Apostrophe Abuse Hall of Shame: It's vs. Its

From the CD comments and other sources:

1. No one mentioned that Brazil makes it's ethanol from sugar cane.

2. .....to feed it's refineries in the Chicago area...

3. The article is using the example as it's opening wedge....

4. .....if North Dakota continues on it's rampage of oil production the pipeline will...

5.  Exxon is also in the oil sands and wants to move it's product.

6. .....it will turn sleepy backwaters into boomtowns and it's direct effect will be felt for a couple of years.

7. Governor Jack Dalrymple says the oil boom is in it's peak and things will slow down.

Here's the simple, very basic grammar rule for it's vs. its. 

Charts of the Day: Oil vs. Natural Gas Prices; On An Energy-Equivalent Basis Gas is 79% Cheaper vs. Oil

I featured a post yesterday about oil prices vs. natural gas prices with charts from Scott Grannis and Nathan Slaughter, and have two new charts to present above inspired by some charts in the NY Times last February (thanks to Ed Dolan for the link). 

The top chart compares oil prices ($ per barrels) to natural gas prices back to 1994 for the energy equivalent of one barrel of oil, with natural gas prices converted at the ratio of 5.8 million BTUs per barrel of oil.  The bottom chart shows the percentage price difference between oil and natural gas, on an energy equivalent basis, from January 1994 to November 2011. 

The bottom chart shows that over the last 18 years, natural gas has been cheaper than oil on an energy-equivalent basis most of the time except for fairly short periods in 1996 (1 month), 2001 (5 months), 2003-2004 (7 months), and 2005 (4 months).  For the last 33 months starting in March 2009, natural gas has been more than 50% cheaper than oil, and in November gas was cheaper by a record 79% ($95 per barrel for oil vs. $19.82 for gas).  

Bottom Line: Thanks to the shale gas revolution, there's never been a time in recent history when natural gas has been cheaper when compared to oil on an energy-equivalent basis.   

You Can Take a Tour of "Occupy DC" on Weekends

Photos taken today at Occupy DC, McPherson Square Park, where occupiers will take you on a 30-40 minute tour of the park every Saturday and Sunday.

Interactive Graphic of the Eurozone Debt Web from the BBC: Who Owes How Much to Whom?

From the BBC - "The circles in this interactive graphic show the gross external, or foreign, debt of some of the main players in the eurozone as well as other big world economies. The arrows show how much money is owed by each country to banks in other nations. The arrows point from the debtor to the creditor and are proportional to the money owed as of the end of June 2011. The colors attributed to countries are a rough guide to how much trouble each economy is in."

See sample above for Greece (click to enlarge).  

Update: Link fixed. 

America in Color from 1939-1943

Denver Post -- "These 70 images by photographers of the Farm Security Administration and Office of War Information, are some of the only color photographs taken of the effects of the Depression on America’s rural and small town populations. The photographs are the property of the Library of Congress and were included in a 2006 exhibit Bound for Glory: America in Color."

HT: Mike Carlson 

Update: One interesting observation about the photos, sent by email: "Not one fat person."  

Leading Index Rebounds to Record High in Oct.

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.9 percent in October to 117.4, following  increases of 0.1 percent in September and 0.3 percent in August (see chart above).

Says Ataman Ozyildirim, economist at The Conference Board: “The October rebound of the LEI — largely due to the sharp pick-up in housing permits — suggests that the risk of an economic downturn has receded. Improving consumer expectations, stock markets, and labor market indicators also contributed to this month’s gain in the LEI as did the continuing positive contributions from the interest rate spread. The CEI also rose somewhat, led by higher industrial production and employment.”

Says Ken Goldstein, economist at The Conference Board: “The LEI is pointing to continued growth this winter, possibly even gaining a little momentum by spring. The lack of confidence has been the biggest obstacle in generating forward momentum, domestically or globally. As long as it lasts, there is a glimmer of hope.”

Interesting Fact of the Day: Busiest Seaports

Of the world's top 12 busiest container seaports in 2010, 7 are in China and 10 of the top 12 are in Asia.  

Update: Josh Barro counts 11 countries in Asia, if you include the UAE.  In that case I stand corrected.  In these International Macroeconomic databases from the USDA, they classify UAE in the "Middle East," and not in the "Asia and Oceania"  group. 

Comments welcome. 

Nat Gas Brings Economic Boom and Hope to Ohio

HT: Mike W.

Patriotic Millionaires Want Higher Taxes on Rich, But Are Unwilling To Voluntarily Pay Higher Taxes

Washington — "Two dozen “patriotic millionaires” traveled to the Capitol on Wednesday to demand that Congress raise taxes on wealthy Americans.

The Daily Caller attended their press conference with an iPad, which displayed the Treasury Department’s donation page, to find out if any of the “patriotic millionaires” were willing to put their money where their mouth is."

