Tag: news

One month ago we showed that when it comes to the cost of basic (and not so basic) health insurance, the US is by far the most expensive country in the world and certainly among its “wealthy-nation”peers (in a world in which indebtedness is somehow equivalent to wealth), which in the context of the irreversible socialization of American healthcare, was in line with expectations. 

It would be logical then to think that as a result of this premium – the biggest in the world – the quality of the healthcare offered in the US among the best, if not the best, in the world. Unfortunately, that would be wrong and, in fact, the reality is the complete opposite: as a recent study by the Commonweath Fund, looking at how the US healthcare system compares internationally, finds, “the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity.” In other words: most expensive, yet worst in the developed world.

From the report:

The United States health care system is the most expensive in the world, but this report and prior editions consistently show the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied in this report—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2010, 2007, 2006, and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity. In this edition of Mirror, Mirror, the United Kingdom ranks first, followed closely by Switzerland (Exhibit ES-1).

Expanding from the seven countries included in 2010, the 2014 edition includes data from 11 countries. It incorporates patients’ and physicians’ survey results on care experiences and ratings on various dimensions of care. It includes information from the most recent three Commonwealth Fund international surveys of patients and primary care physicians about medical practices and views of their countries’ health systems (2011–2013). It also includes information on health care outcomes featured in The Commonwealth Fund’s most recent (2011) national health system scorecard, and from the World Health Organization (WHO) and the Organization for Economic Cooperation and Development (OECD).

The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes. The Affordable Care Act is increasing the number of Americans with coverage and improving access to care, though the data in this report are from years prior to the full implementation of the law. Thus, it is not surprising that the U.S. underperforms on measures of access and equity between populations with above- average and below-average incomes.

The U.S. also ranks behind most countries on many measures of health outcomes, quality, and efficiency. U.S. physicians face particular difficulties receiving timely information, coordinating care, and dealing with administrative hassles. Other countries have led in the adoption of modern health information systems, but U.S. physicians and hospitals are catching up as they respond to significant financial incentives to adopt and make meaningful use of health information technology systems. Additional provisions in the Affordable Care Act will further encourage the efficient organization and delivery of health care, as well as investment in important preventive and population health measures.

For all countries, responses indicate room for improvement. Yet, the other 10 countries spend considerably less on health care per person and as a percent of gross domestic product than does the United States. These findings indicate that, from the perspectives of both physicians and patients, the U.S. health care system could do much better in achieving value for the nation’s substantial investment in health.

Major Findings

• Quality: The indicators of quality were grouped into four categories: effective care, safe care, coordinated care, and patient-centered care. Compared with the other 10 countries, the U.S. fares best on provision and receipt of preventive and patient-centered care. While there has been some improvement in recent years, lower scores on safe and coordinated care pull the overall U.S. quality score down. Continued adoption of health information technology should enhance the ability of U.S. physicians to identify, monitor, and coordinate care for their patients, particularly those with chronic conditions.
• Access: Not surprisingly—given the absence of universal coverage—people in the U.S. go without needed health care because of cost more often than people do in the other countries. Americans were the most likely to say they had access problems related to cost. Patients in the U.S. have rapid access to specialized health care services; however, they are less likely to report rapid access to primary care than people in leading countries in the study. In other countries, like Canada, patients have little to no financial burden, but experience wait times for such specialized services. There is a frequent misperception that trade-offs between universal coverage and timely access to specialized services are inevitable; however, the Netherlands, U.K., and Germany provide universal coverage with low out-of-pocket costs while maintaining quick access to specialty services.
• Efficiency: On indicators of efficiency, the U.S. ranks last among the 11 countries, with the U.K. and Sweden ranking first and second, respectively. The U.S. has poor performance on measures of national health expenditures and administrative costs as well as on measures of administrative hassles, avoidable emergency room use, and duplicative medical testing. Sicker survey respondents in the U.K. and France are less likely to visit the emergency room for a condition that could have been treated by a regular doctor, had one been available.
• Equity: The U.S. ranks a clear last on measures of equity. Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year.
• Healthy lives: The U.S. ranks last overall with poor scores on all three indicators of healthy lives—mortality amenable to medical care, infant mortality, and healthy life expectancy at age 60. The U.S. and U.K. had much higher death rates in 2007 from conditions amenable to medical care than some of the other countries, e.g., rates 25 percent to 50 percent higher than Australia and Sweden. Overall, France, Sweden, and Switzerland rank highest on healthy lives.

