• Sprott Money
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The Importance of the Macro-Political Landscape and How David Einhorn Used It to Predict 2010

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Mon, 05/24/2010 - 20:02 | 371177 Monkey Craig
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This article is fabulous and got me thinking in a new way....thanks! The best way to short this system (welfare/ warfare/ deficit spending) is to own gold, silver and oil. But, what if the people demand more government intervention when the current government intervention goes awry? Do we just go to a police state? Do we head towards the high inflation of Israel in the early 80s or Argentina in the late 90s?

 

The war for natural resources is on. Got H2O?

http://www.youtube.com/watch?v=7nD7dbkkBIA

Mon, 05/24/2010 - 20:14 | 371191 Kataphraktos
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“Blanche is leading the fight to hold Wall Street accountable and make sure that Arkansas taxpayers are never again asked to bail out Wall Street bankers"

Blanche forgets that NYC tax dollars, a.k.a. Wall Street bank tax dollars, have kept her little flock of inbred "Arkansas taxpayers" from starving to death via Federal government welfare budget transfers for decades. Dearest Blanche, always forgetting that she has always depended on the kindness of strangers.

Mon, 05/24/2010 - 20:17 | 371192 Monkey Craig
Monkey Craig's picture

nice....what America needs is more unemployed politicians

Mon, 05/24/2010 - 20:19 | 371194 Scarecrow
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Great read. Thanks for the article. Politicians are destroying the country.

 

 

Mon, 05/24/2010 - 22:49 | 371352 knukles
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Earth....destroying the whole f*ing thing.   Nowhere left to run and hide.  Tried under my pillow last night, belladonna induced, but they still found me in the morning.

Earth...destroying the whole earth.

Mon, 05/24/2010 - 20:21 | 371197 Chicago bear
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Would be interested to hear if he was in touch with a few other macro trends that are worth watching:

  • ~1.6 million U.S. college grads entering the workforce annually 25% unemployment, with '09 grads still looking while '10 grads displace them, and with questionable skills;
  • 30 million single male Chinese with very little to do, and few women to choose from; Chinese women have money and pick their man carefully; the rest will arm themselves for to fight anything that moves (oh, and Pyongyang is the closest national capital to Beijing than any other nation);
  • The cost to put on the Olympic Games, especially the estimated $4 billion cost pending for London's Games, on top of austerity, and having ugly logos to boot;
  • Generational conflict- 80 year olds working still, knowing how to work in austerity; 60 year olds loving the powers and not willing to give it up; 40 year olds, many who are much wealthier in stocks than their parents, many who are poorer in quality of life than their parents; 20 year olds feeling entitlement facing low paying jobs (the old "blue collar" is the new "tech collar" jobs)
  • Shortage of skilled labor in India, on the surface the world's great tech enabler; several sources say while there are a gazillion engineers, "only a small portion are 'employable.'" 
  • Who decides what to do with Iraq oil.  The internationalists would like to create a bidding among the various national military industrial firms rather than stake national claims to the oil.  Sure would be better for the U.S. to just cut everyone out and get Halliburton-baby and ExxonMobil to serve us the juice, moral stance be damned.
  • Whether wealthy American women go on a spending diet, really stop getting manipulated by Madison AVe, and get serious. They would crush the FED in one weekend of fasting from spending.

The Tea Party (while I like its mission) will end up being a cohort like the '94 class of new congressmen.  It will have several new entrants and will take decades if ever to turn into a new party. The establishment as we speak is undermining the Tea Party members ability to afford to organize and give. Dollars are getting diluted. 

I say one tactic is for U.S. consumers to create volatility. Pick a day and everyone (I mean everyone) buy 1-2 items at Target. Will wipe out their inventory while doing a "positive" thing for the economy.  Next day, Target freaks out since their JIT systems will fritz.  Another random day later, everyone buy 1-2 things at Wal-Mart- done. Costco- done. Ace Hardware- done.  One by one, the consumer will show who's boss.  won't cost much and it will wreak havoc on JIT and supply systems.

 

Tue, 05/25/2010 - 00:15 | 371402 sumo
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Another trend to watch: foreign-born entrepreneurs returning to their home countries because of better opportunities there:

http://www.businessweek.com/technology/content/mar2009/tc20090318_162454...

Why entrepreneurial innovation matters (http://web.mit.edu/krugman/www/myth.html):

In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent.

 

Mon, 05/24/2010 - 20:21 | 371198 dumpster
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sinclair on whats going on

Dear Friends,

The power of the derivative manufacturers is clearly stronger than the combined power of world central banks.

The mockery made of the $1 trillion Shock and Awe of the euro rescue package is telling. The public relations that Monday had to be approved by the architects of what is now a joke.

