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Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

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Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

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Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

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Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134

Warning: Table './transiti_db/watchdog' is marked as crashed and should be repaired query: INSERT INTO watchdog (uid, type, message, variables, severity, link, location, referer, hostname, timestamp) VALUES (0, 'php', '%message in %file on line %line.', 'a:4:{s:6:\"%error\";s:14:\"strict warning\";s:8:\"%message\";s:62:\"Non-static method view::load() should not be called statically\";s:5:\"%file\";s:63:\"/home/transiti/public_html/sites/all/modules/views/views.module\";s:5:\"%line\";i:906;}', 3, '', 'http://www.transitiontowns.org.nz/aggregator?page=7', '', '54.211.113.223', 1418970403) in /home/transiti/public_html/includes/database.mysqli.inc on line 134
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The $50k Manhunt For 100-Baggers

The Daily Reckoning - 9 December 2014 - 5:23am

This post The $50k Manhunt For 100-Baggers appeared first on Daily Reckoning.

I’m about to make what I think is the biggest promise anybody in my business has ever made: I’m going to find you 100-baggers.

A 100-bagger is a stock where every dollar invested turns into $100. That means a $10,000 investment turns into $1 million.

I know, I know… It sounds like an outrageous quest with a wildly improbable chance of success, like setting out to draw a royal flush in poker. And I would probably have agreed with you not so long ago. But then I started to dig in and study the 100-baggers of history…

Before I get to what I’ve learned, let me give you some context.

I’m working with Stephen Jones (String Advisors) to create a comprehensive study of every 100-bagger since 1962. This is a massive undertaking. My publisher has already spent $50,000 on the project. The final bill will be higher.

I’m convinced it will all be worth it.

What I’m looking for is what these stocks have in common. I want to learn how these spectacular returns came about, with an idea toward using those insights in today’s market.

The inspiration for this project came from a book I read in 2011 called 100 to 1 in the Stock Market by Thomas W. Phelps. Published in 1972, Phelps looked at every 100-bagger from 1932–1971. His book lists over 365 stocks. The latest 100-bagger dated from 1967 — that’s a 100-fold return in just four years.

Phelps’ book is out of print, but it is a gem. I’ve written about it many times before and recommended it to my readers. Recently, I was in Manhattan one evening at dinner with a reader who had read the book on my recommendation. He is a professor at The New School, where I have occasionally spoken to his graduate students. We were sitting at the rooftop restaurant Birreria. (They have great cask-aged ales there.) And he suggested I update the book.

Needless to say, I took his suggestion. My new study is an update of Phelps’ work. I also plan to write a new book around the study, called 100-Baggers. I’ll dedicate the book to the old man, Phelps. (He died in 1992 at the age of 90. He lived in Nantucket since moving from Manhattan after he retired.)

I expect to reinforce many things Phelps wrote about. I also believe we’ll uncover some new insights, since our computing horsepower vastly exceeds what was available to Phelps.

I’ll share all of what I learn over time in Capital & Crisis as we make progress on the study. At the outset, I can tell you a few things right away.

Our study, too, uncovered hundreds of stocks.

This should dispel the notion that they are impossibly rare. Phelps, early on in his book, dealt with the myth that finding 100-baggers is a futile effort. In his preface, his first line is: “This is a story — fact, not fiction — of hundreds of opportunities to make a million dollars in the stock market by investing $10,000 in one stock and holding on.”

He goes on to say that you did not need to pick the one right stock or the one right time to buy it. Starting in 1932, you could’ve bought a different stock every year for the next 35 years and multiplied your money 100-fold each time!

So timing is not essential. With our own market running high today, it is worth reiterating this point. Phelps gives us a personal example. He predicted the bear market that began in 1937. It took 7½ years for the market to get back to where it was before that bear market began.

“Yet,” Phelps writes, “I would have been much better off if instead of correctly forecasting a bear market, I had focused my attention throughout the decline on finding stocks that would turn $10,000 into a million dollars.”

