Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

July 8, 2015

The Plan that can Save Us and it Scares the Hell Out of Wall St Billionaires


Long-term unemployment is the scourge of modern economies. In a society where people take value from work, unemployment is destabilizing and degrading. A bout of long-term unemployment can permanently scar worker, leaving them with lower wages and fewer usable skills. Last year, Jared Bernstein and Dean Baker put forwarda persuasive case for a return to full employment as the palliative to unemployment. But it’s increasingly clear the private sector cannot create full employment on its own. Even at the height of the Clinton boom, millions of African-Americans and low-skilled workers were jobless. To get full employment, progressives should embrace an idea that hasn’t surfaced recently in mainstream American political dialogue: a universal government job guarantee.
In a recent article, Derek Thompson explored a future “world without work.” While his article was well-researched and informative, it misses a key point: For inner-city Black Americans, “a world without work” is not a dystopian future, but a present reality. As Mark Levine writes, “By 2010, in five of the nation’s largest metropolitan areas, fewer than half of working-age black males held jobs. In 25 of the nation’s largest metropolitan areas, fewer than 55 percent of working-age black males were, in fact, employed.” In a recent Center for Economic Policy Research report Cherrie Bucknor notes the Black/white gap in employment rates “increased during the recent recession and is still larger than its pre-recession level.”
Reniqua Allen refers to this reality as the “permanent recession” that Black men face. People of color are the first to lose jobs during a recession and the last to gain them in a recovery. Further, many future losses from new technology will occur in heavily racialized sectors, like retail and fast food. Occupational segregation means that people of color, and particularly women of color, will bear the brunt of job losses. Racial justice requires addressing the future of work.
A government job guarantee has a long history in American politics. As Theda Skocpol notes in “Social Policy in The United States,” during the recession of the 1890s, the American Federation of Labor (which later merged with the Congress of Industrial Organizations to form AFL-CIO), requested public works to abate the recession. They repeated these demands during the early 1900s, and after World War I demanded that “a nation that sent men into battle had a moral and political obligation to make sure they had jobs when they returned home.”
However, the AFL were opposed to government-sponsored unemployment insurance. Skocpol cites Alex Keyssar who writes that, “unionists stressed that public works programs were preferable to simple poor relief in three respects: They paid workers a living wage rather than a pittance; they permitted jobless men and women to avoid the demoralizing consequences of accepting charity; and they performed a useful public service.” However, over the past decade, the government hasn’t guaranteed jobs; instead ,conservative austerity policies have lead to millions of public sector jobs being cut.
One partial reason the government job guarantee may be off the political map these days is because many of those who support such a program no longer turn out to vote. Using ANES, I find that while non-voters are more likely to support than oppose a government-job guarantee, voters are overwhelmingly opposed. However, the ANES question is also rather strongly worded: The option that “government should let each person get ahead on own” is appealing, but in an economy where millions of Americans are unemployed or under-employed even at the lowest levels of unemployment, it also seems mythological.
A recent YouGov poll asks a more pointed question: “Would you favor or oppose a law guaranteeing a job to every American adult, with the government providing jobs for people who can’t find employment in the private sector?” In this formulation support increases significantly, though as the chart below shows, there are still race and class gaps.
A job guarantee could leverage two of the strengths of the progressive movement: electoral power at the federal and city level. A progressive President could direct money and projects to mayors, thereby ending the scourge of inner-city poverty that has plagued America for far too long. Progressives have a long history of creating more jobs, but have failed to articulate an argument for why that is true. That is mainly because progressives have preferred an active monetary policy, rather than active fiscal policy, to boost employment. But voters struggle to understand monetary policy. On the other hand, they could understand a universal job guarantee.
Research suggests that Obama’s response to the Great Recession may lead to voters trusting Democrats more on the economy; but as of yet, this has yet to materialize, and Republicans remain more trusted. A universal job guarantee could change that.
recent survey of 200 leading economic security experts by the Center for Global Policy Solutions finds that 91 percent say that job creation is important for closing the racial wealth gap. The report recommends a National Investment Employment Corps, guaranteeing jobs with an annual salary of $23,000.
The biggest opposition to a government job guarantee will almost certainly come from big business, and particularly the business-conservative wing of the Republican Party. This may seem surprising, since businesses would benefit from infrastructure and public works, as well as having a highly trained workforce. But this is to misunderstand what corporations seek: not profit, but power.
Economist Chris Dillow makes this argument, arguing that full employment would deprive business of political power by removing their mystical power over the “state of confidence.” If, in fact, the government can maintain full employment, it won’t have to kowtow to business on taxes, regulation and spending. There are also labor implications. If workers could chose to reject a private sector job knowing that a public sector job was available, business would actually have to make working conditions livable and pay a fair wage. This “reserve army of unemployed paupers,” as one economist called them, ensures that workers accept degradation on the job rather than suffer the horrifying fate of unemployment.
The ultimate goal of business conservatives is to turn labor into one homogeneous glob that can be fired, re-located and re-trained at will. Thus they oppose paid sick leave, family leave and higher wages, even though all of these changes boost workerproductivity. Business conservatives despise the minimum wage, though there is very little credible evidence that a higher minimum wage would eliminate large numbers of jobs. The threat of the minimum wage is that it would cut into profits and, more importantly, power. Though more worker ownership would boost worker happiness and productivity, it worries bosses who feel they would be ceding control. Business wants to control workers as much as possible, devising Orwellian strategies to intrusively monitor workers. Business conservatives want workers to be expendable, so they have fought to ensure that if a worker is killed or maimed on the job, they will  receive next to nothing.
With workers free to pursue a well-paid, productive public job, corporations would have to pay fairer wages and ensure better labor standards. But while private companies say they love competition, in reality nothing is more terrifying. That will be the most difficult force to overcome in the push for a public jobs program. But if it can be overcome, Americans will benefit extraordinarily. In the wake of the Great Recession, LaDonna Pavetti, writes, “thirty-nine states and the District of Columbia used $1.3 billion from the fund to place more than 260,000 low-income unemployed adults in temporary jobs in the private and public sectors.” The result for workerswas higher incomes, and an easier transition into the workforce after the subsidy program ended.
During the Great Depression, make-work programs funded art and infrastructure, most of which we still enjoy today. In the future, robots may do many of the jobs that humans currently do. That shouldn’t be a lament: We can now put human effort into healing the environment, curing disease and ending hunger.
Today, millions of Americans are jobless. Putting them to work would be a boon for economic growth. In the future, everyone can have a truly fulfilling and life affirming job. But that’s going to require some will, and some government.
Sean McElwee 
Sean is a writer and a research associate at Demos. His writing may be viewed at Follow him on Twitter at @seanmcelwee. This post published originally at Salon
Yes, No? Do you Care?

