Honda may have found the answer to $4 plus gas.It has started production of the FCX Clarity fuel cell car that goes on lease in California this year. It is the first regular production fuel cell car aimed at individuals. The others have been aimed at fleet operators. The response has been overwhelming. People have been literally falling over themselves to get a chance to drive the sleek four door car, and Honda has drawn a lottery to decide who will be among the around 100 lucky ones who get to drive it.Mind you, this is when leasers will have to pay $600 a month as lease charges plus extra for fuel. The $600 a month however includes both collision insurance and maintenance.Even then it is a bargain as each car is estimated to cost more than $300,000 to build.A gallon of hydrogen fuel costs about the same as as a gallon of gasoline, but you get two to three times the mileage with hydrogen. Although GM has about a six month start with its Chevy Equinox fuel cell vehicle, Honda has come up with a much more attractive car.
The car's V-flow fuel cell has been developed in-house by Honda. It uses hydrogen to generate electricity, which powers the 134hp electric motor. The car is a front wheel drive, and travels 270 miles on a full tank of hydrogen. It has a top speed of 100mph, and goes from 0-60mph in 10 seconds. Honda intends to develop up to 300 FCX Clarity models over the next three years.
But presently there is a big negative to using hydrogen as a fuel. Making hydrogen takes more energy than hydrogen produces. It is proposed to produce hydrogen from natural gas and the world's reserves of natural gas are limited. Till such time that hydrogen can be produced from sea water, the days of really cheap fuel are still far away.
Hedge Fund Owner Cheats Investors Of $450 Mill,, Vanishes
Samuel Israel, founder of the Bayou hedge fund group has disappeared the day he was to begin a 20 year prison term for defrauding investors of $450 million. Police have put out 'Wanted' posters, and describe him as 'armed and dangerous.'
Founded in 1996, the fund raised about $300 million from investors, promising them that the fund would grow to $7.1 billion in ten years. The fund however never seems to have made any money and got along by overstating gains, or reporting gains where there were losses. In 1998, about three years after the fund was launched, international financial markets were in turmoil following the Asian crisis, and in America things were made worse by the threatened collapse of Long Term Capital Management. The fund made huge losses. In order to cover their losses the group approached investors for fresh money. In order to attract investors , Israel allowed them to join by bringing in a minimum of only $250,000, which is much smaller than the amounts typically demanded by hedge funds. He also waived his management fees and charged only 20% of the fund's profits as his remuneration. Simultaneously he hired a fresh firm of auditors who were willing to fake accounts to hide the mountain of losses the firm was saddled with.
But it was these very practices that started making people suspicious. As news got around about the true state of affairs, investigations were started, and in September 2005 the Commodity Futures Trading Commission filed a complaint in court alleging misappropriation and fraud.
In April of this year, Israel was sentenced to 20 years in prison and ordered to pay a fine of $300 million after pleading guilty to defrauding investors. On the 10th of June he vanished just hours before he was to begin serving his sentence. It could be suicide, but people suspect that he has faked his death and is on the run.
Founded in 1996, the fund raised about $300 million from investors, promising them that the fund would grow to $7.1 billion in ten years. The fund however never seems to have made any money and got along by overstating gains, or reporting gains where there were losses. In 1998, about three years after the fund was launched, international financial markets were in turmoil following the Asian crisis, and in America things were made worse by the threatened collapse of Long Term Capital Management. The fund made huge losses. In order to cover their losses the group approached investors for fresh money. In order to attract investors , Israel allowed them to join by bringing in a minimum of only $250,000, which is much smaller than the amounts typically demanded by hedge funds. He also waived his management fees and charged only 20% of the fund's profits as his remuneration. Simultaneously he hired a fresh firm of auditors who were willing to fake accounts to hide the mountain of losses the firm was saddled with.
But it was these very practices that started making people suspicious. As news got around about the true state of affairs, investigations were started, and in September 2005 the Commodity Futures Trading Commission filed a complaint in court alleging misappropriation and fraud.
In April of this year, Israel was sentenced to 20 years in prison and ordered to pay a fine of $300 million after pleading guilty to defrauding investors. On the 10th of June he vanished just hours before he was to begin serving his sentence. It could be suicide, but people suspect that he has faked his death and is on the run.
U.S. Economic Slowdown Threatens Deflationary Spiral.
When the subprime crisis first broke in August of last year, few anticipated the extent and depth of the crisis. At that time it was estimated that subprime related losses would be about $140 billion. The situation was bad but not impossible and Bernanke rightly assumed that simple adjustments to interest rates would take care of the situation. But the banks and financial institutions had hidden their risky investments too well in off balance sheet entities, to avoid regulatory supervision, as a result of which losses were grossly underestimated. As the magnitude of the crisis unfolded, there was panic all round and the Fed's primary task became one of saving the financial system, never mind inflation or the value of the dollar.
