Monthly Archives: February 2012
Right now there’s a shortage of orange juice in the US because of a number of diseases, especially one called “greening” that has been destroying the crop.
However, there’s an alternative – import Brazilian orange juice.
But we can’t:
The U.S. Food and Drug Administration, after several weeks of deliberation, has blocked imports of frozen, concentrated orange juice from Brazil, probably for the next 18 months or so, even though the agency says the juice is perfectly safe.
So if it is admittedly safe and we need the juice to help meet demand (and keep the price down) why can’t we import this juice? Why can’t we do what is necessary with something the FDA says is safe?
The FDA’s explanation is that its hands are legally tied. Its tests show that practically all concentrated juice from Brazil currently contains traces of the fungicide carbendazim, first detected in December by Coca-Cola, maker of Minute Maid juices. The amounts are small — so small that the U.S. Environmental Protection Agency says no consumers should be concerned.
The problem is, carbendazim has not been used on oranges in the U.S. in recent years, and the legal permission to use it on that crop has lapsed. As a result, there’s not a legal "tolerance" for residues of this pesticide in orange products.
So, according to the FDA, any speck of this fungicide, if found in orange juice, is an illegal adulterant and won’t be allowed, even though residues of the same fungicide are allowed in many other foods, including apple and grape juice.
There is no “legal permission” to use the fungicide on the crop because such “permission” has lapsed and thus there is no “legal tolerance” for any residue no matter how benign. Consequently, because of that lapse the regulatory regime says “no go” on the import of something perfectly safe and in demand.
The result of the unwarranted ban (this orange juice is welcome in Europe, by the way):
In 2010, about 11 percent of all the orange juice consumed in America came from Brazil, according to the U.S. Department of Agriculture. That share may seem modest, but economist Thomas Prusa of Rutgers tells The Salt that cutting it out could boost wholesale prices of concentrated orange juice by 20 to 45 percent.
So gas prices aren’t the only thing going up soon. And in the case of orange juice, the price increase can be tied directly to government regulation.
As orange juice goes up by 20 to 45%, who is it that will be hurt the most? That’s right – the poorest among us who now either have to find a substitute or perhaps forgo the juice altogether.
You probably remember these lines in President Obama’s State of the Union address this year:
Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75 percent of our potential offshore oil and gas resources. (Applause.) Right now — right now — American oil production is the highest that it’s been in eight years. That’s right — eight years. Not only that — last year, we relied less on foreign oil than in any of the past 16 years. (Applause.)
Anyone … what’s the implication? Yes, that’s right, the implication is that this president and his administration have worked tirelessly to aid in the exploitation of oil during his three years in office. And he’s right about one thing, American oil production is the highest its been in eight years.
But it true despite of him and his administration, not because of them. The rise in oil and gas production has been because of an increase in production on state and private land, not federal land as this chart demonstrates:
Another myth destroyed. In fact, as most who’ve followed this administration’s energy policies for three years know, they’ve been anything but friendly toward the petroleum industry. The chart simply quantifies how unfriendly they’ve been. In fact, if it wasn’t for production on state and private land, we’d be looking at the lowest production in eight years.
Oh, by the way, another myth was also offered up that night in an appeal to justify more money to “green” energy, i.e.:
But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy. (Applause.) A strategy that’s cleaner, cheaper, and full of new jobs.
According to the Institute for Energy Research’s North American Energy Inventory published in December of 2011, the total recoverable oil resources in North America (and that obviously includes Canada) is 1.79 trillion barrels, or “enough oil to fuel every passenger car in the United States for 430 years”. Any guess why Keystone XL is so critical?
The problem, according to IER isn’t that we have low proven reserves (the usual figure backing that 2% number is 20 billion barrels). The problem is where there are recoverable oil reserves there are also federal prohibitions against drilling and exploiting those reserves. The US has 1.4 trillion barrels in recoverable oil with the largest deposits located offshore, Alaska and in the Rocky Mountain West’s shale. Combined with Canadian and Mexican resource’s, the total recoverable oil in North America is 1.79 trillion barrels or, as the IER points out, “more [oil] than the world has used since the first oil well was drilled over 150 years ago…”. If you need more context, Saudi Arabia has about 260 billion barrels of proven oil reserves.
And if you really want to see some eye-popping numbers, take a look in the IER Energy Inventory at our gas reserves. At current natural gas generation levels, there are enough recoverable gas resources to provide the US with electrical energy for 575 years.
If we do what is necessary to recover it.
The myth of America being an energy poor country is just that, a myth. And, as the State of the Union proves, it is still used by those who are determined to scare Americans into accepting their more expensive (and thus heavily subsidized) alternatives. The Co2/global warming/cap and trade scare has failed. The alternative is to claim we don’t have the petroleum base to support our consumption. It simply isn’t true.
