Trump’s infrastructure program sounds like a con, smells even worse!

❝ Trumpists are touting the idea of a big infrastructure build, and some Democrats are making conciliatory noises about working with the new regime on that front. But remember who you’re dealing with: if you invest anything with this guy, be it money or reputation, you are at great risk of being scammed. So, what do we know about the Trump infrastructure plan, such as it is?

❝ Crucially, it’s not a plan to borrow $1 trillion and spend it on much-needed projects — which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects — with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.

You should immediately ask three questions about all of this.

❝ First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money…

❝ Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream?…

❝ Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there?…

❝ …All of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity/tax credits stuff. You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers. Is that implausible, given who we’re talking about?

Paul Krugman has it wired. Trump chumps thought they were one up on the system voting in someone they knew was a crook and a liar. They were silly enough to believe he was “their” crook and liar. They missed the lecture on Capitalism 101 which states the greedy bastards in charge aren’t interested in sharing the wealth – except with co-conspirators.

That doesn’t include you.

United States’ last best chance to fix infrastructure, refinance debt


Sure has been a while…

❝ There are times when a confluence of events creates a rare opportunity. The U.S. now is at one of those moments…

❝ Campaign promises were made by the president-elect to upgrade infrastructure;
The U.S. federal debt is almost $20 trillion;
The U.S. has both a high credit rating and a stable, growing economy;
There is a worldwide shortage of sovereign, A-rated bonds;
Negative interest rates are prevalent around the world;
The U.S.’s infrastructure is outdated and deteriorating;
Interest rates are very low, but will likely rise in the near future;
The president-elect comes to office with a background in real-estate development and understands the use of debt.

❝ If this were an equation, the above points would result in an obvious answer: the refinancing of long-term debt and obligations at the lowest possible rate for the longest possible time. I am suggesting that the U.S. issue bonds that mature in 50 or 100 years…

❝ Improving U.S. roads, highways, bridges and tunnels as well replacing or constructing new transport systems is a two-part project: first, commit to making the basic repairs to counter the effects of wear, tear, weather and age. One part of the solution is to fully fund the national Highway Trust Fund by raising the federal gasoline tax. Second, use long-term bonds to upgrade the transportation system, electrical grid and water works that are so crucial to the U.S.’s well-being.

RTFA for the details of Barry Ritholtz’ outline in the issuance and sale of bonds up to 100 year term. We wouldn’t even be the first in North America on the street. Doesn’t lessen the sensible character of his proposal.

Thanks, Barry Ritholtz

New Asian infrastructure development bank approves their first loans

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A new Chinese-led development bank has approved its first loans and expects to suffer no impact from Britain’s vote to leave the European Union, the bank’s president said Saturday at its first annual meeting.

The Asian Infrastructure Investment Bank, launched in January with 57 member governments, already has received expressions of interest from possible additional members, said Jin Liqun at a news conference. He said observers from 24 other nations attended the meeting.

The bank reflects China’s rapidly growing financial might and desire for a bigger voice in global finance, which is dominated by the United States and Europe.

Despite initial U.S. opposition, the AIIB attracted unexpectedly wide support from American allies including Britain, France, Australia and South Korea.

Washington and Japan have refrained from seeking membership…

No doubt Obama is happy at least one client state is obedient.

The bank’s board approved a total of $509 million in loans Friday for a power project in Bangladesh, slum-upgrading in Indonesia and road-building in Pakistan and Tajikistan, according to Jin, a former chairman of China’s sovereign wealth fund…

China, the world’s second-largest economy, has the bank’s biggest voting stake with 26 percent of shares and has pledged to put up most of its initial $50 billion in capital but has no veto power. India has the second-largest voting stake at 7.5 percent and Russia is third with 5.9 percent.

“AIIB is owned by all its members,” said Jin. “This is not China’s bank.”

China has chosen not to borrow from the AIIB to avoid “crowding out” other borrowers but might do so in “special cases,” Jin said…

The AIIB initially was seen as a potential rival to the World Bank and Asian Development Bank…But the Asian bank forged cooperative relations with them and pledged to adhere to global standards.

In a reflection of that cooperation, the World Bank contributed to the Indonesia project. Money for the Pakistan project also came from the ADB and the British government. The Tajikistan project is co-financed by the European Bank for Reconstruction and Development.

Golly. Cooperation working somewhere. Which is not a surprise, of course, unless all your news only comes from sources inside the Beltway around Washington, DC.

Former central bank adviser says China needs to invest in, expand, the nation’s infrastructure


Click to enlargeAssociated Press
Taking a road trip this summer?

Increasing infrastructure investment is the best way to boost economic growth in China and doing so doesn’t undermine efforts to overhaul the economy, according to former central bank adviser Yu Yongding.

