- Not another bogus “shutdown”!
- The new defense secretary’s cushy “private sector” gigs… and the profit opportunities they present you
- A silver record… and prime time for platinum group metals
- Emails reveal how the feds plotted their evil “Operation Choke Point”
- A “risk off” market day… reader tries to school The 5 (you can judge how well he succeeds)… a last word on boots, lumberjack and otherwise… and more!
Here we go again. “Massive Spending Bill Hits Snag in Congress as Deadline Draws Near,” reads a headline in The Washington Post.
Unless Congress acts before midnight Thursday night, the nation faces the prospect of another “partial government shutdown” of the sort we experienced in October of last year. And we all remember how horrible that was.
Uh… You don’t remember? You mean somehow the American people carried on regardless?
The essence of the 2013 shutdown, captured in a single image…We’ll spare you the numbing details of the latest drama this week, lest you be tempted to gouge your eyes out. Because even if there’s a shutdown, federal spending will make up for lost time once it’s over.
That was the lesson of October 2013. The day before the shutdown, the national debt totaled $16.747 trillion. When the shutdown was over 17 days later, the debt instantly ballooned to $17.076 trillion. Now? Near $18 trillion.
Today, we take on a truly mercenary proposition: There’s nothing you can do about it, so you might as well try to make some money off it.
By way of explanation, we begin by sharing a reader’s email…
“Ash Carter is not a ‘colorless’ bureaucrat and academic,” says the reader — a retired Air Force colonel who now runs a defense think tank. He takes issue with how we characterized President Obama’s nominee for secretary of defense last Friday.
“He is a brilliant thinker and a patriot of the highest order,” the reader goes on, “well-respected by colleagues and opponents as a man of honor whose energy and vision are dedicated to making the United States a greater nation in all the most meaningful ways. He will be an excellent SECDEF.”
The part about “respected by colleagues and opponents” is undoubtedly true — although we’re not sure how well it reflects on him… heh.
But that just reaffirms our contention on Friday that his nomination will sail through the Republican-controlled Senate early next year. It also bodes well for increased defense spending and the investments that profit from increased defense spending.
And now that we know a bit more about Mr. Carter’s background, we’re even more sure.
Over the weekend, The Washington Times described “his status as a longtime Washington insider and… the revolving-door nature of Mr. Carter’s history with the Defense Department.”
When he became the Pentagon’s chief weapons buyer in 2009, he needed a special waiver because of his previous work for defense contractors — which paid him nearly as well as his Ivy League professorship.
“While teaching at Harvard,” reports the Moonie rag, “he earned $238,235 from Jan. 1, 2008, through March 18, 2009, when he signed a financial disclosure before taking a job at the Pentagon. Over the same period, he received $65,000 from the Mitre Corp., which manages federally funded research and development centers and consults for the Defense Department, and more than $100,000 from Global Technology Partners, a defense consulting firm.”
Not to mention 20 large in consulting fees from Goldman Sachs. The vampire squid’s tentacles are everywhere…
Then there’s the cushy gig Carter’s had the last 16 months after he returned to the “private” sector.
Politico has a story about his role as “an adviser at a ‘stealth’ consulting firm that boasted on its website, ‘When we do our job, only the inner circle knows that we were involved.'”
The firm is called SBD Advisors. Its lineup includes former Joint Chiefs Chairman Mike Mullen and former Director of National Intelligence Dennis Blair. Crowed the firm’s website: “Our team offers guidance and stealth strategies ensuring that clients benefit from the results of our campaigns while outwardly they are under the radar.”
That was last Thursday. After Politico asked for comment from the firm, that sentence was scrubbed from the SBD website. Go figure.
Carter’s work at SBD is “certainly something that would deserve some follow-up questioning, at least in the preliminary stages of the confirmation process,” says Winslow Wheeler of the Project on Government Oversight.
Now there’s some wishful thinking if we ever heard it.
Sen. John McCain, about to take over as chairman of the Armed Services Committee, calls Carter “a highly competent, experienced, hardworking and committed public servant.” Adds the hawkish Republican Sen. Jim Inhofe of Oklahoma, “I can’t imagine that he’s going to have opposition.”
