Month: December 2012

By MoneyMorning.com.au

Having spent twenty years of my life observing markets, you’d think that there wasn’t much that could surprise me.

But watching markets levitate higher as economic data continues to slide has me scratching my head.

Is money printing really the only thing you need to make markets go up?

Do fundamentals no longer matter at all?

How long can the charade go on?

Another six months?

Five years?

Twenty years? Longer?

Today I’ll give you my take on where the markets and the US economy is heading…

As Bill Gross, the head of Pimco, said recently:

‘All of the money being created and freed up is elevating asset prices, but those prices are not causing corporations to invest in future production. Financial repression and quantitative easing were supposed to be the extraordinary monetary policies that kick-started the real economy in the other direction. They have not. We have been using the lower interest rates to consume as opposed to invest.’

He finishes up by saying that:

‘Investors should recognize that asset and currency prices ultimately rest on the ability of a real economy to grow. If growth cannot be boosted by monetary policy, and fiscal policy is in the hands of a plutocracy more concerned about immediate profits as opposed to long-term vitality, then no Genie or Flavor Flav with a magic clock can make a difference.

‘If, therefore, real economic growth is stunted in the United States and globally, then portfolio strategies should acknowledge bite-sized future returns and the growing risk that the negative consequences of misguided monetary and fiscal policy might lead to disruptive financial markets at some future point. The approaching fiscal cliff might be the first of a series of future disruptions.

‘Although PIMCO expects a middle ground fiscal compromise from Washington, when that is combined with the fading influence of QE monetary policies, it leads only temporarily to 2% real growth in the U.S. at best – growth that is clearly not “Old Normal.” We are in a “New Normal” world where the negative effects of private sector deleveraging are only being weakly addressed by monetary and fiscal authorities.

‘If so, then Treasury yields should stay low and my money market fund should continue to read “.01%.” The “cult” of equity – or better yet the cult of “total return” – for both bonds and stocks – is over, if that definition presumes a resumption of historical patterns anywhere close to double digits. The era of financial repression continues.’

But the stock market doesn’t appear to be that concerned. The US markets are now up over 100% from the lows in 2009. But can they rally another 100% over the next few years? I doubt it.

A cursory glance at the recently released economic data shows that the US manufacturing ISM (Institute of Supply Management) data fell into contraction for the fourth time in six months, Eurozone retail sales fell for the thirteenth month in a row, and Japanese manufacturing PMI (Purchasing Managers Index) data contracted at the sharpest rate in 19 months, with new orders and output plunging.

Economists Says US Already in Recession

The ECRI (Economic Cycle Research Institute) maintains their recession call on the US economy. They believe the US is already in a recession:

They say that:

‘If you look at the size of the simultaneous declines in industrial production and personal income since July, that combination has never occurred outside a recessionary context in over half a century – but it’s occurred in every recession. This leads us to conclude that we are most likely already in a recession that began around mid-2012.’

The fact that employment is continuing to grow doesn’t mean we aren’t in recession, because according to ECRI positive jobs growth isn’t inconsistent with the early months of recession. In fact three of the last seven recessions had increasing employment in the initial months.

All of the above would normally have stock markets around the world taking fright, but day after day I see negative data completely ignored.

There must come a time when fundamentals and market pricing are brought back into alignment.

After watching this rally for nearly four years from the lows in 2009 I feel a high level of conviction that we are getting close to a major correction. The charts have been flashing some pretty serious warning signs over the past few months, but the recent rally has shifted the short term momentum back to the upside.

We now have some very clear lines in the sand. If the S+P 500 rallies above its September 2012 high of 1474 then the long term uptrend is still intact and the bears will have to go back into hibernation.

But if we see some weakness in the days ahead and fall back below the 200 day moving average at 1385 then the dominoes may start falling and we could see a very sharp drop towards the June 2012 lows of 1266. More than 10% below current levels.

The next few weeks really are quite important in giving us a hint about the underlying strength of this market.

Murray Dawes
Slipstream Trader

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning:
If Profits are Falling Why are Stocks Rising?

Money Morning:
Is There Any Good News to Come from the US Debt Crisis?

Pursuit of Happiness:
What if Climate Change Was a Lie?

Australian Small-Cap Investigator:
Why Speculating On Small-Cap Stocks is Your Best Bet in a Rigged Market

How Long Can the Market Ignore These ‘Warning Signs’?

