How a Rational US President Would Create Jobs Now

A rational US president who was genuinely concerned about revitalising the American economy, would first remove all unnecessary and nonsensical government impediments to business investment and enterprise. Commerce and industry are particularly susceptible to government restrictions on the energy, power, and fuels that run society's crucial machinery. That would be a good place to start.

Video h/t Washington Examiner

Imagine if all of Obama's devastating policies of energy starvation were revoked. The resulting growth of jobs, revenues, and energy production would be astounding. Growth of jobs directly involved in energy production, transport, and sales, would be just the beginning. Each new energy job would stimulate the creation of supporting jobs in services, housing, manufacturing, infrastructure, etc. And so it goes: growth breeds growth.

The images below are taken from a report released last week by Wood MacKenzie, looking at the impact of relaxing just a few of President Obama's anti-energy policies (h/t Powerlineblog).

Job Creation Under Relaxation of Obama RulesWood Mackenzie’s analysis found that U.S. policies which encourage the development of new and existing resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed, support an additional 1.4 million jobs, and raise over $800 billion of cumulative additional government revenue.
_quoted_in_Powerlineblog

Enhancement of Government Revenues Under Relaxation of Obama Anti-Energy RulesThe report assumes that the following changes would be made to existing Obama policies in order to allow energy and economic recovery to occur:

• Opening of Federal areas that are currently “off limits” to exploration and development
• Commencement of leasing, drilling and development activity in currently closed regions. Regions to be opened include: Eastern Gulf of Mexico, portions of the Rocky Mountains, Atlantic OCS, Pacific OCS, Alaska National Wildlife Refuge (ANWR) – 1002 Area, National Petroleum Reserve, Alaska (NPRA) and Alaska offshore

• Lifting of drilling moratorium in New York State
• Commencement of drilling and development of Marcellus shale in New York State

• Increased rate of permitting in the offshore Gulf of Mexico
• Allows for a return to pre-Moratorium exploration and development activity

• Approval of the Keystone XL and other future Canada to U.S. oil pipelines
• Facilitates additional Canadian oil sands development, thereby increasing the demand for U.S. supplied equipment and infrastructure

• Regulation of shale resources remains predominately at the State level
• Environmental regulation of shale gas and tight oil plays are not duplicative or unduly burdensome. Permitting levels are at sufficient rates to develop resources in a timely manner _quoted_in_Powerlineblog

Increased Energy Production Due to Relaxation of Just a Few of Obama's Energy Starvation Rules
The improvements projected in the Wood MacKenzie report (PDF) are based largely on the revocation of Obama's de facto offshore oil moratorium, the approval of pipelines from Canada through the US for oil sands transport, and a cleaner and more streamlined set of regulations overseeing shale oil & gas production. The report also assumed an opening of currently blocked oil & gas resources in the Arctic and in the US mountain states, for development, and a reduction of duplication of bureaucratic environmental regulations.

In reality, according to Al Fin energy analysts, a more rational pro-energy policy would improve North American jobs, government revenues, and energy production far more quickly and to higher levels than the Wood Mackenzie report suggests. The reason our analysts are so confident is that potential for development of massive coal and kerogen deposits were not closely considered in the projections. Nor was the potential for development of advanced nuclear energy technologies for both uranium and thorium cycle reactors carefully considered.

Abundant energy opens the doors to other industries and commerce, which means more jobs and more revenues even in areas far removed from direct energy production or sales. The converse is true: energy starvation reduces jobs and revenues not only in the energy-related industries, but in society as a whole. And that is where the US stands under President Obama's policies.

Energy starvation -- shutting down reliable energy in favour of unreliable forms of energy such as big wind and solar -- is never a smart policy. It is a strongly ideological policy promoted by green faux environmental activists, with the unspoken aim of whittling away at the industry and commerce which support advanced economies. Economies which fall under the curse of energy-starvation policies slowly succumb to worsening economic conditions.

Adapted from an article published on Al Fin Energy

More: Three more places where Obama policies are holding back wealth and energy creation: Julia, Arctic, Bakken

The Obama agenda could not be more destructive of US jobs and the US economy if it were designed specifically to wreck the private sector.

Connect the Dots

More 8June11: It's even worse than you think

Gary Locke
International observers are seeing the growing outlines of a world without central leadership or guidance. The US seems unable to find its way out of its stagnant economic condition, and there is no other nation ready, able, and willing to step up to the plate.

Russia's corrupt leadership combined with its one-trick-pony economy simply cannot keep up with the emerging BRICs. Russia's shrinking core population is sick, and morally exhausted. The huge landmass of riches is growing harder to hold.

China's "economic miracle" is in reality a huge house of cards waiting to collapse. Inflation in China is just a tiny hint of the dangerous undercurrent of instability waiting to break into chaotic tumult.

Japan's recent earthquake and tsunami triggered severe economic and social upheaval, which on top of Japan's shrinking demographic promises continued economic problems for the island archipelago as a whole.

The third world is still the third world for many reasons, most of which are not politically correct to mention. It is important to understand that the population of much of the third world is several multiples of the natural carrying capacity of the regions -- without outside aid and assistance. If something happens to the world economy, the death toll in third world nations is apt to be distressingly high.

What about the erstwhile hegemon and superpower of the world, the US? Under President Obama, US economic prospects are looking worse and worse. Americans suspect that there is something wrong with the way that President Obama is handling the US economy. But with the dumbing down of schools and other dulling effects of demographic change on the US population, most Americans lack the ability to pinpoint exactly where Obama is going wrong, economically.

Stimulus after stimulus have failed to achieve anything other than to create an addiction among investors for more stimulus. As QE2 fades, investors look ahead to QE3 for another junky's fix.

Meanwhile, among the US more affluent, educated, and productive classes, birthrates are plummeting. This falling fertility not only reflects a greater affluence and hedonistic tendency, but it also reflects a certain lack of faith in national leadership and the future.

The visible human world is built on psychological whims and beliefs. If those whims and beliefs shift, the human world will shake. Your best bet is to pay attention to basics. Consider instituting triage as appropriate for your personal circumstances.

The financial contraction of 2008 was not a one-off event from which we are all recovering. Almost none of the fundamentals are getting better, and many are getting worse. As a result, 2008 was only a prelude to a worsening future, as long as the twin disasters of debt and demographics continue along their inexorable paths of destruction. Energy starvation due to faux environmentalism, and widespread indoctrination of lobotomising politically correct dogma via the educational system is not helping, either.

Obama Doubles Down on Stupid as US Economy Stalls

The US economy is facing another extended downturn, as Obama's economic policies fail yet again to lift US employment prospects. Years ago, Obama promised to keep unemployment under 8% -- as it was when he took office. Unfortunately, unemployment seems to be heading back toward double-digit territory, in the long term.

Under President Obama unemployment has remained above 8 percent for every single month, with the exception of January 2009 when he entered the Oval Office, rising as high as 10.1 percent in October 2009. By any measure, this is a terrible track record, and as even The New York Times acknowledged earlier this week, “no American president since Franklin Delano Roosevelt has won a second term in office when the unemployment rate on Election Day topped 7.2 percent.”

