Google
 

23 September 2008

Stop Congress from acting

We are faced with the biggest financial crisis since the Great Depression, or so they say. If Wall Street collapses Main Street will also, or so they say. If the government doesn’t step in and buy up all the bad mortgages then millions will lose their homes, or so they say.

The headlines and the talking heads have been heaping up a whole light of gloom and doom lately and in the wake we the American people and more especially the tax payer are headed for disaster. We can ill afford the plans being offered and the actions about to be taken. You cannot continue to cover up a mistake with a bigger mistake and hope no one will notice.

Let me present a simple little story to try to make a point. A local furniture store opens for business with the hope of making a profit by selling its wares to the local community. In the process they stock inventory that they hope will appeal to the local population. Some of it does and some of it doesn’t. Some of it is priced where the average person can afford it and some of it is priced way beyond the reach of the local community. Those things that appeal sell quickly while those that don’t sell are marked down to a price where they will sell. The business learns what the market wants, adjusts its inventory and repeats the process having found a formula that creates a long lasting relationship with the customer in the community.

Another furniture store opens for business and does a good job for awhile but management doesn’t understand the needs of the community. They stock inventory that suits their own desires and ideals and for awhile they see some sales but they begin to taper off. The furniture is just too expensive for what it is and the local economy can’t afford to splurge on these items even if they wanted the styles this store has to offer. As sales continue to fall, they finally reach a point where they can no longer stay in business. The last month the store has signs hung in the window that read ‘Going out of business Sale’ as they try to reduce their stock and payback their creditors. The final days see the owners taking any price on the remaining inventory in an effort to clear the books. The bargain hunters and shoppers find items finally at a price they can live with and clear out the remaining inventory of the store.

Meanwhile the successful store sees a slowdown in its sales temporarily as the ‘going out of business sales’ have taken away some of their shoppers. This only lasts for a little while though, as the successful business continues to provide their community with the right mix of product and price.

This is how business has worked in this country and around the world for years. That is what capitalism is about. Freedom to enter the market and exit the market as the market dictates. If you do things right you are rewarded, but if you do not get things right, you correct your methods or you go out of business. It works on a small scale and it works on a large scale.

If the government decided that the second furniture store should stay in business and decided to loan them enough money to pay their salaries and utilities and they stepped in and bought at full retail all the furniture they couldn’t sell, they could keep this company in business but only for as long as they were willing to pay for their salaries, utilities and buy their crappy inventory. If the company continued to operate the same way as they began it would take continued infusions to let them continue to exist.

Also, how fair is this to the first company? They also wish to remain in business but they have a plan that works and they have been successful in implementing that plan. They do not need the assistance or handout of government nor do they seek one. Is it fair for them to have to pay taxes that are transferred to their competitor just because he is not able to meet the needs of his customer? Is it fair to penalize the first company and reward the second? Is this the government’s role?

If we truly believe that America is great and want it to continue to be great, then we trust in those things that made it great. Freedom is one of them, Capitalism another. This is not a matter of scale, but rather of core values.

If the financial institutions have bad paper on their books then let them mark them down to true value and take the hit to the income statement. If they no longer want to own them, let them take them to the market place and get whatever price another is willing to pay. There is generally a market for everything; you just won’t necessarily like the price. If after selling off your bad inventory and you still find yourself in business then congratulations you are still alive and kicking. If after selling off your bad inventory and you don’t have sufficient cash flow to survive, then close shop, learn your lessons and start again.

Learning the lessons is not an easy thing to do. Some never learn. Some give up and never try again. Some try again but end up doing the same thing they did the first time. Some actually see what they did wrong; make adjustments and move on to bigger and better things. There must be consequences both for when we fail and when we succeed. This is America at its finest.

So what is wrong here, or should I say what are some of the things that are wrong here because there are many and that means there is not a simple single fix that will take care of everything.

As much as there is a cry against deregulation, that is not the problem. There is still more than enough regulation to choke a horse it just needs to be applied, consistently and equally to one and all, no favoritism. This runs throughout the financial world and many aspects of our economy.

The housing problem is a very large issue and one that has been compounded by previous bad responses. It is a market bubble with many providing the hot air to blow it up. Stemming from the last mortgage bail out of savings and loans with the RTC, the continued tax subsidizations that Congress passes to promote debt, and the tax laws that encourage and advantage those that speculate in real estate, it is no wonder that the bubble has ballooned to a point of explosion. If we continue with these proposed fixes then we are just slapping a band aid on the balloon and trying to force more air into the bubble.

