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Inflation isn’t dead; it just might not be where you think it is.

To find significant price increases, you need only look in the right places. There are many goods and services with rising prices, as well as those without. Together, they tell a fascinating tale about the modern global economy. Understanding the forces driving prices higher — or not — is crucial to investors and policy makers alike.

Given that the Federal Reserve has been trying to generate inflation for much of the past decade, the significance of the distribution is both important and telling. Why some prices are rising at twice the median rate of general inflation is worth delving into.

Look at the chart below: it show specific categories of goods and services versus the entire basket of goods and services that makes up the consumer price index.

*see below

Source: American Enterprise Institute

Let’s look a little more deeply at each category.

Textbooks:  The industry operates as a quasi-monopoly. A student assigned a given text book doesn’t have much choice. The rise of used-book exchanges provided some competition, but the publishers merely issue revised editions that are neither new nor improved. Inflation here is a function of rentier capitalism. Note that other kinds of books have fallen in price during the same period.

College Tuition: Blame demographics, guaranteed student loans and administrative bloat. The baby boomers’ kids created many more potential college students than there were seats, leading to an imbalance in demand and supply. Responses varied from adding more professors to expanding class sizes to opening new schools.

But most schools responded by raising tuition.

And students paid. The Federal Reserve Bank of New York and theNational Bureau of Economic Research looked at increases in student borrowing, funded largely through federal student-loan programs. There is a good argument to be made that this is what has drivenmuch of the increase in college tuition.

Medical Care: The bottom line in the relentless rise in health-care costs is that market forces don’t work very well in this industry. This is why every modern industrialized country, except the U.S., has a single-payer government option or something like it. Even worse, the drug industry has persuaded Congress to bar government-run health programs from negotiating lower prices.

Food and Beverages: Prices for milk, beef and most other foodstuffs soared in the 2000s, as the U.S. dollar lost 41 percent of its value (many commodities are priced in dollars) and commodity prices soared.

Housing: During the 2000s housing boom, when lending standards evaporated, home prices went up two and three times their normal rates. But the Bureau of Labor Statistics had the cost of housing as falling. Why? The BLS uses something called owner’s equivalent rent, and it tends to give false reads on housing prices.

When more people are buying and driving up home prices, it means less demand for rental units, leading to lower prices. During the housing bust circa 2006-2011, they showed the opposite. Fewer buyers meant more renters, and so rental price gains were robust.  I don’t know the best way to gauge real estate prices, but tracking owners’ equivalent rent creates a distortion.

Toys: Manufacturing has been outsourced to lowest cost parts of world, hence prices have plummeted.

Wireless Services, Software, TVs: Technology prices benefit from two key factors: the technology adoption lifecycle and manufacturing economies of scale. The long and short of it is that as new products enter the mass market  they move down the unit-cost scale, from quirky one-off devices to cheap commodity goods. Think about the first flat screen televisions at more than $10,000 plus; versions that are as good or better than those now cost $500.

So what might we conclude from looking at the chart’s component parts? Maybe only that it’s a little easier to see why the Fed has been having a hard time getting inflation to rise. While some prices are indeed up, many powerful forces have driven other prices lower — and these are forces that the Fed can’t easily influence. Until there is a substantial and sustained increase in wages (or a huge drop in the dollar), inflation may very well remain below the Fed’s 2 percent target for a long time to come.

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James Grant, Wall Street expert and editor of the investment newsletter «Grant’s Interest Rate Observer», warns of a crash in sovereign debt, is puzzled over the actions of the Swiss National Bank and bets on gold.

From multi-billion bond buying programs to negative interest rates and probably soon helicopter money: Around the globe, central bankers are experimenting with ever more extreme measures to stimulate the sluggish economy. This will end in tears, believes James Grant. The sharp thinking editor of the iconic Wall Street newsletter «Grant’s Interest Rate Observer» is one of the most ardent critics when it comes to super easy monetary policy. Highly proficient in financial history, Mr. Grant warns of today’s reckless hunt for yield and spots one of the biggest risks in government debt. He’s also scratching his head over the massive investments which the Swiss National Bank undertakes in the US stock market.

