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Off the Cuff: Treasurys On The Rise

Global capital is beginning to seek safe harbor
Thursday, May 15, 2014, 1:34 PM

In this week's Off the Cuff podcast, Chris and Brian discuss:

  • Treasurys On The Rise
    • Global capital is beginning to seek safe harbor
  • Mispricing Risk
    • The biggest failing of today's markets
  • The Ticking Sovereign Debt Timebomb
    • It's a questions of "when" not "if"
  • The Supremacy of Risk Management
    • Should be the #1 focus of the prudent investor
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What To Avoid When Relocating

Whether in or outside of your home country
Tuesday, May 13, 2014, 10:34 PM

Executive Summary

  • The math explaining why Ukraine was a predictable flashpoint
  • Why the IMF's "help" is about to make the Ukranian situation a lot worse
  • Implications for those considering relocating inside or outside of the US
  • Chris' "must have" ingredients that make a potential relocation destination worth considering

If you have not yet read Rising Resource Costs Escalate Odds of Global Unrest, available free to all readers, please click here to read it first.

Ukraine

Now back to Dave’s original series of questions. I think that Ukraine was primed and ready for a shove into instability.

There’s a well known psychology experiment where two male rats can be placed in a cage where they will live somewhat happily as long as they have sufficient food. However, if painful electric shocks are applied to the floor of the cage in such a way that the rats cannot escape, the two males will begin fighting.

Keep up the shocks long enough and the fighting will be severe, even to the death.

What’s happening? The rats lack the context to know that the shocks are coming from outside somewhere. The only thing they can project their discomfort onto is the only other living thing in their sight – the other rat.

So they fight.

Similarly, the people of Ukraine lack the context to know just who is to blame for the unpleasant conditions in which they live and seemingly cannot escape. So they blame each other and fight each other. They blame the President and so he’s gone. But the next one, and the ones following, will be just as bad; and eventually they will each be in turn ousted, too.

The problem is the shocks are not being caused by players they can see and blame. We’ll get to more on that in a minute.

By the numbers, the ...: » Read more

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Off the Cuff: Being Bullish Now Means Ignoring History

At least, if data matter anymore
Thursday, May 8, 2014, 12:00 PM

In this week's Off the Cuff podcast, Chris and Charles discuss:

  • Being Bullish Now Means Ignoring Market History
    • Learnings from the Wine Country Conference
  • Mainstream Media Blackout
    • Real news is hard to come by these days
  • Explaining Ukraine
    • Lots of smoke & shades of grey
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Promising Emerging Community Models

Real-world examples of success
Wednesday, May 7, 2014, 12:13 PM

Executive Summary

  • The "half farmer, half X" model
  • The "no middleman" model
  • The "15% commission" model
  • The key features of successful new community models

If you have not yet read The Rise of New Models of Community, available free to all readers, please click here to read it first.

In Part 1, we discussed the potential for new models of collaboration and community enabled by the Web and social media. I proposed a simple metric for differentiating between simulacrum community and the real deal: a community is only a “real community” if the collective actions of its members push the envelope of the material world.

In Part 2, we’ll examine some models that have arisen as people either abandon or are cut out of the Central State/Corporate Consumerism Status Quo and must create new social and economic arrangements to earn a livelihood.  This requires structures that enable self-organizing, voluntary communities to endure and grow.

As Zeus noted in Part 1, The new price of entry is production, meaning that parasitic layers of middlemen have no role in these new arrangements. To participate, one must be productive. i.e. create or add value.

As I mentioned earlier, social media doesn’t change a system’s incentives/benefits and costs/disincentives; the Web is a powerful tool for community building, once the incentives for participating far outweigh the costs.

Let’s start our survey with an example from... » Read more

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How This Situation Can Quickly Get Much Worse

We're teetering on a very slippery slope towards war
Sunday, May 4, 2014, 1:16 AM

Executive Summary

  • Why the US' antagonistic approach towards Russia is likely to backfire big time, in both the near and long term
  • How, by definition, the West has already initiated economic warfare against Russia
  • Why things will get very bad in a hurry for the West if Russia reacts by re-directing its energy exports 
  • And how things could get much worse indeed, for everyone, if this conflict erupts into a military confrontation

If you have not yet read Warning: The Ukraine Is At A Flashpoint, available free to all readers, please click here to read it first.

Poking The Bear

And that finally brings us to Russia, which has a long and complicated history with Ukraine. There are many Russian speaking people in the Ukraine, for whom Russia feels somewhat protective, as perhaps US citizens in Canada or Mexico might expect from the US.

Further, Russia quite rightfully feels that it is being systematically surrounded and cornered by the NATO military structure and they might reasonably ask themselves why and for what purpose(s)?  There are probably other ways to look at this, but it's certainly reasonable to think that Russia might feel just the tiniest bit provoked, if not threatened, at the West's obvious efforts to get Ukraine to join up with NATO.

Instead of sitting down with Russia to try and hammer things out, the US resorted almost immediately to a series of sanctions targeted at Russian individuals and companies, as well as the Russian stock and bond markets, with the intention of creating economic and financial hardship that would get Russia to leave Ukraine to the west.

