Data Centers are information factories that run the digital world. They are utilized by just about every segment of the economy including the financial sector, the industrial sector, education, technology and even the web hosting providers. Outside of the US government, companies like Google, Yahoo! and MSN control and maintain some of the most sophisticated state-of-art data centers in the world. Unfortunately, data centers are energy intensive facilities that require tens of MegaWatts of energy to operate. These data centers house hundreds of server racks and networking equipment that are designed to consume more than 25KW of power per hour. Surging demand for data storage is forcing data centers to upgrade to faster and more densely packed server systems. This high density computing environment becomes a great challenge for the cooling system. A typical facility can support approximately 1MW, but instead they are forced to handle power requirement that can be > 20 MW. Nationally 1.5% of US Electricity consumption was attributed to data center use in 2006. That power usage number is expected to double by 2011. Because of the significant data center building boom in the past 5 years, power and cooling constraints in existing facilities are strained and cannot keep up. As a result, the rising cost of ownership is getting out of control. Cost of electricity for computing and supporting infrastructure now surpasses capital cost of the IT equipment.
The US Department of Energy has established power reduction goals in conjunction with Green Grid partnership. By 2011, the goal is to achieve a 25% energy savings overall in U.S. data center. This equates to approximately 10.7 billion kWh or equivalent to electricity consumed by 1 million typical U.S. households. By reducing power usage, we are able to contain carbon emissions and reduce greenhouse gas emissions by 6.5 million metrics tons of CO2 per year. This potential energy savings between 20-40% are realizable and with more aggressive strategies, we can achieve better than 50% savings in energy usage.
The catch is that companies must be willing to fork out the money today to perform the retrofits. Because paybacks are short (i.e. between 1 to 3 years) companies can regain all of their investments while maintaining the potential to extend life and capacity of existing data center infrastructure. But this also could allow for more IT equip – raising total energy use. Thus, innovative power reduction techniques must be utilized in order to keep energy consumption in-check. We all need to chip in and save a little energy everyday.
________________________________
midphase review midphase coupon midphase coupon midphase review midphase coupon midphase coupon midphase coupon midPhase coupon midPhase coupon codes midphase review midPhase coupon codes midphase coupon
Friday, August 28, 2009
Friday, August 21, 2009
U.S. Dollar is on Shaky Ground
In recent days, several well-noted investment authorities called the public’s attention to the future Dollar demise. Warren Buffet, perhaps the most famous investment guru of our time, chose The New York Times to express his worries.
In an op-ed piece called “The Greenback Effect,” Buffett concentrated on the consequences of our unprecedented levels of debt and loose monetary policy. His opinion should not surprise you: he thinks that these policy actions, while necessary, will have destructive inflationary side effects down the road.
Fiscally, Buffett says, we are in uncharted territory. Federal debt levels are going up, and, while we may not have reached the tipping point yet, sooner or later the ballooning national debt is going to call into question our country’s ability to honor all this debt. This will inevitably impact the value of the dollar.
As everything he does, Buffett makes understanding the numbers seem easy: Even if other sovereign nations buy $400 billion worth of Treasuries, and Americans saved $500 billion and invest them in Treasuries, the Treasury Department would still need another $900 billion to finance the rest of the $1.8 trillion it’s issuing this year. The flood of dollar supply will threaten to erode its value. Our beloved Dollar is on shaky ground.
Another argument was brought up by PIMCO, the manager of the world’s largest fixed income fund. The declining value of the dollar, they argue, will be caused by the loss of its status as the world currency. Our readers know that we have been concerned about this possibility for a while. China, joined by other countries, has been calling for a creation of new global currency to serve as a reserve currency.
These worries can be confirmed by the way gold, the ultimate dollar hedge, has been acting. Despite the dramatic decline in end-use demand (for jewelry, electronics and the like), which in the last quarter fell to the lowest level in six years, gold prices were relatively stable. One of the reasons: a dramatic increase in investment demand. Investors bought more than 222 tons of gold in the period, a 46 percent increase year-over-year, as they opted for safety.
