Archive - Oct 2014

The last two days have seen President Obama will give speeches on the economy. This issue is critical going into the mid-term elections as virtually every poll shows this is a top concern of voters. The question of economic recovery is interesting in the context of where that recovery has occurred.  As we discussed recently in "For 90% Of Americans, There Has Been No Recovery," while the ongoing interventions by the Federal Reserve have inflated asset prices, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else. Unfortunately, the facts are going to make promoting an "economic success" story rather difficult. Let's review Obama's economic scorecard in terms of the things that truly matter to the average American...

The punchline, and what is by far the scariest, is that rising from 19% to a record 30%, and by far the biggest use of funds, is finance, the one industry that doesn't actually lead to growth but merely finds ways to mask the lack of growth with pro-forma adjustments and stacks leverage upon leverage on ever declining underlying equity and cash flows, until the entire system crashes as it did in 2001, 2008 and, well, soon.

Having tried (unsuccessfully) to break up the pro-democracy protesters in the heart of Hong Kong using local triad gangs (as opposed to the optics of actual police), it appears the Chinese government is rolling back from its "wait-and-see" approach and becoming more aggressive once again. Hong Kong's Chief Executive Leung Chun-ying, as DPA reports, demanded protesters end their blockade of major roads by Monday, or the government will take "all necessary measures to restore social order." Tensions continue to rise, with clashes breaking out sporadically, as the protesters have broken off talks with the government. As fears of another Tiananmen square debacle loom, former Hong Kong governor Chris Patten noted, "I cannot believe it would be so stupid as to do anything like send in the army."

Because nothing says "safety precautions" like rolled-up sleeves on a HazMat suit...

Remember Greece: the country that in 2010 launched Europe's sovereign solvency crisis and the ECB's own helpless attempts at intervention, which later was "saved", only to default shortly thereafter (but without triggering CDS as that would end the Eurozone's amusing monetary experiment and collapse the Deutsche Bank $100 trillion house of derivative cards), which later was again "saved" when every single global central bank made sure Greek bonds became the only yield-generating securities in the world? Well, the country which at last count was doing ok, is about to not be ok. Because according to none other than S&P, at some point over the next 15 months, Greek debt is about to be in default when the country is no longer able to cover its financing needs. In other words, back to square one.

Yes the US does not practice laissez faire capitalism.  It never did.  It manipulates sets intersest rates.  The fx market is still understandable and the dollar is moving higher.

When Mario Draghi set off on his latest quest to slay Europe's deflation monster, after an endless array of failed alphabet soup programs to inject money into stock markets mysteriously failed to fix Europe's insolvent economy riddled by record unemployment and trillions in non-performing loans, he clearly was guided by this latest Eurobarometer survey of Public Opinion in the European Union, in which virtually everyone across the board admitted that the most important issue facing the common folk in Europe is plunging prices and crushing deflation.

Oh wait... it says rising prices/inflation. Well, that's embarrassing.

You show me sustainable growth through monetization and I'll take my bat & ball and go home. Until then, you're blowing hot air up my backside.

As the daily propaganda machine prompts the majority of today's American youth to go to college "to further their earning potential," despite the actuality that working alongside a non-high-school-graduate flipping burgers is just as likely an outcome, we thought it only fair to discuss the tradeoff between doing something we love and something that pays the bills. As The Washington Post reports, careers in healthcare and engineering ranked high in both meaningfulness and average pay. At the other end of the spectrum, people who had majored in art and design or humanities fields reported low pay, little sense of purpose, and they were relatively unlikely to say that they'd recommend their major to others.

Not only are the Post 9/11 entanglements the longest of any war the US has been involved in, they are also the most expensive – even more than World War II, when the US was fighting on two major fronts against heavily industrialized powers. Rather than achieving victory quickly as advocated by Sun Tzu, the US has been involved in very costly wars for well over a decade now.  Sun Tzu had something to say about this: “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” Seen in this light, has the Post 9/11 military strategy made the US a victorious warrior? While all of this is taking place, the US’ ideological foes can afford the luxury of sitting back and employing a more measured approach: “To fight and conquer in all our battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.” Indeed, nothing breaks morale more than the prospect of never ending foreign wars.

Remain Calm...

Earlier this week, a bunch of guys from DJIGlobal had a brilliant idea: let's take the infamous "camera on a stick" from Go Pro(laroid), stick it on a drone, and dump the whole thing above the magma caldera of Iceland's most recent active volcanic eruption at Bardarbunga, while filming every step of the way. The resulting video is stunning, even if the camera melted in the process.

This week saw the first confirmed case of Ebola virus within the United States, the latest development in an outbreak that has already claimed over 3,000 lives. Here are some recommendations from The Onion on how you can protect yourself against this deadly disease:

What is really embodied in today’s report is more evidence that America’s dependency ratio is still rising and that the already crushing burden of the welfare state will weigh ever more heavily on an economy that is visibly failing as measured by any of the fundamental trends of performance. Indeed, it is well to recall that even today—after what the clueless occupant of the White House claims as 10 million new jobs when 90% of that number, in fact, represents “born again” jobs relative to the 2007 peak—-there are 110 million Americans living in households receiving means-tested benefits and 158 million in households that receive transfer payments of all types. Yet as the burden of taxation and public debt resulting from these trends weigh ever more heavily, it leaves the mad money printers resident in the Eccles Building stranded in an impossible corner.

While one can't help but snicker when the administration of a Nobel Peace Prize winner has launched at least 7 offensive wars, mostly against Muslim countries with virtually none obtaining prior approval from Congress, until now Obama at least showed the sense to realize that maintaining proper "made for propaganda media" optics matters, even if his underlying actions were the very definition of hypocrisy. And then something snapped. As reported by Yahoo News, the White House has acknowledged for the first time that strict standards President Obama imposed last year to prevent civilian deaths from U.S. drone strikes will not apply to U.S. military operations in Syria and Iraq. A White House statement confirmed the looser policy came in response to questions about reports that as many as a dozen civilians, including women and young children, were killed when a Tomahawk missile struck the village of Kafr Daryan in Syria's Idlib province on the morning of Sept. 23.