The Daily Reckoning February 19th


To Drone, or Not to Drone?

Decent folk don’t need Dick Cheney to describe something as “a good policy” to know it’s probably a bad idea. But just in case they missed the point the first time around, the former VP was on television last week to hammer it home for them.

In an interview with CBS This Morning, Cheney brushed aside calls for “checks and balances” against the Obama administration’s controversial drone program.


“I think it’s a good program,” Cheney told the host. “I don’t disagree with the basic policy that the Obama administration has pursued in that regard.”

Readers will recognize drones, or unmanned aerial vehicles (UAVs), as the weapon of choice used by Nobel Peace Prize recipients who wish to carry out extrajudicial assassinations of United States citizens abroad… and to lay bloody and horrific waste to hundreds of innocent children by raining missiles down on their heads from the high heavens.

Never mind all that, grumbled Cheney. The president “is getting paid to make difficult, difficult decisions.”

In sum, the man who told the world that invading US troops would be greeted in Iraq as “liberators” has assured us that it’s ok for another man, one who personally oversees a “kill list” before unleashing remote control murder machines abroad, to make tough military decisions on your behalf… because he is getting paid a lot of your dollars to do so. They just don’t want anyone to keep track of what they’re doing, is all. On that last point, members of both parties are paid to be in conspicuous agreement.

Are you feeling safer yet?

Of course, as anyone with a spine well knows, it’s not making the “difficult, difficult decisions” that counts; it’s getting them right… or at least not murderously wrong, that’s important. Any scoundrel of the hoi oligoi can choose to, say, invade a foreign country on a false premise… or to bend at the waist every time a special interest group whispers the words “Blackwater” or “Monsanto” or “Unmanned Systems Caucus” softly in his ear. Indeed, moral malleability is practically a job requirement. And for the truly sociopathic, these decisions might even come easily, automatically… as if not a thought was given to their outcome or human consequence.

As it turns out, Obama himself seems capable of understanding that, at least in certain cases, scorching poor, forsaken villages on the other side of the globe with AGM-114 Hellfire missiles is probably less than neighborly conduct. In fact, the “leader of the free world” said as much at press conference in Asia just last year.

“…[T]here’s no country on Earth that would tolerate missiles raining down on its citizens from outside its borders,” the president solemnly declared.

“So we are fully supportive,” he then added, “of Israel’s right to defend itself from missiles landing on people’s homes and workplaces and potentially killing civilians.”

Mr. Obama might want to get out a map (here’s a helpful link, sir). His Weapons of Aerial Destruction are currently, as we type, cutting lines across the skies over (as least) Pakistan, Afghanistan, Yemen and Somalia. As far as we are aware, these are countries roughly located “on this earth.”

If, as the president asserted, “Israel has every right to expect that it does not have missiles fired into its territory,” then what are we to make of the rights of those innocent people formerly living in the above mentioned areas, whose bloodied remains now stain the dirt whence they came? Is pre-meditated murder somehow less painful for the victims’ families if it is delivered by a RQ-1 Predator drone? Is it somehow less “murderous” if the act is carried out by a gutless bot wearing a US military uniform or in possession of a CIA clearance card? Do the bodies still count if the assassin answers to a chain of command that ends with the winner of the 2009 Nobel Peace Prize?

The issue clearly appears to be a confusing one for Obama. “To drone, or not to drone?” Hmm… this must be what Cheney meant by “difficult, difficult decisions.”

Unperturbed, the president marches to the age old Mantra of the Militarist: When in doubt, proceed!


Since taking office, Obama has upped the ante on Bush’s UAV program, increasing total missions flown to date six fold. According to analysis conducted by the Bureau of Investigative Journalism (BIJ), current through January of this year, the Obama administration has executed at least 312 drone strikes, including a couple of operations carried out over Yemen on Christmas Eve which killed at least seven people.

Observed blogger Kevin Gosztola at the time:

There was no ceasefire from the Obama administration during the holiday. In fact, it appears they waited until Christmas Eve on purpose to conduct a couple strikes as there had not been action in the covert drone war in Yemen for well over a month.

