Retail Panic: Largest Equity/[Bond] Fund Outflow/[Inflow] In History

Last week it was the largest equity outflow in over two years. This week, following the Monday drubbing which had the temerity to push the S&P to an “unprecedented” 5% from its all time highs, the timid retail investor said enough, and ran for the hills resulting in the largest equity outflow. Ever.

According to Bank of America, aAfter a 5% loss on the S&P 500 over the last two weeks (through February 5) equity funds reported the largest weekly outflow on record. Outflows from equity funds accelerated to $27.95bn this week from a $12.02bn outflow last week, again led by ETFs.” Sure enough, what goes out (here), must come in (somewhere over there), which is why at the same time all fixed income funds reported a record $14.09bn inflow. “Mutual fund investors were clearly seeking the safety of bonds, as three quarters ($11.05bn) of the total net bond fund inflow went into government funds and another $3.48bn into high grade.” The great unrotation has officially begun, and unless the downward momentum in stocks is halted (think USDSPY upward momentum ignition), the party may be coming to an end.

Full detail from BofA:

After a 5% loss on the S&P 500 over the last two weeks (through February 5) equity funds reported the largest weekly outflow on record, while bond funds had a record inflow. Outflows from equity funds accelerated to $27.95bn this week from a $12.02bn outflow last week, again led by ETFs. At the same time all fixed income funds reported a record $14.09bn inflow. Mutual fund investors were clearly seeking the safety of bonds, as three quarters ($11.05bn) of the total net bond fund inflow went into government funds and another $3.48bn into high grade. Outside of short-term funds inflows into high grade accelerated to $1.80bn. High yield funds, on the other hand, had an outflow of $0.91bn, similar to $1.04bn outflow last week, and EM bond fund outflows also remained elevated at $1.98bn. Loan fund inflows have remained little changed, however, coming in at $0.38bn, while muni funds were close to flat with a $0.07bn net inflow. Finally, money market funds reported a $5.85bn outflow.



Weekly equity fund flows:



Weekly fixed income flows:



via Zero Hedge Tyler Durden

Matthew Feeney Discusses Current Events on the Tom Brown Show on WEZS in New Hampshire at 9pm ET

I will be on the Tom Brown Show later this
evening discussing the Winter Olympics in Sochi and other current

Listen live here.

More from on the Winter Olympics here.

from Hit & Run

The Final Swindle Of Private American Wealth Has Begun

Submitted by Brandon Smith of,

I began writing analysis on the macro-economic situation of the American financial structure back in 2006, and in the eight years since, I have seen an undeniably steady trend of fiscal decline.

I have never had any doubt that the U.S. economy as we know it was headed for total and catastrophic collapse, the only question was when, exactly, the final trigger event would occur. As I have pointed out in the past, economic implosion is a process. It grows over time, like the ice shelf on a mountain developing into a potential avalanche. It is easy to shrug off the danger because the visible destruction is not immediate, it is latent; but when the avalanche finally begins, it is far too late for most people to escape…

If you view the progressive financial breakdown in America as some kind of “comedy of errors” or a trial of unlucky coincidences, then there is not much I can do to educate you on the reasons behind the carnage. If, however, you understand that there is a deliberate motivation behind American collapse, then what I have to say here will not fall on biased ears.

The financial crash of 2008, the same crash which has been ongoing for years, is NOT an accident. It is a concerted and engineered crisis meant to position the U.S. for currency disintegration and the institution of a global basket currency controlled by an unaccountable supranational governing body like the International Monetary Fund (IMF). The American populace is being conditioned through economic fear to accept the institutionalization of global financial control and the loss of sovereignty.

Anyone skeptical of this conclusion is welcome to study my numerous past examinations on the issue of globalization; I don’t have the time within this article to re-explain, and frankly, with so much information on deliberate dollar destruction available to the public today I’ve grown tired of anyone with a lack of awareness.

If you continue to believe that the Fed actually exists to “help” stabilize our economy or our currency, then you will never find the logic behind what they do. If you understand that the goal of the Fed and the globalists is to dismantle the dollar and the U.S. economic system to make way for something “new”, then certain recent events and policy initiatives do start to make sense.

The year of 2014 has been looming as a serious concern for me since the final quarter of 2013, and you can read about those concerns and the evidence that supports them in my article Expect Devastating Global Economic Changes In 2014.

