This ain't Hell, but you can see it from here

Category: Economy

  • Boeing starts layoffs

    Now, I’m certain that this has nothing to do with the fact that election day just passed, but according to Fox News, defense contractor Boeing has begun sending pink slips to 30% of their management staff;

    Boeing, the Pentagon’s second-largest supplier, said it also will close some facilities in California and consolidate several business units in an effort to trim $1.6 billion in costs by the end of 2015, on top of $2.2 billion in reductions achieved since 2010.

    “We are raising the bar higher because our market challenges and opportunities require it, and our customers’ needs demand it,” Dennis Muilenburg, chief executive of Boeing Defense, Space & Security, told employees in a message obtained by Reuters and confirmed by Boeing.

    He said the total savings of $4 billion would make the company healthier and better able to deal with an increasingly complex and challenging marketplace.

    Of course, there were rumors of this before the election, but the Obama Administration used it’s influence to wait until after election day for the announcement so as not to damage the positive, but false message that the economy is improving. You know, like the Labor Department padding the unemployment numbers in the weeks before the election. Kind of like that. It looks like Boeing expects sequestration to happen, not like the Obama Administration has been telling us in the past few weeks.

  • An A123 Systems Postscript

    It looks like A123 Systems, which recently went belly-up after burning through $129 million in Federal loan guarantees, wasn’t totally useless after all.  Apparently they did create a few jobs while the money lasted.

    By the most generous count possible (combining all reports over the life of the company), they created at most 408 new jobs with that Federal money.  That averages out to over $316k in taxpayer money spent per job created.

    Even the Federal government itself does better than that.

  • Yet Another Green Energy “Success Story”

    Seems the more you look, the more “good news” you find regarding our current Administration’s picking of “green energy” winners and losers.

    Like folks playing cards, board games, and helping out at local charities on the company dime.

    Well, sorta on the company dime.  Seems many of those dimes were actually provided by Uncle Sam.

    LG Chem, a South Korean company, decided to build a battery factory in Holland, Michigan.  They got a $151 million grant from the DoE under the Recovery Act.

    The plant cost around $300 million.  And about $133 million of the grant money has been spent – much, rather understandably, going to other South Korean businesses.  Hey, LG Chem is a Korean company; who would you expect them to buy some of their equipment from?

    Still, that’s just normal business.  And I guess I could live with that – if the factory was actually producing anything.

    Unlike some “green” firms, this factory actually could produce a useable product.  The pilot run for the plant produced battery cells that performed quite well.  The production process was sound, and the resulting battery cells would have been useful and salable.  Everything was “good to go” for start-up.

    But the factory has yet to ship a single battery to a customer.  Seems it was built to produce battery cells for use in the Chevy Volt.

    Oops.

    Approximately 100 of the factory’s employees are assessed to be funded by Federal grant money.  Today they – and their colleagues – are doing nothing useful.

    Management had (and has) them doing “make work” jobs – cleaning inside and outside, studying, etc. . . . When there’s no work for them to be assigned, they do nothing – or play cards and board games.  In fact, it got so boring many asked for permission to help out at local charities like Habitat for Humanity on company time.

    In September, they started 1 week in 4 furloughs – though they’ll apparently be eligible to receive Michigan Unemployment Compensation (UC) while on unpaid furlough.  And since Michigan is one of those states that has already exhausted it’s UC fund balance, that means the Federal government will also be paying for those UC benefits, too – at least in the short run.

    None of this is the employees’ fault.  And I can’t really fault LG Chem, either.  They thought they could produce a good product, would get a good economic deal to do so, get a good return on investment, and could also help the local economy.  It just didn’t work out.

    But I do wonder whether they’d have done this without that $151 million “sweetener” that Uncle Sam gave them.  Or without the foolish assurances they doubtless got that the Chevy Volt would be the US auto industry’s “next big thing”.

    Something tells me the answer in both cases is “No”.  And something also tells me that the US taxpayer is out at least $133 million here – and probably more – that they’ll never get back.

    Hat tip to UpNorth for the first link above.

  • “Green” Business As Usual

    Lying to prospective investors to get funding.  Intentional sale of defective products.  Apparent political influence used to get Federal loan guarantees.  Business failure followed by bankruptcy.

    Allow me to present Solyndra, Part III – AKA Abound Solar of Longmont, Colorado.

    They received $400M in loan guarantees from the Federal government in December 2010.  They received – and appear to have spent – $70M in taxpayer funds.  And they started producing solar panels.

