October 23, 2014
- In which The 5 heaps disdain on the federal “Wastebook”…
- Risk on, baby! Stocks up, bonds and gold sell off
- Half of manufacturing execs anticipate “reshoring” back to the U.S.
- Proof solar’s time has come: It’s now an employee benefit
- Looking for signs of a new recession… Jefferson’s 20-year debt jubilee, continued… our pandemic survival guide — revised, updated, expanded… and more!
From the “we learn something new every day” file, we see Wikipedia is a hotbed of sexism.
It has to be, right? Otherwise why would the National Science Foundation drop $202,000 on university research into Wikipedia’s sexist tendencies?
Hmmm… Maybe someone at the NSF caught an Op-Ed in The New York Times last year in which novelist Amanda Filipacchi complained that “gradually, over time, editors have begun the process of moving women, one by one, alphabetically, from the ‘American Novelists’ category to the ‘American Women Novelists’ subcategory.
“The intention,” she went on, “appears to be to create a list of ‘American Novelists’ on Wikipedia that is made up almost entirely of men.”
Then again, a casual Google search reveals this sexism thing has a looong history. The Wall Street Journal noted in August 2009 that only 13% of Wikipedia’s anonymous volunteer contributors are women.
Interesting? Maybe. Worthy of a six-figure federal grant? Hell no. And thus, it makes the cut in this year’s edition of the Wastebook — an annual document of useless federal spending issued by Sen. Tom Coburn (R-Oklahoma).
Uhh… How much did it cost taxpayers to compensate
whoever designed the report’s cover?
The item in this year’s edition that’s getting the most media buzz is a timely one — a $387,000 grant by the National Institutes of Health to study the benefits of Swedish massage on rabbits. (Bonus points: The rabbits were then euthanized.)
It’s timely for the following reason, writes Coburn (or rather, a flunky writing in his name): “The director of the National Institutes for Health claims a vaccine for Ebola ‘probably’ would have been developed by now if not for the stagnant funding for the agency, which has a $30 billion annual budget. Yet NIH did come up with the money to pay to give Swedish massages for rabbits.”
Whatever. At the risk of sounding a bit conspiratorial, we can safely say the Wastebook serves a valuable purpose for elites in America: It’s an entertaining distraction from uncomfortable facts.
After all, if you can mock a competition to build wooden skyscrapers… then you don’t have to wonder why federal health care spending keeps doubling every 10 years or so, and on its current trajectory will eat up half the federal budget by 2030.
And if you can poke fun at a federally funded smartphone app to help parents cajole their kids to eat their vegetables… well, then you don’t have to ask whether the United States really needs to spend as much on defense as the countries with the next 10 highest defense budgets combined.
Nor do you have to ponder this point: Put together, the 100 items in the Wastebook add up to $25 billion. Which works out to a not-so-whopping 0.714% of all federal spending last year.
When we called BS on the feds’ budget figures a few days ago, we noted the national debt climbed $1.086 trillion during fiscal year 2014. Cutting every item in the Wastebook would have trimmed the figure to… $1.061 trillion.
Political postscript: Coburn is retiring from Congress in a few months. But his likely successor on the Homeland Security and Governmental Affairs Committee, Wisconsin’s Ron Johnson, has indicated a desire to carry on the tradition. Of course…
[Health alert: Back to Ebola for a moment — Laissez Faire’s thoroughly updated pandemic survival guide is now available. Among the topics covered…
- New studies and information about Ebola, as well as promising treatments you won’t see covered on the news
- Steps you should take to strengthen your immune system. Research shows it could be the difference between life and death if you do contract the virus
- A list of must-own items in case Ebola reaches your city.
Laissez Faire Letter subscribers got their copy this morning. If you’re not yet among them and want to learn more about the guide, simply follow this link.]
For no obvious reason, it’s a “risk-on” day. As we write…
- Every major U.S. stock index is up at least 1%, and the small-cap Russell 2000 is up 2%. At 1,953, the S&P 500 is now less than 3% off its all-time highs reached last month
- Gold got whacked: From $1,250-plus two days ago, it’s now down to $1,228
- Treasuries are losing steam, with prices falling and yields rising: The 10-year note, which fell below 2% for a while last Thursday, is up to 2.27% on this Thursday
- Crude is bouncing off four-year lows reached yesterday, a barrel of West Texas Intermediate fetching $81.90. News got out this morning that while Saudi Arabia has refused to cut production, it’s nonetheless exporting less oil.
“This week has been an important one,” Matt Insley of our energy desk says of the action in crude. “We’ve finally seen the oil markets take a breather from the downtrend. Prices could be set to return to $85 in short order.
“If crude returns to $85, a signal of strong support, it could be time to buy big in the U.S. shale sector.”
If you’re looking for signs the U.S. is slipping back into recession… you won’t find them in two of the most reliable recession indicators, both hitting the tape this morning.
The Chicago Fed National Activity Index crunches 85 numbers to take the pulse of the overall economy. It’s nailed every recession going back to 1970; it was late calling the oil-shock recession of 1973-75.
A three-month average below negative 0.7 indicates an imminent recession. The latest figure is positive 0.25.
Meanwhile, the Philadelphia Fed State Coincident Index smooshes together four employment numbers from all 50 states. Readings below 50 are a trouble sign. The latest reading is 78; it’s been climbing three straight months.
