Relevant and even prescient commentary on news, politics and the economy.

Interview Notre Dame finance Professor Richard Sheehan

By Divorced one like Bush

Just thought I would pass this along. He sounds like a reasonable thinker on the subject of our “crisis”. He makes understanding what is and has happened easy for those feeling lost in the discussions. The big thing I got out of it is we really do not have to act like this is a fire alarm going off. I did not detect any particular sound bites or memes. Glenn Greenwald questions him about the more common ones but not in a “gotcha” framing.

Scroll down to the dark blue bar and click on the arrow. It is about 20 minutes. Enjoy.

Tags: , , Comments (1) | |

Can we please broaden our thinking in this crisis?

by Divorced one like Bush

February 26, 2008 I posted a question: How are we going to fix a money from money economy. Quoting that post: There is a nice chart. (A few actually). Especially this one.”

And this:

Total financial turnover went from $17,804 billion in 1980 to $508,456 billion in 2000. We’ve seen GDP go from 37.8% of turnover to 1.9% of turnover. That’s how big the money from money train is. Our GDP is only 1.9% of the money from money machine.”

The first response in comments was: “Fix what?”
I think that person has their answer now.

October 6, 2007 I posted: Money from money, not good.

It was about an interview by Bill Moyers of John Bogle. He noted:

JOHN BOGLE: Well, it’s gotten misshapen because the financial side of the economy is dominating the productive side of the economy…We’ve become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it’s growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value.

Go listen to it. Then listen to Mr. Moyers latest interview with Kevin Philips.

But what’s here that doesn’t get the attention is the United States in the last 20 years undertook an enormous transformation of itself with no attention paid. And what it means is and what makes all this so frightening is the country is at risk because of the size of the financial sector that has never been graded on its competence and behavior in any serious way. They are the economy at this point. And we are now seeing what happens when a 20 to 21 percent of GDP financial sector starts to come unglued.
You had essentially a financial sector that, let’s say, was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we’re seeing in terms of bailouts. Even a lot of the people who do it think it’s bad.

This has been going on since the beginning of the 1980s. Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps. Finance has a problem, Federal Reserve to the rescue. Treasury to the rescue. Subsidies this, that, and other.

I am certain we have to do something to help the money flow such that it does not take down the entire system. It would be cutting off our noses to spite our faces not to protect ourselves from what a few have done. We have to be adults, suck it up and clean up the alcohol aroma vomit all over our bathroom.

But, we do not have to let it happen again. There is only one solution to this and no one, not anyone is pointing it out: Put the financial sector of the economy back in alignment with the productive sector. What got us in this mess is our (well not all of us) belief that the financial sector can stand on it’s own as a primary wealth/money creator. It can not. Never could. But, believing it put the impetus to the creation of “vehicles” for creating trades. You know all those securitized whatevers, and alphabet monikers, and insurance for insurance for insurance based on alphabet monikers of securitized whatevers. What did people expect would happen when you turn the part of your system that is dependent on activity in an other part for it’s existence into a stand alone money creator. If you are going to keep generating money from money, then you are going to have to keep coming up with new “product”. New designs, new marketing to create an need and want, new packaging, BRANDING.
Again, Mr. Philip put’s it this way:

But we’ve seen the central component of the rise of the financial sector is the rise of the debt industry. Mortgage, credit cards, all these gimmicks that Wall Street sells– just all kinds of products. And, of course, the products are laying an egg all over the world right now.

Get it? We take an industry subservient to the needs of production and turn it into a competitor of production. I can polish and sell rocks without a bank to borrow from. I can accumulate wealth over time. My business may grow slowly and so may my wealth, but I can do it. But, remove all none financial activities and what does financial do to survive? What does it do to survive with no one needing a loan, backing, no desire to produce in a way that increases our productivity such that we have more time to purse happiness (that constitution purpose)? We treat finance as if it is the chicken/egg question. It is not. Finance came second and is dependent.

