Tag: news

Submitted by David Stockman of Contra Corner blog,

The only thing that can be said about Janet Yellen’s simple-minded paint-by-the-numbers performance yesterday is that the Keynesian apotheosis is complete. American capitalism and all political life, too, is now ruled by a 12-member monetary politburo, which is essentially accountable to no one except its own misbegotten doctrine that prosperity flows from the end of a printing press.

To be sure, this non-sensical and historically disproven proposition gets all gussied up in neo-Keynesian Fed-speak about dual mandates, monetary support to aggregate demand, “slack” in labor markets and remaining shortfalls from potential GDP, among endless like and similar jargon. But it did not take long during yesterday’s presser to reveal that Yellen’s mind dwells completely in a circular puzzle palace.

For once she got a decent question or two, but answered by lapsing instantly into ritual incantation about the macro-cycle the Fed pretends to be superintending. Thus, when asked about the tepid rate of business investment in future productivity and growth, the answer was: Right, that’s why we need ZIRP for longer!  That is, until we can inflate the GDP tire by monetary accommodation, expect CapEx to run flat.

Heavens to Betsy Janet!  CapEx has been running flat for 14 years. The compound growth rate of real plant and equipment spending is less than 1% since 2000 and is still 5% below its 2007 interim peak. There is nothing remotely this dismal during any extended period in modern history.

Likewise, with the structural unemployment and labor force drop-out problem. This has been building for 14 years as documented by the fact that there are now 102 million persons in the working age population who do not have jobs compared to 75 million back in 2000 when the maestro was being hailed for his monetary policy genius.

And no, Janet, these 27 million did not move to a golf course community in Florida for a much deserved and pleasurable retirement. In fact, there are only 7 million more people on OASI retirement today than there were 14 years ago. So don’t dismiss the graph below as representing retirement as normal; its actually an indictment of the Fed’s manic money printing during the interim.

The monetary politburo has been pushing on an employment string for more than a decade, but this is not a cyclical problem. We have a debt-saturated failing economy that is not generating genuine growth, jobs or earned household incomes. Yet the Cool-Aid drinkers in the Eccles Building seem to think that a vast population (at least 30-40 million) that has moved onto food stamps and disability, or into mom and dad’s basement, or onto the student loan bonanza at on-line colleges, or on to the streets is just waiting for “lower for longer” to work it magic.

In fact, Yellen’s lame answer to the chart below was “Its conceivable there has been some permanent damage”.  Indeed.

Never mind. Yellen has a hockey stick embodied in the Fed’s DSGE model that always predicts a return to the full employment GDP path 2-5 years down the road. And by the internal logic of this misbegotten model—which is only a vast set of discredited regression equations and data that embody the Neo-Keynesian world view—-all economic performance problems cure themselves after the Fed has gotten “aggregate demand” re-aligned with its theoretical full employment path. Its one-decision economic levitation writ large.

Except….except… it should be damn obvious after five years of what can only be described relative to all prior history as lunatic monetary expansion—that this mysterious Keynesian ether called “aggregate demand” is not realigning with the postulated full employment path of GDP embedded in the DSGE. That much is blatantly evident in yesterday’s markdown of its estimates for 2014 GDP to take account of the -2% hole in Q1 results.

So as recently as early 2012, the Fed was confidently predicting “escape velocity” would be in full force by 2014, with GDP growth accelerating to 4% and thereby representing the catch-up phase of the macro-cycle. That “above trend” performance, in turn, would bring the nirvana of full employment a few more years down the road. Until then, “unusually accommodative “policy would be warranted.

Well, here we are in 2014 and there is no escape velocity in sight despite roughly $1.8 trillion of bond-buying in the interim, and the GDP forecast is drastically marked down to the 2.1-2.3% range.  Was there any detailed explanation for this stunning repudiation of everything the Fed has predicted for meeting after meeting. Nope! Nothing but the passing of winter, which does come every year, even if this one was somewhat harsher than normal.

But if ZIRP and QE were working, the lost GDP due to snow and cold should be quickly recovered during the balance of 2014. Why did the Fed not upgrade its remainder of the year forecast to 6.0%/quarter to get back to its 4% annualized escape velocity?  After all, virtually every one of the barriers that it blamed for the tepid recovery to date back in 2012 have now been overcome.

Back then it blamed fiscal drag.  But the Obama White House has noisily pointed out that in the interim we’ve had the largest reduction in the Federal deficit ever recorded—-even if it still has clocked in at nearly $500 trillion so far this year. So on the fiscal drag front, we’re there. Check!

Then there was the household deleveraging matter. But we’re there, too. Aggregate household debt finally blipped up in the first quarter after years of decline. Even credit card debt recently got a boost.  So, check, there too.

And what about global growth and the US export recovery?  That one has to be an automatic, postulated…. check, check. Every major central bank in the world still has its shoulder to the wheel of extraordinary accommodation. The BOJ is literally printing itself silly and will soon have a balance sheet of nearly 50% of GDP; the ECB is diving into the monetary nether world of negative deposit rates and back-door money-printing on a vast scale; and the red capitalist overlords in China can’t keep their hands off the RMB print button, even as they fret about the monumental Ponzi rising up all about them. So, yes, check, global growth has to happen.

