Saturday, November 12, 2011

Natural Gas Is Boosting U.S. Regional Economies -- "Hydraulic fracturing (“fracking”) and horizontal wells now make it possible to economically produce natural gas from low permeability shale rock, greatly increasing natural gas supplies while reducing prices. These shale rock formations are found primarily in Louisiana, New York, North Dakota, Pennsylvania, Texas, and West Virginia. Their development is helping many “downstream” businesses grow and create jobs.

For example, estimates of Pennsylvania job creation due to increased shale gas production since 2009 range from 44,000 to 72,000. In Bradford County, Pa., the 2009 unemployment rate of 10 percent has been halved because of Marcellus Shale gas development. New York’s economically depressed Southern Tier is also benefiting from gas field development in nearby Pennsylvania. Case in point: RB Robinson Contracting, Inc., a family construction business in Candor, N.Y., had eight full-time employees in 2009. Today, it provides full- and part-time work for 120 people.

Ohio’s steel industry has also felt the economic impact of the revival of shale production. More than 400 workers in Youngstown are constructing a new $650 million steel mill for Vallourec & Mannesmann Holdings, Inc. It will annually produce a half million tons of seamless steel well tubing used in drilling and “fracking” natural gas wells. U.S. Steel is spending $95 million to expand and upgrade its tubular steel mill in Lorain, Ohio, and Timkin is spending $50 million on a similar project at its Canton mill."

MP: The chart above shows the increase in mining jobs in Pennsylvania, which have almost doubled since 2004, due to the shale gas boom in the Marcellus region of the state.    

HT: Energy Tomorrow

"The 99%" of Us Get Fined and Go to Jail for Insider Trading, But the Exempt "Political 1%" Can Get Rich

Congressional Inside Traders Are Above the Law

(CBS News) -- "Martha Stewart went to jail for it. Hedge fund honcho Raj Rajaratnam was fined $92 million and will go to jail for years for it. But members of Congress can do the same thing -use non-public information to make stock trades -- and there's no law against it. Steve Kroft on "60 Minutes" reports on how America's lawmakers can legally make tidy profits on information only they know, simply because they won't pass a law against themselves. The report will be broadcast on Sunday, Nov. 13 at 7 p.m. (watch preview above).  

If senators and representatives are using non-public information to win in the market, it's all legal says Peter Schweizer, who works for the Hoover Institute, a conservative think tank. He has been examining these issues for some time and has written about them in a book, "Throw them All Out." "Insider trading laws apply to corporate executives, to Americans...If you are a member of Congress, those laws are deemed not to apply," he tells Kroft. "It's really the way the rules have been defined... lawmakers have conveniently written them in such a way as they don't apply to themselves," says Schweizer.

Efforts to make such insider trading off limits to Washington's lawmakers have never been able to get traction."

MP: Maybe the OWS protests should direct some outrage at the greed of the political class "who get rich off insider stock tips, land deals and cronyism that would send the rest of us to prison" (from the front cover of Peter Schweizer's book)?

Update 1:  A 2011 research article in the journal Business and Politics ("Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives") found that the stock portfolios of House of Representative members outperformed the overall stock market by 55 basis points per month, or 6.6% on an annual basis between 1985 and 2001, suggesting that lawmakers have a "substantial informational advantage" over the general public and even over corporate insiders.

Update 2: The chart below illustrates how an additional return of 6.6% per year for House Members would have affected an investment in the stock market between 1985 and 2001. A $1,000 investment in the S&P500 at the beginning of 1985 would have grown to $6,043 by the end of 2001, earning an annual return of 11.16%.  In contrast, adding a 6.6% premium for lawmakers due to their informational advantage would have generated an annual return of 17.76%, and a $1,000 investment in 1985 would have grown to $16,172, or roughly 2.7 times as much as an investment in the S&P500. Not bad.  Insider trading has its advantages.

Wage Gap With China Continues to Shrink, Which Will Mean More Manufacturing Production in U.S.

Chart has been updated to end in 2015.

1. CNBC --"Slowing wage growth in the United States, coupled with rising wages in China and other emerging markets, could soon make the U.S. more competitive. While wage levels in China are still far below the average wage in the U.S,, better technology, transportation and services in the U.S. could help make the difference for companies, according to Bart van Ark, Chief Economist at The Conference Board.

"There are other factors at play here, from access to services, high technology and innovation, to transportation," he told CNBC Friday. As wages increase in the major cities in China, companies are having to move lower-paid jobs further inside the country, where infrastructure has not yet caught up, to get the same benefits."

2. BEIJING, China — "Factories in China’s manufacturing heartland are feeling the squeeze again, with minimum wages in Guangdong province set to rise by as much as 20 percent on Jan. 1 for the second time in less than a year. And while one Chinese province’s minimum wage might seem like a local issue, the salary question underlines a continuing momentum in China toward building higher-end business and better jobs. In other words, the days of endless, cheap Chinese labor are limited."

