It’s like a futuristic film with hoards of evil masses of people, poverty-stricken, living off the land, while the rich and wealthy continue to lord it, served to their hearts content and just raking it in, while the others hardly get enough to eat and drink. Yes, the resources of the planet are finite for the moment. Yes, those resources belong to the same people and yes the lands are worked for the benefit of the dollar-hungry few, while the money-poor subsist on what scraps get thrown to them. But, it might look like the future, but the present certainly resembles very much the long-forgotten past. We haven’t come very far since the days of feudalism, have we? There is still a power-crazed lord of the manor there that is just a business tycoon under another name. There are still the poor vassals that eke out their existence and wait in expectant eagerness for the bones to get tossed to them as the lord and his ladies walk off into the ramparts of the castle. This time it’s the water and the agricultural lands that are the much-sought after means of wealth. They bring down governments these days and oust leaders.
Water and Agriculture are already the cause of many a dispute in the world and even more so in the Middle East, in the Near East and in Africa. Take the example of ex-President Mohamed Morsi and his fall from power. The Ethiopians decided to spend $3 billion on the building of a hydraulic damn to siphon off the Nile. In May 2013, Morsi convened a meeting to discuss the project and it quickly turned into a fiasco with the media as it was transmitted live (by mistake or on purpose) on national television. The meeting went from decision-making discussions to threats of declaring war and to bribery of senior Ethiopian officials, via the destruction of the dam itself by Egyptian forces. Just a few weeks later, Morsi had fallen from power.
Water is everything from economic survival to territorial appropriation. It’s the cause of the downfall of governments and the revolt of the masses in countries that saw the ousting of their leaders during the Arab Springs. No country in the region was in a position to assume agricultural independence and each country has suffered from the increased dependence on water. There were food crises that hit those nations in 2007 as the Western world was being hit by their own financial crisis. The governments of countries in the regions massively invested in agriculture to keep the barking dogs at bay. But, that did nothing but increase the financial pressure on the economy and brought about hyperinflation. The governments were to some extent the cause of their own strife.
- Saudi Arabia pays out a billion dollars per month for imported food.
- Egypt forked out $3 billion for wheat alone in 2010.
- The countries of the Gulf import some 90% of their food today.
- Food prices got out of control in the lead up to the Arab Springs when the United Nations published figures showing that price indexes rose from 2009’s level of 157 to over 230 in 2011.
- Wheat increased over that same period by 30%.
According to the Pierre Blanc from the CIHEAM research laboratory (International Center for Agronomy Studies, France), the future will be worse as agricultural lands are transformed into deserts. Climate change coupled with demographic transitions (increasing numbers of people are huddled together on small pieces of land – in Egypt 95% of the population lives on 5% of the land, for example) in countries in the water-poor regions of the world will lead to increased hydraulic demand that will not be met by available supplies today. While the regions remain politically unstable, the volatility of governments and policies will only mean that it will pave the way for increased disputes over the sharing of resources. Recent discoveries of oil reserves and gas along the Mediterranean coastline between Egypt, Israel Lebanon and Syria as well as Turkey and Cyprus will mean that those countries (as well as other nations in the Western world) will be vying for a place to exploit those reserves to a maximum.
- Egypt has until now supplied 50% of Israel’s energy needs.
- But that may change in the future with the discovery of Tamar and Leviathan gas reserves.
- Tamar (282 billion m3) would allow Israel to ensure its energy needs for the next 25 years.
- Leviathan (540 billion m3) would be a surplus that would enable Israel to rake in a great deal of money.
- 60% of Leviathan will be used for domestic consumption in Israel, while 40% will be exported to other countries.
- The other countries along the coastline seem to have equally promising amounts of gas and petrol in areas under their exclusive economic control.
Where there are resources that we want, there is a fight for power; that struggle turns into political upheaval and change. Too much testosterone will be flying around there yet again and everyone will be playing out their role of the alpha male to dominate the others.