About James GrantJames Grant, financial journalist and historian, is the founder and editor of «Grant’s Interest Rate Observer», a twice-monthly journal of the investment markets and must read for financial professionals. A former Navy gunner’s mate, he earned a master’s degree in international relations from Columbia University and began his career in journalism in 1972, at the Baltimore Sun.

He joined the staff of Barron’s in 1975 where he originated the «Current Yield» column. Mr. Grant is the author of several books covering both financial history and biography. His latest book, «The Forgotten Depression: 1921 – The Crash That Cured Itself», was published at the end of 2014. Mr. Grant is a 2013 inductee into the Fixed Income Analysts Society Hall of Fame. He is a member of the Council on Foreign Relations and a trustee of the New-York Historical Society. He and his wife live in Brooklyn. They have four grown children.Jim, for more than three decades Grant’s has been observing interest rates. Is there anything left to be observed with rates this low?


Interest rates may be almost invisible but there is still plenty to observe. I observe that they are shrinking and that the shrinkage is causing a lot of turmoil because people in need of income are in full hot pursuit of what little of yields remains.

What are the consequences of that?
It reminds me of the great Victorian English journalist Walter Bagehot. He once said that John Law can stand anything but he can’t stand 2%, meaning that very low interest rates induced speculation and reckless investing and misallocation of capital. So I think Bagehot’s epigraph is very timely today.

John Law was mainly responsible for the great Mississippi bubble which caused a chaotic economic collapse in France in the early 18th century. How is the story going to end this time?
It will turn out to be very bad for many people. If Swiss insurance and reinsurance executives are reading this right now they might be rolling their eyes and they might be frustrated to hear an American scolding from a distance of 3000 miles about the risk of chasing yield. After all, if you’re in the business of matching long term liabilities with long term assets you have little choice but to wish for a better, more sensible world. But you have to take the world as it is and today’s world is barren of interest income. The fact is, that these are very risk fraught times.

Where do you see the biggest risks?
Sovereign debt is my nomination for the number one overvalued market around the world. You are earning nothing or less than nothing for the privilege of lending your money to a government that has pledged to depreciate the currency that you’re investing in. The central banks of the world are striving to achieve a rate of inflation of 2% or more and you are lending certainly at much less than 2% and in many  cases at less than nominal 0%. The experience of losing money is common in investing. But where is the certitude of loss even before your check clears? That’s the situation with sovereign debt right now.

On a worldwide basis, more than a third of sovereign debt is already yielding less than zero percent.
There is not quite a bestseller, but a very substantial book called «The History of Interest Rates». It was written by Sidney Homer and Richard Sylla. Sidney Homer is no longer with us, but Richard Sylla is alive and well at New York University. So I called him and said: « Richard, I’ve read many pages but not every single page in your book which traces the history of interest rates from 3000 BC to the present. Have you ever come across negative bond yields?» He said no and I thought that would be kind of a major news scoop: For the first time in at least 5000 years we have driven interest rates below the zero marker. I thought that was an exceptional piece of intelligence. But I notice however that nobody seems to have picked up on it.

It’s now already two years ago since the ECB was the first major central bank to introduce negative rates.
There are some other historical settings: In Europe, Monte dei Paschi di Siena, this 500 and plus year old bank in Italy, is struggling and as broke as you can be without being legally broke. Monte dei Paschi has survived for half a millennium and now it is on the ropes. Meanwhile, the Bank of England is doing things today that it has never done in its history which is 300 plus years. So I suggest that these are at least interesting times and in many respects unprecedented ones.

So what’s the true meaning of all this?
In finance, mostly nothing is ever new. Human behavior doesn’t change and money is a very old institution and so are our markets. Of course, techniques evolve, but mostly nothing is really new. However, with respect to interest rates and monetary policy we are truly breaking new ground.

Now central bankers are even talking openly about helicopter money. Will they really go for it?
I already hear the telltale of beating rotor blades in the sky. I also hear the tom-toms of fiscal policy being pounded. There seems to be some kind of a growing consensus that monetary policy has done what it can do and that what me must do now – so say the «wise ones» – is to tax and spend and spend and spend. That seems to be the new big idea in policy. In any case, it is not good for bondholders.

