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: Economy

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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Venezuela Now a Military Dictatorship

This article appeared online at TheNewAmerican.com on Wednesday, July 13, 2016:  

Nicolas Maduro

Nicolas Maduro

Venezuela’s Marxist President Nicolás Maduro closed the loop on Monday night, declaring under powers granted to himself by his “emergency decree” announced in January (later to be declared “constitutional” by his hand-picked Supreme Court) that his new Great Sovereign Supply Mission would be run by the country’s defense minister, Vladimir Padrino López .

Maduro put everything that moves into the hands of Padrino: “All the ministries, all the ministers, all the state institutions are at the service [of] and in absolute subordination [to the new mission].”

Padrino, the head of Venezuela’s armed forces, now will be in charge of transporting and distributing what’s left of products supplied by the crippled economy, enforcing price controls, and “stimulating” the economy.

A former head of the armed forces commission in the now emasculated congress, Luis Manuel Esculpí, said, “This is now a completely militarized government. The army is Maduro’s [sole] source of authority.”

Juan Pablo Olalquiaga, president of Venezuela’s chamber of commerce, Conindustria, sees what’s coming: “If all the factories now have to run everything by the military, this isn’t going to make raw materials appear all of a sudden. The president is showing [instead that] he does not understand how to manage the economy.”

What it does show is that Maduro has learned how to cement his administration into place, to the detriment of Venezuela’s suffering citizens. By concentrating all power in the military, Maduro needs only to watch Padrino instead of the hydra-headed monster of government agencies and ministers that has continued since the days of Hugo Chávez.

Those who pose any sort of threat are jailed without charge and without end. Example: Antonio Ledezma, former mayor of Caracas and now a guest of SEVIN, Venezuela’s state security police. Late in the afternoon of September 19, 2015, his offices were raided by 80 members of SEVIN, some carrying automatic rifles, and the others armed with semi-automatic pistols. They smashed through the glass door of his office on the sixth floor of a downtown office building and, when confronted with the outraged mayor who demanded they show him a search warrant, they beat him mercilessly and then hauled him away in a black Humvee.

It was a setup from the beginning. Maduro, in explaining how this “threat” to his administration had been neutralized, referred to a full-page ad that Ledezma and two other “troublemakers” allegedly ran in a local paper that challenged Maduro’s authority and called for an election to oust him.

Observers said that coup-plotters rarely signal their intentions with a full-page newspaper ad and then wait around to be arrested.

All public references to Ledezma — his whereabouts, the status of his so-called “trial” that opened a year after his arrest — have disappeared.

Venezuelan resident Nelson Agelvis — a college professor, business consultant, and travel expert — recently described what life is like there:

In Venezuela, what Nicolás Maduro dictates gets done, period. There are no checks and balances; there is no division of power. There is no organ of the state that will tell him “No, you can’t, it’s against the constitution.” [His] PSUV government party controls all organs of the state including the Supreme Court and the Electoral Council — yes, the vote counters….

 

Any ruler who is all-powerful, who controls all instances of power … the executive branch … the judicial and electoral, and who keeps the military happy … is a dictator. He dictates, and it gets done by any means, and citizens are defenseless against him. That’s a dictatorship.

 

According to this definition, Venezuela is a dictatorship.

Ending Crude Oil Export Ban Already Helping U.S. Economy

This article appeared online at TheNewAmerican.com on Friday, July 8th, 2016:  

English: Crude oil tanker SAFWA moored off Rot...

Crude oil tanker SAFWA moored off Rotterdam.

Since the 1970s ban on exporting crude oil was lifted last December, the oil industry has given statists and anti-growth politicians a lesson in free markets: exports increased seven times their previous levels in just the first three months of 2016. And this in the face of an economy that is still suffering from the dregs of the Great Recession.

This was predicted by IHS (Information Handling Services), located near Denver, two years ago when the group stated that

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New Bailout Bill for Puerto Rico Supposedly “Won’t Cost Taxpayers a Dime”

This article appeared online at TheNewAmerican.com on Thursday, June 30, 2016:  

Official portrait of United States Senator (R-KY)

Official portrait of United States Senator (R-KY)

Since Senate Majority Leader Mitch McConnell said it, it must be true: The bill passed by the Senate on Wednesday to rescue Puerto Rico from its overwhelming financial troubles “won’t cost taxpayers a dime, not a dime.”

The president has said he would sign into law the dreadfully misnamed Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) immediately and would then begin to nominate the seven members of the board to oversee its implementation. That board is to become effective on September 1.

