In Wake of JP Morgan Chase Debacle, Where is the Tea Party Again?

The fine folks at JP Morgan Chase continued to make unchecked bets (the same kind that A.I.G. made and got burned) and lost big: $2 Billion in the last 6 weeks.  A few of those folks have since lost their jobs.  But not the man who lobbied the hardest against regulations that would prevent Chase from making those bets – no, he still has his job.  The shareholders are doing what they’re supposed to be doing: asking tough questions.  Will Dimon keep his job?  Sure – crony capitalism rewards failures at the top.

What I want to know is where are the massive rallies by the Tea Party calling for Dimon to be fired and regulations to be imposed on gamblers masquerading as bankers?

The answer is easy: there aren’t any and there won’t be any.  The Tea Party was co-opted by the same folks who perpetrated the worst activities that led up to the Great Recession and our continued economic malaise.  No substantive changes were made in the way Chase or other banks do business – save the tens of Trillions of dollars they got for free from the Federal Reserve.

The co-opting included distracting the populists in the Tea Party with the supposedly scarier threat of a Black Man in the White House.

Meanwhile, speculators were allowed to run up the cost of oil and gasoline, which acts as a choke collar on the American economy, and other right-wing economic theories were imposed across Europe, which has led to what is likely to be another recession:

[h/t Bonddad]

The combination of high oil/gas prices, US corporations sitting on Trillions of dollars in cash (not hiring), and European economic weakness will not help the US economy.  Will our “recovery” be over soon; will we follow Europe into weaker and weaker economic conditions?  Don’t ask the Tea Party, they don’t truly care.

March 2012 Hybrid/Electric Vehicle Sales Jump

More of this, please:

Consumers bought a record 52,000 gas-electric hybrids and all-electric cars in March, up from 34,000 during the same month last year.

The two categories combined made up 3.64 percent of total U.S. sales, their highest monthly market share ever, according to Ward’s AutoInfoBank. The previous high was 3.56 percent in July 2009, when the Cash for Clunkers program encouraged people to trade in old gas guzzlers for more fuel-efficient cars.

While obviously not dominating the vehicle market, vehicles that use considerably less gas than most vehicles are selling better than ever.  There will be ups and downs on monthly and yearly basis in the future, of course.  I hope the day isn’t too far off when electrics and hybrids make up 50% of the market.  And to the free-market worshippers: this is how markets should work.  New technologies should receive a little assistance to spur market penetration.

The transportation sector constitutes a significant portion of our greenhouse gas pollution.  Plus it makes good economic sense to spend money on your own car instead of shoveling it over to the most profitable corporations history has ever known.  An important next step is when we deploy charging stations across urban areas.  There isn’t a good reason to pay $15,000 per battery pack.  Then, distributed renewable energy generation will wrap up my vision of the future.  There is, after all, no need to pour dirty fossil fuels into our transportation devices.

Americans Don’t Think Employer Belief Should Impede Their Access To Insurance Coverage

A solid nominee for the “Duh!” moment of the day: polling shows that Americans think they should have unfettered access to insurance coverage – that procedures and treatments should be available to those who are insured.

Put another way – why should employers get to decide what insured Americans get access to?  The Teabaggers didn’t think that the government should have that ability (not that the recent health insurance legislation ever proposed doing so), so why should it be okay for employers to restrict access, as Republican politicians are advocating?

All that said, this whole thing wouldn’t even be an issue if universal health care was enacted instead of forcing millions of Americans into the for-profit insurance industry.

Slow 2011 Hybrid Car Sales & $4 Gas

I’ve read numerous articles in the first week of the new year describing the “disappointing” sales numbers of hybrid and electric vehicles in the U.S. in 2011.  It somehow makes sense to declare a subsector industry dead after sales came in under expectations.  Interestingly, the same hybrid/electric naysayers didn’t have the same opinion when internal combustion car sales tanked a few years back.

Here is the latest article, written from the Detroit Auto Show.  It brings together a couple of salient facts which aren’t explored in any depth.

Hybrid sales waned as gasoline prices ebbed in 2011, declining to 2.2 percent of the market from 2.4 percent a year earlier, according to the research firm LMC Automotive. Meanwhile, sales of the Nissan Leaf electric car and the Chevrolet Volt plug-in each fell short of expectations.

Analysts do not expect the segment to grow significantly this year: the combination of gas prices below $4 a gallon and higher upfront costs for the cars is not attracting consumers.