Interestingly, nobody seems to be talking about the growing government debt anymore. Also, budget politics are just a side note in the ongoing presidential elections.
The trouble with this election is that somebody has to win it. I have no use for Donald Trump but I have equally no use for Hillary Clinton. The point is that one of those two is going to win. That is the tragedy! So we at Grant’s regret that one of them is going to win.

The financial crisis and the weak economic recovery likely have spurred the rise of Donald Trump. Why isn’t the US economy in better shape after all those monetary programs?
I wonder how it would have been if markets had been allowed to clear and if prices had been allowed to find their own level in real estate in 2008. Central banks have intervened to quell financial panics for at least 200 years. For instance, in 1825 the bank of England lent without stint and was not – as they said – overnice about the kind of collateral. That was a very dramatic intervention. So it’s not as if we have never before seen the lender of last resort at work. But what is new is the medication of markets through this opiate of quantitative easing year after year after year following the financial crisis. I think that this kind of intervention has not only not worked but it has been very harmful. Around the world, the economies are not responding despite radical monetary measures. To some degree, I believe,  they are not recovering because of radical monetary measures.

What’s exactly the problem with the US economy?
There is another side of what we are seeing now: In America certainly the Federal Reserve and bank regulators generally are very heavy handed in their interventions. I’m sure they have every good intention. But with their regulatory charges they are suppressing the recovery in credit that takes place  in a normal economic recovery and in this particular case after a depression or after a liquidation.

Then again, a revisit of the financial crisis would be catastrophic.
The new rules with respect to financial reform have absorbed not only forests worth of paper but also the time and attention of legions of lawyers. If you talk to a banking executive what you hear is that the banks have been overwhelmed by the need to hire compliance and regulatory people. This is especially bearing on the smaller banks. I think that’s part of the story of the lackluster recovery: Monetary policy has been radically open in the creation of new credit. But it has been radically restrictive with regard to risk taking in the private world.

So what should be done to get the economy back on track?
There are guides in history on how to do this. For more than a hundred years in Britain, in the United States and probably as well in Switzerland, the owners of the equity of a bank themselves were responsible for the solvency of the bank. If the bank became impaired or insolvent they had to stump up more capital to pay off the liability holders, including the depositors. But over the past hundred years collective responsibility in banking has gradually replaced individual responsibility. The government, with the introduction of deposit insurance, new regulations and interventions has superseded the old doctrine of the responsibility of the owners of a property. That’s why I think we need to go away from government intervention and go more towards market oriented solutions such as the old doctrine of responsibility of the bank owners.

At least in the US, the Fed is trying to go back to a more normal monetary policy. Do you think Fed chief Janet Yellen will make the case for another rate hike at the Jackson Hole meeting next week?
Janet Yellen is by no means an impulsive person. According to the « Wall Street Journal», she arrives for a flight at the airport hours early – and that’s plural! So this is a most deliberative and risk averse person. Also, as a labor economist, she’s a most empathetic person. She believes what most interventionist minded economists believe: They have very little faith in the institution of markets and they don’t believe that the price mechanism is anything special. They want to normalize rates and yet they can always find an excuse for not doing so. We have been hearing for years now that the next time, the next quarter, the next fiscal year they will act. So I believe what I’m seeing: None of these days the Federal Funds Rate will go higher than 0.5%. I can’t see that happening.

Wall Street seems to think along the same lines. So far, many investors don’t take the renewed chatter of a rate hike too seriously.
The Fed is now hostage to Wall Street. If the stock market pulls back a few percent the Fed becomes frightened. In a way I suppose, the Fed is justified in that belief because it is responsible to a great degree for the elevation of financial asset values. Real estate cap rates are very low, price-earnings-ratios of stocks  are very high and interest rates are extremely low. One can’t be certain about cause and effect. But it seems to me that the central banks of the world are responsible for a great deal of this levitation in values. So perhaps they feel some responsibility for letting the world down easy in a bear market. It has come to a point where the Fed is virtually a hostage of the financial markets. When they sputter, let alone fall, the Fed frets and steps in.

