Islam Is Afire While Obama Fiddles

“Is that a fiddle I hear there somewhere drifting through those fired dry sands?”–Raphie Frank

Another week with Barack Obama as U.S. President and radical Islam grows even stronger. Egypt, America’s largest and most important ally in the Middle East, is aflame as revolutionary forces marched and even burned President Hosni Mubarak’s Ruling Party headquarters.

As I write to you the streets of Cairo are ablaze following a week of mass demonstrations in which thousands of people have attacked the police and ignored curfews. The people want to end the 30-year dictatorial rule of Mubarak, but radical elements are quickly bending the protests their way in an all out effort to turn the land of the Pyramids into the home of martyrs.

If the extremists in Egypt can do what they did in Iran, then the Middle East — home to two-thirds of the world’s oil reserves — will turn to Islamic law.

Egypt sits at the crossroads between Europe and the Middle East. Not only does it have the largest Arab population but also the strongest conventional army in the region. Since the fall of the Shah in Iran, Egypt has provided the glue that held the Middle East together. It was Egypt that was the first Arab nation to recognize Israel and it is always Cairo at center stage in any Middle East peace process.

Political analyst Simeon Mitropolitski sums up what is at stake:

“Egypt offers a completely different political and social model, something between the Iranian and the Taliban versions of Islamic state. In 1954 this organization was banned and shortly afterward it was accused of trying to assassinate President Nasser, a champion of alternative secular social and political model.”

Regardless of what is at stake, Egypt is burning and the Obama administration has once again been caught off guard.

On Monday, Washington was desperately trying to fly more than 2,400 U.S. citizens out of Egypt. It appears that no contingency plan was made for this revolt. Again, American intelligence services appear to be anything but intelligent.

So far the State Department has put a remarkable positive spin on events, just like they did when the Shah was toppled. But wishful thinking isn’t going to create a new Egypt built on Thomas Jefferson’s ideals. It is far more likely that America and the world will have to deal with an Islamic-ruled Egypt, if not now then in a few short years.

One of the most immediate worries is the Suez Canal, a waterway that opens into the Red Sea and which is a choke point for much of the world’s oil supply. Egypt’s primary export is cotton. The world isn’t going to fall apart because of a cotton shortage. Yet whoever rules Egypt also has their hands on the Suez spigot. This could have an immediate short-term impact on oil deliveries — the price of crude has surged more than $6 per barrel in just the past two trading days.

Rioting in Cairo could spread fast. Many businesses have shut down operations. Egypt’s stock market (EGX) has been closed after it fell 16 percent last week.

Outside of Egypt the financial center of the Middle East, Abu Dhabi, has been hit the hardest. On the Dubai exchange shares plummeted to a one-year low. If unrest grows and the Suez Canal closes it won’t be some far off stock exchange falling, it will be the New York Stock Exchange. But there is something far more worrisome than a 25 percent correction in the Dow Jones Industrial Average or even $5 per gallon gasoline. Rather think of the ramifications if Egypt, a center post of America’s war on terror, falls into the hands of the enemy.

Forget Robert McNamara’s incorrect domino theory that was projected for Southeast Asia in the 1960s. If Egypt crumbles there really will be a cascade of giant dominoes headed straight for the West and riding atop each one of them will be a crazed terrorist with a bomb strapped to his back.

It is still too soon to say what will arise from this revolt, but it could center on the growing power of Egypt’s Muslim Brotherhood (MB). According to the Business Insider:

“The MB would be calamitous for U.S. security. What’s more, their current defenders don’t really argue that point, as much as they seem to dismiss it as not important or something we can live with. The MB supports Hamas and other terrorist groups, makes friendly noises to Iranian dictators and torturers, would-be uncertain landlords of the critical Suez Canal, and opposes the Egyptian-Israeli agreement of 1979, widely regarded as the foundation of peace in the Mideast. Above all, the MB would endanger counterterrorism efforts in the region and worldwide. That is a very big deal.”

This leaves the United States at the mercy of another Iranian crisis, but this time around is far worse. 

True, Iran was a major oil exporter and Egypt is not. However the world was consuming only half as much oil when the Shah fell compared to today. More importantly, during the Iranian revolution Saudi Arabia had enough spare oil production capacity to replace all of Iran’s oil exports. In fact, the House of Saud increased oil output from 8 million barrels per day to more than 12 million barrels per day. That is something that Saudi Arabia can no longer do.

If another Islamic Revolution gains traction in Egypt how much longer will there even be a Saudi Arabia as we know it? Egypt has been a great counter-balance against extremism in the Middle East for almost 40 years. It has provided critical support to Arab oil producers like Saudi Arabia and Kuwait and it has been the primary reason there has been peace between Israel and the Arab world.

The Middle East is a bigger tinderbox than ever and once again Obama has shown that, under his leadership, the world continues to become a less safe place. Is it his fault that Egypt is burning? No. But it is his fault that he and his Secretary of State, Hillary Clinton, didn’t see it coming and weren’t able to force Mubarak to reform his dictatorial rule before it was too late. Now the world will have to pay the consequences.

Action To Take

Double down on your oil investments. Canadian oil sands can only benefit from the trouble that is brewing in the Middle East. If you have not yet bought shares in Suncor Energy (NYSE, SU, $41) I urge you to do so. The price of the stock has doubled in the past two years. I expect that it could double again over the next year.

Yours in good times and bad,

–John Myers
Myers’ Energy & Gold Report

With Gun Control, Canadian Criminals Are Making A Killing

“After a shooting spree, they always want to take the guns away from the people who didn’t do it.”–William Burroughs

When I lived in Spokane, Wash., I exercised my right as an American citizen to own a handgun. As an American living in Canada, I no longer have that right. And while there may be fewer guns in Canada, I feel less safe than I did in the U.S. That is because up here it is the criminals that have guns.

There is no constitutional right to bear arms in Canada. Instead, most of us hope that we won’t someday look down the barrel of a gun drawn by a felon.

It is a worry I hope Americans don’t ever have to live with. But you don’t have to be much of a prognosticator to expect a crackdown on guns following the Tucson tragedy. Just days after the murders which almost took the life of Congresswoman Gabrielle Giffords (D-Ariz.), Democratic Rep. Carolyn McCarthy (D-N.Y.) was already planning to introduce legislation that would put restrictions on law abiding citizens’ freedom to obtain firearms.

No doubt McCarthy and other liberals will decry gun ownership and will stump about the need to make America safer.

But I can tell you laws don’t make people safe. Canada has some of the strictest gun control legislation in the world. Yet Canadian criminals seem to have easy access to guns.

Such was the case on New Year’s Day 2009. I was in my office in Calgary. I looked out the window and saw half a dozen police cruisers racing down Bonaventure Drive, sirens blaring. They went to a usually quiet strip mall two blocks from my office.

It was around 3:45 p.m. when a car pulled into the parking lot of the Bolsa Vietnamese Restaurant. One man remained in the car while two others entered the restaurant. There they shot dead two members of a rival drug gang.

An innocent victim, 43-year-old Keni Su’a who happened to be eating alone that day, was also shot dead.

The press named it the Calgary New Year’s Massacre and it was an escalation in an ongoing war between rival drug gangs: The “Fresh Off the Boat” (FOB) and the “Fresh Off the Boat Killers” (FK).

This and many more murders have happened even as the Canadian government has cracked down on gun registration. None of which seems to have bothered immigrant gangs like the FOB and FK who have gone from carrying knives to toting high-powered assault weapons. Such guns were in use again this past New Year’s Day when two gang members fired shots that killed one man and left another in serious condition.

This is happening in Calgary which has a population of 1 million. Things are more dangerous in larger Canadian cities like Montreal, Toronto and Vancouver. And it is not just the drug gangs that breed gun violence in Canada. There is no shortage of crazies who always seem able to arm themselves.

In 2006 a Canadian gunman uploaded pictures of himself posing with a rifle. He bragged on his blog that he loved the Internet game based on the Columbine shootings. One day he decided to stop playing. He went to a Montreal college and, when all was said and done, he killed one person and seriously wounded another 19 before he shot himself.

On Jan. 13 the Ottawa Citizen, concluded that Canadian gun legislation is a failure:

“As strict as Canadian gun laws appear, they do not prevent the movement of illegal firearms in or out of this country, nor their possession, and only cover those firearms that have been registered. Last year, Canadian police services reported some 8,000 victims of violent gun crime, ranging from assault to robbery and homicide — a rate of almost one person per hour victimized by violent gun crime. On average, more than 1,200 Canadians are killed and more than 1,000 injured with firearms each year.”

Canada’s stringent gun laws don’t simply take aim at handguns. In 2001, the registration portion of Bill C-68 was implemented. With that law the Federal government demanded all firearms — including rifles and shotguns — be registered. Then, in 2003, Ottawa passed a law that failure to register any and all firearms would result in criminal charges.

There are a lot of old ranchers and farmers in Alberta that couldn’t be bothered to do the paperwork on an old Winchester. In the eyes of Ottawa’s bureaucrats these people are criminals.

Canada Once Embraced Guns

I was born in Alberta and I grew up around guns. On my 12th birthday my dad bought me a single-shot .22 rifle. On my 18th birthday he bought me a 12-gauge pump action Remington shotgun. I never imagined that a time would come where I would have to level my shotgun at a person; that I would take deadly aim with it.

But that happened when I as a senior at the University of Calgary and was cramming for a final. Around midnight I heard a car screech to a stop outside my parent’s home which sat on an isolated street. I was home alone with the family dog, Elsa, a Great Dane with a gentle disposition.

In the news had been reports that two men were terrorizing women on Calgary streets. Two young women, Laurie Boyd and Debbie Stevens, had been dragged from their cars at night and murdered.

I heard pounding at the front door. I knew something was seriously wrong when I opened the door to find my girlfriend Angela standing before me crying. Before I could even ask her what was happening a second car pulled into our driveway with the high-beams on.

I took Angela inside and went outside to see what the commotion was about. I brought the family dog with me and kept her leash wrapped tightly around my hand.

Two men were walking straight towards the door; neither one saying a word and neither showing any regard for me or our dog which was growling and barking.

I dragged the dog back inside and gave her to Angela. I remembered the Remington that I kept in the front closet. I found it and then fumbled for the single target load shell that I kept in the corner of the hat shelf. It was all the ammunition I had, but I was damn happy to have it.

I was shaking, but I loaded the shell. I slipped back outside. I was surprised at how close these strangers were to me; perhaps fewer than 20 paces. I remember the taller of the two had his hand reached inside his coat.

It was dark so at first I don’t think they noticed my shotgun. But they knew it was there when I raised it to my shoulder and pumped the fore-end, chambering the shell.

In a split second they spun and ran to their car, roaring off into the darkness.

More than a year later two men, Jim Peters and Rob Brown, were charged and convicted on multiple charges of murder.

My girlfriend Angela later became my wife. To this day we don’t know if those men were the Calgary serial killers. All these years later we remain certain of two things: These men had evil intentions and we were damned lucky to have that shotgun.

Yours in good times and bad,

– John Myers
Myer’s Energy and Gold Report

Bailing Out Obama: The Federal Reserve’s New Mandate

“Quis custodiet ipsos custodes?” (“Who watches the watchmen?”)

The Federal Reserve is a traitor to the American people and the nation it has sworn to protect. Recently, the Fed has acted less like a central bank and more like President Barack Obama’s personal piggybank. The Fed seems hell-bent on re-electing Obama for a second term regardless of what it costs.

How is the Fed doing this? By creating trillions of new dollars to re-flate a U.S. economy that is fundamentally flawed by the unprecedented spending of a President and Congress.

The Federal Reserve’s recklessness — orchestrated by Chairman Ben Bernanke — is putting at risk the savings of every American. His actions are straightforward — to create trillions in new aggregate dollars, making each existing dollar able to purchase less.

The central aim of America’s central bank seems simple: Hold together the economy until Obama is re-elected in November 2012. This month the Fed began a second round of quantitative easing, or QE2. This second round of cash creation is meant to jump-start the economy and silence Obama’s critics who complain he hasn’t engineered his promised recovery.

In December the Fed exceeded its authority for the first time when it began purchasing $600 billion in U.S. Treasury securities. Besides flooding the world with fresh money, Bernanke announced in January that he wants to keep interest rates low so the fledgling recovery can fly.

According to Forbes, the Fed’s actions have drawn opposition around the world.

“China, Russia, Brazil, Germany and the U.K. all believe that it will seriously weaken the dollar, possibly forcing other countries to devalue their own currencies and impose more trade restrictions against the U.S. Brazil and other emerging economies also fear that by loosening credit, the Fed could cause new destabilizing asset bubbles abroad.”

Forbes doesn’t point out that none of this is in the Fed’s charter. Instead the job of the Federal Reserve is to faithfully manage the economy and create stability for world markets.

I stumbled upon one of my old textbooks which said: “One of the statutory goals of the Federal Reserve System is to ensure stable prices. This goal can only be achieved if the public believes that the Federal Reserve is taking effective measures to ensure them.”

That is how the Fed is supposed to operate. Created in 1913, the Federal Reserve System had two prime directives: “The dollar over the President; the economy over the Party.”

And for nearly a century the Federal Reserve followed that code of conduct. It was through such actions that the Fed helped establish American economic dominance.

Even after President Franklin D. Roosevelt made it so citizens could not redeem dollars for gold, there have been extended periods when Americans trusted in the dollar more than they trusted gold. Consider President Ronald Reagan’s two terms and the decade that followed. During most of those years, Paul Volcker was Chairman of the Federal Reserve. The result was that between January 1980 and June 1999, the price of gold fell from $850 per ounce to $253 per ounce.

But that was a different era. Today the Federal Reserve and its Chairman no longer hold sacred protecting the purchasing power of the dollar. The once-independent Fed now seems intent on serving the President and promoting his economic policies.

Of course, Bernanke has been a loyal public servant to two Presidents. He was first appointed by President George W. Bush in the winter of 2006. Then Obama re-appointed him. Over those five years Bernanke has used every power at the Fed’s disposal to pump up the U.S. economy, even though it has delivered a devastating bear market for the greenback.

In a short statement given in Martha’s Vineyard in August 2009 with Bernanke at his side, Obama lauded the Fed chief’s “temperament, courage and creativity.” It was these personal characteristics, said Obama, that had helped Bernanke navigate America out of a Great Depression.

President Obama left out the one characteristic that Bernanke seems to have in spades — loyalty. Only loyalty can explain why Bernanke has been playing fast and loose with interest rates while initiating monetary policies that have spawned hundreds of billions of dollars in fresh new money.

Bernanke certainly has more than his share of critics. During his second Senate confirmation, 70 Senators voted in favor of Bernanke, but 30 voted against him. That was the narrowest margin by which a Fed chairman was ever won a nomination.

Still, Obama and many members of his administration applaud Bernanke. As long as he can keep the Chinese lending and investors from balking on Big Board stocks, Bernanke can help Obama be re-elected.

But holding the economy together won’t be easy. The Chinese and other foreign investors are growing restless about throwing money into U.S. Treasuries — those pesky bonds Washington needs to keep selling every week just to stay in business. Meanwhile, people like Congressman Ron Paul (R-Texas) are not turning a blind eye to Bernanke.

According to Paul: "There is something fishy about the head of the world’s most powerful government bureaucracy, one that is involved in a full-time counterfeiting operation to sustain monopolistic financial cartels, and the world’s most powerful central planner, who sets the price of money worldwide, proclaiming the glories of capitalism.”

And there is more to this than just Paul’s opinion. There is hard evidence that the United States — under the leadership of Obama and his loyal lieutenant, Bernanke — is headed for an inflationary maelstrom. Fueled by the Fed’s program of quantitative easing, MZM money supply has soared $475 billion in the past six months. This is the money the Fed lends to the banks which is then lent out at a multiple. That is why MZM is sometimes referred to as super-money, and can be a catalyst in creating inflation.

