Saturday, August 17, 2019

The CPI Understates Inflation Skewing Our Expectations

The purpose of the consumer price index (CPI) is to reflect just how much inflation is eating into both our incomes and our savings. Consumer inflation has been estimated since the 1700s, by measuring price changes in a fixed-weight basket of goods. This method was seen as a way of measuring the cost of maintaining a constant standard of living. In the last 30 years, a growing gap has become obvious between government reporting of inflation, as measured by the CPI, and the perception of actual inflation held by the general public.

Currently, the government understates inflation by using a formula based on the concept of a “constant level of satisfaction” that evolved during the first half of the 20th century in academia. This extended into the BLS re-weightings sales outlets such as discount or mass merchandisers with Main Street shops. Those promoting this change claim it is simply another way to measure inflation and it still reflects the true cost of living. Politicians touting the benefits of this system created it as a way to reduce the cost of living adjustments for government payments to Social Security recipients, etc. By moving to a substitution-based index and weakening other constant-standard-of-living ties those reporting inflation have muddied the water as to just how much we are being impacted by inflation.

The general argument was that changing relative costs of goods results in consumers substituting less-expensive goods for more expensive goods.  Allowing for a substitution of goods within the formerly "fixed-basket" would allow the consumer flexibility in obtaining a “constant level of satisfaction." This adjustment to the inflation measure was touted as more appropriate for the GDP concept in measuring shifting demand and weighting actual consumption. Other tricks were also used to give the illusion of less inflation. In cases where the quality of the product are deemed by the government to be "improved" prices in the CPI, calculations are now adjusted lower to offset the higher quality. Extending this idea the Baskin Commission Report, December 4, 1996, actually used steak and chicken for its substitution example.

Bloomberg recently reported that a shopping trip to Walmart cost an astounding 5.2% more in June than it did just a year ago. Sadly, this is the type of inflation directly impacts many of the consumers that can least afford it. Recently product manufacturers like Coca-Cola, Pepsi, and Procter & Gamble all started raising prices across the board, which means that "something has to give." Retailers can only absorb so much of these increases before being forced to pass them on to consumers. Walmart values low prices and it is a key part of their marketing strategy but higher wages, transportation costs, and e-commerce investments have all pressured Walmart to bump some prices higher.

Click On Image To Enlarge
Many smaller specialty retailers like O’Reilly Automotive and Tractor Supply Company have also been hiking prices. Many of these hikes have been blamed on the trade war and tariffs but the economic reality for what is occurring goes much deeper. For years consumer prices have been held down by America importing goods from countries with cheap labor but that has a hidden cost which is the loss of manufacturing jobs. Another huge issue is that inflation varies drastically from one sector of the economy to another. When it comes to assessing real-world inflation that is having a direct impact on consumers, the Fed is conspicuously absent from this important conversation. The day to day increases in prices we see add credence to the informal evidence and occasional surveys that indicate the general public believes inflation is running well above official reporting. The numbers government pumps out today are politically motivated and the result of changes made in the 1990s when Washington moved to change the nature of the CPI.

These changes were promoted under the cover of academic theories and the sinister move was masked by the contention was that the CPI overstated inflation. Katharine G. Abraham, then commissioner of the Bureau of Labor Statistics, laid out her recollections in an August 1996 paper: “Back in the early winter of 1995, Federal Reserve Board Chairman Alan Greenspan testified before the Congress that he thought the CPI substantially overstated the rate of growth in the cost of living.  Greenspan's testimony generated a considerable amount of discussion but the general public paid little if any attention. In truth, the cuts in reported inflation were part of an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible which was to register a vote that would harm the image of Social Security.

The Importance Of  The CPI (click to enlarge)
While the substitution-related alterations to inflation methodologies were made beginning in the mid-1990s the introduction of major changes to concepts geared towards making us feel better about things began in the 1980s. The aggregate impact of the reporting changes since 1980 has been to reduce the reported level of annual CPI inflation by roughly seven percentage points meaning there is no question as to the understatement of inflation. If the methodological changes did not reduce CPI inflation reporting significantly, the politicians would not have pushed the changes through. The important issue is that without these changes, Social Security checks would be more than double what they are today.

A big factor in a false cost of living is that the purchasing consumer is not given a choice when paying out-of-pocket the full price for a product declared to have quality improvements they do not want or need. An example of this is the government-mandated the use of a gasoline formulation that was to improve auto emissions. It added ten cents per gallon to gasoline costs, but that cost was excluded from CPI calculations even though the person filling his or her gas tank suffered the actual out-of-pocket expense. This is also clearly seen in new computer and televisions. New features are deemed quality improvements resulting in downside price adjustments to the CPI even when the consumer may not use or want them. Also absent from this formula is recognition of how housing prices vary so greatly across the nation. 

