The Saudi Threat -- Would They Dump All Those Treasury Bonds?

There's a bill in Congress at the moment that would allow foreign countries to be held liable for damages in American courts if they take part in terrorist attacks in the USA against Americans.  Right now, such suits are barred by a federal law passed in the mid 1970's, before there was any domestic terror threat.  The country most threatened by this law is Saudi Arabia which conceivably could be held responsible in suits brought by the victims of 9-11 and their families.  According to an article in the New York Times today, the Saudi government has threatened that in the event the law were to pass, they would be forced to sell $750 billion of treasury bonds and other assets in the USA before such items could be attached by American courts.

Let's take a look at this threat.  First of all, what would happen were the Saudis to sell three quarters of a trillion dollars of bonds?  According to the New York Federal Reserve Bank, daily trading in Treasury securities totals on average about $125 billion dollars.  That means that the market most likely could handle to Saudi bond sale unless the Saudis decided to dump all the bonds on the market at one time.  Over a month, the Saudis could sell out and the effect on the market would be substantial but not likely disastrous.  All those extra bonds for sale would lower prices for the bonds and raise rates.  Of course, the Federal Reserve could announce a new special batch of quantitative easing and buy many of the Saudi bonds.  That would limit any interest rise from the Saudi move.  Were the Saudis to dump all those bonds at one time, however, the price would plummet, but that would lose a fortune for the Saudis.  They might temporarily hurt the USA, but they would permanently damage themselves at the same time.

The departure of the Saudis from the American bond market would, of course, hurt if it were to cause other market participants to exit as well.  For example, were the Chinese and the Japanese (who together have three times more bonds than the Saudis) to dump bonds, the effect on interest rates could be severe.  Even the Federal Reserve might be hard pressed to keep a lid on such a move. 

The Saudis also say that they would dump other assets in the USA.  Those other assets are not identified.  Clearly, however, anything that the Saudis dump will see a major price decrease.  Maybe there will be some choice real estate parcels that will be put on the market in distressed sales.  That should benefit the buyers, not the Saudi sellers.

Of course, there is a solution to this mess.  The Saudis might make the magnanimous gesture of establishing a ten billion dollar fund to compensate those who were injured or killed during 9-11.  There would be no admission of guilt and no change to the law.  All there would be is some sort of compensation to the victims of the attack.  The fund could decide how to distribute the cash.  There would be no court involvement, no lawyers collecting fees, and no sales of treasury bonds. 

This Really Is Settled Science, But They Don't Care

Here are three important questions to ponder:

1.  Which is cleaner?
     a.  Producing electricity in coal burning plants.
     b.  Producing electricity in oil fired plants.
     c.  Producing electricity in natural gas fired plants.

2.  Which is cleaner?
     a.  Driving a car powered by gasoline.
     b.  Driving a car powered by natural gas.
     c.  Driving a car powered by a hybrid engine.
     d.  Driving a car powered by an electric engine.

3.  Which of these systems is not able in the next twenty years to produce sufficient energy to satisfy our nation's power needs.
     a,  Solar Power.
     b.  Wind Power.
     c.  Hydroelectric Power.
     d.  Natural Gas Power.

These are not difficult questions.  The answers are settled science to use the vernacular of the global warming crowd.  The cleanest way to produce electricity using fossil fuels is by burning natural gas.  It reduces particulate emissions compared to the other fuels and it reduces greenhouse gas emissions by at least half compared to the others.  The cleanest cars are also those powered by natural gas.  There is no competition between natural gas and any gasoline or diesel engine.  Electric cars themselves produce fewer emissions than the natural gas powered cars, but the electricity used to power the cars comes from a system which uses coal to produce the bulk of its power.  That makes them less clean than the natural gas cars.  Lastly, the only power source that could provide sufficient energy for the nation in the next two decades is natural gas.  Solar and Wind might someday become really efficient energy sources, but they are not there yet.  More important, one cannot get solar energy at night or when the weather does not cooperate.  Hydro power is already fully developed in the USA and it provides just a small percentage of the needed power.

Put all this together and it is clear that natural gas is an essential part of the future of America's energy needs.  So why is it that the left, including candidates like Hillary Clinton and Bernie Sanders are so opposed to fracking?  For those who don't know, fracking is a production method increase production of natural gas from wells.  It has been in use for over fifty years.  The imaginative combination of fracking and horizontal drilling, however, was the method used to start getting natural gas from shale fields in the USA.  It has brought the price of gas down from $14 to $2 per unit.  It has also made the USA into the world's largest producer of natural gas.  We also have such large reserves of the fuel that it could supply all of our energy needs for the next few centuries without problem. 

So let's summarize.  America could switch it's energy usage to very low cost domestic natural gas.  That would end our dependence on foreign oil.  Indeed, we have sufficient reserves of natural gas to export it in large amounts to places like Europe and East Asia where energy is in short supply.  That would give America markets for its products and would produce hundreds of thousands or millions of good jobs here in the USA.  It would also make it nearly impossible for Russia to threaten the Europeans with the cut off of their gas supplies.  It would undermine the countries like Iran that use oil revenues to support terrorists.  It would help raise the standard of living around the world by providing less expensive energy.  All of this switch to natural gas would greatly clean up the environment and would reduce carbon emissions in dramatic fashion.  Just the current switch to natural gas around the USA has led to our reducing our emissions by about 2% per year at a time when the rest of the world keeps increasing their emissions. Despite all this, the left wants to stop fracking.  The very people who talk non-stop about reducing carbon emissions are the same people who want to stop the best way of accomplishing that goal.

