Yes, I know it is early to send out information about an art tour I am planning for Mid October - early November but in order for me to make plans I need an indication of interest now.
I am favoring, on a first come basis, some 30 who truly would like to visit the State Museum (GMOA) on the campus of UGA, in Athens, Ga.
I have done three previous art tours and everyone was a success and those who came had a thoroughly good time and saw things they did not believe existed in Georgia.
I am planning a two day, weekday trip. Tentatively we would leave The Landings around 8:30 and drive to Athens (about a 5 hour drive) and have a buffet style luncheon. Then tour the museum guided by The Director, Bill Eiland, and several curators.
Then a 4:30 private tour of C.L.Morehead's art/artifacts and china collection.
After that we would check into the Indigo Hotel and go to one of the city's best restaurants for dinner.
The next morning, if I can arrange same, we would have a private visit to another magnificent collection and have lunch in Madison. Madison is on the way back and is one of 6 of Georgia's most beautiful cities with homes that are outstanding.
We should be back in time for supper.
The cost of the tour would include the bus, the hotel, various meals (dinner would be according to your own choice). Tip for the bus driver I would be a nomnial one and I would build in a modest per person tax deductible contribution to GMOA.
I would say the cost for a couple would be somewhere in the neighborhood of $600 or less.
I would appreciate your indicating whether you would like to make this trip so I can plan. All hotel reservations should be made through Carolyn La Fleur 598 8000 and would include payment for the bus as well,when it comes time to do so. The bill for the buffet lunch and contribution should be given to me and the bus driver tip will simply be a per person collection. All other personal costs are your own including your dinner charge.
I will make all the other arrangements.
Remember first come and the cut off must be around the low 30's.
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I am leaving for a four day Conference in D.C. this Saturday returning late next Tuesday.. Memos will be curtailed.And this is what the chairman and president of AIPAC think about what Congress and Obama should do concerning Iran:
Don’t Let Up on Iran
By MICHAEL KASSEN and LEE ROSENBERG
By MICHAEL KASSEN and LEE ROSENBERG
WASHINGTON — LIKE all Americans, we strongly hope that the Obama administration’s diplomatic efforts lead to the peaceful dismantling of Iran’s nuclear weapons program. To achieve this key national security goal, we support a policy that complements the current negotiations with a range of congressional actions that threaten greater economic and diplomatic pressure on the Iranian government.
Some opponents of such a policy crudely characterize its proponents as warmongers, and fret that Tehran will walk away from the table. But the critics have it backward.
The approach we outline offers the best chance to avoid military conflict with Iran. In fact, diplomacy that is not backed by the threat of clear consequences poses the greatest threat to negotiations — and increases prospects for war — because it tells the Iranians they have nothing to lose by embracing an uncompromising position.
Successful negotiations between adversaries rest on the confluence of interests and goals. Iran came to the negotiating table because it sought the abrogation of sanctions; we came to the table to reach an agreement that, in the words of President Obama, would “make it impossible” for Iran to develop nuclear weapons.
Our message to Tehran should be clear: It will not achieve its objectives unless it satisfies ours.
Unfortunately, Iran’s leaders are acting as if they have not received that message. In recent weeks, the president of Iran, Hassan Rouhani, has declaredthat his government will not dismantle a single centrifuge. Tehran also went beyond words by testing long-range ballistic missiles that could reach American military bases in the Middle East, as well as our ally Israel. It has evendispatched warships to sail close to the maritime borders of the United States in the Atlantic Ocean.
We also know the Iranians have worked to deceive us in previous rounds of negotiations. In 2003, when Mr. Rouhani was Iran’s chief nuclear negotiator, Tehran issued a declaration that it was suspending uranium enrichment and other nuclear activities. Last year, as he ran for president, Mr. Rouhani even boasted that Iran had flouted the agreement.
Offering inducements is not enough. Diplomacy must be backed by a clear choice for the Iranian government: Either it dismantles its nuclear program so that it lacks a pathway to weapons capability or it faces greater economic sanctions and international isolation. Without this clarity, no one can be surprised if Iran rejects diplomatic overtures.
The partial recovery of Iran’s economy in recent weeks, thanks to the relaxation of sanctions, in tandem with its continuing advanced research and development of centrifuges, highlights our concerns. If Iran can achieve such progress without dismantling any part of its nuclear program, why should it make concessions?
We strongly believe that the assertion by Congress of its historic role in foreign policy can, in fact, complement and enhance the administration’s efforts by forcing Iran to recognize the stark implications of intransigence. The president should welcome such congressional initiatives, which would actually strengthen, not weaken, the hand of his administration in forthcoming negotiations.
Thus we urge Congress to outline for Iran the acceptable terms of a final accord. This must include, at a minimum, the dismantling of its nuclear program, so that Iran has neither a uranium nor a plutonium pathway to a nuclear weapon.
Second, Congress should exercise oversight to ensure that Tehran understands that our existing core sanctions architecture will remain in place for the full duration of the negotiations. Third, Congress must oversee continual implementation of the interim agreement: We cannot permit Iran to violate trust again by advancing its nuclear program even as it joins negotiations.
Finally, we support the Nuclear Weapon Free Iran Act, sponsored by the Senate Foreign Relations Committee’s chairman, Senator Robert Menendez, Democrat of New Jersey, and by Senator Mark Kirk, Republican of Illinois. This bill would present Iran with a menu of consequences, including new sanctions — if, and only if, the talks fail. Earlier this month, we agreed with Mr. Menendez on delaying a vote in the Senate, but we remain committed to the bill’s passage.
Historically, presidents have resisted congressional involvement that would affect or constrain their diplomatic efforts. Over the past two decades, however, both Republican and Democratic administrations have opposed Iran sanctions legislation only to embrace it later as their own. At this moment, we must not allow Iran to dictate the appropriate role of Congress.