Summary

The U.S. ranks last of 11 nations overall. Findings in this report confirm many of those in the earlier four editions of Mirror, Mirror, with the U.S. still ranking last on indicators of efficiency, equity, and outcomes. The U.K. continues to demonstrate strong performance and ranked first overall, though lagging notably on health outcomes. Switzerland, which was included for the first time in this edition, ranked second overall. In the subcategories, the U.S. ranks higher on preventive care, and is strong on waiting times for specialist care, but weak on access to needed services and ability to obtain prompt attention from primary care physicians. Any attempt to assess the relative performance of countries has inherent limitations. These rankings summarize evidence on measures of high performance based on national mortality data and the perceptions and experiences of patients and physicians. They do not capture important dimensions of effectiveness or efficiency that might be obtained from medical records or administrative data. Patients’ and physicians’ assessments might be affected by their experiences and expectations, which could differ by country and culture.

Disparities in access to services signal the need to expand insurance to cover the uninsured and to ensure that all Americans have an accessible medical home. Under the Affordable Care Act, low- to moderate-income families are now eligible for financial assistance in obtaining coverage. Meanwhile, the U.S. has significantly accelerated the adoption of health information technology following the enactment of the American Recovery and Reinvestment Act, and is beginning to close the gap with other countries that have led on adoption of health information technology. Significant incentives now encourage U.S. providers to utilize integrated medical records and information systems that are accessible to providers and patients. Those efforts will likely help clinicians deliver more effective and efficient care.

Many U.S. hospitals and health systems are dedicated to improving the process of care to achieve better safety and quality, but the U.S. can also learn from innovations in other countries—including public reporting of quality data, payment systems that reward high-quality care, and a team approach to management of chronic conditions. Based on these patient and physician reports, and with the enactment of health reform, the United States should be able to make significant strides in improving the delivery, coordination, and equity of the health care system in coming years.

* * *

It should, although if the government is in charge of it, as it now appears to be, it won’t.

via Zero Hedge http://ift.tt/1p5P8QC Tyler Durden

via Zero Hedge http://ift.tt/1uSo6JA williambanzai7

Authored by Mark E. Jeftovic, CEO easyDNS Technologies; originally posted at DollarVigilante.com,

Ghandi was once asked, "What do you think about Western Civilization?" to which he famously replied "I think it's a good idea." He may as well have been talking about free market capitalism.

Capital in the 21st Century has hit the world like a new teen idol sensation. Everybody is drinking the Kool-Aid and it's being held up as the most important book ever written on the subject of how runaway capitalism leads to wealth inequality. Paul Krugman of course, loves it. As does every head of state and political hack in the (formerly) free world. A text-book sized brick that can be condensed down to a couple bullet points:

• that unchecked capitalism leads to increasing wealth inequality, and
• this can be fixed through government management, most notably more taxes and higher minimum wages.

What's not to love?

There are many other refutations of Capital circulating, most of which address the numerous factual errors and flawed research methodologies in the book, and countering the income equality assertions with observations around how the standard of living generally increases across the board during periods of free(er) market capitalism (such as England during the industrial revolution under the classical gold standard or wider Europe during the High Middle Ages).

The age we live in today is not an example of this. I submit that the modern run of standard of living increases, say from end of WWII to present is not an example of "free markets given room to run", but rather a crack-up boom fuelled by credit expansion (cheap money) and cheap energy. This era is now drawing to a close, as the cost of energy inexorably rises and the global debt super-cycle finally hits a wall. After decades of government targeted inflation, after the better part of a decade of ZIRP, after increased regulations in every aspect of our lives, after civil liberties being for the most part abolished (after all, the government is allowed to assassinate any one of us and we are all under continuous pervasive surveillance) what is difficult to fathom is that political economists can still make hay in the world by blaming its problems on capitalism gone wild and runaway free markets. Put simply, true capitalism requires free markets, free markets require a free society and we do not live in a free society.

So let's do something different here and accept a core premise of Capital, and say that wealth inequality is increasing, and that it's a bad thing. Where the point is completely missed is in what causes it (ostensibly "free market capitalism") and what to do about it (increase government control, induce more inflation and raise taxes).

The point of this essay is to assert that it is not unchecked capital or runaway free markets that cause increasing wealth inequality, but rather that the underlying monetary system itself is hard-coded by an inner temple of ruling elites in a way which creates that inequality.

We'll see that wealth doesn't "run away" in a logarithmic fashion (perhaps hinted at by Pareto and captured in various "1% memes") but rather can be best visualized as a vortex, like a tornado, or more accurately, a black hole, a centre swirling around a political/monetary/cronyist nexus that sucks wealth into it from the periphery (the rest of society). Society itself is hard-wired to facilitate this in such an entrenched and subtle fashion that we have arrived in a zeitgeist in which the key facets of this system (the nature of money itself) is out-of-scope. It's not even part of the debate because almost everybody in society is oblivious to it's machinations. (This is the reason why in my writings I do not refer to underclass or overclass but rather, the "outer-class" and the inner elites.)

