Democrats Attack ‘Racist’ Declaration of Independence

By Tad Cronn – Re-Blogged From http://constitution.com

Liberals hate the Declaration of Independence. That’s one quirk of the Liberal mentality I’ve encountered repeatedly throughout the years — as much as they despise and subvert the Constitution, they reserve even more bile for the Declaration.

They hate it so much, in fact, that they will manufacture endless excuses for ignoring it, even to the point of flat out denying that it is a legal document, despite its being passed unanimously by Congress, and going even further to denying that the United States existed as a nation until our independence was “granted” — not won, “granted” like a Christmas present — by the British king.

This used to be puzzling to me, but it long ago became clear that what Liberals really objected to was the fact that the Declaration spells out in plain language that government is subservient to the people, and people get their rights — as Conservatives know — from God the Creator. The reason, too, is clear: Liberals have to destroy that principle in order to push forward their worldview and agendas, in which the state is supreme, effectively God, rights come from and can be repealed by government, the individual must serve the collective for the betterment of the state, and certain classes of people are worthier of government largesse and political favor than others.

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Nuclear Demands a Share of Illinois Carbon Subsidies

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

Illinois nuclear plant operators have demanded more subsidies, to help keep unprofitable nuclear plants open, to prevent a surge of fossil fuel usage which they claim will occur if they are closed. If the British experience is any guide, this is just the beginning.

Nuclear Power Fights for a Spot in Illinois’ Clean Energy Future

State lawmakers are debating whether to keep ailing nuclear plants alive. The outcome will set a precedent for more states to come.

With hard times setting in for some nuclear power plants, Illinois state legislators are trying to decide whether they should put nuclear facilities on life support, or lay them to rest early.

A combination of market forces and policy choices has made the nuclear business tougher in recent years, and that’s the case at two facilities in Illinois operated by Exelon. The company is telling lawmakers that the money-losing reactors will have to be brought offline prematurely unless the state lends support. That would result in lost jobs and a big dip in the state’s capacity to produce electricity—one that could have dirty, carbon-burning power plants stepping up to close the gap. With jobs, tax dollars, and environmental quality at stake, it’s turned into a dramatic battle in the final days of the state’s legislative session.

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Debt To Escape Velocity

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

One of the biggest buzz-terms of the falsetto, faux recovery has been ‘escape velocity’. If there are any NASA engineers left, they can correct me, but I believe the term was used in physics or perhaps rocket science to describe the velocity an object must reach to break the hold of the Earth’s gravity. And you think Economics has some formulas? I’d LOVE to see the one for the real escape velocity.

Getting back to the economic version of rocket science (don’t even tell me that isn’t funny), we have been hearing the term for the past several years. Ironically it started with the central banking crowd, although they never quite told us what exactly the economy had to do to accelerate beyond the grasp of the ‘great recession’.

The point of this piece, however, is not to poke fun at seemingly benign policymakers and their silly words. The thrust of this article is going to be to demonstrate both visually and mathematically using some simple constructs that it is debt that has reached escape velocity and not the economy. Granted, myself and many others have written about this for years and if you’re reading this you probably have known it for that long.

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Major Malaise of Climatology

By Dr. Tim Ball – Re-Blogged From http://www.WattsUpWithThat.com

Scientists lost the scientific script somewhere in the 20th century. The major loss involved the fact that correlation is not cause and effect. It was lost for several reasons:

  • Failure to know or consistently apply scientific methods;
  • Lack of ethics as the end justifies the means;
  • Methods and process are not taught or emphasized;
  • People are more willing to bypass or ignore everything for funding;
  • Too many are willing to subjugate or exploit research for a political agenda;
  • Achieving results to advance a career is more important;
  • A person gets caught up in Groupthink as they go along to get along;
  • and scientists are unwilling to look to themselves to stop the rot.

All of these reasons were on display in the leaked emails from the Climatic Research Unit (CRU).

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Roadmap to Improve Lives, End Poverty

Re-Blogged From Competitive Enterprise Institute

Real Questions and Answers in the Poverty and Inequality Debate

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Market Strategy

By Justin Spittler – Re-Blogged From http://www.Gold-Eagle.com

Below, you’ll read our interview with Nick Giambruno, editor of Crisis Investing. In it, Nick breaks down his successful investing system—what he calls “the most powerful wealth building secret in investing.”


J. Spittler, editor of Casey Daily Dispatch: Nick, your advisory is called Crisis Investing. Could you explain what “crisis investing” is?

Nick Giambruno: Crisis investing is basically buying elite companies in beaten-up countries or industries. When there’s a crisis, most people only see danger. But it’s actually an opportunity. A crisis often allows you to buy a dollar’s worth of assets for a dime…or less.

Many of the world’s greatest investors have made their fortunes this way…but anyone can do it. You don’t need be rich or well-connected. You don’t even need to travel to do it.

In fact, if you have a regular brokerage account—and the courage to buy when others are fearful—you’re all set. The courage part is key. You can’t be a successful crisis investor if you’re not willing to go against the crowd.

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Regulation – The Hidden Curse

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

Regulations are nearly always introduced with the best intentions. In financial services, they aim to stop unscrupulous brokers and banks from ripping off the public through bad practices. Manufacturers are banned from making products which are dangerous to children, the environment, or which might fail through shoddy workmanship. However, state intervention in commercial matters is based on shaky grounds, consistent with denial of the role and workings of markets, and an overriding desire to interfere.

This contrasts with a true understanding of why free markets work, and the control the consumer exercises over prices and choice, subordinating them to his subjective decisions. Consequently, regulation is based on an unreasoned belief that the individual needs state intervention to ensure standards are maintained, and that bad practices will be eliminated. The incorrect assumption is that free markets encourage unscrupulous manufacturers and service providers to defraud the consumer, when in fact, reputation becomes the paramount relationship in trade.

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Gold Juniors’ Q1’16 Fundamentals

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The smaller gold-mining and exploration stocks have enjoyed an amazing year, soaring with gold’s new bull market.  Many have more than doubled since mid-January, and some have more than tripled at best in that short span.  Are such spectacular gains fundamentally-justified, or merely the result of ephemeral sentiment that could vanish anytime?  The gold juniors’ recently-reported Q1’16 results offer great insights.

The junior gold miners and explorers play a critical role in the world gold market.  They bear the major costs and risks associated with discovering and sometimes developing new economically-viable gold deposits.  They painstakingly find the new gold reserves to offset the constant depletion of the world’s existing gold mines, acting as the headwaters feeding the global mined-gold-supply pipeline vital to this industry.

The larger gold miners rely extensively on the juniors’ crucial exploration and early-development work to maintain and replenish their own operations.  While the majors certainly do their own exploration, it is far from sufficient to offset existing gold mines exhausting.  So gold juniors are constantly targeted by the larger miners, which acquire these companies outright, buy their projects, or partner with them for development.

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The Oversupply Of Oil Means Ports Are Swamped With Oil Tankers

By David Haggith – Re-Blogged From http://www.Silver-Phoenix500.com

This picture of one port tells a major story: Tankers are running circles around the Chinese port of Qingdao. One ship has been carving circles in the water for twenty days, waiting for a chance to offload at any one of several “teapot” (small) refineries in the region.

China is the world’s second-largest consumer of oil. Lack of available storage capacity on land is slowing down the rate at which refiners can take in crude, as is a reduction in the profitability of refineries, which is causing them to back off on refining.

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Presidential Race

cropped-bob-shapiro.jpg   By Bob Shapiro

Trump and Clinton. It looks like they will be the two candidates on the ballot in November.

But wait! There are other people running for US President.

Here is an interesting interview by Glen Beck with Austin Petersen. It’s a half hour, but it should be worth your while.

Socialist Venezuela is a Hellscape Right Now

After decades of authoritarian socialist policies and wealth redistribution, the country of Venezuela is collapsing.

Here are a few examples of how the financial system that Salon.com once called an “economic miracle” has deteriorated for the people forced to live under it.