To understand how just how large the impact has been on the CPI it is important to note that 24.0% of the total current CPI-U (the CPI for all urban consumers) is rooted in the category of “homeowners’ equivalent rent of residences.” This means that instead of reflecting some measure of home prices, as was the case before 1983, the BLS estimates the cost of housing based on what homeowners theoretically would pay to rent their own homes from themselves. The BLS then estimates how much homeowners raise the rent on themselves each month. Starting in 1989, the BLS skewed these estimates further by beginning to adjust that imaginary series for quality adjustments that would make the consumer feel good or better enjoy their residence.

Years ago when America was experiencing what the late Allen Meltzer described as "The Great Inflation" his take was that inflation generally was not considered a major problem until it rose into the double-digit area. I maintain the manipulation of data to artificially lower the official rate of inflation feeds into the illusion of economic stability. This helps both politicians and central banks sell the idea that inflation is not and will not become a problem. This false information is then used by individuals to plan and make decisions concerning their investments and retirement needs. I further contend that inflation would be much greater if more money was flowing into tangible goods rather than paper investments and promises. For proof as to the real cost of inflation just look at the surging replacement cost resulting from recent storms and natural disasters. Beware, if you are taking the CPI numbers being reported to heart you will pay dearly in coming years.

Footnote; The following articles are related to this topic.

Sunday, August 11, 2019

Trade Is Not A Big Driver Of The American Economy

Expect the controversy over just how much trade contributes to America's economic growth to be ramped up as growth slows. Trade between countries is given far to much credit for being a big driver of our economy. It pales next to factors such as government spending and credit expansion. The fact is if John needs to buy a wheelbarrow for work it does not matter where it is built. John needs and will buy a wheelbarrow. Where trade does fit into this has to do with what country employes workers to make that wheelbarrow and how much it will cost. While John may save money if the wheelbarrow was produced in a low wage country trade has more to do with who benefits from commerce and should not be seen as a force driving us forward.

Trade Is Not A Big Driver (click to enlarge)
In many ways, trade should be seen as a way to increase access to a greater variety of goods at a better price but this only works over a long period of time if it is balanced. A county that constantly enjoys a trade surplus at the expense of their trade partners often reaches a position to exploit the weaker countries and generally does so. Throughout history, trade policies have had massive long-term ramifications on the strength of a nation's economy. The promise that increased trade will create new jobs has turned out to be largely a myth. Still, we hear the narrative spun by politicians playing the "fear card" with statements such as "We can’t let countries like China write the rules of the global economy.” This implies we will lose the power to control our own fate if we stand firm and protect what is ours.

While the President and the markets want the Fed to do more we should understand simply printing more money and lowering rates has lost its ability to create growth. In many ways, the Federal Reserve has become the great enabler responsible for allowing the world to embark on a huge and rapid expansion of debt and credit during the last decade. This global credit binge could not and would not have occurred without the Fed being totally complicit and agreeing to allow it to take place. As the world's most powerful reserve currency a strong dollar could have contained the economic overindulgence we have witnessed.

By their actions, the Fed has failed to force other currencies to toe the line or pay a stiff price. It has been the Fed that decided to allow the dollar to be used as a global prop. A major problem stemming from low interest easy money policies is that the quality of the growth it generates is often very poor and creates problems in the future. An example of this is the rise in sub-prime loans that fuel auto sales. Just how bad the situation has become tend to be papered over until the point where it can no longer be ignored and things collapse.

The demand that trade partners be fair has become the scapegoat for a sagging global economy at the end of a growth cycle. The real reasons for slowing growth flow from poor government policies and the recognition that quality growth trumps quantity. Trade is overrated as an economic driver which means when imports are reduced internal production simply takes up the slack. For a country like America which has a huge trade deficit, this is a good thing. Long-term planning and sustainable growth is key to a healthy economy. Instead of getting to the business of setting things to right, corrupt and lazy politicians and bankers across the globe play the blame game.

