August 10, 2020

Explaining the National Debt

Posted on 13. Apr, 2012 by Stephan Helgesen in Economy

As a young father, I relished trying to explain things to my children. I wasn’t always successful, but I really loved the challenge of getting into their little minds and rolling around in all that virgin grey matter.

I think I made some headway when I encouraged them to try to visualize things – like what it would be like to be a blood platelet floating through an artery or a summer mosquito flying to treetop heights. Those experiences and others since then have convinced me that many of life’s problems can be put into perspective if only we use a little creativity and try to shrink them down to size.

Speaking of that, the old elephant quote comes to mind, “How can you eat an elephant…one small bite at a time.” And when that incremental approach is coupled with some imaginative thought, even the biggest problems can be brought into focus.

Let’s take the national debt, for example. Every person in the U.S. is on the hook for it. In the sixties,  we were all fascinated by space travel, and economists used to calculate the debt by laying dollar bills in stacks that would reach the moon. We were shocked because we knew the distance to the moon, and that example helped us understand the enormity of our debt.

That indebtedness is like a wart on an elephant compared to the $11.6 trillion economists say we will soon owe over the next few years. So, how do we get our arms around that figure? Dollar bills circling the moon several times and looping back to Earth won’t impress many of us, so I have another idea how we might hammer the point home to our fellow Americans.

Suppose the IRS sends each American family a statement in the mail for the share of the debt they owe? How would we feel opening our mailboxes and seeing a window envelope staring back at us from the Feds? Nervous fingers gingerly tear it open and find the following…

“Dear FellowAmerican,

Please be advised that the U.S. Treasury has assessed your family’s current share of our national debt to be approximately $200,000. This sum is due and payable immediately if we are to liquidate our nation’s accounts payable at this time. We at the IRS realize that the average taxpayer might not be in a position to pay this debt in one lump sum so we are offering you three options.

The first option is for you to begin making payments to us at the rate of $10,000/month (figure adjusted for interest) over the next two years.

The second option is for you to transfer the responsibility of that debt to your children and grandchildren who may pay it to us over the next 10 years.

Please bear in mind that because our debt is increasing at the rate of $3.0 million a minute, the actual amount your children or grandchildren will owe could be considerably larger than the current sum, as it will include interest at an indeterminate percentage (this will depend on the interest rates our Treasury Bills will be required to pay to foreign investors along with the rate of government spending).

There is a third option (though it is not within our agency’s purview to recommend it).

We call your attention to the national elections that will be taking place in November.

Should you decide to vote for candidates who support dramatic curbs on federal spending or espouse balanced budget amendments, their election and subsequent decisions may reduce your family’s indebtedness and therefore your family’s total financial obligation to us. Please check the box alongside option one or two…or check the appropriate box on your ballot on November 6, 2012.

Sincerely,

Your friends at the IRS”

I haven’t asked them, but I think my children would be pleased that their old dad is still trying to explain the inexplicable.

- Editor

Partitioning the USA’s Healthcare: A Patient’s View

Posted on 26. Mar, 2012 by Stephan Helgesen in Economy, Healthcare, Politics, Social/Cultural

In a few short days the Supreme Court will take up the case brought by 26 states against the Patient Protection and Affordable Healthcare Act aka Obamacare. You remember it don’t you? massive 2,700 page piece of legislation passed in the dark of night by the slimmest of Senate majorities with no Republican votes that’s supposed to cure the healthcare ills of all Americans? The one that Representative Nancy Pelosi said “We’d have to pass before we can know what’s in it?” The one that over 60% of all Americans oppose and that’s now projected to cost $1.76 Trillion, double its original estimate?

Yes, that’s the one.

As a patient and a taxpayer I find the whole thing incredible! It has caused a major riff in the entire country and served to drive us farther apart instead of bringing us closer together. We need to strike down this law and start afresh, using some good old fashioned commonsense, innovative thinking and a heaping helping of nationwide conversation.

We could start by looking at other countries’ systems.

I have experienced, firsthand, the healthcare systems of three European countries: Denmark, Germany and The Netherlands and one Asian country, Singapore. The Scandinavian countries are often trotted out as a superb example of how a healthcare system should be constructed and the  Danish system works fairly well for a country of only 5 million plus people. Studies done by my office in the early nineties showed that the Danes pay about 20% of their gross earned income for healthcare.

They have both private and public hospitals. The private ones appeared in the 1990s because the Danes got tired of waiting for months, sometimes years, for elective (read: non life-threatening) surgery. The Mermaid Clinic was one of the first. It did a land office business handling the overflow from the government healthcare system.

Many wealthier Danes also elected to come to the U.S. for diagnostic and specialized care.  As a matter of fact, thousands of foreigners routinely seek out U.S. healthcare services, bringing in millions for the M.D. Anderson Clinic in Houston and the Mayo Clinic in Rochester, Minnesota.

Upsides downsides

One of the first casualties in any government system is the ‘bedside manner’ as doctors have little time for chit chat with individual patients because of huge patient loads. In Denmark, doctors see private patients who reside outside the doctors’ geographically-mandated area of coverage and they see those assigned to them.  Their offices, clinics and hospitals were oversubscribed when I lived there due to a insufficient number of healthcare providers to handle the volume and a general patient entitlement mentality (“I paid for these services with my taxes, and by gosh I’m going to use them!”).

I am willing to bet that hypochondriacs accounted for a fair number of visits to GPs though I have no proof of it. While I can’t comment on the quality of the care others received, I can only say that the week I was hospitalized, I received efficient and professional treatment.

One of the principal areas where the Danish healthcare system fell short was in pharmaceuticals. The drugstores (apoteks) were required to buy drugs from a government-owned and operated central pharmaceutical purchasing organization. This organization determined which drugs would be purchased, in which quantity and at what price. It negotiated with the pharmaceutical companies who were not enamored with the process as many of them had new drugs they were trying to get to market.

The government purchasing office refused to stock many of them despite the fact that they had gone through extensive FDA trials in the U.S. and thereby kept them out of doctors’ and patients’ hands. One of the real benefits of the Danish system, however, was the elimination of anxiety. Danes didn’t worry about being able to afford their care as the costs were rolled into their income tax bill.

