America's Natural Gass Boom Bankrupting China

America’s unheralded natural gas boom has destroyed China and the emerging market's competitiveness to the point that the cost of shipping a container from Asia to the U.S. has collapsed over the last two years by -84 percent to new all-time-low.

Breitbart News reported in July that ‘Baltic Dry Freight Rate Index’ (BDF), the measure of the cost of containerized ocean shipping, had crashed by -61 percent from 2,227 at the end of 2013 to 874. We stated that the BDF price plunge meant that emerging market export competitiveness was on the verge of collapse, led by China.

Since our July article, the BDF has continued to crash; breaking its all-time-low of 500 in December; before hitting a new low of 354 on January 26. According to the ‘gCaptain’   shipping website, demand for the largest container carrying vessels, referred to as 7,500-9,500 teu ships, is “next to zero.” Lack of demand is so bad for this “zombie fleet” of idled vessels that the value of selling them for scrap steel has fallen from $500 to $300 per ton in the last year.

Americans are keenly aware that the U.S. fracking boom has hammered crude oil prices in the last two years, because they are pocketing huge savings with the average price of regular gasoline falling from $3.52 to $1.82 a gallon. But since natural gas is mainly used for industrial and electrical production, few Americans are aware the price of natural gas fell faster from $6 to $1.92 per thousand cubic feet over the same period.

On a worldwide basis, industry uses four times the amount of electricity versus residential consumers. Because coal is usually much cheaper than clean burning natural gas, about 40 percent of worldwide electrical production comes from coal and only 20 percent generated from natural gas.

This ratio was true for the U.S. through 2008. But the fracking boom over the last 7 years has made natural gas cheaper in the U.S. than coal. Beginning in July 2015, America for the first time in history produced more electricity from natural gas than coal.

In August, Breitbart News reported ‘U.S. Factory Construction Hits Highest Level Since 1958.’ Despite a -68 percent plunge in investment in petroleum and mining due to the plunging U.S. energy costs, spending on all types of U.S. production facilities increased +65 percent for the 12 months ending June 2015.

We explained that the biggest driver for America’s factory building boom was U.S. natural gas prices at $1.92 per thousand cubic feet had fallen to about a quarter of $8.40 per thousand cubic feet cost in Asia. Given labor is 8.5 percent and 13.5 energy of global manufacturing input costs, we suggested “Asians could give away their labor and still not be competitive with the U.S.”

Unlike crude oil that can be transported on massive oil tankers for pennies a gallon. But transporting natural gas costs about $4.50 per thousand cubic feet, because it requires huge amounts of energy to drop the temperature to -160 degrees to condense the gas 600 times to form a liquid. The Liquid Natural Gas (LNG) then must be transported in specially designed tankers that use massive amounts of energy to maintain the super-cooled liquid. The unload and heat the liquid to form a gas again.

America’s new cheap energy boom has re-created America’s “comparable advantage” that existed from 1870 to 1970. During that period, the U.S. dominated worldwide manufacturing and created the first middle class society built on manufacturing wages that averaged a third higher than other industrialized nations.

But once America lost its energy advantage, manufacturers began moving production off shore to benefit from cheap wages. By the March 2009 depths of the Financial Crisis, over half of U.S. manufacturing jobs had moved offshore. As a result, America's US balance of payments imploded, national debt ballooned from 30 percent to 100 percent of GDP, “Disposable Personal Income Per Capita” after-inflation fell by $3,437, and income inequality soured.

Many economists predicted that the U.S. was in a terminal financial decline and would soon suffer a currency crisis. But since the depths of the crisis in March 2009, the U.S. Dow Jones Industrial Average is up 182 percent.  In contrast, China’s stock market is up only 38 percent and their industrial profits drop by 4.7 percent over the last year.

The most recent U.S. data for October revealed that natural gas powered 34 percent of U.S. electrical production and coal fell to just 28 percent. With a natural gas boom providing a massive cost advantage over emerging market competitors, American manufacturing is headed for a boom.

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What Russian and Chinese Spies Got Off Hillary Clinton’s Personal Server

It is naive to not expect Russian and Chinese spies hacked Hillary Clinton’s personal server to compromise U.S. Security.

Over 3,500 died and 30,000 were wounded as security contractors for U.S. State Department since the 1960s. Although embassies around the world purport to focus on facilitating trade and building friendship, libertarians know their prime directive is a global effort is to coordinate intelligence gathering on America’s enemies and friends. As U.S. Secretary of State, Hillary Clinton was the CEO of the planet’s most powerful spying organization.