By MoneyMorning.com.au

In Europe, the official French unemployment rate just hit the highest level in 14 years at over 10%! And I hold grave concerns for the French economy under the stewardship of the Socialist François Hollande.

As an example of the economic insanity being shown by French politicians, Steel maker Arcelor-Mittal was recently threatened with the nationalisation of one of their steel plants after it announced in October that it intended to shut down the Florange plant’s already inactive furnaces, saying they were uncompetitive in such difficult trading times.

Yes you heard that correctly. The French government was threatening to nationalise the assets of a private company.

Mish’s Global Economic Trend Analysis website quoted Pater Tenebrarun’s comment that:

‘Montebourg [The French minister for Industrial recovery] makes it sound as though Arcelor-Mittal, a private company, were deputized to the French government to help it fulfill whatever political aims it pursues – as though the government could simply draft private companies to aid it in attaining its socialist goals.

‘This case is going to have repercussions that go far beyond the fate of the loss-making furnaces and Mittal’s continued presence in France. By threatening the company with nationalization if it doesn’t comply with the government’s wishes, Montebourg is signaling that his government has absolutely no respect for property rights.

‘If Mittal closes the two furnaces (which as noted above have been idled for many months already), then the people employed there will lose their jobs which is of course unfortunate. However, this is a typical case of the road to hell being paved with good intentions: by threatening the expropriation of Mittal, Montebourg ultimately risks far more jobs than merely those at the two furnaces.

‘There is a lesson that Mr. Montebourg has yet to absorb: No government can dispense with the laws of economics by decree. It might as well attempt to order the sun not to shine or issue an edict that gravity be abolished.’

Murray Dawes
Slipstream Trader

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning:
If Profits are Falling Why are Stocks Rising?

Money Morning:
Is There Any Good News to Come from the US Debt Crisis?

Pursuit of Happiness:
What if Climate Change Was a Lie?

Australian Small-Cap Investigator:
Why Speculating On Small-Cap Stocks is Your Best Bet in a Rigged Market

The French Economy is Doomed

By The Sizemore Letter

All subcultures have their rites of passage.  Marine recruits have basic training.  Fraternity boys have hazing.   And macro traders have the Japan short.

It seems that you’re not part of the club until you’ve lost money shorting Japan bonds or, more recently, the yen.

You’ll do it for all the right reasons, of course.   We all do.  And chances are good you’ll still lose on the trade.  It happens to the best of us.  Even hedge fund “masters of the universe” like Greenlight Capital’s David Einhorn.  Japanese bond yields have defied the bears for years, as if they are held low by the weight of an immovable sumo wrestler.

Or maybe not.

I recently wrote that Japan would be the next shoe to drop in the global financial crisis, and I got a fair amount of hate mail for it from other investors.  (“Hate mail” may be a little too harsh.  We’ll go with “strongly-worded professional disagreement”).

Yes, Japan may be the most heavily-indebted country in the world with debts that far outweigh those of Greece, Spain or Italy.  But this debt is held domestically, so the thinking goes, so Japan is not at risk of an attack of selling by the bond vigilantes.

This is flawed thinking for a number of reasons, which I’ll address in a second.  But before I do that, I want to ask a simple question:

Why not short Japanese bonds and the yen?

Seriously, you have nothing to lose.  The Japanese 10-year yields a pitiful 0.69%, less than half the yield of the also pitifully low 10-year U.S. Treasury.  The laws of mathematics are pretty straightforward here.  Bond yields can’t go below zero.  Shorting Japanese bonds at these levels is a coin toss in which “heads, I win” and “tails, I have virtually no room to lose.”

And the yen?

Traders are lining up to short the yen right now; the short position in the currency recently hit a five-year high, as measured by the U.S. Commodities Futures Trading Commission.  Whenever I see a crowded trade like this, I get a little suspicious.  But I can certainly understand their bearishness.

The yen has been in a raging bull market since the carry trade “blew up” in 2008.  Traders had been using the yen as their funding currency for years because rates were so much lower in Japan than anywhere else in the world.  But once the dust settled after the 2008 meltdown, rates in the United States and Europe weren’t much higher.  And with the Eurozone looking like it was about to come unwound, parking a little cash in yen seemed like a less bad idea.