Another broad measure of money, M2, has also been rising at an alarming rate, as you can see in the chart below.

That the Fed is pushing such rapid monetary growth may underscore just how frightened Federal Reserve Governors are that we will see a double-dip recession, perhaps even a full-fledged depression. But remember, the Fed is supposed to be worried about protecting the integrity of the dollar. It appears instead that the Fed wants to protect itself along with the rest of the Ruling Elite.

More than 150 banks shut their doors last year. Five-hundred banks could close this year. The Federal Reserve will do whatever it takes to see that doesn’t happen, the dollar be damned.

One final thought — it is probably premature to celebrate the eviction of Obama from the White House in two years as much as we might like to. There are a lot of powers at work, the Federal Reserve included, that will be working to ensure the status quo.

Yours in good times and bad,

John Myers
Myers’ Energy and Gold Report

Obama’s Ultimate Betrayal

Welcome to 2011; another year for President Barack Obama, whose energy policies are dictated not from the White House but from Abu Dhabi and Riyadh.

Obama’s Christmas gift to the nation was the December announcement by the President himself to clamp down further on domestic oil and gas drilling. Welcome to the New Year where pump prices now average more than $3 per gallon.

Despite the worst recession since the Great Depression, we are paying the highest gas prices since 2008. All thanks to Obama’s need to go Green, which is enriching Arab oil producers while putting America’s future at risk.

Obama regulators have been busy slipping in ill-advised energy policies. First came the pre-Thanksgiving announcement that oil exploration and drilling in Alaska would be curtailed. All for a good cause, said the Obamaites, to help save vast expanses of polar bear habitat. Then Obama’s Department of the Interior made a pre-Christmas policy change that would further cut domestic oil supplies by making energy-rich lands untouchable.

It seems that Obama forgot that designating Federal lands as wilderness areas was supposed to require an act of Congress. Yet the day before Christmas Eve, Obama’s Department of the Interior did a coup d’état. As a result, the Obama administration alone is able to judge where oil can or cannot be drilled. In doing this, Obama has thwarted George W. Bush’s policy that restricted unilateral action by the White House.

Then there is the drilling in the deep-water Gulf of Mexico. Nearly three months after the Obama administration lifted its ban, oil companies are still waiting for approval to drill the first new oil well in the Gulf. In fact, the petroleum industry expects the wait to continue until the second half of 2011, and perhaps well into 2012.

This long delay by the Obama administration is costing Big Oil billions of dollars that they have tied up in Gulf projects; projects that are now on hold while petroleum companies pay out thousands of dollars every day on rigs that stand idle.

Last week the Wall Street Journal wrote this indictment of Obama’ energy policy:

“Their impact goes beyond the oil industry. The Gulf coast economy has been hit hard by the slowdown in drilling activity, especially because the oil spill also hurt the region’s fishing and tourism industries. The Obama administration in September estimated that 8,000 to 12,000 workers could lose their jobs temporarily as a result of the moratorium; some independent estimates have been much higher.

“The slowdown also has long-term implications for U.S. oil production. The Energy Information Administration, the research arm of the Department of Energy, last month predicted that domestic offshore oil production will fall 13 percent this year from 2010 due to the moratorium and the slow return to drilling; a year ago, the agency predicted offshore production would rise 6 percent in 2011. The difference: A loss of about 220,000 barrels of oil a day.”

All of which leaves America more susceptible to an Arab oil embargo. The last one happened in the 1970s when the U.S. was pumping twice as much oil as it is now.

With the U.S. gulping more foreign crude than ever, Arabs could bring America to its knees. You would think that a President as smart as Obama would understand the risk he is putting the nation in; a nation which he has sworn to protect.

Perhaps the greatest waste of American resources is out West where there is potentially hundreds of millions of barrels in oil reserves and trillions of cubic feet in gas deposits; all of it just waiting to be drilled and pumped to a thirsting nation. Yet our President is obstructing America from meeting its energy needs.

Ben Lieberman of The Washington Times explains:

“Utah is particularly hard hit, with up to 6 million acres in jeopardy of being locked away from development. Rep. Rob Bishop, Utah Republican, told The Salt Lake Tribune, “[This decision will seriously hinder domestic energy development and further contribute to the uncertainty and economic distress that continues to prevent the creation of new jobs in a region that has unduly suffered from this administration’s radical policies.”

But there is more. Two days before Christmas the Environmental Protection Agency (EPA) undertook a Pearl Harbor-like pre-emptive attack on U.S. refiners with an order that will place severe limits on carbon-dioxide emissions. The EPA, in language Joseph Stalin would have been proud of, said: “The details have yet to be determined.”

The Moroccan Candidate
The bottom-line is that under Obama, Washington is certain to increase the cost of converting oil into gasoline. If you are looking forward to spending $5 per gallon at the pumps, you will love Obama’s bold new move to make America more green.

The $5 per gallon is not just a number I picked out of the air. The former president of Shell Oil says that’s entirely possible as high demand pushes the price of crude oil higher and higher.

Culminating some time by the third quarter of 2012, retail pump prices in places like California and New York will reach roughly $5 per gallon, said former Shell Oil president John Hofmeister.

Former energy secretary Bill Richardson was asked about Hofmeister’s stark prediction: “I hope he’s wrong, but this is a very volatile energy market and we haven’t moved as fast as we should in America towards reducing our dependence on fossil fuels.”

Hofmeister underscores the urgent need to develop domestic oil production and he even accuses the Obama administration of being anti-oil.

“I have no problem moving beyond oil but not today, not tomorrow, not 2011 or 2012. We can’t. It’s simply impractical and unreal,” Hofmeister said.

Meanwhile, the Department of Energy (DOE) has put out a statement saying it will continue to pursue responsible oil and gas production while focusing on vehicle efficiency standards and investing in electric vehicles, bio-fuels and mass transit.

Obama’s DOE must think America alone can make the Earth green. What the President seems to forget is the fact that China, India and Russia, along with a host of Third World polluters, are using coal and even wood furnaces to drive their industries.

It appears to me that Obama’s Green policies are nothing more than collateral damage to a nation that needs domestic petroleum and the jobs that that industry provides. Instead Obama’s policies seem to be helping Arab oil exporters.

If you think I exaggerate, consider this from the Dec. 29 Economist, not known as a bastion of conservative ideals: “Mr Obama’s team of managing the Middle East is even more inept than Mr Bush’s. The American right and many Israelis think he is too pro-Arab.”

Dubya Billboard: “MISS ME YET?”
People in the petroleum industry don’t believe Obama is pro-North America, at least not when it comes to energy. Canada’s oil sands — which help keep America on the road every day—have been labeled “dirty oil” by Obama Democrats (as if the crude they pump out of the Saudi desert was somehow clean). And given the political realities that exist in many parts of Alaska, Sarah Palin has a greater chance of hitting a gusher with an errant shot from her AR-15 than Big Oil has with a drill-bit.

Despite Bush’s multiple mistakes in the Middle East, he was a patriot who at least wanted to ramp up domestic oil and gas production. That’s not true of Obama, who seems intent on increasing America’s dependency on Arab oil.

As I write to you, oil has topped $90 per barrel. I believe that by summer it will break over $100 per barrel. That makes Big Oil a good investment. But at what cost?

Under Obama’s presidency we are headed for an energy crisis worse than anything President Jimmy Carter could have engineered. Just how high oil prices will go I don’t know. Much depends on what happens in the 2012 election.

Yours in good times and bad,

John Myers
Myer’s Energy and Gold Report

Investment Forecast 2011: History And The Doomed Dollar

The administration of President Barack Obama continues to work furiously to float the U.S. economy in order to facilitate his re-election.

Pumping up the U.S. economy has been ongoing for more than two years. Trillions of dollars have been created out of thin air to offset the deflationary destruction of assets that began three years ago. But opting for inflation at all costs is nothing new.

Since the first civilizations there has been a need for money — an instrument which could be a store of value and thus used to expedite trade. Universally, hard assets, most notably gold and silver, have backed money.

But since ancient times there has been the temptation to debase the money in what seems to be an overwhelming desire to have something for nothing. Pontiffs and politicians have for centuries achieved their goals by creating more money. The tendency to inflate the money supply seems to be rooted in human nature.

Julius Caesar understood power came with money and that if he could control Rome’s vast stockpile of gold he would reign supreme.

It was a lesson not lost to his grandnephew, Octavian, who won a civil war largely because he secured Rome’s bullion. Unfortunately, the Empire would list and then sink because of overspending and progressive inflation.

Yet Ancient Rome was not the first great power to fall into ruin from inflation. A thousand years before Caesar, Babylon implemented hard-money and became the center of world power and wealth: A city of gold.

But eventually inflation brought down Babylon’s Tower. King Nebuchadnezzar leveraged the kingdom’s gold to create short-term wealth. He issued receipts — IOUs — and loaned out at interest the great wealth from Babylon’s treasury.

First he doubled and then tripled the empire’s money supply. There was no stock market, but if there had been, it would have soared.

Eventually, foreign claims exceeded the amount of gold in Babylon’s treasury.

Still, the money supply continued to grow. But just as is happening today with the dollar, the growing debt had people demanding more money for their goods and labor. Back in the days of Babylon, inflation went into high gear.

Yet the Babylonians remained undaunted. Their treasury still had lots of silver, so King Merodach-Baladan pulled an interesting trick: He declared that the value of silver equaled the value of gold. Eventually the King declared that copper had a value equal to silver, which had equal value to gold.

You can probably imagine this didn’t work too well. Copper was in far greater supply than silver, which was in even greater supply than gold. Money began losing its value and confidence began to crumble. So did the world’s first great empire.

Babylon’s wealth had been the foundation for its society. The economic crisis led to a civil war. Babylon didn’t fall; it was buried beneath an avalanche of worthless money.

Five hundred years later, the city-states of Greece were issuing metallic coins, the silver obol. Another historical record of monetary inflation soon followed.

After Sparta captured the Athenian silver mines around 400 B.C., Athens was faced with a grave shortage of coins. Over the next couple of decades Athens issued bronze coins with a thin plating of silver. The shortage was made even worse as citizens hoarded the old coins and spent the new. It was the world’s first experience of what has become known as Gresham’s Law: Bad money drives out good money.

Empires Come And Go
It is amazing to think that in 1490 Spain didn’t even exist. Yet within a century it was the greatest power on earth.

The discovery of new lands was the major factor in Spain’s success. In 1492, Christopher Columbus, exploring for Spain, discovered land in the Bahamas, which he named San Salvador and claimed for the Spanish Monarchy. His claims paved the way for future Spanish imperialism. With land came the most important of resources of the age — gold and silver.

The Spanish government seized all of the riches, including the silver mines of the Aztecs. In Peru the Spaniards tapped the richest silver mines in all of the New World.

But Spain would spiral down into decline. Riches from the New World poured into the port of Seville. Spanish expansion was based on finding and bringing precious metals back to the monarchy. Yet no matter how much was brought back, more was spent.

Inflation completely ruined the Spanish economy. Additionally, precious metals being shipped from the Americas often didn’t reach Spain because Spanish ships were pillaged by the English. King Philip had to pay debts to his armies and foreigners, but to pay them he produced more money, making the money worth less and less.

Creditors soon caught on and, when they refused to lend, the Spanish Empire dissolved.

Inflation Boils Even In The 21st Century
History has shown that manipulating the volume of money leads to hyperinflation and economic collapse. Consider what happened in Germany, Zimbabwe, Argentina, Brazil and Peru.

During the era of 1918-1923, the Weimar Republic in Germany began printing money at a dizzying rate, setting off hyperinflation. Prices were rising so fast that workers receiving their pay would immediately run to the store to buy foodstuffs before prices climbed again. Business and industry were paying their employees with wheelbarrow-loads of cash.

In trying to keep up with the falling currency rate, Reichsbank printed a 1,000-billion Mark note that was so worthless that when it was spent few bothered to collect the change. By 1923, with one dollar equal to one trillion Marks and inflation at 30,000 percent, the collapse of German currency was complete.

During the 1980s the South American countries of Argentina, Brazil and Peru all experienced triple digit annual inflation.

In Zimbabwe in late 2008, inflation hit 11 million percent. The government finally acknowledged that its own currency was done and began issuing licenses allowing stores and businesses to begin accepting U.S. dollars, South African rands and other foreign currencies.

The economy had to be “dollarized.” The local currency was worthless as legal tender. Barter trading took over, with the most prominent bartered item being a fuel coupon worth about $30 U.S.

None of these lessons have made an impact on the Obama administration which continues to use the Fed and the Treasury Department to create trillions of dollars in fresh money. The consequences for this reckless action will be felt this year beginning with the…

U.S. bond market, which has a gun to its head despite the fact that during the fourth quarter the U.S. government had no problem selling $36 billion in two-year Treasury notes yielding an unbelievably low yield 0.441 percent. To date, low yields have not fazed bond buyers. That’s because dollar inflation is still coming down the pipeline. This will change as the U.S. Treasury continues its massive sales program to prop up the Obama administration. Warren Buffett was correct when he said, “Debt is a four-letter word.” Once foreign investors, especially the Chinese, understand this it will have a devastating impact on the…

U.S. dollar, which continues to flounder. Last week the Aussie dollar broke above parity with the greenback while the Canadian loonie can almost be exchanged at a one-to-one ratio. A decade ago the Canadian dollar was under 70 cents U.S. and the only relief the greenback has had in a decade-long decline was during the deflationary scare that happened during the banking crisis in late 2008. A weakening dollar and accompanying higher U.S. interest rates will hurt the stock market and the end result will be a continuing bull market in…

Precious metals, which are showing new strength in the New Year. Silver, which has long been a laggard, is at $30 per ounce after reaching a high of $31.10 on Monday. Gold broke through $1,400 before giving up some of its gains. In many ways the precious metal markets are behaving the way they did in the 1970s during the latter part of President Jimmy Carter’s single term. My expectation is that we have yet to see the spectacular blow-off for either gold or silver. I think we will see it this year, with gold moving close to $2,000 per ounce and silver hitting $50 per ounce. Therefore there is more leverage in silver than in gold, but both are worth buying and holding.

Action To Take
Look for an investment crisis in 2011 as inflation makes itself felt on the bond and stock markets. Sell blue chip stocks and all bond instruments. If you want to hold large amounts of cash then do so only in the form of 3-month Treasury bonds. You can always roll those over. You are not losing any income in buying longer term Treasury notes or bonds, just incurring massive risk. Other than money necessary to pay monthly expenses and cover emergencies, I would not keep additional cash in U.S. banks.

Yours in good times and bad,

–John Myers

Myers’ Energy and Gold Report

What Would You Resolve To Do If The World Were To End In 2012?

Countdown to 21.12.2012. It is called the end of time; the end of the world, a.k.a. the end of Mayan Long Count. Whether you call it that or just the apocalypse, some say that all of us have less than two years to live. That’s when the Mayan calendar runs out.

I don’t give a whole lot of weight to the Mayans and their calendar, even if they did build a great empire. If they really had a crystal ball you would think they would have been forewarned that the Spaniards were bringing smallpox to the Yucatán in the 16th Century and they wouldn’t have let themselves be enslaved to relatively few soldiers wearing funny hats and riding strange animals.

Still, there are books out there, along with text and video on the Internet, that claim we are counting down towards destruction worse than Noah faced.

I don’t know much about the Mayans or how good they or other ancients were at prophesying the future. But after almost 30 years in the business, I know a thing or two about publishing. Frankly, doom sells. After I worked as a reporter in Calgary for a year I came to work for my dad’s newsletter in 1980. I was, as he said, a dumb college kid and ill prepared to be a contributing writer to his newsletter. So I started off reading everything that came into my office. That included almost every newsletter that was published at that time.

