Friday, January 29, 2010

The Dangerous Confluence of Jihadists and Eco-Terrorists

Washington Post Online, January 29, 2010, Breaking News: “Al-Qaida leader Osama bin Laden has called for the world to boycott American goods and the U.S. dollar, blaming the United States and other industrialized countries for global warming, according to a new audiotape released Friday.”

Osama bin Laden sees that jumping on the Global Warming bandwagon can help bring down Western Civilization. “In the tape, broadcast in part on Al-Jazeera television, bin Laden warned of the dangers of climate change and says that the way to stop it is to bring ‘the wheels of the American economy’ to a halt,” said the Washington Post Online article.

According to the Washington Post, “The speech, which included almost no religious rhetoric, could be an attempt by the terror leader to give his message an appeal beyond Islamic militants.” Clearly, bin Laden is aligning himself with eco-terrorists and radical environmentalists who all share his goal of bringing down Western Civilization. Beyond that, all these terrorists also share a goal ensuring that Third World or Developing Nations never enjoy even the most rudimentary of Western creature comforts such as a light bulb or heating and air conditioning.

If Osama bin Laden considers the Global Warming issue to be an effective Weapon of Mass Destruction, then perhaps there is hope that our leaders in Washington will not detonate such a device (Cap and Trade Legislation or greenhouse gas emission limitations) on the United States economy. Maybe the political leaders of the world will see the Global Warming Farce for what it is—a terrorist plot.

The revelation of ClimateGate stunned millions of people. Now, we know that Jihadists and eco-terrorists share the same hell-bent goal of destroying Western Civilization. Perhaps, the rest of the world will now see the mounting evidence that conclusively demonstrates that blaming global warming on humans is a farce.

The discovery of thousands of emails is evidence that climate scientists at the Climatic Research Unit of the University of East Anglia in the United Kingdom—working with other leading climatologists around the world—fabricated, distorted, manipulated, and cherry picked climate data records to support their predisposed conclusion that humans are the principle cause of global warming. ClimateGate clearly demonstrates how zealous and dangerous scientists can be when they cease to be true to any scientific code of conduct and become “science advocates.”

The essential question that all of us must always be asking ourselves is, “If a scientist says it is so, is it true?” Before you ask that question, there are a few things you should know about science.

Scientific Method is the process by which scientists make observations, take measurements, conduct experiments, develop a hypothesis, and repeat the cycle in order to prove, disprove, or modify the hypothesis. Often this cycle can take a life time of work without any proof of the hypothesis. Scientific Method is not about consensus. In fact, being skeptical—asking the hard questions—is a healthy attitude for any scientist.

There are a number of different kinds of science. Applied science is proven science that results in the technology we see or use everyday. Microwave ovens, cell phones, medical instruments, pharmaceuticals are just a few examples.

Theoretical science seeks to support a theory about something that may never be proven or debunked such as the origins of matter or how the universe was created. Sometimes it may take generations to learn if the theory is true or not. Einstein did not live to see much of his Theory of Relativity proven and some theories may never be proven one way or the other.

Scientific Modeling is a relatively new form of science that has become much more feasible with the advent of computer technology, especially super computers capable of making billions of calculations per second. Scientists and mathematicians develop complex models that are supposed to mimic reality. Such complex mathematical models include economic models, population models and even climate models. Sets of data are plugged into these models, and as in the case of climate change, the super computers chug away for days before spitting out a likely outcome. The outcome is called a projection, not a prediction. Generally, the projection is considered valid if the core assumptions underlying the model are correct; the model thoroughly considers the impacts of all the various inputs; and the data being entered into the model is accurate and validated. Sometimes, the outputs of one model are then plugged into another model, and so on, thus multiplying the possibility of erroneous projections. This kind of science is the basis for the Global Warming Theory and this is why ClimateGate cast such a large shadow of doubt on the theory that humans are the cause of global warming and even brings into question the premise that the planet is even warming.

