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The future looks bleak for Ontario’s manufacturing sector | Jeff Rubin

The future looks bleak for Ontario’s manufacturing sector | Jeff Rubin.

What’s happened to Canada’s manufacturing sector? Kellogg’s recent decision to close its plant in London ripped another 500 factory jobs away from Ontario. That follows Heinz’s move to shutter its plant in Leamington, which is near Windsor. The 100-year-old plant, and its 740 employees, was the largest employer in the area. The announcement from Heinz comes on the heels of plant closures by Caterpillar, CCL Industries, and Novartis. Added up, and Ontario, home to what’s left of Canada’s industrial heartland, has shed 33,000 manufacturing jobs in the last year.

While the recent plant closures have grabbed headlines, it’s only a fraction of the jobs lost over the last decade. Once the top employer in Ontario, the manufacturing sector is now a shadow of its former self.

Since 2002, Ontario’s manufacturing sector has shrunk by nearly 30 percent—or more than 300,000 jobs. The story is similar when you look at real manufacturing output, which is down almost 20 percent over the same time.

Look back to the 1990s, or indeed most of the post-war period, and manufacturing could be counted on as an engine of economic growth for the province. Today, the opposite is true. The shrinking sector is a drag on growth and part of the reason Ontario’s economy has been a laggard versus other provinces over the last decade.

It’s unfamiliar territory for Ontario, historically the principle cheque writer of equalization payments to the poorer provinces in the Confederation. Not so anymore. The income-per-capita in what was once Canada’s most affluent province is now well below the national average. Ontario’s economic standing among other province’s, similarly, is also on the decline. The province’s share of Canadian GDP is down by roughly 5 percentage points in the past ten years.

It’s not a coincidence that manufacturing employment in Ontario peaked in 2002, just as a free falling Canadian dollar was plunging to nearly 60 cents against the U.S. greenback. Backed by that exchange rate, everyone from auto assemblers to food processors enjoyed a commanding cost advantage over competing plants south of the border.

Since then, the Canadian dollar has soared along with the rising price of oil. While the loonie has long moved to the rhythms of commodity prices, in the last decade it’s danced in lock step with oil prices, which have marched from $20 a barrel to the triple-digit range. These days the loonie is trading more than 50 percent higher than it was during the last peak in manufacturing employment in Ontario.

In the context of exchange-adjusted labour costs rising by more than 50 percent, there’s really no mystery behind why so many manufacturing plants are closing in Ontario. Offsetting such a dramatic swing in exchange-adjusted wage costs would take a boom in productivity that, frankly, just isn’t in the cards.

What’s worse, productivity in the manufacturing sector is actually languishing. In theory, a higher Canadian dollar should make it easier for plants to import machinery and equipment that will enhance productivity. The theory, however, assumes that plants will continue to run. In practice, a soaring loonie is spurring international manufacturers to look for greener pastures elsewhere. Instead of spending money in Canada to improve factory productivity, decisions are being made in the opposite direction, which is resulting in disinvestment.

The numbers speak for themselves. In the last decade, the manufacturing sector’s share of business investment is down by nearly half, falling from 14 percent to as little as 8 percent. Without capital spending on new plants and equipment, productivity growth is going nowhere. That, in turn, only exacerbates the competitive disadvantage that a high Canadian dollar puts on wage costs.

Where to from here? With the loonie trading in the 95-cent range against the greenback, who’s choosing to invest in boosting the productivity of an uncompetitive manufacturing sector?

 

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Most-Accurate Oil Forecasters See Second Year of Losses – Bloomberg

Most-Accurate Oil Forecasters See Second Year of Losses – Bloomberg.

Brent crude prices, the benchmark for half the world’s oil, will weaken for a second year in 2014 as U.S. output expands and threats to Middle East and North African supply ease, the most-accurate forecasters said.

Prices will average $105 a barrel in 2014, from $108.71 in 2013, according to the median of estimates from the seven analysts who most accurately predicted this year’s level in a survey last December. Brent averaged $111.68 in 2012.

Global supply is expanding as the U.S. pumps oil trapped in shale-rock formations, driving domestic output to the highest in a quarter century and curbing demand for the crude priced off Brent. IranIraq and Libya will also produce more in 2014, the forecasters said. While a second annual drop for Brent would be the first consecutive retreat since 1998, prices are still about 39 percent higher than the average over the past decade.

“We’re expecting a surplus,” said David Bouckhout, the senior commodity strategist at Toronto-Dominion Bank in Calgary who was jointly the most accurate forecaster. North American “supply growth is going to remain robust and cover the expected increase in demand. The biggest concern for 2014 on the supply side is going to be Iran, while Iraq is another producer that certainly wants to see its production grow.”

Brent Decline

Brent for February settlement lost 97 cents to $111.21 a barrel on ICE Futures Europe today, leaving prices little changed compared with the start of the year. Hedge funds and other speculators boosted net-long positions in the grade by 41 percent in the week to Dec. 24, restoring bullish bets from their second-smallest level this year, bourse data show.

West Texas Intermediate, the U.S. benchmark, slipped $1.03 today to $99.29 after settling at $100.32 a barrel on the New York Mercantile Exchange on Dec. 27. The grade is poised for an annual gain of 8.1 percent. The spread between WTI and Brent averaged $10.63 this year, compared with $3.94 over the past decade. The widening gap reflects an abundance of U.S. supply at a time of disrupted exports from Iran, Iraq and Libya.

The three most-accurate forecasters from last year’s survey were Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen, Thina Saltvedt, an analyst at Nordea Bank AG in Oslo, and Toronto-Dominion’s Bouckhout.

Mike Wittner, head of oil market research at Societe Generale SA in New York, ranked fourth. Francisco Blanch, head of commodities research at Bank of America Corp. in New York, Jeff Currie, head of commodities research at Goldman Sachs Group Inc. in New York, and Jochen Hitzfeld, an analyst at UniCredit SpA in Munich, were joint fifth.

Exporting Countries

Expansions in supply from producers outside the 12-nation Organization of Petroleum Exporting Countries will more than cover the gain in global demand in 2014, according to the International Energy Agency. Daily non-OPEC output will rise by 1.7 million barrels as worldwide consumption adds 1.2 million barrels, the Paris-based adviser to oil-consuming nations says.

The U.S. will lead the gains as it taps shale reserves in North Dakota and Texas, the IEA said in a Dec. 11 report. Iraq plans more exports next year as part of its long-term strategy to triple production, Oil Minister Abdul Kareem al-Luaibi said Dec. 3. Iran will increase output if international sanctions are eased, Oil Minister Bijan Namdar Zanganeh said the same day. Libya will reopen export terminals closed by protests, Oil Minister Abdulbari al-Arusi said Dec. 21.

Expanding supply from Libya, Iran and Iraq is a “tail risk” rather than a probable outcome, said Societe Generale’sWittner, the most bullish of the top seven analysts. Libya will remain “an unreliable source of supply,” higher output from Iran won’t materialize until later in the year and Iraq has repeatedly missed its expansion targets, he said. Wittner anticipates an average price of $108.

