Daily Archives: December 15, 2011
Another “told you so”:
WHEN is a job not a job? Answer: when it is a green job. Jobs in an industry that raises the price of energy effectively destroy jobs elsewhere; jobs in an industry that cuts the cost of energy create extra jobs elsewhere. You will hear claims from Chris Huhne, the anti-energy secretary, and the green-greed brigade that trousers his subsidies for their wind and solar farms, about how many jobs they are creating in renewable energy. But since every one of these jobs is subsidised by higher electricity bills and extra taxes, the creation of those jobs is a cost to the rest of us. The anti-carbon and renewable agenda is not only killing jobs by closing steel mills, aluminium smelters and power stations, but preventing the creation of new jobs at hairdressers, restaurants and electricians by putting up their costs and taking money from their customers’ pockets. –Matt Ridley, City A.M., 15 December 2011
The parallel-energy universe known as renewables, a place where dollars and economic theory know no bounds and make no sense, looks increasingly like a bubble set to collapse. Or, as I wrote here back in March of 2010: “That eerie hissing you hear may well be the air beginning to seep out of the green energy bubble. The sound is similar to the pfffffft and sshhhhsssssp noises we heard in the early days of the dot-com bubble collapse or the subprime mortgage meltdown.” –Terence Corcoran, Financial Post, 15 December 2011
But our rulers know better, don’t you know? That’s why they do so well picking winners and losers (I assume I don’t need to deploy my sarcasm tag here):
Workers in Germany’s once booming solar energy industry face a shakeout of major proportions following declines in the price of solar panels over the past year. A decision by the German government earlier this year to phase out nuclear energy has done little to reignite the sector. The resulting power gap is likely to be filled by coal and gas rather than solar and wind energy. — Sarah Marsh and Christoph Steitz, Reuters, 15 December 2011
Solon’s insolvency filing is likely to be followed by other high-profile German solar company failures, analysts said, as the blood-letting in the global industry intensifies. Shares in Solon plunged 58 percent on Wednesday after the solar module maker announced the filing late the previous day, becoming Germany’s first major casualty of a crisis in the sector. “Solar managers and experts warned already about further bankruptcies,” a Frankfurt-based trader said. —Christoph Steitz, Reuters, 14 December 2011
Like the man asked, “when is a job not a job?” When it kills other jobs and has to be subsidized by government to continue to exist.
But, you know, that’s old fashioned thinking — just like it was when the dot.com bubble was building. The laws of economics seem to always enforce themselves on an apparently unsuspecting or willfully ignorant elite don’t they?
Today’s economic statistical releases:
Initial jobless claims dropped sharply for the 2nd week in a row, falling 19,000 to 381,000. The four-week average is down 6,500 to 387,750, and has dropped for 10 of the past 12 weeks. One note of caution, however, is that the holiday period can make the numbers volatile, and there are lots of special factors that can affect the numbers. Still, the trend is positive, overall, and is looking better than it has at any time since the recovery—such as it is—began.
Food prices pushed the Producer Price Index higher, up 0.3% for the month and 5.7% for the year. The core rate, which ignores food and energy prices, was up 0.1% last month, and 2.9% over the last year.
Industrial production fell -0.2% last month, well below expectations for a 0.2% increase. Manufacturing was down across the board, but auto manufacturing particularly declined. Capacity utilization also dropped slightly to 77.8%. In contrast to this morning’s industrial production numbers, the Empire State Manufacturing Survey rose well above expectations to 9.53. Especially heartening is new orders which rose to 5.1 versus -2.07 last month. In addition, the Philly Fed’s general activity index rose to 10.3 from November’s 3.6, as manufacturing in the Philly Fed district grew at a faster rate.
The nation’s current account deficit narrowed to $110.3 billion in the third quarter, the smallest gap since Q4 2009.
Inflow of investment income into the US slowed sharply in October, to a net $4.8 billion compared to $68.3 billion in September.
The Bloomberg Consumer Comfort Index rose to the highest level in two months, to -49.9. Of course, -49.9 still isn’t good.
The 9 year long war in Iraq is officially over. Frankly, I’m fine with that. I think the one lesson we need to have learned from both Iraq and Afghanistan is the meaning of punitive raid or punitive action. If a country attacks us or otherwise deserves to see the “blunt instrument” of national policy used, we need to go in and do what is necessary, then leave.
For whatever reason, we’ve chosen nation building as an end state instead. And while I certainly understand the theory (and the examples where it has worked … such as Japan, West Germany, etc.), it shouldn’t be something we do on a routine basis.
There were certainly valid reasons to do what we did in both Afghanistan and Iraq. And while I supported both actions, the decision to try to build a democracy in both countries has been expensive in both blood and treasure and I’d deem it somewhat successful in Iraq (we’ll see if they can keep it) and at best marginally successful in Afghanistan (where I fully expect the effort to collapse when we withdraw).
