Archive - Nov 2013

"Every American family deserves a false sense of security," said Chris Reppto, a risk analyst for Citigroup in New York. "Once we have a bubble to provide a fragile foundation, we can begin building pyramid scheme on top of pyramid scheme, and before we know it, the financial situation will return to normal." Despite the overwhelming support for a new bubble among investors, some in Washington are critical of the idea, calling continued reliance on bubble-based economics a mistake. Regardless of the outcome of this week's congressional hearings, however, one thing will remain certain: The calls for a new bubble are only going to get louder. "America needs another bubble," said Chicago investor Bob Taiken. "At this point, bubbles are the only thing keeping us afloat."

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Economic policymakers seeking successful models to emulate apparently have an abundance of choices nowadays. Led by China, scores of emerging and developing countries have registered record-high growth rates over recent decades, setting precedents for others to follow. While advanced economies have performed far worse on average, there are notable exceptions, such as Germany and Sweden. “Do as we do,” these countries’ leaders often say, “and you will prosper, too.” Look more closely, however, and you will discover that these countries’ vaunted growth models cannot possibly be replicated everywhere. The real heroes of the world economy – the role models that others should emulate – are countries that have done relatively well while running only small external imbalances.

What is more valuable than the life-giving properties of human blood? Why, in the new normal, it's the life-blood of the financial markets - printer ink!!

"We already live in a financial economy in which the debt and capital markets exceed the value of the real economy by far," Marc Faber explains to Germany's Finanzen100, "and that's before the current formation of bubbles." His most ominous warning, and one that fits perfectly with the seeming insanity of Federal Reserve (and all developed market central banks) is that "the next time a bubble bursts, then the capitalist economic system as we know will falter."

Dispassionate discussion of the investment climate.  

Obama: "When we buy I.T. services generally, it is so bureaucratic and so cumbersome that a whole bunch of it doesn’t work or it ends up being way over cost."

...and yet, we've been told we must buy a product, and things have been set up so we can only go through the government's market (the "exchange"), and the government has already demonstrated that its market doesn't work. But you can't walk away, you're forced to buy, and there's nowhere else to go. And yet, he wants us to feel bad about the cumbersome bureaucracy the government encountered trying to procure the wherewithal to set up the market it had already decided we would all need to use.

China has unveiled its most sweeping reform agenda in more than 30 years, but the market impact is likely to be net-negative.

One day before the Senate's digital currency hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies", Bitcoin is largely oblivious to any potential regulatory threats, either at the legislative or the city level, where as reported previously the New York superintendent is in a rush to enforce BitLicenses on businesses that accept BitCoin, and moments ago crossed $500 for the first time ever. Instead, it appears that as we also reported previously, the Chinese Bitcoin craze has reached the parabolic threshold, going so far as making Bitcoin an acceptable payment for real estate, which means that while for the time being Bitcoin becomes the alternative inflation protection medium for hundreds of millions of Chinese, all bets on how high it can get are off.

While hardly as dramatic as last week's revelation that Syrian Al-Qaeda cannibals apologized after chopping off the head of one of their CIA-funded "rebels" by mistake, the news that a US drone struck a US missile cruiser during training off Southern California, causing two minor injuries is maybe even more embarrassing. After all, with Al-Qaeda one can at least make a legitimate case of a friendly fire, er, beheading incident. When it comes to the coast off SoCal, it will be difficult to suggest the Chinese (or Russian) navies were running sorties next to the surfers off Point Mugu.

When last week's Iran nuclear talks were blocked by France, it provided a useful glimpse into just who it was that would benefit politically from a continuation of the regional confrontation. But while the French sabotage was an amusing distraction, it revealed a curious shift in middle-east alliances, namely old "enemies" Israel and Saudi Arabia, both feeling shunned by Big Brother, suddenly becoming the best of buddies. It was only a matter of time before this novel alliance moved beyond just paper and tested how far it could go in real life. Said test may come far sooner than expected: according to the Sunday Times, Israel's Mossad and Saudi Arabia are planning an attack against Iran if negotiations and talks don't come to an agreement, and that Saudia Arabia will permit Israel to use their air space for an attack on Iran including full technical support. According to the Sunday Times, the Saudis would assist an Israeli attack by cooperating with the use of drones, rescue helicopters, and tanker planes. "Once the Geneva agreement is signed, the military option will be back on the table. The Saudis are furious and are willing to give Israel all the help it needs,” said the paper citing an unnamed official.

In a few years’ time we might all be whining because there is no more water left in the world apparently. That’s because according to the World Economic Forum “we are now on the verge of water bankruptcy in many places around the world, with no clear way of repaying the debt”.

Endeavor to perservere!

Just a lucky coincidence?

...harsh, but fair...