For those from the 80’s, we have now learned exactly what was being said when we were told our economy was moving toward a service economy. We were told it was just as good, solid and viable as the producer economy so get trained and be ready. Remember that? Remember those who said no way, it can’t work? Have you watched the movie Other People’s Money yet?

Well, all we do now is complain about the cost of the service economy sector known as health care. It cost too much. And, we have now proven that the service economy sector known as finance can’t create any real material wealth as a prime generator. So, why is no one talking about the need and means to realign our economy?

HOW MANY TIMES DO WE HAVE TO DO THIS? HOW MANY FREAKIN’ TIMES DO WE HAVE TO LEARN THE LESSON?

According to Mr. Philips:

It’s been a bipartisan phenomenon. You can go back to the 1980s and say Reagan and George Bush, Sr., got a bubble started. Clinton got in and got an even bigger bubble going. And then George W. Bush with the biggest bubble of all. But it’s not that the Clintonites didn’t play. They did. Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he’d come back as a pail because this guy bailed out everything you can imagine. They had the Mexican loan bailout. They had the long-term capital management bailout, the Russian Southeast Asian currency bailouts.

Think about any of the concerns voiced here at AB regarding this current “crisis” and read Dean Baker’s list of Principles for Restructuring the Financial System and ask how much of this could be accomplished by simply realigning our economy such that finance is in service to our needs of producing primarily and I guess consume in part. Putting it another way, none of what Mr. Baker is suggesting can come to fruition such that we protect ourself from repeating this experience for a 3rd time (fourth if you count 1987) unless we get our minds back to how true wealth and money are created. Which I happen to post on October 8, 2007: Human Capital is where it’s at. It reports on a World Bank study from 2005 in which I us the quote:

The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population’s knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, “natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent.

All of this relates to some graphs I put up December 12, 2007 in: It’s the big one honey, I know it, showing that personal income for the 99% had fallen below personal outlays since 1996. Something that had not existed since 1941 but was present from 1929 and before. What I found most interesting from that post was that there were only 9 comments. Just 9. Are we going to pretend income distribution is not part of this current crisis? Are we the 3 monkeys of see, hear, speak no income inequality?

So, we can talk about the hundreds of billions, we can total them up, we can debate ethics, we can talk morals and argue who is being partisan and what regulation is needed, what’s fair or….we can face the fact that who we think we are is not who we are; that we have been blowing smoke up our own butts regarding wealth, money, economy and the pursuit of happiness. It’s intervention time folks. Just putting up road blocks to the elixir’s and potions, or setting up games with ourself without changing our world view about what money is and how wealth is created and why we want to create it in the first place won’t cut it.

We use to know all this. It is represented in our Declaration of Independence and our Constitution. An example of the materialization of our realization was put in place in our tax code as we learned the lessons we are relearning now. For example, an instance of need of integration in our thinking, one issue with the current crisis is the mega pay of those that created the mess. Well, one of the reason’s for having a graduated income tax to the point of 90% at the top was to prevent exactly what we are now discussing as one of the issues that needs to be addressed in the bailouts. It was to prevent economic royalty, to preserve democracy, to assure one voice – one vote, to prevent some from being so powerful that they would be insulated from responsibility for the problems they could create. But we’re not hearing about taxing as a solution. One that worked very well because it addressed many of our goals. No, we now will create an entire new set of rules and paper filing…a new game to address one aspect of a crisis of one aspect of our economy because we have isolated taxation as an issue of personal freedom as oppose to an integrated tool of our economy based on our goals as laid out in our founding documents.

How small the discussion has been during this crisis so far.

Tags: , , , Comments (1) | |

Voting your pocketbook?

by divorced one like Bush
Update below.

The other day, reading the comments got me thinking about the relationship of peoples income vs their presidential candidate choice. I think it was about how the economy is doing. Well, we all say it is bad because all these big, humongous finance institutions are having troubles. But, my perspective is that the economy is about you and me. It exists for us. But, not much is being looked at from that perspective, except for the home mortgage sector. Simultaneously we hear how we (you, me and thee) have to learn to save more while being asked what can be done to revive the consumer economy. You know, get it back to the good old days. Yes-er-y, that’s a solvable puzzle. Which good old days do they want to recreate? The saving days or the consuming days? If they want both, I would say ok, but we will have to reverse the income shift.

