en 50 Numbers From 2014 That Sound Fake But That Are Actually Real <p><a href=""><em>Submitted by Michael Snyder via The End of The American Dream blog</em></a>,</p> <p><strong>2014 was quite a bizarre year, wasn&rsquo;t it?&nbsp; </strong>The past 12 months brought us MH370, Ebola, civil war in Ukraine, civil unrest in Ferguson, the rise of ISIS and the fall of the Democrats in the midterm elections.&nbsp; Our world is becoming crazier and more unstable with each passing day, and I have a feeling that things are going to accelerate greatly in 2015.&nbsp; But for the moment things are relatively quiet as much of the world stops to celebrate the holiday season, so now is a good time to look back and see where we have been over the past year.&nbsp; The facts that I am about to share with you sound false, but they are all quite true.&nbsp; If you doubt any of these facts, just click the link on the number to find the source.&nbsp; It has been said that truth is stranger than fiction, and that was definitely the case during the past 12 months.&nbsp;<strong> In no particular order, the following are 50 numbers from 2014 that sound fake but that are actually real&hellip;</strong></p> <p><a href="" target="_blank" title="2.5">2.5</a> &ndash; Researchers have discovered that characters in cartoons for children are 2.5 times more likely to die than characters in adult dramas.&nbsp; But as long as those characters look cute and make funny noises it must be okay.</p> <p><a href="" target="_blank" title="$4.20">$4.20</a> &ndash; The price of ground beef just hit a brand new record high of $4.20 a pound.&nbsp; Exactly 10 years ago, it was just $2.21 a pound.&nbsp; What do you think <a href="" target="_blank" title="Clara Peller">Clara Peller</a> would say about this?</p> <p><a href="" target="_blank" title="19.8 percent">19.8 percent</a> &ndash; This holiday season, nearly 20 percent of all American families are on food stamps.&nbsp; But since the stock market is soaring, most of the rest of the country doesn&rsquo;t seem to care.</p> <p><a href="" target="_blank" title="$20">$20</a> &ndash; If you want to &ldquo;lock down that new man for Christmas&rdquo;, you can buy a positive pregnancy test on Craigslist for just 20 dollars.</p> <p><a href="" target="_blank" title="29.0 years">29.0 years</a> &ndash; The average age when a man in America first gets married has reached an all-time high of 29.0 years.&nbsp; Thus the need for the fake pregnancy tests.</p> <p><a href="" target="_blank" title="31.1 percent">31.1 percent</a> &ndash; An astounding 31.1 percent of all U.S. young adults in the 18 to 34-year-old age bracket are currently living with their parents.&nbsp; But the good news is that demand for tacky basement decor is at an all-time high.</p> <p><a href="" target="_blank" title="33 percent">33 percent</a> &ndash; According to the Wall Street Journal, close to one-third of all Americans have a file in the FBI&rsquo;s master criminal database.</p> <p><a href="" target="_blank" title="34.6 percent">34.6 percent</a> &ndash; According to the CDC, 34.6 percent of all men in America officially meet the criteria for being obese.</p> <p><a href="" target="_blank" title="36">36</a> &ndash; At this point only 36 percent of the U.S. population can name all three branches of government.</p> <p><a href="" target="_blank" title="43">43</a> &ndash; The new EPA regulations issued while Barack Obama has been president are 43 times as long as the entire Bible.</p> <p><a href="" target="_blank" title="45 percent">45 percent</a> &ndash; One survey discovered that 45 percent of all Americans &ldquo;dread&rdquo; the Christmas season.</p> <p><a href="" target="_blank" title="48 percent">48 percent</a> &ndash; Only 48 percent of Americans can immediately come up with $400 in emergency cash without borrowing it or selling something.</p> <p><a href="" target="_blank" title="50">50</a> &ndash; An MIT research scientist is warning that if current trends continue 50 percent of all children in America will be autistic by the year 2025.</p> <p><a href="" target="_blank" title="50 percent">50 percent</a> &ndash; Half of all college graduates in America are still financially dependent on their parents when they are two years out of college.</p> <p><a href="" target="_blank" title="52 percent">52 percent</a> &ndash; According to a survey that was conducted earlier this year, 52 percent of all Americans cannot even afford the house that they are currently living in right now.</p> <p><a href="" target="_blank" title="54 percent">54 percent</a> &ndash; For the first time ever, more than half of all U.S. doctors support the legalization of assisted suicide.</p> <p><a href="" target="_blank" title="57 percent">57 percent</a> &ndash; A recent NBC News/Wall Street Journal poll found that 57 percent of all Americans consider race relations in America to be &ldquo;bad&rdquo;.&nbsp; That is the worst number in 20 years.</p> <p><a href="" target="_blank" title="59 percent">59 percent</a> &ndash; One very disturbing recent poll discovered that 59 percent of Americans are in favor of torturing our prisoners.</p> <p><a href="" target="_blank" title="60 percent">60 percent</a> &ndash; In the United States today, 60 percent of all bachelor&rsquo;s degrees are earned by women.</p> <p><a href="" target="_blank" title="64 percent">64 percent</a> &ndash; It would be a great understatement to say that pornography is popular with men in America.&nbsp; This is true even among men that are supposed to be religious.&nbsp; For example, one survey discovered that 64 percent of all Christian men ages 31 to 49 look at porn at least monthly.</p> <p><a href="" target="_blank" title="65 percent">65 percent</a> &ndash; One shocking new poll found that 65 percent of Americans believe that the government is &ldquo;broken&rdquo;.&nbsp; The shocking part of the survey was that it was only 65 percent.</p> <p><a href="" target="_blank" title="65 percent">65 percent</a> &ndash; According to a Census Bureau report that was released in December, 65 percent of all children in America are living in a home that receives some form of aid from the federal government.</p> <p><a href="" target="_blank" title="70 percent">70 percent</a> &ndash; Right now, about 70 percent of all government spending goes toward dependence-creating programs.</p> <p><a href=";utm_medium=feed&amp;" target="_blank" title="78 percent">78 percent</a> &ndash; According to a Pew Research Center study that was released earlier this year, 78 percent of U.S. women &ldquo;want a spouse with a steady job&rdquo;.&nbsp; Apparently the other 22 percent want an unemployed bum that stays home all day playing video games.</p> <p><a href="" title="85 percent">85 percent</a> &ndash; 85 percent of all artificial Christmas trees are now made in China, and there is a rumor that Santa and his elves are considering a permanent move to the Chinese city of <a href="" target="_blank" title="Shenzhen">Shenzhen</a>.</p> <p><a href="" target="_blank" title="1979">1979</a> &ndash; The United States has become the nation of the &ldquo;permanent emergency&rdquo;.&nbsp; In fact, there has been at least one &ldquo;state of emergency&rdquo; in effect in this country since 1979.</p> <p><a href="" target="_blank" title="7,500">7,500</a> &ndash; The worldwide Ebola death toll has surpassed 7,500 for the first time, but most Americans seem to believe that the crisis is over.&nbsp; The truth is that it may just be beginning.</p> <p><a href="" target="_blank" title="20,000">20,000</a> &ndash; Right now McDonald&rsquo;s has 14,267 locations in the United States, but payday lenders have more than 20,000.</p> <p><a href="" target="_blank" title="$30,000">$30,000</a> &ndash; According to the Social Security Administration, 52 percent of all American workers made less than $30,000 last year.</p> <p><a href="" target="_blank" title="80,000">80,000</a> &ndash; Back in 1980, there were only about 3,000 SWAT raids conducted in the United States.&nbsp; But today, there are more than 80,000 SWAT raids per year in this country.</p> <p><a href="" target="_blank" title="100,000">100,000</a> &ndash; It is estimated that there are at least 100,000 underage sex workers in the United States.&nbsp; In case you were wondering, yes that means that we are a very sick nation.</p> <p><a href="" title="$1,000,000">$1,000,000</a> &ndash; We are supposed to be a government &ldquo;of the people, by the people and for the people&rdquo;, but at this point more than half the members of Congress are millionaires.</p> <p><a href="" target="_blank" title="1,400,000">1,400,000</a> &ndash; Thanks in large part to unchecked illegal immigration, there are now 1.4 million members of criminal gangs living in our cities.</p> <p><a href="" target="_blank" title="2,400,000">2,400,000</a> &ndash; There are currently more than 2.4 million people behind bars in America, and since 1980 the number of people incarcerated in our prisons <a href="" target="_blank" title="has quadrupled">has quadrupled</a>.</p> <p><a href="" target="_blank" title="2,500,000">2,500,000</a> &ndash; According to the National Center on Family Homelessness, there are now 2.5 million homeless children in the United States.</p> <p><a href="" target="_blank" title="4,000,000">4,000,000</a> &ndash; Right now there are more than 4 million adult websites on the Internet, and they get more traffic than Netflix, Amazon and Twitter combined.</p> <p><a href="" target="_blank" title="9,700,000">9,700,000</a> &ndash; Almost 10 million more Americans have enrolled in Medicaid since Obamacare first launched.</p> <p><a href="" target="_blank" title="15,000,000">15,000,000</a> &ndash; More than 15 million Americans have cosmetic procedures done each year, and Christmas is the busiest season of the year for plastic surgeons.</p> <p><a href="" title="30,000,000">30,000,000</a> &ndash; In America today, more than 30 million Americans are taking antidepressants.&nbsp; And keep in mind that antidepressants are only one class of pharmaceutical drug.&nbsp; Overall, nearly <a href="" target="_blank" title="70 percent">70 percent</a> of all Americans are currently on at least one prescription drug according to the Mayo Clinic.</p> <p><a href="" target="_blank" title="$40,000,000">$40,000,000</a> &ndash; More than 40 million dollars has been spent just on vacations for Barack Obama and his family since he has been in the White House.</p> <p><a href="" target="_blank" title="49,000,000">49,000,000</a> &ndash; An astounding 49 million Americans are considered to be facing food insecurity at this point.</p> <p><a href="" target="_blank" title="110,000,000">110,000,000</a> &ndash; Approximately one-third of the entire population of the United States (110 million people) currently has a sexually transmitted disease according to the Centers for Disease Control and Prevention.