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: Free Market

Saudi Aramco’s IPO Too Risky: Institutional Investors Shying Away

This article appeared online at TheNewAmerican.com on Monday, December 2, 2019: 

The “road show” designed to build investor interest and demand for shares of Saudi Aramco’s initial public offering (IPO) ends on Wednesday and the early results are disappointing, to say the very least.

Crown Prince Mohammed bin Salman (MBS) thought back in 2016 that he could sell a tiny piece of his country’s crown jewel, the Saudi Arabian Oil Company (Aramco) and raise $100 billion. He had big plans to invest those proceeds in diversifying his country’s economy away from its near total reliance upon oil revenues for its sustenance and for the maintenance of its welfare state.

Now, however, he’ll be lucky to get a quarter of that. And most of what he gets will come from pressure, threats, intimidation, and manipulation.

The New American has outlined the risks to those investors residing outside the Middle East, including:

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Saudi Arabia’s Aramco’s “Road Show” Ends on Wednesday; Shares to be Offered a Week Later

This article was published by the McAlvany Intelligence Advisor on Monday, December 2, 2019:

This writer published an article here in November (see Sources below) outlining the risks of investing in Aramco’s IPO. Lest there be any confusion on the matter, neither that article nor this one is intended to be investment advice.*

This follow-up article will let the facts and the risks speak for themselves. Putting it simply: because of those facts and risks, the Crown Prince is likely to be sorely disappointed with the final results of his IPO when it comes to market on December 11.

Crown Prince Mohammed bin Salman (MBS) thought back in 2016 that

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Black Friday Purchases to Exceed $1 Trillion This Year

This article appeared online at TheNewAmerican.com on Friday, November 29, 2019:

By 10 a.m. Eastern time on Black Friday, consumers had already spent an estimated $150 billion. At that rate they will easily set a new record, with estimates approaching four percent ahead of last year’s record. That would push Black Friday weekend purchases to more than a trillion dollars for the first time in history.

This is reflective of the continuing strength of the underlying economy, despite naysayers’ attempts to denigrate the economy’ performance. For instance, the Atlanta Fed’s GDP Now index was just raised from an anemic (and woefully incorrect) 0.4 percent growth rate for the fourth quarter to 1.7 percent.

And even that doesn’t reflect what’s really happening online and in the malls.

Let’s review the “real world” data:

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Will China’s Slowing Economy Force a Trade Deal With the U.S.?

This article appeared online at TheNewAmerican.com on Friday, November 22, 2019: 

The underlying assumption in U.S. foreign policy seems to be that by applying pressure economically, China will be forced to agree to a trade deal. Richard Koo, chief economist at Nomura Research Institute, Japan’s largest economic research firm, thinks that policy is working: “I suspect the increasingly pronounced slowdown in China’s economy, coupled with recent employment data pointing to continued strength in the US economy, are putting heavy pressure on China to settle sooner rather than later.”

Koo assumes that the numbers coming out of China are reflective of reality there. At six percent growth per year, China’s economy (using the mathematical Rule of 72) will double every 12 years. If the U.S. economy is growing at two percent annually, its economy will double every 36 years. Simple math dictates that at some reasonably short time in the future, China’s economy will equal that of the United States, with all manner of political ramifications following.

As Michael Pillsbury pointed out in his monumental Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower, the communists running China expect their economy to be

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Target, TJX, Home Depot Follow Walmart With Increased Sales and Profits in Third Quarter

This article appeared online at TheNewAmerican.com on Wednesday, November 20, 2019: 

Target, the eighth-largest retailer in the United States, reported blowout sales and profits in the third quarter, a week after Walmart, the country’s largest retailer, reported similar results. Not only is the U.S. consumer alive and well, he is enjoying the benefits of a robust and growing economy.

Target boasts nearly 1,900 stores nationwide, employing more than 360,000 people, and Wall Street has rewarded investors in the company’s stock with gains of nearly 100 percent since just before last Christmas. And 2018 was, according to Target’s CEO Brian Cornell, the “most successful holiday in more than a decade.”

The retailer is expecting this year’s holiday shopping season to exceed last year’s, with gains of between three and four percent over last year’s results.

