The Economy, stupid

[NorthSideSox72]

http://www.bizzyblog.com/2008/06/10/dirty-...-climate-taxes/

While I agree that the retroactive aspect of the UK law is a horrible idea, I do think that a bracketed tax based on pollution levels is not a bad idea FOR NEW CARS UPON PURCHASE. This way, everyone is making a choice on how to spend their money.

 

[Balta1701]

While I agree that the retroactive aspect of the UK law is a horrible idea, I do think that a bracketed tax based on pollution levels is not a bad idea FOR NEW CARS UPON PURCHASE. This way, everyone is making a choice on how to spend their money.

The problem with that strategy though is that it has a flaw, and it's a flaw that's shown up in the U.S. coal plant system. The U.S. coal plants grandfathered in a bunch of the older, highly polluting coal plants when all of the clean air legislation was written. But because they were allowed to keep running, they just kept running without upgrades, and because there was no punishment built in to the tax system to discourage them from still running, there was no motivation to do anything about them. So when a new power plant was built, it was built up to code, but the older ones keep chugging along without any reason to invest money in building more efficient and cleaner plants or upgrading them, and the companies that owned the older ones always fight to keep them open and hold on to them longer because it's more costly to do the upgrades than to pay the lobbyists.

[Balta1701]

http://www.bizzyblog.com/2008/06/10/dirty-...-climate-taxes/

Unfortunately, this is the boat we're in right now. As long as there are countries out there ignoring the problem, other countries will use them as an excuse to do nothing because the results aren't directly obvious. But then a few cities get lost, people panic, a step or two is taken, but then things die down. This may well be one of those things that just doesn't get done until its too late because the people who have to pay for it don't want to do so. The British won't really want to pay for climate control legislation until London is under water. The U.S. won't want to pay for climate control until it loses a few of its cities....wait a second...

[NorthSideSox72]

The problem with that strategy though is that it has a flaw, and it's a flaw that's shown up in the U.S. coal plant system. The U.S. coal plants grandfathered in a bunch of the older, highly polluting coal plants when all of the clean air legislation was written. But because they were allowed to keep running, they just kept running without upgrades, and because there was no punishment built in to the tax system to discourage them from still running, there was no motivation to do anything about them. So when a new power plant was built, it was built up to code, but the older ones keep chugging along without any reason to invest money in building more efficient and cleaner plants or upgrading them, and the companies that owned the older ones always fight to keep them open and hold on to them longer because it's more costly to do the upgrades than to pay the lobbyists.

Cars die in a few years, for the most part. They aren't coal plants that run for decades. I'm all for change in this regard, but you have to allow the system to grade its way into that change. You start slapping retroactive and regressive taxes on people, and you will get some very upset voters, thus undoing any attempt and making positive ground.

 

[StrangeSox]

Cars die in a few years, for the most part. They aren't coal plants that run for decades. I'm all for change in this regard, but you have to allow the system to grade its way into that change. You start slapping retroactive and regressive taxes on people, and you will get some very upset voters, thus undoing any attempt and making positive ground.

 

Exactly. The lifespan of a typical car might be 10 years, not 30-50 like a power plant. And now you're forcing people who would be buying cheap, used cars because its what they can afford to buy new cars or pay more in taxes. Awesome.

 

You're not going to fix this problem through taxation. That will just lead to backlash against any green movement.

Edited June 12, 2008 by StrangeSox

[NorthSideSox72]

Exactly. The lifespan of a typical car might be 10 years, not 30-50 like a power plant. And now you're forcing people who would be buying cheap, used cars because its what they can afford to buy new cars or pay more in taxes. Awesome.

 

You're not going to fix this problem through taxation. That will just lead to backlash against any green movement.

You're going to have to have some of that, I think. No one is forcing anyone to do anything (assuming you use a pollution-pegged fee on new cars only as I suggested). There is no "right" to drive, or to own a car, or to buy some gas-guzzling SUV. Its a privilege. Cars take a serious toll on roads, the air, etc. And those tolls cost money for everyone. Its just reality.

 

You could structure the tax in a way that didn't charge said tax on cars that were ELEV qualified. That way, some cars would not be taxed at all.

 

I agree with you in general that taxation is not the way to fix the problem. But I think that it will end up being part of the larger solution, in concert with tax incentives, research and production grants, loan guarantees for patent holders going to production, etc. Just make sure that any taxation is non-regressive, non-retroactive, and avoidable by behavior changes.

