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More From Silent Cal…

by coldwarrior ( 28 Comments › )
Filed under Economy, Elections 2016, History, Open thread at November 24th, 2014 - 7:00 am

Yeah,Norquist wrte the following article, as much as i dislike the guy because of his Muslim connections and his torpedoing of the repeal of the ethanol mandate (to keep gas prices high,yeah, THAT isn’t a tax! /), I must say…I enjoy the fact that he agrees with me. Blogmocracy ahead of the curve again! :lol:

Walker in 16? Yeah…I could vote FOR that.

 

What makes Wisconsin’s Republican Governor Scott Walker a good choice for 2016

coolidge at wash mem

After the GOP’s midterm-elections sweep, the Republican Party holds more U.S. House seats and controls more state houses than at any time since 1928. Having reached this goal, the GOP now needs to look for a 2016 presidential nominee to match this success.

President Calvin Coolidge, who sat in the Oval Office from 1923 to 1929, would be a smart model for the party. He reined in spending and reduced tax rates at a time when it was as needed as it is today. President Ronald Reagan admired Coolidge so much that he hung a portrait of the 30th president in his Cabinet Room.

One talked-about possible 2016 presidential candidate who shares many of Coolidge’s policy bona fides is Wisconsin Governor Scott Walker, who won his third statewide race in four years on Nov. 4. The two men have so much in common that it is worth seeing what Coolidge’s experience can tell us about a potential President Walker.

cal w rockefeller

Coolidge took office at an extraordinary period in U.S. history. During his presidency, America advanced from a nation in which the horse and buggy was one of the most efficient methods of travel in many places to one filled with Model T drivers honking at one another to move it. The advent and popularization of modern appliances like electric washing machines allowed women of the 1920s to get out of the house.

Coolidge rose to national prominence largely because of his actions during the 1919 Boston Police Strike. Coolidge was governor of Massachusetts, and he stood down police union bosses to put an end to the strike. He offered a sharp contrast to then-President Woodrow Wilson, silent and timid on an issue of national importance.

Coolidge’s limited-government approach made for both good policy and good politics — it fueled a stunning prosperity. Economic expansion under Coolidge was rapid, with the gross national product rising roughly 4.2 percent a year from 1920 to 1929, as Marquette University’s Gene Smiley explained in an Economic History Association report. This is impressive growth by 19th-, 20th-and 21st-century standards.

Wisconsin Republican Governor Walker addresses his supporters at a rally on election night in Milwaukee

A standoff with powerful bosses of government-employee unions is also what thrust Walker onto the national stage. The 2011 labor reforms that Walker championed and eventually signed into law sparked riotous protests in Madison. It cost $11 million to repair the damage done by union protesters at Wisconsin’s capitol building, considered to have one of the most aesthetically beautiful domes in the United States.

Republicans now have total control of 30 state legislatures — their largest advantage since Coolidge lived in the White House. The government reform and tax-relief measures enacted by Walker and other GOP governors are a big reason for this electoral success. Walker has made clear that more income tax cuts and creating a more competitive business-tax climate in the Badger State are among his top priorities for his second term. Coolidge did that at the federal level — and demonstrated the economic dividends that tax cuts can produce.

Veronique de Rugy of the Mercatus Center at George Mason University laid out the success of these Coolidge tax cuts. From a high of 73 percent, the top rate was reduced to 46 percent in 1924, and then was brought down to 24 percent by the time Coolidge left office.

coolidge signing bill

Walker has adopted the Coolidge tax model, chipping away at his state income-tax rates. He talks about eliminating Wisconsin’s income tax during his second term. He has asked his lieutenant governor, Rebecca Kleefisch, to hold tax-reform roundtables across the state. Given that tax reform is usually the most politically difficult undertaking for lawmakers, Walker is astute in getting constituent buy-in ahead of time.

The day after the 2014 midterms, the national punditry was ready to focus on the 2016 presidential contest. Coolidge’s record and how it compares to what Walker has done in Wisconsin make a strong case for his name to be on the short list of GOP contenders.

 

 

 

Schoolhouse Rock OOT

by Macker ( 19 Comments › )
Filed under Barack Obama, Entertainment, History, Immigration, OOT, The Constitution at November 23rd, 2014 - 10:00 pm

Who all here remembers Schoolhouse Rock? I’m sure we all do!
Well, the liberal folks over at SNL make a mockery of Обама’s recent act, utilizing one of the classic tunes from that series, “I’m Just A Bill“:

Too bad they didn’t depict Обама’s character in regal garb. But no matter. lobo91 is right: it would indeed be funny if it wasn’t so accurate.
It’s The Overnight Open Thread!

Canada Considers Fence On Southern Border To Stem Wave Of Illegal Immigration

by Bunk X ( 4 Comments › )
Filed under America, Canada, Elections 2010, Elections 2012, Humor, immigration, Immigration, Mexico, Politics, Russia, Satire, Special Report at November 22nd, 2014 - 10:54 pm

CAUTION

Mexico allows Central and South American immigrants to pass through her borders on 72 hour visas, and most of those people are headed for the porous southern border of the US. As these illegal immigrants pour in, local pressure builds, and now there’s another movement happening at the US – Canadian Border. Canadians don’t like it.

