Monday, March 31, 2014

Gold, the Economy and Outlook

In 2013 the price of gold bullion lost 28 percent and closed near its low for the year. It was the first annual decline since 2000 and the worst since 1981. Gold ETFs experienced record redemptions, shrinking the funds 33 percent by year end, but they were the exception. Marcus Grubb, Managing Director of the World Gold Council, reported, “2013 has been a strong year for gold demand across sectors and geographies, with the exception of western ETF markets.” While investors were leaving ETFs, demand for gold jewelry, bars and coins was increasing, as were purchases by central banks. Globally, consumer demand increased 17 percent for gold jewelry and 28 percent for bars and coins.

The World Gold Council reported:
  • 2013 saw the largest volume increase in gold jewelry demand for 16 years.
  • Demand for gold bars and coins surged to an all-time high of 1,654.1 t (metric tonnes).
  • Annual demand for gold used in technology stabilized at 404.8t, from 407.5t in 2012.
  • Net purchases by central banks increased global official gold reserves by 368.6t., the fourth consecutive year of positive demand.
The gold markets in 2013 accelerated a trend in recent years of buyers' preference for physical possession of gold. Premiums for physical delivery of gold in Shanghai jumped to a staggering $34.82 per ounce. In India the premiums for physical delivery soared above $100 per ounce. At the Comex, total gold available for delivery was drawn down 80 percent by year's end. In the spring of 2013, ABN-AMRO, the largest Dutch bank, announced it would be unable to deliver physical gold and would instead offer paper gold claims to customers. On April 26, the Chinese Gold & Silver Society in Hong Kong reported it had sold out all its inventory and placed orders in Switzerland four times larger than normal in response to demand. 

Jewelry is the largest single category of global demand for gold, accounting for 59 percent. The largest market is China, with India in second place, followed by the U.S. Jewelry demand in 2013 in China increased to 669t from 519t in 2012, and in India to 613t from 552t.

The WGC reports: “Consumers remain key drivers in the demand for gold...Across the world there were large increases for gold in both emerging and developed markets.” Demand for bars and coins in Turkey was up 113%, Thailand up 75%, China up 38%, Indonesia up 36%, and the U.S. up 26%. (The China Gold Association reported consumer demand increased 41%, not 38%.) According to Thomson Reuters GFMS, a precious-metals consulting firm, Chinese exchanges accounted for 22% of gold traded on exchanges in 2013, more than double the 10% of 2012.

Due to the popularity of gold in Asia, the following banks—most of them very large—opened gold vaults in Singapore or Shanghai in 2013: Deutsche Bank AG, UBS AG, Barclays PLC, and Australia & New Zealand Banking Group Ltd., Also, Metalor Technologies SA opened its first gold refinery in Singapore in 2013.

Technology represents only about seven percent of world gold demand, but this actually accounted for more gold in 2013 than purchases by all the world's central banks (404.8t compared to 368.6t). Moreover, this field could grow very rapidly. Historically the principal industrial use for gold was in dentistry, but this has been surpassed by use in the fast-growing electronics industry because of the metal's excellent conductivity and resistance to corrosion. Those characteristics also makes it the metal of choice for high-technology components in complex and challenging environments, such as the space industry and fuel cells. Gold's catalytic properties are also beginning to create demand in the automotive sector, in the chemical industry, and in medicine because of the metal's excellent bio-compatibility.

Platinum, palladium and rhodium are commonly used in catalytic converters in automobiles. Now a stable, effective and commercially viable catalyst can be obtained by combining gold, palladium and platinum. I don't think anyone expects the automobile industry to decline or reduce its use of catalytic converters.

The whole field of nanotechnology is just opening up. A growing number of patents relating to gold nanotechnology suggests many new catalytic applications for medicine and the environment will be developed in coming years.

Gold can be used for precise delivery of drugs to targets within the human body and to create conducting plastics and specialized pigments. Gold enables certain tests to reliably detect malaria and many other diseases. These tests can be used in developing countries without expensive equipment or supply chains. In Rapid Diagnostic Tests (RDTs), gold nanoparticles drive a color change on a test strip containing a single drop of blood, indicating whether a disease is present. According to the World Health Organization, hundreds of millions of RDTs have already been distributed globally.

Gold nanotechnology research is developing more efficient and accurate ways of delivering cancer treatments. Chemotherapy now widely used in treating cancer can damage healthy cells. Gold nanoparticles can target and destroy cancer cells while leaving healthy tissues largely unaffected. It's hard to believe this use of gold will not grow significantly in the future.

Gold's catalytic properties can be used effectively to reduce hazardous emissions to the air as well as remove pollutants from groundwater. A gold and palladium catalyst removes chlorinated compounds.

All the new uses for gold will not diminish the role of gold as a monetary metal, merely add to its value and demand. Gold's monetary importance will continue to be determined fundamentally by national and international economic factors. Of utmost significance in this regard is the misguided continuation of the U.S. policies of government spending that balloons the national debt and taxation that stymies economic growth.