At the end of 2013 we saw at least three major events that could have sent America spiraling into total collapse. The first was the announcement of possible taper measures by the Fed, which have now begun. The second was the possible invasion of Syria which the Obama Administration is still desperate for despite successful efforts by the liberty movement to deny him public support for war. And, the third event was the last debt ceiling debate (or debt ceiling theater depending on how you look at it), which placed the U.S. squarely on the edge of fiscal default.

As we begin 2014, these same threatening issues remain (along with many others), only at greater levels and with more prominence. New developments reinforce my original position that this year will be remembered by historians as the year in which the final breakdown of the U.S. monetary dynamic was set in motion. Here are some of those developments explained…

Taper Of QE3

When I first suggested that a Fed taper was not only possible but probable months ago, I was met with a bit (a lot) of criticism from some in the alternative economic world. You can read my taper articles here and here.

This was understandable. The Fed uses multiple stimulus outlets besides QE in order to manipulate U.S. markets. Artificially lowering interest rates is very much a form of stimulus in itself, for instance.

However, I think a dangerous blindness to threats beyond money printing has developed within our community of analysts and this must be remedied. People need to realize first that the Fed does NOT care about the continued health of our economy, and they may not care about presenting a facade of health for much longer either. Alternative analysts also need to come to grips with the reality that overt money printing is not the only method at the disposal of globalists when destroying the greenback. A debt default is just as likely to cause loss of world reserve status and devaluation – no printing press required. Blame goes to government and political gridlock while the banks slither away in the midst of the chaos.

The taper of QE3 is not a “head fake”, it is very real, but there are many hidden motivations behind such cuts.

Currently, $20 billion has been trimmed from the $85 billion per month program, and we are already beginning to see what APPEAR to be market effects, including a flight from emerging market currencies from Argentina to Turkey. A couple of years ago investors viewed these markets as among the few places they could exploit to make a positive return, or in other words, one of the few places they could successfully gamble. The Fed taper, though, seems to be shifting the flow of capital away from emerging markets.

The mainstream argument is that stimulus was flowing into such markets, giving them liquidity support, and the taper is drying up that liquidity. Whether this is actually true is hard to say, given that without a full audit we have no idea how much fiat the Federal Reserve has actually created and how much of it they send out into foreign markets.

I stand more on the position that the Fed taper was actually begun in preparation for a slowdown in global markets that was already in progress. In fact, I believe central bankers have been well aware that a decline in every sector was coming, and are moving to insulate themselves.

Is it just a "coincidence" that the central bankers have initiated their taper of QE right when global manufacturing numbers begin to plummet?

Is it just "coincidence" the taper was started right when the Baltic Dry Index, a global indicator of shipping demand, has lost over 50% of its value in the past few weeks?

Is it just "coincidence" that the taper is running tandem with dismal retail sales growth reports from across the globe coming in from the final quarter of 2013?

And, is it just a "coincidence" that the Fed taper is accelerating right as the next debt ceiling debate begins in March, and when reports are being released by the Congressional Budget Office that over 2 million jobs (in work hours) may be lost due to Obamacare?

No, I do not think any of this is coincidence.  Most if not all of these negative indicators needed months to generate, so they could not have been caused by the taper itself.  The only explanation beyond "coincidence" is that the Federal Reserve WANTED to launch the taper program and protect itself before these signals began to reach the public.

Look at it this way – The taper program distances the bankers from responsibility for crisis in our financial framework, at least in the eyes of the general public. If a market calamity takes place WHILE stimulus measures are still at full speed, this makes the banks look rather guilty, or at least incompetent. People would begin to question the validity of central bank methods, and they might even question the validity of the central bank’s existence. The Fed is creating space between itself and the economy because they know that a trigger event is coming. They want to ensure that they are not blamed and that stimulus itself is not seen as ineffective, or seen as the cause.

We all know that the claims of recovery are utter nonsense. Beyond the numerous warning signs listed above, one need only look at true unemployment numbers, household wage decline, and record low personal savings of the average American. The taper is not in response to an improving economic environment. Rather, the taper is a signal for the next stage of collapse.

Stocks are beginning to plummet around the world and all mainstream pundits are pointing fingers at a reduction in stimulus which has very little to do with anything. What is the message they want us to digest? That we “can’t live” without the aid and oversight of central banks.

