Shanghaied By Gore And The Greens

Editor’s note: This is part 2 in a two-part series on the dangers of going green.

In 1992, Chinese leader Deng Xiaoping said: “The Middle East has oil. China has rare earths.”

American liberals are determined to sell out America — even it means a deal with the devil: China, a nation whose ambitions include world domination within the next 20 years.

The only thing standing in Beijing’s way is the United States, a quickly fading superpower that owes more than $1.4 trillion in Treasury debt.

America’s total servitude may soon stretch beyond money. If the Greens get their way, America will need China just to power itself up each day. That is because China has a near monopoly of rare earth elements, the essential ingredients that power renewable energy — something President Barack Obama and the Democrats in Congress insist on.

Last week, OilPrice.com told the dirty truth about clean energy: “It’s official — China’s de facto monopoly on current rare earths production is a threat to the global economy.”

Rare earth elements were the substance discussed at length during the Sept. 21 meetings by the U.S. House of Representatives Committee on Foreign Affairs Subcommittee on Asia and the Pacific.

New American Security analyst Christine Parthemore laid out what was said at the national security meeting: “Reliable access to critical minerals is a matter of both economic and geostrategic importance to the United States. … Today, no minerals are more troubling to U.S. security and foreign policy than rare earth elements. … Supplies are concentrated mostly in the hands of one supplier [China] with its own rising demand, and the United States today has no good options for recycling rare earth minerals or substituting more easily obtained minerals.”

What are rare earth elements? Noted energy analyst and writer Robert Bryce points out that lanthanides power most green technologies. Within them is a subset that is the cornerstone to clean energy: neodymium and praseodymium.

According to Bryce, these two materials, along with the other elements found in the lanthanides’ row of the periodic table, are essential commodities in nearly all of the technologies that are seen as solutions to our energy challenges, from wind turbines and hybrid cars to solar panels, computers and batteries.

Why are they so important? Lanthanides, which are also called “rare earths,” have special features at the quantum mechanics level. The configuration of their electrons allows them to have unique magnetic interactions with other elements. In other words, they have the elements to power the green industry.

There’s just one catch: The characteristics make lanthanides a key choke point in the development of the green economy.

Made In China

This has been one of the biggest lies that Al Gore, Barack Obama and other Greens have told the nation. According to these liars, if we simply use more hybrid cars, wind turbines, solar panels and other such inventions, we will no longer have to go begging sheiks and mullahs for Middle East oil.

Rather, we will have to beg somebody else: America’s rival for superpower status. You see, China controls almost all of the world’s lithium, the essential element in all high-capacity batteries.

Bryce writes: “In its headlong rush to go ‘green,’ the United States may simply be trading reliance on one type of import for reliance on another. Instead of requiring oil supplied by dozens of producers located in the Persian Gulf and elsewhere, it will need rare earth commodities produced by the Chinese as well as lithium mined by a handful of foreign countries.”

It was reported just last month that China now produces nearly 95 percent of the world’s rare earth materials. In today’s “Go Green” society, this gives the Chinese a future monopoly over America’s future energy dependence that the Organization of Petroleum Exporting Countries only could have dreamed about.

People like Gore are either willfully ignorant of this truth about China’s monopoly over Green components or they gleefully ignore it, so they can collect their own green.

In 2007, Gore won his Nobel Peace Prize and declared that the United States should commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years. In a November 2008 opinion piece in The New York Times, Gore said the nation must replace “dangerous and expensive carbon-based fuels with 21st-century technologies that use fuel that is free forever: the sun, the wind and the natural heat of the earth.”

Earlier that year, Gore and the Alliance for Climate Protection launched a $300 million media campaign designed to stop global climate change. Their goals were backed by a number of Web sites, including Wecansolveit.org, Climateprotect.org and RepowerAmerica.org.

In less than a year, more than 2 million people had joined and had agreed to the statement, “I want to Repower America with 100 percent clean electricity within 10 years.”

Gore’s grassroots partners include the National Audubon Society, the Evangelical Environmental Network and many other groups. All Gore’s partners seem either very stupid or shortsighted.

It is true that most Americans have no idea why rare earth elements are important or why the Chinese monopoly on them is so dangerous.

The American Dream reported last month that China is enforcing strict new quotas on the export of all these essential metals. Why is that a problem? According to one Web site: “(It is because) these metals are essential in an increasing number of high technology products.”

We are just into our second decade of the 21st century, and China owns the minerals that make critical products, including:

  • Hybrid car batteries,
  • Supercomputers.
  • Flat-screen televisions.
  • Cellphones.
  • iPods.
  • Radar systems.
  • Missile-guidance systems.
  • Satellites.
  • Aircraft electronics.
  • Smart bombs.

We may not be able to alter the world’s geology. We may have to make deals with Beijing to import these goods that are essential to America’s future. But we don’t have to turn our back on the proven power of petroleum only to further enable our Communist competitors in China.

On the eve of 2012, America can count on two things:

  1. Petroleum remains the best source of energy in the world.
  2. Washington must not be allowed to mortgage America’s future on unproven clean energy, the key components of which belong to China.

The only other alternative is Green energy, a future in which America’s biggest enemy — communist China — dictates our future and our eventual servitude.

Joseph Stalin said: “When we hang the capitalists, they will sell us the rope.” It is an ideology that persists in China today.

Yours in good times and bad,

John Myers
Editor, Myers Energy & Gold Report

Electric Cars: A Bad Idea Whose Time Has Come

Editor’s note: This is part 1 in a two-part series on the dangers of going green.

The road to hell is paved with good intentions. I have little doubt that the road President Barack Obama envisions is built around renewable energy; the only vehicles that traverse it are electric. It is the world of science fiction. America’s problem is that this world will hasten our downfall.

Case in point is Solyndra Inc.’s slide into bankruptcy earlier this month. The Fremont, Calif., solar-panel maker was magically awarded a $535 million Federal loan guarantee in September 2009. It is all part of the President’s dream to remake America green. It began with a loan from the Energy Department from funds derived from the 2009 Obama stimulus package.

Bad news for the White House and Obama Democrats came on Sept. 6 when the company filed for bankruptcy protection. Two days later, the FBI raided the company’s offices.

There was more bad news last week. Solyndra said it needs more than the initially expected four weeks to find a buyer to take over its idled solar panel-making operations.

Solyndra said it had a plan to try to find a buyer by early October, a company that could restart its recently shuttered factory and rehire some of its 1,000 staff. Maybe Solyndra can find some magic beans. It could grow something green that would stretch to the sky, something both the environmentalists and the Obama Administration need.

Recently, an opinion piece of the WNYC website summed up the failure of Solyndra:

That the government invested in a non-viable company because it wanted a “Green” photo-op and that this investment was part of a sweetheart deal to reward an Obama donor is disgusting but typical. The fact is, when the government pours money into a business or a program or an initiative, no one cares too much whether it succeeds or fails.

After all, are any of the people who made the decision to fund Solyndra going to see a pay cut to their own paycheck? Of course not. That remains the number one argument as to why the government should not have the power to use OUR money to fund their pet projects.

It’s also the most reasonable argument for why private businesses always do better than public ones. For example, Fed Ex and UPS have to balance their budgets, make cuts when necessary and care about meeting their bottom line. The US Postal Service? Less.

At least the U.S. Postal Service uses proven technology. The Obama Adminstration wants to reinvent the world with things that, frankly, don’t work — at least not yet. Solar panels are just one failed scheme. Another is the Adminstration’s support for the electric car.

A Lemon That Runs On Electricity

If you listen closely enough to Obama, you might think the Electric Age has just begun when in fact it dates back more than a century. The President has announced his goal of having 1 million electric cars on American roads by 2015. His Administration has even allocated $2.4 billion in “stimulus” money to subsidize production of them, along with the batteries and other components that they use.

Earlier this month, Forbes contributor Louis Woodhill weighed in on what he thought of Obama’s seed money for the electric car:

Unfortunately, electric cars are about to do a barrier crash into economic reality, and all the airbags in the world won’t be able to save them.  The taxpayers’ $2.4 billion is destined to join Obama’s $535 million investment in solar-panel manufacturer Solyndra at the bottom of the crony-capitalism “stimulus” rat hole.

Woodhill was specific in his criticism of Obama’s plan, especially when it comes to mass-produced battery electric vehicles. He points to Nissan, which is engineering state-of-the-art lithium batteries into its new car, the Leaf. “It costs more than twice as much ($35,430 vs. $17,250) as a comparable Nissan Versa,” Woodhill wrote.  And before you rush to save the Earth and sacrifice your pocketbook, keep this in mind: The battery-powered car provides far less convenience and performance than the car that burns gasoline.

The Leaf has terrible acceleration and has only 25 percent the range of a comparable gasoline car.

Given the cost of using batteries for the Leaf versus an economy car you can fill at $4 per gallon with gasoline, you would have to drive your new electric car 164,000 miles just to recover the additional purchase cost.

Factor in interest on your money, and you would have to drive your electric car almost 200,000 miles before you break even. It’s too bad about not being able to merge on to the freeway because of the car’s terrible performance. And it is impossible to drive a Leaf more than 60 miles per day.

That the electric car is a poor substitute for a gasoline car is nothing new. In 1896 Thomas Edison panned the electric car: “Electric cars must keep near to power stations. The storage battery is too heavy.”

More than a century later and with new lithium technology, the fortunes of the electric car still have not changed. In 2009, when speaking of the Chevrolet Volt (a big name among enthusiasts), the president of Audi America, Johan de Nysschen said: “There are not enough idiots who will buy it.”

With the exception of Forbes, the popular press has never given up on trying to find idiots to buy the electric car.

In Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future, author Robert Bryce wrote:

  • 1911: The New York Times declares that the electric car “has long been recognized as the ideal solution” because it “is cleaner and quieter” and “much more economical.”
  • 1915: The Washington Post writes that “prices on electric cars will continue to drop until they are within reach of the average family.”
  • 1959: The New York Times reports that the “Old electric may be the car of tomorrow.” The story said that electric cars were making a comeback because “gasoline is expensive today, principally because it is so heavily taxed, while electricity is far cheaper” than it was back in the 1920s.
  • 1967: The Los Angeles Times says that American Motors Corporation is on the verge of producing an electric car, the Amitron, to be powered by lithium batteries capable of holding 330 watt-hours per kilogram. (That’s more than two times as much as the energy density of modern lithium-ion batteries.) Backers of the Amitron said, “We don’t see a major obstacle in technology. It’s just a matter of time.”
  • 1979: The Washington Post reports that General Motors has found ”a breakthrough in batteries” that “now makes electric cars commercially practical.” The new zinc-nickel oxide batteries will provide the “100-mile range that General Motors executives believe is necessary to successfully sell electric vehicles to the public.”
  • 1980: In an opinion piece, The Washington Post avers that “practical electric cars can be built in the near future.” By 2000, the average family would own cars, predicted the Post, “tailored for the purpose for which they are most often used.” It went on to say that “in this new kind of car fleet, the electric vehicle could pay (sic) a big role—especially as delivery trucks and two-passenger urban commuter cars. With an aggressive production effort, they might save 1 million barrels of oil a day by the turn of the century.”

The sacrifice is all worth it, argues Obama, if only to get the nation off of its addiction to Middle East oil. There’s just one hiccup. While America is hooked on Arab oil and all the problems that come with that, green technology depends on rare earth elements. And the nation holding the bulwark of those materials — perhaps as much as 90 percent — is China.

That means that America is trading away its energy dependence on one region of the world to a single Communist country, China, a nation that has grand ambitions for the 21st century. It is China’s monopoly on these elements that is the real threat America faces if we choose to go green.

Next week, in part 2 of this report, I will tell you about China’s dominant control of critical rare earth elements that the United States could soon depend on.

Until then… yours in good times and bad,

–John Myers
Editor, Myers Energy & Gold Report

Planes, Trains And Stock Markets

Autumn is nearly here, and I am reminded of stock market crashes and one near plane crash.

The September equinox marks the anniversary of when my Uncle Richard and I took off from the homestead runway in his Cessna 172. No sooner were we airborne than we heard the stall horn howl inside the cockpit. The ear-piercing squeal told me something I already knew: Our airplane was falling from the sky. In scant seconds the plane’s landing gear slammed onto the wheat field.

No sooner were we down than the airplane bounced skyward. A lucky gust of wind grabbed at the wings; and, almost as quickly as we fell, the plane began to climb.

Later, I realized how fortunate we were. It wouldn’t have taken much to turn that propeller into a plow.

I haven’t had such a close call since, yet I have a lot of anxiety these days — not about flying, but about the stock market.

The first thing I do each morning is turn on the business channel to see if the Dow Jones industrial average is having another bad day.

You don’t have to have an MBA to know that the air keeping the stock market aloft is growing frightfully thin. Worse yet, the people flying “our” plane are acting reckless. So, each morning, I brace myself for the bad news that Wall Street’s stall horn is blaring. There won’t be a damn thing the President, Congress or corporate leaders can do about it.

Brace! Brace! Brace!

The one good thing about the terror I felt that day in the plane is that it was over quickly. The worries I pack around with me nowadays are different because I can’t shake them.

I suspect that some of you feel like I do: that with President Barack Obama at the controls, the country is spiralling out of control.

But our problems are deeper than having Obama as President. The economy is providing no lift to the stock market, and the nation is carrying so much debt that I don’t believe changing pilots will help much. I don’t think that a true Conservative or a Tea Party candidate in the White House in 2012 will save us. So hold on tight; we are going down.

The Fear of Flying

While I am no engineer, I understand a few things about airplanes. They have to be flying fast enough or else they stall. Right now, the stock market — a leading indicator — is telling us that the economy is stalling.

