Friday, December 30, 2016

I'M BEGINNING TO FEEL SORRY FOR .....(3)

I'm beginning to feel sorry for Barack Obama. Not only has he been mauled by Republicans for nearly 8 yrs, but he is bullied by Netanyahu and Donald Trump.  Well only 3 wks to go.

Thursday, December 29, 2016

ISRAEL'S ONE STATE SOLUTION

John Kerry gave what I thought was a very nice hour plus rebuttal to Netenyahu's claim that the U.S. was the organizer of the Security Council's resolution on settlements in the West bank.  Though  it seems clear to me, Matthew Yglesias gives a very nice summary, but he doesn't seem to understand why Kerry gave the speech.  Don't expect Netenyahu, who seems to be Prime Minister for life, to give thanks for all the aid the US. has given Israel.  We need to remember there is no doubt that Israel has a right to exist as it was formed by the UN in 1948 so it is proper for the U.S. to help assure their existence.  So we need to keep our balance with Israel in spite of Netenyahu.

With the country in the middle of an essentially unprecedented political crisis, there's a kind of eerie normalcy to the speech on Israel and Palestine that John Kerry delivered Wednesday afternoon. The remarks themselves were unusually harsh, as was the United Nations resolution on Israeli settlements last week that the administration allowed through. But US presidents and secretaries of state have been talking about the issue for literally decades without much changing.*

Kerry says at one point that Israel can have a one state solution andit can either be a Jewish state or a democratic state but not both. 

 I'm not sure a two-state solution has ever been in the cards since the 1967 war. in which Israel captured the West Bank after being attacked  See West  Bank Fiasco **  But there may be reasons that Israel doesn't want to formally annex the West BankThere are an estimated 1,658,000 Arabs in Israel  as of 2013  (roughly 20% of the population of Israel) of which many have Israel citizenship and can run for the Knesset. and there usually is one or more elected  Many others have refused citizenship so are permanent residents and can run in local elections but not the Knesset.***  If Israel doesn't formally annex the West Bank, then they don't have to give the Arabs an option of becoming Israel citizens and can remain third class occupants.

 As of July 2015 it has an estimated population of 2,785,366 Palestinians,[3] and approximately 371,000 Israel Settlers. [3] and approximately another 212,00 Jewish Israelis in East Jerusalem.**** Not al Arabs are Muslims and about 9% of the Israel population is Christians.****
 If the West Bank is formally annexed, the Palestinian population will be something like 45% of the Israel population.  I suspect that having such a large population of Arabs in Israel is a scary prospect to them.  Thus Israel may be happy to leave the West Bank as an informal annexation.    And as I have said elsewhere, the West Bank gives Israel importantdefensive qualities.


* http://www.cnbc.com/2016/12/29/kerrys-bombshell-israel-speech-is-one-of-the-most-puzzling-things-i-have-seen-in-politics-commentary.html
 ** http://stopcontinentaldrift.blogspot.com/2016/12/west-bank-fiasco.html
 *** https://en.wikipedia.org/wiki/Arab_citizens_of_Israel
**** https://en.wikipedia.org/wiki/West_Bank \
https://en.wikipedia.org/wiki/Arab_Christians 

CONSUMER CONFIDENCE, CORPORATE EARNINGS, AND HOME PRICES

CNBC has an article on Consumer Confidence.*  Quotes are in italics:
Consumer optimism about the economy increased to the highest level since August 2001, according to a monthly survey released Tuesday.
The Consumer Confidence Index hit 113.7 in December, The Conference Board said on Tuesday. Economists polled by Reuters expected the Consumer Confidence Index to hit 109.0 for the month.
 .............................................................
Consumers' assessment of current conditions declined slightly, with those saying business conditions are "good" sliding from 29.7 percent to 29.2 percent, and those saying they are "bad" ticking up from 15.2 percent to 17.3 percent, according to the report.
A similar dip was reflected in labor statistics, with those saying jobs are "plentiful" dipping to 26.9 percent from November's 27.8 percent, and those saying jobs are scarce climbing to 22.5 percent from last month's 21.2 percent.*...........................................................................
Home Prices also are at new highs:
The SandP/Case-Shiller U.S. National Home Price Index, which measures all nine U.S. census divisions, was also up 5.6 percent in October from the previous year, extending a new high from the previous month.
The SandP CoreLogic Case-Shiller 20-City Composite Home Price Index rose by 5.1 percent in October from the same time last year.**
"Home prices and the economy are both enjoying robust numbers," David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

"However, mortgage interest rates rose in November and are expected to rise further as home prices continue to out-pace gains in wages and personal income."**
 ......................................................................
"The growth we're seeing today is, instead, a natural reaction to basic economic fundamentals. More and better opportunities for American consumers means high demand for housing, and that demand is not being met by an adequate supply of homes for sale — and so prices rise." 
..................................................................... 
And lastly there is the stock market:
Maximilian Kunkel, Cross-asset strategist, Ultra High Net Worth at UBS told CNBC Tuesday.
"If you look at the third-quarter growth in the United States, earnings was at 4 percent. The market had forecast reduction year-on-year by about 1 percent. That was the first time since the middle of 2015 that earnings were actually accelerating. We think the earnings growth is going to accelerate into 2017. That's really what is driving the markets."*** 

* http://www.cnbc.com/2016/12/27/consumer-confidence-for-december-2016.html
** http://www.cnbc.com/2016/12/27/us-home-prices-hit-new-high-in-october-sp-corelogic-case-shiller.html
*** http://www.cnbc.com/2016/12/27/the-market-rally-has-nothing-to-do-with-trumps-victory-analyst-says.html

Wednesday, December 28, 2016

WEST BANK FIASCO

The reason for this piece to to explore the recent passage by  the UN Security Council resolution  condemning the continued building of settlements by Israel in the West Bank  In which the U.S. abstained:
It started last week when the United Nations began considering a deeply one-sided resolution calling on Israel to end all Jewish settlement building in disputed areas of the West Bank and even East Jerusalem without a single word calling on Palestinians to end violent attacks on civilians or do anything else.  (http://www.cnbc.com/2016/12/27/obama-and-trump-are-engaged-in-a-3-billion-game-of-chicken-over-israel-commentary.html)

This abstention has created a good deal of hysteria among various groups although this is not the first time the UN has condemned the settlements.   It also did it in 1979 and 1980 and Israel continued to populate more and more settlements.  Independently Canada and the United Kingdom have held the settlements to be illegal though American legal experts feel they are legal. In theory, the condemnation could be more than words as it could lead to sanctions against Israel, though I doubt that will happen.  So it is just words, as nearly as I can tell.

