Garry McCarthy, Former Chicago Police Superintendent, joined Dan Proft & Amy Jacobson to discuss the 737 murders and 4,000 shootings in Chicago so far this year. He reminded Proft & Jacobson that murders and shootings were at an all time low between 2013-2014 when the police department followed best practices and were able to police. Now, in the wake of #BlackLivesMatter, the police have been politicized and blamed for larger societal problems with limited support behind all the good that they do. Watch now and tell us what you think on Facebook and Twitter using #UpstreamIdeas.
SB2814 – An Overhaul of Illinois Energy Policy and a Bailout for Largest Nuclear Power Company in the US
By Jeanne Ives 12/5/2016
Merry Christmas from the Illinois General Assembly who could not focus on the task at hand – putting a balanced budget together – but had time to bailout a multi-billion dollar company.Sitting in the Governor’s office, is a rate hike bill wrapped up in ComEd red and white paper, an Exelon blue bow on top, and placed appropriately under the artificial green energy Christmas tree.It will be a good Christmas for millionaire CEOs, certain highly skilled workers and renewable energy advocates.
HB 2814 contemplates significantly rewriting energy policy and returning our market-based energy policy instituted in 1998 back to a more regulated, government directed production and consumption model in a protectionist appeal from large energy companies.Various energy proposals have surfaced over the last 18 months with the primary driver of the legislation coming from Exelon.Exelon is a major supplier of power to both Illinois and the PJM base load capacity market through their operation of six nuclear power plants.
Ignores the Free Market:The policy proposals in HB2814 are not market driven solutions to energy production and are instead costly to all classes of rate payers and should be rejected.
This bill requires ratepayers to fund huge profitable companies and favored green energy companies. Exelon’s net income was $2.25 billion in 2015.Hypocritically, prior to beginning the discussion of this subsidy bill, Crain’s reported in late December 2014 that Exelon argued in Ohio against subsidies for its competitors.Crain’s stated,
“Exelon isn’t the only power generator trying to cope with low wholesale electricity prices by asking for financial help from its home state.But the company doesn’t like it when peers ask for similar aid…Chicago-based Exelon, which has said it will lobby Illinois lawmakers next year for legislation to boost revenues at its six nuclear plants in the state has petitioned utility regulators in Ohio to block attempts by generators based in that state to prop up their plants courtesy of ratepayers there.Exelon on Dec 22. issued a strongly worded filing with the Ohio Public Utilities Commission in opposition to the FirstEnergy proposal to require electricity consumers at its Ohio utilities to pay extra for power generated by a 900-megawatt nuclear plant and a 2,200- megawatt coal-fired plant owned by a separate FirstEnergy unit.”
I recognize that nuclear power is essential.In 2014 during the polar vortex, Exelon’s nuclear power plants maintained 96% production reliability — when other sources of energy could not ramp up production due to severe weather, nuclear kept producing.This capability should be preserved through the base load capacity power market and spread to all users of Illinois produced energy including those in other states – not only Illinoisans.Compared to natural gas, nuclear power already receives 4 times more subsidies at the federal level and wind is subsidized 18 times more than nuclear power.Subsidizing anything leads to inefficiencies in the market.Wind and solar have been around since the beginning of man – and wind has been subsidized in modern times since 1992 – more than long enough to stand on its own. Exelon should be arguing, as they did in Ohio for no state energy subsidies.
Costly Efficiency for some, but not for all:This bill is BIG Government saying all ratepayers must pay millions more so ComEd can buy insulation and light bulbs for folks in the name of energy efficiency – and earn a 9.5% return rate while doing so.
Disregards Coal:This bill rejects Illinois’ competitive advantage in coal.Coal accounts for over 40% of Illinois energy production.You need 600 square miles of wind power to equal the same amount of energy from one coal plant.
Crony Capitalism: This bill protects certain classes of workers in Illinois when all industries should receive the same treatment. The most important thing to address is the idea that ratepayers should subsidize a specific industry just to save specific jobs for a specific timeframe.Illinois cannot get into the habit of saving specific industries with tax credits or legislation that skews the free market and picks winners and losers.Going down this road is similar to the very controversial Edge Credits and Special Edge Credits which carved out tax credits for not just specific industries but actually specific companies.It’s wrong and taxpayers continually shepherd these costs with little direct benefit.It should be noted that we did not bail out US Steel Co. when they laid off 2080 employees in Granite City in 2015.Last year we lost 6200 manufacturing jobs who were not saved with a subsidy. So far in 2016, 7900 manufacturing jobs have left Illinois – no subsidy for those workers either.And this legislature took no action when coal lost significant jobs, about 6500 in 2003 and we did nothing for the 1200 coal mining employees who lost their jobs in the last 18 months.
Rejects trend away from RPS:This bill disregards the movement away from wind and solar that is happening in Europe because you cannot run a modern economy on dilute and intermittent energy like wind and solar. Steve Goreham, author of numerous books and articles on this topic (visit stevegoreham.com), stated, “Denmark erected over 5,000 wind turbine towers, one for every thousand Danish citizens. Turbines blanket the nation, providing a beautiful view of a 300- to 500-foot tall tower from almost every house, farm, field, forest, and beach. But in total, the turbines produce only 1.3 gigawatts of electricity on average. All could be replaced by a single large conventional power plant. Today, Denmark has the highest electricity prices of the developed nations.” Here in Springfield where a 500-megawatt power plant operates, you would need about 1000 wind turbines to replace that power and disperse those in such a way as to guarantee that 30% of them were turning at any given time.
This bill buys into climate change alarmism despite the debunking of the IPCC findings, 18 years of no global warming from 1997-2015, and carbon dioxide being a trace element that promotes plant growth not a pollutant as the EPA thinks.The bill even uses President Obama’s EPA language of the social cost of carbon without accounting for the beneficial effects of increased carbon dioxide has by increasing biomass in a farm state like Illinois.
Solar and wind power mandates are strengthened in this bill.This bill, in direct contravention of its intentions, will require more fossil fuel not less as back up energy sources if wind and solar are forced to become a larger portion of our energy mix.Stephen Moore, author of Fueling Freedom, states,” Germany and England are already learning that the more renewable fuels they dispatch to their electric grids, the more coal they must burn to back up the intermittent generation from wind and solar sources.”The goal of 25% renewable use in Illinois by 2025 is unachievable without large and aggressive rate increases. Goreham, in response to this bill when I shared it with him, said this about solar power in Illinois, “Solar in Illinois is like growing pineapples.We’re not the sunbelt.Recent analysis shows that over a 25-year life, the amount of energy produced by a solar system at Illinois latitudes does not rise to the amount of energy used to fabricate the solar cells and install the system.By forcing solar in Illinois, we are causing more energy to be expended in China than we get back over the life of the system in Illinois.”