CNBC Smackdown: Rep. Bachus vs. Schweizer

On Wednesday night's Kudlow Report, Rep. Spencer Bachus responded to charges of insider trading made by Peter Schweizer in his new book:

Peter Schweizer responded to Rep. Bachus last night on the Kudlow Report:

The 25 Worst Passwords of 2011

From PC Mag, the annual list of the 25 worst passwords is out, based on actual compromises.  Here's the Top Ten worst passwords for 2011:

1. password 

2. 123456 

3. 12345678 

4. qwerty 

5. abc123 

6. monkey 

7. 1234567 

8. letmein 

9. trustno1 

10. dragon

Thanksgiving Meal for Ten Only $34.03 at Walmart

BENTONVILLE, Ark. – Nov. 18, 2011 – "The American Farm Bureau Federation (AFBF) recently reported that Americans will pay more to feed 10 people for Thanksgiving dinner this year than since the mid-1980s. The average turkey feast for 10 this year will cost $49.20 – that’s $5.73 more than it cost just last year (see related CD post here). Shoppers at Walmart will pay 1/3 (31%) less for the same Thanksgiving groceries ($34.03) and will have an extra $15 in their wallet with this savings.

“If you think about it, based on the Farm Bureau’s statistics, if you were to shop at Walmart for your Thanksgiving meal for 10, you could essentially feed three of your guests for free because you saved so much on the overall meal,” Sinclair added."

Update 1:  What single organization in human history has made the greatest contribution to enriching and improving the lives of the poor, the middle class, the average citizen, the bottom of "the 99%," etc.?  I nominate Walmart. 

Update 2: See Don Boudreaux's related post here.

Two Charts on Natural Gas vs. Oil Prices, Gas is Now 75% Cheaper On an Energy-Equivalent Basis vs. Oil

1. From Scott Grannis (top chart):

"Natural gas is down fully 75% from its 2008 high, while crude oil is down by only 33%. As the top chart above shows, natural gas hasn't been this cheap relative to crude for decades, thanks to significant new drilling techniques which have resulted in a natural gas production bonanza in the U.S. It is hard to underestimate the degree to which cheap and abundant natural gas is going to transform U.S. manufacturing and energy generation in the years to come."

2. From Nathan Slaughter (bottom chart):

And over the decades, we've grown accustomed to oil as one our chief energy sources. So accustomed, in fact, that we're now overlooking a cleaner, plentiful alternative that is about 75% cheaper. The bottom graph above shows the price of crude oil versus the price of an equivalent amount of energy from natural gas during the past three years.

A barrel of oil contains about six times the raw energy content of a thousand cubic feet (Mcf) of natural gas. So all things being equal, with oil prices about $99 per barrel, natural gas should fetch about one-sixth as much, or $16.50 per Mcf. But thanks to horizontal drilling and fracking technologies, the United States is now awash in accessible, cleaner-burning natural-gas resources. And the resulting flood of natural gas has created a surplus, causing prices to collapse.

Natural gas isn't just readily available at a 10% or 20% discount to oil -- but more than 75%. These economics are simple but powerful. It's hard to justify paying $1 for an energy source when you can buy something comparable for $0.25."

The Daily Show: "LOL, Occupy Segregated"

OWS: The Ghetto vs. The Aristocrats

From Townhall (h/t Warren Smith).

Photo of the Day: Life in the Soviet Union

Consumers had to wait in really long lines for everything so the "time cost" was really, really high, but hey, at least the "money cost" was really low.

L.A. Port Exports Set New Record High in October

The number of loaded export containers leaving the Los Angeles Port for overseas destinations reached a record high in October of 193,547 TEUs (20-foot equivalent units), beating the previous record of 192,850 TEUs in March of this year (see chart above).  October exports this year are 28.14% ahead of the same month last year, and above the previous month by 9.4%. Loaded import containers in October were 5.5% above the year earlier level, but fell from September by 1%. 

Bottom Line: Global demand for U.S. export products shipped from the L.A. Port has never been higher, fueled by an ongoing worldwide economic expansion.   

Update: The L.A. port is America's busiest container seaport, and ranks  No. 17 in the world. 

Remarkable Rise and Fall of Gov. Perry on Intrade

From Intrade.com, the odds for Rick Perry over the last 200 days. 

Chart of the Day: World Shares of GDP

The USDA recently updated its international macroeconomic data set with world and country GDP data estimates for 2011.  Here are some observations:

1. The chart above of world GDP shares (data here) from 1969 to 2011 shows America's amazingly stable share of world output, which has remained at about 26% for more than forty years, with only a gradual decline in recent years.  The U.S. share of world GDP in 2011 (26%) was actually higher than in 1982 (25.8%). 

2. It's also interesting to note that: a) the shares of world GDP in 2011 were almost exactly the same for the U.S. (25.9%), the EU-15 (26.2%) and Asia/Oceania (26.9%). For both of the last two years (2010 and 2011), Asia/Oceania's share of world GDP has been slightly higher than both the EU15 and the USA.  The combined GDP of Latin America, Middle East and Africa has also been relatively stable at about 10%, with recent increases to above 12% in the last two years.

