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eagle2
10-09-2009, 05:38 PM
Alright. There are lots of folks with Ph.D's in economics that agree with me and disagree with you about the benefits of a strong dollar. Likewise there are plenty of Wall St. types that also agree.

Please tell me who all of these folks with Ph.D's in economics are that agree with you and please provide references.

Of course instead of going by what "experts" say, we can look at what happens in the real world. For years, it has been the policy of China's government to keep the value of their currency low. I wonder how it worked out for them.



A weak dollar means that somebody investing in the U.S. will initially get more dollars for their money. And if they export what they make here, assuming they make anything at all, a weak dollar helps them. BUT if the dollar continues to decline the VALUE of their investment in real terms also declines.


No it doesn't. You're assuming that the value of their investment in dollars stays the same. Investments can increase in value even if the currency is going down in value. Melonie has already demonstrated this with her example of the S&P 500. According to Melonie's figures, the S&P 500 gained 20% in value in US dollars over the past 6 months while at the same time, the US dollar lost 10% of it's value to the Euro. Therefore, anyone in Europe who invested Euros in the American companies representative of the S&P 500 would have increased the value of their investment 10% over 6 months, which is a very good return.



Let me put it this way: Would you invest your money in a country with raging inflation ?

If there were good investment opportunities, yes I would.

eagle2
10-09-2009, 05:56 PM
Rather than just keep going back and forth with you, I'll just let you have your own facts and your own reality. How many times do Melonie and /or I have to explain to you how exchange rates and foreign trade work in the REAL World ?

and neither of you understand how exchange rates and foreign trade work in the REAL World. All you do is keep repeating the same thing over and over again, even after you are shown that you're wrong. You have been given a specific example where the price of a gallon of gas is lower now than it was 4 years ago even though the dollar has lost 1/3 of its value, according to you. According to your logic, the price of gasoline should have increased as a result. In the real world, the price of a gallon of gasoline decreased. This is the problem with ideologues like you and Melonie. Ideology is going to take precedence over facts every time. According to your ideology, a weak dollar means the price of gasoline will go up. In reality, the price of gasoline has decreased in dollars, while at the same time the value of the dollar decreased in value. This fact is meaningless to you. Your ideology says that decreasing the value of the dollar will increase the price of gasoline. Even after the price of gasoline has fallen while the dollar's value decreased, you're still going to insist that decreasing the value of the dollar increases the price of gasoline. Why? Because your ideology says so.

threlayer
10-09-2009, 07:34 PM
Lower labor costs leads to the question of 'lower than what' labor costs ? Even if you could buy the factory building for free, you simply can't get labor costs below a $7.50 an hour minimum wage plus probably another $5 an hour in mandatory workmen's comp and unemployment insurance costs plus whatever new 'tax' is about to be imposed on employers to fund health care vouchers for low income employees. This is still an order of magnitude higher than 'all in' labor costs in Mexico, Costa Rica or anywhere in Asia.

For those of us not living in Latin America or other places where labor costs have not caught up wth the developed world, look around. You will not find much quality, legitimate, trainable labor for below the wages stated above, as loaded with taxes and indirects. Unless you want basically a untrainable and unmotivated workforce with a plethora of social problems, you will have to pay a wage at which is liveable at least a single person. You contention that our wages scale is going to be reduced to the level of the third world is just a bit of overly pessimstic fantasy. Short of a worldwide catastrophe of a huge scale this will not happen. There is just too much trainable and trained labor, a training infrastructure, an ethical standard for working, and a demand for such still in the US. Maybe you have not encountered that in your working life, but in reality it is there.

Melonie
10-10-2009, 05:19 AM
You contention that our wages scale is going to be reduced to the level of the third world is just a bit of overly pessimstic fantasy. Short of a worldwide catastrophe of a huge scale this will not happen

I never disputed this point. However my take on the likely result is as follows. Every possible 'low skill level' US job that can be outsourced / automated away will cease to exist precisely because the 'all in' unskilled labor costs to a US employer are far higher than the labor costs in other countries. As a result, the US will have growing percentage of 'permanent structural unemployment' among those Americans with low skills / little education. And those within the group of 'permanent structurally unemployed' will essentially become 'wards of the state' where their standard of living is concerned - with the associated increasing tax / cost burden on US businesses and higher educated higher skilled US workers serving as a growing 'permanent structural drag' on the US economy.

FYI, from where I'm 'sitting', typical labor costs for factory assemblers in Costa Rica is under US$5 per hour 'all in', versus at least $12 an hour in New York. This is the obvious reason that industries are relocating / expanding in Costa Rica at an unprecedented pace.

Beyond this, the only way that Americans with low skills / little education will again become an economically realistic option versus global costs of similarly unskilled labor is if the US dollar falls to the level of a 'peso' while the peso itself retains its value ! However, a currency devaluation of that magnitude would devastate the US middle class and US poor alike.



Unless you want basically a untrainable and unmotivated workforce with a plethora of social problems, you will have to pay a wage at which is liveable at least a single person

arguably, this is EXACTLY where America is headed ! Have at you looked at the high school dropout rate lately ? How about the unemployment rate for teens ? How about the percentage of Americans collecting Food Stamps ? How about the components of California's impending state bankruptcy budget i.e. rising low skill level unemployment and associated rising social welfare benefit costs, personal and business tax increases being put in place to try and fund those costs, and the real world reaction by California businesses and higher earning residents after being hit with those higher taxes ?

~

Eric Stoner
10-12-2009, 07:11 AM
Please tell me who all of these folks with Ph.D's in economics are that agree with you and please provide references.

Of course instead of going by what "experts" say, we can look at what happens in the real world. For years, it has been the policy of China's government to keep the value of their currency low. I wonder how it worked out for them.



No it doesn't. You're assuming that the value of their investment in dollars stays the same. Investments can increase in value even if the currency is going down in value. Melonie has already demonstrated this with her example of the S&P 500. According to Melonie's figures, the S&P 500 gained 20% in value in US dollars over the past 6 months while at the same time, the US dollar lost 10% of it's value to the Euro. Therefore, anyone in Europe who invested Euros in the American companies representative of the S&P 500 would have increased the value of their investment 10% over 6 months, which is a very good return.



If there were good investment opportunities, yes I would.

Peter Morici professor of Economics at the U of Md., Peter Schiff, Arthur Laffer, Larry Kudlow, Robert Rubin, Paul Volcker, the WSJ, the Economist, PAUL KRUGMAN ( his work on international trade won him the Nobel Prize in Economics ), Robert Reich ( one of his few lucid intervals afaic ) , AUSTIN GOOLSBY ( used to be Obama's chief economic advisor now replaced by Geithner and Rahm Emanuel ), Walter Williams ( former Chairman of Economics at George Mason University), Thomas Sowell, the Chinese, the Saudis,the Brazilians just to name a few.

China benefits becuase it has an E X P O R T based economy or hadn't you noticed ?

Increase in value relative to what ? If the dollar loses half it's value ( and it very well might the way we're going ) how much do you think those foreign investments will be worth in RELATIVE terms ? What do you think , that the foreign investors will only spend their profits in the U.S. ? If the dollar is undervalued, how much do you think a French investor can buy back in France after converting his profits to Euros ?

You just demonstrated how absolutely CLUELESS you are about international trade and foreign investment !! You just posted that Europeans would invest Euros in American S & P companies. NO. They invest dollars and that's just if they buy U.S. stocks. Why would they when Europe, Asia and the BRIC countries present them with much better value for their Euros ? Melonie posted ( and it obviously went over your head, possibly resulting from YOUR ideologically induced intellectual sclerosis ) that the gains in the U.S. stock market are running below the decline of the dollar. In other words the decline of the dollar has rendered any gain in stock prices a wash, at best, in terms of absolute value.

You would invest in Zimbabwe ? Or in Argentina when they had hyper-inflation ? Rotflmao ! You are just too much ! I hope you are not employed in finance or anything where you advise other people where to invest their money. Seriously.

There is only one POSSIBLE hypothetical situation I can think of where it might, repeat MIGHT, make sense to do it : If the country were otherwise stable and you had a steady stream of income in a strong currency and you lived where you invested. The problem is that the value of your investment will keep going down as the amount of native currency in circulation kept increasing.

Eric Stoner
10-12-2009, 07:19 AM
and neither of you understand how exchange rates and foreign trade work in the REAL World. All you do is keep repeating the same thing over and over again, even after you are shown that you're wrong. You have been given a specific example where the price of a gallon of gas is lower now than it was 4 years ago even though the dollar has lost 1/3 of its value, according to you. According to your logic, the price of gasoline should have increased as a result. In the real world, the price of a gallon of gasoline decreased. This is the problem with ideologues like you and Melonie. Ideology is going to take precedence over facts every time. According to your ideology, a weak dollar means the price of gasoline will go up. In reality, the price of gasoline has decreased in dollars, while at the same time the value of the dollar decreased in value. This fact is meaningless to you. Your ideology says that decreasing the value of the dollar will increase the price of gasoline. Even after the price of gasoline has fallen while the dollar's value decreased, you're still going to insist that decreasing the value of the dollar increases the price of gasoline. Why? Because your ideology says so.

Where were you last year ? Weren't you paying $4.50 a gallon like the rest of us ? What did you think the dollar was doing last year ?