Will not Improve Environment:And the Wall Street Journal reported that, “In truth, the cost of backup power not only caps solar and wind growth, renewables may already have overshot. The International Renewable Energy Agency, in a discordantly sober report, predicts that wind and solar will start shrinking their share in the fast-growing developing economies in coming years.”
If you still believe carbon dioxide is a problem consider this as reported in the Wall Street Journal, “Germany managed to increase its use of renewables and its output of carbon dioxide at the same time—because it resorted to cheap coal to keep the lights on at a price its people could afford.”
In closing, Illinois should trust the free market to determine what energy is produced and at what price.The free market built this nation and can be better trusted than politicians and special interests.Illinoisans deserve energy that is cheap, reliable and pollutant free. Politicians in state government continue to obscure the path toward those objectives in order to keep political insiders happy.
The federal government is on pace to forgive at least $108 billion of student loans, according to a Government Accountability Office study published Wednesday that analyzed the cost of increasingly popular income-driven repayment plans.
That sum is more than double the U.S. Education Department’s current estimate for the cost of such income-driven repayment plans — an umbrella term for the five repayment plans that base payments on a borrowers’ earnings — and roughly four times the department’s original estimates, the report found.
Why You Should Think Carefully Before Refinancing Your Student Loans
Author Harold Pollack gives some useful tips on managing college debt.
Income-driven plans, which are designed to reduce loan bills to a manageable percentage of monthly income, can be a huge help to struggling college graduates. But some policy experts have raised concerns about the cost of the programs — particularly given the large number of borrowers with graduate school debt who qualify for the programs despite earning high salaries. A key issue: The education department doesn’t break out numbers for different plans, so it’s hard for analysts to calculate how much this latter group is costing the federal government. Soaring Participation
Current versions of income-based repayment were developed during George W. Bush’s administration, but the Obama administration increased the number of plans and expanded the scope of who qualifies. As a result, enrollment in income-driven plans has grown massively in the past few years.
As of the end of June, the outstanding balance in income-driven repayment plans was $269 billion, or 40% of the federal government’s total portfolio of loans made directly — and the number of borrowers in these plans had doubled to 5.3 million in just two years.
The GAO’s analysis assumed that 61% of the total $352 billion in loans in income-based repayment programs would eventually will be repaid — leaving another $108 billion to be forgiven. (Another relatively small share will be discharged because of death or disability.)
5 Ways President Trump Could Affect Your Student Loans
11/21/2016 01:21 pm ET | Updated 1 day ago
NerdWalletProviding clarity for all of life’s financial decisions.
President-elect Donald Trump has plans to address college affordability and student debt, though many details remain to be worked out. In an Oct. 13 speech in Columbus, Ohio, Trump outlined the basics of his views on student debt, tuition rates, administrative “bloat,” income-based repayment and loan forgiveness.
“Students should not be asked to pay more on their loans than they can afford,” Trump said. “The debt should not be an albatross around their necks for the rest of their lives.”
Trump and the Republican Party didn’t emphasize higher education in their campaign platforms, leaving experts puzzled as to what policies a Trump administration might pursue.
“We won’t know what priorities, if any, the administration has until we see what staff is in and what ideas they put out there,” says Matthew Chingos, senior fellow at the Washington think tank Urban Institute.
Some changes to the federal student loan system can be enacted by executive action, but others require congressional action. Here’s what we may be able to expect:
1. Income-driven repayment changes are likely
Under Trump’s proposed student loan program, he would cap repayment at 12.5% of a borrower’s income. He did not indicate if this repayment cap would apply to all federal loan borrowers or only for those who apply for income-driven repayment, as is the case now. In the most widely available income-driven repayment plan currently available to student loan borrowers, known as Revised Pay As You Earn, or REPAYE, monthly payments are capped at 10% of a borrower’s discretionary income.
Trump’s proposal would also forgive student loan debt after 15 years of full payments — five years earlier than the current REPAYE option — though it isn’t clear whether this applies only to income-driven repayment plans.
Jason Delisle, resident fellow at the American Enterprise Institute, says shortening the forgiveness timeline by five years could result in a net increase in the cost of the program for taxpayers.
2. Private banks — not the government — might issue federal student loans
Trump wants to restore a system in which private banks issue federal student loans, Trump’s policy director Sam Clovis said in a May interview with Inside Higher Ed. The Republican Party platform also called for the federal government to stop originating student loans.
Private banks used to issue federally backed student loans until 2010, when the federal government revamped the program and began originating all federal student loans through its Direct Loan program. The Obama administration cited billions of dollars in cost savings as a reason for the switch, and used the savings to offer more Pell Grants for low-income students. Today, most new student borrowing comes from federal direct loans, with private lenders servicing the government-issued loans.
3. Students’ prospective future earnings could inform their ‘loan worthiness’
Trump also wants to let colleges have a say in lending decisions and make them share the risk of student borrowing with lenders, according to the Inside Higher Ed article. It would be up to the colleges and banks to decide together which students could borrow student loans, Clovis said. The decision would be based on factors including the student’s major, choice of college and the potential to find a job after graduating.
For example, students pursuing majors with high post-college employment rates, such as engineering and health care, might be approved to take on more student debt than those studying liberal arts topics. Today, any student — regardless of his or her planned major — can borrow the same amount of federal student loans each year.
The idea that colleges should have “skin in the game” by taking responsibility for student outcomes has bipartisan support. For example, Sen. Jack Reed, D-R.I., introduced a bill in 2015 that would require colleges that accept federal financial aid to share student loan risk with the Department of Education. Chingos says risk-sharing for institutions may also threaten the for-profit college industry, but it’s unclear whether the Trump administration would be sympathetic to for-profit schools.
4. College costs could be reduced by limiting administrative ‘bloat’
Trump said in his October speech in Ohio that he would take steps to push colleges to cut tuition costs. If the federal government is going to subsidize student loans, he said, then colleges must be held accountable to invest in their students. If schools do not invest endowment money to reduce costs, Trump said the government may reconsider whether they deserve to keep those endowments tax-exempt.
“We have a lot of power over the college, and they’re not doing the job of cost cutting because they don’t have the incentive cost to cut it because you’re paying for it,” he said in the speech.
Trump also said in his Ohio speech that he plans to reduce the “tremendous bloat” in college administration. By reducing unnecessary costs of compliance with federal regulations, he said, colleges would be able to pass the savings on to students in the form of lower tuition.
5. You could use federal financial aid to cover nontraditional education programs
On his campaign website, Trump said he planned to “ensure that the opportunity to attend a two- or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for and finish.”
Higher-education programs’ accreditation “should be decoupled from federal financing,” the Republican Party platform said. That may mean that students attending those nontraditional programs could be allowed to pay for the courses with federal financial aid. Currently, only students attending schools that are accredited through the Department of Education can qualify for federal financial aid.
