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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (35707)	8/22/2005 6:12:28 PM
From: CalculatedRisk	Read Replies (3) \| Respond to of 116555

OK, I'll step up and defend Keynes (especially since he was correct). Keynes was exaggerating for effect. At the time, unemployment was 25%+ (remember he wrote that during the Great Depression). He was arguing for useful fiscal stimulus and then argued even a useless public works project (like filling old bottles with notes) would be better than doing nothing. Most people don't appreciate what the Depression was really like. At the time there were no safety nets. I repeat: a useless public works project would be better than nothing. Comparing Keynes exaggeration of how to stimulate the economy to the "broken window" theory is lunacy. One is intended to spur fiscal stimulus (correctly), the other is bad economics.

To: mishedlo who wrote (35707)	8/22/2005 9:11:33 PM
From: Chispas	Read Replies (1) \| Respond to of 116555

Barnett Shale's Rise Can't Offset Declines Aug. 22-- Statewide production of both crude oil and natural gas declined during the first six months of 2005 from the previous year, despite a 17 percent increase in production in the burgeoning Barnett Shale. Production figures from the Texas Railroad Commission show that from January through June of this year, Texas wells produced 171.1 million barrels of oil and 2.788 trillion cubic feet of natural gas. That compares with six-month production in 2004 of 175.8 million barrels of oil and 2.978 trillion cubic feet of natural gas from Texas wells. Texas annually is the largest single producer of both oil and gas among the 50 states. But production has declined steadily for three decades. The state's peak production for both crude oil and natural gas was 1972, when Texas produced 1.26 billion barrels of crude oil and 9.6 trillion cubic feet of natural gas. Last year, Texas produced 349.2 million barrels of crude oil and 5.8 trillion cubic feet of natural gas. That decline in production comes despite an increase in the number of oil and gas wells in the state from 190,606 in 1972 to 223,442 last year. Major multinational companies such as Exxon Mobil Corp. and Chevron have sold much of their Texas holdings in the past decade to concentrate on production overseas. Their places have been taken by newer domestic independent producers who are attempting to coax more production from older wells through fracturing and other techniques. Texas Railroad Commissioner Michael Williams notes that the state's crude oil and natural gas fields are "mature." He has joined in the call for development of new sources of energy. "Texas and the U.S. must find innovative ways to cope with the world's changing energy market to maintain the reliable, affordable energy we have so long enjoyed," Williams said. "The development of new technologies will accomplish this by decreasing dependence on fossil fuels through the development of new transportation fuels and new, cleaner sources for electricity." Stagnant production, both domestic and foreign, has hit Texans and their fellow Americans with record energy prices this summer that exceed $65 per barrel for oil and $9 per thousand cubic feet for natural gas. Those commodity prices have translated into record gasoline-pump prices, in excess of $2.50 per gallon in Texas and above $3 in some parts of the United States. The rise in the price of natural gas, which sold for about $2.50 at the beginning of this decade, already has caused a 45 percent increase in electricity rates since Texas opened its electricity markets in 2002. And natural-gas distributors already are warning that winter heating costs will rise up to 20 percent this winter. The Barnett Shale natural-gas field in North Texas, which was opened to full production in 1999 and now has almost 4,000 wells, again stood out among Texas fields by increasing production by almost 17 percent. The field extends around Fort Worth from Wise to Johnson and Hood counties. Railroad Commission figures show that the field, concentrated in Wise, Denton and Tarrant counties, produced 210.2 billion cubic feet of gas through June of this year against 179.5 billion cubic feet a year ago, when the Barnett Shale field became Texas' largest producing field. In 2004, the Barnett Shale field produced 369 billion cubic feet of natural gas. Barnett Shale production is expected to keep growing as new pipelines and processing plants enable producers to pursue plans to drill in Johnson, Parker and Hood counties. The big Carthage Field in East Texas eked out an increase in natural gas production this year, to 79.1 billion cubic feet from 75.9 billion cubic feet a year ago. But other big Texas gas fields, led by the Freestone Field in Freestone County, the Giddings Field near Bryan-College Station, and the state's all-time top producer, the Panhandle West Field in Moore County near Amarillo, showed declines. The Permian Basin in West Texas was the center of Texas' crude oil production again this year. Through June, the three Railroad Commission districts in West Texas centered in Midland-Odessa produced 72 percent of the state's crude oil. ----- rednova.com

To: mishedlo who wrote (35707)	8/23/2005 12:20:38 PM
From: gpowell	Read Replies (2) \| Respond to of 116555

Keynes argued that workers suffer from money illusion, thus a greater nominal money supply stimulates demand. Of course, he was correct, but Keynes’s economics in the General Theory is an economics where no real scarcities exist, save for the artificial scarcity created by the determination of people not to sell their services and products below certain arbitrarily fixed prices. These prices were in no way ever explained, but were simply assumed to remain at their historically given level (except at rare intervals when "full employment" is approached and goods begin successively to become scarce and to rise in price). Nevertheless, that quote is taken out of context, as the paragraph following the one quoted by “trotsky” is: "The analogy between this expedient and the goldmines of the real world is complete. At periods when gold is available at suitable depths experience shows that the real wealth of the world increases rapidly; and when but little of it is so available, our wealth suffers stagnation or decline. Thus gold-mines are of the greatest value and importance to civilisation. just as wars have been the only form of large-scale loan expenditure which statesmen have thought justifiable, so gold-mining is the only pretext for digging holes in the ground which has recommended itself to bankers as sound finance; and each of these activities has played its part in progress-failing something better. To mention a detail, the tendency in slumps for the price of gold to rise in terms of labour and materials aids eventual recovery, because it increases the depth at which gold-digging pays and lowers the minimum grade of ore which is payable." Keynes always tried to make his detractors look foolish by pointing out their contradictions; the point he is making is that an economist who thinks digging up gold is different from digging up bank notes doesn't know what money is, and probably shouldn't be making any comment.