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The Market Ticker - Yes, These Are Police Officers... Right?

The Market Ticker - 2 hours 58 min ago

Has the balloon gone up yet?

Really folks, when does it go up if it hasn't by now?  The latest is this little ditty:

An Arkansas lawyer representing current and former police officers in a contentious whistle-blower lawsuit is crying foul after finding three distinct pieces of malware on an external hard drive supplied by police department officials.

The attorney is suing the department on behalf of three officers who, it is alleged, were illegally investigated after reporting wage-and-hour violations along with wrongful terminations.

In response to his (lawful) discovery request the cop shop apparently loaded three pieces of malware on the drive they gave him with the responsive documents --.......

(Click link to read more)

Categories: Economics

3 Simple Steps to Keep the Stock Market from Driving You Insane

The Daily Reckoning - 3 hours 20 min ago

This post 3 Simple Steps to Keep the Stock Market from Driving You Insane appeared first on Daily Reckoning.

Is the stock market turning you into this guy?

Look, you’re not alone. We’re all dealing with an irrational, psychotic monster of a market. It’s a three-headed monster running on pure emotion. It doesn’t follow logic and if you’ll go nuts if you expect it to. You could also lose a ton of dough investing on that assumption.

But today I’m going to save you from that padded cell, my friend. If you take a few minutes to think about the market differently, you can save yourself a lot of pain and misery. Added benefit: it could also make you a lot of money. And who knows, you might even start enjoying life again!

So let’s get to it. Here are three things you can do to keep the stock market from shipping you off to the funny farm:

1. Stop staring at 5-minute charts

It’s tempting to watch the market during the day. And any decent online broker now gives you access to millions of ways to absorb real-time data. You don’t have to be Bud Fox to get access to up-to-the second quotes and one-minute candlestick charts. Hell, that’s the starter package in 2015.

But don’t do it. You can’t will stocks higher or lower. There’s no point in cheering on your open positions. In fact, staring at your stocks all day might actually cause you to make terrible snap decisions that ruin your trades. Your emotions and your trading success go together like oil and water. If I sound like a broken record with that message, tough. It’s that important. If you want to be a successful trader chuck your emotions down a well.

Set your buys. Set your stops. Then go play in a sandbox or read War and Peace. Unless you’re daytrading, that blinking real-time chart is nothing but trouble.

2. Start thinking about your risks first

The stock market offers a bonanza of opportunities to make money. You’ll reap the rewards if you put in the work. Or I should say, if you put in intelligent work.

Too many traders spend all their time fantasizing about all the gains they’ll make. And that blinds them to the risk. They see a perfect setup and start thinking about that fancy new car they’ve got their eyes on. You know where I’m going…

The market throws them a curve ball they didn’t anticipate. Then they have to figure out how to exit their trade with the least amount of damage. But they’re emotionally invested. Since they’re so committed to their stock, they can’t pull the trigger when they should. And they get crushed. That fancy new car will have to wait.

But the worst of it could have been avoided if they’d simply planned ahead and picked out a stop loss level before the trade. Better to lose a little than a lot.

Always have a stop loss level in place before any trade. And never back off it, no matter what. Remember what I said about emotions.

3. Repeat after me: “The market will do whatever it wants, whenever it wants.”

You’ve probably heard a lot of correction talk lately.

That’s because everyone and their third cousin thinks stocks needs to move lower.

But guess who doesn’t care? Mr. Market, that’s who. The stock market doesn’t care what you think. It doesn’t care what anyone thinks. So many people waste their time and energy talking about what the stock market should do, instead of focusing on what the market’s actually doing.

If that’s not insanity, I don’t know what is. None of us can make the stock market magically turn into a logical, rational creature. Ain’t happening, Jack.

So you have a choice…

Drive yourself nuts trying to convince a completely irrational market to behave the way you think it should. Or watch the signals it fires off each day and try to exploit them for profit, even if they don’t make sense to you. Or maybe I should say, especially when they don’t make sense to you. Because they often won’t.

These rules could help make you a lot of money over time. Ignore ‘em and you could be heading for the loony bin. Then the poor house. Or maybe vice versa.

The choice is yours…


Greg Guenthner
for The Daily Reckoning

P.S. Don’t let the market drive you insane. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

The post 3 Simple Steps to Keep the Stock Market from Driving You Insane appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - So About That So-Called 'Charity'....

The Market Ticker - 5 hours 36 min ago

I have to admit, this is a pretty impressive tax return.... and belies a simple question: Why would anyone "donate" to such a "charity"?

$144 million in direct contributions and grants; $149 million in total revenue (2013 numbers); of that $8.9 million went to grants paid (that is, about 5.9% of the funds that came in went to charitable causes.)

The rest was either "absorbed" (that is, the "charity" still has it) or was paid out in things like executive compensation.

You might be interested in knowing that the "charity" had 35 employees with reportable.......

(Click link to read more)

Categories: Economics

"What Does a Successful Artist Look Like at a Time of Global Change?"

Energy Bulletin - 6 hours 44 min ago

Sarah Woods and Fern Smith are founders of Emergence and authors of Culture Shift: how artists are responding to sustainability in Wales.

Categories: Peak oil news

Congresswoman Declares Pipeline and Oil-by-Rail Regulatory System "Fundamentally Broken"

Energy Bulletin - 6 hours 53 min ago

“The system is fundamentally broken.”

Categories: Peak oil news

It's Time to 'Do the Math' Again

Energy Bulletin - 6 hours 53 min ago

A new report released today explains why contemporary climate change policy-making should be characterised as increasingly delusional.

