Casey Research Daily Dispatch
In recent polls, 65% of Americans said they were against the US government becoming involved in Syria. Yet, the Obama administration has made it abundantly clear that it will now actively support the rebels there.
Disturbingly, our so-called allies in this fight – the anti-Assad rebels – are the sort of people who use suicide bombers to achieve their goals. Which is not surprising given that Al-Qaeda has openly taken a leading role in the opposition the Obama administration now sees fit to support.
And so it is that the very same Al-Qaeda that the US claims is Enemy #1 will soon be receiving weapons from the US, and probably already has.
In one particularly notable display of the world view of our new friends, a prominent rebel leader named Sunni al-Hamad was videotaped snacking on the lung of a dead enemy soldier. The highly placed member of the intelligence community whom I briefly referenced in my last missive told me that the most favorable interpretation of this barbaric act the analysts could come up with was that the fellow was actually trying to eat the heart, but ate the lung instead. This was taken as “favorable” because Commander Cannibal’s lack of basic human anatomy suggested that eating internal organs was not a regular practice among our new BFF.
Now, as to the “bad guy” in this entire drama … he is the son of Hafez al-Assad, the man who in 1973 changed the constitution of Syria to drop the provision that only Muslims could be president… triggering a running battle against Muslim extremists demanding that the country be Muslim and not secular.
In 1987, Syria actually participated in the so-called willing countries in supporting the US invasion of Iraq.
In 2000 Bashar Assad, the second son of Hafez, succeeded to power after his father’s death and five months later ordered the release of hundreds of political prisoners.
Now, that’s not to say that Assad is a wonderful fellow. No one would argue the fact that he’s accustomed to using a hard hand to keep the discontented in line. And given that those discontented are dominated by the sort of folks willing to blow themselves up in pursuit of religious goals (or, at least encourage the more gullible into doing so), the actions of the Assad government have, on occasion, been uncompromising.
As an aside, you may remember that in 2006 our current allies, the radical jihadists that Assad has also been trying to keep a lid on, attacked the US embassy in Damascus… and now we’re on the same side. Funny how a little time heals all wounds, eh?
Even so, until this latest phase in the conflict blew up in 2011, the level of violence was relatively minor.
But that was then. Now, with the place in flames, the death toll has soared with the latest body count at over 100,000 and counting.
Which brings me back to the question above, what the hell is wrong with Obama? Or, more accurately, what the hell is the US government thinking to interject itself in the conflict? Why would we want to hand the largely secular country over to the jihadists? Who wins?
I thought this quote out of an article on the situation by the folks at CATO worth sharing.
Those most serious about intervention, Senators John McCain and Lindsey Graham, want to do everything. Their joint statement demanded: “provisions of arms to vetted Syrian opposition groups, targeted strikes against Assad’s aircraft and SCUD missile batteries on the ground, and the establishment of safe zones inside Syria.” Graham also argued that “you’ve got to get on the ground” to seize chemical weapons stockpiles.
Though I am not privy to any special information on the political calculations of Washington, it sure seems like we are following the script set down by the neocons (Kristol, Wolfowitz, Cheney, Rumsfeld, Abrams, et al.) that years ago infiltrated the US military-political complex. This is the “Might is right” crowd who believe in exercising US power proactively to knock down the dominos of all Middle Eastern countries Israel feels threatened by, with the end goal of remaking the Middle East as a region dominated by friendly democracies (or, in the case of Saudi Arabia, friendly dictatorships). Failing functioning democracies, turning the outcast countries into failed states that pose no real threat to US or Israeli interests in the area also works.
It’s never been a secret that Syria is a prominent domino: as recently as 2009, Israel bombed a site in Syria where they claim secret nuclear research was being conducted. According to the script, after Syria the US will escalate its targeting of Iran.
Given the hostile neighborhood it’s in, it’s understandable that Israel feels the need to act aggressively to dull the threat. Like individuals, nation-states possess finely honed survival instincts.