That provides no help to Puerto Rico, which will default

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About That New, Dreadfully Misnamed Puerto Rico Bailout law

This article was published by The McAlvany Intelligence Advisor on Friday, July 1, 2016:  

English: Map of Peuto Rico, with inset showing...

Investors saw the market values of their Puerto Rican bonds soar with news that Congress passed the “Puerto Rico Oversight, Management and Economic Stability Act” (PROMESA). They had a right to be happy: prior to the news their long bonds were trading at about 62 cents on the dollar. Afterwards they jumped to 66 cents. Still a paper loss of a third of their initial investment, but better than anticipated.

What’s anticipated is that the new oversight board, populated with politicians (but none from Puerto Rico), will solve all of the island’s problems,

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In Venezuela, the Elite Meet to Eat While the Masses Starve

This article appeared online at TheNewAmerican.com on Friday, June 17, 2016:  

Another version of the flag of Animal Farm, ba...

Another version of the flag of Animal Farm, based on the flag of the Soviet Union. Hoof and horn symbol created by Al2.

On Monday OPEC gave Venezuela more bad news: Oil production fell another 120,000 barrels a day in May, putting further pressure on the socialist regime of Nicolas Maduro to pay its bills and maintain order. On Tuesday more than 400 citizens of Cumana, a city of 800,000 a few hundred miles west of Caracas, were arrested following another food riot.

On Thursday the British tabloid Daily Mail published a dozen pictures of the wealthy elite enjoying themselves at the opulent Caracas Country Club where membership costs $110,000. The slums where the masses are starving can be seen in the background.

The contrast, startling as it was, illustrates how socialism — called Chavismo in “honor” of former president Hugo Chavez — ultimately decimates the middle class and

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United States No Longer First in Global Competitiveness

This article appeared online at TheNewAmerican.com on Wednesday, June 1, 2016:  

English: Cropped version of Thomas Jefferson, ...

Thomas Jefferson

According to a study just released by the International Institute for Management Development (IIMD), the “U.S. economy is no longer the most competitive and pro-business in the world.” It has held the top spot for the last three years but has, thanks to increasing government regulation and taxation, slipped to third place. Said Arturo Bris, IIMD’s director, “The U.S. still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness. The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.”

Based on its analysis of more than 300 criteria, the United States no longer excels based on

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Venezuela Collapsing; U.S. Officials Fear Violence, Military Coup

This article appeared online at TheNewAmerican.com on Wednesday, May 18, 2016: 

Seal of the C.I.A. - Central Intelligence Agen...

U.S. intelligence officials warned on May 14 that Venezuela is descending into economic and political chaos that is likely to end in street violence, military suppression of citizens’ rights, and a possible coup to remove President Nicolás Maduro.

How much of that reflects CIA interventions to keep the crisis somewhat under control is an open question. But one of those anonymous “intelligence officials” told the Wall Street Journal that “[our] goal is to mitigate the crisis that they’re experiencing. It’s in the United States’ interest that Venezuela not bottom out.”

If past experience serves as a guide for the future, the CIA could

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Brazil’s Interim President Says “Trust Me,” Installs Corrupt Bureaucrats

This article appeared online at TheNewAmerican.com on Monday, May 16, 2016:  

Upon taking over Brazil’s presidency from disgraced former President Dilma Rousseff on Thursday, interim president Michel Temer asked his skeptical citizenry to “trust” him, saying that his new administration would be Brazil’s “salvation”:

Trust me. Trust the values of our people and our ability to recuperate the economy…. It is essential to rebuild the credibility of the country abroad to attract new investments and get the economy growing again…. It is urgent to restore peace and unite Brazil. We must form a government that will save the nation…. It’s urgent to seek the unity of Brazil. We urgently need a government of national salivation.

Even if he truly intended to do any of that, the challenges he faces almost defy description.

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Brazil in Turmoil: President’s Impeachment Vote Imminent

This article appeared online at TheNewAmerican.com on Tuesday, May 10, 2016:  

Português do Brasil: O presidente Lula partici...

Partners in crime

In a sudden unexpected move, early Tuesday morning Waldir Maranhão, the interim speaker of Brazil’s lower house (the Chamber of Deputies) reversed his previous decision from Monday to annul a Chamber of Deputies April vote that allowed impeachment proceedings to move forward. The upper house — the Federal Senate — was already moving toward a vote to impeach Brazilian President Dilma Rousseff when word came that the Chamber was going to have another vote on the matter.

