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

Tag Archives: Deficit

Heritage Foundation Blames Obama Admin. for America’s Economic Decline

This article appeared online at TheNewAmerican.com on Wednesday, February 15, 2017:

The Heritage Foundation minced no words in commenting on its latest Index of Economic Freedom: America’s continuing decline is all Obama’s fault:

America’s standing in the index [now in 17th place, the lowest in history] has dwindled steadily during the Obama years. This is largely owed to increased government spending, [increased] regulations, and a failed stimulus program that enriched the well-connected while leaving average Americans behind.

For the ninth time in 10 years, America’s index has lost ground. Coming in above 80 in 2008, the United States’ current index is barely above 75, tying it with

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Intel’s Announcement of New Arizona Plant Negates Trade Deficit Concerns

This article appeared online at TheNewAmerican.com on Wednesday, February 8, 2017:

US-DeptOfCommerce-Seal

Brian Krzanich, head of Intel, probably didn’t know he was making the case for free trade, despite the fact that trade deficits happen, when he announced from the White House on Wednesday morning his company’s plans to build a new plant in Chandler, Arizona. In a microcosm, his announcement perfectly expressed just how free trade between nations and their citizens generally benefits everyone. Krzanich said his company was planning to build a $7 billion microchip plant in Chandler that would directly employ 3,000 people with “high-paying jobs,” and generate a total of 10,000 jobs when support services for those new jobs are factored in.

Krzanich said that most of Intel’s customers are overseas. Last year Intel’s gross revenues exceeded $10 billion, so, doing the math, it’s likely that Intel will sell $6 to 8 billion worth of chips to foreigners. That creates a trade “surplus” for the United States of between $6 and $8 billion. That will offset some of the trade “deficit” just announced by the Commerce Department the day before, of about $500 billion, an announcement that was met with much wringing of hands and gnashing of teeth by economists claiming that that deficit put the United States at some type of unfair disadvantage to the rest of the world.

However, in the real world, trade deficits are not necessarily bad. When someone buys an automobile or a t-shirt or a cellphone, the money they spend winds up as revenues for manufacturers located overseas. Then those manufacturers have excess American dollars that are now available for investment. Many of those dollars get cycled back to the United States, either by buying U.S. goods and services, or U.S. treasuries, or real estate or businesses, which then generate more products to sell overseas.

In 2016, Americans bought from foreign countries $171 billion worth of automobiles, engines and auto parts, $94 billion worth of clothing, $80 billion of crude and refined oil products, $73 billion of cellphones and other household goods, $58 billion of pharmaceutical drugs, with the balance made up of telecommunications equipment, toys, games, sporting goods, televisions, and video games.

In return foreigners — individuals, companies and governments — bought from the United States $65 billion worth of civilian aircraft and engines, $86 billion on travel to the United States, $78 billion on “intellectual property rights” (mostly leases or patents that foreign companies pay to American companies), $70 billion on financial services, with the rest made up of soybeans, chemicals, and newsprint.

The difference is $502 billion. Americans spent $502 billion more abroad than foreigners bought from us. Is that a problem?

Not for companies such as Intel. Its highly regarded technology, in the form of microchips that outperform its competitors, is in great demand worldwide. Foreign companies will use some of those American dollars that Americans spent to buy them. Intel, for its part, will invest billions in new plants and in hiring new people, paying them good salaries, in order to supply that foreign demand. Intel certainly hopes that foreigners will continue to buy them in massive quantities so that it can continue to expand, build, and hire, and so forth.

As Dan Griswold, writing for Cato, put it: No one would do business with anyone else unless both were better off afterwards:

Nations do not trade with each other: people do. America’s trade deficit with the rest of the world is only the sum of the individual choices made by American citizens. Those choices, to buy an import or to sell an export, only take place if both parties to the transaction believe it will make them better off.

In this way, the “balance of trade,” is always positive.

However, Griswold is likely putting too kind a face on trade deficits, per se, for while free trade seems universally beneficial, the use of fiat money — money not backed by a valuable asset such as gold — in the process of trading could lead to hyperinflation in a country, causing widespread devastation. Whether one calls that a trade problem or a currency problem, it is still a problem inherent in trade, maybe especially for the United States. See the article “So I’m Told Trade Deficits Are Good.”

In general, though, if politicians made it even easier for companies here and abroad to do business, then everyone would be even better off, and concerns about trade “wars” and “tariffs” and “mercantilism” would fade back into the woodwork where they belong.

