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Archive for September, 2012

Scientists could not believe their eyes when they viewed the latest pictures from the Mars rover.

Long before the first unmanned missions to the red planet, there was speculation that the dark lines etched across the Martian surface represented ancient infrastructure.  It turns out what were thought to be canals constructed by a long-lost civilization were in fact roads.

But the real news was the condition of these byways.  So riddled with potholes and cracks they represent conclusive proof that our nearest neighbor capable of  supporting life in the distant past was governed by a mayor and City Council.

Scientists are now optimistic about finding remnants of a Martian football stadium, a discovery that would provide a major clue as to why life ended on the now barren surface of the once thriving world.

Mars’ Magnolia Boulevard

The Pep Boys are planning a relief mission to replace the Rover’s shocks and axles .

One small step for Manny; one giant step for Moe and Jack.

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The one that got away

One NCAA football game that will receive national attention this weekend will be the University of Richmond vs. Old Dominion University.  The game, at Richmond’s Robins Stadium, is sold out – all 8,600 seats.  If the game were being played at ODU’s Foreman Field, a capacity crowd of over 20,000 would be there. 

Why the national interest?

It’s not because it is a quality matchup between two good FCS programs (admittedly, the last two years for Richmond have been devoted to rebuilding, although Aaron Corp added fireworks).It’s because ODU’s quarterback Taylor Heinicke set an NCAA record for passing and total offense. He completed 55 passes for 730 yards to lead his team to a 64-61 victory over New Hampshire.  It was a come-from-behind effort as the Lions overcame a 23-point deficit in the second half.

Heinicke has been torching his opponents since he became the starter last year.  I was there in person last season as he and Corp staged a shootout that ODU won on its home turf.

Corp has graduated, but his replacement John Laub, a redshirt senior, is having a pretty decent season, too. 

But there is a sad story for Spider fans.  Heinicke almost played for Richmond.  Had we offered him a scholarship the day he visited our campus he would be wearing red and blue today. But we were a day late and a dollar short, as the old expression goes.  ODU beat us to the punch.

The game promises to be a high-scoring affair, but it should not match the point production of the New Hampshire game.  Richmond tends to manufacture sustained drives – quite a contrast to ODU’s no huddle offense. Also, Richmond has a Taylor of its own.  Pro prospect Cooper Taylor is one of the best free safeties in the FCS.   He transferred to Richmond from Georgia Tech two seasons ago, but missed most of last year to injuries – including the ODU game. And did we miss him.

Despite the offensive potential of this contest, it could very well be decided by a couple of big defensive plays.

I’m sure ESPN will offer highlights on Saturday night.

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Arguably the best sci-fi film ever made, Forbidden Planet will be transmitted to the International Space Station by TCM on October 13th.

I had the pleasure of watching it on the big screen in all of its Cinemascope grandeur several years ago at the Alex in Glendale.

The 1956 film featured Leslie Nielsen as the starship commander.  The plot was inspired by Shakespeare’s The Tempest.  The special effects were cutting edge for the time.  Walter Pidgeon, who played the misguided Doctor Morbius, was already an established star, but the film helped launch the careers of Nielsen, Anne Francis and Robby the Robot. There are a couple of scenes that presage Nielsen’s Naked Gun character.

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Jobs.

The word rolls off the lips of our elected officials or candidates as easily as the sound “da”  is uttered by a baby.

Trust me, babies probably know more than politicians.

No elected official can honestly promise to create  jobs.

Jobs, at least ones that contribute a marginal increase to tax revenues and a healthier economy, are a result of growth in the Gross Domestic Product (GDP).

There is a definite correlation between employment and GDP, as you can easily see from the chart below.

GDP and Job Growth

But what drives GDP?  Will the historical relationship between the change in GDP and employment remain in lockstep?

These are very difficult questions to answer, yet both President Obama and Governor Romney seem to think they know the answers.  If they truly did, they would be able to explain how job creation works.  Instead, we hear the equivalent of an old Seinfeld series expression – yadda, yadda, yadda.

For those who believe in the president’s approach of using stimulus spending as the tool of GDP growth and job creation, consider this: the multiplier effect of government stimulus only works if spending is applied efficiently.