The dire jobs figures are just part of an extraordinarily grim picture for the US economy, nearly two and a half years into the Obama presidency. As ABC News reported yesterday, “a cascade of negative economic reports this week is leaving Americans wondering if this is really a recovery from the recession that officially started December 2007 and ended June 2009.” And the housing market, in which 67 percent of Americans have a stake, is in serious trouble, with home prices sinking to their lowest levels since 2002, falling by 4.2 percent in the first quarter of 2011 and for eight straight months in a row.

In addition, the White House is paralysed in the face of the nation’s towering debts, which reached 62 percent of GDP by the end of 2010, the highest percentage since the end of World War Two. The Congressional Budget Office warned last year in its “alternative fiscal scenario” that “with significantly lower revenues and higher outlays”, the federal debt could grow to a staggering 87 percent of GDP by 2020, rising to 109 percent by 2025 and 185 percent in 2035.
It is little wonder that 66 percent of Americans now worry the federal government will finally run out of their money, and Moody’s Investors Service is threatening to downgrade America’s sterling credit rating unless it gets to grips with the debt crisis. Undoubtedly, the very future of the United States’ position as the word’s only superpower is at stake in the next few years _Telegraph

So what is Obama doing to fix the US' economic problems? He is doubling down on stupid by shutting down a big new oil pipeline from Canada. Not only does this new "Marie Antoinette-esque" policy hurt American energy, industry, and jobs, but it threatens to rile up Canada as well. While in keeping with an overall Obama policy of energy starvation, taking this action at this time makes the US President look even more foolish than usual.

PHMSA is mandating that TransCanada provide a detailed “restart plan,” conduct “mechanical and metallurgical” testing, and analyze the pipeline components that failed last month.

In addition, the order instructs TransCanada to conduct a review of its entire pipeline system within 60 days, among other things.

The order comes at a politically sensitive time for TransCanada. The company is seeking federal approval to expand its Keystone pipeline to carry Canadian oil sands from Alberta to Texas.

The proposed project, known as Keystone XL, is currently undergoing a multi-agency review that is being headed up by the State Department. Comments on the project’s latest layer of environmental review are due by Monday. _The Hill

When combined with the Obama administrations attacks against offshore oil drilling, shale oil fracking, new nuclear reactor design approval, coal plants and new coal technology etc. -- this latest attack on the importation of Canadian oil sands liquids reveals the Obama administration as even more anti-energy than Jimmy Carter.

In the meantime, Obama's crew continues to promote expensive and unreliable solar and wind energy mega-projects technologies -- presumably in an attempt to prevent these funds from reaching other energy projects which might actually supply usable and reliable energy to the American economy.

Of course, never attribute to ideology what could more easily be explained by corruption: One of Obama's biggest financial supporters and public fans, General Electric, is heavily invested in big wind energy and is diving into big solar. The administration is always happy to supply waivers and grant favours to those who are willing to play on the team.

Meanwhile the rest of the US economy is floundering, with no help to be found from an administration of corrupt revolutionaries without a clue.

More: Brian Wang describes the significant buildup of Canadian oilsands production. The Obama - Salazar - Reid policy of energy starvation never made very much sense. If these stuck-on-stupid idiots remain at the controls of US energy policies for much longer, the US may have to join the Organisation of Third World Countries.

More 6June11: More on the political / faux environmental forces lining up in opposition to the Keystone XL cross-border project (including map). With such a large and influential part of government and society promoting suicidal energy policies, the rot will be difficult to excise in time to prevent significant hardship, unless an electoral and taxpayer revolution occurs in the next 2 years.

Organising Community Riots: Revolutionary Without a Clue

... Those who run up debt in good times can borrow only so much more when a recession strikes. And heavily indebted governments postpone fiscal stabilization at their peril. If you wait to reform until the bond market calls time, you are—to use a technical term from economics—screwed. _NiallFerguson

Revolutionary Riots Spill Over from Arabs to Europe to US?
If you are US President Obama, you are ready to blame almost anyone else for the economic despair settling over the American population. As a community organiser, President Obama's instinct is to call out the shock troops, take to the streets, and pin the blame on big banks and capitalism. In fact, billions of US$ were recently diverted from Obama's stimulus moneys to community organising groups, for just that contingency -- among others.

In three short years, Obama has added over $3 trillion to the US national debt. And rather than curtailing the deficit as the president had promised, it is getting much worse. Debt is a killer, but it is easy for the politicians who are responsible for the debt to point to everyone but themselves.

Riots in Europe are occurring as European governments look into the abyss of massive debt and cautiously tinker with a few timid spending reforms. But the people of Europe have come to feel entitled, and will not tolerate even the hint of a retreat from the wet nurse nanny state toward a more firm and responsible oversight government.

Americans are beginning to feel the same sense of blanket entitlement as the Europeans, thanks in part to having elected a community organiser as US President. Due to this massive growth of entitlement sense, the same type of riots seen in Arab countries and in Europe could easily spread to the large central cities of the US and Canada.

Risk of systemic fallout from Eurozone crisis

More from Mish on European abyss

The Obama path to collapse

Debt and Demography: A Deadly Double Dose

Mish
Interest on the US national debt is scheduled to explode wildly out of control, faster than entitlements, faster than any other government expenditure. And yet the US government cannot bring itself to stop its suicidally profligate deficit spending, adding over US$1 trillion a year to the debt!.

This is clearly a global problem, not just a US problem. As the economic foundations of the world's military hegemon and economic powerhouse crumble under an overload of debt and collapsing demographics, the rest of the world is going to feel the pain as well. Just as US baby boomers can find no one to buy their accumulated lifetime wealth, so the US government is finding it harder to find buyers for its accumulating debt.

Across the advanced economies, demographics are collapsing. And the US is not even on the list of the 17 countries with the fastest-collapsing demographics. The deadly combination of exponentially rising debt on top of a quickly collapsing demographic, becomes irreversible after a certain point. But in order for welfare states to maintain their bloated social benefit spending schedules, they must go deeply into debt -- just at the time that their productive workers are disappearing in time.

At the state government level of the US, reality is slowly and spottily sinking into the minds of those who are tasked with keeping the pensions and benefits solvent. But the blowback from leftist government unions, communtiy organisers, and other leftist special interest groups is severe and verging on open violence. In Europe the leftist backlash against proposed austerity programs -- even very modest and minimal plans -- is likewise bordering on open insurrection.

Obama has a plan for a fundamentally different America. We know that Obama has a plan -- he must have a plan! But we cannot decrypt the US President's plan from his words or even his actions. We may have to wait a hundred years, and look back in time at what we can learn about Mr. Obama's plans, to finally understand.

Al Fin has been suggesting that readers should buy precious metals, acquire the capacity to grow their own food, develop the means to defend yourself, your loved ones, and your possessions, and more -- for years now. Some readers may still wonder what he is getting at....

