Tag Archives: Economic

Requirements for Economic Recovery

Requirements for Economic Recovery

To get a handle on where the economy currently stands, take a look at the graph below. It is one of the nicest comparison graphs I’ve run across that compares our current economic (European AEX) picture with the 1929 DJIA economy and the Japanese Nikkei meltdown of the 1990s.

See http://www.vanenschot.com/finance/stockmarketcrash.html. The image is linked below:

Comparison of three stock markets

Comparison of three stock markets

Compare the chart above with the DJIA chart below. Line up the two charts at 2003, and one can see that the AEX and the DJIA are very close in performance.

DJIA Since 2003

DJIA chart courtesy of MSN at http://moneycentral.msn.com/investor/charts/chartdl.aspx?D5=0&D4=1&ViewType=0&ShowChtBt=Refresh+Chart&DateRangeForm=1&ComparisonsForm=1&D3=0&CE=0&Symbol=%24INDU&C9=2&DisplayForm=1&CP=0&PT=10

What Does This Mean?

The translation is this: Expect the stock market’s bottom to hit within the next 45 days (by April 30, 2009), followed by a protracted 5-7 year recovery.

Comments on Presidential Economic Stimulus Package

While I appreciate President Obama’s focus on improving the education system and access to the Internet, those incentives do not create new jobs. One must have a Return on Investment (ROI) that will remain after the money is spent. Education, unfortunately, is an ongoing expense. The ROI time line of education is typically a decade or longer, and this country cannot afford to wait ten years for an economic turn-around.

Obama indicated heavy investment in science and technology, but there needs to be clearly defined areas of investment. Exact areas were not outlined, and in business, identifying exact areas is the first step towards improvement.

For this country’s economy to recover between 2009 and 2015, it will require the federal government to invest in rebuilding the transportation infrastructure that serves as the primary conduit in a healthy, thriving economy.

Simultaneously, the country’s dependence on foreign oil holds this country hostage to foreign governments. Many of those countries would rather squeeze the American economy out of every cent they can. Do we really want to wait until petroleum is selling at $150 per barrel to say the words, “I told you so”?

Recommendations for Economic Recovery

Here are the recommendations I have for economic recovery. Compare what I believe is needed to what President Obama stated is in the stimulus package. See http://www.whitehouse.gov/agenda/economy/ for stimulus details.

1. Fund Alternative green energy for electrical power generation (Wind, Solar, WTE)

Yes. Obama wants “doubling the production of alternative energy in the next three years.” I have no idea how he he plans to replace all the electrical power that will be lost as nuclear plants close, but at least he wants to do it cleanly, right? Hmm, then why did he mention “clean” coal power plants? Does he really think coal is renewable energy?

2.Enact minimum of 40 mpg for passenger vehicles. Stop rewarding automakers for producing gas guzzlers like the Hummer that get single digit mileage. Penalize automakers for anything less than 40 mpg. Make it a federal mandate for all cars sold in the USA. There is no excuse with today’s technology not to get a minimum of 40 mpg for automobiles. Trucks are a different class.

No. Obama has not established anything for setting car mileage requirements or in generating incentives to car companies like Tesla Motors who produce cars with zero emissions and over 200 miles per battery charge.

3. Build twenty new Nuclear power plants to replace aging ones.

No. Obama is against nuclear power. As many as a dozen of the aging nuclear plants will go out of production in the next ten years, with several currently operating beyond the intended life expectancy. The average nuclear power plant generates 1 to 2 gigawatts of electrical power per year. How are we going to replace the power produced by these plants? Through Wind and Solar? No, both of those technologies are too inefficient. A large wind generator can produce 1.5 megawatts. We would need 1000 wind generators to equal the output of a single nuclear power plant! WTE (waste-to-energy) power plant? We would need 4 to 5 WTE plants to equal a single nuclear plant.

4. Enact infrastructure replacement for highway bridges.

No. Obama has not indicated a federal program for this. Yet tens of thousands of highway bridges are in need of serious repair or total replacement. Waiting until the economy starts to recovery is not the time to slow down the highway traffic to perform repairs. Do the repairs and replacements now. Be proactive, damn it!

5. Fund and build a federally subsidized High Speed Rail between all major cities ASAP.

No. Obama has not indicated a federal program for this. Why are high-speed rails not being built along the same corridors as Interstate highways?

Why are we wasting so much time and energy getting on airplanes to take trips of less than 300 miles? While are we spending hundreds of dollars on gasoline for a round trip of 600 miles (10 hours) if we could spend half that amount and spend only 6 hours travelling?

The average traveler spends 2 hours coming and going to the airport, another 2 hours to meet security requirements, and another 2 hours to fly 300 miles by the time we deal with airplane take offs and landings. A total of 6 hours to travel 300 miles.

Compare that with a high-speed rail service capable of 200 mph, and even with the 2 hours to travel to and from the rail terminal, we reduce the travel time from the 6 hours down to 4 hours. No cancellation of travel due to snow. No cancellation of travel due to thunderstorms at other airports.

Every economic recovery of the past one hundred years required investment in mass transportation, whether in providing it or in increasing the speed or improving efficiency. Why is the federal government ignoring this fact this time?


Filed under Economy, Government