Sunday, September 30, 2012

Signs Of Impending Failure

The United States is not the only one with massive economic problems right now. The truth is that just about wherever you look around the globe things are getting even worse. China is experiencing a substantial economic slowdown, and Japan has resorted to yet another round of money printing in an effort to keep the Japanese economy moving. Unemployment in Europe continues to get even worse, and the riots this week in Spain and in Greece have been absolutely frightening at times.

In the United States there are a whole host of signs that another recession is approaching, and the number of American CEOs that say that they plan to eliminate jobs in the coming months is rapidly rising. The world economy is more interconnected today than ever before, and that means that we are all in this together. Just remember what happened back in 2008 and 2009.

From the Economic Collapse blog this article discussing reasons  why things are in fact getting worse not better. I believe that after the elections the happy talk in the mainstream will dry up and the news will get worse as little as they may want to tell us about it. Here are a few reasons why we may draw the conclusion that we are being lied to!

The economic pain that started on Wall Street was felt in every corner of the planet. So anyone that believes that the United States (or any other major nation for that matter) is going to escape the next wave of the economic crisis is simply not being realistic. Why do you think central banks all over the world are in "panic mode" right now? They are firing all of their ammunition and printing money like there is no tomorrow in an attempt to keep the system together. Unfortunately, it is not going to work.

If the powers that be had an "easy button" that would quickly fix everything, they would have pressed it by now. But despite all of their efforts things continue to unravel. If you want to get an idea of where we are headed, just look at what is already happening in Europe. Unemployment has risen above 24 percent in Greece and above 25 percent in Spain.

Those two nations are on the "bleeding edge" of the next wave of economic problems. Unemployment is rising almost everywhere else in Europe as well, and things are eventually going to get really bad in Asia and in North America too.

So hold on to your seat belts - it is going to be a bumpy ride.

The following are 14 signs from around the globe that the world economy is getting weaker....

#1 Things in China do not look good right now. The Shanghai Composite index fell to its lowest point in over 3 years earlier this week. Will the S&P 500 soon follow suit?

#2 The Bank of Japan has resorted to yet another round of money printing in a desperate attempt to try to bolster the faltering Japanese economy....

In Asia, the Bank of Japan has long been manufacturing money out of thin air. It has just announced an eighth round of money printing to prop up the ailing Japanese economy. The Bank of Japan is to purchase 10 trillion yen of bonds to add further liquidity into the financial system. Now it has 80 trillion yen of bonds in its portfolio, equivalent to 20 per cent of Japan's gross domestic product.

#3 In Spain, violent demonstrations over the state of the Spanish economy just outside the national Parliament building in Madrid on Tuesday evening made headlines all over the globe. You can view video of police brutally beating young Spanish protesters during those demonstrations on the Internet.

#4 As unemployment hovers around the 25 percent mark, foraging through garbage bins for food has become so rampant in Spain that one city has actually started putting locks on supermarket garbage bins "as a public health precaution".

#5 Despite all of the money printing that the ECB has been doing, the yield on 10 year Spanish bonds has risen back up to about 6 percent again.

#6 The economic protests in Greece are getting completely and totally out of control. Just check out this description of the "Day of Rage" that took place in Greece earlier this week....

Police fired stun grenades and tear gas at protesters last week as tens of thousands poured into the streets of Athens as part of a nationwide strike to challenge a new round of austerity measures that are expected to cut wages, pensions and healthcare once again.

Dozens of youths, some masking their faces with helmets and T-shirts, hurled Molotov cocktails and rocks at police who fired back in an effort to scatter the angry crowds around the parliament building. More than 50,000 people are believed to have participated in the mass walk-out in Athens alone.

#7 The unemployment rate in France has risen for 16 months in a row and is now the highest that it has been in over a decade.

#8 As I wrote about recently, the number of unemployed workers in Italy has increased by more than 37 percent over the past year.

#9 New orders for durable goods in the United States fell by a whopping 13.2 percent in August. That was the largest decline that we have seen since the middle of the last recession (January 2009).

#10 According to the Bureau of Economic Analysis, U.S. GDP only grew at a 1.3 percent annual rate during the second quarter of 2012 as opposed to the 1.7 percent annual rate previously reported.

#11 The U.S. Postal Service is about to experience its second financial default in just the past two months....

The U.S. Postal Service will default this week on a $5.6 billion congressionally mandated obligation to pre-fund retiree health benefits, marking the second time in two months the cash-strapped agency has done this.

#12 It looks like General Motors is on a path that will lead to bankruptcy (again).

#13 According to a recent survey conducted by State Street Global Advisors, 71 percent of "investors in a survey of 300 around the world, including the largest pension funds, asset managers and private banks, fear an imminent Lehman-like event."

#14 According to a recent survey of American CEOs by Business Roundtable, the number of CEOs that plan to eliminate jobs has risen significantly from earlier this year....

The CEOs’ decline in confidence comes alongside a worsening employment outlook. Thirty-four percent of the 138 CEOs surveyed said in this quarter’s survey that they expected their companies to cut jobs in the next six months, compared to just 20 percent in the second quarter. Likewise, only 29 percent say they expect employment to grow in the next half year, down from 36 percent last quarter. But the mainstream media in the United States would like us to believe that everything is getting better.

The mainstream media would like us to believe that QE3 is going to stimulate lots of new hiring all over America, and they are greatly celebrating the fact that the S&P 500 hit a five year high on Thursday.

Well, those on Wall Street should celebrate this monetary "sugar high" while they still can. Of course QE3 was going to cause stock prices to rise in the short-term, but the reality of the matter is that QE3 is not going to do a thing to stop the financial markets from crashing when the time comes for them to crash.

Economies tend to flourish in a stable, predictable environment. When you start recklessly printing money, it may help your economic numbers in the short-term, but it disrupts the stability of the system.

And once you have created a tremendous amount of instability, it is really, really hard to convince people that you can create stability once again.

When it comes to economics, confidence is one of the most important ingredients. If people lose confidence in the system, it almost does not matter what else you do.

As I wrote about the other day, quantitative easing worked for the Weimar Republic for a little while, but in the end it resulted in total disaster.

It will also end in total disaster for us.

All over the globe financial authorities are playing all sorts of games in an attempt to keep the system functioning smoothly. But these games are going to steadily undermine confidence in the system, and that is going to prove to be absolutely deadly.

Take advantage of this period of relative stability while you still can, because when it is gone it is not coming back.

Friday, September 28, 2012

Rotting America

The fabric of our lives is turning to mulch according to the blog Economic Collapse.

You can tell a lot about a nation by the condition of the infrastructure. So what does our infrastructure say about us? It says that we are in a very advanced state of decay. At this point, much of America is being held together with spit, duct tape and prayers. Our roads are crumbling and thousands of our bridges look like they could collapse at any moment. Our power grid is ancient and over a trillion gallons of untreated sewage is leaking from our aging sewer systems each year. Our airports and our seaports are clogged with far more traffic than they were ever designed to carry.

Approximately a third of all of the dam failures that have taken place in the United States since 1874 have happened during the past decade. Our national parks and recreation areas have been terribly neglected and our railroads are a bad joke. Hurricane Katrina showed how vulnerable our levees are, and drinking water systems all over the country are badly outdated. Sadly, at a time when we could use significant new investment in infrastructure, our spending on infrastructure is actually way down. Back during the 50s and the 60s, the U.S. was spending between 3 and 4 percent of GDP on infrastructure. Today, that figure is down to about 2.4 percent. But of course we don't have any extra money to spend on infrastructure because of our reckless spending and because of the massive amount of debt that we have accumulated.

While the Obama administration is spending more than half a million dollars to figure out why chimpanzees throw poop, our national infrastructure is literally falling apart all around us. Once upon a time nobody else on the planet could match our infrastructure, and now we are in the process of becoming a joke to the rest of the world.
The following are 21 facts about America's failing infrastructure that will blow your mind....

#1 The American Society of Civil Engineers has given America's crumbling infrastructure an overall grade of D.

#2 There are simply not enough roads in the United States today. Each year, traffic jams cost the commuters of America 4.2 billion hours and about 2.8 million gallons of gasoline.

#3 It is being projected that Americans will spend an average of 160 hours stuck in traffic annually by the year 2035.

#4 Approximately one-third of all roads in the United States are in substandard condition.

#5 Close to a third of all highway fatalities are due "to substandard road conditions, obsolete road designs, or roadside hazards."

#6 One out of every four bridges in America either carries more traffic than originally intended or is in need of repair.

#7 Repairing all of the bridges in the United States that need repair would take approximately 140 billion dollars.

#8 According to the U.S. Chamber of Commerce, our decaying transportation system costs the U.S. economy about 78 billion dollars annually in lost time and fuel.

#9 All over America, asphalt roads are being ground up and are being replaced with gravel roads because they are cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt roads into gravel roads, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.

#10 There are 4,095 dams in the United States that are at risk of failure. That number has risen by more than 100 percent since 1999.

#11 Of all the dam failures that have happened in the United States since 1874, a third of them have happened during the past decade.

#12 Close to half of all U.S. households do not have access to bus or rail transit.

#13 Our aging sewer systems spill more than a trillion gallons of untreated sewage every single year. The cost of cleaning up that sewage each year is estimated to be greater than 50 billion dollars.

#14 It is estimated that rolling blackouts and inefficiencies in the U.S. electrical grid cost the U.S. economy approximately 80 billion dollars a year.

#15 It is being projected that by the year 2020 every single major container port in the United States will be handling at least double the volume that it was originally designed to handle.