Eating Ten Year Old Meat

How to Know Spoiled Meat
If you do not do something to preserve fresh meat, it tends to go bad rather quickly. Early humans discovered that eating fresh kill was healthier than eating days or weeks old flesh. Italians in Naples may be discovering the same thing:

Italian police arrested a Naples butcher after discovering worm-infested meat for sale in his store that was 10 years past its expiry date, the ANSA news agency reported Friday.

Shocked food safety inspectors discovered pasta and biscuits crawling with parasites, rotting meats and dairy products, and olives covered in mold in the store of horrors.

The butcher tampered with expiry dates on the products in order to keep on selling the items, even though some were a decade old, the report said.

Police arrested the butcher on suspicion of endangering public health. _FoxDC

Of course, the worms just add to the protein content. But seriously, how did the butcher preserve meat so well that it could be sold to conscious humans after ten years?


Curing Meat

Thousands of years ago, man figured out that salting and smoking meat could retard spoilage and improve flavor. One old-fashioned and time-tested method is the salt barrel. Packed in a barrel of salt, meat will last almost indefinitely. However, salt is a commodity like anything else: unless you have access to an unlimited supply of it, the salt barrel is a very resource intensive method of food preservation. Meat is often salt cured and smoked, but by itself, that is more for flavor than actual preservation. Ironically, the relatively low temperatures at which meat is smoked actually encourages the growth of one very serious pathogen: Botulism.

...To effectively preserve meat in a survival situation, you need only have two things: Salt and Sodium Nitrate. With these two ingredients, you can produce an unbelievable variety of cured and preserved meats that are ready for long term storage or immediate consumption, and eaten “raw” or cooked.

...To dry-cure the meat:
Wrap it in cheesecloth. This is to discourage insects. Hang it in a humid, cool environment. 70% humidity and 55 degrees Fahrenheit are ideal. Humidity may be increased by placing a container of salted water near the meat. Somewhat paradoxically, higher humidity actually yields better results. It may slow the curing process a bit, but in the absence of sufficient humidity, the outer surface of the meat will dry and lock moisture in, causing spoilage. A cellar or even an uninhabited cave is an ideal curing chamber. An unused refrigerator will work as well.

Depending on climate conditions, size, and type of meat, this can take anywhere from a week to several months. A ham should be cured for six months; a pork belly or duck breast only needs a week. It is ready when it has reduced its weight by a third, or just feels “cooked.” You may cook the meat after it is cured, or eat it as is. You can store it by leaving it to hang in the curing environment. It should last almost indefinitely, and add flavor and variety to your diet. _SurvivalBlog

So, according to the author of the piece above, dry cured meat "should last almost indefinitely." That is reassuring, should the power ever go down for 10 or 20 years.

Apparently butchers cannot get away with selling 20 year old meat, but if you are willing to practise the art of dry-curing until you become an expert at the craft, you may be able to put in a good supply of long-term meat, without depending upon a deep freeze to keep the meat edible.

Just something to consider as the moocher in chief doubles down on his lifetime revolutionary goals.

More: Drug-resistant bacteria are commonly found in supermarket meat and poultry. Is food irradiation the answer? Perhaps yet one more reason for stocking your survival compound with a small modular nuclear reactor.

King Obama? It Has a Certain Ring to It!

DirectorBlueThe US is in desperate economic straits. Under the Obama administration, deficits are rising at record rates, while unemployment continues to eat away at the public's sense of well-being and confidence. Clearly something drastic must be done before the entire nation is sold into slavery, but what?

Elect Obama King!

Last night Col. Ralph Peters was on Bill O'Reilly's show, talking about Libya. Peters thinks we should act on behalf of the rebels there, but he expressed skepticism that President Obama will ever do anything. "Obama loves the idea of being President," Peters said, "but he can't make a decision."

I think there is a lot of truth to that, even in domestic policy, where Obama has passively deferred to Harry Reid and Nancy Pelosi on all legislative matters. One can debate whether action is appropriate in Libya or not, but Peters is certainly right when it comes to foreign policy--it is a safe bet that Obama will do nothing, because doing something would require a decision.

That got me thinking: Obama enjoys being president, and he especially treasures the symbolic significance of being the first African-American president. That's how his supporters feel, too. I haven't heard anyone defend his actual performance in a long time, but there is still widespread satisfaction with the symbolic value of his presidency. So why don't we make him king? If being the first African-American president has symbolic value, just think what it would mean for the first King of the United States to be African-American! Plus, Michelle would be a queen and Malia and Sasha would be princesses. How cool would that be?

....The king would have no duties beyond golf, so Obama would be perfect for the job. Our king would need a place to live, of course--we need to coax Obama out of the White House--so I'm thinking one of those big houses in Newport, Rhode Island would be ideal. Safely out of the way.

....we could hold a special election and choose a real president.....On no account would our new constitutional arrangement allow Joe Biden to succeed Obama. He would make a terrific viceroy, or possibly court jester.

Sure, it seems like a radical solution. But consider the alternative. The more I think about it, the better I like it: Obama for King! _Powerlineblog

Besides playing golf, King Obama can be official spokesperson for the official movement to save the environment. The promotion of magic solar energy beans, in particular, would suit the King's persuasive persona and trustworthy demeanour. Saving the entire world as King has got to beat destroying the world's sole superpower, as a mere president.

Let's be honest about Mr. Obama's prospects for doing any type of responsible work at all in his life, on his own. Such prospects are essentially non-existent -- a point that should have been clear well before the 2008 US elections. But we will let that point slide for now.

The important thing is to try to salvage as much as we can from the ongoing debacle popularly known as the Obama regime. It seems clear that the only way to do that is to appoint -- or elect -- Barack Obama King! Then elect a real president who can build the type of tough-love, hard-decision-making US government that is needed.

"President for life" has an unfortunate third worldish sound to it, while "King for life" sounds perfectly natural and normal. As king, Obama would not have to stand for re-election every 4 years like a commoner. And just imagine . . . Queen Michelle . . . for real.

Published earlier at abu al-fin

Whoever It Was, Obama Owes Them a Huge Debt

The attacks, according to the report, were part of a three-phase strategy.

The first phase was the deliberate inflation of oil prices in 2007 that generated as much as $2 trillion of excess wealth for oil-producing nations, 'filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance.'

In the second phase, untraceable investors attacked financial institutions such as Bear Stearns and Lehman Brothers in a 'bear raid'.

The term refers to a strategy where investors try to force the value of companies down through malicious rumours or complex financial trades that impact its stock price.

The report says that as the crisis began, 'virtually overnight' two relatively small brokers emerged to trade, 'trillions of dollars worth of U.S. blue chip companies.'

Crucially, these as yet unidentified investors are currently the number one traders in, 'all financial companies that collapsed or are now financially supported by the U.S. government,' according to Mr Freeman. _DailyMail

ImageSource
Ever since before the great deflation of 2008, rumours have been flying about mysterious investors who interfered with global financial markets to intentionally push them to the breaking point. Whatever the truth of the reports and rumours, it is likely that Mr. Obama and his US Democratic Party would have fared much less well in the 2008 elections, without the big 2008 autumnal economic crash.

Terrorists and other 'financial enemies' were likely responsible for the near collapse of the U.S. financial system in 2008, a new Pentagon report has concluded...

