Wednesday, December 8, 2021

In Florida, You Can’t Use Your Own Solar Panels in a Crisis

by Michael Krieger, Liberty Blitzkrieg:

When it comes to the U.S. economy, the “con” part offers the best description of the current relationship between business, government and the preyed upon consumer. The way things work in early 21st century America is large businesses bribe politicians in a variety of ways at both the local and federal level, and the end result is laws that are designed to increase corporate profits at the expense of the wellbeing and freedom of the American public. Politicians end up with financial war chests to run their next campaign, while bureaucrats see a lucrative opportunity to swing through the ever spinning revolving door should they play ball with lobbyists and their patrons. Yes, there’s always some degree of corruption within any society of humans, but there are peaks and valleys in such cycles. I’d argue we are somewhere in the peak corruption phase.

Today’s article focuses on one of the most highly regulated industries in the country, electric utilities. It’s one of the most boring businesses in America. I know this because it fell under the umbrella of my responsibilities during my last Wall Street job, and I could barely read a utilities research report without immediately falling asleep. Nevertheless, as you’ll see in today’s piece, the industry still finds a way to generate large profits while simultaneously harming the people it’s supposed to service.

When I think about solar panels, it’s not just the use of a renewable resource I find appealing, but also the potential to take energy generation into your own hands; something that can prove quite useful in a major global crisis, or even something more minor like Hurricane Irma’s impact on Florida. The latter could’ve been a lifesaver for some Florida residents recently, but a local electric utility has done everything in its power to deny its customers such freedom.

Here’s some of what we learned about this situation from a fascinating article published by the Miami New TimesWhy Didn’t FPL Do More to Prepare for Irma?

 

Hurricane Wilma, the last ‘cane to hit South Florida, tore through the area in 2005 and killed power to 3.24 million of FPL’s then-4.3 million customers (75 percent of the grid). Many of those customers had to wait up to two weeks for power to return. Since then, the company has spent more than $2 billion supposedly girding itself against the next storm, according to a Sun Sentinel piece published before Irma hit.

But after Irma, which by most reports brought only Category 1-strength winds to South Florida, by some measures the company did even worse. Despite all of those upgrades, an even larger percentage of FPL’s customer base — 4.4 of 4.9 million customers, almost 90 percent — lost electricity this past weekend.

FPL and its parent company, NextEra Energy, have for years heavily influenced state and local politics through donations, making billions in profits each year ($1.7 billion alone in 2016) thanks to favorable state laws that are sometimes literally written by the power company’s own lobbyists.

FPL’s lobbying wing has fought hard against letting Floridians power their own homes with solar panels. Thanks to power-company rules, it’s impossible across Florida to simply buy a solar panel and power your individual home with it. You are instead legally mandated to connect your panels to your local electric grid.

More egregious, FPL mandates that if the power goes out, your solar-power system must power down along with the rest of the grid, robbing potentially needy people of power during major outages.

“Renewable generator systems connected to the grid without batteries are not a standby power source during an FPL outage,” the company’s solar-connection rules state. “The system must shut down when FPL’s grid shuts down in order to prevent dangerous back feed on FPL’s grid. This is required to protect FPL employees who may be working on the grid.”

Astoundingly, state rules also mandate that solar customers include a switch that cleanly disconnects their panels from FPL’s system while keeping the rest of a home’s power lines connected. But during a disaster like the aftermath of Hurricane Irma, FPL customers aren’t allowed to simply flip that switch and keep their panels going. (But FPL is, however, allowed to disconnect your panels from the grid without warning you. The company can even put a padlock on it.)

The law winds up forcing residents to remain reliant on the state’s private power companies. For now, solar-panel owners can still get something out of the law, in that the “net-metering” provision lets you sell excess power back to the company. The provision also lets power companies charge a $400 or $1,000 application fee for consumers who want to install systems more powerful than 10 kilowatts.

But if power companies had their way, the net-metering law would vanish tomorrow. Both FPL and its trade association, the Edison Electric Institute, have spent millions trying to kill that net-metering law and instead win the right to charge you for installing your own solar-panel system. In 2016, FPL spent more than $8 million on Amendment 1, a ballot initiative that industry insiders admitted was written to trick customers into giving up their rights to solar power.The law’s language would have paved the way for Florida to kill net-metering rules.

This past April, the Energy and Policy Institute caught an FPL lobbyist straight-up drafting anti-solar laws for Fort Myers state Rep. Ray Rodrigues, who also took a $15,000 campaign contribution from FPL this year.

Thanks to power-company influence, one of America’s sunniest states lags far behind the rest of the nation when it comes to solar adoption.

Read More @ LibertyBlitzkrieg.com

Russia’s Interesting New Oil Geopolitics

by F. William Engdahl, New Eastern Outlook:

Since the 1928 Red Line Agreement between British and French and American oil majors to divide the oil riches of the post-World War I Middle East, petroleum or more precisely, control of petroleum has constituted the thin-red-line of modern geopolitics. During the Soviet time Russian oil exports were largely aimed at maximizing dollar hard currency income in any possible market. Today, with the ludicrous US and EU sanctions on Russia and the Washington-instigated wars in the Middle East, Russia is evolving a strategic new frame for its oil geopolitics.