US Canada Border Fence

Here’s the full transcript from The Manitoba Herald 1 December 2010:

Border Fence Proposed
by Clive Runnels
The flood of American liberals sneaking across the border into Canada has intensified in the past week, sparking calls for increased patrols to stop the illegal immigration. The recent actions of the Tea Party and the fact Republicans won the Senate are prompting an exodus among left-leaning citizens who fear they’ll soon be required to hunt, pray, and to agree with Bill O’Reilly and Glenn Beck.

Canadian border farmers say it’s not uncommon to see dozens of sociology professors, animal-rights activists and Unitarians crossing their fields at night.  “I went out to milk the cows the other day, and there was a Hollywood producer huddled in the barn,” said Southern Manitoba farmer Red Greenfield, whose acreage borders North Dakota. The producer was cold,exhausted and hungry. He asked me if I could spare a latte and some free-range chicken. When I said I didn’t have any, he left before I even got a chance to show him my screenplay, eh?”

In an effort to stop the illegal aliens, Greenfield erected higher fences, but the liberals scaled them. He then installed loudspeakers that blared Rush Limbaugh across the fields. “Not real effective,” he said. “The liberals still got through and Rush annoyed the cows so much that they wouldn’t give any milk.”

Officials are particularly concerned about smugglers who meet liberals near the Canadian border, pack them into Volvo station wagons, and drive them across the border where they are simply left to fend for themselves. “A lot of these people are not prepared for our rugged conditions,” an Ontario border patrolman said. “I found one carload without a single bottle of imported drinking water. They did have a nice little Napa Valley cabernet, though.” When liberals are caught, they’re sent back across the border, often wailing loudly that they fear retribution from conservatives. Rumors have been circulating about plans being made to build re-education camps where liberals will be forced to drink domestic beer and watch NASCAR races.

In recent days, liberals have turned to ingenious ways of crossing the border. Some have been disguised as senior citizens taking a bus trip to buy cheap Canadian prescription drugs. After catching a half-dozen young vegans in powdered wig disguises, Canadian immigration authorities began stopping buses and quizzing the supposed senior-citizens about Perry Como and Rosemary Clooney to prove that they were alive in the ’50s. “If they can’t identify the accordion player on The Lawrence Welk Show, we become very suspicious about their age,” an official said.

Canadian citizens have complained that the illegal immigrants are creating an organic-broccoli shortage and are renting all the Michael Moore  movies. “I really feel sorry for American liberals, but the Canadian economy just can’t support them,” an Ottawa resident said. “How many art-history majors does one country need?”

In an effort to ease tensions between the United States and Canada, Vice President Biden met with the Canadian ambassador and pledged that the administration would take steps to reassure liberals. A source close to President Obama said, “We’re going to have some Paul McCartney and Peter, Paul & Mary concerts. And we might even put some endangered species on postage stamps. The President is determined to reach out,” he said.

The US and Canada are not the only countries experiencing an influx of illegal immigrants crossing their southern borders. Check out this image from Vladikavkaz, Russia:

illegal-immigrants-in-russia

If the Theory of Global Worming is true, there’s going to be a massive influx of people from all regions south of the Arctic Circle, judging from the current migration patterns.

Sure, Canada has Molson’s and poutine, but I’m gonna stay put and watch the parade. By the way, The Manitoba Herald folded in 1877, there is no such person named Clive Runnels, and I am not the author of the quoted satirical article. Go figger.

Do the Republicans Now Own the Coal Vote?

by Iron Fist ( 83 Comments › )
Filed under Economy, Energy at November 9th, 2014 - 7:02 am

Politico seems to think so:

The Republicans’ romp this week may have permanently turned coal country from blue to red.

Coal-heavy districts in West Virginia, Kentucky and Illinois that had been steadily moving away from Democrats in recent elections appear to have completed that shift Tuesday, when they overwhelmingly backed Republicans who vowed to oppose what they call President Barack Obama’s “war on coal.”

“This has been a growing trend in coal politics and will outlast President Obama’s tenure,” Wheeler said.

Gee, you tell people that you intend to put them out of business (and, thus, out of a job), and they’ll vote against you for it? Who could have seen that coming? In reality, it doesn’t make much sense for anyone in the entire energy sector, with the exception of “green” energy that relies on government subsidies to stay afloat, to vote for the Democrats. It isn’t just coal. The Democrats hate fracing. They hate offshore drilling, too. And they really hate nuclear and hydroelectric energy. Basically, if you are in the energy sector, the Democrats want you out of business.

Think about that for a minute. Damned near everything that we think of as “Modern Civilization” requires energy to function. It always kills me to see the hippies protesting power plants while yakking on their cell phones and surfing the web on their iPads. The anti-energy people are some of the lest self-conscious people out there. You can think of them as a human sponge (the sea creature). They sit there and take all the energy in that anyone else does, but they do it simply by virtue of being. They don’t have any real awareness of where it comes from or what is necessary to produce it (you get the same kind of thing with people that think meat comes from a grocery store).