3. The biggest changes over time have been the gradual decline in the EU-15's share of world GDP from almost 36% in 1969 to roughly 26% by 2011, while Asia/Oceania's share has increased from less than 15% in 1969 to almost 27% in 2011. The fact that America's share of world GDP has remained constant over time is a testament to how America's dynamism, resiliency, and culture of innovation and entrepreneurship have enabled us to continue to be productive and competitive in a "tough world."  In contrast, the EU-15's declining share of the world economy demonstrates the failure of anti-growth, European-style socialism with high taxes and excessive regulations that have created a culture of dependency and entitlement.     

4. For the first time ever, real world GDP (in 2005 dollars) exceeded $50 trillion in 2011, a new record high level of world output, and 2.7% above last year.  At the global level, there's been a complete recovery from the worldwide slowdown in 2008 and 2009 with world output now at an all-time high.    

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Obama's Indefensible Pipeline Punt

Some excerpts from Vaclav Smil's article in the American.com: 

"With a total length of close to 3,000 kilometers, the new [Keystone XL] pipeline would add just over 1 percent to the already existing network of crude oil and refined products lines that crisscross the United States and parts of Canada. Why, if pipeline safety is a key concern, have we not seen waves of civil disobedience focused on more than a quarter million kilometers of existing pipelines?

Long-term statistics show convincingly that there is no safer way to transport large masses of liquids over long distances than a pipeline. Moving the same amount by trucks or rail would be much more risky, in addition to being vastly more expensive. So would be moving the oil from Alberta to British Columbia and then shipping it by tankers via the Panama Canal to Texas.

 Here comes the craziest twist: if the opponents of the XL succeed and prevent its construction, there is a strong possibility that Alberta’s oil sand-derived oil will be piped westward to Canada’s Pacific coast and loaded on supertankers going to Asia, to feed China’s grossly inefficient industries.

By preventing the oil flow from Canada, the United States will thus deliberately deprive itself of new manufacturing and construction jobs; it will not slow down the increase of global CO2 emissions from fossil fuel combustion; it will almost certainly empower China; and it will make itself strategically even more vulnerable by becoming further dependent on declining, unstable, and contested overseas crude oil supplies. That is what is called a spherically perfect decision, because no matter from which angle you look at it, it looks perfectly the same: wrong."

Big Farm Raked in Record Profits This Yr. As Farm Land Soars, But They Harvested $10B in Handouts

According to the USDA, net income from U.S. farms is expected to set a new record this year of $103.6 billion on record cash receipts of $370.4 billion.  The record farm income this year is 31% above last year's income, and marks the first time in history that the combined income of U.S. farms has exceeded $100 billion.       

The USDA also estimates that the total value of farm real estate will approach $2 trillion this year, an increase of 7.12% from last year.  Separately, CNN is reporting record farmland prices based on Federal Reserve data, with 25% increases in Midwest farmland (and 31% in Iowa), the largest annual gains in three decades.

Even with record-level income, revenues and farm land values, farmers "harvested" more than $10 billion in direct government (taxpayer) payments (subsidies) this year.  

Whenever oil prices and "Big Oil" profits are high, politicians call for imposing "windfall profits taxes" and ending oil subsidies (even though oil companies don't actually get any direct government payments and only get the same tax deductions and cost recovery allowances that are available to all U.S. manufacturers), so maybe it's time for equal treatment of Big Farm?

Private Labor: Wake Up and Smell the Tar Sands

Daniel Henninger in today's WSJ:

"The decision by the Obama administration to "delay" building the Keystone XL pipeline is a watershed moment in American politics. The implication of a policy choice rarely gets more stark than this. Put simply: Why should any blue-collar worker who isn't hooked for life to a public budget vote for Barack Obama next year? The Keystone XL pipeline would have created at least 20,000 direct and indirect jobs. Much of this would have been well-paid work for craftsmen, not jobs as hod carriers to repave the Interstate. 

Within days of the Keystone decision, Canada's prime minister, Stephen Harper, said his country would divert sales of the Keystone-intended oil to Asia. Translation: Those lost American blue-collar pipeline jobs are disappearing into the Asian sun. Incidentally, Mr. Harper has said he wants to turn Canada into an energy "superpower," exploiting its oil, gas and hydroelectric resources. Meanwhile, the American president shores up his environmental base in Hollywood and on campus. Perhaps our blue-collar work force should consider emigrating to Canada. 

No subject sits more centrally in the American political debate than the economic plight of the middle class. Presumably that means people making between $50,000 and $175,000 a year. The president fashions himself their champion.

This surely is bunk. Mr. Obama is the champion of the public-sector middle class. Just as private business has become an abstraction to the new class of public-sector Democratic politicians and academics who populate the Obama administration, so too the blue-collar workers employed by them have become similarly abstracted. 

You would think someone in the private labor movement would wake up and smell the tar sands."