Because the nature of money itself has been so, for lack of a better word, "esotericized", I need to include Stephen Zarlenga's seminal work "The Lost Science of Money" in our expose. While Zarlenga blesses us with an exhaustive study of money and banking practices throughout history, and does a superb job deconstructing the perniciousness of central banking and debt based money systems, he erroneously arrives at conclusions favouring direct government creation of fiat money (he even came out in favour of that whole "Trillion Dollar Coin" idea because to him it signalled a tacit admission that the government doesn't really need the Federal Reserve). However even his arrival at this seemingly (to us) off-base solution tells us something vital about the system within which we are all immersed.

This is what it tells us: if smart, scholarly people happen to believe that government fiat money is both feasible and beneficial to society, and they put serious thought into devising such a system, what they will not come up with is one run by private central banks issuing debt-based money. They just won't. Any critical analysis would grasp that such an architecture would become a parasitic cancer on the entire society. When you realize this, it's hard not to posit a far-reaching conspiracy to institutionalize inequality. While I am a big believer in the maxim "never ascribe to conspiracy what can be explained by stupidy" it to me falls short in this case. When we look at the structure of the entire monetary system and realize that it's the worst way possible to design a such a system if you have the best interests of the wider society in mind then you can't help but ask in whose interests was it designed and implemented?

As such, the system within which we find ourselves seems to be one that isn't designed to be in the best-interest of most of us reading this (and would remain true even if you were inexplicably reading this on Huffington Post, Slate or Business Insider).

If we want to understand where wealth inequality comes from, "The Lost Science of Money" is a good place to start  for two reasons: 1) his book is an exhaustive history of money, even if one disputes some of his takeaways from it) and 2) like many libertarians and an-caps, he understands the pernicious, malignant effect of private central banking. His ideal solutions may not fly (government controlled fiat, because governments will always inflate and debase) but his exposure of the fraud is convincing. Zarlenga's main thesis can be put briefly that the primary arena of human struggle throughout history has been mainly over the monetary control over societies. If Zarlenga had to put it in one sentence, which he did, it would be this one:

"It is by misdefining the nature of money, special interests have often been able to assume control of society's monetary system, and in turn, the society itself". (emphasis added, and you'll see why soon). He broke his book (almost as big as Capital) down into sections, examining that:

• The Main Obstacle is The Mystification of Money
• Monetary History Has Been Ignored
• Monetary History Has Been Censored
• Monetary Data is Often Misinterpreted

All of which is correct and explains why a book like Capital is on the New York Times Best Seller List. The premise that wealth inequality is caused by unchecked capital formation (a.k.a runaway free markets or capitalism gone wild) derives from the biggest misinterpretation of them all. It's not only monetary data that is misinterpreted, it's the entire framework around monetary policy itself which leads to these increasing imbalances. In other words, it is the structure of our monetary system itself which institutionalizes accelerating wealth inequality. Thus, taxation, intentional inflation, credit expansion, money supply injections and central planning all exacerbate income inequality, they do not alleviate it. Pikkety is a political economist (as is Krugman) and Zarlenga calls political economists the "Priesthood of the Bankers." Among the Priesthood I'll again list off Zarlenga's bullet points but this time I'll inject my own interpolation of their meaning in today's climate:

Ideas rule:

Here we mean academic political economists with no real world financial, market or business experience devise elegant theories which look good on a blackboard, will earn them Nobel Prizes and become ensconced into the prevailing orthodoxy of conventional economic thought. Governments can then utilize these theories (or self-serving adaptations of them) to justify monetary polices that enable them to live beyond their means or otherwise further their own interests and those of their cronies.

 

These policies are utterly backwards in that they posit what economic forces should do according to some model, instead of trying to understand what they actually do based on observed results. When you do unleash Nobel laureates with their theoretical constructs on the real world, you don't get "green shoots", you get LTCM.

Economists as propagandists.

Two words: Paul Krugman.

Economics degenerates from the scholastics

Even the untouchable pillar of Keynesianism is a bastardized caricature of what Keynes actually said, which was that governments could smooth out the business cycle by deficit spending during bust years by running surpluses during the boom years. In it's most basic form this just means saving for a rainy day. But governments don't do that, because (as people like Krugman opine) "the government doesn't have to pay it's bills". Thus, it's all deficit spending, all the time. The last US president to actually run a surplus and pay down debt was Eisenhower (the so-called Clinton era surpluses were a sleight-of-hand fiction). The last president to pay off the debt was Andrew Jackson.