Categories: Peak oil news

Culturally Appropriate Urban Farming at GrowHaus in Denver

Energy Bulletin - 6 hours 54 min ago

The GrowHaus, a non-profit social impact center and food oasis, in the neighborhood of Elyria-Swansea in North Denver, Colorado, is indeed a gem in its community.

Categories: Peak oil news

Degrowth, Sustainability, and Tackling Global Inequalities

Energy Bulletin - 6 hours 55 min ago

One of the provocations the degrowth movement offers is whether true sustainability, one planet living, actually implies a rejection of the affluent consumer way.

Categories: Peak oil news

Peak Oil Review - Apr 27

Energy Bulletin - 6 hours 55 min ago

 A weekly roundup of peak oil news, including: Oil and the Global Economy, The Middle East and North Africa, China, Russia/Ukraine, Greece and the EU, and the Briefs.

Categories: Peak oil news

Bioregions: Notes on a Design Agenda

Energy Bulletin - 7 hours 21 min ago

In myriad projects around the world, a new economy is emerging whose core value is stewardship, not extraction.

Categories: Peak oil news

"What does a successful artist look like at a time of global change?"

Transition Culture - 11 hours 32 min ago

Sarah Woods and Fern Smith are founders of Emergence and authors of Culture Shift: how artists are responding to sustainability in Wales.  Fern spent many years as artistic director of Volcano Theatre Company, an experimental theatre company.  In the last 5 years she has been rethinking the role of the arts, inquiring "what is the Arts’ role in a time of global crisis?"  The ensuing conversation led, among other things, to meeting Sarah and to starting Emergence, a ‘creative practice for a sustainable future’.   Sarah's journey is similar, having been a successful playwright who, like Fern, stepped back to as "if I really did want to create change in the world, or at least create the conditions for change, how should I best do that?"  She now works much more closely with communities and scientists, out in the world. 

This week is the week when Lucy’s book comes out, and it pulls together many of these things; you’ve talked about there being a movement and there being a lot of people who were feeling disparate but are now feeling like they’re coming together around this. Why does Lucy’s book matter, do you think?

SW: There was a really interesting experience as Lucy started to search for people and to bring people together to start making this book. For some of us it’s been quite a long haul, obviously most of all for Lucy. It’s been a long process and a really revealing process. A group of us came together, and working individually with people over the course of that week, there was such a relief as people realised we were all talking the same language, and as people started to find the words to describe their own practice. A lot of people just do what they do, and sometimes finding ways to reflect on that and explain it, sometimes there just isn’t time for it.

That process was hugely important for the artists involved. Obviously, in any work of communication, even before publication it draws more and more people in, and then hopefully after publication draws more and more people into that community again. It really was a very timely build of a community in practice.

FS: I had an email a couple of days ago from a young artist currently doing her dissertation.  I’ve heard a lot of people talking in this way. She was actually saying I was thinking of leaving the Arts, because she just felt it wasn’t relevant. She came across Culture Shift, someone directed her to it. It was a beautiful email because there was such relief, that she was saying "ah, there’s a place, there are people doing this already".

It seems maybe to a lot of young people who are going into the Arts that actually it’s the business as usual model in the Arts. You get in debt, you either get unemployed or you get employed in the Arts, but you just keep on doing it. You keep making art and then more art and more art.

However fantastic and inspiring some of our pieces are, I think that there is a whole movement of artists just saying "maybe this isn’t a luxury that I can afford". I don’t mean that art is a luxury that society can’t afford, I absolutely don’t mean that. But those people who have maybe been activists in their own lives, or are really questioning the old models, they look at the Arts and in terms of the mainstream there isn’t much leadership for social change going on.

Unless those people are aware that there are these pockets, these mini-movements or people actually galvanising activity, then maybe those young people are going to leave the Arts and we’ll lose those potential leaders of future-making art. So ‘Playing for Time’ is so important. I wonder how much of a splash it will make. I hope it makes a big one.

But in a way, like the most important things, it’s the ripples. People passing on the book that gets passed on to somebody else, and people go "oh my God, I didn’t know that this was happening and I want to be part of it". Actually, with ‘Culture Shift’ as well, people have echoed that relief that people are naming something that is already happening, and then people go – that’s exactly how I’ve been thinking, and I didn’t know other people were questioning.

As an artist, I can align my art with my deeply held personal values. We had a bit of a sense that certainly in the first survey that we did with Emergence, a lot of artists were saying "I believe this in my home life and my personal life, but actually when it comes to the Arts, because I’m a revenue-funded client from the arts organisation, my priority to keep receiving my funding is to make the shows, to keep on making the art which keeps on keeping our company in funding".

Because of the pace that everyone is working at the moment in every single sector, there is less time to stop and to question. Actually a lot of those artists in Playing for Time and in Culture Shift have often been artists that have stopped. It’s not been an easy transition to go – alright, I’ll just move and nudge my practice a little bit, and now my practice will become more consciously in service of people and the planet. Often it’s not that comfortable.

Artists have always been leaders of change. They’ve always been pioneers in those paradigm shifts within society. But sometimes we all run scared and we all want to keep our funding and we all want to keep our jobs. Actually, the leadership in ‘Playing for Time’ and the leadership in ‘Culture Shift’ was coming from the artists. It wasn’t actually coming from the Arts Councils and the policy makers.

