Economics – Page 8 – Outrun Change

Accelerating collapse of the Venezuelan economy – 9

The economic devastation and human suffering in Venezuela is getting worse by the day. Every article I see shows the economy has taken one more step towards utter collapse.

6/9 – Washington Post – As hunger mounts, Venezuelans turned to trash for food – A man who used to work at a bakery now searches garbage cans for food because he will starve if he doesn’t find something to eat in the trash.

He is joined by small business owners and retired people in the search for enough food to merely stay alive.

Number of people below the poverty line has skyrocketed from 52% as recently as 2014 up to 76% today.

I wonder what could have caused that devastation?

In the 535 word article, the only hint of the reason for this human suffering is citing the government’s claim that the political opposition is intentionally causing this suffering in order to throw the president out of power.

While the WP reporters are incapable of seeing the cause, at least they are able to see the suffering.

6/10 – AFT at Yahoo News – Venezuela lets Maduro recall advance, with threats – Article reports looting is increasing and more protests involve violence.

A protest by opposition legislators resulted in several of them getting beat up. Yes, legislators are getting beaten when they protest.

Continue reading “Accelerating collapse of the Venezuelan economy – 9”

Yet another reason I am so optimistic when I take my eyes off the political news of the day: the energy revolution that keeps gaining speed.

One more illustration of the energy revolution currently underway. BTW, flaring is down to about 11% of all natural gas produced. Photo by James Ulvog. — One more illustration of the energy revolution currently underway. BTW, flaring is down to 9.2% of all natural gas produced. About 91% is captured, which shows great progress. Photo by James Ulvog.

When I look at the political news and the headlines in general news every morning, I get so discouraged. When I look away from those areas I am so optimistic.

Consider what the two following articles suggest about how bright our economic future could be: an abundant supply of oil and gas at increasingly lower cost to produce.

6/13 – JH at The American Interest – Resilient Shale Producers Get Their Second Wind – Article mentions a Financial Times article which indicates there is some increase in drilling, which is driven by prices a few weeks ago. Since then oil prices have come up further. Discussion speculates if prices remain in the $50 range there will be even more drilling.

The small-scale and short development time of shale wells creates a soft ceiling on prices. Shale production can increase quickly which will put supplies on the market quickly, which will counter a surge in prices.

A quoted analyst says his expectation is a long-term price of oil around $60. There will be fluctuations up to $80 and down to $40, but the price will tend toward $60. Drillers needing a price higher than that to be profitable will have a rough time.

Continue reading “Yet another reason I am so optimistic when I take my eyes off the political news of the day: the energy revolution that keeps gaining speed.”

Is the oil market ready to turn?

There is room for a few more wells on that site when the price is right. Photo by James Ulvog. — There is room for a few more wells on that site when the price is right, which may be soon. Photo by James Ulvog.

Daniel Yergin thinks so.

Bargain hunters who are hunting bargains think so.

Increase to $50 has some producers completing DUCs, which tells us those producers think so.

Oh, USGS estimates a field in Colorado has 40 times more natural gas that previously estimated. The field is almost as large as Marcellus.

6/5 Calgary Herald – Oil recovery is on its way after two-year-long rout, says energy economist – As one of many comments at a conference in Calgary, Daniel Yergin said he thinks the oil industry at the start of a recovery.

Continue reading “Is the oil market ready to turn?”

Are you richer today than John D. Rockefeller was in 1916? The answer is, um, yes.

Would you trade your place in life today for life occupying the Gould-Guggenheim mansion when it was completed in 1912? Even if a billion dollars was tossed into the trade? Photo by Adobe Stock. — Would you trade your place in life today for life occupying the Gould-Guggenheim mansion when it was completed in 1912? Even if a billion dollars was tossed into the deal? I would not make the trade. Photo by Adobe Stock.

I suggest you are in fact richer today than John Rockefeller was 100 years ago. If it were possible for Prof. Don Boudreaux to switch places with John Rockefeller’s life and even if he could have a billion dollars after he arrived back in 1916, he would not make the switch. He would rather live as a comfortable professor today than be a billionaire 100 years ago.

I agree.

Here are three posts to explain this strange idea: first, what life was like 100 years ago, why Prof Boudreaux would not make the switch, and then why Coyote Blog wouldn’t either.

