Frances Benjamin Johnston Courtyard, 620-621 Gov. Nicholls Street, New Orleans 1937
How to cut through the crap.
• Here Is The Reason For The “Surge” In Q3 GDP (Zero Hedge)
Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP! This is how the unprecedented trimming of Obamacare’s contribution to GDP looked like back then.
Of course, even back then we knew what this means: payback is coming, and all the BEA is looking for is the right quarter in which to insert the “GDP boost”. This is what we said verbatim:
Don’t worry though: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2. Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4. And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).
Well, we were wrong: it wasn’t Q2. It was Q3, albeit precisely in the Q2-Q4 interval we expected. Fast forward to today when as every pundit is happy to report, the final estimate of Q3 GDP indeed rose by 5% (no really, just as we predicted), with a surge in personal consumption being the main driver of US growth in the June-September quarter. As noted before, between the second revision of the Q3 GDP number and its final print, Personal Consumption increased from 2.2% to 3.2% Q/Q, and ended up contributing 2.21% of the final 4.96% GDP amount, up from 1.51%. So what did Americans supposedly spend so much more on compared to the previous revision released one month ago? Was it cars? Furnishings? Housing and Utilities? Recreational Goods and RVs? Or maybe nondurable goods and financial services? Actually no. The answer, just as we predicted precisely 6 months ago is… well, just see for yourselves.
In short, two-thirds of the “boost” to final Q3 personal consumption came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to pull it completely and leave this “growth dry powder” for another quarter. That quarter was Q3.
“Of note: real spending on gasoline and other energy goods rose 4.1%. Wait, what? Wasn’t spending on energy supposed to drop?”
• The US Economy ‘Grew’ By $140 Billion As Americans Became Poorer (Zero Hedge)
This is simply stunning. Regular readers will recall that last month, at the same time as the US Bureau of Economic Analysis reported was a far better than expected 3.9% GDP (since revised to 5.0% on the back of the previously noted Obamacare spending surge), it also released its Personal Spending and Income numbers for the month of October, or rather revised numbers, because as we explained exactly one month ago “Americans Are Suddenly $80 Billion “Poorer”” thanks to (upward) revised spending data and (downward) revised income. What this meant a month ago is that as a result of a plunge in the imputed US savings rate, some $80 billion in personal savings was revised away from the average American household and right into the US economy. After all, something had to grow the US GDP by a massive amount in order to give the Fed the green light it needs to hike rates eventually, just so it can then ease when the global dry powders from all the other central banks is used up.
And sure enough, this is how just one month ago, personal income was revised lower…
… Even as personal spending was revised higher:
Leading to an $80 billion revision lower in personal saving, and by mathematical identity, a comparable growth in US GDP. Fast forward to today when we find that… absolutely nothing has changed, and in order to boost US GDP some more, the BEA engaged in precisely the same data revision trick! On the surface, today’s Personal Income and Spending data were inline to a little bit better than expected: Personal Income supposedly rose 0.4% in November, up from a 0.3% revised growth in October, and in line with expectations. Personal Spending supposedly also rose, this time by 0.6%, up from an upward revised 0.3%, and just above the 0.5% expected. Of note: real spending on gasoline and other energy goods rose 4.1%. Wait, what? Wasn’t spending on energy supposed to drop?
So far so good: nothing abnormal (except for the clearly made up spending data), and in isolation this data would be good, suggesting the US consumer is getting more confident and is spending ever more as the year closes, on expectations of higher paying jobs, stronger economy, etc. And then we looked at the Personal Savings number: it was reported at 4.4% in November, down from 4.6% in October. Which is odd because last month, the October savings rate was disclosed as 5.0%, in turn down from a downward revised 5.6% in September. Wait, could the BEA be engaging in precisely the same deception in November as it did in October. Why yes, Virgina: not only did the US Department of Economic Truth completely fabricate its GDP numbers earlier, but the way it got to said fabrication is by fudging – for the second month in a row – both the entire Personal Income and Personal Spending data series.
“The Chinese private sector debt… is higher now than America’s at its peak. And the acceleration of debt was faster… “The bubble in China is bigger and faster than the sub-prime bubble was in America.”
