The Senator Has A Plan

Senator Chris Dodd has a plan to make investing in new ventures more difficult.

...Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

The above linked article has the reactions of a number of individuals. Here are some quotes from those individuals.

Robert E. Litan is vice president of research and policy at the Kauffman Foundation who writes at the Huffington Post had this to say:

Various studies published or sponsored by the Kauffman Foundation have made it abundantly clear how dependent the U.S. economy has been and will continue to be on the formation and growth of new companies. Angel investors are important funders of new companies. There is no good time to make it more difficult for them to invest in startups, and now -- when the economy is struggling to recover from what may be the deepest recession since the Great Depression -- is the very worst possible time to discourage angel investment.

I guess it depends on whether you want the economy to recover. Maybe recovery is not part of the plan.

A writer who calls himself Zemanta has this to say about Texas, one of the States that is weathering the financial crisis fairly well.

My dad sent me an email the other day pointing out a news story about an incubator in Texas that was cranking out startups and creating jobs. He told me that he believes that the work entrepreneurs and the people who work with them (ie me) are doing is incredibly important to the health of our economy. He's right and we need to explain that to Chris Dodd and his friends in the Senate. If they are going to reform accredited investor regulations, they should liberalize them, not constrain them further.

In other words our Congress is going in the wrong direction. No surprise there.

And how about this block buster from my first link:

Investors offered more criticism on Twitter, with Slide vice president Keith Rabois tweeting, “Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?”

But Mr. Obama has a degree from Harvard Law. I don't understand. Harvard graduates are supposed to be very smart. Nobel prize winner Friedrich August von Hayek explained it all in his book The Road to Serfdom. No amount of central planning can account for the knowledge of millions of individuals. Not even a degree from Harvard Law is good enough to paper over those difficulties. But that is our problem. Too many lawyers in Government. I suppose it makes law writing easier. But what good is that if Congress is writing bad laws?

It is becoming more and more obvious that the American Dream is under attack. Hard work, a good idea, and a lot of luck are not enough any more. Now you also need enough spare cash to buy at least half of Congress. What ever happened to limited government? It is enough to make you want to join a Tea Party.

I'd say if you have a good idea now is the time to put your plan in motion before the law goes into effect. These books might help:

Successful Business Plan Secrets and Strategies

Raising Venture Capital for the Serious Entrepreneur

And it might also be a good idea to write a Senator or two before you are forced to buy them retail.

Cross Posted at Classical Values

Why We Can't Work It Out

The below video explains why banks are not wiling to make a deal on foreclosed property. And also why "the less we sell it for the better" is depressing housing prices. Now this may be a good thing to get property moving again. But it means that the true market value is unknown. The good stuff begins about a minute forty into the video.

The video with commentary is also available here.

H/T Jccarlton at Talk Polywell

Cross Posted at Classical Values

Here Come The DOLTS

Worried about a Greek default? Good. There is trouble ahead in European economic waters. But it is not just small economies that are in hot water. There are some big ones are also in trouble.

Feb. 9 (Bloomberg) -- When it comes to America’s AAA debt rating, we have to ask whether we would be better off without it.

That notion is pure heresy, and Treasury Secretary Timothy Geithner was quick this weekend to try and dispel any thought that the U.S. would ever be in for a downgrade.

“That will never happen to this country,” Geithner said during an interview with ABC News. The remark came after Moody’s Investors Service last week said the pristine U.S. rating will come under pressure unless something is done about mounting deficits.

Geithner shouldn’t have fought Moody’s report. He should have embraced it. What better way to impress upon Congress that the U.S. is very much in crisis and needs to face up to its problems.

That reality has yet to set in on Capitol Hill. Two weeks ago, for example, the Senate shot down a proposal to create a deficit-reduction commission. The measure failed because the Left worries such a committee will cut spending, while the Right is afraid it will call for tax hikes.

So no spending cuts or tax hikes, which is what we need -- just deficits as far as the eye can see. Let’s break out the fiddles already and watch Rome burn.

This is why concerns over the so-called PIGS -- Portugal, Ireland, Greece and Spain -- or those on the geographic and economic periphery of the European Union are really a sideshow. The real danger to markets lies with the DOLTS, or Dangerously Over-Leveraged Triple-A Superpowers.

That club currently consists of the U.S.

You can read more. And you should. Because when this crap sandwich trickles down to Main Street we are going to be in a place worse than we were in September of 2008.

China is now beginning to deleverage.