An article recently by Mohamed Aly El-Erian published on Project Syndicate states; "Trade tensions are a symptom rather than a cause of the world’s underlying economic and financial malaise. Moreover, an excessive focus on trade could deflect policymakers’ attention from other measures needed to ensure faster and more inclusive growth in a genuinely stable financial environment." He then goes on to write, "Monetary policy has not been very effective in boosting sustainable growth, but it has lifted asset prices significantly. This has further fueled complaints that the system favors the already-rich and privileged rather than serving the broader population"

History has shown that trade agreements with low wage nations are not the great job creators we have been told. Much of the "free trade" movement is driven by mega-companies desire for larger markets and greed. It is difficult to deny that in our modern world many large companies already have more power than most nations and their power continues to grow at an alarming rate. The desire of companies to both develop and control future rules has caused them to lobby individual governments into giving up control and becoming subservient to corporate “efficiency.”

It is these mega-companies and the money they wield that has hijacked the conversation about how much benefit creates. I contend that trade shifts growth and jobs from one country to another rather than simply adding to the equation in a substantial way. This translates into the companies and their owners or shareholders benefiting far more than the economy in general. In many ways, the global economy has become an ill-regulated business model tilted to favor big business and giant conglomerates. It is not difficult to make the argument this has been harmful to the smaller domestic companies that generate many jobs here in America, Apple is a prime example of this.

Circling back to the example of John and his wheelbarrow used at the beginning of this article, it is wise to remember that the economic cycle is rooted in reality. The Johns and Freds of the world only need so many wheelbarrows, when they have enough, they stop buying them until they are worn out and they need more. Low interest rates, super sales, and easy credit can only stimulate growth in these sales so much and often it is at the cost of future sales. As the economy slows and trade tensions rise expect more fingers to point at sagging trade as the culprit. The fact is, no matter what we have been told by those with an agenda, trade between countries is only a small factor in what produces quality and sustainable economic growth.

Sunday, August 4, 2019

The Yen Is A Major Conduit For Wealth Leaving China

The link between China and Japan recently raised its head in the currency markets when President Trump upped the ante over trade-talks. Following a session in Shanghai that yielded only anger, the American trade-talk delegation quickly left for home. It appears that China has little intention of altering its course and will concede little or nothing in future talks. This highlights that China is a state-run economy based on a business model geared to expand by crushing its competition. Within hours, President Trump threatened to increase tariffs on Chinese goods flowing to America. This signals a growing impatience on the part of the White House to move trade-talks forward and finalize a deal.  

China Faces Growing Trade Problems
Immediately currency markets witnessed the yen surge in response. This makes it difficult to argue that a correlation does not exist between the value of the yen and problems in China. The yen has become a major conduit by which wealth is transferred out of China. This tight relationship can be seen each time trouble surfaces in China's economy. When this happens the yen rises in value as wealth exits China through business back-channels. It is also important to remember that economic weakness in China carries over and has a negative impact on Japan's overall GDP. Feeding into this relationship is the fact Japan does not desire a stronger yen which hurts exports. Since the yen constitutes just about 4 percent of the global world currency reserve the boost in its value is generally short-lived as the wealth flowing out of China moves on to other countries across the globe.

Last year, the U.S. combined goods and services deficit with China was a hefty $309.8 billion US dollars. Presidents Trump and Xi Jinping at their April 2019 meeting at Mar-a-Lago mapped out a strategy to remove trade irritants from the overall relationship and established a 100-day plan to reach an agreement. So far this map has led nowhere. The opinion that China may be stalling in hopes that Trump is not reelected is gaining traction. This has generated a tougher attitude in the White House that could have decades-long consequences. Trump claims he is hellbent on ending China's system of subsidizing Chinese companies in a multitude of ways that allows them to export goods at slightly below cost in exchange for manufacturing jobs. This is not stupid it is predatory
Trade Deficit Continues Running Ahead Of  2018
As you may recall, in May with great fanfare the “initial results” of the plan were revealed in the form of a ten-point program.  Sadly, many of the Chinese concessions listed were pre-existing obligations that China had already agreed to. In truth, after stripping out the pre-existing Chinese obligations and including new American concessions the May 11th deal does little to decrease the U.S. trade deficit with China. We have seen this play out in recent months as the trade deficit continues running slightly ahead of last year’s near-record pace despite efforts by the Trump White House to reduce them

There is even talk of not implementing the new deal until 2025. Many Americans see this as totally insane and take it as a sign that America has no stomach for playing hardball. Other issues also play into this discussion, as we focus on China taking advantage of America we tend to give a pass to Japan. America's "far too generous" relationship with Japan is rooted in a longtime post-war relationship. I contend it is time to question whether Japan deserves such treatment considering the strong economic ties Japan has formed with China. Up until now, Trump has left Japan relatively unscathed when it comes to demanding trade concessions, however, just like Mexico, Japan has the potential to become a prime target because of the strong economic links it has developed with China. Trade flows are far more complicated than many people realize. Most Americans remain oblivious to the fact that because of the huge trade deficit Mexico has with China the money Mexico receives from trading with America quickly passes through its lands and flows to Asia.