Further helping the case for gold is the fact that central banks, traditionally the largest suppliers of gold, are now engaged in less selling. In the first six months of the year, the banks have only sold 39 tons of gold, the lowest amount since 1944, and about a 73 percent reduction compared to the same period last year. For the first time since at least 2000, according to the World Gold Council, central banks were net gold buyers. In a recent renewal of a Central Bank Gold Agreement signed by 18 central banks, the annual gold sales limit was set at 400 tons, a 20 percent reduction from the previous limit. Going forward, we can expect to see a reduced supply on the gold market from the so-called official sector, giving the metal additional support.
Oil rallied sharply yesterday as the Department of Energy reported that U.S. oil inventories fell by more than 8 million barrels during last week. It was the biggest weekly drop in more than a year. Imports now stand at the lowest level since last September.
U.S. oil demand has also improved, according to the American Petroleum Institute. July oil product deliveries fell 3 percent compared to year-ago levels, slowing the rate of decline by half compared with the first half of the year. July crude oil production for the U.S. dropped for the first time since October as pipeline maintenance slowed production in Alaska. The average utilization rate at U.S. refineries, at 84 percent of capacity, in July was at the second highest level since November, and remained nearly 20 percentage points above the average utilization rate across all U.S. manufacturing industries. Overall, the action in oil prices is just a reminder of how responsive they are to even small signs of a potential demand increase.
________________________________
market club trading software marketclub trading software market club market club trading software marketclub trading software free ino tv marketclub ino tv
In an op-ed piece called “The Greenback Effect,” Buffett concentrated on the consequences of our unprecedented levels of debt and loose monetary policy. His opinion should not surprise you: he thinks that these policy actions, while necessary, will have destructive inflationary side effects down the road.
Fiscally, Buffett says, we are in uncharted territory. Federal debt levels are going up, and, while we may not have reached the tipping point yet, sooner or later the ballooning national debt is going to call into question our country’s ability to honor all this debt. This will inevitably impact the value of the dollar.
As everything he does, Buffett makes understanding the numbers seem easy: Even if other sovereign nations buy $400 billion worth of Treasuries, and Americans saved $500 billion and invest them in Treasuries, the Treasury Department would still need another $900 billion to finance the rest of the $1.8 trillion it’s issuing this year. The flood of dollar supply will threaten to erode its value. Our beloved Dollar is on shaky ground.
Another argument was brought up by PIMCO, the manager of the world’s largest fixed income fund. The declining value of the dollar, they argue, will be caused by the loss of its status as the world currency. Our readers know that we have been concerned about this possibility for a while. China, joined by other countries, has been calling for a creation of new global currency to serve as a reserve currency.
These worries can be confirmed by the way gold, the ultimate dollar hedge, has been acting. Despite the dramatic decline in end-use demand (for jewelry, electronics and the like), which in the last quarter fell to the lowest level in six years, gold prices were relatively stable. One of the reasons: a dramatic increase in investment demand. Investors bought more than 222 tons of gold in the period, a 46 percent increase year-over-year, as they opted for safety.
Further helping the case for gold is the fact that central banks, traditionally the largest suppliers of gold, are now engaged in less selling. In the first six months of the year, the banks have only sold 39 tons of gold, the lowest amount since 1944, and about a 73 percent reduction compared to the same period last year. For the first time since at least 2000, according to the World Gold Council, central banks were net gold buyers. In a recent renewal of a Central Bank Gold Agreement signed by 18 central banks, the annual gold sales limit was set at 400 tons, a 20 percent reduction from the previous limit. Going forward, we can expect to see a reduced supply on the gold market from the so-called official sector, giving the metal additional support.
Oil rallied sharply yesterday as the Department of Energy reported that U.S. oil inventories fell by more than 8 million barrels during last week. It was the biggest weekly drop in more than a year. Imports now stand at the lowest level since last September.
U.S. oil demand has also improved, according to the American Petroleum Institute. July oil product deliveries fell 3 percent compared to year-ago levels, slowing the rate of decline by half compared with the first half of the year. July crude oil production for the U.S. dropped for the first time since October as pipeline maintenance slowed production in Alaska. The average utilization rate at U.S. refineries, at 84 percent of capacity, in July was at the second highest level since November, and remained nearly 20 percentage points above the average utilization rate across all U.S. manufacturing industries. Overall, the action in oil prices is just a reminder of how responsive they are to even small signs of a potential demand increase.