#16 All across the United States, conditions at many of our state parks, recreation areas and historic sites are deplorable at best. Some states have backlogs of repair projects that are now over a billion dollars long.... More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York's are at least $1 billion. Hawaii officials called park conditions "deplorable" in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.

#17 Today, the U.S. spends about 2.4 percent of GDP on infrastructure. Meanwhile, China spends about 9 percent of GDP on infrastructure.

#18 In the United States today, approximately 16 percent of our construction workers are unemployed.

#19 China has plans to build 55,000 miles of highways by the year 2020. If all of those roads were put end to end, it would be longer than the total length of the entire U.S. interstate system.

#20 The World Economic Forum ranks U.S. infrastructure 23rd in the world, and we fall a little bit farther behind the rest of the developed world every single day.

#21 It has been projected that it would take 2.2 trillion dollars over the next 5 years just to repair our existing infrastructure. That does not even include a single penny for badly needed new infrastructure.

So where did we go wrong? Well, one of the big problems is that we have become a very materialistic society that is obsessed with short-term thinking. Investing in infrastructure is something that has long-term benefits, but these days Americans tend to only be focused on what is happening right now and most politicians are only focused on the next election cycle. Another major problem is that there is so much corruption and waste in our system these days. The government certainly spends more than enough money, but very little of that money is spent wisely.

 A lot of the money that could be going toward rebuilding our infrastructure is being poured down the toilet instead. For much more on this, please read my previous article entitled "16 Sickening Facts That Show How Members Of Congress And Federal Workers Are Living The High Life At Your Expense".

Unfortunately, it is probably appropriate that our infrastructure is decaying because we are decaying in just about every other way that it is possible for a society to decay. We are decaying economically, politically, mentally, emotionally, physically, morally and spiritually. We are a complete and total mess.

So why shouldn't what is happening to our infrastructure on the outside match what is happening to us as a nation on the inside? And sadly, we simply do not have the money that we need for infrastructure because of all the debt that we have piled up. The federal government, our state governments and our local governments are all struggling to stay afloat in an ocean of red ink, and unfortunately that means that spending on infrastructure is likely to be cut even more in the years ahead. So get used to rotting, crumbling, decaying infrastructure. What you see out there right now is only just the beginning.

Wednesday, September 26, 2012

Climate Change and Food Production

From the London School of Economics this discussion of how crops and agriculture are going to be forced to undergo changes thanks to changes in climate. I recently reread Guns Germs and Steel by Jared Diamond and I was struck by the fact that according to his thesis crops grown in abundance in the Middle east some ten thousand years ago gave the Middle east and Europe a leg up on the path to civilization and power. These cultures now find that those abundant crops from the Golden Crescent of the Euphrates and Tigris Rovers now face a changing climate and new  tolerant crops with high yield will need to be found to feed many, perhaps too many people.

Food is one of society's key sensitivities to climate. A year of not enough or too much rainfall, a hot spell or cold snap at the wrong time, or extremes, like flooding and storms, can have a significant effect on local crop yields and livestock production. While modern farming technologies and techniques have helped to reduce this vulnerability and boost production, the impact of recent droughts in the USA, China and Russia on global cereal production highlight a glaring potential future vulnerability.
There is some evidence that climate change is already having a measurable affect on the quality and quantity of food produced globally. But this is small when compared with the significant increase in global food production that has been achieved over the past few decades. Isolating the influence of climatic change from all the other trends is difficult, but one recent Stanford University study found that increases in global production of maize and wheat since 1980 would have been about 5% higher were it not for climate change. All else being equal, rising carbon dioxide concentrations – the main driver of climate change – could increase production of some crops, such as rice, soybean and wheat.
However, the changing climate would affect the length and quality of the growing season and farmers could experience increasing damage to their crops, caused by a rising intensity of droughts, flooding or fires. The latest IPCC report predicted improving conditions for food production in the mid to high latitudes over the next few decades, including in the northern USA, Canada, northern Europe and Russia. Conversely, parts of the subtropics, such as the Mediterranean region and parts of Australia, and the low latitudes, could experience declining conditions. For example, across Africa, yields from rain-fed agriculture could decline by as much as 50% by 2020. Beyond this, if global temperatures rise by more than about 1–3°C, declining conditions could be experienced over a much larger area. The future course of global food production will depend on how well societies can adapt to such climatic changes, as well as the influence of other pressures, such as the competition for land from biofuel production.
The IPCC concluded that in the poorer, low-latitude countries, climate change could seriously challenge the capacity to adapt for a warming of more than 3°C. The richer, higher latitude countries are likely to have a greater capacity to adapt and exploit changing climatic conditions. But we can't ignore the potential for "surprises" down the line. There are many uncertainties in such predictions. The world has not seen such changes in climate for millennia, and so it is impossible to know how our agricultural systems will react in the real world. For example, the complex interlinkages with the impacts of climate change on pests, diseases and pollinators, like bees, are largely unknown. Also, climate models have difficulty in accurately predicting the detailed local environmental changes that are important for food production, particularly weather extremes.
A looming vulnerability is the world's fisheries, which provide an important source of protein for at least half the world's population. Fisheries are already stressed by overexploitation and pollution. Warming surface waters in the oceans, rivers and lakes, as well as sea level rise and melting ice, will adversely affect many fish species. Some marine fish species are already adapting by migrating to the high latitudes, but others, such as Arctic and freshwater species, have nowhere to go. The absorption of carbon dioxide emissions by the oceans also has a direct impact on marine ecosystems through ocean acidification. But what does this mean for food security – the price and availability of food for the world's seven billion people? A 2011 Foresight report concluded that climate change is a relatively small factor here, at least in the short term, when compared with the rapid increases in global food demand expected in the next decade.
On current projections, by 2050 there will be between one and three billion additional mouths to feed. As people become wealthier, they also demand more food and disproportionally more meat, which requires far more land and water resources per calorie consumed. When these factors are combined, it points toward a future of increasing and more volatile food prices. As was seen during the 2007–08 food price spikes, the poorest countries and communities will be hit first and hardest. The Foresight report concluded that international policy has an important role to play here – today, despite plentiful supplies of food globally, almost one billion people are undernourished. Finally, food production itself is a significant emitter of greenhouse gases, as well as a cause of environmental degradation in many parts of the world. Agriculture contributes about 15% of all emissions, on a par with transport.
When land conversion and the wider food system are taken into account the total contribution of food may be as high as 30%. This means that to limit the long-run impacts of climate change, food production must become not only more resilient to climate but also more sustainable and low-carbon itself. •
This article was written by Nicola Ranger of the Grantham Research Institute on Climate Change and the Environment at LSE in collaboration with the Guardian

Monday, September 24, 2012

3rd World Greece

On  a vacation to the Dominican Republic I remember flying over Haiti and looking down at a brown lump of land. apparently devoid of trees right up to the line that marks the land border with the Dominican Republic. Haiti, the poorest  country in the Americas has long been spiralling into ever more intense poverty that robs the land of its future as its desperate people consume every last natural resource in reach in an attempt to stay alive. As ghastly as that is, the situation is now showing itself in Europe, in the ancient seat of European civilization.
Greek consumers are seeking out alternative ways of heating their homes as, at 1.30 to 1.40 euros per liter, the price of heating oil has become prohibitive for many following the increase of the special consumption tax to 80 percent of that on diesel.
In large cities, although most heating oil tanks have been filled since April, when the price stood at just 1.05 euros/l, more and more people are taking the decision not to turn on their central heating this winter unless the temperature drops to very low levels. In rural areas, and particularly in northern Greece, the majority of consumers made the switch last year, opting mostly for fireplaces and wood stoves, while demand for wood and pellets has soared. Demand for wood is showing a 100 percent increase compared with last year.
Traders estimate there will be a serious shortage this winter while the average price of firewood has risen by some 10 percent from last year. High demand for wood has led to a massive increase in illegal logging in mountainous regions of the country, where forests and even orchards are being depleted, along with a rise in illegal sales. There has also been a considerable increase in wood imports from Bulgaria, which, according to traders, covers some 90 percent of demand in Macedonia. The market estimates that this year’s rise in the price of heating oil means it’s 60 percent cheaper to heat one’s home by burning wood, with urban dwellers catching on fast despite the technical difficulties of building a fireplace or installing a wood stove in apartments. “I do not see us moving any [fuel] trucks this year.
At Koropi the number of wood traders has grown from five to 30 and at Anavyssos from three to 25,” the president of the Federation of Fuel Traders of Greece, Michalis Kiousis, told Kathimerini, referring to areas in eastern Attica. He added that the losses suffered by heating oil sales last season were largely reduced in April as consumers rushed to fill their tanks ahead of further price hikes. Countryside fuel stations whose turnover relied mostly on heating oil will now have to shut down, says Kiousis.
However, fuel stations across the country are feeling the effects of the change in consumers’ home-heating practices. Very few trading companies now sell fuel on credit, he notes, as most prefer cash transactions, while a number of companies have been demanding cash in advance since last year. In Attica, Thessaloniki and Thessaly, where natural gas networks have been installed, there has been an increase in connections since last year. Last winter, it was 19 percent cheaper to heat one’s home with natural gas from the Attica Gas Supply Company than with heating oil, while this October the saving will rise to 35 percent.
Due to the steep rise in the price of heating oil, the Finance Ministry is seeking fair criteria for the payment of heating oil benefits as it recognizes that a major portion of consumers are unable to cover the cost involved. Yiannis Psychogios, the head of the Association of Oil Product Trading Companies, says the heating oil price hike is the biggest problem his sector is facing. He estimates that the drop in demand will amount to 20-40 percent year-on-year. The average cost of the various heating systems per year is now estimated as follows: Heating oil -- 3,000-4,000 euros, natural gas -- 2,100-2,800 euros, pellet burners -- 1,100-1,400, air-conditioning units -- 800-1,000, wood stoves or energy-saving stoves -- 500-700 euros.

