When you see all of the things going wrong around us, it can be hard to remember to be grateful for the things that we still have. But this ruling should remind us that there are many things to be grateful for in America. In many countries, such a ruling would have never been issued.
If you want to know just how ridiculous our agricultural programs are, consider this: for about half a century, we priced milk based on how far the cow was from Eau Claire, Wisconsin. No, I swear, I am not making this up. Apparently, the USDA scientifically determined that Eau Claire was the perfectest place in the entire world to keep cows, and that therefore the farther you were from that fabled city, the harder you must find it to produce milk.
Macro Man put up a post arguing that oil prices had risen to far to fast to be justified by the fundamentals. In response, someone calling themselves Moe Gamble said….
Oil started to go into a trading range on April 23. Saudi Arabia was bringing on 300,000 barrels a day, and the price would have stabilized for a couple of months.
What happened is that we had strikes in the UK and Nigeria that took roughly 380,000 barrels a day out of May supply. To make matters worse, this lack of supply was not spread smoothly through the month. It was bunched up into a couple of weeks, and the effect of those weeks just started to hit. Traders had to pull off shorts and the price zoomed up.
Also, it turned out that Saudi Arabia had lied about when those extra 300,000 barrels a day were coming online. They had announced to the press that production had started the third week of April. Now it looks like the new production really didn’t come online for another 2-3 weeks (if then).
Prices would normally come down in a few weeks as this production started returning to the inventory reports. But you can kiss that good-bye because we have a special situation right now–China and India have been holding off on purchases, and a flood of new demand will be hitting when they get their act together in the next week or two. India: http://timesofindia.indiatimes.com/BPCL_starts_rationing_fuel_supplies/articleshow/3061069.cms. China: http://in.reuters.com/article/asiaCompanyAndMarkets/idINPEK15115620080521.
This has been China’s normal cycle for at least the past year. Foot-dragging then massive buying when the diesel runs out. And now they are burning diesel in power plants to make up for a lack of coal related to the earthquake.
Meanwhile, Russia’s exports are off 3.3% from last year, and existing production has a decline rate somewhere between 4.5% and 8% (and rising).
That started off a back and forth discussion that was very interesting. You should read the whole thread.
This article on Burma from Spiegel should have been essay of the week. But it came out to late and I don’t want to want to wait until next week to bring it to peoples attention. It should be read.
This rant is a useful to reminder why many Jews were so committed to the recreation of Israel.
As this essay sets out to prove, there is no assurance that the sky will not fall any minute now. Consider yourself warned.
The first signs of declining interest among the young in science and engineering appeared almost two decades ago, after Japan reached first-world living standards, and in recent years there has been a steady decline in the number of science and engineering students. But only now are Japanese companies starting to feel the real pinch.
By one ministry of internal affairs estimate, the digital technology industry here is already short almost half a million engineers.
Headhunters have begun poaching engineers midcareer with fat signing bonuses, a predatory practice once unheard-of in Japan’s less-cutthroat version of capitalism.
The problem is likely to worsen because Japan has one of the lowest birthrates in the world. “Japan is sitting on a demographic time bomb,” said Kazuhiro Asakawa, a professor of business at Keio University. “An explosion is going to take place. They see it coming, but no one is doing enough about it.”
This is happening all over the developed world. To much talent has been directed towards being a lawyer or a banker. Add that to a shortage of kids general and young engineers are going to be in high demand.
That anger is flowing in communities across the disaster zone. While the overall death toll has passed 21,500 and is expected to climb as high as 50,000, there is special tragedy — and perhaps a whiff of scandal — in the number of young people who died in collapsed schools. Communities like Juyuan have had an entire generation of young people wiped out. In the nearby city of Dujiangyan, more than 300 students were killed when the Xinjian Elementary School collapsed. Sixty miles away in the mountainside town of Hanwang, the scene repeated itself at the Dongqi Middle School, where an estimated 200 students died. Five children were killed when two schools even collapsed in Chongqing, the state-run Xinhua News Service reported. The city is more than 200 miles away from the quake’s epicenter.
Freddie Mac issued its quarterly “report” and gave clues as to how to paint lipstick on pigs and actually get away with it. The trick is to put $157 billion (from $32 billion before) over to Level 3, where absolutely no haircut is then reported. Readers may recall that Level 3 essentially allows the reporter to make up their own prices separate from market prices. In the case of Freddie, management has determined that “market prices don’t make any sense”, hence the move. This writer would argue that the quasi-official institutions like the GSE and foreign central banks themselves are creating massively distorted Soviet Union style prices that if anything makes even the market prices that Freddie dismisses too high.
From Macro Man (Click on link for graphs)……
Regular readers will recall that when the Fed cut 50 bps in September, Macro Man opined that the dollar was toast. When BB and co. slashed rates by 75bps when the stock market got Kerviel’ed, it seemed like they were hitting the panic button. And what’s happened since then? Median one year inflation expectations have rocketed from 3.1% to 5.2%. Sadly, Bloomberg doesn’t have historical data for average 12 month inflation expectations; those are now a resounding 7%!!! It seems as if not everyone is living in the Fed’s hedonically and seasonally adjusted, core goods world.
The rise in inflation expectations is all the more remarkable when put into historical context; they are now the highest since February 1982. Now, just because you expect higher inflation and demand higher wages doesn’t mean you’ll get ’em, especially in the context of an incipient recession. But with the balance of probability favouring a Democratic sweep come November, what odds that there emerges a legislative response to the juxtaposition of near-record corporate profits as a % of GDP along with stagnant/negative real wage growth?
From the Daily Rap via Calculated Risk……
The truth is their data is wrong. The market has, obviously, taken the view that the worst of the writedowns are behind us, and if anything it’s now just a macroeconomic problem we face. I think that’s dead wrong. We’re now entering the phase where the macro impacts earnings, but also the stage where real cash losses start to hit the banks (subprime and Alt-A is primarily a mark-to-market issue, but HELOCs are going to be large, outright losses). Once WAMU, WFC, BAC and JPM start to get data through on how rapidly their HELOC portfolios are deteriorating, watch the losses pile up. I’m talking realised losses, not mark-to-market writedowns.”