• China’s Bubble Looks Bigger Than America’s, Says Steve Keen (Straits Times)
“Did you wake up before or after the sunrise today?” asks Professor Steve Keen “After,” I mutter sheepishly. “That’s a trick question. The sun doesn’t rise,” he says before letting out a guffaw. “The earth rotates… (But) it’s more natural for us to use that language than to say what actually happens.” The analogy is rather fitting for an Australian academic who wrote a book called Debunking Economics, and is now the chief economist of a global network of thinkers that declares it is “dedicated to the reform of economics”. In Bangkok recently for the launch of the Institute for Dynamic Economic Analysis, the 61-year-old professor in Britain’s Kingston University London equates mainstream economic theory with spurious astronomy assumptions.
Strangely enough, he says, it overlooks the role of money. Instead, it likens governments to households which ought to prize prudence, which in government terms means generating consistent surpluses. But the private sector, in order to pay the government enough to generate its surplus, has two options: It either “runs down the money it’s got, which means the economy is shrinking”, or borrows money to make such payments. Countries that run a trade surplus with others can maintain a permanent surplus without forcing its private sector into a debt crisis, but the good times don’t last. China – the world’s largest economy – is an example where the rise of private sector debt is bringing the country dangerously close to a crisis, he says.
Its central bank made a surprise cut in interest rate in November amid weakening economic data. Growth in the third quarter slackened to 7.3%, which is already its lowest since 2009. Prof Keen, who accurately predicted the last financial crisis before the 2008 crash, warns that another even bigger bubble is brewing in China. Chinese private sector debt, he points out, has risen from roughly 100% of its gross domestic product in 2008 to about 180% now, as the government encouraged lending to stimulate demand and make up for the shortfall in exports. “That’s an enormous increase,” he says. “The Chinese private sector debt… is higher now than America’s at its peak. And the acceleration of debt was faster… “The bubble in China is bigger and faster than the sub-prime bubble was in America.”
“.. mainland companies deposit 20% to get a letter of credit from an onshore lender. They take that document to get a low-interest dollar loan from a Hong Kong bank, which treats it like a no-risk check fully backed by the guarantor. The companies flip those dollars back to the mainland, where they use them as collateral to get even more letters of credit..”
• UBS Raises Flag on China’s $1 Trillion Overseas Debt Pile (Bloomberg)
UBS is flagging risks from China’s $1 trillion worth of unhedged foreign debt as forecasters see bets against the greenback unwinding in 2015. The world’s second-largest economy is exposed to shifts in currency and interest rates as never before because of expanding international trade and easing foreign-exchange regulations, said Stephen Andrews, head of Asia banks research in Hong Kong at UBS. Daiwa Capital Markets has a $1 trillion estimate for carry-trade inflows since 2008, bets on the difference between yields in China and overseas. It sees a 5.7% drop in the yuan next year. The renminbi is heading for a 2.8% drop in 2014 as the dollar gains on Federal Reserve plans to raise interest rates and the People’s Bank of China cuts borrowing costs to support a flagging economy. Capital controls and record foreign-exchange reserves will help the PBOC cope with any similar situation to 1997’s Asian financial crisis, when firms struggled to repay debt as regional currencies slumped, Andrews said.
“This could get very uncomfortable very quickly,” he said in a Dec. 12 interview. “I boil it down to its basics. You’ve borrowed unhedged and leveraged: you’re at risk.” Andrews says the mechanics of what’s happening are this: mainland companies deposit 20% to get a letter of credit from an onshore lender. They take that document to get a low-interest dollar loan from a Hong Kong bank, which treats it like a no-risk check fully backed by the guarantor. The companies flip those dollars back to the mainland, where they use them as collateral to get even more letters of credit, leveraging even further, said Andrews. That money is then used to invest in China’s high-yield and often risky trust products or in the booming stock market. The profits are then used to pay off dollar borrowings.
Hong Kong banks mainland-related lending stood at HK$3.06 trillion ($394 billion) at the end of September, 14.7% of total assets, according to the city’s monetary authority. Andrews said his estimate is higher as he includes trade bills and other forms of lending not captured by the data, such as between sister companies in intergroup corporate transfers or letters of credit between onshore and offshore bank branches. “There were too many cheap dollars in the market for everyone to borrow,” Kevin Lai, an economist at Daiwa in Hong Kong, said Dec. 16. “If you just put the money in China, the carry plus appreciation is about 5%, so why not, right?” Lai estimates $1 trillion of carry-trade inflows since the first round of quantitative easing in 2008, of which $380 billion entered China disguised as commerce flows.
Hundreds of rigs will be dropped.
