Markets in Everything: Trained Russian Circus Cats

Thought for the Day: We Never Run Out of Natural Resources, We Just Find Better Alternatives

The Stone Age didn't end because we ran out of stones, and the petroleum age won't end because we run out of petroleum.

Likewise, the age of horse/animal power didn’t end because we ran out of animals, and we didn’t stop using steam power because we couldn’t build enough steam engines.

And the age of whale oil didn't end because we ran out of whales, and the age of using wood for heating homes didn't end because we ran out of trees.

Cheap Oil is Here to Stay; Forget "Peak Oil," We Now Have "Peak Demand," We'll Never Run Out

CNN Money -- A growing number of experts are saying that oil prices will remain well below $100 a barrel as the economy remains fragile and efficiency measures kick in.

"The world will never run out of oil," Deutsche Bank analysts wrote in a recent research note, echoing the old logic that the Stone Age didn't end because the world ran out of stone. "If the oil age does end, it likely will be because we become more efficient and simply use less petroleum." It's this "becoming more efficient" idea that the Deutsche Bank analysts use to predict even lower oil prices in 2010 than now - an average of $65 a barrel next year compared to nearly $80 currently.

To get there, they employ a metric known as energy intensity, which basically measures the amount of oil used in relation to the size of the economy. The energy intensity of the U.S. economy has actually dropped by about 2% a year every year since the early 1980s (see updated chart above). In the next couple of years Deutsche Bank expects it to decline by around 3% as people buy more fuel efficient cars and respond in other ways to the high prices of 2004-2008 and as government conservation measures kick in.

"US oil demand may have already peaked," the note said. "There's so much spare capacity right now," said one analyst, noting that oil prices in the $70 range are still high enough to insure new supplies are being brought online. "It's very difficult to see prices much higher."

The Motley, Motley CRU (Climatic Research Unit) Has Given All of Science a Massive Black Eye

Ken Green of The American Enterprise Institute sums up the fallout from Climategate:

Most troubling are the suggestions that a tribe of incestuous climate scientists may have actively conspired to undermine the peer-review process, until now considered a determinant of what is worthy of scientific consideration, and what is not.

Science is vitally important for the operation of a highly technological society, and that science must be open and transparent, and must adhere to the scientific method and the institution of science, which has no place in it for hiding data, hiding data-processing, shaping data to conform to pre-existing beliefs, undermining the peer-review process, cherry-picking reports in order to slant political IPCC reports, or slandering critics by comparing them with flat-Earthers, moon-landing conspiracy theorists, or holocaust deniers.

The climate scientists at the CRU have given not only climate science, but all of science, a massive black eye, and should the public lose faith in science, a great deal of the responsibility will accrue to them. The scientists involved in the Climategate scandal should be permanently removed from any position in which they can influence climate policy. They should be excluded from peer-review panels, banned from participating in the IPCC process in any capacity, and kept far away from editorial positions at journals. Their data and methods must be made absolutely transparent and available for outside inspection.

Denmark's 200% Car Tax: Crazy and Crazier

NY Times -- Is saving $40,000 at the showroom enough to get drivers behind the wheel of an electric car? With a program in the works to add easy access to charging stations, Denmark is about to find out. The country imposes a punitive tax of about 200% on new cars, so a vehicle that would cost $20,000 in the United States costs $60,000 here. For a quarter-century, electric cars have been exempt from that tax. But the models on the market were so limited in their capabilities that only 497 of them are registered in the entire country.

For all their potential, electric cars have always been the subject of more talk than action, and only a handful are on the road in Denmark. But now the biggest Danish power company is working with a Silicon Valley start-up in a $100 million effort to wire the country with charging poles as well as service stations that can change out batteries in minutes.

The government offers a minimum $40,000 tax break on each new electric car — and free parking in downtown Copenhagen. But even in Denmark, one of the most environmentally conscious nations in the world, skepticism abounds. It is not clear that car buyers can be persuaded to make the switch.

