Weekend Reflection Points
The lead article in the current AER is available here (gated, apparently, though the link isn’t working; h/t Tom Bozzo [on FB] and Brad DeLong; I was using the paper copy). The most interesting part so far: the authors only considered the documented costs of air pollution—not land, not water—in deriving the (embarrassingly negative) ROI figures for coal and oil.
As Cousin Lucia and Tom Zeller, Jr., note today, the cost of water pollution makes oil power plants an even worse option.
In such a context, Europe in general and Germany (the top maker of solar panels until China recently passed them) in particular rubs in our faces that they’re winning on the alternative-energy sources front (h/t Barry Ritholtz):
The 15 mile-per-hour winds that buffeted northern Germany on July 24 caused the nation’s 21,600 windmills to generate so much power that utilities such as EON AG and RWE AG (RWE) had to pay consumers to take it off the grid.
Rather than an anomaly, the event marked the 31st hour this year when power companies lost money on their electricity in the intraday market because of a torrent of supply from wind and solar parks. The phenomenon was unheard of five years ago.
Meanwhile, back in the U.S., it is no secret that Brad and Robert Waldmann are on one (affirmative) side of the TARP-was-a-success argument, and I’m on the other.* But even the Success crowd may pause to wonder if the short-term “profit” was a good long-term strategy:
Some large U.S. banks would have stronger capital bases to better deal with today’s market stresses had regulators not relaxed bailout repayment criteria in late 2009, a new government audit showed on Friday.
Bank of America (BAC.N) Citigroup (C.N), Wells Fargo (WFC.N) and PNC Financial (PNC.N) were allowed exit the Troubled Asset Relief Program without raising as much equity capital as initially prescribed by the Federal Reserve, the TARP Special Inspector General said in the report.
Following bank stress tests earlier in 2009, the Fed gave several banks guidance that they must raise $1 in common equity for every $2 in TARP bailout funds repaid — a formula meant to enable them to withstand future stresses.
But this standard — which was never previously made public — was quickly relaxed, allowing Bank of America, Citi and Wells Fargo to repay taxpayers nearly simultaneously in December 2009,** raising a combined $49.1 billion in equity capital.
Enforcement of the $1 in equity for every $2 repaid guidance would have required $57.5 billion in equity capital to be raised by the three institutions. PNC was later allowed to exit TARP under similar relaxed guidance. [emphasis mine]
The most recent SIGTARP report (28 July 2011), uses the word “Bailout” only once in its 304 pages—and that’s in the title of testimony by Sheila Bair, ““Statement of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation on The Changing Role of the FDIC before the Subcommittee on TARP, Financial Services, and Bailouts of Public and Private Programs; Committee on Oversight and Government Reform, U.S. House Of Representatives.”
Noted for the record: Patch uses the same article (with minor customization) in multiple locales, highlighting it as a “local” piece. I defer to Felix as to whether this is in keeping with the rest of their “business model.”
As Dan Becker can tell you, the small business “ownership society” is not for the faint of heart. Nor, as anyone who thinks about it for more than three seconds can tell you, is it a primary driver of employment growth. Yet when the most visible and successful Management Consultancy in the United States thinks about growth, its two primary points are “take monies from the government” and “expand small businesses.” But give them credit for recognizing a point that is often obscured by
H1-B trolls technology firm leaders such as Meg Whitman:
[I]t’s not just the young who can help fill the skills gap; older, experienced workers can play a part, too. In the US aerospace sector, 60 percent of the workforce is over 45. A practical response would be for governments to remove barriers—particularly those related to the provision of health care and to benefits rules—that prevent older workers from staying in the workforce longer. Germany and the Netherlands raised the participation rate of the 55-to-64 age group by 21 and 24 percentage points, respectively, between 1990 and 2009. In the Netherlands, there were significant changes to pensions and welfare benefits to improve incentives to work longer, coupled with initiatives to change public perceptions, improve employability, and reduce discrimination against older workers. [emphasis mine]
It’s nice to see McKinsey endorsing Medicare For All.
*As a general rule, the Econ-first analysts are affirmatives, the finance-grounded ones are negative. If you have to think about why that would be: one group makes its living finding $100 bills on the sidewalk that the other one swears cannot exist. As the Mark Thomas of the world would note, the issue of priors might need to be addressed.
**The reason December 2009 is important is that it meant that monies that otherwise would have to have been used to shore up capital were instead paid out as bonuses by the now-uncontrolled banks, or, in Reuterspeak, “keen to escape executive compensation restrictions associated with the bailout funds.”
Reuterspeak ….. the contrived linguistics of the Carny Class to separate the small fish from their ‘investment’ money at saturation buying areas and saturation selling areas…
No windmills investments for this ultra privileged class… not enough leverage to make the big kill …. The Carny class loves asset deflation because … in the decay phase the d(asset devaluation)/dt is so much faster than the growth phase. Instead of skimming the system with tiresome slow growth and small decay saturation curves, they can bucket the system when asset devaluation in a collapsing money-debt system occurs in a nonlinear fashion….
As for the small businesses, with the exception of those involved in the foreclosures, strong arming to extract bad debt payments on overvalued assets, and the property liquidation business, consumer demand is kaput in a deflationary asset overvalued asset saturated environment. Courtesy of the Tea Partiers (invented by the 12 malt bourbon sipping Rentiers), the 12 trillion equivalent for the jail worthy bailout recipients, the principal causal agents of the degree of this mess – with their owned politicians) are not even on page 37 of the local AP-Reuter contributed newspapers. They are off the newspaper Fox News screen.
On the screen is the Tea Partier’s Rentier’s highlighted Social Security Ponzi scheme. Of course, that’s it, that’s the problem – that tax earmarked Ponzi scheme is sucking the life blood of the free US markets.
Yes, by the Rentier’s Tea Party, supporting of the US constitution and the right to work, this is now the time for retrenchment, getting the old financial house in order. Let the 60 and 65, and 70 years old’s return to a job market that hasn’t (cannot) created (create) a net gain in jobs for an additional 30 million entry population. Deregulate the minimum wages and let the oldsters compete with the unemployed youngsters,. That is the solution to America’s macroeconomic saturation of debt and overvalued overproduced and Wall Street over facilitated assets. Work you old dogs and compete with those young upstarts for pennies while the Reuterites make an absolute killing during the great asset collapse.
OK. The debt-money situation in Europe is collapsing. In the dry vaults of French banks there is less than two Euro’s on reserves for deposits and loans…
Where is the classical Lammert saturation growth and decay quantum fractal series :: x/2.5x/2x with a nonlinear break between 2x and 2.5x of the second fractal(2.5x)?
ECCE now …. the composite CAC daily saturation curve after a 9 August 3 day incipient initiating fractal:
ECCE likewise the composite DAX for exactly the same pattern….
from 11 August 2011 7/17/14 days :: x/2.5/2x with a nonlinear drop between day 16 and day 17 of the second fractal ….. It is a perfect quantum time fractal proportionality ……
What then …. is the probability that this three phase final ( final -in the sense of final before the historical equity CRB gold silver asset collapse) saturation growth pattern described in 2005 in the Main Page of the Economic Fractalist … is …. is ……..is……. occurring ……by chance …… and chance alone?