Nuclear Program

U.S. President Barack Obama, speaking in Washington on Dec. 7, assessed the chances of a comprehensive deal on Iran’s nuclear program as no better than 50-50. The nation, once OPEC’s second-biggest member, is producing about 930,000 barrels a day less than at the start of 2012, data compiled by Bloomberg show.

Libyan production is close to the lowest level since the uprising that unseated Muammar Qaddafi in 2011 as armed groups blockade eastern ports, oil ministry data showed Dec. 23. Iraq’s production of 3.1 million barrels a day in November was 7 percent lower than a year earlier amid attacks on pipelines and a dispute with leaders in the country’s Kurdish region, according to data compiled by Bloomberg.

A supply glut will be averted because Saudi Arabia, the biggest member of OPEC, will curb output if needed, Societe Generale’s Wittner said. The kingdom’s daily production swung from 8.75 million to 10.25 million barrels over the past several years, he said.

Beat Expectations

Oil demand may exceed analysts’ expectations next year as the U.S. economy strengthens, said Bjarne Schieldrop, the chief commodities analyst at SEB AB in Oslo. The global economy will expand 3.6 percent in 2014, from 2.9 percent in 2013, the International Monetary Fund said in a report in October.

“Demand has clear upside potential,” SEB’s Schieldrop said. “Oil prices should be set to stay around the $108 to $109 level seen this year, rather than set for a really bearish development.”

U.S. crude production surged to a 25-year high of 8.11 million barrels a day in the week ended Dec. 20, government data show. That’s the highest level since September 1988.

Iraq Ambitions

Iraq plans to export an average of 3.4 million barrels daily in 2014, Oil Minister al-Luaibi said Dec. 3. Shipments were 2.38 million barrels a day in November, the ministry said this month. The country has said it wants to produce 9 million barrels a day by the end of the decade.

Libya will consider armed force to reopen eastern ports closed by a blockade, Ajwa Leblad News cited Oil Minister Al-Arusi as saying Dec. 16. Production in the holder of Africa’s largest oil reserves has dwindled to 210,000 barrels a day, as of November, from this year’s peak of 1.4 million barrels in March, according to a Bloomberg News survey.

Iran may be able to boost oil exports by 500,000 barrels a day following an agreement on Nov. 24 that eased some sanctions in exchange for a pause in the country’s nuclear program, Toronto Dominion’s Bouckhout said. That might expand should Iran reach a wider deal with world powers, he said. The country shipped 850,000 barrels a day in November, according to the IEA.

Iran’s improved relations with western governments may make Saudi Arabia, its regional rival, more reluctant to act as the swing producer, said Danske Bank’s Tuxen. OPEC may then be divided over who should cut to restore the balance between supply and demand, driving prices lower, she said.

“The Saudis will continue to add to an oversupplied market,” Tuxen said. “We see them cutting supplies slightly, but not enough to make up for the production increases we see elsewhere, especially in light of the Iranian-U.S. deal. They can actually deal with an oil price that falls somewhat below $100 and still be fairly well-off.”

 

US names six drone research sites – Americas – Al Jazeera English

US names six drone research sites – Americas – Al Jazeera English.

FAA does not currently allow commercial use of drones, but it is working to develop guidelines by 2015 [AFP]
The US has named six states that will develop test sites for drones, a critical next step for the move of the unmanned aircraft into domestic skies.The Federal Aviation Administration (FAA) does not currently allow commercial use of drones, but it is working to develop operational guidelines by the end of 2015, although officials concede the project may take longer than expected.Drones have been mainly used by the military, but governments, businesses, farmers and others are making plans to join the market.

Many universities are starting or expanding drone programmes.

Alaska, Nevada, New York, North Dakota, Texas and Virginia will host the research sites, providing diverse climates, geography and air-traffic environments, Michael Huerta, the FAA administrator, said on Monday.

At least one of the six sites will be up and running within 180 days, while the others are expected to come online in quick succession, Huerta said.

The growing US drone industry has critics among both conservatives and liberals.

Giving drones greater access to US skies moves the nation closer to “a surveillance society in which our every move is monitored, tracked, recorded and scrutinised by the authorities”, the American Civil Liberties Union declared in a report last December.

Huerta said his agency is sensitive to privacy concerns involving drones. Test sites must have a written plan for data use and retention and will be required to conduct an annual review of privacy practices that involves public comment.

While selecting the sites, the FAA considered geography, climate, ground infrastructure, research needs, airspace use, aviation experience and risk. New York’s site will look into integrating drones into the congested northeast US airspace.

Nevada offered proximity to military aircraft from several bases.

In choosing Alaska, the FAA cited a diverse set of locations in seven climatic zones.

“These test sites will give us valuable information about how best to ensure the safe introduction of this advanced technology into our nation’s skies,” Anthony Foxx, US transportation secretary, said in a statement.

 

The Year’s Big Stories : Personal Liberty™

The Year’s Big Stories : Personal Liberty™.

The Year’s Big Stories

PHOTOS.COM

It’s time to put a cap on 2013. It’s a year that, for liberty’s sake, would have best been thrown into the crapper.

The U.S. system is a totalitarianism that has over the past year begun to lose even its veneer of benevolence. This is typical of governments, which naturally grow, increasingly centralize power and become more corrupt.

As countries have more and more centralized power (fascist state), the people have less and less freedom. Propaganda is intensified, vital information is withheld, and peoples’ expectations are manipulated. In reality this mind manipulation and control are nothing less than an assault upon the mental and physical body. It is all accepted gradually — so gradually that most of the people never become alerted to lost freedoms.

It is this gradual, insipid assault on the people and freedom that we battle every day. That is our purpose here at Personal Liberty Digest™.

It’s customary as each year draws to a close for media organizations to cover the year’s big stories. Those decisions are usually quite subjective and are made by people living in an insular bubble of their own design. Their ideas are generally an echo chamber of groupthink.

The wonders of the Internet allow us to use a different metric in determining the big stories. It is you, the readers, who determined for us what was important and what was controversial. You did so by your responses.

What follows are the top stories based upon input you didn’t realize you were providing. They are the stories written by me that had the highest number of viewers. You think this isn’t the best way to list them? Wait until you read them to decide. Most of them deal directly with the growing fascist state.

No. 1: Viewed 53,832 Times

Proof Of A U.S. Police State

America has fast descended into a police state. The trouble is that we want to believe in the rule of law and the system that alleges to support and enforce it. But when reality collides with illusion, it is too late. No matter how bad things seem, we always think that times will get better and that government will do the right thing.

Only a few people left Germany in the early 1930s. They could clearly see the evolving tyranny. Many who stayed thought that things would not get so bad or that times would get better. They suffered from normalcy bias, a form of cognitive dissonance. They paid.

The wisdom today is in being able to see what is happening and having the vision to discern what is going to happen. Sorry. Anyone who still believes in the illusion of the rule of law will not see reality until it’s too late to do what is necessary to survive and keep their assets.

