Taking The Petro Out Of The Dollar

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Saudi Arabia has been in the news recently for several interconnected reasons. Underlying it all is a spendthrift country that is rapidly becoming insolvent. While the House of Saud remains strongly resistant to change, a mixture of reality and power-play is likely to dominate domestic politics in the coming years, following the ascendency of King Salman to the Saudi throne. This has important implications for the dollar, given its historic role in the region.

Last year’s collapse in the oil price has forced financial reality upon the House of Saud. The young deputy crown prince, Mohammed bin Salman, possibly inspired by a McKinsey report, aims to diversify the state rapidly from oil dependency into a mixture of industries, healthcare and tourism. The McKinsey report looks like a wish-list, rather than reality, particularly when it comes to tourism. The religious police are unlikely to take kindly to bikinis on the Red Sea’s beeches, or to foreign women in mini-shorts wandering around Jeddah.

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More Productive Than Cash?

By Axel Merk – Re-Blogged From http://www.Gold-Eagle.com

Is gold, often scoffed at as being an unproductive asset, more productive than cash? If so, what does it mean for asset allocation?

There are investors that stay away from investing in gold because it is an ‘unproductive’ asset: the argument points out gold doesn’t have an intrinsic return, it doesn’t pay a dividend. Some go as far as arguing investing in gold isn’t patriotic because it suggests an investor prefers to buy something unproductive rather than investing into a real business. In many ways, it is intriguing that a shiny piece of precious metal raises emotions; today, we explore why that is the case.

Investing is about returns…
Each investor has their own preference in determining asset and sector allocations. Some investors prefer to stay away from the tobacco, defense or fossil fuel industry. During times of war, countries have issued bonds calling upon the patriotism of citizens to support the cause. At its core, however, investing, in our assessment, boils down to returns; more specifically, risk-adjusted returns. The “best” company in the world may not be worth investing in if its price is too high. Similarly, there may be lots of value in a beaten down company leading to statements suggesting profitable investments may be found “when there’s blood on the street.”

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Mercatus Study: Govt Regulations Have Cost US Economy $4 Trillion

By F McGuire – Re-Blogged From http://www.newsmax.com

The cost of U.S. regulations is larger than Germany’s economy, amounting to a $4 trillion loss to the American economy, the Free Beacon reported.

The study by the Mercatus Center at George Mason University found that regulations over the past several decades amount to a loss of $13,000 for each American worker, the Free Beacon reported.

“The impact of regulation on economic growth has been widely studied, but most research has focused on a narrow set of regulations, industries, or both,” the report stated. “These studies typically rely on regulatory indexes that measure subsets of all regulation, on country-to-country comparisons, on short time spans, or on surveys in which experts report how regulated they believe their country or industry is,” the report said. Continue reading

80-Year Old Thwarts Robbers

By Onan Coca – Re-Blogged From Eagle Rising

Once again, the inalienable right to self-defense comes in handy for an innocent American citizen.

Just last week, an 80-year old man in Fairmont, West Virginia, was awoken in the middle of the night by someone knocking on his front door. Wisely, he answered the door with a concealed firearm. Upon opening the door, a young woman begged to use his phone and was quickly followed into the house by two seemingly armed thugs. The men brandished their weapons and threatened the elderly man while informing him that he was being robbed. However, this was no shrinking violet they were dealing with, and the man swiftly pulled his own weapon and opened fire.

Three of the four shots connected with their intended targets and the elderly homeowner then contacted the police. When the authorities arrived they found the elderly man waiting in front of his home with the bodies of two of the tree intruders. One, 28-year old Larry Shaver was dead from a gunshot to the head, the other, John Grossklaus, had been incapacitated by a gunshot to the abdomen.

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Weekly Climate and Energy News Roundup #223

The Week That Was: April 23, 2016 – Brought to You by www.SEPP.org

By Ken Haapala, President, Science and Environmental Policy Project

Three Groups: MIT Professor Emeritus of Meteorology Richard Lindzen is featured in a very clear four-minute video explaining the ongoing conflicts regarding the human influence on global warming, (now called climate change), primarily from emissions of carbon dioxide (CO2). He divides the participants into three groups: 1) knowable scientists who largely agree with the findings of the UN Intergovernmental Panel on Climate Change (IPCC) and its 5 assessment reports (ARs); 2) knowable scientists who largely disagree with the findings of the IPCC that burning of fossil fuels may cause dangerous global warming, and 3) politicians, environmentalists, and the media. [It should be noted that a number of scientists in group 2 participated in earlier IPCC reports, including Mr. Lindzen, and departed from it. Some stated that the IPCC has become too politicized.]

Lindzen notes that the two groups of scientists who disagree on the effects of burning of fossil fuels largely agree on a surprising number of points.

· The climate is always changing.

· CO2 is a greenhouse gas without which life on earth is not possible, but adding it to the atmosphere should lead to some warming.

· Atmospheric levels of CO2 have been increasing since the end of the Little Ice Age in the 19th century.

· Over the past two centuries, the global mean temperature has increased slightly and erratically by about 1.8 degrees Fahrenheit or one degree Celsius.

· Given the complexity of climate, no confident prediction about future global mean temperature or its impact can be made.

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China: Still the World’s Number One Heavy Metal Rock Star

By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com

I want to begin with a quote from a recent Cornerstone Macro report that succinctly summarizes the research firm’s view on growth prospects in emerging markets, China specifically. Emphasis is my own:

Our most out-of-consensus call this year is the belief that China, and by extension many emerging markets, will see a cyclical recovery in 2016. We understand the bearish case for emerging markets on a multiyear basis quite well, but we also recognize that in a given year, any stock, sector or region can have a cyclical rebound if the conditions are right. In fact, we’ve already seen leading indicators of economic activity and earnings perk up in 2016 as PMIs have rebounded in many areas of the world. That is all it takes for markets, from equities to CDS, to respond more favorably as overly pessimistic views get rerated. And like in most cyclical recoveries that take place in a regime of structural headwinds, we don’t expect it to last beyond a few quarters.

There’s a lot to unpack here, but I’ll say upfront that Cornerstone’s analysis is directly in line with our own, especially where the purchasing managers’ index (PMI) is concerned. China’s March PMI reading, at 49.7, was not only at its highest since February 2015 but it also crossed above its three-month moving average—a clear bullish signal, as I explained in-depth in January.

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Seven Earth Day Predictions that Failed Spectacularly

By Andrew Follett – Re-Blogged From http://www.WattsUpWithThat.com

Never Trust The Doom-Mongers: Earth Day Predictions That Were All Wrong

EarthDay_Envorinmental_Scares
The Daily Caller, 22 April 2016

Andrew Follett

Environmentalists truly believed and predicted that the planet was doomed during the first Earth Day in 1970, unless drastic actions were taken to save it. Humanity never quite got around to that drastic action, but environmentalists still recall the first Earth Day fondly and hold many of the predictions in high regard.
So this Earth Day, The Daily Caller News Foundation takes a look at predictions made by environmentalists around the original Earth Day in 1970 to see how they’ve held up.
Have any of these dire predictions come true? No, but that hasn’t stopped environmentalists from worrying. From predicting the end of civilization to classic worries about peak oil, here are seven green predictions that were just flat out wrong.

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Tough Day For Tech Stocks — Tough Year For The Rest Of The Market?

By John Rubino – Re-Blogged From Dollar Collapse

Coming into this corporate earnings season, everyone seemed to expect disappointment. But they thought it would come from the energy sector and the banks that had lent that sector way too much money (see Goldman Sachs is a flattened slug).

Technology was, as always, thought to be immune to the vagaries of the Old Economy. But apparently what’s bad for Exxon and Caterpillar is also bad for Google and Microsoft. Here’s what Big Tech is doing this morning:

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Subsidy Sam in the News!

By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com

Josh writes:’Subsidy Sam’ is a children’s story written by Lyndsey Ward to counter the shameless pro-wind propaganda allowed in schools. Lyndsey asked me to help out with a cartoon and I was only too happy to oblige. Today ‘Subsidy Sam’ made it into The Press and Journal, a Scottish newspaper – see below.

SubsidySamPJ-22-4-16.jpg

You can read the whole story on the Wind Energy’s Absurd Facebook page and, as Lyndsey suggests, please do post/share/Tweet/Facebook as much as you can. I will update with a link to the online version when it becomes available.

Here is the cartoon on its own should you need it.

Subsidy-sam_scr.jpg

Cartoons by Josh

CONTINUE READING –>

Silver’s New Bull Market

By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com

Silver officially entered a new bull market this week, decisively crossing the necessary +20% threshold.  Speculators and investors alike are returning as awareness spreads of how radically undervalued silver is compared to prevailing gold prices.  When silver awakens to a new bull market after a long bearish slumber, massive gains are usually unleashed.  Silver’s tiny advance so far is just the tip of the iceberg.

This Tuesday, silver surged 4.4% higher on strong Asian bidding in parallel with gold.  The catalyst was fascinating, China finally launching its long-awaited yuan-denominated gold benchmark.  China is the world’s largest gold producer, importer, and consumer, a commanding position that should grant it much bigger say in the gold industry.  The new yuan gold price will ultimately challenge London’s century-old hegemony.