U.S. Dependence on Foreign Oil Lowest Since 1995

From Daniel Yergin's September WSJ article "There Will Be Oil":

"In 2003, the Bakken formation in North Dakota was producing a mere 10,000 barrels a day. Today, it is over 400,000 barrels, and North Dakota has become the fourth-largest oil-producing state in the country. Such "tight" oil could add as much as two million barrels a day to U.S. oil production after 2020—something that would not have been in any forecast five years ago.

Overall U.S. oil production has increased more than 10% since 2008. Net oil imports reached a high point of 60% in 2005, but today, thanks to increased production and greater energy efficiency (plus the use of ethanol), imports are down to 47%."

MP: The chart above displays oil imports as a share of U.S. consumption back to 1973 (data here), showing that dependence on foreign oil has fallen to 46.3% this year (average through September) and is the lowest in 16 years, since the 44.5% share in 1995.

Architecture Indexes Improve in October

"After a sharp dip in September, the Architecture Billings Index (ABI) climbed nearly three points in October (see chart above). As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 49.4, following a score of 46.9 in September. This score reflects an overall decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.3, up from a reading of 54.3 the previous month."

Related: See Reuters report here.

Insider Trading, Congress Style

On CNBC this morning Author Peter Schweizer discussed his forthcoming book “Throw Them All Out: How Politicians and Their Friends Get Rich off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison."

IJ Goes Up Against the Connecticut Dental Cartel

Institute for Justice -- "Teeth-whitening services are popular and increasingly available at spas, salons and shopping malls. This has been a boon for consumers because these businesses offer whitening services at a much lower cost than dentists do, often charging less than 25 percent of what a dentist would charge for similar results.

There is one group that is not smiling about these new, low-cost teeth-whitening services: the Connecticut Dental Commission. In June, the Commission ruled it is a crime punishable by up to five years in jail or $25,000 in civil penalties for anyone but a licensed dentist to offer teeth-whitening services, even if the customers apply the product to their own teeth.

Teeth-whitening products are regulated by the FDA as cosmetics, which mean anyone—even a child—can purchase them and apply them to his or her own teeth without a prescription and without supervision or instruction.

The Dental Commission's ruling has nothing to do with public health or safety and everything to do with protecting licensed dentists from honest competition." 

Watch video above, and here's background information from IJ, and here are some news reports here, here and here.

CPI Factoid of the Day: Natural Gas Prices -2.2%

Interesting factoid from Table A above (click to enlarge) in today's CPI report:

Compared to one year ago, every category of goods and services has increased except for one deflationary item: "Utility (piped) gas service," which has decreased by 2.2% from October 2011.  As I reported recently, natural gas futures prices for the month of November are the lowest in ten years, so the decline in natural gas prices for consumers is likely to continue through the winter.   

Welcome to America's shale gas revolution.

Chart of the Day: Gas Prices in Europe vs. USA

From Business Insider.

HT: Robert Kuehl

Amazing Time Lapse Views of Earth from Space

Earth | Time Lapse View from Space, Fly Over | NASA, ISS.

The video above features time lapse sequences of photographs taken by the crew of expeditions 28 & 29 onboard the International Space Station from August to October 2011 at an altitude of around 350 km.

HT: Sprewell

Happy 40 Year Anniversary Information Age 2.0

INTEL -- "The microprocessor has been the engine of the digital revolution that has changed our society dramatically over the past few decades, democratizing access to information and making for a more equalitarian world. This year Intel celebrates the 40th anniversary of the microprocessor and the 40th birthday of the Intel® 4004 which was the first customer-programmable microprocessor to become available on the commercial market."

MP: After the invention of the printing press in the 15th century that started Information Age 1.0, the commercial introduction of the mircochip in 1971 was the second most important information-related breakthrough in human history. Thanks to the introduction of the microprocessor in 1971, we can celebrate this year the 40th year anniversary of Information Age 2.0.  

Even in a Sub-Par Jobless Recovery, There Are Labor Shortages in the U.S. and Around the World

1. Wall Street Journal article "The $200,000-a-Year Mine Worker" (HT: Bob Wright):

"Demand for [workers] willing to work 12-hour days in sometimes dangerous conditions, while living for weeks in dusty small [mining] towns, is huge.

"It's an historical shortage," says Sigurd Mareels, director of global mining for research firm McKinsey & Co. Not just in Australia, but around the world. In Canada, for example, the Mining Industry Council foresees a shortfall of 60,000 to 90,000 workers by 2017. Peru must find 40,000 new miners by the end of the decade.

Behind this need for mine workers is a construction boom in China and other emerging economies that has ramped up the demand for iron ore, used to make steel, and other metals used in construction, such as copper, typically used for wiring buildings.

The [labor] shortage is particularly acute in Australia, the world's biggest source of iron ore and the world's second-biggest gold producer. The Minerals Council of Australia estimates the country needs an additional 86,000 workers by 2020, to complement a current work force estimated at 216,000.