All of this is good news for the GOP, not just for this election, but for the coming elections:

In West Virginia, once a long-time Democratic stronghold, Republicans will take control of both houses of the state legislature for the first time since 1931. Republicans picked up seven seats in the state Senate to bring the balance to 17-17, and then Democrat Daniel Hall switched parties Wednesday to give the majority to the GOP.

Voters there also elected Rep. Shelley Moore Capito as their first GOP senator in 56 years, and Republicans won three congressional contests, even kicking out 38-year incumbent Rep. Nick Rahall.

[snip]

The “policies and priorities espoused by the national Democratic Party, as reflected in their platform, don’t resonate with the priorities, beliefs and feelings of the people” of West Virginia, said Evan Jenkins, the Republican who will take Rahall’s place in Congress.

“Southern West Virginia in particular has been devastated economically over this last six years in the war on coal,” he said. “It’s very difficult for West Virginia Democrats to explain to the voters why their party maintains such an anti-coal agenda.”

Now, keep in mind that this is just West Virginia. This won’t have the same impact that, say, California waking up from her slumber and recognizing what the Democrats hath wrought would have. But it is a start, and it may be the leading edge of a permanent shift (as much as anything in politics can be termed “permanent”).

While West Virginia has been trending toward the Republican Party for years, in Kentucky, where Sen. Mitch McConnell beat Grimes by 15 percentage points, Obama’s policies on coal appeared to have helped the GOP, he said.

McConnell won by the largest margins in the state’s coal-producing counties, often topping the 70 percent mark. “I’m not sure some of those counties he’s won ever,” said Bissett. The senator won 47 counties where more than 60 percent of voters are registered Democrats.

As the next Senate majority leader, McConnell says Republicans “will use the power of the purse to try to push back against this overactive bureaucracy,” pointing to the “war on coal” as a prime example.

While the new GOP majority in Congress means fossil fuels will see more support in Washington, the loss of so many Democrats from coal-heavy House districts may make it harder for Republicans to reach across the aisle on measures to benefit the industry.

With the defeats Rahall, Bill Enyart (D-Ill.) and John Barrow (D-Ga.), “it is going to be much harder crafting bipartisan legislation on energy and environmental issues in the House,” Wheeler said.

Enyart, a co-chairman of the congressional coal caucus, represented a southern Illinois district heavily reliant on coal, and Barrow and Rahall held the center on the House Energy and Commerce Committee as “go-to Democrats for sponsorship of Republican-led and industry-favored legislation and letters,” Wheeler said. “Their defeat means it will be harder to attract Democrats to such efforts.”

This is why I say it may be the leading indicator of a permanent shift. The opposition to energy badly hurt the Democrats this time around, but rather than learning from that experience and shifting their policies accordingly, it looks like instead they are going to double-down on it. If you look at a map of the United States showing the counties that voted Republican versus Democrat, you see a set of large urban areas that are extremely heavily Democrat surrounded by a sea of, well, the rest of the country, that is Republican. These large urban areas are tremendous consumers of energy, but the popular will there is decidedly against the energy sector, with the exception of “green” power. These people have no idea what it takes to keep a power grid running. Electricity is magic pixie dust that comes out of a socket on the wall. That is why you see the perennial push for “electric” cars as “green” alternatives. They never consider that you have to burn coal (or natural gas, nuclear fuel, or whatever) to produce the electricity to charge the car.

The Energy Sector is a huge sector of the economy, and it is not at all a stretch to say that it is the sector that makes most (if not all) of the other sectors of the economy possible. If you work in that sector directly, it really is foolish to vote for the Democrats. They ultimately want to put you out of a job, unless you are a windmill operator or the like. But for the rest of us, energy is a vital commodity as well. When the Democrats try to put coal out of business, they are making almost everything else more expensive. The power that you use to power the computer that you are using may very well have been produced by coal, but even if it wasn’t, the loss of the supply of coal energy will cause the price of all other supplies of energy to rise, as the Law of Supply and Demand dictates. The Democrats feel that they are above even natural laws, but when they step off the side of a building, they are going to fall just like the rest of us. With their war on energy, the Left may be taking that first fatal step right now.

The End Of QE

by coldwarrior ( 175 Comments › )
Filed under Economy, History, Open thread at October 30th, 2014 - 6:30 am

Some interesting points from Evans-Pritchard, I will have to think on them and comment later asI have to get Princesses Ilsa, Anna, and Merida’s costumes ready for tomorrow night.

The final word on quantitative easing will have to wait for historians. As the US Federal Reserve winds down QE3 we can at least conclude that the experiment was a huge success for those countries that acted quickly and with decisive force.

Yet that is not the ultimate test. The sophisticated critique – to be distinguished from hyperinflation warnings and “hard money” bluster – is that QE contaminated the rest of the world in complicated ways and may have stored up a greater crisis for the future.

What we can conclude is that extreme QE enabled the US to weather the most drastic fiscal tightening since demobilisation after the Korean War, without falling back into recession. Much the same was true for Britain.

The Fed’s $3.7 trillion of bond purchases did not drive up debt ratios, as often claimed. It reduced them.

