The largest oil consuming countries (and EU), in millions of barrels per day:
| Country | consumption | % of oil used | % of population | % of World GDP |
|---|---|---|---|---|
| USA | 20.8 | 25.9 | 4.5 | 21.0 |
| European Union | 14.6 | 18.1 | 7.4 | 21.9 |
| China | 6.9 | 8.6 | 19.9 | 10.7 |
| Japan | 5.4 | 6.7 | 1.9 | 6.5 |
| Russia | 2.9 | 3.6 | 2.1 | 3.2 |
| Germany | 2.6 | 3.3 | 1.2 | 4.3 |
| India | 2.4 | 3.0 | 17.0 | 4.6 |
| Canada | 2.3 | 2.9 | 0.5 | 1.9 |
| Korea | 2.1 | 2.7 | 0.7 | 1.8 |
| Brazil | 2.1 | 2.6 | 2.9 | 2.8 |
| Mexico | 2.1 | 2.6 | 1.6 | 2.1 |
All data is from CIA World Factbook 2008 (downloaded Jun 2008). GDP calculated using purchasing power parity.
Related: Top 10 Manufacturing Countries 2006 - Country H-index Rank for Science Publications - Best Research University Rankings (2007)
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Even worse is the influence of the pork-barrel. Only around 20 states use cost-benefit analyses to evaluate transport projects; of these, just six do so regularly. Alaska’s “bridge to nowhere” is an infamous result of this sort of planning. But it is not exceptional. Two months after the bridge collapsed in Minneapolis, the Senate approved a transport and housing bill that included money for a stadium in Montana and a museum in Las Vegas.
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Such plans stand in stark contrast to the federal government’s strategy today. America invests a mere 2.4% of GDP in infrastructure, compared with 5% in Europe and 9% in China, and the distribution of that money is misguided.
I think they underestimate our ability to ignore. For example we have over $500,000 in federal government debt per household and continue to raise taxes on future generations without any guilt. I think our capacity to ignore is pretty large and certainly large enough to ignore the decision to spend money on things other than infrastructure repair.
I think those that don’t somehow manage to remain ignorant all know that China has taken the lead in investing in infrastructure and that the USA has chosen to elect politicians that are gutting infrastructure investments (and still spending far beyond the resources they have available). I can’t imagine many who understand economics have any trouble seeing which country is investing in the future and which country is selling out its future. It is not the choice I wish was being made in the USA but it is obviously the choice we are making.
Related: USA Infrastructure Needs Improvement - Politicians Again Raising Taxes On Your Children - Manufacturing Takes off in India - True Level of USA Federal Debt
Japan to Cut the Cost of Solar 50% Creating Greater Self-sufficiency
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The incentive will decrease the cost of a solar photovoltaic system by an estimated 50% within 3 to 5 years. This initiative will make solar energy especially appealing because the cost of electricity in Japan is already over $.20 a kWh. This is roughly double the rate of electricity found in many areas of the US.
Germany is the largest solar market (due to government policy encouraging solar development).
Related: Large-Scale, Cheap Solar Electricity - Solar Energy: Economics, Government and Technology - Wind Power Potential to Produce 20% of Electricity Supply by 2030 - solar energy posts on the Curious Cat Science and Engineering blog
Over the last 2 months the yields on bonds have increased the discount rate has continued to decline.
The spread between corporate bond yields and government bonds has decreased a bit as treasury yields have increased 37 basis points compared to just 4 and 6 basis point increased in corporate bond yields.
Data from the federal reserve - corporate Aaa - corporate Baa - ten year treasury - fed funds
Related: Bond Yields 2005-2008 - 30 Year Fixed Mortgage Rates versus the Fed Funds Rate - Initial Retirement Account Allocations
Pretty much everyone (certainly the vast majority of regulators and politicians) have no clue about capitalism. The concept that a “free market” should be allowed to operate is theoretical, based on “perfect competition” (which essentially means zero barriers to entry). Obviously the politicians support, not capitalism (which would require regulation of imperfect markets (and certainly not support consolidation past the point of many competing companies), but the idea that those with the gold make the rules. Natural monopolies (like gas distribution, electricity, likely internet infrastructure…) should be fully regulated companies which then have the infrastructure accessed by multiple competitors (none of which own the natural monopoly - of course).
