Friday, July 31, 2020

Amazon, Jeff Bezos, And The Influential Washington Post

Influence And Power Wrongly Placed!
After Jeff Bezos and several other CEOs testified before the House Judiciary antitrust subcommittee over anti-competitive conduct the following article has taken a huge leap in importance. The Washington Post is an influencer with great power. What is the definition of an influencer? The definition of an influencer is a person or entity that exerts influence. An influencer inspires or guides the actions of others The old theme of laziness and mellowness runs counter to today's influencers, who are business-people and upscale inspirational promoters. During recent years several of the tech giants have come under fire for skewing and manipulating public opinion but sliding below the radar is the Washington Post. This means few people question the newspaper's findings, stories, articles, or opinions.

The Washington Post is by far the most influential newspaper in America. Its subtle ability to influence, shape, and mold the opinion of Americans cannot be overestimated. Day after day those working for the Washington Post are quoted time and time again as experts and authorities as they appear on talk-shows and news-feeds spreading their message. Much in the way a stone hitting the water sends out ripples, this amplifies their spin and in many ways determines the focus and direction in how we view issues. The Washington Post's power goes far beyond just reporting the news but it has the ability to plant an idea like you would a seed. It then shapes public opinion utilizing various tools and even coordinating the timing to maximize their impact.

Power Corrupts (click to enlarge)
Almost as frightening as the concentrated power held by companies such as Facebook and Google is the fact Jeff Bezos, CEO of Amazon and the world's richest man, is the person who owns and controls the Washington Post. It is silly to think Jeff Bezos purchased the Washington Post in 2013 because he expected newspapers to make a lucrative resurgence. It is more likely he purchased the long-trusted U.S. newspaper for the power it would ensure him in Washington when wielded as a propaganda mouthpiece to extend his ability to both shape and control public opinion.

To be blunt, the Washington Post controls much of the narrative put before the American people. Jeff Bezos, the epitome of a person who rises to the top in unregulated capitalist systems where money rewards people who are comfortable with exploiting and harming others should not be wielding such power. The fact is, when you couple the voice of the Washington Post with Amazon, a company so deeply involved with discovering and archiving detailed files and information about individuals and politicians across America you command far too much muscle and clout.

It is not a coincidence that the Washington Post has broken many big stories that move the needle of public opinion in huge ways. This is done over the years with a cumulative effect, meaning that while many of these stories don't immediately wow us they seem to rapidly spread throughout the mainstream media taking on a life of their own and eventually have huge ramifications that can be so subtle they go unnoticed by the average American. The propaganda they dish out can be very seductive, they simply add in a few gentle jabs to embarrass their enemies and then stir the power of suggestion.

Many people do not realize it but the Washington Post cloaking itself as a pro-establishment mainstream publication can defend establishment narratives but actively attack anyone who challenges them. By this I mean it serves the wealthy and the powerful which can only exist with nonstop advertising to convince the American public that the "overall status quo" is in their best interest. The Washington Post is used to manufacture consent for that system; for the economic system, for the wars which prop it up, for the politicians which the plutocrats own and operate, for the political system which wealthy insiders have infiltrated every level.

An example of this is how a story about Roy Moore published in the Washington Post on November 9, 2017, resulted in him losing the election. WaPo reported that Moore had initiated a sexual encounter with a young girl in 1979 when she was 14 and he was 32 years old. The allegations of sexual misconduct dumped out a month before the election while never proven spread like wildfire as the term "pedophile" went viral causing Moore to lose to Democratic candidate Doug Jones.

This brings us to the question of whether The Washington Post is "that good" at uncovering and reporting the truth or simply maximizing its influence to alter and control public opinion? Even when not breaking a big story WaPo is not averse to stirring the pot and increasing outrage that can later be directed towards their target. Whether we are talking about the "Me Too" movement or just recently, the idea that record gun sales for protection because people are afraid of growing crime, will result in countless deaths.

In recent months, according to the firearm industry's trade group National Shooting Sports Foundation (NSSF), Americans have purchased millions of guns. These gun sales have occurred during the government-mandated lockdowns and riots erupted after the killing of George Floyd. An article authored by Ryan McMaken of The Mises Institute looks into how the Washington Post is trying to turn the soaring gun sales narrative around. A recent WaPo article claims people aren't buying guns as a reaction to violence and social disarray but insists those new gun purchases are the cause of the violence in the first place. The piece even goes as far as attempting to tie the purchases to "state-level racism" using a study about data on Google searches for the n-word, an approach used by social scientists in the past.

Circling back to the crux of this article, being manipulated by bias reporting claiming to be fair and balanced is real and dangerous. This needs to be exposed and curtailed or society will be lead down a path designed to enhance the power of those in control. We must never forget that Amazon is a job-killing exploiter and the company is no stranger to sweetheart deals and has lined the pockets of its CEO, Jeff Bezos, at taxpayer expense. Many of the options Bezos employs to expand Amazon are available to him only because of the many areas his various companies engage in, this is the crux of growing antitrust talk surrounding Amazon which has become a threat to our democracy and capitalism.

Subtle but constant jabs take their toll over time and add fuel to an atmosphere that constantly warps our perception of reality. Adding to its importance is this is an election year and because our nation is so polarized the direction we take going forward matters a great deal. While Trump may not be God's gift to mankind he does represent an effort to turn back economic forces and a deep state that has become too strong. Influencers such as WaPo by effectively undermining President Trump are much more dangerous at altering the results of the election than countries like Russia or China. Little things such as reminding the electorate and women especially that Trump "does not respect women" resulted in flipping a very valuable vote in an evenly split Senate, this matters.

When WaPo helped to fuel the "MeToo" movement that was raging due to high profile revelations relating to Harvey Weinstein and other powerful men acting like pigs they shifted votes. In an article titled, "The Marginalized Voices Of The #MeToo Movement" the Post took a victory lap of sorts on December 7, 2017, by pointing out that when Time magazine recognized the #MeToo movement as its Person of the Year, it solidified just how much of a cultural moment we are in when dealing with sexual harassment and assault allegations against powerful men. Unstated was how the growth of the movement has further polarized our divided nation. Even the mention of this movement in a negative light has resulted in people being cast off a show or dis-invited to an event.

All this adds fuel to an atmosphere that constantly warps our perception of the Trump administration. This is then coupled with a constant barrage of headlines such as "Trump Decides To remove National Security Advisor And Others May Follow" or, "Trump To Fire McMaster As National Security Advisor, WaPo Reports But White House Denies." These often well-laundered stories tend to repeat vague rumors and innuendos which feed into the narrative of a White House in chaos. Most of these articles tend to loop back on themselves, while described as news they are designed to continually jolt the emotions of both those on the left and the right reinforcing the polarization that grips our nation but leaving nobody to blame.

