Greece’s Threat to the European Economic Recovery

Desmond_Lachman_300x225   By Desmond Lachman

It is difficult to exaggerate the importance of the Greek government’s failure today to secure sufficient votes in parliament to choose a new president for the country. Since such a failure not only forces Greece to hold snap elections by the end of January, which could see the coming to power of a radical left-wing government. It also raises the real possibility that Greece will be forced to exit the Euro in 2015 that would be a major blow to the prospects of a meaningful European economic recovery.

On the basis of current electoral polls, the Syriza Party, headed by Alexis Tsipras, should win the parliamentary elections now scheduled for January 25. Judging by

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Bail-In Normalization

Re-Blog from Andy Sutton at Silver Phoenix 500

When the bail-in first ripped through Cyprus in the first part of 2013, I wrote a series of articles about the topic and examined some documents from the Bank for International Settlements, the FDIC and Bank of England regarding treatment of depositors and their funds. To sum it up as we begin the latest chapter in what will no doubt morph into the biggest swindle ever to impact humankind, let’s recap what exactly the bail-in is.

It was determined in late 2012 that there are certain banks that simply cannot be allowed to fail – at any cost. They were quickly labeled ‘Too big to fail’. I and others added that they were too big to jail too since this select group pretty much received

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Sound Money and the Ring of Truth

Guy Christopher   By Guy Christopher

We Americans no longer carry gold and silver money in our pockets and purses as our grandparents did during their lives. But we still carry the history, legacy and spirit of those gold and silver coins in our language – with more meaning than you might imagine.

“Sound money” has a clear message recognized for centuries around the world. It describes the musical, metallic ring of a gold, silver, or copper coin dropped on

 

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Effects Of Monetary Policies

Ed BugosGuest Post   By Ed Bugos

Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.” Dec 17, 2014; FOMC Statement

That paragraph is the only part of the growing FOMC statement that matters – aside from the sometimes entertaining dissenting votes, in

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Weekly Climate and Energy News Roundup #161

The Week That Was: 2014-12-20 (December 20, 2014) Brought to You by SEPP (www.SEPP.org)
The Science and Environmental Policy Project

Quote of the Week: The real problem in speech is not precise language. The problem is clear language. Paraphrased from Richard Feynman.

Number of the Week: 15, 17, 50 to 100 years?

The Game in Lima: The high-stakes energy and diplomacy game in Lima finally ended with little real damage to the industrialized world, in spite of the best efforts of delegates from Western Europe and the United States. The game is sponsored by the UN Conference of Parties

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Executive Review of Laws

cropped-bob-shapiro.jpg   By Bob Shapiro

The US Constitution is the highest law of the land.

The US Constitution does not include any other document – the Federalist Papers are NOT part of the Constitution, the past Supreme Court Decisions are NOT part of the Constitution, all the Laws and Executive Orders on the books are NOT part of the Constitution, and the Bible, Torah, and Koran are NOT part of the Constitution.

Only the exact words written in the US Constitution are the US Constitution. Everything else is just interpretation and subordinate to

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Could An Energy Bust Trigger QE4?

Peter-Schiff   Guest Post By Peter Schiff

In a normal economic times falling energy costs would be considered unadulterated good news. The facts are simple. No one buys a barrel of oil to display above the mantle. No one derives happiness from a lump of coal. Energy is simply a means to do or get the things that we want. We use it to stay warm, to move from Point A to Point B, to transport our goods, to cook our food, and to power our homes, factories, theaters, offices, and stadiums. If we could do all these things without

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New Study: Two Thousand Years of Northern European Summer Temperatures Show a Downward Trend

Re-Bloggedd From http://www.WattsUpWithThat.com

In a paper published in the Journal of Quaternary Science, Esper et al. (2014) write that tree-ring chronologies of maximum latewood density (MXD) “are most suitable to reconstruct annually resolved summer temperature variations of the late Holocene.” And working with what they call “the world’s two longest MXD-based climate reconstructions” – those of Melvin et al. (2013) and Esper et al. (2012) – they combined portions of each to produce a new-and-improved summer temperature history for northern Europe that stretches all the way “from 17 BC to the present.” And what did they thereby learn?

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Global Warming – Natural or CO2?

cropped-bob-shapiro.jpg   By Bob Shapiro

One of the focal points of Global Warming alarmism is the shrinking of polar ice. Since melted ice causes ocean levels to rise, they predict that tens of millions of people worldwide are in danger of being flooded out of their homes in years to come.

