Cold Weather To Blame For The Collapse (Their Word, Not Mine) Of The Economy; A Random Update On "The Road To New England"; How Bad Was The Winter Of 2013 - 2014?

Cold Winter To Blame For Collapse Of Economy

I find it incredible that Reuters continues to insist it was a "bitter winter" that caused the collapse (their word, not mine) of the economy in 1Q14. In all my years of investing, I never once heard the phrase that the economy collapsed because of bad weather. With all the talk of global warning, it just sounds so .... well, ludicrous. [Update, some hours later, when I was proof-reading this for errors, I broke out laughing: Hurricane Katrina was blamed on a president; the collapse of the economy was blamed on less than three months of a "severe winter'; the collapse had nothing to do with DC policies.]

Reuters notes that the contraction at a rate of 2.9% in 1Q14 was the "worst decline in five years." Five years -- Reuters failed to note that this was five years into the "recovery."

Reuters has expanded the list to three items why the economy collapsed (that, by the way is what one is taught in writing classes -- always make it a list of three): a bitter winter, end of long-term unemployment benefits, and failure of businesses to restock.

The failure of businesses to restock: that sounds like circular reasoning, or cause/effect confusion, or more bluntly what came first, the chicken or the egg. If the economy was in "recovery" mode, why did businesses fail to restock?

The end of long-term unemployment benefits probably contributed to the economic collapse (their word, not mine) but it speaks volumes about the world's largest economy requiring unemployment benefits to keep it afloat.

So, we get back to the "bitter winter." And global warming. Oh, well.

As I've said many times, any news article on the economy that fails to mention the 800-pound gorilla in the room is less a news article and more an op-ed disguised as a news article. During a recession/recovery, the worst thing a government can do (see The Grand Pursuit, Sylvia Nassar) is increase taxes and ObamaCare was the biggest tax increase this country has seen in quite some time, and maybe the biggest tax increase if one took the time to add up the effects of national health care as it permeates through the entire economy. The three biggest business concerns with ObamaCare: a) uncertainty; b) 50-full-time-worker threshold; and, c) 29-hour work week.

I doubt most folks are paying close attention to ObamaCare but the number of "bad news" ObamaCare stories continues to increase. My hunch is that as more and more folks are impacted by national health care, the pace of such stories will increase. Ironically, one President Obama's biggest supporters, The Los Angeles Times seems to be reporting a "bad news" ObamaCare story every other day or so.

The top story today, front page of The Los Angeles Times: confusion, costs plague state's ObamaCare enrollees. That's the headline. By the way, that was the word used in the headline: "Obamacare." With an lower case "c," however. I point that out because from the beginning I used the word "ObamaCare" and was taken to task for using that word in a pejorative sense. Not true. I used it because a) it was easier and faster than the full name; b) it was a more honest name than the "real" name of the national health care bill); and, c) "everyone" called it ObamaCare. Anyway I digress. The story at the link:

Frustration and legal challenges over the network of doctors and hospitals for Obamacare patients have marred an otherwise successful rollout of the federal healthcare law in California.

Limiting the number of medical providers was part of an effort by insurers to hold down premiums. But confusion over the new plans has led to unforeseen medical bills for some patients and prompted a state investigation.

More complaints are surfacing as patients start to use their new coverage bought through Covered California, the state's health insurance exchange.

"I thought I had done everything right, and it's been awful," said Jean Buchanan, 56. The Fullerton resident found herself stuck with an $8,000 bill for cancer treatment after receiving conflicting information on whether it was covered.

Whatever the 2Q14 GDP turns out to be, it would have been much better had it not been for ObamaCare, but if 2Q14 GDP comes in under expectations, which now run the gamut from 2.0 to 8.9, it seems, Reuters will no doubt blame the "late" spring, and the icebergs still on Lake Superior. 

[Much of the article focuses on UC Irvine Medical Center. UC Irvine? Really?]

[With regard to the collapse of the economy, we did not even address the president's energy program, using the term "program" lightly.]

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The Road to New England

Another great article sent by a reader. The Bangor (Maine) Daily News is reporting:

Natural gas, which was used to generate 43 percent of New England’s power in 2012 and 2013, exerts an increasingly significant impact on the region’s electricity prices. With domestic production on the rise, it is considered an inexpensive, reliable energy source because natural gas-fired power plants can be turned on relatively quickly. But New England’s pipeline infrastructure is inadequate to handle the volume of natural gas that could be pumped east from U.S. shale fields.

“The fact is that Maine people are being hurt terribly by the natural gas pipeline constraints,” said Tony Buxton, an attorney who is lead counsel for the Industrial Energy Consumers Group, which represents many of the state’s paper mills and other large energy consumers.

Greg Cunningham, a Portland-based attorney with the Conservation Law Foundation, disagrees. He takes issue with the process he said began with a conclusion: that more natural gas pipelines are the answer.

“What’s objectionable in the process is that they have leaped over other alternatives,” Cunningham said, proposing that greater pipeline efficiency, added gas storage facilities, LNG infrastructure and other changes to the power grid could help solve the problem.

“Those aren’t part of the solution that the [Maine Public Utilities Commission] or [the New England States Committee on Electricity] is looking at. They are going immediately to the most expensive, highest-risk and most permanent solution.”

But Buxton said a new pipeline is the only solution to the delivery bottleneck that prevents Maine from tapping enough of the new, cheaper supply of domestic natural gas to drive down energy costs in a way that is needed.

“None of [the other measures] make a significant difference in the absence of pipeline capacity — that’s the overwhelming [cost] driver here,” he said.

Every time I read these stories, I'm reminded of either "the ant and the grasshopper fable" or "The Little Red Hen" story. I have no dog in this fight, but it is entertaining to watch the road to New England.

It looks like, thanks to the Conservation Law Foundation, the good folks in New England will see another year, and another winter, go by having made no new progress in solving a problem. Perhaps more windmills off the coast.

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How Bad Was The Winter of 2013 - 2014?

Our granddaughters love making little snowmen out of stryofoam balls, putting said snowmen on skis (popsicle sticks), etc). The other day we noted a snowman on our granddaughter's desk, something we had not noticed before. Apparently she also thought the winter was bad enough to hang a snowman in effigy off her desk lamp: