![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_7a.gif)
Gold and Silver • When the bond markets crash then gold and silver prices will
When the bond markets crash then gold and silver prices will go ballistic
Posted on 10 June 2013
You need to have some imagination to understand the bull market case for gold and silver. Not very much imagination, a little will do. The bears do tend to be traders rather than economists though we were saddened to see that Nouriel Roubini is about to trash his good name again by joining them .
Perhaps in his case an innately pessmistic nature has just fastened onto the wrong negative. He thinks inflation is beaten and gold is no therefore no longer needed as a hedge. The Fed can print money until the end of time without any meaningful consequences. He will look right, of course, until he is hopelessly wrong.
Bond market bubble
Why can we be so sure that the bond markets of the world are going to correct or more probably crash? And as bonds are inversely related to interest rates that means much higher interest rates. Higher interest rates and higher gold and silver prices are hardly incompatible, by the way.
That is how we got to the peak precious metal prices of the late 1970s when inflation and interest rates hit the roof. We are not there yet. Gold would be $5,000 an ounce and silver $250 if adjusted for real inflation since then. But that is the whole point, that is where we are most definitely headed.
Take the UK, for example. Bond yields have recently dropped as low as 1.5 per cent. They have not been lower in 300 years, not even in the Great Depression. This just has to be a low, does it not? How much lower could it possibly go? So we will have the inevitable pull back in the reverse direction.
Follow the money
Where will all that money go, and don’t forget government bond markets are the largest and most liquid of the global financial markets, much bigger than the stock markets?
It could go into cash but then if inflation is going higher then cash is not so attractive. It could head into equities, although it is far more likely that stocks will take a parallel fall as a high interest rate environment is hardly good for business profits.
No investors get corralled into precious metals as the ultimate financial bubble, the last in the series of asset price bubbles. Now the brightest investors, not very likely economists, like hedge fund managers George Soros and John Paulson know this and have made big wagers on it.
The problem is always timing. But as Baron Rothschild once remarked buying and selling early was how he made his fortune. Why not just buy and hold gold and silver? Realistically how far off can a bond market event be from happening?
http://www.arabianmoney.net/gold-silver … ballistic/
Statistics: Posted by yoda — Mon Jun 10, 2013 12:05 am
View full post on opinions.caduceusx.com
Agriculture • Wheat prices dip after US foresees huge world crop
Wheat prices dip after US foresees huge world crop
Wheat prices extended losses after US farm officials lifted the bar on estimates for this year’s world harvest of the grain, and cautioned over heightened competition among exporters to secure orders.
The US Department of Agriculture, in its first forecasts for 2013-14 season, pegged the world wheat harvest at a record 701.10m tonnes, lifted by a sharp recovery in former Soviet Union harvest, and increases in Australia, Canada and the European Union too.
"Production is projected higher in all of the world’s major exporting countries," the USDA said in its benchmark Wasde report on world crop supply and demand.
Indeed, the Russian harvest was seen rebounding 49% from last year’s drought-affected levels to 56.0m tonnes, narrowly overtaking US production.
The world figure was above forecasts from other commentators, including a 695m-tonne forecast from the United Nations Food & Agriculture Organization on Thursday, and a 680m-tonne estimate from the International Grains Council.
Export competition
With all major world wheat exporting enjoying strong harvests, the US itself faced a drop of nearly 10% in its own shipments, to 25.2m tonnes (925m bushels).
Wasde wheat estimates, change on last and (on market forecast)
2012-13 US carryout stocks: 731m bushels, unchanged, (-2m bushels)
2012-13 world carryout stocks: 180.17m tonnes, -2.089m tonnes, (-1.36m tonnes)
2013-14 US carryout stocks: 670m bushels, N/A, (+12,000 bushels)
2013-14 world carryout stocks: 186.38m tonnes, N/A, (+2.01m tonnes)
Sources: USDA, ThomsonReuters
"Large crops for major export competitors limit opportunities for US wheat," the USDA said.