Fostering a disdain for the lessons of history

You can look at almost any financial panic, especially over the last hundred years, and you'll see the same thing play out repeatedly.

 

For example, if you go back and look at the S&L crisis and the policy response to it, one is stricken with the similarities between then and now, how nothing was actually resolved in the policy response to S&L, in fact just the contrary, how bad behaviour and incompetence were rewarded instead of allowed to be punished via free enterprise rules of engagement.

 

The pattern is as follows:

•     poor policy, credit expansion, government management of the economy (i.e. housing bubble) and insulation from consequences by special interests (bankers, etc) leads to a panic.
•     government bails out bad actors at public expense
•     massive wealth transfer from public to elites occurs
•     free markets and runaway capitalism blamed
•     additional regulations imposed restricts range of operations of non-elite players while enabling elite cronies to externalize losses
•     additional controls over economy enacted (ZIRP, new regulations, etc)
•     increased government debt (stimulus, etc)
•     next wave crack-up boom induced

The cycle repeats each time ensuing bubble and subsequent meltdown increasing by an order of magnitude. Which brings us to Vincent LoCascio, probably the most under appreciated commentators on our monetary system of this era. If ever there was a pair of "must" read books about what really causes wealth inequality in our society it is his Special Privilege: How the Monetary Elite Benefit… At Your Expense, and The Monetary Elite vs Gold's Honest Discipline.

In Special Privilege,  a chapter entitled "The Recurring Nightmare" enumerates the serial financial panics of the 19th and early 20th centuries (to wit: The Panic of 1819, The Panic of 1837, The Panic of 1857, The Panic of 1873, The Panic of 1893, and the Panic of 1907, whose policy response led in a straight line to The Federal Reserve Act of 1913). LoCascio poses the question "Isn't There A Lesson Here?"

"The 19th century and early 20th century  panics were so uniformly accompanied by the liberal extension of credit for speculative purposes that any serious reviewer of these events could not possibly fail to hypothesize a likely causative relationship.

 

Little if any attention, however, was focused on the role the prior euphoria played in causing the resulting panic. Rather, attention was focused on the panics themselves and the virtually unanimous conclusion by those in position to bring about reform, was the great elasticity of currency would ameliorate, if not eliminate, the panics."

He went on to observe,

"During the 50 years of the National Banking System, currency had increased from roughly  $1 billion to $3 billion –or, by a factor of 3. Bank loans on the other hand, grew from roughly $0.5 billion to $13 billion–or by a factor of 25. This provides a rough numerical measure of the tendency (which continues to this day) that money creation has been tied to debt creation by banks."

LoCascio published Special Privilege in 2001 (he died in 2006), but large swaths of his work could easily be cut and pasted into the aftermath of the Global Financial Crisis and no doubt, will be highly germane during the forthcoming, next crisis. The only difference being that after the next, inevitable (possibly imminent) wave of financial panic, it may be impossible to kick the can down the road yet another time. We may have finally, collectively come to the end of the line on "the great fiat monetization of everything" and be barreling toward the brick wall of unsustainability at the end of the runway.

 

This is what is so maddening about the irony of a book like Capital, chock full of fallacious data and erroneous conclusions makes Pikkety hotter than Justin Bieber, while brilliant historians such as LoCascio die in obscurity. The fact is that financial panic, followed by institutional wealth transfer (and confiscation) is systemically ingrained into what is called "conventional economic thought"

The big question around wealth inequality is this: why does wealth inequality increase as the distance from the nexus of political power increases? Why does wealth concentrate toward the centre? When asked this plainly, the answer becomes just as obvious: because the system is rigged that way.

Because that is wealth inequality in action. When looked at from this angle you are able to see the underlying flawed assumptions that are otherwise considered "out of scope."

Whether you don't believe in a classical gold standard (Zarlenga) or you do (LoCascio), whether you think bitcoin is viable or lunacy, where all these schools of thought intersect is at the point that finds private, fractional central banking a blight on civilization that leads to cronyism oligarchy between banksters, career politicians and corporate/kleptrocrat elites and this is the point that is most vociferously relegated out-of-scope in any kind of dialog around today's central, pressing issues of the time.

As LoCascio predicts,

"The ultimate crisis will occur when the situation is so thoroughly perverted that the defenders of the status quo can no longer resurrect confidence in the system."