...The report also concludes that untraceable actors undertook a three-tiered attack beginning in 2007, and that 'Phase III [of the attack] may be under way right now.'

'In addition, these same actors have clearly demonstrated the means to carry out such an attack.

'There is sufficient justification to question whether outside forces triggered, capitalised upon or magnified the economic difficulties of 2008.'

The report concluded that: 'Without question, there were actors who had the motive to harm the U.S. economy.

The report was commissioned in early 2009 by the Pentagon's Irregular Warfare Support Program - which prepares U.S. government and military agencies for emerging non-traditional threats...

...Attacks on banks, especially Lehman Brothers which collapsed in 2008, caused interbank lending to seize up and stock markets around the world to collapse.

The U.S. government then had to step in and bail the system out.

Following this, the 'third phase' has seen the massive U.S. public debt now threatening the primacy of the dollar as a global currency.

'Such an event,' the report says, 'has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states.

'In short, a bear raid against the U.S.financial system remains possible and may even be likely.'

The report also points to evidence by former U.S. Treasury Secretary Henry Paulson, who said in 2008 that the Russian government had made a 'top-level approach' to the Chinese, asking them to dump shares in American mortgage giants Freddie Mac and Fannie Mae - forcing both into insolvency. _DailyMail

In the short period of time between the US Republican National Convention of 2008, and the great financial crash, Mr. Obama saw his impressive lead in the polls evaporate. It was only after the crash that his lead returned, and remained strong through the elections. Mr. Obama carried along a tsunami of Democratic Party legislative candidates on his coat-tails, giving him the most solid same-party control of congress of any US president since Bill Clinton in 1992.

Unfortunately, Mr. Obama used that solid control to pass budgets, laws, regulations, and fiats which virtually guarantee a perpetual worsening of the US economy and competitiveness for as long as the malign influence of these changes remain -- most likely many years after he is gone.

Simmering Panic over Loss of US Reserve Currency Status?

More: Is the US Dollar Still a Safe Haven? asks the same question in less strident tones. Clearly Americans elected a wrecking crew in 2008 to run their government, rather than responsible leadership. A deep fatalistic Carteresque malaise appears to be smothering the American Dream. Is the economic prophecy of doom displayed in the video below a realistic scenario?

The video above lasts over 1 hour, presenting a message of impending collapse of the US dollar and the US economy due to hyper-inflation and the loss of US dollar reserve currency status. But is the idea realistic, or even frightening?

There are rumours that China plans to shift to a new gold-backed international reserve currency to replace the US dollar. If that happens, will the resulting monetary shock overturn the US economy?

First, China may be holding a lot more US securities than it has admitted up until now. It will not be easy for China to throw these securities away, or do anything to significantly depreciate their value. Second, the US dollar may not be so easy to replace.

...the definition of reserve currency: "A foreign currency held by central banks and other major financial institutions as a means to pay off international debt obligations, or to influence their domestic exchange rate."

Foreign Currency Reserve Factors

1. Trade Volumes
2. Trade Deficits
3. Currency Manipulation
4. Hot Money

_Mish

Mish then goes on to explain how the US dollar fits into the four factors as an international reserve currency. It will be difficult -- but not impossible -- to replace.

But even if a better reserve currency can be created, will the utter devastation predicted by the video above actually come to pass inside the US? Mish has a lot to say about that as well. In a two word summary: "no disaster."

The true disaster to be faced is the US fiscal and monetary policies of the Obama government, combined with suicidal US energy, business, and foreign policies. Those are the things to worry about.

Should you be worried? Sure, if you are unprepared you should worry just enough to motivate yourself to become prepared. Do not expect a government or organisation to take care of you. That's your job.

As mentioned previously on multiple occasions, precious metals are a vital part of any integrated preparation for a prolonged chaos of an economic or other type. Food, water, medicines, backup power supplies and lighting, backup heating, sanitation, a low profile, etc. etc. are all crucial for the short term. For a longer term disruption, skill competencies, materials, food-growing capacity, water-purification, organisation into groups for trade and defense, etc. become more important.

The Obama regime is still in power. Any meaningful long-lasting financial recovery is out of the question -- although pockets of economic sanity may crop up in parts of the US willing to face the creeping rot head-on, such as Wisconsin.

Hope for the best. Prepare for the worst.

US Government Desperately Needs a Maintenance Shutdown

Machinery of all types experience wear and tear over time. Routine scheduled shutdowns for vital maintenance are part of any industrial plant's life cycle in the developed world. Such routine and profound plant overhauls prevent disastrous failures at future times. The machinery of large governments is no different -- it needs to be shut down periodically for crucial maintenance, replacement, and refurbishing.

The US government is in current desperate need of overhaul, requiring deep surgical cuts to prevent a far worse catastrophic failure in the future. Despite rampant quasi-superstitious fears over the thought of a government shut-down, the alternative of "business as usual" is the genuine cataclysmic alternative.

The government in Belgium has been shut down for 257 days, and the people there seem happy with the result. In the US, as long as the social security checks and other important entitlement disbursements continue during the shutdown, the people of America should be likewise content. Particularly if they were made aware that crucial maintenance was being done to the government, to allow it to avoid a massive breakdown within the next decade or two.

Fiscal policies of government are in particular need of overhaul, with no end in sight for a growing massive debt. Educational, immigration, and cultural policies are leading to a dumbed down Idiocracy which cannot support a high tech society for long. Current energy policies are leading to a terminal energy starvation whose fatal repercussions will rebound through the US economy and society in devastatingly short order.

The US elections of 2010 revealed a deep-seated dissatisfaction among the American electorate, with the direction of the Obama - Pelosi - Reid regressive government. Most Americans believed the nation was being badly mis-directed by its leadership. The election of 2010 re-arranged the US Congress as well as state-level legislatures and governorships. It was not a merely cosmetic overhaul.

There is an awakening at the American grassroots -- particularly among persons who must produce the wealth which the rest of the country lives on -- that the American government has grown a huge crop of freeloaders both within and around Washington DC and state capitals. It is an unsustainable crop which is choking off any chance of economic prosperity for the nation at large.

A few modest attempts to right some of these wrongs in the state of Wisconsin has led to a massive reactionary and potentially violent government-sector union response. President Obama himself has denounced the Wisconsin governor's attempts to balance the Wisconsin state budget -- using his campaign apparatus to bus in hundreds or thousands of outside agitators-for-hire in an attempt to intimidate the government and people of Wisconson into acquiescing to their own death-by-parasites.

What is happening in Wisconsin is bound to happen in many or most other US states, and eventually in the US government. No one knows how violent and bloody these standoffs can become, if the freeloaders of the public sector decide to go all out in demanding their special privileges and benefits. Mr. Obama has so far done everything he can to fuel public union intransigence, anger, and potential violence.

If something cannot go on forever, it will eventually stop. It is in the interest of government and public sector unions to accept the reality that a perpetual wild and exponential growth in their ranks and benefits is unsustainable. An orderly shutdown and overhaul -- similar to a deep maintenance shutdown in an industrial plant or a "controlled burn" in the wild -- is mandatory to prevent a cataclysmic collapse eventually.

