The Moroccan Pottery Distraction

October 18, 2012

  • $27 million for pottery classes… in Morocco? We’re sure it’s mandated in the Constitution somewhere…
  • Why penny-ante outrages serve only to distract from real threats to your prosperity and personal liberty…
  • Gold ETFs: A “gateway drug” to the real metal? G’head, the first one’s free…
  • Heh. New York Times discovers “the new silicon” more than a year into the story: Why there’s still time to profit…
  • Debate disgust (we know, right?)… a little-known reason responsible people get turned down for mortgages… Atlas on the cusp of the big Shrug… and more!

  And you laughed at the proverbial college course in “advanced basket weaving.” How about “impossible-to-replicate pottery techniques”… at your expense?

In 2009, the U.S. Agency for International Development undertook the task of improving Morocco’s economic competitiveness.

Key to the plan: a training program for Moroccans to create and design pottery, led by an American instructor. Never mind that Moroccans have successfully made pottery on their own for centuries.

“Unfortunately,” reads our copy of Wastebook 2012, “the translator hired for the sessions was not fluent in English and was unable to transmit large portions of the lectures to the participants.” Worse, the dyes and clay used by the instructor can’t be bought in Morocco.

Cost to U.S. taxpayers: $27 million.

The Wastebook is an annual compendium of such outrages, compiled by the staff of Sen. Tom Coburn (R-Okla.). And helps kick off one of our favorite episodes of The 5 Min. Forecast every year.

  On the government dime, the Wastebook continues, researchers at two California universities sought to learn how rattlesnakes would react to the presence of mechanical squirrels.

RoboSquirrel 1.0, complete with wagging tail…Using part of a $325,000 National Science Foundation grant, the researchers created RoboSquirrel — “a taxidermied actual squirrel that is stored with live squirrels so it smells real. The body and tail are heated with copper wiring, so the snake can see the squirrel’s heat signature as if it were real. The tail is controlled by a linear servo motor that makes it wag back and forth.”

In the field, the researchers found rattlesnakes reacted to RoboSquirrel as if it were the genuine article — and thus did not attack when RoboSquirrel wagged its tail.

We’re not sure what useful insights were gleaned from this groundbreaking research. Nor are the scientists themselves, judging by their final report.

Still… the work must go on. They’re already building other robot mammals.

  If you golf, you’ll be interested to know that researchers at Purdue University used part of a $350,000 National Science Foundation grant to come to a not-so-stunning conclusion: Visualization helps improve your game.

Take it to heart. If you “imagine” a bigger hole, you have a better chance at making a putt. Or as the scientists put it, “Perceived increase in target size will boost confidence in one’s abilities.”

And grant subsidies, apparently.

100  “Some of our favorites,” writes the DC Decoder, an insider blog, “include $10,000 for talking urinal cakes in Michigan (to fight drunken driving), $142,000 for a Department of Transportation grant offering free bus rides to Super Bowl attendees in Indianapolis, $25,000 for the Alabama Watermelon Queen to tour the state to promote her prized crop, just under $50,000 for Smokey Bear hot-air balloon rides…”

  To that list we might include the:

* $1.6 million NASA spent to develop video games to enhance the space agency’s cool factor among nerds… after scuttling the Space Shuttle program.

* $300,000 spent by the USDA to promote consumption of caviar… likely among their own staff, we are left to presume. What better fish egg tasters could there be, after all?

* A half-million bucks used to help develop pet shampoos… $1 million to taste foods destined for the planet Mars… $2 million more in financial assistance provided to upscale cupcake bakers…

The Wastebook documents $18 billion in such grants, exemptions and programs.

  Here’s the “unfortunate but true”-ism… as much as “waste, fraud and abuse” stoke the ire of voters… $18 billion is only one half of one percent of the $3.8 trillion federal budget.

Half a percent.

You could eliminate every one of these goofy programs and still be left with 98.2% of last year’s $1 trillion deficit.