The real story is that the credit default swaps derivative dealers are stronger than all central banks put together. Soon markets will see this and rush to the side of the stronger which are the currency shorts of the Western world.

Gold will be purchased for a very long time to come as currencies will offer no storehouse of value. The central banks have publicly lost the battle and no cover will serve to keep this realization away from international money.

The euro pulled back almost, but not quite, to the base line of the flat bottom triangle and is now looking at $1.10 support. The size of the fortunes which are being made by the attacking forces boggles the imagination.

Those that will make the largest profit in gold are just the same forces now attacking Western world currencies.

Mon, 05/24/2010 - 20:26 | 371204 dumpster
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and no obvious pragmatic purpose has breached all time highs; and with such success inevitably comes .. yadda

 what is no pragmatic purpose lol gold has the greatest value as money and will be the underlying basis for a sound monetary system in the future . whats not pragmatic about that, its not obvious because we are dealing with Keynesian wonder zits ... and born again knot heads ... in my very humble opinion

Mon, 05/24/2010 - 20:33 | 371213 JackTheOffer
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"... Iran continues to pose the biggest threat to the global economy ..."

Bullshit.

The biggest threat to the global economy is the United States of America.

We're #1!  And any 3rd rate, 3rd world poseur had better not forget it!

 

Mon, 05/24/2010 - 20:39 | 371217 dumpster
dumpster's picture

thats a 10-4 and the turd  head killers that raid the cookie jar for the wealth of the nations ,

 

how do these brain dead not see that iran is not the problem ,, but a empire of guns and obnoxious political shit heads

Mon, 05/24/2010 - 20:43 | 371221 dumpster
dumpster's picture

every one in the article are perplexed by afganistan ..

get the heck out ,, iraq   ditto   they  are their on a lie

 

and still the no brainers white wash and try to explain ..

 

Mon, 05/24/2010 - 20:52 | 371235 doolittlegeorge
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don't forget to turn that slice of white over while commenting.  it's getting a little burnt on "side a."

Mon, 05/24/2010 - 20:54 | 371240 ratava
ratava's picture

the fx intervention can provide a bunch of nasty intraday spikes through less dense areas but they are not turning the trend. trying to do that would drive the countries bankrupt even faster. orderly decline with a stophunt here and there is name of the game.

Mon, 05/24/2010 - 20:55 | 371244 RichardENixon
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"While CNBC talks about things like CPI, PMI, and Cramer’s PMS instead of bigger picture geo-political developments, their importance cannot be understated." I assume that you meant to write "their importance cannot be overstated."

Mon, 05/24/2010 - 21:11 | 371268 Kayman
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Ahmadinajerkoff cannot fight a 2 front war.  And I think he will get what he is hoping for.

The great god in the sky will martyr our boyo and grant him 75 virgins as his reward. 

Too bad for Ahmadinajerkoff that the virgins are goats.

Mon, 05/24/2010 - 21:38 | 371294 dumpster
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and the western lizard who push the fight ,, are prepared to sacrifice the army of the youth .

for their paradise power empire . 

the great white hope comes and destroys the gentiles //in the clouds of heaven 

every one has their pet killers  ... and a Viagra pill

 

Mon, 05/24/2010 - 21:52 | 371309 TexasAggie
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Remember, we have the best Congress (HR, Senate) and President that money could buy. Until Congress can be fixed, it will be hard to control spending. The Repubs ran in 94 on limited government and then started spending like there was no tomorrow.

The only solution is to get rid of the lifetime Congress, and staffers: For HR, every 2 yrs pick two names from REgistered voters in the District 30 days in front of November 1st and the two will compete.  The winner will have his/her finances placed in Trust and if in 2 yrs, the trust is greater that when he/she entered office after accounting for inflation, the member is executed, and his family loses everything (This keeps a members family from trading on the members position). The same applies for Senators.  Staff members can only work on Capitol hill for 5 yrs and cannot work for a lobbying firm until 5 yrs after. 

After we execute several for breaking these rules, the rest should improve.

Mon, 05/24/2010 - 22:20 | 371326 AccreditedEYE
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Thank you for the great read. A common theme I see running throughout is our mindless focus on the short term for EVERYTHING. In finance and politics, nothing is done with a long term purpose anymore. We try to "game" this or "spin" that while at the same time shooting ourselves in the foot every time. While I am sure the flow of information has had a lot to do with this, we need new leaders in finance and politics to stand up, get beat up by naysayers and the MSM and make the really tough decisions. I'm not trying to be Pollyanna here.. the system will require this as we experience total breakdown. I'm just hoping that there are enough individuals of this caliber to step up and make real change when the time comes.

Mon, 05/24/2010 - 22:48 | 371338 Mercury
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If our fate really does hang in the balance upon the outcome of the "Campaign of Cuomo" we're already beyond hope.

