Daily Digest 11/19 - China Curbs Inflation, Oil Shock in UK, Fuel Economy Hits Record
- IMF Says Hong Kong Property Prices May Spur Slump
- Dollar Slips as Bernanke Defends Easing
- China Takes Moves to Curb Inflation
- Oil Shock Warning for UK Government
- Alaskan Court Accuses BP of Criminal Negligence
- Cold Comfort as Energy Prices Increase Again
- As Things Fell Apart, Nobody Paid Attention
- Fuel Economy Fleetwide in U.S. at Record Levels
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The International Monetary Fund said Hong Kong’s accelerating asset inflation risks causing a bust that leads to deflation and an extended economic “downturn,” and urged further measures to rein in property prices. “Depending on the amplitude of the upswing, the resulting downturn could prove both protracted and painful,” the IMF said in a report today. The government should consider increasing stamp duties on housing and taxes on owners of higher-end properties if prices continue to rise, it said. Hong Kong home prices have climbed about 50 percent since the start of last year, surpassing a 1997 peak that was followed by a six-year deflationary slump.
“Fully aware of the important role that the dollar plays in the international monetary and financial system, the [Federal Open Market Committee] believes that the best way to continue to deliver the strong economic fundamentals that underpin the value of the dollar, as well as to support the global recovery, is through policies that lead to a resumption of robust growth in the context of price stability in the United States,” Bernanke said in a speech delivered at a conference at the European Central Bank. The Fed released the text of the speech late Thursday night in Washington. Bernanke also implied that China’s decision not to allow the yuan to rise more rapidly has essentially thrown a wrench into the global economic recovery.
The Chinese central bank on Friday raised capital reserve requirements for its banks for the fifth time this year in order to “appropriately control” credit and liquidity. Meanwhile, the Hong Kong government significantly raised the stamp duty on residential property transactions to damp property speculation. The People’s Bank of China said the proportion of deposits to be set aside by banks should increase by 50 basis points to 18.5 per cent for large banks, the highest level ever. The widely expected move comes on the heels of figures that showed consumer price inflation in China jumped last month to 4.4 per cent – well above the government’s target of 3 per cent – amid sharp rises in the price of some foods.
The cost of food, heating, travel and retail goods will all rise if there is not a ‘strong and coordinated response’ from government to act against rising oil prices, an industry group has warned. The report from a group including Richard Branson’s Virgin, Kingfisher and Stagecoach Group calls for a ‘contingency plan’ to address the risk of Peak Oil – the point at which oil production plateaus and then drops. The Industry Taskforce on Peak Oil & Energy Security says ‘we are running out of time’ to protect the UK economy and make the necessary switch to sustainable energy sources. It has previously warned that peak oil could come potentially by 2015.
In a petition filed Wednesday in a U.S. District Court, federal probation officer Mary Frances Barnes accused BP of criminal negligence in its conduct prior to another North Slope oil spill in November 2009. That, she wrote, constituted a violation of the probation conditions set in 2007 for the earlier spill. U.S. Judge John D. Roberts ordered BP to appear in federal court in Anchorage on Dec. 20 in connection with the petition. BP said it would answer the government's legal filings in due course. The move piles the pressure on the U.K.-based oil giant, which is already under intense scrutiny over its role in the Deepwater Horizon disaster earlier this year. A report from a team of technical experts this week concluded that BP suffered from an "insufficient consideration of risk" and a "lack of operating discipline" that contributed to the disaster, which touched off the worst offshore oil spill in U.S. history.
Gas and electricity pundits have moved from elation to despair in the past few weeks, after EDF Energy's announcement of a winter price freeze was followed by a 7pc energy price rise from former state provider British Gas. Scottish & Southern Energy also lifted its gas prices by a huge 9pc. Rivals are expected to follow suit, although none had done so at the time of going to press. EDF has now confirmed that the price freeze will apply to its cheapest web tariff. Despite EDF's plans, the picture looks gloomy for the average customer. We already owe a collective £1.1bn to the energy companies, and this figure is likely to rise as the temperature drops.
There are consequences to every action. There are also consequences to every inaction. Over the next decade Americans will experience the dire consequences of inaction. The implications of peak cheap oil have been apparent for decades. The Department of Energy was created in 1977. The Department of Energy’s overarching mission was to advance the national, economic, and energy security of the United States. In 1970, the U.S. imported only 24% of its oil. There were 108 million motor vehicles in the U.S., or .53 vehicles per person in the U.S. Today, the U.S. imports 70% of its oil and there are 260 million vehicles, or .84 vehicles per person. The land of the delusional has no inkling that their lives of happy motoring are winding down. The vast majority of Americans believe that oil is abundant and limitless. Their leaders have lied to them. They will be completely blindsided by the coming age of hardship.
The EPA is tasked in part with getting the automotive industry in the U.S. to meet standards on fuel economy. The goal of the standards is to not only reduce the nations need for foreign oil, but to reduce the amount of pollution that is produced by cars that burn more fuel. According to the EPA, the fuel economy in the overall vehicle fleet in the U.S. during 2009 hit a record high. The overall fuel economy has increased 1.4 mpg to 22.4 mpg, the highest overall fuel economy rating in the U.S. since the EPA starter tracking fuel economy overall line 1975. The overall fleetwide average fuel economy for 2010 year model vehicles is expected to grow to 22.5mpg.
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