Archive - Jul 2011

I am not sure when U.S. politicians changed from being elitist, self-serving, perk enjoying, hypocrites, to teenage girls, but it has happened. Boehner sends a Dear John letter. Obama complains that phone calls aren't being returned. Reid is pulling petals from a flower repeating, 'he loves me', 'he loves me not'. We have had to listen to stories about getting homework done on time and eating our peas. I have seen this story before, actually multiple times a day, just turn on Disney network and you can watch the same story unfold over and over. We all know how those shows end, everyone agrees that the other side wasn't totally wrong, there is an awkward group hug, and everyone is happy, until the next episode.

"Professional" journalists ...

CNTV has released the first video of the horrific crash in which two bullet trains collided and 4 train cars fell from viaducts. The full clip can be seen below.

Today MSFT is effectively a 68% foreign operation. In return they get all the benefits of stimulus and minimize the costs of supporting the US system... One of the big economic winners, Apple Computer, is even worse...

While it is always good to hear grizzled veterans explain what we all know, namely that the US debt situation is untenable and America will eventually collapse under the weight of its obligations, we wonder: where were these same people while the debt was being accumulated and everyone was shiny and happy (there is a reason why the correlation between US GDP and debt is about as close to 1 as they come) and without a care in the world about America's long term solvency?  Yes: we do enjoy the writings of Oaktree's Howard Marks who has chosen to dissect the US debt ceiling and more specifically America's untenable deficit spending as the topic of his latest letter, although we can't help but wonder: why now? Why not a year ago? Or, better yet, a decade ago? Furthermore, as last night's explosive announcements by the president and Boehner demonstrated the debt hike story has so many moving parts that staying on top of it is virtually meaningless. Indeed, it would have been much more useful for America if financial luminaries as Marks had actually spoken up while the US Treasury was accumulating trillions in debt, instead of all the Monday Morning quarterbacking we seem to be getting each and every day from all the "fiscally prudent" ones who rode the train of America's "great moderation" runaway debt to stratospheric wealth and were all very silent then...

A European Bank Run: Step-by-Step. I outline the problems of a single bank that, unfortunately, is shared by many. This time next year, never let anybody tell you that this couldn't be seen coming as I illustrate how it will happen, and in detail!

It was only a matter of time before China's pursuit of infrastructure perfection for the sake of merely recycling trade surplus dollars ended up in casualties. And while its now innumerable ghost cities are unlikely to hurt anyone since they are, well, vacant, the same can not be said about its infrastructure. Earlier today, China's D-Train, a first generation of its bullet train, travelling the Hangzhou to Wenzhou route derailed, with two of its carriages falling off a bridge. The precise number of casualties is as of this moment unknown, although the latest report from Reuters is of 11 killed and 89 injured. We expect the number to be far higher in the end. Just like in the US where none of the massive infrastructure spending as part of ARRA actually went to infrastructure, so China is about to realize that mixing unprecedented corruption and ultra high speeds usually results in very catastrophic consequences.

Here is my take on the Greek "bailout" and what it means for the rest of us...

We'll be going down some time between 12:30 and 1:00 Eastern for a much needed update. Thanks!

It's an oven out there...

It was just three short months ago that Jeremy Grantham was spewing Malthusian fire and brimstone. He did so, however, from a broadly generalist perspective. Today, the head of GMO has released his second follow up in the "peak everything" series which is sure to provoke yet another round of bickering and debate between the disciples and nemeses of the logarithmic function and its applications in the real world. Among the key topic dissected this time are ongoing resource depletion and soil erosion. To wit: "As the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses. It may have the responsibility for feeding an extra two to three billion mouths, an increase of 30% to 40% in just 40 years. The availability of the highest quality land will almost certainly continue to shrink slowly, and the quality of typical arable soil will continue to slowly decline globally due to erosion despite increased efforts to prevent it. This puts a huge burden on increasing productivity...Here, the discussion is about the pain and time involved in getting to long-term sustainability as well as trying to separate the merely irritating from the real, often surreptitious, threats to the long-term viability of our current affluent but reckless society. The moral however, is clear. As Jim Rogers likes to say: be a farmer not a banker – the world needs good farmers!"

Are we living in Narnia?

Perhaps it is time for the Telegraph to issue a retraction to its kneejerk publication in which it automatically cast blame on Islamists and other "eastern" terrorists-by-default. Because according to just released info, they could not have been more wrong, and it is the reaction to precisely this type of prejudice that will never facilitate bridging frayed relations between disparate cultures. Anyway, so much for prejudiced speculation and/or lies about some Islamist organization taking the blame for the events in Norway today. Here is the truth:" VG has
received confirmation from several independent sources that it was
Anders Behring Breivik, who was arrested by armed police after the mass
killings of Utøya Friday.  VG was also present when the emergency squad took action against the flat 32-year-old susceptible west of Oslo. Several foreign media have also named Breivik as the perpetrator." More on his motives: "A childhood friend of Breivik says to VG Nett that he should have been right-wing in the late 20's, and posted a series of controversial opinions on Facebook." And the kicker, for all the bigots out there: he was an ultra nationalist who hated Islam. Today's tragic events were merely the outburst of deranged and very much troubled Loughner, McVey-like psychophath. And nothing more.

Live webcast here.

It's looking more and more like an anti-Islam Christian nationalist psychopath was the terrorist ...