I understand the higher upfront costs, especially in the continued economic malaise that most Americans are experiencing.  The $4 per gallon of gas is an interesting factoid to throw in there though, don’t you think?  After all, we’ve only visually seen $4 gas once so far.  Gas prices in 2011 came close to $4, but the magic `4` never appeared on signs.

Which brings me to the following: demand in 2011, especially the 2nd half of 2011, was multiple percentage points below demand in 2010.  Yet gas prices rose to close to $4 anyway.  It’s all supply and demand, you might say, especially demand in other countries which would lead to higher fundamental prices.  Well, oil prices shot up in Feb-Apr from $84 to almost $114 per gallon, then fell back below $80 by Sep (when gas prices were highest, despite slack demand in the U.S.).  Oil is trading at more than $100 per gallon again now, yet gas prices continue to decline.

No, there are more variables than simply supply and demand at play.  $4 gas represents an important psychological barrier for traders just as it does for gasoline consumers.  There is incredible pressure to keep prices from rising above that threshold because too few people can think critically: when prices pass the threshold, one trader panics, then most everybody else panics.  Consumers are just as irrational, however.  More than anything, they sense that $4 gas represents some kind of significant threshold, even though too few consumers can analyze at which threshold gas represents a significant point at which their household budget is adversely affected.  Moreover, consumers have an irrational desire to recoup additional costs of a hybrid/electric vehicle inside of 1 year.  Where are their similar demands for products they’ve been buying their entire lives?  It really doesn’t exist.

In 2000, Toyota sold 5,600 Prii in the U.S. (the 1st year available).  In 2011, Nissan sold 9,700 Leafs in the U.S. (the 1st year available), or 73% more units than the Prius.  75% more sales of just 1 new hybrid/electric is a very significant number.  Imagine if there were 73% more sales of a new kind of cell phone than a different cell phone 10 years after the first was introduced.  That would be touted as a wild success story.  The poor treatment of the hybrid/electric vehicle segment is pitiful.  Is there a long path toward 1.5 million electric vehicles on the road by 2015?  Yes, there is.  But you might want to share with the rest of the car industry that having aggressive 2015 goals is a really bad idea.  I doubt you’ll receive much of an audience.

Oil Back Near $100/Barrel: Where Is The Demand?

The price per barrel of oil is back up near $100 as of the end of last week and through today’s trading.  According to the free-marketeers, that must mean gasoline demand has been through the roof.  Oops, not so much: demand is down -4.3% YoY, at 8671 M gallons vs. 9056 M a year ago, as noted at The Bonddad Blog.

Clearly, something other than just demand is and has been at work.  Oil trading is as much gambling as the stock market is.  All the volatility that consumers are affected by arises primarily from large amounts of bets placed on anticipated prices.

Why is this important?  As NDD notes, “This [oil's price] is back above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump declined $.03 to $3.42 a gallon. Measured this way, we probably are still about $.15 above the 2008 recession trigger level.”  Those bets have real-world implications.  Recessions are easier to trigger when oil and gas prices remain high.

Citigroup Earnings Rise 74% to $3.8 Billion

I think that headline says enough, don’t you?

If not, there’s this (emphasis mine):

Three years after needing a (taxpayer funded) federal bailout (of billions of dollars) to survive, Citigroup reported its seventh-straight quarterly profit, with a 74 percent rise in the third quarter despite dismal results of its investment bank.

Remember, instead of consumer advocates or labor (you know, people who actually voted for him), Team Obama has people from Citi and other super-banks advising him on economics.  Does anybody seriously think that’s accidental?  No, it’s exactly what Obama wants.  Think that through carefully as you hear his campaign ramp up attacks on Romney for being too connected to Wall Street.  Rolling up his sleeves and giving speeches around the country is meant to obscure that hypocrisy.  Tell me again exactly how Romney would be worse if you’ve lost your home and/or job in the past 5 years while Citi got bailed out with your tax money and is now posting record profits.  Tell me how Romney would be worse when real incomes have fallen for the first time since WWII with a “Democratic” President pushing conservative economic policies as hard as his Con predecessor.  Because on too many issues, I’m not seeing enough of a difference.

Markets Finally Reflect What Most Americans Figured Out A Long Time Ago: Austerity Is The Wrong Answer

The debt “deal” that the Republican Teahadists convinced an amenable President Obama to agree to won’t actually do much of what it was touted to do.  As usual, the political theater of Washington entertaining Washington took center stage while doing nothing to address the crises bubbling around the country.  The deficit will continue to set records, largely because the Bush-Obama tax cuts still aren’t paid for and the Bush-Obama occupations also continue to be unpaid.  Add to that millions of underemployed Americans, while those who are employed are tending to make less than they did before; none of whom are shopping like they did 5 years ago (because they can’t).  Add to that a refusal to understand Economics 101, which says if businesses aren’t spending (which they aren’t; instead, they think hoarding Trillions of dollars of cash is a good idea), then government should spend (especially when consumers no longer can), but the Teahadists force exactly the opposite action (government spending less), and it should be obvious what’s going to happen to the U.S. economy: it will contract.  It has to.  Every component of GDP is declining, which is exactly what the Teahadists want going into the 2012 election year.