"It's a tight labor market and difficult cost environment," said Ian Ashby, president of BHP BillitonLtd.'s iron-ore division. To attract workers, BHP and other companies are building recreation centers, sports fields and art galleries in hardscrabble company towns."

MP: Maybe that's what will happen in places like Williston, ND?

2. Business Week article "Why Americans Won't Do Dirty Jobs":

"Alabama enacted an immigration law in September that requires police to question people they suspect might be in the U.S. illegally and punish businesses that hire them. The law, known as HB56, is intended to scare off undocumented workers, and in that regard it’s been a success. It’s also driven away legal immigrants who feared being harassed.

[There] are [now] thousands of vacant positions and hundreds of angry business owners staring at unpicked tomatoes, uncleaned fish, and unmade beds. “Somebody has to figure this out. The immigrants aren’t coming back to Alabama—they’re gone,” says Randy Rhodes, owner of Harvest Select, a catfish processing plant. “I have 158 jobs, and I need to give them to somebody.”

There’s no shortage of people he could give those jobs to. In Alabama, some 211,000 people are out of work. In rural Perry County, where Harvest Select is located, the unemployment rate is 18.2%, twice the national average. One of the big selling points of the immigration law was that it would free up jobs that Republican Governor Robert Bentley said immigrants had stolen from recession-battered Americans. Yet native Alabamians have not come running to fill these newly liberated positions. 

Many employers think the law is ludicrous and fought to stop it. Immigrants aren’t stealing anything from anyone, they say. Businesses turned to foreign labor only because they couldn’t find enough Americans to take the work they were offering.

At a moment when the country is relentlessly focused on unemployment, there are still jobs that often go unfilled. These are difficult, dirty, exhausting jobs that, for previous generations, were the first rickety step on the ladder to prosperity. They still are—just not for Americans."

MP: More evidence that there's been a structural shift in the U.S. economy (especially the second story), leading to a temporary mismatch between the jobs available (which might be plentiful) and the skills and willingness of available employees to fill those jobs (which might be scarce), which is contributing to a stubbornly high jobless rate. 

Fact of the Day: North Dakota Oil Production Approaches OPEC Member Ecuador's Level

BLOOMBERG -- "Surging crude output in the Bakken shale formation is set to make North Dakota a bigger oil producer than OPEC member Ecuador. The CHART OF THE DAY above tracks North Dakota’s production, which has almost doubled in the past two years, as Ecuadorean output has stagnated."

Markets in Everything: Canine Food Truck

"Fido to Go is Chicago's premier gourmutt food truck serving hand-crafted canine cookies & doggy ice creams! Find us out and about at the city's dog parks, beaches, and special events. We are also available to cater doggy parties and can even provide the games, activities, and photographer!"

HT: Mike W. 

Quote of the Day on Taxpayers as the Government's ATM, and Really Expensive $500 Haircuts

"The government's chief asset—in fact, pretty much its only asset—is its ability to tax people, now and in the future. The taxpayers are the government's ATM. Make a withdrawal today, and there's less available tomorrow.

Now the ability to tax is a pretty huge asset and the government has not (yet!) come close to depleting it. In that sense, there's a lot of money in the bank. But no matter how much you've got in the bank, a policy of ever-increasing withdrawals is nothing at all like a decision to earn more income. It's important to get the analogy right. And it's clear from the blogs and the op-ed pages that not everybody gets this.

Instead, the notion persists that an extra trillion in federal spending can be converted from "irresponsible'' to "responsible'' as long as it's accompanied by an extra trillion in tax hikes. That's like saying a $500 haircut can be converted from "irresponsible'' to "responsible'' as long as you withdraw the $500 from your bank account. If the super committee loses sight of this fundamental truth, it is doomed to fail."

~Steven Landsburg in today's WSJ

Jobs in Texas vs. California (the Lost Decade State)

Following up on a CD post yesterday about companies leaving California in record numbers, the chart above shows the difference in employment levels between California and Texas. While Texas employment was stable through the recession and is now 242,000 jobs above the December 2007 level, California lost jobs for 23 consecutive months starting in February 2008 and the September employment level is more than one million jobs below December 2007.  In every month since September 2009, the employment level in California has been below 16 million, which is back to the employment level of 2000, more than a decade ago.  In contrast, Texas employment is about 14% above the 2000 level.

Further evidence of companies and employees leaving California for better opportunities in prospering states like Texas is provided by the U-Haul rates for a one-way 26-foot truck rental:

 

Dallas to LA: $1,024

LA to Dallas: $1,762

Premium to leave California for Texas: 72.1%

Houston to LA: $892

LA to Houston: $1,884

Premium to leave California for Texas: 111.2%

  

Assuming that one-way U-Haul truck rental rates are based on relative demand, there are a lot more people and trucks leaving California for Texas than vice-versa, resulting in huge premiums to rent trucks going to Texas and large discounts for trucks going to California. 