I do, however, blame President Obama and the State Department and all the many sycophants in government and parasites in businesses that profit from war for once again entangling the country in a foreign conflict. That they do so in the face of overwhelming opposition among the public reveals “government of the people, for the people” as the meaningless platitude it has become.
That our new allies are jihadists who upon taking power will oppress the country like Assad never did, then turn their weapons against the Great Satan that provided them, makes our support of them not just a bad joke but spectacularly bad karma.
Then there’s the tens of thousands of innocents who will suffer and die before this is over. But, hey, it’s the Middle East where life is priced very low, so why should anyone care? The neocons certainly don’t.
I’ve said it before and I will say it again: the constant turmoil in places like Syria, and the hardships it causes to the civilian population, is a damn shame, but it’s not our damn shame. Left to their own devices, maybe – just maybe – they’d finally get their act together.
That the Obama administration would ignore the will of the people and deliberately make the troubles in Syria our own, and freakishly do so in an alliance with jihadists, strikes me as highly suspect and even treasonous.
One can only hope that one shiny day not too far down the road, these people would be held accountable for their actions. Maybe starting by impeaching the president?
I’m not holding my breath.
Death of (the Retirement Dreams of) a Salesman
Last week I played in a semi-serious golf tournament hereabouts. It’s only the second such tournament I’ve played in, and I had great reservations about doing so again. Mainly because of the stress associated with playing tournament golf. As one’s state of mind has a huge effect on one’s state of play, undue stress can result in all manner of bad outcomes. In this tournament, my usually reliable putting went out for coffee and didn’t come back until near the end of the third match, at which point it was way too late.
Even so, I mostly enjoyed the experience and didn’t mind losing as the competition played significantly better than I and were nice fellows, to boot.
I mention this only to set the context of a rather revealing conversation I had over a consolatory beer in the clubhouse. The fellow who so kindly bought me that beer was a sales manager who, over the course of the conversation, revealed to me that he was hoping to retire in the coming year in order to spend his golden years doing little more than playing golf.
Without any urging, he then expressed some concern that the amount of money he had saved up might not be enough to see him through his retirement.
It’s a valid concern: with a steady stream of advances in medicine and the fact that he is a fit 64 years old, his retirement could easily last twenty years. And thirty or even forty years isn’t out of the question.
That’s a lot of time, and a lot of money.
In the way of idle conversation, I asked him how much of his assets he has in the stock market. The answer, “Something over 90%,” made my eyebrow inadvertently twitch.
“What sort of stocks are you in?”
“I don’t know, stuff my broker said I should own. I think I have some stuff in the health industry, but I’m not sure.”
“Have you looked into how the companies you own might fare under ObamaCare?”
“No, I sure hope my broker does, it does kind of worry me.”
“What kind of broker do you use?”
“A full-service one. He’s kind of a friend.”
“And you keep all your money with a single broker?”
“How much commission do you pay on a trade?”
“You don’t know?”
“No, but I seem to recall it’s around 2%.”
“Does your broker live in a pretty nice house? Better than yours?”
“Yeah, he’s very successful.”
As I didn’t want things to get awkward or spoil his happy day, I nudged the topic in a different direction.
Yet when I got home, I couldn’t help but shake my head at the idea that someone could be so unmindful about the funds he is relying on for retirement. Which, reading between the lines, is an amount just a bit over $1,000,000 – the rewards of a lifetime of hard work.
In fact, as far as I could tell, he had committed what might be called the 7 Commandments of Investing.
Thou Shalt Not Over-Concentrate. For starters, his portfolio is way over-concentrated in a single asset class.
Thou Shalt Not Be Ignorant About What You Own, and Why. His portfolio is made up entirely of investments that he doesn’t even know the names of, let alone the basic metrics related to their underlying value or financial soundness 3.Thou Shalt Not Fail to Rebalance After Big Run-Ups. The sector in which he is so heavily invested, US equities, has already had a big run-up. As you can see from the chart here, it is looking perilously close to a near-term top. As an aside, the pattern evident in the chart suggests a trading pattern you might want to use to your advantage. It should continue for awhile – maybe even until the entire Fed-led Ponzi scheme collapses the economy.