Today, the rule of law is what the 1 percent (the government) says it is. The government holds the police power and the military power. Its main purpose is to be the silent force to contain the population.

The population in the United States is well-armed. That fact does not escape the 1 percent. That is why the 1 percent is so eager to find a basis upon which to justify disarming the people. The armed populace is all that stands between the people and full-blown tyranny.

To read the rest of the article, go here

No. 2: Viewed 35,776 Times

Is Government Readying For A Shooting War Against Gun Owners?

Gun grabbing lawmakers at both the State and Federal level continue to push forward with their anti-American, anti-2nd Amendment, anti-gun agendas, even as more individuals, State legislatures and manufacturers of weapons, weapons accessories and ammunition push back. It almost seems as if the elected class is itching for a fight.

And when one considers that the Department of Homeland Security has contracted for 1.6 billion rounds of ammunition — much of it hollow points or for use in sniper rifles — for its 55,000 armed agents, plus 2,717 armored personnel carriers and 7,000 select fire “personal defense weapons,” it seems even more apparent that’s the goal. For perspective, 1.6 billion rounds is enough to fight the Iraq war for 20 years. It’s enough to shoot every American five times. It’s 28,000 tons, or the equivalent of three guided missile destroyers. It’s almost 30,000 target practice rounds per armed agent — but of course, because they are more expensive, hollow points are not used for target practice.

These purchases have long concerned many of those who pay attention. But only the alternative media talked about it — to derision and catcalls — until Feb. 15. That’s when The Denver Post ran an article by The Associated Press about the purchases. That prompted a column by Ralph Benko at Forbes.com in which he said it’s time for a national conversation about the purchases.

More than that, it’s time for a national conversation on the link between the purchases and the ongoing push by the elected class to collapse the economy and pass legislation against the will of the people.

To read the rest of the article, go here

No. 3: Viewed 31,083 Times

Prepare For A Grid-Down Scenario

On Nov. 13-14, America’s major electricity generating companies along with the FBI, Department of Homeland Security and government agencies in Canada and Mexico will conduct a drill to test system responses to cyberattacks and physical attacks on the North American electrical grid that cause its widespread failure.

The drill is called GridEx II, and it moves the threat of a total electrical blackout that sends the country back into the 19th century from the stuff of science fiction and/or tinfoil hattery to the mainstream. According to The New York Times, the drill is designed to:

practice for a crisis unlike anything the real grid has ever seen, and more than 150 companies and organizations have signed up to participate.

“This is different from a hurricane that hits X, Y and Z counties in the Southeast and they have a loss of power for three or four days,” said the official in charge of the drill, Brian M. Harrell of the North American Electric Reliability Corporation, known as NERC. “We really want to go beyond that.”

One goal of the drill… is to explore how governments would react as the loss of the grid crippled the supply chain for everyday necessities.

Should the grid collapse, those with medical conditions requiring machines to keep them alive or stable could be in trouble quickly, but most people could easily survive without power for two or three days. It’s not unusual for major storms to knock out power for that long. But longer-term power outages turn into desperate situations as water and food run low and/or generators run out of fuel. Google Hurricane Katrina and Superstorm Sandy to see how some people fared during long-term localized outages.

To read the rest of the article, go here

No. 4: Viewed 31,036 Times

An Open Letter To The Elected Class Regarding Gun Control

Dear ______________:

I realize it is customary to begin missives to elected representatives with the words Honorable Senator ______________ or Honorable Representative ______________, but I believe that title must be earned. Frankly, you (I am referring to you individually and to Congress as a whole) have not done so and, therefore, do not deserve to be addressed that way. However, the purpose of this letter is not to criticize you, but to inform you about what is happening in the country you were elected to serve.

According to a recent poll, Congress’ favorability ranks below lice, cockroaches, colonoscopies and root canals. Have you for a moment stopped to wonder why? It’s because a vast majority of Americans believe that Congress no longer represents them, but instead represents big corporations and, mostly, themselves and their cronies. The recent “fiscal cliff” deal is a perfect example. It socked a tax increase on 80 percent of American workers while doling out $76 billion in government money (which means my money) through special tax favors to large corporations, such as General Electric, Citigroup, Goldman Sachs, Morgan Stanley and DIAGEO, and to Hollywood and green energy companies. According to a recent column in The Washington Examiner, Senator Max Baucus’ (Fascist-Mont.) former staffers who are now lobbyists all got their clients millions of dollars in special benefits from the fiscal cliff deal. In return, Baucus received thousands of dollars in political contributions from those companies’ political action committees. Americans, myself included, believe this is standard operating procedure in Washington, D.C. And there is talk that additional tax increases on the middle class are on the way.

Upon your inauguration, you swore an oath, with your hand on a Bible, to uphold and defend the Constitution. You have repeatedly violated that oath by passing unConstitutional laws like the USA Patriot Act (and subsequent extensions) and the National Defense Authorization Act, which grants the President the authority to indefinitely detain American citizens and suspends habeas corpus. If I’m not mistaken, these unConstitutional laws contain provisions that in some way violate Amendments 1, 4, 5, 6, 8 and 9. That’s quite a feat for two laws.

To read the rest of the article, go here

No. 5: Viewed 29,619 Times

More Blood On Obama’s Hands

The overhyped and superfluous George Zimmerman trial is winding down, and Florida’s law enforcers are growing antsy. That’s because they’re seeing in social media and hearing from the streets that if Zimmerman is acquitted in a trial that never should have been held to begin with, blacks will riot and kill whites.

If there are riots and people are injured and property is damaged, President Barack Obama and his Department of Justice will be to blame. The blood will be on their hands.

In the wake of the Trayvon Martin shooting, Obama claimed that if he had a son, Trayvon Martin is what he’d look like. Then the DOJ dispatched its Community Relations Service (CRS) team to Florida to hold “marches, demonstrations, and rallies” on Martin’s behalf. According to documents obtained by Judicial Watch, the DOJ spent more than $3,800 to incite racial tensions in Sanford, Fla., and oust the police chief because Zimmerman was not charged immediately in Martin’s death. One of the rallies sponsored by CSR was headlined by the notorious race-baiter Al Sharpton. CSR-sponsored rallies went on for a couple of weeks; and if sparking unrest was the goal, the money was well-spent.

To read the rest of the article, go here

No. 6: Viewed 28750 Times

How To Avoid The Obamacare Death Trap

We are less than one year out from healthcare tyranny under the oligarchy-endorsed Obamacare.

It’s very deceptive to call Obamacare socialized medicine. The law has nothing to do with healthcare. It’s just the opposite. It’s sickness care. The Nazis had their gas chambers and America has “medical care,” which is the most sophisticated killing machine that demented minds can create.

Americans are mentally dependent on the “medical” brainwash. When our dumbed-down people hear the trigger word “medical care,” they go blind and hyperventilate. They do not know a scam from a sham. They will go unanimous for anything with the term “healthcare” in it.