China joined my bubble brigade and raised their reserve requirements on banks for the second time this month! The reserve requirement will increase 50 basis points, or 0.5 percentage point, effective Feb. 25, the People’s Bank of China said on its Web site today. The current level is 16 percent for big banks and 14 percent for smaller ones.

Stocks reversed gains in Europe after the announcement on concern that tighter lending in China will dampen the global economic recovery. Policymakers aim to avert asset bubbles and restrain inflation after banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) lending target in January and property prices climbed the most in 21 months.

“This is all about controlling the boom, so that we don’t have a bust in the second half,”

said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai.

So what do I think? Interest rates have to go up. They have to go up to a point where leverage is squeezed out of the market. Not that I'm against leverage. It is just that we are leveraged on the wrong things. Clear the table and let us plan a science meal instead of Chinese, the kind where you are hungry again after an hour.

Did I mention that we may only have snacks while we replan the meal? Life is hard and then you die. Take your enjoyment where you find it.

Green Jobs Come Real Jobs Go

Power Magazine whose mission is to cover Business and Technology for the Global Generation Industry reports on what Green Energy is doing to Spain. It is pretty ugly.

Gabriel Calzada Álvarez, PhD, an economics professor at King Juan Carlos University in Madrid, completed Spain’s first comprehensive review of the long-term effects of Spain’s renewable energy policy on jobs and the economy. His report, "Study of the Effects on Employment of Public Aid to Renewable Energy Sources," was released in March. Some of its most surprising findings include these:

* The premium paid for renewable power in Spain that’s charged to consumers translates into $774,000 for each Spanish "green job" created since 2000. In an interview with Bloomberg, Álvarez stated: "The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices."
* The study calculates that the programs creating those jobs resulted in the destruction of nearly 110,000 jobs elsewhere in the economy, or 2.2 jobs destroyed for every "green job" created. The report notes that Obama’s estimates of job creation gloss over jobs lost due to lost opportunity in the private capital market or the higher efficiency of private capital employed in renewable energy investment. Álvarez concluded that each "green" megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, and 5.05 by mini-hydro.

Now couple that knowledge with how people are feeling about the US Economy.

A string of new polls seems to show that America’s belief in the wonder-working power of Obamanomics has begun to fade. A Pew poll found President Obama’s economic approval rating has fallen to 52 percent from 60 percent in April. A Wall Street Journal poll found 53 percent disapprove of his handling of GM and Chrysler vs. 39 who approve. And the New York Times found that 60 percent don’t think Obama has a “clear plan” to deal with the monstrous budget deficit.

Okay, here’s the thing: Obama took a tremendous economic and political gamble last January. The new president had the option of putting forward a stimulus plan that would attempt to reverse or significantly dampen America’s terrible economic downturn ASAP. The quickest and most effective approach would have been a big cut in payroll taxes. For $800 billion, combined Social Security and Medicare taxes could have been slashed by 6 percentage points, or 40 percent. That would have put $1,500 in worker paychecks and, according to one credible study, increased employment by 4 million jobs in 2009.

Instead, Obama chose to listen to Rahm “Never let a crisis go to waste” Emanuel and put forward an $800 billion plan that advanced his healthcare, energy and education policy goals — but pretty much neglected the economy in 2009. Team Obama had to fully understand this. Indeed, a study from the Congressional Budget Office study — when led by current Obama budget chief Peter Orszag — concluded that an Obama-like economic stimulus package would be “totally impractical” because it would take so long to implement. (True enough, only seven percent of the American Recovery and Reinvestment Act has been doled out so far.)

And how about the rosy future we have hears so much about in the last few months, "an economy on the mend".

The terrible tale of the tape: a) the current downturn is arguably the worse since the Great Depression; b) household wealth has fallen by $14 trillion during the past two years, including the first quarter of 2009; c) while the economy may not shrink as much this quarter as it did in the previous three months (-5.7 percent) or the final quarter of 2008 (-6.3 percent), unemployment is soaring; d) Obama himself said the jobless rate will hit 10 percent this year; d) even worse, the Federal Reserve sees it approaching 11 percent next year. (Recall, that the original White House economic analysis of the Obama economic plan never saw unemployment exceeding 8 percent if Obamanomics was passed by Congress.)

So now many Americans are rightfully wondering just what they are getting for that $800 billion, as well as massive budget deficits as far as the eye can see. And it goes beyond the mercurial world of polling. Pricey plans to deal with perceived climate change and healthcare are also appear on the ropes or are being scaled back as voters view them as lower priorities than job creation and taming out-of-control spending.

