Investing Curiouscatblog

Tag: USA

  • Working Less: Better Lives and Less Unemployment

    The average worker in Germany and the Netherlands puts in 20% fewer hours in a year than the average worker in the United States. This means that if the US adopted Germany’s work patterns tomorrow, it would immediately eliminate unemployment.

    I do think there is merit to reducing yearly hours worked in the USA. The problem is this is all within a larger system. The USA’s broken health care system makes it extremely expensive to hire workers. One way to deal with the health care system failure is maximizing hours worked to spread out the massively expensive USA health care costs.

    Also the USA standard of living is partially based on long hours (it is but one factor). We also have to work quite a few hours (about 5% of the total hours) to just bring us equal with other rich countries, in order to pay for our broken health care system.

    Still reducing our purchases by cutting out some fancy coffee, a few pairs or shoes, a few cable channels (or all of them), text messages from overcharging phone companies… in order to have a couple more weeks of vacation would be a great tradeoff in my opinion. And one I have made with my career.

    I have changed to part time in 2 of my full time jobs (to make my own sensible yearly hour model even if the bigger system can’t. Another time I bargained for more vacation time over more $. It isn’t easy to do though, most organizations are not willing to think and accommodate employees (hard to believe they respect people in this case, right?). The system is not setup to allow people to adjust total hours to maximize their well being.

    Another option in the USA is to live within your means and then make your own sabbaticals during your career. Take a year off and travel the world, or hike the Appalachian Trail, or read trashy novels, or whatever you want.

    Related: Medieval Peasants had More Vacation Time Than We Do – Dream More, Work Less – Vacation: Systems Thinking

  • Global Trends in Renewable Energy Investment

    Global Trends in Renewable Energy Investment 2012

    in 2011, global investment in the renewable energy sector hit another record, up 17% to $257 billion. This was a six fold increase on the 2004 figure and 93% higher than the total in 2007.
    …
    renewable power (excluding large hydro) accounted for 44% of new generation
    capacity added worldwide in 2011, up from 34% in 2010 [and 10% in 2004]. The $237 billion invested in building these green power plants compares with $223 billion of net new expenditure annually on building additional fossil-fuelled power plants globally last year.
    …
    Current predictions are that total installed capacity in non-hydro renewable power will rise ninefold to 2.5Tw by 2030, with investment in assets rising from $225 billion in 2011 to $395 billion-a-year by 2020 and $460 billion-a-year by 2030

    Total investment in solar in 2011 increased 52% to $147 billion, driven by a drop of 50% in photovoltaic module prices. Investment in wind dropped 12% to $84 billion, while onshore wind turbine prices fell between 5 and 10%. Biomass and waste to energy was the 3rd largest renewable sector at $11 billion in investments (down 12% from 2010).

    USA investment surged 51% to $51 billion just behind China at $52 billion (China increased investment in renewable energy by 17% from 2010). German investment dropped 12% to $31 billion.

    In 2011 renewable energy power capacity (excluding large hydropower), as a percentage of total system capacity, reached 9%, up from 4% in 2004. Total renewable energy generation (excluding large hydro) reached 6%, up from 4% in 2004.

    Related: Top Countries For Renewable Energy Capacity – Wind Energy Capacity Exceeds 2.5% of Global Electricity Needs – Leasing or Purchasing a Solar Energy System For Your Home

  • Nuclear Power Generation by Country from 1985-2010

    chart of nuclear power generation by the largest producing countries from 1985 to 2010The chart shows the top nuclear power producing countries from 1985 to 2010. The chart created by Curious Cat Investing and Economics Blog may be used with attribution. Data from US Department of Energy.

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    Nuclear power provided 14% of the world’s electricity in 2010. Wind power capacity increased 233% Worldwide from 2005 2010, to a total of 2.5% of global electricity needs. Nuclear power generation declined by .72% for the same period.

    Burning coal was responsible for 41% of electricity generation in 2010. Burning natural gas accounted for 21% and hydroelectric generation accounted for 15%.

    Japan just announced that they have closed their last operating nuclear power plant. They have no nuclear power plant generating electricity for the first time in more than 40 years. It will be interesting to see how low their actual generation totals fall this year. They plan to re-open some of the plants but it is a political issue that is far from settled.