Obamacare is not healthcare. It has absolutely nothing to do with healthcare. It’s a great transfer of wealth and population control with a ticket to the death panels when we are no longer considered productive citizens.

As the paper money regime collapses, the money creators are speeding up the printing presses in a desperate ploy to transfer the wealth of the American people before it becomes worthless anyway. It is disguised warfare against the American people.

It reminds one of the last days of the Nazi regime. As the cities were reduced to rubble, German citizens were being shot for “treason.” In the last days of any regime, the process of oppression of citizens is intensified.

To read the rest of the article, go here

No. 7: Viewed 28,735 Times

DHS Suggests Christians, Constitutionalists Should Get Extra Surveillance From LEOs

Big government progressives and collectivists love labels. They seem to come up with a new one almost daily, as they seek to isolate and demonize one small segment of the population at a time that they can identify as “extremist” and then dismiss from any discussion about the country’s direction.

The Department of Homeland Security and the military have, in reports published over the past several years, equated a large segment of the U.S. population with terrorists for simply expressing displeasure of the nation’s course, preparing for disaster or even paying in cash. DHS and the Barack Obama regime are aided in this endeavor by government propaganda arm mainstream media and organizations like the Southern Preposterous Lie Center (aka Southern Poverty Law Center), see here, here and here.

Now, true to its communistic-sounding roots, DHS is becoming exceedingly fearful of Christians who believe the Bible is God’s word, Christian “fundamentalists” (whatever those are), Americans who believe the country was founded on Godly principles and those who believe the Constitution stands as the law of the land. In training materials, DHS has lumped Christians and Constitutionalists in with a group it calls the sovereign citizen movement and identified them as requiring special surveillance by law enforcement.

In a letter to a conservative blogger, Prowers County (Colo.) Undersheriff Ron Trowbridge revealed what he learned during a recent training course conducted by Colorado State Patrol (CSP) Trooper Joe Kluczynski, a CSP analyst for the Colorado Information Analysis Center, (CIAC). CIAC is funded by DHS and run by the CSP, and the training materials Kluczynski used came from DHS.

To read the rest of the article, go here.

No. 8: Viewed 28,546 Times

Boston And More Government Lies

The Saudi Arabian “person of interest” who was hospitalized with serious injuries and then held under guard at a hospital because he was suspected of playing a part in the Boston Marathon bombing is just a college student who happened to be enjoying the annual spectacle.

Two Chechnyan brothers — one a naturalized U.S. citizen — who heretofore were unknown to the U.S. security apparatus, became radicalized for unknown reasons. Using instructions found online, they fabricated bombs using kitchen utensils, hardware junk and fireworks, concealed them in a backpack and duffle bag and detonated them near the finish line of the race.

Days later, after the FBI solicited the help of the public in identifying two men in grainy video images, the two Chechnyan brothers came out of hiding, killed an MIT police officer in cold blood in an effort to steal his sidearm, car jacked an Asian man, drove to a convenience store and robbed it, then engaged in a firefight with police. The two men were armed with a small arsenal of five pipe bombs, an M-4 carbine, two handguns and a BB gun. They planned to kill as many people as they could and then, depending on who is talking, blow up New York or party there, authorities said.

During the early morning hours of Friday, April 19, the two men battled with police, exchanging gunfire and exploding at least one of their bombs. At least 200 rounds were fired by the cops. The suspects fired back 80 or more at police. The older brother, identified as Tamerlan Tsarnaev, was apprehended when he ran toward police while firing his weapon. Tamerlan was on the ground being handcuffed by police when younger brother Dzhokhar — by all accounts of friends a nice and friendly guy who had never expressed jihadist opinions — drove over him in a stolen SUV, dragging the body at least 30 feet before it became disentangled from the vehicle’s undercarriage.

This violent exchange, in which police believe they wounded Dzhokhar, led to a voluntary lockdown of the town of Watertown, part of greater Boston. Residents and business owners were encouraged but not forced to stay inside all of Friday while police, FBI and National Guard troops and equipment scoured the neighborhood for the criminal terrorist. Police tactical units, armed in full SWAT or military gear conducted house-to-house searches, asking people to exit their homes at gunpoint, strongly encouraging them (with threats) to raise their hands (even if they were of different sex, race and age of the known suspect) and be frisked.

To read the rest of the article, go here.

No. 9: Viewed 28,371 Times

Adam Kokesh Has Been ‘Disappeared’

Adam Kokesh, the Iraq war veteran and host of the Internet radio program “Adam vs. The Man” who became a staunch opponent of the “war on terror” and who planned a peaceful armed march on Washington, D.C., on July 4, was disappeared in broad daylight while speaking at a Smoke Down Prohibition rally in Philadelphia May 18.

Kokesh’s kidnapping came at the hands of Philadelphia police and other LEOs (legally entitled to oppress) who dragged him off the stage just after he began to speak. A video of the incident shows Kokesh being dragged away without resisting. Arresting “authorities” initially claimed Kokesh was to be charged with resisting arrest. But it seems they realized it’s hard to resist arrest when your arrest is illegal, so they apparently changed the charges to “forcibly assaulted, resisted, opposed, impeded and interfered with officers and employees of the United States,” according to these documents. If that’s the case, then apparently standing with your hands up while an inept LEO tries to wrestle you to the ground is now “assault” in the eyes of a government that deems you a terrorist and then targets you for special “scrutiny” if you exercise your 1st Amendment guaranteed right of freedom of speech, claim to be a Tea Partier, hoard food and water, and/or support small government.

To read the rest of the article, go here.

No. 10: Viewed 27,775 Times

President Harrison J. Bounel

Who is Harrison J. Bounel? According to the 2009 tax return submitted by President Barack Obama, he’s the President of the United States. All nine U.S. Supreme Court Justices are scheduled to discuss this anomaly today.

The case in question is Edward Noonan, et al v. Deborah Bowen, California Secretary of State, and the Justices are finally looking at it thanks to the dogged determination of Orly Taitz. The case calls into question many of the documents Obama (Bounel, Soetoro, Soebarkah, etc.) has used and/or released as authentic since he came on the national scene. The case contends that the documents — birth certificate, Social Security number, Selective Service registration, etc. — are fakes or forgeries. If that’s the case, Obama should not have been on the California ballot in 2008 and, therefore, should not have received the State’s electoral votes.

Four of the nine Justices must vote to move the case forward. We’ll see.

Meantime, on Feb. 4, Kathleen O’Leary, presiding judge of the 4th District Court of Appeal, reinstated the appeal of Taitz v. Obama et al filed by Taitz when she ran for Senate. That case involves evidence of 1.5 million invalid voter registrations in the State of California. The appeal also involves Obama’s lack of legitimacy to hold the office of President based on his forged IDs, stolen Connecticut Social Security number, the fact the last name he’s using is not legally his and his fraudulent claim to be the U.S. citizen.

To read the rest of the article, go here

I don’t know about you, but I’m glad the page is finally turning on 2013.

