Federal Reserve

The Fed has continually, and I believe mistakenly, focused on interest rates rather than reserves. The Fed just announced a July increase in bank reserves at the Fed. That should put upward pressure on stock prices and lift consumer spending. That is where I think the programs should be focused on increasing reserves. Lending helps the economy grow but not reckless lending.

http://www.latimes.com/business/la-fi-lend18-2009aug18,0,1021931.story

Sir Richard Branson

My first reaction was some oil rich guys are dreaming. But wait, this is the same group that invested $2.7 billion in Daimler and became the largest shareholder. Maybe they are dreaming like a fox. Look at their objectives--tourism capital of the world and center for scientific research and innovation. That is pretty heady. Then there is Sir Richard Branson who has built a very large fortune and owns Virgin Group. He looked at Formula 1 and decided that the Brawn group had become too costly. Probably not a bad move because you should only pay so much to play. This is not play. Dig more into Virgin Galactic, the group Aabar Investments spent $280 million for a 32% ownership, and you find Burt Rutan. He is the brilliant aeronautical engineer who built the winner in the 2004 race to build the first commercial ship for space travel. It was his company that built Virgins Galactic’s first space ship the current test mule White Knight Two and the next one Spaceship Two. Both have flown well. I think you've got a winner in commercial travel in space. Good luck and God’s speed.

Try this. A little different. I think the venture is a winner. They also have deep pockets.

Pope Benedict

If we lived in a utopian world some of these thoughts, in the long run, might have merit. We do no live in a utopian world. We live in an imperfect world and always will. It is one driven by the profit motive. In every country regardless of their political system there are the rich and the poor. Yes the financial system got very greedy and maybe developed financial instruments’ that were too complex. But that cannot be fixed on a global basis but locally or nation by nation. A ”true world political authority” will not work. The United Nations has had moderate success but it does not function as a “world authority”. Our approach must be to learn from what has worked – a free market economy based on profit. However we must monitor and fix the excesses on a local basis. Sometimes that is industry by industry others the fix is nationally. What did we learn from the auto industry? You must be a swift as your competition and have the same or better cost structure. The auto industry got out of step. Whose fault is that? I think it was the short sightedness of management that wanted peace and over the years gave the unions what they asked for. That is why they were restructured and let’s hope it works.

Fred Pipin

Federal Reserve keeps interest rates in check, downplays inflation threat

After reading Don Lee's article in the L.A. Times, I am not comfortable where this is all headed. The Fed Res has really not done well with their approach to monetary policy. I see inflation in the future. If this is a “jump start” it is really slow. People who use to spend no matter what don’t. Just ask the ones that just got laid-off. Or the poor restaurant owner. I talked with a lady that owns two small restaurants in suburban Chicago. The amount she has had to invest from her savings to keep them “afloat” is staggering. Thankfully there were the savings. The greed has not been dealt with. The pain by those who caused this economic morass has not been felt by them. The recovery is very slow in spite of the heightened spending. Where do we turn the corner and start returning what has been spent?. Certainly not the $69 billion returned by 10 greedy banks.

10 banks want to pay back the loan

Why did 10 banks want to pay back the loan? I think that it is because they did not want government intrusion especially in the area of compensation. We got into this mess because a number of financial institutions did NOT have adequate financial governance. Have they learned their lesson? I think not. There has not been enough time of governance and pain. Left to their own devices the 10 banks will make a lot of the same mistakes of greed. I do not think we are yet headed in the proper direction with our financial institutions. Is the government the proper ones? NO! It takes strong and committed private control.

Finding the Lola T70 MK3B and its first race

The Beginning

My partner Jack Douglass--a Hinsdale, Illinois Chevrolet dealer--and I decided in 1968 we needed an upgrade from the McKee MK VI we had been campaigning. I found a Lola T70 MK3B in California that was owned by Carol Shelby’s company. It had been driven the previous year by Peter Revson for Dana Chevrolet. Peter was later killed in an F1 accident while testing in Africa. I flew to California and went with some people from Shelby to Willow Springs for testing. Wow! It was the fastest car I had ever driven even though it was powered by a small block Chevrolet. I discussed it by phone with Jack. We agreed to buy it. We paid $10,000 for the car, packaged and delivered to the airport, extra engine, wheels and lots of spare parts.

The car was flown to Chicago where it was readied for its first race, the 1968 500-miler at Elkhart Lake. I had renewed my friendship with Jerry Entin while in California. He agreed to co-drive with me. The car was ready--painted as it arrived in primer, engine rebuilt by Traco, etc. Jerry arrived in Chicago. As a low budget operation, he stayed at my house. We arrived at Elkhart Lake and I qualified. Not sure where. I started and early in the race braked hard coming into Canada Corner. The car did a 180 and backed into the foliage next to the track. No real damage but the end of the race for Team Douglass. It turned out that one of the many team volunteers had not tightened both master cylinder caps. The rear drained and thus the braking problem. SORRY JERRY!

Federal officials unsure about California bailout

In the Los Angeles Times, an article by Peter Nicholas and Richard Simon addressed this issue. I cannot understand how we we can bail out California if they do not have a plan on how it would be repaid from current revenues not projected ones., It my understanding that California is one of the most highly taxed states in the country. Where is their fiscal responsibility? Can you tax yourself out of this? I do not think so. You need to reduce payment to those that are not paying taxes and are enjoying our free services. Get the budget balanced, determine how the government loan, if any, is repaid, and set a budget that reflects current revenues.

http://www.latimes.com/news/local/la-me-california-budget22-2009may22,0,153010.story