Friday, July 31, 2015

Benjamin Netanyahu and Iran's Moving Nuclear Target Date

Let's open by looking at a speech given to the United Nations General Assembly by Benjamin Netanyahu on September 27, 2012:

Go to the 25 minute and 10 second mark where Benjamin Netanyahu begins to explain Iran's nuclear program using what can only be termed a Warner Brothers cartoon-like bomb:

"In the case of Iran's nuclear plans to build a bomb, this bomb has to be filled with enough enriched uranium and Iran has to go through three stages.  The first stage, they have to enrich enough low enriched uranium.  The second stage, they have to enrich enough medium enriched uranium.  And the third stage, the final stage, they have to enrich enough high enriched uranium for the first bomb.  Where's Iran?  Iran has completed the first stage.  It took them many years but they completed it and they are 70 percent of the way there.  Now, they are well into the second stage.  And by next spring, at most, by next summer at current enrichment rates, they will have finished the medium enrichment and move onto the final stage.  From there, it's only a few months, possibly a few weeks before they get enough enriched uranium for the first bomb."

He goes on to state that the information that he has provided is not secret and has not been gleaned from military intelligence, rather, they are taken from public reports provided by the International Atomic Energy Agency.

From the timeframe given by Israel's Prime Minister, Iran would have finished the medium enrichment program by mid-2013 and have developed a bomb by the end of 2013 at the latest.  This means that, according to Benjamin Netanyahu in 2012, Iran should have developed a fully functional nuclear weapon nearly one and a half years ago or within eighteen months of his speech to the United Nations.

Now, let's look at what Benjamin Netanyahu had to say about the deal signed with Iran by P5+1 in mid-July 2015:

At the 3 minute and 21 second mark, he makes this comment:

"By not dismantling Iran's nuclear program, in a decade, this deal will give an unreformed, unrepentant and far richer terrorist regime, the capacity to produce many nuclear bombs, in fact, an entire nuclear arsenal with the means to deliver it.  What a stunning, historic mistake."

So, Iran's nuclear program didn't meet Benjamin Netanyahu's late 2013 deadline so he readjusts and  proposesnew time line, a decade-long period for the development of Iran's first bomb.  Given that the recent agreement limits Iran's enrichment capacity and research and development for 15 years and that inspections and transparency measures will remain in place for as long as 25 years, it looks like Benjamin Netanyahu's concept of time as it relates to Iran's nuclear program is, once again, off base.

Interestingly enough, while it's barely worth the paper that it's written on, the nuclear Nonproliferation Treaty (NPT) of 1968 recognizes only five states as possessors of nuclear weapons (nuclear weapons states or NWS); China, France, Russia, the United Kingdom and the United States.  Three states, India Pakistan and Israel never joined the NPT and according to the Arms Control Association, it is believed that Israel possesses between 80 and 100 nuclear weapons with fissile material for up to 200 additional weapons.

Wednesday, July 29, 2015

How Liberal and Conservative are Americans?

Updated June 2016

In a very interesting twist, a recent poll by Pew shows how American's views on social issues has changed over the past 15 years.  While both sides of the political spectrum seek to appeal to their traditional bases, this poll suggests that the political leaning of the United States as a whole may be evolving.

Here is the first question in the poll:

"Thinking about social issues, would you say your vies on social issues are very conservative, conservative, moderate, liberal or very liberal?"

For the first time in Gallup records dating back to 1999, the number of very conservative and conservative respondents and liberal and very liberal respondents was tied, each coming in at 31 percent with moderates coming in at 33 percent.  Here is a graphic showing the results of the same polling question back to 1999 showing how the share of social liberals has grown and the share of social conservatives has declined:

In the latest annual poll, 5 percent of Americans declared themselves as very conservative, down from a recent high of 9 percent (in 2009, 2010 and 2012).  Twenty-six percent of Americans declared themselves as conservative, down from a peak of 33 percent in 2009, 33 percent declared themselves as moderate, down from a peak of 39 percent in 2005, 21 percent declared themselves liberal, down from a peak of 23 percent in 2011 and 10 percent declared themselves as very liberal, tied with 2014 for the highest percentage in the past 15 years.  The percentage of very liberal Americans is up significantly from its lows of 4 percent in both 1999 and 2003.