</p> <p><a href="" target="_blank" title="156,600,000">156,600,000</a> &ndash; The population of Bangladesh (156,600,000) is actually larger than the population of Russia (143,500,00).&nbsp; But nobody is scared of Bangladesh.</p> <p><a href="" target="_blank" title="3,000,000,000">3,000,000,000</a> &ndash; For the first time ever, there are now more than 3 billion people on the Internet around the globe.&nbsp; I don&rsquo;t know if that is a good thing or a bad thing.</p> <p><a href="" target="_blank" title="$600,000,000,000">$600,000,000,000</a> &ndash; Americans will spend more than 600 billion dollars this Christmas season.&nbsp; That is an amount of money greater than the entire GDP of Sweden.</p> <p><a href="" target="_blank" title="$1,200,000,000,000">$1,200,000,000,000</a> &ndash; Student loan debt has hit a grand total of 1.2 trillion dollar<a href="" target="_blank" title="1.2 trillion dollars">s</a> in the United States.&nbsp; That number has grown <a href="" target="_blank" title="by about 84 percent">by about 84 percent</a> just since 2008.</p> <p><a href="" target="_blank" title="$2,000,000,000,000">$2,000,000,000,000</a> &ndash; The war in Iraq cost U.S. taxpayers more than 2 trillion dollars, but now a radical jihadist terror organization known as ISIS controls <a href="" target="_blank" title="nearly a third of the entire country">nearly a third of the entire country</a>.</p> <p><a href="" target="_blank" title="5,000,000,000,000">5,000,000,000,000</a> &ndash; There are now 5 trillion little pieces of plastic floating around in the oceans of the world, and lots more plastic is being dumped into our oceans every single day.</p> <p><a href="" target="_blank" title="$18,031,021,541,347.52">$18,031,021,541,347.52</a> &ndash; The current size of the U.S. national debt.&nbsp; It increased by more than a trillion dollars during the fiscal year that ended a few months ago, and it is on pace to approximately double during Obama&rsquo;s eight years in the White House.</p> <p><a href="" target="_blank" title="$40,000,000,000,000">$40,000,000,000,000</a> &ndash; There are five &ldquo;too big to fail&rdquo; banks in the United States that each have more than 40 TRILLION dollars worth of exposure to derivatives.&nbsp; This is a &ldquo;sword of Damocles&rdquo; that could destroy our financial system and our entire economy at any time.&nbsp; Let&rsquo;s just hope that it does not happen in 2015.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="365" height="243" alt="" src="" /> </div> </div> </div> Barack Obama Census Bureau China Fail FBI Iraq National Debt NBC Obamacare Shenzhen Too Big To Fail Twitter Twitter Ukraine Wall Street Journal White House Thu, 25 Dec 2014 03:00:37 +0000 Tyler Durden 499539 at The Christmas Hope: A To-Do List for a Better World <p><a href=""><em>Submitted by John W. Whitehead via The Rutherford Institute</em></a>,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The Christmas hope for peace and good will toward all men can no longer be dismissed as a kind of pious dream of some utopian. If we don&rsquo;t have good will toward men in this world, we will destroy ourselves by the misuse of our own instruments and our own power. Wisdom born of experience should tell us that war is obsolete. We must either learn to live together as brothers or we are going to perish together as fools.&rdquo;&mdash;Reverend Martin Luther King, Jr., Christmas Eve sermon, 1967</p> </blockquote> <p>As a child, my Christmas wish list came right out of the Sears and Roebuck catalogue&mdash;toys, board games, bikes, action figures, etc. My parents, like so many in their day, belonged to the working-class poor, so while I never lacked for the necessities of life, many of the items on my wish list never came to be. Even so, I was no worse off for it.</p> <p>I wish the same could be said of those still unfulfilled items on my adult Christmas wish list. Each year, I wish for the same things&mdash;an end to war, poverty, hunger, violence and disease&mdash;and each year, I find the world relatively unchanged. Millions continue to die every year, casualties of a world that places greater value on war machines and profit margins than human life.</p> <p>I&rsquo;ve seen enough of the world in my 68 years to know that wishing is not enough. We need to be&nbsp;<em>doing</em>. It&rsquo;s not possible to solve all of the world&rsquo;s problems right away. For most people, putting an end to world hunger, poverty, disease and the police state may seem too insurmountable a task to even tackle. But as I point out in my book <u><a href=""><em>A Government of Wolves: The Emerging American Police State</em></a></u>, there are practical steps each of us can take to hopefully get things moving in the right direction. Here&rsquo;s what I would suggest for a start:</p> <p><em><strong>Tone down the partisan rhetoric, the &ldquo;us&rdquo; vs. &ldquo;them&rdquo; mentality</strong>.</em>&nbsp;Politicians frequently perpetuate a &ldquo;good&rdquo; versus &ldquo;evil,&rdquo; &ldquo;us&rdquo; versus &ldquo;them&rdquo; rhetoric which pits citizen against citizen and allows the politicians to advance their personal, political agendas. Instead of wasting time and resources on political infighting, which gets us nowhere, it&rsquo;s time Americans learned to work together to solve the problems before us. The best place to start is in your own communities, neighbor to neighbor. After all, at the end of the day, it makes no difference what politician you voted for&mdash;Republican, Democrat or otherwise&mdash;politics will never be the answer. Politicians have mastered the art of creating dissension, but they&rsquo;re all the same. Grassroots activism is the only kind of change you can count on.</p> <p><em><strong>Turn off the TV and tune into what&rsquo;s happening in your family, in your community and your world</strong>.</em>&nbsp;Read your local newspaper. Attend a school board or city council meeting. Get involved with a nonprofit that works in your community. Whatever you do, reduce your intake of mindless television and entertainment news. The only reality programming worth taking notice of is the one playing in your home and community.</p> <p><em><strong>Show compassion to those in need, be kind to those around you, forgive those who have wronged you, and teach your children to do the same</strong>.</em>&nbsp;Increasingly, people seem to be forgetting their p&rsquo;s and q&rsquo;s&mdash;basic manners that were drilled into older generations. I&rsquo;m talking about simple things like holding a door open for someone, helping someone stranded on the side of the road, and saying &ldquo;please&rdquo; and &ldquo;thank you&rdquo; to those who do you a service&mdash;whether it be to the teenager bagging your groceries or the family member who just passed the potatoes. As author Robert Heinlein observed, &ldquo;A dying culture invariably exhibits personal rudeness. Bad manners. Lack of consideration for others in minor matters. A loss of politeness, of gentle manners, is more significant than is a riot...&rdquo;</p> <p><em><strong>Talk less, listen more</strong>. Take less, and give more.</em>&nbsp;If people spent less time dwelling on and attending to their own needs and more time trying to help and understand those around them, many of the problems we currently face could be eliminated.</p> <p><em><strong>Stop acting entitled and start being empowered</strong>.</em>&nbsp;We have moved into the Age of Entitlement, where more and more people feel entitled to certain benefits without having to work for them. There&rsquo;s nothing wrong with helping those less fortunate, but as my parents taught me, there&rsquo;s a lot to be said for an honest day&rsquo;s work.</p> <p><em><strong>Remember that all people are endowed with inalienable rights</strong></em>. I&rsquo;ve heard a lot of chatter in recent years in favor of torturing detainees and denying basic rights to non-citizens, but doing so not only goes against everything that the U.S. is supposed to stand for, but it also goes against every principle common to all world religions&mdash;forgiveness, charity, nonjudgmentalism, nonviolence, etc. America cannot continue to lambast terrorist groups for their contempt for human life and dignity when our own nation violates these same principles time and again.</p> <p><em><strong>Stop being a hater</strong></em>. Increasingly, we as a society have come to reflect the hostility at work in the world at large. This is so even in such a virtual microcrosm as Facebook, where &ldquo;unfriending&rdquo; those with whom you might disagree has become commonplace. How can we ever hope to curb the hatred and animosity that have spurred global terrorism over the past few decades if we can&rsquo;t even forgive the human failings of those in our immediate circles?</p> <p><em><strong>Learn tolerance in the true sense of the word</strong></em>. There&rsquo;s no need to legislate tolerance through hate crime legislation and other politically correct mechanisms of compliance. True tolerance stems from a basic respect for one&rsquo;s fellow man or woman. And it should be taught to children from the time they can understand right from wrong.</p> <p><em><strong>Treat women like people, not things</strong>.</em>&nbsp;If pop culture and the media are any reflection of how women and girls are viewed today&mdash;primarily as sex objects&mdash;then one can only wonder what exactly the women&rsquo;s rights movement has been doing in recent years. The use of sex and its impact on young girls is particularly troubling. As professor Henry A. Giroux observed: &ldquo;Market strategists are increasingly using sexually charged images to sell commodities, often representing the fantasies of an adult version of sexuality. For instance, Abercrombie &amp; Fitch, a clothing franchise for young people, has earned a reputation for its risqué catalogues filled with promotional ads of scantily clad kids and its over-the-top sexual advice columns for teens and preteens; one catalogue featured an ad for thongs for ten-year-olds with the words &lsquo;eye candy&rsquo; and &lsquo;wink wink&rsquo; written on them. Another clothing store sold underwear geared toward teens with &lsquo;Who needs Credit Cards ...?&rsquo; written across the crotch. Children as young as six years old are being sold lacy underwear, push-up bras and &lsquo;date night accessories&rsquo; for their various doll collections. In 2006, the Tesco department store chain sold a pole dancing kit designed for young girls to unleash the sex kitten inside.