MP: The chart above illustrates the shrinking manufacturing wage gap between the U.S. and China, as wages increase in the U.S. at about 2% compared to 15-20% wage increases in China (Note: Those wage increases in China may obviously not continue in the long run, but are shown here to illustrate the shrinking wage gap).  As recently as 2005, average manufacturing wages in the U.S. were more than 20 times higher than in China, but the U.S./China wage ratio had shrunk to only 10 times by 2010, and will likely be only 5-to-1 by 2015 at the current rate of wage increases.  

Along with the shrinking wage gap, there are other factors that are starting to favor increased manufacturing production in the U.S. including greater productivity of American workers, the cost of shipping goods 8,000 miles from China with a 3-week delivery time, the logistical advantages of domestic production to avoid the challenges of coordinating design changes or addressing quality issues when production is taking place 13 times zone away, cheap industrial and commercial land in the U.S. and weak enforcement of intellectual property rights in China, among others. 

As the Boston Consulting Group reported in May, "Within the next five years, the United States is expected to experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world.  We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015. As a result of the changing economics, you’re going to see a lot more products ‘Made in the USA’ in the next five years."

HT to Gary Lyle for the CNBC link

Intrade: The Rise of Gingrich and the Fall of Perry

Current Intrade odds: 2.4% for Perry (down from above 20% in early October) and 12.8% for Gingrich (up from 1.2% in early October). 

Friday, November 11, 2011

Today 11/11/11 is Nigel Tufnel Day

EW.COM -- "Because sometimes, you just need to take things to 11. Nearly three decades after 1984 mockumentary "This Is Spinal Tap" introduced us to Nigel Tufnel, fans have joined together to declare today, Nov. 11, 2011 (a.k.a. 11/11/11), Nigel Tufnel Day."

Federal Raid on Gibson Signals U.S. Is Not Open for Business and Obama Is Not Serious About Jobs

From Saturday's WSJ article by Nancy Dewolf Smith:
On Aug. 24, federal agents descended on three factories and the Nashville corporate headquarters of the Gibson Guitar Corp. Accompanied by armored SWAT teams with automatic weapons, agents from the Fish and Wildlife Service swarmed the factories, threatening bewildered luthiers, or guitar craftsman, and other frightened employees. A smaller horde invaded the office of CEO Henry Juszkiewicz, pawing through it all day while an armed man stood in the door to block his way.

The incident attracted national attention and outrage. Like Boeing—whose plans to locate new production in South Carolina are opposed by the National Labor Relations Board—here was an iconic American brand under seemingly senseless federal fire. The fact that Gibson was singled out when other guitar makers use the same woods has fed speculation that the company was targeted—because it is not unionized, perhaps, or didn't donate enough to the Democratic Party. 

"I don't think it's a political issue," Mr. Juszkiewicz says, shaking his head. "But I will say this: I wrote a letter to President Obama. I spelled out what happened. I said: You know, we got raided and here are the facts, I think it's unfair. What do you think we should do? No response."

Maybe the president is not a music lover? "He knows who we are," Mr. Juszkiewicz says. "His daughters have a couple of Gibsons. [Mrs. Obama] gave a guitar to [the French president's singer-songwriter wife] Mrs. Sarkozy. And we called up to make sure that he saw the letter, and he did. No response." 

Outsourcing Shifts Into Reverse: Caterpillar Brings Production Back from Japan = +1,000 New Jobs

Wall Street Journal -- "Caterpillar said it plans to shift production of small construction machinery from Japan to a new plant in North America that is expected to employ more than 1,000 people. The new plant, whose location wasn't identified, will become the company's global source for small bulldozers and mini-hydraulic excavators. It also will export partially assembled mini-excavators to Europe to improve delivery times for European customers. 

 "The markets for smaller track-type tractors and mini-excavators have evolved significantly in the past 30 years, with the majority of customers now located in North America and Europe," said Mary Bell, vice president for Caterpillar's Building Construction Products division. "Producing these machines at a North American location will put us in the best possible position to serve our customers in the building construction industry." 

Caterpillar also is moving assembly of its larger excavators from Akashi, Japan, to a new plant in Victoria, Texas, to free up production capacity for Asian markets where sales of Caterpillar equipment have been surging in recent years. The new Texas plant is expected to be completed by the middle of 2012.

Caterpillar's announcement of a new plant without naming a location will likely set off an intense competition between U.S. states hungry for manufacturing jobs. States interested in hosting plant can be expected to offer the company incentive-laden aid packages with tax breaks and government grants for training new employees.

Nearly all of Caterpillar's investments in new U.S. plants in recent years have been in the South, particularly Texas and North Carolina, where the company's Building Construction Products division is based. Caterpillar already builds compact construction machinery in Clayton and Sanford, N.C."

HT: Mike W.

Interesting Fact of the Day: More Than Half of Walmart Sales Come from Its Groceries Business

We typically think of Walmart as a retail giant, so I was surprised to learn in today's WSJ that for the last several years more than 50% of Walmart sales have come from its grocery business. 

The article "Wal-Mart Sets Prices Sizzling For Choice Beef" discussed how "The massive buying power of Wal-Mart is driving the wholesale price of choice beef to a nearly eight-year high as the retailer stocks its refrigerator cases for the first time with higher-quality cuts."