What Pikkety has succeeded in is proving that we are not there yet. The propensity of the masses to rally behind this shows that confidence in the system is still long and strong. But what we are seeing are fissures in the logic – not only in books like Capital in the 21st Century but in entirely new and nonsensical economic schools of thought seemingly conjured out of thin air for the sole purpose of justifying and explaining away the otherwise unavoidable distortions and non-sequiturs of our economy (such as Modern Monetary Theory and Modern Monetary Realism – more on those in another post ).

People are still very willing to believe in Unicorn Economics, the emergence of crypto-currencies such as bitcoin point to a widening rejection of that, but it will likely not achieve critical mass until the wheels come off the current system altogether.

Postscript:

As I completed writing this essay, the ECB announced negative interest rates, in other words NIRP. This is sold to the public as a mechanism to spur bank lending to – again – stimulate the economy. What nobody asks is how the financial system can be so distorted, so perverted that policymakers can simultaneously implement negative interest rates while holding on to claims of legitimacy around their ability to "regulate" or "manage" the economy, or that the wider society is actually benefiting from these policies. If you think – and I know some otherwise highly intelligent people who do – that this is just some highly abstract financial smoke and mirrors that doesn't really mean much in the real world, remember where you read this first: when NIRP fails to stimulate lending, the next Big Idea in Unicorn Economics will be to target money velocity and put expiry dates on cash. It's the next logical step once you've entered the Twilight Zone as we have, and that's also what you get when a global monetary system based on perpetually expanding debt approaches the end of the runway. (Or as as Fiat Paper Money author Ralph T Foster put it,  "Reading history is a harmless pastime, reliving it is another matter.")

via Zero Hedge http://ift.tt/1m9dpla Tyler Durden

Perhaps the miserable failure of the bear case on global equities over the past 5 years has more to do with marketing the message than anything actually wrong with the arguments for higher volatility and lower asset prices. As a reminder, ConvergEx’s Nick Colas notes the classic “4 P’s” of marketing are: Product, Price, Promotion, and Place (Distribution), pointing out that when it comes to getting the bear case out, it is clear which component is missing: Price. Stock markets that churn higher – as they do right now – simply make it too expensive to sit out the rally.  The “Product” and “Promotion” are both fine – you can read negative commentary in many reputable places and speak with very intelligent bears. That takes care of “Place” as well; it’s not hard to find cautionary investment opinions. The take-away from this approach is simple: calling the top may not be as hard as you think. The first 10% pullback may be enough to complete the 4 Ps. Until then, however, it’s just too hard a story to sell.

 

 

Via ConvergEx’s Nick Colas,

“Sell me this pen.”  That is one of the oldest interview questions in the book.  I have heard that it goes back to the old International Business Machines hiring process, when that organization was light years ahead in terms of hiring the best and brightest. There are many wrong answers to the question and only one right one, even if it comes in many permutations. Here are some examples:

The “Wolf of Wall Street” smart-alecky answer.  Take the pen from the interviewer and quickly say “Write your name”.  Your counterpart will start to look around for another pen.  You then propose that you have one, and they obviously need it.  Cute, but probably not the answer your prospective employer is looking to hear from a potential hire.

 

The “Rookie” answer.  Most untrained salespeople will look at the pen and launch off into a description of its merits.  “Let me tell you about this pen, ma’am.  It has a lovely feel on the paper, never smears, and my firm guarantees that performance for life!”  This may seem like standard used car salesman fare, mostly because it is.  Bad answer. 

 

The “Right” answer.  You start by asking questions about what the interviewer does with his or her day.  If they are a CEO, do they have occasion to sign important documents in the presence of others?  You go for the high end pen sale, with a second one to give the other party as a toke of the CEO’s esteem. If they are an accountant, focus on keeping costs low with a bulk order.  But in all cases, the right answer involves gathering facts first and selling second.

Just as there are “Right” and “Wrong” ways to sell products and services, the business discipline of marketing has its own rules of the road.  Some of the most durable tenets of the profession come from the pen (no sale needed) of E. Jerome McCarthy, a marketing professor at Michigan State after World War II.  In 1960 he codified the “Four Ps” of marketing – essentially the critical features behind marketing any product or service. In case it has been a few years since you studied them, here they are:

Product.  The item or service that a company wants to sell.

 

Price.  The amount the consumer is willing to pay.

 

Promotion.  How the consumer hears about the product or service.

 

Place (Distribution).  Where the buyers goes to purchase the item.

Now, instead of applying these categories to “Mad Men” style marketing of cars or detergent, think of them as the checklist for a point of view on securities prices.  The Internet and social media have made ideas into consumer goods, after all.  For any product – tangible or not – to succeed it must adhere to a solid strategy and address the “Four P’s” directly and forcefully.