 

[jackie hayes]

Exactly. The lifespan of a typical car might be 10 years, not 30-50 like a power plant. And now you're forcing people who would be buying cheap, used cars because its what they can afford to buy new cars or pay more in taxes. Awesome.

 

You're not going to fix this problem through taxation. That will just lead to backlash against any green movement.

I think the idea (NSS's, anyway) would be to levy the tax only once, for new car purchases. Of course, that would raise the price of used cars as well (since the substitute -- new cars -- would be more expensive), but only by some part of the original tax, so it's unlikely that people who would otherwise buy used would switch to new cars.

 

The problem is that we really want to tax according to the amount of pollution produced, and a tax like this does not distinguish between those who drive 5k miles a year and those who drive 20k miles a year, so it's a poor proxy for the 'right' tax.

 

And, of course, it's political suicide.

[jackie hayes]

You're going to have to have some of that, I think. No one is forcing anyone to do anything (assuming you use a pollution-pegged fee on new cars only as I suggested). There is no "right" to drive, or to own a car, or to buy some gas-guzzling SUV. Its a privilege. Cars take a serious toll on roads, the air, etc. And those tolls cost money for everyone. Its just reality.

 

You could structure the tax in a way that didn't charge said tax on cars that were ELEV qualified. That way, some cars would not be taxed at all.

 

I agree with you in general that taxation is not the way to fix the problem. But I think that it will end up being part of the larger solution, in concert with tax incentives, research and production grants, loan guarantees for patent holders going to production, etc. Just make sure that any taxation is non-regressive, non-retroactive, and avoidable by behavior changes.

I like progressive income taxes very much, but I don't agree that regressive taxes should be avoided in every case. In terms of a car/pollution/congestion tax, the idea behind it is that you want to make the price right, so that it's utilized correctly. The better solution is to still implement the right tax while reducing the income tax burden of the poor (make the income tax more progressive).

[NorthSideSox72]

I think the idea (NSS's, anyway) would be to levy the tax only once, for new car purchases. Of course, that would raise the price of used cars as well (since the substitute -- new cars -- would be more expensive), but only by some part of the original tax, so it's unlikely that people who would otherwise buy used would switch to new cars.

 

The problem is that we really want to tax according to the amount of pollution produced, and a tax like this does not distinguish between those who drive 5k miles a year and those who drive 20k miles a year, so it's a poor proxy for the 'right' tax.

 

And, of course, it's political suicide.

Yes, that was the general idea.

 

Keep in mind though, in many states, the registration fees for cars are already on graduated scales based on, say, the value of the car. Colorado does this. Having the registration fee have a pollution component is not that novel. Chicago charges more for city stickers on larger vehicles, under the guise of they simply take a larger toll on the roads and the air quality. Other villages do that too. Its not such a huge leap.

 

But just to be clear and reiterate here, I see that as a mostly local thing, and not a large part of the solution. The bigger chunks need to be tax incentives and research and results-oriented grants, etc.

 

[Cknolls]

So Chris Dodd received two loans from the FRIENDS of ANGELO program at Countrywide. Should he be involved in the mortgage bailout bill(s) being floated in Congress, or should he recuse himself?

[Cknolls]

Senator Dodd received two loans in 2003 through Countrywide’s V.I.P. program. He borrowed $506,000 to refinance his Washington townhouse, and $275,042 to refinance a home in East Haddam, Connecticut. Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, about $700, on the second, according to internal documents. Both loans were for 30 years, with the first five years at a fixed rate.

 

The interest rate on the loans, originally pegged at 4.875%, was reduced to 4.25% on the Washington home and 4.5% on the Connecticut property by the time the loans were funded. The lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home. The former employee says the float-downs were free. Senator Dodd’s wife, Jackie Clegg, said in a brief interview that two other lenders they checked with offered comparable interest rates. The senator’s office said Thursday afternoon that it is preparing a response

[Balta1701]

Senator Dodd received two loans in 2003 through Countrywide’s V.I.P. program. He borrowed $506,000 to refinance his Washington townhouse, and $275,042 to refinance a home in East Haddam, Connecticut. Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, about $700, on the second, according to internal documents. Both loans were for 30 years, with the first five years at a fixed rate.

 

The interest rate on the loans, originally pegged at 4.875%, was reduced to 4.25% on the Washington home and 4.5% on the Connecticut property by the time the loans were funded. The lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home. The former employee says the float-downs were free. Senator Dodd’s wife, Jackie Clegg, said in a brief interview that two other lenders they checked with offered comparable interest rates. The senator’s office said Thursday afternoon that it is preparing a response

Well, depending on the response, that potentially pushes him out of the VP running.

