The market mood has definitely soured and risk appetite has faltered.  This is good for the USD but bad for relatively high yielding/commodity risk trades. The USD is set to retain a firm tone over the near term even if is temporary, which I believe it is.  

Whether it’s profit taking on crowded risk trades, a lot of good news having already been priced in, fears that other countries will follow Brazil’s example of taxing capital inflows to dampen currency strength, or a reaction to weaker economic data, it is clear that there are many reasons to be cautious. 

It is also unlikely to be coincidental that the rise in risk aversion and drop in equity markets is happening at a time when many central banks are contemplating exit strategies and when many investors are pondering the timing of interest rates hikes globally following the moves by Australia and Israel. 

One of the reasons for the worsening in market mood is that some parts of the global economy may not be ready for rate hikes.  Certainly there is little chance of a US rate hike on the horizon and perhaps not until 2011 given the prospects of a sub par economic recovery.  This projection was given support by the surprise drop in US consumer confidence in October.

It is not just the US that is unlikely to see a quick reversal in monetary policy.  As indicated by the bigger than expected decline in annual M3 money supply growth in the eurozone, which hit its lowest level since the series began in 1980, as well as the drop in bank loans to the private sector, the ECB will be in no hurry to wind down its non-standard monetary policy measures. 

The chances of any shift in policy at next week’s ECB meeting are minimal, with the ECB’s cautious stance emboldened by the subdued money supply and credit data.  As long as EUR/USD remains below 1.50 ECB President Trichet is also unlikely to step up his rhetoric on the strength of the EUR.  

Although the major economies of US, Eurozone, Japan and UK are likely to maintain current policies for a long while yet, the stance is not shared elsewhere.  The Reserve Bank of India did not raise interest rates following its meeting this week but edged in this direction by requiring banks to buy more T-bills. Other central banks in the region are set to move in this direction.

In terms of developed economies, Norway was the latest to join the club hiking rates by 25bps and adding to the growing list of countries starting the process of policy normalisation.   Australia is set to hike rates again at next week’s meeting although a 50bps hike looks unlikely, with a 25bps move more likely. 

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) –

October 7, 2009 17:19:00

Updated

October 7, 2009 17:25:00

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World …

Source: Shares surge on Reserve Bank"s vote of confidence

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) –

Boris Schlossberg

Director of Currency Research, GFT

AUD Employment Change 40.6K vs. -9.7K eyed

AUD Unemployment Rate 5.7% vs. 6.0%

JPY Economy Watchers Sentiment 43.1 vs.42.5

JPY Prelim Machine Tool Orders -61.9% vs. -71.5% last

GBP CB Leading Index 0.9% vs. 0.5% last

EUR …

Boris Schlossberg

Director of Currency Research, GFT

• AUD Employment Change 40.6K vs. -9.7K eyed
  
• AUD Unemployment Rate 5.7% vs. 6.0%
  
• JPY Economy Watchers Sentiment 43.1 vs.42.5
  
• JPY Prelim Machine Tool Orders -61.9% vs. -71.5% last
  
• GBP CB Leading Index 0.9% vs. 0.5% last
  
• EUR German Industrial Production n/a
  
• GBP MPC Rate Statement n/a
  

Event Risk on Tap

• CAD Housing Starts expected at 147K
  
• USD Unemployment Claims expected at 54.3K
  

Price Action

• 
  
  USD/JPY
  
  
  
  
  
  continues to press the 88.00 level holds so far
  
• 
  
  AUD/USD
  
  
  
  
  
  blows through the .9000 handle after labor data surprises to the upside
  
• 
  
  GBP/USD
  
  
  
  
  
  boosted by news of Llyods possible offering takes out 1.6000
  
• 
  
  EUR/USD
  
  
  
  
  
  1.4800 remains resistance ahead of ECB
  

Risk FX staged another strong rally in Asian and early European sessions today aided by a number of factors that supported the global economic recovery trade. In US the better than expected numbers from Alcoa which saw aluminum demand rise by 11% in Q3 helped lift equity futures in after market hours and sent


Nikkei





higher by more than 1%. Despite the fact that some of Alcoa’s gains may have been exaggerated by cash for clunkers program the markets were encouraged to see ongoing demand from EM nations as infrastructure build outs continue in the region. As we’ve noted many times in the past China, not US is the new driver of global growth and until and unless Chinese demand cools, the recovery theme will continue to dominate trade in the Currency market.

