Month: November 2014

Presented with little comment aside to suspect the answer to our implicit question is something like “you don’t understand the new valuation metrics”

 

Alibaba tops Walmart’s Market Cap… Walmart’s quarterly sales are 44x Alibaba’s – that is all.

 

Source: Bloomberg

via Zero Hedge http://ift.tt/1x194qK Tyler Durden

I saw this on the front page of the esteemed Palo Alto Daily Post this morning:

Soooooo………they want to seduce Stanford Graduates (who might otherwise be foolish enough to strike it rich with stock options at some overvalued startup, or live the life of casual luxury at Facebook) to work for the NSA because they’d get to do……….some “neat stuff”?

Sure, it would be neat. Maybe the gang could stop by the malt shop and grab a pop and a burger! We wouldn’t want to be late to the sock hop at the gym tonight and spin a few platters. I heard there might even be some necking afterwards!

Anachronistic language notwithstanding, I think Matt Damon had the NSA all figured out nearly twenty years ago………

via Zero Hedge http://ift.tt/1s0nW0D Tim Knight from Slope of Hope

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

I thought one of the principles of democracy is listening to people and allowing them to give their opinions. If people can’t express their opinions, then it’s not a democracy of great quality.

 

– Artur Mas, President of Catalonia

We all know that Spain has had very rough go as of late. From 50% youth unemployment, to American financial oligarchs Goldman Sachs and Blackstone entering the nation’s depressed real estate market, it seems Spaniards simply can’t get a break.

As is always the case, at some point all populations snap under the relentless weight of fraud and corruption and demand an end to the status quo. It appears that moment may be near for the Spanish population, as evidenced by the incredible rise of the brand new political party “Podemos,” which translates into “We Can.”

The party was formed earlier this year, and is now leading the polls against both establishment political parties, the Socialists and the People’s Party, which have run the country for the past 32 years. The following graphic perfectly demonstrates the incredible suddenness of its rise:

 

More from Bloomberg:

Nov. 3 (Bloomberg) –- Spanish Prime Minister Mariano Rajoy is being challenged on a second front as support for the anti-establishment Podemos party surges before an informal ballot on Catalonian independence.

 

Podemos was formed less than a year ago to channel Spaniards’ disaffection with Rajoy’s People’s Party and the opposition Socialists, who between them have run the country for the past 32 years.

 

With corruption allegations again swirling around the PP, that discontent may be reaching tipping point: a poll for El Pais newspaper yesterday showed Podemos doubled its support in a month to a record 28 percent. In doing so, it’s overtaken both main parties, while challenging European attempts to restore political stability after years of debt crisis.

 

Podemos grew out of the “indignados” movement that saw thousands of Spanish set up camp in Madrid’s Puerta del Sol in 2011 as unemployment soared above 20 percent, peaking at more than 26 percent the following year.

Unfortunately, some of its policies seem destined to further run the Spanish economy into the ground…

With youth unemployment stuck above 50 percent, the group is calling for a program of public investment to create jobs. It also wants to cap the working week at 35 hours and lower the retirement age to 60 to redistribute job opportunities. The group proposes prohibiting profitable companies from firing workers and imposing a maximum wage.

 

Its program demands an audit of Spain’s public debt to assess what part of it is “illegitimate” and advocates giving euro area governments control over the European Central Bank.

I certainly can’t blame them for questioning the debt.

While the next scheduled national elections that would allow voters to pass judgment on Podemos aren’t due until late 2015, Rajoy faces a more immediate electoral threat in Catalonia on Nov. 9. That’s when nationalists plan to defy his government and the Constitutional Court to hold a volunteer-run ballot on independence.

 

Separately, the prime minister apologized last week for an “accumulation of scandals” after evidence showed party officials were taking kickbacks to hand out 250 million euros of public contracts while he was administering the harshest budget cuts in Spain’s democratic history.

 

“Let’s not give the impression, because that is not the reality, of a country immersed in corruption — it’s not true,” Rajoy told parliament in Madrid on Oct. 29. “Politics is a very noble activity, even with errors and mistakes.”

It appears Rajoy is prepping himself for his next career as a comedian.

On a more serious note, Americans need to understand that Spain is merely a few years ahead of us. The question isn’t whether the status quo will be overthrown, the question is what will replace it. Something better, or something worse? Our key mission must be to ensure we get a better system after this one blows up, not something even worse.

Watch Spain closely in the months ahead. It will be another canary in the coal mine for the entire Western world.

via Zero Hedge http://ift.tt/1zuwR3m Tyler Durden

The mainstream American press has agreed – at the request of the government – not to report on suspected Ebola cases.

