Saturday, October 17, 2009

The Great Man-Cession of 2008-2009 Was Real

From the article "The "Man-Cession" of 2008-2009: It's Big, but It's Not Great" by Howard J. Hall, Vice President of the St. Louis Fed:

Despite the sudden interest in the phenomenon, the relative effects of the recession on men and women are not the least bit unusual. At least since the 1969 recession, men have borne the brunt of job losses during recessions, and, compared with previous recessions, men have actually borne a smaller proportion of job losses in the current recession.

Women have a much larger presence in the work force now than between 1969 and 1991; so, a more-relevant comparison is to the 2001 recession.

For that recession, employment peaked in the first quarter of 2001 and bottomed out in the third quarter of 2003, with a total loss of a little more than 2.6 million jobs. Men accounted for 78% of those job losses, just as they have during the current recession. So, in terms of job losses, the current recession has hit men in roughly the same proportion as did the previous recession, but by a much smaller proportion than during earlier recessions.

MP: The charts below were created using monthly data from the
BLS for female and male employment.

The first graph shows the male and female job losses from March 2001 (when the recession started) and January 2002 when both male and female bottomed out, shortly after the recession ended in November 2001 (see shaded area). Therefore, this is the period of job losses that is directly associated with the actual 2001 recession, and not the jobless recession period that lasted until mid-June 2003, when the jobless rate peaked. But during the actual recession period (March 2001 to November) and the next two months (Dec. 2001 and Jan. 2002) when employment levels were still falling, it was actually a "she-cession," since 52.4% of the job losses were jobs held by women.

If we next consider the period that includes the 2001 recession and one additional year of the "jobless recovery" through December 2002, we get a period where male job losses were 61.4% of the total, but that is still nothing really close to the male job losses during the 2008-2009 "man-cession," as the next two graphs illustrate.

The graph below captures the first 13 months of the most recent recession, from December 2007 through December 2008, and shows that for that period, male job losses were 84% of the total, vs. only 16% for women. In other words, men lost 5.25 jobs for every one job lost for women. Now that's a real "man-cession." And by December 2008, the male-female jobless rate gap had risen to 1.5%, which was 5 times greater than the maximum male-female jobless rate gap of 0.30% during the 2001 recession, another sign that the "Great Man-Cession" of 2008 was real.

Assuming that the recession ended in June 2009, like many economists are now predicting, the next graph highlights the employment losses by gender from December 2007 and May 2009, to capture the period most likely associated with the most recent recession. Over this period, the job losses for men were 75% of the total, which is still much higher than a) the percent of job male jobs losses during the 2001 recession, b) the percent of job losses during the 2001 recession and the period of "jobless recovery" through end of 2002. Further, by May 2009 the male-female jobless rate gap hit 2.5%, the highest rate ever at that time, and almost 3 times the maximum gap of 0.90% in July 2003 during the jobless recovery following the 2001 recession.

Bottom Line: At least compared to the 2001 recession, the 2008-2009 recession was real, historic and unprecedented. And the recent record male-female jobless rate gaps are another indication that something historic and unprecedented happened during the most recent recession.

Finally, it's probably not really fair to compare job losses by gender during the actual recessionary months of the most recent recession, to the job losses from 2001-2003 that includes both the actual recession period from March 2001 to November 2001 and several more years of data after the recession was over. During the actual recession months of 2001, it was actually more of a "she-cession" than a "man-cession."

Worldwide Recession Is Over

Manufacturing Activity
NY TIMES -- The worldwide recession appears to have ended, with surveys showing manufacturing activity is on the rise nearly everywhere. “It is the emerging markets that are leading, with the U.S. following and Europe lagging,” said Chris Williamson, the chief economist of Markit, a company that surveys manufacturers in many countries.

The surveys, conducted in the United States by the Institute of Supply Management and in other countries by Markit, measure not the level of manufacturing output but the way it is changing. The surveys have a reputation for showing turns in the economy, often before other indicators do. In the charts above, the index figures have been converted to show the number of points over or under 50 for each of 12 countries, from the end of 2007 through September.