Meanwhile, Australia – the one Anglo Saxon economy that has benefitted the most from Chinese demand – saw its Unemployment Rate improve markedly as it dropped to 5.7% from 6.0% eyed while the country generated 40.6K new jobs against forecasts of a -9.7K contraction. The news sent Aussie skyrocketing above the .9000 figure as traders Started to price in the possibility of a second rate hike by the RBA in November. Yesterday we stated that


AUD/USD





had a good chance of reaching .9000 before the week’s end should risk flows prove supportive, and now that it has taken that target, the longer term forecast for Aussie indicates that the unit could hit parity with the buck if global GDP growth returns to trend in 2010. The case for


AUD/USD





1.0000 rests on three factors – further increases in Australian interest rates, a stationary US interest rate environment and continued rally in


gold





which is a peripheral but nevertheless important support for the Aussie given the fact that Australia is one of the largest producers of the yellow metal.

Today, the rally in risk even helped the pound, which soared above the 1.6000 level to hit a high of 1.6072 after Lloyds banking group announced its intent to file for a rights offering that may help it escape the UK Asset Protection Scheme earlier than the market had anticipated. Cable has been weighed down by UK’s hobbled financial sector which has been rescued by required billions of tax payer funds. The Lloyds’ announcement was taken very positively by the market as it was the first sign of possible relief for the UK Treasury with public capital now being replaced by private funds.

We have been arguing all week that Cable was showing signs of a bottoming out and today’s Price Action suggests that a turn in sentiment is taking place. We noted that 1.6000 needed to be pierced with authority in order to establish a counter trend rally in the pair and if it can maintain this level for the day, sterling could see further strength in the days ahead.

With no major data out of the US today all attention will be focused on the BoE and ECB rate decisions due later in the day. The markets expect no Changes from either central bank, but the statements from the monetary authorities will be heavily scrutinized for any Change of tone. With MPC, markets will likely zero in on any reference to further QE measures, while with the ECB the key concern will be on exit strategies. We expect the MPC to remain stationary on QE while the ECB will maintain its cautious tone suggesting that it is too early to change its accommodative stance. If that scenario were to develop,


EUR/GBP





which has already dropped sharply in Europe could continue to fall f or the rest of the day as traders unwind their sterling shorts.

Currency	GMT	EST	Release	Expected	Prior
CAD	12:15	8:15	CAD Housing Starts	147K	151K
USD	12:30	8:30	USD Unemployment Claims	543K	551K

<!– Loading —>
<!—/ End Loading —>

Source: Risk FX Rally Continues – A Turn in the Pound?

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – The latest employment data is not only a stunning result, but it suggests the Australian economy has executed another critical turning point.

And it is a surprise double act that will have other developed economies around the world green with envy – once again.

Firstly, with the Reserve Bank’s confidence on Tuesday to raise the cash rate from an emergency level of 3 per cent, and now with the jobless rate falling to 5.7 per cent, spurred by growing employment.

It is an optimistic brew that has fermented in the space of 48 hours, almost setting a pace to rival Prime Minister Kevin Rudd’s 24-hour news cycle.

Economists who had been tipping unemployment to rise to more than 6 per cent with a decline of 10,000 jobs have also been left in their tracks once again.

It is more evidence that reading the tea leaves is just as complex in recovery and it was when the downturn started to hit.

However, even those who were mildly critical of the Reserve Bank’s decision to hike rates on Tuesday agree today’s result is something of a vindication.

“It validates what the Reserve Bank did earlier this week and what they are going to do again in November,” said Michael Blythe, chief economist at the Commonwealth Bank.

“The economy still has the ability to surprise.”

Rory Robertson, the Macquarie Group interest rate strategist who tipped Tuesday’s rates move, had earlier warned there was a remote chance of embarrassment for the RBA if the perceived recovery suddenly “turned to custard”.

But today he was making the most of making the right call.

“It’s a brilliant result. It suits everyone, from the Reserve Bank to the jobs market,” he said.

JP Morgan chief economist Stephen Walters, who was first to predict Tuesday’s rate hike, says the surprise jobs result raises the chances of a follow-up on Melbourne Cup day in November.

“It’s a strong message, if you believe the numbers, that our economy is outperforming the rest of the world,” he said.

But as economists always warn, employment is a lagging indicator and today’s surprise is one result that on its own, does not constitute a trend.

