Studies Show Fracking Ban Would Wreak Havoc on U.S. Economy

By Tim Benson – Re-Blogged From WUWT

A new study from the American Petroleum Institute (API), with modeling data provided by the consulting firm OnLocation, details how a nationwide ban on hydraulic fracturing (colloquially known as “fracking”) could trigger a recession, would seriously damage U.S. economic and industrial output, considerably increase household energy costs, and make life much harder and costlier for American farmers.

In America’s Progress at Risk: An Economic Analysis of a Ban on Fracking and Federal Leasing for Natural Gas and Oil Development, API argues that a fracking ban would lead to a cumulative loss in gross domestic product (GDP) of $7.1 trillion by 2030, including $1.2 trillion in 2022 alone. Per capita GDP would also decline by $3,500 in 2022, with an annual average decline of $1,950 through 2030. Annual household income would also decline by $5,040.

Continue reading

Tariffs Are Having A Bigger Effect On US Manufacturing Than Initially Thought

By Frank Holmes – Re-Blogged From Gold Eagle

The U.S. manufacturing sector contracted for the fifth straight month in December, with the monthly reading from the Institute for Supply Management (ISM) hitting its weakest point in more than 10 years. The purchasing manager’s index (PMI) fell to 47.2, a level we haven’t seen since June 2009, as global trade tensions continued to take a toll on the country’s manufacturers.

The news comes as two new papers indicate that U.S. tariffs on imported goods, particularly those originating in China, have had more of an impact on manufacturing and industrial output than initially believed.

Continue reading

Mexico Becomes A Net Oil Importer

By SRSrocco – Re-Blogged From Silver Phoenix

While Mexico suffered the bloodiest year of violent deaths in 2018, even bigger trouble may be ahead for the embattled country.  For the first time in more than 50 years, Mexico has become a net importer of oil.  This is undoubtedly bad news for the Mexican Government as it has relied upon its oil revenues to fund a large percentage of its public spending.

And, the majority of these revenues came from just one prolific oil field.  After the discovery of the huge Cantarell Oil Field in the Gulf of Mexico in 1976, Mexico’s oil production surged from 894,000 barrels per day to a peak of 3.8 million barrels per day (mbd) in 2004.  That year, Mexico’s net oil exports exceeded 1.8 mbd.

Unfortunately, the downturn of Mexico’s oil production was also due to the peak and decline of the Cantarell Oil Field, which topped out at 2.1 mbd in 2004 and is now below 135,000 barrels per day:

Continue reading

President Trump’s Trade Tantrum Triggers Slump

By Alasdair Macleod – Re-Blogged From Silver Phoenix

For decades, Western governments have been pursuing a policy of transferring wealth from the public to themselves, their licensed banks and the banks’ favoured customers by means of interest rate suppression and monetary inflation. Consequently, inflation of financial asset prices has benefited the financial sector to the detriment of those employed in the productive economy. Over time, this has badly weakened productive capacity and the long-term ability of the market economy to fund future government spending.

It is a situation which seems bound to eventually lead to major economic and monetary problems. Additionally, global economic prospects have worsened considerably as a result of President Trump’s tariff wars against China and others. Empirical evidence from the 1930s as well as economic analysis illustrate how trade tariffs have a devastating effect on domestic economic activity, a prospect wholly unexpected by today’s economists.

Continue reading

US Just Became Net Oil Exporter for First Time in 75 Years

By Bloomberg – Re-Blogged From Newsmax

America turned into a net oil exporter last week, breaking 75 years of continued dependence on foreign oil and marking a pivotal — even if likely brief — moment toward what U.S. President Donald Trump has branded as ‘energy independence.’

The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania.

While the country has been heading in that direction for years, this week’s dramatic shift came as data showed a sharp drop in imports and a jump in exports to a record high. Given the volatility in weekly data, the U.S. will likely remain a small net importer most of the time.

Kudlow: Market Worried Democrats Will Overturn Trump Growth Policies

By F McGuire – Re-Blogged From Newsmax

White House economic adviser Larry Kudlow says that Wall Street is plunging because of fear Democrats will win midterms and end President Donald Trump’s “pro-growth policies.”

