Tesla Motors Quietly Expands

Tesla Motors is quietly about halfway from being a boutique auto maker selling a few hundred cars to being a major player with a U.S. market share over 1 percent. That analysis might have seemed like a stretch before the company’s latest earnings report, but that report this week pointed to a pace of sales roughly equivalent to a 0.25 percent U.S. market share, a big jump from the previous quarter. Future events that are easy to predict can be expected to at least double the company’s appeal: an expanded recharging network, a redesign of the most popular model for which a price cut is promised, more sales and service locations, and two or three years out, a new model with a less compact design. Unexpected events on the horizon may be just as significant, such as a spike in gasoline prices or a technological advance that makes the car battery smaller or lighter. If there is a faster increase in demand for Tesla’s electric cars, the automaker is in a position to meet it. It is the owner of a large, mostly vacant factory that, combined with its robotics-driven approach, looks sufficient to take it, perhaps just as quietly, to a market share above 10 percent. That can happen, of course, only if events intervene to give electric cars some new advantage over gasoline-burning cars. But, given the recent history of troubles in Detroit and in the oilfields, along with the steady march of changes in electric technology, such a turn of events would not be too surprising.

FDA Warns on Acetaminophen Danger

Ever since people have been using acetaminophen as a pain reliever, the drug has come with the caution that using too much of it can damage the liver. In recent years more careful study has found that acetaminophen is more toxic and in lower doses than previously recognized. Acetaminophen is now recognized as the predominant cause of liver damage and liver failure. The FDA’s new guidance for prescription drugs recommends limiting the dosage to 325 milligrams per capsule:

FDA recommends health care professionals discontinue prescribing and dispensing prescription combination drug products with more than 325 mg of acetaminophen to protect consumers

FDA is recommending health care professionals discontinue prescribing and dispensing prescription combination drug products that contain more than 325 milligrams (mg) of acetaminophen per tablet, capsule, or other dosage unit. There are no available data to show that taking more than 325 mg of acetaminophen per dosage unit provides additional benefit that outweighs the added risks for liver injury. Further, limiting the amount of acetaminophen per dosage unit will reduce the risk of severe liver injury from inadvertent acetaminophen overdose, which can lead to liver failure, liver transplant, and death.

Most U.S. cases of liver failure are linked to accidental overdoses of acetaminophen, but even recommended doses of acetaminophen carry a slight risk of serious liver damage or liver failure. It is probably safest to assume that every dose of acetaminophen causes liver stress that could reduce liver function, increasing body toxicity and potentially contributing to a wide range of other illnesses. For such a common drug, this is a significant public health problem. The FDA says it plans to withdraw approval for prescription drugs that contain more than 325 mg of acetaminophen, and it will address over-the-counter drugs separately. It is the prescription drugs that pose the greatest danger of overdose, though: patients sent home in a post-surgical fog may not read the fine print on the prescription pain relievers they are taking. It may not occur to them that the drugs contain acetaminophen at all.

Why Coal Disasters Occur So Frequently

This weekend there is a new reminder of how toxic coal can be. A coal-processing disaster has a quarter of West Virginia worried about the water supply, as the water is temporarily too toxic to touch. The chemical in question is used every day to produce what is euphemistically known as “clean coal.” As coal is cleaned, the chemicals and contaminants are simply left behind in the mountains, where it hoped they will stabilize before they do too much harm. That depends, of course, on containment, and in an industry that is no longer cost-competitive with solar for electric generation, the money for reliable containment just isn’t there. As the cost of solar declines, the financial pressure on coal increases, so that we can expect this kind of large-scale coal disaster to recur on a yearly basis, in spite of talk about the need to improve. As spills occur, most of the costs are borne by the public, and the costs may occasionally be partly remediated by government. It is a perverse and roundabout way of subsidizing coal-generated electricity.

Update, January 17: To underscore the marginal financial condition of the coal business, the coal-washing chemical factory at the center of the latest disaster filed for bankruptcy today, saying it is unable to pay its operating expenses. Freedom Industries filed for bankruptcy reorganization under Chapter 11, but it is hard to imagine how it can escape liquidation.

This Week in Bank Failures

Janet Yellen is taking some pains to dispel the assumption that the Fed is a branch of Wall Street. After “Helicopter Ben,” it may take a couple of years before Wall Street accepts the sobering thought that the Fed will not come galloping to its rescue after its next misadventure.

New mortgage rules that go into effect today are meant to ban the most common forms of high-risk home mortgage loans. Bank underwriters are required to find that a borrower will have the earning ability to make all the payments required by a home mortgage. This includes any possible interest rate increases and balloon payments, details that were often overlooked when underwriting mortgage loans before 2008. Underwriters are now required to document an applicant’s earning ability and credit history. There are also rules about mortgage disclosures and marketing practices. Loan officers, for example, can no longer receive bonuses for steering borrowers toward high-risk loans. None of these new rules should have any obvious impact, as they are not so tight as mortgage underwriting has become since 2009. However, under the ability-to-pay rules, some real estate speculators might find financing harder to come by. The one new rule that might have an immediate impact is a limitation on closing costs and points which now cannot exceed 3 percent of the loan’s original principal. This limit will affect refinancing more than it affects home purchases. If upfront fees and costs for a $50,000 loan are limited to $1,500, that may make banks a little less eager to make those loans.

U.S. unemployment has been falling as more workers drop out of the job market, but unemployment has stayed near record highs in Europe, with new records for unemployment set in Greece and in the eurozone.

Banks will be filing new financial reports in the coming weeks to cover the fourth quarter of 2013, and we can watch for bank closings among those banks whose new balance sheets show a deterioration in asset quality and liquidity. However, with so much private capital flowing into banking, the pace of bank failures is likely to continue to decline.

Dry January

Giving up alcohol in January has become a recognized trend in Britain, with Guardian reporting on a recent survey:

Quarter of Britons give up alcohol in January, says poll

What I find most interesting is that people have saving money on their minds, and that it is a broad trend:

The majority – 56% – said they were "going dry" to save money . . . 19% said it was because "no one else drank in January".

When the popular image of a product makes people think of saving their money, that can be an early sign of a long-term downward trend. Purchasing habits change over a period of time, but changes may be inevitable after product perceptions have changed.