Mr Walters also counsels that “there is still a lot of water under the bridge” and that the impact of Tuesday’s rate hike could dampen next week’s consumer confidence data.

There is another downside as the Australian dollar continues to climb in anticipation that the cash rate will climb 75 basis points in the coming months.

Travellers will be salivating over a dollar worth 90.1 US cents and the prospect of parity with the greenback.

However, exporters are far from happy as they continue to be crunched because of the stronger currency.

It is a factor that could be a significant obstacle to a recovery in the manufacturing sector, which has been hurt badly by the downturn over the past 18 months.

Source: Jobless rate will have others green with envy

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – The Australian unemployment rate has unexpectedly dipped to 5.7 per cent in September, in the latest indication Australia’s economy has defied the global recession.

Unemployment had remained at 5.8 per cent for the previous three months, despite the loss of 27,100 jobs in August.

The official employment survey’s seasonally adjusted figures show 40,600 more jobs were created in September, with 35,400 of those being full-time positions.

The result was much better than the average economists‘ expectations of 10,000 jobs being lost for an unemployment rate of 6 per cent, and the surprise pushed the Australian dollar from 89.34 US cents immediately before the decision to 90.09 US cents straight afterwards.

The result goes some way to vindicating the Reserve Bank’s surprise decision to raise interest rates on Tuesday, at least a month ahead of when most economists thought it would move.

JP Morgan’s chief economist, Stephen Walters, was one of the very few economists who predicted the RBA’s rate hike, and says more figures like these will see further rises coming sooner rather than later.

“It’s a strong message, if you believe the numbers, that our economy is substantially outperforming the rest of the world,” he told Reuters.

“After this, I think the chance of a November move has gone up a lot, although there is still a lot of water under the bridge. For example, next week’s consumer confidence will likely take a hit from Tuesday’s rate hike. I see rates at 4 percent by Q1 [the first quarter of] next year.”

Ben Potter, a research analyst with IG Markets, says today’s numbers could even mark the peak of unemployment.

“It’s pretty obvious the RBA had an advanced read on today’s employment numbers and can now more easily justify the reason they pulled the rates trigger,” he wrote in an emailed note on the data.

“The creation of 40,000 jobs against forecast losses of 10,000, and the unemployment rate falling to 5.7 per cent, would certainly seem to suggest we have seen peak unemployment, particularly given the positive reads from recent forward looking indicators.”

The participation rate also recovered from a drop last month, when people giving up looking for work was the main reason the unemployment rate remained stable despite a substantial loss of jobs.

That, combined with the strong increase in full-time jobs, meant that total hours worked last month increased by 13.4 million to more than 1.52 billion hours.

Stephen Walters says this is a good sign that there is a genuine recovery building in the employment market.

“It was a very, very strong number. Most of the increase was in full-time, and interestingly, unemployment went down even though more people entered the workforce.”

NSW, Victoria lead

New South Wales had a strong drop in unemployment, with the jobless rate falling from 6.1 to 5.6 per cent seasonally adjusted.

So did Victoria, where the unemployment rate fell to 5.6 per cent in September, coming back from a steep upward jump to 6.2 per cent in August.

That has left Queensland with the highest unemployment rate in the country, after its jobless rate climbed from 5.5 to 6.3 per cent in the space of a month.

However, Westpac’s economics team urges caution when looking at the monthly unemployment figures, which are based on a survey that can contain substantial statistical variations.

“One significant caution – the monthly employment data is volatile, and looking at the state split this month suggests noise at play,” Westpac’s economists wrote in a note.

“While employment rose in NSW (6,200) and Victoria (5,300), the sum of the state numbers gave a total employment rise of 22,900 – well below the aggregate published 40,600 rise. Also, the lion’s share of the growth came in one of the smallest states by GDP size, South Australia, where employment rose 15,900.”

However, the more stable national trend unemployment figure came in steady for the fourth straight month at 5.8 per cent, suggesting a plateau in the jobless rate is more than just statistical noise.

Source: Unemployment rate records shock drop

Good morning!  A few items of interest on our paddle through the news this morning:

A WSJ opinion piece on flawed theories of health care cost-control:

In President Obama’s Washington, medical specialists are slightly more popular than the H1N1 virus. Compared to bread-and-butter primary care doctors, specialists cost more to train and make more use of expensive procedures and technology—and therefore cost the government more money. Even so, the quiet war Democrats are waging on specialists is astonishing.