And never mind the graph below which documents the preposterous deflation of the Fed’s 2014 forecast. You heard Yellen’s words yesterday. No problem!  Escape velocity has been rescheduled for 2015 and 2016. Check.

But here’s the point. If you are not wearing Keynesian blinders, it is self-evident that the $3.5 trillion expansion of the Fed’s balance sheet since September 2008 has all gone into the reflation of financial assets—a staggering gift to speculators and the small portion of households (10%) which own more than 80% of all financial assets. The reason for this diversion of the Fed’s vaunted “extraordinary accommodation” into windfall gifts to the 1% is that the historic “credit expansion channel” of monetary policy transmission is broken and done.

We are at “peak debt” folks. Household debt normally amounted to about 75% of wage and salary income back in the prosperous days before we launched into monetary central planning in 1971.  But after a 40 year parabolic ratchet to a peak of 220% in 2007, the one time credit fueled boost to household consumption is done. Indeed, the household debt ratio is still at a precarious 180% of GDP, and that’s only on average and therefore only part of the story.

Household Leverage Ratio – Click to enlarge

Take out the top 10% of households with their vastly, if temporarily, inflated financial asset troves, and the bottom 30% who live hand to mouth at Wal-Marts and can’t carry any debt except pay-day loans, and it is obvious that there has been no material deleveraging. The middle class core of main street households are still laboring under a crushing load of debt—so zero percent interest rates until the cows come home will not enable or induce them to borrow.

And on the business side of the peak debt story, the picture is now even worse. Non-financial business debt has grown from $11 trillion on the eve of the financial crisis to nearly $14 trillion at present. But this staggering gain of $3 trillion or 25% has not gone into incremental investment in plant and equipment—that is, the building blocks of future productivity and sustainable economic growth. Instead, and just like during the prior Greenspan housing bubble, it has gone into financial engineering and rank speculation.

Tower of Business Debt – Click to enlarge

That is the explanation for record stock buybacks and the resurgence of mindless M&A deals (globally we just had the first $1 trillion M&A quarter since Q3 2007). These deals are overwhelmingly nothing more than a vast expansion of cheap leverage being used to liquidate target company stock, and which are so lacking in business logic that they will surely be unwound to the tune of vast “one-time” write-offs in the years ahead.

What is at record 2007 peak levels is not loans to main street businesses—most of which do not need funding or are not credit worthy. Instead, the recently heralded growth in bank lending has gone into leveraged buyouts and dividend recaps.

Indeed, credit is flowing every which-way into the Wall Street casino including sub-prime auto junk funds, double-leveraged CLOs, massive junk bond issuance at the lowest rates and spreads ever and “cov lite” loan issuance at rates even higher than 2007. But according to Yellen, “our models” show no indications of bubbles or over-valuation.

Yes, with the Russell 2000 at 85X reported earnings there is no over-valuation. Likewise, S&P 500 reported LTM earnings in Q1 clocked in a $105 per share, meaning the broad market was trading at 18.7X as she spoke. Incidentally, that multiple of the kind of GAAP earnings that they put you in jail for lying about is higher than 86% of the monthly observations in in modern history, and actually higher than 95% if you take out the years of Greenspan’s lunatic dot-com bubble.

Worse still, those $105 of earnings have crept up by only 5% annually since later 2011— during a period in which the stock index has risen by nearly 60%. Yet the current $105 earnings number is also bloated with unsustainable interest subsidies on upwards of $3 trillion of S&P company debt owing to the Fed’s financial repression which is eventually to end; is festooned with tax rate gimmickry that is finally stimulating a Washington revulsion; and is flattered with earnings translation gains that are going to reverse as the ECB puts the kibosh on the Euro.

Yet in the face of all this, her is the Yellen money quote:

“I don’t see a broad based increase in leverage, rapid increase in credit growth or maturity transformation.”

OK, we are nearly at record levels of margin debt against GDP and the former is callable, meaning that it has an effective duration of zero. But no maturity transformation there. Likewise, the US treasury has massively pushed its outstandings to the front end of the curve, yet there is nothing unusual going on there, either.  And what does Yellen suppose the massive explosion of ETFs and options trading during the Bernanke-Yellen bubble inflation is? Well, its all callable money with a half-life of zero when the crunch comes.

So no bubbles—just endless Keynesian babble. On the question of resurgent inflation asked by court jester Steve Leisman, for example, Yellen dismissed his observation that the CPI is already running above target by noting “the data we’re seeing is noisy”.

But that was only half the noise. Later Yellen noted that the Fed’s favorite non-price index, the PCE deflator, is still running well below target and that the Fed would not be satisfied until it hit 2% and stayed there.  Well, let’s see. For the last 17 years the PCE deflator has run a full 0.5% behind the CPI, which medicated as it is, does measuring some of the gain in living costs. So apparently, the long run CPI target is 2.5%, and even that’s not the whole story.

As the table below shows, the cost of things that people really buy has run well ahead of the CPI for the last 14 years. The monetary politburo apparently means, therefore, that it will keep printing and accommodating— even if the actual cost of living on main street is rising by 4-5% annually. Or to put it in the sage context of Paul Volcker’s comment about the arbitrary 2% inflation target in the first place, the Fed’s implicit inflation target implies that a worker’s savings will be cut by 70% over the course of a 30-year working lifetime. But then why should people save, anyway. The Fed has now signaled for most of this century that it intends to punish any citizen who does not spend all he gets and all she can borrow, too.