1. If you live in Venezuela, government policies have made your money worthless.

After current President Nicholas Maduro seized control over monetary policy of the country, a steep and steady devaluation of the currency has taken place. According to CNN:

Socialist President Nicolas Maduro has touted the Bolivarian Revolution, started by his deceased predecessor Hugo Chavez, as a successful movement. The goal is to equally distribute wealth among all the country’s people. Maduro has continued massive public spending programs to appeal to the country’s poor.

But the bolivar’s implosion has only created more inequality. There’s a growing divide between Venezuelans who can pay to exchange bolivars for dollars and those who can’t.

Here is the rate of inflation for the Bolivar:

venezuela inflation_0

One Bolivar is now worth less than a penny.

2. The Venezuelan government does not have enough paper to even print money.

Image Credit: Juan Barreto/AFP/Getty Images

Venezuela is printing currency at an alarming rate, and the government is forced to outsource that printing to offshore companies. The financial site Zerohedge explains why:

“The central bank’s own printing presses in the industrial city of Maracay don’t have enough security paper and metal to print more than a small portion of the country’s bills, the people familiar with the matter said. Their difficulties stem from the same dollar shortages that have plagued Venezuela’s centralized economy, as the Maduro administration struggles to pay for imports of everything, including cancer medication, toilet paper and insect repellent to battle the mosquito-borne Zika virus.”

3. Grocery stores are barren wastelands.

Screen Shot 2016-05-24 at 7.57.56 PM

Government stores are open just two days a week and are only accessible with a valid ID that limits them to a certain number of products. Even with these restrictions, these stores look like barren wastelands. Venezuelans wait all day in line hoping to get their hands on basic goods like bread and milk.

4. A hamburger will cost you $170.

https://i0.wp.com/static.ijreview.com/wp-content/uploads/2016/05/GettyImages-512498654.jpg

Economic shortfall has officially made hamburgers a luxury in the country. What many Americans enjoy off the value menu at McDonald’s is now worth 1,700 Venezuelan dollars or $170, according to Yahoo.

5. People are hunting dogs, cats, and pigeons to eat.

The situation in Venezuela has gotten so severe that bakeries can’t even produce bread anymore. Empty store shelves coupled with hyperinflation has left the community turning to hunting down dogs, cats, and pigeons to survive.

6. Clean water=gold.

As if the crippling economic crisis wasn’t bad enough, the El Nino weather system has caused water levels to drop dramatically. With 60% of the country’s electricity powered by a hydroelectric plant, the country is in a desperate situation.

On top of that, many communities are faced with yellow water that is filled with dirt. Water trucks that carry clean water get robbed 2-3 times a week, leaving drinkable water hard to come by.

7. There’s a black market for milk.

Scarcity in the country has left people looking beyond their empty store shelves to get their necessities. One person described to Telegraph that they message someone using ‘Whatsapp’ when they want to buy milk. This person’s story is more common than you think. Milk is one of the most common items on the black market.

8. There’s no toilet paper.

In Venezuela, people wait in enormous lines, begging for toilet paper. In Venezuela, they don’t care if it’s 2-ply or 4-ply or if a cute bear family is on the wrapper. All they want is a roll.

When they get their hands on it, it’s like they struck gold. With Venezuelans searching up to two weeks for the product, even tourist hot-spot hotels are now asking guests to bring their own toilet paper.

9. Electricity is rationed.

Venezuela’s new 2 day workweek isn’t as glorious as it sounds. It’s actually the latest measure to cut back on power usage. Other measures include shutting off all power for at least four hours a day. Some of these blackouts last up to 12 hours, putting daily life on pause and leaving food to spoil.

10. If you become sick in Venezuela, you are in trouble.

The state of medical care in Venezuela is straight out of a horror movie, with a lack of supplies, clean beds and caregivers. Elderly and children are dying. Read this excerpt from a recent bombshell New York Times report:

The day had begun with the usual hazards: chronic shortages of antibiotics, intravenous solutions, even food. Then a blackout swept over the city, shutting down the respirators in the maternity ward.

Doctors kept ailing infants alive by pumping air into their lungs by hand for hours. By nightfall, four more newborns had died.

“The death of a baby is our daily bread,” said Dr. Osleidy Camejo, a surgeon in the nation’s capital, Caracas, referring to the toll from Venezuela’s collapsing hospitals.

People have turned to social media to find medicine.

 

Faced with a public health crisis, Venezuelans are desperately using the social media platform in a last-ditch effort to save their loved ones. Using the hashtag #ServicoPublico, they are reaching out to each other in search of pills, vaccines, and even blood transfusions.

11. Lawless gangsters can kill you and your family at will.

Venezuela is lawless. Gangs control large parts of the country and commit heinous crimes at will, with little to no recourse from the authorities.

Venezuela has one of the highest murder rates in the world:

And one of the highest kidnapping rates in the world.

For the 30 million people who live in Venezuela, these are the effects of the government’s socialist policies.

CONTINUE READING –>

US Greenback To Rise

By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com

As all monetary students well know, the value of a country’s currency is determined by many factors. Among these are Fundamental Factors, Technical Factors and Pure Political Policies (the latter based upon the immediate “needs” of the politicians in power).  Consequently, it is a daunting task to ACCURATELY forecast the future value of a nation’s currency vis-à-vis other currencies.

As I am NOT a politician, I will only focus upon the US Dollar’s Fundamentals and the Technical Factors in an attempt to forecast the future value of the US greenback.

Fundamental Factors

  • The US$ has long been the world’s universal Reserve Currency.
  • The Euro is well-nigh imploding as the Euro Union is close to collapsing.
  • Banks worldwide are close to bankruptcy.
  • The China Factor
  • Rising US Interest Rates to Fuel Greenback Higher

Technical Factors

  • Based purely upon the Technical Analysis of US$ charts.

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Weekly Climate and Energy News Roundup #227

The Week That Was: May 21, 2016 – Brought to You by www.SEPP.org

By Ken Haapala, President, Science and Environmental Policy Project

Observation and Experiment: Last week’s TWTW discussed a climate model that may work, the Russian Institute of Numerical Mathematics Coupled Model, version 4.0 (INM-CM4). The model tracks historic atmospheric temperature data very well. Virtually, all the other models do not. If a model cannot track historic data well, there is no logical reason to assume it can be successful in predicting the future.

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A Couple of Solar Articles

[Changes in Earth’s climate, from short term seasonal changes to 60-year and 1000-year cycles, greatly affect our need for and usage of energy – for heating and air conditioning. The Sun provides the Energy for Earth’s climate. There is a wealth of information available on changes in the Sun’s properties. Here are two such articles, one dealing with the current Sunspot cycle, and the other trying to find a correlation between Solar Wind Speed & Magnetic Polarity variation compared to the North Atlantic Sea Surface Temperature. – Bob]

Current Solar Cycle Now 3rd Weakest Ever Observed – Least Active Since Dalton Minimum 200 Years Ago!

By Frank Bosse and Fritz Vahrenholt – Re-Blogged From NoTricksZone

The sun in April also was quiet in what has been so far a relatively calm solar cycle (SC). The sunspot number (SSN) was 38.0, which is 50% of what is typically normal for month no. 89 into a solar cycle. The impressive drop in activity is seen clearly in the following chart:

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Real Estate Bubble Part II

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

It shouldn’t be hard to understand that nearly 90 months of ZIRP has regenerated the equity and real estate bubbles that first pushed the global economy off a cliff back in 2007. In fact, the Fed’s unprecedented foray with interest rate manipulation has caused these assets to become far more detached from underlying fundamentals than they were prior to the start of the Great Recession.

The prima facie evidence for the stock market bubble can be found in the near record valuation of the S&P500 in relation to GDP and in its median PE multiple. But perhaps the best metric to illustrate this overvaluation of equities is the current 1.8 Price to Sales ratio of the S&P. This is the highest ratio exhibited outside of the Tech Bubble…and is especially absurd given 5 quarters in a row of falling revenue.

