Dr. Mark Thornton is interviewed on the RT program, “Boom Bust“. He discusses malinvestments stimulated by artificially lowered interest rates.
Mark Thornton on RT: Malinvestments and Interest Rates
By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com
Legendary businessman Warren Buffet has waded into the climate issue, with his latest letter to Berkshire Hathaway investors. Buffet seems to believe climate change is likely to be a serious issue – but he is cautious about this belief. Naturally everyone is interpreting Buffet’s words to suit their own position.
I am writing this section because we have a proxy proposal regarding climate change to consider at this year’s annual meeting. The sponsor would like us to provide a report on the dangers that this change might present to our insurance operation and explain how we are responding to these threats.
It seems highly likely to me that climate change poses a major problem for the planet. I say “highly likely” rather than “certain” because I have no scientific aptitude and remember well the dire predictions of most “experts” about Y2K. It would be foolish, however, for me or anyone to demand 100% proof of huge forthcoming damage to the world if that outcome seemed at all possible and if prompt action had even a small chance of thwarting the danger.
This issue bears a similarity to Pascal’s Wager on the Existence of God. Pascal, it may be recalled, argued that if there were only a tiny probability that God truly existed, it made sense to behave as if He did because the rewards could be infinite whereas the lack of belief risked eternal misery.
The US is 5 months into Fiscal Year 2016, and the 2016 Presidential nomination process is moving along quickly. It looks like we may know who the two Big Party candidates will be within just a few months.
Even so, it appears that the candidates, and the “question asking” media have been ignoring one of the economic elephants in the room. I’m referring to the eternal US Budget Deficit, and the National Debt it causes, which are destroying our once great country.
By Patrick J Buchanan – Re-Blogged From http://www.LewRockwell.com
In a Hillary Clinton vs. Donald Trump race — which, the Beltway keening aside, seems the probable outcome of the primaries — what are the odds the GOP can take the White House, Congress, and the Supreme Court?
If Republicans can unite, not bad, not bad at all.
Undeniably, Democrats open with a strong hand.
There is that famed “blue wall,” those 18 states and D.C. with a combined 242 electoral votes, just 28 shy of victory, that have gone Democratic in every presidential election since 1988.
The wall contains all of New England save New Hampshire; the Acela corridor (New York, New Jersey, Pennsylvania, Delaware and Maryland); plus Michigan, Minnesota, Illinois and Wisconsin in the Middle West; and the Pacific coast of California, Oregon, Washington — and Hawaii.
By Anthony B Kim – Re-Blogged From The Heritage Foundation
America’s declining score in the index is closely related to rapidly rising government spending, subsidies, and bailouts.
Crude Oil prices broke down from $100+ about a year and a half ago. Since then, there has been minimal fallout in the US oil patch, mostly due both to price guarantees built into many contracts and to the availability of loan money.
As the price of oil still lingers in the $30 range (today at $33+), and as all that borrowed money carries interest which must be paid, oil shale producers will start to be pinched more and more this year.
Some shale oil companies will close up shop this year, and some banks with huge oil company non-performing loans also will go bankrupt. And lets not forget the collateral damage to quite a few others businesses whose sales depend on the soon to be out of business companies.
Production will be lost, at least until the price of oil rises a bit. Then there are producers which will run their wells until they’re dry (shale oil wells have a relatively short producing life span). If oil prices remain low, these producers will not replace production right away, so some additional supply decreases will occur.
The cutbacks over the next year or two will be offset by new supply elsewhere, for example Iran as they resume selling oil following the end of sanctions.
So, what could cause oil prices to rise, saving the bacon of the marginal US shale oil producers?
One possibility, both directly and indirectly, is a reversal of the soaring US Dollar, which rose over 20% during the 2nd half of 2014.
Without that rise in the Dollar, oil might be 20% higher than today, or a little over $40 a barrel.
The rise in the Dollar itself was caused in part by the Yen carry trade. As the Japanese Economy foundered, and as the Central Bank kept interest rates significantly lower than the FED did here in the US, speculators were able to borrow in Yen, using the Yen to buy Dollars. Those Dollars bought Treasuries and US stocks, helping to explain rising markets last year.
US markets rose to unsustainably high PE Ratios, at the same time that the rising Dollar was hurting corporate profits. US multinationals’ overseas profits, while still growing in the local markets, started falling in US Dollar terms. The “strong” Dollar also made US domestic companies less competitive with imports, cutting sales and profits.
High PE Ratios, together with falling profits, are a recipe for a severe pullback (50% or more) in US stocks. Falling expected returns on all that borrowed money likely will cause considerable unwinding of much of the Yen carry trade. As the Dollars are withdrawn from US markets to buy Yen to repay the loans, the Dollar will fall.
Assuming the Congressional Republicans keep their word and refuse Mr Obama’s proposed $10 a barrel oil tax, I expect the falling Dollar to raise the oil price to make many proposed shale projects profitable.
So, for 2016, expect:
All this does not factor in any additional craziness coming out of Washington (and the FED), or collateral damage from a market crash. We certainly could see quickly rising unemployment and CPI numbers, even after the hacks in the agencies massage the numbers.
Re-Blogged From The Heritage Foundation
The Blueprint for Balance provides detailed recommendations for the annual congressional budget. Congress needs to drive down spending – including through reform of entitlement programs – to a balanced budget, while maintaining a strong national defense, and without raising taxes.
While Congress cannot solve everything at once, it can and must take opportunities through the annual budget and appropriations process to make a down payment of putting the government’s finances back in order. They can do this by immediately reducing discretionary spending and taking meaningful steps to reduce mandatory spending by reforming those programs.
By Andrew Follett – Re-Blogged From http://www.CFACT.org
Cheap coal, oil and natural gas are outcompeting wind and solar power despite massive government support, and environmentalists are really upset about it.
