can we “cut our way to prosperity”?

In his weekly radio address today, President Obama said, in regard to the upcoming talks he will be having with Congressional leaders over reviving the stalled budget negotiations, “we can’t simply cut our way to prosperity.”

He might do well to consider the record of the Clinton administration. As these charts show, federal spending as a % of GDP fell 4 percentage points—from 22% to 18%—during the 1993-2000 period, thanks mainly to 8 years of very low spending growth: 3.1% on average. During that same period, real GDP grew at an annualized rate of 3.8% per year, well above its long-term 3.1% per year average, and the unemployment rate fell from 7.4% to 3.9%.

During that same period, rising prosperity resulted in a surge of federal tax receipts, which rose from 17% of GDP to 20%, as revenue growth averaged 7.8% per year. The combination of very slow spending growth and a strong economy reduced the budget deficit from 5% of GDP to a surplus of 2.5% of GDP. And thanks to the combination of strong growth and tight monetary policy, the dollar rose 20% during this period, further boosting confidence and investment.

The hallmarks of policy during the 1993-2000 period are exactly what we need today: 1) sharply curtailed spending growth and 2) tighter monetary policy. It’s not a coincidence that explosive spending growth and easy money have given us the slowest recovery on record. Moral of the story: you can’t simply spend your way to prosperity.

UPDATE: To expand on this most important of themes: You can’t spend or print your way to prosperity; prosperity comes only from hard work and productive investments. Government doesn’t know how to do either very well, since it lacks the profit motive, and politicians have the luxury of spending other peoples’ money instead of their own. Printing money doesn’t create prosperity because it only fosters speculation and destroys confidence in the value of a currency. The worst thing about policies of the past several years (including the Bush administration) has been the reliance on policies (e.g., lots of government spending and easy money) that don’t make any sense, but which sound good because they supposedly put the politicians and the bureaucrats in charge of pulling the economy out of a slump that they themselves (of course) were responsible for creating. The Keynesian belief that politicians and bureaucrats can pull spending and money levers and thus turn around the economy have once again been totally discredited. How long will it take before we as a country learn this lesson?

via Calafia Beach Pundit: Why can’t we cut our way to prosperity?.

Histamine H1 receptor breakthrough heralds improved allergy treatments

New 3D picture of human membrane protein enables development of targeted anti-histamines without side-effects

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The crystal structure of human Histamine H1 receptor with doxepin


An international team of scientists using Diamond Light Source, the UK’s national synchrotron facility, has successfully solved the complex 3D structure of the human Histamine H1 receptor protein. Published in the journal Nature this week, their discovery¹ opens the way for the development of ‘third generation’ anti-histamines, specific drugs effective against various allergies without causing adverse side-effects.

The team, comprising leading experts from the USA (The Scripps Research Institute in California), Japan (Kyoto University), and the UK (Imperial College London and Diamond), worked across three continents for 16 months on the project.

Professor So Iwata, David Blow Chair of Biophysics at Imperial College London, BBSRC Fellow and Director of the Membrane Protein Laboratory at Diamond², said: “It took a considerable team effort but we were finally able to elucidate the molecular structure of the Histamine H1 receptor protein and also see how it interacts with anti-histamines. This detailed structural information is a great starting point for exploring exactly how histamine triggers allergic reactions and how drugs act to prevent this reaction.”
H1 receptor protein is found in the cell membranes of various human tissues including airways, vascular and intestinal muscles, and the brain. It binds to histamine, an important function of the immune system, but in susceptible individuals this can cause allergic reactions such as hay fever, food and pet allergies. Anti-histamine drugs work because they prevent histamine attaching to H1 receptors.

Dr Simone Weyand, post-doctoral scientist at Imperial College London, who conducted much of the experimental work at Diamond, said: “First generation anti-histamines such as Doxepin are effective, but not very selective, and because of penetration across the blood-brain barrier, they can cause side effects including sedation, dry mouth and arrhythmia. By showing exactly how histamines bind to the H1 receptor at the molecular level, we can design and develop much more targeted treatments.”

via Lightsources.org- June 23, 2011 – Histamine H1 receptor breakthrough heralds improved allergy treatments.

