I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Friday, February 25, 2011

A message from Russ Carnahan

Dear Dr. Graviss:

Thank you for contacting me with your concerns about federal counterterrorism policy and the PATRIOT Act. I appreciate hearing from you and welcome the opportunity to respond.

During my service in Congress, I have consistently sought to strike the right balance between preserving Constitutional liberties and granting intelligence and law enforcement agencies the tools they need to defend us. While we must act aggressively to ensure the safety of American citizens, we should not do so at the expense of the very rights and freedoms we are trying to protect. For example, judicial review is one of the most important protections that American citizens enjoy under the Constitution, and I have voted to ensure it applies during counterterrorism investigations.

Recently, several provisions of the PATRIOT came up for reauthorization. Although I ultimately voted to preserve the intelligence tools this law authorizes, I opposed the rushed way by which this legislation proceeded, offering little time for debate and no opportunities for amendments.

Please be assured that I will keep your views in mind as Congress continues to consider the PATRIOT Act and the proper response to terrorism.

I always appreciate hearing the views of constituents about issues facing Congress. Please feel free to contact my office if I can be of further assistance to you on this or any other matter of concern. I also hope you will find my website, carnahan.house.gov, a useful resource for keeping up with my work in Washington and the 3rd District of Missouri, and I welcome you to sign up for my e-newsletter at carnahan.house.gov/updates.


Russ Carnahan

Wednesday, February 23, 2011

Embry - Short Squeeze in Silver, Manipulators Getting Overrun

With gold and silver pulling back, King World News interviewed John Embry, Chief Investment Strategist at Sprott Asset Management. When asked about the move in gold and silver Embry stated, “We have been anticipating this for some time which is why we have had such high price targets for both gold and silver. Without exception everybody is saying that demand is off the charts for both metals.”

John Embry continues:

“There is a tremendous bid in the gold and silver markets at a time when the market is tight in these metals and there is a concentrated short position in both gold and silver. The Middle-East crisis has come out of left field and this is creating additional bidding in the precious metals markets. To be bearish gold and silver is to be bullish paper currencies and in view of QE and sovereign risks, that is a terrible bet.”
When asked about silver Embry remarked, “Eric Sprott and I have always contended that in silver if you get some serious physical buying in the absence of above ground inventories that are available for sale, that the paper manipulators would basically get overrun. Right now we are in the process seeing that unfolding.
I definitely think a short squeeze is underway in silver. The evidence will be if the price of silver moves sharply higher from here. I think you will know if you have a real short squeeze if this thing starts piling on gains in the next week.
The price of silver has been held back for so long and this is not something that can be cured with existing mine production because mine production has been sticky. People are coming after silver as a monetary asset because it’s so much cheaper than gold and this is creating an explosive situation.”

When asked about gold specifically Embry commented, “The Asians are looking at the new budget proposal from the US and saying, “Get me out of the dollar.” The other thing that is amazing to me is the sentiment is so bad in gold. There is remarkably little interest in gold, it is almost surreal.”

Embry noted that for the big gains investors should look to the mining shares, “It is time for the investors who really want torque to buy the precious metals mining shares. I think based on ratios that I follow that the shares are at one of the cheapest points vs the metal in recent history. I could see trading days where some of these shares will be up 20% to 25% at a time.

As bullish as I am on the mining shares, I was deeply concerned with the provision in the budget where President Obama was looking to take a 5% gross royalty from mining on public lands. It is a cash grab and nobody is looking at the fact that the return on equity has been awful for the last 20 years.

I think that this is a very short-sighted attitude. The psychological effect of this could have a net negative impact on overall economic activity. It is simply too early in this bull market to put these kind of pressures on mining companies when they have had such a terrible ROI for so long.
I think there is enough upside in the prices in mining shares that they will do fine, but this is just a retrograde move at this stage.”
One of the things I have always liked about John Embry is that he speaks with tremendous authority and conviction. You have to remember that Embry was the first analyst from a major firm to proclaim a bull market in gold. He has remained steadfastly bullish during this cycle and he has also put his money where his mouth is.

Eric King


Tuesday, February 22, 2011

Walker's World: The real G20 crisis

Walker's World

Published: Feb. 21, 2011 at 6:16 AM

By MARTIN WALKER, UPI Editor Emeritus

PARIS, Feb. 21 (UPI) -- Once again, the weekend summit of the Group of 20 lived down to the sinking expectations this purported new system of global governance has already inspired. But there was one significant exception.

Meeting for the first time in Paris, under this year's chairmanship of French President Nicolas Sarkozy, they at least discussed the elephant in the room: the rise in food prices and the consequent threats of inflation and unrest.

The rise in food prices swollen by the climbing costs of a series of basic commodities is now "a global social issue," Sarkozy told other world leaders. Rising prices had helped trigger the revolutions in Tunisia and Egypt, he noted, as he went on to warn of the coming "hunger riots."

"We need to agree a global strategy aimed at ensuring food stability," Sarkozy said as he opened the two-day meeting of finance ministers from the G20 countries, which between them produce more than 80 percent of the world's economic output.

His diagnosis was fine but his prescription was unlikely to win much support from the other members of the G20. In traditional French style, Sarkozy called for greater transparency and regulation of commodities prices and derivative trading. His assumption is that markets are being driven by speculation, as opposed to demand.

"A market without rules is a market which is governed by speculation," Sarkozy said. "Markets must have rules woven into them."

But the real problem of the world food crisis, with the United Nations' food price index higher now than it was at the last peak in 2008, isn't speculation but an acute shortage of supply.

The droughts in Russia last year took Russian wheat exports out of world markets. Floods in Australia and Brazil and a new drought in China are worsening the problem. And with more than 100 million tons of American corn being turned into ethanol, the squeeze on food has tightened further.

And then there is demand, not simply from the 73 million babies born worldwide each year but from the way hundreds of millions of Chinese and Indians and other inhabitants of fast-growing countries want to eat eggs and meat and chicken rather than just rice and beans and bread. Once a country starts climbing the prosperity ladder, it soon starts clambering up the protein ladder, too.

The United Nations' Food and Agriculture Organization estimates that world demand for food will double over the next 20 years. World demand for water is also rising, which is becoming a serious crisis for the arid Middle Eastern countries facing angry riots in their streets.

