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Archive for June, 2010

The Moyer saga.

As you undoubtably are aware the Moyer charter school is closed.

DSEA and DOE are cheering while the first will admit it an the second won’t. DSEA will run through The Hall today telling all and sundry, see we told you charter’s are bad while DOE will cluck sympathetically and shed crocodile tears.

I’ll take DSEA’s gloating over DOE’s group hug anyday. At least with the union you know they’re out get you.  

Now for those who cry the Moyer crew screwed things up let’s, as they say, be real.

Moyer’s population is rough as in gang rough, as in poor nutrition from birth rough, as no successful adult’s to emulate rough and of course as in seeing your loved ones arrested rough.

We can debate the “why” as to the roughness but the fact is undeniable.

So what Moyer did is give these low income families something the middle and upper classes have which is a choice. Better yet a free choice. Moyer and the charter school movement equaled the playing field for these poor families.

Now these kids can walk to school versus a 50 minute ride up ad down I-95. These kids can now take part in school functions because the school is in THEIR community. Ride through Brandywine 100 and notice how their school’s are all in the local neighborhoods.

As for the DOE bleating that the scores are bad well BFD, so are 95% of the traditional school’s yet they are still open and will stay open. The money for school restructuring will soon end up at DELDOT or used to further bribe Fiskar’s for making car’s very few can afford.

So the fact is the Begatto administration had The Jack tell DOE to shut Moyer down so the state can get RTTT money of which will provide more assessment, testing, and empirical data gathering. 

In closing the K12 group DOE is in possible discussions with for re-opening Moyer is a laptop school. Each kid needs a laptop to do the work. Whose paying for that?

By Mr. Gregory telling the parents to look elsewhere now for a school he did them a favor because in the Begatto administration which walks lockstep with DSEA allowing poor city families a choice is not on their agenda.

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I wrote something about this in April, and since Senator Byrd passed away today, I checked to see if they had elected a new Senate President pro-tem. Sen. Daniel Inouye of Hawaii was sworn in as pro-tem today so now he is third in line behind Pelosi.

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The President and the Fed Chairman got together to talk about the economy.

“I think in our discussions we share the view that the economy is strengthening, that we are into recovery, that it’s actually led by some interesting sectors, like manufacturing, that we haven’t seen in quite some time,” the president said. “But what we also agree is that we’ve still got a lot of work to do.”

According to the Economic Cycle Research Institute,

After falling for six weeks, the uptick in the level of the Weekly Leading Index suggests some tentative stabilization, but the continuing decline in its growth rate to a 56-week low underscores the inevitability of the slowdown,” said Lakshman Achuthan, managing director of ECRI.

So, if by “strengthening”, the Administration means “tentative stabilization”, then kudos all around. Makes me remember fondly debating what the “definition of is is”.

The truth is that this economy is a “dead man walking” (I’m not ready to call the next recession, but speak to me in 6 months). And the economic opportunities in Delaware are even worse. Regrettably, these facts won’t stop our elected leaders from sucking more life out of the weak economy that is left.

Delaware’s State government sees revenues rising as far as the eye can see. Which means we need to grow government spending and make humorous excuses as to why a 6.5% increase isn’t really a 6.5% increase (See Delaware State University Professor and oft quoted political expert Dr. Samuel Hoff’s extremely funny justification in today’s News Journal). The short-sightedness of our government continues to astound me. However, mis-judging risk is a widespread human trait. Fortunately, I’ve been less sanguine than our State sponsored DEFAC forecasters for almost a decade, for example, here’s what I wrote last September in this blog:

While the national and global economy will be rebounding strongly [over the next 6-12 months], Delaware’s economy won’t move much because we have no remaining growth industries in the State. State revenues, on the other hand, will benefit from the Corporate taxes paid by global companies benefitting from the global economic growth. Delaware will become increasingly dependent on these external taxpayers as the internal economy continues to idle (as if already paying for ~45% of our budget was dependent enough — try 60%).

In short, the State government can expect a good year, but the average Delawarean can’t.

Seems like I hit the nail on the head — if I do say so myself.

So, back to Washington. I think that the President and the Fed Chairman realize that further Keynsian “stimulus” is politically dead. Even the Europeans have no stomach for more debt. Therefore, it is easier to pretend like the economy is strengthening than to look completely out of step with the rest of the G-20.

Truth is, I think that no new “stimulus” is a good move (even if he was forced into it). An even better move would be an Executive Order imposing a 6 month moratorium on new rules/regulations and eliminate about 1,800 pages from the “Protect The Wall Street Fat Cat Act” masquerading as financial reform. In Delaware, adopting the Governor’s plan to reduce future employee retirement benefits and issuing an Executive Order creating a moratorium on new hires would be good starts. But why bother…

It’s summertime, and the living is easy…

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Readers of this blog know that I share very little in common with Keynsians. I think that the whole premise of government stimulus is built on a false premise called “aggregate demand”. Simply put, Keynes believed that there was an “aggregate demand” in an economy that could be described by the following equation:

GDP = C + I + G + (X-M)

C-Consumption, I-investment, G-Gov’t spending, X-Exports, M-Imports

This equation is a good one and most entry level economics courses spend a lot of time focused on it. Just like most elementary chemistry courses talk about the equation to calculate the number of molecules in a volume of gas. However, in chemistry the students are told that this equation only holds for standard temperature and pressure. If either of those changes, the equation must change. The benefit that chemistry has is that you can run controlled experiments at standard temperature and pressure to analyze your results.

