August 9, 2011

Resource nationalism, capacity constraints the biggest risks facing global mining

Mineweb.com | Geoff Candy

Supply capacity constraints and changing notions of exactly who should be allowed to extract resources and how much they should pay for that privilege dominate the list of the top 10 business risks facing mining companies.

Topping the 2011 edition of Ernst & Young’s annual Business risks facing mining & metals 2011-2012 publication is resource nationalism. Up from fourth place in last year’s survey, the concerns come on the back of a significant increase in focus from tax authorities across the globe on the resources sector.

As the report explains, “As many governments struggle with deficits or hold concerns over the effects of a two speed economy, the continuing boom in commodity prices has seen the mining and metals sector targeted as an area in which they can raise revenue” As a result of this,

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Sunshine in Litigation Act Reported in Senate

Secrecy News | Steve Afterwood

A bill that would curb the ability of courts to impose secrecy orders on public health and safety information was favorably reported by the Senate Judiciary Committee last week. See the report (pdf) on the Sunshine in Litigation Act of 2011, August 2, 2011.

“Court secrecy prevents the public from learning about public health and safety dangers,” the Committee report said. “Over the past 20 years, we have learned about numerous cases where court-approved secrecy, in the form of protective orders and sealed settlements, has kept the public in the dark about serious public health and safety dangers.”

Such cases, many of which are cataloged in the report, have included “complications from silicone breast implants, adverse reactions to a prescription pain killer, ‘park to reverse’ problems in pick-up trucks, and defective heart valves.”

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What’s in a Downgrade?

Capital Gains and Games | Andrew Samwick

Not much, in my opinion. In my last post, I argued that I’d take the debt deal even at the expense of the negative publicity we got for the juvenile way the negotiations were conducted. So we avoided default and got downgraded by S&P anyway. S&P’s arithmetic mistake aside, I don’t think potential investors in U.S. Treasuries relied too much on its previous AAA rating in actively valuing the bonds and bills. And even if they did, they should be only minimally bothered by its current AA+ rating. Potential investors have plenty of public information on current and projected cash flows of the U.S. government. In those circumstances, there is little value added by a ratings agency’s grade.

Where ratings agencies can add value is in rating securities that are harder to value. I cannot say it better than E.J. Dionne did:

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Super Congress A Gift to K Street

Texas Straight Talk | Congressman Ron Paul

The Super Congress created by the recent debt ceiling increase deal is a typical example of something nefarious attached to a bigger bill that is rushed through Congress without giving Members ample opportunity to consider the full ramifications. This commission may turn into an early Christmas present for the well-heeled lobbyists of K Street. This is because the commission presents a huge opportunity for lobbying firms to sneak their client’s pet projects and issues into whatever legislation is created by the commission. The fact that automatic cuts to defense are named if the committee deadlocks simply signals to the military industrial complex to bring their A game to the lobbying effort.

One red flag I am constantly aware of in my position as a Congressman is that highly complex and convoluted legislation frequently has dangerous provisions hidden in the fine print. Elaborate legislative packages force lawmakers to take the bad with the good, and often if they refuse, they are accused of voting against the positive provision – never mind the blatant Constitutional violations in the bill, the spending, the waste, and the unchecked expansion of government

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Barney Frank: Military spending to blame for U.S. credit downgrade

Raw Replay | David Edwards

ppearing on CBS Monday, House Financial Services Committee ranking member Barney Frank (D-MA) pointed to growing military spending as one of the causes of S&P’s downgrade of U.S. credit.

“I would hope there would be one bipartisan agreement we can reach and I’ve been working for,” Frank told CBS’ Nancy Cordes. “There is one area in American policy where we are doing things disproportionate to the rest of the world. We don’t give our older people more medical care, we don’t have a better retirement, we don’t spend more on the environment. Where America is disproportionate is our extraordinary willingness to be the military policemen for the whole world.”

“We spend far more of our economy as a national percentage on the military than just about any nation except a beleaguered nation like Israel, which has to do with self defense.

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Why Is the Stock Market Plunging?