The Credit Crunch has ended but the Debt Disaster is pushing uncertainty strong upNotice the graph above. It measures the volatility of the U.S. stock market over the past 21 years. As you can see, equity investors have only had one worse case of the jitters since 1990, and that was in the midst of the credit collapse in 2008. Last week, the EconoMonitor commented on the current investment and economic climates:

The past summer has been filled with bad news, the current economic slowdown, financial stress and political tensions in Europe and the U.S. are in fact the logical extension of the first leg of the crisis that hit in 2008-2009. There is one major difference, though: the policy tool box to deal with financial and economic shocks is now significantly smaller than it was in 2008. Interest rates are at 1.5% in Europe, 0.5% in the UK, and 0.25% in the U.S.

In Europe, banks own large amounts of sovereign debt, which creates the possibility of a self-fulfilling crisis of bank runs and bankruptcies if fears of default on sovereign debt leads the interest rate on this debt to increase, causing a default and bank runs.

As you can see, interest rates have been cut to almost zero, and central banks can’t make money any more affordable than it is. That leaves governments with one option, injecting even more money.

Money Needs Velocity

Let me use the airplane analogy one last time. A plane needs to be going fast enough for the wings to provide lift. The economy needs velocity, which is money moving throughout the economy. If Washington pumps a lot of money into the economy but nobody spends it, it won’t provide any lift to the economy.

The United States has lots of money sloshing around. The Federal government has injected well over $1 trillion into the economy in the past three years. But the government cannot get people to spend or lend money. If these huge injections of capital get stashed in mattresses, the economy stalls. That is what is happening.

This is reflected by the consumer confidence graph below. It shows that only once in over a decade has consumer confidence been lower than it is now. Obama’s pledge to uplift America and bring new confidence to the country is nothing more than an empty promise.

United States Consumer ConfidenceBanks are not lending, and consumers are not spending. That means the American economy is set to crash.

Given the multitude of economic problems facing the United States, plus a real lack of leadership in the White House and Congress, I believe we are headed for tough times. September and October historically have been bad for stock investors as far back as 1929. As an investment writer, I have experienced market crashes three times: in 1987, 1989 and 2008. I think there is a good chance the stock market may crash again in the weeks ahead.

Action to take: Continue to hold precious metals and, in some cases, stocks that are leveraged to rising prices for real assets (petroleum, gold and other hard asset companies). Liquidate all other U.S. paper instruments. U.S. interest rates may soon spike, so I urge you to sell bonds other than cash you have tucked away in three- to six-month U.S. Treasury bills.

Next year is shaping up to be a bad year for U.S. paper instruments. Anxious investors are already disrupting the markets. I would not be surprised to see U.S. stock indexes fall below their March 2009 lows (the Dow industrials hit 6440). Don’t be surprised by a 50 percent correction in blue chip stocks. Long-term bonds — with maturities of more than 10 years — may fall in equal measure.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

No Viable Substitute For Oil, Gas

A couple of years ago, former oil maverick T. Boone Pickens launched an $82 million national advertising campaign to promote the Pickens Plan, an energy policy aimed at reducing the American addiction to foreign oil.

The public gobbled up the TV and print ads, along with the stories Pickens told. His tour even included appearances before Congress and town hall meetings.

Pickens’ message to America: “I’ve been an oilman my entire life, but this is one emergency we can’t drill our way out of.”

Pickens’ age-spotted hands still scribble futuristic plans on old blackboards. Even though he is in his 80s, it hasn’t stopped Pickens from hammering home his message: We are at the mercy of peak oil (the point in time at which the world has reached the maximum production rate of petroleum); and, because of that, the United States is vulnerable to Muslims, mullahs and sheiks.

In the 20th century, Pickens built one of the U.S.’s largest independent oil companies, Mesa Petroleum. Later, he became a successful entrepreneur and then a media darling. Today, Pickens wields power through his energy fund, BP Capital. With it he champions new energy policies to replace petroleum, yesterday’s fuel, which Pickens claims will only further enslave and bankrupt America.

Pickens faces only one problem: There is no viable substitute for oil and gas — at least not yet.

But that is no bother to people like Pickens who have always liked cash more than crude.

That is the conclusion of Robert Bryce in his 2010 book, Power Hungry: The Myths Of “Green” Energy And The Real Fuels Of The Future:

All the blather about ‘green’ has fostered the delusion that we can get our energy on the cheap without any environmental impacts at all. Again, that’s just not true.  Sure, the idea of wind turbines might have a certain charm, and arrays of solar panels might make our cities and towns look like settings for science-fiction films. And if only we could just get a few coal-fired power plants to belch a rainbow every once in a while, they might look kind of pretty, too. But the hard truth is that energy production is not pretty, cheap or easy.

I was reading about Pickens while I was on vacation last month in Kingston, Ontario. Kingston is Toronto’s poorer cousin. It is located at the intersection of the St. Lawrence River and Lake Ontario. Just a few miles from Kingston is the Wolfe Island wind facility, the site of 86 gigantic wind turbines. That gives Kingston the second-largest wind-generated energy station in Canada. There was just one problem the day my wife, Angie, and I were there: The wind wasn’t blowing.

Those hulking windmills stood motionless. I don’t know how the city and the surrounding area got its energy that day, but it wasn’t from the wind.

At a nearby park I talked to an old-timer who told me he hated the propeller monstrosities, that they had ruined what had once been a picturesque shoreline.

“Bird killers, that’s what those things are,” said the man wearing a faded Toronto Blue Jays cap.

That caught my attention. Just last year, the Greens were gloating over the conviction of Syncrude Canada Ltd., which was slapped with a $2.9 million penalty after 1,600 ducks died in a company tailings pond in 2008.

The Financial Post indicated that in just the first eight months of operation, the Wolfe Island windmills killed nearly 2,000 birds and bats. “Such numbers earned wind power generators the moniker ‘Cuisinarts of the Air,’” according to the Post.

Yet there was no indictment against the windmill operators on Wolfe Island. It seems that as long as Green machines are doing the killing, it really isn’t a big deal.

An Inconvenient Truth

Men like Pickens and former Vice President Al Gore don’t seem bothered by such setbacks, at least when the end goal is saving the planet. They and the liberals are willing to bet your money and future on renewable energy — and with good reason: The profit potential for them is enormous.

Between now and 2030, the International Energy Agency expects that $5.5 trillion will be spent on renewable energy products. After all is said and done, renewable energy could produce 10 percent of the world’s primary energy needs.

Two key phrases in that last paragraph are “could” and “$5.5 trillion dollars.”

I have a minor in geology and have yet to spend a single day working for an oil and gas company. But I am willing to bet that if you give me $5.5 trillion, I can generate a lot more than 10 percent of the world’s energy needs in the next 19 years.

Why am I so confident about what I can do with more than $5 trillion? Consider that Exxon Mobil Corp., the world’s biggest publicly traded oil company, spends about $5 billion per year on new exploration projects. If it can replace its oil by spending $100 billion over the next two decades, I bet I can do better with $5 trillion.

Yet Greens keep selling their ideas. No matter how silly some renewable energy idea sounds, investors and the Federal government are hell-bent on backing it. Forget that we are in a recession and may be headed for a depression. Forget that real unemployment is 16 or 17 percent. Forget massive trade and budget deficits. The only thing that seems important is that fossil fuels are bad and going Green is good.

This mantra is repeated for two reasons:

  1. Being Green gets votes. People love the “save the planet” candidate.
  2. If you are pro-environment, you have a good chance of getting rich with few questions asked. Bernie Madoff’s mistake wasn’t that he was a crook. It was that he was an old-fashioned crook. If he had conned people into building windmills and solar panels, Al Gore would probably have hosted a dinner for him.

My Father’s Dying Dream

It is easy to hate Big Oil, and it isn’t hard to dislike some of the people in the business. I suppose that is why some Personal Liberty Digest® readers have accused me of being pro-petroleum. So I want to share this story with you about my father, Vern, and how he spent the last year of his life.

My father was hoping that America had found a way out of its energy predicament. He was 78 years old, and he had been diagnosed with two primary cancers. He had come a long way from the farm boy that graduated with a gold medal in geology in 1930. He had earned the opportunity to cover the great oil booms: first in North America and then in the Middle East. The Petroleum Age made him wealthy and famous.

Yet he continued to hope that inventors would come up with an alternative to fossil fuels. Even though he was ill, he attended the renowned press conference given by Martin Fleischmann and Stanley Pons in 1989, a presentation on their experiments with cold fusion. The two scientists promised that they had discovered a limitless and inexhaustible source of clean energy requiring only seawater as fuel.

My dad died a few months after attending that conference. Until the end, he hoped those two men held the key to a better and cleaner future.

I, too, hope for that future. But until I see something better than the false promises by the likes of Gore and Pickens, I am going to continue to be an advocate for petroleum.

Yours in good times and bad,

John Myers
Editor, Myers’ Energy & Gold Report

Ten Years Later And Still Losing

When it comes to defeating Islamic extremists, maybe President Barack Obama should take lessons from Hollywood bad boy Charlie Sheen. That way Obama could reach his younger constituency through the magic of YouTube.

Secretary of State Hillary Clinton could throw the President a softball: “Barack, how are you doing against al-Qaida?”

The President could drag his long ebony fingers across his tanned face and then tug his graying hair. “Winning! Still winning!”

Sheen’s rants fueled by caffeine and coke — the beverage or the leaf — didn’t get him his job back on Two and a Half Men. Obama wants to keep his job. But most of us know that Obama is “losing” the War on Terror. I suspect he may be doing so on purpose.

In the 10 years since Islam murdered thousands of our women and children, we are still paying dearly for a war without borders against a ragtag enemy that hides in dark caverns.

Yes, Osama bin Laden was finally killed. And Saddam Hussein was hanged. But the United States is having one heck of a time extricating our military from Islamic lands; places such as Pakistan, where corrupt allies are most likely enemies. The lines between good and bad are so blurred these days that the War on Terror reads like a John le Carré spy novel, where evil always seems to find a fresh foothold.

Then there is the home front where a decade after 9/11 we must face the ugly truth that America continues to become a less free society.

A couple of weeks ago, as I caught a plane back to Calgary, I had the good fortune not to be submitted to a total body scan. I did get the pat-down, and then walked over and bought the August issue of Harper’s. The cover: “The American State of Terror.”

The feature article — To Catch A Terrorist: The FBI hunts for the enemy within — is the story about the vast powers given away by our government to law enforcement.

Harper’s points out liberties we have lost because of the Patriot Act, which has put unprecedented power in the hands of the FBI and even local law enforcement.

Ordinary cops are using Suspicious Activity Reports (SARs). And SARs goes far beyond investigating blatant acts you might expect from a terrorist.

Harper’s reports that suspicious activities listed on the Los Angeles Police Department’s website include: “joggers stretching for an inordinate amount of time and people carrying on long conversations on pay or cellular phones.”

That leaves us fighting a two-front war: one against the terrorists and one against our own government. Yet the Liberals don’t see it this way. They just think the government is doing its job in protecting us. What I want to know is, who is going to protect us from the government?

Victory Not In Sight
Our government cannot or will not provide an endgame to win the War on Terror. It is already the longest war in America’s history, and just how much longer it will last depends on who you ask. I tend to think it will last as long as Washington wants it to.

Yet more American blood is spilled every passing month and the nation’s once unquestioned superpower status slips a little further. It is a war that is bleeding away any chance at peace and prosperity.

It is, in the end, another Vietnam. As with that war, the U.S. forces have not been defeated on the battlefield. Back then we were an occupation force trying to inflict Western values on a people that were willing to defend their way of life to the last combatant, regardless of how long it took.

Just as were the North Vietnamese, the Taliban are very patient. In fact, the Taliban has an old saying: “You have all the watches. We have all the time.”

In his 2011 New York Times Bestseller, The Longest War, Peter L. Bergen writes that America can’t even shape events in Kabul, the capital of Afghanistan.

“Years after the fall of the Taliban, Kabul had a distinctly fin-de siècle air,” wrote Bergen. “An economy steeped in corruption and driven by the heroin/opium trade and foreign aid enriched an elite who partied into the night, taking advantage of new freedoms that under the Taliban might have earned them a reprimand from the religious police (listening to music); landed them in prison (drinking alcohol); or had them stoned to death (sex outside marriage)… But, as years went by, the establishments catering to foreigners and rich Afghans increasingly took on the look of fortresses. Hotels invested in bomb shelters and restaurants deployed armed guards. In May 2006, an angry anti-American mob shot out the ground-floor windows of Kabul’s five-star Serena hotel, and a year later Taliban fighters shot the guards outside the same hotel and went room to room hunting and shooting Westerners.”

You can order Bergen’s book at Amazon.com by clicking here.

The Escalating Economic Cost
On August 28 the Los Angeles Times reported:

“A decade after the Sept. 11, 2001, attacks on the World Trade Center and the Pentagon, federal and state governments are spending about $75 billion a year on domestic security, setting up sophisticated radio networks, upgrading emergency medical response equipment, installing surveillance cameras and bombproof walls, and outfitting airport screeners to detect an ever-evolving list of mobile explosives.”

The Times doubts this money is being put to good use. The paper quoted al-Qaida expert and Ohio State University professor John Mueller: "The number of people worldwide who are killed by Muslim-type terrorists, al-Qaida wannabes, is maybe a few hundred outside of war zones. It’s basically the same number of people who die drowning in the bathtub each year.”

Mueller added, if your chance of being killed by a terrorist in the U.S. is 1 in 3.5 million, the question is, how much do you want to spend to get that down to 1 in 4.5 million?

The answer may depend on who is getting paid to improve those odds. Meanwhile, keeping the public perpetually afraid insures a tighter grip on power for the ruling elite.

So there you have it; Obama is losing the War on Terror. It is strange, but President Bill Clinton and President George W. Bush didn’t fare all that well either. It seems that Washington just can’t stand the idea of seeing the War on Terror end.

