___________________________________________________________________________________________Comments are currently unavailable. We’re working on the development of a NASCAR fan forum – please stay tuned.
___________________________________________________________________________________________Comments are currently unavailable. We’re working on the development of a NASCAR fan forum – please stay tuned.
MORE 2020 NFL DRAFT:Full results | Team-by-team grades | Winners & losersEagles draft picks 2020: Who did Philadelphia draft?Round 1, Pick No. 21: Jalen Reagor, WR, TCURound 2, Pick No. 53: Jalen Hurts, QB, OklahomaRound 3, Pick No. 103: Davion Taylor, LB, ColoradoRound 4, Pick No. 127: K’Von Wallace, S, ClemsonRound 4, Pick No. 145: Jack Driscoll, OT, AuburnRound 5, Pick No. 168: John Hightower, WR, Boise StateRound 6, Pick No. 196: Shaun Bradley, LB, TempleRound 6, Pick No. 200: Quez Watkins, WR, Southern MissRound 6, Pick No. 210: Pince Tega-Wanogho, OT, AuburnRound 7, Pick No. 233: Casey Toohill, OLB, StanfordEagles 2020 NFL Draft orderRoundPick12125331034127414551686196 (from Bears)620062107233MORE: Read the latest NFL Draft news at SN’s draft HQ Eagles NFL Draft needsWide Receiver: With Alshon Jeffery and Desean Jackson both at the tail end of their careers, this is the time for Philadelphia to find its future No. 1 receiver, whether that’s staying put at pick No. 21 or doing what it takes to trade up and get one of the top three receivers (CeeDee Lamb, Jerry Jeudy, Henry Ruggs III) in this year’s draft.Another Wide Receiver: No team suffered more collective misfortune at wide receiver last season than the Eagles. In their home playoff game against Seattle, they started Greg Ward, Robert Davis and Deontay Burnett. There’s no telling what they’ll get from Jeffery or Jackson, and with the depth at receiver in this year’s class, it’d be a great time to pick up a young duo that could wreak havoc for years.Linebacker: The Eagles currently only have five linebackers on the roster, and none of them are particularly experienced, so they could definitely find a starter in the first few rounds, and look to add depth towards the end.Offensive Tackle: Even though Philadelphia has one of the best offensive lines in the league, the only back up tackle on the roster is Jordan Mailata, so there’s certainly a need to add depth there.Defensive Back: The Eagles made a big move by trading for Darius Slay, but they still need to add depth at corner back with some players approaching free agency. They could also use some backup at safety behind Jalen Mills and Rodney McLeod.Eagles mock draft 2020Here are the latest 2020 NFL Draft projections for the Eagles, according to Vinnie Iyer’s seven-round mock draft :RoundPickPlayerPositionSchool121Justin JeffersonWRLSU253Malik HarrisonLBOhio State3103Michael OjemudiaCBIowa4127Saahdiq CharlesOTLSU4145J.R. ReedSGeorgia4146Devin DuVernayWRTexas5168Lamical PerineRBFlorida6190Kyahva TezinoLBSan Diego State The Eagles filled a big need at wide receiver in the first round of the 2020 NFL Draft, selecting TCU’s Jalen Reagor. But they made a lot more noise with their second-round pick, taking Oklahoma quarterback Jalen Hurts.While there were some questions about Reagor’s selection over players like Tee Higgins and Justin Jefferson, his role in Philadelphia’s offense is pretty clear. But that’s not the case with Hurts. Is he supposed to replace the oft-injured Carson Wentz? Is he going to a Taysom-Hill-esque gadget player? Is here merely a backup? While Hurts probably dominated most of the conversation among Eagles fans, Philadelphia selected 10 total players in the 2020 Draft, which means there will be lots of other questions regarding roles in the preseason.Here’s a look at where the Eagles will be picking in the 2020 NFL Draft along with updated selections:
Meeting Nelson Mandela on Robben Islandduring the 2003 Fifa inspection tour wasthe highlight of Pertti Alaja’s trip to SouthAfrica. “Playing in a Fifa World Cup is anunparalleled experience for a footballer,”says Pertti Alaja.When former Finland international goalkeeper Pertti Alaja received a call last year on his mobile phone from a number starting with +27, he had a flutter of excitement.Alaja knew it was the international dialling code for South Africa, and on the other side of the line a voice with an offer he knew instantly he couldn’t refuse.“When the proposal came for me to join South Africa’s 2010 Fifa World Cup Organising Committee, it took me less than 10 seconds to say yes,” he says.As an 18-year-old, Alaja made his debut for Finland’s biggest and most successful club, HJK Helsinski, going on to be a colossus in the Finnish national team for over a decade between 1973 and 1983.He is now tournament director for Fifa’s 2009 Confederations Cup and 2010 World Cup, but even before his appointment he knew South Africa well.In 2003 Alaja was part of the five-person Fifa inspection group that assessed candidate countries bidding for the right to host the 2010 World Cup. He was immediately drawn to the country, and his was a ringing endorsement of South Africa’s credentials as a prospective host country.