http://online.wsj.com/article/SB10001424052970204653604577249722036131042.html?mod=WSJ_Opinion_AboveLEFTTop
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"People will never attain what they cannot see themselves doing" (Karen Ford)
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So yesterday TransCanada announced that it plans to break up the ($7.6 billion) Keystone XL pipeline project into several stand-alone parts, beginning immediately with a leg connecting Cushing, Oklahoma with the Gulf Coast.
The original plan was to connect U.S. refiners with Alberta oil sands crude and other Canadian and U.S. resources. But to satisfy the environmental lobby, President Obama's State Department refused to issue the cross-border permits last month.
This is odd since the State Department "studied" the Keystone XL proposal for 3 years (2008 thru 2011). Over that period, the State Department asked for 59 different changes to the proposal, all of which Keystone agreed to (these were not small changes: one change was to bury the pipeline 4 feet underground for it's entire length!).
This new side project will alleviate some of the bottlenecks around Cushing, but it doesn't do anything to get oil from Canada to the U.S. which is the main point of the pipeline.
President Obama welcomed the news: "we support the company's interest in proceeding with this project." The Wall Street Journal's interpretation of this is that President Obama is simultaneously opposing and supporting Keystone XL. Cross border permits: NO. New pipeline inside the U.S. border: YES.
What makes Keystone XL not work crossing the border but OK inside the U.S.?
This new section from Cushing to the Gulf will create jobs and improve system efficiency but it is also true that it does not need State Department or Presidential approval because it is not crossing a "border." Frankly, if I were Keystone and I had an off the record agreement with President Obama's staff that he OKs the cross border portion of the pipeline after the election, I'd start it now. What's the difference? You can't build a 1700 mile pipeline all at once anyway.
We'll see.
Wednesday, February 29, 2012
Tuesday, February 28, 2012
The Economy
http://www.nytimes.com/2012/02/29/business/economy/steep-drop-in-orders-for-durable-goods.html?_r=1&ref=business
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"You must be the change you want to see in the world." (Mike Bassett quoting Mahatma Gandhi)
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What a boring subject but, for all you loyalists reading this, there is some good news in the midst of the bad.
As Mark Zandi put it recently, the rebounding U.S. economy should be able to shrug off the weight of higher gasoline prices and turmoil in Europe's financial sector. But, "House prices are still declining nationwide...and we are expecting house prices to fall another 3% or so in 2012."
Zandi's perspective is based on the presumption that the share of home sales that are depressed will rise over the next two or three quarters. The good news in real estate is that commercial properties have turned the corner.
Zandi sees gasoline prices moderating after the summer driving season.
Zandi's team at Moody's sees Europe as already in a mild recession and without any solid growth for another 4 or 5 years.
Moody's Analytics predicts that Texas will dominate the top U.S. employment markets in 2012 and 2013.
Since hitting its all-time low of 25.3 in February of 2009, the Conference Board's Consumer Confidence Index has now risen to 70.8 points (from 61.5 in January). Good, but well below the 90 that it levels at when the economy is humming.
Mixed signals are what an economy looks like when it "may" be on the mend. But, there are those that feel we have a "perfect storm" coming at the end of this year with tax policy and national debt issues coming together.
Anybody listening to the Fed's announcement that it's keeping it's looser monetary policy ongoing to or thru 2014, probably got a hint of where the Fed thinks the economy is going in the short term.
We'll see.
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"You must be the change you want to see in the world." (Mike Bassett quoting Mahatma Gandhi)
***************
What a boring subject but, for all you loyalists reading this, there is some good news in the midst of the bad.
As Mark Zandi put it recently, the rebounding U.S. economy should be able to shrug off the weight of higher gasoline prices and turmoil in Europe's financial sector. But, "House prices are still declining nationwide...and we are expecting house prices to fall another 3% or so in 2012."
Zandi's perspective is based on the presumption that the share of home sales that are depressed will rise over the next two or three quarters. The good news in real estate is that commercial properties have turned the corner.
Zandi sees gasoline prices moderating after the summer driving season.
Zandi's team at Moody's sees Europe as already in a mild recession and without any solid growth for another 4 or 5 years.
Moody's Analytics predicts that Texas will dominate the top U.S. employment markets in 2012 and 2013.
