China's Wen confident on inflation after rate rise

More information on China's efforts to control inflation. From Reuters. 

Sun Dec 26, 2010 6:09PM EST

By Langi Chiang and Chen Aizhu

BEIJING (Reuters) - China's government will be able to keep inflation in check, Premier Wen Jiabao said on Sunday, a day after the central bank raised interest rates, and he pledged to speed up efforts to rein in house price surges.

Steps taken in the past month, including administrative controls to curb speculation and monetary tightening, had started to produce results, Wen said.

The People's Bank of China raised interest rates on Christmas Day for a second time in just over two months as Beijing strengthened its battle against stubbornly high inflation.

Analysts said the latest rise showed that measures such as increasing banks' required reserve requirements to rein in liquidity were not enough on their own, and that the Chinese authorities were determined to keep inflation under control.

"We have raised reserve requirement ratio for six consecutive times and increased interest rates twice to absorb excess liquidity in the market to keep it at a reasonable level to support economic development," Wen said in a state radio broadcast a day after the rate rise.

"I believe we can keep prices at a reasonable level through our efforts. As a major leader of the government, I have the responsibility and I have the confidence, too," he said in remarks published on www.cnr.cn.

The rate rise came after Beijing said earlier in December it was switching to a "prudent" monetary policy, from its earlier "moderately loose" stance.

"The rate rise shows China is quickening its pace to normalize monetary policies," said Ba Shusong, a senior economist with the Development Research Center, under the State Council, the country's cabinet.

"The front-loaded tightening, before the peak of consumer inflation in the first half of 2011, is helpful to curb inflationary expectations," Ba was quoted as saying on the financial website www.caing.com.

AHEAD OF THE CURVE

Chinese authorities have repeatedly stressed the importance of staying ahead of the curve in the battle against inflation.

"Inflationary expectation is worse than inflation itself," Wen said in the radio broadcast.

"When there is inflation, we must establish confidence, know our vantage points and take forceful and decisive measures in a timely manner to curb price rises."

The central bank said on Friday it would deploy a range of measures to head off inflationary pressures and asset bubbles.

China also intensified its property tightening measures in April and September in an attempt to brake soaring property prices.

"Until now, the measures are not implemented well enough, and we will reinforce our efforts in two ways," Wen said.

The government plans to build 10 million units of affordable housing in 2011, up from this year's target of 5.8 million.

China will also increase efforts to curb speculation in the real estate market, mainly through monetary policies and stricter use of land, Wen said, without giving details.

Property transactions as well as land costs, a major contributor to high housing prices, have shown signs of a rebound in recent weeks, triggering concerns of more tightening.

Despite all the challenges, Wen said: "I believe property prices will return to reasonable levels through our efforts. I have the confidence."

Chinese stock markets have shed nearly 10 percent since mid-November on concerns the government would ratchet up its monetary policy tightening in the face of rising inflation.

However, analysts suggested China's share market could push higher on Monday on optimism about the overall outlook for shares in 2011.

(Editing by Robert Birsel)

Sent by iPhone 

City’s Revenue Shows Mixed Message

While some counties are showing positive gains in recent months for sales tax collections, the City of Neosho hasn’t seen the same trend.  Although December’s receipts were up over last year by more than 5%, November was down more than 8.5%.  For the first three months of the current fiscal year, Neosho’s revenues over last year are down 0.86%

For the past 12 months, revenues are down 0.68% over the previous 12-month period.

China's Economic Concerns Still Growing

This article was on the New York Times website this evening. It gives a very good summary of the issues facing China's overheated economy. The comments mirror what I saw and read during my Asia trip in November.

http://www.nytimes.com/2010/12/13/business/global/13yuan.html?hp=&pagewanted=all

This One Made Me Think

Money To Burn – And You’re Paying For It

If you didn’t catch the Yahoo article, here’s a good one.

The US Treasury has printed more than 1 billion (with a ‘b’) new $100 bills with additional security features.  Unfortunately, the bill was so hi-tech, the treasury had trouble printing them.  The result?   Poor quality printing that makes some of the bills unusable.  What’s worse?  The bad bills are mixed with good bills in such a way that  sorting them will take a 20-30 years if done by hand or 1 year if done by machine.

The solution – burn the bills (wasting the $120 million it cost to run them) and go back to the previous style.

My guess is no six sigma black belts were overseeing the QC aspect of the treasury’s printing operation.