In Germany, the system relies on private insurance companies to back up its system. Since the Germans are true believers in insurance, and are home to an impressive number of insurance companies, it took no leap of faith to build a system that relied on them. The quality of healthcare and ease of delivery correspond to that of their Scandinavian neighbors’, but the major difference is the size of the populations: Germany has 80 million people, Denmark 5.5 million.  In my four years in southern Germany, I observed that their operation runs smoothly.

In Singapore, medical care was excellent with many top-notch practitioners and great hospitals to serve a relatively small population of a little over 4 million. In fact, Singapore, a tiny nation-state that’s only 21 miles by 19 miles, also benefitted from foreign patients, principally from Malaysia which was a short drive across the causeway that connected the two countries. The Singaporeans are big on technology and had the latest and best diagnostic equipment, and they used it, liberally. Our embassy assessment was that the healthcare was uniform and good.

There were at least four things these countries had in common: 1.) a belief that healthcare is a right and not a privilege, 2.) a national health ID card, 3.) a national patient database and 4.) very high healthcare costs.

That brings me to a CNN reportage done by Fareed Zakaria who is beating the drum for a single-payer system for the U.S. Unfortunately, Mr. Zakaria used the tiny, wealthy nation of Switzerland to make his case for exporting the single-payer system to the USA. Last time I checked the State Department’s statistics, Switzerland’s population was only 8 million and the average income of the  Swiss citizen was $67,000 compared to the U.S. population of 320 million with $31,000 per capita income. While it was interesting to see Switzerland’s system and hear their rationale for it, it was hardly a fair comparison to make with the U.S. demographics, infrastructure, history and geography.

A two-tiered system for the U.S.?

Given the importance of this issue and the turmoil that has ensued since passage of Obamacare, we ought to be engaged in a Manhattan Project-like dialogue to bring all affected groups to the table and consider everybody’s ideas. There are plenty of them out there, like a possible two-tiered or partitioned system: one government-run and administered system for those who dearly want it (or can’t afford anything else) and one that’s private for the rest of Americans.

Those who believe in the government system can pay the costs for running it out of their taxes for their coverage and the rest of us can continue buying our insurance to pay ours. Admittedly, this is what Medicare and Medicaid was set up to do, but the math just doesn’t work anymore which is why there must be a radical transformation in the way states are able to care for their own populations. Even the Europeans understand the principle of ‘subsidiarity’ (applying solutions locally), and they have enshrined that principle in their European Union laws.

More individual state freedom with less federal intervention is necessary to make healthcare work, locally, taking advantage of user-based budgeting and a reordering of healthcare delivery that includes a number of new solutions like health exchanges.

Risk-pool healthcare?

The new government system should not be, to borrow a transportation term, an FOB (free on board) system. Users should be means/income-tested and their fair share of the costs (or premium size) should be based on their ability to pay. Risk pools offering low monthly basic premiums could be set up alongside the full plan, financed with private and public funding. These would be offered to economically disadvantaged persons or those with debilitating illnesses in order to get them the care they need while shielding them from total financial ruin.

Similar pools could be created for those with better overall health. The pool principle is the same, however. The healthier the participants in the individual pools are, the fewer services they require. This would create the potential for profitability, and that profit would accrue the investors in the pools which would include government and the insured participants themselves.  Being able to lower your premiums is also a powerful incentive for adopting healthier lifestyles.

This idea simply exempts those citizens who choose the private insurance solution from having to participate in the government system or paying for its operation, though I believe there should be an option for them to join the government system should their health or financial situations change, dramatically. That way nobody falls through the cracks.

Participants in the government system would be required to have their medical records reside in a secure (hopefully) fire-walled government database. They would be subject to government-mandated norms for all procedures and care and have to accept the rationing that would certainly accompany it. Private plan participants would not. That may sound grossly unfair to those wanting universal, one-size-fits-all healthcare, but there is a tradeoff to be made with participation in any government program.

There’s no one, single, perfect solution to America’s healthcare system, but one thing is for certain… it must be reformed. We must bring our costs down, provide better preventative care and eliminate unnecessary procedures, many of which are now ordered out of fear of lawsuits. We need tort reform, healthcare exchanges, insurance portability across state lines and more patient involvement in their own health.

While many suggestions like those I’ve presented above may be wishful thinking and not be  financially viable, they need to be vetted in an open forum in the states where much of the responsibility to administer any government system we create must reside. We need flexibility and subsidiarity not rigidity to make it all work.

If that dialogue is to take place, we will need the Supreme Court to strike down the Act so that we can start from scratch, going about the business of reforming our healthcare system so that it is built on a public consensus around the kind of basic care Americans want, need and deserve and not on a single vote in the Senate at midnight.

Stephan Helgesen is a former U.S. diplomat. He has lived and worked in over 24 countries and has worked with the local healthcare industries in several of those countries. He can be reached at: stephanhelgesen@cs.com

 

Stimulus funds use “smart” technology for surveillance of American citizens!

Posted on 26. Mar, 2012 by Stephan Helgesen in Economy, Energy/Environment

With gas prices climbing, so is the popularity of fuel-efficient cars. AltTransport.com, a site “dedicated to giving you the latest news and the smartest analysis of the shift towards smarter and more efficient modes of transportation,” reports that “with gas prices rising, car manufacturers are starting to see some of their most fuel-efficient cars fly off the shelves.”

A call to the Smart Car Center in my area reveals that their sales are currently about double the usual; seven sales by mid-month rather than the usual three to five.

While the Smart Car may get good gas mileage and fit into tight parking places, how “smart” is it really? The April 2012 issue of Consumer Reports is now out and features the best and worst cars of 2012. The Smart Car didn’t make the list, nor did it receive a “recommended” rating in the “Hatchback: fuel-efficient class”—where its overall road test rating is 28 of a possible 100.

The April issue’s “Safety” section states: “Even a small car with a good crash-test rating will bear the brunt of a crash with a larger sedan, SUV or pick up.” The issue also states that “motor-vehicle crashes are the leading cause of death for people 5-34 years old and that they amount to more than $99 billion a year in medical and lost-work costs because of injuries.”

