There is in fact a solution to the current financial disaster in the automobile industry. This seems to be the most pressing problem to confront the incoming Obama administration and how they handle it may very well decide their effectiveness on other issues.

The problem, of course, is that to just let the auto companies go under would cause economic havoc in the current environment, yet to continually bail out the industry places the government in the business of making cars, which is not the proper role of government.

The solution is for the administration on day one to pass a law requiring all gas stations by 2012 to carry “STANDARDIZED exchangeable charged batteries”. An electric car, using these batteries, would then simply exchange their battery with a fresh one when depleted, much like filling up your gas tank. The government could then form a joint venture with the car manufacturers to produce the electric cars that use these exchangeable batteries. This would be more in line with the proper role of government, to help society with mandated changes that benefit the larger group.

The automobile companies would still be free to produce trucks and SUV’s, but without the help of the government. Thus, the government would stay out of the business of determining what sells or is popular.

Of course, as with any good idea, I’m not the first to think of this. Here are 3 links below concerning Better Place’s plan to do just that. What is needed is the government requiring this transition, to make it a reality.

Hawaii Endorses Plan for Electric Cars

While Detroit Slept By THOMAS L. FRIEDMAN

Better Place L.L.C.

If the Obama administration can make it past this first step without stumbling, they could build off this with many more projects. What comes to my mind immediately are:
1) modernizing our electric power grid infrastructure to transport the needed electricity;
2) deregulating the power grid to allow private energy producers access to transport their electricity to customers;
3) and tax breaks for wind farms and solar power plants to jump start the industry.

But we will leave that for another day. For now, let’s just pass the “Electric Car Battery Exchange” law.

I think basically I agree with Mr. Sirota that the bailout money hasn’t been used efficiently. Here is a link to a column he wrote on the same subject.

General Motors’ actions over the last few years has hardly made a very good case for the government saving it from bankruptcy. Micheline Maynard has written 2 scathing articles recently for the New York Times.

At G.M., Innovation Sacrificed to Profits

With Saturn, G.M. Failed a Makeover

Apparently, the company has had numerous chances to make structural changes that would have helped its’ current plight. In particular, GM financially strangled the Saturn division which was all about a new approach to running the business.

In addition, I can’t help mentioning the recent public relations debacle of the executives flying in on their corporate jets. In my opinion, the worst part was their response of driving to Washington the second time, a complete PR stunt. After that, it’s hard to imagine any of the executives have any sincerity at all, or independent thinking for that matter, since they all drove in unison. Not one of them could figure out how silly it all looked.

So one is tempted to let them bear the fruits of their actions. But at the same time, having the entire auto industry shut down would be a disaster to the current economy.

My partial solution to the predicament is for the government to form a separate joint venture with GM to build fuel efficient, hybrid and electric cars (with different management obviously), possibly even using the Saturn division as a starting point. Although this doesn’t save all of the auto industry, it would assure that the U.S. is still a player in the business.

In regards to solving the credit crunch in the financial system, I have an alternative to continually providing select banks with fresh capital or buying up their bad securities. Both of these plans don’t appear to be working. Plus, neither of these ideas is particularly fair to the smaller banks or to the taxpayer, which is funding all of this.

Instead, the government should set up a national bank in direct competition to these banks, which are no longer performing their basic function in the financial market of providing liquidity to businesses. Then, to keep their business clients the banks will have to start using their capital as intended, and if they can’t survive in the current financial environment at least there will still be the national bank available to maintain liquidity. Fortunately, the trend seems to be heading in that direction.

A November 24 New York Times article states that the Federal Reserve and the Treasury intend to do pretty much that. Below is a quote from the article:

In effect, the program would create a government bank to finance hundreds of billions of dollars in commercial debt, like car loans, student loans and business leases. The Treasury is expected to contribute $10 billion to $20 billion in seed capital, which would come from the $700 billion originally provided to shore up the financial system. The Federal Reserve would lend the new entity as much as 20 times that amount.

Along the same lines, a Bob Herbert column on the same day states that Senator Chris Dodd is sponsoring a bill that would create an infrastructure bank.

Senator Chris Dodd of Connecticut is sponsoring a bill that would create an infrastructure bank with a bipartisan board of directors and a chief executive to be appointed by the president and confirmed by the Senate.

Both are moves in the correct direction. I might add that a similar approach could be used to finance wind and solar energy development, which has been waiting for government backing to jump start the business for many years.

I feel compelled to not be left out, and to describe what I think the next administration’s priorities should be also. So here goes:

Fiscal Stimulus Package
There seems to be general agreement that the economy is in a precarious state and needs a stimulus package. Lowering interest rates via monetary policy clearly won’t be sufficient in this situation. This is just basic economic theory. Robert Reich, an informal advisor to Obama states pretty much this in a recent article he authored. Further, I have no problem with how he intends to spend the money, essentially on infrastructure projects, which from an economic standpoint is probably the most direct way to put people back to work. His quote:

“infrastructure” — repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation

In addition, he mentions health care and child care as an appropriate way to stimulate the economy, which I also agree with.

