Hey, Is It A Problem That We're All On One Side Of The Boat?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

It may appear to be safe for everyone to be on the same side of the boat, but the gunwale is awfully close to the water.

Gee, we're all on one side of the boat now–long the S&P 500, NASDAQ, Dow, Eurozone stocks, the Nikkei, not to mention rental housing, junk bonds, bat quano, 'roo belly futures and the quatloo–basically every "risk-on" trade on the planet–is that a problem?

The conventional (and convenient) answer is "nah–stocks can only rise from here." So what if market bears have fallen to 15% or less? So what if 85% of investors are on the same side of the boat? You'd be nuts to leave the winning side, the trend-is-your-friend side, the "don't fight the Fed" side, the side with all the "smart money."

It may appear to be safe for everyone to be on the same side of the boat, but the gunwale is awfully close to the water. With the sea remarkably calm (i.e. no waves of turbulence or volatility), the fact that the boat is overloaded doesn't seem dangerous.

But once the sea rises even a bit and water starts lapping over the gunwale, the "guaranteed safety" of the bullish trade might start looking questionable.

When the boat takes on water quicker than anyone believes possible and capsizes, it will be "every punter for himself." But few longside punters are wearing lifejackets.

This is all Investing 101: be wary of extremes of euphoria and confidence and being on the same side of the trade as everyone else. Yet everyone continues adding to their long positions without adding portfolio protection (puts, etc.):

Three indicators suggest this move will reverse shortly, either in a "healthy correction" or a reversal of trend–which one cannot be determined until the downturn is underway.

The rapid rise of the market has traced out a bearish rising wedge. This pattern usually leads to some sort of correction. The MACD histogram is divergent, dropping to the neutral line as the SPX has soared ever higher.

Lastly, price has pulled away from both the 50-day and 200-day Moving Averages, suggesting the rubber band is remarkably stretched.

Round-number attractors are close at hand. The SPX at 1798 is two measly points from the round-number attractor of 1800, and the Dow at 15,961 is a coin-toss away from its round-number attractor of 16,000. This level will invite great cheering ("new all time high," never mind adjusting for inflation) and also present an opportunity for the imbalanced boat to capsize.

Even more astonishing, the crowd is also betting on volatility declining from extreme lows. Look at the put and call options on the VXX, a security that tracks the short-term volatility of the VIX: at the money December calls (bets volatility will rise by December 20) number 311 while puts (bets volatility will decline some time between now and December 20) number 11,265.

Hey, you 311 bears! Join us 11,265 longs on the guaranteed winning side of the boat! Uh, thank you for the kind offer, but no thanks. Though the uncrowded side is uncomfortably above the water at this point, with 11,265 fattened Bulls on the side close to the waterline, the few on this side are less likely to be trampled when physics trumps psychology.

Hey all you PhDs in Behavioral Economics: perhaps you could investigate the "how many angels can dance on the head of a pin?" nature of this psychological conundrum:the market can only do what few expect of it, so if everyone is looking for bubbles, there can't be any bubbles. But what else do you call a market that rises 10+% in a mere 6 weeks?

In other words, if people are looking at the market and realizing it is dangerously close to capsizing, then it can't capsize because the market can only capsize if nobody expects it. The absurdity of this argument is revealed by turning it around: if Bulls confidently expect the market to keep rising, then how can it rise when everybody expects it to rise?

The answer to the question "how many angels can dance on the head of a pin?" is the same as the answer to the question, "How many Bulls can crowd on one side of the trade without capsizing the boat if there are 311 Bears on the other side?" The absurdly concise answer is 11,265–at least for now.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i8oTZoO4pzM/story01.htm Tyler Durden

Corp. Extortion Over Minimum Wage In Germany: BMW, Daimler, VW Threaten to Offshore Production

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

Germany has neither a minimum wage nor a government. Someday it might have both.

If not, there will be new elections, and Chancellor Angela Merkel might get pummeled because she’d get blamed for them. The CDU/CSU won a phenomenal victory in September, but not an absolute majority. To govern, it must form a coalition. Erstwhile coalition partner, the FDP, got kicked out of parliament. Now Merkel’s clan is negotiating with the left-leaning SPD, runner-up in the elections, to form a Grand Coalition.