Daily Mises | Robert P. Murphy

Investors the world over are still reeling from last Thursday’s massive plunge in the US equity markets, in which the major indices all gave up more than 4 percent. It was the worst day for the US stock market since December 2008.

None of this should surprise those conversant with Austrian economics. The “fundamentals” of the economy have been and remain awful because the government and Federal Reserve are consistently doing the wrong things. The apparent recovery, fueled by Bernanke’s sheer money creation, has been bogus all along.

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Brace for Impact

USA Watchdog | Greg Hunter

“Brace for Impact.” I have thought about this economic collapse title for months. I held onto it and figured I would know when the right time was to put it out there. Today is the day. Watching mainstream media (MSM) this weekend, you would think a one notch downgrade to America’s debt doesn’t really matter. For example, former CNBC anchor Erin Burnett said Friday night on CNN the downgrade was “already priced into the market.” The panel spoke as if the first U.S. debt downgrade in history was no big deal. To that I say, positively absurd!

The gold market must think the same thing I do because when the Asian market opened, the price of the yellow metal shot up more than $27 an ounce, which is another all-time high. At around 1:30 am today it was up $50 and ounce another all-time high

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The Market Has Spoken: Austerity Is Bad for Business

Global Research | Ellen Brown

It used to be that when the Fed Chairman spoke, the market listened; but the Chairman has lost his mystique. Now when the market speaks, politicians listen. Hopefully they heard what the market just said: government cutbacks are bad for business. The government needs to spend more, not less. Fortunately, there are viable ways to do this while still balancing the budget.

On Thursday, August 4, the Dow Jones Industrial Average fell 512 points, the biggest stock market drop since the collapse of September 2008.

Why? Weren’t the markets supposed to rebound after the debt ceiling agreement was reached on Monday, avoiding U.S. default and a downgrade of U.S. debt?

So we were told, but the market apparently understands what politicians don’t: the debt deal is a death deal for the economy.

Reducing government spending by $2.2 trillion over a decade, as Congress just agreed to do, will kill any hopes of economic recovery. We’re looking at a double-dip recession.

The figure is actually more than $2.2 trillion. As Jack Rasmus pointed out on Truthout on August 4th:

Economists estimate the “multiplier” from government spending at about 1.5. That means for every $1 cut in government spending, about $1.5 dollars are taken out of the economy. The first year of cuts are therefore $375 billion to $400 billion in terms of their economic effect. Ironically, that’s about equal to the spending increase from Obama’s 2009 initial stimulus package. In other words, we are about to extract from the economy – now showing multiple signs of weakening badly – the original spending stimulus of 2009!

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Ron Paul Slams Obama’s “Monstrous Creature,” the Super Congress

The Daily Bell | RonPaul2008dotcom

Congressman Ron Paul is interviewed on CNN by Lou Dobbs about why he voted “NO” to raising the debt ceiling. Ron said the following:

“Mainly because I have never voted for any of the spending essentially over the many years I have been in Congress … I believed that debt was going to be a real problem many years ago and debt is the problem. So you don’t get out of the problem of having too much debt by allowing the Congress to spend a lot more and granting them another $2.4 trillion worth of debt. So it never made any sense to me to do it that way; it just digs a hole much deeper and it gets harder for us to get out. So it was a very easy vote for me, but it became much easier for me when I saw this vehicle they were using to create this ‘Super Congress.'”

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Chomsky: Public Education Under Massive Corporate Assault — What’s Next?

AlterNet | Noam Chomsky

The following is a partial transcript of a recent speech delivered by Noam Chomsky at the University of Toronto at Scarborough on the rapid privatization process of public higher education in the United States.

A couple of months ago, I went to Mexico to give talks at the National University in Mexico, UNAM. It’s quite an impressive university — hundreds of thousands of students, high-quality and engaged students, excellent faculty. It’s free. And the city — Mexico City — actually, the government ten years ago did try to add a little tuition, but there was a national student strike, and the government backed off. And, in fact, there’s still an administrative building on campus that is still occupied by students and used as a center for activism throughout the city.

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Celente: Dollar not worth its paper, Greatest Depression up ahead

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