“I love this country. I know these people,” he says. “The decision of whether I would be interested in supporting South Africa in its efforts to host the Fifa World Cup was an easy one.”It is not just his love of football that made his decision easy, it was also his passion for a country he first visited in 1996. This made him determined to help make the first Fifa World Cup on African soil a success.“When I came in 2003 I was confident that the country would be able to host a very good Fifa Confederations Cup and Fifa World Cup,” Alaja says. “Now that I am here and actively working on the project, that belief hasn’t changed.”As tournament director, Alaja’s job is to take the planning of the Fifa World Cup from head office to venue operations, as it’s in the host cities and the country’s 10 stadiums where the tournament will actually take place.“It is about building a bridge between the two [head office and venue operations]” he says. “My job is to work with the venues to create an environment for Fifa to take over tournament operations. I have to make sure that the matches are played according to Fifa standards and will be safe, happy and joyful.”An experienced administrator, Alaja has been a Fifa general coordinator at a number Fifa tournaments and was general-secretary of Finland’s Football Association.He also managed the Nordic bid – by Sweden, Denmark, Norway and Finland – to host Euro 2008, which was ultimately won by Switzerland and Austria. Before coming to South Africa, Alaja was national director of the SOS Children’s Villages Association of Finland.Alaja has been impressed with the Organising Committee’s venue managers and the committee members themselves. “Progress is being made and I am confident in their ability to deliver,” he says.A passionate man with football in his veins, Alaja played alongside legendary South African footballers like Vusi “Computer” Lamola in his day.“My dad was a priest and in Finland religion and sport go hand in hand. My father played football and it was natural that my siblings and I would be intimately involved in the sport too.“Playing for your country is the true fulfilment of your dreams,” says Alaja.Alaja was never able to represent Finland at a Fifa World Cup, but he sees his new vocation, as part of a committed South Africa working hard to successfully deliver the Fifa World Cup, as a calling.“Playing in a Fifa World Cup is an unparalleled experience for a footballer. It is a theatre of players and the whole world is watching – there is no better opportunity for your career.“But this is also a unique opportunity to tell the world what South Africa is really about. Some may know Cape Town, but South Africa is really a world in one country. All the nine host cities are completely different. From the relaxed beachside city of Port Elizabeth to Johannesburg, which few will know is one of the greenest cities in the world; this event has the potential to turn South Africa into a tourism mecca.“As a country progress has already been made. The nation is already more confidence in itself, in its abilities,” Alaja says. Do you have queries or comments about this article? Email Mary Alexander at [email protected]
Trending Articles PLAY LIST 00:50Trending Articles00:50Trending Articles00:50Trending Articles01:37Protesters burn down Iran consulate in Najaf01:47Panelo casts doubts on Robredo’s drug war ‘discoveries’01:29Police teams find crossbows, bows in HK university01:35Panelo suggests discounted SEA Games tickets for students02:49Robredo: True leaders perform well despite having ‘uninspiring’ boss02:42PH underwater hockey team aims to make waves in SEA Games CONTRIBUTED PHOTO/POOLKUALA LUMPUR — Philippines blew host Malaysia apart, 98-66, to score its third straight win Wednesday night in the Southeast Asian Games men’s basketball.The win assured the Philippines of a place in the semifinals after victories over Thailand and Myanmar.ADVERTISEMENT SEA Games in Calabarzon safe, secure – Solcom chief MOST READ SEA Games: PH’s Alisson Perticheto tops ice skating short program LATEST STORIES As a result, Cruz and Amer were ejected with 5:41 left in the third quarter with Gilas protecting a 57-41 lead.READ: Ravena lauds Standhardinger’s efforts in Gilas cadets’ opener winUnfortunately, organizers only meted punishment on the Gilas guards and none on the Malaysians.But that hardly mattered as the Filipinos simply widened their lead by more than 30 