After Trump’s speech in Ohio, his campaign did not release a more comprehensive higher education plan on its website.
What college students and loan borrowers can do now
Students seeking financial aid should fill out the Free Application for Federal Student Aid each year they’re in school. Submitting the FAFSA is required by those who want to be considered for grants, scholarships, work-study jobs and federal student loans.
A previous version of this article didn’t state that some changes to the student loan system could be made by executive action. This article has been corrected.
For the fiscal year 2017 budget, the U.S. Department of Education (Education) estimates that all federally issued Direct Loans in Income-Driven Repayment (IDR) plans will have government costs of $74 billion, higher than previous budget estimates. IDR plans are designed to help ease student debt burden by setting loan payments as a percentage of borrower income, extending repayment periods from the standard 10 years to up to 25 years, and forgiving remaining balances at the end of that period. While actual costs cannot be known until borrowers repay their loans, GAO found that current IDR plan budget estimates are more than double what was originally expected for loans made in fiscal years 2009 through 2016 (the only years for which original estimates are available). This growth is largely due to the rising volume of loans in IDR plans.
Estimated Costs of Direct Loans in Income-Driven Repayment Plans
Note: Due to the timing of the fiscal year 2017 budget, the amount of loans made to borrowers in fiscal years 2016 and 2017 are estimated.
Education’s approach to estimating IDR plan costs and quality control practices do not ensure reliable budget estimates. Weaknesses in this approach may cause costs to be over- or understated by billions of dollars. For instance:
Education assumes that borrowers’ incomes will not grow with inflation even though federal guidelines for estimating loan costs state that estimates should account for relevant economic factors. GAO tested this assumption by incorporating inflation into income forecasts, and found that estimated costs fell by over $17 billion.
Education also assumes no borrowers will switch into or out of IDR plans in the future despite participation growth that has led budget estimates to more than double from $25 to $53 billion for loans made in recent fiscal years. Predicting plan switching would be advisable per federal guidance on estimating loan costs. Education has begun developing a revised model with this capability, but this model is not complete and it is not yet clear when or how well it will reflect IDR plan participation trends.
Insufficient quality controls contributed to issues GAO identified. For instance:
Education tested only one assumption for reasonableness, and did so at the request of others, although such testing is recommended in federal guidance on estimating loan costs. Without further model testing, Education’s estimates may be based on unreasonable assumptions.
Due to growing IDR plan popularity, improving Education’s estimation approach is especially important. Until that happens, IDR plan budget estimates will remain in question, and Congress’s ability to make informed decisions may be affected.
Why GAO Did This Study
As of June 2016, 24 percent of Direct Loan borrowers repaying their loans (or 5.3 million borrowers) were doing so in IDR plans, compared to 10 percent in June 2013. Education expects these plans to have costs to the government. GAO was asked to review Education’s IDR plan budget estimates and estimation methodology.
This report examines: (1) current IDR plan budget estimates and how those estimates have changed over time, and (2) the extent to which Education’s approach to estimating costs and quality control practices help ensure reliable estimates. GAO analyzed published and unpublished budget data covering Direct Loans made from fiscal years 1995 through 2015 and estimated to be made in 2016 and 2017; analyzed and tested Education’s computer code used to estimate IDR plan costs; reviewed documentation related to Education’s estimation approach; and interviewed officials at Education and other federal agencies.
What GAO Recommends
GAO is making six recommendations to Education to improve the quality of its IDR plan budget estimates. These include adjusting borrower income forecasts for inflation, completing planned model revisions and ensuring that they generate reasonable predictions of participation trends, and testing key assumptions. Education generally agreed with GAO’s recommendations and noted actions it would take to address them.
For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.
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FEDERAL STUDENT LOANS:
Education Could Do More to Help Ensure Borrowers Are Aware of Repayment and Forgiveness Options
GAO-15-663: Published: Aug 25, 2015. Publicly Released: Sep 17, 2015.
Many eligible borrowers do not participate in the Department of Education’s (Education) Income-Based Repayment and Pay As You Earn repayment plans for Direct Loans, and Education has not provided information about the plans to all borrowers in repayment. These plans provide eligible borrowers with lower payments based on income and set timelines for forgiveness of any remaining loan balances. While the Department of the Treasury estimated that 51 percent of Direct Loan borrowers were eligible for Income-Based Repayment as of September 2012, the most recent available estimate, Education data show 13 percent were participating as of September 2014. An additional 2 percent were in Pay As You Earn. Moreover, Education has reported ongoing concerns regarding borrowers’ awareness of these plans. Although Education has a strategic goal to provide superior information and service to borrowers, the agency has not consistently notified borrowers who have entered repayment about the plans. As a result, borrowers who could benefit from the plans may miss the chance to lower their payments and reduce the risk of defaulting on their loans.
Repayment Plan Participation of Direct Loan Borrowers in Active Repayment, September 2014
Few borrowers who may be employed in public service have had their employment and loans certified for the Public Service Loan Forgiveness program, and Education has not assessed its efforts to increase borrower awareness. Beginning in 2017, the program is to forgive remaining Direct Loan balances of eligible borrowers employed in public service for at least 10 years. As of September 2014, Education’s loan servicer for the program had certified employment and loans for fewer than 150,000 borrowers; however, borrowers may wait until 2017 to request certification. While the number of borrowers eligible for the program is unknown, if borrowers are employed in public service at a rate comparable to the U.S. workforce, about 4 million may be employed in public service. It is unclear whether borrowers who may be eligible for the program are aware of it. Although Education has a strategic goal to provide superior information and service to borrowers and provides information about Public Service Loan Forgiveness through its website and other means, it has not notified all borrowers in repayment about the program. In addition, Education has not examined borrower awareness of the program to determine how well its efforts are working. Borrowers who have not been notified about Public Service Loan Forgiveness may not benefit from the program when it becomes available in 2017, potentially forgoing thousands of dollars in loan forgiveness.
Why GAO Did This Study
As of September 2014, outstanding federal student loan debt exceeded $1 trillion, and about 14 percent of borrowers had defaulted on their loans within 3 years of entering repayment, according to Education data. GAO was asked to review options intended to help borrowers repay their loans.
For Direct Loan borrowers GAO examined: (1) how participation in Income-Based Repayment and Pay As You Earn compares to eligibility, and to what extent Education has taken steps to increase awareness of these plans, and (2) what is known about Public Service Loan Forgiveness certification and eligibility, and to what extent Education has taken steps to increase awareness of this program. GAO reviewed relevant federal laws, regulations, and guidance; September 2014 data from Education and its loan servicer for Public Service Loan Forgiveness; Treasury’s eligibility estimates; and 2012 employment data (most recent available) from the Bureau of Labor Statistics. GAO also interviewed officials from three loan servicers that service about half of Education’s loan recipients.