Finally, Wall St. has figured it out.  The markets since the “deal” earlier this week have fallen by multiple percentage points.  In fact, the Dow today lost 512 points to turn in its worst performance since the 2008 financial crisis.  Commodities are all trading sharply lower.  All of this was easily forecastable: none of the fundamentals which led up to the 2008 financial crisis have appreciably improved.  Some of the commentary would be downright laughable if it weren’t so important to actually understand what happened:

“The conventional wisdom on Wall Street was that the economy was growing — that the worst was behind us,” said Peter Schiff, president of Euro Pacific Capital. “Now what people are realizing is the stimulus didn’t work, and we may be headed back to recession.”

Wall St., like Washington, exists in its own self-made bubble.  The reality that the rest of us face (high unemployment, falling wages, foreclosures) were not faced by the moneyed elite.  “The conventional wisdom of Wall Street” is a joke.  What indices were they looking at that indicated the economy was free of the troubles that assailed it in 2007-2010?

“The stimulus didn’t work.”  This is another stupid talking point.  What chance did it have to work?  It was too small (by at least half) and directed at things that would never cycle the money through the part of the economy that actually matters: consumers.  The stimulus couldn’t work when trillions of dollars of taxpayer money were given away to Wall St. firms who continue to sit on it, too dumb to realize they’re still causing the economy harm.

So congratulations, Wall St.  I’m so glad there is a shining example of a leading indicator finally catching up to where many of us have been for a long time.  It must be irony’s sense of humor or something…

Carmakers Agree To Near-Doubling of mpg: 54.5 by 2025

I didn’t think I’d see this day come any time soon: U.S. and foreign carmakers have agreed with the Obama administration to increase miles-per-gallon standards of cars and light trucks sold in the U.S. to 54.5mpg by 2025.  This follows news that standards will be increased to 35.5mpg by 2016.

Note that both of these standards are well within reach of today’s technologies.  Nothing revolutionary has to happen in the next 14 years to achieve these standards, as carmakers have already demonstrated in Europe and Asia.  What’s been missing in America is the will power to do the strategically correct thing: reduce fuel consumption, which will help ease the impact on Earth’s climate system, save consumers money, and boost our national security standards, all at one time.

Another Republican In Favor Of Bigger Government

Not that the rabid right-wing teabaggers will deign to realize the irony of the situation, but Sen. Shelby (RTB-AL) wants to break the Consumer Financial Protection Board under the weight of unnecessary, bloated government.  Instead of letting the agency do its duly appointed business, Shelby wants to set up a five-member panel over the director, give Congress control over its finances and give corporate mega-banks that caused the Great Recession veto power over new regulations.

Stay classy, you big-gubmint lover.

Millions of Gallons of Diesel Fuel Injected into Ground across U.S.

File this under the “I’m Not Surprised” category.  Drilling corporations have spent years and millions of dollars trying to prevent anyone from finding out what the constituents of the fluids they were pumping into the ground to force natural gas and oil up.  Now, thanks to an investigation by the U.S. House Energy and Commerce Committee’s year-long investigation, part of the answer has come to light.

I will borrow a phrase from all the anti-American voices who came out from the shadows during the Bush Regime: “If you have nothing to hide, you have nothing to fear from us looking into your business.”  Hiding behind claims of proprietary business information is just about as cowardly as these corporations can get.

The congressional investigation found that oil and gas service companies have injected over 32 million gallons of diesel fuel or hydraulic fracturing fluids containing diesel fuel in wells in 19 states between 2005 and 2009.  In addition, the investigation finds that no oil and gas service companies have sought – and no state and federal regulators have issued – permits for diesel fuel use in hydraulic fracturing, which appears to be a violation of the Safe Drinking Water Act.

We all know who was “running” the country during these years.  And don’t think I’ll hold back any condemnation if I find out the Obama administration continued these disgusting practices.  I’m not surprised that dirty energy corporations didn’t seek approval for their likely illegal actions – they think they’re above American law.  I also won’t be surprised if they’re never held accountable either – they have worked hard to buy off our elected officials.