• Oil Drillers Under Pressure to Scrap Rigs to Cope With Downturn (Bloomberg)
Offshore oil-drilling contractors, who last year were able to charge record rates for their vessels, are now under pressure to scrap old rigs at an unprecedented pace. The recent five-year low in oil prices is threatening an industry already grappling with a flood of new vessels and weakening demand. More than 200 new rigs are scheduled to be delivered in the next six years. That’s a 25% jump from the number currently under contract. To cope, many rig owners will try to keep revenue up by culling older vessels to balance supply and demand. “The older assets, particularly those built before the 2000 time period, are really less desired by the industry,” James West, an analyst at Evercore ISI in New York, said in a phone interview.
Those vessels “are only causing the customer base to use those rigs against higher quality rigs to get pricing lower.” About 140 older rigs would need to be scrapped to make way for the new vessels scheduled for delivery by 2020, according to Andrew Cosgrove, an analyst at Bloomberg Intelligence. That pace would double the number scrapped in the previous six years and even eclipse the 123 vessels retired since 2000, according to data compiled by Bloomberg. Booming offshore exploration earlier in the decade encouraged a flurry of rig orders. That’s now leading to a potential market crash in a global industry pegged to generate revenue of $61.5 billion this year. Low oil prices are compounding the problem, alarming investors.
Three of the six worst performers in the Standard & Poor’s 500 Index this year are offshore rig contractors: Transocean, Noble and Ensco. Hercules Offshore, the largest provider of shallow-water rigs in the Gulf of Mexico, has fallen 84% as producers consolidated and drilling was postponed. “There is an old saying: If our customers get a cold, we get pneumonia,” John Rynd, chief executive officer of Houston-based Hercules, told investors this month. “We’re getting pneumonia right now.” Next year may be worse. Explorers and producers are expected to cut offshore spending by 15%, with “grievous” cuts coming for exploration, Bill Herbert, an analyst at Simmons & Co., said in an e-mail.
“CNBC: “Peak Oil didn’t happen” .. Pickens: “That’s all bullshit .. I am the expert, not you.”
• T. Boone Pickens Says Oil Down Due To “Weak Demand” (Zero Hedge)
Narrative, we have a problem! No lesser oil-man than T. Boone Pickens made quite an appearance on CNBC this morning – stunning the cheerleaders into first defense then silence as he broke the facts on oil’s collapse to them. Oil is down “mainly due to weak demand,” he explains… the anchors deny, “I am the expert, not you” Pickens rages as he warns drilling rigs will be laid down on a very wide scale (just as we have noted previously). Arguing over ‘peak oil’, he calls CNBC chatter “bullshit” and laid out a rather dismal short- to medium-term outlook for the oil & gas sector – not what the cheerleading tax-cut slurping media narrative wants to hear at all…
“demand is down” – “lower demand is the main driver” – “rig count is gonna fall – drop 500 rigs in next 6-9 months” Capex cuts coming… oil prices may be back at $90-100 Brent in 12-18 months but not without rig counts plunging. At 4:15 Pickens starts to discuss Peak Oil… enjoy – CNBC: “Peak Oil didn’t happen” .. Pickens: “That’s all bullshit… I am the expert not you” CNBC: “well you’re not much of an expert if you thought Peak Oil happened”
Not a terribly intelligent piece.
• Can Canadian Oil Sands Survive Falling Prices? (BW)
As oil prices have crashed over the past six months, a lot of attention has focused on what this means for frackers in the U.S., as well as the national budgets of a lot of large oil producing countries, such as Russia and Venezuela. In short, it’s not good. But what about Canada? The country is the world’s fifth-largest oil producer, and only Saudi Arabia and Venezuela have more proven reserves of crude. Almost all of Canada’s reserves (and production) are in the form of oil sands, which are among the most expensive types of crude to produce. There are pretty much two ways to do it. One is to inject steam into wells deep underground to heat up a thick, gooey type of oil called bitumen. The other is basically to strip mine large tracts of land and extract a synthetic blend of oil out of the earth and sand. Taken together, both methods require about 17% more energy and water than conventional oil wells and also result in similarly higher levels of carbon emissions.
That’s made oil sands a particular target of environmentalists. Now the Canadian oil sands producers have to contend with an even greater opposing force: economics. If Canadian oil sands are more expensive to produce than most other oil, how can they survive in the face of prices that are nearly 50% cheaper since June? A few things play to their favor. The first is that their costs are more akin to a mining operation than conventional oil drilling. Oil sands projects require massive upfront investments, but once those are made, they can go on producing for years with relatively low costs. That’s made oil sands, and the companies that produce them, quite profitable over the past few years. Suncor and Cenovus are two of the biggest oil sands producers in Canada. Both have profit margins that would be the envy of a lot of major oil companies.