The real reason stocks and other indicators are stumbling is because the effectiveness of stimulus manipulation has a shelf life, and that shelf life is over for the Federal Reserve. I suspect they will continue cutting QE every month for the next year as stocks decline.  Will the Fed restart QE?  If they do, it will probably not occur until after a substantial breakdown has ensued and the public is sufficiently shell-shocked.  The possibility also exists that the Fed will never return to stimulus measures (if debt default is the plan), and QE stimulus will eventually be replaced by IMF "aid".

Government Controlled Investment

Last month, just as taper measures were being implemented, the White House launched an investment program called MyRA; a retirement IRA program in which middle class and low wage Americans can invest part of their paycheck in government bonds.

That’s right, if you wanted to know where the money was going to come from to support U.S. debt if the Fed cuts QE, guess what, the money is going to come from YOU.

For a decade or so China was the primary buyer and crutch for U.S. debt spending. After the derivatives crash of 2008, the Federal Reserve became the largest purchaser of Treasury bonds. With the decline of foreign interest in long term U.S. debt, and the taper in full effect, it only makes sense that the government would seek out an alternative source of capital to continue the debt cycle. The MyRA program turns the general American public into a new cash stream, but there’s more going on here than meets the eye…

I find it rather suspicious that a government-controlled retirement program is suddenly introduced just as the Fed has begun to taper, as stocks are beginning to fall, and as questions arise over the U.S. debt ceiling. I have three major concerns:

First, is it possible that like the Fed, the government is also aware that a crash in stocks is coming? And, are they offering the MyRA program as an easy outlet (or trap) for people to pour in what little savings they have as panic over declining equities accelerates?  Bonds do tend to look appetizing to uninformed investors during an equities route.

Second, the program is currently voluntary, but what if the plan is to make it mandatory? Obama has already signed mandatory health insurance “taxation” into law, which is meant to steal a portion of every paycheck. Why not steal an even larger portion from every paycheck in order to support U.S. debt? It’s for the “greater good,” after all.

Third, is this a deliberate strategy to corral the last vestiges of private American wealth into the corner of U.S. bonds, so that this wealth can be confiscated or annihilated? What happens if there is indeed an eventual debt default, as I believe there will be? Will Americans be herded into bonds by a crisis in stocks only to have bonds implode as well? Will they be conned into bond investment out of a “patriotic duty” to save the nation from default? Or, will the government just take their money through legislative wrangling, as was done in Cyprus not long ago?

The Final Swindle

Again, the next debt ceiling debate is slated for the end of this month. If the government decides to kick the can down the road for another quarter, I believe this will be the last time. The most recent actions of the Fed and the government signal preparations for a stock implosion and ultimate debt calamity. Default would have immediate effects in foreign markets, but the appearance of U.S. stability could drag on for a time, giving the globalists ample opportunity to siphon every ounce of financial blood from the public.

It is difficult to say how the next year will play out, but one thing is certain; something very strange and ugly is afoot. The goal of the globalists is to engineer desperation. To create a catastrophe and then force the masses to beg for help. How many hands of “friendship” will be offered in the wake of a U.S. wealth and currency crisis? What offers for “aid” will come from the IMF? How much of our country and how many of our people will be collateralized to secure that aid? And, how many Americans will go along with the swindle because they were not prepared in advance?


via Zero Hedge Tyler Durden


Glassholes by Anthony Freda

A Mini NSA On Your Face

eOnline reports:

A new app will allow total strangers to ID you and pull up all your information, just by looking at you and scanning your face with their Google Glass. The app is called NameTag and it sounds CREEPY.


The “real-time facial recognition” software “can detect a face using the Google Glass camera, send it wirelessly to a server, compare it to millions of records, and in seconds return a match complete with a name, additional photos and social media profiles.”


The information listed could include your name, occupation, any social media profiles you have set up and whether or not you have a criminal record (“CRIMINAL HISTORY FOUND” pops up in bright red letters according to the demo).

Since the NSA is tapping into all of our digital communications, it is not unreasonable to assume that all of the info from your digital glasses – yup, everything – may be recorded by the spy agency.

Are we going to have millions of mini NSAs walking around recording everything … glassholes?

Postscript: I love gadgets and tech, and previously discussed the exciting possibilities of Google Glasses.