One of those publications was The Granville Letter, written by Joe Granville, who knew my dad. Granville had a huge following at the time. In January of 1981, he had become extremely bearish. His office made 3,000 phone calls to clients urging them to sell everything. Granville didn’t make this prediction because he foresaw the Federal Reserve increasing interest rates or a sneak attack by some foreign power. Instead, he said the Dow Jones Industrial Average was going to collapse because California was going to be struck by an earthquake measuring 8.3 Richter in Los Angeles in May.

Here is the really interesting part. Some people actually believed his prediction. You don’t have to take my word for it, just Google, “Joe Granville earthquake.”

On the day of Granville’s dire forecast the Dow Industrials actually fell 24 points, or almost 3 percent, in what was then the heaviest volume in the history of the New York Stock Exchange. As it turned out, Granville had it dead wrong, and not just about the earthquake. Eight months following his prediction the Dow hit its final bottom and started an 18-year bull run which would take it from 777 to 11,750.

My doom and gloom research culminated 11 years ago this month when I was an editor for Mark Skousen’s newsletter, Forecasts & Strategies. I was reading what some others were predicting about Y2K and what they said would be the ensuing economic collapse. Over the years I have read much about coming calamities. I have even been accused of being a doomster myself. (For the record, I have never predicted an earthquake for L.A. or anyplace else, and I really don’t think the world is going to end on Dec. 21, 2012.)

I am not suggesting that you should become like Pollyanna. Like Bob Livingston, I too think we are in for some hard times. That is mostly what I write to you about. But as the clock is set to strike 2011 I thought: “How would we want to live if we thought the world was going to end in 2012?”

I don’t want to touch on pop culture, such as books like On the Beach, or movies like Armageddon, and speculate as to how society would act (probably not very well). Instead, I am interested in how you think you might act. I have a feeling it might make for some interesting New Year’s resolutions.

What Would You Invest In?
If you simply knew the world was going to end in December 2012, I have a feeling not many of you would be too worried about how your portfolio was doing. All the gold King Midas ever touched is not going to do much good in a little more than 100 weeks, and I don’t believe that the person with the most toys wins. So you wouldn’t have to buy any more gold. Finally! And you sure as heck wouldn’t be buying Treasury notes or bonds (although if you are buying them now you just might continue because you are probably crazy).

So there goes one of your biggest worries —  investing — out the door.

What’s next? Living here in cold Canada, I can tell you that I might like a warm vacation; perhaps a trip to Las Vegas or someplace less glitzy. But if you are like me you probably wouldn’t want to travel much, unless it was to visit a loved one. I think I would stick close to home.

Of course you are going to still want money. It will be fun to buy things you can share. And you will feel a lot better spending it without as much worry or guilt.

I drive an older car I like, so I would probably just keep it. Perhaps larger vehicles might come in handy, but I don’t think I would get much enjoyment out of a fancy new Cadillac or Mercedes-Benz. I also think I might want to read more. I thought back to the last time I saw something really good on television and that was 21 years ago when I watched the mini-series Lonesome Dove. (Even though the world probably isn’t ending I recommend you rent it, but be sure to get the original co-starring Robert Duvall.)

I think reading would be comforting. I don’t believe I would delve into what the great philosophers had to say. I could hardly understand them when I was in college so I am quite certain I can’t now. It would be a relief not to have to read the next stupid thing politicians are doing. I would probably turn to the Bible. And I might like to read fact, and even some fiction, about family, friendships and sacrifice.

At the end, that is what it would come down to; the family and friends we care about and letting old grudges subside — that, as well as spending less time worrying about what is going to happen tomorrow. After all, we would know what’s going to happen; if not tomorrow, then at least in 700 tomorrows. Hopefully, that is enough time to come to peace with God, ourselves and the people we love. And I think that is a resolution worth making regardless of the future.

Yours For Many Happy New Years,

John Myers
Myers’ Energy and Gold Report

P.S. Next week I will be back with my annual investment forecast column for the year ahead.

Bad Santa: Obama Has Everything Covered Except Our Future

Christmas has arrived with tax cuts for the rich and more handouts for the unemployed. That is President Barack Obama’s economic plan, and it is not a new one. I’ve been writing about Washington for more than 25 years and the Federal government reminds me of an alcoholic friend who used to say: “Don’t worry; I am going to quit drinking… tomorrow.”

Obama, like so many Presidents before him, pledges he won’t mortgage our children’s future. Yet he and the rest of Washington do exactly that, month after month, year after year. Federal debt could reach $20 trillion in five years. It is hard to know where the breaking point is, but it is out there somewhere and we are headed straight for it.

Fears over the deficit have been going on for a long time. I dug out one of my dad’s newsletters from December 1982 where he declared, “Deficit spending cannot continue indefinitely.” If he were alive today he would be shocked to see the extent to which Federal deficits have climbed.

But just because we haven’t killed our economy off yet doesn’t mean that we won’t. That doesn’t seem to bother Obama, who has been acting like “Bad Santa” on a bender.

Lots of Christmas Cheer for Big Banks
Wall Street’s big banks used government bailouts to post their best two years in investment banking and trading ever. Bloomberg reports heady times for the Big Five — Goldman Sacks, JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley. Together they took in $135 billion from the Treasury Department’s Troubled Asset Relief Program and borrowed billions more from the Federal Reserve’s emergency-lending facilities in late 2008 and early 2009. All that came after the collapse of Lehman Brothers. Since then, the banks have benefited from record low interest rates and the Federal Reserve’s purchases of bonds.

“This is a once-in-a-lifetime opportunity for most of these banks,” said Charles Geisst, a Wall Street historian and finance professor at Manhattan College in Riverdale, N. Y.

Last year, the Big Five generated $127.8 billion in revenue just for debt and equity underwriting and from trading stocks and bonds. They will post almost that much revenue again this year just for those services. What is incredible is that even after being saved by the Federal government — in other words us — we don’t know how fat their piggy banks have gotten because they don’t have to report all revenue streams.

Such accounting doesn’t seem important to Washington. This would explain Obama’s tax cut deal. It is a massive compromise that extends unemployment benefits to the so-called 99ers for 13 months in exchange for a two-year extension of the Bush tax cuts.

Of course the rich like it. As ABC’s David Kerley on World News pointed out: “Extending all the cuts means that someone making $10 million a year will keep $450,000 of their income that would have gone to Uncle Sam… Keeping taxes at this level over the next 10 years could add nearly $4 trillion to the national debt.”

So what is another few trillion dollars here or there? Not much, says the Left, who continue to cry about the unemployment problem; the one that their President was going to fix.

The new Obama deal passed its first hurdle in the U.S. Senate last week. It should make the unemployed happy as well. After all, last year’s gift certificate benefits are running out, “and at the worst possible time,” declare Democrats. After all, Christmas is here!

I have news for the liberals; I too have been laid off a couple times in my life and I can tell you, neither one came at a “good time.”

It’s A Wonderful Deficit
Some Democrats seem to think that Washington has been tighter with money than Old Man Potter in the face of a bank run. That simply isn’t true. In fact, just a few weeks ago the Federal Reserve pumped an additional $600 billion dollars to buy U.S. Treasuries. That’s money that is not even counted on the government’s official ledger. As for Federal government funds, an astonishing amount has been and is going to continue to be spent; a fact that brings peril to the United States.

Meanwhile Obama has thrown his deficit-reduction commission under the bus after it failed to win political support.

"Yields are up… because we got $1 trillion in deficit spending with no signs of fiscal discipline on the horizon," said Julia Coronado, economist at BNP Paribas in New York. "It feels to global investors like the U.S. is becoming Argentina."

The country is facing the prospects of higher interest rates dictated by bond buyers and not by the Federal Reserve. That would put the U.S. into a much worse recession

And then there is the dollar itself. Last week we learned that the Federal budget deficit rose to more than $150 billion last month, the largest November imbalance ever. The Treasury Department says the November budget deficit was 25 percent higher than the $120 billion deficit in November 2009. That leaves the total Federal deficit approaching $14 trillion.

I hate to give away my age, but I was doing research back when the deficit hit $1 trillion. A lot of people back then didn’t think the U.S. economy could withstand such deficits. They were wrong. However, at some point deficits do matter. The best explanation for why comes from the Dec. 13 Christian Science Monitor:

“Every business person, and anyone who has ever managed a checkbook [sic], knows you can’t survive by borrowing 40 cents of every dollar you spend. Yet this is what our federal government is doing — with no real improvement projected even after the economy recovers.

“Tax cuts, trillion-dollar wars, deep recession, and the spending binge of the past 10 years have boosted our national debt to $13.8 trillion, over 90 percent of our total national output (GDP). This is two and a half times what it was 10 short years ago. Underfunded [sic] Social Security, Medicare and other entitlement benefits add another staggering $50 trillion to what the nation is obligated to borrow. That equates to about $200,000 in debt for every man, woman, and child in our country.

“The country is broke and our lenders are about to run out of patience. As it has already done with Greece and Ireland, the international financial community can at any time begin ‘voting with its feet,’ abandoning our debt for safer investments like commodities, land, or foreign securities. Doing so would cause the dollar to collapse and interest rates to surge. This would trigger renewed recession and a sharp decline in living standards since there is virtually nothing we Americans drive, wear, or work with that doesn’t have substantial foreign labor or material content.”

All of which brings me back to gold. I have had the good fortune to write to you for the past year and a half. As many of you know, I have been suggesting that you buy and hold gold. So far it has been good advice, because when I started writing for Personal Liberty Digest, bullion was trading under $900 per ounce. It is currently at $1,400 per ounce, which puts it close to its recent all-time high.

I have been writing about gold for a long time. I was doing it as a publisher in the 1990s and during that period I was dead wrong. But beginning in October 2000 I started writing Outstanding Investments. At the time gold was trading for $285 per ounce. I was telling subscribers that gold was an excellent buy; that they should accumulate as much of it as they could. Over the decade I have not wavered in that advice.

I bring this up not to brag about my record or tell you how smart I am. Rather I tell you this because I often sign off my columns with a few sentences recommending gold. I have noticed a few reader comments that have mentioned that the reason I endorse gold is because I profit from this advice. One reader a while back even suggested that they had seen me on a Florida station pitching gold coins. The truth is, I am not in the business of buying and selling gold.

Also, it is ludicrous to think I can manipulate the price of gold with my columns even if I wanted to. Consider that the average daily volume of gold cleared at the London Bullion Market Association (LBMA) for October 2010 was 17.1 million ounces worth about $20 billion. This means that an amount equal to the annual world gold mine production is cleared at the LBMA every five days.* Gold is a huge market, where price dictates come from central bankers and world leaders, not newsletter writers.

The only thing that helps me out is if I give sound advice. I have been able to earn a living as an investment writer all these years because I have been right a bit more than I have been wrong. Could I be wrong about gold now? Yes. After all, prices are lofty. That is until you consider the amount of dollars floating around the world.

One thing is certain, there will come a time when gold enters into a deep and prolonged bear market. If I am smart and lucky I will notice the signs. When that happens I will tell you, my readers.

Wishing you a Merry Christmas,

John Myers
Myers’ Energy and Gold Report

 

* This according to the London Bullion Market Association’s clearing turnover statistics released November 12, 2010. http://www.lbma.org.uk/pages/index.cfm?page_id=51&title=clearing_-_most_recent_figures.

Ben Bernanke: The Ghost Of Christmas Future

"At the rate we’re going, it could be four, five years before we are back to a more normal unemployment rate," Federal Reserve Chairman Ben Bernanke, interviewed on 60 Minutes.

You might have thought that Federal Reserve Chairman Ben Bernanke could have waited until after Christmas to spring the bad news. After all, the nation is not looking for a rock in its stocking following two bad Christmases. Yet Bernanke announced his message of bad cheer Dec. 5 on the CBS program 60 Minutes.

So why did Bernanke deliver this cold truth in somber tones about America’s continuing economic crisis? Perhaps because he understands that no one in the Federal government has admitted the truth — that the nation is in for years of tough times.

That is not the message we are hearing from President Barack Obama. Almost two years since the presidential election, Obama still praises the core strength of the U.S. economy and says he is on target with his promise to “rebuild America.” “We’ve got to do everything we can to accelerate this recovery and keep our economy moving forward,” the President recently said.

Not true, wrote Project Syndicate last week. Instead, “Obama has so far managed to only describe the world that he wants; he has not been able to bring it about.”

What America needs far more than Presidential proclamations is jobs. Last week we learned that the United States unemployment rate had climbed to 9.8 percent in November, up from 9.6 percent the previous month. That puts it within a hair of the 10.1 percent peak it reached in October, 2009.

The Obama administration has pushed for unprecedented interest-rate reductions and has instituted stimulus plans to the tune of trillions of new dollars. Still, banks are freezing credit and Americans are not going back to work.

It is true that unemployment, even touching near 10 percent, is not the worst America has experienced. I was just getting started as an investment writer during the rolling recession of the early 1980s when unemployment hit almost 11 percent. But that rate of joblessness was created by a proactive Federal Reserve led by Chairman Paul Volcker. That Fed pushed short-term interest rates to almost 20 percent. That was the price the Fed was willing to pay to squeeze out the inflationary excess of the 1970s. It was a tough pill to swallow, but the medicine was digested in less than two years and the United States, led by the steady hand of Ronald Reagan, was then on firm footing.

Today, unemployment is again almost that high, and not because the President or the Fed has taken tough action. Quite the opposite is true. Bernanke’s Federal Reserve is the most permissive in the central bank’s 97-year history, and makes the 1970s Fed led by Chairman Arthur Burns look frugal.

Bernanke has driven effective interest rates to zero, and is standing by the Fed’s recent controversial decision to initiate a $600 billion Treasury bond-buying program. It is the second round of so-called “quantitative easing,” which is meant to stimulate the economy by keeping rates at zero.

According to Bernanke, the Fed may not be done yet. Responding to the 60 Minutes question about the possibility of additional quantitative easing, Bernanke said: "Oh, it’s certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks."

“How the economy looks”? I don’t know how the economy looks from Bernanke’s ivory tower, but from my office it looks terrible. And according to my best friend, who has spent nearly four decades hauling heavy loads across North America, things look even worse from the cab of his truck. He tells me that not only is the construction business not picking up, but interstate traffic is also light. Even the line-up at the U.S./Canadian border is shorter than he has seen in decades. Yet he considers himself to be one of the lucky ones this Christmas. He is still working, while nearly one in five construction workers in the U.S. doesn’t have a job.

Business can’t seem to recover. And the Fed’s actions read like a “how-to” book for a Latin American dictator. That means the economy, including the construction business, isn’t likely to pick up any time soon.

“There is, however, a good reason why America’s economic performance has been so slovenly,” says the British newspaper The Independent. “This is not a post-war crisis. It is like a pre-war crisis, a crisis which unfortunately shares many traits with the Great Depression in the 1930s. House price declines, defaults, bank failures, low interest rates, hopelessly weak credit expansion, high unemployment, depressed levels of economic activity: The ingredients were all there in the 1930s and they’re back again today.”

What is different is that the Federal government and the Federal Reserve are doing the opposite of what they did during the onset of the Great Depression. Back then the Federal Reserve raised interest rates and Washington slashed spending. Today the United States is taking on debts than would have been unimaginable a decade ago.

China and India, along with more traditional allies like Japan, have bought into Obama’s plans by lending the U.S. Treasury Department trillions of dollars. The world is hoping that this universal bailout will rescue the U.S. economy and that America’s deep recession won’t become a world depression. But unless these countries start to see things turning around, they may hit the panic button. Then it will be every nation for itself, and no country or corporation will be willing to throw good money after bad.

That of course would mean sweeping deflation like that experienced during the Great Depression. The result could be unemployment that could exceed 30 percent. That would mean mass foreclosures and waves of bank failures. The economic crisis could get so bad that Washington might even forsake the Constitution and subject Americans to martial law.

The good news — if you can call it good news — is that we don’t have to face such catastrophe this Christmas. For now at least, the world is still backing Obama and Bernanke in the greatest bailout ever attempted.