As long as Mr. Rouhani can brazenly declare that he will not dismantle a single centrifuge as part of a final agreement, the United States Congress should proclaim that Iran will pay a steep price for its recklessness. America’s elected representatives are not the problem; the unelected theocrats of Iran are.
Next week, more than 14,000 Americans from all walks of life will carry this bipartisan message to Capitol Hill as part of the American Israel Public Affairs Committee’s annual policy conference. We support the president’s diplomatic effort to prevent Iran from acquiring a nuclear weapon. We also believe the best chance for success in this purpose lies with continued congressional pressure on Iran throughout the negotiations.
Michael Kassen is the president, and Lee Rosenberg is the chairman of the board, of the American Israel Public Affairs Committee.
===
Some opponents of such a policy crudely characterize its proponents as warmongers, and fret that Tehran will walk away from the table. But the critics have it backward.
The approach we outline offers the best chance to avoid military conflict with Iran. In fact, diplomacy that is not backed by the threat of clear consequences poses the greatest threat to negotiations — and increases prospects for war — because it tells the Iranians they have nothing to lose by embracing an uncompromising position.
Successful negotiations between adversaries rest on the confluence of interests and goals. Iran came to the negotiating table because it sought the abrogation of sanctions; we came to the table to reach an agreement that, in the words of President Obama, would “make it impossible” for Iran to develop nuclear weapons.
Unfortunately, Iran’s leaders are acting as if they have not received that message. In recent weeks, the president of Iran, Hassan Rouhani, has declaredthat his government will not dismantle a single centrifuge. Tehran also went beyond words by testing long-range ballistic missiles that could reach American military bases in the Middle East, as well as our ally Israel. It has evendispatched warships to sail close to the maritime borders of the United States in the Atlantic Ocean.
We also know the Iranians have worked to deceive us in previous rounds of negotiations. In 2003, when Mr. Rouhani was Iran’s chief nuclear negotiator, Tehran issued a declaration that it was suspending uranium enrichment and other nuclear activities. Last year, as he ran for president, Mr. Rouhani even boasted that Iran had flouted the agreement.
Offering inducements is not enough. Diplomacy must be backed by a clear choice for the Iranian government: Either it dismantles its nuclear program so that it lacks a pathway to weapons capability or it faces greater economic sanctions and international isolation. Without this clarity, no one can be surprised if Iran rejects diplomatic overtures.
The partial recovery of Iran’s economy in recent weeks, thanks to the relaxation of sanctions, in tandem with its continuing advanced research and development of centrifuges, highlights our concerns. If Iran can achieve such progress without dismantling any part of its nuclear program, why should it make concessions?
We strongly believe that the assertion by Congress of its historic role in foreign policy can, in fact, complement and enhance the administration’s efforts by forcing Iran to recognize the stark implications of intransigence. The president should welcome such congressional initiatives, which would actually strengthen, not weaken, the hand of his administration in forthcoming negotiations.
Thus we urge Congress to outline for Iran the acceptable terms of a final accord. This must include, at a minimum, the dismantling of its nuclear program, so that Iran has neither a uranium nor a plutonium pathway to a nuclear weapon.
Second, Congress should exercise oversight to ensure that Tehran understands that our existing core sanctions architecture will remain in place for the full duration of the negotiations. Third, Congress must oversee continual implementation of the interim agreement: We cannot permit Iran to violate trust again by advancing its nuclear program even as it joins negotiations.
Finally, we support the Nuclear Weapon Free Iran Act, sponsored by the Senate Foreign Relations Committee’s chairman, Senator Robert Menendez, Democrat of New Jersey, and by Senator Mark Kirk, Republican of Illinois. This bill would present Iran with a menu of consequences, including new sanctions — if, and only if, the talks fail. Earlier this month, we agreed with Mr. Menendez on delaying a vote in the Senate, but we remain committed to the bill’s passage.
Historically, presidents have resisted congressional involvement that would affect or constrain their diplomatic efforts. Over the past two decades, however, both Republican and Democratic administrations have opposed Iran sanctions legislation only to embrace it later as their own. At this moment, we must not allow Iran to dictate the appropriate role of Congress.
As long as Mr. Rouhani can brazenly declare that he will not dismantle a single centrifuge as part of a final agreement, the United States Congress should proclaim that Iran will pay a steep price for its recklessness. America’s elected representatives are not the problem; the unelected theocrats of Iran are.
Next week, more than 14,000 Americans from all walks of life will carry this bipartisan message to Capitol Hill as part of the American Israel Public Affairs Committee’s annual policy conference. We support the president’s diplomatic effort to prevent Iran from acquiring a nuclear weapon. We also believe the best chance for success in this purpose lies with continued congressional pressure on Iran throughout the negotiations.
Michael Kassen is the president, and Lee Rosenberg is the chairman of the board, of the American Israel Public Affairs Committee.
===
===
At least one young lady gets it:
I subscribe to EconSouth, which is a research publication of The Atlanta Federal Reserve.
In the latest issue they discuss : "The Productivity Paradox: Is Technology Failing or Fueling Growth/"
The discussion was two sided but it is clear technology is having a decided impact on employment in several ways:
a) Though technology may fuel growth, employment is less than created by the Industrial Revolution.
b) Whatever growth technology is creating, the qualifications for those employed is much more demanding and the problem is our society is not producing enough technologically qualified employees.
Furthermore, the long term unemployed are in serious need of extensive retraining.
c) Consequently, productivity has been outstripping wage increases and this trend may continue.
The article concludes: "...Economic growth in the long run will be driven by productivity increases, and thus, by technology. The debate between the techno-pessimists and techno-optimists is not going away, and it could not be more relevant to our future standard of living."
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Obama is accomplishing his desire to reduce America's foot print but at what future cost? Only time will tell. (See 1 below.)
===
Yesterday the FCC Commissioners, after brief thought, decided stepping on our Constitution and the First Amendment was not a politically astute act prior to the forthcoming 2014 elections.