While details vary, the slump was sharp in nearly every country, reflecting the sudden decline that came after Lehman Brothers collapsed in September 2008. That worsened a credit squeeze, which meant some companies had no choice but to cut back on everything they could, from inventories to marketing expenditures to jobs. Others, fearing that the economic outlook could become much worse, cut back voluntarily.

It now appears that companies cut too much, and the surveys of manufacturing show that companies are expanding in most countries. Over all, the surveys indicate that the manufacturing sectors of China, Taiwan, South Korea and India had begun to grow by April, but that the United States did not follow suit until August.

Great Interactive Map Showing Job Gains & Losses


Click here for a great interactive map from MITACS showing monthly job losses and job gains for the 100 largest U.S. metropolitan areas and the 20 largest Canadian metro areas, from July 2002 to July 2008 (more details here). Notice the following:

1. You can see that the jobless recovery in the U.S. following the 2001 recession lasted well into 2003, with the jobless rate peaking in June 2003, and widespread, solid job gains not returning until 2004.

2. You can see the spike in job losses in the Louisiana area following the twin hurricanes of Katrina (August 2005) and Rita (September 2005).

3. During the years 2004, 2005 and 2006, there were consistent job gains around the country, until some job losses start showing up in Michigan in the fall of 2006, and those job losses in Michigan continued into 2007, and then really worsened in 2008 and 2009.

4. The next area of job losses leading into the recession was in Florida, starting in mid-2007, followed by job losses starting in California by the end of 2007.

5. By the middle of 2008 job losses were mounting, but were most heavily concentrated in California, Florida and Michigan. There were still employment increased in the central part of the U.S., especially in Texas and Oklahoma, and also job growth in the NYC-DC-Boston-Philadelphia area. Almost all areas of Canada were still experiencing job growth in June 2008.

6. By the fall of 2008, jobs losses were widespread across the U.S., except for Texas and Oklahoma; and by the spring of 2009 almost the entire country was experiencing job losses. Even into the summer of 2009, some parts of Canada were still seeing job gains, and it seems obvious that the Canadian economy survived the recession better than the U.S., at least in terms of jobs losses.

Thanks to Scott Bury.

Friday, October 16, 2009

Long-Term Interest Rates Suggest Low Inflation?



In a previous post, I suggested that historically low 30-year mortgage rates reflected relatively low market expectations of future inflation. Some commenters (and Robert Shiller this afternoon on CNBC) pointed out that the Fed is buying mortgage securities, which is temporarily keeping 30-mortgage rates low, rather than low inflation expectations keeping rates low.

But the charts above that other long-term rates (30-year Treasury bond, 30-year AAA corporates and 30-year Baa corporates) are historically low, as well as the prime rate being historically low, and these low rates wouldn't necessarily have anything to do with Fed purchases.

Question: How could all of these long-term rates be so low if there were inflationary pressures building up in the economy, which would lead to higher expected future inflation, and higher nominal long-term interest rates, and not historically low long-term rates?

Canadian Real Estate Rebounds to Record Levels

OTTAWA (October 15th, 2009)National resale housing activity climbed to the highest level of any third quarter on record. Home sales via the Multiple Listing Service of Canadian real estate boards totalled 135,182 units in the third quarter of 2009, according to statistics released by The Canadian Real Estate Association (CREA). This is the highest level of activity on record for the period from July to September. The number of transactions was up 18% from the third quarter of last year, representing the biggest year-over-year increase since early 2002.

Seasonally adjusted national MLS home sales numbered 127,941 units in the third quarter, up 12 per cent from the previous quarter. Building on two previous quarterly increases, seasonally adjusted MLS home sales activity now stands 48 per cent above the low reached in the fourth quarter last year.

“Momentum for sales activity remained strong throughout the third quarter,” said CREA President Dale Ripplinger. “Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market.”

