War on Commodities: Intervention Phase Worsens and Spreads With More Credit Margin Hikes!

[This post, which I published last May 10, seems to have vanished from my inventory of articles. Perhaps this could be an unintentional omission as part of the patching of the technical glitch, or the alternative, I don’t like to think about it. Nevertheless I am reposting it, but with slight revisions. Anyone who has a copy of the old post pls resend to me benson.te@gmail.com. Thanks]

So the mainstream picks up on the war being waged on commodities.

For politicians it’s all been about political correctness, thus any deviances or incorrectness must be faced with 'discipline'.

Bloomberg’s Matthew Lynn writes, (bold highlights mine)

The battleground that matters most for the banking and finance industry right now is the profits it is making from commodities trading.

Over the last few days, prices have been bouncing all over the place, a reminder for everyone of just how unstable the market in food and raw materials has become.

Now there is a backlash building. The banks should take note of that. If they don’t, they could easily be driven out of this business -- and they will only have themselves to blame.

Investors held a record $412 billion of raw-material assets at the end of March, almost 50 percent more than a year earlier, according to estimates by Barclays Capital. Trading in futures and options contracts is rising rapidly. For banks and fund managers, it is a lucrative business. And the more volatile it is, the more profitable it gets.

Not everyone is happy about that. Last month, Barclays Plc was targeted at its annual general meeting for its trading profits in food commodities. The World Development Movement, a London-based group, claims that Barclays may be making as much as 340 million pounds ($554 million) a year from “food speculative activities.”

That may be exaggerated, but there will be plenty of sympathy for that view. French President Nicolas Sarkozy has blamed speculators for pushing up food prices. The European Union’s financial services commissioner, Michel Barnier, is even calling for limits on trading in commodities...

It would be easy to dismiss those protests as nothing more than the complaints of a few anti-business fringe groups and grandstanding politicians. Easy, but wrong. In reality, there is a serious issue here. Speculation in commodities isn’t like trading in financial instruments. People don’t eat Nestle SA shares. They don’t need Treasury bills to keep their factories running. The prices of those instruments can jump around like crazy without it affecting people’s lives.

But when the price of wheat or copper soars, it makes a big difference. Some people can’t afford to eat anymore because food is too expensive. Companies that used to be profitable start losing money and firing workers because the cost of their raw materials has risen so much. If they think the banks are to blame for that, they will be angry.

As I have been saying governments have been so predictable;

First governments inflates, then blames everybody else.

Then they apply propaganda to justify their actions.

Next they’ll impose price controls in the hope that edicts will be able repeal economics.

Eventually reality catches up and the facade collapses.

And as we have been pointing out inflation and price controls are like (fraternal) twins. Fraternal because both emanate from government policies, however one aspect is monetary while the other is administrative or fiscal.

Now the propaganda-price control stage is getting clearer

And this has been part of the slew of propaganda being tossed out by the Fed which for me constitutes part of the ‘signaling channel’ conditioning for the next QE.

Here is a Fed study which attempts to show that the link between US dollar and inflation has been fading.

From the Wall Street Journal Blog,

Currency weakness leading to higher import prices is a hallowed cause-effect connection for economists. But it’s a link that may be eroding...

Certainly, import prices have increased as the dollar has weakened. Over the year ended April, the trade-weighted value of the dollar fell about 6%, while the prices of non-oil imports increased 4.3%.

Much of the price gain, however, reflects higher costs for imported commodities and supplies. The prices of imported capital and consumer goods — items that feed more directly into broader U.S. inflation measures — are up only about 1% over the past year.

Economists at the Fed have looked into the link between exchange rate and import prices. What they found is the pass-through effect from a weaker currency eroded from the 1980s into the early 2000s.

What’s behind the looser link?

One reason, the economists theorize, is that a greater share of imports are goods with prices less sensitive to currency movements. For instance, Apple — not the forex market — sets the price of iPads.

Also, companies are more able to hedge against currency moves or shift production and supply sources around the globe.

Another reason for the erosion is China dominance of the U.S. import market.

With all the gobbledygook, we should start believing them. Unfortunately technical gibberish won’t supplant the law of economics. Printing more money relative to actual output of goods and services will lead to HIGHER prices.

And that’s what’s been happening.

Yet if you look at their chart which tries to identify the so-called decoupling, it simply is not there, see the trend lines I drew—red nominal imports; blue trade weighted US dollar.

The immediate effects may not be as strong as the previous, but it doesn’t mean the current divergences should translate to a deepening trend.

One development which may induce this temporal decoupling would be by intervention via the financial markets, which is what the governments been doing now.

The charts above reveal that prices of non-commodity imports have been rising.

Then Northern Trust notes,

Prices of consumer goods excluding autos increased 0.4% in April and are up 0.6% from a year ago. Prices of autos have risen 1.8%, while that of capital goods have increased 1.0%. The import price index of manufactured goods posted a 5.5% increase in April.

At the present time, the upward trend of non-oil import prices reflects the impact of a weak dollar. It is conceivable that these prices will be more threatening as demand gathers steam.

So politicians in realizing these, appears to be in an intense denial, thus the transition towards the psy-war and intervention phase.

It should be a reminder that denial and anger is part of the human psychology when undergoing substantial stress.

This can be seen in the Kubler-Ross Grief cycle.

Of course the intervention phase, so far, has not been directed at the consumer level, but as pointed out by Mr. Lynn, rather through the financial markets.

The desperate attempts to control commodity prices have been worsening.

Notes Tyler Durden of Zerohedge.com, (bold emphasis mine)

CME goes full retard, and is now seriously threatening to destabilize the clearing structure of the market with what appears a panicked margin hike every single day in one or more commodities. Among today's products impacted RBOB and RBOB crack spreads, up by 21% and 50%, respectively, as the CME makes it all too clear which products the Obama memo said need to be killed post haste.

Changing rules of the game won’t change the outcome.