As it is, Israel seems to be taking sanctions against those who voted for the resolution.  Is anyone else bothered by Netanyahu's attempts to run U.S. foreign policy?  [He] reportedly told New Zealand’s foreign minister that support for a UN resolution condemning Israeli settlement-building in the occupied territories would be viewed as a “declaration of war”.
(https://www.theguardian.com/world/2016/dec/28/netanyahu-told-new-zealand-backing-un-vote-would-be-declaration-of-war)  He is lucky we didn't vote for the resolution.  Since 13 other countries were involved in the decision, Netanyahu has declared a WW!

Ronald Reagan had one of the mildest opinions on the West Bank settlements; however,
In Reagan’s view, Israeli settlement was not illegal, but merely “ill-advised” and “unnecessarily provocative.” (http://www.cmep.org/content/us-statements-israeli-settlements_short)

Actually, Israel has conceded about two dozen settlements are illegal and promised to remove them, but nothing has been done. (http://www.cnbc.com/2016/12/27/obama-and-trump-are-engaged-in-a-3-billion-game-of-chicken-over-israel-commentary.html)

1967 War
In 1967, Israel was attacked by Egypt, Syria, Jordan and Iraq in what is called the Six Day War.*  In this war, Israel captured the Sinai and Gaza Strip from Egypt, the Golan Heights from Syria and the West Bank and East Jerusalem from Jordan.

East Jerusalem
East Jerusalem has been occupied by Israel since 1967 and was effectively annexed by Israel in 1980, an act internationally condemned. On 27–28 June 1967, East Jerusalem was integrated into Jerusalem by extension of its municipal borders and was placed under the law, jurisdiction and administration of the State of Israel.[10][11] In a unanimous General Assembly resolution, the UN declared the measures trying to change the status of the city invalid.[12
............................................................................
Following the 1967 war, Israel conducted a census in East Jerusalem and granted permanent Israeli residency to those Arab Jerusalemites present at the time of the census. Those not present lost the right to reside in Jerusalem. Jerusalem Palestinians are permitted to apply for Israeli citizenship, provided they meet the requirements for naturalization—such as swearing allegiance to Israel and renouncing all other citizenships—which most of them refuse to do. At the end of 2005, 93% of the Arab population of East Jerusalem had permanent residency and 5% had Israeli citizenship.[65]
Between 2008 and 2010, approximately 4,500 Palestinians resident in East Jerusalem applied for Israeli citizenship, of which one third were accepted, one third rejected, and one third had the decision postponed.[66]
As residents, East Jerusalemites without Israeli citizenship have the right to vote in municipal elections and play a role in the administration of the city. Residents pay taxes, and following a 1988 Israeli Supreme Court ruling, East Jerusalem residents are guaranteed the right to social security benefits and state health care.  (https://en.wikipedia.org/wiki/East_Jerusalem)

Golan Heights
After 19 yrs of sniping and other attacks, Israel captured the Golan Heights** in the Six Day War and formally annexed it in 1981 for defensive purposes at which time military rule was replaced by civilian rule.
Click on figure to enlarge)


Sinai
Eventually, Israel ceded the Sinai back to Egypt in a peace agreement that recognizes Israel's existence and Israel even withdrew its settlements, military bases, and oil land in 1982.***

Gaza Strip
The Gaza strip had long been a hybrid property that was claimed by Egypt but never formally annexed it nor made the residents Egyptian citizens.***  The Israel occupation lasted until 2005 when Israel formally withdrew and removed Jewish inhabitants (some by force).  Egypt had renounced Gaza also in 1979 so the tiny Gaza Strip became a Palestinian land.***

East Jerusalem
Israel has annexed East Jerusalem and combined it with West Jerusalem to unify the city and make it the capital of Israel.

West Bank
About 300,000 Israeli settlers live in the West Bank along the Israeli West Bank barrier (and a further 200,000 live in East Jerusalem and 50,000 in the former Israeli–Jordanian no-man's land).[citation needed] The barrier has many effects on Palestinians including reduced freedoms, road closures, loss of land, increased difficulty in accessing medical and educational services in Israel,[42][42] restricted access to water sources, and economic effects. Regarding the violation of freedom of Palestinians, in a 2005 report, the United Nations stated that:[47] ...it is difficult to overstate the humanitarian impact of the Barrier. The route inside the West Bank severs communities, people's access to services, livelihoods and religious and cultural amenities. In addition, plans for the Barrier's exact route and crossing points through it are often not fully revealed until days before construction commences.[43] This has led to considerable anxiety among Palestinians about how their future lives will be impacted...The land between the Barrier and the Green Line constitutes some of the most fertile in the West Bank. It is currently the home for 49,400 West Bank Palestinians living in 38 villages and towns.***

It has seemed clear to me that the West Bank is not a "bargaining chip" in an effort to trade land for peace but that Israel informally annexed it decades ago (some of it is even on the Israel side of the barrier wall).   After all, the 1967 War will have its 50th anniversary next year, less than a week away.  The rest of the world pretends the West Bank not to be Israel's but occupied territory, however, Israel steadily keeps building settlements there, in spite of decades of objectons.  I call it "taking over the West Bank one settlement at a time."  And you can see why Israel might want to keep it because the previous boundaries left Israel with a narrow neck of land less than 10 mi. across in its most narrow place.  One argument has been to use the West Bank for defensive purposes and has been used Israel for keeping the West Bank.
(Click on figure to enlarge)

While I understand the Israel need for the West Bank for defensive purposes, I do feel they should treat the Palestinian inhabitants better.  They did leave the Gaza Strip and gave the Sinai back to Egypt in a peace deal after destroying the houses.  So it is clear the West Bank is something different for them.