Much has been said about how Russia under the Putin era has used its leading role as a natural gas supplier as a vital part of its geopolitical diplomacy. Nord Stream and soon Nord Stream II gas pipelines direct from Russia undersea, bypassing the political NATO minefields of Ukraine and of Poland, have the positive benefit of building an industry lobby in the EU. Especially in Germany, which would think twice about the more lunatic Russo-phobic provocations of Washington. Similarly Turkish Stream that gives South East Europe a secure prospect of Russian natural gas for industry and heating independent of Ukraine is positive both for the Balkans as for Russia. Now a new element is emerging in the strategy of Russian state-owned oil majors to develop a new geopolitical strategy using Russian oil and oil companies.

Matryoshka dolls, Qatar and Rosneft

On December 7, 2016 Russia’s President Vladimir Putin announced that the Russian state had sold a 19.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} share of Rosneft to a joint venture between Swiss commodity giant, Glencore and the Qatar Investment Authority for €10.2 billion. Russia retained more than 60{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} control by the sale. There was great mystery as to the ultimate details which were buried in what in Russian is called a matryoshka doll structure, referring to the famous Russian painted dolls which when opened, reveal a smaller doll and again, an even smaller doll and so on. It referred to the nested structure of offshore shell companies used in the Rosneft-Qatar/Glencore purchase.

Whatever the details of that December sale, which brought the Russian treasury badly needed funds amid a budget shortfall caused by the sharp decline in world oil prices, some ten months later, Russia and Rosneft have now negotiated with Qatar, Glencore and China’s CEFC China Energy Company Ltd., for CEFC to buy 14{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the 19.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} share of Rosneft.

Qatar clearly is reacting to Saudi-driven economic sanctions and the resulting cash drain on its economy by selling most of its share in Rosneft. The most significant aspect however is that Rosneft for the first time makes a share holding with a Chinese major oil company in the process. CEFC, a $34 billion annual income private Shanghai company with its subsidiaries is engaged in oil and gas agreements worth more than US$50 billion with companies in the Middle East and Central Asia. The synergies of the Rosneft-CEFC deal for the elaboration of the mammoth Eurasian Belt, Road Initiative (BRI) are obvious.

An analyst with Wood Mackenzie, Christian Boermel, commented on the significance: “This deal intensifies the energy relationship between Russia and China. A direct stake in Rosneft will make CEFC China the main driver for the relationship of Rosneft with China, ahead of CNPC, Sinopec and Beijing Gas.”

With this deal Russian and Chinese state oil companies will cooperate on joint oil development around the world, a major cementing of a bilateral relationship that has emerged as a direct consequence of Washington stupidity in the past years, first with the 2007 ballistic missile defense stations in Poland and across the EU aimed at Russia, then the 2014 Ukraine coup d’etat by the CIA and US State Department, obviously intended to drive a wedge between Russia and the EU, a coup that has cost the EU economies an estimated $100 billion since 2014 according to a new UN report.

Like most Pentagon and neocon projects, the Ukraine coup boomeranged and turned Russia in a most significant way to an Eastern pivot towards cooperation with China and all Eurasia. Now with Russia’s Rosneft–the world’s largest publicly traded oil company–in a strategic partnership with China’s huge CEFC Energy, a significant new element is added to Russia’s potentials of energy geopolitics, as well those of China.

Russia with Turkey in Iran

In another highly significant geopolitical move, the Russian state oil company JSC Zarubezhneft announced in August that it has entered a triangular oil development agreement with the Turkish energy group, Unit International Ltd. and the Iranian Ghadir Investment Company in well drilling projects in Iran worth a reported $7 billion. The three companies will finance and develop energy projects, including development of Iran’s vast undeveloped oil resources.

Unit International earlier this year signed an agreement together with a South Korean engineering company to build five gas-fired power plants in Iran worth $4.2 billion having a generation capacity of 5,000 megawatts, making them Iran’s largest privately developed power plants. Iran is also the second largest gas supplier to Turkey after Russia. Clearly here at least the Sunni vs Shi’ite antagonisms take a back seat to pragmatic strategic energy cooperation, and that’s all to the good. Wars of religion never produce good as we see today.

The Turkish joint venture with the Russian state oil company in Iran comes at the same time Turkey announced that it has finalized purchase of the advanced Russian S-400 Triumf anti-aircraft system, said to be the world’s most advanced, over howls of protest from Washington.

Zarubezhneft is a Russian state oil company specialized in drilling projects outside Russia. They are currently active in Vietnam, Cuba, Republika Srpska, Jordan and elsewhere. The geopolitical dimension of those projects, and now the joint Russia-Turkey oil and gas development agreement in Iran, begins to suggest a geopolitical strategy. Joint energy development is serving to weave vital economic ties around Russia.

When all these developments are viewed superimposed on a map of Eurasia, it becomes clear that a new geopolitical relationship, what we might call an economic energy force field is drawing Turkey closer to Russia and to Iran, as well as China.

For its part, Qatar, a nominally Sunni country which earned the enmity of Prince and soon-to-be King, Mohammed bin Salman of Saudi Arabia, did so less for Qatar’s earlier support of the Muslim Brotherhood and more for its developing relations with not only Moscow, but also with Shi’ite Iran and with China. Qatar had been in secret negotiations with Iran for joint development of their shared Persian Gulf natural gas field.

Previously Qatar, along with the Saudis and even Turkey, financed the war against Bashar al Assad for Assad’s refusal to go with a Qatar gas pipeline via Syria to Europe. Assad instead joined with Iran and Iraq in an alternative Iran gas pipeline to Europe and the six-year-long terrorist war against Assad was launched.

