Economic revival

There is a quote by B.C Forbes that goes, "The victors of the battles of tomorrow will be those who can best harness thought to action."

Yesterday I watched a speech given by President Obama in Indiana where he announced a grant to the local factory to build electric vehicles or a component thereof. The actual grant was one of many from the stimulus and similar announcements were apparently being made by the Vice President and other members of the cabinet.

What I found significant was that he talked about the need for American to take leadership in the renewable energy field.

I couldn't agree with him more, and the question is can we?

The Government stimulus and the bank bailouts have been widely criticized. However, they shouldn't be in fact they serve as real investments in America. As far as the bank bailouts, if the banks generally recover, as many of them seem to be, and they repay the Tarp money with interest computed at the Treasury rate, they are simply investments that transfer money borrowed by the Government to a future period. Since they provided needed reserves and allowed the financial system to recover they are in fact not a debt being handed to the next generation. Further, our stock positions in C and AIG may end up being profitable as well as the amounts we get for the warrants the financial institutions gave us.

Similarly, while it may take a while longer, the amounts provided to the Auto industry have similar potential. When I hear analysts arguing against them, they immediately assume we will never get paid back. I don't really know, but I do see some signs of recovery in the Auto industry, helped in part by Cash for Clunkers. So maybe that money will return to the treasury and not add to the debt down the road.

I would also like to address a comment I hear about cash for clunkers that sort of is inane yet often repeated. It is arguing that it is stealing sales from the future. There is no proof of this and further, what about all those sales that didn't happen between the middle of 2008 and now? I know that I have been thinking about replacing my wife's car and when I heard about Cash for Clunkers coming, decided to wait. Turns out her car doesn't qualify but I don't think I was the only one thinking that way. Further, cars wear out. There is some normal turnover cycle for cars and it is greater than the rate that we have seen recently. The cars being sold in this program are not just cars that would have been sold anyways. They are in many cases cars that should have been sold over the last six months. Another factor is that it is stirring other economic activity. There has been an uptick in used cars recently. Ever occur to anyone that it might be well worthwhile to buy a clunker if you don't already own one? Finally, every car turned in generates jobs, sales tax and improves gas mileage reducing the need for foreign oil and improving air quality. I challenge anyone to find a more productive Government use for the $3 Billion dollars.

Considering the need to reduce foreign oil dependence and increase jobs in this country, the investment in renewable energy has the potential to do both of these things. We need to be the ones to win the battles of tomorrow by harnessing thought to action. Every person working generates taxes, every product that gets built in this country creates jobs. A lot of the analysts who pooh pooh the stimulus, are in the financial sector and they don't care if the work is performed in this country or somewhere else as long as they can profit from it. I have no problem with them betting against America, and I also think the rest of the world has some wonderful investment opportunities that don't conflict with American prosperity. But if you are betting that America is down and not getting back up, I think you are going to lose that one.