Liberal Media Exposed

Wednesday, February 19, 2020

2014 In Review – Financial Updates

As 2014 comes to an end it’s time to have a last look back at the financial events of the year. It’s been a complex, and at times confusing, picture set against the background of a continuing global recovery from the financial crisis. Growth has been uncertain at times, alarming the stock markets. Conflict and crisis have played a part in destabilizing commodity prices and investor confidence, the shadow of debt still troubles large parts of the world economy and currency fluctuations offer both opportunities and dangers. Let’s have a look at each of these in a bit more detail. Firstly, the equities markets. In general share prices have had a positive year. Most economies have been growing steadily as the global economy climbs away from the wreckage of 2008, and that’s pushed share prices up. However many analysts are concerned that the markets may be overheating, with prices rising faster than economic performance seems to justify. The Eurozone has registered the highest rises through the year, with prices already up 28 percent by June, with the USA close behind. On the other hand the UK, which has the highest actual growth figures in the EU and compares well with …continue reading

IRS Tea Party

Taxation is always a thorny subject, raising questions of individual vs. societal rights and about how much of their own hard-earned cash people should be allowed to keep, but in principle just about everyone agrees that at least some tax is a necessary evil. After all we need to support the military and control the borders, and some spending on roads is always going to be necessary. It gets more complex when we start arguing about whether the government should be providing health care and education. Then there’s maybe the biggest difference between the political right and left – should tax be used to redistribute wealth from those who earned it to those who didn’t?
Now a congressional investigation has come up with evidence suggesting that tax policy has been used to do something much, much worse than redistributing wealth – it looks like the IRS might actually have been targeting tax to harm political opponents. The House Oversight Committee is working through 1.3 million pages of documents and emails covering the IRS, Treasury and Justice Department. A lot of this has fallen out of a 2013 FBI investigation that found the IRS had been targeting a variety of politically active groups, giving their tax-free status additional scrutiny. Obviously there are laws covering what political activity a group can carry out and still remain tax exempt, but what worries investigators is the way groups were targeted.
It looks like the IRS chose the groups to investigate by looking at their names, as well as making value judgements on their objectives. Aiming to “make America a better place to live” was enough to start a tax probe. That caught up a handful of liberal groups like Occupy, but it seems likely they were included to disguise the real focus of the operation. Targeted terms included “TEA Party”, “patriot” and anything critical of Obamacare. Any criticism of how the country was being run could trigger an investigation. Suggesting that American children needed to be taught about the Constitution and Bill of Rights would, too.
It’s obvious from the wording that would attract an IRS assessment that this whole plan was aimed at making life difficult for Obama’s opponents on the right. After all how many ultra-liberal groups have “patriot” in their title? Or “Constitution”? This is clear use of the IRS as a political weapon, sending out agents to harass law-abiding Americans on the basis of their political beliefs. If the administration disagrees with someone it should have an open discussion and say why it thinks they’re wrong, not try to silence them by tying them up in the famously arcane bureaucracy and paperwork of the tax system.
It’s likely that most of these investigations would come to nothing, but IRS scrutiny means real possibility of being unfairly stripped of tax exemptions. That can make a huge difference to an organization, depriving them of the funds they need to do their job. Shutting down the opposition is something we associate with banana republics; it’s very disturbing that Congress is now finding so much evidence of tactics like this being used in America.

