“The first two weeks of January, you’re going to see the market turn around from December cold,” said Dave Melita, president and chief meteorologist of Melita Weather Associates in Durango, Colorado. “The snow cover will be melting fast. It will be 20 degrees above average on some days.”I tend to take these comments with some gravity as these guys are betting real margin money on NG which is very sensitive to weather.
Temperatures in Chicago will dip to a low of 19 degrees Fahrenheit (7 Celsius) on Jan. 1, 2 degrees above normal and 14 degrees higher than a year earlier, according to AccuWeather Inc. in State College, Pennsylvania. New York will fall to 38 degrees, 10 above average. About 52 percent of U.S. households use natural gas for heat.
Natural gas for January delivery advanced 11.8 cents, or 2.9 percent, to $4.23 per million British thermal units at 12:29 p.m. on the New York Mercantile Exchange. The contract expires today. Gas for February delivery rose 13 cents to $4.285. Heating demand drove gas prices above $6 last January.
‘Blowtorch Hot’
Higher-than-average temperatures will persist throughout the Midwest and eastern U.S., with potential in February for “blowtorch hot” weather compared with seasonal norms, Melita said.
The Energy Department reported last week that inventories declined by 184 billion cubic feet in the week ended Dec. 17 to 3.368 trillion cubic feet. Stockpiles reached a record 3.84 trillion the week ended Nov. 5.
Gas stockpiles will total 1.833 trillion cubic feet at the end of the winter heating season in March, about 171 billion cubic feet higher than at the end of March 2010, the Energy Department said Dec. 7 in its Short-Term Energy Outlook.
U.S. natural gas production may reach a record high of 62.09 billion cubic feet a day this year, the department said.
“It’s a pretty bearish picture weather wise, and we’re really not seeing a decline in production,” said Hamza Khan, an analyst with the Schork Group Inc., a consulting company in Villanova, Pennsylvania.[More] [My bold]
I wish I could come up with a Grand Unified Theory of Food Thought to help all of us understand how our minds process food issues differently. I suspect it may be harder-wired than we suspect, as food has been on our minds a lot as a species.The poultry-centric controversy began late last week when Lotte Mart, one of South Korea's biggest retailers, began selling its fried chicken at a level that undercut the prevailing market price by more than 60 per cent.
South Korea's presidential secretary for political affairs bristled in a blog that, even on a crude calculation of raw materials and processing, Lotte Mart appeared to be losing about 1200 won every time it sold a serving of fried chicken from one of its 82 stores.
That was the cue for a verbal bombardment from Kyochon Chicken, Goob-ne Chicken and hundreds of small restaurants and shops across South Korea that make their living from fried chicken, who fear they would be thrust out of business. Their trade body, the Korea Franchise Association, quickly weighed in with a threat of legal action and allegations of “fried chicken dumping”.
At first, the public shared their rage and seemed ready to be worked up by the media into passionate defence of the little guy against rapacious giants such as Lotte. Then they smelt the chicken, realised they could feed their families for roughly the price of a bus ticket and joined the monstrous queues at branches of Lotte.
The controversy fed into South Korea's unease over how it should continue sculpting its economy now that it is up there among the largest in the world and an attractive model for emerging nations.
[More]
So, what do we do? I wish there was an answer that offered real value. After all, I’m a business executive who runs a health plan providing benefits to thousands of employers. I’m also a taxpayer who supports government programs. Unfortunately, there are no such assurances, but there are steps we can take.It will be impossible to avoid the hard choices rushing toward us of how much health care is given to each person. Given the enormous and certainly advanced health care industry here in the US, the answer has always been "whatever it takes". But just like we are finding out the pledge to "pay any price" is an unsustainable burden when applied too loosely to every foreign policy objective, the hard truth is that we can provide more services than we can afford in an ultimately futile attempt to promote an open-ended lifespan or make right every medical problem.
Best Course
As a society, we need to be honest about treatment limitations. Patients should be well informed about what the industry knows and doesn’t know. There should be candor about the likelihood that care will make them worse instead of better. Patients should be empowered to be the treatment decision makers.
In recognition of the uncertainty patients face, we need to compassionately acknowledge their pain and fear. We need to counsel that aggressive intervention isn’t always the best course of action.
I share these conclusions not to suggest dissatisfaction; Linde and I are grateful for her care. Her clinicians included the country’s most respected doctors who did what they were trained to do -- aggressively seek a cure.