“There is a psychological barrier for consumers when their car is dependent on a battery station,” warned Henrik Lund, a professor of energy planning at Aalborg University. “It’s risky.”

MP: Two amazing points: First, a 200% tax on cars in Denmark? That seems crazy. Second, most car buyers in Denmark actually pay the 200% tax and buy a regular car when they could avoid it by buying an electric car? That seems even crazier. I always thought that if you subsidize something you get more of it. Not in Denmark I guess.

Thanks to Stuart Anderson.

Update: Denmark, which hosts the UN climate change conference next week, is often seen as one of the most environmentally friendly countries in the world. This reputation is mostly undeserved, but Denmark is doing its best to catch up.

MP: Undeserved is maybe right, since many seem perfectly willing to pass up $40,000 in green subsidies and tax savings?

Las Vegas Home Sales Increase for the 14th Straight Month; Highest October Sales Since 2006

DQNews -- First-time buyers and investors pushed Las Vegas-area home sales higher in October as the overall median sale price held at $130,000 for the fourth consecutive month. Foreclosure resales remained a major market force but continued to wane. In October, 66.8 percent of the Las Vegas-area houses and condos that resold were foreclosure resales, meaning those homes had been foreclosed on in the prior 12 months. That was down from 67.1 percent in September but up from 64.7 percent in October 2008. Foreclosure resales peaked in April this year at 73.7 percent of the region’s resales.

A total of 5,068 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area in October, up 1.1 percent from September and up 22.2 percent from a year earlier (see chart above). It was the highest sales total for an October since October 2006, when 5,693 homes sold. October marked the 14th consecutive month in which sales have risen on a year-over-year basis.

The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in October was $130,000, unchanged from September but down 33.7 percent from $196,000 a year earlier.

Adjusted Jobless Claims Signal End of Recession

The November employment report was released today, and the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the November labor force of 153,877,000 and the November average for initial unemployment claims (502,562 for the 4-week moving weekly average). This measure of initial jobless claims, adjusted for the size of the U.S. labor force, shows that jobless claims peaked during this recession above the levels of the last two recessions (1990-1991 and 2001), but were never anywhere close to the levels of the previous three recessions in the mid-1970s and early 1980s (see chart above).

The sharp reduction in adjusted jobless claims from the March 2009 high follows the same pattern of sharp reductions in adjusted claims at the end of the 2001 recession and at the end of each of the last five recessions.

See a very similar analysis here from Scott Grannis, who alternatively calculates jobless claims as a percent of payrolls with the exact same graphical pattern presented here using jobless claims as a percent of the labor force (slightly different denominator, but same numerator, and same story).

The Real Fiscal Cost of Government-Run Healthcare

This CF&P Foundation video explains why healthcare proposals in Washington will result in bloated government and higher deficits. This mini-documentary exposes the pervasive inaccuracy of congressional forecasts and succinctly lists 12 reasons why Obamacare will be a budget buster.

Retail Clinics Provide Network of Vaccine Outlets

TAMPA - Swine flu immunization clinics hitting the Tampa Bay area this weekend may be a sign the vaccine is finally reaching the general public.

Starting Saturday, immunization clinics in Polk and Sarasota Counties will begin offering the vaccine to people outside the priority groups for swine flu vaccination. Also, in larger counties including Hillsborough, retail health clinics at Walgreens and CVS are being approved to serve as vaccine outlets for the general public.

MP: This highlights another advantage of the 1,200 retail health clinics around the country - they provide an automatic and efficient infrastructure that is already in place to help promote certain public health initiatives, in this case by providing a network of outlets to facilitate the distribution of the swine flu vaccine.

Jobless Rate Drops, Overtime and Temp Jobs Rise

WSJ -- U.S. job losses slowed sharply in November and the unemployment rate unexpectedly declined, in a sign the labor market is finally starting to heal as the economy recovers. Nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October, as the recovery encouraged companies to retain workers, the Labor Department said Friday.