I've posted this I don't know how many times and I've already agreed to let you have your own facts and your own reality, but for everyone else : Supply and demand is a major factor in the price of things like imported oil. But it's NOT the only factor. Guys like T. Boone Pickens who have spent a lifetime in the oil biz agree that a declining dollar will increase what we pay for oil. If you track oil prices, they have moved UP this year as the dollar has declined. Except for Eagle in his alternate universe, of course. Why do you think there is a movement to force importers ( that's the U.S. ) to pay for oil in something other than dollars ? Why is Lula of Brazil pushing for using the Rial and other "native " currencies instead of dollars for international trade ? Do you seriously think this would be happening if the dollar was strong relative to other currencies ? Why do you think the dollar has historically been a reserve currency ?

Eric Stoner
10-12-2009, 07:29 AM
I never disputed this point. However my take on the likely result is as follows. Every possible 'low skill level' US job that can be outsourced / automated away will cease to exist precisely because the 'all in' unskilled labor costs to a US employer are far higher than the labor costs in other countries. As a result, the US will have growing percentage of 'permanent structural unemployment' among those Americans with low skills / little education. And those within the group of 'permanent structurally unemployed' will essentially become 'wards of the state' where their standard of living is concerned - with the associated increasing tax / cost burden on US businesses and higher educated higher skilled US workers serving as a growing 'permanent structural drag' on the US economy.

FYI, from where I'm 'sitting', typical labor costs for factory assemblers in Costa Rica is under US$5 per hour 'all in', versus at least $12 an hour in New York. This is the obvious reason that industries are relocating / expanding in Costa Rica at an unprecedented pace.

Beyond this, the only way that Americans with low skills / little education will again become an economically realistic option versus global costs of similarly unskilled labor is if the US dollar falls to the level of a 'peso' while the peso itself retains its value ! However, a currency devaluation of that magnitude would devastate the US middle class and US poor alike.




arguably, this is EXACTLY where America is headed ! Have at you looked at the high school dropout rate lately ? How about the unemployment rate for teens ? How about the percentage of Americans collecting Food Stamps ? How about the components of California's impending state bankruptcy budget i.e. rising low skill level unemployment and associated rising social welfare benefit costs, personal and business tax increases being put in place to try and fund those costs, and the real world reaction by California businesses and higher earning residents after being hit with those higher taxes ?

~

According to the latest stats from the Bureau of Labor Statistics the "yoot" unemployment rate is 18.5%; the highest on record. For Blacks it is 15.4%; For Latinos 12.7 but for Asians it is 7.4 %. Who thinks it is a coincidence that Asians have the lowest drop out rate ?

eagle2
10-16-2009, 08:14 PM
I never disputed this point. However my take on the likely result is as follows. Every possible 'low skill level' US job that can be outsourced / automated away will cease to exist precisely because the 'all in' unskilled labor costs to a US employer are far higher than the labor costs in other countries. As a result, the US will have growing percentage of 'permanent structural unemployment' among those Americans with low skills / little education. And those within the group of 'permanent structurally unemployed' will essentially become 'wards of the state' where their standard of living is concerned - with the associated increasing tax / cost burden on US businesses and higher educated higher skilled US workers serving as a growing 'permanent structural drag' on the US economy.


You have no idea how things work in the real world, only in your own ideological based world. Cost of labor and electricity are not the only factors in determining where businesses will locate their facilities. There are some industries that are very labor-intensive and will do most of their production overseas, but there are plenty of others that will remain here.



Beyond this, the only way that Americans with low skills / little education will again become an economically realistic option versus global costs of similarly unskilled labor is if the US dollar falls to the level of a 'peso' while the peso itself retains its value ! However, a currency devaluation of that magnitude would devastate the US middle class and US poor alike.

Again, you're making things up based on your ideology.




arguably, this is EXACTLY where America is headed ! Have at you looked at the high school dropout rate lately ? How about the unemployment rate for teens ? How about the percentage of Americans collecting Food Stamps ? How about the components of California's impending state bankruptcy budget i.e. rising low skill level unemployment and associated rising social welfare benefit costs, personal and business tax increases being put in place to try and fund those costs, and the real world reaction by California businesses and higher earning residents after being hit with those higher taxes ?

~

The high school dropout rate has fallen dramatically over the past 50 years.

http://www.infoplease.com/ipa/A0779196.html

We are going through a major economic downturn, so of course unemployment is up and more Americans are collecting food stamps. This doesn't mean it's permanent.

eagle2
10-16-2009, 08:35 PM
Peter Morici professor of Economics at the U of Md., Peter Schiff, Arthur Laffer, Larry Kudlow, Robert Rubin, Paul Volcker, the WSJ, the Economist, PAUL KRUGMAN ( his work on international trade won him the Nobel Prize in Economics ), Robert Reich ( one of his few lucid intervals afaic ) , AUSTIN GOOLSBY ( used to be Obama's chief economic advisor now replaced by Geithner and Rahm Emanuel ), Walter Williams ( former Chairman of Economics at George Mason University), Thomas Sowell, the Chinese, the Saudis,the Brazilians just to name a few.


Do you have references? I hardly consider Arthur Laffer or Thomas Sewell objective sources. They're both right-wing ideologues.



China benefits becuase it has an E X P O R T based economy or hadn't you noticed ?

China is one of the world's largest importers. China imports over a trillion dollars worth of goods.



Increase in value relative to what ? If the dollar loses half it's value ( and it very well might the way we're going ) how much do you think those foreign investments will be worth in RELATIVE terms ? What do you think , that the foreign investors will only spend their profits in the U.S. ? If the dollar is undervalued, how much do you think a French investor can buy back in France after converting his profits to Euros ?

You are unable to even understand the most simple math concepts. If the value of the investment in dollars increases more than the value of the dollar decreases, the investor will make money. I don't see how anyone is not able to understand this.



You just demonstrated how absolutely CLUELESS you are about international trade and foreign investment !! You just posted that Europeans would invest Euros in American S & P companies. NO. They invest dollars and that's just if they buy U.S. stocks. Why would they when Europe, Asia and the BRIC countries present them with much better value for their Euros ? Melonie posted ( and it obviously went over your head, possibly resulting from YOUR ideologically induced intellectual sclerosis ) that the gains in the U.S. stock market are running below the decline of the dollar. In other words the decline of the dollar has rendered any gain in stock prices a wash, at best, in terms of absolute value.

No they're not. You can't even read a simple chart. The S & P increased 20 percent over 6 months and the value of the dollar fell 10 percent. 20 percent is more than 10 percent. Therefore a European who invested money in the S & P 500 would have made approximately 10 percent profit. This is simple math.



You would invest in Zimbabwe ? Or in Argentina when they had hyper-inflation ? Rotflmao ! You are just too much ! I hope you are not employed in finance or anything where you advise other people where to invest their money. Seriously.

Typical obnoxious response from a conservative ideologue. For a number of years, Zimbabwe had the best performing stock market in the world. I guess you should tell all of those investors who doubled or tripled their money, they were wrong because they went against your ideology.

Phil-W
10-17-2009, 05:27 AM
...China is one of the world's largest importers. China imports over a trillion dollars worth of goods...

Yeah, but they export even more - or why would they be running a massive trade surplus?


Typical obnoxious response from a conservative ideologue. For a number of years, Zimbabwe had the best performing stock market in the world. I guess you should tell all of those investors who doubled or tripled their money, they were wrong because they went against your ideology.

And for years Zimbabwe has been run by a murderous tyrant who has taken a once flourishing economy and turned it into an economic basket case.

Phil.

Eric Stoner
10-19-2009, 08:05 AM
Do you have references? I hardly consider Arthur Laffer or Thomas Sewell objective sources. They're both right-wing ideologues.


China is one of the world's largest importers. China imports over a trillion dollars worth of goods.


You are unable to even understand the most simple math concepts. If the value of the investment in dollars increases more than the value of the dollar decreases, the investor will make money. I don't see how anyone is not able to understand this.


No they're not. You can't even read a simple chart. The S & P increased 20 percent over 6 months and the value of the dollar fell 10 percent. 20 percent is more than 10 percent. Therefore a European who invested money in the S & P 500 would have made approximately 10 percent profit. This is simple math.


Typical obnoxious response from a conservative ideologue. For a number of years, Zimbabwe had the best performing stock market in the world. I guess you should tell all of those investors who doubled or tripled their money, they were wrong because they went against your ideology.

The work of the gentlemen I cited is all over the Web. Please do your own reading. Was Arthur Laffer a "conservative ideologue" when he was advising Clinton ? How would you define Rubin, Summers and Reich ? It 's worth a giggle every time one of them is asked about Clinton's strong dollar policies and watch them try to avoid remembering.

China does do a lot of importing. They do even more exporting. Why do YOU think the Chinese want to pay for their imported oil in something other than dollars ? They are the ones who tied their currency to the dollar.

Either you are letting your wishes father your thoughts or YOU don't know anything about exchange rates and think that foreign investment occurs in a vacuum. As I said, if , IF, the foreign investor just leaves her money in the U.S., lives in the U.S. and spends it in the U.S., then your model works. BUT if they want to enjoy the fruits of their investment in their native country then they have to convert their dollars to their native currency- Euros, Yen, Canadian or Australian dollars, whatever. And if the dollar has declined then the value of their investment has also gone down in relation to the difference in value of the two currencies.

For the short term and just with reference to our Stock Market since about March of this year, you are essentially correct. You of course ignore the long term decline of the dollar going back to the Bush Administration and what is virtually certain to occur in the months and years ahead.

I was a bit snarky and personalized which I shouldn't have done. I apologize.
Now that I've gotten that out of the way- ROTFLMAO ! You have posted some great stuff lately but singing the praises of the Zimbabwean stock market ?????
You have outdone yourself !!!!! What years are you talking about ? WHEN were YOU recommending investment in Zimbabwe ? Still think it's a good play do you ?