Since they blame CO2 for rising global temperatures, they want to shut down world use of fossil fuels, even though modern civilization depends on plentiful, affordable energy, which cannot be supplied by windmills and solar arrays.

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cropped-bob-shapiro.jpg   By Bob Shapiro

If the only tool in your kit is a hammer, pretty soon every problem starts to look like a nail. I’m not sure where I hear that, but I’ve seen that phenomenon in action.

I read an otherwise excellent recounting of the travails of Russia and its Ruble during the last few months, as their major exports, oil and gas, have plunged on world markets. As oil and gas prices have gone down, so has the foreign exchange value of the Ruble, by a comparable

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FED Policy & Government Spending

cropped-bob-shapiro.jpg   By Bob Shapiro

During the 1970s, inflation, as measured by the CPI, started to reemerge as a national problem. By the end of the decade, the US had “Double Digit Inflation.”

Paul Volker, the FED chief at the time, observed a steep rise in long dated Treasury Bonds, and slowly raised the short term Fed Funds interest rate, to keep the “spread” between the two rates reasonably close together. At the time, Volker was roundly criticized in the financial press for being “behind the curve” for being late consistently in raising the FED Funds rate.

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Doctor Suicides

cropped-bob-shapiro.jpg   By Bob Shapiro

I recently watched a rerun of House, a TV show about a hospital diagnostic team (great show – worth your time). In one episode, one of the doctors on the team inexplicably commits suicide.

Today, I read an article by a doctor, who just started following my blog, talking about physician suicide. I was very surprised to find out that doctors “die by suicide at twice the rate of their patients….The fact is each year we lose over 400 doctors to suicide—that’s like an entire medical school gone,” according to physician, Pamela Wible.

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Healthy Economy? I Don’t Buy It.

David Stockman   Guest Post by David Stockman

First comes production. Then comes income. Spending and savings follow. All the rest is debt…….unless you believe in a magic Keynesian ether called “aggregate demand” and a blatant stab-in-the-dark called “potential GDP”. I don’t.  So let’s start with a pretty startling contrast between two bellwether data trends since the pre-crisis peak in late 2007—debt versus production. Not surprisingly, we have racked up a lot more debt—notwithstanding all the phony palaver about “deleveraging”.  In fact, total credit market debt outstanding—-government, business, household and finance—-is up by 16% since the last peak—from $50 trillion to $58 trillion. 

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Skype Opens America’s Borders

Re-Blogged From: Tea Party economist

Beginning in 2015 and escalating from then on, skilled workers from all over the world will have the digital equivalent of green cards. They will be legal to hire. They will flood into America’s middle-class job markets.

The last major barrier is coming down: the language barrier.

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Weekly Climate and Energy News Roundup #160

The Week That Was: 2014-12-13 (December 13, 2014) Brought to You by SEPP (www.SEPP.org) The Science and Environmental Policy Project

THIS WEEK:

By Ken Haapala, Executive Vice President, Science and Environmental Policy Project (SEPP)

The Game in Lima: The high stakes game in Lima has ended, with little damage to the industrialized world, except for the costs of maintaining this international theater, where political actors can pompously ply their trade. The annual December meeting of the UN Conference of Parties (to be COP-21) to the 1992 UN Framework

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When Does Helping Actually Hurt

cropped-bob-shapiro.jpg   By Bob Shapiro

The US Cost of Living has gone up relentlessly since Eisenhower was President – sometimes faster and sometimes slower. Every Administration, whether Republican or Democrat, has seen a higher CPI reading than his predecessor.

Some categories have gone up faster than others, year after year. Much of the reason for these categories not only rising year after year, but rising more quickly than other categories, is that this is where government money has flowed.

Let’s look at a few examples. The cost of a college tuition and the cost

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Normalizing Relations With Cuba

It’s interesting that President Obama said that sanctions don’t work, as a justification for beginning the “Normalization” process between the US and Cuba, since he recently imposed sanctions on Russia, also in an effort to cause a foreign leader, Mr. Putin, to change his behavior (relating to Ukraine). Even so, I think this (Cuba) is one of the few decisions that Obama has made that I agree with. Please read this Re-Blogged piece from Ryan McMaken at http://www.Mises.org. -Bob

Cuban-US Relations: A Step in the Right Direction

The US government has moved toward normalizing relations with Cuba, including opening an embassy in Havana and allowing for some limited trade. The economic basics of the agreement include:

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Socialism vs Capitalism

cropped-bob-shapiro.jpg   By Bob Shapiro

A couple of commenters have made me aware that the terms I use may not have a standard definition. And, because my intellectual and emotional combination may differ from that of other people, sometimes the definitions are the least of the problem.