The prospects of more Chinese with their deep cultural affinity for precious metals having easier price discovery and access catapulted silver into bull-market territory.  Its previous best close of 2016 about a week earlier was only 18.5% above its 6.4-year secular low in mid-December leading into the Fed’s first rate hike in 9.5 years.  Tuesday’s big Chinese silver rally boosted this young upleg’s gains to 23.7%.

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Inflation as a Policy

By Henry Hazlitt – Re-Blogged From http://www.Mises.org

In his classic little history of fiat money inflation in the French Revolution, Andrew D. White points out that the more evident the evil consequences of inflation became, the more rabid became the demands for still more inflation to cure them. Today, as inflation increases, apologists emerge to suggest that, after all, inflation may be a very good thing—or, if an evil, at least a necessary evil. The chief spokesman of this group is Prof. Sumner H. Slichter of Harvard.

Slichter’s testimony and writings overflow with fallacies. I confine myself here to three: (1) That a “creeping” inflation of 2 percent a year would do more good than harm. (2) That it is possible for the government to plan a “creeping” inflation of 2 percent a year (or of any other fixed rate). (3) That inflation is necessary to attain “full employment” and “economic growth.”

I long ago pointed out (Newsweek, Sept. 23, 1957), as did others, that even if the government could control an inflation to a rate of “only” 2 percent a year, it would mean an erosion of the purchasing power of the dollar by about one-half in each generation. This cannot fail to discourage thrift, to produce injustice, and to misdirect production. Actually inflation in the United States has been much faster. The cost of living has more than doubled in the last twenty years. This is at a compounded rate of about 4 percent a year.

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Inflation is the Goal… and Central Banks Will Stop at Nothing to Get It!

By Graham Summers – Re-Blogged From Phoenix Capital Research

The markets are prepping for the next massive round of QE.

As I noted earlier this week, NIRP has been entirely ineffective at generating Central Bankers’ desired “inflation.” The ECB has cut rates into NIRP four separate times only to find itself with 0% inflation. In contrast, the Bank of Japan has cut rates once…and has immediately fallen back into a deflationary collapse.

Indeed, NIRP has even been a dud when it comes to pushing stocks higher.

The ECB’s four NIRP cuts have had a minimal impact on boosting EU stock prices: The German DAX is roughly flat since the EU first began implementing NIRP.

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Big Science Is Broken

By Benny Peiser – Re-Blogged From http://www.WattsUpWithThat.com

Also: Poll: Just 6 Percent Of Americans Say They Trust News Media

johann-wolfgang-von-goethe

From the Lewpaper department:

Science is broken. That’s the thesis of a must-read article in First Things magazine, in which William A. Wilson accumulates evidence that a lot of published research is false. But that’s not even the worst part. Advocates of the existing scientific research paradigm usually smugly declare that while some published conclusions are surely false, the scientific method has “self-correcting mechanisms” that ensure that, eventually, the truth will prevail. Unfortunately for all of us, Wilson makes a convincing argument that those self-correcting mechanisms are broken.

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How They Fool Us, China Edition

By John Rubino – Re-Blogged From Dollar Collapse

So it seems that China’s economy, caught in the grip of a credit crisis just a few months ago, is all better. And so, by extension, is everyone else. As the Wall Street Journal explains it:

China Calms Anxiety With Economic Fixes

WASHINGTON—The world’s financial leaders started the year worried about China’s decelerating economy dragging the world into another major crisis. Now, they are breathing a small sigh of relief.Finance ministers, central bankers and other top officials gathering here in recent days said Beijing’s moves to stabilize its economy have temporarily eased global fears tied to the world’s No. 2 economy.

“There was not the same level of anxiety,” said International Monetary Fund Managing Director Christine Lagarde.

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…They Lit The First Candle

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

Many of us have waited for today, April 19, as we anticipated the new Chinese daily gold fix and the opening of the ABX physical exchange.  Some may be disappointed, others, ecstatic.  I will say I am personally pleased because it was almost exactly as I suspected.

Much has happened over the last couple of weeks — and a lot of it has to do with “truth” being exposed.  The “markets” are no different.  China, in my opinion, is simply trying to aid in markets determining prices of gold and silver.

Last Friday we got horrifying (from a contrarian standpoint) COT numbers with nearly record numbers for commercial shorts.  With history as any guide, gold and silver should have already been slaughtered, they have not been.  In fact, we now have silver and gold at nearly one-year highs and mining equities exploding.  Yesterday saw a dozen or more juniors up 25%++ for the day!

As I have maintained, I believe today’s action will become more frequent with the Shanghai physical demand pushing prices higher.  I believe they lit the first candle of truth today, other candles will follow until the light switch gets flipped on.  COMEX/LBMA will either go along in price or they will be arbitraged completely out of inventory.  As I wrote several weeks back, “what good is a contract that cannot perform”?  It is very possible China will let this “stew” for a while and allow the markets time to adjust to real and free pricing …only then do I see China coming out with a gold backed yuan.  If they were to do that today, it would be a declaration of war on the U.S. hegemon, if they wait, they can have cover and say “hey, it was global free markets that pushed gold out of sight”.

As mentioned above, commercials are very short gold and silver now…and they have lost $billions just today.  Maybe they continue to throw paper at gold and silver, but Shanghai ain’t buyin’ it!  No matter what the apologists say, COMEX can and will default when they can no longer deliver metal.  They say “cash settlement” is not a default …who are they kidding?  This is the rally you never sell …until you are offered a different “paper” (one that is backed by something, anything) that can be trusted.  China may be making this offer in the near future!

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Nearly 80 Percent of US Taxes Paid by Rich

By Joe Crowe – Re-Blogged From http://www.newsmax.com

Americans that earned six figures or more paid 79.5 percent of the nation’s share in individual income taxes in 2014, according to preliminary IRS information, reports The Washington Free Beacon.

In 2014, Americans paid a total of $1,358,093,169,000 to the IRS in individual income taxes. Americans earning $100,000 or more paid $1,079,392,180,000 or 79.5 percent of the total.

Those top earners represented 16 percent of the total number of individual income tax returns filed with the IRS in 2014. The highest earners were 23,745,195 of the 148,686,586 individual returns filed.

“Liberals say that high earners pay a high share of taxes only because they have high incomes,” Cato Institute tax policy expert Chris Edwards explained in the Beacon report.

“But high earners also pay much higher tax rates than everyone else,” Edwards continued. The top fifth of earners paid a 14-percent tax rate, while the middle fifth paid at a 2-percent rate, he added, citing Congressional Budget Office figures. The U.S. progressive tax rate is the highest among wealthy nations. Edwards called on Congress to make the U.S. tax code “more equal and proportional,” because “the level of progressivity in the tax code has become extreme.”

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Weekly Climate and Energy News Roundup #222

The Week That Was: April 16, 2016 – Brought to You by www.SEPP.org

By Ken Haapala, President, Science and Environmental Policy Project

Freedom from Fear? The Progressive politically movement began with the hope that government powers can be directed to do social good. In the 1880s it targeted political machines and their bosses, which were common in many cities in the East. Early national icons included presidents from both major political parties such as “trust-busting” Theodore Roosevelt, William Taft, and Woodrow Wilson. (In recent years, Wilson has been under severe criticism for his views and actions on racial segregation.). Among the national political actions attributed to the progressives are the national income tax, direct election of Senators, and the prohibition of alcoholic beverages and distilled spirits. Many progressives also embraced eugenics to scientifically select a better human race.

The only president elected to a third term (and 4th), Franklin Roosevelt, instituted major economic changes, called the New Deal, which is considered by many historians to be an extension of the progressive era. After World War II revealed the horrors of eugenics practiced by the Nazis and others, the progressive movement waned. In recent years it has become strong again with many liberal Democrats identifying themselves to be progressive – particularly members of Obama Administration.

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Obama Just Gave Cops the OK to Simply Take Your Stuff

By Ilya Shapiro & RJ Meyer – Re-Blogged From http://www.Cato.org

When Attorney General Loretta Lynch decided late last year that the Justice Department would end the federal civil-asset forfeiture program, criminal-justice reform advocates proclaimed it a “significant deal.”

But late last month, less than four months later, the Obama administration reversed itself and reinstated the Asset Forfeiture Fund’s Orwellian “equitable sharing” program.

That’s a shame, particularly when the only supporters of the policy are the law-enforcement agencies that directly benefit from it. Indeed, the federal program’s combined annual revenue has grown more than 1,000 percent in the last 15 years, filling the coffers of federal, state and local police departments.

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Exxon Strikes Back Against the Climate Witch Hunt

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

Exxon has just challenged attempts by Al Gore’s climate witch hunt to “investigate” them, by demanding to know what crime they are supposed to have committed.

Exxon Fires Back at Climate-Change Probe

Argues subpoena represents unwarranted fishing expedition into its records that violates its constitutional rights

Exxon Mobil Corp. went to court Wednesday to challenge a government investigation of whether the company conspired to cover up its understanding of climate change, a sign the energy company is gearing up for a drawn-out legal battle with environmentalists and officials on the politically charged issue.

The company filed court papers in Texas seeking to block a subpoena issued in March by the attorney general of the U.S. Virgin Islands, one of several government officials pursuing Exxon. Wednesday’s filing argues that the subpoena is an unwarranted fishing expedition into Exxon’s internal records that violates its constitutional rights.