Obviously, the financial markets like this cautious mindset of the Fed. Earlier this week, US stocks climbed to another record high.
Isn’t that a funny thing? The stock market is at record highs and the bond market is acting as if this were the Great Depression. Meanwhile, the Swiss National Bank is buying a great deal of American equity.

Indeed, according to the latest SEC filings the SNB’s portfolio of US stocks has grown to more than $60 billion.
Yes, they own a lot of everything. Let us consider how they get the money for that: They create Swiss francs from the thin alpine air where the Swiss money grows. Then they buy Euros and translate them into Dollars. So far nobody’s raised a sweat. All this is done with a tab of a computer key. And then the SNB calls its friendly broker – I guess UBS – and buys the ears off of the US stock exchange. All of it with money that didn’t exist. That too, is something a little bit new.

Other central banks, too, have become big buyers in the global securities markets. Basically, it all started with the QE-programs of the Federal Reserve.
It is a truism that central banks do this. They’ve done this of course for generations. But there is something especially vivid about the Swiss National Bank’s purchases of billions of Dollars of American equity. These are actual profit making, substantial corporations in the S&P 500. So the SNB is piling up big positions in them with money that really comes from nothing. That’s a little bit of an existential head scratcher, isn’t?

So what are investors supposed to do in these bizarre financial markets?
I’m very bullish on gold and I’m very bullish on gold mining shares. That’s because I think that the world will lose faith in the PhD standard in monetary management. Gold is by no means the best investment. Gold is money and money is sterile, as Aristotle would remind us. It does not pay dividends or earn income. So keep in mind that gold is not a conventional investment. That’s why I don’t want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder.

 

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The rise of passive asset management threatens to fundamentally undermine the entire system of capitalism and market mechanisms that facilitate an increase in the general welfare, according to analysts at research and brokerage firm Sanford C. Bernstein & Co., LLC.

In a note titled “The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism,” a team led by Head of Global Quantitative and European Equity Strategy Inigo Fraser-Jenkins, says that politicians and regulators need to be cognizant of the social case for active management in the investment industry.

“A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active market led capital management,” they write.

 

High fees and subpar returns, coupled with the creation of a plethora of relatively inexpensive exchange-traded funds that track major equity indexes have helped fuel a massive shift in asset flows away from active management in favor of passive. While policymakers are quick to praise the benefits of these low-cost options for retail investors, Bernstein argues that this is a short-sighted view that doesn’t take into account the potential downsides involved with the increase in passively-managed assets.

Source: Investment Company Institute

Fraser-Jenkins notes that the rise of indexing should theoretically entail that stocks tend to move in the same direction more often (though such a simple relationship isn’t necessarily borne out by the data), and cites research indicating that “if the correlation of stocks increases then that impedes the efficient allocation of capital. That is, there isn’t as big of a difference in capital expenditures on a sector by sector basis than what would be expected based on relative profit growth.

The social function of active management, in a capitalist society, is that it seeks to direct capital to its most productive end, facilitating sustainable job creation and a rise in the aggregate standard of living. And rather than be guided by the Invisible Hand and profit motive, capital allocation under Marxism is conducted by an oh-so-visible hand aimed at producing use-values that satisfy each member of the society’s needs. Seen through this lens, passive management is somewhat tantamount to a nihilistic approach to capital allocation.

To adapt a line from a Coen brothers classic: Say what you will about the tenets of Marxism, Dude, at least it’s a formal attempt to direct capital to achieve a desired end.

 

“The commonality between both active market management and the Marxist approach is that in both cases there are a set of agents trying – at least in principle – to optimize the flows of capital in the real economy,” writes Fraser-Jenkins.

Bernstein’s team isn’t asking for governments to bail out active managers, but merely advises that lawmakers and regulators “may wish to consider the broader benefits of a functioning active asset management industry to society as a whole so that when policy initiatives are undertaken they do not explicitly undermine active management.”