The impact was exacerbated by strong crops in many importing nations, with Middle Eastern purchases, for instance, expected to drop more than 20%.
"Also affecting global trade prospects are year-to-year production increases for major importers, the Middle East and North Africa, where weather has been favourable for winter crops since seeding last fall," the USDA said.
http://www.agrimoney.com/news/wheat-pri … -5823.html
Statistics: Posted by yoda — Sun May 12, 2013 12:37 pm
View full post on opinions.caduceusx.com
Agriculture • Prices for corn and soybeans, five years from now
Prices for corn and soybeans, five years from now
Stu Ellis, FarmGate blog | Updated: 05/10/2013
Although challenges to planting the 2013 crop may provide some degree of support to corn and soybean prices, they have quickly faded from the 2012 highs and are threatening to diminish further from the highs that began in 2007. When corn prices were pumped up from ethanol demand and soybean prices had to bid for acres, a new era of commodity prices was declared by economists. Since we are six years into that era and prices are settling down as predicted, how far down will they settle, anyway?
Iowa State University economists Dermot Hayes and Lisha Li leave little doubt they believe commodity prices are high now, but offer some long term projections which may be valuable for farmers to engage in some long term financial planning. After all, if commodity prices fade further, it may be hard to make the cash rent payment. The economists offer a formula for projecting corn and soybean prices out for five years, using the same type of calculations used by USDA’s Risk Management Agency for establishing revenue guarantees for crop insurance.
Their contention is that economic models designed to predict prices are not as good as the use of commodity futures prices, since traders are using information that helps establish prices. However, the more distant the contract the less the liquidity behind it and the less valuable it becomes as a predictor of prices into the future. Subsequently, the Iowa State economists have projected a six year price trend, based on the futures market, plus an implied volatility factor. But they are quick to qualify the accuracy of their projection, “Of course, any projected price level is subject to enormous uncertainty, and this uncertainty expands as one looks further and further into the future.”
Based on graphs that depict the price trend from their formula, they say corn futures will fall to a level just under $5 by December 2017. And soybean prices are expected to fall to about $11 per bushel by the same time frame. They say, “These prices suggest that futures traders expecting continued demand growth will hold prices at what can be considered historically high levels. However, the projected prices are substantially below current levels, indicating that traders expect world supply to expand to eliminate the current scarcity of corn and soybeans.”
While those would be considered average prices for corn and soybeans five years out from now, there is also the change those might not be achieved, and Hayes and Li offer a “worst case scenario” made up of the bottom 10 percent of potential prices. Any farmer who is creating a valid marketing plan should be aware of the potential for the worst-case-scenario.
Year
Corn
Soybeans
2013
$4.27
$9.69
2014
$3.85
$8.89
2015
$3.41
$7.85
2016
$3.12
$7.09
2017
$2.89
$6.55
The Iowa State economists say, “These extremely low prices levels are unlikely, but they do give one pause.”
Summary:
Based on futures prices and their implied volatility, which are used for setting crop insurance revenue guarantees, it is also possible to project corn and soybean prices several years out. This will help farmers with cash flow projections.
http://www.cattlenetwork.com/cattle-new … 08131.html
Statistics: Posted by yoda — Fri May 10, 2013 9:49 am
View full post on opinions.caduceusx.com
Agriculture • Wisconsin farmland prices soar in 2012, continuing trend
Wisconsin farmland prices soar in 2012, continuing trend
Michael Sears
Across a five-state region that includes Wisconsin, farmland prices were up 16% in 2012, according to a recent report from the Federal Reserve Bank of Chicago.
Interest rates are low, demand for corn high, but is it enough?
By Rick Barrett of the Journal Sentinel April 1, 2013
The value of prime Wisconsin farmland continues to climb as farmers count on high crop prices and low interest rates to cover their costs for corn and soybean acreage.
With spring planting only weeks away, farmers are facing some of the highest prices for land and land rental they have ever seen.
Across a five-state region that includes Wisconsin, farmland prices were up 16% in 2012, the third-largest increase since the late 1970s, according to a recent report from the Federal Reserve Bank of Chicago.