Listen closely to what the Warmists are saying and study their rhetoric closely. There is a pattern to be observed in the phenomena called Global Warming. The underlying assumptions are that Western Civilization is bad for the environment and Developing Nations would be better off without Western-like Civilization. The science is being manipulated to support this erroneous conclusion. And now, we are seeing the dangerous confluence of eco-terrorism and Jihadists terrorists. Both have demonstrated an alarming disregard for humanity that should be cause for America and the rest of the world to be concerned, very concerned. And maybe, just maybe, Al Gore, NASA’s James Hansen, the United Nations Intergovernmental Panel and Climate Change, and the rest of the radical environmentalist community should have their names added on the No-Fly List.

Tuesday, January 26, 2010

The Gold Rush of 2010

[Note: I am not an investment counselor and you should not buy, sell, or hold anything based on my advice alone or anything I say in this column.]

It actually began in 2009, but the Gold Rush of 2010 is now in full swing. Haven’t you heard? There is gold in them thar hills; or is it in your jewelry box; or is it available for purchase from a number of different gold vendors. You can get it minted in coins; you can buy it in bars; or you can get it the old fashioned way—from a mine.

I find it curious that the gold dealers come out in droves every time the economy is down or there is even the mere mention of possible inflation. Listen to the ads on any one of the television business channels and you’ll get an ear full of doom and gloom. “Worst recession since the Depression.” “Out of control government spending.” “The falling value of the dollar.” “Inflation.” “Record unemployment.”

There can be no doubt, many of these claims may indeed be true, but I have never seen an industry rally around bad news more than the purveyors of gold. Well, maybe the mainstream media loves bad news, but I digress. It is as though the only way to sell gold is by creating and instilling fear. “Gold is the only asset that never has zero value.” “Gold is your hedge against inflation and a falling stock portfolio.” If the only thing we have to fear is fear itself, then I am convinced that gold brokers foment more fear than miners find gold.

In fact, the Gold Rush of 2010, driven by fear tactics, has pushed the price of gold well over $1,000 per ounce which is about twice as much as it costs to get gold out of the ground. If you are absolutely convinced that gold is your best investment, then for crying out loud, buy stock in a gold mine. Those guys are making good money right now.

But, let’s examine the underlying theories behind the Gold Rush of 2010.

The dollar is dropping in value compared to other currencies such as the Euro or the Yen. So, you put your dollars into gold. What are you going to do with the gold? Put it under your bed; bury it in your back yard? Heat your house with it? Eat it when you get hungry? Nope, just like any other investment, you are going to sit on it and wait for its value to go up, down, or stay the same. The problem is that you can’t spend gold. Just try going down to your local store to buy some groceries with the gold shavings you whittle off of your gold bar. When you get hungry or it is time to pay your property taxes, you are going to sell some gold and get dollars back. If the fear-mongering purveyors of gold are right, the dollars you get when you sell your gold are going to have less purchasing power than the dollars you used to buy the gold. If the value of gold went up more than the dollar went down, then you are okay. But if it does not, then you are no better off, or worse yet, you have lost money. This same logic applies if you are investing in gold to hedge against inflation.

Gold is a commodity and like all commodities it has real intrinsic value and it has psychological value. When gold supply is low and demand for gold jewelry, gold circuitry, and gold-tipped Ipod cords is high, then the price of gold goes up. What we are seeing today is that because fear is high, so is the price of gold. The first example is the law of supply and demand; the second is speculation. “Speculation” is nothing more than a euphemism for gambling.

But, the gold broker will tell you that gold will never be worth zero. Go tell that to Bunky Hunt who lost billions of dollars in the 1970s speculating that silver would continue to go up in value. He and his brother tried to corner the world market by buying close to 100 million ounces of silver. When silver prices crashed on Silver Thursday in March 1980, they lost everything and had to file bankruptcy. The price of silver may not have gone to zero, but they still lost their shirts.

