Friday, September 11, 2009

The End of Cheap Water?

AGORA Financial: Rude Awakening

The End of Cheap Water?

Baltimore, Maryland

* Markets’ meteoric rise flattens, could this be the edge of the next cliff?
* When it comes to investing in China, there’s something in the water,
* Avoiding the dubious art of “falling with style” and plenty more…

Eric Fry
, reporting from Laguna Beach, California…

Fans of the 1995 animated movie, “Toy Story,” will remember when Buzz Lightyear conducts a series of acrobatic maneuvers that persuades most of the other toys he can fly. But, Woody, the toy cowboy, angrily objects, “That wasn’t flying! That was…falling with style!”

Fans of the 2009 rally on Wall Street also seem to believe that the U.S. economy can fly. But that’s not flying, dear investor, that’s falling with style.

“Airborne” and “aerodynamic” are not synonyms.

If the nation’s leading economists are to be believed, the U.S. economy has lifted off from the long, bumpy runway of recession. But your editor suspects that this liftoff might last only slightly longer than the Wright Brothers’ 12-second flight at Kittyhawk.

The problem is that government credit is lousy jet fuel. Only private capital can power long-distance flights. For a short time, governmental efforts can send an economy airborne. But these flights of fancy almost always end quickly…and badly…unless private capital returns to the venue.

So far, private capital has shown little inclination to resume investing in anything riskier than T-bills. Financing remains scarce for most of the small and mid-sized businesses that comprise the heart and soul of the American economy. [Every single small- to mid-size businessperson with whom your editor has spoken during the last few months has reported that lack of credit is hobbling business. If any Rude readers would like to corroborate or refute this anecdotal impression, please email your firsthand accounts to Joel]. In the meantime, many of the most visible indicators of economy vitality remain unmistakably downbeat.

Given the related facts that private capital is conspicuously absent from the economy and that government stimulus programs are notoriously ineffective, the U.S. economy might struggle to remain aloft.

The nearby chart shows that the Institute for Supply management’s Index of U.S. service sector industries has improved a bit of late. Apparently, this segment of the economy has gained a little altitude. But remember, airborne is not aerodynamic.

“If we have a recovery at all, it isn’t sustainable,” predicts Kevin Harrington, managing director at the hedge fund group, Clarium Capital Management LLC. “This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”

Paul Tudor Jones, one of the most successful hedge fund managers in America, holds a similarly dour outlook. Accordingly, he distrusts this year’s big rally on Wall Street that has lifted all the major averages 50% or more. This was merely a “bear market rally,” Tudor declared in an August 4th letter to his firm’s clients. Interestingly, all the major U.S. stock market indices are flat since August 4th.

This recent lackluster performance does not prove Tudor is correct, but it does prove that he isn’t wrong…at least not yet. In other words, his bearish outlook may not be right, but it is probably justified.

The very same stock market that has been going up for most of the last six months – and that Abby Joseph Cohen, the robotically bullish strategist at Goldman Sachs, predicts will continue to go up – is the same stock market that may begin going down…simply because the underlying economic realities fail to support rising stock prices.

Not all stocks deserve to be sold, of course. In fact, some types of stocks are probably worth buying right now…

In the column below, Chris Mayer, editor of Mayer’s Special Situations, revisits one of his favorite long-term investment opportunities…

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The End of Cheap Water?
By Chris Mayer

The price of water is starting to rise in a big way, at least in China. I’ve expected this for a few years.

Water rates in China have been so far below the global average it’s ridiculous. Especially when you consider the severe water problems in China. The Chinese are water-poor. They are sucking their aquifers dry. It is particularly bad in the north of China. The groundwater under the North China Plains is draining away quickly. By some estimates, China will exhaust this water supply in the next ten years.