(Cross-post from Attestation Update. This post supports my conversation on ancient finances at that blog and also fits the discussion of how much life has improved over the last 200 years here.)

An article in The Atlantic on 2/11/16 describes America in 1915: Long Hours, Crowded Houses, Death by Trolley. The article is drawn from a report by the Bureau of Labor Statistics: The life of American workers in 1915. If you enjoy this brief discussion, I heartily recommend you read the full BLS report. It is a fun read, but then, I am an accountant.

I will update a few of the stats in the Atlantic article where the author took a shortcut. When I browsed through the BLS report, I noticed some sentences which were repeated nearly verbatim in the article, which is okay since the report is a public document.

A few highlights:

Workers in factories averaged 55 hours a week. The fatality rate across the economy was 61 deaths per 100,000 compared to about 3.3 per 100,000 today.

Continue reading “Are you richer today than John D. Rockefeller was in 1916? The answer is, um, yes.”

Continuing human suffering in Venezuela due to government policies

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

Just in case you think I’ve been too hard in my description of the devastation in Venezuela or I’ve been too blunt in laying blame for the suffering at the feet of socialism, just check out Prof. Mark Perry’s column: Venezuelan apocalypse: Some updates on the epic failure of socialism in oil-rich Venezuela.

Keep in mind this human suffering is taking place in a country that has more proven oil reserves that Saudi Arabia.

Here are a few tidbits from the article:

5/4 – Pan Am Post – Hungry Venezuelans Hunt Dogs, Cats, Pigeons at Food Runs Out – Yes, cats, dogs, and even pigeons are disappearing. As I’ve said before, it is a sign of a famine-in-progress when dogs and cats start to disappear from the streets.

5/15 – BBC News – Venezuela crisis: Maduro threatens seizure of closed factories.

I must quote the professor: Continue reading “Continuing human suffering in Venezuela due to government policies”

How much has our economic wellbeing improved from that our of distant ancestors?

A view of economic progress. Ponder the productivity improvement and resulting increase in wealth to go from this:

To this:

The overall standard of living has increased by a factor of somewhere between 30 and 100 in the last 200 years.

The little side trip in this post and the next will lead me back to my discussion of ancient finances in general and Alexander’s haul from his military campaigns in particular.

(This is a cross-post from my other blog, Attestation Update. It is part of a series of posts discussing ancient finances, with a focus on the loot taken by Alexander the Great during his military campaign. This particular post is pertinent to this blog, so I will bring it here. The remaining conversation on Alexander’s haul will remain at the other blog, since that is where I talk about finance. You can find the discussion here.)

Writing in Bourgeios Equality: How Ideas, Not Capital or Institutions, Enriched the World, Professor Deirdre McCloskey says it this way:

..in the two centuries after 1800 the trade-tested goods and services available to the average person in Sweden or Taiwan rose by a factor of 30 or 100. Not 100 percent, understand— a mere doubling— but in its highest estimate a factor of 100, nearly 10,000 percent, and at least a factor of 30, or 2,900 percent. The Great Enrichment of the past two centuries has dwarfed any of the previous and temporary enrichments.

Let me phrase that another way. The value of what is enjoyed today by an average person is roughly equal to what 30 or 100 people had two centuries ago. That means the constant dollar value of what is consumed and enjoyed has grown by a factor of somewhere between 30 and 100.

Continue reading “How much has our economic wellbeing improved from that our of distant ancestors?”

This is what the lack of freedom looks like

The cost of freedom. Image courtesy of Adobe Stock.

This freedom stuff is not just some abstract concept. The lack of economic, political, or religious freedom is ugly and painful.

If you want to see what the lack of economic and political freedom looks like, consider Venezuela today.

5/20 – Yahoo News – Venezuela, where a hamburger is officially $170 – That hamburger priced at 1,700 bolivars is US$170 at the official exchange rate. At black market exchange rates it is about a buck and a half.

Article reports that the middle class is sliding into poverty. Keep in mind people are essentially paid at the official exchange rate.

Stores that sell anything other than food are closed. Article says nobody is buying anything other than food.

What is going on in Venezuela?

5/28 – New York Times – Venezuela Drifts Into New territory: Hunger, Blackouts and Government Shutdown – The New York Times notices the devastation afflicting the people of Venezuela.

Government offices are only open two half-days each week.

Article says protests at empty grocery stores are turning violent.

