Author Archives: eehines

Tariff Bankruptcy?

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Or is that just an excuse? Marelli, which supplies Nissan and Stellantis with auto parts like lighting and internal electronics, has filed for bankruptcy and is blaming the current tariff environment for the filing.

However, as Marelli’s CEO David Slump admitted in his company’s bankruptcy filing, as summarized by The Wall Street Journal,

…the company had already been struggling with long-term supply-chain issues stemming from the Covid-19 pandemic….

The company also has been struggling with losses and a hefty debt load for years.

Slump said the pandemic restricted access to both raw materials and the labor market, and set off a series of events that led to Marelli being unable to sustain its nearly $5 billion of debt. Even after the pandemic subsided, the impeded supply chain for semiconductors had an acute effect on automotive production.

Obvious questions arise:

  • what has the company been doing to reduce and then eliminate those losses over those years?
  • how assiduously has the company been working to pay down that debt? Has it only been paying the contractually obligated minimum payments, or has it been paying something extra against the principle in each payment period? Coupled with that, the company’s debt repayment has been heavily complicated by operating at a loss for years.
  • what has the company been doing to readjust its own supply chains? It saw, empirically, those five years ago during the supply chain disruptions of the Wuhan Virus situation, that its existing supply chains were heavily vulnerable.
  • what has the company been doing to develop new products and new buyers?

Slump’s claim of macroeconomic headwinds associated with the imposition of tariffs in countries around the world may well have been the trigger, but those “headwinds” are only that. This has been a bankruptcy building toward actuality for a few years. Excuse-making isn’t much in the way of a solution.

Some Editors are Worried

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Some editors, here The Wall Street Journal‘s, worry that a criminal investigation into Biden White House staffers’ apparent coverup could get those staffers to clam up and not talk. They’re happy with House Oversight Committee Chairman James Comer’s (R, KY) civil-oriented investigation into the coverup and worry further that a criminal investigation could interfere with the civil one.

Maybe, maybe not. The only way the staffers could clam up in a criminal investigation would be to plead the 5th Amendment right against self-incrimination. They could otherwise slow-walk their testimony, be evasive in their answers, fail to remember things, and on and on. But they can do those things in Comer’s investigation, too—especially, plead the 5th.

The editors closed their piece with this:

Learning more about how the White House covered up Mr Biden’s decline matters, but raising American incomes matters more.

The two are not mutually exclusive. On the contrary, increasing American incomes depends critically on a mentally competent President. Learning how the last President’s mental decline occurred, and especially how it was covered up and by whom—the positions as well as the incumbents—is critical to maximizing our chances of having mentally competent Presidents in future.

And that requires a criminal investigation, also, to determine if any criminal laws were broken, if so by whom, and locking those persons up. They’ve done their damage, criminally or civilly, but locking up those who broke criminal laws would discourage future staffers from doing the same thing.

Resist

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That’s what the tech industry honchoes are doing vis-à-vis Republican moves to cut or eliminate altogether clean energy tax credits. They want to maintain their handouts.

The Data Center Coalition, a group that includes Microsoft, Alphabet’s Google, Amazon.com and Meta Platforms, recently made its pitch in a letter to Senate Majority Leader John Thune (R, SD), according to a copy viewed by The Wall Street Journal. The group asked him to preserve tax credits and loan funding that would be aggressively phased out in the version of the bill passed by the House of Representatives last month.
The bill is fueling industry concerns about rising prices and power shortages if planned investments don’t materialize.

There’s this, too:

The House bill would require solar, wind, and other projects to begin construction within 60 days of the measure’s enactment to receive tax credits. It would also require the projects to come online by 2028, setting a hard cutoff for any projects placed in service after that year. Under current law, the tax credits phase out over four years, starting in either 2032 or when the US power sector’s greenhouse-gas emissions fall to a quarter of their 2022 levels—whichever comes later.

