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Federal Government to Require Transgender Shelters

Posted by Steve Markowitz on November 20, 2015

BathroomJust when you thought that the Feds could not outdo themselves with ridiculous ideas, they come up with one that leaves many stunned.  According to the Washington Free Beacon, the Department of Housing and Urban Development (HUD) will be requiring special shelters to accommodate transgender people that would include sleeping and bathing facilities of their choosing.

This is another example of the Federal government creating classifications of people.  Ten years ago most Americans never heard of the term “transgender”.  Now, the Federal government is making laws to protect them.  There is nothing in the Constitution that gives the government the power to take such actions.  It would be bad enough if the government’s intent came from compassion, but it is likely more to do with money and power.  HUD’s annual budget is $6.5 billion.  By creating subgroups of disadvantaged Americans it gives itself more power and larger future budgets.  The only way to put a stop to this lunacy is by forcing the government to operate within a balanced budget.

Posted in Government Waste | Tagged: , , , , | Leave a Comment »

Unemployment Number Drops While Economy Weakens

Posted by Steve Markowitz on November 17, 2015

The US Bureau of Labor Statistics last week released the monthly unemployment figures that indicated over 270,000 new jobs being created with the unemployment rate dropping to 5%.  The Obama Administration touted these figures as positive indicators of economic strength.  A look under the covers shows show something different.

While the official unemployment rate has dropped significantly since President Obama’s first election, these numbers are at best suspect.  First, they do not take into account the quality of the jobs created; i.e. pay scales. In addition, the figures ignore the many Americans who are underemployed and no longer count because they are no longer searching for a job.

Tony Sagami recently published an article titled The Poisonous Cocktail of Main Street Woes and Federal Reserve Liftoff that shares some sobering statistics putting the true economic situation in perspective.  This includes:

·       401(k) plans are a tax efficient means for workers to put money away for retirement.  Withdrawing funds from these accounts prior to the age of 59.5 leads to a 10% penalty and additional income tax.  Irrespective of this 30 million workers have prematurely taken money out of the plans with 20% of account holders borrowing against their 401(k)s.

·       A record 36% of women between the ages of 18 and 34 continue to live with their parents.  In addition homeownership is at its lowest level in three decades even though mortgage rates are at historic lows.

·       During October, foreclosures on homes jumped by 12% with final stage foreclosures increasing 31%.

At best the numbers Sagami presents demonstrate the weakness of the recovery since 2008.  They likely indicate systemic problems within the economy caused my inept governmental and central-bank policies, as well as the inefficiencies brought to the economy via access governmental regulations.

The low interest rate policies pursued by the Federal Reserve since the 2008 meltdown have failed to create a robust economy.  These policies have not only weakened long-term economic growth, but also increased the disparity between wealthy and average Americans.  However, the Fed is now in a conundrum.  While it should be increasing interest rates, and there are predictions it will do so in December, the economic withdrawal caused by that action could lead to further economic weakening.

Posted in economy, Unemployment | Tagged: , , , , , | 1 Comment »

Bernie Sanders Blames Climate Change for Causing Terrorism

Posted by Steve Markowitz on November 15, 2015

During the Democratic presidential candidate debate Saturday evening, Bernie Sanders, Senator from Vermont showed nativity to the extreme when it comes to terrorism and its causes.  When asked by the moderator whether he stuck to his previously made claim that climate change is the greatest threat to national security, Sanders answered “absolutely”.  Not satisfied to leave that bit of ignorance to stand on its own, Sanders than went on to claim: “climate change is directly related to the growth of terrorism.”

Let’s see, the clash between Islam and the West has been ongoing since the Crusades, which started 1,000 years ago, approximately eight centuries before the beginning of industrialization that the zealots claim is the prime cause of climate change.  For Sanders to now blame Islamic terrorism on climate change is incredulous.  More troubling is that Sanders is currently the Democrat’s second choice to be president of the United States.  That’s scary!


Posted in Climate Change, Terrorism | Tagged: , , , , | 1 Comment »

China’s Coal Consumption Underestimated

Posted by Steve Markowitz on November 9, 2015

The New York Times has reported that China’s coal consumption has been underestimated by a whopping 17% in recent years.  This increase alone is greater than Germany’s entire economy emits annually from fossil fuels.  Adding detail to the numbers, China added 600 million tons to its 2012 coal consumption.  Between 2011 and 2013 China released approximately 900 million metric tons of additional carbon dioxide.  With 4.2 metric tons consumed during 2013, China is the largest user of coal in the world.

liarCommenting on the updated information on China’s coal consumption, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, China said:  “It’s created a lot of bewilderment.  Our basic data will have to be adjusted, and the international agencies will also have to adjust their databases.  This is troublesome because many forecasts and commitments were based on the previous data.”