In this post, though I’ll touch on issues which certainly have both national and economic import, I’d like to do it from the perspective of gaining a better definition of a couple of terms and lessening the emotional content of our arguments.

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Disconnect Between Academia And The Real World

Guest opinion: Dr. Tim Ball

There are many parallels between the Jonathan Gruber story and what has occurred in climate science. Gruber used a computer model to produce justification for a US national healthcare system. This parallels the Intergovernmental Panel on Climate Change (IPCC) use of computer models produced to justify the need for international climate control. They both claim their models are accurate and solid as the basis for draconian policy changes. They both fail to understand that playing with models in a university requires they satisfy research and scientific standards. We don’t know if they do, because so much of

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On Assimilation

Guest Post by Doc Halliday

I would ask that you consider these organizations: American Association of Whites in Energy; the Association of White Psychologists; National Association of White Accountants; National Association of White Hotel Owners, Operators and Developers; National Association of White Journalists; National White Business Council, Inc.; National White Chamber of Commerce; National White MBA Association; National White Nurses Association; National Council of White Women, Inc.; National Coalition of 100 White Women; National Society of White Engineers; Organization of White Designers; United White College Fund; 100 White Men of America; National White Police Association; White Collegian; White Entertainment Television; Congressional White Caucus. I can list many more, but I believe this gives you the idea.

All of these organizations exist. Would you, or have you, joined one of

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Cliches of Progressivism

cropped-bob-shapiro.jpg   By Bob Shapiro

The Foundation for Economic Education (FEE) has a series of articles which together are referred to as “Cliches of Progressivism.” The latest in the series, Number 35, says “Government is an Inflation Fighter.”

They describe how, to throw observers of the track of why prices rise, Progressives have changed the definition of Inflation away from the Classical Liberal meaning of expanding a nation’s money supply, which

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November Housing Starts Didn’t Weaken – They Plunged

Guest Post by Lee Adler

Don’t believe everything you read in the mainstream media. Especially don’t believe anything in the financial news media until you’ve looked at the data yourself.  It’s no wonder investors are so often caught flatfooted in the markets. Financial “journalists” feed their readers and viewers a constant stream of misinformation and bad data.

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The CRomnibus Abomination Was Not ‘A Rare Bipartisan Success’

David Stockman   Guest Post by David Stockman

The rank economic cheerleading in the guise of “news” printed by the Wall Street Journal, Reuters and the rest of the financial press never ceases to amaze. But on the heels of Congress’ pathetic capitulation to Wall Street over the weekend you have to wonder if even the robo-writers who compose the headlines are on the take.

How could anyone in the right mind label this weekend’s CRomnibus abomination “A Rare Bipartisan Success for Congress”? Apparently,

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Why a Strong Economic Base is Important

cropped-bob-shapiro.jpg   By Bob Shapiro

Misguided government policies, going back generations, and from both political parties, have caused America’s industrial base to become hollowed out. These stupid policies are unlikely to go away any time soon.

Where once the US was the world leader in steel, aluminum, electronics, and many other industries, if imports stopped overnight, our country would not have the ability to replace those goods domestically. It would

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SPX Topping Valuations

Here at US-Issues.com, we deal with “Political Issues of Economic Importance.” Most Americans own stocks, either directly or through some kind of retirement plan. For them, whether stocks will be continuing to go up or will start to head down is of exceptional importance. The fact that market ups and downs are influenced greatly by government policy also makes this a political issue. Please enjoy this piece from Adam Hamilton.

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Guest Post by Adam Hamilton

The prevailing valuations in the lofty US stock markets are increasingly becoming a bone of contention.  Wall Street calmly asserts stocks are fairly valued or even cheap, since it has a huge vested interest in keeping people fully-invested.  But a growing chorus of dissenters is disputing that idyllic notion, warning that stock valuations are very high and portend great downside risk.  Indeed, topping valuations abound.

