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Life Goes On
Read the latest Stock World Weekly: Life Goes On
Excerpts:
While Japan’s crisis overshadowed other news, tensions in the Middle East continued to escalate. Rebel forces in Libya were pushed back to their stronghold city of Benghazi, losing town after town on the way. Gadaffi’s powerful counterattack consisted of armored formations, troops equipped with heavy weaponry and backed by air support. On Thursday, the United Nations Security Council passed a resolution imposing a no-fly zone over Libya and authorizing “all necessary measures” to protect civilians. This was followed by Saturday’s assault upon Libya by a coalition consisting of French, U.S. and British forces acting in response to continued attacks on civilians by the Gaddafi regime.
Tensions in the Middle East caused oil prices to climb, with West Texas Intermediate Crude gaining 1.7% and ending the week at $103.24. We have been watching the $105 level as a target for initiating a short position in oil.
[...]
Phil also discussed his premise for being cautiously bullish going into next week. Short- term, the pullback we were looking for occurred, giving us more confidence that our Breakout 2 levels would hold. Phil explains “Keep in mind that inflation is pretty much our entire bullish premise as the Global Economy is not really in such good shape, but prices do keep rising and that makes Corporate Revenues rise and that makes earnings rise as well – IF businesses manage to control their input costs. Since Real Estate is still in the dumps, that key cost component is well under control for those businesses still solvent enough to pay their rents. Labor costs, if anything, continue to plunge, so as long as we avoid businesses that are susceptible to commodity input costs – we should do fine.” Is there a limit to how long inflation will inflate the stock market? Yes. “Once the people who benefited from stock and commodity inflation begin to cash out and buy things – they then begin to send a wave of price inflation, also from the top down, that can hit the lower classes like a tsunami that cannot be stopped.”
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Pope Benedict and Prince Charles joining forces to behead Dimon, Paulson, Blankfein, Buffet - scuttling the IMF - and becoming allies of Islam and the Tea Party by ending usury and imposing a flat tax?
Good piece Falak.
Falak, this would be a very interesting piece, if you could explain it to non-initiates. I've read more philosophy than 99% of people, but all those arcane references lost me fast.
Seriously, I'd love to read the expanded and explained version.
There are tipping points in western civilisation's history when empires die. One question I asked myself is does history repeat itself. Of course never 100%. But history, inexact human science, has as arrow this concept of entropy. All things tend to get orderly under the influence of great men only to end up disorderly, inevitably, under the impulses of human nature which loses sense of reality precisely as those born to power lose all memory of the trade-offs (mostly about virtuous human mind set which allowed their forefathers to get there in the first place). Thus it is often about men who reach those same tipping points when the superstructure of inherited power becomes too difficult to handle, too complex, in the face of hungrier, younger opponents. Life is an interactive game and power brings corruption, paranoia, as we see opponents both within as without, forgetting life's primary lesson : we are our own enemy when we want to preserve power whatever the cost, we become inexorably agent's of times arrow, of entropy, and the rot sets in faster because of that.
This is the inevitable cycle. But it is triggered for different reasons at different moments in history.
First how does western civilisation differ from others? Answer : it is simpler and based on four principles :
a) Logic. Never junk logic. One lesson of history. Build on it.
b) Fact. Never junk facts. Always the theory. To look for another synthesis of the analysis of the facts.
c) Free will and debate. The individual leads. Commonality through debate brings out the consensus.
d) Act to achieve the objective. Western civilisation is pragmatic and reactive, then active. Never obsessed with sophistry, never subservient to obscurantism or dogmatic idealism. We have learnt the hard way. By trial and error. That's history. So we never junk it. We incorporate it's lessons. To build our institutions. Oriental civilisation has never achieved this clarity, this repetitive, heuristic empirical progress, this logic building, this institutional memory bank of our thought/experience process. It is our greatest asset through the ages. Oriental civilisation can never separate myth from fact, dogma from reality, subjectivity from objective analysis. Great competitive advantage over the ages that's now disappearing as they've learnt so fast from us since 1970. Globalisation has bridged this psychological gap. Orient and Occident merge. They are us now.
This process in our civilisation is repetitive since time immemorial. It is the foundation of our civilization since three thousand years. We have never changed it. Religion played a part in building this process, as the initial source of logic temporarily died when Rome/Greek inheritance died. Only to be revived during the renaissance. Then the cultural input limitation of religion into the logic process became evident (not as source of spiritualism to the individual as this is still so relevant. Logic cannot answer the essential existential, metaphysical mysteries of life. The individual still needs spirituality/religion to face this unknown. Not the state, for policy making).
Having stated some of the philosophical assumptions in my analytical framework let's see how history repeats itself in reality to pan this out :
1° Greece and Athens where it all began. They failed because they could not reconcile democracy at home and hegemony abroad. The Penepolesian war leading to Athens's subsequent demise was based on this contradiction. Socrates brought it out in his analysis of two types of justice that this implied : those for the winners and those for the losers. Moot point in all empire building. Corner stone for revolt and resentment that brings the empire down later on when it gets too top heavy. This is now true in today's USA...