In order to prop up the financial system an unprecedented amount of money has been pumped into the market. It is this growth in money supply which lies at the root of inflation, although it has become fashionable to blame emerging market growth and commodity prices for it. Inflationary pressures coupled with falling home prices, have finally taken their toll on consumer sentiment. A near stagnant economy, together with falling asset prices and the devaluation of the dollar has impoverished the American people.
The economic numbers released lately paint a picture of the economy which is not as grim as expected, which has prompted many experts to stick their necks out and predict that the worst is over. But this may not be the case, and in fact the worst may just be about to begin. This is because in order to fight inflation the Fed will have to increase interest rates sharply, although it may choose to wait till after the November elections to do so. Central banks all over the world are expected to follow the Fed in raising interest rates to tame runaway prices. The impact of rising interest rates on an economy already teetering on the brink of recession is almost a foregone conclusion. Economic activity in the US is expected to decline further. These recessionary conditions will put further pressure on asset prices and they are expected to fall across the board. Bond prices will fall as interest rates rise, as will stocks, as higher interest rates eat into corporate profitability and falling demand reduces their ability to raise prices. Home prices are already projected to continue falling till the end of the year at the very least.
Banks and other financial institutions have already written down the value of their assets by about $389 billion, which has impacted their share prices. Reduced economic activity will impact future revenues and reduce earnings as well as valuations. The only chance of avoiding this scenario would be if by some miracle oil and commodity prices were to come down sharply. If this happens without having to raise interest rates too far, a deflationary spiral may perhaps be avoided.
In order to prop up the financial system an unprecedented amount of money has been pumped into the market. It is this growth in money supply which lies at the root of inflation, although it has become fashionable to blame emerging market growth and commodity prices for it. Inflationary pressures coupled with falling home prices, have finally taken their toll on consumer sentiment. A near stagnant economy, together with falling asset prices and the devaluation of the dollar has impoverished the American people.
The economic numbers released lately paint a picture of the economy which is not as grim as expected, which has prompted many experts to stick their necks out and predict that the worst is over. But this may not be the case, and in fact the worst may just be about to begin. This is because in order to fight inflation the Fed will have to increase interest rates sharply, although it may choose to wait till after the November elections to do so. Central banks all over the world are expected to follow the Fed in raising interest rates to tame runaway prices. The impact of rising interest rates on an economy already teetering on the brink of recession is almost a foregone conclusion. Economic activity in the US is expected to decline further. These recessionary conditions will put further pressure on asset prices and they are expected to fall across the board. Bond prices will fall as interest rates rise, as will stocks, as higher interest rates eat into corporate profitability and falling demand reduces their ability to raise prices. Home prices are already projected to continue falling till the end of the year at the very least.
Banks and other financial institutions have already written down the value of their assets by about $389 billion, which has impacted their share prices. Reduced economic activity will impact future revenues and reduce earnings as well as valuations. The only chance of avoiding this scenario would be if by some miracle oil and commodity prices were to come down sharply. If this happens without having to raise interest rates too far, a deflationary spiral may perhaps be avoided.
High Oil Prices May Cause De-Globalization!
The global economy today is more integrated than ever before. Globalization has on the whole, brought tremendous benefits to the participating nations.Among other reasons, the unprecedented worldwide economic boom witnessed in the last few years was due to manageable oil prices. I say manageable because, while oil prices which were around $30 a barrel before the start of the US led invasion of Iraq, rose to about $60 a barrel by the end of 2006, they were still well below earlier peaks after adjusting for inflation. Trade between nations has grown exponentially, particularly between the US and other Asian countries, which have been able to successfully leverage their low wage structure. In the process these Asian countries, notably China, came to enjoy sustained double digit rates of growth, which lifted a large proportion of its huge population out of poverty. The cheap goods which they exported to the US, helped in keeping inflation there in check and prevented any major increases in wages. This led to a tremendous improvement in US corporate productivity and profitability.
Now the dream is coming to an end.The cost of transporting both goods and people is rising at such a fast pace that it threatens to derail global trade. Shipping costs to the US from Asia have already tripled since 2000, and are set to rise further as oil prices show no signs of coming down.Not only is the cost of shipping goods to the US from China increasing, China finds that the cost of importing raw materials is increasing as well, which will undoubtedly impact its profitability. The rising cost of imports will further increase inflationary pressures within the US economy and will make the Fed's job of restraining inflationary pressures more difficult. The Fed is well aware of the problem that it faces, and in recent comments Bernanke has focused more on the dangers of inflation with the housing crisis taking a back seat. It has to perform a tough balancing act in the days to come. Faced with expensive imports, consumers are likely to switch their demand to locally manufactured goods, which though being good for local industry as it gives them pricing power, will certainly impact global trade. The process of de-globalization seems to have begun.