The Ghost of Christmas Future
My late dad C.V. Myers always insisted that the dark forces of deflation will always be stronger than the ability of central banks and governments to inflate weak economies.

The National Inflation Association (NIA) believes the same. After Mr. Bernanke’s 60 Minutes interview, the NIA wrote, “It is more likely that in 4 to 5 years from now, U.S. unemployment will rise to Great Depression levels. Bernanke’s policy of printing money and creating inflation will not create jobs because the money the Fed creates is going to fund non-productive and wasteful U.S. government spending. The only jobs being created are artificial government jobs.”

Action To Take:
Over the next six months we should find out if the NIA is correct. The only way to protect ourselves against either extreme inflation or extreme deflation is with physical gold. Physical silver and resource stocks will do great if we end up with inflation. If money and credit are being destroyed instead, I think you should only hold bullion and a few of the biggest gold corporations in the world. I like both Barrick Gold Corporation (NYSE, ABX, $53.47) and Newmont Mining Corp (NYSE, NEM, $62.00).

Both Barrick and Newmont are at all-time highs, but I think both will go higher yet given either extreme inflation or crushing deflation. Keep in mind that during the Great Depression shares in blue-chip gold mining stocks soared. Homestake Mining stock rose continuously from $80 per share in October 1929 to $495 per share in December 1935. That was a total return of 519 percent (excluding cash dividends) during the most devastating bear market ever.

Except for a few special situations and major gold producers like those mentioned above, most of your money should be either in physical gold or physical cash. And I don’t mean in a bank account either. I don’t know what is going to happen, but if things get very bad I don’t think we can trust the banks. When it gets right down to it, we can’t trust the chairman of the Federal Reserve.

I hope I am wrong, yet fear that I am correct. All of which makes me feel like Scrooge in Charles Dickens’ A Christmas Carol. When Ebenezer’s grave is revealed he is overcome with foreboding. Frantically, he asks the Spirit of Things to Come if these shadows are what will be or what may be. The Spirit says nothing, either because it doesn’t know or because it won’t say. As for me, I simply don’t know.

Yours for better times,

– John Myers
Myers’ Energy and Gold Report

Obama’s Foreign Policy: Plain Stupid Or Darkly Sinister?

Forget Obamacare. With the way the world is spiraling out of control, we could be staring at deathcare. That’s my concern after seeing the latest WikiLeaks document releases which reveal a reckless President in Barack Obama.

The irony in Obama’s actions could almost be comical if they were not so damned scary. After all, the man once hailed as the Peace President — they even gave him “The Prize” — is making foreign policy decisions the way President Lyndon Johnson might have if he had been smoking crystal meth.

Last week we learned not only of the failure of Obama’s foreign policy, but also that his administration has been deliberately deceiving the American public regarding affairs with Muslim governments.

Iran: The Unspoken Crisis
Last week WikiLeaks released more than 250,000 documents. The information is as surprising as it is immense (216 million words in all). It includes the truth about Obama; that he has been talking closely about eliminating Iran’s nuclear weapons program. Those talks have been ongoing not with Israel, but with perhaps an even more important Obama ally: Saudi Arabia. To top it off, the new WikiLeaks provide confirmation that Saudi Arabia is still funding Islamic terrorism. It sounds like a Tom Clancy novel.

Unlike the George W. Bush administration — which constantly warned of the threat that Saddam Hussein posed with weapons of mass destruction — the Obama administration has said nary a word to the American people about Iran, which after all is a much larger and more credible threat than Iraq ever was.

According to Sever Plocker, a columnist for the Tel Aviv newspaper Yediot Ahronot, WikiLeaks strongly suggests the world is in peril. According to Plocker, "The massive leak of American diplomatic telegrams indicates a single picture, sharp and clear… (That) the entire world, not just Israel, is panicked over the Iranian nuclear program.”

Last week The Christian Science Monitor wrote: “Beyond the momentary public relations dividend, one Israeli veteran of diplomacy said the widespread fear of Iran among America’s Arab allies does not bode well for the Obama administration’s foreign policy — particularly its efforts to engage Iran diplomatically.”

America’s foreign policy is a disaster, contends Shlomo Avineri, a political science professor at Hebrew University and a former director general of the Israeli Foreign Ministry.

"When Obama decided on negotiating with Iran, he was doing exactly the opposite of what the American allies are thinking,” said Avineri, adding, "Obama has made all of his friends nervous, and the Iranians are spitting in his face."

It is not just the Jews that are upset about Obama’s recklessness. According to Sir Simon Jenkins in the U.K. newspaper, The Guardian, “It is looking to many in the world that the world’s superpower is roaming helpless in a world in which nobody behaves as bidden."

The German newspaper Der Spiegel described the latest WikiLeaks as indicative of "a political meltdown for American foreign policy. Leaving the trust by America’s partners… badly shaken."

Most troubling is that under Obama’s leadership the United States enlisted some very unsavory partners.

Pakistan On The Brink
The latest evidence also shows that the Obama administration is determined to send billions of dollars in aid to Pakistan and enlist it in fighting the Afghan war, even though Washington believes that Pakistan cannot be trusted with nuclear weapons.

Included in the latest batch of WikiLeaks releases is a cable that describes a "dangerous standoff" with Pakistan over nuclear fuel. Last year the U.S. Ambassador to Islamabad, Anne Patterson, reported that Pakistan was refusing to schedule a visit by American technical experts because, as a Pakistani official said, "If the local media got word of the fuel removal, they certainly would portray it as the United States taking Pakistan’s nuclear weapons."

Pakistan’s Foreign Ministry even refused to allow U.S. officials to visit a nuclear reactor that the United States helped build in the 1960s. "We said no, because it’s now our property, and we will not return it," said a Pakistani official.

According to Abdul Basit, Pakistan’s Foreign Ministry spokesperson, "This only shows that Pakistan is very sensitive about its nuclear program… (That) no one can touch Pakistan’s nuclear facilities and assets."

We learn that Israel is very nervous about world events, and with good reason. WikiLeaks reports a conversation between Mossad chief Meir Dagan and U.S. counterterrorism Chief Frances Townsend to discuss their concerns about Pakistan falling into the hands of Islamic radicals.

Dagan characterizes a Pakistan ruled by radical Islamists with a nuclear arsenal at their disposal as the world’s biggest nightmare; that Al-Qaeda or another "Global Jihad" might be quick to pull the trigger on Pakistan’s nuclear gun.

And we learn that Pakistan is Israel’s President Ehud Barak’s "private nightmare." According to WikiLeaks, Obama is deeply concerned that the world will wake up one day and find "everything changed" in the wake of an Islamic extremist takeover in Pakistan.

WikiLeaks makes it apparent that the Obama administration is treating Pakistan with kid gloves. For example, Washington is even worried how Islamabad might respond if the U.S. were to use force to destroy Iran’s nuclear program. However, revelations about the Obama administration’s mismanagement regarding Pakistan are not new.

In his recent blockbuster, Obama’s Wars, Bob Woodward pointed out just how fragile the leadership in Islamabad has grown with Pakistan President Asif Ali Zardari, who is convinced that the Obama administration is plotting to overthrow and even occupy Pakistan.

Woodward writes:

One evening during the trilateral summit, Zardari had dinner with Zalmay Khalilzad, the 58-year-old former U.S. ambassador to Afghanistan, Iraq and the U.N. during the Bush presidency.

Zardari dropped his diplomatic guard. He suggested that one of two countries was arranging the attacks by the Pakistani Taliban inside his country: India or the U.S. Zardari didn’t think India could be that clever, but the U.S. was behind the attacks, confirming the claims made by the Pakistani ISI (Inter-Services Intelligence).

“Mr. President,” Khalilzad said, “what would we gain from doing this? You explain the logic to me.”

This was a plot to destabilize Pakistan, Zardari hypothesized, so that the U.S. could invade and seize its nuclear weapons.

There you have it; the leader of America’s most important ally on the War on Terror believes that WE are the terrorists. Wikileaks also revealed that Saudi King Abdullah has spoken contemptuously of Zardari. Abdullah has called Zardari the greatest obstacle to peace in the region, and was quoted as saying: "When the head is rotten, it affects the whole body."

I haven’t even touched on Afghanistan and the ongoing war over there, which is looking to be unwinnable. Last week the publication Foreign Policy warned: “Obama’s goal in reaching out to the Muslim world has always had both short-term and long-term dimensions.”

One can choose to believe that Obama is more hapless than Jimmy Carter on his worst day. Either that, or entertain the notion that something more sinister is at work. I myself can’t say it is the latter, although one thing is certain: Obama is creating…

A Perfect Storm For Gold
Obama promised to restore world confidence in the United States. But two years after taking office, he has done the opposite. On the domestic front, he has mounted inflationary strategies, while U.S. foreign policy has been a series of missteps that are breaking the confidence of traditional allies. The Obama administration has in fact spied on Western diplomats while secretly working deals with Arab leaders; some of whom have malevolent intentions towards the United States.

All of this is undermining the U.S. dollar and putting a springboard beneath the price of gold. Is the world on the brink of war? I don’t know. The better part of me says not. But world tensions are building, and there has been a complete lack of leadership by the Obama administration. Of that I am convinced. I fear that Obama may be like the great German strategist Otto von Bismarck. More than a century ago, Bismarck’s power-politics and the resulting entanglements led to the First World War. We can only hope that America’s President doesn’t push us towards a Third World War.

Action To Take
We may see some further correction in the price of gold from its November high of $1,421 per ounce on the London Fix. We may even see the price breakdown below $1,300 per ounce, but there is support between $1,123 and $1,187 per ounce London prices. Given the macroeconomic fundamentals (the Federal Reserve purchases of U.S. Treasuries) and growing instability around the world — in large part because of the Obama administration — I expect to see bullion at $1,800 to $2,200 per ounce before the end of 2011. Therefore I urge you to hang on to gold and, if possible, even add to your position.

Yours for future wealth and happiness,

John Myers
Myers Energy And Gold Report

Government Motors: President Obama’s Hollow Victory

A shiny new initial public offering (IPO) hit the market last month for a rusted old automaker. On Nov. 18, General Motors re-emerged on the New York Stock Exchange after surviving bankruptcy. The carmaker’s IPO, priced at $33 per share, was one of the biggest ever and came about sooner than expected for the once busted company.

On the very first day of trading, General Motors stock (NYSE, GM) rose 3.6 percent on heavy volume. At this writing, it is trading around $33 per share. Before you melt down grandma’s silver tea set for shares of GM, keep in mind that the company still has much to overcome.

In an effort to boost growth, GM just unveiled a new brand in China, targeting Asian buyers. Whatever GM is working on becoming, it will be a far cry from what it once was: The crown jewel of American industry. While GM is no longer the biggest automaker in the world, it is the largest overseas automaker in China.

“So what’s the difference?” Democrats ask as they race to proclaim the GM bailout a stroke of genius by President Barack Obama. This is what The Hill proclaimed under the headline, President Obama’s Capitalist Triumph on Autos:

“Let’s see if those Adam Smith wannabes on the Republican right, and Roger Ailes of Fox who again called President Obama a socialist, will give the president a standing ovation for his capitalist triumph in saving the American auto industry.” [Emphasis added]

Really? Yes indeed, writes The Hill:

“General Motors is now profitable. The auto business is coming back big time. The major Wall Street firms, private equity funds, mutual funds and hedge funds have been breathlessly trying to get their hands on the new GM stock. Remember when they called it ‘Government Motors’? Now they can call it Profitable Motors. Now they can call it the capitalist stock they all crave. Now they can praise the President for a job well done.”

Before you start applauding Obama, you may want to consider the fact that General Motors isn’t out of the woods yet; not even after the Troubled Asset Relief Program (TARP), which provided the nation’s largest car company with $50 billion in taxpayer money following its June 2009 bankruptcy.

General Motor’s IPO has reduced the government’s stake in the company from 61 percent to 36 percent. But the United States is still a huge shareholder, and for the Federal government to break even on its investment it will have to sell its remaining stake for about $50 per share. That is almost 50 percent higher than where the stock is trading now.

The Democrats don’t seem to think this will be a problem. In fact, Obama was quick to claim outright victory with the GM bailout, which he claims has saved more than 1 million jobs across all 50 states.

“We are finally beginning to see some of these tough decisions that we made in the midst of the crisis pay off,” Obama said.

It seems a bit early to proclaim victory by the President or anyone else. That is because we are not seeing anything close to a typical economic recovery for the auto industry.

Not Your Father’s Oldsmobile
The Daily Mail points out the facts: “At the bottom of the recession in June 2009, U.S. car sales had fallen a record-breaking 39 percent from their pre-recession rate of 16 million units a year in late 2007 to 9.7 million units. Based on analysis of previous recessions, by June this year car sales should have recovered 71 percent from 2009’s low. Instead sales have recovered a meager 14 percent.”

Detroit once dominated the car industry. Today the Big Three are in various states of disrepair while Toyota is the world’s largest car manufacturer.

According to Jess Toprak, an analyst at True Car Inc., GM’s future depends on the company moving 80 percent of its production outside the United States, principally in South America and China. That does not bode well for creating American jobs. The Democrats also seem to be ignoring the fact that Detroit automakers have been in a state of decline since the 1970s and that Washington has intervened for them, beginning with the Chrysler Corporation Loan Guarantee Act of 1979.

Furthermore, the United Auto Workers (UAW) union lost another 76,000 members last year, bringing its total membership to 355,000. This puts membership at levels not seen since the late 1930s, just after the fledgling organization had won recognition at General Motors. As the chart below shows, the UAW is an organization that is just a fraction of the size it was 30 years ago.

To believe that Obama has rescued GM is to ignore history and the inconvenient truth that U.S. automakers have been in a state of decline for decades.

In the Feb. 3, 1992 issue of Myers’ Finance & Energy I wrote: “Detroit’s Big Three auto chairmen have sallied over to Japan to hide behind the skirt of President (George H.W.) Bush as he begged for leniency from Japanese auto manufacturers. Further humiliation came when Japan gave trade concessions to placate the U.S. entourage. As one Japanese auto executive said, ‘our feelings are of sympathy for America’s plight.'”

I continued by saying Detroit was broken down and rusted out; that in the 1950s America manufacturers built three out of every four cars made world-wide and sold nine out of every 10 cars in the United States.

Given the Big Three’s long decline, The Hill must think as Henry Ford did, “History is more or less bunk.”* That might explain why that publication has waxed praise about the TARP bailout.

Built Like A Wok
The Democrats want to claim victory on TARP now that the Presidential election is less than two years away. As Charlie Wilson, President Dwight D. Eisenhower’s nominee for Secretary of Defense and the former CEO of GM pointed out: “What was good for our country was good for General Motors and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country.”

So the Left is bragging that Obama saved the auto industry. But the truth is, only a few GM plants have reopened in the U.S. And while GM still earns most of its money in North America, the company’s focus for the future is overseas. For example, GM already sells more autos in China than it does in North America. And the company recently announced that it will start exporting Chinese-made Chevrolets to Latin America and the Middle East. Don’t be surprised when the people in the Midwest buy Chevy trucks made in Shanghai.

The fact is, TARP is not creating American jobs. Oh yes, Obama has helped the new GM; the one that will employ tens of thousands of low-cost Asian workers. The original GM, along with the rest of Detroit, is going to be as obsolete as the Edsel.

According to The Wall Street Journal, GM has been abandoning several North American plants and is continuing the massive downsizing that began last year. And UPI recently reported GM is holding fire sales on its U.S. assets.

“Auctioneers are selling lots of hammers, wrenches and 22-ton metal-cutting machines.” The buyers of these tools are foreign companies; corporations that will use these tools to build automobiles on foreign soil and sell them back to Americans; many who trusted in Obama’s vision.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

 

* The famous quote by Henry Ford was just part of what he said to the Chicago Tribune in May 1916. “History is more or less bunk. It’s tradition. We don’t want tradition. We want to live in the present, and the only history that is worth a tinker’s damn is the history that we make today.”