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The Winter of Discontent

By Peter Schiff – Re-Blogged From Euro Pacific Capital

The Winter of 2015-2016, which came to an end a few weeks ago, has been officially designated as the mildest in the U.S. in 121 years according to NOAA. While this fact will certainly add a major talking point in the global warming debate, it should also be front and center in the current economic discussion. The fact that it isn’t is testament to the blatantly self-serving manner in which economic cheerleaders blame the weather when it’s convenient, but ignore it when it’s not. If economists were consistent (and that’s a colossal “if”), the good weather would be taken as a reason to believe the economy is weaker than is being reported.
The two previous winters were much harsher. 2013-2014 brought the infamous “Polar Vortex,” an unusual descent of frigid polar air that brought temperatures down significantly throughout most of the United States. The next winter was almost as bad, with colder than usual temperatures combined with record snowfalls in much of the country. These conditions were cited again and again by many economists to explain why Q1 GDP growth was so disappointing both years. Annualized growth came in at just -.9% and .6% respectively (Bureau of Economic Analysis). As both 2014 and 2015 got underway, economic optimism had been riding high. When both started off with such resounding stumbles, excuses were needed to explain why the forecasters were so wrong. The snow and cold provided those fig leaves.

ECB And Shadow Banking

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Markets have fully adjusted to a financial world which reflects the leadership and management of money by central banks and are increasingly frightened of any prospect of their control failing. Every time the system stumbles, the response has been for central banks to force greater control and regulation of the monetary system to the detriment of free markets. It is the financial version of the Road to Serfdom. Central banks have become ill-equipped to allow markets to price risk, and in the case of the ECB, it is downright hostile to market-determined prices.

The ECB is a creature of the EU. The EU super-state has legal primacy over the consumer in determining consumer, market and monetary affairs. I was alerted to the full implications of this fact when I recently chaired a presentation of a remarkable paper written by a barrister, Ben Wrench, sponsored by the Institute for Direct Democracy in Europe. Wrench’s paper is worth reading to appreciate its full implications, and it can be found on the IDDE’s website.

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Startling Inflation News Illustrates The Failure Of Easy Money

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

After three decades of epic deficit spending and three years of extraordinary money creation, Japan’s economy is enjoying a rollicking inflationary boom. Just kidding. Exactly the opposite is happening:

Japan households’ inflation expectations hit three-year low – BOJ

(Reuters) – Japanese households’ sentiment worsened in the three months to March and their expectations of inflation fell to levels before the Bank of Japan deployed its massive asset-buying programme three years ago, a central bank survey showed.

The survey’s bleaker outlook keeps alive expectations of additional monetary stimulus even as BOJ Governor Haruhiko Kuroda maintained his optimism that the world’s third-largest economy was recovering moderately.

Kuroda, however, warned that he was closely watching how a recent surge in the yen and slumping Tokyo stock prices could affect the outlook.

“Global financial markets remain unstable as investors are becoming increasingly risk averse due to uncertainty over the outlook of emerging and resource-exporting economies,” Kuroda said in a speech at an annual meeting of trust banks on Monday.

“The BOJ won’t hesitate to take additional easing steps if needed to achieve its inflation target,” he said.

The BOJ’s quarterly survey on people’s livelihood showed the ratio of households who expect prices to rise a year from now stood at 75.7 percent in March, down from 77.6 percent in December and the lowest level since March 2013.

A separate index measuring households’ confidence about the economy stood at minus 22.5 in March, worsening from minus 17.3 in December to the lowest level since March 2015.

The gloomy outcome underscores the dilemma the BOJ faces as it battles mounting external headwinds for the economy with its dwindling policy tool-kit.

The BOJ’s adoption of a massive asset-buying programme, dubbed “quantitative and qualitative easing,” in April 2013 was intended to spur public expectations that prices will rise, and in turn, encouraging households and firms to spend.

That has failed to materialise, forcing the central bank to add negative interest rates to QQE in January in a fresh attempt to accelerate inflation towards its ambitious 2 percent target.

The move has failed to arrest a worrying spike in the yen or boost business confidence. Japan’s economy contracted in October-December last year and analysts expect it to post only feeble growth, if any, in January-March. Inflation has also ground to a halt, keeping the BOJ under pressure to ease again in coming months.

A separate poll by private think tank Japan Center for Economic Research, among the most comprehensive surveys conducted on Japanese analysts, showed 39 of the 44 analysts surveyed projecting that the next BOJ move would be further monetary easing.

But Japan is a unique case; easy money is generating excellent growth and rising inflation pretty much everywhere else. Just kidding again. The US, after multiple QEs and a doubling of federal debt, is looking a lot like Japan:

Consumers’ Inflation Expectations Fell Again in March, Fed Says

U.S. consumers’ expectations for inflation declined in March following a rise from record lows the month before, according to Federal Reserve Bank of New York data released Monday.

The numbers, which have been highlighted recently as a potential cause for concern by top officials including Fed Chair Janet Yellen and New York Fed President William Dudley, may add to the debate over downside risks to the U.S. central bank’s 2 percent inflation target. These risks have contributed to policy makers’ cautious approach to tightening monetary policy this year following a decision in December to raise interest rates for the first time in almost a decade.

The median respondent to the New York Fed’s March Survey of Consumer Expectations expected inflation to be 2.5 percent three years from now, down from 2.6 percent in the February survey. In January, expected inflation three years ahead was 2.45 percent, marking the lowest level in data going back to June 2013.

The New York Fed divides survey respondents into two groups based on a short aptitude test: high-numeracy and low-numeracy. Expected inflation among high-numeracy respondents, which tends to be more stable than that for low-numeracy respondents, declined to a record low in March.

The drop came despite a rise in expected gasoline prices. The median survey respondent in March expected the cost of gas to be 7.3 percent higher a year.

This is odd, since oil prices have stabilized and a consensus seems to be forming around the idea that inflation is about to pick up. Some talking heads are even wondering how the Fed will respond to the above-target inflation that’s coming. See Just how much of an overshoot on inflation will the Fed tolerate?

So what’s with all the pessimistic consumers?

Well, a data series from PriceStats (related to MIT’s Billion Prices project, I think) that measures a wide variety of prices in real time has the answer: Prices are actually falling faster than the official CPI number indicates, and have not picked up as oil has stabilized. In fact, the US has been in deflation for the past five months.

So it’s no surprise that people who are actually buying the stuff that’s falling in price would register this fact and answer surveys with deflationary sentiments. It’s also no surprise that central banks, which presumably see the same data, would be looking for ways to ease even further (Japan and Europe) or walk back their previous threats to tighten (the US Fed) — apparently in the hope that increasing the dose will cure the credit addiction.

[Disclaimer by Bob Shapiro – CPI numbers noted above don’t seem to square with reality. The official CPI dipped below zero very briefly a year ago, whereas the chart above implies they hovered around – both above and below – zero since 2008. And, calculated as they were in 1980, the CPI hasn’t been below 5% for the last 30 years!]

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Methane Madness

By Paul Driessen – Re-Blogged From http://www.WattsUpWithThat.com

Quick: What is 17 cents out of $100,000? If you said 0.00017 percent, you win the jackpot.

That number, by sheer coincidence, is also the percentage of methane in Earth’s atmosphere. That’s a trivial amount, you say: 1.7 parts per million. There’s three times more helium and 230 times more carbon dioxide in the atmosphere. You’re absolutely right, again.

Equally relevant, only 19% of that global methane comes from oil, natural gas and coal production and use. Fully 33% comes from agriculture: 12% from rice growing and 21% from meat production. Still more comes from landfills and sewage treatment (11%) and burning wood and animal dung (8%). The remaining 29% comes from natural sources: oceans, wetlands, termites, forest fires and volcanoes.

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Hate Taxes? You Certainly Are Not Alone…

By Michael Snyder – Re-Blogged From http://freedomoutpost.com

At this time of the year, millions of Americans are rushing to file their taxes at the last minute, and we are once again reminded just how nightmarish our system of taxation has become.  I studied tax law when I was in law school, and it is one of the most mind-numbing areas of study that you could possibly imagine.  At this point, the U.S. tax code is somewhere around 4 million words long, which is more than four times longer than all of William Shakespeare’s works put together.  And even if you could somehow read the entire tax code, it is constantly changing, and so those that prepare taxes for a living are constantly relearning the rules.  It has been said that Americans spend more than 6 billion hours preparing their taxes each year, and Politifact has rated this claim as true.  We have a system that is as ridiculous as it is absurd, and the truth is that we don’t even need it.  In fact, the greatest period of economic growth in all of U.S. history was when there was no income tax at all.  Why anyone would want to perpetuate this tortuous system is beyond me, and yet we keep sending politicians to Washington D.C. that just keep making this system even more complicated and even more burdensome.

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“Top Secret” Abuse

cropped-bob-shapiro.jpg   By Bob Shapiro

The US has a system of classification of documents for national security purposes. Many other countries also protect sensitive material.

While there are numerous cases where protecting the actual contents of a document ( as opposed to a summary), the classification process likely has been abused to include information which could be embarrassing to Americans both inside and out of government and which could affect US relations with other countries. A good example of the latter might be the suppressed pages of the 9-11 Commission Report, which it is said suggests Saudi Arabian government aid to the terrorists.

So far as I can tell, there is no penalty for abusing the classification process. I think that needs to change.

We need a law – possibly a Constitutional Amendment – which requires our government officials to release all documents except those which the official is willing to Certify requires classification. Falsely Certifying a document would carry a penalty, which might include a fine, loss of government office, prison, or a prosecution for treason, with no Statute of Limitation protection for previous offenses.