Yours in good times and bad,

John Myers
Editor, Myers Energy & Gold Report

America’s Boom Gone Bust

If you ask me, the Debt Crisis of 2011 is more a dog and pony show than real substance. The Democrats rightfully blame George W. Bush. The GOP points out that President Barack Obama’s spending makes Bush seem like a piker. I have news for both sides. Obama is the worst of a very long list of spenders that began with President Lyndon B. Johnson, whose spending habits President Richard Nixon was able to afford only by suspending the gold standard.

What is truly unique to the 21st century is that we are running out of affordable crude oil, the fuel that propelled staggering economic growth during the previous 100 years. And while the wheeler-dealers in Congress can lift the debt ceiling with the stroke of a pen, all the king’s horses and all the king’s men can’t put oil back in the ground again.

It was the Petroleum Age that ushered in the last and most potent round of the Industrial Revolution. It was the very fuel that powered world growth. And it was ubiquitous.

The tremendous economic growth in the 20th century, which saw the standard of living leap by a bound greater than it had jumped during the previous 1,000 years, can be attributed to a single factor: cheap and plentiful oil.

Some economic models show that labor and capital account for less than 25 percent of the actual growth of the U.S. economy. Three-quarters of the increase is the result of energy and technology, with energy producing the lion’s share of the latter.

Up until the late 20th century, energy was becoming more and more efficient. Each kilowatt produced more work. That is, until 1996. Since then, the 100-year trend has peaked, and we are no longer getting a bigger bang for our barrel.

The graph below shows how significantly oil has contributed to world gross domestic product. It underscores that the good life has come not only from great men or great ideas, but from our economic lifeblood harvested from the ground.

 

Easy oil meant easy times. One of the periods of great growth was between 1980 and 2000. During that time, daily oil consumption rose from 15 million barrels per day to nearly 20 million barrels per day.

During this orgy, oil prices dropped from $36 per barrel to $20. In real terms the price of oil fell by 60 percent. (See the chart below.) It’s no coincidence that during this same span America’s GDP rose from $2.7 trillion to $9.6 trillion. It was one of the most impressive 20-year growth rates in the history of the United States, and it helped Washington get spending under control.

 

Right along with the growing economy was a booming stock market. In 1980, the Dow Jones industrial average lingered below 1,000. By 2000, it stood above 10,000.

Over the past decade, the U.S. economic engine slowed and finally stalled with the economic crisis of 2008. Even after a recovery of sorts, the Dow sits just 2,000 points higher than where it stood at the onset of the 21st century. If you factor in an inflation-adjusted Dow, stock prices have actually declined 10 percent from when Bill Clinton was President.

Today, we face the prospect of not only higher oil prices, but a possible oil shock. With record demand and global production stagnant, the interruption of just 5 percent of the world’s oil supplies would likely create a 50 percent price spike. That would put crude oil prices at almost $150 per barrel in scant days and would push gasoline prices above $6 per gallon.

Make no mistake; petroleum is used to produce everything. Building the average car consumes approximately 27 to 42 barrels of oil. Constructing the typical desktop computer requires more than 10 times its weight in fossil fuels.

Cheap oil is essential not only for making things but in growing things as well. From making fertilizer, to powering the tractor and fueling trucks and trains to bring crops to markets, agriculture needs oil. More expensive oil makes everything more expensive.

As our dependence on oil grows, the availability of it is shrinking. The United States is currently producing less oil today than it was in the early 1950s. And you can’t find a single oil man who thinks global oil production will grow.

“Over 1.5 trillion barrels of oil equivalent have been produced since Edwin Drake drilled the world’s first oil well in 1859, reported Angel Research. “The world will need that same amount to meet demand in the next 25 years alone.”
And there is nothing on the horizon to replace petroleum. In fact, every four years, the United States consumes a cubic mile of oil. This has the energy equivalent of:

  • Four dams equivalent to the Three Gorges dam, cranking out power for 50 years.
  • More than 30,000 wind turbines, cranking for 50 years (at 100 percent capacity).
  • 104 coal-fired electric plants, going full capacity for 50 years.
  • 52 nuclear electric plants, running full-bore for 50 years.

The Crude Truth About America’s Future

The disaster building in energy means the arrest of the amazing economic growth enjoyed by the United States and the world over the past century. As oil prices go up, the cost of everything goes up — from the shoes you buy to the food you eat. That leaves less disposable income for luxuries and that means big-time profit slumps for companies of every ilk. It will be especially bad for the airline and automobile sectors, which will be hit not only by rising costs but also tumbling sales.

Of course, Obama doesn’t want America or the world to believe this inevitable truth. He hints that there is some Green Genie tucked away that will solve all of America’s energy needs. This is nonsense.

The last President that was honest about the nation’s energy predicament was Jimmy Carter. That was more than 30 years ago, and it played a role in his failure to be re-elected. Obama is determined not to make that same mistake — at least not until after the election. I expect over the next two years we will hear more baloney about the prospects for electric cars, high-speed rail systems and whatever else appeals to the President’s imagination and that he can still sell to the American people.

Yours in good times and bad,

–John Myers
Editor, Myers Energy & Gold Report

The Depression: Past And Future

America’s recovery has run out of steam. Job growth is nonexistent. Stock indexes cling to highs set earlier this year. Barack Obama’s moneyfest has failed to right America’s listing ship. Yet no one from the Potomac to Wall Street has noticed the obvious — that the U.S. is facing a deflationary collapse worse than anything that has happened in 80 years.

I remember the Crash of 1987, Black Monday, Oct. 19. The only thing I had going for my family was that I held enough gold to somewhat offset the huge losses in my portfolio.

But I was lucky. The ensuing recovery meant that I never understood the hardship my parents and grandparents endured during the Great Depression. I worry that may change.

Bedtime Stories That Give Me Nightmares

Upon learning of the great stock market crash that swept away fortunes, my grandfather said to my dad, “Good riddance.”

The family homestead on Alberta’s prairies seemed a world away from the vexations on Wall Street in the autumn of 1929. My grandfather could not anticipate that the sweeping loss of wealth and confidence would impact his life.

When the stock market crashed, the price of wheat gyrated and began a long decline from $2.50 a bushel to a low of 25 cents a bushel in 1934.

But it wasn’t just the collapse in grain prices that almost bankrupted my family; it was the disappearance of confidence that cut a wide swath over all businesses.

My dad told the story of my grandmother. She had bought about 5,000 bushels of wheat. When the margin ran out, the brokerage firm Tull and Arden Ltd. of Calgary, Alberta, called and wanted more cash. These margin calls happened more than once. My grandparents decided to put up enough cash to hold them over. They sent Tull and Arden $5,000 above the margin.

Many brokerage firms were going out of business. My grandparents asked around and were assured that Tull and Arden would not fail.

My dad told me of the morning his mother came out of their farmhouse to say that the radio had just reported that Tull and Arden was bankrupt. The $5,000 in additional margin money evaporated; my grandparents’ lifetime of savings.

There was talk that Tull and Arden would make good on their clients’ losses. That did not happen. My grandparents never saw a nickel out of the $5,000 they had sent to support their contracts. It was gone along with the original $3,000 they had invested. That equals $100,000 in today’s money. (You can run the numbers yourself here.)

Because the family homestead wasn’t mortgaged, my grandparents were able to hang on — but just barely. Many of their neighbors were not so lucky. As confidence dwindled, so did credit. The economies of the world corkscrewed downward, and my family faced hard times over the next decade.

The Dollar’s Quarter Century Of Decline

We are staring into the face of an economic depression. Bankers are again nervous that other banks might turn off the tap. And the banking crisis of 2008 still plagues the global economy.

Already, banks have once again begun hoarding capital. And the modern economy cannot function when credit is not available. Since most companies and households don’t take out big new loans every day, it takes time for this truth to be realized. But when this happens, panic will ensue.

Washington and the Federal Reserve are doing their utmost to turn back the deflationary tide. The Fed has already injected more than $1 trillion into the economy in a desperate attempt to resuscitate the business cycle. I believe if the President had his way, he would pump trillions of dollars more into American banks, automakers and any and all corporations that might help him get re-elected. What Obama and the Federal Reserve are unable or unwilling to understand is that all this money is killing the one great thing America still had going for it: the U.S. dollar. The greenback that was once revered around the world is now an asset that depreciates almost daily.

The endgame of this accidental or purposeful mismanagement of the American economy could be a 1929-style crash of dollar instruments and devastating deflation.

Obama Will Kill The Dollar, Too

I anticipate that the greenback will lose another 30 percent of its worth against major currencies in the next two years.

As my former publisher at Agora, Bill Bonner, wrote earlier this month:

Every empire ends up broke… and defeated. And the fate of every country that has tried to run a pure paper money system… with currency not backed by gold… has been a disaster. It didn’t matter what anyone thought or did. Once you head down that road, it seems that you have to go all the way. There are a lot of byways and side-roads you can take. But you always seem to end up in the same place.

The correction in bullion prices earlier this year has run its course. Political posturing by the President and Congress and their failure to deal with the fundamental economic and debt problems facing the nation are leading us toward bankruptcy. I believe this ongoing crisis will push gold to $2,000 per ounce by Christmas.

Some have accused me of being a gold bug. Not true. I am a survivor bug. I will take no joy in seeing gold at $2,000 per ounce or even $3,000 per ounce. Such prices will mean hardship for the people I love and for the country I love, the United States of America.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Snap Back: Stock Crash!

Stock indexes went postal on Washington’s debt deal celebration. Last Thursday, the Dow Jones industrial average declined more than 500 points, its worst setback since the Crash of 2008. Then on Friday, Standard & Poor’s downgraded America’s debt from AAA to AA+. In response, the market suffered an even greater setback on Monday, with the Dow Jones industrial average falling 643 points.

The sky is falling. If you don’t believe me, check what happened to the stock market just last week. American stock indexes vaporized $2.5 trillion in assets over five days last week, and the likelihood of a crushing depression now looms large. The only good news out of any of this is that Congress — that useless bunch of imbeciles — has gone on vacation. Good riddance.

The world is waking up to the reality that President Barack Obama and Congress have agreed only to waste more of our money. Investors get it: America is a runaway train headed for bankruptcy. Traders finally understand that Obama’s vision of Big Government is grinding the world’s greatest nation into a second-rate power at best. America, with all its debts, is being stretched past the breaking point.

Congress needs to own up to some of this mess. Just scant hours before the deadline of deadlines, Washington voted to pass a bill that would raise the U.S. debt limit by at least $2.1 trillion and cut spending by about half that amount over the next decade… or so says Washington.

This has created a big stir with the popular media, yet the government has not done its job. All this hubbub, and Big Government (just the way the Democrats want it) goes on.

But Republicans share some of the blame. The useless agreement involved wrangling, threats and even name-calling by our elected officials. The only reduction in deficit spending set in stone, for now, calls for the government to trim $900 billion in spending during the next decade. Other cuts may be made, but it is uncertain under the agreement.

Put that in perspective: Concrete spending reductions amount to $90 billion per year. Washington is expected to spend roughly $1.4 trillion this year, which it can finance only by further borrowing. These so-called cuts amount to only about 6.4 percent of the current deficit.

It is like a gambler who promises his wife to blow the family paycheck only at a discount resort in Lake Tahoe rather than Caesars Palace in Las Vegas. Remember, the Federal government has promised to reduce spending more times than Charlie Sheen has promised to quit smoking crack.

The U.S. dollar continues to slump while gold has reached all-time highs, prices that were incomprehensible a couple of years ago. The once-unassailable U.S. dollar is sitting on death row. Washington has given it only a short reprieve — and judging by the reactions of the stock markets, a very short one at that.

Equity investors finally understand that the cinching sound they hear every time America raises its debt ceiling is the sound of impending doom.

I know from experience that all things — from debt to barbed wire — can be stretched only so far.

A Tale From The Prairies

I will never forget my days repairing fences with my dad. We stabled horses and always kept an eye on the fences. We would secure them with barbed wire.

Loose wire could maim a horse, so our job was straightforward: Find and tighten any loose wires between fence posts.

We stapled the barbed wire tightly to each post, then moved on to the next one. Dad would then attach the wire stretchers, a jack-like device through which the barbed wire was threaded and then advanced. The key to the operation was to have the wire as tight as possible without causing it to break.

At each post Dad would start cranking the wire stretchers. At first, there was no noticeable change in the slack of the wire. Slowly, each crank would pull the wire through the stretchers. Within a few minutes, the wire would become taut. Then, I would staple down the wire, and we would move on to the next post.

My dad was a perfectionist. If the wire would take three more cranks, he was determined not to stop after one or two. Like anything, you can stretch something only so far before it snaps.

I could always tell when we reached that point, because the wire would start to give off a low humming sound.

That was my cue to step in with a hammer and staple. Sometimes, he would wave me back. “Let me give it a few more tugs. I want to make it tight.”

He would crank again. By then, the wire would be humming like a fluorescent light. That was when I knew to step back. Crank… snap!

At the weakest point between the two posts, the wire would snap. This threatened life and limb, because barbed wire was racing in opposite directions at breakneck speed.

I wish that more members in Congress and the President had put in a little time farming. If they had, they might understand that things can be stretched only so far before they reach their breaking limit.

Instead, our leaders are blissfully ignorant of their massive spending that continues today and every day.

Perhaps the debt ceiling should not have been lifted. Perhaps America should have experienced default. Only our mistakes teach us life’s hard lessons. And I am willing to bet that most of our government officials have never had to face tough lessons. In my opinion, that makes them poor leaders. They are sending America off in the wrong direction, one that will eventually end with a catastrophic result.

Raise And Call

There is an old saying that after you have been sitting at the poker table for more than 15 minutes and you are still looking for the patsy, you’re the patsy.

I am an American living in Canada, a nation best known for its beer and hockey. A decade ago, the Canadian dollar (“loonie”) traded under 70 cents to the greenback. It is now worth $1.05.

