The Economic Wisdom of a Green Recovery

by David Sassoon          As reported in Huffington Post Economy 

Welcome to a periodic interview series SolveClimate is inaugurating with this video called A New York Minute with Dan Greenwood: Why the Recession is a Good Time to Invest in Green Infrastructure.

Usually, you will find Professor Dan J.H. Greenwood teaching in a classroom at the Hofstra University School of Law. He’s spent a good part of his career understanding corporations and their role in politics, and his work sheds light on why global warming is not something that corporations will be able to solve without government regulation.

We enticed him on camera to explain to us a thing or two about the pending economic recovery package. With the feds set to print a trillion dollars of new currency and give it away, we were alarmed. After all, if you or I tried to do that, we’d be thrown in jail.

For the good professor, there’s no such thing as a dumb question, and so he answered our concerns. He also explained a good deal more: why the current recession is an especially good time to invest in green infrastructure projects; how the poor have been impoverished over recent decades (no, that’s not a redundancy); and why the jobs we create are the truest measure of an economy that works.

To view the feature, click on the link below.

http://www.youtube.com/watch?v=0vS2tVyUSWg&eurl=http://solveclimate.com/blog/20090127/video-economic-wisdom-green-recovery&feature=player_embedded

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Unemployment rose in every state in December

 

David Duprey / AP     As reported on MSNBC.com

Manufacturing particularly hit, analyst sees trend continuing through year

WASHINGTON – Rising unemployment spared no state last month, and 2009 is shaping up as another miserable year for workers from coast to coast.

Jobless rates for December hit double digits in Michigan and Rhode Island, while South Carolina and Indiana notched the biggest gains from the previous month, the Labor Department said Tuesday. A common thread among these states has been manufacturing industry layoffs tied to consumers’ shrinking appetite for cars, furniture and other goods.

With tens of thousands of layoffs announced this week by well-known employers such as Pfizer Inc., Caterpillar Inc. and Home Depot Inc., the unemployment picture is bound to get worse in every region of the country, economists say.

 

“We won’t see a light at the end of the tunnel until 2010,” said Anthony Sabino, a professor of law and business at St. John’s University.

The number of newly laid off Americans filing claims for state unemployment benefits has soared to 589,000, while people continuing to draw claims climbed to 4.6 million, the government said last week. There’s been such a crush that resources in New York, California and other states have run dry, forcing them to tap the federal government for money to keep paying unemployment benefits.

Aside from manufacturing, jobs in construction, financial services and retailing are vanishing — casualties of the housing, credit and financial crises.

Highs, lows States with the highest unemployment rates in December 2008: 1. Michigan, 10.6 percent 2. Rhode Island, 10 percent 3. South Carolina, 9.5 percent 4. California, 9.3 percent 5. Nevada, 9.1 percent 6. Oregon, 9 percent 7. District of Columbia, 8.8 percent 8. North Carolina, 8.7 percent 9. Indiana, 8.2 percent 10. Florida, 8.1 percent States with the lowest unemployment rates in December 2008: 1. Wyoming, 3.4 percent 2. North Dakota, 3.5 percent 3. South Dakota, 3.9 percent 4. Nebraska, 4 percent 5. Utah, 4.3 percent 6. Iowa, 4.6 percent 7. New Hampshire, 4.6 percent 8. New Mexico, 4.9 percent 9. Oklahoma, 4.9 percent 10. West Virginia, 4.9 percent

Clobbered by problems at Detroit’s auto companies, Michigan’s unemployment rate soared to 10.6 percent in December. Rhode Island’s jobless rate hit 10 percent, the highest on records dating back to 1976.

Those states — along with eight others and the District of Columbia — registered unemployment rates higher than the nationwide average of 7.2 percent, a 16-year high.

South Carolina and Indiana posted the biggest bumps in their monthly unemployment rates. Each state logged a 1.1 percentage point rise in unemployment from November to December.

In South Carolina, the unemployment rate bolted to 9.5 percent as laid-off textile, clothing and other factory workers found it difficult to find new jobs.