What Inflation Shortfall?

But then we get to the rotten heart of the matter, and the everlasting blame that should be assigned to the two Bush presidencies—-12 years of alleged “conservative” economic governance that actually implanted the Keynesian curse now upon us. Namely, the “dot plot”, and folks its just that. Namely, its an emerging bit of pure intellectual gibberish with respect to the so-called “neutral federal funds” rate that if adhered to would keep Wall Street speculators in zero-cost trading stakes for time immemorial.

For several years now there was a constant refrain from the Eccles Building that as soon as its dual mandate targets were securely in sight or hand, that the funds rate would be lifted back to its alleged neutral level of 4%–representing the math of 2% inflation plus the 2% real rate that was decreed 20 years ago. The author of that thoroughly destructive rule was a crypto-Keynesian economist by the name of John Taylor, who had managed to implant himself in high economic positions at the Treasury and CEA during the George H.W. Bush Administration.

Needless to say, the so-called Taylor Rule is anti-capitalist to its core because it denies the free market the essential task of price discovery on the single most important price there is—namely, the price of carry in the money markets and therefore the price of leveraged speculation. After three bubbles in two decades that should be obvious enough.

But no matter. The Taylor Rule is the foundation of our current regime of Keynesian central banking. As Jim Grant has so succinctly explained it, it establishes the rule of price administration by the state in place of price discovery by the market.  Yet once that line of demarcation was crossed early in the Greenspan era it was Katie-bar-the door. With government policy apparatchiks in charge of pricing money, debt and indirectly all risk assets which are inherently valued based in cap rates and yield curves established by the central bank, there would always be a vast potential for mission creep and re-definition of the Rule.

Indeed, Professor Taylor, who was himself a life-long policy apparatchik and had hung around the White House, Treasury and think tanks, was the very archetype of the power-hungry bureaucrats who subsequently took his Rule and ran with it. Apparently, the good professor was trying to solve Milton Friedman’s quantity rule, which had become an laughing-stock during the 1980s, with his own selfie called the Taylor Rule.

But the Taylor Rule is much worse and far more statist than Friedman’s. It’s just flat-out price administration, and it’s content was not all the scientific razz-matazz it was cracked up to be. The proceeding decades of history which he claimed to have based his Rule on were not a timeless clock of business cycles that could be weighed, averaged and regressed upon a mean. Instead, Taylor’s test period was a historically unique and aberrant trip into a regime of bad money that incepted in the mid-1960s and was interrupted only briefly by the Volcker interregnum—a period in which an inflation fevered economy was largely cured, but under conditions in which the Taylor Rule would have been a menacing excuse for accommodation.

In short, after the travesty of the Great Inflation during the 1970s and the free ride given to nearly $2 trillion of deficits during the Reagan-Bush period we desperately needed to get back to sound money based on an external anchor like gold—-a standard which would discipline the monetary politburo, not enable it to run the printing press at will. As is now becoming evident as the Taylor Rule prepares to be gutted by the current inhabitants of the Eccles Building, the good professor is second only to Alan Greenspan in the gallery of villains who paved the way toward the present Keynesian apotheosis—which is to say, destruction of free market capitalism as we have known it.

For what is now going down is a accelerating crawl toward a re-tailored funds neutrality rule at 2%.  It is already being promoted as the new abnormal by Wall Street gamblers, and especially the larcenous front-runners who operate PIMCO. The reasoning is that with 2% inflation given by policy writ, the “real” neutral rate should remain at zero indefinitely, and here’s the reason why: Namely, that the US economy is too weak to hold-up the vastly inflated trillions of debt and equity that have been priced under a regime of zero-cost carry. Stated differently, we dare not risk a recession owing to interest rate normalization—least PIMCO and most of its hedge fund bretherns will be instantly put out of business as the Wall Street house of cards craters.

Already, the dot-plot is heading toward 2%, and the theory is that it would stay there will beyond the 2017-2018 milestone where DSGE model says we will reach the Fed’s targets. Could anyone have imagined zero or negative real interest rates for a decade running even as late of 1990 when some folk memory of sound traditions still existed?

In fact, they were quashed once and for all by the Bush White Houses.  Another huge villain in the piece is Michael Boskin, the Bush 1.0 CEA head who lead the commission that attempted to define inflation out of existence, and thereby remove the last folk restraint on the Fed’s resort to the printing press. All of the mechanisms which drastically dilute the CPI—hedonic adjustments, geometric means, frequent least-cost product substitution are all on his plate–even if Boskin’s real purpose was to cheat old people out of their full COLA adjustment.

But obviously what has happened, instead, is that the American people have been jipped out of sound money and the value of their savings. Good going, Michael.

And then we get to the depredations of Bush 2.0, but only one needs a reminder. Bernanke’s published work, as thin and derivative as it is, was there in plain sight when he was drafted for the Fed by Karl Rove and the Bush 2.0  gang of political hacks.