Kudlow, speaking to reporters outside the White House on Tuesday, blamed the market decline on mid-term elections, CNBC.com reported.

Continue reading

Is The American Machine Tool Industry Well?

By Albert Albrecht – Re-Blogged From https://www.mmsonline.com

If you can believe the economist, it is on its way to recovery. Machine tool shipments and imports have turned around since the 2009 recession low, and in recent months have steadily improved. After a dismal 2009 and poor start in 2010, quarterly shipments have started to increase, evidence that the industry has started to recover. This is encouraging, if it were not for the fact quarterly shipments fell to record lows and 2009 and 2010. It is like getting a few drops of wine to an empty wine glass—the glass is still less than half full.

Continue reading

Is Oil About To Become Front-Page News? “A Glut That Held Prices Down For Years Is Essentially Gone”

By John Rubino – Re-Blogged From Dollar Collapse

Here’s a new indicator for you: It seems that the difference between the price of oil here and abroad is a measure of tightness in the market, with a rising spread indicating higher prices in the future, with all the inflationary pressures that that implies. From today’s Wall Street Journal:

Continue reading

Trade Gap Narrows as Claims Remain Low, Productivity Stays Tepid

By Bloomberg – Re-Blogged From Newsmax

The U.S. trade deficit narrowed in March by the most in two years, while last week’s unemployment filings were below estimates and productivity gains remained lukewarm in the first quarter.

Here’s what you need to know from the economic reports out Thursday morning:

Continue reading

The Impact Of Currency Exchange Rates On The Economy

   By Katherine Reed

Most people see currency conversion as something simple that appears because of a need to change currency. The problem is that currency exchange is incredibly complicated and there are so many different things that are analyzed when the rates are calculated. The truth is that exchange rates will always have an impact on business and since the economic recession hit many companies, the impact is a lot higher at the moment. Drastic fluctuations will affect the entire global training market.

Continue reading

Strategic minerals – Our next energy and security crisis?

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

Foreword:

America has had its share of oil-centered energy problems and disruptions. Now it faces potential renewable energy and high technology crises, because of its heavy reliance on imports of the rare earth and other strategic minerals that are the essential building blocks for wind turbines, solar panels, computers, smart phones, medical diagnostic devices, night vision goggles, GPS and communication systems, long-life batteries and countless other applications.

The White House and Trump Administration recently launched initiatives designed to ensure access to up-to-date information on potential US and other alternative sources – and to finding safe and environmentally sound ways to find, mine, reprocess and recycle critical minerals. The goal is to emphasize sources that are less likely to come from unfriendly nations, less likely to face disruption … especially from domestic mining.

Continue reading

As Trump Weighs Tariff, US Steelmakers Enjoy Rising Profits

Re-Blogged From Newsmax

The Trump administration has chosen an odd time to offer special protection to the U.S. steel industry.

As President Donald Trump prepares to impose a 25 percent tax on imported steel, America’s steelmakers are actually faring pretty well: The U.S. steel industry last year earned more than $2.8 billion, up from $714 million in 2016 and a loss in 2015, according to the Commerce Department. And the industry added more than 8,000 jobs between January 2017 and January 2018.

Even before Trump mentioned the tariff last Thursday, the price of the benchmark U.S.-made hot-rolled steel had reached the highest level since May 2011, according to S&P Global Platts. The price surged even higher on the tariff news.

Continue reading

The Price Of Eco-Madness: California’s Oil Production Collapse

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

From the “everything is leaving California these days” department. The collapse of the oil industry in California, once our second-most-important producing state, is a very sad thing to see.

The U.S. shale oil revolution has completely passed the state by.

