Hot 5: Wyoming Supercomputer. Debt Burdens. New Nebraska Water Pipeline. Japan Substitutes Wheat for Corn. Sweet Potatoes. 2 Replies 1. The New Wyoming Supercomputer. This video explains the newly opened NCAR-Wyoming Supercomputing Center (NWSC), which provides advanced computing services to scientists studying a broad range of disciplines, including weather, climate, oceanography, air pollution, space weather, computational science, energy production, and carbon sequestration. It also houses a landmark data storage and archival facility that will hold, among other scientific data, unique historical climate records. I’m proud to say that the video was produced by a friend who is the Lila Films producer. 2. Cleveland Fed-Speak on Debt Burdens It is unfortunate that economics is an art and not just math, because today it has become quite the platform for politics and the public is confused as a result. Not so for households trying to balance a checkbook — that’s pretty straightforward. Owen F. Humpage and Margaret Jacobson authored “The Burden of Public Debt” (10.30.2012) for the Federal Reserve Bank of Cleveland. Besides the different schools of economics, how-to-deal-with-our-debt is the subject that is primarily being politicized, so I thought this direct report was timely. When crunch time comes, the facts will no longer lend themselves to politics. (Please go to the source to see charts and the rest of the article if you are interested.) ~~~~~~~ This Cleveland publication begins by pointing out that the IMF has issued warnings about the average ratio of public debt to GDP in the advanced economies that could damage future growth prospects. The U.S. public-debt burden will settle at 114 percent after 2015, according to the IMF. Debt burdens above 100, 85, or even as low as 40 percent are considered high ratios by the IMF. These same nations face aging populations which add to the burden. To the extent that public debts absorb private savings that otherwise would support private investment, long-term economic growth will suffer. Because advanced economies around the globe face large debt burdens, they will be competing for domestic and foreign savings to finance their public debts which will lead to substantially higher interest rates. Smaller financial inflows at high interest rates spell less domestic investment. Likewise, they are likely to initiate bigger exchange-rate movements. Central banks will have difficulty reducing their balance sheets since high interest rates increase the cost of funding public debt. The IMF calls the scenario “sobering”. The anticipated high public-debt burdens could also complicate central-bank efforts to reduce their balance sheets. High interest rates raise the costs of funding public debt. Their impact on government debt burdens can become profound if crowding out simultaneously slows economic growth. Under such circumstances, governments, intent on financing their debts at low costs, might exert pressures on central banks to keep monetary policy relatively easy. Inflation would then rise. The beneficial budget impacts, however, would only be transient because savvy financial markets would quickly demand interest rates to compensate for higher anticipated inflation. Nominal interest rates would eventually rise, leaving the real interest cost of financing the debt unchanged. The IMF, like many economists, views the advanced world’s fiscal prospects as “sobering.” To be sure, countries—including the United States—have reduced heavy debt burdens successfully in the past. They did so by shifting the noninterest portions of their budgets to surpluses while maintaining relatively strong economic growth. Repeating such efforts while coming off of the worse economic collapse since the 1930s and facing adverse demographic trends does seem sobering—to say the least. 3. A Historic Nebraska Water Project to Address Legal Compliances Medicine Creek in Nebraska Photo credit: Flickr CC via skw9413The Natural Resource Districts in central and southwest Nebraska have purchased a 19,518-acre farm in south-central Nebraska in order to idle 115 center-pivot irrigation systems. This will help to end decades-long water legal disputes for Nebraska including the Republican River Compact. It will idle farmland that would otherwise be used to grow corn, soybeans, and potatoes. The cost of the land purchase was $83 million. The seller was a group of out-of-state investors under the name “Lincoln Farm” and the farm was previously owned by a New Mexico and Texas cattleman. Nebraska irrigators will pay for the purchase. The land will be reseeded as rangeland. To accomplish the water obligations, a 17-mile pipeline will be needed to transport water to a Republican River tributary such as the Medicine Creek and to the South Platte River. After the engineering of the design is completed, it is expected that 45,000 acre feet of water will be added to the rivers in years when needed to meet compliances. 4. Japan is Substituting Wheat for Corn Japan, the nation which has historically imported the most corn from the U.S., started switching to wheat use as feed in the fall of 2011. When corn prices went up sharply this summer due to the combination of drought and ethanol policy in the U.S., the substitution became more pronounced as demonstrated in the above graph provided by the U.S. Grains Council. The USGC states: High global corn prices will cause reaction in the industry with people trying to mitigate high feed costs. This substitution is a great example of increasingly competitive situation facing U.S. corn. Once end-users and feed mixers become accustomed to a new ration, it can become a challenge to win back the market. 5. Sweet Potatoes. Photo credit: Flickr CC via NatalieMaynorFifty percent of the sweet potatoes in the U.S. are produced in North Carolina. The states of California, Louisiana, and Mississippi harvest most of the remaining fifty percent. One cup of cooked sweet potatoes contain 377 percent of our daily requirement of vitamin A. Many people are confused about the difference between yams and sweet potatoes. Nigeria leads the world in yam production, and yams are seldom found in the U.S. They contain only a meager amount of vitamin A, and are drier and starchier than sweet potatoes. From 1998 to 2008, the U.S. consumption of white potatoes declined by 14 percent whereas the consumption of sweet potatoes increased by 32 percent. Sweet potato fries have become very popular as a tastier, healthier option to traditional fries. There may be a great opportunity for continued growth in the sweet potato market share, which is still less than 5 percent of the potatoes consumed in the U.S.