They’re horse trading over who gets which ministry, and they’re tearing each other’s hair out over sharing election spoils, and they’re butting heads over legislative projects. Among the SPD’s campaign promises was a general minimum wage. Not a non-subsistence minimum wage, of the kind favored by the US government, but €8.50 ($11.50) per hour.

Fear-mongering over it started to heat up at the end of October when Daimler CEO Dieter Zetsche told the Handelsblatt that imposition of a minimum wage would cost jobs in the long run. It would not hit the automotive industry per se due to its higher wage levels, he said, but the Mittelstand – privately held enterprises that have become world leaders in their niche, at least until the Chinese came along. They’re component suppliers, so higher wages would feed into input costs for automakers. The labor market must remain flexible, Zetsche said. But at the time, he still couldn’t envision moving production from Germany to China.

What a difference three weeks make.

Germany has been accused of becoming a low-wage country. For a reason. Workers – from doctors to cleaning staff – have watched their real wages decline for years. Individual taxes have been jacked up, corporate taxes have been cut. Retail sales are now lower than they were in 1994. It’s not magic. It’s a national policy handed down from government to government like a religious document: exports at any price.

This dependence on exports, and the parallel overexposure to wages in China and elsewhere, “has deprived Germany’s workers of what they have earned, and should be able to save and spend,” US economist Adam Posen writes. “Most importantly, this means they move down the value chain in relative terms, not up.”

But low wages are corporate manna. Hence the fight over minimum wage, with a good dose of corporate extortion.

They did it together during a joint interview published by the Sunday edition of the Bild, the most read paper and tabloid in Germany: the CEOs of Daimler, BMW, VW, und Opel. But it was Daimler’s Zetsche who pulled the ripcord: “If the conditions in Germany continue to get worse, we have to think about the transfer of production to other locations.”

Offshoring to China? For years, they’ve been building plants in China, and it has become their most promising market. China is written between the lines every time a CEO of a German automaker says anything at all.

The auto industry needed to strengthen its competitiveness, not weaken it, Zetsche said. VW CEO Martin Winterkorn agreed; collective bargaining partners should be the ones negotiating wages, not the government. “The principle of collective bargaining autonomy in Germany has been proven,” he said – in light of the real-wage declines that these CEOs are so proud of. And they fretted about the controversy over temporary and contract workers that has been spiraling out of control.

More than one million people work as temporary or contract workers for the metal and electrical industry in Germany, which includes the automakers, the Spiegel reported. Nearly one third of the workers in the industry! In the auto industry, 100,000 temporary workers and 250,000 contract workers (employed by Randstad, Loewe, or other staffing agencies) work alongside 763,000 regular employees.

Manfred Schoch, chairman of BMW’s supervisory board (workers’ council) explained that he was not opposed to contract work per se to keep some flexibility, but “a problem arises when tasks that used to be performed by BMW employees are assigned to other companies whose employees on our premises get half the wages.”

Detlef Wetzel, head of the Industrial Union of Metalworkers (IG-Metall) didn’t mind contract workers in general, he said. But he was against them “when they’re used to massively suppress wages.”

The evil combination of a decent minimum wage and some limitations on temporary and contract work are now on the negotiating table in Berlin. If they make it into law, Zetsche said, “Germany would squander its lead in Europe in terms of competitiveness.” And VW’s Winterkorn opined that it was “reckless to eliminate or limit these instruments of flexibility.”

These “instruments of flexibility” have worked well: record corporate profits, fabulous bonuses for the top echelon, and record trade surpluses. On the other side of the ledger: strung-out workers who cannot afford to spend or save money they’re not making. And the consequences have been documented by a huge, multi-year ECB study…. Total Fiasco: Germans are the Poorest in The Eurozone

But cheap labor wasn’t their only concern. They also complained about the cost of energy, which BMW CEO Norbert Reithofer said was twice as high as in the US. And now, companies may soon lose an exemption from expensive renewable energy surcharges. Business leaders worry this will “destroy Germany’s industrial core.” Read…. German Industry Dreads Getting Slammed By The Costs Of Green Energy


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FRjFi4iOsUw/story01.htm testosteronepit

