Category Archives: Economics

Business, Economics, History, Space

Huh?

50 Comments

Why does the Air Force think that their launch costs will go up with the new policy? Look at the caption of the picture:

Less demand could drive up costs for rocket propulsion systems used to launch Air Force satellites.

This makes no sense. How is flying additional missions for NASA creating “less demand”?

There are two factors that will affect the price of EELVs with the new policy. The first is that adding failure on-set detection to the vehicles may increase their production cost, but I can’t imagine it will be by much. Most of the cost will be in development, which could legitimately be charged to NASA. The second is that increased demand will provide a higher flight rate (which the system is quite capable of, in both production and operations), which will allow the amortization of fixed costs over a larger number of flights, reducing the cost (and presumably price) per flight. From that standpoint, the Air Force should welcome this (and always should have, and in fact not approved NASA’s Ares plans). Moreover, a couple years ago the Air Force was considering forcing one of the lines to shut down, to save fixed costs, which goes against the doctrine of assured access to space, because if there was a problem with the remaining vehicle (whether Atlas or Delta), the Air Force would have no ability to launch its satellites. Increasing the demand like this allows both lines to continue affordably. I just don’t understand the concern.

Is there anyone who can explain this?

[Update a couple minutes later]

I see that Clark Lindsey is scratching his head, too. I just don’t know what Gary Payton is thinking.

[Update a few minutes later]

Commenters over at NASA Watch can’t figure it out, either. So it’s not just me.

[Update a few minutes later]

OK, I’m starting to infer that the problem is the production base for the solids. Apparently, ATK and others have been sharing fixed costs between NASA and the Air Force, and if NASA is no longer purchasing SRBs, as Shuttle ends and Ares doesn’t begin, the Air Force will have to bear the full burden.

Well, boo frickin’ hoo. So the taxpayer will no longer be subsidizing the Pentagon with NASA’s budget, and the actual cost of maintaining our missiles and boosters for defense will become more transparent. Why am I supposed to be concerned about this?

Business, Economics, Media Criticism, Political Commentary

Five Lies

6 Comments

…about the economy:

1. Bold government action staved off a Depression, saving or creating 1.5 million jobs.

“Just remember,” Treasury Secretary Tim Geithner said on November 1, 2009, “a year ago today, last year, you had markets around the world come to a stop. Economic activity just stopped, came to a standstill, like flipping a switch.”

Geithner implies that the American business climate improved substantially in the first year of the Obama administration. In fact, nearly every indicator, from employment to freight transport to rents to retail sales to real estate, has headed steadily south. In some cases, such as unemployment, the numbers have been far worse than the Obama economic team’s worst-case projections. In others, such as real estate, the weakness of the market is masked by expensive government support, including but not limited to the unkillable First-Time Homebuyer Credit, an assault on loan underwriting standards (see Lie No. 2) by the Federal Housing Authority and the government-run mortgage giants Fannie Mae and Freddie Mac, and the completely opaque $75 billion Home Affordable Modification Program (HAMP).

The $787 billion in stimulus spending authorized by the American Recovery and Reinvestment Act of 2009 is now best known for its inflated and unsupportable job creation numbers. At press time, Council of Economic Advisers Chairwoman Christina D. Romer (who, confusingly, made her academic reputation proving that fiscal stimulus did not help the U.S. economy during the Great Depression and World War II) was giving the stimulus credit for 1.5 million American jobs in 2009. All efforts at checking her claims, however, have turned up very different numbers.

There’s a lot more.

Business, Economics, Media Criticism, Political Commentary

The Economic Ignorance

6 Comments

…of Pat Buchanan. Some thoughts:

True, the United States imports a lot of stuff, particularly stuff made by low-wage, low-skilled workers. Everybody’s got a comparative advantage, and sweatshops aren’t ours. I can live with that. But here’s a shocker: The majority of the stuff we import is not consumer goods. The majority of what we import is stuff we use for manufacturing. As Daniel Ikenson reports, as recently as 2006, 55 percent of our imports were industrial components, i.e. stuff that goes into our factories as inputs and comes out as products. Ikenson: “Meanwhile, U.S. factories remain the world’s most prolific, accounting for more than 20 percent of the world’s added manufacturing value. By comparison, Chinese plants account for about 8 percent. And manufacturing is thriving in large measure because of international trade. Manufacturing exports and imports hit records in 2006.”