But you can count on continuing to hearing both myths continued during this election year.
Don’t buy into them … demand the federal government get the hell out of the way and let us do what is necessary (safely and sanely) to exploit the tremendous petroleum and gas reserves we enjoy.
The following statistics were released today on the state of the US Economy:
Initial jobless claims remain unchanged at 351,000 for the latest week. The 4-week moving average fell 7,000 to 359,000. The recent decreases in claims indicate that a positive Employment Situation report for the month.
The Bloomberg Consumer Comfort Index rose to the highest reading since April, 2008, coming in at -38.4. Of, course, that’s still a minus sign in front of that number.
The FHFA reports house prices improved a bit in December, rising 0.7%. That’s still down -0.8% on a year-over-year basis.
The Kansas City Fed Manufacturing Index came in well above expectations, rising from 7 last month to 13 in February.
Well, frankly, I’m not particularly sure. Of course we have RomneyCare and ObamaCare. And we have this, said in Chandler, Arizona by MItt Romney concerning taxes:
"I am going to lower rates across the board for all Americans by 20%. And in order to limit any impact on the deficit, because I do not want to add to the deficit, and also in order to make sure we continue to have progressivity as we’ve had in the past in our code, I’m going to limit the deductions and exemptions particularly for high income folks. And by the way, I want to make sure you understand that, for middle income families, the deductibility of home mortgage interest and charitable contributions will continue. But for high income folks, we are going to cut back on that, so we make sure the top 1% keeps paying the current share they’re paying or more."
Really? Because that’s right out of the Occupy Wall Street playbook. His campaign staff released a press release which stated, “"The principle of fairness must be preserved in federal tax and spending policy,"
Of course they don’t believe that at all or they wouldn’t be talking about “the top 1%” paying more. It has nothing to do with “fairness” as most people would define it.
This is what I talk about when I say that Republicans are as much a problem, if not more of a problem, than Democrats. Republicans like Romney compromise their principles for votes. This is a class warfare buy-in by him, even using the OWS/Democratic rhetoric.
If you wonder why Conservative Republican voters are less than enthusiastic about this field, Romney demonstrates it yet again.
Plastic, fantastic Mitt co-opt’s the left’s class warfare rhetoric and caves on taxes.
We’ve been seeing some better—if not good—economic numbers lately, mainly in employment, but also in industrial production, and general business conditions. One might be tempted to believe there’s at least a mild recovery on the way. That’d be nice.
But I’m…troubled. First, there’s this:
Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more…
In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.
During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl…
At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot.
In other words, there’s at least an 18% price differential in the current price of oil compared to gold, compared to the historical average.
Another important thing to remember is that the current rise in energy prices does NOT appear to be related to demand for energy. According to the US Energy Information Agency, the US demand for both electricity and petroleum has been decreasing.
Statistics for energy use usually run a couple of months behind, but the recent figures for petroleum are that from August, 2011 until November 11, Total Crude Oil and Petroleum Products consumed, in thousands of barrels per month, fell from 593,757 to 562,019. Figures for the same months in 2010 are 609,517 and 569,312, respectively.
Similarly, the most recent electrical generation numbers, in millions of kilowatt hours, show that from August to November, 2011, total electricity consumption fell from 370,073 to 273,053. Both figures are about 2 million kWh less than the same months in 2010.
Now, maybe in the last two months there’s been a huge turnaround in energy consumption, but please note that the year-on-year demand is declining, and in general, has been since 2006.
So, if energy use is declining, while prices are increasing, and supply remains steady—or is increasing—then we can reasonably look to monetary reasons for the price increase, as the economic fundamentals do not explain the price changes.
The implications for energy prices, therefore, are not good. Start saving those pennies, kids.
For all the good it’ll do you.
Oh, and by the way, if the economy is recovering, why is energy demand decreasing, rather than increasing? Just asking.
When Larry Summers and team were preparing a memo for Barack Obama on the planned stimulus, Christina Romer was a part of the effort. The New Republic brings to light a conflict within that team about how much stimulus they should recommend. As you recall, the final recommendation included two options. Option one was a “modest” stimulus in the rage of $550 to $670 of legislated money (about the same amount that Paul Krugman first recommended). The second option was for $850 billion and was the option Obama chose.
Summers mentions in the memo that in order to make a bigger impact on the “output gap”, a stimulus of over a trillion dollars was needed but most likely “not accomplish the goal” of reducing the “output gap” because of the “impact it would have on markets”.