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Economic Impact of Greenhouse Gas Emissions

By Ken Gregory- Re-Blogged From http://www.WattsUpWithThat.com

Energy Balance Climate Sensitivity

The most important parameter in determining the economic impact of climate change is the sensitivity of the climate to greenhouse gas emissions. Climatologist Nicholas Lewis used an energy balance method to estimate the Equilibrium Climate Sensitivity (ECS) best estimate at 1.45 °C from a doubling of CO2 in the atmosphere with a likely range [17 – 83% confidence] of 1.2 to 1.8 °C. ECS is the global temperature change resulting from a doubling of CO2 after allowing the oceans to reach temperature equilibrium, which takes about 3000 years.

A more policy-relevant parameter is the Transient Climate Response (TCR) which is the global temperature change at the time of the CO2 doubling. A doubling of CO2 at the current growth rate of 0.55%/year would take 126 years. The analysis gives the TCR best estimate at 1.21 °C with a likely range [17 – 83%] of 1.05 to 1.45 °C.

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Free-Market Think Tanks Should Pitch Trump Their Best Ideas

By Deroy Murdock – Re-Blogged From National Review

Conservatives can help him craft an innovative reform agenda. Free-marketeers who are in tears about Donald J. Trump’s pending presidential nomination should heed the wisdom of the Beatles: “Take a sad song and make it better.”
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Trump’s policy agenda remains largely unwritten. While he has detailed solutions on immigration, taxes, and health care, Trump has left many issues untouched. This is a problem, but also an opportunity. Conservatives and small-l libertarians who supported Ted Cruz, Marco Rubio, or Scott Walker for president can curse Trump . . . or do something constructive: work with him and his team to develop his platform.

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Stock Share Buybacks Now Bought Out

By David Haggith – Re-Blogged From Great Depression Blog

I have pointed out in previous articles how most of the growth in stocks over the past few years has been due to stock share buybacks. Without this hideous (and at one time illegal) practice, there would have been no bull market over the last few years.

That’s right. Research from no other place than Wall Street, itself, indicates that almost all of the returns since 2009 have been due to stock share buybacks!

Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that “… there has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds….” Since every buyer has a seller (and vice versa), what group or groups had enough of a buying presence to push the S&P 500 14.2% off of the February closing lows? Corporations. (Seeking Alpha)

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Marin Katusa Interview: Insane Speculation

By Marc Slavo – Re-Blogged From http://freedomoutpost.com

Over the course of the last six weeks, major companies around the world have reported significant drops in sales and consumer sentiment. By all accounts, the global economy is coming to a standstill. But somehow financial markets continue to hover near all-time highs. That a day of reckoning is coming is a foregone conclusion. Something is wrong and highly renowned global strategist Marin Katusa explains that the insanity is just beginning:

Unintended Consequences (Part 1)

By John Rubino – Re-Blogged From Dollar Collapse

Somewhere back in the depths of time the world got the idea that easy money — that is, low interest rates and high levels of government spending — would produce sustainable growth with modest but positive inflation. And for a while it seemed to work.

But that was an illusion. What actually happened was textbook, long-term, surreally-vast misallocation of capital in which individuals, companies and governments were fooled into thinking that adding new factories, stores and infrastructure at a rate several times that of population growth would somehow work out for the best.

China, as with so many other things, was the epicenter of this delusion. In response to the 2008-2009 financial crisis it borrowed more money than any other country ever, and spent most of the proceeds on infrastructure and basic industry. It’s steel-making capacity, already huge by 2008, kept growing right through the Great Recession, and now dwarfs that of any other country.

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“Clinton Prosperity” Of The 1990s Is A Myth

By David Stockman – Re-Blogged From Contra Corner

That Hillary Clinton has—–unaccountably——stood by her man for 40 years is her particular foible. But now she wants 320 million Americans to stand by him, too, by electing her President so she can make Bill the nation’s economic czar:

During a speech in Kentucky Sunday she referred to “my husband, who I will put in charge of revitalizing the economy ’cause he knows what he’s doing.”

Actually, he doesn’t.

Herein follows a two-part essay on why Bill and Hillary Clinton had precious little to do with the vaunted prosperity of the 1990s, and why another twofer would be exceedingly bad for the nation.

In truth, it was the doing of Alan Greenspan, and not in a good way.

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Eurozone Is The Greatest Danger

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

World-wide, markets are horribly distorted, which spells danger not only to investors, but to businesses and their employees as well, because it is impossible to allocate capital efficiently in this financial environment. And with markets everywhere disrupted by interventions from central banks, governments, and their sovereign wealth funds, economic progress is being badly hampered, and therefore so is the ability of anyone to earn the profits required to pay down the highs levels of debt we see today. Money that is invested in bonds and deposited in banks may already be on the way to money-heaven, without complacent investors and depositors realising it.

It should become clear in the coming weeks that price inflation in the dollar, and therefore the currencies that align with it, will exceed the Fed’s 2% target by a significant amount by the end of this year. This is because falling commodity prices last year, which subdued price inflation to under one per cent, will be replaced by rising commodity prices this year. That being the case, CPI inflation should pick up significantly in the coming months, already reflected in the most recent estimate of core price inflation in the US, which exceeded two per cent. Therefore, interest rates should rise far more than the small amount the market has already factored into current price levels.

Most analysts ignore the danger, because they are not convinced that there is the underlying demand to sustain higher commodity prices. But in their analysis, they miss the point. It is not commodity prices rising, so much as the purchasing power of the dollar falling. The likelihood of stag-flationary conditions is becoming more obvious by the day, resulting in higher interest rates at a time of subdued economic activity.

A trend of rising interest rates, which will have to be considerably more aggressive than anything currently discounted in the markets, is bound to undermine asset values, starting with government bonds. Rising bond yields lead to falling equity markets as well, which together will reduce the banks’ willingness to lend. In this new stagnant environment, the most overvalued markets today will be the ones to suffer the greatest falls.

Therefore, prices of financial assets everywhere can be expected to weaken in the coming months to reflect this new reality. However, the Eurozone is likely to be the greatest victim of a change in interest rate direction. The litany of potential problems for the Eurozone makes Chidiock Titchborne’s Elegy, written on the eve of his execution, sound comparatively upbeat. Negative yields on government debt will have to be quickly reversed if the euro itself is be prevented from sliding sharply lower against the dollar. Bankrupt Eurozone governments are surviving only because of the ECB’s money-printing, which will have to restricted, and government borrowing exposed to the mercy of global markets. Key Eurozone banks are undercapitalised compared with the risks they face from higher interest rates, so they will do well to survive without failing. There is also a growing undercurrent of political unrest throughout Europe, fuelled by persistent austerity and not helped by the refugee problem. And lastly, if the British electorate votes for Brexit, it will almost certainly be Chidiock’s grisly end for the European project

We know the powers-that-be are very worried, because the IMF warned Germany to back off from forcing yet more austerity on Greece, which is due to make some €11bn in debt repayments in the coming months. The only way Greece can pay is for Greece’s creditors to extend the money as part of a “restructuring”, which then goes directly to the Troika, for back-distribution. It will be extend-and-pretend, yet again, with Greece seeing none of the money. Greece will be forced to promise some more spending cuts, and pay some more interest, so the fiction of Greek solvency can be kept alive for just a little longer.

One cannot be sure, but the IMF’s overriding concern may be the negative effect Germany’s tough line might have on the British electorate, ahead of the referendum on 23rd of June. That is the one outlier everyone seems to be frightened about, with President Obama, NATO chiefs, the IMF itself, and even the supposedly neutral Bank of England, promising dire consequences if the Brits are uncooperative enough to vote Leave.

All this places Germany under considerable pressure. After all, her banks, acting on behalf of the government and Germany’s populace, have parted with the money and cannot afford to write it off. Greece is bad enough, but Germany must be even more worried about the effect that a Greek compromise will set for Italy, which is a far larger problem.