From Senate Finance Chairman Max Baucus’s health-care bill to changes the Administration is pushing in Medicare, Democrats are systematically attacking specific medical fields like cardiology and oncology. With almost no scrutiny, they’re trying to engineer a “cheaper” system so that government can afford to buy health care for all—even if the price is fewer and less innovative ways of extending and improving lives

Australia surprises with a rate hike, taking it’s policy rate up 25bp to 3.25% in response to stronger-than-expected economic conditions….  (Marketwatch.com)

Secret meetings to end dollar dealings for oil?  That’s what the Independent reports in an article generating big interest from currency and gold traders this morning.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) –

The New Zealand dollar rallied against the greenback for the tenth consecutive week, with the NZD/USD advancing to a fresh yearly high of 0.7161 however, the higher-yielding currency looks to be losing its footing as the economic docket for the following week is anticipated to show a 0.2% contract …

Source: New Zealand Dollar To Weaken as Growth Rate Contracts, Trade Falters

The Miami Herald reports that, “the aide to the chairman of the state’s Public Service Commission made more than 100 cellphone calls to Florida Power & Light officials in the past six months, in the midst of the company’s request to increase rates.”

“The records made public show that [William] Garner called either FPL lobbyist Jorge Chamizo or FPL attorneys Natalie Smith and Ken Hoffman 107 times between Feb. 23 and Aug. 20, after the company filed its request to raise customer rates.”

PSC chaiman’s aide called FPL officials more than 100 times [Miami Herald]

Florida CFO and Gubernatorial candidate Alex Sink tells the Palm Beach Post, “I’m opposed to the FPL rate increase. And FPL’s attempt to implement the rate increase before the Public Service Commission makes a decision is simply unnecessary and outrageous.”

Sink: FPL $900 million premature rate hike “outrageous” [Palm Beach Post]

Impatient with delays by the Public Service Commission, Florida Power & Light plans to institute their requested rate hike of more than $900 million without waiting for the PSC to vote.

As the Palm Beach Post reports,”Florida law allows the utility to implement the rate hike without the regulatory panel’s approval, but FPL would have to refund the difference to customers if the PSC authorizes a smaller increase. The regulatory board’s final decision is now scheduled for Jan. 11 because the rate case has run into overtime.”

PSC Chairman Matthew Carter today refused to grant FPL’s requests from earlier this week to make a decision by Dec. 4.

Instead, the PSC will keep its schedule of finishing its hearing Oct. 21-23, voting Dec. 21 on the total amount FPL can collect and voting Jan. 11 on how that increase will affect different types of customers, such as homeowners and businesses.

The Juno Beach-based company’s proposal would allow it to charge customers an extra $900 million a year beginning in 2010 and another $400 million a year beginning in 2011.

FPL to implement $900 million rate hike before PSC vote [Palm Beach Post]

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – Click on Title to access article details

Source: Euro Breaks 1.4800, British Pound Halts Three-Day Slide

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – Click on Title to access article details

Source: New Zealand Dollar To Weaken as Growth Rate Contracts, Trade Falters

Dollar weakness has been excessive…at least for now..

The overnight wave of dollar selling was mostly led by a fresh wave of buying in commodity currencies (rather than only rising equities) courtesy of +$70 in crude prices and hawkish comments from the Reserve Bank of Australia raising the possibility of rate hikes before a peak in the unemployment rate. Markets were already expecting the RBA to raise rates by 25 bps by year-end. Todays comments further boost the long term viability of the currency. But current US dollar weakness shows to have grown unsustainable considering the related expansion in risk appetite and the lack of unjustifiable data developments in the Eurozone, UK, Canada and New Zealand–and not to mention recent rhetoric from central bankers and finance Ministry officials to jawbone the latest strength in their currencies. Accordingly, we cannot ignore the flattening momentum in G-5 equities over the last 3 sessions, which is beginning to appear similar to the period prevailing in the first week of June.

The Dollar Index (basket against 6 currencies with EUR accounting for 57% of the basket) has tested the June lows at 78.31, a break of which would be the lowest since December. We should once again expect to hold at 78.25 — the 61.8% retracement of the rise from the 71.29 low to the 89.50 high. The fact that dollar weakness occurred despite a flat Tuesday close in the Nikkei underlines the prevalence of the sell-USD status quo, which was magnified earlier by hawkish comments from the RBA. But its time for a corrective bounce again.