All of this contributed to the yen bull market.  But this trend has gone about as far as it can.  As I wrote in the last article, Japan’s domestic population is dying.  Japan is the oldest country in the world, and more adult diapers are sold there than children’s diapers (Seriously, stop and think about that for a second).

With a shrinking domestic market, Japan needs exports to stay above water…which means that they need a weak currency.  The high price of the yen (along with weakness in Japan’s export markets in the U.S. and Europe) sent Japan’s famed trade surplus into deficit for much of 2011 and 2012.  You think Japan’s leaders are happy about that?

The fair question to ask is “Why now?”  Japan has been a wreck for 20 years, and the country has lived with high debt levels for a long time.  Why is this time different?

To start, Japan’s probable next prime minister, Shinzo Abe, has made it a point of policy to lower the value of the yen with unprecedented levels of quantitative easing.   He also wants an explicit inflation target of 2-3%.  It’s hard to see interest rates staying at less than 0.7% if inflation gets anywhere near that level.

If the yen continues to crack, we may actually get a decent short-term rally in Japanese stocks.  But whatever you do, don’t fall in love with this trade.  If interest rates rise significantly, Japan will have a hard time rolling over its debts—it’s colossal, 220% of GDP debts.  And if we start to see rates creeping up, I expect to see a lot of volatility in Japanese equities.

All of this is compounded by the fact that Japan will have to increasingly fund its large budget deficits (roughly 10% of GDP per year) in the international bond market.  The Japanese savings rate is not what it used to be.  In fact, at 1.9%, it’s lower than America’s now.

Do you think international bond investors—those same investors that drove Spain and Italy to the brink of needing sovereign bailouts—will continue to roll over Japanese debt at current rates?  Yeah, me neither.

When Japanese rates begin to rise, I believe we will have the short opportunity of a lifetime in Japanese assets—stocks, bonds, the yen, you name it.

Investors wanting to short Japanese bonds can go about it several different ways.  One option is the Powershares DB Inverse Japanese Government Bond ETN (NYSE: $JGBS), though you should be careful with this one.  It’s thinly traded.

Shorting the yen via ETFs is a little easier with the ProShares UltraShort Yen ETF (NYSE: $YCS).  And shorting Japanese equities can be done with the ProShares UltraShort MSCI Japan ETF (NYSE:$EWV) or by simply shorting the popular iShares MSCI Japan ETF (NYSE: $EWJ).

In the meantime, be patient.  Unless you want to join the “macro traders who lost money in Japan” club.

Note: For an interesting piece that takes the other side of the argument, check out Steven Towns’ bullish piece on Japanese equities.   Towns makes a compelling case for several Japanese blue chips, and many I would consider buying after a major crash.  But for now, I see the best opportunities in Japan coming on the short side.   

Disclosures: Sizemore Capital has no positions in any securities mentioned.

The post Japan is a Dead Man Walking appeared first on Sizemore Insights.

By MoneyMorning.com.au

Despite the fragile state of the global economy, and growing production in the US, the oil price has remained stubbornly high this year.

The price of a barrel of Brent crude is roughly where it was at the start of the year, at around $110.

Tension in the Middle East over Iran has been one of the biggest issues propping the oil price up.

But a growing number of energy analysts believe that problems in another Middle Eastern country could send the price of crude oil much higher.

We’re talking about Saudi Arabia – the world’s largest oil producer…

 Saudi Arabia’s Oil Production Could be Peaking

 Earlier this year, amid concerns over Iran’s nuclear ambitions, oil prices started to rise, with Brent hitting over $120 a barrel.

Then the Saudis intervened. Oil minister Ali Naimi publicly pledged to raise production and push down prices. He stated that ‘Saudi Arabia has invested a great deal to sustain its capacity, and it will use spare production capacity to supply the oil market with any additional required volumes. We have done it many times before, we will do it again.’

Almost immediately, oil prices started to fall. It also seemed to suggest that the ability of the Saudis to influence the global oil supply was undiminished.

However, a closer look at the figures reveals that it might be tough for them to keep this up in the long term. The problem is that the increase in supply didn’t come from drilling new wells, or even getting a better yield from existing ones.

Instead, it came from bringing wells that the Saudis had previously abandoned back online. These sources have very limited reserves. This means that they are hardly a long-term solution.