This type of reporting does not stop at attacking Trump but extends into our feelings about the world including our view of Russia, North Korea, Iran, and even issues like trade. It all seems a bit ironic that it was the Washington Post which was the first to print these stories that you would normally expect to flow from a source closer to home such as a newspaper in the city or state where the event took place or the accuser lived. While this is inconclusive in proving that they were prefabricated of wrongdoing. it can be taken as proof of the power the Post wields.

One of the best descriptions I have ever read of Jeff Bezos calls him the most crafty plutocrat alive and stated he purchased the Washington Post so he could shape America's agenda. The neo-liberal Orwellian establishment that Bezos is building his empire upon has been greatly enhanced by using the long-trusted US newspaper as a propaganda mouthpiece to propel his agenda forward. Very troubling is the fact Jeff Bezos is also a contractor with the CIA and sits on a Pentagon advisory board all part of doing everything he can to cozy up and ingratiate himself to the establishment on which his empire is built. This includes kicking WikiLeaks off Amazon servers in 2010 and dovetails in a creepy way with Amazon’s involvement in surveillance systems and digital “assistance” devices like Alexa.

It amazes me that average Americans still have a difficult time internalizing the fact businesses are dying and workers are getting poorer as Bezo's empire continues to grow. Bezos is happily collaborating with depraved intelligence agencies, manipulating and propagandizing Americans, and expanding the gulf between the rich and the poor all in his effort to garner more wealth. In our system where money rewards sociopaths and money equals power the plutocrats that form alliances with each other and with defense and intelligence agencies to ensure the continuation and expansion of their empires have little concern for the average American.

Thursday, July 30, 2020

Negative Side-effects Of Protecting Renters From Eviction

The Federal CARES ACT passed in March protects renters living in properties with government-backed mortgages from eviction until July 25. While the intent of lawmakers might be to protect what they consider the most vulnerable in our society this sends a grave signal to landlords. Halting evictions cuts away at the very fabric of contracts to lease property and undermines the rights of owners. Ironically in the end this will most likely put more pressure on low-income tenants and result in higher rents.

In the same way, rent controls have proven detrimental to controlling housing markets governments efforts to protect renters from eviction may result in unintended consequences. What seems by many a noble pursuit will cause many landlords to exit the business or take rental units offline. The government's action of halting evictions could be seen as an extension of current policies that sidestep dealing with the problem that society is creating a growing number of irresponsible tenants. The ugly fact is that government housing cherry-picks the best of the low-income renters providing them with very low rents and nice apartments. The rest they dump on the private sector.

Now that the eviction moratorium has expired, the covid pandemic predicts a wave of evictions is about to take place. The Urban Institute estimates the with the expiration of the eviction moratorium more than 12.3 million or 28 percent of America's 43.8 million renters are at risk of losing their homes. Landlords that have had enough have begun an unsavory part of their job filing eviction paperwork for tenants who haven't paid rent for 30 days or in many cases, months. This, of course, comes just as some 25 million Americans are about to lose the generous weekly $600 federal unemployment checks.

Unfortunately, the clowns in Washington are busy playing politics with this. In remarks outside of the White House on Wednesday, Trump and Treasury Secretary Mnuchin acknowledged that while the administration and Democrats remain far apart on any kind of deal. This resulted in them pushing for the extensions of both programs. Trump emphasized that halting evictions and keeping people in their homes has become a priority. A big part of the problem is that letting people remain in the property without paying rent does not stop the bills a landlord must pay from coming due. This rapidly makes being a landlord a money-losing proposition.
80% Of New Units Are High-End Luxury Units
This all adds to the feeling everything is a bit off. It seems reality is starting to hit home as soaring rental costs collide with the fact overall disposable incomes have rapidly eroded for the middle class. The main driver of soaring rents seem to be following new building costs, in particular, land, material, and hard costs mostly driven by labor make it harder to build new buildings at a reasonable cost. This has resulted in some investors moving away from new construction and into remodeling older units which also raises the rents on current tenants ever higher.

Ultimately higher costs for taxes, local fees, utilities, insurance, maintenance cost, general labor, and just about everything will be passed on to the renter. While the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability or desire to supply housing that is affordable for middle- and working-class renters this becomes very noticeable when we look at the population with very low incomes. Developers have displayed little interest in, or they simply can't afford to add anything but luxury units.

There's a huge unhealthy disparity in high-end rents versus low-end rents across the country and with building cost being similar between constructing high-end versus low-income units why would anyone want to deal with the low end of the market and all the trash that comes with it when you consider that;
  • Our government has been busy encouraging people who have no business owning a house to buy one regardless if they have any idea of how to maintain  it. This government policy is to generate a slew of programs geared to assist first-time home-buyers and others with special incentives and aid. This often means anyone with any kind of credit and even getting all their income from government programs often move out of apartments to buy a house. This creates higher turnover rates and leaves the apartment manager forced to lease the unit to someone with even less income or no credit.
  • Another part of our government's housing policy funds and determines what is built, the problem is a massive amount of money is flowing into apartments that most people cannot afford. Low-interest rates coupled with speculators using "Wall Street" money are creatively financing these units out of thin air. From somebody that knows the industry, you can take it to the bank that it will not end well when these new units go online and are unable to meet income projections. A while back, an article in Business Insider warned the US apartment market has become overdeveloped, with supply outpacing demand, especially in the most expensive segment of the market but that has not slowed building.
  • Building and providing housing to low-income people often proves to be a thankless job that nobody wants. This is beginning to put a great deal of pressure on the system as private sector landlords that do not partner with government programs suffer the abuse. Simply put, government housing policy has failed to address the housing needs of the growing group of dysfunctional individuals that are the bane of society. Few honest people desire to put up with the endless crap such a position constantly dishes out. Inventing market terms such as "sub-luxury segment" to describe basic housing only confuses the issues that need to be addressed.
Housing Policy Throws Older Units "Under The Bus"
The government holds huge responsibility for a rising share of our housing problems in low-income situations because its policies ignore the reality many tenants are simply irresponsible. The main reasons for most evictions center around people not following the rules, damaging an apartment, or not paying their rent. By making anyone with an eviction on their record "ineligible" for most housing programs the government shrewdly and cleverly has sidestepped having to deal with these people. Even with close to half (47%) of all renter households (21 million) pay more than 30 percent of their income for housing, including 11 million households paying more than 50 percent of their income for housing, it is not enough when we are talking about "low incomes" and the amount of damage and grief they dump upon their landlords.