In earlier wars, there may have been some kind of a truce because most of the soldiers and their families would be celebrating Christmas, however, characteristic of drone warfare, the drone pilots who carried out the order to fire upon suspected militants were nowhere near the area of the strike. They were completely detached and, depending on where they were when they directed the flying killer robot to attack, they were likely able to go home and see their family on Christmas Eve.

On the body count question, Obama’s “targeted killing” operations have so far resulted in the deaths of between 473 and 893 civilians in Pakistan. Of these victims, 176 were children. They had names like Syed Wali Shah, a seven year-old boy, and Maezol Khan, an eight year old girl. Between 1,270 and 1,433 innocent people were reported injured in the attacks.

Of course, precise numbers are notoriously hard to come, due both to the nature of the strikes themselves and the bureaucratic opacity shrouding operations. This is especially true in Yemen and Somalia. In the former state, the BIJ estimates anywhere between 42 and 135 strikes carried out since 2002. Total death estimates range from 374 to 1,112 people.

In their 2012 report, Living Under Drones, researchers at Stanford University found that, lo and behold, the tale served up to the American public with regards to the administration’s expanded drone program was, well… flawed.

“In the United States, the dominant narrative about the use of drones in Pakistan is of a surgically precise and effective tool that makes the US safer by enabling ‘targeted killings’ of terrorists, with minimal downsides or collateral impacts. This narrative is false…

“Publicly available evidence that the strikes have made the US safer overall is ambiguous at best,” says the report, adding that targeted killings and drone attacks undermine respect for international law.

Is it any wonder then that the Cheneys and Obamas of the world would rather their heinous operation be kept under wraps, far from the prying eyes of the public and the dreaded “checks and balances” they might seek to impose?

Needless to say, the families of slaughtered civilians in Pakistan and elsewhere know far more about the horrors of living under America’s predator drone program than do Americans themselves. Don’t feel left out though. If these criminals have their way, (and there is good reason to believe they will) their robots of death will be patrolling the skies over your backyard soon enough… if they aren’t already.

[Ed. Note: When the last administration started the drone war almost 10 years ago, hardly anyone said anything. And then when the current administration continued and expanded it to target U.S. citizens abroad, the outcry a reasonable person might expect, didn’t happen.

Now we have drones patrolling our skies in North Dakota, keeping an eye on potential cow thieves. And the Dallas Police Department’s SWAT team has a 50 lb. drone with the capability of carrying a 12 gauge shotgun or a 40 mm grenade launcher (though neither’s been installed…yet).

And just yesterday, there are reports of House Minority Leader, Nancy Pelosi, saying that the President doesn’t have to disclose to the public when he targets and executes an American citizen with a drone. As she eloquently told the Huffington Post, “It just depends.”

As you probably know, the FAA has cleared the way for 30,000 drones to patrol American airspace, watching, recording and transmitting the images of your daily life back to some data storage facility. Leaving a record of your activities in your backyard, trips to soccer games with your kids and even walking your dog.

This is not what we want from our government. I can only assume that you feel the same way. If you do then sign our petition and tell the White House, Congress and John Brennan we have seen enough of their drones.)

Joel Bowman

Original article posted on Laissez-Faire Today

To Drone, or Not to Drone? appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.


RNA Interference’s Hot Partnership With Stem Cells

Stem cell therapy and RNA interference (RNAi) may be the sexiest hook-up since peanut butter and chocolate. And scientists are just beginning to explore the potential of combining these medical therapies.

Until very recently, the application of each therapy seemed very specific and limited: stem cells for regenerative medicine; RNAi for genetic correction. Furthermore, the repairing abilities of stem cells seemed more limited than first expected, and RNAi proved very difficult to be delivered to its intended targets.

But researchers recently discovered that the weakness of one technique was the strength of the other. So some research teams began combining the two to develop innovative and effective therapeutic tools for victims of neurodegenerative disorders like Huntington’s disease (HD).

At present, no preventative or curative treatments exist for HD, a hereditary disorder in which nerve cells (neurons) progressively breakdown in certain parts of the brain. Victims of the disease experience uncontrolled movements, dementia and eventually die from complications (infection, heart failure and pneumonia) that arise from the effects of HD on the body.

