Weekend Roundup: Ron Paul Wins Straw Poll; Outlook on Spain; Icesave Vote Pending; Companies Abandon Climate Partnership; US Weekly Claims

Ron Paul Assumes Role Of Conservatives' Favorite

Ron Paul Wins Presidential Straw Poll at CPAC

Ron Paul has ended Mitt Romney's three-year run as conservatives' favorite for president, taking 31 percent of the vote in the Conservative Political Action Conference's annual straw poll.

Paul, a Republican congressman from Texas known for his libertarian views, ran for president in 2008 but was never a serious contender for the GOP nomination.

Romney, former Massachusetts governor and also a 2008 GOP candidate, has won the last three presidential straw polls at the annual conference. This year, he came in second, with 22 percent.

Sarah Palin, who didn't attend the conference, was a distant third in the straw poll, with 7 percent, followed by Tim Pawlenty, the Minnesota governor, and Rep. Mike Pence of Indiana.

Ron Paul Asks Are US Taxpayers Bailing Out Greece?

Are US Taxpayers Bailing Out Greece?

Last week we were reminded that ours is not the only country suffering from severe economic turmoil. The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.

But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not forthcoming.

Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit.

Greece is only the latest in a series of countries that have faced this type of crisis in recent memory. Not too long ago the same types of fears were mounting about Dubai, and before that, Iceland. Several other countries (Spain, Portugal, Ireland, Latvia) are approaching crisis levels with public debt as well. Many have strong ties to Goldman Sachs and the case could easily be made that default could have serious implications for big US banking cartels. Considering the ties between the Fed and these big banks, it is not outlandish to wonder if the US taxpayer is secretly bailing out the entire world, country by country, even as our real unemployment tops 20 percent.

Unless laws are changed to allow a complete and meaningful audit of the Federal Reserve, including its agreements with foreign central banks, we might never know if this is occurring or not.

Failure Of The Keynesian State

This is a lengthy video but worth a listen for those with some time.

Ron Paul at Mises Circle: Prepare for the Worst



Outlook on Spain

A cyberspace friend "Bran" sends me European material nearly every day. Today he writes:

Hello Mish

How are you? It never rains in southern Spain, it pours. We have had so much rain lately. Here are some odds and ends from Spain.

Eurostat Data for Nov. 2009 - youth unemployment (under 25) in Spain almost 44%. I don't believe it's any better since then.

A chart and an accompanying article by Expansion.com (in Spanish) states 3 million people are claiming benefits and an additional million receive none, being outside of the right to do so.



A second Expansion.com (in Spanish) has an interactive on public employment - now also 3 million people , half of which are employed by regional government.

It is no wonder the economy is going down - there are no workers left to do much else.

Farmers in the northeast have been protesting farm prices. The amount of property for rent under 1000 euros monthly has increased to five times its level two years ago.

In Spain, a government job has always been sought after traditionally, They overdid it - and we still don't really know who is in charge of what!

Readers Digest UK Goes Bankrupt Over Pension Liabilities

Reader’s Digest Insolvent In UK After Pension Troubles

Seventy-two years after its first edition, the Reader’s Digest’s UK edition, which bills itself as “the world’s favourite magazine’, has filed for administration, after failing to win government backing for a pension fund rescue plan.

This was expected. The title’s U.S. parent Reader’s Digest Association (RDA) filed for Chapter 11 U.S. bankruptcy last year and recently told a U.S. court it had “a longstanding and significant unfunded liability within its UK pension scheme” that might lead to it filing for adminstration (for U.S. readers, that’s the term for placing insolvency businesses alternative hands, to maintain and reorganise operations).

Icesave Vote Coming Up

Icesave Vote by March 6

Iceland's parliament on Friday said a referendum must be held no later than March 6 on terms under which the country will repay Britain and the Netherlands more than $5 billion (3.1 billion pounds) owed as a result of its financial meltdown.

Icelandic President Olafur Grimsson unexpectedly refused to sign an amended law this week approving repayment, citing a wave of popular anger over the bill. Under the constitution, his refusal forced Iceland to hold a referendum on the bill.