    Globally nuclear power production increased 84% from 1985 to 2010. This is a very low percentage. Global output over that period increased much more than that, as did global electricity use. The share of electricity production provided by nuclear power peaked at about 17% for much of the 1990s.

    Related: Nuclear Power Production Globally from 1985 to 2009 – Oil Production by Country 1999-2009 – Top 10 Countries for Manufacturing Production from 1980 to 2010: China, USA, Japan, Germany… – Japan to Add Personal Solar Subsidies – Nuclear Energy Institute (statistics)

    Another view of data on nuclear power shows which of the leading nuclear producing countries have the largest percentages of their electrical generating capacity provided by nuclear power plants (as of 2009). France has 75% of all electricity generated from nuclear power. Ukraine had the second largest percentage at 49%, then Sweden at 37% and South Korea at 35%. Japan is at 28% compared to 20% for the USA. Russia was at 18% and China was at just 2%.

  • Consumer and Real Estate Loan Delinquency Rates from 2001 to 2011 in the USA

    chart showing loan delinquency rates from 2001 to 2011 in the USA
    Chart showing loan delinquency rates from 2001-2011. It shows seasonally adjusted data for all banks for consumer and real estate loans. The chart is available for use with attribution. Data from the Federal Reserve.

    2011 saw delinquency rates for loans fall across the board in the USA. Residential real estate delinquency rates fell just 25 basis points (to a still extremely large 9.86%). Commercial real estate delinquency rates fell an impressive 186 basis points (to a still high 6.12%). Credit card delinquency rates fell 86 basis points to a 17 year low, 3.27%.

    The job market continues to struggle, though it is doing fairly well the last few months. The serious long term problems created by governments spending beyond their means (for decades) and allowing too big to fail institutions to destroy economic wealth and create great risk to the economy are not easy to solve: and we made no progress in doing so in 2011. The reduction in delinquency rates is a good sign for the economy. The residential real estate delinquency rates are still far too high as is government debt. And the failure to address the too big to fail (big donors to the politicians) is continuing to cause great damage to the economy.

    We need to reduce consumer and government debt. Many corporations are actually flush with cash, so at least we don’t have a huge corporate debt problem. Reducing debt load will decrease risks to the economy and provide wealth for consumers to tap as they move into retirement. The too-big-to-fail big political donors like to keep policies in place that encourage too much debt and favor complex financial instruments that they take huge fees from and then let the government deal with the aftermath. The politicians continued favors to too-big-to-fail institutions is very damaging to out economic well being.

    Across the board, the wealthy economies are facing a rapidly aging population (the USA is actually acing this at a much slower rate than most other rich countries – which is helpful).

    Related: Consumer and Real Estate Loan Delinquency Rates 2000-2011 – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – Government Debt as Percent of GDP 1998-2010 for OECD

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  • Which Currency is the Least Bad?

    I really can’t figure out which currency is something I would want to hold if I had the option. It doesn’t really matter, since I am not going to act on it in a very direct way (maybe if I felt very strongly I would do something but it would probably be pretty limited), but I still keep thinking about this issue out of curiosity.

    The USA dollar seems lousy to me. Huge debt (both government and consumer). Government debt is huge on the books and huge off the books (state and local retirement – and federal medical care [social security is really in much better shape than people think, though it also has issues 30 + years out}).

    The Euro seemed a bit lame 3 years ago. Today it seems crazy to think at least one Euro country won’t default in the next 3 years – and likely more. And if they take steps to avoid that it seems like it is going to make the case for the Euro worse).

    The Japanese Yen is much stronger than makes any sense to me. I think it is mainly because of how lousy all the options are. The huge government debt (worse than almost anywhere) and lousy demographics (and the refusal to deal with demographics with immigration or something) are big problems. The biggest reason for strength is that the individuals have huge savings (when your citizens own the debt it is much less horrible than when others do – especially when you are looking at currency value).

    The Chinese Yuan is the best looking at the economic data. The problem is economic data is questionable for the best cases (looking at the USA, Japan…). China’s economic data is far from transparent. There is also great political and social risk. The current worries of a real estate bubble seems justified to me and China just this week took exactly the wrong action – trying to prop up the bubble (in order to decrease the economic slowdown). I can see either of these cases playing out 10 years from now: It was obvious the Yuan was the strongest currency you are an idiot for not being able to see that or It was obvious China was a bubble with unsustainable policies and likely social upheaval thinking that was anything but a sign to sell the Yuan was foolish.