You probably know that the city of Venice is sinking a fraction of an inch per year. But that’s nothing compared to what is going on in Beijing. Parts of Beijing are sinking 8 inches a year! According to Andrew Lees (The Right Game), it is the world’s largest cone of depression (an underground hole created by a depleted water table) at over 15,000 square miles. The second largest cone of depression is around Shanghai.

So finally, many cities are raising the price of water. The WSJ points out several places where water prices could rise 25-48%. Shanghai, for instance, raised water rates 25% in June and plans another 22% increase next year.

The second event that caught my eye was the collaboration between China and India to monitor the health of Himalayan glaciers. This area is very important to both countries. They fought a war over it in 1962. So, the fact that they are getting together on the Himalayan glaciers is meaningful.

Here is why it is so important: Seven of the world’s largest rivers, including the Ganges and the Yangtze, are fed by the glaciers of the Himalayas. They supply water to about 40 per cent of the world’s population.

Well, those glaciers are shrinking. The Indian Space Research Organization, using satellite images, has studied the changes in 466 glaciers. It found they had lost more than 20% of their size between 1962 and 2001.

This melting increases the water flow at first, but eventually slows dramatically as the glaciers either melt completely or reform. These observations have given rise to a kind of “Peak Himalaya” theory where people wonder if we have not seen the maximum water flow from the mountains.

We know the current run rate on demand is already well above what is sustainable given annual rainfall and river flows. That’s why you have those depressions under Beijing and Shanghai. That explains the depleted aquifers and the rivers that don’t reach the sea. Now throw into that ugly brew a decline in water supply from the Himalayas. The situation is worse than it seems, if that is possible, because much of the existing fresh water in both countries is so polluted it is unfit for human consumption.

As if all of that weren’t bad enough, the demand for water is still rising rapidly in China and India. The water use per capita in China and India are still well below global averages. As these countries industrialize, they’ll consume exponentially more water. It takes water to make just about everything. For example, to make a 1 tonne passenger car takes more than 100,000 gallons of water. Just to make a cotton shirt takes over 1,000 gallons of water. And most of our water goes into making our food.

So, population growth by itself guarantees increased water demand. (Globally, water consumption increases at more than twice the rate of population growth.) These two countries already have big populations and both will get bigger. When you look at demographic trends, China and India alone will add close to 600 million people over the next 30 years. That’s two present-day United States.

Fresh water, like oil, is getting a lot harder to find for 40% of the world’s population. It will get worse before it gets better. The days when we think of water as a cheap resource are coming to a close. That’s especially true for China and India.

Bottom line: We need to create more fresh water. You do that by finding new sources either through new supplies (drilling deeper, desalination, etc.) or by using existing supplies more efficiently (irrigation and other efficiency gains).

All of that takes time and energy. Desalination is energy intensive. Drilling deeper for water or going to more distant source requires energy to pump and move the water. Replacing older, less efficient plants and equipment takes time and energy again. (Detect a theme here?)

Countries, companies and people will find ways to make this transition. The companies that can solve these problems will do well.

Joel’s Note: … and, odds are, those companies will – if they haven’t already – find their way into the Mayer’s Special Situations portfolio. For a complete rundown on this excellent research service and access to his favorite resource plays, continue reading here.

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[Rude Endnote: Whatever happens in the future, if it happens for long enough, will come to be known as “normal.” As we all know, normal can differ vastly from country to country, generation to generation. What is normal for a child in the Sudan is not likely to resemble any kind of normal for a Goldman Sachs executive, for instance.

Still, everyone we talk to seems contended with the assumption that things, economically speaking, seem to be “returning to normal.” We wonder what that actually means? Yesterday we asked readers what they thought the “New Normal” might look like.

“I don't like what I perceive as the coming ‘new normal,’” writes reader, Jim. “It consists of higher unemployment, tighter credit, belt-tightening everywhere, increased homelessness, agitated, fearful, and frustrated citizens, combined with a squirrely set of politicians making things worse as they muck around pretending that they know how to fix a broken system.”