“I believe low energy prices may complicate the transformation, to be very frank, and this is a very important issue for countries to note; all the strong renewables and energy efficiency policies therefore may be undermined with the low fossil fuel prices,” Fatih Birol, the executive director of the International Energy Agency (IEA), told reporters in Brussels.
Americans are spending less on energy than they have at virtually any other point in recent history. Energy prices dropped by 41 percent in 2015 due to innovative new techniques to extract hydrocarbons, like hydraulic fracturing and horizontal drilling.
Environmentalists are also terrified that the rise of cheap conventional energy will hurt wind and solar.
By John Rubino – Re-Blogged From Dollar Collapse
It appears that Great Britain might actually do the until-recently-unthinkable, and leave the European Union. The reasons for this dramatic break-up are many, and can be Googled easily enough. For our purposes, suffice to say that traders are scrambling to figure out what this means for the British pound, and they’re not liking the answers. Here’s a quick look at the recent foreign exchange action:
(MarketWatch) – The pound has been clobbered this week, driven close to seven-year lows against the U.S. dollar — and analysts don’t see any catalyst in sight to turn that fall around.
The pound on Tuesday dropped below $1.39 against the greenback for the first time since March 2009, hitting an intraday low of $1.3879, according to FactSet. Sterling versus the dollar — known as “cable” — has lost roughly 3.5% since Friday, when the floodgate of debate surrounding the potential exit of the U.K. from the European Union burst open.
By John Browne – Re-Blogged From http://www.Silver-Phoenix500.com
On February 16th, The Washington Post printed the article, “It’s time to kill the $100 bill.” This came on the heels of a CNNMoney item, the day before, entitled “Death of the 500 euro bill getting closer.” The former cited a recent Harvard Kennedy School working paper, No. 52 by Senior Fellow Peter Sands, concluding that the abolition of high denomination notes would help deter “tax evasion, financial crime, terrorist finance and corruption.” In recent days, former Treasury Secretary Larry Summers, ECB President Mario Draghi, and even the editorial board of the New York Times, came out in support of the elimination of large currency notes. Apart from the question as to why these calls are being raised now with such frequency, the larger issue is whether these moves are actually needed or if they merely a subterfuge for more complex economic manipulations by central banks to extend control over private wealth.
In early 2015, it was reported that Spain had already limited private cash transactions to 2,500 euros. Italy and France set limits of 1,000 euros. In France, all cash withdrawals in excess of 10,000 euros in a single month must be reported to government agencies. In the U.S., such limits are $10,000 per withdrawal. China, India and Sweden are among those with plans under way to eradicate cash.
By Doug Casey – Re-Blogged From International Man
You’re likely thinking that a discussion of “sound banking” will be a bit boring. Well, banking should be boring. And we’re sure officials at central banks all over the world today—many of whom have trouble sleeping—wish it were.
This brief article will explain why the world’s banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the world’s economy is now based upon unsound banks dealing in unsound currencies. Both have degenerated considerably from their origins.
Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely. Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money.
Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.
Chinese companies have been buying up foreign businesses, including American ones, at a record rate, and it’s freaking lawmakers out.
There is General Electric’s sale of its appliance business to Qingdao-based Haier, Zoomlion’s bid for the heavy-lifting-equipment maker Terex Corp., and ChemChina’s record-breaking deal for the Swiss seeds and pesticides group Syngenta, valued at $48 billion.
Most recently, a unit of the Chinese conglomerate HNA Group said it would buy the technology distributor Ingram Micro for $6 billion.
And the most contentious deal so far might be the Chinese-led investor group Chongqing Casin Enterprise’s bid for the Chicago Stock Exchange.
By Nick Giambruno – Re-Blogged From International Man
This definitive sign of a currency collapse is easy to see…
When paper money literally becomes trash.
Maybe you’ve seen images depicting hyperinflation in Germany after World War I. The German government had printed so much money that it became worthless. Technically, German merchants still accepted the currency, but it was impractical to use. It would have required wheelbarrows full of paper money just to buy a loaf of bread.
At the time, no one would bother to pick up money off the ground. It wasn’t worth any more than the other crumpled pieces of paper on the street.
Today, there’s a similar situation in the U.S. When was the last time you saw someone make the effort to pick up a penny off the street? A nickel? A dime?
Walking around New York City recently, I saw pennies, nickels, and dimes just sitting there on busy sidewalks. This happened at least five times in one day. Even homeless people wouldn’t bother to bend over and pick up anything less than a quarter.
The U.S. dollar has become so debased that these coins are essentially pieces of rubbish. They have little to no practical value.
By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com
I got an email today that contained a blog post about another subject unrelated to climate or energy, but it had this graph in it that caught my eye:
The invention of the steam engine (which used coal and wood at first, with oil and natural gas coming later) seems to be the catalyst for change in the human race. Now that’s a hockey stick we can all get behind!
By Peter Schiff – Re-Blogged From http://www.Gold-Eagle.com
Operating under the mistaken belief that a modest dose of inflation is either a prerequisite for, or a by-product of, economic growth, the nation’s top economists have been assuring us for quite some time that inflation will stay very low until the currently mediocre economy finally catches fire. As a result, they believe that the low inflation of the past few months has frustrated Federal Reserve policy makers, who have been supposedly chomping at the bit to keep hiking rates in order to restore confidence in the present and to build the ability to cut rates in the future if the nation were to ever, god forbid, enter another recession.
In the weeks leading up to the Fed’s December 16 decision to raise rates by 25 basis points (their first increase in nearly a decade) the consensus expectations on Wall Street was that the Fed would deliver three or four additional interest rate hikes in 2016. But with the global markets now in turmoil, GDP slowing, and the stock market off to one of its worst starts in memory, a consensus began to emerge that the Fed is reluctantly out of the rate hiking business for the rest of the year.
