Guest Post: Two Forces And Three Bears

Submitted by James H. Kunstler of,

In these climax years of industrial technocratic society, two opposing forces shape the destiny of government: the desperate effort to control everything versus the decline of the ability to carry out that effort. The result will be the loss of legitimacy and the collapse of government from the highest levels, moving downward until the real power to make anything work re-sets at a feasible and appropriate level — probably very local. This dynamic is seen very clearly in three spectacles du jour: the “national security” (spying) mess, government-sponsored accounting fraud in finance, and the ObamaCare rollout.

As history develops, people do things for the simple reason that it seems like a good idea at the time. Computer tech made it possible for bureaucrats and military apparatchiks to invade the privacy of everybody, but in the end it only had the effect of embarrassing the perpetrators and eroding a big chunk of the US government’s legitimacy. The attempt at maximum control will eventually lead to maximum resistance and, quite possibly, some sort of political revolution, perhaps starting with the death of the two dominant political parties. When political disruption finally occurs, it will manifest quickly, as criticality thresholds are breached. It has the potential of taking this society in very undesirable directions including civil war, theocracy, and war against other peoples.

The diminishing returns of computer technology applied to intelligence gathering are that it produces more mountains of data than any team of professionals can make sense of, and it prompts said professionals to make mischief with the information that is easiest to sort out: the financial records of ordinary citizens. Nothing will create political resistance more surely than messing with people’s money. The NSA apparatus is now a self-reinforcing monster that will strive for ever more control ineffectively, creating a debris path of ever more embarrassment and resentment. A lone true patriot like Snowden does more to oppose this monster than all the “freedom” and “liberty” spouting, flag-lapel-pin-wearing cowards in either political party.

The pervasive accounting fraud in the attempt to prop up an unsound banking system is even closer to criticality. A society that produces tradable goods needs sound money which functions as 1) a medium of exchange, 2) a store of value 3) a unit of account for establishing prices. The combined accounting frauds in Federal Reserve policy, private banking and securities markets, and government fiscal management is destroying all these functions. The more abstracted finance gets from real productive activity, the more fragile the system becomes. We are doing nothing now except adding more complexity and abstraction to it, causing the system to become more detached from reality. In effect, we’re opting to forego an economy based on goods in favor of one based on empty promises and paper swindles. The potential and probable consequent destruction of nominal wealth would be an event that advanced technocratic society likely will not recover from — in the sense that today’s standard of living could be preserved for billions of people worldwide. That destruction would herald a new dark age, this time without any prospect of recovery via the exploitation of natural resources, which will have been depleted.

The ObamaCare piece of the picture is a mere pathetic soap opera compared to the first two quandaries. The 2000-page law did nothing to address the core tragedy of medicine in America — namely, that it has evolved into a hideous hostage racket. You go to a hospital with a terrifying illness and you are susceptible to fleecing by the so-called “care-givers” for the promise that you may get to live. No prices for treatment are never discussed. They are presumed to be astronomical — but who cares if you end up dead, and if you do get to live, you’ll figure that out later. If you hold an insurance policy, these charges will be subject to a fake negotiation between grifting insurance companies and grifting hospitals, physicians, and drug companies. The price “settlements” are only slightly less a joke than the actual charges, and are obfuscated in documents designed to bewilder even well-educated policy-holders.

Even if you are insured, the charges may bankrupt you. A typical one-day charge for “room and board” in a non-specialized hospital in-patient bed runs $23,000 at my local hospital. For what? Half a dozen blood-pressure checks and three bad meals? You can be sure that ever-fewer families will be able to fork over $12,000-a-year for basic coverage. The ObamaCare legislation and its laughable rollout of a useless website is just a punctuation mark at the end of the soap opera script. The result eventually will be the complete implosion of the medical racket and a return to a very primitive clinic system, with payment in chickens or cords of stove-wood. The smaller number of surviving humans will surely enjoy better health, and greater piece of mind, when this monster racket expires of inertia, bad faith, and deceit.

These efforts to manage runaway hyper-complexity with more complexity are guaranteed to fail. Our prime task at this moment in history is managing contraction, and the means for doing that would be simplifying, not adding layers of complication larded with fraud, pretense, and mendacity.


via Zero Hedge Tyler Durden


In the paradoxical New Normal media world in which the legacy creators of original content (even if most of it is designed to suit a specific agenda) are hopelessly burning cash at an ever faster pace, while those who (at least for the time being) are profitable and cater to the “social network crowd” do so on the backs of kittens, slideshows and headlines designed to attract the lowest common denominator, what is one to do? One suggestion, as the following XKCD table shows, is to rewrite history, while focusing on the only thing that matters: trolling for reads, bobbing for CPM and clickbaiting, of course.