Flow of Funds data show that total non-financial debt has dropped from a peak near 260pc of GDP in 2009 and since stabilised at 237pc of GDP. Public debt did jump, matched by falls in household and corporate debt ratios.

On cue, federal debt is now falling as well. The deficit is down to 2.8pc of GDP, low enough to erode the debt ratio in a growing economy through the magic of the denominator effect.

This is not a “pure” economic experiment, of course. There are other variables: the shale boom and the manufacturing renaissance in chemicals and plastics that it has spawned; quick action by the US authorities to clean up the banking system. Yet it is indicative.

By contrast, the eurozone carried out its fiscal austerity without monetary stimulus to cushion the shock, lurching from crisis to crisis as a result. The region has yet to reclaim it former levels of output, a worse outcome than during the Great Depression by a wide margin. Not even the 1840s were this bad. You have to go back to the Thirty Years War in the 17th century to trump the economic devastation of EMU.

The eurozone’s public debt ratios have rocketed, yet unlike America there has no been no drop in private debt to compensate.

The latest Eurostat data are staggering. They show that Italy’s debt has jumped by 5.5pc of GDP to 133.8pc over the past year despite a primary surplus, purely because of EMU contractionary policies. The eurozone has bent every sinew to cut debt, and ended up in a worse predicament, exactly as Britain did under its infamous deflation policies in the 1920s.

At the end of it all, Euroland is again on the cusp of a triple-dip recession, with unemployment stuck at 11.5pc. It faces devastating hysteresis effects in southern Europe, where a large chunk of those under 30 have never had a permanent job. Leaving aside the social destruction, this will reduce the economic growth of these countries for two decades or more. It overwhelms the alleged benefits of EMU-imposed reforms.

The contrast with the US is so stark that there can be little argument. The US suffered broadly the same economic shock in 2008 and had a similar jobless rate in the white heat of the crisis. Its unemployment rate has since tumbled to 5.9pc. Lay-offs have dropped to a 14-year low. There is even an acute shortage of truck drivers, now able to command $40,000 a year.

Britain’s workforce has reached fresh records above 30m. Some are highly-educated refugees from the EMU victim states, a loss to them, a boon to us. The British recovery may be unhealthy in many ways – not least the current account deficit – but it is surely better for the long-term prospects of this country than the cosmic gloom gripping the Maastricht bloc.

It is true that Japan is struggling despite the most radical QE blitz ever attempted in a large economy – roughly $70bn a month since Shinzo Abe took power, and began to shake Japan out of its fatalism – but it had a bigger mountain to climb, and it has in fact weathered the shock of its sales tax rise this year. Those who say QE has failed in Japan are premature, and offer no counterfactual argument. Clearly the status quo ante was a path to ruin.

You can argue that zero rates robbed savers, and that QE robbed them a fraction more, but let it never be forgotten that the state rescued the banking system across much of the industrial world in 2008. If governments had let banks collapse – and 4,000 went under across the US in the early 1930s – savers would have lost their shirts. They were in fact bailed out by the taxpayers, and little gratitude some show for it.

What QE has done is to distribute the costs of crisis evenly between creditors and debtors, a matter of natural justice. Eurozone policies are by contrast an enforcement mechanism for creditors alone. Debtors in Spain have been reduced to servitude by a combination of medieval debt laws and the “internal devaluation” imposed by the EMU regime.

We will never know whether extreme monetary stimulus averted social and political breakdown, a slide into beer-hall thuggery and street militias, but would you ever wish to put the matter to a test? So let us give due credit to the heroes of our time – Ben Bernanke, Mervyn King and those who stood by them against the mob of howling critics.

And yet, there is a problem. The Bank for International Settlements and others such as India’s central bank governor Raghuram Rajan argue that QE is in essence a beggar-thy-neighbour ploy that shifts the burden onto others in a “Pareto sub-optimal” for the world as a whole.

They argue it led to a flood of liquidity into emerging economies and that they were not able to neutralise the effects. Most of the world has now been drawn into an all-engulfing debt trap that has left the international system more vulnerable than ever.

Debt has risen by 20 percentage points to a record 175pc of GDP in emerging markets, with China already around 250pc, according to Standard Chartered. These are unprecedented levels for countries without mature financial markets and deep layers of wealth. Morgan Stanley calculates that gross global leverage has risen from $105 trillion to $150 trillion since 2007. The BIS says the world is on a hair-trigger, at risk of “violent” effects if there is slightest loss of liquidity.

This may soon be out to the test since it is not only the Fed that is tightening, tapering QE3 from $85bn a month to zero since the start of the year. By a quirk of fate, China’s central bank has stopped accumulating foreign bonds as well, for its own reasons. Let us hope they are talking to each other.

The Chinese central bank became a net seller of Treasuries, Bunds, Gilts and French bonds in the third quarter. This is a major change of strategy. It was buying $35bn a month earlier this year, before premier Li Keqiang announced that excess reserves had become an inflationary “burden”. This shift is not exactly “reverse QE” but is analogous.

The world must deal with a double shock from the two monetary superpowers. Investors had hoped that the European Central Bank would pick up the baton in a seamless transition. This has not yet happened, and may not happen on any worthwhile scale for a long time given the “German problem”.