But the NSA is ruining the fun, just like it’s harming U.S. Internet business.


Spy Agency Engaged In Internet “False Flag” Attacks


via Zero Hedge George Washington

State Department Confirms Authenticity Of Intercepted Ukraine Phone Call: Accuses Russia Of Dirty Tricks

If there was any doubt whether the intercepted “Fuck the EU” phone call between Assistant Secretary of State Nuland and the US Ambassador to the Ukraine Pyatt was authentic, it can now be laid to rest: in an earlier response to questions from reporters, State Department spokeswoman Jen Psaki did not dispute authenticity of recording and essentially confirmed it was real “I didn’t say it was inauthentic.”

However, in the tried and true fashion of assigning blame elsewhere, the world learned that it was really all Russia’s fault and the released intercept was a “new low of Russian tradecraft.” Psaki added that there are moments “in every diplomatic relationship” when you disagree, Psaki says. But the absolute punchline: “It’s concerning that private conversation was recorded.

Perhaps maybe the NSA can opine on the concernability of a private conversation being recorded.

Then again in a world in which only the NSA is allowed to record every single private conversation, one can easily see why the State Dept thought it was safe to discuss its state subordination strategy over what appears to have been an unencrypted landline. At least the CIA used to communicate by encrypted redlines.

Finally, while Russian “tradecraft” may have hit a new low, so did US reputation and standing abroad, however offset by the humiliation and embarrassment of US foreign policymakers which has never been higher.


via Zero Hedge Tyler Durden

Guest Post: Limits to Growth – At Out Doorstep, But Not Recognized

Submitted by Gail Tverberg via Our Finite World blog,

How long can economic growth continue in a finite world? This is the question the 1972 book The Limits to Growth by Donella Meadows and others sought to answer. The computer models that the team of researchers produced strongly suggested that the world economy would collapse sometime in the first half of the 21st century.


I have been researching what the real situation is with respect to resource limits since 2005. The conclusion I am reaching is that the team of 1972 researchers were indeed correct. In fact, the promised collapse is practically right around the corner, beginning in the next year or two. In fact, many aspects of the collapse appear already to be taking place, such as the 2008-2009 Great Recession and the collapse of the economies of smaller countries such as Greece and Spain. How could collapse be so close, with virtually no warning to the population?

To explain the situation, I will first explain why we are reaching Limits to Growth in the near term.  I will then provide a list of nine reasons why the near-term crisis has been overlooked.

Why We are Reaching Limits to Growth in the Near Term

In simplest terms, our problem is that we as a people are no longer getting richer. Instead, we are getting poorer, as evidenced by the difficulty young people are now having getting good-paying jobs. As we get poorer, it becomes harder and harder to pay debt back with interest. It is the collision of the lack of economic growth in the real economy with the need for economic growth from the debt system that can be expected to lead to collapse.

The reason we are getting poorer is because hidden parts of our economy are now absorbing more and more resources, leaving fewer resources to produce the goods and services we are used to buying. These hidden parts of our economy are being affected by depletion. For example, it now takes more resources to extract oil. This is why oil prices have more than tripled since 2002. It also takes more resource for many other hidden processes, such as deeper wells or desalination to produce water, and more energy supplies to produce metals from low-grade ores.

The problem as we reach all of these limits is a shortage of physical investment capital, such as oil, copper, and rare earth minerals. While we can extract more of these, some, like oil, are used in many ways, to fix many depletion problems. We end up with too many demands on oil supply–there is not enough oil to both (1) offset the many depletion issues the world economy is hitting, plus (2) add new factories and extraction capability that is needed for the world economy to grow.

With too many demands on oil supply, “economic growth” is what tends to get shorted. Countries that obtain a large percentage of their energy supply from oil tend to be especially affected because high oil prices tend to make the products these countries produce unaffordable. Countries with a long-term decline in oil consumption, such as the US, European Union, and Japan, find themselves in recession or very slow growth.

Figure 1. Oil consumption based on BP's 2013 Statistical Review of World Energy.

Figure 1. Oil consumption based on BP’s 2013 Statistical Review of World Energy.

Unfortunately, the problem this appears eventually to lead to, is collapse. The problem is the connection with debt. Debt can be paid back with interest to a much greater extent in a growing economy than a contracting economy because we are effectively borrowing from the future–something that is a lot easier when tomorrow is assumed to be better than today, compared to when tomorrow is worse than today.