All balloons can only hold so much air. There is only one way to find out how much it will hold, and after you find out, it will never hold that amount again. Then you are left looking for a new balloon.

Instead of all this governmental intervention to circumvent the markets, let’s make a way for the market to take over and work the way it was meant to. Let stability return to the market place naturally. Let the rules work naturally as they always seem to do no matter how much governments try to change them.

We will get through this. I just don’t want it to be harder than it has to be.

This is Ed Nef with a view from the Farr West.

Energy solutions?

I have seen a couple of commercials lately that have caught my interest but then created disappointment and just a touch of anger. The two I am talking about are the ones espousing T Boone Pickens Plan and the other being the We Can Solve It group.

It seems like every other ad these days has an internet address attached to it for further information and in some cases the only way to find out any information about the company that is doing the advertising. In most cases, probably 98 times in 100 I don’t give the ad a second thought and very seldom if ever actually go to the web site. In fact I am almost anti web page advertising and actively ignore some of the more gimmicky ads like the one that starts you off on some adventure and then wants you to go to their web page to see what happens next. Sorry I haven’t done it yet and don’t intend to. I just don’t manipulate that way.

Curiosity did get the best of me on these two though because they are covering topics that I have had an interest in, or at least I thought I did.

As when American with a pulse knows the price of gasoline has gone up a little bit lately and it has caused some concern. T Boone Pickens, an oil man who has made a fortune from the oil industry is also concerned and has decided to put his money into letting us know of this concern and at the same time offer up a proposal on how to solve this dilemma we now face.

His proposals for the most part are sound with the stated goal of getting America to do some basic things that would significantly reduce our dependence on foreign oil. He suggest converting some of our transportation vehicles such as trucks and buses to run on natural gas which burns more cleanly and is a product that this nation has a rich abundance of.

This approach has a lot of merit but will take a little time and some commitment on people and companies willing to break some new ground. The infrastructure for refueling vehicles with natural gas is not nearly as abundant as it is for gasoline and diesel. As demand goes up so will the facilities. I have a friend right now that is converting to natural gas powered cars and he is loving it. He has to plan his fuel stops but when he fills up it only costs 8 or 9 dollars as compared to the 45 to 50 it has been costing me. He deserves those bragging rights.

The downside is planning a long cross country or even a short trip to grandmothers house will take extra effort to make sure there is fuel available along the way. There are some cars that are dual fuel machines and can run either or but most are single fuel choice. Another setback is the added weight for carrying the heavy high pressure tanks that hold the fuel. This will reduce the performance of the vehicle and I am including handling as part of that.

Another key ingredient to the plan is to really start harvesting one of the energy sources that America has an abundance of, namely the wind. We have all seen the pictures of big wind turbines and some of us have actually seen them in action. They can be quite impressive. Some of the wind farms are immense and make quite an impact by its presence. I have seen wind farms in the hills of California to the high Wyoming valleys. I have seen giant windmills on the hilltops of Greece from 35,000 feet wondering what they would look like at ground level if they where that easily seen from that height. I have seen large single windmills set within city limits and on military installations supplying energy to their communities. I have also seen small single units and testing units churning away producing energy. Each time a see a modern era windmill silently working away I am impressed.

I have often driven through the back country of America, for lack of a better term, and have past often old and forgotten windmills that used to serve the ultimate off the grid user, the ranchers and farmers of the west. These old windmills had one important function, bring the water from the well to the surface to water crops, livestock, and family.

There is so much potential for wind and I hope that it begins to be realized. If interest grows then technology advancements will also grow and increased efficiencies will be injected into the equation making the cost benefit analysis of wind a great alternative energy source. The one thing missing in most all of these arguments is a true comparison of costs.

I think that the cost issue may account for the lack of mentioning of photovoltaic or solar cell technology. Again though, as interest grows technology advances and possibilities increase.

More information about the Pickens Plan can be found at:

http://www.pickensplan.com/index.php

The other advertisement that has had a lot of airplay lately is a group of people taking about the current problems we are having with the high cost of oil but ends with the collective resolve that we can solve it by demanding action.

Before I go any further let me tell you up front what it took a very little digging to find out. This web site is a front for Al Gore and his politics. It is totally centered on his vision of the environment and his environmental manifesto. Just know that going in. I for one was greatly disappointed by this fact.

