Tuesday, September 20

From the readers

+ John commented on one of the Katrina posts that the governmental consequences may be similar to those in following the Kobe earthquake. I asked him to elaborate and he responded with an email that should be a post in itself. So here it is!

Tomiichi Murayama's government was an unstable coalition to start with so its defeat at the ballot box 12 months after the quake probably wasn't that surprising. The government was damned for not being able to mount an effect response and for hampering efforts by people who were trying to.

One thing I didn't realise was that it was only two months after the quake when the Tokyo subway was hit with sarin gas. Not a good year to be the prime minister of Japan.

Here are a few relevant links:


+ Paul sent me three editorials from the Wall Street Journal on the airline situation. (He worked hard at it, too, because of the email address change). Thanks, Paul!  Please comment, Paul (and everyone else). My thoughts:
  • 1st, Coffee, Tea or Bankruptcy by Robert Crandall (former CEO of American)
    • the 'legacy' carriers may have changed a lot, but not enough
    • he blames government regulation, unions, and lack of investment in infrastructure
    • he complains that carriers should be allowed to be more radical in Chapter 11
    • finally here he gets to the market: carriers could sell off some of their assets
    • he blames management for dumb labor deals
    • 'the U.S. badly needs a vibrant, growing and successful aviation industry'.
      • True. Don't we all...
  • Come Fly With Congress (WSJ Editorial staff)
    • Pensions: bad
    • Hopeful that Northwest and Delta coordinated so they could merge.
  • For U.S. Airlines, a Shakeout Runs Into Heavy Turbulence
    • Why is the air market so jacked up? they ask
    • Airlines in bankruptcy continue to fly so competitors can't raise prices.
      • Now we're getting somewhere...
    • They can't lay people off.
      • This is a problem.
    • We're travelling more and paying less (inflation-adjusted) than in the past.
      • At the expense of tax-payer subsidized airlines, which is a problem. Allow me to go libertarian for just a minute: Cut those taxes. Quit subsidizing. Let the market go to work and let people decide how to spend their 'rebate' relative to air travel. Let the system adjust itself.
    • "There's nothing wrong here," says Severin Borenstein of the University of California at Berkeley, an economist who studies the dynamics of airline deregulation. "From a consumer perspective, prices are low. Levels of service rebounded quite nicely after 9/11. There's no sign of inadequate investment. We should stop worrying and learn to love bankruptcy, which is simply the transfer of assets from equity holders to debt holders."
      • In my mind, that adds up to little likely change soon (barring something drastic). Oh well.
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