The unintended consequences of government policy which sidesteps responsibility for America's dysfunctional poor over time have added a great deal to our housing woes by driving up the cost of renting for everyone else. Many people do not realize that over the years government in many areas of the country have put massive disincentives in place for those interested in renting housing. Those include competing with them on many levels. Private landlords are forced to pay taxes that go to subsidize government-backed competitors that reject the least desirable tenants then ask the private sector to provide them with shelter. This allows government-backed projects to provide a better product at a lower price which often results in such projects being poorly run.

Bad Tenants Can Do A Lot Of Damage
 By bending over backward in an attempt to "protect the consumer" the government and courts are creating an army of irresponsible people who go through life exploiting "the system." We have even have gone to where tax money is being used to pay the legal fees of tenants wanting to fight the very landlords they have wronged. The government has even made it much harder to check the credit of someone wanting to rent claiming it is to protect the potential tenant's privacy. This ignores the fact those renting an expensive piece of property are putting themselves at great financial risk.

Landlord claims are usually pursued and disputed in the small claims division of the court where getting an eviction or judgment against a bad tenant has become increasingly time-consuming and expensive. Adding to this ugly reality are limits that often allow only a fraction of a landlord's loss to be covered, these can be as low as $1,500. It is not difficult for unpaid rents and damages to greatly exceed this amount. It must be noted that getting a judgment in your favor does not mean it will ever be paid and that these people continue to move from place to place causing havoc wherever they go.

Stories that delve into what is happening in our communities are important, I consider them as "micro-economic" images of what is occurring in many places across America. A show on Netflix titled "Renters" looks into the misadventures of property managers and their troublesome renters in New Zealand. It reveals similar housing problems exist in many countries. My attitude may be skewed by living in one of if not the lowest rent areas in America. A ZeroHedge article stated that "attractive rents" are a relative term as the monthly dues for a tiny studio apartment in NYC will still run you $2,681, or $64.92 per sq. ft. we're pretty sure that implies the average studio is roughly 495 square feet...or about the size of the average living room in all those "fly-over states" that elitist New Yorkers love to look down upon. The fact is, rents in my area are often as little as $650 a month for a two-bedroom one-bath 950 sq. ft. apartment. This is far less for essentially the same product.


Footnote;  I may have understated how much regulations also add to higher rents. In some states, the government is even debating putting the burden and responsibility for keeping occupied units clean upon the landlord. Also, it is not possible to evict someone during the Christmas Holidays in my area for any reason, you can file but no action will be taken until after the holidays are over. One way to address or level the playing field would be to move away from public housing and give those needing housing aid "rent only vouchers" that could be used with any landlord rather than putting these people into a quasi-government ran project. More on the subject of evictions in the article below.
https://brucewilds.blogspot.com/2016/05/evictions-in-america-plight-of-poor.html

Tuesday, July 28, 2020

China's Massive Three Gorges Dam On Edge Of Failure

The massive flooding taking place in China continues, for some reason, this story has been widely ignored by mainstream media. It is important because China's massive Three Gorges Dam is in peril. If the dam fails there will be a staggering loss of lives and property. The Three Gorges Dam is around one and a half miles long and just over 600 feet tall. About 400 million people live downstream of the dam and apparently, no plans have been made for their evacuation.

The failure of this dam, which is the largest in the world, would have catastrophic consequences. It is estimated such an event could result in around half a million people being killed. The Asia Times reported several days ago that Beijing has admitted that its 2.4-kilometer Three Gorges Dam spanning the Yangtze River in Hubei province “deformed slightly” after record flooding. The deformation occurred last Saturday when waters from western provinces including Sichuan and Chongqing along the upper reaches of the Yangtze River peaked. At this, point the biggest concern is that rain continues and more is expected.

China's Three Gorges Dam
The company that manages the dam noted that parts of the dam had “deformed slightly,” displacing some external structures. Seepage into the main outlet walls had also been reported throughout the 18 hours on Saturday and Sunday when water was discharged through its outlets. Wang Hao, a member of the Chinese Academy of Engineering and an authority on hydraulics who sits on the Yangtze River Administration Commission, has assured that the dam is sound enough to withstand the impact from floods twice the mass flow rate recorded on Saturday.

It should be noted that Wang’s remarks stoked a volley of mockery after he said the flooding could be a good thing as the dam would only become more rigid the longer it was steeped up to its top. Below are three new YouTube videos outlining the severity of the situation and a link to a previous article about the Three Gorges Dam posted on AdvancingTime on July 19th.

 https://www.bing.com/videos/search?q=china+three+gorges+dam+failure&ru=%2fvideos%2fsearch%3fq%3dchina%2bthree%2bgorges%2bdam%2bfailure%26qpvt%3dchina%2bthree%2bgorges%2bdam%2bfailure%26FORM%3dVDRE&qpvt=china+three+gorges+dam+failure&view=detail&mid=9F556E885205FE404B7F9F556E885205FE404B7F&rvsmid=D1158E78B079B0D43A6ED1158E78B079B0D43A6E&FORM=VDQVAP

 https://www.bing.com/videos/search?q=china+three+gorges+dam+failure&ru=%2fvideos%2fsearch%3fq%3dchina%2bthree%2bgorges%2bdam%2bfailure%26qpvt%3dchina%2bthree%2bgorges%2bdam%2bfailure%26FORM%3dVDRE&qpvt=china+three+gorges+dam+failure&view=detail&mid=ACC49FA1D66B74299B93ACC49FA1D66B74299B93&&FORM=VDRVSR

 https://www.bing.com/videos/search?q=china+three+gorges+dam+failure&ru=%2fvideos%2fsearch%3fq%3dchina%2bthree%2bgorges%2bdam%2bfailure%26qpvt%3dchina%2bthree%2bgorges%2bdam%2bfailure%26FORM%3dVDRE&qpvt=china+three+gorges+dam+failure&view=detail&mid=E9480BC6D21D685C85A7E9480BC6D21D685C85A7&&FORM=VDRVSR

Link to previous AdvancingTime article;  https://brucewilds.blogspot.com/2020/07/chinas-massive-three-gorges-dam-is-in.html

All this circles back to highlight how decisions are made in China and the quality of construction, or lack of it, that is widespread throughout the country. Because of its size, the failure of the Three Gorges Dam would have broad ramifications for China's Communist Party and its reputation.