The commercial has great power in that it alludes to the people of this land banding together as individuals and making changes within their own lives and actions they can take that will lead to a ground swell change. The kind of changes made for individuals by individuals. Changes that come from ideas that are freely shared, and expanded upon by individuals, with the common goal of freeing ourselves from the oil crisis.

What you get is a call to become a political activist and demand Al Gore’s environmentalist programs be turned into Congressional mandates. He has already conned more than 1.5 million into signing up. This means he can weld some influence in Washington which is easily pushed over by such silliness. Do all of those that signed up on the web site really understand that they are giving their voice to the personal fancy of one man?

There are the solutions already mentioned but without any detail nor again any cost benefit analysis which is to be expected of a long term politician. It is easy to say we should enhance energy efficiency and adopt the use of renewable energy; it is a whole other ball game when you actually infuse it with a real plan of action. And that is where Al Gore fails. He wants to set the goal that sets the agenda and he wants others to figure out how to met his goal and then he can take credit for it while he calls it innovative leadership.

Al Gore’s web site can be found at:

http://www.wecansolveit.org

My biggest gripe for both of these movements and especially Al Gore’s is that they both call for government action. Both want government intervention to force and fund full implementation of their plans. That funding would come from taxpayer dollars and changes would be mandated is where these plans break down. If they are viable worthwhile goals, both economically and environmentally, (which I think they are), they should be able to be implemented directly without the need for government mandates, infusions, or interventions.

Of the two plans at least Pickens is putting some of his plan into real action by starting wind farms to harness and produce a real change. I can assure you that he will only do this as long as it is economically viable and that is the other reason for him to seek government subsidization, but a better way would be to continue to seek ways that would make it profitable on its own.

The last energy crunch of the 70’s created a surge in wind generators and solar cells that were heavily subsidized with tax breaks. Because the cost break even points were artificial, true cost benefits were not needed. The quality of the products that were rushed to market to fill the new tax subsidized industry were subpar and new technologies were not needed because existing or old tech would meet the rules for tax write off purposes. When the wind generators broke they sat there broke because it was not worth putting any money in to fix them.

I don’t want to see us head down that path again. We can’t afford to waste time and energy on more knee jerk reactions that continually shift the problem. We need real solutions from real people for real people, not government solutions for the masses. If the government would kindly leave some money in my pocket rather than continually confiscate it for ill conceived plans, then maybe I as a consumer could create an influence through my actions and choices that would make a real difference. Maybe I could afford to support by investing in a wind farm of my own, or at least buying a solar system for my house. One that put money back into my pockets because of savings and sell back would make it all the more sweet. That is where you start and that is how you make it work.

This is Ed Nef with a view from the Farr West.

15 September 2008

Free DVD rental at Redbox

If you are fortunate enough to live near a place that has a Redbox then you know how handy they can be. For those that don’t let me tell you what they are. Someone came up with the great idea of setting up a movie rental business from a vending machine. I finally overcame my fear of the new technology and had to try it out, and I must say I do like the idea. I have since seen the idea done in other places but Redbox seems to have the formula down pat.

They have placed the rental kiosk in many convenient locations such as McDonalds and Smith’s Food King and some local Wal-Marts. At the screen select any of the DVDs available, enter your credit card and out comes the movie. When you are finished watching the movie you take it back to any location, it doesn’t even have to be the one where you got it from and return it. Your credit card well then be automatically billed for the whopping price of (get this) $1 + tax per day. These are for any selections in the box including new releases. That certainly beats out the last few places I used to rent from.

And what happens if you keep it an extra day? Nothing but an extra $1 charge. In fact if you have it out over 25 days just keep it because the charges stop after 25 days and it is assumed that you have bought the movie.

As Redbox continues to grow, there are over 8,000 locations now, it will make it easy for families that go on a road trip to stop at one place and rent a kid friendly movie, watch it on the video player that so many mini vans and SUVs have now and turn it back in for another one somewhere down the road. If I didn’t like to do the driving so much I would definitely be a passenger.

Now it won’t completely replace your local video store as the vending machines are limited on the total number of selections available. You can only put so many into one machine, so if you are looking for an obscure classic you will be better off shopping the local store. If you want one of the latest new releases, be sure to get there early because they might run out of stock, especially on hot items and especially on the weekends. That said, you generally find a pretty good selection and I only go away without finding something really worth watching occasionally.

