October 20, 2009 | www.CaseyResearch.com Buffaloes and Bureaucrats
In yesterday’s edition of the Daily Dispatch, I closed by commenting on a much circulated video of climate change skeptic Lord Monckton. In that video, he shares his opinion that by signing the climate change agreement now being worked up for the UN Copenhagen Climate Change conference in December, the U.S. would be essentially signing away its sovereignty.
Last night, I made my bedtime reading the 181-page United Nations Framework Convention on Climate Change agreement that Monckton referenced.
If you can read this document without getting incensed and perhaps even a little green around the gills, you are made of sturdier stuff than I. While I did not get all the way through the bureaucratic brick, from what I did read, the following principles/objectives are clear:1) The developed world owes a â€œcarbon debtâ€ to the developing world, which should be settled posthaste by providing billions of dollars in additional aid each year.
2) The document grossly conflates climate change alarmism with economic development. And I quote…
â€œDeveloping countries face not only the additional challenge of adaptation but also the need to put their economies on a sustainable path. All Parties agree that developing countries face serious adverse effects of climate change as well as threats to their future economic potential due to insufficient access to shared global atmospheric resources.â€
(Ed. Note: I am shaking my head at that last line, which seems to say that because of proposed new emissions caps, the developing countries will have to remain quiet backwaters that rely for their subsistence mostly on the billions in fresh aid. )
3) There is no further debate as to whether or not the world is on the path to climate-related destruction, or whether it is entirely the fault of mankind. Those are officially settled in no uncertain terms in the document, even though there is no consensus among real scientists (versus the pretend sort).
4) It makes a clear attempt to squeeze as many recipient nations as possible under the tent into which the developed nations are expected to throw their many billions. Again, below I provide a quote, leaving intact the proposed edits that are still found in the document. To assist you in translating same, I am boldfacing the definitional phrases.
â€œ[Recognizing that sustainable development that ensures capacity for] [A shared vision recognizes that] [adaptation to the adverse effects of climate change is the most important issue for] [the most vulnerable countries are] all developing countries, [particularly] low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change, [as stated in preambular text 19 of the UNFCCC].â€
So, just to be clear, if you are a developing country with a coast line, or an arid or semi-arid regionâ€¦ or an area that occasionally floods, or suffers drought, or you have mountains, then it’s under the tent and onto the gravy train for you.
In other words, every developing country in the world will qualify.
Now, as fast as I read, I was unable to battle through the bureaucratese to the parts where the U.S. signs over its sovereignty although there are many clauses even in the early going that are strongly suggestive of same.
For instanceâ€¦12. [All Parties should take mitigation actions under an enlightened sense of solidarity] [All Parties should contribute to the global effort to combat climate change], in accordance with their common but differentiated responsibilities and respective capabilities [ a spectrum of effort is envisaged]. All countries will need to develop comprehensive climate response strategies, in line with their individual responsibilities and capabilities, that achieve an emission trajectory to a low emission economy.
(Ed. Note: Can you say â€œFrom each according to their abilities, to each according to their needsâ€?)13. [[In this context,] developed country Parties [have committed to] [should] demonstrate that they are taking the lead in modifying [the] long-term trends in emissions [reduction] consistent with the objective of the Convention [and in accordance with its provisions and principles.] In doing so, Annex I Parties pledge to meet their targets fully, effectively and in a measurable, reportable and verifiable manner.
(Ed. Note: â€œAnnex I Partiesâ€ are the developed countries the milking cow in this treaty.)
So, is this treaty something to be concerned about? Yes and no.
Yesâ€¦ because if this treaty were to be signed in Copenhagen, it would open up a whole new chapter in the global reach of government, including billions in new spending and tax mandates.
Noâ€¦ because as feeble-minded as people in power can be, I have to believe that no leader of a developed nation is going to sign on to this insanity. If I’m wrong, however, then good luck to us all we’ll need it.
For those of you made of sturdier stuff, you can download the document and delve into it yourself, by following the link just below.
Text of the Convention
Before moving on, if you feel like taking a break for some humor, you can read the posting on Watts Up With That? on the court in Louisiana that ruled the unfortunates living in the path of Hurricane Katrina can sue energy companies over the global warming that the plaintiffs’ ambulance chasers say caused the hurricane.
Hurricane Katrina Victims Have Standing To Sue Over Global Warming Watts Up With That?
All of which makes me wonder as I read this stuff if I’m still asleep and having a dreamâ€¦ or a nightmare, such as the case may be.
The Housing Trap
No surprise to you, dear readers, but the latest data find that fewer houses are being built than anticipated in the celebratory gushings about the many green shoots now rising steadily into the blue sky.
According to reporters at Bloomberg, the likely reason for the unexpected slowdown is the builders’ growing and entirely valid concern that demand will again dry up once the government’s $8,000 sticky trap for new homeowners is withdrawn on November 30.
Proving that the first-time homeowner should energetically avoid these traps traps that, once stepped into, leave the recipient inextricably stuck with taxes, upkeep expenses, repairs, etc. our own Jake Weber has produced a chart that does much to dispel the popular illusion that real estate was uniformly a good investment over the recently deceased bubble years. Here’s his reportâ€¦
The stretch from 1997 to 2007 was the helium-rich years of a multi-decade-long credit bubble, when buying and selling dot-com stocks was replaced with suburban houses as the path to riches.