Specifically,

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New York Times Claims FedEx Paid Zero Taxes in 2018; FedEx Founder Wants Debate

This article appeared online at TheNewAmerican.com on Monday, November 18, 2019:

After reviewing various publicly available sources, three New York Times staff writers discovered that FedEx Corporation paid no income taxes in 2018. They also discovered that FedEx didn’t use the estimated $1.6 billion it saved in taxes to increase its investment in new equipment, reneging on an implied promise FedEx’s founder, Fred Smith, made when lobbying for Trump’s Tax Cut and Jobs Act.

This was perfect fodder to promote the Times’ anti-capitalist ideology that FedEx, and by extension all capitalists, are greedy selfish liars. The paper made its case in a front-page article published on Sunday.

The three Times staffers made clear their ideology, noting in the article’s opening that “the company, like much of corporate America, has not made good on its promised investment surge from President Trump’s 2017 tax cuts.” They noted:

In the 2017 fiscal year, FedEx owed more than $1.5 billion in taxes. The next year, it owed nothing….

 

FedEx reaped big savings … but it did not increase investment in new equipment and other assets in [2018] as Mr. Smith said businesses like his would.

Instead, the company used “much of its [tax] savings … to reward shareholders: FedEx spent more than $2 billion on stock buybacks and dividend increases in the 2019 fiscal year, up from $1.6 billion in 2018, and more than double the amount the company spent on buybacks and dividends in fiscal year 2017.”

The staffers extended their accusations from FedEx to capitalists in general: “From the first quarter of 2018, when the [tax] law took effect, companies have spent nearly three times as much on additional dividends and stock buybacks, which boost a company’s stock price and market value, than on increased investment.”

This aroused the ire of Smith, who issued a statement later that day calling the article a calumny and challenging the Times’ editor, A.G. Sulzberger, to a public debate. Said Smith:

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Maduro Reversal? Price Controls Not Being Enforced, Leading to Economic Revival in Venezuela

This article appeared online at TheNewAmerican.com on Wednesday, September 18, 2019: 

Almost unnoticed by the mainstream media are recent decisions by Venezuela’s Marxist dictator, Nicolás Maduro, to relax some of the more debilitating of his economic policies. That relaxation is already leading to economic revival in the country’s cities.

As reported by Kejal Vyas from Caracas and published by the Wall Street Journal on Tuesday, Maduro “has quietly and cautiously begun implementing free-market policies … [his regime has] largely stopped enforcing the price controls that had led to dire food shortages … [which is] giving some life, even if limited, to the economy.”

The economy under Maduro is worse than America’s was at the bottom of the Great Depression, and the IMF is forecasting it will shrink by another 35 percent this year. More than four million of Venezuela’s 30 million residents have left the country, leaving the rest behind to cope with lack of food, medical services and supplies, disease, and starvation.

But, thanks to Maduro’s silent lifting of some of his more onerous restrictions, the economy is beginning to recover, at least in Caracas. Wrote Vyas: “Here in the capital … new stores have popped up, selling everything from boxes of Cheerios to bottles of water.” Reappearing on stores’ shelves are multiple brands of sugar, pasta and flour.

Maduro is also cutting back on the prime driver that has led his socialist regime to install price controls:

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NPR Shops at Walmart to Learn Cost of Trump’s Tariffs, Gets Big Surprise

This article appeared online at TheNewAmerican.com on Tuesday, September 17, 2019: 

Staffers from NPR (National Public Radio) went shopping at Walmart to confirm that Trump’s tariffs are already costing American consumers a lot of money. They couldn’t hide the results: The impact is hardly noticeable.

In announcing the results of a year-long study of prices at a local Walmart, NPR boldly announced: “Shoppers beware: the tariffs will bite.” The bite turned out to be a nibble.

In August 2018, NPR staffers began tracking the prices on some 70 items at a Walmart store in Liberty County, Georgia, ranging from toilet paper and black beans to lightbulbs and TVs. They learned that of those 70 common everyday items, only 24 of them saw increased prices, while 12 of them saw decreased prices, and the remaining 34 had no price changes.

The staffers had to backtrack on their preconceived notions:

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Two Latest Jobs Reports Confirm Healthy, Growing U.S. Economy

This article appeared online at TheNewAmerican.com on Friday, September 6, 2019: 

The two latest jobs reports confirm that the U.S. economy remains on solid footing, growing across every sector (including manufacturing) and putting additional pressure on China to come to terms in the tariff war with President Trump.

Wednesday’s jobs report from ADP, one of the country’s largest payroll processors, showed that the U.S. economy added 195,000 jobs in August, with gains across every sector and every company size. And that didn’t include the 17,200 jobs that were added in the franchise sector in August.