For the last five years, the negative case on risk assets – developed and emerging market equities, corporate debt, even notionally riskless sovereign paper (think Greek or Spanish debt) – has been losing market share to its more sanguine counterpart.  Even investors with a positive view of the global economy will freely admit that things are still pretty weak, whether the metric is economic output or labor market growth.  So why are equities higher, with the S&P 500 hitting a new record just yesterday?  It’s not because things are great.  It is because the “Positive story” about risk is trumping the “Negative story”, exactly as Ford might best Chevy or Frosted Flakes win over Shredded Wheat.

Let’s review the two products – positive and negative takes on risk assets – through the lens of the “Four P’s” of marketing.

Product: At first blush, we’re looking at a red car and a green car.  Positive and negative investment cases are really the same product, albeit with different attributes. Stocks go up, or stocks go down. Bonds rise in price, or decline. Granted, there are a lot of reasons used to support these views in the world of investment analysis – political, economic, social, etc.  But in the end it all comes down to a single call.  Buy ‘em or sell ‘em.  The menu in the cafeteria of modern finance is still quite short: chicken or beef.

 

Price: Thanks to the Internet, a lot of investment opinion is now essentially free.  “And worth every penny”, you might add.  Fair enough, but that obscures a larger truth. The price of investment viewpoints is the opportunity cost of doing something stupid or clever. Making money, or losing it. Follow the right counsel, and you profit. Be led astray, and you lose. The price on the dust jacket of the idea is the least of your worries. 

 

Promotion: Again, thanks to business television and radio, the Internet, old school media, and Web 2.0 social networking, anyone interested in learning more about the capital markets knows where to go.  Seeking Alpha for the mainstream, Zerohedge for the edgy stuff that the cool kids like, and hundreds of sites in between. Buy side and sell side businesses have their own pundits and experts, blogs and press pages. No shortage of promotion in this market, including (of course) this note. 

 

Place: Pretty much like promotion, but since research opinions are so widespread and largely without explicit price, you can find them anywhere.  It’s sort of like the old Anglican hymn: “You can meet them in school, on the street, in the store, in church, by the sea, in the house next door”.  Only that refers to saints, not investment views.

In the end, there isn’t actually much of a difference between the bull and bear case on risk assets – three of the four Ps line up pretty exactly.  The one exception is price, as expressed by opportunity cost.  Go short a market that rises 10%, and you have lost 20% – half from your ill-considered negative bet, and half from not buying the asset in the first place. And this is where the positive case for risk has it all over the negative arguments in the Four P’s comparison. Nothing succeeds like success, and the market share winner of this two product race is the full-throated roar of the optimist.

That doesn’t mean that this will always be the case – far from it.  The positive case for risk hasn’t won the day because of a slew of upside surprises for economic data, corporate earnings, or even benign headlines on geopolitics or energy prices. Corporate earnings are great, no doubt, but reinvestment rates are low as companies buy back stock rather than accelerate the expansions of their businesses.  Labor markets are still punk throughout the developed world, oil prices are the straw that sits on the proverbial camel’s back, and no one can argue that the world is a more peaceful place than a decade ago.

There hasn’t been a pullback in U.S. stocks of more than 10% in 30-odd months, and in that fact sits an important reason why the rally has continued.  I am not sure that the +5 year bull market for stocks could actually withstand a 10% correction, especially a quick flush lower.  Remember – the only real differentiator between the bullish and bearish “Product” is cost. Specifically, opportunity cost. Once the negative case begins to pay off, it could begin to gain the advantage with market participants and cause a deeper selloff.  Which will make it even more popular.

Either way, you’ll probably need a pen to write your thoughts. Can I interest you in this one?

via Zero Hedge http://ift.tt/1p4sLuL Tyler Durden

By: Brad Thomas and Chris Tell at: http://ift.tt/146186R

Our friend and colleague Harris Kupperman recently wrote an article about Kashagan and the massive delays being enjoyed by this particular project. The problem is that Kashagan is a poster child for the sector as a whole. This isn’t an anomaly.

Let me copy a few key paragraphs from his article:

Ever since oil prices bottomed in 2002, people have wanted to believe that new supply would reduce prices. Over the past decade, they’ve talked about increased Iraqi and Libyan oil; there has been the promise of tar sands and Brazilian pre-salts and now they’re talking about shale oil. Yet, despite all of this talk, world oil production has plateaued for years.

 

The simple truth is that much of the world’s easy oil has now been exploited. The world isn’t running out of oil any time soon, but we will need much higher prices to bring new supply online.

The oil industry is not dissimilar to large scale infrastructure, something I will never invest in for all the reasons I laid out here.