A Tribunal, as free as possible from political influence, should be set up to review all currently classified documents. Their task would be to review every single document currently classified, and to order the release of all documents not requiring (or no longer requiring) classification. They also would order appropriate prosecution of government officials who have abused the classification system for any individual or group of documents.

Separately, the Freedom of Information laws would be extended to include classified documents. FOI requests would cause the Tribunal to review appropriate classified documents immediately – even if previously reviewed – under the same terms as with their regular review.

And, as any new document is proposed for classification, first the Tribunal would review it.

It is high time for Americans to exercise control over our employees – government officials – by restricting their ability to hide embarrassing information.

ACTION ITEM:

  • Create a Tribunal to review all current and proposed classified documents
  • Give Tribunal authority to release documents and to order prosecution of classification abusers

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Below is a recent article relating to possible classification abuse relating to the 9-11 Commission report.

By Tim Brown – Re-Blogged From http://www.EagleRising.com

Former Florida Senator appeared on 60 Minutes recently and dropped a bombshell concerning the Islamic jihad attacks on 9/11. He said what many of us have said all along and that is that the 19 Saudi hijackers had “support from within the US.”

Former Florida Senator Bob Graham, who was also chairman of the Senate Select Committee on Intelligence appeared on 60 Minutes and dropped this bombshell on the American people:

I think it’s implausible to believe that 19 people, most of whom didn’t speak English, most of whom had never been in the United States before, many didn’t have a high school education, could have carried out such a complicated task without some support from within the United States,” said Graham.

For many, they have questioned those of us who have questioned certain aspects of the official story of the 9/11 Report as conspiracy theorists. Yet, the reality is that now Graham is confirming that.

I also believe the 28 pages that have yet to be releasedfrom the 9/11 Report, would also change a bit of the narrative in the public’s eye.

CBS reports:

Graham and his Joint Inquiry co-chair in the House, former Representative Porter Goss (R-FL) — who went on to be director of the CIA — say the 28 pages were excised from their report by the Bush Administration in the interest of national security. Graham wouldn’t discuss the classified contents, but says the 28 pages outline a network of people he believes supported hijackers in the U.S. He tells Kroft he believes the hijackers were “substantially” supported by Saudi Arabia. Asked if the support was from government, rich people or charities, the former senator replies, “all of the above.”


Graham and others think the reason for classifying the pages was to protect the U.S. relationship with ally Saudi Arabia.

In addition to Graham and Goss, Kroft also speaks to former 9/11 Commission members U.S. Sen. Bob Kerrey and former Navy Secretary John Lehman; lawyers for family members of attack victims suing the Kingdom of Saudi Arabia; and to Tim Roemer, former Democratic U.S. Representative from Indiana who was the only person to serve on both Congress’ Joint Inquiry and the 9/11 Commission. All of the former U.S. officials have read the redacted pages. Roemer says it’s time to let everyone know what’s in the top secret documents.

“Look, the Saudis have even said they’re for declassifying it. We should declassify it,” he tells Kroft. “Is it sensitive…a bit of a can of worms or some snakes crawling out of there? Yes,” says Roemer.

The Free Thought Project adds:

remember-9-11This information being aired on mainstream television is nothing short of historical and is a bombshell to those seeking the truth. For over a decade, the families of the victims have demanded the full story on what happened and have only been met with ridicule and closed doors.

Even the 911 commission was railroaded. Not only were the commissioners given extremely limited funds to conduct their investigation, but they were also met with dead ends in almost every direction.

For starters, only $15 million was given to investigate 9/11. Compare that to the over $60 million that was spent investigating Clinton’s affairs with Monica and the travesty becomes greater. This was the largest act of murder in recent US history, and more money was spent investigating a philandering president!

Also, Senator Max Cleland, who resigned from the 9/11 Commission after calling it a “national scandal,” stated in a 2003 PBS interview,

“I’m saying that’s deliberate. I am saying that the delay in relating this information to the American public out of a hearing… series of hearings, that several members of Congress knew eight or ten months ago, including Bob Graham and others, that was deliberately slow walked… the 9/11 Commission was deliberately slow walked, because the Administration’s policy was, and its priority was, we’re gonna take Saddam Hussein out.”

In 2006, the Washington Post reported that several members of the 9/11 Commission suspected deception on the part of the Pentagon. As reported,

“Some staff members and commissioners of the Sept. 11 panel concluded that the Pentagon’s initial story of how it reacted to the 2001 terrorist attacks may have been part of a deliberate effort to mislead the commission and the public rather than a reflection of the fog of events on that day, according to sources involved in the debate.”

The truth is that we were not given the whole story from the Bush administration, and we aren’t being given the whole story from the Obama administration. Whatever is in the 28 pages that have yet to be release, we can be assured that our government doesn’t want us to know.

While I am not one that does not think Islamists didn’t have anything to do with 9/11, the fact remains that there are countless questions as to what occurred that day. Perhaps if we can get the documents released, it may cause an outrage, since we have been driven to war against Afghanistan and Iraq over these attacks, and yet, we have failed to follow the Constitution regarding a declaration of war, as well as infringing on the rights of law abiding Americans.

Auto Loan Crisis Is Here

By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com

Greed and recklessness continue to govern the markets; nothing was learned from the 2008 financial crisis. Hence, history is destined to repeat itself…and this might occur a lot faster than most anticipate.  Fitch states that Subprime Auto bond delinquencies are at a 20 year high.

Take a look at this chart; it shows you great things are (us being sarcastic)

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Fed Credibility Dwindles, Pension Funding Crisis Looms

By Clint Siegner From http://www.MoneyMetals.com

Fed officials jawbone the markets and spread disinformation. They figure it’s part of their job as central planners. It’s not enough to pull the levers and twist the knobs on interest rates, the money supply, and asset prices. They also use propaganda to manage investor psychology. It’s all smoke and mirrors.

Frustrated metals investors wonder just how long officials will maintain their hold over markets when so much of what they say turns out to be garbage and so much of what they do ends in failure.

The answer is perhaps not much longer. There are real cracks emerging in the credibility of Fed banksters. It has taken years, but investors and pundits are finally questioning whether the Fed knows what it’s doing. They have progressed from the blind worship of Alan Greenspan, who engineered first the Dot.com bubble and then the housing bubble that made people feel so wealthy, to wondering if they can believe a word Janet Yellen says.

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Fed Official: America No Longer Top Country to Achieve American Dream

Re-Blogged From http://www.Newsmax.com

The United States is no longer the top country for achieving the American Dream, a Federal Reserve official claims.

“While income mobility in the United States has been relatively unchanged, it remains well below several other nations,” New York Fed President William Dudley said in a speech about economic opportunity and income mobility.

“The probability of moving from the bottom quintile to the top quintile is 7.5 percent in the United States, as compared to 11.7 percent in Denmark and 13.5 percent in Canada — two countries with relatively high levels of intergenerational mobility.”

“So effectively the chance of achieving the American Dream is not the highest for children born in America,” said Dudley, a permanent voter on policy.

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Minimum Wage Debate

By Andy Sutton – Re-Blogged From http://www.Silver-Phoenix500.com

There has been an incredible amount of posturing, debate and arguing over the minimum wage situation – particularly surrounding recent events in California and New York where legislation was recently signed into law that would effectively double the nominal minimum wage over the next several years – 6 years in California, and 3 in New York City. The rest of New York will see the changes phased in over a longer period of time.

Instead of diving headlong into the useless arguing and name-calling, I think it is important to take a step back from the dogmatic rhetoric we hear on television, from the media, our legislators, and those in academia and take a hard look at the economics behind the idea of having a minimum wage to begin with. This going to take a bit of a leap for pretty much all of us since we’ve either grown up with a minimum wage in place or have had a job that paid minimum wage at some point – myself included.

I also understand that it is a political season here in the United States and with an economy that is more congested than the sinuses of half the Northeast population, talking about people’s bottom line is going to elicit some serious responses. People are going to react emotionally instead of rationally. So I’m not going to give my opinion. I’m going to try to remove myself from the debate and present facts and positions on both sides and let you – the reader – decide.

I am prefacing this examination of the minimum wage situation with the admission that there are many variables involved – well beyond the scope of this paper. Entire textbooks could easily be written just on this topic. The purpose of this paper is to bring about a better general understanding of the minimum wage, the more salient arguments for and against it, and the application of the laws of economics to the subject.

The Arguments ‘For’ a Minimum Wage – and the Increase

One of the biggest arguments for a minimum wage over the past several decades was that it was intended to create a ‘living wage’. Someone should be able to go get a job that pays the minimum wage and run a household off the proceeds of their endeavors.

Using the ‘living wage’ doctrine, it is easy to see why the wage MUST be increased. With a 2000 hour working year, even a minimum wage of $10/hour pays $20,000. This is before federal, state, and local governments cut themselves in for a piece of that already small pie. According to H&R Block’s basic tax calculator, a single person in this situation is going to pay around $1000 to the federal government, another $604 if they reside in Pennsylvania like I happen to, and another $200 to the local government (again, assuming they live where I do in PA). In totality, that’s nearly 10% of their wages. So they’re down to $18,000. Renting any decent apartment will eat up at least a third of this. Throw in utilities, vehicle expenses, food, clothing and so forth and it is pretty easy to see how even $10 is really going to be falling short of being a ‘living wage’.