Sunday, September 23, 2012

Preventing Terrorism

I happened on found this essay on my favorite (and perhaps only!) Miami blog,( ) and realised how appropriate this essay is on this day when I am flying to Iowa to pick up a scooter (as a result this blog will likely go dormant for a week!). I hate flying, I hate the check points and the general helplessness of the modern cattle car version of commercial flight. I would never fly if I could get away with taking the time to drive (or sail). Apparently I am not alone. here is some food for thought on flying terrorism and surveillance in modern America:

I've been spending a lot of time in airports lately. A lot of time waiting in lines to pass through TSA security checkpoints. Time watching a heavy-handed, cumbersome, Department of Motor Vehicles mentality that is the insistent marker of TSA checkpoints.

It is time to change how Americans are being herded into a national security landscape on the retail level, that seems hopelessly driven by a down-market bureaucracy.

True, there have been no airline hijackings in the US since 9/11/2001. But there would have been no 9/11 if our elected officials had been vigilant.

It was all there: the information, the data, the intel that Al Qaeda was coordinating a major attack on US soil, as a New York Times editorial on the 9/11 anniversary, reminds us.

The other day my wife was singled out for a random security check at LAX. My wife is in her sixth decade. The check involved a TSA screener not only feeling her body, but also putting fingers along inside the waist hem of her blue jeans. Excuse me?

Yesterday's OPED in the New York Times by Kurt Eichenwald reminds me that it was political incompetence that changed America. What worries me most is that there is no road map for dialing back government surveillance and national security initiatives. Every day the TSA illustrates how we have become captives of our own incompetence.

What am I saying? A couple of things. The explosion of domestic surveillance (and presumably human intelligence gathering) by the US national security apparatus has a very high likelihood of identifying terrorist plots within the United States before they are executed.The chance of the TSA stopping a well-coordinated terrorist attack is, in my opinion, nil. The chances of someone slipping through the TSA checkpoints? Fairly high.

The probability of identifying every plot against citizens may never be better than predicting the weather. So why do we behave as though we can, as retail travelers at airports?

The enormous problem that overshadows even those threats to our security that are real and present danger, is that a ponderous, wealthy and cosseted security infrastructure has created its own support system. How do you back it down, now?

Is it even possible to ratchet back, when every vested interest in national security spending and infrastructure has set its alarm bell to ring, at the first hint, scent or indication of a calamity averted or caused?

I don't mean to diminish the horror of 9/11, the lives lost, and tragedy imprinted on families. But part of me looks at the TSA security checkpoints every time I travel and thinks, the bad guys won.

The bad guys not only put us on the defensive, they have apparently done so permanently. Al Qaeda used box cutters to rearrange the playing field so our democratic freedoms now conform with the same instinct that organizes their hatreds. We are all victims, taking off our shoes, belts, and removing all coins from our pockets.

On the one hand, I understand that the TSA security checkpoints are a price we pay for a world made small by technology and freedom of access and movement to anyone with an airline ticket and identification. How would I like being on a passenger flight commandeered by terrorists because we "let down our guard"? Not at all.

Still. Tear down those TSA checkpoints, Congress.

Keeping America safe from terrorism depends, in the end, on a few elected officials paying attention and not falling asleep. 9/11 could have been prevented. Stopping the next 9/11 is consuming billions if not hundreds of billions of tax dollars. TSA security checkpoints are as effective as putting your seat in the upright position on take-off and landing. We can do better, without. Click, read more for the NY Times OPED by Kurt Eichenwald)

The Deafness Before the Storm

IT was perhaps the most famous presidential briefing in history.

On Aug. 6, 2001, President George W. Bush received a classified review of the threats posed by Osama bin Laden and his terrorist network, Al Qaeda. That morning’s “presidential daily brief” — the top-secret document prepared by America’s intelligence agencies — featured the now-infamous heading: “Bin Laden Determined to Strike in U.S.” A few weeks later, on 9/11, Al Qaeda accomplished that goal.

On April 10, 2004, the Bush White House declassified that daily brief — and only that daily brief — in response to pressure from the 9/11 Commission, which was investigating the events leading to the attack. Administration officials dismissed the document’s significance, saying that, despite the jaw-dropping headline, it was only an assessment of Al Qaeda’s history, not a warning of the impending attack. While some critics considered that claim absurd, a close reading of the brief showed that the argument had some validity.

That is, unless it was read in conjunction with the daily briefs preceding Aug. 6, the ones the Bush administration would not release. While those documents are still not public, I have read excerpts from many of them, along with other recently declassified records, and come to an inescapable conclusion: the administration’s reaction to what Mr. Bush was told in the weeks before that infamous briefing reflected significantly more negligence than has been disclosed. In other words, the Aug. 6 document, for all of the controversy it provoked, is not nearly as shocking as the briefs that came before it.

The direct warnings to Mr. Bush about the possibility of a Qaeda attack began in the spring of 2001. By May 1, the Central Intelligence Agency told the White House of a report that “a group presently in the United States” was planning a terrorist operation. Weeks later, on June 22, the daily brief reported that Qaeda strikes could be “imminent,” although intelligence suggested the time frame was flexible.

But some in the administration considered the warning to be just bluster. An intelligence official and a member of the Bush administration both told me in interviews that the neoconservative leaders who had recently assumed power at the Pentagon were warning the White House that the C.I.A. had been fooled; according to this theory, Bin Laden was merely pretending to be planning an attack to distract the administration from Saddam Hussein, whom the neoconservatives saw as a greater threat. Intelligence officials, these sources said, protested that the idea of Bin Laden, an Islamic fundamentalist, conspiring with Mr. Hussein, an Iraqi secularist, was ridiculous, but the neoconservatives’ suspicions were nevertheless carrying the day.

In response, the C.I.A. prepared an analysis that all but pleaded with the White House to accept that the danger from Bin Laden was real.

“The U.S. is not the target of a disinformation campaign by Usama Bin Laden,” the daily brief of June 29 read, using the government’s transliteration of Bin Laden’s first name. Going on for more than a page, the document recited much of the evidence, including an interview that month with a Middle Eastern journalist in which Bin Laden aides warned of a coming attack, as well as competitive pressures that the terrorist leader was feeling, given the number of Islamists being recruited for the separatist Russian region of Chechnya.

And the C.I.A. repeated the warnings in the briefs that followed. Operatives connected to Bin Laden, one reported on June 29, expected the planned near-term attacks to have “dramatic consequences,” including major casualties. On July 1, the brief stated that the operation had been delayed, but “will occur soon.” Some of the briefs again reminded Mr. Bush that the attack timing was flexible, and that, despite any perceived delay, the planned assault was on track.

Yet, the White House failed to take significant action. Officials at the Counterterrorism Center of the C.I.A. grew apoplectic. On July 9, at a meeting of the counterterrorism group, one official suggested that the staff put in for a transfer so that somebody else would be responsible when the attack took place, two people who were there told me in interviews. The suggestion was batted down, they said, because there would be no time to train anyone else.

That same day in Chechnya, according to intelligence I reviewed, Ibn Al-Khattab, an extremist who was known for his brutality and his links to Al Qaeda, told his followers that there would soon be very big news. Within 48 hours, an intelligence official told me, that information was conveyed to the White House, providing more data supporting the C.I.A.’s warnings. Still, the alarm bells didn’t sound.

On July 24, Mr. Bush was notified that the attack was still being readied, but that it had been postponed, perhaps by a few months. But the president did not feel the briefings on potential attacks were sufficient, one intelligence official told me, and instead asked for a broader analysis on Al Qaeda, its aspirations and its history. In response, the C.I.A. set to work on the Aug. 6 brief.

In the aftermath of 9/11, Bush officials attempted to deflect criticism that they had ignored C.I.A. warnings by saying they had not been told when and where the attack would occur. That is true, as far as it goes, but it misses the point. Throughout that summer, there were events that might have exposed the plans, had the government been on high alert. Indeed, even as the Aug. 6 brief was being prepared, Mohamed al-Kahtani, a Saudi believed to have been assigned a role in the 9/11 attacks, was stopped at an airport in Orlando, Fla., by a suspicious customs agent and sent back overseas on Aug. 4. Two weeks later, another co-conspirator, Zacarias Moussaoui, was arrested on immigration charges in Minnesota after arousing suspicions at a flight school. But the dots were not connected, and Washington did not react.

Could the 9/11 attack have been stopped, had the Bush team reacted with urgency to the warnings contained in all of those daily briefs? We can’t ever know. And that may be the most agonizing reality of all.

Kurt Eichenwald, a contributing editor at Vanity Fair and a former reporter for The New York Times, is the author of “500 Days: Secrets and Lies in the Terror Wars.”

Friday, September 21, 2012

Food Or Fuel?

The French government is moving to do what the US government should have done long ago, which is to stop growing fuel and use the corn as food. Ethanol is a massive government give away to the private sector and it only helps increase food prices. The news bureau of the EU reports changes are coming in Europe.

A French plan to fight food price volatility took further shape yesterday (12 September) with a call to pause global development of biofuels, just a day after President François Hollande pushed for creation of strategic food stocks.

A government spokeswoman, speaking after a cabinet meeting, said France would “push for a pause in the development of biofuels competing with food."

