by Ben B.Boothe, Sr. | Saturday, January 17, 2015, 9:09 AM (CST)
Note from BootheGlobalPerspectives (BGP) : We thought our readers would appreciate this article, and credit to Bloomberg and writers Steve Matthews, Lauren Etter and Jeanna Smialek forsome of this article. We are watching and should the price of oil continue to fall, for an extended time, a downward impact on the economy will occur, especially in oil producing states. We already have seen hotel “listings” for sale increase and smart movers and shakers are preparing for the worst, curtailing projects, and freezing hiring. Time will tell, but in this kind of environment, those who have the most in cash reserves, survive, while others struggle and fail. Issues such as this impact property values. Note the graphics.
1. Why is this happening? See the chart, the USA production of oil is now greater than Saudi Arabia, and the Saudi’s have said that they want to regain “market share”. This means making it unprofitable for U.S. and other drillers, to drill and operate. Thus Saudi Arabia is pumping and producing at full levels, while world demand seems to be slacking off.
This chart tells us the answer to the question why? US, oil production and market share exceeds Saudi Arabia. Saudi Arabia sees the US less dependent upon Saudi Arabia, and also does not like the possibility that the USA is trying to repair relations with Iran. Saudi is Sunni. Iran is Shiah. Iran could become the most influential power in the region, and a low price of oil punishes Iran. Also, these oil prices punish Russia which has also competed with Saudi for market share. Saudi’s cost of production is lower, and its foreign currency reserves of over $700, 000,000 (billion) give it the power and strength to dominate and flood the market with oil. But, in spite of lower prices, most producers are still producing. Thus Saudi’s strategy only succeeds if this is a sustained effort.
Historically, past drops in the oil prices follow the pattern seen in the chart, with a rapid fall, and then only a slow recovery in prices. Only a change in demand or some crisis situation would accelerate the process of recovery. Note the price fall in 1985-86 charted with the 2014-2015 fall in prices.
The research is what industry said was “break even” prices in 2014.
The research to the left originated from industry sources, although we have noticed in recent weeks industry leaders are revising their public “break even” prices downward.
The Fiscal Fuel chart shows at what price levels the states adopted their budgets. Some states will lose budget income with lower oil prices.
Oil-Job Losses
That may be about to change. For every 25 percent drop in oil prices, employment could decline 0.6 percent in Texas and 0.8 percent in Louisiana. Wyoming stands to lose 2.1 percent of its jobs and North Dakota and Oklahoma about 1 percent each, according to research by Stephen Brown, a professor of economics at the University of Nevada-Las Vegas, and Mine Yücel at the Federal Reserve Bank of Dallas.
In Houston, the fourth-largest U.S. city, employment growth probably will slow to 2.8 percent in 2015 and 0.7 percent in 2016, said Robert Dye, chief economist at Comerica Inc. in Dallas.
“This is a downdraft that will be felt throughout the entire Houston economy,” Dye said of the oil-price drop. “We are expecting significant economic drag.”
A protracted pullback could push Texas into a recession, according to JPMorgan Chase Chief U.S. Economist Michael Feroli. In a report issued Dec. 18, he compared the current situation to a similar slump in the 1980’s when a Texas oil boom turned into a bust, roiling the housing market, spurring widespread area-bank failures and spawning a “painful regional recession.” This could impact hotels, city budgets, unemployment, in “oil production areas”.
Tax-Revenue Decline
Such an outcome would mean smaller state and municipal coffers. Oil and mineral revenue accounts for 87 percent of the budget in Alaska, 31 percent in Wyoming, 17 percent in New Mexico, 13 percent in Louisiana and 4.8 percent in Texas, based on the Standard & Poor’s report.
“Lower extraction will hurt state-tax revenues,” said Chris Lafakis, senior economist at Moody’s Analytics in West Chester, Pennsylvania. In the Bayou State, tax revenue from oil “could fall $90 million short of Louisiana legislators’ projections.”
Moody’s Investors Services revised its outlook for Alaska this week to negative from stable. “Just as the state has benefited from high oil prices in recent years, prices well below previous expectations could lead the state to substantially reduce its financial reserves,” Moody’s said.
Bond Payments
Some communities may find it difficult to pay bond holders. Voters in Cuero, Texas, approved a $76 million offering last year to build two new elementary schools and a performing-arts center.
“If the drilling is curtailed for any length of time or pulled back because of lower prices and the tax base begins to fall, that debt will still be out there,” said DeWitt County Judge Daryl Fowler.
For the national economy, reduced prospects for energy-producing states will be masked by stronger consumer spending, with Americans paying less to fill their cars’ tanks and heat their homes. The nationwide average for a gallon of gasoline fell to $2.48 on Dec. 18, the lowest since October 2009.
“Consumers gain more than domestic producers lose,” said James Hamilton, an economist at the University of California-San Diego and former visiting scholar at the Fed, whose research focuses on energy.
Middle-Class Tax Cut and Winners in the U.S. Economy.
Each 1 cent decline, sustained for a year, reduces consumer spending on gasoline by $1.1 billion, according to Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. The drop can be considered a “middle-class tax cut” because these households spend the most on gas, Goldman Sachs Group Inc.’s Kris Dawsey wrote in a Dec. 9 note to clients.
That’s good news for shoppers in Mississippi and South Carolina, where gasoline expenditures take up the largest share of disposable income, based on a Moody’s Analytics analysis.
No doubt, there are economic benefits to lower energy costs, that will stimulate some areas and industries, as well as help consumer spending. This is like giving every American, an additional $2,000 per year in auto fuel savings, and another benefit from lower food costs, lower utility bills, and generally lower prices for many consumer goods.
Also consumers in large cities, such as Atlanta, Chicago, Miami, New York, will benefit from lower oil prices, for both heating, utilities, and travel. Airlines will profit, and travel should decrease air and rail costs. Trucking, distribution will benefit. Non coal utility companies should lower their rates. Farmers, agriculture, food production all will see lower costs and thus lower prices. But, the studies, indicate that significant recession could occur in oil producing states, if low prices prevail for a long period of time.
LOSERS: Losers in this matter are oil companies, drillers, and areas that see break even prices above current market prices for oil and gas. One huge loser renewable energy. Companies that make, sell or distribute solar panels, wind turbines, and alternative sustainable energies will find that low energy costs delay and kill many progressive projects, that the world and the USA need in the long run. The environment will be a loser because more petroleum products will continue to be used, at lower prices, creating a higher carbon impact. “Real estate investors in oil production and drilling areas will likely see real estate prices decline” says Appraiser/Broker, Ben Boothe. Other international losers, include, Russia, Iran, and a host of smaller nations that produce oil. International winners, would be China, India, Korea (north and south). China can sit back on this one and enjoy seeing many western nations decline, while the low price of oil helps their manufacturing base. Economists are still trying to calculate impacts upon the USA.