I will quickly grant that every area is different. There are tax breaks, etc. You throw a second breadwinner into the situation, get a roommate, live with family, etc. and $10 is doable. There are too many variables to properly cover every single scenario in a book, let alone an op-ed piece such as this one.  But the federal minimum wage is only $7.25/hour. Suddenly, that $20,000/year drops to $14,500/yr. Still tenable? Probably not. $7.25 certainly isn’t a living wage.

The “Value” of the Minimum Wage Keeps Dropping

The second major argument for hiking the minimum wage is that frankly, our money just doesn’t buy what it used to. The dollar has lost so much of its value that consumers need more and more dollars to purchase the same amount of goods and services as they had previously.

There are statistics galore about the erosion in the dollar’s purchasing power and most of them are invalid. Here’s an example. Most people like potato chips. Let’s say that back in 2006 a bag of plain old potato chips was $1.79. I don’t know what the price is and when you see where I’m going you’ll understand that the price is actually irrelevant. That bag was 16 ounces. Today, you’ll pay around $2.50 for a bag of chips on sale, depending again on where you are, etc. The problem is, you’re not buying the same bag of chips. Many of the bags that used to be 16 oz. are now 12, 11, or even 10 ounces. You’re paying more and getting less. But when the ‘value’ of the dollar is calculated they ONLY look at the price. $1.79 to $2.50 in 10 years isn’t that bad they’ll say. What they should look at is the cost per ounce. Ice cream is another big one. Orange juice another. If you do any amount of grocery shopping, you’ll know exactly what I’m talking about.

So where this interfaces with the minimum wage, is the data are distorted. The $7.25 is bad enough if you use the government’s measures of inflation. It gets even worse when you look at the actual purchasing power of the $7.25 – what it will actually buy.

Incidentally, this is the main reason the minimum wage needs to be raised periodically – our money is losing value. This is not my opinion, it is the main reason cited by economists and policymakers when arguing for minimum wage hikes.

Low Minimum Wages are Actually Subsidies for Business

I included this one because it came up on quite a few lists of arguments for raising the minimum wage, but in fairness, this is a two-edged sword and I’m going to cut with the other side in the next section of the article.

The premise behind this argument is that if our hypothetical worker discussed above makes less than a living wage, he or she is going to turn to the government for assistance. This is almost assuredly true. Something will have to be done. They’ll need a roommate, help from parents, credit cards, or help from the government. They’ll need assistance. Most likely it’ll end up being all of the above.

So our hypothetical worker applies for government assistance. The argument is that now the government is basically paying these people. If the minimum wage were a living one, the business owner(s) would be paying the person instead. Proponents of higher minimum wages will argue that having too low a minimum wage places a burden on the taxpayers. A recent UC Berkeley study stated that taxpayers pay around $243 billion each year to subsidize fast food workers alone. This money is paid because those people don’t make enough at their jobs and apply for government assistance. The argument is that raising the minimum wage will cut into that $243 billion in subsidies.

And the Rest…

The three arguments above were selected out of several lists because they were the ones that had merit. The remainder of the arguments for an increased minimum wage were of the variety of ‘So and so said it should be done’. Whether it was Nobel laureates, university professors, the government bureaucrats, churches, or politicians. The last is somewhat hilarious because this is an election year. It is well accepted by pretty much everyone that politicians will say whatever they think will get them elected. If they thought that legalizing goat racing in Honduras would pave a path to the Oval Office, they’d advocate it.

The bottom line is that ‘because I say so’ is not a valid argument for any policy, hence the discounting of many popular arguments for raising the minimum wage and the absence of those arguments in this piece.

Part II – The Arguments Against

After reading the above it might seem downright cruel that anyone would be against raising the minimum wage. It has already been demonstrated that $10/hour is not going to cut it, especially in areas where there is a high cost of living. Good examples of this would be New York, particularly in the 5 boroughs, California (oddly, where the recent legislation came from), and most other urban areas.

The Minimum Wage is a Price Control

At its barest level, the minimum wage is a price control. People don’t often think of it this way. They’ll understand the state minimum price on things like cigarettes or milk, but don’t understand that labor also has a price. The minimum wage is merely the price of labor, but understand that price and cost do NOT mean the same thing. The price of labor is what the company pays the employee. The cost is the total financial and economic burden of carrying that employee on the payroll. These are two very different concepts.

I am including a link to a paper I authored some time ago on partial equilibrium analysis because the minimum wage is a prime example of a situation where this analysis comes in handy. It’s a somewhat long read, but if you really want to understand what is going on economically, it’s well worth the time in my opinion.

In a free market, price controls are generally avoided because they create what is called a total welfare loss – somewhere. It might be the employee, the firm, the general public, or some combination of those actors. Anytime there is disequilibrium between supply, demand, and price, there is an inefficiency. Where there is inefficiency, someone loses. So, by definition, price controls create loss. This is a fact of economics and of nature. Now, great meandering by statisticians, economists, etc. has been done to move that loss around or to make it appear as though it is being shuffled, but the fact is it cannot be eliminated. The nice thing about advanced economics and mathematics is that we can quantify the amount of the loss; or at least attempt to. This is where the Berkeley study mentioned above was going. They attempted to quantify the amount of the subsidy paid out by the government (taxpayer) as a result of the price control.

********

Take a look at the graphic above. If you look at the intersection of W0 and L0 you’ll see that represents equilibrium. Put more simply, supply=demand at a particular price level. Can there still be unemployment even if the price of labor as at equilibrium? Absolutely. Firms can still close, even if there is equilibrium with regard to the price of labor. There can be labor shortages too if new firms open. Keep in mind also that there is not just one equilibrium; there are many. The supply/demand dynamics for fast food workers are completely different than those of NASA rocket scientists. So, following the logic, there will be many, many equilibria. The point here is to convey a general understanding of how equilibrium works.

Now, pay particular attention to the W1 line that is parallel with the x-axis. This represents the price control: the minimum wage. In this case, it is above the equilibrium wage. If you have a good understanding of this concept, you’ll understand that there is no point to setting the minimum wage price control below the equilibrium. Such an exercise would be pointless. If such were the case, what we would see is there would be nobody making minimum wage; almost everyone would be making more. We’ll get back to this point a bit later.

Now, take a look at the above chart with the filled in red area. This represents the inefficiency or ‘welfare loss’ referred to above. This is the waste if you will, that is created by the price control. What is more important is that if you look at where the supply and demand lines intersect W1, you’ll notice that supply is greater than demand. This means the price control has created a labor surplus for this particular equilibrium. If we are talking about the fast-food worker, employers are not going to demand as much labor at the higher price. Given the same cohort of workers as before the price control, some will likely lose their jobs. In that case, the worker bears the brunt of the shaded in area of inefficiency or welfare loss. It is also important to note that supply and demand ‘curves’ are rarely linear as is shown. The straight lines are used for simplicity’s sake and to help illustrate what is going on.

Now let us go a level deeper into why the above is the way it is. Let us discuss price versus cost. For those of you with business backgrounds, think of the profit maximizing function where marginal cost equals marginal revenue. If we are talking about labor, an employer will only add another unit of labor (employee) when the revenue gained from adding that worker is at least the same as the cost the employer bears for employing that worker. If the revenue gained from adding that worker is greater than the cost, the employer may well hire yet another worker. Now, do all employers sit down and actually figure this out? Most definitely not. But from an efficiency standpoint it makes no sense to hire a worker when it’ll cost more to employ that worker than the revenue the worker will bring into the firm.

So again, looking at the minimum wage worker, we are talking about doubling their rate of pay. But what is the effect of doubling the price of labor on the total cost of employing that worker? It is generally accepted that the actual cost of having an employee is 125 to 140% of that employee’s wage. Studies at MIT and the Department of Labor are generally in agreement on this range. The range is so broad mostly because of the non-mandatory benefits that many employers provide like health insurance, vacation, bonuses, etc. and the cost of all of those items vary greatly. Put in the terms used thus far in the article, the cost of the employee is 1.25-1.4 times the price of the employee. Using the example of a $15/hour minimum wage for fast food workers and a 25% premium for the mandatory programs like FICA, Medicare, Unemployment, and Worker’s Compensation, the cost of carrying a worker is $18.75/hour. If the employee can’t generate that much revenue for the firm, then there is no point in having that worker.

Based on the above, one might ask the question – can anyone at McDonald’s or Burger King generate that kind of revenue at the current prices these establishments charge for their products? Remember that labor is only a portion of the cost of producing a Big Mac. There are raw materials costs, building rents, taxes, and general overhead as well. The point here is that just because the minimum wage doubles, the price of a Big Mac doesn’t need to double to cover the increase in wages paid, all else remaining the same.

The Minimum Wage Only Applies to a Small Percentage of Workers? Yes AND No

This is where things get interesting. According to the US Department of Labor, the number of workers earning the prevailing minimum wage (or less) in the US in 2014 was 3.9% of the workforce. There seems to be this perception that a huge proportion of workers are paid the minimum wage and that simply isn’t true. However, let’s take the person making $8/hr. How much better off are they than someone making the $7.25/hour statutory minimum wage? I know, 75 cents an hour, but really, they might as well be included in this group too. And you can run that logic up the flagpole to the $10/hour and even $15/hour levels and you’ll catch more and more folks.

