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

OPEC Agreement to Limit Production Boosts Crude Price 11 Percent

This article appeared online at TheNewAmerican.com on Thursday, December 1, 2016:

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

The global price of crude oil jumped more than 11 percent since OPEC announced on Wednesday its first agreement to limit production by the cartel since 2008. There are many moving parts to the agreement — perhaps too many.

First, the cartel’s de facto leader, Saudi Arabia, has promised to

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Trump “Saves” 1,000 Carrier Jobs

This article appeared online at TheNewAmerican.com on Wednesday, November 30, 2016:  

Boston

Carrier Corporation, a division of United Technologies, announced on Tuesday that it will, after months of negotiations, keep some of the jobs in Indiana that it earlier planned to ship to Mexico. Indiana Governor and now Vice President-elect Mike Pence, as governor of the state, was the initial driving force behind the negotiations. Both he and President-elect Donald Trump will start their “thank you” tour on Thursday, beginning with Indiana, where the details of the agreement will be spelled out.

That’s why Trump was able to tell his crowd of supporters in Indianapolis in April that the deal was all but done:

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Trump Picks Elaine Chao for Transportation Secretary

This article appeared online at TheNewAmerican.com on Wednesday, November 30, 2016:  

Labor Secretary Elaine Chao.

President-elect Donald Trump picked Elaine Chao shown) for secretary of the U.S. Department of Transportation on Tuesday, raising concerns about her connections with the Republican establishment as well as China. Some of those concerns are balanced by her affiliations with pro-freedom and pro-free market organizations.

If confirmed, she will face a host of issues,

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Donald Trump Meets Ayn Rand

The Passion of Ayn Rand

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 30, 2016:  

Ayn Rand passed away in 1982 at age 77 when Donald Trump was just 36. But the astounding success of her masterwork, Atlas Shrugged, led to an interview at the Trump Tower on Monday in the form of one of her most avid fans: John Allison.

Allison, a Phi Beta Kappa graduate of the University of North Carolina in 1971, read a copy of it as a young man and it changed his life. There’s an outside possibility that it might change the life of millions of others.

Following graduation he went to work for BB&T Corporation, a small rural bank in North Carolina. By 1989 Allison was the bank’s CEO. By 2010 he had grown the bank from $4.5 billion in assets to

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Trump Meets With Former Banker Who Wants to End the Fed

This article appeared online at TheNewAmerican.com on Tuesday, November 29, 2016: 

John Allison BB&T

John Allison

Donald Trump met with former banker John Allison on Monday in a meeting that was largely ignored by the mainstream media. It remains unclear whether Allison was being interviewed for the job of secretary of the Treasury or was just giving Trump some advice from a free market perspective.

Either way, it’s a breath of fresh air in an era where statism and excessive hubris (the idea that mere politicians and economists can guide, even stimulate a $20-trillion-dollar economy with monetary policy) has reigned for decades.

Right after graduating Phi Beta Kappa from the University of North Carolina in 1971,

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Venezuelan Currency Lost Half Its Value in November

This article appeared online at TheNewAmerican.com on Monday, November 28, 2016:  

Português: Brasília - O chanceler da Venezuela...

Nicolas Maduro

Bloomberg reported last Thursday that Venezuela’s currency — the bolívar fuerte or “strong bolivar” — has lost 45 percent of its purchasing power so far this month, with six days to go. The underlying cause was put simply by Professor Milton Friedman, a member of the “Chicago School” of economic free market thinking and winner in 1976 of the Nobel Memorial Prize in Economic Sciences: “Inflation is always and everywhere a monetary phenomenon … and can be produced only by a more rapid increase in the quantity of money than in output.”

On the other hand, Venezuela’s president, Nicolas Maduro,

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Mexico’s Huge Oil Reserves Now Open to Private Exploration

This article appeared online at TheNewAmerican.com on Monday, November 28, 2016:  

Four years ago Enrique Peña Nieto (pictured, with Donald Trump) promised while running for president of Mexico that, if he were elected, he would open the country’s energy industry to the private sector. At the time his promise was almost laughable. While he did win the election, his party controlled less than 40 percent of the Congress, below the 50 percent needed to gain any kind of traction for his promise, and far below the two-thirds majority needed to attack the root cause: a constitution that prevented any outside competition to either of its state-owned oil (Pemex) or electricity (CFE) monopolies. He also faced enormous political pressure from leftist labor unions, environmentalists, and beneficiaries of the various welfare-state programs that revenues from Pemex were funding.