With Brazilian politicians doing everything they can to stay out of jail, they are working hard to keep the public’s attention focused on Rousseff’s problems and away from their own. In March, Mihir Kapadia, the head of Sun Global Investments, a London investment firm that specializes in emerging-market opportunities, certainly sees one in Brazil:

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Trump Suggests National Debt “Deal,” Media Calls It “Fanciful” and “Dangerous”

This article appeared online at TheNewAmerican.com on Monday, May 9, 2016:  

A snippet from Donald Trump’s conversation with CNBC on Thursday raised the ire of numerous media commentators, who called Trump’s plan “unprecedented” (CNBC), “fanciful” and a “threat” (New York Times), and “tantamount to a debt default” (Yahoo Finance). Others called his remarks “reckless,” while Tony Fratto, a former Treasury official in the George W. Bush administration said, “This isn’t a serious idea — it’s an insane idea.”

What sparked the ire? The initial impetus was when Trump said, “[The U.S. Treasury is] paying a very low interest rate. What happens if that interest goes up two, three, four points? We don’t have a country. I mean, if you look at the numbers, they’re staggering.”

Indeed they are. The U.S. Debt Clock shows the national debt closing in on $20 trillion, while the economy is slumping along, with a GDP at just over $18 trillion. Put another way,

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Puerto Rico to Default on $422M Payment Today; Likely Another $2B in July

This article appeared online at TheNewAmerican.com on Monday, May 2, 2016:  

Puerto Rico continued its “death spiral,” with its failure to make a $422 million interest payment on Monday on some of the island’s gigantic $73 billion debt. This comes on the heels of missed payments over the last year, and will be followed up by a $2 billion payment due on July 1, which it is also widely anticipated to miss. The payment is due from the island’s Government Development Bank (GDB), the main bond issuer and the island’s fiscal agent.

So far Governor Alejandro Garcia Padilla (above) has, as noted previously in The New American, been able to keep the lights on and the water running by moving money around on the island’s balance sheet, paying only those with the highest and most enforceable claims and dealing as best he can with those holding lower credits. It was Padilla who said his island was in a “death spiral” as far back as last July, because his 3.5 million inhabitants, half of whom live in poverty, didn’t have the money.

But for decades Padilla and his predecessors acted as if they did have it,

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What Happens After Venezuela Destroys its Currency?

This article appeared online at TheNewAmerican.com on Friday, April 29, 2016:  

English: THE KREMLIN, MOSCOW. At a joint press...

Hugo Chavez and Vladimir Putin

Venezuela is unable to pay its currency printers. Those printers have been flying in planeloads of currency in the middle of the night, landing at airports where it is offloaded onto trucks to be dispersed to banks throughout the country. In other words, Venezuela doesn’t have the money to pay for its money.

The destruction of the currency, the bolivar fuerte (“strong bolivar”), has been documented at The New American and elsewhere. When oil prices dropped, so did revenues to fund the various socialist welfare schemes put in place by the communist Hugo Chávez and continued by his protégé, Nicolás Maduro, at Chavez’s passing in March 2013. Instead of reining in those unaffordable programs, socialist economists instead decided to print their way out of the crisis.

The results were predictable, and catastrophic.

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Cruz Tosses Second “Hail Mary” Pass, Names Carly Fiorina as His VP

This article appeared online at TheNewAmerican.com on Thursday, April 28, 2016:  

When he announced Carly Fiorina (shown) as his running mate, Republican presidential candidate Ted Cruz said on Tuesday, “It’s unusual to make the announcement as early as we’re doing so. But this race, if anything, is unusual.”

Others viewed his decision to name former GOP candidate Carly Fiorina as his vice-presidential running mate in different terms.

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Is $40 Oil the New Normal?

This article was published by The McAlvany Intelligence Advisor on Friday, April 22, 2016:  

To the consternation of traders short the market, crude has jumped from $30 a barrel in late January to over $40 currently, with many indicators pointing to still higher prices. Was $30 the bottom? What will be the new ceiling?

Every bull market rises from the ashes of fear, disgust and despair. Traders and investors reasonably expected oil to bottom at well below $30, perhaps in the 20s, with some heavyweights, including Goldman Sachs, suggesting even lower prices. Some took short positions, certain that their calculus was correct: OPEC had maxxed out, American production seemed impervious to precipitous declines in rig counts, China’s economy was faltering and signs of recession were continuing to expose themselves around the globe, including the U.S. What could go wrong?

