- The weird thing about al-Qaida targeting Gates and Buffett
- The greatest leveraged bet in history, still paying off 14 years later
- A sun-powered milestone — and the next one due Oct. 28
- Janet Yellen, test pilot (and that’s no compliment)
- Sinking global food prices… readers weigh in on the Medicare screw job… standing up for lemonade freedom… and more!
So… al-Qaida has issued an economic hit list.
“A notorious al-Qaida magazine is encouraging lone-wolf terrorist attacks on U.S. economic leaders, including Bill Gates, Michael Bloomberg and Warren Buffett,” reports NBC News.
“The list in Inspire magazine also included industrialist brothers Charles and David Koch, Internet entrepreneur Larry Ellison and casino magnate Sheldon Adelson.”
The article says the stated goal of these attacks would be to derail the “revival of the America Economy” [sic].
Really?
In the first place, “revival” is too strong a word to describe the U.S. economy since 2009.
More to our point, if you want to wreck the U.S. economy, offing an oligarch or two seems like a mighty roundabout way of doing it.
Maybe al-Qaida is losing its way without Osama bin Laden anymore. Now, there’s someone who knew what he was doing.
In 2004, bin Laden said, “We, alongside the mujahedeen, bled Russia for 10 years until it went bankrupt and was forced to withdraw [from Afghanistan] in defeat… So we are continuing this policy in bleeding America to the point of bankruptcy.”
Hours after he was taken out by U.S. special forces in 2011 (Why wasn’t he captured alive and asked about everything he knows? But we digress…), we observed that bin Laden had executed “the most brilliant leveraged bet in history.”
With the 14th anniversary of the Sept. 11 attack coming tomorrow, it’s a good time for an update.
“Every dollar of al-Qaida defeated a million dollars,” bin Laden said in that 2004 speech, “besides the loss of a huge number of jobs.”
That wasn’t an empty boast. And in the decade since, the ratio has become even more impressive.
The 9/11 Commission concluded al-Qaida pulled off the Sept. 11 attacks for roughly $500,000.
Since then, up through the end of fiscal 2014, the Congressional Research Service says Uncle Sam has spent $1.6 trillion waging the Iraq and Afghanistan wars.
Thus, bin Laden got a return of 3.2 million-to-1. And counting.
This year, for instance, the Pentagon tried to build a pro-U.S. rebel faction to fight the multisided war in Syria. The military spent $500 million in hopes of training up 15,000 rebels.
In the end, they found only 54 people who didn’t have any terrorist ties. That’s $9.3 million per rebel — an awful result even by Pentagon standards.
Bonus points: As soon as the rebels were dispatched to fight in July, about a dozen of them were captured. By al-Qaida.
By the way, bin Laden’s 3.2 million-to-1 return doesn’t account for the post-9/11 homeland security bureaucracy, future health care for wounded veterans and so on. The gains will pile up in perpetuity.
One more thing, at the risk of sounding irreverent: Where the hell is Trump on al-Qaida’s list of bigwigs?
Before the day is out, he’ll probably do a cable news interview in which he says, “They’re afraid of me!”
Perhaps. On the other hand, maybe al-Qaida is still smarter than we think. Maybe they haven’t forgotten bin Laden’s logic and they figure Trump is their best bet to drag the American empire back into a full-scale Mideast war. (“I’m the most militaristic person there is,” he bragged last month.)
If so, he’s more valuable to them alive than dead.
For a change, major U.S. stock indexes aren’t registering wild swings this morning. The S&P 500 is up about a half percent, at 1,952. The Dow is up a little less, the Nasdaq a little more.
Gold is up about $5, at $1,111. But the big winner is crude — up nearly 3.5% at last check, to $45.67.
The only economic number of note this morning is first-time unemployment claims — which at 275,000 last week tells us nothing new. The number is typical for a healthy recovery, but it says nothing about the legions of working-age Americans who’ve given up looking for work since 2008.
We interrupt the three-week stock market freakout to notice a milestone in the solar energy sector.
A new industry report shows the United States has now built out more than 20 gigawatts of solar electric capacity through the first half of 2015. That’s enough power for 4.6 million homes, according to GTM Research and the Solar Energy Industries Association.
Quarter by quarter, here’s what it looks like going back to 2010.
At the current pace, 2015 is due to set another record — on top of the one set in 2014. What’s more, “the second half of the year should be significantly larger than the first in terms of new deployments,” says the report.
Of particular note is that residential installations have grown 70% year over year.
We expect three more industry reports — due at the end of next month — will be an even bigger eye-opener. And they’ll light up a select group of solar stocks. “The way I see it,” says Matt Insley of our energy team, “each day that passes between now and Oct. 28 is a missed opportunity to start a life-changing fortune — on your way to 15 or 21 times your money.”
Sounds as if there’s no time to waste. Here’s where you can get started.
“Even though this market volatility continues to be business as usual (for better or worse), there is something worth thinking about right now,” says Jonas Elmerraji of our trading desk.
And that’s the Federal Reserve — which decides one week from today whether it will finally raise its benchmark fed funds rate. Jonas keeps an eye on the Fed, even though he’s mostly a trend follower — or as one of our readers notoriously labeled him, a “chart chimp.”
