* SEPTEMBER 27, 2010
The Regulation Tax Keeps Growing
Blame Washington, not China, for the decline of American manufacturing.
BY NICOLE V. CRAIN AND W. MARK CRAIN
The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.
By Ambrose Evans-Pritchard
Published: 6:01PM BST 26 Sep 2010
We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.
The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of “unsterilized” intervention.
Of course, gold can go higher.
The Friday Report: September 24, 2010
Bob Garino, ISRI
First, some big picture numbers: Cumulative 8-month global steel production was placed by the WSA at
932 mmt, up 22% from a year ago and just slightly above 2008. Annualized, we’re looking at 1.398 billion
mt of steel for 2010. China’s output year-to-date was up 15% at 425.8mmt while the U.S. produced 54.5 mmt, up 56%. That’s a lot of steel around the world looking for end use markets.
For this month, MAR, for one, expects to see a decline in Chinese production partially offsetting the
seasonal increase leading, they believe, to either a nominal increase or a decline in global production. An
article in this week’s WSJ noted that mills in China were “…likely to cut production by 3% to 5%” by year
end. That looks to be a stretch. London-based MEPS is forecasting China’s crude steel production this year to hit 627.0 mmt, up 10.4% from last year’s 567.8 mmt.
So, where are we with respect to the domestic markets for finished steel and scrap? At our (fabulous)
Ferrous Roundtable last week, panel members were generally cautious with respect to the near term with
more attention given to what the global steel industry had experienced since the global recession took
hold of steel back in 2008. Speaker James Moss described the economic recovery as “slow and multispeed”
and one that will be led by the developing world, not the developed world. He estimated that steel demand in the U.S. would not see 100 million tons until 2014.
As for scrap’s role in meeting the demand both here and abroad, there was also general agreement that
scrap supply was more than adequate despite less than confident research available on the potential pool
of available obsolete scrap. Moss believes that if domestic steel demand increases as forecast, the U.S. could very well see “record setting scrap shipments by 2013.”
More current news, however, suggests a domestic steel market that’s unsettled at best with a degree of
pessimism about the near term. As widely reported, producer prices have increased in August and again
this month with the intention of securing $620/net ton for hot-rolled coil. Most published sources place HR
in a $570-$610/ton range. SMU, for one, reckons that the mid-point is $590/ton, the same with Platts’
Midwest reference price. Last week’s “SteelBenchmarker” placed its HR reference price at $599/ton and this week, SBB’s “Steel Index” has HR @ $582/ton.
And ferrous scrap? Latest indications place No.1 HMS at $343.17/gross ton, with shredded scrap at
$372.83/ton, and No.1 bushelings @ $434.50/ton, as reported this week by Scrap Price Bulletin. Again
referencing WSD’s “SteelBenchmarker” they have No1 HMS figured closer to $323/ ton with shredded scrap @ $358/ton.
For the month of September, RMDAS is referencing its No.1 HMS price @ $341/ton delivered…shredded
scrap @ $370/ton, and new production scrap @ $435/ton. Their HMS price was up $21.00/ton from their August 20th report.
4. China is in Short of High-end Heavy Castings and Forgings
In the online interview of China Economic Net, Mr. Zhang Zhenrong, senior vice president of China First Heavy Industries indicated that as for domestic heavy castings, there were always shortages of high-end ones and excess of low-end ones.
In terms of the industrial layout of national development, domestic high-end heavy castings and forgings are mainly supplied by several enterprises, such as First Heavy, Second Heavy and Shanghai Heavy. Actually, First Heavy Group bears the responsibility of manufacturing 60% of the total high-end heavy castings and forgings. In the past several years, along with the increasing market demand of heavy castings and forgings, other domestic enterprises were beginning to engage in market of high-end castings. Presses with 10,000 tons capacity are either planned or are already under construction.
Mr. Zhang Zhenrong said, as for domestic heavy castings, there were always shortages of high-end ones and excess of low-end ones. Heavy casting industry, especially high-end heavy casting completely belongs to the high-tech industry, and is related to various subjects. Last week, our country has already clearly shown that high-end equipment manufacturing will be one of the seven new industries. The manufacturing of high-end heavy castings lies not only in equipments, but also in technical level. 5. Xuzhou Heavy Machinery Co., Ltd: Enhancing the Development of Projects and Strengthening Competitiveness
September 23, 2010
In fact, as a country, we haven’t deleveraged at ALL. All the moves made by the private sector have been vastly outpaced by the federal government’s efforts to add leverage to the economy. The net result is that we are much more indebted now than we were before the recession began; as a result, we are digging ourselves even faster into debt.
So, even though households and state and local governments have begun to learn some valuable lessons, DC still managed to increase the overall level of non-financial debt in the US to a record $35.45 trillion. In an era of supposed deleveraging, the rate of debt accumulation has increased from 4.5% to 4.8% annualized over the past quarter.
In the real world, all government stimulus comes from borrowing, spending, or printing, or to put it another way: deferred taxation, capital redistribution, or inflation. That means all US debt is ultimately backed by the tax base of the country. Therefore, whether the consumer or the government that does the borrowing is really unimportant because, in the end, it is the consumer that will receive the bill.
The simple problem is spending: today, we spend 9.7 percent of GDP on entitlements, while by 2030 we will spend around 14.4 percent. In contrast, the federal government spent only 6.7 percent of GDP on entitlements in 1990 and 4.0 percent in 1970. Two forces push entitlement spending upward: the aging population and rising health care outlays per beneficiary. More retirees collecting higher benefits means higher costs