Rather, these observations are offered to challenge the U.S. health-care industry to be more explicit about medical treatment being as much an art as a science and to provide emotional and spiritual support to improve patient and caregiver experience.
Course of Disease
There may be an economic benefit to this. As patients learn more about the limits of medicine, some may choose less intensive and costly care. As a nation, our health-care spending increases as patients near the end of life. [More]
A World Bank study released in September tallied farmland deals covering at least 110 million acres — the size of California and West Virginia combined — announced during the first 11 months of 2009 alone. More than 70 percent of those deals were for land in Africa, with Sudan, Mozambique and Ethiopia among those nations transferring millions of acres to investors.While we are fixated on Asia the real frontier could be the dark continent. Mostly because we are so poor at geography as an inward-looking profession, we miss how big a deal developing Africa could be. Maybe this map will help.
Before 2008, the global average for such deals was less than 10 million acres per year, the report said. But the food crisis that spring, which set off riots in at least a dozen countries, prompted the spree. The prospect of future scarcity attracted both wealthy governments lacking the arable land needed to feed their own people and hedge funds drawn to a dwindling commodity.
“You see interest in land acquisition continuing at a very high level,” said Klaus Deininger, the World Bank economist who wrote the report, taking many figures from a Web site run by Grain, an advocacy organization, because governments would not reveal the agreements. “Clearly, this is not over.” [More]
If you're looking for a description of the Ryan/Rivlin Medicare reforms that have gained so many admirers on the right, Matt Yglesias has a good write-up of the idea. But I'd add another way of explaining the proposal: The Ryan-Rivlin plan basically turns Medicare into Obamacare. And in that context, Republicans love the idea behind ObamaCare and think it'll save lots of money.In getting down to real numbers, Ryan may be discovering what Obama did about what is possible, rather than just broadcast sweeping idealistic goals. And one thing that is looking more and more useful, even as it faces judicial challenges, is requiring universal coverage. Consider what is happening with "Romneycare".
Under the Ryan-Rivlin plan, the current Medicare program is completely dissolved and replaced by a new Medicare program that "would provide a payment – based on what the average annual per-capita expenditure is in 2021 – to purchase health insurance." You'd get the health insurance from a "Medicare Exchange", and "health plans which choose to participate in the Medicare Exchange must agree to offer insurance to all Medicare beneficiaries, thereby preventing cherry picking and ensuring that Medicare’s sickest and highest cost beneficiaries receive coverage."
Sound familiar? [More]
So rather than sit around and wonder about a world without an individual mandate, let's talk about a world that has one. We don't have to go into hypotheticals to get there. We just have to go to Massachusetts.Even if the courts rule the mandate unconstitutional, I have a hard time seeing legislators snatch long-awaited coverage access from children in college (or unemployed) now covered by parents, or the growing number of recission victims, or folks whose state program for high-risk are full. Those numbers are expanding, and without requiring coverage, insurers will be pounding on Congress for relief.
In 2006, then-governor Mitt Romney signed a major health-care reform bill into law. "An achievement like this comes around once in a generation," he said. "Today, Massachusetts is leading the way with health insurance for everyone, without a government takeover and without raising taxes."
...
Given that the plan was enacted anyway, it's time to check in on how Massachusetts is doing. And the answer, basically, is pretty well. This week, the state's health and human services agency released the results of a new, independent survey examining coverage in Massachusetts. More than 98 percent - 98 percent! - of the state's residents now have health insurance, as do more than 99 percent of the state's children.
Remarkably, those numbers have gotten better in recent years, with the number of uninsured residents in the state falling to 1.9 percent in 2010 from 2.6 percent in 2008. That's very unusual. Normally, the ranks of the uninsured swell during recessions as people lose their jobs and states cut back on public programs to balance their budgets. Nationally, the number of Americans who are uninsured rose to 16.76 percent in 2010 from 14.8 percent in 2008, according to Gallup.
That Massachusetts's reforms have survived, and even prospered, in this economic environment has left the law's architects feeling vindicated. "The goal of the law was covering people," says Jonathan Gruber, an MIT health economist who worked on the legislation, "and it couldn't have gone better."[More]
5. Temporary higher deductibles for late sign ups – If an individual signs up for insurance after previously being uninsured, the company could be given the right to charge them a dramatically higher deductible for the first five months they are insured. This also helps eliminate the finical incentive to wait to get insurance until you get sick.I suspect that while repeal will be at least attempted even Republicans are counting on the Senate to stop it. The real work will be folks like Ryan and Rivlin who will smash this vehicle into shape.