“You may not have realized it, but Fed chair Janet Yellen is a test pilot,” says Jonas. “It’s true!”
Jonas flies planes for fun. So he knows a thing or two when he makes an analogy between aviation and central banking.
“In flying, when a pilot does something outside the published specifications in an aircraft’s operating manual, we say that he or she ‘becomes a test pilot.’ That isn’t a compliment. You don’t want to become a test pilot.”
“But as it turns out, that’s exactly what’s going on at the Fed right now,” Jonas goes on.
“Janet Yellen is operating outside the economy’s Pilot’s Operating Handbook if she and her peers decide to raise rates. In other words, she’s a test pilot — and we’re all along for the ride.
“Typically, raising interest rates is the Fed’s way of cooling down an overheating economy. It helps to curb inflation and slows things down. The problem is that the economy isn’t overheating right now. Inflation is already near zero (thanks in large part to the collapse in commodity prices) and teetering on the edge of deflationary territory. Any slower and we’ll be moving backward.
“In the last 45 years, the Fed has never targeted interest rates when the U.S. Bureau of Labor Statistics’ core inflation levels have been below 1%. That inflation gauge is at 0.2% as I write.
“But after years of holding rates near zero, the folks at the Federal Reserve feel like they should be bringing interest rates to a more normal level. The real question now is whether the economy can stomach it.
“In the real world, being a test pilot is a dangerous job. There’s a reason these guys wear parachutes. The problem here is that we don’t know what will happen if the Fed decides they need to bail out…”
Speaking of deflationary forces, look at what’s happening to global food prices. They’ve just registered the biggest monthly fall in seven years — down 5.2%, says the United Nations Food and Agriculture Organization.
Back in early 2011, when soaring food prices helped touch off the Arab Spring, we kept tabs on the FAO’s monthly food index. It was touching all-time highs.
Now? It’s at its lowest level since April 2009 — when the Great Recession was still “officially” underway in the U.S.
“There is a lot of supply out there,” says FAO chief economist Abdolreza Abbassian. “Farmers are producing more, and the off take is not very strong.”
Harvests have been good, commodity prices in general are falling and there are the ever-present worries about Chinese growth. Global inventories of grains like corn and barley are likely to reach all-time highs next year.
“Ha, ha, ha. I am part of the 70%,” a reader gloats after we said yesterday about 30% of Medicare recipients are set for hefty Part B premium increases next year.
“I guess my Social Security ‘take home’ will not change,” he goes on. “I love the strong dollar. I live in a third-world country… I am upper middle class on Social Security alone.”
“It is all starting to sound like a George Carlin punch line,” writes another reader, not an expatriate.
“I am not yet a Medicare-enrolled datum, but will admit to being in the ‘seasoned citizen’ demographic, and that means I got out of grammar school at a time when people could still think.
“If there is nearly general deflation, according to the Federal Reserve pooh-bahs, and accordingly no COLA, then WHY have my various utilities been granted rate increases? How come my landline phone went up about 5% here in the Peoples’ Republic of California and the electricity is striving for similar ‘growth’?
“P.S. We even knew ‘people’ is the plural of ‘person’ — unless, of course, you are Caltrans posting idiotic signs about how car pools are ‘two or more persons per vehicle.’ I still want to test that one in court with the legal-person status of my corporate seal being the second of the persons in my automobile.”
The 5: Good luck with that.
Although you got us thinking about “people” versus “persons.” Your editor got into journalism at a time when a handful of fuddy-duddies were still trying to parse a difference.
The website Grammarist recalls: “There is an old usage prescription holding that people applies to uncountable groups of individuals (e.g., ‘Times Square was packed with people’) while persons applies to groups that are easily counted (e.g., ‘there were four persons on the balcony’). But there is no good reason for this distinction, and in any case, it is not consistently borne out in real-world usage.”
Evidently, the distinction still lives on in government regulations. All the more reason to dispatch with it in everyday usage!
“Jerry Seinfeld and the boys should join LemonadeFreedom.com,” a reader writes after we took note of a lemonade crackdown at the far end of Long Island. “If you guys haven’t seen this site, you’ll want to add it to your repertoire.”
The 5: We were not aware of it — a site that appears to aggregate news stories from around the country about bureaucratic busybodies shutting down lemonade stands.
We did take note in 2011 of the first Lemonade Freedom Day, organized near as we can tell by the same people who maintain the website. It’s heartening to see someone keeping up the good fight.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Pardon us for straying a bit from the financial beat, but…
If you had to fight in trench warfare and you could bring only one kind of drink to keep you energized, healthy and fit to fight… what would it be?
A. Some kind of sports drink
B. Water
C. Alcohol
If you were part of the Spanish army in the Peninsular War, the answer would be…
D. None of the above
Instead, they brewed a secret concoction that helped their warriors maintain robust health. The advantage was so staggering, Napoleon’s spies snuck behind enemy lines to steal the secret.
The good news is we now know what the magic ingredient was, and it can work like a miracle for your heart health.
Click here to discover what it is.