Very few of us have the capacity to corner any market, let alone the gold or silver market. So, if you are buying gold because you fear the economy is going to collapse, ask yourself the logical follow-up question, what will I do with all this gold if the economy does collapse?

Much of the fear-mongering associated with gold goes back to the decision by the United States to take its currency off of the gold standard. Since ancient times, gold has been used as currency all over the world. Gold was more rare back then and it has always been available in finite quantities, thus its value was relatively stable. Moreover, gold is gold and no matter what language you speak or what your culture is, gold transcends it. People got tired of carrying gold around in their pockets and using scales when the printing press came along and they could paper currency. Paper currency then was the same as debit cards are today, more convenient. In order to build trust in paper money, government currencies were redeemable for gold or silver. This gave people the illusion of security. The reality is that the value of gold fluctuates, as does the value of paper currency, but few people ever redeemed their paper currency for gold or silver. Instead, paper dollars were doing what currencies are intended to do; they were used to buy goods and services and facilitate trade. When the United States went off of the gold standard, the value of the currency was based on the quantity and efficiency of the production of goods and services. Like gold supplies, the supply of goods and services produced can go up or down and the value of the currency follows.

I will always remember when the Federal Reserve Bank Chairman, Arthur Burns, was testifying on the value of the U.S. dollar and whether we should go back to the gold standard. A Congressman held up a five-dollar bill and asked Burns what he could get for that five dollar bill? Burns reached into his pocket and peeled off five one-dollar bills and said, Sir, what else do you need? Currency is just a medium of exchange. The value of currency is affected by changes in either the supply and demand of goods and services or by the supply and demand for money itself. Money Supply is managed by the Federal Reserve Bank, and ever since the inflation of the late ‘70s and early ‘80s, the Fed has done a masterful job of controlling Money Supply to keep inflation in check. A vivid example of this is that you can go to any fast food joint in town and buy for $1 the same burger you got for a buck back in 1980. Yes, prices of good and services have changed and that is to be expected as supply or demand fluctuates. With all the government borrowing, rising energy prices, spiraling medical costs, the overall U.S. inflation rate for 2009 ended up being only 2.9%.

There may be many warning signs out there today that could give the most optimistic of us pause about the future of our economy. Gold may indeed be an appropriate part of the mix of any investment portfolio along with mutual finds, bank certificate of deposits, and real estate. But, beware of snake-oil salesmen. The old maxim—there is no such thing as a free lunch—still holds true. I suggest we do our research, consult with sage financial counselors, and invest wisely, but I would not put my faith in any investment. As for me and my house, we will trust in the Lord, and not in a pot of gold at the end of the rainbow or under my bed.

Monday, January 11, 2010

“Bad Policy” Does Not Always Equal “Unconstitutional”

There is a mantra that is repeated across these United States on a regular basis. It is most often invoked when someone does not like a particular policy of the President or legislation being considered by the Congress. The mantra goes like this. Someone hears about a new bill in Congress that they oppose or something the President is proposing to do that they do not like. Immediately, it is labeled as “Unconstitutional.” The term itself has become a political trump card, but unfortunately the users all too often do not know the difference between a bluff and trump.

It is an unfortunate fact of life that too few Americans ever read the United States Constitution. Oh, yes, it is taught in school, but being part of a curriculum does not necessarily mean that students actually read the document itself. More importantly, we all come away with our particular impression of what the Constitution says and that memory is usually incomplete and heavily influenced by cultural factors and political persuasions.

Many times I have thought that all natural-born Americans should be required to pass a citizenship test before their rights as a U.S. citizen are conferred upon them. I believe that most naturalized U.S. citizens have a better working knowledge of the Constitution than many natural-born Americans. This is a sad state of affairs that could be easily rectified.