Source: XKCD


via Zero Hedge Tyler Durden

Expect Signs Of Peak Smartphone From The Market Leaders Samsung And Apple As Competition Increases

Apple announces after the market close today. For my subscribers, I believe true valuation hovers around my base case scenario from the last Apple update. Of course, after we have crunched the numbers from this quarterly update we will have considerably more empirical data to munch on. As a quick review…  

Apple’s major problem is that the vast majority of its profits come from 2 products, both of which are rapidly losing market share and are outclassed by the competition in many different ways. On top of that, the competition is both undercutting on prices and outperforming on tech. That’s a bad combination for a company that relies on fat margins to sustain their share price.

iPhone-5-vs-Galaxy-S4-Xperia-Z-Ultra iPhone-5-vs-Galaxy-S4-Xperia-Z-Ultra

The mere diversity of the Android universe is a significant threat to Apple’s margins. Check this out…

2 402 40

A water-proof phone must be corny, right?


I know, many will say.. “But, But this is tablet, not a phone!!!” Well, if that’s the case, it competes mightily against both the iPad and the iPad mini (the mini hurts Apple’s historical margins and the iPad is dropping in both ASP and market share like a rock). We all know what follows rapid market share loss, right?

In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant… . I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? Was I right?

Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysis

Sony Xperia Z Ultra Apple CompareSony Xperia Z Ultra Apple Compare

The iPhone and the iPad business franchises are still making money hand over fist, but they are also losing market share and margin – and doing so quickly…


 The addition of (margin) mini products and iPhone 5Cs simply evidence what is obvious, the existence of products like those below are pressuing Apple and continue to eat at its hegemony…

11 xperia z ultra 27131543859011 xperia z ultra 271315438590382730382730

On top of the fact that Apple faces extreme compeition on all fronts, common business sense begs the question, Have We Reached “Peak Premium Smartphone”?

See also:

Is Tim Cook Cooked? Market Share vs Profit Margin, part 2 – Follow What I Do, Not What I Say!


  1. Here I go again – Hardware is Dead & Samsung Agrees
  2. When Berries Go Bad: BlackBerry to Slash Workforce by Up to 40% (As Predicted)
  3. Samsung Follows Footsteps Of Apple, HTC, Nokia – Wasn’t That Quick?
  4. Looking Through Windows To See The Big Data On Fruit – Or Android Gets ’em Again
  5. iPad Shipments Decline As BoomBustBlog Time Machine Disrupts The Apple Reality Distortion Field Once Again
  6. Apple Bonds Proven To Have A Nasty Taste
  7. Angels, ArchAngels and Data Demons: The Smartphone Battle Is Officially Taken To The Cloud!
  8. Google Has Officially Gone On Record To Confirm Reggie Middleton’s “Negative Margin Business Model” Tactics
  9. Blackberries, Apples & Fruit Borne Successitis – The Problem With Excess Profits Is Hubristic Management Tends To Take Eyes Off The Prize!!!
  10. Is It Time To Buy Apple As A Valuation Play? The Contrarian That Called The Top In Apple Weighs In


via Zero Hedge Reggie Middleton

President Obama "Installs" New FBI Director – Live Webcast

With ‘spies like us’ who needs enemies. With the world upset at what Obama now claims is all Bush’s doing, the installation of a new FBI Director (James Comey) may just have some irony to it; especially since the White House has specifically noted he will be making some ‘remarks’. Of course, the hope is that President Obama will use this opportunity to answer a few questions from an uninspired press corps…




via Zero Hedge Tyler Durden

President Obama “Installs” New FBI Director – Live Webcast

With ‘spies like us’ who needs enemies. With the world upset at what Obama now claims is all Bush’s doing, the installation of a new FBI Director (James Comey) may just have some irony to it; especially since the White House has specifically noted he will be making some ‘remarks’. Of course, the hope is that President Obama will use this opportunity to answer a few questions from an uninspired press corps…




via Zero Hedge Tyler Durden

Big Brother Is Coming To Your Car

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

This is a topic that has been on my radar screen for a while, but one that very few Americans seem to be paying attention to despite the egregious revelations concerning NSA spying that have emerged recently. I first flagged this issue in late 2012 in an article titled: Coming to Your Car: Mandatory Black Boxes That Record Everything.

The latest push for tracking devices in cars is being sold as necessary in order to raise funds to pay for the nation’s decayed highway infrastructure. For example:

As America’s road planners struggle to find the cash to mend a crumbling highway system, many are beginning to see a solution in a little black box that fits neatly by the dashboard of your car.

This is simply idiotic. There is already a tax per gallon on gasoline, so people are already being taxed based on how much they drive. Only a control-freak, moronic government bureaucrat would come to the conclusion that the solution to this problem is to install Orwellian tracking devices in people’s cars.

More from the LA Times:

WASHINGTON — As America’s road planners struggle to find the cash to mend a crumbling highway system, many are beginning to see a solution in a little black box that fits neatly by the dashboard of your car.


The devices, which track every mile a motorist drives and transmit that information to bureaucrats, are at the center of a controversial attempt in Washington and state planning offices to overhaul the outdated system for funding America’s major roads.

Are people really so dumb they will agree to this? Probably.