The promises that Barrack Obama made to get himself elected have proven false, are counter to logic and the lessons of history, and have left this country with a bleak future. It is obvious that the U.S. can never pay all its obligations. Social Security, Medicaid and Medicare are going bankrupt, but Obama hasn't even tried to do anything about them. Instead he proposes more spending—which, together with past obligations to spend more in the future—caused the problem in the first place. He simply made it worse—much worse—and now proposes to do more of the same. The feds spent $2.98 trillion in 2008, but Obama now proposes to spend almost a trillion dollars more ($3.9 trillion) in his budget for the fiscal year beginning October 1. Spending would rise by another $1 trillion by 2020, much of it fueled by the exploding costs of Obamacare, and would reach an astonishing $6 trillion by 2024. That won't happen. A complete financial collapse will occur long before then.

It was claimed Obama's economic recovery program of 2009 would produce 4.2% average growth, based on recoveries from previous recessions. But the problem was, “the Obama program did not promote growth, it impeded it,” according to Gramm and Solon. Recovery averaged just 2.2%, less than half the norm for postwar recoveries. Worse, the Congressional Budget Office now says our long-term growth has been permanently weakened, thereby reducing our growth rate to 2.2% for the next decade! Thus, despite all the hoopla about the economy finally turning around and improving, the CBO predicts the next decade will have the same growth rate, 2.2%, as the unimpressive period 2011-2013.

Another recent CBO report shows how slower growth is bleeding the federal government of trillions in revenue. CBO's 10-year projection shows $4.9 trillion have already been lost due to slower growth since the recession began, and the losses are accelerating.

Obama has proposed about $1 trillion in new taxes over the next ten years, almost all from higher earners. He has learned nothing from the tax cuts by presidents Ronald Reagan and John Kennedy. In both cases, reductions in tax rates resulted in increased tax revenue for the government. When Reagan became president, he reduced the top marginal income tax rate to 28%, from 70%, but when he left office, tax revenues had almost doubled. During this same period, the inflation rate fell to 4% from 13%, unemployment dropped to 5.3% from 7.5%, 17 million new jobs were created, and the longest peacetime boon in our history was underway. When Reagan took office in 1981, the top one percent of income earners paid 17.58% of all federal income taxes. Twenty-five years later, in 2005, that one percent paid 39.38% of all income taxes despite the much lower rate. In the 1960s President Kennedy cut the highest income tax rate to 70% from 91% with a similar result. Obama's tax ideas are an ideological fantasy out of touch with historical evidence.

Presidents Harding and Coolidge cut federal income taxes several times throughout the 1920s, sharply lowering the top rate in steps to 25% from 73%. As the top tax rates were cut, tax revenues soared, as did the share paid by the rich. Those earning over $100,000 paid 29.9% of the total in 1920, 48.8% in 1925, and 62.2% in 1929. The share of overall taxes paid by top one percent rose from about one-third in the early 1920s to two-thirds in 1928. All this means nothing to Obama because in his view Marxist ideology trumps reality.

Pursuing Karl Marx's ideology, Obama seeks economic equality through redistribution of wealth. He has declared economic inequality is the “defining challenge of our time...That’s why I ran for president....It drives everything I do in this office.” That's why he pitches his soak-the-rich tax proposals in the Marxist terms of class warfare and the rich as enemies of the people, impediments to achieving his dream of socialism's equality.

The U.S. economy is in far worse shape than is generally acknowledged. Now in Obama's fifth year as president, the labor participation rate is the lowest in 35 years. His expensive economic stimulus and jobs programs have failed. Fifty-seven months after the official end of the Great Recession, fewer Americans have jobs than in December 2007. Furthermore, the so-called recovery has been characterized by downward mobility.  During the recession, 60% of job losses were in the middle pay range, 21% were lower.  In the recovery, only 22% of new jobs were in the middle range while 58% were in the low end of the scale.
Home sales fell again in February, to the lowest level since July. They declined in six of the last seven months.

Job creation rose in February, which was expected after the poor number in January due to extreme winter weather in parts of the U.S. Even so, the February number of 175,000 new jobs was below the prior 12-month average of 189,000. Furthermore, the average work week (now 34.2 hours) has been declining, resulting in the equivalent net loss of 100,000 jobs since September. This cannot be explained by harsh winter weather because parts of the West, Midwest and South experienced milder than normal weather, and the numbers were already seasonally adjusted. Besides, the work week decline began before winter set in, with declines in hours in September and October.

The unemployment rate is actually about 13%, roughly twice the reported rate, if you include people “marginally attached” to the workforce. At the end of 2013 there were 27.3 million part-time jobs, 18% of the workforce. The reported unemployment rate is deceptive in that it omits those who are not employed but have stopped looking for work.

Government spending has not made Americans richer. The median net worth of American adults in now one of the lowest among developed nations according to Credit Suisse Global Wealth Databook. The U.S. figure of $45,000 is less than Australia's $220,000, France's $142,000m—and even Greece's $54,000. The net worth of almost a third of American adults is less than $10,000.