Since investing is all about buying low and selling high, the price paid for any investment is everything.  Buy good companies at cheap prices, and you’ll multiply your wealth over time.  But buying those very same good companies at expensive prices radically stunts future gains.  While cheap investments have great potential to

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$15 Minimum Wage – Now?

cropped-bob-shapiro.jpg   By Bob Shapiro

The current US economic environment of continuing Great Recession makes me wonder what those pushing the $15 Minimum Wage are thinking. Here are a few of the numbers I see:

The BLS reported 321,000 new jobs in November. That sounds like good news, but since 317,000 old jobs were lost, there were only 4,000 more Americans working than in October. (Private firm ADP shows

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What Issues Are Important?

cropped-bob-shapiro.jpg   By Bob Shapiro

The United Nations is taking a poll online (over 7 million votes so far) asking what issues are important. Countries with both developed and emerging economies, both men & women, various ages & education levels are represented.

What I found interesting is that, out of 16 categories, “Action Taken on Climate Change” finished dead last. Around the world, when people consider what really is important to them, they don’t think that Global Warming should be high on their lists.

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Green Quotes to Make You Angry

cropped-bob-shapiro.jpg   By Bob Shapiro

Two quotes from H.L. Mencken:

  • The whole aim of practical politics is to keep the populace alarmed — and hence clamorous to be led to safety — by menacing it with an endless series of hobgoblins, all of them imaginary.”
  • The urge to save humanity is almost always only a false face for the urge to rule it.”

And two more quotes on knowledge and politics:

  • When the search for truth is confused with political advocacy, the pursuit of knowledge is reduced to the quest for power.” -Alston Chase
  • The press should be not only a collective propagandist and a collective agitator, but also a collective organizer of the masses.” -Vladimir Lenin

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Tom Scott has gathered a hundred or so wonderful quotes. A few like

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Checking Scientific Theories

cropped-bob-shapiro.jpg   By Bob Shapiro

Once upon a time, before massive government funding, science involved a mix of guessing a theory to explain a natural phenomenon and doing a lot of grunt work to see if the first guy’s theory held up to testing.

To some degree, that still is true, however the theorizing part is more sexy, and more likely to gain grant money. Since the grant money

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Whither the Weather?

Guest Opinion: Dr. Tim Ball

Pick your trend.

The historical relationship between solar activity and temperature indicates the world is in a cooling trend. Meanwhile, governments prepare solely for warming, using manufactured academic and scientific justification. Regardless, of your position on the science of these issues, there is a strategy that is more logical in terms of both adaptation and preparation. Unfortunately, because global warming

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Oil Prices

cropped-bob-shapiro.jpg   By Bob Shapiro

I wrote recently about the big drop in the price of oil since last summer. Back in June, crude oil sold for $105 – today, the price is below $59 – per 55 Gallon barrel. That’s a drop of about 44% during the last 6 months.

On the supply side, that drop likely will cause some slowdown in the new US oil fields in North Dakota and Texas, which are dependent on

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Data Driven or Driven Data

Peter-Schiff   By Peter Schiff

There can be little doubt that data releases rather than experience or intuition are driving the economic conversation. This is perhaps a function of the disconnection that many people feel about an economy that they no longer understand. Rather than trusting their own eyes or their own gut to form an opinion, it’s much easier to grab a set of convenient numbers. The big question then becomes what numbers you choose to look at and which you choose to ignore.

While there are a great many types of economic data releases, issued by a myriad of public and private sources, two reports have risen above the rest in importance: the

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Are Americans Too Stupid – And Why?

cropped-bob-shapiro.jpg   By Bob Shapiro

A year ago, Jonathan Gruber as a consultant on how to pass ObamaCare – through not letting the public know what was in the Bill – called the American voter too stupid to know they were being misled.

Lately, this Gruber quote has gained widespread circulation, and some in the media are up in arms.

But, Gruber’s elitist thinking is a natural outcome of the Dumbing Down of America through a restructuring of the way that schools teach. This

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Official US National Debt Passes $18 Trillion

cropped-bob-shapiro.jpg   By Bob Shapiro

The Official US National Debt (that’s NOT including either Agency Debt or Unfunded Liabilities) just passed the $18 Trillion mark. If every American (including babies and 100-year olds) were working and earning the average US wage, that $18 Trillion would come out to about 2600 hours worth of debt – EACH!. That’s over 1 year and 3 months, at a 100% tax rate, to pay off just the official National Debt.

Of course, we don’t have that many Americans working. Dividing the debt by the roughly 100,000,000 Americans working, at the national

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Government vs Free Market Solutions

cropped-bob-shapiro.jpg   By Bob Shapiro

I have written several times about how we should allow the Free Market to provide services rather than give the job to a government agency, mentioning ObamaCare and Medicare specifically. I have said that the Free Market will produce better, more efficient, more innovative results.