What GAO Recommends
GAO recommends Education consistently notify borrowers in repayment about income-driven repayment, and examine borrower awareness of Public Service Loan Forgiveness. Education generally agreed with GAO’s recommendations, but it believed the report overstated the extent to which borrowers lack awareness of income-driven repayment. GAO modified the report to clarify this issue.
For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.
French Election Hints at a European Shift Toward Russia
The victory of François Fillon in France’s center-right presidential primary is the latest sign that a tectonic shift is coming to the European order: toward accommodating, rather than countering, a resurgent Russia.
Since the end of World War II, European leaders have maintained their ever-growing alliance as a bulwark against Russian power. Through decades of ups and downs in Russian-European relations, in periods of estrangement or reconciliation, their balance of power has kept the continent stable.
But a growing movement within Europe that includes Mr. Fillon, along with others of a more populist bent, is pushing a new policy: instead of standing up to President Vladimir V. Putin of Russia, stand with him.
Mr. Fillon has called for lifting sanctions on Russia and for partnering with Moscow in an effort to curtail immigration and terrorism. He is friendly with Mr. Putin. If pollsters are right and Mr. Fillon wins the French presidency in the spring, he could join several rising European politicians and newly elected leaders who are like-minded.
These changes, along with the impending British withdrawal from the European Union and the election of Donald J. Trump as president of the United States, foretell a “dramatic shift” in the half-century of Western unity against Russia, said James Goldgeier, a political scientist and the dean of American University’s School of International Service in Washington.
“All the trend lines right now point away from a tough approach to Russian aggression and point toward more accommodation of the Russian notion that they have a privileged sphere of influence,” he said.
It is unclear how far into Europe that sphere of Russian influence might extend, or the consequences for nations that would come under it after escaping Soviet domination only a generation ago. But those are questions of degree; Mr. Fillon’s primary victory suggests that the shift has already begun.
A Pro-Putin Populism
Though Mr. Fillon would reverse his country’s hard line on Russia, he would not be the first French leader to reach out to Moscow — Charles de Gaulle, the president from 1959 to 1969, also did this — and could not, on his own, upend European unity.
More important, he would not be alone. Mr. Trump has promised cooperation with Russia and threatened to diminish the United States’ role in NATO. Several East European countries have elected leaders who advocate reconciling with Moscow.
In Western Europe, politics seems poised to move in Mr. Fillon’s direction. Mainstream parties, forced to acknowledge that they cannot contain the far right, are instead working to co-opt it.
Mr. Fillon illustrates this trend well. Unlike the French far right, he wishes to maintain his country’s membership in the European Union. But, indulging Europe’s populist wave, he has promised to curtail immigration sharply, promote conservative social values, impose “strict administrative control” over Islam and bring security against terrorism.
Benjamin Haddad, a French analyst at the Hudson Institute, a conservative think tank based in Washington, said that such policies point, in ways that might not be obvious to Americans, toward another agenda item of the European far right: partnering with Mr. Putin.
“All over Europe, Putinism has emerged as an ideological alternative to globalism, the E.U., etc.,” Mr. Haddad said, with Mr. Putin seen as “a bulwark for conservative values — a strongman against gay marriage, immigration, Islam.”
Mr. Haddad added, “It’s largely a domestic phenomenon, rather than the reflection of a strategic debate over the relationship with Moscow.”
Mr. Fillon’s warmth toward Mr. Putin is apparently heartfelt, and it predated this election. What changed is French voters, who increasingly desire hard-line policies and signs of strength that they perceive Mr. Putin as representing.
Nicolas Sarkozy, Mr. Haddad pointed out, won the French presidency in 2007 by running as a pragmatic pro-American conservative, but this year he ran as a pro-Russian populist. While Mr. Sarkozy lost the center-right primary this month, Mr. Fillon carried that same message to success.
The Eastern and Southern Fronts
In some ways, Mr. Fillon is particular to France, where nationalist politicians since de Gaulle have long asserted French independence from the United States and Britain by reaching out to Russia. But similar trends are playing out in several European countries, along their own particular national lines.
In Germany, for instance, center-left leaders are pushing to abandon their country’s role in leading European efforts to counter Russia. Instead, they advocate reverting to the Cold War-era policy of Ostpolitik, in which West Germany sought a neutral balancing role between East and West.
Often, West European politicians do not see themselves as explicitly calling for aligning with Moscow, but rather for abandoning the costly mission to counter Russia’s aggression against faraway eastern states at a moment when they have more immediate concerns.
Independent journalism.
More essential than ever.
West European leaders see themselves as fighting an increasingly untenable two-front war: a southern front against immigration and terrorism and an eastern front against Russia.
The eastern front is largely a project of policy establishments that see it as essential to maintaining Europe’s postwar order. Voters are more skeptical; a 2015 Pew poll found that slight majorities in France, Germany and Italy said their countries should not uphold their treaty obligation to defend an eastern NATO ally should it be attacked by Russia.
Voters, particularly those on the right, have long seen southern issues — terrorism and immigration — as more important. Their threats to install far-right governments that would dismantle the European project entirely are increasingly credible.
European political establishments, unable to resist such sentiments forever, may feel they have to give up on the east to focus on the south.
The Careening Balance of Power
The international context is starker.
Russia is growing in power and aggression just as the Western order’s two strongest powers — the United States and Britain — are threatening to step away.
In the cold-eyed view of international relations scholars, who tend to measure history in epochs rather than election cycles, what Mr. Fillon says or believes is almost irrelevant. Europe’s balance of power is rapidly shifting east, pulling nations like France with it.
Russia is far weaker than the United States, and its wheezing, energy-dependent economy is half the size of France’s or Britain’s. But it still commands one of the world’s largest militaries and its largest nuclear arsenal. Its 2014 annexation of Crimea showed Mr. Putin’s willingness to use that military in Europe.
Balance-of-power theory states that, when a country like Russia rises, the other states in that region have three choices. They can counter by escalating against the rising power. They can flip sides to join the rising power. Or they can accommodate the rising power, allowing it a greater stake in the region.
In the past few years, Europe had confidently chosen the first option, meeting Russia’s aggression with sanctions and eastward military deployments meant to show Russia that the status quo order would remain.
But that approach looks increasingly untenable with Mr. Trump’s election and with Brexit. Even if Mr. Trump does not follow through on his threats to abandon American commitments to defend NATO allies, those allies have little choice but to prepare for the possibility.
To the degree that is already changing, European states seem to be eyeing the third option: to accommodate Russia’s rise, indulging enough of Moscow’s demands to restore stability.
Within Europe, the old order has been led by Chancellor Angela Merkel of Germany, who sees herself as defending the European project but is increasingly challenged by wavering allies and skeptical populations, including many Germans.