Because Wal-Mart is purchasing domestic beef, "The interest by Wal-Mart in higher quality meat is being welcomed by the cattlemen who raise choice animals. They haven't always been rewarded for the higher feed costs and better animal genetics it takes to produce choice beef."

And how are Wal-Mart's purchases of choice beef benefiting American cattle producers' bottom lines?

"The shift by Wal-Mart has translated into a noticeable jump in profits for ranches such as Mushrush Ranches, in Strong City, Kan. Ninety percent of the cattle it produces achieve the grade of choice."

We also frequently think of Wal-Mart purchasing most its retail inventory from China and Mexico, but that's likely changing as the company has increasingly shifted towards selling food, and now sells more groceries than electronics products, clothing and toys.  It's probably the case that the shift towards groceries means that Wal-Mart now buys more of its products (e.g. milk, eggs, meat, cheese, vegetables, fruits, etc.) from American producers today than in the past when electronics, clothing, footwear, toys, etc. were the majority of its sales.  If that's the case, there are probably thousands of American farmers like the Kansas cattle producers who have higher profits today because of Wal-Mart's shift to being America's largest grocer.     

Pipeline Decision Signals U.S. Is Not Open for Business and Obama's Not Serious About Jobs

Some commentary on postponing the Keystone XL pipeline decision until after the 2012 election:

1. "If Keystone XL dies, Americans will wake up the next morning and continue to import 10 million barrels of oil from repressive nations, without the benefit of thousands of jobs and long-term energy security."  

~CEO Russ Girling of TransCanada Corporation, the company that applied for the permit to build the pipeline.

2.  "So much for the U.S. being the bastion of free enterprise and respecting due process.

With the State Department announcing Thursday it wants to explore alternative routing for TransCanada's Keystone XL pipeline, after the project has been subject to 36 months of review - dutifully following a prescribed process that resulted in thousands of pages of documentation - the U.S. has signalled to the world it is not open for business.

Businesses need certainty and transparency to make investment decisions; that has been destroyed with one news release."

~Deborah Yedlin, Calgary Herald

3. "President Obama used to be fond of "shovel-ready projects." He's also demanding that Congress pass his jobs bill immediately because 9% unemployment is a crisis, and, by the way, he's for making the U.S. less reliant on energy from tyrants. So how about putting 20,000 Americans to work on a North American energy project that's as shovel-ready as they come? Sorry, Mr. Obama is voting present."

 ~WSJ editorial 

Obamacare Destroys 1,000 Jobs at Stryker Corp.

What is the medical device tax?

The $20 billion tax was included in the Affordable Care Act that was signed into law in 2010. The amount is based on a 2.3% excise tax that will be levied on the total revenues of a company, regardless of whether a company generates a profit, starting in 2013. Many companies will owe more in taxes than they generate from their operations. The result will be devastating to innovation, patient care and job creation.


Nov. 10 (Reuters) - "Medical device maker Stryker Corp (NYSE: SYK) said it will cut 5 percent, or about 1,000 jobs to largely offset costs related to the scheduled implementation of the new Medical Device Excise Tax in 2013.

"While it is still uncertain whether the device tax will exist in its current form come 2013, we believe that companies across the space will make moves to mitigate the P&L impact of the new excise tax," Susquehanna International Group analyst David Turkaly wrote in a note.

The maker of hip and knee replacements and surgical products, which expects to save about $100 million from the restructuring, said it will record $85-$95 million of the entire $150-$175 million charge in the current quarter. Stryker expects to complete the restructuring activity by 2012-end."

MP: Should it be any surprise to the Obama administration that we've got a sub-par recovery with weak job creation, when there are massive job-killing regulatory reforms pending in the  form of Obamacare and Dodd-Frank, along with uncertainty about future environmental regulations and future taxes, and anti-job decisions like the delay of the Keystone XL pipeline?

HT: Buddy Pacifico

Gene Marks on MSNBC: Three Must-Read Blogs

On this segment of MSNBC's "Your Business," New York Times' small business columnist and blogger Gene Marks recommends three must-read blogs for small business owners to get up-to-date economic information: 1) Washington Post columnist Ezra Klein's Wonkblog, 2) Calculated Risk and 3) Carpe Diem.     

How Smart Are You?

Take a 30-question "IQ test" here and find out how you compare to others who have taken the test. You have about 8 seconds to answer each question.

Occupiers Are Blaming the Wrong People

Margaret Wente writing in Canada's Globe and Mail:

"It’s not the greedy Wall Street bankers who destroyed [the Occupiers'] hopes. It’s the virtueocracy itself. It’s the people who constructed a benefit-heavy entitlement system whose costs can no longer be sustained. It’s the politicians and union leaders who made reckless pension promises that are now bankrupting cities and states. It’s the socially progressive policy-makers in the U.S. who declared that everyone, even those with no visible means of support, should be able to own a home with no money down, courtesy of their government. In Canada, it’s the social progressives who assure us we can keep on consuming all the health care we want, even as the costs squeeze out other public goods.  