And now there is a further problem, the steady spread of the Ug99 wheat rust virus, which has spread from its origins in Uganda to Somalia, Yemen and now Iran. Attempts to stop its spread by planting resistant strains of wheat developed in Australia have failed, because the virus is mutating as it travels.

If it continues to spread into the South Asian breadbasket of the Punjab, that spells disaster for India and Pakistan. If it spreads north into Kazakhstan, Russia and Europe, the consequences are equally severe.

In a speech to last week's annual FarmTech conference in Edmonton, Canadian food pathologist Tom Fetch warned that "Ninety percent of the wheat varieties in the world are susceptible."

"Ug99 can be brought into North America at any time," he said. "It's not really a matter of if it will come here but when it will come here."

Fetch, one of the scientists recruited to a $13 million research project with Agriculture Canada looking to breed varieties resistant to Ug99, is pinning his hopes on two Canadian strains, AC Cadillac and Peace, which are highly resistant to the disease.

Meanwhile in Afghanistan, which needs to grow about 5.million tons of wheat each year to be self-sufficient, U.S. troops from the 10th Mountain Division are being trained to recognize the virus and to warn Afghan farmers to plant resistant strains.

"It's already in neighboring Iran and we are expecting it to hit Afghanistan probably in the next year or so," warns Peter Hobbs, professor of crop and soil sciences in the College of Agriculture and Life Sciences at Cornell University. "Farmers don't know this. They don't know it's on its way."

By comparison with the food issue, the G20 talks on financial issues were almost irrelevant. They at least agreed, after initial Chinese objections, to talk about global trade imbalances and the role of currency valuations. U.S. Treasury Secretary Timothy Geithner charged that China's currency was still "substantially undervalued" and that recent steps taken by Beijing to raise its value were inadequate.

But the concern over food and commodity prices kept recurring, with Geithner and the International Monetary Fund's Dominique Strauss-Kahn both warning of the role rising prices had played in what Geithner called the "historic events" in North Africa.

The IMF estimates that commodity prices jumped 20 to 30 percent last year, a trend that Strauss-Kahn said was "creating a lot of problems for low-income countries and vulnerable people."

Separately, World Bank President Robert Zoellick said, "We're reaching a danger point" in these countries. He said he urged G20 officials to "put food first in 2011," even as they argued over ways to measure imbalances in the world economy.

Read more: http://www.upi.com/Top_News/Analysis/Walker/2011/02/21/Walkers-World-The-real-G20-crisis/UPI-88851298286960/#ixzz1Eir0P8Z7

Monday, February 21, 2011

Those Who Know Will Understand

a little conspiracy theory

Submitted by JR Nyquist on Fri, 17 Sep 2010

According to some experts the U.S. economy is one “event” away from a catastrophic sequence. My own variation on this sequence goes something like this: first, the dollar collapses; second, the government’s response prevents any chance for recovery; third, political unrest and destabilization begins; last, the defensive function of the state fails as external and internal enemies take advantage of the country’s weakness. This sequence would likely be nonsense if it were only my sequence. Unfortunately, it is a sequence dreamt up by Soviet strategists as far back as the 1960s. It was the entire basis of the Soviet strategic blueprint of half a century ago. The writings of at least two Soviet Bloc defectors suggest that this same blueprint dictated the controlled “collapse” of Communism in Eastern Europe from 1989-91. This would differ from the uncontrolled collapse of capitalism that Soviet strategists also anticipated.

The self-destructive course of bourgeois society is something Communists are well equipped to envision. They are ready to denounce the selfish “individualism” of capitalist society, the disintegration of community, the dire consequences of untrammeled greed. But America’s demise is mediated by other factors, nearly all of them enumerated in George Washington’s Farewell Address: “As a very important source of strength and security, cherish public credit,” said Washington. “One method of preserving it is to use it as sparingly as possible.” He further advised Americans to avoid “likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear....”

American leaders make policies that fly in the face of Washington’s advice. The government spends way too much money, and will continue to spend too much money. Look at what is happening today. There are numerous entitlement programs, and government is expected to pay until the system is totally bankrupt. It is therefore foreseeable that the U.S. military will collapse when the U.S. financial system ultimately fails. Even our enemies recognize this, and look forward to it. Under the current regime, the American people seem determined to consume the seed corn meant for tomorrow’s harvest. So the enemy asks himself, "How can America be pushed over the edge? How can the process of unraveling be hurried along?"

Nine years have passed since terrorists destroyed the World Trade center and burnt the Pentagon. The terrorist cause was Islam, supposedly. The purpose of the attack was economic sabotage, most definitely. One might say that America was pushed as it strolled along the edge of an economic abyss. It is in this context we should consider the allegations of former KGB/FSB officer Alexander Litvinenko, who said the KGB was behind al Qaeda. Litvinenko claimed that Ayman al-Zawahri, the number two man in al Qaeda, was a longtime KGB agent. What lends credence to Litvinenko's claim is the well known fact that the Kremlin poisoned Litvinenko with radioactive polonium 210. The substance used to kill him was ridiculously expensive and exotic, indicating a government sponsored assassination. Major media outlets have confirmed the conclusion of official inquiries; namely, that Litvinenko was assassinated by Kremlin agents.

A curious addendum to Litvinenko’s testimony was broadcast on Echo of Moscow on 9 September 2010. A former member of the Russian parliament, Konstantin Borovoy, gave an interview to Tatyana Felgenhauer in which he revealed something related to 9/11 -- something that supports Litvinenko's allegations. Describing the 1999 terrorist attacks in Russia that enabled Putin and his FSB/KGB colleagues to take power, Borovoy indicated a conspiracy at the highest levels; specifically, he said the attacks were a method used to stop the advance of freedom and capitalism in Russia. The KGB had to reassert itself, and justify a gradual return to Soviet methods, by organizing terrorist acts that would be blamed on Muslims from Chechnya. Borovoy hoped the Russian people would catch on. He hoped they would realize who the real terrorists were; but this did not happen. "Actually," said Borovoy, "the [political] tactics or technology [of manipulation], which was tested through the bombing of the apartment houses [in 1999], worked. Every time an attack happens, people are frightened; and much of society responds very simply. They rally around the centers of power. " Borovoy then pointed to information indicating that the KGB was also behind the terrorist attacks of 9/11.

