Wednesday, October 7, 2009

G20 PostReport

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Gary’s Note: The story can be told at last. Byron King gives the details from on the ground at the G-20 as only he can. If you were counting on anything productive coming out of this meeting, then Byron is sorry to have to disappoint you…but that doesn’t mean he doesn’t have a plan.

Whiskey & Gunpowder
By Byron King

October 7, 2009
Pittsburgh, Pennsylvania, U.S.A.

From the Front Lines of the Pittsburgh G-20

Wow, there were cops everywhere.

On Wednesday, the day before the G-20 opened, I drove through the Oakland section of town, home to the University of Pittsburgh and Carnegie Mellon University. There were squads of state troopers on every block. It was just a long, gray line of troopers, with their distinctive “Smokey Bear” hats. Along some blocks, there were more troopers than college kids. Nothing to see here, folks. Just move along. Oakland was safe.

The other good news was that if you were out driving on the Pennsylvania Turnpike, there were few troopers on road duty. You could go pedal to the metal. As in, you could finally figure out how fast that Buick Fireball 3800, Series II, L-67, supercharged, V-6, 220-horsepower engine could take you. Not that I know anything about anybody doing something like that. Nope.


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Down with Plate Glass... Ummm… I Mean Capitalism!

On Thursday afternoon, a few protesters tried to march through a Pittsburgh warehouse district toward the downtown convention center. But they were met by platoons of police in “tactical” dress — ninja armor, riot helmets and long batons.

From what I saw, on Thursday, there were more police than protesters. I think there were more news reporters than protesters, as well. Still, in the name of anti-globalism, a few windows got smashed here and there. Down with capitalism and plate glass, and all that.

The cops revved up and used a new device (new to me, anyhow) called a sound cannon. It shoots a directional sound wave that’s noisy as hell and very disorienting. Worked as advertised. First time it’s ever been used in the U.S., I’ve been told. Probably won’t be the last, if you know what I mean.

Not to be overly judgmental, but the protesters were pathetic. Really, I’ve seen protests, and these guys were amateurs. Thursday’s protest activities, for example, included the young waifs tossing rocks at such noted Pittsburgh corporate criminals as Lu Lu’s Noodles and Pamela’s Diner. Also, a few sticks and stones went through the glass of that notorious oppressor of the poor, Boston Market. “Down with chicken! Down with chicken salad!”

Dudes, is that your best shot? Really. Whatever happened to, “The people, united, will never be defeated”? Put your ball cap on straight, pull your trousers up, and PROTEST like you MEAN it!

To be fair to the protesters, someone managed to score a hit on an A-list target by tossing a brick through the window of a BMW dealership. And we all know how BMW has wrecked the hopes of mankind, right? Right-on, right? Power to the people, right?

Black Masks and F-15s

That Friday, the G-20 world leaders gathered around a VERY large circular table. They all read from written scripts, except for President Obama, who used a teleprompter. Then they all issued a communiqué. More on that below.

There was rumbling jet noise all day, as Air Force F-15 Eagles flew combat air patrol overhead. They were guarding the earthly bigwigs from wayward airliners piloted by any hardened ideologue who may have smuggled a pair of nail clippers or an oversized tube of toothpaste past the TSA screeners at Boston Logan, or Newark Intl.

One Eagle driver surely earned his flight pay and a commendation, if not an air medal, by dropping flares near a Cessna 152 that was following Interstate 79 west of Pittsburgh. Turns out that the little prop-job broke airspace restrictions and wound up getting escorted to Wheeling, W.V., for a visit with the nice people from the Secret Service. I can hear him now. “Hey, it’s IFR flying. As in the expression, ‘I follow roads.’”

As the air war raged overhead, back on the asphalt, the Friday protesters staged another march. Many wore black jeans, black sweatshirts, black face masks, black gloves, dark glasses, and even dark hard hats. I know it’s not right to label people, but it seemed to be more than a mere group of youths out on a frolic while collectively making a fashion statement.

As these men in black (and women, to be sure) marched through the Bloomfield section of town — Pittsburgh’s Little Italy — something happened that was right out of a movie script. Local home and business owners appeared at their front doors, holding baseball bats and garden shovels. The message was clear. Toss a brick, and you’ll get your arm broken, or maybe lose a few teeth. Forget the sound cannon. That’s one way for a city to keep its disobedience at the “civil” level.