* https://www.blogger.com/blogger.g?blogID=112427639902898514#editor/target=post;postID=8607618832097246103
** http://www.jewishvirtuallibrary.org/jsource/Peace/golan_hts.html
*** https://en.wikipedia.org/wiki/Israeli-occupied_territories

Monday, December 26, 2016

NAFTA ELECTRICITY - OIL/GASOLINE - NATURAL GAS

An important recent article by CNN discusses the comp;eof the oil-gas-electricity trading between the U.S., Canada, and Mexico.*  Quotes from the article are in italics.

Texas-refined gasoline fuels Mexican cars. Natural gas from Canada helps heat the Midwest and cool California. Electricity flows over the northern and southern U.S. borders in both directions.

The interconnections in the North American energy industry are huge and growing — and could grow even closer during the Trump administration unless it decides to alter the flow of a key U.S. export (and import) — at the border.
...................................................................
"It's not so simple to say we're going to renegotiate the trade deals. We set up the system to create those inter-linkages. You just can't overnight legislate or executive order that away. If you try to do that, it's going to have negative economic impacts, not just for the economies on the border but for these specific industries, like energy," said Scott Anderson, chief economist at Bank of the West.
....................................................................
Perhaps one of the most surprising recent developments is the boom in U.S. natural gas that's flowing across the southern border, and the ambitious plans by the Mexican government to build more pipelines to take U.S. natural gas throughout Mexico and as far as Mexico City.
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Perhaps one of the most surprising recent developments is the boom in U.S. natural gas that's flowing across the southern border, and the ambitious plans by the Mexican government to build more pipelines to take U.S. natural gas throughout Mexico and as far as Mexico City.
....................................................................
The energy picture changed dramatically for North America in the last decade. The push by the U.S. energy industry into hydraulic fracking and horizontal drilling unleashed an energy boom, making the U.S. the world's biggest producer of natural gas and placing it firmly among the top three oil producers.

That has changed the situation for all of North America, at a time when Mexico's oil and gas output was in decline and Canada found some of its potential oil output landlocked. The ties between the three countries go way back. In the early 1900s, the U.S. began sharing electricity with its neighbors, and Canada is now a significant net exporter of electricity to the U.S.
........................................................................
Yuen said Canadian gas is still important to the U.S. West Coast, the Midwest and New England, in part because pipelines don't carry U.S. gas to those areas. Gas imports from Canada fluctuate based on weather, and can go from 5 to 7 billion cubic feet a day, he said. 

(Click on figure to enlarge)
.......................................................................
"This speaks to how extensive the energy cooperation is between these countries," said Yuen. "It's almost as if the borders aren't really there. If you look at Canada and the U.S., they are part of the same cross-border electricity reliability councils for some regions. … It's not just natural gas, it's power lines, hydroelectricity and those are long-standing agreements and trade.
......................................................................
According to Citigroup, new cross-border pipeline capacity of 7 billion cubic feet per day is expected to come on line by 2020, adding to the current capacity of 6 to 7 billion cubic feet per day.
......................................................................
Mexico, in fact, now imports almost as much natural gas from the U.S. as it produces, and the U.S. in recent months has become a net exporter of natural gas for the first time in a sustainable way.  
......................................................................
In 2015, the U.S. government granted Blackstone Group permission to export electricity from the Frontera power plant in the Rio Grande Valley to Mexico's newly opened electricity market this year. Mexican customers pay nearly twice as much as U.S. customers do for the power.
"Mexico is building some renewable projects along the border and that power is going to the U.S.," said Alex Wood, DOE policy analyst.
"It really is becoming more and more integrated," said Wood of the North American market. "Virtually all of Canada's surplus oil goes to the United States. The United States is producing surplus crude oil. … It's refined and it goes to Mexico." 

* http://www.cnbc.com/2016/12/13/one-industry-will-keep-holding-north-america-together-no-matter-what-happens-to-nafta.html

CHRISTMAS MESSAGE

May the Lord guide us to Middle East peace.

Sunday, December 25, 2016

DONALD TRUMP, THE PRE-PRESIDENT

I have restrained myself from commenting on the results of the recent election while sausage is being made in forming the next administration.  It is not completely made (No Secretary of Agriculture has been named, for example.).  But we are far enough along to make some comments on things like defense contractors defense contractors.  It is that he is not president yet.  He is making top-of-the-head comments about policies that have been in force by Republican and Democratic administrations alike for decades.

President Trump is like a 3 yr old who can't wait until Christmas but starts whining a month before, a week before, a day before.  And he is very impulsive writing those tweets before he becomes president.

Everything about him proves to be an exception.  He won't reveal his taxes.  He is not going to pay any attention to conflict-of-interest rules and plans to monetize his term of president.  He is to some extent taking over the presidency before he is president..  If you don't like it, impeach him.  It seems the same will go for his appointees, unless they voluntarily comply.  I'm sure there are those who love these sorts of heavy-handed things.

At least we know that Trump doesn't have any stock in Boeing or Lockheed since he bad mouths both.  Apparently he used to have stock in Boeing but we are told he sold all his stock last June, although there is no proof of this.  It is not that I think it is undeserved that Trump comment on these companies, but he is not president yet.

Please recall that Trump did not have even a Board of Directors, although many CEOs are also Chairman of the Board.  So he has had no restraining  matters in his life,.  This is why CEO's seem to make bad politicians.  There are used to being little Golds (and many they don't recognize the word "little").