Related: "The Long Stall: California’s jobs engine broke down well before the financial crisis," by Wendell Cox in City Journal and commentary at Coyote Blog.  (ht: morganovich)

Markets in Everything: Price Check iPhone App

From TechCrunch:

"As we near Black Friday and Cyber Monday, Amazon is launching a new way to comparison shop on the go. Called Price Check, the free iPhone app allows users to scan the barcode of a product, take a picture of an item or say the product’s name to access product listings on Amazon.com’s marketplace. If the product is listed on Amazon, customers can then purchase the item with one click."

Austrian School Economist Hayek Finds New Fans

NPR had a segment today on Nobel economist Hayek, with some commentary from Cafe Hayek's Don Boudreaux.

Yesterday Ayn Rand was featured.  

Housing Slump Leads to Some Unusual Outcomes

1. "Here in Merced, California a city in the heart of the San Joaquin Valley and one of the country’s hardest hit by home foreclosures, the downturn in the real estate market has presented an unusual housing opportunity for thousands of college students. Facing a shortage of dorm space, they are moving into hundreds of luxurious homes in overbuilt planned communities."

"Animal McMansion: Students Trade Dorm for Suburban Luxury."

2. "Las Vegas has a pot home problem. And like many of the region's maladies, it's tied to the housing slump. Major cultivators spend tens of thousands of dollars turning cheap homes into greenhouses. Last year, authorities took down 153 indoor grow sites in Nevada and seized more than 13,000 plants, compared with 18 sites and 1,000 plants in 2005, the U.S. Drug Enforcement Administration said."

"In Foreclosure-Plagued Vegas, Empty Homes Go to Pot."

Chart of the Day: Structural Shift in U.S. Economy

I have featured charts similar to the one above that displays real GDP and civilian employment over the last ten years.  More than any single chart, I think this one really helps to accurately describe the current state of the U.S. economy:

1. Measured by real output (GDP), the U.S. economy has made a complete recovery from the 2007-2009 recession now that real output in Q3 was higher than the 2007 Q4 level when the recession started. 

2. While real output has completely recovered to above pre-recession levels, U.S. employment at 139.6 million is still 6.6 million jobs (and 4.5%) below the 2007 peak of 146.2 million, and that translates into the ongoing "jobless recovery."   

3. The recovery of real output to historical highs with 4.5% fewer employees has also translated into record-level corporate profits, which are now almost 40% above pre-recession levels.  

4. The recovery of both output and profits to above 2007 levels with 6.6 million fewer workers could explain the sluggish job growth that will probably continue for several more years.  If companies can produce more output now than in 2007 with fewer workers and record profits, where's the incentive to hire more workers?  

The Great Recession stimulated huge productivity and efficiency gains as companies shed marginal workers and learned how to do "more with less (fewer workers)."  The surge in productivity over the last few years may be unprecedented in recent history and may be responsible for a "structural shift" in the U.S. economy that will have long-lasting effects, e.g. an extended period of time with a jobless rate above 7%.

From ‘Made in China’ to ‘Bought in China’

Fact of the day:

Boston Globe -- "China is now the world’s largest consumer in a number of categories, including beer, cigarettes, and — remarkably — cars. Some Western automakers have begun skipping US and European markets and debuting models in China first."

Markets in Everything: Chipotle Asian Style

Washington Post -- "With more than 1,000 locations in North America and the United Kingdom, most of us are exceedingly familiar with Chipotle’s colossal mountains of Mexican deliciousness. But at least for the foreseeable future, ShopHouse Southeast Asian Kitchen — the brand new brainchild of Chipotle CEO Steve Ells that just opened recently — has only one location: Dupont Circle (DC). 

Chicken and pork meatballs, right, are one of the meat offerings at ShopHouse. The new fast-casual concept has the same pick-and-choose style of Chipotle: Choose either a banh mi sandwich or a rice bowl, with your choice of chicken satay, tofu, steak or chicken and pork meatballs. The sandwiches are topped with green papaya slaw, herbs and crushed peanuts, while the rice bowls offer your choice of veggies, sauces, toppings and garnishes. Early favorite toppings include those with the word “spicy” in them: spicy red curry sauce, spicy charred corn and the even spicier long beans."

Here's the menu.  I've tried it twice and really liked it. I predict success. 

Companies Continue to Leave Anti-Business California in Record Numbers to Save 40% in Costs

Los Angeles - "It's time to take a hard look at why businesses are leaving the state.

Since 2007, more than 2,500 employers have left California. They've taken about 109,000 jobs with them. Why is that happening and... more importantly... how can it be stopped?

Joseph Vranich, a business relocation expert, explains the exodus in the video report."

According to Joe Vranich, "Business leaving the City of Los Angeles for a nearby county can save up to 20% in costs while moving to another state can save up to 40% in costs."

It's Not Just Members of Congress Who Benefit from Insider Trading, Congressional Staff Also Gain

Wall Street Journal (October 11, 2010) -- "At least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee, according to a Wall Street Journal analysis of more than 3,000 disclosure forms covering trading activity by Capitol Hill staffers for 2008 and 2009. 