This does not mean they actually understand the stupidity of their proposition. It simply suggests they do not have the guts to move forward on implementing actions that are unconstitutional like their leader.
Consequently, the Gestopoing of our news dolts is deferred for another day.
Be wary Americans of Liberals and Progressives who want to improve upon our Constitution.!
That said, you still run the risk of having your life threatened if you say anything counter to what Obama and his gum shoes deem acceptable(See 2 below.)
Silencing the opposition is what they do best in Chicago and Obama has proven very adept at making every insidious effort to do just that. Would not be surprised if the head of an animal is in D'Souza's bed next!
What is going on is blatant! Wake up America - tyranny is afoot!
===
Porter engages in a back and forth regarding The Fed's tapering unwinding pirouette. (See 3 below.)
===
Dick
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1) America's Global Retreat
Never mind the Fed's taper, it's the U.S. geopolitical taper that is stirring world anxiety. From Ukraine to Syria to the Pacific, a hands-off foreign policy invites more trouble.
Since former Federal Reserve Chairman Ben Bernanke uttered the word "taper" in June 2013, emerging-market stocks and currencies have taken a beating. It is not clear why talk of (thus far) modest reductions in the Fed's large-scale asset-purchase program should have had such big repercussions outside the United States. The best economic explanation is that capital has been flowing out of emerging markets in anticipation of future rises in U.S. interest rates, of which the taper is a harbinger. While plausible, that cannot be the whole story.
For it is not only U.S. monetary policy that is being tapered. Even more significant is the "geopolitical taper." By this I mean the fundamental shift we are witnessing in the national-security strategy of the U.S.—and like the Fed's tapering, this one also means big repercussions for the world. To see the geopolitical taper at work, consider President Obama's comment Wednesday on the horrific killings of protesters in the Ukrainian capital, Kiev. The president said: "There will be consequences if people step over the line."
No one took that warning seriously—Ukrainian government snipers kept on killing people in Independence Square regardless. The world remembers the red line that Mr. Obama once drew over the use of chemical weapons in Syria . . . and then ignored once the line had been crossed. The compromise deal reached on Friday in Ukraine calling for early elections and a coalition government may or may not spell the end of the crisis. In any case, the negotiations were conducted without concern for Mr. Obama.
The origins of America's geopolitical taper as a strategy can be traced to the confused foreign-policy decisions of the president's first term. The easy part to understand was that Mr. Obama wanted out of Iraq and to leave behind the minimum of U.S. commitments. Less easy to understand was his policy in Afghanistan. After an internal administration struggle, the result in 2009 was a classic bureaucratic compromise: There was a "surge" of additional troops, accompanied by a commitment to begin withdrawing before the last of these troops had even arrived.
Having passively watched when the Iranian people rose up against their theocratic rulers beginning in 2009, the president was caught off balance by the misnamed "Arab Spring." The vague blandishments of his Cairo speech that year offered no hint of how he would respond when crowds thronged Tahrir Square in 2011 calling for the ouster of a longtime U.S. ally, the Egyptian dictator Hosni Mubarak.
Mr. Obama backed the government led by Mohammed Morsi, after the Muslim Brotherhood won the 2012 elections. Then the president backed the military coup against Mr. Morsi last year. On Libya, Mr. Obama took a back seat in an international effort to oust Moammar Gadhafi in 2011, but was apparently not in the vehicle at all when the American mission at Benghazi came under fatal attack in 2012.
Syria has been one of the great fiascos of post-World War II American foreign policy. When President Obama might have intervened effectively, he hesitated. When he did intervene, it was ineffectual. The Free Syrian Army of rebels fighting against the regime of Bashar Assad has not been given sufficient assistance to hold together, much less to defeat the forces loyal to Assad. The president's non-threat to launch airstrikes—ifCongress agreed—handed the initiative to Russia. Last year's Russian-brokered agreement to get Assad to hand over his chemical weapons is being honored only in the breach, as Secretary of State John Kerry admitted last week.
The result of this U.S. inaction is a disaster. At a minimum, 130,000 Syrian civilians have been killed and nine million driven from their homes by forces loyal to the tyrant. At least 11,000 people have been tortured to death. Hundreds of thousands are besieged, their supplies of food and medicine cut off, as bombs and shells rain down.
Worse, the Syrian civil war has escalated into a sectarian proxy war between Sunni and Shiite Muslims, with jihadist groups such as the Islamic State of Iraq and Syria and the Nusra Front fighting against Assad, while the Shiite Hezbollah and the Iranian Quds Force fight for him. Meanwhile, a flood of refugees from Syria and the free movement of militants is helping to destabilize neighboring states like Lebanon, Jordan and Iraq. The situation in Iraq is especially dire. Violence is escalating, especially in Anbar province. According to Iraq Body Count, a British-based nongovernmental organization, 9,475 Iraqi civilians were killed in 2013, compared with 10,130 in 2008.
The scale of the strategic U.S. failure is best seen in the statistics for total fatalities in the region the Bush administration called the "Greater Middle East"—essentially the swath of mainly Muslim countries stretching from Morocco to Pakistan. In 2013, according to the International Institute of Strategic Studies, more than 75,000 people died as a result of armed conflict in this region or as a result of terrorism originating there, the highest number since the IISS Armed Conflict database began in 1998. Back then, the Greater Middle East accounted for 38% of conflict-related deaths in the world; last year it was 78%.
Mr. Obama's supporters like nothing better than to portray him as the peacemaker to George W. Bush's warmonger. But it is now almost certain that more people have died violent deaths in the Greater Middle East during this presidency than during the last one.