GOP Needs to Be Reasonable on Tax Cuts Now, but Fundamental Changes in Gov’t Need to Happen Too!

With the GOP’s recent wins in the US House of Representatives, those who promised change in 2008 are definitely going to see it come 2011.  But between now and January, many American’s are also going to see a change in their tax rates if Congress doesn’t act and act soon.

Why?  Many of the Bush-era tax cuts are set to expire for the 2011 tax year.  That means many Americans (not just the “rich”) will be paying more, including those making below $34,550 a year.

(I won’t post here my complaints about why democrats have made this a priority only after losing badly in November.  Heck, they’ve had two years and everyone knew it was coming.  But that’s for another day)

So it would seem reasonable, especially during an economic recession, that extending such cuts would be a no-brainer.  After all, leaving money in the hands of the people to spend is a better option than collecting the money in taxes and letting the government spend it (Reaganomics vs. Keynesians).  Right?  Well, yes and no I guess.

Republicans as expected are fully behind the supply-side theory – cut taxes to drive economic expansion.  No cut is too much, no income is too high. 

Democrats are on board too - at least for those making $250k or less (they almost have to be after President Obama “promised” no tax increases for that segment of the population).  But they don’t believe a multi-millionaire will miss a few percent of that vast fortune.  In other words, – they can “afford” it.  Now the battle begins.

How much income is from small business?  Don’t small businesses create most of the jobs?  Won’t a tax increase on the “rich” hurt job growth?  What about the deficit?

I offer this – GOP beware, but DC wake up!  Don’t get me wrong.  I’m all for extending the cuts.  Ideally, I agree that those cuts will help more than they hurt and it’s an overall good strategy that has worked before and will work again.  But I also think the republicans need to concede that at some point (maybe it’s a $1 million, maybe it’s more), imposing a “small” tax increase on some in the short-run may be necessary to get this compromise done.  I don’t think there is much to be gained by republicans drawing a line in the sand that such cuts are an all-or-nothing deal.  That could very easily backfire and hurt them in 2012.

But I also think that all of DC, all parties included, need to understand that the country can no longer afford to spend more than we make (common sense to me, but not politically rewarding to those career politicians we send there.)  We’re already facing unprecedented debt.  (If it wasn’t for low interest rates, our debt would be even worse.)  Without changes in programs at all levels – even those once considered off limits – our country will dig a debt hole so deep that no level of taxation will ever fill it.

Changes in defense, social security, education, medicare, medicaid, and others MUST happen.  Unfortunately, we’re all going to have to suffer to fix it.  But if we don’t act now, I’m afraid the fallout will be even worse.

So get the darn tax cuts extended, get past the bickering, and know that the tax-cut battle is only a small skirmish in a much bigger battle that we have no option but to win.

Don’t Like the Message? Don’t Blame the Interpreter!

 

There’s an ongoing debate in Neosho’s world of politics as to the planned uses of the city’s voter-approved Economic Development sales tax.  Some want to spend it.  Some want to save it.  But it boils down to a two-fold issue: WHAT CAN it be used for and the WHAT SHOULD it be used for.  To get from point A (what can) to point B (what should), I’ve taken the approach of starting at A and then working toward B (vs. the other way around).  While it seems logical to me, some aren’t so happy.

The tax, last approved by voters around 1995 is authorized by state statute.  Specifically, it was passed by Neosho voters using the statute found under Chapter 94 Section 94.577 of the Missouri Revised Statutes.  (If you want to look it up, you can on the www.moga.mo.gov site.)  While the current online section varies slightly from what it read in 1995, nothing material has changed to affect its application here.  (I know what because I’ve spent several hours since April researching each of the city’s taxes to ensure we were using them correctly.  This included several faxes, email, and phone calls to Jefferson City requesting a number of documents.)

The debate begins with the current administration taking a cautious approach on interpreting the statute that enables the city to collect the voter-approved tax.  It reads, in part, that the tax “…shall be used solely for capital improvements….”  Now I’m a fairly capable guy when it comes to basic interpretation of the law and the use of common sense.  It doesn’t take a PhD from Harvard to know what “shall” and “solely” mean.  The word “capital improvements” is also fairly straight forward.  I’ve said recently in a local newspaper that the meaning (of the statute) was “pretty clear”.  The city attorney used similar language in the same article saying it was “pretty obvious”.  Either way, it think the city has done the “right” thing to be conservative on its approach in using the funds moving forward.