Friday’s jobs report from the Bureau of Labor Statistics (BLS) showed that

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Million-dollar Homes in Aspen Aren’t Selling. Recession Ahead?

This article appeared online at TheNewAmerican.com on Thursday, August 29, 2019: 

On its face, the claim that since million-dollar homes in Aspen are taking up to three years to sell means that a recession is coming is ludicrous. But if it comes from the mouth of an establishment economist, the mainstream media gives such a silly claim credibility.

Mark Zandi fits the mold of an establishment economist perfectly. With economics degrees from the Wharton School at the University of Pennsylvania, he has been steeped in Keynesian economics from infancy.

He has thrived in the culture,

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Establishment Economists Continue to Get It Wrong

This article was published by The McAlvany Intelligence Advisor on Friday, August 30, 2109: 

Establishment economists consistently bring a negative cast to their forecasts. Perhaps it’s because their worldview precludes any thought that people allowed to operate in an environment of lower taxes and fewer regulations can actually outperform their models. Perhaps it’s their excessive hubris springing from their Keynesian belief system that they can accurately predict (and thus manage) the future through econometric modeling.

Instead, many of them would benefit from just going shopping at, say, Walmart, Target, Kohl’s, Lowe’s, or Home Depot, and taking note of what’s going on there.

When they make predictions, they embarrass themselves and expose their so-called “profession” for what it really is: not much more than crystal ball gazing mixed with a negative worldview.

Consider Mark Zandi.

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Million-dollar Homes in Aspen Aren’t Selling. Recession Ahead?

This article appeared online at TheNewAmerican.com on Thursday, August 29, 2019: 

On its face, the claim that since million-dollar homes in Aspen are taking up to three years to sell means that a recession is coming is ludicrous. But if it comes from the mouth of an establishment economist, the mainstream media gives such a silly claim credibility.

Mark Zandi fits the mold of an establishment economist perfectly. With economics degrees from the Wharton School at the University of Pennsylvania, he has been steeped in Keynesian economics from infancy.

He has thrived in the culture,

Keep reading…

What Are the Real Costs if the Federal Minimum Wage Is Increased?

This article was published by The McAlvany Intelligence Advisor on Wednesday, July 10, 2019: 

Having never learned, or conveniently forgotten, the “law of unintended consequences,” House Democrats are poised to pass their Raise the Wage Act next week. If passed into law, it would more than double the present federal minimum wage of $7.25 an hour to $15 an hour. It would be staged in, reaching $15 by 2024.

It’s because those workers (and Democrat voters, it is assumed) “deserve” it. Rep. Steny Hoyer (D-Md.) said that, “Americans who work hard deserve to afford a middle-class life and deserve opportunities to get ahead and help their children get ahead.” The first fallacy immediately appears: What if they don’t? What if their work isn’t worth paying them $15 an hour? Democrat answer: Give it to them anyway.

House Democrats were doubtless overjoyed upon learning that the Congressional Budget Office (CBO) came to their rescue, reporting that mandating that employers pay their people at least $15 an hour, starting in 2024, would boost the pay of an estimated 17 million workers and “could” also raise the pay of 10 million more workers already earning close to $15 an hour. It would also, said the CBO, lift 1.3 million workers above the poverty level.

Ignored were the other costs, including,

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CBO Counts Cost of Raising Minimum Wage to $15

This article appeared online at TheNewAmerican.com on Tuesday, July 9, 2019:  

Just a week before the Democrat-controlled House of Representatives is due to vote on its Raise the Wage Act, the non-partisan Congressional Budget Office (CBO) calculated its possible impact on the economy. The bill, if enacted into law (highly unlikely), would gradually raise the minimum wage in the country from its present level of $7.25 an hour to $15 an hour by 2024.

The CBO concluded that, “For most low-wage workers, earnings and family income would increase, which would lift some families out of poverty [for a single person, that level is $1,040 a month; for a family of four, it’s $2,145 a month]. But other low-wage workers would become jobless, and their family income would fall — in some cases, below the poverty level.”

