Insider Report
Headlines (Scroll down for complete stories):
1. Red Tape Deterring Hydropower Projects
2. Sen. Coburn's New 'Wastebook' Cites $30 Billion
3. Wealthy Spend Billions in Record-Setting Art Sales
4. Iran Cancels Loan for Pipeline the U.S. Opposes
5. Poll: Belief in God Remains Strong
6. Number of U.S. Banks at Record Low
1. Red Tape Deterring Hydropower Projects
Small-scale hydropower can generate clean, low-cost electricity and reduce carbon dioxide emissions, but onerous federal regulations are discouraging development of this renewable energy.
Small-scale hydropower usually does not require dams, and most commonly is produced when water from a river is diverted to a pipeline. The water flows through a turbine or waterwheel, powering a generator to produce electricity.
This hydropower could potentially yield enough electricity throughout the United States to power more than 65,000 homes annually.
Hydropower generates electricity more efficiently than any other form of electrical generation, and usually has "limited or even no environmental effects," according to a report published by the Mercatus Center at George Mason University.
Nevertheless, "the federal permitting process is onerous," the report states, and projects may have to obtain permits from as many as 25 regulatory agencies.
These include compliance with the Clean Air Act, the Clean Water Act, the Endangered Species Act, the National Historic Preservation Act, and the Fish and Wildlife Coordination Act.
The report points to the example of Logan, Utah. The city planned a small-scale hydropower project that could power 185 homes and reduce carbon dioxide emissions from coal-powered plants by about 3.7 million pounds a year.
But due to federal regulations, the project ended up taking four years and costing nearly $3 million. By comparison, energy experts estimate that a similar project in Canada would have cost between $225,000 and $375,000.
In Logan, regulations "drove up costs in terms of time and money, and as a result, Logan is not planning to undertake any similar projects in the future," the Mercatus report observes. "Other cities have had similar experiences.
"We find that regulation is likely deterring the development of small hydropower potential across the United States."
In another example cited by the report, Afton, Wyo., had to spend $7.5 million for a small-scale hydropower project, including an estimated $5.6 million on regulatory compliance.
Federal legislation signed into law in August 2013 is intended to streamline the permitting process, but Mercatus notes that "it is still too soon to tell whether this law will have its intended effects."
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2. Sen. Coburn's New 'Wastebook' Cites $30 Billion
Sen. Tom Coburn has released his annual "Wastebook" citing egregious examples of government waste resulting from what he calls "mismanagement and stupidity."
These examples "collectively cost nearly $30 billion in a year when Washington would have you believe everything that could be done has been done to control unnecessary spending," the Oklahoma Republican said.
"The Army National Guard spent $10 million on Superman movie tie-ins while plans were being made to cut the strength of the Guard by 8,000 soldiers," he pointed out. "And while nutrition assistance was being reduced for many needy families, USDA was spending money on celebrity chef cook-offs and running up the taxpayer tab on Bloody Marys, sweet potato vodka, and red wine tastings from here to China."
The examples from "Wastebook 2013" include:
- $50 million to National Technical Information Services, which charges for reports that can often be found for free through a Google search.
- $17.5 million for special tax exemptions for Nevada brothels, including tax deductions for prostitutes' wages, rent and utilities, and even "breast implants and . . . costumes."
- $297 million for the Army's "mega-blimp," or Long Endurance Multi-Intelligence Vehicle. Intended for use in Afghanistan, it made only one trip, a flight over New Jersey, and was sold back to the contractor for just $301,000.
- $384,989 for a Yale University study, "Sexual Conflict, Social Behavior and the Evolution of Waterfowl Genitalia."
- $65 million for Superstorm Sandy emergency funds that were used to pay for tourism ads for New York and New Jersey.
- $125,000 for NASA's project to create a 3-D pizza "printer" that makes synthesized food for astronauts.
- $284,300 to allow 12 music label executives and one government official to travel to Brazil to promote American music in foreign markets.
- $125,000 for a documentary, "Superheroes: A Never-Ending Battle," examining the history of comics.
- $7 billion for the Pentagon to destroy vehicles and other military equipment used in conflicts in the Middle East rather than sell them.
Said Coburn: "When it comes to spending your money, those in Washington tend to see no waste, speak no waste, and cut no waste."
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3. Wealthy Spend Billions in Record-Setting Art Sales
Wealthy people around the world are increasingly investing eye-popping sums in artworks, smashing an array of previous records.
On Nov. 12, Christie's sold a triptych by British painter Francis Bacon, "Three Studies of Lucian Freud," for $142.4 million, a record price for a painting at auction. The previous high at an auction was for Edvard Munch's "The Scream," which sold for $119.9 million in May 2012.
At the same Christie's sale, a steel sculpture by Jeff Koons, "Balloon Dog," sold for $58.4 million, the highest price ever for a living artist's work sold at auction.
That auction also set a record for the most money spent in a single auction at Christie's, $691 million, according to The Independent.
Then on Dec. 4, Norman Rockwell's "Saying Grace" became the most expensive American painting ever sold at auction, going for $46 million at Sotheby's. The previous high for an American painting sold at auction was $27.7 million for George Bellows' "Polo Crowd" in 1999.
The next day at Christie's, Edward Hopper's "East Wind Over Weehawken" sold for $40.5 million, a record for a Hopper.
"The art coming to auction is neither better nor worse than the art that came to auction a year or 10 years ago," said Todd Levin, director of Levin Art Group. "But there is now an extremely thin layer of ultra-high net worth individuals, who have massive amounts of excess capital sloshing around, and they have to put that money somewhere."