Officially, the Italian government’s debt-to-GDP ratio stands at 130%, and since the public sector is 50% of GDP, government debt is 260% of the Italian tax base. It is also the nature of these things that these official numbers probably understate the true position.

If the Eurozone is the greatest risk to global financial and systemic stability, Italy looks like being the trigger at its core. The virtuous circle of Italian banks, pension funds and insurance companies, funding ever-increasing quantities of debt for the government, is failing. Pension funds and insurers cannot match their liabilities at current interest rates, and importantly, the banks are under water with non-performing loans to the tune of €360bn, about 18% of all their lending. It also represents 19.4% of GDP, or because the NPLs are all in the private sector, it is 39% of private sector GDP.

Within the private sector, NPLs are more prevalent in firms than in households. And that is the underlying problem: not only are the banks undercapitalised, but Italian industry is in dire straits as well. The Banca D’Italia’s Financial Stability Report puts a brave gloss on these figures, telling us that the firms’ financial situation is improving, when an objective independent analysis would probably be much more cautious.

All financial prices in the Eurozone are badly skewed, most obviously by the ECB, which will be increasing its monthly bond purchases from next month to as much as €80bn. So far, the price inflation environment has been benign, doubtless encouraging the ECB to think the inflationary consequences of monetary policy are nothing to worry about. But from the beginning of this year, things have been changing.

Because the recent pick-up in commodity prices will begin to show in the dollar’s inflation statistics, markets will begin to smell the end of negative euro rates, in which case Eurozone bond yields seem sure to rise steeply. Given their extreme overvaluations, price volatility should be considerably greater than that of the US Treasury market. Imagine, if instead of yielding 1.5%, Italian ten-year bond yields more accurately reflected Italy’s finances, by moving to the 7-10% band.

This would result in write-downs of between 40%and 50% on these bonds. The effect on Eurozone bank balance sheets would be obvious, with many banks in the PIGS needing to be rescued. Less obvious perhaps would be the effect on the ECB’s own balance sheet, requiring it to be recapitalised by its shareholders. This can be easily engineered, but the political ramifications would be a complication at the worst possible moment, bearing in mind all EU non-Eurozone central banks, such as the Bank of England, are also shareholders and would be part of the whip-round.

Assuming it survives the embarrassment of its own rescue, the ECB will eventually face a policy choice. It can continue to buy up all loose sovereign and corporate debt to stop yields rising, in which case the ECB will be signalling it has chosen to save the banks and member governments’ finances in preference to the currency. Alternatively, it can try to save the currency by raising interest rates, giving a new and darker meaning to Mario Draghi’s “whatever it takes”. In this case insolvent banks, businesses and the PIGS governments could go to the wall. The choice is somewhat black or white, because any compromise risks both a systemic failure and a collapse in the euro. And there is no guarantee that if the banks fail, the euro will survive anyway.

The ECB is likely to opt for supporting the banks and over-indebted governments, partly because that is the mandate it has set for itself, and partly because experience after the Lehman crisis showed it could expand money supply without destabilising price inflation. But the danger, once it dawns on growing numbers of investors and bank depositors, is stagflation. In other words, rising goods prices, falling asset prices, and interest rates not being allowed to rise enough to break the cycle, all combining to further undermine the euro’s purchasing power.

Financial and economic prospects for the Eurozone have many similarities to the 1972-75 period in the UK, which this writer remembers vividly. Equity markets lost 70% between May 1972 and December 1974, cost of funding was reflected in a 15-year maturity UK Treasury bond with a 15.25% coupon, and monthly price inflation peaked at 27%. There was a banking crisis, with a number of property-lending banks failing, and sterling went through a bad time. The atmosphere became so gloomy, that there was even talk of insurrection.

This time, the prospects facing the Eurozone potentially could be worse. The obvious difference is the far higher levels of debt, which will never allow the ECB to run interest rates up sufficiently to kill price inflation. More likely, positive rates of only one or two per cent would be enough to destabilise the Eurozone’s financial system.

Let us hope that these dangers are exaggerated, and the final outcome will not be systemically destabilising, not just for Europe, but globally as well. But a wise man, faced with the unknown, believes nothing, expects the worst, and takes precautions.

CONTINUE READING –>

Weekly Climate and Energy News Roundup #226

The Week That Was: May 14, 2016 – Brought to You by www.SEPP.org
By Ken Haapala, President, Science and Environmental Policy Project

A Climate Model That May Work: In his written testimony submitted to the US House Committee on Science, Space & Technology on February 2, John Christy of the University of Alabama in Huntsville presented the results of a basic empirical test. Do the climate models simulate what has occurred in the atmosphere since the advent of comprehensive satellite measurements of atmospheric temperatures in the last few weeks of 1978 – the only comprehensive global measurements of temperatures existing – and independently supported by four datasets from weather balloons, which are not comprehensive. The test period includes the entire satellite record from 1978 through 2015 – 37 years.

As Christy wrote:

“I was able to access 102 CMIP-5 rcp4.5 (representative concentration pathways) climate model simulations of the atmospheric temperatures for the tropospheric layer and generate bulk temperatures from the models for an apples-to-apples comparison with the observations from satellites and balloons. These models were developed in institutions throughout the world and used in the IPCC AR5 Scientific Assessment (2013).”

There were a total of 32 models represented in these 102 simulations. Of these 32 models only one tracked well against global mid-tropospheric temperature variations – the Russian INM-CM4. On average, the models overestimated global warming by 2.5 times that measured.

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Life Cycle Of Money

By Mickey Fulp – Re-Blogged From Geologist Musings

In the aftermath of the global economic crisis of 2008-2009, governments throughout the world have fostered a tenuous recovery predicated on massive increases in money supplies and debasement of currencies.

Note, however, that monetary debasement is not a recent phenomenon; it is simply the natural life cycle of money.

There are six well-defined stages in the life cycle of money. This progression has occurred in every dominant civilization over the 5000 years of recorded human history:

Stage 1: A Barter Market Begins.

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Financial Armageddon Looms On The Horizon As The EURO UNION IMPLOSION Nears

By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com

History is testament that an ill-conceived fetus is doomed to a handicapped crippled adulthood. Thusly, many rational pundits perceive the hodge-podge jumbled union of many European nations, known as the Euro Union. But just as oil and water cannot be blended nor melded into a stable liquid, it logically follows that the haphazard mixture of many radically diverse nations are likewise immiscible…and will probably collapse in the not too distant future.

Implosion of the European System

“…Europe is made up of a good number of historically distinct nations whose diversity of political cultures, even though this diversity is not necessarily marked by national chauvinism, has sufficient weight to exclude recognition of a “European People” on the model of the United States “American people.” THIS IS A MUST READ:   http://monthlyreview.org/2012/09/01/implosion-of-the-european-system/ )

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How Stupid Do You Have To Be

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

“Of course, there are true copper-bottomed mistakes, like spelling the word “rabbit” with three m’s, or wearing a black bra under a white blouse, or, to make a more masculine example, starting a land war in Asia.” — John Cleese

We all make mistakes, but some are bigger than others. An example of a serious one that’s both potentially catastrophic and easily avoided is to lend money for long periods during a time of rising debt and financial instability. Who, for instance, would commit capital for 30 years to Italy by buying that country’s long-dated government bonds? “No one” is the sane answer, yet those bonds do find buyers.

Even higher on the crazy scale is the following:

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It’s A Small Club

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

For many years we have warned of the dangers of derivatives.  We were laughed at leading up to the 2008 financial debacle when Lehman broke and nearly took the entire system down.  That turned out to be no laughing matter and here we are again at exactly the same situation where derivatives threaten to melt the financial system again.  The difference now of course is the “saving ammunition” has already been spent where sovereign treasuries and central banks have destroyed their own balance sheets.