STATES THAT ARE LOSERS WITH LOW OIL PRICES: Oil producing states, such as Oklahoma, Texas, Arkansas, Kansas, California, North Dakota, Pennsylvania, Louisiana, and southwestern New Mexico will show some economic downturn. Of these, states such as Texas and California have diversified, and Northern New Mexico has little oil production, so that some losses are offset by other economic gains, but our opinion at Boothe Global Perspectives is that there will still be a net downturn, or growth slowdown for these states. Bank lending will be tighter. Many homes, hotels, mobile home parks, will go for sale, and there will be sales at lower prices, particularly in oil patch areas. In West Texas, South Texas, Southwest New Mexico, and North Dakota, hundreds of new hotels, housing and apartment developments have been built and no doubt these will suffer. Some projects will be cancelled. Others will simply cut expenses and room rates for hotels will decline substantially.
I thought in light of the anger and violence in the Middle East and in Paris and other places, this message of how to get along, how to find peace and compassion appropriate. Look at the faces of the youth from around the world who agree with another, peaceful, compassionate way. These are my “Global Connected Generation” who are the hope for our future.
by Ben B.Boothe, Sr. | Wednesday, December 24, 2014, 7:42 AM (CST)
The Interview: Sony’s North Korea film to be screened in US
The Interview film poster
Previews of The Interview, suggested a raunchy, comedy of crude humor, with the target of the jokes North Korean leader Kim Jong-un. Kim Jong-un is young, and he and his wife watch a lot of what goes on in America. He and his father have built a legacy of paranoia, as well as a legacy of convincing the North Korean people that they are celebrities to be admired. Kim Jon-un continues to show press releases indicating the adoring North Korean people loving and admiring him as you can see below in this article.
The people there have a right to admire him and it is their nation. We hope one day that the people will have the freedom and rights to truly express their feelings about their country in a free vote, but non the less, it is their nation, their lives and to some extent their choice who they will love and admire. But Kim Jong-un and his father have consistently blamed the USA and it’s people for every problem, every issue, every thing that goes wrong or is bad in the world. They have threatened and declared war on the United States so many times, it has become almost boring, and most observers of the world discount their temper tantrums as “adolescent”.
But Mr. Kim and his wife are coming to realize how dear, and how important, the concept of “Freedom of Speech” is for Americans. We Americans may not particularly like all that is said, or every movie that is made, in our nation. But we will fight with all that is within us to protect the rights of our citizens to excercise freedom of speech. Thus, Americans were proud of President Obama, when he said, that Sony made a mistake by “pulling the film” because Kim Jon-un of North Korea didn’t like the film. He didn’t like being the butt of the joke. But we Americans just assume that public figures, by being “out there” voluntarily make themselves targets for jokes, criticism, and yes, even movies that may attack their egos.
We at BootheGlobalPerspectives, applaud the move, by theater owners throughout the nation, who have said: “We will show the film, we believe in freedom of speech, and no leader of another nation will take our freedom of expression away.” Good for them. Good for us.
Mr. Kim Jong-un, our message to you is:
“Take a deep breath. Don’t take yourself or your self made legend about yourself so seriously. Live and let live. And don’t mess with our freedom of speech, it is what makes us different from your nation.”
Now we are pleased that Sony (Japanese owned) is now to get a limited theatrical release.
This is after hundreds of theaters said: “We want the film, and we will show it. We will not be bullied by Kim Jon-un”. The Interview will be shown in many some
independent US cinemas on Thursday (Christmas Day). Ironically, it could be that the very activities of North Korea, has created a “back lash” that could make this film an iconic success, even a part of history. Alas, that is the way Americans are, when someone messes
with our “Freedom of Speech”. The Japanese executives at Sony, may be intimidated by Korean threats and bully talk, but the American people are not.
As for me and my wife Saneh (Who also happens to be an actress) , you can count on it, we will make a special trip to the
Jean Cocteau Cinema, Santa Fe
Jean Cocteau Cinema, Santa Fe, New
Mexico, to see The Interview, my guess is that it will be sold out for every screening, even though it is Christmas Day.
Sony Chairman Michael Lynton said he was “excited” that the comedy, about a plot to assassinate North Korean leader Kim Jong-un, would now be seen.
Over 200 theaters from Atlanta to Austin to Santa Fe, all across the nation have already revealed screenings and the number is growing by the hour. Sony has never seen such a public demand as this.
Saneh Boothe, Actress
The message to Korea epitomized by actress Saneh Boothe’s statement: ‘Don’t mess with our movies, our arts, our freedom of speech’.
They said via social media that Sony Pictures had authorized them to show the film, which has been at the center of escalating tensions between the US and North
Korea. Typical of announcements all of the USA, were the announcement from the Alamo Drafthouse cinema in Austin, Texas:
“Breaking news,” tweeted Tim League, founder of the Alamo Drafthouse cinema in Austin.
“Sony has authorized screenings of THE INTERVIEW on Christmas Day. We are making shows available within the hour.”
Some have posted in bold letters: ‘Freedom prevailed’
White House put out a statement: “President Barack Obama applauded Sony’s decision and that the US was a country that believes in free speech”.
Seth Rogen, who directed and starred in the film, tweeted: “The people have spoken! Freedom has prevailed! Sony didn’t give up!”
Sony, in deference to it’s chicken hearted lawyers, had previously announced that the film’s release would be pulled completely, following a hacking attack on the
company and threats against cinema chains that planned to screen the film. The American people didn’t buy that argument, and Sony’s owners learned another
lesson about America. The decision by Sony has attracted complaints and criticism from throughout the nation, especially journalists, the movie industry
and patriots. For once, even the “Tea Party Crowd” was in agreement with President Obama on this one. Korea’s hacking was an attack on Freedom of Expression.
The Interview
The film was branded an “act of war” by North Korea We share with you the following, and credit the following to BBC.
Analysis: Alastair Leithead, Los Angeles
What started out as a Christmas comedy caper has become quite the seasonal thriller. It’s got everything: cyber-attacks, terror threats and an international incident between America and North Korea, but all of it is a drama Sony Pictures could do without.
The company has been through a lot in the last month, and has now backtracked on its decision to pull the film completely. As yet the big theatres have still not said when, or whether, they might screen the film.
Sony Pictures Entertainment has been hit hard – first by the embarrassment of personal emails being dumped online. But as the seriousness of the cyber-attack unfolded, it also became clear that the personal details of thousands of staff and former-employees had been stolen – opening the door to class-action lawsuits.
Unreleased films leaked online, and then the pulling of a major movie, could cost tens of millions of dollars – let alone the price for the computer network repairs and beefed-up security.
It’s a still-unfolding script to a drama the critics might even slam for being a little too far-fetched.
‘First step’
Hundreds of independently-owned theaters had signed a petition expressing support for the film and its screening.
However, major movie chains in the US are thought unlikely to take part in the release at this stage.
Mr Lynton said: “We are continuing our efforts to secure more platforms and more theaters so this movie can reach the largest possible audience.”
He also said he “hoped it would be the first step of the film’s release”.
The company has yet to reveal further details of its release plans, but there is also speculation that video on-demand (VOD) will be offered as part of the package.
Sony’s decision to show the film came hours after North Korea suffered a severe internet outage that effectively shut down its internet services for 10 hours.
Kim Jong-Un with North Korean soldiers’ families
North Korea says the film hurts the “dignity of its supreme leadership”
It was not clear what caused this. North Korean officials have not commented on the issue.
The country’s internet services appeared to suffer a second outage on Tuesday afternoon, but they were restored in under an hour, an internet monitoring company said.