Here are a few of the efforts so far... » Read more

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How To Oppose the Deep State

Don't volunteer for victimhood
Wednesday, April 30, 2014, 9:42 AM

Executive Summary

  • A middle ground approach is best at this stage
  • While the Deep State is threatened by its own dysfunction, a collapse will not be pretty for citizens
  • How not to volunteer for victimhood
  • Where hope lies

If you have not yet read The State of the Deep State, available free to all readers, please click here to read it first.

On general principle, the sort of odious operations represented by the Deep State, including warrantless police actions, immersive surveillance, and even assassination, ought to be opposed by Americans who care about their country and the ongoing project of remaining civilized. The Deep State’s totalitarian tendencies are self-evident. Therefore, “we the people” are obliged to dismantle it as expeditiously as possible, ideally by voting for electoral candidates who vow to work toward that end, but by resistance if that fails. Political actions might include getting rid of all the redundant “security” agencies piggybacked around the CIA since 9/11; voting the Patriot Act out of existence; and introducing legislation to re-define the “personhood” of corporations and their putative “rights” to “free speech” as defined by flinging money at elections.

However, the electoral process, being subject to the depredations and manipulations of the Deep State, may itself be too much a part of the problem at the present time. Resistance, on the other hand, can beat a fast path into the perilous realm of revolution and sedition, inviting punishment by the Deep State. For the moment then, the preferable action probably lies in the middle ground: political persuasion, speaking out against the Deep State. There is simply not enough of this now, especially among serious people in positions of authority. This, by the way, was exactly what turned the nation against the folly of the Vietnam War.

It begs the question: where are the Bobby Kennedys, Gene McCarthys, and William Fullbrights of our time? Where are the visible people of stature willing to take a stand, to put their careers on the line? Not just... » Read more

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Japan's Economy Is Shattering

Abenomics is fast proving to be a costly failure
Monday, April 28, 2014, 11:09 AM

When you are a fully-industrialized island nation that makes its living in the world by importing raw materials, fashioning them into useful exports, and collecting the difference as your profits, then you simply have to run a trade surplus for the model to work.

Which means Japan is in big trouble: » Read more

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Off the Cuff: Abnormal Times

Our institutions no longer serve our interests
Thursday, April 24, 2014, 2:47 PM

In this week's Off the Cuff podcast, Chris and Jim discuss:

  • The Dimming of US Legitimacy Abroad
    • Americans have a growing fear & distrust of our own foreign policy
  • Charity Begins at Home
    • Why are we sending $ abroad that is much needed at home?
  • Abnormal Times
    • We are so far from fundamentals that a correction is guaranteed
  • This Weekend's Seminar at Rowe
    • Kunstler will be participating
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Why Demand Will Become Even More Scarce

Prospects for disinflation in 2014
Tuesday, April 22, 2014, 1:14 PM

Executive Summary

  • Anemic employment & wages growth depresses the odds of near-term interest rate hikes
  • Why energy costs increases are experiencing a lull, keeping inflation lower than many expected
  • The demographic arguments for deflation
  • Why the US is becoming more vulnerable to a repricing of natural gas -- vs oil -- in the coming decade

If you have not yet read Part I: When Every Country Wants to Sell, Who Buys?, available free to all readers, please click here to read it first.

The most recent US jobs report was once again a disappointment, despite the headline number of 192,000 jobs created. Over the past two years, the economy has reliably created about 150,000 jobs per month. This has been just enough to keep up with population growth, but alas, not enough to put the long-term unemployed back to work. The concerning data in the report came in the details of the jobs created: as usual--and this has been a trend for several years now--mostly in the lower wage sectors. A few wrap-up tweets from Dan Alpert of Westwood Capital summed up the facts rather nicely:

Other notable observations from recent trends in US jobs reports include the fact that job creation in 2013 was no higher than in 2012. Not exactly an encouraging trend for those who would be looking for inflation risk, or strong growth in 2014.

But perhaps worst of all has been the number of workers leaving the workforce. Part of this can be explained, of course, by demographic retirements. It's no secret that the US has an aging population, and there's a bulge of retiring workers that will admittedly create some gaps in the labor market over the next decade. But the large numbers of workers exiting the workforce is also explained by discouraged workers, and that unemployment benefits for many have started running out.

What many in the public do not understand, is that workers taking unemployment checks are counted as active seekers of employment. They are added to the composition of the workforce, and when they continue to take unemployment checks but do not find work, they serve to keep the unemployment rate elevated. But when unemployment benefits expire, and workers leave the workforce, the unemployment rate may... » Read more

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Off the Cuff: The Ukraine Powderkeg

We're playing for higher stakes than make sense
Thursday, April 17, 2014, 9:22 PM

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

  • The Ukraine Powderkeg
    • US policy is unrealistic & hypocritical
  • It's All About Resources
    • Expect more Ukraines as world powers increasingly compete
  • Government Overstep
    • At what point is too far "too far"?