And while Congress can’t agree on whether to proceed, several states are not waiting. They are exploring how, over the next decade, they can move to a system in which drivers pay per mile of road they roll over. Thousands of motorists have already taken the black boxes, some of which have GPS monitoring, for a test drive.


This really is a must for our nation. It is not a matter of something we might choose to do,” said Hasan Ikhrata, executive director of the Southern California Assn. of Governments, which is planning for the state to start tracking miles driven by every California motorist by 2025. “There is going to be a change in how we pay these taxes. The technology is there to do it.”


The push comes as the country’s Highway Trust Fund, financed with taxes Americans pay at the gas pump, is broke. Americans don’t buy as much gas as they used to. Cars get many more miles to the gallon. The federal tax itself, 18.4 cents per gallon, hasn’t gone up in 20 years. Politicians are loath to raise the tax even one penny when gas prices are high.

Loath to raise the tax, so let’s put a tracking device in every car instead. I don’t even know where to begin…

As the trial got underway, the ACLU of Nevada warned on its website: “It would be fairly easy to turn these devices into full-fledged tracking devices…. There is no need to build an enormous, unwieldy technological infrastructure that will inevitably be expanded to keep records of individuals’ everyday comings and goings.”

But it’s for the highways people. You like highways don’t you? I’m sure it’ll piss off the terrorists too.

What a sad state of affairs.

Full article here.


via Zero Hedge Tyler Durden

Carl Icahn Pimpco Slaps Bill Gross As Billionaire Tweet-fight Escalates

A week ago, completely out of the blue, Bill Gross took a swipe at Carl Icahn, tweeting “Icahn should leave #Apple alone & spend more time like Bill Gates. If #Icahn’s so smart, use it to help people not yourself.” Today, Carl Icahn retaliates.

We can’t wait as this cage match between a 69 and a 77 year-old escalates and culminates with the inevitable (Im)Mor(t)al Combat fatality.

For now, our money is on the Icahnator.

More impotantly: as the bored billionaires seek Twitter exposure, it is once again popcorn time.


via Zero Hedge Tyler Durden

What Spanish Recovery?

One of the prevailing themes in recent weeks has been that Spain has transformed out of Europe’s economic basket case into a success story. This was further exemplified today by the following quote by DieselBOOM:


It could, if one listens to bureaucrats peddling snake oily hope, but certainly not based on actual dynamics in its housing market, where mortgage apps have tumbled 90% from all time highs, pocket change investment by Bill Gates notwithstanding, and where even the YoY change has now trippled dipped.


… and certainly not based on loan to companies or households, which continue to be the worst in the Eurogroup.

So one wonders: with a housing market deader than ever, and with loan creation that is the worst in the Eurozone, will the modest bounce in employment, which as we explained last week was all driven by a seasonal jump in temp and self-employed workers, just where is Mr. DieselBOOM and the endless ranks of Eurotopians seeing this mythical Spanish recovery? Aside from the IBEX of course, which like every other liquidity-bubble dependent indicator is merely reflecting the roughly $3 trillion in annual global liquidity injections by the world’s central banks?


via Zero Hedge Tyler Durden

Dallas Fed Dumps From 19-Month High; Misses By Most In 6 Months

Last month was all ponies and unicorns as hope was extrapolated that a 19-month high in the Dallas Fed meant this time was different and not entirely cyclical as we have pointed out again and again. Once again it seems the government-budget-based hope has collapsed as even optimism for the future dropped to its lowest in 4 months. This is the biggest miss of expectations on six months and the lowest print in 5 months. Reflecting the margin pressures that we discussed previously, prices received dropped dramatically as price paid soared.





and it appears margins will remain under pressure in the futures:

Looking ahead, 39 percent of respondents anticipate further increases in raw materials prices over the next six months, while 34 percent expect higher finished goods prices.


via Zero Hedge Tyler Durden

Home Sales Collapse At Fastest Rate In 40 Months; Stocks Spike

Despite Joe Lavorgna's seemingly gigantic cognitive dissonance in the face of this report, the pending home sales data collapsed in September (and remember this is before the shutdown and was heralded at the time as buyers rushing to buy before the risk of the shutdown slowed acceptances). Affordability, argued by some serial extrapolators as still being 'relatively' positive – has drastically weighed on housing at the margin just as we argued previously. This is the first annual drop in 29 months, the biggest drop in 40 months, and the biggest miss against expectations in 40 months. Even the typically full of spin, NAR Chief economist had to admit "this tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014." Apparently, if one is to believe the spin, overheard everywhere in September: "Hmm, government may shut down next month – let's not buy a house."

Of course, NAR Chief Economist seems to have found an excuse by time-shifting his narrative…

NAR chief economist, said concerns over the government shutdown also played a role. “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” he said. “In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases.”

Umm no Larry… because in our world September is before October and no one was talking about shutdown's impact then OR even pricing it in any way…



none of this should be a surprise given the impact on mortgage activity that higher rates have had…


Despite all the chatter that rates are still 'near' generational lows….

Of course – the market loves this crappy data is rallying handsomely as Taper is pushed off once again.


via Zero Hedge Tyler Durden