economy

[JohnRoberts]

Really?

The STOCK bill in 2012 of Pres Obama made insider trading illegal and it applied to the President and Congress.

From Wiki:
"The bill prohibits the use of non-public information for private profit, including insider trading by members of Congress and other government employees."

The amendment affected the transparency aspects of the bill, but did not change law prohibiting insider trading.  The transparency requirements seem to still apply to The President, Congress and anyone running for Congress though, but the amendment changed all the reporting requirements of staff as it raised privacy concerns.

From wiki:
"The STOCK Act was modified on April 15, 2013, by S.716. This amendment modifies the online disclosure portion of the STOCK Act, so that some officials, but not the President, Vice President, Congress, or anyone running for Congress, can no longer file online and their records are no longer easily accessible to the public. In Section (a)2, the amendment specifically does not alter the online access for trades by the President, The Vice President, Congress, or those running for Congress.[11] The reasoning for this change was to prevent criminals from gaining access to the financial data and using it against affected persons. "


HOWEVER, actually investigating Congress for insider trading is thorny, bringing up separation of powers issues. A divided government of separate but equal branches is great in principle, but difficult and messy in practice.

So still illegal but made impossible to catch them? Sounds like business as usual for the swamp dwellers.

My trading activity is probably not so well protected.

Drain the swamp... In fact make them obey every single law that we have to...  cut out all the special deals congress votes for themselves.

We go to jail for lying to them, they lie to us all the time and get rewarded for it. 

JR

 

[Matador]

My local very expensive "clean coal" plant (thank you tree huggers and regulators who kept changing the rules) is burning NG and likely to always burn gas because it's cheaper than "clean" coal, even though we have local coal seams next to the plant. So that massive expense to build a still experimental technology clean coal power plant was a total waste of me any my neighbor's (utility ratepayers)  money. 

JR

Hmmm, is it this plant?

Kemper power plant promised to be a world leader in ‘clean coal’ technology but Guardian reporting found evidence top executives knew of construction problems and design flaws years before the scheme collapsed

But a review by the Guardian of more than 5,000 pages of confidential company documents, internal emails, white papers, and other materials provided anonymously by several former Southern Co insiders, plus on- and off-record interviews with other former Kemper engineers and managers, found evidence that top executives covered up construction problems and fundamental design flaws at the plant and knew, years before they admitted it publicly, that their plans had gone awry.
...
Kemper promised a way forward. But the documents show that while Southern Co management presented a rosy picture of Kemper’s prospects to the public, numerous structural problems with the project had emerged during construction and internal documents questioned the very foundation of the plant’s viability.
...
The company repeatedly assured regulators and the public that they were “confident” they could build the plant on budget. But internally there were early doubts at the highest levels even before a single shovel was turned.

Still sure it was the 'tree huggers' and the regulators 'changing the rules'?  ;D

 

[JohnRoberts]

Hmmm, is it this plant?

Kemper power plant promised to be a world leader in ‘clean coal’ technology but Guardian reporting found evidence top executives knew of construction problems and design flaws years before the scheme collapsed

yup, that's the puppy...

Still sure it was the 'tree huggers' and the regulators 'changing the rules'?  ;D

Since it has been local news for years, I have watched the slow motion train wreck play out. In fact I have followed clean coal technology for decades, not exactly a new concept, and good in theory. In the words of my older a brother a consultant in the power generation industry "clean coal is just impractical". Too hard, too expensive and this opinion was shared decades ago before fracking and horizontal drilling dropped energy costs so much.  All of his recent utility power generation projects have used NG for years. There was a government funded clean coal research project in (Illinois ?) that was abandoned decades ago as impractical.  Of course the government still "officially" supports clean coal with new research grants.