In a January interview with the New Yorker magazine, the president said something truly stunning. "I don't really even need George Kennan right now," he asserted, referring to the late American diplomat and historian whose insights informed the foreign policy of presidents from Franklin Roosevelt on. Yet what Mr. Obama went on to say about his self-assembled strategy for the Middle East makes it clear that a George Kennan is exactly what he needs: someone with the regional expertise and experience to craft a credible strategy for the U.S., as Kennan did when he proposed the "containment" of the Soviet Union in the late 1940s.
So what exactly is the president's strategy? "It would be profoundly in the interest of citizens throughout the region if Sunnis and Shiites weren't intent on killing each other," the president explained in the New Yorker. "And although it would not solve the entire problem, if we were able to get Iran to operate in a responsible fashion . . . you could see an equilibrium developing between Sunni, or predominantly Sunni, Gulf states and Iran."
Moreover, he continued, if only "the Palestinian issue" could be "unwound," then another "new equilibrium" could be created, allowing Israel to "enter into even an informal alliance with at least normalized diplomatic relations" with the Sunni states. The president has evidently been reading up about international relations and has reached the chapter on the "balance of power." The trouble with his analysis is that it does not explain why any of the interested parties should sign up for his balancing act.
As Nixon-era Secretary of State Henry Kissinger argued more than half a century ago in his book "A World Restored," balance is not a naturally occurring phenomenon. "The balance of power only limits the scope of aggression but does not prevent it," Dr. Kissinger wrote. "The balance of power is the classic expression of the lesson of history that no order is safe without physical safeguards against aggression."
What that implied in the 19th century was that Britain was the "balancer"—the superpower that retained the option to intervene in Europe to preserve balance. The problem with the current U.S. geopolitical taper is that President Obama is not willing to play that role in the Middle East today. In his ignominious call to inaction on Syria in September, he explicitly said it: "America is not the world's policeman."
But balance without an enforcer is almost inconceivable. Iran remains a revolutionary power; it has no serious intention of giving up its nuclear-arms program; the talks in Vienna are a sham. Both sides in the escalating regional "Clash of Sects"—Shiite and Sunni—have an incentive to increase their aggression because they see hegemony in a post-American Middle East as an attainable goal.
The geopolitical taper is a multifaceted phenomenon. For domestic political as well as fiscal reasons, this administration is presiding over deep cuts in military spending. No doubt the Pentagon's budget is in many respects bloated. But, as Philip Zelikow has recently argued, the cuts are taking place without any clear agreement on what the country's future military needs are.
Thus far, the U.S. "pivot" from the Middle East to the Asia Pacific region, announced in 2012, is the nearest this administration has come to a grand strategy. But such a shift of resources makes no sense if it leaves the former region ablaze and merely adds to tension in the latter. A serious strategy would surely make some attempt to establish linkage between the Far East and the Middle East. It is the Chinese, not the Americans, who are becoming increasingly dependent on Middle Eastern oil. Yet all the pivot achieved was to arouse suspicion in Beijing that some kind of "containment" of China is being contemplated.
Maybe, on reflection, it is not a Kennan that Mr. Obama needs, but a Kissinger. "The attainment of peace is not as easy as the desire for it," Dr. Kissinger once observed. "Those ages which in retrospect seem most peaceful were least in search of peace. Those whose quest for it seems unending appear least able to achieve tranquillity. Whenever peace—conceived as the avoidance of war—has been the primary objective . . . the international system has been at the mercy of [its] most ruthless member."
Those are words this president, at a time when there is much ruthlessness abroad in the world, would do well to ponder.
Mr. Ferguson is a history professor at Harvard and a senior fellow at Stanford University's Hoover Institution. His most recent book is "The Great Degeneration" (Penguin Press, 2013).
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2GOP Senators Press FBI Chief on D'Souza Indictment
Four Republican members of the Senate Judiciary Committee have demanded that FBI Director James Comey answer specific questions regarding the "routine review" of campaign filings that led to last month's indictment of conservative commentator and best-selling author Dinesh D'Souza on campaign-finance charges.
The letter, dated Wednesday, was signed by the committee's ranking GOP member, Sen. Chuck Grassley of Iowa, along with Sens. Jeff Sessions of Alabama, Ted Cruz of Texas, and Mike Lee of Utah.
The letter, which was reported by The Weekly Standard and other news organizations, quotes former Harvard Law School professor Alan Dershowitz's recent column in The Wall Street Journal attacking D'Souza's indictment. "I can't help but think that [D'Souza's] politics have something to do with it. ... It smacks of selective prosecution," the letter states.
D'Souza, 52, directed the 2012 film critical of President Barack Obama, "2016: Obama's America." It is a top-grossing documentary, with a take of more than $33 million.
His second documentary film — "America" — is scheduled to be released July 4.
D'Souza was indicted on Jan. 23 on charges of using straw donors around August 2012. He is accused of reimbursing people whom he had directed to contribute $20,000 reportedly to the New York Senate campaign of Republican Wendy Long, a longtime friend.
Long was handily defeated by Democrat Kirsten Gillibrand in last November's election.
His lawyer, Benjamin Brafman, has contended that D'Souza's actions were "at worst" an act of misguided friendship toward the candidate.
D'Souza was charged with one count of making illegal contributions in the names of others, and one count of causing false statements to be made.
Federal law in 2012 limited primary and general election campaign contributions to $2,500 each, for a total of $5,000, from any individual to any one candidate.
D'Souza, who has pleaded not guilty to the charges and remains free on $500,000 bail, vowed earlier this month that he would not be intimidated by the charges.
"I’m going to proceed with my work and my ideas — and the film will be unimpeded by what's going on,” D’Souza told The Daily Caller.
Dershowitz and other conservative commentators, including several interviewed by Newsmax, have charged that the indictment was a form of retribution for D'Souza's role in the anti-Obama film.
In their letter, the senators cited news reports saying that the D'Souza indictment "began as a result of a 'routine review by the FBI of campaign filings with the [Federal Election Commission] of various candidates after the 2012 election.