At some point following Russia’s decision to aid Assad in late 2015, in a pragmatic turn that infuriated the Pentagon and Prince Salman, Qatar made a new decision along the lines “if you can’t lick ‘em, join ‘em.” Qatar entered secret talks with Iran over Syria and over a joint Qatar-Iran pipeline that would mutually develop the world’s largest known natural gas field they both share in the Persian Gulf—the South Pars/North Dome field, by far the world’s largest natural gas field according to the International Energy Agency (IEA). The battle to control Qatar in a sense is the battle to dominate world natural gas markets, today almost as economically significant as oil to the future world economy.

In response to the Trump-Kushner inspired Saudi and UAE-led economic sanctions against Qatar last June, Qatar has stepped up its relations with Iran, with Russia and with China, while refusing the impossible Saudi-UAE demands. The Chinese state bank in Doha has transacted the dollar equivalent of over $86 billion worth of transactions in Chinese Yuan since the opening of the Doha branch of China’s Industrial and Commercial Bank of China in 2015, and has signed other agreements with China that encourage further economic cooperation.

Then on August 23, Qatar announced it was restoring full diplomatic relations with Iran, not exactly what Jared Kushner’s friends in Washington and in Tel Aviv wanted to see. Since the Saudi-led sanctions to isolate and starve Qatar into submission, Iran has provided Qatar with sea shipments of fresh food and allowed Qatar planes to cross its airspace.

Moreover, Qatar relations with Russia are developing. Qatar, Iran and Russia are the main lobbyists for the creation of the so-called “Gas OPEC”, which Saudi Arabia, the United Arab Emirates and the United States vigorously oppose.

Add to this changing force field in the Gulf the fact that Erdogan’s Turkish government, previously a staunch ally of Saudi Arabia, condemned the Saudi actions against Qatar. Turkey sent food supplies to prevent embargo-related shortages in Qatar after June and passed legislation through parliament to deploy Turkish troops on Qatari soil.

A new geometry

Russia, China, Turkey, Iran, Qatar. They are weaving deeper peaceful economic

Read More @ Journal-NEO.org
 

The Rules of the Electric Car Game Just Changed in a Massive Way

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by Marin Katusa, Katusa Research:

Last weekend, as the media focused on hurricanes and Donald Trump’s immigration policies, two massive stories flew under the market’s radar.

These stories were about one of the biggest economic revolutions of our time… and they have major investment implications.

First, China announced it plans to ban the sale of fossil-fuel powered cars and trucks. No date was given, but China is making it clear that Electric Vehicles (EVs) are the future of the world’s largest car market (which is 35{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} larger than the U.S. market). China is desperate to clean up its infamous air pollution. Emission-free electric vehicles will play a huge role in the efforts.

Secondly, Volkswagen, the world’s largest car company, announced it plans to design electric versions of all 300 of its models. To achieve this, Volkswagen plans to invest over $70 billion into new infrastructure. It’s going to be a huge shift undertaken by one of the world’s largest, most powerful manufacturing companies.

Regular Katusa Research readers know that I believe the Electric Vehicle revolution is one of the biggest investment themes of our time. For a long time, mass adoption of EVs were an environmentalist’s fantasy. Zero emission vehicles that run on electricity just couldn’t compete with conventional cars on price, quality, and fueling infrastructure. But thanks to incredible advances in technology, massive investments by large car makers, and huge government support, electric vehicles (EVs) are poised to go mainstream.

The news from China (the world’s largest car market) and Volkswagen (the world’s largest car maker) tell me that mass EV adoption will occur faster than most people believe it will… even faster than I believed it would just six months ago.

I believe a big reason the rate of EV adoption will take so many people by surprise because they don’t understand how technological progress is now occurring at an exponential rate. This rate of change is far faster than the kind of “linear change” most people are used to.

Exponential progress is happening now because of the stunning increases in the power and speed of computers. Computing power is the foundation on which our world of technological progress rests on. It’s what makes the Internet, your iPhone, your Facebook account, Tesla cars, Wi-Fi, and thousands of other things possible. After decades of refining and improving computer technology, progress in the field is accelerating. Our computers are getting much faster, much more powerful, much smaller, and much cheaper. The kind of economic shifts that used to take 20 years to play out are now taking just five years to play out… and catching many people off guard. This trend is affecting all industries, no matter how “old school” they are.

Back to China and Volkswagen…

Of course, China’s new policy will have measurable and direct affects in China. Of course, Volkswagen’s new policy will have measurable and direct affects in the company. But just as importantly, these policies will have massive indirect affects across the entire world.

These decisions mean more and more money will be invested into EV research and development. I’m talking about tens of billions of dollars over the short-term and hundreds of billions of dollars over the long-term (over 10 years). More money and more minds will go to work on making EVs better, cheaper, and more reliable. More new ideas will be developed and tested. Many will fail, but some will be world-changing breakthroughs. These breakthroughs will be developed at a faster rate than before. The world’s largest car market and the world’s largest car maker want it that way.

The enormous amount of money and energy devoted to EVs will drive production costs lower. Lower EV production costs will mean cheaper EV sticker prices and increased competitiveness with fossil fuel powered vehicles.