US officials have declined to comment on who might have been responsible for the shutdown.
Mr Obama has previously vowed to respond to a hacking attack on Sony, which led to sensitive data and unreleased film material being leaked.
The US said an FBI investigation showed that North Korea was responsible for the cyber attack on Sony – claims denied by North Korea.
The Interview saga
The Interview features James Franco and Seth Rogen as two journalists granted an audience with Mr Kim. The CIA then enlists the pair to assassinate him.
22 November: Sony computer systems hacked, exposing embarrassing emails and personal details about stars
7 December: North Korea denies accusations that it is behind the cyber-attack, but praises it as a “righteous deed”
16 December: “Guardians of Peace” hacker group threatens 9/11-type attack on cinemas showing film; New York premiere cancelled
17 December: Leading US cinema groups say they will not screen film; Sony cancels Christmas Day release
19 December: FBI concludes North Korea orchestrated hack; President Obama calls Sony cancellation “a mistake”
20 December: North Korea proposes joint inquiry with US into hacks, rejected by the US
22 December: North Korea suffers a severe internet outage
23 December: Sony bosses appear to change their minds, saying they will now give The Interview a limited Christmas Day release
(BGP Comment: Let’s just watch. This movie will be sold as CD’s, videos, it will be on TV, and our prediction is that it will be on NetFlix. Korea’s ill advised actions should give that nation pause to know something. The USA is special, and American’s regardless of political persuasion, will fight for “freedom of speech” and “freedom of artistic expression”. Mr. Kim, learn by this.
by Ben B.Boothe, Sr. with Credit to the Washington Post and others | Wednesday, December 17, 2014, 2:55 PM (CST)
Credit for much of this reporting to Karen DeYoung and Brian Murphy December 17 at 1:37 PM
(Comments from BGP: Our thanks to the Washington Post for reporting on this issue. We at BGP (BootheGlobalPerspectives) see this news as ground breaking and worthy of our readers.
President Obama made history today, in a huge diplomatic success for the President. Obama, who also had the help of Pope Francis, recognized that the announcement culminated years of negotiations and efforts in this direction. People in Cuba, Miami and many Latin American nations applauded, cried, and celebrated when President Obama announced a normalization of relations with Cuba.
President Castro of Cuba simultaneously made the announcement to the Cuban people. This represents correction of a failed policy, that dates back to the Kennedy Administration. For years, enemies of the United States have used Cuba, to create problems for the United states at our very doorstep, and Obama’s move represents an earth changing move, that is enlightened and progressive.
It is a move for peace and communication. We at BootheGlobalPerspectives believe it has huge implications for travel, new business for American firms and Cuban firms, and for peaceful unification of Cuban people in the USA and Cuba. It marks the days of Miami being a headquarters of militant and immigrant Cubans, and a reunification of families. We will see new prosperity in Cuba and a growth in commerce, import and export in places such as Miami, Tampa, Houston, Beaumont and Havana. Tourism, labor exchanges, educational exchanges, new hotels and resorts, even investment by Americans for homes in Cuba could happen. Cuba has suffered economically, and the Cuban people see this as a chance for progress.
One thing is certain. We are neighbors with Cuba and it’s people. It is time we acted in peace as neighbors. As Castro of Cuba said: “We don’t have to agree on everything but we must act with friendship and respect”. Castro called for an end of economic sanctions on Cuba. Most informed experts believe the USA will move in that direction quickly. This is also a victory for Obama, in relation to Russia which made a multi decade point of sending economic aid and support to Cuba. While Russia’s economy is suffering and Russia is engaged in military expansion in the Crimea, Ukraine. The U.S. economy is expanding, more people than ever in the USA are working, and the USA is creating peaceful relations with it’s neighbors. The contrast between Russia an the USA is telling. In the meantime, American investors, corporations, hotel and travel industry leaders, all are eager to bring business and new development into Cuba. This deal could mean hundreds of millions of dollars of new investment flowing into Cuba and a huge source of new business and exports for American business.)
President Obama announced sweeping changes to U.S. policy with Cuba on Wednesday, moving to normalize relations with the island nation and tear down the last remaining pillar of the Cold War.
Under the new measures, the United States plans to reopen its embassy in Havana and significantly ease restrictions on travel and commerce within the next several weeks and months, Obama said. Speaking from the White House, he declared that a half-century of isolation of the communist country “has not worked.”
“It’s time for a new approach,” he said.
Cubans gather to watch sunset at the ocean
The history-shaping overtures come after more than 18 months of secret negotiations with the Cuban government of President Raul Castro. The final touches appeared to be arrangements for a series of simultaneous prisoner releases.
Cuba agreed to release Alan Gross, a U.S. Agency for International Development contractor imprisoned for five years, on humanitarian grounds. The Cubans also released an unnamed U.S. intelligence asset held for two decades and in exchange U.S. officials released three Cuban nationals convicted of spying in 200-1.
“What a blessing it is,” Gross said at a hastily arranged news conference in Washington. “Thank you President Obama for everything you have done today and leading up to today.” Maryland resident, left Cuba aboard a bright blue and white U.S. aircraft Wednesday morning, with UNITED STATES in huge letters on the fuselage, accompanied by his wife and several members of Congress and arrived at Joint Base Andrews. The Cubans landed in Havana. The unidentified asset was flown separately to the United States.
Although Obama has the power to establish diplomatic relations, the move was the latest in a series of steps he has taken to use executive powers to circumvent legislative opposition — and one that drew a sharp reaction from GOP lawmakers.
In a hard-edged appraisal of U.S. policies, Obama also noted that decades of embargoes and isolation against Cuba failed to topple its communist system and at times spilled back against U.S. interests in the region.
“We do not believe we can keep doing the same thing over five decades and expect a different result,” he said.
Earlier, a White House statement said the U.S. stance against Cuba alienated Washington from “regional and international partners.”
Economic Impacts Hinted at by President Obama
President Barack Obama says his changes to U.S. policy with Cuba will make it easier for Americans to travel to Cuba, and to use their credit and debit cards in the country.
Obama also says that more resources should be able to reach the Cuban people, so he’s significantly increasing the amount of money that people in the U.S. can send to them.Obama says increasing commerce and the flow of information will be good both for Americans and Cubans.
As Obama spoke, Castro addressed the Cuban people with promises of a new chapter in relations with Washington but also noted that there are hard issues to work through.
The U.S. embargo “continues to create economic damage to our country. It must stop,” Castro said.
“We recognize we have profound differences, especially in the areas of national sovereignty, democracy, human rights and foreign relations,” he said.
But he added the countries have to learn to live with their differences “in a civilized manner.” Across Havana, church bells rang as he spoke.
“In Havana, people listened raptly to Raul’s speech on the streets and gathered in hotel lobbies to watch Obama’s speech on TV. They burst into spontaneous applause at its conclusion,”said Geoff Thale, program director at the Washington Office on Latin America (WOLA), who is on the island for meetings with Cuban officials.
The outreach does more than break down one of the enduring legacies of the Cold War. It also reverberates across many political frontiers where the standoff between Washington and Havana played a role — from snubs against the United States by Cuba’s Latin American allies to the hero’s welcome given then-President Fidel Castro during a visit to Tehran in 2001.
