Insider

Enter a comma separated list of user names.
Insider

Finding Authentic Happiness

The steps that build a solid foundation
Wednesday, October 10, 2012, 7:22 AM

Executive Summary

  • Why buying into the Status Quo undermines personal empowerment
  • Echew debt and consumerism. Instead, focus on cultivating resilience and social capital
  • The importance of differentiating hedonia vs eudaimonia
  • The key roles of Expectation, Narrative, and Challenge
  • The foundations of happiness

If you have not yet read Part I: The Pursuit of Happiness, available free to all readers, please click here to read it first.

In Part I, we challenged the assumption that the successful pursuit of happiness is based on material prosperity and what we might call the psychology of the atomized individual.

If material prosperity is necessary but insufficient, and our social and financial order is sociopathological, what does an authentic pursuit of happiness entail?

For answers, we can survey recent research into human happiness, and consider “powering down” participation in a deranging social and financial order.

Pondering Power

The primacy of power in human society is omnipresent. Humans scramble for power in all its forms to improve social status and the odds of mating, living a long life, and acquiring comforts.  What is remarkable about the current American social order is the powerlessness of the vast majority of people who have “bought into” the Status Quo. 

When the public vehemently disapproves of a policy, such as bailing out the “too big to fail” banks, they are routinely ignored, and for good reason: They keep re-electing incumbents.  Most have little control over their employment status, workflow, or income, and most devote the majority of their productive effort servicing private debt and paying taxes that service public debt.

The one “power” they are encouraged to flex is the momentary empowerment offered by purchasing something; i.e., consuming.  The corporate marketing machine glorifies acquisition as not just empowering but as the renewal of identity and the staking of a claim to higher social status – everything that is otherwise out of the control of the average person.

The dominant social control myth of our consumerist Status Quo is that wealth is power because you can buy more things with it.  But the power of consumption is one-dimensional and therefore illusory.  The only meaningful power is not what you can buy – a good, service, or experience – but what you control – your health, choice of work, income, surroundings, level of risk, and your circle of colleagues and friends.

The “wealthy” who own an abundance of things but who are trapped in debt are not powerful.  Their choices in life are limited by the need to service the debt, and their pursuit of happiness is equally constrained.

The kind of wealth that enriches the pursuit of happiness is control over the meaningful aspects of life. It is no coincidence that studies of workplace stress have found that those jobs in which the worker has almost no control over their work or surroundings generate far more stress than jobs that allow the worker some autonomy and control.

Financial and material wealth beyond the basics of creature comfort is only meaningful if it “buys” autonomy and choice.

We all want power over our own lives.  Once we free ourselves from social control myths, we find that becoming powerful and “wealthy” in terms of control does not require a financial fortune. It does, however, require sustained effort and a coherent long-term plan... » Read more

Insider

Off the Cuff: When Trillions Aren't Enough

Our banks' bottomless need for capital
Thursday, October 4, 2012, 11:36 AM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • No Joy on Wall Street
    • Banks cry poor despite record profits
  • The Invisible Recession
    • Hidden by faulty data
  • The Fallible Fed
    • It really doesn't know what's going on
  • Our Taxing Tax System
    • The case for simplification

It's clear to all that QE3 is a continued push by the Federal Reserve to rescue the banking system. But why is it necessary? » Read more

Insider

What Happens Once We've Burned All the Resources?

Why we're inheriting a 'slower moving' world
Wednesday, October 3, 2012, 1:03 AM

Executive Summary

  • Why purchasing power and quality of life will decline in OECD countries, even as economic 'growth' is maintained
  • Why 'energy mix' is as critical as 'energy supply'
  • The potential of natural gas as a "bridge" fuel
  • Why we're inheriting a "slower moving" world

If you have not yet read Part I: The War Between Credit and Resources, available free to all readers, please click here to read it first.

Low-Quality GDP

Declinists have been surprised by the ability of policy makers to slow the rate of our post-Peak-Oil financial collapse using quantitative easing. But the global economy stopped funding new industrial growth with oil starting seven years ago. Accordingly, the transition to coal as the source to fund growth was well underway before the financial crisis began.