With such thoughts firmly entrenched, many were largely caught off guard by the arrival last Friday (February 19th) of new inflation data from the Labor Department that showed that the core consumer price index (CPI) rose in January at a 2.2 % annualized rate, the highest in more than 4 years, well past the 2.0% benchmark that the Fed has supposedly been so desperately trying to reach. It was received as welcome news.
A Reuter’s story that provided immediate reaction to the inflation data summed up the good feeling with a quote by Chris Rupkey, chief economist at MUFG Union Bank in New York, “It is a policymaker’s dream come true. They wanted more inflation and they got it.” The widely respected Jim Paulsen of Wells Capital Management said that the stronger inflation, combined with upticks in consumer spending and jobs data would force the Fed to get on with more rate hikes.
But higher inflation is not “a dream come true”. In reality it is the Fed’s worst possible nightmare. It will expose the error of their eight-year stimulus experiment and the Fed’s impotence in restoring health to an economy that it has turned into a walking zombie addicted to cheap money.
While most economists still want to believe that the recent slowdown in economic growth (.7% annualized in the 4th quarter of 2015, which could be revised lower on Friday) was either caused by the weather, confined to manufacturing, oil related, or just some kind of statistical fluke that will likely reverse in the current quarter, and that the stock market declines of 2016 have resulted from distress imported from abroad, a much more likely trigger for all these developments can be found in the Fed’s own policy.
The Chinese economic deceleration and market turmoil made little impact on U.S markets prior to the Fed’s rate hike. And although U.S. markets rallied slightly in the days around the historic December rate hike, they began falling hard just a few days later. Stocks remained on the downward path until a recent rally inspired by dovish comments from various Fed officials which led many to conclude that future rate hikes may be fewer and farther between then was originally believed.
In truth, the markets and the economy have been walloped not just by December’s quarter point increase, but from the hangover from the withdrawal of QE3, and the anticipation of higher rates in 2016, all of which contributed to a general tightening of monetary policy.
The correlation between monetary tightening and economic deceleration is not accidental. As it had been in Japan before us, the unprecedented stimulus that has been delivered by central banks, in the form of zero percent interest and trillions of dollars in quantitative easing bond purchases, failed to create a robust and healthy economy that could survive in its absence. Our stimulus, which was launched in the wake of the 2008 crash, may have prevented a deeper contraction in the short term, but it also prevented the economy from purging the excesses of artificial boom that preceded the crash. As a result, we are now carrying far more debt, and the nation is far more levered than it was prior to the Crisis of 2008. We have been able to muddle through with all this extra debt only because interest rates remained at zero and the Fed purchased so much of the longer-term debt.
In the past I argued that even a tiny, symbolic, quarter point increase would be sufficient to prick the enormous bubble that eight years of stimulus had inflated. Early results show that I was likely right on that point. The truth is that the economy may be entering a period of “stagflation” in which very low (or even negative) growth is accompanied by rising prices. This creates terrible conditions for consumers whereby prices rise but incomes don’t. This leads to diminished living standards.
The recent uptick in inflation does not somehow invalidate all the other signs that have pointed to a rapidly decelerating economy. Just because inflation picks up does not mean that things are getting better. It actually means they are about to get a whole lot worse. Stagflation is in fact THE nightmare scenario for the Fed. If inflation catches fire now, the Fed will be completely incapable of controlling it. If a measly 25 basis point increase could inflict the kind of damage already experienced, imagine what would happen if the Fed made a real attempt to raise rates to get out in front of rising inflation? With growth already close to zero, a monetary shock of 1% or 2% rates could send us into a recession that could end up putting Donald Trump into the White House. The Fed would prefer that fantasy never become reality.
But the real nightmare for the Fed is not the extra body blow higher prices will deliver to already bruised consumer, but the knockout punch that will be delivered to its own credibility. The markets believe the Fed has a duel mandate, to promote employment and to maintain price stability. But it is currently operating like it has just a single unspoken mandate: to continue to shower markets with easy money until asset prices and incomes rise high enough to reduce the real value of our debts to the point where they can actually be serviced with higher rates, regardless of what happens to employment or consumer prices along the way.
If you recall back in 2009 and 2010, when unemployment was in the 8% to 10% range, former Fed Chair Ben Bernanke initially indicated that the fed would raise rates from zero once unemployment fell to 6.5%. At the time I wrote that it was a bluff, and that if those goalposts were ever reached, they would be moved. That is exactly what happened. But when 5% unemployment finally backed the Fed into a credibility corner it had to do something symbolic. This resulted in the 25 basis points we got in December. Yet even as official unemployment is now 4.9%, the Fed can postpone future, more damaging rate hikes, so long as low-inflation provides the cover.
But can the Fed get away with moving its inflation goal post as easily as it had for unemployment? In fact, the Fed has already done so, with little backlash at all. When created by Congress the Federal Reserve was tasked with maintaining “price stability”. The meaning of “stability” should be clear to anyone with a rudimentary grasp of the English language: it means not moving. In economic terms, this should mean a state where prices neither rise nor fall. Yet the Fed has been able to redefine price stability to mean prices that rise at a minimum of 2% per year. Nowhere does such a target appear in the founding documents of the Federal Reserve. But it seems as if Janet Yellen has borrowed a page from activist Supreme Court justices (unlike the late Antonin Scalia) who do not look to the original intent of the framers of the Constitution, but their own “interpretation” based on the changing political zeitgeist.
The Fed’s new Orwellian mandate is to prevent price stability by forcing price to rise 2% per year. What has historically been seen as a ceiling on price stability, that would have forced tighter policy, is now generally accepted as being a floor to perpetuate ultra-loose monetary policy. The Fed has accomplished this self-serving goal with the help of naïve economists who have convinced most that 2% inflation is a necessary component of economic growth.