&rdquo;</p> <p><em><strong>Value your family</strong></em>. The traditional family, such that it is, is already in great disrepair, torn apart by divorce, infidelity, overscheduling, overwork, materialism, and an absence of spirituality. Despite the billions we spend on childcare, toys, clothes, private lessons, etc., a concern for our children no longer seems to be a prime factor in how we live our lives. And now we are beginning to see the blowback from collapsing familial relationships. Indeed, more and more, I hear about young people refusing to talk to their parents, grandparents being denied access to their grandchildren, and older individuals left to molder away in nursing homes. Yet without the family, the true building block of our nation, there can be no freedom.</p> <p><em><strong>Feed the hungry, shelter the homeless and comfort the lonely and broken-hearted</strong>.</em>&nbsp;Volunteer at a soup kitchen. Take part in local food drives. Take a meal to a needy family. &ldquo;Adopt&rdquo; an elderly person at a nursing home. Support the creation of local homeless shelters in your community. Urge your churches, synagogues and mosques to act as rotating thermal shelters for the homeless during the cold winter months.</p> <p><em><strong>Give peace a chance</strong>.&nbsp;</em>So far, the wars in Afghanistan, Iraq, and Pakistan have cost American taxpayers more than $4 trillion, and that doesn&rsquo;t even begin to approach the human cost in lives lost&mdash;military and civilian&mdash;and families rent asunder. The military industrial complex has a lot to gain financially so long as America continues to wage its wars at home and abroad, but you can be sure that the American people will lose everything unless we find some way to give peace a chance. We can start by bringing all of our men and women in uniform home.</p> <p><em><strong>Start your own teaspoon brigade</strong>.&nbsp;</em>&nbsp;You don&rsquo;t have to solve all the world&rsquo;s problems single-handedly, nor do you have to solve them overnight. Little by little, you&rsquo;ll get there, but you have to start somewhere. It is up to each of us to do our part to make this a better world for all. As the legendary singer, songwriter and activist Pete Seeger once remarked to me:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>I tell everybody a little parable about the &ldquo;teaspoon brigades.&rdquo; Imagine a big seesaw. One end of the seesaw is on the ground because it has a big basket half full of rocks in it. The other end of the seesaw is up in the air because it&rsquo;s got a basket one-quarter full of sand. Some of us have teaspoons, and we are trying to fill it up. Most people are scoffing at us. They say, &ldquo;People like you have been trying for thousands of years, but it is leaking out of that basket as fast as you are putting it in.&rdquo; Our answer is that we are getting more people with teaspoons every day. And we believe that one of these days or years&mdash;who knows&mdash;that basket of sand is going to be so full that you are going to see that whole seesaw going zoop! in the other direction. Then people are going to say, &ldquo;How did it happen so suddenly?&rdquo; And we answer, &ldquo;Us and our little teaspoons over thousands of years.&rdquo;</p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="340" height="423" alt="" src="" /> </div> </div> </div> Afghanistan ETC Fitch Iraq Newspaper Reality Sears Thu, 25 Dec 2014 02:45:50 +0000 Tyler Durden 499532 at Fukushima Children Thyroid Cancer Rate Continues To Rise <p>Fukushima prefecture has been conducting regular checkups of over 360,000 people who were in Fukushima in March 2011 and were age 18 or under when the nuclear crisis struck. <a href="">As WSJ reported in August,</a> a <a href="">study by researchers in Fukushima prefecture</a> found 57 minors in the prefecture have been diagnosed with thyroid cancer so far and another 46 are showing symptoms that suggest they may also have the disease. Today, <a href="">as The Japan Times reports,</a> four more children are suspected of suffering from thyroid cancer in the latest survey bringing the total to <strong>107 out of 385,000 now surveyed</strong>. This is <strong>dramatically higher than the normal "between 5 to 11 cases per million people,"</strong> that Okayama University professor Toshihide Tsuda cites for national statistics between 1975 and 2008.</p> <p><a href=""><em>As The Japan Times reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Four more children are suspected of suffering from thyroid cancer in the latest survey</strong> on the possible health impact of the 2011 triple meltdown at Tepco’s wrecked Fukushima No. 1 plant, sources said Tuesday.</p> <p>&nbsp;</p> <p><strong>The four, who were 6 to 17 years old at the time of the disaster,</strong> had been diagnosed as not having the cancer in the first survey that was conducted within three years of the meltdowns, they said.</p> <p>&nbsp;</p> <p><strong>The first survey covered all 370,000 children in the prefecture who were aged 18 or younger at the time of the disaster. The second survey , which began last April, covers some 385,000 children, adding those born a year after the disaster struck.</strong></p> <p>&nbsp;</p> <p>Researchers at Fukushima Medical University, which has been leading the study, will work to confirm if the four have developed the cancer and carefully study if the cases are due to the influence of radiation, according to the sources.</p> <p>&nbsp;</p> <p>The university takes the results of the first survey as the basic data in <strong>assessing whether cases of the cancer may increase in the future.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p><a href="">The increasing rate of discovery of thyroid cancer rates among children from the time of the Fukushima disaster is being played down by authorities based on this utter crap</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"Studies published as early as 1947 demonstrated it [the commonality of papillary child thyroid cancer], and more recently, a report has shown that <strong>nearly every thyroid gland might be found to have a cancer if examined closely enough</strong>."</p> </blockquote> <p>Even as one lone voice spoke up...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>One dissenter, Okayama University professor Toshihide Tsuda, purported that <strong>the frequency of child thyroid problems in Fukushima Prefecture is “several tens of times” higher than before the accident</strong>. He said national statistics between 1975 and 2008 showed a variance of between 5 to 11 cases per million people.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Given the bullshit that Japan's political leaders spew day after day with no consequences, we suggest taking any 'positive' post-radiation-exposure news with a pinch of salt and remaining highly skeptical. If 'experts' can claim the Japanese economy is recovering when it enters a quadruple-dip-depression, then what hope for ivory tower nuclear scientists?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="317" height="300" alt="" src="" /> </div> </div> </div> CRAP Japan Meltdown Thu, 25 Dec 2014 02:05:35 +0000 Tyler Durden 499545 at We Live In A New World And The Saudis Are The First To Get It <p><a href=""><em>Submitted by Raul Ilargi Meijer via The Automatic Earth blog</em></a>,</p> <p><strong>There are many things I don&rsquo;t understand these days, and some are undoubtedly due to the limits of my brain power. But at the same time some are not.</strong> I&rsquo;m the kind of person who can no longer believe that anyone would get excited over a 5% American GDP growth number. Not even with any other details thrown in, just simply a print like that. It&rsquo;s so completely out of left field and out of proportion that you would think by now at least a few more people understand what&rsquo;s really going on.</p> <p>And Tyler Durden breaks it down well enough in <a href="" target="new"><span style="font-size:13px;color: #FF2222;font-weight:bold">Here Is The Reason For The &ldquo;Surge&rdquo; In Q3 GDP</span></a> (delayed health-care spending stats make up for 2/3 of the 5%), but still. I would have hoped that more Americans had clued in to the nonsense that has been behind such numbers for many years now. The US has been buying whatever growth politicians can squeeze out of the data and their manipulation, for many years. The entire world has.</p> <p><strong>The 5% stat is portrayed as being due to increased consumer spending. But most of that is health-care related. And economies don&rsquo;t grow because people increase spending on not being sick and/or miserable. That&rsquo;s just an accounting trick. The economy doesn&rsquo;t get better if we all drive our cars into a tree, even if GDP numbers would say otherwise.</strong></p> <p>All the MSM headlines about consumer confidence and comfort and all that, it doesn&rsquo;t square with the 43 million US citizens condemned to living on food stamps. I remember Halloween spending (I know, that&rsquo;s Q4) was down an atrocious -11%, but the Q3 GDP print was +5%? Why would anyone volunteer to believe that? Do they all feel so bad any sliver of &lsquo;good news&rsquo; helps? Are we really that desperate?</p> <p><strong>We already saw the other day that Texas is ramming its way right into a recession, and North Dakota is not far behind (training to be a driller is not great career choice going forward), and T. Boone Pickens of all people confirmed today at CNBC what we already knew: the number of oil rigs in the US is about to do a Wile E. cliff act.</strong> And oil prices fall because global demand is down, as much as because supply is up. A crucial point that few seem to grasp; the Saudis do though. Good for US GDP, you say?</p> <p>What I see more than anything in the 5% print is a set-up for a Fed rate hike, through a variation on the completion backward principle, i.e. have the message fit the purpose, set up a narrative that makes it make total sense for Yellen to hike that rate. And Wall Street banks (that&rsquo;s not just the American ones) will be ready to reap the rewards of the ensuing chaos.</p> <p><strong>And I also don&rsquo;t understand why nobody seems to understand what Saudi Arabia and OPEC have consistently been saying for ever now.</strong> They&rsquo;re not going to cut their oil production. Not going to happen. The Saudis, probably more than anyone, are the guys who know what demand is really like out there (they see it and track it on a daily basis), and that&rsquo;s why they&rsquo;ll let oil drop as far as it will go. There&rsquo;s no other way out anymore, no use calling a bottom anywhere.</p> <p><strong>In the two largest markets, US demand is down through far less miles driven for a number of years now, while domestic supply is way up; at the same time, real Chinese demand is way below what anybody projects, and oil is just one of many industries that have set their &ndash; corporate &ndash; strategies to fit expected China growth numbers that never materialized.