“Merkel can’t do it by herself. Germany doesn’t have that ability,” Mr. Goldgeier said. If she wishes to remain in office, she may have to give on something, and Europe’s hard-line on Russia could be it.
As soon as one country breaks from the united front against Russia, Mr. Goldgeier said, “each European country will look to cut its own deal with the Russians.”
That could mean granting Russia concessions in Syria, lifting the European Union sanctions that were meant to force an end to the continuing war in eastern Ukraine, or tolerating greater Russian influence in Eastern Europe.
It is impossible to predict where these trend lines lead, not because they are in doubt but because they foretell such extreme changes in the European order that their consequences vary too widely to pin down.
Mr. Goldgeier, though, said his immediate concern was for the former Soviet republics that are not members of the European Union or NATO and would most likely be first to come under expanding Russian influence.
“For the people of Ukraine, Moldova and Georgia, these trend lines are quite tragic,” he said.
With fewer than 50 days left before President Barack Obama becomes ex-President Barack Obama, you might think Obama would spend his time gilding the lily enough to ensure he’s remembered for more than just a fraud-riddled health insurance scam which is as likely to survive the coming year as a defenseless newborn in a Planned Parenthood “clinic.”
You’d think. You’d be wrong. Nope, before our man Barry bounces back to Grant Park, he wants to ensure we remember him as a bitter man who has some unresolved issues with white people. And when Obama sat for a game of softball with Jann Wenner, the billionaire publisher of Rolling Stone magazine, Obama eschewed burnishing his own legacy for a chance to whine about how poopy everything has gotten.
“I don’t want to sugarcoat it. There are consequences to elections. It means that the next Supreme Court justice is going to be somebody who doesn’t reflect my understanding of the Constitution. It means that the work we’ve done internationally and domestically on climate is going to be threatened. It means that the Affordable Care Act, which has provided 20 million people with health insurance, is going to be modified in ways that some people are going to be hurt by.”
So what if those are some of the precise reasons America just repudiated his entire regime? He’s worried, you guys! More importantly, he’s worried about the people who did the repudiating.
“(T)here is a cohort of working-class white voters that voted for me in sizable numbers, but that we’ve had trouble getting to vote for Democrats in midterm elections. In this election, [they] turned out in huge numbers for Trump…whatever policy prescriptions that we’ve been proposing don’t reach, are not heard, by the folks in these communities. And what they do hear is Obama or Hillary are trying to take away their guns or they disrespect you… in these rural or predominantly white areas, particularly in the Midwest. It’s going to be harder to do in the South…”
Not just “voters,” but “working class white voters.” I guess the rich white people are ok with the president. It’s those rednecks in the South and rubes in flyover country; they’re the real problem. Evidently, it hasn’t occurred to the originator of the infamous “bitter clinger” epithet that shrieking at gun owners every time some thug commits a crime with an illegally-obtained firearm hasn’t proven particularly effective. It also seems to have escaped the Great Uniter that habitually pigeonholing people by skin color is also known as “racism” in some parts.
But Obama doesn’t just think “working class white voters” are racist trash. He also thinks they’re all morons who would be much better off if they would trust people like him to do their thinking for them.
“Part of it is Fox News in every bar and restaurant in big chunks of the country… One of the challenges that we’ve been talking about now is the way social media and the Internet have changed what people receive as news… The whole movement away from curated journalism to Facebook pages, in which an article on climate change by a Nobel Prize-winning scientist looks pretty much as credible as an article written by a guy in his underwear in a basement, or worse. Or something written by the Koch brothers.”
Right. If only there was a way to keep people from hearing things Obama doesn’t want them to, then Obama wouldn’t be such a sad clown. And it never occurred to him that a president with a nearly unprecedented track record of dishonesty, whining to a magazine publisher who’s about to write some big checks for his own rag’s version of “curated journalism,” might be part of why he can’t turn that frown upside down.
Presuming Obama is right, and the Democrat Party’s problem is one of miscommunication, not their near-criminal disregard for everything from Constitutional limits to basic human decency, then it would follow that Obama should use his post-presidential time to help re-establish those lines of communication. Instead, he’s complaining about stupid white people and duplicitous billionaires to Wenner; a stupid, white, duplicitous billionaire. While Obama’s mewling might seem undignified, or even a bit sad, I fully endorse his continuation thereof. Let him wallow in his miserable sty; blaming silly crackers and their television-watchin’ foolishness for the mess he left behind. — Ben Crystal
These Warehouses are in Homer Township, Semi-Trucks are going down Gouger from 159th Overweight without being tciketed, some speeding, on roads not built for 80,000 lbs. Unsafe for School District 92.
Is Lockport becoming the next Bensenville?
I can speak for all of the homeowners in Creekside Estates because I represent them as the Homeowners Association President. Everyone in this neighborhood purchased their homes with the intentions of living in Lockport for a long time.
Our Subdivision is comprised of 44 homes located on the Northern Boundary of Lockport. About two weeks ago, we received a letter from Big Run Wolf Farm, which he received from the City of Lockport. The letter explained how PROLOGIS was exploring the idea of building a series of five industrial warehouses directly behind our subdivision and four other subdivisions.
This project was an ill-conceived plan from the start without the well-being of the residents in mind. Besides lowering our property values and increasing safety concerns for commuters and school children, due to the increase in truck traffic, Big Run Wolf Farm should be of everyone’s concern. Approximately 40,000 people visit the farm each year. Some elected officials may feel that bringing an industrial park to Lockport will attract new restaurants and retail to our area. In my opinion, most of my neighbors can and would prefer to live with the sounds of a howling wolf!
Most elected officials selling point to its residents is that this project will bring more retail and restaurants to Lockport. If anyone has driven past Bensenville, ask yourself this question, when is the last time I traveled there to eat or shop? My guess is never. One other question, why would an elected official decide to place an industrial park right in the center of five residential neighborhoods? For most of us that built our homes in the years of 2004-2006 we all lost approximately 30% in the value of our homes across the board. If this facility goes in research shows that a minimum of a 20% reduction in value can be expected. The great recession was out of our control, this is not!
Our intentions are not to back down. We are not interested in higher berms, higher trees or real estate tax credits. As a resident in Lockport and a representative of Creekside Estates as their Homeowner Association President, we are hoping that the elected officials of Lockport do the right thing. Most importantly, please listen to your taxpayers. We are what make Lockport a great community, not a bunch of warehouses!
Our sign should always read, Welcome to Lockport, not welcome to the next Bensenville!
Michael Bonomo, Lockport resident
In what direction do we want the City of Lockport to go?
This is the question we ask ourselves as residents of Creekside Estates in Lockport. On November 8, 2016, at the Planning and Zoning Commission meeting, a development by Prologis for a 206.36 acre industrial/business park on the property located south of 143rd Street and west of I-355, and east of Archer Avenue was proposed. The property is to be sandwiched into an area surrounded by 5 residential communities and a beloved Wolf Ranch.