More importantly, if Obama stops getting a free pass on his handling of the BP oil disaster that is going to be a big deal and that will be reflected in the markets. If beaches start closing across half the country's coastline in the middle of the summer people are going to think Obama held back government aid in order to distance himself politically or give a boost to "green" energy sentiment or both.

Mon, 05/24/2010 - 22:33 | 371339 sethstorm
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While posting a trade deficit in March has calmed the domestic calls for the appreciation of the Yuan, I doubt anyone would characterize the US-Chinese dynamic as warm. The Google censorship conflict presents an altogether different political challenge and I’m sure Hilary Clinton’s remarks today calling for China to increase corporate freedom and transparency failed to improve relations. Slowly but surely, we are seeing China capitalize on its economic power to gain political power, something that the US has largely had a monopoly upon the previous century or so.

Time to fix that problem with China such that they gain no ground at worst, lose ground at best.

Mon, 05/24/2010 - 23:41 | 371381 The Alarmist
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Note that the common theme in the post is the active intervention of the state, with the problems resulting from A deciding that B needed something or should be given something, and C (you and I) should pay for it.

Tue, 05/25/2010 - 01:34 | 371449 Apostate
Apostate's picture

Speaking of the male/female imbalance in China...

Why hasn't anyone started shipping mail-order brides there?

Anyone wanna start a profitable-as-hell flesh trade?

Great article, by the way.

Tue, 05/25/2010 - 01:45 | 371454 laosuwan
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Our military sources have learned that the USS Truman is just the first element of the new buildup of US resources around Iran. It will take place over the next three months, reaching peak level in late July and early August. By then, the Pentagon plans to have at least 4 or 5 US aircraft carriers visible from Iranian shores.

OFF TOPIC BUT INTERESTING COINCIDENCE

Most Asian astrologes are predicting ...

JULY - AUGUST: Misfortune prevails during these two months. Refrain from travelling if not necessary. Be prepared for a disaster and outbreak of a disease. There will be two accidents related to the sea.

Tue, 05/25/2010 - 06:46 | 371510 Anton LaVey
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Anyone who believes in astrology -- Chinese or otherwise -- should have their ZH permits revoked.

And parotting whatever DEBKA says is fairly close to believing in astrology.

Of course, I don't know anything, so make of that what you will.

 

Wed, 05/26/2010 - 03:08 | 373796 laosuwan
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I don't know anything, so make of that what you will.

http://www.youtube.com/watch?v=ke5Mr5eCF2U

Wed, 05/26/2010 - 03:49 | 373822 laosuwan
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By the way, Gabby, did you know that classic Fibonacci ratios used by technical traders are approximations of Planetary Motion Ratios, the time it takes for two planets sequentially distant from the Sun to make a complete revolution around the Sun, such as Mercury and Venus, or Venus and Earth?

 

 

 

When you do the math of each possible ratio you get a number that is closely approximated by a Fibonacci ratios.

 

 

 

 

Tue, 05/25/2010 - 05:23 | 371494 Coldcall
Coldcall's picture

Interesting article but i think the writer is slightly confused about some laws of nature which blur the cause/effect mechanism one sees in "linear" type systems.

Economies and markets are effected by causal factors such as those the writer mentions. However, because there are probably an infinite amount of such factors all pushing and pulling - so to speak - prediction is almost impossible.

This is my major argument against the agw bandwagon. The climate system, like the markets, are open ended non linear chaotic systems. Because we cannot measure initial conditions to infinitie accuracy our predictions are at best "good guesses".

Nature's one major law is that whether at macroscopic or microscopic levels, she is inherently unpredictable.

Thats not to say one cannot make statistical predictions, but pretending there is any certainty is just good old hubris.

 

Tue, 05/25/2010 - 06:10 | 371502 kwvrad
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OFF TOPIC BUT  just found this out,,

BP just ordered another million tonnes of Corexit! This poison is forbidden in the UK and many other countries. Even though many experts warn since weeks to use these huge amount of this poison in the gulf, BP insists to use it further.

so lets see it clear: Corexit is made by ‘Nalco’. According to the company webside the owners are.... the envelope please....

 In 2003: The Blackstone Group, Apollo Management L. P. and Goldman Sachs Capital Partners bought Ondeo Nalco corp.

Tue, 05/25/2010 - 06:44 | 371509 Anton LaVey
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While the US states do not face the same difficulties as their European counterparts, their problems may be just as difficult to overcome.

Oh boy - California, New York and Illinois are on the brink of bankruptcy, and US states do not face the same difficulties as Europe?

Mark my words: the collapse of the USA will make Europe's current problems feel like a walk in the park.

And, to get back to the current article: only bloody morons think that the economy is not political. Ask any Austrian parrot on ZH.

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