Crash tests show the Smart Car is “jarringly stupid.” Video from the Insurance Institute for Highway Safety shows that in a crash with a mid-size Mercedes C-Class sedan, “the Smart ForTwo is not only pulverized, with the passenger compartment getting squashed, but it goes airborne like a beach ball.” Just how “smart” is that? Is gas mileage more important that safety? I’d call it “stupid.”

Like burgundy is 2012’s “new black” for fall—serving as a “new neutral hue” that “will soon become the new backbone of your fall wardrobe”—and sixty is the new forty because “people are living longer today, they’re healthier, and they’re enjoying life more,” “smart” is the new “stupid.”

Labeling something “smart” has the automatic implication that it is right and better—when in fact, like the Smart Car, it may be “stupid” (or, at least, have foolish elements). The April 2012 issue of Consumer Reports has a section titled: “Stopping car crashes with smarter cars,” which focuses on how “talking cars can protect you.” The systems are several steps up from electronic toll collection or the use of drive-by weigh stations favored by truckers.

These V2X systems allow cars in the same area to communicate with each other over a wireless network, exchange data about each vehicle’s speed, location, and direction of travel. Consumer Reports admits that “to some this might seem like a Big Brother approach to monitoring driver behavior,” but says: “such a system has the potential to help drivers avoid” crashes.

Sounds “smart.” But, Justin Brookman, director of the Consumer Privacy Project at the Center for Democracy & Technology, points out: “The concern is that once you set up a mechanism to collect data for one admittedly beneficial use, there are no intrinsic limitations on that data being collected retained, transferred, and used for other purposes.”

We’ve recently seen the collection of data being done without consumer approval as in the case against Google and Apple. On January 23, the US Supreme Court ruled that use of a wireless GPS device attached by law enforcement to monitor a vehicle, without a court order as required for wire taps and other types of monitoring the citizenry is unlawful, a violation of the 4th Amendment. Yet, unauthorized data collection is one of the primary concerns facing consumers in states with mandated “smart” meters.

If you live in a state that is not requiring smart meters, you may not know what they are. Smart meters replace your standard analog electric meter with a digital one that can be read from a central office rather than a meter reader visiting your home—thus eliminating hundreds of jobs. President Obama says they are “devices that will have a direct benefit for consumers who want to save money on their electric bills.”

They will “Allow you to actually monitor how much energy your family is using”—“even by the hour.” But these smart meters allow others to “monitor” your electricity use as well. Additionally, the next generation of smart meters will probably have controls that let the electric company turn off your electricity at peak times—or, perhaps, if you use too much. Only then, will they actually save any electricity.

Addressing smart meters, Mark Levin, talk show host and author of Liberty and Tyranny and Ameritopia, says: “I don’t need some smart meter telling me when to increase or reduce the heat. We also know when the peak periods are—when we are home!

That’s when the peak periods are. Think we are that stupid?” He captures the concern so many feel when he says: “It is there to monitor you and dictate to you.” He concludes, “The less information they have about real American citizens the better.”

Mandatory smart meters have constitutional and statute violations, in that they include unreasonable, invasive networking elements to detect, record, report and exploit private customer energy consumption and other personal information, without receiving prior customer agreement.

In response to increasing customer objections to the smart meters, many states are now proposing opt-out programs—often with high fees for the customers who do not cooperate with the plan. Without fully understanding the implications, paid for with taxpayer dollars doled out through the American Reinvestment and Recovery Act of 2009 (stimulus funds), thousands of Americans have given up freedoms.

Like the Smart Car, smart meters sound good. The Smart Car does get good gas mileage, but it is dangerous. Smart meters can help manage how energy is used and keep power reliable, therefore keeping customers happy.

But smart meters need to be something that people ask for, not something that is forced upon them; something that rewards ratepayers with lower rates for allowing their appliances to be turned off at peak times, not something that charges penalties to opt out.

And we haven’t even touched on the smart grid.

When you hear something being touted as “smart,” beware. Chances are that it is a marketing technique designed to make you think you should have something that is really “stupid.”

Burgundy is the new black. Sixty is the new forty. Smart is the new stupid.

This article was submitted by Marita Noon, the author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

 

China Trade: A ‘Target Rich Environment’. Now, It’s American Auto Parts!

Posted on 26. Mar, 2012 by Stephan Helgesen in Economy

The post-Crash intervention by the Obama administration in mid-2009 in righting the General Motors and Chrysler ships was an extraordinary example of ideal cooperation between industry and government.

And anyone who argues against it ignores the realities of the surrounding financial marketplace which at the time offered absolutely no luxury of time and no market-available means of restructuring these two companies so integral to the American economy.

A cascade into bankruptcy or liquidation by GM and Chrysler – with Ford following in their wake – would have led to the immediate loss of hundreds of thousand jobs, with disastrous effect throughout the nation, but especially in Michigan, Ohio and Indiana where employees directly and (with the multiplier effect) indirectly associated with motor vehicle manufacturing (autos, parts and tires) account for around 8% of total non-farm employment (of 11.9 mm).

For a decade, many of us have been calling on the White House – first, Mr. Bush’s, and now, Mr. Obama’s – to demand that the U.S. have a formal national all-of-government Manufacturing Policy to rival the Policies of our major trading partners. If such a Policy had been in place in mid-2009, the appropriateness of and the mechanisms for restructuring the auto manufacturing industry would have been more obvious to all and the “prove-it-to-me” naysayers would not still be arguing, even today, over either the clear imperative or the now very obvious positive outcomes of the ultimate effort.

But the continuing absence of such a Policy has left stranded, so to speak, many thousands of the 1.6 million combined direct and indirect jobs in the auto industry related to parts and tire manufacturing. The overall motor vehicle manufacturing sector is the second-largest employer among all U.S. manufacturing industries, and parts and tire manufacturing contribute the most direct jobs (two-thirds or more), of which many are now at grave risk of being offshored, especially to China.

Despite the Obama administration’s highly successful reorganization of the end-of-the-line manufacturing companies (GM, Chrysler and, indirectly, Ford) – which has eliminated, at least for Chrysler and GM, the roughly $2,000-a-car cost disadvantage that these companies previously had due to high legacy costs, specifically wages and retiree benefits – a large number of employees, in the tens and tens of thousands, are still jeopardized by often unfair trade policies.