At Suncor, earnings before interest, taxes, depreciation, and amortization (Ebitda), a basic measure of a company’s financial performance, have risen from 11.7% in 2009 to 31% through the first nine months of 2014. Exxon Mobil’s Ebitda so far this year is about half that at 14.3%. That cost structure may give oil sands producers an advantage over frackers in the U.S., who operate on a much shorter time horizon. Fracked wells in the U.S. tend to produce most of their oil within about 18 months or so. That means that to maintain production and rates of return, frackers need to keep reinvesting in projects with fairly short lifespans, whereas an oil sands project, once up and running, can continue to chug along, even in the face of lower prices, since its costs are spread out over a decade or more rather than over a couple years. That should keep overall oil sands production from falling and help insulate oil sands producers from lower prices, at least for now.
But we’re doing great!
• Existing Home Sales Collapse Most Since July 2010 (Zero Hedge)
Having exuberantly reached its highest level since September 2013 last month (despite the total collapse in mortgage applications), it appears the ugly reality of the housing market has peeked its head out once again. As prices rose, existing home sales plunged 6.1% – the most since July 2010 (against an expected 1.1% drop) to 4.93mm SAAR (the lowest in 6 months). So what was it this time: the polar vortex, the crude collapse, the crude vortex? Neither: According to the NAR’s endlessly amusing Larry Yun, this time it was the stock market: “The stock market swings in October may have impacted some consumers’ psyche and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”
Supposedly he is referring to the tumble, not the resulting Bullard “QE4” mega-explosion in stocks that pushed everyhting to new all time highs. In other words, according to the NAR, even the tiniest downtick in stocks, and the housing market gets it. Sure enough, it is time to boost confidence in a rigged, manipulated ponzi scheme: DROP IN NOVEMBER COULD BE ONE-MONTH ‘ABERRATION,” YUN SAYS .. Unless, of course, stocks drop again, in which case all bets are off. Meanwhile, it appears investors have left the building…
That’s what you get in a fake recovery.
• U.S. Minimum Wage Hikes To Impact 1,400-Plus Walmart Stores (Reuters)
Minimum wage increases across the United States will prompt Wal-Mart Stores Inc to adjust base salaries at 1,434 stores, impacting about a third of its U.S. locations, according to an internal memo reviewed by Reuters. The memo, which was sent to store managers earlier this month, offers insight into the impact of minimum wage hikes in 21 states due to come into effect on or around Jan. 1, 2015. These are adjustments that Wal-Mart and other employers have to make each year, but growing attention to the issue has expanded the scope of the change. Thirteen U.S. states lifted the minimum wage in 2014, up from 10 in 2013 and 8 in 2012. Wal-Mart spokeswoman Brooke Buchanan said the company was making the changes to “ensure our stores in the 21 states comply with the law.”
For Wal-Mart, the biggest private employer in the United States with 1.3 million workers, minimum wage legislation is not a small thing. Its operating model is built on keeping costs under close control as it attracts consumers with low prices and operates on tight margins. In recent years, it has been struggling to grow sales after many lower-income Americans lost jobs or income in the financial crisis. The Wal-Mart memo shows that there will be changes to its pay structure, including a narrowing of the gap in the minimum premium paid to those in higher skilled positions, such as deli associates and department supervisors, over lower grade jobs. Wal-Mart will also combine its lowest three pay grades, which include cashiers, cart pushers and maintenance, into one base rate.
The changes appear in part to be an effort to offset the anticipated upswing in labor costs, according to a manager who was implementing the changes at his store. “Essentially that wage compression at the upper level of the hourly associate is going to help absorb that cost of the wage increase at the lower level,” said the manager, who spoke on condition of anonymity. Wal-Mart’s critics – including a group of its workers backed by labor unions – say the retailer pays its hourly workers too little, forcing some to seek government assistance that effectively provides the company with an indirect taxpayer subsidy. Labor groups have been calling for Wal-Mart, other retailers and fast-food chains to pay at least $15 an hour.
Do read the entire piece, it has lots of goodies.