But within two years he had accomplished the impossible: Articles 28 and 29 in his country’s constitution were modified, allowing private producers in to explore, extract, refine, transport, store, and distribute crude oil and natural gas. This included allowing private companies to bid to generate electricity in competition with CFE.

Pemex was formed in 1938 with the remnants of foreign oil companies that were nationalized by Mexico’s then-President Lázaro Cárdenas. And the memories of that takeover still lingered.

But when he announced the new freedom to open bidding for oil and gas leases in the Gulf of Mexico, Nieto said:

Reforms are the foundation for building a better country. They are [the] platform for beginning a new stage of development….

 

One of the key elements of the reform is to enable competition in the market. Competition should bring better prices to industry, which, in turn, can be more competitive, increasing exports, generating new employment and reducing prices in the local market.

He described the lifting of the heavy hand of the state from his country’s energy industry as “knocking down the walls”: “If we really want to achieve change in these [industries], then this has to be a structural change … we have to be the government that knocks down the walls that are in the way of achieving a more equitable and just society.”

Within weeks of Nieto’s announcement in August 2014, the U.S. Energy Information Administration (EIA) adjusted Mexico’s oil and gas projections upward by 25 percent and then, as foreign interest in developing Mexico’s vast untapped reserves began to surface, it readjusted them once again, this time by 75 percent.

It took time for the improvement in production to take place, not only because of the new rules that the government was tasked to write to incorporate the new freedoms, but because of the enormous decline in crude oil and natural gas prices set off by OPEC’s decision in November 2014 to flood the market.

But now, with the recovery in oil prices, interest in the nearly 1,000 oil and gas leases of Nieto’s country has skyrocketed. In August Exxon Mobil joined with Chevron and Hess to bid for rights to drill in Mexico’s deep waters. They will be competing with 20 other companies which have set their sights on the same leases, with the winner to be announced on December 5.

This has excited investors, with Business Insider calling it a “huge opportunity.” On Saturday James Stafford, writing for Oilprice.com, declared: “Welcome to the early stages of an oil and gas game that will be bigger … than anything in history. Mexico’s reform legislation … provides an unprecedented opportunity for oil companies looking to tap into Mexico’s huge oil potential.”

International Frontier Resources Corporation (IFRC), a Canadian oil development company, estimated those untapped Mexican reserves “could total as much as 115 billion barrels … [thanks to] the denationalization of 914 oil and gas leases.”

According to the CIA’s 2015 World Factbook, Mexico had less than 10 billion barrels of proven reserves as of December. If IFRC is correct, Mexico’s new proven reserves would jump to 125 billion barrels, placing it ahead not only of the United States (with 36 billion) but also the UAE (98 billion), Russia (103 billion), and Kuwait (104 billion).

As Stafford concluded: “Right now, there is nothing bigger than Mexico when it comes to oil and gas sales. We’re talking about North America, large oil reserves, good infrastructure and discoveries that are already in development.”

Once the heavy hand of the state is lifted from the economy, it’s positively astonishing what the free market can accomplish. Not only investors, but also lovers of freedom, are watching events unfold south of the border with great anticipation.

Who Knew Mexico Had So Much Oil? Who Cared?

This article was published by The McAlvany Intelligence Advisor on Monday, November 28, 2016:  

According to the CIAs 2015 World Factbook, Mexico had less than 10 billion barrels of proven crude oil reserves as of last December. That placed the country at 17th position, just ahead of Angola and just behind Algeria. The fact that it had ten times more than that underground and under the Gulf of Mexico didnt matter. If you cant get to it, it doesnt count.

And ever since 1938 a succession of Mexican statist presidents made sure no one could get to it. When then-President Lazaro Cardenas consolidated all foreign oil producers by nationalizing their properties, he named the resulting company Pemex. And then he and future presidents milked it for all it was worth, funding various socialist projects, setting up retirement plans for their political cronies, and in general ignoring the untapped reserves lying just offshore.