It's true that at one time Zimbabwe had a vibrant economy and was a net food exporter. That was MORE than ten years ago; before Mugabe started confiscating white owned farms and before he started printing Monopoly money. He has given Zimbabwe the world's highest inflation rate and one of its highest unemployment rates. Since you like to point to Pinochet's Chile as an example of a capitalist failure, you get to wear Zimbabwe around your neck as the ultimate in a "managed economy".

Zimbabwe hasn't been a net food exporter in years. Food and cotton production are minute fractions of what they were just ten years ago. Her Chromium mines are at less than 50% of capacity. Tourism has collapsed completely. Cholera and other diseases are epidemic.

Socialismo o Muerte !

Melonie
10-19-2009, 01:05 PM
I've been keeping my eye open for a simplified presentation of foreign 'disinvestment' in America, and finally found this ...

(snip)"Now let's look at capital flows into the United States, which has FALLEN off the face of the earth, using the Fed's flow of funds data chart:

http://www.safehaven.com/images/tedbit/14759_i.png

Capital is NO LONGER flowing to the US, in fact it is FLEEING, because the terrorists in Washington are DESTROYING capitalism, just like Lenin, Hitler, Mao and Stalin and their socialist supporters did in their respective countries,and it has now come to AMERIKA.

This is a great big vote of NO CONFIDENCE in US political leadership by INTERNATIONAL investors. They are voting with their feet and capital is taking a ticket "out of town"; the destination: emerging markets and countries with the rule of law and private property still intact such as Canada, New Zealand, Australia, Switzerland, etc. These deficits can only be filled by BIG BANKS loaning to the treasury rather than MAIN STREET."(snip)

from

eagle2
10-19-2009, 04:51 PM
The work of the gentlemen I cited is all over the Web. Please do your own reading. Was Arthur Laffer a "conservative ideologue" when he was advising Clinton ? How would you define Rubin, Summers and Reich ? It 's worth a giggle every time one of them is asked about Clinton's strong dollar policies and watch them try to avoid remembering.


When Bill Clinton was President, the unemployment rate was 4% and the economy was growing at 4% a year. Under these circumstances, a strong dollar makes sense. When you have an unemployment rate of 10%, very little economic growth, and no inflation, a strong dollar does not make sense.



Either you are letting your wishes father your thoughts or YOU don't know anything about exchange rates and think that foreign investment occurs in a vacuum. As I said, if , IF, the foreign investor just leaves her money in the U.S., lives in the U.S. and spends it in the U.S., then your model works. BUT of they want to enjoy the fruits of their investment in their native country then they have to convert their dollars to their native currency- Euros, Yen, Canadian or Australian dollars, whatever. And if the dollar has declined then the value of their investment has also gone down in relation to the difference in value of the two currencies.

Again, you don't understand the most simple, basic math and economics concepts. You are assuming that any investments foreigners make get a 0% return on investment in US dollars. Most don't. If the value of their investment increases faster than the value of the dollar decreases, they will come out ahead.



I was a bit snarky and personalized which I shouldn't have done. I apologize.
Now that I've gotten that out of the way- ROTFLMAO ! You have posted some great stuff lately but singing the praises of the Zimbabwean stock market ?????
You have outdone yourself !!!!! What years are you talking about ? WHEN were YOU recommending investment in Zimbabwe ? Still think it's a good play do you ?

It's true that at one time Zimbabwe had a vibrant economy and was a net food exporter. That was MORE than ten years ago; before Mugabe started confiscating white owned farms and before he started printing Monopoly money. He has given Zimbabwe the world's highest inflation rate and one of its highest unemployment rates. Since you like to point to Pinochet's Chile as an example of a capitalist failure, you get to wear Zimbabwe around your neck as the ultimate in a "managed economy".

Zimbabwe hasn't been a net food exporter in years. Food and cotton production are minute fractions of what they were just ten years ago. Her Chromium mines are at less than 50% of capacity. Tourism has collapsed completely. Cholera and other diseases are epidemic.

Socialismo o Muerte !

None of this changes that fact that Zimbabwe's stock market rose over 600% in the first quarter of 2007.

http://seekingalpha.com/article/31425-1q07-global-market-performance-s-p-500-underperforms

eagle2
10-19-2009, 04:52 PM
Capital is NO LONGER flowing to the US, in fact it is FLEEING, because the terrorists in Washington are DESTROYING capitalism, just like Lenin, Hitler, Mao and Stalin and their socialist supporters did in their respective countries,and it has now come to AMERIKA.



More right-wing crazy talk.

hockeybobby
10-19-2009, 06:21 PM
That chart looks like every other chart, whether you are looking at the stock market or commodities or employment or whatever. Everything took a dump....in just about every country. All the charts show a massive parabolic runup and a massive drop. Take another look at that chart in a year.

Nothing to see here folks...move along.

Melonie
10-20-2009, 12:24 AM
Nothing to see here folks...move along

Thanks for reiterating mainstream financial media's official gov't sanctioned spin on the TIC capital flow numbers. However in point of fact, over the past 40 years, with the single and very brief exception of the LTCM crisis, international capital flows to the USA have NEVER turned negative ... not during Nixon's trashing of the international gold standard, not during Carter stagflation, not during the post-9/11 crash. Whether you and mainstream media want to admit it or not, these capital outflows are unprecedented in recent history.

And while I'll freely admit that the link I posted is far from objective in terms of political economics, this does not affect the accuracy of their data. Nor does it invalidate the author's basic point, which is that 'smart money' international investors are now beating a hasty retreat from the US dollar and US investments.



You are assuming that any investments foreigners make get a 0% return on investment in US dollars. Most don't. If the value of their investment increases faster than the value of the dollar decreases, they will come out ahead.

Technically true. However the basic equation boils down to reward ( i.e. real net return on investment after taxes, currency exchange etc. - which is much lower for US dollar denominated investments than other alternatives in different currencies / markets) versus risk (i.e. real exposure to sudden negative currency / market moves). From this standpoint, asian markets and commodity backed currencies now offer a much better risk vs reward potential ... which is precisely why the 'smart money' international investors are 'picking up their marbles'.

Eric Stoner
10-20-2009, 07:02 AM
When Bill Clinton was President, the unemployment rate was 4% and the economy was growing at 4% a year. Under these circumstances, a strong dollar makes sense. When you have an unemployment rate of 10%, very little economic growth, and no inflation, a strong dollar does not make sense.


Again, you don't understand the most simple, basic math and economics concepts. You are assuming that any investments foreigners make get a 0% return on investment in US dollars. Most don't. If the value of their investment increases faster than the value of the dollar decreases, they will come out ahead.



None of this changes that fact that Zimbabwe's stock market rose over 600% in the first quarter of 2007.

http://seekingalpha.com/article/31425-1q07-global-market-performance-s-p-500-underperforms

Well as I said, there were some who criticized Clinton for making the dollar too strong. What you refuse to accept is the connection between a strong currency and steady and stable economic growth.

The problem with the weakening dollar is that it only has an arguable benefit for industries dependent on exports. Everyone else suffers from a weakening currency because the value of their savings and investment goes down in real terms. The cost of imports, and not just oil, goes way up. Even the value of export sales goes down in real terms because the American goods are paid for in dollars that have lost value . A weak dollar just gives U.S. exporters a price advantage. Add in the high inflation that invariably results from too many dollars floating around and we are virtually guaranteed to see a repeat of the late 70's and early 80's. Actually it's potentially a LOT worse because NOW we have massive deficits that we didn't have back in the Carter days.

Rather than pontificate further, let me ask you : What do YOU see happening with reference to the dollar and inflation ? Geithner has paid lip service to a strong currency but has done nothing to stop the dollar's slide and has no plans to do in the future. How long do you think the Fed can keep pumping out money and lending it out at an effective interest rate of zero ?

Btw, just to be clear, I am NOT saying that I think the Fed ought to slam on the brakes or that Obama ought to slash spending. We don't need a repeat of 1937-8. What I am saying is that the Fed. ought to take its foot off the gas and slow the rate of growth in the money supply. That it should raise rates sooner rather than later. That it should stop buying MBS's. That Obama and Congress ought to hold the line on spending and not give us a Third stimulus package. Arguably it will be a FOURTH ! The first one was in February, 2008 which Americans saved rather than spent. The second was Obama's $787 billion package that was supposed to keep unemployment from hitting 8 % and the third was "Cash for Clunkers" that did save a few autoworker jobs. In Japan and Korea !

As to foreign investment, I NEVER made any such assumption. Of course there is a return on their investment. Unless they put it all into GM bonds. The question is :compared to what ? Investments in Canada and Australia are currently MUCH more attractive. They offer a higher rate of return in a far MORE stable currency. If you bother to LOOK where the "smart" money is going those are two places along with Brazil and China where money is pouring in. And yes, if, IF their investment increases faster than the decline of the dollar AND the inflation rate then a foreign investor will come out ahead. Rather than be subject to not one but two vagaries beyond their control, many foreign investors are voting with their money and investing elsewhere.

Are you seriously trying to say that Zimbabwe had a healthy economy or ANY economy worthy of the name in 2007 ? Or at any time in the recent past ? Are you seriously recommending that people invest in Zimbabwe ? Would you invest there ?

Eric Stoner
10-20-2009, 07:04 AM
That chart looks like every other chart, whether you are looking at the stock market or commodities or employment or whatever. Everything took a dump....in just about every country. All the charts show a massive parabolic runup and a massive drop. Take another look at that chart in a year.

Nothing to see here folks...move along.