They could not read his comments about the Fed’s printing press?  They could not detect the obvious Keynesian bias of the demand-side model that suffused his writings. For all their Reagan worship, they did not know that the Bernanke view of the world was something that the Gipper actually understood, and thoroughly detested. They did not recall that even Ronald Reagan understood that an activist Fed would eventually lead to the evisceration of free market capitalism?

The worst thing is that this out-and-out Keynesian in their midst got two more promotions–to the CEA in 2005 and to head the Fed in 2006. And the last one was fatal. It placed this phony scholar of the 1930s—-the professor who had won his PhD from Stanley Fischer by essentially xeroxing Milton Friedman’s drastically erroneous claim that the Fed’s failure to go on a bond buying spree during 1930-1932 was the cause of the Great Depression—in the catbirds seat when the second Greenspan Bubble came crashing down in September 2008.

Yet there was never any Great Depression 2.0 in sight, as I have documented thoroughly in my book, The Great Deformation: The Corruption of Capitalism In America.

As we now embark upon the apotheosis of Keynesianism it can be well and truly said that the conservative party in America brought this baleful condition to its present estate. First, with Nixon’s abominations at Camp David in August 1971; and then with the horrid economic legacy of the Bushes who brought the Keynesian destroyers to the killing rooms of the Eccles Building.

via Zero Hedge http://ift.tt/1uI83OD Tyler Durden

Following the initial de-dollarization meeting, there has been a slew of anti-dollar moves around the world (including Gazprom’s shift of 90% of its clients to non-dollar payments). However, on the heels of the “anti-dollar alliance” discussions yesterday, DW reports that China would start direct trade between the renminbi and the British pound on Thursday. China’s Foreign Exchange Trade System (CFETS) confirmed Sterling and yuan would be directly swapped without using the US dollar as an intermediary.

Via DW,

China’s Foreign Exchange Trade System (CFETS) said Wednesday the Asian nation would start direct trade between the renminbi and the British pound on Thursday.

 

Sterling and yuan would be directly swapped without using the US dollar as an intermediary, the trade platform noted.

 

“The move will promote the bilateral trade and investment between China and the United Kingdom and facilitate the use of renminbi and pound in the cross-border trade settlement,” CFETS commented.

 

China has long had direct currency trade with the US and has recently added Japan’s yen, the Australian, New Zealand and Canadian dollars, Russia’s ruble and the Malaysian ringgit to its options.

 

Wednesday’s announcement came during a visit to the UK by China’s Prime Minister Li Keqiang and after the signing of various bilateral business contracts.

 

Britain for its part has been looking to make London a European hub for overseas yuan trading in competition with Frankfurt and Paris. China’s central bank announced Wednesday that a subsidiary of China Construction Bank had been chosen to undertake yuan clearing business in London.

Still – there’s always Iraq to trade USDs with…

via Zero Hedge http://ift.tt/1uI85Ge Tyler Durden

Submitted by Michael Snyder of The Economic Collapse blog,

War, famine, mass extinctions and devastating plagues – all of these are coming unless some kind of miraculous solution is found to the world's rapidly growing water crisis.  By the year 2030, the global demand for water will exceed the global supply of water by an astounding 40 percent according to one very disturbing U.S. government report.  As you read this article, lakes, rivers, streams and aquifers are steadily drying up all over the planet.  The lack of global water could potentially be enough to bring about a worldwide economic collapse all by itself if nothing is done because no society can function without water.  Just try to live a single day without using any water some time.  You will quickly realize how difficult it is.  Fresh water is the single most important natural resource on the planet, and we are very rapidly running out of it.  The following are 25 shocking facts about the Earth's dwindling water resources that everyone should know…

#1 Right now, 1.6 billion people live in areas of the world that are facing "absolute water scarcity".

#2 Global water use has quadrupled over the past 100 years and continues to rise rapidly.

#3 One recent study found that a third of all global corn crops are facing "water stress".

#4 A child dies from a water-related disease every 15 seconds.

#5 By 2025, two-thirds of the population of Earth will "be living under water stressed conditions".

#6 Due to a lack of water, Chinese food imports now require more land than the entire state of California.

#7 At this point, the amount of water that China imports is already greater than the amount of oil that the United States imports.

#8 Approximately 80 percent of the major rivers in China have become so polluted that they no longer support any aquatic life at all.

#9 The Great Lakes hold about 21 percent of the total supply of fresh water in the entire world, but Barack Obama is allowing water from those lakes "to be drained, bottled and shipped to China" at a frightening pace.

#10 It is being projected that India will essentially "run out of water" by the year 2050.

#11 It has been estimated that 75 percent of all surface water in India has been heavily contaminated by human or agricultural waste.

#12 In the Middle East, the flow of water in the Jordan River is down to only 2 percent of its historic rate.

#13 Due to a lack of water, Saudi Arabia has essentially given up on trying to grow wheat and will be 100 percent dependent on wheat imports by the year 2016.

#14 Of the 60 million people added to the major cities of the world every year, the vast majority of them live in deeply impoverished areas that have no sanitation facilities whatsoever.

#15 Nearly the entire southwestern United States is experiencing drought conditions as you read this article.  It has been this way for most of the past several years.

#16 Thanks in part to the seemingly endless drought, the price index for meat, poultry, fish, and eggs in the U.S. just hit a new all-time high.

#17 As underground aquifers are relentlessly drained in California, some areas of the San Joaquin Valley are sinking by 11 inches a year.