And it remains vexing, to be sure, to understand how the world economy has been able to move forward – at least a little – in the post-2008 environment.

Nevertheless, we now have those answers and no longer need to forecast an imminent black swan or tail event... » Read more

Insider

Why the U.S. Dollar, Counterintuitively, May Strengthen from Here

When the future seems inevitable, challenge your assumptions
Thursday, September 27, 2012, 8:32 PM

Executive Summary

  • Why to expect household income will continue to decline (in real terms)
  • The ceiling that the price of oil may place on central bankers' ability to print money
  • Why money printing does not always result in inflation
  • The argument for a stable and/or strengthening U.S. dollar

A year ago, in the wake of the then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency did indeed strengthen notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.

If you have not yet read Part I: Welcome to the Era of 'Ugly' Inflation, available free to all readers, please click here to read it first.

In Part I, we covered “beautiful deleveraging,” the goal of which is to systemically distribute the financial pain so the Status Quo is left intact, and the threat to this strategy posed by “ugly inflation.”  The critical difference between “beautiful” and “ugly” inflation is that incomes keep pace with the rising cost of goods and services in the former and are stagnant in the latter.  In ugly inflation, households’ discretionary income declines, reducing consumption, slowing investment, and crippling future borrowing.  Defaults rise; consumption, tax revenues, and lending decline; and the economy enters a self-reinforcing feedback loop of contraction.

This is the position the U.S. economy is in, as real household income has declined 8% since 2007 and inflation officially bubbles along at 2-3% (and at a higher rate for many essentials).

The Status Quo attempt to painlessly inflate our way out of over-leveraged indebtedness has run up against limits that are not apparent in a strictly financial model like Ray Dalio’s “beautiful deleveraging.” If we understand these other forces and tipping points, we will understand why central-bank deleveraging will fail. » Read more

Insider

Off the Cuff: At the Boiling Point

Unrest is erupting around the globe
Wednesday, September 26, 2012, 11:02 PM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Unrest is breaking out around the world
    • When the populace has no options, it revolts
  • QE3 bang already a whimper
    • The impact of each successive easing is less than its precedent
  • Gold showing real strength
    • Support for the metal is going mainstream
  • Canadian coal-mine canary
    • Huge drop in housing sales

As predicted, as we head out of the slow summer, events are now beginning to unfold fast and furious. Renewed street riots in Spain and Greece show how disaffected the citizens there are from the failed policies that have been used to placate them to date. China and Japan seem to be inching further to potential armed conflict, as do Israel and Iran. The market is realizing that with open-ended money-printing now announced, there is no future "juice jolt" to anticipate, and so asset prices have already returned to pre-QE3 territory. With such uncertainty growing everywhere one looks, it's little surprise that more and more of those who once scoffed at gold are now recommending the precious metal.

Insider

The Implications of a German Exit from the Eurozone

What changes to expect
Tuesday, September 25, 2012, 12:45 AM

Executive Summary

  • Why the U.S. and the IMF won't act soon enough to avoid a German exit
  • Why Finland will bolt from the Eurozone the moment Germany does (and how many others may soon follow?)
  • What a German exit (and a new mark) would really mean
  • When will Germany likely announce its departure from the Eurozone?

If you have not yet read Part I, available free to all readers, please click here to read it first.

In Part I, we covered the background to what now appears to be inevitable: Germany has to leave the Eurozone. She, along with the Netherlands and Finland, simply cannot afford to bail out the rest of the Eurozone, so she is standing in the way of a resolution to the crisis. It is therefore only a matter of time before the political classes have to face this reality.

Time is running out, and the longer Germany delays, the worse her position will be. The yields on Spanish and Italian debt will inevitably head towards and through the 7% "point-of-no-return" threshold and beyond, and Germany will get all the blame. Germany will be seen as a thorn in the side of the ECB, restricting its scope for monetary action and obstructing a solution, partly because of the Bundesbank’s stubborn conservatism and partly because Germany’s Constitutional Court frowns on monetising government debt. She will be unfairly condemned by everyone.