China’s revised coal consumption numbers are troubling on various levels.  First, it is an indication that countries fudge carbon dioxide numbers for their benefit.  This makes any attempt at worldwide control nearly impossible.  However, it should not be surprising that countries cheat to obtain benefit over others.

China’s willingness to fudge figures brings into question the modeling used to support the theory of man-made global warming.  Modeling is as much an art as it is science.  It can only be as good at predicting future events as the assumptions made in creating the model, as well of the data inputted into the model.  China’s fudging of its carbon dioxide output numbers is another example of the flawed modeling approach used to predict “global warming’s” future.

Posted in Global Warming | Tagged: , , , | 2 Comments »

Physicist Predicts Imminent Global Cooling

Posted by Steve Markowitz on November 6, 2015

Many are focused on the man-made global warming theory, some because they are true believers and others for less honorable reasons.  There are also esteem scientists that do not buy in to that popular theory.

Astronomynow.com recently published an article Diminishing solar activity may bring new Ice Age by 2030 that offers a very different view on impending climate change.  This article not only questions the theory of man-made climate, but predicts a significant and potentially cataclysmic cold spell within the next 15 years.

Physicist Dr. Helen Popova of the Skobeltsyn Institute of Nuclear Physics and of the Faculty of Physics of the Lomonosov Moscow State University proffers the view that periodic changes in solar activity have historically been a major cause of climate change.  Specifically, previous global cooling’s have correlated with the periodic changes in solar activity; i.e. the amount of sunspots.

coldAccording to Dr. Popova, the solar activity results in significant changes in electromagnetic radiation from the Sun.  This includes a 11 and 90 year cycles.  Popova presents evidence that the “Little Ice Age” that occurred in the 17th century coincided with a significant drop off in sunspot activity, something she predicts will reoccur within the next 15 years.

Dr. Popova position is theoretical, as is the man-made global warming theory that is based on computer modeling.  However, Popova makes a compelling case to question the man-made global warming theory stating:

“There is no strong evidence, that global warming is caused by human activity.  The study of deuterium in the Antarctic showed that there were five global warmings and four Ice Ages for the past 400 thousand years.  People first appeared on the Earth about 60 thousand years ago.  However, even if human activities influence the climate, we can say, that the Sun with the new minimum gives humanity more time or a second chance to reduce their industrial emissions and to prepare, when the Sun will return to normal activity”.

If man’s use of carbon-based fossil fuels is indeed the cause of global warming, it is problematic for the environment.  However, the proponents of the man-made global warming theory have not offered solutions that would significantly decrease the amount of carbon exhaust created.  More problematic, the suggested feel-good steps suggested will significantly increase the cost of energy and food creating significant hardship for mankind, especially in poorer countries.

While it is hard to predict the consequences, both positive and negative, of global warming, it is easier to predict consequences that would result from another Little Ice Age; i.e. significant decreases in man’s ability to produce food, as well as increased demand for energy.

Posted in Global Warming | Tagged: , , , | 1 Comment »

Global Warming Science Remains Unsettled

Posted by Steve Markowitz on November 3, 2015

Intellectual debate on the theory of man-made global warming is heresy to those who believe in a narrative that has taken on the trappings of a neo-religion.  When skeptics question cause and effect, they are shut down with the claim that the science is absolute and not open for debate.  These folks should be reminded that strong claims were once made by the entire scientific community about the earth being flat and at the center of the universe.  Those who opposed these false narratives were labeled heretics.

The science behind the theory of man-made global warming is not settled.  This reality was brought to the forefront once again with a release of a recent NASA study.  It concludes that the snow accumulation in the Antarctic that began 10,000 years ago continues and at a pace that on a yearly basis adds enough ice to the continent to more than offset any thinning of its glaciers.  The NASA study also disagrees with other studies’, including the well-publicized 2013 Intergovernmental Panel on Climate Change’s (IPCC), that concluded Antarctica has a net ice loss.  The NASA study states:

We’re essentially in agreement with other studies that show an increase in ice discharge in the Antarctic Peninsula and the Thwaites and Pine Island region of West Antarctica.  Our main disagreement is for East Antarctica and the interior of West Antarctica – there, we see an ice gain that exceeds the losses in the other areas.”  The study further concluded that in East Antarctica from 1992 two 2008, ice mass gain from the thickening averaged 200 billion tons per year, over three times the 65 billion tons per year of loss in West Antarctica and the Antarctic Peninsula.