Hillary Clinton maintained State Department data forwarded to her personal server that was maintained by a mom-and-pop outfit — run out of an old bathroom closet in a downtown Denver loft, according to London’s Daily Mail. Data on the server included national security treasurers such as spy satellite imagery of North Korea’s nuclear sites.

Despite Clinton’s years of saying “nothing sensitive” was forwarded to her server, the Intelligence Community Inspector General Charles McCullough and other investigators have concluded that the contents of Clinton’s personal server contain Imagery Intelligence (IMINT), Human Intelligence (HUMINT), and Signal Intelligence (SIGINT). 

Clinton has also said that if there was classified data on her server, it was not classified at the time she received it. But all State Department members know IMINT is always classified “SECRET//NOFORN” (no foreign national), regardless of the absence of classification markings. Documents containing or referencing HUMINT are always classified “SECRET”, and if specific names of sources or handlers are mentioned, they are “SECRET//NOFORN”. SIGINT is always known to be at the Top Secret level. 

 

 

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Liberty Freely to Publish

Image result for libertyRecently my wife and I saw two movies: “Spotlight” and “Concussion.”  Both are hard-hitting movies that focus upon perceived large-scale damages being perpetrated upon many people by two large and powerful institutions: the Catholic Church and the National Football League.  Whether the facts depicted in these movies are true, recklessly false or true-but-exaggerated I leave to your conclusions and our various laws covering libel and defamation.  But the ability for movie makers – or any of us – freely to publish arguments like these is fundamental to Liberty.

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LA Forces Walmart to Close due to $15 Minimum Wage

Impoverished Los Angeles residents of Chinatown were saddened when they learned on January 17 that the Walmart they pleaded for years to get, shut down at 7 pm that evening due to the $15 minimum wage and continuing union harassment.

Asian and Hispanic residents of downtown Los Angeles campaigned for years to get a big box retailer to locate in their economically depressed neighborhood to compete against liquor stores that sold a limited number of food items at very high prices. Walmart in September 2013 opened a 33,000-square-foot grocery and drug store in central Chinatown.

Poor residents flocked to the store for lower food costs, substantially cheaper pharmaceuticals, and ethnic offerings. But labor leaders immediately started protesting against the store for refusing to unionize, despite the 100 Walmart employees refusing to sign union organizing cards.

Thousands of protesters were bused in to protest against Walmart destroying downtown, during the November 2014 Black Friday protests in downtown Los Angeles led by the union-funded Movement Generation's Justice and Ecology Project, even though the company only had the one store in Chinatown.

Movement organizer Brooke Anderson thundered, “As people deeply committed to environmental and climate justice, we condemn Walmart as a climate criminal and we stand side-by-side with Walmart’s workers organizing for $15 per hour, full time work, and the respect they deserve.”

During last summer’s union-led 'Fight For 15' minimum wage movement in Los Angeles, Walmart was portrayed on giant banners proclaiming, “Walmart Wages War on Workers” and “Walmart Wages War on Planet Earth.”

But after succeeding with passing a minimum wage that was set to start on January 1 at $10 an hour and jump in steps to $15 in 2018, unions and liberals have begun to panic that spiking wages might actually cause the 15 percent rate of unemployment among those with a high school diploma or less to rise.

The non-partisan Congressional Budget Office most recent in-depth analysis on minimum wage hikes estimated that President Obama’s proposed federal minimum wage from $7.25 to $10 an hour would raise wages for 16 to 24 million people, but it would kill 500,000 existing jobs. 

Liberals piously called this negative impact a “reasonable trade-off worth embracing,” whereas conservatives and business owners called it proof that risky government interference would destroy jobs and put more people on welfare. But there are no independent studies of what a 50 percent, let alone 100 percent increase would do.  

 

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Sanctions Relief: Iran Gets $215 Billion and West Gets Cheap Oil