So I’m fine with folding the flag and leaving Iraq. And before the Obamabots try to claim it was their man who finally made it happen, Google it. This is the Bush plan, negotiated before he left office and simply executed by this administration. That said, Obama will shamelessly try to take credit for it while also trying to erase the memory of voting not to fund the war while troops were engaged in combat.
It is going to be interesting to see how Iraq turns out. It is an extraordinarily volatile country sitting right next to two countries waging religious war against each other by proxy. Saudi Arabia and Iran are deadly enemies and with the end of the US presence there, I think Iraq will end up being their battleground.
Within a few months I think there will be concerted campaigns of violence aimed at toppling the current government and installing some flavor of Islamist regime there. I hope I’m wrong.
But again, bottom line – I’m happy to see this chapter draw to a close and that we’re getting our troops out of Iraq. It’s time. And to them all, a huge “well done” and “welcome home”.
While we’re still a little less than a year out form the 2012 presidential election, there are some disturbing signs for the incumbent. While President Obama seems fine in those traditionally blue states that make up the Democratic base, he isn’t faring as well in the all important swing states which we the difference between defeat and victory in 2008.
It is those states which are likely to determine the winner. Each side starts with a base of over 190 electoral votes (196 for Obama, 191 for the GOP nominee). It is from there they wage campaign war and the final outcome will be determined in 12 states that could go either way.
However, the signs aren’t particularly favorable for Obama and the Democrats in those states (Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, Virginia and Wisconsin). Obama took them all last time around and has to take at least half to repeat.
However, per a USA Today poll, that’s not going to be easy:
In swing states, Obama trails former Massachusetts governor Mitt Romney among registered voters by 5 points, 43% vs. 48%, and former House speaker Newt Gingrich by 3, 45% vs. 48%.
In the swing states, the number of self-identified Democrats (not including those who lean Democratic) fell from 35% to 30% since 2008. The number of independents rose 7 points, 35% to 42%.
But the nation’s ideological makeup creates more stress for Democrats than Republicans. In the 12 swing states identified by USA TODAY, 44% of those surveyed are conservatives, more than double the 21% who call themselves liberal.
And of course that makes independents the most sought after group by both sides. And as many polls have indicated over the last three years, independent voters have been deserting the Democrats in droves.
As mentioned they’re critical to both sides, but Democrats have to capture more of their vote to win than do Republicans:
To win a majority, the GOP needs to attract the lion’s share of conservatives plus only a fraction of the 35% who call themselves moderates.
In contrast, the Democratic candidate has to claim the solid support not only of liberals but also most of the moderates.
The problem with that mix, of course, is that moderates or independents have been deserting the Democrats because of their turn to the liberal side of issues. It is for this reason that the old class warfare meme has been revived. Obviously Obama thinks that’s the bridge that will work.
Two factors I continue to point too are key to the election outcome: enthusiasm and independents. In both areas Democrats are hurting. Ed Morrissey makes another important point:
There’s more bad news for Team Obama as well, which is the nature of head-to-head comparisons while only one party has a contested primary. The GOP has not united behind a single candidate, and the passions of the primary fight will act to depress the results for those candidates. The key here is that Obama can’t get above 45% in these swing states against either candidate, which indicates that the actual general-election results could be significantly worse — perhaps a 10-point loss. After all, Obama himself told CBS that he will be judged against the alternative, and that low polling figure at this stage in swing states bodes ill for Obama in that comparison.
It is still either/or for GOP voters while there’s only one choice for Democrats – and even with the split, Obama trails in those key states. Morrissey is right and the possibility that the real difference in the swing states could be significantly higher once a GOP nominee is decided upon makes sense. Again, bad news for the Obama campaign.
Finally, that critical enthusiasm gap I’ve mentioned before:
And the "enthusiasm gap" that helped fuel a Democratic victory last time has turned into a Republican asset. Sixty-one percent of Republicans say they are extremely or very enthusiastic about voting for president next year, compared with 47% of Democrats.
As for the mix:
Among the most enthusiastic are some of the GOP’s core voters: conservatives, middle-aged men and those 50 to 64 years old. Those who are least enthused include core Democratic groups that were critical to Obama’s election in 2008, including minorities and younger voters.
Why are the Democrats key groups turned off? Here’s a clue:
While the nation’s overall unemployment rate dropped to 8.6% in November, the Bureau of Labor Statistics reports that African-American unemployment actually rose from October to 15.5%. For those 20-24, it was up to 14.2%. The jobless rate for Hispanics was unchanged at 11.4%.
Discouraged voters aren’t likely voters. And the key groups noted can’t be happy with the results of 3 years of Obama – especially with the inflated expectations he created and has been unable to deliver upon.
And, he now has to actually run on a record – that record.
Keep an eye on the swing states in the coming months. And pay particular attention to the polls in those states when the GOP finally decides on a nominee. They will most likely tell the tale of the election well before it is ever held.