NASA also concludes: “The good news is that Antarctica is not currently contributing to sea level rise, but is taking 0.23 millimeters per year away.  But this is also bad news.  If the 0.27 millimeters per year of sea level rise attributed to Antarctica in the IPCC report is not really coming from Antarctica, there must be some other contribution to sea level rise that is not accounted for.”  This inconvenient truth will be buried by the mainstream media and their partners in Progressive governments.

While the science is not settled on man-made global warming, that does not stop those with vested interests in promoting it using draconian tactics to quash dissent.  For example, last week renowned French weatherman, Philippe Verdier, was fired for publishing a book that questions the man-made global warming theory.  His book, Climate Investigation, accuses promoters of the theory of misleading the public.  According to Verdier his concerns began when he and other French meteorologists were called into a meeting with French Foreign Minister Laurent Fabius who instructed them to push the man-made global warming narrative, irrespective of the facts.

Why are man-made global warming theory advocates so adamant about stopping debate?  The uneducated masses have good intent, convinced and scared by junk science.  There are others with less benign motivations.  The scientific community at the university level receives significant funding from governments.  That funding would be at risk if they do not tow the Progressive line on the environment.

As for governments, their motivations are age-old; power and money.  By creating an enemy with cataclysmic potential, governments can increase their power by promising corrective action, irrespective of any benefits from those actions.  Of course, saving us requires significant funding and redistribution of assets.  As has been said throughout history, when in doubt, follow the money

Posted in Global Warming | Tagged: , , , , | 3 Comments »

Bill Maher & Congresswoman Gabbard Chastise Obama on Response to Radical Islam

Posted by Steve Markowitz on November 1, 2015

President Obama and others on the extreme Left either refused to recognize or refuse to define the most challenge America faces, which is from radical Islam.  Examples include the terrorist attack that resulted in the killing of American soldiers at Fort Hood, Texas being called “workplace violence”.  Also, when a terrorist attack occurs in the name of Islam, Obama refuses to even use an explanatory phrase such as “radical Islam” or “Islamic extremists”, instead using a more generic term such as “violent extremists”.  This head-in-the-sand approach is outrageous on its face and is hard to justify using any form of reasonable logic.  However, the fact that radical Islam continues to grow during the presidency of Barack Obama shows it to be counterproductive.

Independents and Republicans are not the only Americans concerned with the dangers posed to the Country from Radical Islam.  There is a growing number of Democrats and liberals voicing concern, as exemplified in the video below with ultra-liberal Bill Maher and Democratic Congresswoman Tulsi Gabbard of Hawaii during which Maher concludes rhetorically: “I don’t know why we can’t call out this stuff for what it is”.

It takes a special kind of politician to get staunch Republicans and Bill Maher to agree on anything substantive.  Barack Obama is a special type of president.

Posted in Radical Islam | Tagged: , , , , | Leave a Comment »

California Taxing and Regulating Itself into Bankruptcy

Posted by Steve Markowitz on October 26, 2015

Victor Davis Hanson published a piece in the nationalreview.com titled “Can California be Saved?”.  This article offers a clear indication that California is a canary in the mine for the social and economic decay in America.  Hanson shares the following facts for the State:

  • Los Angeles’s violent crime is up nearly 21% for the first half of 2015 with an 11% increase in property crimes. One cause is California’s Proposition 47 passed in 2014 that released thousands of prisoners.  Proposition 47 was an attempt by California to its costs for the prison system.  Costs may be down, but crime is skyrocketing.
  • California is in the fifth year of a significant drought. This could be alleviated had the State followed through with a new reservoir system approved under California Water Project.  Lack of funding caused projects to be unfinished.
  • California’s traffic accidents have increased by 13% during in last three years. A significant cause is deteriorating roads that are not properly maintained.  It is hard to imagine why a state that includes some of the highest taxes in the country cannot repair its own roads.
  • California is awash with natural resources, yet its gasoline and electricity costs are amongst the highest in the country. Progressive policies inflicted by wealthy liberals who can bear these expenses are the cause.  However, these high costs devastate lower income brackets, a typical unintended consequence of Progressive policies.
  • Approximately 33% of America’s welfare recipients reside in California with nearly 25% of the State’s residents falling below the poverty line. This is unconscionable considering where that state was economically just a few decades ago.

Who is responsible for this sad state of California’s economics?  It is politically expedient to blame the wealthy or nasty conservatives.  However, given that many of the wealthy in California are liberals and all major government offices in the State are controlled by Democrats, this dog just doesn’t hunt.