But what’s been fantastic is, certainly in Arts Council of Wales, they want this change to be led by the artist. Then the Arts Council are actually supporting that. So the same in England. It’s been a real artist-led movement, and hopefully the policy makers will then join with the artist in creating change, rather than it being a tick box strategy first and then artists feeling like – actually these funders are saying this is what we want to fund, let’s start making art like that. It’s actually happened the other way round, and I think that’s been the exciting thing.

What is Art?

SW: It goes back to the Hamlet thing of putting a mirror up to society and for me that’s what art is. It enables society to better see itself, I think.

FS: For me, there’s something about art that reconnects us with a source. A source of possibility, a source of inspiration, a source of divine. Whatever language different people use. But it’s something that can connect us, art can connect us with the spirit of the depths and the spirit of the times. I think art is what happens in the middle when the spirit of the depths and the spirit of the times come together either in a beautiful way or in a clashing, tough, difficult way.

On your website you talk about different things, you have bullet points of things:

  • "Live the future now
  • acquire information and practical skills which enable us to put our principles into practice
  • develop effective ways to communicate this to a wider audience
  • resource ourselves to keep on doing the work that’s needed to be done
  • re-enchant ourselves with each other, with art and with life".

They struck me as five things that resonate very deeply with Transition and what Transition groups are doing. This question about re-enchanting ourselves with art and bringing art into Transition is something that Lucy’s book will very much put on the map, but which has been growing since its inception really. I wondered what your thoughts were in terms of what the Arts bring to Transition, what dimension the Arts can bring to the work that people who are doing this work are doing?

SW: I’ve felt for quite a long time that in trying to wrestle with the complex challenges that we have in looking at how to move through this Transition, this culture shift, that there is an art-shaped gap really. I feel that for myself and also for the artists I’ve spoken to engaged in this work now, that we are responding to a need –that’s what artists do.

Artists pick up on what’s happening in society from talking to people through an innate curiosity that we live with all the time. The reason artists were pulling away was that there was almost a calling to go and do something else. There is this gap, and it exists everywhere where this change is happening, and there are a lot of roles that art can play that you wouldn’t necessarily traditionally think that art might play in this sort of a journey.

That’s why, for the artists involved, there’s been a confusion to the point of people saying "are we artists any more? Is this what artists do?" I’m certainly not sitting up in my garret smoking cigarettes and typing on my typewriter, which is the sort of view I had of a writer when I first set out in my career. What I’m doing is a much more renaissance activity. It’s multi-faceted. In trying to find out how we usefully fill this gap, we’re taking on a different role which has been hugely challenging and continues to be challenging but is also very inspiring.

I’ve been trying to teach this to first year students at Manchester University to really distil some of this and boiled it down to the idea that artists are having a relationship to change, so are able to give communities, audiences, people involved a relationship to the idea of change. The artwork itself is about change, and has a relationship to change. It’s about participation so it’s not about audiences and spectators. It’s about people being active. Augusto Boal, the founder of Forum Theatre who was working with art and social change in Brazil, talked about 'the spectactor', somebody who watches and also takes part. Participation is absolutely key to this practice.

It’s also cross-form. A lot of my work is narrative arts meets activism. I also use film. I have members of the audience up on stage. I do all sorts of different things and I interview people. Everybody I think would say the same, that we’re working with a very cross-form practice. Those things have developed in response to what is needed.

Anyone in Transition, anyone dealing with the sort of culture shifts that we’re trying to manage should see the arts really as a way of responding to that, in a way that you might call out the Green Flag or somebody when you break down. Actually, the artists are trying to come into these situations of – again Augusto Boal talks about the Chinese word for 'crisis' meaning both danger and opportunity.

Artists are trying to come into those moments of both danger and opportunity and ensure that we land more squarely on the side of opportunity while taking into account danger. So it’s very much a renaissance practice that’s building up. It’s also about holding space, about enabling dialogue, about creating empathy and connection between people, bringing them out of isolation and many other things that means that this is a very useful tool for anyone who’s feeling that they’re on the turn I suppose in terms of trying to manage change.

FS: Suzy Gablik, an American art critic then moved more and more closely to this ecological and relational art practice. This book ‘The Re-enchantment of Art’ almost feels like it has been a handbook for change for artists of this particular stripe and also a manifesto and a provocation. The book itself, even though it was written 20 years ago is having real renaissance and now to a lot of artists who are working in this Culture Shift or Playing for Time way are really getting support from what this book says. The subtitle of Lucy’s book comes from a Gablik quote: ‘making art as if the planet mattered’ or ‘making art as if the world mattered’.

She asks a very significant question which has been a provocation for us within ‘Culture Shift’ and also ‘Playing for Time’, she asks the question "what does a successful artist look like at a time of global change?" Of course, as artists, we often measure our success in the number of publications, the number of plays that have been put on, the number of international tours, the number of world festivals that we show our work at, or art publications that cover us. But she’s saying actually, in a sense that is a successful artist in terms of the old paradigm. That’s a live question, I don’t think it’s been answered yet and that’s why it’s such an interesting question at the moment, what does a successful artist look like at a time of global change?

The one definition of sustainability we come back to again and again from Professor Tim Jackson is “the art of living well within the ecological limits of a finite planet.” Just that phrase ‘the art of living well’, it feels like something you could live your life by. It’s not just artists that can do it. So it’s about how do we live more artfully.