________________________________
market club trading software marketclub trading software market club market club trading software marketclub trading software free ino tv marketclub ino tv
Wednesday, August 19, 2009
Stocks Confound Expectations
Stocks are supposed to go down, but they don't want to just yet.
World stock markets declined sharply Monday. The trouble started in Shanghai, where the benchmark index fell 5.8 percent, its biggest loss since November. The Dow Jones industrial average's 2 percent decline that day actually understated the weakness here in the U.S.
The widely stated reason for the tumble was renewed worries about the strength of the global economic recovery. But there doesn't have to be an official reason. In my view, it was simply a matter of overdue profit taking.
After all, news on the economy has actually been improving. And the profit taking lasted just one day. U.S. stocks have since made up for Monday's lost ground. At today's market close, the S&P 500 was actually slightly higher than its closing level last Friday.
My long-term view for both U.S. Treasury securities and the dollar is unfavorable. In both cases, it reflects concerns about the massive amount of debt in the U.S., exacerbated by the necessary but costly government programs to bail out the troubled economy and financial system. This makes our government debt securities and our currency relatively unattractive.
For Treasury issues, there are also worries about the large quantity of them held by foreign investors. It's generally in the interest of these investors to support their large Treasury stakes. But there are also signs that they want to diversify away from Treasury issues, and that they won't be as willing to buy as much as before even as new issuance will jump in order to fund our mounting debt.
But sometimes short-term trends run counter to the long-term ones.
China and Japan, the world's largest creditors to the U.S., bought longer-term Treasury notes and bonds at a record rate in June. It's also worth noting that demand for Treasury securities has risen from U.S. households, which have finally started to save more after years of spendthrift behavior.
China and Japan were heavy sellers of short-term T-bills in June. But total foreign net buying of Treasurys excluding Treasury bills hit $100.5 billion in June.
So while we continue to worry that the U.S. government's aggressive stimulus program will eventually fuel inflation, this is not yet a major concern for foreign buyers.
In June, yields on Treasury notes and bonds hit their highest levels for the year, with the 10-year yield briefly climbing above 4 percent. That yield has now fallen to below 3.5 percent amid strong buying. Yet investors supposedly are turning more bearish on Treasuries based on the belief that yields will rise (will lower prices) as the economy gradually improves
Meanwhile, the dollar benefited in 2008 as a safe haven amid a risk-averse, global flight to quality during the economic crisis. But as the world's investors regain a taste of risk, they tend to move out of dollars and into other vehicles that offer better profit potential, particularly in a recovering economic environment.
For the dollar, the direction is more clear: down. While demand for Treasury issues has remained relatively strong despite perceived economic improvement, that same factor is putting pressure on the greenback
The Dollar Index, which the Intercontinental Exchange (a publicly traded global electronic marketplace) uses to track the dollar against six major currencies, is now at its lowest level in almost a year. Stronger economic data tend to weaken the dollar as investors became more comfortable buying riskier, higher-yielding assets elsewhere.
A potential catalyst for a higher dollar would be if the Federal Reserve were to start raising short-term interest rates again. But that's not in the cards yet.
The big picture for the world's economy is this. First, many emerging-markets economies are doing well. Second, the economies of many more mature nations stabilized in the second quarter. The U.S., however, continues to lag, although growth is expected to return in the current quarter.
The Organization for Economic Cooperation and Development said this week that its 30 members, developed-market nations, collectively should start to grow sooner than previously expected. But the group's economic recovery will probably still be weak.
The OECD said its member countries stabilized in the second quarter, led by export growth in Germany and Japan. The OECD's report said that gross domestic product (GDP) of the OECD's major seven countries (Canada, France, Germany, Italy, the U.S., the U.K. and Japan) slipped 0.1 percent from the previous quarter between April and June after dropping 2.1 percent in the first quarter. The U.K. and Italy lagged the most behind, followed by the U.S. at a 0.3 percent drop.