Over the years Japanese direct investments and technology have played a critical role in the development and competitiveness of China’s global supply chains. A strong link exists between China and Japan because of these major investments in China. It is clear China has exploited this relationship to learn the advanced industrial skills and production techniques of its neighbor. An example of how strong those links are can be seen at call centers in China where young workers speaking flawless Japanese answer customer service calls for a Japanese company. In western Japan, a new commercial Chinatown is rising in Kobe City's rebuilt port area. Instead of the gaudy restaurants in old Chinatown, the new area contains nondescript office buildings that are leased to Chinese companies focusing on everything including biotechnology.

This increased trade with China while bolstering the Japanese economy has also driven costs down significantly for Japan's long-suffering consumers which also played into the deflation factor. As for the yen, with a government gross debt to GDP ratio of 253 percent, Japan has the unwanted title of ranking highest in the developed world. The recent budget requests by Japan's central government ministries and agencies for fiscal 2019 total a record-high 102.77 trillion yen. Recently Japan's trade balance has again swung into deficit territory and a matter that has not garnered enough attention is how the economic problems that continue to develop in China will most likely spill over and affect Japan.

Between slowing economic growth and rising protest in Hong Kong, it seems China's problems may be about to get worse. China's economy is hooked on new credit and government stimulus. China’s debt mania, by this I mean madness, craziness, and frenzy is now the largest ever experienced in the postwar emerging world. As the China story unfolds it is clear the scope for a debt meltdown in China remains immense. China watchers, economists, and investors have been forming battle-lines for years as they debate the true strength and sustainability of China's economy and its role as a global player. Those of us that paint a picture of future collapse and a day of reckoning are often accused of spreading "doom-porn" for claiming the Chinese have masked over their dire situation by continually expanding credit.

In January alone, Beijing injected a staggering $685 billion in new credit into its financial system and the money continues to leak out causing assets to rise across the globe. Today China continues to prop up the "unpropable," and yes, while no such word exists, when it comes to China's economy it should. A matter that has not garnered enough attention is how the economic problems that continue to develop in China will spill over and affect Japan. The Japanese economy is very vulnerable to a negative economic feedback loop flowing from China. Recent market action should not be misinterpreted as the yen strengthening, but as simply a temporary bump before the wealth moves on to a safer place. This wealth shift will have a major impact on currency markets going forward. expect the yen to be a popular vehicle by which wealth flees China and enters the global economy.

Saturday, August 3, 2019

Somethings Got To Give! - The Ugly Economic End Game

It is very possible we are moving towards an economic Armageddon that will shake the world to its core. The numbers simply don't work. When the markets succumb to the fact that current economic policies have failed all will collapse. Following the onset of such a collapse central banks will be forced to unleash huge massive amounts of new currency into the system to combat the scourge of deflation. This mind staggering shift will in effect clear the deck of deadwood through hyperinflation. It will also, most likely, pave the way forward to introduce a new or a "batch of new" currencies.

Call it a multi-generational "re-alignment" if you wish, but in reality, it is the recognition that our path was an unsustainable illusion. By declaring "that a new start" has been deemed the best path out of the legal morass that contagion and collapse has rendered those in charge of such things can throw the common man under the bus. In such a situation, the debts that are not written off will become a moot point in that most will be devalued and paid off in worthless paper. The important issue will not be fairness but how to get from here to there with the least damage to the institutions and wealth those in power seek to protect. Sooner or later all great Ponzi schemes must come to an end.

We are but pawns in the giant game known as the global economy. Please excuse the tone of this article, it is rooted in the idea that on occasion it is good to vent or say what is on our mind. Sometimes we have to simply concede things are what they are and find solace in the thought that things could be far worse. You can expect promises to be rewritten and broken. Rules will change as we go through the wash. Most people will see their assets rinsed away as society is put through the wringer. For example, expect the cost of living adjustment on social security to be modified reducing payments to the elderly. Adding to the woes of retirees is that many pensions will be forced to reduce payouts and break promises as the returns on their investment fail to meet expectations. Many of the guarantees and paper promises granted over the past decades will prove to be less valuable than the paper they are printed on.