 

When cow love meets car love

When cow love meets car love.

by Tom Abel, originally published by A prosperous way down  | TODAY

For an anthropologist like myself raised on stories of the Nuer and Dinka (and the other tribes in the region), the latest news from the Sudan is jarring. These men fighting each other are not ‘soldiers’, they are warriors. They live in ‘tribes’ or ‘local groups’ ruled by kinship. And they fight each other in terms of historical animosities. But they are now armed (who armed them?), and the big players (the US, China, others) have oil ‘interests’ in the region. So the language has changed, this is a ‘state’, it should follow the ‘rules’ of international law, people can be charged with ‘war crimes’, etc. The US has soldiers stationed nearby to protect ‘facilities’. Thousands of UN ‘peacekeeprs’ as well as ‘attack helicopters’ are coming. All of this, clearly, is not for the building of ‘democracy’ or for some other higher moral purpose, but to create ‘stability’.

e3_cow

A Nuer ox, with tassels hanging from its horns, from Evans-Pritchard’s famous ethnography, The Nuer (1940)

Stability is the overarching goal of our time, perhaps the only widely-agreed-upon social goal any more, with the ultimate purpose in this case of allowing the oil to flow. This is what we foist on the rest of the world, this is what the US and the UN and the Chinese and the Russians, and especially their corporations do when they set their sights on resource extraction from a region clearly not ready or even desiring of such economic ‘development’. All in the name of our addiction to oil, to automobiles, to plastics, to pharmaceuticals, to pesticides, etc. Just watch, we will end up blaming one tribe or another for the violence, or some ‘warlord’, or some ‘faction’, or the ‘uncivilized’ behavior generally of Nilotic peoples. But are they to blame? For having their world turned completely upside down? By peoples with weapons, technologies, and goals they barely understand?

Nuerland in the rainy season with sorghum plots (Evans-Pritchard 1940).

Nuerland in the rainy season with sorghum plots (Evans-Pritchard 1940).

I don’t mean to romanticize the Nuer or the Dinka. They are thoroughly modern peoples, capable of coming to comprehension of what now assaults them. But this was not their choice, and they are certainly not in control of what is happening. A few will be made superrich. The rest, you can imagine. And in a decade or two, when the oil’s gone, should we picture a peaceful democracy with schools and hospitals and cafes? Look at Nuerland. In the rainy season it is one great swamp. Where do you put the 7-11s?

I find it very hard to watch this. I want to look away. But then I realize that this is the same story that we read if we dare to read the colonial histories of Europeans throughout the world. Time and again the killing and the ‘civilizing’ and in the end some foreigners or their companies are left holding the prize, and the locals are reduced or tamed and left with little. South Africa, Nigeria, Indonesia, we can trace this back a long way, the Americas. We think this is history. This can’t happen today. But there it is. Right there, once again in my news feed. The Nuer, the Dinka, famous breeders of cows, worshipers of cows, are being set up to go the way of all those others before them.

Time to think again?

We in the developed countries should consider the impacts of our lifestyles. We did this. We are doing this, as I write. Isn’t it time for a reboot, a fresh look at the world, time to think smaller, to live more locally, to pedal instead of drive? A better world won’t come to us. Our government sure won’t hand it to us. We have to make it ourselves, from the bottom up, from the choices we make every day in what we do and buy. It’s starting. Many people and communities are beginning to choose more renewable lifestyles, more local, more self-sufficient. Transition Towns are an example, but there are many possibilities. There are guidelines here (on the Prosperous Way Down website) for how we can reorganize communities during transition to fit with the natural processes of land and water that sustain us (summarized here). Growing some of your own food is a good beginning. People are starting down that road. But don’t wait for politicians to lead us. We’ll have to show them, and show ourselves too (and that’s a big sell), that there is another way to live in the 21st Century. Start small. Show your neighbors. It’s worth a try. For the Nuer and Dinka, and all the rest.

 

Is America About To Reach A Breaking Point? Anger Grows As Unemployment Benefits Get Cut

Is America About To Reach A Breaking Point? Anger Grows As Unemployment Benefits Get Cut.

Breaking PointIn America today, there are close to 50 million people living in poverty and there are more than 100 million people that get money from the federal government every month.  As the middle class disintegrates, poverty is climbing tounprecedented levels.  Even though the stock market has been setting record high after record high, the amount of anger and frustration boiling just under the surface in our nation grows with each passing day.  And now extended unemployment benefits have been cut off for 1.3 millionunemployed Americans, and it is being projected that a total of 5 million unemployed Americans will lose their benefits by the end of 2014.  In addition, as I have written about previously, 47 million Americans recently had their food stamp benefits reduced.  The conditions for a “perfect storm” are certainly being created.  So how much longer will it be until we see all of this anger and frustration boil over in the streets of our major cities?  Is America about to reach a breaking point?

If you think that the title of this article is “alarmist”, you probably have not been paying attention to what has been happening over the past few weeks.  For example, a 600 person brawl broke out at at movie theater in Jacksonville, Florida just the other day…

Five teenagers were arrested when a 600-person brawl broke out in a Florida movie theater’s parking lot on Christmas night.

Described by police as a “melee,” the fight occurred around 8:30 p.m. on Wednesday outside the Hollywood River City 14 movie theater in Jacksonville when a group tried to storm the theater’s doors without purchasing tickets, police said. Several had rushed an off-duty police officer working as a security guard.

The officer “administered pepper spray to disperse the group, locked the doors and called for backup, following protocol,” said Lauri-Ellen Smith, a spokeswoman for the Jacksonville Sheriff’s Office.

Soon after the pepper spray was used, “upward of 600 people moving throughout a parking lot about the size of a football field began fighting, disrupting and jumping on cars,” she said.

And a “flash mob” of “400 crazed teens” was so violent that it forced a mall in Brooklyn to shut down just a few days ago

A wild flash mob stormed and trashed a Brooklyn mall, causing so much chaos that the shopping center was forced to close during post-Christmas sales, sources said Friday.

More than 400 crazed teens — who mistakenly thought the rapper Fabolous would perform — erupted into brawls all over Kings Plaza Shopping Center in Mill Basin on Thursday at 5 p.m., sources said.

The troublemakers looted and ransacked several stores as panicked shoppers ran for the exits and clerks scrambled to pull down metal gates.

In addition, the release of new Air Jordan sneakers caused mini-riots and brawls to break out all over the country just before Christmas.

So why is all of this happening?

Of course people will come up with all sorts of theories to explain these outbreaks of violence, but what pretty much everyone should be able to agree on is that we are seeing levels of anger and frustration rise to very dangerous levels in this country.

Right now, there are approximately 6 million Americans in the 16 to 24-year-old age group that are not in school and that are not working either.  What that means is that we have an alarmingly high number of very frustrated young people that do not have anything better to do than to cause trouble.