In laymen’s terms, the vital link between the growth of automobile production jobs and automobile parts jobs has been broken: the direct manufacturers are recovering, but the parts companies are still shrinking, with significant continued threat to our ongoing economic recovery. The Obama administration now needs to use its authority and capabilities, within the limits of global trade and trade-related agreements, to protect these jobs as well.

The realities associated with this unfair and often illegal overseas competition need to be fully understood before solutions can be crafted and applied.

Right now, China, in accordance with its “Twelfth 5-Year Plan” and the Plan’s stated commitment to promote all aspects of its domestic auto industry, indisputably favors its own domestic auto parts industry in ways that are in direct violation of commitments it made when it officially joined the WTO in December 2001. Evidence of this includes: The Chinese government’s subsidy of auto parts for export into the U.S. market – according to EPI, to the tune of a staggering 27.5 billion just since 2001 – while using its draconian “Indigenous Innovation Act” to effectively limit imports from America parts manufacturers into its markets. In those few instances when an American supplier is allowed access to Chinese purchasers, the American company has to set up shop in China and transfer its proprietary technology, i.e., its “intellectual property”.

China’s imposition of restraints on the export of key raw materials – especially the so-called ‘rare earth’ minerals – needed for high-end parts production. The industry and the nation can take a lot of comfort from President Obama’s resolve just last week to attack these restraints head on by bringing, along with Japan and certain of our European allies, a trade case solely directed at China’s rare earth minerals trade practices, which today have China controlling more than 95% of the globe’s overall trading in these vital commodities.

The results of these aggressive actions – which can’t be any surprise to anyone – are that imports of Chinese auto parts into the U.S. have increased by 25% in only the last two years and, even more sobering because it confirms a now seemingly irreversible trend, the U.S. trade deficit with China in auto parts has increased an almost unbelievable 900% since 2000.

Thankfully, there are solutions to this trade imbalance-cum-nightmare, and if everyone would simply acknowledge that it is indeed a “nightmare”, they are solutions which are eminently achievable.

To start, the Obama administration needs to take action, under WTO, against China’s unfair auto parts export practices, exactly as he has just proposed doing related to rare earth metals.

President Obama needs to insist that the American auto parts industry be a priority consideration of the recently announced Interagency Trade Enforcement Center that he established to police trade compliance.

As In the same way that President Obama, with great leadership, recently signed into law the legislation (SB 2135/HR 4105) that allows for countervailing duties on subsidized goods imported into the U.S. from China and Vietnam, he needs to ignore the thinly veiled threats of the Chinese government regarding auto parts..

Congress needs to enact the Reciprocal Market Access Act, the bipartisan legislation sponsored in the House by Representatives Louise Slaughter (D-NY) and Walter Jones (R-NC) as HR 1749 and in the Senate by Senators Sherrod Brown (D-OH) and Kay R. Hagan (D-NC) as SB 1766. The Reciprocal Market Access Act would immediately break down the ‘barrier’ which exists between traditional tariff barriers and the increasingly much larger non-tariff barriers (NTBs) (such as China’s oppressive and illegal ‘buy Chinese’ purchasing requirements) that prevent fair market access by American suppliers, and it would give our government – triggered by either a private sector or Congressional request – the automatic negotiated right to revoke concessions made to a trading partner if it doesn’t implement the commitments it made to us.

Finally, in order to put a stop to the theft of American intellectual property, Congress also needs to adopt former U.S. Senator Slade Gorton’s (R-WA) recommendation last year to the U.S. China Economic and Security Review Commission that the U.S. impose tariffs equivalent to 150% of the estimated annual IP losses suffered by American companies.
Some would say that we are making appropriate progress in trade reform, and that it’s time to slow down a bit. Yes we are progressing, but I, for one, am not satisfied that it is yet the degree of progress we need – and the Sword of Damocles hanging over the American auto parts manufacturing industry proves the point.

My mantra continues to be that we still need to take a much more pro-active stance in trade in order to better balance the nationalistic economic policies and mercantilist practices of our trading partners with our own trading rights as a nation. And this stance will pretty obviously not come from either of the two remaining major Republican candidates for President. Governor Romney, after first stating that America’s Big Three car manufacturers could go bankrupt for all he cared, further showed his true colors by opposing relief for tire workers in the U.S. when that industry faced a verifiably unfair increase in Chinese imports. And Senator Santorum believes tax cuts alone are sufficient to keep the entirety of the overall automobile industry prospering here at home, no matter what unfair behaviors our overseas trading partners adopt.

American-made products can compete globally just fine, thank you – their manufacturers only need to be in fair fights in order for these products to do so.

This article was submitted by Leo Hindery Jr. who is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with USW President Leo Gerard) of The Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media, and is currently an investor in media companies.



New Mexico 2012 Home Sales Up Over 8% from 2011

Posted on 25. Mar, 2012 by Stephan Helgesen in Economy

1,758 sales were reported to the REALTORS® Association of New Mexico during January and February 2012.  This number is 8.1% higher than the number reported for the first two months of 2011 and 10.9% higher than the sales reported for same period in 2010.

February’s median price was $159,500.  This compares to the January 2012 median of $163,250, and a February 2011 median of $165,000.  The 2012 Year-to-date median is $160,000.  Median price means half the houses sold for more and half for less.

“Lower prices (which are influenced by foreclosures and short sales) mean great news for buyers and the increase in number of sales reflects the decision to ‘buy now’ of many of those folks who were on the fence about buying,” said Debbie Rogers of Silver City, 2012 RANM President.  “Many of our members are reporting increased activity in their market.”

“Real estate markets vary widely across the state,” according to RANM Executive Vice President Steve Anaya.  “As always, there are reporting markets with increases in sale numbers and markets with decreases in sales.”

The spring market is nearly here and there is evidence that it will be stronger than recent history.  Fannie Mae’s February National Housing survey found with low mortgage rates and falling home prices, 70 percent of those surveyed say now is a good time to purchase a home.  Also, more Americans surveyed say now is a good time to sell, rising to 13 percent in February, which is the highest level in more than a year but still low by historic standards.