Happy Thanksgiving, America!

Tomorrow is perhaps America’s most important holiday, and it comes amidst the most positive change that has happened in a generation.

The Tea Party led the GOP to victory and it has given new hope to America. Furthermore, it is the Tea Party that has inspired many to challenge a leftist President and overthrow a liberal House of Representatives. It is the Tea Party that is setting a new course; one based on the blueprints that built this great nation.

Change has come quickly. Before the midterm election, it seemed many were giving up hope. And while the Tea Party does not yet have a unified agenda, its candidates have pushed for a balanced budget, the eventual elimination of the Federal debt and will try to repeal President Barack Obama’s healthcare reform law.

The Tea Party has instilled new passion and direction in the conservative movement, and it has done so from the bottom up. The ideas and inspiration from the Tea Party come mostly from ordinary people that Americans can understand, not intellectuals like William F. Buckley, Jr.

Liberty Still Thrives Inside America
Keep in mind that I’m a dyed-in-the-wool realist. My wife tells me that I see the glass half empty, and years ago Personal Liberty Digest co-columnist Chip Wood called me Calamity John.

But I am far more optimistic this Thanksgiving than I have been in years past. The recent election has demonstrated that libertarian ideals are still alive.

That is a relief, because America may be the only nation that still has a conservative voice. It certainly has fallen silent in Canada.

Two summers ago my wife and I traveled to Ottawa, Ontario to our eldest son’s wedding. Our daughter-in-law’s parents had some friends that were active in Canada’s Progressive Conservative (PC) Party. At the wedding rehearsal I spoke politics with a few of them. I had spent much of the previous 20 years living in Spokane, Wash., and was woefully ignorant of the political climate that had changed in Canada. I was shocked at how these “Conservatives” not only liked President Barack Obama but were also inspired by his policies regarding bailout and healthcare bills.

They were members of the political party that had helped elect John Diefenbaker, one of Canada’s great Conservatives, just 50 years earlier. Yet as Canadian Conservatives they believed in the ideology of Ted Kennedy rather than the ideals of Ronald Reagan.

Back when Diefenbaker was Prime Minister there were two principals: the Liberal Party and the PC Party. Today there are three other major Canadian political parties at the national level: the Le Bloc Québécois, the New Democratic and the Green Party. The last two are on the far Left.

And despite the success of the Tea Party, there is no conservative movement like it in Canada. It is an interesting distinction, writes Canada’s most influential newspaper, The Globe and Mail:

“Canada and the United States are remarkably similar countries — so similar, that no one else on earth can tell the two of us apart, unless this Austrian or that Sri Lankan has an ear so well attuned to English that she can distinguish Newfoundland from Missouri accents. Yet politically, we are solitudes…

“(Yet) for all our shared geography and history, Canadians are more Japanese than American. Or more German. Or Norwegian. We accommodate ourselves to the political reality we inhabit. Only the Americans are perpetually up in arms against the status quo. It makes for more unstable, more dysfunctional, but ultimately more democratic politics.”

For the past four decades Canada has moved further and further to the left; so far, in fact, that Canada seems devoid of citizens who even know what individual liberties are, let alone demand them.

Northern Sheep
Tom Flanagan is a United States-born, Calgary, Alberta academic, and was an adviser to Canadian Prime Minister Stephen Harper. Flanagan has said he doesn’t think a group like the Tea Party will bloom north of the 49th Parallel because Canada’s political system — unlike the U.S. primary system — is not required by law to hold free and open nomination contests.

“You could have an insurgency here and there in Canada, but a wide uprising like we saw in the U.S. just isn’t possible here,” Flanagan told The National Post.

Others in Canada have pointed out that there is no Tea Party because Canada’s economy is so much better off. I can tell you that this is nonsense; that by most measures the U.S. has a higher standard of living and a better economic future than does Canada.

The real reason there is no Tea Party in Canada is that Canadians sheepishly accept what government dictates. Let me give you an example. When I was going to the University of Calgary in the 1970s, Ottawa instituted the unpopular metric system. Many Canadians complained when the provinces made all road signs metric. Yet the signs were erected and were soon accepted.

Around that time, Washington State was also putting up metric road signs. But those signs didn’t catch on. That was because drivers were tearing them down.

Perhaps the differences between Canada and the U.S. are not surprising; not when you consider the United States revolted against King George III, while those further north were happy to be co-opted by the British Empire.

Yet there was a time when conservatism had a strong voice in Canada. Today such ideals and the concept of individual liberty exist almost exclusively inside the U.S. As much as ever, America is a last bastion of freedom. One can only hope that with time American ideals will spread.


Canada is hardly alone on turning its back to the freedoms and responsibility that made western democracy so successful, says Mark Steyn in his New York Times bestseller, America Alone: The End of the World as We Know It.

“Today in your typical election campaign, the political platforms of at least one party in the United States and pretty much every party in the rest of the West are all but exclusively about secondary impulses: Government health care (which America is slouching towards incrementally but remorselessly), government daycare (which was supposedly the most important issue in the 2006 Canadian election), government paternity leave (which Britain has introduced). We’ve elevated the secondary impulses over the primary ones: national defense, self-reliance, family…”

But even as the rest of the world turns its back on libertarian values, America has not. That makes this year’s Thanksgiving special. Hopefully there will be even more to celebrate in two years.

Best wishes on Thanksgiving,

John Myers
Myers Energy And Gold Report

The Tea Party May Save Us Yet

There has been a huge sigh of relief in the corridors of Calgary’s oil towers following the Republican victory in the mid-term election. The GOP win assures much-needed changes in the Federal government’s energy policy; changes that will benefit American consumers as well as Canadian petroleum producers.

It seems certain that climate change legislation in the United States is dead for at least the next two years, and hopefully forever. That is good news for Alberta’s oil sands industry, which has been facing an uphill battle against Greens inside the old Democrat-controlled Congress.

"I think the playing field for Canadian energy will be a lot more level now,” said Republican David Wilkins, the Bush administration’s last ambassador to Ottawa.

Former Canadian diplomat Colin Robertson agrees and says that while special interest groups will still keep up their lobbying efforts against oil sands, climate change legislation is DOA. That closes the casket on what could have become a border levy on Alberta’s oil sands.

A Fresh Look For Oil Sands
While Canadians may hate guns and embrace universal healthcare, many are happy about the Tea Party’s influence. This is true of Canadian petroleum executives who understood the threat of ousted Speaker of the House, Nancy Pelosi (D-Calif.). They realize that the 112th Congress will have a far more balanced approach to petroleum. Incited by President Barack Obama, Democrats had been making “clean energy” their mantra.

Finally, some sanity is restored. There is a growing realization that wind and solar power are incredibly expensive and are without significant infrastructure, and an understanding that neither will make a noticable dent in America’s energy appetite before the end of this decade.

This truth didn’t seem to faze House Democrats who wanted a national renewable-electricity standard. They were blissfully ignorant of a fundamental truth — that Green energy is more pie in the sky than it is juice on the grid.

Democrats also misunderstood America’s growing dependence on Arab oil. Consider the Obama drilling moratorium in the Gulf of Mexico following the Deepwater Horizon disaster. Neither he nor House Democrats seem to comprehend that oil from the Gulf of Mexico was helping the U.S. reduce oil imports. And while the largely untested Bakken formation of the Dakotas and Montana is promising, it was Gulf Coast production that was making the difference.

Stopping The Greens Before It’s Too Late
A more conservative Congress can take immediate steps to re-establish offshore oil drilling and open up oil exploration in Alaska. This cannot happen too soon, as America faces an immense energy crisis — one that the Obama administration has recklessly ignored.

The GOP gets it, especially the conservative wing of the Party, which understands that fossil fuels are and will remain essential to America’s national security. Oil will account for more than 90 percent of U.S. transportation energy and more than two-thirds of U.S. electricity through the end of this decade. The newly elected conservatives promise to be an enormous improvement over the previous Congress, which was focused on strengthening the Energy Independence and Security Act of 2007; an act which Obama reinforced last year with stimulus money.

What most Americans don’t realize is what folly taxpayer’s money was being spent on. There is a hidden clause in the Energy Independence and Security Act which was signed into law in 2007. It is found within Section 526.

According to that section, all Federal agencies — with the exception of NASA — are prohibited from purchasing carbon-intensive unconventional fuels:

“No Federal agency shall enter into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from non-conventional petroleum sources, for any mobility-related use, other than for research or testing, unless the contract specifies that the life-cycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.”

The U.S. military could not get its fuel from Alberta’s oil sands and instead had to rely on oil from nations like Saudi Arabia and Venezuela, two countries renowned for their grassroots hatred of the U.S.

Last month, Energy & Capital pointed out what an obstacle this is, because America’s military is the world’s single largest purchaser of crude oil. Most anyone outside the Democratic Party will take Alberta over Arabia.

That is because most people have some common sense. They understand that having a strategic supply of oil next door in a democratic nation that shares a common language and core values is a good thing. But “most people” does not include Pelosi or Obama.

An Early Thanksgiving
Thank Heaven for the GOP’s victory. Without it, Obama would have been free to sign a climate bill that would have targeted Canada’s oil sands industry. Instead, Obama has been forced to admit that his hopes to put a price on the cost of carbon dioxide emissions — which he and the Greens blame for global warming — will be put on hold for at least the next two years. If you drive a car or heat your home you have to say: Hallelujah and pass the petroleum!

As you know, most Republicans campaigned against a so-called Cap-and-Trade bill that would have put a ceiling on U.S. climate pollution. We have a President that made “Going Green” a priority right after socialized medicine. Obama’s Cap-and-Trade bill was in fact passed by the House, but stalled in the Senate because it was rightfully branded harmful to the U.S. economy by conservatives and others who were not corrupt or feebleminded.

Energy Injustice Derailed
Obama has not given up on saving the environment. The President said he will push for more piecemeal incentives for developing alternative energies that could help the U.S. reduce its “carbon footprint.”

The Greens may get their way if Obama continues forward with his economic policies. A recession turned depression would certainly reduce America’s carbon footprint. It might even make the most radical of the Greens happy.

If you think I exaggerate, consider KAIROS, a coalition of half a dozen large liberal church groups in Canada that includes the United Church, some Catholics, Mennonites and Quakers. They have a staff of more than 20 and an annual budget that exceeds $4 million. Their largest project is called Energy Justice.

According to their Web site: “KAIROS is in the midst of Re-Energize: Time For A Carbon Sabbath, a three-year campaign for personal, community, and political change.”

You might think that Canadian Christian groups might be worried about the lack of democracy or even women’s rights in big Arab oil-exporting countries, some of which are known to finance terror groups like al-Qaida. Instead KAIROS, which unbelievably gets $1.5 million per year from the Canadian Federal government, has set its sights on something it considers far more evil: Alberta’s oil sands.

What is most frightening is that environmental groups like KAIROS have plenty of allies, including Obama, Pelosi and Senate Majority Leader Harry Reid (D-Nev.).

Liberty For All
And while many Canadians decry American conservative policies, Canada, too, is reaping the rewards of the conservative revolution spreading within the U.S. Canada is like American liberals who oppose handguns yet sleep better at night knowing that criminals are wary of breaking into their homes because at least a few of the neighbors are packing pistols.

Both Canada and the U.S. need Alberta’s oil sands. Canada has roughly 180 billion barrels of proven oil reserves, second only to Saudi Arabia. More than 95 percent of these reserves are oil sands deposits in Alberta. In the past decade, Canada’s oil production has steadily risen as new oil sands have come on-stream to replace aging, mature fields. This has been fortuitous to the United States, whose own aging fields have been in drastic decline. That the previous Congress thwarted this marriage of necessity borders on treason.

Next week I will be giving thanks with my family that there is new hope with the new Congress; hope sparked by the conservative ideals of the Tea Party, which are arresting the energy idiocy that is Obama and his Democrats.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

And The Band Played On

Another election is over and the sweet promise of more change in two short years is wistfully blowing. It looks like it will be a humdinger of a Thanksgiving for Republicans.

While I will be giving thanks, I won’t be celebrating. The new Congress, packed with what Bob Livingston correctly calls the Ruling Elite, will be rearranging the deck chairs on the Titanic.*

Some think the nation took a turn for the worse with President Franklin Delano Roosevelt. I disagree. What came after FDR was total victory over Hitler and Tōjō as well as immense new wealth. By the late 1950s America was rich, stable and could call on the most dominant army ever assembled.

From the ashes of World War II the United States was the only major power that became richer rather than poorer. By the early 1950s the U.S. was the world’s largest creditor and was posting unprecedented trade and budget surpluses. America’s immense agriculture base and mineral wealth were just beginning to be exploited, and the country was the number one producer and exporter of crude oil.

Writing for Benjamin M. Rowland’s 1977 book, Balance of Power or Hegemony: The Interwar Monetary System, Charles P. Kindleberger said that in 1950 Washington possessed $20 billion in gold reserves or almost two-thirds of the world’s total of $33 billion.

In 1950 America’s per capita gross domestic product was seven times that of Japan’s and was almost double that of Great Britain’s. Today Japan and Great Britain have per capita GDPs that measure more than three-quarters of America’s. In fact Ireland, home to one of the worst famines of the post-Industrial Revolution, has a higher per capita GDP than does the United States.

America’s economy was also a dynamo that just kept spinning faster. Measured in constant dollars, the nation’s GDP rose tenfold between 1940 and 1969.

A half century later the U.S. was the largest borrower in history, the biggest buyer of fossil fuels and was posting staggering deficits. And by the dawn of the 21st Century the U.S. held slightly more than 25 percent of the world’s official gold reserves, or about $355 billion worth. That won’t even pay down 4 percent of the $13 trillion in U.S. Federal debt.

The onset of the massive decline began in the 1960s under President Lyndon Baines Johnson. It is worth noting that that Democratic President’s agenda was similar to President Barack Obama’s. Both set out to redistribute America’s wealth and both sent young men to fight and die in a losing war halfway around the world.

America was on the brink of revolt following Johnson’s election in 1964. It is worth remembering that things did not get much better after his successor — the deeply conservative President Richard Nixon — was elected four years later. Over the next decade American’s fortunes became progressively worse, and the nation has continued in a state of decline that persists to this day.

It all adds up to America’s grand decline, declared National Affairs earlier this year in an article with the headline, “Complexity and Collapse: Empires on the Edge of Chaos.

“Imperial collapse may come much more suddenly than many historians imagine,” is the summation of that article written by Niall Ferguson. “A combination of fiscal deficits and military overstretch suggests that the U.S. may be the next empire on the precipice.” You can read the article here.

Ferguson cites two troubling trends in America’s decline:

First, that America’s public debt may skyrocket from 44 percent of GDP before the 2008 financial crisis to more than double that figure within a generation.

Second, China will have a larger economy than America in 17 years and India’s GDP will exceed America’s in less than 40 years. If so, the U.S. could soon be a third rate power.

Ferguson is not the first historian to point out that America is an empire in decline. In 1987, Paul Kennedy’s book, The Rise and Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000 traced the decline of dominant nations beginning 500 years ago.

Kennedy’s conclusion is that all great powers have a natural progression that starts with a rise to prominence and then an inevitable decline. This erosion of wealth and influence has affected every leading power including Spain, the Habsburgs and Britannia.

“Imperial expansion carries the seeds of future decline,” wrote Kennedy. "If a state overextends itself strategically… it runs the risk that the potential benefits from external expansion may be outweighed by the great expense of it all.”

This phenomenon of "imperial overstretch," says Kennedy, is common throughout history.

Even America’s own regression has long been understood. In the 1960s, Arkansas Senator William Fulbright, the Democratic chairman of the Foreign Relations Committee, wrote the book, The Arrogance of Power. He was highly critical of overspending and the Vietnam War. The title became something of a slogan for the antiwar protests of the 1960s.