6. Multi-year waiver – This is an idea put forward by Paul Starr that should eliminate Hudson’s constitutional objections. If the individual doesn’t want to pay the mandate penalty, they wouldn’t be forced to as long as they sign away their right to guaranteed issue, community ratings, and subsidies for a set period of time, like five years. After that time, the individual can get the regulatory benefits or choose to sign another multi-year waiver.
7. Open enrollment period – You can have one month open enrollment period each year. People who sign up that month get the basic rate. The insurance companies would be allowed to charge a set higher premium for people who sign up at any other point for the rest of that year. [More]
China has agreed to lift its extensive limits on the import of U.S. beef, lower restrictions on imports of wind turbines and telecommunications equipment, and take an array of other steps that U.S. officials say could lead to a substantial boost in U.S. exports to the world's second-largest economy. [More]This is a big deal for corn farmers as well. Not only could this support beef prices high enough to keep from destroying demand, as the yuan slowly but inexorably increases in value, the beef price could anchor the whole protein complex.
But yields that rise because the government's solvency is in question are very different from yields that rise because the private sector is competing for the private savings government has lately gobbled up. Which kind of rise in yields are we seeing now?If the economy is stronger than we suspect right now, and with the stimulus effect of the deal, this analysis could prove very timely.
It's not possible to say with complete certainty, and there may be aspects of both. But I would make one observation on this score. Over the whole of the past week, yields have been generally flat, even as it became clear that a deal on the Bush tax cuts was likely. And most of the budget impact in the deal is attributable to the tax extensions that were expected to pass. But the "new stimulus" in the deal—the payroll tax cut and the accelerated depreciation for businesses—was close to a policy surprise. These measures were actually unanticipated by markets. And so it stands to reason that most of the jump in yields is likely due to their inclusion.
What's important to note is that these aspects account for basically all of the new stimulus in the bill, but they only add modestly to the budget impact of the package. The forecasters revising up their growth expectations probably already had extension of most of the Bush tax cuts in their models, meaning that the upward bump is attributable to the surprise measures. And so it seems reasonable to conclude that most of the rise in Treasury yields is due to improved expectations for the American economy.
Of course, the better the economy looks moving forward, the greater will be the rise in yields. But this is precisely why I've argued that the surest way to get Congress to tackle deficits is to generate a strong recovery. Bond yields will force action, and bond yields respond most strongly to rising growth expectations. [More]
Google eBookstore addresses a complaint many have lodged against Amazon's Kindle: The books bought for it can only be read using Kindle software. This would be a major problem if there weren't Kindle apps for iOS and Droid devices, as well as for Windows and Mac computers; I don't own a Kindle, but I own several Kindle e-books and read them on my iPhone and iPad. What I can't do with my Kindle books is read them on a friend's iPad during a visit, or on a shared work computer if I want, say, to point out an interesting passage to a colleague. Google's e-books will be accessible via a user's Google account from any device that runs a Web browser (that includes tablet computers and smart phones), as well as via apps designed to run on various mobile platforms. I can also read my Google e-books on a Nook or Sony Reader, should I ever decide to buy one, something I can't do with Kindle titles. But remember: You also can't use your Kindle to read any e-books you buy from Google.I tell ya - for gadgeteers, life just keeps getting better.
So let's review: Google eBooks is a big improvement on the Kindle (still the most popular dedicated e-reader device) if you anticipate wanting to switch from one dedicated e-reader device to another, but if you're switching to an iPad, then it's a wash. On the other hand, if you're a student at the library one afternoon without your Kindle or iPad and you want to be able to access a Kindle book you bought for a class, you're out of luck. (If that last example strikes you as an exotic scenario, bear in mind that while Kindles are the most popular dedicated e-reader devices, the majority of people who read e-books still read them on a laptop or desktop computer, and many of these readers are students.) Your Google e-books, however, can be read on the library's computer using a Web browser. But hold on a minute! -- Amazon just announced that it will be introducing its own Web-browser-based Kindle reader in a month or so.