This speaks volumes about the mess Washington has made over the past 10 years and portends dark days ahead.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Wild Horses And Black Swans

It seems we are all living on a razor’s edge. In Barack Obama we have an ineffective President and a Congress that seems unable or unwilling to get its act together. The Muslim threat has not disappeared after the death of Osama bin Laden, and America seems headed toward either a financial or energy crisis or perhaps both.

These are the things we suspect might go wrong. What really worries me about our future is the unknown that might jump up and bite us. Things that are not only unpredictable but are counter to anything we might expect.

I grew up on a small farm where we harvested a bit of grain, planted a lot of trees and even raised some livestock. But the understated purpose of our little operation was always horses.

My dad grew up where horses provided the power, and he loved them. He took my older sister under his wing at a very young age, and by her early 20s she was on the Canadian Olympic Stadium Jumping Team — no small accomplishment.

My two older brothers also rode. And we had a hired man, Jonesy, who was good with horses.

I tell you this not to brag, but to underscore just how much experience and horse sense we had at our little operation. Yet despite all of it, a bolt out of the blue happened one morning in the early 1960s.

We kept a stallion in an 8-foot fenced private paddock. Each year, we would breed him to one of the mares. One spring, a mare had a foal, a sprightly chestnut colt.

There was also a fenced pasture that ran parallel to the stallions and held the mixture of our other mares and geldings. Both pastures led down to a pond at the bottom of the slope.

One morning, my dad and sister decided it was time for the colt to stretch his legs. With mother in halter, they were taken into the common pasture and walked down to the pond to drink.

Now, horse people know that you can’t keep a strange stallion around a colt; he will kill it. I suspect that knowledge goes back to Mongol times or even before.

What was also known (or thought to be known) is that a gelding, having been castrated, would lose the stallion within him — the compulsion to kill a colt. Colts are thought to be safe around geldings.

That holds true, but not for a gelding named Redskin. He snorted, pawed at the ground and made loud huffing noises. Then he sprang, charging down the pasture and straight toward the colt.

I can still hear that broadside crash of Redskin driving the colt into the water. And despite protests from my dad, my sister and even the trainer, Redskin had only one thing on his mind — to drown that colt. Its mother bayed and tried to block the charges but was brushed aside by the bigger horse.

The colt was shaky and weak. The end came quickly. Something that should never happen had just happened — a gelding had purposefully killed a newborn.

There were a lot of tears that morning, but what I remember most was my dad’s consternation. “Damn it, Jonesy, what we just saw shouldn’t have happened.”

This story from my past came to me one night while reading The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb.

What Taleb writes is that just because we have not seen something does not mean that it does not exist. But since in our mind it does not exist, we have no way to anticipate it, much less prepare for it.

“Before the discovery of Australia, people in the old world were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence,” writes Taleb. “The sighting of the first black swan might have been an interesting surprise for a few ornithologists (and others extremely concerned with the coloring of birds), but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge.”

To Taleb there will always be black swans, impossible to predict because we can’t even conceive of them in our minds. He goes on to write that World War I, the rise of Hitler, the market crash of 1987 and 9/11 are “Black Swans.”

Taleb also says there is no way to predict them and since they have the biggest impact on society and the economy, predictions from government, scientists and economists are a waste of time — time in the writing of them and time in the reading of them.

“Go ask your portfolio manager for his definition of ‘risk,’ and odds are that he will supply you with a measure that excludes the possibility of the Black Swan — hence one that has no better predictive value for assessing the total risks than astrology,” writes Taleb.

But Taleb doesn’t throw up his hands. He says we can protect ourselves against the next Black Swan. How? Well, for the rich clients he used to work with on Wall Street, derivatives offer good protection.

For us ordinary folks I think the best — in fact, the only — protection we have from a Black Swan event is gold.

Action to take: Gold has topped $1,600 per ounce, almost twice the price it was when I started recommending it to Personal Liberty Digest™ readers two years ago. Yet given the amount of money that has been injected into the economy by the Obama Administration, plus growing world restlessness, I believe bullion will top $2,000 per ounce within the next year. A Black Swan event might take it toward $3,000 per ounce. Therefore, I urge that you continue to accumulate physical 1-ounce gold coins. My two favorites are American Eagles and South African Krugerrands.

Yours in good times and bad,

–John Myers
Editor, Myers Energy & Gold Report

 

 

OPEC Takes Aim At America

Only once have I looked down the barrel of a gun. I can tell you it was damn disconcerting. It happened 25 years ago. The automatic rifles that were drawn on me then are pointed at America today. Yet President Barack Obama refuses to acknowledge that America is facing Middle Eastern guns.

In 1986, I traveled to Geneva to attend an emergency OPEC meeting. My father Vernon was in his early 70s but had lost none of the drive that shaped his youth as a reporter, which led him to found Oil Week Magazine and Myers Finance & Energy (MFE).

Vern was old school. While he had not changed from his reporting days, the world had. I got a sense of that when we pulled up to the hotel decked with machine gun-toting policemen.

My dad either didn’t notice the tight security at the hotel or he simply didn’t care. He asked the desk clerk, “Where’s the meeting?”

That was a tough question for anyone, never mind someone not familiar with English.

“Are you looking for the OPEC meeting? That is on the penthouse,” he responded.

“Thanks,” mumbled my dad, as he marched toward the elevator. As I crept behind, I heard the clerk say: “Sir, you are not allowed up there!”

Inside the elevator my dad said, “Penthouse!”

The elevator operator protested until my dad spelled it out: “We are the press.”

The operator reluctantly pushed the button. As our elevator climbed higher, I got a sinking feeling in my stomach. I understood we were about to walk in unannounced on some of the world’s biggest power brokers.

The elevator stopped. The doors slid open and before you could say, “Sheik Your Booty,” four machine guns were aimed at our heads. There stood four of the biggest men I have ever seen, each wearing a turban and a bulletproof vest.

Questions were barked out in Arabic. My dad was led down a hall while a single guard stood over me. I must have put him at ease; because after a few minutes, he shouldered his gun and offered me a cigarette.

Our entrance was like the Keystone Kops, but luck would have it that Vern got his story. Down the hall was a member of the Saudi delegation who remembered my dad from a 1962 trip to the Kingdom. While I stood before the guard, Vern was talking to his old Saudi acquaintance. He learned that Saudi Arabia was going to open up its spigots. Over the next several months, oil prices began to fall dramatically.

An Energy Crisis Waiting to Explode

That OPEC no longer exists. The de facto leader of OPEC today is militant Iran, whose influence grows with each passing month. Whether we know it or not, America is staring into the guns of OPEC.

A recent simulation called Securing America’s Future Energy declared that the United States lacks effective energy policy responses in the event of another OPEC embargo. The Heritage Foundation, which is made up of current and former government officials and diplomats, reported that protracted turmoil in principal OPEC countries has the potential to cause a sharp decline in oil production and an acute price spike.

The crisis game they played was called Oil ShockWave, and it took place in The Ritz-Carlton ballroom a stone’s throw from the White House. Players included George Bush’s former deputy secretary of state John Negroponte, a former official of Jimmy Carter’s Administration and a former Shell Oil chief executive. They participated as make-believe cabinet officials. At the conclusion of the simulation, participants acknowledged America had become hostage to its need for oil, yet they couldn’t quite seem to break away.

“We are reaping the harvest of our dependence on petroleum and the fact that the countries that produce it are either unstable or hostile to our interests,” declared Stephen Hadley, who reprised his real-life role as Bush’s national security adviser. “How did we let this happen when we’ve known we’ve been dependent on oil for 20 years?”

Former Shell Oil chief executive officer John Hofmeister played the role of energy secretary in the exercise. He gave assurances about U.S. domestic supply. Not one person called for an accelerated transition to renewable energies. According to one participant, nobody even whispered the words “climate change.”

Hofmeister said: “The most powerful message that we have is that the United States of America has more oil than any other country in the world that we know of. We have simply been holding ourselves back from producing that oil. I think it is time to really get the message to Congress that it is time to start producing.”

My question is: When is Obama going to wake up to the impending crisis? It may already be too late, and if Muslim guns turn on the Saudi Royal family itself, it will be far too late — not just for the House of Saud for but the United States.

Ari Fleischer, the White House press secretary under George W. Bush, said: “The president has to do something bold. He has a real challenge to his leadership.”

Fleischer’s conclusion is that Obama should announce the Federal government is going to open up every acre of land for oil drilling that was previously declared off-limits.

After 2½ years of disappointment, I think my odds of winning the SuperLotto are better than the chances that Obama will wake up to the petroleum peril America is facing. That is bad news for the country, which is staring down the barrel of $8 per gallon gasoline prices.

This summer the threat of soaring energy costs has been swept under the rug by a President and a Congress that want us to be mesmerized by the “debt crisis.” I believe a compromise on the debt ceiling will happen. While nobody may like it, it will do enough to temporarily placate dollar holders. Meanwhile, the clock continues to count down toward zero hour when energy prices explode.

As an investor, you should seek out blue chip petroleum companies whose reserves are in North America. Natural gas is extremely underpriced right now. Besides being abundant, it has the added benefit of pleasing the Greens because it is cleaner than coal and oil.

According to a report from International Energy Agency, natural gas is poised for a golden age — with at least a 50 percent spike in demand by 2035.

The upswing in natural gas comes from several factors. First, there will be a continued focus on energy sources that have lower carbon-emission levels. What’s more, demand from China, India and other emerging economies should remain strong.

In addition, as seen with the Fukushima nuclear implosion in Japan, natural gas looks fairly safe. Germany recently announced that it will shut down 17 of its nuclear power plants.

Action to take: Buy EOG Resources (NYSE: EOG. $101). The company is a big producer of natural gas in North America. But it also has operations in China, so it can take advantage of the resilient Asian economy.

EOG is on the cutting edge of finding and developing unconventional sources of natural gas, especially methane extracted from shale.

EOG has proven reserves of 11.7 trillion cubic feet and not much debt. That combination allows EOG to finance further exploration, while developing new technologies to extract gas. EOG could be a takeover target by one of the majors within the next year.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Oil: Idiocy Or Conspiracy?

With oil priced at just two-thirds of its highs set three years ago, President Barack Obama launched yet another spend-now-pay-later program. But this time, the President has done it with something much harder to replenish than fiat dollars. He is spilling out the nation’s emergency crude oil reserves.

A year after Obama began limiting domestic petroleum exploration, he has begun siphoning off America’s last energy bulwark — the U.S. Strategic Petroleum Reserve (SPR). Thirty million* barrels of oil have already been frittered away by Obama, yet oil prices are now higher and supplies are tighter than they were before these precious emergency reserves were drained away.

Obama’s actions are so blatant that I refuse to give him the benefit of the doubt. Not only is the price of crude far lower than it was in the summer of 2008, but there is no physical shortage. Just the opposite; oil inventories in June were close to historic highs. There can be no doubt, however, that they will decline. The President has choked off domestic offshore oil exploration and has refused to open up potential petroleum-rich regions like Alaska for onshore exploration.

Does the President really believe we are in a crisis now? Or does he want to make things worse by throwing away our last line of defense, the SPR?

 

Crude Oil Prices Light Crude

Last week, Congressional leaders grilled Federal Reserve Chairman Ben Bernanke as to why Americans are facing rising prices even in the face of a stagnant economy. Crude oil is traded in U.S. dollars, meaning that petroleum exporters like OPEC are insisting on higher well-head prices for finite amounts of oil in a world where Washington is able to create an infinite amount of dollars. It all translates to higher prices at the pump — if not this summer, then certainly by the end of the year.

Worldwide oil supplies are not keeping pace with global demand. Emerging markets’ demand for oil is rising, while mature fields in Russia, the North Sea and Mexico start to wind down.

Congressman Bill Cassidy (R-La.) along with 26 other lawmakers, signed a letter to the President on the drawdown of the SPR. They openly question why the Administration tapped the SPR without adopting a national energy policy that will lessen America’s dependence on foreign oil. The letter begs the question: Why not develop America’s energy resources and remove regulations on drilling in the Gulf of Mexico?

The letter from those members of Congress states:

It’s time to adopt a national energy policy which develops America’s natural resources, creates jobs and lessens our dependence on foreign oil. By tapping the Strategic Petroleum Reserve, the administration acknowledged that rising gasoline costs and increased dependence on foreign oil are unacceptable. Yet, the Department of the Interior continues to delay the issuance of new permits for offshore drilling in the Gulf of Mexico.

The current energy policies damage not only Louisiana’s economy but also exacerbate America’s energy problems. The president has often expressed interest in alternative energy. These polices can be pursued without ignoring domestic energy resources and the associated good paying jobs.

Is Obama acting out of stupidity or is something more sinister going on? That’s a reasonable question, considering that the President is driving America toward an energy maelstrom.

Obama apologists argue that the President simply doesn’t know better, that he and his team of energy advisers really do believe that the draining off of America’s emergency energy reserves makes sense so that the country can afford one last summer’s trip to Nantucket.

I don’t buy that Obama is stupid, not for one second. Say what you will about the President, but he is intelligent, probably too much so for the country’s own good. Obama is a graduate of Columbia University and Harvard Law School. Ivy League universities don’t graduate dummies. I have had two friends who graduated from Yale. Both are remarkably smart.

So what does that leave us with? I believe we have a President who is pressing forward an energy policy that will backstop Saudi Arabia at any cost.

Bandar Barry

Because of the Bush family’s close relationship with the Saudi royal family, Bandar bin Sultan bin Abdul-Aziz, Saudi Arabia’s ambassador to the United States from 1983 to 2005, was nicknamed Bandar Bush.

And while each President since Richard Nixon has supported the House of Saud, no President before Obama has bowed so diligently and committed so much to Saudi Arabia. It seems the Saudi Kingdom dictates policy to Obama rather than the other way around.