</strong> Just you watch what other &ndash; industrial &ndash; commodities fields are going to do and show in 2015. Or simply look at prices for iron ore, copper etc. today.</p> <p style="margin-left: 20px;"><a href="" target="new"><span style="font-size:13px;color: #FF2222;font-weight:bold"> OPEC Leader Vows Not To Cut Oil Output Even If Price Hits $20 </span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><i>In an unusually frank interview, Ali al-Naimi, the Saudi oil minister, tore up OPEC&rsquo;s traditional strategy of keeping prices high by limiting oil output and replaced it with a new policy of defending the cartel&rsquo;s market share at all costs. &ldquo;It is not in the interest of OPEC producers to cut their production, whatever the price is,&rdquo; he told the Middle East Economic Survey. &ldquo;Whether it goes down to $20, $40, $50, $60, it is irrelevant.&rdquo; He said the world may never see $100 a barrel oil again.</i></p> <p>&nbsp;</p> <p><i>The comments, from a man who is often described as the most influential figure in the energy industry, marked the first time that Mr Naimi has explained the strategy shift in detail. They represent a &ldquo;fundamental change&rdquo; in OPEC policy that is more far-reaching than any seen since the 1970s, said Jamie Webster, oil analyst at IHS Energy. &ldquo;We have entered a scary time for the oil market and for the next several years we are going to be dealing with a lot of volatility,&rdquo; he said. &ldquo;Just about everything will be touched by this.&rdquo;</i></p> </blockquote> <p><strong>Saudi Arabia is desperate alright, but not nearly as much as most other producers</strong>: they have seen this coming, they&rsquo;ve been tracking it hour by hour, and then made their move. And they have some room to move yet. Many other producers don&rsquo;t. Not inside OPEC, and certainly not outside of it. Russia should be relatively okay, they&rsquo;re smart enough to see these things coming too, and adapt accordingly. Many other nations don&rsquo;t and haven&rsquo;t, perhaps simply because they have no room left. Anatole Kaletsky makes quite a bit of sense at Reuters:</p> <p style="margin-left: 20px;"><a href="" target="new"><span style="font-size:13px;color: #FF2222;font-weight:bold"> The Reason Oil Could Drop As Low As $20 Per Barrel </span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><i>&hellip; the global oil market will move toward normal competitive conditions in which prices are set by the marginal production costs, rather than Saudi or OPEC monopoly power. This may seem like a far-fetched scenario, but it is more or less how the oil market worked for two decades from 1986 to 2004.</i></p> <p>&nbsp;</p> <p><i>Whichever outcome finally puts a floor under prices, we can be confident that the process will take a long time to unfold. It is inconceivable that just a few months of falling prices will be enough time for the Saudis to either break the Iranian-Russian axis or reverse the growth of shale oil production in the United States. It is equally inconceivable that the oil market could quickly transition from OPEC domination to a normal competitive one. </i></p> <p>&nbsp;</p> <p><i>The many bullish oil investors who still expect prices to rebound quickly to their pre-slump trading range are likely to be disappointed. The best that oil bulls can hope for is that a new, and substantially lower, trading range may be established as the multi-year battles over Middle East dominance and oil-market share play out. The key question is whether the present price of around $55 will prove closer to the floor or the ceiling of this new range. [..]</i></p> <p>&nbsp;</p> <p><i>&hellip; the demarcation line between the monopolistic and competitive regimes at a little below $50 a barrel seems a reasonable estimate of where one boundary of the new long-term trading range might end up. But will $50 be a floor or a ceiling for the oil price in the years ahead?</i></p> <p>&nbsp;</p> <p><i>There are several reasons to expect a new trading range as low as $20 to $50, as in the period from 1986 to 2004. Technological and environmental pressures are reducing long-term oil demand and threatening to turn much of the high-cost oil outside the Middle East into a &ldquo;stranded asset&rdquo; similar to the earth&rsquo;s vast unwanted coal reserves. [..]</i></p> <p>&nbsp;</p> <p><i>The U.S. shale revolution is perhaps the strongest argument for a return to competitive pricing instead of the OPEC-dominated monopoly regimes of 1974-85 and 2005-14. Although shale oil is relatively costly, production can be turned on and off much more easily &ndash; and cheaply &ndash; than from conventional oilfields. This means that shale prospectors should now be the &ldquo;swing producers&rdquo; in global oil markets instead of the Saudis. </i></p> <p>&nbsp;</p> <p><i>In a truly competitive market, the Saudis and other low-cost producers would always be pumping at maximum output, while shale shuts off when demand is weak and ramps up when demand is strong. This competitive logic suggests that marginal costs of U.S. shale oil, generally estimated at $40 to $50, should in the future be a ceiling for global oil prices, not a floor.</i></p> </blockquote> <p>As Kaletsky also suggests, there is the option of a return to an OPEC monopoly and much higher prices, but I personally don&rsquo;t see that. It would need to mean a return to prolific global economic growth numbers, and I simply can&rsquo;t see where that would come from.</p> <p><strong>Meanwhile, there&rsquo;s the issue of &lsquo;anti-Putin&rsquo; sanctions hurting western companies, with an asset swap between Gazprom and German chemical giant BASF that went south, and a failed deal between Morgan Stanley and Rosneft as just two examples, and that leads me to think pressure to lift or ease these sanctions will rise considerably in 2015.</strong> Why Angela Merkel is so set on punishing her (former?) friend Putin, I don&rsquo;t know, but I can&rsquo;t see how she can ignore domestic corporate pressure to wind down much longer. Russia is part of the global economic system, and excluding it &ndash; on flimsy charges to boot &ndash; is damaging for Germany and the rest of Europe.</p> <p>Finally, still on the topic of oil and gas, Wolf Richter provides another excellent analysis and breakdown of US shale.</p> <p style="margin-left: 20px;"><a href="" target="new"><span style="font-size:13px;color: #FF2222;font-weight:bold"> First Oil, Now US Natural Gas Plunges off the Chart </span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><i>It&rsquo;s showing up everywhere. Take Samson Resources. As is typical in that space, there is a Wall Street angle to it. One of the largest closely-held exploration and production companies, Samson was acquired for $7.2 billion in 2011 by private-equity firms KKR, Itochu Corp., Crestview Partners, and NGP Energy Capital Management. They ponied up $4.1 billion. For the rest of the acquisition costs, they loaded up the company with $3.6 billion in new debt. In addition to the interest expense on this debt, Samson is paying &ldquo;management fees&rdquo; to these PE firms, starting at $20 million per year and increasing by 5% every year.</i></p> <p>&nbsp;</p> <p><i>KKR is famous for leading the largest LBO in history in 2007 at the cusp of the Financial Crisis. The buyout of a Texas utility, now called Energy Future Holdings Corp., was a bet that NG prices would rise forevermore, thus giving the coal-focused utility a leg up. But NG prices soon collapsed. And in April 2014, the company filed for bankruptcy. Now KKR is stuck with Samson. Being focused on NG, the company is another bet that NG prices would rise forevermore. But in 2011, they went on to collapse further. In 2014 through September, the company lost $471 million, the Wall Street Journal reported, bringing the total loss since acquisition to over $3 billion. This is what happens when the cost of production exceeds the price of NG for years.</i></p> <p>&nbsp;</p> <p><i>Samson has used up almost all of its available credit. In order to stay afloat a while longer, it is selling off a good part of its oil-and-gas fields in Oklahoma, North Dakota, Wyoming, and Colorado. It&rsquo;s shedding workers. Production will decline with the asset sales &ndash; the reverse of what investors in its bonds had been promised. Samson&rsquo;s junk bonds have been eviscerated. In early August, the $2.25 billion of 9.75% bonds due in 2020 still traded at 103.5 cents on the dollar. By December 1, they were down to 56 cents on the dollar. Now they trade for 43.5 cents on the dollar. They&rsquo;d plunged 58% in four months.</i></p> <p>&nbsp;</p> <p><i>The collapse of oil and gas prices hasn&rsquo;t rubbed off on the enthusiasm that PE firms portray in order to attract new money from pension funds and the like. &ldquo;We see this as a real opportunity,&rdquo; explained KKR co-founder Henry Kravis at a conference in November. KKR, Apollo Global Management, Carlyle, Warburg Pincus, Blackstone and many other PE firms traipsed all over the oil patch, buying or investing in E&amp;P companies, stripping out whatever equity was in them, and loading them up with piles of what was not long ago very cheap junk bonds and even more toxic leveraged loans.This is how Wall Street fired up the fracking boom.</i></p> <p>&nbsp;</p> <p><i>PE firms gathered over $100 billion in their energy funds since 2011. The nine publicly traded E&amp;P companies that represent the largest holdings have cost PE firms at least $12.7 billion, the Wall Street Journal figured. This doesn&rsquo;t include their losses on the smaller holdings. Nor does it include losses from companies like Samson that are not publicly traded. And it doesn&rsquo;t include losses pocketed by bondholders and leveraged loan holders or all the millions of stockholders out there. </i></p> <p>&nbsp;</p> <p><i>Undeterred, Blackstone is raising its second energy-focused fund; it has a $4.5 billion target, Bloomberg reported. The plunge in oil and gas prices &ldquo;has not created a lot of difficulties for us,&rdquo; CEO Schwarzman explained at a conference on December 10. KKR&rsquo;s Kravis said at the same conference that he welcomed the collapse as an opportunity. Carlyle co-CEO Rubenstein expected the next 5 to 10 years to be &ldquo;one of the greatest times&rdquo; to invest in the oil patch.</i></p> <p>&nbsp;</p> <p><i>The problem? &ldquo;If you have an asset you already own, it&rsquo;s probably going to go down in value,&rdquo; Rubenstein admitted. But if you&rsquo;ve got money to invest, in Carlyle&rsquo;s case about $7 billion, &ldquo;it&rsquo;s a great time to buy.