Since hitting its all-time low of 25.3 in February of 2009, the Conference Board's Consumer Confidence Index has now risen to 70.8 points (from 61.5 in January). Good, but well below the 90 that it levels at when the economy is humming.
Mixed signals are what an economy looks like when it "may" be on the mend. But, there are those that feel we have a "perfect storm" coming at the end of this year with tax policy and national debt issues coming together.
Anybody listening to the Fed's announcement that it's keeping it's looser monetary policy ongoing to or thru 2014, probably got a hint of where the Fed thinks the economy is going in the short term.
We'll see.
Saturday, February 18, 2012
Europe's Carbon Tax on Airlines
http://www.nytimes.com/2012/02/18/business/global/countries-seek-retaliation-to-europes-carbon-tax-on-airlines.html?ref=business
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"One of the keys to maximizing realistic thinking is aligning your resources with your objectives." (John C. Maxwell)
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China, the U.S. and 24 other countries are looking at a coordinated response if Europe tries to enforce a law requiring airlines to pay for their greenhouse gas emissions.
The system went into effect this year, although the first payments will not be due until 2013. The system requires an airline landing or taking off in Europe to acquire "permits" corresponding to the amount of greenhouse gases emitted during the entire flight regardless of where it originated or ended.
Officials from the 26 governments will gather in Moscow on Tuesday to discuss a "basket of countermeasures" to block the European system.
This is how trade wars start.
A positive here is that the meeting in Moscow has China and the U.S. on the same side in dealing with an issue.
Unless I'm missing something here, the European Union has more serious issues it needs to deal with right now. Some current perspectives on their economy have them already in recession. The EU is encouraging China to invest there in an effort to prop up their debt structure. These new rules would probably NOT be a way to encourage China to do anything supportive of the EU.
The carbon tax issue is a "symptom." The European Union has serious financial problems right now - that is the most important thing to deal with. Creating the potential for a trade war in the middle of trying to fix those problems is indicative of a lack of leadership and also implies structural flaws in how the EU was designed in the first place.
For those of us who never thought the "euro" was worth more than the dollar, we're not surprised at the problems.
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"One of the keys to maximizing realistic thinking is aligning your resources with your objectives." (John C. Maxwell)
***************
China, the U.S. and 24 other countries are looking at a coordinated response if Europe tries to enforce a law requiring airlines to pay for their greenhouse gas emissions.
The system went into effect this year, although the first payments will not be due until 2013. The system requires an airline landing or taking off in Europe to acquire "permits" corresponding to the amount of greenhouse gases emitted during the entire flight regardless of where it originated or ended.
Officials from the 26 governments will gather in Moscow on Tuesday to discuss a "basket of countermeasures" to block the European system.
This is how trade wars start.
A positive here is that the meeting in Moscow has China and the U.S. on the same side in dealing with an issue.
Unless I'm missing something here, the European Union has more serious issues it needs to deal with right now. Some current perspectives on their economy have them already in recession. The EU is encouraging China to invest there in an effort to prop up their debt structure. These new rules would probably NOT be a way to encourage China to do anything supportive of the EU.
The carbon tax issue is a "symptom." The European Union has serious financial problems right now - that is the most important thing to deal with. Creating the potential for a trade war in the middle of trying to fix those problems is indicative of a lack of leadership and also implies structural flaws in how the EU was designed in the first place.
For those of us who never thought the "euro" was worth more than the dollar, we're not surprised at the problems.
Saturday, February 11, 2012
A Spotty Recovery
http://www.nytimes.com/interactive/2012/02/10/business/economy/off-the-charts-private-sector-leads-recovery.html?ref=economy
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"The first responsibility of a leader is to define reality." (Max DePree - Chairman of the Board, Herman Miller, Inc.)
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In a speech Thursday to the National Association of Home Builders, Ben Bernanke said that declines in home prices have forced many Americans to cut back sharply on spending and warned that the trend could weigh on the economy for years.
Bernanke said the broader economy won't fully recover until the depressed housing market turns around: "People are spending less because they are stuck in 'underwater' homes, which are worth less than they owe on their mortgage."
If you look at the components of GDP growth as it has occurred since June, 2009, the trend lines (article attached) show personal consumption up (but not enough) and government spending down (too much). The U.S. needs and needed infrastructure spending and hasn't been getting enough. Not only does the U.S. "need" new bridges and roads (for example), but Mark Zandi (and others) have been telling Congress and the Obama administration that infrastructure spending has the best ratio for job creation (dollars spent to jobs created: 1/1.5).