The outlook from Europe, where the OECD is based, is much the same as it is here. For example, the International Chamber of Commerce there said that high unemployment rates and rising public debt in many countries bring concerns about a sustained recovery in the global economy.
________________________________
ipowerweb review powweb reviewlunarpages review anhosting coupon 1and1 godaddy coupons dot5hosting review aplusnet review
World stock markets declined sharply Monday. The trouble started in Shanghai, where the benchmark index fell 5.8 percent, its biggest loss since November. The Dow Jones industrial average's 2 percent decline that day actually understated the weakness here in the U.S.
The widely stated reason for the tumble was renewed worries about the strength of the global economic recovery. But there doesn't have to be an official reason. In my view, it was simply a matter of overdue profit taking.
After all, news on the economy has actually been improving. And the profit taking lasted just one day. U.S. stocks have since made up for Monday's lost ground. At today's market close, the S&P 500 was actually slightly higher than its closing level last Friday.
My long-term view for both U.S. Treasury securities and the dollar is unfavorable. In both cases, it reflects concerns about the massive amount of debt in the U.S., exacerbated by the necessary but costly government programs to bail out the troubled economy and financial system. This makes our government debt securities and our currency relatively unattractive.
For Treasury issues, there are also worries about the large quantity of them held by foreign investors. It's generally in the interest of these investors to support their large Treasury stakes. But there are also signs that they want to diversify away from Treasury issues, and that they won't be as willing to buy as much as before even as new issuance will jump in order to fund our mounting debt.
But sometimes short-term trends run counter to the long-term ones.
China and Japan, the world's largest creditors to the U.S., bought longer-term Treasury notes and bonds at a record rate in June. It's also worth noting that demand for Treasury securities has risen from U.S. households, which have finally started to save more after years of spendthrift behavior.
China and Japan were heavy sellers of short-term T-bills in June. But total foreign net buying of Treasurys excluding Treasury bills hit $100.5 billion in June.
So while we continue to worry that the U.S. government's aggressive stimulus program will eventually fuel inflation, this is not yet a major concern for foreign buyers.
In June, yields on Treasury notes and bonds hit their highest levels for the year, with the 10-year yield briefly climbing above 4 percent. That yield has now fallen to below 3.5 percent amid strong buying. Yet investors supposedly are turning more bearish on Treasuries based on the belief that yields will rise (will lower prices) as the economy gradually improves
Meanwhile, the dollar benefited in 2008 as a safe haven amid a risk-averse, global flight to quality during the economic crisis. But as the world's investors regain a taste of risk, they tend to move out of dollars and into other vehicles that offer better profit potential, particularly in a recovering economic environment.
For the dollar, the direction is more clear: down. While demand for Treasury issues has remained relatively strong despite perceived economic improvement, that same factor is putting pressure on the greenback
The Dollar Index, which the Intercontinental Exchange (a publicly traded global electronic marketplace) uses to track the dollar against six major currencies, is now at its lowest level in almost a year. Stronger economic data tend to weaken the dollar as investors became more comfortable buying riskier, higher-yielding assets elsewhere.
A potential catalyst for a higher dollar would be if the Federal Reserve were to start raising short-term interest rates again. But that's not in the cards yet.
The big picture for the world's economy is this. First, many emerging-markets economies are doing well. Second, the economies of many more mature nations stabilized in the second quarter. The U.S., however, continues to lag, although growth is expected to return in the current quarter.
The Organization for Economic Cooperation and Development said this week that its 30 members, developed-market nations, collectively should start to grow sooner than previously expected. But the group's economic recovery will probably still be weak.
The OECD said its member countries stabilized in the second quarter, led by export growth in Germany and Japan. The OECD's report said that gross domestic product (GDP) of the OECD's major seven countries (Canada, France, Germany, Italy, the U.S., the U.K. and Japan) slipped 0.1 percent from the previous quarter between April and June after dropping 2.1 percent in the first quarter. The U.K. and Italy lagged the most behind, followed by the U.S. at a 0.3 percent drop.
