This tab is for you kids!

The latest report from the nonprofit State Budget Solutions (SBS) estimates Delaware’s outstanding debt to be $14.4 billion. This is four times the state’s current general operating budget of $3.6 billion.

SBS aggregates state government debt (Delaware ranks 7th highest per capita in the nation), unemployment insurance trust fund loans, the current state budget gap, and the unfunded pension and retiree healthcare liabilities.

With below average growth forecast for Delaware’s economy over the long-term, it seems unlikely the state will be able to “out grow” this debt through major increases in revenue. To date no public officials are stepping forward calling for action on this looming debt. Perhaps they are simply content to kick the can down the road to their children and grandchildren. We hope not.

Dr. John E. Stapleford, Director Center for Economic Policy and Analysis

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'Occupy' demonstrators are misguided

The more things change, the more they stay the same. I must admit that I was not yet around during the height of the hippie movement, but do remember the residual long hair, bell bottoms and tie-dye that epitomized the liberal sect of that generation. Back then they cried out for freedom from civil authority. They claimed oppression and rebelled against the daily routine of normal life. They marched in unison for Social Justice. Well, they're back! Only this time they are demanding justice of another breed -- Economic Justice. Could someone please tell me what that means? Is it justice to take from one who earns only to give to someone who takes? Perhaps these misguided souls never heard the parable of the ant and the grasshopper. While they camp out at Wall Street and demand whatever it is they are demanding, the rest of us are working hard to provide for our families. And then we are expected to feel sorry for them and somehow relate to their plight. Unfortunately I am still trying to figure out why they are there. What exactly are they entitled to? What are they owed? The only coherent message that one has so far been able to ascertain is that the wealthy have too much authority. To fix that problem, they are seeking economic justice. Back in the 1960s they wanted to spread the love, today it's all about s preading the wealth. I could be mistaken but I think the whole living-in-communes thing is about to make a comeback, as well. How sad that someone would expect to reap the spoils of someone else's labor. I know times are tough; they are for my family too. I was let go from my job a year ago. Why am I not in New York declaring solidarity to the cause? The answer is really quite simple -- I am an American and so have the opportunity to do something about it! Instead of feeling sorry for myself when my employer fired me two days after Christmas, I started my own business. Where am I one year later? Still struggling, but determined to make it work.

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This tab is for you kids!

The latest report from the nonprofit State Budget Solutions (SBS) estimates Delaware’s outstanding debt to be $14.4 billion. This is four times the state’s current general operating budget of $3.6 billion.

SBS aggregates state government debt (Delaware ranks 7th highest per capita in the nation), unemployment insurance trust fund loans, the current state budget gap, and the unfunded pension and retiree healthcare liabilities.

With below average growth forecast for Delaware’s economy over the long-term, it seems unlikely the state will be able to “out grow” this debt through major increases in revenue. To date no public officials are stepping forward calling for action on this looming debt. Perhaps they are simply content to kick the can down the road to their children and grandchildren. We hope not.

Dr. John E. Stapleford, Director Center for Economic Policy and Analysis

To VIEW this ARTICLE CLICK HERE

US Will Win in 21st Century!

Dear Friends,

For those who are concerned about the long-term future of the U.S., this article is a game changer. It turns out that we will almost surely remain dominant in the 21st Century if we do the right things.

Why?

1. Within 5 years, the U.S. will be "well on its way to self-sufficiency in fuel and energy." Last year, the U.S. increased supply growth more than any other nation through the use of "hydraulic fracturing." This has made some of our largest oil fields hugely productive. Shale oil production could increase as much as ten times from 2009 to 2015. U.S. oil and gas production already meets 72% of our own needs, a huge increase from just 50% about ten years ago!

2. Chinese wage inflation has been 16% annually for 10 years. This, combined with problems in Chinese manufacturing concerning shipping costs, piracy of technology, and reliability problems, is already causing some factories to move back to the U.S. This trend is likely to accelerate, with some estimates reaching 3.2 million additional jobs by the middle of this decade.

3. Currency imbalances are creating huge problems for both Europe and China.

4. The U.S. is the only country with a population growing fast enough to actually have hope of paying off much of our debt. Both Europe and China will have massive challenges with rapidly aging populations.

Unfortunately, there will almost surely be huge economic pain for the next few years. Nevertheless, if we can elect politicians who will allow us to return to free enterprise, we will win in the long run!

Rich Collins
302-381-1610

P.S. Subsidized green energy, the favorite of many vote-buying politicians, will surely die an ugly death because of the rapidly expanding supplies of much cheaper oil and gas. The sooner they accept that, the less long term damage will be done to the economy from this source.

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The Vatican's Monetary Wisdom

More than 'greed,' fiat money and central-bank policies caused the financial crisis.

On Monday, the Vatican released an 18-page document titled "Toward Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority." Since then, it has been celebrated by advocates of bigger government the world over.
What's ignored is that the document—released to stimulate debate, not offer official doctrine—embraces a sound economic theory concerning the cause of the world financial crisis: the breakdown of the postwar Bretton Woods monetary system and the unleashing of fiat currencies and central-bank printing presses.
Let's look at a representative passage, while keeping in mind several important markers: 1971 was the year that the Nixon administration killed the gold standard, and along with it Bretton Woods and hard currencies; in the early 1980s, financial deregulation in many countries removed the last major barriers to virtually unlimited amounts of credit; and the 1990s was the decade when the drive to suppress interest rates became the common policy of central banks around the world.
Since the 1990s, we have seen that money and credit instruments worldwide have grown more rapidly than revenue, even adjusting for current prices. From this came the formation of pockets of excessive liquidity and speculative bubbles which later turned into a series of solvency and confidence crises that have spread and followed one another over the years.
A first crisis took place in the 1970s until the early 1980s and was related to the sudden sharp rises in oil prices. Subsequently, there was a series of crises in the developing world, for example, the first crisis in Mexico in the 1980s and those in Brazil, Russia and Korea, and then again in Mexico in the 1990s as well as in Thailand and Argentina.
The speculative bubble in real estate and the recent financial crisis have the very same origin in the excessive amount of money and the plethora of financial instruments globally.