There’s also this sense in the book that it’s not saying artists own creativity or artists own the arts. It is this sense of saying actually an artist is not a kind of human being, but a human being is a special kind of artist. Equally Joseph Beuys is saying everyone is an artist. What we’re saying and the artists who are involved in this relational participatory spect-ator practice is – we are all artists, and how can we together learn to live more artfully together? We don’t necessarily have to use words like sustainability or sustainable development. They might be useful for some people, but for a lot of people, they either feel ignorant or switch off when these words are used. 

This is an edited version of the original, longer, conversation.  For the full discussion, you can listen to the podcast below. 

Ruth is just one of over 60 artists who have written sections for Lucy Neal's forthcoming book 'Playing for Time: making art as if the world mattered" (see cover, right).  The book is now published.  TransitionNetwork.org readers can get £5 off Playing for Time.  Simply enter this discount code at oberonbooks.com - ONPFT2015.  Valid until 31 Dec 2015.

Categories: TT news

Chinese energy figures suggest much slower growth than advertised

Energy Bulletin - 27 April 2015 - 4:21am
Energy consumption statistics hint that China may have already begun its decent into slower growth and that that growth will be much slower than almost anyone has forecast.
Categories: Peak oil news

The Market Ticker - Keep Dreaming, Government

The Market Ticker - 27 April 2015 - 4:13am

From JP Moron "Asset Management":

J.P. Morgan Asset Management says the average 65-year-old last year paid $4,400 in premiums for Part B (outpatient services), Part D (prescription drugs), Medigap supplemental coverage, out-of-pocket expenses, vision and dental services. Those costs will rise at an annual rate of 6.1 percent over the next 20 years, to $17,000 at age 85, the company forecasts.

No it won't, for the simple reason that as an average most seniors simply don't have $17,000 a year to spend on this; that would be either nearly all or factually all.......

(Click link to read more)

Categories: Economics

The Market Ticker - I Found A Unicorn (The Mythical Unified Email Inbox)

The Market Ticker - 27 April 2015 - 12:00am

It has been 10 years now, more or less, that I have run with a hybrid infrastructure for email.

Let me explain what I mean by that.

I have "two worlds" in which I live when it comes to email -- mobile and not.  "Not" encompasses desktop and laptop type machines; real computers.  I have an utterly enormous store of emails, going literally back to the 1980s, in hundreds upon hundreds of folders.  I file things away and archive everything else on a calendar basis.  Yeah, it's a big hunk of data.  Yeah, I may never look at 98% of it ever again.  But for that 2% given how cheap disk is these days, and that I can store it encrypted at rest having access to it is very, very nice.

Well, phones don't get along with that paradigm very well.  Among other things the amount of data involved that they can potentially get.......

(Click link to read more)

Categories: Economics

The Market Ticker - Has The Balloon Gone Up?

The Market Ticker - 25 April 2015 - 11:00pm

What is the difference between an armed band of thugs and the police?

The latter conform with the law, including the 1st, 2nd, 4th and 5th Amendments.

The former do not; they come with guns drawn, take what they want, and demand your silence -- not as a civil right in a court of law but as a demand that they make clear will be enforced with those very same guns.

One of these groups ought to be given deference and respect.  The other ought to obtain neither, nor be safe anywhere from justice and retribution both before the laws of civil society and, if that fails, the laws of provenance.

Such it was in 1776 when entreaties to the laws of.......

(Click link to read more)

Categories: Economics

Inner Transition sans frontières!

Energy Bulletin - 25 April 2015 - 8:00pm

About a year ago I started hosting on line conversations for people involved with Inner Transition in different countries.

Categories: Peak oil news

QE = Debt Cancellation

The Daily Reckoning - 25 April 2015 - 8:06am

This post QE = Debt Cancellation appeared first on Daily Reckoning.

We return after yesterday’s, ahem, uplifting reckoning.

“So, basically,” wrote one reader after mulling over, “we’re screwed…

“More of the same to stay afloat — yay! Stagnation and suffering ahead — oh, boy!! Nothing could be better!! Yipee!!! I’m so glad — let me jump in front of this speeding train to celebrate…”

If you’re just tuning in, we’re two parts deep into our three-part conversation with Richard Duncan. In Part I, he outlined why he believes capitalism has died… and where that leaves us.

In Part II, yesterday, he went a step further to explain why QE4 and probably QE5 are necessary to stave off collapse. Don’t tell Congress… but Duncan explained that if Japan’s debt-to-GDP ratio was any indication, the U.S. has at least $17 trillion more in borrowing headroom.

After having 24 hours to chew on that fact, some of your fellow readers are finding Richard’s point of view… umm… hard to swallow.

“I just have to reply to your ‘deep thinker,’” wrote a second reader. “Austrian economists always like to refer to the three people on an island to demonstrate how resources are finite. Duncan’s idea is nothing more than I’ll pay you Tuesday for a hamburger today. Eventually, there are no more hamburgers and everyone goes hungry. This type of deep thinking is what caused the problem we have now.

“Substitute money printing for creditism and the brilliance of this line of thinking is reduced to its true essence. They are both the same. There are limited assets on the planet, and creating more credit cannot solve that problem.

“His eventual conclusion is the correct one, so bite the bullet, take the pain and deal with reality. Otherwise, this will end in a crisis of incredible proportions. We are simply living the crackup boom, and there are no grown-ups around to end the party.”

Our second reader may be right — no one really knows. But Richard, right or wrong, reaches a different conclusion. We think it’s at least worth considering.

“The question,” he cautioned in these pages on Oct. 24, 2014, “is not whether we are going to abandon capitalism and replace it with a different kind of economic system. We did that long ago. The question is: Are we going to allow the economic system now in place to collapse?”