"To dispel this sort of public perception that Mr. D'Souza may have been targeted because of his outspoken criticisms of the president, it is important for the FBI to be transparent regarding the precise origin of this investigation," the letter continued.
The senators then pose 12 direct questions to Comey regarding the general scope of the reviews and specifically concerning the D'Souza indictment.
"During your confirmation hearing, you pledged that you would carry the values of transparency and try to spread them as far as you could within the FBI," the senators said before listing their questions. "To explain the details of these routine reviews and provide context to those who may be skeptical of the origins of this investigation, please provide answers to the following questions regarding FBI's regular review of campaign filings."
The questions are:
1. It appears from U.S. Attorney's Office comment that the FBI conducts regular, perhaps random reviews of campaign filings. Is this correct? If so, what methodology does the FBI use to conduct these reviews?
2. Please identify and describe all methods by which a review of campaign filings may be initiated.
3. Please identify all other government entities involved in the FBI's review of campaign filings and describe their involvement.
4. How and why was this particular review initiated?
5. What criteria involved in this particular review led to the suspicion that warranted further inquiry?
6. What are the guidelines under which the FBI conducts its review of campaign filings?
7. Please describe how the FBI's reviews of campaign filings are conducted.
8. How many campaign filings has the FBI reviewed in each year from 2008 to the present?
9. On average, how long does it take to complete a review of a campaign filing?
10. How many agents are assigned, per case, to review campaign filings?
11. On average, how many man hours are spent reviewing campaign filings?
12. When did the FBI begin routinely reviewing campaign filings?
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3)Porter Stansberry: Are You Playing the Right Energy Trend?
Interview from The Energy Report
The Energy Report: Let's start with an article that was published in the S&A Digest Premium
Porter, in that article, you state that you're bearish on the market, citing that when the U.S. Federal Reserve stops quantitative easing (QE), interest rates will go up. Rising interest rates could be a catalyst for a stock market crash. Your colleagues at Stansberry & Associates feel that short-term interest rates will allow the market to continue to run. To what extent are you in disagreement?
Porter Stansberry: We are in disagreement because I think the timing is important. Steve Sjuggerud in particular believes that the "Bernanke boom," which is the ongoing inflation of the credit market, will continue for much longer. He forecasts that before this credit market bubble bursts, stocks will reach much higher valuations, 25 or 35 times earnings. That's a lot different than my outlook.
I believe stock multiples, the price that stocks are trading as a multiple of their annual earnings, are going to decrease substantially as the Fed begins to taper and interest rates rise. Stock price multiples are negatively correlated with real interest rates. As interest rates rise, the market multiple will fall. I see stocks getting less expensive. Steve sees stocks becoming much more expensive. I can't tell you who will be right.
TER: What's the catalyst for rising interest rates, as there wasn't a reaction to the initial tapering?
PS: I studied what happened in the bond and the stock markets during previous periods when the Fed stopped manipulating the bond market. In every single case, the moment the Fed announced that there would be a cessation of intervention, stocks declined and interest rates went up.
The Fed is still buying $75 billion worth of U.S. Treasury debt. It is the world's largest holder of Treasury debt, holding significantly more than the Chinese and the Japanese.
The Fed is painting itself into a corner. If it does not continue to support the market, there is no doubt in my mind that prices for fixed income will go down. That means that yields will rise.
TER: What if the Fed very slowly tapers off the support?
PS: Let's just be clear about what happened: 10-year rates have gone from 1.6% last May to about 3% recently. Interest rates have almost doubled in less than a 12-month period. That is an enormous move. That changes the value of bonds significantly. It reduces the price almost by 50%. Folks who bought bonds that were yielding 1.6% have gotten killed.
The Fed's buying is far more important to the market price of U.S. debt than any other economic variable. If the Fed stops buying, it doesn't matter whether unemployment goes up or down. It doesn't matter whether inflation is higher or lower. Its influence on the market is dominant. You can't expect the market to have the same price when the guy who's buying $1 trillion per year of bonds steps away from the market.
TER: What's going to cause the Fed to step away from the market?
PS: Two things: There is overwhelming evidence that QE is not solving the country's economic problems. In particular, it is not increasing employment. There are 92 million Americans who aren't working. There are 50 million people on food stamps. That hasn't improved from the Fed spending $3.5 trillion on bonds. The rationale for this policy is nonexistent and the policy has been a failure. What the Fed is doing is economic suicide.
The Fed knows very well it's going to be incredibly painful to unwind. It has a ticking time bomb in its hands. The Chinese are running balanced budgets. They're running current account surpluses. They're buying up all the gold that comes up for sale around the world, and they're cutting bilateral currency agreements with every large economy in the world. All of this is laying the groundwork for making the yuan convertible in the capital account.
What's going to happen to the dollar's role as the reserve currency around the world?
TER: Do you see a significant devaluation of the U.S. dollar in 2014?
PS: That's a realistic scenario for this year. Time is slipping away from the Fed. If the Chinese make that step, the Fed is going to have a lot less flexibility. It has to get its house in order. It has to stop this wild experiment with the monetary base for the simple reason that our currency is in constant competition with others. We are at risk of alienating our partners who hold our currency in huge numbers.
Ask yourself a simple question: Do I think it's reasonable that the Fed will become the only global holder of Treasury bonds? That's the course we're on.
TER: If rates go up and markets go down in the U.S., to what extent does that also influence markets across the world?
PS: We're already seeing some impact… Emerging markets have gotten crushed over the last 12 months. More money is on the margin. A 3% yield is more reasonable to a banker than a 1.6% yield. As a result, money is coming out of markets where higher yields are available, like Brazil. And that is influencing bond and equity markets around the world.
If I'm right and the U.S. yields go to something like 5% or 6%, there will be an absolute catastrophe in emerging-market stocks.
TER: Would that mean lower stock prices in the U.S, and if the yuan becomes a stronger currency, higher stock prices in China?