If the Fed doesn't slow down and stop monetizing all the debt, that chart is certain to look a LOT worse a year from now. You don't see the Canadian central bank behaving anything like the Fed, do you ? Why do you think that is ?

Eric Stoner
10-21-2009, 08:46 AM
For anyone thinking of following Eagle's advice and investing in Zimbabwe, Mugabe has squandered another major opportunity to get his country out of the mess he created. There were newly discovered diamond deposits along Zimbabwe's eastern border that could be generating as much as $600 million a month. Mugabe turned the area over to his cronies who are busy lining their own pockets. Only $20 million a month is going to government coffers. Violence and theft are epidemic in the mining areas. Since the product qualifies as "Blood Diamonds" because of the violence, the overseas market for them is very limited. From Partnership Africa Canada and Human Rights Watch.

Eric Stoner
10-21-2009, 08:56 AM
More evidence of the downside of a weak dollar- Overseas earnings are getting serious discounted for American multi-nationals and those with heavy exports.

For instance, Coca Cola sales were up 18% in Latin America, 7 % in Europe and up in Africa and Asia. BUT after factoring the effect of a weaker dollar, earnings were actually flat in Latin America and DOWN in Europe. There was only a 2% REAL earnings increase in Africa and Asia.

The dollar was actually lower this time last year than it is now.The stampede into Treasuries after the Lehman Crash drove the dollar up and interest rates down. But the dollar has been steadily declining over the last six months. The dollar has been holding its own against the Yen but its down 6% against the Euro and way down vs. gold.

Most analysts agree with me that the price of oil is affected by the weak dollar. It went over $80 per barrel today.

eagle2
10-21-2009, 09:35 PM
Well as I said, there were some who criticized Clinton for making the dollar too strong. What you refuse to accept is the connection between a strong currency and steady and stable economic growth.

The problem with the weakening dollar is that it only has an arguable benefit for industries dependent on exports. Everyone else suffers from a weakening currency because the value of their savings and investment goes down in real terms. The cost of imports, and not just oil, goes way up. Even the value of export sales goes down in real terms because the American goods are paid for in dollars that have lost value . A weak dollar just gives U.S. exporters a price advantage. Add in the high inflation that invariably results from too many dollars floating around and we are virtually guaranteed to see a repeat of the late 70's and early 80's. Actually it's potentially a LOT worse because NOW we have massive deficits that we didn't have back in the Carter days.

A weak dollars benefits any domestic business that competes against foreign business for both exports and domestic sales. A weak dollar helps American auto-makers by making American cars cheaper compared to imports. A weak dollar encourages foreign manufacturers to move production to the US, which is why so many foreign auto-makers now have plants in the US.



Rather than pontificate further, let me ask you : What do YOU see happening with reference to the dollar and inflation ? Geithner has paid lip service to a strong currency but has done nothing to stop the dollar's slide and has no plans to do in the future. How long do you think the Fed can keep pumping out money and lending it out at an effective interest rate of zero ?


As long as economic growth is slow and unemployment is high.

In Japan, interest rates have been at zero or close to zero percent for over a decade and they have not experienced inflation.




As to foreign investment, I NEVER made any such assumption. Of course there is a return on their investment. Unless they put it all into GM bonds. The question is :compared to what ? Investments in Canada and Australia are currently MUCH more attractive. They offer a higher rate of return in a far MORE stable currency. If you bother to LOOK where the "smart" money is going those are two places along with Brazil and China where money is pouring in. And yes, if, IF their investment increases faster than the decline of the dollar AND the inflation rate then a foreign investor will come out ahead. Rather than be subject to not one but two vagaries beyond their control, many foreign investors are voting with their money and investing elsewhere.


You don't know what your rate of return is going to be if you're investing in stocks.

If you invested in US stocks in the late 1970's when the dollar was weak and inflation was high, you would have done much better over the next 5-10 years than if you invested in US stocks in the late 1990's when the dollar was strong.



Are you seriously trying to say that Zimbabwe had a healthy economy or ANY economy worthy of the name in 2007 ? Or at any time in the recent past ? Are you seriously recommending that people invest in Zimbabwe ? Would you invest there ?

I am not saying Zimbabwe has a healthy economy. I am saying that investing in the Zimbabwe stock market, you have a possibility for a very high rate of return. As I said before, in just one quarter, in 2007, the Zimbabwe stock market returned 600%. You cannot deny that this is great return on investment.

I would consider investing some money in Zimbabwe's stock market if there was an easy way to do it.

Eric Stoner
10-22-2009, 07:53 AM
A weak dollars benefits any domestic business that competes against foreign business for both exports and domestic sales. A weak dollar helps American auto-makers by making American cars cheaper compared to imports. A weak dollar encourages foreign manufacturers to move production to the US, which is why so many foreign auto-makers now have plants in the US.



As long as economic growth is slow and unemployment is high.

In Japan, interest rates have been at zero or close to zero percent for over a decade and they have not experienced inflation.




You don't know what your rate of return is going to be if you're investing in stocks.

If you invested in US stocks in the late 1970's when the dollar was weak and inflation was high, you would have done much better over the next 5-10 years than if you invested in US stocks in the late 1990's when the dollar was strong.



I am not saying Zimbabwe has a healthy economy. I am saying that investing in the Zimbabwe stock market, you have a possibility for a very high rate of return. As I said before, in just one quarter, in 2007, the Zimbabwe stock market returned 600%. You cannot deny that this is great return on investment.

I would consider investing some money in Zimbabwe's stock market if there was an easy way to do it.

Whatever. This is why I've given up and just agreed to let you have your own facts and your own reality. Heck you can even have your own country if you want. From now on you can be King of Zimbabwe. I'd love to see the look on Mugabe's face when you tell him.

For the rest of us choosing to remain with our feet on the ground :As I illiustrated with Coca Cola, foreign sales can be chimerical if the dollar is plunging. The actual value of those sales is declining as the dollar plunges.

Economic growth has been rising and unemployment is going up.

Japan has experienced deflation and a "lost decade" of zero economc growth. Is that what you're prescribing for the U.S. ? They had over a decade of stimulus but the difference was their central bank was far more monetarily reponsible than our Fed.

Who was President when the stock market boomed starting in 1982 ? What policies did he pursue ? Tax cuts; strong dollar; free trade.

If you want to invest in Zimbabwe, be my guest. I just hope you don't do it with the rent money. Btw, that 600% return - What do you think it translated to in REAL money ? If you wanted to sell and lock in your 600% gain how much do you think you would actually pocket ? The answer is nothing. Zip, zero, nada because the hyperinflation in Zimbabwe has made their currency worthless and whatever gain you had this morning would be made worthless by dinnertime of the same day. How many dollars do you think you could buy with Zimbabwean currency ?

Melonie
10-22-2009, 10:05 AM
A weak dollars benefits any domestic business that competes against foreign business for both exports and domestic sales. A weak dollar helps American auto-makers by making American cars cheaper compared to imports. A weak dollar encourages foreign manufacturers to move production to the US, which is why so many foreign auto-makers now have plants in the US.


Whatever. This is why I've given up and just agreed to let you have your own facts and your own reality. Heck you can even have your own country if you want. From now on you can be King of Zimbabwe. I'd love to see the look on Mugabe's face when you tell him.

If for no other reason than for other Dollar Den readers, I'm not going to simply give up. What Eagle2 is attempting to claim is that a US dollar devaluation makes US products, and specifically US autos, cheaper versus foreign competitors. This is technically true for just one aspect of input costs ... US labor costs ... and even THAT aspect only holds true as long as salaries / mandated benefit costs / employer taxes do not rise in response to a falling dollar. Of course the competitiveness of US manufacturing labor costs on a global basis is still facing ( wild example ) $20 per hour direct labor cost + $15 in mandatory benefit costs / employer taxes, as opposed to $2-3 per hour all-in manufacturing labor costs in China or $5-$6 per hour all in manufacturing labor costs in Central America. Even a 50% devaluation of the US dollar would STILL leave US manufacturing labor costs as being much more expensive than either of these offshore locations !!!

But the flip side is global commodity costs. The more the US dollar declines, the higher the US dollar denominated prices of manufacturing commodities rises - since these prices are based on global markets and global demand. This is already true of steel, copper, nickel, oil based plastics, oil based paints and chemicals etc. It is also true of embedded energy costs to melt / shape that steel, to refine that oil into chemicals etc. Thus in an overall sense, any decline in the US dollar's purchasing power will be offset by a similar increase in US dollar denominated commodity costs, totally cancelling out any long term differential in costs for steel / copper / paint used to manufacture a car in Detroit versus Central America or Asia.

Also, in real world terms, US manufacturers have already outsourced a significant number of subassemblies to offshore suppliers. As the US dollar's exchange rate declines, the de-facto costs of these subassemblies as quoted in Yuan or Pesos or whatever foreign currency increases in US dollar terms. As above, this totally cancels out any long term differential in costs.

As to the true reason that foreign auto manufacturers choose to establish and operate US facilities has very little to do with labor or manufacturing costs. Instead it has to do with avoiding the 25% US 'chicken tax' on new vehicles imported in a totally assembled and salable state, as well as avoiding 'US content' restrictions that apply to new vehicle purchases by the US federal / state / local gov'ts and their agencies / contractors. And in point of fact, most foreign auto plants in the USA are assembly operations, where the labor intensive / energy intensive subassemblies like engines and transmissions are imported and simply bolted in by US assembly workers.

!