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OPEC to Meet in Vienna Wednesday to Plan Production Cuts

This article appeared online at TheNewAmerican.com on Friday, November 25, 2016: 

Oil ministers from the 14 oil producing countries that make up the OPEC cartel are arriving in Vienna to prepare for their formal gathering there next Wednesday. The meeting is supposed to finalize a tentative agreement reached in September that would put a cap on the cartel’s production in an effort to raise the price of a barrel of crude oil. A sufficient rise would reduce the pain currently being inflicted on those members as the decision to keep pumping in November 2014 has bitten them — some of them badly.

Saudi Arabia was forced last month to

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Not Missing an Opportunity, Radicals Descend on Cannon Ball, North Dakota

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 23, 2016: 

The complete quote from Rahm Emanuel’s early days as soon-to-be-former President Obama’s Chief of Staff is: “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Starting in 1969 with the Club of Rome’s declaration that “The common enemy of humanity is man,” green radicals have been seeking or creating opportunities to promote the concept that man is the great polluter and his capitalist efforts to use resources to improve his standard of living should be resisted.

Just such an opportunity presented itself when

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McDonald’s Response to $15 Minimum Wage: Automation in Every Store

This article appeared online at TheNewAmerican.com on Wednesday, November 23, 2016: 

English: The mdonalds logo from the late 90s

It’s official: McDonald’s says that every one of its 14,000 stores nationwide will be replacing order takers with automated touch-screen kiosks. They’re starting with stores where minimum-wage laws mandate the highest rates, such as Florida, New York, San Francisco, Boston, Chicago, Washington, D.C., and Seattle.

According to CNNMoney:

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Dallas to Declare Bankruptcy?

This article appeared online at TheNewAmerican.com on Monday, November 21, 2016:  

The New York Times just reported that the Dallas police and firefighters pension plan is $7 billion short of meeting its obligations and needs an immediate bailout of $1 billion just to stay afloat. The problem is that Dallas’ annual budget is $3 billion.

Three years ago Dallas wasn’t on anyone’s “watch” list.

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Ford Will Keep Producing Lincoln MKC in Kentucky; Trump Claims Victory

This article appeared online at TheNewAmerican.com on Friday, November 18, 2016:

Early Thursday evening President-elect Donald Trump tweeted: “Just got a call from my friend Bill Ford, Chairman of Ford, who advised me that he will be keeping the Lincoln plant in Kentucky — no Mexico.” A few minutes later he tweeted an addendum: “I worked hard with Bill Ford to keep the Lincoln plant in Kentucky. I owed it to the great State of Kentucky for their confidence in me!” (Trump won Kentucky’s 8 electoral votes by beating Hillary Clinton, 62 percent to 32 percent.)

The anti-Trump media jumped all over Trump’s self-proclaimed “victory,” noting in the process that he got some of his facts wrong:

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OPEC Lives in a Dream World

This article was published by The McAlvany Intelligence Advisor on Friday, November 18, 2016:  

There are at least two problems with Saudi Arabia’s oil minister’s dream as he expressed it on television on Thursday: one, he doesn’t know what he’s talking about, and two, what he does know is wrong.

Mark Twain put it well: “It’s not what you don’t know that kills you. It’s what you know for sure that ain’t true.”

Saudi Arabia’s Energy Minister, Khalid al-Falih (shown), still thinks OPEC can impact the world oil markets the way they were able to just a few short years ago:

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Saudi Oil Minister “Optimistic” That OPEC Will Cut Production

This article appeared online at TheNewAmerican.com on Thursday, November 1, 2016:  

English: Flag of the Organization of Petroleum...

Flag of the Organization of Petroleum Exporting Countries

Saudi Arabia’s Energy Minister Khalid al-Falih said on television on Thursday that the crude oil market is close to becoming “balanced” between supply and demand and that the OPEC meeting happening in less than two weeks will likely generate an enforceable limit on the cartel’s production:

Reaching (a decision) to activate that ceiling of 32.5 million barrels per day will speed up the (market) recovery and will benefit producers and consumers….

 

I’m still optimistic that the consensus reached [last month] for capping production will translate … into caps on [each cartel member’s] levels.

He also added that he “hoped” an agreement the cartel might reach would be honored by non-OPEC member Russia.

Hope is not a strategy. Neither is optimism based upon it,

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Multi-nationals Are Leaving Venezuela, Selling Out at Fire Sale Prices

This article appeared online at TheNewAmerican.com on Wednesday, November 16, 2016:  

Over the last year, General Motors, Ford Motor Company, auto parts maker Dana, Clorox, Kimberly-Clark, Bridgestone Tire, and Liberty Mutual have either sold out their Venezuelan interests at huge losses, have given their factories and properties away for free, or are planning to. Those who used to work for them are now working in another profession: as bachaqueros. This is slang for “giant ants,” used as a pejorative to describe street vendors offering their wares in the black market.

