While states like Indiana, Ohio, Wisconsin and New Jersey are founding and creating the way forward for excellent Republican government, Missouri’s Republican Party has decided that state government centralized planning for special interest groups is the way to go.
Not that long ago, St. Louis’ extremely well-located airport, Lambert International, constructed a third parallel 10,000 foot runway for future growth. Since the 9/11 attacks and the demise of TWA through its merger with American Airlines, the new runway has become a giant parking lot of disuse.
Now come some dreamers who say that we can overcome the underused status of Lambert International Airport by creating an “Aerotropolis.” What is an Aerotropolis, you might ask?
The word Aerotropolis was first coined by author Dr. John D. Kasarda. He basically describes modern airports as the core of new development, including manufacturing, distributing, hotels, retail, entertainment, residences and services. The airport will eventually transform itself into an Airport City with access through the air, rail, road and/or water, with tens of thousands working at or around the core. These effects around the core can extend as far as fifty miles from the airport.
In the period just before the 9/11 attacks, TWA and Lambert International Field had more than reached a regional, if not national ascendancy, as the best Midwestern hub outside of Chicago and Dallas. And, so all of the Aerotropolis effects had occurred to the extent they were going to occur before TWA’s demise. Lambert International had already become the Aerotropolis of the St. Louis region. At its zenith in 2000, TWA had over 500 flights a day out of St. Louis.
So, politicians, being what they are, have concocted a theory to construct a Chinese cargo hub to restore economic vitality to Lambert International:
Today, some 130 million of a total of 150 million pounds of freight from China is flown in and out of O’Hare Airport in Chicago with a total of 25-30 weekly flights. O’Hare is a very congested airport and frequently deals with weather issues. The Chinese like St. Louis’ central location and weather, the fact that our airport is underused and that it has plenty of capacity to grow their operations.
If this is true, why don’t they start flying here immediately? We already have plenty of cargo facilities that are under-employed from the TWA era. But, why does anyone in Missouri want to help facilitate the Chinese export their currency-subsidized exports back into our Missouri? This will only result in the loss of more Missouri-based jobs in manufacturing. And, as a matter of fact, there are St. Louis-based companies that are very near Lambert International that have moved production facilities to China. Why should they benefit by having Missouri taxpayers subsidize their shipping operations to make production in China even more attractive and ship more jobs to China?
And now we find out why the Chinese are definitely not yet using Lambert International at all:
For Lambert to become attractive to freight forwarders (shippers) a minimum number of flights per week are required. Air freight is very costly so it is used exclusively for higher-priced and time-sensitive goods. If Lambert had only two flights a week and an airplane would break down it would be three days before the next flight would be available and that’s just too long for perishables and other time-sensitive cargo. We could simply not compete.
A 5-7 days a week flight schedule would have to be offered to raise serious interest and expanding operations to around 20 flights a week would be necessary for a long-term sustainable and profitable proposition.
The goal of the Aerotropolis bill is to give freight forwarders, manufacturers, distribution and shipping centers an incentive to move to or start operations in the St. Louis metro area to facilitate export to China on China Cargo Airlines.
It offers freight forwarders tax incentives per pound of freight exported (only outbound flights are subsidized!) as well as tax breaks on bui... Continue
Last week's stock market turmoil was a reminder that America continues to struggle to recover from the financial collapse of 2008-2009. Benchmarks of our economic progress, or lack of it, are over 40 million people on food stamps, unemployment rates stuck over 9%, and GDP growth slowing, as it just missed expectations of 1.3% growth. The Obama Administration's massive deficit spending has almost doubled the publicly held debt which was $5.808 trillion on 9/30/08, or 40% of GDP, to an estimated $10.672 trillion as of 9/30/11, or almost 71% of GDP. This is all just in 3 fiscal years. The road to recovery for most people looks longer than anyone expected.
But the American economy, being what it is, there are bright spots for some people. From the March 15, 2011 Wall Street Journal:
Warren Buffett's Berkshire Hathaway Inc. said Monday it will buy chemical maker Lubrizol Corp. for $9 billion, in its latest expansion into the industrial sector, where the billionaire investor has been seeking new avenues for growth.
Cash-rich Berkshire said Monday it will pay $135 a share and assume about $700 million of debt in its deal to acquire Lubrizol....
The purchase price represents a 28% premium to Lubrizol's closing price Friday on the New York Stock Exchange and is 18% above the stock's all-time closing high in October....
The deal was unveiled about two weeks after Mr. Buffett, Berkshire's chairman and chief executive, wrote in his annual letter to shareholders that he was "itchy" for a major acquisition.
Big business deals like this are often fraught with problems. This one resulted in a sticky disclosure problem about who knew what and when they knew it. From the April 27, 2011 Wall Street Journal:
A committee of Berkshire Hathaway Inc. directors pinned the blame on the stock-trading controversy dogging the conglomerate squarely on former executive David Sokol, saying he misled top executives, including Berkshire Chairman and Chief Executive Warren Buffett.
In a report released Wednesday, the audit committee of Berkshire's board said it has determined that Mr. Sokol's conduct and trading activities in the shares of a chemicals company that Berkshire recently agreed to buy violated the Omaha, Neb., company's standards of business ethics and insider-trading policies.
Striking a much harsher tone than Mr. Buffett did when he first disclosed Mr. Sokol's stock purchases in late March, the report criticized Mr. Sokol's disclosures about them to Berkshire's senior management as "misleadingly incomplete," and said Mr. Sokol "violated the duty of candor he owed" Berkshire....
The report said Berkshire's board may consider legal action against Mr. Sokol, whose stake in Lubrizol rose in value from $10 million to roughly $13 million after Berkshire reached a deal in mid-March to acquire the company for $9 billion cash.
It is a principle of fair and transparent financial markets that people do not act on inside information to which they have access before the same information is released to the public when everyone can act on it at the same time. This is a constant problem in the financial markets. But, what we see here is a strict standard imposed on an executive making a $3 million profit on stock which he allegedly owned before his employer, Berkshire Hathaway, purchased the same company for $9 billion. Yes, it is good to see such high profile people in the financial industry arguing for and adhering to high standards of conduct in not utilizing inside information to increase profits outside a transparent market.
Very recently, another fascinating, if not controversial, member of the financial industry published its financial results. These results, like the American economy, were somewhat downbeat. From the July 20, 2011 Wall Street Journal:
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