The plan is forming in response to the third global food price spike in four years, this time sparked by the worst US drought in over half a century and persistent dry conditions in other key cereal producing areas that revived memories of unrest from 2007/08's food emergency.

Hollande earlier said he was in talks with other heads of state to launch strategic stockpiles of agricultural commodities, one of the boldest measures yet to tame volatile food prices.

Although it was unclear whether Hollande would succeed in convincing major players such as the United States or China to agree on strategic food stocks, potentially a difficult and costly challenge, Italy has already backed the French initiative.

The biofuels move is in line with a bid by the European Union executive to impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, as shown in draft EU legislation seen by Reuters.

The European Commission's plan still needs to be approved by EU government and lawmakers.

Biofuels are made mostly of grains and oilseeds. Prices soared to record highs this year due to drought in the U.S. Midwest and the Black Sea region.

Internally, France already plans to cap at 7% - the current level - the use of crop-based biofuels in fuels, a read-out of a cabinet meeting showed.

The UN Food and Agriculture Organization called last month for a relaunch of the debate on biofuel policies and for a look at ways to make them more flexible to reduce the risk of food crises and stepped up the pressure on the United States to change its biofuel policies.

France's calls to ease so-called first generation biofuels, also widely used in sugar cane-based ethanol in Brazil, is a new sign of the country's efforts to prevent price spikes.

Thursday, September 20, 2012

Oil Prices

From 24/7 Wall Street we hear that oil prices are going to spike once again, as if they haven't already, following the Federal Reserve's recent announcement of endless money printing until the recovery takes hold. That the recovery is a chimera promoted by the election cycle seems out of the grasp of most Americans, including reporters. Increasing oil prices just make life harder, never mind the false "recovery."

Driven mostly by the Federal Reserve’s QE3 announcement, WTI crude prices leapt to within a few pennies of $100, and Brent is above $117. WTI crude prices already had moved up sharply from the June low of just above $80. Economists can once again begin to make cases that high oil prices will dampen whatever GDP expansion there is in the United States and can also overwhelm any positive effects of the Fed’s actions. The bearish forecasts will be fair.

Although oil prices spread throughout the economy because of the use in refined crude for everything from petrochemicals to heating oil, the number that catches the most attention is always gasoline prices — probably because nearly everyone in America older than 16 years old drives.

The AAA Fuel Gauge puts the price of a gallon of regular gasoline nationwide at $3.871, up from $3.709 a month ago. In heavily populated states, which include California, New York, Michigan and Illinois, the price of a gallon of regular on average is already over $4. The national average could certainly move back toward the $4 before the holiday season, as oil prices rise, even though oil and gas prices are not directed linked.

Some experts believe that gas prices had a hand in the slowing of a recovering economy last spring. That can never be proven entirely, but based on the lack of discretionary income among the poor and middle class, it is a plausible theory.

The economy already has moved toward another major set of tests, and high gas prices would add to the severity of those. The fiscal cliff and a lack of momentum during the holiday shopping season could each cripple gross domestic product at the end of this year and well into next. Gas prices have both a real effect that could magnify these problems, and the psychological effect based of the price pushing through a level — the power of which at precisely $4 is only imaginary.

The imaginations of many Americans may be the most substantial barrier to a full-blown recovery.

Read more: The Oil Price Dilemma Returns - 24/7 Wall St.

Wednesday, September 19, 2012

Water Shortages

Reported in a US cattle men's magazine of all outlets, this serious discussion of a critical issue. When we lack water we lack an essential tool for sustaining life. Consider how important this issue is and how little it gets top billing in the press.

The world must confront a looming water shortage or the political impact may be devastating. That’s the warning from a new report issued jointly this week by the InterAction Council (IAC), a group of 40 prominent former government leaders and heads of state, United Nations University, and Canada’s Walter and Duncan Gordon Foundation.

Former Canadian Prime Minister and IAC co-chair Jean Chrétien, said, the impact of water scarcity “will lead to some conflicts. Using water the way we have in the past simply will not sustain humanity in the future. The IAC is calling on the United Nations Security Council to recognize water as one of the top security concerns facing the global community.”

The report, “The Global Water Crisis: Addressing an Urgent Security Issue,” compiles many factors contributing to deteriorating water security worldwide, and 23 international water experts identify a host of serious security, development and social risks associated with the water crisis, including food, health, energy and equity issues.

Specifically, the report says the world will have an additional 1 billion mouths to feed by 2025, which means the world must find the equivalent of the flow of 20 Nile Rivers or 100 Colorado Rivers by then to grow the necessary food.

The report said the greatest growth in demand for water would be in China, the United States and India due to population growth, increasing irrigation and economic growth.

“By 2030, demand for water in India and China, the most populous nations on Earth, will exceed their current supplies,” the report said. The authors also suggested global warming, due to human emissions of greenhouse gases from burning fossil fuels, would aggravate the problems.

Chrétien said, “Starting to manage water resources more effectively and efficiently now will enable humanity to better respond to today’s problems and to the surprises we can expect in a warming world.”

The report calls on Governments and international institutions to:

•Radically reform attitudes toward water and how it is managed globally, including programs to reduce demand through conservation, efficiency, re-use and the replenishment of natural systems;
•Increase annual investment in water supply and sanitation-related efforts by approximately $11 billion;
•Create an international governance mechanism and relevant institutions to cope with the growing number of environmental migrants foreseen in years to come;
•Create new water governance alliances between public, private and civil society sectors, emphasizing the participation of women;
•Pursue a “Blue Economy” economic paradigm in which water sustainability is rewarded;
•Underline the need among government and finance leaders to understand the relationship between clean, safe water and health, development and national economic well-being.
Zafar Adeel, director of the United Nations University’s Canadian-based Institute for Water, Environment and Health, says the main challenge facing agriculture “is not so much growing 70 percent more food in 40 years, but making 70 percent more food available on the plate. Reducing losses in storage and along the value chain may go a long way towards offsetting the need for more production.”

Projections vary significantly, but the UN Food and Agriculture Organization estimates an 11 percent increase in irrigation water consumption from 2008 to 2050, Adeel says. This is expected to result in a roughly 5 percent increase in water withdrawals for irrigation.

“Although this seems a modest increase, much of it will occur in regions already suffering from water scarcity,” Adeel says. “Water security requires long-term political ownership and commitment, recognition of water’s key role in development and human security, and budget allocations appropriate to the fundamental importance of water to every living thing.”

And then there is the cost of food, in the US, that will be affected by the massive shortage of rain:

The impact of this summer’s drought in the Midwest is likely to hit consumers in 2013, raising the year’s grocery bill for a family of four by $351.12.

The projections by the Food Institute average to about $6.75 per week, only slightly higher than the 2.5% to 3.5% estimated by the USDA. The Food Institute says food-at-home spending will be about $4 higher per week and away-from-home spending will increase by $2.50 per week.

Higher grocery bills will be most notable in the meat section where a family of four can expect to pay $44 more in 2013 than this year. Produce is another leading category where the bill is expected to rise by $23.44 next year.

Grocery shoppers may find ways to limit price increases by purchasing frozen and canned items or by using coupons.

The Food Institutes’ projections are calculated using USDA’s food price projections for 2013.

Tuesday, September 18, 2012

Greece and The European Experiment 2

Continued from yesterday a discussion of Greece and the EU, from Yanis Varoufakis ( ):

PART B – Mr Draghi’s nod to Euro-loyalists

On 8th August 2012 the President of the ECB acknowledged that the Eurozone was at an advanced process of disintegration and, in the same breath, promised to do what it takes to put a stop to it. On September 6th came his OMT announcement that many commentators see as a game changer. While most acknowledge that it will not suffice as a weapon with which to win the war against the Crisis, it has given Euro-loyalists a chance to argue that, in the end, Europe has a way of resolving its crises. The fact that the OMT announcement overlapped, time wise, with the impressive document issued by the European Commission regarding the formation of a proper banking union and, also, the German Constitutional Court’s grudging acceptance of the right of the ESM to exist, gave rise to a collective Euro-loyalist sigh of relief.
For the purposes of, as they say, full disclosure, these lines are written by a Euro-critic, though definitely not a Euro-clast (see Part A for the distinction). I am saying this because one would be excused to think that, as a Euro-critic, I have a vested interest in seeing Mr Draghi, Mr Baroso and the rest of our European leaders fail in their quest for a solution predicated upon the basic assumptions and policies that have, so far, not been revised or amended. For my part, all I can do is try to look at the new situation without prejudice and with a fresh analytical eye. So, let’s take a fresh look at the situation the Eurozone is facing: Have Euro-loyalists been vindicated?

The Euro-loyalist position was that, in good time, Europe will rise to the occasion and will create the institutions necessary for overcoming the Crisis threatening the euro. What are the minimum institutions necessary to accomplish this? I think we all agree that there are three: First, a proper banking union. Secondly, a buffer between the national debt of different member-states that prevents a sequential run on their bonds. Thirdly, a strategy for dealing with a dearth of aggregate investment and with internal imbalances (of investment, capital flows and trade) – what I like to call a Surplus Recycling Mechanism. How much closer is the Eurozone to getting these three institutions up and running before the Crisis wrecks its foundations completely?

Starting from perhaps the last of the three missing institutions (the Surplus Recycling Mechanism), there is little to say, save for the observation that it is not even on the agenda. It is quite instructive, and sad, that in the case of the, say, Greece, the European Investment Bank, instead of being the pillar of all attempts to help the collapsing social economy grow, has been neutered by the unfolding fiscal and banking crisis. While Greece has 12 billion euros pending from Brussels (unspent structural funds for the 2007-2012 period), the European Commission is only channelling 1.44 billion to the EIB for investments in Greece. Without any plans for a pan-European investment strategy, centred around the EIB, Europe’s growth and rebalancing prospects are looking very dim.