“If China does not increase infrastructure investment now, it may miss a historical opportunity,” Yu said Saturday at an economics conference in Beijing….

The time is right because of the global economic downturn, falling commodity prices, the low interest rates in Western countries and overcapacity in China, said Yu, now a senior research fellow at the Chinese Academy of Social Sciences.

Regional debt surged in China after the 2008 global financial crisis, when the government urged provinces that were then banned from selling bonds to boost infrastructure spending with a $611 billion stimulus package.

The stimulus was right to do because without it “China would have experienced a hard landing,” Yu said. “At the time it was hard to avoid the increase in debt and leverage.”

There are small bits here and there unique to China’s context. Inevitable. What struck me when I listened to Asia-centric economists discussing the Beijing conference – and Yu Yongding’s comments – was similarities to the economic situation in the United States.

If anything, the need to direct dollar$ and boots onto the path of rebuilding infrastructure – rather than China’s need for expansion – is more imperative. You can’t redirect an economy into healthier modern avenues if the streets and bridges are crumbling. You can’t retrain workers into new relevant skills, building new crafts and companies if the heart of government enterprise is gutted by Congress.

The company behind California’s methane disaster knew the well leaked 24 years ago

Last fall, a 7-inch injection well pipe ruptured 500 feet below the surface of Los Angeles, after ferrying natural gas for six decades. The resulting methane leak is now being called one of the largest environmental disasters since the BP oil spill, has pushed thousands of people out of their homes, and has quickly become the single biggest contributor to climate change-causing greenhouse gas emissions in California. But it’s not the first time this well sprang a leak—and Southern California Gas Company (SoCalGas), which owns and operates the well, knew it…

So who’s to blame for a leak that cannot be stopped? Aging natural gas equipment may have contributed. According to documents filed with the California Division of Oil, Gas & Geothermal Resources, this particular well, referred to as Standard Sesnon 25, was originally drilled in 1953, and showed signs of leakage 24 years ago, in 1992. Inspectors reported that they could hear the leak through borehole microphones.

Gene Nelson, a professor of physical science at Cuesta College in San Luis Obispo, California who has seen the document, said that he found it “appalling that SoCalGas did not identify this as a well to shut off,” after receiving this feedback.

There have been other problems documented at this facility before. And in 2014, inspectors at the wells documented corrosion and negative integrity trends…

Other safety issues have been pointed out recently, too. Earlier this month, The LA Times reported that attorneys representing some of the 1,000 residents suing SoCalGas over the leak claim the company failed to replace an important safety valve that was removed in 1979 — a valve that could have stopped the current leak in its tracks. The plaintiffs also allege that the company again identified leaks at the site five years ago, but never implemented plans to fix them…

So far, some 2,300 homes have voluntarily evacuated and several schools have been closed, with many residents complaining of headaches and nosebleeds from the foul-smelling chemical additives. These include radon, hydrogen sulfide, and an odorant called mercaptan, which is added to the gas both before and after it leaves the storage field.

The well, which funnels natural gas to 22 million customers in the Los Angeles Basin, is expected to take another three months to plug. O’Connor says that the disaster is a telling sign about the viability of natural gas in a country of aging infrastructure.

The methane released into the air will take about 10 years to convert to slightly less of a danger to the climate. Just one more example of crap infrastructure – private and public – crippling the economic and environmental life of our nation. Infrastructure our elected officials refuse to regulate or repair.

Beancounters in Congress say don’t worry about bridges and roads

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Pickup truck crashed into collapse of Interstate 10 bridge

All traffic along a major freeway connecting California and Arizona was blocked indefinitely when a bridge over a desert wash collapsed during heavy rain, and the roadway in the opposite direction suffered severe damage…

The collapse Sunday of Interstate 10 in southeastern California left one driver injured, stranded numerous motorists and complicated travel for countless others for what officials warned could be a long time.

The closure will force drivers seeking to use I-10 to travel between California and Arizona to go hundreds of miles out of their way.

The rains came amid a second day of showers and thunderstorms in southern and central California that were setting rainfall records in what is usually a dry month. Forecasters expected scattered rain through Monday as the remnants of a tropical storm off Baja California continued to push north…

One driver had to be rescued from a pickup that crashed in the collapse and was taken to a hospital with moderate injuries…

Hundreds of other cars were stranded immediately after the collapse, but the California Highway Patrol worked to divert them and it wasn’t clear if any remained, Kasinga said…

Saturday’s rainfall broke records in at least 11 locations, including five places that had the most rain ever recorded on any day in July, said National Weather Service meteorologist Joe Sirard.

July is typically the driest month of the year in Southern California. Because of that, Saturday’s 0.36 inch of rain in downtown Los Angeles exceeded the 0.24 inch recorded July 14, 1886, which had been the wettest July day in nearly 130 years.