Reader Thomas B opines, “The abnormal 'new normal' is happening as it is because the Government Market Controllers have achieved some sort of control over the whole system....enough so that the market moves the way they want it to, when they want it to, for as long as they want it to....and I expect it to continue this way...in [an] irrational, abnormal way that [will] define the ‘new normal’.”

We’ll have more thoughts from the irrepressible Rude readership throughout the week. If you want to comment what you think the “New Normal” might look like, simply drop us a line below.

Until next time…

Cheers,

Joel Bowman

The Rude Awakening
aussiejoel@the-rude-awakening.com

The Real State of American Wealth,

Agora Financial: The 5 Minute Forecast

Gold Still a Buy?, Insiders Selling Stocks, North Dakota and More!

by Addison Wiggin & Ian Mathias

* Are you wealthier now than in 1998? The government quietly announces the average answer
* Gold hits $1,000 again… Bill Bonner on whether to buy, sell or hold
* Stock insiders selling at frightening rate… sell signal or contrarian indicator?
* Doug Casey on “an excellent place to be” as the crisis continues
* Plus, readers chime in on how North Dakota has managed to dodge the global downturn

Over the last 10 years, have you really become more wealthy? We hope the answer is yes… one of our many credos is to protect and enhance your wealth, as small or large as it may be.

But for the average family, the answer is no, says a Census Bureau study released this week.

From 2007-2008, the most up-to-date data the government has, the median family income fell almost $2,000, to $50,300. That wipes out all gains made over the last three years. Factor in inflation, and the typical family is actually making less now than they were in 1998.

So let us gripe for bit: We all spend so much time poking at things like our GDP -- reporting changes every quarter and spending millions upon millions guessing where it will be next month, next year, etc. Yet there’s only one gauge of how wealthily we as a nation are actually growing… and we leave it to the Census Bureau to report once a year, with a nine-month lag time. Which matters to you more: If you are more financially sound now than you were last quarter or if the U.S. gross domestic product shrank 2.1% or 2.3%?

Poverty in the U.S. has risen to its highest level in 11 years -- that’s the more popular headline from the Census report. They released the annual poverty study this week, which was oddly delayed, as we mentioned back in August, because the data were “not optimal.”

At any rate, 13.2% of Americas lived in poverty in 2008, up almost a full percentage point from 2007. That’s the highest rate since 1997. And even though you’re likely shaking in suspense over next year’s number -- SPOILER ALERT -- we ain’t seen nothin’ yet.

What exactly is “poverty” to the U.S. government? The equivalent of a family of four living on an annual budget of $22,025 or less. Rest assured that if you’re stuck raising a family on 30k a year, you’ll be just fine.

We hate to rub it in, but gold went for less than $300 an ounce 10 years ago today. Take that, inflation.

The spot price today has once again broken through the $1,000 mark. Traders have bumped gold up to $1,010 as we write, thanks mostly to a weakening dollar.

“Is this still in a bull market in gold... or at the end of one?” asks Bill Bonner. “Are we idiots for holding it now... or idiots for not buying more?

“The feds are desperate to restart the economy. The only way they can imagine is by increasing the money supply... and inducing people to spend money. They want inflation, no doubt about it. And they'll get it -- no doubt about that, either.

“The question is when. Our view is that they'll get more than they expect, but later than they want it. We're looking for another crack in stocks...followed by more fear and loathing in the economy. This will have two major effects. First, investors will turn to the familiar dollar for safety. Second, everyone will hoard money... speculation will cease... and prices will fall -- including the price of gold.

“Market events -- such as another big break in the banking sector -- could bring a deflationary collapse. If not, the Fed itself may have to step in to protect the dollar. In either case, gold is not likely to reach its final, bubble phase until this contraction is over.

“In the meantime, our advice remains unchanged: Buy gold on dips.”

The dollar has found a new 2009 low. At 76.5, the dollar index is at its lowest level since this time last year… right before Lehman died and the market started to tank. What a coincidence!

