Britannia Radio

The Daily Reckoning U.S. Edition

Home . Archives . Unsubscribe

The Daily Reckoning | Wednesday, May 9, 2012 Profit potential in a high-voltage medical field of interest, Are you shirking your patriotic duty to waste money? Plus, Bill Bonner on phony growth, the cost of going broke and plenty more... ------------------------------------------------------ External Advertisement The New American Pioneers How thousands of retirees are escaping the economic trap at home and rebuilding their retirement dreams beyond the US border. Get full details here. GDP Growth: The Civic Duty of Every US Consumer Bill Bonner Reckoning today from Baltimore, Maryland... No panic on Wall Street — yet. Gold still over $1,600. But watch out. Our hunch is that when people come to their senses...they will run for the exits. Europe’s shifting from austerity to “growth”...which really means more debt. America’s growth is phony — with fewer jobs today than when the ’08 recession began. More people are below the poverty line. More people on food stamps. And more people so broke they can’t even go broke. CNN Money reports: This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy. The average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research submitted to the National Bureau of Economic Research. As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year. The research, conducted by a group of professors from Columbia University, the University of Chicago and Washington University in St. Louis, examined how bankruptcy filings spiked after people received their tax rebates in previous years. They estimate that another 200,000 consumers, who would otherwise not have enough money to file, will use their tax refunds to pay for bankruptcy this year. “For lots of people, bankruptcy has been taken off the table as an option because of the severe fees involved,” said Jialan Wang, co- author of the report. And here comes the critical insight: “It becomes harder and harder to pay off the debt as interest payments get higher, so your debt grows larger and larger,” she said. Hey, somebody should mention this to the world’s central banks. And to Paul Krugman. And Larry Summers. And Ben Bernanke himself. They think the key to solving the world’s financial problems is more spending...more debt and more “growth.” But you know they can’t really give the world more growth. Real growth requires real investment, real output, real risk, skills...customers with money...and all the rest. All they can really give the world for sure is more debt. Which is exactly what the plan is. More debt is certain. Growth is unlikely...except in the ersatz version. Thanks to LTRO, QE and the Twist the feds are really not borrowing money at all. They’re printing it. So, you might say that printing money is a debt-free approach to growth. Except that even dollar bills are debt instruments. They are “notes” from a bank of zero maturity. You can cash them in at any time. Of course, all you’ll get are more paper notes. Which just goes to show how silly the whole system is. The trouble with the folks who are too broke to go broke is that they don’t have enough of those paper notes. If they were a major bank...or a national government...they could get more of them, just by asking. The Fed would print them up “out of thin air.” They might as well do the same for the small deadbeats too. Why not? The paper money doesn’t cost them anything. But today we’ve got more important things on our mind that the problems of America’s poor people. We’re thinking about growth itself... The guy who drives out to the neighborhood bar, spends all night drinking, and then drives back home...stimulates GDP. Better yet, he crashes his car on the way home. Then, he is a real hero to the economy. He has to buy another car. The poor sap who stays at home is a drag on growth. The fellow who goes to McDonald’s night after night rather than cooking his own burgers...the fellow who leaves his window open with the air-conditioning running...the fellow who hires a lawn service company rather than cutting his own grass...the man who borrows money to finance a house or a vacation — all of them add to the GDP. Want to increase GDP? Want growth? Let’s cut each other’s lawns. Let’s get others to wash our clothes...and clean our houses. Let’s make gadgets, geegaws and other worthless paraphernalia and sell them to each other! Get the housewives into the labor force. Give jobs to teenagers. Don’t do anything for yourself. The guy who plants his own garden...who cuts his own firewood...who fixes his own roof — he is a traitor to the economy. He needs to get another job...borrow money...burn more gasoline...to buy more stuff...! Doesn’t he know the US needs growth? The trouble with GDP growth is that it only tells you how fast the wheels are spinning. It doesn’t tell you if you’re getting anywhere. Dozens of Congressmen have used “inside information” to make a fortune on stocks... ..without so much as getting a slap on the wrist by the SEC. But did you know that there’s another way Congressmen pile up personal wealth while they’re in office? Senator Kerry did this recently and took home at least $92,723. What’s really surprising is that you and I can use this “trick” as well. Learn about the full story here. The Daily Reckoning Presents An Electrifying Biotechnology — A Shot at Shocking Profits Patrick Cox Fascination with the effects of electricity on the body goes back — way back. In the 1770s Italian physician and physicist Luigi Galvani shocked the world with the discovery that a spark could cause a dead frog’s legs to twitch. In 1802, German chemist Johann Wilhelm Ritter furthered Galvani’s research into electrophysiology. He observed how halting a strong current in muscle nerves could cause a muscle to contract. Electricity as a medical therapy became a high-voltage field of interest. By the late 1800s, scientific literature described how electrical pulses could kill bacteria in river water or change the shape and color of red blood cells. Luminaries, such as Nikola Tesla, pioneered experiments and patented electrotherapeutic equipment. Although electricity’s effect on the body had long been studied by the middle of the 20th century, many of the mechanisms were not yet known. In the 1950s, however, this began to change. For example, in 1951 Nobel Laureate in physiology or medicine Alan Lloyd Hodgkin theorized that the breakdown of a cell’s “skin” was at the root of many of electricity’s observed effects. Hodgkin believed cellular membranes were electrically insulating layers, and that strong electricity caused pores to permanently open. Irreversibly opening pores made cells break apart and die. The phenomenon was dubbed electroporation, from the words “electric” and “pore.” However, more experiments by other researchers eventually showed that irreversible electroporation wasn’t always the outcome of passing electricity through cells. Cellular pores are electrically charged gates. If pulses of electrical energy are sufficiently low and brief, existing gates open only temporarily. These cells don’t die, but this effect can still be useful. With electroporation, the ability of cellular membranes to keep a tight seal to the outside world can be manipulated for short