They were there, every year. Tables in his book show it was so, “with painful clarity.” Phelps’ book is a warning to stay away from market timing. It is also a hymn to the powers of compounding and the virtues of sitting still.

Which is one of the second striking things about 100-baggers. You often have years to buy them. In example after example, he shows how you could’ve bought the same stock anytime during a five- or 10-year stretch and still had a 100-bagger.

It would’ve been impossible not to… if you just held on.

Think about that. You could’ve paid the 52-week high for five or 10 years running and still made 100 times your money on each purchase.

All that sweating people do over eighths and quarters, the games people play to try to save a dollar or two… it really doesn’t matter when you are hunting for 100-baggers.

Buying right is only half the meal. Holding on is the other half. Selling, then, is a confession of error. It means you made a mistake. The shorter the time you owned the stock, the more easily perceptible the error.

Still, we have to correct our mistakes. To recognize a mistake and then not do anything about it is to make it worse. So I’m not saying we sit on everything forever. But we should recognize the missed opportunity a sale represents.

“In a bull market, correcting mistakes often means taking profits,” Phelps writes. “But when we do so, let us not kid ourselves we are making money. The truth is we are acknowledging missing vastly bigger opportunities, and incurring a capital gains tax liability to boot.”

Old man Phelps set the bar high. I love it.

At bottom, there is a mathematical law to every 100-bagger. They have to compound at a high annual rate. Phelps has a table in his book that lists the returns and how many years before you get a 100-bagger:

  • 14%: 35 years
  • 6%: 30 years
  • 20%: 25 years
  • 26%: 20 years
  • 36%: 15 years

The faster we can get a 100-bagger, the better.

But there are many ways to get there — all kinds of businesses in all kinds of industries have done it. I look forward to mapping out the pathways of these 100-baggers.

And most of all, I look forward to finding 100-baggers in the making…

The quest for the next 100-bagger logically begins with a study of the wizards who have already done it.

The Outsiders by William Thorndike profiles four of them. Recently, I got to ask Thorndike about 100-baggers in the making.

If you don’t know about his book, you should read it. He profiles eight CEOs. Four of their stocks became 100-baggers under their watch. These CEOs include Henry Singleton at Teledyne (180-bagger), Tom Murphy at Capital Cities (204-bagger) and John Malone at TCI (900-bagger). Oh, and Warren Buffett, an absurd 6,000-plus-bagger.

There are also four who don’t quite make the cut of being a 100-bagger, such as Katharine Graham at The Washington Post (89-bagger) or Bill Stiritz at Ralston Purina (52-bagger). But we won’t be too doctrinaire about this. With Stiritz, that 52-bagger took just 19 years. Imagine putting $10,000 with him and turning it into $520,000. That can save a retirement.

The point is investing with these people made you a pile of money. You didn’t even have to be around for the full ride.

The idea of the book is simply to draw out some key things these people did. And it turns out they did do some of the same things. They made great decisions about when to buy back stock, when to buy another company and so on. There is more to it than just this, but that’s the gist. In short, they were smart investors. (“Capital allocators” is the fancy phrase.)

In New York, Thorndike sat down for a Q&A moderated by William Cohan, who was an investment banker at Lazard and now writes books and shows up on TV. The New York Society of Security Analysts hosted the event.

It was definitely worthwhile.

I won’t recount the whole discussion. But I will highlight one part that will interest you. And that is his answer to my question. I asked him what CEOs and companies he thought followed the Outsiders template.

He rolled off several ideas…

Regards,

Chris Mayer
for The Daily Reckoning

P.S. Laissez Faire Today is about three things: Freedom. Self-reliance. Action. In this week’s Laissez Faire Today, managing editor Chris Campbell shows his readers five ways they can boost their wealth and health before 2015. Don’t miss a single episode. Click here to sign up absolutely FREE.