Increased competitiveness means more people buying electric vehicles sooner. More EV sales will signal to automakers that they should invest even more money into research and development. Even better technology will be developed and production costs will go even lower. It will become a virtuous, self-reinforcing cycle.

Perhaps the best way to showcase how increased investment has cut costs in the EV sector is by looking at the cost of lithium-ion batteries used in EVs. The chart below shows the dramatic cost reduction from 2010 to 2017.

Personally, I believe the best way to profit from the electric vehicle revolution is not by investing in EV makers, but by selling EV makers the materials they must all consume in huge quantities for decades in the future.

The average electric vehicle with a 65 kwh battery pack will require over 100 pounds of copper, 20 pounds of cobalt and 100 pounds of lithium carbonate.

Remember how I mentioned Volkswagen wants to make electric versions of all 300 of its models. Below is a chart which shows the quantity of metals demanded by Volkswagen to go 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} electric, relative to the current annual production. These numbers are not exact. There is going to be variance depending on battery type, however the numbers are staggering enough as is.

Read More @ KatusaResearch.com

Venezuela Has Officially Abandoned The Petrodollar – Does This Make War With Venezuela More Likely?

by Michael Snyder, The Economic Collapse Blog:

Venezuela is the 11th largest oil producing country in the entire world, and it has just announced that it is going to stop using the petrodollar.  Most Americans don’t even know what the petrodollar is, but for those of you that do understand what I am talking about, this should send a chill up your spine.  The petrodollar is one of the key pillars of the global financial system, and it allows us to live a far higher standard of living than we actually deserve.  The dominance of the petrodollar has been very jealously guarded by our government in the past, and that is why many are now concerned that this move by Venezuela could potentially lead us to war.

I don’t know why this isn’t headline news all over the country, but it should be.  One of the few major media outlets that is reporting on this is the Wall Street Journal

The government of this oil-rich but struggling country, looking for ways to circumvent U.S. sanctions, is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy have told The Wall Street Journal.

Before we go any further, we should discuss what we mean by the “petrodollar” for those that are not familiar with the concept.  The following comes from an excellent article by Christopher Doran

In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.

This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve.

As will be explained below, the fact that virtually everyone around the world has to use our currency to buy oil is a massive advantage for us.  Venezuela knows this, and so in response to new sanctions being imposed upon them, they are hitting us where it hurts

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

If more nations start to follow suit, it would be absolutely disastrous for the United States.

In other articles, I have detailed why the petrodollar is so incredibly important to our economy and our financial system.  The following is an extended excerpt from one of those previous articles

So why is the petrodollar so important?

Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe.  Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency.  That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries.  If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.

In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt.  Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars.  Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed.  One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries.  This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.

But if the rest of the world starts moving away from the U.S. dollar, all of this could change.

History has shown that when the status of the petrodollar is threatened, the U.S. is swift to take action.

And it is very interesting to note that President Trump will be meeting with Latin American leaders next week, and the main topic for discussion will be “the Venezuela crisis”

U.S. President Donald Trump has invited three Latin American leaders to dine with him next week in New York as he seeks to address the Venezuela crisis and build bridges with the region after an acrimonious start with neighbor Mexico.

The political and economic turmoil in Venezuela, source of 10 percent of the oil consumed by the United States, will almost certainly top the agenda when he receives the center-right presidents of Peru, Colombia and Brazil at Trump Tower on Monday evening, diplomats said.

Could this latest move by Venezuela be enough to potentially spark a military conflict?

The guys over at Zero Hedge seem to think so…

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

It would be absolutely no surprise at all if John McCain and Lindsey Graham start appearing on the major news networks calling for war with Venezuela, but hopefully President Trump will not listen to such nonsense.

Read More @ TheEconomiccollapseBlog.com

Venezuela Begins Publishing Oil Basket Price In Yuan

from ZeroHedge:

Two days after the WSJ confirmed Maduro’s earlier threat that he would stop accepting US Dollars as payment for crude oil imports, Venezuela has done just that.

As a reminder, and as we reported previously, in an effort to circumvent U.S. sanctions, Venezuela told oil traders that it will no longer receive or send payments in dollars. As a result, oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

Furthermore, Venezuela’s state oil company Petróleos de Venezuela SA, or PdVSA (whose bankruptcy is fast approaching), told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner. The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

Fast forward to today, when according to a statement on the Venezuela oil ministry, the country’s weekly crude oil and petroleum basket “will be published in Chinese Yuan” – oddly, not in Euros as the WSJ hinted – going forward. We can only assume that Venezuela avoided the European currency on concerns that Brussels may follow in D.C.’s footsteps and impose financial sanctions on the Maduro regime next. Which meant that the only “safe” currency to transact in, was that of the country’s two big sources of vendor (and commodity) financing: China and Russia. For now Venezuela has picked the former.

The ministry also unveiled a price of 306.26 Yuan per barrel for the week of Sept. 11-15, up 1.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} from the 300.91 in the previous week, saying “the more favorable outlook on world oil demand and reports of lower global production contributed to the strengthening of crude oil prices this week.”

As for the more relevant topic, Venezuela’s abdication of the US dollar, whether permanent or temporary – until the US finds a way to intervene and restore normalcy – Nomura debt analyst Siobhan Morden warned that “you can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. this political posturing will only be to their detriment.

It remains to be seen if president Trump will use today’s official switch by Venezuela to a PetroYuan as justification for a more “aggressive” foreign policy posture.

