Published: December 26 2008 19:53 | Last updated: December 26 2008 19:53
Published: December 26 2008 19:53 | Last updated: December 26 2008 19:53
By John Cloud
An acronym for “party unity my ass,” this term was the rallying cry of Clinton supporters who backed her candidacy even after many party leaders called for consensus around Obama in order to ensure a unified Democratic front going into the general election. As Barrett of doubletongued.org points out, PUMAs hoped to bring the Clinton-Obama fight “to a head-to-head smackdown vote at the [Democratic] convention.” Instead, Clinton threw her support to Obama well before the convention. This word, which disproportionately described female voters, recalls TIME’s 2007 buzzword of the year: cougar, i.e., an older woman seeking younger men.
I’ve tried to lay off my econ-based threads so all those that celebrate national crass consumerism day could stay off the window ledges instead, enjoying the yuletide fireplace. This year, I’m earning my title as dismal scientist and this post is not full of seasonal cheer.
Employment: The level of continuing first time unemployment claims stands at a 26-year high of 4.51 million. The 1982 recession was the worst post WW2 recession to date.
2008 Yearly Market Performance: (11 year lows)
|Dow Jones Industrial Average||-35%|
|Dow Jones Financials||-55%|
|Amex Oil Index||-38%|
Housing: House prices have fallen to their 2004 level. Sales of both existing houses and new construction are miserably low. Resales were down 10.6%f this year. Basically, we’re seeing the fastest decrease in sales on record.
The Reuters/University of Michigan survey of consumers rose to 60.1, better than a preliminary reading of 59.1 released earlier this month and topping the 58.5 reading forecast by economists’ surveyed by MarketWatch.
It also marked a sharp improvement from November’s 55.3 reading, a 28-year low…
The index has tumbled 20% from last year and 38% from a peak reached in Jan. 2007
It’s almost the New Year. Having once dated a New Yorker for an extended period of time, I got used to William Safire (whose column I miss a lot) and his end of the year Office Pool. He always had a list of predictions that challenged you to beat the pundit. Some of my favorite questions had to do with the results of elections as well as topical things like the number of troops left in Iraq by the end of the year.
You can be as snarky, hopeful, truthful, or scary right on as you wish.
Here’s a few of them to get you started:
A few weeks ago I opened a thread about a Pigouvian tax on gas. I argued that it would accomplish several things. The first is to discourage consumption of gas and oil. The second to discourage consumption of gas and oil from foreign countries. The third was to discourage consumption of gas and oil that contributes to global warming and pollution. The fourth was to switch consumption and product development to energy efficient and non petroleum-based energy sources. It struck a nerve among a lot of people because it basically is going to cost all of us money at all levels of society. I heard a lot of folks saying that the impact on the poor would be ‘unfair’ because so many would be unable to transfer out of gas-guzzlers and long commutes in the short run. I also suggested that this could be offset with some kind of manipulation of the tax code to give them more take home pay until they can change the behavior. I know suggesting tax increases on every one but the extremely rich is a highly unpopular thing, but unfortunately, it’s not only the rich that adopt behaviors that pass on social costs to the entire society. Every has a stake in energy indepency, energy efficiency, and cleaner energy technologies. If folks don’t change voluntarily (and history has taught us in this case they don’t), some times we have to make it costly.
Since I wrote that thread, the NY Times editorial board came out for a petroleum tax. Gas prices are still falling and are now at about 5 year record lows. Just like the 1970s and the 1980s, the american public is returning to its old habits. This was just published at CNNMONEY.COM.
NEW YORK (CNNMoney.com) — After nearly a year of flagging sales, low gas prices and fat incentives are reigniting America’s taste for big vehicles.
Trucks and SUVs will outsell cars in December, according to researchers at the automotive Website Edmunds.com, something that hasn’t happened since February.
Meanwhile the forecast finds that sales of hybrid vehicles are expected to be way down.
“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” commented Michelle Krebs, Senior Editor of Edmunds’ AutoObserver.com.
This month, trucks and SUVs will make up 51% all vehicles sold in the U.S., according to Edmunds.com. Before the spike in gas prices earlier this year, market share for trucks and SUVs had been even higher than that, said Edmunds.com sales analyst Jesse Toprak.
It just seems that we some people never learn. That is when a Pigou tax in necessary.