Saturday, July 25, 2020

Predictions Of The Dollar's Demise Are Likely Premature

Predictions of the dollar's demise are likely premature and overblown. This post is in response to the rising interest in both precious metals and cryptocurrencies. Several factors are driving this trend. One is the idea governments have targeted cash and wish to move us towards a "cashless" society where they control our every move. Another is rooted in the idea inflation is about to raise its ugly head as currencies are debased. 

I contend that for several years currencies have been trading in a hyper-manipulated state. It should be noted that fiat money is often sheltered from the storm of volatility by both politics and because it exists in a rather closed system. Wealth is contained within this system of fiat money by laws and rules that discourage freedom of movement. It is the coordinated collusion of the major central banks that have allowed this charade to exist. The fact it has not been recognized or acknowledged does not alter or guarantee the system will continue. The failure or major repricing of any of the world's four major reserve currencies will destroy the myth that major currencies are immune to the fate that has haunted fiat money throughout history. When the nations granting these currencies prove unable to control their budgets history shows their currency is destroyed and crushed under the weight of debt.

Central Bank Balances Have Exploded
One thing the global economy doesn't need with all the uncertainty that is currently floating around is unstable currency markets. When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current situation that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat.

Over the years countries have become very adept at coordinating economic policy, currency swaps are only one of the tools they use, this has now even extended to investing in stocks. When the dollar began to soar back in late 2014, fear began to rise and concerns grew about the stress it was causing in countries that owed a great deal of debt that would have to be paid back in dollars rather than their own currency. This has caused Fed Chairman Powell to attempt navigating a course that doesn't cause the dollar to strengthen and devastate emerging markets. By doing so the Fed has created a situation that allows the dollar to be used as a global prop.

As far as the idea that China and its cohorts are tanking the dollar because by reducing their holdings of U.S. Treasuries in order to support the yuan, their ability to carry out such a scheme is questionable. We must remember the world currency market is a complicated place full of paths that fall away or come back on themselves and many of the tools used are like a double-edged sword that cut both ways. In the case of China, capital is sneaking and flowing out of the country faster than the government can create new ways to bolster the currency. Sadly for them, it is flowing into America strengthening the dollar even more. Adding to China's woes is that as their currency falls they will hear more calls from Trump supporters to place duties and tariffs on their exports to America in an effort to level the playing field and reduce the trade deficit.

Currency Swaps Creates Illusion Of Stability
Refrain from calling me Captain Obvious when saying that currencies are trading in a false paradigm and investors should get ready for a rude awakening when currency values shift. A dam has been built to protect market stability but pressure is building and when it breaks it will wreak major damage. Part of this is constructed upon the fallacy we have been given and accepted that a major currency cannot fail or collapse. This will only become more apparent as concern over the future of both the yen and the euro become more of an issue. Both the yen and the euro have major problems going forward and while people point to the fact that behind the dollar America stands with a rapidly growing national debt it is nothing compared to the issues Japan and the Euro-zone face.

The different growth paths are a symptom of a general problem that has haunted currency unions for centuries. Competitiveness and productivity develop at a different pace in different countries. Over time, this leads to large imbalances in growth and a shifting of wealth among the members of a currency union. When the dollar union of the U.S. threatened to fall apart during the Great Depression because of the different economic conditions and unequal potential apparent between states, the federal government found it necessary to enact federal income transfers from prosperous states to aid ailing ones. The federal budget rapidly increased and this practice of income transfers from one state to another to bind the states together as a union became permanently embedded in the American system.

While in the United States a no-bailout policy of crisis-hit states that had been enacted decades ago remains, our "inter-system wealth transfers" has contributed that "special something" that the Euro-zone completely lacks. Inequality has a way of growing and must be addressed early, After a certain point, it becomes too late to implement such a system that transfers wealth from the most prosperous to the most needy because some people feel cheated and others resentful. The bigger a debt problem and inequality is allowed to grow the more people and institutions suffer when they become the victims of a default. Greece has fallen and continues to suffer the consequences of this while much bigger countries like Italy and Spain are teetering on the brink.

During the last several years the question of how to exit the Euro-zone monetary union and the euro has become an important economic issue. Uncertainty and fear relating to its costs tend to discourage political leaders from taking the risk and decisive steps towards an exit but if one or more sizeable countries bolt from the shelter of the euro or the Euro-zone the currency could quickly unravel. A major cause of the Euro-zone problem is growing inequality among its members exacerbated by the lack of system-wide bank protection which causes money and wealth to flee the weaker countries and their failing banks. Japan faces an entirely different problem while national debt is an issue for the central banks that issue both currencies. Japan's debt is much larger and the country faces a demographic crisis that leaves it forced to support a population comprised of citizens far too old to work.

These problems give credence to the possibility that both the euro and the yen will fail at some point and if they do it is very likely that in our modern era, where wealth leaps across borders at the push of a button, their death will be fast, and swift. Like many Americans, I have railed against our growing debt and questioned whether it would destroy the dollar, however, when looking at the miserable alternative currencies before us the dollar is without a doubt king. We must not underestimate the advantage the dollar has as the world's reserve currency or the size of debt floating across the globe comprised of dollar based-agreements. If the dollar proves victorious in the currency wars and is indeed the last major currency standing the people of America will reap the benefits of a game well played or just plain luck.


Footnote;  If you have read the above article in its entirety I urge you to not nitpick or respond with a knee-jerk reaction. To say this is a complex issue is an understatement and I would be interested in your thoughts. I recognize those interested in pursuing a New World Order will gladly throw us under the bus for fun and profit. Still, shifting currency values are a big deal.

Sunday, July 19, 2020

China's Massive Three Gorges Dam Is In Peril

Click On Image To Enlarge
Over the last month, most people have not paid much attention to the weather in China. This is because it is not something we dwell upon but it merits our attention because word has been leaking out that China's massive Three Gorges Dam is in peril. Most of us have little knowledge of this dam which is the world's largest or the implications if it does fail. The biggest is a massive loss of life and property. After record rainfall with more expected concern is rising as the flooding continues,

It is said about 400 million people live downstream of the dam and apparently no plans have been made for their evacuation. Here are a few facts about the dam. The Three Gorges Dam is around one and a half miles long and just over 600 feet tall. It is a hydroelectric gravity dam that spans the Yangtze River by the town of Sandouping, in Yiling District, Yichang, Hubei province, China. Construction was started in the 1990s and completed in 2006. Its failure would have catastrophic consequences and could kill around half a million people.