But as officially measured consumer prices surpass the 2% threshold by an ever-wider margin, (which could occur in earnest once oil prices find a bottom) how far up will the Fed be able to move that goal post before the markets question their resolve? Will the Fed allow 3% or 4% inflation to go unchallenged? President Nixon imposed wage and price controls when inflation reached 4%. It’s amazing that 2% inflation is now considered perfection, yet 4% was so horrific that such a draconian approach was politically acceptable to rein it in.
Once markets figure out that the Fed is all hat and no cattle when it comes to fighting inflation, the bottom should drop out of the dollar, consumer price increases could accelerate even faster, and the biggest bubble of them all, the one in U.S. Treasuries may finally be pricked. That is when the Fed’s nightmare scenario finally becomes everyone’s reality.
By George C Leef – Re-Blogged From The Foundation for Economic Education
It’s time to repeal the absurd, costly “Jones Act”
The 2016 presidential campaign so far has featured almost no discussion of downsizing the federal government. Americans would benefit enormously if we could get rid of costly old laws that interfere with freedom and prosperity, and future generations would benefit even more.
I keep hoping that someone will manage to put this question squarely to the candidates in either party: “What laws would you seek to repeal if you were the president?”
There are so many laws that ought to be repealed, including countless special interest statutes that benefit a tiny group while imposing costs on a vastly greater number of Americans. But if candidates need an idea of where to start, one such law is the Merchant Marine Act of 1920, also called the “Jones Act.”
The Act requires that all shipments between American ports to be done exclusively on American ships. As Daniel Pearson explains,
Its stated purpose was to maintain a strong U.S. merchant marine industry. Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels.
The theory behind the law is musty, antiquated mercantilism — the notion that the nation will be stronger if we protect “our” industries against foreign competition.
Imagine how strong we would be if there had been a Jones Act for automobile transportation. Would Americans be better off today if the Detroit automakers had remained an oligopoly by keeping out all of those Hondas, BMWs, and Hyundais? Obviously not — yet this logic has handicapped US shipping for 96 years.
By Roger Pilon – Re-Blogged From The Cato Institute
The 2000 presidential election was widely understood to be a battle for the courts. When George W. Bush finally won, following the Supreme Court’s split decision in Bush v. Gore, many Democratic activists simply dug in their heels, vowing to frustrate Bush’s efforts to fill vacancies on the federal courts. After Democrats took control of the Senate in May of 2001, they began calling explicitly for ideological litmus tests for judicial nominees. And they started a confirmation stall, especially for circuit court nominees, that continues to this day. Thus, 8 of Bush’s first 11 circuit court nominees went for over a year without even a hearing before the Senate Judiciary Committee, and most have still not come before the committee.
By Julian Sanchez – Re-Blogged From http://www.CATO.org
It’s not even, really, the latest round of the Crypto Wars—the long running debate about how law enforcement and intelligence agencies can adapt to the growing ubiquity of uncrackable encryption tools.
Rather, it’s a fight over the future of high-tech surveillance, the trust infrastructure undergirding the global software ecosystem, and how far technology companies and software developers can be conscripted as unwilling suppliers of hacking tools for governments. It’s also the public face of a conflict that will undoubtedly be continued in secret—and is likely already well underway.
By David Stockman – Re-Blogged From http://www.DavidStockmansContraCorner.com
There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothetical world embedded in the Fed’s tinker toy model of the US economy.
Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy.
But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead.
In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind. That alone should give investors pause—-especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”.
Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue—-its proof that Yellen is the ultimate Keynesian catechumen.
By GE Christenson – Re-Blogged From http://www.Silver-Phoenix500.com
Q: Most people do not value silver and prefer to invest in bonds from big governments. Why?
A: Most people would prefer to follow the herd because following the herd is comforting and often correct. Occasionally it is disastrous. I suspect the next few years will see the herd slaughtered. (Bubbles always pop and bonds are in a bubble.)
Q: Silver has gone down for almost five years. Will it continue to drop?
A: Probably not, but if you are stacking for the long term, you care little! Silver was valuable and minted into coins 2,000 years ago in the Roman era. It will remain valuable 1,000 years from now, long after the Federal Reserve, the EU, the Bank of Japan, and dollars, yen, euros, and pounds have been forgotten.
Q: The global financial system is based on debt and is no longer backed by gold or silver. Why?
A: Banks are far more profitable if they are not constrained by a gold standard. Also politicians can easily spend, buy more votes, and receive payoffs under a fiat paper currency system not backed by gold. Military contractors profit from the wars that would probably not happen under a gold standard. Borrow and spend is the “battle cry” of politicians and bankers because it works for them – at least for now.
Q: Former Federal Reserve Benjamin S. Bernanke was critical of gold. Why?
A: Consider the source, his loyalties, and what he was selling. Does the Chairman of Wal-Mart encourage people to shop at Target? Do Ford managers buy Chevys? Does the Pope advocate for Muslims? Do US Presidents discourage military adventures or Wall Street?
By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com
There were many questions to a recent interview I did last Friday (released Sunday) asking about what a “cashless” society would mean so I’ve decided to expand on it. As it turns out, the timing was very good (by mistake) because over the weekend Europe announced plans to discontinue the 500 euro note. This was immediately followed on Monday with a trial balloon by Larry Summers calling for the end to the $100 bill. You can certainly see where they are headed!
First, let’s look at why they want to do this and then move on to what exactly it will mean to you and me. If we take Larry Summers at his word (something I hesitate to do!), discontinuing the $100 bill will hamper corruption and terrorism. He also talks about the use of cash for tax evasion purposes. It is said drug dealers would be put out of business if cash were banned. Maybe so but then you must ask yourself “who” is at the heart of supply and generates “dark” cash flow for funding? Wouldn’t this be like shooting yourself in the foot?