March 20, 2014

The Billionaires First came for the Money, then they Stoled the Country

First the rich-rulers came for our economy, and we said nothing. 
Then they came for our government, and again, we said nothing.
Now, they've come for science, and we're not saying a word.
Thanks to Republican-backed austerity measures, our nation’s scientific infrastructure has been hit with devastating budget cuts.

All across America, research labs are shutting their doors, scientists are joining unemployment lines, and potentially life-saving drug trials and research projects are being put on hiatus.
But have no fear, because the billionaire oligarchs are here.
As William Broad points out in The New York Times, "Yet from Silicon Valley to Wall Street, science philanthropy is hot, as many of the richest Americans seek to reinvent themselves as patrons of social progress through science research."
Broad goes on to write that, "The result is a new calculus of influence and priorities that the scientific community views with a mix of gratitude and trepidation."
 Broad goes on to write that, “The result is a new calculus of influence and priorities that the scientific community views with a mix of gratitude and trepidation."

And as Steven Edwards, a policy analyst with the American Association for the Advancement of Science said, “For better or worse, the practice of science in the 21st century is becoming shaped less by national priorities or by peer-review groups and more by the particular preferences of individuals with huge amounts of money."

From disease research and underwater exploration, to space travel and climate change denial, billionaires are funding just about all aspects of science -- or pseudoscience -- in America today.
As a result, basic science research, which is most often responsible for huge scientific breakthroughs, is suffering, because it's not in the personal interests of the billionaires.
They’re only funding areas that they personally care about, and they're privatizing science in the process.

