On fears that the government would shut down, the market dropped a bit this week. Oil hitting $112 didn't help either. But for Bernanke's money, this week would have been seriously ugly.
Japan continues to dump radioactive water into the ocean. Radioactive levels in the water are now several million times the legal limit. There will be no fishing off the coast of Japan for an extended period. If the radioactivity spreads (it will), fishing could be shut down in much of the north pacific, spreading perhaps as far as Alaska, British Columbia, and Washington. The FDA assures us that the leakage was small compared to size of the ocean, and in a few weeks it will be dispersed to below legal limits. Unfortunately, I no longer find government assurances very assuring.
Japan continues to be rocked by aftershocks. Damage continues to be done. However, in 5 years we'll look back and the real damage will be from the initial tsunami, and the resulting displacement of 1,000,000 people and radioactive poisoning of the oceans by Fukushima.
ok, sit down for this - seriously, it's a real shocker. The French army is proving unable to beat the Libyan army and dislodge Qaddafi. There is no reason at this time to believe Qaddafi will step down or be removed before his death.
Republicans and democrats are fighting over the deficit. Obama projects the deficit this year at $1.6 trillion, a bit over 10% of GDP. Republicans want to cut the deficit by 3.8%, about $50 billion. Democrats think 2.4% is enough. And I've had enough. This reminds me of when Mark Twain's doctor told him "Wine, women and song are killing you." "Fine, I shall give up singing." Late Friday a compromise was reached that will keep the government open. Future battles like over the debt ceiling and next year's budget promise to be fought more fiercely. The Tea Party says they want to shut down the department of energy entirely, which I'm all for.
Representative Paul Ryan has a plan to cut our deficit. His plan hinges on two main points: 1) unemployment hits 2.8% in three years; and 2) we convert Medicaid and Medicare into insurance subsidies. The first I can only account for as a drug relapse. The second basically says half of all old people shouldn't get medical care. We need to reform medicare and medicaid, but the way to do it is to step hard on insurance companies, hospitals and drug companies, not to pander to them. It's become clear to me where this will all end up: medical care in this country in 30 years will be a regulated monopoly, like the power company or post office. Government agencies will set rates for payments and reimbursements and standards for care. It's also become clear to me that we're going to walk right up to the edge of the national bankruptcy cliff before we take this step.
Oil continues to go up. Gasoline is now well over $4 in the People's Republic of California, and averages $3.76 nationwide. Diesel averages $4.05, about the same as premium gas.
Saudi Arabia’s population has grown from 5 million in 1965 to 25 million in 2010. The population is projected to reach 27 million in 2015 and 32 million in 2025. At that point the Saudi population will be larger than the combined populations of Australia and New Zealand. Why do we care? Between air conditioning, desalinization, and the huge cars they love to drive, projections are that by 2025 Saudi Arabia will be consuming 8 million barrels of oil per day - their entire oil production. Shortly after that they'll be trying to import oil, exporting apparently figs and used cars. This has already happened in Indonesia and is happening right now in Egypt. When the oil producers become net consumers, we're at the end. India and China will never get a chance to become car cultures - so much for the proposed ad slogan, "See the PRC, in your BYD!"
Ford's Fiesta ECOnetic is a sporty subcompact that seats five, offers a navigation system, and gets a whopping 65 miles to the gallon. Diesel vehicles now hitting the market with pollution-fighting technology are as clean or cleaner than gasoline and at least 30% more fuel-efficient. Yet while half of all cars sold in Europe last year ran on diesel, only 3% of cars in the US use diesel. Due to US taxes on diesel fuel aimed at commercial trucks, and the US public preferring hybrids and disliking diesels, Ford has no plans to import the European ECOnetic to the US.
With gas over $4 / gallon and racing to $5, you might be interested in what you can buy and what it costs to fuel it for a month. Edmunds.com analyzed a bunch of cars and small SUVs for monthly fuel costs. Here's their best. The Ford ECOnetic would be comparable to the Chevy Volt in fuel costs, and comparable to the Prius in price if imported from Europe, more like a Civic if built in Mexico.
|Honda Civic GX||$86|
|Honda Civic Hybrid||$107|
|Ford Fusion Hybrid||$108|
|Hyundai Sonata Hybrid||$111|
|Chevy Cruze Eco 1.4L Turbo||$125|
|Toyota Camry Hybrid||$125|
|Hyundai Elantra 1.8L||$132|
|Ford Escape Hybrid||$132|
|Volkswagon Jetta Turbodiesel||$134|
|Chevy Cruze LS 1.8L||$138|
|Volkswagon Jetta Sportwagon TDI||$141|
|Toyota Corrola 5-speed||$142|
|Ford Escape Hybrid AWD||$145|
|Mitsubishi Outlander Sport FWD CVT||$155|
|Nissan Juke FWD CVT||$156|
|Toyota Highlander Hybrid||$158|
|Hyundai Tucson GL 2.0L 6A||$162|
|Mitsubishi Outlander 2.4L||$179|
|Nissan Rogue AWD||$187|
|Toyota RAV4 2.5L||$187|
|Kia Sorento 2.4L||$187|
CMA calculates the probability of sovereign default based on CDS rates. Here's their current results:
Why is it so hard to scale back public worker's benefits? Here's a little clue:
|American Federal, State, County & Municipal Employees||$40,281,900||$547,700|
|International Brotherhood of Electrical Workers||$29,705,600||$679,000|
|National Education Association||$27,679,300||$2,005,200|
|Communication Workers of America||$26,305,500||$125,300|
|Service Employees International Union||$26,252,000||$1,086,200|
|American Federation of Teachers||$25,682,800||$200,000|
|United Auto Workers||$25,082,200||$182,700|
|Carpenters and Joiners Union||$24,094,100||$2,658,000|
|Machinists & Aerospace Workers Union||$23,875,600||$226,300|
|United Food and Commercial Workers Union||$23,182,000||$334,200|
|Sheet Metal Workers Union||$16,347,200||$342,800|
|Plumbers & Pipe fitters Union||$14,790,000||$818,500|
|Operating Engineers Union||$13,840,000||$2,309,500|
|Airline Pilots Association||$12,806,600||$2,398,300|
|International Association of Firefighters||$12,421,700||$2,685,400|
|United Transportation Workers||$11,807,000||$1,459,300|
|American Postal Workers Union||$11,633,100||$544,300|
|Nat'l Active & Retired Federal Employees Association||$8,135,400||$2,294,600|
|Seafarers International Union||$6,726,800||$1,281,300|