As for terrorism, I agree there are some crazies out there who want to do some very radical things. However, I would ask you the following questions. How many “terror attacks” have actually been false flags? And who actually funds some of these terror organizations? Have you ever “followed the money” to see who actually funds ISIS or even formed Al Qaeda years ago? Enough said I think.
Now let’s get to the REAL reasons to ban currency. First and foremost, those in power understand the viability to the current system is now very limited. In other words, they know the system is going to come down. On one hand the West has already passed legislation for “bail ins”. On the other hand, how best would it be best to corral capital into these banks they know will be bailed in? Now your putting the dots together!
By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com
[You CAN’T measure global temperature with garbage data. – Bob]
From the “global warming data looks better with heat-sinks and air conditioners” department.
Dr. Mark Albright, of the University of Washington writes:
Here is a great example of how NOT to measure the climate! On our way back to Tucson from Phoenix on Monday we stopped by to see the Picacho 8 SE coop site at Picacho Peak State Park. Note the white MMTS temperature monitor 1/3 of the way in from the left. The building is surrounded by the natural terrain of the Sonoran Desert, but instead the worst possible site adjacent to the paved road and SW facing brick wall was chosen in 2009 as the location to monitor temperature.
Here is a view looking Northeast:
By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com
Enhanced levels of carbon dioxide are likely cause of global dryland greening, study says
Enhanced levels of atmospheric carbon dioxide are a likely key driver of global dryland greening, according to a paper published today in the journal Scientific Reports.
The positive trend in vegetation greenness has been observed through satellite images, but the reasons for it had been unclear.
After analyzing 45 studies from eight countries, Lixin Wang, assistant professor of earth sciences in the School of Science at Indiana University-Purdue University Indianapolis, and a Ph.D. student in Wang’s group, Xuefei Lu, concluded the greening likely stems from the impact of rising levels of atmospheric carbon dioxide on plant water savings and consequent increases in available soil water.
By Mike Gleason – Re-Blogged From http://www.Silver-Phoenix500.com
Mike Gleason: It is my privilege now to be joined by a man who needs little introduction, Marc Faber; editor and publisher of The Gloom, Boom & Doom Report. Dr. Faber has frequently appeared on financial shows across the globe and he’s a well-known Austrian school economist, and an investment adviser. It’s a real honor to have him on with us today. Dr. Faber, thank you so much for joining us.
Marc Faber: It’s my pleasure, thank you very much.
Mike Gleason: Well, I want to start out by asking you about the current state of the financial world here in the early part of 2016. We’ve got the global equities markets continuing to roll over. Meanwhile, the metals are doing quite well and acting as a bit of a safe haven. What do you make of the market action here, so far this year?
Marc Faber: Well, basically, the financial markets have been sick for quite some time. Emerging markets either never made a new high above the 2006, 2007 highs, or they peaked out in 2011, or some even later in 2014. Basically after about February/March 2015, they started to drift. And in the U.S., the indices were strong, but the average stock was down substantially in 2015. This is called weakness beneath the surface of the indices because an index, theoretically, could have 500 stocks and 499 decline, but one stock goes up a lot and drives up the index. So this happened last year, to some extent, in the U.S… you have the strong stocks, Facebook, Amazon, Netflix, Google, and maybe another 20 stocks that were going up. And at the same time, you have thousands of stocks that were acting badly and going down, which accounts for actually a horrible performance for most investors. Now in January, reality set in with the strong stocks, they’re all down 20, 30, and sometimes even more percentages.
The Week That Was: Feb 13, 2016 – Brought to You by www.sepp.org
By Ken Haapala, President, Science and Environmental Policy Project
Quote of the Week:
“Facts do not cease to exist because they are ignored.” Aldous Huxley [H/t Timothy Ball]
Number of the Week: 15%
Surprise? Background: President Obama’s power plan, and similar environmental regulations, are based on executive orders. Since the defeat of cap-and-trade during a Congress dominated by his own party, he has not reached out to Congress for the legislative authority to restrict carbon dioxide (CO2) emissions from power plants. When cap-and-trade failed, Mr Obama famously stated there are other ways to skin the cat (accomplish what he seeks). Using a very broad concept of executive powers, he and selected agencies, namely the EPA, issued orders to various states and companies to take steps to reduce CO2 emissions. Many industries are affected by these orders, including appliance manufacturers who must redesign products to conserve electricity, often with little government regard of costs to the consumers.
By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com
Well, they got that right. Detecting that “parts of the U.S. jobs report for January seem fishy”, MarketWatch offered this pictorial summary:
Needless to say, none of that stink was detected by Steve Liesman and his band of Jobs Friday half-wits who bloviate on bubblevision after each release. This time the BLS report actually showed the US economy lost 2.989 million jobs between December and January. Yet Moody’s Keynesian pitchman, Mark Zandi described it as “perfect”
Yes, the BLS always uses a big seasonal adjustment (SA) in January——so that’s how they got the positive headline number. But the point is that the seasonal adjustment factor for the month is so huge that the resulting month-over-month delta is inherently just plain noise.
By David Zeiler – Re-Blogged From http://www.wallstreetexaminer.com
With each passing day, the irresponsible behavior of the world’s central banks brings us closer to a full-blown global stock market crash in 2016.
We’re already in a bear market. On Thursday, the MSCI All-Country World Index fell 1.3%, giving it a 20% decline since last May.
Issues such as slowing economic growth in China, $5 trillion of emerging market debt, and rock-bottom oil prices have made investors increasingly skittish.
But now the world’s central banks have started to toss gasoline on the fire in the form of negative interest rates. The lower they go, the more likely they are to trigger a global stock market crash in 2016.
By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com
European Banks holding European sovereign debt may have to take haircuts and be part of bail in plans should that same debt default, according to a plan being pursued by German government advisers. In another attempt to shelter German tax payers from the largess and excess of fellow European neighbouring countries’ national banks, the move could trigger a run on billions of euro of sovereign debt of said banks. In an article penned by the Telegraph’s Ambrose-Evans Pritchard, one of the council’s dissenting members describes the plan as the “fastest way to break up the Eurozone”.