DUBAI, United Arab Emirates (AP) — Saudi Arabia’s Cabinet approved on Monday a new anti-terrorism draft law that criminalizes acts that disturb public order, defame the reputation of the state or threaten the kingdom’s unity, raising concerns by activists it could be used to quash political dissent.
During 2013, America continued to steadily march down a self-destructive path toward oblivion. As a society, our debt levels are completely and totally out of control. Our financial system has been transformed into the largest casino on the entire planet and our big banks are behaving even more recklessly than they did just before the last financial crisis. We continue to see thousands of businesses and millions of jobs get shipped out of the United States, and the middle class is being absolutely eviscerated. Due to the lack of decent jobs, poverty is absolutely exploding. Government dependence is at an all-time high and crime is rising. Evidence of social and moral decay is seemingly everywhere, and our government appears to be going insane. If we are going to have any hope of solving these problems, the American people need to take a long, hard look in the mirror and finally admit how bad things have actually become. If we all just blindly have faith that “everything is going to be okay”, the consequences of decades of incredibly foolish decisions are going to absolutely blindside us and we will be absolutely devastated by the great crisis that is rapidly approaching. The United States is in a massive amount of trouble, and it is time that we all started facing the truth. The following are 83 numbers from 2013 that are almost too crazy to believe…
#1 Most people that hear this statistic do not believe that it is actually true, but right now an all-time record 102 million working age Americans do not have a job. That number has risen by about 27 million since the year 2000.
#2 Because of the lack of jobs, poverty is spreading like wildfire in the United States. According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.
#3 As society breaks down, the government feels a greater need than ever before to watch, monitor and track the population. For example, every single day the NSA intercepts and permanently stores close to 2 billion emails and phone calls in addition to a whole host of other data.
#4 The Bank for International Settlements says that total public and private debt levels around the globe are now 30 percent higher than they were back during the financial crisis of 2008.
#5 According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.
#7 The six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.
#8 The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
#9 JPMorgan Chase is roughly the size of the entire British economy.
#10 The five largest banks now account for 42 percent of all loans in the United States.
#11 Right now, four of the “too big to fail” banks each have total exposure to derivatives that is well in excess of 40 trillion dollars.
#12 The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.
#13 According to the Bank for International Settlements, the global financial system has a total of 441 trillion dollars worth of exposure to interest rate derivatives.
#14 Through the end of November, approximately 365,000 Americans had signed up for Obamacare but approximately 4 million Americanshad already lost their current health insurance policies because of Obamacare.
#15 It is being projected that up to 100 million more Americans could have their health insurance policies canceled by the time Obamacare is fully rolled out.
#16 At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.
#17 It is has been estimated that Obamacare will add 21 million more Americans to the Medicaid rolls.
#18 It is being projected that health insurance premiums for healthy 30-year-old men will rise by an average of 260 percent under Obamacare.
#19 One couple down in Texas received a letter from their health insurance company that informed them that they were being hit with a 539 percent rate increase because of Obamacare.
#21 The U.S. government has spent an astounding 3.7 trillion dollarson welfare programs over the past five years.
#22 Incredibly, 74 percent of all the wealth in the United States is owned by the wealthiest 10 percent of all Americans.
#23 According to Consumer Reports, the number of children in the United States taking antipsychotic drugs has nearly tripled over the past 15 years.
#24 The marriage rate in the United States has fallen to an all-time low. Right now it is sitting at a yearly rate of just 6.8 marriages per 1000 people.
#25 According to a shocking new study, the average American that turned 65 this year will receive $327,500 more in federal benefits than they paid in taxes over the course of their lifetimes.
#26 In just one week in December, a combined total of more than 2000 new cold temperature and snowfall records were set in the United States.
#27 According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row.
#28 The rate of homeownership in the United States has fallen for eight years in a row.
#29 Only 47 percent of all adults in America have a full-time job at this point.