Two weeks ago, the Fed announced a “48 hour stay in place” provision for collateral of any derivative contracts where the big banks are involved.   http://www.bloomberg.com/news/articles/2016-05-03/fed-expected-to-drag-hedge-funds-into-plan-to-halt-next-lehman  The idea here is to prevent collateral being pulled by the survivor for 48 hours should the bank counterparty become insolvent.  This will give the Fed a window of time to get the fire hose of liquidity out and reliquefy a large bank’s balance sheet before they can break the derivatives chain.  But what does this really do?  Does it make derivatives any more sound or does it really just add more risk to central bank balance sheets and thus the currencies themselves?  ( Derivatives Crisis Of Banks…Worldwide )

It is very important to understand just how important derivatives have become.  Derivatives have been used to push, pull, manhandle and outright price many global markets.  They have been used to paint a picture as “proof” the Alice in Wonderland markets are in fact real.  Not even one single market can get out of control because “truth” anywhere will lead to TRUTH everywhere!  Even one single market left alone to Mother Nature will lead to questions that cannot be logically answered.

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Why Puerto Rico Defaulted And Greece Did Not

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

The Caribbean island of Puerto Rico is in the throes of a debt crisis that recently reached a breaking point when it missed a $422 million bond payment due May 2nd. When asked in a subsequent interview about the likelihood of making future payments on the remaining $72 billion of debt, Puerto Rican Governor Alejandro Garcia Padilla noted that the U.S. territory “does not anticipate having the money.”

Even a cursory review of Puerto Rico’s finances confirms Padilla’s claim of insolvency. The government is expecting deficits to grow from $14-$16 billion over the next five years, and for revenue to fall by $1.7 billion over that same five-year period. To makes matters worse the U.S. territory’s unemployment rate is a lofty 12.2 percent.

The problem is simple:  Puerto Rico’s debt burden is equal to over 100% of its GDP when including the $43 billion worth of unfunded pension liabilities. This situation is exacerbated by falling population growth and perpetually shrinking GDP.

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Another Look at a Scary Temperature Spiral

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

This week there was lots of noise from the Twittersphere and Blogosphere over this tweet from climate scientist Ed Hawkins which was covered at WUWT: Making Global Warming Scarier

It received over 10,000 retweets so far. Eric Worrall wrote then:

Ed Hawkins, a professor at University of Reading, has ditched boring old graphs, and created an animated graphic which attempts to maximise the emotional impact of global warming data.

It’s true, and “spiral” has a special scary connotation since NSIDC’s Mark Serreze coined the phrase “death spiral” for Arctic Sea ice. Unfortunately for him, the ice is still there. Josh saw an opportunity to educate, and has done so splendidly by taking Hawkins own method and combining it with other climate data he did not display.

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Wendy’s Replacing Workers With Kiosks In Response to ‘Fight For $15’

By – Re-Blogged From Infowars

Wendy’s announcement leads to fully robotic restaurants. In response to recent minimum wage hikes, Wendy’s is now replacing fast food workers with robots.

The fast food chain announced it will start automating all of its restaurants by installing self-serve kiosks in 6,000 locations by the end of the year.

Although McDonalds has already been experimenting with kiosks, Wendy’s announcement is the largest roll-out to date and will likely spark a trend leading to fully robotic restaurants.

“Wendy’s President Todd Penegor said it will be up to franchisees to decide whether or not to adopt the kiosks in their stores, noting that many franchise locations have had to raise prices to offset wage increases,” Slashdot reported. “California’s decision to gradually raise the minimum wage to $15 by 2022 will impact Wendy’s 258 restaurants, all of which are franchise-operated.”

“About 75% of 200-plus Wendy’s restaurants are run by franchisees in New York, a state that is also on its way to $15.”

It’s simple economics: when labor costs are too high to stay in business, owners will look for alternatives – including burger flipping robots.

One such robot, developed by the San Francisco start-up Momentum Machines, can replicate a fast food worker by shaping burger patties from ground meat, grilling them, adding the specified amount of ingredients, and serving them to customers on a conveyor belt.

Many fast food chains may be forced to outsource jobs to these machines because they cannot afford to stay in business paying workers $15 an hour, given the number of restaurants that have already closed after Seattle enacted such a minimum wage.

“The businesses that couldn’t afford it either shut down or laid off workers, and the businesses that could afford it simply shifted some money around by eliminating benefits and putting those dollars toward wages,” Joshua Krause of the Daily Steeple reported. “What the supporters of a higher minimum wage just don’t get, is that it hurts poor unskilled workers the most.”

 

Compulsory Courses for Any Curriculum; The Science Dilemma

By Dr Tim Ball – Re-Blogged From http://www.WattsUpWithThat.com

Science is pervasive directly and indirectly in every phase of modern life. While the majority are not directly involved in science, they need to understand science and how it works. It is increasingly the underlying control of social, political, and economic decisions made by them or for them. They need to understand how it works, even if they don’t make it work. This knowledge must be a fundamental part of any school curriculum.

Climate skeptics struggle with getting the majority of people to understand the problems with the UN Intergovernmental Panel on Climate Change’s (IPCC) anthropogenic global warming (AGW) story. It was the theme of my presentation at the first Heartland Climate Conference in New York and many articles and presentations since. The problem is much wider because it relates to the lack of scientific abilities among a majority of the population. Based on teaching a science credit for science students for 25 years, giving hundreds of public presentation and involving myself in education at all levels from K-12, to graduate, and post-graduate, plus the transition to the workplace, I believe a fundamental mandatory change in thinking and curricula are required.

I believe abilities are an example of the ongoing nature/nurture argument. People can learn an ability, but can only achieve a high level of competence with an innate ability. For example, most people can learn the mechanics of teaching, but only a few are ‘gifted’ teachers. These concepts are particularly true of certain abilities, such as music, art, languages and mathematics. From my experience, I learned that most people with these gifts struggled with understanding why other people cannot do as they do. Often, they do not even see their ability as unique, and some deride those without their ability. On a larger scale than just mathematics, which philosophically is an art, is the distinction of abilities between those who are comfortable with science and those who are not.

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The OPEC Epoch Is Over – Where Are Oil Prices Headed Now?

By David Haggith – Re-Blogged From Great Recession Blog

The fate of oil companies and nations hangs in the balance of oil prices. Russia could go broke. Some think that’s by US design. Saudi Arabia could experience its Arab Spring if oil prices remain too low too long. And OPEC is dead. That’s the biggest news in this new century for oil.

The House of Saud has stated clearly many times now and again this week in an even more emphatic manner that it intends to move the oil market from decades of OPEC price manipulation to a raw supply-and-demand equation. Rigging the price of oil was the raison d’être of the cartel known as the Organization of Petroleum Exporting Countries, and that function has now ended. But people are slow to get their heads around such big news.

Saudi Arabians enjoyed a tax-free environment as long as oil paid the bills and cheap subsidized fuel. Huge revenue from oil enabled constant pay-offs to the powerful that stabilized the state. All of that has ended or is at risk of ending as the Saudis seek to rebalance their state budget in the face of huge declines in revenue. So, changing the pricing structure of oil is a perilous change of course for the House of Saud, which tells you how serious they are about transforming the market back to a free market.

It’s fraught with peril for all. Among oil companies and banks, it’s not just the little leaguers that are hurting. Royal Dutch Shell reported an 83% decline in profits year on year. Most oil companies reported significant drops in profit for the first quarter of 2016, though many saw their stock values soar upon reporting because investors had feared an even worse hit. Their banks have reported the same.

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Why Trillion Dollar Deficits Are Coming Back Soon

By David Stockman – Re-Blogged From Stockman’s Contra Corner

Yesterday I noted that the frogs of Wall Street linger in the boiling pot because they are under the delusion that stocks are cheap based on the sell-side hockey sticks that always show $135 per share of S&P earnings and a 15X multiple in the next year ahead. Besides that, should anything go awry with the economy, Washington purportedly stands ready to bail-out the stock market with a new round of fiscal stimulus after the election.

The latter delusion brings to mind what might be called the “CBO hockey stick”, which is a fiscal fantasy so unhinged from reality as to make the Wall Street stock analysts look like models of sobriety by comparison. To wit, CBO’s latest 10-year budget projection assumes that the US economy will hit full employment next year, and remain there with nary a bump or recession in sight through September 2026, at least.