That’s on top of a 22% increase in 2011 – the biggest jump in farmland prices in 35 years.
Fueled by a profitable grain market that includes corn to produce the biofuel ethanol, the demand for farmland has resulted in bidding wars – with some property selling for more than $10,000 per acre in Wisconsin and $20,000 an acre in Iowa.
"Perhaps the most surprising aspect of 2012′s strong gain in farmland values was that it occurred in the midst of the worst drought in the Midwest since 1988. Moreover, 2012 marked the third consecutive year of significant jumps in agricultural land values," the Federal Reserve noted.
Wisconsin farmland values increased 11% in 2012, compared with 20% in Iowa and 18% in Illinois.
That’s largely because Wisconsin farmers grow more corn and soybeans for their own livestock feed, rather than selling the crops on the commodities markets.
Even with a recent drop in price, corn remains profitable because of the drought that left grain in short supplies.
Nationwide, farmers intend to plant 97.3 million acres of corn this year, the most since 1936, according to the U.S. Department of Agriculture’s spring planting survey. Wisconsin farmers are expected to plant 4.4 million acres of corn, about the same as last year.
Rising land values have caused some worries about a potential farmland price bubble like the one seen in the 1980s, when farmers lost their land from the lethal combination of falling commodity prices, too much debt, and rising interest rates.
Today, there’s concern that the federal government could back away from raising the amount of ethanol required in gasoline and send corn prices into a downward spiral.
"There’s a lot of uncertainty on the horizon. If we move away from corn-based ethanol, that certainly would take the legs out from under the corn market. Farmland values would drop, that’s for sure," said Alex Breitinger, a commodities futures trader in Valparaiso, Ind.
But farmers are carrying much less debt now, thanks to record income from high commodity prices. The current land rush would be more worrisome if it were fueled by credit rather than cash, Breitinger said.
Overall, the farm economy is in very good shape, said Sam Miller, managing director/agriculture for BMO Harris Bank.
"There’s a lot of talk about a farmland price bubble. But the last time we experienced a big correction in land values, we had very high interest rates, and we also had loan-to-value levels that were very high. Land isn’t highly leveraged now like it was 25 years ago," Miller said.
Higher farm expenses, including land rent, could put a damper on profits this year.
Some farmers are paying several hundred dollars an acre to lease cropland this year, and there’s not as much available land as there’s been in past years.
"I have gotten a lot of calls concerning rents. It’s hard to find much for less than $100 an acre," said Kevin Jarek, a University of Wisconsin-Extension agent in Outagamie County.
With bigger farms and bigger machinery, more farmers are willing to travel farther to grow their crops – increasing the competition for buying and renting cropland.
Last year, rents jumped to $300 an acre for the most fertile ground in south-central Wisconsin.
Farmers can reduce some of their costs by doing things such as buying cheaper seed, although that could mean lower crop yields. But it’s tough for someone to get a break on land costs unless the person is buying or renting from a family member.
The cost of land, Jarek said, can determine whether a farmer makes a profit or loses money on a crop.
http://www.jsonline.com/business/wiscon … 72241.html
Statistics: Posted by yoda — Tue Apr 02, 2013 11:06 pm
View full post on opinions.caduceusx.com
Gold and Silver • Silver Prices Before the Monetary Collapse
Silver Prices Before the Monetary Collapse
Has the silver market been pricing in the coming collapse?In a word, no!
Markets dominated by the impulses of real people largely no longer exist. The machines have taken over, as bots read the news and respond rapidly with large transactions.
No matter how volatile world markets will get, remember that there will be more Cyprus-type events, more Quantitative Easing programs, more denials of the importance of inflation, more threats from Central Banks to remove liquidity, more mining sector failures and more bubble callers designed to influence mainstream investor opinion.
COMEX Dominates Metals Pricing
Prices for physical precious metals still move based on the COMEX futures price action. If silver futures rise, physical prices go up, and if futures fall, physical prices drop. Furthermore, just like always, silver’s price action typically depends on the monthly event cycle.