Scheduled, elective surgery is always in the best interest of the patient, the surgeon, and the medical centre. It is time to schedule a deep surgical procedure on the US government.

Obama's Anti-Energy Bias Threatens US With New "Dark Age"

Even More, 13 Feb 2011: Is the Obama administration giving the "kiss of death" to small modular reactors (SMRs)? It looks as if the regime is pretending to support SMRs while behind the scenes it is boosting the organisations who oppose them -- and all nuclear reactors. Certainly Greg Jaczko _-- Obama's chief of the NRC -- seems to want to regulate SMRs the same way as large 1 - 1.5 GW reactors are regulated. That is total idiocy, of course, but it is the bureaucratic mindset.

More 13 Feb 2011:

Nations such as Japan issue nuclear-power permits within six years while the U.S. Nuclear Regulatory Commission may take at least 10 years, Upton, a Michigan Republican, said today in Washington. Lawmakers will examine the time required to approve new U.S. plants, Upton said.

“If you can shorten the time, you’re going to reduce the costs perhaps in the billions of dollars per reactor,” Upton said in an interview. “That’s a good thing.”

The House committee, which has jurisdiction for energy legislation, plans to tackle individual issues such as faster nuclear-plant licensing rather than seeking to pass “1,000-page bills” that are more comprehensive, he said. _Bloomberg

On every front, US President Obama seems to oppose all forms of reliable energy production. His EPA is trying to find ways to shut down unconventional oil & gas production, his Interior Deparment has already effectively shut down new offshore oil & gas production, his administration wants to shut down coal plants and mines, and to stop importing Canadian oil sands -- all out of carbon hysteria. Perhaps worst of all, Obama's NRC has been dragging its feed on safer, more reliable, and cheaper new nuclear reactor designs. Obama wants the US to rely on unreliable forms of energy such as solar and wind -- guaranteeing future blackouts and freeze-outs which are likely to cost lives.

Texas has already suffered rolling blackouts due to over-investment in wind [and the UK has suffered power "reductions" -- also see comment by Weekend Yachtsman. AF], and under-investment in nuclear. As Obama pushes the US into fool-hardy forms of energy dependency, expect things to only get worse. The US is long overdue for a return to more reliable forms of energy.

To say the U.S. has a lot of catching up to do in the nuclear power race doesn't come close to the reality. Consider these statistics, based on Nuclear Energy Agency data: France gets 77% of its electricity from nuclear plants; Sweden, 42%; Switzerland, 39%; South Korea, 37%; and Finland, 30%. The U.S.? A mere 20%.

...If the U.S. chooses to not reprocess nuclear waste, Nevada's Yucca Mountain (or some other storage facility at an out-of-the-way site to be named later) could be pressed into use. New York Times columnist Thomas Friedman, a proponent of green and renewable energy, has often noted the odd U.S. stance regarding nuclear power compared to our democratic cousins in France. The U.S. is too afraid to store nuclear waste in the middle of the desert at Yucca Mountain while French mayors campaign to have nuclear reactors built in their towns to create jobs.

...One out-of-date argument against nuclear power concerns its cost, but new, refined nuclear plants based on simple modular designs have eliminated that concern, The Economist magazine reported. Further, modularity allows plant builders to incrementally add power generation if electricity demand increases. Modularity, with its smaller initial construction costs, also shortens the break-even timetable for utilities.

...it seems almost implausible -- indeed, irrational -- that technology and innovation powerhouse U.S. would pioneer a revolutionary technology like nuclear power and then walk away from it when it's refined, leaving other nations to apply it to their social, economic and environmental benefit.

France, China, and the U.K., among others, recognize that nuclear power represents a win-win on climate change and self-sufficiency grounds. It's time the U.S. realized it as well, and started making up for decades of lost time -- and energy. _DailyFinance

In reality, nuclear alone cannot prevent a new dark age. It will most definitely require clean coal, unconventional and conventional gas, offshore and unconventional oil, Canadian oil sands, Green River kerogens, plus biofuels and nuclear energy. Enhanced geothermal could provide excellent power as well.

Obama -- for all his hatred of European "imperialism" against the third world -- seems to want to ape a lot of Europe's policies. This is unfortunate, since most of the policies Obama wishes to imitate, lead only to financial and societal ruin. Go figure.

Perhaps it is time that enlightened individuals around the world began to learn how to do things for themselves -- learn to bypass corrupt governments and their autocratic, irrationally arbitrary ways of inaction in the face of critical need.

Obama is not the only president who has neglected this problem -- but his policies of "energy starvation" are particularly egregious in terms of trying to shut down and delay all reliable forms of energy, while promoting decidedly unreliable forms such as solar and wind.

For more news and perspective on global energy issues, check out the Al Fin Energy blog.

Obama, Like an Albatross, Hung 'Round the Nation's Neck

America is facing a significant restructuring, beginning with the state and municipal levels of government

Critical information about the image above and the muni and sovereign bond crunch

Will America choose a rational bankruptcy restructuring plan for the troubled states, or will Obama try to bail out his friends in public sector unions at the cost of the greater US economy?

Here is just one reason why American jobs are not coming back: weak demand. But there are many other important reasons -- including intentional job-killing and industry-killing energy starvation policies within the federal government. Oddly enough, almost all of the reasons for the endless recession center on Obama and his enablers.

The Obamacare scam that was forced through the Pelosi-Reid US Congress is a huge, job and business-killing monstrosity. But is Obama's "Net Neutrality" plan even more monstrous?

Around the world, America is perceived as weak under Obama. It is being called the post-American, Chinese century. But if the US can get the albatross off from around its neck, is it possible the US has a bit more life left in it?

Who could lead America out of the rapidly deepening pit that Obama is digging? There are no names mentioned as credible challengers to the albatross president. The only name that keeps being mentioned -- generally in terms of which leftist would like to kill her today -- is Sarah Palin. Just when you thought you'd heard the last of her, she keeps showing up.

America's ruling classes have built a byzantine edifice of state-sympathetic media -- in both the news and entertainment sectors. For three years, both media sectors have mercilessly and incessantly attacked anyone bold enough to criticise or contradict the albatross in chief. The media sectors have studiously avoided the glaring weaknesses and failures of Obama's policies, and have exaggerated the most insignificant successes into grand triumphs.

A lot of Americans have been stupid enough to fall for the agitprop. After all, average population IQ in the US is only 98 points. That means that about half of Americans have IQs below 98! A very scary thought, around voting time. Knowing that the average populution IQ of Mexico is 87 fails to provide reassurance for America's future ability to vote its way out of the quagmire of stagnant idiocracy.

Focus on the basic essentials for yourself, your families, your communities if you have them. Hope for the best, prepare for the worst.

Are We In A Commodities Bubble?