Philip Hoffman, head of the Fine Arts Fund Group, which consults with art buyers, told the Los Angeles Times: "What we're seeing is that wealth is expanding in Latin America and the Middle East. The new rich like to enjoy art, show it off, have it as an alternative asset."
There are now some 2,170 billionaires worldwide, three times as many as five years ago. The number of billionaires in China alone grew 400 percent from 2008 to 2012. In Mexico, there were 145,000 millionaires by the end of last year.
About 3 percent of the world's wealthy currently own art, but Hoffman estimates that will rise to as high as 40 percent in the next decade.
The global art market is now worth about $60 billion, according to the Times.
The highest price ever paid for a painting in a private sale was the $259 million spent for Paul Cezanne's "The Card Players" in April 2011 — $269.4 million in today's dollars. The buyer: the royal family of Qatar.
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4. Iran Cancels Loan for Pipeline the U.S. Opposes
Iran has abruptly canceled a $500 million loan to Pakistan for its work on a pipeline designed to bring Iranian natural gas to Pakistan.
Iran's deputy oil minister, Ali Majedi, said the cancellation was due to the impact of sanctions on Iran's economy and Pakistan's slow progress on its share of the IP (Iran-Pakistan) pipeline.
"Pakistani officials were told that, given the sanctions, Iran is not able to finance construction of the [Pakistani part of the] pipeline and has no obligation to do so," he said.
Iran is advising Pakistan to look to European nations for the financing it needs, an estimated $1.5 billion, CNS News reported.
Iran's federal minister for petroleum and natural resources, Shahid Khaqan Abbasi, has confirmed that the IP pipeline project is unlikely to go ahead as planned, according to The News International, Pakistan's leading English-language newspaper.
Iran has already built a 600-mile-long, 42-inch-diameter pipeline from gas fields in southern Iran almost to the Pakistani border at a cost of $2 billion. But the Islamic Republic charges that Pakistani "procrastination" has put the project years behind schedule.
Pakistan needs to build 488 miles of pipeline for the project, intended to bring 21.5 million cubic meters of Iranian gas to Pakistan daily by the end of next year.
The U.S. State Department has warned that it was in Pakistan's "best interest to avoid any sanctionable activity."
But during a visit to Tehran in March, then-Pakistani President Asif Ali Zardari dismissed Western concerns about the pipeline undermining sanctions, claiming that "enemies of Islam" were seeking to prevent closer ties between Iran and Pakistan.
The United States has been encouraging alternatives to the IP pipeline, including a plan to pipe gas from the Caspian Sea through Afghanistan to Pakistan and then on to India.
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5. Poll: Belief in God Remains Strong
A strong majority of American adults say they believe in God, although this belief has declined in recent years, a new Harris Poll reveals.
A majority of Americans also believe in miracles, angels, life after death, heaven and hell, and the divinity of Jesus.
In the survey of 2,250 adults by Harris Interactive, 74 percent said they believe in God, down from 82 percent in 2005.
Republicans are more likely to believe — 87 percent of those polled said they believe in God, compared to 72 percent of Democrats and 70 percent of independents.
Among age groups, 83 percent of those 68 or older believe, while just 64 percent of Americans 18 to 36 feel that way.
Among all respondents, 54 percent said they are "absolutely" certain there is a God, and 14 percent are "somewhat" certain. Only 16 percent are "absolutely" or "somewhat" certain there is no God.
In 2005, 79 percent of Americans believed in miracles; today the number has dipped to 72 percent.
Similarly, the percentage who believe in heaven has fallen from 75 percent to 68 percent.
Other findings of the Harris survey:
- 68 percent believe Jesus is God or the son of God, down from 72 percent in 2005.
- 68 percent believe in angels, down from 74 percent.
- 65 percent believe in the resurrection of Jesus Christ, 64 percent believe in the survival of the soul after death, and 58 percent believe in hell and in the devil.
- A minority of Americans, 47 percent, believe in Darwin's theory of evolution.
- 42 percent believe in ghosts, 36 percent ascribe to creationism, 36 percent believe in UFOs, and 29 percent believe in astrology.
- 59 percent of respondents said they are "very religious" or "somewhat religious," down from 70 percent in 2007.
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6. Number of U.S. Banks at Record Low
The number of banking institutions in the United States has fallen to its lowest level since at least the Great Depression — while overall bank deposits have more than quadrupled since the 1980s.
Federally insured institutions across the country dropped to 6,891 in the third quarter, falling below 7,000 for the first time since federal regulators began keeping track in 1934, the Federal Deposit Insurance Corp. disclosed.
The number peaked at more than 18,000 in the 1980s.
The decline in the number of banks has come almost entirely among smaller banks, those with less than $100 million in assets. From 1984 to 2011, more than 10,000 banks ceased to exist as a result of mergers, consolidations, or failures, the FDIC reported.
From 2008 to 2012, 465 banks failed, while only 10 failed in the five prior years.
At the same time, overall bank deposits have risen from around $2.3 trillion in the mid-1980s to around $9.6 trillion this year.
The falloff in the number of smaller banks "is raising alarms among boosters of community banks, who say such lenders — which represent the vast majority of U.S. banks — are critical to the economy because they are more likely to make small-business loans," The Wall Street Journal observed.
The number of new startup banks has also dwindled in recent years. Every year from 1934 to 2009, investors chartered at least a few and sometimes hundreds of new banks. But since December 2010, only one new startup has been chartered — a bank that opened earlier this month in Bird-in-Hand, Pa.
According to The Journal, the reluctance to open new banks "stems from slim profits and rising regulatory costs as Washington tries to ensure banks won't fail en masse as they did during and after the 2008 financial crisis."
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