Yes, Southern Company looks like the gang that can't shoot straight, this isn't their only high profile utility project failure. They currently have one (or two) new nuclear power plants in other states suffering huge cost overruns that may not ever be completed (GA and SC IIRC). While it is easy to argue that they are responsible for the increased local utility costs, the state regulators apparently can not force Southern Company (parent company) to pony up the extra $B for the local utility's excessive debt. The burden for paying the huge pile of cost overrun debt lands on the local ratepayers (like me). The local public utility commission recently disallowed a local utility (MS Power)  proposed rate increase, supposedly to shield ratepayers from the cost burden, but BZZT it doesn't exactly work that way. The local utility will continue to borrow the money for the money already spent and debt incurred. We will have to pay that all back eventually with interest.  I am old so kicking this can down the road is in my personal self interest, but it just isn't prudent. Even local politicians (like the utility commission) are reluctant to make voters take their unpleasant medicine (politicians are always more interested in being reelected than doing the right thing)..

The Kemper "clean" coal plant was based on unproved experimental "clean" coal technology. Despite the onerous delays and cost overruns, I am not sure the technology even works perfectly now. AFAIK there were a handful of test runs using coal, but when the power plant was finally turned on to make electricity (years late) it was burning NG because it is cheaper than the "clean" coal process.

The plant was supposed to be in service by 2014 at a cost of $2.4B.  Now another $5B down that black hole the "clean" coal part of the project has been abandoned. If this plant was built to use NG from the start, it wouldn't even cost the original $2B. I don't recall all the details and am too lazy to look them up but I recall several exchanges with regulators about how much emissions would be tolerated and the government holding a hard line or even tightening the requirements.  Perhaps this will be revisited again if domestic NG prices rise to world prices, but they seem to keep finding more NG reserves so will probably remain cheaper for years.

On paper a "clean" coal plant  and two new nuclear power plants seems environmentally friendly and good corporate citizenship, but the regulatory environment around both of those technologies seems pretty challenging. The big nuclear power plant technology company (Japanese I think) recently declared bankruptcy because of failed projects.  This is unfortunate because new technology nuclear plants are superior for safety (due to cooling design improvements) and promise better control over fissile byproducts, attractive for bomb making. (The main reason some countries pursue nuclear energy.)

I like the planet too, and dirty coal is guilty of releasing mercury and other heavy metal toxins into the atmosphere. Expecting the first attempt at "clean" coal power generation to meet every requirement seems overly optimistic. So yes I still blame regulators, along with parent Southern Company's gross project mismanagement. The government encouraged the pursuit of "clean" coal but it is unclear whether they really supported the practical execution of same.

Anybody have a spare $5B laying around? MS ratepayers can hardly afford this, but that is the (our) present reality.

JR

PS; On the subject of mercury, a concern surrounding improper disposal of CFL bulbs (that use mercury inside), an EU commission study stated that the energy saved by the higher efficiency CFL bulbs more than offsets any mercury inadvertently released by improper handling (EU burns a bunch of coal but I expect the calculus holds for here too). 

 

[JohnRoberts]

I think I may have figured out why inflation is running low. I just bought a new 55" HD 4k TV monitor for $289.  Seriously cheap. I think I paid more for my old 44" that I thought was crazy cheap at the time. Maybe they are blowing out old technology in anticipation of OLED models, but I can live with that.  8)

I just moved my old 44" over to my computer desk, so will you guys stop yelling .  (kidding, but stop yelling).

Sorry I need to go watch some more basketball... until politics ruins that too.  :

JR

 

[JohnRoberts]

I routinely diss economics because it isn't a hard science, but here a "soft" economic prediction I am willing to feel very confident about.

United Airlines has just announced that they will replace their quarterly performance bonuses with random drawings for prizes. These awards will be for more valuable prizes, but even if this was revenue neutral (it probably isn't) it will generate far more losers than winners and remove all incentive to perform better.

Why bother to work harder or better if the rewards are purely random and unrelated to performance.... ? 

I'd sell my United stock if I owned any (I don't).

JR

 

[tands]

No reason whatsoever to work any harder than the minimum, ever. No incentive is worth more hours of my life, or anyone's, to fill some capitalist's pockets with loot.