Minyanville

Are commodity prices already overdone? Like everything else, it depends. Each commodity has its own story -- amply demonstrated by the chart above. _Minyanville

Read the rest of the article linked above to get a better idea of what you may have to do to free yourself from the false euphoria that comes from breathing too much commodity laughing gas.
The author recommends a "bottom-up" approach. Look at the news and fundamentals for each commodity, using all of the information resources available. Then do your own calculations as to whether current or futures prices are inflated or undervalued.

An alternative approach is to take a "top-down" viewpoint. What are the realities and trends of the overall markets, which tend to drive demand for commodities?

Take the US: The stock market has been doing better, and recent retail sales seem to have rebounded somewhat from earlier in the current and ongoing downturn. The nominal "unemployment rate" has been relatively stable for years, albeit at a higher-than-comfortable level of unemployment. The nominal "inflation rate" has stayed relatively low, and interest rates should be encouraging more economic expansion.

But the US housing market continues to sink ever lower, with sky-high foreclosures continuing. Homes are traditional stores of value in the US, as well as one of many leading economic indicators. And "real employment" is actually getting worse, as more and more people drop out of the job market in discouragement. The true growth enterprise in the US under Mr. Obama is the federal government.

Underlying everything else is the spectre of inflation, and how many parts of the economy can be blown apart by an intentional inflationary policy.

Why does inflation serve the largest banks and corporations disproportionately while hurting the average working citizen?

Greater Inflation is desired because the largest banks still hold massive amounts of "bad" loans on their books that simply cannot be justified under any scenario except elevated housing prices. Greater inflation is desired by large multinational businesses so that they may increase current pricing levels and continue to grow profitability for shareholders. Greater inflation is sought so that the Fed can regain credibility and maintain the illusion of being in control of the markets. Inflation in basic necessities such as food, energy, health care and educational expenses have the potential to drain the resources of anyone below the upper strata of society. Making life harder for those on the margin to protect those at the top is not only bad economic policy, it's immoral.

What might the potential long term effects of a near zero Fed funds rate be?

The longer the Fed keeps rates at zero, the longer the banks have to develop strategies for operating in a "risk" free capital environment. Given past history, it's only a matter of time (when, not if) until the banks blow the economy up yet again. Low rates directly benefit the banks and large corporate sectors of the economy. They can borrow at historic low rates whereas the average citizen has no capability of obtaining such funding. While mortgage rates have moved to levels we have not seen in a decades, the corresponding tightening in loan qualification standards means that many cannot take advantage of them. Profits to the largest businesses and no tangible benefit to the American citizen - can you see a pattern developing? _SeekingAlpha

Looking at it that way, the ongoing runup in commodities prices take on a whole new meaning.

Central bank-generated inflationary bubbles are a whole different pickle than investor euphoria-driven bubbles. If the bubble we see developing is coming from the US central bank, it is an ominous sign of an out-of-control economy in the making. As if the government debt build-up was not bad enough, the Fed under Obama appears to be intentionally filling the entire economy with noxious gases.

Time for average people to focus on issues of essential function and enduring value. The US dollar does not have enduring value, and serves an essential function in fewer and fewer locations around the world. The US government has fallen under the control of persons who are in over their heads, treading water, flailing for their lives.

But their flailings have a definite trending, which appear to benefit a small, select group of insiders, at the expense of the taxpayers and citizens at large.

More interesting thoughts on a US Fed-induced bubble from Zero Hedge and Powerline

Extreme Yoga: When You Learn to Bend So Far You Can Kiss Your . . . . Self Good-Bye

Economists at Bank of America Merrill Lynch say one key to a jobs recovery is an improvement in housing -- because so much job creation is driven by new businesses that have in recent years been financed in part by home equity borrowing.

This sort of job creation has been missing the last couple years, thanks to the housing crash. If U.S. house prices embark as expected on a new decline, the long-awaited hiring renaissance could be put on hold yet again. _Fortune

Image Source

... a disproportionate amount of job creation comes from new business start-ups, which of course typically at least start small. Start-ups account for just 3% of overall employment but 20% of new jobs in any given year, according to Meyer.

When that engine sputters – as it has in recent years, with tight credit and consumer belt-tightening – it robs the economy of one of its driving forces.

..."We have bad news for an awful lot of people, but it's a Goldilocks economy for stocks," said Keith Springer, a financial adviser in Sacramento. "The Fed is trying to create a bubble of artificial demand to create the wealth effect. It doesn't do much for jobs, but for now it's pretty good at driving stock prices." _Fortune

At the low end of the housing problem, the US is experiencing an epidemic of homelessness. With a steady growth of structural unemployment, fewer people are able to maintain mortgage payments -- or even to make rent payments.

US housing is in fact on life support. This is the 53d month of housing value declines in the US -- exceeding the number during the great depression of the 1930s.

There is nothing in either President Obama's or Paul Krugman's bag of big government tricks which can possibly turn this economic farce around. While Obama's allies continue to hope for another Oklahoma City bombing or 9/11 attack in order to improve the president's poll numbers, the real economy (not the stock market) and real people continue to suffer in ever larger numbers.

Financial Armageddon
One day you will wake up to find that 100% of US tax revenues are going to pay interest on the national debt. If you have waited until that day to begin preparations, you will need to begin practising your extreme yoga immediately ;-).

And to imagine, the situation in Europe is actually worse than in the US. The rest of the world actually still needs Europe and the US as export markets -- despite all the excessive protestations to the contrary. Interesting times.

14Jan11 More: Mish provides a very interesting look at the extreme contortions undergone by Obama and the Fed in claiming to have created or saved millions of jobs, and having reduced the "unemployment rate." The reality is certainly not the same as what you are being told by your president-for-life.

Big Money in Climate Change: Who Gives, Who Gets

The amount of money being spent on climate change research this year is astounding. I urge you to read the document yourself. Here is the question to take away: what are we getting for the billions of dollars we've spent? When 2011 is over will we look back at the published research and be satisfied with how our billions have been spent? This type of spending has occurred for some time, and what do we have to show for it? Multiple federal agencies having multi-hundred million dollar budgets in the same (controversial) field is wasteful. Let's make sure 2011 is the last year these budgets increase. _ClimateQuotes_via_TomNelson

Tom Nelson from ClimateQuotes
Climate Change is a big money complex. The US government alone spends roughly $4 billion a year to finance climate research and initiatives. That level of spending leaves all private US entities in the dust by a factor of roughly 1,000. In North America, the US federal government controls climate change spending.

The big winner in the climate change money train is the National Science Foundation. They are requesting $1.616 billion dollars. They want $766 million dollars for the Science, Engineering and Education for Sustainability Program. This is a 15.9% increase from their last budget. They also need another $370 million for the US Global Change Research Program (USGCRP) an increase of 16%. The say they also need another $480 million for Atmospheric Sciences an increase of 8.1% and Earth Sciences up 8.7%. Oh, and not to be left out we need $955 million for the Geosciences Directorate, an increase of 7.4%. That’s a mighty hefty sum of money to dig into if you’re doing climate change research. _EnergyTribune

A 15.9% increase from last year's budget? They must have found some very, very urgent issues that need their attention. Certainly things are getting desperate for the NSF to be requesting so much more money to study this issue -- right in the middle of a long-term economic downturn?