Even keeping production at existing levels may be difficult, let alone increasing it. There have been queries about the quality of oil that the Manifa project, due to start pumping in 2014, will produce. And even if it does live up to hopes, the expiry of other wells will mean that overall output remains the same.

There are also big question marks over whether the Saudis are telling the truth about their levels of reserves.

Last year, leaked US diplomatic emails suggested that an ex-head of exploration at Saudi Aramco, the state oil company, privately estimated that the country’s reserves are 30% lower than the official figures. He also suggested that ‘no amount of effort’ by the Saudis will be able to stop ‘a steady decline in output’.

Peaking production is not the only threat to Saudi Arabia’s role as the world’s largest oil producer. The country will increasingly need to keep more of its resources for itself.

According to Citigroup, growth in the population and the economy are drastically increasing energy consumption. If current trends continue, Saudi Arabia will become a net importer of crude by 2030.

 Why the Saudis May Want a Higher Oil Price

 On top of this, Saudi Arabia’s desire to put a cap on oil prices may also start to weaken. Up until now the Saudis have tried to avoid prices rising too high.

This is not out of charity. It’s because Saudi Arabia doesn’t want to give other countries an incentive to invest in alternative energy sources. There’s no point in killing the goose that lays the golden eggs after all. And the fact that Iran, Riyadh’s main rival, is hit far harder by lower prices is an added bonus.

However, the social upheaval of the Arab Spring and beyond may force Saudi Arabia to change its view. Rulers in Jordan and Kuwait, for example, have tried to buy their rebellious populations off with increased social spending.

While this strategy might work in the short term, it’s very expensive. Jordan already has a large deficit, and the International Monetary Fund has refused to lend them any money that isn’t tied to unpopular reforms, such as the removal of price subsidies. This has forced the Gulf states, including the Saudis, to step in.

Saudi Arabia also has its own problems, with unrest in its eastern province, which follows a different branch of Islam than the rest of the country. There is also growing demand for general political reform in what remains one of the most repressive countries in the world.

The frail health of the 87-year old King Abdullah is also another worry. All these factors have led it to increase public spending by $130bn this summer in an attempt to shore up support.

All these spending factors mean that the Saudis may need oil prices to be at least $90 a barrel to balance the state budget. So at the very least, if prices go up again, Saudi Arabia won’t continue to increase production.

 The Good News About Higher Oil Prices

 This might sound like bad news – and it is in the short run. But in fact, the real bad news would be a prolonged plunge in the oil price. Why? Because that would stifle the search for alternatives.

America’s shale oil reserves could see the US replace Saudi Arabia as the world’s top oil producer by 2020, according to the International Energy Agency. However, because shale oil extraction is a more expensive process, the oil price needs to be around current levels to make it worthwhile.

With Saudi Arabia squeezed by its own budget needs, the chances of it deliberately trying to cut prices to scupper competition in the energy sector, are low.

Matthew Partridge

Contributing Editor, Money Morning

 Publisher’s Note: This article originally appeared in MoneyWeek

 From the Archives…

Now it’s the Turn of These Small-Cap Stocks to Rally…

31-11-2012 – Callum Newman

 Why It’s Possible to Buy AND Sell This Market

30-11-2012 – Kris Sayce

William Knox D’Arcy: The Greatest Australian You’ve Never Heard Of

30-11-2012 – Callum Newman

Why I’m Bullish on These Beaten-Down Stocks

28-11-2012 – Kris Sayce

Natural Gas to Rule the World

27-11-2012 – Dr. Alex Cowie

How the Oil Price Could Affect Saudi Arabia’s Energy Dominance

AUDUSD breaks above the upper line of the price channel on 4-hour chart, suggesting that the fall from 1.0488 has completed at 1.0392 already. The pair is now facing 1.0488 resistance, a break above this level will confirm that the longer term uptrend from 1.0149 (Oct 8 low) has resumed, then further rise towards 1.0550 could be seen. Support is at 1.0435, only break below this level will indicate that lengthier consolidation of the uptrend is underway, then deeper decline to 1.0350 area could be expected.

Forex Signals

By Central Bank News
Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.)