Let’s provide some context …

The U.S. National Academy of Science noted in 2005 (starting on the bottom of p. 64):

In the United States, national and local government and public health authorities badly mishandled the [1918 "Spanish Flu"] epidemic [which killed up to 50 million people worldwide], offering a useful case study.

 

The context is important. Every country engaged in World War I tried to control public perception. To avoid hurting morale, even in the nonlethal first wave the press in countries fighting in the war did not mention the outbreak. (But Spain was not at war and its press wrote about it, so the pandemic became known as the Spanish flu).

 

The United States was no different.  In 1917 California Senator Hiram Johnson made the since-famous observation that “The first casualty when war comes is truth.” The U.S. government passed a law that made it punishable by 20 years in jail to “utter, print, write or publish any disloyal, profane, scurrilous, or abusive language about the government of the United States.”

 

One could go to jail for cursing or criticizing the government, even if what one said was true. A Congressman was jailed. Simultaneously, the government mounted a massive propaganda effort. An architect of that effort said, “Truth and falsehood are arbitrary terms…. There is nothing in experience to tell us that one is always preferable to the other…. The force of an idea lies in its inspirational value. It matters very little if it is true or false” (Vaughn, 1980).

 

The combination of rigid control and disregard for truth had dangerous consequences. Focusing on the shortest term, local officials almost universally told half-truths or outright lies to avoid damaging morale and the war effort. They were assisted—not challenged—by the press, which although not censored in a technical sense cooperated fully with the government’s propaganda machine.

 

Routinely, as influenza approached a city or town—one could watch it march from place to place—local officials initially told the public not to worry, that public health officials would prevent the disease from striking them. When influenza first appeared, officials routinely insisted at first it was only ordinary influenza, not the Spanish flu. As the epidemic exploded, officials almost daily assured the public that the worst was over.

 

This pattern repeated itself again and again. Chicago offers one example: Its public health commissioner said he’d do “nothing to interfere with the morale of the community…. It is our duty to keep the people from fear. Worry kills more people than the epidemic” (Robertson, 1918).

 

That idea—“Fear kills more than the disease”—became a mantra nationally and in city after city. As Literary Digest, one of the largest circulation periodicals in the country, advised, “Fear is our first enemy” (Van Hartesveldt, 1992).

 

In Philadelphia, when the public health commissioner closed all schools, houses of worship, theaters, and other public gathering places, one newspaper went so far as to say that this order was “not a public health measure” and reiterated that “there is no cause for panic or alarm.”

 

But as people heard these reassurances, they could see neighbors, friends, and spouses dying horrible deaths.

 

In Chicago, the Cook County Hospital mortality rate of all influenza admissions—not just those who developed pneumonia—was 39.8 percent (Keeton and Cusman, 1918). In Philadelphia, bodies remained uncollected in homes for days, until eventually open trucks and even horse-drawn carts were sent down city streets and people were told to bring out the dead. The bodies were stacked without coffins and buried in cemeteries in mass graves dug by steam shovels.

 

This horrific disconnect between reassurances and reality destroyed the credibility of those in authority. People felt they had no one to turn to, no one to rely on, no one to trust.

 

Ultimately society depends on trust. Without it, society began to come apart. Normally in 1918 America, when someone was ill, neighbors helped. That did not happen during the pandemic. Typically, the head of one city’s volunteer effort, frustrated after repeated pleas for help yielded nothing, turned bitter and contemptuous:

 

Hundreds of women who are content to sit back had delightful dreams of themselves in the roles of angels of mercy, had the unfathomable vanity to imagine that they were capable of great sacrifice. Nothing seems to rouse them now. They have been told that there are families in which every member is ill, in which the children are actually starving because there is no one to give them food. The death rate is so high and they still hold back.³

 

That attitude persisted outside of cities as well. In rural Kentucky, the Red Cross reported “people starving to death not from lack of food but because the well were panic stricken and would not go near the sick” (An Account of the Influenza Epidemic, 1919).

 

As the pressure from the virus continued, an internal Red Cross report concluded, “A fear and panic of the influenza, akin to the terror of the Middle Ages regarding the Black Plague, [has] been prevalent in many parts of the country” (The Mobilization of the American National Red Cross, 1920). Similarly, Victor Vaughan, a sober scientist not given to overstatement, worried, “If the epidemic continues its mathematical rate of acceleration, civilization could easily … disappear … from the face of the earth within a matter of a few more weeks” (Collier, 1974).

 

Of course, the disease generated fear independent of anything officials did or did not do, but the false reassurances given by the authorities and the media systematically destroyed trust. That magnified the fear and turned it into panic and terror.

 

It is worth noting that this terror, at least in paralyzing form, did not seem to materialize in the few places where authorities told the truth.