&rdquo; They all agree: opportunities will be bountiful for those folks who refused to believe the hype about fracking over the past few years and who haven&rsquo;t sunk their money into energy companies. Or those who got out in time. </i></p> </blockquote> <p><strong>We live in a new world, and the Saudis are either the only or the first ones to understand that. </strong>Because they are so early to notice, and adapt, I would expect them to come out relatively well. But I would fear for many of the others. And that includes a real fear of pretty extreme reactions, and violence, in quite a few oil-producing nations that have kept a lid on their potential domestic unrest to date. It would also include a <strong>lot of ugliness in the US shale patch, with a great loss of jobs</strong> (something it will have in common with North Sea oil, among others), but perhaps even more with profound mayhem for many investors in US energy. <em>And then we&rsquo;re right back to your pension plans.</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="695" height="497" alt="" src="" /> </div> </div> </div> Carlyle China Consumer Confidence Copper ETC Germany headlines KKR LBO Market Share Middle East Morgan Stanley Natural Gas NG Oklahoma OPEC Recession Reuters Saudi Arabia Tyler Durden Volatility Wall Street Journal Thu, 25 Dec 2014 01:32:40 +0000 Tyler Durden 499537 at Make No Mistake, The Oil Slump Is Going To Hurt The US Too <p><a href=""><em>Submitted by Marin Katusa via Casey Research</em></a>,</p> <p><strong>If you only paid attention to the mainstream media, you&rsquo;d be forgiven for thinking that the US is going to get away from the collapse in oil prices scot free. According to popular belief, America is even going to be a net winner from cheaper oil prices, because they will act like a tax cut for US consumers. Or so we are told.</strong></p> <p>In reality, though, many of the jobs the US energy boom has created in the last few years are now at risk, and their loss could drag the economy into a recession.</p> <p><strong>The view that cheaper oil automatically boosts US GDP is overly simplistic.</strong> It assumes that US consumers will spend the money they save at the pump on US-made goods rather than imports. And it assumes consumers won&rsquo;t save some of this windfall rather than spending it.</p> <p>Those are shaky enough. But the story that cheap fuel for our cars is good for us is also based on an even more dangerous assumption: that the price of oil won&rsquo;t fall far enough to wipe out the US shale sector, or at least seriously impact the volume of US oil production.</p> <p>The nightmare for the US oil industry is that the only way that the market mechanism can eliminate the global oil glut&mdash;without a formal agreement between OPEC, Russia, and other producers to cut production&mdash;is if the price of oil falls below the &ldquo;cash cost&rdquo; of production, i.e., it reaches the price at which oil companies lose money on every single barrel they produce.</p> <p><strong><u>If oil doesn&rsquo;t sink below the cash cost of production, then we&rsquo;ll have more of what we&rsquo;re seeing now. US shale producers, like oil companies the world over, are only going to continue to add to the global oil glut&mdash;now running at 2-4 million barrels per day&mdash;by keeping their existing wells going full tilt.</u></strong></p> <p>True, oil would have to fall even further if it&rsquo;s going to rebalance the oil market by bankrupting the world&rsquo;s most marginal producers. But that&rsquo;s what&rsquo;s bound to happen if the oversupply continues. And because North American shale producers have relatively high cash costs (in the $30 range), the Saudis could very well succeed in making a big portion of US and Canadian oil production disappear, if they are determined to.</p> <p style="text-align: center;"><a href=""><img alt="" src="" style="width: 599px; height: 454px;" /></a></p> <p style="text-align: center;">&nbsp;</p> <p><strong>In this scenario, the US is clearly headed for a recession, because the US owes nearly all the jobs that have been created in the last few years to the shale boom.</strong> All those related jobs in equipment, manufacturing, and transportation are also at stake. It&rsquo;s no accident that all new jobs created since June 2009 have been in the five shale states, with Texas home to 40% of them.</p> <p style="text-align: center;"><a href=""><img height="457" src="" width="600" /></a></p> <p>Even if oil were to recover to $70, $1 trillion of global oil-sector capital expenditure&mdash;in fields representing up to 7.5 million bbl/d of production&mdash;would be at risk, according to Goldman Sachs. And that doesn&rsquo;t even include the US shale sector!</p> <p>Unless the price of oil miraculously recovers, tens of billions of dollars worth of oil- and gas-related capital expenditure in the US is going to dry up next year. While US oil and gas capex only represents about 1% of GDP, it still amounts to 10% of total US capex.</p> <p style="text-align: center;"><a href=""><img alt="" src="" style="width: 600px; height: 552px;" /></a></p> <p>We&rsquo;re not lost quite yet. Producers can hang on for a while, since there has been a lot of forward hedging at higher prices. But eventually hedges run out&mdash;and if the price of oil stays down sufficiently long, then the US is facing a massive amount of capital destruction in the energy industry.</p> <p><strong>There will be spillover into the financial arena, as well.</strong> Energy junk bonds may only account for 15% of the US junk bond market, or $200 billion, but the banks are also exposed to $300 billion in leveraged loans to the energy sector. Some of these lenders are local and regional banks, like Oklahoma-based BOK Financial, which has to be nervously eyeing the 19% of its portfolio that&rsquo;s made up of energy loans.</p> <p>If oil prices stay at $55 a barrel, a third of companies rated B or CCC may be unable to meet their obligations, according to Deutsche Bank. But that looks like a conservative estimate, considering that many North American shale oil fields don&rsquo;t make money below $55. And fully 50% are uneconomic at $50.</p> <p><strong>So if oil falls to $40 a barrel, a cascading 2008-style financial collapse, at least in the junk bond market, is in the cards.</strong> No wonder the too-big-to-fail banks slipped a measure into the recently passed budget bill that put the US taxpayer back on the hook to insure any ill-advised derivatives trades!</p> <p><strong>We know what happened the last time a bubble in financial assets popped in the US.</strong> There was a banking crisis, a serious recession, and a big spike in unemployment. It&rsquo;s hard to see why it should be different this time.</p> <p>It&rsquo;s a crying shame. <strong><u>The US has come so close to becoming energy independent. But it&rsquo;s going to have to get its head around the idea that it could become a big oil importer again. In the end, the US energy boom may add up to nothing more than an illusion dependent upon the artificially cheap debt environment created by the Federal Reserve&rsquo;s easy money policy.</u></strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>To find out more, sign up for Marin Katusa&rsquo;s just-launched advisory, The Colder War Letter.</em></p> <p><em>You&rsquo;ll also receive monthly updates on the latest geopolitical moves in this struggle to control the world&rsquo;s oil pricing and the energy sector at large and what it means for your personal wealth. Plus, you&rsquo;ll get a free hardback copy of Marin&rsquo;s New York Times bestselling book, The Colder War, just for signing up today. <u><a href="" target="_blank">Click here for all the details.</a></u></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="672" height="509" alt="" src="" /> </div> </div> </div> B+ Bond Deutsche Bank Federal Reserve Goldman Sachs goldman sachs New York Times OPEC Reality Recession Regional Banks Unemployment Thu, 25 Dec 2014 01:30:15 +0000 Tyler Durden 499544 at The Last-Minute Christmas Shopping Tip List <p>Battling the mob of moar-buyers in the mall? <em>Here are some crucial tips...</em></p> <p>&nbsp;</p> <p><a href=""><img src="" width="574" height="624" /></a></p> <p>&nbsp;</p> <p><em>h/t @ThePoke</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="574" height="624" alt="" src="" /> </div> </div> </div> Thu, 25 Dec 2014 00:55:04 +0000 Tyler Durden 499543 at The Dangerous Economics of Shale Oil <p><a href=""><em>Submitted by Dave Fairtex via Peak</em></a>,</p> <p>For years, <a href="" target="_blank">we&#39;ve been warning</a> here at that the <strong>economics of the US &#39;shale revolution&#39; were suspect</strong>. Namely, that they&#39;ve only been made possible by the new era of &#39;expensive&#39; oil (an average oil price of between $80-$100 per barrel). We&#39;ve argued that many players in the shale industry simply wouldn&#39;t be able to operate profitably at lower prices.</p> <p><strong>Well, with oil prices now suddenly sub-$60 per barrel, we&#39;re about to find out.</strong></p> <p>Using the traditional corporate income statement, it is difficult to determine if shale drilling companies make money. There are a lot of moving parts, some deliberate obfuscation at some companies, and the massive decline rates make analysis difficult &ndash; since so much of reported profitability depends on assumptions made regarding depreciation and depletion.</p> <p><u><strong>So, can shale oil be profitable? If so, at what price? And under what conditions?</strong></u></p> <p>I try to deconstruct all this here.</p> <h2><u>Technology</u></h2> <p>A shale well consists of a vertical shaft that drives down into the earth to get to the right geological layer where the oil is located. Then the shaft bends 90 degrees, and extends horizontally 5000-10000 feet. It is in the horizontal section where the magic takes place. At intervals along the horizontal section, the &ldquo;frac stages&rdquo; happen, each of which fracture the surrounding rock to release the oil locked inside the rock.</p> <p>Constructing a shale well happens in two stages. First both the vertical and horizontal sections of the well are drilled, and that costs around $4 million taking perhaps 20 days. Then, the well is &ldquo;completed&rdquo; - this is where the frac stages are placed. Each frac stage costs around $70k, and there are often 20-30 frac stages per well. The entire completion process costs around $4M. Once completed, the well starts producing oil and gas.</p> <p>The initial production (IP) of a new well is a critical number for estimating the total amount of oil likely to be produced over the lifetime of the well (&ldquo;Estimated Ultimate Recovery&rdquo; = EUR), along with the expected decline rate. While the EUR is a theoretical number and assumes a recovery time of 10-30 years, from a practical standpoint, companies need to recoup the costs of drilling the well within 3 years.