The Occupiers are right when they say our system of wealth redistribution is broken. But they’re wrong about what broke it. The richest 1 per cent are not exactly starving out the working poor. (In the U.S., half all income sent to Washington is redistributed to the elderly, sick and disabled, or to those who serve them, and nearly half the country lives in a household that’s getting some sort of government benefit.) The problem is, our system redistributes the wealth from young to old, and from middle-class workers in the private sector to inefficient and expensive unions in the public sector.  

Among the biggest beneficiaries of this redistribution is the higher-education industry. In Canada, we subsidize it directly. In the U.S., it’s subsidized by a vast system of student loans, which have allowed colleges to jack up tuition to sky-high levels. U.S. student debt has hit the trillion-dollar mark. Both systems crank out too many sociologists and too few mechanical engineers. These days, even law-school graduates are having trouble finding work. That’s because the supply has increased far faster than the demand."

The U.S. Already Has a Safe Network of Pipelines That Are An Integral Part of Our Energy System

The map above (click to enlarge) shows the existing, extensive network of energy pipelines in the U.S. with the following code: green for oil, red for gas, and blue for products such as gasoline, propane and ethylene.
In a temporary victory for environmentalists, the Obama administration has delayed its decision on whether to approve the controversial Keystone XL oil pipeline until after the 2012 election, which further delays the creation of 20,000 jobs for this "shovel-ready" project.  Environmentalists claim that the Keystone XL pipeline's route across the Midwest "would endanger sensitive lands and drinking water supplies."

With all of the environmentalism NIMBYism/alarmism about the proposed Keystone XL oil pipeline, it might be a good time to point out that:  a) the United States already has a huge network of existing pipelines for oil, natural gas and gasoline illustrated in the map above, b) pipelines have been used successfully and safely in the U.S. for more than 100 years, and c) pipelines are an integral part of our domestic energy system.   In other words, we live safely with energy pipelines every day and the Keystone XL pipeline would simply become one new part of an existing and extensive pipeline network that makes a significant contribution to America's dependable and affordable energy.  

HT:  Dwight Oglesby

Retro Cartoon of the Day from the War on Booze: It's Still Relevant Today, Just a Different War

Thursday, November 10, 2011

Cost of Thanksgiving Dinner Increases 13%, But Remains a Bargain at Less than $5 Per Person

WASHINGTON, D.C., November 10, 2011 – "The retail cost of menu items for a classic Thanksgiving dinner including turkey, stuffing, cranberries, pumpkin pie and all the basic trimmings increased about 13 percent this year, according to the American Farm Bureau Federation (AFBF). AFBF’s 26th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.20, a $5.73 price increase from last year’s average of $43.47.

“The cost of this year’s meal remains a bargain, at just under $5 per person,” said AFBF President Bob Stallman, a rice and cattle producer from Texas. “The quality and variety of food produced for our dinner tables on America’s diverse farms and ranches sets us apart from our contemporaries around the world.  It is an honor for our farm and ranch families to produce the food from our nation’s land for family Thanksgiving celebrations.”

The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10. There is also plenty for leftovers.

The big ticket item – a 16-pound turkey – came in at $21.57 this year. That was roughly $1.35 per pound, an increase of about 25 cents per pound, or a total of $3.91 per whole turkey, compared to 2010.  The whole bird was the biggest contributor to the final total, showing the largest price increase compared to last year. “Turkey prices are higher this year primarily due to strong consumer demand both here in the U.S. and globally,” said John Anderson, an AFBF senior economist."

MP: The 13% increase in the cost of Thanksgiving dinner this year is the largest annual nominal increase since a 16.8% increase in 1990, and the 10% increase in the inflation-adjusted cost is the largest real increase since a 10.8% increase in 1990.  However, about half of this year's 13% increase is because turkey prices increased by 22% over last year; without turkey, the increase in the cost of the other ingredients was only about 7%. 

In 2011 dollars, the $49.20 cost this year for a dinner for ten was the highest since 1990, when the inflation-adjusted cost was $49.53.  Compared to the highest inflation-adjusted cost in the AFBF's data series of $58.78 in 1986, this year's Thanksgiving dinner for ten is 16.3% lower than 25 years ago.

Update: The bottom chart above shows the "time cost" of a Thanksgiving dinner measured in the number of hours of work at the average hourly wage that would generate enough income to purchase the turkey dinner for ten at the retail price.  This year it will require about 2.5 hours of work at $19.53 per hour to purchase the dinner for $49.20, and that "time cost" has been relatively stable for the last twenty years, and 22% below the "time cost" of  3.22 hours in 1986.  

Bottom Line: The fact that the average American family can celebrate Thanksgiving with a turkey dinner feast for ten people at a "time cost" of only 2.5 hours of work for one person means that we really have a lot to be thankful for on Thanksgiving: an abundance of cheap, affordable food.  Exhibit A: In 1929, the average American family spent 22.7% of their disposable income on food, and today's families spend half that amount: only 11.4% (data here).

Bon appetit!