As I am always on the lookout for great ideas to invest in, this one surely grabbed my interest. I went straight to the internet to look for more information on this company. I knew this was a good idea when I went to the local McDonalds one night to rent the latest comedy and noticed that the line outside in front of the Redbox was longer than the line inside ordering food. You know you have a winner when…

Unfortunately Redbox was and as of this writing still is a privately held company. They have made known their intention to file registration statements for an initial public offering with the SEC. Depending on the pricing and business plan laid out in the prospectus this might be a worthy investment. After all, some of the sites with a Redbox have added a second box so business must be booming.

So the last thing to say is that when I gave them my e-mail address they gave me a promotion code that I could give to my friends for one free night rental, so if you are in an area with a Redbox and want to give it a try, enter the promo code “DVDONME”. Tell them Ed sent you.

You can find them on the web at www.redbox.com.

This is Ed Nef with a view from the Farr West.

12 September 2008

ACSC course a tuffy

So here I am again taking many days off but I am back. I have been rather busy and not in a good way all the time. Being busy in a good way at least lets you feel like you are accomplishing something, and I have on a few things but not nearly to the extent I would have liked.

I did finish a class I have been taking at work for the last 18 months. It is called the Air Command and Staff College a course that is part of the PME or Professional Military Education. It is a self paced self study course or it can be taken in residence if you are lucky enough to be selected for that. I joined up with a group that was interested in taking the course and did it seminar style. Our study group started out with 14 individuals but by the end we were down to 6, and even then we were fragmented by at the end. I was the first one to complete the course with one other completing 2 days later. The rest are still working towards the last test. I really pushed hard the last few months to finish because I got to the point where I couldn’t take much more.

It was a very hard course in a lot of ways. Mostly because it was a new language made of governmentese with lots of new acronyms. Some of the acronyms were defined when first encountered while many were not. This made for a longer learning process as you spent time searching for what was really being said. Towards the end you didn’t care as much and tended to just take the acronym as its own word and pressed on hoping that through repetition it might stick. I find that with a lot of acronyms used in the government, many users only know the acronym and have long since forgotten what it actually stands for if they ever really knew in the first place. The acronym takes on a life of its own.

The course consists of 7 text books covering different sections. Each book has a comprehensive test of 50 questions that must be passed with a 70% or better. If you miss a test you have one retake available per book and the retest is not the same test you took the time before. If you miss that one you must reapply generally after a 30 day wait. Most in our group have had to do a retest while some have had to reapply. The good thing about being in a group is the motivation factor and encouragement that each would provide to help each other press on. If it wasn’t for that, I am sure I would have quit on several occasions through discouragement and other reasons. I did not want to let the group down so I always tried to meet my commitments, contribute where I could and keep up with everyone.

Along with the test there is a written assignment with the first book and three computer exercises, one with each of the last three books. I had talked myself into thinking that they would be pretty bad and I was really worried about them until I actually did them. I think that sometimes when I make things out to be so much worse than they are it is a little easier to handle the reality of it when it comes time to actually do them. On the other hand it can make things worse than they need to be.

That is the way this course was though. In hind sight it doesn’t look nearly as bad as it was when I was in the middle of taking it. I hope that means I will survive without too much post traumatic stress syndrome. It took a lot of effort to go through a topic that was of very little interest and at times felt like it was messing up my mind. I have had a hard time focusing on things since taking this course. Now that it is over I am hoping that I can do a few things that have been put on hold and get life back to normal. The fact that it is looking smaller and smaller in the rear view mirror is a good sign.

I joked that I needed to go back to reading Dr. Seuss to start getting my head straight again. I was joking but I am wondering if there isn’t some truth in that. I used to read a lot and think a lot as well as watch tv, movies, music, road trips, bike rides, family outings, car shows, hikes, and just general hanging out. I have had a strong desire to get back into flying, finish up my license, build a plane and doing some cross countries but it has all been put on hold. I just haven’t done much of any of those life kinds of things while I was taking this course, with the exception of walking. I would take the occasional break at work and go for a walk on an untraveled road near my building and I would take the text book with me to read while I was walking. That sounds difficult but it seemed to help me stay awake and a little more alert while getting in a little exercise. Keeping blood and oxygen flowing was a definite plus in studying this stuff.

It is not that it was all bad but a lot of it was. There was some interesting stuff and there were some topics that you would have loved to have had a serious discussion on, but you weren’t in a classroom setting at the time and the author wasn’t readily available to have a proper debate with. There was a lot of paradox in the text and no way to reconcile it. The text books are made up of several articles and various regs and pubs. Government publications are not structured for quick and easy absorption. They are a great remedy for insomnia.