This is sophisticated economic analysis. People are occupying Wall Street, blaming capitalism, speculation and greed, but rare is the analysis that traces all these problems back to the structural change in money that was brought about in the early 1970s.
We went from a hard-money regime, in which there were restrictions on the power of central banks and financial institutions to create money and credit, to one where money became purely paper. There were no restrictions remaining on the power of governments to finance unlimited debt. Banks could create credit seemingly without limit. Central banks became the real power in the world economy.
None of this was true under a gold standard. That system limits the expansion of credit by an indelible physical fact. There was a limit, a check, a rule that went beyond the whim of financial masters and politicians. The Vatican seems to understand this.
But discerning the disease and finding the cure are very different undertakings, and here the document falls short. It imagines a new world central bank and political authority that will rule without "any partial vision or particular good" but rather seek "the common good." Its decisions should "be made in the interest of all, not only to the advantage of some groups, whether they are formed by private lobbies or national governments."
Somehow, with an intelligence never before discovered in government bureaucracies, these proposed global authorities would create "socio-economic, political and legal conditions essential for the existence of markets that are efficient and efficacious."
Contrary to what is being said, this document presumes the existence and continuation of "free and stable markets." The problem is that the Vatican imagines that a "world central bank" and a "global public authority" can do this with more competence than national governments that have a checkered history in this regard.
It was centralization that caused this mess in the first place. Central banks created paper money, easy and limitless credit, and the moral hazard that accompanies them. Why should we believe that more centralization is the solution when experience suggests precisely the opposite?
Many people who favor free markets worry about the implications of the Vatican document. And there is no question that it will be used around the world to stir up political mischief. It will also be used to convince the Catholic faithful that big-government solutions are morally justified. But let's not forget that there are really two parts to the document: the diagnosis and the prescription. We should embrace the former and eschew the latter.



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A State budget deficit already?!

The Delaware Economic and Financial Advisory Committee (DEFAC) met on September 19th and the news isn’t encouraging.

Less than three months into the new fiscal year, the state is running an operating balance deficit of $355 million and an unencumbered cash balance of $32 million. In September of 2010 the state’s operating balance was a $47 million surplus and the unencumbered cash balance was $107 million.

Expected revenues for this fiscal year (FY 12) have been reduced $234 million, a drop of 4% over the June, 2011 forecast. Meanwhile, as of September, projected FY 12 operating expenditures are running at a pace that exceeds the FY 11 expenditures by 14%.

The bottom line right now for FY 12 is projected expenditures of $3,734.8 and projected revenue of $3,379.5.

Slightly over 1% of the 4% drop off in revenue is due to a weaker than expected economy. The remainder is due to the state’s politicians’ decision to spend $191 million out of last fiscal year’s cumulative cash balance on special projects, thus reducing the funds available for operations. This generous expenditure came after DEFAC’s last meeting in June.

On the expenditure side many areas of spending are locked in for the fiscal year. Most of the increases are self-inflicted.

· Projected state Medicaid spending has jumped $205 million (44%) over FY 11. This is due to the generous state Medicaid qualification rules put into place previously, to the termination of the Federal stimulus funds and to a carryover from the last fiscal year.

· Salaries are up $82 million…a 2% across the board six month pay raise that somehow has translated into a 7% jump in salary spending. Part of this is due to an extra pay period and to employee step increases. But at least $20 million appears to be net new hiring.

· Benefits and pension are up 8.3% as the state refuses to take the aggressive adjustments made by private companies to shift more responsibility to employees.

· Grants have risen 18%, spending on contractual services 17%, and outlays on supplies and materials a whopping 49%. So much for running state government like a business.

The good news is that DEFAC and the Delaware Department of Finance are carefully tracking these numbers. And that the accuracy of the expenditure and revenue data improves as the fiscal year progresses.

The disappointing news is that state politicians seem to be unwilling or unable to stop spending. Delaware’s economy will simply not revive with government as the only growth industry.

And throwing around grants to venture capital start-ups is far less important than keeping Delaware’s state and local tax burdens competitive, not raising energy costs, and having public schools that work.


Dr. John E. Stapleford, Director
Center for Economic Policy and Analysis

The single currency is close to collapse

With Europe on the brink of a disaster, the euro must be reconstituted as an entity based on economic reality, not ideological folly.
Yet again, Europe stands on the brink of abject disaster, apparently unable to resolve its differences. A monetary union that was meant to bring former enemies together, binding them to each other via irreversible economic integration, is succeeding only in tearing them apart. It is a crisis that this newspaper has consistently warned of since the single currency’s creation; it gives no pleasure to see our predictions come true.
With a meltdown in the sovereign debt markets fast metastasising into an all-embracing economic and political calamity, the Continent’s position has rarely seemed quite so imperilled since the days of the Second World War. Most worrying is that the Franco-German partnership which lies at the heart of the European project is fracturing as never before, with deep divisions over almost every aspect of the grand rescue plan.
It has already been conceded that this weekend’s meeting of EU leaders in Brussels – billed as the summit to end all summits – will be unable to agree anything of importance. Few have any confidence that a separate meeting on Wednesday will do much better. Whatever is agreed is almost guaranteed to fall short of expectations. Solutions that might have worked if enacted at an earlier stage are being rendered progressively obsolete by fast-deteriorating economic conditions and debt dynamics. Even Germany now seems to be slipping back into recession.
No longer is it possible to rely on the post-war assumption that, while Europe’s leaders may quarrel and disagree, they will always – in extremis – find a way through. Continental solidarity is being tested to its very limits, and the differences could be intractable.
The detail of the disputes over bank bail-outs and the scale of the European rescue fund is tortuous and convoluted. But the underlying problem is simple enough. Europe’s political elites know that for the euro to survive in its present form, it must move – with speed – towards full fiscal and political integration. Yet national leaders, and the voters they answer to, are as yet unwilling to accept the loss of sovereignty, and indeed the shared liabilities, that such a revolution demands.