It was the best showing since December 2007, when payrolls rose by 120,000, said a Labor department official. Economists surveyed by Dow Jones Newswires had expected a payroll decrease of 125,000. The unemployment rate, calculated using a survey of households as opposed to companies, edged lower to 10% in November from 10.2%. Economists had forecast the jobless rate would remain at October's level of 10.2%, when it rose to the highest level since April 1983. Employment fell in construction, manufacturing and information, while temporary help services and health care added jobs.

MP: Two additional positive signs from today's employment report are: a) the increase in manufacturing overtime to 3.3 hours, the highest level since October 2008, and b) the increase in temporary help workers to the highest level since February 2009 (see graph above). Both of those signal a labor market that is slowly recovering, and strongly suggest that the worst is behind us.

Black Women Earning College Degrees Outnumber College-Educated Black Men 2 to 1

I've written before about the huge and growing female-male "college degree gap" see posts here, here and here. Women now dominate men at almost every level of higher education, in terms of degrees conferred (the only exception is for Professional Degrees - MD, JD, and DDs). Here's the breakdown for graduates of the Class of 2009 (estimates from the Department of Education, data here):

Associate's Degrees: 164 for women for every 100 for men.

Bachelor's Degrees: 137.5 for women for every 100 for men.

Master's Degrees: 152 for women for every 100 for men.

Professional Degrees: 99.15 for women for every 100 for men.

Doctoral Degrees: 105 for women for every 100 for men.

The Department of Education also has college degree data based on sex and race/ethnicity, but it's only through the 2006-2007 academic year. The chart above shows the college degree breakdown for the graduating classes of 1977 and 2007 based on the number of degrees earned by black females for every 100 degrees earned by black males. The "degree gap" is much wider for black college graduates compared to the degree gap for all racial/ethnic groups.

For example, there were almost 250 master's degrees awarded in 2007 to black females for every 100 degrees earned by black men. Consider also that in 1976-1977, black men outnumbered black women for doctor's degrees and professional degrees (MDs and JDs) and there were 100 doctor's degrees earned by black men for every 67 degrees awarded to black females, and 100 professional degrees for black men for every 44.1 degrees earned by black women (more than a 2:1 ratio in favor of black men). By 2007, the gender imbalance had completely reversed and black women outnumbered black men by almost 2:1 for both doctor's and professional degrees.

Comments welcome.

Jobless Claims Drop for 13th Week to 13-Mo. Low

WASHINGTON — New claims for unemployment benefits in the United States fell unexpectedly, according to the latest weekly data Thursday, showing fresh signs of stabilization in the ailing labor market. The seasonally adjusted number of new unemployment claims in the week ending November 28 fell to 457,000, down 1.1 percent from the previous week's downwardly revised figure of 462,000, the Labor Department said.

New claims for unemployment insurance benefits are now at the lowest level since September 2008 and have declined for five consecutive weeks, the longest streak since the US economy entered recession in December 2007. The four-week moving average, which smooths out week-to-week volatility, was 481,250, a decrease of 14,250 from the previous week's revised average of 495,000 (see chart above).

MP: Jobless claims (4-week moving average) have now decreased for the 13th consecutive week to a new 13-month low of 481,250, the lowest level since November 1, 2008.

60% of All Vanguard Accounts and 71% of Target-Date Funds Have Recovered to 2007 Levels

ABC News -- Another major provider of 401(k) accounts says the typical retirement saver now has more money in their account than they did before the stock market began tumbling two years ago. The Vanguard Group Inc. said Wednesday that 60 percent of participants who continued to contribute and stayed invested have more money in their accounts than they had in September 2007 — before the market decline. That means 40 percent of continuous participants have lower balances, although Vanguard said most of them are less than 20 percent below their earlier peak value.