The ECB’s balance sheet has contracted by €150bn to just over €2 trillion since Frankfurt first unveiled its “QE-Lite” more than four months ago. The ECB bought €1.7bn of securities last week but this is a toe in the water.

It is too early to judge whether even the Anglosphere can really throw away its QE crutches. The risk of a relapse is obvious as the commodity nexus flashes global stress warnings. We may need QE4 after all.

If so, let us inject the stimulus directly into veins of the economy money next time, using it to build roads, houses and an infrastructure fit for the 21st century. Experts call that “fiscal dominance”, a dirty concept, a slippery slope towards to monetary financing of deficits. To which the condign reply in a global deflationary trap with chronic lack of demand is, all the better.

 

FRAC Goes the Oil Market

by coldwarrior ( 80 Comments › )
Filed under Economy, Energy, Open thread at October 15th, 2014 - 8:00 am

I started my day like every day…Kettlebell and Nordictrack and CNBC at 0530. The heads are finally getting at what the Frac boom mans to the oil market. Combine the frac with very low economic growth expectations and you get several things:

A Nervous Saudi (PLEASE read the entire article at this link):

A Saudi billionaire investor has sounded the alarm over the potential impact of falling oil prices on the Gulf kingdom’s economy.

In an open letter to Saudi ministers posted via Twitter, Prince Alwaleed bin Talal al-Saud expressed his “astonishment” at comments made by Ali al-Naimi, the oil minister, who reportedly played down the impact of oil prices falling below $100 a barrel. Prices have since fallen below $88 a barrel, or a quarter since June.

Prince Alwaleed, noting the kingdom’s 2014 budget was 90 per cent dependent on oil revenues, said belittling the impact of lower prices was a “catastrophe that cannot go unmentioned”…

The prince expressed similar concerns last year over the rise of shale oil, which, with weakening Asian demand, has contributed to the rapid slide in oil prices – despite geopolitical uncertainties in Iraq, a major producer.

His public broadside against the veteran oil minister came as analysts said the Gulf members of Opec, the oil producers’ cartel, led by Saudi Arabia, seem prepared to drive down oil prices to retain market share and fend off the threat of rising US production, despite the risks to their hydrocarbon-dependent economies…

Gulf oil producers, most of which have large cash reserves, seem to be betting that the short-term pain of declining oil revenues from lower prices will close off competing supplies and revive the lowest global oil demand since 2009.

Oil prices are reaching levels that, if sustained, threaten the ability of some Gulf states to meet domestic spending commitments, forcing a drawdown on reserves or debt issuance.

Saudi Arabia needed an oil price of $89 a barrel in 2013 to balance the budget, up from a “fiscal break-even” of $78 a barrel in 2012, according to the International Monetary Fund.

Chart

But Riyadh’s regional political rivals, such as Iran and Iraq, as well as other Opec members such as Venezuela, have much higher fiscal break-evens.

That bolded paragraph is the new reality, the ME is being driven from relevance.

 

And you get market fallout:

Crude oil futures settled down 4.6 percent at $81.84 a barrel, the biggest percentage drop since November 2012 and the lowest settlement since June 28, 2012.

Brent crude for November slid earlier and lurched lower toward the end of the day, dropping by more than $4 a barrel to dip below $85 a barrel for the first time since 2010. It was the biggest one-day drop in prices since 2011. The benchmark settled at $85.04, $3.85 lower on the day.

Oil dived more than $4 a barrel on Tuesday, its biggest drop in more than two years as mounting evidence of slackening demand and unrelenting U.S. shale output left traders struggling to peg a floor for crude’s four-month rout.

The abrupt acceleration of an over 26 percent slide in prices since June was triggered by three news items that epitomized the market’s turn: a downgrade in global oil consumption forecasts; projections for another big boost in shale oil; and reluctance by OPEC members to cut output.

Read MoreCheap oil is here to stay, at least for a few months

Oil is struggling to find a floor after Saudi Arabia made clear that it was focused on maintaining market share, not supporting prices with unilateral production cuts.

Other members appear to be taking a similar tack. A source familiar with oil policy in Iran, normally one of the first in OPEC to call for production cuts, followed Kuwait in saying there was no need to rein in supplies.

Read MoreOil slide wipes out stock market gains

“I think it’s just continued the rationalization that all signs continue to suggest that OPEC is not going to do much,” said Dominick Chirichella, senior partner at the Energy Management Institute, New York.

Getty Images

The slide began early in the day after the International Energy Agency, the West’s energy watchdog, cut its estimates for global oil demand growth by 250,000 barrels per day for this year and by 90,000 bpd for 2015. It said demand for OPEC oil would be 200,000 bpd lower for both years.

Read MoreOil demand to ‘rise tentatively’ in 2015: IEA

The diminishing outlook for consumption is colliding with an unrelenting rise in U.S. shale oil, leading to a glut of crude that has knocked Brent lower since June.

Losses deepened in mid-afternoon after the U.S. Energy Information Administration projected that fast growing shale basins would increase output by some 106,000 bpd in November from a month earlier.