US Power Grid Vulnerable to Just About Everything

As Washington hunts ill-defined al-Qaeda groups in the Middle East and Africa, and concerns itself with Iran’s eventual nuclear potential, it has a much more pressing problem at home: Its energy grid is vulnerable to anyone with basic weapons and know-how…

(Video) Alcoa and Aluminum: Latest Price Action Suggests 2 Major Opportunities

Mike shows you that, going back to the same 2008-2009 period, AA has followed the price of aluminum very closely. You get a detailed view of Alcoa’s recent drop below a key support price level, plus the analysis of an important trendline…

Large Currency Speculators trim US Dollar bets for first time in five weeks

Non-commercial large futures traders, including hedge funds and large speculators, trimmed their US dollar long positions to a total of $8.01 billion on November 27th from a total long position of $11.2 billion on November 20th…

USD/JPY: Lemons into Lemonade

Going into the November 14 low, USD/JPY charts had been showing an impulsive downward Elliott wave pattern. Impulses are 5-wave moves, but on November 13-14, the pattern looked incomplete: the fifth wave down seemed to be missing..

 US Dollar tells us Stocks are Likely to Pullback – Simple Analysis

Trading with the trend is not always an easy task. It is human nature to predict and jump to conclusions and usually it’s better to trade with the trend no matter what your emotions are telling you. The current trend is down…

By Central Bank News
    The Bank of Canada (BOC) held the target for its overnight rate unchanged at 1.0 percent, as expected, and maintained its tightening bias, saying that it will have to raise interest rates at some point to ensure that inflation does not exceed its target.
    “Over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 percent inflation target. The timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector,” the bank said in a statement.
    The BOC, which has held its overnight rate steady since September 2010, said the global economy was unfolding broadly as the bank had projected in October with the U.S. economy progressing but also held back by uncertainty over budget talks. Europe remains in recession but China appears to be stabilizing and global inflationary pressures are subdued due to excess capacity.
    “Global financial conditions remain stimulative, though vulnerable to major shocks from the U.S. or Europe,” the BOC said.
    The BOC has maintained since April that it will have to raise rates at some point, a hawkish tone that is in stark contrast to central banks in most other advanced economies that are stimulating economic growth.

    Canada’s economy was weak in the third quarter due to temporary disruptions in the energy sector, and although underlying momentum is “slightly softer than previously anticipated” the bank said it expects the pace of growth to pick up through 2013, driven by consumption and business investment.    Canada’s Gross Domestic Product rose by 0.1 percent in the third quarter from the second for annual growth of 1.5 percent, down from 2.8 percent in the second quarter.
    Housing activity had started to decline from historically high levels and growth in household credit had slowed, but the bank said it was still too early to determine whether this moderation would be sustained.
    “The challenges include the persistent strength in the Canadian dollar, which is being influenced vby safe haven flows and spillovers from global monetary policy,” the bank said.
    Canada’s October headline inflation rate was steady for the third month in a row at 1.2 percent and the bank said it expected the headline and core rates to rise and return to 2 percent over the next 12 months as the economy gradually absorbs the small degree of slack.

    www.CentralBankNews.info
    

By Central Bank News
    Uganda’s central bank cut its Central Bank Rate (CBR) by 50 basis points to 12.0 percent as subdued inflationary pressure allows the bank to stimulate economic growth.
    The Bank of Uganda, which has now cut its policy rate by 1100 basis points this year, said headline inflation “rose only marginally” in November and the bank forecasts that core inflation will stabilize around its medium-term policy target of 5.0 percent over the next 12 months as inflationary pressures are “currently subdued and are likely to remain so in the near term because of the negative output gap.”
    The bank said the November headline inflation rose to 4.9 percent from 4.5 percent in October while core inflation eased to 3.8 percent from 4.0 percent. The rise in headline inflation was driven by food crops, energy, fuel and utilities.
    The bank said the prospects for growth in the 2012/13 fiscal year had weakened, with the main constraints weak demand, lack of private sector borrowing, the need to cut government expenditure in response to donor aid cuts and the difficult global economic outlook.
    “With real GDP growth forecast to remain below potential, the negative output gap is expected to persist through 2012/13,” the bank said.
    Uganda’s Gross Domestic Product contracted by 0.16 percent in the second quarter from the first for an annual shrinkage of 0.2 percent, down from annual growth of 2 percent in the first quarter.
    www.CentralBankNews.info

By OilPrice.com

As Washington hunts ill-defined al-Qaeda groups in the Middle East and Africa, and concerns itself with Iran’s eventual nuclear potential, it has a much more pressing problem at home: Its energy grid is vulnerable to anyone with basic weapons and know-how.