The Persistent—But Fading—Appeal of JFK Conspiracy Stories

Speaking
of JFK’s assassination
, I have an
article
on the subject at Time.com today. Here’s how it
opens:

"That umbrella, we employed it."If you could settle the question with a
national vote, there would be no doubt that a conspiracy killed
John F. Kennedy. Two weeks after the shooting, a Gallup poll showed
52% of Americans blaming a force larger than Lee Harvey Oswald for
the President’s death. Half a century later, a new Gallup poll puts
the number at 61%. Earlier this year an Associated Press survey
said the number was 59%, while a Public Policy Polling effort said
it was a more modest but still substantial 51% — not far at all
from those initial results in 1963.

Those numbers may sound surprisingly high, but by other years’
standards they’re actually low. A decade ago, an ABC News poll had
70% of the population believing there was more than one man behind
the slaying. When ABC posed the same question in 1983, the number
was 80%. In 1994, the sociologist Ted Goertzel suggested that
belief in a Kennedy conspiracy has “increased as the event became
more distant.” For a while it did, but then it reached a peak and
started sinking.

So there are two trends that cry out to be explained here. Why are
Kennedy-assassination theories still so popular, and why are they
less popular than before?

For my answers to those questions, you can read the rest of the
piece
here
.

On a related subject: New York magazine has marked the
JFK anniversary by publishing a mini-encyclopedia
of conspiracy theories. I contributed the entry on
Operation Mindfuck
.

from Hit & Run http://reason.com/blog/2013/11/18/the-persistentbut-fadingappeal-of-jfk-co
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Jerry Brito on Turning the Tables on the Surveillance State

Narrative ClipSousveillance is the recording of an activity by
a participant in that activity, and it can be thought of as the
inverse of surveillance. The word “sur” in French means “over” or
“above,” hence surveillance is “watching from above” or
“overseeing.” The word “sous,” by contrast, means “under” or
“below.” To date, “veillance” has only been available to the
powerful–whether through corporate or government CCTV cams perched
atop buildings or utility poles. But, writes Jerry Brito, with the
advent of cheap wearable computers, we will all soon be able to
point a camera back at the powers that be from below.

View this article.

from Hit & Run http://reason.com/blog/2013/11/18/jerry-brito-on-turning-the-tables-on-the
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Updated! Show Suspended for 2 Weeks! Alec Baldwin Condemns “Libertarian Trash” Who Are “Defenders of Gay Rights”

This post has been updated at 10pm ET on November 15.
Scroll down to read the update.


The latest rampage by rageaholic – and ultra-talented, btw –
actor Alec Baldwin is on display at TMZ.com (click above to watch).
After winning a case against a stalker,
Baldwin saw fit to scream at and threaten a shutterbug on the
streets of New York.

During the episode, Baldwin refers to the photographer as a
“cocksucking fag,” an insult that calls to mind a previous incident
in which the 30 Rock alum and current MSNBC host
threatened to foot-fuck
a “toxic little queen” and “a toxic
little bitch” who had libeled his wife.

While giving no quarter to what he sees as invasive
photographers, Baldwin has checked in with advisers and
concludes

This tweet came just hours after Baldwin had tweeted
Anti-gay
slurs are wrong. They not only offend, but threaten hard fought
tolerance of LGBT rights
.”

And not long after Baldwin had tweeted (and duly deleted) this
slag on “libertarian trash” who defend gays:


I can’t speak for the Breitbart crowd (though Andrew Breitbart
was certainly a staunch supporter of gay
equality
) but the “libertarian trash” at Reason has been
defending gay rights since the magazine’s earliest days in the late
1960s. In fact, when mainstream liberal and conservative
publications were still arguing over whether homosexuality should
be decriminalized, we were already talking about marriage equality.
If the state is going to involve itself in marriage (and it
shouldn’t) among consenting adults, it should not draw invidious
distinctions and treat some people as second-class citizens.

