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Monthly Archives: March 2012

Europe’s Scariest Chart Just Got Scarier

via Zero Hedge

The last time we plotted European youth unemployment in what was dubbed “Europe’s scariest chart” we were surprised to discover that when it comes to “Arab Spring inspiring” youth unemployment, Spain was actually worse off than even (now officially broke) Greece, whose young adult unemployment at the time was only just better compared to that… of the United States. Luckily, following the latest economic (yes, we laughed too) update from Greece, it is safe to say that things are back to normal, as Greek youth unemployment is officially the second one in Europe after Spain to surpass 50%. In other words, Europe’s scariest chart just got even scarier.

Read the rest (and see the scary chart) here.

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The Beginning of the End of Wind

 Matt Ridley

Here is my Spectator cover story on wind power:

To the nearest whole number, the percentage of the world’s energy that comes from wind turbines today is: zero. Despite the regressive subsidy (pushing pensioners into fuel poverty while improving the wine cellars of grand estates), despite tearing rural communities apart, killing jobs, despoiling views, erecting pylons, felling forests, killing bats and eagles, causing industrial accidents, clogging motorways, polluting lakes in Inner Mongolia with the toxic and radioactive tailings from refining neodymium, a ton of which is in the average turbine — despite all this, the total energy generated each day by wind has yet to reach half a per cent worldwide.

If wind power was going to work, it would have done so by now. The people of Britain see this quite clearly, though politicians are often wilfully deaf. The good news though is that if you look closely, you can see David Cameron’s government coming to its senses about the whole fiasco. The biggest investors in offshore wind — Mitsubishi, Gamesa and Siemens — are starting to worry that the government’s heart is not in wind energy any more. Vestas, which has plans for a factory in Kent, wants reassurance from the Prime Minister that there is the political will to put up turbines before it builds its factory.

This forces a decision from Cameron — will he reassure the turbine magnates that he plans to keep subsidising wind energy, or will he retreat? The political wind has certainly changed direction. George Osborne is dead set against wind farms, because it has become all too clear to him how much they cost. The Chancellor’s team quietly encouraged MPs to sign a letter to No. 10 a few weeks ago saying that ‘in these financially straitened times, we think it is unwise to make consumers pay, through taxpayer subsidy, for inefficient and intermittent energy production that typifies onshore wind turbines’.

Putting the things offshore may avoid objections from the neighbours, but (Chancellor, beware!) it makes even less sense, because it costs you and me — the taxpayers — double. I have it on good authority from a marine engineer that keeping wind turbines upright in the gravel, tides and storms of the North Sea for 25 years is a near hopeless quest, so the repair bill is going to be horrific and the output disappointing. Already the grouting in the foundations of hundreds of turbines off Kent, Denmark and the Dogger Bank has failed, necessitating costly repairs.

In Britain the percentage of total energy that comes from wind is only 0.6 per cent. According to the Renewable Energy Foundation, ‘policies intended to meet the EU Renewables Directive in 2020 will impose extra consumer costs of approximately £15 billion per annum’ or £670 per household. It is difficult to see what value will be got for this money. The total carbon emissions saved by the great wind rush is probably below 1 per cent, because of the need to keep fossil fuels burning as back-up when the wind does not blow. It may even be a negative number.

America is having far better luck. Carbon emissions in the United States fell by 7 per cent in 2009, according to a Harvard study. But the study concluded that this owes less to the recession that year than the falling price of natural gas — caused by the shale gas revolution. (Burning gas emits less than half as much carbon dioxide as coal for the same energy output.) The gas price has fallen even further since, making coal seem increasingly pricey by comparison. All over America, from Utah to West Virginia, coal mines are being closed and coal plants idled or cancelled. (The US Energy Information Administration calculates that every $4 spent on shale purchases the same energy as $25 spent on oil: at this rate, more and more vehicles will switch to gas.)

So even if you accept the most alarming predictions of climate change, those turbines that have ruined your favourite view are doing nothing to help. The shale gas revolution has not only shamed the wind industry by showing how to decarbonise for real, but has blown away its last feeble argument — that diminishing supplies of fossil fuels will cause their prices to rise so high that wind eventually becomes competitive even without a subsidy. Even if oil stays dear, cheap gas is now likely to last many decades.

Read the rest here.

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Green Mountain Option Bets Raise Eyebrows

Green Mountain put volume surges before Starbucks news

* Green Mountain downside March puts heavily traded

* Trading in Starbucks $52.50 strike calls stand out

By Doris Frankel

March 9 (Reuters) – A heavy burst of bearish option action in Green Mountain Coffee Roasters Inc in the hours before Starbucks announced plans to launch a single-cup coffee and espresso brewer has raised eyebrows among some option market participants.