The plan, by The German Council Of Economic Experts, calls for banks to be bailed in should losses occur from a sovereign default before the European Stability Mechanism steps in to stabilise the situation.
Italian and Spanish banks hold vast amounts of their national government debt; in Italy’s case they are supporting the Italian treasury. Should that debt default, which is a very real possibility, then Italian banks would have to take significant losses first, only then would the ESM be allowed to step in.
This post will serve as part 2 of the 2015 update of the model-data comparisons of satellite-era sea surface temperatures. The 2014 update is here. This, the second part, contains time-series graphs. But the data and model outputs are being presented in absolute, not anomaly, form.
The climate models used by the Intergovernmental Panel on Climate Change (IPCC) are not simulating climate as it exists on Earth. That reality of climate models will likely come as a surprise to many climate laypersons.
We presented in part 1 of this series how the spatial patterns of the modeled warming rates for the surfaces of the global oceans from 1982 to 2015 (the era of satellite-enhanced sea surface temperature observations) show no similarities to the spatial patterns of the observed (data-founded) warming and cooling. And we discussed why it’s important that the models used by the IPCC are capable of simulating where and when and why the temperatures of the ocean surfaces vary. It’s relatively easy to understand. Where and when the surfaces of the oceans warm, don’t warm, or even cool naturally and by how much—along with other naturally occurring factors—dictate where and when land surface air temperatures rise and fall and where precipitation increases or decreases…on annual, decadal and multidecadal bases.
In part 2, we’re presenting the model-data comparisons in time-series graphs globally and for a number of subsets. And as noted earlier, the data and models are being presented in absolute form. The use of sea surface temperatures instead of anomalies helps to illustrate addition problems with the models.
It seems that Obama, while gladly taking credit for the drop in gas and fuel prices, desperately wants them to rise again.
President Barack Obama will propose a $10-per-barrel charge on oil to fund clean transportation projects as part of his final budget request next week, the White House said Thursday.
Oil companies would pay the fee, which would be gradually introduced over five years. The government would use the revenue to help fund high-speed railways, autonomous cars and other travel systems, aiming to reduce emissions from the nation’s transportation system.
It’s a classic example of manipulation. “We don’t want you to drive. We want you to use trains, buses and other travel systems instead. Instead of passing a law forbidding you to drive a car, which even Republicans might not permit just yet, we will pass a law making it less possible for you to afford to drive your own car. We will still call it a choice.” This is what manipulators do.
Obama said Friday that the investments would put the United States in a “much stronger position” in the coming decades, particularly if oil prices start to rise again. It makes more sense to levy the charge now while gas prices remain low for consumers, he contended.
This is also what manipulators do. “Raising the cost of oil is for your own good. It’s going to rise again anyway. So let’s get it over with now. Instead of reserving your pain for the future, or giving you time to plan for such price rises in the market, let’s impose the pain right now.” It’s also what sadists do. Masochists accept the pain, and welcome it as their due by their masters.
Re-Blogged From Financial Sense
Financial Sense recently had the pleasure of speaking with George Friedman, internationally recognized geopolitical forecaster and best-selling author, to get an update on escalating problems in Europe.
George says Greece was not an outlier, but merely a precursor to a much larger battle now taking shape in Italy, the fourth largest economy in Europe. Dr. Friedman is Founder and Chairman of Geopolitical Futures, a new online publication dedicated to forecasting the course of global events.
Here’s what he had to say on Wednesday’s podcast:
“Greece was not an outlier. It was a forerunner, and a lot of the battles that were fought in Greece were precursors to a much larger one, which is Italy.
The Italians have non-performing loans at 17% officially—that’s a very flexible number and you can go up or down—but since most of the non-performing loans are corporate loans, we’ll say that about a quarter of the assets of banks are at risk and it’s the largest ones that are most at risk.
By Bob Shapiro
There is a War on Energy, and President Obama wants to add another 10% to the price of crude oil.
Now, crude oil isn’t used to generate very much electricity, but it is used to heat many homes (including mine). But, many homes are heated with electricity – and electricity is vital to a modern society. As the temp outside gets below zero here in Massachusetts, remember to thank all those democratic fighters against energy.
By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com
The global Central Banks have declared War on Cash.
Historically, one of the safest things to do when the markets begin to collapse is to move a significant portion of your holdings to cash. As the old adage says, during times of deflation, “cash is king.”
The notion here is that cash is a safe haven. And while earning 1-2% in interest doesn’t do much in terms of growing your wealth, it sure beats losing 20%+ by holding on to stocks or bonds during their respective bear markets
However, in today’s world of fiat-based Central Planning, cash represents a REAL problem for the Central Banks.
By Christopher Monckton of Brenchley, Willie Soon and David R. Legates
Re-Blogged From http://www.WattsUpWithThat.com
Ten killer questions that expose how wrong and ideologically driven they are
A century or so from now, based on current trends, today’s concentration of carbon dioxide in the air will have doubled. How much warming will that cause? The official prediction, 1.5-4.5 degrees Celsius (2.7-8.1 degrees Fahrenheit) per doubling of CO2, is proving a substantial exaggeration.
Professor William Happer of Princeton, one of the world’s foremost physicists, says computer models of climate rely on the assumption that CO2’s direct warming effect is about a factor of two higher than what is actually happening in the real world. This is due to incorrect representations of the microphysical interactions of CO2 molecules with other infrared photons.
As if that were not bad enough, the official story is that feedbacks triggered by direct warming roughly triple the warming, causing not 1 but 3 degrees of warming per CO2 doubling. Here, too, the official story is a significant exaggeration, as demonstrated by Professor Richard Lindzen of MIT, perhaps the world’s most knowledgeable climatologist.