Green shoots? Oh there are some to be sure. Just yesterday, the Conference Board said its index of leading economic indicators rose by its biggest monthly amount in five years And the stock market is up nearly 40 percent from its lows as depression fears ebb. Gluskin Sheff economist David Rosenberg, by contrast, declares that the “era of the green shoots is over.” He points out that 1) bellwether FedEx described the economy as “extremely difficult” when it reported disappointing earnings , 2) United Airlines said second quarter traffic fell as much at 10.5 percent, 3) commercial real estate loan concerns led S&P to cut ratings on 22 non-”too big too fail” regional banks; 4) incomes are being pinched by rising gas prices, and 5) surging interest rates are refreezing the housing market.

The Republicans tried to tell Obama what to do: "lower taxes, drill for oil, implement alternative energy when it becomes cheaper than the alternative". Was Mr. Obama listening? Evidently not. Let us hope his party pays for it in the 2010 mid-term elections.

And about that health care thing? Bill Whittle has some words on the subject. The words are not kind to Mr. Obama and his Democrat confederates.

So what do I think is required to get us out of the current mess? Cheaper energy. And not just oil. Although we need to bring more of that to market. It wouldn't hurt to get electrical energy below the price of coal. I think fusion might be an answer.

You can learn the basics of fusion energy by reading Principles of Fusion Energy: An Introduction to Fusion Energy for Students of Science and Engineering

Polywell is a little more complicated. You can learn more about Polywell and its potential at: Bussard's IEC Fusion Technology (Polywell Fusion) Explained.

And the best part about Polywell? We Will Know In Two Years.

The next best? If it works it should be possible to make fusion electricity for about the same price or less than coal electricity.

Why hasn't Polywell Fusion been fully funded by the Obama administration?

Cross Posted at Classical Values

Giving The Economy A Boost

It looks like the Obama administration has accidentally given the economy a boost.

Due to the overwhelming increase in orders, it has become increasingly difficult to predict deliveries for all Rock River Arms' products. Because of this, we are no longer quoting estimated delivery dates. We are continuing to increase production, build, and ship products as inventory becomes available based on the date your order was placed. In addition, we will no longer call for payment before orders are shipped. If you place an order using a credit card and your order becomes available for shipment, we will process the order with the credit card supplied. If the credit card supplied is declined for any reason, the next order in line will be shipped and the declined order will be placed at the back of the file for future shipment. We sincerely apologize for any inconvenience and appreciate your patience and continued support.

Sounds like a seller's market to me. Perhaps if President Present secretly threatened to outlaw auto sales he could do something useful for Detroit too.

Cross Posted at Classical Values

Why hasn't Polywell Fusion been funded by the Obama administration?
Bussard's IEC Fusion Technology (Polywell Fusion) Explained

Breaking The Bank

There was a time when Democrats were screaming about the costs of the Iraq War.

Okay, $7 trillion it is, and if you think that's an exaggeration, you're wrong. In this year alone, we have committed an amount that is more than half of our entire annual gross national product to assorted bailouts and guarantees. No, that doesn't mean that we have diverted half our GNP for bailouts; it means that we have created half our gross national product virtually out of nothing.

Tuesday it was the Fed saying it would buy up to $600 billion more in mortgage-related assets and will lend up to $200 billion to holders of securities backed by some consumer loans. That $800 billion is more than what Social Security lays out each year, and twice as much as the federal government annually collects in corporate income tax. It is about three times as much the entire federal deficit.

Consider: President George W. Bush has been passionately faulted for "breaking the bank" by conducting the Iraq War. But the non-partisan Congressional Research Service figures that the total cost of the Iraq War and the rest of the global war on terror, including the war in Afghanistan since Sept. 11, 2001 is $864 billion. Now, we can whistle past that in a single day, and few seem to worry. There are no metaphors for this because there is nothing comparable to the rapidity of our plunge into national hock.

"Talk about throwing money at a problem," said Sheila A. Weinberg, founder of the Northbrook (Ill.) based Institute for Truth in Accounting. "The better question is where is all this money coming from? The people I ask either don't know, believe that it's money we have on hand or will come from taxing the wealthy. We're borrowing it. About half of the borrowings are coming from foreign entities."

In a matter of a few months Congress has managed to exceed the costs of the five year Iraq War many fold.

This has got to lead to stagflation. I think Obama will be a one term President.

H/T The Whig