In the 1980s I started doing my own research into America’s decline. I found that in the 1950s one out of every three cars made worldwide was built by General Motors. At that time, GM sold more than one out of every two cars made in America. By the late 1980s, GM’s share of the domestic market had fallen to around 35 percent, and today it stands at less than 20 percent.

At the height of American power, General Motors President Charles Wilson said, “What’s good for General Motors is good for the country.” I think the converse could also be argued. America’s Ruling Elite seem as arrogant as Charles Wilson and Henry Ford II and if that is the case the nation itself is headed for bankruptcy. The only difference is that General Motors could count on Washington to bail it out. But who can bail out America?

Yes, we have elected a new Congress. And yes, in two years we might have a new President. But how much of a difference will it make? Not much. Consider that America has been in a state of decline for more than four decades. The nation’s multitude of problems — the war in Afghanistan, the energy and debt crisis, illegal immigration and spread of immorality — cannot be cured over the next few years.

My friends, the die is cast for America just as it was for all the great empires. Consider Spain. In the late 16th Century it was the most dominant power in the world. One hundred years later the plague, corruption and sweeping emigration had reduced Spain’s population from 8 million to 7 million. By then it hardly mattered who carried the crown once worn by the laudable Charles V.

A more contemporary example is England. After compiling huge debts and barely surviving the onslaught of Nazi Germany, did it much matter if Conservative candidate Winston Churchill or his opponent, Labour’s Clement Attlee, formed the Government that was elected in 1945? Of course it didn’t; not in the long run. And neither will it much matter who we elected last week or whom we elect two years from now.

Action To Take
It is important to note that when all empires collapse so, too, do their currencies. I believe the dollar is doomed and don’t see much hope for the euro either. Keep the bulk of your assets in physical gold with a sprinkling of silver and only a select group of natural resource stocks.

Yours for real wealth and good health,
John Myers
Myers’ Energy and Gold

* Footnote: The origin of this quotation is The Washington Post, May 16, 1976, when Rogers Morton, an American public relations officer, told the newspaper: "I’m not going to rearrange the furniture on the deck of the Titanic."

The Election Can’t Save Us From The Fed

"We can pay anybody by running a printing press." — Thomas Gale Moore, a Ronald Reagan economic advisor, 1986.

Don’t expect America’s fortunes to change in the wake of yesterday’s election. Even if some semblance of sanity comes to Congress we are still left with that other dysfunctional institution, the Federal Reserve, which is bent on inflating the United States economy, the dollar be damned.

Part of the problem is Ben Bernanke, the chairman of the Federal Reserve. He was reappointed by President Barack Obama last year and has shown himself to be a kindred spirit to the President. Both had zero business experience before moving to government. Bernanke spent most of his life learning economics as taught by Harvard and MIT, before becoming a professor at Stanford and Princeton.

Bernanke has been hailed as the world’s leading expert on the Great Depression. If you are worried this doesn’t qualify him to help resurrect the U.S. economy you are probably right. It is doubtful that the Pentagon would have put famous historian A.J.P. Taylor in charge of combat operations in Vietnam because he knew so damn much about World War II.

Bernanke is making sure that the Fed does what the central bank calls quantitative easing. That is a fancy term for saying they are “printing money” commented The Wall Street Journal last week, pointing out that such terminology makes it easier for the American public to swallow than if the Fed just came out and admitted what it is really doing.

But even The Journal has it wrong. In today’s world Washington doesn’t run printing presses. The truth is that creating new money today doesn’t have anything to do with paper and ink (if it did the Greens would be screaming about the forests). Instead it is done at the push of a button. 

Rather than print money, the Federal Reserve buys assets — usually government bonds, mortgage-backed securities — from banks or on the open market. There is thus more dollars sloshing around in the economy.

So where does the money to buy these assets come from in the first place? In fact says MoneyWeek, “The central bank just creates it out of nowhere.”

The Fed is fighting the depression of the 1930s. It raged before the Internet, TV, and the hula hoop and ended 13 years before Bernanke was born.

In the high-tech age, creating money to float the economy is very simple. The Treasury simply records on its computers the amount of securities the Fed purchased and this new money goes into the banking system to be loaned out at some multiple.

How much money are we talking about? According to Goldman Sachs, the Federal Reserve may soon purchase $2 trillion of assets to stimulate the U.S. economy. Goldman estimates that as much as $4 trillion of additional large-scale asset purchases might be poured into the economy to meet the Fed’s targets. All this money is being created because the Fed has exhausted its usual mechanism of increasing the money supply: Lowering the interest rate at which banks may lend one another their reserves held at the Fed. Currently the Federal funds rate is now zero.

I didn’t go to Harvard or Princeton, but even I understand Economics 101. Creating more dollars — in this case trillions more dollars — will devalue each and every dollar. That means that money you have tucked away in a retirement fund or bank account is going to be worth less, a lot less regardless of who is in Congress and how they are voting.

Back when I was in college I was taught the purpose of the Federal Reserve was to protect the integrity of the dollar. And for most of the 20th Century the Fed did protect the integrity of the dollar. Even when I first started writing about the markets, the Fed under Paul Volcker made the country and the world swallow a bitter pill by jacking up the Fed Funds rate, which nearly doubled between 1979 and 1981; jacking up the interest rate that banks charge each other rose from 11.5 percent to 21.5 percent. That led to a bad recession, but the U.S. dug its way out because the dollar remained intact.

Now we have the Fed as appointed by Obama. And as the chart below shows, under Bernanke, the Federal Funds Rate has been pushed to zero, lower than at any point in more than a half a century. Unlike Volcker, who worried about the stability of the nation’s currency — the world’s currency — The Wall Street Journal recently summed the central bank’s goal: “The Fed hopes to chase investors out of Treasuries into other, riskier securities. Like stocks.”

Since when did it become the Fed’s job to get bullish on stocks? What’s next, moving the Merrill Lynch Bull statue outside the Eccles Building?

Effective Federal Funds Rates

Now The Bad News
Moreover, I am wondering if Bernanke and the Federal Reserve Bank presidents have really thought through their actions. What if money isn’t moved out of the Treasury market and into the stock market but is instead moved into euros, gold or anything besides U.S. dollars?

China and Japan are sitting on $1.7 trillion of U.S. Treasury debt. China’s is holding one-fifth of its annual gross domestic product (GDP) in Uncle Sam IOUs. Their leaders might be Communists, but they are not idiots. With the Federal Reserve set to magically create four trillion new dollars you can bet that some of the guys wearing the Chairman Mao suits think it might be time to pull the plug on their Treasury investments.

If this happens, and the Chinese do begin to liquidate Treasuries, it would create a level of financial havoc that would make the Great Depression seem like a bump in the road. I can’t see any way we are going to get out of this unscathed.

I write this before the elections have happened, so I don’t know if the GOP won. But what should scare you is that it doesn’t matter. Congress could include Santa Claus, the Easter Bunny and the Tooth Fairy, and as long as we have a Federal Reserve acting as recklessly as the one now controlling our economic fate, we are in a lot of trouble.

Action To Take
Regardless of the election’s outcome and your expectations for 2012, please don’t get bullish on Big Board stocks or bonds. The core of your holdings should be in physical gold, along with some silver. If you want to get some leverage stick to resource stocks that are involved either in precious metals or hydrocarbon energy.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

Nothing Is Less Certain Than A Lead-Pipe Cinch

The headline of this story was an adage of my father’s. I remember it from a time before I knew what a lead-pipe cinch meant and I heard about it when I believed that most things my dad said were dead wrong. Now that I am in my mid-50s I have come to understand how often he was right.

I have been thinking about what my dad said because everything indicates that the GOP is certain to roll up a big victory in less than a week. Acclaimed pollster Scott Rasmussen last night predicted that Republicans will gain 55 seats in races for the U.S. House of Representatives Nov. 2; much more than the 39 needed for a Republican majority in the House for the first time since 2006.

That is not all. According to Rasmussen, the Senate Republicans should have 48 seats with the Democrats holding 47. Another five seats could slide either way, Rasmussen has said.

I am praying that Rasmussen is correct and we will be delivered a Republican victory; one that will launch a two-year countdown on President Barack Obama’s eviction from the White House. Still, you will have to excuse me if I don’t put the champagne on ice just yet.

After all, it is hard to forget the big story on Election Day, Nov. 7, 2000. At 8 p.m. the Voter News Service — a group pooling the resources of ABC, NBC, CBS, CNN, Fox and The Associated Press — called the state of Florida for Al Gore. What followed was this from Peter Jennings of ABC, “Al Gore wins the state of Florida and its 25 electoral votes.”

Two hours later the networks took another look and decided that it was too soon to tell whether Florida and with it the Presidency belonged to Gore.

At CBS, Dan Rather blamed the mistake on technology. “To err is human," Rather said, "but to really foul up requires a computer… If you’re disgusted with us, frankly, I don’t blame you."

Let’s face it, ever since odds-makers refused to set a betting line on Moses making it out of Egypt, experts have gotten plenty of things wrong. And while victory for the GOP in next week’s midterm elections is a crucial step in defeating Obama in 2012, it is far too early to plan that celebration.

First off, this election has a cast of characters unlike any witnessed. There is Ohio Republican Rich Iott who was photographed while dressed in Nazi SS garb which he was wearing to connect with his son. And let’s not forget Connecticut Democrat Richard Blumenthal who has repeatedly lied about serving in Vietnam. And it is not just the newcomers that are bizarre.

One race for Senate could be made into a novel except no one would believe it. Democratic incumbent and Senate majority leader Harry Reid (D-Nev.) was quoted as saying that he admires Barack Obama because he speaks "with no Negro dialect, unless he wanted to have one." His opponent, Republican Sharon Angle has said that if Congress can’t fix things, people may find themselves resorting to "Second Amendment remedies."

While I hate to contradict what Ronald Reagan preached — “Thou shalt not speak ill of any fellow Republican” — I feel it necessary to point out that Reaganesque leaders are few and far between. The majority of voters understand this and I think it could mean:

  1. The bums that we now have in office don’t get thrown out.
  2. We get a whole new set of incompetents in Congress who could be almost as bad as the last group.

I’m not much of a gambler so I am not betting on how this election turns out. I will, however, wager that whatever way it turns out it won’t be the salvation many American’s are looking for. Even with a Republican landside the White House is in Obama’s hands for at least another two years. A sitting President wields considerable power, even without a majority in the House or Senate, the kind of power that can co-opt a new Congress.

We also need to keep in mind that even 21st Century versions of the Founding Fathers were elected next week, the country has massive problems that will take years to solve.

Still a GOP victory is a step in the right direction. Conservative Republicans are campaigning on cutting Federal spending, extending the Bush tax cuts to all Americans and repealing Federal healthcare reform. And at least they understand that the stimulus bill has not helped grow the economy and the national debt is strangling us.

In the GOP weekly address, House Republican Conference Chairman Mike Pence (R-Ind.) said:

“Today, our national debt stands at more than $13 trillion — that’s more than $44,000 of debt for every man, woman and child in this country. The administration promised that if Congress borrowed a trillion dollars from future generations, their ‘stimulus’ bill would keep unemployment below 8 percent. Today unemployment remains at a heartbreaking 9.6 percent, making this the longest period that unemployment has been at or above 9.5 percent since the Great Depression.”

What Pence left unsaid is that these sorts of problems can’t be fixed by a midterm election and a few new members in the House and Senate.

“It’s endemic in our type of society that we always think there’s a person who holds the magic wand,” says Senator Judd Gregg (R-N.H.), a fiscal conservative who is not running for re-election. “But this society and this economy are far too complex to be susceptible to magic wands.”

Douglas Holtz-Eakin, former Director of the Congressional Budget Office concurs:

“The public has been sold this notion that somehow we can control the economy — that we can fine-tune it so we don’t get inflation on the upside, we don’t get recessions on the downside, [that] when something happens, they can step in and offset it.”

The facts speak for themselves. The U.S. economy is mired in its worst recession in 80 years. The nation has used up many of its natural resources; has unprecedented amounts of debt and is waging and losing a costly war in Afghanistan.

Excuse me for pushing the analogy, but America is like an aged, obese smoker who has drank too much and whose health has been neglected for decades. Such a patient will hardly be cured by switching around the nurses making rounds.

Instead the nation needs a lot of time, effort and leadership before we see any real improvement. A critical step in that will be when the country gets a new doctor. Hopefully that will be in two years. But even that probably won’t be a lead-pipe cinch.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Golden Words: “The Democrats Must Go!”

Heading towards next month’s election, gold has given the Democrats a clear vote of no confidence. Despite the excitement and even euphoria that Obamamania created two years ago; the Midas metal — which abides no politics and holds no favorite — is showing two thumbs down on re-electing a Democrat majority.

The day before President Barack Obama won the election — on Nov. 3, 2008 — gold was trading at $729 per ounce. Today gold is trading around $1,350 per ounce. That is a whopping 85 percent gain in less than 24 months.

Only one other President has done so much to help gold and to hurt the nation. Jimmy Carter was elected on Nov. 2, 1976. On that day gold traded at $122.50 per ounce. Twenty-three months later bullion was at $215 per ounce. That was a 75 percent increase in the Midas metal; less than what Obama has accomplished. Who says President Obama isn’t good at anything?

The Dems Have Sent Gold Soaring

History Says Bullion Will Continue To Boil
If you think that the Obama Gold Bull is becoming a bubble consider this: The Carter Great Gold Bull just kept on going. By the time it hit its all-time high in 1980, bullion was trading for $850 per ounce. That was four times higher than what gold was after Carter’s first two years in office. Even if Obama holds on for just one term and gold follows a path similar to the Carter Presidency, bullion could top $5,000 per ounce.

But Obama’s influence can be felt well beyond the gold market. The Christmas before Obama was sworn in crude oil was selling for less than $38 per barrel. Since then oil prices have more than doubled to $82 per barrel.

While commodity prices keep rising the dollar keeps on falling. Since summer the U.S. dollar index (a measurement of the strength of the dollar against a basket of other key currencies) has fallen off a cliff — dropping from an index reading of 89 to just 77.

Regardless of what economic propaganda Washington spews, we all know that the basic cost of living is higher now than it was two years ago. Gasoline costs more, bread costs more; even a cup of coffee costs more. And oh yes, there are fewer jobs.

There are 14 million unemployed and underemployed workers, or 17.7 percent of America’s total population. Each month millions of middle class Americans see their dollars buying them less while millions more keep searching for work. It is a building catastrophe and is leading towards economic stagflation.

Stagflation is the worst of both worlds. It is a stagnant economy and currency inflation at the same time. It is going to only get worse. Consider that the economy only grew 1.7 percent in the second quarter of this year, not enough growth to improve the economy.

Economists argue that we need 2.5 percent annual growth in the gross domestic product to prevent our already high unemployment rate from rising. That means we need to add more than 100,000 jobs per month to keep our unemployment rate from rising. Yet we created only 64,000 private sector jobs in September.

Meanwhile, unemployment has been at 9.5 percent or higher for the past 14 months. That is already a month longer than our last severe recession in 1982-1983, and no turnaround is in sight.

Last week Chicago Now said that President Obama’s stimulus package is deeply flawed: “It continues to increase our government debt at record levels. The bailout of our financial institutions has helped the banks, yet they are hesitant to loan money to consumers and businesses, which has compounded the chance of a smooth economic recovery. The banks are using our tax money while hoarding cash and our federal government has not instructed them to make loans.”

Hurricane Barack
If the election doesn’t change business as usual by the President and Congress, the result will be even greater deficit spending; something that will trigger a dollar catastrophe.

According to a story in Benzinga.com last week, 2010 bank reserves are incredibly high — above $1 trillion. That is more than 23 times the $44.6 billion in bank reserves that were held at the end of August, 2008.