The outlook from Europe, where the OECD is based, is much the same as it is here. For example, the International Chamber of Commerce there said that high unemployment rates and rising public debt in many countries bring concerns about a sustained recovery in the global economy.
________________________________
ipowerweb review powweb reviewlunarpages review anhosting coupon 1and1 godaddy coupons dot5hosting review aplusnet review
The Stock Market is Overdue For a Correction
The consumer continues to be under duress. Job losses continue to mount; while weekly readings are down from their highs, initial unemployment claims are still running above expectations. For those already out of work, they face only a finite amount of unemployment benefits. Housing prices continue to fall, again, at a slower pace, but the effect is still the same as Americans can no longer draw on their home values for spending or count on the ever-rising house price for future wealth increases. Credit lines are being drawn in by card issuers and consumers face high fees for their outstanding debt balances. Without question, these factors have had their effect on consumer spending (and saving). Retail sales continue to contract more than economists have expected. The savings rate, at 4.6 percent, remains close to the 13-year high it reached in May.
The tough consumer environment clearly is having an effect on retailers, who have largely struggled through this deep recession. At the expense of profits, most have cut prices to keep up sales volumes; job cuts and inventory reductions have helped support profit margins, but there is no getting around the dismal environment. On the other hand, some retailers have held their own. One in particular has been Wal-Mart (WMT). The world’s largest retailer reported second-quarter earnings last week that not only beat analysts’ expectations, but also showed growth versus the year earlier period.
For the first time in five weeks, the market posted a weekly decline last week, changing the underlying mood from overwhelmingly bullish to more cautious. Market participants concentrated on retail sales numbers and on the decline in consumer confidence as measured by Reuters and the University of Michigan index of consumer sentiment.
While the auto sector has received a boost from cash-for-clunkers-related sales, the overall picture continues to reflect a consumer who’s stretched beyond his means. Foreclosure filings rose to a record, and retail sales declined the most since March. Americans are increasingly seeking bankruptcy protection: 35 percent more individuals or households file for bankruptcy today than a year ago, and the numbers are moving higher. The trend is also very disturbing for businesses, with a 64 percent increase in filings over a six-month period versus a year ago.
These are just some of the reasons why I am concerned that the market’s advance is overdone. The government spending, which has been replacing both consumer and business demand, has been helping the economy, but this just cannot replace all the demand that’s been lost – and cannot go on forever.
The other day, Warren Buffett reiterated his views on the government spending by writing an op-ed piece for The New York Times. Buffett called it a “butterfly effect” as the consequences of the government spending could exceed the size of it. With the U.S. economy “out of the emergency room,” now could be the time to address the size of that spending. “With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap.”
Buffett finished his op-ed article with the following: “Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.” I cannot agree more. This is why I like the markets of those countries that are commodities-rich, expecting commodities to benefit from the weaker dollar. And, of course, I like gold – the ultimate dollar hedge.
________________________________
fatcow couponfatcow review1and1 1and1
1and1 1&1 1and1 1and1
1and1
1and1 1and1 1and1
The tough consumer environment clearly is having an effect on retailers, who have largely struggled through this deep recession. At the expense of profits, most have cut prices to keep up sales volumes; job cuts and inventory reductions have helped support profit margins, but there is no getting around the dismal environment. On the other hand, some retailers have held their own. One in particular has been Wal-Mart (WMT). The world’s largest retailer reported second-quarter earnings last week that not only beat analysts’ expectations, but also showed growth versus the year earlier period.
For the first time in five weeks, the market posted a weekly decline last week, changing the underlying mood from overwhelmingly bullish to more cautious. Market participants concentrated on retail sales numbers and on the decline in consumer confidence as measured by Reuters and the University of Michigan index of consumer sentiment.
While the auto sector has received a boost from cash-for-clunkers-related sales, the overall picture continues to reflect a consumer who’s stretched beyond his means. Foreclosure filings rose to a record, and retail sales declined the most since March. Americans are increasingly seeking bankruptcy protection: 35 percent more individuals or households file for bankruptcy today than a year ago, and the numbers are moving higher. The trend is also very disturbing for businesses, with a 64 percent increase in filings over a six-month period versus a year ago.