But this billionaire takeover of science in America shouldn't come as a surprise, because it's just the latest piece of the puzzle.
Before they had their sights aimed on science, the billionaires came for our economy, and turned it into an oligonomy.
With the help of Ronald Reagan, they unleashed Reaganomics on America, taking our nation back to the Gilded Age era of oligonomy, an economy dominated by oligarchs.
In 1981, soon after he took office, Reagan signed into law one of the largest tax cuts in history.

That legislation included a 23% across-the-board cut to individual income tax rates.
And in 1986, Reagan again lowered individual income tax rates.
Meanwhile, Reagan also stopped enforcing the Sherman Antitrust Act, a law that has been on the books since 1890.
The Act prevents monopolies from forming, and protects against other unfair business practices.
Unfortunately, without being enforced, corporations were allowed to grow out-of-control under Reagan, as the billionaire oligarchs got even richer.
This all inevitably led to a massive split between the wealthy elite and everybody else in America, a gap in income equality that is getting worse and worse every day.

Next, the billionaires came for our government, and turned it into an oligarchy.
From the halls of Congress to state houses across the country, government is working for the wealthy elite first, and everyone else second.
The ultimate proof of the oligarchs' success in taking over our government came in 2008, when they crashed our economy.
During the Great Recession, total U.S. household wealth fell by about $16.4 trillion, with much of those losses going into the pockets of the oligarchs who caused one of the worst economic collapses in American history.
Not a single billionaire bankster was jailed or even prosecuted for that collapse.
And for even more proof that Washington has turned into an oligarchy, the NRA, a group that is among the oligarchs, is fighting feverishly to block President Obama's nomination of Dr. Vivek Murthy to be Surgeon General.
With help from current Senators, including Democrats, the NRA has launched campaign against Murthy, arguing that his position that gun violence is a significant public health threat means that he is hostile towards the Second Amendment rights of American citizens.
Over the past 40 years, billionaire oligarchs have slowly but surely taken over just about all aspects of life in America.
But enough is enough.
It’s time to end America’s oligonomy by rolling back the Reagan tax cuts and enforcing the Sherman Anti-Trust act, so that corporations can't grow out-of-control and amass endless piles of money.  

And as for Washington’s ruling oligarchy, we need to roll back Citizen’s United, and say loudly and clearly that money is not speech.

January 19, 2014

How NYC Creates the Homeless- A real Case-Study on the Poor and the Economy

The well off and their political party have always said that if there is economic growth there would be less poverty. Everyone’s income will rise and so everyone’s standard of living.
This is so silly I am amazed than when politicians say this the media doesn’t laugh them out of their shows. The media doesn’t because guess on which side those in the media fall?

There is people living very well and “If they lived better everyone else will live better”.  Not true they already live better than anybody else. Maybe if you work 7 days a week and your partner too. Even then is to hold your living standard, not to get you wealthy.

If everyone would be tax in a fair way according to what they make and have, maybe when the economy grows then everyone grows (the wealthy not as much but still will get mor e). When people are left way behind  even when the economy improves it does not help them. Having the interest rates lower does not makes it easier for the poor to buy a car or move to a better apartment. They need cash to do either. Even on credit you have to make the payments and pay the insurance for those things 

Getting no raise or unemployment or no unemployment or no COLA for retirees and disabled or COLA’s not really attached to how the economy is doing and what you can buy with the dollar makes people dependent on those things fall further deeper in the hole. Those things bring every one down economically. Even when times get better, people are loaded with debt or collection whitch will keep them from getting a better apartment or a second hand car. A credit score is now taken for everything., From getting an apartment to non emergency medical care. Once you go down once, you will stay down.  
I’ll give you a recent (real) example I know.  This individual we will call Mr. Pink.

Mr. Pink, disabled person worked all his live ,even with a disability. Have had an apartment for 12 years. Every year the rent went up.  He was able to manage it by working partime and getting his pension. He gets sick as the work load got to be too much and by that time SSDI did not pay their COLA for two consecutive years. But the rent went up the maximum allowed by law an average of 5% every year regardless.  No work and solely dependent on SSDI eventually the rent caught up with him. Now paying about 75% in rent without electric.