However, IRS data show that during these years, as Americans pocketed $5,312 billion in capital gains, they simultaneously shelled out $5,252 billion in mortgage interest and real estate taxes a difference so small as to be a rounding error. Over the same period, homeowner costs rose 122% for mortgage interest and 112% for property tax, while personal income increased by a paltry 63%. The cost of home-sweet-home ownership was eating Mr. & Mrs. Suburbia alive.
This 10,000-foot view is just a snapshot of the big-picture trend. There were obviously home flippers and stock market players that profited handsomely during the market’s boom. And we haven’t factored in the balance between taxes saved from interest/taxes written off and taxes owed from capital gains. But as a whole, did the nation grow any wealthier as a result of Americans being obsessed with selling their houses to each other? At best it looks like a zero-sum, tax code-induced illusion.
As Doug Casey has long and often said, a house is not an investment, it’s a consumer good, albeit the most expensive one that most Americans will ever make. And consumer goods are not, as a rule, great investments.
For over 28 years, Doug Casey has spotted the big-picture trends emerging throughout the investment universe. But more importantly, he understands how to profit from them by investing ahead of the crowd. So what does Doug Casey think makes for a great investment in today’s frenzied markets? Find out now by accepting our no-risk, 100% satisfaction guaranteed trial subscription to The Casey Report by clicking here.
David again. Whereas most housing hasn’t been a particularly good investment, gold certainly has been. On that topic, here’s some breaking news from Jeff Clark, editor of our popular Gold & Resource Reportâ€¦
Buffaloes Are Back!
By Jeff Clark
You may recall the U.S. Mint stopped producing the American Gold Buffalo coin late last year when demand for all things gold and silver skyrocketed and they couldn’t keep up. I was personally disappointed, because I love that coin.
Well, I’m glad to report it’s back on sale! Beginning this Thursday, October 22, you can once again buy the 2009 Gold Buffalo. The U.S. Mint is officially releasing the coin for sale that day, and you can purchase them from the Mint directly or from any dealer who’s got them available.
What many people don’t know is that the Gold Buffalo is the only U.S.-minted 24-karat gold coin. Wait, you’re saying, isn’t the American Eagle 24 karats? Nope, it’s a 23-karat coin; it contains one ounce of gold, but it also contains an alloy, about 10%, presumably to make it sturdier. The Buffalo contains no alloy and is thus the purest form of gold you can buy.
If you’d like to own a Buffalo, I’d suggest calling Asset Strategies International (1-800-831-0007). Why? Even though you can’t buy it today, they’ll take your name and number now and then call you on Thursday to lock in a price. They’ve also got the best price I’ve seen: they’re currently asking a 6% premium (or lower for larger orders).
This is a better deal than Kitco, for example, because they’re not taking orders yet and also said their premium is likely to be at least 8.25%. Keep in mind, though, that premiums could easily be forced up if the demand, like last time, is strong. I suspect it will be for this popular coin.
If you think the gold price is going to fall and could thus get it cheaper, I’ll mention that the U.S. Mint projects they’ll produce enough coins to keep up with demand. This doesn’t mean your dealer couldn’t run out, but hopefully the mint’s calculations are correct and there will still be plenty of coins available at later times. No guarantees, though, and premiums will certainly fluctuate.
[Not all precious metal dealers are created equal. Want to know whom we trust to buy our gold and silver from? Check out our archived issues by subscribing to the new Casey’s Gold & Resource Report for just $39. Click here to learn more.]
Is Limited Government an Oxymoron?
This past Sunday, a television station in Texas ran a program by the title above, featuring Thomas Woods of the Ludwig von Mises Institute and our own Doug Casey.
If you’ve got the time, give it a watch, as it offers worthwhile insights into the philosophical underpinnings of the case for small governments.
Watch it hereâ€¦
Is Limited Government an Oxymoron?
Fannie & Freddie are worthless. Yesterday, leading bank analysts Keefe, Bruyette & Woods (KBW) updated their opinion of Fannie Mae and Freddie Mac, the two government-sponsored mortgage providers. Between them, Fannie and Freddie backed 68% of all mortgages generated so far in 2009.
So, how, according to KBW, are they doing?
Well, despite the government (taxpayers) pumping a cool $98 billion into these lap dog institutions, KBW has cut their target price from $1.00 to $0.00. Yes, zero.
While they used more genteel terms to describe the dysfunctional pair, their final analysis might be summed up as saying that Fannie and Freddie are a couple of bungling bureaucratic and bankrupt black holes whose business has largely been bank-rolling billions in bad loans.
Olympic Dam Update.As reported here previously, Australia’s massive Olympic Dam mine recently suffered severe damage to its main shaft. Today we found out just how severe, when mine operator BHP Billiton declared force majeure on contracts tied to the mine’s production. In its announcement, BHP said they expected to produce 20% less uranium and copper from the mine for a period of up to six months.
Glancing over the portfolio of uranium companies now being followed by Casey’s Energy Report, you can see the results of this announcement in spiking share pricesâ€¦ with Denison Mines as a representative example, up over 7% so far today, despite the broader markets and even gold heading in the opposite direction.
(For all our favorite uranium picks, and much more, try a risk-free, three-month subscription to Casey’s Energy Report today.)
And with that, dear reader, I must sign off. As I do, I see the U.S. stock market is giving back most of its gains from yesterday. Be careful, we are on thin ice.
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