#18 It is being projected that Lake Mead has a 50 percent chance of running dry by the year 2025.

#19 Most Americans don't realize this, but the once mighty Colorado River has become so depleted that it no longer runs all the way to the ocean.

#20 According to the U.S. Geological Survey, "a volume equivalent to two-thirds of the water in Lake Erie" has been permanently drained from the Ogallala Aquifer since 1940, and it is currently being drained at a rate of approximately 800 gallons per minute.

#21 Once upon a time, the Ogallala Aquifer had an average depth of approximately 240 feet, but today the average depth is just 80 feet. In some areas of Texas, the water is already completely gone.

#22 Approximately 40 percent of all rivers and approximately 46 percent of all lakes in the United States have become so polluted that they are are no longer fit for human use.

#23 Because of the high cost and the inefficient use of energy, desalination is not considered to be a widely feasible solution to our water problems at this time…

The largest desalination plant in the Western Hemisphere is currently under construction in Carlsbad in San Diego County at great expense. The price tag: $1 billion.

Right now, San Diego is almost totally dependent on imported water from Sierra snowmelt and the Colorado River. When the desalination plant comes online in 2016, it will produce 50 million gallons per day, enough to offset just 7 percent of the county’s water usage. That’s a huge bill for not very much additional water.

#24 We have filled the North Pacific Ocean with 100 million tons of plastic, and this is starting to have a very serious affect on the marine food chain.  Ultimately, this could mean a lot less food available from the Pacific Ocean for humans.

#25 One very shocking U.S. government report concluded that the global demand for water will exceed the global supply of water by 40 percent by the year 2030.

Sadly, most Americans are not going to take this report seriously because they can still turn on their taps and get as much fresh water as they want.

For generations, we have been able to take our seemingly endless supplies of fresh water completely for granted, but things have now changed.

We are heading into a horrendous water crisis unlike anything that the world has ever experienced before, and right now there do not seem to be any large scale solutions capable of addressing this crisis.

Hundreds of millions of people living in North Africa, the Middle East, India and parts of China already deal with severe water shortages as part of their daily lives.

But this is just the beginning.

If nothing is done, the lack of fresh water will eventually be deeply felt by nearly everyone on the entire planet.

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

“It’s for your own good, remember.” As Bloomberg reports, based on a study showing the “stunning effectiveness of kill switches,” Google and Microsoft have agreed to NY AG Schneidermann’s calls that such ‘security measures’ be incorporated in all new Android and Windows phones (following Apple’s inclusion in September). With Android phones making up 80.2% of global shipments this year, “control” will be pleased…

Via Bloomberg,

Google and Microsoft will incorporate a “kill switch” into the next versions of their smartphone operating systems as evidence mounts that such security measures may be deterring theft, the New York attorney general’s office said.

 

Mobile phone technology companies have faced pressure from public officials during the past year to add mechanisms to allow smartphone owners to disable the devices if they are lost or stolen, limiting their resale potential.

 

More than 30 percent of robberies in major cities involve mobile phones, with some instances of theft also including violence, according to the Federal Communications Commission. Following Apple Inc. (AAPL)’s release of a kill switch in September, thefts of iPhones in some cities “plummeted,” said New York Attorney General Eric Schneiderman, who helped start a law enforcement coalition aimed at addressing the thefts.

 

The Secure Our Smartphones Initiative group said in a report today that robberies involving Apple products in New York dropped 19 percent in the first five months of 2014 compared with the same period last year. In San Francisco and London, robberies involving Apple products dropped 38 percent and 24 percent, respectively, according to Schneiderman’s office.

 

“The statistics released today illustrate the stunning effectiveness of kill switches and the commitments of Google and Microsoft are giant steps toward consumer safety,” Schneiderman said in a statement.

We are sure this is well intentioned… but worry of the unintended consequences (hackers able to entirely kill phones) and of course the libertarian perspective where ‘control’ is given to TPTB… how many more police violence cellphone clips? Turkey killed Twitter, why not kill all phones for a weekend?

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

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

My recent post “It’s over!” stirred up a lot of emotions. I received many thoughtful replies commending me on it, and quite a few others threatening me and wishing me bodily harm, disease, death or a job at the TSA. I’m not sure which would be worse…?

In that piece I discussed how angry people become when they are faced with facts which are disruptive to their lifestyle. Boy, was I right! It’s completely understandable, actually.

Here is just one of the comments I received on the website:

“…Do I care if Joey, a “local” in some developed world country loses his job to Jacindra in Manila? No…”

F^#k you. Piece of sh*t globalist.

My response to this gentleman:

You suffer from the misguided view that by sheer accident of birth you’re somehow entitled to a better life than some other human being on the other side of the world, who is prepared to work harder, longer and for less money than you in order to feed his/her family.

I treat all people with equal respect and dignity. It is the transfer of resources, capital and know how that has made the world a far wealthier place, not the hindrance of such. You are one of those unfortunate people who believes that stifling this process somehow makes for a good case. That belief can only be a result of you being in a privileged position that is under threat. As I said, I’m not giving advice, I’m simply stating the facts. You can choose to do with them what you will.