HT: Bob Wright

The Public-Union Albatross

In yesterday's WSJ, Philip K. Howard writes that public-union pension abuses are so common that they're taken for granted.  Some examples:

1.  "Spiking" union pensions with excess overtime in the last year of employment.
2. Until recently, over 90% of Long Island Rail Road (LIRR) workers retired with a disability—even those who worked desk jobs—adding about $36,000 to their annual pensions. The cost to New York taxpayers over the past decade was $300 million.  As one investigator put it, fraud of this kind "became a culture of sorts among the LIRR workers, who took to gathering in doctor's waiting rooms bragging to each [other] about their disabilities while simultaneously talking about their golf game." How could almost every employee think fraud was the right thing to do? 

3. That kind of "disability abuse" is not just happening in New York - in California, 82% of senior state troopers are "disabled" in their last year before retirement. 

Howard's solution?  "America must bulldoze the current system and start over. Only then can we balance budgets and restore competence, dignity and purpose to public service."

The Quiz Daniel Kahneman Wants You to Fail

"In the December 2011 issue of Vanity Fair, Michael Lewis profiles Nobel Prize–winning psychologist Daniel Kahneman, who pioneered research into “heuristics,” or the shortcuts humans use when making decisions. At this link, take a 5-question quiz to see how your own mind works."

Typical Example of Media Mis-Reporting Trade Data

WASHINGTON POST — "The U.S. trade deficit fell in September to the lowest point this year as foreign sales of American-made autos, airplanes and heavy machinery pushed exports to an all-time high. The deficit narrowed 4 percent to $43.1 billion, the third straight decline and the smallest imbalance since last December, the Commerce Department reported Thursday.

Through September, the deficit is running at an annual rate of $558.2 billion, up 11.6 percent from the imbalance for all of last year of $500 billion. A higher deficit acts as a drag on economic growth because it means fewer jobs for American workers."  

MP: The story from the Washington Post above (emphasis added) is a typical example of how the media frequently mis-reports international trade data, for the following reasons:

1. Once we account for all international transactions including:  a) purchases of goods and services, b) investment income payments and receipts, and c) purchases of financial assets, there is an overall balance of U.S. international transactions, and the "balance of payments" account equals zero.  That is, the only way the media can report a trade "imbalance" is to completely ignore investment income, financial transactions and capital flows.  

2. The assertion that fictitious "trade imbalances," or "trade deficits" for only goods and services, are associated with "fewer jobs for Americans" is not supported by the empirical evidence.  According to research at the Cato Institute by Dan Griswold:

"Trade deficits are routinely blamed for job losses, yet civilian employment grew a healthy 1.4 percent annually during periods of rising trade deficits while job growth was virtually zero during those periods when the deficit was declining. Ditto for the unemployment rate. The jobless rate ticked down 0.4 percentage points per year on average when the trade deficit was on an upward trend, and jumped a painful 1.0 point per year when the trade deficit was shrinking. In four of the five periods in which imports did outpace exports, the unemployment rate fell, and in every period in which imports grew more slowly than exports, or fell more rapidly, the unemployment rate rose."

Markets in Everything: $19 Unlimited Phone Plan

YAHOO NEWS -- "When it comes to mobile carriers, consumers may have four major choices, but they're all starting to look the same — and that isn't a good thing. But a new provider, Republic Wireless, headquartered in North Carolina, is shaking things up with a rather unbelievable $19 a month no-contract plan. That's $19 not just for unlimited calling and texting, but mobile data too."

MP: Gotta love the cutthroat competition, often the best form of "regulation" and market discipline, and the consumers' best friend.   

U.S. Exports, Total Trade Reach Record Highs

The total volume of U.S. international trade activity (exports + imports) reached an all-time record high in September (not adjusted for inflation, BEA report here) of $404 billion, slightly higher than the previous record of $401 billion in July 2011 (see top chart above).  Compared to the recession-related, cyclical low of $277 billion of trade activity in May 2009, there has been a 46% increase in U.S. trade, as the U.S. and world economies have gradually  recovered from the 2008-2009 recession.    

The September volume of exports ($180.3 billion) was the highest monthly export volume in history (in both nominal and real terms, see bottom chart), a further sign that a recovery in worldwide economic conditions has increased demand for U.S. products.  There was an overall monthly nominal increase of 1.4% for shipments of U.S. exports in September, including increases in industrial supplies (3.2%), capital goods (0.3%) automobiles (1.7%) and an especially strong gain in consumer goods (5.3%). 

Odds for Perry Plummet on Intrade to 4.3%

Intrade odds for Rick Perry to be the Republican nominee fell from 10% a few days ago to 4.3% today. 

Wednesday, November 09, 2011

Markets in Everything: Polaroid's New Instant Digital Camera, a Portable Digital Photo Booth

Coolest Gadgets -- "The $300 Polaroid Z340 is said to boast of a full-function 14-megapixel digital camera as well as a built-in ZINK printer, delivering a whole new twist on the instant experience. This camera enables you to customize each individual photo between the snap and share process, turning it into a portable digital photo booth, now how about that? You will be able to deliver such images from a file to print in under a minute."

N.Dakota Oil Continues Exponential Growth and Is on Pace to Become the No. 2 Oil State in January

In just a little more than two years, oil production in North Dakota has doubled from 232,000 barrels per day in August 2009 to a new record-high 464,000 barrels per day in September of this year, according to data released yesterday by the state's Department of Mineral Resources (see chart above).  September's record-setting oil production was 4.5% above the previous month and 35% above the year-ago level.  The number of wells producing oil in the Peace Garden State also reached a new record level in September at 5,818, and the daily oil production of 80 barrels per well also set a new record.       