The post The $50k Manhunt For 100-Baggers appeared first on Daily Reckoning.

Categories: Economics

How Banking Stocks Can Make You a Fat 25% Gain

The Daily Reckoning - 9 December 2014 - 4:37am

This post How Banking Stocks Can Make You a Fat 25% Gain appeared first on Daily Reckoning.

The big, bad banks that everyone loves to hate – that you probably love to hate – are breaking out. Big time.

And if you want to score a nice, fat 25% gain, hold your nose and hit the “buy” button…because banking stocks are thundering back after five years in the garbage dump.

Yup, we’re laying a bet on the odious (and odorous) financial institutions that crippled the world economy just seven short years ago.

Look, I completely understand if you find the big banks repulsive. If you can’t bring yourself to shell out some coin on the vampire squid, then maybe you should shut down the ol’ computer and go back to reading the sports section. Or maybe check out TMZ.

Still with me? OK, so here’s why we’re betting on banks today…

I’ve said it before and I’ll say it again: If you’re invested in the wrong sectors, the market will stomp out any hope you have at serious gains gains. And right now, financials are looking really good.

Earlier this year, the financial sector was a bloody mess of busted charts and broken trades. You had no business going anywhere near it—period.

Financial stocks looked as bad as they smelled. And yeah, they smelled awful. In fact, out of the major sectors, only consumer discretionary stocks were performing worse than these financials halfway through the year. Regional banks in particular were taking it on the chin. And it wasn’t just the little banks that were flailing. J.P. Morgan Chase, Citigroup and Bank of America – you know, those guys— were all red on the year by June. Please…no tears.

But it went deeper than that…

You see, the financials have been one of the weakest sectors in the entire market since the post-financial crisis bull market began all the way back in 2009.

“It’s the only market sector that hasn’t hit historic highs,” explains renowned technician John Murphy over at Stockcharts.com. “Financials have been market laggards over the last seven years…”

See where I’m going here? Bingo – you guessed it…

This streak of mediocrity is quickly coming to a close. Financials are beginning to flex their muscles—and they may be starting to catch up with the rest of the market, Murphy says. And you know what that means. Yes sir, we’re ready to buy. Still can’t bring yourself to pull the trigger?

Consider this:

The Financials Select Sector SPDR (NYSE:XLF) is hitting new year-to-date highs. Banks are starting to outperform the S&P 500 – after getting clobbered earlier this year. And short-term interest rates are finally starting to rise—which is huge for banks that have suffered years of historically low rates.

After its furious rally off the October lower, XLF is now up nearly 10% over the past six months, compared to a gain of only about 6.5% for the S&P 500. Sure, they’re late to the party. But these stocks are primed and ready for serious gains heading into the holiday season.

Regards,
Greg Guenthner

for The Daily Reckoning

P.S. If you still have a bad smell in your nostrils, don’t worry. You’ll feel better about it after you get a fragrant whiff of that crisp new money sitting in your account. If you want to cash in on the biggest profits the market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Don’t miss out. Click here now to sign up for FREE.

The post How Banking Stocks Can Make You a Fat 25% Gain appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - Still Nobody Asks The Proper Question

The Market Ticker - 9 December 2014 - 2:58am

Why should anyone care any more about where this nation is headed when nobody will stand and do a damn thing about it?

U.S. diplomatic and military posts overseas are being put on alert over the potential backlash from a looming Senate report examining the alleged use of torture by the CIA, with one top lawmaker warning its release could cause "violence and deaths."

...

In Washington, tensions grew over the expected release of the report, with House Intelligence Committee Chairman Rep. Mike Rogers, R-Mich., saying America's allies are predicting "this will cause violence and deaths." He said U.S. intelligence agencies and foreign governments have said privately that the release of the Senate intelligence panel report on CIA interrogations a decade ago will be used by extremists to incite violence that is likely to cost lives.

So why isn't Mike Rogers, who has access to this data and has had it all along, not be in the dock right here and now on charges?