Germany, for example, has yet to accept that it must take on a share of the responsibility for the peripheral nations’ debts; it must also enable them to regain competitiveness by engaging in unprecedented economic stimulus in Germany itself, thereby surrendering some of its own competitiveness and accepting higher inflation. Brought up on the strict monetary disciplines of the Bundesbank, most Germans find such potentially reckless policies anathema.
By the same token, France is struggling to deliver the structural, pensions and labour market reform that would put it on a par with Germany. Politically, the French and many others find it virtually impossible to accept the loss of fiscal sovereignty that the Germans would demand in return for bailing out their neighbours. Predicting how these standoffs might play out remains close to impossible. The only guarantee is that, whatever Nicolas Sarkozy and Angela Merkel manage to cobble together next Wednesday, it is most unlikely to solve the underlying problem.
In front of our eyes, one of the biggest financial and economic storms of the modern age is brewing. It may need to break with full force before workable solutions are contemplated. That could involve cutting Greece and others loose, and establishing a more tightly knit, fiscally solvent eurozone. Or it could mean splitting it in two, with France allying itself with the Mediterranean south so as to limit the scale of the devaluation, its inflationary consequences for the south, and the loss to the creditor nations of the north. To many, this would seem like the end of the European dream. But that dream was always doomed by the imbalances that the single currency enshrined. The question now is how best to minimise the damage, so that the single currency does not take the world economy down with it – and reconstitute the euro as an entity based on economic reality, not ideological folly.

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Energy Department Defends Loan to Company Building Electric Cars in Finland

The Department of Energy is standing by a $529 million loan guarantee to a company building an electric car line in Finland.

A department official, in a lengthy response posted on a government blog Thursday night, confirmed that the company Fisker is assembling its Karma electric car at its "overseas facility."

The response comes after ABC News reported that the Obama administration gave the green light for the company to move the manufacturing to Finland two years after announcing the loan.

• 
  

But Energy Department spokesman Dan Leistikow said none of the U.S. loan money contributed to the production work in Finland.

"The Department's funding was only used for the U.S. operations," Energy Department spokesman Dan Leistikow wrote. "The money could not be, and was not, spent on overseas operations. The Karma also relies on an extensive network of hundreds of suppliers in more than a dozen U.S. states."

He said the first part of the loan, $169 million, supported engineering work at Fisker's U.S. facilities as the company "developed the tools, equipment and manufacturing processes for Fisker's first vehicle" -- though that work so far has not contributed to a production line in the U.S.

But Leistikow said the rest of the loan is still supporting U.S. production of another vehicle line called the Nina.

"Fisker is using this funding to bring a shuttered General Motors plant in Delaware back to life and employing more than 2,500 workers. Fisker was attracted to this site in part by the opportunity to rehire some of the trained, dedicated workers who lost their jobs when that plant closed," Leistikow said. The department later clarified that 120 workers have been hired at the site to date, with the rest set to be hired by early 2013.

For the Karma line, founder Henrik Fisker reportedly claimed the company could not find a manufacturer in the U.S. for the job. So the production went to Finnish company Valmet Automotive, along with 500 manufacturing jobs.

A company spokesman told FoxNews.com that Fisker had "explored the possibility of producing the Karma in the U.S."

"However, there are no contract manufacturers like Valmet in the U.S., and none of the established domestic automakers were willing to partner with Fisker to provide an manufacturing option in the U.S. that would work for the Karma program," the spokesman said.

The development comes amid widespread scrutiny of the Obama administration's loan programs for alternative energy companies and projects. The bankruptcy of government-backed solar panel firm Solyndra in September touched off a frenzy of questions on Capitol Hill over whether U.S. taxpayer money is being used wisely to prop up the industry.

The ABC News report noted the political connections enjoyed by Fisker and another company, Tesla Motors, which together received about $1 billion in loans. Fisker reportedly is backed by a firm that counts ex-Vice President Al Gore among its partners. The article said just 40 of Fisker's Karma cars have been produced so far, and that Tesla is consistently losing money.

But Leistikow said Tesla has added 1,000 new jobs since receiving the government support. He said both companies' loans were approved "on the merits after extensive review."

"They represent exactly the type of cutting edge, innovative manufacturing this program was intended to support, and are part of a large, robust portfolio of investments that are helping America become more globally competitive," he said.

EU bank failures will crash Wall Street — again

Worst-case scenario’s closing fast: Occupy Wall Street growing. But no political power or allies yet. Feared yes, attacked by GOP proxy tea party. Soon the Occupation will explode into a new American Revolution


When? A string of European bank collapses is dead ahead. And like the Arab Spring, they will trigger an economic disaster for American banks.