periods of time. As it turns out, the discovery of reversible electroporation revolutionized biotechnology research. Cracking open a cell’s pores allows researchers to get stuff into cells they weren’t able to before. By the 1980s, thanks to reversible electroporation, researchers were able to modify genes in everything from mouse cells to bacteria. Today, electroporation equipment is a standard appliance in research labs. These devices, called electroporators, are used to create things like “knockout mice” — organisms with genes modified to study everything from cancer compounds to Alzheimer’s disease. Moreover, many of the new wonder drugs are biologics, which means they are produced by living organisms. Biologics often depend on the use of electroporation to create genetically modified cell lines to manufacture complex therapeutic proteins. Up until recently electroporation has been limited to the lab. It is something used to introduce molecules that normally won’t be absorbed by cells while in culture. But that has changed... Today this same technology is being applied for the treatment of cancer in living organisms — humans, to be exact... You may already be familiar with some of this technology. I’ve been writing about it for some time. Therapeutic engineered DNA molecules, known as plasmids, are an exciting, maturing platform for treating disease. Plasmids are small rings of DNA that are used to turn cells into custom protein manufacturing plants. Once introduced into a cell, these genetic code constructs act like native DNA: they guide the production of proteins. This can include therapeutic proteins. The downside of DNA plasmids as agents to cure disease, however, is that they don’t migrate into a cell’s interior very well, if at all. Electroporation solves the problem of DNA delivery. It has been used for this job in labs for decades. It can increase the ability of molecules like DNA to enter cells by 1,000 times or more. Electroporation drug delivery can be used for far more than DNA vaccines. It can be used to deliver DNA designed for other purposes, as well as for improving the uptake of therapeutic molecules that are already on the market... One use of gene therapies involves injecting directly into tumors. This focuses on writing the code for these naturally occurring anti- cancer agents in its DNA plasmids, and then introduces them into tumor cells via electroporation. Normally, the immune system works to seek and destroy cells that develop mutations. Sometimes, however, mutated cells develop the ability to defend themselves by hiding from the immune system. Alerting the immune system with these signaling proteins allows the immune system to recognize cancer cells and triggers a cascade reaction to destroy them. Early investors in the technology will be on track to reap rich rewards from breakthrough electroporation platforms... it addresses a huge market. Regards, Patrick Cox, for The Daily Reckoning Joel’s Note: Read the above column again. And again. Then compare it to the conversation currently occupying the political sphere...the kind you’ll find in the morning newspaper or on the nightly news. Something amiss? The difference should be akin to night and day...black and white...truth and government statistic. These opposing narratives should be as distinct from one another as can be. In fact, the kinds of breakthrough technologies that Patrick researches ought to sound completely insane to anyone who is subjected to even one iota of reality TV. To the mainstream, it ought to sound crazy...insane...improbable and borderline nuts. That’s because the conversation Patrick is a part of is one entirely detached from the world of lethargic regulation and statist do- goodery. Instead, it is innovative, responsive to real market demands, dynamic and intrepid in a way that statist bureaucracy could never hope to be. Then again, that’s exactly how new and disruptive technological breakthroughs always come about...as a complete and utter surprise to the mainstream. It’s also why most people don’t profit from these epochal shifts...and why only a few do. Change happens at the margin. To catch a glimpse squarely outside your comfort zone, you’re invited to click here. Patrick Cox’s Technology Profits Confidential Presents... Only 62 People Know Exactly Why These Four Companies Could Change the World Now you’re #63 “on the inside” — and you’re on the verge of raking in lasting wealth. This could go down in history as the story of our era. Click here for all the details. And now back to Bill, with the rest of today’s reckoning... Bill Bonner Turns out, more and more people are shirking their patriotic duty to waste money; they’re betraying the economy that supports them. A report a few weeks ago told us that young people have fallen out of love with the automobile. They buy fewer of them. They drive less. They consume less fuel, less oil, less gasoline. That certainly won’t help growth. And neither will people without jobs. There are, officially, 13.3 million of them. And 29% of them have been unemployed for a year or more. Can’t get much growth that way. And what happens after you’ve been jobless for a year or more? The Washington Post calls it the “incredible shrinking labor force.” People in the work pool are drowning before they are rescued. If the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1 percent. If the percentage was where it was when George W. Bush took office, the unemployment rate would be 13.1 percent. That helps explain a seeming contradiction in the unemployment numbers — the rate keeps dropping even though job creation has been soft. In April, the US economy added a mere 115,000 jobs, according to Bureau of Labor Statistics data released Friday. In a normal month, that would not even be enough to keep up with new entrants into the labor market. But in this economy, it was enough to drive unemployment from 8.2 percent down to 8.1 percent, the lowest point since January 2009. The explanation is a little-watched measure known as the “labor force participation rate.” That tracks the number of working-age Americans who are holding a job or looking for one. Between March and April, it dropped by 342,000. But because the official unemployment rate counts only those workers who are actively seeking work, that actually made the unemployment rate go down. In February, the Republican National Committee released a research note on “The Missing Worker,” arguing that “over 3 million unemployed workers have called it quits due to Obamanomics.” Economists say the story is considerably more complicated. For one thing, the trend predates President Obama. And while part of the story is clearly that the labor force is shrinking because the bad economy is driving workers out, another significant factor is that baby boomers are beginning to retire early — a trend that has worrying implications for future growth. A smaller workforce means less growth! We added the exclamation point. Less growth. The wheels are slowing down. This could be a disaster, right? So, fewer people working means less GDP...less growth. So what? More tomorrow...and more on the Pentagon going rogue, too. Regards, Bill Bonner for The Daily Reckoning ---------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com