California can be considered one of the great experiments for American Progressives.  Liberal politicians promised to fix societal ills with all sorts of interventions.  The fact that these ills are larger today than when the liberals started their experimentation and have spent trillions implementing the policies is proof they failed.  In addition, a significant portion of these poorly spent funds were but a form of crony capitalism, benefiting the social services, education and other industries

Adding insult to injury, Progressive policies distorted the economic diversity of the State.  Those considering starting businesses are likely to leave California in search of more business friendly environments.  Those wanting to build wealth for their families moved to states with less aggressive tax policies.  In addition, immigrants found California’s easy to obtain social benefits and naturally matriculated to this environment.  The result; California is top-heavy with those who being pulled in the cart then those pulling it.  The cart is now being bogged down in a quagmire.

California needs to change its political and economic ways if it is to remain solvent.  Before a plan can be created to implement change, it is necessary that the State become introspective and ask why and how California has deteriorated so much over the past five decades.  The answer will be painful for many.

Posted in Debt, Deficits | Tagged: , , , , , , | Leave a Comment »

Posted by Steve Markowitz on October 21, 2015

Macro-Economic Consequences of Excessive Debt

During the past three and half decades the United States and other countries have been on a debt binge.  At an increasing rate the Country has used debt not to finance needed infrastructure or future growth, but instead to increase the lifestyle and wealth of the current generation, most notably Baby Boomers.  Examples include the United States running significant deficits to fund its social programs and crony capitalism.

DebtIn the private sector, individuals and corporations now use a similar philosophy for debt.  Instead of using debt in the traditional role of financing growth, companies use it to increase distribution to executives, employees and shareholders.  Similarly, individuals who in previous generations used debt mainly to fund the purchase homes, vehicles and other big-ticket necessities, now use it to purchase any product that offers instant gratification.  Debt is also used, with governmental support, to fund higher education that no longer offers income growth.  The significant increase in worldwide debt is depicted in the chart.

Although politically incorrect to state in today’s world, excessive debt has consequences.  On the consumer side it often leads to bankruptcies and loss of assets.  A more insidious problem occurs when debt is sovereign, the consequences that we are now seeing in the lethargic economic growth that is occurred since the end of the recession nearly 6 years ago.

Dr. Lacy H. Hunt, Ph.D has published a lengthy report on issues created by excessive debt in the Hoisington Quarterly Review and Outlook – 3Q2015.  This report advises investors to stay in long-term government bonds given the likelihood of long-term \ continued low interest rates.  The report also includes reasons why the debt has been, and will continue to be, a drag on economic growth.  Hunt’s conclusions include:

  • Future business activity will reflect two economic realities: 1) the over-indebted state of the U.S. economy and the world; and 2) the inability of the Federal Reserve to initiate policies to promote growth in this environment.” Translation – The Fed’s easy money policies have not and will not fix the economic problems brought on by excessive debt.
  • S. government debt now stands at 103% of GDP. If private debt is included, the ratio climbs to about 370% of GDP.  Scholarly studies indicate that real per capita GDP growth should slow by about one-quarter to one-third from the long-run trend when the total debt-to-GDP ratio rises into the range between 250% and 275%.  Since surpassing this level in the late 1990s, real per capita GDP has grown just 1% per annum, much less than the 1.9% pace from 1790 to 1999.”  Translation – Excessive debt has led to lower economic growth.
  • These results indicate that the relationship between debt and economic growth is non-linear, or progressively negative, as debt advances to higher levels, a pattern confirmed by academic research (Chart 2). The latest information further supports this relationship.  The current expansion began in 2009, and since then real per capita GDP growth has been 1.3%, less than half the 2.7% average growth in all expansions from 1790 to 1999.”  Translation – This recovery is different and historically weak and seems related to the growing debt.
  • The Bank of International Settlements released a report last month stating that total public and private debt relative to GDP for the entire global economy stands at 265%, up from 219% at the peak of the prior credit cycle. Additionally, the global rate of growth is decelerating significantly while debt levels are continuing to rise, indicating an increasing debt drag. Researcher Chris Martenson calculated that since 2008 total public and private debt rose by $60 trillion while GDP gained only $12 trillion.”  Translation – While the huge deficit spending by governments have not led to proportional economic improvement.
  • Despite the unprecedented increase in the Federal Reserve’s balance sheet, growth in M2 over the first nine months of this year fell below its average rate of growth over the past 115 years, a time when the growth in the monetary base was stable and quite modest (Chart 3).” ….  “The drop in velocity to a six decade low is consistent with a misallocation of capital and an increase in debt used for either unproductive or counterproductive purposes.”  Translation – While the Fed has increased its balance sheet significantly, it has not led to a real increase in the money supply, a requirement for economic growth.
  • The current zero interest rate policy has rendered mass distortions in the allocation of capital and mispricing of risk assets. Such repressed interest rates have contributed to more excess capacity that, in turn, has reduced inflation.  The ZIRP policy allows low quality borrowers access to debt markets, creating untenable balance sheet exposure when economic activity slows”  Translation – The fed’s policies are leading to imbalances in the markets that will ultimate have to rebalance, which always involves pain.
  • An extended period of negative interest rates would lead to many adverse unintended consequences just as with QE and ZIRP. The initial and knockoff effects of negative interest rates would impair bank earnings.  Income to households and small businesses that hold the vast majority of their assets with these institutions would also be reduced.  As time passed a substantial disintermediation of funds from the depository institutions and the money market mutual funds into currency would arise.  The insurance companies would also be severely challenged, although not as quickly.  Liabilities of pension funds would soar, causing them to be vastly underfunded.”  Translation – The coming consequences of the Fed’s policies will not be pretty.