Global Debt Has Surged Since 2008
Blame the Fed if you like but it does little to alter the reality or ugly road ahead. The Fed's past collusion with Goldman Sachs and the fact it has been complicit in allowing other central banks to massively expand credit has garnered far too little attention. The scheme to transfer wealth to the large banks is intact and most Americans know something is wrong but are too busy with their day to day existence to react. There is a huge revolving door between large financial institutions and government that allows former employees with connections and strong ties to policies to flow freely back and forth between the two and the conflict it raises. We need only look at the soaring national debt to see this wave of crony capitalism will soon sweep us off our feet. This is a form of government corruption that has inflicted pain upon people throughout history.

With big business increasingly exerting its power over small enterprises. We the people are trapped in a world where our options are rapidly vanishing. In many ways, those in control have paved over economic reality masking and covering a multitude of sins against the laws of supply and demand. It is impossible to deny this has also taken its toll on "true price discovery" that allows our economic system to adjust and properly function. As pawns in this game, we can either choose to sacrifice ourselves or fight. In this case, fighting means to undertake a strategy that protects what we can of the life we have created within the power we have been granted. The fact you are reading and thinking about this subject puts you in a far better position than the masses who see before them blue skies and unicorns grazing upon a hill.

As the global economy moves forward it is difficult to ignore that it is constructed on a weak foundation of imbalances, lies, and excesses. We only need to look towards China with its ghost cities and the fact its massive factories continue to crank out far more steel than is needed. Across the world, debt has exploded as wages stagnate. Countries have borrowed against the future by running up huge deficits. Good jobs based on creating and doing a real task that can be economically justified are in short supply. The situation has become dire and the numbers do not work, borrowing money to merely pay the interest on past debt and NIRP is not a prescription that leads to economic nirvana and bliss.

Make no mistake, we cannot and should not look for a white knight to come riding in to save the day, no such leader exists to lead us out of the economy hell we have created. Predictions of  "lost decades" are not uncommon as we recover and struggle to find a path forward. Here in America, we see a field of over twenty presidential hopefuls that will soon be weened down but do not expect a hero to emerge. In the end, the system we have created will ask a majority of voters to cast their ballot for the candidate they "hate the least" or in more politically correct terms the "least of two evils".  Adding to our woes is the constant reminder that even if we garner up the enthusiasm to go to the polls rather than disengaging from the process the poorly crafted electoral college will soon strip us of any illusion that all votes are created equal. In the end, a few voters in some "battleground" state will make the final decision as to our fate.

Returning to the subject of the economic end game, make no mistake, periods of rapid credit expansion always end the same way and that is in default. This translates into a major shift in wealth. Global debt has surged since 2008, to levels that should frighten any sane investor because debt has always had consequences. Much of the massive debt load hanging above our heads in 2008 has not receded or gone away it has merely been transferred to the public sector where those in charge of such things feel it is more benign. By a series of off-book and backdoor transactions, those in charge have transferred the banks loses onto the shoulders of the people, however, shifting the liability from one sector to another does not alleviate the problem. As noted earlier, the fact you are reading and thinking about this subject puts you in a far better position than the masses to weather the coming storm.

Tuesday, July 30, 2019

Old Nuclear Plants Online Are A Danger Overlooked

People should consider it a deeply worrisome sign that of Russia's ten nuclear power plants two recently suffered significant operating incidents in the same week. This caused multiple reactors to be taken offline. Russia's TASS reported that a "transformer short circuit" at the Kalinin nuclear power plant (NPP) resulted in "a complete shutdown of two and a partial shutdown of another power unit. In total 3 out of the 4 nuclear plant's reactors had to be "unplugged." The Kalinin plant is north-west of Moscow in central Russia and has been operational since the mid-1980s. The other incident reported by state media involved a nuclear plant in the central Russian city of Beloyarsk. There, a reactor had to be disconnected when an automatic safety mechanism was triggered. It came back online after an inspection found no issues.

Click On Map To Enlarge!
The point of this article is to underline the fact that it is only a matter of time before another disaster at a nuclear power plant occurs. This is something we have come to live with and grown complacent about.  If you live in the U.S., there’s a good possibility that you live near a nuclear power plant. More than 120 million Americans are within 50 miles of a reactor. Several nuclear disasters have taken place over the years. We tend to brush these aside and are often oblivious to the danger growing in our own backyard. As a reminder of the danger, I bring up names such as Three Mile Island, Chernobyl, and Fukushima. the fact is we can paper over and ignore this danger but once this gene gets "out of the bottle" it has proven both expensive and difficult to contain. As a reminder as to the potential for disaster sitting in our backyards lets look back at a couple of these past incidents.