As the great Professor Ludwig von Mises presciently wrote, (highlights mine)

The public discussion of economic problems ignores almost entirely all that has been said by economists in the last two hundred years. Prices, wage rates, interest rates, and profits are dealt with as if their determination were not subject to any law. Governments try to decree and to enforce maximum commodity prices and minimum wage rates. Statesmen exhort businessmen to cut down profits, to lower prices, and to raise wage rates as if these matters were dependent on the laudable intentions of individuals. In the treatment of international economic relations people blithely resort to the most naive fallacies of Mercantilism. Few are aware of the shortcomings of all these popular doctrines, or realize why the policies based upon them invariably spread disaster.

These are sad facts. However, there is only one way in which a man can respond to them: by never relaxing in the search for truth.

Blogger’s Friday the 13th Snafu

Blogger’s been down for more than a day. But it’s obviously back.

Unless one is stricken by Friday the 13^th phobia or friggatriskaidekaphobia, then blogger.com’s foul up has most likely been a coincidence.

Hopefully it’s been a technical glitch….

Notes the CNET,

"We're nearly back to normal -- you can publish again, and in the coming hours posts and comments that were temporarily removed should be restored," Eddie Kessler, tech lead/manager at Blogger, wrote in a post on the Blogger Buzz site around 10:30 a.m. PT.

The post continues:

Here's what happened: during scheduled maintenance work Wednesday night, we experienced some data corruption that impacted Blogger's behavior. Since then, bloggers and readers may have experienced a variety of anomalies including intermittent outages, disappearing posts, and arriving at unintended blogs or error pages. A small subset of Blogger users (we estimate 0.16%) may have encountered additional problems specific to their accounts. Yesterday we returned Blogger to a pre-maintenance state and placed the service in read-only mode while we worked on restoring all content: that's why you haven't been able to publish. We rolled back to a version of Blogger as of Wednesday May 11th, so your posts since then were temporarily removed. Those are the posts that we're in the progress of restoring.

The publishing site has millions of active blogs, he said.

…and not seeds towards online censorship.

Graphic: Devil Finds Work For Idle Hands

Here is another wonderful illustration from Jessica Hagy’s Indexed which she calls as ‘Often A wonderful thing’.

For me, this looks more like the idiom the ‘devil finds work for idle hands’

Steve Forbes: The US Will Revert to the Gold Standard in 5 years

The US will embrace the gold standard in 5 years, predicts publisher Steve Forbes of the Forbes magazine.

According to Humanevents.com (hat tip Bob Wenzel) [bold emphasis mine]

A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said. The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added.

If the gold standard had been in place in recent years, the value of the U.S. dollar would not have weakened as it has and excessive federal spending would have been curbed, Forbes told HUMAN EVENTS. The constantly changing value of the U.S. dollar leads to marketplace uncertainty and consequently spurs speculation in commodity investing as a hedge against inflation.

The only probable 2012 U.S. presidential candidate who has championed a return to the gold standard so far is Rep. Ron Paul (R.-Tex.).

The gold standard has been gaining much of public’s attention as I have pointed out earlier.

And the gold standard has been associated with Congressman and presidential aspirant Ron Paul, which implies that Dr. Paul’s advocacy throughout the years has been successfully gaining followers.

I don’t think going back to the gold standard would come orderly or casually.

Considering that most politicians are intuitively averse to cut even the slightest of their expenditures, a gold standard would translate not only to less spending, but a substantial reduction of political power for power hungry politicians. And this seems to be a universal phenomenon, which means this applies to most politicians of every government.

I don’t think that this would happen even if Mr. Ron Paul successfully wins the US Presidency in 2012. (Although Dr. Paul could aid or facilitate the process, but an orderly transition is something else. Dr. Paul will be fighting entrenched and powerful vested interest groups who will vigorously oppose him by hook or by crook)

In other words, a gold standard will only happen once a severe financial storm slams the US and the world economy and markets sooooo strong or powerful enough for people to compel politicians to renege on the current system.

That’s unless politicians wake up one day and find themselves assimilating angelic virtues, all willing to abandon their functional entitlements. But this would be a black swan for me.

In effect, my interpretation of Mr. Forbes prediction is that over the next 5 years a big crisis will buffet the US for her to reluctantly adapt to a gold standard (of course this means the world too).

Have a nice day.

The US Stock Markets As Target of US Federal Reserve Policies

The US stock markets have been target of US Federal Reserve policies!

This is what I’ve repeatedly been saying all along since 2008! And have been validated anew.

First, Fed officials deny it.

Reports the Wall Street Journal Blog (bold highlights mine)

For many years, central bankers have declined to comment on the performance of stock markets, and have instead justified their actions in purely economic terms. To the extent financial markets entered into it, central bankers were most mindful of bond markets as the mechanism that translated changes in monetary policy into credit availability for businesses and households.

The stock market only entered into the picture in times of deep market disruptions, or as part of broader discussions about the “wealth effect,” wherein rising stock prices are thought to make households feel richer, and spend accordingly. Of course, stock market operators have always spoken of the a Fed “put,” in which the central bank will ease policy to arrest sustained stock market declines.

All of that has changed since the Fed restarted late last year a program to buy $600 billion in longer-dated government bonds, in a bid to spur higher levels of growth and get the unemployment rate down faster than would otherwise be the case.

Then they confirm it.

Again from the same WSJ Blog (bold highlights mine)

It isn’t clear whether Bernanke’s shift in focus represents a change in how the Fed does business, or whether his comments represent an effort to justify a policy that hasn’t worked as planned, leaving the chairman to support it in whatever way he can. It’s a potentially dangerous policy stance, because if stocks were to undergo an extended period of losses, it could argue for the Fed to keep policy easier than it may want to.

For Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, the increased prominence of asset prices as a focus of monetary policy is not so much an enduring shift in how policy is made, as it is a recognition of what caused the huge economic and financial problems of recent years.

“This recession and the relatively slow recovery we’ve gone through, a lot of it can be traced back to net worth,” Kocherlakota told reporters after a speech in New York Wednesday. “The fall in net worth is what drove us into recession” and “in those circumstances you can see why asset values, both for land and for stocks, are really going to be a central ingredient in the recovery process,” he said.

To ensure the recovery will take hold, it’s important for the Fed to help re-flate asset prices and given households and businesses a chance to rebuild and rebalance their respective financial positions, the official explained.

“In this kind of post financial crisis, post net worth driven recession, it makes sense to be thinking about asset value as a way to try to generate more stimulus than you do in a typical recession,” Kocherlakota said.