With that in mind, it’s time to revisit a theme introduced in these virtual pages two years ago by our executive publisher, the founder of this e-letter and best-selling author Addison Wiggin: “In Empire of Debt, we postulated the empire has a logic all its own. That logic will bring about events beyond your control. It is far better to understand those events and plan your life and your ‘portfolio’ accordingly… than to allow them to blindside you and your family.”
“In crass terms,” Addison went on, “we call it ‘making the empire pay.’ If it suits you better, think of it as channeling some of your tax dollars back into your own pocket.”
There’s no better time than now, with someone like Ashton Carter coming into the Pentagon and hawkish Republicans taking over Congress.
Indeed, if you want to maximize the potential gains, you’d do well to act before the current lame-duck Congress signs off on a budget deal before its self-imposed midnight Thursday deadline.
Tucked within that bill are all sorts of goodies for connected contractors. We understand the profit potential is at least as good as it was with the budget-busting arms buildup under Reagan in the ’80s — gains to the tune of 7,047% or more.
Curious? Check out the details now, before Congress makes its move.
To the markets, where it’s a “risk off” day.
Overnight, China’s stock market sold off 5.4%. (You mean a 20% run-up the last three weeks couldn’t go on forever?) Then Greece’s stock market tumbled 11% at the prospect of a left-leaning party coming to power in parliament. (You mean the mess in Greece hasn’t been fixed yet? Say it ain’t so!)
Those excuses are as good as any for the major U.S. indexes to chop downward today — just as Jonas Elmerraji of our trading desk warned might happen yesterday. At last check, the S&P 500 is down about 1%, to 2,042.
Hot money is flowing into U.S. Treasuries — sending prices up and yields down. A 10-year note yields 2.23% this morning.
Gold is likewise benefiting — moving decisively above $1,200 for the first time in six weeks. At last check, the bid was $1,231. To some extent, that’s a function of a faltering greenback — the dollar index is down nearly 1%, to 88.4.
Crude? That’s looking oddly calm, up about 50 cents, to $63.52.
Small-business owners are feeling as good as they have in nearly eight years, according to the latest Optimism Index from the National Federation of Independent Business.
The November number rang in this morning at 98.1 — the highest since February 2007. That’s almost as good as the historical average before the “Great Recession” arrived.
One month does not a trend make, cautions NFIB chief economist Bill Dunkelberg: “This performance will have to be consolidated by several more positive readings before owners are confident to hire more employees and expand their business.
“But it’s a good sign that comes at a good time for small business.”
Gold isn’t the only precious metal shining today. Silver’s up nearly 5%, to $17.17.
And the platinum group metals (PGMs) are no slouch either. Platinum is up $19, to $1,247, while palladium is back above the $800 level, at $805.
“Unlike gold and silver,” our Byron King reminds us, “platinum and palladium are mostly used for industrial applications, and they get ‘used up’ in the process.” So supply and demand count for a lot with the PGMs. “And for several years now, supply of these metals hasn’t been enough to meet demand.”
Users have been relying on stockpiles all this time… and those stockpiles are dwindling. Blame it on strikes earlier this year in South Africa, producer of nearly half the world’s PGM supply.
“As those stockpiles draw down,” says Byron, “mine supply shortfalls will start to have a real impact on the market, especially since global demand is still rising steadily.” That is, growing middle classes in the developing world want cars. And cars need PGMs for their catalytic converters.
The Sprott Physical Platinum and Palladium Trust (SPPP) is a holding in Outstanding Investments…. and now would be a good entry point.
Supplies also remain tight for U.S. Silver Eagles. Year to date, the U.S. Mint has sold 42,864,000 of them. So last year’s record of 42,675,000 has been broken.
After a brief pause earlier this year, the Mint says supplies for its dealer network will continue to be rationed well into next year. Coins dated 2014 are set to run out next week. The 2015 issues will be available on Jan. 12.