We could not operate our current economy without debt. Debt is what has allowed us to “pump up” economic growth. Consumers can buy cars, homes, and college educations that they have not saved up for. Businesses can set up factories and do mineral extraction, without having past profits to finance these operations. We can now operate with long supply chains, including many businesses that are dependent on debt financing. The ability to use debt allows vastly more investment than if potential investors could only the use of after-the-fact profits.

If we give up our debt-based economic system, we lose our ability to extract even the oil and other resources that appear to be easily available. We can have a simple, local economy, perhaps dependent on wood as it primary fuel source, without debt. But it seems unlikely that we can have a world economy that will provide food and shelter for 7.2 billion people.

The reason the situation is concerning is because the financial situation now seems to be near a crisis. Debt, other than government debt, has not been growing very rapidly since  2008. The government has tried to solve this problem by keeping interest rates very low using Quantitative Easing (QE). Now the government is cutting back in the amount of QE.  If interest rates should rise very much, we will likely see recession again and many layoffs. If this should happen, debt defaults are likely to be a problem and credit availability will dry up as it did in late 2008. Without credit, prices of all commodities will drop, as they did in late 2008. Without the temporary magic of QE, new investment, even in oil, will drop way off. Government will need to shrink back in size and may even collapse.

In fact, we are already having a problem with oil prices that are too low to encourage oil production. (See my post, What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs.) Other commodities are also trading at flat to lower price levels. The concern is that these lower prices will lead to deflation. With deflation, debt is strongly discouraged because it raises the “inflation adjusted” cost of borrowing. If a deflationary debt cycle is started, there could be a huge drop in debt over a few years. This would be a different way to reach collapse.

Why couldn’t others see the problem that is now at our door step?

1. The story is a complicated, interdisciplinary story. Even trying to summarize it in a few paragraphs is not easy. Most people, if they have a background in oil issues, do not also have a background in financial issues, and vice versa.

2. Economists have missed key points. Economists have missed the key role of debt in extracting fossil fuels and in keeping the economy operating in general. They have also missed the fact that in a finite world, this debt cannot keep rising indefinitely, or it will grow to greatly exceed the physical resources that might be used to pay back the debt.

Economists have missed the fact that resource depletion acts in a way that is equivalent to a huge downward drag on productivity. Minerals need to be separated from more and more waste products, and energy sources need to be extracted in ever-more-difficult locations. High energy prices, whether for oil or for electricity, are a sign of economic inefficiency. If energy prices are high, they act as a drag on the economy.

Economists have missed the key role oil plays–a role that is not easily substituted away. Our transportation, farming and construction industries are all heavily dependent on oil. Many products are made with oil, from medicines to fabrics to asphalt.

Economists have assumed that wages can grow without energy inputs, but recent experience shows the economies with shrinking oil use are ones with shrinking job opportunities. Economists have built models claiming that prices will rise to handle shortages, either through substitution or demand destruction, but they have not stopped to consider how destructive this demand destruction can be for an economy that depends on oil use to manufacture and transport goods.

Economists have missed the point that globalization speeds up depletion of resources and increases CO2 emissions, because it adds a huge number of new consumers to the world market.

Economists have also missed the fact that wages are hugely important for keeping economies operating. If wages are cut, either because of competition with low-wage workers in warm countries (who don’t need as high a wages to maintain a standard of living, because they do not need sturdy homes or fuel to heat the homes) or because of automation, economic growth is likely to slow or fall. Corporate profits are not a substitute for wages.

3. Peak Oil advocates have missed key points. Peak oil advocates are a diverse group, so I cannot really claim all of them have the same views.

One common view is that just because oil, or coal, or natural gas seems to be available with current technology, it will in fact be extracted. This is closely related to the view that “Hubbert’s Peak” gives a reasonable model for future oil extraction. In this model, it is assumed that about 50% of extraction occurs after the peak in oil consumption takes place. Even Hubbert did not claim this–his charts always showed another fuel, such as nuclear, rising in great quantity before fossil fuels dropped in supply.