 

The down side? This can be deflationary and the Fed does not have much room to move on interest rates. This could cause QE again here as Europe heads for another recession. Low $ oil shuts off the Shale wells in America at,I think $80 a barrel. Weak expected demand and the march toward American Energy independence is going to be an interesting ride.

Supply, Demand, Dollar Values and FRAC!

by coldwarrior ( 72 Comments › )
Filed under Economy, Energy, Open thread at October 9th, 2014 - 8:00 am

An interesting article:

 

HERE

The Shale Revolution Is Changing How We Think About Oil And The Dollar

 

goldman sachs commodoties and dollarGoldman Sachs

Historically, there’s been a pretty consistent correlation between oil prices and the US dollar.

When the dollar strengthened, oil prices would fall — and vice versa.

For the longest time, this relationship has been explained by the huge flow of US oil imports.

However, a new report by Goldman Sachs’s Jeffrey Currie says that rationale has broken down in the wake of the American shale revolution.

“In 2008 … the US was importing on a net basis nearly 12 million [barrels per day] of oil and products,” Currie writes. “Owing to shale technology, today that number is now less than 5 million b/d. And subtracting out Canada and Mexico, the number drops to 2.4 million b/d. In other words, net imports are over 60% lower than in 2008.”

This has “significantly reduced the correlation between commodities and the US dollar,” he writes.

Back in the day…

In the past, Currie writes, investors believed that the “primary mechanism for the correlation” between oil prices and the dollar was the large US petroleum current account deficit.

“From the early 2000′s to the global financial crisis, increasing oil imports saw a widening US current account deficit, which put depreciation pressure on the dollar (appreciation pressure on oil producers currencies), which in turn put further widening pressure on the current account deficit (for any given volume of imports), causing additional dollar weakness,” Currie writes.

By 2008, oil reached $147 per barrel and the US dollar was at its weakest point versus the Euro at 1.6. At the time, the US was importing on a net basis approximately 12 million barrels per day of oil and products.

And then there was the shale revolution…

santorum north dakota shaleREUTERS/Harrison McClaryA piece of North Dakota shale.

Today, the number of imports has dropped to around 5 million. If you take out Canada and Mexico, that number falls further to 2.4 million — a stark difference from 2008′s 12 million.

Overall, oil imports are down more than 60% since 2008.

Imports have dropped because the US is now using hydraulic fracturing to extract oil from its massive shale basins, creating more supply.

And it’s during this same 2008 – 2014 time period that there’s been a huge reduction in correlation between oil prices and the US dollar, according to Currie.

“Along with the post-crisis financial market normalization, [the drop in oil imports] has dramatically reduced the correlation between oil and the USD, to around 0% (i.e. uncorrelated) today from historical highs near 60% in 2008/2009,” Currie writes.

Thus, according to this analysis, although oil prices have recently dropped as the dollar has surged, one trend doesn’t explain the other.

 

Time to Panic?

by Iron Fist ( 217 Comments › )
Filed under Academia, Economy, government, Politics at October 5th, 2014 - 8:00 am

Good article in the Free Beacon:

Deadly, irrational, and determined, the intruder snuck across a weakened perimeter. Eluding capture, the intruder was detained only after missteps and close calls. The spin began soon after the threat was isolated. Information was selectively leaked. Half-truths and untruths were uttered. Responsibility was avoided; privileges and credentials asserted; authority reasserted. Trust us. Remain calm. Don’t panic.

This is the template of recent events. A mental case jumps the White House fence. He makes it to the East Room before he’s tackled by an off-duty Secret Service agent. Initial statements turn out to be misleading or false. We discover that lapses in security are much worse than previously understood, that in recent memory the White House was sprayed with bullets, and that an armed man with a criminal record rode in an elevator with the president. The official in charge of the Secret Service, promoted for reasons of affirmative action, resigns hours after the White House expresses its confidence in her abilities. The overriding impression is of disarray, confusion, bad management, failed communication, anomie, disillusion, corruption, and secrecy. But do not worry. Things are under control.

The elevator? It was in the Center for Disease Control and Prevention in Atlanta, where the president told the American people that the Ebola outbreak in West Africa is not a threat to our country. President Obama said the chances of Ebola appearing in the United States are “extremely low.” If a carrier somehow finds his way to the 50 states, “We have world-class facilities and professionals ready to respond. And we have effective surveillance mechanisms in place.” Two weeks later, as Byron York points out, the president was proven utterly wrong.

And he goes on with more examples. The upshot:

It is precisely the intersection of Ebola and globalization that worries me. The only response to a virus this deadly is to quarantine it. Stop flights, suspend visas, and beef up customs and security. It can be done. If the FAA can cancel flights to Israel, why can’t it cancel flights to and from the West African countries whence the outbreak originated?

Simple: because doing so would violate the sacred principles by which our bourgeois liberal elite operate. To deny an individual entry to the United States over fears of contamination would offend our elite’s sense of humanitarian cosmopolitanism. For them, “singling out” nations or cultures from which threats to the public health or safety of the United States originate is illegitimate. It “stigmatizes” those nations or cultures, it “shames” them, it makes them feel unequal. It’s judgmental. It suggests that America prefers her already existing citizens to others.