Bottom Line: At the current rate of ongoing record-setting increases in its oil production, North Dakota is on pace to surpass both California (540,000 barrels per day) and Alaska (550,000 barrels per day) by next January to become the No. 2 oil-producing state in the country, behind only Texas (1,410,000 barrels per day).    

The Power of the Blog: Local Blog in Fullerton CA Broke a Story Leading to Police Murder Charges -- "The pretrial hearing for excessive force and murder charges filed against Officer Manuel Ramos and Cpl. Jay Cicinelli in the death of Kelly Thomas begins November 4, 2011. Thomas was a 37 year old schizophrenic drifter who was beaten to death by officers at a Fullerton, California, bus depot in July 2011 .

The charges came down after multiple headlines were made, not by local media, but by a local small-government blog in Fullerton called Friends for Fullerton’s Future . The blog was the first to publish a horrific picture of Thomas in the hospital and a chilling video of the incident captured by a cell phone video camera.

“The picture was so horrific that the local news channels wouldn’t show it and a lot of times they don’t think there is much of a story there because they get the police version of the story,” says Travis Kiger, a blogger at Friends for Fullerton’s Future.

Kiger and Chris Thompson, also a blogger, sat down with Reason TV in the video above to talk about how the blog broke the story and what they think contributed to the international media attention."

HT: Sprewell

Tuesday, November 08, 2011

Builder Mag: The 8 Healthiest U.S. Housing Markets

REALTOR MAG --"Builder Magazine teamed with Hanley Wood Market Intelligence to compile its annual list of the healthiest housing markets in the country, factoring in housing projections from Moody’s The list was based on projected price appreciation, population growth, income growth, and improving employment picture.

Many of the housing markets projected to have the biggest gains into 2012 tend to be the home to major universities, strong private sector employment, or have nearby military bases, according to a list of the healthiest housing markets by Builder Magazine. 

Click here to see the eight cities that topped Builder’s list, including projected housing permits in 2011 and 2012."

Walmart Serves Underserved and Unbanked Customers with Everyday Low Banking Fees

YAHOO FINANCE -- "Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the huge retailer would drive small bankers out of business and potentially conflate its banking and retail operations. Ever since, Wal-Mart has been quietly building up à la carte financial services, becoming a force among the unbanked and “unhappily banked,” as one Wal-Mart executive put it.

Jennifer Tescher, chief executive at the Center for Financial Services Innovation, which focuses on finding financial services for those not well served by banks, said Wal-Mart brought much-needed competition — and lower fees — to financial services.

“I think it’s one of the best things that has happened in the last 10 years for underserved consumers,” she said. “There is now much more choice in the marketplace for consumers, where they can vote with their feet.”

Even before the recent outcry against banks, the services had become popular with cash-poor customers, many of whom never had a bank account and found the services more affordable than traditional check-cashing operations. Now newcomers to the ranks of the banking disaffected are helping to swell the numbers, Wal-Mart officials said."

MP: Gotta love Walmart for improving the lives of millions of low-income Americans on a daily basis. 

Fact of the Day: Consumer Sovereignty

In the last four weeks, as anger over debit card fees festered, more than 650,000 customers signed up for credit unions, according to the Credit Union National Association.

Via NY Times

Sortable List: College Majors, Salaries, Un Rates

From the WSJ, comes this sortable list of college majors, salaries and jobless rates.

Job Openings Reach Three-Year High in September

The BLS reported today that total job openings in the U.S. reached a three-year high of 3,354,000 open positions at the end of September, the highest level of openings since August of 2008 (see chart).   Private-sector openings were just slightly below 3 million at the end of September, which was also the highest level since August 2008.  

In a related report that shows increased job availability, the Monster Employment Index for the U.S. increased by 11% in October compared to a year ago, "demonstrating improved overall online job availability compared to October 2010."

IRS Data from 1992-2008 on the Top 400 Show Significant Turnover: 73% Last for Only 1 Year

In Table 4 of the IRS bulletin "The 400 Individual Income Tax Returns, 1992-2008," they report the "Frequency of Appearing in the Top 400 Tax Returns for Tax Years 1992-2008." 

Over the 17 tax years between 1992 and 2008, there were a total of 6,800 tax returns analyzed (400 per year), and because some individuals appeared in the top 400 for more than one year, there were 3,672 unique taxpayers.  Here is what the IRS found about the ever-changing group of the top 400 taxpayers:

1. Almost three out of four of those individuals (2,676 or 72.88%) were in the top 400 taxpayer group for only a single year over the 17-year period.

2. Only 439 individuals, or 11.96% of the total, remained in the top 400 for two years.  Therefore, almost 85% (or 3,115 of the 3,672 total) were in the top 400 for only one or two years. 

3. Only 1% of the sample group (37 out of 3,672) stayed in the top 400 for 14 years or more, and only 4 taxpayers (or about 1/10 of 1 percent or 1 in a 1,000) stayed in the group for the entire 17-year period.  