Regarding the Banking Union, we have a clash of titans brewing. A new Titanomachy is raging, as these lines are written, between German bankers adamant against any serious supervision by the ECB and the Commission which has issued a splendid paper on what Europe’s banking system should look like within a few years. The Titanomachy in question is neither visible to the naked eye nor is its outcome predictable. As I have written elsewhere, the German Finance Ministry is adopting the language of a banking union in order to deny the substance. This does not augur well for a banking union that succeeds in its main task: to de-couple the banking crisis from the crisis of national debt in the Eurozone’s Periphery.

Let us now turn to the other institution which is sine qua non for ending the Crisis: how to finance the stricken nations, Italy and Spain more significantly, that are caught in the clutches of a postmodern Gold Standard, unable to finance themselves, at a time of vicious recession. What would take to end this? Whatever institution is created, it must be centred upon the ECB and must find a way of bypassing the no bailout clause that was the ECB’s foundation stone. In our Modest Proposal, Stuart Holland and I have outlined a simple way of doing this: the ECB acts as a go-between member-states and financial markets, borrowing on their behalf at attractive rates and organising a credible repayment mechanism which would see to it that the new loans are repaid by the national governments, thus ensuring that the ECB need not monetise their debt (either at the primary or at the secondary markets). The only serious argument against this proposal, that I encountered amongst policy makers, was that this would give the ECB a role that no other Central Bank has ever had. Germany, apparently, is eager to ensure that the ECB abstains from ‘innovative’ Central Banking. Our proposal struck them as too innovative at a time when minimum innovation was a political imperative.

The only other serious alternative being discussed at the time was to give the ESM-EFSF a banking licence, allowing it to lever up its loans to the stricken member-states using the ECB’s balance sheet. I opposed this idea because I considered the very structure of the ESM-EFSF toxic (especially when bank recapitalisations add new debt to the sovereigns that fund the ESM-EFSF, and which may need funding from the latter). Levering up a toxic fund was not our idea of good policy. Still, the US Federal Reserve, the French government, and possibly a majority of the Eurozone’s Periphery secretly hoped that the ESM-EFSF could get its banking licence. Well, it did not. Yet, Mr Draghi’s eventual ‘solution’, his OMT, comes pretty close to this.

Under an ECB-turbocharged (or leveraged) ESM-EFSF, the Eurozone’s bailout fund would borrow say 5 euros for each euro that it was funded with by governments in order to lend to countries like Italy and Spain, under strict IMF-troika-like conditionalities of course. This was deemed politically, even morally, unacceptable by Mrs Merkel, by the German constitutional court, by German public opinion etc. So, what will the OMT do differently? Not much, according to Gavyn Davies. Here is Davies’ argument:

Under Mr Draghi’s OMT, Spain will have to submit to a strict IMF-troika-supervised fiscal adjustment program. Once the program is approved, the ESM-EFSF will lend monies to Spain directly (i.e. purchase Spanish bonds in the primary market) while the ECB fires up its digital presses to create the money with which it will purchase many more ‘second hand’ Spanish bonds (of a maturity that does not exceed 3 years) in the secondary markets.

While Gavyn Davies has a point, I think there is an important difference between the ECB-leveraged ESM-EFSF idea and OMT. Under OMT, the ESM-EFSF will be more limited in how many fresh bonds it can buy (as its funding is severely circumscribed). This means that Mr Draghi will have to print a lot more money so as to direct it to the secondary market so as to keep Spanish interest rates low. In reality, his OMT is a less efficient version of the ECB-turbocharged ESM-EFSF model. The political significance of this is that the ECB will face more flak than necessary from the Bundesbank for achieving the same compression of interest rate spreads within the Eurozone (as it will have to print more money to achieve the same effect that an ECB-leverage ESM-EFSF would have). Still, to be fair to Mr Draghi, he may well reply that the OMT’s merit is that, unlike the ECB-leveraged ESM-EFSF plan, it was possible to sell it to the German polity now. In essence, short term political acceptance in Germany was bought at the cost of greater long term German opposition to the ECB’s operations; a point that resonates with Wolfgang Munchau’s analysis.

Be that as it may, the question is how effective the OMT system will be in providing a proper “buffer between the national debt of different member-states that prevents a sequential run on their bonds”. It all depends on whether bond market participants take a look at it and decide that it will not pay them to bet against its integrity. Will speculators wager a few billions that ‘unspecified bond purchases’ means something different to ‘unlimited bond purchases’? Will they want to bet perhaps that, in the end, the Bundesbank will win the argument against Mr Draghi, thus pulling the rug from under his feet? It will also depend on what the OMT means for countries that are already in the clutches of troika programs. Will the ECB be purchasing Irish, Greek and Portuguese bonds in the secondary markets? Will the spreads that the ECB aims at for each member-state be the same? If not, who will determine, and on what basis, the difference between these target spreads? The ECB itself? Europe’s political leaders? Is it possible to imagine that a country like Greece is turned into a kind of Kosovo (a protectorate with the euro as its only currency but with no functioning state, a derelict banking sector and a disheartened mafia-ridden society whose only export is its people plus tourism) while the OMT successfully saves Spain and Italy?
Euro-loyalists will probably answer that it is too early to be negative about Mr Draghi’s OMT. That this is only one step in the direction of a fiscal union, a Federal Europe; as evidence by Mr Baroso’s recent bold statement. Their only worry is that the OMT’s success, even the ebullience that its announcement caused, will alleviate the pressure on governments that keeps them on the straight and narrow, thus raising the prospect of a negative troika report which, in turn, will force the ECB to withdraw its OMT assistance to the said member-state; at which point the latter will face a serious prospect of ejection from the Eurozone, therefore landing us back to the present mire of, in Mr Draghi’s words, “convertibility risk” (the euphemism he coined for Euzone disintegration). Still, Euro-loyalists hope that, before such a cul-de-sac is reached, Mr Baroso’s plans for the Eurozone’s federation will be so advanced that the centrifugal forces will be tamed.

In summary, Europe is currently in the clasps of a ruthless Titanomachy. In the red corner, the German banks are struggling with all the force they can muster to avoid a proper banking union. They are joined by a Bundesbank determined to stick to its guns, undermining Mr Draghi’s efforts to monetise part of Spain’s and Italy’s debts so as to compress the interest rate spreads between the core and the periphery which guarantee the common currency’s, and the single market’s, failure. Over at the blue corner we have Mrs Merkel, Mr Hollande and Mr Barosos who have formed an alliance of convenience backing Mr Draghi. For the time being they are keeping the German bankers (private banks plus the Bundesbank) at bay. But their greatest enemy is silent, sinister and is working away underground, eating into the Eurozone’s foundations. Who is that enemy? The unrelenting logic of disintegration buried deeply into the recessionary macrodynamics of today’s austerian Eurozone.

Monday, September 17, 2012

Greece and The European Experiment

I found this series of articles from a commentary on naked capitalism. The author Yanis Varoufakis ( is living the daily nightmare in Athens and he argues that European leaders will do anything to keep Greece in the Union, no matter how much better off Greeks might be with a return to their own currency.

PART A – In the balance

They sound technical and minor when projected against the great scheme of Europe’s extraordinarily rich history. Will there be conditionality attached to the ECB’s bond purchases? Will the bonds that it purchases be treated on a pari passu basis in relation to bonds held by private institutions? Will the ECB supervise all banks or just the ‘systemic’ ones? These are questions that ought to be of no genuine interest to anyone other than those with a morbid interest in public finance. And yet, these questions (and the manner in which they are answered) will probably prove as important for the future of Europe as the Treaties of Westphalia, of Versailles, of Rome even. For these are the issues that will determine whether Europe holds together or succumbs to the vicious centrifugal forces that were unleashed by the events of 2008.
It is now official: The existing institutions of the Eurozone have caused the common currency area to spin out of control once the financial sector imploded in 2008. They just could not sustain the thrust of that earthquake, the result being that the whole edifice started unravelling. Either the architecture would have to be revamped throughout the Eurozone or it would, inevitably, buckle under its grossly erroneous design.

Europe chose to remain in denial for three long years. To do only the minimum necessary in order to avert the Eurozone’s imminent collapse. These ‘moves’ did ensure that the Eurozone survived till now but, alas, they deepened the structural faults under the surface and hugely increased the economic and social cost of resolving the Crisis. The very principle at the heart of the ‘rescue’ efforts revolved around the combination of huge loans for stricken banks and member-states and generalised austerity which reduced the incomes on which the solvency of these same banks and member-states relied. The result was to gain time at the expense of the Eurozone’s longer term prospects.

Three currents: Euro-clasts, Euro-loyalists, Euro-critics

From the outset, three were the dominant views on what to do with this Crisis: First, there were those who welcomed the Eurozone’s dismantling. I shall call them, borrowing from our Byzantine tradition, Euro-clasts. They comprised neoliberal eurosceptics who always looked upon Brussels and the European integration project with the antipathy that they felt a super-state deserved, left wingers who saw in the Eurozone an attempt to pull the rug from under whatever powerbase labour had built up over the decades for supporting working people’s lives and conditions, and, finally, outright nationalists for whom borders provided a false sense of identity/security.