And now documentary proof the feds will put you in their cross hairs even if you’ve done nothing illegal.
Last spring, we chronicled how the Justice Department’s “Operation Choke Point” was making life hell for legal businesses that might, hypothetically, have a tie to “money laundering” — payday lenders, firearms merchants, tobacco shops, even porn starlets. (Coin dealers too, it turns out.) Under pressure from the FDIC, banks were shutting down their accounts with next to no warning.
Yesterday, the House Oversight and Government Reform Committee issued a scathing but ultimately toothless report on the practice. The highlights were some internal government emails. Here’s one from an FDIC regional director to the head of the Justice Department’s “Division of Depositor and Consumer Protection”…
Another email from an FDIC public-relations flunky acknowledged his agency was effectively deciding “what is moral and immoral” versus what type of lending is legal.
Alas, the report — prepared by the committee’s Republican majority staff — is long on outrage and short on suggested remedies to rein in these abuses. Because Republicans, once back in the White House, can be trusted to never use these powers to harm businesses they find morally objectionable, right?
“Er, guys, get your facts straight,” a reader writes after yesterday’s episode, in which we touched on the late Eric Garner and the fatal consequences of defying the taxing authorities.
[Oooh, it’s great when people go this route. Even better than, “I love The 5, but…”]
“Eric Garner was a ticking health time bomb — he was 6 foot 3 inches, 350 pounds (obesity!!!), diabetic and asthmatic and had advanced heaffffrt disease and sleep apnea, and six children to boot!
“Given that there were OVER 228,000 misdemeanor arrests (like Garner’s) in NYC and NO ONE died, I would suggest that the hysteria over Garner’s truly unfortunate death is way overblown, given his health made him liable to die at any small disturbance in his life of selling illegal cigarettes.”
The 5: Hey, that’s a pretty good imitation of a police union press release. Have you applied for work down there?
Snark aside, what the hell does the state of Garner’s health have to do with anything?
“To believe that what happened to Eric Garner is justifiable,” writes Peter Suderman at Reason, “here’s what you have to be willing to accept: that a group of police officers placed an unarmed man who was not threatening them in a sustained chokehold, a chokehold that led directly to his death, a chokehold move known to have killed people before and which police have been expressly prohibited from using specifically because it had previously led to the deaths of others, over nothing more than the possibility that he might be selling illegal cigarettes on the street.” [Emphasis added]
Maybe you’re OK living in a country like that. But you can’t describe it as a free one.
“For all you city folk with limited understanding of anything other than branded shoes, this is the skivvy,” a reader writes, carrying on our L.L. Bean “lumberjack chic” discussion.
[Thank you for giving us an opportunity to end today’s episode on a light note…]
“The L.L. Bean boots are commonly known as ‘pacs’ or ‘packs.’ They are cold-weather wear when you have to keep your feet warm and dry. Rubber bottom is lighter than leather and is waterproof. They are purchased extra-large so you can wear two pairs of heavy wool socks and have room for thick felt lining.
“I have owned several pairs of ‘pacs’ in my life, as I grew up in northern Minnesota. These are not ‘lumberjack’ boots! Lumberjacks wear steel-toe boots with instep protectors.
“Six months to train someone to hand-stitch? Are they training monkeys!? Just saying.”
The 5: Well, we wouldn’t put it past Bean to engage in a little brand-reputation hyperbole…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. As long as we brought up the subject of government officials cracking down on legal activities that they frown on for moral reasons…
Maybe you’re not a payday lender or a firearms dealer. But you do seek to minimize your tax bill, right? And you’d like to do everything in your legal power to escape Obamacare’s clutches, right? And you wouldn’t turn down a few tips to stay away from the NSA’s prying eyes either, we’ll bet.
No wonder the book sitting on my desk right now is in danger of being banned at any moment.
Don’t let the title fool you. It might sound like a book full of simple system loopholes for health and wealth, but trust me, there’s nothing in this book that makes the government look good.
What kind of secrets could get us in hot water?
Take the next three minutes to grab this book immediately — before the government sends us a “cease and desist” letter and you never get the chance.