Vice Minister of Emergency Management Zheng Guoguang said on Monday that the Yangtze, Asia's longest river, and parts of its watershed have seen the second-highest rainfall since 1961 over the past six months. Residents in the Yangtze River basin in recent weeks have expressed concerns over the ability of the massive dam to handle more heavy rain, even though authorities have been releasing floodwater from the structure. If the dam does fail the province's capital Wuhan the epicenter of China's coronavirus outbreak would be hard hit.

For those interested here are a few links to a few of the recent YouTube videos related to this subject.

https://www.bing.com/videos/search?q=The+Three+Gorges+reservoir%2c&&view=detail&mid=A69A87025FACCF3AACEEA69A87025FACCF3AACEE&rvsmid=AE7D94CC2CC86D21B817AE7D94CC2CC86D21B817&FORM=VDQVAP

https://www.bing.com/videos/search?q=The+Three+Gorges+reservoir%2c&&view=detail&mid=28C2B1A14C975770583728C2B1A14C9757705837&rvsmid=AE7D94CC2CC86D21B817AE7D94CC2CC86D21B817&FORM=VDQVAP

https://www.bing.com/videos/search?q=The+Three+Gorges+reservoir%2c&&view=detail&mid=3F6670CD5F8FBF70209A3F6670CD5F8FBF70209A&&FORM=VDRVSR

Reuters
https://www.msn.com/en-us/weather/topstories/record-floods-spark-concerns-about-china-s-three-gorges-dam-report/vi-BB16Ozw1

Some people claim this whole "flooding thing" is deliberate and a conspiracy to wash away the evidence related to Covid-19. Really? that is a reach in my opinion.
 https://www.bing.com/videos/search?q=The+Three+Gorges+reservoir%2c&&view=detail&mid=450ED0928EF95316C514450ED0928EF95316C514&rvsmid=3F6670CD5F8FBF70209A3F6670CD5F8FBF70209A&FORM=VDQVAP

The Epoch Times - Three Gorges Dam braces for more flooding; China bank collapse rumors spark bank runs
 https://www.bing.com/videos/search?q=The+Three+Gorges+reservoir%2c&&view=detail&mid=20D6C4B1E8C1DB1D314020D6C4B1E8C1DB1D3140&&FORM=VDRVSR

The following piece looks at all the problems that surfaced as the plan came together and leads us to believe a disaster may soon occur.
|News Tv 004|Cold people looked at The Three Gorges Dam, the process of making a Bomb


This article is being banged out rapidly and on short notice, because I feel the story has merit. This is especially true if it does fail. While this is not something I would normally write about but it does circle back to highlight how decisions are made in China and the quality of construction, or lack of it, that is widespread throughout the country. Because of its size, the failure of the Three Gorges Dam would have broad ramifications for China's Communist Party and its reputation.

Saturday, July 18, 2020

Paper Assets And Promises Often End In Default

During times of financial disruptions defaults rise in importance and move front and center. The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value, a default falls into this area. In the last decade, debt has soared across the globe. With this in mind, you never want to be caught on the wrong side of a debt default. That is the place where you don't get paid or are paid with a less valuable currency that has seen its value eroded by inflation. A debt default can take many forms but what they have in common is they all can be considered as reneging on financial obligations. Generally, we make a distinction between public and private debt but even that may become blurred when a government in need of funds has to seize or take over assets or institutions.

Relationship Of Tangibles To Intangibles (click to enlarge)
An area of great concern should be the growth in non-recourse loans, this includes unsecured personal loans. The fact these are particularly dangerous has not discouraged many investors from becoming seduced into thinking the yield justified rolling the dice and putting at least some money at risk. The chart to the right shows how intangible assets have grown, be cautious if you are owed money, that falls into the area of an intangible asset. The problem is that lenders will find little help in recovering their money from an expensive legal system that has become overwhelmed by the complexity of modern life.

An example of this is explored in a recent article by Mish Shedlock reported how changes in the bankruptcy laws have made it easier for small companies to now file and sidestep their debt obligations. Thanks to the Small Business Reorganization Act of 2019 (SBRA), as of February 19, 2020, new rules make it easier for small businesses to file for chapter 11 and to simply walk away from obligations. The law is the most significant change to the bankruptcy code since 2005 and bodes poorly for those thinking a contract is still a binding agreement.

SBRA Highlights
  • Applies to businesses with $2.7 million in liabilities, raised to $7.5 million under coronavirus stimulus
  • Owners continue operating their business while in court
  • Owners can retain equity after exiting bankruptcy
  • Owners can modify residential mortgages if a home was collateral for a business loan
  • Faster turnaround to save time and minimize legal fees
  • Owners generally have three to five years to repay creditors
  • Creditors can be paid based on a business’s projected income

Legislation that allows easy bankruptcy protection is a gift for anyone wanting to plot a course forward by exploiting those stupid enough to loan them money. This includes landlords and suppliers willing to extend them credit during hard times. To be clear, a default results in a transfer of wealth. This is not always clear in that the party to which the wealth is transferred may have already squandered it, this means it only reduces his financial obligations. Making it easy for someone to run up obligations and not meeting them undercuts the idea we as a society must take responsibility for our actions.

It is also important to make a distinction between public and private debt. Many investors have become seduced into thinking the backing of government adds tremendous validity to both the explicit and implied warranty that come with government-backed instruments. History, however, has shown public debt can also be mishandled, in several ways. One example from the past was how Henry VIII, in addition to engaging in an epic debasement of the currency, seized all the catholic church's vast landholdings. While not strictly a bond default, actions such as these accompanied by imprisonment or even executions can still be considered as reneging on financial obligations. It is difficult to argue this doesn't constitute some kind of default. 

Inflating away debt is another form of defaulting on debt. We should consider the possibility that inflation has been kept in check primarily because we as a society have invested a large percentage of our wealth into intangible products or goods such as stocks, bonds, and even currencies.  If faith drops in intangible "promises" and wealth shifts into tangible goods seeking safety inflation would soar. This would drive interest rates upward and result in massive losses for bondholders. To give you a sense of what this may mean to U.S. Treasury Bond investors a 10-year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds before rates rise, you would only be able to sell those bonds for $58,000 in the secondary market. Please note the $58,000 you get back would also be affected by a loss of purchasing value lost from inflation.

A debt default that results from the collapse or failure of an institution, financial mechanism, or even a financial instrument and can result in a rapid shift in the value of assets. This has been witnessed time and time again as a stock suddenly becomes worthless. The word "collapse" has a way of conjuring up the image of something falling or crashing in but it is important to note subtle details of the way this occurs can have a great effect on the damage it creates. Many of the economic crises we encounter in our complex modern world have the potential to spread from one institution to another creating contagion and resulting in a destructive domino effect. The massive derivatives market that is touted as one of our modern financial tools is often sighted as having the potential to wreak havoc in this way.