PS: There will definitely be higher prices for Chinese equities. There are other key factors in the pricing of Chinese equities that need to be resolved, mostly the issue of the rule of law and the amount of transparency. China's equity markets have been badly damaged by the amount of accounting scandals the country has suffered during the past 18 months. I don't think there will be a quick or easy solution to that reputational problem.
TER: Then there really is no viable alternative currency to the U.S. dollar in the short term?
PS: The yuan is actually a very attractive currency and will prove to be very reliable – much more so than the U.S. dollar. I think the Chinese are going to come out with a gold-backed yuan, whether that is done legally or simply a de facto gold-backing due to the size of their treasury's gold holdings.
I think that they're going to offer a very high real yield. And I think that they'll do a good job, as they have done throughout the last 25 years in developing their economy. The problem, of course, is that the equity markets in China are not very well regulated and there has been a large amount of fraud.
TER: Newsletter writer Harry Dent believes the stock market will crash sometime between January and May. You expect a market correction. But where your views diverge is that Harry believes this crash will be followed by years of deflation.
He points to the aging world population and a natural inclination for reduced consumption as you age. You believe there will be inflation as a result of the massive international QE. On the surface, that's a demographic trend versus a monetary trend. In your view, how do these two factors play out?
PS: Harry – as much as I respect his long career as a publisher and as a pundit – is just completely off base. Inflation is always and everywhere a monetary phenomenon. I don't care how much the population of Zimbabwe has aged or hasn't aged. When you're doubling and tripling your monetary base every year, you're going to have runaway inflation sooner or later.
TER: So what's an investor to do?
PS: The easy and simple thing is to own short-term, high-quality corporate bonds, so you can hold things that are going to mature in a year or two. If you're getting 6% or 8% on those bonds, you're going to be protected from inflation. And you'll have the ability to roll them over at a higher rate so that you don't have anything to worry about.
To protect yourself from loss of purchasing power, you can buy high-quality common stocks that are trading at a reasonable price, but with the ability to increase prices. In my newsletter, I just recommended shares of Lorillard Inc. (LO), which is a tobacco company that has the leading e-cigarette franchise. You can still buy that stock at about eight times cash earnings. It's incredibly capital efficient. It pays about 60% of every $1 of revenue out to its shareholders in the form of cash dividends and buybacks.
Obviously, precious metals have long been a store of value in a period of inflation. You can buy gold and silver. You can buy real estate. I've been buying real estate pretty much continuously since 2010.
I started out by buying slum apartments in South Florida. I then moved into trophy properties as the volume in the market picked up and properties began to change hands. Most recently, I bought a farm. I borrowed some money at 4% and bought a producing farm that will pay for itself.
Assuming that interest rates in the U.S. go above 4%, I'll get the money literally for free. Of course, I also expect farm prices to increase, so hopefully soybeans and corn give me a good profit going forward.
I don't think there's going to be a crash. But I do think it's going to be very difficult for people who are heavily invested in very expensive stocks. Do you have any idea what the earnings-per-share multiple on Amazon is?
TER: Twenty?
PS: One hundred and fixty-six. Do you have any idea what Amazon's operating margin is? It's less than 1%, yet its shares are valued at 156 times earnings and more than 20 times book value. Investor expectations have become completely untethered to the reality of that business.
I'm not saying that Amazon is not a good business. It is. But at $180 billion and already dominating the U.S. retail industry, that company cannot grow fast enough nor can it possibly hope to increase its margins enough to justify investor expectations. The folks who are buying those companies are going to be sorely disappointed.
TER: You have an interesting measurement that plays along with this concept called the S&A Blacklist. It includes companies with more than $10 billion in market cap trading at more than 10 times sales. You use this to determine if the market is getting frothy.
PS: Over the history of the equity markets, the number of companies that have been able to significantly increase and hold their value once they have been so highly overvalued is very small. Most companies that trade at these kinds of enormous valuations are never able to justify the valuations. Even if the earnings grow, the stock price declines.
Yes, some of these companies will turn into the next Facebook or eBay, but most of them will not. The ones that can't are going to crash. We keep track of this list because at market bottoms, there are fewer than five companies anywhere in the world that are trading for more than $10 billion and more than 10 times sales. At market tops, the number of companies that meet those criteria can be more than 12. Today, there are 20 companies on that list, which is the highest number we have seen since the 2000 market top.
TER: To what extent is that number really just a reflection of having nowhere else to put your money?
PS: It's a very big reflection of that. The Fed has driven people out of the bond market. People looking for reasonable, safe investments have been forced into things like master limited partnerships and real estate investment trusts. They have driven investors into riskier and riskier assets. And it's increased the number of people who are willing to invest in stocks at insane prices.
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2GOP Senators Press FBI Chief on D'Souza Indictment
Four Republican members of the Senate Judiciary Committee have demanded that FBI Director James Comey answer specific questions regarding the "routine review" of campaign filings that led to last month's indictment of conservative commentator and best-selling author Dinesh D'Souza on campaign-finance charges.
The letter, dated Wednesday, was signed by the committee's ranking GOP member, Sen. Chuck Grassley of Iowa, along with Sens. Jeff Sessions of Alabama, Ted Cruz of Texas, and Mike Lee of Utah.
The letter, which was reported by The Weekly Standard and other news organizations, quotes former Harvard Law School professor Alan Dershowitz's recent column in The Wall Street Journal attacking D'Souza's indictment. "I can't help but think that [D'Souza's] politics have something to do with it. ... It smacks of selective prosecution," the letter states.
D'Souza, 52, directed the 2012 film critical of President Barack Obama, "2016: Obama's America." It is a top-grossing documentary, with a take of more than $33 million.
His second documentary film — "America" — is scheduled to be released July 4.
D'Souza was indicted on Jan. 23 on charges of using straw donors around August 2012. He is accused of reimbursing people whom he had directed to contribute $20,000 reportedly to the New York Senate campaign of Republican Wendy Long, a longtime friend.