Romer, on the other hand, felt that closing the “output gap” was much more important than the impact such a move might have on markets and recommended a much higher stimulus. How much higher? Approximately twice the level of the highest option presented to Obama of $850 billion. That’s right, about $1.7 trillion dollars. Romer claimed that doing so would bring the unemployment rate to “5.1%”. But then, as we remember, the country was promised that if the stimulus that was eventually passed was made law, unemployment would remain under 8%.
Of course it didn’t rising to 10.5%. However the prediction came directly from the memo Summers presented to the president – $880 billion stimulus would create 3.4 million jobs and keep the unemployment rate at 7.3%.. Neither of those came true and the administration was reduced to claiming “saved” jobs in its defense.
Romer’s predictions were even rosier. She believed that a $900 billion stimulus would create 3.75 million jobs and put the unemployment rate at 6.6%. Again, not even close.
Yet, when you read the comments of others out there, you find some of them still implying that a larger stimulus would have been better for what ailed us. That our problem was the size of the stimulus, not its design.
Of course that’s patent nonsense. The stimulus failed because it was horribly designed and terribly executed. And it was aimed at the wrong things. It became a combination of slush fund for politicians and budget short-fall device for states. Where what little was aimed at it supposed purpose (creating jobs) it failed. We discovered that “shovel ready” was anything but. Additionally it was used to bail out industries government had no business bailing out.
Whether it was $900 billion or $1.7 trillion, those facts wouldn’t have changed one bit. About all that might have happened had Romer gotten her way is a few states might have been able to delay their financial reckoning for another year or so.
Noam Scheiber, the author of the TNR article (and an upcoming book on how the Obama White House “fumbled” the recovery) doesn’t go as far as to claim the larger stimulus would have been a better choice although he certainly implies it. He argues that Obama wouldn’t have proposed it because Congress – even a totally Democratic Congress – wouldn’t have passed a $1.8 trillion dollar stimulus.
However, he argues, the inclusion of the higher stimulus number would have gotten Obama to “have felt a greater sense of urgency had he better understood how far he was from the ideal.”
First, I don’t agree that a Nancy Peolosi/Harry Reid controlled Congress wouldn’t have done exactly that, i.e. passed an almost $2 trillion dollar stimulus package. One only has to remember how they steamrolled the health care bill through to doubt such a thing couldn’t have happened with a larger stimulus. Secondly, it is highly debatable that Romer’s number was any sort of an “ideal”.
It was, at most, a “best guess” and given her predictions of the effect of a $900 billion stimulus (the size eventually passed) on job creation and unemployment, it is a suspect “best guess”.
And finally, regardless of the numbers proposed, it was a terribly designed and executed program that redefined “waste, fraud and abuse”. Doubling that wouldn’t have made it better.
Unlike some out there lamenting Summers refusal to have included Romer’s recommendation, I applaud it. That doesn’t mean I agree with the number he came up with, but to use Washington DC budgetspeak, he “saved” us about a trillion dollars.
The following statistics were released today on the state of the US Economy:
ICSC-Goldman reports store sales were driven up 3% last week by Valentines Day. Sales are 3.2% higher than last year. Predictions for the whole month however, are still below trend. Redbook’s same-store sales rate, at only a 2.9% year-over-year increase last week, continues to hold almost at the lows for the year. Conversely, Redbook is signaling a strong 1.4% gain for the month, in opposition to the ICSC-Goldman forecast.
Existing home sales rose 4.3% in January to a 4.57 million annual rate. But the median price still fell sharply, down -4.6% to $154,700.
The Mortgage Bakers Association reports mortgage applications fell -4.5%, with purchase apps down -2.9%, and refinance apps down -4.8%.
As I’ve said repeatedly over the years, candidate vs. candidate polls are virtually useless this far out from an election (9 months).
There’s little reason to pay attention to them. So when you see these:
Obama 48.6 %
[I]n January 1980, the Gallup Poll showed:
And, of course, there are plenty of other examples of those sorts of polls to be found if you look.
That said, there are polls that are indicators because they provide a history that lends itself to identifying whether or not an incumbent is actually in trouble or not. The candidate v. candidate polls above really don’t. We’re still in the early stages of nominating a candidate for one party and the focus has yet to really turn on the incumbent. Numbers will change, I suspect fairly dramatically, when that happens. And, to this point, I’d suggest that most of the country isn’t yet engaged in the presidential race. That will happen 6 months from now when you can begin to pay attention to those polls pitting candidate against candidate.
But to those polls that matter, or at least point to historical trends, etc. Here’s one:
It’s February, nine months before a presidential election, and only 22 percent of Americans say they are satisfied with the way things are going. Voters haven’t been this unhappy with the country since George H.W. Bush’s presidency, when only 21 percent of Americans reported being happy with the country’s direction. And before that, the lowest approval rating was 19 percent during Jimmy Carter’s first term.