points in the final quarter.ADVERTISEMENT View comments Catriona Gray spends Thanksgiving by preparing meals for people with illnesses LOOK: Venues for 2019 SEA Games Read Next Fil-German Christian Standhardinger scored 18 points and 18 rebounds for Gilas.READ: SEA Games: Gilas cadets survive ThailandFEATURED STORIESSPORTSWATCH: Drones light up sky in final leg of SEA Games torch runSPORTSSEA Games: Philippines picks up 1st win in men’s water poloSPORTSMalditas save PH from shutoutGame was interrupted by a scuffle involving frustrated Malaysia defender on Kevin Ferrer. Baser Amer, Bryan Cruz and Troy Rosario engaged Malaysian players in pushing contest.Kuek Tian Yuan first fouled Ferrer and refused to let go, prompting Gilas teammates to come to his side but instead of cooling it off, it escalated the situation. Brace for potentially devastating typhoon approaching PH – NDRRMC WATCH: Streetboys show off slick dance moves in Vhong Navarro’s wedding Don’t miss out on the latest news and information. Short on projection, PH gymnasts still log ‘marked progress’ LIST: Class, gov’t work suspensions during 30th SEA Games UPLB exempted from SEA Games class suspension
Fire hits houses in Mandaluyong City MOST READ For the complete collegiate sports coverage including scores, schedules and stories, visit Inquirer Varsity. Fire hits houses in Mandaluyong City Season 78 eventually saw Matt develop into his own as he grew into one of Ateneo’s main offensive threats.READ: Ateneo stays unbeaten in five games, keeps UST winlessFEATURED STORIESSPORTSWATCH: Drones light up sky in final leg of SEA Games torch runSPORTSSEA Games: Philippines picks up 1st win in men’s water poloSPORTSMalditas save PH from shutoutIn Season 80, Matt has more than doubled his career scoring average to 10.8 points to become Ateneo’s leading scorer behind Thirdy Ravena, who averages 17.4 a game.“I’m just doing my job, I’m just finding open lanes, looking for my teammates, and it’s just a bonus that I can make my shots,” said Nieto Wednesday after the Blue Eagles’ 94-84 win over University of Santo Tomas. Brace for potentially devastating typhoon approaching PH – NDRRMC He exploded for a career-high 22 points against the winless Tigers in an impressive shooting display as he went 7-of-12 from the field.Matt said this increase in production is the product of an intenstive personal preseason workout.“Maybe I just improved since last season, I just really practiced hard during the summer break,” said Matt. “I’m thankful for my coaches and my teammates for giving the confidence.”ADVERTISEMENT View comments Filipino athletes get grand send-off ahead of SEA Games PLAY LIST 01:27Filipino athletes get grand send-off ahead of SEA Games00:50Trending Articles00:59Sports venues to be ready in time for SEA Games01:37Protesters burn down Iran consulate in Najaf01:47Panelo casts doubts on Robredo’s drug war ‘discoveries’01:29Police teams find crossbows, bows in HK university01:35Panelo suggests discounted SEA Games tickets for students02:49Robredo: True leaders perform well despite having ‘uninspiring’ boss02:42PH underwater hockey team aims to make waves in SEA Games Ginebra thwarts San Miguel’s grand slam bid, enters semis Typhoon Kammuri accelerates, gains strength en route to PH Read Next Photo by Tristan Tamayo/INQUIRER.netMatt Nieto just went from twin brother to just about anything for Ateneo.Joining the team in 2015 together his twin brother Mike, Matt struggled to find his form in the first two seasons with the Blue Eagles as he averaged just 4.4 points as an on-and-off rotation player.ADVERTISEMENT Don’t miss out on the latest news and information. LOOK: Loisa Andalio, Ronnie Alonte unwind in Amanpulo for 3rd anniversary Nonong Araneta re-elected as PFF president BSP sees higher prices in November, but expects stronger peso, low rice costs to put up fight Frontrow holds fun run to raise funds for young cancer patients LATEST STORIES
August 31, 2000The steps are starting to harden around the wooden form. The Arcosantiworkshop program teaches the necessity of teamwork during a concrete pour.Photo by: Doctress Neutopia