The final elements of the deal were cemented in a telephone conversation Tuesday between Obama and Raul Castro — the first direct communication between a U.S. and Cuban leader since relations were severed in January 1961. (BGP, This is consistent with President Obama’s philosophy that diplomacy and communication is an avenue to peace and progress)
Officials said the call followed secret channel talks begun in June last year between White House and Cuban officials in a series of meetings held in Canada. The final planning meeting was held in November at the Vatican, where officials said Pope Francis had been instrumental in facilitating agreement.
The issue of Cuban relations, and particularly Gross’s imprisonment, was discussed during Obama’s meeting with the pope in March. Francis subsequently made a personal appeal to both Obama and Castro in letters sent early this summer.
The Vatican “has been deeply involved in this whole negotiation with the prisoners and played a key role,” said Sen. Richard J. Durbin (D-Ill.), who was among a number of lawmakers meeting Gross on his arrival at Andrews.
Administration officials said that they did not expect a strongly negative public reaction to the moves, citing changes in the political sentiments of a new generation of Cuban Americans. Virtually all Latin American governments, including close U.S. allies, have long denounced the embargo and called for normalization of relations between the United States and Cuba.
But while church bells were ringing, and the Cuban people were celebrating, as expected the negative political opposition including many Republicans and Cuban American lawmakers were quick to denounce the move.
Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.) said Obama’s actions “will invite further belligerence toward Cuba’s opposition movement and the hardening of the government’s dictatorial hold on its people.” Menendez seemed to not want reconciliation, preferring a continuation of a decades long failed policy (BGP).
Sen. Marco Rubio (R-Fla.) called the announcement “just the latest in a long line of failed attempts by President Obama to appease rogue regimes at all cost.” (BGP, Marco Rubio has been recipient of Cuba expatriate contributions, and was instantly critisized by the press for his negative comments. Some said this means “adios” to Rubio as a viable Presidential candidate).
The deal reached is a major diplomatic victory for Castro, 83, who has said he will step down in 2018.
Since taking over in 2006 from his ailing older brother Fidel — now 88 and all but disappeared from public life — Castro has repeated an offer to engage in direct conversations with Obama “as equals,” saying any issue would on the table.
U.S. officials insisted that Gross’s release was on “humanitarian” grounds and separate from what they characterized as a prisoner exchange of intelligence assets.
Gross with USIS-USIA released by Cuba, arrives in Air Force One
But, at its core, the swap is the same deal Cuba has been offering for several years: to trade Gross for a group of imprisoned Cuban intelligence agents that Havana champions as “anti-terrorism” heroes. The spies were sent by Cuba in the 1990s to infiltrate anti-Castro exile groups in Miami.
Havana’s ceaseless crusade to “Free the 5” — which included paid advertisements in American newspapers and giant billboards in U.S. cities — was always more than a propaganda campaign. For the Castros, it was personal. Two of the five prisoners had already served much of their terms in prison and been released to Havana.
The Justice Department said that Obama had commuted the remaining sentences of the three and that they had been delivered to Cuba by the U.S. Marshals Service.
After a series of hotel bombings in 1997 by anti-Castro militants targeting the island’s burgeoning tourism industry, Fidel Castro authorized Cuban officials to release information on the groups to U.S. investigators.
But the information the militants provided helped American law enforcement detect the presence of the spies, ultimately leading to their arrests in 1998 and subsequent U.S. prison convictions.
Fidel Castro was said to be personally anguished by the fate of the spies and burdened with guilt for having inadvertently contributed to their arrests.
After the last major upheaval in U.S.-Cuba relations — the all-out campaign to bring home child castaway Elian Gonzalez in 2000 — Fidel Castro and the Cuban government started a similar blitz on behalf of the spies. But they got little traction.
Taking Gross into custody in 2009 changed the equation. His arrest, for distributing computer equipment as part of a clandestine U.S. effort, put new pressure on the covert U.S. democracy-building programs that were an annoyance to the Cuban government.
More importantly, he would become Cuba’s bargaining chip.
Havana never charged Gross with espionage but instead convicted him for “crimes against the state” — essentially for trying to subvert the communist government and working for USAID programs that are illegal on the island.
Gross was sentenced to 15 years, and jailed at a military hospital, where his mental and physical health were said to be in steady decline. In recent months, he had refused medical care and diplomatic visits while threatening to take his own life.
At the news conference in Washington, Gross was missing several teeth, which he said he lost while in captivity.
Adam Goldman and Ed O’Keefe in Washington and Nick Miroff in San Diego contributed to this report, and Boothe Global Perspectives (BGP) made editorial comments at the beginning to introduce the article.
Karen DeYoung is associate editor and senior national security correspondent for the Washington Post. Brian Murphy joined the Post after more than 20 years as a foreign correspondent and bureau chief for the Associated Press in Europe and the Middle East. He has reported from more than 50 countries and has written three books. Ben Boothe, of Boothe Global Perspectives has reported and worked in 20 nations and published BootheGlobalPerspectives for 27 years.
by Credit to the Economist for this art | Wednesday, December 17, 2014, 8:59 AM (CST)
Winners and losers
America and its friends benefit from falling oil prices; its most strident critics don’t
Oil Refinery
IN EARLY October the IMF looked at what might happen to the world economy if conflict in Iraq caused an oil-price shock. Fighters from Islamic State (IS) were pushing into the country’s north and the fund worried about a sharp price rise, of 20% in a year. Global GDP would fall by 0.5-1.5%, it concluded. Equity prices in rich countries would decline by 3-7%, and inflation would be at least half a point higher.IS is still advancing. Russia, the world’s third-biggest producer, is embroiled in Ukraine. Iraq, Syria, Nigeria and Libya, oil producers all, are in turmoil. But the price of Brent crude fell over 25% from $115 a barrel in mid-June to under $85 in mid-October, before recovering a little (see chart). Such a shift has global consequences. Who are the winners and losers?
(BGP Comment: We see Iran as a loser, they depend on oil income and now are in a deep negative budget situation. Russia is a loser, because it cannot pay it’s budgeted bills at current prices, and confidence the the nation’s currency the Ruble is seriously down. The size of Russia’s problems are similar to the size of Putin’s ego. Venezuela, with an economy already suffering is a loser. The USA gains as much in economic stimulus from lower prices as it losses from lower prices.
In business, the travel industry, airlines, hotels, car rentals, is a winner. The automotive industries are winners. Manufacturing is a winner. Farming and agriculture wins because the price of fuel for fertilizers and running irrigation is substantial. Dairy farms, truck farms, farm product processing, food processing, container industries, plastics industries, all are winners when the price of fuel goes down. Consumers have more consumer spending when the price of oil drops. Trucking, rail, and distributions companies are winners with lower oil. Losers, are oil producers, refinery operations, drillers, and governments who rely upon taxes from the sale of fuel, all are losers when the price of oil and petroleum products go down. Texas, mixed bag but we can say that Houston, San Antonio, Odessa, Midland has the most to lose, while Dallas, Fort Worth, Amarillo, Lubbock are winners. New York City, Chicago, LA are winners, Miami is a winner with lower oil, the farming states tend to benefit from low oil prices, as do industrial states.)