All this money could turn into an inflationary tsunami in quick order because the Federal Reserve could use these bank reserves to buy more Treasury securities which will allow the Obama administration to continue to create debts that are beyond the nation’s capacity to repay.

The price of gold is already flashing this sign but there hasn’t been wholesale liquidation of greenbacks… at least not yet.

What you need to know is that it could happen even if the Republican Party pries away seats from the Democrats next month. After all, the instrument of all this destruction will still be sitting in the White House for at least another two more years.

According to Benzinga.com, “With the Federal Reserve and Treasury/President/Congress doing these things, historic monetary instability is the prompt, unsurprising result. The dollar’s value is dropping to all-time lows as proved by the gold price rocketing past $1,350/oz, up 386 percent since achieving equilibrium value of $350/oz in 2003. This means the Fed has devalued the dollar about 75 percent in the past seven years, an average annual monetary inflation rate of 10.7 percent.”

The Rule of 72 tells us that if this inflation rate stays true, that dollar in your pocket will be worth 50 cents in just over six years (hopefully not, but possibly when Obama exits the White House for good).

Even if Obama is defeated in two years he has plenty of time to wreak havoc on the economy and the dollar. Again, let’s consider Carter.

After the Democrats lost seats in the 1978 midterms Carter stuck to his liberal guns. The nation was just falling into the grips of sky-high inflation, rising interest rates and surging unemployment. But over the next two years the economic crisis got much worse. It was very bad for the nation but high times for gold.

I see the same situation today. Whether or not gold will reach $5,000 per ounce I don’t know. I tend to think not because there is also a chance for a stunning deflation if America’s creditors like China get tired of the Federal government’s runaway spending. Still, gold is very strong and it has legs to move much higher in short order.

Action To Take
We only have one vote. But we can protect ourselves and our families from the stupidity that is rampant in Washington. I urge you to sell all bond instruments and use the funds to buy bullion, either in physical form or blue-chip gold mining stocks.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

Pakistan Could Be Obama’s Biggest Blunder

President Barack Obama has been so preoccupied with the November elections that he has shamefully neglected foreign policy. This is especially true with regard to Pakistan — a nuclear nation that could soon tumble into the hands of Muslim extremists who want to buy a one-way ticket to paradise by killing Infidels.

Despite deficits that have mounted into the trillions of dollars, the Obama administration has been downright miserly towards Pakistan. The result is a fractured Pakistan that may yet be swallowed up by jihad.

According to The Express Tribune, “It is an undeniable fact that a revolution is coming in Pakistan.”

The sobering truth points to one thing — Pakistan is at a tipping point. Whether it is an intended strategy or willful neglect by Obama, radical Muslims could soon seize control of this military superpower and its bristling array of nuclear weapons. If you think President Jimmy Carter executed poor foreign policies during his one term, consider this: Pakistan is Iran on steroids and may become bent on our destruction.

This month militants in Pakistan have destroyed several large and desperately needed fuel supplies headed for our embattled troops in Afghanistan.

Worse yet, these attacks come just days after the Pakistani government — our supposed ally — blocked entry into Afghanistan, bringing the American — Pakistan relationship to an all-time low.

Obama’s war against Afghan insurgents is pushing Pakistan towards the brink of civil war, warns Time Magazine’s Robert Baer: "We’re reduced to common sense in figuring out where Pakistan’s breaking point is. The war in Afghanistan has done nothing for Pakistan’s stability, and in fact it’s gotten progressively shakier over the past 10 years.”

Another Islam Misstep By Obama
Pakistan is America’s most important ally against the war on terror. President George W. Bush understood that and provided Islamabad with more than $11 billion after the 9/11 attacks. But under Obama, President Asif Ali Zardari’s government has received just a tiny fraction of that amount.

Zardari admits that he is nearly impotent against the Taliban-led insurgency that began after Obama assumed office. Today the Taliban encircles the capital, Islamabad.

According to Zardari the United States is not providing enough money to deal with the 18,000 madrassas (radical Muslim religious schools) or enough to backstop Pakistan’s security forces including its army.

There is much at stake, admitted Secretary of State Hillary Clinton: “One of our concerns is that if the worst, the unthinkable were to happen, and this advancing Taliban… were to essentially topple the government for failure to beat them back, then they would have the keys to the nuclear arsenal of Pakistan. We can’t even contemplate that.”

Recent catastrophic floods have pushed Pakistan’s economy to the edge. Islamabad’s debt has ballooned to $55 billion and any tax base to fill it has evaporated. One third of Pakistan’s population has fallen below the poverty line.

A disaster of Biblical proportions is pushing the Islamic nation of 170 million people towards economic collapse. Agriculture has been ravaged by floodwaters that have submerged nearly a quarter of the country’s farmland and swept away 70 percent of the roads and bridges. More than 10,000 schools and 500 hospitals have been destroyed or damaged. There are doubts that the land will improve before the autumn wheat planting. If that happens Pakistan faces starvation. Yet Obama pays no heed to Pakistan’s plight.

The Montreal Gazette reports that millions of Pakistanis — who were just surviving before the floodwaters hit — are now homeless and unable to feed themselves. According to Pakistan Prime Minister Yousuf Raza Gilani, losses from the flood could reach $43 billion which is an Obama-like fortune for this Third World country. Western analysts say that the end result could cause 20 percent inflation. All this for a country already mired in a terrible economic depression.

This month eight suspected German nationals were killed in a U.S. launched missile drone strike in north-western Pakistan. The group is called Jihad al Islami and their very existence has sparked a not-so-funny joke.

Question: “Which is worse: German Nazis or Pakistan Jihadists?
Answer: German Jihadists.”

Pakistan’s Nukes Are America’s Worst Nightmare
Since the collapse of the Soviet Union, NATO has been unopposed. That is until now. This month container trucks and fuel tankers that supply 80 percent of NATO’s needs in Afghanistan were blocked by Pakistan forces. This may turn into the biggest embargo America and its allies have faced since Stalin sealed off Berlin six decades ago. It demonstrates what a thin string Obama’s policies are hanging by.

When I was a kid my dad actually started digging a bomb shelter during the height of the Cuban Missile Crisis. Those were crazy times and it left me worried about nuclear war until I was almost 30. Like many of you, I thought that the collapse of Communism had arrested nuclear Armageddon, at least in my lifetime. But Pakistan is the cause of a whole new nightmare. It is a nuke toting nation whose arsenal may fall under the control of Muslim radicals.

According to Zardari, “We are not a failed state yet but we may become one in 10 years.”

Don’t bet that Zardari isn’t being overly optimistic. His wife — the charismatic Benazir Bhutto — was perhaps the country’s last legitimate national leader before she was brutally assassinated. Since her death the Taliban have launched hundreds of terrorist attacks across Pakistan. The situation has become so bad that Zardari is now a captive of a bunker that more resembles Adolf Hitler’s Wolfsschanze military headquarters than it does a presidential palace in a democratic society.

Things have gotten so bad the Obama administration is attacking the enemy within Pakistan’s borders. If you don’t think that is an alliance in crisis imagine American B-17s bombing England on D-Day.

The Guardian newspaper says the Obama administration has lost patience with Islamabad. This should be worrisome to the world. After all, Zardari’s teetering government is all that stands between us and a Jihad armed with 100 nuclear weapons. Last week in OpEdNews, Michael Payne wrote: “The probability that this scenario (involving Pakistan) could explode into a war like no other in history grows greater every day.”

While Obama’s domestic policies have been atrocious, his lasting legacy may be his failure to deal with Islam and Pakistan. And frankly, I am too old to start digging a bomb shelter.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Allah, Oil And America’s Future

(Part two of a two-part series. Part one, Is It Time To Say, “To Hell With Islam?” ran Sept. 22)

Islam is one of the biggest threats facing America. Yet President Barack Obama and key Democrats are Islam appeasers and Muslim apologists. Does the President and his supporters act out of woeful ignorance or willful sabotage?

Consider that Obama has thrown the weight of the Presidency behind the building of the New York City Mosque next to 9/11 Ground Zero.

"As a citizen and as President,” Obama said, “I believe that Muslims have the right to practice their religion, as everyone else in this country. And that includes the right to build a place of worship and a community center on private property in Lower Manhattan, in accordance with local laws and ordinances. This is America. And our commitment to religious freedom must be unshakable."

This is not the first time that Obama has been an advocate for Muslim rights. In a speech at Cairo University last year the President made a spectacular overture to the 1.5 billion Muslims of the world when he called for, “a new beginning.”

In that speech Obama spoke of a complete withdrawal of United States forces from the Middle East and, regarding the conflict President Obama said, "We do not want to keep our troops in Afghanistan… We would gladly bring every single one of our troops home if we could be confident that there were not violent extremists in Afghanistan and now Pakistan.”

Obama apologized for the CIA’s involvement in Iran’s democratically elected government in 1953, an event that for many Muslims was the beginning of American interdiction.

“Since taking office, President Obama has reached out to the Muslim world as a whole,” said International Herald Tribune columnist Roger Cohen last month in an op-ed in The New York Times.

Former House Speaker Newt Gingrich couldn’t agree more. CNN reported that, at the Fifth Annual Value Voters Summit in Washington, D.C., on Sept. 17, Gingrich warned America faces a dire threat.

"We are at a point where our establishment is sliding into policies of such disastrous impact that they will in fact fundamentally challenge the survival of America as we know it," Gingrich said. "On the one front we have a secular socialist machine led by (President) Obama, (House Speaker Nancy) Pelosi, and (Senate Majority Leader Harry) Reid, and on the other front we have radical Islamists who would fundamentally change this country into a system none of us in this room would recognize."

Gingrich also said he will oppose any efforts to impose Sharia on the U.S. Yet the former House Speaker doesn’t have a vote. Pelosi and Reid do. Their support for Islamic rights — whether near Ground Zero or around the world — is troubling.

Backing Islam Or Locking In Oil?
To be fair, Obama is not the first U.S. President to sooth Arab sensibilities. Washington has been influenced by Arab interests for decades.

Earlier this month The Tablet wrote: “There is an Arab lobby in the United States — one as old as, if not older than the Israel lobby and it has helped to shape U.S. foreign policy and economic life since the end of World War II.”

Arab’s influence encompasses everyone from U.S. Foreign Service officers, Arab-American activists, Islamist ideologues and even Secretary of State Hillary Clinton. And no administration had closer ties to the Saudi Royals than George W. Bush’s.  Prince Bandar bin Sultan bin, Saudi Arabia’s former U.S. envoy, was even nicknamed Bandar Bush. All this Arab influence in America can be traced to a single commodity: Oil.

Oil provides 40 percent of the world’s energy and 96 percent of the world’s transportation energy. According to the Institute for the Analysis of Global Security, world oil consumption will surge by 60 percent in the next decade. That means even more money for Saudi Arabia. According to Mark Steyn in his book, America Alone, The End Of The World As We Know It, the Saudis are already spending billions to fund, “mosques and madrassas [sic] in every corner of the planet. Oil isn’t their principal export, ideology is — petroleum merely bankrolls it.”

This should put a red light over the Middle East which in 10 years will hold 83 percent of the remaining global conventional oil reserves.

The Dirty Truth About Democrats
Access to Arab oil explains some, but not all of the reasons Obama, Pelosi and Reid are pro-Islam. After all there is another huge energy producer whose resources almost equal that of Saudi Arabia. Yet this nation is given no quarter by the President or the Democrats in Congress. It seems hard to understand why when this country is America’s closest ally, a friend for 200 years and shares the same language, culture and religion as the United States. Yet Canada — with its vast oil sands — is the target for attacks by the Liberal Elite in Washington.

The Canadian oil sands will send America nearly 1 billion barrels of crude oil this year, making Canada the number one supplier of crude oil, ahead of Saudi Arabia.

Annual U.S. Imports from Canada of Crude Oil and Petroleum Products

Yet Canada’s oil sands have been attacked by Democrats as being an unethical environmental atrocity. There are reports that Left-leaning members of Congress want to ban oil sand imports into the U.S. Apparently it would be better to accept more oil from Saudi Arabia than from its northern neighbor; better to buy crude from the Arab Kingdom that spends a fortune financing al-Qaida and other extremists than to buy it from an ally whose soldiers fight and die next to their American brothers in the God-forsaken mountains of Afghanistan.

The Democrats in Congress who make cozy with Arab special interests have lost sight of the fact that in Saudi Arabia there is no democratic voice, women have no say; while torture and executions are a daily occurrence. While Canada gave every assistance to the U.S. during 9/11 — I saw waves of commercial airplanes approaching Calgary International Airport that morning — it was Saudi Arabia that was the inspiration for the attack. Saudi Arabia is where Osama bin Laden made his fortune and it was home for 15 of the 19 9/11 hijackers.

Hypocrites Favor The House Of Saud
In his new book, Ethical Oil, The Case For Canada’s Oil Sands, Ezra Levant writes: “If Saudi Arabia didn’t exist, it would take a science fiction writer in an apocalyptic mood to invent it.”

Yet Liberal Democrats in Congress are already lining up against Canada’s oil sands. Last month Pelosi visited Canada to gather ammunition to either tax or block future oil sands imports to America.

Some Democrats are campaigning against government approval for the final stage of the Keystone Pipeline project linking the oil sands to Texas refineries. And Pelosi has the power to expedite or delay clean energy legislation currently before the Senate.

According to the Montreal Gazette, “Ms. Pelosi’s mind is made up. The Alberta oil sands are a last-resort fuel for Americans best eliminated as quickly as possible.”

Alberta’s oil sands do have environmental issues. Some 1,600 ducks died after landing on a giant sludge pond which is part of the oil sand’s landscape. That is a lot of ducks to be sure, but only a tiny fraction of the number of birds that are killed every year by wind turbines. It might come as comfort to the Greens that very few ducks are killed as a result of Saudi oil production, in part because there are no ducks in the desert.

However I do have news for Liberal Democrats like Pelosi. While you support women’s rights and oppose the death penalty, you should note Saudi Arabia freely executes people, especially women. The nation has the highest per capita capital punishment rate in the world. (America’s other great Arab ally Pakistan, beheads and tortures nearly the same number of people each year.)

What is chilling is that people like Pelosi and Obama see evil in things like Canada’s oil sands but appear blind to the dangers of Islam and the ambitions that some within it have against the West. One can only hope that these leaders simply don’t know better. To entertain something more sinister is dismaying.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Is It Time To Say, “To Hell with Islam?”

Part one of a two-part series

If you are like me, you are sick and tired of being frightened over Muslim sentiments. I say it’s high time to understand that regardless of what we do or say, we Christians have a target on our back. It’s time to face the cold truth: For countless believers of the Quran, we ARE the enemy. The sooner we understand this, the better.

It is time to say: To hell with Islam. We’re not going to take it anymore!

As I write to you, Muslims are still vowing to build a mosque near the site of the 9/11 attacks in New York and Pastor Terry Jones backed down from burning the Quran on the anniversary of the Twin Towers tragedy. While I believe that anybody that burns books is an idiot, I find it objectionable that Jones abandoned his convictions because of pressure from the President Barack Obama White House. Unlike President George W. Bush who clearly laid out the battle lines — “you’re either with us, or against us” — Obama is obsessed over what Muslims “might do” if we offend them.

President Obama — The Eager Appeaser
Call it politics, background or birthright; Obama is intent on appeasing the Muslims of the world. In fact Obama has traveled so far out of his way to avoid confronting Muslims that it’s hard to believe he is still on planet earth.

Obama is not alone in apologizing to Muslims. In 2008, England’s Archbishop of Canterbury gave an interview to the BBC. He said that the introduction of Islam in the United Kingdom — prayers from which are broadcast three times daily over loudspeakers in Oxford — is “inevitable.”

Even comedians are afraid to ruffle Muslim feathers. One of England’s top funny men, Rory Bremner, said he’s afraid to write jokes about Islam because he fears death threats.