From Vanguard's press release:

The study looked at Vanguard participant balances between September 2007 and September 2009, a period during which the market peaked in October 2007 and declined dramatically in 2008 and early 2009. At Vanguard as of September 2009, 60% of continuous participants (those with a balance in their plan over that two-year period) had the same or a higher account balance than they had at the stock market’s October 2007 peak. The balances of 40% of continuous participants were lower, although most of them had balances that are less than 20% below their earlier peak value.

The study also found that 71% of pure Vanguard target-date fund investors (those investing their entire plan account in a target-date fund) saw their account balances return to or exceed the level of two years ago. The median pure target-date investor’s account increased more than 80% during the period. These positive outcomes occurred regardless of the stated retirement year of the fund.

“The main reason for the recovery in 401(k) balances is ongoing contributions. Both investment returns and contributions jointly determine retirement savings,” said Stephen P. Utkus, head of the Vanguard Center for Retirement Research. “Growth in one of those factors can offset losses in another over a given period. Our evidence suggests that ongoing contributions plus improvement over time in the capital markets may restore many more of these individuals to their pre-October 2007 wealth levels, perhaps more rapidly than previously anticipated.”

HT: Lyle Meier

Texas vs. California

From "America’s Future: California vs. Texas" in Trends Magazine:

What's the worst state to do business in? According to readers of Chief Executive magazine, it's California. In the same poll, Texas won first place as the best state in which to put your headquarters. As reported in The Economist, the two largest states in the nation have very different philosophies and very different success rates.

What’s wrong with California, and what’s right with Texas? It really comes down to four fundamental differences in the value systems embodied in these states:

1. Texans on average believe in laissez-faire markets with an emphasis on individual responsibility. Since the '80s, California’s policy-makers have favored central planning solutions and a reliance on a government social safety net. This unrelenting commitment to big government has led to a huge tax burden and triggered a mass exodus of jobs. The Trends Editors examined the resulting migration in “Voting with Our Feet,” in the April 2008 issue of Trends.

2. Californians have largely treated environmentalism as a “religious sacrament” rather than as one component among many in maximizing people's quality of life. As we explained in “The Road Ahead for Housing,” in the June 2009 issue of Trends, environmentally-based land-use restriction centered in California played a huge role in inflating the recent housing bubble. Similarly, an unwillingness to manage ecology proactively for man’s benefit has been behind the recent epidemic of wildfires.

3. California has placed “ethnic diversity” above “assimilation,” while Texas has done the opposite. “Identity politics” has created psychological ghettos that have prevented many of California’s diverse ethnic groups and subcultures from integrating fully into the mainstream. Texas, on the other hand, has proactively encouraged all the state’s residents to join the mainstream.

4. Beyond taxes, diversity, and the environment, Texas has focused on streamlining the regulatory and litigation burden on its residents. Meanwhile, California’s government has attempted to use regulation and litigation to transfer wealth from its creators to various special-interest constituencies.

MP: The 4.2% difference in October jobless rates (12.5% in CA vs. 8.3% in TX) tells the story (see graph above). In fact, California's unemployment rate has been more than 4 percent above the rate in Texas every month this year except for January, and that is the first time in state jobless rate history back to 1976 that there has ever been a 4-point difference in the unemployment rates between those two states.

HT: Enterprise Blog

LASIK As a Model for Health Care Reform

Market-based health care solutions are discussed in this Reason.tv video, based on what works quite well in the other five-sixths of the U.S. economy, where choice and competition lead to increases in quality and lower prices over time (electronics, automobiles, clothing, etc.). In one of the few truly market-based areas of health care that is actually consumer-driven (since it's not covered by insurance and patients make direct cash payments) - LASIK eye surgery - there have been market-driven improvements in quality and dramatic reductions in cost, which could be a model for health care reform for other procedures.