"When the apartment bombings happened in September of 1999 I held a press conference," said Borovoy, "I got hold of very serious intelligence. It happened to contain data ... about the U.S., which I gave to the FBI." The contact who provided this "serious intelligence" indicated that the FSB was, in fact, behind the apartment bombings. But there was more. "Besides that," Borovoy explained, "he also provided me with information regarding the United States. This information, in 1999, sounded totally absurd. He told me that someone named bin Laden was going to torpedo skyscrapers with Boeing airliners."

When Borovoy learned about the bin Laden story, as ridiculous as it sounded in 1999, he felt obligated to say something to the Americans. So when he was traveling in the United States a month later, he wanted to convey the information without sounding ridiculous. He therefore approached the Americans with an apology in case the information sounded crazy: Osama bin Laden was going to hit American skyscrapers with airliners. "I gave them this information," said Borovoy. "And would you believe, this exact thing happened in two years?"

So how did Russians in Moscow know about 9/11 two years in advance? If Borovoy is telling the truth, there is only one likely answer to the question. The Russians had long prepared something known by the General Staff as "the overture," which was described by GRU defector Viktor Suvorov as

a series of large and small operations the purpose of which is, before actual military operations begin, to weaken the enemy's morale, create an atmosphere of general suspicion, fear and uncertainty, and divert the attention of the enemy's armies and police forces to a huge number of different targets, each of which may be the object of the next attack." [Spetsnaz, p. 196]

According to Suvorov, the overture is carried out by special services agents of satellite countries and by "mercenaries recruited by intermediaries." The method employed in these operations is known as "grey terror." In Suvorov's words, this is a "kind of terror which is not conducted in the name of the Soviet Union. " Moscow does not leave its visiting card. Instead, other people's cards are used. "The terror is carried out in the name of already existing extremist groups not connected in any way with the Soviet Union, or in the name of fictitious organizations."

During the period of grey terror, Russian sabotage operations "should be regarded as natural disasters, actions by forces beyond human control, mistakes committed by people, or as terrorist acts...." Attending the terror campaign, there will also be a disinformation campaign intended to destroy the authority of the government. Plausible scandals will be created out of nothing. Generals and politicians will be driven to suicide. The KGB and GRU will dust off their old files -- especially files on the most powerful people in the West. These men and women, above all, will be targeted for destruction. Methods will include slander and innuendo. "The main victims now are the people whom the Soviets had tried to recruit but failed. Now carefully edited and annotated materials get into the hands of the press," noted Suvorov.

Soviet intelligence has tried to recruit thousands, even tens of thousands, of people in its time. They include young lieutenants who have now become generals and third secretaries who have now become ambassadors. All of them rejected Soviet efforts to recruit them, and now Soviet Intelligence avenges their refusal. [Spetsnaz, pp. 197-8]

Imagine the confusion and erosion of authority that will attend this last phase of the operation. The most trustworthy people will be distrusted. Those who were actually recruited by Soviet Intelligence, will be the only figures apparently free from scandal. The peace movement will simultaneously gain prestige. Those who suspect Moscow will lose all credibility. Finally, when grey terror has served its purpose the Russians and their Communist allies will resort to open warfare: "Red Terror."

If you think "the overture" is fantasy, you are sadly mistaken. What Suvorov described in his book, written in the mid-1980s, is the very real plans of real men -- deadly enemies of the United States, determined to destroy America forever. Konstantin Boroyov is merely one witness out of many, telling you the same story. Litvinenko told this story more directly, and was poisoned. Boroyov offers a few facts, and hopes that people will "wake up." Of course, he knows they won't.

Related to this, a suggestive item recently appeared in an American newspaper, the Savannah Morning News. Effingham County Sheriff deputies arrested three men (two from “former” Soviet Russia and one from “former” Soviet Kazakhstan) near a power plant on Old Augusta Road at 1 a.m. Sunday morning, 5 September. The men were in possession of a machete, shovel, wire cutters and ski masks. According to the Savannah Morning News, one of the men “had black silk stockings in his front left pocket.” Of course, all three were released after being interviewed by officials of the Joint Terrorism Task Force.

The job of Soviet spetsnaz (special forces), who train in the United States under the guise of "tourists," is to infiltrate the U.S. prior to a nuclear war and take out key targets. These would include power plants, city water supplies, government leaders, etc. They are also tasked with burying nuclear weapons on American soil in advance of a war. If you look at Old Augusta Road on a map, it is located about two miles east of the McIntosh Combined Cycle Plant in a rural wooded area. So let us imagine this situation: three young male tourists from the “former” Soviet Union, of military age, driving a Nissan Pathfinder at 1 a.m. on a Sunday morning with ski masks and black silk stockings, a shovel, wire cutters and a machete. Their destination is not a nightclub or bar. They are driving to "the end of the road." From their tools one may expect they will be cutting their way through brush, digging a hole, and cutting wires. One more thing: Old Augusta Road has power lines running along its length. In the following passage, read what GRU Col. Stanislav Lunev says about Russian nuclear devices maintained on U.S. soil:

Setting up one of these devices is complicated. The bombs need a small amount of power to keep them safely in storage. For example, the GRU specialist might have to run a very small wire to an electrical source, such as a power wire, and then attach it to the weapon. The wires can be run as far as one hundred yards or more from the weapon. The wires are small enough that they would easily break if someone tampered with them or tried to follow them to their source. In case there is a loss of power, there is a battery. (Through the Eyes of the Enemy, p. 26)

According to Lunev, GRU operatives have been sent to find hiding places for Russian nuclear weapons on American soil. One of these weapons, the RA-115 portable nuclear weapon, is intended for use against American leaders and other targets of strategic importance at the outset of a war. As Lunev explained, “it is surprisingly easy to smuggle nuclear weapons into the U.S., either across the Mexican border or using a small transport missile that can slip by undetected when launched from a Russian airplane.”

Related to the suspects' possession of a shovel, GRU defector Suvorov explained that the shovel (or spade) is the “principle weapon” of Soviet spetsnaz. According to Suvorov, a shovel is an excellent device for torturing prisoners, “to cut off ears and fingers, to hit the victims in the liver and perform a whole catalogue of unpleasant operations on a person under interrogation.”