#30 The unemployment rate in the eurozone recently hit a new all-time high of 12.2 percent.
#31 If you assume that the labor force participation rate in the U.S. is at the long-term average, the unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.
#32 In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6 percent of all working age Americans have a job.
#33 There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, our population has grown by more than 16 million people during that time frame.
#34 Only 19 percent of all Americans believe that the job market is better than it was a year ago.
#35 Just 14 percent of all Americans believe that the stock market will rise next year.
#36 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.
#37 Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million dollars last quarter. But according to the financial markets it is currently worth about 22 billion dollars.
#39 Total consumer credit has risen by a whopping 22 percent over the past three years.
#40 Student loans are up by an astounding 61 percent over the past three years.
#41 At this moment, there are 6 million Americans in the 16 to 24-year-old age group that are neither in school or working.
#42 The “inactivity rate” for men in their prime working years (25 to 54) has just hit a brand new all-time record high.
#43 It is hard to believe, but in America today one out of every ten jobs is now filled by a temp agency.
#45 According to the Social Security Administration, 40 percent of all U.S. workers make less than $20,000 a year.
#46 Approximately one out of every four part-time workers in America is living below the poverty line.
#47 After accounting for inflation, 40 percent of all U.S. workers are making less than what a full-time minimum wage worker made back in 1968.
#48 When Barack Obama took office, the average duration of unemployment in this country was 19.8 weeks. Today, it is 37.2 weeks.
#49 Investors pulled an astounding 72 billion dollars out of bond mutual funds in 2013. It was the worst year for bond funds ever.
#50 Small business is rapidly dying in America. At this point, only about 7 percent of all non-farm workers in the United States are self-employed. That is an all-time record low.
#51 The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.
#52 Once January 1st hits, it will officially be illegal to manufacture or import traditional incandescent light bulbs in the United States. It is being projected that millions of Americans will attempt to stock up on the old light bulbs before they are totally gone from store shelves.
#53 The Japanese government has estimated that approximately 300 tons of highly radioactive water is being released into the Pacific Ocean from the destroyed Fukushima nuclear facility every single day.
#56 Wal-Mart recently opened up two new stores in Washington D.C., and more than 23,000 people applied for just 600 positions. That means that only about 2.6 percent of the applicants were ultimately hired. In comparison, Harvard offers admission to 6.1 percent of their applicants.
#57 At this point, almost half of all public school students in America come from low income homes.
#58 Tragically, there are 1.2 million students that attend public schools in the United States that are homeless. That number has risen by 72 percent since the start of the last recession.
#59 According to a Gallup poll that was recently released, 20.0 percent of all Americans did not have enough money to buy food that they or their families needed at some point over the past year. That is just under the all-time record of 20.4 percent that was set back in November 2008.
#61 Right now, one out of every five households in the United States is on food stamps.
#62 The U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas.
#64 According to one survey, approximately 75 percent of all American women do not have any interest in dating unemployed men.
#65 China exports 4 billion pounds of food to the United States every year.
#66 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.
#68 It is being projected that the number of Americans on Social Security will rise from 57 million today to more than 100 million in 25 years.
#69 Back in 1970, the total amount of debt in the United States (government debt + business debt + consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars.
#71 The U.S. government “rolled over” more than 7.5 trillion dollars of existing debt in fiscal 2013.
#72 If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.
#74 The U.S. national debt is on pace to more than double during the eight years of the Obama administration. In other words, under Barack Obama the U.S. government will accumulate more debt than it did under all of the other presidents in U.S. history combined.
#75 The federal government is borrowing (stealing) roughly 100 million dollars from our children and our grandchildren every single hour of every single day.
#76 At this point, the U.S. already has more government debt per capitathan Greece, Portugal, Italy, Ireland or Spain.
#77 Japan now has a debt to GDP ratio of more than 211 percent.
#78 As of December 5th, 83 volcanic eruptions had been recorded around the planet so far this year. That is a new all-time record high.