Specific recommendations from Reason include:

1. Change the tax code.

2. Scale back state regulations and create a national market for health insurance.

3. Promote Health Savings Accounts (HSAs).

MP: The chart above shows the 42% reduction in LASIK surgery between 1991 and 2009 (in inflation-adjusted 2009 dollars).

Corporate Layoffs: The Storm Has Passed

Scott Grannis at the always excellent Calafia Beach Pundit blog produced the graph above on Corporate Layoffs, and comments:

I've been showing this chart since early this year, saying that it was a good indicator of improvement in the economy. Corporate layoff announcements (which are presumably a fairly accurate gauge of distress in the large corporate sector of the economy) are now down to levels that in the past have been consistent with healthy economic growth. The storm has clearly passed.

MP: What's interesting is to compare Scott's graph above to the graph below of the "Search Volume Index" for the term "layoffs" using Google Trends, showing the same surge towards the end of 2008 followed by a huge spike around the first of the year, and then a sharp decline over the year, falling to levels in recent months that are about the same as in 2007. (Note: Google Trends only goes back to 2004 so it's not possible to match the same time periods in both graphs.)

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

The New York Fed recently released its latest "Probability of U.S. Recession Predicted by Treasury Spread," with data through October 2009, and the Fed's recession probability forecast through October 2010 (see top chart above). The NY Fed's model uses the spread between 10-year and 3-month Treasury rates (3.32% spread in October) to calculate the probability of a recession in the U.S. twelve months ahead.

The Fed's model (data here) shows that the recession probability peaked during the October 2007 to April 2008 period at around 35-40%, and has been declining since then in almost every month. For October 2009, the recession probability is only 0.18% (less than 1/5 of 1%) and by a year from now in October 2010 the recession probability is only .105%, or about 1/10 of one percent.

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

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

DJ Economic Sentiment Indicator Increases in 11 of Last 12 Months to Highest Level Since August 2008

Increasingly positive media coverage of consumer spending contributed to a significant rise in the Dow Jones Economic Sentiment Indicator (ESI) in November. The ESI rose to 38.3, up from 36.9 in October.

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the broad coverage of 15 major daily newspapers in the U.S. The ESI has risen 11 out of 12 months since its low of 22.2 in November 2008, data that confirm the consensus among economists that the U.S. recession ended sometime early in the summer.

“The Dow Jones Economic Sentiment Indicator climbed to its highest level since August 2008, suggesting the U.S. economic recovery is entrenched and that the number of jobs lost during the month continued to shrink sharply,” Dow Jones Newswires 'Money Talks' columnist Alen Mattich said. “Market expectations for November job losses have been falling, a view supported by the indicator. This in turn could underpin retail sentiment over the next month."

The ESI represents one of the most comprehensive and far-reaching examinations of media coverage as an economic indicator. The ESI’s back-testing to 1990 shows that the ESI clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators.

Interesting Lists

1. America's Best Bang-For-The-Buck Cities: Omaha, Little Rock, Jackson, Des Moines, Augusta.

2. Top Words, Phrases and Names for 2009: a) Twitter, H1NI, Obama; b) King of Pop, Obama-mania, Climate Change; c) Barack Obama, Michael Jackson, Mobama. For previous years, go here.

When It Rains in Cuba: Leaky Roofs, No Umbrellas

One might think that in a tropical country life is organized taking the climate into account, and that along with our light clothing we always have umbrellas and raincoats at hand. Not so. Leaking roofs are common, especially in the construction of the last fifty years; homes, offices, schools and hospitals, and even stores suffer repeated losses because of them. Collapses, now typical in the urban landscape, are not the result of bombardments of imperialism, rather they are caused by the difficulty of acquiring waterproof construction materials.

In foreign films we often see scenes of crowds in the rain. We are impressed by the image of a cloud of umbrellas that extends the length of a street or the full width of the stands in a stadium. We inevitably compare these scenes with the typical appearance of our streets during a cloudburst: nylon bags used as protection, trying to cover one’s head with the newspaper Granma or a piece of cardboard; older people waiting under the balconies or huddled together at a bus stop.

