U.S. Economic/Financial News

Richmond Fed Chief Calls for Higher Interest Rates

Aug. 19 (EIRNS)—Speaking on Bloomberg television today, Federal Reserve Bank of Richmond President Jeffrey Lacker said that higher interest rates may be needed to bring down inflation, before growth and financial markets return to normal. "It is important to withdraw this monetary policy stimulus in a timely way," Lacker said. "That may require us to withdraw before we are certain all of the weakness is behind us...."

Lacker said he definitely opposed lower rates, and was very concerned about inflation. The U.S. Labor Department reported today that U.S. consumer prices had risen at the fastest pace in 17 years.

Dallas Fed President Richard Fisher is the only Fed bank president to have aggressively called for an increase in interest rates, in the face of the Fed's hyperinflationary policy. Both Atlanta Fed President Dennis Lockhart, and Philadelphia Fed President Charles Plosser say they believe the present inflation merits consideration of raising interest rates soon.

Ex-IMF Chief Economist: 'The Worst Is To Come'

Aug. 19 (EIRNS)—Kenneth Rogoff, a Harvard academic who formerly served as chief economist for the IMF (2001-03), made headlines by declaring, at a Singapore conference today, that a big U.S. bank is likely to fail in the next few months. Rogoff's evaluation is being echoed nearly universally within knowledgeable financial circles—and vastly understates the reality that the financial system itself is in the process of unwinding.

But Rogoff was pithy. "I would ... say 'the worst is to come,' he said. "We're not just going to see mid-sized banks go under in the next few months. We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."

Rogoff attacked the Fed for having cut interest rates as "dramatically" as it did, but did not call for raising them, as LaRouche has done.

USA Electric 'Lights Out' Policy

Aug. 18 (EIRNS)—Wind was the biggest mode of new electricity generation capacity brought on line in the United States in 2007! Plus, there has been a plunge in new additions of power capacity to the grid over the past five years.

In 2003, there were 32,626 megawatts (MW) of new capacity added, and 21,759 MW added by expanding capacity in existing plants. By 2007, these figures had drastically fallen, to 7,063 MW of new capacity, and 5,286 MW from expansions, with wind being the biggest mode. The U.S.A. has now exceeded Germany in wind power generated (figures from EnergyBiz, July/August 2008).

The North American Electric Reliability Council (NERC) estimates that by 2015, an additional 140,000 MW of generating capacity will need to be added in order to meet an expected 19% increase in usage in the United States. So far, only 57,000 MW are even on the drawing boards.

TVA To Study Completion of Two Nuclear Plants

Aug. 21 (EIRNS)—The president of the seven-state Tennessee Valley Authority (TVA), Tom Kilgore, announced yesterday that the Federal agency will carry out a $10 million study to determine whether to finish two nuclear power plants whose construction was halted in the 1980s. The two reactors at the Bellefonte site in Alabama were 88% and 58% complete when they were cancelled in 1988. More than $4 billion had been invested. TVA is looking a decade down the road, at how to best meet its mandate to provide reliable, affordable electric power. TVA is also considering the construction of two new reactors at the Bellefonte site.

During the 1970s, the TVA was the largest nuclear power plant construction site in the world, with 18 reactors planned. Following President Carter's appointment of Ford Foundation "appropriate technology" fanatic, S. David Freeman, as TVA chairman in the mid-1970s, and the economic slowdown that followed multiple oil crises and failed anti-nuclear "energy" policies, all but a half dozen of the reactors were cancelled. Freeman proposed that Valley residents, who had gone from a Third World standard of living to the highest per-capita consumption of electricity in this country, use wood stoves in the Winter, rather than electric power. On June 12, Freeman said he was "appalled at the idea that the Tennessee Valley Authority is going back to nuclear power," saying it had "failed."

Last year, a reactor at Browns Ferry that had been shut down in 1985, was brought back on line, after a $1.8 billion up-grade and refurbishment. In 2012, the Watts Bar Unit 2 nuclear plant in Tennessee will finally come on line, after an investment of $2.49 billion. Construction had been halted in 1985, when the plant was 80% complete.

TVA Chief Operating Officer Bill McCollum explained, regarding the two unfinished Bellefonte units, that "the amount of embedded value that we have in the ground in concrete, steel, and buildings at Bellefonte has gone up significantly, when you look at alterative sources and the increasing costs of construction." An official of the Economic Development Authority in Jackson County where Bellefonte is located, said the community would welcome the completion of the two reactors.

The TVA is this nation's largest utility, and has been a model for economic development projects on every continent in the world. President Franklin Roosevelt is undoubtedly smiling.

'Experts Doubtful About Bloomberg's Windmill Plan'

Aug. 21 (EIRNS)—The New York Times today carries an article with the above headline, with the subhead, "Predictions of Huge Costs for Minuscule Amounts of Energy," filling two-thirds of a page in its first section, nearly half of which is a photo of the Statue of Liberty with her torch replaced by a wind turbine. The article reports the critiques by architects, engineers, and energy experts, of Mayor Michael Bloomberg's proposal to place wind turbines atop the city's skyscrapers and bridges, and along the coastline of Queens and Brooklyn. Bloomberg made the pitch recently at the National Clean Energy Forum, which appropriately enough was held at a hotel in the something-for-nothing paradise of Las Vegas.

The criticisms center on economic costs and the energy output. New York skyscrapers would have to be designed, or retrofitted at great cost, to accommodate the extra weight, vibration, and swaying of the turbines, and insurers would have to be persuaded that turbines are worth the risk. On the other hand, the Times says, even if Bloomberg could find investors to build turbines able to produce 1,000 megawatts of electricity, "operators of the city's grid would be able to count on only 100 megawatts, or less than 1 percent of peak demand."

The Times then reveals its own science fiction bent, by proposing instead that: "Solar panels, by contrast, can be put on an array of structures and are active on hot, sunny days when electricity use is high," and proceeds to argue the case for a solar energy boondoggle.