    The panels didn’t work worth a damn, but the sold them anyway.  Otherwise, they’d miss required benchmarks necessary to get more guaranteed loans.

    They still went belly-up.  They filed for bankruptcy in June of this year.

    And now they’re under investigation by local authorities for investment fraud.  Deliberately misleading prospective investors is considered a crime in Colorado.

    More details can be found here.  They ain’t pretty.

    We’ve seen a number of cases similar to this already in the “green energy” sector.  So I think we can say this one looks like just another example “business as usual” for one of this Administration’s pet “green energy” firms.

    Given their track record to date, I think  it’s time for the Federal government to quit meddling in this field.  They should quit trying to pick winners and losers and leave that type of business to those who know what the hell they’re doing.

  • Why Looking at the “Official” Unemployment Rate Is a Waste of Time

    By now, everyone should have seen the latest (September 2012) “official” unemployment figures – 7.8%.  That’s the same as the unemployment rate was in January 2009.

    Hallelujah!  The economy has recovered!  That means good times are at hand, right?

    Not so fast, Buckey.  By itself, the “official” unemployment rate tells you very little.  It’s one of the least understood – and, frankly, least useful – measures of how well the US economy is actually performing.  Even though it’s one of the most widely quoted.

    What follows is an explanation of what the “official” unemployment rate is, how it’s calculated, and what it means.  I’ll also explain why it’s not a particularly good indicator of the economy’s overall performance  – and I’ll suggest a couple of better ones.

    Here, I’m defining overall economic performance as good based on the number of people voluntarily working full-time.  That is, more people working full-time means that the economy is doing well overall, while fewer persons working full-time mean that the economy is doing poorly.  If you’re defining good economic performance differently, this article isn’t for you.

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  • For What It’s Worth . . .

    We apparently have yet another record-high number of US residents getting food stamps – somewhere around 47 million.

    Remember – free groceries are a SNAP.  For more and more people every day, it looks like.

    And it also looks like it’s worth close to $80 billion a year for the foreseeable future, too.   That’s what it’s gonna cost the US taxpayer.

  • Solyndra Redux

    According to Bloomberg.com, battery-manufacturer A123 Systems, Inc., has filed for bankruptcy.

    Under one of its “green” initiatives to encourage the use of electric vehicles, the US government gave A123 Systems a grant of nearly a quarter of a billion dollars – $249.1 million, to be precise – in 2009 to build a US factory.  (Thankfully, A123 systems appears to have “only” managed to burn through about $129M of the grant before going belly-up; the rest is apparently still in the US Treasury.)  They also got $125M in Michigan state tax credits to build the factory.

    The factory opened in 2010, in Michigan.  But the firm couldn’t seem to make a suitable product.  Costs of recalling batteries it supplied to electric-car maker Fiskar seem to have nailed the company’s finances badly enough to force bankruptcy.

    I don’t exactly think this is what Steve Miller was thinking about in 1976 when he wrote “Take the Money and Run.”  But maybe it’s apropos as a theme song for the current administration’s “green” policies.

  • Federal Fiscal Follies, Part Vb: Unemployment Compensation (Conclusion)

    As I wrote previously, one of the questionable programs on which the Federal government spends huge amounts of money is Unemployment Compensation (hereafter UC).  As with many Federal programs, the original intent of UC was good – helping people who’ve lost their job through no fault of their own with some temporary income while they look for another job.  But as is so often the case with Federal good intentions, the road they now pave appears to have forked, and to no longer be the road we ought to travel.

    So let’s look at some of the details of today’s UC programs.  It’s rather complex, and hopefully I can give an overview of the current mis-mash of such programs – as well as point out some of the issues with them.

    I.  Overview

    Federal involvement in Unemployment Compensation started during Great Depression – just like food stamps and Social Security.  The program was first authorized by the Social Security Act of 1935; four years later, enabling legislation – the Federal Unemployment Tax Act, or FUTA, formalized the program and completed its structure.  Yeah, this is yet another “good deal for America” you can thank FDR for starting.

    A detailed overview of the current US UC system is given in CRS Report RL33362, published roughly two weeks ago; much of the information in this section comes from this and the prior link.

    Virtually all employment in the US is now covered by UC.  The employment currently exempted is self-employment (including sole proprietorships), plus certain agricultural labor and domestic work; work for relatives; work performed by patients in hospitals; selected student interns; selected alien farmworkers; selected seasonal camp workers; and railroad workers (who have their own unemployment program).  It’s estimated that 97% of workers in the US are covered under state UC programs, provided they have sufficient income and service.

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