The first winner is the world economy itself. A 10% change in the oil price is associated with around a 0.2% change in global GDP, says Tom Helbling of the IMF. A price fall normally boosts GDP by shifting resources from producers to consumers, who are more likely to spend their gains than wealthy sheikhdoms. If increased supply is the driving force, the effect is likely to be bigger—as in America, where shale gas drove prices down relative to Europe and, says the IMF, boosted manufactured exports by 6% compared with the rest of the world. But if it reflects weak demand, consumers may save the windfall.
Today’s falling prices are caused by shifts in both supply and demand. The world’s slowing economy, and stalled recoveries in Europe and Japan, are reining back the demand for oil. But there has been a big supply shock, too. Thanks largely to America, oil production since early 2013 has been running at 1m-2m barrels per day (b/d) higher than the year before. Other influences are acting as a brake on the world economy. But a price cut of 25% for oil, if maintained, should mean that global GDP will be roughly 0.5% higher than it would be otherwise.
Some countries stand to gain a lot more than that average, and others, to lose out. The world produces just over 90m b/d of oil. At $115 a barrel, that is worth roughly $3.8 trillion a year; at $85, just $2.8 trillion. Any country or group that consumes more than it produces gains from the $1 trillion transfer—importers, most of all.
China is the world’s second-largest net importer of oil. Based on 2013 figures, every $1 drop in the oil price saves it an annual $2.1 billion. The recent fall, if sustained, lowers its import bill by $60 billion, or 3%. Most of its exports are manufactured goods whose prices have not fallen. Unless weak demand changes that, its foreign currency will go further, and living standards should rise.
Cheaper oil will also help the government clean up China’s filthy air by phasing out dirty vehicle fuels, such as diesel. Lighter fuels are dearer and, under current plans, drivers could pay up to 70% of the extra; lower prices will soften that blow. More generally, says Lin Boqiang of Xiamen University, lower prices should support the government’s efforts to reduce subsidies (it has already freed some gas prices, and electricity prices are expected to follow next year).
The impact on America will be mixed because the country is simultaneously the world’s largest consumer, importer and producer of oil. On balance cheaper oil will help, but not as much as it used to. Analysts at Goldman Sachs reckon that cheaper oil and lower interest rates should add about 0.1 percentage points to growth in 2015. But that will be more than offset by a stronger dollar, slower global growth and weaker stockmarkets.
Extracting oil from shale is expensive. So when the oil price drops, America is one of the places most likely to pull back (Arctic and Canadian tar-sands producers are even more vulnerable). According to Michael Cohen of Barclays, a bank, a $20 drop in the world oil price reduces American producers’ earnings before interest by 20%, and only four-fifths of shale reserves are economic to extract using current technology with Brent around $85. How quickly production will fall as a result, though, is unclear, since producers’ costs vary and some have locked in prices via hedging. The impact will also vary by region. “If I’m in California, it’s pretty clear-cut that this is a good-news story,” says Michael Levi of the Council on Foreign Relations, a think-tank. “If I were in North Dakota [the biggest shale-oil state], I would be a lot more nervous.”
America is a net importer, so lower prices mean Americans get to keep more of their money and spend it at home. But the stimulative impact is less than it used to be, since imports are becoming less important, and oil is shrinking as a share of the economy. The Energy Information Administration, an independent government agency, expects net oil imports to drop to 20% of total consumption next year, the lowest share since 1968. In the early 1980s, when oil accounted for over 4% of GDP, a 1% price drop would boost output by 0.04%, says Stephen Brown of the University of Nevada, Las Vegas. That had fallen to 0.018% by 2008, and he reckons it is now about 0.01%.
Cheaper oil could make more of a difference to monetary policy. Inflation expectations have become more stable since the 1980s, which means that the Fed feels less need to act when oil prices shift. But with inflation below its 2% target, it will fret that falling oil prices could be pushing expectations down, making it harder to keep inflation on target. It could decide to keep interest rates at zero for longer, or even extend its bond-buying programme (“quantitative easing”).
Fears of deflation apply with greater force in Europe. Energy imports into the European Union cost $500 billion in 2013, of which 75% was oil. So if oil prices stay at $85, the overall import bill could fall to under $400 billion a year.
But the benefits would be muted twice over. First, inflation in the euro zone is even lower than in America. Mario Draghi, the head of the European Central Bank, claims that 80% of its decline between 2011 and September 2014 was caused by lower oil and food prices. Oil at $85 could lead to deflation, provoking consumers to rein in spending further. Second, European energy policy is only partly to do with price and efficiency. Europeans are also trying to reduce dependence on Russia and to cut carbon emissions by turning away from fossil fuels. Cheaper oil makes these aims slightly harder to achieve.
Reaping the benefits
But one group of countries gains unambiguously: those most dependent on agriculture. Agriculture is more energy-intensive than manufacturing. Energy is the main input into fertilisers, and in many countries farmers use huge amounts of electricity to pump water from aquifers far below, or depleted rivers far away. A dollar of farm output takes four or five times as much energy to produce as a dollar of manufactured goods, says John Baffes of the World Bank. Farmers benefit from cheaper oil. And since most of the world’s farmers are poor, cheaper oil is, on balance, good for poor countries.
Take India, home to about a third of the world’s population living on under $1.25 a day. Cheaper oil is a threefold boon. First, as in China, imports become cheaper relative to exports. Oil accounts for about a third of India’s imports, but its exports are diverse (everything from food to computing services), so they are not seeing across-the-board price declines. Second, cheaper energy moderates inflation, which has already fallen from over 10% in early 2013 to 6.5%, bringing it within the central bank’s informal target range. This should lead to lower interest rates, boosting investment.
Third, cheaper oil cuts India’s budget deficit, now 4.5% of GDP, by reducing fuel and fertiliser subsidies. These are huge: along with food subsidies, the total is 2.5 trillion rupees ($41 billion) in the year ending March 2015—14% of public spending and 2.5% of GDP. The government controls the price of diesel and compensates sellers for their losses. But, for the first time in years, sellers are making a profit. As in China, cheaper oil should reduce the pain of cutting subsidies—and on October 19th Narendra Modi, India’s prime minister, said he would finally end diesel subsidies, free diesel prices and raise natural-gas prices.
The International Energy Agency, an oil consumers’ club, reckons that the global cost of subsidising energy consumption (mostly in developing countries) is $550 billion a year. The fall in the oil price should reduce that, all else being equal, to about $400 billion. That means many countries face a choice: seize the moment to dismantle subsidies, or keep on handing out goodies that now cost less? Either way, they will benefit—by ending an economic distortion (though with some risk of a consumer backlash), or by reducing its fiscal cost for a while.
The choice is particularly stark for oil importers in the Middle East (see chart). Energy subsidies cost Egypt 6.5% of GDP in 2014, Jordan 4.5%, and Morocco and Tunisia 3-4%. A 20% fall in the oil price would improve the fiscal balances of Egypt and Jordan by almost 1% of GDP, says the IMF. But, fears Mr Baffes, the efficiency gains may not be enough to persuade regimes, especially shaky ones, to cut subsidies that mostly benefit the politically influential middle classes.
