ERMUSR Misc. Issues 01-11-2005 - Laserfiche WebLink

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/~//~~y~ The low U.S. savings rate threatens long-term economic health, since it limits the funds available for businesses to expand and boost productivity. Without enough savings from individuals and/or the government, companies must rely on foreign investment in U.S. financial assets. That's likely to slow in coming years, and interest rates will rise, curbing investment and consumption. But short term, a jump in savings would be a mixed blessing. Modest job and wage gains provide little impetus for the economy, so it's spending by consumers and businesses that's fueling the growth that we have. Thus, a sharp shift. in Americans' spendthrift habits, which also have pushed consumer debt to a near record, would hurt. • Fortunately, the slender 0.2% U.S. savings rate is understated because it doesn't account for home equity or appreciation in assets. And over time, the rate will climb a bit. Rising interest rates and baby boomers' growing awareness of the approach of retirement age will coax a few more dollars into savings. Partial privatization of Social Security would also encourage consumers to sock more away. Meanwhile, though, the dilemma is making investors uneasy. ® The government wants to prime the Pump for nuclear energy Plants. Also by 2010, enough wind-powered electricity for a million homes is likely. A federal tax credit specifically for wind-generated power plus $300 million a year in state grants for all renewable energy sources are sparking rapid growth. That, plus new breakthroughs in turbine blades, conversion technology, software controls and more, will increase output to nearly 13,000 megawatts, 4% of anticipated U.S. energy needs in 2010. Chances are that federal energy legislation will speed progress. So it'll pay half the tab for studies required to get approval for facilities planned for sites near existing plants in Va. and I11. Regulators also plan to streamline approvals, halving the time needed. Recent Energy Dept. moves are meant to end a financing logjam that's blocking construction of new plants, including the two planned for the Va. and I11. sites. Lenders have balked at the 10-year lead time and the $50 million to $100 million needed to meet requirements imposed by DOE, EPA and a variety of other federal, state and local agencies. By 2010, the two plants will come on line, launching a 50% hike in nuclear energy output expected by 2020 as even more plants are built. DOE doesn't plan to continue picking up study costs for other facilities. It figures once streamlined regs are in place, financing will be easier. It will offer millions in grants for research on renewable energy sources of all sorts...solar, biomass, fuel cells, etc., as well as wind power. •~ ~ Is it possible to profit by reducing carbon dioxide emissions? Some firms are counting on it. Among them: Temple-Inland, a Texas wood products manufacturer, Interface Inc., a Ga. carpet maker, as well as such big names as DuPont, Bayer and International Paper Co. Odds are they're right. By the end of the decade, Uncle Sam is likely to follow the lead of states that are limiting COz emissions. A futures market for pollution credits will facilitate tradine. Futures contracts on credits for sulfur dioxide, which has been regulated for two decades, debuted today. COZ contracts will follow in a year or so. ~ For instant online access and searchable archives, go to KiplingerForecasts.com/start ~ '`~