Let me be clear, I wrote that post with sympathy to those who have already faced redundancies, struggled with mounting bills, a lack of education, and many of the other challenges facing individuals the world over in both developed and emerging economies.

First and foremost, the colour of ones skin, their “nationality” and their current status in life are not criteria one should use to consider a person’s worth. The world is incredibly unequal, but that should be no reason to follow our political leaders down the collectivist path.

Unfortunately, it is too easy to gull the pack; it just takes a little bit of theater, flags flapping in the wind, a brass band and a “strong” leader. Wow, what a sense of collectivist power. “We” the politicians favoured “inclusive” word, assures there exists a “them”. This is how trade barriers are erected, this is how troops go to war. Thump, thump to the steady drum and soldiers boots. What an intoxicating thing. Always the herd. It’s a very dangerous thing.

When a steam roller is coming down the road you are best to step aside before getting squashed, because squashed you will be. Technology is such a steam-roller. It always has been and it likely always will be.

Being pro-active rather than re-active is a far smarter strategy, because no amount of declaring that the “steam roller” should not be allowed to roll down the road is ultimately likely to help you. Legislating against “steam rollers” simply destroys the competitiveness of the jurisdiction passing such legislation.

Heavily subsidized industries have proven to be incrementally larger burdens on society. They will ultimately ensure the destruction of that society if left to run rampant. There is a reason that the United States was once leading the world in economic terms, and it is the flip side of the very same reason that the USSR did not. That reason is economic freedom. The freedom for capital, goods, skills (which means people) and services to move across borders freely.

If you need any evidence I ask you to look to Europe, the poster child of socialist dogma, where everyone is “protected” from not only themselves, but also those “nasty foreigners” who are “stealing our jobs”. How’s that turning out for them?

What I find interesting is that the vitriol, together with the compliments sent to my inbox and posted on forums, is only able to occur via technology; technology which without the globalization so decried, would simply not be at the finger tips of all… myself included.

Instead of screaming at the steam roller, Mark and I believe in acknowledging it and being pro-active rather than reactive to its presence. Both my recent articles “I want my children to go cold and hungry” as well as “Self sufficiency – Lessons from a Mother” drive into the heart of this matter.

Molly coddled adults are one thing, but it’s our job to ensure our kids have a fighting chance, because I promise you that mothers and fathers in many of the countries we operate in are leaving nothing to chance.

We may think that the world we live in today is vastly different than that which our ancestors enjoyed, and while that’s factually true, many of the issues we grapple with today have in some shape or form been present in the past.

Consider the following short list:

• The replacement of the equestrian industry with railroads;
• The replacement of stokers on steam locomotives in favour of diesel engines;
• The replacement of the bank clerk with the ATM, and now mobile/online banking;
• The replacement of farm hands manually ploughing fields in favour of tractors and harvesters;
• Print media has largely been replaced by digital media;
• Encyclopedias (which were horrendously expensive to print and massively wasteful) and associated publishers and salesman have been replaced by Wikipedia and search engines at an absolute fraction of the cost.

The list is endless, but hopefully you get the picture.

We don’t believe in sitting around pontificating and whining about the world. For those who care to step out and take a look it is brimming with opportunity. Below is a sampling of some of the most interesting disruptive technologies shaping the world right now. As private equity investors we’ve been positioning ourselves to capitalise on disruptive technologies within Seraph, our private investor syndicate.

In no particular order:

Crowdfunding

• Reinventing finance. What can I say, this is an industry screaming out for monumental change. Yes, there will be job losses for “Joey”, and Wall Street’s traditional chop shops won’t like it one bit. Crowdfunding is highly disruptive. We have no idea how much this is going to revolutionize personal finance and investing for the little guy. It WILL be huge. We’re already invested in two companies that are shaping this space, and we’re looking closely at a third as I punch out this post.

Robotics

• Robots will replace much of human labour at some point, it’s inevitable. We are early investors in a company which solves a simple problem, namely logistics in the food industry. They are set to ramp from essentially zero, to $66m in sales in just 3 years if they get it right. We think they have a very good chance! It’s quite simply a massive industry and opportunity.

Media and Entertainment

• The music industry has been disrupted by peer-to-peer file sharing technology. Katy Perry, for example, gets millions of YouTube views when she releases a new single, yet she may only sell a hundred thousand actual “albums”. We seeded a company that has created a platform to allow artists to monetize their work in a completely different fashion, by embracing this change as opposed to challenging it.

Augmented/Virtual Reality

• Oculus Rift proved that the “big guys” are embracing this technology and so are we. The big brother of virtual reality, augmented reality is going to be a part of our everyday life, so much so that within 20 years most people won’t understand how we did without it. Think about having the ability to conduct surgery remotely, pick inventory off a shelf in a warehouse on another continent using your Google Glass headset, or walking to an appointment in a city you’ve never been and being guided by a “virtual” guide walking alongside you.

Alternative Energy

• We participated in a private placement in an innovative startup company that has built a hybrid wind and solar system for end-users. Being connected to a “grid” will eventually be unnecessary. The inefficiency and waste, not to mention environmental degradation that occurs is just unnecessary. Massive disruption in this industry can’t happen soon enough!

Secure File Storage and Sharing

• We were cornerstone investors in a secure, client side, encrypted file storage provider. NSA, KGB, MI5, hackers, Microsoft, Diane Feinstein, spammers… These guys are helping to solve the problem of having to trust any of the aforementioned!