Stocks look set to end the week quietly. As we write, the S&P is hovering around break-even. Still, at around 1,045, the S&P 500 is at a year to date high.

If you seek the market’s next move, why not ask the CEOs of publicly traded companies? For every $1 of insider stock purchases in August, there was $31 worth of sales, says a report from market researchers TrimTabs. According to the firm, execs at U.S. public companies have been net sellers of $105 billion worth of stock over the last four months. That’s the most aggressive insider selling since the summer of 2007… heh, you know… when most papers were rejoicing “Dow 14,000!”

What’s more, insiders have been spot on so far in 2009. Check out this track record:

We admit there’s a lot more going on here than simple market timing. And of course, many CEOs are no better at managing their own money than they are at running their companies (Greenberg, Fuld, Cayne, etc.). Tracking insider buying and selling sometimes does little more than confirm predispositions.

Disclaimers be damned, the numbers don’t lie… insiders have had a stellar track record so far this year, and right now, they are crowding around the exits. Caveat emptor.

(By the way, as buyers and sellers argue which way the market should head next, options traders are quietly getting rich. One of our options analysts is boasting an incredible track record so far this year… get details -- and his strategy -- right here.)

“I think that cattle is an excellent place to be,” says the always interesting Doug Casey.

“There is such a thing as a cattle cycle, and right now, all over the world, cattle are in liquidation. Farmers and ranchers just can’t make any money on cattle. Nobody has made any money on cattle in North America or Europe for years, and it’s especially serious now. So worldwide, cattle herds are being slaughtered, and that’s depressing the prices.

“The interesting thing is that even as prices are being depressed by all the selling, counterintuitively, cattle herds are collapsing. That means the number of cattle and the price of cattle are going down at the same time. That, obviously, can’t go on forever; at some point, the relative number of cattle is going to be quite small and prices are going to explode upward. Why? Because people in China, the rest of the Orient and across the developing world are going to want more beef -- in addition to the traditional consumers. And the numbers of cattle are going to be very low…

“Why, if I believe we’re sliding into the Greater Depression, am I long cattle? Because you’ve got to be a buyer when everybody else is a seller, and everyone else is a seller right now, because no one can make any money on cattle. That’s No 1. No. 2 is that despite the fact the world is going into a depression, the world population will continue growing, and the countries in the Orient are going to do relatively much better than countries in the West, so I’m willing to bet on rising beef consumption. No. 3, real cattle prices are at generational lows.

“But I’m not speculating in cattle; I’m investing in cattle. I’m not doing anything with them in the futures market.”

(Doug means that in the most literal sense… he has a crew of gauchos herding ’em in Argentina.)

Last, here’s one to keep on file, from a town hall meeting last night on CNBC:

Steve Liesman: [This time] next year… will more Americans have jobs than today?

Tim Geithner: Absolutely.

Heh, we know it’s not politically legit for the Treasury Secretary to give an honest or realistic answer like “Maybe” or “How the hell should I know?” But to be “absolutely” sure… c’mon.

“I believe one of the reasons North Dakota is doing so well is they have their own State bank,” a reader writes in response to our coverage of this recession-free state. “They can loan to themselves at low or no interest rates. Just shows how much better off they are without the Fed banks -- exactly how things are supposed to be set up.”

The 5: The Bank of North Dakota is actually the only state-owned bank in all 50 states. There’s no office of the Fed and BND’s deposits are NOT insured by the FDIC… yet (gasp!) the bank is stable and capable of self-governance.

“I live in North Dakota and have interests in the Bakken,” another reader writes, “and was surprised to see both mentioned in your e-mail letter yesterday. North Dakota is an interesting place to live and work. The total population is something like 630,000, and about 30% of those live within a few miles of the Red River, which makes up the eastern border. The state is about 340 miles by 210 miles, so you can guess that there are large areas that are sparsely populated. Most of the state is agricultural, and a lot of that is marginally productive. Fortunately, much of the marginal areas have oil below, including the land above the Bakken Formation. I would say the politics are conservative relative to the rest of the country, although the congressional delegation are all Democrats. However, there was very little of the mortgage and property value silliness that some other places experienced.