Further evidence of just how easily things go wrong in this industry landed in my inbox a few weeks ago from a friend, who is a technology expert working on an oil and gas deal.

Chris,

 

I’m working on an oil/gas field project these days. That industry has an amazing amount of waste – recently a series of shale oil wells were dug with pipe measured (manually) by a tape measure with 3″ of the length project off – no one noticed. So all of these pieces of the well pipe were 3 inches short and thus the assemblies for 11 different wells came up short. In all cases, bits didn’t make the end so all the wells had to be filled with concrete and started over.

A $100 tape measure cost $100M in damage with almost a month in delays, pulling bits back out of the wells, concreting them, starting over etc.

Yikes!

Laugh, or cry, this sort of situation, while anecdotal shows us the immense numbers involved and when something goes wrong it costs a HUGE amount of capital.

The reality is that the industry has failed to bring on increased supply and while in the short term fundamentals don’t matter a jot in a central banker liquidity driven world, in the long term they ALWAYS matter.

Harris goes on to discuss the fundamentals…

Just look at how complex the problems related to these mega-projects are—mistakes in engineering can cost tens of millions and delay billions in cash flow. With oil at $100 a barrel, prices just aren’t high enough to justify the investment in many of these projects. At the same time, investors are learning that shale oil wells have higher decline curves than expected, which substantially reduces the economics on many of these projects.

 

Over the past few months, I’ve heard some very smart people speculate that oil prices will decline as new supply comes online—mainly related to shale oil. This just isn’t the case. If prices decline, it won’t be on the supply side—it will be demand related.

 

The oil bull market started over a decade ago and is a trend that you can bet on for decades into the future. Every time a Kashagan gets deferred by two years, it will force producers to re-assess their oil price assumptions for investment, and possibly choose not to make the investment. Don’t let people convince you that oil prices are going lower, they aren’t—they’re likely going much higher. If someone wants proof of this, have them do a bit of reading about the decade-long fiasco named Kashagan.

Even without Iraq descending into a civil war, the fundamentals for oil going higher are hard to ignore. Brad Thomas and I have made a habit of catching up on the markets on a weekly basis and so it was with interest that, when I rang him up this week and said something along the lines of “what’s the topic this week?” he immediately responded… oil.

Brad’s rationale is driven from his trading strategy which is “finding deep value situations with an asymmetric payoff”. Brad mentioned how so many times over the decades of trading the markets he’s been down 50% or more on a trade with years to run to expiry and has ultimately made out like a gangster with a bad rap song and millions of Twitter followers.

Specifically, Brad looks for low volatility coupled with very favorable fundamentals and his alert to subscribers this week he just bought a large oil company with 2 years to expiration. I’ve excerpted a small portion of his rationale…

All the recent talk about crude moving higher due to problems in Iraq/Ukraine is very misleading. For the last three years something has been brewing with crude. Its trading range has been narrowing and it appears to be set to break to the upside. Considering that crude has essentially gone nowhere for some 4 years, the upside is likely to surprise most, perhaps to a magnitude that will rival what happened in early 2008!

Take a look at crude – seems this sucker is about to blast into the stratosphere! We can see the base being built over the last 3 years. These formations typically break either up or down and given the fundamentals discussed I don’t want to be short.

Brad then goes further to explain what makes for the asymmetry in the trade…

Few, if any, are expecting a dramatic move higher in the price of crude. I say this because volatility on long term call options on the big oilers is being sold at record low levels, and materially lower than it was being sold in 2007 prior to the price of crude doubling in some 12 months. If it was expected that crude would move materially higher over the coming months, then volatility certainly wouldn’t be sold at such low levels.

Both Harris and Brad are two of the most knowledgeable traders I know, and both believe we should be looking at this sector right now. I’d love to know your thoughts. Send them to us here and as a shameless plug, I recommend you take advantage of Brad’s 30 years of trading experience for less than the cost of your morning latte.

– Chris, Brad and the team

 

“A century ago, petroleum – what we call oil – was just an obscure commodity; today it is almost as vital to human existence as water.” – James Buchan

via Zero Hedge http://ift.tt/1iY64Ap Capitalist Exploits

The bodies of hundreds of undocumented immigrants who died (usually from exposure in the 100-degree-plus heat) while crossing the Texas-Mexico border over the last few years have been discovered in mass graves in a South Texas cemetery, with remains found in trash bags, shopping bags, body bags, or no containers at all, according to The Corpus Christi Caller Times. The bodies are believed to have been buried by a local funeral home since 2005 in the Sacred Heart Burial Park in Brooks County. County officials said they paid the local funeral home $450 per body to handle the bodies (after officials discovered them in brush country) and County Judge Raul Ramirez said that was the practice for at least 16 years. "To me it’s just as shocking as the mass grave that you would picture in your head, and it’s just as disrespectful," exclaimed one of the discoverers, and Democratic state Sen. Juan “Chuy” Hinojosa called for the district’s attorney general to open a criminal investigation as "this is too serious of a wrongdoing."