Two years ago, another Saudi former ambassador to the United States, Turki al-Faisal, wrote an essay for Foreign Policy badgering “misguided” U.S. politicians who promote American energy independence from the Kingdom. According to the former ambassador, it is “political posturing at its worst.”

I am offended that our President would take such lectures on decency from a tribal prince living in a brutal Muslim regime.

PhillyBurbs.com had the same conclusion on July 11.

It’s not just that Obama has presided over the near-end or slow crawl of new domestic drilling. The administration has been dragging its feet on approving a game-changing new pipeline (from Canada) that would, according to a December 2010 study commissioned by the Obama administration itself, effectively eliminate our dependence on oil from Saudi Arabia…

Our dependence on, in many cases, anti-American oil — Saudi oil, Nigerian oil, Venezuelan oil and the rest — will continue to rise, transferring our remaining wealth to the stand-out Shariah states, kleptocracies [SIC] and Marxist states of the world, further entrenching that ‘oasis of interdependence and cooperation’ Saudi royals talk about. It’s the Saudi dream come true. But it’s an American nightmare.

I can’t speculate as to why the President of the United States is selling out the nation to appease Muslim oil exporters. I believe Obama’s energy policies are inconsistent with those of a President working for America’s best long-term interests.

Action to take: Obama’s policies are leading to a depreciating dollar and higher oil prices. My expectation is that within the next 18 months, crude will surpass $150 per barrel. I urge you to buy blue chip North American petroleum stocks. Suncor Energy, one of Canada’s leading oil sands producers (SU, NYSE, $39.50), remains one of my favorite picks.

In the end, all of Obama’s horses and all of Obama’s men won’t be able to put the House of Saud back together again.

Yours in good times and bad,

–John Myers
Myers’ Energy & Gold Report

 

*Update: The original post had billion. Million is correct.

Defending Your Life

Sometimes, we are in danger because we are in the wrong place at the wrong time. Knowing what to do to avoid such a situation, or what you must do if you cannot, can be a lifesaver.

As a child, I was bullied, and I took more than my share of beatings in the schoolyard. I grew out of that stage and became a satisfactory football player. But I was never confident that I could defend myself.

At 17, I spent a year taking karate lessons. The conditioning part of it was fine, but part of me knew it was a waste of time. There was never any contact, and our sensei taught us that we had to pull our punches. In football we were taught to tackle through the opponent, so I knew there was something amiss.

Later, I spent a lot of years in the weight room. Even as I got stronger, I never had confidence. I decided to go back to traditional karate classes when I was 30. The kata movements that were taught were more choreographed dance steps.

Each day driving home from work, I would pass Matt David’s kickboxing gym. I finally mustered up the courage to go in.

Matt David was an imposing man. He owned a Spartan Gym in the rough area of town, along East Sprague in Spokane, Wash. Matt had a regulation boxing ring at the center of the gym. Surrounding it were speed bags, heavy bags and a mirrored wall. In the evenings, the Lilac City Boxing Club would train there.

I was not so impressed that Matt David had a 7th dan black belt in traditional kenpo karate, a rank he was awarded from the renowned Ed Parker. What impressed me most was that Matt had been an all-state wrestler in high school and was a former two-time California Golden Gloves heavyweight boxing champion.

When I first sat down with Matt, he asked me if I had any martial arts experience. I told him I had spent a couple of years in karate.

“That’s too bad,” he said. “But I can teach you to lose those bad habits.”

So began the school of hard knocks. No longer did I wear a white gi with a belt around my waist. Instead I wore tennis shoes, shorts, a T-shirt, hand wraps and a molded mouthpiece.

Our training was broken into two parts. First, we did calisthenics, hit the bags and shadow boxed. Then, we sparred in the ring with 16-ounce gloves, wearing full protective headgear.

I learned two things: that I didn’t know how to throw a punch and, more important, I didn’t know how to take a one. I dreaded getting in the ring against experienced fighters, but I was willing to pay that price.

That first summer at the gym, I took some tough rounds and suffered a couple of concussions. After one tough round, the head coach for the Lilac City Boxing Club, Dan Vassar Sr., approached me.

“Are you getting tired of getting beat up?” he asked.

At age 34, I joined the boxing club. I started training five days a week. I soon began to improve and gain confidence.

In three years, I had only three fights. I lost them all. But I finished each one of them on my feet. It was an incredible experience to spar against gifted fighters and with great instructors. It was invaluable.

A few years after I stopped boxing, I was cornered by two men on a stairwell when I was with my 10-year old son. They wanted to rob me.

My son and I were lucky: We got out of that mess without a scratch. Our two attackers didn’t fare so well. One ran away, and the other was taken by ambulance to the hospital.

I was not charged. To this day, I know the outcome would have been very different if I had not practiced full-contact fighting.

Three Rules To Live By

I encourage anyone at any age to learn realistic self-defense. No, you don’t have to join a boxing gym. You should not, however, waste another dollar or minute in traditional non-contact martial arts. Instead, study judo, wrestling or mixed martial arts — anything that involves actual physical contact.

In his book Streetwise: The Complete Manual of Personal Security and Self Defence, Peter Consterdine writes that the self-defense combinations most schools teach are a waste of time, that no one ever uses a karate-based attack and they don’t leave their hand or foot stuck out for you to do your stuff.

Consterdine knows his stuff. He is a former British Karate International full-contact kickboxing champion as well as a reputable bodyguard.

If you are unconvinced, consider the adage: “The way you train is the way you fight.”

If you think you might have to defend against a 2-by-4 piece of pine, then by all means, take up traditional karate or tae kwon do and learn how to break a board in half. Then again, traditional martial art students might want to consider what the late, great fighter Joe Louis once said: “Everyone has a plan until they’ve been hit.”

If you want to learn more about real self-defense, pick up a copy of Forrest Griffin’s book, Got Fight?: The 50 Zen Principles Of Hand-to-face Combat. Griffin is a former Ultimate Fighting Championship® light heavyweight champion. Reader beware, he uses graphic language and details the savagery that is a part of his life in and out of the octagon.

The best advice I got from Matt David had nothing to do with throwing punches or applying arm bars. He had three simple rules:

  1. Don’t be in a place where you will have to defend yourself.
  2. If trouble comes your way, run.
  3. If you can’t run, grab the closest thing you can and use it as a weapon.

Hopefully, you can avoid ever having to defend yourself. If you must, you can only hope you have learned a few tactics and that the person threatening you says: “I have to warn you… I have a black belt in karate!”

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

NOTE: Dan Vassar passed away last autumn. You can read about his life here.

Why I Hate Walmart

I doubt any of the nine justices on the U.S. Supreme Court has ever shopped at a Walmart. That probably helped the retail giant when the Court dismissed the largest employment discrimination case in U.S. history last month. But the Supreme Court’s refusal to hear the case brought by 1.5 million female employees hardly makes Walmart a paragon of good business.

The best prices in town really only add up to big profits for Walmart shareholders. Annual sales total more than $300 billion per year. In 20 years, the price of Walmart stock (NYSE:WMT) has risen almost tenfold. But Sam Walton’s Frankenstein has killed off countless small businesses and destroyed hundreds of thousands of jobs.

Based on revenues, Walmart is the largest company on the Fortune 500. The company employs 2.1 million workers worldwide — 25 times more than Exxon/Mobil. Roughly 90 percent of Americans live within 15 miles of a Walmart.

Walmart’s 4,424 stores in America are supplied by 10 million 40-foot containers that cross the Pacific each year from Singapore, Shanghai and Shenzhen, China, to the Long Beach/Los Angeles port. It is estimated that Americans spend $36 million at Walmart every hour of every day, almost all of it on cheaply produced goods made in Asia.

But this fact flabbergasted me most: Walmart imports more goods from China than the total imports from the U.K. or Russia. That makes Walmart a huge contributor to America’s trade deficit, an imbalance that is eroding America’s economic prospects.

In the book The Retail Revolution: How Wal-Mart Created a Brave New World of Business, Nelson Lichtenstein writes: “(Wal-Mart has created an) imagined community where economic and moral lives are interconnected and virtuous. The fact that Wal-Mart itself contributed to the conditions that lead to so much social and familial instability may be irrelevant to those who shop and work there. Indeed, the low pay, high turnover, awkward shifts, and general precariousness that have become the norm.”

My Walmart Story

Last Christmas, I went to Walmart with my wife, Angie, who spent a pile of money there on decorations. Since I bought my Timex at that store the previous summer, I took it the jewelry section to see if they could fix the light that no longer worked. The clerk took it apart in front of me, then gave it back and said, sorry, the watch was OK but the light was broken. Not a problem. That is, until I got home and looked at my watch. It had stopped.

I got in my car and drove through Christmas traffic. This time, I got a different clerk. The clerk that stopped my watch had gone home.

I told the new clerk what had happened, and I could tell she was getting cranky.

“It’s not like we stopped your watch,” she declared.

“It’s exactly like that,” I said.

I knew she wasn’t going to budge. She kept insisting that no Walmart clerk under any circumstances would ever take any watch apart. She repeated this even though she was standing beside the very instrument that had dismantled my watch just an hour earlier.

Finally, I noticed the security camera directly above us.

“Check your cam for 2:55 p.m. That’s when the watch stopped, and that’s what time you will see that the clerk took my watch apart.”That is when she accused me of running a scam to get free batteries out of the store. I told her I was not making a living running around the city stealing Timex batteries from Walmart stores. I went on and explained that it’s like taking your car to get washed, and then it won’t start.

That’s when she told me she knew all about cars because she drove a Lincoln and added that she used to manage seven retail stories where she repaired “nice watches. Rolexes!”

I told her I didn’t care if she once polished the Crown Jewels; I wasn’t leaving until that Timex started ticking.

Finally, my wife, Angela, came along. One of her friends is married to the manager at the store. Angela politely mentioned the manager’s last name.

To which the clerk screeched, “What’s his first name!?”

Only after Angie calmly pronounced the manager’s name, proving she was not a liar, did the clerk finally realign the battery on my watch. It took her less than a minute. As she handed it back to us, she said: “You wouldn’t believe the kind of people we get in this store.”

“She means people like us,” Angela said.

When I started telling friends my Walmart story, I learned that many had their own, some worse than mine.

I decided I would do some research and not let one cranky clerk sway my opinion. I phoned the public library and asked them to set aside some books for me on Walmart. I was shocked to find they had held seven books, all of them to varying degrees negative about the mega-retailer. In fact, one of them — How Wal-Mart is Destroying America (and the World) by Bill Quinn — is rife with horror stories told by shoppers and employees.

Quinn’s book makes other criticisms, too. It points to a 1993 article by The Wall Street Journal that reported on the predatory ways of the retailer. According The Journal, Walmart would lavish money on small-town newspapers with full-page ads. After the company had run its competitors out of business, it cut its advertising budget to the bone. Publishers were left to suffer along with many others in the community.

Dana Meadows, the late founder of the Sustainability Institute, pointed out a Massachusetts study which stated that for every 140 jobs Walmart adds, an estimated 230 higher-paying jobs are destroyed.

You can read the report here.

I am skeptical of this study. But you cannot argue that Walmart has hurt countless family businesses. In Quinn’s book is this 2003 letter from Doug Hartig, the CEO of America’s second-oldest continuously operated family drug chain:

“I’m am a third generation pharmacist, fifty-three years old, with a wife and two great high school boys at home. I spend about half of my time battling Wal-Mart in some way, shape or forum every day. In a nutshell I’ve lost one store to Wal-Mart and they’re after me again.”

Hartig had built a spanking-new store in Galena, Ill., after lots of politicking and hard work. It turned out that Walmart liked his location so much that it decided to build a mega-store right beside his. For three years, Hartig fought to stop the building of that Superstore. It opened in 2005.

Hating Walmart Doesn’t Make Me A Liberal

Walmart is reminiscent of how John D. Rockefeller ran Standard Oil a century ago. He would come into an area and, if he couldn’t buy an oil refinery on the cheap, J.D. would build a Standard Oil refinery next door and sell gasoline below cost. That is, until the other refinery went out of business. Then, Standard Oil would jack up its prices.

On the subject of oil and Walmart, fiction writer Douglas Coupland had this to say: “If I think too much about all of those Chinese factories where all the stuff in a Wal-Mart is made, I get that woozy feeling you get when you see ducks covered in crude oil.”

I understand that a great many Conservatives like Walmart. My grudge against the retailer is not because its female workers didn’t get the Supreme Court to hear their case or because Walmart is anti-union.

Mostly, I don’t like Walmart because it has become so big that it doesn’t care about its customers. America was made great because businesses used to have a heart. My Walmart experience told me that it doesn’t give a damn. Its philosophy: “We got another billion where that guy came from.”

Yours in good times and bad,

John Myers
Editor, Myers’ Energy & Gold Report

Note: The Walmart facts mentioned in the column come from WSJ.com, the books mentioned above and this website.

Blood In The Streets

The headline above once pertained to bear markets and the pounding investors would take.* Nowadays, real blood is being spilled in Western democratic cities like Vancouver, Canada, and Athens, Greece. With America’s economy stuck in recession and with the dismal and arrogant leadership provided by President Barack Obama and Congress, it is not hard to imagine similar violence in American cities.

Such an idea would have seemed preposterous four years ago. But that was before the financial crisis of 2008. For three years, anger has been building — and not just in places like the Middle East where violence is as much a part of their culture as the Quran.

On June 15, riots broke out in Athens, the birthplace of democracy. On Tuesday, violence erupted again. The outbursts were ignited by further austerity measures ordered by the Greek government.

The free lunch Greek citizens have been getting for decades is being ripped off the table. The country has already gobbled up the first $139 billion European Union-led bailout. Any talks on a second bailout for Greece hinge on a further belt-tightening. The people of Greece, raised on socialist handouts, are in no mood to stay on a diet.