By Alasdair Macleod – Re-Blogged From GoldMoney
There is a conflation of three related events that materially alter the prospects in favour of a higher gold price. The change in the outlook for US interest rates has probably put an end to the dollar’s four-year bull run, it is clear that there is a growing likelihood of negative interest rates in the future, and the global banking system is no fit state to manage the potential challenges of 2016. This article walks the reader through the likely economic effects relevant to the future purchasing power of the dollar, and therefore prospects for the gold price.
On the 5th February, the price action in gold was significant. At about 9.40AM New York time, a seller dumped 10,000 contracts on the Comex market, worth about $1.2bn. The price fell from $1162 to $1145, a fall of $17. Having risen over the course of the week, it was vulnerable to profit-taking, so in principal it was a good time to take the price down in order to take the steam out of the market. However, from that $1145 level, gold quickly and unexpectedly rose strongly, gaining nearly $30 into the close. Furthermore, the gold price has continued to rise this week.
By Mark O’Byrne – Re-Blogged From http://www.goldcore.com
In one of his starkest warnings yet, Former White House Budget Director (Office of Management and Budget, OMB), David Stockman has warned that banks and the global financial system remain vulnerable and there is likely to be another global financial crisis which will be worse than the first involving “a run on mutual funds and ETFs.”
By Axel Merk – Re-Blogged From http://www.merkinvestments.com
“The Fed doesn’t have a clue!” – I allege that not only because the Fed appears to admit as much (more on that in a bit), but also because my own analysis leads to no other conclusion. With Fed communication in what we believe is disarray, we expect the market to continue to cascade lower – think what happened in 2000. What are investors to do, and when will we reach bottom?
By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com
The EPA is seeking to ban the freedom of individuals within the USA to convert street cars into race cars.
WUWT reader Wolfpack987 writes:
Another example of government abuse of power, the EPA is seeking to remove more freedoms from American citizens in the name of the environment, by prohibiting the act of converting street cars into race cars. The sheer ridiculousness of this move to can be measured by how little of an impact it will have on the environment, given how little the number of cars converted into racecars per year.
The U.S. Environmental Protection Agency (EPA) has proposed a regulation to prohibit conversion of vehicles originally designed for on-road use into racecars. The regulation would also make the sale of certain products for use on such vehicles illegal. The proposed regulation was contained within a non-related proposed regulation entitled “Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2.”
By David Haggith – Re-Blogged From Gold-Eagle
Only a couple of weeks ago, I said we were entering the jaws of the Epocalypse….
Mexican retail billionaire Hugo Salinas Price has looked long into the stomach of this mammoth, and this is what he has seen:
“[Global] debt [as a percentage of GDP] peaked in August of 2014. I’ve been watching this for 20 years, and I have never seen anything like it. It was always growing, and now something has changed. A big change of this sort is an enormous event. I think it portends a new trend, and that trend will be to get out of debt. Deleverage and pay down debt. That is, of course, a contraction. Contraction means depression. The world is going into a depression. It’s going to get very nasty. (USAWatchdog)”
By Sol Palha – Re-Blogged From http://tacticalinvestor.com
They say a picture is worth a thousand words and this chart is probably worth a lot more. It illustrates how the BLS has been lying through its teeth over the past seven years. Then again anyone with a grain of common sense could figure out that the retarded methodology the BLS employs is bound to create the illusion that all is well. They purposely discount individuals that have stopped looking for work in coming up with their unemployment numbers. Hence, the 5% figure is not an accurate reflection of the landscape. The chart below provides a more realistic view of the unemployed in the U.S and in some areas we believe that the numbers could be more than 30%
By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com
After my last article we received two logical questions from readers. The first one pertaining to “gaps” and the Deutsche Bank derivative exposure; the second pertaining to Japan’s strong currency with negative yields while the debt to GDP levels are astronomical. Below is the first question.
“In the past you have warned about derivative exposure and now gapping.
One of my worst fears as a day trader on a derivatives platform is gapping. That is why I will never have an open position when the market is closed. Even then, that is not guaranteed.
A lot of trading platforms got hammered when the Swiss franc was revalued.
Could you put out a letter for your readers explaining why for example the Deutsche Bank derivatives exposure is so dangerous in terms of gapping.”
By Jo Nova – Re-Blogged From http://joannenova.com.au
While the Paris agreement was toothless the bite may well come from a pincer movement with domestic laws. Paris was voluntary and non-binding but may be used to provide a means for National laws that are binding to take effect. The laws within each country may have been put into effect earlier with specially prepared clauses that could be triggered or enabled by the Paris agreement.
Strangely Democrat members, elected democratically, don’t appear to have any problem with this. It doesn’t matter if the elected representatives get bypassed, I suppose — the ends justifies the means, the climate needs to be saved, and the voters are stupid.
By Dr. Tim Ball – Re-Blogged From http://www.WattsUpWithThat.com
Recent discussion about record weather events, such as the warmest year on record, is a totally misleading and scientifically useless exercise. This is especially true when restricted to the instrumental record that covers about 25% of the globe for at most 120 years. The age of the Earth is approximately 4.54 billion years, so the sample size is 0.000002643172%. Discussing the significance of anything in a 120-year record plays directly into the hands of those trying to say that the last 120-years climate is abnormal and all due to human activity. It is done purely for political propaganda, to narrow people’s attention and to generate fear.
The misdirection is based on the false assumption that only a few variables and mechanisms are important in climate change, and they remain constant over the 4.54 billion years. It began with the assumption of the solar constant from the Sun that astronomers define as a medium-sized variable star. The AGW proponents successfully got the world focused on CO2, which is just 0.04% of the total atmospheric gases and varies considerably spatially and temporally. I used to argue that it is like determining the character, structure, and behavior of a human by measuring one wart on the left arm. In fact, they are only looking at one cell of that wart for their determination.