Anyway, I decided to see if I could create a movement to focus the issue of the economy back onto how you and me are doing. It’s a monumental task, but I’m game. I’ve gotten a little help from McCain in that he has tied the fundamentals of the economy to you and me, the American Worker (stand up and salute!). As much as “fundamentals” are not considered the worker, the reality is we the citizens are the fundament factor in an economy. No you and me, no exchange of valuable stuff.

So, I have created a chart because I don’t know how to produce one of those neat colored USA maps of all 50 states, their unemployment rate, hourly wage, 1 yr change of wage, hours worked and 1 yr change of hours worked. The data is from here. I then color coded the state name based on the polling map as of 9/16/08.

How do you like it? I’m rather proud of my self.

The color for the states are blue, light blue, red, light red and black. I assume the red/blue shades are obvious. The black are toss-up states. The data in blue are numbers that did worse than average for the variable to the detriment of the citizen. If the unemployment was higher than average, it is blue. If the wage change and hourly wage was less than average it is blue. Those in red are negative. The hours worked and change in hours worked greater than average are in blue. I view having to work more a negative. I do not want to have to continually increase my time in the rat race. Though, some I’m sure would look at the opportunity to work more as a positive. You get to earn more. Well that’s relative to your opinion of what your free time is worth. One state has green…Utah. It’s hourly wage and work hours have gone down. But, hey the unemployment rate is very low.

There are 8 undecided, 18 blue or leaning blue and 24 red or leaning red.
14 of 23 states with unemployment below average are voting or tending to vote McCain. Three undecided have lower rates. 8 states of the 23 are voting or tending to vote Obama. 61% red and 44% blue are below the average unemployment.

12 of 22 states with above average hours worked increase are red or leaning that way. 8 of are blue.
6 of the 12 state with negative increases in hours worked are red, 4 are undecided which leave 2 blue.

9 of 26 states that saw negative, zero or less than average 1 year hourly wage increases are red or leaning such. 7 are undecided and 10 are blue or leaning such. 3 of the 6 states with negative hourly wage growth are red, one is undecided and one is blue.

21 states of 30 who have an average hourly wage less than the national average are red or leaning that way. 5 are blue or leaning such and 4 are undecided.

18 of the 24 states that work more than the national weekly average hours are red or leaning such. 3 are undecided and 3 are blue.

6 of 9 states who are working more than the average work week and did not see their wage increase the average amount are red or leaning red. 2 are undecided and 1 is blue. 2 states saw their hourly wage go down and their hours worked go up, both are red.

Ok, so what are we to make of the voting your pocketbook thought?

Update: Ran some numbers. Red states average $19.41/hr and 35.73 hours per week for a gross pay of $693.52. Blue states average $22.68/hr and 34.38 hours per week for a gross pay of $779.74. Earn more, work less. Now that is the way to get out of the rat race!

Tags: , , , Comments Off on Voting your pocketbook? | |

Report on oil speculation

by Divorced one like Bush

Anyone else see this report?

The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.

Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at about $102 a barrel Wednesday on the New York Mercantile Exchange

WSJ notes there is a second report to be out probably by tomorrow from Commodity Futures Trading Commission.
Of course, there has to be an ulterior motive:

Critics said Mr. Masters is trying to buoy his own investing portfolio, which is laden with transportation-related stocks, and lawmakers are trying to show they are addressing high gas prices.

Or maybe not:

European Central Bank President Jean-Claude Trichet last week told attendees at a Frankfurt conference that speculation had contributed to the oil-price shock that has hindered global growth. The two presidential nominees, among others, have attacked the trend.

Tags: , Comments Off on Report on oil speculation | |

Oil as an excuse for Bush et al’s economic performance

by Divorced one like Bush

From comments in Cactus’ post:
“Now in the last couple of years we have seen unprecedented oil prices that have sapped our economy’s strength.”