In the absence of a perfect substitute, the drop-off can be expected to be very steep. This happens because population rises as fossil fuel use grows. As fossil fuel use declines, citizens suddenly become much poorer. Government services must be cut way back, and government may even collapse. There is likely to be huge job loss, making it difficult to afford goods. There may be fighting over what limited supplies are available.What Hubbert’s curve shows is something like an upper limit for production, if the economy continues to function as it currently does, despite the disruption that loss of energy supplies would likely bring.

A closely related issue is the belief that high oil prices will allow some oil to be produced indefinitely. Salvation can therefore be guaranteed by using less oil. First of all, the belief that oil prices can rise high enough is being tested right now. The fact that oil prices aren’t high enough is causing oil companies to cut back on new projects, instead returning money to shareholders as dividends. If the economy starts shrinking because of lower oil extraction, a collapse in credit is likely to lead to even lower prices, and a major cutback in production.

4. Excessive faith in substitution. A common theme by everyone from economists to peak oilers to politicians is that substitution will save us.

There are several key points that advocates miss. One is that if a financial crash is immediately ahead, our ability to substitute disappears, practically overnight (or at least, within a few years).

Another key point is that today’s real shortage is of investment capitalin the form of oil and other natural resources needed to manufacture the new natural gas powered cars and the fueling stations they need. A similar shortage of investment capital plagues plans to change to electric cars. Wage-earners of modest means cannot afford high-priced plug in vehicles, especially if the change-over is so fast that the value of their current vehicle drops to $0.

Another key point is that the alternatives we looking at are limited in supply as well. We use far more oil than natural gas; trying to substitute natural gas for oil will lead to a shortfall in natural gas supplies quickly. Ramping up electric cars, solar, and wind will lead to a shortage of the rare earth minerals and other minerals needed in their production. While more of these minerals can be accessed by using lower quality ore, doing so leads to precisely the investment capital shortfall that is our problem to begin with.

Another key point is that electricity does not substitute for oil, because of the huge need for investment capital (which is what is in short supply) to facilitate the change. There is also a timing issue.

Another key point is that intermittent electricity does not substitute for electricity whose supply can be easily regulated. What intermittent electricity substitutes for is the fossil fuel used to make electricity whose supply is more easily regulated. This substitution (in theory) extends the life of our fossil fuel supplies. This theory is only true if we believe that  coal and natural gas extraction is only limited by the amount those materials in the ground, and the level of our technology. (This is the assumption underlying IEA and EIA  estimates of future fossil use.)

If the limit on coal and natural gas extraction is really a limit on investment capital (including oil), and this investment capital limit may manifest itself as a debt limit, then the situation is different. In such a case, high investment in intermittent renewables can expected to drive economies that build them toward collapse more quickly, because of their high front-end investment capital requirements and low short-term returns.

5. Excessive faith in Energy Return on Energy Investment (EROI) or Life Cycle Analysis (LCA) analyses. Low EROI returns and poor LCA returns are part of our problem, but they are not the whole problem.  They do not consider timing–something that is critical, if our problem is with inadequate investment capital availably, and the need for high returns quickly.

EROI analyses also make assumptions about substitutability–something that is generally not possible for oil, for reasons described above. While EROI and LCA studies can provide worthwhile insights, it is easy to assume that they have more predictive value than they really do. They are not designed to tell when Limits to Growth will hit, for example.

6. Governments funding leads to excessive research in the wrong directions and lack of research in the right direction. Governments are in denial that Limits to Growth, or even oil supply, might be a problem. Governments rely on economists who seem to be clueless regarding what is happening.

Researchers base their analyses on what prior researchers have done. They tend to “follow the research grant money,” working on whatever fad is likely to provide funding. None of this leads to research in areas where our real problems lie.

7. Individual citizens are easily misled by news stories claiming an abundance of oil. Citizens don’t realize that the reason oil is abundant is because oil prices are high, debt is widely available, and interest rates are low. Furthermore, part of the reason oil appears abundant is because low-wage citizens still cannot afford products made with oil, even at its current price level. Low employment and wages feed back in the form of  low oil demand, which looks like excessive oil supply. What the economy really needs is low-priced oil, something that is not available.

Citizens also don’t realize that recent push to export crude oil doesn’t mean there is a surplus of crude oil. It means that refinery space for the type of oil in question is more available overseas.