One negative consequence of the decision (combined with other fiscal issues in the city) was the termination of the city’s Economic Development contract with the local chamber of commerce.  It was an unfortunate happening as losing that “ED” focus could make Neosho less able to compete for industries and other businesses looking to expand in the 4-state area.  But given the alternatives, i.e. more cuts in areas such as police and fire, we didn’t really have a choice.  (To clarify, I believe all of the city’s ED committee understood the reasons and supported the city’s decision to cut the Chamber contract.)

But what is more concerning to me now is that some have hopes that the city will at some point “change its interpretation” of the statute to allow for a great flexibility in the fund’s use.  Say what?  How do you “change” the interpretation of seven words that seem so clear in their intended meaning?   Isn’t that a little disingenuous?

Well, for the record, I stand by the city’s interpretation of the statute.  The city administration and the council will work through the fallout.  Eventually, we’ll be back on track to be able to do more with the resources we have.  But for now, we’ve got to get a firm hold on doing what is necessary to protect the city’s remaining services and resources until this economic slow-down passes.

I’ll leave you with the full version of my quotes related to this issue that appeared this week in the Joplin Globe.  Like the statue, I think they are “pretty clear”.

Excerpts from the November 25th Joplin Globe article:

Mayor Richard Davidson said the current financial situation has raised “little immediate support” for any economic project that requires the city to incur additional long-term debt. “To me, there are simply too many uncertainties in the current economic climate right now,” the mayor wrote in an email response to questions. “We need to see some good news on job growth along with increases in consumer confidence before such projects become a priority. Today, we’re simply not there.”

“Good or bad, you have a statute that is pretty clear in what you can and can’t do with the revenue,” he said. “This council is simply working to make sure we comply with the restrictions we are given by the state. I’m not happy about not funding the chamber contract, but I think it was the responsible thing to do given the circumstances. Other basic services in the city were a priority.”

No Slow Down Here

Driving in any direction from where I am now and you'll see a Chinese economy that continues to grow.  New building projects, including infrastructure, commercial and residential, continue to spring up everywhere.  In fact, the growth is so strong that the Chinese government is working to help slow it down and help ease concerns over inflation.

Just this week, the Chinese government increased the reserve rate for large banks 0.5% to 18.5%.  The increase is the fifth this year and the second this month alone.  Increasing the rate reduces the amount of capital in the market that is available for lending, thus (hopefully) reducing the number of future projecs by reducing the amount of money available to fund them.  The increase will freeze almost $45 billion USD in liquidity.   

The government has also jumped into the residential property market by limiting the ability of a Chinese person to own a second home.  This action is intented to help with the steep increases on real estate (due in part to speculation) which some estimate will increase as much as 80% this year alone in some markets.

Throw on top of that a continuing fear of inflation for food and materials and China has some challenges ahead.

While the intra-China growth shows no sign of slowing, the business climate for those supplying goods to the US isn't so rosy.  Many of the factories I've been to this week report slow orders for the last quarter and some hint that the US has taken a "double dip" in terms of its slowing recovery. 

iPhone Shutter Effect on my Propeller

This image is looking forward in my Bonanza with the propeller turning at 2300 rpm. I'm not sure why the image looks as it does, but it was an interesting photo.

Printer Salesmen Beware

As is typical with our government and its reactive nature, last week's printer bomb scare has forced new rules for airline passengers. You can no longer carry a printer cartridge in your checked bags or your carry on (no really!)

Here's the official policy:

Toner and ink cartridges over 16 ounces will be prohibited on passenger aircraft in both carry-on bags and checked bags on domestic and international flights in-bound to the United States. 

Whew. Glad to know the TSA is on top of things. I just hope there are no more underwear bombs. Flying commando would not be good. 

Neosho’s November Sales Tax Receipts Down

November’s tax payments from the Dept. of Revenue for sales tax collections were down from the same time last year.  November’s receipts on the 1% general sales tax were $128,398.  That compares to $140,440 in November of 2009.

For the first two months of the fiscal year that began October 1, receipts are down 4.5% vs. last year. 

For the last 12 months, receipts are down almost 2% compared to the prior year’s collections. 

Hayes Execution was the Right Decision

I can think of very few crimes where my immediate response would be to send someone to death row (and the sooner the better), but the circumstances surrounding the murders of a Connecticut woman and her two daughters is one of them.

