- Data To Show Housing As Economy’s Achilles Heel
- A.I.G. Repays Fed Debt and Looks Toward Big Stock Sale
- Mauldin: Thinking the Unthinkable
- Early Warning: Misflation
- Miliband Environmental Worries Over BP Arctic Oil Deal
- Masdar City ’Energy Positive,’ Produces More Power Than Needs
- Major Environmental Ruling On Coal
Get started building resilience into your life with our ‘What Should I Do?’ guide
Experts say housing construction has leveled off but show no signs of recovery. In December, starts are expected to fall 2.2% to a seasonally adjusted annualized rate of 543,000 after rising 3.9% to a 555,000 rate in November. Building permits are at their lowest levels since April 2009.
Friday signaled the closing of the A.I.G. recapitalization plan, in which the insurer drew on proceeds from recent asset sales and Treasury funds to pay off its debts to the New York Fed. At the same time, the Treasury converted its preferred shares in A.I.G. into common stock, which it planned to sell off beginning in either March or May, according to people briefed on the matter. “It’s a major milestone,” Robert H. Benmosche, A.I.G.’s chief executive, said in a telephone interview from Washington, where he had lunch with Treasury Secretary Timothy F. Geithner. “Now we’ve got to get on to running the company.”
Last week, in the first part of my annual forecast, I suggested that 2011 would be better than Muddle Through, with GDP growth in the US north of 2.5%. World GDP growth should be even better. This week we look at what I see as the real downside risks to that prediction. Oddly enough, the risks are not in the US but on the other side of both our oceans, in Europe and China. Plus, we will visit a few other items, assuming we have space (Bernanke’s recent speech just screams for some comments).
Early Warning: Misflation (bill)
I was thinking the word “deflation” seems to have slipped in status in the economic blogosphere lately. From being in every other blog post, suddenly it seems to have slipped back into the trees with the recent influx of slightly better economics news. Intrigued, I went and updated the graph above, which shows the monthly changes in the CPI ex food and energy. As you can see, the last two data points (Nov and Dec 2010) show a bit of an uptick. Possibly one could attribute this to the Fed’s QE2 program. So this presumably explains why people stopped talking about it.
“BP has done little to address the issues raised by the Deepwater Horizon disaster, while last year the Greenland government refused to grant drilling concessions to the company because it wasn’t convinced BP has rigorous enough safety protocols,” said Charlie Kronick of Greenpeace. “Now BP has bought its way into the Arctic by the back door. “It seems the company learned nothing last year in the Gulf of Mexico.”
“Right now, Masdar City is energy positive,” Afshin Afshari said during a site visit today. “The power it sends to the grid exceeds the amount used at Masdar Institute and the site offices.” Masdar City produces 10 megawatts from a photovoltaic solar plant and 1 megawatt from solar panels on the roof of the Masdar Institute, Afshari said. The institute is a renewable energy research university.
What seems to have happened here, according to Ward, is this. After Haden’s ruling, Arch, the operator, scaled the site back by 700 acres (the current 2,300 acres is still about the size of downtown Pittsburgh) and got a new permit from the Army Corps of Engineers in 2007. The Obama administration came in and signaled its intention to review the matter. A full year was spent in negotiation between the EPA and the company trying to find a compromise that would let the mining go ahead but with stronger safeguards, according to Ward. But no deal could be reached.
Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the “3 Es.”