The stories consumers read about growing oil supplies are made even more believable by forecasts showing that oil and other energy supply will rise for many years in the future. These forecasts are made possible by assuming the limit on the amount of oil extracted is the amount of oil in the ground. In fact, the limit is likely to be a financial (debt) limit that comes much sooner. See my post, Why EIA, IEA, and Randers’ 2052 Energy Forecasts are Wrong.

8. Unwillingness to believe the original Limits to Growth models. Recent studies, such as those by Hall and Day and by Turner, indicate that the world economy is, in fact, following a trajectory quite similar to that foretold by the base model of Limits to Growth. In my view, the main deficiencies of the 1972 Limits to Growth models are

(a) The researchers did not include the financial system to any extent. In particular, the models left out the role of debt. This omission tends to move the actual date of collapse sooner, and make it more severe.

(b) The original model did not look at individual resources, such as oil, separately. Thus, the models gave indications for average or total resource limits, even though oil limits, by themselves, could bring down the economy more quickly.

I have noticed comments in the literature indicating that the Limits to Growth study has been superseded by more recent analyses. For example, the article Entropy and Economics by Avery, when talking about the Limits to Growth study says, “ Today, the more accurate Hubbert Peak model is used instead to predict rate of use of a scarce resource as a function of time.” There is no reason to believe that the Hubbert Peak model is more accurate! The original study used actual resource flows to predict when we might expect a problem with investment capital. Hubbert Peak models overlook financial limits, such as lack of debt availability, so overstate likely future oil flows. Because of this, they are not appropriate for forecasts after the world peak is hit.

Another place I have seen similar wrong thinking is in the current World3 model, which has been used in recent Limits to Growth analyses, including possibly Jorgen Randers’ 2052. This model assumes a Hubbert Peak model for oil, gas, and coal. The World3 model also assumes maximum substitution among fuel types, something that seems impossible if we are facing a debt crisis in the near term.

9. Nearly everyone would like a happy story to tell. Every organization from Association for the Study of Peak Oil groups to sustainability groups to political groups would like to have a solution to go with the problem they are aware of. Business who might possibly have a chance of selling a “green” product would like to say, “Buy our product and your problems will be solved.” News media seem to tell only the stories that their advertisers would like to hear. This combination of folks who are trying to put the best possible “spin” on the story leads to little interest in researching and telling the true story.


Wrong thinking and wishful thinking seems to abound, when it comes to overlooking near term limits to growth. Part of this may be intentional, but part of this lies with the inherent difficulty of understanding such a complex problem.

There is a tendency to believe that newer analyses must be better. That is not necessarily the case. When it comes to determining when Limits to Growth will be reached, analyses need to be focused on the details that seemed to cause collapse in the 1972 study–slow economic growth caused by the many conflicting needs for investment capital. The question is: when do we reach the point that oil supply is growing too slowly to produce the level of economic growth needed to keep our current debt system from crashing?

It seems to me that we are already near such a point of collapse. Most people have not realized how vulnerable our economic system is to crashing in a time of low oil supply growth.


via Zero Hedge Tyler Durden

That Woman Who Has Been Fighting To Get Off the No-Fly List for Years? It Was Due to a Paperwork Error.

You are now free to move about the country, Ms. Ibraham.We’ve previously
the case of Rahinah Ibraham, a scholar who has been
fighting the federal government for years trying to figure out why
she was placed on the TSA’s no-fly list and trying to get off. The
government has fought her each and every step of the way, going so
far as using their powers to keep her daughter from boarding a
plane to come testify on her behalf.

So it turns out an FBI agent filled out a form wrong.

That’s literally what happened, back in 2004. The wrong box was
checked off. Wired
that the judge in the case released his full ruling
today. He already ordered in January for the feds to fix it the
mistake, but now we know exactly what the mistake is:

The agent, Michael Kelly, based in San Jose, misunderstood the
directions on the form and “erroneously nominated” Rahinah Ibrahim
to the list in 2004, the judge wrote.

“He checked the wrong boxes, filling out the form exactly the
opposite way from the instructions on the form,” U.S. District
Judge William Alsup
 (.pdf) today.