The government  in NY announces new apartments and condos for well off families being constructed but a percentage of the apartments would be affordable apartments commensurate with income.

Finally Mr. Pink finds the one that falls within his SSDI income: Applies and qualifies . They have an apartment for him at less than half of his current apartment rent. What happiness! Can not be believe it!

Now comes a background check for crime and to see wether he pays his rent. All ok.
Now comes a credit report. He is disqualified 10 days before moving because he got behind on bills when he got sick and stop working. Real case. 

Now the question is, do we have a homeless now in this person?. Clearly he can not go another year with another rent increase and can’t move out because landlords take credit reports and use them to disqualify otherwise good tenants. 

Do you see that when they say things are stock up against the poor no matter what the new mayor says or the old mayor said or the new governor is been saying. We create new homeless without helping out the current homeless population. This is a real case that just happened in the City of New York.

Coming back to the science of the economy and actual economic growth with the past eight years of being in the dumps.  

Eight years of low growth have marginalized the lower base of society, economic growth is not the only factor that reduces poverty, experts now say.
However, they added, poverty alleviation is impossible without robust economic growth.

“According to international research, as growth increases the income of the lowest 40 percent earners rises by the same proportion in developed countries and by 25 percent in developing economies,” said senior economist Naveed Anwar Khan.

“Income inequality might also increase in such cases. However, income itself is an indicator of welfare as it increases the purchasing power of the poor people and addresses their educational and health concerns.” He added that with low or stagnant growth, the poor people are affected more than the affluent.

“The underprivileged are forced to reduce their living standards, which leads to a rise in poverty,” Khan said, adding that equitable growth does not seem achievable in the near future.

He said that inequality would decline if the poor people’s income rises by a high percentage than the affluent.

“Income inequality will widen even if the economy grows by seven percent and the incomes of rich and poor also increase by the same percentage.”

(The following is an International example to be applied to the economies connected to each others economic growth) 

He added that in such a scenario, the income of a daily wager would increase from 10,000 a month to 10,700, while a rich person drawing 100,000 per month would increase by 7,000. (you can substitute the money figures for dollars or pounds, or even rubes)

 Incomes would not rise with no economic growth.  The lower middle class has come down to the level of the poor due to a considerable decline in economic growth in the US and other countries. In some cases, we may see countries registering high growth but the trickle-down effect on the poor may be nominal or not at all.  

Economic planners should see the reasons that have denied the poor even a reasonable share in high growth. Financial openness, policies that trigger inflation and disturb the budget balance affect the poor people’s share in growth.

The state will have to play its due role to ensure that overall prosperity is shared. The poor need taxation and policies that improve the quality of their lives. “A level-playing field through competent state institutions will accelerate prosperity among the poor.”

Market analyst Dr Shahid Zia said the state should create opportunities for the poor people to reduce the widening income gap.

“Policies and an overall environment that promotes investment, growth and create jobs with the institutional support of the state will reduce inequalities,” he said.

Source of economic figures taken from sources on the net.

Pic credit to on report complaining about beggars allowed on the streets again

December 4, 2013

Hello! Oil Independent, Rich and Fat Saudi America

Obama as Oil Sheik

Tim Johnson on  Mcclatchy DC  wrote a piece Im posting below. This article is head on of where the US is and headed on the “National Security” problem of depending on oil from unstable places like the middle east. Despite all the crying and yelling from the Republicans in Congress the US has solved the problem of energy and oil.  No body is dancing and celebrating because we are not 100% there yet and most important people can not be taking food stamps, meds, education and other things that cost money and the government has been helping but now with yells about a budget (if it was not the budget it would be something else) and how we can not afford our own. They say the money we have should go to the debt otherwise our kids will inherit nothing. That is an old song and a dance.

The truth is and someone that believe will not deny it. This is a matter how we think of us and our neighbors on the other side of town. There was and still is a belief that everyone needs to work and pull it self by their own bootstraps. This formula comes from the days in which you had Landlords as in ‘Lords that controlled the government because they were the ones with real money.  