I applaud the jury’s decision to send Steven Hayes to death row.  Justice can’t come quick enough for that evil monster. 

Kids Make You Proud

I almost forgot to post my daughter’s trophy from her hunt during youth season.  She nailed the 8-point buck out of a ground blind at about 25 yards. 

The best part of the story?  Prior to the kill, I was browsing the internet on my iPhone when I heard “Dad, there’s a deer and it’s got horns.”  Glad to know someone was actually paying attention.

Globe Vents About Sunshine Law…Again

Today’s Joplin Globe editorial took at shot at MSU for alleged Sunshine Law Violations uncovered during a state audit.  The alleged violations were listed in the October 2010 report released by the auditor’s office.  The report also includes responses from MSU’s leadership disagreeing that their actions were actual violations.  But that’s not why I’m writing this.

While criticizing MSU, the Globe editorial board also took a shot at other governmental boards says that Sunshine law violations were “disturbingly common” and “almost routine” with city councils, school boards and Boards of Governors.  (I’d tell you it’s not so in Neosho, but that’s just my opinion.)

What appears to be at issue is how a body lists a planned “closed” session and, specifically, does listing in advance more than one of the allowed closed-session topics imply that those topics will actually be discussed.  I’d say “Yes - probably, but….”

Regardless of what is listed in the agenda , the specific reasons for entering must be included in the minutes.  In fact, the Sunshine Law requires that “members must cite in open session the specific statute and subsection allowing closure”.  So regardless of how many items are listed on the agenda (which is really a best-guess of what will be discussed), the minutes of the actual vote will reflect why and under what section the meeting was actually closed.

I took time to review minutes from recent Neosho council meetings and without exception, the council ALWAYS listed the specific Sunshine law 610.021 subsection that applies.  So with that, the public will have a written record to know what topic was being discussed during a closed meeting.

As to the Globe’s assertion that using the entire list as a placeholder “just in case” is wrong, I’d agree - that is pushing the limits and should be corrected.  But to imply that such actions are “common” and “routine” by all governmental bodies is well over the line and only serves to further degrade an already low level of trust that citizens seem to have in their elected officials.

Also implying that residents wouldn’t know what was actually discussed would be wrong because the minutes require such a list to be recorded (and voted on by each council member.)

PS – If you really think something has been violated, seek judicial enforcement as the law allows and put the burden on the body to to demonstrate compliance.  And also remember that “knowingly” or “purposely” violating the law can result in fines to those that do it. 

Blunt Makes Final Election Push in Neosho

US Congressman and Senate candidate Roy Blunt made a campaign stop in Neosho this afternoon. Joining him was 7th district candidate Billy Long and former Gov. Matt Blunt.

Elder Blunt spoke on the need to limit the size of government and create jobs in the private sector. Blunt faces democratic opponent and current Secretary of State Robin Carnahan in Tuesday's general election.

Police and Fire Benefit from Car Show

A local Corvette club held a car show today on the historical Neosho square with proceedings going to help Neosho's police and fire department.

The event wrapped up with each laid-off employee receiving a gift card and other gifts. Mayor pro-tem Tom Workman and myself selected the Best-of-Show entry from over 100 entries. A '56 Chevy station wagon from Joplin was our top pick.

A special thanks to the club and Mr. and Mrs. Lehar for the invite. It was a good time for all.

Moody’s Report is Depressing

Last week, I attended my first meeting as a board member of the Missouri Higher Education Partnership (MOHEP).  During that meeting, James Moody (who is a Government Relations Consultant) talked in detail about the current budgetary issues being faced by Missouri and what to expect in the next few years.  It was sobering to say the least.

Regardless of where you fall politically, more funding cuts are all but certain and the pain we felt this year (FY2011) is just the beginning until the economy turns around.

Here are some highlights from Moody’s presentation:

FY2009 – Missouri revenues fell 7.0%

FY2010 – Missouri revenues fell 9.1%

FY2011 – Missouri Revenues (thru Q1) – fell 1.8%

FY2011 Budget assumes 2% annual revenue growth

FY2012 Budget planning assumes 6% growth and major increases in capital gains receipts.  Even with that, there is currently a $700 million gap to fill with only $212 million if Federal stimulus to fill it.  (That equates to another $500 million in spending cuts.)