Now the dream is coming to an end.The cost of transporting both goods and people is rising at such a fast pace that it threatens to derail global trade. Shipping costs to the US from Asia have already tripled since 2000, and are set to rise further as oil prices show no signs of coming down.Not only is the cost of shipping goods to the US from China increasing, China finds that the cost of importing raw materials is increasing as well, which will undoubtedly impact its profitability. The rising cost of imports will further increase inflationary pressures within the US economy and will make the Fed's job of restraining inflationary pressures more difficult. The Fed is well aware of the problem that it faces, and in recent comments Bernanke has focused more on the dangers of inflation with the housing crisis taking a back seat. It has to perform a tough balancing act in the days to come. Faced with expensive imports, consumers are likely to switch their demand to locally manufactured goods, which though being good for local industry as it gives them pricing power, will certainly impact global trade. The process of de-globalization seems to have begun.
China Buys Its Way Into Wall Street
After Abu Dhabi Investment Authority, which made news last year for picking up a 4.9% stake in Citigroup for $7.5 billion, it is now the turn of the Chinese government owned Chinese Investment Corporation to get into the act.
Eager to cash in on the opportunity thrown up by the debt crisis the Chinese Investment Corporation has ploughed billions of dollars into the best known names on Wall Street. In control of almost $100 billion of China's huge forex reserves it has pumped in close to $5 billion into Morgan Stanley in a deal announced at the end of 2007. This means that China has ended up with almost as much as 9.9% of one of Wall Street's most powerful banks. This is the latest in a string of high profile investments made by the Chinese. The CIC already has a stake in the US private equity firm Blackstone and the Chinese Development Bank owns 3% of Barclays.
The deal only serves to highlight how things have changed over the last few moths, all due to the credit crunch. Two years ago a Chinese oil company wanted to buy the small US oil group Unocal. US politicians cutting across party lines asked that the plan be dropped and demanded that China open up its economy and protect intellectual property rights. Likewise when Dubai Ports World took over strategically important US ports last year, it kicked up a political storm which ended only when the bidder agreed to sell off the US ports.
Till now it was the US banks which were keen to acquire stakes in Chinese banks in a bid to gain a foothold in China to tap into the growing wealth of its population. Now it seems to be the other way round. China not only holds a stake in Barclays but also has a director on its board. Morgan Stanley for its part has made it clear that CIC will not have a representative on its board. This may well have been a condition imposed by the White House, one readily accepted by China after its Unocal experience.
Such investments by China in the capitalist world would have been unthinkable a few years back. Indeed there are many who view them with suspicion, as having been prompted by other than purely business considerations. The Chinese had clearly anticipated this problem and have constituted CIC as an independent company with its separate board of directors. They are at pains to point out that it is free from any state control whatsoever and argue that it is necessary to develop institutions to manage the $1.3 trillion worth of forex reserves they presently hold.
With its economy unaffected by the current financial crisis, the Chinese look set to follow the oil rich nations of the Middle East as big investors in the US economy. In a way it may be good for the global economy. Once the largest economies of the world are more closely interconnected and interdependent it would be less likely that any one of them would want to spoil the party.
Eager to cash in on the opportunity thrown up by the debt crisis the Chinese Investment Corporation has ploughed billions of dollars into the best known names on Wall Street. In control of almost $100 billion of China's huge forex reserves it has pumped in close to $5 billion into Morgan Stanley in a deal announced at the end of 2007. This means that China has ended up with almost as much as 9.9% of one of Wall Street's most powerful banks. This is the latest in a string of high profile investments made by the Chinese. The CIC already has a stake in the US private equity firm Blackstone and the Chinese Development Bank owns 3% of Barclays.
The deal only serves to highlight how things have changed over the last few moths, all due to the credit crunch. Two years ago a Chinese oil company wanted to buy the small US oil group Unocal. US politicians cutting across party lines asked that the plan be dropped and demanded that China open up its economy and protect intellectual property rights. Likewise when Dubai Ports World took over strategically important US ports last year, it kicked up a political storm which ended only when the bidder agreed to sell off the US ports.
Till now it was the US banks which were keen to acquire stakes in Chinese banks in a bid to gain a foothold in China to tap into the growing wealth of its population. Now it seems to be the other way round. China not only holds a stake in Barclays but also has a director on its board. Morgan Stanley for its part has made it clear that CIC will not have a representative on its board. This may well have been a condition imposed by the White House, one readily accepted by China after its Unocal experience.
Such investments by China in the capitalist world would have been unthinkable a few years back. Indeed there are many who view them with suspicion, as having been prompted by other than purely business considerations. The Chinese had clearly anticipated this problem and have constituted CIC as an independent company with its separate board of directors. They are at pains to point out that it is free from any state control whatsoever and argue that it is necessary to develop institutions to manage the $1.3 trillion worth of forex reserves they presently hold.
With its economy unaffected by the current financial crisis, the Chinese look set to follow the oil rich nations of the Middle East as big investors in the US economy. In a way it may be good for the global economy. Once the largest economies of the world are more closely interconnected and interdependent it would be less likely that any one of them would want to spoil the party.
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