The Federal Reserve has been accommodative of Obama's spending by providing whatever money is needed by simply creating more of it. There is no limit on the amount it can create because that money is backed by nothing; it is fiat money, paper not backed by gold or any material value. As a result of the Bretton Woods conference in 1944, the U.S. dollar became the world's reserve currency. Only the dollar was directly pegged to gold, and other countries were required to maintain fixed exchange rates of their currencies to the dollar. The U.S. agreed to maintain dollar-gold convertibility for foreign central banks. President Nixon ended that convertibility in 1971, after which there has been no limit on the amount of money the Fed can create.

As a result, the U.S. began producing enormous trade deficits. Other countries would send us TV sets, washing machines, refrigerators, cameras, tools and compact fluorescent light bulbs, and we would send them more paper dollars. They would send us clothes, iphones, computers, shoes, toasters, tires and just about everything else, and we would pay for them with fiat dollars created by the Federal Reserve. Those dollars would be recycled back to the U.S. by foreign governments using their accumulating dollars to buy U.S. treasury securities—in effect, the U.S. was borrowing back the dollars, which were then used for more spending and increasing the federal debt.

Economy didn't matter any more. The system facilitated any amount of uneconomic expenditures by passing the cost to future generations by simply adding it to their tab: a growing national debt. It became the ultimate way for politicians to redistribute wealth: steal it from future generations who have no vote in the matter, and distribute it now to voters who will put you in office or keep you there.

The system can not continue indefinitely. Nobody can ever get out of debt by borrowing successively larger sums to cover successively larger debts. Neither can governments. Eventually debts are repaid or the borrower goes bankrupt. According to the International Monetary Fund, meeting America's obligations will require an immediate and permanent 35% increase in all taxes and a 35% cut in all government benefits. That's not going to happen. It can't happen. Instead America will undergo a financial collapse. By 2025, entitlement spending and debt payments are projected to consume all federal revenue. And having the Fed print vastly more money to pay our obligations will not solve the problem; it will merely bring inflation that destroys the value of the dollar.

For five years the Fed has been engaging in “quantitative easing”—printing money—at rates as high has $85 billion per month—over $1 trillion per year. Recently that has been reduced to $65 billion per month. The Fed is not the only central bank engaging in quantitative easing. Central banks all over the world have been doing so to try to stimulate their economies and placate voters that they are “doing something.” The Fed, the European Central bank and the central banks of Japan, Switzerland and China have printed well over $10 trillion since 2007, more than tripling the size of their combined balance sheets.

Japan was the latest of the major central banks to reach its “Havenstein moment,” a moment already reached by the other central banks just mentioned. It is the moment when the person in charge of the money supply decides that massive printing of money is better than the alternative, that it is preferable to deflation. Rudolf Havenstein was the head of German Central Bank (Reichsbank) from 1908 to 1923 and presided over the great hyperinflation in Germany. The newly elected government in Japan stated in May 2013 that it aimed to improve the economy with 2 percent inflation by doubling the money supply. It said it will engage in “unlimited” or “open ended” printing of money to achieve that goal.

With all the fiat money being printed by central banks all over the world, it should be no surprise that people all over the world have been exchanging it for gold. They see it as more likely to retain value than paper currencies, which they fear could result in either uncontrollable inflation or a bursting of the monetary credit/debt bubble and catastrophic collapse.

The latter is what happened in 1929, following the credit expansion of the money supply in the 1920s. The excess credit found an outlet in the stock market. A similar expansion of credit in the mortgage/housing industry created a bubble that burst bringing on the Great Recession of recent years. Will the huge amount of money the Fed has been creating since 2007 find a similar outlet in those industries? The stock market has been making all-time highs, and the Fed's policy of near zero interest rates has driven money from safer investments into stocks in search of higher returns. And while the Fed was buying $85 billion per month in bonds, $40 billion of that was in mortgage backed securities in an effort to goose home buying and employment in home building. So the stock market and the housing industry may be “bubble” candidates.

There are, or course, other possibilities which could upset the precarious financial position the United States has created for itself with its spending and debt problems. The most intriguing relates to the increasing demand of gold buyers to take physical delivery of gold.

As we noted, the amount of gold eligible for delivery on Comex futures contracts was drawn down 80 percent in 2013. The Comex handles 82% of all gold futures trading, but only a very tiny percentage take delivery; it is a basically an exchange for paper trading. Physical deliveries of gold on the London Bullion Market are about nine time greater than on the Comex, but here, too, paper trading predominates.

The Shanghai Gold Exchange is the one for physical delivery. Its physical deliveries have been almost equal to world gold production. In 2013 SGE delivered 2,197 tons of gold, up 92.9% from 1,139 tonnes in 2012. In January 2014, it delivered a record 247 tons, 43% greater than the monthly record set in 2013, and greater than monthly global production of gold in the entire world.