The bottler producing Coca-cola products cannot find sugar so it is halting production.

Other suffering this article doesn’t mention:

No toilet paper on the grocery store shelf and no international phone service.

The country’s largest beer producer can’t get enough foreign currency to buy hops so it has stopped making beer.

Water is rationed.

Electricity is only available sometimes and randomly at that.

Infants are dying in hospitals because of lack of medicine and respirators.

Back to the NYT article.

When water is on, people are gathering some in spare buckets for use later. The water (when available) is brownish and is making members of one quoted family sick. Many people say either lack of washing or the water itself is causing illness.

What is the cause of this suffering?

Continue reading “This is what the lack of freedom looks like”

Explanations for the collapsing Venezuelan economy that avoid the actual cause – 7

As the level of massive, avoidable, preventable, yet fully predictable suffering expands without end, we see two new explanations for the suffering.

5/18 – Daily Mail – No electricity, no antibiotics, no beds, no soap: A devastating look inside Venezuela’s crisis-hit hospitals where 7 babies die a day, bleeding patients lie strewn on the floor, and doctors try to operate without tools. Hospitals have minimal electricity, no soap, no antibiotics, no gloves, no x-rays.

Even The Guardian is seeing horrid problems in the socialist paradise. Yes, The Guardian!

5/18 – The Guardian – Venezuelans on the food and economic crisis blighting their daily lives / Food shortages and soaring black market prices are making life a misery for people across the country – One person says that essentially every grocery store in Caracas has hundreds of people in line every day.

One woman says she has not been able to buy milk, sugar, or corn flour in about the last five months. Toilet paper, soap, and deodorant are very difficult to find as well, she said.

Article tells of supply trucks on their way to a grocery store being looted. There are 107 episodes of looting reported so far in 2016.

Article says many people are spending all their time trying to find food in the stores.

Update: 5/20 – Fortune – Coke Has Suspended All Production in Venezuela – The lack of sugar has led Coca-Cola FENSA to suspend production of all products in Venezuela. Article says this is the largest individual bottler in the world.

This follows the Polar Group, the largest beverage and food company in the country shutting down production of beer a month ago.

What caused this horrible humanitarian disaster? Here are two new explanations.

We finally know what caused all the suffering

1.It’s the fault of the political opposition

Aha! The Associated Press finally explains the cause of the economic collapse. It is the fault of the opposition political party creating a political standoff. They made this mess, not the current government.

Continue reading “Explanations for the collapsing Venezuelan economy that avoid the actual cause – 7”

Venezuela continues slide into chaos – 6

Things are bad and likely to get far worse for the people living in Venezuela. More reports of looting are appearing in news stories. Read between the lines on the comment from a mayor who says that dogs and cats are disappearing from the streets.

5/14 – Zero Hedge – Scenes From the Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking for Food – Opening photo shows over 100 soldiers (by my count) holding back a huge crowd on a street.

Article reports on several specific stores being looted with comments there have been many more in the last two weeks. There is so little food and when available it is expensive. More people are slipping into severe hunger. Widespread looting is the expected next step in the collapse of the country.

The mayor of Chacao in Caracas said the cats and dogs in the city are disappearing. Pigeons as well. That is traditionally a sign of famine.

5/13 – Reuters – U.S. concern grows over possible Venezuela meltdown – officials – Continue reading “Venezuela continues slide into chaos – 6”

Ongoing deterioration in the Venezuelan economy and increased suffering – 5

The level of suffering is increasing and the economy continues collapsing in Venezuela.

A few articles to describe this live demonstration of the glorious success of socialism:

Food becoming scarcer.
Soldiers stealing goats so they have something to eat.
Hard core socialists blame the suffering on everything but socialism.
A better description of the cause. Also, comments that looting and rioting has started to appear.

5/2 – Business Insider – “We want out of this agony’: What it’s like to eat in a country that’s on the verge of collapse – Food is getting even more scarce in Venezuela. You have to stand in line for many hours in order to buy a few items that are on the shelf. Oh, there is little on the shelves.

Poor people are skipping meals because they can’t afford what little can be found, and what little they can afford comes with the additional price of standing in line all day.

5/4 – CNBC – How bad is it in Venezuela? Soldiers are stealing goats – Six soldiers were arrested over the weekend by local police for stealing goats.

Why rip off goats?