Consider Paul H. O'Neill who was president Bush's (43) Secretary of the Treasury.  He had to be let go because he kept telling the truth and wasn't diplomatic.  And then there was Donald Rumsfeld, Bush's Secretary of Defense who finally resigned under fire.  I loved to hear him speak and so did the press.  He had to be changed in 2006 because of the "Generals Revolt."  Both these men were successful CEOs and both had previous government experience, but they had to go

Now we are to have CEOs all over the government and generals too.   A proposed Secretary of Labor who is anti-labor.  A Director of EPA who is anti-environment.  A secretary of Education who is opposed to public education.  They won't be able to shut the Departments down* but can do a lot of damage. I'll accept the Secretary of State being Rex Tillerson,CEO of Exxon-Mobile, because he is recommended by Bob Gates (whom I greatly admire), but the guy has had no public experience and may find it even harder to convert than those CEO's who had previous government experience.

And the new administration seems to be very vindictive (Nixonian).  The names of all who worked on Global Warming in EPA  were asked for, and I doubt it was to give them a medal.  Fortunately some backbone was shown and there was refusal to give the names.  George W. Bush was somewhat the same though he wanted to pack the scientific committees with Creationists (give them equal time).  It is "Don't bother me with the facts, this is what I believe."

It is hard to see how this ends well.

* http://stopcontinentaldrift.blogspot.com/2016/12/eliminating-federal-government.html

Thursday, December 22, 2016

ECONOMIC SUMMARY - OBAMA ADMINISTRATION


The White House released Thursday its annual Economic Report of the President, the last such volume produced by the Obama administration.
..........................................................................
First, the report flags the recent slowdown in productivity growth, a problem that isn’t unique to the U.S. Average annual productivity growth—that is, the amount of output a worker can produce in an hour of work—has slowed to less than 1% in advanced economies over the past decade, roughly half the rate of the previous decade. In the U.S., labor productivity growth has been slightly higher, at 1.3% annually, over the decade ended last year.*
(Click on figure to enlarge)
.............................................................................
But there has been much accomplishment over the past 7 yrs as well.
It notes a string of 74 months of job growth, adding 14.8 million jobs, and the 5% jump in real median incomes between 2014 and 2015. It also notes how growth in inflation-adjusted employer-based health-care coverage so far this decade has fallen well below the levels of last decade.*
There is more that could be added such as a record string of months where new jobless claims dropped below 300,000 for 93 consecutive weeks and counting.  It is the longest stretch since 1970 and the longest ever for claims per 100,000 population.

The current recovery in the economy is the 4th longest ever and will overtake the 3rd longest about next May (2017) if President-Elect Donald Trump doesn't screw it up.**

The GDP figures are low, mostly due to a buildup of inventories.***  There is some indication for the last couple of months of inventories beginning to be drawn down.  So if consumers continue to consume at their present rate, GDP should stat to raise.  The GDP figure for November is 2.9 that might begin to show the inventory decline.

* http://blogs.wsj.com/economics/2016/12/15/white-house-economists-spell-out-the-four-most-stubborn-economic-challenges/?mod=djemRTE_h
** http://stopcontinentaldrift.blogspot.com/2016/11/economy-and-employment.html
http://stopcontinentaldrift.blogspot.com/2016/10/remarkable-economy-forecast.html
http://stopcontinentaldrift.blogspot.com/2016/07/the-american-economy-great-recovery.html
*** http://stopcontinentaldrift.blogspot.com/2016/08/new-analysis-of-gdp.html
http://stopcontinentaldrift.blogspot.com/2016/10/gdp-inventories-housing-unemployment.html

Tuesday, December 20, 2016

MODERN DAY LUDDITES

Luddite, Original: A member of any of the bands of English workers who destroyed machinery, especially in cotton and woolen mills, that they believed was threatening their jobs (1811–16).*
Luddite Modern: A person opposed to increased industrialization or new technology."a small-minded Luddite resisting progress*
A serious problem for our age is how many jobs should we maintain that are not needed any more?

Coal is gradually being replaced by natural gas in production of energy, and the price of coal is dropping putting many coal miners out of work.  In fact, Coal-mining employment increased rapidly in the late 1800s and early 1900s, and peaked in 1923 at 798,000. Since then, the number of miners has fallen considerably due to mechanization.**  See in the figure below, the sharp fall-off in total mining employment even since 2014.  President-elect Trump of the United States may have won the election, in part, by promising to reopen coal mines in West Virginia that are not needed.  Is this wise?

An article in Forbes Magazine says it ain't a goin' ta happen.****  We're not going to use as much coal in the future and the coal that we will use isn't going to come from the Appalachian mines. Trump simply isn't going to bring back all those mining jobs. They're gone, gone forever. Just like those assembly line jobs in electronics. And pining for the lost blue collar jobs isn't going to help in the slightest. The thing to do now is to work out what other task that same labor can do.****

(Click on figure** to enlarge)

Another case is steel production.  Should we increase production of steel and dump it on the market to maintain jobs?:
The high point came in 1973, when the United States produced 137 million metric tons of raw steel. By 2013, the most recent year available, that had fallen to 87 million metric tons -- a decline of more than one-third from 1973.***
..............................................................................
Other current economic trends have also had an impact. For instance, the ongoing decline in oil and gas drilling due to low prices is driving companies to cut back on tubing orders, contributing to a slowdown in steel production, said Jeff Manuel, an associate professor of historical studies at Southern Illinois University-Edwardsville. ***
..............................................................................
 In addition, much steel formerly used to build automobiles  has been replaced by aluminum and plastics.
...............................................................................
Data from the American Iron and Steel Institute pegged the all-time employment high at 650,000 employees in 1953. More recent data from the institute, for 2015, shows that the steel industry directly employs about 142,000 people in the United States. **
...............................................................................
According to the American Iron and Steel Institute, "labor productivity has seen a fivefold increase since the early 1980s, going from an average of 10.1 man-hours per finished ton to an average of 1.9 man-hours per finished ton of steel in 2014."***