Eric Stoner
10-22-2009, 12:27 PM
If for no other reason than for other Dollar Den readers, I'm not going to simply give up. What Eagle2 is attempting to claim is that a US dollar devaluation makes US products, and specifically US autos, cheaper versus foreign competitors. This is technically true for just one aspect of input costs ... US labor costs ... and even THAT aspect only holds true as long as salaries / mandated benefit costs / employer taxes do not rise in response to a falling dollar. Of course the competitiveness of US manufacturing labor costs on a global basis is still facing ( wild example ) $20 per hour direct labor cost + $15 in mandatory benefit costs / employer taxes, as opposed to $2-3 per hour all-in manufacturing labor costs in China or $5-$6 per hour all in manufacturing labor costs in Central America. Even a 50% devaluation of the US dollar would STILL leave US manufacturing labor costs as being much more expensive than either of these offshore locations !!!

But the flip side is global commodity costs. The more the US dollar declines, the higher the US dollar denominated prices of manufacturing commodities rises - since these prices are based on global markets and global demand. This is already true of steel, copper, nickel, oil based plastics, oil based paints and chemicals etc. It is also true of embedded energy costs to melt / shape that steel, to refine that oil into chemicals etc. Thus in an overall sense, any decline in the US dollar's purchasing power will be offset by a similar increase in US dollar denominated commodity costs, totally cancelling out any long term differential in costs for steel / copper / paint used to manufacture a car in Detroit versus Central America or Asia.

Also, in real world terms, US manufacturers have already outsourced a significant number of subassemblies to offshore suppliers. As the US dollar's exchange rate declines, the de-facto costs of these subassemblies as quoted in Yuan or Pesos or whatever foreign currency increases in US dollar terms. As above, this totally cancels out any long term differential in costs.

As to the true reason that foreign auto manufacturers choose to establish and operate US facilities has very little to do with labor or manufacturing costs. Instead it has to do with avoiding the 25% US 'chicken tax' on new vehicles imported in a totally assembled and salable state, as well as avoiding 'US content' restrictions that apply to new vehicle purchases by the US federal / state / local gov'ts and their agencies / contractors. And in point of fact, most foreign auto plants in the USA are assembly operations, where the labor intensive / energy intensive subassemblies like engines and transmissions are imported and simply bolted in by US assembly workers.

!

Melonie. Stop the twisting the knife and confusing the man with actual facts. If he refuses to acknowledge how the REAL WORLD works and all the downside of a weak dollar, let him. You and I have explained this very point to him over and over again and he just refuses to accept it.

Yes, a weak dollar aids exports by making them cheaper in the importing country. But as you explain, anything and everything that went into that product here in the U.S. costs MORE because of the weak dollar.

Melonie
10-22-2009, 12:53 PM
Yes, a weak dollar aids eports by making them cheaper in the importing country. But as you explain, anything and everything that went into that product here in the U.S. cost MORE because of the weak dollar.

... which in turn merely helps US exporters sell any products they already have in completed inventory ! But it does little or nothing to help US exporters sell products they must build in the future. Those US exporters are faced with a dilemma ... they can either hold US dollar denominated prices and see their profit margins erode to zero due to rising raw material / energy costs, or they must raise US dollar denominated prices to offset rising raw material / energy costs to maintain profit margin and see export sales drop as a consequence.

And ALL of the above sidesteps the simple fact that, even with a depreciated dollar, US manufacturing labor and benefit costs will STILL be an order of magnitude higher than actual manufacturing labor costs in Asia, Central America etc. Ultimately, US export manufacturers remain at a disadvantage whether the US dollar is strong or weak. And the (obvious) reasons for that disadvantage boil down to US corporate tax rates, much higher US manufacturing labor costs versus global counterparts also due in part to higher US individual tax rates, higher US energy costs also due to high energy tax rates and expensive environmental compliance costs etc. No matter what happens with the US dollar, nothing removes these 'systemic' additional costs of doing business in the USA.

Eric Stoner
10-23-2009, 07:50 AM
^^^ Yeah but, the idea that we don't make anything in the U.S. anymore is false. Lat year the U.S. generated $1.7 trillion in manufacturing outputs. China, with 5 times our population was second with $1.3 trillion. Manufacturing costs are just one part of the picture. The fact remains that there is demand for what we produce.

eagle2
10-23-2009, 08:55 PM
Whatever. This is why I've given up and just agreed to let you have your own facts and your own reality. Heck you can even have your own country if you want. From now on you can be King of Zimbabwe. I'd love to see the look on Mugabe's face when you tell him.

Eric, who has yet to provide a reference, is criticizing someone for "having their own facts"? Sorry Eric, just because the facts contradict your right-wing ideology doesn't mean they're not facts. It's your right-wing ideology that is not fact.

One thing right-wingers seem to have in common, besides a lack of understanding of economics, is they're very unfunny, as Eric shows here. They're obnoxious, but not funny.



For the rest of us choosing to remain with our feet on the ground :As I illiustrated with Coca Cola, foreign sales can be chimerical if the dollar is plunging. The actual value of those sales is declining as the dollar plunges.


Coca Cola estimates that a strong dollar would hurt operating income by 12 percent to 14 percent in the third quarter, and by the low single digits in the fourth quarter. As always, the facts contradict Eric's right-wing ideology.

http://biz.thestar.com.my/news/story.asp?file=/2009/7/22/business/20090722092810&sec=business
(snip)
Still, those foreign sales were dragged down by the stronger dollar, which hurt operating income by 14 percent in the quarter.

Overall, sales fell 9 percent to $8.27 billion, missing Wall Street's estimate of $8.66 billion.

Companies that do significant international business are hurt by a stronger dollar as revenue is translated from local currencies into fewer dollars.

Coca-Cola estimated the drag of foreign currencies would hurt operating income by 12 percent to 14 percent in the third quarter, and by the low single digits in the fourth quarter.
(snip)





Economic growth has been rising and unemployment is going up.


Employment growth generally lags behind economic growth.



Japan has experienced deflation and a "lost decade" of zero economc growth. Is that what you're prescribing for the U.S. ? They had over a decade of stimulus but the difference was their central bank was far more monetarily reponsible than our Fed.


A typical straw-man argument from a right-winger. My point was that low interest rates don't automatically lead to inflation.



Who was President when the stock market boomed starting in 1982 ? What policies did he pursue ? Tax cuts; strong dollar; free trade.

As usual, Eric is making up his own facts. Reagan pressured Japan to "voluntarily" reduce the number of cars and motorcycles they were exporting to the US. The President doesn't make monetary policy. Over the long term, Reagan (and Bush's) tax cuts have been disastrous for the US.



If you want to invest in Zimbabwe, be my guest. I just hope you don't do it with the rent money. Btw, that 600% return - What do you think it translated to in REAL money ? If you wanted to sell and lock in your 600% gain how much do you think you would actually pocket ? The answer is nothing. Zip, zero, nada because the hyperinflation in Zimbabwe has made their currency worthless and whatever gain you had this morning would be made worthless by dinnertime of the same day. How many dollars do you think you could buy with Zimbabwean currency ?

As usual, Eric doesn't know what he's talking about so he just makes stuff up based on his ideology. The return was in US dollars. This year, over a three month period Zimbabwe's stock market capitalization more than doubled over a five month period in US dollars.

http://www.zimnetradio.com/news/zimnet27668.html

(snip)
“Volumes of trade started at 6,9 million valued at US$536 285.60, rose to 11,6 million in April 2009 valued at US$202,8 million and reached 57,2 million valued at US$804,7 million at the end of June 2009,” Biti said.

“Share prices registered phenomenal growth with some shares such as Hippo gaining over 2,000 percent and Econet 200 percent.”

Biti said the improved performance in volumes and share prices was reflected in the improvement in market capitalisation which increased from US$1,7 billion to the current US$3,9 billion.
(snap)

Once again, the facts contradict Eric's right-wing ideology. I would bet that none of Eric's investments did anywhere near as well as Zimbabwe's stock market.

eagle2
10-23-2009, 09:14 PM
... which in turn merely helps US exporters sell any products they already have in completed inventory ! But it does little or nothing to help US exporters sell products they must build in the future. Those US exporters are faced with a dilemma ... they can either hold US dollar denominated prices and see their profit margins erode to zero due to rising raw material / energy costs, or they must raise US dollar denominated prices to offset rising raw material / energy costs to maintain profit margin and see export sales drop as a consequence.


Yes it does. A weak dollar has no effect on the cost of domestic raw material or on the cost of energy, most of which comes from domestic supplies. For any imported raw materials going into the product, US manufacturers pay the same price as manufacturers in other countries, while the cost they pay for labor, domestic raw materials, and energy from domestic suppliers is less; thus their costs are less and they can sell their products for less.



And ALL of the above sidesteps the simple fact that, even with a depreciated dollar, US manufacturing labor and benefit costs will STILL be an order of magnitude higher than actual manufacturing labor costs in Asia, Central America etc. Ultimately, US export manufacturers remain at a disadvantage whether the US dollar is strong or weak. And the (obvious) reasons for that disadvantage boil down to US corporate tax rates, much higher US manufacturing labor costs versus global counterparts also due in part to higher US individual tax rates, higher US energy costs also due to high energy tax rates and expensive environmental compliance costs etc. No matter what happens with the US dollar, nothing removes these 'systemic' additional costs of doing business in the USA.

Our labor costs are similar to competitors in Western Europe and Japan, who are our main competitors in a number of industries.

US corporations on average pay less in taxes than corporations in many other countries. While our rates are higher, there are many more loop holes for corporations to reduce taxes.

http://www.cbpp.org/cms/?fa=view&id=784

(snip)
The U.S. corporate tax burden is smaller than average for developed countries.[1] Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent.
(snip)

Melonie
10-24-2009, 03:36 AM
A weak dollar has no effect on the cost of domestic raw material or on the cost of energy, most of which comes from domestic supplies

OK Eric, you're right ! Now I give up !!!

eagle2
10-24-2009, 09:32 AM
Please explain how a weak dollar will cause the price of energy to go up from a coal-burning or nuclear power plant.