MP: The IRS study of the top 400 taxpayers over a 17-year period provides additional evidence of significant income mobility over time.  Individuals do not remain stuck in the same static income groups, quintiles, percentages or brackets over their careers or lifetimes, but instead move dynamically both up and down through those statistical groups from year to year. 

HT: Peter Parlapiano

Monday, November 07, 2011

Public School Teachers Are Overpaid by 52%

Andrew Biggs (AEI) and Jason Richwine (Heritage) in today's WSJ (link works now):

"In short, combining salaries, fringe benefits and job security, we have calculated that public school teachers receive around 52% more in average compensation than they could earn in the private sector.

The compensation premium is especially relevant today, as states and localities struggle with budget deficits. Restraining the growth of teacher compensation—in particular, pension and retiree health benefits that outstrip what comparable private-sector workers receive—could help balance budgets and perhaps restore school resources lost to rising labor costs. Broader pay reform should give school administrators greater flexibility to reward the best or most-needed teachers with high salaries and benefits, while encouraging the least effective ones to improve or to leave the profession.

Effective reform, however, requires knowing all the facts about teacher pay. Policy makers and the public should not accept at face value that the typical teacher earns far less than he or she would in the private sector. The evidence points to a very different conclusion."

What's Your News IQ? Take the Test and Find Out

Take the new Pew Research Center News IQ test here.  

Chairman of China's SWF Lectures Europe on the Accumulated Troubles of Worn-Out Welfare State

At about 12:30 in the interview above with Aljazeera (link here), Jin Liqun, the chairman of China's sovereign wealth fund, gets tough with Europe and criticizes its welfare state:

"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labor laws are outdated. The labor laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack.

Why should, for instance, within the Eurozone, some members' people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."

HT to Morganovich, who comments in an email: "The world sure has changed. If you had told me 10 years ago that China would be preaching the virtues of capitalism and the pitfalls of a welfare state to Europe (and be right), I would have never believed you."

Update: Look for the quote above in tomorrow's WSJ featured as the daily "Notable and Quotable." 

N. Dakota Leads U.S. in Hotel Occupancy Growth

BISMARCK, ND -- "This summer's flooding disrupted lives, businesses and vacations. Not surprisingly, the state's tourism division says fewer people traveled around the state during the flood, but the division says these past three months tourism has rebounded.

"You wouldn't go to Disney World without calling and making sure you had a hotel room. We`re just trying to get people to think of North Dakota that way," said Sara Otte Coleman, director of the state's tourism division. 

"Tourism is not just leisure travel, but it's broader," Coleman said. "It includes business travel. It includes visiting friends and relatives and all of that so it`s still tourism even though it`s not our focus which is leisure travelers."

Thanks to the oil boom, finding a hotel room anywhere near Minot, Williston or Dickinson is becoming nearly impossible if you don't have a reservation. Coleman says North Dakota is leading the country in hotel occupancies, increasing by 9 percent from this time last year."

MP: More evidence that the oil boom in North Dakota is having significant and positive spillover effects on other industries in the state, including tourism. 

New Research Reveals Huge Geothermal Resources in U.S. Accessible with New Advanced Technology

GIZMAG.COM -- "As a green energy source, geothermal heat is tough to beat, but until recently, it was believed to be economically feasible only in areas with shallow tectonic (volcanic) activity. Now, with a generous grant from, the search engine giant's philanthropic arm, two scientists from Southern Methodist University (SMU) have pooled together the results from more than 35,000 data sites to paint a very different, almost rosy, energy picture for the United States and, indeed, the world.

We now know that potentially exploitable EGS resources can be found in all 50 U.S. states and countless regions around the globe as well, so it's only a matter of time before abundant clean energy begins to flow from tapping into that massive molten furnace churning below our feet. 

SMU Geothermal Lab Coordinator Maria Richards and Geophysics professor David Blackwell's research has revealed, however, that a much larger portion of the earth's crust can yield usable energy than was previously thought, especially in the eastern U.S. The project's findings indicate that, with advanced technology already available, the continental U.S. harbors a staggering 2,980,000 MW of potential energy! That's especially impressive considering the current global geothermal generating capacity is only 9,000MW.

"Both Google and the SMU researchers are fundamentally changing the way we look at how we can use the heat of the Earth to meet our energy needs, and by doing so are making significant contributions to enhancing our national security and environmental quality," said Karl Gawell, executive director of the Geothermal Energy Association.

To view the new Enhanced Geothermal Systems maps constructed with SMU's data , go here to get the latest version of Google Earth, then download and open the file here."

MP: Watch video above for an overview of EGS potential.  This is one more reason that "peak oil" is "peak idiocy" (credit to Mike Munger for that term).  

U.S. Corn Yields Have Increased Six Times Since the 1930s and Are Estimated to Double By 2030

The chart above displays annual U.S. corn yields (bushels per acre) back to 1866 (USDA data here).  After remaining flat between 1866 and 1939 at about 26 bushels per acre, corn yields started increasing dramatically in the 1940s due to the introduction of hybrid seeds, and the widespread use of nitrogen fertilizers and herbicides (source).  By 2009, average corn yields had increased by more than six times to a record high 165 bushels per acre, before falling to 153 bushels per acre last year, and an estimated 148.1 bushels per acre for 2011.   