Many other countries are also wrestling with energy subsidies. Indonesia spends about a fifth of its budget on them. Gulf oil exporters are even more profligate: Bahrain spends 12.5% of GDP and Kuwait, 9%. Brazil wants a high oil price to attract investment to its ultra-deep offshore (pré-sal) oil reserves. But cheap oil is a boon to its farmers, and in the short term to Petrobras, its state-controlled oil firm, which has been forced to import at world prices and sell at a government-capped rate in order to keep inflation artificially low. For the first time in years, it is no longer making a loss on the imports it sells.
Contrasting futures
It might seem that the country which is the world’s largest exporter must lose out. With oil at $115 a barrel, Saudi Arabia earns $360 billion in net exports a year; at $85, $270 billion. Its budget has almost certainly gone into the red. Prince Alwaleed bin Talal, an influential businessman, called lower prices a “catastrophe” and expressed astonishment that the government was not trying to push them back up. But Saudi Arabia’s long-term interest may in fact be served by a period of cheaper oil. It can afford one, unlike most other exporters. Though public spending has risen in recent years, its foreign reserves have risen more. Net foreign assets were 2.8 trillion riyals ($737 billion) in August—over three years’ current spending. It could finance decades of deficits by borrowing from itself even if oil were cheaper than it is now.
Over the past year production by non-OPEC countries, such as Russia and America, has risen from 55m b/d to 57m b/d. The Saudis might conclude that the main beneficiaries of dear oil have been non-OPEC members. Some of the new output is high-cost, unlike the Saudis’. A period of cheaper oil could drive some high-cost operators to the wall, discourage investment in others and let the Saudis regain market share.
In the mid-1980s Saudi Arabia cut its output by almost three-quarters in an attempt to sustain prices. It worked and other countries cashed in—but the Saudis themselves suffered a big loss of revenues and markets. They see little reason to make such a sacrifice again.
Blowing windfalls
Saudi Arabia can survive low prices because, when oil was $100 a barrel, it saved more of the windfall than it spent. The biggest losers are countries that didn’t. Notable among these are three vitriolic critics of America: Venezuela, Iran and Russia.
“However low the oil price falls,” Nicolás Maduro, Venezuela’s president, declared on October 16th, “we will always guarantee…the social rights of our people.” The reality is quite different. Hugo Chávez, his predecessor, dismantled a fund intended to squirrel away windfall oil profits, spent the money and ran up tens of billions of dollars in debt. That debt is now coming due. Earlier this month a hefty service payment took Venezuela’s foreign reserves below $20 billion for the first time in a decade. Every dollar off the price of a barrel cuts roughly $450m-500m off export earnings. By Deutsche Bank’s calculation, the government needs oil at $120 a barrel to finance its spending plans—higher than before the recent tumble.
So, unlike other oil exporters’ budgets, Venezuela’s was already in trouble. Last year’s fiscal deficit was a reckless 17% of GDP. In response, the government printed bolívares, pushing inflation (even on official measures) over 60%. Industrial production is grinding to a halt and Standard & Poor’s, a ratings agency, downgraded Venezuela’s debt to CCC+ last month. Analysts have long thought it would move heaven and earth to avoid default—not least because it has overseas assets that creditors could seize and depends heavily on financial markets. But the “d” word is increasingly often heard.
The impact of Venezuela’s oil-related travails may be felt beyond its borders. The country runs a programme called PetroCaribe, which provides countries in the Caribbean with cheap financing to buy Venezuelan oil. For Guyana, Haiti, Jamaica and Nicaragua annual deferred payments under PetroCaribe are worth around 4% of GDP. But it costs Venezuela’s government $2.3 billion a year. So if Venezuela decides to cut back on its largesse, the shock waves will be felt throughout the Caribbean.
Iran is even more vulnerable than Venezuela. It needs oil at $136 a barrel to finance its spending plans, most of them inherited from the profligate and inefficient government of Mahmoud Ahmadinejad. Last year it spent $100 billion on consumer subsidies, about 25% of GDP. Sanctions mean it cannot borrow its way out of trouble.
Hassan Rouhani, who took office last year, has re-established a degree of macroeconomic stability. The central bank said the economy grew in the second quarter of 2014 for the first time in two years. But he was elected on the promise of improving living standards. It is not yet clear whether lower oil prices will force further reforms, and increase pressure for a deal with America over Iran’s nuclear program, or whether falling revenues will boost support for conservatives who are already making trouble for him.
For Russia the impact will be less dramatic, at least at first. Its draft budget for 2015 assumes oil at $100 a barrel; below that, it will be harder for Vladimir Putin, the president, to keep his spending promises. Something similar happened when the oil price fell in the mid-1980s, leaving the indebted Soviet Union cash-strapped. (BGP Comment: The declining Ruble has enormous impact on the Russian people, who now see the cost of goods, food, and consumer products much higher, while their wages and income are stagnant. The people, in simple terms have become poorer, and the shelves have less.
But Russia now has reserves of $454 billion to cushion against oil-price fluctuations. More important, the ruble has fallen. Next year’s budget assumes a dollar is worth 37 rubles, so it balances with oil at 3,700 rubles. A barrel currently costs 3,600 rubles (a much smaller fall than the dollar price), because the currency has plunged 20% this year. With oil at $80-85 a barrel Russia would probably run a budget deficit of only about 1% of GDP next year.
All the same, the country will suffer a slowdown. For years, real incomes rose, thanks to wage increases in the state sector. The increased spending went on imports made cheaper by a strong currency. So the slide in the ruble is cutting living standards by making imports dearer. Western sanctions have closed capital markets to Russian firms, even private ones. Business activity is waning. A senior finance-ministry official says the share of non-oil-and-gas revenues in the budget is shrinking, making Russia more dependent on oil. Some analysts think growth in 2015 will be just 0.5-2%, compared with about 4% a year in 2010-12. Inflation is 8%. Russia, it seems, is headed towards stagflation. (BGP: Many economists including ours say Russia is headed for deeper recession, perhaps even economic melt-down with shrinking confidence running rampant. All that is holding Putin’s economy together is his $454 billion in reserves, but these are being depleted at a rate of $1 to $2 billion per day).
For most governments—Venezuela’s is a possible exception—cheaper oil is likely to have a modest impact at first. Even Mr Putin may be able to ride out stagflation for a while. But over time, the consequences are likely to grow. The years of $100-a-barrel oil also saw the rise of a “Beijing consensus” towards more economic interventionism. Perhaps a period of $85 oil—if that were to happen—might usher in another shift in attitudes, assumptions and policies.
Last year a little girl in Afghanistan picked up a hand grenade. When it exploded it took off her arm and part of her face. The “Men called Shriners” heard about it, and used their influence to fly the child to Los Angeles and put her in one of the 22 Shrine Children’s hospitals. The shriner doctors gave her a new arm, rebuilt her face and during rehabilitation the little girl’s extraordinary talent as a painter emerged. Shriners took her to famous artists in Beverly Hills and she got training and encouragement. Soon celebrities started buying her paintings so that when she went back to Afghanistan she could help her family financially.
One night terrorists, the Taliban kicked I the door of their house and threatened to kill her parents and blow off her arm again. “You have been corrupted by Americans” they said. The corruption consisted of her and her family telling everyone in Afghanistan of the kindness and compassion of Americans, particularly the Shriners at the hospital who gave her the possibility for a new life.