Here is an interesting graphic that looks at the percentage of Republicans and Republican leaners who  describe themselves as conservative, moderate or liberal on social issues:

It is interesting to see that the 53 percent of Republicans that describe themselves as social conservatives is the lowest since 2001, well below the peak of 67 percent back in 2009, this, despite the Republican Party's strong objections to the Obama Administration.

Pew explains that these changes in the degree of social liberalism are mainly a result of an increasing number of Democrats who describe themselves as liberal rather than moderate and likely reflects the shift of Democrat attitudes on social economic and political issues further toward the left as we see on this graphic:

Changes in social liberalism are evident in how Americans feel about issues like same-sex marriage (60 percent approval in 2015 compared to 27 percent in 1996) as shown on this graphic:

...the legalization of marijuana with 51 percent approval in 2015 compared to 34 percent in 2004 and the impact of immigrants on the United States as shown on this graphic:

It is believed that these shifts are due to changing demographics.  As an older, more conservative demographic cohort passes on to their great reward in the skies and younger, more socially liberal Americans replace them, attitudes have morphed.  This change will have a significant impact on the 2016 election cycle as candidates adjust their platforms to appeal to a more socially liberal electorate.  At the very least, this swing in the political winds will have a particular impact on Republican candidates who will find themselves needing to be somewhat less strident about their conservative social stance if they want to appeal to a broader audience that has become more socially liberal.

Tuesday, July 28, 2015

What Are Commodities Telling Us About the World's Economy?

In the mainstream media, we keep hearing about the strength of the United States economy.  Growth is reasonable, headline unemployment rates have reached relatively healthy levels and the dollar is strong.  That said, the world's commodities are having a terrible year.

Let's open by looking at what makes up the Commodity Research Bureau Index or CRB.  The CRB was founded in 1957 and follows the index of commodity futures.  Over the decades, it has been revised several times to reflect commodity market evolution.  It currently consists of 19 commodities with the CoreCommodity CRB Index having the following weightings:

The most recent revision was in 2005; this revision changed from an equal weighting for all components to a four tired group system that was designed to reflect the significance of each commodity as follows:

Precious Metals: 7 percent
Base and Industrial Metals: 13 percent
Energy: 39 percent
Agriculture 41 percent

Here is a chart showing what has happened to the Reuters/Jefferies Commodity Research Bureau (CRB) Index since February 2008:

The CRB Index high point over the last eight years (since just prior to the Great Recession) was 473.9669 in July 2008 and the low point was 200.1563 in February 2009.  The current index at 205.04 is well below the 8 year average of 296.98 and at its lowest level in more than six years.  As well, the CRB has dropped by 44.65 percent from its post-Great Recession high of 370.47 at the end of March 2011.

Here's what has happened to the CRB over the past year:

At the end of July 2014, the CRB was at roughly 298.  On a year-over-year basis, the CRB Index has fallen by 31.2 percent and has dropped by 10.1 percent since the first trading day of 2015.  Obviously, with the weighting given to oil, at least some of this commodity collapse is due to the falling price of oil but there is more to the story than just oil.

I find it particularly fascinating that, even with the world's central banks increasing the world's monetary base through quantitative easing and other imaginative monetary programs, all of that cash seems to have left the commodities markets, seemingly with a preference for both stocks and bonds which have left stock markets overvalued and bond markets extremely fragile, particularly when interest rates rise.

Let's take a look at one key commodity that, while it gets less attention than oil, is often considered to be a bellwether for the world's economy, thus, the nickname "Doctor Copper".  Here is a chart showing what has happened to the price of copper since mid-2005:

Over the past eight years, copper has ranged in price from a high of $4.625 on July 11, 2007 to a low of $1.250 per pound on December 23, 2008 with an average of $3.375 per pound over the entire period.  After the so-called end of the Great Recession, copper hit a high of $4.623 per pound on February 14, 2011.  Copper traded above $3.00 per pound until mid-March 2014 and then began to show greater signs of weakness in December 2014 when it consistently traded below $3.00 per pound.  