Resale activity in September 2009 posted the fourth consecutive increase from year-ago levels, all of which exceeded 15%. Sales numbered 42,497 in September, up 17% year-over-year and a new record for the month (see graph above). The national MLS residential average price surpassed all previous monthly levels in September 2009, rising 13.6% year-over-year to $331,602 (see graph). July and August also posted new average price records for their respective months. A number of provinces set new average price records for the month of September, and Ontario posted the highest average price on record.

Nationally, the number of months of inventory was 4.9 months in September 2009. This is down slightly compared to August, and remains well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

Industrial Production Grew at 5.2% in Q3

NEW YORK (Reuters) - U.S. industrial production rose in September for a third consecutive month, Federal Reserve data showed on Friday, suggesting the economy closed out the third quarter with surprisingly strong growth. For the third quarter as a whole, output advanced at a 5.2% annual rate, the first quarterly gain since the first quarter of 2008 and the largest increase since the fourth quarter of 2005.

The figures will likely reinforce the view that the longest recession since the Great Depression ended in the third quarter. Economists in a Reuters poll released on Thursday pegged the third-quarter growth rate at 3.1%.


MP: The chart above shows that industrial production grew for a third straight month in September, for the first time in almost four years (see shaded areas).

Mortgage Rates Below 5% = Inflation Will Be Low

McLean, VA Freddie Mac today released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 4.92% with an average 0.7 point for the week ending October 15, 2009, up from last week when it averaged 4.87%. Last year at this time, the 30-year FRM averaged 6.46%.

"Mortgage rates rose slightly over the week, but rates on 30-year fixed mortgages remained below 5% for the third consecutive week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Homeowners are taking advantage of these low rates to refinance their current balances. Over the past five weeks ending October 9, more than three out of five mortgage applications were for refinancing, according the Mortgage Bankers Association.

MP: The chart above shows monthly mortgage rates back to 1965 to help put the current situation into perspective. There has never been any comparable period since the 1960s when 30-year mortgage rates have remained so low for so long. On a weekly basis, mortgage rates have been below 5% for fourteen weeks so far in 2009, including the last three weeks.

Mortgage rates climbed to historically high levels in the late 1970s and early 1980s because of historically high levels of actual inflation and expected inflation.

If inflationary pressures are now building up in the U.S. economy, and future inflation is expected to rise, why aren't those inflationary pressures being reflected in the bond market (see related
CD post) or the mortgage market? For those worried about future inflation, this would be a great time to re-finance your mortgage at the current rates of below 5% for 30 years. All it would take is an actual inflation rate of above 5% sometime during the next 30 years to result in a negative, real interest rate, the best of all possible worlds for a borrower (it's like borrowing $100 from a bank, but only have to pay back $99, $95 or $90 in real dollars).

Bond Market's Expectation of Inflation: Only 1.75%

The top chart shows the bond market-based 10-year TIPS-derived expected inflation back to 2003, calculated as the weekly difference between 10-year regular, nominal Treasury yields and 10-year Treasury inflation-indexed yields (a measure of the real interest rate), both on a constant maturity basis (St. Louis Fed data here for 10-year TIPS and here for regular 10-year Treasuries); the bottom chart shows those yields graphed separately.

After an unusual period in late 2008 resulting in a narrowing spread when the TIPS 10-year yields were unusually high and approaching 3%, and regular Treasury yields were unusually low and approaching 2%, the Treasury market seems to have stabilized, and the bond market's 10-year expectation of inflation is now around 1.75%, lower than the inflationary expectations from 2003-2007 of around 2.5%.

Many analysts and economists seem to be worried about future inflation, resulting from the easy Fed monetary policy in 2008 (which has also contributed to a falling dollar). Apparently the bond market doesn't necessarily share those concerns. According to the inflationary expectations derived from the bond market, future inflation is less of a concern now in 2009 than it was during the 2003-2007 period.

Thursday, October 15, 2009

Based on M2 Growth, The $ Should Be Stabilizing

There has been a lot of discussion and concern lately about the falling U.S. dollar, but not a lot of attention on one of the main factors that ultimately determines the dollar's value in the foreign exchange markets: the supply of dollars.