Amongst those is us who, for different reasons perhaps, did not want to see the European Union fall into pieces (thus recognising that the Eurozone, however terribly designed it might have been, ought to be maintained) two were the dominant currents: the Euro-loyalists who subscribed, however reluctantly, to the European elites’ handling of the Crisis and those who, like myself, thought that the cure was worse than the disease (whom I shall refer to as Euro-critics).

The Euro-loyalists’ argument has been, from the beginning, that the steps taken (e.g. the first Greek bailout, the creation of the EFSF, the first bond purchasing program of the ECB, the creation of the ESM, the Fiscal Pact, now Mr Draghi OMT etc.) were natural steps toward the creation of the missing architecture. They concede that terrible mistakes were made along the path but insist that the path, however meandering, will lead Europe to deliverance.

In contrast, Euro-critics (like myself) have been arguing that the chosen path leads with a high probability to a bottomless pit from which nothing good can come out; that the very foundations of the new institutions, e.g. the EFSF-ESM, are toxic and, therefore, will fail the more ‘weight’ is placed upon them by authorities increasingly desperate, as the Crisis worsens.

The last few weeks have seen to an acceleration along the path that the Euro-loyalists think will take Europe out of the Crisis’ black forest. Mr Draghi’s OMT pronouncement, moves by Brussels to integrate the banking system, plus the favourable verdict by the German Constitutional Court, have all contributed a nice breeze straight into the Euro-loyalists’ sails. The question is: Is this genuine hope? Or just more hot air? To answer dispassionately, we need to take a nuanced, close, careful look at the facts.

[To be continued tomorrow]

Friday, September 14, 2012

Greece Sells Itself

By Sharon Smyth of Bloomberg, a story presented with a straight face as though even with this extreme move Greece can actually start to hope to pay off what it owes. Not onl;y is the notion absurd, this idea of giving away sovereign land (presumably to German sowbirds, who else?) will simply infuriate an already humiliated people. In any event we have reached the stage where Greece eats itself alive to pay back what it owes in a computer file. Truly the end of the world as we know it. And the mainstream press reports this nonsense as real.

Greece’s Hellenic Republic Asset Development Fund has identified 40 uninhabited islands and islets that could be leased for as long as 50 years to reduce debt as pressure grows on the country to revive an asset-sales plan key to receiving international aid.

“We identified locations that have good terrain, are close to the mainland and have a well-developed infrastructure and, at the same time, pose no threat to national security,” Andreas Taprantzis, the fund’s executive director for real estate, said in a Sept 6. interview in Athens. “Current legislation doesn’t allow us to sell them outright and we don’t want to.”
While some islands are already privately owned, such as Skorpios by the Onassis shipping heiress Athina Onassis, the state owns islands such as Fleves, which is near the coastal resort area of Vouliagmeni, and a cluster of three islands near Corfu.

The fund is charged with raising 50 billion euros ($64 billion) from state assets by 2020 to meet conditions tied to pledges of 240 billion euros in foreign aid. As international inspectors in Athens scrutinize the country’s fitness to receive the latest aid payment, Prime Minister Antonis Samaras has said commercial exploitation of some islands could generate the revenue lenders need to see to continue funding the country.

The shortlist includes islands ranging in size from 500,000 square meters (5.4 million square feet) to 3 million square meters, and which can be developed into high-end integrated tourist resorts under leases lasting 30 years to 50 years, Taprantzis said.

Action Plan

The fund announced an action plan to speed up the country’s privatization program yesterday. In its statement, the fund named the companies it’s chosen to proceed to the next phase of tenders in three real estate projects. The benchmark ASE Index was up 5.3 percent at 770.5 points at the close in Athens, the highest since March 23 and the day’s biggest gain among major European indexes.

The fund reviewed 562 of the estimated 6,000 islands and islets under Greek sovereignty. While some are already privately owned, such as Skorpios by the Onassis shipping heiress Athina Onassis, the state owns islands such as Fleves, which is near the coastal resort area of Vouliagmeni, and a cluster of three islands near Corfu. Taprantzis declined to identify any of the islands.

Legislation needs to be passed to allow development of public property by third parties and reduce the number of building, environmental and zoning permits needed before the plan can proceed, Taprantzis said.

Sensitive Issue

Outright sales have been ruled out because the returns for the Greek state wouldn’t be higher than a leasehold arrangement, he said. Greece will attract more investment if an island is turned into a resort, he said.

Selling public land outright is a politically sensitive issue in Greece. In 1996, Greece and Turkey almost went to war over who owned the uninhabited Aegean islet of Imia, known as Kardak in Turkey. A proposal by Greece’s lenders last year to increase revenue from asset sales including property drew opposition from then-premier George Papandreou, who said he’d legislate to prohibit such sales.

The country has only raised about 1.8 billion euros from its asset sales program, sparking criticism among European officials that the government isn’t moving quickly enough to reduce debt. Months of negotiations over the country’s debt restructuring earlier this year, the largest ever, and two general elections that threatened Greece’s membership of the euro area also held back progress on sales.

‘Appropriate’ Target

Takis Athanasopoulos, the fund’s new chairman, said the goal of generating 19 billion euros from state asset sales by 2015 can be met as long as Greece’s business environment is “appropriate.”

The fund will be able to gauge demand for Greek real estate as it revives a tender to develop a golf course on the island of Rhodes, Taprantzis said.

The fund chose six companies, including London & Regional Group Holdings Ltd. and NCH Capital Inc., out of seven contenders to enter a second round of bidding for developing a strip of land on the island. A preferred bidder for the site measuring 1.85 million square meters, including an 18-hole golf course, is expected to be chosen by the end of February, the fund said yesterday.

“We are enthusiastic about the potential of this particular tender and what it reveals about market sentiment for Greek assets at this time,” Taprantzis said.

The fund also selected Qatari Diar Real Estate Investment Co., London & Regional, Elbit Cochin Island Ltd. and Lamda Development SA (LAMDA) for the second phase of bidding to buy a majority stake in Hellenikon SA. Hellenikon will develop the site of the former Athens International Airport, which at 6.2 million square meters is more than three times the size of Monaco, according to the fund.

Thursday, September 13, 2012

Universal Health Care

I am of the belief that the one percenters want President Obama re-elected. ON every major issue of interest to them he has bowed, not least on health care. Having abandoned single payer early on, then public health exchanges in favor of industry supported mandates he is bringing some kind of painstaking piecemeal reform, much needed but entirely too complex and inadequate. I grew up with single payer and I still miss it even though I have good insurance through my job. I always have because to go without insurance was bizarre to my European rooted brain. Here is an American writer in Europe telling The Progressive magazine why single payer makes the world go round properly. Note: it's not free, just affordable and sensible and anxiety reducing.

I live in Amsterdam. When I first came here in 2006, I noticed immediately how much more civilized it felt to be living in a country where I knew that everyone had health care. I used to joke that I’d move back to the States only when a similar system was finally in place there.

So I was naturally thrilled when it seemed like the United States was moving towards a more progressive system with President Obama’s health care overhaul. When it passed, I even started looking at apartment prices in New York.

As the plan moved through the Supreme Court, however, I listened with special interest (via podcast and downloads) to the debates about the controversy over the “individual mandate” because Holland’s health care system is built on something very akin to the “individual mandate” approach.

Every person who lives in the Netherlands is required to buy medical insurance from one of many private insurance companies. Employees can receive medical coverage via their job, individuals can buy it for themselves, and those who can’t afford it receive a subsidy from the government to purchase it privately. As a condition of my visa, I had to prove that I had purchased medical insurance.

I pay out of pocket, but because of the economies of scale built into the universal health care system, I found that the premiums are very reasonable. Basic insurance (known as basisverzekering) can be secured for little as 90 euros a month (about $110), and I used a free website to compare and contrast plans offered by various insurers. All of them covered primary care with a general practitioner, specialist care on referral, hospital inpatient and outpatient and emergency services, as well as prescription medication—all without a co-pay. And under Dutch law, no one can be denied basisverzekering because of any preexisting conditions.

There are options for plans that are more expensive and offer more bells and whistles, so you can buy Honda insurance or Cadillac insurance, depending on your style and your cash at hand.

Because it was relatively inexpensive, I went for a slightly higher-end plan that also covers all dental expenses (procedures up to about $2,000 a year), eyeglasses, physical and psychiatric therapy, and longer hospital stays. I didn’t splurge on the “premium” plan that would also have covered all elective and plastic surgeries.

My current plan costs me 153 euros a month (about $200) and covers pretty much everything I’ve ever needed. Well, not everything. . . . This year, I bought a new pair of glasses, and my insurer covered 200 euros but I had to pay 100 euros or so extra for the Ralph Lauren frames. There was also a genetic test I had decided I wanted to have done when I was trying to get pregnant that my insurance company didn’t deem necessary. So I paid for that on my own.

I started using the Dutch health care system as every Dutch person would. I first signed up with a local huisarts, or house doctor, a general practitioner in my neighborhood, within walking distance of my house. (They used to make house calls regularly, and still do in some circumstances.)

When I nervously called to make my first appointment for intake, a brusque receptionist on the phone said, “Well, we can’t see you right away!” I said that was all right, assuming that it would be a few weeks before I’d get in to meet my new doctor. But then she asked: “How about tomorrow afternoon at three?”

My huisarts wears street clothes rather than a white lab coat, and she welcomes me into her office for a conversation that could last anywhere from five minutes to a half hour, depending on my complaint, then treats what she can on the spot. I do my gynecological exams with her, and she treats me if I have something ordinary, such as the flu or an infection, and I get my vaccinations there when I go on trips. If my huisarts feels there’s something she can’t handle, she refers me to a specialist.