In a previous posting we noted that Germany has had difficulty since October 2012 obtaining return of gold it owns that is stored at the New York Federal Reserve Bank. That same posting noted Alan Greenspan's testimony before the House Banking Committee, “Central banks stand ready to lease gold in increasing quantities, should the price of gold rise.” The question immediately arises whether, in fact, the Fed has leased, hypothecated or perhaps even sold gold at the Fed stored for Germany and other countries. The Fed agreed to return 300 of the 1500 tons of gold it stores for Germany but said this would require 7 years. Why so long? If the Fed does not have all the gold, it would have to buy it, at market prices, to cover shortages in its accounts; if it has the gold but has leased it or encumbered it in some other way, it would need time to unwind those commitments or let them expire. Further suspicion is aroused by the fact that in the entire year of 2013 the Fed sent a mere 5 tons of gold back to Germany.
With the growing demand from consumers worldwide for physical possession of gold, and with Shanghai deliveries consuming effectively all of mine production, the market is very tight. Suspicions have arisen that increased demand for physical delivery for futures contracts at the Comex in particular (and perhaps in London) will exceed the exchange warehouse supplies of deliverable gold. 

Paul Craig Roberts, a former assistant secretary of the U.S. treasury, says, “One day the Chinese will buy 100 tons of gold, and we won’t be able to make delivery.  That would crash the system.  It would just pop.”

In that case the exchange would be forced to settle the futures contracts for cash, which it is legally allowed to do. But the consequences to the dollar will be enormous. There will be a decoupling between paper gold and the physical metal. I believe metal will win. This means the gold price will be determined by trading in the metal itself, not in paper transactions that are subject to manipulation as explained by Alan Greenspan in order to give false value to a fiat currency by driving down the gold price.

There will be a tremendous loss of confidence in the dollar. The workings of the Fed will be exposed, and more confidence will be lost, not just in the Fed and the dollar as a currency—but in its role as the world's reserve currency.

As I explained in my latest book, The Impending Monetary Revolution, the Dollar and Gold, events have been chipping away at the dollar's reserve status for some time. In 2011 China and Russia agreed to trade with each other in rubles and yuan, rather than dollars. China has bilateral currency swap agreements with at least 13 other countries. China has trade and investment agreements with Singapore and Korea as well as faraway countries such as Belarus and Iceland. Japan agreed to hold some of its foreign currency reserves in yuan and to issue yuan-denominated bonds in mainland China. Indonesia did the same thing. I even speculated that we may see petro-yuan replace petrodollars in the oil market.

Recently the BRIC nations (Brazil, Russia, India and China) have agreed that trade among them will no longer be in dollars. These are all large countries with sizable populations and all, except possibly Russia, have growing economies.

Now let's look at possible effects of the Ukrainian situation. Russia supplies gas not only to Ukraine but to many countries in the European Union via pipelines through Ukraine. It supplies 30% of Europe's natural gas. For several countries, it is their sole source of supply, and alternative sources of supply are not available. The government in Ukraine is on the verge of bankruptcy and will need international financial aid to survive. The IMF and various nations are trying to arrange this. But most of the money Ukraine owes it owes to Russia, and if those bills aren't paid, Russia can shut of the country's imports of gas. (It has done so in the past.) Any funds that are given to Ukraine will quickly end up going to Russia for past debts.

As a result of promises made between the U.S. and Saudi Arabia back in the 1970s, the Saudis agreed that all energy contracts would be settled in dollars. The petrodollar has been a major factor in maintaining the role of the U.S. dollar as the world's reserve currency. Europeans pay for their gas from Russia with dollars.
U.S. and various other nations have imposed economic sanctions on Russia over Crimea and may impose more. Will sanctions prevent European nations from buying oil and gas from Russia? Of course not. It is in everyone's interest to keep Russian gas flowing through the pipelines.

It is unlikely sanctions will alter Putin's behavior, but if they become too onerous, they invite a devastating retaliation from him. What if he tells those gas-buying countries, “OK, you can pay for Russian gas in any currency other than dollars”? That would be the end of the dollar as the world's reserve currency. The exchange rate of the dollar would plummet, the price of gold would skyrocket, and the Fed would be powerless to defend the dollar against it as Greenspan envisioned. The effect in the U.S. would be catastrophic, particularly on the New York stock exchange.

Friday, February 28, 2014

It's the Sun, Stupid

“Who are you going to believe, me or your own eyes?”—Groucho Marx.
Who are you going to believe, those claiming global warming or the temperature records you can see with your own eyes?

Marx's line (actually spoken by Chico dressed up as Groucho) was intended to be humorous because it is so preposterous. The second line—no less preposterous—is, in essence, put forth by the International Panel on Climate Change (IPCC) and other human-caused global warming alarmists as serious, because it is intended to make people believe it is not preposterous but scientific. It would be humorous if the consequences were not so costly. The misdirection of public policy engendered by fears of overheating the planet is not only financially wasteful but detrimental to the environment and to human rights and freedom.

The scare that humans a​re creating catastrophic warming of the planet is based on computer models purportedly representing the real world. That's how it was possible to sell the idea to the public. The models, however, were never able to be verified by historical observational data, and their key element—that carbon dioxide causes dangerous global warming—has been shown to be baseless by thousands of peer-reviewed scientific papers in professional journals. The latest Nongovernmental International Panel on Climate Change (NIPCC) report references almost 5,000 of these. They were ignored by the IPCC and most of the news media and politicians who fanned the hysteria over global warming.