The chart above shows the weekly M2 money supply plotted against the weekly trade-weighted dollar index for major currencies starting at the beginning of 2008. From the March 11, 2009 peak the U.S. dollar index has fallen by just over 13%, but most of that decline happened from early March to early June (-11%), and since then the dollar has only fallen by a little more than 2% during the last four months. Over the last two months since early August the value of the dollar against the major currencies index (based on the euro, Canadian dollar, Japanese yen, British pound, Swiss franc, Australian dollar, and Swedish krona) has been flat (data are available through October 7).

The M2 money supply increased by 10% in 2008 as part of the Fed's expansionary monetary policy that lowered the Fed Funds rate to almost zero by the end of 2008. From the start of this year, the M2 money supply has been basically flat, growing by only 1.8% over the last ten months. What can we learn from these data? Here are some ideas:

1. The 13% decline in the value of the dollar over the last seven months largely reflects the 10% increase in the money supply in 2008.

2. In 2009, the growth in M2 money supply has stabilized at less than 2%, and this means the value of the dollar will stabilize later this year or by next year at the latest. In fact, this dollar stabilization has already happened over the last several months, with only about a -0.60% decline in the major dollar index since early August.

3. Against the broad dollar index, the U.S. dollar has fallen by only -10.3% from the early March peak versus the -13.1% decline for the major currency index, meaning that the dollar has fallen more against the major currencies than against all currencies in general.

Healthcare Odds: From 48% to 17% in 84 Days

Intrade contract: "A federal government run health insurance plan to be approved before midnight ET 31 Dec 2009."

World Stock Markets Rally to 12-Month High

The MSCI World Stock Market Index has registered gains in 8 out of the last 9 trading days, and closed today at 1166.652, the highest close since October 1, 2008, more than a year ago (see chart above). The World Index has risen 26.8% since the first of the year, and by more 69% from the early March bottom. Welcome to the Worldwide Bull Market Rally of 2009.

Markets in Everything: Amazon Same Day Shipping

SEATTLE--(BUSINESS WIRE) Amazon.com, Inc. (NASDAQ:AMZN) today announced the launch of “Local Express Delivery,” a new shipping option giving customers same-day delivery in seven major cities including New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington D.C. The service will be extended to Chicago, Indianapolis and Phoenix in the coming months.

Thousands of items are now available for Local Express Delivery. Amazon Prime* members pay just $5.99 per item for the service. Full details, including the rate card for all other customers, are available at www.amazon.com/help/shipping.


MP: Goodbye brick-and-mortar stores?

NY Fed Treasury Spread Model: Economic Recovery Underway, NO Chance of a Double-Dip Recession

Full history here, click to enlarge.
The New York Fed just released its latest "Probability of U.S. Recession Predicted by Treasury Spread," with data through September 2009, and the Fed's recession probability forecast through September 2010 (see charts above). The NY Fed's model uses the spread between 10-year and 3-month Treasury rates (3.28% spread in September) to calculate the probability of a recession in the United States twelve months ahead.

The Fed's model (data here) shows that the recession probability peaked during the October 2007 to April 2008 period at around 35-40%, and has been declining since then in almost every month. For September 2009, the recession probability is only 0.66% (2/3 of 1%) and by a year from now in September 2010 the recession probability is only .11%, or about 1/10 of one percent.

Further, the Treasury spread has been above 3% for the last five months (since May), a pattern consistent with the economic recoveries following the last two recessions. Finally, the pattern of the recession probability index so far this year (going below double-digits and declining monthly) is very similar to the pattern starting in March 2002 that signalled the end of the 2001 recession.


According to the NY Fed model, the chances of a double-dip recession this year or next year? Zero.

Cool Picture of the Day

HT: Grant "Big Daddy" Leonard

Empire Indexes (General, Future) Reach 5-Yr. Highs

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved significantly in October. The general business conditions index climbed 16 points to 34.6, its highest level in more than five years (since May 2004, see chart above).

