Monthly Archives: March 2012

Reality Check: 20120330

Here is Gary’s article CROSS-BORDER MARTIAL LAW: STAGE 1. For more by Gary, visit his website at http://www.garynorth.com/.

Key points:

  • On Monday, April 2, the leaders of the United States, Mexico, and Canada will meet at … the North American Leaders Summit.
  • An initial meeting cited threats to North America and the hemisphere [that] are increasingly complex and require non-traditional responses. Responses include:
  • ways to improve our support to the efforts of civilian public security agencies in countering illicit activities in our respective countries and the hemisphere, such as narcotics trafficking.
  • Explore how we can collaborate to increase the speed and efficiency with which our armed forces support civilian-led responses to disasters.
  • His conclusion: the targets of this trilateral planning are civilians, not terrorists. This is all about a cross-border system of martial law.
  • He then goes on: In 2011, the Canadian government posted what it called an Economic Action Plan. This is a bilateral plan to integrate economically the USA and Canada.
  • His conclusion: This, in turn, is preparatory for regional/hemispheric integration.
  • Reality Check: 20120327

    This is the inaugural post for republishing Gary North’s excellent work. We attempted to contact him for permission to republish without success. Instead, the agent that he publishes through has given us the following permission:

    Thank you for your email. We actually do not publish Gary North’s Reality Check, but he does write for the Daily Reckoning. I can tell you that anything he has published through the Daily Reckoning you are free to reprint as long as you cite the author and source, as this is a free e-letter. However, I cannot give permission for any articles published in Reality Check since that is not one of our publications. Thank you for your interest!

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    The articles come from The Daily Reckoning via email and anyone may subscribe. Here is BEN BERNANKE AND THE CASE OF THE MISSING JOBS.

    Stratfor: 20120327

    The United States in Korea: A Strategy of Inertia

    March 27, 2012 | 0857 GMT

    By George Friedman

    After U.S. President Barack Obama visited the Korean Demilitarized Zone on March 25 during his trip to South Korea for a nuclear security summit, he made the obligatory presidential remarks warning North Korea against continued provocations. He also praised the strength of U.S.-South Korean relations and commended the 28,500 U.S. troops stationed there. Obama’s visit itself is of little importance, but it is an opportunity to ask just what Washington’s strategy is in Korea and how the countries around North Korea (China, Russia, South Korea and Japan) view the region. As always, any understanding of current strategy requires a consideration of the history of that strategy.

    Living In a Hypothesis

    In a recent speech at the National Association for Business Economics Annual Conference, Washington, D.C. March 26, 2012, Fed Chairman Ben Bernanke talked about the US job situation and monetary policy designed to rectify the problem. That Fed policy is consistent with central bank policy worldwide makes this speech worthy of study. The frightening aspects are that this policy represents untried economic theory – a “hypothesis”, the results to date are a failure, the future impact is unknown beyond some theoretical speculation, and central banks will continue to implement it magnifying future effects.

    Things That Make You Go Hmmm…: 20120325

    To view this document in full screen mode, scroll down to the bottom of the embedded viewer (not the viewed document) to the Scribd control bar. Clicking on the link next will take you to the document viewed on the Scribd site (Note: Scribd can be slow responding – be patient).

    Summary points:

    • Grant provides a brief history of European accords and organizations including:
    •  the Treaty of Paris which created the European Coal and Steel Community in April 1951,
    • the Treaty of Rome which created the European Economic Community (or ‘Common Market’)
    • the EU in its current form with an update on the latest agreements and proposals.
  • One gets the sense from his discourse of the penchant for the Europeans to create commissions and bureaucracies to draft reports to be discussed at summits to create agreements which will last for a few days or weeks before the cycle begins anew.
  • He reviews Britain’s debt situation:
    • In just four short years, since February of 2007, UK government debt has nearly DOUBLED, rising by +98.8% !!!!
    • Britain’s budget deficit currently stands at 8.24% of GDP.
    • Not only are there NO spending cuts within the UK Budget projections for the next five years, annually through the year 2017 … spending will increase, every year, including +2.8% … this year. (when in need of austerity do this?)
    • The UK government is ‘banking on’ growth in Revenue that will exceed the rate of growth in Expenditures, including growth of +3.5% cooked-into-the-books for this year. (dreamland)
  • We have reached the point where investors are comfortable enough that the fear of a systemic collapse has now more or less dissipated and faith in a resumption of growth (at least in the US) is slowly returning (though I have my doubts about that being the case …).
  • Credit Bubble Bulletin: 20120323

    In this letter, Interesting Juncture, Doug Noland, “The Prudent Bear”, examines a number of premises that would support his contention that equity markets are in a bubble. If the premises are valid we should see clear evidence of a bubble in the coming weeks.

