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A little exercise in basic economic theory
Bill Taylor
It seems to me
http://xeniagazette.1upmonitor.com/main ... M=31130.33
(no photographs)
It seems to me that the battle to make sure that the end of the month doesn’t come before the end of the money is taking toll on more and more folks in this country. We hear stories about how families are losing their homes because they can’t keep up the mortgage payments. Then there are workers facing decisions on how to get enough money to pay for gas to get to work. Lots of tales of downsizing and business closing and such as the economy appears to be in a downward spiral. And all that makes me wonder how the rich and famous are managing to weather this financial storm.
One of these folks who might not be a familiar household name is Paul Allen, one of the founders of Microsoft who reportedly started that business, along with Bill Gates, in a garage some years ago. According to Forbes, the outfit that tracks such things, Mr Allen is worth somewhere around $18 billion, give or take a billion or two depending on how the market is on any given day. Anyway, Mr. Allen is a guy who believes in living it up a bit - you know, if you got it, why not use it.
He currently owns a yacht, the Octopus, which is one of the largest in the world. At 414 feet long, it’s about the size of one of our Navy frigates (a warship that is the next smaller class than a destroyer.) Since we don’t see many Navy frigates around our part of the country, just imagine a ship so big that it wouldn’t fit into a football field including both end zones. It would be about 50 feet too long.
Anyway, according to the yachting news folks, this little toy comes fully equipped with two helicopters and a 60 foot submarine. Having a helicopter or two on board makes some sense just in case someone needs to make a quick beer run, but why the submarine? Oh, yes, he reportedly has former Navy Seals as crew members, possibly to repel boarders and help subdue rowdy guests, but that’s just a rumor.
So how is the economic situation impacting Mr Allen? I don’t think the sub-prime mortgage lending problems will make much difference - I doubt he is faced with
foreclosure because of an increase in a variable rate loan on his yacht. In fact, just how much he paid for the Octopus is somewhat of a mystery, but the best guess is that he laid out somewhere about a quarter of a billion (that’s with a “bâ€) dollars.
It’s just as difficult to figure out what it costs to run the Octopus. For example, the size of the crew is not public knowledge, but best estimates place it between 50 and 55. Even with that approximation, the size of the payroll is still anybody’s guess. But where we just might get an insight into the impact of today’s economic situation is in the cost of gassing up his ocean-going dinghy.
Now these ships run on marine diesel and, as anyone who drives by a local gas station knows, the cost of diesel fuel has jumped even more than the cost of gasoline. Suppose he were to pull up to the equivalent of a gas station for ships and ask for a fill up. One tank of fuel amounts to 224,400 gallons for this little jewel. At the current going rate for marine diesel of about $3.50 a gallon, that fill up would run about $785,400.
You don’t suppose they have self-service, do you? Then, too, I wonder if the attendant asks, “Cash or credit?†Can you imagine what his credit card bill must look like? On the other hand, just think of the how many points he could accrue with a Capital One card.
OK, so we’ve had a little fun and maybe raised a bit of economic envy with this exercise, but let’s take another look. Mr. Allen is spending money on the Octopus - likely millions of dollars a month. Just think of the salaries alone for his crew plus the expenses for supplies and maintenance. And all that puts money into the economy.
Now I suppose there are those who will make the argument that yachts are a waste of money. This is the same kind of thinking that led to the politically correct decision a few years ago to “soak the rich†by putting punishing taxes on yacht construction. The net result was that the wealthy simply put their money elsewhere and huge numbers of our shipyard workers lost their jobs. By the time this blunder was recognized and corrected, it was too late to save much of the industry.
Our economy is based on consumer spending - that’s abundantly clear. If folks at all economic levels of our economy stop spending, for whatever reason, the entire system slows down. If goods and services are not being bought and sold, jobs are lost because businesses cannot afford to keep employees on the payroll and the laid-off employees no longer have the money to buy goods and services. So the downward cycle continues.
OK, so what does this have to do with Paul Allen and other rich folks? Just this, I sure hope they will spend their wealth and lots of it right here in our country. Houses, airplanes, yachts, whatever - just spend, spend, spend. Put their money back into our economy where it will create more jobs so workers can purchase more goods and services which in turn will create more jobs and the upward cycle continues. That would likely do more good in the long run than our government going untold billions of dollars into debt in an effort to “jump start†the economy. Most folks want jobs, not handouts - that’s just basic economic theory. At least that’s how it seems to me.