Statin Drugs Linked to Diabetes Risk

Cholesterol-lowering drugs called statins, which have been shown to lower a person’s risk for heart attack, can also slightly increase a patient’s risk for developing diabetes, particularly at higher doses, new research shows.

The findings, based on new analyses of five clinical trials involving 32,752 patients, raise new questions about how much we really know about the long-term effects of statins, which are the most widely prescribed drugs in the United States. The focus on the link between statins and diabetes comes at a time when some medical experts and pharmaceutical companies have pushed to broaden the use of the drugs beyond the 40 million at-risk patients who already use them to healthy people who would take the drugs for prevention of heart disease.

via Statin Drugs Linked to Diabetes Risk – NYTimes.com.

Dawn of agriculture took toll on health

When populations around the globe started turning to agriculture around 10,000 years ago, regardless of their locations and type of crops, a similar trend occurred: The height and health of the people declined.

“This broad and consistent pattern holds up when you look at standardized studies of whole skeletons in populations,” says Amanda Mummert, an Emory graduate student in anthropology.

Mummert (in photo at right) led the first comprehensive, global review of the literature regarding stature and health during the agriculture transition, to be published by the journal Economics and Human Biology.

“Many people have this image of the rise of agriculture and the dawn of modern civilization, and they just assume that a more stable food source makes you healthier,” Mummert says. “But early agriculturalists experienced nutritional deficiencies and had a harder time adapting to stress, probably because they became dependent on particular food crops, rather than having a more significantly diverse diet.”

via eScienceCommons: Dawn of agriculture took toll on health.

Jeff Zwart’s Porsche GT3 sets Pikes Peak record

We’ve seen footage of Jeff Zwart practicing for his recent run up Pikes Peak, now filmmaker Will Roegge has delivered unto us the footage from Zwart’s Time Attack 2WD class record.

Zwart ran his 911 GT3 up 12.42 miles and through 156 turns in just 11:31.095, averaging over 65 miles per hour. But you don’t need us to tell you about it – these things tend to speak for themselves.

watch an amazing record being set …

via Video: Jeff Zwart’s Porsche GT3 sets Pikes Peak Time Attack 2WD class record — Autoblog.

Natural gas has become a very cheap and abundant source of energy


Yesterday I stumbled across an interesting article in Salon entitled “Everything you’ve heard about fossil fuels may be wrong.” The thrust of the article was to highlight the huge increases in proven and exploitable reserves of natural gas that have been discovered in recent years thanks to “fracking” technology, and what this means to the search for alternative energy sources and U.S. energy independence.

As everyone who follows news about energy knows by now, in the last decade the technique of hydraulic fracturing or “fracking,” long used in the oil industry, has evolved to permit energy companies to access reserves of previously-unrecoverable “shale gas” or unconventional natural gas. According to the U.S. Energy Information Administration, these advances mean there is at least six times as much recoverable natural gas today as there was a decade ago.


So I thought it would be interesting to compare the relative costs of natural gas and crude oil as sources of energy, and produced the chart above. What it shows is that since 2003 the price of natural gas has fallen from the equivalent of about 20 barrels of crude per 10,000 BTUs, to less than 5 today. In other words, natural gas has become 75% cheaper relative to crude oil in the span of just eight years, thanks to huge increases in natural gas supplies. (Natural gas futures traded around $5-6 per million BTUs in 2003 and today trade around $4-5, while crude oil has soared from $30/bbl to $100.)

This indeed has enormous implications for future energy use and industrial development. It isn’t often that we see such huge changes in relative prices that have such a huge potential for changing the way our economy works.

via Calafia Beach Pundit: Natural gas has become a very cheap and abundant source of energy.