Melonie
10-24-2009, 02:47 PM
^^^ very simple. Spot market ISO electricity pricing is set by the bid price of the last generator to come online in order to meet total system load demand ... a generator which is today almost always oil or gas fired. As a result, even though the production cost of nuclear power may not increase, the price the nuclear power plant is PAID ( and thus the price electric utilities and their customers are charged ) is effectively determined by the cost of oil and gas which set the bid for that last generator.

Oil is an international commodity whose price in US dollar terms is inversely proportional to the strength of the US dollar. Gas and coal prices roughly follow the BTU per US dollar cost of oil over the long term ... which is more or less proven by the price of oil going from ~$40 to ~$80 per barrel over the past few months while the price of natgas has gone from <$3 to >$5 per MMBTU over the same time period.

Of course, coal fired power ( or lack thereof ) in America has its own story ...

(snip)"On October 31, 2009, the once largest aluminum plant in the world will shut down. With it goes another American industry and more American jobs. The Columbia Falls Aluminum Company in Montana will shut down its aluminum production because it cannot purchase the necessary electrical power to continue its operations.

How did this happen in America? America was once the envy of the world in its industrial capability. America's industrial capacity built America into the most productive nation the world had ever known. Its standard of living rose to levels never before accomplished. Its currency became valuable and powerful, allowing Americans to purchase imported goods at relatively cheap prices.
America grew because of innovation and hard work by the pioneers of the industrial revolution, and because America has vast natural resources. A great economy, as America once was, is founded on the ability to produce electrical energy at low cost. This ability has been extinguished. Why?

Columbia Falls Aluminum negotiated a contract with Bonneville Power Administration in 2006 for Bonneville to supply electrical power until September 30, 2011. But, responding to lawsuits, the 9th US Circuit Court ruled the contract was invalid because it was incompatible with the Northwest Power Act. Therefore, the combination of the Northwest Power Act and a US Circuit Court were the final villains that caused the shutdown of Columbia Falls Aluminum.

But the real reasons are much more complicated. Why was it not possible for Columbia Falls Aluminum to find sources of electricity other than Bonneville?

We need to look no further than the many environmental groups like the Sierra Club and to America's elected officials who turned their backs on American citizens and in essence themselves, for they too are citizens of this country. These officials bought into the green agenda promoted by the heavily funded environmental groups. Caving to pressure, they passed laws and the environmental groups filed lawsuits that began turning off the lights in America. The dominos stated to fall.

They began stopping nuclear power plants in the 1970's. They locked up much of our coal and oil resources with land laws. They passed tax credits, which forces taxpayers foot the bill for billionaire investors to save taxes by investing in less productive wind and solar energy projects. "(snip)

(snip)Nevertheless, our politicians have passed laws stating that carbon dioxide is bad. See California's AB32 which is based upon science fiction. (For readers who take issue with me, I will be happy to destroy your arguments in another place. In this paper, we focus on the damage to America that is being caused by those promoting the global-warming fraud.)

In the year 2000, America planned 150 new coal-electric power plants. These power plants would have been "clean" by real standards but the Greens managed to have carbon dioxide defined legally as "dirty" and this new definition makes all emitters of carbon dioxide, including you, a threat to the planet. Therefore, using legal illogic, the Sierra Club stopped 82 of these planned power plants under Bush II and they expect it will be a slam-dunk to stop the rest under Obama.

And now you know the real reason the Columbia Falls Aluminum Company had to shut down. America stopped building new power plants a long time ago. There is now no other source where the company can buy energy. Our energy-producing capability is in a decline and it is taking America with it."(snip)

from

... which explains why the last power plant coming online, i.e. the one that sets the ISO price for ALL power being generated during that particular hour, is no longer coal fired but either oil or natural gas fired. - as well as explaining why the electricity price to all customers is now directly tied to the US dollar denominated price of oil and gas, which in turn is affected by the strength or weakness of the US dollar exchange rate.


The real 'moral' of the story of course is that buying stock in companies that own and operate existing US nuclear power plants is probably a fairly risk free way to realize a lot of dividend income and capital gain going forward !!!



~

eagle2
10-24-2009, 03:12 PM
I'm sure you're making this up to support your ideology, just like much of the other stuff you make up. Oil only accounts for approximately 1% of the electricity generated in the US. Coal, nuclear, and hydro account for over 70%. You really think that one resource that accounts for 1% of electricity generated has more of an impact on the price than resources that account for over 70% of electricity generated?

I've been living at the same place for 15 years and there has been very little change in my electric rates during the entire time I've been here, regardless of how strong or weak the dollar is.

Melonie
10-24-2009, 03:28 PM
^^^ I don't know where 'here' is for you. Based on your comments, I would guess the midwest, where coal fired power still dominates ISO pricing in that region. However, in the rest of the USA, ISO pricing is now determined by oil and gas prices ...

from

(snip)"said Director of Market Monitoring Keith Casey. "We are seeing extreme volatility in the gas market and it could worsen..... considerably." Natural gas is the major source of fuel for electrical generators in California and power prices typically follow gas prices.

"We are charged with making sure the lights stay on in California and continually strive to find the correct balance between cost and reliability," said ISO Board Chair, Ken Wiseman. "With unpredictable fuel prices and intense competition for power around the West, we need to make sure out-of-state energy suppliers will offer their power to the Real-Time Market. We do not expect prices to hit this higher cap often and the volume at that price should be extremely low."

It should be noted that part of the California ISO Market Redesign and Technology Upgrade program includes raising the bid cap to $500 in 2007 when the redesign is fully implemented. Additionally, there is a pending proceeding at FERC addressing the issue of payments to generators for their capacity that may also affect the level of the bid cap in the near future."(snip)

[ the bid cap of $500/MWH = $5.00 per kWh - sic]

(snip)The 2009 Regional System Plan released today by ISO New England Inc. forecasts ....

Gas, which fueled 41 percent of the region`s electric generation last year, is likely to remain the dominant fuel for the foreseeable future. That said, regional and interregional coordination between the gas and electric power industries, conversions of natural gas plants to dual-fuel capability [ with the second fuel being oil - sic], and expanded natural gas infrastructure are lessening risks of supply disruptions. (snip)

hockeybobby
10-25-2009, 10:44 AM
The trade deficit has been hugely negative for years and years. Now the dollar is dropping compared to other currencies, and the trade deficit is disappearing. You argue elsewhere about the "artificially high standard of living" due to the trade deficit, but argue here in favour of a strong dollar. Curious.

Melonie
10-25-2009, 03:27 PM
^^^ nothing inconsistent about this ... spending more money than the US is actually 'earning' takes place by both a widening of the trade deficit or by the spending of freshly printed new dollars ( i.e. weak dollar scenario). The latter is more insidious though since it effectively 'steals' existing value from savers and investors while providing an artificially high standard of living for those who are the deepest in debt.

threlayer
10-25-2009, 07:29 PM
^^^ very simple. Spot market ISO electricity pricing is set by the bid price of the last generator to come online in order to meet total system load demand ... a generator which is today almost always oil or gas fired. As a result, even though the production cost of nuclear power may not increase, the price the nuclear power plant is PAID ( and thus the price electric utilities and their customers are charged ) is effectively determined by the cost of oil and gas which set the bid for that last generator.
~

This is just NOT true. Peaking plants are largly oil-fired gas turbines or natural gas fired plants, as well as peaking hydro or pumped storage units. Power systems run those in times where their own load is nearing the peaking capability of their system or purchased generation,given that tie-lines to neighboring utility systems are at limits. Generation units are scheduled so that marginal cost of the last kw of system generation is minimized.

Now for the peaking characteristics....
Most utility loads are summer peaking, but northern states are largely winter peaking. Most of the year the peak is never neared. Consequently most of the year the peakin gunits are not used for generatio=ng ssignificant electricity, other than very short-term running for maintenance procedures. In addition when system emergencies occur, such as multiple tie-lines are out of service, those units can be run for usually only a few hours.

Now about marginal generation costs....
Only the generating plants having high marginal costs charge those high costs. It is not true that only the highest cost plants set the rates for selling power. Utilities have never operated this way. Only the peaking units from that utility of a neighboring utility selling (wheeling) power under contract to that utility will charge their own marginal generating rate plus a small wheeling charge to the purchasing utility. That is unless a contract sets another rate, which would be unusual. Utilities, not being competitive except in the case of selling excess capacity, are unusually cooperative. Ever notice crews from other utilities coming in to help your utility recover from a strong storm? That's cooperation. It occurrs in generating and transmision as well. It is done because it works best for all utilities toshare resources when the time comes. That has been going on for a century now. It is a case of what goes and comes around.

threlayer
10-25-2009, 07:34 PM
I've been living at the same place for 15 years and there has been very little change in my electric rates during the entire time I've been here, regardless of how strong or weak the dollar is.

The biggest change I've seen was due to PURPA and the state of new york mandating that cogeneration should sell for a fixed HIGH price well beyond what utilities would ever buy on their own, except for peaking power. Electricity here went from 3.5 cents per kilowatt-hour to over 14 cents/kwh. And, further, that was the start of the massive emigration of industry and population from NYS which is going on even faster now. A strong or weak dollar had absolutely no effect on that. It was stupid, short-sighted government decisions. Mario Cuomo was our Democtatic governor then. OK, so someone here will now try to tie that in to Obama.

eagle2
10-25-2009, 10:42 PM
^^^ I don't know where 'here' is for you. Based on your comments, I would guess the midwest, where coal fired power still dominates ISO pricing in that region. However, in the rest of the USA, ISO pricing is now determined by oil and gas prices ...