With some market that is even remotely in the area where a capitalist free market was in place, it is very simple to not have to deal with companies that treat customers horribly (like Verizon, Comcast, Time Warner Cable…) you just chose another company to deal with.
But these companies want to have the government allow them to create a monopoly (or something extremely close) and then claim to be in favor of capitalism (and further make ludicrous claims about what capitalism would suggest about regulation in oligopolistic markets). These ideas is so laughable that if politicians had even a sense of economic understanding they would adopt the appropriate capitalist response (for government).
Obviously, regulation is required as the market moves away from the area of “perfect competition.” When some huge company wants to buy some other huge company (say creating greater than 10% of the market combined) this would be rejected. If the market is a natural monopoly where the free market is not the proper capitalist market (such as one where the government would allow the proper capitalist response to players in the market attempting to break the free market by gaining to much control), then, of course a regulated natural monopoly would take on that economic task. This is not really complicated stuff.
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This year, the average discount rate has fallen every month while the average 30 year mortgage rate has climbed all but 1 month (a 5 basis point drop). In January, 2008 the discount rate averaged 3.94% and 30 year conventional fixed rate mortgages averaged 5.76%. In May, 2008 the discount rate had fallen to 1.98% (for a 196 basis point drop) and 30 year conventional fixed rates had risen to 6.04% (for a 28 basis point increase).
The chart shows the federal funds rate and the 30 year conventional fixed rate mortgage rate from January 2000 through May 2008 (for more details see: historical comparison of 30 year fixed mortgage rates and the federal funds rate).
Related: Affect of Fed Funds Rates Changes on Mortgage Rates - real estate articles - Bond Yields 2005-2008 - Jumbo and Regular Mortgage Rates By Credit Score
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What’s the real federal deficit? by Dennis Cauchon, 2006
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The audited financial statement - prepared by the Treasury Department - reveals a federal government in far worse financial shape than official budget reports indicate, a USA Today analysis found. The government has run a deficit of $2.9 trillion since 1997, according to the audited number. The official deficit since then is just $729 billion.
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The new Medicare prescription-drug benefit alone would have added $8 trillion to the government’s audited deficit. That’s the amount the government would need today, set aside and earning interest, to pay for the tens of trillions of dollars the benefit will cost in future years.
Standard accounting concepts say that $8 trillion should be reported as an expense. Combined with other new liabilities and operating losses, the government would have reported an $11 trillion deficit in 2004 - about the size of the nation’s entire economy.
The federal government also would have had a $12.7 trillion deficit in 2000 because that was the first year that Social Security and Medicare reported broader measures of the programs’ unfunded liabilities. That created a one-time expense.
The continued attempts by politicians to distract from the huge taxes they are voting to place on our children and grandchildren is disheartening. And the continued actions that are the equivilent of getting another credit card when they spend so much that even the “official” books that they have exceeded the allowable total federal debt that is damaging the economy. They need to learn how to live within the current taxes they collect just as people need to learn to live within their earning. Either that fails to do so mortgages their future.
Related: Politicians Again Raising Taxes On Your Children - USA Federal Debt Now $516,348 Per Household - Washington’s Funny Accounting - Lobbyists Keep Tax Off Billion Dollar Private Equities Deals and On For Our Grandchildren - Failed Leadership: Estate Tax Repeal
I would guess a majority of people that read this blog are in the top 2% of earnings in the world. Many might not think they expect to live with more economic wealth than 98% of the world but their expectations seem to indicate that they do.