Residential investment has been abysmal - see Bernanke's comments above. Private sector investment has been up but "sectorized." That's proven by the all time record level of cash on the books of Top 500 companies. And, "jobs" are net "up" in the private sector while they are net "down" in the government sector. Right now, that's a "push."
Again, my truck with economists is that (looking at these trend lines) the "total jobs" trend line did not start back up again until 18 to 21 months into the recovery as "they" define it: from June, 2009. It's not a "recovery" until jobs start back up again (so, that would be June 2011) and a recovery doesn't continue without investment.
Nouriel Roubini's perspective as recently as Davos (January, 2012) is that the U.S. economy will be at "stall speed" for 2012 (in the 1% neighborhood for GDP growth). Bernanke's Fed has "announced" that they will keep interest rates where they are until 2014. Do you think the Fed has done that because they see a roaring recovery going on?
Those who have some experience with the housing market see the possibility of a comeback in prices as early as 2014. So, until then...
***************
"The first responsibility of a leader is to define reality." (Max DePree - Chairman of the Board, Herman Miller, Inc.)
***************
In a speech Thursday to the National Association of Home Builders, Ben Bernanke said that declines in home prices have forced many Americans to cut back sharply on spending and warned that the trend could weigh on the economy for years.
Bernanke said the broader economy won't fully recover until the depressed housing market turns around: "People are spending less because they are stuck in 'underwater' homes, which are worth less than they owe on their mortgage."
If you look at the components of GDP growth as it has occurred since June, 2009, the trend lines (article attached) show personal consumption up (but not enough) and government spending down (too much). The U.S. needs and needed infrastructure spending and hasn't been getting enough. Not only does the U.S. "need" new bridges and roads (for example), but Mark Zandi (and others) have been telling Congress and the Obama administration that infrastructure spending has the best ratio for job creation (dollars spent to jobs created: 1/1.5).
Residential investment has been abysmal - see Bernanke's comments above. Private sector investment has been up but "sectorized." That's proven by the all time record level of cash on the books of Top 500 companies. And, "jobs" are net "up" in the private sector while they are net "down" in the government sector. Right now, that's a "push."
Again, my truck with economists is that (looking at these trend lines) the "total jobs" trend line did not start back up again until 18 to 21 months into the recovery as "they" define it: from June, 2009. It's not a "recovery" until jobs start back up again (so, that would be June 2011) and a recovery doesn't continue without investment.
Nouriel Roubini's perspective as recently as Davos (January, 2012) is that the U.S. economy will be at "stall speed" for 2012 (in the 1% neighborhood for GDP growth). Bernanke's Fed has "announced" that they will keep interest rates where they are until 2014. Do you think the Fed has done that because they see a roaring recovery going on?
Those who have some experience with the housing market see the possibility of a comeback in prices as early as 2014. So, until then...
Friday, February 10, 2012
Mean Spirited & Bad Economics
http://economix.blogs.nytimes.com/2012/02/09/mean-spirited-bad-economics/?emc=eta1
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"The problem with popular thinking is that it doesn't require you to think at all." (Kevin Myers)
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Simon Johnson, the former chief economist for the International Monetary Fund writes regularly for the NY Times "Economix" site. His 2/9 post on unemployment was exceptional.
Since the 1930s, employers have been paying insurance premiums (payroll taxes on wages) to the government. But, the severity and depth of the current recession ("current" is his term and mine - from an employment point of view, nothing's changed except a couple of positive months of U.S. hiring), raise an issue that we haven't had to confront since the 1930s - what do we do when people run out of standard unemployment benefits?
In a position that appears to be either so ignorant or so cynical that it defies reality, "House Republicans" propose to cut back on these benefits, asserting that this will push people back to work and speed the recovery. Quoting Johnson: "Does this make sense, or is it bad economics, as well as mean-spirited?"
What work would these unemployed people be going back to? Alan S. Blinder (former Vice Chairman of the Fed and Princeton Economics Professor) discovered, as a result of reading "The World Is Flat" and researching 800 plus job classifications, that as many as 40 million jobs could be eliminated over the coming years because they can be done more cheaply elsewhere. Fareed Zakaria reminds us that the current U.S. GDP level is at the same place it was in 2007 but with 10 million less people employed. While Johnson doesn't refer to it directly, the long term unemployed (1 year or more) number continues to be 3.5 million people. Do we think these people are going to hop back into the workforce anytime soon?