The second largest request for money in 2011 comes from the Department of Energy. They say they need $627 million dollars for things like funding for renewable energy. The request represents a whopping 37% increase from last year! They want a 12% increase for energy efficiency programs. They want to eliminate $2.7 billion dollars of subsidies for industries that emit large amounts of carbon dioxide. A 37% increase? I thought we were broke. _ET

OMG! A 37% increase for the DOE for climate change related programs. Certainly we are on the razor's edge, one whisker's breadth from total oblivion?

For 2011 NASA wants $438 million dollars to study climate change, an increase of 14%. NASA’s total Earth Sciences budget request is actually $1.8 billion dollars. Some $809 million of that is for satellites, some of which are specifically put in orbit to study climate change. It is difficult to separate out which ones are for climate monitoring and which ones are not so I won’t include this number in the over all climate change money train, but make no mistake about it, a significant percentage of the $809 million is exclusively for climate change satellites. _ET

NASA doesn't have the time for space exploration, now that climate change is so much better at ripping budget funds out of tight fisted congresspersons. No, NASA is all climate change, all the time, now.

The National Oceanic and Atmospheric Administration is looking for $437 million dollars for climate research. This is an increase of 21.4% from the previous budget. This includes funds for regional and national assessments of climate change including ocean acidification. Once again, another meaty bag of money to tap into for researchers who have nice cars and big houses and need to keep up the payments. All aboard the money train!

The Department of the Interior (DOI) is also interested in tapping into the climate change vault. They say they need $244 million in 2011. Of this total, $171 million is for the Climate Change Adaptation Initiative. This program identifies areas and species that are most vulnerable to climate change and implements coping strategies. Another $73 million is needed for The New Energy Frontier Initiative. The goal of this program is to increase solar, wind and geothermal energy capacity. Interesting that solar and wind power don’t actually make any money without this government funding.

Wow! This list just goes on and on, no wonder we have a $14 trillion dollar deficit!

But wait! as the say on TV there’s more. The Environmental Protection Agency (EPA) wants there share of the pot of gold. They need $169 million to reduce greenhouse gas emissions, an increase of 1%. Do you really believe that next year greenhouse gases will be reduced by EPA spending $169 million dollars? I would bet the ranch that greenhouse gases will continue to increase next year and the year after that and the year after that despite EPA spending millions of dollars. It’s a complete waste of $169 million dollars.

I’m beginning to wonder if there is any government agency that does not get some climate change funding! The United States Department of Agriculture (USDA) wants $338 million dollars for climate change programs. They want $159 million dollars for climate change research, up a whopping 42%. They also want another $179 million for renewable energy, an increase of 41%! The USDA’s climate change efforts are supposed to help farmer and land owners adapt to the impacts of climate change. _ET

The popular message we get from the idiots in the media and the echo chorus of circular jerkulars, is that big oil and big coal is funding a vast network of climate change deniers. The reality is that institutions such as the US government outspend more neutral and anti-catastrophe entities by about 1,000 to 1.

Smart people tend to be skeptical people. But virtually the full weight of government, journalism, academia, and the entertainment media is pushing the public to accept uncritically the orthodox dogma of anthropogenic climate catastrophe. From the first grade of school -- if not earlier -- children are indoctrinated into the cult of carbon hysteria by their teachers, as if the fate of the world depended on the little tykes adopting a boundless attitude of carbon hysteria. And from there it only gets worse. Paid for by your government, of course, which means you.

Ever since ClimateGate, more smart people have peeled off from the mass of unthinking drones. But the government-financed, media amplified message of catastrophe continues to blare at full volume over virtually every media outlet.

And the energy starvation! The suffocating regulations, prohibitions, taxes, and penalties! The choking off of new business and new sources of employment! It continues to get worse -- all financed from the top.

The people receiving these big money budgets and grants understand that everything depends upon their continued findings of "climate catastrophe." Anyone who falls off-message will be cut off, demonised, and left for dead -- figuratively speaking.

Washington DC is increasingly the place to be if you want to prosper in the US -- at least now, in the days of Obama. DC is the chokepoint, literally.

Now the race is on, between the ability of Americans to comprehend the enormous suicidal scam being pulled, and the ongoing processes which are turning the US into an Idiocracy. Precautions may be called for. Hope for the best, prepare for the worst.

Source

Climate Change in the FY 2011 Budget (PDF)

The Lunatic Who Believes He Is Barack H Obama

Somewhere in a Washington DC asylum, a lunatic who believes he is Barack H Obama is busy writing yet another autobiographical account of his short life.  The US elections of November 2010, and a recent media release of internal US State Department diplomatic correspondence, should provide some excellent -- though unsolicited -- grist for the book mill. What do others think about what the cables reveal?

The cables, in sum, reveal an American administration that refuses to look at the facts on the ground, even when friendly governments rub the noses of American diplomats into them. Obama is beyond reality; he has become the lunatic who thinks that he is Barack Obama. _Spengler_via_ReverseSpins

Image via ScottySarnesIt is Obama's turn to be riding on the "down" escalator, although nobody in the White House dares to be the one to tell "The One" what is going on. Unfolding events will simply need to "drip, drip, drip . . ." through the lunatic's near-impervious skull like a Chinese water torture, until he finally gets it. It may, finally, require the moving van's arrival at the asylum to remove his personal belongings, before this one begins to comprehend the turning of the screw.

Napoleon was a lunatic who thought he was Napoleon, and the joke applies to the 44th United States president with a vengeance. What doesn't the president know, and when didn't he know it? American foreign policy turned delusional when Barack Obama took office, and the latest batch of leaks suggest that the main source of the delusion is sitting in the Oval Office.

...The initial reports suggest that the US State Department has massive evidence that Obama's approach - "engaging" Iran and coddling Pakistan - has failed catastrophically. The crisis in diplomatic relations heralded by the press headlines is not so much a diplomatic problem - America's friends and allies in Western and Central Asia have been shouting themselves hoarse for two years - but a crisis of American credibility.

Not one Muslim government official so much as mentioned the issues that have occupied the bulk of Washington's attention during the past year, for example, Israeli settlements. The Saudis, to be sure, would prefer the elimination of all Israeli settlements; for that matter, they would prefer the eventual elimination of the state of Israel. In one conversation with a senior White House official, Saudi King Abdullah stated categorically that Iran, not Palestine, was his main concern; while a solution to the Arab/Israeli conflict would be a great achievement, Iran would find other ways to cause trouble.

...How do we explain the gaping chasm between Obama's public stance and the facts reported by the diplomatic corps? The cables do not betray American secrets so much as American obliviousness. The simplest and most probable explanation is that the president is a man obsessed by his own vision of a multipolar world, in which America will shrink its standing to that of one power among many, and thus remove the provocation on which Obama blames the misbehavior of the Iranians, Pakistanis, the pro-terrorist wing of the Saudi royal family, and other enemies of the United States.