I earlier quoted Ben Bernanke in November 2010 who already validated my views... (bold highlights mine)

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

This has long been Chairman Ben Bernanke’s guiding principle since he was a professor at the Princeton University (unfortunately the link to foreignpolicy.com has been removed, nevertheless can be found in Wikipedia) [emphasis added]

There’s no denying that a collapse in stock prices today would pose serious macroeconomic challenges for the United States. Consumer spending would slow, and the U.S. economy would become less of a magnet for foreign investors. Economic growth, which in any case has recently been at unsustainable levels, would decline somewhat. History proves, however, that a smart central bank can protect the economy and the financial sector from the nastier side effects of a stock market collapse.

If the imperatives of the “wealth effect” or that the Fed sees the importance “to help re-flate asset prices and given households and businesses a chance to rebuild and rebalance their respective financial positions” then ending QE, given current fragile "asset price" conditions, would mean that the FED will overturn her priorities. This would signify as a bizarre logic.

This only gives further clues that the Fed will continue to inflate the system, in spite of the current rhetoric about exits and the culmination of the QE which for me signifies as another episode of poker bluffs.

Incidentally, US household ownership of stocks has been on a big decline since 2007.

According to Gallup,

Even as stocks have returned to lofty heights from their March 2009 lows, the percentage of Americans saying they hold individual stocks, stock mutual funds, or stocks in their 401(k) or IRA fell to 54% in April -- the lowest level since Gallup began monitoring stock ownership annually in 1999. Self-reported stock ownership has trended downward since 2007 -- before the recession and financial crisis began -- when 65% of Americans owned stocks...

Americans still have still been enamored to properties.

Again the Gallup, (emphasis added)

The financial crisis and the losses it produced for many investors have combined with government bailouts and Wall Street scandals to turn many Americans away from investing in stocks. Even as stocks have surged over the past couple of years, it has been hard for most Americans to understand what is happening on Wall Street and why, leaving them hesitant to invest in the stock market.

On the other hand, housing and real estate have also experienced sharp losses in recent years and show no signs of significant recovery; still, many Americans see real estate as the best investment for the long term. In part, this may be because depressed prices in the real estate sector make it a relatively attractive investment when investors hold it for the long term. It could also be that Americans feel more comfortable with and better understand real estate as an investment compared with stocks and Wall Street.

My final two cents.

Rising equity prices seen in the backdrop of falling US household ownership means that the equity gains have primarily been benefiting financials companies, since nonfinancial corporations have also been sated with cash.

Chart from Wall Street Journal Blog

This is the obvious effects of the redistribution of wealth from the households to Wall Street and other Washington cronies.

Two, I doubt Americans see real estate as “best investment”. I’d rather surmise that falling real estate represents cognitive biases of “loss aversion” and the “endowment effect” where homeowners have been reluctant to realize or accept losses and instead hold out on their properties based on hope.

Maybe they are hoping that the crash would just go away soon. Or maybe that Fed policies could relieve them.

Either way, if asset prices has been the essential determinant of spending, as proposed by Fed officials led by Ben Bernanke, then obviously inflationism will be expected to continue.

And this seems one good reason why the campaign or war against commodities has intensified.

Video: Paul Romer on how 'Charter Cities' can change the world

Stanford and New York University's Paul Romer gives a fascinating talk at the TED on how rule based Charter Cities which empowers choices for people and leaders, can significantly improve the world. (hat tip: Tom Palmer)

Mr. Romer concludes with a noteworthy quote,

The reason we can be so well off even though there are so many people on earth is because of the power of ideas. We can share ideas with other people when they discover them they share with us. It’s not like scarce objects where sharing means we each gets less, when we share ideas we get more. When we think about ideas in that way we usually think about technologies, but there is another class of ideas, the rules that govern how we interact with each other...

If we can keep innovating in our space of rules, and particularly innovate in the sense for coming up with rules for changing rules so we don’t get stuck with bad rules then we can keep moving progress forward and truly make a better place...

Self Development: Success= Compound Efforts + Fire In the Belly

Earlier I posted here a great article by Agora Publishing’s Bill Bonner on how to use ‘efforts’ similar to interest rates: by compounding—the length and quality of exposure determines expertise or specialization or productivity.

Austrian Economist Professor Gary North expands the discussion, see link here.

But this time Professor North’s article comes with an additional tip: Fire in the Belly or PASSION (calling).

The reason I am posting topics related to self-development is to help newbies readers like my children. [I noticed that many readers of this blog are from schools, which I presume could mostly be students]

The lessons here applies to almost anything most especially to investment.

The following are excerpts from Prof. North’s wonderful article supplemented by my headings (blue bold emphasis mine)

1. Compound efforts needs FUTURE orientation

It is not a matter of brains. It is a matter of character. From time to time, we do hear of young men who seem to understand as teenagers how little time men have, and how large the payoff is for hard work, high thrift, and dedication to the mastery of some field. These are the super-performers discussed in books like Malcolm Gladwell's Outliers. They invest their crucial 10,000 hours before they reach age 21.

But it is not just character. It is something else. It is their understanding of time. They recognize that effort and assets invested early in life have a compounding effect. This makes an enormous difference at age 40 or 50, if a person finds the right niche in which to invest his time.

To do this, a young person needs future-orientation. This is exceedingly rare among the young. As Ben Franklin put it in 1750, "A child thinks that twenty pounds and twenty years can never be spent." A few musical artists figure it out early, or at least consent to their parents' demands while they are still forming their habits in life. But few understand it with respect to money.

2 Capital accumulation or wealth is a PROCESS

In Chapter XVIII of his magnum opus, Human Action (1949), Ludwig von Mises presented the case for the importance of time perspective as a source of thrift, capital formation, and wealth. He called this outlook "time-preference." Some people are present-oriented. They want satisfaction now. They will not lend money at low rates of interest. They borrow at high rates. Others are future-oriented. They save at low rates of interest. They refuse to pay high rates of interest when borrowing.

He made a profound observation on why we are rich compared to earlier generations.