    He begins with the premise that global central bank market interventions are in the end destabilizing. He states that These types of policy-induced market dislocations spawn market anomalies and uncertainties. Next, he says he would contend … that global markets have never been as susceptible to performance-chasing herd behavior. And, finally, he notes that market participants have generally been conditioned to expect buoyant markets and loosened Credit conditions to prove constructive for economic activity.  He concludes that these types of dynamics have in the past supported bullish market runs with legs.

    John Hussman: 20120319

    Summary points and comments are made below on John’s note of An Angry Army of Aunt Minnies.

    Time To Get Ready for the Next Big One

    Reuters had an informative article today on TB: Drug-resistant “white plague” lurks among rich and poor. Drug resistant varieties of TB have been around for years. More recently, multi-drug resistant TB, or MDR-TB, has been encountered. Now, Reuters reports new cases of so-called “totally drug resistant” TB [or TDR-TB] in India suggests the modern-day tale of this disease could get a lot worse.

    Why should we worry about what’s going on in India? Do you want to bet your life on the answer to this question? No? Too bad, because in fact the bet has already been placed.

    Things That Make You Go Hmmm…: 20120318

    To view this document in full screen mode, scroll down to the bottom of the embedded viewer (not the viewed document) to the Scribd control bar. Clicking on the link next will take you to the document viewed on the Scribd site (Note: Scribd can be slow responding – be patient).

    Summary points:

    • Grant begins by noting the price differential between WTI (West Texas Intermediate) and Brent prices of oil. Brent in particular, has recently set new all-tine highs.
    • The official American response has been to blame the high price on “speculators” and “evil” ones at that. The real issue is high oil prices produce high gasoline prices which reduce economic growth and make voters cranky. This is not what the administration wants in an election year. [This may be why Obama does not want a war with Iran until the end of the year, after the election since this would drive oil prices much higher.]
    • He cites another analyst, Ronni Stoeferle from Vienna who has a detailed report available HERE (write and ask). It notes that Mexico, Saudi Arabia, and Russia have made the most accurate forecasts in the past including the actual price last year. This year, Saudi Arabia expects an average WTI price of USD 97, Mexico forecasts USD 116, and Russia USD 120/barrel.
    • Grant says that the issue with oil is clearly one of supply and capacity right now. He cites a recent article entitledUnderstanding TheNew Price Of Oilby Gregor McDonald as to why supply is now primary. New oil is simply much more costly to produce and no mega-fields are coming on line in the next 3 years.
    • On interest rates: The increase in the price of oil that is attracting so much attention currently is partly down to supply constraints, partly down to inflationary pressure and partly down to fear.
    • On the canary to watch: The turn in the bond market is absolutely the most important thing to be watching for currently because when it comes, and once it picks up some steam there will be no stopping it.

    The Fiscal Cost of Immigrants to Canada: $6000 Each Per Year

    In 2011, Patrick Grady and Herbert Grubel (G&G) of the Fraser Institute published a study titled Immigration and the Canadian Welfare State 2011. In it, they estimated that in 2005, Canada’s immigrant selection policies resulted in an average fiscal burden on taxpayers of $6,000 per year for each immigrant. Later that year, Mohsen Javdani and Krishna Pendakur from the economics department at Simon Fraser University (J&P) presented an alternative estimate of this fiscal burden at $450. In a follow-up review titled Fiscal Transfers to Immigrants in Canada: Responding to Critics and a Revised Estimate, (G&G) refute the J&P response and using new and additional data, confirm their original estimate.

    We examine some of their key observations below.

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