Image result for obama foreign policyTermination of Iranian sanctions means Iran will pocket about $215 billion in cash, sell another million barrels of oil a day (bpd), and within 10 years be producing another 5 million bpd; while the West gets a 20-years of cheap oil. But the real meaning of ending the sanctions is that President Barack Obama has radically changed American foreign policy by accepting that the future of the Middle East and North Africa will now be determined by competing Sunni and Shiite Muslim Caliphates.  
American foreign policy since the defeat of the Ottoman Empire at the end of World War I has been to make sure that no state could gain hegemon status across a wide swath of the Middle East and North Africa. Up until the 1979 Iranian Hostage Crisis, the U.S. had allied with Shiite Muslim Iran to undermine the ability of Soviet Union to foment the rise of a Sunni Caliphate that could dominate the region. Since 1979, the U.S. backed the Saudi Arabia to prevent Iran from spreading a Shiite Caliphate.  
But President Barack Obama signaled he intended to change history when his first action when moving into the White House in January 2009 was sending back the Winston Churchill bust loaned to the U.S. from the British government’s art collection as a sign of solidarity after the September 11th terrorist attacks. 
Obama, whose Sunni Muslim grandfather was supposedly tortured by the British while Churchill was Prime Minister, sought to visibly communicate his reorienting of American foreign policy away from supporting numerous autocratic Middle East dictators to championing a Sunni Muslim liberation theology across the North Africa and the Middle East. Obama's infamous bow to the King of Saudi Arabia in April 2009 was seen in the region as America accepting new Sunni Caliphate dominating all of the Middle East.  

Booting of Churchill and bowing to a Sunni King was followed on June 4, 2009 with Obama’s first international speech at Cairo University, where he apologized for West’s “colonialism that denied rights and opportunities to many Muslims.”  The President stated that the Quran called the Arab world to revolt, “We have the power to make the world we seek, but only if we have the courage to make a new beginning, keeping in mind what has been written.” Obama's language was seen as revolutionary.

The President was rewarded with the 2009 Nobel Peace Prize for his “extraordinary efforts” to “strengthen cooperation between peoples” by “reaching out to the Muslim world.”  The Nobel Committee’s Chairman, Thorbjorn Jagland, said he welcomed America’s new reliance on diplomacy and dialogue to enhance peace, “And who has done more than Barack Obama?”  Obama in his Nobel Prize acceptance speech spoke of “just war” and use of force “justified on humanitarian grounds.”

Unbeknownst to most observers, the Obama Administration had already begun pouring hundreds of millions of dollars into non-governmental organizations (NGO) promoting the “just” overthrow of authoritarian Arab states.  Michael Simon, who pioneered social network targeting for Obama’s insurgent 2008 Presidential campaign, was sent to train the Egyptian Democratic Academy and their leader Esraa Abdel Fattah on how to use social networking to compel individuals to action.  The EDA was indirectly funded by Congress through the Washington-based National Endowment for Democracy.

 

  

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Struck by lightning


Image result for terrorism photosA tech journalist observed the absurdity of security theater at the recent Consumer Electronics Show (CES) in Las Vegas. In short, CES claimed there would be increased security then proceeded to relax (or ignore) the new security rules it said would be in effect.

Even more absurd was the journalist's experience leaving Las Vegas:

TSA threw out its security protocols.

We were told to leave all the items we normally must take out -- laptops and travel-sized hygiene bottles -- in our bags. We were told to put our wallets, smartphones and other such items in our luggage. Shoes? Belts? Keep them on!


It's not that we should be so aghast about apparent lack of security. Rather, why do we need so much security in the first place?

It's probably fair to say that most of us don't walk around in mortal fear of being struck by lightning. Yet many people seem all too willing to put up with all manner of security in the name of terrorism -- despite the fact that the odds of being killed by a terrorist are far greater than being struck by lightning. According to this data scientist the odds of being struck by lightning are 1-in-576,000. The odds of being killed by a terrorist? 1-in-9.3 million. In other words, you are 16 times more likely to be struck by lightning (itself a very low probability event) than killed in a terrorist attack.

Another point of reference: According to The Economistthe odds of being killed in an airplane crash are 1-in-5.4 million. In other words, you are almost twice as likely to be killed in an airplane crash (an even rarer event that being struck by lightning) than by a terrorist. Yet that didn't stop more than 3 billion people from boarding commercial aircraft in 2013.
This is not to say that we shouldn't be concerned about the threat of terrorism. Nor is it an argument for making America a security free zone. But, as I've pointed out previously, we need to put threat of terrorism and our associated responses in better context -- including acknowledging the reality that ISIS and terrorism are not existential threats (despite the rhetoric of politicians and pundits)

And that more security doesn't necessarily make us more secure.  Indeed, much of existing security may not be nothing more than security theater -- intended to provide a feeling of security rather than actually work. To go back to where I started: As the tech journalist noted after TSA dropped many of its security protocols (presumably in response to the large number of CES attendees trying to fly out of Las Vegas), "Oh, I made my flight. And there were no terrorism attacks that day."