A government can do great harm in its own territory, but its options are extremely limited regarding assets outside its borders. Politicians in South Africa, for example, can’t tax or regulate a mine in British Columbia. Only one party has complete freedom to choose which projects to back and what jurisdictions to take a chance on: the investor. There will always be some risk when investing in mining—but what if you could find an opportunity where the host government is so low risk, it actually promotes mining? Mining Investment Nirvana If you’ve no appetite for investments that tank because of crazy dictators and the like, the good news is that it is possible to say goodbye to unnecessary political risk—and we’ve found a place where you can do it. Our new stock pick in the October issue of BIG GOLD has a political-risk rating so low that it’s essentially negligible and enormous upside potential—what Louis James called an “impossible” stock. How do we know the risk is so low? We spent months developing what we call our “Casey Country Score” for each of 74 countries with significant amounts of mining around the world—a proprietary indicator that taps a variety of sources to assess a country’s investment climate. Combined with site visits when possible, the end result is a comprehensive analysis of the political risk for buying a gold or silver stock in that country. You won’t find it anywhere else. Our “Impossible” stock has a political-risk rating lower than any other stock in our portfolio—which says a lot, because the BIG GOLD portfolio is already rated 30% lower than the global average. The political system in the jurisdiction where this company operates is very stable. The local government promotes mining and offers exceptionally generous tax incentive programs for mineral exploration. It even collects geological data for the mining community and has one of the largest such databases in the world. A refreshing thing to hear in the present environment, eh? Explosive Potential Of course, low political risk alone can never be our sole reason to buy a stock… so what about the upside? This company is a little different from what I normally recommend in BIG GOLD. That’s because it’s not a producer, but an explorer with massive potential—and cash flow. Lucky for us, the political Shangri-La this company operates in is also known for its exceptional mineral potential, and the company controls almost two dozen properties there—which means the odds of making a game-changing discovery are much higher than average. The company cleverly lowers its exploration risk by establishing partnerships with other mining companies. The upside is also shared, but not every exploration project works out, and this reduces the company’s financial commitment. A key part of this investment is that the company is led by an enormously successful, award-winning exploration geologist. He’s under the radar of most retail investors, yet he’s already found half a dozen economic mineral deposits, which is about half a dozen more than most geologists find in their lifetimes. I’ve dubbed him “the best explorer you don’t know.” But the best part is that management made one of the richest gold discoveries anywhere in the world over the last decade, and now has a substantial royalty on the mine being built there—with advance royalty payments already rolling in. This is important because most exploration companies are what Doug Casey calls “burning matches,” i.e., they burn out when the money runs out. To have cash flow to fund exploration for the next giant gold deposit instead of diluting shareholders to the point of no returns is so exceptionally rare, it really is almost an impossible accomplishment. This is an opportunity I just recommended to our BIG GOLD subscribers last week, so I can’t give away the name of our Impossible pick. However, you can take advantage of it by giving BIG GOLD a try today (and I haven’t even revealed another angle to this stock that is just as exciting as the exploration potential). It’s completely risk-free: You have 3 full months to test BIG GOLD, and if you’re not 100% satisfied—for whatever reason—just cancel within those 3 months for a full refund of every penny you paid. Even if you cancel later, you’ll still get a prorated refund. Simply click here to start your risk-free trial now. As a metals analyst, I sometimes find a stock that seems to have everything going for it—but then some darn politician steps in and ruins the investment… On April 5, 2011, I recommended Pan American Silver (PAAS) to BIG GOLD subscribers. It was virtually a no-brainer pick—and yet we ended up selling for a loss. It was why we sold that really grated me. At the time, the company generated a million dollars per day in operating cash flow, had a pristine balance sheet, and was headed by “broken slot machine” Ross Beaty, who earned the nickname from his uncanny ability to return a profit every time you invested in one of his companies. But the real prize was the giant Navidad silver deposit in Argentina, which, if permitted, would have paved the way for Pan American’s production to jump by 65%, to a whopping 40 million ounces per year. This would catapult PAAS to the rank of largest silver producer in the world—an exciting prospect. But the politicos threw us a curveball. The local governor announced he wanted “greater state ownership” of the mine and to increase the royalty from 3% to 8%. The leftovers were too