Yes, coming soon says Martin Weiss in his “7 Major Advance Warnings,” which is “bound to have a life-changing impact on nearly all investors in the U.S. and around the globe.” His new Weiss Ratings warnings are the “most important” in a 40-year career. The stress on Wall Street banks will force them back to Congress for more bailouts.
Warning eight: No new bailouts. That will push the economy into a deep recession.
Then what? New Glass-Steagall? Not enough. Tax the rich? Not enough. Perp walks? Not enough. Presidential commission? Useless promises. Occupy Wall Street will fail without a fundamental constitutional change. No compromise. Or Wall Street wins, again. We go back to the same free market, deregulated, too-greedy to-fail, conservative Reaganomics policies that have been destroying democracy for a generation.
All this was so obvious, so predictable. America is at a crossroads. Occupy Wall Street buildup has emerged as America’s last great hope to restore democracy. Last week when USA Today called the Occupiers a “ragtag assortment of college kids, labor unionists, conspiracy theorists and others” hinting they’re a flash-in-the-pan “devoid of remedies,” I smiled, reminded of that famous painting of George Washington crossing the Delaware on Christmas 1776, leading what historians also called a “ragtag” Continental Army, surprising the British, and winning the Battle of Trenton.
America’s collective conscience wants true democracy restored
Yes, USA Today sees a “ragtag” army: No mission, no goals, no organization, no agenda, no leaders, and no staying power. Wrong. Look deeper: The Occupiers are the voice of America’s collective conscience demanding a return to our 1776 roots, to a “government of the people, by the people, for the people.”
Our collective inner voice knows America’s moral compass is broken. We’ve become a government “of, by and for” special interests, the wealthiest 1%, Wall Street insiders, CEOs and Forbes-400 billionaires. It happened fast: In one generation the Super Rich grabbed “absolute power,” killing the middle class American dream.
Wall Street banks are already dismissing the Occupiers … planning bigger bonuses this year… lifting limits on their license to gamble Main Street deposits in the $600 trillion global derivatives casino … they already spend hundreds of millions lobbying every year … they’re convinced they can defeat the Occupiers with campaign donations in the back rooms of Congress … writing off the fight as another business expense … ultimately expecting the Occupiers will vanish into the cold winter months.
One citizen. One dollar. One vote. Anything less is failure
Warning: Don’t be fooled. Occupy Wall Street knows exactly want it wants. The tea party, GOP’s proxy, isn’t fooled. They feel threatened, counter-attacking, worried their role will be lost in the 2012 elections, fearful they’ll lose sway over Republicans, so they’ve got a smear campaign against Occupy Wall Street. Won’t work:
Amid all the noise surrounding Occupy Wall Street we hear their “one simple demand.” Missed by most outsiders, that demand echoes down through American history, first heard in 1776 in the Declaration of Independence. Earlier the Occupiers voiced their one simple demand:
“We demand that integrity be restored to our elections. One citizen. One dollar. One vote. Only citizens should make campaign contributions. Campaign contributions by citizens should not exceed $1 to any political candidate or party. Help us reclaim democracy.”
Yes, one simple demand: “Stop the monied corruption at the heart of our democracy.” That one simple demand echoed over and over. And no compromise when dealing with so fundamental a principle of democracy. Compromises the last generation surrendered America to Wall Street and the Super Rich. Compromise this principle again, and we all lose, destroy America. No compromise. Period.
Phase 2: EU bank collapse gives Occupiers new political power
The Occupiers Revolution enters a new phase soon: First Arab Spring rippled into American Fall. Next, EU bank collapses will ripple through Wall Street. For a long time we’ve been warning the 2008 meltdown never ran its course, foiled by mega-bailouts … bankers never shared the sacrifice … fought all reforms … are back to business-as-usual … learned no lessons … now even more delusional, expecting bigger bonuses … trapped in denial for three years … cannot see what’s ahead … a perfect setup for a bigger crash.
That’s why my eye locked on Martin Weiss’ “7 Major Advance Warnings.” Weiss has been a champion of the little guy for 40 years, author of “The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.” Weiss Ratings of domestic and foreign debt markets downgraded U.S. debt before the S&P.
Both of us were warning well in advance of the 2008 crash. It was so predictable: Weiss warned of “failure of Bear Stearns Lehman, Washington Mutual, near-failure of Citigroup and the demise of Fannie Mae years before it collapsed.”
So listen closely to his “7 Major Advance Warnings,” which are “the most important in the 40-year history of my company.” Many will dismiss them, distracted by today’s campaign noise. Others will dismiss them as “over there,” problems for Europeans. Weiss warns: EU banks problems are “bound to have a life-changing impact on nearly all investors in the U.S. and around the globe.”
So listen and discount what Wall Street is selling you. Protect your portfolio. Here are edited highlights:
1. Greece will default very soon ...
”Banks must bite the bullet and take some big hits in their Greek loans. … Whether banks accept this ‘solution’ voluntarily or not, it will mean Greece is in default.”
2. The contagion of fear will spread …
Global investors know “if one major Western government can default, so can others.” They will refuse to lend “to highly indebted governments” or “demand outrageously high yields.”
3. European megabanks will collapse …
Some of the “largest banks will collapse under the weight of defaulting sovereign debts and … mass withdrawals … Spain … French banks” … the impact will ripple across “J.P. Morgan Chase, Bank of America and Citigroup … All three are in danger.”
4. EU governments suffer new credit rating downgrades ...
”France and Germany, will scramble to rescue their failing banks.” But “bank bailouts are seriously flawed” as “governments gut their own fiscal balance … suffer big downgrades,” or pay “far higher interest rates.”
5. Spain and Italy next to face default on their massive debts ...
With “$3.4 trillion in debt, or about 10 times more than Greece” they too risk default.
6. Global debt markets will suffer a critical meltdown ...
Anticipating “default by a country as large as Spain or Italy, nearly all debt markets in the world will freeze.” Withdrawals, panic “not only crush the borrowing power of the PIIGS” but threaten meltdowns in “France, Germany, Japan, the U.K. and the U.S.”
7. Vicious cycle: sovereign defaults, bank failures, global depression ...
Government defaults trigger more bank failures, “cut off the flow of credit to businesses and households, sink the global economy into a depression, and perpetuate the vicious cycle.”
Warning to investors: No bank bailouts, power to Occupation
History inevitably repeats itself: Arab Spring triggered Wall Street Fall. Next, the raging European monetary collapse will ripple through America’s banking system, completing the 2008 meltdown that never ended because Wall Street fought all reforms.
But now, a bigger meltdown as history repeats a dangerous cycle like the 1929 Crash and Great Depression.
History will also deal a fatal blow to Wall Street. Weiss adds a key warning: No bank bailouts. America’s banking system is bankrupt, structurally and morally. Washington is broken. And thanks to the Occupiers Revolution the masses will never accept new bank bailouts. Never. They’ll toss politicians and overthrow government first.
No new bailouts will be the stake in the heart of Wall Street, ending the “greed is good” power of America’s “bloodsucking vampire squid,” handing the Occupiers new political power in Washington.
Weiss’s worst-case scenario highlights everything we’ve both been warning investors about for a long time. The 2008 meltdown never ended, lessons never learned. But now the end game is accelerating.
Listen closely: Weiss final warning to all investors: “Get all or most of your money out of danger immediately … above all, stay safe!” Prepare for the coming bank collapse. And discover how this historic scenario will empower the Occupiers message to get money out of elections: “One citizen. One dollar. One vote.”
Compromise on that principle and Wall Street wins, again.