The trends and numbers reported are only a snapshot of market activity.  If you are interested in buying or selling, consult a REALTOR familiar with your market area; he/she can provide information on specific trends in your neighborhood.

Statistical information and trends are based on information furnished by New Mexico Member Boards and MLSs to U. S. House Stats. Current reporting participants are: Greater Albuquerque Association of REALTORS, Las Cruces Association of REALTORS MLIS, New Mexico Multi-Board MLS (Artesia, Carlsbad, Clovis/Portales, Deming, Gallup, Grants, Hobbs, Las Vegas, Sierra County areas), Otero County Board of REALTORS, Roswell Association of REALTORS, Ruidoso/Lincoln County Association of REALTORS, Santa Fe Association of REALTORS, San Juan County Board of REALTORS, Silver City Regional Association of REALTORS, and the Taos County Association of REALTORS. Reports represent single family residential data only.  Information does not necessarily represent all activity in any market/county.  Figures based on reports run 3/16/12.  Visit www.nmrealtor.com (housing trends) for county and board statistics.

This article was submitted by The REALTORS Association of New Mexico, one of the state’s largest trade associations, representing over 5,300 members involved in all aspects of the residential and commercial real estate market.

 

China targets solar industry in trade war against American manufacturing

Posted on 06. Mar, 2012 by Stephan Helgesen in Economy, Energy/Environment

On March 27 in D.C., I will be part of a panel at the Second Annual Conference on the Renaissance of American Manufacturing, along with Leo Gerard (International President of the United Steelworkers) and Mike Mandel (Chief Economic Strategist of the Progressive Policy Institute).

Building off of Mike’s ongoing superb economic analysis to prove the imperative of a robust manufacturing sector, I will try to make the further case, as Rick Sloan (Communications Director of the International Association of Machinists and Aerospace Workers) and I tried to do in a piece last month (http://www.huffingtonpost.com/leo-hindery-jr/do-manufacturers-need-spe_b_1274551.html) that U.S. government policies across the board – trade, taxes, investments, R&D, exports, infrastructure and procurement – need to be integrated into a manufacturing policy to rival those of our trade competitors.

A robust manufacturing sector – with no less than twenty percent of the nation’s workers engaged in it – is critical to the American economy.  Indisputably, manufacturing has the largest multiplier of all sectors of the economy (every dollar in final sales in manufacturing products supports about $1.40 in other sectors of the economy); manufacturing employees earn higher wages and receive more generous benefits than other working Americans (on average, they earn 23% more than workers in other parts of the economy); American manufacturers are responsible for the majority of all business-related R&D in the U.S.; and an increase in the production of manufactured exports and import-replacing goods in the United States is the only thing that will significantly bring down our trade deficit  and reduce our international debt burden.

Before the March 27 Conference, however, the Obama administration will have an ideal opportunity to support America’s manufacturing base when the Commerce Department considers two cases involving massive illegal subsidies and illegal dumping practices by China’s state-directed solar manufacturing industry.

These specific cases are part of the larger pattern of unfair trade practices by the Chinese that have taken a significant toll on American manufacturers and workers since China joined the WTO.

The extensive subsidies that China lavishes on its state-owned enterprises (or SOEs), from currency manipulation to low- and even no-cost loans, from free power and water to forced technology transfers and hoarding of rare earth minerals, have caused at least 18 million U.S. jobs, both direct and indirect, to be off-shored to China in the last decade.

With these massive subsidies, Chinese manufacturers – including the Chinese subsidiaries of and joint ventures with U.S. manufacturers – can deliver products to market more cheaply than U.S.-based manufacturers operating without such subsidies.

These unfair subsidies and practices have impacted numerous U.S. industries, but none more so than America’s solar manufacturing sector.  According to the U.S. Department of Energy, the Chinese government has handed Chinese solar manufacturers more than $30 billion in subsidies in just the past few years.

Not surprisingly, this largess has tipped the competitive balance in favor of the Chinese manufacturers.  So far, twelve American solar manufacturers have either been forced to close or downsize, with significant job losses.  The American companies are simply not competitive in the face of China’s tilting of the playing field.

To be clear,  I am not talking here about the much-publicized failure of the company Solyndra, which rather than making conventional solar panels made more expensive, but potentially more efficient cylindrical ones that became uncompetitive once silicon prices plummeted.  Solyndra’s collapse was as much due to a bad bet on long-term materials costs as it was to the unfair re-stacking of the economic odds by the Chinese.

That the goal of the Chinese is to dominate the global solar and renewable energy industry is clear.  A report released in February by the Senate Finance Committee’s Subcommittee on Trade titled “Losing the Environmental Goods Economy to China” provides ample evidence.

According to the Subcommittee’s report: The U.S. trade deficit in environmental goods with China reached an all-time high in 2011.  Because of the surge in imports from China, the overall U.S. deficit in environmental goods increased an astonishing 87 percent in that time. U.S. imports of solar cells and modules from China went up 135 percent in 2011.  Imports of solar cells alone from China shot up more than 300 percent. European Union and Japanese exporters of environmental goods are also unfairly losing market share to China.

As bad as the Chinese employing unfair trade practices to gain an upper hand over American solar manufacturers is the fact that the Chinese are using U.S. know-how as the backbone of their current solar manufacturing industry.

This technology was blatantly pilfered from U.S. companies in the same way that the Chinese have made the theft of other American intellectual property the mainstay of their internal manufacturing policy.

As I’ve written previously, when it comes to finding solutions to the daily theft of America’s invaluable IP, a single anecdote brings this imperative home.  Microsoft, one of the real gems of American ingenuity and also one of the most patriotic major companies headquartered in the U.S., recently sold to a large commercial customer in China one (1) unit of its advanced business software, for several hundred dollars.

However, when it sent out an upgrade to the software, the upgrade was downloaded thirty million (30,000,000!!) times.  This egregious theft of Microsoft’s IP is why Microsoft’s profits from sales in China, with its 1.3 billion population, are no greater than its profits from sales in The Netherlands, with its population of only 16.7 million.

As a result, the United States went from having a small trade surplus with China in solar equipment in 2010 (primarily thanks to sales of manufacturing equipment and polysilicon, the base ingredient in solar cells and modules) to a huge deficit today.

