Tuesday, May 24, 2011

China, Housing and College, Oh My!

China has decided to take a little preemptive action on the whole global debt discussion. While the West is obsessing with Greece, Italy, and Spain, the Chinese version of S&P or Moody's downgraded the UK debt to A+ with a negative outlook. The Chinese are further asserting themselves in the global economic discussion (they are also quietly making a push for an expanded role for Asia at the IMF). It should be interesting.

The new homes data today was dismal but you wouldn't know that from listening to the news. The headlines today screamed "NEW HOME SALES UP 7% in APRIL!!!" Well, that's technically true but new home sales always go up in April when compared to March because it's spring. The better observation would be that April's new home sales (323k annual run rate) are the lowest April sales data on record and down 23% from April last year. Yikes!


This is clearly the most troubling set of stats for recent college grads you'll see today....

"What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.

The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account.

Of course, these are the lucky ones — the graduates who found a job. Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted.

An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008..

There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services. And when college majors are busy waiting tables, being baristas, or selling liquor and gas - it has a cascading effect. "

Finally, it appears that our cup runneth over with green energy (literally):

"High runoff in the Columbia and Snake Rivers have filled the Bonneville Power Authority dams to bursting. The BPA is prohibited by EPA regulations from opening the dams’ spillways because that increases nitrogen levels in the water that will kill the river’s fish. So the hydro-turbines have to run more, generating more electricity which fills the region’s grid capacity. Because the grid is maxed out with hydro-generated power, the BPA has no choice but to stop accepting wind-generated power."

Lack of access to the grid isn’t the only problem that wind generation faces. The low cost of natural gas in the US also affects the willingness of developers to build new wind farms. The US added 10,000 megawatts of wind generation capacity in 2009, and that could drop to as little as 5,000 megawatts of new capacity by 2012.

The blame is laid at the feet of shale gas, which is keeping the cost of natural gas low. However, uncertainty over tax credits and lower demand for electricity as a result of a slow US economy more than make up for the positives.

The expansion of wind generation in the US has reached the point where continued development is just as likely to depend on grid capacity as on demand for electricity."


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