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Financial News – Fed Policy

The recent huge fall in oil prices has wide-ranging implications right across the markets. It offers a chance for the battered precious metal sector to recover, by deflating possible gains in a rival commodity; it should boost manufacturing shares by slashing production and transport costs; and it’s likely to have a depressing effect on oil extraction and exploration stocks as the pressure to open new fields eases off. Cheap energy could help Europe avoid a new recession and reduce the specter of a new debt crisis among poorer Eurozone members. The price slump also raises a few warning flags though, and that could have an effect on the Federal Reserve’s plans.
Just a few weeks ago it looked like the Fed was ready to move ahead with an interest rate increase, signaling a definitive end to the quantitative easing programs that have been running since the 2008 crisis. That might be about to change though, as cheap oil destabilizes an economic landscape that had looked ready for more expensive lending. Low oil prices are deflationary, pushing prices down across the full range of manufactured goods and many services, and while the US economy isn’t deflating it’s certainly seeing the inflation rate slowing down. The Fed has a 2 percent inflation target and right now it doesn’t look like being achieved, so some action to correct that is likely.
Cheap lending tends to increase demand, which drives prices up, so a temporary hold on rate increases is an obvious tool for the Fed to apply. It also answers new concerns about the creditworthiness of companies in the oil sector, who’re now looking at falling profits as margins per barrel sink. That’s a real concern for the US shale industry because production costs are higher there than in the traditional oil exporters, and if prices continue to fall the break-even point isn’t that far away.
How low can oil sink? For the US producers, not much more. OPEC members have more leeway but as shale oil becomes uneconomical to produce output will fall sharply, stabilizing prices and probably driving them back up. That would be inflationary, so whatever the Fed decide to do with rates they’ll need to be ready and willing to reverse it just as fast – this is unpredictable territory.
For now the US economy remains highly levered and could be more dependent on cheap financing than the Fed had previously realized. That could mean the ideal interest rate to sustain growth is much closer to where it is now, and any rise could have unintended consequences. There’s still a lot of wariness around economic growth, which has been healthy for most of the year but shrank drastically in the first quarter. A bad holiday retail season could see that pattern repeat next year, with a chilling effect on job figures.
The Fed have a lot of interests to juggle when it comes to setting rates, but the current oil crash is a major one and getting bigger by the day. With the benchmark crude price now below $60 and still falling expect it to play a big part in whatever decision they finally make.

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Financial News

One of the biggest financial worries right now is the slow pace of the Eurozone economy, fueling fears of a new recession and even possibly another debt crisis. That’s been overshadowed in the last few days though, as the equities markets unexpectedly slumped. For the past few weeks stocks, including the headline FTSE 100 index, have been turning in a reasonable enough performance even if it wasn’t anything spectacular. That looks like it might be changing, which is sure to stoke up the worries over the way Europe’s heading. That’s obviously a worry for US firms too, because Europe is the USA’s biggest export market, so we can expect a few jitters on the Dow Jones if the overseas markets don’t recover quickly.
The latest glitch was caused by investors dumping shares in commodities. The big financial story of late 2914 has been the sustained drop in oil prices, with Brent crude now well below $70 a barrel and still heading down. The reason for the fall is simple – OPEC haven’t cut their production target despite huge increases in US domestic extraction – but the net result is oil below its five-year low and still in free fall. The lower costs imposed by cheap oil are good news for the economy, but it makes oil a bad investment. It’s also depressed shares across the whole energy sector with exploration companies hit particularly hard – some of them lost close to 8 percent in a day and a half.
Meanwhile precious metals are having a rough patch, with all of the big five trading at well below the year’s peak and a couple pushing through five-year lows. Usually falling metals prices are a sign of a buoyant stock market, with traders moving out of safe havens to take advantage of rising prices, but this time commodities seem to be dragging the major indexes down with them. Last week’s Swiss referendum rejecting higher national gold reserves pushed the spot price down 2.1 percent and the FTSE 100 quickly followed.
Base metals are down as well, thanks mainly to slower than expected growth in China’s manufacturing sector. China is now the world’s largest market for raw materials and any weakness in their figures has an instant effect on prices.  That’s good news for other commodity consumers of course, but not if it creates uncertainty. This looks to be exactly what’s happening.
Probably the most worrying aspect for investors is the oil slump. Growing fears of sovereign default in oil-exporting nations are adding to worries already stoked by the problems in Europe, and with memories of 2008 still raw that has the potential to push stocks down sharply. There are exceptions though. Low crude prices, especially Brent, should lead to lower fuel prices in the short term. That’s already helping some stocks buck the trend, with airlines being the most noticeable. Lower fuel costs aren’t likely to cut fares, so airline profitability is looking healthy. International Airlines Group is up 2 percent over the last week with other operators also posting gains. That’s probably where the smart money is right now.