</p> <p>Shale drilling has dramatically improved over the past five years. Horizontal lengths have doubled, upgraded drill rigs result in fewer breakdowns and faster drilling speeds, pad drilling has eliminated the downtime required to move the drill.</p> <p>Today&#39;s wells (vs wells drilled in 2008-2011) have horizontal sections twice as long, with three times more frac stages, with closer frac groupings, and the wells are drilled in about half the time. This results in wells that produce about twice as much, and take half the time to drill. However at the same time, many of the best spots have already been drilled, so the significant improvements in drilling efficiency have only been able to increase per-well production by a modest amount &ndash; perhaps 7%.</p> <h2><u>Regions, Geography, Decline Rates</u></h2> <p>There are three primary geographical regions where shale oil drilling takes place: Bakken, Eagle Ford, and the Permian Basin. Total production in these three areas: 4.6 mbpd, or 92% of shale-region oil production in the US. Shale regions provide all the growth in US domestic oil production.</p> <p class="rtecenter" style="text-align: center;"><img alt="" src="" style="height: 450px; width: 600px;" /></p> <p>Of these three areas, Bakken and Eagle Ford are the most productive oil shale areas, and of these two regions, I&#39;ve selected the Bakken for a more detailed analysis.</p> <h2><u>Decline Rates</u></h2> <p>The decline rate of shale is the defining characteristic of a shale well, and a shale region. Decline rates vary by region. On average, the Eagle Ford region has a 62% decline rate, the Bakken region overall has a 54% rate, and the Permian region (many wells there are not horizontal wells) declines at a 33% rate.</p> <p>Individual wells decline more rapidly, and most steeply in their first year of production: Bakken wells decline at a 72% rate for the first year, and then more slowly in the following years. Many Permian wells are vertical wells, and so their decline rates are much more gradual, accounting for the slower Permian region decline rate.</p> <p>If a well&#39;s IP (initial production) is 1000 bbl/day, a 72% well decline rate means that one year later, that well will only be producing 280 bbl/day. With the IP=1000, the first year production is 205k bbls, and the EUR (lifetime theoretical) is 650k bbls. Here is a look at changes in the decline rates of the different regions over time. [source: <a href="" title=""></a>]</p> <p class="rtecenter" style="text-align: center;"><img alt="" src="" style="height: 450px; width: 600px;" /></p> <h2><u>Drilling Rights</u></h2> <p>In order to acquire the right to drill on a particular patch of land, the drilling company must purchase these rights from the landowner, and/or another drilling company that has already bought the rights. In the most productive areas such as the Bakken shale, rights are expensive, with recent transactions priced around $10k per acre.</p> <p>After a fair amount of experimentation, drillers have determined they can put from 1-3 wells on one square mile before the wells start interfering with each other. There are 640 acres per square mile, therefore drilling rights are about $6.4M/square mile. This makes land costs to be around $2M-$6M per well.</p> <p>Before you can drill, you have to get the rights. Typically, you go into debt in order to buy the rights, then you start drilling to recoup your investment and pay the interest costs on all that debt. Maybe you can even sell those rights to someone else for a profit. That&#39;s the ponzi aspect of shale: buying land rights with junk bond financing for $2000/acre, and selling those right off to an unsuspecting oil major for $10,000/acre.</p> <p>Rights only last from 5-10 years. Failure to drill = wasted money.</p> <h2><u>Shale Economics</u></h2> <p>To understand the economics of shale, we view company performance through the lens of accounting. A good accountant is a historian, honestly assessing the success or failure of a particular venture. (A bad accountant &ndash; at Enron, for example &ndash; is a fiction writer).</p> <p>So first, some accounting terms:</p> <ul> <li> <p><b>Revenues</b>: barrels of oil sold x the price of oil. Its pretty simple.</p> </li> <li> <p><b>Capex</b>: capital expenditures. In shale, this is all the costs involved in drilling and completing wells, purchasing equipment, land drilling rights, and other long-lived assets required to run the business.</p> </li> <li> <p><b>Opex</b>: operating expenses. In shale, this includes all the other expenses the business has:</p> <ul> <li> <p>well operations: insurance, repairs, maintenance, pumping costs, etc</p> </li> <li> <p>G&amp;A: general &amp; administrative costs &ndash; including paying the CEO</p> </li> <li> <p>interest expense: for bonds, bank loans, preferred stock dividends</p> </li> <li> <p>transport: getting the oil to market</p> </li> <li> <p>royalties: paying the landowner a chunk of your revenues</p> </li> <li> <p>production taxes: paying the state a chunk of your revenues</p> </li> </ul> </li> </ul> <ul> <li> <p><b>depreciation/depletion</b>: a fraction of capex &ndash; it should be the decline rate of each well multiplied by the cost of the land plus the cost to drill &amp; complete.</p> </li> <li> <p><b>Income</b> = <b>revenues</b> &ndash; <b>opex</b> &ndash; <b>depreciation</b></p> <ul> <li> <p>here is where the funny stuff happens. If you want your company to <b>look</b><span style="font-weight: normal"> profitable, you will tell your accountant to write a work of fiction rather than be a historian. Instead of having her use your actual 72% well decline rate, you will instead tell her to use, say, 10%. </span></p> </li> <li> <p><span style="font-weight: normal">Key concept: </span><b>understating depreciation increases reported profits</b><span style="font-weight: normal">. Why would you do this? Well, if you wanted to sell your shale properties to a greater fool, you probably want to look profitable in the meantime. Or if you wanted to get a bank loan, or sell junk bonds, you probably want to look profitable too. Banks are more clever than junk bond buyers, however; they use ratios that depend on EBITDA, not phony &ldquo;profits.&rdquo;</span></p> </li> </ul> </li> <li> <p><b>EBITDA</b>: <b>revenues &ndash; opex</b></p> <ul> <li> <p>Simply put, this is &ldquo;earnings before accounting/depletion fraud.&rdquo;</p> </li> <li> <p>This is the number I use to study profitability in the shale world. I can then apply my own depreciation based on decline rates and figure out for myself how the business is really doing.</p> </li> </ul> </li> </ul> <p>All right, armed with your new degree in shale accounting, let&#39;s look at a simple fictional example. The hypothetical One-Well Shale Company obtains property for $10k/acre, then drills and completes a Bakken shale well costing $9M, with an IP of 500 bbl/day, 1<sup>st</sup> year production: 102k bbl, decline rate 72%. Further, we assume an eventual 3 wells per square mile, and an oil price of $99/bbl.</p> <p class="rtecenter" style="text-align: center;"><img alt="" src="" style="height: 485px; width: 600px;" /></p> <p>The income statement shows that with honest accounting, we are barely profitable just looking at the 3-year P&amp;L statement. The price I selected wasn&#39;t an accident &ndash; I searched for the break-even price and found it at around $99/bbl.&nbsp;</p> <p>However, will this well at $99/bbl ever make back its drilling costs? It won&#39;t, since in the following years, the &ldquo;fixed costs&rdquo; for the company will be a heavier and heavier burden on the well whose production declines every year. Likely, $99/bbl is even too low. We can call it a &ldquo;best case scenario&rdquo; - only if we assume One Well Shale sells the well to someone else for $986k (the remaining depreciation) at the end of year 3.</p> <p>What&#39;s more, companies have already spent huge sums accumulating land, on which they&#39;ve drilled a relatively smaller number of wells, so this &ldquo;One-Well&rdquo; shale company is definitely fictional. Take OAS, which has 468 wells in production (45k bbl/day = 98 bbl/well) and 779 square miles of land they&#39;ve bought for $1.8 billion. That&#39;s only 0.6 wells per square mile. However, they&#39;ve already spent the money for the land, so from a &ldquo;cash flow basis&rdquo;, they don&#39;t really count the land cost when answering the question: &ldquo;do I want to drill a well here or not.&rdquo; At this point, money to buy the land is gone, so from a corporate survival standpoint, all they ask is, &ldquo;if I drop a well, will it pay me back in 3 years?&rdquo; And in the current environment, they probably only look at year 1 when making this analysis.</p> <p>But from an overall economic analysis of shale profitability over the longer term, land cost really is an important factor, so we include it in our accounting. If we were to be hard-nosed, we would probably assume a &ldquo;wells per sq mile&rdquo; of 0.6, since that&#39;s the &ldquo;actual debt burden&rdquo; on the real drillers like OAS.</p> <p>Now lets drop the oil price to $55/bbl and see what happens to One-Well Shale.</p> <p class="rtecenter" style="text-align: center;"><img alt="" src="" style="height: 489px; width: 600px;" /></p> <p>Its a sea of red ink. Clearly this well loses money. It cost $9M to drill, and we get back $2M in EBITDA at the end of year 1, the best year for the well. By the end of year 3, EBITDA is negative. It is definitely not worthwhile to drill this well, not even if we assume the land is free.</p> <p>This represents the average well in the Bakken. At current prices, the average well loses money, no matter how you slice it. So how will this affect capex budgets in 2015? Here&#39;s one data point from OAS, a company for whom 100% of their production comes from the Bakken: they are cutting their capex budget in half, choosing only to drill in their better properties. [Source: an awesome, detailed, fact-filled investor document that Google located for me &ndash; one wonders if they meant to release it to the public: <a href=""></a>]</p> <h2><u>Hedging</u></h2> <p>Shale producers don&#39;t want to expose themselves to bouncing oil prices &ndash; they have fixed costs, and so they&#39;d prefer to have fixed revenues too. So they typically engage in oil price hedging to eliminate one big variable from their business plan. One-Well Shale certainly had big problems when oil dropped to $55/bbl; if One-Well had engaged in hedging, it might have been able to ride out the low prices at least for a time.