Getting medications in the Netherlands is a particular treat. My huisarts writes prescriptions for medication, I walk to the local pharmacy, I hand it to the pharmacist, and I get my meds. No money is ever exchanged.

This year I got pregnant, and all of my medical expenses were covered under my plan, from weekly visits to my team of midwives (doctors don’t get involved in pregnancy and birthing here unless there are medical complications) to ultrasounds, blood tests, delivery, and post-natal care. That may not sound remarkable unless you consider that for ten days after giving birth, I was also provided with a home health care nurse called a kraamzorg.

She arrived every morning at 9 a.m. and stayed until 3 p.m. She checked on me and my baby, helped me master the art of breastfeeding, showed me how to wash, change, and put my child to bed, prepared lunch, did my laundry, cleaned my apartment, and looked after the baby in the afternoon so that I could take much-needed naps.

I’m not lying about this. The kraamzorg service, which is unique to the Netherlands, was entirely covered under my insurance—as it is for every woman who gives birth in Holland.

There’s a certain peace of mind that comes from knowing that every mother and every child born in the country where you live gets this kind of personalized attention. It’s been perspective-altering to experience how well the “individual mandate” operates to provide universal quality care literally from cradle to grave.

I won’t argue that there’s nothing wrong with the Dutch health care system, of course. Other expat friends complain bitterly about many doctors’ bias against prescribing antibiotics (typically, the advice is to go home and wait a week to see if it isn’t a viral infection first). I’ve heard some people argue that you have to fight hard for referrals to get highly specialized care.

But at least I know that I won’t be denied services because of a preexisting condition or because some administrator somewhere is poring over my individual itemized bills, or that my doctor can’t prescribe me medications because they’re too expensive for my insurer. Or even that I’ll have annoying little $10 or $40 co-pays for meds.

I no longer joke about returning to the United States only when there’s a decent health care system in place. I’m serious: It’s a huge quality of life issue.

I can’t imagine going back and finding the old system still in place if, somehow, Mitt Romney were to become President and succeed in his vow to repeal the Affordable Care Act.

Listening to the Supreme Court debate and the commentary that went along with it, I was surprised by the level of outrage among some pundits about the fact that so-called Obamacare would require everyone to buy into the system, as if this were a completely untested idea.

I’d like to point out to all those myopic pundits and politicians who oppose the Affordable Care Act that this idea has already been tested. And as an American living abroad and experiencing it firsthand, I can say that I’m completely satisfied with the results.

Nina Siegal is an American journalist and writer living in the Netherlands.

Wednesday, September 12, 2012

Monsanto And Hungary

Raul Ilargi Meijer of The Automatic Earth website describes a little known story: Hungary won't allow Monsanto sell its dreadful genetically modified products. Monsanto has a habit of trying to force farmers to use its seeds with patents and bully tactics. It appears to have been out-bullied! And no one has yet reported it.
I don't know about you, but I would label my personal knowledge of Hungary as wanting, if not painfully incomplete. It's not an easy country to come to grips with, not least of all of course because Hungarian doesn't look like any western language we know with the possible exception of Finnish. I did visit just after the Wall came down, and remember huge contrasts, almost paradoxes, between rural poverty and a capital, Budapest, that was much richer than other capitals such as Prague, a leftover of Budapest's status as meeting place between western and eastern diplomats and businessmen.

The riches were not for all, though, the city center was full of beggars and panhandlers, mostly Roma. To keep up the paradox, Mercedes sold more luxury models in Hungary than just about anywhere else back then, reportedly mostly also to Roma; just not the same.

In the years since, precious little attention has been and is being devoted to the former eastern bloc countries in the Anglo press. We know most of the countries are now members of the European Union, but only a few have been allowed to enter the hallowed grounds of the eurozone.

One thing I did pick up on last year was the news that Hungary's PM Victor Orbán had thrown chemical, food and seed giant Monsanto out of the country, going as far as to plow under 1000 acres of land. Now, I have little patience for Monsanto, infamous for many products ranging from Agent Orange to Round-Up, nor for its ilk, from DuPont to Sygenta, all former chemical companies that have at some point decided they could sell more chemicals than ever before by applying them on and inside everyone's daily food. Patenting nature itself seems either unworthy of mankind or its grandest achievement. I don't care much for either one. So Orbán (who has a two-thirds majority in parliament, by the way) has my tentative support on this one.

This is from July 22, 2011, International Business Times:

Hungary Destroys All Monsanto GMO Maize Fields

In an effort to rid the country of Monsanto's GMO products, Hungary has stepped up the pace. This looks like its going to be another slap in the face for Monsanto. A new regulation was introduced this March which stipulates that seeds are supposed to be checked for GMO before they are introduced to the market. Unfortunately, some GMO seeds made it to the farmers without them knowing it.

Almost 1000 acres of maize found to have been grown with genetically modified seeds have been destroyed throughout Hungary deputy state secretary of the Ministry of Rural Development Lajos Bognar said. The GMO maize has been ploughed under, said Lajos Bognar, but pollen has not spread from the maize, he added.

Unlike several EU members, GMO seeds are banned in Hungary. The checks will continue despite the fact that seed traders are obliged to make sure that their products are GMO free, Bognar said. During their investigation, controllers have found Pioneer and Monsanto products among the seeds planted.

It's remarkably hard to find sources on this, ironically. It’s even harder, even more ironically, to find anything that mentions the Wikileaks report on the connections between the US government and the chemical/seed industry. Which is curious, in my opinion; it's not as if there's nothing newsworthy in the topic. Just about the only thing I could find was this from Anthony Gucciardi at

US to Start ‘Trade Wars’ with Nations Opposed to Monsanto, GMO Crops

The United States is threatening nations who oppose Monsanto’s genetically modified (GM) crops with military-style trade wars, according to information obtained and released by the organization WikiLeaks. Nations like France, which have moved to ban one of Monsanto’s GM corn varieties, were requested to be ‘penalized’ by the United States for opposing Monsanto and genetically modified foods. The information reveals just how deep Monsanto’s roots have penetrated key positions within the United States government, with the cables reporting that many U.S. diplomats work directly for Monsanto. [..]

Perhaps the most shocking piece of information exposed by the cables is the fact that these U.S. diplomats are actually working directly for biotech corporations like Monsanto. The cables also highlight the relationship between the U.S. and Spain in their conquest to persuade other nations to allow for the expansion of GMO crops. Not only did the Spanish government secretly correspond with the U.S. government on the subject, but the U.S. government actually knew beforehand how Spain would vote before the Spanish biotech commission reported their decision regarding GMO crops.

It doesn't look like Orbán and Hungary have a lot of support in their fight against Monsanto and GMO in general on the political front. But that still does little to explain the radio silence.

There was more international reporting earlier this year, when Orbán again faced up to two other major forces, in this instance the IMF and the EU. On January 1, the Hungarian parliament and president signed a new constitution into law. And it contains a number of things that the Troika members don't like. In particular, they are probably at odds with taxes levied on bank transactions, and especially central bank transactions. Not the kind of thing the IMF is likely to ever agree with. It all gets clad in protesting (the EU even threatens with courts) the independence under fire of the central bank, the media and other parts of Hungarian society.

The IMF and EU, like the tandem team of Monsanto and Washington before them, act like schoolyard bullies. It's become their standard MO, and it usually works. Portraits of Orbán as a fool, a reckless idiot and a dangerous populist, on par with that of Hugo Chavez or newly found international enemy Rafael Correa, are much easier to find than those links to Wikileaks Monsanto cables. It would be good to see Orbán continue to stand up to the IMF bullies, but he may not have that choice. They can simply financially bleed him dry, like they have so many other countries and their leaders. It's a time tested model.

So maybe we’ll have to do with a good and hearty chuckle, and enjoy his announcement yesterday:

Hungarian prime minister unfriends IMF on Facebook

Hungary's prime minister has long had a testy relationship with the International Monetary Fund — and on Thursday he used Facebook to unfriend the agency and reject its allegedly tough loan conditions.

Prime Minister Viktor Orban said in a video message on his official Facebook page that Hungary could not accept pension cuts, the elimination of a bank tax, fewer public employees and other conditions in exchange for an IMF loan that other officials have said could be about €15 billion ($18.9 billion). The IMF's list of conditions, Orban said, " contains everything that is not in Hungary's interests."

Orban's announcement took the markets by surprise, in part because just a day earlier he had said loan negotiations with the IMF and the European Union were going according to schedule and both sides were willing to reach an agreement. [..]

In late 2008, under a Socialist government, Hungary became the first EU country to receive an IMF-led bailout. The Orban government, however, decided not to renew the loan agreement in 2010 so it could implement its economic policies without IMF control. But the increasing weakness of the forint, the Hungarian currency, and investors' growing loss of trust in the country's economy made the government abruptly change its mind late last year, when it again sought IMF help.

Basically, what the IMF demands is what it has always demanded through the years from countries it lends money to: cut pensions, cut the public sector, cut benefits yada yada, and then privatize, open markets, and open financial systems, so international operating conglomerates can move in and divvy up the spoils - "create a more 'business friendly' environment to boost growth" -. The IMF is the poster child for disaster capitalism, no matter how you twist and turn it. And Orbán can see clearly what is being done to Greece, which is just around the corner from Hungary.

Hungary: Orban’s horror show

A “list of horrors”. That’s how Hungary’s prime minister Viktor Orbán described on Thursday the conditions given by the IMF / EU for a deal, via a video on his Facebook page. [..]