Normal human DNA contains a gene that codes for Huntingtin protein (htt). But in HD victims, that particular gene mutates, leading to the production of abnormally long htt proteins. The elongated htt proteins degrade into smaller, toxic fragments that bind together and accumulate in neurons, disrupting their normal functions. [For the record, “huntingtin,” the protein, is spelled with an “i,” while “Huntington,” the disease, is spelled with an “o.”]

The degeneration and eventual death of neurons in certain areas of the brain underlie the signs and symptoms of HD. Therefore, reducing or eliminating the mutant htt would halt or slow the progression of the disease. Many researchers consider gene-silencing with RNAi the best candidate therapy for the job.

Here’s how it works: Scientists produce in vitro snippets of RNA, called small interfering RNA (siRNA). siRNA are a close relative of DNA that match a portion of the gene of interest — like, for example, the mutant gene that produces the abnormal htt protein. siRNA can destroy the gene’s products before they can be turned into a protein. So in theory, specialized siRNA could be designed to interfere with the mutated htt gene’s ability to produce the abnormal htt protein.

But the challenge remains how to dispatch the siRNA into the human brain in a sustained, safe and effective manner. And even after siRNA find its way to the brain, it still has to penetrate into the brain cells in order to reach the degenerating neurons’ of HD patients. This is where stem cells enter the picture. They might be able to help siRNA make this challenging journey.

A group led by Dr. Jan Nolta of the University of California Davis, has tested a unique and very ingenious method to pass siRNA into neurons using mesenchymal stem cells (MSC).

MSCs have a wide variety of important roles in the body, but what interests Nolta is their ability to converge on sites of injury — kind of like cellular paramedics. But unlike ordinary paramedics, MSCs would also be willing to perform a transplant on the spot, using their own organs to save their patient! MSCs fuse with the damaged cells and inject them directly with ‘spare parts’ to help aid healing.

Therefore, if the MSCs contained siRNA designed to reduce the amount of abnormal htt, MSCs could transport and deliver them right to the heart of the degenerating neurons and prevent htt accumulation.

Scientists can easily extract MSCs from fat or bone marrow of adult donors. In Dr. Nolta’s vision, MSCs, isolated from a patient, would be modified in vitro to carry and produce siRNA. These modified MSCs would then be injected back into the patient’s brain, or possibly blood. Because of their natural properties, MSCs would then sidle up to neurons, poke them with a membranous finger, and pump them full of the miracle therapy.

In a paper published this year in Molecular and Cellular Neuroscience, Nolta’s team documented that siRNA-carrying MSCs were able to reduce htt levels by 50% in the target cells…at least in a petri dish. The reduction was not complete, or permanent, but it served as a proof-of-principle that MSCs can indeed deliver siRNA to other cells.

Dr. Nolta’s team has ideas on how to optimize its MSCs/siRNA system and has started testing it in animal models.

“Not only is finding new treatments for Huntington’s disease a worthwhile pursuit on its own,” said Nolta, who recently received a prestigious Transformative Research Grant from the National Institutes of Health to pursue her research, “but the lessons we are learning are applicable to developing new therapies for other genetic disorders that involve excessive protein development and the need to reduce it. We have high hopes that these techniques may also be utilized in the fight against some forms of amyotrophic lateral sclerosis (Lou Gehrig’s disease) as well as Parkinson’s and other conditions.”

While a therapy based on Dr. Nolta’s approach remains far from the doctor’s office, stem cell treatments are closer than ever. Combining them with RNAi, the hottest technique in molecular biology, opens more possibilities and hopes than ever before of curing degenerative diseases.


Severine Kirchner
for The Daily Reckoning

RNA Interference’s Hot Partnership With Stem Cells appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

More Headline Hysteria

One year can make a big difference.

In 2012, the market quietly jumped higher to start the year. No one cared.

Yet in 2013, it’s almost impossible to escape the coverage — and the worries that have come along with the news that stocks are close to new highs.

Thanks to some impending market milestones, investors can’t shake the feeling that disaster is nearby. The generally accepted market narrative for 2013 is that stocks are overinflated and due for a huge correction.

Most investors — along with the financial media — are so wrapped up in new highs that they have lost the ability to think straight. For some reason, everyone believes that the 2013 rally is some unprecedented event that has to immediately end in a meltdown.

But it’s not. In fact, the action we’re seeing in stocks this year isn’t even beating out the market’s start to 2012.