If you have not done so in recent years, find yourself a copy of the U.S. Constitution and read it—all seven Articles, the Bill of Rights, and the rest of the Amendments. It is a relatively short and easy read. It is a beautifully written and masterfully constructed document as evidenced by its having endured these 222 years. One of its greatest strengths is in what it does not say as much as what it says. It is an organizational document that sets up three branches of government and the checks and balances among the three that prevent any one branch from dominating. It describes how our leaders are to be elected or appointed; it articulates their powers and authorities; it sets out our rights as citizens; and it limits the role of government.

But, the U.S. Constitution does not tell us what is right or wrong; it does not differentiate between good and bad. The Constitution does not tell us which policies would best help achieve the purposes of the federal government articulated in the Preamble. The Constitution establishes the process by which we govern ourselves and it identifies those rights that shall not be infringed upon. As long as we adhere to those processes and do not abridge those rights, as ultimately determined by the Supreme Court, there is wide latitude delegated to the Congress and the President to establish whatever policies they determine will advance the above-mentioned purposes.

There is a subtle point—a fine line—where Americans cross pollinate bad policy with unconstitutional. I have very strong views about a number of issues including health care reform, energy and environmental policies, support for our military, and the prosecution of the war on terror, just to name a few. Regardless of my views about any particular policy, I believe all these issues and others are within the domain and established purposes of the federal government. The domain and purposes of the federal government are laid out in the Preamble to the Constitution. “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” Moreover, if you think that an action by Congress is unconstitutional, I invite you to read Article I, Section 8, where the powers of Congress are enumerated.

An important distinction to make is that there are very clearly articulated philosophies of government that were expressed by the Founding Father of this great country. They formed their views of democracy and a vision of limited government in the context of having been oppressed by the English monarchy and unfair taxation policies. They believed in the power of individual liberty and the freedom to pursue happiness. They saw the potential of free enterprise to create a better world. And they believed that government should help, not hinder or over regulate, the individual’s freedom to pursue life, liberty and happiness. I firmly believe that there is plenty of historical documentation that would suggest that the Founding Fathers would be firmly opposed many of the social engineering and taxation policies proposed and in place today.

I also believe it is correct to say that this nation was founded upon Judeo-Christian principles and that most of the Founding Fathers considered themselves to be Christians. That said, those same Founding Fathers ensured freedom of religion in the First Amendment and when they inserted into Article VI of the Constitution: “The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution; but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.”

Another principle often misunderstood by a lot of people is that there is no Constitutional responsibility of our elected Representatives or Senators to carry out our desires or necessarily the wishes of the majority of their constituents. The Constitution created a “republican” form of government, not a pure democracy. We elect leaders to serve the United States of America. They should gather information from all sides of an issue. They are to understand the policy or legislation being proposed. They should consider what is best for the nation as a whole as well as the collective will of the people they represent. Finally, our leaders cast their vote knowing that they will be held accountable for their positions every two or six years when “We the People” have our opportunity to cast our votes.

The only Oath or Affirmation articulated in the Constitution (Article II, Section 1), and the basis for all oaths pertaining to federal service, is:--"I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States." There is nothing in that oath of office or the Constitution obligating our leaders to act in accordance with our wishes, collective or individual. For me, I do not want a leader who makes decisions based on polling data, putting their wet finger in the air to see which way the political winds are blowing today. Polls can be too easily manipulated by the media and the pollsters, and all too often the opinions of the general public are not well informed or thoughtful. I want a leader with the same core values that I embrace, who acts on principles, and has a moral rudder that will guide them through the stormy seas whipped up by the political winds.

For America to continue to be that bright shining star of liberty and freedom and the land of opportunity, we must firmly exercise our rights as citizens to hold to our beliefs and to express them peaceably. It is our solemn duty to engage in the political process of selecting our leaders and to make known to them our informed position on any given issue. But, whether or not we like a proposed policy or law, let us not resort to the high-handed bluff of declaring it “Unconstitutional!” Let us read and more fully understand what the Constitution says, and just as importantly, what it does not say. And let us leave questions of Constitutionality to the purview of the courts as envisioned by the Founding Fathers and enshrined in Article III of the Constitution.