But time continues to prove the climate alarmists are wrong. The earth has shown no warming for 17 years despite a continuous increase in carbon emissions. In the fifteen years prior to 2013, carbon dioxide emissions grew from 1.8% per year to 2.2%. From 1998 through 2012, humans produced 461 billion tonnes of carbon dioxide, compared to only 302 billion tonnes in the prior fifteen years, 1972 through 1987. The global-warming models have been an utter failure, projecting a scenario exactly opposite to what occurred in the real world. When a theory contradicts reality, it is the theory that is wrong.

The sun is the ultimate source of all the energy on Earth; its rays heat the planet and drive the churning motions of its atmosphere,” explains retired meteorologist Joseph D'Aleo. Everyone knows the sun's heating of the earth and atmosphere is uneven. We have all witnessed changes in the sun's heat we receive throughout the day, that it is warmest in midday when the sun is directly overhead; and as the sun moves across the sky, new volumes of air are exposed to its heating while others are left behind. This uneven heating is the basis for wind currents. A similar process takes place in the oceans, creating ocean currents. According to NASA, “uneven heating from the sun drives the air and ocean currents that produce the Earth's climate”

The Hadley circulation is an atmospheric movement of air between the equator and the poles.
This flow of air occurs because the sun heats air at the Earth’s surface near the equator. The warm air rises, creating a band of low pressure at the equator.  Once the rising air reaches the top of the troposphere at approximately 10-15 kilometers above the Earth’s surface, the air flows toward the north and south poles. The Hadley cell eventually returns air to the surface of the Earth in the subtropics.

The large planets Jupiter and Saturn exert a gravitational pull on the earth that makes the earth's orbit around the sun elliptical. These planets align to pull the earth away from the sun to the maximum distance of its orbit every 100,000 years. The earth's 3 degree change in its inclination to its rotational axis has a 41,000 year cycle. And the precession of its rotation, which exposes one pole or the other to more sunlight, has a 22,000 year cycle. There is also a climate cycle of 135 million years that corresponds to earth passing through the arms of the Milky Way. The Milky Way galaxy, which is 100,000 light years across and 10,000 light years thick, has six arms spiraling out from its center like a pinwheel.

While orbital changes produce long-term climate cycles by varying the distance of the earth from the sun, shorter cycles are determined by changes in the surface of the sun itself. The sun's radiation is not uniform but varied by disturbances on the surface of the sun, called “sunspots.” Magnetic fields rip through the sun's surface, producing holes in the sun's corona, solar flares, coronal mass ejections, and changes in the solar wind, the stream of charged particles emanating from the sun. The solar wind, by modulating the galactic cosmic rays which reach the earth, determines both the formation of clouds and the carbon dioxide level in the earth's atmosphere—which has nothing to do with emissions from factories or automobiles! That's why adding 461 billion tonnes of carbon dioxide to the atmosphere did nothing to increase the global temperature. As Reid Bryson, founding chairman of the Department of Meteorology at the University of Wisconsin, put it, “You can go outside and spit and have the same effect as a doubling of carbon dioxide.”

Sunspots have been observed for millennia, first in China and with a telescope for the first time by Galileo in 1610. We now have a 400-year record of sunspot cycle observations, from which we can see a cycle length of 11 years. Combining this fact with the discovery of a strong correlation between solar activity and radioactive carbon 14 in tree rings, it has been possible to backdate sunspot cycles for a thousand years, back to the Oort Minimum in 1010.

After about 210 years, sunspot cycles “crash” or almost entirely die out, and the earth can cool dramatically. These unusually cold periods last several decades. Of greatest concern to us is the Maunder Minimum, which ran from 1645 to 1715. Figure 1 shows the paucity of sunspots during this time. Some years had no sunspots at all. The astronomer Sporer reported only 50 sunspots during a 30-year period, compared to 40,000, to 50,000 typical for that length of time.

Figure 1, Source

Since the Maunder Minimum, a less extreme but still significantly below-average period of cooler temperatures occurred during the Dalton Minimum (1790 to 1830), also shown on the graph.

Changes in the number of sunspots cause only slight changes in the sun's radiation, but these changes are amplified many fold by the radiation's interaction with 1) ozone in the upper stratosphere, and 2) clouds in the lower troposphere. The sun's energy output that reaches earth varies only slightly (about 0.1 percent) throughout most 11-year solar cycles. However, in ultra-long cycles (since the Maunder Minimum) the irradiance changes are estimated to be as high as 0.4%. 
Figure 2, Source

In 2008 the minimum for Solar Cycle 23, shown in Figure 2, had 266 days with no sunspots. This is considered a very deep solar minimum. You can check out pictures of sunspots—or their absence—day after day for recent years at
Figure 3, Source

We are currently over five years into Solar Cycle 24. We should be at the maximum for this cycle, but in Figure 3 the smoothed sunspot number maximum for this cycle is only about 67, reached in the summer of 2013. That's about half of the maximum in Cycle 23, which peaked in early 2000, and less than half the maxima of Cycles 19, 21 and 22 shown in Figure 2. This is a very ominous picture: it portends an extremely weak Cycle 25—meaning much more cold weather is ahead, not global warming.

