Consumers Step Back; U.S. Cedes Energy Race: Commentary Review
July 31, 2010, 10:15 AM EDTBy Bloomberg
Waning Confidence Is Bad Omen
Consumer confidence is low and dropping around the world. And I am worried.
In a “60 Minutes” interview on June 7, 2009, U.S. Federal Reserve Chairman Ben S. Bernanke said: “Well, I absolutely agree that confidence is key. People don’t know what’s happening. And they’re afraid. And they’re not sure what, you know, whether or not the system is going to recover. So, how do you get confidence, that’s the question. And I think the way to get confidence is to show progress.”
Improvements in what John Maynard Keynes called these animal spirits -- which he defined as “a spontaneous urge to action rather than inaction” -- are vital if we are to see a recovery emerge from what is, hopefully, a once-in-a-lifetime, financial cataclysm.
When the U.S. housing market began to collapse in 2006, animal spirits among businesses and consumers started falling precipitously from July of that year. A broadly similar story happened about six months later in the U.K. (July 29)
David G. Blanchflower
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Senate Looks Backward
Right now the U.S. Senate is conducting a master class on the perils of legislation by rearview mirror. On July 27, when Majority Leader Harry Reid unveiled the “Clean Energy Jobs and Oil Company Accountability Act,” the two most powerful clean energy provisions were missing: a cap on carbon emissions from the electric power sector and a national Renewable Electricity Standard (RES), which would require utilities to generate at least 15 percent of their electricity from renewable sources by 2021.
For years, business leaders from General Electric Chief Executive Officer Jeff Immelt to venture capitalist John Doerr have warned that if America failed to pass a comprehensive climate-and-energy bill, the country risked losing the clean energy race to China -- sacrificing the jobs of the future in a timid, ill-fated effort to preserve the jobs of the past. Now those warnings are coming true.
Clean energy advocates were angry but not surprised on July 22, when Reid said he was pulling the plug on the carbon cap. Powerful utilities were withholding support. President Barack Obama wasn’t trying to forge a compromise. And key Democratic senators had no appetite for a bill that might cause a modest, short-term increase in electricity prices -- potentially endangering some 20th century manufacturing jobs -- even if it helps create many more 21st-century jobs by making clean energy competitive with coal. (July 30)
Eric Pooley
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Australia’s ‘Seinfeld Election’
Here’s the plot: an unmarried, foreign-born, atheist woman whose partner is a male hairdresser wants to lead a major nation famous for manly men. Her opponent is the “Mad Monk” -- a Speedo-loving amateur boxer who once studied to be a priest.
The latest Fox sitcom? Nope, it’s the script for next month’s Australian election. It really would be hard to make this stuff up. And yet there is a farcical angle worth noting here. The Aug. 21 contest has been dubbed the “Seinfeld Election,” meaning that it’s about nothing.
No bold plans about Australia’s future from Labor Prime Minister Julia Gillard or Liberal opposition leader Tony Abbott, no grand designs to improve competitiveness, no fresh thinking about the risks of becoming China’s fuel station. Plenty of chatter about emotionally charged issues such as asylum seekers arriving by boat. Little about what role the nation of 21 million wants to play in a fast-changing global economy. (July 26)
William Pesek
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Fannie, Freddie Elude Scrutiny
The White House says it’s finally ready to consider new ideas for what to do about Fannie Mae and Freddie Mac. Still absent from the government’s agenda is any serious effort to hold anyone accountable for their ruin or investigate why they collapsed.
Back in December 2003, after Freddie disclosed what in retrospect was a relatively mild accounting scandal, its regulator published an exhaustive 185-page report cataloguing the company’s financial-reporting abuses. In May 2006, the same regulator disclosed similar findings about Fannie’s books in a report covering 348 pages.
Strangely, there’s no similar examination under way today by the Federal Housing Finance Agency into the reasons why Fannie and Freddie imploded in 2008, or whether anyone at the companies did anything improper. That’s probably because the agency and its predecessor, the Office of Federal Housing Enterprise Oversight, bear responsibility for letting the companies resume their natural tendency to run amok.
Other probes seem to be going nowhere. The federal panel charged with investigating the companies’ demise, the Financial Crisis Inquiry Commission, is overloaded with other assignments and running out of money. (July 29)
Jonathan Weil
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--Editors: John Lear
To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net