• 20 Stunning Facts About Energy Jobs In The US (Zero Hedge)
For all those who think the upcoming carnage to the shale industry will be “contained” we refer to the following research report from the Manhattan Institute for Policy Research:
- The United States is now the world’s largest and fastest-growing producer of hydrocarbons. It has surpassed Saudi Arabia in combined oil and natural gas liquids output and has now surpassed Russia, formerly the top producer, in natural gas. [ZH: that’s about to change]
- The increased production of domestic hydrocarbons not only employs people directly but also radically reduces the drag on growth and job formation associated with America’s trade deficit.
- As the White House Council of Economic Advisors noted this past summer: “Every barrel of oil or cubic foot of gas that we produce at home instead of importing abroad means more jobs, faster growth, and a lower trade deficit.” [the focus now is not on the oil produced at home, which is set to plunge, but the consumer “tax cut” from plunging oil prices]
- Since 2003, more than 400,000 jobs have been created in the direct production of oil & gas and some 2 million more in indirect employment in industries such as transportation, construction, and information services associated with finding, transporting, and storing fuels from the new shale bounty.
- All told, about 10 million Americans are employed directly and indirectly in a broad range of businesses associated with hydrocarbons.
- There are 16 states with more than 150,000 people employed in hydrocarbon-related activities. Even New York, which continues to ban the production of shale oil & gas, is seeing job benefits in a range of support and service industries associated with shale development in adjacent Pennsylvania.
We all are, would be my guess.
• Asian Currencies Set For A Wild Ride In 2015 (CNBC)
Asian currencies could be in for a wild ride in 2015, with central bank policy on track for further divergence as the Federal Reserve prepares to raise interest rates, analysts say. “The U.S. Federal Reserve will be hiking interest rates next year, while some Asian central banks will be acting in the opposite direction. Growth momentum is firmly in favor of the U.S., while structural and cyclical slowdowns in certain parts of Asia will see growth differentials narrow,” ANZ said in a note last week. The Federal Reserve is widely expected to hike interest rates in July after unwinding its quantitative easing program this year, according to CNBC’s latest Fed survey of economists, strategists and fund managers, released last week. By contrast, most of Asia’s central banks are easing.
The People’s Bank of China cut interest rates for the first time in two years in October, while the Bank of Korea cut rates to a record low that month. Meanwhile, the Bank of Japan remains committed to its massive stimulus effort, while calls for rate cuts in Thailand and Australia are growing. ANZ forecasts 3% depreciation in Asian currencies over 2015, “a similar decline to that seen in 2014,” noting that “risks are tilted towards a larger depreciation should tighter U.S. monetary policy lead to larger portfolio outflows from the region.” Saxo Capital Markets agrees. “The world’s major central banks and economies are entirely out of sync and the oil price collapse has added a dramatic new geopolitical and economic twist to global markets,” Saxo’s head of foreign-exchange strategy John Hardy said in a note last week.
He anticipates “U.S. dollar strength on U.S. outperformance” next year. There are four potential ‘what if’ catalysts for currency volatility next year, according to Hardy: U.S. junk bond outflows, the resignation of European Central Bank (ECB) president Mario Draghi, Chinese yuan devaluation and a substantial weakening in the Japanese yen. “There are already signs that the junk bond market in the U.S. is under severe strain here late in 2014. Liquidity is terrible in these bonds,” Hardy said. “Junk bonds related to the U.S. shale oil are the most clearly in the danger zone and investor flow out of bonds could see mayhem and see the Fed ceasing all thoughts of hiking rates,” which would see the dollar weaken sharply.
“Evoking the fear of euro exit may not work this time with lawmakers and voters.”
• Greeks Used to Years of Chaos Dismiss Samaras’s Warnings (Bloomberg)
As Prime Minister Antonis Samaras’s political maneuvers to avoid early elections edge toward a dead end, his warning of turmoil risks falling on deaf ears among Greeks numbed by years of upheaval. After losing a second vote in parliament yesterday on his candidate for a new president, Samaras needs to win over a dozen lawmakers before a final ballot on Dec. 29. Should he fail, the constitution dictates that elections must be called, with opposition party Syriza leading opinion polls. “We’ve already been living through chaos for years now,” said Kostas Grekas, a 23-year-old computer-technology student in Athens who graduates next year. “I’d prefer there to be elections now so that Syriza gets in, just to break up the old party system and to see something different.”
Greece marked 2014 by exiting a six-year recession that cost the country about a quarter of its economic output and tripled the unemployment rate. While Samaras’s pitch is that a change of government would endanger the incipient recovery, Syriza promises to abandon austerity measures tied to the country’s international bailout. Samaras, 63, garnered 168 votes out of 300 members of parliament to get approval for Stavros Dimas as the country’s largely ceremonial head of state. He needed 200 votes for victory and the threshold next week falls to 180 lawmakers. In the third vote, “each MP will come face to face with the anguish of the Greek people and the interests of the nation,” the prime minister said after the result.