little for Pan American to turn a profit; management was forced to admit that the world’s largest pure silver deposit was “uneconomic at any reasonable estimate of long-term silver prices.” Navidad still sits idle today. Greed Is Good—Until You’re the Victim Unfortunately, there are many stories like this—and the trend is getting worse. Veteran gold mining investors have witnessed the growing move of governments increasing their take in mining projects through higher taxes and royalties, higher regulatory or environmental bars, and sometimes outright nationalization. The kicker is that a management team can do everything right and have a great project—much like Pan American—but a voracious government can render it uneconomic to develop or too burdensome or unprofitable to operate. Unreasonable political interference doesn’t just hurt mining companies or local communities. It hurts investors, too. Stock prices take a hit, and portfolios absorb losses. The pain spreads as money flees other companies operating in that jurisdiction. Trust is hard to re-earn. The temptation is to hurl four-letter pejoratives at politicians. But it’s more constructive to simply focus our money where it’s safer. Beat the Politicians: Vote with Your Investment Dollars Three parties are involved in a mining project: the mining company that operates the project; the host country where the asset is located; and investors who back the project and buy the stock. Two of these parties have very limited options: The mining company can’t move the deposit to a more friendly business environment. If local politicians demand more earnings, management teams have no choice but to negotiate. It can get more diabolical: the host government may permit a project and let the mining company spend millions (or billions) developing the project, only to add onerous taxes or royalties after it begins operation—if it doesn’t just steal the whole thing.
In his book The Theory of Interest, Irving Fisher, whom Nobel Laureate Milton Friedman called “America’s greatest economist,” created the Fisher equation. It states that the nominal yield of a bond is equal to its real yield plus expected inflation. This equation serves as the pillar of all of macroeconomics and as the foundational tenet of the bond market. It has been reconfirmed many times by scholarly examination and by the sheer force of historical experience. If we examine periods of both low and high inflation, we’ll see how each variable in the Fisher equation affects the outcome. From 1871 to 1948, a period of relatively low inflation, the US Treasury bond yield averaged 2.9%, with the inflation rate 1.0% and the real yield 1.9%. From 1948 to 1989, a period of higher inflation, inflation jumped to 4.3% on average. The Treasury bond yield increased to 6.0%, but the real yield remained close to historical norms at 1.7%. More recently, the inflation rate has declined, but the real rate has remained close to historical averages. My point is that while average inflation and bond yields were volatile, the average real yield was far more stable. Over longer stretches, the real yield was never far from its post-1871 average of 2.2%. Thus, over long periods of time, bond yields fluctuated in response to rising and falling inflation. However, the real bond yield steadily reverted to its mean. Inflation While a host of factors caused inflation to vary in the aforementioned periods, two significant ones are easily identifiable. First, the 70-year span between 1871 and 1948 (excluding the World War years) was an extended global market era. A new paradigm of uninterrupted transcontinental railroad travel plus the completion of the Suez Canal ushered in this era of rapidly expanding global trade. By 1871, 10% of US railroad traffic carried globally traded goods. This era produced increasing returns to scale and minimized price pressures. Second, the 1871-1948 period encompassed two episodes of high indebtedness: the 1870s, and then the 1920s until the mid- to late 1940s. Both severely destabilized economic activity and produced minimal inflation, which in turn led to depressed bond yields that eventually reached slightly less than 2%. Those episodes roughly correspond with the two 20-year periods of that era when the total return on long-term Treasury bonds exceeded the total return on the S&P 500: one from the 1870s to the 1890s and another from 1928 to 1948. On top of that, the traditional demographic vibrancy in the United States ended during the 1930s as both the birth rate and total increase in population slowed dramatically. The period from 1948 to 1989 differs markedly. By 1948, a global market did not exist, and the excessive indebtedness of the 1920-1930s had been eliminated. In the late 1940s, the Iron and Bamboo Curtains imposed