Geranium Farm Home     Who's Who on the Farm     The Almost Daily eMo     Subscriptions     Coming Events     Links
Hodgepodge     More or Less Church     Ways of the World     Father Matthew     A Few Good Writers     Bookstore
Light a Prayer Candle     Message Board     Donations     Gifts For Life     Pennies From Heaven     Live Chat

Ways of the World

Carol Stone, business economist & active Episcopalian, brings you "Ways of the World". Exploring business & consumers & stewardship, we'll discuss everyday issues: kids & finances, gas prices, & some larger issues: what if foreigners start dumping our debt? And so on. We can provide answers & seek out sources for others. We'll talk about current events & perhaps get different perspectives from what the media says. Write to Carol. Let her know what's important to you:

Sunday, March 27, 2011

Geraldine Ferraro

The passing of Geraldine Ferraro touches us. Many of us who read these Ways of the World articles, eMos and other Geranium Farm content, and especially those of us who write them, owe her and her associates huge debts of gratitude for what they accomplished in their own right and for the paths they blazed for the rest of us. Here are two illustrations of those gifts of Geraldine Ferraro.

Gail Collins, in When Everything Changed, her recent compendium of the evolution of women in modern society, quotes Madeleine Kunin, who ran for governor of Vermont in 1984, the year of Ferraro's Vice Presidential candidacy. Collins sets the stage and Kunin's remarks follow: "Ferraro arrived to campaign with [Kunin]. Thousands of people turned out to greet them. 'Fathers brought their daughters to see us, carrying them on their shoulders, holding them in their arms, leading them by the hand. "I want her to see this, to know this, so she'll remember," a man said as he asked a bystander to snap our picture together: Gerry Ferraro, Daddy, the baby, and me.'"[1]

Ms. Ferraro and Sarah Palin appeared together on Fox News this past election night, November 2, 2010. Watch the video It's an extraordinary moment.

Thank you, Gerry. May you rest in peace.


[1]Gail Collins. When Everything Changed: the Amazing Journey of American Women from 1960 to the Present. New York: Little, Brown and Company. 2009. Page 324.

Labels: ,

Monday, March 14, 2011


We have so much to talk about – a follow-up to our article about oil prices last week, the "sequel" to it on food prices, the condition of state and local government budgets and so on – but clearly this Monday, there is only one topic: Japan.

First, here is a statement from the Archbishop of Nippon Sei Ko Kai, the province of the Anglican Communion in Japan: Archbishop Uematsu describes about the churches there the same kinds of issues we are hearing about homes and other buildings: worrying that facilities near the sea might have been totally destroyed and simply not knowing their condition and/or the condition of their people due to the breakdown in communications. Writing Monday afternoon Tokyo time, he says that he has spoken to the Bishop of Tohoku, who was able to phone him Saturday. The Archbishop is establishing relief efforts. Indeed, we also refer you to the site of Episcopal Relief & Development,, which is already mounting a fund-raising effort here in the U.S. for this purpose. Archbishop Uematsu asks our prayers as well. Absolutely.

O God,
who in Jesus stills the storm and soothes the troubled heart,
bring hope and courage to all
who are affected by this earthquake as we wait in uncertainty.
Bring assurance that you will be with us in whatever lies ahead.
Give us courage to endure all that we now face,
for you are our refuge and strength.
You are God, and we need you.
We pray in the name of Jesus Christ, our Savior and Lord.
[adapted from Evangelical Lutheran Worship: Pastoral Care, page 174.
© Evangelical Lutheran Church in America. From Accessed March 14, 2011.]

Some of the Disaster's Impact
In my former Wall Street career, I worked for the New York office of Nomura Securities, the largest Japanese securities dealer, and I still receive email material from my colleagues there. My inbox began to fill at midday Sunday – that would have been shortly after midnight Monday morning in Japan – with extensive analysis of the impact of the earthquake and tsunami on the industry of the country. Here are a couple of the major points.