Well, now. Don’t bother to say Rosy Scenario move over because the arithmetic of CBO’s fantasy speaks for itself. That is, it is advising Washington to relax——we are heading for 207 straight months without a recession. And not in the next world, but this.

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Dow Could Be Above 25,000 Without Government Regulation

By Michael Carr – Re-Blogged From http://www.newsmax.com

A recent study concluded that the growth of regulation between 1977 and 2012 reduced economic growth by about 0.8 percent a year. Without all of those new regulations, GDP would be about $4 trillion higher.

This may seem like an abstraction but individuals suffer when economic growth fails to meet its potential. With $4 trillion in economic growth, there would be more jobs and jobs would pay better. As study by the Mercatus Center at George Mason University found, regulations could be shaving as much as $13,000 from each worker, on average.

Skeptics need to realize many manufacturers wouldn’t relocate if regulations didn’t increase the cost of doing business. There would be more jobs and better paying jobs without onerous regulation.

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Macy’s Crushed By Amazon

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

This is a tale of changing environments and the organisms that are, as a result, dying off.

First, consider the bricks and mortar retailers. Amazon, the dominant online seller of virtually everything, reports a spectacular quarter with soaring sales and (fairly new for them) strong profits. But in a world of flat consumer spending, where families have already used up their savings, their kids’ college funds and the loose change in their sofas to make ends meet, one store’s feast is necessarily another’s famine. And the physical retailers — which require you to actually go to them in order to buy their stuff — now find the water hole dry and the trees barren of leaves. Here’s what Macy’s reported this morning:

Macy’s results reminiscent of financial crisis

(CNBC) – Macy’s dismal first-quarter results are bringing back unwelcome memories of the financial crisis, as the retailer on Wednesday reported two metrics that harken back to that period of economic malaise.

During the first quarter, the department store chain said its comparable sales fell 5.6 percent. That marks a deceleration from its fourth-quarter same-store sales decline of 4.3 percent, and represents its most severe decrease in this metric since second quarter 2009. During that quarter, Macy’s comparable sales slid 9.5 percent.

Meanwhile, the retailer reported a 36 percent year-over-year drop in operating income. That not only marks its seventh straight quarter of year-over-year declines for this metric, but it is far steeper than any quarter during the Great Recession, said Ken Perkins, president of Retail Metrics. In second quarter 2009, by comparison, the retailer’s operating income fell closer to 10 percent.

It’s hard to see how Macy’s survives in its current form. But it might hang on longer than Italy’s major banks, which are saddled with a profligate and therefore ungovernable home country locked within a currency union managed by Germany for Germany. The result is catastrophic:

Tumbling Banco Popolare leads Italian bank shares lower

(Reuters) – Shares in Banco Popolare plunged 14 percent on Wednesday after a surprise first-quarter loss driven by loan writedowns — the main focus of investor concerns over Italian banks.

Banco Popolare booked loan writedowns requested by the European Central Bank as a condition for approving a planned merger with Banca Popolare di Milano that will create Italy’s third-biggest banking group.

To improve its loan loss provisions Banco Popolare must raise 1 billion euros in a share issue slated for early June.

Italian banks have lost nearly 40 percent of their market value so far this year, weighed down by concerns they could need additional capital to shoulder losses from sales of bad loans that rose to 360 billion euros ($410 billion) during a long recession.

A share rebound triggered by the hasty creation last month of the fund intended to inject capital into weaker lenders and buy their bad loans proved short-lived.

Banco Popolare said late on Tuesday that it had written down loans for 684 million euros in the first quarter, nearly four times more than in the same period of 2015, posting a net loss of 314 million euros for the first three months.

CEO Pierfrancesco Saviotti told an analyst call that the loan writedowns were the first step towards selling chunks of bad loans and that it would book further provisions this year.

He said the ECB wanted provisions to cover 62 percent of the most troubled loans up from a 60 percent coverage ratio the bank reached in the first quarter.

Bankers say other Italian banks are likely to follow in the steps of Banco Popolare and raise cash to make up for loan losses.

Loans to insolvent borrowers are valued on average at around 40 percent of their nominal value on Italian banks’ balance sheets but market prices for these assets reach at most 30-35 cents on the dollar when the loan is backed by a good-quality property.

The problem for both physical retailers and Italian banks is that the world continues to change in unfavorable ways. E-commerce keeps getting easier and more fun, and malls as a result keep getting emptier, with no end in sight. (Actually there is an end in sight, which is when most malls are cleared of bankrupt retailers and converted to refugee housing.)

As for Italian banks, the euro is up lately, which makes Italy that much less competitive on global markets and Italian borrowers that much less likely to cover their payments. And with interest rates trending ever-more-negative, there’s not much for even a well-run bank to do with excess capital these days.

Which leads inescapably to the conclusion that while Macy’s and the Italian banks are the weakest and therefore most vulnerable organisms in this ecosystem, they’re just the first to go. Other US retailers will report a string of bad numbers in the coming month and other banks around the world will follow the Italians’ lead. Here’s a Zero Hedge chart comparing the stock price of Germany’s iconic Deutsche Bank to (iconic in a different way) Lehman Brothers pre-Great Recession:

As a result, in the coming year the dominant question will morph from “what to buy?” to “what crashes next?”

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Stan Druckenmiller: The Bull Market Is Exhausted

By Patrice Fusillo – Re-Blogged From http://www.Gold-Eagle.com

Legendary investor Stan Druckenmiller, founder of Duquesne Capital Management LLC, told the Sohn Investment Conference in New York last week that he is bullish on gold and bearish on the stock market. He told the conference, “Gold is our largest currency allocation.”  Moreover, Druckenmiller recommended that investors sell their equity holdings. “The bull market is exhausting itself,” he told the conference. A major factor has been the Federal Reserve’s easy money policy, which has resulted in “reckless” corporate behavior.

Growing corporate debt is increasingly used for financial engineering, rather than in R&D that could lead to productivity improvements, Druckenmiller said. According to him, from 2012 to 2015, use of debt for U.S. nonfinancial firms for stock buybacks and M&A increased from $1.25 trillion to $2 trillion, while debt for R&D and office equipment grew from $1.55 trillion to only $1.8 trillion.

“The corporate sector today is stuck in a vicious cycle of earnings management, questionable allocation of capital, low productivity, declining margins and growing indebtedness,” Druckenmiller added.

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A Trade Policy that Puts Americans First

By Bryan Riley – Re-Blogged From Heritage Foundation

Congress should eliminate all tariffs on inputs used by U.S. manufacturers to compete in the global economy.

In 2015, 45 percent of all U.S. imports were “intermediate goods” ranging from aircraft parts to oil to zinc. U.S. manufacturers rely on these imports to create American jobs and compete in the global marketplace. Another 20 percent of imports were capital goods like machinery and manufacturing equipment. Americans imported three times as many intermediate and capital goods as they did consumer goods like T-shirts and cell phones.

U.S. tariffs on intermediate goods drive up the cost of manufacturing. The government should permanently eliminate all of these self-destructive tariffs.

History

Cutting tariffs on inputs is not a new idea. In 1887, President Grover Cleveland observed: “The radical reduction of the duties imposed upon raw material used in manufactures, or its free importation, is of course an important factor in any effort to reduce the price of these necessaries.”[1] Although the U.S. never took President Cleveland’s advice to eliminate tariffs on inputs, other countries have done so.

