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Submitted by Erico Matia Tavares via Sinclar & Co,

There are plenty of things to worry about these days. A cursory look through today’s (13 Sep 14) drudgereport.com sets the tone: the Pope says WWIII is underway; a senior Democrat accuses the Republicans of endangering civilization; drones are invading the privacy of citizens; militias are blocking traffic in the Mexican border; Feds run a US$589 billion budget deficit; the UK might fall apart; the Ebola epidemic is getting serious in Africa; a mystery virus spreads to NY and CT (and we could not resist adding this one: Hillary Clinton is doing yoga).

With all of this in our minds it is easy to forget, or at least put in proper context, the extraordinary progress that mankind has achieved over the centuries against remarkable odds. World population has steadily increased, proving Malthus wrong. Serious diseases like polio and smallpox, which affected even monarchs and presidents over the centuries, have been eradicated. We can crisscross the planet in less than 24 hours and put satellites in deep space. The baby boomers and their offspring are the most prosperous generations the world has ever seen.

This shows that with enough intelligence, political will, common sense and perseverance most challenges we face as a species can be overcome. This should provide a decent amount of hope that we can tackle whatever we are facing right now.

So why worry?

Well, what will happen if we start losing those qualities and values as a global society? Which is why we believe that the following graphs are the scariest in the world today:

WORLD IQ LEVEL OVER TIME

 

Source: MailOnline, University of Hartford.

 

INDEX OF MILITARY EXPENDITURES OVER TIME (1950 = 100)(a)

 

Source: SIPRI.

(a) Based on NATO expenditures (in 2011 constant US$), the longest data series publicly available.

The average world citizen is getting dumber while our means of doing harm are increasing. This trend is clearly not our friend.

Consider the following.

Countries around the world today spend over US$1.7 trillion on weaponry – more than the total global investment in energy supply. Beyond the manufacturers and suppliers downstream, this produces zero economic benefits (weapons become obsolete very quickly and do not generate any returns; on the contrary as, well, they blow stuff up) and the associated costs add to already bloated government debt levels. And that’s US$1.7 trillion less available each year to improve world education, food and fuel availability, the environment and shifting global demographics, all critical issues of the 21st century.

Also concerning is the fact that control over these weapons can be quickly lost, creating the prospect of blowbacks, never ending conflicts and major tragedies.

Prior to 1991, the Soviet Union had more than 27,000 nuclear warheads and plenty of weapons-grade uranium and plutonium to triple that number. While there have been no confirmed reports of missing or stolen former-Soviet nuclear weapons (astonishing given all the political and economic turmoil since then), there is ample evidence of a significant black market in nuclear materials. How long before someone in that rapidly expanding pool of idiots gets a hold of some is anybody’s guess.

Note: accidents can happen as well, adding to the unease of handling this type of firepower. For instance, in 1961, a B-52 carrying two nuclear bombs broke up in mid-air, dropping its nuclear payload very close to Goldsboro in North Carolina. Five of the six fuses designed to prevent a detonation failed in one of the bombs, with only the last one averting a nuclear explosion. That was an unbelievable close call.

And now turmoil is spreading across the Middle East yet again. With all the conflict going on, anyone showing up and volunteering to fight for one of the sides will be given free food and weapons, courtesy of the associated regional and international powers. Will those weapons stay there, concerning as that might already be for local populations, or will they be used elsewhere, even if the conflict is contained or resolved? As we all know fundamentalists – probably the most idiotic of the bunch – are ready to do anything.

Humanity cannot risk its future falling into the hands of increasingly lethal buffoons. The stakes are just too high now. Hopefully our leaders are paying attention, but this should concern us all. Let’s try to be smart about it – while the smart is still going.

via Zero Hedge http://ift.tt/XpJN9Y Tyler Durden

Back in 2012 we accurately predicted that in the Brave New Normal World, where zero cost debt-issuance is used to immediately fund stock buybacks instead of being reinvested in growth and expansion, in the process boosting management pay through equity-performance linked option payout structures, that with every passing year CapEx spending would decline first in relative then in absolute terms, even as free cash flow use of funds is spent on other “here-and-now” shareholder-friendly activities such as buybacks and dividends would grow exponentially (which also explains the unprecedented emergence of shareholder “activists” who demand that in an Ex-CapEx world they get paid right here, right now).

That much has been proven and now, year after year, strategists keep telling us that the long overdue CapEx spending boom is just around the corner (as is the so-called recovery), because as of this moment in the all important industrial and construction segments, CapEx is running a whopping 30% below trend…

… and yet, the “boom” never comes.

And here is why it never will, because while waiting for CapEx is reminiscent of waiting for the proverbial Godot, nowhere is it more evident that CapEx is not coming back, in any terms, than in the following chart from Goldman showing both historical and forecast CapEx, created on a bottoms-up basis and showing that global CapEx will decline sequentially both next year and the year after that.

And yet companies which have no choice but to continue their existence, even if they are forced to pay out all incremental cash to their loud-mouthed shareholders simply because there really is no global economic growth which can soak up the incremental growth spending, they still spend money on (mostly) maintenance and (to a tiny extent) growth capital spending.

So for those curious where this spending ends up (because everyone knows where dividends and buybacks go), here is a global heatmap of all capex spending broken down by region and segment:

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

Yuanification continues around the world. As The USA attempts to corral its allies in a ‘broad coalition’, an increasing number of people – including domestic economic policy advisors – are shifting away from the USD as primary reserve currency. However, the move by British Chancellor of the Exchequer George Osborne, announced Friday, is likely the most notable yet in the world’s de-dollarization. As Xinhua reports, the British government intend to be the first nation (ex-China) to issue Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency. Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency”.

As Xinhua reports,

British Chancellor of the Exchequer George Osborne announced Friday that the British government intend to issue a Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency.

 

“I can now announce that the UK government intend to be the first national government outside of China to issue a bond in China’s currency. We issued bonds in U.S. dollar before, now we will be issuing a bond in RMB,” said Osborne in the press release of the Sixth China-UK Economic and Financial Dialogue (EFD).

 

Chinese Vice Premier Ma Kai and Osborne concluded the meeting of the Sixth China-UK Economic and Financial Dialogue in London.

 

Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency”.

 

“And let me be clear, as China becomes a bigger and bigger part of the world economy, their currency is going to be used around the world. We here in Britain understand that, and we want us to be the first country in the west to seize the opportunities that it will bring,” declared Osborne.

 

Meanwhile, the issuance of Chinese currency bond means jobs and investment in Britain, which the government’s long-term economic plan is all about, noted Osborne.

*  *  *

With friends like that, does the USA need more enemies? Time for some Uk sanctions…

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