Thou Shalt Not Keep Too Much of Your Money in a Single Institution. Effectively, he has all of his money in a single financial institution. As the investors with money on account at MF Global will attest, in today’s world that’s just plain reckless. Very few banks and brokerage houses aren’t entangled in the obscure and impenetrable web of derivatives markets and so are at risk. (This is a topic that David Webb will be addressing in depth at our only Casey Research Summit in 2013, Oct. 4 – 6 in Tucson, Arizona. Details here, registration is limited. )
Thou Shalt Not Blindly Rely on the Advice of a Commissioned Broker. It’s their job to get you to trade. It’s how they earn the money to buy that nice house. Sure, if a commissioned broker provides real value, then they have earned their commission. But you need to do your own homework and not just acquiesce to their every recommendation. That’s how you end up with 90% of your retirement assets at risk in a single investment sector. As an alternative for those who want to leave their investing to a pro, a pure fee-based money manager can make sense as their only goal is (or should be) to impress you so you’ll continue to retain their services.
Thou Shalt Not Fail to Watch Your Investment Expenses. In this case, a full-service broker has been charging him 2% (and maybe more) to under-perform in the sector he has him in up to his ears. And, I suspect, does a fair bit of trading. Essentially, the client takes all the risk and the brokerage house earns a bigger net return. Additionally, if the broker is aggressive, then there’s a good chance he’s not particularly attentive when it comes to short- versus long-term capital gains.
Thou Shalt Not Be Ignorant About Managing Money. Anyone who hopes to maintain and increase their portfolio over time needs to have at least passing familiarity with the fundamentals of investing and managing money. Otherwise you are likely to violate the preceding commandments. And you need to keep yourself informed about the macro-picture for the economy and for the primary asset classes in which you are invested.
These are not easy times to be an investor.
Especially when you consider that global stock markets are now rallying on bad economic news – as that is (correctly) taken as providing an excuse for the Fed to continue the money printing. That should tell you pretty much everything you need to know about the big picture.
As Terry Coxon, co-editor of The Casey Report, recently put it, “The stock market is levitating on QE. When QE ends, the stock market falls to earth.”
Thus, your investment returns depend not only on investing in the right individual asset, but on whether the Fed in all its infinite wisdom (or proven lack thereof) decides to withdraw liquidity… or, as was the case recently, ponders doing so.
Simply put, we will see a lot of volatility between now and when the vultures finally come to rest on the bones of this crisis (either through a deflationary collapse, but more likely an inflationary one). In the interim, the “right” investment for the long term might turn out to be a very wrong investment for the short and medium term.
As to the longer term, again quoting from Terry Coxon, the smartest person I know on central banks and matters related to monetary policy…
“The Fed is not going to exit the business of monetary easing. They may pause now and then, but when they see the results, they will resume. Every hyperinflation has been punctuated with pauses during which the central bank resolved to stop printing, to avoid destroying the currency.”
At the end of the day, for any of us to successfully make it to the other side of this crisis with our assets intact is going to require diversification, bullet-proof income investments, a fair bit of cash, a focus on quality, and, while it may not seem the case at the moment, gold. Of course, we’ll be addressing all those topics and a whole lot more at our Casey Research Summit this October 4 – 6 in Tucson. Hope to see you there.
(Because gold has been much in the news this week, and because he’ll be participating as a faculty member side by side with the audience over the three days of our Summit in Arizona, I thought you might enjoy this quick clip of Jim Rickards sharing his outlook for gold.)
Speaking of the Summit, one of the panels will feature Ron Paul and Doug Casey, among others, addressing the topic of “Politics Gone Wild.” This topic is of no small importance, as the entire world is currently locked into a destructive paradigm of sick nation-states committed to doing “whatever it takes” to maintain the status quo.
Yet, as the result of decades of irresponsible governance driven by political expedience and vote gathering, the underpinning of the status quo has been shattered, and there’s no easy way to put Humpty Dumpty back together again. Consequently, it’s all but certain we’re going to go through social, as well as financial, hardships before this thing is over.