Nanotechnology

• Intelligent, wearable fabrics that can monitor your vital signs, improve athletic performance and even keep your infant safe. One of our portfolio investments is a company that is creating ridiculously robust fabrics, and the only company in the world that binds nano-particles to composites using a protein.

That’s a mere sampling of some of the things we find interesting and disruptive enough to put our money where our mouths are. Other areas which we believe interesting, but have yet to find suitable investment opportunities are: 3D printing, remote education, agricultural sciences and bio-medicine.

If you are an accredited investor interested in private investment opportunities, we’re hosting a special event in Aspen in August that may be of interest. Many of the companies mentioned above will be presenting to our Seraph syndicate members, our network of colleagues and a few very special guests.

It is going to be a small, exclusive event where guests will interact one-on-one with thought leaders in these disruptive industries.

For those that would like more information, you can download the agenda/program here:

http://ift.tt/1uHShD6

Password for the page is: snowmass

The event is almost full, as registration is limited. This is not only a chance to hear some great speakers… guys like Paul Rosenberg, Louis Petrossi, Doug Casey, Jason Best and David Weild IV (Father of the JOBS Act), but most appealing I think is the chance to connect with like-minded, sophisticated high net worth investors from well over a dozen countries.

Keep in mind, this event is for accredited investors only. Please contact us with any questions.

– Chris

“By seizing the opportunities that disruption presents and leveraging hard times into greater success through outworking/outinnovating/outthinking and outworking everyone around you, this just might be the richest time of your life so far.” – Robin S. Sharma

via Zero Hedge http://ift.tt/UkePyZ Capitalist Exploits

Submitted by Brandon Smith of Alt-Market.com,

The multitudes of people, especially Americans, who view U.S. government activity in a negative light often make the mistake of attributing all corruption to some covert battle for global oil fields. In fact, the average leftist seems to believe that everything the establishment does somehow revolves around oil. This is a very simplistic and naïve view.

Modern wars are rarely, if ever, fought over resources, despite what the mainstream gatekeepers might tell you. If a powerful nation wants oil, for instance, it lines the right pocketbooks, intimidates the right individuals, blackmails the right officials or swindles the right politicians. It has no need to go to war when politicians and nations are so easily bought. Modern wars, rather, are fought in order to affect psychological change within a particular country or population. Wars today are fought to cover up corrupt deals and create desperation. Oil is used as an all-encompassing excuse for war, but it is never the true cause of war.

In reality, oil demand has become static and is even falling in many parts of the world, while new oil and gas-producing fields are discovered on a yearly basis. Petroleum is not a rare resource — at least, not at the present. And the propaganda surrounding the “peak oil” Armageddon scenario is pure nonsense. Oil prices, unfortunately, do not rise and fall according to supply – instead they rise and fall according to market tensions and, most importantly, the value and perceived safety of the U.S. dollar. Supply and demand have little to do with commodity values in our age of fiat manipulation and false investor perception.

That said, certain political and regional events are currently in motion that could, in fact, change investor perception to the negative, and convince the world of a false fear of reduced supply. While supply is more than ample, the expectation of continued supply can be jilted, shocking commodities markets into running for the hills or rushing into mass speculation, generally resulting in a sharp spike in prices.

A very real danger within energy markets is the undeniable threat that the U.S. dollar may soon lose its petrodollar status and, thus, Americans may lose the advantage of relatively low gas prices they have come to expect.  That is to say, the coming market crisis will have far more to do with the health of the dollar than the readiness of supply.

In the span of only a few years, as the derivatives crisis took hold and the fed began its relentless bailout regime, petroleum costs have doubled. It wasn’t that long ago that someone could fill his vehicle's tank with a $20 bill. Those days are long gone, and they are not coming back. The expectation has always been that prices would recede as the overall economy began to heal. Of course, our economy will not be healed until it is allowed to crash, as it naturally should crash. And as it crashes, because of our currency's unique place in history, the price of oil will continue to climb.

The petrodollar has always been seen as invincible — a common denominator, a mathematical constant. This is a delusion propagated by a lack of knowledge and common sense amongst establishment economists.

As I have covered in great detail in numerous articles, the U.S. dollar’s world reserve status is nearing extinction. Multiple major economies now trade bilaterally without the use of the dollar; and with foreign conflicts on the rise, this trend is going to become the norm.

In the past week alone, Putin adviser Sergey Glazyev recommended to the Kremlin that a coalition of nations be formed to end the dollar's reserve status and initiate a form of economic warfare to stop "U.S. aggression".  Of course, anyone familiar with the escapades of international banking cartels knows that it is the money elite that dictate U.S. aggression, just as they dictate the policy initiatives of Russia.  I would note that there is only ONE currency exchange structure that could be used at this time to shift global forex reserves away from the dollar system, and that is the IMF's Special Drawing Rights.

The argument has always been that the IMF is a U.S. controlled institution, however, this is a faulty assumption.  The IMF is a GLOBAL BANKER controlled institution, a front organization for the Bank of International Settlements, which is why the recent refusal by the U.S. Congress to vote on new capital allocations for the IMF has resulted in the world's central bank threatening to remove U.S. veto power. Globalists have no loyalty to any single nation, and the reality is, the fall of the dollar actually benefits these financiers in the long term.