Through all of this we are led to suspect that Russia is preparing to attack the United States. Along with Communist China, it is only logical that the Russians are waiting for the collapse of the U.S. economy. They hope that Americans will turn against each other. They further hope that America's defensive systems will stop being serviced. Undoubtedly Americans are not acting wisely. The U.S. government is spending too much money. We continue to slide toward bankruptcy.

In closing, I would like to quote from a courageous blogger in Moscow.

I am not a Cassandra. I am not into conspiracy theory, not even close. But at the end of July 2001 I was expecting that somewhere on earth somebody was preparing for a devastating terror attack. I have my own system to figure things out. I observe, analyze, and draw conclusions. What I mean is that from the middle of 1990 I noted that as soon as a certain Very Important Person [VIP] starts to frequently appear on [Russian] TV, a terror attack follows. Either a suicide bomber in Israel, or an explosion of a pipeline ... I was never building any graphs with data. My method is based on observing this particular snout on the TV screen. Then I start thinking, ‘Who is going to die this time.’ And I am never wrong. As soon as this particular VIP appears with a certain frequency on the TV screen, something very bloody happens. It is important to know that this particular VIP is a top flier in the special services [KGB/FSB]; so this character suddenly starts to crawl across the TV screen in July 2001 and remains there through all of August; and this is what I was thinking: Is it going to be a war? Because this character can do it. On September 11, 2001 around 5 p.m. Moscow time, I realized that again I wasn’t mistaken. This snout never appears on TV for nothing; so those who understand have no doubt about who I mean in particular. Intelligenti satis et sapienti sat.

Among brave freethinking Russians, this commentary was recognized as one of the best blogs of the day at http://www.besttoday.ru/subjects/225.html.

JR Nyquist

jrnyquist @ aol.com http://www.jrnyquist.com

Thursday, February 17, 2011

The Coming Food Envy

By Kevin Brekke

In 1996, a book titled The Clash of Civilizations and the Remaking of World Order by Samuel P. Huntington was published. In it, the author argues that the age of ideology had concluded, and that the primary axis of future conflicts in a post-Cold War world will be along cultural and religious lines. The uprisings, skirmishes and wars to come would not be fought over resources such as rice or oil but over differences of ethnicity and faith.

Huntington’s theory, as you would expect, mustered ample critics. Among them was Edward Said who, in his 2001 response The Clash of Ignorance, indicts Huntington for his use of oversimplification and static depictions of whole cultures. Reality, counters Said, is far more complex and dynamic.

A darkly comical sidebar to the debate was the response from the United Nations, its so-called theory of Dialogue Among Civilizations. The “theory” was the basis for a UN resolution naming the year 2001 as the Year of Dialogue Among Civilizations. When all you have is talk, every problem looks like faulty communication. Presumably, the solution to all strife in the world would come about from endless talking by its delegates while bravely enduring long hours in premium-class airline cabins, soldiering through endless caviar-topped buffet luncheons, and suffering unknown numbers of nights at five-star hotels.

The machinations of clueless NGO personnel notwithstanding, it is said that time heals all wounds. It also exposes false assumptions, like Huntington’s speculation, as we were again reminded by yesterday’s news.

“World Bank: Food Prices at Dangerous Levels,” read the Associated Press headline.

I doubt that anyone reading this gives much thought to the possibility of hunger or malnutrition paying them a visit. To Western cultures, the idea is as foreign as a homegrown political revolution or life without air conditioning. Even for a well-seasoned traveler in possession of a dog-eared passport, the plight of the world’s hungry is largely out of sight. As a tourist, you are not likely to encounter the dark underbelly of extreme poverty while taking in the popular attractions.

But leaving home is not mandatory to witness food insecurity among the most unfortunate. As of last month, the number of Americans receiving food stamps reached 43.2 million, 14% of the population, or nearly 1 in 7 people.

The phenomenal rise in the number of people seeking food assistance has so far been the direct result of protracted economic hardship that has befallen many individuals and families. The culprit has been mainly unemployment.

But if the worldwide rise in commodity prices continues, opening the door to food price inflation, the financial and economic crises plaguing the U.S. will soon devolve into a social crisis. It is one thing to be struggling to pay your bills; it is a whole different thing to be struggling while you and your family are hungry or feel deserving of a better diet.

Your neighbor may not like forgoing his cell phone for a landline, or battling with an antenna after canceling cable, all in the name of belt-tightening and a shrinking family budget. But when the smell of your steaks on the backyard grill wafts across his nostrils while he pretends to enjoy another plate of spaghetti and meatless sauce, a new kind of resentment will seep into the collective conscience of a growing slice of anxious Americans…

Food envy. At some point, and it is not far off, the complexity and urgency of food security will become a reality, and a battle in the land of plenty will ensue.

In many ways the battle has already begun. Shoplifting of food, or “shrinkage” as it is known in the retail industry, is on the rise. This is a fact that the food industry avoids talking about and works hard to keep out of the press. Not surprising when you consider that few food items carry a security tag, making them an easy mark.

Profit margins at grocery chains have compressed as retailers attempt to absorb price increases as rising commodity prices pass through to the wholesale level. Inventory shrinkage at grocery stores further pressures margins, and retailers will be forced to pass along their rising costs to the consumer. There is little to no room left for retailers to eat price increases.

Recalling Huntington’s outlook for clashes among civilizations, it looks like his theory is hit and miss on several issues. Conflict between differing groups has occurred since the human population exceeded one – it seems part of the human condition, and no change looks to be imminent. And disagreements over resources and ideology will continue; the idea that one would supplant the other seems na├»ve. So, maybe a more appropriate title for his book would have been to suggest intra- rather than inter-civilization clashes.

The coming rise in food prices will be no less dramatic than for all commodities as the downfall of paper money accelerates. A man can survive without many things, but food is not one of them. And long before his supper table is empty, his envy of those with a diet more aligned with his desires will predictably spur a great cry for “food justice.” Any attempt by government to control, subsidize, or ration the food supply will end in disaster, and if history is a guide, shortages and higher prices. When preparing for future surprises, don’t forget to include higher food bills.