Trump Showed His Hand to Mexican President Nieto, via Twitter

This article was published by The McAlvany Intelligence Advisor on Monday, January 30, 2017:

Poker Rule No. 65 is “Don’t Show Your Hand:”

The problem with showing cards when you have them is that people then assume that the next time you don’t show them you don’t have them. And when you want them to think you have them the next time you feel obligated to show your hand again. If you start showing people your cards all the time, they are going to figure out the way you play long before you figure out the way they play.

If one player is Donald Trump, you don’t allow the media to see your hand either, especially since they will do everything in their power to expose his hand, disrupt the game and make Trump look like a fool.

The flurry of tweets last week taught Trump that lesson.

Following issuance of his executive order to start building the wall along the US’ southern border, Trump tweeted:

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Venezuela’s Dictator Fires Head of Central Bank; Inflation at 1,600 Percent

This article appeared online at TheNewAmerican.com on Monday, January 23, 2017:

Nicolas Maduro

Venezuela’s Marxist dictator, Nicolas Maduro (shown), fired the head of his country’s central bank on Friday. Without fanfare or any public statement from either Maduro or his banker, Nelson Merentes, the firing is the latest move by the president to place the blame for the collapse of his country anywhere but where it belongs: on his socialist policies.

For months The New American has tracked the retrogression of a country which was once one of the leading economies in South America to a banana republic where people are starving, sick people are dying for lack of care, and a black market has replaced a once-thriving free economy. Last June, the New York Times was finally forced to admit the cause:

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Teamsters’ Pension Plans Seek Massive Cuts to Retirees to Stay Solvent

This article appeared online at TheNewAmerican.com on Monday, January 2, 2017:

Logo of the United States Pension Benefit Guar...

The Central States Teamsters pension plan, covering more than 400,000 participants, expects to receive permission shortly from the Treasury Department to cut benefits to those participants, possibly by as much as 30 percent. At the end of 2014 the plan had $35 billion in liabilities (future promises to participants as they retire) compared to less than $18 billion on hand to pay them.

Right behind Central States was the New York State Teamsters Conference Pension and Retirement Fund, which is also in trouble. Owing nearly $3 billion to its 35,000 plan participants, it has less than $1.3 billion to meet this obligation. Its plan, in its request to the Treasury Department, spelled out just how great the cuts would be:

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Will Mick Mulvaney Pull Trump’s Financial Fat Out of the Fire?

This article was published by The McAlvany Intelligence Advisor on Monday, December 19, 2016:  

English: Official portrait of US Rep. Mick Mul...

Michael “Mick” Mulvaney (shown) rode the Tea Party wave in 2010 into Congress, replacing a 14-term Democrat from South Carolina’s 5th District. He has been handily reelected ever since. He took his oath of office seriously, saying in 2010 that “If political reporters want to know what drives the Tea Partiers, it is their belief in the Constitution. That’s what has always driven me in politics and will guide me in Congress.”

He remained as true to his word as any of those riding the same wave,

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Simmering Greek Financial Crisis Explodes Once Again

This article appeared online at TheNewAmerican.com on Thursday, December 15, 2016:  

Under the terms of its last bailout, Athens (above) was required not only to continue to impose harsh austerity terms (higher taxes, less government spending, better accountability, and increased tax collection enforcement onto Greek citizens) but to inform the unelected “higher” European authorities of any change in those terms by Athens.

Last week Athens unilaterally

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Trump Picks Former Goldman Sachs Banker for Treasury Secretary

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

English: Logo of The Goldman Sachs Group, Inc....

One of the first criticisms over Donald Trump’s nomination of former Goldman Sachs banker Steven Mnuchin on Wednesday for Treasury secretary came from the Democratic National Committee: “So much for draining the swamp … nominating Steven Mnuchin to be Treasury Secretary is a slap in the face to voters who hoped [Trump] would shake up Washington.”

Just the name “Goldman Sachs” sends shivers down the backs of Americanists.

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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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The Tax Foundation’s Big Surprise: Trump’s Tax Plan is Better Than Hillary’s!

This article was published by The McAlvany Intelligence Advisor on Friday, October 21, 2016:  

English: The standard Laffer Curve

The standard Laffer Curve

The Tax Foundation, founded nearly 80 years ago, considers itself non-partisan, guided by what it calls “the principles of sound tax policy, simplicity, transparency, neutrality, stability, no retroactivity, broad [tax] bases and low [tax] rates.” It has steadfastly opposed tax increases of any kind: income, corporate, or excise. Especially annoying are tax “preferences” (i.e., subsidies) for the housing industry and tax credits for certain constituencies (which the Foundation calls “picking winners and losers”).