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The Best Countries for Starting a Business Now

Which Countries Love Start-ups?

The World Bank's annual Doing Business report ranks the ease of doing business within 183 countries based on business-friendly regulations. The formula takes into account the ease of starting a business, factoring minimum cost, time, and available capital. Which economies are fostering start-ups? Get this, entrepreneurs: While the United States ranks fourth in the over-all ease of doing business in 2011, it didn't crack the top 10 for start-ups. Here's the count-down, starting at No. 9.

9. Belarus

Rank last year: 7
Days to start a business: 5
Access to credit ranking: 98
Over-all ease-of-doing-business rank: 69
In its overall ranking, the country, which is largely categorized as upper-middle income, made a whopping 22-position jump—going from 91 last year to 69 this year.

8. Rwanda

Rank last year: 9
Days to start a business: 3
Access to credit ranking: 8
Over-all ease-of-doing-business rank: 45
The World Bank study points out that Sub-Saharan Africa has been making massive efforts to reform economic hurdles for businesses, and Rwanda ranking within the top 10 for starting a business is proof. The country has recently instituted some electronic processes for starting a business, boosting entrepreneurship.

7. Georgia

Rank last year: 1
Days to start a business: 2
Access to credit ranking: 8
Over-all ease-of-doing-business rank: 16
Georgia, considered a lower-middle income country, is improving access to credit and protecting investors.

6. Macedonia

Rank last year: 5
Days to start a business: 3
Access to credit ranking: 24
Over-all ease-of-doing-business rank: 22
This is another country working in several sectors to ease the process of doing business, including dealing with construction permits, getting credit, and registering properties.

5. Hong Kong

Rank last year: 6
Days to start a business: 3
Access to credit ranking: 4
Over-all ease-of-doing-business rank: 2
The study points out that the country is actively making regulation reforms, in the areas of cost and minimum capital, that help foster start-ups.

4. Singapore

Rank last year: 4
Days to start a business: 3
Access to credit ranking: 8
Over-all ease-of-doing-business rank: 1
Singapore boasts relatively quick processes for getting construction permits and registering properties, while also has easy access to credit.

3. Canada

Rank last year: 3
Days to start a business: 5
Access to credit ranking: 24
Over-all ease-of-doing-business rank: 13
In a global trend in which where large economies are mentoring developing nations, Canada has been working with Peru to improve its business environment.

2. Australia

Rank last year: 2
Days to start a business: 2
Access to credit ranking: 8
Over-all ease-of-doing-business rank: 15
According to the data, the country has relatively easy access to credit and ease in trading across borders.

1. New Zealand

Rank last year: 1
Days to start a business: 1
Access to credit ranking: 4
Over-all ease of doing business rank: 3
According to the study, the "one-stop" shop approach, where most of the government agencies that a start-up needs are linked online, keeps the country on top.

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PNC Economic Outlook Survey -- Fall 2011

Key Findings:
With weak sales as a major challenge, U.S. small business owners have no plans to hire over the next six months and many plan to raise selling prices to preserve profit margins in the face of rising costs, according to the PNC Economic Outlook survey's newest findings. The fall 2011 findings of the biannual survey provide insights on the current mood and sentiment of U.S. small business owners.

Optimism Shrinks Amid Slow Pace of Growth
Less Optimistic about Own Company:Just under one-fifth (18%) remain optimistic about their own company's prospects during the next six months, lower than in the past year. Just under one-fourth (24%) are pessimistic which is up from 17% last spring.

Price Hikes to Preserve Profits:

Just over one-third (35%) plan to raise their selling prices and only 7% intend to cut, which is similar to the potential pricing pressures identified six months ago.