For example, a recently completed freeway project connecting Reno, NV to the state capitol Carson City – a distance of 30 miles – cost $550 million and will shave only 6-8 minutes off the existing commute.  There were serious safety issues with the old road, but improvements could have been made for $125 million, bringing US 395 to interstate standards, rather than constructing  a whole new interstate highway through rugged terrain, which included a bridge rising 300 feet above the valley floor.

The freeway is complete and the construction jobs are gone.  Could we have put the excess $425 million to far better use? Can anyone say if there was a real net improvement to GDP as a result of this project? 

I’m sure the $425 million windfall to Nevada must have made Senator Harry Reid happy.

By the way, there are high wind issues that may render the bridge unusable to high-profile vehicles during the winter.

The multiplier effect of government spending has been estimated between  .3 and 1.8 by a 2009 IMF study and from .5 to 2.0 by a UC San Diego economist, according to an article in Forbes. That allows for a wide range of error when modeling the effects of government spending.  A multiplier of less than 1.0 decreases GDP, which will likely decrease employment.

Not all government spending has the same impact on the economy.  When spending is determined by partisan political motives, such as the loan to Solyndra, the risk of a failure is increased and GDP could suffer. On the other hand, spending on stem cell research has great potential to improve GDP through the creation of cures for deadly and debilitating diseases.

There is a high likelihood that the shotgun approach to the stimulus spending since the recession began has resulted in a multiplier effect less than 1.0.  It would be the same as going to the race track and placing bets at random. Chances are, you are going to lose.

By contrast, Governor Romney backs a strategy of reducing spending, which frees up capital for private industry. His assumption is that the private sector will create  jobs. 

It’s a perfectly logical argument, but there are some holes in this approach.  For one thing, companies are already sitting on large cash reserves.  How much more capital do they need, especially when worldwide demand is sluggish? Will increased production create enough jobs; will it even create enough jobs to absorb the employment requirements of a growing population? After all, steady improvements to productivity bring into question the need for the private sector to create new jobs in an expanding economy.

One wild card neither candidate has addressed is how quickly the baby boom generation will retire.  Who knows? But it could make or break any jobs forecast. Many boomers lost much of their retirement nest eggs.  Some never had adequate retirement funds set aside to begin with.  Retirement will not be an option for many of that generation anytime soon. The bottom line is that the longer the boomers have to work, the fewer employment opportunities will be available for those entering the work force.

Add to that, neither candidate has the power to tweak the world economy through their policies.  The United States has yielded much influence to increased international competition over the post-World War 2 era.  The trend is irreversible.

The bottom line is that promises to create significant job growth are empty ones. We cannot rely on the historical correlation of GDP growth and jobs.  It is a new world in search of new solutions to achieve prosperity. The presidential campaigns of Obama and Romney amount to the most expensive pandering ever unleashed on the American public.  Sad to say, based on the dozens of Facebook posts I receive every day, it appears too many people are falling for the charade.

It is bad enough we are being manipulated at a national level. In Los Angeles, the three insider candidates for mayor – Greuel, Garcetti and Perry – also like to talk about job creation.

Councilman Garcetti was the latest to trumpet jobs.  No details, of course, other than partnering with local colleges to attract high technology firms, as if such companies have not worked with Southern California’s academic sector before.

It is critical that the insider candidates are asked tough questions about job creation by the public and outsider candidate Kevin James, a former federal prosecutor and radio commentator. 

The track record of the mayor and City Council leaves something to be desired. A case in point – despite promises by city officials to end the steady decline of film production in the city, only two of  23 new hour-long dramas will be shot in Los Angeles. The multiplier effect of the lost filming is devastating to the local economy.

As stated in a Los Angeles Daily News editorial: “If only public officials from Washington to Sacramento to city halls were as effective at boosting employment as they are at talking about it.”

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That’s quite a mix of tags in the title of this article. I will probably never again have another opportunity to jam as many into a single headline.

The embarrassment created by the omission of a reference to God and whether Jerusalem was the capital of Israel almost stole the spotlight at the Democratic National Convention.  It actually did until Bill Clinton’s speech overshadowed it. Nevertheless, it represents baggage that will follow the Obama re-election campaign.  The incident will probably not cost the Democrats support from the existing pool of committed voters, but it could very well cost them support from uncommitted voters. In any event, the impact will be hard to measure, but damage control will detract from the campaign’s message. It will be like a pitcher constantly dealing with runners on base – it forces him to focus less on the batter.