Generalizations about age groups I find to be mainly useless (providing no actual valuable information, either because it is plain wrong or the truth is so limited as to provide little value). There are often differences among age groups, but rather than the binary way it is presented it is more like those in their 20’s have x trait to say 45% and those in their 30’s have it 35% - hardly the distinct separation many claim. I do, however, think many in the USA today seem to think that it is their right to be rich. This can lead to behavior that is detrimental in the long term - since they are entitled no need to work hard, since they are entitled no need to worry about spending more than they have, since they are entitled there is no need to invest so the future will be prosperous, since they are entitle no need to worry about their own future (savings, career planning…)…
I don’t think this is very defined by age: though to some extent I feel this has grown over the decades. Those that lived through the depression, World War II, without air conditioning, without central heating, had parents that worked in factories when the parents were 14, only the richest in the USA lived in mansions (Mc or otherwise)… are not as likely to think that they just have a natural right to be rich.
Other countries are making the sacrifices today to invest in a prosperous future. It seems to me the USA is mainly counting on the huge economic wealth that has been built up to continue to provide it a prosperous future. That wealth does provide a huge advantage. But if too much is consumed today the future will not be as bright. And for the last few decades it seems to me we have been spending down the huge advantage more than building it up.
It is nice to be rich. But a society believing it is owed a life of luxury has not worked out well over the course of human history.
Related: The Ever Expanding House - Creating a World Without Poverty - Charge It to My Kids - Engineering the Future Economy - USA Federal Debt Now $516,348 Per Household - China’s Economic Science Experiment - Trying to Keep up with the Jones - It’s Not Money
Economist challenges government data
An update e-mailed to ShadowStats subscribers at the beginning of the month warned darkly that “GDP (gross domestic product) and Jobs Data Appear Rigged” and “Despite Manipulated Data, the Recession Deepens.”
By his reckoning, the economy shrank 2.5 percent in the year that ended in March, unemployment is really 13 percent and year-over-year inflation is 7.5 percent.
If I was to believe one of those I would pick 7.5% inflation (or at least something a bit closer to that than to and the government figure). If I had to pick one I think is way off, I would pick the unemployment rate. One thing people need to remember is that numbers can be questioned. Often people see a number and just believe it must be true because it is a number (they usually don’t consciously think this but do so sub-consciously). I am losing confidence in the inflation figures quoted by the government (they just seem to far from what seems to be happening). The GDP is never exact, so being off by a couple percent depending on what assumptions you make is not impossible to understand (yet the news media, politicians, business press… act as though the figure is exactly accurate).
John Williams’ web site, Shadow Government Statistics, has the feel of someone that is a gadfly. And I don’t accept his statements, but I believe the government figures are indeed deserving of more scrutiny. It makes perfect sense for inflation to more accurately take into account the substitution effects people can make but that also allows the figures to be more influenced by judgments of what is a fair substitution (and also what is increased quality worth…). And those questions on inflation can directly effect whether the economy (GDP) grew by 1% of shrunk by 2%.
Related: What Do Unemployment Statistics Really Mean? - the Proxy Nature of Data - Washington’s Funny Accounting
Payday lenders likely doomed in Ohio. Good.
The Senate was unable to find a compromise that both satisfied payday lenders and eliminated the debt trap that bill supporters said forced too many borrowers to take out new loans to pay for old ones. So it did what the House did last month: dropped the hammer.
“I think everybody said there is just no way to redeem this product. It’s fundamentally flawed,” Bill Faith, a leader of the Ohio Coalition for Responsible Lending, said of the twoweek loans. The industry “drew a line in the sand, and the legislature kicked the line aside and said we’re done with this toxic product.”
House Bill 545 would slash the annualized interest rate charged by payday lenders from 391 percent to 28 percent, prohibit loan terms of less than 31 days and limit borrowers to four loans per year. It also would ban online payday lending.
Yes in a small number of cases payday loans are helpful. In the vast majority of cases they harm citizens and the economic well being of society. Legislators should act to fix practices that harm the economy.