On June 15 and again Tuesday, protestors poured onto the streets throwing rocks at Parliament. Riot police finally quelled the unrest, but more violence is expected.

Last week, Greece was hit by rolling blackouts as workers at the main power utility began 48-hour rolling strikes to protest the company’s privatization, part of austerity plans needed to avoid a national debt default.

Selling off assets in the utility is a step the socialist government in Athens must take in its $71 billion privatization plan, which must be completed by 2015. The Greek people don’t want spending cuts and higher taxes. But the Greek Parliament is staring down the barrel of a gun. If it doesn’t implement changes by the end of the month, the country will not get the last $17 billion of bailout money.

To ease the crisis in Greece, EU finance ministers agreed to raise the amount of money they will provide for countries drowning in debt. The move is a last-ditch attempt to keep Greece’s financial crisis from spreading to Ireland and Portugal.

All of this has international bankers worried. Last week, Canada’s finance minister, Jim Flaherty, warned there is still “a real danger” of contagion from the ongoing debt crises in Europe, including the possibility of some damage to the country’s banking system.

“Canada is not an island — no country, any more, is an island — our economies are clearly interrelated,” Flaherty said at a breakfast appearance in Toronto following emergency discussions with other G7 countries.

It’s All Greek To Me

Flaherty should also worry about Canada’s homegrown rioters.  The same day Athens was burning, so was Vancouver.

On the evening of June 15, the team favored to win Game 7 of the Stanley Cup Finals, the Vancouver Canucks, lost. The Cup went to the Boston Bruins, who did not cheat their way to the NHL Championship or get help from the referees. They simply were the better team.

Like most sports fans, I am often brokenhearted. At the conclusion of most seasons, I say, “Wait until next year!” But thousands of Vancouver Canuck fans didn’t say that. Instead, they said things like: “Let’s blow up cop cars; let’s beat up bystanders; and let’s throw bricks though windows!” And that is exactly what they did.

More than 100 rioters were arrested by Vancouver police; as many as 1,000 people could face criminal charges. The dragnet will be aided by the audacity of the looters who photographed and videotaped their rampage and then displayed it on social media websites like Facebook.

The physical cost for the few hours of rioting is more than $1 million, but experts say the long-term damage to Vancouver’s tourist industry could be billions of dollars.

As in Athens, the rioters in Vancouver were mostly gangs of youths bent on creating chaos. This begs two questions:

  1. What would happen in a city like Vancouver if the fledgling economic recovery collapses and the citizens face hardship?
  2. What are the chances this kind of violence will erupt in the United States?

On FoxNews.com, Bill O’Reilly wrote: “The question is: Could this kind of thing happen in America? And the answer is yes. About half the population here now believes income redistribution is the right thing to do. We’re setting the table for violence in this country. Once people start depending on the government for their livelihood, for essentials, and then those essentials are taken away, you’re going to have violence. Also, the more loons there are, the more potential for violence there is. Those anarchists want to burn down everything.

“So we can watch this stuff in Vancouver and Greece, but we shouldn’t think it can’t happen here. The pinheads in America are mounting.”

Before you dismiss O’Reilly as a fearmongering right-wing extremist, it is worth noting that someone on the far left is also frightened of chaos coming to America. Democratic strategist James Carville spoke out about civil unrest that might spring from a still-sick U.S. economy on Don Imus’ syndicated radio show, Imus in the Morning.

“(The recession) is a terrible thing that has happened to people’s lives… If 54,000 (new) jobs is the new norm – this is going to be very, very tough. Some people say it just might be one more thing. We don’t know.”

Carville added that the consequences of America’s continuing financial crisis will not be limited to politics, and he warned of civil unrest because of the bleak economic situation.

“People, you know, if it continues, we’re going to start to see civil unrest in this country. I hate to say that, but I think it’s eminently possible.”

Carville and O’Reilly have agreed on something. If you don’t believe in the possibility, you would have to be naïve. Economic collapse almost always leads to civil strife. What the Vancouver riots demonstrated is that citizens today are spoiled and think they are entitled to whatever they expect.

I have a feeling the world’s staggering economic recovery is about to fall over dead. And not just for Greece. When that occurs, punks like those who rioted in Vancouver will have a lot more to be upset about than the fact their hockey team didn’t win.

Action to take: Take precautions for you and your family should there be violence in and around your neighborhood. Store extra food and water and have your home well secured. Also take whatever defensive measures you feel are prudent. Secure cash on hand and safely inside your home as well as physical gold and silver.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

*The book, Blood in the Streets: Investment Profits in a World Gone Mad was written in 1987 by James Dale Davidson and William Rees-Mogg. It remains an excellent read. You can purchase it at Amazon.com.

Obama’s Mortgage On Mayhem

Almost all of Afghanistan’s economy is supported by foreign aid, most of which comes from the United States. We have a President who is borrowing money from a potentially much larger enemy, China, to finance foreign wars against Islamic countries who hate us.

According to The World Bank, 97 percent of Afghanistan’s gross domestic product is “derived from spending related to the international military and donor community presence.”

Afghanistan’s government has annual revenues of only $2.5 billion, but the cost of funding its security forces alone is estimated at between $6 and $8 billion. Yes, it sounds like Afghanistan runs its budget the way Washington runs ours.

The United States has spent $18.8 billion on aid to Afghanistan in the past decade. According to a report released by the Senate Foreign Relations Committee, without proper planning, “Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now.”

I have news for those Senators. Afghanistan is already suffering an economic depression. Trying to prove differently will only further bankrupt the United States. (President Barack Obama plans to announce today further troop withdrawals from Afghanistan.)

Afghanistan is a corrupt country that hates our Christian guts and has zero prospects for advancing beyond the Stone Age. Afghan President Hamid Karzai is at best a drug addict and at worst a jihadist in sheep’s clothing.

According to the newspaper The Chronicle Herald, Karzai is no better than Moammar Gadhafi: “Since the tampering and corruption of the August 2009 presidential elections in Afghanistan failed to produce a legitimate result, the Hamid Karzai regime, like Gadhafi, has no legitimate democratic mandate.

“Karzai remains in power simply because he was the chosen candidate of the U.S. in the first place. The notorious Northern Alliance warlords who constitute Karzai’s cabinet are known to have committed numerous war crimes, and some continue to preside over narco-criminal drug enterprises, yet they remain unindicted (sic) for the simple reason that NATO needs their authority to run the country.”

The only booming businesses in Afghanistan are terrorism and opium. Their heroin is smuggled onto our streets, turning cities into slums and destroying American values.

Furthermore, Karzai has implemented Sharia law, including a 2009 law which makes it legal for a husband to rape his wife. Under the law, if the wife won’t comply with her husband’s advances, it is OK to starve her. And if you think a Ben Franklin-type person is about to spring forth in Afghanistan, think again. It is a crime punishable by death for a citizen to convert to Christianity.

According to Pacific Free Press, there were 96,900 U.S. troops and 87,483 supporting contractors in Afghanistan at the end of last year. That means there are almost 200,000 Americans backstopping a country rife with extremists.

Still, the Administration of President Barack Obama seems to have no immediate plans to pull out of Afghanistan.

As reported by Pacific Free Press, a Public Broadcasting Service reporter said: “An executive at a small defense contractor recently joked to me, ‘Afghanistan is our business plan.’ I asked him what he would do if the war ended. He stared at me for a moment and said, ‘Well, then I hope we invade Libya.'”

For the military industrial establishment, things are turning up roses. If some people in the Obama Administration get their way, there will be boots on the ground in Libya.

And it is not stopping there. On June 8, The New York Times reported that the Obama Administration has intensified the American covert war in Yemen. It seems Obama has never met a war he didn’t like. He has almost the whole alphabet covered, from A to Y (Afghanistan to Yemen). South Africa’s Zulus better be on alert.

Borrowing From Peter To Kill Paul

And where exactly is the money coming from to fight all these wars against Islam? Financing much of this fighting is China, which continues to buy U.S. Treasury bills, notes and bonds. It is an ingenious way of doubling down on America’s impending ruination.

The United States has a national debt of $13 trillion. How does a bankrupt nation keep fighting foreign wars? It borrows money.

China holds almost $1 trillion of Uncle Sam IOUs. It is the country with the most to gain from America’s grand decline.

In a column on Digital Journal, freelance writer Kelly Bowlin wrote: “Let’s put things in perspective. The U.S. has hit its debt ceiling. This comes as bad news, because we’re currently fighting 3 un-winnable wars.”

One of the few people who seems to understand and has a vote in Congress is Presidential candidate Ron Paul (R-Texas).

Paul is one of six members of the House of Representatives who released a letter earlier this month calling for a reduction in U.S. military spending by scaling back U.S. military commitments and reconfiguring the country’s global military strategies.

Paul said Congress “cannot be serious about reining in federal government spending if we take the military budget off the table. We must focus our resources on defending the United States rather than on building and maintaining an unsustainable trillion-dollar empire overseas.”

I commend Paul for his efforts, but I fret they amount to calling a Roman water wagon while Nero was plucking his fiddle. America’s financial situation is in extreme peril because of decades of bad policies. Obama is only making matters worse.

The end result will be the continued devaluation of the U.S. dollar and a bear market in dollar instruments. The U.S. economy is again staggering, and the Dow Jones Industrial Average is clinging at 12,000.

Action to take: Expect a summer of discontent at home and abroad as well as in the financial markets. Keep your investments in real assets, either with physical precious metals or with carefully chosen equities that own real assets such as gold, silver, oil and gas.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy and Gold Report

Who Shot The Dollar?

Who killed the U.S. dollar? This question will be debated by future historians. Already, more people are asking that question than tuned in to find out who shot J.R. on Dallas. The lineup of suspects is long, but it ends with Barack Obama, the triggerman who killed the buck.

The first wound came from Franklin Delano Roosevelt, who expanded the Federal government’s influence far beyond what the writers of the Constitution ever imagined. He devalued the price of gold and made it impossible for ordinary Americans to convert currency to bullion. But FDR was also crucial during America’s World War II victory, a pivotal event that set the stage for America to become the world’s largest creditor and greatest superpower.

LBJ Chooses Guns And Butter

Another suspect is Democrat Lyndon B. Johnson. When I was in college studying economics, our professor made us read history. This seemed counterintuitive until we read about the guns-and-butter policies of the Johnson Administration.

And while Presidents George W. Bush and Barack Obama make Johnson look like a penny-pincher, Johnson was the first to take a shot at the dollar.

Johnson pressed forward his vision with major spending programs for education, medical care, crime and transportation. He wanted to transform America the way FDR had. And he had a war to fight in Vietnam.

Gold demand rose, creating a drawdown on America’s gold reserves. The root of it all was a growing trade deficit that the United States owed to the rest of the world.

The Administration of John F. Kennedy knew America’s gold standard was in trouble. In January 1961, Kennedy’s Undersecretary of the Treasury, Robert Roosa, suggested the U.S. and Europe pool their gold to prevent a private marketplace for gold in which the price would exceed the mandated price of $35 per ounce. French President Charles de Gaulle reneged on the deal and began to redeem dollars for gold instead of U.S. Treasuries. The drain on U.S. gold became severe.

The 1960s marked a gigantic increase in Federal spending. Johnson’s two-front war was being fought at a prohibitive cost. In 1968, for the first time since 1893, the United States ran a deficit in its balance of trade. Federal debt began to soar. By the end of the 1960s, the U.S. faced the stark choice of eliminating trade deficits or devaluing the dollar.

Gold On Nixon’s Enemies List

On Aug. 15, 1971, President Richard Nixon cut the final link between gold and the dollar. Other nations could no longer redeem rapidly depreciating greenbacks for bullion.

In February 1973, the world’s currencies “floated.” By the end of 1974, the price of gold had soared from $35 to $195 an ounce. The U.S. could suddenly pump dollars without constraint. It was a period during which red flags were being raised for paper investors, few of whom paid any notice.

The majority of investors would pay a steep price for their ignorance. Over the next decade, they suffered through the worst bear market in stocks since the Great Depression and the worst bond market of the 20th century.

A Democrat Gives The Dollar A Reprieve

It is ironic that another Democrat would breathe life into the buck, but that is what President Bill Clinton did.

During the Clinton Administration — with the help of innovative accounting — the dollar stormed back. The disgrace Clinton brought to the Oval Office over the Monica Lewinsky affair seems almost forgivable since his Administration presided over a growing economy and what underpinned it, a strong dollar. More than a decade ago, the world had confidence in the U.S. dollar.

If you do not believe me, check the chart below.

 

Trade Weighted Exchange Index

As you can see, the greenback has been experiencing an unprecedented decline since 2001. No doubt much of the weakness in the dollar was caused by another guns-and-butter President: George W. Bush.

Just 2½ years into office, Obama is pushing the value of the dollar even lower. It’s so low that the value of the U.S. dollar now threatens to undermine our future and our children’s future.

Obama had an opportunity to restore the U.S. dollar and the United States. In that task he has failed miserably.

The London Telegraph details Obama’s murder of the dollar. A few weeks ago, the newspaper wrote: “If President Obama is to be believed, ‘speculators’ are responsible for the rise in oil prices that threatens the global recovery. However, for the real drivers of the oil price, the President needs to look closer to home.”

The U.S. has continued to devalue its currency by allowing the Federal Reserve to print dollars like they are going out of fashion. This has boosted the price of all commodities — and the trend is likely to continue for the rest of this year.

“Commodities such as oil are priced in dollars. When the dollar falls, these commodities — be they copper, wheat, or oil — become cheaper in other currencies. This prompts “speculators” to buy. Prices of raw materials have therefore risen on a sea of dollar liquidity — fueled by cheap money and quantitative easing.”

Obama has been pumping money the way Saudi Arabia once pumped oil. His spending has gotten America close to Third World status.