Canadian Agriculture's Fannie Mae And Freddie Mac

Many people believe that housing agency Canada Mortgage and Housing Corp. (CMHC) has facilitated the formation of a bubble in the Canadian housing market by insuring so much mortgage debt. But due to what's called supply management, a similar situation may be taking shape within the Canadian farming community and it needs to be addressed.
Particularly in the dairy, egg, turkey, and chicken sectors, farmers rely on supply management to keep product prices high. Under this arrangement, government-backed agencies set prices on the basis of costs, and then support the prices by restricting supply via a limited number of production quotas allotted to farmers.
Because the quotas are a scarce resource tied to the production of goods whose prices are raised almost every year, their value keeps going up. For example, in Ontario, the price to buy a quota in dairy farming climbed from $1,400 to $33,000 per cow between 1981 and 2007. The value of the quotas also spills over into higher prices for farmland, especially whenever quota prices are capped (dairy quota prices in Ontario are now fixed at $25,000).
For persons who wish to buy a farm in supply-managed sectors, the upward spiral in prices has made it very expensive. Enter the government-backed Farm Credit Corp. (FCC), described by one farmer as “Canadian agriculture’s Freddie Mac and Fannie Mae.” It has lent against the quotas and agricultural acreage to facilitate purchase of farms. It has also eased lending terms over the years—notably, amortization periods have been extended from 5 to 25 years.
In short, the FCC, like the CMHC and its U.S. counterparts Freddie Mac (FMCC.OB) and Fannie Mae (FNMA.OB), has facilitated borrowing against an appreciating asset and contributed to further price inflation. But as happened in the U.S., the price of this asset could go into reverse and cause negative equity to emerge in farm quotas and land. This could not only produce financial hardship for heavily indebted farmers but also wreak havoc with the FCC’s credit portfolio.
As long as politicians remain afraid of saying anything negative about supply management, it’s hard to imagine quota and farm prices collapsing anytime soon. Still, the unintended consequences of the quota system are piling up. For example, in the case of the dairy industry, some of the problems studies have found include:
Prices for milk and other dairy products in Canada are among the highest in the world (incentives to control costs are weak when prices are indexed to costs)
Since the introduction of supply management, the consumption of milk (an essential food in the rearing of children) and other dairy products in Canada has declined on a per capita basis, and is nearly a third below levels in the U.S.
Despite very high tariffs, dairy imports into Canada have tripled to 24% of the market over the past decade
To buy quotas, Canadian dairy farmers have amassed unprecedented debt levels, “seen nowhere else in the world"
Young farming families in Canada are fleeing to the U.S where the absence of a quota system lets them purchase better operations at less than half the price of supply-managed sectors in Canada
At some point, the accumulating side effects may reach a critical mass and force a critical review of, and change to, the supply management system. If and when that time comes, there could be adverse implications for farmers and the FCC.
However, one suspects taxpayers will end up on the hook for the brunt of farmers’ transition costs—as well as the non-performing assets of the FCC. The ultimate cost of Canada’s supply management system could therefore end up much higher than what an analysis of current benefits and costs would indicate.

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Washington Considers China Trade War

For the past few years, fear of China's predatory mercantilism has been steadily growing in America, both amongst the public and in elite business and political circles. But last week, for the first time, one could discern the genuine possibility that America might actually do something about it -- even if it means a trade war.
It's not that anything new has been revealed about China's practices, but rather that something new has emerged about the nature of Washington's opposition to it. Last week, the Senate passed a bill that would force U.S. retaliation against China's currency manipulations. The bill passed with 63 votes -- including 16 Republican votes.
There is nothing new about most Democrats supporting what some might consider "protectionist" legislation. But 16 Republican Senate votes are new and revealing. There was no ideological or regional pattern to them. They included Ohio's Rob Portman, a solid senior member of the Republican free-trade establishment who served as President George W. Bush's trade representative and director of the Office of Management and Budget; Maine's liberals Olympia Snowe and Susan Collins; conservative southerners such as Jeff Sessions and Lindsey Graham; and the Rocky Mountain's conservative Mike Crapo.
Also, last week Mitt Romney -- the very model of a Republican financial man and free trader -- wrote in a conspicuous Washington Post article: "If I am ... elected president, I will work to fundamentally alter our economic relationship with China." It got tougher after that. While he firmly defended free trade, he made the argument, "Actually doing something about China's cheating makes some people nervous. Not doing something makes me nervous. We are warned that we might precipitate a trade war. Really? China is selling us $273 billion per year more than America is selling China -- why would it possibly want a trade war?"
Whether Romney is right or wrong about that, what is politically fascinating is that he is not afraid to talk about the threat of a trade war. Yes, he is running for president, so it could be just political. But he may well be the next president, so campaign rhetoric may become presidential policy. And given his deep support in the internationalist, GOP business community, he must have a sense that he is not outraging those supporters by his strong stand.
Equally revealing of the changing mood of the Washington-China trade policy was the Washington Post column last week by solid, centrist, free-trade supporting, highly regarded Robert Samuelson: "No one should relish threatening China with a 25 percent tariff. It would be illegal under existing WTO rules; to save the postwar trading system, we'd have to attack it. This would risk an all-out trade war just when the world economy is already tottering....The policy's only recommendation is that it might be slightly better than the alternative: condoning China's ongoing assault on our industry. ... There's already a trade war between them and us; but only one side is fighting."
It is startling to read the Washington Post's senior economics columnist willing to engage in a trade war with China as the world may be sinking into recession. It's not so much what is being said as who is saying it that makes one sense that Washington may be getting ready to reverse 75 years of post-World War II trade policy.
It is particularly striking when the opposition to the China currency bill have explicitly compared this moment to the 1930s, when a financial crisis lead to the Smoot-Hawley trade war, which led to a decade long world depression. Yet, these and other prominent free traders are embracing -- not running from -- the threat of trade war.
Of course, these are only the opening shots. The Wall Street Journal stands stoutly against such policies. Speaker of the House John Boehner came out against the Senate bill expressly because he worried it might start a trade war. If he permitted a vote, the House would pass the bill at veto-proof strength with upwards of a hundred Republican votes for the bill. President Obama has not yet revealed whether he would sign or veto such a bill if it got to his desk.
But the doubt about letting abstract free-trade principles deter an aggressive U.S. response -- even at the risk of a trade war -- has been building for years.
In a December 2007 column, I assessed the political fact back then that Hillary Clinton and Mike Huckabee were both questioning blind adherence to free trade. I wrote: "Classic free-traders may impute such words by both Hillary and Huckabee to cynicism, populism and demagogy, but it is just possible that the American people may sense a real danger that the elites, heavily invested in the globalization project, cannot see yet."
Now, four years on, some of those very elites are beginning to express the same doubts about the utility of relying on abstract free-trade principles, and they are willing to consider the risk of a trade war rather than endure more of the same trade imbalances.
Weak as our economy is now, our gross domestic product is still about three times the size of China's. If we have to push back against abuse of free trade principles, better now than five years from now when (if we continue current policies) we are not likely to be nearly as strong.
When the real-world fears and judgments of the Washington political and journalistic elites begin to line up with the same sentiments in the broader public, it may be the beginning of an historic trade policy shift.