I’d like to think that Alec Baldwin can understand that about
“libertarian trash.” But if his now-you-see-it, now-you-don’t
Twitter feed is any indication, he’s already on to more important
topics, such as conflating “single-bullet theorists” with
minimum-wage flat-earthers:

Update (10pm ET, November 15):
According to Variety
, Alec Baldwin’s MSNBC show, Up
Late
, has been suspended for two weeks. The suspension comes
not because of the event described above but due to a threat and
insult Baldwin made to a reporter for a local New York Fox
affiliate earlier this week. Along with other journalists hovering
around Baldwin after his testimony against his stalker, the Fox
reporter asked him questions. To which Baldwin responded

“If you’re still here when my wife and kid come out, you’re
going to have a big problem, you know that?” 

He then insulted the reporter, saying, “You are as dumb as
you look. You are with Fox, right?”


More here.

from Hit & Run http://reason.com/blog/2013/11/15/alec-baldwin-condemns-libertarian-trash
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Updated! Show Suspended for 2 Weeks! Alec Baldwin Condemns "Libertarian Trash" Who Are "Defenders of Gay Rights"

This post has been updated at 10pm ET on November 15.
Scroll down to read the update.


The latest rampage by rageaholic – and ultra-talented, btw –
actor Alec Baldwin is on display at TMZ.com (click above to watch).
After winning a case against a stalker,
Baldwin saw fit to scream at and threaten a shutterbug on the
streets of New York.

During the episode, Baldwin refers to the photographer as a
“cocksucking fag,” an insult that calls to mind a previous incident
in which the 30 Rock alum and current MSNBC host
threatened to foot-fuck
a “toxic little queen” and “a toxic
little bitch” who had libeled his wife.

While giving no quarter to what he sees as invasive
photographers, Baldwin has checked in with advisers and
concludes

This tweet came just hours after Baldwin had tweeted
Anti-gay
slurs are wrong. They not only offend, but threaten hard fought
tolerance of LGBT rights
.”

And not long after Baldwin had tweeted (and duly deleted) this
slag on “libertarian trash” who defend gays:


I can’t speak for the Breitbart crowd (though Andrew Breitbart
was certainly a staunch supporter of gay
equality
) but the “libertarian trash” at Reason has been
defending gay rights since the magazine’s earliest days in the late
1960s. In fact, when mainstream liberal and conservative
publications were still arguing over whether homosexuality should
be decriminalized, we were already talking about marriage equality.
If the state is going to involve itself in marriage (and it
shouldn’t) among consenting adults, it should not draw invidious
distinctions and treat some people as second-class citizens.

I’d like to think that Alec Baldwin can understand that about
“libertarian trash.” But if his now-you-see-it, now-you-don’t
Twitter feed is any indication, he’s already on to more important
topics, such as conflating “single-bullet theorists” with
minimum-wage flat-earthers:

Update (10pm ET, November 15):
According to Variety
, Alec Baldwin’s MSNBC show, Up
Late
, has been suspended for two weeks. The suspension comes
not because of the event described above but due to a threat and
insult Baldwin made to a reporter for a local New York Fox
affiliate earlier this week. Along with other journalists hovering
around Baldwin after his testimony against his stalker, the Fox
reporter asked him questions. To which Baldwin responded

“If you’re still here when my wife and kid come out, you’re
going to have a big problem, you know that?” 

He then insulted the reporter, saying, “You are as dumb as
you look. You are with Fox, right?”


More here.

from Hit & Run http://reason.com/blog/2013/11/15/alec-baldwin-condemns-libertarian-trash
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Obamacare’s Website Gets Its First Performance Metrics. Will They Be Enough?

For
the past few weeks, the Obama administration has been promising
that that the federal health insurance exchange portal run through
HealthCare.gov will work “smoothly” for the “vast majority” of
users by the end of the month. But the administration hasn’t
offered much detail about what that means.

For that, we
turn
to The Washington Post, which explains that the
administration is focused internally on getting 80 percent of users
all the way through the enrollment process. In a detail that is
suggestive of the managerial failures that led to the disastrous
rollout of the exchanges, The Post also reports that the goal is
“the first concrete performance standard in the 31/2 years since
the government began to design the health exchange.” Prior to the
launch of the site, the administration had no internal definition
of what constituted a working site. And the contractors who built
the exchange system apparently did not have clear expectations
regarding their work either:

When HHS in 2011 invited contractors to bid on the chance to
build HealthCare.gov, the department’s “statement of work” did not
include requirements typical of many IT contracts in which
interested companies must spell out how the system would perform,
according to an industry representative close to the project, who
was granted anonymity in order to speak frankly. The agreement
that CGI
Federal
, the company chosen as the main contractor, signed on
Sept. 30, 2011, also did not contain specific performance criteria,
success measures or response times.