 

One lesson is clear from this experience: In handling any crisis, it is absolutely crucial to retain credibility. Giving false reassurance is the worst thing one can do. If I may speculate, let me suggest that almost as bad as outright lying is holding information so closely that people think officials know more than they say.

Exactly.

As Reuters pointed out yesterday, there’s still a lot about Ebola that scientists don’t understand. Trying to pretend they know everything will just create more panic in the long run.

Note: The above-quoted comment was made by John M. Barry, Distinguished Visiting Scholar at the Center for Bioenvironmental Research at Tulane and Xavier Universities at a scientific workshop entitled The Threat of Pandemic Influenza: Are We Ready?

Barry’s 2004 book The Great Influenza: The Epic Story of the Greatest Plague in History was a New York Times Best Seller, and won the 2005 Keck Communication Award from the United States National Academies of Science for the year’s outstanding book on science or medicine. In 2005 he also won the “September 11th Award” from the Center for Biodefense and Emerging Pathogens at Brown University.    Barry has served on a federal government’s Infectious Disease Board of Experts, on the advisory board of MIT’s Center for Engineering Fundamentals, and on the advisory committee at Johns Hopkins Bloomberg School of Public Health for its Center for Refugee and Disaster Response.

H/t: Mr_Potatohead.

via Zero Hedge http://ift.tt/1sea7N6 George Washington

When (0.94) correlation is causation…

 
The shift in the percent of the US population that is capable of
work has tracked almost perfectly (0.94 correlation over the last 25 years)
with US gasoline sales…

Source: Bloomberg Data

Structural or cyclical?

h/t @EPomboy

via Zero Hedge http://ift.tt/1AcsGKL Tyler Durden

Submitted by Thad Beversdorf via First Rebuttal blog,

I wrote an article recently over at Voices of Liberty that lays out the very dire picture for those of us who have yet to retire.  The gist of the article is that the Fed has effectively robbed the retired class of any hope for having enough of a nest egg to live off through the end of their lives if they want to retire at 65.

Some may argue well this past 10 years has just been an anomaly of low interest rates but they will come back i.e. normalize to higher levels here in the next couple years.  Well let me show you why that is simply wrong.

Here is why interest rates will be perpetually low for the rest of our lives, why the inflation calculation has been changed to a dynamic formula (meaning they now change the inputs each quarter) and why those of us yet to retire are screwed.

What I have laid out here is a green line that represents our total debt as a percentage of GDP.  The purple line is the historic 10 yr Treasury Note rate which we are using as a proxy for the average interest rate on total debt (AIR). And the blue line is the interest payment on our total debt as a percentage of GDP (again using the 10 yr rate as a proxy for average interest rate on total debt) let’s call it DSGDP.

Do note that total debt as a percentage of GDP (green line) recently exceeded 100%.  Also note that as the green line increases the spread between the purple and blue lines gets smaller.  This is really just an algebraic principle.  Historically the blue line is essentially a fixed rate (within a range) and so as the green line moves up the purple line (AIR) must move down so the DSGDP stays within the fixed range.  As total debt became a higher percentage of GDP the average interest rate on debt must move down toward that 2.5% line that we’ve held for 15 years.  As the total debt to GDP moves above 100% we should start to see the average interest rate on total debt (the purple line) move below 2.5% in order to keep the DSGDP around the 2.5% 15 year average.  As a side, I did regress these relationships and found both statistical significance and good explanatory properties.

Now even the CBO is forecasting debt to GDP to continue rising for as far as the eye can see and so there must be a negative slope on interest rates. If average interest rates on debt were to move back to let’s say the 20 yr average of 7.5% our interest payments would take up 7.5% to 10% of our GDP.  And that is something we simply cannot afford.  The most our average interest on total debt can move in the near term is to around 4% which would take us to the high end of the historic DSGDP range.  Fortunately I suppose that would also crush what little demand is left in the economy and so there is much incentive to do so.  In 5 or 10 years time total debt will be sufficiently more than GDP that even 4% will be unsustainably high.

You will see from the chart above we’ve had a fairly steady decline in interest rates since the late 1970′s about the same time that total debt began rising as a percentage of GDP.  The inverse relationship between these two metrics is not coincidence, but of necessity.  So you start to understand that interest rates are locked into a very low range forever or at least until total debt gets paid down, which none of us expect to ever happen.   So with total debt greater than GDP and rising it’s SOL for future retirees and all other savers.  Next stop will be negative interest rates which of course will need to be monetized.  In chess they have a term called Zugzwang; a situation in which no matter what move you make you will be worse off than you are currently.  I believe we may be in a Zugzwang now.

via Zero Hedge http://ift.tt/1GlK403 Tyler Durden