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NIA Exposes Occupy Wall Street Truth

The Occupy Wall Street movement is gaining tons of momentum and is likely to continue picking up steam in the weeks and months ahead. Americans are angry but they aren't exactly sure what they are angry about and they don't know for sure who they should be angry with. It is easy for them to point their fingers at Wall Street, but Wall Street is in no way responsible for the financial crisis our country has today.NIA believes that Occupy Wall Street protesters need to be educated to the facts and truth about the U.S. economy and what is truly causing our economic problems. NIA is getting ready to release 'Occupy Wall Street the Documentary', which NIA has produced so that Occupy Wall Street protesters can understand exactly what changes need to be made in America if our country is going to survive the Hyperinflationary Great Depression that will soon hit America and steal all remaining purchasing power that the U.S. dollar still has left.NIA first saw signs of the protests taking place today back in November of 2009 when we were in Beverly Hills filming our documentary 'The Dollar Bubble'. We were alerted by NIA members to a major protest that was breaking out at the University of California. We went to see it and witnessed a very violent protest of students upset about a 32% increase in college tuition for the next semester.The UCLA protest showed us just how angry Americans can become about inflation. Because we were forecasting massive food inflation to start breaking out in 2010, we made the prediction that we would see large "End the Fed" protests beginning in 2010. We did see massive food inflation in late 2010, accelerating greatly throughout 2011. However, we overestimated the ability for average Americans to quickly point the finger at the Federal Reserve. We also didn't expect many citizens of foreign countries, especially Arab nations, to begin protesting before Americans did.About one year after the violent UCLA tuition inflation protest that we witnessed, a larger even more violent tuition inflation protest broke out in London. When Prince Charles' security detail made the mistake of driving him and the Duchess of Cornwall past the area where the protest was taking place, in a vehicle that cost more than what each protester will earn in the next ten years combined, about 50 of the protesters broke through the motorcycle police protecting the Prince chanting "Off with their heads!", beating on the side of their Rolls-Royce with sticks and bottles. Luckily, the car was armored and only suffered minor damages, keeping Prince Charles and the Duchess safe. A Jaguar behind it containing police officers was destroyed to the extent that the officers ended up using car doors from the Jaguar as shields, which still couldn't prevent six of them from being seriously injured.The food inflation protests that NIA had been expecting for over a year, started to break out in late January of this year in Algeria, with citizens chanting "Bring Us Sugar!" Eight citizens were killed during the protests in Algeria. This quickly spread to a massive outbreak of civil unrest in neighboring Tunisia, where thousands protested food inflation and high unemployment. The Tunisian revolution led to the ousting of longtime President Zine El Abidine Ben Ali, but came at the expense of 79 protesters being killed.This rapidly spread to the riots in Egypt. Before the Egyptian protests even began, six Egyptian citizens committed suicide in front of government buildings by dousing themselves with fuel and lighting themselves on fire. All together, 846 protesters were killed across different parts of Egypt and over 6,000 more were injured. The Egyptian protesters were eventually successful at getting Egyptian President Hosni Mubarak to resign from office.NIA saw the resignation of Mubarak as a farce from the beginning. We couldn't understand how thousands of angry Egyptians who were calling for Mubarak's head would within seconds of his resignation announcement erupt into cheers like Egypt had just won the World Cup. The resignation of one man would not eliminate the corruption in Egypt's government and fix their inflation and jobs crisis. Most of Mubarak's cronies are still in power. Mubarak agreed to just take one for the team. For the protesters to declare victory and go home after one man announced his resignation shows that most of the protesters were sheep who were just copying their friends without having a real grasp on the issues affecting the economy in Egypt. What if Mubarak came back on television and said "I was just kidding" or "I just changed my mind and decided not to resign", would the protesters have come back?After Egypt, the protests spread to Jordan and Yemen. Once again, food inflation was the main root cause of the protests, something that the mainstream media in the U.S. largely ignored when reporting on the protests. The American mainstream media was not allowed to discuss inflation when corresponding about the global inflation protests, because it didn't want the world to connect the dots and realize that Federal Reserve Chairman Ben Bernanke is more responsible for the global food inflation crisis and protests than the leader of any foreign country.Because of the U.S. dollar's status as the world's reserve currency, the majority of the world's most important agricultural and energy commodities are traded in U.S. dollars. When Bernanke prints trillions of dollars out of thin air in an attempt to reinflate the Real Estate bubble and lower unemployment in the U.S., it has a direct affect on what foreigners pay for all goods and services around the world. With China printing massive amounts of Yuan to keep it pegged to the U.S. dollar and the Bank of Japan intervening to keep the Yen from appreciating too rapidly against the U.S. dollar, countries like Australia are now quick to blame any short-term dip in manufacturing, agriculture production, or energy commodity exports on their currency being too strong against not just the U.S. dollar but the Yen, Yuan, and most other fiat currencies.In just