Wednesday, October 6, 2010

Congressional Gridlock Makes Congress Look Silly

So far this congressional session, beginning in January 2009, the House of Representatives has passed 420 bills on which the Senate has failed to take any action one way or the other. The bills awaiting Senate action include many which would have salutary impact on the American economy, and some, like a bill requiring auditing of the $20 billion BP oil spill claim fund, which should be completely non-controversial. That’s one bill for nearly every Congressman which sits on a shelf awaiting action in the Senate. We should all be angry about this, and right now House members are angrier than most of us that their work is clogged up in Senate partisanship.

Wind Farm Nuisances

The “clean, green” wind generated electrical power from rapidly rising wind farms across America has brought nuisance lawsuits in Illinois, Massachusetts, Pennsylvania, Texas and Wisconsin, contending that turbine noise and vibration from nearby windmills has driven down the value of neighboring residential property. Whether this is just another example of NIMBY, or whether it will become a growing problem for regulator responsible for locating wind power production facilities remains to be seen.

Overseas Cement Gambles

Foreign cement manufacturers are staking hundreds of millions of dollars on investment in new cement production capacity, betting that construction activity will pick up rapidly in their corners of the globe. MerchantBridge of London and LaFarge SA of Paris invested $220 million in expansion of a cement factory in Karbala, Iraq, and MerchantBridge has obtained a license to construct a new two million ton per year cement factory less than ten miles away from the expanded Karbala facility. Iraqi government spokesman Ali al-Dabbagh predicts Iraq will invest $200 billion in infrastructure construction over the next four year period – hence the need for a dramatic increase in cement production capacity.

Meanwhile, Brazil’s Votorantim Cementos SA is investing $1.47 billion in construction of eight new cement making facilities in Brazil, bring Votorantim’s Brazilian capacity to 35 plants producing 42 million tons of cement per year. Votorantim also owns cement making plants in Bolivia, Canada, the United States and Chile.

Tuesday, October 5, 2010

Transportation Capital Funding – The Next Battleground

America’s position in the global economy is rapidly being undermined by a rapidly deteriorating and drastically underfunded transportation system. Congress’ failure to act before the midterm elections on a long term reauthorization of the Federal Highway Trust Fund is just the main symptom of pain in this sector. A report released yesterday contains warnings by bipartisan transport experts that unless
Congress and the public quickly get behind innovative transportation reforms, America’s global economic leadership will fade in the near future.

Yesterday afternoon Transportation Secretary Ray LaHood announced federal grants totaling $776 million to 45 states plus the District of Columbia for bus system improvements, but much of that cash will go to purchase busses and other equipment, and very little of it to transportation infrastructure construction.

Meanwhile, several Republican gubernatorial candidates in hotly contested state election races are making campaign promises to block the Obama administration’s ambitious plans for bullet train service in the northeastern industrial corridor from Boston to Washington, D.C. The Stimulus legislation committed billions to high speed rail construction proposals touted as “shovel ready,” but so far the shovels have not turned a single scoop of railroad ballast onto high speed rail construction projects anywhere in the nation. If economic recovery is depending on the construction industry to bring job growth, these gubernatorial campaign issues are an ill wind blowing the wrong direction.

Small Business Lending Restricted By Market Forces

Average people and many small businesses needing working capital are finding their usual lenders have no money to lend them, severely crippling job growth in this slowly recovering economy. Why? Because the megacorporations who really don’t need to borrow are in fact borrowing and hoarding huge sums merely because they are able to issue debt at amazingly low interest rates. While Microsoft and other huge borrowers are placing huge bond issues at interest rates so low any of us would gladly have them instead of our current historically low home mortgage interest rates, these companies are not investing the borrowed funds in new, factories, equipment or payroll expansion. Instead, they are hoarding the cash until the economy improves, effectively drying up sources of working capital for the smaller business which would love to hire and grow of only they had working capital to fund their expansion.