You either have a policy backed by the rule of law or you do not.  There is no middle ground.  If there are to be exceptions in times of exigent circumstance then those who make those exceptions ought to be prepared to sacrifice their freedom or even their life when they exercise that exception.

If it's not worth that sacrifice then the exigent circumstance doesn't really exist.

I have had to face, in my life, several circumstances where in my opinion a specific someone "deserved" to have violence done to them.  I decided not to inflict that violence, despite what I believed to be good cause, because (in part) they were not worth the prison sentence that I would probably have to endure were I to choose to do so.

That's what the rule of law does folks.  That's where it's value comes from; not from actually putting people in prison but deterring them from taking actions that require putting them in prison because the penalty for a given action, balanced against whatever benefit the person evaluating that action perceives, weighs toward a decision not to engage in the conduct.

Were I President, for example, and our law said that torture was never acceptable and if used was punishable by summary execution that would, provided I believed the threat of punishment was real, deter me from ordering or allowing torture.

The exception might be if I learned that a terrorist had a nuclear weapon and was about to use it, and through torture of someone we had captured we probably would learn enough to prevent its detonation.

In that case I would choose to sacrifice my life so that tens or hundreds of thousands of other people would live.

That is, the decision to commit the offense would be worth the penalty that would be imposed.

This is how and why justice is supposed to work, but it only works when The Rule of Law exists.

Today it does not exist.  It does not exist in our police departments, it does not exist in Congress, it does not exist on Wall Street and it does not exist in the White House.

It does exist for someone selling "loosie" cigarettes, however, where the penalty for that behavior apparently includes summary execution.

You either change this, America, or our nation and your future are both fucked.

Period.

Categories: Economics

The Market Ticker - Retail Is Dying

The Market Ticker - 9 December 2014 - 2:02am

Seriously.

This weekend I've spent a bit of time in a few retail stores.

Where are the deals?  They're missing, really.

I can't find them at all.  Retailers are notorious for marking things up in the fall and then having great "sales" that aren't really sales, but there are usually a few deals to be had in various things you might want or need.

I'm not seeing them this year in any material sense -- not even in places where you usually do see them.

For instance, last year you could buy a 4TB hard drive (very nice if you happen to need one; that plus a $30 enclosure makes an excellent gift for someone who has a computer and doesn't back it up -- and you know damn they should!) for about $100.  This year that same drive (literally) is 30-40% more.  That's unheard of in the technology sector, but the "not on sale" price was around $140ish, so what's really happened is that there are no sales.

There are many other examples -- including things like BluRay players and other consumer electronics, where the deals are typically actually pretty decent.

If you look at the stocks of many of the retail firms they're a disaster, with many (Abercrombie anyone?) off 30, 40, even 50%.

How does anyone square a craptastic consumer economic picture as measured by actual performance of real firms selling real goods with the claimed "retail sales" reports and sky-high asset prices?  That's your puzzle for the week, and if you're one of those who believes in those market unicorns you may wish to add some eggnog to your evening ritual in an attempt to sleep well through the night.

PS: Gravity is a bitch....

Categories: Economics

Inez Aponte: From dismal science to language of beauty – Towards a new story of economics

Transition Culture - 9 December 2014 - 1:56am

Humans are storytelling beings. In fact one could argue that it is impossible to make sense of the world without story. Storytelling is how we piece together facts, beliefs, feelings and history to form something of a coherent whole connecting us to our individual and collective past, present and future. The stories that help make meaning of our lives inform how we shape and re-shape our environment. This re-created world, through its felt presence in structures and systems as well as its cultural expressions, in turn tells us its story.

We live in a time of powerful globalised narratives. We no longer (or rarely) sit and listen to tales that were born of places we know intimately and told by people deeply connected to these places. Ours is a world saturated with information from every corner of the planet, voiced by ‘storytellers’ on television, radio, the internet, mobile phones, newspapers, billboards, books and magazines.  It would appear that we now have access to a multitude of perspectives and, with that, more understanding of the different options open to human beings to live fulfilling lives. In reality however, the majority of us have to conform to a narrow set of rules not of our own making: the rules of economics.