A little energy company, Callon Petroleum, showed exactly what could go wrong. Three times in the last six months the company has sold new shares to raise equity, and three times the company’s stock has risen. Logic and experience would suggest that dilution of shares would reduce their price. But with Callon, shares jumped from $4.21 in the middle of January to nearly $10 currently.

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Nothing is Likely to Change in Brazil

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 20, 2016: 

One of Warren Buffett’s favorite expressions is “when the tide goes out, everyone will see who’s been swimming naked.”  In Brazil the tide went out at the start of the Great Recession and now the whole world can see who was swimming naked.

When President Lula was elected in 2002 the commodity boom was underway, and Brazil was enjoying the ride. Its major exports are soybeans, sugar, and iron ore, and under Lula Brazil’s GDP was running 10 percent a year. Lula implemented major expansions of the welfare state, including putting in place such generous pension plans that state workers could retire at age 54 for men and at age 52 for women at 90 percent of their final pay. The average Brazilian’s household income rose, and statists worldwide pointed to Brazil’s success story, naming it as one of the BRIC countries that would soon overtake the developed nations of the world, and doing it while expanding government spending.

But when Dilma Rousseff took over in 2011 the Great Recession was revealing the true nature of spending far beyond the ability of the economy to sustain it. In 2014 the government’s finances were in such dreadful shape that

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Goldman Sachs’ Warning Dents Crude Oil Price

This article appeared online at TheNewAmerican.com on Wednesday, April 13, 2016:  

The price of crude oil, which reached $65 a barrel a year ago, fell below $30 in January with expectations that its decline wouldn’t end until it hit $20, or even lower. But hopeful optimists see light at the end of the tunnel — this coming from next Sunday’s OPEC meeting in Doha, Qatar (photo above) — where an agreement to freeze production at current levels will be on the table, bid crude higher in an almost straight line. On Tuesday NYMEX crude hit $42 a barrel, a 40-percent jump from January’s lows.

A note from Goldman Sachs on Tuesday provided a sobering view:

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The PC Crowd, Economic Ignorance, and the Minimum Wage

This article was published by The McAlvany Intelligence Advisor on Monday, April 4, 2016:  

No political correctness

Nick Adams, the Australian author of Retaking America: Crushing Political Correctness, has arrived on the American scene at precisely the right moment. He has appeared on nearly every major TV and radio show, writes for Townhall.com and Townhall Finance, and serves as a Centennial Institute Policy Fellow at Colorado Christian University. And he was named Honorary Texan in 2013 by Texas Governor Rick Perry.

PC is being used as a hammer to intimidate, emasculate, or otherwise neutralize opposition to any Progressive agenda. Rather than answering legitimate questions or responding to thoughtful objections, the PC crowd instead accuses the questioner of being

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A Closer look at the Jobs Report

This article appeared online at TheNewAmerican.com on Friday, April 1, 2016:  

From a distance the jobs report issued on Friday by the Bureau of Labor Statistics (BLS) looked pretty good: 215,000 new jobs were created by the economy in March while earnings, year-over-year, increased by 2.3 percent. The average hours worked remained stable, and the labor force participation rate rose off its recent record lows.

The numbers came from two sources: payroll numbers provided by businesses directly to the Labor Department, and household numbers provided by phone-call surveys.

In looking at the numbers, Ward McCarthy, chief financial economist at Jefferies LLC, a massive global investment firm headquartered in New York City, said that “we continue to generate a lot of jobs” without asking what kind. A closer look reveals

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Credit Rating Agencies Finally Reacting to China’s Economic Implosion

This article was published by The McAlvany Intelligence Advisor on Friday, April 12, 2016:  

English: World countries by Standard & Poor's ...

English: World countries by Standard & Poor’s Foreign Rating. Legend: Green – AAA Turquoise – AA Lighter blue – A Darker blue – BBB Purple – BB Red – B : Grey – not rated, (Photo credit: Wikipedia)

First it was Fitch. Late last year it downgraded China’s sovereign debt by two notches, from AAA to A, which, according to its own definition, signals debt that is “more vulnerable to adverse business or economic conditions than is the case for [the two] higher ratings.”

In early March, Moody’s Investors Service got on board, knocking China’s debt rating down by one notch, followed by Standard and Poor’s on Thursday, which kept China’s rating at AA but with a negative outlook.

Translation: something’s coming.

Said S&P:

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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.