At least as far back as 2007—before Cycle 23 had bottomed—a Russian solar physicist, predicted what we are seeing now. Professor Habibullo Abdussamatov, head of the Pulkovo Observatory in Russia, noting that solar irradiance had already begun to fall, said a slow decline in temperatures would begin as early as 2012-2015 and lead to a deep freeze in 2050-2060 that will last about fifty years. He said the warming we've been witnessing was caused by increased solar irradiance, not CO2 emissions:

It is no secret that increased solar irradiance warms Earth's oceans, which then triggers the emission of large amounts of carbon dioxide into the atmosphere (italics added.) So the common view that man's industrial activity is a deciding factor in global warming has emerged from a misinterpretation of cause and effect relations.

Further, debunking the very notion of a greenhouse effect, the celebrated scientist said:

Ascribing 'greenhouse' effect properties to the Earth's atmosphere is not scientifically substantiated. Heated greenhouse gases, which become lighter as a result of expansion, ascend to the atmosphere only to give the absorbed heat away.

In a paper published in 2009, Abdussamatov wrote that there have been 18 Maunder-type minima of deep temperature drops in the last 7500 years, “which without fail follow after natural warming.”
And, correspondingly,

while in the periods of high sunspot maxima, there have been periods of global warming. Such changes in the climate of the Earth could be caused only by lasting and significant changes in the Sun, because there was absolutely no industrial effect on nature in those times.

We would expect the onset of the phase of deep minimum in the present 200-year cycle of cyclic activity of the Sun to occur at the beginning of solar cycle 27; i.e., tentatively in the year 2042 plus or minus 11 years, and potentially lasting 45-65 years.

Regarding analyses of ice cores in Greenland and Antarctica, Abdussamatov wrote:

It has been seen that substantial increases in the concentration of carbon dioxide in the atmosphere and global climate warming have occurred cyclically, even when there was as yet no industrial action on nature. It has also been established that periodic, very substantial increases in the carbon dioxide content in the atmosphere for a period of 420 thousand years never preceded warming, but, on the contrary, always followed an increase in the temperature with a delay of 200-800 years, i.e., they were its consequence (italics and boldface added.)

In an update in October 2013, Abdussamatov warned, “We are now on an unavoidable advance towards a deep temperature drop.”

Abdussamatov's conclusions about global cooling came from his studies of the sun, but another scientist came to a similar conclusion by studying ocean currents. Don Easterbrook, a geology professor and climate scientist, correctly predicted back in 2000 that the earth was entering a cooling phase. He made his prediction by tracing a “consistently recurring pattern” of alternating warm and cool ocean cycles known as the Pacific Decadal Oscillation (PDO). He found this cycle recurring every 25 to 30 years all the way back to 1480. Projecting this forward, he concluded “the PDO said we're due for a change” and that happened. No warming now for 17 years.

Asked by CNSNews about the IPCC, Easterbrook said they “ignored all the data I gave them...every time I say something about the projection of climate into the future based on real data, they come out with some modeled data that says this is just a temporary pause...I am absolutely dumfounded by the totally absurd and stupid things said every day by people who are purportedly scientists that make no sense whatsoever....These people are simply ignoring real-time data that has been substantiated and can be replicated and are simply making stuff up.” He said they are driven by money and power and added, “What they're doing in the U.S. is using CO2 to impose all kinds of restrictions to push a socialist government.”

Is it true that the global-warming issue has become a front for a political ideology? Has it become a tool for increasing government control over our lives, not just in the U.S. but all over the globe? In 2010 a leading member of the United Nation's IPCC said, “One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore.” Now it's not about saving the environment but about redistributing wealth, said Ottmar Edenhofer, a co-chair of the IPCC's Working Group III and a lead author of the IPCC's Fourth Assessment Report (2007). “We redistribute the world's wealth by climate policy.”

"Developed countries have basically expropriated the atmosphere of the world community" said Edenhofer,” and so they must have their wealth expropriated and redistributed to the victims of their alleged crimes. U.N. warm-mongers are seeking to impose a global climate reparations tax on everything from airline flights and international shipping to fuel and financial transactions....Given this administration's willingness to compromise American sovereignty, we could soon see Americans taxed to fund a global scam—the ultimate form of taxation without representation.

Edenhofer told a German news outlet (NZZ AM Sonntag ): “Basically, it's a big mistake to discuss climate policy separately from the major themes of globalization. The climate summit in Cancun at the end of the month is not a climate conference but one of the largest economic conferences since the Second World War.”

The Cancun agreement set up a “Green Climate Fund” to administer assistance to poor nations suffering from floods and drought due to global warming. The European Union, Japan and the United States have led pledges of $100 billion per year for poor nations up to 2020, plus $30 billion in immediate assistance.

The Cancun agreement says it “recognizes that deep cuts in global greenhouse gas emissions are required according to science” and calls for “urgent action” to cap temperature rises. At the Cancun conference, UN Secretary-General Ban Ki-moon warned, “Nature will not wait....Science warns that the window of opportunity to prevent uncontrolled climate change will soon close.” That is funnier than Groucho Marx. (Well no, not really—but just as preposterous.)

