Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

This is the Largest Wealth Transfer in History

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, January 21, 2015: 

English: Murray Rothbard in the 90's

Libertarian economist Murray Rothbard

Coinciding with the announcement from the IRS that January 20 is the start of the 2015 tax season came the report from two wealth management consultancies, Wealth-X and National Financial Partners, that the largest transfer of wealth in world history is about to take place. With Obama’s help and the acquiescence of the Congress, the IRS is hoping to partake in the windfall.

According to the Family Wealth Transfer Report, an estimated $16 trillion of wealth belonging to 211,275 ultra-high net worth (UHNW) individuals worldwide will pass to their heirs over the next 30 years. $6 trillion of that wealth is

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Largest Wealth Transfer in History is Coming

This article first appeared online at TheNewAmerican.com on Tuesday, January 20, 2015: 

According to a study just published by Wealth-X and National Financial Partners, $16 trillion of wealth belonging to 211,275 “ultra-high net worth” individuals will be passed on to the next generation over the next 30 years. $6 trillion of that wealth is located in the United States, and financial “consultancies” such as Wealth-X and NFP are gearing up to help them manage the transfer.

Two-thirds of that wealth was created by entrepreneurs starting businesses, and these entrepreneurs are now faced with questions on the future of their money:

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“Audacious” State of the Union Speech to Push for Higher Taxes on the Rich

This article first appeared online at TheNewAmerican.com on Monday, January 19, 2015:

In what the New York Times termed an “audacious” move, President Obama will use his State of the Union speech on Tuesday night to push for higher taxes on the rich and big financial institutions, and give the money to the middle class still caught in the clutches of a slow economic recovery from the Great Recession.

The details are straightforward:

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Obama to Burnish his Unrepentant Marxist Credentials in his State of the Union speech

This article first appeared at The McAlvany Intelligence Advisor on Monday, January 19, 2015:

From each according to his ability, to each ac...

From each according to his ability, to each according to his need

An anonymous source at the White House leaked the details of Obama’s State of the Union speech scheduled for Tuesday night. In a move deliberately designed to infuriate Republicans who thought they might hear from a repentant president sincerely interested in reconciliation, he will instead poke them all in the eye in a move that the New York Times called “audacious.”

Not happy with increasing the capital gains tax rate by 58 percent so far in his administration, from 15% to 23.8%, he will announce his plan to nearly double it, to 28%. Furthermore,

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China Stock Market Off Sharply After Regulatory Crackdown

This article first appeared online at TheNewAmerican.com on Monday, January 19, 2015:

Chateau Lafite Rothschild Label for the 1999 v...

Chateau Lafite Rothschild Label for the 1999 vintage

During Monday’s session, stocks traded on the Shanghai stock market fell to their lowest level since June 2008, losing nearly eight percent.

Hardest hit were three brokerages that have been heavily involved in allowing Chinese small investors to open margin accounts, through which investors are able to borrow a portion of the money needed to buy securities, using the securities as collateral. When many of them were unable to settle their accounts, rather than forcing margin calls (a demand by a broker that an investor deposit further cash or securities to cover possible losses), the brokerage houses simply allowed them to

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Canada’s Oil Sands Impervious to Crude Oil’s Price Decline

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, January 14, 2015:

 

On Monday – the same day that UAE’s Energy Minister Suhall al-Mazrouel said that OPEC was going to stick to its decision to keep pumping regardless of price declines – the same day that Goldman Sachs issued its negative outlook for prices – when crude oil prices dropped in response by 5 percent, hitting a six-year-low of $44.20 a barrel on Tuesday, the CFO of Canadian Natural Resources announced he was going to expand both its production and its output into 2015 and beyond.

Chief Financial Officer Corey Bleber was oblivious to the carnage, saying that his company expected its overall output for 2015 to be at least seven percent ahead of last year’s, and that it would continue

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Impacts of Lower Crude Oil Prices Continue to Spread

This article first appeared online at TheNewAmerican.com on Tuesday, January 13, 2015:

 

After oil forecaster Jeremy Warner got lucky last year when he accurately called the top in oil prices, with a fall to at least $80 a barrel, he doubled down by predicting “that the oil price will remain low for a long time, sinking to perhaps as little as $20 a barrel over the coming year before recovering a little.”

Warner got lucky once again when Goldman Sachs confirmed his prognosis, setting off an eye-popping five percent decline in oil to $45 a barrel which continued into Tuesday. Tuesday’s low was $44.20. As Goldman Sachs noted,

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Auto Loan Bubble a Replay of Housing Mortgage Bubble?