This is where the whole ‘living wage’ doctrine falls short because it is very subjective. What exactly constitutes a ‘living wage’?  How much per hour? Nobody can really say because it is subject to perceptions and opinions. What one actually needs versus what one thinks they need comes into play. It is impossible to base any type of scientific study or experimentation on something so ersatz in nature.

The problem with doubling the minimum wage is now you’re not just talking about the 3.9% who currently make minimum wage, you’re talking about everyone up to $15/hour in the case of NY and CA. Obviously that is going to involve a lot more workers. Take the person currently making $14/hour. They’re making almost double the current minimum wage. When this goes into effect they’ll get a $1/hour ‘raise’. Keep in mind, the $14/hour worker might very well be the manager that supervises minimum wage workers and now they’ll be making the same amount of money. So the firm is going to have to bump the manger up accordingly. But now the manger makes more money than the district manager and so forth. What is likely to happen is that such a dramatic hike in the minimum wage over such a relatively short period of time will cause a wage-price spiral, especially if the federal minimum wage was raised, thereby affecting everyone. Firms will have to cover their increased costs somehow. The ability of firms to raise prices is going to be determined by the elasticity of demand for their products, among other factors such as regulatory inhibitions like those found in healthcare, etc.

Minimum Wage Jobs Are Not “Career” Jobs – The ‘Living Wage’ Argument Nullified

Many people who read this paper will be able to say that they started their first job as a teenager making minimum wage, your author included. While the argument can be made that someone needs to flip burgers, there are plenty of teenagers. Note the graphic below:

Please pay attention to the explanation of ‘near minimum wage workers’. These are folks who are essentially making less than $10.10/hour. Without passing judgment on anyone it must be noted that the vast majority of these workers are working jobs that are meant to be ‘starter’ jobs and that is the role these jobs have traditionally played in the economy. In fact, nearly half of all minimum wage workers are between the ages of 16 and 24 according to the Department of Labor.

The fact that there are people who are working in beginner’s jobs’ due to layoffs and the need for additional household income, etc. is more an indictment of the general health of the USEconomy and really has very little to do with the minimum wage situation at all. By and large, minimum wage jobs don’t exist to pay a ‘living wage’, they’re a place for young people to start out, learn the responsibilities of employment, save for college, and so forth, not to support a household.

3.9% is Telling Us Something Regarding the Minimum Wage

To elaborate from above, the fact that just 3.9% of workers are currently making the minimum wage, from a supply and demand perspective, demonstrates very strongly the fact that the wages for the vast majority of workers are already higher than the price control and are already in fact close to or at equilibrium. There is a perception that businesses are too frugal and don’t want to pay people and that this needs to be remedied by government interference via a price control. If that were really true, we’d expect to see a much, much higher proportion of the workforce trapped at the minimum wage level. Again, referring to the chart above showing the kinds of jobs in the $10.10 and less range, they are starter jobs for the most part. Or at least should be.

In fact, if the federal minimum wage ends up being increased to $15/hour, the proportion of people making minimum wage will go up dramatically. If business adjust proportionately and increase up their corporate food chains to compensate for this interference, something will have to give. Layoffs are a real possibility and in fact very likely. A switch from use of human workers to automation is another possibility. Increased prices are virtually guaranteed. Another point that needs to be mentioned is the increase in government tax revenues as a result of a doubling of the minimum wage in CA and NY. Obviously the federal government will benefit from this too and that reality probably accounts for many of the calls from Washington DC for dramatic increases in the minimum wage.

In Conclusion

In summary, probably the most important take-home from this discussion is there is a significant, but not overbearing, cohort that is trying to live off of jobs that were historically performed by young people and those looking for casual income. The loss of the majority of the manufacturing base in the United States needs to be included in this discussion. For the most part, this discussion is not taking place. The evisceration of the goods-producing base has been a national policy for nearly 30 years and it is long overdue that those responsible be held accountable. Another crucial piece of this discussion stems from the loss in purchasing power of the dollar. The policy of dollar devaluation has been systematically and publicly pursued by the federal reserve over the past 100+ years. This has been done without shame, regret, or accountability. If the United States were to return to a system of honest money (gold and silver or at least gold and silver backed), a minimum wage increase would not only be unnecessary, but the idea of a minimum wage in the first place would be pointless as well.

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Time to Invest for Stagflation

By Michael Pento – Re-Blogged From http://www.PentoPort.com

Whether you call it a 1970’s style stagflation or, as we call it, a recessflation, investors need to prepare their portfolios to profit from a protracted period of rising prices in the context of zero growth. Here are some facts: Growth in the U.S. has averaged just 2% since 2010. However, Q4 2015 GDP growth grew at a 1.4% annualized rate and the Atlanta Fed model has Q1 GDP growth slowing to just 0.4%. The simple truth is that the rate of growth is slowing towards 0%, just as asset prices continue to rise to record levels due to vast intervention from central banks.

The U.S. is now in the process of moving away from an environment of disinflation and slow growth, to one of inflation and recession. Indeed, the entire global economy is careening towards an epic recessflation crisis.

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Declining Profits, Rising Defaults Assure 2016 Recession

By David Haggith – Re-Blogged From The Great Recession Blog

I believe a 2016 recession is already a fact in the US, and the Great Recession will return with a vengeance. That recession never really ended. It was simply propped up while all of its fundamental flaws remained, and the props are now all ended or failing. It will ultimately become the mother of all recessions. Even the Great Depression has nothing up on what we are now entering.

GDP estimates are increasingly moving in favor of my prediction that the US has been entering a recession since the start of 2016. (Keep in mind recessions are always declared after the fact — after quarterly statistics are in. That’s why I call it a “prediction,” even though I say we have already entered it. The prediction is that it will eventually be declared, but not for many months.)

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New Battery is a Game Changer

By Roger E. Sowell – Re-Blogged From http://www.WattsUpWithThat.com

Lighter Cheaper More Powerful Battery Changes Renewable Economics
It is not often on SLB that I use the phrase “game-changer.”  Most things progress, if they progress at all, in small increments.  This time, though, is one of those that deserves the phrase game-changer.

The innovation is the low-cost, light-weight but powerful battery developed by Nobel prize-winner Alan Heeger, PhD of the University of California at Santa Barbara (UCSB).  The company is Biosolar .  see link to http://www.biosolar.com

The battery is suitable for mobile and stationary applications such as cars, trucks, grid stabilization, home power storage, and others.   The innovation is the use of the Nobel prize-winning plastic-that-acts-like-a-metal, haologenated polyacetylene.

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More Pressure Builds Against Oil Prices

By David Haggith – Re-Blogged From The Great Recession Blog

Saudi Arabia has moved beyond its original statement that it will only support a production freeze if “other major producing nations” sign on to the agreement. It has now clarified what I believed to be intended by its initial caveat all along, stating that it will only sign on to a production freeze if ALL nations sign on to such a freeze. So, “other” means “every.”

To which, Iran says, “Never!”

The Saudi Deputy Crown Prince went even further than that by stating if ANY nation does not sign on to a production freeze, “then we will not reject any opportunity that knocks on our door,” by which he means any opportunity to ramp up crude oil production and sell more oil.

And here is what that means for the OPEC meeting in Doha this month that has raised hopes that I believed to be absurd in the first place:

OilBarrels-500x375

The actions and intentions of Saudi Arabia and Russia—the two largest oil-producing nations attending the Doha meeting on 17 April—have dashed all hopes of any fruitful outcome. The most important meeting of the last three decades, which has promised to forge new friendships and a new cartel, is turning out to be the biggest farce, even before the curtain is raised.

The recent announcements from Saudi Arabia outlining the plan to create a $2 trillion fund to reduce dependency on oil and reports of austerity plans indicate that the Kingdom is not taking the Doha meeting seriously. It also seems to be sending a message to the others that it will not buckle under any sort of pressure, and it is readying its Plan B.

The Doha meeting will turn out to be a total disaster and the sentiment will be further damaged if the participating members don’t release a common statement. Forget about the production freeze. Listen carefully, Bears can be heard sharpening their claws ahead of the meeting. (OilPrice.com)

Meanwhile, what do Russia’s actions (the other key player in this agreement to talk about an agreement) say about the likelihood of success? Russia’s production has worked its way up since talk about having a talk began to a new thirty-year high!

Oil production in Iraq has also picked up so much that there is standing room only in the Persian Gulf:

Oil tankers are caught in a traffic jam near the Iraqi port of Basra, causing delays in loading. According to Reuters, around 30 very large crude carriers (VLCCs) are sitting in the Persian Gulf, and the backlog could cost ship owners more than $75,000 per day. Some could be waiting for weeks to reach the port…. The culprit is high oil production in Iraq. The port at Basra is struggling to load up all the oil tankers fast enough, forcing some to sit and wait…. And the line of tankers appears to be growing. The gridlock is forcing up the cost of renting an oil tanker. That, combined with the shrinking capacity of available storage in China is pushing up tanker rates in Asia as well. (OilPrice.com)

While oil tankers are stacking up because of increased Iraqi production, they are also stacking up because, once loaded, they have nowhere to go! So, it’s a pile-up at sea.

As storage becomes less available on land and sea, the price of storage goes up (supply and demand again). As ships has become backlogged, the price of shipping has nearly doubled. Increases in the cost of moving and storing crude oil, put additional downward pressure on how much people are willing to pay for crude oil. So, while supply (production) is still rising in many parts of the world, demand for more crude is going to fall, as it gets pricy to have it just sitting around.