“The last few years have been good for the state's coffers. When the price of oil peaked last year, there was an enormous amount of money generated for the state. There are a lot of very productive gas wells in the same areas where oil has been found, and even though the price of natural gas is a little depressed right now, it generates a lot of money for the state. Large parts of the state also have thick seams of low-grade lignite coal under them, which is used locally for power generation and some of that power might be exported, but I don't know that for a fact. Coal trains leave the state at a rate of one every few minutes 24 hours a day, and because it is such low-grade, high-sulfur coal, I can only imagine that a lot of it is going overseas. In addition to conventional energy, the last few years has seen a big boom in agriculture related to ethanol and biodiesel generation.

“So with such a small population and all of these energy-related opportunities, in addition to all the regular business that you might find in a state, we would have been pretty irresponsible to not have a budget surplus.”

The 5: Heh, you could say the same thing about the U.S. in general, but that hasn’t stopped anyone for a long time.

“Thanks for the heads-up on DXO last week,” writes the last reader today. “I got out in time, and had a profit to boot! You guys are great. Thanks.”

The 5: Good to hear. We wouldn’t be at all surprised to see other securities follow suit, especially leveraged ones that take up politically unpopular positions. But if DXO is any example, it seems like they are still safe to play with for now… it’s wind down was pretty civil.

Have a nice weekend,

Ian Mathias
The 5 Min. Forecast

P.S. By the time you read this, we’ll be on our way to Dewey Beach, Del., for a quick weekend of relaxation. Summer changed to fall like the flick of a light switch here in the Mid-Atlantic, but we’re dashing over to the shore anyway… we’re more there for peace and quiet than sun and surf. We’d love to list all the provocative and fascinating books we plan on reading on our long weekend… but honestly, little more than eating and napping is on the agenda. It’s one of those vacations.

You’ll be left in the extraordinarily capable hands of Addison Wiggin and Dave Gonigam for a few days. Both mercilessly edit and critique The 5 day in and day out, so by all means… don’t go easy on ’em. Catch you next week.

P.P.S. Would you care for some weekend reading? We recommend Byron King’s latest report on investing in silver. Check it out right here.

The Destruction of the US Empire

By Bill Bonner
London, England

Edward Gibbon described the happiest age of mankind as the period of the “five good emperors” between AD98 and AD180, when Marcus Aurelius died.

What was America’s Golden Age?

It is much too soon to write the history of America’s decline and fall. Still, that doesn’t stop us from guessing.

We would name the period between the fall of the Berlin Wall and the fall of Lehman Bros – a period of only 19 years – as the peak of US power and wealth. Of course, Americans were dreaming during those years. The dreams were the usual imperial sort – that the US Empire was such a benefit to the rest of the world that the foreigners would support it indefinitely. Rome didn’t take any chances; it forced its conquered nations to render tribute…slaves…gold…and wheat. The American empire depended on trade…and the dollar. As long as the United States had a commercial advantage, the empire was profitable. But as the 20th century aged, so did the US economy. Its competitors – notably Germany and Japan – had a big advantage. They had been bombed out in the ’40s. They could build anew. America’s trade advantage slipped away…and then its trade balance went negative in the mid-’80s. It has been getting more negative almost every year.

The trade losses shrank after the fall of the House of Lehman. Americans cut back. But today we get news that the trade deficit has just grown more than in any month in the last 10 years. Have Americans suddenly become big spenders again? Probably not. But we’ll have to wait for another explanation; we don’t have one.