He then outlined three distinct options for policymakers…

Option 1: The government could sharply reduce its spending. The result would be a New Great Depression. This is the least attractive option.

Option 2: The government could carry on doing what it does now — that is, the status quo, borrowing and spending to support consumption. This approach would sustain the economy for at least a decade. Then there would be a U.S. sovereign debt crisis, and the world would collapse into a New Great Depression. This option is preferable to Option 1, but far from ideal.

Option 3: The government could borrow and invest in a way that not only supports the economy but actually restructures it so as to restore its long-term viability. This option, rational investment, is the only one of the three with the potential to result in a happy ending. If government is invested in projects that will generate a high enough return to pay the interest on the debt, then it will support not only the economic structure now in place, but also a larger and more prosperous economy.

The part to remember, though, is that you can ignore Richard’s prescriptions if you don’t like them. They’re a moot point, anyway. We’re not crazy enough to debate policy — certainly not on a Friday.

Instead, we’re here to serve up analysis of what the Fed and Congress might do next and why and then figure out what the impact might be on your money and investments.

To that end, we find Richard’s descriptions of what may happen as a consequence of possible policy actions helpful. We hope you do too.

You’ll find the third part of our discussion, below…

Peter Coyne: Richard, when we left off yesterday you were talking about globalization and deflation. Mind picking up there?

Richard Duncan: Yes. You know, Pete, as I’ve said, the thing everyone should keep in mind is that we’re not starting from some sort of laissez-faire equilibrium state today. We have a massive global economic bubble and its natural tendency is to collapse into deflation.

The natural tendency is for this bubble to deflate and on top of that globalization is very deflationary. Today is not like the old days when we had a domestic economy where trade had to balance. Since the Bretton Woods System broke down in 1971, the U.S. has been able to run very big trade deficits. And so we no longer hit domestic bottlenecks. We can just buy as much as we want from the rest of the world.

That’s why we’ve been able to avoid inflation ever since we started running very large trade deficits. Now on the labor side of the global economy there are two billion people who live on less than $3.00 a day. That means we’re never going to get labor constraints within our lifetimes and probably not for several lifetimes.

In terms of industrial capacity, China has created so much industrial capacity across every imaginable industry that there is far, far too much of it and so product prices are falling. In China they’ve been falling every month for 36 months.

You’ve heard the statistic, no doubt, that during two years recently China expanded its — I think it was cement production — by as much as the U.S. did during the entire 20th century.

We have a big global credit bubble that would deflate if left to its own devices. It would deflate into a great depression like the 1930s. But policy members have been keeping it inflated — very successfully as we’ve been discussing.

They kept the horrific global credit bubble inflated through massive budget deficits and trillions of dollars of fiat money creation around the world. But just barely. Inflation rates are pretty much at zero now most places — at least in the developed western countries. So it looks like it’s more likely to deflate from here than to inflate.

Peter Coyne: When we spoke yesterday, you explained your raft analogy. I was wondering if the raft represents just one country in isolation or are you talking about the entire global economy. I ask, because even though QE has ended in the U.S., we still have QE in Japan… a new QE program in Europe… rate cuts from many other central banks. What’s the net effect?

Richard Duncan: With every analogy you can only take it so far. But I generally mean it’s global and it helps the global economy when several central banks are creating money very aggressively the way that the ECB and the Bank of Japan are doing at the moment. But of course it has a different impact on different parts of the world.

Peter Coyne: Can you elaborate on that?

Richard Duncan: Yes. Well clearly now that ECB is printing 60 trillion euros a month — that’s very aggressive. And Japan is equally aggressive and they’ve been at it now for two years. So in both of those cases, they’re actually printing the equivalent of and buying financial assets equivalent to twice the budget deficits of those countries, respectively. So they’re not only monetizing the debt, they’re monetizing it twice over in Japan and Europe.

Now it’s important to understand that QE is debt cancellation. And let me briefly spell out the details of what I mean by that.

The right now the way it works is, okay, the Fed has printed money and it’s accumulated $2.5 trillion of U.S. government bonds. And so the government has to pay interest on those bonds to the Fed and it does.

But at the end of every year, the Fed gives practically all of that money, all of its profits — which mostly come from the interest income on those bonds — the Fed gives all of its profits back to the government. So in other words, it’s essentially the same thing as the government paying interest to itself.

The government pays the Fed, which is really part of the government. The government pays interest to the Fed. The Fed takes that interest and gives it back to the government, effectively cancelling those bonds.

Last year the Fed gave $97 billion back to the government and that reduced the budget deficit last year by almost 20%. It would have been $600 billion instead of $500 billion.

Since 2008, the Fed has given the government half a trillion dollars in this way reducing the budget deficit by half a trillion dollars. So, as long as the Fed keep rolling those bonds over when they mature (as they are doing now) and so long as the Fed never sells those bonds, then the $2.5 trillion worth of government bonds that the Fed has acquired has been effectively cancelled.

This debt has no cost to the government. This is going on in the U.S. and also in the U.K. where the Bank of England has roughly 25% of all of U.K. government debt paying interest to itself, effectively cancelling that. ECB is now doing it as well.

But Japan is a particularly interesting case because in Japan, as you know, the Japanese government debt is something like 250% of GDP. At this stage, the Bank of Japan has now accumulated government debt equivalent to 50% of GDP. In other words, effectively they’re cancelling 20% of all of the Japanese government debt.