 

[JohnRoberts]

It appears that United has already reversed their misguided random award program because the bonuses had no connection to performance. 

Surprised that it got as far as it did. I may not be an economist, but whomever is running that operation, wouldn't know a good idea if it fell out of a lost suitcase on their foot.

JR

 

[dmp]

. I think he's has been held back from severe policy mistakes only by the GS execs

??

GS = Goldman Sachs

Gary Cohn (ex-GS) just resigned from the Trump administration. breaking news
Trump initially put several ex-GS executives in the cabinet (5?) 
Mnuchin is another prominent one.

 

[JohnRoberts]

GS = Goldman Sachs

Gary Cohn (ex-GS) just resigned from the Trump administration. breaking news
Trump initially put several ex-GS executives in the cabinet (5?) 
Mnuchin is another prominent one.

Yup, I was surprised that you trusted the judgement/advice of wall street executives.  ;D

It is pretty routine for executives from "government sachs" to do stints in Washington DC. Gary Gensler served in both Clinton and Obama administrations, William Dudley was pres of NY federal reserve bank under Obama. Ex-GS execs can be found in most previous administrations in recent history. Some view this is virtuous public service, others as self dealing, protecting wall street interests. 

Specifically Gary Cohn may have overstepped his role, trying to set up a meeting in the WH with industry leaders who would be hurt by a blanket tariff on steel and aluminum, obviously trying to influence the president's thinking, with that strongly opposed viewpoint.

I am still waiting to hear an actual firm tariff proposal. This seems like a typical negotiation where you start with an outsized position then settle somewhere in the middle creating a win-win where one didn't exist.

JR

 

[volker]

I am still waiting to hear an actual firm tariff proposal. This seems like a typical negotiation where you start with an outsized position then settle somewhere in the middle creating a win-win where one didn't exist.

https://youtu.be/3ixjZ-wKbbs?t=2m4s

;D

 

[dmp]

Yup, I was surprised that you trusted the judgement/advice of wall street executives.  ;D

It is pretty routine for executives from "government sachs" to do stints in Washington DC. Gary Gensler served in both Clinton and Obama administrations, William Dudley was pres of NY federal reserve bank under Obama. Ex-GS execs can be found in most previous administrations in recent history. Some view this is virtuous public service, others as self dealing, protecting wall street interests. 

Specifically Gary Cohn may have overstepped his role, trying to set up a meeting in the WH with industry leaders who would be hurt by a blanket tariff on steel and aluminum, obviously trying to influence the president's thinking, with that strongly opposed viewpoint.

I am still waiting to hear an actual firm tariff proposal. This seems like a typical negotiation where you start with an outsized position then settle somewhere in the middle creating a win-win where one didn't exist.

JR

Ha, I only trust their greed and self-interest to try to prevent Trump from damaging the economy. 
For Cohn, he spent a little over a year in service and managed a tax cut that will personally net him millions.

As to GS execs in Gov, don't forget Henry Paulson, who served under GWB as Treasury Sec after being CEO of Goldman Sacks.  He was the one who organized the massive Gov. bailout of the banks in 2008.
Privatize profits, subsidize losses. 

 

[fazer]

Privatize profits, subsidize losses

I'm opposed to welfare for Banksters.  Don't they know they can do the tried and tested Jump out of the window from the 80th floor when things get rough? Simple and effective.

 

[JohnRoberts]

Privatize profits, subsidize losses.

Gotta love those old classic talking points... kind of like comfortable old shoes.  ;D

For the record we still haven't completely unwound the massive financial interventions after the collapse in 2007/8, so not time to joke about it just yet (IMO).  :

I hope we can someday....  sooner rather than later (hopefully in my lifetime).  8)

JR 

[edit] back to replacing Gary Cohn, it seems prudent to find another person with significant bond market experience, in light of the huge government security portfolio, being reduced. [/edit]

 

[Matador]

Gotta love those old classic talking points... kind of like comfortable old shoes.  ;D

Well, if the shoe fits...