Long was handily defeated by Democrat Kirsten Gillibrand in last November's election.
His lawyer, Benjamin Brafman, has contended that D'Souza's actions were "at worst" an act of misguided friendship toward the candidate.
D'Souza was charged with one count of making illegal contributions in the names of others, and one count of causing false statements to be made.
Federal law in 2012 limited primary and general election campaign contributions to $2,500 each, for a total of $5,000, from any individual to any one candidate.
D'Souza, who has pleaded not guilty to the charges and remains free on $500,000 bail, vowed earlier this month that he would not be intimidated by the charges.
"I’m going to proceed with my work and my ideas — and the film will be unimpeded by what's going on,” D’Souza told The Daily Caller.
Dershowitz and other conservative commentators, including several interviewed by Newsmax, have charged that the indictment was a form of retribution for D'Souza's role in the anti-Obama film.
In their letter, the senators cited news reports saying that the D'Souza indictment "began as a result of a 'routine review by the FBI of campaign filings with the [Federal Election Commission] of various candidates after the 2012 election.
"To dispel this sort of public perception that Mr. D'Souza may have been targeted because of his outspoken criticisms of the president, it is important for the FBI to be transparent regarding the precise origin of this investigation," the letter continued.
The senators then pose 12 direct questions to Comey regarding the general scope of the reviews and specifically concerning the D'Souza indictment.
"During your confirmation hearing, you pledged that you would carry the values of transparency and try to spread them as far as you could within the FBI," the senators said before listing their questions. "To explain the details of these routine reviews and provide context to those who may be skeptical of the origins of this investigation, please provide answers to the following questions regarding FBI's regular review of campaign filings."
The questions are:
1. It appears from U.S. Attorney's Office comment that the FBI conducts regular, perhaps random reviews of campaign filings. Is this correct? If so, what methodology does the FBI use to conduct these reviews?
2. Please identify and describe all methods by which a review of campaign filings may be initiated.
3. Please identify all other government entities involved in the FBI's review of campaign filings and describe their involvement.
4. How and why was this particular review initiated?
5. What criteria involved in this particular review led to the suspicion that warranted further inquiry?
6. What are the guidelines under which the FBI conducts its review of campaign filings?
7. Please describe how the FBI's reviews of campaign filings are conducted.
8. How many campaign filings has the FBI reviewed in each year from 2008 to the present?
9. On average, how long does it take to complete a review of a campaign filing?
10. How many agents are assigned, per case, to review campaign filings?
11. On average, how many man hours are spent reviewing campaign filings?
12. When did the FBI begin routinely reviewing campaign filings?
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3)Porter Stansberry: Are You Playing the Right Energy Trend?
Interview from The Energy Report
The Energy Report: Let's start with an article that was published in the S&A Digest Premium
Porter, in that article, you state that you're bearish on the market, citing that when the U.S. Federal Reserve stops quantitative easing (QE), interest rates will go up. Rising interest rates could be a catalyst for a stock market crash. Your colleagues at Stansberry & Associates feel that short-term interest rates will allow the market to continue to run. To what extent are you in disagreement?
Porter Stansberry: We are in disagreement because I think the timing is important. Steve Sjuggerud in particular believes that the "Bernanke boom," which is the ongoing inflation of the credit market, will continue for much longer. He forecasts that before this credit market bubble bursts, stocks will reach much higher valuations, 25 or 35 times earnings. That's a lot different than my outlook.
I believe stock multiples, the price that stocks are trading as a multiple of their annual earnings, are going to decrease substantially as the Fed begins to taper and interest rates rise. Stock price multiples are negatively correlated with real interest rates. As interest rates rise, the market multiple will fall. I see stocks getting less expensive. Steve sees stocks becoming much more expensive. I can't tell you who will be right.
TER: What's the catalyst for rising interest rates, as there wasn't a reaction to the initial tapering?
PS: I studied what happened in the bond and the stock markets during previous periods when the Fed stopped manipulating the bond market. In every single case, the moment the Fed announced that there would be a cessation of intervention, stocks declined and interest rates went up.
The Fed is still buying $75 billion worth of U.S. Treasury debt. It is the world's largest holder of Treasury debt, holding significantly more than the Chinese and the Japanese.
The Fed is painting itself into a corner. If it does not continue to support the market, there is no doubt in my mind that prices for fixed income will go down. That means that yields will rise.
TER: What if the Fed very slowly tapers off the support?
PS: Let's just be clear about what happened: 10-year rates have gone from 1.6% last May to about 3% recently. Interest rates have almost doubled in less than a 12-month period. That is an enormous move. That changes the value of bonds significantly. It reduces the price almost by 50%. Folks who bought bonds that were yielding 1.6% have gotten killed.
The Fed's buying is far more important to the market price of U.S. debt than any other economic variable. If the Fed stops buying, it doesn't matter whether unemployment goes up or down. It doesn't matter whether inflation is higher or lower. Its influence on the market is dominant. You can't expect the market to have the same price when the guy who's buying $1 trillion per year of bonds steps away from the market.
TER: What's going to cause the Fed to step away from the market?
PS: Two things: There is overwhelming evidence that QE is not solving the country's economic problems. In particular, it is not increasing employment. There are 92 million Americans who aren't working. There are 50 million people on food stamps. That hasn't improved from the Fed spending $3.5 trillion on bonds. The rationale for this policy is nonexistent and the policy has been a failure. What the Fed is doing is economic suicide.
The Fed knows very well it's going to be incredibly painful to unwind. It has a ticking time bomb in its hands. The Chinese are running balanced budgets. They're running current account surpluses. They're buying up all the gold that comes up for sale around the world, and they're cutting bilateral currency agreements with every large economy in the world. All of this is laying the groundwork for making the yuan convertible in the capital account.