* * *

Meanwhile, recall that the decision by the nation with the world’s largest proven oil reserves to eliminate the dollar, comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

Read More @ ZeroHedge.com

It’s official as another OPEC nation has killed the Petrodollar as Venezuela no longer accepting them for oil sales

by Kenneth Schortgen, TheDailyEconomist:

On Sept. 13 the Wall Street Journal announced that Venezuelan President Nicholas Maduro has officially cut off accepting dollars for oil as another OPEC nation has joined in to kill the long-standing Petrodollar agreement.

Confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports. 

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters, 

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal. 

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies. 

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said. 

And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, 

Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said. 

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner. 

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.” – Zerohedge

Venezuela now joins with Iran and Syria for no longer accepting dollars in the sale of oil, and this list of OPEC countries ditching the reserve currency are only expected to increase as China prepares to soon create a new oil contract outside of the Petrodollar.

Read More @ TheDailyEconomist.com

Gold Oil Dollars Russia and China

by F. William Engdahl, New Eastern Outlook:

The 1944 Bretton Woods international monetary system as it has developed to the present is become, honestly said, the greatest hindrance to world peace and prosperity. Now China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over the world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it.

Shortly before the end of the Second World War, the US Government, advised by the major international banks of Wall Street, drafted what many mistakenly believe was a new gold standard. In truth, it was a dollar standard in which every other member currency of the International Monetary Fund countries fixed the value of their currency to the dollar. In turn, the US dollar was fixed then to gold at a value equal to 1/35th of an ounce of gold. At the time Washington and Wall Street could impose such a system as the Federal Reserve held some 75{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all world monetary gold as a consequence of the war and related developments. Bretton Woods established the dollar which then became the reserve currency of world trade held by central banks.

Death Agony of a Defective Dollar Standard

By the end of the 1960’s with soaring US Federal budget deficits from costs of the Vietnam War and other foolish spending, the dollar standard began to show its deep structural flaws. A recovered Western Europe and Japan no longer needed billions of US dollars for financing reconstruction. Germany and Japan had become world class export economies with higher efficiency than US manufacturing owing to a growing obsolescence of US basic industry from steel to autos and basic infrastructure. Washington should then have significantly devalued the dollar against gold in order to correct the growing world trade imbalance. Such a dollar devaluation would have boosted US manufacturing export earnings and reduced the trade imbalances. It would have been a huge pus for the real US economy. However for Wall Street banks it spelled huge losses. So instead, the Johnson and then Nixon administrations printed more dollars and in effect exported inflation to the world.

The central banks of especially France and Germany reacted to the deafness in Washington by demanding US Federal Reserve gold for their US dollar reserves at $35 per unce s in the Bretton Woods 1944 agreement. By August 1971 the redemption of gold for inflated US dollars had reached a crisis point where Nixon was advised by a senior Treasury official, Paul Volcker, to rip up the Bretton Woods system.

By 1973 gold was allowed by Washington to trade freely and was no longer the backing of a sound US dollar. Instead, an engineered oil price shock in October 1973 that sent the dollar price of oil higher by 400{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in a matter of months, created what Henry Kissinger then called the petrodollar.

The world needed oil for the economy. Washington, in a 1975 deal with the Saudi monarchy, insured that Arab OPEC would refuse to sell one drop of their oil to the world for any currency other than US dollars. The value of the dollar soared against other currencies such as the German Mark or Japanese Yen. Wall Street banks were awash in petrodollar deposits. The dollar casino was open and running, and the rest of the world was being fleeced by it.

In my book, Gods of Money: Wall Street and the Death of the American Century, I detail how the major New York international banks such as Chase, Citibank and Bank of America used the petrodollars then to recycle Arab oil profits to oil-importing countries in the developing world during the 1970’s, laying the seeds for the so-called Third World Debt Crisis. Curiously, it was the same Paul Volcker, a protégé of David Rockefeller and Rockefeller’s Chase Manhattan Bank, who this time, in October, 1979 as Chairman of the Fed, triggered the 1980s debt crisis by pushing Fed interest rates through the roof. He lied and claimed it was to nip inflation. It was to save the dollar and the Wall Street banks.

Today, the dollar is a strange phenomenon to put it mildly. The United States since 1971 has gone from being a premier industrial nation to a giant debt-bloated casino of speculation.

With Fed Funds interest rates between zero and one percent the past nine years—unprecedented in modern history—the major banks of Wall Street, the ones whose financial malfeasance and murderous greed created the 2007 Subprime crisis and its 2008 global financial Tsunami, set about to build a new speculative bubble. Rather than lend to debt-bloated cities for urgently-needed infrastructure or other productive avenues of the real economy, instead they created another colossal bubble in the stock market. Major companies used cheap credit to buy their own stocks back, thereby spurring the stock prices on Wall Street exchanges, a rise fed by hype and myths about “economic recovery.” The S&P-500 stock index rose by 320{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} since the end of 2008. I can assure you those paper stock rises are not because the real US economy has grown 320{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

American households earn less in real terms each year over decades. Since 1988 median household income has been stagnant amid steadily rising inflation, a declining real income. They must borrow more than ever in history. Federal Government debt is at an unmanageable $20 trillion with no end in sight. American industry has been closed and production shipped offshore, “outsourced” is the euphemism. Left behind is a high-debt, rotted out “service economy” where millions work two even three part-time jobs just to keep afloat.

