Tag Archives: political economy

Bank Capital Requirements

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The Federal Reserve is looking hard at increasing the amount of capital that banks must hold in the Fed’s effort to boost bank liquidity, or their ability to handle sharply increased withdrawal rates.

There is pushback against this proposal, including objections that it might make it harder for banks to lend to folks on the lower economic tiers, even that it might make American banks less competitive than foreign competitors. That last often (not always) is just political Newspeak for “be more like Europe.”

However, the problem can be preempted—or at least pushed a considerable way down the road, allowing for more thought—by doing something different that IMNSHO is a better move, anyway.

Rather than increasing capital requirements, require all banks to mark to market (semiannually? quarterly?) all of the debt instruments the banks hold in satisfaction of existing capital requirements.

Then leave that requirement in place for some period of time (5 years, say) in order to get a serious look at how well, or poorly, that requirement supports bank liquidity during economic downturns.

You’ve Formed Your Opinion on EVs. Now Let Me Change It.

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That’s the headline on Dan Neil’s Wall Street Journal paeon to the battery-powered car. In his piece, he acknowledges the past and current shortcomings of Electric Vehicles, but he lays those off to car company marketing rather than to actual performance.

My mind isn’t as made up as Neil’s headline implies; nevertheless, challenge accepted.

I drove a Ford Fusion Hybrid for a number of years, and it was a fine car. However, the battery price premium was enormous, and the reduction in trunk capacity to make room for the battery was just as enormous.

I replaced it with an ICE Fusion, and that car was just as peppy and responsive as the Hybrid (peppiness and responsiveness was one of Neil’s touts regarding battery-powered cars), and I had decent trunk capacity.

I’d get a Hybrid again, were the battery premium actually to come down decently.

I won’t buy a purely battery-powered car until a number of criteria are met:

  • the battery has to be chargeable to a 400-mile range in the same minimal time that I can fill my ICE gasoline tank to a 400-mile range
  • the battery premium must come down. The 14% reduction Neil claims is from a hugely high price
  • the battery’s lifetime must be at least as many years as I drive my cars, and as many miles
  • the battery must stop suffering so significantly from cold temperatures. The battery in my ICE that powers my car’s starter motor also suffers, but it only needs to crank the engine. If needs be, I can get a jump start. The EV’s battery is its motive source, and that motor can’t be jump-started; its power source must be “refueled”
  • the battery must be disposable/recyclable with far less environmental damage done or risk of damage done than is the case today

EV prices are coming down, as Neil claims? Show that after EV subsidies are stopped, and EV buyers pay actual market prices. No one should have to pay tax money because someone else bought an EV.

AMLO’s Extortion Attempt

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Mexican President Andrés Manuel Lopez Obrador has made his demands clear concerning what he wants in return for helping the Biden administration do its job—which it doesn’t need help doing—regarding our border with Mexico. AMLO’s demands are naked extortion.

  • give $20 billion to Latin American and Caribbean countries
  • grant work visas to 10 million Hispanics who have worked in the US for at least 10 years
  • end sanctions against Venezuela and halt the blockade of Cuba

No. Just close the border altogether. Let no illegal aliens in; forcing their remaining in Mexico. Also bar Mexican visitors and Mexican products.

This won’t happen, though, with Timid Joe Biden. And it’s shameful that the United States should be victimized by the extortion of a Third World nation run by drug cartels.

Western Battery-Car Adoption Anxiety

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The Wall Street Journal ran an article centered on how “western anxiety about Chinese EVs could prove self-defeating,” with a subheadline that summarized the thesis:

The US and Europe risk slowing electric-vehicle adoption by excluding Chinese suppliers from subsidies and raising tariffs

I have a hard time seeing the downside to slowing battery car adoption. Leave aside the tremendous drain that charging all those battery cars (assuming widespread adoption) would have on our already near or at capacity electric power grid and generating capacity for that grid.

Battery cars are tremendously polluting and damaging to our environment, from dirt in the ground to end-of-life battery disposal. Mining the metals—lithium, nickel, cobalt, copper, and on and on, metals that are used in far greater quantity in battery cars than in gasoline- diesel- or natural gas-powered vehicles—is extremely damaging, both from the toxicity of the metals themselves and from the toxicity of the tailings from the mining operations.

Processing those metals into battery-car-usable components is intensely energy demanding (have I mentioned the strains on anyone’s electricity grid?).

Disposing of those so-far unrecyclable dead batteries at their end of life is enormously polluting as they leach out of even the most well-kept landfills.

The risk is that the West cuts off its nose to spite its face. Slow down the shift to EVs too much to build local supply chains and give domestic manufacturers time to adapt, and Chinese technology might simply pull farther ahead….

Meh.

The technologies involved are useful, they should be pursued apace, and the supply chain problems need to be worked for a host of different reasons. However, it’s a Good Thing that battery cars are not being rapidly incorporated into our transportation systems.

Punishing Success

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Los Angeles has decided that the successful are too successful, and they must be knocked down. To that end, the city’s government has decided to tax the sales proceeds of the wealthy’s homes at 4% on homes sold for $5-$10 million and at 5.5% on homes sold for more than $10 million. This is on top of the real estate brokers’ ordinary 6% fee, and it’s paid by the buyer. Not that that will have any impact on the seller’s ability to sell at a fair price, or anything.

LA isn’t alone in this “mansion tax” move, either. Other jurisdictions, mostly at the State level (it won’t be long before California broadens LA’s move), are doing this, also. They’re all Progressive-Democrat-run, too, all but one of them exclusively so.

  • Connecticut: 2.25% on properties surpassing $2.5 million. Progressive-Democrat Governor, Senate, House
  • District of Columbia: 1.45% on properties sold for $400,000 or more. Progressive-Democrat Governor, City Council
  • Hawaii: Marginal rates ranging from 10% to 20% for estates valued over $5.49 million. Progressive-Democrat Governor, Senate, House
  • New Jersey: 1% on real estate transactions exceeding $1 million. Progressive-Democrat Governor, Senate, House
  • New York: 1% to 3.9% on residential acquisitions of $1 million or more. Progressive-Democrat Governor, Senate, House
  • Vermont: 16% on properties valued over $5 million. Republican Governor, Progressive-Democrat Senate, House
  • Washington: Graduated rates starting at 1.28% for properties sold at a minimum of $500,000. Progressive-Democrat Governor, Senate, House

And, to repeat,

  • Los Angeles: 4% on homes sold for more than $5-$10 million and 5.5% on homes sold for more than $10 million. Progressive-Democrat Mayor, City Council

This is behavior of the green-eyed jealous politicians of the Progressive-Democratic Party: seizing the produce of success and redistributing it for their own political gain. It’s also just one more incentive for the successful to leave these jurisdictions altogether.