In the early morning hours of April 26, 1986, things went horribly wrong in the town of Pripyat, in northern Soviet Ukraine. Reactor No. 4 at the Chernobyl Nuclear Power Plant, was overwhelmed by an uncontrolled reaction that could not be stopped. Two initial explosions blew the top off the reactor. This allowed plumes of fission matter to escape into the atmosphere. Before long, this radioactive material spread onto Western Europe and the Western USSR. Nine days later the fire was finally contained but not before roughly 400 times more radioactive material was released than from the atomic bombing of Hiroshima and Nagasaki. Twenty-eight firemen and operators died from acute radiation syndrome in the months following the explosion.

The Chernobyl Disaster Has Faded From View
What exactly caused the Chernobyl disaster is still a matter of disagreement.  The first official explanation of the accident proved to be erroneous.  It now appears an ill-planned late-night safety test to simulate a power-failure set in motion the very chain reaction that led to the disaster.  During the experiment, the emergency safety and power-regulating systems were both intentionally turned off.  Then the operators attempted to boost the reactor output; a violation of the approved test procedure.  Soon after, all control was lost. Most accounts now assign equal blame to human error and reactor design flaws. It now appears that shortsighted engineers failed to idiot-proof the nuclear power plant for the operators and those operators succeeded at being idiots.

Disasters can also be the result of forces beyond our control. Following a major earthquake on 11 March 2011, a tsunami swept over the coast of Japan. The tsunami killed more than 15,000 people and destroying or damaging more than a million buildings. It also disabled the power supply and cooling of three Fukushima Daiichi reactors, causing a nuclear accident. The cores of reactors 1, 2 and 3 largely melted in the first three days while unit 4 was written off by a hydrogen explosion. This quickly became the most significant nuclear incident since the 1986 Chernobyl disaster and the only other disaster since to be given the Level 7 event classification of the International Nuclear Event Scale.

Following a mass evacuation, an area now exists in Japan where people can never return to their homes. Years after the disaster we still don't know how much land must be decontaminated before people can return. Also, there is the issue of how long it will take. It won't be today and certainly not in the next few years. It took decades to clean up the reactor at Three Mile Island, and a quarter-century to clean up after Chernobyl where there's still a lot of work to be done. It might be decades before Units 1, 2, and 3 are cleaned up. Much of this delay is necessary to allow radiation dose rates to decay to the point where work can be done or villages can be reoccupied.

Nuclear Plants - A Bomb In Our Backyard?
America's big nuclear scare took place in 1979 when reactor 2 at Three Mile Island suffered a partial meltdown. At the time it sparked an evacuation and panic. Much of it was fed by a lack of information provided to the public. The incident did not result in any deaths or injuries but it spurred broad safety overhauls in the industry. The incident also inflamed worries about the safety, security, and transparency of nuclear plants that that continue to dog the industry today. While these concerns have raised the issue of nuclear plant safety they have not been enough to stop America from extending the operation of these plants well past beyond their planned useful life. 

In May 2019, Exelon Generation, the current owner of Three Mile Island nuclear power plant, acknowledged that it plans to go through with a shutdown starting in June. The last remaining nuclear reactor is scheduled to go offline in September. The domestic commercial nuclear power industry is facing economic headwinds due to the U.S. oil and gas boom and stiff opposition from the gas industry, as well as renewable energy advocates still skeptical of nuclear power. Last year nuclear power plants generated about 20% of the nation's electricity and produced the largest share of zero-carbon electricity in the country. Yet, in the face of cheap natural gas and falling prices for wind, solar and, more recently, battery storage, the business case for nuclear has become ever more difficult to prove.

Today, more than a third of the country's 60 nuclear plants are either unprofitable or slated to close. On average, it would cost $814 million annually to bring unprofitable plants back to a breakeven point. Of course, industry advocates such as Maria Korsnick, president and CEO of the Nuclear Energy Institute, the industry's main trade group, still see nuclear energy as very important. she recently said, "It's in our nation's best interest for lawmakers both in state capitals and Washington to push for market solutions and policies that value all clean energy sources, or face the economic and environmental consequences for generations to come."

Another issue is that to extend their life these plants often require expensive infrastructure improvements. An example is the $478 million planned upgrade at Cook Nuclear Plant in southwestern Michigan taking place in 2019-2020. Unit 1 began operation in 1975 and unit 2 in 1978. The first had an operational license that expired in 2014 and the second in 2017, both licenses have been extended by 20 years. The owner, Fort Wayne, Indiana-based Indiana Michigan Power is asking for higher rates to help pay for it. The utility is asking the Public Service Commission to review base rates for an overall increase of nearly 19%. For a typical residential customer who uses 1,000-kilowatt-hours this would amount to about $36 a month.