The CBO did its calculations, and drew its conclusions, based on three different scenarios:

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The Fed’s Impossible Task: Steering the U.S. Economy by Looking Through Its Rear-view Mirror

This article was published by The McAlvany Intelligence Advisor on Monday, July 8, 2019: 

Libertarian scholar Murray Rothbard was notoriously opposed to any sort of government control over the individual, especially by central banks and central bankers. In his book, What Has Government Done to our Money?, published in 1963, he wrote:

Money … is the nerve center of the economic system. If, therefore, the state is able to gain unquestioned control over the unit of all accounts, the state will then be in a position to dominate the entire economic system, and the whole society.

The fatal flaw is this: the hubris inherent in thinking that any gaggle of economists gathered around a table – no matter how well-educated and regarded as experts, and no matter how exotic and sophisticated their formulas and algorithms designed to track and follow the economy – can do better than the economy does all by itself. These economists believe that Adam’s Smith’s “invisible hand” is inferior to their own.

A perfect example just presented itself

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Another Record for U.S. Crude Oil Production: 12 Million Barrels Per Day in April!

This article appeared online at TheNewAmerican.com on Monday, July 1, 2019: 

Two recent reports confirmed the preeminence of the United States in its production of crude oil and its related derivative, natural gas. Earlier this month British Petroleum (BP) released its “Statistical Review of World Energy” for 2019 in which it reported that the United States extended its lead as the world’s top oil producer to a record 15.3 million bpd (barrels per day): 11 million bpd of crude and 4.3 million bpd of natural gas liquids (NGL) in April.

BP added that the United States led all global oil producers by increasing its production by more than two million bpd in 2018, 98 percent of the total new global production.

Friday’s report from the U.S. Energy Information Agency (EIA) overshadowed that from BP, noting that

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U.S. Enjoying Its New Role as World’s Largest Energy Producer

This article was published by The McAlvany Intelligence Advisor on Monday, July 1, 2019:

There’s an old saying in sales and marketing: “There aren’t too many problems that can’t be solved by sufficient production.” Donald Trump is learning that it also applies to production of crude oil and natural gas. Sufficient production solves many problems.

For one, he delivered a clear and distinct message to Middle East oil producers when he pulled his punch last week and canceled a military response to the shooting down of a U.S. drone surveilling the Strait of Hormuz:

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The Fed’s Irrelevance Is a Beautiful Thing

This article was published by the McAlvany Intelligence Advisor on Wednesday, June 12, 2019:

When President Trump tweeted “The United States has VERY LOW INFLATION, a beautiful thing!” on Tuesday morning, he was referring to the latest PPI numbers from the Labor Department. For May, its Producer Price Index came in at a benign and nearly invisible 0.1%. Year over year the PPI was just 1.8 percent, down from 3.1 percent last summer.

Trump should have been referring to the quiescent Fed, which is in a state of confusion. By this time, according to standard interventionist (Keynesian) theory, a 10-year-old economic expansion should be exhibiting signs of inflationary pressures. Instead, real price increases are approaching low levels not seen in years.

The Fed chair Jerome Powell has repeatedly stated that his “target” is 2.0 percent inflation. His reasoning?

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Trump: “Very Low Inflation, a Beautiful Thing!”

This article appeared online at TheNewAmerican.com on Tuesday, June 11, 2019: 

Upon reading the latest report from the Bureau of Labor Statistics (BLS) about its Producer Price Index (PPI), President Trump tweeted: “The United States has VERY LOW INFLATION, a beautiful thing.”

What’s beautiful is that, in the month of May, wholesale prices — the prices paid by firms buying products and services from other businesses — scarcely increased: just 0.1 percent. Even better the year-over-year PPI slowed from 3.1 percent last summer to just 1.8 percent today.

The New York Federal Reserve bank reported on Monday that the outlook for future inflation looks rosy as well. Consumers polled by the central bank see lower inflation over the next one to three years. This matches the inflation numbers coming from the Fed’s preferred inflation measure, the PCE (Personal Consumption Expenditures) index.

This puts the lie

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The Resurrection of Ford’s Bronco Illustrates How Capitalism Works

This article was published by The McAlvany Intelligence Advisor on Wednesday, May 22, 2019: 

Ford’s announcement of its resurrected Bronco for 2020 shows pictures of steep technical trails heading off into the woods while calling it a “no-compromise midsize 4×4 utility for the thrill seekers who want freedom and off-road functionality, with the space and versatility of an SUV. It’s capable of conquering everything from your daily commute to gravel roads and boulders.” (See Sources below)

This is how capitalism works.

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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.
Copyright © 2018 Bob Adelmann