No it isn't. I live in the eastern US, and the primary source of power where I live is nuclear. Oil, has practically zero impact on the price of electricity. Approximately 1% of electricity is generated from oil-powered plants. I have no idea how you could possibly think that a resource that accounts for approximately 1% of the power generated in the US determines the price of electricity.



from http://www.thefreelibrary.com/California+ISO+Board+Approves+Increase+in+Bid+Cap+ Level.-a0139852879

(snip)"said Director of Market Monitoring Keith Casey. "We are seeing extreme volatility in the gas market and it could worsen..... considerably." Natural gas is the major source of fuel for electrical generators in California and power prices typically follow gas prices.

"We are charged with making sure the lights stay on in California and continually strive to find the correct balance between cost and reliability," said ISO Board Chair, Ken Wiseman. "With unpredictable fuel prices and intense competition for power around the West, we need to make sure out-of-state energy suppliers will offer their power to the Real-Time Market. We do not expect prices to hit this higher cap often and the volume at that price should be extremely low."

It should be noted that part of the California ISO Market Redesign and Technology Upgrade program includes raising the bid cap to $500 in 2007 when the redesign is fully implemented. Additionally, there is a pending proceeding at FERC addressing the issue of payments to generators for their capacity that may also affect the level of the bid cap in the near future."(snip)

[ the bid cap of $500/MWH = $5.00 per kWh - sic]

(snip)The 2009 Regional System Plan released today by ISO New England Inc. forecasts ....

Gas, which fueled 41 percent of the region`s electric generation last year, is likely to remain the dominant fuel for the foreseeable future. That said, regional and interregional coordination between the gas and electric power industries, conversions of natural gas plants to dual-fuel capability [ with the second fuel being oil - sic], and expanded natural gas infrastructure are lessening risks of supply disruptions. (snip)

Natural gas only affects the price of electricity in areas where most of the electricity comes from natural gas powered plants. Less than 25% of our electricity is generated from gas powered plants. In areas where the primary source of electricity comes from coal, nuclear, or hydro power, the price of gas has little or no effect on the cost of electricity. The price of oil has no affect on the cost of electricity anywhere, except where the approximately 1% of the electricity that comes from oil generated plants is used.

Melonie
10-26-2009, 01:41 AM
Natural gas only affects the price of electricity in areas where most of the electricity comes from natural gas powered plants. Less than 25% of our electricity is generated from gas powered plants.


Only the generating plants having high marginal costs charge those high costs

No offense intended, but you are both dreaming. If ONE natural gas or oil fired generator must come online to meet system load, even if it only represents 1% of the total power being generated during that hour, then EVERY ISO electricity customer is charged the price bid by that oil or gas fired generator ... and every hydro / nuclear / coal fired generator that is supplying an aggregate 99% of the total power during that same hour is paid the same price bid by the gas / oil fired power plant supplying the last 1% !!!

The ONLY way that hydro / nuclear / coal fired power can be purchased at a lower price is if the ISO pricing market has been bypassed via a pre-existing contract between that specific generator and a specific electricity customer ... which is typically a huge industrial customer or an Energy Services Company acting as agent for thousands of commercial and residential customers. This was the situation between Bonneville Power and the Aluminum Smelter described in a different thread. This was also the reason that the Aluminum Smelter is shutting down ... because Bonneville was forced to shut down a coal fired power plant and no longer had sufficient generating capacity to continue supplying contracted ( lower priced non ISO) power in the amount required by the Aluminum Smelter.

The kicker in that case, and also a kicker in the northeast, is that tightening environmental regulations are forcing coal fired power plants to either invest billions to clean up their stack emissions, or more often simply forcing coal fired power plants to permanently shut down because the investment required to clean up stack emissions doesn't make economic sense for the plants' owners. As coal fired power plants are permanently taken offline, their lost generation capacity is replaced with oil and gas fired units ... with the hourly ISO electricity price then being set by those oil and gas generators at a significantly higher price than was formerly the case when the last generator coming online to meet system load was coal fired !!! My links from California and New York both clearly state that natural gas ( or oil ) generating units now dominate ISO hourly electricity pricing levels even if they do not constitute the majority of generation capacity !!!

On a sideways tangent, the fact that every generator is paid the same price for their electricity regardless of their actual cost of generation has been one of the few bright spots in funding New York's budget deficit. The state of NY, via it's Power Authority, owns a whole bunch of hydro generators. Lately, these generators have been getting paid 5-6-7 cents/kWh ISO prices for power that costs them less than 2 cents/kWh to produce. The resulting billions of dollars worth of 'profits' are being swept into the state's coffers.

~

Zofia
10-26-2009, 05:50 AM
EVERY ISO electricity customer is charged the price bid by that oil or gas fired generator ... and every hydro / nuclear / coal fired generator that is supplying an aggregate 99% of the total power during that same hour is paid the same price bid by the gas / oil fired power plant supplying the last 1% !!! Yeah, right. When someone says EVERY in all caps, I immediately suspect that they really mean somewhere, there is one example. Otherwise they would not have to use the all caps. Try again sweetie. Or just have another tequila.

Eric Stoner
10-26-2009, 07:17 AM
Eric, who has yet to provide a reference, is criticizing someone for "having their own facts"? Sorry Eric, just because the facts contradict your right-wing ideology doesn't mean they're not facts. It's your right-wing ideology that is not fact.

One thing right-wingers seem to have in common, besides a lack of understanding of economics, is they're very unfunny, as Eric shows here. They're obnoxious, but not funny.



Coca Cola estimates that a strong dollar would hurt operating income by 12 percent to 14 percent in the third quarter, and by the low single digits in the fourth quarter. As always, the facts contradict Eric's right-wing ideology.

http://biz.thestar.com.my/news/story.asp?file=/2009/7/22/business/20090722092810&sec=business
(snip)
Still, those foreign sales were dragged down by the stronger dollar, which hurt operating income by 14 percent in the quarter.

Overall, sales fell 9 percent to $8.27 billion, missing Wall Street's estimate of $8.66 billion.

Companies that do significant international business are hurt by a stronger dollar as revenue is translated from local currencies into fewer dollars.

Coca-Cola estimated the drag of foreign currencies would hurt operating income by 12 percent to 14 percent in the third quarter, and by the low single digits in the fourth quarter.
(snip)





Employment growth generally lags behind economic growth.



A typical straw-man argument from a right-winger. My point was that low interest rates don't automatically lead to inflation.


As usual, Eric is making up his own facts. Reagan pressured Japan to "voluntarily" reduce the number of cars and motorcycles they were exporting to the US. The President doesn't make monetary policy. Over the long term, Reagan (and Bush's) tax cuts have been disastrous for the US.



As usual, Eric doesn't know what he's talking about so he just makes stuff up based on his ideology. The return was in US dollars. This year, over a three month period Zimbabwe's stock market capitalization more than doubled over a five month period in US dollars.

http://www.zimnetradio.com/news/zimnet27668.html

(snip)
“Volumes of trade started at 6,9 million valued at US$536 285.60, rose to 11,6 million in April 2009 valued at US$202,8 million and reached 57,2 million valued at US$804,7 million at the end of June 2009,” Biti said.

“Share prices registered phenomenal growth with some shares such as Hippo gaining over 2,000 percent and Econet 200 percent.”

Biti said the improved performance in volumes and share prices was reflected in the improvement in market capitalisation which increased from US$1,7 billion to the current US$3,9 billion.
(snap)

Once again, the facts contradict Eric's right-wing ideology. I would bet that none of Eric's investments did anywhere near as well as Zimbabwe's stock market.

1. I provide lots of references. It's not my fault that you don't bother to read them.
I'm actually trying to avoid arguing with you because the only facts you're willing to recognize are those that fit your high tax, high spend, high borrow politics. Rather than engage in name-calling or other nonsense, I've just agreed to let you have your own facts and am posting for the benefit of those who've managed to maintain an open mind

2. Your Coca Cola link is THREE (3) months out of date. That was the results for the SECOND Quarter of 2009. I was referencing the more recent THIRD Quarter which you can reference at Cnbc.com among other places. For the last time: Do You EVER actually READ your own links ?????

3. According to OBAMA's Chief Economic advisor we had better get used to 10% unemployment. She has joined many others in predicting a jobless recovery. That's quite a lag behind economic growth.

4. I NEVER said that. Letting you have your own facts is one thing but could you at least quote me accurately ? It is not just the low rates but low rates combined with huge increases in the money supply and huge budget deficits and a WEAK DOLLAR that will give us inflation.

5. Irrelevant ! Import restrictions on Japanese cars had nothing to do with the dollar's strength. You are ignoring the role of the Treasury Department in bolstering or weakening our currency. We had a strong dollar under Reagan and under Clinton, Rubin was adept at going into the currency markets from time to time and buying up excess dollars. The Clinton budget surpluses were also a big help.

6. Reagan's tax cuts gave us 20 years of unprecedented economic growth. Clinton's tax cuts continued that growth. Bush's tax cuts sustained that growth.
How do you think that people paying 40, 50, 60, 70 % of their money just to the Federal Government generates economic growth ?

7. Rotflmao !!!!! If you want to invest in Zimbabwe, be my guest. Mugabe is obviously some sort of kindred spirit for you. So much so that you accept whatever you read on HIS Government controlled web-site as valid. Zimbabwe has made Haiti look functional. Do you seriously think that your investment in Zimbabwe would be A. safe and B. unaffected by their hyperinflation ?
Knock yourself out ! Go for it !