Imports of Chinese solar cells and panels rose from $1.2 billion in 2010 to $2.8 billion in 2011, a jump of $1.6 billion – nearly 135 percent.  U.S. exports of solar manufacturing equipment and polysilicon to China – the same products that were keys to the 2010 surplus – declined by $170 million and $194 million, respectively, in 2011, according a report by the Coalition for American Solar Manufacturing.

This issue isn’t mere hyperbole.

China every day grabs global market share in everything technology-based.  For example, in late February, according to Bloomberg, the Chinese Ministry of Industry and Technology announced targets for increasing production capacity at key polysilicon and solar cell makers, part of the Chinese government’s plan to ensure its companies survive the current global industry slump.

A Ministry official quoted in the story said that the government wanted to ensure enough domestic capacity to meet the export goals in China’s latest five-year-plan.

Moreover, in addition to supporting the export capabilities of their domestic manufacturers, the Chinese government has announced specific plans to squeeze out U.S. polysilicon manufacturers in the interim.  In the ultimate irony, the Chinese government, as an obvious stalling tactic, has started its own “dumping investigation” of the now much-beleaguered U.S. industry.

Ending China’s unfair trade practices – especially at the moment those targeting the solar energy industry in particular and the renewable energy industry in general – should be an opportunity for all who are adversely impacted by China’s behavior to come together: suppliers, manufacturers and installers of all types.

On this point, one would think that curtailing China’s unfair trade practices and strengthening our nation’s solar manufacturing base would enjoy unanimous support from the entirety of the business community and Congress.  Surprisingly, however, there are some companies and trade associations which either remain on the sidelines or directly oppose the trade case brought by U.S. solar manufacturers against China, worrying, perhaps, about how these trade cases might affect their own bottom lines.

However, given China’s clear goal of dominating all global industries, no American company is immune from unfair trade practices, which is a lesson better learned sooner than later.As I’ve written before, whether on a schoolyard or on a continent, “treading softly and using diplomacy” in dealing with a bully seldom promises a happy outcome.

It’s past time for America to stop being a spectator to global trade abuses, with our hands bound by either our diplomatic sensitivities or corporate short-sightedness in valuing short-term profits over the long-term viability of our national economy.

This article was submitted by Leo Hindery Jr. who is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with USW President Leo Gerard) of The Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations.  He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media, and is currently an investor in media companies.


High gas prices: Bad for America, good for an election?

Posted on 06. Mar, 2012 by Stephan Helgesen in Economy, Energy/Environment

I don’t need to use a lot of space telling you why high gas prices are bad for America, but I contend that they are good for an election. Until the current precipitous price increases, energy seemed absent from the overall debate. Now the GOP candidates are all talking about how they would maximize American resources to bring down the price of gas and, rightly so, putting President Obama on the defense.

Press Secretary Jay Carney has recently repeated that there is nothing the White House can do. President Obama uses the high prices as an excuse to keep throwing good money after bad to develop “alternatives” like the now fabled Solyndra and this week’s Abound Solar announced lay-offs and delays—even though solar energy, if it ever became viable, has virtually nothing to do with transportation.

Secretary of Energy Steven Chu is now having to defend his comment in response to a question regarding whether or not the Administration’s goal is to lower gasoline prices: “No, the overall goal is to decrease our dependency on oil.” While it might appear that the White House was broadsided by the energy conversation, President Obama is very well aware of the importance of energy in the 2012 election cycle.

Back in November when President Obama announced he’d delay the decision on the Keystone XL pipeline for more than a year, until after the elections, Republicans were outraged. The pipeline represents up to 20,000 direct jobs and untold thousands of follow-on jobs in hotels, restaurants, retail, and more. In an attempt to force the issue, Republicans inserted a Keystone decision into December’s payroll tax-cut extension bill.

Weeks before an end-of-February answer was needed, President Obama handed the Republicans the makings of a campaign commercial. He claims to support job creation, yet here, with no government funds involved, were thousands of jobs—and he killed the project! Does he really care about out-of-work Americans and the economic boost those jobs would provide?

The answer lies in the location of those thousands of jobs: red states (those that typically vote Republican). The Keystone XL pipeline travels exclusively through red states; states the President is not likely to win no matter how many jobs his policies could create in the region. Supporting the pipeline and the 6,000-20,000 jobs it represents (pipeline opponents claim the 20,000 number is inflated, saying 6,000 jobs is more realistic) would not help his re-election efforts. He could kill Keystone, make his environmental base happy, and not lose an electoral vote.

Then, days later, January 24, in the State of the Union address (SOTU), President Obama angered that very same green base by ignoring their key cause—global warming and its supposed solution: green energy—and touted the benefits of natural gas. America’s natural gas abundance is a result of high-pressure extraction—a practice known as “fracking” (short for hydraulic-fracturing).

Two states rich in this shale gas have turned poor farmers into overnight millionaires: Pennsylvania and Ohio—both are blue states (typically voting Democrat). Go against natural gas extraction in these two important states and President Obama could lose the entire election. Here, alienating the environmental base is worth the gamble.

Additionally, these two blue states have been trending red. The last gubernatorial election saw a Republican win in each state—replacing a Democrat. Both Pennsylvania and Ohio have one Democrat and one Republican Senator. The 2010 election brought in new Republican Senators in each state. In 2012, each state has a Democrat Senator up for reelection. Republican red already controls the House of Representatives. Taking control of the Senate would virtually neuter the White House.

President Obama’s SOTU support for natural gas contradicts his energy policies and practices. He has thrown money into green project after green project. His EPA Administrator Lisa Jackson is threatening America’s newfound riches with a proposed ban on fracking. Such actions would bring an abrupt halt to the growing economies in Pennsylvania and Ohio. He’d anger the electorate and ensure a Republican vote. In the SOTU, President Obama had to quell concerns to try to keep those Democrat Senators.

His first campaign ad of the 2012 election cycle was designed to make the average viewer think that he is the champion of fossil fuels. His claim that the US oil imports are now below 50% is true—although no thanks to his policies.