Now, it’s not that the people working for the government are trying any less hard to do a good job, compared to their private sector counterparts. When I worked as an outbound mail manager at a large mail service

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The Mother Of All Bank Runs!

Bill Holter   By Bill Holter

Do you remember seeing old pictures of the Great Depression which depicted “lines?” There were two types, bread lines and also lines to the front doors of banks. While we don’t see any bread lines today, trust me, there are bread lines in every single state, and long ones at that. 

Nearly 50 million people in the U.S. survive on SNAP, EBT cards

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New Paper Faults WHO’s Willful Exaggeration

Re-Blogged from CFACT, by Indur Goklany

A new briefing paper from the Global Warming Policy Foundation examines the World Health Organisation’s recent report on climate change and finds that its estimates of future mortality from global warming are grossly exaggerated.

The WHO report predicted that climate change would bring about 250,000 extra deaths annually between 2030 and 2050, but relied upon absurd assumptions to

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What Does Sustainability Mean?

cropped-bob-shapiro.jpg   By Bob Shapiro

Today’s Sunday Boston Globe carried an “Ideas” piece on Sustainability. Aside from it having become a political buzzword, sustainability makes me cringe every time I hear the word because I haven’t seen a definition which makes sense to me.

From what I can tell, nature isn’t sustainable. It changes constantly on many time frames. A tree grows leaves in the Springtime, and flourishes through summertime. But then, as temperatures drop in the Autumn, the tree loses its leaves, and goes to sleep as Winter’s chill hits.

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A Case for Defunding Public Broadcasting

(Re-Blogged from Cato Institute, by Trevor Burrus)

Public broadcasting has been in critics’ crosshairs since its creation in 1967. Assailed from all sides with allegations of bias, charges of political influence, and threats to defund their operations, public broadcasters have responded with everything from outright denial to personnel changes, but never have they squarely faced the fundamental problem: government-funded media companies are inherently problematic and impossible to reconcile with either the First Amendment or a government of constitutionally limited powers.

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Is the US Economy Heating Up or Stalling?

cropped-bob-shapiro.jpg   By Bob Shapiro

There is a ton of economic data available in a constant flood. Some data is “official” while other information is from the historical experience of various analysts.

One indicator that I look at from time to time is casually referred to as Dr. Copper. With the metal being included

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The End of the Light Bulb

cropped-bob-shapiro.jpg   By Bob Shapiro

In the late 1870s, several inventors were working on, and received patents on, several versions of the incandescent light bulb. Edison’s bulb became the standard because of his many other inventions, which allowed for use by the masses. Though other inventors had created electric lighting as far back as 1800 (the arc light), his was the first

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Why America’s Shale Oil Boom Could End Sooner Than You Think

Re-Blogged from Forbes, By Christopher Helman

America’s oil producers are nervous. They’ve had a great run the past few years. Domestic oil production is up 43% since 2008 to 6.5 million barrels per day, the highest level in decades. The majority of that 2 million bpd jump comes out of the two most successful new oil fields, the Bakken and the Eagle Ford. To develop these and all the other fields nationwide, the top 50 operators invested $186 billion in 2012, according to Ernst & Young. That was a record level of spending, up 20% over 2011.

You’d think that with drillers getting better, honing techniques and driving down costs, that a 20% increase in investment would bring about a more than commensurate

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Oil and World Politics

cropped-bob-shapiro.jpg   By Bob Shapiro

Oil prices are falling. Since last summer, when crude oil was selling for $106 a barrel, black gold has fallen almost 40% to $66 and change. Is this good or bad, and what (who) is causing it?

I’ve been reading reports that the Saudis and OPEC have been ramping up production for several months, and they most recently refused to cut production to support the price. The reason being suggested is that they want to kill off competition from the oil sands industry and allow for future monstrous profits.

While there is a certain pizzazz that goes with this reasoning, it defies all economic logic. The Saudi oil costs next to nothing (yes, literally) to produce. If the are forcing the price down, then they and OPEC are foregoing Billions of Dollars of profits now.

OPEC

Their hope would be that the competition would be utterly destroyed. However, if oil sands production stops, what would keep it from restarting once price recovers? Nothing! Yes, the ownership of the wells might change hands due to bankruptcy of some companies, but the new owners already would have functioning wells that would need the figurative switch to be turned back to “ON.”