In other words, figuring out which e-book system will best meet your needs is really, really confusing. [More]
Here’s the more detailed testimony of CBO director Douglas Elmendorf. He calculates that reducing employers’ payroll taxes would increase GDP by between 40 cents and $1.20 for every dollar spent, while reducing employees’ payroll taxes would boost GDP by somewhere between 30 cents and 90 cents. On the jobs front, every million dollars spent on the employer side would create between 5 and 13 jobs in the first year; if the cuts were applied to employees, the range is between 3 and 9 jobs.I'm going with Felix on this one, and I also agree it was the most viable political choice. Regardless, if you look at the analysis of the stimulative effects of the whole proposal it looks like Obama may have just negotiated his reelection. And as several commenters have pointed out, it pretty well exposes the pseudo-concern of Republicans over the deficit.
Elmendorf writes that reducing employees’ payroll taxes “would have effects similar to those of reducing other taxes for those workers”; he doesn’t go into any detail about the behavioral economics of quietly reducing withholding versus sending out splashy rebate checks.
So, let me apologize to Greg Mankiw for calling him disingenuous yesterday: there’s clearly much more of a consensus here than I thought.
I’m not yet persuaded that employer-side tax cuts are better: I still think that for three main reasons, employee-side cuts make sense right now. The experience of the last cuts shows how invisible they are and therefore how likely they are to be spent; the size of corporate cash piles shows how unwilling companies are to reinvest extra temporary cashflow; and in general employers are richer than employees, so giving the tax cut to them seems regressive. But it’s clearly credible and intellectually honest to believe otherwise.
That said, I love Elmendorf’s idea of cutting employer-side payroll taxes only for those employers who increase their payrolls. That policy would surely have a very large bang-to-buck ratio. [More]
Given enough time, however, it will make economic sense to pick berries with robots rather than humans. The history of industrial agriculture teaches us that if a worker can be replaced by a machine, they will be. Yet despite the obvious disruptions this causes in employment, I think the eventual move towards robotic agriculture is a vital one. We are still fighting global hunger, and anything that can increase our productivity and efficiency in agriculture is likely a valuable step towards solving that grand challenge. The strawberry robot is a relatively small development, but it’s a good one. [More]
The deal has something to annoy everyone -- but also something for everyone. You're a Democrat? The tax cuts for the rich are extended, and the estate tax deal exempts inheritances up to $5 million while cutting the rate heirs pay to 35 percent. But that's why the Republicans like it. You're a Republican? The tax cuts are only extended for two years, and they're paired with 13 months of unemployment insurance, an extension of a variety of tax credits passed in the stimulus, and a new payroll tax cut -- all of them deficit-financed. But that's why the Democrats like it. You're a deficit hawk? The deal adds more than $700 billion to the deficit. And, let's be honest, you got nothing in return.The surprise for me is the payroll tax cut. This tax is the most regressive and hence, the most powerful stimulus tool available. It puts money directly into hands that spend 110% of their income.
It's important, however, to keep the actual policy in perspective. If you're a Republican who argues that long-term uncertainty about tax rates and the deficit are the main problem for the economy, this deal only eases tax uncertainty for two years and it makes the deficit worse. If you're a Democrat looking for more stimulus, this isn't nearly enough, and most of what's there is just an extension of programs that are currently in place. In reality, the politics of the compromise might mean more to the market than the specifics of the policy: The two parties actually have the ability to sit in a room and come to a compromise. That has implications far beyond yesterday's tax cut deal. It suggests that we may see more get done in the next two years than many of us thought, and there'll be more capacity to respond to crises than some feared. [More]
Under the plan, the Social Security payroll tax on individual wages would be lowered to 4.2% in 2011, from the current 6.2% rate.For farmers the SE tax is our Voldemort. No matter how much shiny steel we buy, it won't go away (via Sec. 179 magic), unlike income taxes. Most of us will happily take the $2100, I'll bet.
A worker earning $70,000 would pocket $1,400 as a result of the tax cut. Social Security taxes apply only to the first $106,800 in wages, so the benefit for high earners tops out around $2,100. The employer share of Social Security taxes would not be affected.
Obama administration officials say there would be no effect on Social Security benefits or long-term solvency. But the government would have to borrow to make up the lost revenue to the Social Security trust fund. The plan's detractors say it would undermine the program and likely become permanent. [More]
On December 6, 2010, President Obama announced that he reached a deal with Republicans to extend the federal estate tax and other tax cuts.Plus capital gains stay at 15%! So there should be great rejoicing in farm country, no? (This is me holding my breath...)