Orban blamed the “long list” of onerous conditions that had, supposedly, been leaked to Magyar Nemzet, a slavishly pro-government daily, on Wednesday. The list contains a number of Orbán’s most sacred political themes, including cuts in pensions, family allowances and transport perks, an increase in the age of retirement, the introduction of a property tax, the abolition of the bank and financial transaction taxes, and modifications to the flat-rate, personal income tax regime.

And here's a bit more:

Hungary PM rejects IMF/EU terms, hopes fade for deal

Hungary threw hopes for a new loan to prop up its sagging economy into disarray on Thursday as Hungarian Prime Minister Viktor Orban rejected what he called unacceptable IMF conditions, crushing prospects for a fast agreement. Orban, in a video posted on his Facebook page, cited demands from the International Monetary Fund (IMF) for a raft of changes that he said were too high a price for Hungary to pay.

"From cutting pensions to reducing bureaucracy to scrapping the bank tax and the funds to be made available to banks, everything is in there that's not in Hungary's interest," Orban said. "The parliamentary group meeting (of the ruling Fidesz party) took the view, and I personally agree with it, that at this price, this will not work," he added. [..]

To reverse that momentum, Orban is pushing a 300 billion forint ($1.33 billion) job saving plan, partly funded by a new tax on central bank operations, a key sticking point in the IMF talks, which the European Central Bank has also criticised. [..]

"Junk"-rated Hungary faces a repayment hump in the next five quarters, with the equivalent of €4.6 billion euros falling due from its previous IMF/EU bailout alone.

It's enough of a David vs Goliath fight, or a Little Red Riding Hood vs the Wolf, to make one question the bullies. Now, I don't really know Victor Orbán, all I know is western media descriptions of him, not a very reliable source, and he could well be a bully himself. But I still like the Little Red Riding Hood story (and dislike Monsanto and the IMF) enough to give him the benefit of the doubt for now.

And besides, it's as refreshing as it is high time to talk about something else than Greece or Spain. We'll have to get back to them soon enough, after Draghi's unlimited buying bailout boondoggle yesterday

Tuesday, September 11, 2012

Lowest Common Denominator Pay

It makes for a great story - richest woman in the world, who inherited her wealth- suggests dropping pay to Third World levels while telling workers to work harder to become millionaires themselves. That she would be so blunt about poverty wages is just attributable to her own moral sense, or lack of it. The bigger story is that First World wages are bound to drop as wealth everywhere shrinks in response to rising energy costs. We see it in the US where corners are being cut at home to preserve the national budget even as outrageous sums are paid to corporations to privatize the work of the military in spurious overseas wars. As always its not that there is no money, its that there's no will to spend it as Norway does to benefit the collective. The result is on our streets to be seen every day as our nation crumbles and education shrinks and health and welfare becomes a dirty socialist concept.

Mining executive Gina Rinehart says mining in Australia is "too expensive" and suggests lower pay for workers -- perhaps as low as "$2 per day."

In a video address posted Thursday on the Sydney Mining Club Web site, Rinehart -- who inherited and runs Hancock Prospecting -- said Australia is "becoming a high-cost and high-risk nation" for global investors.

"The evidence is indeed inarguable that Australia is indeed becoming too expensive and too uncompetitive to do export orientated business -- businesses that must sell their products at world market, not Australian, prices," she said.

Rinehart -- who is said to be the richest woman in the world and the richest person in Australia with a fortune estimated at $18 billion -- said Australia needs to compete with nations offering lower labor costs.

"Africans want to work and its workers are willing to work for less than $2 per day," she said.

Australian Prime Minister Julia Gillard said it wasn't "the Australian way to toss people $2, to toss them a gold coin, and then ask them to work for a day."

Australian Council of Trade Unions Secretary Dave Oliver told the Australian Broadcasting Corp. Rinehart's suggestion was "an insult to all the workers who work for her company."

"It just beggars belief that she is trying to advocate a position where for us to be competitive we have to look at the conditions that we see in Third World countries," Oliver said.

Responding to Rinehart's suggestion of a so-called economic trade zone across northern Australia with lower taxes and fewer regulations, Professor John Buchanan of the University of Sydney business school's Workplace Research Center told ABC he preferred to compare Australia's experience with that of countries he said are more like Australia, including Norway, which has an average rate of 78 percent tax on profits in its oil sector.

"Oil companies are queuing up to deal with the Norwegian oil sector because that tax rate is used very creatively by the Norwegian government to encourage employment and further resource development," Buchanan said.

Rinehart recently made headlines for comments she made in a magazine article critical of poor people.

"There is no monopoly on becoming a millionaire," she wrote. "If you're jealous of those with more money don't just sit there and complain, do something to make more money yourself. Spend less time drinking, smoking and socializing and more time working."

Monday, September 10, 2012

Gold Hoarding

By Brett Arends of Market Watch argues there are investment opportunities in gold as the countries that hope to rule the world in the future collect the precious metal. As usual its the writer's intent to push the investor toward a preferred product, in this gambling on low priced mining shares. However the interesting point here is that Russia has a strategy, whatever it may be.

I can’t imagine it means anything cheerful that Vladimir Putin, the Russian czar, is stockpiling gold as fast as he can get his hands on it.

According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.

It emerged last month that financial gurus George Soros and John Paulson had also increased their bullion exposure, but it’s Putin that’s really caught my eye.

No one else in the world plays global power politics as ruthlessly as Russia’s chilling strongman, the man who effectively stole a Super Bowl ring from Bob Kraft, the owner of the New England Patriots, when they met in Russia some years ago.

Putin’s moves may matter to your finances, because there are two ways to look at gold.

On the one hand, it’s an investment that by most modern standards seems to make no sense. It generates no cash flow and serves no practical purpose. Warren Buffett has pointed out that we dig it out of one hole in the ground only to stick it in another, and anyone watching this from Mars would be very confused.

You can forget claims that it’s “real” money. There’s no such thing. Money is just an accounting device, a way of keeping track of how much each of us produces and consumes. Gold is a shiny and somewhat tacky looking metal that is malleable, durable and heavy. A recent research paper by Duke University’s Campbell Harvey and co-author Claude Erb raised serious questions about most of the arguments in favor of gold as an investment.

But there’s another way to look at gold: As the most liquid reserve in times of turmoil, or worse.

The big story of our era is not that the Spanish government is broke, nor is it that Paul Ryan apparently feels the need to embellish his running record. It’s that the United States, which has dominated the world’s economy for several lifetimes, is in relative decline.

As was first reported here in April of last year, according to International Monetary Fund calculations, the U.S. is on track to lose its status as the world’s biggest economy—when measured in real, purchasing-power terms—to China by 2017.

Bankers, expect your 2012 bonus to be down 30%

As investment bank bonus pools continue to shrink, banks are expected to continue to lay off staff. Find out how bad it’s going to get.

We will soon be the first people in two hundred years to live in a world not dominated by either Pax Americana or Pax Britannica. This sort of changing of the guard has never been peaceful. The declines of the Spanish, French and British empires were all accompanied by conflict. The decline of British hegemony was a leading cause of the First and Second World Wars.

What will happen as the U.S. loses its pre-eminence?

Maybe this will turn out better than similar episodes in the past. Maybe the Chinese will embrace an open society and the rule of law. If you believe that, there is probably no reason to hold any gold.

On the other hand, we may be about to enter a much more turbulent and dangerous era of power politics and international competition.

Not long ago, world gold reserves were mainly in the hands of the U.S. and the Europeans, which accumulated their holdings during their centuries at the top. The U.S. has 75% of its currency reserves in gold. Many other first world powers have comparable proportions.

But that’s beginning to change. According to the World Gold Council, China, Saudi Arabia and Russia are now in the top five. Western European countries have been selling gold. If the current financial crisis gets any worse, they may yet sell more.

Emerging markets have been buying. In most cases, gold remains a very small percentage of their total reserves. China, despite its recent buying, holds less than 2% of its currency reserves in gold.

But you have to wonder how long emerging countries will want to hold their reserves in any currency that is controlled by someone else. Vladimir Putin clearly doesn’t want to. Gold now accounts for 9% of Russia’s reserves, and that figure is rising.

The gold price has had a shakeout since peaking at around $1,900 an ounce a year ago. It fell as low as $1,566 in June. Since then, it has risen to $1,688.

But that shakeout has been exaggerated by the rally in the U.S. dollar over most of the past year. Put another way: Priced in euros, gold is nearly back to its old high. It’s 1,343 euros per ounce, just shy of the 1,356 euro record set a year ago.

The most common means of buying gold is either in bullion or through an exchange-traded bullion fund such as the SPDR Gold Shares. And maybe that’s sensible.

But you might also take a look at shares in gold-mining companies. They are at, or near, historic lows when compared with the gold price. Contrarians may take that as a buying signal.

The Philadelphia Gold & Silver Index, which tracks the stocks of precious-metal mining companies, stood at 170 on Tuesday—a level first seen five years ago, in September 2007, when gold itself was just $730 an ounce. Relative to gold itself, the Philly index is about 60% below the average levels seen since 1985.

Die-hard gold fans will tell you that the mining stocks involve all sorts of extra risks that you don’t get with the metal. Companies can be mismanaged. Mining costs go up. Countries can wallop miners with windfall taxes.

They’re right on all of the above. On the other hand, the equities are cheap and they do generate cash flow. Barrick Gold ABX+2.97% , the world’s biggest, trades at eight times forecast earnings, with a dividend yield of nearly 2%. Newmont NEM+1.55% is trading at 10 times forecast earnings, yielding 2.8%.

As ever, you pays your money and you takes your choice.