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School Surveillance

There have been concerns about the abuse of authority in America’s public school system for a long time and they’re reaching frightening proportions under the current administration. Worried parents are being bombarded with attacks on their right to teach their children about morality, marriage and creation; obstacles are increasingly being put in the way of anyone who wants to take their kids out of the system and educate them themselves, with home schoolers increasingly being portrayed as antisocial or even dangerously misguided. But this all pales into insignificance compared with the increase in government surveillance our children are being subjected to by school districts.
Some city schools have been making students walk through metal detectors for years, and while supporters justify that on security grounds it’s still an egregious violation of personal privacy and pushes hard against the boundaries of the Fourth Amendment. Is it really a “reasonable search” to make innocent kids walk through a body scanner every day? It gets worse though. Authorities are taking an unhealthy interest in what kids eat, often over-riding the decisions of parents to enforce an officially approved diet. Rules on dress codes, designed to control the urge of some students to turn up half-dressed, are now being used to censor clothing that carries a politically incorrect message – meaning anything administrators don’t like. And now schools are actually hiring snoops to spy on kids.
Last week Orinda Union School District in the notoriously liberal Bay Area suspended a 7-year-old girl after claiming her parents had lied about residency on their application. The girl, from a Hispanic family, was registered at an address in an upscale area; the school decided she didn’t really live there and decided to investigate. Instead of taking appropriate steps – like asking her parents – they decided to hire a private investigator to follow her around and dig into her background. The detective posed as an insurance investigator to interview the girl’s mother and residents of her old neighborhood in Bay Point, as well as following her to and from a home in Orinda – the address she was registered to. Despite this the school decided her residency was false, and told her to leave the school.
If they’d bothered to ask they’d have learned that her mother was a live-in nanny for an Orinda family, and the girl – named only as Vivian – did indeed live inside the school district’s boundary. However it was only when a local paper published details that administrators admitted their mistake and allowed Vivian back to school.
It turns out that this is far from an isolated case. In fact several school districts around the Bay Area hide references to private investigators in the small print, and inquiries among detective agencies reveal that this is happening on a massive scale. San Francisco Unified ordered surveillance on thousands of students in 2010, then dismissed thousands for living at the “wrong” address. Several agencies get so much work from school boards that they advertise student tracking services on their websites.
It’s not acceptable that school administrators are allowed to order Soviet-style surveillance on students, or that parents trying to do their best for their kids should be surreptitiously interrogated by covert investigators. If kids have aspirations and a desire to learn our public schools should be helping them, not crippling them under an ever-increasing load of state control.

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Texas Schoolbooks

One of the most fiercely contested battlegrounds in modern American society is the public education system, where a liberal agenda is relentlessly promoted to the nation’s young people. Whether it’s pushing the homosexual agenda or teaching controversial scientific theories as if they were facts conservatives face a constant struggle to keep politics out of the classroom, and in this fight Texas has long been recognized as key terrain. Because of the way the state’s education system works it makes huge purchases of school textbooks every few years, and to win those orders publishers tend to tailor books to what Texas educators want. That’s good news for the nation because Texas is traditionally conservative, but in recent years more and more secular and leftist pressure groups have been trying to influence the content that will be taught in American schools.
The struggle to prevent interference in textbook selection hit the headlines four years ago when a coalition of secularist groups fought to prevent books mentioning the key role of Christianity in developing the US Constitution, and it erupted again this year over the purchase of new social studies texts. There were several issues at stake, including the extent to which the Founding Fathers were influenced by their Judeo-Christian traditions, controversy over the effects of affirmative action and an excessive focus on slavery as a cause of the Civil War. There were also several scientific controversies, with the two biggest being promotion of extreme climate change propaganda and the perennial topic of the theory of evolution.
Under pressure from the various groups to disregard the state’s latest (2010) education standards in favor of a progressive agenda, the State Board of Education has spent several months trying to preserve the standards as much as possible while defusing the issue. Agreement was finally reached last week on removing several graphics that had been labeled “offensive”; in the end several hundred changes were made by publishers. Unfortunately the Board was split along party lines, with all five Democrat members refusing to seek consensus and insisting on the full list of requested changes. At the end of the day the revised textbooks were approved 10-5, but the fuss is a good illustration of the way politics is being forced on young people – often with the active connivance of the federal government.
Democrats know as well as anyone else that books adopted by Texas are likely to be chosen by most other states in the future, so their wish list gives valuable clues to what the left plan on spreading through the public school system. Common themes, apart from doubtful scientific theories, seem to be a determined effort to play down the role of Christianity in the development of American society (tied to a promotion of Islam as an alternative religion) and an attack on the principle of states’ rights. Texas has managed to win a qualified victory over this agenda for the moment, but with the new books scheduled to start appearing in classrooms next year parents and local school boards will need to be vigilant for any attempts to sneak in the politically correct versions.