American steel production has increasingly shifted away from the extraction of ore for raw material and towards the recycling of scrap metal, which typically requires fewer workers. "Now, more than 50 percent of all steel produced in the United States is from a process that recycles scrap metal," Giarratani said.***

But President-elect Trump himself has departed from using US. steel and aluminum in his own buildings:  The report by investigative journalist Kurt Eichenwald found that Trump used Chinese-made steel for the Trump International Hotel Las Vegas that was purchased through a holding company registered in the British Virgin Islands and that he bought Chinese aluminum for the Trump International Hotel and Tower in Chicago.****
(Click on figure to enlarge) USGS Minerals Yearbook (By Plazak - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=42008699)

Vaudeville Isn't Coming Back There is a drift away from manufacturing things no longer used and jobs that require handwork towards more cerebral jobs   Many cannot make this transition.  Maintaining jobs not needed is the same as the old ploy of having one group of workers dig a hole during the day and another group filling in the holes at night.

Think of the industries that no longer exist.  For example, U.S. Leather was the second largest industry after U.S. Steel at the turn of the 19th Century to the 20th Century.  Should we still be maintaining it?  What would we do with all the leather?  Though U.S. Steel is still in business, it no longer has the power it used to have, even after WW-II for 20 yrs or more.

Think of all the jobs that either no longer exist or are greatly reduced in number: gas station attendants washing wind shields and pumping gas, telephone operators, clerk typists,   These jobs have essentially been turned over to the consumer: you pump your own gas and wash your own windshield, you let your fingers do the numbers in trying to telephone a business or government office, and you type your own stuff.  I've also noticed robots delivering medications in hospitals and some restaurants have computerized ordering.  We are told that the higher the minimum wage, the more restaurants will be automated (but I presume upscale restaurants will always have a wait staff).  This is true in spite of a minimum wage creating a level playing field that businesses say they want.

And a BIG disruption is coming in the automated vehicle (currently being tested in New Zealand) that will greatly reduce or eliminate taxi and truck drivers plus the part-time drivers like Uber (that is testing "nearly' self-driving cars in Pittsburgh) and Lyft.  Should we delay vehicle automation to maintain these jobs, even though many lives will be saved and serious injuries prevented in their coming.  Just think, fewer accidents will occur where alcohol is involved and the elderly will become  more mobile.

* https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=luddites%20definition
** http://www.cnsnews.com/news/article/terence-p-jeffrey/us-has-lost-191000-mining-jobs-september-2014
*** http://www.politifact.com/truth-o-meter/statements/2016/jul/05/barack-obama/barack-obama-wrong-about-size-us-steel-production-/
**** http://www.forbes.com/sites/timworstall/2016/05/05/like-manufacturing-jobs-to-china-whatever-trump-says-mining-jobs-are-not-returning-to-w-virginia/#5eb5c0bf6f48
http://www.nwitimes.com/business/steel/usw-furious-after-report-trump-bought-chinese-steel/article_8dd3f432-34e7-5feb-bf0f-15d33d4e72b5.html







Saturday, December 17, 2016

DOLLAR INDEX OVER TIME

The Dollar Index ($DXY) is composed of a basket of foreign currencies valued against the dollar.  Barchart gives the following figure (https://www.barchart.com/stocks/quotes/$DXY):

(Click on figure to enlarge)

The Index is weighted as follows: 57.6% for the Euro (remember the Euro combined a number of European currencies together), 13.6% for the Japanese Yen, 11.9% for the Pound Sterling, 9.1% for the Canadian Dollar, 4.2% for the Swedish Krona, and 3.6% for the Swiss Franc.  The higher the Dollar valuation the higher the Dollar Index number.

This post is an update from one published last August (http://stopcontinentaldrift.blogspot.com/2016/08/dollar-index-25yrs.html) showing the effects of the election.  From an historical perspective, the so-called Trump effect is small compared to fluctuations of history.

The Index starts arbitrarily as 100 of  March 1973:
USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the US Dollar Index was 100.000. It has since traded as high as 164.7200 in February 1985, and as low as 70.698 on March 16, 2008.

The make up of the "basket" has been altered only once, when several European currencies were subsumed by the euro at the start of 1999. The make up of the "basket" is overdue for revision as China, Mexico, South Korea and Brazil are major trading partners presently which are not part of the index whereas Sweden and Switzerland are continuing as part of the index.*


* https://en.wikipedia.org/wiki/U.S._Dollar_Index

Friday, December 16, 2016

ELIMINATING FEDERAL GOVERNMENT DEPARTMENTS

There is lots of brave talk about getting rid of federal government departments.  This is nothing new and goes on all the time.*  Usually the proposals really are not to really get rid of the functions of the department but just to move them elsewhere, sometimes to the states.

President-Elect Trump says he plans to get rid of the Departments of Education and EPA (that he calls the Department of the Environment - DEP).**  It also looks like he wants to get rid of the Department of Labor because his nomination for Secretary of Labor is hostile to labor.  He has some surprises coming.  To the best of my knowledge, no Federal Department has ever been eliminated. They have only increased in number.***

For example, the Department of Commerce and Labor was split into the Departments of Commerce and Labor.  Department of Health Education And Welfare was split into Departments of Health and Human Services and Education.

The original Department of the U.S. Government was the Department of War (estab. 1879). In 1947, this Department was split into the Departments of the Army and Air Force.  Then the departments of The Army, Navy and Air Force were combined into the Department of Defense in 1949, but the divisions still exist, still called Departments, and we still have sub-cabinet level Secretaries of the Army, Navy and Air Force.