For economic analysis, you can’t hold variables constant and run the experiment. I can’t go back to the late 1990’s and change the Clinton Administration policy to make low income household homeownership a key policy and analyze the impact in 2007. GDP is not a stagnant number. It changes minute to minute, second to second. “Aggregate demand” is a useless number for setting policy — as the world is now recognizing.

So, with this as a back drop, it was nice to see Friedrich Hayek getting some ink in the Wall Street Journal, today. The Op-Ed can be found here (subscription fee may apply). The following quote from the piece I find particularly accurate:

First, he and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story. Boosting aggregate demand by keeping school teachers employed will do little to help the construction workers and manufacturing workers who have borne the brunt of the current downturn. If those school teachers aren’t buying more houses, construction workers are still going to take a while to find work. Keynesians like to claim that even digging holes and filling them is better than doing nothing because it gets money into the economy. But the main effect can be to raise the wages of ditch-diggers with limited effects outside that sector.

Not too mention that the government must issue debt to pay the ditch-diggers. That debt is a tax on the future. Consumers are smart enough to know that taxes will be rising and so future consumption will take a hit. The result is to reduce spending today to prepare for the future.

Need proof? Just look at the economic indicators — reduced business investment, reduced employment, low levels of personal spending, etc…

The last point I’ll make regarding Hayek focuses on crony capitalism, which has seen a huge step up in the US in the last few years. Look at GE, and how it uses NBC to promote policies and stroke egos that it needs to grow its bottom line (and stock options for insiders)…

Even when the state tries to steer only part of the economy in the name of the “public good,” the power of the state corrupts those who wield that power. Hayek pointed out that powerful bureaucracies don’t attract angels—they attract people who enjoy running the lives of others. They tend to take care of their friends before taking care of others. And they find increasing that power attractive. Crony capitalism shouldn’t be confused with the real thing.

Look at Delaware’s Strategic Fund (which is getting a huge influx of fresh taxpayer cash) to see this point played out in little Delaware. Or look at the Escheat Process and the deals cut to balance the budget and spread the “goodies” around in a completely non-transparent way.

Hayek rules!!

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This is classic Joe.    During a photo op at Kopp’s Custard Stand in Wisconsin, our VP and the manager have a little exchange:

“What do we owe you?” Biden is heard saying in footage captured by WISN-TV.

“Don’t worry, it’s on us,” the manager replied. “Lower our taxes and we’ll call it [the custard] even.”

“Why don’t you say something nice instead of being a smartass all the time?” Biden said a few minutes later.

Here’s the video and the interview with the custard stand manager:

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The bailout date for Bluewater/NRG to get out of the contract with Delmarva without having to pay a penalty ($3 Million if I recall) was right around this date. I think that it is June 30 but it may have been the 23d.
So, unless NRG has some other use for Bluewater, it looks like the rest of the windpower industry was wrong. Maybe they think that they can deliver offshore wind for under 13 cents. I doubt it, but they are betting millions.
Anybody heard whether Delmarva received the “written Notice of the final Project Capacity” as required by the same date?
Just keeping track.

Here is the section of the contract:

2.4 Seller Early Termination and Declaration of Project Capacity.
(a) During the period that begins on the Execution Date and ends on the twoyear anniversary of the Execution Date, on thirty (30) days prior written Notice, Seller may terminate this Agreement in its sole discretion if it is not able to find satisfactory purchaser(s) for the Excess Products, or determines that it is otherwise not prudent to continue to develop the Project. If Seller terminates this Agreement in accordance with the provisions of this Section 2.4, Buyer shall refund to Seller the full amount of the Development Period Security posted by Seller within ten (10) Business Days of such termination.
(b) On or before the second anniversary of the Execution Date, Seller shall provide Buyer with a written Notice of the final Project Capacity, which amount must at all times equal or exceed 200 MW (except with respect to reductions in Project Capacity
permitted under Sections 3.1(d), 5.4, 5.7 and 12.4) and be no greater than 600 MW, and which amount can only be modified pursuant to Sections 3.1(d), 5.4, 5.7 and 12.4.

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The following statistics come from a friend of mine in Financial Planning:

Recent surveys by national and state medical societies have found more doctors limiting Medicare patients.  The American Academy of Family Physicians says 13% of respondents didn’t participate in Medicare last year, up from 8% in 2008 and 6% in 2004.  The American Osteopathic Association says 15% of its members don’t participate in Medicare and 19% don’t accept new Medicare patients. The American Medical Association says 17% of more than 9,000 doctors surveyed restrict the number of Medicare patients in their practice. Among primary care physicians, the rate is 31%.

Add to this the difficulty that Congress had in passing the “Doc Fix”, which only extended the higher payments to doctors for 6 months, and now the G-20 has announced that we will be cutting our government debt by 50% by 2013, medical reimbursement rates will need to be slashed for both Medicare and Medicaid. (NB: The Obama Administration has no intention of stopping the spending or reducing the debt, but that still won’t affect the rapid reduction in the number of physicians using government programs).

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