Never underestimate the power of nostalgia. With a Muslim father and stepfather, and an anthropologist mother whose life's work defended Muslim traditional society against globalization, Obama harbors an overpowering sympathy for the Muslim world. He is not a Muslim, although as a young child he was educated as a Muslim in Indonesian schools. His vision of outreach to the Muslim world, the most visible and impassioned feature of his foreign policy, draws on deep wells of emotion. _Spengler

The lunatic who believes he is Obama contains many deep wells of emotion, and little else. Besides his deep well of emotion connecting him to the Muslim world, is his deep well of emotion connecting him to third world liberation movements, and the deep wells of emotion containing unbridled hatred toward capitalism and anything European. Any deep wells of emotion he may have regarding his wife Michelle, or anyone else who has managed to get reasonably close to him, might best remain unexplored. Like the Wikileaked documents, many people may not like what is revealed by such explorations.

This lunatic's delusions might have been better left undisturbed altogether, if not for the unbounded stupidity of voters within a growing Idiocracy.

Turbulent Oil Prices Ride Storms of Stupidity

“Very little of the recent price rise has really been down to the improving supply-demand balance,” said Matt Parry, senior oil consultant at KBC Process Technology Ltd. Instead, most of the recent rise is due “to a combination of the anticipated renewal in quantitative easing and the general increase in investor appetite for risk.”

In fact, investors could discover that they’ve bitten off more than they can chew when it comes to increasing their risk.

“Any market that shows a strong divergence from its fundamentals … is vulnerable to a sharp sell-off,” said Darin Newsom, senior analyst at Telvent DTN. _Marketwatch

Puts: Oil vs Gold
T. Boone Pickens is predicting $95 a barrel oil prices in one year. Other investors and investment houses are predicting that oil will shoot well above $100 a barrel in 2011, perhaps much higher. Given the turbulence in commodity pricing, predicting prices a year in advance is not much easier than predictions for 10 or 20 years in advance. But present circumstances can give us a few ideas what to expect.

Uncertainty is rampant in modern markets. The world's reserve currency is being treated like toilet paper by its own government and central bank. The Eurozone is being shaken to its foundations by demographic change and debt. The ability of China and India to pull the world out of its economic doldrums without help from North America or Europe is being belatedly recognised as having been overstated.

What I am saying is that large investors are hard put to find a safe haven. Just as in late 2007 and early 2008, these investors are running to commodities for a false sense of security. Gold has a fairly good record historically as a storage of value of last resort, but oil is something of a johnny-come-lately in that regard. Investors were killed in 2008, and they will be killed again, betting on oil.

“Commodities seem to spend more time moving with little regard to underlying fundamentals,” said Newsom. “Money flows from market to market, often driven by action in the dollar.”

Weakness in the dollar against its foreign currency rivals, money flow in financial markets, and worries over further quantitative easing have all been strong influences in gold’s climb to record levels, but they’ve been key factors for oil as well...

...“The extreme liquidity in financial markets recently has caused some commodities (like gold and oil) to inflate far more than fundamentals would support,” said Michael Lynch, president of Strategic Energy & Economic Research.

“Expectations of the [second round of quantitative easing] and then the reality were the major factor behind oil’s rise since September, with secondary support from slight strength in fundamentals,” he said.

...“It is clear that the dollar is being deflated by the Federal Reserve printing more money,” said Perry Management’s Perry. So “currency is being invested more in commodities, such as gold and oil.”

Crude oil has had a strong negative correlation with the U.S. dollar index, Newsom points out, and at times, “acts as an investment hedge against inflation.”

That sounds very similar to gold, though oil has “not completely supplanted gold as a safe-haven market yet,” he said.

...Whatever the case, oil trading similar to a currency is worth watching, as the global currency wars “look to be a key issue moving forward, and the cash-rich economies (such as China) need somewhere to put their faith, and likely commodities (particularly gold, but also oil), seem like sensible options,” said KBC’s Parry. _Marketwatch

It is easier to find new oil than it is to find new gold. Recent oil price increases are helping to spur large new oil finds on the North American mainland. And although the ill conceived Obama moratorium continues to stymie new oil development in the Gulf of Mexico, massive new oil deposits are waiting to be found there -- and become ever more affordable as the price of oil tends to rise.

New oil supplies tend to help hold oil prices down -- as does demand destruction caused by higher oil prices. Demand destruction can be due to depressed economic activity, or due to energy consumers finding substitute sources of energy and practising energy conservation. The underestimation of potential demand destruction by energy forecasters is one of the more ludicrous aspects of the current investment atmosphere.

Here at Al Fin, we are less concerned about short-term fluctuations in price than we are concerned with current US government policies of energy starvation, which create political peak oil conditions -- with accompanying higher energy costs, depressed markets, and demand destruction. Such concerns are also rising to the top of the list of concerns of the American voter.

Is Obama's America Losing Its Grip on Freedom?

Source

Economic freedom allows people to move up the economic ladder under their own initiative. It is the main reason why immigrants come to the US and other relatively free nations: to make a better life. But under Obama, it is becoming much harder to create new businesses and jobs. Everyone is becoming equal in poverty. Inequality plus socioeconomic mobility would be far preferable.

Bill Beach, director of the Heritage Foundation's Center for Data Analysis, which compiles the index with The Wall Street Journal, says the index defines "economic freedom" to mean: "You can follow your dreams, express yourself, create a business, do whatever job you want. Government doesn't run labor markets, or plan what business you can open, or over-regulate you."

We asked Beech about the U.S. ranking. "For first time in 16 years, the United States fell from the 'totally free' to 'mostly free' group. That's a terrible development," he said. He fears that if this continues, productive people will leave the United States for freer pastures.

"The United States has been this magnet for three centuries. But today money and people can move quickly, and in less than a lifetime a great country can go by the wayside."

Why is the United States falling behind? "Our spending has been excessive. ... We have the highest corporate tax rate in the world. (Government) takeovers of industries, subsidizing industries ... these are the kinds of moves that happen in Third World countries. ..."

Beach adds that the rule of law declined when the Obama administration declared some contracts to be null and void. For example, bondholders in the auto industry were forced to the back of the creditor line during bankruptcy. And there's more regulation of business, such as the Dodd-Frank law for the financial industry and the new credit-card law. But how could the United States place behind Canada? Isn't Canada practically a socialist country?

"Canada might do health care the wrong way," Beach said, "but by and large they do things the right way." Lately, Canada has lowered tax rates and reduced spending. _Reason

The Obama Pelosi agenda is still in its early stages. Give them time, and they will push the US well down in the rankings of economic freedom -- right next to Cuba and Venezuela. When you put it that way, the US Tea Party movement is looking better and better.

Whooops! The Bat Slipped, I Swear!

Source_via_

A few decades ago, most Americans would never believe that an elected US President would intentionally disrupt and disable large portions of the private sector economy of the US. Alas, more thoughtful Americans are now being forced to acknowledge what is happening. The zombies, of course, remain mired in tunnel vision....or, perhaps not all of them. Some may be having second thoughts.

Jobless America Threatens to Bring World Down With It

Obama Cuffs Recovery

Entering a Stormy Period

PDF The Gathering Storm PDF A Risk of Extreme Meltdown

Obama's Big Hole

People are Becoming Concerned