The only factor keeping the dollar from total collapse is the US military and Washington’s deployment of deceptive NGOs around the world to facilitate plundering of the world economy.

So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt—Treasury securities—with the bulk of their surplus trade dollars. Washington and Wall Street smiled. They could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

Viable Alternative Emerges

Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

For several years both the Russian Federation and the Peoples’ Republic of China have been buying huge volumes of gold, largely to add to their central bank currency reserves which otherwise are typically in dollars or euro currencies. Until recently it was not clear quite why.

For several years it’s been known in gold markets that the largest buyers of physical gold were the central banks of China and of Russia. What was not so clear was how deep a strategy they had beyond simply creating trust in the currencies amid increasing economic sanctions and bellicose words of trade war out of Washington.

Now it’s clear why.

China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.

Currently, in addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and most recently India and Pakistan. This is a population of well over 3 billion people, some 42{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the entire world population, coming together in a coherent, planned, peaceful economic and political cooperation.

If we add to the SCO member countries the official Observer States—Afghanistan, Belarus, Iran and Mongolia, states with expressed wish to formally join as full members, a glance at the world map will show the impressive potentials of the emerging SCO. Turkey is a formal Dialogue Partner exploring possible SCO membership application, as are Sri Lanka, Armenia, Azerbaijan, Cambodia and Nepal. This, simply said, is enormous.

BRI and a Gold-Backed Silk Road

Until recently Washington think tanks and the Government have sneered at the emerging Eurasian institutions such as SCO. Unlike BRICS which is not made up of contiguous countries in a vast land-mass, the SCO group forms a geographic entity called Eurasia. When Chinese President Xi Jinping proposed the creation of what then was called the New Economic Silk Road at a meeting in Kazakhstan in 2013, few in the West took it seriously. The name officially today is the Belt, Road Initiative (BRI). Today, the world is beginning to take serious note of the scope of the BRI.

It’s clear that the economic diplomacy of China, as of Russia and her Eurasian Economic Union group of countries, is very much about realization of advanced high-speed rail, ports, energy infrastructure weaving together a vast new market that, within less than a decade at present pace, will overshadow any economic potentials in the debt-bloated economically stagnant OECD countries of the EU and North America.

What until now was vitally needed, but not clear, was a strategy to get the nations of Eurasia free from the dollar and from their vulnerability to further US Treasury sanctions and financial warfare based on their dollar dependence. This is now about to happen.

At the September 5 annual BRICS Summit in Xiamen, China Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated, “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.” To my knowledge he has never been so explicit about currencies. Put this in context of the latest financial architecture unveiled by Beijing, and it becomes clear the world is about to enjoy new degrees of economic freedom.

China Yuan Oil Futures

According to a report in the Japan Nikkei Asian Review, China is about to launch a crude oil futures contract denominated in Chinese yuan that will be convertible into gold. This, when coupled with other moves over the past two years by China to become a viable alternative to London and New York to Shanghai, becomes really interesting.

China is the world’s largest importer of oil, the vast majority of it still paid in US dollars. If the new Yuan oil futures contract gains wide acceptance, it could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. That would challenge the two Wall Street-dominated oil benchmark contracts in North Sea Brent and West Texas Intermediate oil futures that until now has given Wall Street huge hidden advantages.

Read More @ Journal-NEO.org
 

Wave Good-Bye To The Dollar’s Reserve Status

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by Dave Kranzler, Investment Research Dynamics:

“Paper Money Eventually Returns To Its Intrinsic Value – Zero” – Voltaire

Set aside all other financial, economic and political concerns continuously shoved in our collective faces by the mainstream media.  It’s a distraction – to a large degree intentional.

These are the ONLY events that matter right now:    this, “China Begins To Reset The World’s Currency System,” and this,   “Venezuela Is About to Ditch the Dollar in Major Blow to US: Here’s Why It Matters.”

Once the dollar is no longer regarded or used as the reserve currency, third-world poverty will engulf everyone in this country below the upper half percent wealth stratum…except those who possess a fair amount of physical bullion.  I just bought more gold and silver coins from a friend yesterday who had an uncontrollable urge to get their house painted and needed to sell some to me to fund it.  It won’t matter what the house looks like in a couple years but they would never take my word on that.

The level of assumed entitlement in this country by the middle class is absurd…

All the money and all the banks in Christendom cannot control credit…Gold is money and nothing else – JP Morgan’s 1912 Congressional testimony on “the justification of Wall Street

Trump has suggested permanently removing the Treasury debt-ceiling. The Treasury debt-ceiling is the last remaining barrier to the ability of the Fed and the Government to create an infinite amount of fiat currency.  Debt that is issued behaves exactly like printed currency until that debt is repaid.  The non-repayment and continued issuance of the amount of debt outstanding is the critical point to understanding this concept.  Since the early 1970’s, the Treasury debt outstanding has grown continuously.

Printed Treasury certificates created in this manner behave no differently than printed currency. This is a reality that economists completely ignore.  Most analysts who think they understand monetary economics look upon this concept with disdain. The continuous issuance of an increasing amount of credit of any type is no different that outright currency printing (until the amount of outstanding credit is paid off, which it never has been since the demise of Bretton Woods in 1971).