While the question of whether the rise of passive investing is an existential threat to capitalism remains an open one, Bernstein’s team acknowledges one uncomfortable truth: it certainly looms as a major downside risk for the livelihoods of people who produce sell side equity research.

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‘We have fallen upon evil times, politics is corrupt and the social fabric is fraying.’ Who said that? Donald Trump or Bernie Sanders? Nigel Farage or Marine Le Pen? It’s difficult to keep track. They sound so alike, the populists of the left and the right. Everything is awful, so bring on the scapegoats and the knights on white horses.

Pessimism resonates. A YouGov poll found that just 5 per cent of Britons think that the world, all things considered, is getting better. You would think that the chronically cheerful Americans might be more optimistic – well, yes, 6 per cent of them think that the world is improving. More Americans believe in astrology and reincarnation than in progress.
Johan Norberg and Fraser Nelson discuss the doom delusion:

If you think that there has never been a better time to be alive – that humanity has never been safer, healthier, more prosperous or less unequal – then you’re in the minority. But that is what the evidence incontrovertibly shows. Poverty, malnutrition, illiteracy, child labour and infant mortality are falling faster than at any other time in human history. The risk of being caught up in a war, subjected to a dictatorship or of dying in a natural disaster is smaller than ever. The golden age is now.

If you look at all the data, it’s clear there’s never been a better time to be alive.
We’re hardwired not to believe this. We’ve evolved to be suspicious and fretful: fear and worry are tools for survival. The hunters and gatherers who survived sudden storms and predators were the ones who had a tendency to scan the horizon for new threats, rather than sit back and enjoy the view. They passed their stress genes on to us. That is why we find stories about things going wrong far more interesting than stories about things going right. It’s why bad news sells, and newspapers are full of it.

Books that say the world is doomed sell rather well, too. I have just attempted the opposite. I’ve written a book called Progress, about humanity’s triumphs. It is written partly as a warning: when we don’t see the progress we have made, we begin to search for scapegoats for the problems that remain. Sometimes, in the past and perhaps today, we have been too quick to try our luck with demagogues who offer simple solutions to make our nations great again – whether by nationalising the economy, blocking imports or throwing out immigrants. If we think we don’t have anything to lose in doing so, it’s because our memories are faulty.

Look at 1828, when The Spectator was first published. Most people in Britain then lived in what is now regarded as extreme poverty. Life was nasty (people still threw their waste out of the window), brutish (corpses were still displayed on gibbets) and short (30 years on average). But even then things had been improving. The first iteration of The Spectator, in 1711, was published in a Britain whose people subsisted on average on fewer calories than the average child gets today in sub-Saharan Africa.

Karl Marx thought that capitalism inevitably made the rich richer and the poor poorer. By the time Marx died, however, the average Englishman was three times richer than at the time of his birth 65 years earlier – never before had the population experienced anything like it.

Fast forward to 1981. Then, almost nine in ten Chinese lived in extreme poverty; now just one in ten do. Then, just half of the world’s population had access to safe water. Now, 91 per cent do. On average, that means that 285,000 more people have gained access to safe water every day for the past 25 years.

Global trade has led to an expansion of wealth on a magnitude which is hard to comprehend. During the 25 years since the end of the Cold War, global economic wealth – or GDP per capita – has increased almost as much as it did during the preceding 25,000 years. It’s no coincidence that such growth has occurred alongside a massive expansion of rule by the people for the people. A quarter of a century ago, barely half the world’s countries were democracies. Now, almost two thirds are. To say that freedom is still on the march is an understatement.

Part of our problem is one of success. As we get richer, our tolerance for global poverty diminishes. So we get angrier about injustices. Charities quite rightly wish to raise funds, so they draw our attention to the plight of the world’s poorest. But since the Cold War ended, extreme poverty has decreased from 37 per cent to 9.6 per cent – in single digits for the first time in history.

This has not happened through the destruction of the western middle class. Times have been rough since the financial crisis, yet for all the talk of Americans ‘left behind by globalisation’, median income for low- and middle-income US households has increased by more than 30 per cent since 1970. And this excludes all the things you can’t put a price on, such as advances in medicine, an extra ten years of life expectancy, the internet, mass entertainment, and cleaner air and water.