These kinds of arguments aren’t academic. When implemented as policy, protectionism can destroy, or prevent the creation of, trillions of dollars worth of wealth. It was one of the few areas of policy that Bill Clinton got right.

Business, Economics, Political Commentary

Just In Case The House Dems Are Stupid Enough To Believe Harry Reid…

36 Comments

The Senate Republicans have the votes to prevent “fixes” via reconciliation.

What’s important for people to understand (including the wavering House Democrats) is that once the Senate bill passes the House, Obama can simply sign it, and the war is over. They have no incentive to keep their promises. Or at least not enough to do so. And even if they want to, as noted above, they won’t be able to. So it has to be stopped now.

[Update a few minutes later]

For those who comment without following the link (far too many), let me provide a couple quotes to make it clear:

“There are a lot of things they want to see fixed that are going to be subject to parliamentary point of order in the Senate,” Kyl said during an interview on Fox News. “And we believe we have the votes to sustain those points of order, which means that those things will come out of the legislation.”

“…It is a very risky proposition for those Democrats in the House who are nervous about their reelection, and are banking on the Senate banking [sic — I assume he means “bailing” — rs] them out,” he said. “It’s probably not going to happen.”

That’s the way I’d bet. But maybe they think that “transforming America” is more important than keeping their seats. I hope not.

[Thursday morning update]

Michael Barone says that the Dems have put themselves in a no-win situation. Well, since their victory is the Republic’s defeat, good.

It’s beginning to look like the goal of health-care legislation was a bridge too far. There’s a reason it’s hard to pass unpopular legislation on party-line votes. It’s not the Senate rules. It’s called democracy.

Unfortunately, the misnamed Democrats don’t appear to believe in that.

Business, Economics, Political Commentary

The Coming Fiscal Disaster

48 Comments

The latest CBO report:

According to CBO, the Obama budget plan would run up much larger budget deficits and pile up even more debt than the administration reported in February.

Over the period 2010 to 2020, CBO expects the Obama budget would run a cumulative deficit of $11.3 trillion — $1.2 trillion more than the administration predicted. By 2020, total federal debt would reach an astonishing $20.3 trillion — up from $5.8 trillion at the end of 2008.

The president likes to say he inherited a mess. He did in fact enter office during a deep recession that sent deficits soaring on a temporary basis. But his policies have unquestionably made an already difficult medium- and long-term budget outlook much, much worse. The problem is that President Obama is a world-class spender. He wants to pile massive new commitments on top of a bloated and unreformed government. He is willing to raise taxes to pay for some of his wish list, but far from all of it. For the rest, he plans to run up the nation’s debt with reckless abandon.

Fortunately, the people are finally on to him.

[Mid-morning update]

More from Veronique de Rugy. Look at the graph.

Business, Economics, Political Commentary

Uh Oh

14 Comments

Walmart’s customers are running out of money.

That’s both a symptom of and a bad portent for the economy.

[Update a few minutes later]

Somehow, I can’t help but think that this is related: consumer confidence in the economy’s future is at the lowest point yet in the Obama presidency. And it wasn’t high when it started.

I suspect that won’t change before November. And even then, we’ll be stuck with him for another two years, though at least he’ll be defanged. As Glenn often says, another Jimmy Carter is a best-case scenario.

[Update a couple minutes later]

This was particularly disturbing:

Forty-six percent (46%) of all adults now say it is at least somewhat likely the United States will enter an economic depression similar to the 1930s within the next few years, showing little change in this view over the past two months. That number includes 21% who say it’s very likely. Another 46% see a 1930s-like Depression as not likely, but just nine percent (9%) say it’s not at all likely.

I think that the probability of that depends on the voters, this cycle and next. If they keep reelecting people who enact policies that, for whatever reasons, continue to sicken the economy, as they did in the thirties, it could get really bad. I hope that the voters are smarter this time around. It’s possible to learn from history, at least in theory.