Tuesday, February 15, 2011

Silver is Approaching Stage Two of its Bull Market

by James Turk

February 14, 2011 – Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”

I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one. Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two." I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value."

I did not make any mention of silver in the above two articles. It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.

This chart shows a massive accumulation pattern, marked by the green lines. This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter.

From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here’s the important point.

Silver is still in stage one. It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.

I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.

Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value.

Monday, February 14, 2011

Escaping the Great Depression - and Extending the Greater Depression

Great article showing why govt spending is not the answer, GDP is a poor measure of economic health (hint: it includes govt spending), and why WW2 was FDR's historical saving grace, although not the commonly believed solution to the Great Depression.

Escaping the Great Depression - and Extending the Greater Depression

Friday, February 11, 2011

Ted Butler Commentary

February 9, 2011

Those who keep up with business news will have no doubt read about the recent developments in the category of minerals known as rare earth elements (REE’s). These are minerals that are vital to modern industrial applications, ranging from lasers, batteries, alternative energy, and superconductors to all sorts of important high-tech applications. There are 17 minerals classified as REE’s with exotic names like scandium, yttrium, lanthanum, cerium, and praseodymium. Don’t worry, this is not a technical discussion and this will probably be the only time I write about rare earth elements.

Actually, these minerals are not all that rare, in the strictest sense of the word. Many are quite abundant in the earth’s crust. What makes them rare is that they are generally not concentrated in ore bodies offering economically feasible extraction. The first rare earth mineral was discovered around 1800, in a village in Sweden named Ytterby, and several REE’s are named after that village. Up until about 1950, most rare earth production came from India and Brazil. In the 50’s, South Africa was a big producer, then California took the lead from 1960 through the 1980’s. Then, China came to be the dominant producer by far, and currently produces 97% of world production.

Due to booming world demand, production has strained to keep pace. This was recently exacerbated by China’s new export restrictions, due to falling ore reserves and environmental concerns. This sent the price of rare earth elements soaring by hundreds of percent, prompting a world-wide effort to ramp up production. However, you just don’t flip a light switch and begin new mine production. It can take years to develop a mine and begin production. In the meantime, industrial consumers must compete for available supplies by bidding up the price. This is the essence of the law of supply and demand.

Since I’m not a REE expert why am I writing about them? The answer has to do with silver. Silver shares many characteristics with the rare earth elements and there is a lot to learn from them in our analysis of silver. In fact, the purpose of this article is to make the case that silver is the rarest of all the rare earth elements.

One of the common characteristics between silver and the rare earth elements is that many REE’s are mined in conjunction with other minerals, the same as silver with its by-product mining profile. Mining for both tends to concentrate on the easiest to exploit properties first. Consequently, the remaining properties tend to be lower-grade and more expensive and difficult to develop. Both silver and REE’s have seen the emergence of China as the chief producer of each. (In the case of silver, the production reliance includes the processing of scrap material not mined in that country.) Silver production from China is nowhere near 97% of world production, as it is in the rare earth elements, but it still is significant. Environmental issues and restrictions inhibit the production of both silver and the REE’s. And with both, higher prices don’t automatically guarantee immediate new production. For instance, last year on an 80% increase in silver price, the mine production of Peru (the world’s largest miner) declined 7% or 12 million ounces. That’s a million silver ounces less per month than from a year earlier. Recently, the price of REE’s skyrocketed, due to China’s sharply curtailed exports. Should any major silver producing country sharply restrict the export of silver, the price would soar.

In most industrial applications, there is a small, but necessary amount of silver and rare earths used which is resistant to substitution. The chemical properties of silver and rare earth elements are usually unique in the specialized industrial applications which mandate their use. Generally, the consumption of silver and rare earth elements is price-inelastic, meaning sharply increasing prices of each do little to discourage consumption, due to the lack of substitutes. As was seen recently in the rare earth elements, the industrial users panicked when the supply was curtailed. This will also happen in silver, as I have long predicted.

Where do I get off with the statement that silver is the rarest earth element of them all? This point is the easiest of all to make and should prompt you to rush out to buy silver immediately. What separates silver from the REE’s is the one stark factor which is unique to only silver. You can actually buy and hold silver in its purest elemental form, unlike other rare earth elements. Try calling some dealer to invest in pure yttrium, or promethium or gadolinium. And if by some miracle you can find someone to buy from, try to imagine how you could possibly sell or determine a fair price?

The thing that separates silver from all other REE’s is that you can invest in it directly. Sure, you can buy stocks in companies that mine silver or REE’s, but only silver has the dual role of basic investment asset and industrial material. That’s what makes silver the rarest of the rare. What separates silver from any other natural resource is thousands of years of primal attraction, held by man as a form of wealth, and simultaneously a vital and strategic industrial material necessary to modern life. It’s just not practical for the average investor to buy a pound of a rare earth, a barrel of oil, or a bushel of corn for investment purposes. I suppose a case can be made about investing in platinum or palladium, both important industrial metals, but there has never been any evidence of a world-wide rush to buy these metals as there has been in silver. Buying or selling an ounce or a pound of actual silver is as easy as falling off a log. The United States Mint sells Silver Eagles by the millions of ounces every month. And while many invest in gold, it doesn’t have that investment asset and industrial material dual role unique to silver. That’s what makes silver so rare.

The amazing thing is how few of the world’s potential investors appreciate the uniqueness of silver’s rare dual role. The ease of investing in silver is taken for granted by the world. Just a few decades ago, silver was in common coinage. This explains why people have difficulty comprehending how such a formerly abundant material could be considered rare today. How many people know that world silver stockpiles are down 90% since 1940? That’s precisely what creates the investment opportunity of a lifetime – seeing something before the crowd.

It seems preposterous that a material like silver, which the common man carried in his pocket for bus fare or a newspaper could somehow transform itself into a rare material about to enter into a profound shortage. That shortage is virtually guaranteed by silver’s unique dual role. The coming rush into silver by investors seeking profits and industrial users looking to stockpile a vital manufacturing component makes a shortage almost certain. There is no way production can ramp up nearly as quickly as the combined force of investment and user demand.