Current price action suggesting unsustainability of further USD weakness reflected in the lack of follow-through in EURUSD, and GBPUSD, as market remains unwilling to close at its intraday highs (trend of past 7 sessions). Throughout last week, we addressed the failure by these currencies to close at or near their intraday highs, a recurring trend that began to suggest unsustainability in these rallies.

Thus, the equivalent of the 77.90 support in the dollar index translates roughly to $1.4320 in EURUSD resistance, $1.6570 in GBPUSD resistance, 0.8360-70 in AUDUSD and 0.6650 in NZDUSD, all of which are expected to hold into first week of August. Prior to this morning’s US data release we asked in our Intraday Market Thoughts (08:30 ET) “If equities hardly managed a rebound despite a sharp increase in US new home sales, then what would they do in case of renewed decline in S&P/Case Shiller home price index and US July consumer confidence”. Indeed, consumer confidence slumped to 46.6 in July, even at a time of rallying equities. We remind that the June 30th release of the June consumer confidence coincided with the intermediate peak in equity indices before a 6% decline occurred in the ensuing 2 weeks.

How Much Beyond Parity in S&P500/Gold Ratio?

One week after the S&P500/Gold ratio rose to parity, the equity index has garnered further ground to hit 1.03, its highest level since January. The daily chart below shows the rising S&P/Gold ratio to be a result of the superiority of equities vs metals in March. But as the Fed began purchasing US treasuries in April, inflationary concerns stemming from a potential debasement of the US currency prompted capital into metals. The broadening advances in global risk appetite of the past 4 months have prompted gains in both gold and equities, leading to a consolidation in the equity/gold ratio.

The only viable means for the equity/gold ratio to regain its 2008 highs (S&P/Gold regains 1.10), would be for the Fef to begin withdrawing liquidity (exit strategy via selling back treasuries) without upsetting equity markets. At the present macro juncture, this is highly unlikely for at least the next 2 months. Only when unemployment has shown clear signs of peak and GDP growth emerges from slowing decline to positive growth, would a rally in equities be sufficiently strong to overcome a tighter monetary policy.

For now, with equities being overstretched in terms of valuations and nonsupportive macro climate (excessive emphasis on cost-cutting rather than revenue growth), a gradual retreat in stocks and metals is the more likely course into end of Q3. But the ensuing retreat in gold may not breach below the 880 level considering the escalating fiscal imbalances in the US Federal Govt as well as the individual States. Thus, we expect the recent ascent in equities relative to gold to be nearing its peak, without exceeding 1.05 in S&P500 / Gold, 9.5 in Dow30 / Gold, 1.7 in NASDAQ100 / Gold and 4.8 in FTSE 100 / Gold.

For a multi-year study on the 40-year cycles in Equities/Gold ratio, see our Forex & Intermarket Dynamics Workbook

[tags]2008, AUDUSD, Australian Dollar, British Pound, Commodities, Euro, EURUSD, Federal Reserve, GBPUSD, GDP, Gold, Inflation, Monetary policy, Moving Average, New Zealand Dollar, NZDUSD, Rate hike, Risk appetite, S&P500, Stocks, U.S. Dollar, Unemployment[/tags]

Poor Oklahoma Natural Gas CEO John Gibson.  His 2008 salary was $825,000.  Include stock awards, incentive plans, and other benefits, and his compensation only amounted to $6,751,790.  That’s a nearly pathetic 800% over his base pay.

On a side note, ONG is seeking a $66 million rate hike.

I fully support this hike.  Without increasing profits, shareholders can’t buy Hispanic housekeepers  or diamond monkeys.  We can’t expect our beloved CEOs to live on anything less than millions.  They’re not Oliver.

The rate hike will increase our gas bill about $6 a month.  That’s only $72 a year.  Add that to electric bill increase, my property tax increase, homeowner insurance increase due to my supposed increased value property and utility rate increase, that’s around $400 more a year.  Compared to Gibson’s $6 million, that’s not much.

Since I’m not getting a raise this year due to tight funds, and a new office policy that will short me $8,000 this year, I had already planned to become poor.  What’s another $400 cut out of my budget?  To compensate, I’ve decided my life would become fun themes, such as Once-Week-A-Meal Mondays or Toothpaste Tuesdays.

If anyone should not have to suffer, it’s the CEOs.  Becoming poor would be a bigger drop for them than the measly small businesses that drive the economy.  Since their drop would be steeper, their drop would be more traumatic.  Let’s protect our CEOs.

I begin my new life on payday when I open all my bills.  I plan to call it Soil Myself Saturdays.