</p> <p>There are many types of hedges available &ndash; our friendly banking establishment stands ready to provide all sorts of financial tools to shale companies to help them out. For a fee, of course. I&#39;ll start with the simple ones, and gradually get more complicated.</p> <ul> <li> <p>Swaps<span style="font-weight: normal">: buyer locks in a fixed price for oil. No upside, complete downside protection &ndash; you know exactly what price you&#39;ll get, and on what date. Low cost. This is why futures markets exist. Speculators take the risk, and companies get to operate in a more predictable world.</span></p> </li> <li> <p>Puts<span style="font-weight: normal">: complete downside protection, unlimited upside. The higher the floor and the longer the date, the higher the cost. Puts are relatively expensive.</span></p> </li> <li> <p>Collars<span style="font-weight: normal">: complete downside protection, lower cost, limited upside. Buyer writes a call, and buys a put. Upside available up to the call strike price, and the call helps make the put less expensive. As with the standard put, the higher the put&#39;s strike price and the farther out the date, the more expensive it is.</span></p> </li> <li> <p>3-Way Collars<span style="font-weight: normal">: limited downside protection, limited upside, usually free cost. Buyer writes a call and a put, and buys another put. This complicated beast generally ends up being free, but only is good for maybe $10-$15 of coverage. It&#39;s probably a banker&#39;s delight. It sounds vaguely salacious.</span></p> </li> </ul> <p>When you look at the company hedge book, which they report in their 10-Q, understanding just what sort of coverage they have is quite important. Swaps provide perfect coverage, while 3-way collars only protect against a fraction of the drop we&#39;ve just experienced. And its important to match up the number of barrels of coverage to the oil production, to see the percentage of coverage the company has in place. A survey of shale companies shows a range of from 20-60% coverage, at an oil price of about 90.</p> <p>Looking at our favorite Bakken company OAS, we see their hedge book below, helpfully provided in their investor document. It looks complicated. So we just look for key words: first, what type of hedges? Swaps, puts, &amp; 2-way collars. Great, that&#39;s 100% coverage. Second, how much production do they represent? 1H 2015: 32k bbl day, and 2H 2015: 15k bbl/day. Let&#39;s assume OAS keeps production steady at 45k bbl/day. That&#39;s a 71% coverage for 1H 2015, and a 33% coverage for 2H 2015 at &ldquo;around&rdquo; $90/bbl. Looks like they&#39;ll be mostly ok for 1H 2015, but for 2H 2015 they will definitely be losing money if oil stays at $55/bbl.</p> <p class="rtecenter" style="text-align: center;"><img alt="" src="" style="height: 285px; width: 599px;" /></p> <p>Hedges can be cashed in at any time. A company with a trader as a CEO, or one that needs to raise cash to stay in business today might well decide to &ldquo;go naked&rdquo; and take their chances with market oil prices and close out their positions. One company did this just recently. CLR sold their entire hedge book in Q3 2014, raking in a cool $420 million. They did this (from what I can tell) when oil was trading at about $77 &ndash; about $20/bbl too early. They left $500 million on the table. Maybe more. And now they&#39;re fully exposed to $55 oil. Factoid: $420 million will fund <b>one month</b> of 3Q capex at CLR.</p> <h2><u>Shale History &amp; Accumulated Debt</u></h2> <p>One-Well Shale&#39;s &ldquo;honest income statement&rdquo; shows that 2014 shale technology is economical at $100 oil, assuming &ldquo;average well production&rdquo; - an IP of 500 is average in the Bakken.</p> <p>Of course, shale companies must survive today, with oil at $55/bbl. Let&#39;s assume OAS gets serious, and drills only in their really hot areas. Viewed through the One Well Shale P&amp;L statement, if I set the IP=750, and I set the oil price to $87/bbl, cash flow is $9M in the first year and a 3-year ROI of 67%. Through 1H 2015, OAS will be all right if they can just drill their best opportunities, and rely on their hedge book to keep them afloat.</p> <p>That&#39;s not the the same thing as asking if the wells they drill will be &ldquo;profitable long term&rdquo; since that $87/bbl price obtained via hedges will only last through 1H 2015. Once the hedges run out, those IP=750 wells will be just barely above break-even (after 3 years!) at $55/bbl. But for the moment, OAS can stay above water.</p> <p>I&#39;m deliberately avoiding the question of how long-lived the shale resource is. I am just answering the question: what is the break-even oil price for drilling a Bakken shale well. The answer is, with an average well (IP=500) at a company with an average cost structure is long-term break-even at about $99/bbl, best case, assuming 3 wells per square mile and a property cost of $10k/acre.</p> <p><strong>Bottom line: the average US shale oil well is uneconomical even with hedging in place, since most hedging is around $90/bbl and the break-even is $99/bbl.</strong></p> <h2><u>The Risk We Now Face</u></h2> <p><em>In <a href="" target="_blank">Part 2: The Destruction That Awaits</a>, we delve into the important question of the longevity of shale oil supply. The projections we can make from the latest data are quite frightening.</em></p> <p><em>As is the massive impact today&#39;s oil prices will have on the shale industry should they persist. Simply put, if oil prices stay at $55/bbl, we will eventually lose the vast bulk of US shale oil production, simply because perhaps 3/4 of even Bakken shale is just not economical at that price.</em></p> <p><em>And this prediction assumes the economy continues along as it has for the past several years. Should there be a serious economic contraction and/or a tightening of the credit markets, and the declines hit harder, many fewer shale drillers will be able to find any sort of funding, property sales will be fewer and for lower prices, and a lot more shale drillers will go bankrupt &ndash; and recoveries on those bankruptcies will be lower. Knock-on effects will hose the banks providing credit lines, vendors that provided services to companies and were not paid, and pension (and bond) funds that bought the junk bonds that are now worth pennies on the dollar. All of this will simply worsen the carnage to the shale sector.</em></p> <p><em><a href="" target="_blank">Click here to access Part 2</a> of this report (free executive summary; <a href="" target="_blank">enrollment </a>required for full access)</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="536" height="391" alt="" src="" /> </div> </div> </div> Bond Capital Expenditures Enron ETC fixed Ford Google OpEx recovery Thu, 25 Dec 2014 00:20:24 +0000 Tyler Durden 499542 at Chinese Gold Diggers Drop Their Shovels As Gold Miner Bankruptcies Begin <p>For those wondering where US shale exploration and production companies will be in about 2-3 years, look no further than the gold miners, where the disconnect between undaunted physical demand and relentless paper supply (after rebounding above 0%, <a href="">GOFO is once again negative </a>through the 3 month mark), and where high production costs and low selling prices, after two years of balance sheet pain, is finally leading many over the cliff. Case in point, Canadian gold-miner San Gold, which had a capitalization of over $1 billion in 2010 just filed for bankruptcy protection. It isn't the first gold-miner to wave the white flag, and it certainly won't be the last.</p> <p>As the <a href="">WSJ reported earlier</a>, the Winnipeg-based company said in a statement that it has asked Canadian courts for an initial 30 days protection from its creditors as it seeks to restructure its business.</p> <p>“San Gold spent half a billion on their assets, and they haven’t had a profitable quarter in six years,” said Greg Gibson, who became CEO in June after a boardroom revolt against the previous management.</p> <p>The problem, as gold miners (and their long-suffering shareholders know) and as shale companies are about to find out, is that "the sector had overstretched itself during the commodity boom, when the high gold price, and willing investors, saw miners spend heavily on acquisitions and bring new production on line. Some of the sector’s new production was lower grade gold, which is more expensive to mine and became unprofitable as the price of gold fell."</p> <p>This all happened before the Swiss National Bank imposed its currency controls by way of a EURCHF 1.20 floor on September 6, 2011 as the Eurozone was tearing apart, and which, incidentally, also marked the record high in the gold price. Since then gold has tumbled by a third and many of the smaller miners have gone bankrupt while others have stopped production or exploration as they look to raise cash.</p> <p>As Gibson said, “The party is over and its time fix things" and now even the big companies, those which have access to Wall Street's ZIRP capital are starting to fold. </p> <p>But it's not just western gold miners that are finally starting to feel the pain of three years of declining gold prices: even more importantly, according to <a href="">Bloomberg's Chart of the Day</a>, China's <em>"gold diggers"</em> are also preparing to drop their shovels. </p> <p>As a reminder, China surpassed South Africa as the top bullion producer in 2007 as surging prices spurred domestic companies such as Shandong Gold and Zijin Mining Group. Global production reached a record high in 2013, according to the World Gold Council. China’s output may exceed 470 metric tons this year, up from a record 428 tons last year, according to the China Gold Association.</p> <p>That is about to change: monthly output growth in China almost stalled in August through October, World Bureau data show. Miners’ costs are mostly higher than spot prices, increasing the likelihood of writedowns next year, Nick Holland, chief executive officer of Gold Fields Ltd., said Nov. 20. The production cost per unit for Shandong Gold Mining Co., one of China’s four biggest gold miners, will rise to 150 yuan per gram ($749 an ounce) in 2015 from 146 yuan now, UBS’s Lin estimates. And while Shandong will still be profitable, many of its peers will not be so lucky.</p> <p><a href=""><img src="" width="600" height="313" /></a></p> <p>As a result, Chinese gold miners, which ramped up production are poised to begin reducing output as the price slump begins to bite with a several year delay. Putting it in context, Chinese mine output rose 15% in the first 10 months of this year, outpacing a 3.4% gain in the global total, according to World Bureau of Metal Statistics data, even as gold prices declined.