by Russia and China removed roughly 50% of the world’s population from global trade, reducing economies of scale. During the war years, from 1933 to 1948, the US ratio of public and private debt to GDP dropped from 295% to 139%, as the personal saving rate jumped from below zero to 28%. With normal and sustainable debt levels the US entered the post-war boom, a period of rapidly rising prosperity that produced greater returns on the S&P 500 than on long-term Treasury bonds. Additionally, the abysmal demographics of the 1930s gave way to the post-war baby boom as households became more optimistic about their economic prospects. Today, conditions resemble the 1871-1948 period. Global trade is once again less inhibited, and public and private debt is high and rising. The saving rate is greatly depressed. Demographics have soured. The birth rate in 2013 fell to its lowest level on record, and the rate of population increase was the slowest since the Depression-era year of 1937. Thus, fundamental conditions are now conducive to an inflation rate averaging 1% or less. Based on the Fisher equation, long-term bond yields should be comfortable trading at 3% or lower. Many factors influence the global inflation rate, but the current bout of low inflation and insufficient demand are both symptoms of extreme over-indebtedness. Price weakness is evident in numerous different measures. Over the last twelve months ending November, the durable and nondurable goods components of the US personal consumption deflator fell by 2.0% and 0.6%, respectively. Prices of imported goods fell 1.5% over the same period; excluding oil, the decline was nearly as large. Facing weak domestic demand, foreign producers cut prices on goods headed toward the US market, and this forced domestic producers to match those lower prices. A lack of pricing power is likely to continue in 2014, for three main reasons. First, the global economy continues to incur more indebtedness. Both public and private debt in the major economies of the world continue to rise further above the levels that depress economic activity. Second, monetary conditions moved in the wrong direction last year, partly as a result of misguided policy efforts at quantitative manipulation of reserves. Third, although the sequester of government expenditures will be less in 2014 than in 2013, fiscal policy in the broadest sense is not supportive of economic growth. Indebtedness Academic research shows that a public and private debt-to-GDP ratio above the range of 260-275% depresses economic growth. In 2000, the US debt level exceeded this range. Since then, the bond yield has averaged 4.6%, with inflation at 2.1% and the real yield 2.5%. By comparing growth and debt figures prior to 2000 with those afterward, we can assess the magnitude of the problem and likelihood of its persistence. From 1871 to 1999, private and public debt averaged less than 165% of GDP (well below the 260-275% critical level), and the trend growth in real GDP was 3.8%. From 2000 through 2013, GDP growth has faltered to just 1.9%. Based on the latest 2013 figures, total private and public debt amounted to $58.2 trillion, or 344% of GDP. If the debt-to-GDP ratio were currently the same as the average from 1871 to 1999, total debt would be only $30.5 trillion, or almost half of the existing level. The debt-to-GDP ratio declined since peaking in 2009, but not enough to reenter the normal range. Moreover, the ratio resumed its upward trajectory in 2013. Thus, the US appears to be following the Japanese example of trying to cure a debt problem by accumulating more debt. Scholarly research conducted in the US and Europe over the past three years indicates that the amount of government debt relative to GDP has reached levels that historically have produced a deleterious effect on economic growth. This effect has historically lasted two decades or longer. As termed by European researchers, the current levels have reached the “non-linear zone.” This means that the negative effects on growth are likely to intensify as this debt ratio moves higher. Ignoring this research is ill advised, especially since the debt levels are still advancing. Although the US budget deficit was smaller last year, the more critical debt ratio continued to rise. According to the Organization for Economic Cooperation and Development (OECD), general US government gross financial liabilities as a percent of GDP reached 104.1% in 2013, the highest level since the early 1950s. (Gross, rather than net, government debt is the appropriate measure; netting out the government debt held in other government accounts is not appropriate since the social insurance trusts have far greater liabilities than they have government securities to fund those future commitments.) By the