"Congressional staff are often privy to inside information, and an unscrupulous person could profit off that knowledge," says Vincent Morris, a spokesman for Rep. Louise Slaughter (D., N.Y.), a leading backer of the "Stop Trading on Congressional Knowledge Act," or STOCK Act. "The public should be outraged there is no law specifically banning this."

Congressional aides have ringside seats on the making of laws that affect American business. Receiving salaries up to roughly $170,000 a year, they can glean information about policies and government action before the public. They have access to information about hearings or legislation that can move stocks and markets." 

HT: Cyril Morong

Happy Birthday P.J. O'Rourke

It's P.J. O'Rourke's 64th birthday today, here are some quotes:

1. Giving money and power to government is like giving whiskey and car keys to teenage boys.

2. If you think health care is expensive now, just wait until you see what it costs when it’s free.

3. The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then they get elected and prove it.

4. The mystery of government is not how Washington works but how to make it stop.

5. The Clinton administration launched an attack on people in Texas because those people were religious nuts with guns. Hell, this country was founded by religious nuts with guns. Who does Bill Clinton think stepped ashore on Plymouth Rock?

6. Social Security is a government program with a constituency made up of the old, the near old and those who hope or fear to grow old. After 215 years of trying, we have finally discovered a special interest that includes 100 percent of the population. Now we can vote ourselves rich.

7. When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.

8. No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power.

9. If government were a product, selling it would be illegal.

10. Feeling good about government is like looking on the bright side of any catastrophe. When you quit looking on the bright side, the catastrophe is still there.

11. America wasn't founded so that we could all be better. America was founded so we could all be anything we damned well pleased.

12. Bureaucrats want bigger bureaus. Special interests are interested in whatever's special to them. These two groups bring great pressure to bear upon politicians who have another agenda yet: to cater to the temporary whims and fads of the public and the press.

13. People who are wise, good, smart, skillful, or hardworking don't need politics, they have jobs.

14. If we're going to improve the environment, the first thing we should do is duck the government. The second thing we should do is quit being moral. Screw the rights of nature. Nature will have rights as soon as it gets duties. The minute we see birds, trees, bugs, and squirrels picking up litter, giving money to charity, and keeping an eye on our kids at the park, we'll let them vote.

15. The U.S. Constitution is less than a quarter the length of the owner's manual for a 1998 Toyota Camry, and yet it has managed to keep 300 million of the world's most unruly, passionate and energetic people safe, prosperous and free.

16. When you look at the Republicans you see the scum off the top of business. When you look at the Democrats you see the scum off the top of politics. Personally, I prefer business. A businessman will steal from you directly instead of getting the IRS to do it for him. And when Republicans ruin the environment, destroy the supply of affordable housing, and wreck the industrial infrastructure, at least they make a buck off it. The Democrats just do these things for fun.

Markets in Everything: Superhydrophobic Coating

The product NeverWet provides water repellent, anti-corrosion, anti-bacterial, anti-icing and self-cleaning properties to anything it coats. Your stuff will never get wet again, check out the video above.

Natural Gas Prices at 10-Year Low for November

WSJ Blog -- "Home heating costs for many Americans will be lower this year. Natural gas futures closed on Friday at $3.58 for a million British thermal units, down 20% from early June (see chart, data here). In a typical November, natural gas prices start rising in anticipation of higher demand, but this year a supply glut is weighing on the market. It has been 10 years since prices were this low heading into the winter."

MP: The chart above shows inflation-adjusted natural gas futures prices back to 1994.  November futures prices of $3.58 are 14% below a year ago, 39% below two years ago, about half of the price in November 2008 of $7.13 and well below the average real price of natural gas futures contracts over the last decade of $6.73.  Welcome to the shale gas revolution.     

Above the Law: Insider Trading on Capitol Hill

On Saturday, there was a CD post featuring a preview of the "60 Minutes" segment "Congress: Trading stock on inside information?" The full episode aired last night and appears above; it's based on Peter Schweizer's forthcoming book, "Throw them All Out." Following a preview by Steve Kroft, here's how the segment opens:

Peter Schweizer: "This is a venture opportunity [being in Congress], this is an opportunity to leverage your position in public service, and use that position to enrich yourself, your friends and your family."

Quote of the Day on the Cornucopia of Taxpayer Dollars for Renewable Energy, aka Crony Capitalism

“It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” said Kevin Smith, chief executive of SolarReserve, whose Nevada solar project has secured a 25-year power-purchase agreement with the state’s largest utility and a $737 million Energy Department loan guarantee and is on track to receive a $200 million Treasury grant. 

Source: NY Times article "A Gold Rush of Subsidies in Clean Energy Search."

Interesting Fact of the Day: As the "Saudi Arabia of Natural Gas," the U.S. Could Become an Exporter

Philadelphia Inquirer (fixed now) -- "Now, another potentially large rival market for natural gas is emerging: Exports.

The Department of Energy has received five applications from companies that want to create terminals to ship liquefied natural gas (LNG) overseas. One application has been approved.