If voters reject the bill, the law reverts to an earlier version passed in August. Britain and the Netherlands rejected that version because repayments were not guaranteed after 2024.

I hope Iceland voters select default. It is the sane thing to do.

Conoco, BP, Caterpillar Leave Climate Coalition

Conoco, BP, Caterpillar Leave Climate Coalition

ConocoPhillips, Caterpillar Inc. and BP America have left the U.S. Climate Action Partnership, a coalition of more than two-dozen companies and environmental groups lobbying Congress to pass greenhouse gas emissions cap-and-trade legislation.

In interviews, officials from both companies said legislation pending in Congress, including a bill passed by the House last summer, does not do enough to promote expanded natural gas consumption as a hedge against climate change. Moreover, the legislation puts the transportation sector -- including oil and gas producers -- at a disadvantage compared with coal.

The House-passed bill (H.R. 2456) would cap carbon dioxide and other heat-trapping gases at 17 percent below 2005 levels by 2020 and 83 percent by 2050. Under the bill's cap-and-trade proposal, power plants, oil refiners and other regulated entities must pollute less or buy and sell emissions allowances to meet the federal targets.

The bill would allocate the electricity sector 35 percent of allowances -- nearly commensurate with its share of U.S. emissions. The oil and gas sector, which accounts for roughly a third of U.S. greenhouse gas emissions, would receive 2 percent of the allowances.

Those percentages show just how ridiculous cap and trade is, creating winners and losers out of thin air. Is Obama trying to buy votes in coal states?

Who knows? What we do know is the whole idea of energy credits is seriously flawed. Let's look at more winners and losers to see what we can find.

Inquiring minds might be interested to learn Al Gore is a partner in Kleiner, Perkins, Caufield & Byers. The company is a venture capital firm that invests in technology to address global warming. Kleiner Perkins has an interest in 40 companies that will benefit from cap and trade. Al Gore claims he will not benefit from it.

The foundry has a nice take from last April called Al Gore, You’ve Truly Outdone Yourself.

Speaking at a Congressional hearing in support of a massive, costly energy bill that would attempt to slow global warming by reducing carbon dioxide and other greenhouse gas emissions, Al Gore likened climate change legislation to some of the largest events in U.S. history:

"I believe this legislation has the moral significance equivalent to that of the civil rights legislation of the 1960’s and the Marshall Plan of the late 1940’s. I am here today to lend my support to one of the most important pieces of legislation ever introduced in the Congress.”

By the way, the fact that ConocoPhillips, Caterpillar Inc. and BP America stopped lobbying is an indication they think cap and trade is dead. Let's hope so.

Too Little Too Late For Mortgage Rule Changes In Canada

Flaherty to toughen mortgage rules

Finance Minister Jim Flaherty will announce new rules Tuesday aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise, CBC News has confirmed.

Sources say the measures will discourage reckless real estate speculation, such as borrowing heavily for an investment property that is not the investor's primary residence. Flaherty is also set to deter households from taking on more mortgage debt than they can afford to repay when interest rates rise, as they are expected to do later this year.

The finance minister is also expected to discourage people from raising cash by refinancing their homes with larger mortgages — again because they may not be able to make the payments at higher interest rates.

Flaherty is about 5 years too late.

US Weekly Unemployment Claims Jump

Inquiring minds are investigating the Unemployment Weekly Claims Report for February 18, 2010.

In the week ending Feb. 13, the advance figure for seasonally adjusted initial claims was 473,000, an increase of 31,000 from the previous week's revised figure of 442,000. The 4-week moving average was 467,500, a decrease of 1,500 from the previous week's revised average of 469,000.

Weekly Unemployment Claims



After last week's unexpected huge dip, this week sports an unexpected huge rise. That's why it's best to focus on the trend in the 4-week moving average.

4-Week Moving Average of Initial Claims



The 4-week moving average of claims for the last three weeks is above where it was on December 12, 2009 and just slightly better than it was on December 5, 2009. By this measure, the recovery has stalled.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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