In some of our largest cities this has become a massive problem.  In fact, quite a few major U.S. cities actually have more than 100,000 “idle youth” living in them…

Just look at some of the nation’s largest cities. Chicago, Houston, Dallas, Miami, Philadelphia, New York, Los Angeles, Atlanta and Riverside, Calif., all have more than 100,000 idle youth, the Opportunity Nation report found.

But the Obama administration says that this should not be a problem.  In fact, the Obama administration tells us that the unemployment rate has been steadily “declining” and that there are plenty of opportunities for everyone.

Of course that is a giant lie.  Just before the last recession, about 63 percent of all working age Americans had a job.  During the recession that number fell below 59 percent and it has stayed there ever since

Employment-Population Ratio 2013

So the notion that we are experiencing an “employment recovery” is absolutely laughable.

But most of our politicians appear to believe this lie, and it is being used as justification to cut off extended unemployment benefits.

And the funny thing is that by cutting off these benefits, it is going to make it appear as though unemployment has gone down even more.  Millions of unemployed workers that are being forced into the streets will now be counted as having “left the labor force”, and it is being projected that the unemployment rate could decline by as much as half a percentage point as a result.

What a joke.

A lot of the people that are having their benefits cut off are really hurting.  For instance, consider the case of 63-year-old paralegal Laura Walker

“Not all of us have savings and a lot of us have to take care of family because of what happened in the economy,” said Walker, of Santa Clarita, who said she has applied for at least three jobs a week and shares an apartment with her unemployed son, his wife and two children. “It’s going to put my family and me out on the streets.”

So what is she going to do?

Well, at this point she appears to be down to just one option…

“I just don’t know what to do, except pray.”

And of course the unemployed are not the only ones that have had their benefits cut.  As I mentioned above, all 47 million Americans that are currently on food stamps recently had their benefits reduced.  The following is an excerpt from a recent article by Mac Slavo

Earlier this year government benefits for nutritional assistance were reduced after the expiration of emergency legislation that was enacted following the 2008 financial collapse. Nearly all of the 48 million people receiving food stamp distributions were affected. The move led to warnings from food pantries and recipients around the country who said that the $40 billion in cuts would leave many American families without the ability to put food on dinner tables across America. According to Feed America, the roughly $29 per family that would no longer appear on their EBT cards will amount to about1.5 billion meals in 2014.

The fact that government dependence has soared to all-time highs even in the midst of this so-called “economic recovery” is just another sign that the middle class is dying.  For years, middle class families have tried strategy after strategy in an attempt to survive, but now it has become apparent that the middle class is rapidly approaching a breaking point

Rising income inequality is starting to hit home for many American households as they run short of places to reach for a few extra bucks.

As the gap between the rich and poor widened over the last three decades, families at the bottom found ways to deal with the squeeze on earnings. Housewives joined the workforce. Husbands took second jobs and labored longer hours. Homeowners tapped into the rising value of their properties to borrow money to spend.

Those strategies finally may have run their course as women’s participation in the labor force has peaked and the bursting of the house-price bubble has left many Americans underwater on their mortgages.

And even though the Obama administration and the mainstream media have tried to convince us over and over that the economy is “getting better”, most Americans are not buying it.  In fact, according to a newCNN poll, 70 percent of all Americans believe that “the economy is generally in poor shape”.

As the economy continues to decline, not all Americans will respond to their desperate situations by getting violent.  Many suffer quietly, hoping that things will eventually turn around for them.  Unfortunately, the ranks of the suffering grow with each passing year.  For example, a recentCNN article discussed the continued growth of “tent cities” all over America…

The total number of homeless people residing in tents and makeshift homes is unknown. Many of these communities are small and hidden from public view, while others claim hundreds of residents and are sprinkled through major urban areas.

Some, like those tucked under roadways, are temporary and relocate frequently. Their conditions are vile, unsanitary and fail to provide refuge from storms and winds. Then there are communities, such as Dignity Village in Portland, Oregon, that have a more sustained presence. The 13-year-old “ecovillage” set up by homeless people is hygienic and self-sufficient.

Preliminary findings by The National Law Center on Homelessness and Poverty show that tent cities have been documented in almost every state, and they’re growing.

So how do we solve these problems?

Are there any solutions that could get us out of this mess?

Of course there are.  But don’t hold your breath waiting for any of them to be adopted.  In fact, the American people continue to express great support for the very people that got us into this mess in the first place.  For example, according to a Gallup survey that was just released, Barack Obama is the most admired man in America by a very wide margin and Hillary Clinton is the most admired woman in America by a very wide margin.

And the mainstream media will continue to tell all of us that “leaders” like Obama, Clinton, Reid, Boehner, McConnell and Pelosi can be trusted to get us out of this mess.

If you believe that, there is a bridge that I would like to sell you.

The American people need to stop having blind faith in the relentless propaganda that is being spewed at them through their televisions screens.  The pretty faces that you see “reporting the news” do not care about you and they are not watching out for your best interests.  Thecorporate-controlled news is highly scripted and it is pretty much the same whatever channel you turn to.  If you have any doubt that “the news” is scripted, just check out this video

This is What Really Happens in the Drone Program from an Insider | A Lightning War for Liberty

This is What Really Happens in the Drone Program from an Insider | A Lightning War for Liberty.

Over the weekend, Heather Linebaugh wrote a powerful Op-ed in The Guardian newspaper lamenting the lack of public understanding regarding the American drone program. Heather should know what she’s talking about, she served in the United Stated Air Force from 2009 until March 2012. She worked in intelligence as an imagery analyst and geo-spatial analyst for the drone program during the occupations of Iraq and Afghanistan.

Here are some key excerpts from her article:

Whenever I read comments by politicians defending the Unmanned Aerial Vehicle Predator and Reaper program – aka drones – I wish I could ask them a few questions. I’d start with: “How many women and children have you seen incinerated by a Hellfire missile?” And: “How many men have you seen crawl across a field, trying to make it to the nearest compound for help while bleeding out from severed legs?” Or even more pointedly: “How many soldiers have you seen die on the side of a road in Afghanistan because our ever-so-accurate UAVs [unmanned aerial vehicles] were unable to detect an IED [improvised explosive device] that awaited their convoy?”

Few of these politicians who so brazenly proclaim the benefits of drones have a real clue of what actually goes on. I, on the other hand, have seen these awful sights first hand.

I knew the names of some of the young soldiers I saw bleed to death on the side of a road. I watched dozens of military-aged males die in Afghanistan, in empty fields, along riversides, and some right outside the compound where their family was waiting for them to return home from the mosque.

What the public needs to understand is that the video provided by a drone is not usually clear enough to detect someone carrying a weapon, even on a crystal-clear day with limited cloud and perfect light. This makes it incredibly difficult for the best analysts to identify if someone has weapons for sure. One example comes to mind: “The feed is so pixelated, what if it’s a shovel, and not a weapon?” I felt this confusion constantly, as did my fellow UAV analysts. We always wonder if we killed the right people, if we endangered the wrong people, if we destroyed an innocent civilian’s life all because of a bad image or angle.