[Cknolls]

Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.

 

Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.

 

Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.

 

Holbrooke, whose stint as U.N. ambassador ended in 2001, was also working in the private sector when he and his family received V.I.P. loans. He was an adviser to Hillary Clinton’s presidential campaign.

 

James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign Wednesday after the Wall Street Journal reported that he received Countrywide loans at below-market rates.

 

Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as “F.O.A.'s”—Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo. While the V.I.P. program also serviced friends and contacts of other Countrywide executives, the F.O.A.’s made up the biggest subset.

 

According to company documents and emails, the V.I.P.'s received better deals than those available to ordinary borrowers. Home-loan customers can reduce their interest rates by paying “points”—one point equals 1 percent of the loan’s value. For V.I.P.'s, Countrywide often waived at least half a point and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation. If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free “float-down” to the lower rate, eschewing its usual charge of half a point. Some V.I.P.'s who bought or refinanced investment properties were often given the lower interest rate associated with primary residences.

 

Unless they asked, V.I.P. borrowers weren’t told exactly how many points were waived on their loans, the former employee says. However, they were typically assured that they were receiving the “Friends of Angelo” discount, and that Mozilo had personally priced their loans.

 

The V.I.P. loans to public officials in a position to advance Countrywide’s interests raise legal and ethical questions. Countrywide’s ethics code bars directors, officers and employees from “improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value.” Federal employees are prohibited from receiving gifts offered because of their official position, including loans on terms not generally available to the public. Senate rules prohibit members from knowingly receiving gifts worth $100 or more in a calendar year from private entities that, like Countrywide, employ a registered lobbyist.

 

 

Senator Dodd received two loans in 2003 through Countrywide’s V.I.P. program. He borrowed $506,000 to refinance his Washington townhouse, and $275,042 to refinance a home in East Haddam, Connecticut. Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, about $700, on the second, according to internal documents. Both loans were for 30 years, with the first five years at a fixed rate.

 

The interest rate on the loans, originally pegged at 4.875%, was reduced to 4.25% on the Washington home and 4.5% on the Connecticut property by the time the loans were funded. The lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home. The former employee says the float-downs were free. Senator Dodd’s wife, Jackie Clegg, said in a brief interview that two other lenders they checked with offered comparable interest rates. The senator’s office said Thursday afternoon that it is preparing a response.

 

Countrywide has also contributed a total of $21,000 to Dodd’s campaigns since 1997. While a presidential candidate last year, he filed a bill to ban lenders from charging prepayment penalties and steering home buyers to more costly loans—both practices in which Countrywide reportedly engaged. He also called for criminal charges for such predatory lending.

 

Senator Conrad borrowed $1.07 million in 2004 to refinance his vacation home with a balcony and wraparound porch in Bethany Beach, Delaware, a block from the ocean. Mozilo instructed a subordinate to “take off 1 point,” or $10,700, according to a March 17, 2004, email.

 

Later that year, Conrad refinanced an eight-unit apartment building that he and his brothers owned in Bismarck, North Dakota. According to the former employee, the loan violated Countrywide’s normal policy of providing loans for buildings of four units or fewer. In an April 23, 2004, email, Mozilo encouraged an employee to “make an exception due to the fact that the borrower is a senator.”

 

Senator Conrad acknowledged in a statement that he received financing from Countrywide. “I never met Angelo Mozilo,” he said. “I have no way of knowing how they categorized my loan. I never asked for, expected or was aware of any special treatment…From what we have been able to determine, it appears that we were given a competitive rate.”

 

A spokeswoman for Countrywide, which is slated to be acquired by Bank of America, declined to comment. A Bank of America spokesman said that senior executives there “do not get involved in the origination of mortgages,” but will refer inquiring friends to the right loan programs.

 

Mozilo co-founded Countrywide in 1969 and helped build it into the nation’s largest home mortgage lender. While interest rates were dropping in the first half of this decade, prompting widespread demand for refinances and home-equity loans, Countrywide loaned hundreds of millions of dollars per year through its V.I.P. program to politicians, government officials, business executives, entertainment celebrities and other customers singled out for special treatment. Account executives at Countrywide’s call center in Rosemead, California, handled the bulk of the loan applications, which were processed by a separate V.I.P. underwriting unit that had its own branch number in Countrywide’s record-keeping system.