The way in which our lives have become dominated by the pursuit of financial gain is full of contradictions. We may not be driven by the ‘love of money’ but we still have to ‘make a living’. The fluctuations in the economy have a profound effect on our everyday lives, but very few of us understand how it works, let alone feel we have the power to influence it. This lack of agency fills most of us with a degree of ‘background anxiety’ that drives many of our decisions, consciously or unconsciously. The economic story is possibly the most powerful story being told at this very moment.

So how is this story being told (and sold) to us? How is it being framed?

1- The work/life balance

This term has become so ubiquitous that it is often used in its English form even in non-English speaking countries. It seems to be a concept that needs no translation; it can easily be swallowed whole. But hidden inside this seemingly innocuous phrase are some powerful assumptions.

On one side of the scales we place work, not just any work, but paid labour. On the other side we place life. By life we don’t mean the actual fact of being alive, but our aliveness, our joy, our pleasures. Placing work and life on opposite sides of the balance we are tacitly agreeing that paid work is worth sacrificing our aliveness for, that it is ok to be a little bit ‘dead’ in your job. If you are lucky enough to have a job you love the concept may seem irrelevant, but for people whose work is tedious, soul-destroying or even dangerous this is the perfect frame to diffuse any discontent: ‘We agree that having a degree of aliveness is important, but you cannot have all of it. You have to sacrifice some of your aliveness just to stay alive.’ The framing of paid work as a necessity for ‘earning’ one’s existence remains unquestioned.

2- The economy must grow

Having determined the necessity of jobs it’s no surprise to hear world leaders repeating the growth mantra over and over. The story goes like this: we need growth so we can create jobs so we can pay people money to buy stuff that creates more jobs. Nobody questions whether the jobs that are created are worth giving up their aliveness for or even whether what is being produced or provided adds any further joy or satisfaction to society. The frame of ‘employment for all’ is so sacred that anyone pointing out how many of the businesses providing these jobs destroy the planet we depend upon for our survival is presented with another false dichotomy: people against nature.

When George Bush sr, at the time of the Kyoto protocol, told Americans “I am the one that is burdened with finding the balance between sound environmental practice on the one hand and jobs for American families on the other.” he was setting up a frame that continues to be echoed by world leaders today. Even if in our heart of hearts we know we need the earth more than we need the artificial constructs of jobs and money, by now we have become so dependent on money to stay alive that this kind of language stifles our capacity to imagine a different solution. Fearing for the survival and safety of our loved ones we accept the war declared on nature in our name.

3- Humans are selfish

This experience of fearing for our survival dovetails neatly with our third and perhaps most powerful economic frame: the rational, utility maximising individual – Homo Economicus. This story tells us that given the choice humans will seek to get the most for themselves with the least amount of effort. It’s simply a ‘dog eat dog’ world.

Funnily enough it looks like the people who most fit the stereotype of the selfish utility maximiser are economists themselves. Various studies have repeatedly shown that non-economists are not as selfish or rational as economic theory would have us believe and that economists, or students of economics, consistently score higher on selfishness than ‘ordinary’ people. Despite these insights, the story that humans are by nature selfish and competitive persists.

But are any of these frames telling us the truth about ourselves and the world? Do we have to accept work as a necessary burden? Do we have no choice but to destroy the planet in order to survive? Are we really as selfish as economic textbooks suggest?

Perhaps the first thing we need to ask is: Is any of this about true economics in the first place?

To answer this question we need to travel back to ancient Greece where Aristotle was musing on two distinct practices: Oikonomia and Khrematistika. Oikonomia is where we get the word economics from and is described as ‘the management of the household so as to increase its use value to all members over the long term’. Khrematistika on the other hand (from khrema, meaning money) refers to ‘the branch of political economy relating to the manipulation of property and wealth so as to maximize short-term monetary exchange value to the owner’.