    Given all this I think I weakly come down on the side that the Yuan is likely to be the strongest.

    The safest play I think is the US dollar (as lousy as it is on an absolute basis the options make it look almost good). It could get clobbered. But that seems less likely than the others getting clobbered.

    Smaller currencies have some promise but they can be swamped by global moves. I really have no idea about the Brazilian Real. That might actually be a really good option. The Australian Dollar and Canadian Dollar may also. But those economies are really small. I don’t trust India: they have many good macro-economic factors but the climate for business leaves far too much to be desired (as does the pace of progress fixing those weaknesses). Many economist like them due to demographic factors. I understand that demographic factors will help, but without systemic reform I question how well India can do (it certainly has the potential to do amazingly well, but they seem to be significantly farther away from reaching their potential compared to many countries).

    The Singapore Dollar seems good on many levels, but the economy is small. I am not really sure about emerging economies, there currencies can get swamped in a hurry. Thailand and Indonesia experienced this recently. Thailand, Indonesia and Malaysia are interesting to me in thinking about what their currencies may experience, I would like to read more on this.

    This is more an intellectual and curiosity exercise than something I see directly tied to my investing strategy. But having clear answers of what I thought reasonable scenarios were for currencies going forward that would factor into my investing decisions. Right now, the confusing this causes me, leads me to favor companies that should be fine whatever happens: Apple, Google, Toyota, Intel (I don’t really like Facebook overall but in this way they fit). Lots of the stocks in my 12 stocks for 10 years portfolio, you might notice.

    Related: Is the Euro Going to Survive in the Long Run? – Why the Dollar is Falling – Strong Singapore Dollar – Warren Buffett Cautions Against Buying Long Term USD Bonds

  • The USA Is Not as Dependent on China Economically as People Think

    3 Economic Misconceptions That Need to Die

    Just 2.7% of personal consumption expenditures go to Chinese-made goods and services. 88.5% of U.S. consumer spending is on American-made goods and services… Walmart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Walmart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.
    …
    Just 6.4% of nondurable goods — things like food, clothing and toys — purchased in the U.S. are made in China; 76.2% are made in America. For durable goods — things like cars and furniture — 12% are made in China; 66.6% are made in America.

    Those numbers are significantly less than I expected but the concept matches my understanding – that we greatly underestimate the purchasing of USA goods and services.

    We have an inflated notion of how large the China macro economic numbers are for the USA (both debt and manufacturing exports to us). The China growth in both is still amazingly large: we just overestimate the totals today. We also forget that 25 years ago both numbers (imports from China and USA government debt owned by China) were close to 0.

    We also greatly underestimate how much manufacturing the USA does, as I have been writing about for years. In fact, until 2010, the USA manufactured more than China.

    China owns 7.6% of U.S. government debt outstanding. As of November, China owned $1.13 trillion of Treasuries. Government debt stood at $14.9 trillion that month. That’s 7.6%.

    Who owns the rest? The largest holder of U.S. debt is the federal government itself. Various government trust funds like the Social Security trust fund own about $4.4 trillion worth of Treasury securities. The Federal Reserve owns another $1.6 trillion.

    Ok, this figure is a bit misleading. But even if you thrown out the accounting games 1.13/8.9 = 12.7%. That is a great deal. But it isn’t a majority of the debt or anything remotely close. Other foreign investors own $3.5 trillion trillion in federal debt (Japan $1 trillion, UK $500 billion). The $4.6 trillion of federal debt owned by foreigners is a huge problem. With investors getting paid so little for that debt though it isn’t one now. But it is a huge potential problem. If interest reates increase it will be a huge transfer of wealth from the USA to others.

    Just 9.8% of oil consumed in the U.S. comes from the Middle East. According the U.S. Energy Information Administration, the U.S. consumes 19.2 million barrels of petroleum products per day. Of that amount, a net 49% is produced domestically. The rest is imported.