One other area, that is mentioned in the comment section of the article, would be “technology infrastructure”, such as broadband to rural areas and computers to low income areas.

It is interesting that Reich doesn’t include bailing out homeowners or the auto industry as the correct use of money from a stimulus package. His quote:

This means bailing out Wall Street or the auto industry or the insurance industry or the housing industry may at most help satisfy creditors for a time and put off the day of reckoning, but industry bailouts won’t reverse the downward cycle of job losses.

This is a debatable point, but I will leave it for a later discussion.

But now, with the immediate crisis dealt with, what should Obama’s long term objectives be? Here are my ideas.

Renewable Energy
This has got to be on anyone’s short list. We should invest heavily in solar, wind, and very importantly, an upgrade of our electrical power grid. This compliments very neatly the proposed stimulus package mentioned above, which I also suggested previously in a post of mine on July 21, 2008. A point I also made in that previous post was that the rules regarding electrical transmission lines should be deregulated so that other small energy producers have a means to get their product to market. This should be done correctly, not like the past California energy deregulation fiasco. The exact mechanism I will save for another post. Now for the clincher, this should be paid for by a $1 to $2 per gallon tax on oil and gas. This might not be politically popular and possibly runs counter to the financial stimulus package concept, but it is truly necessary to make sure these alternative energy projects are economically viable and a gas tax is the best way to accomplish this.

Cars and Water
A by-product of our energy independence is that we can now have development in two other very energy hungry fields. With abundant electricity, we can concentrate on creating hybrid and all electrical cars. I’m sure Al Gore would be all for this. In addition, the shortage of water, which doesn’t seem to be discussed much, is a problem just waiting to happen. Desalting plants are an obvious solution, but are very energy intensive. With cheap electricity from renewable sources we could begin to address this emerging problem.

Financial System
Although curing the banking system may not be a solution to our economic woes, they sure were a contributing factor to the economic downturn. The essence of the problem is that people/institutions in the financial sector currently are not trusting each other to remain solvent. The solution is simply “send in the auditors”, with transparency comes confidence in each other. Obviously, our government regulating of the financial markets needs an overall, which I have confidence the Obama administration already has a fairly good handle on, something I wrote about in a previous post. The essence of his approach, which I agree with, is expressed in a direct quote from Obama’s plan:

Regulate financial institutions for what they do, rather than who they are.

Universal Health Care
It seems pretty obvious that some sort of health care reform will be passed with the next administration. I personally favor a simple plan where everyone pays into the same system and everyone is covered. This is the simplest, easiest, and cheapest. Political considerations, however, make me think that the eventual plan will be anything but simple. Too bad. Having health care covered by the government instead of individual companies is critical to having U.S. companies regain competitiveness in the international market, where companies from other countries don’t have this burdensome expense.

Immigration Reform
I’m not sure I have a solution for this quagmire, but the issue clearly needs to be addressed. Just yesterday I overheard a conversation with painters that just happened to be painting the outside of my office building which said it all. The owner of the painting business was berating his employee for lying to him about having a green card and social security number, when they were actually bogus documents. The employee was apologetic about lying, but was clearly forced into it when applying for the job. The owner was upset about being lied to and being vulnerable to losing his business license for hiring illegal workers. But most remarkably, they both dropped the subject and went back to work. They both needed each other, despite all the unnecessary controversy. Something is clearly wrong with this picture and it needs to be resolved.

International/Terrorism
This is probably too large an issue to be solved in a few sentences, but one idea which I’ve suggested in an earlier post, is to devote our resources to improving the economic conditions of the people in North West Pakistan, rather than just fighting them as adversaries. Just too simple to believe.

Legal Drugs
Now for the more controversial proposals. But just because it’s controversial doesn’t make it incorrect. We waste enormous resources fighting a victimless crime, that ends up funding all sorts of bad actors from South American drug cartels to the Taliban in Afghanistan . In addition, I take personal affront that those that insist on criminalizing drugs have the self righteousness to think that their judgement is better than others and should then tell others how to conduct themselves in society. The whole issue is wasted energy.

Election Reform
I may very well lose my readers on this one, but I have my own theory as to how to reform the national election process. I describe it in more detail in my wiki here, but the essence is as follows:

Changing via legislation the actual process that we elect the president I think would be too controversial to succeed. So I won’t even suggest that, but instead advocate one party becoming the dominant party, so that the nomination of someone by that party is by default the winner of the election. This could be done if the party’s selection process is vastly superior to any other party’s and consistently provides the best candidate.

The fundamental problem with our current selection process is that we select solely by popularity (much like creating a famous movie actor) and to create this popularity huge sums of money is required to sway millions of people. Instead, the candidate should be selected by those close enough to him to ascertain the person’s actual character but still have these people reflective of the collective will of everyone else.