“The money I was making, I’d be hard-pressed to find a job paying that,” said Gregory Smalls, a 49-year-old Columbia, S.C., resident who lost his more than $50,000-a-year job as a truck body shop manager when his department merged with a dealership’s service department.

Indiana’s jobless rate soared to 8.2 percent in December as workers were hit by layoffs in manufacturing — including at engine maker Cummins Inc. — as well as in construction and retail.

Many Indiana counties with high jobless rates are in the northern part of the state, which has been battered by layoffs in the recreational vehicle industry. Hundreds of workers have lost their jobs at RV makers such as Monaco Coach Corp., Keystone RV Co. and Pilgrim International.

Gayle Glaser, who owns the Shortstop Inn restaurant in Wakarusa, Ind., said those job losses have hurt her business, too.

“We just don’t have the traffic here from the plants,” she said. “All my customers coming in — they’re all laid off.”

States that have been spared the worst of the recession’s pain tend to benefit from energy and agriculture production, while also having relatively minimal exposure to the housing and manufacturing busts.

Economy in Turmoil Unemployment rose in every state in Dec.   Rising unemployment spared no state last month, and 2009 is shaping up as another miserable year for workers from coast to coast. Consumer confidence sinks to a new low The wealthy turn stealthy as economy weakens Dudley picked as New York Fed chief Home prices drop by record pace in Nov.

Wyoming posted the lowest unemployment rate, 3.4 percent in December. It was followed closely by North Dakota at 3.5 percent and South Dakota at 3.9 percent.

In 2008, the country lost 2.6 million jobs, and in 2009 at least 2 million more jobs are forecast to disappear.

Minneapolis-based retailer Target Corp. said Tuesday that it will cut an undisclosed number of workers at its headquarters. Elsewhere, specialty glass company Corning Inc. said it would cut 3,500 jobs, or 13 percent of its work force, as demand slumped for glass used in flat-screen televisions and computers. And chemical company Ashland Inc. said it would eliminate 1,300 jobs, freeze wages and adopt a two-week furlough program.

Roughly 40,000 layoffs were announced on Monday by a string of companies, including Pfizer, Caterpillar and Home Depot.

To stimulate job growth and the broader economy, President Barack Obama and Congress are racing to enact a $825 billion package of tax cuts and increased federal spending, including money for big public works projects.

The U.S. has been mired in a recession since December 2007. It is on track to be the longest downturn since World War II.

Some Things You Should Probably Know About Natural Gas

Josh Nelson

Editor, theseminal.com

Originally posted at The Seminal.

Natural gas does not get nearly as much attention as oil or coal. But the role this resource plays in our lives has been steadily increasing for decades. We must begin to address natural gas now, or we will leave future generations with a natural gas dependency reminiscent of our current dependence on foreign oil.

Here are some things you should probably know about natural gas.

Consumption of natural gas in the united states has remained relatively stable for the past 35 years.

But natural gas imports in the United States have more than quadrupled in the past 20 years.

And the price we pay for imported natural gas has more than tripled in the past 15 years.

This probably has something to do with the fact that production of Natural Gas in the United States peaked about 35 years ago, in 1973.

Recent enthusiasm for natural gas is due in large part to drastically increased shale gas production, particularly in the Barnett Shale. But the production process for shale gas, which includes fracturing the shale rock with water mixed with toxic metals and chemicals, is already polluting drinking water for hundreds of thousands of Americans.

Russia, Iran and Qatar have about 55% of the world’s known natural gas reserves. They are planning to create a cartel for natural gas, much like OPEC. Russia has already shown how far they are willing to go to manipulate prices. Natural gas proponents in the United States like to point to the fact that natural gas is, for the most part, not a fungible commodity. This is true because compressed natural gas is very difficult and expensive to transport, especially over long distances. But this is only true for compressed natural gas. The rapidly growing market for liquified natural gas, which can be transported relatively inexpensively, changes the equation quite a bit.