Here’s the thing, though. This isn’t so much a rescission of the tax credits or removal of “loan funding” as it is a requirement that recipients not dilly-dally about their performance. To get/keep the credits and funding, they actually have to start doing the things—begin construction, for instance—required to “earn” the handouts. Then they have to stop slow-walking their performance, pocketing the money money without anything to show, and instead complete their promised project and bring their “clean-energy” facility on line by a date certain.

Their worry about rising prices and power shortages is a valid concern, but that’s not effectively addressed with tax credits or government loans for their projects. That’s effectively addressed by getting government regulations out of the way of fossil fuel-sourced energy. Natural gas is about as clean as it gets, even counting the fiction that atmospheric CO2—plant food—is a pollutant. Oil-based energy production is nearly as clean, as is modern coal-based energy. The actual pollutants from burning coal have long been cleaned up be well-established technologies.

Fossil fuel-sourced energy is lower priced in no small part because it’s utterly reliable, producing energy whether or not the sun is shining or the wind is blowing, and those fossil fuel facilities need no expensive, themselves polluting from mining through disposal, battery storage that lasts only a very few hours into a long-term weather or night-time outage.

Clean energy facilities don’t need the tax credits or artificial government loans any more than do fossil fuel facilities. When they’re ready for market, the market will call for them without taxpayer money being donated to them. The proper resistance is a pushback and retention of the tax credit cuts and rescissions.

Is Harvard Worth Saving?

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That’s the question The Wall Street Journal asked, ironically, on D-Day. The news outlet also asked “How?” but I’m setting that aside as irrelevant: Harvard doesn’t need saving, at least not financially.

Harvard has that $53+ billion endowment, with its annualized return on that endowment of roughly 11% over the last 50-ish years. The question proceeds from the false premise that it needs saving.

Harvard doesn’t need our taxpayer money. More than that, if it no longer gets our money, it’ll be free of government strictures on what it does with the money it receives—the school can do whatever it wants, politically and scholastically, including reforming itself and ridding itself of its institutional antisemitic behavior and ridding itself of those in its employ or student population who act overtly on their own antisemitic behavior, illegalities like seizing and occupying buildings, denying its owners their own property; vandalizing those buildings and others on campus; openly denying Jewish students access to their classes; overtly threatening Jewish students with violence and delivering that violence; and actively denying those who disagree with them their own rights to free speech. That’s the short subset of a very long list.

Or Harvard can choose to continue those bigotries, absent government funding and attached strings. With either choice, though, it cannot continue—must not be allowed to continue—the illegal behaviors in which so many of the school’s bigots openly engage. A school that chooses to continue those behaviors and to condone them among its population doesn’t deserve saving, even with its own money.

A Reason to Help the PRC

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President Xi Jinping set a goal, which he called in typical PRC cutesy fashion, Healthy China 2030, to raise PRC citizenry life expectancy to 79 by 2030, a goal he achieved in 2016. He also wants to improve health care so that all mainland Chinese can live longer, healthier lives in their dotage.

This is a goal well worth us supporting the PRC on.

This is, after all, a nation with a fertility rate of 1.55, which compares with a replacement birth rate—the rate needed just to maintain a nation’s population at its current level, but not growing or shrinking—of 2.1.

This is a nation with a currently aging population, and that will continue to age due to that broadly inadequate fertility rate.

This is a nation with an elderly dependency rate—the ratio of the elderly population per 100 people of working age—of 20.7 and growing rapidly.

The is a nation with a potential support ratio—the number of working-age people for each elderly person—of 4.8 and shrinking rapidly, the inexorable effect of that very low fertility rate.

Helping the PRC to help its elderly to live longer and more healthily not only is a moral imperative, it’s a strategic political objective, too. The growing old folks population with its increasing longevity, coupled with that shrinking labor force, makes the aging population increasingly dependent on government handouts. That shrinking labor force, though, produces increasingly less output and so sends increasingly less revenue to government to redistribute to its aging population. It’s an open question whether automation and robots can maintain or increase production enough to produce the revenue needed for that redistribution.

We should be helping that population grow ever older, healthier, and longer-lived. That will speed the economic dislocation from that aging, and possibly push it into economic collapse. That’s an outcome for an enemy nation that wouldn’t be all bad for us.