Read More @ InvestmentResearchDynamics.com

THE U.S. PETRO DOLLAR BREAKDOWN CONTINUES: Big Moves In Gold & Silver Ahead

by Steve St. Angleo, SRSrocco:

The four-decade long monopoly of the U.S. Petro-Dollar as the world’s reserve currency is coming to an end.  Unfortunately, most Americans have no clue that when the Dollar loses its reserve currency status, life will get a lot tougher living in the U.S. of A.  Let’s say, Americans will finally receive “Precious metals religion.”

The U.S. Dollar Index fell considerably yesterday and is now down below a key support level.  In early morning trading yesterday, the U.S. Dollar Index fell to 91.46, down 73 basis points:

According to technical analyst, Clive Maund, in his recent article, DOLLAR update as LOSS OF RESERVE CURRENCY STATUS LOOMS..., he stated the following:

The dollar is on course to lose its reserve currency status. This is not something that will happen overnight, it will be a process, but at some point there is likely to be a “sea change” in perception, as the world grasps that this is what is happening, which will trigger a cascade of selling leading to its collapse, whereupon gold and silver will rocket higher.

In that article, Clive posted the following chart on the U.S. Dollar Index (USD index) and its key support level:

As we can see, traders are looking closely to the Key support area at 92.5 for the USD index.  With the USD index now below that key support area, it could spell real trouble for the Dollar if it closes below that level at the end of the week.  After the markets opened today, the Dollar fell to a low of 91.08.  So, it looks like the Dollar will close this week well below the key support area.

Now, part of the reason for the selloff in the Dollar may have been due to the disaster that took place in the 10-year U.S. Treasury Repo market today.  According to Zerohedge’s article “We’ve Never Seen Anything Like This”: Repo Market Snaps As 10Y Suffers “Epic Fail”:

 Commenting on this dramatic move in 10Y repo rates, Stone McCarthy’s Alan Chernoff, in a note titled “Epic Fail”, writes that “the 10-year note has been below the fails rate and shows no signs of moving! It opened at -350 basis points, and though pressure has eased off of it slightly, it is STILL below the fails rate at -300 basis points.”
Commenting on this dramatic move in 10Y repo rates, Stone McCarthy’s Alan Chernoff, in a note titled “Epic Fail”, writes that “the 10-year note has been below the fails rate and shows no signs of moving! It opened at -350 basis points, and though pressure has eased off of it slightly, it is STILL below the fails rate at -300 basis points.”

The pressure on the U.S. Treasury 10-year repo market is likely a reaction to what came out of the annual BRICS summit in China yesterday,  According to the article, Escobar Exposes Real BRICS Bombshell: Putin’s “Fair Multipolar World” Where Oil Trade Bypasses The Dollar:

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

This announcement by Putin that oil trade should by-pass the Dollar came a few days after China announced that they plan to start trading oil on their Shanghai Exchange in Yuan, which will be backed by gold.  While we have heard for years that China was going to back their currency or trade with gold, we now see actual plans to start implementing it sometime this year.

By China backing its new oil trading benchmark in Yuan with gold, it provides countries with a great deal of confidence in trading oil in another fiat currency besides the U.S. Dollar.  Thus, countries that acquire a lot of Chinese Yuan by trading oil don’t have to worry about devaluation as they can convert Yuan into gold.

This Is Bad News For the Saudi-Petro Dollar System

The Petro-Dollar system that has been the foundation of world oil trade for the past four decades is now about to become obsolete.  Even though many countries will continue trading oil in Dollars in the future, a larger percentage will likely move into trading oil in Chinese Yuan as it provides a “gold-backed protection” against fiat currency devaluation.

Not only is the Petro-Dollar under severe pressure, so is Middle East’s largest oil exporter that was the foundation of this monetary system back in the early 1970’s.  Ever since the price of oil peaked in 2014 and has fallen by more than half to $49 currently, this has put an enormous strain on Saudi Arabia’s financial bottom line.  In the past three years, Saudi Arabia sold over $250 billion of its foreign exchange reserves, which are mostly in U.S. Treasuries, to fund its national government.

Read More @ SRSrocco.com

Two Nuclear Power Plants In Florida Are Directly In The Path Of Hurricane Irma

by Michael Snyder, End Of The American Dream:

Hurricane Irma is more powerful than all of the other major Atlantic storms this year combined, and it has an eye as large as the entire Detroit metro area. It is being reported that “upwards of 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” of Barbuda has already been destroyed by the storm, and it is being projected that some areas of Puerto Rico could be without power “for between four and six months”. You may want to view these photos and these videos to get a better idea of the immense destructiveness of this very powerful storm. The latest forecasts have Hurricane Irma making landfall in Florida, but so far the two nuclear power plants in Florida that would be directly in the path of the storm have not even started the process of shutting down

In anticipation of powerful Hurricane Irma, which projections on Wednesday showed headed straight for South Florida, Florida Power & Light’s two nuclear plants were finalizing staffing plans and cleaning up the grounds. But neither Turkey Point nor the St. Lucie plant further up the coast had made the call yet to shutting down the plants.

Peter Robbins, spokesman for FPL, said shutting down a reactor is a gradual process, and the decision will be made “well in advance” of the storm making landfall.

We all remember what happened with Fukushima, and we definitely do not want to see a repeat on U.S. soil. The Fukushima nuclear disaster changed millions of minds about the safety of nuclear power, and as a member of Congress I will do all that I can to encourage the development of our solar power, wind power and geothermal power capabilities.