This is a dangerous path we are heading down. We have been increasing natural gas imports and expenditures at a healthy clip for the past several decades, while domestic production has struggled to remain flat. Industry points to new domestic production potential, but the potential costs include access to clean drinking water for millions of Americans in the surrounding areas. Meanwhile, a handful of countries control a majority of the world’s reserves, and are planning to organize a cartel to manipulate prices. Their ability to do so is likely to increase in the coming years, due to market realities (increasing fungibility).

While replacing coal-fired power plants and drastically reducing oil consumption remain the two key components of transitioning to a sustainable energy policy, those who are interested in long-term solutions must look beyond natural gas as well. Yes, natural gas will play some role as a “bridge fuel”. It is clear that we will continue to use it in power generation for years and years to come. And I’ll grudgingly admit, the percentage of vehicles running on natural gas will almost certainly go up before it goes down. But we should be very cautious and smart about how we produce our natural gas, how quickly we use our reserves, and how we can use them most effectively. Above all we must begin thinking about how we will prevent the global power dynamics behind the oil trade from being replicated with yet another finite fossil fuel. I’m sure even T. Boone Pickens would agree with that.

Warren Buffett: US IN “Economic Pearl Harbor”

Written by Timberly Ross  as reported by AP

 

OMAHA, Neb. — Billionaire investor Warren Buffett says the U.S. is engaged in an “economic Pearl Harbor.”

In an interview that aired Sunday on “Dateline NBC,” the chairman and CEO of Berkshire Hathaway Inc. said the nation’s economic situation is not as bad at World War II or the Great Depression, but it’s still pretty severe.

Buffett said Americans are in a cycle of fear, “which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We’ll break out of it. It takes time.”

Buffett’s interview centered on President-elect Barack Obama and the tough task he faces in fixing the U.S. economy.

“You couldn’t have anybody better in charge,” the Omaha resident said of Obama, who’ll be sworn into office on Tuesday.

As one of Obama’s economic advisers, Buffett said the president-elect listens to what his advisers say, but ultimately comes up with better ideas.

He predicted that Obama will be able to convey the severity of the economic situation to the American people and explain their part in alleviating it.

As to how long the crisis would continue, Buffett said he didn’t know.

“It’s never paid to bet against America,” he said. “We come through things, but its not always a smooth ride.”

Omaha-based Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

 

Let us know your thoughts? you may leave a comment or email george@hbsadvantage.com

Low Demand Keeps Natural Gas Cheap

By BEN CASSELMAN

Frigid temperatures and winter storms have blanketed the country from New Orleans to Chicago this month, weather that usually leads to a spike in the price of the most popular fuel for home heating, natural gas.

But not this year.

Natural-gas prices remain in a slump because manufacturers, which are even bigger users of gas than chilly homeowners, have cut back their operations in response to the recession. And low demand means low prices.

View Full Image

Associated Press

Despite a cold, stormy start to winter in much of the U.S., natural-gas prices have stayed relatively low as the recession hits industrial usage.

“It all boils down to the economy,” said Ray Deacon, an analyst for Pritchard Capital Partners in New York.

Despite an uptick this week, natural-gas futures have fallen 9% this month, to $5.910 per million British thermal units, and are down 16% from last year despite colder weather. Prices haven’t been this low in December since 2003.

Storage levels remain 3.4% higher than normal even after the frigid start to the season. According to federal data released Wednesday, the U.S. withdrew 147 billion cubic feet of gas from storage last week, about normal for this time of year, but less than would be expected after a bout of cold weather.

Boon for Consumers

Low prices are a rare piece of good news for consumers, who might get smaller bills this year for home heating and electricity.

But the price slump spells bad news for gas producers, who have been forced to slash spending on drilling, and for gas-producing states like Texas and Colorado, which had been shielded from the national economic slowdown by their strong energy industries.

The low prices come despite an unusually cold start to winter, which has seen rare snowstorms in New Orleans, Houston and Las Vegas, subzero temperatures in Chicago and a devastating ice storm in the Northeast.

Michael Schlacter, chief meteorologist for the forecasting service Weather 2000, said the weather so far this season has been the most extreme in at least eight years.

“Mother Nature’s doing all she can,” Mr. Schlacter said.