Speaking of water, Disraeli described the Thames as ‘a Stygian pool reeking with ineffable and intolerable horrors’. As late as 1957, the river was declared biologically dead. Today it is in rude health, with scores of different species of fish. The idea of the environment as a clean canvas being steadily spoilt by humanity is simplistic and wrong. As we become richer, we have become cleaner and greener. The quantity of oil spilt in our oceans has decreased by 99 per cent since 1970. Forests are reappearing, even in emerging countries like India and China. And technology is helping to mitigate the effects of global warming.

Parts of the world are falling to pieces but fewer parts than before. Conflicts always make the headlines, so we assume that our age is plagued by violence. We obsess over new or ongoing fights, such as the horrifying civil war in Syria – but we forget the conflicts that have ended in countries such as Colombia, Sri Lanka, Angola and Chad. We remember recent wars in Afghanistan and Iraq, which have killed around 650,000. But we struggle to recall that two million died in conflicts in those countries in the 1980s. The jihadi terrorist threat is new and frightening – but Islamists kill comparatively few. Europeans run a 30 times bigger risk of being killed by a ‘normal’ murderer – and the European murder rate has halved in just two decades.

In almost every way human beings today lead more prosperous, safer and longer lives – and we have all the data we need to prove it. So why does everybody remain convinced that the world is going to the dogs? Because that is what we pay attention to, as the thoroughbred fretters we are. The psychologists Daniel Kahneman and Amos Tversky have shown that people do not base their assumptions on how frequently something happens, but on how easy it is to recall examples. This ‘availability heuristic’ means that the more memorable an incident is, the more probable we think it is. And what is more memorable than horror? What do you remember best – your neighbour’s story about a decent restaurant which serves excellent lamb stew, or his warning about the place where he was poisoned and threw up all over his boss’s wife?

Bad news now travels a lot faster. Just a few decades ago, you would read that an Asian city with 100,000 people was wiped out in a cyclone on a small notice on page 17. We would never have heard about Burmese serial killers. Now we live in an era with global media and iPhone cameras every-where. Since there is always a natural disaster or a serial murderer somewhere in the world, it will always top the news cycle – giving us the mistaken impression that it is more common than before.

Nostalgia, too, is biological: as we get older, we take on more responsibility and can be prone to looking back on an imagined carefree youth. It is easy to mistake changes in ourselves for changes in the world. Quite often when I ask people about their ideal era, the moment in world history when they think it was the most harmonious and happy, they say it was the era they grew up in. They describe a time before everything became confusing and dangerous, the young became rude, or listened to awful music, or stopped reading books in order to just play Pokémon Go.

The cultural historian Arthur Freeman observed that ‘virtually every culture, past or present, has believed that men and women are not up to the standards of their parents and forebears’. Is it a coincidence that the western world is experiencing this great wave of pessimism at the moment that the baby-boom generation is retiring?

So who did say those words at the start of this article, about how we have ‘fallen upon evil times’? It wasn’t Trump. It wasn’t Farage. A century ago, an American professor found them inscribed on a stone in a museum in Constantinople. He dated them from ancient Chaldea, 3,800 BC.

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Fits in nicely with an assignment that I am trying to complete in Environmental Law.

 

It has not only been a waste of money, it has done real harm. Some trillions of hard-earned taxpayer dollars have been spent to combat global warming over the last three decades. Has the expenditure of all of this money reduced global temperatures from where they would have otherwise been? No, at least not to a measurable degree. The major governments of the world have undertaken a public policy which to date has cost far more than any benefits. The rebuttal by the advocates of all of this government spending is to say it is nothing more than a down payment on what needs to be done and the benefits will accrue to future generations.