China alone holds nearly $1 trillion in U.S. Treasury obligations. Still, we have a President who is bent on blaming Wall Street. And he does so after having spent more than $1 trillion in bailouts and pushing the Federal deficit past $14 trillion!

Tale of Two Presidents

The Administration of President Jimmy Carter dealt President Ronald Reagan a bad hand. The world was losing confidence in the once-almighty dollar. Commodity prices were soaring. Reagan did the right thing for America. He bit the bullet. Interest rates soared under the discipline of Reagan and then-Federal Reserve Chief Paul Volcker. The result was a rolling recession that hurt a lot of Americans and could have cost Reagan a second term.

Obama has not shown that courage. Rather than batten down the hatches, Obama has opened the spigots — to the tune of trillions in new dollars. The result is a world in which other nations no longer want the greenback as the world’s reserve currency.

History will show that a lot of Presidents injured the U.S. dollar. But the one who gave the greenback the coup de grâce was Obama.

Action to take: Obama’s re-election is paramount to him. He doesn’t care whether the dollar dies. As a result, you should continue to get out of dollar investments and into real assets. The U.S. dollar and Big Board stocks are heading for a collapse. Real assets offer you your only chance of financial survival.

Yours in good times and bad,

John Myers
Myers’ Energy & Gold Report

Woe Is The Information Age

If you think the Information Age has advanced the world and is leading to the pursuit of happiness, think again. Now in my 50s, I am convinced technology is killing our spirit and setting us up for a big fall. And while I don’t consider myself a Luddite, my three children might disagree.

I bought an Apple II Plus in 1983. It was a marvel. I still needed a dictionary because Bill Gates had not yet invented MS Word. I even took a week-long class in Seattle, Wash. to learn how to dial-up the Ethernet. It was the precursor to the Internet and was painfully slow. My publisher used to come into my office. He would get frustrated that I couldn’t seem to reach a supercomputer like H.A.L. and have every answer to any question. I didn’t know that the world was on the brink of that dream.

iPhones Won’t Win Friends

Twenty years ago, I bought a Motorola cell phone, which was appropriately called “the brick.” It was a serious status symbol and came with a built-in excuse: people could reach me in case there was an emergency.

Today, I don’t own a cell phone, and I don’t want to. There never does seem to be an emergency; they still make pay phones; and, frankly, it seems like too much work to learn how to operate these devices which have almost every application you can dream of. Now even children own cell phones, so whatever status they had disappeared long ago.

My wife already accuses me of being obsessive-compulsive about checking my email on my PC at work. I have decided that when I get away from the office, I really do want to be away.

Has all this information made us more productive or more intelligent? I don’t believe so. When I was a young editor for my father’s newsletter, we made his publication special because we did something few other newsletters did. We put in a lot of research. I sometimes would put in the better part of a week at the old Spokane Public Library.

It may have taken me hours to find a fact that can now be retrieved in two minutes on Google. I had to read a lot of books, but the worst of it was going over scores of microfiche or outdated statistic tables. The process was enlightening. It might take a dozen magazines to find what China’s gross domestic product was, but in that search I would learn much more.

Today, fifth-graders can look up China’s GDP in seconds. That doesn’t mean they have an understanding of China or what is happening to that country and to the rest of the world that must compete against it. One-sentence answers abound, but the Information Revolution has created a void when it comes to an understanding of what is really happening.

A year ago, The Wall Street Journal carried this headline: “Does The Internet Make You Dumber?” The story reported: “Today, the Internet grants us easy access to unprecedented amounts of information. But a growing body of scientific evidence suggests that the Net, with its constant distractions and interruptions, is also turning us into scattered and superficial thinkers.”

Texting Me Crazy

I dropped off my wife at the grocery store the other day and was driving through the parking lot. A young mother with her baby in a stroller was busy texting on her cell phone when she walked directly in front of my car. I stopped with plenty of room to spare. But had I also been texting, I would have hit the both of them. According to a recently published study by Virginia Tech, people who text while driving are 23 times more likely to be in an accident.

I wonder about the people who show complete and utter disrespect for others by carrying out loud cell-phone conversations while shopping, in elevators or while at the gym. I started going to athletic clubs 35 years ago. They never did turn me into an athlete, but I am convinced working out is a better stress reliever than any pill or shrink. At least it was until people started bringing their cell phones to the gym. I finally got so fed up with people talking about their everyday trivia that I gave up my membership. I now burn calories uninterrupted in a tiny, but quiet, weight room on the main floor of my office building.

As I watch everyday people engaged in their serious conversations that can’t wait, I wonder: What job do they have? They don’t look like they run a major oil company or are police detectives. Yet they talk and text as if lives depended on it. Most seem oblivious to the world around them and everyone else in it.

The epitome of ego is Twitter, the network for microblogging on which people have the audacity to broadcast instantly any thought that pops into their mind. People love celebrities, so they sign up by the thousands to receive updates by the likes of Charlie Sheen (to find out whether he is still “winning!”) and Maria Shriver (to learn her latest thoughts on her cheating husband, Arnold Schwarzenegger).

It all seems like a huge waste of time. None of it makes our children smarter or the workforce more productive. In fact, the Internet and all the personal communication devices that come with it might be doing the opposite. Teachers have had to ban cell-phone use in the classroom. All for good reason, says Nobel Prize-winning neuroscientist Eric Kandel.

According to Kandel, students can pay deep attention to a new piece of information only when they are able to associate it “meaningfully and systematically with knowledge already well established in memory.” Such associations are essential, but they don’t take place when people are surfing on their laptops, jabbering on their BlackBerrys or texting on their iPhones.

The cold truth is that technology is not the panacea for all that ills us. It is a tool we should control. Yet it seems to controls us.

Yours in good times & bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Barbarians Inside Our Gates: Who Makes Your List?

In the spring of 1775, silversmith and patriot Paul Revere rode into the cold night to warn that the British were coming. A century and a half later, America helped defeat Nazi Germany and Imperial Japan — two nations bent on world domination and extinguishing individual liberty.

The world has changed, and the war at home rages. Geographic borders no longer demarcate the saintly from the sinister. Battle lines between good and evil dissipate like ink in a churning ocean.

Look no further than billionaire Donald Trump who wanted to sell out America for better ratings and bigger profits — so says author Jerome Corsi, who has accused Trump’s publicized run for the Republican candidacy as “working with (President Barack) Obama.” The goal of Trump’s gambit was to neutralize the entire Birther controversy.

Corsi says the real truth is in his book Where’s the Birth Certificate? Corsi declared that revelations in his book would mean the Obama Administration “would not survive.” Corsi believes he has evidence that proved the administration has tried to preserve itself using “criminal fraud.”

According to Corsi, Trump engineered the entire birth certificate controversy in order to make the press “go to sleep.” Trump was able to kill two birds with one stone. Not only was Obama exonerated, but candidate Trump smeared the conservative movement just as it was gaining momentum.

Trump’s reward was a $60 million television contract with NBC, owned by General Electric, which has been an enormous backer of Obama. This won’t surprise readers of Personal Liberty Digest™. More than a month ago, Bob Livingston, Ben Crystal and yours truly suggested this Trump card was being played out.

It is deceit like this that makes it harder to know who stands with us and who stands against us.

Attila The Nun

“When barbarians sacked Rome in the 5th Century, they came from without,” wrote James Dale Davidson and Lord William Ress-Mogg in their book The Great Reckoning. “Today, America’s barbarians are homegrown.”

That book was published in 1994. Even as I was reading it, I had my own reckoning of sorts.

We had who we thought was a wonderful young woman working for us. Nobody would have recognized her as a barbarian. Her name was Grace. She had been schooled at a Catholic seminary. Grace seemed like a perfect employee: punctual, helpful and polite.

One morning, Grace didn’t arrive at work. We didn’t find out why until the next evening when my wife and I were watching the local nightly news. Suddenly, Angela blurted out: “My God, that’s Grace!”

There was Grace, handcuffed and clad in an orange prison jumpsuit. Behind her was her barbarian boyfriend replete with biker clothes and an earring. Grace had been arrested for conspiring to commit murder against the boyfriend’s handicapped wife to collect on a life-insurance policy.

Grace had enlisted murder for hire. Her would-be hit man was a cop. The evidence was on audio tape. It was meant to look like a robbery gone awry.

Grace was an example of a homegrown barbarian pulling at the social fabric, ripping at a nation founded on decency and civility.

Enemies Of Liberty: The Federal Reserve

A decade before Grace devised a murder plot, I started working for my father, who wrote critically about the Federal Reserve. It wasn’t as much in fashion in those days, but one of the questions he wanted to know (and which remains unanswerable): Who owns the Federal Reserve? It is not the Federal government, even though the Fed creates money and lends it to American citizens and foreign investors via the private banks that are the real owners.

The Fed also decides what rate of interest to charge, thus creating waves of deflation, as in the 1930s, or inflation, as in the 1970s (and perhaps today). The Fed also buys U.S. Treasury debt with money created by the stroke of a computer key. American taxpayers are left to pay the bill, plus the going interest rate on their credit cards, mortgages and all other debt.

The Fed is not answerable to Congress or the President. Created almost a Century ago, the Fed is shrouded in mystery.

It was the Fed whose loose monetary policies led in part to the ongoing financial crisis. And what has the central bank done to fix the calamity it created? It cocked a gun at the head of Congressional leaders and told them to bail out the big banks with hundreds of billions of dollars, “or else.”(If you haven’t read the book Too Big to Fail by Andrew Ross Sorkin, watch the new HBO movie by the same title.)

For the past decade, the Fed has cut interest rates, which now sit at all-time lows (see the graph below of the Fed Funds rate which is effectively at zero).


Because of the Fed, purchasing power of the dollar has been eviscerated. For that, each of us pays every day.

Enemies Of Liberty: The Media

I don’t get every American TV channel living up here in Canada. But with the new year, our cable provider added MSNBC. I clicked only once to that station and witnessed Keith Olbermann in the middle of his meltdown, the tirade that got him fired.

While Olbermann may be extreme, he certainly isn’t alone in pushing the liberal agenda. The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell makes this argument. The book cites a study by Brian Mullen of Syracuse University that demonstrated a bias by Peter Jennings, the late anchor for ABC’s World News Tonight, when he was reporting on Presidential candidates Ronald Reagan and Walter Mondale.

I don’t need studies to tell me the press is biased. Just last week on NBC, correspondent Norah O’Donnell excitedly touted Obama’s stop in Ireland as he toured Europe to connect with his roots. The reporter proclaimed: “The Irish eyes are smiling today as this country welcomes President Obama. And I can tell you that the people here in Moneygall are overjoyed that Obama has Irish roots.”

Seriously? I am Irish, too, but only on St. Patrick’s Day and only if my wife lets me go to the pub.

Who Or What Makes Your List?

I have named just two barbarians inside our gates. I would love to know who you would put on your list and if you agree with my choices.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Afghanistan: A Lost Cause

“Afghanization. Vietnamization. Surge. Gradual escalation. Corrupt dictators. Internal dissension. The war follows a familiar script.” POLITICO

Despite proclamations of victory by the Administration of President Barack Obama, the death of Osama bin Laden is not like the fall of Berlin in 1945. In itself, killing bin Laden brings no peace. It does ask many unsettling questions about America’s No. 1 ally in the War on Terror, Pakistan. It also puts into question America’s ability to even win the war in Afghanistan.

When Obama took office, he got this advice from Vice President Joe Biden: “If you don’t get Pakistan right, you can’t win.”[1]

The reason was and remains simple. The enemy, the Taliban, are using Pakistan as a base to operate hit-and-run missions against American troops the way North Vietnam used Cambodia to strike GIs four decades ago. The key difference is former President Richard Nixon launched attacks into Cambodia. Obama’s Cambodia is Pakistan, a Muslim nation with 100 nuclear weapons in its inventory.

If you think the nearly decade-long war in Afghanistan has a lot of similarities with Vietnam, you are not alone. The New York Times reports the recently deceased Ambassador Richard Holbrooke had to shut up regarding how badly the war in Afghanistan was going.

“There are structural similarities between Afghanistan and Vietnam,” Holbrooke noted, in ruminations now in the hands of his widow, Kati Marton.

“He thought that this could become Obama’s Vietnam,” Marton recalled. “Some of the conversations in the Situation Room reminded him of conversations in the (Lyndon B.) Johnson White House. When he raised that, Obama didn’t want to hear it.”

The Times indicated if Holbrooke were still alive, he would be shuttling frantically between Islamabad, Pakistan, and Kabul, Afghanistan, trying to take advantage of bin Laden’s killing to lay the groundwork for a peace process.

The Ghost of LBJ

Johnson was a guns-and-butter Democrat who sat in the Oval Office during the Vietnam War. The undoing of the nation was not solely over his vision of the Great Society, but rather America’s defeat in Vietnam.

Even LBJ finally understood that Vietnam was a lost cause, but not before tens of thousands of Americans died.

Johnson drawled: “Light at the end of the tunnel? We don’t even have a tunnel; we don’t even know where the tunnel is.”

This truth applies to Obama, who still won’t admit it. Without Pakistan as a reliable partner, the United States cannot win peace in Afghanistan. And Pakistan is moving away from the U.S. faster than a bootlegger from the cops.

Last week, the Toronto Sun wrote: “The Pakistani government is embarrassed that bin Laden was found living in relative comfort, but there’s little in their reaction that indicates shame. Rather, they are miffed that the American SEAL team went in without telling them. Parliamentarians even cheered Prime Minister Yousuf Gilani when he warned of dire consequences if the U.S. ever again sent troops into Pakistan without permission.”

Gilani declared that Pakistani intelligence services were neither complicit nor incompetent and that the discovery of bin Laden living in plain sight of Pakistan’s military academy was not Pakistan’s fault. He insisted China is Pakistan’s “all-weather friend” and implied the U.S. is an unfaithful ally.