Manufacturing Downturn

But rising residential and commercial heating demand has run up against slumping industrial demand for natural gas, which is used to make everything from diapers to fertilizer.

“Industrial demand is going away in a big way,” said Abudi Zein, senior vice president at Genscape Inc., which monitors electricity generation and fuel supplies.

Forecasters expect the weather to warm up in at least parts of the country early in the new year, but industrial demand isn’t likely to recover for months because the recession has knocked down industries like auto manufacturing.

“We know industrial demand is going to be impacted in 2009 — it has to be,” said Dave Pursell, an analyst at energy-focused investment bank Tudor Pickering Holt & Co. in Houston. “Everything that goes into a car — steel, glass, plastic — is natural-gas intensive.”

Adding to the downward pressure on prices, natural-gas production has remained relatively high. Gas producers such as Chesapeake Energy Corp., Range Resources Corp. and Exco Resources Inc. have been slashing drilling budgets since autumn in response to falling prices. But it has taken months for those spending cuts to show up on the ground in the form of reduced drilling activity, and it will take months more for production to fall significantly.

Rebound Is Seen

Longer term, many analysts think prices are likely to rise. Tudor Pickering, for example, predicts gas will drop as low as $4.75 per million BTUs in the third quarter of 2009, but will rebound in 2010.

Subash Chandra, an analyst at Jefferies & Co., is predicting a faster recovery. Even though a lot of gas is in storage, he said, it can’t all be tapped right away, so the immediately available supply of gas is lower than many people think.

But after a year of ups and downs, no one can have much confidence in price predictions, he said. “Gas has thrown so many head-fakes in the past,” Mr. Chandra said. “Anybody who thinks they’ve had it figured out in December, even if they’re freezing their noses off, well, history tells a different story.”

Krugman, Reich, Take Obama Up On Stimulus Advice

As reported by Sam Stein

 

Last week, Barack Obama let it be known that when it came to formulating a stimulus bill, all ideas were welcome — whether they came from the bowels of conservative fiscal philosophy or New York Times columnist Paul Krugman.

“I want this to work,” said the president-elect. “This is not an intellectual exercise, and there’s no pride of authorship. If somebody has an idea for a tax cut that’s better than we’ve proposed, then we’ll embrace it… If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it.”

Now Krugman has taken Obama up on his offer. Writing in today’s Times, the Nobel Prize winning economist puts together a laundry list of economic to-do’s, with the general theme of making the stimulus “bigger.”

• “Mr. Obama should scrap his proposal for $150 billion in business tax cuts”
• He should “get an early start on the insurance subsidies — probably running at $100 billion or more per year”
• His plan should “include[e] a lot more public investment in his plan.”
• He should not “wait for proof that a bigger, longer-term plan is needed… Right now the investment portion of the Obama plan is limited by a shortage of “shovel ready” projects, projects ready to go on short notice. A lot more investment can be under way by late 2010 or 2011 if Mr. Obama gives the go-ahead now — but if he waits too long before deciding, that window of opportunity will be gone.”

 

In providing Obama stimulus advice, Krugman is not alone. Writing on his personal blog, last week, former Labor Secretary Robert Reich had a specific recommendation for Obama’s economic team. If you wanted to create “lots of new jobs” while also investing “in the nation’s future productivity,” go green, he wrote.

… there’s no reason to think about “green jobs” as simply high-tech. Many low-income and low-skilled workers — women as well as men — could be put directly to work providing homes and businesses with more efficient and renewable heating, lighting, cooling, and refrigeration systems; installing solar panels and efficient photovoltaic systems; rehabilitating and renovating old properties, and improving recycling systems. “Green Jobs Corps” teams could be trained to evaluate and advise homeowners and businesses on these and other means of conserving energy.
[snip]

I’d suggest that all contracts entered into with stimulus funds require contractors to provide at least 20 percent of jobs to the long-term unemployed and to people within comes at or below 200 percent of the federal poverty level. And at least 2 percent of project funds should be allocated to such training. In addition, advantage should be taken of buildings trades apprenticeships — which must be fully available to women and minorities.