25 June 2009 is a major News Day – Major Legend and Musical Genius who roused major controversy in his later years – Michael Jackson unexpectedly passed away last night from cardiac arrest. Farrah Fawcett also lost her battle with cancer on the same day.

With Confederations Cup in South Africa Bafana Bafana team – ranked 77th in the world held their own against 5 time world champions Brazil, until the 87th minute, where they lost 1 – 0 to Brazil with a penalty kick. Now they’ll be battling with Spain for 3rd place. Nobody thought they’d get this far! Homeground advantage?

Then of course there’s the rate cut that didn’t happen and the electricity hike that did happen – I think the fat cats out there are just asking for a revolution. The recession is biting hard!

A recent article in the Palm Beach Post – “Boynton Beach Condos in over their heads after water hike” (Saturday, June 13, 2009) – has sparked renewed interest in the City’s recent water rate hike. Water use restrictions put in place by the South Florida Water Management District, and the way we use water; a faltering economy that has affected residential and commercial development; and a rise in the cost of the materials necessary to ensure delivery of pure, clean drinking water have all contributed to the need to revise the rate structure. The Utilities Department deferred approximately 20 percent of its annual Capital Improvement Program to later periods in order to minimize the impact of a rate increase. When compared with neighboring communities, even with the rate increase, water in Boynton Beach still costs less than in Lake Worth and Delray Beach.

The fact of the matter is that most utilities have suffered deferred maintenance due to the cheap price of water and wastewater, and they are now in a race to arrest the threat of deteriorated water and wastewater infrastructure and the community health risks that go along with that. Soon, Boynton may find itself at the bottom of the rates chart again. Palm Beach County Utilities has raised its rates since January of this year, and Delray is considering doing the same. In its May 18, 2009, issue, the Sun Sentinel, reported that water and sewer rates of “Hollywood – and possibly five other South Broward cities – will probably rise by about 29 percent later this year so the city can afford to refurbish its aging utilities system.”

Boynton’s new rates went into effect May 1. Much like a telephone, electrical or gas bill, the City’s typical customer bill is made up of two charges; the base charge and commodity charges. The base charge covers the costs associated with bringing the dial tone, power or gas to the customer’s home and, in the case of Boynton Beach Utilities, water to the customer’s home. Everyone pays the same base charge. What makes up the commodity charge in customers’ bills for all these services will vary according to the number of toll calls that are made, the amount of electricity and gas that are used, and the amount of water that flows from the tap.

In the new rate structure, the bill of a typical 5,000 gallon residential customer increased from $37.27 a month to $49.82, or approximately 33 percent. This breaks down to new base and commodity charges of $10.77 and $39.05, respectively. The commodity charges include a sewer base charge, charges for the amount of water and sewer actually used, a fixed storm water charge and a utility tax.

Typical average rates are as follows:

As one Post reader noted, the cost of the actual water is minor, but the cost of providing clean water to your faucet is determined by a number of different factors.

On Tuesday afternoon, May 26th, the Board of Directors of the Pasadena Chamber of Commerce considered the cost increases proposed by the Pasadena Water Department to stabilize the department’s financial position.

Rate increases proposed will increase the cost of water  by between 10% and 30% for most customers. While higher usage is charged more, there is no allowance made for conservation. Increases fall more heavily to commercial customers than residential ones, though the majority of water wasted is used in residential irrigation.

The Board;s position:

THE BOARD OF DIRECTORS OF THE PASADENA CHAMBER OF COMMERCE expresses significant reservations about the proposed increases in the cost of water as proposed by the Pasadena Water Department.

The Board is very concerned that water costs for commercial customers will rise by 10% to 30% on July 1, 2009, with additional increases proposed for July 1, 2010.

Concerns expressed very strongly by Chamber members are:

• Increases coming in the midst of a severe economic downturn may have far reaching negative impacts on our members and the local economy.
  • The impact could be cushioned by phasing increases in over multiple years, or
    
  • Lowering the percentage increase
• Pasadena Water Department needs to demonstrate efficiencies and cost reductions before asking for a rate increase.
  • Businesses are reducing operating budgets by 20% or more, Pasadena Water Department is seeking an increase to maintain its budget at present levels. While cuts are being made, they are not in proportion to budget reductions seen in private sector businesses.
• Commercial customers are paying a disproportionate amount of the increases, especially when it is mostly residential customers who are wasting water through irrigation.
  • Larger customers will pay significantly more for water while likely being unable to make substantial savings as they already have implemented applicable conservation measures. These customers are also unable to recoup the additional costs so likely will have to reduce costs in other areas such as workforce reductions.
  • There is no consideration given to those customers who have reduced their water usage by the requested 10%.