The money most of the time was not made by them but was inherited from the family. Having obtained wealth, who would want to share with the poor? So the myth came to be that the poor was poor because they were defective.  They did not have the blood line that put them in place to inherit wealth. As the new world came to be and  the Landlords diminished because the economy diminished for them and changed.  No slaves meant no land.  Land had to be sold and now you had more ‘common’ people with land and getting money from the new economy of the ‘Industrial Revolution.” As things developed and less people were needed to do jobs that machines could do cheaply and many times better, now you found this new class of people (middle class) with some money but loosing with when they had no jobs. No jobs, money gone back to being poor. This was going on until the oil shortages started occurring. Now we have under the excuse of democracy invading other countries that either had oil or where an impediment to us getting that oil. The poor were wanted to fight and now had jobs connected to cars, factories and anything connected to the modern economy of 1940-70.

The country as a whole did well even with expensive wars. We just printed our money and barrow.  We borrowed not to feed anyone, but to fight for democracy (oil). Now that we see the end to this cycle of invading for oil we see an outcry that we have no money because we need to pay what we borrowed.  No matter that as the nation gets out from underneath the importing of energy, the nation will be dancing on money. Those words are never said because then people won’t work so they can get $8000 a year  for their families in an economy that calls for at least $20,000 for a single individual to live. Not save or travel around the world and shop at the best stores, but to managed to survive and pay a rent like in New York  which is going now for $12,000-$15,000  year, very conservatively speaking.

Oil Refinery in Detroit Getty Images/Fickr RM 
 “For the past 40 years, U.S. presidents have launched distant wars, allied with autocratic sheikhs and dispatched naval fleets to protect sea lanes, all for the imperative of keeping foreign oil spigots flowing.     

That imperative has now subsided. Rather suddenly, the center of gravity of global energy production has swung toward the Americas as shale oil and gas fields in North Dakota and Texas hum with activity. America is moving to the fore as the world’s largest producer of petroleum and natural gas.