Even getting rid of Federal Bureaus is difficult, but does occur. **** Some examples are the Bureau of Prohibition and more recently, the United States Bureau of Mines.  Much of the staff of the Bureau of Mines was distributed between the Department of Energy (after which some of the employees were transferred again, this time to HHS), the U.S. Geological Survey and the Bureau of Land Management.  About 1,000 employees were let go, fewer than 50%.  The last Director of the Bureau of Mines was an African American lady Rhea Lydia Graham who was appointed shortly before the Bureau was shut down.  I wonder if she knew that was going to be her job?

One reason it is so hard to close Federal Agencies and Bureaus is that Senators and Representatives dearly love to be Chairman of a Committee or at least a Sub-Committee preferably several.  Also being a member of these groups lends prestige.

So President-Elect Trump has his work cut out for him.

* http://www.theatlantic.com/politics/archive/2014/08/how-to-eliminate-almost-every-federal-agency/452961/
** “The Department of Environmental,” Trump replied. “I mean, the DEP is killing us environmentally, it’s just killing our businesses.”  Who is going to tell him there is no department with that name. (http://grist.org/climate-energy/trump-wants-to-eliminate-the-department-of-environmental-colbert-points-out-a-problem/).  It has been pointed out that NYC (where Trump lives) does have such a department, but I doubt he is talking about that.
http://kut.org/post/why-eliminating-government-agency-isnt-simple
*** https://en.wikipedia.org/wiki/United_States_federal_executive_departments
**** https://en.wikipedia.org/wiki/Category:Defunct_agencies_of_the_United_States_government

Wednesday, December 14, 2016

THE WRONG PERSON DID IT (Biographical)

A problem with old age is that sometimes you think of the slights of life (though I try not to).  For example when I was probably 16, I entered a Junior NRA freestyle target shooting contest.  There were two guys I knew who were better than me so I thought I had a good chance to take third place.  The best shot, who shot better than me while standing and I at prone, decided he would really lock it up and shoot kneeling,   I couldn't believe it.  At any rate he wasn't used to doing it and blew it.  The second guy better than me had a case of nerves and blew it.  I shot my normal score and, through luck, won! Imagine my surprise and delight.  But the officials decided they would not award the usual prize because, they said, not that many people entered.  I complained and they finally gave me a large emblem (but no certificate saying I had won) that I kept for many years.  I don't know what finally happened to it.  I believe that it may have been the first time I was introduced to the concept of "sorry the wrong person did it,  no offense"

I'll do one more.  The athletic club my father belonged to had an intramural basketball league (maybe still does) that I played in.  I was OK as a basketball player but hardly z star.  As It turned out in my last year (maybe  age 17) we came into the last game with me about 10 total points scored behind the leader.  The leader was a much better player than me so this was a surprise.  Since I had locked up second place, I decided not to play the last game.  My father said, however, that I should play because "you never know."  So I went and it turned out that the scoring leader couldn't play because he had to go to Juvenile Court for stealing a bicycle.  And his father was a vice-president at a major company.  He didn't need to steal bicycles.  As it turned out, I shot about my usual score and edged out the previous leader for the total scoring championship, the major prize. Now my teammates and the best player went to the same parochial high school although they were on different teams.  As we went down the steps to the shower, one of my fellow players said, "Of course, your know you are the cheese champ."  I was surprised an hurt because I had played with these guys for two years. Although they were  technically right, I thought  I deserved to  bask in the glory of winning at least for a little while.  But the wrong person did it.


Now the rational feeling I've decided should be that most people don't even get the chance to be the wrong person who did it.  But sometimes it is hard to keep the mind rational.

Tuesday, December 13, 2016

HE STOLE THE ELECTION FAIR AND SQUARE

Now Donny, don't be a sore winner.*  You seem ungreatful to Vladimir Putin for helping you win the election (with an assist from WikiLeaks), but then maybe Putin likes it that way as he does not want to appear so inteested in you, even though he is.

And what about the Director of the FBI James Comey who creamed Hillary 10 days before election with a phony accusation that he later took back (too late of course)?  Mr. President-elect Trump liked Comey when he thought the FBI was going to indict Hillary, but doesn't like Comey when he says that the Russians helped him, Donald  Trump, win.  Ditto for the CIA.  Let's have some respect here.

Remember when you said you knew more than the Generals and you are now hiring them?  Is that so you can educate them?

Of course Hillary got something like 2.8 million more votes than you did, Donny, but, of course, there were all those cheating voters, millions of them in your alternative world   Now don't be a sore winner, I repeat.

And to get something like 306 electoral votes is hardly a landslide as you insist, based mainly winning on three states by a total of less than 100,000 votes out of millions..  For example, even Obama got more Electoral Votes than you did: 332 in 2012 and 365 in 2008.  In addition, Obama got 69.5 million votes in 2008, the most ever plus he got over 51% of the vote twide that hasn't happened since 1956

You know what a landslide is? I'll tell what a landslide is - Fritz Mondale versus Ronald Reagan.**  Now that's a landslide!  Mondale won only the state of Minnesota (13 electoral votes against 523 for Ronny Reagan) in 1984.  And George McGovern didn't fair much better against Richard Nixon in 1972 (17 for McGovern against 520 for Nixon).  And Nixon resigned from office a bit later!.  And Jimmy Carter didn't fair much better against Ronald in 1980 getting only 49 electoral votes against 489 for Ronny.  Then there was Lyndon Johnson with 486 electoral votes against 52 for Goldwater in 1964.  FDR was another landslide winner.** Well I won't go on (see the list***) as in your alternative world, you won in a landslide.  There is no convincing you otherwise.  Dream on.

* Of course I didn't come up with "sore winner."  I suppose it has been around for a long time but, as nearly as I can tell, the first to use it on Donald Trump was: http://www.dailynewsbin.com/news/sore-winner-donald-trump-jeb-bush/26626/
** Come to think of it, George Washington won 100% of the electoral college vote.
*** https://en.wikipedia.org/wiki/List_of_United_States_presidential_elections_by_Electoral_College_margin

Monday, December 12, 2016

THE GREATEST CON WINS

Back in August of this year I published a piece "Donald Trump's Biggest Con" (http://stopcontinentaldrift.blogspot.com/2016/08/donald-trumps-biggest-con.html).  Well, the Con Job worked and Donald Trump is President-Elect.