Well, the site certainly behaved like one built without any
performance criteria.

The revelation of this metric leaves us with several big
questions. Is it achievable? And if so, how will we know whether it
has been achieved? An 80 percent success rate leaves room for just
enough failures that it will be hard to independently verify. And
given previous reports by the Post and others that the site is not
likely to improve enough to be working by the White House’s
end-of-month deadline, there’s reason to doubt that the goal can
actually be reached.

Even if it is achieved, will it be enough? The 80 percent target
is simply for users of the exchange to be able to get all the way
through the enrollment process. But it doesn’t say anything about
the accuracy of the enrollment or pricing data that is generated in
the process. That could be a big problem, given that the site has
been sending bad enrollment data to insurers and has also had
trouble with the subsidy calculator that determines premium prices
and subsidy levels.

Indeed, if the website becomes generally usable for those who
want to enroll but continues to generate bad enrollment and pricing
data, we could end up with large numbers of people who think they
are enrolled in one plan, at a particular price, but whose
enrollment information is never properly transmitted, resulting in
mass confusion once new coverage kicks in next year. Hitting this
particular goal, in other words, might not really fix anything, and
could make things even worse. 

from Hit & Run http://reason.com/blog/2013/11/18/obamacares-website-gets-its-first-perfor
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You Know What This Hotel Made Out of Ice Needs? Smoke Detectors!

Do smoke detectors pick up frostburn?Visitors to the IceHotel in the village of
Jukkasjärvi, Sweden, should consider themselves lucky. Well,
obviously, the hotel, which is exactly what the name suggests, is a
huge draw around the world and reservations aren’t exactly easy to
come by. Anybody who can afford a room there probably leads a
pretty lucky life. But visitors are also lucky that they all
haven’t perished in a roaring fire! It turns out the IceHotel has
been operating all this time (since 1990) with no smoke
detectors!

Authorities in Sweden have finally
put an end
to this reckless endangerment by the company.
Courtesy of Agence France-Presse:

The Ice Hotel, located in the small Arctic town of Jukkasjarvi,
is following a request by authorities to guarantee the safety of
its guests.

Hotel spokeswoman Beatrice Karlsson said the hotel was a little
surprised at first, but understood as “there are things that can
actually catch fire, like pillows, sleeping bags or reindeer
skins”.

“To us the most important concern is the safety of our clients,
so we will comply,” she said.

Some may point out that fires that break out in pillows and
sleeping bags are unlikely to spread anywhere in a hotel made
entirely out of ice or produce enough smoke to cause serious
inhalation problems, but that’s not the point! The point is that
safety rules must be followed no matter what!

Plus, ice can totally catch on fire. As this little experiment
below shows, all they have to do is accidentally build the IceHotel
on top of a bunch of calcium carbide:

from Hit & Run http://reason.com/blog/2013/11/18/you-know-what-this-hotel-made-out-of-ice
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Bill Clinton Hoping For a “Woman President” in His Lifetime

Bill Clinton
has said that he hopes there is a female president in his lifetime,
but added that he has “no idea” if his wife is planning on
running.

From
Politico
:

Former President Bill Clinton said Monday he would like to see a
female president, but he has “no idea” if his wife, former
Secretary of State Hillary Clinton, will run in 2016.

“I hope we have a woman president in my lifetime, and I think it
would be a good thing for the world as well as for America,”
Clinton said at a conference in China, according to Agence
France-Presse.

Although Bill Clinton claims to have “no idea” about his wife’s
plans for 2016, Democratic strategists and donors
are preparing
for a what is widely considered as an
inevitable Hillary Clinton presidential campaign.

Follow this story and more at Reason
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.

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at 
@reason247.

from Hit & Run http://reason.com/blog/2013/11/18/bill-clinton-hoping-for-a-woman-preside
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