For example, trading in silver is always heavy around the COMEX options expiration dates, as professional option traders actively rebalance their portfolios to remain delta neutral.
Furthermore, several key events tend to provide intuitively positive news for the precious metals. These include the release of the FOMC Minutes, speeches or testimony by Fed Chairman Ben Bernanke, Presidential press conferences, and the various jobs reports that are dominated by theNon-Farm Payrolls data release.
Hedge funds have reduced long silver exposures and seem to be maintaining a short bias.Commercial shorts have reduced their net positions.
Overall, it seems that the silver market has reached a likely bottom for now. This has nothing to do with deflation, inflation, bond markets or currencies. It is instead all about the paper trade.
Deflationary Fears and Silver Demand
Economies tend to naturally go through periods of deflation and inflation as they weaken and then strengthen. Long term silver investors should beware of the futility of focusing on this cycle to forecast demand for silver.
U.S. government budget deficits are running $1.2 trillion per year, and unfunded liabilities are increasing at rate of $6.9 trillion a year. In just a few years, the Medicare system will be bankrupt, thereby adding another $1 trillion per year to this deficit. Budget deficits will only grow from here.
The deflationist’s theory has always been that when pushed into a corner, the politicians will make the tough choices and implement the necessary budgetary cuts, but they will not.
The deflation argument might seem correct until the day that the inflationists are proven right, and the whole thing spirals out of control in the blink of an eye. This traumatic event will most likely take the form of a currency crisis and an international crash in the U.S. Treasury market.
How Silver Looks Now
Industrial demand for silver might well decrease in future as cheaper replacements like Graphene are found.Nevertheless, if that happens, the chronically undervalued silver market would probably go right back to focusing on the unresolved problem of this mountain of outstanding sovereign debt.
In a weak economy, people start questioning the creditworthiness of those who have taken out existing loans that they may not be able to repay.
The global economy will eventually experience the same sort of severe financial crisis that the United States experienced in 2008, in which manyfinancial institutions would have failed had the U.S. government not stepped in with truckloads of just printed bailout money. Government intervention in businesses seems to have now become a regular occurrence.
Remember, silver is just a commodity until the day that the increasingly tenuous paper currency based financial system finally unravels. Then it will once again becomehard money, and investors who want to preserve at least some of their wealth through such a crisis will wish they owned it.
http://www.silver-coin-investor.com/Sil … lapse.html
Statistics: Posted by yoda — Fri Mar 22, 2013 10:17 am
View full post on opinions.caduceusx.com
Gold and Silver • The “Fix” Is In for Gold and Silver Prices?
The “Fix” Is In for Gold and Silver Prices?
by Washingtons Blog – March 18th, 2013
Gold and Silver Prices Are Set In Libor-Like Daily Conference Calls Between a Handful of Big Banks
There is increasing evidence that the gold market is manipulated. The amount of physical bullion may be greatly over-stated, and gold may be manipulated in the same way that Libor rates are:
The Telegraph noted Monday:
[Bank of England executive] Paul Tucker told MPs that Barclays’ abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information, suggesting that other markets should now be investigated.
An official inquiry into Libor – which helps determine interest rates for householders and businesses – should be broadened to include several over markets where banks are trusted to report their own data, he said.
***
The Libor scandal could be repeated in a number of other “self-certifying” markets where prices are determined, he said.
“Self-certification is clearly open to abuse, so this could occur elsewhere,” he said.
A Financial Services Authority inquiry into Libor should be extended to other self-certifying markets, he said. The Treasury said last night that the review, led by Martin Wheatley, was free to examine markets other than Libor.
***
Some markets in gold and oil are also based on self-certification.
Mainstream commentators are starting to publicly discuss manipulation in the precious metals markets. See this, this and this.
Avery Goldman noted last year:
On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan’s application to become a licensed vault facility, using a “self-certification” process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both “weighmaster” and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.”