The storm brought weekend flash floods and power outages and turned Los Angeles County’s typically packed coast into empty stretches of sand when the threat of lightning forced authorities to close 70 miles of beaches.

Rebuilding, repairing infrastructure across the nation was a non-starter when President Obama and his economics advisors suggested the process in his first term. He could have suggested the sun rise in the East and Congressional Republicans would have opposed the concept. The amalgam of racism, contempt for working people, fear of science and real change has kept the Republican Party tightly bunched into a herd of cattle stupidity for several years, now.

Ayup. No problems from climate change either. As long as you have sufficient money to relocate to a McMansion further inland – on a mountain top – with no fire danger.

Republican supply-side economics bring doom and gloom to Kansas

Every year, right after the April 15 tax deadline, the U.S. Census releases its data on the prior year’s state tax collections. It is a fascinating document, filled with great data points for tax and policy wonks. It reveals a good deal about the state of local economies, economic trends and results of specific policies. In broad terms, the financial fortunes of the states are improving.

State government tax revenue increased 2.2 percent…according to the U.S. Census Bureau’s 2014 Annual Survey of State Government Tax Collections.

General sales and gross receipts taxes drove most of the revenue growth…

Let’s focus on Kansas, because of all the states its tax data reflects conscious policy choices as opposed to larger economic forces, such as falling oil prices.

Under the leadership of Republican Governor Sam Brownback, the state radically cut income taxes on corporations and individuals. Going on the assumption that this would generate a burst of economic growth and higher tax revenue, no alternative sources of revenue were put into place. Similarly, the state failed to lower spending.

Alas, reality trumps theory. As we have seen almost every time this thesis has been put into practice, it fails. The tax cuts don’t magically kick the economy into higher gear and the government ends up short of money…

Continue reading

The Large Hadron Collider is switching back on – What do scientists hope to learn?

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The Large Hadron Collider — the particle accelerator used to discover the Higgs boson in 2012 — is being fired back up after a two-year break.

The gigantic collider (which includes a 17-mile-long underground tunnel that runs between France and Switzerland) was shut down in February 2013 so engineers could make upgrades. Now, physicists are starting it back up for a new series of experiments intended to push the laws of physics to their limits…

In essence, these experiment involve shooting beams of particles around the ring, using enormous magnets to speed them up to 99.9999 percent of the speed of light (causing them to whip around the ring about 11,000 times per second), then crashing them together. Sophisticated sensors capture all sorts of data on the particles that result from these collisions.

The huge amount of energy present in these collisions leads the particles to break apart and recombine in some pretty exotic ways. And these conditions can reveal flaws in the standard model of physics — currently our best formula for predicting the behavior of all matter.

Physicists want to do this because, as accurate as the standard model seems to be, it’s still incomplete…

The LHC’s biggest finding so far was the July 2012 discovery of an elementary particle called the Higgs boson.

Since the 1960s, the Higgs boson was thought to exist as a part of the Higgs field: an invisible field that permeates all space and exerts a drag on every particle. This field, physicists theorized, is why we perceive particles to have mass…

On paper, the Higgs field and boson both made a lot of sense — all the equations of the standard model pointed toward their existence. But we had no direct physical evidence of them…

After several years of upgrading the LHC’s magnets (which speed up and control the flow of particles) and data sensors, it’ll begin…a new series of experiments that will involve crashing particles together with nearly twice as much energy as before.

These more powerful collisions will allow scientists to keep discovering new (and perhaps larger) particles, and also look more closely at the Higgs boson and observe how it behaves under different conditions…

Once upon a time, it looked like a truly gigantic accelerator would actually be built in the US. In 1989, Congress agreed to spend $6 billion to build the Superconducting Super Collider: a 54-mile-long underground ring in Waxahachie, Texas, that would have produced collisions with five times as much energy as the LHC’s. But in 1993, with the costs rising to a projected $11 billion, Congress killed the project — after $2 billion had already been spent on drilling nearly 15 miles of tunnel.

Just in case you thought stupid was a new definition of Congressional priorities.

Invading other countries because liars in the White House say we must; building new fleets of fighter jets and ships to protect landing craft for future invasions because liars in the military-industrial complex say we must; building bridges to nowhere instead of repairing and improving our nation’s infrastructure because powerful members of Congress say we must – are the kinds of commitments to increasing the national debt that our politIcians adore, the average American loves. The size of the “Boom” is sufficiently impressive to draw everyone’s attention away from the results of science and studies headquartered outside our borders.

And TV news-as-entertainment gets to fill the space where conversation used to get in the way with beaucoup footage of all the people around the world who love Americans more than ever.

Who needs science, anyway?

Addendum: Ursarodinia sent me this link this morning – before the LHC post; but, I didn’t get round to checking my email until late this afternoon.

Art meets the science of the Biggs Boson