Let’s look at some back-of-the-envelope figures... » Read more

Insider

Off the Cuff: Beggar Thy Neighbor

What happens to world currencies when everyone prints money?
Thursday, September 20, 2012, 7:17 PM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Asian saber-rattling
    • How serious is it?
  • From here to QE-ternity
    • And wither the dollar from here?
  • Leading indicators lose steam
    • The economy is slowing further.
  • Intervention in oil prices?
    • Recent trades look fishy.

Where to start this week?

Insider

DonkeyHotey on flickr

Understanding the Implications of QE3

How will the major asset classes react?
Tuesday, September 18, 2012, 7:06 PM

Executive Summary

  • We've now entered a new era of economic and fiscal descent; expect the next stage to be prolonged and bumpy
  • Why only two possible economic outcomes remain at this point (and one of them has a 90%+ chance of occurring)
  • How the recent liquidity measures announced by the world's largest central banks will impact:
    • stocks
    • bonds
    • gold & silver
    • other commodities
    • real estate
  • Why adopting a wealth preservation strategy is critical right now (and why so many will fail to do so)
  • Why this is not (yet) the moment to go "all in" in exchanging paper assets for hard ones (but do get started if you haven't already!)

If you have not yet read Part I: The Trouble with Printing Money, available free to all readers, please click here to read it first.

A Process, Not an Event

Okay, the ECB and the Fed are now in the game with unlimited, open-ended commitments to print as much money as necessary to get back to the same rates of GDP growth we had in prior decades. I should note that the ECB actions, at least, will be fully sterilized, meaning that they won't boost the money supply – at least that's the plan right now. Soon enough, Japan is going to have to join the fray simply because it cannot afford a stronger yen here; it will have to print because it is first, second, and last an export economy...

After that, it is anybody's guess as to how long China will put up with its massive $3.2 trillion in foreign exchange reserves being debased willy-nilly, but my vote is 'not long.'

These latest rounds of QE are certainly unnerving and may prompt many of you to want to accelerate your own private efforts at financial, emotional, and physical resilience. By all means, use these moments to focus your attention and efforts. But also be aware that we are experiencing what is certain to be a very long process rather than some dramatic event. » Read more

Insider

Off the Cuff: The Plot Thickens

Developments are happening faster now
Thursday, September 13, 2012, 1:11 AM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris tackle

  • The German Constitutional Court decision
    • What importance does it have? Any?
  • America is back in recession
    • More hard-to-refute data
  • Whither the Fed?
    • Why markets will be disappointed by Bernanke

Surprising to those who don't read this site, a number of notable announcements are happening this week besides Apple's unveiling of the iPhone 5...

Today, the German Constitutional Court made its ruling on the legality of Mario Drahgi's plans to flood European banks with liquidity. The court has the power to block the ECB's profligacy; but it seems that once again, politics trumps justice. Draghi will be allowed to proceed with some tissue-thin restraints. 

Meanwhile, new data show North America's economies are slowing down. Indeed, more and more analysts are coming to the conclusion that the US has slipped back into recession (even though to many it feels as if America had never left it). Jabbering of 'recovery' and slight declines in the official employment rate – which is a complete farce, as those unable to find work after a time are removed from the lists of those counted as 'unemployed' – are fooling no one at this point.

Which leads all eyes to the Fed. What will it do (or better asked, what can it do) to combat this dismal data? » Read more

Insider

DonkeyHotey on flickr

Nowhere to Go

The Fed is almost certain to disappoint tomorrow
Wednesday, September 12, 2012, 12:09 PM

All eyes are on the Fed meeting and the almost fully expected (99% chance, already priced in) round of quantitative easing (QE) that will be announced upon the conclusion of the September 12-13 Federal Open Marked Committee (FOMC) meeting. Or not. » Read more