On a David Frost television program this past summer, Bremner said, “The greatest danger now is that one of the toughest issues of our time is religion. I’m writing a line and I think, ‘If this goes down badly, I’m writing my own death warrant there.’ Because there are people who will say, ‘Not only do I not think that’s funny but I’m going to kill you’ — and that’s chilling.”

Seth MacFarlane, the creator of the TV show Family Guy — which routinely makes fun of Christ — was on Larry King Live a couple of months ago and also admitted that he, too, worries about poking fun at Islam.

The truth is we are a millennia and a half beyond offending Islam. They have been offended for more than 1,000 years and I have news: They will stay that way.

This is what Tricia Erickson had to say on the subject in a Sept. 11 News Blaze, op-ed:

“For the sake of the REALITY of who we are indeed at war with and why, let me quote some scriptures from the Koran that may be recited in the new Mosque to be built at ground zero:

  • "Martyrdom is therefore the ONLY way for a Muslim to obtain forgiveness of sins" Surat Al Tawbah 9:111.
  • "Jihad (fighting for Allah’s cause) is ordained for you" Surat Al-Baqarah 2:216.
  • "Kill the Mushrikun (non-Muslims); wherever you find them, and capture them and besiege them, and lie in wait for them in each and every ambush" Surat Al-Taubah 9:5.
  • "They (non-Muslims) shall be killed or crucified or their hands and their feet be cut off from opposite sides, or be exiled from the land" Surat Al Maidah 5:33.
  • "And if you are killed or die in the Way of Allah, forgiveness and mercy from Allah are far better than all that they amass" Surat Al Taubah 9:111.

Erickson points out that the Quran is filled with proclamations calling for the killing and maiming of “Christians, Jews and overall non-believers”.

In Allah’s Own Image
I don’t know how things are in your neck of the woods, but up here in Calgary, Canada the majority of Muslims do not immigrate and assimilate. They congregate.

In fact, Calgary is home to the largest Muslim temple in North America, the colossal 48,000-square-foot Baitun Nur mosque. The Mayor of Calgary, Dave Bronconnier, said when the complex was completed: “On laying the foundation stone of this magnificent mosque, Canadian values are flourishing in the City of Calgary."

Frankly, I just don’t see it. Maybe three decades ago it was that way with the Muslim immigrants I shared classes with at the University of Calgary. But today you can hardly travel a few blocks and not see a Muslim woman wearing the traditional burqa. In fact Canada’s Muslim population has doubled since 9/11.

Keep in mind I am not suggesting for a moment that Calgary’s Muslim population is bent on the destruction of Western Civilization, or even misfeasance. What I am saying is that the overwhelming evidence in Calgary and in Canada indicates that the vast majority of Muslims are clinging to their traditional culture and ethos. As their numbers grow, these things will lead to a nation far different from the one my parents and I were born into.

Before I get a bunch of hate comments accusing me of racism, consider this: I have close personal and decade-long relationships with two people of the Muslim faith; both of whom have been ostracized by their communities because they practice a Western lifestyle. And if you are a blue-blooded Liberal keep this in mind: Under the Sharia or the law of Allah, “Women are considered inferior to men, and have fewer rights and responsibilities.” There goes women’s liberation.

The Muslims Are Coming, The Muslims Are Coming

If you think that the growth of Islam is unique to Canada, think again. According to the book: America Alone: The End of the World as we Know It, the author Mark Steyn argues that the West’s steady decline relative to Islam has much to do with Muslim insistence on keeping their culture as well as their high fertility rates.

For example, the U.S. has a fertility rate of a little more than two births per woman. Europe falls far below this level. Germany checks in at 1.3 births per woman, with Russia and Italy at 1.2 and Spain a little more than one birth per woman.

Steyn contrasts this with the fertility rate in Muslim countries like Afghanistan, 6.69 births per woman, Mali 7.42 and Somalia 6.76 births per woman. Steyn points out that Muslims living in Europe do not assimilate and, because of their population boom, they will instead take over Europe and be the dominant cultural force in 40 years.

According to Steyn, Islam is a far greater threat than global warming, China or any other man-made or natural disaster imaginable.

Certainly this is not how Obama and likeminded Liberals in and out of the Federal government see things. They continue to try and win over hearts and minds of Muslims; to convert them to Western Democratic thinking. It is a losing strategy, and one for which we will pay a very dear price.

Yours for wealth and health,

John Myers
Myers’ Energy & Gold Report

P.S. — Look for part-two, Allah, Oil & Our Future on Oct. 6. It will examine one reason why Obama feels the need to placate Muslims, plus how America can change its future by weaning off Arab oil while exploiting our own rich reserves of coal and natural gas. The Greens won’t like it but I am way past worrying about their feelings.

Titanic Arrogance: Obama Is Sinking America

The United States of America is racing towards ruin at breakneck speed and her captain, President Barack Obama, seems blissfully ignorant of the peril he is piloting the nation towards.

As Obama traveled the country to beg Americans to vote Democrat last week, new images of the RMS Titanic’s wreck were published. Taken from three miles deep in the Atlantic, the photographs are further testament to a time when technological arrogance and Edwardian pride believed that government and industry could surmount all challenges.

When completed in 1911 the Titanic was considered the Eighth wonder of the World. Its captain, Edward J. Smith, boasted that the ship was unsinkable.

“I cannot imagine any condition which would cause a ship to founder. I cannot conceive of any vital disaster happening to this vessel. Modern shipbuilding has gone beyond that,” Smith said.

The Titanic’s aura of invincibility stemmed from the period; it was the onset of the 20th Century and men believed machinery could overcome all, even nature. This was a notion the populace, especially the traveling public, was eager to swallow.

Captain Smith epitomized the age. He was at the apex of his career and was White Star Line’s most senior captain, chosen specifically to skipper the Titanic.

So convinced were captain and crew of the ship’s indomitability that they raced across the Atlantic at record speed. On the evening of April 14, 1912 the Titanic was sailing in the dark at 22 knots. Smith seemed oblivious to icebergs which could easily cross the great ship’s path at that time of year. It was a grandiose display of arrogance which cost more than 1,500 lives.

The PBS special, “Lost Liners” puts the blame solidly on Captain Smith.

“Fault rests on the Titanic’s skipper for not exercising more caution. Having received repeated ice warnings, he did not slow his ship down. In fact, Captain Smith had a casual, almost cavalier, air that evening, when he lingered late over a second cigar following an elegant dinner with some of the ship’s more distinguished passengers.”

Obama’s Orders — Ahead Full!
A century later, the greatest marvel of the Age of Enlightenment is the United States of America and it is on a collision heading. The U.S.A. will not be sunk by icebergs, but by debt and policies which sacrifice the dollar for political expediency. At the helm is Obama who seems more worried about his crew (Democrats in Congress) keeping their jobs than he is about the ship (America) itself; more concerned about his place in history than America’s immediate future.

We are trapped in the brig with a President who continues to steam forward regardless of opposition or hazard.

“From the day I took office, I’ve been told that addressing our larger challenges is too ambitious; such an effort would be too contentious,” Obama said during his State of the Union Address, Jan. 27, 2010. “For those who make these claims, I have one simple question: How long should we wait?”

One answer might be: “Until it is safe!” 

No doubt Obama is too busy racing ahead to even hear this warning. Just this past  Labor Day the President announced he is moving forward with even more spending; some $50 billion in new road, rail and airport construction projects and a plan to both overhaul national infrastructure spending and jump-start a sea of jobs.

The President spoke in Milwaukee to union members about his ambitious agenda to construct 150,000 miles of new roads, a network of high-speed rail lines and a next-generation airport system that includes 150 miles in new runways.

Left unsaid is that this expansion will have to be done on more borrowed money. Also absent from the speech was the fact that the unemployment rate won’t budge much below 10 percent and a credit crisis which began more than two years ago continues to linger despite trillions of dollars in Federal spending.

Instead Obama reiterated that more spending won’t raise the deficit.

“This is a plan that will be fully paid for and will not add to the deficit over time — we’re going to work with Congress to see to that,” Obama said. “All of this will not only create jobs now, but will make our economy run better over the long haul.”

It is hard to follow the President’s logic. A couple of days before his $50 billion spending pledge for transportation, the non-partisan Congressional Budget Office said this year’s U.S. Federal budget deficit will top $1.3 trillion.

That would be a tiny improvement of $71 billion over last year’s record $1.4 trillion deficit and hardly the direction we need to go if the President wants to restore world confidence in America and the dollar. After all, the 2009 and 2010 shortfalls are the largest ever. Each is three times bigger than the government’s annual deficit has ever been.

U.S. Dollar: Going, Going, Gone!
To say that deficits don’t matter is to ignore history and to put the county in peril. Even some of Obama’s crew admits that much. Earlier this year Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, issued a stark warning regarding the ballooning U.S. Federal government annual deficit and cumulative national debt.

“Without pre-emptive action, the U.S. risks its next crisis,” stated Hoenig, who went on to explain that Obama’s deficits endanger the Fed’s ability to fulfill its mandate of maintaining economic growth and price stability.

Hoenig is the first senior Federal Reserve official to go on record and state that the current U.S. fiscal policies are unsustainable and, unless halted and reversed in short order, will precipitate hyperinflation.

At the risk of carrying my analogy too far, Obama has a crew member in the crow’s nest screaming, “Iceberg!” and still he steams even faster.

How To Save Yourself
We don’t need a banker from the Federal Reserve warning us. The markets themselves are flashing “Danger!”  As the chart below shows, the dollar has been sinking for a decade. It got a brief respite in 2008 because of the deflationary scare. But that recovery appears to be over and the downward trend-line remains very much intact. I expect that over the next two years the dollar will continue to fall further once Obama’s inflationary policies get traction.

The Sinking Greenback

A decade ago I wrote to my subscribers this headline: “Get into the Lifeboat!”  In that newsletter I spoke about the fact that when the Titanic first struck the iceberg, most of those on board didn’t believe it could sink. Those that were smart enough not to believe in the fallacy of that age actually got off the ship and survived.

At the time of my “Lifeboat Alert,” gold was trading under $300 per ounce. At this writing gold is fetching more than $1,260 per ounce. My expectation is that after Obama really does sink the nation and the dollar, gold will be trading above $2,000 per ounce. It is not too late to save yourself, but time is running out.

Action To Take
Buy physical gold. I like American Gold Eagles, Canadian Maple Leafs and African Krugerrands. All three are stamped in English, have their gold content stamped on them, come in convenient, well-known sizes (1-ounce, half-ounce, quarter-ounce and one-tenth-ounce).

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

The Obama Solution: “Blame It On Bush”

I have a sneaking suspicion that President Barack Obama has a sign on his Oval Office desk that reads, “The buck stops with Dubya.”

According to the Boston Herald, “Our President cannot resist a good opportunity to blame Bush.” The President has blamed Bush on everything from the credit crisis to Hurricane Katrina.

It was on the five-year anniversary of Katrina late last month that Obama showed courage in the face of criticism and calmly reiterated the message from that chart topping song a decade past, “It Wasn’t Me.”

Last month the President was campaigning for the upcoming elections in New Orleans, ground zero for Katrina. He told the audience that he would not abandon their cause. Then the President called Katrina and its aftermath not just a natural disaster but “a manmade catastrophe — a shameful breakdown in government that left countless men, women and children abandoned and alone.”

“Implicit in Obama’s remarks,” wrote The Associated Press: “is an indictment of sorts against former President George W. Bush’s administration for its handling of the crisis.”

When it comes to the Gulf Coast the President just can’t resist blaming Bush. During the height of the BP oil spill the President was at it again.

“For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill,” said Obama from the White House Rose Garden last May. “It seems as if permits were too often issued based on little more than assurances of safety from the oil companies. That cannot and will not happen anymore."

In fact, the Obama administration has a laundry list about the previous President, two wars in the Middle East and an economy that can’t get traction. The way Obama is revving up for the fall elections you would almost think he himself was running against Bush.

While giving a speech last month, Obama said the Republican Party hasn’t differentiated itself from its predecessor.

“They don’t have a single idea that’s different from George Bush’s ideas — not one,” Obama said to applause. It seems that Obama thinks he is taking the high road as to not actually naming Bush but instead saying, “The previous administration.”

Countless times Obama has said that it is Republican policies which caused the recession.

“We got here after 10 years of an economic agenda in Washington that was pretty straight forward,” Obama said in August. “You cut taxes for millionaires, you cut rules for special interests, and you cut working folks loose to fend for themselves. That was the philosophy of the last administration and their friends in Congress.”

And it is not just Obama whose mantra is to fault Bush. Congressional Democrats like to blame the former President for just about everything. Even with the 2010 midterm elections a couple of months away, Democrats think that “blaming Bush” is still a winning strategy, even though they have had a majority for almost four years and Obama has been in control for nearly two.

I am not yet an old timer but I have been around the block. Never before have I seen a sitting President blame his predecessor the way Obama has blamed Bush.

Consider the mess Ronald Reagan inherited from Jimmy Carter.

When Reagan took office on Jan. 20, 1981, inflation was out of control, the economy was in a deep recession, and America was coming off of two oil embargoes which had lead to gasoline lines that stretched for blocks. On that day Iran still held American hostages and the nation’s standing in the world had never been lower.

Yet according to my research Reagan did not blame Carter once. Instead he got on about the business of leading the nation forward. And he did a damn fine job, coaxing legislation to stimulate the economy while curbing inflation and increasing jobs. Reagan also cut taxes, strengthened the nation’s armed forces and created renewed confidence in the United States such that the greenback surged.

The same could be said about President Lyndon B. Johnson, whose downfall was caused by Vietnam. It was President John F. Kennedy who first sent combat advisors to Vietnam and it was Kennedy’s Cabinet that urged Johnson to get tough on North Vietnam. Yet during his Presidency and the years that followed when he was on his ranch near Stonewall, Texas, Johnson did not blame JFK.

And was there ever a leader who could more easily blame his predecessor than Winston Churchill? It was Prime Minster Neville Chamberlain who placated Hitler and neglected Britain’s defense forces. It can be argued that Chamberlain laid the groundwork for World War II. Yet when Chamberlain died it was Churchill that defended him with a eulogy: “Neville Chamberlain acted with perfect sincerity according to his lights and strove to the utmost of his capacity and authority.”

Good leaders don’t make excuses and lament about their circumstances. They move forward. They lead. This is something that a whining and complaining Obama can’t seem to do, and the nation is suffering because of it.

Unemployment remains stunningly high, the housing crisis is unabated and investor confidence is shrinking rapidly. Late last month the Spectrem Millionaire Investor Confidence Index (SMICI) fell to its lowest level in more than a year as wealthy U.S. investors worried about politics and unemployment.

The SMICI fell 11 points in August to minus 18, its lowest level since June 2009, when it fell a record 18 points to minus 20 shortly after the S&P 500 index hit a 12-year low. Gluskin Sheff economist David Rosenberg calls current economic conditions “a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-1933 recession and the one that began in 2008 triggered “euphoric response.”

“Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times,” he said.

Rosenberg points out that encouraging gross domestic product (GDP) news happened in the period 1929-1933 where there were six quarterly bounces in GDP with an average gain of 8 percent.

“False premise,” warns Rosenberg. “We may well be reliving history here. If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3 percent.”

Rosenberg points out that the “overall economic malaise” has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts.

Given the growing economic crisis Obama would be smart to listen to political opponent, Senator John McCain, (R-Ariz.).

“George Bush looks like a piker compared to what has taken place since President Obama has come into the presidency,” McCain said. “He can keep ‘B.I.O.B.’ no matter what it is, ‘Blame it on Bush’ — he can keep that up. The American people are going to hold him accountable this November, not an administration that went out of power more than a year ago."

The problem is that the ultimate judgment on Obama won’t take place for another two years and two months. That’s another 26 more months of Obama blaming Bush while doing precious little else to reshape America’s fortunes. We can only hope that in the autumn of 2012 we have a new President; a President who gets on with the business of leading rather than finger pointing.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report