A large group of supporters of Donald Trump seem to be white working men.  They love when he says he is going to export millions of illegals from this country, that he is going to build a wall on the southern border (not a fence).  They howl when he says he is going to "lock her up (Hillary)."  They applaud hysterically when he says he wants to bar all Muslims from entering this country.

But they ignore it when he said the American worker's wages are too high on the Fox News debate of November 10, 2015.*  When asked about this the next morning on Morning Joe, he replied, "We have to become competitive with the world. Our taxes are too high, our wages are too high. Everything is too high. We have to compete with other countries."**  Joe Biden even made a point of Trump mentioning this in a speech in his home town of Scranton, PA.**

Maybe these white male workers don't care about wages and only want the emotional highs that satisfy the soul.  Maybe.  I doubt it, but they weren't listening.  I think they are going to be disappointed.

Andy Puzder last March wrote an article printed in the WSJ about restaurant automation.***  I find the article to be very good in general, though he seems unaware of just how much automation could replace in the fast-food business.
They bread chicken tenders by hand, prepare complex burger orders, hand-scoop the ice cream for milkshakes, ... the company I lead, our Carl’s Jr. and Hardee’s employees make biscuits from scratch. and the restaurants offer table service. None of these tasks can be effectively automated, and we wouldn’t want them to be.
Of course you could automate making biscuits, bread chicken tenders and scoop ice cream, and they might even be better than doing these things by hand.  I am not enamored with "hand made."  I was in a restaurant once that advertised hand-made lamb patties.  I told the waitress that I preferred machine made, but will take hand made if that is the only choice.  But maybe  others that are attracted by "hand made."  I knew a store owner once who insisted that listing an item as  $1.99 instead of $2.00 made a difference in sales.

Incidentally Puzder mentions Eatsa automated restaurants, but these have a very restricted menu. These are not an upgrade to the old Automat chain.  Only dishes with Quinoa are served at the Eatsa restaurants.  As I have mentioned elsewhere, I was in a Automat**** in 1940 as a child and found it to be lots of fun.  The chain has never really taken off, however.

* http://talkingpointsmemo.com/livewire/donald-trump-wages-too-high
** http://www.businessinsider.com/donald-trump-wages-are-too-high-2015-11 https://www.washingtonpost.com/video/politics/biden-trump-says-american-workers-wages-are-too-high/2016/11/06/d109ac0a-a450-11e6-ba46-53db57f0e351_video.html
*** http://www.wsj.com/articles/why-restaurant-automation-is-on-the-menu-1458857730
**** http://stopcontinentaldrift.blogspot.com/2016/03/restaurants-going-fully-automatic.html

Sunday, December 11, 2016

FRIENDS AGAIN !

So we are going to be friends with the Soviet Union/Russia again.  Of course, Obama and Hillary Clinton had there reset with Putin  for which Hillary was roundly criticized by the Republicans.  Now they seem to be all right with it.  I guess it matters who does it.  But it confuses me.

Prior to WW-II a lot of people in the U.S. turned to Soviet-style Communism in a hangover from the Great Depression (or were we still in it?).  Then in WW-II they were our friends that seemed a bit strange, but I understand that the enemy of our enemy is our friend so it was OK.  Also they took the brunt of WW-II as the main front though it was difficult enough what we and our allies did.

But shortly after armistice of WW-II  the Soviets/Russians became our enemies again.  Remember the "Cold War?"  then in the early 1970s, President Nixon started a "Détente" and the Soviets/Russians were our friends again.   I was confused by this but "what the 'hey " I was offered a science prize and went over to give a couple of lectures during a "hard" freeze on foreign travel by the U.S. government.  I had to get myself to London and they did the rest (see "You couldn't Have Been On That Plane - Parts I- III:" http://stopcontinentaldrift.blogspot.com/2013/04/you-couldnt-have-been-on-that-plane.html).  Everything was very nice and I had to spend all the prize money in the Soviet Union/Russia so I went first class on everything that, was none too good  in some cases.

Then came along President Reagan and the Soviet Union/Russia became the "Evil Empire," in 1983 -  remember?  This felt better to me.

Reagan was followed by President George H.W. Bush who negotiated the fall of the Berlin Wall and the collapse of Communism in the Soviet Union/Russia.  Under these conditions, it was not surprising that we became friendly with the Soviet Union/Russia again as they tried to convert to Capitalism.  Give them a chance, so to speak.

This friendly relationship extended into President Clinton's* years, although he took several Eastern European counties into NATO that created a stir, but
Clinton also supported the besieged leadership of Russian president Boris Yeltsin as well as the funneling of billions of dollars in loans to Russia from the International Monetary Fund.In 1999, Clinton's support for financial aid to Russia came under attack in the face of mounting evidence that much of the borrowed money may have been stolen by an organized criminal syndicate which included members of Yeltsin's own family. However, supporters of Clinton's pro-Yeltsin policies credit his administration with an important achievement not easily measured in dollars or in the short run: the security of the Russian nuclear arsenal. Working through the provisions of the Nunn-Lugar Act, the administration provided extensive technical assistance and funding to the former Soviet states in the safeguarding of nuclear power plants and dismantling of nuclear weapons—an astounding achievement in view of the animosity that once existed between the United States and the Soviet Union. By the end of the Clinton presidency, the likelihood of a nuclear exchange between the superpowers was almost nonexistent.

However, the failed "reset" in the Obama/Hillary Clinton period sort of drifted back to hostility to the Soviet Union/Russia which is where we are now with about a month to go in the Obama Administration tour.  There seems little reason for a change in attitude.  The Soviet Union/Russia is still occupying parts of the Ukraine and has taken over the Crimea.  The Soviet Union/Russia still supports the leader of Syria and won't agree to a cease fire in Aleppo.  What's changed ?