The IPCC regularly submits its reports to its Expert Reviewers Panel. As you might expect, most of its appointments to this panel have been supporters of global warming. A few nonbelievers have been included to give the appearance of balance, but their comments and questions have been routinely ignored as the IPCC focuses on what it claims to be the “consensus” view.

Only one person has been been on every IPCC Expert Reviewers Panel, dating back to 1990. That man is Dr. Vincent Gray of New Zealand. He submitted a very large number of comments to IPCC drafts, including 1,898 for the Final Draft of the 2007 report. Here are some of his comments from a letter he wrote on March 9, 2008:

Over the period I have made an intensive study of the data and procedures used by IPCC contributors throughout their whole study range....Right from the beginning I have had difficulty with this procedure. Penetrating questions often ended without any answer. Comments on the IPCC drafts were rejected without explanation, and attempts to pursue the matter were frustrated indefinitely....

I have been forced to the conclusion that for significant parts of the work of the IPCC, the data collection and scientific methods employed are unsound. Resistance to all efforts to try and discuss or rectify these problems has convinced me that normal scientific procedures are not only rejected by the IPCC, but that this practice is endemic, and was part of the organization from the very beginning. I therefore consider that the IPCC is fundamentally corrupt. The only "reform" I could envisage, would be its abolition....

The models are so full of inaccurately known parameters and equations that it is comparatively easy to  "fudge" an approximate fit to the few climate sequences that might respond....

By drawing attention to these obvious facts I have now found myself persona non grata with most of my local professional associations, Surely, I am questioning the integrity of these award-winning scientific leaders of the local science establishment. When you get down to it, that is what is involved....

Yes, we have to face it. The whole process is a swindle. The IPCC from the beginning was given the license to use whatever methods would be necessary to provide "evidence" that carbon dioxide increases are harming the climate, even if this involves manipulation of dubious data and using peoples' opinions instead of science to "prove" their case.

The disappearance of the IPCC in disgrace is not only desirable but inevitable....Sooner or later all of us will come to realize that this organization, and the thinking behind it, is phony.  Unfortunately severe economic damage is likely to be done by its influence before that happens.

Vaclav Klaus, former president of the Czech Republic and a university professor before he became president, is the author of a book on global warming and has spoken often on the subject. He says , “What frustrates me is the feeling that everything has already been said and published, that all rational argument has been used, yet it does not help.”

It does not help because global warming alarmism is not based on rational argument. It is not based on science. It is not based on reality. It is based on political ideology. If rational argument doesn't fit, then phony arguments must be invented: the spread of malaria, the loss of biological diversity, oceans flooding, polar bears disappearing, Himalayan glaciers vanishing, etc. If global warming does not fit the observable temperature measurements, then a new “reality” must be invented to fit the ideology: actual temperature records must be altered or dismissed—hundreds of temperature-reporting stations in colder areas worldwide were eliminated from the global network so the average temperature is higher than when those stations were included link. Presto! Global warming. Ditto for carbon dioxide measurements: 90,000 CO2 measurements in 175 research papers were dismissed because they showed higher CO2 levels than desired, and various other studies were selectively edited to eliminate "uncooperative" measurements while claiming the cherry-picked remaining ones showed global warming link. The global warming advocates are not disturbed by all this because, in their view, ideology trumps reality!

Patrick Moore, a co-founder and director of Greenpeace, resigned because of its “trend toward abandoning scientific objectivity in favor of political agendas.” After the failure of communism, he says, there was little public support for collectivist ideology. In his view a “reason environmental extremism emerged was because world communism failed, the [Berlin] wall came down, and a lot of peaceniks and political activists moved into the environmental movement bringing their neo-Marxism with them and learned to use green language in a very clever way to cloak agendas that actually have more to do with anti-capitalism and anti-globalism than they do anything with ecology or science.”

“I think if we don't overthrow capitalism, we don't have a chance of saving the world ecologically,” said Judi Bari, principal organizer of Earth First!

NASA Scientist James Hansen—notorious for his many inexplicable “corrections” to temperature measurements—virtually invented global-warming alarmism with his widely publicized testimony before the U.S. Senate in 1988 that he was 99% sure greenhouse warming was already underway. He revealed a passionate hatred of capitalism and industrial development in an impassioned e-mail in 2007 denouncing the attention paid to errors in NASA temperature data: “The deceit behind the attempts to discredit evidence of climate change...has a clear purpose: to confuse the public about the status of knowledge of global climate change, thus delaying effective action to mitigate climate change. The danger is that delay will cause tipping points to be passed, such that large climate impacts become inevitable...[T]he ones who will live in infamy if we pass the tipping points, are the captains of industry, CEOs in fossil fuel companies such as EXXON/Mobil, automobile manufacturers, utilities, all of the leaders who have placed short-term profit above the fate of the planet and the well-being of our children.”

