World power swings back to America
The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.
Assumptions that the Great Republic must inevitably spiral into economic and strategic decline - so like the chatter of the late 1980s, when Japan was in vogue - will seem wildly off the mark by then.
Telegraph readers already know about the "shale gas revolution" that has turned America into the world’s number one producer of natural gas, ahead of Russia.
Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.
"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d)," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.
Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.
The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.
"The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players," said Mr Blanch.
Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.
"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.
A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.
"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.
The gap in "productivity-adjusted wages" will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.
The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.
Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.
As Philadelphia Fed chief Sandra Pianalto said last week, US manufacturing is "very competitive" at the current dollar exchange rate. Whether intended or not, the Fed's zero rates and $2.3 trillion printing blitz have brought matters to an abrupt head for China.
Fed actions confronted Beijing with a Morton's Fork of ugly choices: revalue the yuan, or hang onto the mercantilist dollar peg and import a US monetary policy that is far too loose for a red-hot economy at the top of the cycle. Either choice erodes China's wage advantage. The Communist Party chose inflation.
Foreign exchange effects are subtle. They take a long to time play out as old plant slowly runs down, and fresh investment goes elsewhere. Yet you can see the damage to Europe from an over-strong euro in foreign direct investment (FDI) data.
Flows into the EU collapsed by 63p from 2007 to 2010 (UNCTAD data), and fell by 77pc in Italy. Flows into the US rose by 5pc.
Volkswagen is investing $4bn in America, led by its Chattanooga Passat plant. Korea's Samsung has begun a $20bn US investment blitz. Meanwhile, Intel, GM, and Caterpillar and other US firms are opting to stay at home rather than invest abroad.
Europe has only itself to blame for the current “hollowing out” of its industrial base. It craved its own reserve currency, without understanding how costly this “exorbitant burden” might prove to be.
China and the rising reserve powers have rotated a large chunk of their $10 trillion stash into EMU bonds to reduce their dollar weighting. The result is a euro too strong for half of EMU.
The European Central Bank has since made matters worse (for Italy, Spain, Portugal, and France) by keeping rates above those of the US, UK, and Japan. That has been a deliberate policy choice. It let real M1 deposits in Italy contract at a 7pc annual rate over the summer. May it live with the consequences.
The trade-weighted dollar has been sliding for a decade, falling 37pc since 2001. This roughly replicates the post-Plaza slide in the late 1980s, which was followed - with a lag - by 3pc of GDP shrinkage in the current account deficit. The US had a surplus by 1991.
Charles Dumas and Diana Choyleva from Lombard Street Research argue that this may happen again in their new book "The American Phoenix".
The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.
Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.
It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.
Europe's EMU soap opera has shown why it matters that America is a genuine nation, forged by shared language and the ancestral chords of memory over two centuries, with institutions that ultimately work and a real central bank able to back-stop the system.
The 21st Century may be American after all, just like the last.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8844646/World-power-swings-back-to-America.html
Kids Bible classes are compared to the Klan (it was in another quote in a simular article), come on, what an idiot . Hope they sue the school and get the idiot fired, if he is that dumb he should be running a school, but what do you expect out of public school. This policy will probably be changed before i post this.
Christian Club Sues School Over Media Restriction
An Oklahoma school district is facing a lawsuit for allegedly forbidding organizers of a Christian club from promoting events on campus.
“This is a simple matter of a school district targeting a Christian organization,” said Matt Sharp, an attorney representing the “Kids for Christ,” a community-led Christian group suing the Owasso Public Schools.
Sharp, an attorney with the Alliance Defense Fund, said the school district told the club it could no longer publicize its events – including discouraging organizers from spreading the word in the community and local media.
“They have a specific policy on the books that targets religious expression by community organizations,” he told Fox News.
School officials confirmed Monday afternoon they had received the lawsuit – but said they have not had time to review the contents.
Sharp said the club meetings are held at the local elementary school before school and are open to students in kindergarten through the fifth grade. Other groups, including the Boy Scouts and YMCA, are allowed to promote activities at the school, but the Christian group is not.
“The superintendent said they were religious and couldn’t have the same access as other clubs,” he said.
The club was organized last year, and Sharp said the “Kids for Christ” initially was given permission to promote activities through flyers and announcements. But that changed with the new semester.
Their ultimate goal with the lawsuit?