What's going to happen to the dollar's role as the reserve currency around the world?
TER: Do you see a significant devaluation of the U.S. dollar in 2014?
PS: That's a realistic scenario for this year. Time is slipping away from the Fed. If the Chinese make that step, the Fed is going to have a lot less flexibility. It has to get its house in order. It has to stop this wild experiment with the monetary base for the simple reason that our currency is in constant competition with others. We are at risk of alienating our partners who hold our currency in huge numbers.
Ask yourself a simple question: Do I think it's reasonable that the Fed will become the only global holder of Treasury bonds? That's the course we're on.
TER: If rates go up and markets go down in the U.S., to what extent does that also influence markets across the world?
PS: We're already seeing some impact… Emerging markets have gotten crushed over the last 12 months. More money is on the margin. A 3% yield is more reasonable to a banker than a 1.6% yield. As a result, money is coming out of markets where higher yields are available, like Brazil. And that is influencing bond and equity markets around the world.
If I'm right and the U.S. yields go to something like 5% or 6%, there will be an absolute catastrophe in emerging-market stocks.
TER: Would that mean lower stock prices in the U.S, and if the yuan becomes a stronger currency, higher stock prices in China?
PS: There will definitely be higher prices for Chinese equities. There are other key factors in the pricing of Chinese equities that need to be resolved, mostly the issue of the rule of law and the amount of transparency. China's equity markets have been badly damaged by the amount of accounting scandals the country has suffered during the past 18 months. I don't think there will be a quick or easy solution to that reputational problem.
TER: Then there really is no viable alternative currency to the U.S. dollar in the short term?
PS: The yuan is actually a very attractive currency and will prove to be very reliable – much more so than the U.S. dollar. I think the Chinese are going to come out with a gold-backed yuan, whether that is done legally or simply a de facto gold-backing due to the size of their treasury's gold holdings.
I think that they're going to offer a very high real yield. And I think that they'll do a good job, as they have done throughout the last 25 years in developing their economy. The problem, of course, is that the equity markets in China are not very well regulated and there has been a large amount of fraud.
TER: Newsletter writer Harry Dent believes the stock market will crash sometime between January and May. You expect a market correction. But where your views diverge is that Harry believes this crash will be followed by years of deflation.
He points to the aging world population and a natural inclination for reduced consumption as you age. You believe there will be inflation as a result of the massive international QE. On the surface, that's a demographic trend versus a monetary trend. In your view, how do these two factors play out?
PS: Harry – as much as I respect his long career as a publisher and as a pundit – is just completely off base. Inflation is always and everywhere a monetary phenomenon. I don't care how much the population of Zimbabwe has aged or hasn't aged. When you're doubling and tripling your monetary base every year, you're going to have runaway inflation sooner or later.
TER: So what's an investor to do?
PS: The easy and simple thing is to own short-term, high-quality corporate bonds, so you can hold things that are going to mature in a year or two. If you're getting 6% or 8% on those bonds, you're going to be protected from inflation. And you'll have the ability to roll them over at a higher rate so that you don't have anything to worry about.
To protect yourself from loss of purchasing power, you can buy high-quality common stocks that are trading at a reasonable price, but with the ability to increase prices. In my newsletter, I just recommended shares of Lorillard Inc. (LO), which is a tobacco company that has the leading e-cigarette franchise. You can still buy that stock at about eight times cash earnings. It's incredibly capital efficient. It pays about 60% of every $1 of revenue out to its shareholders in the form of cash dividends and buybacks.
Obviously, precious metals have long been a store of value in a period of inflation. You can buy gold and silver. You can buy real estate. I've been buying real estate pretty much continuously since 2010.
I started out by buying slum apartments in South Florida. I then moved into trophy properties as the volume in the market picked up and properties began to change hands. Most recently, I bought a farm. I borrowed some money at 4% and bought a producing farm that will pay for itself.
Assuming that interest rates in the U.S. go above 4%, I'll get the money literally for free. Of course, I also expect farm prices to increase, so hopefully soybeans and corn give me a good profit going forward.
I don't think there's going to be a crash. But I do think it's going to be very difficult for people who are heavily invested in very expensive stocks. Do you have any idea what the earnings-per-share multiple on Amazon is?
TER: Twenty?
PS: One hundred and fixty-six. Do you have any idea what Amazon's operating margin is? It's less than 1%, yet its shares are valued at 156 times earnings and more than 20 times book value. Investor expectations have become completely untethered to the reality of that business.
I'm not saying that Amazon is not a good business. It is. But at $180 billion and already dominating the U.S. retail industry, that company cannot grow fast enough nor can it possibly hope to increase its margins enough to justify investor expectations. The folks who are buying those companies are going to be sorely disappointed.
TER: You have an interesting measurement that plays along with this concept called the S&A Blacklist. It includes companies with more than $10 billion in market cap trading at more than 10 times sales. You use this to determine if the market is getting frothy.
PS: Over the history of the equity markets, the number of companies that have been able to significantly increase and hold their value once they have been so highly overvalued is very small. Most companies that trade at these kinds of enormous valuations are never able to justify the valuations. Even if the earnings grow, the stock price declines.
Yes, some of these companies will turn into the next Facebook or eBay, but most of them will not. The ones that can't are going to crash. We keep track of this list because at market bottoms, there are fewer than five companies anywhere in the world that are trading for more than $10 billion and more than 10 times sales. At market tops, the number of companies that meet those criteria can be more than 12. Today, there are 20 companies on that list, which is the highest number we have seen since the 2000 market top.
TER: To what extent is that number really just a reflection of having nowhere else to put your money?
PS: It's a very big reflection of that. The Fed has driven people out of the bond market. People looking for reasonable, safe investments have been forced into things like master limited partnerships and real estate investment trusts. They have driven investors into riskier and riskier assets. And it's increased the number of people who are willing to invest in stocks at insane prices.
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