 

[JohnRoberts]

The thing I like about taking an economic perspective on events is parsing out unintended consequences.

I recall protesting in the Boston Common, but that was protesting President Johnson and the Viet Nam war several decades ago.  The picture above is recent new england protests against NG pipelines.... DUH  apparently picture is in the summer time too. I bet they are cold now and wouldn't mind cheaper NG.  :

Right now the rest of the country has NG coming out of our ears, but new england is importing Russian NG because the NG pipeline expansion has been slowed/blocked.

Seriously... In what world does this make economic sense?  I guess they can brag about having the highest energy cost.  :

JR

 

[JohnRoberts]

I felt like commenting about the elephant (chicken) in the room when discussing free (fair) trade, tariffs and imports. 

In 1963 LBJ imposed a 25% tariff on light commercial vehicles (like pickup trucks), in response to a trade skirmish with europe over poultry prices.

Perhaps this is why detroit is so focussed on making and selling very profitable pick-up trucks because it is not a level playing field, due to a 25% tariff moat suppressing imports.

JR

 

[benb]

I saw a video interview from 1968 with Friedman explaining his NIT concept and it has some attractive prospects. First it could reduce the bureaucracy of government welfare programs, turning it into an extension of the income tax system.

I wholeheartedly agree that reducing bureaucracy would be a Good Thing, but I have a hard time believing that would actually happen. If NIT (or especially UBI which "looks different" from something like income tax even if it's the same thing) actually happens, it would probably be "administered" yet another bureaucracy-filled government "administration."

It would be an uphill battle to push the idea that "we're getting rid of welfare, but we're paying every adult the equivalent of $15 an hour/40 hours per week" even if the welfare recipients ended up getting double.  It's virtually impossible to get rid of such a big entitlement, and people would be afraid NIT/UBI is some sort of a lie. Washington DC would be in gridlock from the people marching in the streets against it.

Perhaps it would be better to wait for [or, rather, promote!] the "groudswell of grass roots protests" get loud enough before taking action. I wonder if proponents like Scott Santens would get under-the-table kickbacks to keep doing what their doing, and eventually testify to Congress that "this is what the country needs."

Not sure if I'm a cynic or a realist.

 

[Matador]

People were screaming "TAX INCREASE" when Medicare for all was being pitched:  apparently increasing your taxes by $10K but then saving $12K in health care expenditures was some impossibly convoluted calculus for some people.

So I agree, most would not understand it.

 

[Script]

--Really an aside--

Buffet finally dumped the rest of his IBM shares.

Like many other ' investors' he seems to be holding too much in cash still.

--End of aside--

 

[JohnRoberts]

--Really an aside--

Buffet finally dumped the rest of his IBM shares.

He prefers long term holds, but IBM has been a value trap for years... IBM has been buying back their own stock to engineer a better P/E, but top line growth was soft.  IBM is actually a player in implementing blockchain technology but not a big money maker for them.

Like many other ' investors' he seems to be holding too much in cash still.

--End of aside--

Me too... 

Too much cash is a perennial problem for Buffett.  He does not issue dividends or buy back his own stock so his cash hoard just builds up until he buys the next big something, often a whole company. Problem right now is the stock market is not very cheap. He prefers to buy companies on the cheap when their stocks (or bonds) are better bargains than right now.

I am kind of waiting for him to kick, expecting his Berkshire Hathaway stock price to dip on that news, so I can buy some more. He has already replaced himself with 2 or 3 younger guys to do his investment research. Warren would have never bought Apple or an airline on his own, but now they have major positions.

But yes I expect them to have a too much cash problem for even longer until the market gets cheaper (could be a while, could be years.)  After he kicks I kind of expect (hope?) the new guys start paying a dividend, at some point they have to run out of good companies to buy cheap, while the machine keeps churning out more and more cash (a good problem to have). 

JR