For all intents and purposes, silver has been the best investment over the past decade. Those investors who studied the facts objectively and bought silver, have reaped multiples of their original investment. Silver will likely be the best investment of the next decade as well. Those who study the facts and act on them by buying silver will be generously rewarded. There is no way anyone can turn the clock back to single digit silver. Those days are long gone. But in some ways, the more exciting time lies ahead.

Ten years ago, it was difficult to convince people to buy silver. The stock market was flying high and real estate was just entering a major bull market. Crude oil was sliding towards $20/barrel and most commodities were flat. Silver was under $5, gold under $300, and the term rare earth was mostly unknown. Anyone investing in natural resources needed to have their heads examined. Even though silver was in a deficit consumption pattern, there was little interest in buying it as an investment.

Today, things are different. Natural resources are more widely appreciated, in light of burgeoning world populations and the growth in living standards. Now it is a question of which natural resource will experience the next supply and demand crunch, rather than will there be any crunches.

In the last decade, silver rose due to the cumulative effect of a 60 year deficit and the start of net investment demand. This decade, it will be investment demand driving silver higher, along with the end of the short selling manipulation. This termination appears underway. Thanks to great price performance, more investors will be drawn to silver. Thanks to the Internet, a great manipulative force that restricted the price cannot last much longer. While it may be hard to achieve the 7-fold increase in price from the extreme lows of ten years ago, the gains will still be spectacular and should come quickly. At some point the buying momentum will overwhelm those shorts trying to hold back the tide. The big shorts look tired of the manipulation and appear ready to stand aside on the next big rally.

How many neighbors and friends and relatives and fellow citizens do you know that have made a serious investment in silver? I doubt you can discover one in a hundred, or one in a thousand. Despite the impressive price gains over the past 5 or 10 years, silver is still vastly under-owned and under-appreciated. The investment flows into silver, compared to any other investment class, have been tiny. However, the amount of real silver available for investment is so small that the small investment flows to date have been sufficient to power silver higher. As more investors become aware of the silver story, the money coming into silver will only increase, propelling the price to levels once thought impossible. Importantly, the money flowing into silver appears to be for physical buying and not margin. Bubbles only occur when people are so enamored of an investment that they recklessly borrow to buy as much as possible. We’re a very long way from that in silver. That’s yet to come.

There are now $2 trillion in assets in hedge funds (the pre-financial crisis levels). This is hot money that comes into any promising investment theme in a flash. It is big money, always on the prowl for a good investment idea. To my knowledge, there has been no rush yet into silver by the hedge fund sector. Remarkably, silver recorded an 80% gain last year and a 170% gain over the past two years with no visible participation from the biggest and hungriest investors of all. There is no doubt in my mind that before the silver price saga is finished, the hedge funds will have come into silver in a big way. If silver can climb 80% and 170% without them, what can it climb with them knocking down the doors to get in? The silver story is just getting out. Please take the time to study the facts and act before the big surge.

(For subscription information to Ted Butler’s private newsletter, please go to www.butlerresearch.com)

At least he got that right

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. ~ John Maynard Keynes

Thursday, February 10, 2011

How Governments Solve The Short Term Debt & High Inflation Dilemma

By Daniel R. Amerman, CFA


Misunderstandings can be quite expensive for investors, and this article will examine two common but mistaken beliefs about short-term government debt and inflation. The first belief is that because much of government debt is short term, and short term rates are likely to eventually rise rapidly with rising inflation, this means that the debt can't truly be inflated away. Therefore, many people think that even in a highly inflationary environment, the inability of the government to inflate away its debt means that literal bankruptcy becomes highly likely or inevitable.

A related belief is that Treasury bills in the US (and their equivalents in other nations) may be a surprisingly good investment for keeping up with inflation. The theory is that there is likely to be an initial loss when inflation first accelerates, but once short-term interest rates catch up with inflation, the investor is effectively protected.

As we will convincingly demonstrate herein, a government can use inflation to redistribute wealth from short term investors to the government - but it isn't actually the inflation that does it. The wealth redistribution is very real, but it comes from effectively taxing inflation, rather than from destroying the purchasing power of the investment principal directly. Ironically, most people are investing for the wrong risk, and are being distracted by what doesn't work for the government, while ignoring the little understood vehicle that governments around the world can use to avoid bankruptcy by appropriating the net worth of investors.

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Wednesday, February 9, 2011

Why higher gold prices are good for most people


Precious metals and the validity of technical analysis


Last month’s drop in the price of gold was accompanied by almost universal recognition of a head-and-shoulders top, one of the classic reversal patterns recognised by technical analysts. This is a pattern that marks the end of a trend; the end of a bull or bear market, or at the very least a bull or bear phase. But how relevant is technical analysis to precious metals?

There is no doubt that using chart analysis in the right circumstances can be a powerful tool, but this presupposes that investor sentiment, in other words the emotions of greed and fear that drive investors, is properly reflected in the price. For this to be true, investors with these emotions must dominate the market, and prices themselves must be an accurate reflection of supply and demand. This is habitually true of equity markets, where public sentiment predominates, and for which technical analysis was originally developed. It is obviously less true of other markets that are dominated by other factors, such as changing patterns in non-investment demand or the manipulation of interest rates; but wherever the public’s investment activities are part of the pricing, technical analysis will always have some relevance. However, precious metals have their own peculiarities.

Gold and silver are segregated into two basic markets, paper and physical, which have become somewhat detached from each other. The public interest, with respect to investment, is mostly corralled into the paper markets such as futures and options. The public interest, with respect to hoarding, is entirely centred on the physical. While many of us indulge in both activities the distinction has to be clearly understood because investment motivation is entirely different from that of hoarding. In economic terms, investment is the application of savings for the expectation of a return, but hoarding is the removal of savings from circulation entirely. Investors expect to make a return measured in their paper currency, while hoarders seek protection from their currency. Technical analysis is of no interest to hoarders, since they are driven by fear alone and price is therefore immaterial.

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Common Gastrointestinal Conditions

Medscape: Dr. Thomas, can you summarize some of the major findings in the report in each of the therapeutic areas discussed? First, what is the role of these agents in prevention and treatment of acute gastroenteritis (AGE)?