Eric Stoner
10-26-2009, 07:20 AM
Yeah, right. When someone says EVERY in all caps, I immediately suspect that they really mean somewhere, there is one example. Otherwise they would not have to use the all caps. Try again sweetie. Or just have another tequila.

And your F A C T S to contradict what she posted are WHAT ?

Eric Stoner
10-26-2009, 07:34 AM
No it isn't. I live in the eastern US, and the primary source of power where I live is nuclear. Oil, has practically zero impact on the price of electricity. Approximately 1% of electricity is generated from oil-powered plants. I have no idea how you could possibly think that a resource that accounts for approximately 1% of the power generated in the US determines the price of electricity.



Natural gas only affects the price of electricity in areas where most of the electricity comes from natural gas powered plants. Less than 25% of our electricity is generated from gas powered plants. In areas where the primary source of electricity comes from coal, nuclear, or hydro power, the price of gas has little or no effect on the cost of electricity. The price of oil has no affect on the cost of electricity anywhere, except where the approximately 1% of the electricity that comes from oil generated plants is used.

This highlights why so many of your posts are factually delinquent. Do you seriously think there is a direct line from the nuclear plant to your house ? Where do I sign up for direct service off the Grid ? All Electricity, regardless of how it's generated gets on the same grid and gets bought and sold among the various utilities.

Eric Stoner
10-26-2009, 07:35 AM
I'm sure you're making this up to support your ideology, just like much of the other stuff you make up. Oil only accounts for approximately 1% of the electricity generated in the US. Coal, nuclear, and hydro account for over 70%. You really think that one resource that accounts for 1% of electricity generated has more of an impact on the price than resources that account for over 70% of electricity generated?

I've been living at the same place for 15 years and there has been very little change in my electric rates during the entire time I've been here, regardless of how strong or weak the dollar is.

I think your electric bill has been so low because you spend so much time in the dark.

Eric Stoner
10-26-2009, 08:17 AM
The trade deficit has been hugely negative for years and years. Now the dollar is dropping compared to other currencies, and the trade deficit is disappearing. You argue elsewhere about the "artificially high standard of living" due to the trade deficit, but argue here in favour of a strong dollar. Curious.

NOT according to the latest numbers. For August, 2009 the U.S. had a trade deficit of over $30 billion. That's according to Official U.S. stats compiled by the conservative ideologues at OBAMA's Dept . of Commerce. In case anyone's curious where I get my numbers.

Eric Stoner
10-26-2009, 08:19 AM
OK Eric, you're right ! Now I give up !!!

Relax. Just do what I do. Let him have his liberal alternative universe and his own facts and just post for the rest of us.

Melonie
10-26-2009, 02:29 PM
... OK. for the rest of us dealing with the real world ... a seemingly clear as crystal explanation from the New England ISO.


(snip)"Background on the wholesale electricity market’s UCP [ Uniform Clearing Price - sic ] auction

ISO New England administers the wholesale electricity markets based on a UCP auction, as do all wholesale electricity markets in the United States. The ISO dispatches generators in the region starting from the lowest-priced bids (this includes generators that bid $0, such as hydro units and nuclear units) and progressing to higher-priced bids (i.e., gas-fired generating units), until New England has enough generation to meet consumers’ demand for electricity. Under a UCP auction, each generator receives the same (uniform) price based on the price of the last unit needed to meet the overall demand for electricity, regardless of each generator’s bid. The bid price of the last generator used to satisfy the total demand for electricity therefore determines the wholesale price of electricity.

A UCP auction is a well-tested and common market structure

Most commodity markets operate with a UCP structure. Corn, soybeans, oil, iron ore, silver, and gold are all traded with a UCP because, like electricity, one unit of a product is like another, regardless of how it is produced. Corn trades for so many dollars a bushel regardless of what it cost any one farmer to produce that bushel because, to the market, a bushel is a bushel. Some farmers have lower costs, some have higher costs, but each faces the same market price. The UCP in the electricity market is no different."(snip)

from


And in fairness, there IS an exception to the UCP structure for the pricing of power from certain generators. In many ISO regions, legislation has been passed that guarantees 'above UCP auction' prices will be paid to wind / solar generators. This premium price is partially funded via higher electricity prices charged to customers who specifically request green power. However, this premium price is also partially funded by 'stealth' fees and markups on UCP electricity prices charged to all other customers.

~

threlayer
10-26-2009, 06:59 PM
And your F A C T S to contradict what she posted are WHAT ?

As of the date and time of your reply, Mel posted no backup to her opinion. Thus the "facts" as you generously call them were in dispute.

I will reserch this issue myself. I should be up on it soon if my direct contacts are still available. It is definitely NOT they way the NPCC (Northeast Power Coordinating Council) used to run things.

Oh, another thing...Largely the coal-fired plants coming out of service because they cannot meet new pollution regulations are very old 1920s and 1930 plants where the boiler and stack systems are decrepit anyway and much less efficient that designs from the 1960s onward. Pollution controls restrict the exhause pressure an thus the efficiency of the older less efficient units. So taking them out of service and reducing pollution is actually a good thing* IF sufficient base-load capacity were available. And actually THAT is the big problem.

Furthermore...The older plants were fully amortized and their capital cost was completely off the rate-base. Newer plants providing replacement capacity are gong to be on the rate base, causing political pressure due to the cost of providing electricity and lack of rights-of-way for transmission for wheeling lower cost purchased power.

SO it is a LOT more than just pollution regulations and raisng rates. It is never as simple as it is portrayed by people outside of the complex industy. Especially here.

---------------
* good thing if you regard human health as important enough to consider

eagle2
10-26-2009, 07:36 PM
Relax. Just do what I do. Let him have his liberal alternative universe and his own facts and just post for the rest of us.

Not going along with Eric's crazy right-wing ideology is having an alternative universe? LOLOLOL!!!!!!!

eagle2
10-26-2009, 10:23 PM
... OK. for the rest of us dealing with the real world ... a seemingly clear as crystal explanation from the New England ISO.

Considering how much stuff you make up and how much of the stuff you make up turns out to be wrong, I really don't think you're in a position talk about "dealing with the real world". Since you continue to mock me for not "dealing with the real world", here are just a few examples where stuff you made up contradicts what does happen "in the real world":

Melonie makes up: Professionals in Asian countries have a higher standard living than professionals in the US because the cost of unskilled labor is cheaper.

Fact: The cost of living is Shanghai is similar to the cost of living in New York City

Melonie makes up: Residents in Shanghai pay much lower taxes than residents in New York City

Fact: The top income tax rate in China is much higher than the top income tax rate in the US. The V.A.T. tax in China is much higher than the sales tax in New York City.

Melonie makes up: College graduates are leaving New York City for more conservative states like Texas, because of lower taxes and lower cost of living

Fact: The number of college graduates living in New York City has increased dramatically over the past decade

Melonie repeats what someone else made up: Temperature measurements are rising because temperature measurement stations were shut down in Siberia after the collapse of the Soviet Union

Fact: Satellite temperature measurements concur with ground stations that temperatures have been rising

Melonie makes up: BMW moved their production to South Carolina because they would go bankrupt if they persisted in importing vehicles manufactured in western europe because of high wages

Fact: BMW produces 80 - 90% of their vehicles in Germany and exports a significant number of them to the US


.

(snip)"Background on the wholesale electricity market’s UCP [ Uniform Clearing Price - sic ] auction

ISO New England administers the wholesale electricity markets based on a UCP auction, as do all wholesale electricity markets in the United States. The ISO dispatches generators in the region starting from the lowest-priced bids (this includes generators that bid $0, such as hydro units and nuclear units) and progressing to higher-priced bids (i.e., gas-fired generating units), until New England has enough generation to meet consumers’ demand for electricity. Under a UCP auction, each generator receives the same (uniform) price based on the price of the last unit needed to meet the overall demand for electricity, regardless of each generator’s bid. The bid price of the last generator used to satisfy the total demand for electricity therefore determines the wholesale price of electricity.

A UCP auction is a well-tested and common market structure

Most commodity markets operate with a UCP structure. Corn, soybeans, oil, iron ore, silver, and gold are all traded with a UCP because, like electricity, one unit of a product is like another, regardless of how it is produced. Corn trades for so many dollars a bushel regardless of what it cost any one farmer to produce that bushel because, to the market, a bushel is a bushel. Some farmers have lower costs, some have higher costs, but each faces the same market price. The UCP in the electricity market is no different."(snip)

from http://iso-ne.com/pubs/whtpprs/uniform_clearing_price_auctions.pdf


And in fairness, there IS an exception to the UCP structure for the pricing of power from certain generators. In many ISO regions, legislation has been passed that guarantees 'above UCP auction' prices will be paid to wind / solar generators. This premium price is partially funded via higher electricity prices charged to customers who specifically request green power. However, this premium price is also partially funded by 'stealth' fees and markups on UCP electricity prices charged to all other customers.

~

Looks like Melonie is arguing with herself now. In discussing whether or not the strength of the dollar affects the price of electricity, Melonie claims that prices are set by the highest cost of generated electricity used.

When discussing BMW's production facilities, Melonie claims BMW moved production to South Carolina because they have cheap electricity from coal powered plants.

When it was pointed out to her that the majority of electricity generated in South Carolina comes from nuclear power, she claims that the price of electricity is set by the cheaper coal fired plants.

So which is it Melonie? Is the price of electricity set by the highest cost plants or the lowest cost plants?