Such pieties endanger us. They are the reason we were slow to contain the influx of Central American refugees, the reason we do not follow-up on illegal immigrants who fail to show up for hearings, the reason we remain unable to strip jihadists of U.S. citizenship, the reason that a year after two Chechen refugees bombed the Boston Marathon, America is preparing to expand resettlement of Syrian refugees. The imperatives of the caste, the desire to make actual whatever is rattling around Tom Friedman’s brain at a given moment, take precedence over reality.

The system can withstand only so many shocks. For the last two years it has suffered nothing but blows, traumas, national and international concussions. The response by our government has been denial and delusion. But that has further alienated the public, and it won’t be long before things get really weird. Maybe it is time for the political class to panic, too.

Know hope? That’s passé.

Know fear.

He is right. Over and over our political class is falling short. We are proving again and a gain that our leaders simply aren’t up to the task of governing. My only question is what if they are doing it out of malice? I have been posing that question about Obama recently. I would say that at this point it is impossible to determine whether he is supremely incompetent or supremely malicious. It could be either of these, or both. But when they keep getting the same results from doing the same things, repeatedly and predictably, you have to ask if they are satisfied with the results that they are getting. The same is true of the political class as it is Obama himself. They insist on doing the same old same old, repeatedly, and they get the same piss poor results every time that they do it. It isn’t as though their policies have ever succeeded at bringing peace and prosperity to America. They always produce the same failures. Are our political elites somehow damaged intellectually, that they cannot see the results of their policies on every issue from gun control to foreign policy to the economy? Are they completely stupid? Even someone with mental handicaps is capable of recognizing when their actions produce negative results. They are (for the most part) capable of being self-critical, and of learning from their mistakes, and improving on the outcomes of their actions. Only the most severely mentally handicapped person is incapable of this (in my years in the restaurant industry I’ve worked with a number of developmentally handicapped people, and they have always shown the ability to do this). It is self-evident from their actions that either the Left must be incapable of this level of cognition (i;.e. rational and critical thinking), or they are acting with malice aforethought. You can’t necessarily prove which of these it is, but I ask you, if it were malice, what would they be doing differently than they are right now? I can’t think of much of anything. They do have to live in a world where they can only go so far openly, lest the LIVs catch on and vote them out of their offices, fire them from their jobs as academians, o r otherwise take steps to neutralize their malice.

Dhimmi Carter Birthday Wishes

by Macker ( 139 Comments › )
Filed under Anti-semitism, Democratic Party, Energy, Hamas, History, Inflation, Iran, Koran, Misery Index at October 2nd, 2014 - 6:00 pm

Happy Belated 90th Birthday to the WORST US President…of the 20th Century! Yes, James Earl Carter, Jr. is still kickin’…and it’s time for those of us on the Right Side to leave any type of Birthday Greeting to a forerunner of who we have now.
Think of all the things he’s responsible for: The Misery Index, stagflation, high unemployment, military emasculation, the Iranian Hostage Crisis…and that’s just for starters.
Have at it!

How the US government trashed the diesel fuel cost advantage

by 1389AD ( 105 Comments › )
Filed under Cars & Trucks, EPA, Food and Drink, Regulation at September 30th, 2014 - 8:00 am
Pain at the pump
Diesel or petrol, pain at the pump

I’m no Jay Leno but I do know a thing or two about motor vehicles, and a thing or three about tyranny, of which I have made a lifelong object of study. You shouldn’t need me to tell you that anything that raises the costs of road transportation also hamstrings the US economy, makes ordinary Americans poorer, strangles our liberty, and helps our enemies who are burdened by no such constraints.

I’ve owned both diesel and gasoline vehicles. Diesel was once the way to go when it came to saving money at the fuel pump. Diesel engines still outlast the gasoline variety and can deliver impressive power, but the US grabbermint deliberately wiped out the diesel fuel dollars-per-mile advantage.

Here’s how they did it:

Eric Peters: The Diesel Dilemma

The last time people began to sweat the cost of gas, they were able to turn to diesels. The cars delivered tremendous mileage (e.g., a VW Rabbit diesel was capable of 50-plus MPG, as good or better than a new Prius hybrid) and – perhaps as important – the fuel itself was cheaper than gasoline.

You may recall.

What happened?

Government.

Diesel fuel became more expensive than gasoline – because of government edicts that made it more rather than less expensive to refine. Today’s “ultra-low sulfur” diesel runs close to $4 a gallon in my neck of the Woods vs. just over $3 for a gallon of regular unleaded.

This cost-to-feed disparity takes a lot away from the economic argument in favor of buying a diesel-powered car. Especially given that modern diesel-powered cars – though excellent in many ways – are also a great deal less fuel-efficient than the diesel powered cars of the ’70s and ’80s (the era before government got around to hassling diesels to the extent that it had been hassling gas-powered cars). Engine design had to be altered; exhaust systems changed up. Almost all current-year diesel-powered passenger cars have particulate traps and “regeneration” (diesel fuel is injected into the exhaust to after-burn it for emissions control reasons; of course, fuel used to burn off soot is fuel not used to propel the car – and your mileage goes down).