The new orders index rose 11 points, and the shipments index shot up 30 points, to 35.1. Both employment indexes were positive for the first time in more than a year. Price indexes were little changed, with the prices paid index remaining positive while the prices received index hovered just below zero. Future indexes advanced to relatively high levels, indicating that respondents expect conditions to improve further in the months ahead (see chart above, highest level since October 2004).

MP: What more can I add? Five-year highs for both Empire indexes, both for general business (current) conditions and future business conditions. Full recovery underway and the future looks even better. Chance of a double-dip? Close to zero.

Jobless Claims (4Wk. Avg.) Fall to Lowest Level in 38 Weeks, Down 119,000 (-19.3%) From April Peak


WASHINGTON (Reuters) - The number of U.S. workers filing new claims for jobless insurance unexpectedly fell last week to the lowest level since January, according to a government report on Thursday that hinted at stabilization in the labor market.

Initial claims for state unemployment benefits fell 10,000 to a seasonally adjusted 514,000 in the week ended October 10, the Labor Department said. New jobless claims have declined for five of the last six weeks. The four-week moving average for new claims dipped 9,000 to 531,500 last week, declining for a sixth straight week (see top chart above).


MP: From the early April peak of 658,750, jobless claims (four-week average) have fallen by 127,250 to 531,500 (-18%), and that measure of jobless claims has fallen in 21 out of the last 27 weeks, including the last six months in a row. Jobless claims are now at the lowest level since January 17, 38 weeks ago. The bottom chart above shows that the 19% decline in jobless claims since the peak in April is consistent with the similar drops that marked the end of the 1990-91 recession (-15%) and the 2001 recession (-19%).

Wednesday, October 14, 2009

Graph Addiction and The Intervention



Step 1 of 12. We admitted we were powerless over our addiction to charts and graphs — that our lives had become unmanageable.

(HT: Catherine Rampell at
NY Times' Economix blog.)

Wal-Mart's $45 Cell Phone Plan: Unlimited Minutes, Unlimited Text Messages, Unlimited Web Access

To help drive down no-contract wireless phone pricing for customers, Walmart will launch Straight Talk providing customers the following two options:

Straight Talk “All You Need” 30-day Plan that includes the following for only $30 a month:
1,000 minutes, 1,000 texts and 30MB of mobile web access
Nationwide coverage
411 Information calls at no extra charge

Straight Talk’s Unlimited 30-day Plan that includes the following for $45 a month:
Unlimited minutes, text and mobile web access
Nationwide coverage
Unlimited 411 Information calls at no extra charge

MP: The "invisible hand" at work, bringing you the lowest cell phone prices in history.

The average U.S. adult spends $78 per month to receive 1,000 minutes a month. By switching to the $30 Straight Talk plan, the average 1,000 minutes-per-month consumer could save more than $500 per year.

Volatility Index Falls Below 23 to a 13-Month Low

The CBOE Volatility Index (VIX) fell below 23 yesterday (to 22.99) for the first time since September 3, 2008, and fell again today to close at 22.86. From the high of 80.86 on November 20 of last year, the VIX has fallen by a full 58 points, and is back to the pre-financial crisis level. Just another indication that the worst is behind us.

Nobel Prize Inequality

Thirteen 2009 Nobel prizes were recently announced, bringing the total number of Nobel prizes awarded since 1901 to 974, and the recipients of those awards represent 63 different countries.
The chart above shows that almost 96% of all Nobel prizes (934 out of 974) have been awarded to recipients in the 31 countries that have received the most Nobel prizes over the last 109 years, i.e. the top 50% (
data here). The share of Nobel prizes given to the top 5%, 10%, and 25% are also displayed above, and reflect a very unequal distribution of awards.

The unequal distribution of the Nobel prizes among the 63 countries represented by recipients is much greater than the inequality of income among American taxpayers in the United States in 2006 (most recent year available), based on the shares of total income earned by the top 5%, 10%, 25%, and 50% (see chart above,
IRS data here).

