Category: Economy

OUR PROBLEMS: Out of control gas prices, gasoline fights, pollution and world climate change. I’m sure you know what I’m talking about.

BAD NEWS: One of the potential solutions is the water automobile. This is different from the water hybrid and is not yet coming out of the assembly lines. The reason for this is that there is little agreement on the strategies for trial. These designs are also too expensive to implement, filled with problems and not predictable in advance.

THE GOOD NEWS: Widespread development and experimentation by numerous back yard engineers has proven one method FEASIBLE. With this method you can run your traditional automobiles PARTIALLY ON WATER (that’s a “Water Hybrid”) with little or no modifications. * You should be able to increase your gas efficiency by as much as 59% (Toyota 99) or even 70% (Cadillac 99). * You could drastically cut down discharges and help reduce Global Warming. * You can improve efficient burning of fuel and consequently lessen wear and tear, engine clatter, high temperature in the engine, carbon deposits, etc.

Here you have come upon some unique information. There are a few people on the web who will not just sell you products, but when you become a member of a “club” or group you will learn how to make these systems by yourself at home. There are also some who will freely provide a HYDROGEN BOOSTER SYSTEM already put together so that you can prove its efficacy and have a copy to replicate. When you become a member you can also participate as a researcher. This is the reason they give you the gift.

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I saw a CNN special presentation last night that had as its title, “We Were Warned - America Out of Gas. The same holds true for the airline industry. They were warned but except for Southwest Airlines and perhaps one or two others, like Jetblue, the highly paid executives were too busy enjoying their perks to listen up. Now, they are in fact paying through the nose for jet fuel with no end in sight.

And how about the American automotive industry? Did they heed the warnings? Just look at all of the suddenly unwanted SUV’s and trucks now accumulating at dealerships. It took gas prices near $4.00 a barrel to wake the public up and to cut into that SUV demand. The executives produced a lot of SUV’s because they were high profit models and the nearly mindless public could be convinced that they just had to have one to stand out from the crowd. Then as gas prices mover ever higher the SUV buyers found that they had purchased a vehicle that the crowd no longer wanted.

In the CNN special there was a very interesting segment featuring Sir Richard Branson, the founder of Virgin Airlines. Sir Richard was quite straightforward in his assessment of the energy situation. He stated that the shocks to the world financial system will be greater than the combined effects of World Wars One and Two combined. To try to save the day he thinks that, quite correctly in my opinion, it will take a huge emergency effort on the part of world governments, by industry and the public. He is not at all sure that we will have enough time to move to alternative energy sources before time runs out and we are at nearly empty.

Bankers, who benefit from our fractional reserve system, never criticize the Fed, especially since it’s the lender of last resort that bails out financial institutions when crises arise.

This year the Fed even extended its bailout provisions to Wall Street brokerage firms, like Bear Sterns, but the Fed’s aggressive actions in trying to avoid a recession may well make matters only worse. The mismanagement of the spend, spend, spend federal government and the unofficial US policy over many years of letting the US Dollar lose value has unleashed inflationary forces that Ben Bernanke is going to find exceedingly difficult to control. Unleashing a flood of additional liquidity when excessive debt is already a major part of the problem will surely backfire on the Fed chairman.

It is true that special interests and bankers do benefit from the Fed, and may well get bailed out – just as we saw with the Long-Term Capital Management fund crisis a few years ago. Bankers own the earth; take it away from them but leave them with the power to create credit, and, with a flick of the pen, they will create enough money to buy it all back again. Take this power away from them and all great fortunes will disappear. Perhaps then this world would be a happier and better world to live in.

The present economic analysis is grim. Until very recently it appeared that the leaders of the world’s major central banks — Fed, ECB, Bank of Japan — all seemed comfortable with a further decline in the dollar. Unlike previous dollar decline periods, the Bank of Japan shows little interest in propping up the dollar, and the ECB, despite signs of moderating growth in Europe, is not sending monetary easing signals.

The Russian economy is characterized as a transition economy since the fall of the socialist system in the beginning of the 1990’s. In principle it is a market economy adhering to the basic freedom of enterprise and market based pricing mechanisms but the characterization of a transition economy refers to the many features that constitute the inherited socialist institutions still influencing the operation of the economy.

The Russian economy has passed through a long and wrenching depression. Official Russian economic statistics indicate that from 1990 to the end of 1995, Russian GDP declined by roughly 50%, far greater than the decline that the United States experienced during the Great Depression . Since Putin become President, now Prime Minister, the Russian economy has fully recovered and continues to grow strongly, buoyed by rising terms of trade, which, in turn, are supporting a boom in domestic consumption.

Part of Putin’s good fortune in presiding over a rapid growing economy is from good decisions on his part, for example, Putin championed the 13% flat tax in Russia which did much to foster economic growth, and part of the high growth rate is by good luck. Putin had little to do with soaring energy prices over the past year, the US had more to do with that with its disastrous Iraq war adding to oil’s price a war premium, yet Russia as a major oil and gas producer has benefited from a tremendous surge in export revenues as oil approaches $150 a barrel.

You might be wondering just how bad can the US housing crisis get? The short answer is that it will probably be much worse than you now think.

The National Association of Homebuilders, as you might suspect, keeps a close eye on the nation’s economic trends. Home building is an important part of the US economy, accounting directly and indirectly for about 10% of all economic activity. The following is from one of the NAHB’s recent reports.

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The Economy Skates Close to Recession

GDP revisions for the fourth quarter of 2007 left the overall economic growth rate at a meager 0.6%, but the estimated contraction in residential fixed investment deepened to a 25.2% annual rate and RFI subtracted a whopping 1.25 percentage points from the GDP growth rate.

The housing contraction weighed on GDP growth from other directions as well, including the reeling housing finance system and components of retail sales closely related to housing market activity.

Available data, including housing starts and building permits for January and February, point toward another sharp contraction in RFI and another very weak GDP growth rate in the first quarter of this year, a pattern that skates dangerously close to recessionary conditions.

We now view a mild recession as a nearly even bet, but we also believe that aggressive actions by the Fed and the recently enacted economic stimulus package virtually guarantee stronger growth by the second half of the year.

To see more go to NAHB
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Note that the NAHB forecasters still take the common view that things will pick up in the second half of the year. Most economists, government leaders, and the average consumer is, in my opinion, still in denial as to how deep and prolonged this downturn will be.