So what now?  Well, without some other forms of revenues, our legislature will finally have to face a day of reckoning and actually make our spending fall within our revenue sources (assuming of course that Washington DC doesn’t offer more “help” in the form of more stimulus funds).  There is a little wiggle room in the tax ceilings, but it’s unlikely you would see any increases come through the General Assembly.  Throw in the limitations of the Hancock and Carnahan/Farm Bureau amendments and we’re basically stuck with cutting non-Conservation and non-MODOT spending (those two agencies are quasi-independent and excluded from these cuts.)

The impact will be felt (as already is being predicted) by education at all levels.  Social programs will inevitably be hit as well.  Regardless of the party, making those unpopular cuts will make for a very tough two years coming up in Jefferson City.

Just for reference, here are some tax numbers presented by Moody for what could be generated annually from various taxes  (increases require voter approval:)

• Sales Tax – 1% increase = $600 million
• Income Tax – 1% increase (from 6% to 7%) = $900 million
• Tobacco Tax – each 1-cent increase is roughly $5.35 million
• Internet Sales Tax enforcement - $100 - $200 million

As Goes Juan, So Does my Funding

This week’s firing of Juan Williams by NPR solidified my decision of whether to continue supporting public radio with my private donations.  (I won’t be sending a check.)

While Williams’ views may not be popular, they are very much a reality for many travelers.  Here is what he said during a TV discussion with Bill O’Reilly Monday night when O’Reilly said the US was facing a Muslim dilemma:

“I mean, look, Bill, I’m not a bigot. You know the kind of books I’ve written about the civil rights movement in this country. But when I get on the plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.”

I, too, am guilty of the same.  But that’s a reality based on the known facts that Muslim extremists are continuing to target Americans (and have already killed 3000 innocent Americans on American soil in 2001).  It’s not because I (or Juan) have an issue with Muslims in general.

What does IPv4 and Social Security Have in Common?

I read this morning that the global body in charge of allocating IP addresses will be handing out its final block early next year.  After that, due to the design of the system, those addresses will be depleted.  (An IPv4 address is the familiar 1.2.3.4 address used to identify websites and other destinations on the internet.)  This is prompting calls to push the IPv6 protocol (which was introduced in 1995) that is more robust.

What I find interesting is that the eventuality of running out of IPv4 addresses has been known for years…just like the pending insolvency of Social Security.  But no seemed to concerned until the inevitable was before us.

The good news is the IPv6 protocol is being worked on and the switch is already well underway.  But it goes to show that procrastination and denial won’t stop the inevitable.  So deal with it, plan, and make it smoother for everyone.

The article can be found here.

Auditor Contribution Allegations Unfounded (Best I Can Tell)

  Since the state audit of Neosho began this summer, I’ve heard a variety of “rumors” about how things are (or are not) being handled by the state auditor’s office.  One that I continue to hear is that a local businessman has contributed significantly to the Montee re-election campaign as a way to have influence over the audit’s findings. 

I’d first comment that state officials probably value their job and reputation a little more than a few dollars in contributions.  Throw in that the Auditor is both an attorney and a CPA, it virtually rules out that such donations could be an influence.  (While I don’t share Ms. Montee’s political views, I absolutely respect her professionally as well as the integrity of the office.)

But to stay with the allegation for a moment, I took a look at the state’s election tracking site tonight to see for myself who, if anyone, had contributed to the Montee re-election campaign. 

After searching for any contributions to Montee of $100 or more from addresses in the 64850 zip code, I found one contribution – Raymond McClelland - $100.  That’s it.  One.  And not to discount Raymond’s contribution, it certainly wasn’t “significant” in terms of what some allege and also wasn’t from the name being alleged.

I then searched for any contributions in the same dollar range for Montee’s opponent Tom Schweich.  I found two contributions – Richard Davidson (that’s me) - $250 and Rudy Farber - $2500.  (I will say I was the only one who gave BEFORE the election believing he was the right guy…but that’s for another day.) 

So if anything has happened, a local business man (or two) have put their money and support behind a candidate OPPOSING the current auditor, not supporting them.

I think the time has come for all of the ridiculous allegations (about me and others) to stop unless you have “proof” of something.  I get so tired of hearing about the illegal activities going on in Neosho.  And to those that still believe it, take it to someone empowered to check it out.  Simply blirting out such comments is just irresponsible. 

If you want to do your own search, here’s the link:

http://www.mec.mo.gov/EthicsWeb/CampaignFinance/CF_SearchContr.aspx