President Obama knows energy is key to the 2012 election and has set policy based on votes rather than what is best for all of America. We can hope that the need to win Ohio will cause him to keep a lid on Lisa Jackson’s overzealous regulatory aims for fracking—but then, Steven Chu offered Republicans more campaign ad fodder when he went rogue and admitted that the Administration didn’t care about high gas prices.

Instead of beating up on each other, the Republican candidates need to grab the ball and run with it: attack President Obama for his abysmal record on energy, maximize the Keystone debacle, point out the damage to the Gulf economy his drilling ban inflicted, keep the EPA’s barrage of cost-increasing regulations front and center, and quote Chu.

When energy costs go up, everyone gets hurt—but the poor are more severely impacted. Trapped into dependence, hope of personal prosperity is dashed. James Fallows, in his Atlantic cover story, says Obama’s opponents will argue that he’s been “Too weak in defending the nation’s interests, and all too skillful in advancing his socialist agenda.”

America needs a President who will put “defending the nation’s interests” ahead of “advancing his socialist agenda.”

This article was submitted by the author of Energy Freedom, Marita Noon who serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.


 

 

2012 New Mexico Home Sales Off To a Good Start

Posted on 05. Mar, 2012 by Stephan Helgesen in Economy

791 New Mexico sales were reported during January 2012 to the REALTORS Association of New Mexico.  This number is higher than January sales reported for both 2010 and 2011 and continues the gradual upward trend of home sale transactions.

“Buyers are responding to very favorable market conditions,” according to RANM President Debbie Rogers of Silver City.  “The uptrend of home sales, both in New Mexico and nationwide, is in line with the underlying fundamentals of a strong housing market – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation, and rising rents.”

Home prices continue to be a bargain, and reflect the number of foreclosures and short sales that represent just over one third of the market.  Nationally, distressed sales accounted for 35 percent of January sales, up from December 2011 (32% of total sales), but less than January 2011 (37% of total sales).

New Mexico’s reported January median price was $163,500.  While this price is up slightly (0.4% from December 2011’s median of $162,922) it is nearly 4% lower than the January 2010 median.

Nationally, the inventory of homes for sale represents a 6.1 month supply at the current sales pace down over 20% from a year ago.  RANM Executive Vice President Steve Anaya speculates that the fall in inventory of homes for sale is helping create a balance in the market, not favoring buyers or sellers.  “In several markets home buyers and investors are competing for foreclosure properties.”

The trends and numbers reported are only a snapshot of market activity.  If you are interested in buying or selling, consult a REALTOR familiar with your market area; he/she can provide information on specific trends in your neighborhood.

Statistical information and trends are based on information furnished by New Mexico Member Boards and MLSs to U. S. House Stats. Current reporting participants are: Greater Albuquerque Association of REALTORS, Las Cruces Association of REALTORS MLIS, New Mexico Multi-Board MLS (Artesia, Carlsbad, Clovis/Portales, Deming, Gallup, Grants, Hobbs, Las Vegas, Sierra County areas), Otero County Board of REALTORS, Roswell Association of REALTORS, Ruidoso/Lincoln County Association of REALTORS, Santa Fe Association of REALTORS, San Juan County Board of REALTORS, Silver City Regional Association of REALTORS, and the Taos County Association of REALTORS. Reports represent single family residential data only.  Information does not necessarily represent all activity in any market/county.  Figures based on reports run 2/17/12.  Visit www.nmrealtor.com (housing trends) for county and board statistics.

This article was submitted by The REALTORS Association of New Mexico, one of the state’s largest trade associations, representing over 5,300 members involved in all aspects of the residential and commercial real estate market.  No report of January 2012 activity was received from the Taos County Association of REALTORS.

 

Exporting just got easier and more affordable!

Posted on 05. Mar, 2012 by Stephan Helgesen in Economy

The New Mexico Manufacturers Extension Partnership (MEP) is pleased to announce that a new (and affordable) export readiness program is now open to all New Mexico manufacturers (the first session starts April 24th). It’s called, ‘ExporTech’ and is designed to give companies the foundation they need to be successful in foreign markets in three short months.

ExporTech is a nationally recognized joint offering of the National Institute of Standards and Technology and the U.S. Export Assistance Centers of the U.S. Dept. of Commerce

● It helps companies select and enter new export markets

● It assists companies develop an international growth plan

● It provides experts who will assess the plan

● It helps companies move their products to overseas markets

ExporTech will lead you through a guided process that prepares you for profitable growth in global markets. It’s customized to your specific learning needs and includes workshops that are limited to eight companies. That way you get more individualized time and attention to your specific challenges.

You’ll meet for three one-day sessions over a three-month period, and, in between sessions, you’ll work on developing your own export plan with expert coaches who are knowledgeable in all aspects of exporting.

And the best part is: it’s affordable, costing only $1,000 for the entire three months which includes 20 hours of personal consultation, three full-day workshops and a complimentary Gold Key (personalized assistance from the American Embassy or Consulate in the foreign market of your choice), courtesy of ExporTech’s sponsor, Federal Express!

The first session is scheduled for April 24th, so sign up now for ExporTech, the absolute best way to maximize your export potential. For more information, please contact Karen Converse, Innovation Director, at 505 314-9127 or by email at: karenc@newmexicomep.org For registration, please contact Claudia Serrano at 505 314-9131 or by email at claudias@newmexicomep.org

 

Do Manufacturers Need Special Treatment? – They Both Need It And Deserve It.

Posted on 22. Feb, 2012 by Stephan Helgesen in Economy, Politics

In one of the most uninformed – and counter-productive – op-eds we’ve read in the last five years, President Barack Obama’s first chairwoman of the Council of Economic Advisors, Christina D. Romer, just spent 1,200 words arguing that we should do nothing about the crisis in American manufacturing.

She meticulously constructed three straw men – market failures, jobs and income distribution – and then proceeded to knock the stuffing out of each of them.  (“Do Manufacturers Need Special Treatment?”, New York Times, 2-04-12)

It was a heroic, if not faintly humorous, performance given Ms. Romer’s recent position in the administration and the fact that few others in the country misread more the depth and the duration of the still largely ongoing Great Recession of 2007.