In their book ‘For the Common Good’ economist Herman Daly and theologian John Cobb, Jr distinguish between the two as follows:

“Oikonomia differs from chrematistics in three ways. First, it takes the long-run rather than the short-run view. Second, it considers costs and benefits to the whole community, not just to the parties to the transaction. Third, it focuses on concrete use value and the limited accumulation thereof, rather than on an abstract exchange value and its impetus towards unlimited accumulation…. For oikonomia, there is such a thing as enough. For chrematistics, more is always better… “

By now you might recognise our current economic system in this description of chrematistics. No wonder we are confused. We believe we are practising economics when we are in fact practising chrematistics. This has far reaching consequences for both the practice of economics and its perception. By allowing chrematistics to masquerade as economics the owning classes have perpetuated the illusion that increasing their financial wealth will be good for all of us and we, in our own misunderstanding of the proper function of an economy, have accepted chrematistics as the dominant form of resource management.

But what if there was another way of thinking and speaking about the economy, one that was in line with the true meaning of the word: the ability to manage the home for all, the art of living? What if we were able to redeem the language of economics so that it might liberate our imaginations and creativity and tell a beautiful story that expresses what we truly value?

Human Scale Development

In the 1970s, after many years of researching poverty in Latin America, Chilean economist Manfred Max-Neef came to the conclusion that conventional economics, in practising chrematistics, did not have the tools to adequately address the experience of poverty and could not serve to alleviate it. What was needed was a language that allowed poverty and wealth to be understood in much broader terms. Together with his colleagues he developed what is now commonly known as Human Scale Development (HSD) or ‘barefoot economics’.

HSD proposes that there are nine fundamental human needs which are universal across time and place (as opposed to wants which are subject to cultural and historical trends). These fundamental needs are: Subsistence, Protection, Identity, Understanding, Participation, Creation, Freedom, Affection and Idleness.

Needs are not the same as the strategies or satisfiers we use to meet those needs. Needs are finite; satisfiers are culturally determined and infinite. In HSD each satisfier is valuated according to its impact on the rest of our own needs, the needs of others and, most importantly, on the conditions for life itself: a living thriving planet.

In this model of economics, you are wealthy when your needs are satisfied and if one or more of your needs are not met you are poor. Whereas our current model has conventionally defined wealth as how much money you possess and poverty as a lack of money – expressed as a poverty of subsistence – in HSD you may suffer from any number of poverties if one or more of your needs are not adequately satisfied. So you may have a full belly and suffer from poverties of affection, understanding or identity. Or you may feel safe and protected by having a secure well-paid job, but work so much you suffer from poverties of creation, participation and idleness. When enough members of a community suffer a particular poverty for prolonged periods it develops into a pathology. It becomes a sickness that is often hard to recognise because it has been normalised. We may ask whether our tendencies towards addictive behaviours, whether they be addictions to work, alcohol, gaming or sex, are expressions of such pathologies.

In HSD the key to living well, and therefore the purpose of a true economy, is to adequately satisfy our fundamental human needs within the Earth’s natural limits. Our role within such an economy is not only to seek to get our needs met, but to use our gifts to meet the needs of others.

This is good news, because here the time you spend playing with your child and meeting their need for creation, affection and participation creates a positive balance in the economy. As does the meal you made for your elderly neighbour, (meeting the needs of subsistence, affection, understanding, and protection) as does joining a community garden, learning a new skill, lying in the grass watching the clouds go by. Framing economics in this manner tells us that we are economic participants regardless of whether we are making financial gains. Other skills, gifts or abilities become our ‘currency’. In fact most things that the conventional (chrematistic) economy ignores create wealth in a Human Scale Economy.