The prospect of early parliamentary elections has roiled financial markets in Greece, evoking memories of the height of the financial crisis in 2012 when the country’s euro membership was in jeopardy and Samaras took power after two knife-edge ballots in the space of six weeks. Samaras says Syriza has revived the prospect of a euro exit, yet polls show the party would prevail in a vote. A survey by polling company Rass published on Dec. 21 showed Syriza ahead of Samaras’s New Democracy by 3.4 percentage points, albeit down from 5.3 points in November. “Samaras has cried wolf too many times,” said Dimitrios Triantaphyllou, assistant professor in the international relations department at Kadir Has University in Istanbul. “Evoking the fear of euro exit may not work this time with lawmakers and voters.”
“Dangerous weather, terrorist attacks and economic collapses are all best dealt with by higher authorities, he said.”
• US Families Prepare For ‘Modern Day Apocalypse’ (Sky News)
“We’re not talking about folks walking around wearing tin foil on their heads,” Jay tells Sky News. “We’re not talking about conspiracy theorists. “I’m talking about professionals: doctors and lawyers and law enforcement and military. Normal, everyday people. They can’t necessarily put their finger on it. But there’s something about the uncertainty of our times. They know something isn’t quite right.” Jay is a celebrity in the strange but increasingly mainstream world of preppers, writing prepper books and touring America, speaking at prepper expos where a bewildering range of survival supplies and techniques are on offer. Why is it happening? Partly, no doubt, because it allows Americans to indulge in some of their favourite pastimes: consuming, camping and buying lots and lots of guns.
And partly because fear sells, drives up numbers for cable news, and increases sales for everything from dried food to assault rifles. But it’s also arguably a sign of a country coping with economic decline. The end of the American Dream has left people more uncertain about their future, and their country’s. Katy Bryson is in Jay’s prepper network. Prepping, she says, puts Americans back in charge of their destiny. They’re not in control of whether they lose their job or not but they are in control of whether they are prepared. So I feel like that’s why the industry is just booming right now for preparedness,” Katy added. It is also a fundamentally American phenomenon. In a country built on the radical individualism of its founding fathers, people have an inbuilt mistrust in their government’s ability to protect them.
Sociologist Barry Glastner wrote The Culture of Fear. He told Sky News: “Americans are fairly unique as world citizens in that we tend to believe that we control our own destiny as individuals to a much greater extent than we really do.” Ironically, he points out preppers may actually be reacting to their fears in the least effective way. Dangerous weather, terrorist attacks and economic collapses are all best dealt with by higher authorities, he said. “Where there are real dangers, to take an individualistic approach is usually exactly the wrong thing to do. So the kinds of things that the preppers are preparing to protect themselves from are much better handled on a community-wide basis than they are in your own home.”
It’s been predicted for a while now.
• El Nino Seen Looming by Australia as Pacific Ocean Heats Up (Bloomberg)
El Nino-like weather may persist in coming months as the Pacific Ocean continues to warm and indicators approach thresholds for the event that brings drought to Asia and heavier-than-usual rains to South America. Sea-surface temperatures have exceeded the thresholds for a number of weeks and the Southern Oscillation Index has generally been negative for the past few months, Australia’s Bureau of Meteorology said today. While trade winds have been near-average along the equator, they have been weaker in the broader tropical belt, it said. A sustained weakening of trade winds is needed for the phenomenon to develop, the bureau says. El Ninos, caused by periodic warmings of the Pacific, can roil world agricultural markets as farmers contend with drought in Asia or too much rain in South America.
Palm oil, cocoa, coffee and sugar are among crops most at risk, Goldman Sachs says. Forecasters, including Australian scientists, raised the possibility of an El Nino earlier this year before tempering their outlook as conditions didn’t develop. “The tropical Pacific Ocean continues to border on El Nino thresholds, with rainfall patterns around the Pacific Ocean basin and at times further afield displaying El Nino-like patterns over recent months,” the bureau said. “If current conditions do persist, or strengthen into next year, 2014–2015 is likely to be considered a weak El Nino.” El Nino conditions appear to have formed and will probably continue, the Japan Meteorological Agency said on Dec. 10. The surface temperature of the Pacific was higher than normal in almost all areas in November, it said.