Let us hope that Hurricane Irma weakens before it gets to Florida, because the destruction that it is causing right now is off the charts. When it made landfall in Barbuda, there were some wind gusts that were “above 215 mph”

Irma first made landfall in Barbuda — an island with a population of about 1,600 — around 1:47 a.m. ET Wednesday. Local weather stations there captured wind gusts of 155 mph before going silent, indicating the instruments had been blown away. Irma’s sustained winds have been reported at 185 mph, with gusts above 215 mph.

When you have winds that high, there is little that you can do to prepare. According to one top official, “upwards of 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” of Barbuda has already been destroyed…

At least one death was reported in Barbuda, according to ABS TV Antigua. Charles Fernandez, minister of foreign affairs and international trade for Antigua and Barbuda, told ABS that destruction on Barbuda was “upwards of 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.”

Irma destroyed government buildings, tore roofs from houses and left northern Caribbean islands without power or communications.

Considering what has already happened in the Caribbean, it astounds me that Miami is not being evacuated yet. If all of these communities in the south Florida area try to wait until the last minute to evacuate, it is going to create a traffic nightmare of epic proportions. According to CNN, we could be looking at “one of the largest mass evacuations in US history”…

Based on Irma’s projected path, which includes Florida’s heavily populated eastern coast, the enormous storm could create one of the largest mass evacuations in US history, CNN senior meteorologist Dave Hennen said. Miami-Dade, Broward and Palm Beach counties combined have about 6 million people.

Monroe County, home to the Florida Keys, has already ordered mandatory evacuations. Broward County, which includes Fort Lauderdale, issued a mandatory evacuation Wednesday for areas east of Federal Highway.

There is still a chance that the storm may not hit Florida at all, and let us hope that is the case.

Sadly, there are some out there that actually want the storm to hit Florida. In fact, some leftists on Twitter are actually rooting for the storm to destroy President Trump’s Mar-a-Lago resort.

How can people be so cruel? When I first made the decision to jump into the world of politics, I thought that I would be able to avoid much of the nastiness, but I quickly found out that people are going to call me all sorts of names too. I am starting to understand why it is so hard to get good people to run for office, because there is a great price to be paid for putting yourself out there.

In this situation, my hope is that people down in south Florida won’t wait for a formal evacuation order and will start getting out well ahead of this storm. According to CNBC, Hurricane Irma could cause a quarter of a trillion dollars in damage if it is still a category 5 storm once it reaches Miami…

But if it stays a Category 5 and hits Miami, the $125 billion estimate could be doubled, making it by far the costliest storm ever. At $105.8 billion, Hurricane Katrina in 2005 is currently the leader, though Hurricane Harvey, which struck Houston two weeks ago, could well surpass that total.

Can you imagine what a quarter of a trillion dollars of damage would look like?

And let us not forget that another hurricane is following right behind Irma. This could easily become the worst hurricane season in all of U.S. history, and we still have many more weeks to go before the season is over.

Meanwhile, a disaster of another sort is unfolding out west. Large portions of Washington, Oregon, Idaho and Montana are literally on fire. One of the reasons why we are having such a huge problem with wildfires out west is because the federal government is not properly managing public lands. So when these fires hit areas controlled by the feds, they tend to burn more intensely than they should. I intend to fight to have control of those lands transferred to state governments, and I hope that you will support my efforts. Here in Idaho, it has been estimated that we have more than a trillion dollars worth of natural resources under our feet, and if we can get full control of our public lands it would end our state budget problems permanently.

Read More @ EndOfTheAmericanDream.com

$10,000 or more gold price doesn’t need a failure in currencies to occur if it soon comes to back oil trade instead

by Kenneth Schortgen, The Daily Economist:

As central banks have gone on to expand money supplies to unthinkable levels over the past 17 years, many analysts in the gold space have discussed the possibility of returning sovereign currencies to a gold standard because debt levels have simply gotten too high.  And with these hypotheses have also come conjectures on just how much the price of gold would have to be raised to backstop the world’s nearly $250 trillion of debt.

But yesterday saw a much different scenario hit the financial world, and one that could completely change or eradicate the long-standing petrodollar system that protects America’s dollar hegemony.  And this scenario is coming out of China and offers the potential for a gold standard not coming from the backing of sovereign currencies and fiat debt, but from what many consider the one true currency that is needed to run every aspect of the global economy.

Oil.

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.  

The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.  

China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. – Nikkei Asia via The Daily Economist

Interestingly, using oil production as a benchmark for gold rather than trying to correlate a gold price for the hundreds of different sovereign currencies that do not all move in tandem is a much more stable measure since the only two variables in play are the amounts of gold and oil produced each year.  And from there all you would have to do is use the gold to oil ratio to determine price.

As of late 2016 oil was a $1.72 trillion market, with gold production being only a $170 billion one.  This equates to an Oil to Gold ratio of approximately 10.12:1.  And at the current gold price of $1320, it would mean the price would have to multiply by that amount ($13,355) to be in line with a fair price value to backstop the energy sourse in an oil contract.

If you think about it, oil has been the global reserve currency since 1973 when the United States dollar went off the gold standard, and instead measured its value in relation to oil.  So for the past 44 years oil has been the true global reserve currency, and all sovereign currencies simply measure themselves on that commodity.

Read More @ TheDailyEconomist.com