That change will reorder the globe in ways large and small.
U.S. experts say it will prolong the United States’ position as the predominant global superpower. Arab nations that shook the world with the 1973 oil embargo almost certainly will be weakened. Russia will find its power ebb as European nations find alternate suppliers for natural gas. New energy technologies will reorder the scales of global winners and losers.
“There are not many times in history where you can see the balance of power shift,” said David L. Goldwyn, founder of Goldwyn Global Strategies, an energy intelligence consultancy in Washington. “We are going to see that.”
Coinciding with America’s shale oil boom, Goldwyn said, are cutting-edge technologies that allow new parts of the globe to tap into unconventional energy resources, including deep offshore natural gas beds. Places like Cyprus in the eastern Mediterranean, Mozambique in Africa and Colombia in South America hold promise with energy reserves.
“We’re really seeing the small ‘d’ democratization of access to energy in more countries and more places,” Goldwyn said.
There are skeptics, of course, whose doubts range from distrust of the geological forecasts to analysts who say an environmental disaster could derail the shale oil and gas boom, just as the 2011 Fukushima nuclear disaster in Japan sapped global enthusiasm for nuclear energy.
“The implications of the U.S. shale revolution are so great for its economy and security that you don’t want to kill it with stupidity,” said Robert A. Manning, an energy expert at the Atlantic Council, a public policy think tank on trans-Atlantic issues. He advocates more federal regulation on the process of extracting energy from hydraulically fractured shale formations, a process known as “fracking,” to ensure that environmental or other setbacks do not occur.
“If we find out that it’s causing earthquakes, or something else bad happens, you want to prevent that stuff,” he said.
Even doubters, however, are beginning to think the fracking boom may have long-range implications.
Chief among them is the Organization of Petroleum Exporting Countries, the energy cartel that for four decades was the arbiter of world energy supplies and prices. Just this month, OPEC reversed its previous view of the “marginal” nature of the U.S. fracking boom, acknowledging that energy supplies created by new technologies could cut sharply into the cartel’s market.
Throughout Africa, oil-producing states express alarm about the drop-off in their exports to the United States. The flow of Nigerian crude to U.S. shores hit 1.3 million barrels per day in 2007, but by August it had fallen to 77,000 barrels daily. African oil producers now ship more oil to Europe and China, but many there are concerned by the loss of a dependable customer.
Iraq, whose oil deposits were once thought likely to benefit U.S. oil companies, has found that Chinese, not U.S., companies are the ones interested in its oil bounty. American oil companies would rather drill at home.
Perhaps what is most alarming to some is that the shale revolution is likely to perpetuate U.S. dominance, not just in geopolitics but in the energy industry itself. While many countries also have massive shale reserves – China is the most notable, but Algeria, Argentina and Mexico are others – none is thought likely to be able to take advantage of those deposits easily, certainly not with the explosive growth seen in the United States.
Many factors give the United States a head start in exploiting energy locked in shale, including its access to cutting-edge technology and risk capital, clear private resource ownership and huge numbers of drilling rigs, most of them capable of the difficult horizontal drilling required in fracking.
“I’m very skeptical about the ability of any other country to replicate the drilling intensity” of the United States, said Leonardo Maugeri, a former executive at the world’s sixth largest oil company, Italy-based Eni, who is at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government.
Companies in the United States own nearly 60 percent of all active drilling rigs in the world, Maugeri said, a key condition for the continuous drilling needed for fracking.
“Texas is the most drilled state in the world,” Maugeri said. “To give you an order of magnitude, the number of wells drilled in Texas compared to Saudi Arabia is 1,000 to one.”
The ability of the United States to dominate the extraction of shale deposits at home raises another question, troubling to some: Will the United States become less interested in the global military role it plays now?
“One thing this may do is untangle the obsessiveness about Middle East oil, this whole idea that we have to somehow protect these sea routes at all costs,” said Mark Clinton Thurber, associate director of the Program on Energy and Sustainable Development at Stanford University.
Forty years ago, supertankers sailing through the Strait of Hormuz at the entrance to the Persian Gulf carried more than half the world’s crude. U.S.-allied petro states there grew rich, buying U.S. armaments and fighter jet squadrons. U.S. strategic interests led it to launch Gulf wars in 1991 and 2003.
The greatest symbol of U.S. presence and power in the region is the Navy’s 5th Fleet, docked in the tiny sheikdom of Bahrain. Comprising some 30 ships and 20,000 personnel, the fleet protects the Persian Gulf and the Red and Arabian seas.
Today, U.S. taxpayers foot the bill for Navy ships that largely protect supertankers headed to Asia. China overtook the United States as the largest importer of Persian Gulf oil two years ago.
That trend will surge, and “it’s going to raise all new questions,” said Amy Myers Jaffe, an expert on global energy production at the University of California, Davis.
“You have the Chinese and other Asians free riding on a U.S. security presence, and I’m not sure that’s sustainable,” said Manning of the Atlantic Council.