And it removed 50% of GDP out of the 250% of GDP in total. I think once you understand that QE is debt cancellation, it really makes sense of Japan’s very aggressive QE policy. Because they’re now buying up twice the budget deficit every year.

With every month that goes by, their percentage share of total government debt outstanding is growing. So in a few more years they’ll have 100% of government debt to GDP, and then 150% of government debt to GDP — if it goes on like this.

This is important because right now in Japan the interest rates are extremely low — 30 basis points on ten year Japanese government bonds.

People have always worried that if any sort of shock occurs and interest rates there go up say, by, 300 basis points to 3% then it would effectively create a fiscal crisis that the government may not be able to deal with.

But the greater the share of Japanese government bonds held by the Bank of Japan, the less likely such a crisis would be. That’s because no matter how high the interest rates go, the government — the ministry of finance — would have to pay interest on those bonds to the Bank of Japan but the Bank of Japan would just give all that money back to the government.

So the more the Bank of Japan acquires, the less government debt outstanding there actually is that the government has to worry about because the debt held by the BOJ has been effectively cancelled.

Peter Coyne: Okay. I’d like to turn to the liquidity gauge that you track. It’s a good indicator for asset prices. I’ve updated your work on it periodically since you and I met in Australia last year around this time. I believe, and correct me if I’m wrong, that the last time we talked about it, you had an estimate for a $200 billion liquidity drain in 2015?

Richard Duncan: Yes.

Peter Coyne: Is that still the case? And can you describe what that means?

Richard Duncan: Things have changed in two ways. There is still a drain in 2015 and as far as the eye can see into the future. Remember the liquidity gauge is quantitative easing plus the current account deficit. Today, there’s no more QE. So it’s just the current account deficit that is supplying liquidity while government borrowing is draining liquidity. Today, government borrowing is higher than the current account deficit unlike the 12 years from 1996 until 2008 or so.

So we’re seeing a liquidity drain. But it is necessary to adjust the numbers for two reasons. The first reason is oil.

We have had a very significant collapse in the price of oil. The U.S. is importing much fewer barrels of oil every year because it’s producing so much more domestically. On top of that the U.S. is exporting more and more petroleum related products. So both in volume terms and value terms, the “oil deficit”, if you want to call it that, is becoming significantly smaller. And that reduces the country’s current account deficit.

That supplies less liquidity to the U.S. economy and it makes the liquidity drain more negative. However, offsetting that you have a very strong dollar now which should make U.S. imports increase. That in turn should make U.S. exports decrease and make the current account deficit worse.

So these two factors are pulling in different directions. So I’m trying to recalculate what all of this will mean for the liquidity gauge. Overall, it’s still negative. But I think it’s not as negative as the last time we talked.

Peter Coyne: Okay, so it’s safe to assume that you think that the Fed increasing interest rates this year would be a very bad decision?

Richard Duncan: Yes, I find it odd that they’re still so aggressively talking about increasing interest rates, given how weak the U.S. economy seems to have become in the last few months.

You must have seen the Atlanta Fed’s GDPNow numbers?

Peter Coyne: I did.

Richard Duncan: At the beginning of February it was suggesting that the first quarter GDP should be growing at something like 2.4% and now it’s showing that it only grew by 0.1%. The numbers have been pretty bad across the board. Some of it may have been weather related.

But that really doesn’t explain what’s been going on in other areas. Maybe there was some impact from the west coast port strikes or work slowdowns, but that ended in the middle of February so that shouldn’t have such a lingering effect either.

Peter Coyne: What then, is a possible explanation for why they’re talking about a rate increase, given what you just told me?

Richard Duncan: You know it’s very hard to guess what they are thinking and it’s hard to know what they really do know. It’s hard to really know if they have the right understanding of the economy or not. Maybe they really believe that we don’t have a global bubble.

Maybe they think the economic imbalances have corrected. Perhaps they think the household sector has paid its debt down from $14 trillion to $13 trillion and now we’re all fine again even though household debt increased from $4 trillion in 1994 and even though wages aren’t going up.

Maybe they really think that we’re at the point where the economy can finally achieve self-sustaining growth by itself, whereas I don’t see it that way at all. Or, maybe with interest rates so low for so long they’re increasingly worried about asset bubbles forming that they would like to control.

It seems, given what we’ve talked about, that they want to talk up the value of the dollar relative to other currencies as if they want the U.S. current account deficit to become larger.

The bigger the current account deficit becomes, the more liquidity — more dollar liquidity it throws out into the global economy.

Also, when the U.S. current account becomes larger, it allows the exporting countries to export more every year. At the same time the money that the trade surplus countries receive gets recycled and sent back into the U.S. too. But right now the current account deficit has fallen to something like $400 billion last year.

And with oil — with the U.S. oil deficit becoming smaller and smaller, that suggests other factors being the same, the U.S. current account deficit should be shrinking, which means less global liquidity, fewer opportunities for other countries to export and a greater risk of a global economic crisis since the driver of global growth — the U.S. current account deficit — has gone into reverse. Maybe they’re afraid that the current account deficit is going to become so small that it will set off another phase of the global economic crisis.

And so if they can make the dollar go up a lot then that should cause the U.S. current account deficit to stop shrinking at least. It would shrink because of the fewer oil imports. But maybe if the dollar becomes very much more expensive that would prevent it from shrinking as much or even allow it to stabilize or perhaps even expand a little bit.

The IMF is forecasting that the U.S. current account deficit is going to be flat this year but then start growing again quite significantly over the next few years, but I don’t think it will.