The next time someone starts to tell you about the perils of global warming, ask them about fracking and natural gas.  Watch them try to explain why they oppose the one thing that will bring major economic benefits to the USA and will accomplish their goal of reducing greenhouse gases.

When Does Success Become Failure?

There's reports today on the impending implosion of Obamacare.  All but one of the twenty-two insurance coops set up by the law have now failed or are scheduled to close.  The cost of these failures has been many billions of dollars for the nation's taxpayers.  Numerous insurance companies are pulling out of the exchanges and more are likely to follow suit for 2017.  Premiums are rising quickly.  Coverage is shrinking too as the huge deductibles get larger not smaller.  In short, what it all means is that consumers will have many fewer choices with worse coverage which will cost more.

The administration calls this a success.  In fact, the director of the program was recently quoted as pointing to the 12.7 million people who bought insurance through the exchanges as proof positive of the program's success.  I guess the best response to that claim is "huh????"  According to the low-ball estimates put forward by the Obama administration when the program was passed, 2016 was supposed to see twenty million people signed up for coverage on the exchanges.  Instead, there is only 60% of that number, but the director says this is proof of success.  Translating this all into English, the Obamacrats are saying, "the program has been a disaster, but we'll point to the numbers that demonstrate how bad it is and claim it to be a success.

Think about this.  It's roughly the same as someone going to Weight Watchers to lose thirty pounds, gaining five pounds after four months and then claiming success because they only gained a small amount of weight.  Obamacare is clearly a failure, and the sooner the Obamacrats admit this, the sooner something that works can be put in its place.

Meanwhile In Brazil.....

The president of Brazil is about to be impeached.  The Supreme Court of Brazil rejected a plea by the president's lawyer to stop the impeachment vote.  The vote in the Court was 8 to 2.  Clearly, it was the proper decision.  After all, the president wanted the court to declare any impeachment vote unconstitutional even though impeachment is specifically designated by that constitution as the way to remove the president.

So what will all this mean?  First of all, it seems pretty clear that the vote will be in favor of impeachment.  That will install the vice president in office as temporary president until, at least, the president is tried in the senate.  Given that there is little support remaining for the president, she is likely to be convicted.  That will install the current vice president as president for the rest of the term (until 2018).  It will also mean that Brazil will have a president will little popular support.  All the problems that have so undermined support for the president will still be there, but there will not be a political leader with the support to do anything about these problems.  It's not looking good for all those people in Sao Paulo and Rio.

To Boldly Go Where No Man Has Gone Before

I laughed this morning when I saw the big headline on Yahoo News.  It proclaimed that president Obama had a "Bold" initiative to promote competition.  The funny thing, of course, is that all that had happened is that Obama announced that he would be signing an executive order telling federal agencies to try to remove roadblocks to competition.  There was nothing "bold" about this move.  Most likely, it will not affect anything.  The roadblocks to competition coming from the federal government are not minor administrative items; they are major actions taken by the government like Obamacare, subsidies to big donors to Obama's campaigns, and the like.  Even a media outlet as biased as Yahoo News ought to know that.

About two hours later, I happened back to Yahoo News.  The word "Bold" had been removed from the headline.  Even inside the bubble, there are people who realize that it was a joke to call this move by Obama "bold".  I guess that even the most biased journalists in the media still have a limit to their spinning for the Democrats.

A Bit More Of The Sanders Lunacy

Simone Zimmerman is the director of the Bernie Sanders' campaign who is assigned to lead the effort by Sanders for "Jewish Outreach".  It's more than a little strange to think that the only nominally Jewish candidate for president needs to have a special group for Jewish outreach, but that's a minor point.  Much more instructive about Sanders is just who he picked to lead his effort to gain the votes of America's Jewish community.  Here's a recent post on social media by Simone Zimmerman:



Wow.  Let's forget the obvious idiocy of what Zimmerman has to say.  Imagine, she castigates the prime minister of Israel, home to more Jews than any other country, for "daring to insist that [he] legitimately represents even a fraction of the Jews in this world".  Let's see.  Roughly half of the world's Jews live in Israel.  Netanyahu is the duly elected head of the government.  To Zimmerman, however, that doesn't make Bibi a "legitimate representative" of even a fraction of the Jews in the world?  How delusional is that?

More important than the obvious lunacy of Zimmerman, is the judgment of the man who selected her to be the director of Jewish outreach for his campaign.  What's next?  Will Sanders hire David Duke to head an "Office of Negro Outreach" or maybe he can bring in Raul Castro's son to try to win over Florida's Cuban community.  Sanders clearly does not have good judgment. 

Feeling The Bern -- or -- Losing the Sanity

It's hard to imagine, but after watching Hillary Clinton debate Bernie Sanders tonight, I find myself agreeing with Hillary.  Agreeing with Hillary is, for me, cause for great consternation.  Nevertheless, when it comes to choosing between Hillary and Sanders, there seems to be no choice.  Bernie Sanders is so far out in left field that I wonder if he is even on the same planet as most of America.  The Sanders' solution to so many problems is either to mouth slogans without substance or just to say things that make no sense.  I mean Hillary is a total liar.  Just because she says something is no reason to think that she really believes it.  Indeed, from what Hillary says, there is no way to know what she would do if elected.  Sanders, on the other hand, seems to mean what he says, and that is even more troubling.  We're now finishing eight years of the Obama presidency when we've had a delusional person in the White House who was nevertheless limited by political realities.  Sanders would be a delusional person who is not so limited.

Sanders really is a danger to the country.