No account of America’s glory years – roughly the period between the reign of George Bush I and that of his son, George Bush II – would be complete without mention of the events that happened on this day eight years ago. A small group of terrorists pulled off an amazing coup – bringing down two of America’s iconic buildings, right in the heart of New York City…and on primetime TV! Historians might be tempted to use this event as a milestone, marking the end of the period of maximum happiness in the United States of America. We caution against it. It was only later that it became apparent that the US reaction to the terrorist incident was suicidal. The nation desperately needed to bring its ambitions back in line with its means. It needed to save and invest in new factories and new infrastructure. Instead, it wasted trillions fighting phantoms and nobodies. But as far as anyone knew, US influence, prestige and power remained near its zenith throughout the wars on terror and Iraq.

The fall of Lehman changed things. Then it was obvious that not only was America vulnerable, she was an enemy to herself. She had diddle-daddled during the glory years, dawdling with the lion cubs that would grow up and maul her. Now, in the period we are living through, she attempts to go back to sleep and rerun her balmy dreams. That is what “recovery” is all about – a return to the land of nod and nonsense…in which people think they can actually become wealthier by squandering money they don’t have on things they don’t need.

Fortunately, as near as we can tell, most private citizens are now awake. A report at the beginning of this week showed that they repaid debt at a rate four times faster than economists projected. Savings rates are rising. Spending is falling. People are doing what they should do – they’re cutting back.

But the feds continue their efforts to sabotage the correction and destroy the empire. They have already blown-up the budget – with $9 trillion in deficits expected over the next 10 years. Now, they’re working on the dollar.

Yesterday, the dollar fell to $1.45 per euro. Gold remained just below the $1,000 an ounce mark. And the Dow rose 80 points.

Stock market investors seem to be looking forward to another big bull market. But with the economy deteriorating, they are probably just dreaming, too. Median household income fell 3.6% over the last 12 months. Of course, that’s just what you’d expect in a correction. But it’s not what the feds were hoping for. So, they’re pulling out all the stops to try to turn it around. Most important, they’re pulling out the stop that keeps the dollar from rolling down the hill.

The empire sinks into the mud. Yes, this is the downhill period…the slide into corruption…the period in which Juvenal complained that Romans were only interested in ‘bread and circuses.’

When you are on the board of a decent corporation, for example, if you have a direct financial interest in a matter under consideration you’re expected to ‘declare an interest’ and absent yourself from the vote. But in a mature democracy, the most self-interested citizens are those most likely to vote. Currently, about 20 million people work for government. About 45 million receive Social Security benefits. About 34 million depend on food stamps.

(People who count on the government to feed them, warned Jefferson, “will soon want bread.” That doesn’t seem to worry many people. But at least the state of Maryland has an Orwellian sense of humor about it. People who depend on government for food are given “Independence” cards.)

That’s 99 million people who have a direct interest in expanding government outlays…with some overlap, of course. And it doesn’t mean that every person receiving a Social Security check is going to back the feds. But it doesn’t count all the millions more who get subsidies, bailouts, welfare payments (often masquerading as tax credits), government contracts, and so forth, either.

Well, how many people does it take to win a national election? Obama won with 63 million votes.

The dollar’s weakness hasn’t been missed by it biggest foreign holder – China.

Reported earlier this week in the Telegraph:

“‘We hope there will be a change in monetary policy as soon as they have positive growth again,’ said Cheng Siwei…talking about America.

“‘If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,’ he said.

“China’s reserves are more than – $2 trillion, the world’s largest.

“Mr. Siwei continued: ‘Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,’ he added.”

Then, two days ago, in came a report that China is going to issue bonds of its own – in yuan.

This news is a shot across the bow of America’s imperial currency. It signals that China is moving into position to eventually challenge the greenback. Investors will have another alternative to the dollar…another bond issued by another government and backed by another economy…maybe one that is on the way up, rather than on the way down.