S&P 500 YTD Return 2012-2013

That’s what happens when you get stuck in the vortex of the big bear market — you tend to lose perspective.

In 2012, the market ended the year higher with little fanfare (with a couple of twists and turns, of course). Today, investors are losing their lunch over a 6% move…

But if you commit to following price action — instead of emotional news stories — you can get a leg up on this market. No, stocks won’t go straight up forever. But during the quick January push higher and the consolidation we’ve seen so far this month, price action has been orderly, healthy, and downright bullish.


You don’t need to sell here and lock yourself in the basement. There’s plenty of upside potential left. Let price guide you — not hysteria.

Greg Guenthner
for The Daily Reckoning

More Headline Hysteria appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

35,000 Protesters, Your Chance To Cash In!

“32 days of higher gas prices comes at tough time” shouts a headline at CNN Money.

All told, national gas prices are up 13% in a little over a month – I’m sure you’ve seen the change in price at your local gas station, too.

But if you think that’s painful, you’ll want to keep an eye on what happened in DC this past weekend…

On Sunday, 35,000 protesters gathered in Washington D.C. to protest, of many things, the Keystone XL Pipeline decision.

This Keystone Pipeline decision, as you’ll see, is an important milestone in U.S. energy policy. If environmental interests get their way, Obama will block the increased flow of crude oil from Canada to the U.S. On the other hand, if the pipeline proposal is approved, more crude will flow from Canada to Houston’s refineries.

And while we may not be able to control the outcome of this landmark decision, we sure as heck can take a look at both sides of the argument and figure out how to play this whole situation.

First, though, let’s cover the basics.

The proposed Keystone XL pipeline expansion will bring increased amounts of Canadian crude oil to Houston’s refineries. But since the increased capacity will be crossing international borders it needs federal approval (in particular a State Department report along with president Obama’s signature.).

For years now, the Keystone Pipeline saga has been playing out like any inefficient, red-tape laden government decision would.

In January 2012 Obama officially vetoed the proposed pipeline expansion, citing questions about the environmental impact to an aquifer in Nebraska. Since then, the pipeline proposal has been slightly altered and now we’re waiting for the latest State Department report to get a feel for which way the president will lean.

Here’s a visual of what we’re talking about:


The way I see it, I’ll take all the Canadian crude we can get.

Right now the U.S. still relies heavily on oil from the Middle East and OPEC. So in lieu of more cargo ships from the Persian Gulf, a Canadian pipeline is a welcome site. Not to mention having a safe, abundant supply of crude could keep domestic prices in check if Middle East turmoil causes a supply disruption.

But I bet the 35,000 protesters that showed up at the national mall on Sunday have a different view.

Here’s the thing. Most of these anti-pipeline folks don’t know the whole story. In other words they were probably referred by a friend, a Sierra Club email, or a short essay on why the pipeline is allowing “dirty” oil into the world market.

At any rate, they got the wrong info. For some reason this crowd is looking at the pipeline decision in a vacuum. They believe a presidential veto will stop the flow of Canadian crude to market. In so doing, this will reduce the amount of dirty crude oil on the market and help reduce carbon emissions.

This, however, is NOT the case. As you and I know, economic oil will find its way to the market. And if the Canadians can produce the stuff for $60/barrel and sell it for $95, they’re going to.

An approved pipeline means that oil comes south to Houston’s refineries. A presidential veto means Canada will figure out a new plan – most likely with the word “China” attached to it.

So you see, while the protesters have a valid cause, they don’t have their facts straight. Nor did they pay attention during their Economics 101 lecture.

Whatever the case for their attendance, I vehemently disagree with their stance on the pipeline. It’s a no-brainer to approve this project, and as Byron King puts it an “energy disaster” to veto it.

Heh, and get this. According to Bloomberg protesters were coming from all over the country – a bus from Massachusetts, a train from Chicago, and plenty of other far off places.

Taking a gasoline-chugging bus to an oil pipeline protest? Yes, the irony runs thick my friend.

The point is cheap and abundant energy is an important part of America. Today, though, the pendulum has swung so far that we’re encountering pushback on the key factors that made our nation so prosperous.