end of 2015, the OECD projects this figure to jump to 106.5%. And according to the Congressional Budget Office, over the next 25 years, government debt to GDP will move dramatically higher. Since European fiscal policies mirror those in the US, it is not surprising that European growth prospects remain dismal. According to the OECD, general government gross financial liabilities in Europe reached 106.4% of GDP in 2013, up from 95.6% in 2011, an even faster rise than in the United States. New research shows that the world average of total public debt, expressed as a percent of global GDP, is approximating its highest level since 1826 (IMF Working Paper WP/13/266, “Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten,” December 2013, by Carmen M. Reinhart and Kenneth S. Rogoff). Private debt to GDP in the Eurozone and the UK (and interestingly, in Japan) are all higher than in the US and even further above the levels that research has identified as being detrimental to growth. Monetary Conditions Monetary policy continues to be a negative for growth. Three academic papers presented at the Jackson Hole conference last August determined that the present approach of quantitative easing by the Federal Reserve has actually slowed economic activity. Four considerations show that monetary policy is working against economic growth. First, monetary policy works primarily through price effects. The level of real interest rates determines the price of credit. In 2013, long-term Treasury bond yields rose 100 basis points, or 1.0%. The inflation rate, measured by the year-over-year change in the Fed’s targeted core personal consumption expenditure deflator, dropped 50 basis points. This pushed the real yield on the 30-year bond to nearly 3% at the close of 2013. Thus, real yields currently carry a significant premium to the long-term average. The effects of this rising price of credit are visible in the high-frequency housing data. Recently, pending and existing home sales fell below year-ago levels. Mortgage applications for home purchases in December were at their lowest level in more than a decade. Second, the money multiplier that reflects the conversion of bank reserves into deposits (money) by the banking system fell to a new 100-year low of less than 3 in late December 2013. This indicates that the Fed’s large-scale asset purchases (LSAP) are not currently producing real, tangible economic effects and are not likely to in the future. Since 1913, $1 of high-powered money has, on average, resulted in an increase of $8.20 of M2. The current multiplier constitutes an unprecedented historical gap. To accelerate economic growth from a monetary perspective, an increase in the multiplier would be necessary. The best indicator of whether this acceleration process is working would be the expansion of bank credit, which includes bank investments and bank loans. Unfortunately, for the past 12 months the expansion of total bank credit is only 2.0% higher than one year ago, and bank loans have expanded by only 1.9%. Third, in spite of the Fed’s LSAP, which was larger in 2013 than 2012, M2 expanded at a considerably slower pace of 5.3% in the 12 months ending December 2013, down from 8.2% a year ago. The reduced money growth is an indication that LSAP is becoming more counterproductive. Fourth, the velocity of money (V) continues to reject the argument that monetary policies are gaining traction. Velocity, or the speed at which money turns over, links M2 to the level of nominal economic activity. With the money supply expanding at 5.3% in the latest year, it would be reasonable to expect the same growth rate in nominal GDP if V were stable. Unfortunately, since 1997 velocity has been falling—and in the last 12 months it has dropped by 3.0% to 1.57, the lowest level in six decades. While a myriad of factors influence velocity, the rate of change of financial innovation and lending for productive purposes affect its direction. If debt generates an income stream that repays principal and interest and creates other activities, it will tend to expand economic activity and cause V to rise. Student, auto, and other loans for consumption (which represent the bulk of the increase in consumer credit in 2013) do not meet that criterion—those forms of debt are merely an acceleration of future consumption and tend to inhibit the borrower’s ability to increase consumption down the road. Further, new regulations on our financial industries are discouraging financial innovation, and this could bring further downward pressure on velocity. In 2014, if velocity erodes at a generously low (and unlikely) 2% pace and money supply continues to grow at its current rate, nominal GDP will expand at about a 3% growth rate. If 2013 growth rates in velocity and money persist