So what? Read the rest here at
The Enterprise Blog.

VAT: It Would Be Like Giving Whiskey and the Car Keys to a Group of Teenage Boys


This Center for Freedom and Prosperity Foundation video explains why a value-added tax (VAT) would be a dangerous money machine for big government, like giving a group of alcoholics keys to a liquor store. The evidence from Europe also shows that VATs have actually lead to higher, not lower, income taxes.


Tuesday, October 13, 2009

Canadians Speak Out Against Socialized Medicine IV



Special interests, union protectionism, over-regulation, contradictory government policies: When politicians and bureaucrats make health care decisions rather than doctors and patients, the results aren't pretty. From the Mackinac Center for Public Policy.

Markets In Everything: Online Auto-Body Work Bids

Boston Herald -- Consumers who dread going from auto body shop to auto body shop for estimates to fix car dents and scratches can now do it by computer from the comfort of their homes.

DentBetty.com allows car owners to upload photos of their damaged cars and receive online bids for repairs from area garages. Launched in San Francisco in July and Boston last month, the service is free, although DentBetty hopes to expand nationally and eventually start charging repair shops a small subscription fee.

“The thesis behind it is that it’s much easier to upload photos on a computer to get bids online - it literally takes 15 minutes - than it is to spend a half a day driving around,” said Alec Murray, a DentBetty investor and board member from Wellesley who’s handling the company’s East Coast rollout.


Ticket Scalper Sues To Allow Willing Buyers and Sellers to Engage in Voluntary Transactions


SEATTLE TIMES -- When the Seattle Mariners play at Safeco Field, Will Anderson (pictured above) can often be found selling tickets on the corner of First Avenue South and Edgar Martinez Way. Anderson, a 40-year-old portrait photographer who sells tickets for extra money, says he conducts business on private property not owned by the Mariners. Even so, he says his tickets have been seized and that he has been repeatedly cited by off-duty officers for selling tickets in a no-vending zone or for selling without a permit, which the city has refused to issue him.

"I sell tickets where it's legal to sell tickets," said Anderson, a father of two. "This most definitely impacts my life — you invest your money in something, and somebody keeps taking your investment away and making you start over." Anderson recently filed a federal lawsuit, claiming the city, the Mariners and several off-duty police officers violated his constitutional rights through unreasonable searches and seizures. The suit also accuses police of selective enforcement by targeting scalpers like Anderson "in order to reduce or eliminate ticket sales competition with the Mariners."

"This law is supposed to be enforced by the (Seattle) Department of Transportation, not the police and certainly not police officers getting paid by a private entity," Ford said. "To me, this is a case of a big corporation using police to put its competition out of business."

MP: If ticket scalping is a "crime," who is the victim? Seems to me like a voluntary transaction between a willing buyer and a willing seller....

Thanks to Zach Slaton.

Medicated Nation: 12.6 Prescriptions Per Capita!

According to the Kaiser Family Foundation's study, "Prescription Drug Trends":

The average number of retail prescriptions per capita increased from 8.9 in 1997 to 12.6 in 2007 (see chart above). The percent of the population with a prescription drug expense in 2005 was 59% for those under age 65, and 91% for those 65 and older; the proportions of these populations with a drug expense has changed little since 1997, when they were 59% and 86%, respectively.

MP: I'm not sure what's going on here, but these statistics on prescription drug use were really surprising to me (maybe because I fall into the "0 retail prescriptions per capita" category almost every year). But here are a couple possible explanations on why the average per-capita prescription drug use is so high in the U.S. (it would be interesting to see an international comparison), and why it's increased between 1997 and 2007:

Increased advertising for prescription drugs, an aging population taking more drugs, greater availability of generic drugs, new and better drugs being introduced, and lower drug prices? Comments welcome.