These are just some of the reasons why I am concerned that the market’s advance is overdone. The government spending, which has been replacing both consumer and business demand, has been helping the economy, but this just cannot replace all the demand that’s been lost – and cannot go on forever.
The other day, Warren Buffett reiterated his views on the government spending by writing an op-ed piece for The New York Times. Buffett called it a “butterfly effect” as the consequences of the government spending could exceed the size of it. With the U.S. economy “out of the emergency room,” now could be the time to address the size of that spending. “With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap.”
Buffett finished his op-ed article with the following: “Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.” I cannot agree more. This is why I like the markets of those countries that are commodities-rich, expecting commodities to benefit from the weaker dollar. And, of course, I like gold – the ultimate dollar hedge.
________________________________
fatcow couponfatcow review1and1 1and1
1and1 1&1 1and1 1and1
1and1
1and1 1and1 1and1
Wednesday, August 12, 2009
The U.S. is No Longer an Economic Superpower
In last week's update, I outlined the no-win situation the U.S. economy finds itself in today. I was pleased that so many people sent me comments and questions. Considering how much work I put into these missives, it's great to know people are reading them. And while I can't reply to every message individually, I can attempt to address the most common issues and questions people had.
My basic argument is that the U.S. is becoming a smaller part of the global economy, while the combined emerging markets and resource-rich markets are starting to matter more.
This shift in power and influence carries some dire implications for Americans. For, if the world's economy continues growing, commodity prices will rise to ever higher levels. For obvious reasons, the resource-rich nations will benefit from this trend. Brazil, Canada, Australia (and to some extend Russia and China) will grow rich by supplying commodities to everyone else. Emerging nations too will prosper. Their strong growth will be the driving force behind commodity prices. At the same time, that growth will outpace inflation, enabling them to comfortably pay more for commodities.
Unfortunately, the U.S. is neither emerging nor possesses excess resources. Moreover, the U.S. consumer has been dealt a serious blow in this recession. In the past decade, consumers spent more money than they earned, creating more GDP growth than their GDP contribution. But those days are over, forcing the U.S. to experience much slower growth. Consequently, for Americans, rising commodity prices will not be a sign of expansion but rather a tax that inhibits spending.
Some experts suggest that commodity prices and the growth of the U.S. have a direct correlation. But there are two problems with the idea that one automatically means the other. Over short-term periods commodity prices correlate strongly with world growth, including U.S. growth. Higher production usually raises demand for raw materials. Thus I see that this year stock prices have risen along with commodities. Similarly, brief downturns in commodity prices can occur alongside brief downturns in stocks.
However, over longer periods, the correlation reverses. In fact, looking at data as far back as the 1970s, I can see a negative relationship between commodities and growth. Sharply higher commodity prices can limit growth and rapid growth can bring commodity prices down. I won't go into the math here, but the statistics clearly support this view. (If you want the figures, let me know.)
The other problem with this belief is to regard the U.S. as the top player on the world stage. That's because, until quite recently, it was. For decades, the U.S. economy accounted for over 50% of the global economy.
People's understanding of the world changes much slower than the world itself. So it's no wonder most people still believe that if the U.S. sneezes the world catches a cold (and, vice versa, if the U.S. strikes gold the whole world gets rich).
The world has been changing, however, in ways that few Americans comprehend. China and India combined now account for more of the world’s GDP than does the U.S. (in real terms). Moreover, their growth rates are many times ours, which means that by the time you read this, the difference between China/India and us will be even greater. Throw in Brazil, Russia, and the rest of Asia and you'll discover the U.S. is no longer the economic superpower it once was.
Today, growth in the U.S. can falter without derailing commodity prices (at least not for long). What's more, the longer the developing world keeps its growth rate above ours, the bigger its influence on the world economy will become, and the smaller ours will be. Just as no one worries if a recession in Switzerland will cause the price of cocoa beans to plummet, eventually a recession in the U.S. will have much less of an effect on oil prices.
So the question is -- How do we deal with this brave new world?...Give me your thoughts.