For example, China does not impose tariffs on intermediate goods used to produce products for export markets. In 2015, Canada eliminated all remaining tariffs on machinery and inputs for industrial manufacturers. According the president of the Canada Manufacturers and Exporters, “The elimination of all tariffs on imported goods and equipment, along with other tax measures, is providing Canadian manufacturers with a significant competitive advantage. Manufacturers across the country are using these tax savings to invest in innovation, growth and jobs.”[2]

On April 22, Canada’s Department of Finance announced plans to pursue additional tariff cuts to boost agricultural producers:

Manufacturers need a wide range of inputs to produce their products. Some of these inputs are imported and may face tariffs when entering Canada. Such tariffs are a non-recoverable charge that increases the production costs for Canadian manufacturers, affecting their competitiveness at home and abroad. Eliminating tariffs on imported food manufacturing inputs will support both investment and job creation in Canada’s agri-food processing sector—the country’s largest manufacturing employer and an important contributor to the economy. It will also make the sector more competitive in domestic and foreign markets.[3]

What the Experts Say

Many studies have documented the potential benefits of removing tariffs on inputs.

According to a report from the Organisation for Economic Co-operation and Development, “Import barriers can deny firms access to the goods and services they need to compete internationally. Rather than protecting domestic jobs, trade restrictive policies can produce plant closures and job losses. On the other hand, more liberal trade policies allow firms to fully benefit from international production networks.”[4]

An American Economic Review study of Indonesia by Mary Amiti and Jozef Konings concluded that “a 10 percentage point fall in input tariffs leads to a productivity gain of 12 percent for firms that import their inputs.”

Shimelse Ali and Uri Dadush at VoxEU observed: “Because imports increasingly feed into exports, an import tariff on parts and raw materials has a big impact on exports. Tariffs on intermediates may also discourage inward bound foreign direct investment and encourage outward bound instead.”[5]

Pierre-Louis Vézina explained the importance of cutting tariffs on inputs in order to attract foreign direct investment (FDI): “[T]he two decades of unilateral tariff cutting in Asia’s emerging economies may indeed have been driven, at least in part, by a competition for FDI. Racing governments were cutting tariffs on inputs to obtain marginal locational advantages in attracting multinationals that relied on imports of parts and components for local processing.”[6]

Current Efforts to Cut Tariffs on Inputs

Congress is considering the American Manufacturing Competitiveness Act, which would allow for small temporary tariff cuts of up to $500,000 per year for three years on imported inputs that are not produced in the U.S. This legislation has received broad support.

“Amid rising costs and a tough global economy, manufacturers are paying and will continue to pay a heavy price if Congress does not move on this legislation,” the National Association of Manufacturers argues. “These distortions are particularly severe for those manufacturers that must pay tariffs on necessary inputs not produced domestically, while the competing foreign finished product comes in duty-free.”[7]

According to Kevin Brady (R–TX), Chairman of the House Ways and Means Committee:

[O]ur bill will create an effective process for the House to consider manufacturing tax cuts that will help our job creators compete in the global market. Under the new process, our manufacturers will regain their competitive edge over manufacturers from other countries. Soon, it will be easier for our manufacturers to lower costs, create new jobs, increase U.S. production, reduce prices, and help grow our economy.[8]

PING golf equipment’s parent company has noted the urgency of “fixing the tariffs that penalize U.S. manufacturing, limit our ability to make products and provide jobs here while competing on the global playing field.”[9] U.S. tariffs on golf club parts are actually higher than tariffs on full golf clubs, which discourages the production of golf clubs in the United States: “PING is required to pay a higher tariff rate for importing component parts of golf clubs—and providing jobs to U.S. workers assembling golf clubs at PING—than the tariff rate we would pay to import a golf club wholly manufactured overseas. Why does our federal government penalize us in this way?”[10]

“To me,” says House Speaker Paul Ryan (R–WI), “this is just common sense. This bill would eliminate duties on hundreds of products that we don’t even make in this country—and that our manufacturers need to make their own products.”[11]

Think Big

If small temporary cuts on tariffs applied to inputs are beneficial, surely large, permanent cuts would be even better. Manufacturers should not have to worry about whether their temporary tariff cuts might be suspended in future years. Eliminating tariffs on big-ticket imported inputs like auto parts would encourage more jobs in the car manufacturing industry. To help companies like PING, in addition to a small temporary cut in tariffs on golf club parts containing titanium, the government should eliminate the 14.8 percent ($37.9 million) tariff on imported titanium.

Permanently eliminating all tariffs on inputs is a trade policy that would be guaranteed to encourage more job-creating investment in the U.S.

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Newsbytes: Elon Musk’s SolarCity Crashes

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

As SolarCity Crashes, Is Elon Musk Overrated?

Shares of SolarCity nose-dived on Tuesday after disclosing earnings results that cast gloom over the provider of solar systems. The big problems for the solar company: The quarterly report disclosed a loss that was bigger than expected, and management followed that up with a dismal outlook for future results. So far in 2016, SolarCity shares have plummeted 65 percent. –George Avalon, Silicon Beat, 10 May 2016

The real problem with Tesla cars is that no one actually buys them. Well, not directly. Their manufacture is heavily subsidized — and their sale is heavily subsidized. Tesla does not make money by selling cars, either. It makes money by selling “carbon credits” to real car companies that make functionally and economically viable vehicles that can and do sell on the merits — but which are not “zero emissions” vehicles. It is estimated that Musk’s various ventures — including his new SolarCity solar panel operation and SpaceX — have cost taxpayers at least $4.9 billion, with Tesla accounting for about half of that dole. –Eric Peters, The Detroit News, 9 May 2016

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Misuse of The Law; Another Battle in the Climate Wars

Dr. Tim Ball – Re-Blogged From http://www.WattsUpWithThat.com

“In war, truth is the first casualty.” Aeschylus (525 BC – 456 BC)

Maybe my first payment from Exxon for my climate views will arrive with the subpoena from the Attorney General (AG) of the Virgin Islands charging me under the Criminally Influenced and Corruptions Organizations Act (CICO) for trying to tell the truth. This is the Virgin Island’s version of the Racketeer Influenced and Corrupt Organizations Act (RICO). Most who contribute to WUWT, are included because at the public event,

“Al Gore, announced that his new coalition would find “creative ways” to prosecute fossil fuel companies, individuals, and organizations who disagree with the catastrophic global warming narrative.”

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Japan: An Economy Of Zeros

By Michael Pento – Re-Blogged From http://www.Silver-Phoenix500.com

The red sun on the flag of Japan symbolizes its position as the land of the rising sun. However, during WWII that round shape was pejoratively referred to as a zero. And now, since Japans economy is emitting so many zeros it can, unfortunately, once again be referred to as the land of zeros.

Prime Minister Shinzo Abe’s economic plan known as Abenomics consists of three arrows. The 1st Arrow is aggressive money printing known as QQE in order to bring about yen depreciation. The 2nd arrow is massive deficit spending. And the 3rd arrow is structural reform, which is political claptrap for feckless growth proposals like increasing workforce diversity.

Therefore, the core strategy of Abenomics is to derive growth by increased government spending and flooding the world with the yen. If Abenomics were only about yen depreciation it would be considered a huge success. The yen lost 35% of its value between 2012-2015. Likewise, if the goal were to run huge deficits Abenomics has also achieved its goal. Since December of 2012 fiscal deficits have ranged between 6-8% of GDP.

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Weekly Climate and Energy News Roundup #225

The Week That Was: May 7, 2016 – Brought to You by www.SEPP.org

By Ken Haapala, President, Science and Environmental Policy Project

Tropical Atmosphere: Temperature trends in the tropical atmosphere are particularly important because, according to the theory advanced by the UN Intergovernmental Panel on Climate Change (IPCC), this is where any warming from carbon dioxide (CO2) should be amplified by an increase in warming from other factors, namely water vapor – the most abundant greenhouse gas. Indeed, amplified warming has been a major feature in recent IPCC reports, beginning in the Second Assessment Report (AR-2, 1996), which claimed a pronounced warming trend over the tropics centered about 10 km (33,000 feet) of about twice the warming trend of the surface. A paper published by Douglass, Christy, Pearson and Singer in 2007 pointed out that the hot spot cannot be found in the atmospheric temperature trends measured by balloons and by satellites. This has been a major source of contention between scientists supporting the IPCC and by those challenging it. [As Richard Lindzen stated in his video reviewed in the last two TWTWs, Group 1 and Group 2 scientists.]