Corn facts from the Corn Farmers Coalition:

1. Farmers today grow five times as much corn as they did in the 1930s – on 20 percent less land. That is 13 million acres or 20,000 square miles, twice the size of Massachusetts. The yield per acre has skyrocketed from 24 bushels in 1931 to 154 now, or a six-fold gain.

2. The national average of 153 bushels produced on each acre in 2010 was nearly 20 percent larger than the average yield in 2002 – and plant breeding experts estimate yields may jump 40 percent before 2020 and, perhaps, hit a national average of 300 bushels per acre by 2030.

3. America’s corn farmers are by far the most productive in the world, growing 20% more corn per acre than any other nation.

HT: Dennis Gartman, who discussed historical corn yields in today's "The Gartman Letter."  

Markets in Everything: Fly-In, Fly-Out Coal Girls

SUNDAY MAIL -- "Fly-in, fly-out "working girls" traveling from as far away as New Zealand to the resource-rich mining regions of Queensland and Western Australia are making as much money in one or two days as mine laborers earn in a week. The rich pickings up to $2000 a day are attracting scores of women to communities bursting with cashed-up men deprived of female company for weeks."

17 Positive Trends in the U.S.

On his blog, Scott Adams (creator of the "Dilbert" comic strip) lists 17 positive trends and news items in the U.S., see the opening paragraph and first item below:

"Let's see how much good news we can put in one blog entry.  For today only, skip the usual negative comments and leave only optimistic thoughts based on real trends and actual news items. I'll start. Remember to suspend skepticism for just one day. My examples focus on the United States because I know it best. Feel free to expand.

Energy: Amazingly, some say the United States is well on its way to being energy self-sufficient, thanks in part to huge new oil fields in North Dakota and hundreds of other developments in conservation and green energy. One good example is a recent discovery that the United States has far more geothermal potential than anyone predicted."

Sunday, November 06, 2011

Rail Shipments of Oil Set New Record in October

A recent CD post featured the huge boom in U.S. rail traffic for transporting oil that has resulted from the huge oil boom in places like the Bakken region of North Dakota.  The chart above comes from the American Association of Railroads' latest monthly "Rail Time Indicators" and provides new details about how significant that increase in rail shipments of petroleum has been this year.  October rail shipments of oil were 19.4% ahead of the same month last year, and 34.4% above October 2009.  In the last four months starting in July, oil shipments by rail have set new all-time monthly high records  in each of those months.   

In addition to the increase in economic activity that results directly from increased domestic energy production, there are additional increases in jobs, output and economic activity that result indirectly from increased oil and gas production, with increases in rail traffic being just one of many examples. 

HT: Robert Kuehl

Jobless Rate in Williams County ND Is Below 1%!!

Williston (ND) Herald -- The latest numbers from Job Service North Dakota’s Labor Market Information Center report that Williams County has the lowest unemployment rate in the state, and perhaps the lowest in the entire United States. September numbers, which are the most recent available, put Williams County at a staggeringly-low 0.9 percent (see chart above).

“In my words, it’s unbelievable,” Williston Workforce Development Coordinator Shawn Wenko said. “I’ve never in my life heard of an unemployment rate that low.”

Related: North Dakota had 17,545 open and available positions in September 2011.

Note: Williston, North Dakota is at the center of the energy-boom Bakken region of North Dakota. 

Energy-Boom States Are Oases of Optimism In A Barren Landscape of State Budget Cuts and Layoffs

From the Associated Press:

"Resource-rich Alaska took in nearly $1.9 billion more than expected last fiscal year thanks largely to high oil prices and ended the fiscal year with an estimated $260 million surplus, an amount equal to nearly 4 percent of its general fund.

A handful of states — led by those that enjoy bountiful energy reserves such as West Virginia, Wyoming and North Dakota — have found themselves in similarly enviable positions, oases of optimism in an otherwise barren landscape of budget cuts and government layoffs. A few other states, including Massachusetts, South Carolina and Virginia, have combined slight increases in tax revenue with tight spending controls to produce modest surpluses.

In West Virginia, the surplus is going toward reserves, pension programs and debt. Wyoming put much of the extra money into savings after years of investing heavily in roads and schools.

And in North Dakota, which is experiencing an energy boom similar to the one Wyoming went through several years ago, investments included an extra $370 million for road repair and construction, especially in the oil-producing western part of the state. Some $340 million will go to schools over the next two years to help reduce property taxes, while $22 million will go toward a disaster relief fund for a state that has been inundated with floods in recent years.

At the same time they are saving and investing, North Dakota and West Virginia are reducing their corporate income tax rates, a move that could make them even more attractive to certain businesses."

Intrade Odds: Gingrich Surges Ahead of Cain

The chart above shows the latest Intrade odds for Gingrich (8%) and Cain (5.4%) to be the Republican nominee.  Odds for Gingrich have been above Cain for the last four days.