So it’s no surprise that in its study of Trump’s and Clinton’s so-called “tax plans” the Foundation concluded that Trump’s was vastly superior to Hillary’s:

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Saudi Arabia to Sell $10 Billion in Bonds to Shore Up Its Finances

This article appeared online at TheNewAmerican.com on Wednesday, October 19, 2016:  

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

Oil ministers from Saudi Arabia have been traveling the world doing investment “roadshows” to promote their $10-billion bond offering that hits the markets this week. In so doing, they must disclose the risks investors could be taking, and then price the bonds according to those risks.

The Saudis appear to be paying the price for losing their bet about American oil producers. In November 2014 they made a massive wager that they could

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Candidates Silent as Government Spending Jumps, Deficit Increases

This article appeared online at TheNewAmerican.com on Monday, October 17, 2016:  

On Friday, the Treasury Department published the final revenue and spending numbers for the federal government for Fiscal Year 2016, which ended on September 30. According to Treasury’s report, spending increased significantly (by nearly five percent) over the previous year, to more than $3.8 trillion, while revenues remained essentially flat from the year before, at $3.25 trillion. That left a shortfall of approximately $600 billion, forcing the government to borrow 15 cents of every dollar it spent last year. And the two presidential candidates have remained disturbingly silent about the issue.

Said Robert Bixby, the executive director of the Concord Coalition, a non-partisan group that favors reducing the deficit,

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Reality Sets In: OPEC Ready to Cut Production to Raise Oil Prices

This article appeared at TheNewAmerican.com on Friday, September 30, 2016:  

Wednesday’s announcement from OPEC about an agreement to cut production to shore up crude oil prices was met with both delight and scorn by observers. Exuded Phil Flynn, senior energy analyst at Price Futures Group:

This is the first OPEC deal in eight years! The cartel proved that it still matters even in the age of shale. This is the end of the “production war” and OPEC claims victory.

Bunk, said David Petraeus, the former CIA director who was forced to resign under a cloud in November 2012 and who subsequently was hired by Wall Street firm Kohlberg Kravis Roberts to chair the firm’s newly created KKR Global Institute:

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New North American Oil Discoveries Continue to Frustrate OPEC

This article appeared online at TheNewAmerican.com on Wednesday, September 7, 2016:  

Apache Corporation, the sixth-largest independent oil and gas producer in the United States, announced this week that it has found a new gargantuan reserve of oil and natural gas in West Texas that could be one of the largest energy finds in the last decade. At the low end, the new “Alpine High” field could contain two billion barrels of oil plus massive natural gas reserves. More importantly, especially to OPEC members gearing up to find ways to raise prices, the company’s estimated profit margin is 30 percent after taking in account all expected development costs, even with crude selling at below $50 a barrel.

Apache isn’t waiting around for higher prices but instead has already drilled 19 wells into the new field and has committed one-fourth of its capital budget this year to develop the field further. The profit potential for natural gas is nearly off the charts. So abundant is that energy source from the new field that the company’s breakeven point is just 10 cents per million British thermal units (BTUs) while the market price for natural gas closed Tuesday at $2.72. This is going to turn Apache, currently a $20 billion company, into a major player.

The discovery is also going to turn OPEC’s plans to cap production in order to drive prices higher upside down. It is planning to meet informally later this month in Algiers to plot ways that it can drive the price of crude higher in response to increasing pleas from members such as Venezuela and Algeria for higher prices.

As recently as a month ago, OPEC was hoping to drive prices back to $70 a barrel in order to reduce the financial pressures low crude oil prices have imposed on all of the cartel’s members. Now, however, it is hoping to drive prices up to $60. Last month Venezuela’s President Nicolas Maduro, under mounting pressure to solve his country’s self-imposed problems resulting in inflation and food riots, said last month that the “fair, balanced oil price must be set at $70 a barrel.” On Monday the head of Algeria’s state-owned oil company, Noureddine Boutarfa, exclaimed that oil prices “below $50 a barrel is not acceptable.”

Acceptable or not, oil prices are headed lower according to both Morgan Stanley and Bank of America. Earlier this year Morgan Stanley estimated that the price of crude would move higher, but just cut its third-quarter forecast from $50 a barrel to $45. On August 25, Bank of America estimated that demand for crude would decline further than expected.

What befuddled prognosticators was the failure of the oil market to “rebalance” during the summer when American drivers set a record, burning through nearly 10 million barrels of gasoline every day. Even though American drivers drove a record three trillion miles over the last 12 months, that failed to soak up much of the surplus overhanging the market. Now, with demand slackening after Labor Day, and an economy essentially flat-lined, there is little reason to believe that prices will move higher.