Our activities are designed for a longer period of provision because we are the lucky heirs of a past which has lengthened, step by step, the period of provision and has bequeathed to us the means to expand the waiting period.

Mises recognized that modern man is the heir of generations of capital formation and thrift.

3. Future Orientation MUST come with PASSION

FIRE IN THE BELLY

There are good employees who meet the criteria of predictable performance. But they will remain employees if they do not have fire in the belly.

Some people call this character trait an obsession. It probably is. Others call it ambition. It often is. Still others call it visionary. It always is…

The person with no fire in his belly is unlikely to take the risks that mastery require. Mastery is a high-risk endeavor. It is more than routine maintenance. It is a matter of putting your reputation on the line in something like full public view.

Rockefeller and Carnegie had fire in the belly. They helped to create a new, far richer world. Both of them switched to charitable giving when they got old. Their money bankrolled some of the most insidious projects of the so-called New World Order. They were better at piling up wealth than giving it away. They had no skills at giving it away. They would have done more good for mankind in their lifetimes if they had stuck to their knitting. But super-rich men cannot escape their responsibility for managing great wealth in this way. Their piled-up capital will be inherited....

I think a person must have this fire in the belly: his calling. I define calling as the most important thing you can do in which you would be most difficult to replace. This may be a person's occupation, but only rarely. It was an aspect of John Wooden's job, but it reached far deeper than his job. After he retired, his calling remained. His influence grew greater over the years as a result of the foundation of his life, which was also the foundation of his occupational success...

Fire in the belly keeps a person from getting sidetracked. He may go over a cliff.

That’s why applied to the stock markets, I vehemently oppose simulation games (because this lacks the element of the stakeholder’s problem) or short term trades (yes even taught by schools!!!).

This is because any person who is dominated by present orientation extrapolates to a lack of depth in analysis or thinking, in trading—limits to gains while enlarging risks (with emphasis on the frequency more than the magnitude), amplifies emotional approach to the markets, and renders one vulnerable to social conformity rather than rigorous independent thinking which is a prerequisite to getting ahead of the curve.

I hope this helps.

Fearing Symbolisms of Revolt: China Bans Jasmines

Politicians sell us symbolisms to get elected and to maintain and preserve power, yet politicians are afraid of the very imagery which they use when used against them.

The series of revolts in MENA seem to have incited a political paranoia: China’s government has banned sales of Jasmines.

This from the New York Times, (bold emphasis mine)

Since Tunisian revolutionaries this year anointed their successful revolt against the country’s dictatorial president the “Jasmine Revolution,” this flowering cousin of the olive tree has been branded a nefarious change-agent by the skittish men who keep the Chinese Communist Party in power.

Beginning in February, when anonymous calls for a Chinese “jasmine revolution” began circulating on the Internet, the Chinese characters for jasmine have been intermittently blocked in cellphone text messages while videos of President Hu Jintao singing “Mo Li Hua,” a Qing dynasty paean to the flower, have been plucked from the Web. Local officials, fearful of the flower’s destabilizing potency, canceled this summer’s China International Jasmine Cultural Festival in south China, said Wu Guangyan, manager of the Guangxi Jasmine Development and Investment Company.

Even if Chinese cities have been free from any whiff of revolutionary turmoil, the war on jasmine has not been without casualties, most notably the ever-expanding list of democracy advocates, bloggers and other would-be troublemakers who have been preemptively detained by public security agents, among them the artist provocateur Ai Weiwei, who remains in police custody after being seized at Beijing’s international airport last month.

Less well known are the tribulations endured by the tawny-skinned men and women who grow ornamental jasmine here in Daxing, a district on the rural fringe of the capital. They say prices have collapsed since March, when the police issued an open-ended jasmine ban at a number of retail and wholesale flower markets around Beijing...

Much like the initial calls on the Internet for protesters to “stroll silently holding a jasmine flower,” the floral ban is shrouded in some mystery. The Beijing Public Security Bureau, reached by phone, declined to answer questions about jasmine. But a number of cut flower and live plant business owners said they had been either visited by the police in early March or given directives indicating that it had become contraband.

This only goes to show how politicians seem to be afraid of their own shadows.

Video: Attack On Libertarianism Using Somalia

Here is a terse video attacking Libertarianism which misleadingly uses Somalia as a "Libertarian's Paradise". (hat tip Bob Wenzel)

Why the video is short?

Because it deliberately applies the “cum hoc ergo propter hoc” or correlation is causation fallacy. The video's implication: Because Somalia has no government therefore she is poor PERIOD. By making it short the video eludes the required proofs. So this easily would dupe the ignorant.

Again, reference point matters.

I would like to say that Somalia IS NO LIBERTARIAN UTOPIA. But we certainly can learn some lessons from her experiences.

Yet it is very important to point out that even before Somalia overthrew her government she has already been poor. So it would be wrong to adduce poverty to statelessness.

And the reason for the impoverished state is that Somalia had been ruled by a nasty communist regime; the Somali Democratic Party (1969-1991). So essentially Somalia has swung from the extremes of total government to statelessness.

So the appropriate question is “has Somalia been better off at her current state or with the communists?”

The obvious answer is that Somalis said NO to communism.

Here is a briefer of Somalia from Wikipedia,

Somalia, from 1991 to 2006, is cited as a real-world example of a stateless society and legal system. Since the fall of Siad Barre's government in January 1991, there had been no permanent national government in Somalia until the current Transitional Federal Government. Large areas of the country such as Puntland, and Galmudug are internationally unrecognized autonomous regions, while Somaliland is a de facto sovereign state. The remaining areas, including the capital Mogadishu, were divided into smaller territories ruled by competing warlords. In many areas there were (and still are) no formal regulations or licensing requirements for businesses and individuals.

One would ask, if Somalis has been better off why the civil wars?

Again the Wikipedia,

With worsening conditions in Somalia, rebels of the United Somali Congress (USC) led by Mohamed Farrah Aidid attacked Mogadishu and on January 26, 1991, Barre's government was taken out of power.

In May 1991, the northernwestern Somaliland region of Somalia declared its independence. This Isaaq-dominated governing zone is not recognized by any major international organization or country, although it has remained more stable and certainly more peaceful than the rest of Somalia, neighboring Puntland notwithstanding.