My implementation of this would be to have all voters organized in approximately 100 people affinity groups, not necessarily geographically, but by their interests. The internet lends itself to this kind of organization quite naturally. In addition, Obama’s recent use of the internet during the election has already created a similar organization. Then each of these groups select a representative to a convention of about 1000 people, which then in turn select their representative. You now have something similar to Britain’s House of Parliament. (100 people x 1000 people convention x 1000 members of parliament = ~100,000,000 people) The parliament then selects the president. In this case, the parliament would just be members of the one political party. The advantages to this are:
-candidates are selected from peers that have personal knowledge of the person;
-the massive election campaign funds are no longer needed, thereby reducing the pressure for corruption;
-and the president is directly responsible to a small group of people with knowledge of his behavior.

**********

That’s my plan for the new administration. I’m sure there’s more, but I think that’s enough for now.

NOVEMBER 14,15, 16
& 21, 22, 23 ROCK ‘N ROLL REVUE.
Live! With Billy Schieve and Friends
Dance to the rollicking tunes of yesterday.
Eagles Hall
Benefit for Gloriana, $20. No host buffet and bar. 964-SHOW

November 12, 2008
This first in a series of public workshops is designed to create opportunities for community input and dialogue about future redevelopment of the 415-acre former mill property in Fort Bragg. The workshops are part of a comprehensive land-use planning process to develop a “Specific Plan” that will guide how and where future redevelopment occurs on the property.

Wednesday, 6 p.m. to 8 p.m.
Dana Gray Elementary School
1197 E. Chestnut St., Fort Bragg

Mendocino Theater Company Presents
The Cripple of Inishmaan
Thursday, Nov 6, 8:00 p.m.

Complimentary wine, coffee, hors d’ouevres at 7:00 p.m

Come enjoy an unforgettable evening at the theater, and help promote water safety education. The Mendocino County Water Safety Coalition, together with the Mendocino Theater Company in Mendocino, invites you to an evening of live entertainment among friends on Thursday, November 6. Your ticket includes complimentary wine, coffee and foods prepared especially to show our thanks for your support.

Tickets: $40.00 (Donors will receive tax-deductible confirmation of a portion of the proceeds.)

Call (707) 937-5804 for ticket information, or visit the office at the State Parks Mendocino District headquarters, two miles north of Mendocino on Highway one, across from Russian Gulch State Park. The office is open M-F
8:00-4:00.

About the play: The inhabitants of a small island in the west of Ireland are jostled out of their routine by the arrival of a Hollywood film crew making a documentary about the life of the islands. Billy, the ‘cripple’ of the title, seizes on this as opportunity to make his escape. The result is a black humor blend of Irish whimsy tempered with social insights into the mores of a community that may not be as remote as geography would suggest.

About the author, Martin McDonagh: Martin McDonagh was born in London in 1971 to expatriate Irish parents. He has been resident playwright at the Royal National Theatre in London, and has won numerous awards, including the Evening Standard Award for Most Promising Playwright, and four Tony Awards for The Beauty Queen of Leenane when it opened on Broadway. He lives in London.

About the Water Safety Coalition: The Coalition will use the donated funds for public education projects aimed at reducing water recreation accidents. The group is an affiliation of concerned citizens, government agencies, and non-profit organizations with support from county businesses that includes:
American Red Cross, Sonoma County Chapter
California Department of Forestry and Fire Protection
California State Parks
The Coast KOZT-FM 95.3 / 95.9
Mendocino Area Parks Association
Mendocino Land Trust
NOAA’s National Weather Service
Point Cabrillo Lightkeepers Association
Surfrider Chapter Mendocino County
United States Coast Guard
United States Coast Guard Auxiliary
United State Army Corp of Engineers
Mendocino Volunteer Fire Dept.

Yes–dancing will abound on Halloween….

At the Caspar Community Center: Kevin and the Coconuts will swing the steel from 8 to late
At Frankie’s in Mendo: Pura Vida and other features will rock the street
scene on Ukiah st. from 5 to 10
At the Arena Theater in Point Arena: Salvador Santana band–yes he is the
son of Carlos–playing funky Latin influenced Hip Hop with DJ Sister Yazmin
opening, 8 to late

Mendocino Land Trust Dine-Out Night
Hosted by the MacCallum House Inn & Restaurant

You are invited to support the Mendocino Land Trust by enjoying dinner
at the MacCallum House Restaurant!

Wednesday, November 5, 2008
5:30 p.m. to 9:00 p.m.

The MacCallum House Inn & Restaurant will graciously be donating all
profits from the evening to the Mendocino Land Trust, so gather your
friends and family for a wonderful dining experience in Mendocino.

Reservations are recommended - call 707-937-0289. For more
information, call Jenny at 707-962-0470 or email
jhall@mendocinolandtrust.org.

The MacCallum House Restaurant will serve dinner from its regular
menu. The MacCallum House Inn & Restaurant is located at 45020 Albion
Street, Mendocino, CA.