Lacy concludes by saying: “History, economic studies and practicality of politics suggest this is just another red herring trying to solve over-indebtedness with more debt.”  In normal times the obviousness of this conclusion would be laughed at.   But these are not normal times for the world’s economies.

Hoisington Quarterly Review and Outlook – 3Q2015

Posted in Debt | Tagged: , , , , | Leave a Comment »

Federal Reserve Indicates Willingness to Employ Negative Rates

Posted by Steve Markowitz on October 12, 2015

For months the Federal Reserve (Fed) has been “threatening” to increase interest rates from the historic lows.  To date the Fed has come up with a myriad of excuses in delaying any increase.  Given the bubbles created in certain parts of the market including worldwide equities, it is likely that the Fed fears that a rate increase would pop the bubbles leading to significant economic dislocations.

In a world where macroeconomic rules have been turned on their heels, the Fed has floated a trial balloon that is diametrically opposed to their purported goal of increasing rates.  As reported by MarketWatch.com, some in the Fed have indicated a willingness to go to negative interest rates during the next economic crisis; i.e. recession.  In a nutshell, those that put cash in the bank would lose a small percentage of that cash each year, instead of obtaining interest, the historical norm.

New York Fed president William Dudley said in an interview last week: “Some of the experiences [in Europe] suggest maybe can we use negative interest rates and the costs aren’t as great as you anticipate.”  He went on to state: “We see now in the past few years that it has been made to work in some European countries,” and “so I would think that in a future episode that the Fed would consider it.”

It is likely that Dudley’s comments were not a slip of the tongue, but instead a trial balloon to see how markets would react to a radical economic move.  While there has been some softening of the US dollar and increases in commodity prices such as gold, the response has been muted, exactly what the Fed hope for.  This helps demonstrate how far off of economic reality we have come.

Interest RatesTo help put things in perspective, the Federal Reserve refused to implement negative interest rates during the 2009 meltdown, the worst economic calamity since the Great Depression, for fear of the consequences.  The fact that they would consider such action today helps demonstrate just how fragile the Fed views the economy.

The central banks have used historically low interest rates since the 2009 meltdown, as indicated in the attached chart.  Pushing rates to negative returns is a continuation of this policy, although now breaking a psychological barrier, whose goal is to stimulate the economy through increased consumption.  This low interest rate policy has been a failure, which is being confirmed by the Fed’s willingness to go even further.  Why should we expect this additional step would be more successful?

A negative interest rate policy will have unintended economic consequences.  However, there are consequences that are rather easy to foresee:

  • Lower savings for individual Americans will make them even more vulnerable to the consequences of recession.
  • Inflicting economic pain on retirees and others on fixed incomes.
  • Cajoling investors into more risky investments in search of returns.
  • Significantly damaging those dependent on money markets.
  • Decreasing return assumptions for pension plans that will force managers into more risky investments and require additional injection of funds to keep the plans solvent.

New York Fed Chairman Dudley would be willing to pursue the radical negative interest rate policy based on the fact that some European countries have implemented it without major consequences.  However, Dudley ignores the fact that the US dollar is the world’s reserve currency and therefore has broader implications.

We are now approaching the eighth year since the economic meltdown.  We were told that the Fed’s low interest rate policies will repair the damage.  We also have been told by our government that all sorts of stimulus programs and deficit spending would repair the economy.  Both failed, which has resulted in the Federal Reserve announcing the possibility of still more radical programs.  A more prudent approach would be a realistic review of the implemented policies and determine why they failed before implementing more of the same.  But this small piece of logic is either lost on the Fed or they feel that they have no alternative.  Neither offers confidence in the Fed’s ability to navigate these complex issues.


Posted in economics, Federal Reserve | Tagged: , , , , | Leave a Comment »


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