Yes, we have. Others have presented this argument. However,there was plenty of information in existence long before the “last couple of years” regarding the issue of oil price on economic performance. This report from the IMF, The Impact of Higher Oil prices on the Global Economy from 12/8/2000 suggests that we have been living with such a predicament and certainly had tasted such and thus should have had better policy responses. It is a report in response to the World Economic Outlook report of 9/2000 which “contained an extensive discussion of the potential impact of higher prices.” It is written such that it: “includes a discussion of main policy implications for developed and developing countries. An Appendix reviews lessons from earlier oil price increases.”

Discussing consumption and production:

In 2000, the price of oil has been at its highest level since the mid-1980s, excluding the brief price spike at the end of 1990. The current price hike, if maintained for any significant length of time, is likely to accentuate the trend towards energy conservation and the shift from oil to other sources of energy, especially in sectors other than transport.

Well, Bush et al sure proved that prediction about shifting toward conservation was wrong? At least for US.

The report notes 5 means by which rising prices will effect the global economy(paralleling the WEO):

There will be a transfer of income from oil consumers to oil producers.
There will be a rise in the cost of production of goods and services in the economy, given the increase in the relative price of energy inputs, putting pressure on profit margins.
here will be an impact on the price level and on inflation.
There will be both direct and indirect impact on financial markets. Actual as well as anticipated changes in economic activity, corporate earnings, inflation, and monetary policy following the oil price increases will affect equity and bond valuations, and currency exchange rates.
Finally, depending on expected duration of price increases, the change in relative prices creates incentives for suppliers of energy to increase production (to the extent that there is scope for doing so) and investment, and for oil consumers to economize.

In the conclusion:

For much of the period since the October 2000 World Economic Outlook was completed, oil prices have averaged $5 per barrel higher than assumed in that exercise. A sustained oil price increase of that size would imply a permanent transfer of about ¼ percent of GDP from global oil importers to oil exporters, relative to the WEO baseline, with additional transfers of income from oil consumers to oil producers within countries.

Get that last bit? From us heart of America, working class local yokels to the producers. Windfall profits anyone?

The suggested policy for countries like US:

With regard to policy implications, as experience in previous oil shocks shows… monetary policy in advanced countries will need to prevent second round price effects. This will help ensure that there is only a price level effect, but not a continuing impact on the rate of inflation.

I think they are saying raise the rates or at least not drop them without caution? We went from4.99 in 7/1999 to a peak of 6.54 in 7/2000 to 3.77 in 7/2001 and 1.73 by 7/2002. OH Well.

In the WEO report it notes specifically for the US:

In the short term, the current fiscal stance should be maintained—and to the extent possible, strengthened—by resisting calls for tax reductions or additional expenditures. Over the longer term, the authorities’ intention to substantially preserve the fiscal surpluses in prospect, and to pay down the public debt, will help support national savings, as well as prepare for the coming long wave of unfunded liabilities associated with the retirement of the baby boom generation.

We can list all sorts of “events” that happened to cause a less than desirable outcome, however, it is the response to the events that ultimately determines the final experiences. The response is materialized in the policy adopted. To date, the policy has failed to stabilize our economic performance, never mind improve it over the course of 8 years. I would accept “events” as a reasonable argument for our current status if Bush et al had not performed worse than historical. That is the real GDP rate from 1930 to 2000 being 3.66% vs 2001 to 2007 of 2.58%.
Or real GDP per capita of 2.44% 1930 to 2000 vs 2001 to 2007 of 1.61%. Bush et al could not even perform as well as 1930 to 1940 when real GDP and GDP/capita were 2.72% and 2.00% respectively. This 10 year period included negative growth of GDP/capita for 4 periods of: 7.14,13.46, 1.86 (1930 to 1933) and 4.19 (1937/38).

Bush et al’s results are pure policy and that is based on ideology and that is what this election is all about.

Comments Off on Oil as an excuse for Bush et al’s economic performance | |

No laboring in economics

by: Divorced one like Bush
at the beach on vacation Ha!