 
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Oregon Standoff: Isolated Event or Sign of Things to Come?

undefinedThe nation's attention turned to Oregon this week when a group calling itself Citizens for Constitutional Freedom seized control of part of a federal wildlife refuge. The citizens were protesting the harsh sentences given to members of the Hammond ranching family. The Hammonds were accused of allowing fires set on their property to spread onto federal land.

The Hammonds were prosecuted under a federal terrorism statute. This may seem odd, but many prosecutors are stretching the definition of terrorism in order to, as was the case here, apply the mandatory minimum sentences or otherwise violate defendants’ constitutional rights. The first judge to hear the case refused to grant the government’s sentencing request, saying his conscience was shocked by the thought of applying the mandatory minimums to the Hammonds. Fortunately for the government, it was able to appeal the decision to judges whose consciences were not shocked by draconian sentences.

Sadly, but not surprisingly, some progressives who normally support civil liberties have called for the government to use deadly force to end the occupation at the refuge. These progressives are the mirror image of conservatives who (properly) attack gun control and the PATRIOT Act as tyrannical, yet support the use of police-state tactics against unpopular groups such as Muslims.

Even some libertarians have joined the attacks on the ranchers. These libertarians say ranchers like the Hammonds are “corporate welfare queens” because they graze their cattle on federal lands. However, since the federal government is the largest landholder in many western states, the ranchers may not have other viable alternatives. As the Oregon standoff shows, ranchers hardly have the same type of cozy relationship with the government that is enjoyed by true corporate welfare queens like military contractors and big banks. Many ranchers actually want control of federally-held land returned to the states or sold to private owners.

Situations like the one in Oregon could become commonplace as the continued failure of Keynesian economics and militaristic foreign policy is used to justify expanding government power. These new power grabs will increase the threats to our personal and economic security. The resulting chaos will cause many more Americans to resist government policies, with some even turning to violence, while the burden of government regulations and taxes will lead to a growing black market. The government will respond by becoming even more authoritarian, which will lead to further unrest.

 

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Democrats Want Data Encryption Back Doors

The White House just organized the ‘Countering Violent Extremism Task Force’ in an effort to coerce tech giants in Silicon Valley to cooperate in giving government encryption back-doors for surveillance.

The FBI, Homeland Security, Justice Department, National Counterterrorism Center, and other federal law enforcement and intelligence agencies supposedly want to prevent “extremist groups” from using social media to radicalize and mobilize new recruits.

The December San Bernardino terrorist attack has tanked the President’s favorability and is seriously undermining the Democrat Party fortunes for the 2016 election. Gallup polling found that since the attack, President Obama’s disapproval rating has relentlessly risen to 52 percent and his approval ratings fell to 45 percent.

The Presidents numbers are 8 points worse than the average for U.S. Presidents in their fourth year after an election. Obama’s bad numbers could be associated with the type of negative coattails that crushed the Republicans in 2008.

Disgust by women and younger voters with the President George W. Bush’s handling of the raging Middle East turmoil, powered the Democrats pick-up of the presidency, 8 Senate seats, 21 House seats and a governorship.

In the latest NBC News/Wall Street Journal poll 40 percent of American voters judged National Security to be their most important issue and 70 percent now believe the nation is headed in the wrong direction. The President’s effort to deflect blame onto gun ownership and climate change has found no traction with voters.

The NBC/WSJ survey found that when voters were asked, “Is taking military action against ISIS in Iraq and Syria in our national interest or not,” roughly 60 percent are ready to send in the military and only 13 percent are opposed to direct intervention.

As a result of these negative trends, President Obama’s disapproval rating has risen by 11 points since early summer and may spike higher after the January 8 ISIS terrorist attack on a police officer in Philadelphia.

The tech industry has mouthed their willingness to cooperate on National Security issues. But American cloud computing companies have reported losing huge oversees sales and opportunities over fears the U.S. security agencies already have encryption keys as “back-door” to access customer’s sensitive data. Forrester Research estimates that such fears could cause the U.S. information technology sector could lose as much as $180 billion in business by the end of this year, according to a story by the LA Times.

Silicon Valley knows that providing U.S. security agencies such a back-door access to private information will fosters deep user distrust and open a portal for malicious attacks by hackers. The tech sector is also concerned the federal government will interpret the term “extremist group” to go on regulatory and IRS fishing trips into personal data.

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China Wields Communist Iron-Fist in Economic Crisis

With a foreign exchange and currency crisis crushing stocks and spreading international fear, China is reverting back to the communist "Iron Fist" to deal with its economic crisis.