Again the Shriners rose to the occasion and flew her and her family back to America to allow them to live in peace. Now here we can see why terrorism does one good thing. It is so bad, so cruel, so outrageous that it shows the contrast of evil cruelty to loving compassion. The Shriners were able to send a message for all to hear and that was: “We don’t help children to manipulate the for religion or politics. Indeed we are not a political or religious organization. We help kids, never charging those kids who cannot pay, because it is the right thing to do.” The contrast is made possible by the extreme evil of terrorists vs the good and compassionate people of our world. Every time another child or person is beheaded, or murdered by terrorists there stands a peaceful army of compassionate people like the Shriners whose good works shine like the sun in contrast to the darkness of terrorism. Terrorism is a ploy, a means to get attention and to intimidate people into bowing down in obedience. But good men stand tall and with light when they pick up a crippled child and carry them to places of comfort, healing and love. Terrorists kidnap children, rape the girls, give the boys guns and show them how to hate and kill. Good people show tangible positive love and teach them to be doctors, nurses and yes, painters of beauty to bring light to our world. The good thing about terrorism it provides clarity of choice for our world. Black uniforms representing death and fear vs white medical garb representing healing and hope. These days our world has a choice and the choice for 98% is to appreciate and seek the light. The Shriner Children’s Hospitals have treated kids for over 90 years and have never charged a child who could not pay. Remember their good work the next time you hear of some outrageous terrorist act. The good deeds of good men far outweigh the evil manipulations of terrorism.
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With a broad based economic recovery and in some places outright “boom”, conversely we see states where diversity and contrasts indicate areas of great wealth, next to poor areas. In New Mexico, pockets show suffering and high unemployment, contrasted with other areas where business can’t find enough workers. Texas shows farmers failing because of drought, with some cities almost ghost towns, while other farmers are prospering and towns booming. In California we see huge debt and infrastructure demands, high taxes, in the richest economy of the nation.
TEXAS: For example, in Texas, buses line up in the city of San Antonio to take workers to oil/gas fields in SW Texas, and it is almost impossible to find a hotel or motel room in SW Texas or in West Texas because of new drilling, exploration and production. Yet in many small towns across the state, that do not have oil and gas, there are still many vacant downtown store fronts, because the drought in past years has caused such losses in farming and agriculture. In Houston, a recent visit showed 9 help wanted signs in 3 blocks, and a surge in new housing and new construction.
CALIFORNIA: In California, the movie industry has consolidated into fewer and fewer, larger and larger film conglomerates, and there are still many independent film makers which often offer more new jobs and opportunities than the big companies. The big film houses have created expanded “theme parks” that generate millions in tourism dollars. The entertainment industry continues to be strong. Farming in the Sacramento Valley is showing greater profitability, but a water shortage and drought concerns continue to stress the economy. Retail, housing, manufacturing, imports are all still suffering from some economic slowness. Yet California, is showing good travel, tourism and a growing economy. California has huge debt issues, and the expensive infrastructure demands higher taxes to keep it maintained.
New Mexico, an area of beautiful vistas, has had slow growth, particularly in remote areas of the west, and northern New Mexico. Towns such as JAL, Mora, Wagon Mound, Watrous, Springer, Raton, have seen their communities struggle to survive. But, Santa Fe and Albuquerque, Roswell, Hobbs, Carlsbad, and Los Alamos have all maintained strong and growing economies. Clovis and Los Alamos enjoy military and federal research spending. Locations such as Albuquerque, Santa Fe and historic towns with well preserved older buildings such as Las Vegas, New Mexico have become magnets for film productions.
Las Vegas, New Mexico appears to be stable, with slow growth, but this city has water issues and cultural conflicts that have in the past slowed growth. Younger progressive bankers and thinkers are bringing new hope for Las Vegas vs other small towns. Young educated and motivated leadership may be the best hope for the economy of New Mexico, because young progressive business executives and investors appear to be emerging and doing well in bringing new economic opportunity to the state. Being the smallest of the three states of this report, it has excellent potential for expansion and change.
Economic Factor
CALIFORNIA
NEW MEXICO
TEXAS
Unemployment Rate
7.8% statewide (4.4% San Francisco, 8.5% Los Angeles)
California added 27,000 new jobs in July. Overall new job growth has been slow but steady.
6.5% (5.6% in Albuquerque,
4.2% Santa Fe)
New jobs were largely offset by losses with very slow growth in 2013-14.
5.2% (3.5% Austin, 5.1% Dallas)
Texas added 46,600 new jobs in July, and 60,000 new jobs in June of 2014. With 370,300 new nonagricultural jobs from June 2013 to June 2014.
Population Trends
California grew to 38.200,000, but most of this is from birth, and immigration. The population rose .88%, considered a “slow growth, with 170,000 coming to California while 103,000 people left for other States in the USA.
Average 3% growth per year over 10 years, although net population dropped in 2013. Mora, Sierra, Quay, DeBaca and Hidalgo counties are all shrinking.
Average 5% growth per year over the past 10 years. The fastest growing state in the USA, has population of 27,194,258 in 2014.
New Construction
Growing slowly, 10% increase in new construction projects. Large downtown rehabilitations in San Francisco and Los Angeles, with $1.7 Billion to be sped in Los Angeles and San Francisco. Public spending on new high speed rail and new sports facilities are in process.
Regulations and red tape appear to slow new construction in Los Angeles, and San Francisco, and there is new home construction in outlying areas such as Lancaster and mid-sized towns.
California coast has some of the highest valued real estate in the nation. Many Californians and companies liquidate and expand to less expensive properties in other states.
20% increase in new construction is single family housing, and a few large corporate facilities such as the 192,000 Schott Solar plant in the Mesa Del Sol submarket for a data center, and US cotton expanded their facility in Rio Rancho with 64,000 s.f.
Demand for new space is slow, and contractors have excess capacity that needs to be absorbed. Most new projects are expected to be delayed until 2015.
New Mexico Real estate is undervalued and driven by out of state investors.
Energy construction boom for the coast of Texas and Louisiana, at $116.85 billion, $12.18 billion of industrial projects, and more infrastructure for roads and water projects in the billions. Also large expansion of new residential, apartment, condominium and new office buildings state wide.
New construction activities for commercial buildings, hospitals and luxury gated communities is becoming brisk in Texas.
Texas real estate shows stable growth over last 30 years.
Tax Trends
Taxes are high and must go higher. Huge political battles over already high taxes looming. California has huge deficits, and may ultimately see public defaults or restructuring.
Taxes are moderate but will be increased. Much political resistance to increases.
Taxes are low, and probably will show few increases. Culture of Texas resists taxes and public spending vs private development.
Major industries driving growth/recovery
Entertainment, distribution, export import, shipping, high technology, medical, government spending, public sector projects, oil, research, import/export. Large service sector.
State facing water issues to support industry.
Defense, government, oil, ranching, tourism, high technology, mining, service industries. Ranching and agriculture strong in certain sectors. State has water shortage, which limits growth.
Oil, gas, wind, agriculture, manufacturing, high tech, medical, aviation, defense, service industries, small manufacturing, large service sector.
State facing water issues, over long term this could slow growth, but state has excellent long term water plan.
Growth Described As
Steady (but not dynamic) recovery.