    The oil figure is a bit less meaningful, I think. Oil import are hugely fungible. The USA cutting back Middle East imports and pushing up imports from Canada, Mexico, Nigeria… doesn’t change the importance of Middle East oil to the USA in reality (the data might seem to suggest that but it is misleading due to the fungible nature of oil trading). Whether we get it directly from the Middle East or not our demand (and imports) creates more demand for Middle East oil. It is true the USA has greatly increased domestic production recently (and actually decreased the use of oil in 2009). So while I believe the data on Middle East oil I think that it is a bit misleading. If we had 0 direct imports from there we would still be greatly dependent on Middle East oil (because if France and China and India… were not getting their oil there they would buy it where we buy ours… Still the USA uses far more oil than any other country and is extremely dependent on imports. Several other countries are also extremely dependent on oil imports, including the next two top oil consuming countries: China, Japan.

    Related: Oil Production by Country 1999-2009 – Government Debt as Percentage of GDP 1990-2009: USA, Japan, Germany, China… – Manufacturing Output as a Percent of GDP by Country – The Relative Economic Position of the USA is Likely to Decline

  • Leasing or Purchasing a Solar Energy System For Your House

    The economics of solar energy make sense today. The main stumbling block is financing the initial purchase (for homeowners, businesses or utilities). For new power generation solar is economically competitive in many locations today and prices continue to decline. One aspect that has harmed financing is the historical depreciation has been high (assuming a short lifespan of solar panels) but the panels now have much longer lifespans, meaning that when computing the return of solar investments you can expect a longer payback period. Combine that with falling prices and the economic case is great.

    For a homeowner there is still the problem of financing what could be a $30,000 installation. Of course, the extremely low interest rates help here. First you have low cost capital (when calculating your return). Second, your alternative yields are very low (so it isn’t like you would earn 8% on your money just buying a CD). But for those that don’t want to take on the loan many companies are being formed to work on the financing for you (they deal with financing and then sell you the electricity they generate with panels on your home). It is a good business model I think. I personally think you are better off cutting out the intermediary and financing it yourself, but if you don’t want to, you can get cheaper electricity and help the environment.

    In the USA there is a 30% federal tax credit for solar installation. Several states also offer tax credits for solar installation. There are also incentives in many other countries including Japan, Germany, Spain, Italy…

    Where the U.S. Solar Industry Is Shining

    The residential market for solar is still nascent, with less than 0.1 percent of U.S. homes outfitted with panels. That number could climb to 2.4 percent by 2020, estimates Bloomberg New Energy Finance. Prices for solar cells fell 51 percent in 2011, to 88¢ a watt, according to data compiled by Bloomberg.
    …
    Developers in the U.S. added 449.2 megawatts of solar-generating capacity in the third quarter of 2011, the latest data available, up 140 percent from the same quarter a year earlier.
    …
    SunRun hires local companies in 10 states to install solar arrays on customers’ roofs. The company charges clients for the electricity they generate— at monthly rates as much as 15 percent below those of regular utilities. Jurich says she expects SunRun to have a presence in 15 to 20 states within five years.

    I own JinkoSolar stock which manufactures solar panels. This is based on the belief that solar has reached a point where it is a good way to generate electricity and we have huge needs for electrical power generation world wide.

    Related: Top Countries For Renewable Energy Capacity – Global Wind Energy Capacity Exceeds 2.5% of Global Electricity Needs – Solar Energy: Economics, Government and Technology – Oil Consumption by Country 1990-2009

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  • USA Apartment Market in 2011

    The national occupancy climbed 110 basis points during the year, and effective rents jumped 4.7% according MPF Research.

    Occupancy rates increased to 94.6% at the end of 2011, up from 93.5% a year ago and from 91.8% when the occupancy rates bottomed in late 2009.

    MPF Research predicts occupancy rates to increase another 50 basis points, and rents to rise 4.5%.

    Northern California’s apartment markets ranked as the nation’s rent growth leaders during calendar 2011, despite the fact that some weakness registered in the performances recorded in parts of the Pacific Northwest specifically during the fourth quarter. Year-over-year, effective rents for new leases jumped 14.6% in San Francisco, 12.3% in San Jose, and 9% in Oakland. With rents down 0.4%, Las Vegas was the nation’s only major apartment market that lost pricing power during calendar 2011.