The proposed development will occupy 2.1 Million sq ft. of space with 1,373 parking spaces, 572 semi truck parking spaces along with 328 semi truck docking doors. The effects of such a monstrosity will be numerous and irreversible. Property values will not just decrease, they will plummet. The proposed type of property with hundreds of trucks belching noxious diesel fumes, harming the health of our children and adults, polluting the natural habitat, threatening endangered species, bringing rats and other vermin, creating traffic congestion nightmares will undoubtedly be an economic and environmental catastrophe. We can see no positive outcome for the residents of the city of Lockport should this Prologis Development proceed.
The possibility of this development is a result of recent re-zoning changes of which many residents have been, until recently, unaware. Does this type of development portray the direction we want the City to go?
Carol and Jerry Welenc, Lockport residents
Protecting a neighborhood
We are absolutely stunned our city leadership believes that constructing 2 million square feet of industrial warehouses in the middle of five residential neighborhoods and the Big Run Wolf Ranch is a sound idea. The negative impact on our quality of life, environment, safety, crime, traffic and real estate values will be detrimental to all of us.
In a Daily Southtown article from August 6, 2015, 1st Ward Alderman Jim Petrakos questioned whether the city council was approving too many light industrial projects. And I quote Alderman Petrakos, “We don’t want a lot of empty warehouse buildings along I355.” In addition, Alderman Petrakos had testimonials from his neighbors lauding the fact he vehemently fought industrial development behind his and their homes in the Karen Springs subdivision on his www.jimpetrakos.com website. So, which is it Mr. Petrakos, industrial development is bad if it is in your backyard, but good if it is in mine?
At the November 8, 2016 zoning meeting, a representative of Prologis said that this type of development in the middle of several residential communities is a rarity for them. I would challenge anybody reading this article to go to any of the Prologis facilities in Illinois and see if they have one surrounded by single family homes and a wild life preserve like the Big Run Wolf ranch. You won’t find one.
We don’t know what we are more disappointed in, that Mayor Steven Streit and our First Ward Alderman Jim Petrakos believe this to be in our best interest, or the lack of transparency we were shown as a community in this process.
Trump’s victory was predictable, and was predicted, but not by looking at polls. Polling has taken a beating recently having failed to predict the victory of David Cameron’s Conservative Party in the British general elections, then Brexit, and now the election of Donald Trump. One can argue about what’s wrong with the methods involved, but more fundamentally what polls do is to treat these phenomena as isolated events when they are in fact the product of a common set of causes 30 years in the making.
There are two issues at play here. The first is known as Galton’s problem, after Sir Francis Galton, the inventor of much of modern statistics. Galton’s problem is that when we treat cases as independent—the British election, Brexit, the U.S. election—they may not actually be independent. There may be links between the cases—think of Brexit’s Nigel Farage showing up at Trump’s rallies—and there could be subtler contagion or mimicry effects in play as information from one case “infects” the other, changing the dynamics of the system as a whole. Could there then be a higher set of drivers in the global economy pushing the world in a direction where Trump is really just one part of a more global pattern of events?
Consider that there are many Trumpets blowing around the developed world, on both the right and the left. On the one side, insurgent right-wing parties are bulldozing the vote shares of traditional centrist parties all over Europe. For example, the Finns Party is the second-largest party in the Finnish parliament. In Sweden, the Swedish Democrats are the third-largest party in parliament. In Hungary, Prime Minister Viktor Orban’s political party, Fidesz, runs the country having won two elections. Meanwhile in France, the most popular political party is the National Front, which in all scenarios but one—whatever such exercises are actually worth—is expected to win the first round of voting in the 2017 French presidential election. But when all the other parties in France close ranks to prevent the National Front from winning the second round, it’s hardly a victory for democracy. And even in that bulwark of stability, Germany, the upstart Alternative for Germany beat German Chancellor Angela Merkel’s Christian Democratic Union into second place in her own backyard.
But there is also a left-wing version of this phenomenon. Consider the Scottish National Party (the clue is in the name), which has annihilated every other political party in Scotland, or Podemos in Spain, which has won 69 out of 350 seats in the Spanish parliament. Left-wing upstart Syriza runs Greece—even if it’s under Troika tutelage—and Die Linke in Germany is yet another drain on the vote share of the once-dominant Social Democrats, whose own vote share has utterly collapsed.
These parties of course have very different policy stances. The new right favors nationals over immigrants and has, at best, a rather casual relationship with the liberal understanding of human rights. The new left, in contrast, favors redistribution from top to bottom and inclusive rather than exclusionary growth policies. But they also have more in common than we think. They are all pro-welfare (for some people, at least), anti-globalization, and most interestingly, pro-state, and although they say it sotto voce on the right, anti-finance. To see why, consider our second issue.
At the end of World War II, the United States and its allies decided that sustained mass unemployment was an existential threat to capitalism and had to be avoided at all costs. In response, governments everywhere targeted full employment as the master policy variable—trying to get to, and sustain, an unemployment rate of roughly four percent. The problem with doing so, over time, is that targeting any variable long enough undermines the value of the variable itself—a phenomenon known as Goodhart’s law.
Long before Goodhart, an economist named Michal Kalecki had already worked this out. Back in 1943, he argued that once you target and sustain full employment over time, it basically becomes costless for labor to move from job to job. Wages in such a world will have to continually rise to hold onto labor, and the only way business can accommodate that is to push up prices. This mechanism, cost-push inflation, where wages and prices chase each other up, emerged in the 1970s and coincided with the end of the Bretton Woods regime and the subsequent oil shocksto produce high inflation in the rich countries of the West in the 1970s. In short, the system undermined itself, as both Goodhart and Kalecki predicted. As countries tried harder and harder to target full employment, the more inflation shot up while profits fell. The 1970s became a kind of “debtor’s paradise.” As inflation rose, debts fell in real terms, and labor’s share of national income rose to an all-time high, while corporate profits remained low and were pummeled by inflation. Unions were powerful and inequality plummeted.
The era of neoliberalism is over. The era of neonationalism has just begun.
But if it was a great time to be a debtor, it was a lousy time to be a creditor. Inflation acts as a tax on the returns on investment and lending. Unsurprisingly in response, employers and creditors mobilized and funded a market-friendly revolution where the goal of full employment was jettisoned for a new target—price stability, aka inflation—to restore the value of debt and discipline labor through unemployment. And it worked. The new order was called neoliberalism.