Defaults often fuel the collapse of what some people label as Ponzi-type schemes, underfunded pension funds can be considered in this category. Pensions and promises will be broken so get ready for more pain. This is especially true in the public sector where the 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities. One reader on another site compared pensions to a Ponzi scheme where benefits are paid out to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. I fear the future will prove him mostly right. The financial stress caused by defaults is often the final straw that brings collapse and causes things to cave in upon themselves.

This Chart Is From Before Recent Problems! (click to enlarge)
One thing is clear, we are only beginning to see the tip of the iceberg when it comes to this growing problem and just how many pensions are severely underfunded. This is a problem that exists all over the world. Remember the PBGC, America's safety net for failed pensions has far less in the way of total assets than liabilities. A message from the head of the PBGC in the 2019 annual report states, "The Corporation is in a difficult financial position today." He goes on to say, "Without reforms, our Multi-employer Insurance Program - the backstop that is the last resort for retirees when a plan fails is very likely to become insolvent in 2025, leaving participants and beneficiaries with significantly less than the level of benefits guaranteed by the PBGC."

A "bank bail-in" is another way to disguise a massive default and it can happen here in America. An example of just how delusional we have become as to the fragility of our financial system is that many people have taken comfort in the efforts to control the banking sector through legislation following the 2008 crisis. The Dodd-Frank Act of over 2,300 pages allows this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debt holders, and other unsecured creditors including depositors.

Many who have read my blog have indicated to me they strongly feel a major financial reset will take place in the future. Those invested in bonds should not underestimate the power of inflation to strip them of their wealth. Never before do I remember seeing so many predictions of interest rates remaining low forever and a day. We should have a problem lending hard-earned money out for lengthy periods and we should be wary. Rates are based on predictions of future government deficits and events around the world that may or may not unfold as expected. Part of a conundrum we face is that far more freshly printed money has flowed into the system than new tangible assets created to back it.

An issue that merits far more attention than it gets is the massive role our government plays in the economy. I contend that in the case of a financial crisis brought on by a large number of defaults it will act as a net under the economy making painful deflation unlikely. This means, in the end, those in power and control of the financial system are more likely to engineer an inflationary exit from this mountain of debt. As stated earlier, paying back debt with something of lower value is another way the system masks a default.

Sunday, July 12, 2020

Covid-19's "Inconsistent Nature" Confuses Us All

As time goes by covid-19 has proven not to be the hammer or tsunami we feared. It has not taken the large number of lives many experts predicted but it has brought the economy to its knees. It now seems covid-19 is just a deadly bug that will probably with us for some time. Not only has it spread slower than we were told it would but the fatality rate is far lower than many "experts" predicted. Still, this inconsistent beast holds society confused and paralyzed with fear. The article below is an effort to give this subject some context and frame of reference. 

Covid-19 Has Confused Us All
Over time answers have begun to emerge as to the extent covid-19 will have to impact our lives in coming years, however, the truth is being diluted and held hostage by politics. Because I live in a rather conservative area my views may be a bit skewed when it comes to how other Americans see the government's role in handling the pandemic.

Interestingly, it is mainstream media that is largely responsible for banging the drums of fear by speculating the worst is yet to come. Mainstream media appears to be going out of its way to weaponize covid-19 it an effort to demonize Trump and paint his administration as a failure. One theory is that democrats and other big-spending politicians are using all the fear-mongering as a way to  push a massive stimulus package through with little resistance. This is a very troubling development for those of us that expect our government to be at least somewhat responsible and to consider how its actions will impact society.

Early on I pointed out the "need to know more and collect real information" was crucial to creating a plan that would minimize the damage covid-19 posed. That need still exists. When the virus first appeared, the projection below was written based on the lower edge of what the experts were touting as expected percentages of infection. No wonder people became fearful.

         We are all like frogs in a pot of water and the water temperature is slowly rising.
         If predictions are correct, I see a giant catastrophe ahead. In a city of 300 hundred 
         thousand people, let's do some numbers. They est. 40% to 80% of people may get 
         this bug. Of those American health officials say as many as 20% may need to be
         hospitalized, some for months.
         Going with a 50% catch rate, roughly 150,000 people will get infected in my area.
         With only a 10% hospitalization rate it would come to 15,000
         We sure don't have the beds in my area to handle such a surge. Note, this is 5% of 
         the population.
         In this case, It's not just about how many people may die but the fact that simply 
         caring for so many very sick people creates a massive problem!

While it is true we should error to the side of caution when dealing with a new pandemic, the problem is that as this unfolded, not only can we not trust the numbers because of fraud and inconsistent testing from one area to another but when important facts or a shred of truth does emerge it is rapidly mucked up when dropped into this data. Adding to the confusion and fear-mongering flowing from the mainstream media is the fact frustrated Americans confronted with a resurgence of the scourge are facing long lines at testing sites in the summer heat or are getting turned away. Some people are having to wait before receiving a diagnosis. Not only are some test sites running out of kits, but labs are also reporting shortages of materials and workers to process the swabs.

The total failure of Governments across the world to lead us through this mess confirms a bleak future for mankind going forward. One critic of  how this has been handled is Ron Paul, a physician that served as the U.S. Representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985 recently wrote an article in which he questioned whether the covid-19 spike in Texas was fake news. He contends Texas Governor Greg Abbott's executive order mandating the wearing of face masks both indoors or outdoors across the state is a violation of the civil liberties of all Texans.

Will History View Fauci As A Hero Or Goat?
Paul argues the executive order is based on inaccurate information about a “rise” in Covid cases due to the Texas State Department of Health Services changing the definition of what constitutes a “Covid case” to a ridiculous level. Paul writes, In a Commissioners Court hearing for Collin County on May 18th, it was revealed that while previously the determination of a Covid “case” was a confirmed test result, the definition was suddenly changed to count “probable” cases as “cases.” This discounts the fact that many people will already carry some natural immunity to covid-19 making them far less likely to catch it.

The policy adopted by Sweden differs greatly from that of other countries. The Swedes have settled on a more traditionalist approach that avoided a full-scale lock-down and has allowed people to maintain their personal freedom even amid this global pandemic. Sweden pursued a course they felt was sustainable and would save as many lives as possible in the long run. While Sweden’s fatality rate is higher than some and lower than others. (Sweden has 543 deaths per million this translates into roughly 1 death in every 2,000 people.) As in other countries, the vast majority of Swedish fatalities have been among people 70 years and older with underlying health conditions.