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Immigration News

Immigration controversy has been a constant theme of the Obama presidency, with many Americans worried that the president’s liberal policies in this area will bring about catastrophic changes in American society. Those worries are now coming very close to home with news over the last week that Obama plans a wide-reaching amnesty for illegal immigrants – and is willing to resort to an executive order if Congress tries to intervene.
Obama’s latest idea is to grant “deferred action” – basically an indefinite freeze on deportation procedures – to any illegal immigrant who came to the USA as a child. The same privilege will be handed to parents of US citizens, permanent legal residents and a whole raft of other categories. The immediate result will be freedom to remain for at least 5 million people, but the longer term impact is likely to be a lot more serious.
Veteran conservative activist Phyllis Schlafly told World Net News last week she believes there’s a very sinister motivation behind the White House proposals. Most illegal immigrants, if they’re eventually given US citizenship and the right to vote, will give their support to the party that let them in – the Democrats. It’s gerrymandering on a national scale and the numbers involved are enough to change the balance of political power forever. The media hasn’t missed the fact that this plan is going forward despite the nation having soundly rejected Obama’s policies in this month’s elections. It’s a worrying tactic – if the voters don’t support you just import a bunch of new ones who will. This has a lot of people very worried.
If Obama moves ahead with an executive order there’s little Congress can directly do to stop him, so leading conservative figures are now urging the House and Senate leadership to take more rigorous action in the event the amnesty is forced through. Richard Viguerie has called on Republicans to withhold part of the government’s funding unless the will of the people is respected and suggests that a government shutdown would be another appropriate response. He has also predicted widespread public discontent if this administration flouts democracy so blatantly, and he’s very likely right.
The issue is that as sitting president, Obama has the power to push this law through if he chooses, but any veneer of popular support for it vanished with the GOP’s electoral victory two weeks ago. It’s very clear that the American people have lost patience with the Democrats and their soft line on border violations. Unfortunately if the president is unscrupulous enough he can get his way even in the face of unified opposition from both houses and the American people themselves; from what’s being said right now it seems like Obama is at least contemplating that. The danger is that unlike many acts of political spite this one could have consequences that can’t be so easily reversed. A conservative president might be able to overturn a deportation freeze, but what about any illegals who’ve managed to get American citizenship before that happens? Democracy means doing what the American people want, not creating a new “American people” that supports what you plan to do.

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Fed Ends QE

Quantitative easing, or QE, has been one of the most controversial policies of the US government since the financial crisis began in 2008. By artificially pumping money into the bonds market the Fed was able to stimulate demand in the US economy and help the stock markets recover from the worst effects of the crash, but the program has grown far beyond what was planned six years ago. There have now been three rounds of QE in total and between them they’ve sucked up $3.5 trillion, a lot more than anyone at the Fed expected when they started the process. The aim was to increase the money supply beyond what the devastated banks could manage, through buying up financial instruments – including colossal amounts of mortgage debt. The effect was to put more money in the hands of banks, businesses and consumers, and overall it’s sent several trillion dollars flowing through the economy.

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Inflation And The Cost Of Living In The US

Economists have been reporting low rates of inflation all year – the annualized rate has been below 2.1 percent right through 2014, and has even dipped below 1.2 percent – but for many Americans it doesn’t feel that way. If inflation is so low, why is it a basket of groceries seems to cost so much more than last year, and why is there never any money left at the end of the month? The answer is that inflation isn’t really a good measure of what’s happening to the cost of living. To understand what’s really going on we need to look in a bit more detail.

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Ebola & The Markets

The Ebola epidemic is fast becoming the lead story in the news, as the death toll mounts – it’s already killed more people than every previous outbreak combined – and cases start to appear in the USA and Europe. Most of the attention is focused on the spread of the disease and the steps being taken to contain it, but behind the scenes many financial analysts are concerned about the effect it could have on the markets.

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