Green Mountain’s Keurig machines are the No. 1 single-cup brewers in the United States. Starbucks Corp, the world’s biggest coffee chain, provides coffee refills for Keurig machines under a partnership with Green Mountain and its announcement late on Thursday was seen as a competitive threat to its partner.

Option bets on a big move up in Starbucks shares and on a sharp drop in Green Mountain stock preceded the news.

“The level of aggressiveness that traders early on Thursday came for Green Mountain March downside puts was very suspicious,” said Alan Thompson, options market maker at Timber Hill, a division of Interactive Brokers Group. “It raised our eyebrows.”

The put buying in Green Mountain “was off the charts into last night’s announcement,” said Jon Najarian, a co-founder of online brokerage TradeMonster in Chicago, who also noticed very strong buying of upside calls in Starbucks on Wednesday.

“We expect that the regulators will take a deeper look at both Starbucks and Green Mountain ahead of (Thursday) night’s announcement,” Najarian said.

The U.S. Securities and Exchange Commission, which looks into unusual stock and options activity, declined to comment.

Read the rest here.

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James Dyson Reinvented the Vacuum. Now He Wants to Remake the Economy

Doug Saunders

You have to drive far out into the West Country, through forested hills and ancient villages, if you want to find the last of the mad British inventors. His wide glass desk perches amid a clutter of aluminum tubes, DC-pulse motors, lithium-polymer batteries and whirring prototypes in a distant corner of a sleek, silver building that contains 1,450 engineers, accountants, marketing people, managers and lawyers, and not a single labourer.

Behind that desk sits the silver-haired man who has become the only living British inventor every school kid here can name, a guy known for building actual things. Five years ago, that status would have been almost quaint. Today, it puts him in the political vanguard, both at home and, increasingly, across the Atlantic.

James Dyson’s surname adorns an expanding array of bag-less vacuum cleaners, blade-less fans and washroom hand dryers that actually dry your hands. His private company claimed more than a billion pounds in worldwide sales last year, growing right through the recession.

Now, though, Mr. Dyson, 64, is even better known as the leading proponent of the suddenly popular idea that Western nations ought to return to manufacturing and exporting physical goods, after decades of shifting the roots of their economies to services, property and finance.

His call for an assemblyline renaissance has echoed far beyond Britain, where he was appointed a senior adviser to Prime Minister David Cameron’s coalition government and has spawned a raft of policies.

Read the rest here.

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Weekend Infographic: Humans Vs. Animals

Humans are the most unique animals on the planet. Because of our ability to effectively communicate, opposable thumbs, and other traits.

No other species can compare to a human’s ability to run long distances. Our two legs allow us to run long distances without excreting large amounts of energy. Humans are truly amazing unique animals, and our abilities to continue expand our span of thought show that we are capable of many more great things. I can’t imagine where the human race will be 30 years from now, but I can assure you that it will be an amazing life as we experience it.

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NFL: Peyton Manning Meets With Denver Broncos

ENGLEWOOD, Colo. — Peyton Manning’s whirlwind free-agency tour kicked off in grand fashion, complete with a chartered plane coming to pick him up and a helicopter hovering overhead as he met with the Denver Broncos.

And this was only Day 1 of his adventure.

Manning spent Friday in Tim Tebow’s neighborhood, chatting with the Broncos for nearly six hours.

Speculation was that Arizona was next up, and television crews were staking out the Cardinals’ headquarters in Tempe on Saturday. But there was no sight of the superstar.

Not that the facility was quiet. The Manning frenzy coincided with Kurt Warner’s “Ultimate Football Experience,” a fundraiser for his foundation.

Manning is the NFL’s marquee free agent after being released by the Indianapolis Colts two days ago. The Broncos rolled out the red carpet for visit by the four-time MVP.

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AAA EU countries “possibly have better” say when replacing Juncker

But hey, if the other nations don’t like that, they are welcome to try financing their own budgets on their individual credit ratings…

ATHENS (Reuters) – Euro zone countries with a top credit rating might have a bigger say in talks to replace Jean-Claude Juncker as chairman of the bloc’s finance ministers, a Greek newspaper quoted German Finance Minister Wolfgang Schaeuble as saying on Saturday.

Asked in an interview in weekly To Vima whether Juncker’s successor would have to come from a triple-A country, Schaeuble said: “Member states that observe the euro zone’s fiscal rules and are rewarded for this by the rating agencies and the market will possibly have better chance to promote their candidates for the post.”