Continue reading “Ongoing deterioration in the Venezuelan economy and increased suffering – 5”

Ongoing deterioration in the Venezuelan economy – 4

The soon-to-be condition of working light bulb in Venezuela. Photo by James Ulvog. — The soon-to-be condition of working light bulbs in Venezuela. Photo by James Ulvog.

One old joke and two new ones:

What did socialists use before candles? Electricity.
Before tree leaves? Toilet paper.
Before the telegraph? Telephone and email.

Was planning to hold on to this post for a while, but the bad news is piling up too fast. Need to print this while it is still of readable length.

Bonus question for the day: What economic system is in place in Venezuela that is producing these results?

4/15 – Yahoo News – In Venezuela, no toilet paper and now lousy phone service – The government distributes dollars as it wishes. It has not provided enough dollars to telephone companies and cable companies for them in turn to pay their providers. As a result several international telecoms have cut off long-distance services to the country. In addition vendors providing cable channels are cutting their services because they haven’t been paid.

As a result, telephone service is deteriorating and the number of channels available on cable TV is dropping.

Continue reading “Ongoing deterioration in the Venezuelan economy – 4”

US crude oil is shipping overseas

Big implications from a few minor shipments of crude. Also, the OPEC+Russia meeting over the weekend did not result in any agreement to hold production at current levels.

4/19 – Bakken.com – Bakken crude sold as export first time since ban lifted – Not a big story by itself but the implications are huge. Hess Corp. shipped the first-ever load of 175K barrels of Bakken crude to an unspecified European refinery.

Continue reading “US crude oil is shipping overseas”

Continued deterioration in the Venezuelan economy – 3

The citizens of Venezuela continue to suffer at the hands of their elected officials.

Question for you to ponder: Is there a particular economic system that is causing all the suffering?

2/29 – AP at Fox News – Inflation-hit Venezuela to print bigger bills – Central Bank president says Venezuela will start printing 500 and 1,000 bolivar notes sometime. No date mentioned.

Largest bill in circulation is currently the 100 note. At exchange rates in effect a month ago or so, that would be worth about US$0.10. Largest bill in circulation is equal to about one American dime.

How can an economy function in such circumstances? Not very well.

3/4 – According to dolartoday.com, the exchange rate is 1,105 bolivars to the dollar. That means 100 bolivars is 9.05 cents.

3/18 – Exchange rate is 1,211, or 100 bolivars is 8.25 cents.

3/18 – Foundation for Economic Education – What Did Venezuela Use Before Candles? Electricity.

Continue reading “Continued deterioration in the Venezuelan economy – 3”

Poorly producing Ivanpah plant might have to close due to low production

The glare from those towers is visible from the air 100 miles away. The field around that white-hot tower toasts birds. Photo by James Ulvog. — The glare from the Ivanpah towers is visible to pilots 100 miles away. The field around that white-hot tower toasts birds that venture too close. Photo by James Ulvog.

In news cheered by all migratory birds west of the Mississippi, The Wall Street Journal reports on 3/16 that Ivanpah Solar Plant May Be Forced to Shut Down.

In old news, the plant isn’t producing as much electricity as expected. The new information is the wing-toasting solar plant isn’t meeting its contractually required output. Due to peculiarities of the regulatory world, this means it needs special permission from state regulators to keep operating.

Update: One year reprieve to meet contract requirements granted when PUC approved a forebearance agreement between PG&E and Ivanpah.

Continue reading “Poorly producing Ivanpah plant might have to close due to low production”

Update on marijuana regulation – #23

I have not noticed a lot of coverage of the efforts to regulate the newly state-legal business of recreational marijuana. Here are a few articles catching my interest.

As a reminder, I am watching the efforts in Colorado and Oregon to develop a new industry which is highly regulated. This is a natural experiment to test my hypothesis that heavy-handed regulation will constrain a new industry.

1/5 – Denver Post via The Cannabist – Federal judge tosses Colorado marijuana banking lawsuit – State of Colorado chartered a credit union, the Fourth Corner Credit Union, with its business model of serving the state-legal marijuana industry. The credit union requested a master agreement allowing it to access the Federal Reserve system and thus participate in the banking system.

The FRB denied the application. The credit union sued.

A federal judge threw out the suit on the basis that allowing the credit union to operate would “facilitate criminal activity” since marijuana is illegal under federal law.

Continue reading “Update on marijuana regulation – #23”