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 Strategies & Market Trends : Mish's Global Economic Trend Analysis

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From: JohnG11/13/2008 9:06:49 AM
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We borrowed from future economic activity 1. somewhat buy building cars we really don't need and 2. a great deal by building homes we don't need. In one sense, the best thing would be to shut down car building and especially home building until demand catches up.

Another solution would be to import people to fill the demand.

Unfortunately, the FAR SIGHTED <GG> trade policies have gutted a lot of other manufacturing and sent it abroad. Thus we have gotten used to trading CLOWN BUCKS for real imports -- and decimating mfg employment in exchange. Cutting off imports is not a solution as it would cause a global sontraction.

The only solution is to stimulate the construction of things here that are both useful and have a high multiplier. Construction activities meet the bill.

Such construction activities can give us a double effect if they reduce the importation of foreign oil and gas (we really care less if the despots that send us oil and gas see their imports slip drasticly).

Unfortunately, now, just as we need to convert to autos that use less imported oil (or no oil at all) we see the cost of gas drop hugely. This simply lures citizens back to driving gas guzzlers. Thus, it is clear that the externalities (economic costs imposed on the country in addition to the immediate cost of gasoline) from cheap oil imports and cheap gasoline ABSOLUTELY MUST BE ADDRESSED if the country is to get out of this mess. The Government must put a floor under the cost of gasoline and imported oil and proceed to both replace it and eliminate it. Otherwise no business can make a case for capital expenditures required to greatly reduce oil imports.

These externalities must be addressed even if it involves rebating an oil/gas tax back to the people and legislating hybred cars and electric cars.

Even the ethanol boondoogle fits in here if we can move from grain-to-ethanol to celulose-to-ethanol fairly rapidly.

Thus some economic proposals:
1. Import people--hopefully those with some education and tallent. Start up rebates for the quality of immigrants we choose to especially welcome.
2. Create a family friendly country so those wanting large families will not be economically devistated by the cost of raising the families:
a) cash for babies
b) low medical cost for pregnancy and delivery
c) cheap medical care for children
d) cheap education for kids willing to apply themselves
e) help for working single moms meeting standards

3. Economic activity cutting oil imports
a) Import tax on foreign oil or gasoline/diesel bringing cost up to to $80/bbl equivalent
b) Support ethanol ONLY IF we really can switch from grain based ethanol to econominal celulose based ethanol reasonably c) Drill-baby-drill for US oil fields with oil export regulations. We aren't trying to compete with oil despots so much as to eliminate the need for their oil worldwide while cutting oil imports into the US to ZIP.
d)Force prototype clean coal burning plants
e) Mandate auto/truck/bus fuel efficiency. 1) force hybred designs, 2) force all electric designs, force diesel designs, force CNG designs
f) Replace trucks, buses, planes and some autos with trains to some extent--trains are maybe 6 times as fuel efficient as trucks. Force double tracking on high volume train tracks.
g) Interim rebates to gasoline users to absorb the shock of the floor on oil prices.
h) Set up a transportation economic planning department designed to integrate these changes AND preveng congressional Herky Jerky plan changes.
i) ABSOLUTELY MUST PUT A PRICE FLOOR UNDER THE PRICE OF OIL/GASOINE--OTHERWISE NOTHING WILL WORK.
j) If you like -- limited large scale solar farms and wind farms so they may be further evaluated
k) Force safe nuclear power plants. Eliminate state & local blocades against the plants and waste storage.
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