Forget about cyber warfare and highly organized terrorist attacks, a lack of basic physical security on the US power grid means that anyone with a gun—like disgruntled Michigan Militia types, for instance–could do serious damage.

For the past two months, the US Federal Energy Regulatory Commission (FERC) has been tasked with creating a security strategy for the electric grid and hydrocarbon facilities through its newly created Office of Energy Infrastructure Security. So far, it’s not good news.

“There are ways that a very few number of actors with very rudimentary equipment could take down large portions of our grid,” warns FERC Chairman Jon Wellinghoff. This, he says, “is an equal if not greater issue” than cyber security.

FERC’s gloom-and-doom risk assessment comes on the heels of the recent declassification of a 2007 report by the National Academy of Sciences.

The National Academy of Sciences on 14 November warned that a terrorist attack on the US power grid could wreak more damage than Hurricane Sandy. It could cause massive blackouts for weeks or months at a time. But this would only be the beginning, the Academy warns, spelling out an “end of days” scenario in which blackouts lead to widespread fear, panic and instability.

What they are hinting at is revolution—and it wouldn’t take much.

So what is being done to mitigate risk? According to FERC, utility companies aren’t doing enough. Unfortunately, FERC does not have the power to order utilities to act in the name of protecting the country’s energy infrastructure. Security is expensive, and more than 90% of the country’s grid is privately owned and regulated by state governments. Private utilities are not likely to feel responsible for footing the bill for security, and states may not be able to afford it.

One key problem is theoretically a simple one to resolve: a lack of spare parts. According to the National Academy of Sciences, the grid is particularly vulnerable because it is spread out across hundreds of miles with key equipment not sufficiently guarded or antiquated and unable to prevent outages from cascading.

We are talking about some 170,000 miles of voltage transmission line miles fed by 2,100 high-voltage transformers delivering power to 125 million households.

“We could easily be without power across a multistate region for many weeks or months, because we don’t have many spare transformers,” according to the Academy.

High-voltage transformers are vulnerable both from within and from outside the substations in which they are housed. Complicating matters, these transformers are huge and difficult to remove. They are also difficult to replace, as they are custom built primarily outside the US. So what is the solution? Perhaps, says the Academy, to design smaller portable transformers that could be used temporarily in an emergency situation.

Why was the Academy’s 2007 report only just declassified? Well, its authors were worried that it would be tantamount to providing terrorists with a detailed recipe for attacking and destabilizing America, or perhaps for starting a revolution.

The military at least is preparing to protect its own power supplies. Recently, the US Army Corps of Engineers awarded a $7 million contract for research that demonstrates the integration of electric vehicles, generators and solar arrays to supply emergency power for Fort Carson, Colorado. This is the SPIDERS (Smart Power Infrastructure Demonstration for Energy Reliability and Security), and the Army hopes it will be the answer to more efficient and secure energy.

Back in the civilian world, however, things are moving rather slowly, and the focus remains on the sexier idea of an energy-crippling cyberattack.

Last week, Senator Ed Markey (D-Mass.) urged House Energy and Commerce Committee chairman Rep. Fred Upton (R-Mich.) to pass a bill—the GRID Act–which would secure the grid against cyberattacks.

“As the widespread and, in some cases, still ongoing power outages from Superstorm Sandy have shown us, our electric grid is too fragile and its disruption is too devastating for us to fail to act,” Markey wrote. “Given this urgency, it is critical that the House act immediately in a bipartisan manner to ensure our electrical infrastructure is secure.”

This bill was passed by the House, but has failed to gain any traction in the Senate.

FERC, of course, is all for the bill, which would give it the authority to issue orders and regulations to boost the security of the electric grid’s computer systems from a cyberattack.

But it’s only a small piece of the security puzzle, and FERC remains concerned that authorities are overlooking the myriad simpler threats to the electricity grid. These don’t make for the easy headlines, especially since they are not necessarily foreign in nature.

Source: http://oilprice.com/Energy/Energy-General/US-Power-Grid-Vulnerable-to-Just-About-Everything.html

By. Jen Alic of Oilprice.com