 The irony. The International Monetary Fund (IMF) also released its latest “World Economic Outlook” this week.

Relative to annual economic output, the U.S. national debt is on par with four out of five PIIGS countries.

  Not even big enough to make Coburn’s book, the U.S. Department of Transportation is funneling $275,000 to police agencies in Connecticut and Massachusetts, the better to stop the “plague” of driving-while-texting.

“In order to more accurately identify and effectively stop the dangerous practice of texting behind the wheel,” wrote Transportation Secretary Ray LaHood on Tuesday, “the demonstration grants announced today call for Connecticut and Massachusetts to develop anti-texting enforcement protocols and techniques such as using stationary patrols, spotters on overpasses on elevated roadways and roving patrols.”

Never mind that traffic deaths fell between 1995-2009, despite an eightfold increase in the number of cellphone subscribers and an overall increase in miles driven.

  “Guess what happens,” Addison writes in his latest forecast, “when all these little interventions start to pile up. Guess what happens when you roll over and accept what bureaucrats do.

“I’ll give you a hint — you create the ultimate form of job security. Not for us, obviously… but for them. The more decisions we cede to the authorities, the less we’re able to make decisions for ourselves..”

Addison has labored for several months to devise a means of defense. He’s found practical solutions you can put to work in your own life — no matter who’s elected next month or what the scoundrels do next year. You owe it to yourself to investigate: Here’s where to begin.

  Stocks are showing little direction this morning. The Dow is up a bit, the S&P down a bit.

In addition to earnings, the following numbers are in traders’ sights:

  • First-time unemployment claims: Up big last week, after a sharp drop the week before. The four-week moving average has barely budged at 365,500
  • Mid-Atlantic factory activity: Back in positive territory for the first time since April, according to the Philly Fed survey. Unfortunately almost all of the bump up can be attributed to the prices manufacturers pay for their raw goods.
  • Leading economic indicators: Up 0.6% in September, says to the Conference Board. That more than makes up for August’s decline. The number has moved within a tight range all year.

Gold is losing ground this morning at $1,744 as the dollar index rises to 79.2.
“This week’s first half featured a return to risk,” Options Hotline editor Steve Sarnoff wrote his readers last night, “as indexes wend their way through earnings season. The euro moved up versus the dollar. Gold shares gained from support. Stocks found support and are generally higher. Bonds were bashed by resistance and are breaking down to challenge the next level of underlying support.”

Congrats to Steve’s readers who bagged 84% in less than four months on Arch Coal call options. That’s ten winners since Steve began issuing explicit sell alerts three months ago. The average gain is 81% with a hold time of 39 days. Want a piece of the action? Steve’s next buy recommendation is due Sunday.

  Gold investors are wising up to the difference between paper and physical…or are they?

Barclays says gold holdings in ETFs are still growing… but more slowly than from 2004-09. The theory is that after getting a taste of paper gold, investors then switch to the real thing.

“The question is whether the pace of [ETF] buying has slowed,” Barclays precious metals trader Cengiz Belentepe told Bloomberg, “or whether the people have become a bit more sophisticated in recognizing the costs and liabilities.”

Well, if that’s the question, we don’t think the latter is too far-flung to assume. Yet we do have to be cautious of Barclays’ timeliness on this. As Mark O’Byrne from GoldCore points out, Barclays is eagerly pushing its new precious metals storage solution.

“Barclays may be attempting to capture some of the large capital flows that have flowed into the ETFs in recent months and continue to do so,” O’Byrne writes. Sneaky, sneaky.

“We’ve seen instances of people coming in whose first step is to buy an ETF,” Belentepe goes on, “second step is to get educated on how the market works, third step — I’m going to shift this in direct gold purchase and storage, fourth step — let me allocate this metal into these locations. It’s the early step they are all migrating through, expressing the same view but in different ways.”

Sophistication, slowdown or clever marketing?

  “You’ve probably never heard of graphene,” The New York Times writes, late to the party, but claiming to be the early bird, “a carbon-based material, but it might be stuffed into your pocket or wrapped around your wrist in the not-too-distant future.