In fact, let me mention something that’s happening with global trade. In between December and February, U.S. imports fell by 9% which is really quite a dramatic drop. Imports had been growing and growing for decades. Then in 2009 they collapsed. By the end of 2010 they were pretty much back to where they were in 2008. So they had recovered all their lost ground.

But then, from about 2011 until a couple months ago, U.S. imports were pretty much flat. That is why the global economy has been so weak. U.S. imports used to drive everything. But now just over the last couple of months, U.S. imports have dropped 9% between December and February. It looks very traumatic on the chart.

Chinese exports last year only grew by 6% which is very weak for China. And China’s imports last year only grew by 0.5%. For the last four months, I think, China’s imports have been contracting at practically a double-digit rate.

So, it doesn’t matter how much China’s economy supposedly grows — at least it doesn’t from the rest of the world’s perspective. What matters is how much China’s imports increase every year. For China to act as a driver of global growth, China’s imports have to increase and right now they’re dropping at a double-digit rate.

China is the opposite engine of global growth. China’s abrupt economic slowdown is acting as a significant break on global economic growth.

Peter Coyne: This is why the Peoples Bank of China recently cut rates…

Richard Duncan: They’re trying to prop up the domestic economy, but that’s hard to do because it’s such an enormous bubble. Their whole growth model is in crisis.

They can’t have export-led growth because there’s no one left to export to. The U.S., Europe and Japan are all in crisis.

They can’t have investment driven growth either — why invest more when you have massive excess capacity of everything already?

World trade is growing by about 2% in volume terms when normally it grows between 5% and 10%. But if you put that in value terms measured in U.S. dollars, world trade is now down 11% year on year — far worse than the earlier recessions we had except for the great recession of 2009.

In value terms, world trade is collapsing. And remember, profits are measured in terms of values, not in terms of volumes. This explains why U.S. corporate profits fell last year and why they’re expected to fall in the first and the second quarter of this year.

One of the main reasons that world trade is collapsing is because commodity prices are crashing. That’s reflecting the fact that the global bubble is deflating. And that is because the Fed started tightening monetary policy 15 months ago.

Peter Coyne: We met last year soon after tapering began. Where do we stand now, versus what you were telling me then?

Richard Duncan: My outlook is the same in terms of I expected everything to slow down when QE ended and it has. Nothing drops in a straight line, though, we might get a bounce in second quarter GDP numbers.

Meanwhile, we now have a ten year U.S. government bond yield somewhere below 1.9% whereas of course 12 months ago everybody thought yields would be above 3% by now. It’s not impossible that the ten-year bond yield is going to keep moving lower and lower. I’m not saying that’s my projection but that is a possibility.

If the ten-year bond yield moves below 1.5%, then that should support the economy for longer and it should also support stock prices for longer. If it moves below 1%, even more so. And if it falls to 8 basis points like it is in Germany or even 30 basis points like it is in Japan, then the stock market could double from here and that would support the economy for some time into the future.

So much depends on what happens to the ten-year government bond yield. The Fed keeps talking about trying to make it go up. If they do, then the global bubble is going to sink much more quickly.

Then they’ll reverse and launch QE4. So, it may require a stock market sell off before the Fed reverses course and launches QE4. But if it starts to sell off they won’t wait long.

I think what happened in October when the stock market had its mini-crash is a good guide. It was down 10% and it looked like it was in complete panic mode until Fed president Bullard said on live Bloomberg TV that maybe the Fed should extend QE3 longer and not end it as it was scheduled to end at the end of October.

Before he finished the sentence, all the stocks had rebounded very amazingly. The market quickly recovered that 10% loss. But since QE has ended at the end of October, the stock market is more or less flat. Whereas during 2013 when the Fed created a trillion dollars and pumped it into financial markets, the S&P index went up 30%. And in 2014 when the Fed created $450 billion and pumped it into financial markets, the S&P went up 11%.

But now that QE has ended, the stock market is flat. I don’t think it’s going to remain flat — I think it’s going to correct unless the interest rates go very much lower, although the possibility of much lower interest rates can’t be ruled out.

Peter Coyne: So, inevitably the stock market is headed higher, even if it corrects — because the Fed will reverse and, if history is a guide, the stock market will go up in lock step with it?

Richard Duncan: I think that’s right. That’s how our government is managing the global economy. I’d just like for everyone to recognize that the economy is being managed. And I’d also like them to understand that if the government stops managing it will collapse into a great depression. If that occurs, a lot of people are going to suffer beyond anything they’ve imagined in their lives.

So they should think carefully before accepting all the anti-government intervention doom porn to which they are exposed. Isn’t that what you call it in The Daily Reckoning? Doom porn? I wanted to ask you that because it’s such a great phrase.

Peter Coyne: Heh… yep.

Richard Duncan: Yes, so, they should stop getting off on the doom porn and look at this realistically and understand that we don’t have a capitalist economy. It’s not the 19th century, it’s not the Wild West.

The government has been managing our economy since at least World War II. And they’ve mismanaged it, they’ve created a big bubble. Now they’re keeping the bubble inflated. If they let it deflate, millions of Americans will be hunting squirrels for a living.

Peter Coyne: That sounds pretty dire. But barring that depression, investors should stick with stocks and if they feel comfortable, buy on the correction?

Richard Duncan: It depends on their risk tolerance and their nerve. Passive investors could probably just stay in the market and ride out the correction and still be up a couple of years from now.