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Friday Night Lights

By Friday night, after the G-20 was officially over, the protesters were ready to party. So they went to Oakland and tried to trash the place. Too bad for these revelers, but there were still a couple thousand cops walking the beat. There were cop cars all over, with lights winking and blinking. The festival culminated in a protester roundup on the lawn in front of Pitt’s iconic — and, in this case, ironically named — Cathedral of Learning.

According to the Pittsburgh Police, there were 190 arrests related to G-20 over three days. The number pales to insignificance compared with other world venues for similar meetings. Then again, in how many other cities will homeowners break out the baseball bats and garden shovels to keep the protesters in line?

Pittsburgh locals accounted for 91 of the arrestees, with 99 from out of town. It appears, in the aftermath, that a number of those busted were innocent nonprotesters who came out to take a look and got caught up in various police sweeps. This included a few members of the news media, and even a Pitt videographer who was recording the protests for the university’s insurance carrier.

The G-20 Results — a Communiqué!

So what did the G-20 accomplish, besides spending $35 million in the Pittsburgh area on hotel rooms, food and other support? (Plus another $20 million budgeted for security — see above.)

Well, there was a communiqué. Whew. Close call. Had me worried for a time. OK, it was a darn good communiqué! All’s well that ends well. It was worth the hassle. Or so they say.

In the G-20 communiqué, the U.S. said that it would take the lead in phasing out subsidies for fossil fuels. The rest of the world said, essentially, “Yeah. Right. Go ahead. Do it. Whatever that means.” What does it mean, by the way? It’s not entirely clear. I think that “phasing out subsidies” is a smoke screen (whoops, bad metaphor) for raising taxes on oil companies.

As sure as the sun rises in the east, you can count on the current U.S. political class to raise taxes on oil companies. There’s a political class in the U.S. that just HATES oil companies. Must be something in the water, so to speak. The rest of the world doesn’t care. “Go ahead, U.S.,” they say. “Tax your oil companies into the dirt.” That just makes it easier for other up-and-comers to compete and profit (which is why those up-and-comers are in the OI portfolio and why my subscribers to Outstanding Investments will benefit).

Everybody at the G-20 also agreed that the International Monetary Fund (IMF) would set up a fund to help with development in poor countries of the world. How noble, right? But wait a minute. Did anybody tell the protesters? There they were, marching through Lawrenceville to help the poor countries of the world, and in the process getting their eardrums busted by a sound cannon. All the while, the G-20 was coming up with a program to help the poor. Hey guys, listen up! (Whoops. You’re deaf. Sorry. My bad.)

Next question, though, is where will the IMF get the funds to set up this development fund? There were some vague references to something about selling IMF gold. That’s right. Get rid of that barbarous relic. Who needs gold anymore, anyhow? Sell the gold. Raise cash to lend to the poor nations for development.

Now the next part is a little tricky. Who’s going to buy the gold? That decision wasn’t exactly spelled out in the precise wording of the communiqué. But rumors are that the Chinese agreed to bite the bullet and take that barbarous gold off the hands of the IMF. Whew! Had me worried.

Calling for Mogambo Guru

The G-20 communiqué also delved into the current world recession, and the global policy response. Here’s some of the exact wording:

“We cannot rest until the global economy is restored to full health, and hardworking families the world over can find decent jobs.

“We pledge today to sustain our strong policy response until a durable recovery is secured. We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility.”

Let’s dissect this. The G-20 gang are not going to “rest.” Not until “the global economy is restored to full health.” I think we’re going to have some very tired G-20 people on our hands. If they’re really not going to rest, I want to know if there’s enough NoDoz in the whole world to support this commitment.

Then, they’re going to “sustain” their “strong policy response” until a “durable recovery” occurs. Meanwhile, they’ll keep the “stimulus” flowing. (Stimulus? Have you seen it? I must’ve missed it.) And do it all while “maintaining our commitment to fiscal responsibility.”

Wow. They’re going to spend stimulus money, but do it with fiscal responsibility. OK, if you say so, boss.


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Then again, where’s Mogambo Guru when you need him? This communiqué overflows with total cognitive dissonance. It’s incoherent. It babbles. It flies in the face of reality. It was obviously written by a committee, pulling 3-by-5 cards out of a hat, and on the cards were written every feel-good political bromide known to modern man.

This communiqué is an embarrassment. It makes it look like the police used the sound cannon on the people who wrote it. It’s as if the drafters were blinded by the flares from the F-15. For this kind of pabulum, the owners of Lu Lu’s Noodles had to get their windows broken?