Gee the economics profession is ignoring labor. I wonder why. Could it be who we follow? It’s not like we don’t quote old Adam often. Free market and ghost hand ideas are mentioned all the time as we follow Milton:

According to The Economist, Friedman “was the most influential economist of the second half of the 20th century…possibly of all of it”.[2] Former Federal Reserve Board chairman Alan Greenspan stated, “There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people.”[3]

I would add, a mind who focused on….wait for it…. MONEY.
“Monetarism is a school of economic thought concerning the determination of national income and monetary economics. It focuses on the supply of money in an economy as the primary means by which the rate of inflation is determined.”

In an interview at Right Wing News by John Hawkins (sorry no date)of The Man who is introduced thusly:

But I think the fact that Mr. Friedman finished in a tie for the 15 slot when RWN had conservative bloggers select, “The Greatest Figures Of The 20th Century” gives you some idea of Mr. Friedman’s stature.

we get responses to the questions by Mr Influence of the 20th century of:

From my point of view, we in the United States have gone overboard in respect to the extent of regulation and detailed control of labor standards, industry, and the like. It’s bad for us, but fortunately we had two hundred years of relatively free development to provide a strong basis to sustain the cost.

Well, they only consider half of the problem. If you move jobs overseas, it creates incomes and dollars overseas. What do they do with that dollar income? Sooner or later it will be used to purchase US goods and that produces jobs in the United States.

If the White House were under Bush, and House and Senate were under the Democrats, I do not believe there would be much spending.

How do you get them together by forming industrial cartels and keeping prices and wages up? That’s what Roosevelt’s policies in the New Deal amounted to. Essentially, increasing the role of government, enhancing the monopolistic position of labor, and creating as I said before the equivalent of price fixing cartels made things worse.

Well, who would provide the funds, the capital, and the entrepreneurship for the new industries? In a world in which there were no rich people, how would you have ever gotten the capital to produce steel mills or automobile plants? You can do it through the state, but the world tried that with the Soviet Union.

Well, Social Security is having a bad effect now through the tax system.

So we have a profession which followed a man whose focus was minimally on labor and by the above quotes maybe even condescending to labor as a factor in economics and wonder why the profession of this man has de-emphasized the subject? HELLO!!!!!!!!!!!!!!!!!!!

Maybe the profession really only needs to follow one piece of advice from Mr. Milton:

John Hawkins: Are there any political websites you’d like to recommend to our readers?

Milton Friedman: No, I don’t really follow any political websites. I think they’ll do better reading theWealth of Nations (laughs)…

Ok, lets read the words of the originator of the ghost hand theory:

“Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man’s own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”[3]

If you will allow me, let’s put a picture to Mr Smith’s concept as it relates to why the economics profession needs to follow this one piece of Mr Influence’s advice.

Then there is this. And this as to why the economic profession needs to study this. Of course if the profession would just think about how the majority (like super duper majority) acquire their money, then maybe they would have not passed on this currently wide open, you can own it, make a name for your self aspect of money making.

Tags: , , Comments Off on No laboring in economics | |

Oil prices VS Storms

By: Divorced one like Bush

Being that there is a lot of “authoritative” talking going on about the cause of the up’s and down’s of oil and one cause being suggested is the anticipation of storms, I thought looking at the history of storms and oil price would help toward answering the hypothesis of oil prices rising in anticipation of storm damage.

Using the daily price of WTI Cushing/Oklahoma oil I charted the relationship of price to the storm dates. I use 6 price points. A. 2 Monday’s before, B. Friday before, C. Monday before, D. Day of Storm, E. Friday after, F. 1 week after day of storm. Any number in parenthesize is the price for the next open trading day. When the storm fell on a week end, I counted 1 week after and used the next Monday.

Chart after the fold.


I do not do correlation calculations. But, I think this chart shows that there is no significant speculation in pricing based on Gulf storms. There are 4 times that the price 1 wk post storm is lower than 2 Monday’s prior to the storm. They are in order: Dolly 7/23/08 down $22.95, Dennis 7/10/05 down $2.66, Rita down 2.58 9/24/05 and Opal 10/4/95 down $0.10. Of these 4, Rita has the highest pre-storm climb of $3.92 or 6%. Dolly only showed a 2% climb pre-storm but there has been a 16% drop since her high 2 weeks before she hit.