 

As Reich and others argue, training people for “green jobs” could be a relatively cheap down payment for long-term economic growth. Employers may have to be nudged into helping — one of the chief concerns is not the cost but that a large enough work force won’t be in place — but once the ball is rolling a green corps could provide a large bang for the stimulus buck. And Obama has offered support for the idea.

“Not only does it generate good high paying long term jobs,” said Sasha Mackler, a research director for the National Commission on Energy Policy, which will be releasing a report on jobs generated from energy projects this coming spring. “It also gets us going in the direction we need to be in a lot of other fronts, including climate change and energy, which will be good for Americans in other areas.”

UNEMPLOYMENT REPORT: Rate Jumps To 7.2%, 524,000 Jobs Axed

Written by JEANNINE AVERSA | January 9, 2009 01:12 PM EST |

As reported in Huffington Post

WASHINGTON — The nation’s unemployment rate bolted to 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs, capping one of the worst years in modern history for American workers.

The Labor Department’s report, released Friday, underscored the grim toll the deepening recession is having on workers and companies. And it highlights the difficulty President-elect Barack Obama faces in resuscitating the flat-lined economy. This year has gotten off to a rough start with a flurry of big corporate layoffs, pointing to another year of hefty job reductions.

“There is no end in sight in terms of layoffs,” said economist Ken Mayland, president of ClearView Economics. “January could be worse because some companies put layoffs on hold because of holiday sensitivities.”

Not only are employers slashing jobs; they also are cutting workers’ hours and forcing some into part-time work. The average work week in December fell to 33.3 hours, the lowest level on records dating to 1964 _ and a sign of more job reductions in the months ahead, economists said.

Obama called the unemployment report “a stark reminder of how urgently action is needed” to revive the nation’s staggering economy. And Hilda Solis, his pick for labor secretary, called the job losses “a crisis situation” and said one of her initiatives would promote “green jobs” that could reduce the nation’s dependence on foreign oil.

For all of 2008, the economy lost a net total of 2.6 million jobs. It was the first time payrolls had fallen for a full year since 2002 and was the most since 1945, when nearly 2.8 million jobs were lost. Though the U.S. labor force has more than tripled since then, losses of this magnitude are still being painfully felt.

With employers throttling back hiring, the nation’s jobless rate averaged 5.8 percent last year. That was up sharply from 4.6 percent in 2007 and was the highest since 2003.

All told, 11.1 million people were unemployed in December. In addition, 8 million people were working part time _ a category that includes those who would like to work full time but whose hours were cut back or those who were unable to find full-time work. That was up sharply from 7.3 million in November.

While economists were forecasting even more payroll reductions in December _ around 550,000 _ job losses in both October and November turned out to be deeper than previously estimated. Revised figures showed employers slashed 584,000 positions in November and 423,000 in October.

The unemployment rate, meanwhile, rose from 6.8 percent in November, to 7.2 percent last month, the highest since January 1993. Economists were expecting the jobless rate to rise to 7 percent.

During President George W. Bush’s nearly eight years in office, 3 million jobs were created. In President Clinton’s two terms, nearly 21 million jobs were generated.

Meanwhile, the Commerce Department reported Friday that wholesale inventories dropped 0.6 percent in November, the third straight month of business cutbacks, while sales were down a record 7.1 percent. On Wall Street, stocks slid. The Dow Jones industrials lost more than 110 points in afternoon trading.

Job losses were widespread in December. Construction companies slashed 101,000, and manufacturers axed a a whopping 149,000 jobs. Professional and business services got rid of 113,000 jobs. Retailers eliminated nearly 67,000 jobs, and leisure and hospitality reduced employment by 22,000. That more than swamped gains in education and health care, and the government.

Employers are chopping costs as they try to cope with dwindling appetite from customers in the U.S. as well as in other countries, which are struggling with their own economic problems.

Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.36 in December, up 0.3 percent from the previous month. Economists were expecting a 0.2 percent increase.

Over the year, wages have risen 3.7 percent, though high prices for energy and food earlier this year made people feel that their paychecks weren’t stretching that far.