The region directly impacted by the quake encompasses plants and other facilities accounting for just under 7% of industrial output in Japan. The industries with the largest concentrations there include mining, agriculture and food manufacturing, metals – especially steel, electrical machinery, precision equipment and electric power generation. The electrical machinery and precision sectors contain a large amount of IT-related industry. In this last category, semiconductors are very important and there is also a major manufacturer of the screening material used on LCD TVs. Sony, Pioneer and Casio are familiar names whose plants are presently shut down. In some cases, the shutdown is due to power outages, not plant damage, so those could reopen relatively quickly, but there may well be bottlenecks in world semiconductor production and availability.

Among food products, there are a number of beer breweries in the region. Asahi, Kirin and Sapporo brands are particularly affected, with 10% to 40% of each company's total output impacted. At one plant, storage tanks collapsed, at another, the plant itself suffered major damage, and electricity seems to be out everywhere.

Obviously, by contrast, some sectors will get boosts due to the nature of the disaster. Companies that inspect and repair nuclear power plants and construction and construction equipment-makers are examples. In a different vein, the Nomura analysts cite Alfresa Holdings and Medipal, which are wholesale distributors of pharmaceuticals and cosmetics; these and other companies "may suspend regular wholesaling activities . . . to create emergency distribution networks in the Tohoku region".

The loss is great, unimaginable for us. But in the Japanese reaction, we see immediate evidence of adaptability and courage in the face of the sorrow and mourning. Still, even as the Nomura commentators try to describe for us a basic assessment of this massive disaster for business and industry, they also give a caveat; that statement is not meant to tug at readers' hearts, but it does: "This report is based on the existing knowledge of our analysts . . . . We have not yet discussed any issues with company representatives, as disaster response is currently their top priority." Indeed it is. Just now, as we have finished typing this paragraph, a new headline reports yet another explosion at Unit 2 of the Fukushima Daiichi nuclear power plant. Lord, have mercy on them.

Labels: , , ,

Tuesday, March 08, 2011

Oil Supply & Demand Put Us on Tenterhooks Once Again

Regular gasoline sold for a national average of $3.52 last week, according to Department of Energy data reported Monday. The increase for the last two weeks was 33.1 cents, the second largest increase ever over a two-week span, with only the spurt during Hurricane Katrina larger. The $3.52 price is 28% above a year ago and a record for this time of year; even in the high-priced period of 2008, the level around March 1 was right at $3.15.

Such a surge, plus increases in food prices, pose dilemmas for policymakers in the U.S. and in a number of those Middle Eastern and Asian countries, as well as discomfort for the people who have to pay them. Clearly the Mideast turmoil is responsible for the sudden, large energy price gains. But these prices were already headed upward to some extent, having started the current uptrend at the end of last September. So there must be some other force at work on both energy and food prices. We'll save food for a "part 2" article and continue here with the steep oil price rises.

Besides the Mid-East violence, two non-political causes for these price advances are readily identified. One is the very fundamental demand/supply balance: world demand is growing and exceeds supply. Second, many express concern that inflationary monetary policies are contributing to the upward push in the prices of these basic necessities of life. The connection here is hard to measure, but there may be some justification for it.

A new study by economists at the International Monetary Fund (IMF) published just in January explores these two connections, supply/demand and money, for oil prices. Cevik and Saadi Sedik performed statistical analysis to assess the impact on crude oil prices of demand growth in the world economy, over against growth in the supply of oil; they also try to gauge the impact on prices of the amount of money in the world economy as generated by four major central banks. They represent energy demand by growth in industrial output in 45 countries, which they place in two groups, developed and emerging.[1]

The results of Cevik and Saadi Sedik's statistical regression calculations are very interesting. Using monthly data, they show that since 1998, oil supplies have had some influence on oil prices; as supplies expand more, prices tend to decline, although the magnitude of the decline can be quite variable. The amount of money available for use in world trade and finance is related positively to oil prices; as excess liquidity increases, so do oil prices. Again, though, this relationship, though, is subject to considerable variability through time. Much more significant as a determinant of oil price trends is demand growth in the various countries; moreover, demand in emerging markets has more than twice the measurable impact of demand in settled industrial countries, and the reliability of the emerging market relationship is much tighter than the supply and monetary relationships.