California crude oil production in thousands of barrels per day since 1980. Data source: US Energy Information Administration

Continue reading

Mexico’s Oil Industry Continues To Disintegrate: PEMEX Suffers $18 Billion Loss

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

The situation in Mexico’s oil industry continues to rapidly disintegrate as falling oil production and rising costs resulted in an $18 billion fourth-quarter loss for the state-run oil company, PEMEX.  Part of the reason for the huge financial loss at PEMEX was the fall in the value of the Mexican Peso.  While PEMEX’s costs are in Pesos, it sells crude oil and purchases petroleum products in Dollars.  Because the Mexican Peso declined 8% versus the Dollar, it put a huge strain on the company’s year-end financials.

Continue reading

Germans Become The World’s Biggest Buyers Of Gold

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

When I talk about Indians’ well-known affinity for gold, I tend to focus on Diwali and the wedding season late in the year. Giving gifts of beautiful gold jewelry during these festivals is considered auspicious in India, and historically we’ve been able to count on prices being supported by increased demand.

Another holiday that triggers gold’s Love Trade is Dussehra, which fell on September 30 this year. Thanks to Dussehra, India’s gold imports rose an incredible 31 percent in September compared to the same month last year, according to GFMS data. The country brought in 48 metric tons, equivalent to $2 billion at today’s prices.

 

Continue reading

Stalling Engines: The Outlook for U.S. Economic Growth

By John P Hussman – Re-Blogged From Hussman Funds

Imagine driving a car moving down the road at 20 miles an hour. You hold a rope out the window. At the other end of that rope is a skateboard. If the skateboard is behind the car, yanking the rope pulls the skateboard forward, so the skateboard might temporarily speed ahead until it gets way ahead of the car and the rope tightens again. At that point, yanking the rope will pull the skateboard back, so even while the car continues down the road at 20 miles an hour, the skateboard actually loses ground for a while. Over the long-term, the car and the skateboard move ahead at the same speed, but the speed of the skateboard over shorter horizons depends on its position relative to the underlying trend.

The same proposition applies to the trajectory of numerous economic and financial variables. We have to be attentive to at least two things: 1) the central tendency of growth in underlying fundamentals, and 2) our current position, relative to that central tendency. The difference between the two is what separates longer-term growth from cyclical fluctuations.

Continue reading

A Little Perspective On The Post-Election Gold Market

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

Most of gold’s downside is geared not to the financial decisions of millions of investors around the globe, as the mainstream media would have you believe, but rather to linear computer algorithms geared to the dollar index.  The trading part of the software has been told to automatically place trades at certain correlated price levels and that is why we get these waterfall drops.  The rocket launch trajectories to the upside come when the trading function is told to buy and cover the previous shorts.

Continue reading

Elimination of GMO Crops Would Cause Hike in Greenhouse Gas Emissions

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

From PURDUE UNIVERSITY and the “better living through genetics” department comes this press release that is sure to setup an impossible quandary in the minds of some anti-GMO zealots who also happen to be climate proponents…

Planting GMO crops is an effective way for agriculture to lower its carbon footprint.

Model predicts elimination of GMO crops would cause hike in greenhouse gas emissions

WEST LAFAYETTE, Ind. – A global ban on genetically modified crops would raise food prices and add the equivalent of nearly a billion tons of carbon dioxide to the atmosphere, a study by researchers from Purdue University shows.

Using a model to assess the economic and environmental value of GMO crops, agricultural economists found that replacing GMO corn, soybeans and cotton with conventionally bred varieties worldwide would cause a 0.27 to 2.2 percent increase in food costs, depending on the region, with poorer countries hit hardest. According to the study, published Oct. 27 in the Journal of Environmental Protection, a ban on GMOs would also trigger negative environmental consequences: The conversion of pastures and forests to cropland – to compensate for conventional crops’ lower productivity – would release substantial amounts of stored carbon to the atmosphere.

Continue reading

The Ugliest Economic Data I’ve Ever Seen (Part 2)

By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com

It’s Thursday morning – and there are nearly a dozen “PM bullish, everything-else-bearish” headlines worthy of distinct articles.  Such as…

1. This shocking, and hilarious, segment of the John Oliver show, depicting how subprime auto lending has officially reached the destructive lunacy of the 2007-08 subprime mortgage market. Not to mention, subprime student lending, as a whopping 37% of the $1+ trillion, government-underwritten student loan “market” is now delinquent.