What do the two presidencies have in common? Neither of them won re-election. And, if the trends holds true, Obama looks to be in an equally precarious situation.
The American Enterprise Institute for Public Policy Research released its 2012 campaign outlook, and it’s clear Obama’s sitting in the same position George H.W. Bush and Jimmy Carter were in during the February before their election losses—voters don’t feel good about the country.
So when I hear Democratic strategists like James Carville saying things like this …
The only way the president will lose according to Carville is if some event takes place and changes things. He maintained it wouldn’t be the result of the GOP nominee outshining Obama.
“Right now, things are starting to perk up a little bit,” he said. “Who knows? This is the — no Republican can beat Obama. Events can beat Obama. He’s not going to get beat by a Republican. Now events could come in and cause him to lose the election. But that’s it right now. That was not the case three months ago.”
… I laugh. This is pure “whistling past the graveyard” and political spin. Carville is engaged in psychological warfare here. He wants everyone to believe the worm has turned and it is all sunlight and roses for his candidate.
If dissatisfaction can be called an “event”, then that’s the event which should put Obama exactly where he belongs in November – planning for his presidential library in 2013.
Carville knows as well as anyone that at this point in the process, his choice for re-election has gone almost unscathed and his record mostly unscrutinized. But that will change and it will change dramatically in a few months. And about that time, the focus of the nation will begin to turn to national politics.
The fact remains that the American public is not happy and when it is not happy it tends to not reelect its president. That is the “event” this president faces. And my guess is, when the GOP finally settles on its candidate, OMG (Obama Must Go) will be the driving “event” which determines the election.
Carville says “no Republican” can beat Obama? I disagree. In the end, any Republican can beat Obama. Some by larger margins than others, certainly. But that’s my prediction. The Democrats really haven’t a clue about the level of dissatisfaction that exists with this president.
Even the president most demonized by the left had better numbers than Obama does. At the January SOTU prior to his 2004 re-election run, George W. Bush enjoyed a 41% satisfaction rate (as did Ronald Regan and Bill Clinton). As noted, Obama is at 22%, 3 points above the president almost universally identified as our worst modern president.
Let’s see if James Carville is still laughing after the “event” it November. My guess would be “no”.
I’m sure you’ve seen this by now, but ESPN fired a couple of folks for using an old, old, old saying in a perfectly appropriate way because they, apparently, aren’t familiar with the difference in use and misinterpreted a word for a racial slur.
The PC police, apparently just as ignorant, called for the heads of two members of ESPN when they used the phrase “chink in the armor” to describe Jeremy Lin’s on court vulnerabilities (turnovers as it happens). But, but, but, Jeremy is of Chinese descent, so “chink” is therefor a “racial slur”.
Pure and total outraged ignorance. Those who’ve pushed this ought to be ashamed of themselves. HuffPo, naturally, is at the forefront of the stupidity:
And, now, we may have found our most offensive headline from a mainstream media outlet.
Several hours after the Knicks’ Lin-spired winning streak was snapped by the New Orleans Hornets, ESPN ran the headline "Chink In The Armor" to accompany the game story on mobile devices. ESPN’s choice of words was extremely insensitive and offensive considering Lin’s Asian-American heritage. According to Brian Floyd at SB Nation, the headline appeared on the Scorecenter app. The offensive headline was quickly noticed, screen grabs, Twit pics and Instagrams were shared and it began circulating widely on Twitter.
The use of the word "chink" is especially galling as Lin has revealed that this racial slur was used to taunt him during his college playing career at Harvard. After a brief run, the headline was changed to "All Good Things.."
Being so ignorant of the proper use of the word “chink” in this context is even MORE galling.
Professor Jacobson educates the dummies:
Chink in the armor” is a non-racial idiom, not a single word, denoting:
A vulnerable area, as in Putting things off to the last minute is the chink in Pat’s armor and is bound to get her in trouble one day . This term relies on chink in the sense of “a crack or gap,” a meaning dating from about 1400 and used figuratively since the mid-1600s.
The term “chink in the armor” is used frequently in sports analogies, as this 2005-2010 Google search indicates.
“Chink” standing alone also is a slang pejorative for someone of Chinese or more generally of Asian descent.
In discussing Jeremy Lin’s playing vulnerabilities, an on-air ESPN announcer used the phrase “chink in armor” and it was repeated in an ESPN web headline early the next morning.
Absurd, disturbing, ignorant.
A virtual trifecta brought to you by oversensitive and ignorant popinjays who cost two people their jobs because they were too stupid to understand the proper use of a word. And ESPN, you’re no better.