Mish's Global Economic Trend Analysis

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• Slow Speed Ahead: Cargo Ships Travel Slower Today Than 130 Years Ago
• Underemployment 28.4% for Ages 18 to 29, 18.4% in all Age Groups - Gallup Poll
• Interactive Map of Failed Banks - August 2010 Update

Slow Speed Ahead: Cargo Ships Travel Slower Today Than 130 Years Ago Posted: 07 Aug 2010 07:43 PM PDT In an effort to save fuel Modern cargo ships slow to the speed of the sailing clippers The world's largest cargo ships are travelling at lower speeds today than sailing clippers such as the Cutty Sark did more than 130 years ago. A combination of the recession and growing awareness in the shipping industry about climate change emissions encouraged many ship owners to adopt "slow steaming" to save fuel two years ago. This lowered speeds from the standard 25 knots to 20 knots, but many major companies have now taken this a stage further by adopting "super-slow steaming" at speeds of 12 knots (about 14mph). Travel times between the US and China, or between Australia and Europe, are now comparable to those of the great age of sail in the 19th century. American clippers reached 14 to 17 knots in the 1850s, with the fastest recording speeds of 22 knots or more. Maersk, the world's largest shipping line, with more than 600 ships, has adapted its giant marine diesel engines to travel at super-slow speeds without suffering damage. This reduces fuel consumption and greenhouse gas emissions by 30%. It is believed that the company has saved more than £65m on fuel since it began its go-slow. Ship engines are traditionally profligate and polluting. Designed to run at high speeds, they burn the cheapest "bunker" oil and are not subject to the same air quality rules as cars. In the boom before 2007, the Emma Maersk, one of the world's largest container ships, would burn around 300 tonnes of fuel a day, emitting as much as 1,000 tonnes of CO2 a day – roughly as much as the 30 lowest emitting countries in the world. Maersk spokesman Bo Cerup-Simonsen said: "The cost benefits are clear. When speed is reduced by 20%, fuel consumption is reduced by 40% per nautical mile. Slow steaming is here to stay. Its introduction has been the most important factor in reducing our CO2 emissions in recent years, and we have not yet realised the full potential. Our goal is to reducing CO2 emissions by 25%." Some ships have been fitted with kite-like "skysails", or systems that force compressed air out of hulls to allow them to "ride" on a cushion of bubbles. These measures can cut fuel consumption by up to 20%. John Sauven, head of Greenpeace, said: "The simplest thing you can do to reduce emissions is reduce speed, but this must now be backed by regulation to make this the norm." Everyone Wants to Meddle More regulation is the last thing we need. If politicians would simply get out of the way, the economy would cure itself. In fact, we would not be in this mess in the first place were it not for the Fed and politicians promoting things. In this case, the free market is functioning perfectly well, yet someone wants to regulate it. Interestingly, President Obama and Congress is coming out of the woodwork with ideas to stimulate demand, to encourage more housing, more spending, more debt, while simultaneously wanting to reduce the energy footprint. I have a better idea, get the hell out of the way and stop meddling. It would do wonders for the economy. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Underemployment 28.4% for Ages 18 to 29, 18.4% in all Age Groups - Gallup Poll Posted: 07 Aug 2010 01:29 PM PDT A Gallup poll shows underemployment is holding steady at 18.4%, a couple points higher than the BLS number from Friday's jobs report. Please consider U.S. Underemployment Steady at 18.4% in July Underemployment Underemployment, as measured by Gallup, was 18.4% in July, essentially unchanged from 18.3% at the end of June and in mid-July. Underemployment peaked at 20.4% in April. Gallup's underemployment measure includes both Americans who are unemployed and those working part time but wanting full-time work. It is based on more than 17,000 phone interviews with U.S. adults aged 18 and older in the workforce, collected over a 30-day period and reported daily and weekly. Gallup's results are not seasonally adjusted, and tend to be a precursor of government reports by approximately two weeks. Substantially Higher Underemployment Persists Among the Young Americans aged 18 to 29 had easily the highest underemployment rate in July of any age group, at 28.4%, including 11.8% who were unemployed and 16.6% who were employed part time but wanted full-time work. Among all U.S. adults in the workforce, a higher percentage of women than of men are underemployed. Underemployed Are Less Hopeful The percentage of underemployed Americans who are "hopeful" that they will be able to find a job in the next four weeks fell to 40% in July -- down from the better levels of May (43%) and June (42%). Seasonal Fluctuations Gallup reports higher levels of underemployment but slightly lower levels of unemployment than does the BLS. The lower unemployment level (8.9% Gallup vs. 9.5% BLS) likely stems from seasonal variations (the BLS seasonally adjusts numbers, Gallup does not). Notably, Gallup is consistently higher by a large margin on underemployment for the entire year. Seasonal adjustments cannot account for the over 2% points difference. Here is the pertinent table as discussed in Jobs Decrease by 131,000, Rise by 12,000 Excluding Census; Unemployment Steady at 9.5%; June Revised from -125,000 to -221,000 Table A-15 Table A-15 is where one can find a better approximation of what the unemployment rate really is. click on chart for sharper image Looking ahead, there is no driver for jobs. Moreover, states are in forced cutback mode on account of shrinking revenues and unfunded pension obligations. Shrinking government jobs and benefits at the state and local level is a much needed adjustment. Those cutbacks will weigh on employment and consumer spending for quite some time. Expect to see structurally high unemployment for years to come. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Interactive Map of Failed Banks - August 2010 Update Posted: 07 Aug 2010 10:42 AM PDT Following is a visualization of bank failures this year. Friday's failure of Ravenswood Bank in Chicago, Illinois (not shown). A quick look at the Texas Ratios and other data will show you why they failed. List is sorted by date. Hover over the fields in the list box for any bank that failed this year, to see bank assets, loans and leases, deposits, and much more data. As is always the case with these interactive visualizations, Please give them an extra few seconds to load. Powered by Tableau Thanks to Ellie Fields and Ross Perez at Tableau Software for help with the display! We hope to update this list every Monday or Tuesday going forward. Also I hope to have new Texas Ratios for all banks through the first quarter of 2010 sometime soon. Note: A few state banks and S&Ls may not display on the list for lack of data. Here is the Failed Bank List from the FDIC. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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