The Greens and their democratic vassals may be anti-energy, but how would making already cheap fossil fuels (compared to Wind and Solar) even cheaper be good for the Greens. As we’ve seen, when the price goes back up, so does oil sands production.

There are reports that Russia is being devastated by the low oil prices, since they rely so heavily on resource exports, chiefly oil and gas, to earn hard currency to pay for their imports. Again, it sounds plausible.

But, several facts show this is more nonsense. Recently, the Russian Ruble has fallen 35+% since last summer, so in Ruble terms, the Russians are getting the same price for their oil.

The Russians don’t need the “Hard” Dollars anyway; they have $165 Billion in treasuries sitting in their foreign reserves, which they’d like to get rid of. (They tried, and maybe that’s the real reason for US sanctions against Russia, and not Ukraine, which they used to own.)

And again, they don’t need the Dollars because they have been running massive trade surpluses in recent years. Maybe their balance of payments will shift closer to neutral, but things are much different than they were when the Soviet Union was run into bankruptcy over oil.

Russia recently inked a deal with Europe mostly for natural gas to keep the people in the Eurozone from freezing to death this winter, even though Europe is participating in the US declared sanctions. And Russia also inked a deal to send China the oil that they need.

Russia & China

Much of these exports either are being priced in Gold, or the Dollars paid are going for immediate purchase of Gold. Again, Russia hates the Dollar.

China definitely benefits from lower oil prices, since it imports most of the oil it needs. Aside from the Russian oil pact, China has been active making deals for natural resources all over the globe. It’s not unreasonable to think that an agreement with the Saudis included an incentive for them to allow oil prices to fall, damaging the United States.

The Chinese have been buying Gold with both hands for a decade, and various estimates put their holdings at perhaps 10,000 tons, which is 2,000 tons more than the (unaudited since 1954) US stash of Gold. Their recent bilateral agreements on trade specifically have avoided the use of the US Dollar.

The time may be here when the Chinese are ready, willing and able for the Renminbi (yuan) to replace the US Dollar as the world’s premier reserve currency. Explicit Gold backing for their money would improve their credibility, and probably will happen within 5 years.

When US Dollars cease being the reserve currency, and world trade starts to be denominated in Renminbi, Gold, or local currencies, then the $3+ Trillion of US Dollars held as foreign reserves by foreign Central Banks becomes much less (completely?) unnecessary.

A rush to sell Dollars around the world would herald a very difficult situation for the US Dollar and for the domestic US Economy. This appears to be inevitable, and we need to put our country’s economic house in order now, to moderate the bad effects as much as possible. Chief among what the US needs to do is:

  • Bring federal spending into balance (or surplus) with revenues
  • Allow the Free Market to set interest rates so that the real Price of Money can be used in business decisions
  • Stop shooting ourselves in the foot with stupid anti-energy policies and other over-regulation, which hinder US economic growth.

Mini-Milestone – 100th Post

cropped-bob-shapiro.jpg   By Bob Shapiro

This is the 100th post to US-Issues.com. Most of the posts are original, plus about 10 reblogged posts. I’ve been active for about two months and have gained a small, but respectable size, following with about 1150 page views so far.

Comments have been received, although interestingly, most of these come through my personal (Bob Shapiro) Facebook page. So far, there have been no flames (Thanks!), and several back and forth comments.

Action Item

One feature that is included on the web site, is a listing of all the “Action Items” that I’ve called for, including a few US Constitutional Amendments, a few Congressional Rules changes, and a lot of new laws. These Action Items have dealt with reducing the size of our federal government:

  • Balance the Budget & Repay the National Debt
  • A Dollar Cap on Federal Spending
  • Eliminating Agencies like EPA, FDA, & the FED
  • Bill Max Length (50 pages) & Legislator MUST know what’s in the Bill in order to vote yes
  • Phase out various Entitlement Programs like Food Stamps, Medicare, ObamaCare, & Social Security
  • Stop Debasing the Dollar & Return to Silver and/or Gold Standard
  • Deregulate industries like Food, Drugs, Airline, & Energy
  • Stop Green Anti-Energy Programs like ending subsidies on Wind & Solar, prohibitions on fossil fuels, and CO2 CAGW Nonsense
  • Oversee & Correct Statistical Standards like CPI Manipulations
  • Stop Bailouts & Bail Ins allowing Too Big To Fail businesses to go into bankruptcy if they’re broke & incompetent

Issues

I’ve dealt with a broad range of issues, sticking mostly to our Tag Line, “Political Issues of Economic Importance.” I’ll try to keep giving you more good, thoughtful pieces that you’ll be happy to read.