The interesting string is the 4 storms of 2005. Katrina and Rita are the only storms that show some possibility of a storm pricing effect within this series. Katrina with an almost $2.00 (3%) rise in 2 wks and then a decline of $4.50 until the price jumped $4.30 in 1 week before Rita. However, the next trading day after Rita, the price was down $1.23 and 1 week later it was within $0.93 of the 2 weeks prior to tropical storm Cindy of 7/5/05 ( 2.5 months time between the two). As to this year, the price is just plain going down since the peak 2 weeks before hurricane Dolly which is 1 month of downward trend before the republicans started filling hot air balloons.

It appears that if there is a storm pricing effect, it is a recent phenomenon and of a rather small and short lived event. Being a new event in oil pricing, I would suggest that what effect there is, is purely emotional and related to the emotional climate we are living in. Gun shy? We only have fear to fear? Or, maybe it is an herd mentality learned that a storm is a good excuse to make a quick dollar. That would be herd mentality market manipulation. Oh no, did I just ruin it for everyone?

Guess we are going to have to find someone talking with more authority than what we have had so far regarding the cause oil pricing.

Tags: , , , Comments Off on Oil prices VS Storms | |

Money = Wind, Bush and Fox News?

By: Divorced one like Bush

Yes, you read that correctly. The right is reporting there is money to be found in wind. Sacrilege in their church of oil. In an article, May 17, 2008 we learn about a Bush administration report on wind.

A little back ground first:

With major government investments in wind in the 1970s, the U.S. was poised to be a dominant player in what was clearly going to be one of the biggest job-creating industries of the next 100 years. As late as the mid 1980s, we had over 85 percent of the world’s global installed capacity, and U.S. companies possessed the most critical knowledge about how to develop wind farms cost-effectively.
President Reagan cut the renewable energy budget more than 80 percent after he took office, and eliminated the wind investment tax credit in 1986.

Since the turn of this century, wind has been growing explosively. From 2000 to 2007, the industry increased fivefold in size. Last year, $36 billion in wind investments were made around the world, with $9 billion invested in U.S.-based projects. In 10 years, it is expected to nearly quadruple in size.

In fact, because the new wind turbines are tall, and don’t interfere significantly with grazing or farming, they have become popular in the central U.S., where the wind resource is best in the country. Some ranchers make half a million dollars a year by leasing only a fraction of their land for turbines.

From 2004 to 2007, the company’s wind turbine production has grown 500 percent, and the division brought GE revenues exceeding $4 billion in 2007.

While the multi-decade drop in wind prices has stalled temporarily, prices for the competition have gone up the smokestack. New nuclear plants, for instance, have tripled in price. Analysis for the California Public Utility Commission puts the cost of power from new nuclear plants at 15 cents per kWh. It also puts the cost of coal (without carbon capture and storage) at more than 10 cents/kWh. That’s a major reason why, since 2000, Europe has added 47 GW of new wind energy, but only 9.6 GW of coal and a mere 1.2 GW of nuclear.

The report:

…the recent Department of Energy report, called “20% Wind Energy by 2030.” With improved efficiency and a decrease in capital cost, the report found that wind power should cost 6 to 8.5 cents/kWh, unsubsidized, even including the cost of transmission to access existing power lines. And the cost of integrating the power into the U.S. grid would be under 0.5 cents per kWh. This effort would only add about 50 cents per month per household, or under 2 cents a day.

The study notes that “few realize that electricity generation accounts for nearly half of all water withdrawals in the nation.” By 2030, wind would be cutting water consumption by 450 billion gallons a year, of which 150 billion gallons a year would be saved in the arid Western states, where water is relatively scarce — and poised to get even scarcer thanks to climate change. And on top of that, we get half a million jobs, of which nearly a third are high-wage workers directly employed in the industry.