 

Jackson, the former H.U.D. secretary, borrowed $346,331 from Countrywide in June 2003 to refinance his Alexandria, Virginia, townhouse. That December, he applied for a $308,000 mortgage to buy a vacation home on a golf course in Hilton Head Island, South Carolina. The loan came through on January 21, 2004, a week before President Bush named him to the H.U.D. post. He resigned in March 2008 amid unrelated cronyism allegations.

 

 

H.U.D. has wide-ranging relationships with Countrywide and other lenders. It regulates real estate settlements and closing costs, and runs the Federal Housing Administration, which guarantees mortgages.

 

The former employee says that Jackson received discounts on both loans. Defending his transactions, Jackson said he was a Countrywide borrower long before he met Mozilo or worked for H.U.D. Asked if he received any breaks on the loans, he said, “Not to my knowledge. If I did, it certainly wasn’t discussed with me.”

 

Former H.H.S. secretary Donna Shalala received two V.I.P. loans, for $338,685 and $202,300, in 2002. “Normally, I would not ask for special consideration toward a certain loan/customer, but the complexity of the Shalala deal calls for it,” one Countrywide executive wrote in an August 20, 2002, email, explaining that the University of Miami president was buying an interest in a timeshare. “Angelo asked me to ensure that we ‘knock her socks off’ with our great service.” On September 21, another Countrywide staffer wrote that Shalala’s loans were “ready to close…I floated both of them down to current pricing.” Shalala did not respond to messages, and an assistant at the University of Miami said that she was traveling.

 

Holbrooke’s wife, author Kati Marton, received loans totalling $1.4 million to refinance two properties in 2002. “Look for these,” one Countrywide manager wrote in a September 27, 2002, email, alluding to Marton’s loan applications. “These loans are incredibly important to Angelo and as such they are incredibly important to us.”

 

The next year, Holbrooke borrowed $1.2 million to refinance a vacation home in Telluride, Colorado. Countrywide waived at least 1.25 points, or $15,000. “Per Angelo, this loan is to be at zero points,” a Countrywide manager wrote in a February 20, 2003, email. Also in 2003, Holbrooke’s son, David, and daughter-in-law Sarah received a half-point discount on a $559,500 loan, or about $2,800, when they refinanced their Brooklyn high-rise co-op, and five-eighths of a point discount on a $428,000 loan, or about $2,600, when they bought the floor above it. Neither Holbrooke nor his wife and son returned messages.

 

Holbrooke and Johnson are both vice chairmen of the private banking firm Perseus. Besides the discounted interest rates reported by the Journal, Countrywide also waived points for Johnson, a former chief executive of government-sponsored mortgage reseller Fannie Mae. In 2003, Countrywide took 1.375 points, about $13,000, off a nearly $1 million loan to refinance Johnson’s Washington home. When he borrowed almost $1.3 million in 2003 that same year to refinance a 4,400-square-foot, Southwestern-style home with four bedrooms and five baths beside the second green of a golf course in Palm Desert, California, Countrywide waived 1.875 points, or about $24,000.

 

In 2004, Johnson borrowed $3 million to upgrade to a larger estate—a 5,875-square-foot house, with a guesthouse and pool—on the same course. Although the size of the loan exceeded Countrywide’s limit for a second home, Mozilo told an employee to “do the deal.”

 

Brian Brooks, a lawyer for Johnson, said that he never asked for a discount on his loans, and that it is “common knowledge” that individuals of high income and high net worth receive lower rates than other borrowers. “We don’t see anything out of the ordinary here.”

 

Widely criticized for spurring the country’s mortgage crisis with over-aggressive lending policies, Countrywide saw its share price plunge from $45 in February 2007 to less than $5 in January 2008, when Bank of America agreed to acquire the company in a $4 billion stock swap.

 

Countrywide is reportedly under F.B.I. investigation for alleged securities fraud, and Mozilo has drawn criticism for unloading $474 million in Countrywide shares between 2004 and 2007 as the housing crisis neared. He’s defended the sales as part of his retirement planning.

 

Additional reporting by Julia Ramey; this story was adapted from a feature in an upcoming issue of Condé Nast Portfolio.

 

 

 

[southsider2k5]

Countrywide, which just happens to be the same company that Jim Jonnson received loans directly from the CEO of...

 

I guess that makes Dodd qualified to be in the VP vetting process?

[southsider2k5]

Twin bits of good news on the crude oil front.... China annoucned they are raising the gas prices in their country and Saudi Arabia announced they are increasing production 200k barrells a day. Crude is down over $4 as we speak, and still falling.