In spite of ramping up it’s production, Iraq is one of five OPEC nations on the brink of financial disaster, due in large part to the current low oil prices — the others being Venezuela, Nigeria, Libya, and Algeria. So, these smaller nations talk of hope for the Doha meeting, while the larger nations give no rational basis for hope.

One has to wonder how long it will be before some architect of human chaos decides the way to resolve this crisis for the oil and banking industries is with a Middle-East war that crushes supply lines and knocks out production. Let’s hope not, but history has its example wars that look like they had such motivation.

So far, there is a growing storm of reasons to stay with my prediction that the price of oil is going to go back down. As I published my article yesterday to that effect, the price of oil was going up rapidly; but I look at the fundamentals and see a lot more downside … and stay with that.

Oil, oil everywhere, and almost nowhere left to put it.

CONTINUE READING –>

Five Points About Climate Change

By Professor Philip Lloyd – Re-Blogged From http://www.WattsUpWithThat.com

Daily we are told that we are wicked to burn fossil fuels.  The carbon dioxide which is inevitably emitted accumulates in the atmosphere and the result is “climate change.” If the stories are to believed, disaster awaits us. Crops will wither, rivers will dry up, polar bears will disappear and malaria will become rampant.

It is a very big “IF”. We could waste trillions for nothing.  Indeed, Lord Stern has estimated that it would be worth spending a few trillion dollars each year to avoid a possible disaster in 200 years’ time. Because he is associated with the London School of Economics he is believed – by those whose experience of insurance is limited. Those who have experience know that it is not worth insuring against something that might happen in 200 years time – it is infinitely better to make certain your children can cope. With any luck, they will do the same for their children, and our great-great-great grandchildren will be fine individuals more than able to deal with Lord Stern’s little problem.
So I decided to examine the hypothesis from first principles.

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Rising Default Rates

By Chris Ciovacco – Re-Blogged From http://www.Gold-Eagle.com

Yield vs. Safety Of Principal

If an investor was given the opportunity to invest in two nearly identical bonds with one bond paying 2% per year and the other paying 6% per year, logic says most would choose to invest in the higher-yielding bond. In the real world, the bond paying 6% also comes with a higher risk of default. Therefore, when investors start to become more concerned about the economy and rising bond default rates, they tend to gravitate toward lower-yielding and safer bond ETFs, such as IEF, relative to higher yielding alternatives, such as JNK. The chart below shows the performance of JNK relative to IEF. The chart reflects a bias toward return of principal over yield.

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Perfect Storm For Oil Started On Schedule And Continues To Build

By David Haggitg – Re-Blogged From http://www.Gold-Eagle.com

The perfect storm I predicted against the price of oil in the Ides of March has not fully developed, but all the forces I spoke of are continuing to build. The balmy days that prevailed for oil prices in early March have gone away, replaced by a downdraft that is once again suppressing prices more and more since their peak in mid-March. The storm’s breezes can now be felt in prices that have relinquished 40% of their earlier gains, and the clouds are becoming more apparent to all.

Prices had one of their worst days of the year on Friday of last week and drifted marginally lower again on Monday of this week, stabilizing some on Tuesday. Friday’s pounding came because Saudi Arabia announced it would not participate in the oil supply freeze that it negotiated with Russia since Iran is not going to join the freeze.

That is one of the major storm fronts that I said would come into prominence as part of the perfect storm against the price of oil. I pointed out a few times that market enthusiasm over talk of a deal (still not completed) between Saudi Arabia and Russia to merely freeze production was ludicrous because the Saudis always said the deal was contingent upon other producers joining and that “other producers” most certainly included Iran, and that Iran most certainly would not join the deal.

Don’t expect Saudi Arabia to flinch and start backing down now that Iran has made clear it will not join the deal by freezing its production. Deputy Crown Prince …

Bin Salman nevertheless said Saudi Arabia was ready to face a prolonged period of low oil prices that have dropped sharply since mid-2014 as a result of higher global production. “I don’t believe that the decline in oil prices poses a threat to us,” he said. (Arab Times Online)

Even if a production freeze is formalized, it’s a bad thing, not a good thing. That makes it all the more silly that talk of the deal pushed down prices for a while. The deal, if it happens, promises to freeze production at January’s extremely high levels, which absolutely guarantees continued oversupply (unless there is a huge increase in demand, which so far has evaded the oil industry). A freeze is far from being a production cut, which is the only thing that can solve the oil industry’s problems on the supply side. Far too much has been made of the deal by a market full of unrealistic optimists for that reason.

Freezing production at January levels is “looking more and more pointless”, according to analysts…. What is becoming very clear is that Saudi Arabia is serious about moving away from the traditional play of adjusting prices by cutting or freezing supplies by itself. (The Week)

The dividing line between Saudi Arabia and Iran has hardened, and a deal would only freeze production at a level of continuous oversupply. All what I said a month ago. It’s a deal that is not likely to happen, and if it does, it is pointless anyway. I’ve just been waiting for this one part of the storm to organize into clear formation so that everyone can see it before writing more, and it now has. You can see those swirling storm clouds from that particular direction quite clearly now in the daily news, and you can see that they have started bringing down oil prices.

That was Friday’s big blow. Monday’s downdraft came in part because the National Iranian Oil Co. stated that it just authorized sales of crude to Dutch Royal Shell after the company settled a debt dispute with Iran. Iran repeated that it will continue to expand its oil production and sales until they reach the levels they were before Iran’s nuclear dispute with the West, hardening its stance against the Saudi-Russian deal.

Demand for oil products may be receding, not rising

Compounding matters, government data was released on Monday that showed the first small drop in gasoline demand in fourteen months. Until now, gasoline demand has remained a pillar that helped support the US oil industry through the supply glut. Drop in demand for products derived from oil is being noted in other parts of the world, too:

The oil price “can easily revisit the lows seen earlier this year,” French bank BNP Paribas said in a note to clients, as bearish demand data added to concern over a deal to freeze excess supply…. This comes ahead of a second quarter period that typically sees a dip in demand as refinery maintenance peaks. (The Week)

That’s right. The refinery shut-down period for maintenance that I said would be the second front that comes in to form the perfect storm has just begun. It’s a couple of weeks later than I expected, but wind from that direction is picking up velocity now. It will become an additional force against the price of oil so long as refineries stay in maintenance mode, which reduces their demand for crude.

The third front in the perfect storm — tanks starting to fill the brim

…This all coincides with figures showing buying of crude derivative products slipping in key Asian markets, “as onshore storage facilities in Singapore and Malaysia are filled to the rims”

The third front is just starting to happen. It will very slowly gain strength, but it certain to be the worst front of all over time. As tank farms around the world fill to capacity along with ships at sea, storage becomes more problematic. Oil has fewer and fewer places to go, and demand for crude will fall off a cliff.

As it stands right now, there is nothing that will prevent that from happening. A production freeze means we keep moving toward that end at the current rate of production. Lack of a freeze means production continues to expand so that the world has to make the necessary supply adjustments out sooner.

On Tuesday, Brent crude briefly touched down on a one-month low of $37.27 then floated back up slightly when Kuwait claimed that a production freeze is still possible without Iran.

Asked if anything is likely to come from the April 17th meeting of OPEC where the possible production freeze will be discussed, Lord John Brown, executive chair of L1 Energy, told CNBC

I’d be very surprised at this time. Production is high. People are scrambling to maintain markets that they have and to gain markets from other people. So, it’s not a time for reconciliation yet.

I would be surprised, too, because Kuwait doesn’t have a lot to say about it and, in fact, is doing its part to make things worse, while Saudi Arabia has made its position clear, exactly where I said it would stand. In fact, Kuwait may just be trying to take pressure off its own announcement that it will be ramping up more production soon:

The Middle East sour crude complex is likely to come under bearish pressure on news of Kuwait and Saudi Arabia agreeing to restart production from the 300,000 b/d offshore Khafji oil field…. “Even the idea of a freeze [in oil production] may be tested by [the] announcement that Saudi Arabia and Kuwait are preparing to restart the 300,000 b/d Khafji oil field … Citi analyst Timothy Evans said in a note to clients. (Platts)

Iraq’s oil production also increased through the month of March.

The impact on the US oil industry, seen in broad terms, is that the US now has fewer oil rigs in production than at any time in the past sixty years following fifteen weeks of continual decline. Nevertheless, oversupply continues to rule the market. As many as sixty small and a couple of large oil companies have gone out of business or declared bankruptcy.

Numerous bonds and other forms of loans to the oil industry are in default but are being ignored by banks because the banks don’t wish to compound the problem for themselves by creating a situation where they have to write down the value of the securities on that debt and have to write off debts. So, everyone is trying to sit it out. The scale of the problem for banks is largely masked because the Dallas Fed has told banks to sit tight as much as possible.

It’s believed data later this week will show that crude stock in the US has continued to grow over the past week to a higher record high. That will be the eighth week of setting new records in total US oil storage. If that data turns out as expected, that will offset news of a drawdown in Oklahoma the week before, showing it that to be nothing more than a brief eddy in the winds.

We are relentlessly getting closer to a point of total market saturation, which happens when all tanks are full.