The U.S. recession, which just entered its second year, is already the longest in a quarter-century and is likely to stretch well into this year. The fact that the country is battling a housing collapse, a lockup in lending and the worst financial crisis since the 1930s make the current downturn especially dangerous.

Corporate layoffs continue to pile up. G&K Services Inc., which provides uniforms and facility services, on Friday said it is eliminating 460 jobs as it aims to trim costs amid weak demand. And late Thursday, Intermec Inc., which makes electronic devices for tracking inventory, said it plans to cut 150 jobs, or 7 percent of its work force.

Earlier this week, drugstore operator Walgreen Co., managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International all announced major layoffs to cope with the recession.

All the problems have forced consumers and companies alike to retrench, feeding into a vicious cycle that Washington policymakers are finding difficult to break.

Obama says a bold approach is needed to bust through this cycle and revive economy.

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” he said Thursday.

“If nothing is done, this recession could linger,” Obama warned. “The unemployment rate could reach double digits.”

Obama, who takes over Jan. 20, is promoting a huge package of tax cuts and government spending that could total $775 billion over two years. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.

Even with a new government stimulus and the Federal Reserve’s decision to ratchet down a key interest rate to an all-time low, the unemployment rate is expected to keep rising. Some economists think it could hit 9 or 10 percent at the end of this year.

Our Perspective:

Where will all this end? 

This is the result of always putting bandaids on everything.

Politicians are always running for re-election so they can’t focus on long term solutions, their results have to be measurable, for they will be held accountable for them. 

Maybe it is time to bring in a new type of focus. It seems President Obama is banging the drum. Is anybody listening?

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Keep our eye on the ball

Army! We have to stay on offense!  We can’t let the new Congress and the new Administration shove our dependence on foreign oil to the back burner.  Here’s why. When we started the Pickens Plan last July, oil was at about $147 per barrel, gasoline at the pump was $4.11,  and we were importing about 70 percent of the oil we use.  Today oil is $100 per barrel less, but we are still importing about 70 percent of our oil. Why is this important?  Because we are still at the mercy of foreign governments and unstable areas of the world for our oil supply. It is still a crisis,  but it’s also an opportunity for us to fix it. Look at the headlines from just the past couple of days. – Oil up $5 on OPEC cuts. – Russia cut off natural gas supplies to Ukraine.  – Iran calls for oil embargo for supporters of Israel.  Just before the holidays, OPEC met to try to raise oil prices.  OPEC delivers 40 percent of the daily oil supply.  They decided to cut their output by 2.2 million barrels per day to try and get the price back in the $70 range. You’ve heard me tell you before that if consumption runs short of supply, then the only way to balance the books is by raising the price.    What have we seen?  Gasoline at the pump has jumped back over $2 per gallon in many areas and is moving back up. Next headline:  On New Year’s Day, Russia cut off natural gas supplies to Ukraine in a dispute over prices and payments. According to Reuters news service, “That has hit natural gas supplies to countries in eastern and southern Europe facing freezing temperatures and has worried European countries, which get one fifth of their gas through pipelines that cross Ukraine.” Think about that:  The Russian government is willing to force its customers to pay whatever price it sets by cutting off supplies; not threatening to cut off supplies, but by actually doing it in the coldest part of winter. We don’t rely on Russia for our natural gas.  We don’t import any of it, and we have plenty of our own natural gas supply.  The problem comes from that second headline – what happens if Iran and other Mideast and African countries decide to use oil as a weapon against us like Russia is using natural gas as a weapon against Ukraine? I’m not making this up.  Here is what the Iranian News Agency reported over the weekend: “Pointing at Westerners’ dependence on the Islamic countries’ oil and energy resources, [Iranian leaders] called for cutting the export of crude oil to the Zionist regime’s supporters the world over.” Iran understands how to leverage our over-dependence on foreign oil.  OPEC understands how to manage output.  We are left without any weapons in this price war. We have to remind our leaders in Washington that whether oil is a $50 a barrel or $150 a barrel it is the level of our dependence on foreign oil, not just the price, which puts us all at the mercy of unfriendly foreign governments and you don’t know when they will move against us. — Boone