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Monday, April 30, 2012

ECRI's WLI and Deficit Spending

ECRI's WLI Moves Higher; Q1 GDP Positive Due To Deficit Spending
For the week ending April 20, 2012:
  • WLI increased to 124.1, up 0.3 from the prior week's reading of 123.8.
  • WLI growth fell to a positive 0.6%, down from last week's reading of 1.2%. 
  • First estimate of Q1-2012 GDP Growth is only 2.2%
ECRI WLI & WLI Growth vs. US GDP Growth

GDP, WLI and Deficit Spending

As my graph above shows, GDP turned lower as you would expect with the lower WLI readings, but it remains firmly in positive territory. The US economy has not entered a recession but it is painfully low.
Actual GDP in Q1-2012 was $15.462 trillion compared to $14.868 trillion in Q1-2011. The difference is $594 billion, less than the current 6 month deficit of $779 billion I show in the second chart in the Seeking Alpha article "U.S. Borrows 53.7 Cents Of Every Dollar Spent In March." Clearly, we would be in a recession that ECRI predicted if not for deficit spending.

A "Failure of Leadership"
The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that, "the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit. ~ Senator Barack H. Obama, March 2006

Tuesday, April 24, 2012

David Archibald Four Great Global Challenges

David Archibald discusses the Four Great Global Challenges

On Tuesday, 28 February, Mr. David Archibald - an Australian-based climate scientist and oil exploration expert - delivered a two-part guest presentation at the Institute entitled "The Four Horsemen of the Apocalypse."  It is interesting that he says we will face a global COOLING cycle due to reduced sum spots.

Mr. Archibald - who has been recognized as "the first to realize that the length of the previous sunspot cycle (PSCL) has a predictive power for the temperature in the next sunspot cycle" - also argued that the warming of the last 150 years will be reversed as the Earth's temperature begins to cool sharply due to lower solar activity.  Global cooling may well jeopardize grain production and threaten potential famines, which will certainly impact significantly the international situation.  Below are excerpts from The Institute of World Politics

The four horsemen, i.e. great challenges the world will soon have to face, are:
  1. a decreasing extraction of oil, causing growing prices of energy and, by extension, food; 
  2. Pakistan's nuclear weapons program, which threatens proliferation and, perhaps, even a nuclear war in the region; 
  3. rapid population growth in the Middle East and North Africa coupled with higher food imports in those regions, which spells mass starvation; and 
  4. a 210-year climate cooling cycle.
$200 per barrel oil by 2014?

Mr. Archibald suggests a three-pronged solution to tackle the energy crisis:
  1. replacing declining oil production with coal liquefaction and compressed natural gas for automotive use; 
  2. employing nuclear power, rather than coal, for electric power generation; and 
  3. developing much safer thorium reactors to replace uranium in nuclear energy. 
 It should be noted that China is already actively pursuing these options.

To view Mr. Archibald's slideshow in its entirety, please see:

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