Signed an eighth airline this week, according to this, adding 135 more planes to what we hope will be its WheelTug backlog. As I’ve said, the question now doesn’t seem to be whether airlines will want this — what airline wouldn’t? — but whether it will come to successful fruition. If it does, the company would presumably be worth a great deal more than the $40 million market capitalization at which it currently trades. But that’s still a big if, so . . . only with money you can truly afford to lose.
BALANCED BUDGET: ARE YOU NUTS?
The way the government does its accounting, investments are counted as “spending.”
By this logic, no family could balance its budget if it bought a house, unless it had enough cash to do so without taking a mortgage; no business could take a loan to finance inventory or build a factory.
Every public company in America uses “Generally Accepting Accounting Principles.” But not the US government.
So one long-term “solution” to our deficit problem might be to change the way the government does its accounting. But that would mean huge fights over what qualifies as an investment (is education an investment?) and over what length of time those investments should be written off (a lifetime?). It would also mean recognizing some of the long-term obligations the government takes on, which are not currently counted in the budget.
In the real world the benchmark should probably be: is the National Debt growing a little slower, over the long run, than the economy as a whole? In high-unemployment years, as now, extra government spending and investment are wholly appropriate. And in boom years, very low deficits — or even surpluses — are appropriate. But over long periods of time (e.g., the 35 years from 1946, when the Debt was 121% of GDP, through 1980, when it had shrunk to 30%), is the Debt gradually shrinking?
Think about it: if the debt grew on average by 3% a year while the economy itself grew on average by 4.5% a year (2% the little bit of inflation we tend to get when things are okay and 2.5% real growth), a perfectly realistic objective — then over time the debt would shrink dramatically as a proportion of the economy as a whole.
Well, 3% of the current Debt is about half a trillion dollars. That would be a perfectly reasonable deficit to run in a normal year, given the way the government does its accounting.
We’d like to see some years when the debt barely grew at all — like the last two Clinton years. We’d like to see years when the economy grew at more than 4.5% (with most of that coming from real growth, not inflation). And I think that we’ll have some years like that. But we’ll also have years like 2013 when unemployment — and the need for increased government investment, and thus big deficits — remain high.
People need to understand that, given the way the government does its accounting, a literally “balanced budget” is as dumb — and as bad for America — as telling a young business it can’t invest to grow or a young family it can’t borrow to buy a home.
Yesterday, a joyful video about a whale.
Today, a second one — involving humans:
Dr. Moshe Dauber: “This company has made the IBD news since December, and as an ‘Israeli’ company I had interest. Not to mention that in December when it was trading around $40 I followed IBD’s rec (sort of) by buying February 45 calls. WOW! And then I looked into how ‘green’ they are . . . and then I saw this video. Now I am really on board. And today I bought SODA. What do you think? I mean ‘with money you could truly afford to lose?’”
Wow, indeed! No idea how the stock will do – but what a hopeful, worthy enterprise. I just bought two SodaStreams to show support, and even a little stock, as well.
Quote of the Day
We're not trying to outsmart the smart guys. We're trying to sell bonds to the dumb guys.~alleged remark of the head of a Wall Street mortgage-bond group
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