Skype 5.5 Beta Rolls in Facebook Contacts, Adds Facebook Chat

skype (now owned by microsoft) gets closer to facebook …  might this be compelling to phone users?

 

Skype 5.5 Beta Rolls in Facebook Contacts, Adds Facebook Chat

Windows: Skype’s new beta for Windows now allows you to chat directly with Facebook friends and access your Facebook contacts. The app has a new Facebook Contacts tab that will bring up all of your Facebook friends, and allows you to see their online status and start a conversation with them.

Skype for Windows already allows you to read your Facebook news feed, but the beta also allows you to “like” statuses and comment on them without logging in to Facebook on the web to do it.

Skype 5.5 Beta Rolls in Facebook Contacts, Adds Facebook ChatSkype 5.5 Beta for Windows | Skype

via Skype 5.5 Beta Rolls in Facebook Contacts, Adds Facebook Chat.

The Cost of Medicare Will Double by 2040

The findings in this week’s chart won’t come as a big surprise to anyone. The chart, which uses data from the 2011 Trustees Report and the Congressional Budget Office, shows the growth of Medicare costs over time.

Between 1975 and 2010, the number of Medicare enrollees doubled to 47 million, and the real cost per enrollee quintupled (in 2005 dollars). Based on these projections, by 2040 Medicare will cover 88 million people and the cost will be nearly two times higher than in 2010.

And things will be worse than they look on this chart. As Yuval Levin and I have explained previously, the Trustees Report makes many assumptions about cost-saving measures in the health-care law that are unlikely to actually be implemented.

via The Cost of Medicare Will Double by 2040 – By Veronique de Rugy – The Corner – National Review Online.

Israel has more oil than Saudi Arabia

Lawrence Solomon: Israel’s new energy

In the first 25 years after Israel’s founding in 1948, it was repeatedly attacked by the large armies of its Arab neighbours. Each time, Israel prevailed on the battlefield, only to have its victories rolled back by Western powers who feared losing access to Arab oilfields.

The fear was and is legitimate – Arab nations have often threatened to use their “oil weapon” against countries that support Israel and twice made good their threat through crippling OPEC oil embargoes.

But that fear, which shackles Israel to this day, may soon end. The old energy order in the Middle East is crumbling with Iran and Syria having left the Western fold and others, including Saudi Arabia, the largest of them all, in danger of doing so. Simultaneously, a new energy order is emerging to give the West some spine. In this new order, Israel is a major player.

The new energy order is founded on rock – the shale that traps vast stores of energy in deposits around the world. One of the largest deposits – 250 billion barrels of oil in Israel’s Shfela basin, comparable to Saudi Arabia’s entire reserves of 260 billion barrels of oil – has until now been unexploited, partly because the technology required has been expensive, mostly because the multinational oil companies that have the technology fear offending Muslims. “None of the major oil companies are willing to do business in Israel because they don’t want to be cut off from the Mideast supply of oil,” explains Howard Jonas, CEO of IDT, the U.S. company that owns the Shfela concession through its subsidiary, Israel Energy Initiatives. Jonas, an ardent Zionist, considers the Shfela deposit merely a beginning: “We believe that under Israel is more oil than under Saudi Arabia. There may be as much as half a trillion barrels.”

Because the oil multinationals have feared to develop Shfela, one of the world’s largest oil developments is being undertaken by an unlikely troop. Jonas’s IDT is a consumer-oriented telecom and media company that is a relative newcomer to the heavy industry world of energy development. Joining IDT in this latter-day Zionist Project is Lord Jacob Rothschild, a septuagenarian banker and philanthropist whose forefathers helped finance Zionist settlements in Palestine from the mid-1800s; Michael Steinhardt, a septuagenarian hedge fund investor and Zionist philanthropist; and Rupert Murdoch, the octogenarian chairman of News Corporation who uncompromisingly opposes, in his words, the “ongoing war against the Jews” by Muslim terrorists, by the Western left in general, and by Europe’s “most elite politicians” in particular.