Can you imagine Winston Churchill warning America about coming on British soil to hunt Nazis during World War II? Of course not, but Pakistan is not a real ally. It is a Muslim nation in which key members of the government and its intelligence service (Inter-Services Intelligence) covertly plan American deaths in Afghanistan while cheering on a war that is exhausting both America’s financial resources and the nation’s psyche.

But there are no Churchills in Pakistan or Afghanistan.

The President of Pakistan is Asif Ali Zardari. His own people call him “Mr. 10 Percent” because of all the kickbacks he took during the premiership of his late wife, Benazir Bhutto, who was assassinated when she again ran for office in 2007. Not only is Zardari corrupt, but he is weak against the Muslim mob which grows angrier each month.

The other key ally in America’s war on terror is Afghanistan President Hamid Karzai, who is also corrupt, perhaps delusional and, most likely, a drug addict. The U.N. envoy to Afghanistan even questioned the “mental stability” of Karzai and suggested the Afghan president may be using drugs.

In an interview on MSNBC, Peter Galbraith described Karzai as “off-balance” and “emotional.” Galbraith went so far as to call for Obama to limit Karzai’s power to appoint officials within Afghanistan until he proves himself a reliable partner.

“He’s prone to tirades. He can be very emotional, act impulsively. In fact, some of the palace insiders say that he has a certain fondness for some of Afghanistan’s most profitable exports,” said Galbraith, in reference to heroin.

When asked straight out if Karzai is a drug addict, Galbraith responded: “There are reports to that effect. But whatever the cause is, he can be very emotional.”

You can see where this is going. In World War II America had Churchill and Charles de Gaulle on our side. In this war we have Zardari and Karzai, two leaders that make South Vietnam’s dictator Ngô Đình Diệm look like Thomas Jefferson.

A Steep Price of Peace

There is a lot of money being made in these Arab wars, at least for U.S. military contractors. Fighting in Afghanistan and Iraq has cost more than$1 trillion. Yet some neoconservatives just can’t get enough, as was evident earlier this year when Senator John McCain (R-Ariz.) wanted to put boots on the ground in Libya. McCain declared the Libyan “rebels” are true heroes and represent American democracy. Either the Senator has seen Star Wars one too many times, or he has forgotten that Americans are still dying because Washington armed the mujahideen in Afghanistan in the 1980s.

It is true that Presidents and generals never get credit for battles they never fought. In this way President George H.W. Bush never got credit for not invading Iraq in 1991 and for letting the Communist bloc determine their destiny without American interference.

Furthermore, the success in killing bin Laden shows that surgical operations, whether lead by SEAL teams or pinpoint bombing, can knock out America’s enemies and not at the cost of hundreds of billions of dollars per year.

But I don’t expect Obama to declare victory and bring the troops home anytime soon. There is still an election to win, so I expect the President to give his “Peace with Honor” speech just before Americans go to the polls.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

[1] From the book, Obama’s War, Bob Woodward, Simon & Shuster, New York, NY, 2010

Barack Attack!

“They want what every first-term Administration wants — a second term.” — from the movie “Clear and Present Danger”

America hasn’t had a leader like President Barack Obama in generations. He is more shrewd than a Chicago mayor, more powerful than the Tea Party and able to read a teleprompter at a single glance. He is ObamaMan! Not since former President Harry Truman’s capture of former Prime Minister of Japan Hideki Tojo has the nation had such a “presidential” President.

The “interdiction” ordered against Osama bin Laden, aided by the best fighting force in the world, is sure to make Obama’s Nobel Peace Prize a footnote for some of his biographers. And depending on whom you listen to, the President has either eradicated Muslim extremism or set a course for democracy in the Middle East.

No doubt Hollywood producers are hoping Wesley Snipes will be released from jail so he can play the role of the commander in chief. Expect the screenplay to deviate from the truth. In the film version the President will probably overcome an army of Muslim bodyguards armed with AK-47s before kicking down a steel door and dealing with bin Laden mano a mano.

The true story is not nearly as engrossing. It is about a president desperate for reelection and seeking the spotlight for an American electorate who only glance at headlines.

But the question remains: Why did it take our government nearly a decade to kill the worst mass murderer of the 21st century? And why was our closest ally in the Middle East protecting him? In the final analysis, both Pakistan and the White House may have to answer for the medieval meltdown that is the Muslim world.

We are left watching The Barack Obama Tour, with visits by the President to Ground Zero, an hour-long interview on 60 Minutes and a jingoistic speech in front of America’s real patriots, the men who carried out the mission: the Navy SEAL assault force the President spoke to at Fort Campbell, Kentucky.

If you think I am wrong about Obama being an opportunist, consider what Gary D. Barnett wrote for The Daily Reckoning:

“There has never been such an opportunity for the U.S. government to stage a false flag event in order to start yet another war as there is today. The setup is obvious to Libertarians and some sane others, but it eludes most (sic) all Americans who are busy dancing in the street after the so-called killing of Osama bin Laden.

“Consider the timing of this attack by U.S. Navy SEALs, and then consider recent events. First, the economy is in shambles, unemployment is sky high, price inflation is excessive, and the U.S. military has been bombing civilians in an attempt to assassinate (Moammar) Gadhafi, including murdering innocent little children. Our money is being destroyed before our eyes. The wars are not going well for the ruling elite, and Obama’s ratings are horribly low at the beginning of his presidential crusade.

“What better reason then for an event to solidify the masses… ”

It is the dangerous masses, a growing Muslim mob that is becoming more belligerent to America each passing year. Arab governments collect billions of dollars from us while secretly supporting jihad when our backs are turned. What makes it all the more maddening is that a tidal wave of Arab hate created bin Laden and not the other way around.

More lives than a cat

According to the CBC TV program The Fifth Estate, there were nine previous attempts by the U.S. to kill or capture bin Laden before his death. They commenced with the Administration of former President Bill Clinton and finally succeeded this month. But should it take more than a decade and three Presidents to kill one man living next door to Pakistan’s version of West Point?

On more than one occasion, Pakistan’s government or security apparatus, the Inter-Services Intelligence (ISI), tipped off bin Laden. That is a bad deal to U.S. taxpayers who have provided Pakistan with more than $10 billion since 9/11. Then again, bin Laden was a cash cow for the Pakistani government, which only feigned being his bounty hunter.

But that gravy train might soon be over, as announced by Senator Dianne Feinstein, the head of the Senate Intelligence Committee. The Democrat from California said that if it turns out the Pakistani government knew where bin Laden was hiding, Congress may cut $1.5 billion dollars in annual aid to Pakistan. That should have happened years ago, and the Obama Administration knows it.

The problem with PakiSatan, a Muslim power with more than 100 nuclear warheads, is its intelligence service and the government itself are corrupt — begging for money from the United States in a pretense to arrest extremism while at the same time providing aid and support to Islamic extremists. The evidence comes from the Pakistani government which first insisted it knew nothing of the planned assault, then claimed to have provided crucial intelligence for the raid on the compound.

Pakistan can’t have it both ways, or can it? The government of Pakistan even wants an apology from Washington for conducting a military operation on its soil to get bin Laden. So strained have relations between the two countries become that, on occasion, U.S. troops have had to engage Pakistani soldiers in firefights, and the Navy SEAL team was prepared to shoot its way out of Pakistan should it have to engage the enemy… I mean ally.

It is hard to know who America’s real friends are in the Muslim world, as many Islamists are outraged over the killing of bin Laden. They don’t understand our outrage, and I partially blame Obama for that. Obama was sympathetic to the mosque being built next to Ground Zero and shared his outrage over Pastor Terry Jones’ burning the Quran.

American troops are still falling in Afghanistan as the Obama Administration props up corrupt and unpopular Muslim leaders. These diplomatic failures will in the end far outweigh the killing of one aging terrorist.

While it is wonderful to have bin Laden dead, others are carrying the torch of hate. In the end, one dead Saudi isn’t going to pave a road to peace.

Yours in good times and bad,

John Myers
Myers’ Energy & Gold Report

Filling Up On Stupid

The next time you pull into a gas station and pull out $100 from your wallet, take a look around. Notice the other vehicles that are sucking up the $4-per-gallon gasoline. My guess is you would be hard-pressed to find a late-model car, truck or SUV that has anything smaller than a 200-horsepower engine.

I know more than half-a-dozen family and friends driving vehicles that punch out a mind-numbing 300 to 500 horsepower. That is a lot of ponies unless you spend your Friday nights down at the local drag strip.

It was not supposed to turn out this way. Thirty-five years ago, I carpooled to the University of Calgary with my best friend Dave. The world had just come off of two OPEC-induced oil shocks and he drove a 1976 Honda Civic. It looked exactly like the car pictured at the top, replete with the tiny fog lights and the canary-yellow paint.

Dave’s Honda had a 91-cubic-inch engine that produced 53 horsepower. For four years, we drove 40 miles round-trip in it. On alternate weeks we took my car, a 1976 Mercury Capri. That was a bit of a hot rod for its day, generating 130 horsepower.

What I remember most about Dave’s Honda is that it got us to class on time, it never broke down and we passed a lot of gas stations. It was to be the wave of the future.

But in the early 1980s, crude-oil prices fell all the way to $12 per barrel. People stopped caring about fuel economy and became obsessed with horsepower and status.

From 1984 through 2010, the fuel economy of new U.S. cars increased… from 27 mpg to 27.5 mpg. Forget the tech revolution. In the past three decades, the average car can now go half a mile farther on a gallon of gasoline.

Source: Wikipedia

 

As a result, it is not hard to understand that demand for gasoline in the U.S. has nearly doubled in the past 35 years.

The Wall Street Journal addressed the issue a year ago with a story which asked: Whatever happened to fuel efficiency? According to the newspaper, “If there is a super fuel-efficient car in your future, then it was built in 1986.”

The Journal pointed out the Environmental Protection Agency’s top 10 list of cars with the best fuel economy in history. According to The Journal: “Many of the best haven’t been available in showrooms for years or even decades.”

“In addition to music, the 1980s were a high point for fuel-efficient cars,” concluded the WSJ. “Even when judged against today’s high-tech hybrids, cars like the 1987 Honda CRX shine.”

The CRX was updated version of my friend Dave’s ’76 Honda Civic. Like that Civic, the CRX was fun, dependable and it got 47 mpg! It turned out nobody wanted it.

The New “Stupid” Car

It almost seems as if Detroit doesn’t even know what the price of gasoline is.

A few weeks ago, Ford announced its newest Mustang, the Shelby Super Snake (try saying that four times in row). In case you are worried about merging onto the interstate, you can take comfort in knowing the Super Snake pumps out 800 horsepower. That is about the same horsepower Japan used in Zero fighters during World War II, and it will catapult today’s new Mustang from zero to 60 in fewer than 4 seconds. If luxury is more your style, you can pick up the Cadillac CTS-V super sedan with its 556-horsepower supercharged engine that gives you a top speed of 190 mph.

With products like these, it is not hard to see how Detroit has been broke and begging Washington for money since Chrysler first got on bended knee in 1980.

The real question is: Why do we ignore all common sense when it comes to things like cars, yet complain when we have to pay so much at the gas pump? (By the way, I don’t exempt myself from these criticisms. My lust for fast cars ended only after I almost killed myself in my 1995 Chevy Camaro. By today’s standards, the Camaro was relatively tame, generating just 275 horsepower and a top speed of only 155 mph.)

It’s the Economy that Needs Turbo-charging

Remember the 1980s when America had a fast economy and slow automobiles? Today, it is the opposite. Unemployment is a chronic problem. Credit is almost gridlocked. And inflation is starting to boil over. A single oil shock — say upheaval in Saudi Arabia — could send the U.S. economy over a cliff.

Even-higher gasoline prices would quickly choke off U.S. consumer spending, the one bright spot in a dull economy. Say gasoline gets above $7 per gallon. In that case, there won’t be much left to spend on clothes, entertainment and even basics like food and mortgages.

That is exactly what happened in the 1970s following two oil embargoes. The price of crude oil rocketed from $3 per barrel to $36 per barrel. Unemployment soared from 4.9 percent in 1973 to 5.6 percent in 1974 and then hit 8.5 percent in 1975. Then, things got bad. As a result, the Dow Jones Industrial Average lost two-thirds of its inflation-adjusted value by 1980.

All this happened just more than a generation ago, yet we Americans continue to make stupid mistakes — from the cars we choose to the leaders we elect.

For example, President Barack Obama wants to spend billions of dollars on new rail systems, new solar-energy power plants and electric cars — most of them built off a blueprint that doesn’t even exist.

My question is: Why don’t we improve our economic prospects by returning to tried-and-true technologies (like fuel-efficient cars) while exploring and developing America’s own fossil fuel reserves, especially those offshore and in Alaska?

The answer comes down to two words: power and corruption. Despite the fact taxpayers keep bailing out Detroit, U.S. automakers could not care less about what is good for the country. They care about padding profits and collecting big bonuses. And you don’t have to be an automotive engineer to see the fat profits in an 800-horsepower muscle car compared to an economy car that gets 50 mpg.

As a nation, we must start making smarter choices because we are running out of chances. When I was going to college in that Honda, the U.S. imported 6 million barrels of crude oil each day. Today, the U.S. imports twice that amount (see chart below). Yet Washington doesn’t bat an eye as Madison Avenue convinces us we cannot possibly be happy unless we have a 300-horsepower V-8 parked in the garage.

 

U.S. Imports of Crude Oil and Petroleum Products (Thousand Barrels per Day)

Through it all, Obama proclaims he wants to rebuild America, make it a Green utopia fabricated from fanciful wishes and borrowed money.

But listen hard and you can almost hear them coming: a mechanized army of Obama electric cars. What a shame when all we needed was to modernize that little yellow Honda and elect some good leaders.

Yours in good times and bad,

John Myers

Editor, Myers’ Energy & Gold Report