ETFs, bullion banks, storage facilities and other holders of gold that are “self-certifying” – without any checks by third party auditors – have been caught misreporting and raiding even allocated precious metals accounts, and using the loot to speculate or pay off other debts.
As such, manipulation in the self-certifying portions of the oil and gold markets could have a huge impact on assessing the true health of financial institutions, the economy as a whole, and the assets of individual investors.
Yesterday, the Guardian reported on the stunning similarities between the daily “fixing” of the gold price and of the Libor rate:
London’s financial sectorwas last night bracing itself for another official investigation into alleged price-fixing following reports that a US regulator is considering launching an inquiry into the City’s gold and silver markets.
The Commodity Futures Trading Commission is discussing whether the daily setting of gold and silver prices in London is open to manipulation, according to the Wall Street Journal, which stated that the CFTC is examining whether prices are derived sufficiently transparently.
The system of setting gold prices in London is unusual and involves a twice-daily teleconference involving five banks – Barclays, Deutsche Bank, HSBC, Bank of Nova Scotia and Société Générale – while silver is set by the latter three. The price fixings are then used to determine prices worldwide.
***
The fixing of the gold price in London dates back to September 1919, when the process involved NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps & Wilkins.
At the start of each gold price-fixing, the chairman announces an opening price to the other four members who relay this price to their customers. Based on orders received from them, the banks declare themselves as buyers or sellers at that price.
Provided there are both buyers and sellers at that price, members are then asked to state the number of bars they wish to trade.
***
If at the opening price there are only buyers or only sellers, or if the numbers of bars to be bought or sold does not balance, the price is moved and the same procedure is followed until a balance is achieved. The silver fix dates back to 1897.
http://www.ritholtz.com/blog/2013/03/th … er-prices/
Statistics: Posted by yoda — Mon Mar 18, 2013 12:14 am
View full post on opinions.caduceusx.com
Canadian • 44% decline in Canadian housing prices – Moody’s
Moody’s ‘stress’ analysis assesses 44% decline in Canadian housing prices
Republish ReprintReprintsRepublish OnlineRepublish OfflineBarbara Shecter | 13/03/11 More from Barbara Shecter
.
Tyler Anderson/ National Post“As with Australia, Spain and the U.K., we expect house prices in Canada to suffer the most due to the misalignment of current house prices with historic fundamentals,” the ratings agency said..
.A severe economic shock, such as the kind that hit Japan in the early 1990s and California and Nevada in 2006, would have to knock Canadian housing prices down by 44% to cause securities linked to Canadian mortgages to lose the highest ratings assigned by Moody’s Investors Service.
House prices to remain flat for 10 years: TD
OTTAWA — Canada’s real estate bonanza of the past decade has come to end and the long-term trend as one of the most profitable places to invest is also not encouraging, a new research paper from the TD Bank argues.
.Such a house price decline, were it to happen, would be driven primarily by the phenomenal upswing in Canadian home prices over the past decade, Moody’s said.
Canada joins Spain, as well as the United Kingdom and Australia, in the ratings agency’s assessment of countries where growth in housing prices over the past 10 years has driven their values away from sustainable market fundamentals and into “overheated” territory.
“As with Australia, Spain and the U.K., we expect house prices in Canada to suffer the most due to the misalignment of current house prices with historic fundamentals,” Moody’s said.
The ratings agency released the report Monday that included its housing market analysis, along with request for comment on its proposed approach to analyzing the credit risk of non-insured mortgage pools.
“Moody’s Investors Service is in no way predicting the extent nor the causes of a large scale house price depreciation in Canada,” spokesperson Thomas Lemmon said in an emailed statement.
“Along with many other factors, the home price component of our analysis provides that in order to achieve our highest rating, a mortgage pool would have to be able to withstand a 44% downturn.”
Moody’s is the second ratings agency in as many weeks to seek input on a proposal to change the methodology used to analyze securities linked to mortgages.
..Last week, London and New York-based Fitch Ratings unveiled a proposed a two-step model that reduces home prices to a “sustainable” value based on a number of factors including data provided by Canadian banks. It then further subjects the homes to a “stressed market” value decline assumption.