“According to the American Chemical Society (ACS),” the Gray Lady continues, “graphene is a ‘wonder material’ 100 times stronger than steel and is so thin that a single ounce of it could cover 28 football fields.”

If you’re new to this beat, we’ve been discussing it here at The 5 for a stretch, or at least since our resource man Byron King brought it to our attention. But it seems like every time we turn our heads, graphene has reinvented itself again into yet another pioneering technological advance.

The latest development of the “wonder material” is its use in solar panels, “that could be used to cover the outside surface of a building, in addition to the roof,” turning your entire house into one big solar panel. Form and function.

  And… as we’ve mentioned, bendable smartphones. “Touch screens made with graphene as their conductive element could be printed on thin plastic instead of glass, so they would be light and flexible, which could make cellphones as thin as a piece of paper and foldable enough to slip into a pocket,” the ACS writes. “Because of graphene’s incredible strength, these cellphones would be nearly unbreakable.”

“So when can we expect these wonder devices?” the Times asks. “Scientists aren’t sure just yet, but they do predict that the first consumer application for graphene will be a flexible cell phone.”

As has been his wont, Byron will undoubtedly offer up some clues in his exclusive graphene teleconference this coming Sunday. Get the inside scoop, pull out your calendar and click here for all the information.

  “More ‘bread and circuses’ is all I heard during the debate Tuesday night,” writes a reader with an unsolicited, but nonetheless welcome opinion.

“Romney, speaking in his customary hesitation/stutter and failing to address questions with authority and clarity… and Obama, orating clearly and forcefully his standard lines of BS. If I hadn’t already sent in my absentee ballot in a moment of weakness, I wouldn’t bother voting at all.

“I’m so fed up with the theater, total lack of statesmanship and lack of a ‘stewardship’ viewpoint by elected officials I’m ready to toss in the towel and ignore politics completely, shut down my business and head to greener pastures… or at least pastures that don’t stink of the manure of this political system!”

  “The loan underwriting process for mortgages is out of control,” writes a reader on an ongoing subject. “Despite supposed interest rates well below 4%, many people are prevented from getting a loan because of unclear lender standards and the inability to get necessary comparables.

“But a bigger problem for many borrowers is the ‘shadow system’ of credit appraisals conducted by the FNMA ‘Desktop Underwriter’ system. Almost all mortgage loans in the U.S. are securitized and have to comply with Fannie Mae guidelines. The FNMA Desktop Underwriter system overrides credit reports from the three major credit reporting systems, so a qualified borrower with a good credit report may be barred from borrowing or refinancing by an inaccurate Desktop Underwriter report.

“So even though I have a credit score safely over 700, I have problems refinancing because Desktop Underwriter ‘interprets’ a $200 dispute with a former lender over a misapplied payment six years ago as a foreclosure. The Desktop Underwriter system, like most of the regulatory apparatus set up for the mortgage market, is designed for the benefit of banks, and is invisible to borrowers. Most people don’t know Desktop Underwriter exists. But it is an unaccountable invisible hurdle that results in many qualified people being barred from mortgage financing.”

The 5: Fascinating… Sounds like another distant front in The War on You.

  “In line with the most interesting ‘War on You’ theme,” another reader chimes in, “long ago, Ayn Rand wrote:

“‘We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.’

“I wonder: Are we there yet?”

The 5: Better not wait to find out: Act accordingly.


Dave Gonigam
The 5 Min. Forecast

P.S. Today, Addison is “going dark” here in The 5 to concentrate on the next issue of Apogee Advisory… unpacking practical solutions for retirement income that keep you outside the 401(k)/IRA corral… and plans to unveil “one button” you need to push to double your retirement over the next seven years. It’s easy. And apparently, there’s legislation on the books prohibiting providers from advertising its existence to you.

Details will emerge next week… Not a subscriber yet? Here’s where to become one.


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