Cheap, abundant energy – and unfettered capitalism – made our country what it is today. Just looking back over the past 100 years this is what made our country thrive – plus, gave us a crucial advantage in WWII.

Ugh. And here we are today with tens of thousands of people trying to block a pipeline decision that’s in our country’s best interest.

Lies Spread Faster Than The Truth

What you have to understand is that in a lot of cases – as my late grandmother used to say – the lies spread faster than the truth. When it comes to the Keystone Pipeline decision or opinions on “fracking” this is most certainly the case.

Sure, thinking the veto of a pipeline will protect polar bears is catchy, but it’s not necessarily accurate. Instead, just think that a veto of the pipeline could mean millions of barrels of crude headed to China where most of their cars don’t even have catalytic converters! With lax Chinese pollution standards I couldn’t think of a worse fate for Canada’s crude.

Switching gears a bit, just yesterday I was driving home and saw a “stop fracking now” bumper sticker on a car near my house (ha, there goes the neighborhood!) I didn’t get a chance to poll my neighbor, but I can say with near certainty that had I asked her to describe what fracking actually is she wouldn’t be able to.

In the same sense, I guarantee you a majority of the protesters in DC yesterday never got a full economic dissertation on the pipeline decision. This is the same crowd of people that would have chained themselves across a train track to get special funding for “green” energy – the same funding that went to debacles like the now-defunct Solyndra. That my friend is called getting swindled.


Again, it’s easier to spread lies than the truth. No one wants to hear about “balance sheets” and “year over year profit” instead, they want to hear (and believe) in economic solar energy.

They don’t want to hear about geophysics and geopolitics, they want to hear (and believe) about “dirty” oil – and blocking a symbolic pipeline. Indeed, people love being tricked, it’s easier that way.

Heck, I even saw this a few years back on a visit to South Africa. South Africa, if you didn’t know, has a moratorium on fracking. This was a preemptive move by the government to understand concerns with the technology before permitting it. That’s all well and good.

But what’s funny, really funny, is that when you ask the people on the street why fracking is banned you get some wild stories! The one that I heard more than once revolved around a giant telescope.

What’s a giant telescope got to do with fracking? Damned if I didn’t want to find out! Well, it turns out that someone spread the idea that seismic activity cause by fracking would disrupt this huge telescope and create blurry pictures. (This is completely unfounded by the way.)

But that’s what the oil industry is fighting, “blurry pictures of the moon.” So instead of the citizens thinking in terms of energy development and facts about ground-water safety they’re all tied up on blurry pictures of the moon!

The same goes for this pipeline decision – stories have trumped facts. So where do we go from here?

How To Profit From The Protests

Last year when president Obama vetoed the Keystone Pipeline I discussed three blue-chip ways to play the botched pipeline decision. Today with a second decision in our immediate future let’s check in on our thesis.

The key back then was that no matter which way the State Department report and presidential consent went, three energy companies were set to cash in. The list included companies that had Canadian crude production as well as a strong U.S. presence: Chevron (CVX), Exxon (XOM) and ConocoPhillips (COP).

All three companies are sporting a profit since Obama’s botched decision in January 2012. Exxon is up 7%, ConocoPhillips is up 9% and Chevron is up 12% (dividends included.) That’s solid work for these blue-chips!

The real profit multiplier, though, came in the form of a ConocoPhillips spinoff. Back in May 2012 ConocoPhillips spun off its refining business unit, Phillips 66, and gave shareholders one share of the newly formed refiner for every two shares of ConocoPhillips. Refiners had a great year. Had you held on to shares of Phillips 66 through the spinoff you’d be sitting on a 30% total gain on your ConocoPhillips position, since January 2012.

All said, our thesis is still intact. These blue-chip players are going to ride the North American energy wave higher. With production coming from Canada and the U.S. they’ll be able to keep churning revenue and paying dividends – no matter which way the pipeline decision goes.

And on a positive note, if gas prices keep heading higher these players should help us offset some of that pain at the pump… unlike the bussed in folks in D.C.

Keep your boots muddy,

Matt Insley

Original article posted on Daily Resource Hunter

35,000 Protesters, Your Chance To Cash In! appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

avatarThe Daily Reckoning - The Daily Reckoning posted Tuesday, February 19th, 2013.

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