#79 53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.
#80 Violent crime in the United States was up 15 percent last year.
#81 According to a very surprising survey that was recently conducted,68 percent of all Americans believe that the country is currently on the wrong track.
Under its proposed rule released Monday, the agency will require manufacturers to prove that their antibacterial soaps and body washes are safe and more effective than plain soap and water. If companies cannot demonstrate the safety and effectiveness of their products, they would have to be reformulated, relabeled or possibly removed from the market. The agency will take comments on its proposal before finalizing it in coming months.
“Due to consumers’ extensive exposure to the ingredients in antibacterial soaps, we believe there should be a clearly demonstrated benefit from using antibacterial soap to balance any potential risk,” said Dr. Janet Woodcock, director of the FDA’s drug centre.
The agency’s proposal comes more than 40 years after the agency was first tasked with evaluating triclosan and similar ingredients. Ultimately, the government agreed to publish its findings only after a three-year legal battle with the environmental group, Natural Resources Defense Council, which accused the FDA of delaying action on triclosan. The chemical is found in an estimated 75 per cent of antibacterial liquid soaps and body washes sold in the U.S.
The FDA’s preliminary rule only applies to personal hygiene products, but it has implications for a $1 billion US industry that includes thousands of antibacterial products, including kitchen knives, toys, pacifiers and toothpaste.
Most of the research surrounding triclosan’s safety involves animal studies, which cannot always be applied to humans. But some scientists worry the chemical can disrupt hormones in humans too, raising the risk of infertility, early puberty and other developmental problems. Other experts are concerned that routine use of antibacterial chemicals like triclosan is contributing to a surge in drug-resistant germs, or superbugs, that render antibiotics ineffective.
In March 2010, the European Union banned the chemical from all products that come into contact with food, such as containers and silverware.
An environmental group says more needs to be done to prevent an iconic Canadian animal from going extinct.
The Canadian Parks and Wilderness Society (CPAWS) is releasing a report today, co-authored by the David Suzuki Foundation, on the status of woodland caribou.
CBC News obtained an embargoed copy of the report, “Population Critical: How are the caribou faring?”
It comes one year after the federal government issued a recovery strategy to prevent the woodland caribou from becoming extinct.
The caribou are listed as a threatened species at risk, largely because industrial development is destroying their habitat in the boreal forest.
Ottawa’s recovery strategy gave provinces and territories three years to come up with a plan to stop the decline of caribou herds in their jurisdictions.
The CPAWS report looks at what progress has been made in the past 12 months.
‘Caribou aren’t protected’
CPAWS national executive director Éric Hébert-Daly says there has been a lot of discussion, but little else.
“The truth is while we wait and while we plan and we do all that work, the caribou aren’t protected,” he told CBC News.
CPAWS gave three provinces and territories a medium grade for showing some signs of progress.
The rest got a low mark for doing little if anything to stop industrial development.
Hébert-Daly hopes that will change in the next 12 months.
“There isn’t really a jurisdiction yet that has really shone in terms of being able to lead the way, and so we’re looking for that in the next year,” Hébert-Daly said.
Some provinces declined to comment yesterday, saying they wanted more time to read the report.
A spokesman for Environment Canada said the department will keep working “with all jurisdictions” on recovery actions for the caribou.
“The Government of Canada has already acted to protect critical habitat in Wood Buffalo National Park (N.W.T./Alberta) and Prince Alberta National Park (Sask.),” Mark Johnson said in an email to CBC News.
The federal government is staying quiet on reports it has caved to U.S. demands on intellectual property and copyright issues in a new Pacific trade deal currently under negotiation, saying only that talks are ongoing.
Citing a report from the Washington Trade Daily, the Council of Canadians saysCanada has backed off its resistance to “outrageous” new intellectual property rights the U.S. wants to see included in the Trans-Pacific Partnership.