Over the next thirty years the world was transformed from a debtor’s paradise into a creditor’s paradise where capital’s share of national income rose to an all-time high as labor’s share fell as wages stagnated. Productivity rose, but the returns all went to capital. Unions were crushed while labor’s ability to push up wages collapsed due to the twin shocks of restrictive legislation and the globalization of production. Parliaments in turn were reduced to tweet-generating talking shops as central banksand policy technocrats wrested control of the economy away from those elected to govern.
But Goodhart’s law never went away. Just as targeting full employment undermined itself, so did making inflation the policy target.
Consider that since the 2008 crisis the world’s major central banks have dumped at least $12 trillion dollars into the global economy and there is barely any inflation anywhere. Almost a quarter of all European bonds now have negative yields. Unsurprisingly, interest rates are on the floor, and if it were not for the massive purchasing of assets in the Eurozone by the European Central Bank, deflation would be systemic. In sum, we may have created a world in which deflation, not inflation, is the new normal, and that has serious political consequences, which brings us back to Trump.
In a world of disinflation, credit became very cheap and the private sector levered up—massively—with post-crisis household debt now standing at $12.25 trillion in the United States. This is a common story. Wage earners now have too much debt in an environment where wages cannot rise fast enough to reduce those debts. Meanwhile, in a deflation, the opposite of what happens in an inflation occurs. The value of debt increases while the ability to pay off those debts decreases.
Seen this way, what we see is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself—what we might call “Goodhart’s revenge.” In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can’t pay—but politically, and this is crucial—it empowers debtors since they can’t pay, won’t pay, and still have the right to vote.
The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.
In short, to understand the election of Donald Trump we need to listen to the trumpets blowing everywhere in the highly indebted developed countries and the people who vote for them.
The global revolt against elites is not just driven by revulsion and loss and racism. It’s also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun.
This article was originally published on FEE.org.
An overzealous federal agency is targeting Florida cats in a pest removal operation and it’s becoming a huge problem for pet owners.
Throughout the ages, cats have held a high place in society. Scholars commonly hold that felines were first domesticated in Egypt 4,000 years ago due to their ability to police the dirty, disease-carrying rodents that plagued the land. This heroic role made cats so revered in ancient Egypt that some worshiped the animals as deities.
If a person were to kill a cat, even accidentally, the act was punishable by death. Upon their death, cats were often mummifiedand left to lay with their trophies: dead rats. However, times have changed for the once-renowned species.
Criminalizing instincts
The Smithsonian recently published an article titled, To Save the Woodrat, Conservationists Have to Deal with an Invasive Species First: House Cats. This is the latest entry in the U.S. Fish and Wildlife Service’s cat fight with residents of Key Largo, Florida, and their beloved pets.
In 2014, the Fish and Wildlife Service implemented a pest management plan designed to trap cats the agency perceived as a threat to the Key Largo woodrat. The furry targets of this sting operation were accused of trespassing on federal land, which is a woodrat habitat, and doing what cats do best: hunt and kill rats. When agents prowl off of federal land to trap private citizens’ cats on private land, the agents are acting unlawfully. Instead of focusing only on the large swaths of feral cats that pose the primary threat to the rats’ survival on the island, the Fish and Wildlife Service went overboard. Resident cat owners complained that agents set baited traps adjacent to the private property of the owners who live next to the federal park.
Then, Fish and Wildlife Service agents trapped Rocky, a pet cat of Spencer Slate, a Key Largo businessman who runs a scuba diving center. According to Slate, the traps “were all about 50 feet from [his] property” when Rocky was lured in one night. As a result, Slate saidthat “Rocky’s face was so bloodied by the trap’s spring-shut door that he did not recognize his pet.”
Slate discovered this after a Fish and Wildlife Service agent showed up at his business to serve him with a written citation threatening jail time for allegedly allowing Rocky to enter federal land. When delivering the citation, the agent neglected to return the captive kitten, instead depositing Rocky at an animal shelter nearly 15 milesaway.
In the face of agency abuse, Slate refused to roll over, taking his case to a federal judge who dismissed the citation after the scuba captain demonstrated that the Fish and Wildlife Service had set the trap that captured Rocky outside of federal land.
As Mark Miller, managing attorney for the Pacific Legal Foundation’s Atlantic Center in Florida, explains, “when [Fish and Wildlife Service] agents prowl off of federal land to trap private citizens’ cats on private land, these agents’ actions implicate a number of constitutional clauses” that could make the agents’ actions unlawful.
Furthermore, the fact that Slate was threatened with jail time for the instinctive response of his baited cat is a gross misuse of government power. This tactic represents the phenomenon of over criminalization, the use of the criminal law and penalties to punish every mistake and to solve every problem — including a pet cat wandering around Key Largo.
More of the same
One would hope that after Slate exposed this injustice in court, the government would start leaving pets and their owners alone, but this is not the only example of federal regulation of domestic animals.
For instance, it is a crime to “allow” a pet to make a noise “that frightens wildlife” on land administered by the National Park Service. It is also a crime to walk your dog in a national park on a seven-foot leash, 36 CFR § 2.15(a)(2) and 36 CFR § 1.3. Keep Lassieclose or she could put her owner in the slammer.
Over the years, courts too have weighed in on animal treachery. In 1926, the English Court of Appeals held in Buckle v. Holmes that a cat owner is not responsible for the damage caused by his trespassing pet. It is a crime to “allow” a pet to make a noise “that frightens wildlife” on National Park Service-administered land. Even earlier, in 1890, a Pennsylvania court held in McDonald v. Jodrey that a cat owner is not responsible for the “predatory habits” of the species, but can only be held liable for the “known mischievous tendencies” of a particular pet.
The judge in Slate’s case is not the only judge who would likely view the adoption of a wildlife conservation strategy that encourages federal agents to confiscate pets as an alarming government overreach.
Adding the threat of jail time for property owners who are mere bystanders to government conservation efforts and the natural instincts of orderly pets is all the more unjust. Legend has it that Pope Gregory IX denounced cats as an incarnation of Satan in the 13th century. This led to the mass extermination of medieval felines.
With cats no longer present to stand guard, Europe experienced an explosion in the rat population, which spread the ravaging bubonic plague throughout the land. Scholars estimate that the Black Deathkilled one-third of Europe.
The Fish and Wildlife Service ought to heed this historical warning and leave the cats of Key Largo alone. — David Rosenthal David Rosenthal is a visiting legal fellow in the Edwin Meese III Center for Legal and Judicial Studies at The Heritage Foundation.
On Monday, a person of Somali origin attacked people with a vehicle and butcher knife on the Ohio State University (OSU) campus. He took a chapter right out of the ISIS play book. Not surprisingly, the perpetrator had recently spent time in Pakistan. Also, not surprising, no one noticed, or if they did, they didn’t care. The perp had also posted rantings on Facebook and once again, no one noticed or cared. The media, police and the usual assortment of talking heads are trying to figure out if this was an act of terrorism. Well duh! From my vantage point, from somewhere in the basket of deplorables, it seems pretty clear that it was. I can also tell you there will be more of these attacks. Suppose an Ohio coal miner went into the rather large Somali community around Columbus, Ohio, where this guy lived, and did the same thing to them. How long do you think the media, police and the talking heads would take to call that terrorism?