Which delivers me somewhat seamlessly to the next item catching my eye this week…
Failed Expectations, Failing States
There is a parable about a Southern farmer who takes up the challenge of capturing a herd of particularly aggressive feral hogs. The story proceeds with him putting out some food where he knows the hogs will find it. He then continues putting the food out day after day while, at the same time, slowly building a pen around the feeding spot. The story ends with the farmer simply closing the newly constructed gate on the hogs while they are snout-deep in their slops.
If one so desired, however, one could continue the parable as follows…
Some months later, the farmer found himself facing hard financial times and decided he could no longer afford to keep feeding the hogs at the same level. The decision made, the next day he cut back the quantity of their rations and substituted the higher-quality feed he had been dishing out with far less tasty tidbits.
For a few days the hogs waited patiently for their usual rations, but when the farmer failed to come through, the hungry hogs began to fight over the reduced slops provided.
It was not long after that the farmer – confident that the hogs were properly domesticated – let himself into the pen only to find himself surrounded by angry hogs who made him what’s for lunch.
The moral to the longer-version story is that the domesticated hogs will remain docile only for as long as you keep them snout-deep in slops.
Which brings me to the riots in Brazil, the latest footnote on the continuum of the slow-motion global financial collapse now underway.
Simply, years of expanding politically motivated social welfare programs around the world have raised the expectations of the masses to the point where they simply can’t be met.
The results are that growing segments of the previously submissive masses, seeing their slops reduced in both quantity and quality, are now drifting back towards a more feral state. (Note the Mad Max hair in the photo above… yet another example of life mimicking art.)
You can see the problem in this chart showing the federal government’s expenditures by function. While the chart is a little out of date, the trend couldn’t be clearer… or more concerning.
The rapid increase in social spending reflects the unintended consequences of the “chicken in every pot” promises that have become the basis of every election campaign for decades now. This is a picture of what happens when you train the masses to look to the government, and not the free markets, to solve every problem, water every plant, kiss every boo-boo.
Thanks to the surge in socialism, this pattern is mirrored the world over. It’s now projected that Italy will need a bailout from the EU within six months – again due to its unfunded and non-payable social obligations.
Since the latest crisis began, we have seen governments around the world “socialize” the bad debts of failing financial institutions by transferring those debts from private balance sheets to those of the governments (and the central banks). This has only exacerbated an already impossible situation, requiring the widespread adoption of global monetary madness.
Seriously, who in their right mind could possibly think creating trillions in new monetary units in order to support virtually unchecked government spending is a sound and sustainable policy?
Yet that’s exactly the operating model of the leadership in most of the world’s largest economies. I suspect this is so only because they simply don’t see any other way to delay the inevitable.
Flash riots in places like Brazil only encourage these governments to continue acting like monetary sluts in order to keep the public slops flowing. And to the extent that it helps even temporarily mollify the expectations of the masses, expect other equally counter-productive measures as well. In the case of Brazil, its government is seriously levying yet another tax on the successful to pay for the social spending being demanded by the rioters.
And the global economy continues to spiral around the drain.
When might the hard truths become unavoidable? For an answer, I turn to Ayn Rand’s classic Atlas Shrugged…
“Do you wish to know when that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming self-sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.”
Atlas Shrugged, p. 385 (1957)
If Rand is right, we’re getting close.
Meanwhile, for those of you deluded enough to believe the US government will someday soon get its fiscal house in order, the social and political consequences of doing so be damned, here’s a quick snippet from USA Today last week…
WASHINGTON — The U.S. House failed to pass a sweeping five-year farm bill with sharp cuts to food stamps, a surprising development that sets the stage for an uphill fight in Congress to craft a new law.
The Republican-led House soundly rejected a $500 billion measure by a vote of 195-234, failing to muster enough support from conservative Republicans concerned about costs and Democrats and concerned about deep cuts to the country’s popular food stamp program.
Of course, per the above parable, when it comes to keeping hogs and people happy, a steady supply of food is essential. So, do you really think the US government is going to cut back the food stamps now being provided to 1 in 5 households (approximately 50 million people)? Hardly.