Catching OPEC by surprise was the news that U.S. frackers restarted eight oil rigs every week this summer despite the lower prices. This puts the cartel in a pickle of its own creation: If it cuts production in order to drive prices higher, this will only further encourage U.S. producers to bring more rigs online. If they continue to flood the market, their budget deficits will get even larger while still losing precious market share to the Americans.

One unnamed OPEC official told the Wall Street Journal that all of this has caught the cartel by surprise: “[The U.S. shale industry has] surprised us, and can surprise us again.”

Oil Price Rise Only Temporary; Could Drop Back to Low $20s

This article appeared online at TheNewAmerican.com on Wednesday, August 10, 2016:  

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

In light of record supplies of gasoline and crude oil, why are prices rising? After hitting a low of $26 a barrel in January, crude oil topped $52 a barrel in early June, only to drop below $40 a barrel last week. The recent rise back above $40 is a head fake, according to oil analyst Stephen Schork, editor of the daily subscription Schork Report. The recent bounce forced massive short covering by traders convinced oil was headed back down to the $20s and had nothing to do with the fundamentals.

The fundamentals, according to Schork, are bearish for oil (and gasoline) prices, and not likely to change any time soon. Even the Energy Information Administration (EIA), the government’s watchdog agency in charge of predicting the future, has been forced to

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Trump’s Plan for “Winning the Global Competition”

This article appeared online at TheNewAmerican.com on Tuesday, August 9, 2016:  

During his hour-long speech on Monday at the Detroit Economic Club, Republican Party presidential nominee Donald Trump was serious and reasonable, avoiding histrionics and the temptation to push back against protesters who interrupted him several times. He followed his script and peppered the economic landscape with his wish list of actions he would take as president to “Make America Great Again.”

It was a very long list:

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Production Freeze Main Topic at OPEC Late September Meeting

This article appeared online at TheNewAmerican.com on Monday, August 8, 2016: 

OPEC’s current president, Qatar’s energy minister Mohammed bin Saleh Al Sada (shown at center, above), announced Monday that the oil cartel will hold “informal” side meetings at the International Energy Forum in Algeria in late September. Not surprisingly, the topic will once again be “cooperation” among the disparate and increasingly desperate members to restrict production in efforts to force oil prices higher.

Al Sada, who holds a Ph.D. from England’s University of Manchester’s Institute of Science and Technology, asserted,

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California’s Pension Plans Report Dismal Results, Increasing Shortfalls

This article appeared online at TheNewAmerican.com on Wednesday, July 20, 2016:  

Ted Eliopoulos, the chief investment officer of the country’s largest pension plan, the California Public Employees Retirement System (CalPERS), did the best he could with the bad news: “Positive performance in a year of turbulent financial markets is an accomplishment that we are proud of.” That “positive performance” was a measly 0.61-percent return from July 1, 2015 through June 30, 2016, on his $300 billion pension plan. That means that the fund is now about $100 billion short of meeting its future obligations.

But that $100 billion number greatly understates the real liability because it’s based on a pixie-dust assumption that the plan can earn an average

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Latest CBO Report “Grim”; Offers No Solutions to National Debt

This article appeared online at TheNewAmerican.com on Friday, July 15, 2016:  

Ida May Fuller, the first recipient

Ida May Fuller, holding the first check from the Social Security Administration

On Tuesday, the Congressional Budget Office (CBO) published its annual report on the country’s long-term budgetary and financial outlook. One need only to see the chart on Page One of the report to see why CBO’s Justin Bogle said the outlook was “grim”: It shows government spending growing so much more quickly than anticipated revenues that annual deficits will likely triple in the next 30 years, if not sooner. Bogle called this scenario unsustainable.

For the first time, the CBO built into its assumptions the projected impact of ObamaCare, the country’s declining birth rate, the explosion of Baby Boomers demanding benefits from Social Security and Medicare over that period, plus Boomers’ increasing life expectancies and the increasing costs of providing them healthcare along the way.

It also assumed that government debt will

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Rio Gets $900M Emergency Disbursement From Gov’t for Olympics

This article appeared online at TheNewAmerican.com on Monday, June 20, 2016:  

Português: Placas promovendo a candidatura do ...

On Friday, just seven weeks before the Rio 2016 Olympic Games are to begin, the governor of the state of Rio de Janeiro, Francisco Dornelles, declared a financial emergency, saying that his state has run out of money.

In his official statement, Dornelles said the state — which is helping the city of Rio prepare for the Games, which begin on August 5 — is facing a “public calamity,” adding:

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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.