The China regulatory authorities on January 7 issued a “circuit-breaker" order just 15 minutes into the day’s trading to suspend all of the nation’s stock trading after a -7 to -8.25 percent crash. The suspension is the second in 3 days of trading and represents a failure of the Chinese authorities to stop a growing panic.    

Despite China regulators banning selling by large shareholders and ordering state-owned financial institutions to buy about $20 billion of domestic shares, the new selling pressure has spread internationally. The 46-nation MSC world stock Index fell by -2.5 percent and the oil oil plunged by 5 percent to $33 a barrel.

U.S. stocks that rely on China consumers were especially hammered. Apple Inc. that relies on the “China Region” for 24 percent of its sales, saw their shares plunge by about -$3.50 to $97, its lowest price since July 2014. Tesla Motors that quadrupled their charging stations in China anticipating a sales surge, saw their shares plunge by -$7 at one point.   

International alarm bells went off after the People’s Bank of China announced that their foreign exchange reserves posted a record -$107.9 billion decline in December. The drop was the steepest one-month decline in history and capped a $1 trillion decline since mid-2014, according to Stratfor Global Intelligence.

The Chinese have complained that America has an unfair “exorbitant privilege” as the world’s only reserve currency. This allows Americans to buy foreign products a half of a percent cheaper and the U.S. government to run huge trade deficits without a balance of payments crisis.

China has been promoting internationalizing its yuan currency as an alternative reserve currency to the U.S. dollar for the last couple of years. But the scheme required opening China's foreign exchange trading to international financial institutions that are outside of the control of the “Red Dragon.”

Many analysts believed that with China holding $4.3 trillion in foreign exchange, the government could pump back up their domestic stock market that suffered a 41 percent crash this summer. The confidence in the central authorities seemed justified after Chinese stocks had risen by about 20 percent and exchange rate of 6.2 yuan to the the dollar remained stable through year end. 

But this confidence ignored the fact that China's so-called “economic miracle” was directly tied to a 67 percent devaluation by the government in the mid-1990s that saw the exchange rate of the yuan to the dollar fall from 2.7 to 8.3. The devaluation cut in half the standard of living for most Chinese city-dwellers. But as an impoverished communist nation, the Chinese authorities had the iron-fisted power to mandate such a brutal devaluation.

 

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'The Big Short' Movie Forgot to Blame Congress

Image result for stupid congress'The Big Short' is a great movie and the stars deserve recognition for acting. But the story is spiked with lots of Hollywood fiction that blames Wall Street, while ignoring that Congress was completely responsible for a 15-year policy that created ludicrously a high-risk environment that eventually imploded into the "mortgage meltdown."

Just before the crisis began in 2008, about 31 million loans of 63 million U.S. mortgages were subprime or had some type of elevated risk. About three quarters of these loans were held on the books of government agencies, referred to as government-sponsored enterprises.

The two largest "GSE" were Fannie Mae and Freddie Mac, both entities were created by Congress in 1938 and subject to constant government oversight. Only about 24 percent of these loans were on the books of private sector entities, such as banks, investment banks, insurers, and investment funds of all kinds.

Because of the government backing and ability to borrow at about the same cost as the U.S. government, Fannie Mae and Freddie Mac dominated the mortgage business and essentially set the rules for the market. Instead of making loans directly to borrowers, they purchased mortgages from banks and other lenders. By extending their Congressional guarantee, GSE loans were sold to investors at very low interest rates.

For the first 54 years in business, Fannie Mae and Freddie Mac only accepted prime mortgages with down payments of about 20 percent and solid "FICO" credit score of at least 660. The borrowers also could not have total debt payments after the loan that exceeded 38 percent of income. As a result, the homeownership rate in the U.S. were stable at 64 percent from 1962 to 1992.

The Democrat controlled Congress blamed this GSE stability on keeping millions of lower income Americans that could not qualify for so called “prime loans,” from enjoying the dream of home ownership.

The Democrat Congressional majority in 1992 passed and President George H.W. Bush signed on to a program known as the “affordable housing goals.” Fannie Mae and Freddie Mac were initially required to set a goal of purchasing an annual quota of 30 percent of their loans from low or moderate income borrowers.

Furthermore, 30 percent of all loans these GSEs acquired in any year had to be made to home buyers who were at or below the median income level where they lived. There were also a number of “goals” that required loans to minorities and borrowers below 80 and 60 percent of median income. 

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