Daily Digest 10/21 - Stimulus Flawed But Valuable, After The Natural Gas Boom
The Fiscal Stimulus, Flawed but Valuable (jdargis)
The stimulus legislation, technically known as the American Recovery and Reinvestment Act of 2009, was a mixture of tax cuts for families and businesses; increased transfer payments, like unemployment insurance; and increased direct government spending, like infrastructure investment. A growing literature examines the effects of such tax cuts and increases in government spending over history and across countries, and the overwhelming conclusion is that fiscal stimulus raises employment and output in the near term.
Whether its new-fangled Japanese stocks, hi-tech internet company valuations, multi-colored flowers, or mansions made affordable by criminally lax lending standards, Grant Williams notes that a bubble is a bubble is a bubble; and citing Stein's Law: "If something cannot go on forever; it will stop." In this excellent summary of all things currently (and historically) bubblicious - whether greed-driven or fear-driven - Williams concludes it is never different this time as he addresses the four phases of the classic bubble-wave: smart-money, awareness, mania, blow-off (or crash) and explains how government bonds are set to burst and gold is only just about to enter its mania phase.
Moyers & Company Show 141:Plutocracy Rising (Arthur Robey)
The One Percent is not only increasing their share of wealth — they’re using it to spread millions among political candidates who serve their interests. Example: Goldman Sachs, which gave more money than any other major American corporation to Barack Obama in 2008, is switching alliances this year; their employees have given $900,000 both to Mitt Romney’s campaign and to the pro-Romney super PAC Restore Our Future. Why? Because, says the Wall Street Journal, the Goldman Sachs gang felt betrayed by President Obama’s modest attempts at financial reform.
Members of the neo-Nazi Golden Dawn party, who are widely seen to have the support of the police, clash violently with leftists and immigrants, raising fears of the precariousness of the rule of law. But the discord is not confined to them.
An improving housing market is helping boost household confidence just as companies cut back on replacing outdated equipment on concern about the so-called fiscal cliff. Federal Reserve policy makers will meet this week for the first time since announcing another round of stimulus in August aimed at shoring up growth that may help reduce unemployment.
Gulf Oil: Keeping It To Themselves (jdargis)
Energy use per head is also rising. According to BP, in 1970 in the Middle East it was half what it was in other emerging markets. By 2010 it was three times higher. Global oil consumption stayed at roughly 4.6 barrels a head annually between 2000 and 2010, but the average Iranian and Saudi was getting through roughly 30% more by the end of the decade. The Saudis consume 35.1 barrels each. Overall energy consumption per head, at 7.3 tonnes of oil equivalent, is roughly the same as in America (see chart), which is much richer.
After The Boom In Natural Gas (jdargis)
“The country has stumbled into a windfall on the backs of these entrepreneurs,” said Edward Hirs, a finance professor at the University of Houston who contributed to a report that estimated that the nation’s economy benefited by more than $100 billion last year alone from the lower gas prices.
But while the gas rush has benefited most Americans, it’s been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.
President Obama has held up the pipeline in Nebraska until an in-depth environmental impact study can be completed. In the meantime, he endorsed the fast-tracking of the southern portion. Earl Hatley, an Oklahoman of Cherokee decent who is protesting the pipeline, thinks fast-tracking the southern portion of the Keystone pipeline will make the creation of the northern portion inevitable.
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