As Asian populations rise and economies grow, nations there should be recruited to help patrol sea lanes, said Charles K. Ebinger, director of the Energy Security Initiative at the Brookings Institution, a Washington think tank.
“I can envisage that as both India and China become maritime powers, that we have joint operations,” Ebinger said. “Let’s say that we are even thrown out of our base in Bahrain; I could see a rotational basis between the three great powers, China, India and the U.S.”
Some experts argue that the United States should not disengage from the Persian Gulf because U.S. interests there go far beyond energy supplies. The region is vital to efforts to contain nuclear proliferation and religious extremism, the protection of Israel remains a central U.S. interest, and while the importance of Middle East oil may be on the decline for the United States, any disruption there would send world prices skyrocketing – harming economies in Asia that are vital U.S. markets.
“The United States is so woven into the world economy that we need that energy flowing to Asia,” said Rachel Bronson, vice president of studies at the Chicago Council on Global Affairs and an expert on U.S.-Saudi relations.
Saudi Arabia, Washington’s most important strategic Arab partner, has sharply diverged from the Obama administration this year over whether to arm Syrian rebels and how to confront Iran’s nuclear program.
The Saudis still share strategic interests with the United States and continue to play a large global energy role for their ability to increase oil production so prices do not spike even as OPEC, the once-formidable cartel, has seen its production remain stagnant for 40 years. The 12-nation cartel now supplies 39.8 percent of world crude and liquid fuels production, down from 54 percent in 1973, according to the Energy Information Administration, the statistics branch of the U.S. Energy Department.
“OPEC’s going to be on the defensive,” said Jaffe of UC-Davis.
For the short and medium term, oil giants like Saudi Arabia and Kuwait may survive unscathed as they look to Asia, sending as much as 70 percent of their oil there. Smaller oil producers in North Africa and the Middle East, however, may encounter “power struggles or upheaval” as they face declining revenue, according to a report in February from Citigroup, the global financial concern.
Over the longer term, the outlook may be brighter. The Paris-based International Energy Agency forecast in a report this month that rising global demand would allow the Middle East to recapture its role as a key source of oil by the mid-2020s, primarily to meet surging demand in Asia while Europe and the United States reap benefits of improved energy efficiency.
Most U.S. experts concur that a big loser from the growth of the U.S. shale industry will be Russia, which has locked in Eastern and Western Europe as clients for its natural gas, leveraging the reliance on its supplies for political gain.
The Russian share of the European Union’s natural gas imports is expected to drop, however, from the current 34 percent to below 15 percent over the next 10 to 15 years, according to some analyses, replaced by supplies of liquefied natural gas from the United States.
“Russia is in big, big trouble,” said Ebinger of Brookings, noting that Moscow is losing revenue by subsidizing domestic consumption even as natural gas prices are under assault, slowly decoupling from decades of linkage to crude oil prices.
China, with its massive appetite for energy and pressing need to cut down on coal-fired power generation that contributes to pollution, has compelling reasons to extract more energy – if only it can corral the know-how and drilling muscle to do so.
According to a June estimate by the U.S. Energy Information Administration, China has the world’s largest recoverable shale gas reserves, nearly double of those in the United States. Its shale oil reserves are the world’s third largest after Russia and the United States, the EIA said.
But whether China will exploit those finds is uncertain. The country’s three major oil companies currently see greater profits for themselves working overseas rather than at home. And foreign companies are reluctant to work in China because of restrictive contracts and other conditions.
Chinese analysts have wrung their hands over the impact of the U.S. shale revolution, with one heavyweight pundit declaring that it will remold the world.
“This writer, as a diplomat who has over 40 years of experience in the Middle East, believes that the U.S.-initiated shale gas revolution will not only change the global landscape of energy distribution but will also change the world’s geopolitical layout. The United States will take a more dominant position in global energy distribution,” wrote Wu Sike, a senior statesman who used to be China’s envoy to the Middle East and is now member of a key foreign affairs committee.
Middle East turmoil, however, won’t end, and eventually, Wu writes, “The United States will become less and less reliant on Middle Eastern oil, until this reliance finally ends.”
Wu sees fracking as having “an insurmountable impact on the Middle East, the global economy and the world’s geopolitical map.”
Some U.S. analysts generally agree, and say the result of the U.S. shale revolution will be a strengthened economy and a turn-around morale in a nation that some felt was on the decline.
“As the United States’ imports shrink, and we are exporting less dollars abroad to pay for oil and gas, then our trade deficit will narrow,” said Jaffe. “We won’t be as badly disadvantaged compared to China anymore. And their economy is going to shrink some because they’re not going to be leading in petrochemicals anymore because some of the industry . . . is coming back to the United States.”
The February Citigroup report, titled “Energy 2020: Independence Day,” put it more simply.
“The United States should see its role in the world as a singular superpower enhanced and prolonged,” the report says.)
Introduction by Adam Gonzalez
Article written BY TIM JOHNSON
Originally posted at:
Mcclatchy DC      

