"...If the S&P500 were to come down by 50% look at the bright side. The Millennial generation can finally buy into America’s future at a good price. Look at what they are facing right now: very little return on their savings and very lofty prices that they have to pay to invest in their future. So we often forget that these wrenching dislocating financial events, particularly for older generations, can create opportunities for the young, and often create space for something more durable for the times to be built. So I’ll just summarize it with Schumpeter’s phrase: creative destruction. That’s how I prefer to see what happens in a Fourth Turning."
It’s easy to see evil in dead people. Stalin... Hitler... Pol Pot... people who tortured and killed just to feel good. The jaws of Hell must open especially wide to let them in. But who should go to the devil today?
The inability of the linear thinking ruling class to acknowledge the seriousness of our current circumstances and the implications of the era of depression and violence the country is about to experience can be witnessed on a daily basis by listening to mainstream media talking heads or politicians of all stripes who bloviate about economic improvement and progress just ahead. Could there be a better example of myopia, delusion and willful ignorance than the theme and opening line of Obama’s State of the Union speech: "The Shadow Of Crisis Has Passed" Do Obama and his advisors actually believe this Crisis is over? Or is he purposely misleading the American people about the seriousness of our circumstances because he has been instructed to do so by the men who really pull the levers of this country?
Pimping Passports For Chinese Capital: America's Ingenious Ploy To Raise CapEx From China's OligrachsSubmitted by Tyler Durden on 12/10/2014 23:54 -0400
A week ago we wrote how Pennsylvania is financing various state infrastructure projects by selling residency to Chinese "investors" for $500K each. As it turns out, the practice of pimping passports for Chinese capex is hardly new or just isolated to Pennsylvania and is, in fact, massively widespread throughout America's insolvent states whose tax collections are far below budget and which are in desperate need of fresh funds to embezzle invest in random boondoggles. Case in point, New York, where the Biggest real-estate project in a generation, the Hudson Yards, is now officially financed by 1200 Chinese families in search of visas allowing them to live (and park their stolen cash) in the US. In all, 10,928 foreign investors applied to invest through the program in the fiscal year ended Sept. 30, up from 6,346 a year earlier and 486 in 2006, according to U.S. Citizenship and Immigration Services, the program’s administrator. Most projects have been real-estate developments.
- Grand jury expected to resume Ferguson police shooting deliberations (Reuters)
- PBOC Bounce Seen Short Lived as History Defies Bulls (BBG)
- Home prices dropped in September for the first time since January (HousingWire)
- UPS Teaches Holiday Recruits to Fend Off Dogs, Dodge NYC Taxis (BBG)
- US oil imports from Opec at 30-year low (FT)
- Hedge Funds Bet on Coal-Mining Failures (WSJ)
- Putin Woos Pakistan as Cold War Friend India Buys U.S. Arms (BBG)
- How the EU Plans to Turn $26 Billion Into $390 Billion (BBG)
- The $31 Billion Bet Against Brazil’s New Finance Minister (BBG)
The following chart-heavy presentation from Grant Williams is among his best as he wends his way methodically from the 19th century to the present day (and into the future) examining "The Consequences of the Economic Peace." From Keynes to Kondratieff and from Napoleon to Nixon, Williams looks at the ramifications of several decades of easy credit and attempts to draw parallels with a time in history when the world looked remarkably similar to how it does now (as he notes "that last time didn’t end so well, I’m afraid.") The real day of reckoning (Williams notes rather ominously), when the unconscionable level of debt that has been built up during the fiat money era finally topples over under its own weight like the giant wave in The Perfect Storm, lies ahead of us.
It's lights-out for the world-renowned Dennis Gartman...