WikiLeaks, which released a draft copy of the IP chapter of the deal last month, described it as having “far-reaching implications for individual rights and civil liberties.”
Critics of the deal say if the U.S. gets its way, the result could be the criminalization of small-scale copyright infringement and households being disconnected from the internet under laws that punish unauthorized downloading. Internet providers would be forced to do more monitoring of their subscribers, and it would be easier for governments to remove websites, critics say.
Additionally, proposed extensions to drug patents and copyright terms would mean more expensive drugs and other products, critics say.
“Australia, New Zealand and Canada, among others, dropped their objections to the high-standard disciplines in intellectual property and came on board by agreeing to the modified text,” the Council of Canadians quoted the Trade Daily as saying.
“Effectively, there is consensus on the intellectual property dossier except for one developing country.”
The Department of Foreign Affairs and International Trade did not address the claims directly, but told HuffPost Canada that “the IP chapter is still under negotiation and Canada continues to advance its interests at the negotiating table.”
Canada “is committed to ensuring that its intellectual property regime balances the interests of both rightholders and users,” a DFAIT spokesperson said in an emailed statement.
Documents released by WikiLeaks last month showed Canada had been in the majority of negotiating countries in resisting the IP provisions the U.S. wants. It’s unclear whether Canada’s reported change of stance, along with the shift by other countries, now gives the U.S. the muscle to make the IP provisions part of the final agreement. Negotiations continue under a veil of secrecy, with the latest round wrapping up in Singapore last week.
Council of Canadians trade campaigner Stuart Trew called on the federal government to release the proposed text of the TPP to the public.
“This is a transparent effort to find more profits for U.S.-based pharmaceutical companies by undermining other countries’ efforts to keep health costs down,” he said.
“People have a right to see what other ridiculous trade-offs are happening in the TPP negotiations. The Harper government, and all TPP countries, owe it to everyone to make the full text public now.”
Along with Canada and the U.S., the countries negotiating the TPP are Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
A trade area among those countries would have a population of nearly 800 million and would represent more than 38 per cent of the world economy.
A glass of orange juice in the morning is something many of us take for granted. But that might soon change thanks to a citrus disease affecting every major orange-growing region in the world.
The world’s orange crop is being threatened by “citrus greening,” a bacterial infection carried by a fly that feeds on citrus leaves.
Jack Payne, a senior vice-president of agriculture at the University of Florida, is leading the charge to find a cure in that state where citrus trees are being destroyed in large numbers.
In the science world, the condition is “better known as HLB which stands for huanglongbing, and the reason why it’s become known as citrus greening is that once the tree succumbs to the disease, the fruit remains green,” he explains.
“After about five years, the tree dies, and during that time you have less and less production, the sweetness never develops. It’s a very sour-tasting fruit.”
Citrus greening originated in China and made its first serious impact back in the 1940s and ’50s. But the destruction then was largely regional, among producers in China and Taiwan.
Since then, the disease has spread across much of Asia and, over the past few decades, arrived in the North American and South American growing regions of Florida and Brazil.
Payne says the results have been devastating in Florida where oranges have been the state’s signature crop. “This was first discovered in 2005. Our ag-economists at the university have estimated that since that time there has been a $4-billion loss in revenue to the citrus growers and 6,000 jobs lost.”
Citrus greening has no known cure, apart from additional pesticide use to try to keep the flies away, and additional fertilizer use. But even those techniques haven’t been completely successful, and only kept he disease at bay for a few seasons.
That’s why Payne has been pursuing other avenues, like genetic modification to develop orange varieties that are resistant to the fly.
This week also saw the U.S. Department of Agriculture join the fight in earnest with the announcement that it is creating an “emergency response framework” to tackle the disease.
In the meantime, Florida is inching closer to significant agricultural change.
With 6,000 jobs lost and revenues down billions, oranges may not be the future in Florida. Increasingly, orange farmers are tearing out groves and replacing them with blueberries, strawberries and peaches.
Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts. So far this year, they have yanked out $52.8 billion. In the third quarter alone, as yields were soaring on the Fed’s taper cacophony and as bond values were swooning, net outflows from muni funds reached $32 billion, which according to Thomson Reuters, was more than during any whole year.
Muni investors have a lot to be frazzled about. Municipal bonds used to be considered a safe investment – though that may have been propaganda more than anything else. Munis are exempt from federal income taxes, hence their attractiveness to conservative investors in high tax brackets. Munis packaged into bond funds appealed to those looking for a convenient way to spread the risk over numerous municipalities and states. While the Fed was repressing rates, muni bond funds were great deals.
Then came the bankruptcies.
The precursor was Vallejo, CA, a Bay Area city of 115,000 that filed for Chapter 9 bankruptcy protection in 2008 and emerged two years ago. But it’s already struggling again with soaring pension costs that had been left untouched. Jefferson County, which includes Alabama’s largest city, Birmingham, filed in 2011 when it defaulted on $3.1 billion in sewer bonds, the largest municipal bankruptcy at the time [but it’s already issuing new bonds; read….. Municipal Bankruptcy? Why Not! And so The Floodgates Open].
Stockton, CA, filed in June 2012. Mammoth Lakes, CA, filed in July 2012. San Bernardino, CA, filed in August 2012. They were dropping like flies in the “Golden State.” Detroit filed in July this year, crushing all prior records with its debt of up to $20 billion. That’s $28,000 per person for its population of 700,000.
But Detroit is just a fraction of what is skittering toward muni investors: the Commonwealth of Puerto Rico. The poverty rate is 45.6%. Unemployment is 14.7%. The economy has been in recession since 2006. The labor force has shrunk 16% from 1.42 million in 2007 to 1.19 million in October. The number of working people, over the same period, has plunged from 1.8 million to 1.1 million, a breathtaking 39%.
Puerto Rico had a good run for decades as federal tax breaks lured Corporate America to set up shop there. But when these tax breaks were phased out by 2005, the companies went in search for the greener grass elsewhere. To keep splurging, the government embarked on a borrowing binge that left the now lovingly named “Greece of the Caribbean” with nearly $70 billion in debt.
That’s 70% of GDP, and for its population of 3.67 million, about $19,000 per capita, or about $64,000 per working person. And then there is the underfunded pension system. But unlike Detroit, Puerto Rico is struggling to address its problems with unpopular measures, raising all manner of taxes and cutting outlays. Not even the bloated government payrolls have been spared. Too little, too late? Given the enormous poverty rate and long-term shrinking employment, what are the chances that this debt will blow up?
Pretty good, according to Moody’s Investors Service. Last week, it put $52 billion of Puerto Rico’s debt under review for a downgrade – to junk. Moody’s litany of factors: “Failure to access the public debt market with a long-term borrowing, declines in liquidity, financial underperformance in coming months, economic indicators in coming months that point to a further downturn in the economy, inability of government to achieve needed reform of the Teachers’ Retirement System.” This followed a similar move by Fitch Ratings in November.
Alas, Puerto Rico has swaps and debt covenants with collateral and acceleration provisions that kick in when one of the three major credit ratings agencies issues the threatened downgrade. Which “could result in liquidity demands of up to $1 billion,” explained Moody’s analyst Lisa Heller. It would “significantly narrow remaining net liquid assets.”
Now Puerto Rico is under pressure to show that over the next three months or so it can still access the bond markets at a reasonable rate. If not….
Puerto Rico’s debt was a muni bond fund favorite because it’s exempt from state and federal taxes. Now fears of a default on $52 billion or more in debt are cascading through the $3.7 trillion muni market. But Puerto Rico isn’t alone. Numerous municipalities and some states have ventured out on thinner and thinner ice.