</p> <p>“We will see output growth moderating going forward into 2015 as miners perceive a downtrend in gold prices to persist,” said Lin Haoxiang, an analyst at UBS Group AG in Shanghai. “<strong>Falling prices are cutting into some high-cost private mines in China, while some big miners chose to reduce costs by reducing jobs and capital investments.”</strong></p> <p>The bottom line: just as everyone expects oil production to decline as capital spending plunges, the reality is that for the next couple of years domestic oil production will actually surge as producers try to put their competitors out of business while collecting every dollar of demand cash that is available, a process <a href="">described previously</a>. For the gold miners, however, the buffer period is now over even with the benefit of ZIRP providing cheap funding extending the inevitable collapse, not only in the US but also in China. And as gold prices continue to slide, the <a href="">marginal cost producers </a>- who have been living onborrowed time for year - are about to fold <em>en masse.</em></p> <p><a href=""><img src="" width="569" height="337" /></a></p> <p>What happens next is that physical gold supply is about to slide, even as demand for physical gold remains solid, or even rises more now that India is once again easing import regulations. The only question is how will relentless paper gold supply impact the price of gold and can the world hit a thought experimental state where the cost of gold is so low that physical production is completely mothballed and where the price of gold is set entirely by paper contracts representing said non-existent physical. Impossible? Then read the <a href="">fascinating story </a>of how an otherwise bankrupt Radioshack is kept in a pseudo-alive zombie state thanks to $25 billion of Credit Default Swaps who just can't envision the company folding. Now reverse that and apply it to gold.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1200" height="626" alt="" src="" /> </div> </div> </div> China Credit Default Swaps Creditors default Eurozone India Reality Swiss National Bank World Gold Council Yuan Wed, 24 Dec 2014 23:44:05 +0000 Tyler Durden 499546 at The Keynesian Desperation Regarding 1920-21 Is Now Embarrassing <p><a href=""><em>Submitted by Robert Murphy via Mises Canada</em></a>,</p> <p><strong>In a <a href="">previous post</a>, I discussed the newfound interest in the United States&rsquo; depression of 1920-21 because of <a href="">Jim Grant&rsquo;s book</a>.</strong> As I explained in my post, Grant is following in the tradition of several free-market writers (<a href="">including me</a>) who think the 1920-21 depression shows the flaws in Keynesian thinking. Specifically, the depression after World War I was sharp but short, with the economy snapping back into recovery without Keynesian &ldquo;stimulus&rdquo;&ndash;indeed despite massive doses of &ldquo;austerity&rdquo; to use the modern lexicon.</p> <p><strong>Naturally the Keynesians (and others) pushed back, arguing that the Fed was decisive in ending the contraction. </strong>But analysis by <a href="">Jeff Herbener</a> (via Tom Woods) and <a href="">George Selgin</a> show that that narrative doesn&rsquo;t work; the timing is simply off. The economy had clearly bottomed out and was recovering <em>before</em> the Fed loosened up the monetary spigots, looking at various criteria. (I should admit that the argument for monetary stimulus does have some support if we look at interest rates, rather than monetary growth. I will elaborate on this in a future blog post.)</p> <p><strong>But if the attempt to attribute the recovery from the 1920-21 depression to <em>monetary</em> policy is dubious, Barkley Rosser&nbsp;ups the ante&nbsp;by bringing in fiscal stimulus as well. </strong>After <a href="">writing a blog post</a> making the familiar argument about the 1920-21 being a textbook case of tight/loose money, Rosser then <a href="">follows in the comments</a> with this jaw-dropping argument and &ldquo;history&rdquo;:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&hellip;Herbert Hoover really does come out looking not so bad, partly thanks to all these people who think that 1921 was the way to go criticizing him. In fact, he was Commerce Secretary under Harding, and while it has not been widely advertised (supposedly there was no fiscal stim in 1921), by the end of 1921 there was in fact an increase in public works spending coming down that was driven by Hoover. So, the bounceback from the 1921 decline was aided by both fiscal and monetary policy stimulus, which you do not hear from Grant or any of these others.</em></p> <p>&nbsp;</p> <p><em>Indeed, Hoover attempted fiscal policy after 1929, mostly for investment in airports and dams (they do not call it the Hoover Dam for nothing), but he was somewhat held back by Congress, and, ironically, FDR criticized him for his deficit spending and [FDR] ran on a balanced budget platform&hellip;only to abandon it once in office&hellip;This is all a bit more complicated than many like to acknowledge.</em></p> </blockquote> <p><strong>Do you see how wonderful this is? </strong>Rosser is saying the recovery from 1921 is partly thanks to the big-spending Herbert Hoover. Apparently, as Commerce Secretary, he was able to push through Keynesian fiscal stimulus, but as president, the conservative Congress&nbsp;forced him into the mold of&nbsp;the tight-fisted budget balancer that we all learned about in school (and that Krugman used as the villain in his <a href="">2008 column&nbsp;&ldquo;Fifty Herbert Hoovers&rdquo;</a> to warn against state budget cuts).</p> <p><strong><u>Even though we can understand the rhetorical need to tie himself in such knots, Rosser&rsquo;s version of history is so ludicrous that I don&rsquo;t have to do much except show the relevant budget figures, put out by <a href="">the White House</a>&nbsp;(Table 1.1, p. 23):</u></strong></p> <p><a href=""><img alt="Federal Outlays FY 1919 1924" class="aligncenter wp-image-10288 size-full" src="" style="width: 599px; height: 368px;" /></a></p> <p><strong>As the chart above indicates, total federal outlays fell every single year from Fiscal Year 1919 through 1924. Do you see any evidence of the &ldquo;fiscal stimulus&rdquo; that helped pull the economy out of the 1920-21 depression? </strong>Now in general, we might have to worry about the calendar/fiscal year mismatch. For example, &ldquo;Fiscal Year 1921&Prime; ran from July 1, 1920 through June 30, 1921. (Note that the start of the federal government&rsquo;s fiscal year shifted to October 1 in 1976.) So when Barkley Rosser says there was a spurt of &ldquo;public works spending&rdquo; at the end of 1921, maybe he is referring to the calendar year?</p> <p><strong>But, as the chart shows, it doesn&rsquo;t matter: there were steady and significant drops throughout the entire depression and recovery.</strong> Federal outlays dropped by a whopping 66% from FY1919-1920, by another 20% from FY1920-21, and then another 35% from FY1921-22. (For purists, in the following years it fell an additional 4.5% and 7.4%.) This is not &ldquo;fiscal stimulus,&rdquo; and the only reason Rosser is forced into suggesting such an absurdity is that he recognizes the awkwardness of this episode for traditional Keynesian policy prescriptions. (Note that I don&rsquo;t deny that there may have been specific spending projects at the end of 1921&ndash;but clearly there is not &ldquo;fiscal stimulus&rdquo; on balance.)</p> <p><strong>Things are equally grim for the other end of Rosser&rsquo;s historical narrative. </strong>The following chart shows federal spending when Hoover actually <em>did</em> have something to say about it:</p> <p><a href=""><img alt="Federal Outlays FY 1928 1933" class="aligncenter wp-image-10289 size-full" src="" style="width: 600px; height: 373px;" /></a></p> <p>Here we see that federal spending went up every year that Hoover was in office, except the last. (Remember that Fiscal Year 1933 ran from July 1, 1932 through June 30, 1933, and that Franklin Roosevelt was not sworn in until <a href="">March 4, 1933</a>.) Hoover was sworn in on March 4, 1929, and the stock market crash of October 1929 technically happened in Fiscal Year 1930.&nbsp;Rounding, the increases in federal spending from the previous year were 6% and 8% in FY 1930 and 1931, followed by a whopping 30% boost in FY 1932. <strong>Remember, this was happening as tax receipts were&nbsp;collapsing and prices were falling, making these nominal increases even more impressive.</strong></p> <p>Finally, as everyone knows, Hoover was a coldhearted &ldquo;budget balancer&rdquo; and slashed spending in FY 1933 by 1.3%, bringing it down to &ldquo;only&rdquo; 47% above the level that Calvin Coolidge had bequeathed, at the end of the Roaring Twenties. It&rsquo;s worth pointing out that in this allegedly austere year, the budget was hardly balanced&ndash;the federal deficit was still $2.6 billion, or 4.5% of GDP.</p> <p>It is truly amazing to see the contortions into which some analysts twist themselves, trying to make the historical facts fit their economic models. (I realize such is a common complaint that Keynesians level against <em>their</em> intellectual opponents; irony abounds.) <strong>When it comes to the depression of 1920-21, the central bank and federal government did the opposite of what Keynesians recommend.</strong> Nonetheless, recovery ensued despite continued budget cutting and a loosening of monetary policy that happened well after the recovery was underway.</p> <p>In contrast, both the Fed and the feds engaged in monetary and fiscal &ldquo;stimulus&rdquo; after the 1929 stock market crash. Nonetheless, things just kept getting worse, so that the Keynesians have no explanation except to say, &ldquo;too little, too late.&rdquo;</p> <p><strong>In summary, things make perfect sense if we accept the hypothesis that government spending wastes resources. This really shouldn&rsquo;t be such a scandalous suggestion, especially since it fits the empirical evidence so neatly.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="449" height="272" alt="" src="" /> </div> </div> </div> Deficit Spending Federal Deficit Jim Grant Krugman Market Crash Monetary Policy recovery White House Wed, 24 Dec 2014 23:10:25 +0000 Tyler Durden 499540 at Thank You Fed <p><strong>America's wealth gap - between middle-income and upper-income families - is at its widest on record.</strong> <em>Guess when it started to surge...</em></p> <p><strong>Thank you Fed QE...</strong></p> <p><a href=""><img src="" width="600" height="467" /></a></p> <p>&nbsp;</p> <p><strong>Happy Holidays "wealthy people"</strong></p> <p><a href=""><img src="" width="600" height="219" /></a></p> <p>&nbsp;</p> <p><a href=""><em>Source: PEW</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1039" height="809" alt="" src="" /> </div> </div> </div> Wed, 24 Dec 2014 22:35:03 +0000 Tyler Durden 499541 at