"The Chart." Johnson includes the chart I favor on the recession compared to previous ones in his post and I think it does a nice job of showing how dramatically far below "normal" the work force of the U.S. is.
Depending on the time frame you use and the data selected, Johnson says the U.S. has lost 8 million jobs "...most of which have not returned." Johnson cites an enormous statistic: since 2008, the share of long-term unemployed to total unemployed has moved up to 45%. That number is usually 10 to 15%.
Does anybody think these people are going to find a job right away?
The official BLS unemployment rate is 8.3% right now and any drop in that statistic is good, but I like to follow the BLS U6 unemployment rate which attempts to characterize the unemployed plus those who have given up looking for a job: 15.1%. That, to me, is a more reasonable characterization of the unemployment situation.
Johnson introduces us to Paul Solman's "U7" unemployment rate which includes the "underemployed" and those who have been out of work so long that the government no longer counts them: 16.9%. Click on Solman's chart/article from the Johnson post.
Johnson spends a good portion of his post asking what we stand for as a society if we want to cut off unemployment benefits to people whose job prospects just aren't that good. I ask the same question. Do you?
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"The problem with popular thinking is that it doesn't require you to think at all." (Kevin Myers)
***************
Simon Johnson, the former chief economist for the International Monetary Fund writes regularly for the NY Times "Economix" site. His 2/9 post on unemployment was exceptional.
Since the 1930s, employers have been paying insurance premiums (payroll taxes on wages) to the government. But, the severity and depth of the current recession ("current" is his term and mine - from an employment point of view, nothing's changed except a couple of positive months of U.S. hiring), raise an issue that we haven't had to confront since the 1930s - what do we do when people run out of standard unemployment benefits?
In a position that appears to be either so ignorant or so cynical that it defies reality, "House Republicans" propose to cut back on these benefits, asserting that this will push people back to work and speed the recovery. Quoting Johnson: "Does this make sense, or is it bad economics, as well as mean-spirited?"
What work would these unemployed people be going back to? Alan S. Blinder (former Vice Chairman of the Fed and Princeton Economics Professor) discovered, as a result of reading "The World Is Flat" and researching 800 plus job classifications, that as many as 40 million jobs could be eliminated over the coming years because they can be done more cheaply elsewhere. Fareed Zakaria reminds us that the current U.S. GDP level is at the same place it was in 2007 but with 10 million less people employed. While Johnson doesn't refer to it directly, the long term unemployed (1 year or more) number continues to be 3.5 million people. Do we think these people are going to hop back into the workforce anytime soon?
"The Chart." Johnson includes the chart I favor on the recession compared to previous ones in his post and I think it does a nice job of showing how dramatically far below "normal" the work force of the U.S. is.
Depending on the time frame you use and the data selected, Johnson says the U.S. has lost 8 million jobs "...most of which have not returned." Johnson cites an enormous statistic: since 2008, the share of long-term unemployed to total unemployed has moved up to 45%. That number is usually 10 to 15%.
Does anybody think these people are going to find a job right away?
The official BLS unemployment rate is 8.3% right now and any drop in that statistic is good, but I like to follow the BLS U6 unemployment rate which attempts to characterize the unemployed plus those who have given up looking for a job: 15.1%. That, to me, is a more reasonable characterization of the unemployment situation.
Johnson introduces us to Paul Solman's "U7" unemployment rate which includes the "underemployed" and those who have been out of work so long that the government no longer counts them: 16.9%. Click on Solman's chart/article from the Johnson post.
Johnson spends a good portion of his post asking what we stand for as a society if we want to cut off unemployment benefits to people whose job prospects just aren't that good. I ask the same question. Do you?
Tuesday, February 7, 2012
Anthropogenic Climate Debate
http://online.wsj.com/article/SB10001424052970203711104577201483976477936.html?mod=WSJ_Opinion_MIDDLEThirdBucket
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"We must stop assuming that a thing which has never been done before probably cannot be done at all." (Donald M. Nelson)
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Al Gore sent a couple of his representative to my office this week to argue for global warming as a people-caused thing: "Anthropogenic?" Really? I, of course, felt outnumbered. I immediately declared that I would stop driving my SUV (actually, I don't have an SUV, but, if I did, I would at least stop driving it until I needed to go home).