[kapkomet]

Twin bits of good news on the crude oil front.... China annoucned they are raising the gas prices in their country and Saudi Arabia announced they are increasing production 200k barrells a day. Crude is down over $4 as we speak, and still falling.

It needs to go down about $40 per barrel.

[southsider2k5]

It needs to go down about $40 per barrel.

 

My non-expert opinion is that we at least test the old 120ish lows. After that, par is possible.

[Cknolls]

My non-expert opinion is that we at least test the old 120ish lows. After that, par is possible.

 

 

$128.31 is a measured move from the high of $139.89. $127.81 is the low of the last breakout and, in my opinion a better long entry. But, what's fitty cents.

[southsider2k5]

I guess with the US being the Mexican welfare system, it makes this turnabout and fairplay?

 

http://www.signonsandiego.com/news/mexico/...-1m19tjgas.html

 

Public bus service may be halted today

By Omar Millán González

UNION-TRIBUNE

 

June 19, 2008

 

TIJUANA – Truck and bus drivers experienced a day of chaos in Tijuana yesterday, as they chased a dwindling supply of diesel fuel. Today was shaping up to be even worse.

 

 

DAVID MAUNG

Pemex gas station manager Claudia Torres placed a sign yesterday to block the entrance to the diesel pumps after the Tijuana station ran out of the fuel.

For weeks, drivers from the United States have snapped up Mexican diesel, which is selling for about 50 percent less than in California.

 

That has resulted in a shortage of the fuel, and gas stations nearest the border crossings started halting or limiting sales last weekend.

 

By yesterday, diesel had started to run out at outlying stations, provoking delays or cancellations in public and private transportation. New supplies might not arrive until Monday.

 

Long lines of trucks and buses, their drivers desperate to buy diesel, formed at those stations still selling the fuel.

 

Public transportation officials announced that if they could not refuel their buses they would halt service today, a decision that affects at least 750,000 daily riders.

 

Ernst & Young

“We spent today suspending routes,” said Armando Robles of ABC y Subur Baja, a popular bus company in the region.

 

“Up until Tuesday, we were leaving every 20 minutes. Now with the diesel shortage, we're leaving every hour to make what we have last,” he said. “But we know that an enormous problem awaits us on Thursday because we won't find any diesel.”

 

Jorge González, a manager at Mexicoach, a bus company that transports tourists to both sides of the border, said the company canceled some trips yesterday. Mexicoach, which previously bought diesel in Tijuana, was now buying it in San Diego, paying significantly more. González said the company had no choice but to raise its fares as well.

 

Dozens of cargo trucks were stranded along roads south and east of Tijuana after their drivers could not find diesel. The drivers said their only choice was to wait until gas stations were replenished.

 

“I transport perishables from Tijuana to La Paz, and I've been stuck here for more than two hours waiting for more diesel to arrive,” said Roberto Pérez, a driver with Coronado Truck. “I'm being doing this for 20 years, and I've never seen anything like it.”

 

Local officials with Pemex, the national oil monopoly, have refused to comment about the crisis for days. But in Mexico City, its director, Jesús Reyes Heroles, denied yesterday that there was a fuel shortage on the border, the news agency Notimex reported.

 

He did say, however, that Pemex was “taking extraordinary measures” to supply gasoline to that region, particularly in Tijuana, because of the massive influx of motorists from the United States who bought Mexican fuel, the news service reported.

 

Mexican government subsidies keep the fuel price lower than in the United States. A gallon of regular unleaded gas (87 octane) sells for $2.54, premium (91 octane) for $3.19 and diesel for $2.20.

 

Rationing of diesel began Friday, with gas stations nearest the border crossing receiving no new shipments since then.

 

Omar Millán González is a contributor to the Union-Tribune's Latino newspaper, Enlace.

[Balta1701]

Italy fires out an oil company windfall tax.

[Cknolls]

Will the next shoe to drop in fact be GM, and not a financial company. Hmmm.

[NorthSideSox72]

Italy fires out an oil company windfall tax.

As a general rule, following the political lead of Italy is usually a bad idea.

 

[southsider2k5]

In the midst of today's selloff, here is the stat of the day, GM is trading at prices not seen since 1955. Let that sink in for a minute.

[NorthSideSox72]

In the midst of today's selloff, here is the stat of the day, GM is trading at prices not seen since 1955. Let that sink in for a minute.

Is that reflective of splits?

 

[southsider2k5]

Is that reflective of splits?

 

Yes.