So, this is what could be. Being that we are a “global economy”, our companies need to be able to compete, correct? Here is the competition environment:

By 2020, many European wind farms will be generating electricity at 2¢ per kilowatt-hour, making it cheaper than all other sources of electricity.

Wind-generating capacity worldwide is growing at over 30% per year and has jumped from less than 5,000 megawatts in 1995 to 39,000 megawatts in 2003—an increase of nearly eight-fold. The fossil fuel with the highest growth rate—natural gas—grew at just over 2% annually during the same period. Oil grew at less than 2% annually, and coal at less than 1%. Nuclear generating capacity expanded by 2% annually.

One would think that an industry growing at 30% would be far more inviting to the “free market” entrepreneur than one growing at 2%. But, that is not where we are seeing money flow. No, we felt it was wiser to spend it creating a democracy in an oil rich country. Then again, in 8 years of neocon election policy and 50 plus 1 strategy, we have not seen any major news organization go after the 49% not being ideologically serviced. Think that might have something to do with the policies we vote for?

But, back to the environment to be competing in:

With wind-generated electricity, the principal production cost is the capital outlay for initial construction. Since wind is a free fuel, the only ongoing cost is for maintenance.
Many countries in Europe are pushing hard to bring in more wind power. Here are a few examples.

The United Kingdom is requiring an investment of over $12 billion in off-shore wind farms that should satisfy the residential electricity needs of 10 million of the country’s 60 million people.
Tiny Denmark, which led Europe into the wind era with the development of its own wind resources, now gets an impressive 20 percent of its electricity from wind.
Germany overtook the United States in terms of wind-based generating capacity in 1997. Now Spain is close to overtaking the United States as well.

As to investments being made, it is just as we are seeing in beer:

Regulatory issues do not appear to have deterred energy companies from making US acquisitions. Energias de Portugal paid nearly $3 billion to acquire Horizon Wind Energy from the Goldman Sachs Group. The purchase doubled the amount of wind power operations in the Portuguese company’s portfolio. German utility E.On has agreed to acquire the North American assets of Irish wind power company Airtricity Inc. for $1.4 billion. Acciona Energia has acquired the wind farm development rights of EcoEnergy, a company based in Illinois. Spanish energy giant Iberdrola has acquired Oregon wind development company PPM Energy, as well as Community Energy of Pennsylvania, and more recently US wind farm companies Greenlight Energy and Orion Energy.

But get this, Fox News titles their article: Denmark Points Way in Alternative Energy Sources
Fancy that. Fox News says we can learn from the foreigners.

…most of the Western world was subjected to an Arab-led oil embargo. The crisis forced Denmark, which was 99-percent dependent on foreign oil at the time, to develop an alternative-energy policy.
In the 30 years since, Denmark has worked tirelessly to develop new technology and new policies.
Twenty percent of Denmark’s energy needs are now met by electricity generated by wind turbines, and the proportion is steadily increasing. Thanks to advances in technology and turbine design, the cost ofwind power has been reduced by 75 percent since 1970, when the programs began.
The Danish attitude toward energy conservation means “people don’t have as many appliances, or gizmos,” said Griswold, a frequent visitor to Denmark. “Also, there are stringent requirements for insulation when building new homes. Every individual mandate like that means the nation uses less energy.”
A major part of that success is the Danish commitment to and attitude toward its energy policies, Griswold said.

“After the [1973-74 oil] embargo, Denmark had the attitude that they were going to become less dependent on the outside world and more self-sufficient,” he said. “And upon making this commitment, they’ve gained benefits, including lower national debt, cleaner air and less dependency on other countries.”

Let me repeat the important part of that last sentence: “And upon making this commitment, they’ve gained benefits, including lower national debt, cleaner air and less dependency on other countries.”

One final point Fox News wants us to learn: “Danes would say, ‘Thank goodness we have a government that plans so well that we are only minimally impacted.'” he said. “The average Dane isn’t terribly conscious of being in an energy-saving environment because it’s so natural to [him or her].”

Now there is a message I would have never expected Fox News to promote.

Tags: , , , Comments Off on Money = Wind, Bush and Fox News? | |