Monday, October 12, 2009

7th Consecutive Monthly Gain in World Stock Value

As stock markets around the world gained ground in September (MSCI World Index increased by 3.8% for the month), the total world stock market capitalization increased by $1.94 trillion in September, according to preliminary data from the World Federation of Exchanges. The September gain follows increases of $1 trillion in March, $3.69 trillion in April, $4.12 trillion in May, $575 billion in June, $2.92 billion in July, and $1.12 trillion in August, and is the first time in more than two years of seven consecutive monthly advances in world stock market value.

The cumulative seven-month gain of $14.375 trillion in world stock market capitalization brings the value of world equities up to $44.77 trillion in September, the highest level since August 2008, and marks a 52.7% increase from the February bottom (see chart above).

Canadians Speak Out Against Socialized Medicine III



Canadians have to put up with long waits to see specialists or get diagnostics like MRIs or CT scans. Now, businesses offering insurance products to help them avoid waiting for a critical test are trying to offer options, but they are finding resistance from special interests within Canada. Part III of the video series from Michigan's Mackinac Center for Public Policy: "Canadians Speak Out Against Socialized Medicine."

Canadians Speak Out Against Socialized Medicine II



Canada's public health care system promises universal coverage, but it does not guarantee universal access on a universal schedule. Long wait times force some Canadians living in pain to go out of country rather than wait 6 months to a year and a half for surgery for non-life-threatening conditions. Watch Part II of the Mackinac Center for Public Policy's series on "Canadians Speak Out Against Socialized Medicine."

Canadians Speak Out Against Socialized Medicine I


With Canadians enduring pain for months and years while they wait for surgery, traveling to the U.S. for treatment, entering "lotteries" to get a doctor, and getting "wait list insurance," is Canada really a model for U.S. health reform? As America moves closer to a government-controlled health care system, anxious Canadians want to set the record straight about life under their country's “universal” system.

Join Michigan's Mackinac Center for Public Policy, as it journeys across Canada, documenting harrowing stories from real Canadians of long waits, physician shortages, doctor lotteries, special treatment for insiders and being forced to travel abroad for basic medical care. This is the first in a series, more videos to follow on CD.


Energy Crisis Postponed: New Gas To The Rescue; U.S. May Return to Near Energy Self-Sufficiency?

Engineers have performed their magic once again. The world is not going to run short of energy as soon as feared. Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said. This is almost unknown to the public.

As for the U.S., we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.


~
Ambrose Evans-Pritchard in the U.K. Telegraph

MP: The chart above shows monthly U.S. natural gas imports back to January 1985 and through July 2009 (EIA data here). Imports in May of this year (258,033 MMcfs) were at a level last seen almost 11 years ago, in November 1998 (see bottom red line in graph). On a 12-month moving average basis (to smooth out the monthly variations), natural gas imports have fallen this summer to the same level as January 2001, almost nine year ago (see top red line in graph).

HT: R. Adams

Update: See related NY Times article "
New Way to Tap Gas May Expand Global Supplies":

Gas analysts have made a wide array of estimates for how much shale gas could be tapped globally. Even the most conservative estimates are enormous, projecting at least a 20% increase in the world’s known reserves of natural gas.

One recent study by IHS Cambridge Energy Research Associates, a consulting group, calculated that the recoverable shale gas outside of North America could turn out to be equivalent to 211 years’ worth of natural gas consumption in the United States at the present level of demand, and maybe as much as 690 years. The low figure would represent a 50% increase in the world’s known gas reserves, and the high figure, a 160% increase.

The projections suggest that the new method of producing gas “is the biggest energy innovation of the decade,” said Daniel Yergin, chairman of the Cambridge consulting group. “And the amazing thing is there was no grand opening ceremony for it. It just snuck up.”


HT: Colin, who wrote in a comment on this post:

It's further evidence of the genius of the free market and should warrant increased skepticism of centrally planned efforts to move the US to alternative energy sources. Guided by the price mechanism, it is the market, not politicians, that should be charting our future direction in energy.