In his written testimony to the U.S. House Committee on Science, Space and Technology on February 2, John Christy of the University of Alabama in Huntsville submitted the results of 102 IPCC CIMP-5 Climate Model runs for the Global Bulk Atmospheric Temperature. (Surface to 50,000 feet (15,240 meters). (CIMP-5 is the latest version global climate models used by the UN Intergovernmental Panel on Climate Change (IPCC))

Christy tested the results of these model runs against temperature observations by four different datasets of weather balloon measurements with one type of instruments and by satellites with another type of instruments as calculated by 3 different entities. Christy shows a 0.98 correlation between the types of observational datasets, which is very high for such types of measurements. Not only is there significant disparity between the average of model runs and observations; but also, since 1995 the disparity is increasing significantly. The models greatly overestimate the warming of the bulk atmosphere, and that over the tropics by approximately three times the observed. (TWTW, Feb 6, 2016)

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Man Who Foresaw Oil Crash Bets Against Saudi Arabia

By Matt Egan – Re-Blogged From CNN Money

Two years ago, Zach Schreiber correctly predicted the epic oil crash. Now he’s warning of a looming financial disaster in Saudi Arabia.

When Schreiber speaks, people sit up and pay attention. His 2014 prophesy reportedly led to a $1 billion profit for his firm.

“If you’re long, I’m sorry for you,” the CEO of hedge fund PointState Capital said when he made the bet two years ago and oil was over $100 a barrel.

Oil’s eventual crash to as low as $26 a barrel this past February has created headaches for Saudi Arabia and other countries that rely on oil to make their budgets. Saudi Arabia has already slashed spending and is racing to raise cash. This past weekend, the country fired its longtime oil minister.

Schreiber believes things are about to get a lot worse.

“Saudi has two to three years of runway before it hits a wall,” Schreiber said at the 21st Annual Sohn Investment Conference last week, returning to the scene of his 2014 oil call.

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More US Taxpayer Cash Giveaways for Clean Energy

By Eric Worrall – ReBlogged From http://www.WattsUpWithThat.com

The US Government is concerned that huge taxpayer underwritten loan guarantees for renewable energy projects aren’t producing the results they want, so they have decided to step up the effort to give away money, by offering free cash and work space to projects which are too “high risk” to attract investment from venture capitalists, or qualify for other green funding schemes.

For America’s next generation of clean energy innovators, getting started can be the hardest part.

That’s why the Department of Energy is testing a new model for clean energy research and development (R&D) through a program called Cyclotron Road. The goal is to support scientific R&D that is still too risky for private‐sector investment, and too applied for academia.

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Trumped! Why It Happened And What Comes Next

By David Stockman – Re-Blogged From Stockman’s Contra Corner

Donald Trump’s patented phrase “we aren’t winning anymore” lies beneath the tidal wave of anti-establishment sentiment propelling his campaign and, to some considerable degree, that of Bernie Sanders, too.

As we demonstrated in Part 1, what’s winning is Washington, Wall Street and the bicoastal elites. The latter prosper from finance, the LA and SF branches of entertainment ( movies/TV and social media, respectively) and the great rackets of the Imperial City—including the military/industrial/surveillance complex, the health and education cartels, the plaintiffs and patent bar, the tax loophole farmers and the endless lesser K-Street racketeers.

But most of America’s vast flyover zone has been left behind. Thus, the bottom 90% of families have no more real net worth today than they had 30 years ago and earn lower real household incomes and wages than they did 25 years ago.

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The Next “Advance Auction on Stolen Goods”

By Doug Casey – Re-Blogged From International Man

It appears there are two candidates running from the left wing of the Demopublican Party (Hillary and Bernie), and two and a half from the right wing (Trump, Cruz, and Kasich). Note: The media identifies the Lefties by their first names, a friendly and personal thing, unlike the Righties.

I find it distasteful discussing current political figures. But since somebody new is going to be president come November, it makes sense to figure out who that might be, in order to insulate yourself as much as possible from the damage they’ll do.

Let me start by saying that this is not just the most entertaining election I’ve ever witnessed. But after the 1860 election, which Lincoln won with 40% of the popular vote (the remainder split between Stephen Douglas and two other candidates), I suspect it will also be the most divisive, hostile, and critical to the future of the country. Ever.

Why do I say that? Because the U.S. hasn’t been this unstable since the unpleasantness of 1861–1865.

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Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing

By Michael Snyder – Re-Blogged From Economic Collapse

We continue to get more evidence that the U.S. economy has entered a major downturn.  Just last week, I wrote about how U.S. GDP growth numbers have been declining for three quarters in a row, and previously I wrote about how corporate defaults have surged to their highest level since the last financial crisis.  Well, now we are getting some very depressing numbers from the rail industry.  As you will see below, U.S. rail traffic was down more than 11 percent from a year ago in April.  That is an absolutely catastrophic number, and the U.S. rail industry is feeling an enormous amount of pain right now.  This also tells us that “the real economy” is really slowing down, because less stuff is being shipped by rail all over the nation.

One of the economic commentators that I have really come to respect is Wolf Richter of WolfStreet.com.  He has a really sharp eye for what is really going on in the economy and in the financial world, and I find myself quoting him more and more as time goes by.  If you have not checked out his site yet, I very much encourage you to do so.

On Wednesday, he posted a very alarming article about what is happening to our rail industry.  The kinds of numbers that we have been seeing recently are the kinds of numbers that we would expect if an economic depression was starting.  The following is an excerpt from that article

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Next Employment Crisis Is Here

By Michael Snyder – Re-Blogged From Economic Collapse

Should we be alarmed that the number of job cuts announced by large U.S. companies was 35 percent higher in April than it was in March?  This is definitely a case where the trend is not our friend.  According to Challenger, Gray & Christmas, U.S. firms announced 65,141 job cuts during April, which represented a massive 35 percent increase over the previous month.  And so far this year overall, job cut announcements are running 24 percent higher than for the exact same period in 2015.  Meanwhile, on Thursday we learned that initial claims for unemployment benefits shot up dramatically last week.  In fact, the jump of 17,000 was the largest increase that we have seen in over a year.  Of course the U.S. economy has been slowing down for quite a while now, and many have been wondering when we would begin to see that slowdown reflected in the employment numbers.  Well, that day has now arrived.

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Prepare for Blackouts: San Diego To Run 100 Percent On Renewable Energy By 2035

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

The city of San Diego has announced a bold new plan to run completely on renewable energy by 2035. While the city already produces the second largest electrical output from solar energy in the U.S., the new plan further details a way to cope with the changing climate. It plans to reduce 50% of the greenhouse gas emission by 2035, as well as create new jobs through the manufacturing and installation of solar panels. “San Diego is a leader in innovation and sustainability,” the Climate Action Plan reads:

“By striking a sensible balance between protecting our environment and growing our economy, San Diego can support clean technology, renewable energy, and economic growth.”

San Diego joins San Francisco, Sydney, and Vancouver in its effort to run entirely on renewable energy.

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T-TIP: Salvation or Trash-Tip?

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

President Obama weighed into the Brexit debate on his recent visit to the UK, saying that if Britain left the EU, she would be at the back of the queue when it comes to a free trade agreement.

If this was intended to scare voters into voting Remain, the tactic seems to have failed, with the subsequent swing in the polls favouring Brexit. However, this intervention has drawn widespread attention to the current trade negotiations between the US and the EU, known as T-TIP.

It stands for Transatlantic Trade and Investment Partnership, and is intended to be a free trade and investment agreement between the United States and the (currently) 28 member states of the EU. It makes eminent sense to have free trade between these two economic powers, which account for over 50% of world GDP. Both sides recognise the economic benefits, hardly surprising for America which experienced the disaster of the 1930 Smoot Hawley Tariff Act. It is a little surprising that the EU’s leaders, who genuinely dislike Anglo-Saxon concepts of free markets, and therefore the concepts behind free trade, also accept it will improve prospects for the EU economy.

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