Thank you for reading my Blog!

WSJ Reports CPI Under-Reporting

cropped-bob-shapiro.jpg   By Bob Shapiro

I’ve mentioned several times that our government under-reports the rate of rising prices. Prices are up about 30 times (that’s not 30%) since the Federal Reserve (FED) received the monopoly to print paper dollars in 1913. (The FED has printed well over 100 times as many dollars, but as innovation increases productivity, it keeps prices from rising as much as monetary debasement would call for.)

www.ShadowStats.com has a pair of alternate measures to the CPI. One is calculating today’s numbers using the way they would have been calculated in 1990. That shows the CPI rising at around a 5.5% annual rate, versus the reported CPI figure of 1.8% over the last 12 months.

ShadowStats other calculation uses the BLS methodology from 1980, which shows price inflation of 9.5% since a year ago.

CPINov 14

I read on Yahoo! This morning of a Wall Street Journal report (paywalled) also indicating that the CPI grossly understates price inflation. (See Yahoo!’s article: Fed says ‘no inflation’ but middle class reality says otherwise.)

But, whether you accept the “Official” CPI numbers, prefer the WSJ’s study results, or think that one of ShadowStats’ inflation recaps is correct, all of them show prices going up year after year, decade after decade, at least since Eisenhower was President.

In a Capitalist country (that’s what our Founding Fathers originally set up) using Free Markets, prices should decline continuously as new and better ways of doing things improves productivity.

With over-regulation and other government tinkering with the US Economy, productivity gains will be slower, but prices still should decline over the long haul.

Monopoly Money

It is only with the FED’s continuous misuse of its role as the nation’s paper dollar printer, only with the FED’s debasement of the currency, only with the FED’s counterfeiting of Americans’ store of value, that prices can go up all the time.

Action Item: End the FED!

Weekly Climate and Energy News Roundup

(Re-Blogged from http://www.WattsUpWithThat.com, from http://www.SEPP.org)

The Week That Was: 2014-11-29 (November 29, 2014) Brought to You by SEPP (www.SEPP.org) The Science and Environmental Policy Project

THIS WEEK:

By Ken Haapala, Executive Vice President, Science and Environmental Policy Project (SEPP)

National Energy Policy: “You can accurately judge the viability of a potential energy source by the attitude of green activists to it. If they attack it, it is viable. If they defend it, it is non-viable.” The preceding quote is from John Brignell, a pioneer in scientific measurement. He has long commentated on the energy policies of the United Kingdom (UK) and the European Union (EU), pointing out that politicians do not comprehend the long-term consequences of their actions, which may extend for

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Let’s Have MORE Airline Deregulation

cropped-bob-shapiro.jpg   By Bob Shapiro

The Jones Act of 1920 limited the access to US coastal facilities to US Flag merchant marine ships. The ship had to be US, the captain had to be American, and other similar restrictions kept foreign operators out of US waters. It was a kind of Maritime Acts (which was one reason for the American Revolution), but in reverse. Ugh!

In the 1940s, this doctrine was extended to air carriers, and formalized into law. The US could agree to bilateral “You can fly here, if your country let’s our planes fly there” deals. The emerging commercial air industry was a privilege only the rich could afford.

The 1978 Airline Deregulation Act greatly expanded options for competition on domestic US routes. Multiple carriers on routes became usual, and prices came down so that air travel by Americans of modest means became commonplace.

Airline Passengers

As wide-body jets and lowered fares allowed much higher passenger-miles to be flown, consolidation in the industry began. Today four major airlines split most of the business: American/US Airways (21%), Delta (16+%), United (16%), and Southwest (15%).

While there are a handful of small no-frills lines, these have tended to handle short flights to smaller cities as partners to the majors’ Hub & Spoke systems. Competition is negligible with fares between airlines on the same routes generally offering almost the same fares, amenities, and extra charges.

While air carriers from other countries are allowed to fly to the US, they may not fly between US cities. It is time for the Airline Industry to be deregulated further, giving the flying public the benefit of greater competition.

Greater competition would mean lower fares. It would mean more innovation. It would mean that more US cities would be served. Current policy which has been in effect for many years, through both Parties’ Administrations in Washington, DC, needs to be changed.