This is not about whether you believe the platform should have included an explicit reference to God or to the status of Jerusalem; it is about the clumsy attempt to deal with adding them in and the veracity of the excuses offered up by party stalwarts.

Senator Chuck Schumer of New York and Representative Debbie Wasserman Schultz of Miami, FL tried to spin the initial omission of God and Jerusalem as a technical error.

According to the National Journal, Wasserman Schultz said, “Through the drafting process and the platform committee process, there was never any discussion or debate or commentary over adding or subtracting it.”

The Huffington Post quoted Senator Schumer on the omission: “It’s not that someone had a plan.”

Right.

That is as believable as if the RNC had omitted a reference to abortion and then claimed it was an oversight.

We can forget to dot an “i” or cross a “t”.  We can change or omit an adjective. 

But unknowingly change the substance of a key provision?

I don’t think so.

I’m a CPA. When writing footnotes to the financial statements, the first thing I do is read last year’s and consciously decide if something needs to be changed.  Either it is applicable to the current year, or it is not.  Either it remains unchanged, or it requires modification. Disclosures important enough to include in the footnotes require serious judgment when you change, modify or exclude them. You have to have a reason if you take any of those actions. If you say, “Oops, I made a mistake and should have said….”, you could get sued.

A party platform is a living document; you expect changes.

But simply trying to explain a substantive change as a simple mistake is not only disingenuous, it is an insult to the intelligence of the voters.  Anyone who is not a diehard partisan will see through the smoke and take note of it.  It will change some minds on election day.

Just as Governor Romney cannot deny being familiar with the key tenets of the Republican platform, to suggest that key Democratic Party leaders were unaware of sensitive provisions in their platform until the Republicans took note of them does not wash.

Whether you agree or not with the positions taken in the respective platforms, any eleventh hour scrambling to change them suggests pandering at its worst.

So, I have mentioned Schumer, Wasserman Schultz, God and Jerusalem.  What about Mayor Villaraigosa?

He filled the role of the court jester in this affair. That’s about the only role he is fit to handle.

The mayor is accustomed to dealing with a City Council that votes in lockstep 95% of the time.  I would dare say when it comes to two-thirds votes, the Council is in agreement 99% of the time. It must have been a shock, then, to the subject of Los Angeles Magazine’s “Failure” cover that there is such a thing as a democracy where people have diverse opinions.

His handling of the motion to restore the references to God and Jerusalem was a testament to the established definition of insanity – doing the same thing over and over again and expecting different results. No different from his management of Los Angeles.

I only hope President Obama is not considering Villaraigosa for a post in the administration.

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The Whining Games

The Hunger Games was the first book in a widely popular trilogy and was a blockbuster movie when released back in March.

The story is about the triumph of the individual spirit over despotism.  Selfless sacrifice trumps selfish manipulation.

There is a game played throughout most of the fifty states, including California…and at the local level, especially the City of Los Angeles.

It’s called the Whining Games and no one plays it better than the Los Angeles Police Protective League.

Governor Brown’s modest pension reform package was barely introduced when the LAPPL issued a release condemning it as something short of draconian, “attacking hard working public sector workers.”  That’s right, Governor Brown, the enemy of the public employees.

While Brown’s plan does not go far enough, it is probably the best deal one could have hoped for given the union-backed legislature he had to convince to vote for it. There is still a chance parts, if not all of it, could be reversed or neutralized over the years. It does nothing to reduce the unfunded pension liability, the very thing that will eventually curtail an already diminishing menu of services to the citizens of California.

The LAPPL is frightened even though the bill does not affect cities with pension plans independent of the state, such as Los Angeles’ retirement systems.

Just as in The Hunger Games, those in power fear any attempt to challenge the selfishness of the status quo.  The LAPPL wields considerable power with the City Council.  It is part of a triumvirate which includes the DWP’s IBEW and the Coalition of City Unions, dedicated to draining the general fund, making it difficult for the city to sustain services.

The LAPPL treats Brown’s package, or any other reform measure, as an attempt to terminate defined benefit plans.

Nothing is further from the truth. The objectives of pension reforms have been to shield the taxpayers and residents from the market risk and carrying costs of generous plans. San Jose’s and San Diego’s efforts are excellent examples of government intervention on behalf of their citizens.

Everyone wants the best possible compensation and benefits, but forcing others to pay too much of the costs is unacceptable.

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