Since I can’t find the Mogambo Guru, I’ll just quote him. “We’re all freaking doomed. Buy gold. And if you can’t buy gold, buy silver. Or oil.”

(That’s exactly what subscribers to my newsletter Outstanding Investments have been doing…at steep discounts. Outstanding Investments subscribers will looking for the new issue in which I’ll be giving them a way to buy into the ongoing development of “tight gas” plays. And the best part? This investment currently has a yield north of 11%.)

Until we meet again,
Byron W. King

P.S.: Enough G-20! If you want to know what a REAL meeting of the minds looks like, from Oct. 11-13, there’s a tightly packed gathering in Denver of the U.S. section of the Association for the Study of Peak Oil and Gas (ASPO). Speakers include geologist Gil Mull, who discovered the oil field at Prudhoe Bay, Alaska, in 1967. And geochemist Marcio Mello, of Petrobras fame, whose work led to the recent gigantic discoveries offshore Brazil. (Since Gil and Marcio will be there, I’m going too.) These, and many more great speakers will offer a mind-expanding menu of perspective on where things are going in the world of fossil fuels. Here’s a link to the ASPO site, with details on how to sign up to attend.

A Parting Shot
We’re going to talk a bit more about oil tomorrow. Today, we address reactions to the latest offering from James Howard Kunstler…

Boy, I must be more cynical than I realized; I found Jimmy’s WWIII article actually humorous! Not because it’s far-fetched. Oh no, on the contrary, what he depicts is all too possible. I guess it was funny because nobody else on the blogs I attend, wants to believe ANYthing bad could EVER happen to USA. (What planet do they live on?)

The only quibble I have is that the elected leader of Iran has not only made “intemperate remarks,” he’s also been testing missiles capable of reaching Saudi Arabia! We do indeed live in interesting times...

Thank heaven that that’s your only quibble…

I have a request that you post this message to all my fellow shooters:

Folks, do not unsubscribe to W&G just because JHK insults us nearly every chance he gets just because of the way we choose to live. Take a shot of Southern Comfort, then after W&G publishes his leftist big government elitists rants, FLOOD all of Agora with how much you dislike him. Email Gary, Bill, Addison, Ian and anyone else whose email you have. That may eventually get this guy discarded. It may be an exercise in futility, but it sure will make you feel better in the mean time. I swear, JHK must have some seriously incriminating photos of Gary, Bill or Addison somewhere, That is the ONLY reason I can see they keep him around.

I’ll drink to that one!!!!

I don’t know about Bill or Addison, but there are incriminating photos of me already floating all over the internet. Luckily, in most cases the lighting is poor enough or the angle of the photo oblique enough that I can plausibly deny each of them.

And ways of life frequently deserve insulting...even if it’s the way the vast majority choose to live.

A few years ago I was a pariah in every single one of my social and professional circles because I refused to borrow more money than I could hope to pay back for a home in an overheated real estate market bid up by millions of other people who’d borrowed more money than they could ever hope to pay back.

I was called a fool, a knave, a Cassandra and worse. Laughed at behind my back. Derided to my face!

Never once did I worry. I believed the likes of Bill and Addison and, yes, even that gadfly wordsmith James Howard Kunstler. My family, friends and acquaintances were participating in the madness of crowds in its latest incarnation: the housing bubble. They were exercising their “choice” to participate in the profane and the unsustainable. And they are all now getting what they deserve.

We here at Agora Financial don’t run Jim’s material because we delight in angry emails and unsubscribe requests. We do it because our onus in this world is to be ahead of the crowd...and that usually means pointing out that the crowd is engaged in mass folly...and that they’re going to get what they got coming...good and hard!

(In fact we do it till it hurts. Case in point: The New Empire of Debt is available. It’s hard being so right and simultaneously witty and charming, but someone’s got to do it. But Bill Bonner and Addison Wiggin aren’t ones not to offer solutions as well. You can get the latest solutions by reading the book.)

So when James calls the post-industrial megalopolis a monstrosity with no future...or points out that the automobile-centric suburban infill is a cartoon of a real human settlement...he’s doing it because it’s true...and we pass it along to you because deep down we love you.

So we’re glad some of this stuff makes you uncomfortable and outright angry. It should. And it’s likely to keep on happening. We’re challenging assumptions that won’t get challenged anywhere else. And we don’t apologize for it. We got ideas…and we’re not afraid to use them!

But keep those outrages coming, Shooters. Discussions can get boring when there’s nothing but agreement.

Gary Gibson
Managing Editor,
Whiskey & Gunpowder

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