Dr. Thomas: A number of randomized controlled trials (RCT) of probiotics in AGE have been conducted. Rotavirus was the most common cause of acute diarrhea in these studies. While the results indicate that there is modest benefit with use of probiotics to prevent AGE in infants and children, the available data do not support routine use to prevent nosocomial rotavirus diarrhea in children attending daycare. Rotavirus vaccine is likely to be a much more effective agent in preventing rotavirus infection although there may be special circumstances, such as long-term care facilities, where use of probiotics may be useful in prevention. In the treatment of AGE, however, the data are positive. There is evidence from well-conducted RCTs to support the use of probiotics, specifically LGG, in the management of acute infectious diarrhea. Probiotics have been found to shorten the duration of diarrhea by about 1 day and to decrease the number of diarrheal stools. They also shorten the time necessary for intravenous hydration when this is required. Probiotics seem to be more effective when given early in the course of diarrhea and are most effective in healthy infants and young children with watery diarrhea due to viral gastroenteritis, such as rotavirus, but not invasive bacterial infections.

Medscape: Another common cause of diarrhea in young children is the use of antibiotics. What does the report say about use of probiotics in the prevention and treatment of antibiotic-associated diarrhea?

Dr. Thomas: Prevention of diarrhea due to antibiotic use is another area where a meta-analysis of RCTs indicates a benefit from probiotics.[1] In most of the studies, a probiotic was initiated at the same time as the antibiotic, resulting in a substantial reduction in development of diarrhea. Approximately 1 in 7 cases of antibiotic-associated diarrhea was prevented by the use of a probiotic. However, there have been no published RCTs examining probiotics for the treatment of antibiotic-associated diarrhea in children, including Clostridium difficile antibiotic-associated diarrhea, and therefore their use presently cannot be recommended for pediatric patients.


Dr. Thomas: Prebiotics are supplements or foods that contain viable microorganisms that cause alterations in the microflora of the host and stimulate favorable growth of probiotic bacteria. Human milk contains substantial quantities of prebiotics, and prebiotics and probiotics have also recently been added to infant formulas. Human milk and formula therefore are examples of functional foods -- a modified food that provides a health benefit that cannot be attributed to the nutrients in that food (see the Table for terms). The most studied probiotic bacteria to date include Lactobacillus rhamnosus GG (LGG), Bifidobacterium lactis, and Streptococcus thermophilus. Live yogurt, which contains probiotics, is the most common example of a functional food. The list of products containing probiotics is rapidly expanding and clinicians can access the most up-to-date information at www.usprobiotics.org. It should be noted that this is an industry-maintained Website.

Table. Definitions of Agents

Probiotic A supplement or food containing a sufficient number of viable microorganisms to alter microflora and has the potential for health benefit

Prebiotic A nondigestible food ingredient that selectively stimulates favorable growth and/or activity of 1 or more indigenous probiotic bacteria

Synbiotic A product containing both probiotics and prebiotics. Synergy of a specific probiotic for a probiotic in the product is not essential. May be separate supplements or added to food

Postbiotic A metabolic byproduct generated by a probiotic microorganism that influences biologic functions

Functional food Any modified food that provides a health benefit beyond that ascribed to any specific nutrients it contains

Barbarism the New National Norm?

Marybeth Hicks

Civility is making the headlines lately, but if you dig a bit deeper, barbarism is the real story.

To wit: Last month, MSNBC.com carried this story from Reno, NV: “Six girls arrested for Facebook ‘Attack a Teacher Day’ invite.” One middle school girl was arrested for inviting 100 fellow middle schoolers on the social networking site to participate in something she called “attack a teacher day,” while five other girls were arrested for responding to the invitation with threats against specific teachers.

Another story, this time from CBSNews.com on January 31, is titled, “6 Pa. Students Arrested in Bullying Attack.” This incident involved a half-dozen 13- to 17-year-old high schoolers who assaulted a fellow 13-year-old student, kidnapping him and hanging him from a fence post. He was not seriously hurt. Not physically, anyway.

Then there’s the MiamiHerald.com story entitled: “Teens Arrested After Facebook Threats Revealed.” This episode exposed a group of loyal middle school gal pals – all ages 13 and 14 – who posted credible death threats against a student they believed had “snitched” on the boyfriend of one of the girls by telling school administrators he was in possession of a firearm.

Posts included gang-style verbiage including, “Ima help kill him. That punk ruined our lives!! Hes soo Dead!!!” and my personal favorite, “Oh that little b---- is dead. Just u have to show me who he is first then he is dead.”

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Saturday, February 5, 2011

Food Prices Aren't Rising, Fiat Currencies Are Collapsing

By: Jeff Berwick Fri, Feb 4, 2011
The following is an excerpt from the February Edition of The Dollar Vigilante

It has been a most interesting month of January. A likely presage to an interesting year to come.

We have spoken often about what will be the first real domino to fall in causing a chain reaction ending up in massive global political and financial change. Often we follow our predictions with a statement something along the lines of, "but, in actuality, the defining primary event will likely come from somewhere that no one expects".

I think it's safe to say that no one expected TEOTMSAWKI (The End Of The Monetary System As We Know It) would begin in Tunisia!

It appears that people, including Americans and westerners, are willing to put up with all manners of oppression, taxation and economic stagnation until it reaches the point where they are so impoverished that they cannot even afford to eat.

It is, at that point, that they finally fight back against their oppressors as was the case in Tunisia - and which set off a chain reaction of protests and uprisings in Yemen and Egypt along with other related uprisings in Algeria, Lebanon and Jordan.

It is still far too early to begin to make any conclusions about these new developments caused partially by rising food prices in the Arab world but there are three very possible outcomes that all threaten the tenuous US dollar based financial system:

1. The worst case scenario: Many of the current governments in the Arab world are overthrown, giving way to the democratically elected devils they didn't know, who delve the entire Middle East into war. This has any number of potential outcomes including nuclear war. It could also drag the US military into hostilities which would further increase the pace of US dollar monetary inflation (needed to pay for further war) which would further hasten the dollar hyperinflation.

2. The wave of Arab uprisings moves into Saudi Arabia and the other Middle East/Arab major oil producers causing an overthrow of American friendly governments resulting in an end to the "oil for Treasury bonds" agreement. This could result in the oil region not reinvesting its profits into Treasury bonds causing further weakness in bonds, and prompting the Federal Reserve to contemplate QE3 in order to prevent rates from rising too dramatically, or to the 11.1% mark where the US government may become technically insolvent as interest rates overtake all tax income (minus social security payments).