Russia’s historic oil and gas deal with China, just signed weeks ago, removes the dollar as the petroleum reserve currency.

Russia’s largest gas company, Gazprom, has all but excluded the dollar in all transactions with foreign nations. In fact, nine out of 10 of Gazprom’s foreign clients were more than happy to buy their products without using dollars.  This fact cripples the arguments of dollar cheerleaders who have always claimed that even if Russia broke from the dollar, no one else would go along.

Gazprom and the Russian government have followed through with their threats to cut off gas pipelines to Ukraine, and now, some analysts fear this strategy may extend to the EU, in which many countries are still 30% dependent on Russian energy.

China is currently striking oil deals not only with Russia but also with Iran. New oil deals are being signed even after a $2 billion agreement fell through this spring.  And, despite common misinformation, it was actually China that was reaping the greatest rewards through the reopening of Iraqi oil fields, not the U.S., all while U.S. military assets were essentially wasted in the region.

Now, any U.S. benefits are coming into question as Iraq disintegrates into chaos yet again. With the speed of the new Islamic State of Iraq and Syria (ISIS) insurgency growing, it is unclear whether America will have ANY access to Iraqi oil in the near future.  If ISIS is successful in overrunning Iraq, it is unlikely that Iraqi oil will ever be traded for dollars again. Unrest in Iraq has already caused substantial market spikes in oil prices, and I can say with considerable confidence that this trend is going to continue through the rest of the year.

Interestingly, mainstream news sources suggest that Saudi Arabia has been a primary funding source for the ISIS movement.  It is true that the Saudis have warned for years that they would fund and arm Sunni insurgents if America ever pulled out of the country.  But, I would point out that the U.S. has also been covertly supporting such extremist groups in the Mideast for quite some time, and this is not discussed at all in the MSM storyline. The mainstream narrative is painting a picture of betrayal by the Saudis against the U.S. through subversive groups designed to break the foundations of nations opposed to its policy views.  When, in fact, the destabilization of Iraq has been nurtured by money and weapons from both America and Saudi Arabia.

It was the CIA which trained ISIS insurgents secretly in Jordan in preparation for their subversive war in Syria.  It was an agreement signed by George W. Bush and delegated under Obama's watch that allowed ISIS leader, Abu Bakr al-Baghdadi, to be set free in 2009.  Saudi Arabia has been openly arming the Sunni's for years with the full knowledge of the U.S. government.  So then, why is the narrative being created that America and Saudi Arabia are at odds over ISIS?

Such a development would place the U.S. squarely in conflict with the Saudi government, our only remaining toehold in the global oil market. Without Saudi Arabia’s patronage of the dollar, most OPEC nations will follow (including Kuwait), and the dollar WILL lose its petrodollar status. Period.

In the past few days, Saudi Arabia has demanded that the foreign interests refrain from any military intervention in Iraq.  While Barack Obama has repositioned an aircraft carrier, armed troops, and special forces in the area.

Now, my regular readers understand that this was going to happen eventually anyway. The Federal Reserve’s quantitative easing bonanza has destroyed true dollar value and spread unknown trillions of dollars in fiat across the planet. The dollar’s death has been assured. It has been slated for execution. This is why half the world is positioning to dump the currency altogether. My regular readers also know that the destruction of the dollar is not an accident; it is part of a carefully engineered strategy leading to the centralization of all economic power under the umbrella of a new global currency basket system controlled by the International Monetary Fund.

I believe Saudi Arabia may be a near term trigger in the next great shift in petroleum markets away from the dollar. Renewed U.S. involvement in Iraq, diplomatic tensions over ISIS, and more lucrative offers from Eastern partners have been edging Saudi Arabia away from strict petrodollar ties. This shift is also not limited to Saudi Arabia.

“Abu Dhabi, the most influential member of the United Arab Emirates,” has suddenly ended its long-standing exclusive relationship with Western oil companies and has signed a historic deal with China’s state-owned China National Petroleum Corporation (CNPC).

Russia has formed the new Eurasian Economic Union with Belarus and Kazakhstan, two countries with freshly discovered oil fields.

On the surface, it appears as though the world is huddling itself around oil resources in an environment of East versus West conflict. However, these changes are not as much about petroleum as they are about the petrodollar. The reality is the dollar’s reserve-status days are numbered and this is all part of the plan.

What does this mean for us? It means much higher gas prices in the coming months and years. Is $4 to $5 per gallon gasoline a burden on your pocketbook? Try $10 to $11 per gallon, perhaps more. Do you think the economy is straining as it is under the weight of current gas prices? Imagine the earthquake within our freight-based system when the cost of trucking shipments triples. And guess who will end up paying for the increased costs? That’s right: you, the consumer. High energy prices affect everything, including shelf prices of retail goods. This is just the beginning of what I believe will be ever expanding inflation in oil prices, leading to the end of the dollar’s petroleum reserve status, then it's world reserve status by default, and the introduction of a basket currency system that will ultimately benefit a select few global financiers while diminishing the quality of living for millions, if not billions, of people.

via Zero Hedge http://ift.tt/1uI8597 Tyler Durden