Thomas Friedman in today’s NY Times advocated the tax on petroleum for the same reasons. Quoting Friedman is not something I usually do. He’s has,however, spent some time studying the problem. Here’s his take:
The two most important rules about energy innovation are: 1) Price matters — when prices go up people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit — and demand that the auto companies use this cash to make more fuel-efficient cars — and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.
There has to be a system that permanently changes consumer demand, which would permanently change what Detroit makes, which would attract more investment in battery technology to make electric cars, which would hugely help the expansion of the wind and solar industries — where the biggest drawback is the lack of batteries to store electrons when the wind isn’t blowing or the sun isn’t shining. A higher gas tax would drive all these systemic benefits.
The same is true in geopolitics. A gas tax reduces gasoline demand and keeps dollars in America, dries up funding for terrorists and reduces the clout of Iran and Russia at a time when Obama will be looking for greater leverage against petro-dictatorships. It reduces our current account deficit, which strengthens the dollar. It reduces U.S. carbon emissions driving climate change, which means more global respect for America. And it increases the incentives for U.S. innovation on clean cars and clean-tech.
The Times Editorial mentioned some of the same numbers.
The recent infatuation with the Toyota Prius and other fuel-efficient cars could well come to a similar end. It took a gallon of gas at $4.10 to push the share of light trucks down to 45 percent in July. But as gasoline plummeted back to $1.60 a gallon, their share inched back up to 49 percent of auto sales in November.
There are several ways to tax gas. One would be to devise a variable consumption tax in such a way that a gallon of unleaded gasoline at the pump would never go below a floor of $4 or $5 (in 2008 dollars), fluctuating to accommodate changing oil prices and other costs. Robert Lawrence, an economist at Harvard, proposes a variable tariff on imported oil to achieve the same effect and also to stimulate the development of domestic energy sources.
In both cases, the fuel taxes could be offset with tax credits to protect vulnerable segments of the population.
So, here are the arguments again with the evidence that people will not do what’s best without the stick. Please think about it and discuss.
While many analysts in foreign offices of various countries have been increasing;y worried that the global slow down would bring China’s economy closer to social unrest, the focus has now shifted to Russia. The quick slide of petroleum prices plus the financial market crisis has left the former Soviet Union with restless workers demanding more.
This information is from the U.K’s Financial Times. Newspapers in Europe are interested in more than just the upcoming Obama annointment and actually have foreign offices rather than armies of reporters chasing the PE on beaches in Hawaii. Perhaps Russian adventurism in the neighborhood will stop given this unnerving analysis. We can only hope.
It’s interesting to note that Russian cars makers also need a bail out from Mama Bear. It appears no one likes their domestic drives any more.
One of the most interesting things I find with both of these transition economies has been the dance between enjoying increasing levels of consumer goods in return for accepting politically repressive regimes. Folks in both China and Russia have been willing to trade freedom for stuff. Now that the stuff is less available, what will happen? Take that thought one step further and are all that different? Exactly how much freedom do we sell for our daily bread and Wii? While our expression of frustration were vented in the recent vote, how long and deep can this recession go before we too start demanding results from all this change? Better yet, what happens when the candidate that promised to change things so drastically can’t really deliver.
By Isabel Gorst in Moscow and Anuj Gangahar in New York
Russia is bracing for further unrest as the rouble on Friday slid to a new low against the euro after a succession of moves to devalue its currency.
A cut on Friday extended six weeks of devaluations by Russia’s central bank designed to offset the impact of the global economic crisis and falling oil prices as the country’s main export commodity approached its lowest level since 2004.
After the depreciation, which was the eighth so far this month, the rouble declined as much as 1.2 per cent to Rbs29.06 versus the dollar on Friday, a four year low. The rouble has now lost nearly 20 per cent of its value against the US currency since August.
Analysts at Barclays Capital said the best case scenario would see Russian policymakers, facing the mounting evidence of a recession, allowing a one-off depreciation of 10 per cent or more.
The rouble’s slide comes as the government faces scrutiny over its policies. A demonstration earlier this month in the far eastern city of Vladivostok marked the first major challenge to the Kremlin since the onset of the global financial crisis.
Mikhail Sukhodolsky, a deputy interior minister, warned on Christmas Eve that there could be further protests. “The situation may be exacerbated by a growth in frustration of workers over the non-payment of wages or those threatened with dismissal,” he said.
His remarks coincided with criticism of the Kremlin’s rough handling of the protests in Vladivostok. Moscow-based Omon riot police detained about 61 people in the protests against car import duties designed to prop up domestic car producers, but making foreign vehicles prohibitively expensive for ordinary Russians.
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