UN Security Council Resolution 794 was unanimously passed on December 3, 1992, which approved a coalition of United Nations peacekeepers led by the United States to form UNITAF, tasked with ensuring humanitarian aid being distributed and peace being established in Somalia until the humanitarian efforts were transferred to the UN. The UN humanitarian troops landed in 1993 and started a two-year effort (primarily in the south), known as UNOSOM II, to alleviate famine conditions.

Many Somalis opposed the foreign presence. In October, several gun battles in Mogadishu between local gunmen and peacekeepers resulted in the death of 24 Pakistanis and 19 US soldiers (total US deaths were 31). Most of the Americans were killed in the Battle of Mogadishu. The incident later became the basis for the book and movie Black Hawk Down. The UN withdrew on March 3, 1995, having suffered more significant casualties. Order in Somalia still has not been restored.

Yet again another secession from Somalia took place in the northeastern region. The self-proclaimed state took the name Puntland after declaring "temporary" independence in 1998, with the intention that it would participate in any Somali reconciliation to form a new central government.

A third secession occurred in 1998 with the declaration of the state of Jubaland. The territory of Jubaland is now encompassed by the state of Southwestern Somalia and its status is unclear.

A fourth self-proclaimed entity led by the Rahanweyn Resistance Army (RRA) was set up in 1999, along the lines of the Puntland. That "temporary" secession was reasserted in 2002. This led to the autonomy of Southwestern Somalia. The RRA had originally set up an autonomous administration over the Bay and Bakool regions of south and central Somalia in 1999.

So we have a combination of foreign meddling and competing tribes. We might say that foreign meddling to impose a national government may have been a significant factor in creating tribal frictions.

We see such relevance in the repeated foreign incursions on Somalia’s fishing grounds which partly depleted local fisherman’s livelihood that has spawned famously notorious Pirate Industry which I earlier wrote about.

How about today?

Again the Wikipedia, (bold highlights mine)

The various Somali militias had at that point developed into security agencies for hire. Due to that development, security had much improved and an economic rebound occurred. Somalia was then arguably partly in a state of anarcho-capitalism, where all services were provided by private ventures. According to the CIA, Somalia's telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent.

In 2000, Abdiqasim Salad Hassan was selected to lead the Transitional National Government (TNG).

This was followed in 2004 by the establishment of the Transitional Federal Government (TFG) of the Republic of Somalia, the most recent attempt to restore national institutions to the nation after the 1991 collapse of the Barre regime and the ensuing civil war. On October 10, 2004, Somali parliament members elected Abdullahi Yusuf Ahmed, the former President of Puntland, to be the next president and head of the TFG. The other institutions adopted at this time were the Transitional Federal Charter and the selection of a 275-member Transitional Federal Parliament.

Though internationally recognized, the TFG's support in Somalia was waning until the United States-backed 2006 intervention by the Ethiopian military, which helped drive out the rival Islamic Courts Union (ICU) in Mogadishu and solidify the TFG's rule. Following this defeat, the ICU splintered into several different factions. Some of the more radical elements, including Al-Shabaab, regrouped to continue their insurgency against the TFG and oppose the Ethiopian military's presence in Somalia. Throughout 2007 and 2008, Al-Shabaab scored military victories, seizing control of key towns and ports in both central and southern Somalia. At the end of 2008, the group had captured Baidoa but not Mogadishu. By January 2009, Al-Shabaab and other militias had managed to force the Ethiopian troops to withdraw from the country, leaving behind an underequipped African Union (AU) peacekeeping force.

Over the next few months, a new President was elected from amongst the more moderate Islamists, and the Transitional Federal Government, with the help of a small team of African Union troops, began a counteroffensive in February 2009 to retake control of the southern half of the country. To solidify its control of southern Somalia, the TFG formed an alliance with the Islamic Courts Union and other members of the Alliance for the Re-liberation of Somalia. Furthermore, Al-Shabaab and Hizbul Islam, the two main Islamist groups in opposition, began to fight amongst themselves in mid 2009.

As a truce, in March 2009, Somalia's newly established coalition government announced that it would implement shari'a as the nation's official judicial system.

As one would note, there has been so many and continuous foreign meddling in Somalia in the attempt to foist a national government, on what seems to be a society averse to government.

As Professor Ben Powell writes, (bold highlights mine)

The Somalis again have united against this attempt by outsiders to force a government on them. Unfortunately, the result has been an increase in the power of the Union of Islamic Courts (UIC), who, since June, has gained control over much of southern Somalia, including the former capital, Mogadishu. An estimated 600 militias have joined the UIC since the TFG moved into Baidoa in February.

Every government of Somalia has exploited the country’s population. International meddling created the TFG and, unintentionally, a more powerful UIC. If either group were to become a true government, the population likely will once again become oppressed. In the meantime, the two groups appear headed back into civil war, which will likely result in the kind of chaos the country has not experienced since 1995.

Prime Minister Gedi of the TFG recently said, “It is totally misguided not to accept the government. The alternative is chaos.” Unfortunately, he’s got it exactly backwards. It is, in fact, the attempts to impose a government on Somalia that create chaos.

Aside from the wireless services which offers the “lowest international call rates on the continent” as cited by above by Wikipedia, the current economy of the 9.1 m population of Somalia, again as tersely described by Wikipedia, (bold emphasis mine)

Although it states that no reliable statistics are available for the period in question, the United Nations claims that Somalia, already one of the poorest countries in the world, has become even poorer as a result of civil war. However, the CIA Factbook maintains that gains were made during the early 2000s; "despite the seeming anarchy, Somalia's service sector has managed to survive and grow. Mogadishu's main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate, and militias provide security."

When extreme poverty (percentage of individuals living on less than PPP$1 a day) was last measured by the World Bank in 1998, Somalia fared better than many other countries in Africa, over some of whom Somalia also had superior infrastructure. The CIA World Factbook counsels that "Statistics on Somalia's GDP, growth, per capita income, and inflation should be viewed skeptically", while estimating Somalia's GDP per capita at $600.