Earlier this month, British scientist Valentina Zharkova and her team at Northumbria University in the United Kingdom, using a new model, predicted that a coming periodic reduction in the sun’s radiation will soon lead to major global cooling. For many decades, it has been known that a decrease in sun spot activity is associated with lower temperatures. Ms. Zharkova argues that we will soon enter a new “Maunder Minimum,” which refers to the period from 1645 to 1715 when the sun’s surface ceased producing its heat-releasing magnetic storms. This period coincided with the Little Ice Age — a time of much cooler temperatures and crop failures. A number of other respected scientists have also argued that changes in solar output are more important than changes in carbon dioxide in regulating the earth’s temperature. During the last couple of weeks, since the release of the new study, the debate has been quite fierce between those who believe that solar changes trump carbon dioxide and vice versa. Remember, “climate science” is not a unified field of study like quantum physics, but a combination of many different disciplines from the people who study tree rings, ice cores, atmospheric gases, cloud science or solar output.

One climate scientist, commenting on the debate, observed that mankind might luck out with the heat-trapping effects of carbon dioxide, offsetting the temperature decline coming from the expected solar minimum. It may be that the solar folks are right, or the carbon dioxide folks are right or that neither is right.

What do we know? We know that extreme global warming doomsayers, like Michael Mann (of “hockey stick” fame), were telling world leaders if they did not make massive changes in carbon-dioxide emissions by 2002 — that it would be too late. Despite the fact that it is now “too late,” Mr. Mann and others are still preaching the same old gospel — and I expect they will continue to do so until the government grants and other monies run out. We do know that those like Al Gore, who told us that Arctic sea ice would be gone by now and that Antarctica ice would be greatly diminished, were wrong (ships still cannot sail the Arctic Ocean and Antarctica ice is now covering a record amount since the measurements were first taken). We do know that not one of the climate change models predicted the 16-year pause in rising temperatures and all of them overstated the rise in temperature that did occur. We do know that rise in carbon dioxide to date has been largely beneficial, with the earth getting greener (carbon dioxide is plant fertilizer).

What we also know is the trillions spent on global warming mitigation schemes slowed real economic growth through higher energy prices and taxes worldwide, particularly in Europe and to a lesser extent in America, thus leaving millions more people in poverty, without jobs and economic opportunity. The beneficiaries of all this spending were the crony capitalists of the ruling class, including all of the researchers who have been funded to “prove” global warming is a massive immediate threat, caused by humans, and that humans have the tools at hand to stop it. If your research happens to show something else, you are immediately attacked, not in a calm, objective manner, but in a rather vicious manner, as Professor Zharkova has found in the last couple of weeks. The scientific and political establishment has a vested interest in silencing the sun output theorists, because if they are right, many others’ funding and pride are at risk.

What is clear is that much is still unknown — let alone how to stop the newly labeled “climate change.” From the end of the Little Ice Age, temperatures and sea levels have been gradually rising, and mankind has been dealing with it quite well through adaptation. Old structures and piers are replaced as they wear out with stronger and higher structures. Air conditioning is invented. And all of this happens almost automatically without anyone noticing.

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Lovely. Maybe I treat myself if/when I graduate law school.

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Shares of Valeant Pharmaceuticals International Inc. VRX, +12.33% shot up 9.7% in active premarket trade Wednesday, after Morgan Stanley analyst David Risinger turned bullish on the drug maker, citing the belief that major risks to the company have already been priced into the stock. Risinger raised his rating to overweight, after being at in line since October 2015. He raised his stock price target to $42, which is 58% above Tuesday’s closing price of $26.60, from $27. “Risk of severe financial stress should diminish as [debt] covenants are renegotiated and [Valeant] pays down debt, and deleveraging should drive equity value accretion,” Risinger wrote in a note to clients. Regarding risks of drug pricing resets, Risinger said Valeant has already experienced step downs in net pricing and access, and he his valuation estimates already account for generic competition for the company’s most controversial drugs–Isuprel and Nitropress–over the next six to 12 months. The stock, which was on course to open at a 2 1/2-month high, had plunged 74% year to date through Tuesday, while the SPDR Health Care ETF XLV, +0.08% had tacked on 3.1% and the S&P 500 SPX, +0.03%had gained 6.6%.

The increased volatility, sharp drop, sharp rise, are generating some nice profits in this stock.

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