Meanwhile, Americans grow poorer. Bloomberg reports:

“‘The decline in incomes we’re seeing certainly has implications for consumer spending, particularly post-housing bubble when families can’t tap into home equity through loans,’ said Heather Boushey, a senior economist at the Center for American Progress, a research organization headed by John Podesta, a leader of the Obama administration transition team.

“The poverty rate is likely to keep rising through 2012, even after the recession ends, adding to pressure on the Obama administration to enact a second economic stimulus package, said Isabel Sawhill, a senior fellow at the Brookings Institution in Washington, a policy research group.

“‘We will likely have not only a jobless recovery but also a poverty-ridden recovery,’ Sawhill said. ‘The stimulus money is going to go away long before the poverty rate peaks.’”

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed and internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning .

Special Report:The Endless PAYCHECK PORTFOLIO: In three simple steps, unleash a steady flow of work-free income… starting with up to 75 automatic “paychecks” deposited directly into your account.

View articles by Bill Bonner

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial. Additional market commentary is available through The 5Min Forecast and The Rude Awakening. Follow the Daily Reckoning on Twitter and Facebook .
Related Articles:

* June 29, 2009 -- Ruined by Good Luck
* April 1, 2009 -- A Talk With Tim Geithner
* September 8, 2009 -- The Boomers are Out of Time – And Out of Money
* September 7, 2009 -- This Recovery is an Imposter
* September 4, 2009 -- The Capitalists Have No Capital

Obama's regulatory chief; Cass Sunstein pushes new 'bill of rights'

Obama Watch Central

WND Exclusive CZAR WARS

Cass Sunstein part of effort to change interpretation of Constitution by 2020



By Aaron Klein

NEW YORK – A government that is constitutionally required to offer each citizen a "useful" job in the farms or industries of the nation.

A country whose leadership intercedes to ensure every farmer can sell his product for a good return.

A nation that has the power to act against "unfair competition" and monopolies in business.

This is not a description of Cuba, communist China or the old USSR. It's the vision of the future of the U.S, as mandated by a radical new "bill of rights" drawn up and pushed by President Obama's newly confirmed regulatory czar, Cass Sunstein. Until now, Sunstein's proposal has received little scrutiny.

In 2004, Sunstein penned a book, "The Second Bill of Rights: FDR'S Unfinished Revolution and Why We Need It More than Ever," in which he advanced the radical notion that welfare rights, including some controversial inceptions, be granted by the state. His inspiration for a new bill of rights came from President Roosevelt's 1944 proposal of a different, new set of bill of rights.

WND has learned that in April 2005, Sunstein opened up a conference at Yale Law School entitled "The Constitution in 2020," which sought to change the nature and interpretation of the Constitution by that year.

Get Glenn Beck's 'Common Sense' ... The case against an out-of-control government: Inspired by Thomas Paine

Sunstein has been a main participant in the movement, which openly seeks to create a "progressive" consensus as to what the U.S. Constitution should provide for by the year 2020. It also suggests strategy for how liberal lawyers and judges might bring such a constitutional regime into being.

Just before his appearance at the conference, Sunstein wrote a blog entry in which he explained he "will be urging that it is important to resist, on democratic grounds, the idea that the document should be interpreted to reflect the view of the extreme right-wing of the Republican Party."

In his book, Sunstein laid out what he wants to become the new bill of rights, which he calls the Second Bill of Rights:

Among his mandates are:

* The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

* The right to earn enough to provide adequate food and clothing and recreation;

* The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

* The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

* The right of every family to a decent home;

* The right to adequate medical care and the opportunity to achieve and enjoy good health;

* The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

* The right to a good education.

On one page in his book, Sunstein claims he is "not seriously arguing" his bill of rights be "encompassed by anything in the Constitution," but on the next page he states that "if the nation becomes committed to certain rights, they may migrate into the Constitution itself."

Later in the book, Sunstein argues that "at a minimum, the second bill should be seen as part and parcel of America's constitutive commitments."