Here's what has happened to the price of copper over the past year:

At its current level of $2.38 per pound, copper is down $0.87 per pound or 26.9 percent on a year-over-year basis and is down 48.5 percent from its post-Great Recession peak in February 2011.  "Doctor Copper" is certainly suggesting that the world's economy is heading for a slowdown.

For those of us that watch commodities on a regular basis, the recent very significant decline in the price of many of the globe's key commodities suggests that the world's economy is teetering on the edge of an economic contraction, particularly given that many of the commodities in the CRB index are building blocks of a healthy and growing economy.  Certainly, some of the drop in prices for commodities can be laid at the feet of a strong U.S. dollar which has made it substantially more expensive for holders of other currencies to buy these same commodities, an issue that has put at least some downward pressure on demand.  However, even if things are looking rosy for the United States economy, the flagging economies of both China and the European Continent would suggest that all is not well in this globalized world, just as the world's most powerful central bank is considering a dovish monetary policy stance.

Friday, July 24, 2015

Is Stephen Harper Canada's Very Own Jesus?

Vancouver South  MP Wai Young recently appeared as a guest speaker at Harvest City Church in Vancouver.   Ms. Young notes in the introduction to a sermon entitled "Influencer - Have A Lasting Impact" that she has attended both Alliance and Baptist churches as a younger person and that she currently attends a Mennonite church.  This puts her well within the bounds of what most people would classify as a fundamentalist evangelical Christian, not the sort that is part of the social gospel movement like Canada's United Church, Presbyterian and Anglican churches.  This group is often considered the base of the Conservative Party of Canada and the people that Stephen Harper often appeals to when using his family values and tough on crime agendas.

Here's her photo:

Ms. Young was born in Hong Kong and raised in Vancouver.  She worked for both the provincial and federal governments and has a degree in sociology from the University of British Columbia.  She was first elected to the House of Commons in 2011.   

Let's hit a few of the high points of her "sermon", focussing on one point in particular.

Near the beginning of her very obvious campaigning for the October 2015 election, Ms. Young notes that it is "dicey" to mix religion and politics (2 minute 45 second mark) but goes on to mix the two for nearly 20 minutes nonetheless and provides the church's congregation with the address for her Vancouver office (4 minute and 30 minute mark).  She states that she no longer reads the newspapers because "most of the facts in there are not factual" (9 minute mark) and goes on to castigate Canada's journalists for their anti-CPC slant because they no longer present the facts. Apparently, there's nothing like being an uninformed representative of the people, is there?

Here is the sermon in its entirety, noting that Ms. Young speaks for roughly the first 20 minutes:

If you can manage to listen to her musings for any length of time, you will find what I consider to be an interesting comment starting at the 10 minute mark made right after she scolds Canada's media:

"...Given that it's so difficult to get real information nowadays, I just wanted to go back to people of faith to say that we're hear because we believe that Jesus served, he saved but he acted as well and it's because of these three things that his legacy has lasted over these millennia, over time and that's why we still study the Bible and study Jesus because we see that he has done these incredible things.  I want to share with you about what our government is doing in the same vein.  Jesus served and acted to always do the right thing, not the most popular thing and we know all the stories in the Bible that share with us about that.  I want to let you know that our government will stand firm, we will always act and do the right thing."

Apparently, there's no better government than one that has, at its head, a leader that is just like Jesus.

Ms. Young goes on to list what the government has done to "protect Canadians" including promoting the recent Bill C-51, an extremely controversial and unpopular anti-terrorism bill.  She notes that if Bill C-51 had been in place at the time of the Air India disaster, 400 lives would not have been lost.

Toward the end of her sermon, she goes on to plug the Harper government's obvious attempt to buy votes with the recent implementation of the Universal Child Benefit and she goes on to brag that because she has a 17 year old, she will get money back from the government and she's "so happy" about that (14 minute 15 second mark).  Like an MP actually needs even more of our tax dollars.

I did find it interesting that right through the 20 minutes, she never once refers to the Prime Minister by name.

The Conservative Party of Canada, responsible for appointing three Senators that have collectively been charged with breach of trust, fraud, assault, sexual assault, possession of cocaine and bribery and which has one MP that has been convicted of violating Canada's election fraud is now the Party of Jesus.