In the absence of a Somali state and its institutions, the private sector grew "impressively" according to the World Bank in 2003, particularly in the areas of trade, commerce, transport, remittance and infrastructure services and in the primary sectors, notably in livestock, agriculture and fisheries. In 2007, the United Nations reported that the country's service industry is also thriving. Economist Peter T. Leeson, in an event study of "the impact of anarchy on Somali development", found that "[t]he data suggest that while the state of this development remains low, on nearly all of 18 key indicators that allow pre- and post-stateless welfare comparisons, Somalis are better off under anarchy than they were under government." Powell et al. concur that in absolute terms, Somalia’s living standards have improved and compare favorably with many existing African states, but also report that living standards have often improved "relative to other African countries since the collapse of the Somali central government."

It would be a nightmare for governments and politicians around the world to see a stateless society succeed. So the intuitive response is to view data from a stateless government “sceptically”.

Just imagine if Somalia should succeed then there could be mass revolutions to overthrow governments around the world. That's something governments won't want to happen.

So obviously there will always be a reason to keep Somalia poor.

And this video is part of such propaganda.

Because We Are Uncertain About The Future, We Speculate

Below is an example of a deceptive article which attempts to pin the blame of surging commodity prices, particularly of onion, on “speculators”.

Wall Street Journal Blog writes,

Shed a tear for the onion. While prices of many agricultural commodities have soared, farmers received just 7.49 cents for a pound of onions in April, down from 29.9 cents a year ago, in part due to a big harvest. Futures trading in onions — unlike other farm goods — is banned, which prevents the pungent bulb from being used as an investment vehicle.

Why is this article misleading?

Because the article tries to demonstrate that falling prices equates to the absence of speculators—a post hoc ergo propter hoc fallacy.

As we always say here, reference point matters.

The chart in that article virtually ignores showing how volatile prices of onions are.

Professor Mark Perry’s charts gives us a much better perspective because his charts deal with the bigger picture.

It is true today that onion prices have been falling whereas oil prices have been moving higher (as shown by above window chart), but prices of onions have been far more volatile than oil over the span of 11 years.

And this can be measured based on the differences of standard deviations of monthly price changes, as shown in the lower window, where price volatility of oil (red line) has been greatly lesser than of onions (blue line) from 2000-2011.

Excessively volatile prices puts farmers or producers at bigger risks because of the uncertainty behind estimates of price trends which guides their production process.

Professor Perry quotes this Fortune article. (bold highlights mine)

Before the U.S. Commodity Futures Trading Commission starts scrutinizing the role that speculators may have played in driving up fuel and food prices, investigators may want to take a look at price swings in a commodity not in today's news: onions.

The bulbous root is the only commodity for which futures trading is banned. Back in 1958, onion growers convinced themselves that futures traders (and not the new farms sprouting up in Wisconsin) were responsible for falling onion prices, so they lobbied an up-and-coming Michigan Congressman named Gerald Ford to push through a law banning all futures trading in onions. The law still stands.

And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics' belief that futures trading diminishes extreme price swings. Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

The volatility has been so extreme that the son of one of the original onion growers who lobbied Congress for the trading ban now thinks the onion market would operate more smoothly if a futures contract were in place.

Speculators provide more liquidity by risking money on buying and selling to arbitrage from uncertainty.

Yet what speculators do isn’t risk free. In other words, speculators are subject to the rigorous discipline of the markets. Because as much as they profit, they lose money too!

By providing liquidity they give markets more pricing efficiency. This leads to better allocation of resources with the option of being backed by hedging tools.

Importantly, because producers don’t know the future, they are speculating too.

The issue here is uncertainty. Because we are uncertain of the future, thus we speculate.

The assumption that markets can exist without speculators fails to consider why markets exist at all.

Where markets that are not liquid, they are, as the Fortune magazine points out, subject to fierce price swings and less reliable of price signals that heightens risks of producers.

As Ludwig von Mises wrote, (bold highlights mine)

In the real world acting man is faced with the fact that there are fellow men acting on their own behalf as he himself acts. The necessity to adjust his actions to other people’s actions makes him a speculator for whom success and failure depend on his greater or lesser ability to understand the future. Every action is speculation. There is in the course of human events no stability and consequently no safety.

Anyone who says they are certain about the future should put their money where their mouth is.

Iran’s Minister Claims Osama Bin Laden “Died of Illness Sometime Ago”

Iran Intelligence Minister claims that Osama Bin Laden has long been dead.

From the Russia’s RIANOVOSTI.com (pointer to Tyler Durden)

Iranian Intelligence Minister Heidar Moslehi said Tehran has evidence that al-Qaeda leader Osama bin Laden had died of disease long before the United States' alleged raid on the terrorist, FARS Iranian news agency said.

Bin Laden was killed on May 2 in the Pakistani town of Abbottabad, north of the capital Islamabad, during a raid by U.S. Navy Seals.

"We have accurate information that bin Laden died of illness some time ago," Moslehi said.

Bin Laden's body was buried at sea less than 24 hours after the operation.

"If the US military and intelligence apparatus have really arrested or killed bin Laden, why don't they show him (his dead body) why have they thrown his corpse into the sea?" Moslehi continued.

As I have been saying, Bin Laden’s death will produce more questions than answers.

Harvard’s Greg Mankiw Channels F.A. Hayek

It’s rare to see experts of high stature exhibit meekness.

Harvard Professor and former chairman of President Bush's Council of Economic Advisors Greg Mankiw writing in a New York Times column channels F.A. Hayek. (pointer to Professor Russ Roberts) [bold emphasis mine]

AFTER more than a quarter-century as a professional economist, I have a confession to make: There is a lot I don’t know about the economy. Indeed, the area of economics where I have devoted most of my energy and attention — the ups and downs of the business cycle — is where I find myself most often confronting important questions without obvious answers.

Now, if you follow economic commentary in the newspapers or the blogosphere, you have probably not run into many humble economists. By its nature, punditry craves attention, which is easier to attract with certainties than with equivocation.

But that certitude reflects bravado more often than true knowledge.

This exactly is the knowledge problem as Hayek pointed out long ago, which I keep talking about in this space.

F. A. Hayek in The Use of Knowledge in Society wrote, (bold emphasis mine)

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

My salute to Mr. Mankiw.

Blessed are the meek for they shall inherit the earth.