• An examination of budget-based water rates has been ordered by the Council and will be considered for implementation next year. The Council should perhaps consider all rate adjustments together, and forego the current proposal in favor of a comprehensive program that adjusts rates to achieve real conservation.

The Chamber Board recommends very strongly that the City Council reconsider the proposal to increase costs of water for commercial and residential customers.

The Board believes that the water cost increases should be phased in over a longer period of time so the economy has time to recover and customers have more chance to absorb the increases without feeling a significant negative impact or having to make cuts of their own to compensate.

The Board also strongly suggests the department be induced to make significant cuts in its own operational budget before seeking increases in revenue.  As an example, the department is proposing to add seven staff positions to enforce the water conservation strictures. The department has said they can do that by reallocating existing staff.  That leads the Chamber Board to conclude that there are currently seven superfluous employees currently on the payroll. While we can appreciate the desire to have enforcement, the Chamber Board is concerned that these “water police” will alienate customers. Those seven employees could likely save the department at least $500,000 in payroll and benefit expenses, if not more. It also seems a much simpler proposition to monitor water usage through billing using existing technology rather than adding enforcement staff.

The Board also requests that rate increases be adjusted so that those customer classes who are wasting water pay their fair share of any increases, and not have the burden of rate increases fall disproportionally on commercial customers, as is clearly the case with the current proposal. Those customers who cannot reduce usage beyond current levels should not have to pay increased costs simply because they use more water in their operations.

The Board also recommends that the City Council direct its representative on the Metropolitan Water District Board to advocate aggressively for cost reductions at the MWD, including reductions that may result from staffing level reductions and contract renegotiations.  Our representative should  principally act as an advocate for the interests of Pasadena and Pasadena Water Department customers, and that includes aggressively seeking reductions in costs of water for Pasadena.

Finally, the Board recommends the City Council look at restructuring all rates and costs all at the same time rather than increase costs incrementally. Water conservation, cost recovery and capital needs should be addressed comprehensively so the complete impact of the entire proposal can be weighed within the context of service levels, commodity costs and conservation efforts.

Those who have been around the Grid since last October will remember the uproar generated when Linden Lab announced with no fanfare that they planned to raise the purchase price on so-called “Openspace” sims.  The price would increase from $250 to $375 — an raise of 1.5 times — and nearly double the monthly maintenance cost, from $75 to $125.  The rationale given at the Big Blog was that these new land areas, which were meant as light-traffic green zones, were being far overused in terms of both traffic and prims.  Protest erupted quickly, and I commented on it in several articles on 10/28, 10/30, 10/31, 10/31 (second article), 11/3, 11/4, 11/4 (second article), 11/5 and 11/8.  (You will find links in these articles to many more.)

When Linden announced it was changing the decision, many were pleased that the Lab seemed to be listening, at least in part, to the affected Residents’ fears and anger.  The planned compromise price restructuring, however, still chased away many who saw themselves as unable to afford the planned increases even on a stepping-stone basis.  Most analysts of the Grid map noted a large falloff in the number of islands.  Linden Lab denied that there was a massive selloff, as reported by New World Notes.

Still, in an announcement on Tuesday in the Big Blog, the Lab has stated that they will lock down the price increase scheduled for July 1 on owners of their new Homestead sims, as long as the land was purchased prior to July 1.  Landowners who abandoned their Openspace regions may have the land reactivated for no charge.  The grandfathering will last for one year, until July 2010.  Anyone purchasing a Homestead on July 1 or later will pay the full price as stated in the November 5, 2008 Big Blog announcement.

Ari Blackthorne in Common¦Sensible suggests that this is a potential move to avoid another land abandonment or selloff, although he also sees it as a potential olive branch.  The comments on the SL Discussions is the usual mixed reaction, a combination of appreciation and sour grapes for various reasons, with a leavening of unrelated posts.  Generally, though, judging by the lack of traffic on the matter, reaction is muted.  It could be early days in the debate, but very little, either of palms or screeds, has been published.  (If I’m wrong, please leave links in the comments below.)  I do wonder if any great notice has been taken of the announcement.