Fortunately, there was an armed good guy there to stop the impending carnage – something that the anti-gun cupcakes are having trouble digesting. Of course, OSU has no campus carry, but that will undoubtedly be discussed. Texas recently passed open carry on college campuses, which will give people like the Somali nut job something to think about if they try such activities there. OSU immediately instituted their “Run, Hide, Fight” strategy. Suppose you aren’t so good at running and hiding? You are now down to the fighting option and there you are facing one or two people with knives or machetes. What do have to fight with? Not such a hot prospect without a gun. Not too good with a gun, but at least you have a chance, a really good chance if you have been training.
Situations should show you that things can happen anywhere, anytime, which is why concealed carry numbers continue to rise. For those who have concealed carry licenses, you need to carry everywhere you can, all of the time. The people at OSU were lucky that a policeman showed up when he did. You need to be prepared to be the good guy with a gun.
It is interesting to watch the appointments President-Elect Donald Trump is making to his cabinet and advisory staff. One of those is General Michael Flynn. General Flynn is the real deal, which is why the New York Times and the rest of the liberal media of various sorts get acid indigestion at the mention of his name. General Flynn committed the egregious sin of telling President Obama the truth instead of what he wanted to hear. That won’t be happening with President Trump.
Many are questioning the motivation behind the Jill Stein and Hillary Clinton recount when it won’t change the outcome. Why would Jill Stein be able to raise twice as much money for the recount than she did in her run for president? Clearly there is something more going on. I believe their mission is to study how voter fraud is discovered so that they can do it better next time.
Rumors are circulating that when President Obama pardoned “the turkey” at Thanksgiving, Hillary Clinton became quite excited until she was informed it was the other turkey.
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Saturday, December 3, 2016
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Sunday, December 4, 2016
ISRA Black Powder League
Wednesday, December 7, 2016
ISRA Airgun League
Sunday, December 11, 2016
Glock Match
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By Briton Ryle
Written Wednesday, November 30, 2016
Well, well. It looks like the brain trust at OPEC may have finally hammered out an arrangement to lower its price-crushing oil production levels. All I can say is: it’s about time.
Don’t get me wrong. It’s not that I want to pay more for gasoline. I don’t. I’ve enjoyed the cheap fuel as much as anyone. But pumping as much oil as possible in order to push prices lower and drive marginal producers out of business is just stupid. For starters, it’s a direct attack on U.S. business…
Yeah, I know, that’s the way capitalism works. If you can’t price your product competitively, then you deserve to be undercut by those who can do the same job cheaper. Of course, people don’t always like this aspect of capitalism. When it means you buy cheaper blue jeans, chicken, or gasoline, yeah, people love it. But when it means Levi’s starts manufacturing those blue jeans in Malaysia so it can sell you cheap jeans, well, not so much. Because they’re stealing our jobs…
To date, the Saudi oil strategy has driven around 65 U.S. oil companies out of business, cost well over 100,000 jobs, and saddled both individual and institutional investors with hefty losses. Why the U.S. officially calls the Saudis an “ally” is beyond me. But whatever, it’s not my call. I’m here to talk about oil.
West Texas Intermediate Crude (WTIC) is flying higher this morning. It’s up 8% to about $49 as OPEC has apparently agreed to cut 1.2 million barrels of production a day. U.S. production is already down about a million barrels a day. So this cut really is meaningful. It basically ends the oversupply.
The deal has some pretty surprising elements. Like, the Saudis apparently agreed to “allow” their mortal enemy Iran to raise production. Iran had its production levels cut way back by nuclear sanctions. It wants to be able to produce at pre-sanction levels, and Saudi Arabia is actually in agreement.
Of course, there is a ridiculous amount of oil in storage. It’s going to take a while to work off all that inventory. But at least we won’t be adding to it.
Former Saudi oil minister Sheikh Zaki Yamani once famously quipped, “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” The Stone Age
I’m sure that clever quote plays well at cocktail parties. But any attempt to use it to justify the Saudis’ overproduction is silly. I’ve seen it suggested that the Saudis don’t want to have oil in the ground when the world finally moves on from fossil fuels. That somehow justifies selling as much as possible now, while it still has value. But if you think about it, that makes zero sense.
Sure, the world will move on from oil at some point. Is that point dictated by the cost of oil? I would say no. The entire world infrastructure is geared toward fossil fuels. Did global oil demand drop when oil was $100? No, not really. Because much of the developing world has come of age with expensive oil. Like China. The Chinese consumer has come of age with $100 oil, and demand there grows.
Either way, the Saudis will sell 12 million barrels of oil a day between now and the end of the oil age. The only question is: do you want to sell it at $80–$100 a barrel? Or $40–$50? Who gives a crap if there’s leftover oil?
I guess the Saudis finally invested in a decent calculator.
So now, the big question for us as investors is: can we still buy oil stocks?
Sorry, I’m not going to drag out the mystery. You can buy oil stocks, and you should. Because despite the fact that oil stocks are up big today (my favorite that I’ve recommended before is up 21% today to $14.25), there is more to come. Ummm… Yes, You Can Still Buy Oil Stocks
As I said earlier, the U.S. benchmark WTIC is up to about $49. Last week, it was around $50. WTIC could easily trade to the $60–$70 range in the near future. That, in turn, would push money-losing U.S. oil companies back into the black.
Now, I doubt U.S. oil stocks will trade back to their pre-crash levels. You have to price in some skepticism, because the Saudis can easily go wingnut and open the pumps any time they want. And truth be told, betting against a wingnut move from the Saudis is a pretty bad bet. Still, even a partial recovery of their former glory will mean some big gains for these stocks.
So, my favorite oil stock is Oasis Petroleum (NYSE: OAS). I’ve recommended it several times. And I’m still recommending it. It was over $50 a couple years ago. Today, it’s busting through $14. Could it hit $20? Sure. No problem.
Oasis is a Bakken oil company. It is very good at horizontal fracking. You might also want to look at some Permian Basin companies. That prolific field has lower-cost oil than the Bakken. Callon Petroleum (NYSE: CPE) and Laredo (NYSE: LPI) are worth looking into as well.
One final entry: Canada’s Crescent Point Energy (NYSE: CPG). This one actually still pays a small dividend. Because it’s Canadian, Crescent Point tends to fly a little below the radar. Shares aren’t jumping as much as more obvious names. And that may mean there’s more upside on a percentage basis coming.
There’s no need to overthink this: go ahead and buy an oil stock. There’s upside coming.