Growth better in some sectors, including travel, vacation, movie industries”. Los Angeles, San Diego and San Francisco good all stable to growing. Ports and Airports huge economic entities. Agricultural communities stable, but drought is of concern.
Slow Recovery, most income in SE sector (Hobbs, Portales, Carlsbad, Clovis) areas of oil and gas production, and some growth in Albuquerque and Santa Fe, with diversified economies.
Lack of port, makes highway, rail and only one major airport critical to state economy.
Boom, expansion, in construction, energy, industrial, travel and retail. Houston, DFW, Austin, San Antonio, and the Valley all show very strong growth. Texas is a window of commerce from Latin America into the USA. Ports and Airports huge economic entities.
Agricultural Markets
Good profits and prosperity among food and agricultural producers, due to rising commodity prices. There are negative impacts because of drought.
Good profits and prosperity among agricultural growers, especially irrigated areas, although drought has sapped capital from many farmers.
Farmers report recent rains have brought the best crop potential in 7 years, but past drought still shows lakes below normal. Increasing profit margins in farm goods.
Median Household Income
$61,300
$44,424
$50,730
The industrial market in New Mexico appears to be a bargain for renters and those wishing to invest in a depressed market. Note these figures:
USA STATES RENAMED IN ACCORDANCE WITH SIMILAR GDP’S OF OTHER NATIONS
Gross Domestic Product by state, as compared to similar GDP of nations.
California has long been the largest economy of all of the states in the USA with over $2. Trillion of economic output and still growing. But Texas is increasing with $1.6 trillion and gaining on California every month, due to oil, gas, wind, as well as a healthy agricultural sector and growing exports of manufactured, healthcare and technical goods. New York is third, followed by Florida, Illinois, Pennsylvania, Ohio, and New Jersey. New Mexico’s GDP, is 38th on the list, at $80,600,000, less than Nebraska, but greater than Hawaii, about equal to Ecuador.
CALIFORNIA’S ECONOMY HAS CONFLICTS:
The state is huge, but there are deep divisions of cultural and political direction, plus the infrastructure and debt have put great financial pressures on the state. Prisons there are overcrowded, schools indicate that California ranks 3rd to last in the nation, minority dropout rates exceed 60% in much of Los Angeles. The water crisis is real and there is $1.1 trillion in city, county and state debt which has caused concern. If California does not show a significant increase with this recovery, it must face that it has the 46th worst unemployment in the nation, and 50th as a good business startup destination.
Yet California’s land prices show that it is still one of the most popular and sought places to live, the climate, the progressive forward thinking leaders, the leadership for trends in the entire nation all bode well for California. No doubt that in some future date, like General Motors, or Detroit, California’s public debt will probably default and some kind of bankruptcy will occur. But California will continue to be the nation’s economic star and leader…that is, until Texas passes it by sheer fundamental strength of can do people with a good work ethic and a lot of energy and agricultural production.
All of the above factors suggest that a national recovery is being helpful in California, New Mexico and Texas. Of the three states, California is the largest economy, Texas the most dynamic, and New Mexico a lovely place to live in a multi-cultural environment with resorts, mountains and enough economic diversity to attract highly qualified people. Many people in California, make their money there and then move to Texas or New Mexico where the costs of real estate are much lower. But many in Texas make their money in Texas and have second homes in New Mexico and along the California coast to enjoy the best of beauty and nature. But these three states, in tandem, offer great opportunities for business, lifestyle, and a good quality of life. Real estate values in all three are destined to increase.
(Comments from BGP: Our thanks to the Washington Post for reporting on this issue. We at BGP (BootheGlobalPerspectives) see this news as ground breaking and worthy of our readers.
“What a blessing it is,” Gross said at a hastily arranged news conference in Washington. “Thank you President Obama for everything you have done today and leading up to today.” Maryland resident, left Cuba aboard a bright blue and white U.S. aircraft Wednesday morning, with UNITED STATES in huge letters on the fuselage, accompanied by his wife and several members of Congress and arrived at Joint Base Andrews. The Cubans landed in Havana. The unidentified asset was flown separately to the United States.
Some countries stand to gain a lot more than that average, and others, to lose out. The world produces just over 90m b/d of oil. At $115 a barrel, that is worth roughly $3.8 trillion a year; at $85, just $2.8 trillion. Any country or group that consumes more than it produces gains from the $1 trillion transfer—importers, most of all.
The choice is particularly stark for oil importers in the Middle East (see chart). Energy subsidies cost Egypt 6.5% of GDP in 2014, Jordan 4.5%, and Morocco and Tunisia 3-4%. A 20% fall in the oil price would improve the fiscal balances of Egypt and Jordan by almost 1% of GDP, says the IMF. But, fears Mr Baffes, the efficiency gains may not be enough to persuade regimes, especially shaky ones, to cut subsidies that mostly benefit the politically influential middle classes.
It might seem that the country which is the world’s largest exporter must lose out. With oil at $115 a barrel, Saudi Arabia earns $360 billion in net exports a year; at $85, $270 billion. Its budget has almost certainly gone into the red. Prince Alwaleed bin Talal, an influential businessman, called lower prices a “catastrophe” and expressed astonishment that the government was not trying to push them back up. But Saudi Arabia’s long-term interest may in fact be served by a period of cheaper oil. It can afford one, unlike most other exporters. Though public spending has risen in recent years, its foreign reserves have risen more. Net foreign assets were 2.8 trillion riyals ($737 billion) in August—over three years’ current spending. It could finance decades of deficits by borrowing from itself even if oil were cheaper than it is now.
Yet in many small towns across the state, that do not have oil and gas, there are still many vacant downtown store fronts, because the drought in past years has caused such losses in farming and agriculture. In Houston, 
a recent visit showed 9 help wanted signs in 3 blocks, and a surge in new housing and new construction.
and there are still many independent film makers which often offer more new jobs and opportunities than the big companies. The big film houses have created expanded “theme parks” that generate millions in tourism dollars. The entertainment industry continues to be strong. Farming in the Sacramento Valley is showing greater profitability, but a water shortage and drought concerns continue to stress the economy. 
Retail, housing, manufacturing, imports are all still suffering from some economic slowness. Yet California, is showing good travel, tourism and a growing economy. California has huge debt issues, and the expensive infrastructure demands higher taxes to keep it maintained.
has had slow growth, particularly in remote areas of the west, and northern New Mexico. Towns such as JAL, Mora, Wagon Mound, Watrous, Springer, Raton, have seen their communities struggle to survive. But, Santa Fe and Albuquerque, Roswell, Hobbs, Carlsbad, and Los Alamos have all maintained strong and growing economies. Clovis and Los Alamos enjoy military and federal research spending. Locations such as Albuquerque, Santa Fe and historic towns with well preserved older buildings such as Las Vegas, New Mexico have become magnets for film productions. 
Las Vegas, New Mexico appears to be stable, with slow growth, but this city has water issues and cultural conflicts that have in the past slowed growth. Younger progressive bankers and thinkers are bringing new hope for Las Vegas vs other small towns. Young educated and motivated leadership may be the best hope for the economy of New Mexico, because young progressive business executives and investors appear to be emerging and doing well in bringing new economic opportunity to the state. Being the smallest of the three states of this report, it has excellent potential for expansion and change. 
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