For those interested in owning land in Second Life, the move seems to me a generous one as far as it goes.  Those who stayed in world and were bracing themselves for an economic shock in a month will get at least a year’s relief on the matter, and in their bill.  Former Residents who left for OpenSpaces have the opportunity to rebuild their areas in Second Life at little penalty, other than paying the $20/month boost from what they started out with.  What would be nicer would be a continued freeze on prices if company revenues allow next year.  Hopefully Jack and Mark will consider this as the next year rolls around.

As I mentioned over the weekend, stamps went up an additional .2 cents today.  Fine.  I’m over it.  It really never was the end of the world, just a slight nuisance.

But even nuisances have silver linings to it.  In this case, the release of the USPS’s super cute NEW wedding themed postage!

This almost makes the $333 we’ll be spending on stamps so much more worth it.   Almost.

Thanks Mr. Postman?

At its April 21 meeting, the City Commission will hold a second vote on a proposed ordinance that will implement a revised rate structure for drinkable water and wastewater charges, effective May 1, 2009. Press reports, however, about the amount of the increase and how it will be applied have been misleading.

Much like a telephone, electrical or gas bill, the City’s typical customer bill is made up of two charges; the base charge and commodity charges. The base charge covers the costs associated with bringing the dial tone, power or gas to the customer’s home and, in the case of Boynton Beach Utilities, water to the customer’s home. Everyone pays the same base charge. What makes up the commodity charge in customers’ bills for all these services will vary according to the number of toll calls that are made, the amount of electricity and gas that are used, and the amount of water that flows from the tap.

In the new rate structure, the bill of a typical 5,000 gallon residential customer will increase from $37.27 a month to $49.82, or approximately 33 percent; not 122 percent as has been reported. The 122 percent increase is in the base rate only, which is set to increase from $4.84 to $10.77. It is not on the entire bill. This breaks down to new base and commodity charges of $10.77 and $39.05, respectively. The commodity charges include a sewer base charge, charges for the amount of water and sewer actually used, a fixed storm water charge and a utility tax.

Typical average rates will be as follows:

Consumption/Mo                        Old                               New

3,000                                       $26.17                          $37.81

5,000                                       $37.27                          $49.82

7,000                                      $38.57                          $51.81

10,000                                     $43.38                           $57.57

15,000                                     $54.73                           $71.17

20,000                                     $66.08                           $94.77

Water use restrictions put in place by the South Florida Water Management District, and the way we use water; a faltering economy that has affected residential and commercial development; and a rise in the cost of the materials necessary to ensure delivery of pure, clean drinking water have all contributed to the need to revise the rate structure. The Utilities Department has already deferred approximately 20 percent of its annual Capital Improvement Program to later periods in order to minimize the impact of a rate increase.When compared with neighboring communities, even with the rate increase, water in Boynton Beach will still cost less than in Lake Worth and Delray Beach.

Dem out ah dem raas mind!

Why the hell in these hard economic times you want to rape the people of this country with a 25% increase on their light bills?

What the hell wrong wid unnoo?!

No one is getting a pay increase to deal with the massive rise in the cost of living, but we must take another one up the ass to have any sense of comfort in our homes, which, when you look at it, is no comfort at all.

Mullings in his pronouncements on the matter is only covering his ass for when the OUR approves the rate hike. Trying to seem sympathetic to the plight of the people, forgetting that we don’t all earn the millions guvament Ministers make a year.

Hell, the travelling allowance they make a year is a whole lot more than what many, many people earn. Add their various other business from which they make money, and you see where they will barely be affected by the high costs.

And you know they will soon give themselves another salary increase.

Just wait little it soon come out.

If the guvament had any concern for the people of this country they would see to it that the JPS doesn’t extract another pound of flesh from the already suffering people of this country.

Why should the people not in seats of power be required to tighten their belts but the powerful and the corporations can still gorge themselves like pigs?!?

…

The guvament has a 20% stake in the JPS, one, namely me, wonders how much, if any, of this increase would go to them as shareholders?

…

We suffer and guvament ministers are still running up the bills.

Any attempts through the Access To Information Act to get information related to this waste of money will be met with roadblocks, to keep their living high on our backs from getting out.

So tough luck!

…

sigh…

More reasons to use email and your Internet versus sending a letter.  More reasons to pay your bills on line.  More reasons to(fill in yours here).

The USPS will be increasing the stamp rate 2cents starting in May.  Here’s the article with other rate hikes as well.