the last two weeks, the Australian dollar has risen 9.5% against the Yen, 8.5% against the U.S. dollar, and 8.6% against the Yuan. It should be no surprise to NIA members that attempts to copy "Occupy Wall Street" in Australia have been dismal. After 1,000 protesters initially showed up in Sydney on Saturday for their own "Occupy Wall Street" protest that was supposed to continue "indefinitely", less than 50 protesters remained on Monday as most people returned to work. Australia doesn't have an inflation or unemployment crisis because their central bank did the right thing and raised interest rates to 4.75% at a time when everybody else was lowering them. This is why since the inception of NIA we have always suggested Australia as our top choice for Americans to move to if they want to get out of harms way before hyperinflation hits the U.S. We hope that the Reserve Bank of Australia will continue to do the right thing and ignore calls from all around the world for them to lower rates.The mainstream media is currently once again focused on the financial crisis in Europe, which is temporarily distracting from the debt crisis that really matters in the U.S. On Halloween, the official U.S. national debt for the first time ever will surpass U.S. GDP. At any time now without any warning or any new catalyst, we could see a huge onslaught of dollar dumping that causes the economic equivalent of 9/11.There is no hope of preventing hyperinflation in America when President Obama is unwilling to consider any measure that would cut government spending in a meaningful way. In August when the Budget Control Act of 2011 was enacted by Congress, the mainstream media was widely reporting that the "supercommittee" formed by the act would be in charge of finding $1.5 trillion in spending cuts by Thanksgiving. In reality, this "supercommittee" that Obama was so heavily relying on to pay for his proposals in his "jobs bill", is not responsible for finding $1.5 trillion in spending cuts but only a $1.5 trillion reduction in the budget deficit over 10 years.Obama promises to veto any proposals that make large spending cuts, especially to entitlement programs. Many Democrats are calling for a new 5% "surcharge" on Americans earning over $1 million per year. Within a few years, an annual income of $1 million will only have the purchasing power of what a $100,000 salary has today. This proposed new tax would discourage small business owners from expanding and hiring new employees. It would destroy any remaining hope that is left for a real economic recovery and encourage most American entrepreneurs to leave the country permanently.The U.S. Bureau of Labor Statistics (BLS) yesterday released their consumer price index (CPI) data for the month of September. The BLS reported year-over-year CPI growth of 3.87%, the highest rate of U.S. price inflation in three years. The official government reported year-over-year U.S. price inflation rate of 3.87% for September was up from 3.77% in August, 3.63% in July, 3.56% in June, 3.57% in May, 3.16% in April, 2.68% in March, 2.11% in February, 1.63% in January, 1.5% in December, and 1.1% in November. Year-over-year increases in the CPI have risen by 252% over the last ten months.Even year-over-year core-CPI growth rose for the 11th straight month to 1.97% in September, an increase of 223% from year-over-year growth of 0.61% in November. NIA estimates the real rate of U.S. price inflation to currently be 8.5% on a year-over-year basis. It was just announced that American retirees receiving Social Security will receive a 3.6% COLA increase, the first increase since 2009. Social Security is the main reason the U.S. government reports artificially low CPI numbers. By giving retired Americans only a 3.6% Social Security payment increase when real price inflation is now 8.5%, Congress gets to spend the difference in the ways they see fit.With inflation spiraling out of control, the government knows that they soon won't be able to afford even the artificially low COLA increases they are making today. Congress is now exploring ways to keep future COLA increases as low as possible. Many clueless Keynesian economists in Washington are now arguing that the inflation measure the government uses to calculate COLA increases, the CPI-W, is overestimating true increases in the cost of living. These economists claim that Americans can shift between items and if veal prices are rising too much, they can eat chicken or if lobster prices are rising too much, they can eat shrimp. They propose that the government switches to a version of CPI that accounts for these changes, called "chain weighted" CPI.All Americans know that their cost to maintain the same standard of living has increased by a lot more than 3.6% over the past year. The CPI-W being used today already artificially understates inflation so much that current Social Security recipients deserve to be receiving triple their current payments. If "chain weighted" CPI was being used today, American seniors would only receive a 3% COLA increase next year.If the U.S. government did the right thing and invested all FICA tax receipts into gold, it would be able to give Social Security recipients an increase next year of around 8.5% like they should be entitled to. American seniors are being hurt most by inflation because health care has consistently had the highest rate of inflation out of all goods and services. A COLA increase of 3.6% is nothing when NIA estimates the real rate of health care inflation to currently be 15% or 76.5% higher than the overall real rate of price inflation. To artificially lower COLA increases even more would mean utter devastation to the U.S. economy as seniors would need to reenter the workforce and Americans with jobs would need to stop spending money on goods and services in order to help their parents. This would mean even less jobs for the youth in America and less support for them from their parents.

If you would like your friends and family members to be the first to see 'Occupy Wall Street the Documentary' coming soon, simply tell them to become a member of NIA for free today at: http://inflation.us/