To top it off, the agent did not realize he had made a mistake
until he was deposed for this lawsuit last September.

from Hit & Run

Socialism Works – In One Chart

As the US practically decrees a Maserati in every garage, it would seem the Venezuelan version of socialism is not encouraging its wealth redistributed, price-managed, margin-controlled, centrally-planned citizens to buy cars… January saw the lowest volume of car sales ever on record at 722 (not ‘000s) having dropped 87% year-over-year. At least they have record high stocks and toilet paper… oh wait…



Is The US today where Venezuela was 6 years ago?


Data: Bloomberg


via Zero Hedge Tyler Durden

The Farce Is Complete: Blythe Masters Joining CFTC

We thought today’s newsflow and “market action” ranked pretty high on the absurd surrealism scale. And then we saw this.


That’s right – you read it correct: “Blythe Masters, head of JPMorgan Chase & Co.’s commodities division, is joining an advisory committee of the U.S. Commodity Futures Trading Commission, said Steve Adamske, a spokesman for the regulator. Masters, 44, was invited by acting Chairman Mark Wetjen to sit on a global markets committee at the Washington-based regulator of futures and swaps, according to a person with knowledge of the matter. Masters is scheduled to participate in a CFTC meeting on Feb. 12 to discuss cross-border guidance on rules, the person said.”

Ok – ignore, if you will, all alegations about Blythe Masters “interventions” in the precious metals markets.

But don’t ignore Blythe’s CNBC interview in which the soon to be former JPMorganite said, days before the London Whale fiasco was exposed and so were JPM’s attempts to corner the bond market, that JPM has “offsetting positions. We have no stake in whether prices rise or decline. Rather we’re running a flat or relatively flat matched book” – a statement that was a bold faced lie, and was followed up with “what is commonly out there is that JPMorgan is manipulating the metals market. It’s not part of our business model. it would be wrong and we don’t do it.”

No, Blythe had much greater manipulative ambitions, namely becoming the next Enron, which we learned after than the FERC fined JPMorgan – and the group ran by Blythe Masters – for manipulating electricity prices in California and other states.

Fast forward to today when we learn that this certified commodity market manipulator just got a job with none other than the head commodity regulators in the US?

In other words, you too can get a job at the CFTC if only you can answer yes to the following two questions (h/t Manal):

  • Has your bank manipulated energy markets under your watch, and
  • Have you been found guilty of commodity price manipulation

We could ask what Elizabeth Warren would think about this hilarious rotating door out of the most punished for its legal transgressions bank – with about $25 billion in legal fees, expenses and settlement charges – the same Warren who earlier today was parading with pandering populism at the Senate hearing, as a result of which nothing would change…


… but we won’t. Because as we noted: nothing will ever change. Actually correction – now it will be Blythe Masters on top of the one regulators that is supposed to enforce a fair, honest and efficient commodities market.

It’s almost as if they are explicitly telling the handful of people who still care about this entire charade a resounding “fuck you.


via Zero Hedge Tyler Durden

Would “Streaming” Services Like Netflix Be Better If They Were More Like TV? Is TV Streaming?

what channel?Over at Wired, Kyle Vanhemert
that Netflix would do well to think about how to also
present its streaming video content in Web 2.0 streams like
Facebook, Twitter, or:

You know what else is a stream? Live TV! It comes with
the very same qualities that exist in and enliven all the examples
above. It’s immediate. It’s constant. It’s always-on, always-there,
always-new. You don’t have to do a damn thing except show up.

While synonymous with the age of streaming video, Netflix is less
like a stream and more like a colossal vending machine. It offers a
plentitude of carefully wrapped choices, each requiring careful
consideration. Infinite choice is exhausting. Ask anyone who’s
spent 30 minutes trying to pick a movie, only to give up and see
what’s on TV.

I can relate, as can anyone who finds trouble committing to a
two hour long movie and then watches five episodes of an hour-long
TV show instead. Vanhemert suggests Netflix try something between
organizing its “second-tier” content into channel-like streams or
just a “Pandora-mode” of actually-streaming video. He offers that
Netflix may be prevented from doing this by its licensing
restrictions as a reason about why the obvious-when-you-hear-it
idea hasn’t been tried yet.

Netflix is a step in the direction toward a more individualized
television experience, part of the brave new libertarian world of
digital content. Were Netflix to develop channels of their own,
it’s not hard to imagine you’d be able to personalize those too. It
really is hard to say
you’re not better off
than you were ten years ago.

Related on Netflix as television network:
how it’s making TV shows like one

from Hit & Run