By settling on a policy, that keeps the economy running, preserves an atmosphere of normality, and exposes its young, low-risk people to the infection, Sweden is moving its population closer towards the ultimate goal of achieving “herd immunity.” Some people think Sweden is very close to reaching the point where the majority of people have developed antibodies that will help to fend-off similar sars-covid infections in the future. This would ensure that future outbreaks will be less disruptive and less lethal. It must be noted that even The Herd Immunity Threshold (“HIT”) is still being debated.

The reason everyone was so scared about covid-19 originally was because after the lock-down in China it was hyped as a completely new deadly virus with no known cure or natural protection. That has turned out to be false but has been promoted by Fauci and many others. This has resulted in vast destruction to the US economy, an explosion in our national debt, an unprecedented spike in unemployment, and the destruction of tens of millions of small businesses. As we look back most people will realize the error we have made by shutting down a $21 trillion economy and ordering 340 million people into quarantine because a small number of people may die. 

All this means is the subject of a "covid future" has a lot of parts that we have yet to face. Successfully balancing the damage to the economy and the mess it makes of our lives with health issues is a difficult act. It includes the complications, health issues, and other negative outcomes arising from covid and all the ways that it can affect you even if it doesn’t actually kill you. It includes whether schools should be reopened, whether it is safe to fly, and if governments are abusing our rights when ordering people about claiming it is for the greater good. Expect the confusion to continue but rest assured that through all this, those making the rules and at the top of the food chain will be sure to remain unscathed.

Sunday, July 5, 2020

Wall Street Soars While The Real Economy Slowly Dies

Main Street is the real economy that exists far from Wall Street. It can be seen in the large areas of America where most of us live. After twelve long years of near or zero interest rates, massive government deficits, and watching tons of money and stimulus being poured into the economy we remain mired in slow growth. On top of this, we now are seeing covid-19 monkey hammering many sectors of the economy into submission. Small businesses have taken the brunt of this assault. The demise of millions of small businesses underlines  the bleak picture we face, this means unpaid rents and more empty storefronts as Main Street withers on the vine. Until now much of the damage has been masked by a massive government giveaway. Unfortunately, the damage all this has wrought will become apparent over the coming months from the strong headwinds facing our economy.

The Financial Sector Has Grown Too Large
Today the financial sector plays an oversize role in our economy as savers poured money into paper promises such as pensions, bonds, and stocks. Our economy continues to be propped up by a combination of unhealthy policies which include massive government spending on top of the artificially low-interest rates and easy money. This has allowed the mega-rich and politically connected to thrive while a huge majority of Americans wither on the vine. The price of stocks and action on Wall Street should not be confused with what is happening in homes across America.

The real economy is neither vibrant nor healthy and current trends should give us pause. An example of this is seen in agriculture. Even if you don't farm for a living it is important to realize that farm income is not contained in a closed-loop but spills into other parts of the economy, this is true in all of the sectors of our economy. An even bigger issue is how online giant Amazon is allowed to decimate retailers and small businesses aided by the USPS and governments granting it special rates, privileges, and tax abatements. In many parts of America, Wall Street money has become the largest obstacle for small businesses trying to remain competitive. How does a small business abandoned by the banking community compete with companies able to access billions of dollars of low-cost capital?

The truth is small business owners often tied to brick and mortar are forced to wear many hats and their workers are often required to perform several different and distinct tasks. This often means large companies are better candidates for utilizing robots and automation as a way to reduce labor costs. This means a company such as Amazon gains a huge advantage over small and local businesses and helps explain why its CEO Jeff Bezos recently endorsed the idea of a higher minimum wage. For Bezos, this is a bonus in that it will help eliminate competition all across America as he doubles down on adding more robots to his workforce.

Click On Image To Enlarge
It is important to remember that it is not uncommon to see a time lag before the impact of events is truly revealed, this is why a lot of people will be surprised and shocked by the reality that is about to unfold. Government programs to prop up the economy can only mask the truth for so long. With the demise of so many small businesses unemployment which has skyrocketed is here to stay. We can expect many of the employers that remain in business will be doing an about-face on how they view staffing and hiring. For the last several years because it has been difficult to find workers many employers have carried more people on their payrolls than they really needed as a sort of "insurance" in case someone quit. Employers have been forced to pay high wages for workers residing at, shall we say, the bottom of the barrel. These workers often carry so many bad habits that in many ways they are more trouble than they are worth. But those days are over.

We are about to see the problems in the other sectors of the economy raising their ugly heads and dish out massive pain. When the temporary props, such as the $600 a week to the unemployed, stimulus checks, the Payroll Protection Program (PPP), and aid to State and local governments, come to an end, look out below. These programs being used to move us forward will not gracefully expire, but merely set the stage for another round of props perpetuating this false economy to evolve. In the end, our future has a way of being tied to reality and certain economic laws as well as laws of nature that hope and delusion cannot defy. While these bonds can be ignored for a time the force they have over us at some point will suddenly pull us crashing to the ground.

For decades the financial sector has been given rule over the real economy and over events happening in the shops and stores throughout the land. In an effort to stay rooted in reality we should ponder the possibility that we are being played or duped by the financial sector. This includes not just how strong the economy really is, but as to the links and bonds with the economy through both financial institutions and the government. The real economy that lives beyond our financial institutions may be in a death struggle. Those in power tend to warp and skew both numbers and future projections in a self-serving way. A combination of low-interest rates, government spending, and easy money coupled with massive stock buybacks have given many people a false impression all is well, but looking at the numbers and beyond it becomes clear something is dreadfully wrong. 

Today we see a landscape of empty and under-leased buildings that once housed thriving businesses that provided Americans with good-paying jobs. This makes it difficult to think things are getting better. When looking at new job formation details show the growth in low paying part-time jobs and many people have left the job market, many too retire early because their skills are no longer needed. To shed even more light on our woes we only need to take a closer look at auto sales, 31% of those buying cars are taking out sub-prime loans and these loans are being stretched out far longer than ever before. Student debt continues has grown at an alarming pace and will affect the disposable income of many of our youth for years to come. Ironically in stark contrast, job opportunities are on the wane.
Empty Storefronts Are Far Too Common
On more than one occasion the Fed has noted its concern that lower stock prices dampen consumer spending and damage the concept of the wealth effect which drives consumer spending. Far too little attention has been paid to how consumers are spending their money but the focus has been on the amount spent. This translates into the Fed going down the path of propping up valuations rather than focusing on the health of the economy and what is best for it in the long run.