El Nino 2015 versus Global Warming 2015. Which caused the bigger temperature increase?
By Sheldon Walker – Re-Blogged From http://www.WattsUpWithThat.com
The aim of this article is to split the temperature increase that occurred between the end of 2014, and the end of 2015, into 2 components. An El Nino component, and a Global Warming component. This will allow the size of the 2 components to be compared.
In order to do this we need to choose a temperature series. HADCRUT4 monthly temperature data will be used for the initial analysis, but the results for GISTEMP, NOAA, and Berkeley will be included for comparison with the HADCRUT4 results.
Climate models are lousy!
That wouldn’t be a big deal on its own, but that’s not the end of it. Those in power in the US – mostly of one party, but also many in the other – justify much of their stupid policies using the supposed accuracy of the models. A large part of those stupid policies center on the EPA’s War on Energy which, as it destroys the ability of private companies to provide cheap, dependable energy.
That energy is vital for many uses including heating, transport, cooking, and industry. The end game of the War on Energy is the impoverishment of American society. And, since our ability to defend ourselves against the many countries and cultures which want us dead depends on our Economy paying for that defense capability, those stupid policies, based on lousy models, threaten the very existence of our country.
By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com
From the “yes, but satellite data is good enough when they want to scream the Arctic is melting” department comes this powerful takedown of recent claims about the satellite temperature data being inferior to surface temperature data.
I was traveling yesterday, so could not cover this live. Dr. Christy said in testimony:
‘When you look at the United States record of extreme high temperatures you do not see an upward trend at all. In fact, it’s slightly downward. That does fly in the face of climate model projections.
By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com
Is this economic recovery real? Well if you base your observations on how far the Dow has risen since the financial crisis of 2008-2009 and on the B.S statistics the BLS puts out, the answer would be a yes. However, if you do just a little cursory digging, you will spot that this economic recovery is nothing but a grand illusion. The following factors clearly prove that this recovery is not real.
A leading indicator is in a death spiral so all must not be well. It is trading at multi-year low. If the economic recovery were real copper would be trending upwards.
Another leading indicator appears to be locked in a race to the bottom with the copper; this is another index that should be trending upwards and not at multi-year lows.
By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com
The drumbeat of bad (and sometimes just plain weird) news has risen lately — but today’s batch stands out. Here’s a small sampling:
US jobless claims were higher than expected, and continue the rising trend of the past few weeks.
US layoffs surged to a six month high, while asset write-downs are up worldwide. Among today’s related announcements: 6,000 layoffs from ConocoPhillips and 10,000 from Shell Oil, and a $5.75 billion write-down from Credit Suisse.
These aren’t surprising given the bloodbath in oil and banks’ exposure to that industry. Many, many more shocks from these two sectors are coming.
Q4 US worker productivity fell at a 3% annual rate. According to the linked article: “Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity.” In other words, while corporations were borrowing trillions to buy back their shares they weren’t bothering to build new factories or upgrade old ones.
US December factory orders posted their biggest drop in a year. Fewer people are working and those who are are either underpaid or insecure, so they’re apparently buying less stuff. And, again, companies are using all their free cash to buy back shares rather than build capacity.
By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com
The fast money and robo-machines keep trying to ignite stock rallies, but they all fizzle because bad karma is beginning to infect the casino. That is, apprehension is growing among whatever adults are left on Wall Street that 84 months of ZIRP and $3.5 trillion of Fed balance sheet expansion, aka money printing, didn’t do the trick.
Not only is the specter of recession growing more visible, but it is also attached to a truth that cannot be gainsaid. Namely, having stranded itself at the zero bound for an entire business cycle, the Fed is bereft of dry powder. Its only available tools are a massive new round of QE and negative interest rates.
But these are absolutely non-starters. The former would provoke riots in the financial markets because it would be an admission of total failure; and the latter would provoke a riot in the American body politic because the Fed’s seven year war on savers and retirees has already generated electoral revulsion. Bernie and The Donald are not expressions of public confidence in the economic status quo.
So the dip buying brigades have been reduced to reading the tea leaves for signs that the Fed’s four in store for 2016 are no more. Yet even if the prospect of delayed rate hikes is good for a 50-handle face ripping rally on the S&P 500 index from time to time, here’s what it can’t do. The Fed’s last card—-deferring one or more of the tiny interest rate increases scheduled for this year——cannot stop the on-coming recession.
The Week That Was: January 30, 2016 – Brought to You by www.SEPP.org
By Ken Haapala, President, Science and Environmental Policy Project
IPCC v. Nature: The UN Intergovernmental Panel on Climate Change (IPCC) is the self-proclaimed body of experts on climate change. As previously stated in TWTW, the independent Nongovernmental International Panel on Climate Change (NIPCC) comes to drastically different conclusions regarding future climate change. The IPCC claims that climate change since about 1950 is largely human caused, with human emissions of carbon dioxide (CO2) primarily responsible. Using research and data the IPCC largely ignores, the NIPCC claims that recent global climate change (as opposed to local and regional) is largely natural, and there is little or no physical evidence that climate is changing beyond natural occurrences.
One of the most dramatic statements made by the IPCC appeared in its Fourth Assessment Report (AR-4, 2007) which claimed the glaciers in the Himalaya Mountains will disappear by 2035, depriving hundreds of millions of people their primary source of water, the rivers the run off the Himalayas and the Tibetan Plateau.
Alarmed, the government of India, Ministry of Environment and Forests had its glacial expert, Mr. V.K. Raina, Executive Director General of the Geological Survey of India (GSI) prepare a report based on decades of on-the-ground observations. Fear of the possible melting of the glaciers has been expressed for about 100 years resulting in scientific efforts to recognize and examine the fluctuations at the front-snout of glaciers, starting in the early part of the 20th century, although some studies go back 150 years.