During the course of our discussions, the Al Gore representatives chastised me for even reading the Wall Street Journal because it is nothing more than a "tool" for Rupert Murdoch. I promised I would swear off the WSJ (until I need it again for information I use in my classes).
Fortunately for me, I noticed in today's capitalist tool (the WSJ) that some brave souls had responded with letters to the Editor about a letter to the Editor signed by 37 people. The letter signed by 37 people was a response to an Op-Ed signed by 16 people (1/27: "No Need to Panic About Global Warming"). All these letters signed by multiple people! Wow! And they seem to be "comparing" each other's "titles." I guess some people are more important than other people.
How do I make sense of all this? Well, here goes: Kevin Trenberth led the response (to the 1/27 Op-Ed "No Need to Panic...") of 37 scientists (2/1) claiming that skeptics were unqualified to have an opinion about global warming because they are not "climate specialists." Again, really? Richard Lindzen, who wrote a brilliant article toward year end 2009 on global warming in this same (WSJ) capitalist tool (an article I was privileged to comment on - go back and look), is professor of atmospheric sciences, MIT. He was one of the original 16 "signees" to the 1/27 Op-Ed.
It would appear that the approach being taken by the Trenberth's is to shout down opponents to anyone's position because that's much easier than dialogue.
But, then, I don't want to confuse this situation with the facts. Trenberth goes on to say, "...if you have a heart condition, you should consult a heart surgeon, not a dentist."
So, as Peter Wilson says in his letter: "Kevin Trenberth and his colleagues..." want to "Marginalize your opponents by demeaning them ("dentists practicing cardiology")..."
I'm going to go with Thomas H. Lauer who says in his letter that Trenberth "...gives the game away when he pronounces that a transition to a low-carbon economy will drive decades of economic growth. Only climate scientists are qualified to opine on climate, but somehow they are also qualified to explain global economics and political strategy."
So, I'm going to try to keep a low profile and ride my bike to school.
***************
"We must stop assuming that a thing which has never been done before probably cannot be done at all." (Donald M. Nelson)
***************
Al Gore sent a couple of his representative to my office this week to argue for global warming as a people-caused thing: "Anthropogenic?" Really? I, of course, felt outnumbered. I immediately declared that I would stop driving my SUV (actually, I don't have an SUV, but, if I did, I would at least stop driving it until I needed to go home).
During the course of our discussions, the Al Gore representatives chastised me for even reading the Wall Street Journal because it is nothing more than a "tool" for Rupert Murdoch. I promised I would swear off the WSJ (until I need it again for information I use in my classes).
Fortunately for me, I noticed in today's capitalist tool (the WSJ) that some brave souls had responded with letters to the Editor about a letter to the Editor signed by 37 people. The letter signed by 37 people was a response to an Op-Ed signed by 16 people (1/27: "No Need to Panic About Global Warming"). All these letters signed by multiple people! Wow! And they seem to be "comparing" each other's "titles." I guess some people are more important than other people.
How do I make sense of all this? Well, here goes: Kevin Trenberth led the response (to the 1/27 Op-Ed "No Need to Panic...") of 37 scientists (2/1) claiming that skeptics were unqualified to have an opinion about global warming because they are not "climate specialists." Again, really? Richard Lindzen, who wrote a brilliant article toward year end 2009 on global warming in this same (WSJ) capitalist tool (an article I was privileged to comment on - go back and look), is professor of atmospheric sciences, MIT. He was one of the original 16 "signees" to the 1/27 Op-Ed.
It would appear that the approach being taken by the Trenberth's is to shout down opponents to anyone's position because that's much easier than dialogue.
But, then, I don't want to confuse this situation with the facts. Trenberth goes on to say, "...if you have a heart condition, you should consult a heart surgeon, not a dentist."
So, as Peter Wilson says in his letter: "Kevin Trenberth and his colleagues..." want to "Marginalize your opponents by demeaning them ("dentists practicing cardiology")..."
I'm going to go with Thomas H. Lauer who says in his letter that Trenberth "...gives the game away when he pronounces that a transition to a low-carbon economy will drive decades of economic growth. Only climate scientists are qualified to opine on climate, but somehow they are also qualified to explain global economics and political strategy."
So, I'm going to try to keep a low profile and ride my bike to school.
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