She was an architect of the administration’s stimulus package, its auto bailout, and its policies that led to the “green shoots” and “recovery summer” fiascos.  But none of that stopped her from eviscerating arguments meant to do something about the crisis in manufacturing.

Ms. Roemer concluded her op-ed by admitting that manufacturing was “the engine of growth that allowed us to win two world wars and provide millions of families with a ticket to the middle class.”

And yet she felt that public policy regarding manufacturing should be “based on hard evidence of market failures, and reliable data on the proposals’ impact on jobs and income inequality”, for which, in her opinion, “a persuasive case for a manufacturing policy remains to be made.”

President Harry Truman, in a moment of sheer frustration, demanded a one-armed economist. He had grown tired of dismal scientists telling him “on the one hand, we should do this. On the other hand, we should do that.”  He had a point.

Now the consensus among too many economists also seems to be that we should let cycles cycle and the economy naturally evolve – and structural collapse be damned.  They spin so many theories, twist so many numbers, and advance so many specious arguments that the cumulative result is nothing gets done.

We’ve seen the hard evidence in the eyes of the real unemployed and underemployed.  We have reliable data on how many factories have closed and how many manufacturing jobs have been lost overseas.  What we, as a nation, lack is the foresight, drive and intensity to re-spark our true engines of growth.

But those sparks will not come from the dismal scientists that Harry Truman dealt with and Barack Obama seems content to deal with.  They will only come from those who actually want to do something, who take pride in making things in America, and who are willing to look to concrete solutions rather than academic sophistry to drag us out of this jobless recovery.

Borrowing liberally from the writings and speeches of Senators Sherrod Brown (D-OH), Debbie Stabenow (D-MI) and Sheldon Whitehouse (D-RI), and from our colleagues at the New America Foundation, we first have to admit that manufacturing is, as they say, ‘critical to the American economy’.

Largest multiplier.  Manufacturing has the largest multiplier of all sectors of the economy.  Every dollar in final sales in manufacturing products supports about $1.40 in other sectors of the economy.  By contrast, the hallowed financial services sector generates only about 50 cents for every dollar of activity.

Productivity powerhouse.  Manufacturing productivity consistently outpaces productivity growth in other sectors of the economy.  Between 1997 and 2007, multifactor labor productivity in manufacturing grew at an average rate of [4.6]% per year.  This was 60% greater than in the private, non-farm economy as a whole.

Good wages and benefits.  Manufacturing employees earn higher wages and receive more generous benefits than other working Americans.   On average, manufacturing employees earn [23]%  more than workers in other parts of the economy.

Diversified employment.  Manufacturing employs workers at all skill and education levels and helps to reduce income inequality.  For non-college educated workers, manufacturing is a crucial source of good, often highly skilled jobs that pay above average wages.

On average, non-college educated manufacturing workers made $1.38 per hour (or 9.2%) more than similar workers in the rest of the economy in 2006-07.

Source of innovation.  The manufacturing sector is of vital importance in maintaining our innovative capacity.  Manufacturers are responsible for more than [70]% of all business R&D, which ultimately benefits other manufacturing and non-manufacturing activity.

Key to an improved trade balance.   An increase in the production of manufactured exports and import-replacing goods in the United States is the only thing that will bring down our trade deficit to sustainable levels and reduce America’s international debt burden.

Critical to other high value-added sectors of the economy.  The maintenance of a strong and vibrant manufacturing sector is essential to other high value-added sectors of the economy, including design, telecommunications and finance.

It’s past time to admit that the Great Recession of 2007 has only exacerbated the adverse trends in manufacturing that actually first reared their heads as far back as 1980, with the “Reagan Revolution”.  And for those thirty years the manufacturing sector has shed jobs faster than many other sectors of the economy.

While there are many reasons for the decline in manufacturing over this period – including productivity growth – and for the closely related economic downturns, productivity growth in truth is actually much less than some economists – Ms. Romer among them – would have us believe.

The now decades long decline in manufacturing is mostly because while other countries have a policy of maintaining capacity and employment, the U.S. does not have a national manufacturing strategy and has not established a framework for creating one.

U.S. government policies across the board – taxes, trade, investments, R&D, exports, infrastructure and procurement – are not integrated into a strategy to restore and grow the U.S. manufacturing sector.

And until they are and America has its own manufacturing policy to rival those of our trade competitors, U.S. manufacturing employment will continue to decline, as will manufacturing output as a percentage of GDP, and the U.S trade deficit will remain crushingly high.

In the sweeping onrush of the Recession, America’s industrial base is undergoing its most radical restructuring in decades as manufacturers dramatically rethink their businesses, with far too little support from Congress and the administration.

These moves are accelerating the U.S. manufacturing economy’s longer-term shrinkage, as well as exacerbating its shift away from heavy sectors.  In some cases, companies are investing in smaller, more-efficient facilities that rely heavily on goods manufactured overseas.

In other cases, such as with General Electric’s avionics business, they are continuing to relocate labor-intensive operations to countries where wages are cheaper and subsidies, often illegal, are available.

As a result, right-headed economists expect unemployment to remain high for many years as millions of American workers in the hardest-hit sectors struggle to find new jobs.  And while some economists see this restructuring as inevitable, those right-headed ones worry that the sheer scope of the cutbacks could doom companies that ought to survive and further weaken an already depleted manufacturing sector.

The erosion of our manufacturing base – our skilled workforces and our plants, production processes and supply chains – continues even as economists like Ms. Romer urge us to do nothing.  But doing nothing is not an option now.

With nearly a fifth of our workforce idled in real terms and with competitor nations buying our under-utilized machines, now is the time to do what we’ve always done: roll up our sleeves and make the best of a bad situation.

A great nation like ours requires time and space to change directions.  As with a supertanker, there is misdirection to slow and shed before a new course can be set.  And there are always obstacles – naysayers, overseas competitors and the inherent inertia of a very large economy – to overcome before resuming flank speed.

We haven’t a moment to lose.

This article was submitted by Leo Hindery, Jr. who  is Chair of the US Economy/Smart Globalization Initiative at the New America Foundation, Co-Chair (with USW President Leo Gerard) of The Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations.  Rick Sloan is the Communications Director of the International Association of Machinists and Aerospace Workers and Executive Director of its Union of Unemployed.


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