Most (virtually all) current-year diesel-powered passenger cars also require something called Diesel Exhaust Fluid (DEF) to achieve compliance with emissions regs. That is, to placate the government (at your expense). The DEF – basically, urea (that is, piss) – is contained in a separate tank that must be regularly topped off. The DEF works kind of like a gas engine’s catalytic converter, chemically altering the composition of the exhaust stream.

Whether this is good or bad is ultimately neither here nor there as far as the consumer appeal of diesel-powered cars.

Historically, the primary reason for going with a diesel rather than a gas-engined car (all else being equal) was the prospect that the diesel would – hopefully – save you money.

Unfortunately, that’s less likely today than it was yesterday. Because of the higher cost of the fuel – and the lower fuel-efficiency of modern diesels.

Here’s an example:

I recently reviewed the 2014 VW Jetta TDI (see here). For a modern car – relative to other modern cars – it delivers excellent fuel economy: 30 MPG in city driving and 42 MPG on the highway. But back in 1979, a VW Rabbit diesel delivered 45 MPG … in citydriving.

And 57 on the highway.

See here, if you don’t believe me.

Now, granted, the ’79 Rabbit is (was) a smaller car than the ’14 Jetta. But the difference is startling nonetheless – because the Jetta has all the putative advantages of the intervening 40 years (almost) of technological advances.

Shouldn’t it deliver better economy than a Carter-era car?

Well, it could.

If VW were not forced to festoon its brilliant TDI (turbo direct injection) diesel with all the foregoing folderol. If the federal obsession with soot – aka “particulate” emissions – were not so fervid. And here it is important to point out that diesel emissions aredifferent. Particulates may be obnoxious to some, but they are not a factor in the formation of smog – the main justification for swaddling gas engines with a Hannibal Lecter-esque suit of “controls” to tamp them down.

Everything – like it or not – is ultimately a cost-benefit analysis. And frequently there is a conflict between one desired thing and another desired thing. In this case, the desire of the government to effectively curb tailpipe emissions of cars (both diesel and gas) to nil conflicts with the consumer’s desire for a fuel-efficient (to say nothing of affordable) vehicle.

And this is why – for the most part (the Jetta I reviewed being one of literally two exceptions) the diesel-powered cars available today are almost all high-end/expensive cars. The diesel engines available in vehicles like the Mercedes E-Class and the BMW 3 and 5 are touted as much for their performance as their economy – and of course, the cars they’re installed in are sold on the basis of luxury and status. These are the sweeteners that make so-so-efficient modern diesels more palatable to buyers.

But on the economy end of the scale, it is harder to make a sound case for a modern diesel-powered car. Even the thoroughly excellent Jetta TDI. It costs about $5k more than the base trim gas-engined Jetta. And then there’s the 50-75 cents more per gallon you pay at the pump. Sure, the TDI’s mileage is 10-plus MPG better than the gas-engined models. But $5k buys oceans of gas … and don’t forget the extra $8-10 or so more you’ll be paying at each fill-up, diesel vs. regular unleaded.

To sum up:

The proverbial low-hanging fruit was plucked decades ago. That is, on the order of 90 percent of the harmful (e.g., smog forming, respiratory distress-inducing) byproducts of internal combustion were “controlled” by the first simple – but very effective – emissions technologies, such as catalytic converters (for gas-engined vehicles). Since the ’90s, the government’s increasingly demented crusade has been to “control” the remaining fractional part of a vehicle’s exhaust output that is less-than-pure.

I italicize this for emphasis because it is not a literary or editorial flourish. It is the literal truth.  The government will push for – and impose – a new round of emissions rigmarole in order to “cut” what they will invariably describe as “harmful emissions” by half a percent. But they will tout this as a 50 percent reduction – which it technically is. Because if you reduce 1 percent by half you have reduced it by 50 percent. But “50 percent” sounds a helluva lot better, PR-wise, than “half of one percent.”

So, we end with pretty pricey diesels that are only so-so efficient – relative to what they should and easily could be.

Continue reading…

Mixing alcohol with gasoline

Governmental bodies and various private organizations harp endlessly on the dangers of, and legal penalties against, driving under the influence of ethyl alcohol. At the same time, the US government is doing all it can to force you to feed ethyl alcohol into your gasoline-powered engine! Problem is, ethyl alcohol damages equipment that is not purpose-built to use it as fuel. Gasoline adulterated with alcohol can destroy your car, your motorcycle, your aircraft, your boat, your power tools, your generator…you name it. Seems to me that this is a stealth method to force older vehicles and equipment into the junkyard.

Arguably, “gasohol” harms the environment, in that the energy cost of producing the corn (maize), distilling ethyl alcohol from it, and transporting it to the pump, exceeds its yield as a vehicular energy source.

Corn is food. It is especially suited as fuel for people and animals, not machines. It makes economic sense to use corn as animal feed and to consume corn directly as sweet corn, hominy grits, cornbread, tortillas, popcorn, you name it. Burning corn, or for that matter, any food, as substandard vehicle fuel raises food prices worldwide, making people go hungry who otherwise would not.

If you own an older car or motorcycle, or would like to buy one, you owe it to yourself to read this:

Eric Peters: Making Your Car (and Bike) Ethanol-Safe