Conclusion: The perfect storm for oil is arriving onshore now

The winds and clouds that are bringing the perfect storm against oil prices from three fronts are all growing stronger. I can now easily find many conservative market analysts starting to agree with what I predicted a month ago:

Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits…. “Given that recent price appreciation does not seem to be very well founded in improving fundamentals, and that upward trends may prove difficult to sustain, the risk is growing that any setback will result in a rush for the exits that could again lead commodity prices to overshoot to the downside.” (NewsMax)

“Overshooting” is just another way of saying “the perfect storm.”

Barclays also notes that positioning in the oil market has reached “bullish extremes” because the bullish rise in crude oil prices is not based on sound fundamentals. That’s right. It’s based on wishful thinking that is based on vague hopes that, if properly worded, would say Saudi Arabia will continue its production full speed ahead if Iran does cooperate and will otherwise increase production beyond its current levels. (That’s all a production freeze offers.)

Barclays says the rush for the exits could bring a price drop of 25%.

Even Goldman Sachs agrees with me now:

Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating as it did last spring. (Zero Hedge)

In other words, this problem is NOT going away until lower prices finish the job of flushing away the weakest competitors as a way of reducing supply to match current demand. So, if the energy production deal does finally go through in mid-April, we will still have to fill our waterbeds with oil to find places to store the overproduction. It will just take longer to get to the point. (The greater truth is that Saudi Arabia and Russia cannot really ramp up oil production much more anyway. So, talk of a deal not to increase production is really the most meaningless babble on the planet right now.)

Whether a deal happens or not, more oil companies, more related service businesses, and some of their bankers will be flushed away. The only thing that could change that is either a big increase in demand (not seen as likely by anyone that I’ve come across) or a big reduction in supply (not being talked about by anyone anywhere).

Barring a war or huge natural catastrophe that forcibly cuts off large amounts of production, the only reductions in supply that will happen are the hard ones that come from businesses closing shop. Those who continue to hope for an easier answer in the form of prices that stabilize the market at its present production levels are nothing but rosy-eyed dreamers, living in economic denial.

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New Hybrid System Design Could Double Coal-Plant Efficiency

By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com

Combining gasification with fuel-cell technology could boost efficiency of coal-powered plants

This illustration depicts a possible configuration for the combined system proposed by MIT researchers. At the bottom, steam (pink arrows) passes through pulverized coal, releasing gaseous fuel (red arrows) made up of hydrogen and carbon monoxide. This fuel goes into a solid oxide fuel cell (disks near top), where it reacts with oxygen from the air (blue arrows) to produce electricity (loop at right). CREDIT Jeffrey Hanna

This illustration depicts a possible configuration for the combined system proposed by MIT researchers. At the bottom, steam (pink arrows) passes through pulverized coal, releasing gaseous fuel (red arrows) made up of hydrogen and carbon monoxide. This fuel goes into a solid oxide fuel cell (disks near top), where it reacts with oxygen from the air (blue arrows) to produce electricity (loop at right). CREDIT Jeffrey Hanna

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19 Facts That Prove Things In America Are Worse Than They Were Six Months Ago

By Michael Snyder – Re-Blogged From Great Recession Blog

 Has the U.S. economy gotten better over the past six months or has it gotten worse?  In this article, you will find solid proof that the U.S. economy has continued to get worse over the past six months.  Unfortunately, most people seem to think that since the stock market has rebounded significantly in recent weeks that everything must be okay, but of course that is not true at all.  If you look at a chart of the Dow, a very ominous head and shoulders pattern is forming, and all of the economic fundamentals are screaming that big trouble is ahead.  When Donald Trump told the Washington Post that we are heading for a “very massive recession“, he wasn’t just making stuff up.  We are already seeing lots of things happen that never take place outside of a recession, and the U.S. economy has already been sliding downhill fairly rapidly over the past several months.
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White House: Climate & Health

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

A new White House fact sheet claims that global warming will have severe effects on health and death rates. My question – why aren’t the alleged serious health issues associated with warmer weather, already occurring in the tropics?

The following appear to be the main claims made by the new paper;

  • Air pollution and airborne allergens will likely increase, worsening allergy and asthma conditions. Future ozone-related human health impacts attributable to climate change are projected to lead to hundreds to thousands of premature deaths, hospital admissions, and cases of acute respiratory illnesses each year in the United States by 2030, including increases in asthma episodes and other adverse respiratory effects in children. Ragweed pollen season is longer now in central North America, having increased by as much as 11 to 27 days between 1995 and 2011, which impacts some of the nearly 6.8 million children in the United States affected by asthma and susceptible to allergens due to their immature respiratory and immune systems.

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Weekly Climate and Energy News Roundup #221

The Week That Was: April 2, 2016 – Brought to You by www.SEPP.org

THIS WEEK: By Ken Haapala, President, Science and Environmental Policy Project

Cooling Down? Writing in Watts Up With That?, geologist Norman Page argues that the fear of unprecedented and dangerous global warming caused by human emissions of carbon dioxide (CO2) will abate by about 2020. Using sections of the Fourth Assessment Report (AR-4, 2007) of the UN Intergovernmental Panel on Climate Change (IPCC), Page points out that the climate orthodoxy does not know how to test for the reliability of the climate models it uses.

Using proxy data for solar variation, Page asserts that the IPCC erroneously attributes changes due to solar variation for temperature change caused by increasing CO2. As such, the models greatly over estimate future warming, or what he calls Catastrophic Anthropogenic Global Warming (CAGW). According to Page, the short-term cooling that is expected to follow the current El Niño is greatly amplified by a long-term cooling caused by a decline in solar activity. We should be seeing this solar cased cooling by 2020.

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Solar Power Plant vs. A Natural Gas Power Plant: Capital Cost – Apples to Apples

By Philip Dowd – Re-Blogged From http://www.WattsUpWithThat.com

Here is a simple example that illustrates why current solar technology will be hard-pressed to replace existing carbon-fired power plants.

Let’s suppose that a power company is planning to scrap a coal-fired power plant and wants to replace it with a new plant. Furthermore, let’s assume that the old plant to be scrapped is in Arizona. The options for the new plant are natural gas and solar. The company wants a simple, ball-park analysis of the front-end cost to build each of these options.

The requirements:

1. Electricity demand on this facility is 4,800 MWh/day, about the demand for a community of 160,000 average households[i]

2. The “up time” of both plants must be equal. That is, both must be equally reliable and produce the demand for the same fraction of time over the course of one year.

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A Coiled Spring

By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com

Silver’s reluctant, sluggish participation in early 2016’s powerful gold rally has been glaringly obvious.  Instead of amplifying the yellow metal’s big gains as in the past, silver largely failed to even keep pace.  The lack of silver confirmation for gold’s big move has certainly raised concerns.  But despite silver’s vexing torpidity in recent months, it is a coiled spring ready to explode higher to catch and surpass gold.

Silver has always been something of an investing enigma, somehow combining attributes of a highly-speculative investment, a conventional industrial commodity, and an alternative currency.  Silver trades like each from time to time, stymieing attempts to classify it.  Silver tends to grind sideways boringly for long periods of time, and then skyrocket higher in bulls of such magnitude that they are celebrated for years.

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A Tale of Two Currencies

By Alasdair Macleod – Re-Blogged From GoldMoney

There is a widespread and growing feeling that financial markets are slipping towards another crisis of some sort.

In this article I argue that we are in the eye of a financial storm, that it will blow again from the direction of the advanced economies, and that this time it will uproot the purchasing power of major currencies.

The problems we face have been created by the major central banks. I shall assume, for the purpose of this article, that a second financial and monetary crisis will not have its origin in the collapse of China’s credit bubble, nor that Japan’s situation destabilises. These are additional risks, the first of which in particular is widely expected, but are subject to the control of a command economy. They obscure problems closer to home. Instead I shall concentrate on two old-school economies, that of the US and the Eurozone, where I believe the real dangers lie.

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Fed Decision From A Retirement Investor’s Perspective

By Daniel R Amerman – Re-Blogged From http://www.Gold-Eagle.com

We are going to take a look using a number of visual images at what has been happening recently with the Federal Reserve, how this integrates with the federal government and the national debt, and the just extraordinary implications when it comes to retirement and other long-term investment decisions.

Our starting point is this graph from the Federal Reserve Bank of St. Louis, which shows the effective federal funds rate from July 1954 to February 2016.

As you can see it starts off very low in the 1950s and early 1960s, and then it goes in kind of a medium range, we could call them shoulders, between 1965 and the mid-1970s. There’s a sharp peak from 1978 to 1982, and then we’re back in that shoulder range from the mid-1980s through the late 2000s.

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Green Energy May Have Just Cost Britain 40,000 Jobs

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

Tata Steel has announced an immediate withdrawal from Britain, threatening 4000 steel working jobs, and 40,000 jobs in dependent industries. The main reason given for abandoning Britain, is the high price Tata is forced to pay for energy, thanks to Britain’s green energy policies.

Tata’s decision is nevertheless a body blow to steel in the UK, with wide industrial and political implications. The threat to 4,000 jobs at the UK’s largest steelworks at Port Talbot, a community which is synonymous with the steel industry today in the way Jarrow was with the shipyards a century ago, is existential. But the closure of Tata’s plants, if it goes ahead, could threaten at least 40,000 jobs nationwide and help to make a mockery of the “active and sustained industrial strategy” which George Osborne advocated as recently as last November.

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