While the above example is very common, more of a concern is that little has been done to improve safety at many of these plants. Two coastal reactors at the Diablo Canyon Power Plant upwind of ten million people in California are surrounded by earthquake faults. They are also in a tsunami zone like the one where the four Fukushima reactors exploded.  PG&E, the company running the Diablo Canyon plant is in bankruptcy, with its third president in two years, This brings into question whether PG&E is qualified to run two large, old, obsolete, crumbling atomic reactors which are surrounded by earthquake faults.

If a major disaster were to occur, Los Angeles could find itself under an apocalyptic cloud that could result in the death of millions. The people living there would see their lives and the state left in radioactive ruin. The bottom-line is that past disasters and the fact these plants are aging is indeed a reason for concern. Adding to the danger is that we the public are often "sheltered from the truth" and not informed of potential problems. The logic behind this is that it might elevate our fear. Still, this fear is justified when you think about being told to leave your home in the middle of the night with no place to go and never being able to return.

Sunday, July 21, 2019

Advancing Time: Modern Slavery And The Ugly Tale Of Human Traffick...

Advancing Time: Modern Slavery And The Ugly Tale Of Human Traffick...:

Slavery continues in many forms and even flourishes in many parts of the
world. Modern slavery is an ugly topic that includes not only forced labor but enters into such things as sex trafficking.

The term, "human trafficking" is the modern polite replacement for the
word slavery. It involves the trade of humans for forced labor, sexual
slavery, or commercial sexual exploitation.

This all ties into the Jeffrey Epstein child molestation case which has
made big headlines because it is expected to link many rich and powerful politicians and
Washington insiders to this unsavory activity. This article delves into this huge and very ugly business that lurks just under the radar.

Modern Slavery And The Ugly Tale Of Human Trafficking

Modern slavery is an ugly topic that includes not only forced labor but enters into such things as sex trafficking. Unfortunately, slavery continues in many forms and even flourishes in many parts of the world. When a person is owned by another and considered by law as property or chattel they are deprived of the rights ordinarily free people have come to expect. This highly profitable enterprise still exist and most likely will expand as inequality grows because in many ways, whether society wants to admit it or not, the ultra-rich are often above the law.

The term, "human trafficking" is the modern polite replacement for the word slavery. It involves the trade of humans for forced labor, sexual slavery, or commercial sexual exploitation. This market is the trade of selling people, especially women and children but does not necessarily involve the movement of the person from one place to another. Human trafficking can occur within a country or across borders. It may encompass many things such as providing a spouse in the context of forced marriage or even the extraction of organs or tissues.  Human trafficking is a crime against humanity in that it violates the victim's rights of movement and centers on exploitation.

This all ties into the Jeffrey Epstein child molestation case which has made big headlines because it is expected to link many rich and powerful politicians and Washington insiders to this unsavory activity. The fact that years ago Epstein was busted and possibly used his connections to stay out of jail certainly adds to the drama. Although many people can get photographed with celebrities who claim to be “friends” with them in this case, Epstein is, at the very least, a known associate and maybe even actual friend of Bill Clinton and Donald Trump as well as others in their circle. When someone who has abused large numbers of underage girls at his home is connected with US Presidents this raises eyebrows and shocks the public.

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The trade of men, women, and children is occurring all over the globe and governments failing to enforce laws and victims unwilling or afraid to come forward adds to their plight. The subject is often blurred because at times these victims seem to have the freedom to move about within certain limits. Still, the sub-conscience effort to deny the existence of slavery allows the trade of human beings to continue. This activity had lurked in the shadows but is now being reinforced by new high-tech forms of tracking the whereabouts of people. The use of GPS chips and small identification tags which can be placed inside the body and hidden from sight increase the control the powerful and corrupt have over the oppressed.

Sadly, the public should not be shocked as there is a crisis of child abuse and rape throughout the halls of power in nations across the Western World. In Britain, Operation Hydrant a police investigation into cases of non-recent child sex abuse has over 2,200 open investigations unites together by the fact that the suspects, like Mr. Epstein, are all people of “public prominence.” This large scale operation formed to search for perverts and rapists in the UK elite appears not to be a unique phenomenon. The Inquiry into Child Sexual Abuse (IICSA) has been able to shed a lot of light onto numerous suspected pedophiles within Parliament and evaluate how the nation’s political parties have dealt with or refused to deal with accusations of this crime being thrown at their members. This investigation is one of many into different areas of British society including religious organizations as well as governmental bodies and delves into recent cases involving those currently active.