Fitch said Canadian home prices are overvalued by about 20%.
Ratings agencies came under harsh criticism in the aftermath of the financial crisis of 2008 for what was perceived as a failure to predict the U.S. housing market meltdown that precipitated it.
Since then, there has been an attempt to strike a balance of thorough analysis with timely analysis, according to Grant Connor, an associate in equity research at National Bank Financial who previously worked on structured finance at Moody’s.
“At the simplest level, a stress case scenario should represent a realistic worst case scenario,” Mr. Connor said.
As with Australia, Spain and the U.K., we expect house prices in Canada to suffer the most
.The model proposed by Moody’s on Monday determines house price “stress” rates, used to assign ratings, by looking at variable factors such as house price and income growth over 10 years, and fixed factors such as monetary policy.
The analysis of housing prices in the event of economic shocks includes data from Finland in 1989, Japan in 1991, and Hong Kong in 1997, as well as Ireland, Nevada, and California in 2006.
The “variable” analysis assesses how much current house prices have departed from “sustainable” market fundamentals. The assumption is that, in the event of a severe economic shock, expected demand that has been baked into current house prices will not materialize. In Canada, the growth in house prices over the past 10 years has ‘’far outstripped” the growth in incomes, according to Moody’s.
“Think of it like an elastic [being stretched],” explains Mr. Connor of National Bank Financial. “The snap back is going to be a lot harder.”
Moody’s also assesses the “fixed” factor, which rates how vulnerable the consumer is to economic shocks, whether there is a large oversupply of houses, how effectively monetary policy can alleviate the shock, and how dependent the economy is on the real estate sector.
Canada scores better in this area, said Mr. Connor, because the stability of the country and its monetary policy is taken into consideration. While Canada’s household debt to income ratio is very high, at 154%, Moody’s notes that savings rates are higher than in some jurisdictions such as the United Kingdom.
In addition, Moody’s does not seem overly concerned about an over-supply of housing with the possible exception of the condominium market.
.
http://business.financialpost.com/2013/ … =2e05-c069
Statistics: Posted by yoda — Mon Mar 11, 2013 5:24 pm
View full post on opinions.caduceusx.com
Canadian • Canadian home prices are overvalued by about 20 per cent
TARA PERKINS – REAL ESTATE REPORTER
The Globe and Mail
Published Monday, Mar. 04 2013
The rating agency’s estimate of how inflated prices are was included Monday in details of a new financial model that it is proposing to use to estimate the potential losses on pools of residential mortgages, which form the backbone of a number of securities that Fitch rates.
The agency said that, based on its sustainable home price model, it estimates “at the time of publication, that prices are overvalued by approximately 20 per cent in real terms across Canada, with regional variations.”
But “because of the effects of inflation and price momentum, it is not expected that prices would drop by this amount,” it added. “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this timeframe, the actual observed decline in prices could be as low as 10 per cent.”
The agency noted that prices have continued to climb, with small corrections, since 1996, “and specifically since 2008 have risen when underlying fundamentals suggest that growth is unsupportable.”
“This story is similar throughout Canada,” it added. Its estimates of the overvaluation in Ontario, Alberta, British Columbia and Quebec are 21 per cent, 15 per cent, 26 per cent, and 26 per cent respectively.
“Actual nominal [price] declines could range from the low single digits for Alberta, up to more than 15 per cent for B.C. and Quebec over the next several years assuming values start falling immediately and taking into account inflation and other market dynamics,” it said.
Among the four largest provinces, Alberta is the least overvalued because it already went through a house price correction when crude oil prices fell in 2008, and prices have not returned to their 2007 peak. Prices in B.C., on the other hand, quickly rose to record highs after the global recession.
Generally, while low rates have kept payments down for all borrowers, higher home prices have led to larger mortgages, eroding much of the benefit for new buyers, Fitch said.