Global crises wreak havoc on all levels of existence, not to the mention the great cost to human lives. If we are to learn from history, however, it seems as though we might have to nevertheless brace ourselves for yet another one in the near future, as it marks the end of one saeculum and the start of a new economic paradigm aligned more positively with proper balances of trade, debt, and policies. The US is trying to postpone the crisis by printing money, however this is creating currency wars with nearly all major central banks in the world. As history has shown us time and again, causing this delay through money printing will only aggravate the problem, not only not preventing the inevitable, but indeed making the transition more painful and costly.
“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.”
The core elements of this Fourth Turning continue to propel this Crisis: debt, civic decay, global disorder. Central bankers, politicians, and government bureaucrats have been able to fashion the illusion of recovery and return to normalcy, but their “solutions” are nothing more than smoke and mirrors exacerbating the next bloodier violent stage of this Fourth Turning. The emergencies will become increasingly dire, triggering unforeseen reactions and unintended consequences. The civic fabric of our society will be torn asunder.
Tickets to see this year's frigid battle between Seattle and Denver would have cost no more than $85 if they had kept pace with the government's perspective of inflation (CPI). If Super Bowl tickets had tracked the S&P 500's reflationary trajectory, they would cost $275. Instead, in what is the biggest surge in face-value prices YoY ever - more than doubling last year's - the highest Super Bowl tickets this year cost $2,600 face value, a record high. However, resale tickets – where the market really sets the price – tell a quite different (and more) negative story. It’s not simply a lukewarm economy.
The start of 2014 was less than exuberant as the markets turned in the steepest loss for the first trading day of a new year since 2008. What does this mean for the rest of 2014? Likely not much. The old Wall Street axioms of "the first 5 trading days" and "so goes January, so goes the year" tend to be statistically more important. However, it did get me thinking about the new year from a more macro perspective. This weekend's "Things To Ponder" is a collection of ideas to get you to do the same.
- Wonder why: JPMorgan plans to keep pay roughly flat from last year (Reuters) - maybe this: Charles Schwab Warns "We Are In A Manipulated Market"
- Democrats overturn filibuster rule, increasing Obama’s power (FT)
- Day JFK Died We Traded Through Tears as NYSE Shut (BBG)
- When even dictators snub Obama - Afghanistan rejects U.S. call for quick security deal (Reuters)
- Obama Plunges in Investor Poll as Stocks Make New Highs (BBG)
- Iran, six powers struggle to overcome snags in nuclear talks (Reuters)
- Derision for China’s ‘rejuvenation index’ (FT)
- Bottom is in: Paulson Said to Inform Clients He Won’t Add More to Gold (BBG)
- German business sentiment rebounds strongly (WSJ)
- WTO on verge of global trade pact (FT)
"Preservation of Capital" is much more important than any other strategy in the marketplace and this has been demonstrated time and time again over the centuries. Gold, since ancient times, has served four functions. The first is for jewelry and this is a subject for lunch at the Four Seasons. This is not where we are dining today. The three other functions of gold are a replacement for a currency, an asset that rises in value in times of inflation and an asset that becomes more valuable when Fear is hard upon the market place. It is then a matter of viewpoint where you think we are now but given the sell-off in gold, the possibility of a dark horse or two beginning to trot after the German elections or the fantasy numbers pumped out of China becoming unmasked; gold is an interesting option these days. But there is potentially another 'trade'...
Am I a great investor? No, not yet. To paraphrase Ernest Hemingway’s “Jake” in The Sun Also Rises, “wouldn’t it be pretty to think so?” But the thinking so and the reality are often miles apart. When looking in the mirror, the average human sees a six-plus or a seven reflection on a scale of one to ten. The big nose or weak chin is masked by brighter eyes or near picture perfect teeth. And when the public is consulted, the vocal compliments as opposed to the near silent/ whispered critiques are taken as a supermajority vote for good looks. So it is with investing, or any career that is exposed to the public eye. The brickbats come via the blogs and ambitious competitors, but the roses dominate one’s mental and even physical scrapbook. In addition to hope, it is how we survive day-to-day. We look at the man or woman in the mirror and see an image that is as distorted from reality as the one in a circus fun zone.