These are days to ask ourselves when we will have a raincoat – one without holes that fits – let alone what seems to be a pipe dream for so many, when the city will not collapse because of a simple shower that falls in the tropics.

~Yoani Sanchez

The Greatest Scientific Scandal of Our Age

Here's a good summary of why Climategate is the greatest scientific scandal of our generation:

There are three threads in particular in the leaked documents which have sent a shock wave through informed observers across the world.

1. Perhaps the most obvious, as lucidly put together by Willis Eschenbach (see McIntyre's blog Climate Audit and Anthony Watt's blog Watts Up With That ), is the highly disturbing series of emails which show how Dr Jones and his colleagues have for years been discussing the devious tactics whereby they could avoid releasing their data to outsiders under freedom of information laws. They have come up with every possible excuse for concealing the background data on which their findings and temperature records were based. Most incriminating of all are the emails in which scientists are advised to delete large chunks of data, which, when this is done after receipt of a freedom of information request, is a criminal offence. But the question which inevitably arises from this systematic refusal to release their data is – what is it that these scientists seem so anxious to hide?

2. The second and most shocking revelation of the leaked documents is how they show the scientists trying to manipulate data through their tortuous computer programs, always to point in only the one desired direction – to lower past temperatures and to "adjust" recent temperatures upwards, in order to convey the impression of an accelerated warming. What is tragically evident is the picture of the CRU scientists hopelessly at sea with the complex computer programs they had devised to contort their data in the approved direction, more than once expressing their own desperation at how difficult it was to get the desired results. This comes up so often that it becomes the most disturbing single element of the entire story.

3. The third shocking revelation of these documents is the ruthless way in which these academics have been determined to silence any expert questioning of the findings they have arrived at by such dubious methods – not just by refusing to disclose their basic data but by discrediting and freezing out any scientific journal which dares to publish their critics' work. It seems they are prepared to stop at nothing to stifle scientific debate in this way, not least by ensuring that no dissenting research should find its way into the pages of IPCC reports.

Conclusion: Our hopelessly compromised scientific establishment cannot be allowed to get away with a whitewash of what has become the greatest scientific scandal of our age.

~Christopher Booker, author of "The Real Global Warming Disaster: Is the Obsession with 'Climate Change' Turning Out to be the Most Costly Scientific Blunder in History?" writing in The Telegraph

Thanks to Warren Meyer at Coyote Blog.

First 2-Month Restaurant Index Gain (%) in 3 Years

The outlook for the restaurant industry improved somewhat in October, as the National Restaurant Association's comprehensive index of restaurant activity registered its first gain in three months. The Association's Restaurant Performance Index (RPI) a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry stood at 98.0 in October, up 0.5% from its September level (see top chart above). However, the RPI still remained below 100 for the 24th consecutive month, which signifies contraction in the index of key industry indicators. Although restaurant operators continue to report soft samestore sales and customer traffic levels, they are somewhat more optimistic about improving conditions in the months ahead.

MP: Although not reported by the NRA, the bottom chart above shows the percentage change in the RPI from the same month in the previous year. Following negative year-to-year growth in 23 out of 24 months from September of 2007 through August 2009, there have been positive increases in September and October of this year, marking the first back-to-back monthly increases since the summer of 2006. Further, the October-to-October gain of 0.93% is the single largest monthly gain since a 1.3% increase in September 2006, more than three years ago.

Online Black Friday Spending Up By 11% vs. 2008

ComScore, a leader in measuring the digital world, today reported holiday season retail e-commerce spending for the first 27 days of the November – December 2009 holiday season. For the holiday season-to-date, $10.57 billion has been spent online, marking a 3-percent increase versus the corresponding days last year. Black Friday (November 27) saw $595 million in online sales, making it the second heaviest online spending day to date in 2009 and representing an 11-percent increase versus Black Friday 2008.