,

September News and Notes

Getting Bang for the Buck

There is news coming from Washington that the Federal Government may fund public works projects to address aging infrastructure, such as bridges and dams. In addition to the improvements themselves, such a program would provide an economic boost through the employment of engineers and construction workers needed to build the projects. Naturally, this has evoked memories of similar programs that came out of FDR’s New Deal. The question is: would the proposed projects have the kind of long term economic benefits associated with earlier projects? Throughout America’s history, major projects, whether publicly or privately funded, have provided a continuing boost to the economy, long after their completion. The Erie Canal, Transcontinental Railroad, Tennessee Valley Authority, Hoover Dam and even the Interstate Highway System, all provided long term economic benefits by either opening new areas for development, or by making it easier to transport goods to far-flung markets.

There is a lesson here for businesses contemplating their own capital expenditures. Placing an emphasis on acquiring capital assets with lower operating costs or the ability to increase the efficiency of producing and delivering products and services will contribute to better operating results and overall profitability. Delivery trucks with higher gas mileage will help lower expenses. High efficiency production tools and equipment will help increase productivity. While the initial motivation for capital expenditures may be to replace aging vehicles and machinery, focusing on high efficiency models may produce even more benefits for years to come.
 

AIG May Regain Independence

One of several icons of the debt collapse induced recession was massive AIG.  One of the first financial companies to receive government funds to avert a potential collapse, AIG was considered "too big to fail."  Well, now it seems that a plan is coming together that will allow, over time, AIG to return to its status as a public company, while allowing the Federal Government to recover some or all of its investment.  That would be good news for both parties.

This article from The Wall Street Journal explains the anticipated process, and how it all might play out.

http://online.wsj.com/article/SB10001424052748704190704575490162065052900.html?mod=dist_smartbrief

Positive Economic Outlook

It seems that most of the daily news about the economy is negative, even as things improve.  It's nice when prominent business figures come together to support a brighter view of the future, along with their vision of how it might unfold.  Warren Buffett, Steve Balmer and General Electric Chairman Jeff Immelt spoke at a recent conference, sharing their views on why and how the American economy will thrive again.

This article from USA Today provides some details of their presentations.

http://www.usatoday.com/money/economy/2010-09-13-buffett-ballmer-immelt_N.htm