    Rent Growth Leaders in Calendar 2011

    Rank Metro Area Annual Rent Growth
    1 San Francisco 14.6%
    2 San Jose 12.3%
    3 Oakland 9.0%
    4 Boston 8.3%
    5 New York 7.3%
    6 Austin 7.2%

    Related: Apartment Vacancies Fall to Lowest in 3 Years in the USA (April 2011) – Top USA Markets for Buying Rental Property – Apartment Rents Rise, Slightly, for First Time in 5 Quarters – It’s Now a Renter’s Market

  • 243,000 Jobs Added in January Bring the USA Unemployment Rate Down to 8.3%

    Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3%, the United States Bureau of Labor Statistics reported today. Job growth was widespread in the private sector (which gained 257,000 jobs in the month), with large employment gains in professional and business services, leisure and hospitality, and manufacturing (which added an impressive 50,000 jobs). The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000 which brings the total number of jobs gained with this report to 303,000, a very impressive figure.

    This employment news is really starting to add up to something good. And this is going on while everyone is worrying about the Euro imploding. Quite remarkable really. Avoiding a much worse result from the too big-to-fail-financial-firms credit crisis is surprising. We are not close to through the mess that we created, but that it hasn’t been much worse is fairly amazing. And that things are going so well now (even with large unemployment problems) is impressive. The huge government debt balances are a very large concern but it wouldn’t be surprising to have those same huge debts and much worse present day conditions (which would add to the debts).

    The unemployment rate declined to 8.3%; the rate has fallen by 80 basis point since August. The number of unemployed persons declined to 12.8 million in January. Among the major worker groups, the unemployment rates for adult men (7.7%) and blacks (13.6%) declined in January. The unemployment rates for adult women (7.7%), teenagers (23.2%), whites (7.4%), and Hispanics (10.5%) were little changed. The jobless rate for Asians was 6.7%.

    The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.5 million and accounted for 42.9% of the unemployed. Long term unemployment remains a big problem. With a few more months with such strong growth in jobs and that could start to change.

    After accounting for the annual adjustments to the population controls, the employment-population ratio (58.5%) rose in January, while the civilian labor force participation rate held at 63.7%.

    Professional and business services continued to add jobs in January (+70,000). About half of the increase occurred in employment services (+33,000). Job gains also occurred in accounting and bookkeeping (+13,000) and in architectural and engineering services (+7,000).

    Related: USA Adds 216,00 Jobs in March and the Unemployment Rate Stands at 8.8% (March 2011) – USA Unemployment Rate Remains at 9.7% (Feb 2010) – USA Unemployment Rate Rises to 8.1%, Highest Level Since 1983 (March 2009)

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  • Health Care in the USA Cost 17.9% of GDP, $2.6 Trillion, $8,402 per person in 2010

    Total health expenditures in the USA in 2010 reached $2.6 trillion, $8,402 per person or 17.9% percent of GDP. All these are all time highs. Every year, for decades, health care costs have taken a larger and larger portion of the economic value created in the USA. The costs have risen much more rapidly than the costs in the rest of world. This creates a burden that slows the USA economy – it acts as a friction dragging everything else down. We not only need to slow down how fast we are getting worse (which we have done the last 2 years) but actually start making up for all the ground lost in the last few decades. We haven’t even started on that. The amount of work to do in getting our health system back to mediocre and reasonably priced is enormous (currently we have mediocre performance and extremely highly priced – twice as costly as other rich countries).

    In 2009 the USA Spent Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Medical Care.

    USA health care spending grew 3.9% in 2010 following an increase of 3.8% in 2009. While those are the two slowest rates of growth in the 51 year history of the National Health Expenditure Accounts, they still outpaced both inflation and GDP growth. So yet again the health system expenses are taking a bigger portion of overall spending.

    As a result of failing to address this issue for decades the problem is huge and will likely take decades to bring back just to a level where the burden on those in the USA, due to their broken health care system, is equal to the burden of other rich countries. Over 2 decades ago the failure in the health care system reached epidemic proportions but little has been done to deal with the systemic failures. Dr. Deming pointed to excessive health care cost, back then, as one of 7 deadly diseases facing American business. The fact that every year costs have increased more than GDP growth and outcome measures are no better than other rich countries shows the performance has been very poor. The disease is doing even more harm today.

    Related: USA Heath Care System Needs Reform – USA Spends Record $2.3 trillion ($7,681 Per Person) on Health Care in 2008 – Systemic Health Care Failure: Small Business Coverage – Measuring the Health of Nations – How to improve the health care system performance – Management Improvement in Healthcare – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007

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