3. Rising food prices and potential for government collapse in other key US Treasury bond holding states such as China, Japan and other Asian countries result in those countries selling Treasury Bonds and dollars in order to increase the value of their currency in order to reduce the prices of imported food items to keep their populations at bay inducing the same results as in (2) above.

The world appears to be going through a purging. A detox, if you will. At no time in world history have people been more regulated, documented, taxed, governed and oppressed. The detoxification may be starting with the planet's poorest who are driven to fight for their rights and freedoms by a system that has impoverished them through inflation, taxation and outright theft to the point where they cannot even afford to eat.

The rising price of food may be the spark that starts things but rising food prices aren't the cause of much of the world's problems, it is only a symptom.

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Friday, February 4, 2011

The alarm industry

From this post:
...it is clear this latest strand of virulent fundamentalism - carbon fundamentalism - is tolerated and indeed encouraged by virtually all powerful vested interests on earth. Here’s why:

* Insurance companies get to charge higher premiums

* Fossil fuel companies get to keep prices (and profits) high

* Politicians get to enact new taxes

* Public sector entities get new tax revenue to fund their pensions

* Environmental organizations get more funds

* Left wing activists get a new basis to attack private ownership

* Labor unions get more jobs, especially in the public sector

* Lawyers get a new basis to file lawsuits

* Wall street gets to trade emissions credits

* Climate researchers get more grant requests funded

* United Nations bureaucrats get a guaranteed revenue stream

And along with those special interests, sadly, add the inspired hoards of greentech entrepreneurs who are spending precious time groveling for carbon-offset funded subsidies and other government handouts, instead of pursuing innovations that win competitively in the free market.

Cap and Trade Returns From the Grave

Source: WSJ

The president’s plans for “clean energy standards” amount to carbon controls by other means.

Cap and trade is dead. Long live cap and trade.

The president presented his new, conciliatory face to the nation this week, and his State of the Union was as notable for what it didn’t include as what it did. He uttered not one word about global warming, a comprehensive climate bill, or his regulatory attempts to reduce carbon. Combined with his decision to give the axe to controversial climate czar Carol Browner, political analysts took all this as further proof that Barack Obama was moving to the middle, making nice with Republicans.

Snort. Guffaw. Chortle.

Listen carefully to Mr. Obama’s speech and you realize he spent plenty of it on carbon controls. He just used a different vocabulary. If the president can’t get carbon restrictions via cap and trade, he’ll get them instead with his new proposal for a “clean energy” standard. Clean energy, after all, sounds better to the public ear, and he might just be able to lure, or snooker, some Republicans into going along.

The official end of cap and trade, and Mrs. Browner, wasn’t conciliation—it was necessity. The public now understands that cap and trade is an economy killer, and no small number of Democrats lost their seats in midterms for supporting it. Few in the party want to take it up again, and House Republicans won’t let it pass. Mr. Obama would be crazy to continue calling for it.

Mrs. Browner, for her part, had become a political liability. As czar, she’s had sweeping control over administration policy—all of it unaccountable. This worked under a Democratic Congress, but House Republicans had made clear they intended to call her to testify. This had the makings of an ugly fight over executive privilege and would have forced the White House to defend a lack of transparency. Better to let the lightning rod go.

But Mr. Obama has no intention of letting go of his carbon-free world. He instead went to plan B. Specifically, he called in his speech for the nation to “join” him in a “new goal: by 2035, 80% of America’s electricity will come from clean energy sources.” What the president was in essence calling for—in happier, fuzzier, broader language—is what policy wonks refer to as a “renewable portfolio standard.” This is a government mandate requiring that utilities produce annually a specific amount of their electricity from renewable sources—wind, solar, biofuels.

It’s also cap and trade by another name. Consider: The goal of cap and trade is to impose crushing taxes on fossil fuels—oil, coal, natural gas—thereby forcing utilities to switch to costly renewables. Under Mr. Obama’s new proposal, the government skips the tax part and outright requires the use of costly renewables. The result is the same: dramatically higher energy prices, from carbon-free sources. Now you know why even climate warrior John Kerry was so sanguine about the president’s failure to say “climate change” in his speech. “I’m very sympathetic,” said the Massachusetts senator, who clearly got the strategy memo.

Many Republicans understand the situation. Michigan Rep. Fred Upton, chair of House Energy and Commerce, put out a statement following the speech that insisted “the answer is not to hyper-subsidize preferred industries or to force consumers and job creators to purchase energy they can’t afford.” Reached on the phone, Mr. Upton elaborated, telling me the president’s remarks “smell like cap and trade all over again.” He noted that 28 states already have their own renewable standards and so “why have a federal mandate?”

Then again, some Republicans—the self-styled energy progressives—have let it be known they’d be open to a new government diktat, if only the price is right. South Carolina Sen. Lindsey Graham has noodled with legislation to require an energy standard that includes nuclear energy (like that produced in his home state) along with renewables. Indiana Sen. Dick Lugar has floated what he calls a “diverse” energy standard that would mandate renewables, nuclear and . . . coal with carbon sequestration. (Indiana relies on coal.)

This is why Mr. Obama took care in his speech to refer broadly to a “clean energy” standard and make clear he was open to including in it “nuclear” and “clean coal”—along with renewables. He’ll lure Republicans into negotiations, then cement their support with lavish energy pork for their home-state nuclear, clean-coal, wind, biofuels and solar projects. As a bonus, the plan gives cover to nervous coal state Democrats.

What the White House also knows—as do most sensible people—is that these promises mean little. The president has made grand nuclear gestures, but his regulators continue to sit on projects. Clean coal remains a pipe dream. Here’s to betting that if and when the president’s “clean energy” standard kicks in, the only mandated sources utilities have to choose from are wind, solar and biofuels.

The GOP has spent some long, sometimes uncomfortable, years explaining the perils of cap and trade. Yet they risk getting the same policy, all because they’ve yet to find the moxy to resist the “clean energy” drumbeat.

Write to kim@wsj.com