________________________________
bluehost review bluehost bluehost review
bluehost reviewbluehost review bluehost bluehost review bluehost review
My basic argument is that the U.S. is becoming a smaller part of the global economy, while the combined emerging markets and resource-rich markets are starting to matter more.
This shift in power and influence carries some dire implications for Americans. For, if the world's economy continues growing, commodity prices will rise to ever higher levels. For obvious reasons, the resource-rich nations will benefit from this trend. Brazil, Canada, Australia (and to some extend Russia and China) will grow rich by supplying commodities to everyone else. Emerging nations too will prosper. Their strong growth will be the driving force behind commodity prices. At the same time, that growth will outpace inflation, enabling them to comfortably pay more for commodities.
Unfortunately, the U.S. is neither emerging nor possesses excess resources. Moreover, the U.S. consumer has been dealt a serious blow in this recession. In the past decade, consumers spent more money than they earned, creating more GDP growth than their GDP contribution. But those days are over, forcing the U.S. to experience much slower growth. Consequently, for Americans, rising commodity prices will not be a sign of expansion but rather a tax that inhibits spending.
Some experts suggest that commodity prices and the growth of the U.S. have a direct correlation. But there are two problems with the idea that one automatically means the other. Over short-term periods commodity prices correlate strongly with world growth, including U.S. growth. Higher production usually raises demand for raw materials. Thus I see that this year stock prices have risen along with commodities. Similarly, brief downturns in commodity prices can occur alongside brief downturns in stocks.
However, over longer periods, the correlation reverses. In fact, looking at data as far back as the 1970s, I can see a negative relationship between commodities and growth. Sharply higher commodity prices can limit growth and rapid growth can bring commodity prices down. I won't go into the math here, but the statistics clearly support this view. (If you want the figures, let me know.)
The other problem with this belief is to regard the U.S. as the top player on the world stage. That's because, until quite recently, it was. For decades, the U.S. economy accounted for over 50% of the global economy.
People's understanding of the world changes much slower than the world itself. So it's no wonder most people still believe that if the U.S. sneezes the world catches a cold (and, vice versa, if the U.S. strikes gold the whole world gets rich).
The world has been changing, however, in ways that few Americans comprehend. China and India combined now account for more of the world’s GDP than does the U.S. (in real terms). Moreover, their growth rates are many times ours, which means that by the time you read this, the difference between China/India and us will be even greater. Throw in Brazil, Russia, and the rest of Asia and you'll discover the U.S. is no longer the economic superpower it once was.
Today, growth in the U.S. can falter without derailing commodity prices (at least not for long). What's more, the longer the developing world keeps its growth rate above ours, the bigger its influence on the world economy will become, and the smaller ours will be. Just as no one worries if a recession in Switzerland will cause the price of cocoa beans to plummet, eventually a recession in the U.S. will have much less of an effect on oil prices.
So the question is -- How do we deal with this brave new world?...Give me your thoughts.
________________________________
bluehost review bluehost bluehost review
bluehost reviewbluehost review bluehost bluehost review bluehost review
Saturday, August 8, 2009
Cash for Clunkers - Who's The Winner...
The government’s “cash for clunkers” program, which offers credits between $3,500 and $4,500 to those disposing of gas-guzzling vehicles and buying new, more fuel-efficient cars, is bolstering auto sales – and auto makers.
After the initial $1 billion apportioned to the program was rapidly drained, a proposal to top up the funds with an additional $2 billion passed the Senate Thursday by 60 to 37 votes and was signed by President Obama without delay. So far the program (formally the Car Allowance Rebate System, or “CARS”) has led to about 750,000 cars being sold.