The natural gas industry, which is eager to sell more fuel, says overseas markets could generate billions of dollars in export earnings, improve the nation's balance of trade, and boost the economy in shale-gas areas such as Pennsylvania.

The fact that policymakers are even discussing exports is a remarkable statement about how the shale-gas revolution has turned energy markets on their head."

Big Farm's Crony Capitalism and Corporate Welfare

What do Christmas tree growers have in common with producers of beef, blueberries, cotton, milk, eggs, avocados, honey, lamb, mangoes, mushrooms, peanuts, popcorn, pork, potatoes, soybeans, and watermelons?  They are all well-organized, agricultural special interest groups that have lobbied the Department of Agriculture to impose taxes or fees on their products (and raise prices to consumers) to fund the marketing and promotion of their products to the public.   

The Christmas tree growers’ efforts to use the federal government’s coercive power of taxation to benefit their industry had to be postponed last week due to public pushback about higher taxes and the display of blatant crony capitalism.  Maybe it’s time for some public outrage (OWS protestors?) over the corporate welfare bestowed on "Big Farm" for producing blueberries, avocados, peanuts, etc. 

See related: 1) WSJ editorial "About That 'Christmas Tree Tax': The real story is a case of business and government collusion," and 2) Heritage Foundation post "Agricultural Marketing Fees: Not Just for Christmas Trees"  (HT: Matt B.). 
 

Filmmaker Michael Moore's $2m Torch Lake Vacation Mansion in a 99% White Community

Michael Moore's $2 Million Michigan Vacation Mansion

Michael Moore: "Capitalism did nothing for me.  The system is not set up to help somebody from the working class."

Andrew Breitbart: "Left-wing filmmaker Michael Moore has been touring Occupy Wall Street demonstrations across the country urging activists to continue their fight against the wealthy “one percent” of Americans.

According to public tax records, Moore owns a massive vacation home on Torch Lake, Michigan–one of the most elite communities in the United States–in addition to his posh Manhattan residence. Through an independent source, Big Hollywood has obtained exclusive photographs of the house matching the address of Moore’s waterfront mansion (see samples above). It is the kind of luxurious summer home that 99 percent of Americans can only dream of owning (estimated value = $2 million).

In addition, according to statistics from 2009, Forest Home Township [where Torch Lake is located] has no black residents. The township is roughly 98 percent white. Call that 99 percent, and Moore’s claim to be among “the 99 percent” begins to have some basis in reality."

Update: See Henry Payne's excellent article in the Detroit News "Occupy Michael Moore: His opulent Michigan lake estate."

Peter Thiel on Higher Education Bubble. Aptitude Tests for Employers Instead of College Degrees?

In this WSJ video, Peter Thiel, founder of Clarium Capital and The Thiel Foundation, explains why young Americans need to be encouraged to take on more risk to spur innovation and why the cost of a U.S. education is hindering that.

HT: Sprewell

Related: Craig Newmark points to a 2009 George Will article that might help explain why we have a higher education bubble:

"In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test used by Motorola was illegal because it was unfair to "disadvantaged groups."

A heavy burden of proof was placed on employers, including that of proving that any test that produced a "disparate impact" detrimental to certain minorities was a "business necessity" for various particular jobs.

Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants' satisfactory intelligence and diligence. This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005."

MP: Peter Thiel describes higher education as a "giant selection mechanism" and estimates that only 10% of the value of a college degree comes from actual learning, and 50% of the value comes from selection (getting into a selective university) and 40% comes from signalling (graduating from a selective college becomes known to employers).  If employers could use intelligence tests instead of college degrees as measures of aptitude, it might be a lot more efficient and more cost-effective than the current practice of using very expensive four-year college degrees that add very little in terms of educational value (at least according to Thiel).    

The Long, Undistinguished, and Very Costly Graveyard of Failed Government Energy Projects

From an article in yesterday's Washington Post by energy writer Steven Mufson "Before Solyndra, A Long History of Failed Government Energy Projects":

"Solyndra, the solar-panel maker that received more than half a billion dollars in federal loans from the Obama administration only to go bankrupt this fall, isn’t the first dud for U.S. government officials trying to play venture capitalist in the energy industry. The Clinch River Breeder Reactor. The Synthetic Fuels Corporation. The hydrogen car. Clean coal. These are but a few examples spanning several decades — a graveyard of costly and failed projects.

Not a single one of these much-ballyhooed initiatives is producing or saving a drop or a watt or a whiff of energy, but they have managed to burn through far more more taxpayer money than the ill-fated Solyndra. An Energy Department report in 2008 estimated that the federal government had spent $172 billion since 1961 on basic research and the development of advanced energy technologies."

Conclusion: "Perhaps the federal government is, as former Obama economic adviser Lawrence Summers put it, “a crappy VC,” or venture capitalist. Or perhaps it should stick to funding basic research. But if more recipients of Energy Department loan guarantees falter, they will become part of a long, if undistinguished, history of failure."