This article first appeared online at TheNewAmerican.com on Monday, January 12, 2015:

When Patrina Thomas decided it was time to trade in her 2002 Jeep in the summer of 2013, she went back to her local friendly Chrysler dealer. They were only too happy to take her Jeep as a down payment on a used 2008 Chrysler Sebring with the balance, an estimated $10,000, financed at 20.4 percent interest. Because her credit score was below 620, she qualified for “special” financing provided by Santander Consumer USA Holdings, a lender working closely with Chrysler Capital in such cases.

Her payment was so high — $385 a month — that she struggled to make it from the very first month. It finally got beyond her ability to pay, and the car was repossessed a year later. With a market value today of just $4,600 and her remaining loan balance of $7,600, she is upside down by $3,000.

Thomas has lots of company. According to the Wall Street Journal

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New Illinois Governor Facing Torrent of Red Ink

This article first appeared online at TheNewAmerican.com on Monday, January 12, 2015:

 

Previous Illinois administrations and politicians have been kicking the can down the road for decades. Now, the state has run out of road. Bruce Rauner, Illinois’ new Republican governor, was inaugurated on Monday and is facing a daunting task: a $4 billion backlog of unpaid bills and a budget showing deficits approaching $21 billion in three years unless something is done.

During his campaign that successfully ousted what Huffington Post noted as the “nation’s least popular governor,” Pat Quinn, Rauner made the usual political promises of streamlining government and improving education and the state’s business climate, all without increasing taxes. In fact, he promised

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Yes, Karen, There’s an Auto Loan Bubble After All

This article first appeared at The McAlvany Intelligence Advisor on Monday, January 12, 2015:

2007 Chrysler Sebring photographed in USA.

Chrysler Sebring

There’s little doubt that Karen Weise enjoyed her weekend. Back in August she tried to raise concerns about the bubble in auto financing, but couldn’t pin them down. A reporter for Bloomberg Businessweek in Seattle, all she could find back then were Fed spokesmen pooh-poohing concerns that too many broke people were getting car loans, that such fears were “misplaced,” that “it’s unlikely the composition of auto loan originations in our data will radically change since last year,” as New York Fed spokesman Matthew Ward put it.

She quoted four economists from the New York Fed who were unanimous:

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Oil Patch Activity Is Starting to Slow

This article first appeared online at TheNewAmerican.com on Friday, January 9, 2015:

U.S. Steel

In a letter to his union workers at U.S. Steel’s pipe and tube plant in Lorain, Ohio, Tom McDermott, president of United Steelworkers local 1104, was blunt:

The company has suddenly lost a great deal of business because of the recent downturn in the oil industry. What appeared just a few short weeks ago as being a productive year … has most abruptly turned sour.

So sour that U.S. Steel is idling 614 or its 700 workers in Lorain, along with all 142 of its workers in its Houston, Texas plant.

This is likely to be just the beginning. Even as U.S. Steel poured hundreds of millions into its gamble that producing “oil country tubular goods,” or OCTG, would reverse years of losses, other steel makers have done the same:

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New Jersey Driving Away Businesses

This article first appeared at The McAlvany Intelligence Advisor on Friday, January 9, 2015: 

Mercedes-Benz

On Tuesday, when Mercedes-Benz’s North American Chairman Stephen Cannon finally confirmed the rumors swirling around his company’s headquarters in Montvale, New Jersey, that he was going to move it to Atlanta, Georgia, he didn’t tell the whole truth:

New Jersey has been a wonderful home to our U.S. operations for our first 50 years, and still is today. The state has worked tirelessly with us as we evaluated our options.

 

Ultimately, however, it became apparent that to achieve the sustained, profitable growth and efficiencies we require for the decades ahead, our headquarters would have to be located elsewhere.

 

That brought us to Atlanta.

It was the location that sealed the deal, according to Cannon:

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Mercedes-Benz Latest to Leave New Jersey Owing to High Taxes

This article first appeared online at TheNewAmerican.com on Thursday, January 8, 2015:

Mercedes-Benz HighPerformanceEngines

The rumors swirling around the Mercedes-Benz headquarters in Montvale, New Jersey were confirmed by the company’s U.S. president, Stephen Cannon, on Tuesday: It would move its U.S. headquarters from Montvale to Atlanta, starting in July. The move would affect about 1,000 employees, about half of whom would likely be offered the opportunity to move with the company.

The decision to move was based on the high-cost and high-tax environment in New Jersey compared to Georgia, although one had to read between the lines of the company’s official statement to ferret that out:

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Politics Overwhelms Economics as Crude Drops into the $40s

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, January 7, 2015:

English: Kingdom Centre, Riyadh, Saudi Arabia....