To the Pouting Pundits of Pessimism: V-Shaped Economic Recovery Is Well Underway

By nearly every measure, the economy is tracing out a V-shaped recovery. The pouting pundits of pessimism say that people aren't spending, but retail sales (excluding autos) are up at a 3.9% annual rate so far this year versus double-digit declines late last year. Manufacturing has turned the corner (the ISM Manufacturing Index has been above 50 for two straight months), imports and exports are bouncing back, commodity prices are up significantly, and real GDP is set for solid gains of 3%-4%.

Housing has turned the corner as well. After bottoming in January, new home sales are up 58% at an annual rate. Housing starts have also bottomed, housing inventories have plummeted, and home prices are on the rise. The S&P/Case Shiller 20-city index shows that home prices are up for two consecutive months and have risen in 15 out of 20 cities during the past three months.

Jobs are always a lagging indicator, but there are three other contributing factors to the current lackluster jobs numbers. First, CEOs are skeptical of the recovery and tentative about hiring. And productivity is allowing more production with fewer workers. But productivity can only hold off new hiring for so long. With inventories at rock-bottom levels, consumer spending on the rebound and profit-margins wide, job growth should expand sharply in the quarters ahead. Expect positive job growth in late 2009 or early 2010.


~Brian Wesbury writing in
today's Wall Street Journal


Perverse, Reverse Marxism: Capitalist Consumers Are Exploiting the Innovators and Producers?

From the WSJ article "Media Moguls and Creative Destruction: Competition Works to the Benefit of Consumers, Not Producers":

The consumer, not the producer, is the beneficiary of greater competition.


From the NBER paper "
Schumpeterian Profits in the American Economy: Theory and Measurement":

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits and then estimate the value of these profits for the non-farm business economy.

We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers. For the entire postwar period and for the nonfarm business sector, innovators are able to capture about 2.2% of the total surplus from innovation.


MP: It almost seems unfair that consumers engage in such blatant exploitation of producers and innovators, doesn't it? They do all of the entrepreneurial, innovative work, and we get all of the benefit in the form of lower prices, improved products and a higher standard of living. And then after we exploit the producers and innovators as consumers, we turn around and tax them on their minuscule profits with progressive income tax rates.... If only consumer and taxpayer greed wasn't so rampant.....

Sunday, October 11, 2009

Nobel Hope Prize: First Futures Prize in Diplomacy

The Nobel Peace Prize awarded to President Obama was greeted with astonishment as much as any other emotion, even among many of his admirers. Our own reaction is bemusement at the Norwegian decision to offer what amounts to the world's first futures prize in diplomacy, with the Nobel Committee anticipating the heroic concessions that it believes Mr. Obama will make to secure treaties that will produce a new era of global serenity.

~Wall Street Journal editorial

The U.S.A. Is Still the World's Largest Manufacturer

The chart above shows manufacturing output of selected countries and the BRIC countries, as a share of world manufacturing output in 2007, using United Nations data via the BLS (I haven't been able yet to find comparable data for 2008). It's interesting that U.S. factories produced almost twice as much output in 2007 as China, and the U.S. produced an amount equivalent to the total manufacturing output of the four BRIC countries combined (Brazil, Russia, India and China).

As a
Cato Study concluded in 2007, "Reports of the death of U.S. manufacturing have been greatly exaggerated."

And as David Brooks wrote in 2008, "Instead of fleeing to Asia, U.S. manufacturing output is up over recent decades. As Thomas Duesterberg of Manufacturers Alliance/MAPI, a research firm, has pointed out, the U.S.’s share of global manufacturing output has actually increased slightly since 1980."

According to the Federal Reserve data, the U.S. produced almost $3 trillion of industrial output in 2008, measured in 2000 dollars (or about $3.7 trillion in 2008 dollars). In other words, if the U.S. manufacturing sector had been counted as a separate country, it would have been tied with Germany as the world's fourth largest economy, behind the U.S. (non-manufacturing), Japan, and China, and ahead of the entire economies of France, U.K., Italy and Russia (data here).

Bottom Line: The U.S. is still the world's largest manufacturer.