As one of the goals of the program was to get more fuel-efficient cars on the road, it should not come as a surprise that some of the best-selling cars are foreign makes. In fact, as of the latest data available, three out of five new cars purchased through the program are manufactured by non-U.S. companies like Toyota and Honda. As the program has won its additional funds, the hard-hit auto industry will likely benefit from incentive-related sales for a little longer, despite some indications of the waning interest. It’s also important to note that in addition to the U.S., other countries such as the United Kingdom, Germany, Japan and China also offer several measures (consumer credits, tax breaks, subsidies) that are boosting the industry. It was reported that Russia is also considering similar measures for domestic cars. It’s very likely that cash-strapped consumers taking advantage of the program, while getting a good deal on a new car, will have less money in their pockets for other discretionary purchases. And if the economy does not improve significantly by the time the additional $2 billion runs out (which is unlikely), “cash for clunkers” will have revved the auto industry’s engine only temporarily. However, this extra boost should prove helpful to the strongest companies in the business who are getting an incremental advantage over competitors.
One such company is Toyota, a leader in fuel-efficient cars. Toyota, which gets more than a fourth of its sales in North America, holds a second place in cars purchased under the program. Recently, it has provided investors with a look into its future as it released operational results for the first quarter of its fiscal 2010. Despite remaining in the red, the company is now more optimistic about the near-future. Toyota now expects higher sales in Japan for the first time in five years as the result of the government-sponsored program for promoting fuel-efficient vehicles. Its earlier forecasts did not include the effects of government incentives at all. Toyota also narrowed its expectations for full-year operating loss to 750 billion yen from 850 billion yen, a significant improvement. Toyota’s balance sheet remains strong and continues to be a significant long-term positive. While purchases prompted by the governments’ incentives do not necessarily reflect sustained demand, the boost they are giving to Toyota is already helping its near-term results. I like the company because of its industry dominance, which is likely to improve as the industry goes through the slowdown. Toyota’s recent guidance may prove conservative as its technological dominance and financial strength will continue helping it to win over competition.
________________________________
fatcow couponfatcow reviewfatcow couponangies listfatcow coupon
bluehost review
After the initial $1 billion apportioned to the program was rapidly drained, a proposal to top up the funds with an additional $2 billion passed the Senate Thursday by 60 to 37 votes and was signed by President Obama without delay. So far the program (formally the Car Allowance Rebate System, or “CARS”) has led to about 750,000 cars being sold.
As one of the goals of the program was to get more fuel-efficient cars on the road, it should not come as a surprise that some of the best-selling cars are foreign makes. In fact, as of the latest data available, three out of five new cars purchased through the program are manufactured by non-U.S. companies like Toyota and Honda. As the program has won its additional funds, the hard-hit auto industry will likely benefit from incentive-related sales for a little longer, despite some indications of the waning interest. It’s also important to note that in addition to the U.S., other countries such as the United Kingdom, Germany, Japan and China also offer several measures (consumer credits, tax breaks, subsidies) that are boosting the industry. It was reported that Russia is also considering similar measures for domestic cars. It’s very likely that cash-strapped consumers taking advantage of the program, while getting a good deal on a new car, will have less money in their pockets for other discretionary purchases. And if the economy does not improve significantly by the time the additional $2 billion runs out (which is unlikely), “cash for clunkers” will have revved the auto industry’s engine only temporarily. However, this extra boost should prove helpful to the strongest companies in the business who are getting an incremental advantage over competitors.
One such company is Toyota, a leader in fuel-efficient cars. Toyota, which gets more than a fourth of its sales in North America, holds a second place in cars purchased under the program. Recently, it has provided investors with a look into its future as it released operational results for the first quarter of its fiscal 2010. Despite remaining in the red, the company is now more optimistic about the near-future. Toyota now expects higher sales in Japan for the first time in five years as the result of the government-sponsored program for promoting fuel-efficient vehicles. Its earlier forecasts did not include the effects of government incentives at all. Toyota also narrowed its expectations for full-year operating loss to 750 billion yen from 850 billion yen, a significant improvement. Toyota’s balance sheet remains strong and continues to be a significant long-term positive. While purchases prompted by the governments’ incentives do not necessarily reflect sustained demand, the boost they are giving to Toyota is already helping its near-term results. I like the company because of its industry dominance, which is likely to improve as the industry goes through the slowdown. Toyota’s recent guidance may prove conservative as its technological dominance and financial strength will continue helping it to win over competition.
________________________________
fatcow couponfatcow reviewfatcow couponangies listfatcow coupon
bluehost review
Subscribe to:
Posts (Atom)