The simple reality is that “We the people” took the slops, and the consequences of passing our personal responsibilities to the nation-state are yet to be paid in full.
As the nation-states have no path open to them to continue to meet their obligations – at least no path that doesn’t end in widespread pain – expect things to get very, very bizarre in the months and years just ahead.
A Lesson in Irony… Apropos to the Above Article
The Food Stamp Program, administered by the US DEPARTMENT OF AGRICULTURE, is proud to be distributing this year the greatest amount of free meals and food stamps ever, to 46 MILLION PEOPLE.
Meanwhile, the National Park Service, administered by the US Department of the Interior, asks us, “Please Do Not Feed the Animals.” Their stated reason for the policy is: “The animals will grow dependent on handouts and will not learn to take care of themselves.”
THUS ENDS TODAY’S LESSON IN IRONY.
Leno on the Scandals
“I was going to start off tonight with an Obama joke, but I don’t want to get audited by the IRS.”
On NSA surveillance: “We wanted a president who listens to all Americans – now we have one.”
On a new IRS commissioner: “He’s called ‘acting commissioner’ because he has to act like the scandal doesn’t involve the White House.”
On closing the Guantanamo prison for terrorists: “If he really wants to close it, turn it into a government-funded solar power company. The doors will be shut in a month.”
Concerning the Benghazi, Associated Press, and IRS scandals: “Remember in the old days when President Obama’s biggest embarrassment was Joe Biden?”
On Obama saying he didn’t know about the IRS scandal: “He was too busy not knowing anything about Benghazi to not know anything about the IRS.”
“The White House has a new slogan about Benghazi: Hope and change the subject.”
“It’s casual Friday, which means that at the White House, they’re casually going through everybody’s phone calls and records.”
“It is not looking good for President Obama. Today his teleprompter took the fifth.”
“FOX News has changed its slogan from ‘Fair and Balanced’ to ‘See, I told you so!'”
“These White House scandals are not going away anytime soon. People in Kenya are now saying he’s 100 percent American. That’s how bad it’s gotten.”
On Obama’s commencement address: “He told the young graduates their future is bright – unless, of course, they want jobs.”
On a Chicago man who set a record for riding a Ferris wheel: “The only way to go around and around in a circle that many times is to read the official report on Benghazi.”
On White House claims of ignorance on the scandals: “They took ‘Don’t Ask, Don’t Tell’ out of the Pentagon and moved it into the White House.”
Concerned about NSA Spying?
Here’s one (funny) solution: everyone should begin speaking like a terrorist… here’s the video link.
Donald Grove, The Casey Report‘s man in Washington, sent along the following, which, though true, properly belongs in the Friday Funnies section.
Here’s the text of his email:
“The White House is on a roll this morning. The audacity of this administration! That it would suggest that it has any credibility for instilling financial responsibility in young people just takes my breath away. The secretary of the Treasury will have oversight. That will keep it on the up and up, won’t it?”
Don is referring to the Obama administration’s Executive Order earlier this week establishing The Presidential Advisory Council on Financial Capability for Young Americans (or TPACOFCFYA, for short).
Quoting from the Executive Order…
“By starting early, young people can begin to learn the difference between wants and needs, the importance and power of saving, and the positive and productive role money can play in their lives. Having a basic understanding of money management from an early age will make our young people better equipped to tackle more complex financial decisions in their transition to adulthood, when critical decisions about financing higher education and saving for retirement can have lasting consequences for financial security. Strengthening the financial capability of our young people is an investment in our nation’s economic prosperity.”
Don adds, “How about advising young people to observe the fiscal and monetary practices of the federal government and simply do the opposite at every turn?”
Sounds about right to me.
A Good Laugh
My golf buddy Frank sent this along a few minutes ago. Even though the Friday Funnies is longer than usual, I just had to share it.
It’s the voice of a man leaving a message for his boss when he witnesses a car accident… and the incredible events that then follow. It’s really funny. Here’s a link to the recording.