General Mills sold its operations at half the assessed value, while Dana was lucky

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Trump’s Digital Wall

With Gary North’s permission I have reprinted this article from Wednesday’s newsletter. The link to the original article is at the bottom.  

Juggling on the Berlin Wall on 16. November 19...

Donald Trump used a visual image for “seal off the border.” He used a wall.

He isn’t going to build a wall. He will not ask Congress for the funding.

He doesn’t need to.

The border can be policed by satellites and a few thousand low-cost drones. The technology is cheap. It is available now.

These are cheap drones that carry no missiles. They only carry cameras. There can be night drones and day drones. They can observe what is going on for miles.

Put up 1,000 drones at all times, day and night. Aim their cameras 10 or 20 miles south of the border. Is there a truck coming north toward a desolate area? Meet it with troops.

There will be enough troops on the cheap fenced border to head off 80% of the trucks. If 80% of the trucks can’t get their cargo through, the wholesale immigrant business is finished.

Post a thousand troops and drones at the high-crossing areas.

The strategy here is to eliminate the wholesale immigration business. Make the immigrants walk to the border in remote areas. This will drastically reduce the crossings. Move the immigrants from wholesale to retail.

MAKE A DEAL WITH THE COYOTES

Coyotes are the people who take money from desperate would-be illegal immigrants to take them across the border in trucks. They are middlemen.

I propose that Trump make them two-way middlemen.

A coyote brings a truckload of people to the border. On the American side of the border is a border patrol officer who is assigned to an Army unit. He makes the truck driver an offer: “Take them back. Here is $25,000, cash.”

Yes, I know: pretty soon there will be trucks loaded with fake immigrants. So, run the initial program for long enough to get the word out: “Don’t pay anyone to take you across the border. The gringos have cooked up a deal with the coyotes. The coyotes will take your money. Then they will take the gringos’ money to bring you right back.” Six months will do it.

If traffic starts back up, re-start the program.

Keep the immigrants on the Mexican side of the border. This way, there will be no expensive court hearings on our side of the border. There will be no ACLU attorney coming to the defense of illegal immigrants in the middle of the night in the South Texas desert. The immigrants will not cross the border. Mexico will retain jurisdiction.

Station enough troops and drones on the border to seal it off.

Better yet, arrange for the coyotes to bring the would-be immigrants to established check points. No muss, no fuss.

But, you say, no sensible coyote would do this. It would kill his business. So, stage it. Hire some Mexican Americans in South Texas to do a fake crossing at a fake border. Rent an old truck. Have an actor pay the “driver” a wad of bills. Use a dash cam. Make it look real. Then post the video. Do one of these a week. Use the same two or three trucks.

Have you ever seen Wag the Dog?

Trump can supply the video crew. He is a master of reality TV.

Keep the drones flying. Let the coyotes know that they will not be able to get their cargoes across the border. “We can see you coming.”

Maybe a truck turns around and heads home. The driver does not get $25,000. Word will get out: “Don’t pay this guy.”

Maybe the driver stops. He gets his $25,000. He drives them back. Word will get out. “Don’t pay this guy.”

Maybe he unloads them on his side of the border. He gets $25,000. He leaves them. Word will get out. “Don’t pay this guy.”

If he crosses the border, he gets no money. He loses his truck. He gets no food or water. He is sent back on foot with the others. “Have a nice walk with your friends.”

The people who get unloaded will be given two choices: (1) put on a GPS tracking device and start walking back to civilization with food and water supplied by the Americans, or else (2) don’t put on the device and get no food or water. There is this threat: “Take off the device before you get to town A, and the next time we catch you trying to cross illegally, you will get no food and water. And we will catch you. Take the device to our local exchange store, and they will give you $100 cash.” Of course, they are photographed at the border. Their faces go into a facial recognition data base. If they get caught again, they get no food or water for the hike back. “Buy food and water from your buddy.”

Why the exchange store? The store will advertise locally. “If you get caught when our drone system catches the truck that takes you to the border, and if the driver leaves you behind, you can get $100 for the GPS device you will get when you return from the border. We’ll make sure you are in our ‘caught trying to cross the border’ facial recognition system. Then you will get paid.”