Promises have been made, and expectations have been raised that the economy will power through, but are they realistic? After twelve  long years of near or zero interest rates, massive government deficits, and watching tons of money and stimulus being poured into the economy we remain mired in slow growth. Now, the weight of carrying a large number of unemployed and people who have been dropped from the workforce is about to wear down society through attrition. Most of these people have little in the way of savings, this means the burden of caring for them will be transferred to society. If too many people shift into this category the fabric that holds us together as a nation and as a people will be shred to ruin. All this continues to be made worse by new mandates and regulations flowing out of Washington and the lack of needed reform.

We should never underestimate just how far untethered computer-driven trading can distance itself from the true economy. This increases the possibility we may be in another phase of the "Wash, Rinse, Repeat" cycle that flushes money away from the common man and into the hands of the 1% that eats our lunch. The truth is most Americans only get to smell the feast and have no seat at the table when the Wall Street elite dine. We get little more than the promise that our pension or 401 will be solvent when we need the money, that is if we are lucky enough to have either. Sadly, the average American is lucky if they are allowed even a few scraps that fall from the table, again highlighting why bankers have been reviled throughout history. It is ironic this massive sector of our economy produces nothing but holds such power.

Wednesday, July 1, 2020

National Coin Shortage Shines Light On Worthless Penny

A shortage of coins is appearing across America due to the covid‐19 pandemic significantly disrupting the supply chain and normal circulation patterns for U.S. coins. The U.S. Mint halted production due to covid-19 which has caused Fed Chair Powell to admit to lawmakers the Fed will be rationing coins until the problem is resolved. Powell said; "What's happened is that with the partial closure of the economy, the flow of coins through the economy ... it's kind of stopped." He went on to say the shortage which is expected to be temporary is due to the business closures that prevented people from spending their coins, as well as a lack of places that are open where people can trade coins for paper bills.

We can only hope that this will cause more people to question the usefulness of the penny which is a blemish on the face of America. It is costly to produce, no friend to the environment and it wastes America’s resources while sapping our productivity. It cost our country billions of dollars, year after year. According to the “citizens to retire the penny” it cost the Country one hundred million dollars a year to produce the penny, and more then $15 billion dollars annually is wasted just in handling it. Coins are designed by the government to be a simple and efficient medium for the exchange of goods and services. For many years there have been discussions about discontinuing the penny which has become obsolete because of its minuscule purchasing value. The penny is a perfect example of our government's inefficiency and waste, and the cost is a burden carried by business. If an employee is paid $12.00 an hour they receive twenty cents per minute. Businesses simply cannot afford to pay an employee to handle and count pennies, the cost of the labor exceeds their value.

Pennies Make A Great Bathroom Floor
In March of 2012 Canada made the decision to do away with its puny penny coin, loved by some but an annoyance to many, it was withdrawn from circulation because it costs too much to make and had become a pecuniary pest. Ottawa said the penny retained only one-twentieth of its original purchasing power. Because it costs 1.6 cents to produce each one-cent coin stamped out, discontinuing the penny was expected to save around $11 million a year.

"It was just one of those no-brainer slam dunks. It's a place where we can save money," said legislator Pat Martin, who has long campaigned for the penny to be abolished. In the middle of 2014 the Toronto Sun reported that since circulation of the penny was discontinued on Feb. 4, 2013, more than four billion of the copper coins had been recovered, equivalent to a face value of approximately $40 million. The Royal Canadian Mint at the time estimated that approximately 6 billion pennies were in circulation when production of the coin ceased in 2012. I suspect the number has dropped substantially since then and its use has become non-existent. Once the distribution of the coin ceased vendors were no longer expected to return pennies as change for cash purchases and were encouraged to round purchases to the nearest five cents.

As for the issue of the American penny, simply put, the American penny doesn't make sense! Let it be decreed that the penny when weighed and measured is found lacking. Other nations have either ceased to produce or have removed low denomination coins the list includes Australia, Brazil, Finland, Israel, the Netherlands, New Zealand, Norway, Sweden, Switzerland, Britain, and as stated above Canada. By the time it was discontinued many Canadians considered the penny more of a nuisance than a useful coin. They often stored them in jars, threw them away in water fountains, or refuse them as change. Financial institutions faced increasing costs for handling, storing, and transporting pennies, and over time the penny had become a burden to the economy.

The Penny No Longer Makes Sense
To many people the penny is simply a horrible little thing with no redeeming value that destroys vacuum cleaners when they accidentally suck one up.  Still, we find that not only does the government continue making the penny but over the years it has even made new versions of the penny. Voters need to remind Washington that it is not the job of the well-paid employees of the treasury to create collectibles or to pander to small segments of the population by designing coins commemorating or recognizing minor events.

The debate against continuing the penny is overwhelming, anyone still supporting it most likely has not given the subject much thought or is simply resistant to change, “the penny doesn't make sense".  From an environmental standpoint, the penny is also a disaster when you consider all the energy used to make, transport, and distribute this useless coin. Currently, it costs the U.S. Mint 1.66 cents to make each one-cent coin, meaning that taxpayers are losing 0.66 of a cent for each one of the 9.1 billion pennies the Mint produces each year. That is a loss of $60,181,440 to produce pennies in 2016. The U.S. Mint makes an average of  21 million pennies per day which adds up to around nine billion pennies annually. If we just get rid of the penny, the U.S. Mint would cut its work in half. This figure does not include the time, fuel, expense, and hassle of carting all of those pennies around to the banks, merchants, etc.

If we stop making pennies we would also save all this cost associated with it. Remember the penny coin, has almost no purchasing power today and the cost of making the pennies is higher than face value. The melt value of pennies ranges from more than two cents for the pre-1982 copper pennies, to nearly a full cent for the zinc pennies. Logically, sooner or later the penny is destined to the dustbin of history. Ditching the penny would cost literally nothing and with a flourish of the executive pen create huge annual savings for business but such a move remains fiercely opposed by metal alloy industries and Coinstar, which makes millions each year by helping people get rid of their unwanted change.

According to the folks at RetireThePenny.org, the average American wastes 2.4 hours a year handling pennies or waiting for people who handle them. This statistic is the result of compiling several penny-handling related events. These events include the ubiquitous 30 second period we sometimes spend waiting for someone who has to dig through their pockets or purse to find that last cent so they can pay for something with exact change. They probably do this, so they don't get stuck with any more pennies. Still, we should not expect the government to take action anytime soon in our country so focused on pandering to those who fear change. It seems we may need some kind of push to bring about the penny’s final demise, because if we wait for those in charge of such things to do the logical thing we may be waiting until the end of time. Small things matter, if our politicians can’t get this right how can they ever deal with the more important issues facing our nation?


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