Schaeuble declined, however, to make further comments, saying he did “not want to talk publicly about possible candidates” or “make speculations on the issue”.

Four out of the euro zone’s 17 countries currently have a top credit rating: Germany, Finland, Luxembourg and the Netherlands.

Juncker’s term as head of the so-called Eurogroup expires in June and he has said he does not want to keep the job.

Schaeuble reiterated in the interview that there is no guarantee that a second bailout plan for Greece, due to be approved by euro zone finance ministers next week, will work. “No-one can’t rule out that Greece won’t need at some point by then (2020) a third package,” he told To Vima.

He also dismissed any notions that Germany was using the euro zone crisis to dominate Europe.

“Drawing the conclusion that we want to dominate Europe is really, just foolish”, he said. “I can assure you that Germany has neither the intention nor the power to impose such a dominance”.

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Robert Nardelli resigns from Cerberus

He will of course be as missed as at his other past corporate flings; GE, Home Depot, Chrysler…

(Reuters) – Robert Nardelli, the former head of Chrysler and Home Depot, has stepped down from his operating roles at Cerberus Capital Management LP, the private equity firm said this week.

Cerberus said Nardelli, who served as chief executive of the firm’s management consulting affiliate as well as its firearms-making conglomerate, resigned from both posts effective immediately.

Nardelli will continue to serve as senior adviser to Cerberus CEO Steve Feinberg, the firm said.

In a statement, Nardelli said he was stepping away from active management roles at Cerberus to devote his attention to XLR-8 LLC, his investment and consulting company.

Nardelli, a square-jawed General Electric veteran executive who was known as “Little Jack” at the conglomerate for his emulation of mentor Jack Welch, left GE when he was passed over as Welch’s successor.

He became CEO of Home Depot in 2000 but left in early 2007 after losing the support of the board. His $210 million severance package from the chain of home improvement superstores made him a lightning rod for criticism.

Several months later, he took the helm at Chrysler, the then deeply troubled automaker owned by Cerberus.

He arrived promising to take a $1 salary and to restore the company’s reputation as an American icon.

Eighteen months later, Nardelli stepped down following Chrysler’s bankruptcy, the first-ever by a major U.S. automaker.

He returned to Cerberus, where he was eventually named CEO of Cerberus Operations and Advisory Company, a consulting affiliate, and Freedom Works, a gunmaking company in the private-equity firm’s portfolio.

Cerberus said Chan Galbato, a long-time Nardelli protege, would succeed him as CEO of Cerberus Operations and Advisory Company LLC, the consulting affiliate.

At Freedom Works, where Nardelli took over as CEO in January, Cerberus said George Kollitide would act as interim CEO of the firearms maker while a permanent successor is found.

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Velocipede Magic

[youtube://http://www.youtube.com/watch?v=Cj6ho1-G6tw&feature=relmfu 450 300]

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Gropers and Masturbating Men: Welcome to the DC Metro

Metro took several steps this week to address complaints that it wasn’t taking sexual harassment seriously enough.

The agency has established a new task force to address sexual harassment on the transit system, has created an email box ([email protected]) for complaints, and is urging its employees to report any cases to police, General Manager Richard Sarles told employees on Friday.

He specifically urged all workers to call Metro Transit Police if riders report any concerns, responding to complaints that some Metro workers had minimized, even laughed, when riders complained. He also called out Metro workers who make disrespectful comments to riders themselves.

“I was disturbed to hear their reports about assault and intimidation while riding trains and buses, particularly those accounts which involved our employees making disrespectful comments,” Sarles wrote to his more than 11,000 employees in a newsletter on Friday.

Several riders had testified at a D.C. Council hearing last month that Metro needed to take harassment more seriously, recounting stories of being groped on trains and accosted by masturbating men. They said other transit agencies had put up public service advertisements to address the issue.

The complaints became more heated, though, when a Metro spokesman told WUSA9 that “one person’s harassment is another person’s flirting.”

Since then, activists had been taking to Twitter, asking Metro to apologize for the comments and deal with the issue.

Read the rest here.

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You Missed the Epic Bull Market. You’re Not Alone

By on March 09, 2012

Three years ago this morning, I was on a D.C.-bound train with Jack Bogle, the pioneer investor, who I was profiling for this magazine. The then 79-year-old heart-transplant recipient had been recovering during a long stay in the hospital, where he annoyed his nurses by fuming at everything that had gone wrong with the financial sector and corporate governance. The Dow Jones industrial average was at half its 2007 highs, visiting levels it hadn’t seen since 1996—and 1966 if you accounted for inflation. Yes, 1966(!), when the average house cost $14,200 and gasoline—extra lead, please—went for 32 cents a gallon.