in 2014, then nominal growth would be even less. Fiscal Issues Based on scholarly research, only half of the negative economic impact emanating from the $275 billion 2013 tax increase has been registered so far. Due to the recognition and implementation lags, the remaining drag on growth from the tax increase will occur this year and again in 2015. Carrying a negative multiplier of 2 to 3, this impact far outweighs the sequester (which is expected to be slightly less in 2014 than in 2013) since the multiplier for government expenditures is zero, if not slightly negative. An important fiscal policy event for 2014 is the Affordable Care Act (ACA). Health care is the largest US industry, comprising 17.2% of the economy in 2012. That’s more than twice as large as residential construction, oil and gas exploration, and the automotive sectors combined. The scope and scale of ACA may divert energy and activity away from more productive endeavors. The ACA’s employer mandate was waived in 2013, as were similar obligations of labor unions and others, but these waivers expire this year. Firms may have to cut full-time employees to part-time, reduce total employment, or cut benefits since they lack pricing power to cover these costs. As such, this will place the burden of adjustment on consumers. On January 1, health insurance premiums that target small businesses and individuals were raised. These groups create jobs and are vital for growth, so although the amount of the increase is small, this is not a positive development for the economy. While the ACA is an unprecedented event for which no historical point of comparison exists, history does confirm that substantial increases in government regulation are not a springboard for innovation, the lifeblood of economic activity. The slow nominal growth rate anticipated for 2014 should continue to put downward pressure on the inflation rate as insufficient demand continues to foster highly competitive markets. With slower inflation, lower long-term interest rates are a probable outcome. Dr. Lacy H. Hunt is executive vice president of Hoisington Investment Management Company ($4.5 billion under management) and author of two books, and articles in Barron’s, the Wall Street Journal, the New York Times, the Journal of Finance, the Financial Analysts Journal, Business Economic, and the Journal of Portfolio Management. Previously, he was Chief US Economist for the HSBC Group and Senior Economist for the Federal Reserve Bank of Dallas.
Sponsor Advertisement The dollar index finished the Thursday trading session at 80.21—and sank 13 basis points to 80.08 just minutes before the London open. The tiny rally from that point took it back to almost unchanged on the day by shortly before 11 a.m. BST in London—and it was all down hill from there, closing virtually on its low at 80.03—down 18 basis points from Thursday. Will there be a not-for-profit buyer waiting in the wings to prop up the dollar index at the open on Sunday night in New York, one wonders. The gold stocks spent most of the first half of the Friday session trading in positive territory, but rolled over about 12:30 p.m.—hitting their lows minutes after 1 p.m. After that they chopped quietly higher, finishing just barely in the plus column, up 0.16%. Palladium didn’t do much, but did manage to close up 4 bucks—the same amount it close up on Thursday. The silver stocks more or less followed the same pattern as the gold stocks, with the low also coming shortly after 1 p.m EDT. But the low tick was down almost 2 percent from Thursday’s close—and the subsequent rally wasn’t able to get the silver equities in the black. Nick Laird’s Intraday Silver Sentiment Index closed down 0.42%. Platinum spent most of Friday in positive territory—and began to rally with some authority the same time silver did, about 30 minutes before the Comex open. The price almost made it to $1,485.00 spot by 10:30 a.m. in New York, before a willing seller showed up and by 2 p.m. EDT, they had the price down ten bucks and change from its high tick. From there it traded sideways into the 5:15 p.m. electronic close. Platinum closed up 9 bucks. The silver price had a bit more shape to it—and the rally that began about 20 minutes before the Comex open lasted until around 9:15 a.m. EDT. From there it traded sideways until fifteen minutes after the Comex close—and looked like it was going to finish the day above the $21 spot price mark. But someone had other plans—and by the time they were through, silver was back below the $21 spot price market once again. The low and high ticks were $20.90 and $21.205 in the July contract. Silver closed in New York at $20.87 spot, down 24.5 cents from Thursday’s close. Net volume was huge—54,000 contracts in the new front month, which is September.