It’s Now A War On Commodities: Credit Margins On Oil and Gasoline Products Raised!

The war on precious metals has expanded. It’s now a war on commodities.

Considering the ‘Pearl Harbor’ effect or the initial success of interventions with silver, the series of price manipulation will now include hikes in credit margins of oil and gasoline products.

According to the CBS Marketwatch, (bold highlights mine)

U.S. exchange operator CME Group CME +1.17% said Monday it is raising the margin requirements for trade in a wide range of oil products, effective Tuesday. The requirement for a new position in benchmark New York Mercantile Exchange crude contracts rises to $8,438 from $6,750 previously, with margins also higher for contracts in benchmark Brent crude, gasoline and other products. The hike was the first of its kind since March 4, according to TheStreet.com. June crude oil CLM11 -0.62% traded at $101.95 a barrel early in Tuesday's electronic session, down 56 cents, or 0.6%, from the close of floor trading Monday on the New York Mercantile Exchange.

It would be so naive for some to believe that this equates to “mitigating” the effects of loose monetary policies.

Commodity traders suffer undue losses by the rigging the rules of the game by regulators (I know they are private regulators but they appear to be working in behalf of the government).

This is equivalent of robbing commodity traders of their property rights...just to justify current policies.

What if the US government decides to apply the same to the stock market?

Yet this New York Times article says that CME officials, in raising credit margins, have not been aware of the consequences of these interferences on the commodity markets. (bold highlights mine)

On April 25, half a dozen officials from the CME Group, which runs many of the nation’s commodities exchanges, met via videophone to discuss the eye-popping rise in the price of silver, which had doubled in just six months to about $47 a troy ounce.

They didn’t realize it, but they were about to take the first step toward popping a bubble in global commodities prices.

Worried about the speculative run-up and the increased volatility of the silver market, the officials concluded that it was time to raise the amount of money that buyers and sellers had to put down as collateral to guarantee their trades. The first increase in so-called margin requirements took hold the next day, effectively making it more expensive for speculators and other kinds of traders to play in the market...

This is unalloyed hogwash, if not a sheer self-contradiction in reporting. Yes this smells more and more of the Fed's 'signaling channel' or state engineered propaganda aimed at manipulating inflation expectations.

Raising credit margins for FIVE times (or more than double the existing rate) signifies as deliberate measures to curb the price acceleration of silver.

It’s silliness to say that the effect of this measure had not been known and that officials acted on this out of worries.

Also, the fact that they are now expanding coverage means officials see the initial effects as a policy success, which it hopes to replicate on other markets. In short, path dependency.

Even more nonsensical is to the attribution of a commodity bubble.

What should be underscored as a bubble is the bubblehead policies to justify more intervention.

It is even foolish to believe that price controls or manipulation will continuously work under the current regime which promotes such ‘speculative’ dynamics.

That’s because inflationism induces a flight to real assets. For as long as governments, most especially the US government, continue to debase her currency, people will seek shelter through commodities via the marketplace.

And further is the asinine impression that markets operate in inertia.

The markets function as a discounting mechanism. Since the market has priced in new information or that it is now aware of the rigging of game by political operators, the market has begun to adjust accordingly.

Proof of this is that despite the announcement of increasing oil margins, oil, silver and gold surged yesterday!

What this only means, at this early state, that price manipulation efforts appear to be wearing off! And so goes the ‘mitigation effects’.

As Ayn Rand aptly wrote

When you see that trading is done, not by consent, but by compulsion -- when you see that in order to produce, you need to obtain permission from men who produce nothing -- when you see money flowing to those who deal, not in goods, but in favors -- when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you -- when you see corruption being rewarded and honesty becoming a self-sacrifice -- you may know that your society is doomed.

Attacking the symptoms, engendered, fostered and nurtured by policymakers, won’t solve or cover the problem. Instead, it is a sign of societal degeneration.

Medical Marijuana Cures Cancer, Lost Opportunity Due to War on Drugs

Marijuana is an illegal substance which governments around the world have tried to prohibit and control unsuccessfully. Yet unknown to many, despite the popular harmful effects arising from its recreational overuse, Marijuana is said to have healthy attributes.

Dr. Mercola writes, (bold highlights mine)

No matter what you call it, cannabis and its range of varieties, including marijuana, is said to be among the safest medicinal substances known, and there are nearly 25 million Americans who have health conditions that medical marijuana could reportedly treat (and this figure only includes those living in states where its use is currently legal), according to The State of the Medical Marijuana Markets 2011-- yet fewer than 800,000 are taking part.

Dr. Mercola writes more about Marijuana basics,

Cannabis, or as it's more commonly known marijuana, has been used for its medicinal properties for thousands of years. It's been heralded as a "cure-all," revered for its healing properties that not only help relieve pain but also have been highlighted as a potential cancer cure.

Before I delve into the intriguing controversy surrounding medical marijuana, it's important to note that the plants referred to as hemp and marijuana are not the same. Both are members of the Cannabis sativa plant species, but they are two distinct varieties.

Marijuana typically is high in THC (delta-9 tetrahydrocannabinol) -- the compound responsible for the plant's notorious psychoactive effect -- and low in CBD (cannabidiol) content. Both THC and CBD are known as cannabinoids, which interact with your body in a unique way I'll describe later.

What's interesting, however, is that CBD has been shown to block the effect of THC in the nervous system. So, marijuana plants are typically high in THC and low in CBD, which maximizes their psychoactive effects.

Hemp, on the other hand, is typically high in CBD and low in THC, as it is bred to maximize its fiber, seeds and oil, the items for which it is most commonly used. For more information on the difference between hemp and marijuana, here is a comprehensive article on the topic from the North American Industrial Hemp Council (NAIHC).

Ironically, despite their differences, the U.S. Drug Enforcement Agency (DEA) classifies all C. sativa varieties as "marijuana," according to NAIHC.

This is why the United States is the only industrialized nation where growing industrial hemp is illegal. Well, technically it is not illegal, but growing it requires a permit from the DEA – and it is reportedly almost impossible to get one.