Kingdom Centre, Riyadh, Saudi Arabia.

Most prognosticators are concentrating on their understanding of economics to inform their predictions on how much lower crude oil prices can go. It’s a simple matter of supply and demand: supply is increasing, demand is decreasing (and it’s inelastic, to boot), so when demand meets supply – and “clears the market” as economists call it – crude will find a bottom.

One analyst at CNN expects oil to drop into the $30s, declaring that

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Crude Oil Prices: The Politics, Implications, and Backlash

This article first appeared online at TheNewAmerican.com on Tuesday, January 6, 2015:

With the price of crude dropping significantly below $50 a barrel, prognosticators have come out of the woodwork predicting drops to $40, $30, $20 a barrel, and even lower before it rebounds.

Jon Ogg, writing at 247Wall St.com, noted that the precipitous drop in crude oil prices “has serious implications for consumers and companies alike,” and not all of them are unblemished blessings. On the surface the winners are

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Putin Demands All Data About His Citizens Be Stored Inside Russia

This article first appeared online at TheNewAmerican.com on Monday, January 5, 2015:

 

On December 31, 2014, Russian President Vladimir Putin signed the latest version of his country’s “personal data law” that, starting September 1, 2015, will require all companies to store data about Russian users only on computer servers inside the country. That way, according to the New York Times, “it will be easier for the government to get access to it.”

Whether those companies — Facebook, Twitter, and Google, among others — will comply is an open question. When Putin’s Internet “regulator” Roskomnadzor demanded that Facebook take down a page promoting a rally in support of political activist Alexei Navalny (whom the Wall Street Journal called “the man Vladimir Putin fears most”), Facebook complied. But within hours dozens of copycat pages popped up elsewhere, creating even more publicity for the January 15 event. 

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Human Progress Is Accelerating, Says Cato

This article first appeared online at TheNewAmerican.com on Wednesday, December 31, 2014: 

Cato Institute

The Cato Institute continues to update its Human Progress website with sources from around the world showing graphically the enormous progress human beings have made in every conceivable area of their lives, especially over the last 50 years. 

From communications to the environment, from housing to transportation, there’s a data set that shows how far the human race has come in a very short period of time. 

Cato’s primary purpose in continuing to develop its HumanProgress.org website, already remarkably robust, is to dispel the common myth that things are getting worse, and at an accelerating rate: 

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Venezuela’s Welfare State Collapsing Along with Oil Prices

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 29, 2014:

 

As oil prices have dropped, so has Venezuela’s revenue stream that supports its welfare state. Ninety-five percent of Venezuela’s export earnings come from crude oil, and the industry makes up one quarter of the country’s gross domestic product. With oil prices setting new lows last week, Venezuela’s economy, already on the ropes, is set to descend into chaos, anarchy, and looting. The decision by Saudi Arabia to continue to pump in order to maintain its market share reveals not only the inherent inability of any cartel to maintain itself over time, but also the inability of a welfare state to sustain itself without outside help.

With the world’s largest oil reserves, surpassing those even of Saudi Arabia, an uninformed observer would be unable to explain how a country as richly blessed with natural resources as Venezuela could go broke,

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Collapse in Oil and Natural Gas Prices Hitting OPEC the Hardest

This article first appeared online at TheNewAmerican.com on Monday, December 29, 2014: 

On November 17, gas prices had dropped to $1.9...

As prices for crude oil and natural gas continued their precipitous fall over the last five weeks, most commentators have been focusing on the impact — real or predicted — on the oil and gas industry in the United States. Little noticed, however, was the report from the U.S. Energy Information Administration (EIA) about how those declines are likely to affect OPEC.

OPEC’s total revenues, which hit an all-time high of $900 billion in 2012, are expected to decline by half next year, to just $446 billion. And that projection is based on the assumption that oil prices will average

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Wall Street’s Hallelujah Chorus Greets New Highs in Stocks

This article first appeared at The McAlvany Intelligence Advisor on Friday, December 26, 2014:

 

 

Observers of new highs being put in by stocks at the Wall Street Journal could hardly restrain themselves. Eric Morath and Ben Leubsdorf, writing in the Journal on Tuesday, noted that the economy is now enjoying “a sweet spot of robust growth, sustained hiring, and falling unemployment [which is] stirring optimism that a post-recession breakout has arrived.”

Translation: Good times are here again, and likely to continue. Break out the Brie and Chablis.

Looking past the celebrations and the prognostications seemed, at first view, to confirm the market’s outlook:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.