Moreover, the many civilians being incinerated without a trial are not the only victims here. So are the actual drone operators themselves, many of whom end up committing suicide. Recall my article from December 2012: Meet Brandon Bryant: The Drone Operator Who Quit After Killing a Child. Of course, our so-called political “leaders” never get their hands dirty, other than to take a lobbyist bribe that is. Now more from Heather:

Recently, the Guardian ran a commentary by Britain’s secretary of state for defence, Philip Hammond. I wish I could talk to him about the two friends and colleagues I lost, within a year of leaving the military, to suicide. I am sure he has not been notified of that little bit of the secret UAV program, or he would surely take a closer look at the full scope of the program before defending it again.

Full article here.

 

Dozens of Iraqi MPs quit over Anbar violence – Middle East – Al Jazeera English

Dozens of Iraqi MPs quit over Anbar violence – Middle East – Al Jazeera English.

Forty-four Iraqi MPs have announced their resignation over violence in Anbar province, just days after a deadly raid on the home of a Sunni lawmaker in the area.Fighting erupted when police broke up a Sunni Muslim protest camp on Monday, leaving at least 13 people dead, police and medical sources said.

Four people died on Tuesday in clashes between Iraq’s security forces and gunmen in Ramadi, following the forced closure of the site.

The camp has been an irritant to Prime Minister Nouri al-Maliki’s Shia-led government since protesters set it up a year ago to demonstrate against what they see as marginalisation of their sect.

Maliki has repeatedly vowed to remove the camp and accused protesters of stirring strife and sheltering fighters linked to al-Qaeda.

The MPs who stepped down after the latest bout of violence demanded “the withdrawal of the army… and the release of MP Ahmed al-Alwani,” a Sunni of the Iraqiya bloc who was arrested during a deadly raid on Saturday.

Prominent Sunni politician Saleh al-Mutlaq called for all legislators from Iraqiya to withdraw from the political process, saying it had hit a “dead end”.

“Elections in this atmosphere would be settled in advance, therefore we should raise our voices high and say the political process cannot proceed in this way,” he told reporters.

Tension rising

Tensions have been rising over the past few weeks in Anbar, a province that makes up a third of Iraq’s territory and is populated mainly by Sunnis.

Police said the clashes on Monday broke out when armed men opened fire on police special forces trying to enter Ramadi, the city where the protest camp is located.
We hold the government of Nouri al-Maliki responsible for the bloodshed and the fighting.Mahmoud Abdel Aziz, tribal leader

Shooting and blasts were heard in parts of the city. The assailants destroyed four police vehicles and killed at least three policemen in the north of Ramadi, one police source said.

The bodies of 10 other people killed in the clashes were brought into Ramadi’s morgue, hospital and morgue sources told Reuters news agency.

Tribal leader Mahmoud Abdel Aziz, meanwhile, accused the army of firing on unarmed civilians.

“We hold the government of Nouri al-Maliki responsible for the bloodshed and the fighting,” he said.

The fighting spread to the nearby city of Fallujah, where police Captain Omar Oda said armed men burned military vehicles during clashes with security forces.

Maliki’s spokesman, Ali Mussawi, said military sources confirmed that tents at the protest site had been removed and the highway towards neighbouring Jordan and Syria reopened.

This was done “without any losses, after al-Qaeda and its members escaped from the camp to the city, and they are being pursued now,” Mussawi told AFP.

The sprawling protest site on the highway outside Ramadi, where the number of protesters ranged from hundreds to thousands, included a stage from which speakers could address crowds, a large roofed structure and dozens of tents.

Sunni politicians arrested

Protests broke out in Sunni Arab-majority areas of Iraq late last year after the arrest of guards of then-finance minister Rafa al-Essawi, an influential Sunni Arab, on terrorism charges.

The arrests were seen by Sunnis as yet another example of the Shia-led government targeting one of their leaders.

In December 2011, guards of vice president Tariq al-Hashemi, another prominent Sunni politician, were arrested and accused of terrorism. Hashemi fled abroad and has since been given multiple death sentences in absentia for charges including murder.

He had insisted he was still the legitimate vice president, but on Monday he announced his resignation and called on all Sunni members of parliament join him.

“Legally I was still the vice president of the republic. But today I add my voice to my people who have risen up in Anbar,” he told Al Jazeera.

“I stayed in this position until now because it was necessary to challenge and unite the Sunnis. They needed a rallying cause. But enough is enough.”

 

NAFTA turns 20: Mexico is pact’s biggest winner – Canada – CBC News

NAFTA turns 20: Mexico is pact’s biggest winner – Canada – CBC News.

Former Mexican President Carlos Salinas de Gortari, left, former U.S. President George H.W. Bush, center, and former Canadian Prime Minister Brian Mulroney, right, gather for a conference on NAFTA at the Woodrow Wilson International Center for Scholars in Washington in December 2002.Former Mexican President Carlos Salinas de Gortari, left, former U.S. President George H.W. Bush, center, and former Canadian Prime Minister Brian Mulroney, right, gather for a conference on NAFTA at the Woodrow Wilson International Center for Scholars in Washington in December 2002. (J. Scott Applewhite/Associated Press)

Ross Perot may have had it right after all about who would win under NAFTA.

The North American Free Trade Agreement was an important step for all three members, but the evidence points to Mexico — at the time the weak sister in the group that included two G7 economies, the United States and Canada — as by far the biggest winner.

On the 20th anniversary of the pact, Mexico — in 1994, an insular, economic basket case — has in two decades emerged as a forward-looking country with expanding global reach, a handful of world-class corporations and a ballooning middle class.

Perot, who twice ran for U.S. president in the 1990s and made his name as an anti-NAFTA crusader, generally saw that coming although he focused his barbs on what the U.S. would lose in what he termed “the giant sucking sound of jobs going south.”

Perot’s fear was that U.S. firms would flock to where labour costs were cheapest. To an extent that has happened, and it can be argued that Canada too lost critical manufacturing jobs to Mexico.

While there are some in Mexico who would dispute the characterization of their country as the big winner, the numbers make a strong case.

Mexico under NAFTA had a rough start, because of a coincidental pesos crash just as the deal was getting under way. But the country has grown into the one of the more robust emerging economies with exports of about $1 billion a day, more than 10 times what they were in 1994.

Mexico is now estimated to be the world’s 13th-largest economy with total output similar to Canada’s, although on a per capita basis it still lags.

“I think NAFTA has been excellent for Mexico,” says economist Jaime Serra Puche, the Mexican trade minister at the time, adding it would have worked even better if Mexico had not waited almost 20 years to bring in internal reforms to the economy.

“Now with the reforms that are finally taking place I think we are going to gain competitiveness and the platform that has been constructed mostly for exports and manufacturing is going to become stronger.”

‘Manufacturing catastrophe’

Some of that has come at the expense of Canada, or so believes Jim Stanford, an economist with the Unifor union. Under the deal, Mexico has gone from a bit player in the North American auto sector to the second-largest participant with almost 20 per cent of total production, compared with Canada’s 16 per cent.