The problem is that the order and organization of the material is not well planned or laid out. You would try your best to comprehend what you thought was the essence of the article and think that you were grasping a pretty good overview of the what objectives were but then you would run across something else that made you wonder if you were on the right track. Then when you thought you had everything you needed, enough to take the test, the questions would get into the weeds of an article and not the macro vision you thought the book was trying to portray. As a supposed introductory level course it fails to readily build a core foundation with which to understand military doctrine, and it does not well define the terminology required to interact meaningfully in the world that uses such language and thought process.

It is that change in thought process that has me worried for after being immersed in this course for 18 months my mind does not work quite the way it used to and I am working hard to get it back. It is coming but it feels slow in doing so. Like I said I put a lot of things on the back burner and I am just starting to get back to them with real intent. I did just finish an investing book by Jeremy Siegel this last week but there were about three days after the last test where I did nothing but play a video game on the Playstation 2. I know it sounds lame but it was a good change of pace and the video game helps reintroduce the application of logic that is of more use in the real world.

I intend to refresh my efforts to study for my pilot license and continue to set the goals of flying. That was one of the strongest motivators to finish this course and get it out of the way. I am hopeful that the aspect of studying anything has not left me completely. I have wondered about studying a second language as I feel like that is what I have been doing for the last 18 months. I remember reading somewhere that the brain uses a different section to recall a second language depending on when you learned the second language giving evidence that there is something of truth about it being easier to learn another language while in your youth than when you are older. That might help explain why this course was so difficult but also gives me hope that if I can manage to get through this I should be able to learn another language.

In fact that was one of the reasons for taking this course, besides the obvious reason of job advancement, was to exercise the mind and blow out the cobwebs. I was hoping for a positive invigorating experience but I sit here wondering if it was all worthwhile or not. It is supposed to give me a couple of points on my whole person score, about the same as if I had gotten my Masters, and it does help me understand the military lingo a little bit better but did it really improve me as a person and am I better off for expending all that time and effort…only time will tell. Right now it still doesn’t feel like it.

So if you are taking ACSC, I feel for you but keep it up, press on, press through the boggy stuff, hang in there, you can do it, others have and so can you, never give up, and it will be over when it is over. I can't really say that it will get better because it doesn't until it is over.

If you haven’t yet started but are thinking about doing it I would have to give my advice as this, DON'T DO IT, unless it will directly help your career, instead go ahead for a Master’s degree. It will probably be of more value in the end. If you already have your Master’s and you are bored then go get a Doctorate. The sad thing about this course is that if it were properly structured you could probably lay the whole thing out in a 28 page Cliff notes pamphlet. I could do it if I had enough desire to fully comprehend the subject matter and spend the time and still be able to speak English after it was all said and done and still be able to translate things into laymen terms or an understandable format that real people could use. In fact I did a lot of translating to put things into my terms for understanding and for helping others understand only to have to translate it back into government speak to take the test. I tell you it is like learning another language. It does give you an instant understanding of why our Washington is the way it is.

One final note to all those that are looking for a short cut such as dirty purples, don’t bother. The school frowns on it and rightfully so. I don’t know if there are any out there for this course as there were in the past but they can't give you what this course is supposed to give you, and that is an exposure to the military mind think and that is what is needed to participate in the military environment.

As every book and test was administered and developed by a different person what worked well in one book wasn’t always the best method to use in another book. The study questions were a good starting point for us in the beginning but we weren’t referring to them much in the end. After all is said and done you still had to do the work, read the articles, and review the material. You are the one that has to take the test.

I was on version 5.0 and I understand that version 5.1 is just around the corner. The tests are lousy. Many questions have more than one right answer so you have to look for the answer that is right for this particular question. Some questions are easy and some don’t even look like they belong. I had to read through the first six questions on the first test before I knew I had the right test. There is limited feedback so even though you passed a test you had little idea of which questions you answered right and which ones you got wrong. Another secret is that once you passed you didn’t care. A common comment was anything more than the minimum 70% was a waste of brain power. There are also quite a few questions that had been thrown out on the test I took so others that have gone before have also had issues with the test.

Am I glad I did it? I don’t know. Right now I think there were many other things that would have been a better use of my time and energy but it came along and the right time and caught me in the right mood so I signed up and I did it. I accomplished a rather large goal which became a commitment not only to the others in my group but to myself. I finished it as I said I would. If I take nothing else away from this than the accomplishment of finishing and I carry that momentum forward, then I actually have benefited from this course and that is something.

This is Ed Nef with a view from the Farr West.