Under the deal, the estate tax exemption would be up to $5 million for individuals and $10 million for couples. The tax rate would be 35%. The exemption and rate would be in effect for two years. [More]
Again, I don’t doubt that there are individual investors fooled by news stories of massive monetary base increases and huge deficits, who think that high inflation is just around the corner. Not many average investors know that the same thing happened 15 years earlier in Japan, with no inflationary consequences. But I believe the best point estimate of the market’s consensus inflation forecast comes from the CPI futures market, as well as the TIPS spreads in the T-bond market. [More]As he explains in the cited post, demand from India and China, along with decreasing production means the global gold market is not dominated by inflation fears here in the US, but by much larger forces. In fact, my suspicion is as newly, albeit moderately, affluent citizens in developing economies look for somewhere to stash extra moola, they stay pretty close to tangible wealth, not unlike our own forebears who bit on dollars to see if they were real gold. It will be a while before they trust arcane investments like say REITs or swaps.
Benchmark oil settled up $1.19 at $89.19 a barrel on the New York Mercantile Exchange. It's the second time in less than a month that oil has reached the level where it was in the fall of 2008. There are widespread expectations that the price will hit $90 a barrel by year's end and head toward $100 a barrel by next spring when traders begin looking ahead to the summer driving season. [More]Still, I think we have passed a tipping point on oil being able to dominate our economy. Higher prices would not have the effect we have previously endured as Americans are getting better at curtailing use on their own. And it's not like we have full employment with people being paid to commute vast distances just to get the bodies.
First President Obama was defeated at home. Then he toured Asia and was defeated abroad.His inability to secure a trade agreement with South Korea represents a major setback for a White House that had staked a lot on the successful completion of the accord. It also raises serious questions about the president’s comprehension of the challenges to achieve trade agreements and the importance of America’s economic engagement with the world.On free trade, the president has over-promised and under-delivered....
The pacts with Colombia and Panama remain important, but they’re also dwarfed by the deal with South Korea, our seventh-largest trading partner. A successful agreement with Korea would become America’s biggest trade accord since NAFTA--a pact finalized by Bill Clinton, Obama’s Democratic predecessor--and mark a significant step toward the goal of doubling exports.Obama said he would get it done. In June, he gave himself the deadline of last week’s G-20 summit in Seoul. This seemed like a reasonable date because it pushed the issue beyond the midterm elections, safeguarding it from demagoguery.On the Sunday after the elections, Obama contributed an op-ed to the New York Times. He offered a powerful argument for free trade."The great challenge of our time is to make sure that America is ready to compete for jobs and industries of the future." he wrote. "It can be tempting, in times of economic difficulty, to turn inward, away from trade and commerce with other nations. But in our interconnected world, that is not a path to growth, and this is not a path to jobs."Obama also singled out the specific opportunity with South Korea. "President Lee Myung-bak and I will work to complete a trade pact that could be worth tens of billions of dollars in increased exports and thousands of jobs for American workers. Other nations like Canada and members of the European Union are pursuing trade pacts with South Korea, and American businesses are losing opportunities to sell their products in this growing market. We used to be the top exporter to South Korea; now we are in fourth place and have seen our share of Korea’s imports drop in half over the last decade."What happened to the man who wrote these words? Well, he didn’t seal the deal. The president’s self-imposed deadline has come and gone and he has done nothing tangible to increase trade –just more words.This is what kids call an "epic fail."Right after the elections, Obama confessed to a "shellacking" by voters. His failure in Korea is a variation on the same theme--a shellacking suffered at the hands of Big Labor, which rigidly opposes just about any trade policy that doesn’t involve economic isolationism. [More]
According to what is known so far, the South Korean side has made big concessions in the automotive sector, agreeing to postpone for five years the abolition of the 2.5 percent US tax on South Korean auto imports and at the same giving the green light for more US made cars to be exempted its safety standards. Now, any automaker can bring into South Korea 25,000 vehicles, compared to 6,500.
The American automotive industry sees the FTA as a major success, with GM being among the first to express its satisfaction. In a statement released today, the car maker says it now has time to “assess whether Korea's market has opened as negotiated before reducing its tariffs.” [More]