2° Frankish Empire : Built on demographic explosion around year 1000 AD. Fueled by "God wills it" in trying to conquer Holy land, after having conquered England, Sicily, southern Italy and then having crossed over into Byzantine Anatolia. Basic flaw : Religious fanaticism blurred their strategic analysis of adversary's strength. The Moslems united under Saladin precisely when the Crusaders got divided between the different frankish/teutonic nations (France, England and Sicily/Germany), local barons who had become 'doves', the greedy, quarrelsome new comers who were 'hawks', and the orthodox Byzantines who distrusted the latin Franks of catholic obedience. It led to the destruction of Constantinople in 1204 by the Franks to the benefit of capitalistic Venice (first capitalistic, monetarist city republic in west). Then to the subsequent caving in of arrogant Frankish power who thought nobody could fight their heavy armor. From 1250 (Mansourah) to 1415 (Agincourt) they never won a major battle. It took Joan of Arc to bootstrap the french army with a modernised permanent professional light cavalry structure, replacing the old feudal hierarchy. It heralded the birth of the modern nation state. As concomitant to the death of feudalism was the decline of the catholic church with the Renaissance rebirth of those greek ideals that were the basis of logic and the decay of dogma henceforth. The Gutenberg press had a great impact, alike the Internet today, in disseminating this re-found logic throughout western society, which never looked back for five hundred years with Columbus's subsequent discovery. The age of Enlightenment finished off that progressive transformation. Until we entered the industrial age and the subsequent dichotomy between individual liberties and collective wealth that this transformation entailed; as capitalism gave to the entrepreneur a mega Archimedian lever to move the world.
There are many parallels between current USA and Roman Empire and also the Frankish Empire during the crusades. One fascinating parallel with Rome is the tipping point in its history when the Republic became Dictatorship under Caesar. What caused the Republic's demise was all out victory over Carthage and Greek city States. Rome destroyed both Corinth and Carthage in -146 BC, making it the commercial hub of Mare Nostrum; not only political but commercial wealth unimaginable. It's population doubled/tripled through slave labour, they had land/grain speculation cycles after cycle (real bubble economy). It led to civil war between Optimates (conservatives) and Populares (Democrats) for sixty years. Until Caesar having conquered Gaul and Spain made it totalitarian ...
Second analogy : Frankish Empire. Between Saint Louis and GWB. Both young nations, both full of ideological certitudes that exploded in their faces and led to long decline of frankish power from 1250 to 1453 (as above). Saint Louis was ferocious with Occitan 'heretics' at Montsegur; alike GWB at Guantanamo Bay and Abu Ghraib...
Two past examples to meditate about.
The USA being the greatest proponent of capitalism we have now inherent in its body politic all the ills that Marx, its greatest critic had stigmatised, without finding a solution to the problems he had identified. Keynes was his most able son. But even his medicine had its limits. What's followed has exacerbated the divide between indidivual wealth and collecitve poverty.
The issues that are now evident in this demise of American capitalism as I see it are as follows:
1° We thought that Man had tamed Nature thanks to the industrial/ scientific revolution. We now find, as in Japan today, that it is now nature that challenges Man. Both ecologically, in the primal sense as well in terms of resource limitations of the earth's crust. We urgently have to change our growth model.
2° This model change will mean many slow growth years in developed countries while the EM will continue to play catch up ball using the old model, with reduced populations (mega-big painful future challenge), while the developed world reinvents a new model adapted to sustainable development. The USA urgently needs to put it's house in order. It may lose thirty to forty years to do so. As this generation of plutocrats do not want to. One day it will come. Will history be as harsh with the current US elite as it was with Rome? Time and the resolute ability of US people to set the score straight will tell.
TY, enjoy, if you find this stimulating.
When in doubt, go to War
Why "War is merely the continuation of politics by other means.""It is political suicide for politicians in the west to make the necessary cuts in government expenditures....
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/02/why-war-is-merely-continuation-of.html
Archduke,
Please give Karl von Clauswitz his due.
the second time Van Clauswitz has been quoted or paraphrased without attirbution.
I'll make it easy. http://www.military-quotes.com/Clausewitz.htm
The guy was visionary, to say the least.
German military was ridiculed (Tolstoy), because it tried to be systematic, to copy the philosophic ideas of German idealism. Clausewitz was a Prussian officer. Remember von Steuben? They always had great officers and certainly a strong military tradition.
We'll see how the EU will do in Lybia.
All I noticed this weekend was that if Kadafi kills one EU soldier, that the country that send out that soldier will need to pull back all it's soldiers.
Almost every defense minister is now already witchhunted for possible death soldiers.
Our defense minister dared to say that it's possible soldiers would/could get killed. The press almost lynched him...
The worst possible outcome. Gadafi or his cronies cling to power without EU troops on the ground. And now you have a sworn enemy in the Med with plenty of cash. It can't be good. The word "punked" comes to mind.
Did you write that article?
Hey Ilean, I wobble here.
Bullish to what? There are only 40,000 different things you can trade in the markets.
"People cashing out and buying things" Like what, food?
You don't seem to understand the pysch of any investors, do you?
It is not a game of shits and giggles. It is all they have for the future. Of course for the early retiree, who doesn't know his ass from the cash in his wallet.