Titled: “Rise of ‘Saudi America’ will alter globe, prolong U.S. superpower rolePicture: Oil and Capital

Read more here:

October 8, 2013

Debt Ceiling Will Change (CrUsH) Your Quality of Life

Dangerous penetrating spikes pierce unwary travelers from the crushing ceiling.
The budget and debt ceiling fights in Washington often seem to take place in a hermetically sealed bubble. Or maybe on some faraway planet “Beltway,” where there’s definitely less oxygen in the atmosphere. But it’s important for average Americans to realize that going over the debt ceiling isn’t just a political spectacle—it’s a event that could have major, immediate, real world consequences for your quality of life. The key reason that Americans are able to buy homes at low interest rates, travel abroad for spring break, have flat screen TVs in several rooms, and pay the same amount for groceries every year at Wal-Mart is that the credit of the U.S. is good. That’s what allows us to keep the dollar high and borrowing costs lower than our debt levels, growth prospects, and frankly, political competency, would otherwise allow. Once that trust is gone, it’s often gone for good—just ask Argentina, which is still paying through the nose to borrow money thanks to a default that happened twelve years ago.
Unfortunately, the markets are already starting to price in the loss of trust in the full faith and credit of the US government. As politicians continue to wrangle over the shutdown, U.S. sovereign credit markets are increasingly worried about default. You can see it in the anxiety provoking little bump that reflects the interest rates paid out on U.S. Treasury bills. The lower the rate, the safer the bet is considered by the markets, and vice versa. Our bill bump is flat until about October 17th, when the government is expected to run out of money. It then starts to swell, and continues swelling into November—meaning the markets think that we’re more likely to default. The bump goes back down on Treasury Bills that mature in December. But nobody knows yet whether a pre-holiday delivery of a new debt ceiling increase will be successful. That’s why you can also see a rally in U.S. sovereign credit default swaps, complex securities that would theoretically pay out to investors if we did actually default. (Though if I were a buyer, I’d take a good look at Greece and notice that things don’t always go as expected during a default. Borrowers and lenders on all sorts of Greek assets are still duking it out for who gets paid and who doesn’t).
Uncertainty is the key reason that the sales of T-bills to overseas creditors are also very likely slowing. As a new Goldman Sachs report looking at the potential economic impact of the crisis noted today, purchases of Treasury Bills by foreign investors during past debt ceiling showdowns have declined markedly, and while figures are only currently available through July, the August/September numbers due out soon will almost certainly show the same trend. If the Chinese, Japanese, Europeans and others don’t buy as many of our T-bills, we won’t be able to keep rates as low as we have in the past. And it’s worth noting that one of the key reasons that T-bills sales went up so quickly after the 2011 debt debacle is because Europe was in the middle of its own, more serious debt crisis. We were the prettiest house on an ugly block then. But Europe is in recovery now, and the emerging markets are more stable. Who’s to say this won’t be the moment that the long predicted shift in the position of the dollar as the preeminent global reserve currency starts to happen in earnest? If I had to place a bet now, I’d say it’s very possible we could look back on the fall of 2013 as the beginning of the end of the dollar as the world’s sole currency superpower.
Certainly, confidence amongst the nation’s business leaders is down. CEO confidence has been trending lower for the last several months, which means that “companies capital spending plans for the rest of the year are likely to be limited,” notes Michael Purves, chief global strategist for institutional broker/dealer Weeden and Co. That will further depress the growth that’s already being trimmed by around 0.2 percentage points a week as the shutdown lags on. Combine that with lower consumer confidence, along with lower growth in the service sector and housing as people tighten up their wallets, and you’ve turned what was a more robust recovery in the first half of the year into an economy that’s once again struggling to hit 2% growth.
And if we go over the debt ceiling and default on our bills, hold on to your hat, your house, and your job. Failing to pay creditors would immediately downgrade the U.S. credit score. Markets would —the debt ceiling debacle in 2011, which wasn’t as real as possibility, resulted in a 13% drop in the value of U.S. stocks, and hundreds of billions worth of outflows from money market funds, as investors tried to redeem cash as the sky seemed to be falling. Our borrowing costs would rise significantly. By how much, nobody knows. But it’s worth remembering that back in 1979, we had a tiny, technical default on a few T-bills (thanks to a word processing glitch, if you can believe it). There was never any doubt that people would get paid, but rates on T-bills still jumped more than half a percentage point, costing taxpayers an additional $12 billion worth of interest payments. Because the incident was so isolated, it didn’t have much of an impact on consumer markets. A default caused knowingly, and for reasons of political gridlock, would be a very different story. Failing software, of course, can be fixed. Sadly, there’s no virus program we can run on Congress.

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