 

 

The Corpus Christi Caller Times (CCCT) reports,

unidentified migrants who died entering the United States were buried in mass graves in a South Texas cemetery, with remains found in trash bags, shopping bags, body bags, or no containers at all, researchers discovered.

 

 

“To me it’s just as shocking as the mass grave that you would picture in your head, and it’s just as disrespectful,” said Krista Latham, a forensic anthropologist at the University of Indianapolis.

 

Bodies that were not already skeletonized before burial were found in varying states of decomposition, Baker said.

 

The bodies are believed to have been buried by a local funeral home since 2005 in the Sacred Heart Burial Park in Brooks County.

It appears this was policy…

County officials said they paid the local funeral home, Funeraria del Angel Howard-Williams to handle the bodies after sheriff’s officials recovered them from the brush country.

 

County Judge Raul Ramirez said that was the practice for at least 16 years.

 

The funeral home currently charges $450 to handle each body, Brooks County Chief Deputy Benny Martinez said.

But the circumstances are horrific,

A kitchen garbage bag containing bones was tucked inside a gift bag emblazoned with a logo featuring the word “Dignity,”

 

 

In one burial, bones of three bodies were inside one body bag. In another instance, at least five people in body bags and smaller plastic bags were piled on top of each other, Baylor University anthropologist Lori Baker said.

 

Skulls were found in biohazard bags — like the red plastic bags in receptacles at doctors’ offices — placed between coffins.

 

A funeral home official declined to comment, instead referring questions to McDunn.

As CCCT concludes,

The mass graves are yet another sign of U.S. immigration systems and policies overwhelmed by sheer numbers, and of their difficulty coping with the humanitarian aspects of illegal migration. Since October, the nation has struggled to house and process record numbers of minors fleeing civil and political unrest in Central America, many traveling alone. Migrants from Central America travel north along freight train lines in Mexico, leading to the Rio Grande Valley in Texas and on to Brooks County.

via Zero Hedge http://ift.tt/1iY5YJ1 Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

This is a fascinating development and one that I had no idea was happening until today. It seems that rallies are spreading throughout Germany protesting the corrupt and dying global status quo. One of the key targets of these groups is the U.S. Federal Reserve system, which as I and many others have maintained, is the core cancer infecting the entire planet.

As I tweeted earlier today:

 

As I have said many times before, future generations will look back at Central Banking as we look back at slavery.

— Michael Krieger (@LibertyBlitz) June 19, 2014

 

According to the organizer of these rallies, they have now spread to up to 100 cities and have a combined attendee base of around 20,000. What is also interesting, is that the mainstream media in Germany is calling them Nazis. In Germany, if you don’t support Central Banking, this apparently means you are a Nazi. What a joke. Just more proof mainstream media everywhere is complete and total propaganda. It is also a good sign, since it shows the desperate lengths to which the power structure will go to keep their criminal ponzi alive.

Do these folks seem like Nazis to you?

 

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

The vicious circle of central-bank inspired low volatility begetting increasing fragility (instead of 2004-2007’s virtuous circle) is nowhere more clear that in the collapse of alpha generation opportunities and the implicit capitulation of every hedge fund, retail investor, and Goldman muppet to be all-in on stocks. Removing collateral, gating bond funds, and constant warnings that they bonds (not stocks) may be frothy has done nothing but herd an ever more brainwashed investing public into an ever more concentrated ownership of stocks. This, as Citi’s Matt King explains, has distorted markets to no longer follow fundamentals (no matter what you are pitched on TV or by your broker).

 

Risk ‘not taken’ emerges one way or another

If alpha is all but impossible…

 

Then funds will take beta instead…

Funds have not been this balls deep long beta in stocks since the top in 2007

Evan though markets are entirely disconnected from fundamentals…

 

And furthermore, while macro data has moderated, surprise have not – leaving (as we explained in great detail here) the fall in market vol outsripping the moderation in uncertainty dramatically…

 

But Consensus trades have started to crack…

 

The bottom line – there is no Alpha, everyone is all-in Beta, and consensus is now so one-sided that Contagion is inevitable if any event occurs to rattle market’s faith in the omnipotent ones (like a gold spike).

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