We would think probably that demand in big countries should lead because they simply use more oil, lots more. But they are also working hard to conserve it. In the U.S., for example, the current rate of petroleum usage is just under 19.2 million barrels a day (b/d, a barrel contains 42 gallons), down from 2007's peak of almost 21 million b/d. The International Energy Agency estimates that demand among advanced countries as a whole has receded to about 46.5 million b/d in the latter months of 2010 from a peak of 49.3 in 2007. By contrast, the I.E.A. estimates that China's usage in the fourth quarter of 2010 was 10.0 million b/d, more than 30% greater than 2007's 7.6 million b/d. Demand among other developing countries is up over that period by about 10%. Further, most of these countries' economies did not suffer a recession, but continued to grow in 2008 and 2009. These numbers alone, even before we get to Cevik and Saadi Sedik's statistical analysis, highlight the rapidly expanding importance of the developing countries in energy markets.

The longer trends from 1998 through the middle of 2010 tell a fine story that growing prosperity in emerging countries is pressuring energy prices. But obviously the very short-term situation now features near civil-war conditions in Libya. How does this complicate our lives? Just yesterday, Monday, March 7, the Energy Information Administration of the U.S. Department of Energy gave us some comments toward an answer in their article, "Libyan supply disruption may have both direct and indirect effects"[2].

First, while Libya's crude oil output is just 2% of the world's total, the oil they do have is among the highest quality stock. It is easy to refine and has low sulfur content. Energy Department specialists explain that this means almost any refinery in the world can process the oil; its treatment is not restricted to only the newest or most elaborate facilities. Such oil is not easily replaced by substitutes, such as Saudi Arabia has. Libya also sells to customers in both Europe and Asia. Italian refineries buy Libyan crude and make a number of derivative products to sell to an even broader customer base. So the near shut-down of Libyan production can put more pressure on refinery inventories and prices than would constrained supplies from other regions.

Somewhat offsetting this push in the short run, this late winter season is a time of relatively light oil usage in both the U.S. and Europe, the Energy Department underscores, and the disruption in Libyan supply has a lesser impact than it would in late spring and summer. Should the disorder last well into the spring, when refineries will gear up for the large volume of summer driving, that could intensify pressure on supplies and make prices go higher still.

So where do these forces leave us? Briefly, on tenterhooks. The danger to the world economy of this price surge is readily apparent. Still, just in these last hours as we been writing here, we see from Reuters news service and other news sources that Mr. Gadhafi and his supporters may be trying to arrange an "exit strategy". This news accompanies announcements from several world oil companies that they are ceasing the purchase of Libyan oil altogether, thereby cutting off the country's income, which may hasten a resolution. Also, other OPEC nations have expressed willingness to provide extra oil to world markets, to the extent they can substitute. So there are constructive signs in the midst of the turmoil.
Two final thoughts: in this mix of wildly swinging world events, we continue to be heartened by the onrush toward freedom of the peoples of these countries and the repeated indications they are breaking out of repression and poverty. And then, we repeat one of our recurring Ways of the World themes and apply it to these energy prices. The higher prices are not totally harmful. They can provide extra wherewithal for people and companies to develop technologies that make better, more economical use of these raw materials. These are technical and technological issues; we can work on them. Better days are coming, we assert – hopefully.

[1]Serhan Cevik and Tahsin Saadi Sedik. "A Barrel of Oil or a Bottle of Wine: How Do Global Growth Dynamics Affect Commodity Prices?" Washington, D.C.: International Monetary Fund. Working Paper No. 11/1. January 2011. The paper also discusses supply, demand and monetary factors as they affect the price of a bottle of fine wine. The numbers are different, but the shape of the relationships is the same as with oil The emerging markets are indeed beginning to play discernible roles in world business.

Libyan supply disruption may have both direct and indirect effects. Washington, D.C.: U.S. Department of Energy, "Today in Energy" March 7, 2011. Accessed March 8, 2011.


Copyright © 2003-Present Geranium Farm - All rights reserved.
Reproduction of any materials on this web site for any purpose
other than personal use without written consent is prohibited.