But, for active investors, I think it’s a better idea to be out of the stock market right now. Normally the rule of thumb is when the Fed is creating a lot of money and using it to buy a lot of financial assets, the financial assets go up. And when they stop, they go down.

So I think investors should do what the Fed does. When the Fed is buying, they should buy. And when the Fed is not buying they should be out of the markets and wait for a correction.

They should buy again when they see Janet Yellen approaching the microphone and her lips begin to form the letter Q, because when that happens stocks are going to skyrocket and everybody knows that and she knows that. That’s the way active investors should play it.

I think it’s very important for individuals who are concerned about investing their own money them to take an objective look at what is happening.

Whatever they think about government intervention and government budget deficits and quantitative easing, they may approve of it, or they probably disapprove of it, but it’s not going to stop. And the reality is that this isn’t capitalism.

This has evolved into something else. It is an economic system that still is managing to create economic growth, but in order to create growth, it requires government intervention on an unprecedented scale, and this government intervention is not going to stop.

And the average investor should not hope that it does stop because if it stops, the value of his assets will probably all evaporate, and his job will disappear.

So we need to be practical about this, and, therefore, in order to understand what’s going to happen to your investment portfolio, it’s very important to anticipate what the government is going to do next because we are on government life support.

Like it, hate it, this is just a reality. So there’s no point wishing it were some other way. We’re never going back to 19th century laissez-faire capitalism. That died in the world wars.

In World War II, the government took over complete control over the economy. They took over manufacturing, production, distribution, they controlled the prices. They even controlled the labor. When the war started, government spending increased by 900%.

That completely transferred the nature and structure of the U.S. economy, and it never returned to normal, and it’s never going to. So you may weep for capitalism or not, but that’s irrelevant. In order to know how to invest your money, you have to understand how the economic system works now.

And so I believe that in this new age of fiat paper money that credit growth drives economic growth. Liquidity determines the direction of asset prices, and the government attempts to control both credit growth and liquidity to ensure that the economy doesn’t collapse.

So in my work, which I publish in a video newsletter called Macro Watch, I analyze trends in credit growth, liquidity, and government policy to anticipate how they are going to impact asset prices and economic growth.

In this new age fiat money, it’s crucial to understand how the government is directing the economy and to anticipate what they’re going to do next, and that’s what investors need to learn how to do.

I believe this is what they will learn from subscribing to Macro Watch. By the way, I’m offering a 50% discount to the audience of The Daily Reckoning who subscribe. They can go to my website right here. Hit the subscribe button and it will ask you if you have a coupon. For a 50% discount, they should use the coupon code: daily. I hope your readers will check it out.

Peter Coyne: Thanks for spending the time to speak with me Richard. Hopefully, we’ll speak again soon.


Peter Coyne
for The Daily Reckoning

P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics from every possible angle. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you’re missing.

The post QE = Debt Cancellation appeared first on Daily Reckoning.

Categories: Economics

The Last Two Oil Crashes Show Peak Oil Is Real (USO) - Seeking Alpha

Peak Oil - Google - 25 April 2015 - 5:35am


The Last Two Oil Crashes Show Peak Oil Is Real (USO)
Seeking Alpha
One of the biggest arguments, normally used by proponents of owning oil stocks as core holdings, in the energy sector is "Peak Oil." For the unfamiliar, it is a theory forwarded first by M. King Hubbert in the 1950s regarding U.S. oil production ...
Oil prices hit 2015 peakThe Nation
Investing: Making the oil pump work for youUSA TODAY
Crude oil futures trade mixed amid lower US drilling activity and Yemen conflictInternational Business Times UK
Reuters -The Star Online
all 181 news articles »

Anesthetics That Could Put Us Asleep Permanently

The Daily Reckoning - 25 April 2015 - 4:00am

This post Anesthetics That Could Put Us Asleep Permanently appeared first on Daily Reckoning.

Modern anesthesia makes critical operations possible that few humans could survive otherwise. But according to a new study published in the journal Geophysical Research Letters, some of the numbing agents we breathe may also be significant contributors to global warming.

Halogenated gases released as a result of putting people to sleep before surgery such as isoflurane, sevoflurane and desflurane are increasing in the atmosphere. And they are far more potent in their greenhouse potential than CO2. Desflurane, for example, is 2,500 times as powerful a greenhouse gas as CO2.

In the study’s abstract, the authors point out that the gasses “evaporate almost completely to the atmosphere.” And “from urban areas to the pristine Antarctic environment, we detect a rapid accumulation and ubiquitous presence.”

As anesthetics, they are remarkably expensive, so it may be surprising to discover that they are not recaptured by modern hospital equipment, but instead are allowed to escape.

Halothane, another very potent greenhouse anesthetic tracked in the study, has actually declined since 2000 as country after country has banned it because it damages the liver.

To a bright future,

Stephen Petranek
for The Daily Reckoning

Ed. Note: Get the top investment trends for 2015 in medicine and technology from the former head of the most popular science magazine in the world. Simply sign up for our Tomorrow in Review e-letter for FREE right here. Don’t miss out. Click here now to sign up for FREE.

The post Anesthetics That Could Put Us Asleep Permanently appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - Wired Is Right And You Damn Well Ought To Raise Hell

The Market Ticker - 25 April 2015 - 3:32am

Read this carefully folks, because it does not apply only to farmers...

IT’S OFFICIAL: JOHN Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway.

In a particularly spectacular display of corporate delusion, John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.”

It’s John Deere’s tractor, folks. You’re just driving it.


(Click link to read more)

Categories: Economics
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