Nonetheless, President-Elect Trump will try his own reset.  He has been very friendly to Putin and gives every indication of continuing that friendship into his administration.  After all why not ?  Putin has said nice things about him, and helped Trump win the election by leaking things about his opponent through WikiLeaks.  His National Security Adviser, Gen. Flynn, is also is cozy with Putin.**  He is considering a candidate for Secretary of State who is also friendly with Putin and has done business with him (Rex Tillerson, CEO of Exxon Mobil).  Even the leader of the Senate Mitch McConnell has gotten onboard.

[Note added December 13: It appears thaMcConnel has had a change of heart and now supports an investigation into the the Soviet Union/Russian hacking and says that the Soviet Union/Russia is not a firend of ours.***].

So it looks like "Here We Go Again" regarding friendship with the Soviet Union/Russia.  Perhaps Trump at least can build a hotel in Moscow (and maybe one in St. Petersburg as a bonus) and Tillerson can get his deep drilling contract for oil in Siberia out of it.

* http://millercenter.org/president/biography/clinton-foreign-affairs
** https://www.washingtonpost.com/news/checkpoint/wp/2016/08/15/trump-adviser-michael-t-flynn-on-his-dinner-with-putin-and-why-russia-today-is-just-like-cnn/?utm_term=.4f2c30d0cedd
*** https://www.washingtonpost.com/news/powerpost/wp/2016/12/12/schumer-on-congressional-probe-of-russia-i-dont-want-this-to-turn-into-a-benghazi-investigation/?utm_term=.53cc9b92e806

Friday, December 9, 2016

GREAT RECESSION VERSUS THE GREAT DEPRESSION - III

In this comparison of the Great Recession to the Great Depression, a look will be taken at an economic comparison and what, seems to me, to be rather a revisionist examination made in 2014 by Neil Howe  in that, while the GDP increased exceptionally well, unemployment remained high.*  One similarity is that both these "Greats" were financial collapses that were different from your ordinary recession which are usually due to inventory buildups.  Part I concerned the emotional hangover from the Great Depression and Great Recession.  Part II concerned the economics of some of the Rust Belt of states prior to and including the Great Recession.  The Great Depression did not have a cascade of job losses prior to 1929 that happened prior to the Great Recession (see Part II).

In the figure below, it is seen that the GDP has been slowly increasing since 2009, the depth of the Great Recession.  In contrast the dip in the Great Depression that started in 1929  had the GDP of the U.S. rising sharply less than five years after its beginning.

I was born in 1931 so I was only 10 yrs 8 mo. old at the beginning of WW-II and the GDP is shown to be well into positive territory see figure below).  Although my memory is limited, my main memory was that you could get a good-sized chocolate candy bar for a nickel and some bars were three for a dime.

The other thing I remember is men coming door to door and asking if they could mow the lawn or do other odd jobs for food.  My mother used to give them something but would not invite them inside.  I also remember a man coming to the door with a basket full of fine China (made by a German company) having marbleized centers and a gold rim.  My mother had also bought some of this same China a few years earlier (I don't know if it was from the same man).  So my memory is not conducive to their being good times prior to WW-II and  all studies do show unemployment to still be very high by 1939 and 1940 though they differ on the percentage unemployment (9.5% or greater).

In spite of my memories of the late 1930s, GDP bottomed in 1932 - 1933 and began a steep rise.  In contrast, the GDP decline was not as great in the Great Recession but bottomed in 2009 and began a relatively slow but steady rise. 


(Click on figure to enlarge)

Though the percentage drop in the stock markets were comparable between the two Greats, the  recovery of the stock market after the Great Recession has been quite remarkable and much better than for the Great Depression.  The figure below shows the comparison for the Dow Jones Industrial Average (The increase has continued beyond the period in the figure and has been repeatedly been setting new all-time highs lately for all four principal indices (DJIA, S&P 500, NASDAQ Composite, and Russell 2000).**


(click on figure to enlarge)

Quoting Mr. Howe, however, suggests a roaring economy for the Great Depression, "GDP grew at a blistering average rate" (though unemployment remained high):
What’s more, from 1933 on, U.S. GDP grew at a blistering average rate of over 8% per year for the next eight years. And that includes one recession year: 1938. By 1941, 12 years after the Great Depression began, U.S. GDP was 41% higher than its pre-downturn figure. This is almost certainly a much higher level, relative to 1929, than the United States will see by 2019, relative to 2007.*
..........................................................
Mr. Howe does conclude that:
These parallels between eras are so numerous and striking that they are hard to miss once we look broadly at the direction of events. That’s why connecting the economic challenges of the 1930s with those of the 2010s, and seeing them as comparable in some respects, makes a difference. When we are connected to history, we can comprehend better what else is happening in the 2010s, predict better what is likely to happen next, and to figure out, if necessary, how we can avoid an outcome that we regard as especially dangerous.


Note On Recessions A list of the Recessions in the U.S. can be seen in Wikipedia including the dates, duration, interval time between recessions, peak unemployment, and GDP decline.** * The GDP decline of the Great Recession is seen to have been only greater during the Great Depression and the "recession" of 1938 (I would say it was a part of the Great Depression) and the recession of 1945 that occurred while industry converted from wartime production back to peacetime.  Though the GDP decline in 1945 was larger than for the Great Recession, unemployment in 1945 did not reach the depths of the Great Recession.  The only recession worse in unemployment than the Great Recession was that of the long recession of the early 1980s, though the long recession of 1973 - 1975 came close.

* http://www.forbes.com/sites/neilhowe/2014/11/25/are-we-reliving-the-1930s/#57204a703a6c
** https://en.wikipedia.org/wiki/Comparisons_between_the_Great_Recession_and_the_Great_Depression
*** https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
https://www.thebalance.com/us-gdp-by-year-3305543