What the Hell Is Wrong with Obama? – Part Two
This week, the Panderer-in-Chief moved forward with his initiative to curb carbon emissions.
Underscoring the global warming purportedly caused by excessive carbon, a clearly overheated Obama dramatically wiped his face with a white hanky during his out-of-doors announcement. Given that summer in Washington DC is famously hot and humid, maybe some staff member should have scheduled an air-conditioned room for the announcement… oh, wait… silly me, the whole sweating thing was staged! Duh! (Do these people really think that the public consists entirely of gullible morons?)
Quoting Bloomberg on the president’s announcement…
Saying that science had put to rest the question about whether the planet was warming, Obama vowed to use his executive powers to act, arguing that limiting emissions would spur technological advancement and new jobs.
“I don’t have much patience for anyone that denies that this challenge is real,” Obama said in the speech at Georgetown University. “Sticking your head in the sand might make you feel safer, but it’s not going to protect you from the coming storm.”
The irony here is that, at least as far as I can tell, the science tells us nothing of the kind. In fact, for the last seventeen and a half years – a period over which the climate alarmists tell us the planet has been dangerously warming – the planet has shown no warming. Quoting a recent article by Christopher Monckton on the always excellent Wattsupwiththat.com site…
Superimposing the temperature curve and its least-squares linear-regression trend on the statistical insignificance region bounded by the means of the trends on these published uncertainties since January 1996 demonstrates that there has been no statistically significant warming in 17 years 4 months:
And here’s a link to another analysis by a serious scientist that shows just how far off the predictions of global warming have been when compared to actual temperatures.
Sticking with fact versus self-serving fiction, the Centre for Ocean and Ice plotted the daily mean temperature for the Arctic (you know, where the warming is supposedly causing widespread ice melting and a die-off of polar bears) for the period between 1958 and 2013. It, too, found no statistically meaningful deviation from the mean in 2013. Here’s the link.
So, let me ask again… what the hell is wrong with Obama?
Why would he use the powers of the executive to unleash yet another bungling army of bureaucrats and foist yet another expensive body of regulations upon the nation – and do so at such a precarious time for the economy… a period when businesses need help, not hindrance?
I can only assume he is doing so not because he is ignorant about the science, but because he is pandering to the “progressives” (a misnomer that, corrected, would read “regressives”) and others his party needs the support of in order to prevail in the next election.
Fortunately, slowly and steadily the truth will come out. My favorite recent public turnaround was delivered by the mayor of London, the straight-talking Boris Johnson, in an article he penned for the Telegraph titled, The Weather Prophets Should Be Chucked in the Deep End.
A relevant quote:
For more than 20 years now, we have been told that this country was going to get hotter and hotter and hotter, and that global warming was going to change our climate in a fundamental way. Do you remember that? We were told that Britain was going to have short, wet winters and long, roasting summers. It was going to be like 1976 all over again, with streakers at Lord’s and your Mr Whippy melting before you could even lick it, and Hyde Park scorched into a mini Kalahari.
They said we were never going to have snow again, and that we should prepare for southern England to turn gradually into a Mediterranean world. There were going to be olive groves in the Weald of Kent, and the whole place was going to be so generally broiling in summer that no one would be able to move between noon and 4pm, after which people would come out to play boules and sip pastis, to the whine of a mandolin, in the dusty square that had once been a village green.
That’s what they said: the BBC, and all the respectable meteorologists – and I reckon there were tens of thousands of people who took these prophecies entirely seriously. Omigod, they said to themselves, we are all going to fry.
He goes on to suggest, tongue-in-cheek, that every English homeowner who anticipated taking advantage of the pending warmer climate by building a swimming pool should be able to file a claim against the government for reimbursement.
In that same vein, I would propose that the tab for hundreds of billions in wasted taxpayer funds on electric cars, solar, and so forth be divided up and sent for payment to Obama, Al Gore, and anyone else found to have profited – financially or politically – from climate alarmism.
Some of the money collected could be spent trying to deprogram a generation of state-schooled students who now unquestionably accept the bad science of manmade climate warming, despite the huge body of science pointing to the contrary.