“Price-to-rent ratios are now 60 per cent higher than their 30-year averages,” it added. And the average property price is now five times average disposable income, up from the long term average of 3.5 times
http://www.theglobeandmail.com/report-o … le9257855/
Statistics: Posted by yoda — Mon Mar 04, 2013 12:30 pm
View full post on opinions.caduceusx.com
Government Greed Gooses Gas Prices
We recently noted that gasoline prices are up 75 cents since December and motorists in southern California are now paying as much as $6 a gallon. But Golden State motorists will soon be paying even more, “no matter what market forces do,” as one report puts it, because California’s State Board of Equalization just jacked up the excise tax by nearly 9 percent, 3.5 cents, to 39.5 cents a gallon. The increase kicks in on July 1, when more families go on vacation, if they can afford it.
Californians are enduring “the longest stretch of hard times we’ve ever seen,” according to Mark DiCamillo of the Field Poll, and for the sixth straight year more Californians than not say they are worse off than a year ago. Those hardships, and California’s high income and sales taxes, do not appear to be a consideration for a tax board constantly seeking new ways to shake down the people.
Laws signed by former Gov. Arnold Schwarzenegger mandate that the board “adjust” the excise tax by March 1 every year. The board expects the tax hike to generate more than $500 million from July 1 through June 30, 2014. Such is the greed for revenue that during the 1990s the board proposed that California tax editorial cartoons as though they were works of art purchased in a gallery. The “laugh tax” made the state a national joke but did nothing to stop the crusade for higher taxes.
As for market forces, the United States is now producing more than 7 million barrels of oil a day, the highest since 1992, and according to one report, in a few years the nation will “overtake Saudi Arabia as the world’s top oil producer.” If approved, the Keystone pipeline would bring 700,000 barrels of crude oil from Canada every day. But no matter what market forces do, and even in the most severe economic downturn in modern times, government wants you to pay more, not less, for gasoline. Meanwhile, if you make it to July, have a great vacation.
View full post on MyGovCost | Government Cost Calculator
Soaring Gasoline Prices: Why the President Wants You to Pay More
Gasoline prices are up 75 cents a gallon since December and now double what they were when President Obama was inaugurated. Motorists in southern California are already paying more than $5 a gallon and prices are headed resolutely skyward. What could be the reason?
First, understand that soaring gasoline prices are not due to double-digit inflation of the type the United States experienced during the administration of Jimmy Carter. Indeed, the prolonged recession and shrinking economy under Barack Obama help keep inflation in check.
Neither are soaring gasoline prices due to an embargo by OPEC, Saudi Arabia, Iran, Venezuela or any other oil producer. So motorists’ miseries can’t be blamed on malevolent foreigners trying to punish the Great Satan.
Soaring gasoline prices are definitely not due to a shortage of crude oil. Indeed, new technologies have facilitated extraction from shale deposits and traditional oil fields in the United States.
Soaring gasoline prices cannot be blamed on declining car sales. Indeed, car sales continue to climb and the vast majority of the new vehicles sold are powered by gasoline engines.
Gasoline prices are soaring for a simple reason: that’s what president Barack Obama and his fellow climate-change fundamentalists want. Recall that Steven Chu, Obama’s former energy secretary said the administration had to figure a way to make U.S. gasoline prices equal those of Europe. In climate-change orthodoxy, high gasoline prices force the nation to think about mass transportation, alternative energy sources, electric cars and such.
Gasoline prices will continue to soar because president Obama is likely to reject the Keystone pipeline that would bring 700,000 barrels of crude oil from Canada every day. That would decrease dependence on OPEC but the president has expressed little concern about that. Canada is pushing for U.S. acceptance of the pipeline but the president shows little concern for the economic well being of longstanding friends and allies.
The president no longer faces reelection and climate-change fundamentalists have been demonstrating in Washington and demanding that he reject the pipeline to preserve his environmental legacy. That will be hard for the president to resist. So embattled Americans should look for gasoline prices to climb even higher. That’s what the president wants.
View full post on MyGovCost | Government Cost Calculator