Bill Taylor
It seems to me
http://xeniagazette.1upmonitor.com/main ... M=31130.33
(no photographs)
It seems to me that the battle to make sure that the end of the month doesn’t come before the end of the money is taking toll on more and more folks in this country. We hear stories about how families are losing their homes because they can’t keep up the mortgage payments. Then there are workers facing decisions on how to get enough money to pay for gas to get to work. Lots of tales of downsizing and business closing and such as the economy appears to be in a downward spiral. And all that makes me wonder how the rich and famous are managing to weather this financial storm.
One of these folks who might not be a familiar household name is Paul Allen, one of the founders of Microsoft who reportedly started that business, along with Bill Gates, in a garage some years ago. According to Forbes, the outfit that tracks such things, Mr Allen is worth somewhere around $18 billion, give or take a billion or two depending on how the market is on any given day. Anyway, Mr. Allen is a guy who believes in living it up a bit - you know, if you got it, why not use it.
He currently owns a yacht, the Octopus, which is one of the largest in the world. At 414 feet long, it’s about the size of one of our Navy frigates (a warship that is the next smaller class than a destroyer.) Since we don’t see many Navy frigates around our part of the country, just imagine a ship so big that it wouldn’t fit into a football field including both end zones. It would be about 50 feet too long.
Anyway, according to the yachting news folks, this little toy comes fully equipped with two helicopters and a 60 foot submarine. Having a helicopter or two on board makes some sense just in case someone needs to make a quick beer run, but why the submarine? Oh, yes, he reportedly has former Navy Seals as crew members, possibly to repel boarders and help subdue rowdy guests, but that’s just a rumor.
So how is the economic situation impacting Mr Allen? I don’t think the sub-prime mortgage lending problems will make much difference - I doubt he is faced with
foreclosure because of an increase in a variable rate loan on his yacht. In fact, just how much he paid for the Octopus is somewhat of a mystery, but the best guess is that he laid out somewhere about a quarter of a billion (that’s with a “bâ€) dollars.
It’s just as difficult to figure out what it costs to run the Octopus. For example, the size of the crew is not public knowledge, but best estimates place it between 50 and 55. Even with that approximation, the size of the payroll is still anybody’s guess. But where we just might get an insight into the impact of today’s economic situation is in the cost of gassing up his ocean-going dinghy.
Now these ships run on marine diesel and, as anyone who drives by a local gas station knows, the cost of diesel fuel has jumped even more than the cost of gasoline. Suppose he were to pull up to the equivalent of a gas station for ships and ask for a fill up. One tank of fuel amounts to 224,400 gallons for this little jewel. At the current going rate for marine diesel of about $3.50 a gallon, that fill up would run about $785,400.
You don’t suppose they have self-service, do you? Then, too, I wonder if the attendant asks, “Cash or credit?†Can you imagine what his credit card bill must look like? On the other hand, just think of the how many points he could accrue with a Capital One card.
OK, so we’ve had a little fun and maybe raised a bit of economic envy with this exercise, but let’s take another look. Mr. Allen is spending money on the Octopus - likely millions of dollars a month. Just think of the salaries alone for his crew plus the expenses for supplies and maintenance. And all that puts money into the economy.
Now I suppose there are those who will make the argument that yachts are a waste of money. This is the same kind of thinking that led to the politically correct decision a few years ago to “soak the rich†by putting punishing taxes on yacht construction. The net result was that the wealthy simply put their money elsewhere and huge numbers of our shipyard workers lost their jobs. By the time this blunder was recognized and corrected, it was too late to save much of the industry.
Our economy is based on consumer spending - that’s abundantly clear. If folks at all economic levels of our economy stop spending, for whatever reason, the entire system slows down. If goods and services are not being bought and sold, jobs are lost because businesses cannot afford to keep employees on the payroll and the laid-off employees no longer have the money to buy goods and services. So the downward cycle continues.
OK, so what does this have to do with Paul Allen and other rich folks? Just this, I sure hope they will spend their wealth and lots of it right here in our country. Houses, airplanes, yachts, whatever - just spend, spend, spend. Put their money back into our economy where it will create more jobs so workers can purchase more goods and services which in turn will create more jobs and the upward cycle continues. That would likely do more good in the long run than our government going untold billions of dollars into debt in an effort to “jump start†the economy. Most folks want jobs, not handouts - that’s just basic economic theory. At least that’s how it seems to me.
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