“We want equal access,” he said.
http://www.foxnews.com/us/2011/10/24/christian-club-sues-school-over-publicity-restriction/?test=latestnews
Why are they floating this again. They only have the right to mint coin, but it will not take off, maybe if it were $5, $10 and $50 dollar coins, but a dollar is a waste of time. As long as they are either backed in gold or silver and
Replacing $1 bill with coin could save $5.6 billion
A proposal to phase out the $1 bill and replace it with a $1 coin could be gaining currency as the "supercommittee" looks to find ways to save the government money.
Lobbying interests on both sides are ramping up their efforts in the expectation that Congress could decide the issue after more than 25 years of debate. Mining interests, vending companies and mass transit agencies support the coin. Paper and ink producers and some small retailers oppose it.
"You have this gigantic deficit. You have this supercommittee, and Congress is looking for savings anywhere they can," says former representative Jim Kolbe, R-Ariz., a longtime coin advocate.
The move to a coin would cost money in the short term, but eventually save money because paper currency lasts about 42 months — while coins theoretically last forever. Moving to a coin could save $5.6 billion over 30 years, according to the Government Accountability Office.
"You're not going to find that kind of savings that involves no tax increase and no cut to anybody's program," Kolbe says.
The 12-member Joint Committee on Deficit Reduction, created under the debt-limit deal in August, has held few public hearings. Its members are tight-lipped about what proposals are on the table, even as they approach a Nov. 23 deadline. But the savings from a $1 coin are miniscule compared to the committee's $1.5 trillion goal.
When Kolbe first started introducing $1 coin proposals in Congress in 1986, it was a way to help Arizona mining interests, he admits. Those proposals never got out of committee. Now, with most other Western economies replacing their lowest paper bill with coins, the time is right to modernize the currency system, he says.
Kolbe is honorary chairman of the Dollar Coin Alliance. The group has enough momentum that just this month supporters of the paper dollar formed a rival group, Americans for George. They're worried a $1 coin provision could sneak into the supercommittee's proposals.
"We've never been through a situation with the supercommittee before. It was always an issue that was looked at on its face as an individual issue," says Tom Ferguson of Americans for George, the former head of the Bureau of Engraving & Printing.
"A nation's currency is more than just paper. It is iconic. It is emblematic. It signifies the economy," he says.
The armored-car industry also opposes the coin. "It's primarily based on weight," Larry Sabbath of the National Armored Car Association says. "If you think of all our trucks carrying around that weight, that's obviously higher fuel costs for us, and more breakdown of trucks."
There's at least one supercommittee member on each side: Co-chairman Jeb Hensarling, a Republican congressman from Texas, is a sponsor of the $1 coin proposal. Sen. John Kerry, D-Mass., a committee member, has introduced a competing bill to stop production of the dollar coin. Paper for U.S. currency is made by Crane & Co. of a Massachusetts.
Hensarling would eliminate the Susan B. Anthony $1 coin, whose size and color is often mistaken for the quarter, and gets rid of the $1 bill in four years — or earlier if $600 million in $1 coins are circulating.
That's important because just minting the coins is no guarantee people will use them. About $1.1 billion in $1 coins sit unused in vaults, the GAO says.
http://www.usatoday.com/news/washington/story/2011-10-24/dollar-enters-deficit-debate/50898164/1
Debate of the absurd, the unit weighs what it weighs, to protect the people inside, what a farce, as soon as they go to a lighter vehicle, someone will get killed and the they will be back where they started, just billions of dollars poorer. I bet if you look someones cousin or uncle is making money from this. And why are they having a UK based company do it? I guess Walmart has won and buy American is dead, even in the Army.
Army looks for more fuel-efficient Humvee replacement
excerpt
Specifically, the Army is working with Ricardo, an engineering firm based in the U.K. but with U.S. offices, on building improved new troop carriers. The goal is "to improve military vehicle technology, reduce fuel consumption on the battlefield and reduce the nation's dependence on oil," according to Ricardo's website.
Beating the fuel economy of a Humvee shouldn't be too hard: the M1114 Humvee gets in the neighborhood of 4 miles per gallon. Of course, 70% better than that is not very competitive — it's about 7 mpg — for an average consumer truck, much less a car. Another demonstrator is also being developed that runs on a hybrid-electric drive. Testing for that version is scheduled for later this year.
http://content.usatoday.com/communities/driveon/post/2011/10/army-looks-for-more-fuel-efficient-humvee-replacement/1
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