Men And Children Are Also Sold Into Slavery
Slavery and human trafficking is a problem that plagues the world. In Brazil JBS, the world’s biggest meat producer, and other enterprises that can be found on Brazil’s ‘dirty list’ for slave labor donate money to top politicians. states that over 41 percent of all recipients receiving such money are part of the influential ruralist caucus, a congressional faction keen on revoking land rights of indigenous communities and limiting efforts to combat slavery. The leftist Workers’ Party of former presidents Dilma Roussef and Lula da Silva, who is currently facing imprisonment due to corruption, has received a stunning 20 percent of donations from companies on the dirty list. While such donations are not illegal in Brazil when the money received is from such dubious origin we have to question who the politicians are working for.

Few Americans feel women are treated well in Middle Eastern cultures where men are often held in higher esteem. Still, it is important to realize the degree and severity of oppression varies greatly in different situations. While some Americans are appalled at the treatment of women in the Middle East we should not forget varieties of this ugliness is on full display in many poor countries. In Asia, tens of thousands of North Korean women and girls are being actively trafficked into the Chinese sex trade by criminal organizations. Once there they and are often forced to endure "systematic rape, sex trafficking, sexual slavery, sexual abuse, prostitution, cybersex trafficking, forced marriage, and forced pregnancy." According to a report from The Korea Future Initiative, the victims commonly between 12-29 years old are often sold more than once and forced into at least one form of sexual slavery within a year of leaving their homeland.

As they are pushed from their homeland by a patriarchal regime built on the imposition of tyranny, poverty, and oppression, North Korean women and girls are passed through the hands of traffickers, brokers, and criminal organizations" according to the London-based Korea watchdog group. According to the report's author, victims are mostly aged between 15-25 and are habitually subjected to penetrative vaginal and anal rape, forced masturbation, and groping. Girls as young as nine are forced to perform graphic cybersex acts and are sexually assaulted in front of webcams which are streamed to a global audience. This means the prospects for North Korean women and girls trapped in China’s multi-million-dollar sex trade are bleak and many have perished.

With China so large in the news today it very important to key in on the abuses happening there. According to the report, sex trafficking and exploitation is a $105,000,000 per year business for the Chinese underworld. Once in China the victims are prostituted for as little as $4 United States Dollars, sold as wives for just $146 United States Dollars, and trafficked into cybersex dens for exploitation by a global online audience. A shortage of marriageable Chinese women has created a market for foreign brides and sex workers. This demand is being filled in China's southern provinces by trafficking in victims from Vietnam, Laos, and Cambodia as well. Girls and women driven by desperation and fear unwittingly are sucked into this nightmare.

Returning to the situation here in America, it could be that we dramatically understate the magnitude of human trafficking taking place within our borders. The covert nature of these operations and our lack of awareness means statistics under-represent the scale of this problem. Adding to this is the opioid crisis because people suffering from drug addiction are particularly susceptible to being trafficked. The top five cities in America for human trafficking reports are Washington DC, Atlanta, Orlando, Miami, and Las Vegas. This is often driven by the prostitution industry.  While some prostitutes may work entirely on their own a significant number of them are working against their will. It should be noted that each of these locations are major tourist destinations with international airports. On a per-capita basis, Washington DC and Nevada have the most reports of human trafficking in the nation with rates as much as five times greater than in other areas.

The second major category of human trafficking is coerced labor. In heavy agricultural states trafficking reports are also very high. In America, a great deal about the history of slavery is centered upon the oppression of blacks but most people forget or never knew many of the Irish that came to America arrived as indentured servants. A case could be made that slavery is color blind and simply hones in on the most vulnerable of society with something the rich and powerful desire. When all the above is considered, it is not surprising that slavery often resides at the intersection of power and taboo. Cultural taboos whether social or religious prohibiting or forbidding a particular practice often have a strange allure. With this in mind, it seems those in power seem to get a real kick out of suppressing and dominating others. Allowing and accepting this diminishes all of us.
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Footnote; A topic not addressed in this article is that of "state imposed forced labor." The link below delves into how China treats its millions of citizens that do not make an effort to march in step. The ruling Communist Party has built "re-education camps" in an attempt to bring these people into the “modern, civilized” world promote what the government calls “ethnic unity” but in simpler terms the apparent goal is to force detainees to embrace the Chinese communist party.