Back to spring 2009: The market seemed to tumble by triple digits every day. With $9 trillion in stock value having evaporated since 2007—family wealth dived the most since the Depression—investor sentiment was beaucoup putrid. Learned helplessness was rampant.

As our Acela stuttered its way into Union Station, Bogle confessed he had a feeling in his bones that was the inverse of what he had felt in the heady spring of 2000. That’s when the market was at such nosebleed, tech-fetish levels that he broke his long-held vow of passivity—”Don’t just do something, sit there!”—and dumped all his stocks for bonds. Now, with stocks pricing in fiery Armageddon, he thought it was time to go headlong into the market, so help him G-d. Hell, he thought, if the system were going down any more than it already had, we’d all be eating cat food anyway. The reward for taking just basic market risk, he argued, hadn’t looked so attractive in years.

Turns out Bogle called a generational low in the market (and to me, dammit, in person! Why, why didn’t I buy, buy?). Since March 9, 2009, the broad U.S. market, as measured by the Wilshire 5000 index, has surged 110 percent, with dividends reinvested. Emerging-market shares have returned 123 percent. The Russell 2000 index of small-capitalization companies has delivered a 146 percent return—snubbing its nose at those who argued that firms which did not have financing autonomy and tons of cash would be doomed. Apple (AAPL), the stock of our times, is up a sadistic 555 percent from where it was on that early spring day. Don’t say Henry Blodget 2.0 didn’t warn you.

Chances are you missed out anyway. History will show that Americans were substantially underinvested during this epic bull run. Equity fund flows have been in the dumps for four years now, a trend that accelerated last summer, when fears of a tzatziki-greased global economic contagion knocked stocks back down. But not for long; they recently hit highs not seen since 2008.

The economy and stock market need not, and often will not, move in lockstep. Three years ago unemployment was at 8.7 percent, vs. 5 percent in December 2007, the month the recession began. Joblessness would go on to spike into the double digits by October 2009. But in the intervening seven months, the Dow Jones gained 30 percent. And even as the economy has since hacked, coughed, and limped through a mostly jobless recovery, the Dow went on to return another 42 percent.

Last autumn, Vanguard, the index fund shop Bogle founded, published research on how a model portfolio divided equally between stocks and bonds fared in economic expansions and recessions since 1926. Its conclusion: “The average real returns of such a portfolio since 1926 have been statistically equivalent regardless of whether the U.S. economy was in or out of recession.”

Don’t just do something, right?

Back to the here and now. For all the bull run’s virility, and despite nine quarters of earnings growth, the U.S. stock market’s valuation remains 14 percent below its five-decade average. Its price-earnings ratio hasn’t been this low while the index was at a 52-week high in 23 years, according to data compiled by Bloomberg.

So if you missed out last time, take heart; you’re not alone. If history and human nature are any indicators, investors will dive back in, and with gusto, only after the market surges way past these levels.

Source

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Buffett’s NetJets Countersued by U.S. Gov’t for Unpaid Taxes

Seems that Buffett hasn’t done enough slutting and prostituting of himself for the Obama administration. I’m sure we’ll soon see more pandering…
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By Andrew Harris – Mar 9, 2012 3:51 PM ET

NetJets Inc., the private-plane company owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), was countersued by the U.S. over $366 million in taxes and penalties.

NetJets in November sued the U.S., saying the federal government had wrongly imposed taxes, interest and penalties totaling more than $642.7 million.

Claiming the federal Internal Revenue Service wrongfully assessed a so-called ticket tax — an excise tax on payments made in exchange for air transportation — to private aircraft owners maintaining their own planes, the Columbus, Ohio-based company demanded refunds and abatements.

The federal government, in a revised answer and countersuit filed yesterday in federal court in Columbus, rejected NetJets’ claims and alleged that four of the company’s units owe unpaid taxes and penalties.

NetJets Aviation Inc. owes more than $302.1 million, and another unit, NetJets International, is liable for $52.9 million, the U.S. said. Executive Jet Management Inc. owes $10 million while NetJets Large Aircraft owes $1.19 million, the U.S. claimed.

“NetJets doesn’t comment on pending litigation,” General Counsel Colleen Nissl said in a statement e-mailed to Bloomberg News.

The case is NetJets Large Aircraft Inc. v. U.S., 11- cv-01023, U.S. District Court, Southern District of Ohio (Columbus).

Source

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