Protectionism benefiting the airlines should end so that consumers could benefit from the greater competition. All that should be required is that any airline which flies to or within the US, should meet the same rules, the same standards, regardless of whether the airline is owned by a US company or an Asian company or a European country.

Airline Competition

Action Item: Remove all restrictions on which airline or which country’s airlines may provide commercial service to or from, or within the United States, so that competition on an even basis will be encouraged, which will benefit American consumers.

Bail-Ins and the Next Crisis

cropped-bob-shapiro.jpg   By Bob Shapiro

In 2007, a Financial Crisis, initially largely involving Sub-Prime Mortgages, hit the US. Many large banks and other financial institutions were on the brink of bankruptcy, and a few slightly smaller ones did fail.

We’re told that the FDIC exists to protect depositors, but the FDIC’s fund is so small, at $25 Billion, compared to depositor’s money at risk, at $9,283 Billion, that it’s considered a joke within the industry.

FDIC Deposits & Derivatives
Sub-Prime Loans, then also called Liar Loans, were packaged, using Fannie & Freddie guarantees, into Collateralized Debt/Mortgage Securities, and sweetheart deal ratings were extorted out of the three major ratings agencies. These, together with other derivatives, totaled almost $300 Trillion of bets made by the various financial institutions.

These derivatives were marketed widely in the US, and also in Europe. When the underlying Sub-Prime mortgages started defaulting, the prices on CMSs plunged – this is what almost crashed Europe!

To try to prevent the “End of the Financial World as We Know It,” the US Government embarked on massive bailouts of the stupidly run, “Too Big To Fail” institutions, at taxpayer expense. These bailouts have never ended, and the US FED added ZIRP (Zero Interest Rate Policy), QE1, Operation Twist, QE2, and QE3 on top of the bailouts  .

There has been something of a public uproar over the bailouts, so the idea of a “Bail-In” was tried out in Cyprus a few years ago. A Bail-In is where the law allows depositors to lose their money before others. Deposits are “converted” into stock of the institution so that it can continue mismanaging its affairs without interruption. That stock loses value very quickly.

Since the Bail-Ins “worked” well in Cyprus, the practice has been adopted by most Western governments, including here in the US. So, if you have money in an account with one of the Too Big To Fail banks, and there’s another financial crisis, you’re going to lose part or all of your money! Here’s a list of the 29 banks in this category worldwide:

Too Big To Fail Banks

The Sub-Prime loans fell from about $125 Billion in 2007 to $60 Billion by 2009, so everything is under control now, right? No, not right!

The FED’s ZIRP has caused yet another bubble to be blown, this time for Sub-Prime auto loans. These loans have rates around 20%, with loan amounts as high as 115% of the car price. With these, Sub-Prime loans are back up to $120 Billion.

And now, Fannie & Freddie are starting to rev up their loans again, with down payments as low as 3% of equity. Sub-Prime is likely to be a problem again soon.

And all those derivatives, in the 100s of Trillions, are still weighing on the liability side of the Big Banks. With Bail-Ins protecting these financial institutions with your money, you may want to look at that list again and make sure your accounts are elsewhere.

But, you still aren’t in the clear. If you have a pension, there’s a good chance that all your money in the pension fund may be invested in debt of these banks. It’s your money so it’s up to you to find out and tell your pension to stop.

Action Item: Bail-Ins violate the fiduciary responsibility of the financial institutions which benefit at depositors expense.

  • Congress should pass a law, and the President should sign it, outlawing the practice known as Bail-In, returning to the use of bankruptcy proceedings. Bankruptcy should disqualify the managers from continuing at the helm of the institution.
  • Depositors should be returned to the head of the line of who gets their money first in case of a bankruptcy.
  • Managers of financial institutions which use high leverage or risky investments should be held personally liable if those investments go bad.
  • No business should be considered Too Big To Fail. If incompetent managers are allowed to stay in charge as they run the business into the ground, the business should be allowed to go into bankruptcy, an the owners should bear the loss.

The Swiss Vote and Gold & Silver

cropped-bob-shapiro.jpg   By Bob Shapiro

I wrote a couple of weeks ago about the Swiss referendum on whether their Central Bank should be required to:

  • Increase their holdings of Gold, as a percentage of reserve assets, back up to 20%, from the current roughly 7%
  • Repatriate Swiss Gold back to Switzerland from various Central Banks in other countries, where the Swiss Gold is being held
  • Never sell Swiss Gold in the future.

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