Where others would have long ago retired, these businessmen-philanthropists have joined the battle on Israel’s side. While they’re in it for the money, they are also determined to free the world of Arab oil dependence by providing Israel with an oil weapon of its own. The company’s oil shale technology “could transform the future prospects of Israel, the Middle East and our allies around the world,” states Lord Rothschild.

To win this war, Israel Energy Initiatives has enlisted some of the energy industry’s savviest old soldiers – here a former president of Mobil Oil (Eugene Renna), there a former president of Occidental Oil Shale (Allan Sass), over there a former president of Halliburton (Dick Cheney). But the Field Commander for the operation, and the person who in their mind will lead them to ultimate victory, is Harold Vinegar, a veteran pulled out of retirement and sent into the fray. Vinegar, a legend in the field, had been Shell Oil’s chief scientist and, with some 240 patents to his name over his 32 years at Shell, revolutionized the shale oil industry.

Before oil met Vinegar, this was dirty business, a sprawling open mine operation that crushed and heated rock to yield a heavy tar amid mountains of spent shale. The low-value tar then needed to be processed and refined. The bottom line: low economic return, high environmental cost.

Vinegar boosted the bottom line by dropping the environmental damage. No open pit mining, no spent shale, no heavy tar to manage. In his pioneering approach, heated rods are inserted underground into the shale, releasing from it natural gas and light liquids. The natural gas provides the project’s need for heat; the light liquids are easily refined into high-value jet fuel, diesel and naphtha. The new bottom line: oil at a highly profitable cost of about $35-$40 a barrel and an exceedingly low environmental footprint. Vinegar’s process produces greenhouse gas emissions less than half that from conventional oil wells and, unlike open pit mining, does not consume water. The land area from which he will extract a volume of oil equivalent to that in Saudi Arabia? Approximately 25 square kilometers.

Although the Israeli shale project is still at an early stage, its massive potential and Vinegar’s reputation have already begun to change attitudes toward Israel. “We have been approached by all the majors,” Vinegar recently told the press, and for good reason. “Israel is very well positioned for oil exporting” to both European and Asian markets. The majors have other reasons, too, for casting their eyes afresh at Israel. Through its natural gas finds in the Mediterranean’s Levant Basin, and with no help from the oil majors, Israel is becoming a major natural gas exporter to Europe. According to the U.S. Geological Survey, the Levant Basin has vast natural gas supplies, most of it within Israel’s jurisdiction.

Attitudes to Israel in some European capitals – those in line to receive Israeli gas — have already warmed and the shift to Israel may in time become tectonic, in Europe and elsewhere, when oil is at stake – 38 countries have an estimated 4.8-trillion barrels of shale oil, many of which would benefit from the shale oil technology now being pioneered in Israel. Speeding that shift could be the Arab Spring, which many fear will flip pro-Western Arab states into hostile camps. Long time U.S. ally Saudi Arabia is reportedly so distrustful of the U.S. following its abandonment of long-time Egyptian ally, President Hosni Mubarak, that it has pulled back its relationship with the West in favour of China.

Before 1973, when the Arab world first punished the West for its relationship with Israel, Israel was a favourite of the left and of most of the free world. Under Arab punishment, much of the world started seeing the world through Arab eyes and turned on Israel.

But freed of the threat of Arab punishment, and in a new world energy order, Western countries may turn again, back to Israel and to their benefit. Rupert Murdoch well expresses the highest hopes of his partners: “If [our] effort to develop shale oil is successful, as I believe it will be, then the news we’ll report in the coming decades will reflect a more prosperous, more democratic and more secure world.”

LawrenceSolomon@nextcity.com
Lawrence Solomon is executive director of Energy Probe. This is the third column in an ongoing series.

For Rupert Murdoch’s insightful “The ‘Soft War’ Against Israel” speech, click here.
For a detailed description of the Shfela Oil Shale Pilot Project, click here.

via National Post