On June 23, 2008, exactly twenty years to the day from his momentous Senate testimony, Hansen appeared before the House Select Committee on Energy Independence and Global Warming. There he conjured up images of the Nuremberg trials of Nazi war criminals by claiming the CEOs of fossil fuel energy companies “should be tried for high crimes against humanity and nature.” See

Klaus states (link link link): "We succeeded in getting rid of communism, but along with many others, we erroneously assumed that attempts to suppress freedom, and to centrally organize, mastermind, and control society and the economy, were matters of the past, an almost-forgotten relic. Unfortunately, those centralizing urges are still with us....

“Environmentalism only pretends to deal with environmental protection. Behind their people and nature friendly terminology, the adherents of environmentalism make ambitious attempts to radically reorganize and change the world, human society, our behavior and our values....They don’t care about resources or poverty or pollution. They hate us, the humans. They consider us dangerous and sinful creatures who must be controlled by them. I used to live in a similar world called communism. And I know it led to the worst environmental damage the world has ever experienced....

“The followers of the environmentalist ideology, however, keep presenting us with various catastrophic scenarios with the intention of persuading us to implement their ideas. That is not only unfair but also extremely dangerous. Even more dangerous, in my view, is the quasi-scientific guise that their oft-refuted forecasts have taken on....Their recommendations would take us back to an era of statism and restricted freedom....The ideology will be different. Its essence will, nevertheless, be identical—the attractive, pathetic, at first sight noble idea that transcends the individual in the name of the common good, and the enormous self-confidence on the side of the proponents about their right to sacrifice the man and his freedom in order to make this idea reality.... We have to restart the discussion about the very nature of government and about the relationship between the individual and society....It is not about climatology. It is about freedom.”

Since 1993, the U.S. federal government has spent $165 billion on climate change, $22.6 billion of it in fiscal year 2013. This is not merely a total waste but propagates waves of additional wasting throughout the economy. These are far more expensive than that $165 billion. Energy is the lifeblood of the economy. When government, because of fears of carbon dioxide emissions, (1) prohibits new coal-fired power plants from being built, (2) issues new EPA regulations on COfor existing coal-fired power plants that puts them out of business, (3) impedes the development of shale gas, or (4) refuses to license oil pipelines—like Keystone—the price of electricity goes up. Compulsory inefficiency is a waste. It is a cost that should and could be avoided, and it is passed all down the line in products for industry as well as consumers. Furthermore, it is added to by every processor, wholesaler, retailer, or distributor since their energy costs are higher, too.

In addition, when government subsidizes solar and wind projects—the most expensive and least reliable forms of energy—to substitute for fossil fuels, it is a further waste. Subsidies do not make alternative energies economic, they merely transfer their high cost to others. Taxpayers now and in future generations are stuck with the continually rising federal debt for these and thousands of other government expenditures.

The federal debt, now at $17 trillion, is equal to the U.S. GDP (gross domestic product.) That debt does not include future costs of Social Security, Medicare and Medicaid, which amount to $55 trillion, for a total of $72 trillion. The GDP of the entire world, including the U.S., is estimated at $72 trillion. Thus the U.S. is already obligated to pay an amount equal to what entire world produces.

There is no way the U.S. can repay what it has already borrowed. Still, the government continues to spend more and borrow more. The U.S. is in a unique position. The Bretton Woods agreement in 1944 made the dollar the world's reserve currency. As a result, the U.S. is the only country in the world that can pay its debts by simply printing more of its own money. That is what the Federal Reserve has been doing, more aggressively than ever in recent years. In his first term of office, Obama added as much to the national debt as all the presidents from George Washington through George W. Bush combined. In the fifteen months following collapse of the housing/mortgage bubble in 2008, the Fed created more money than in all the years combined since 1913 when it was founded.

The monetary front is quiet for the moment, but the problems have not been solved. The recent U.S. government partial shutdown and furor over increasing the debt ceiling accomplished nothing. The can was merely kicked a little further down the road, but the can is getting too heavy to kick much further, and there is not much road left. As I explain in my recent book The Impending Monetary Revolution, the Dollar and Gold, and in postings on this blog, the world is turning away from the dollar. It is increasingly obvious to everyone that the U.S. is never going to be able to repay what it has borrowed and the current situation cannot continue indefinitely. Some sort of default will occur, and the dollar is going to lose its unique role as the world's reserve currency. Then the U.S. will no longer be able to continue its wild spending and ballooning of the national debt. The balloon is going to burst.

Recently Detroit filed for bankruptcy protection. The city has 88,000 street lights, but according to National Public Radio, fewer than half of them work. It reports, “In some parts of town, city block after city block is filled with streetlights that never come on.” The city doesn't have the money for maintenance. The city's lighting department has 85 workers, down from its peak of 500. Most of the poles are stripped of copper or the underground wiring is fried. In 2008 Detroit had 317 parks, now just 107—and 50 of those are set to close. Only one-third of the city's ambulances are in operation. The short-handed police department takes 58 minutes to respond to citizen's calls, compared to a national average of 11 minutes.

The financial position of the federal government is worse than Detroit's. The day is coming when the federal government, like Detroit, will have to cut back on its spending even for far more important functions than combating global warming. Why wait? That funding should be eliminated now!