Word will get out to the coyotes’ customer base.

Post Spanish language videos on YouTube. The viewers will see the drones, the troops, and the money exchanges. “Warning: the U.S. government has an arrangement with the coyotes. It pays the coyotes to bring people right back at a profit of $25,000 per truckload. You will pay $1,000 for a one-day round-trip visit to the border. The coyotes will make money both ways.”

Put up videos of families walking away from the fence in the middle of the desert. “This is what happens if you try to cross the border in a truck. The drones always spot the trucks. You will be greeted by American troops. Save your money.”

Goodbye, wholesale immigrant market. Hello, individual families on foot.

BETA TEST THIS BY LATE APRIL

This would be cheap to implement. The beta-testing could be operational within three months of Trump’s inauguration.

Put a bird colonel in charge of this. Offer him two stars if he gets it operational by Christmas, but only one star if it’s a day late. Trump can make this offer on January 21. He can ask for volunteers. He will get lots of volunteers by January 23. By February 1, there will be piles of applications.

This colonel would be granted the authority of a four-star general for this project until December 25, 2017.

The colonel will find holes in the system. Most of them can be plugged. He could then ramp up the program by October 31. It would be working by December 25.

Give the program until December 31, 2018 to work. By then, the flow of illegal aliens will be down by 80%.

Priority for Army promotions would be given to successful captains and majors who cut down immigration rates. The statistics would be simple: “Reduce the immigrants in your sector by 20% this year, and you go to the top five of the short list for promotion.” The Mexican border would be the fastest track to stars on the shoulder.

Word would get out. Fast.

CONCLUSIONS

Could Trump do this unilaterally? Of course. He is Commander-in-Chief. Paul Ryan isn’t. Mitch McConnell isn’t.

Trump doesn’t need a wall. He needs only the will.

Here’s the link to his original article: http://www.garynorth.com/public/15899.cfm

Oil and Gas Prices Dropping in Anticipation of Trump Presidency

This article appeared online at TheNewAmerican.com on Monday, November 14, 2016:  

Even as prices for crude oil and natural gas were already declining thanks to continued overproduction by the OPEC cartel, the commitment of millions of dollars in new capital expenditures by major oil companies next year, and the stirring of recovery in the oil patch, last Tuesday’s election added additional impetus to the decline. The price for crude oil for December delivery has dropped more than $2 a barrel since the election, and Evan Kelly, writing at OilPrice.com, thinks it’s going to drop further, perhaps much further.

Reasons abound, mostly around Donald Trump’s promise to breathe new life into an industry hampered by overregulation driven by questionable concerns over global warming.  As Kelly wrote:

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Trump Adds to His List of Advisors

This article appeared online at TheNewAmerican.com on Thursday, November 10, 2016:  

English: Deck of cards used in the game piquet

In March, Donald Trump trotted out an early list of foreign-policy advisors on whom he would be relying if he were elected president. In an interview with the Washington Post, Trump said, “I can give you some of the names … Walid Phares, who you probably know, PhD, adviser to the House of Representatives Caucus, and counter-terrorism expert; Carter Page, PhD; George Papadopoulos — he’s an energy and oil consultant, excellent guy; the Honorable Joseph Schmitz, [former] inspector general at the Department of Defense; [retired] Gen. Keith Kellogg; and I have quite a few more.”

In August he added “quite a few more” and then, the day after he was elected, Trump added still more, this time in the economic policy area.

There are at least four “wild cards” in the deck that Trump is building,

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Latest Jobs Report Masks Continuing Weakness


This article appeared online at TheNewAmerican.com on Friday, November 4, 2016:  

English: Bureau of Labor Statistics logo RGB c...

English: Bureau of Labor Statistics logo RGB colors. (Photo credit: Wikipedia)

The latest jobs report released by the Bureau of Labor Statistics (BLS) on Friday morning was trumpeted as reflective of an improving economy. The Wall Street Journal said the report “signal[ed] solid momentum in the labor market just days before American voters elect a new president,” while Jeffry Bartash, writing for MarketWatch, said it “shows the seven-year-old economic recovery still has plenty of life despite a slowdown in growth earlier in the year.”

A hard look behind the headline numbers — 161,000 new jobs created in October and the unemployment rate at 4.9 percent — reveals

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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.