Default risks are dark clouds on the distant horizon or remain unimaginable beyond the horizon. And hopes that disaster can be averted by a miracle still rule the day. However, the Fed’s taper cacophony is here and now, and though the Fed is still printing money and buying paper at full speed, the possibility that it might not always do so hangs like a malodorous emanation in the air.
Taper talk and bankruptcies are a toxic mix for munis. Now add the lure of stocks that have become the official risk-free investment vehicle with guaranteed double-digit rates of return for all years to come. So muni-fund investors, tired of losing money, are seeking refuge in stocks. This has pressured munis further. The Bank of America Merrill Lynch master municipal index has dropped 2.8% and, unless a miracle happens, will end the year in the red. A first since 2008. Its index of bonds with maturities of at least 22 years has skidded almost 6% – though the Fed hasn’t even begun to taper.
The Fed’s easy money policies over the decades encouraged borrowing binges by municipalities and states. When the hot air hissed out of history’s greatest credit bubble in 2008, the Fed’s remedy, its ingenious QE and zero-interest-rate policies, blew an even greater credit bubble – kudos! As that credit bubble transitions from full bloom to whatever comes afterwards, the plight of muni bond funds is just the beginning.
The Fed’s policies of dollar destruction took on a sudden virulent form in 1970 – clearly visible against the Swiss Franc. And it’s still going on. When even the Swiss couldn’t handle it anymore, they too jumped into the currency war. Read…. Mother Of All Currency Wars in One Chart: Dollar Vs. Swiss Franc
We warned last week of the rising nationalism and concerns about Abe’s intentions and this evening the escalating tensions in the East China Sea are clear once again. In an effort to “normalize” an officially ‘pacifist’ policy, a hawkish Abe announced that Japan has tonight increased its military budget notably to buy drones, amphibious vehicles, submarines, and vertical take-off aircraft to boost defenses around the remote Senkaku islands. It seems the farce is getting more surreal as Japan also considers obtaining the means to counter ballistic missiles the point of launch. Why go to war and risk it all by printing and deficit spending your country into oblivion for a ‘purpose’ when you can do it without spilling a drop of blood?
Japan said Tuesday it intends to boost military spending by five percent over the next five years, with a hardware splurge intended to beef up defence of far-flung territories amid a corrosive row with China.
The cabinet of hawkish Prime Minister Shinzo Abe agreed 24.7 trillion yen ($240 billion) would be spent between 2014 and 2019, including on drones, submarines, fighter jets and amphibious vehicles, in a strategic shift towards the south and west.
The shopping list is part of efforts by Abe to normalise the military in Japan, which has been officially pacifist since defeat in World War II. Its well-equipped and highly professional services are limited to a narrowly defined self-defensive role.
New defence guidelines approved by the cabinet on Tuesday said Tokyo will introduce a “dynamic joint defence force,” intended to help air, land and sea forces work together more effectively in the face of danger.
“China … is taking dangerous action that can draw unexpected contingencies,” said the guidelines.
The government will also consider obtaining the means to counter ballistic missiles at the point of launch, according to new security plans which set a total five-year budget of 24.67 trillion yen ($239 billion), up about 1 trillion yen on the previous five-year plan.
Japan will set up a marines-style force to deal with any island incursions, equipping it with 17 tiltrotor aircraft and 52 amphibious vehicles, as well as three surveillance drones, according to documents given to reporters in advance.
Of course, the populism garnered by such a move is worrisome as these two powers engage in a bigger and bigger pissing match; but it seems, as we warned here, that no matter the cost, there may be war. Bear in mind this move comes on top of passing the Secrecy bill last week.
The right to know has now been officially superseded by the right of the government to make sure you don’t know what they don’t want you to know. It might all seems like a bad joke, except for the Orwellian nature of the bill and a key Cabinet member expressing his admiration for the Nazis, “just as Germany needed a strong man like Hitler to revive defeated Germany, Japan needs people like Abe to dynamically induce change.”
We are sure the world (and the BoJ) will be more than happy to fund this latest Keynesian black hole.