NAFTA Anniversary 20131229Prime Minister Brian Mulroney signs the North American Free Trade Agreement in Ottawa on Dec.17, 1992. After two decades, the age lines are starting to show on the NAFTA trade deal that at one time made Canada, the United States and Mexico the globe’s biggest and most affluent economic zone. (Tom Hanson/Canadian Press)

“Heavy truck shipments in Canada collapsed by 75 per cent between 2006 and 2011. It’s an incredible example of a manufacturing catastrophe and NAFTA was absolutely a key part of it,” he says.

Serra and others who have studied post-NAFTA impacts agree that Mexico’s manufacturing sector, and particularly the auto industry, has been a big beneficiary.

But they don’t give all the credit to the deal.

Even before 1994, Mexico had started on the road to trade liberalization and economic stability, by giving its central bank independence, for instance. NAFTA may have been the last and most important piece of the puzzle, but not the only one, they say.

Overall, trade deals are often oversold by both proponents and critics, says Angeles Villarreal, a trade specialist with the U.S. Congressional Research Service who co-authored a paper on the deal earlier this year.

“It didn’t benefit as much as the optimists predicted, but also the negative effects weren’t as severe. There weren’t huge job losses,” she says.

Mexico transforming

On the plus side for Mexico, the auto industry has taken off, skills have improved and manufacturing has increased — and not just low-skilled factory jobs, she says.

On the negative side, there were losers as well, particularly firms propped up by high tariff walls and small subsistence farmers, although even here the evidence is unclear. Villarreal says it’s difficult to separate the NAFTA effect on farming from that of land reform that came at about the same time.

Christopher Wilson of the Mexico Institute at the Woodrow Wilson International Center in Washington says while there were losers, NAFTA has to be considered an overall success for the country.

“Mexico at the time was the smallest, now the Mexican and Canadian economies are similar in size,” he points out.

“One of the big stories in Mexico has been the slow but steady emergence of a middle class that’s now about half of the country.

“It’s not the same as the middle class as the U.S. or Canada, but it does mean they are not in poverty, they now own a car, they go to the movies, they take a vacation. It’s transforming the country,” he says.

 

Putin’s Deal Is No Gift to Gas-Junkie Ukraine – Bloomberg

Putin’s Deal Is No Gift to Gas-Junkie Ukraine – Bloomberg.

Amazingly, tens of thousands of Ukrainians are still braving the winter cold to protest what they consider to be the sale of their country’s future to Russia.

A big part of the deal in dispute was what Russian President Vladimir Putin described as a “fraternal” 33 percent discount on the price that Ukraine pays for natural gas imports. So why aren’t Ukrainians more grateful to their bigger brother? Maybe they have done the math — which shows it really isn’t such a bargain after all.

There are two major elements to the agreement: a $15 billion loan pledge and a reduction in the price of natural gas imports from about $400 per 1,000 cubic meters (tcm) to $268.50. The average price that Gazprom charges to European Union countries for long-term contracts is $370 to $380. So it sounds as though Ukraine will now get a big discount — plus a generous bailout. Not quite.

The gas has to cross Ukraine to get to EU markets, and the $370-$380 that Gazprom charges countries such as Germany includes the cost of that transit. Ukraine charges about $3 per 1000 cubic meters per 100 kilometers. The distance from the Ukrainian border with Russia to the big European hub at Baumgarten, Austria, is about 1800 kilometers. So subtract about $50 from the European gas price to get closer to a true equivalent. Then consider that the EU now has a hub, or spot market price for gas that’s often lower than Gazprom’s. “What I find interesting is that $268.50 isn’t so far off the European hub price, once you deduct transit costs,” says Simon Pirani, a senior research fellow at the Oxford Institute for Energy Studies, who specializes on the gas trade in the ex-Soviet Union.

When Ukraine struck its gas contract price with Russia in 2009, it was under threat of another cutoff of its gas supply, as had occurred in 2009, 2008 and 2006. The thinking behind the new price was that Ukraine should start paying the European price for gas, in exchange for independence. Think of Ukraine as a natural gas junkie, addicted to cheap Russian fuel. Before 2006, this relatively poor country — which has a population of 46 million and an economy 19 times smaller than Germany’s — had been consuming almost 80 billion cubic meters of gas annually. Germany was consuming just under 100 bcm. Ukraine had been paying just $50 per 100 cubic meters for Russian gas imports. So something had to change.

The formula reached in 2009 was index-linked to the price of oil. Three things then happened: The price of oil rose; the EU started to link up its natural gas grids to create a spot market at the gas hubs, independent of Gazprom’s long-term contracts; and demand for gas within the EU fell. Indeed, without a renegotiation in 2010 (Russia got extended naval basing rights in exchange), Ukraine would now be paying $500 per 100 cubic meters of gas.

The reduced price Ukraine pays to Gazprom is still so out of kilter that it is about $30 cheaper to buy gas the EU has imported and transport it back across the border. This re-importing had started to happen on a very small scale from Poland and Hungary. And on Dec. 9, Slovakia’s gas transit company Eustream agreed on terms to reverse the flow in one of its big transit pipes.

With the necessary Slovak capacity, Ukraine might have been able to fulfill the deal it has to buy 10 bcm of gas annually from Germany’s RWE AG. That would represent about a third of Ukraine’s current imports from Russia, which had already fallen substantially because of Ukraine’s declining gas consumption, due to a collapsing economy, coal substitution and efficiency improvements, according to Pirani.

Faced by competition from EU re-suppliers, Gazprom would in any case have had to choose: risk losing as much as another one third of its gas sales to Ukraine and associated political leverage, or else reduce its price by a third to make EU re-imports uncompetitive.

In sum, it’s clear that the $268.50 discount offered to Yanukovych wasn’t as generous as it sounds. Putin in essence agreed to stop extorting money from Ukraine and charge the market price.

So how about the $15 billion loan? Russia bought the first $3 billion of Ukrainian eurobonds as promised just before Christmas, at a coupon rate of 5 percent. Ukraine had an alternative source for a $15 billion bailout loan, from the International Monetary Fund. The interest rate payable to the IMF probably would have been cheaper by 2 percentage points or more.

The difference between the two loans is, again, best looked at in terms of an addict and supplier. The IMF was offering rehab, a painful treatment that would have involved: devaluing the currency; reducing energy subsidies worth about 7.5 percent of gross domestic product; making other budget cuts in areas such as pensions, which account for as much as 18 percent of GDP; and structural reforms.

Russia’s loan was free of known strings, except those that bind a hopeless debtor to his creditor. What the Russian money does better is fund Yanukovych’s 2015 election campaign. Prime Minister Mykola Azarov immediately started announcing how the money will be spent, including increases to the minimum wage, child benefits and public sector pay raises — everything the IMF would oppose.

The IMF loan terms would have been better for Ukraine. The Putin deal is better for Yanukovych. No wonder some Ukrainians plan to take to the streets again to call for his resignation on New Year’s Day, even if their cause appears to be lost.

 

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