This is a shame for a variety of reasons, including:

Hemp is healthy: Hemp seeds pack a powerful nutritional punch. Two tablespoons of shelled hemp seeds contain about 11 grams of protein and 2 grams of unsaturated omega-3 fatty acids. And, as TreeHugger reported, hemp seeds have a " "perfectly balanced 1:3 ratio of naturally-occurring omega-3 and omega-6 essential fatty acids...unlike other seeds and nutritional oils, such as flax..."

Hemp is good for the economy: The total retail value of North American hemp products was valued at around $400 million in 2009, but U.S. farmers are unable to benefit from this since hemp products are imported.

In the US, a desperate father secretly administered cannabis oil to his 2 year old son who suffered from brain cancer and found his son ‘cured’

Reports the Daily Mail,

A desperate father whose son was suffering from a life-threatening brain tumour has revealed he gave him cannabis oil to ease his pain. And he has now apparently made a full recovery.

Cash Hyde, known as Cashy, was a perfectly healthy baby when he was born in June 2008 but became sick shortly before his second birthday.

At first he was misdiagnosed with glandular fever before his parents Mike and Kalli, from Missoula in Montana, were given the devastating news he had a serious brain tumour.

The little boy had to have arduous chemotherapy treatment to reduce the growth, which had drastic side effects including seizures and a blood infection.

His distraught parents were repeatedly told he was likely to succumb to the illness because the condition was so bad.

After one bout of high-dose chemotherapy, Cash was so weak he could not lift his head and was too sick to eat any solid food for 40 days.

It was at this point that Mr Hyde decided to take action and go down the route of medical marijuana to try to help his young son.

This has been one of the unfortunate unseen side effects of the war on drugs: what could have been used to expand the horizons of medical advancement has been stymied by populist regulations which only have benefited some vested interest groups.

As Dr. Mercola points out anew, (itlalics his)

Even a quick review of the data suggests that cannabis deserves more than a passing glance as a potential treatment for various diseases. But in the United States, these studies are not being done.

According to a report by Americans for Safe Access:

"In the past three decades, there has been an explosion of international studies designed to investigate the therapeutic value of cannabis (marijuana).

However, drastic restrictions on research in the U.S. have meant that few clinical trials are being conducted domestically and none are being conducted as part of a sponsor-funded drug development plan aimed at obtaining Food & Drug Administration (FDA) approval for the prescription use of the botanical plant itself.

Meanwhile, research teams in Great Britain, Spain, Italy, Israel, and elsewhere have confirmed - through case studies, basic research, pre-clinical, and preliminary clinical investigations - the medical value of cannabis ... "

It is easy to see why drug companies would want no part in funding research studies on a plant that can't be patented. If they were to discover that it could cure cancer, patients would be able to grow it themselves right in their own backyard ... this is not something the pharmaceutical companies would want you to know about.

Bottom line: War on Drugs has not only been political failure founded on unsound economics, it also impedes medical progress that would have saved many lives.

Foreign Meddling, Not ‘War in the name of Islam’, Breeds Terror

The Economist produces a table showing the fatalities from Al Qaeda’s “Killing in the name of Islam”

Apparently this has been published to justify the US government’s action on Osama Bin Laden—a reductio ad absurdum fallacy.

It’s foolish to say that these have all been about religion.

Common sense tells us that with an estimated 1.5 billion Islam adherents and growing, then a war on religion would imply that the world would have been embroiled in various types of violence as a result from this ‘false’ war. But where? The war has been limited to but a few.

For instance, Bin Laden’s alleged war with the west has been anchored upon the following key factors, which the legendary investor Doug Casey enumerates:

One thing they should think about is that Osama didn’t actually present – or certainly shouldn’t have presented – a risk to the U.S. You’ll recall that he said he was only up in arms for three reasons: 1) the U.S. had its troops in Muslim lands; 2) the U.S. was supporting the stooges running those countries; and 3) the U.S. was supporting Israel, which he deemed an oppressor of the Palestinians. If the U.S. desisted from those things, he was happy to leave it alone, in the belief it would necessarily self-destruct.

In other words, the so-called religious war only serves as camouflage to advance US imperialist interests.

In the name of War on Terror, more innocent people are being slaughtered every year than the combined activities of the Al Qaeda.

Writes the New York Times,

Last year was the deadliest of more than nine years of war for Afghan civilians, the United Nations reported Wednesday, attributing 75 percent of the deaths to attacks by Taliban and other insurgents rather than coalition forces.

The United Nations said 2,777 civilians were killed in 2010 — a 15 percent increase over the previous year — in its annual civilian casualty report, authored jointly with the Afghanistan Independent Human Rights Commission.

Despite several prominent recent episodes involving civilian deaths that have strained relations with the Afghan government, deaths caused by NATO forces declined by 26 percent, the report found, reflecting new precautionary steps by military commanders, including Gen. Stanley A. McChrystal, the previous top commander in Afghanistan, and Gen. David H. Petraeus, who took over eight months ago.

That’s from Afghanistan alone in 2010.

While most of these are being blamed on Al Qaeda, based on statistics which we can’t rely on, because only nation states have the power to make such declaration. The point is the War on Terror has been causing more needless deaths regardless of who is responsible.

Here is an estimate of the total casualties over the duration of the War on Terror from Wikipedia,

-Iraq: 62,570 to 1,124,000

-Afghanistan: between 10,960 and 49,600

-Pakistan: between 1467 and 2334 killed in U.S. drone attacks as of May 6, 2011

All these goes to show that imperialism, not a war on religion, is what breeds terror. As Sheldon Richman fittingly writes, (bold highlights mine)

Apologists for activist government never tire of telling us that the benevolent state is our protector and that without it we'd be at the mercy of monsters. It is about time that we understood that the U.S. government does more to endanger the American people than any imagined monsters around the world.

How so? By pursuing its Grand Foreign Policy of meddling anywhere and everywhere. It stands to reason that if you stick your nose in other people's quarrels you will acquire enemies. Some of them will be unhappy about the interference and will retaliate. Tragically, they will not be so careful about discriminating between the offenders and innocent civilians. That's wrong, but so is the meddling that brings the retaliation about.

Unfortunately, far more influential are vested interest groups who profits from these wars, whom dictate on foreign policies channeled through political leaders.

All the rest is propaganda.