Of course “absence of recession” is not to be confused with “robust recovery.” Heh…
The “reshoring” phenomenon we anticipated nearly three years ago is gathering speed.
Boston Consulting is out with a survey of U.S. based executives at manufacturing firms with annual sales of at least $1 billion. All told, 16% of them said they’re already moving operations from China back to the United States. That’s up from 13% a year ago.
Fully 54% said they’re interested in reshoring either now or in the future. Most of them cited easier access to skilled labor as a prime reason. Shorter supply chains and reduced shipping costs, too.
Yet another benefit to less-expensive U.S.-made energy — a development our Byron King explained during his “Re-Made in America” presentation in January 2012. It’s not too late to profit by the way, especially with share prices of key U.S. energy players going for a bargain… as Byron explains right here.
“Our company offers terrific benefits — a 401(k), health coverage, solar panels for your home…”
That’s the pitch human-resources people will soon make at big firms like Cisco, 3M and Kimberly-Clark. Under a deal those companies announced yesterday with the World Wildlife Fund, workers will be able to buy or lease solar systems at well-below retail cost.
“For the companies,” says The New York Times, “the arrangement offers a way to attract and retain a workforce that is increasingly attuned to the environment and to the steps employers take to preserve it.”
Average cost — $3 per watt of the system’s capacity. That’s one-third lower than the average U.S. cost last year of $4.53.
“Sustainable sources of energy are rapidly achieving what is called ‘grid parity,’” says Stephen Petranek of our tech team. “That means solar and wind sources of energy are actually about to cross the threshold of being cheaper than anything else.
“In fact, in Europe and parts of the United States, solar photovoltaics (making electricity from solar panels pointed at the sun) achieved grid parity in 2013 — a true breakthrough that points to a large opportunity for investors.” Stephen’s readers have been in front of that opportunity, with a company he considers a solid three-year play he says is “executing brilliantly.”
[Ed. note: We’ve had an enthusiastic response to Stephen’s special report on five world-changing companies that can deliver you “ultra-wealth,” But events are catching up and developments are in the pipeline that could soon render that report out of date… by which time the “easy money” will have been made.
For that reason, we’re taking the report offline in five more days. Take the time to review it now, while there’s still a chance.]
“Two things wrong with the debt-free inheritance scheme,” a reader writes, carrying on a thread that began Monday.
[Every so often, we’re surprised when a topic catches fire with readers. This is surely one of those times…]
“1) It encourages debt creation without obligation and 2) heirs ought to be thankful for whatever scrap they get, rather than demanding it to be without strings. Greed knows no bounds?
“When the government bailed out the banks and auto industry, what they should have done was divide all that money up among all the American adults and handed the money out that way,” writes another.
“Everyone could have paid off their mortgages which would have eliminated all the foreclosures. People could have paid cash for new cars hence saving the auto industry. That would have really stimulated the economy. Sure some people would just party hardy on the money but we would have a lot more people starting new businesses and being able to retire which would have freed up good paying jobs for upcoming employees.”
The 5: And it doesn’t bother you that such a scheme would have generated inflation on a scale of, say, Zimbabwe or Weimar Germany?
“Our Constitution was based on English law which provided protection for every man’s property rights,” a third reader writes. “A debt held by one person is another person’s asset or his ‘property,’ and he is entitled to enforce whatever contract was agreed upon when the debt was established.
“Today, most debt is held by the commercial banks in our country, but what is vastly different is the banking industry today. The fractional reserve system now in use allows these same banks to collect interest on money they never earned — it was collected on money they loaned which was created out of thin air.
“In my mind, this has altered my feelings toward their claims on all debts owed to them, as they are profiting immensely from a system that no other business or person in this country can enjoy. All individuals should be able to enforce terms of their contracts, but there is something wrong when a corporation can ‘loan’ something they never possessed or earned in the first place.
“This same banking system is also the reason we can never return to a gold-backed dollar, it’s virtually impossible with the amount of debt that has been created.”
“Gee whiz, I like my canned food and ammo,” a reader reacts to our musings about market manipulation yesterday.
“I also like my gold and silver, I also like my dividend paying stocks, I also like Jim Rickards, OK, but from Jim’s writings, maybe I should go off grid and eat more Mountain House.”
[Evidently, he’s also reacting to the quickly-going-viral “In the Year 2024” essay Jim wrote…]
“Let me ponder this. Invest in real estate, check. Gold and silver, check. Art, I can’t afford it. Some AA+ bonds, check. Guns and ammo, check. Passport, hmm don’t have one.
“Sometimes one might look back to 2008 and 2009 and see what everyone was writing about and predicting. Whiskey and Gunpowder comes to mind. Anyway, nothing much has changed since then. I never did sell anything in the 2008 disaster. Rode it all back up. But, again, this time around, it may pay to not ride it out again. Oh yeah, rode it out in 2000 also.
“I almost have to agree with Redd Foxx of the Sanford and Son TV series: ‘It’s the big one’ this time around.”
The 5: It’s been interesting monitoring the reaction to Jim’s piece at The Daily Reckoning. He was teasing out only one of an infinite number of possible futures… but a realistic one, if you extrapolate from current events…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. If you missed Jim’s dystopian look at the future — again, we emphasize it’s a thought experiment — it’s right here. And watch this space as we get ready to launch the next phase of our “Prophesy 2015” project with Jim — an Agora Financial exclusive.