2. Obamacare is literally on the brink of collapse, with insurers losing $2 billion in 2015 alone, and pulling out of the program en masse

Continue reading

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.

Continue reading

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.

CONTINUE READING –>

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.

Continue reading

Global Fiscal And Monetary Madness

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

Last week China’s central bank (the PBOC) cut borrowing costs for the sixth time in a year and eased the reserve requirement ratio (RRR) for the third time this year, in a desperate attempt to achieve the prescribed growth target of 7% off the back of ever-increasing credit issuance. The PBOC lowered the one-year benchmark bank lending rate by 25 basis points to 4.35%, the one-year benchmark deposit rate was also lowered by 25 basis points to 1.5%.

In addition to this, the RRR was cut by 50 basis points for all banks, bringing the ratio to 17.5% for the biggest lenders, while banks that lend to small companies and agricultural firms received an additional 50-basis-point reduction to their RRR.

This latest round of easing followed a report showing that despite a surprise devaluation of the yuan in August, economic growth in the third quarter was the slowest in six years. Goldman Sachs Group Inc. estimates the easing will release 600 to 700 billion yuan ($94 billion to $110 billion) into the financial system, keeping borrowing costs at the regime’s all-time low.

Continue reading

China’s Release of Its Peg

cropped-bob-shapiro.jpg   By Bob Shapiro

Last year, in May, the US Dollar began to strengthen against most of the other currencies around the world. More correctly phrased, I believe, is that the other currencies fell against the Dollar, since the US government – running massive Balance of Payments deficits – and the US Central Bank, the Federal Reserve, continued to print paper Dollars with wild abandon.

As the Dollar became relatively more expensive – on average by 20%! – than the currencies of our trading partners, US exports became less competitive than previously, so our exports have fallen. Similarly, other countries’ exports to us – our imports – have fallen in price, and US imports are up dramatically.

Continue reading

Ignore The Commodity Message At Your Own Peril

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

The Thompson Reuters/Jefferies CRB Index (CRB) is back down to the panic lows of early 2009. For those who think the CRB Index says nothing about global growth…invest accordingly at your own peril.

If you believe this commodity crunch is all about some temporary oil supply glut, think again. There are 19 commodities that make up the CRB Index: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, Silver, Soybeans, Sugar, Unleaded Gas and Wheat. The value of the weighted average of these commodities is screaming one thing loudly: the rate of global growth is plummeting just as it was at the height of the Great Recession.

Continue reading

US at War With Puerto Rico

cropped-bob-shapiro.jpg   By Bob Shapiro

The US is causing high unemployment, high and growing public debt, and an increasing reliance on handouts among the citizens of Puerto Rico. US federal laws are killing what could be a Free Market success in this territorial “possession.” Peter Schiff discusses below, the particulars of US stupidity on the island, making Puerto Rico another Greece waiting to happen, and he outlines easy solutions to the US caused socialistic destruction.

By Peter Schiff – Re-Blogged From http://www.Gold-Eagle.com

While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency.

Continue reading

The Swiss Franc Shock!

cropped-bob-shapiro.jpg   By Bob Shapiro

Tiny Switzerland is an economic powerhouse of sorts. Swiss GDP is about 1/50th of US GDP, while GDP per capita is about 5% higher than in the US. Growth in the Swiss Economy is about in line with US numbers – except the US numbers are fudged with the lowball CPI figures. Swiss unemployment is lower than the US. The appeal of its banking system to worldwide customers is legendary.

Continue reading

One Benefit From Shale Oil

Mark Perry AEIFrom  D. Mark J. Perry – American Enterprise Institute

Environmentalists these days tend to fight against any energy source except solar and wind. The US went from being a major exporter of oil many decades ago to having to import over 60% of our needs in 2005.

However, even with regulations attempting to strangle our energy supplies, the private, productive sector – you know, those awful oil companies – have developed new technologies creating a new oil
Continue reading