The reverse is also true. Actions that are now considered beneficial for the chrematistic economy – for example, cutting down forests to build roads – soon appear uneconomical through an HSD lens. The destruction of the natural world also destroys opportunities to meet many of our fundamental needs: for idleness (going for walks in nature) identity (these places hold meaning that stretches back over centuries) participation and creation (it is where the community gathers, connects, plays) and understanding (the opportunity to connect with and learn from the more-than-human world).

Economies are created by the people

Economies, large or small, local or global, are created by the people. They depend on our collective efforts, labour and entrepreneurship as well as our songs, our dances, our poetry, our joy, our curiosity, our dreams. The macro economy must be reformed from the inside out, it must start with an understanding of who we are, what is dear to our hearts and from that place radiate our values outwards in order to truly meet our needs. A ‘barefoot’ economy is an economy where people – liberated from wage slavery, and with access to the means by which they can satisfy their fundamental needs – are able to choose adequate satisfiers suitable to their region and culture. It is one where we acknowledge and respect our dependence on a thriving earth. It is a place where we have once again understood the meaning of ‘enough’.

“If we are looking for insurance against want and oppression, we will find it only in our neighbors’ prosperity and goodwill and, beyond that, in the good health of our worldly places, our homelands. If we were sincerely looking for a place of safety, (…) then we would begin to turn to our communities – and not the communities simply of our human neighbors but also of the water, earth, and air, the plants and animals, all the creatures with whom our local life is shared.”

“The Earth is what we all have in common.”    (Wendell Berry)

I look forward to a time when students of economics are required to study the work of artists, poets and makers. When economic text books, as well as addressing how we manage the earth to provide food, homes, clothing and jobs, also speak of the need for beauty, intimacy, community and love.

The Art of Economics (and may it one day become an art) needs a new story and a new language that doesn’t require us to choose between self and others, work and aliveness, our own lives and the lives of fellow humans or the health of the planet. A language that has the potential to re-frame the story, re-educate our thinking and get us back on the side of community, on the side of the earth and on the side of life.

Inez Aponte is a facilitator, storyteller and activist, and co-founder of the Well & Good Project. You can contact her about talks and workshops on HSD and the Fundamental Human Needs framework at inez_aponte@hotmail.com.

www.somesmallholding.wordpress.com
www.wellandgoodproject.wordpress.com

———————————————–

This article was written based on a talk given in Bonn within a series of REconomy-Events organised by the Bonn Transition-Town Initiative “Bonn-im-Wandel” and supported by theHeinrich Böll Foundation, and was originally published on the website of the recent Degrowth conference in Leipzig. 

Categories: TT news

Knowing what 'just enough' is: Azby Brown on Japan's Edo period - Part One

Transition Culture - 9 December 2014 - 1:44am

One of the most extraordinary books I have read in recent years is Just Enough: lessons in living green from traditional Japan by Azby Brown. Brown is director of the Konazawa Institute of Technologies Future Design Institute and has lived in Japan for the last 30 years.  It is a beautiful analysis of the integrated, mindful and design-driven way in which one traditional society worked and embodied the principles of sustainability.  Here is a TEDxTokyo talk he gave about this:

 

His analysis of the Edo period is the perfect example of the ‘Less is More’ that is our theme for this month.  I talked to Azby by Skype from his home in Tokyo. I began by asking him when the Edo period was, and what it is that he finds so fascinating about it:

“The Edo period began in the first decade of the 17th century and lasted until the country opened to the West in the 1860s. That was a period of a little over 250 years. It was remarkable in many respects culturally, technically and economically because it was preceded by centuries of civil war and also of economic and military expansion overseas. The country basically had exhausted itself, had exhausted its resources. It had deforested most of the country, it had damaged its capability for agricultural production, the population had increased and the country was on the verge of environmental collapse, mainly caused by the deforestation.

But over the course of the first few generations of that period, through very wise policy making and the ability to use people’s traditional knowledge, their understanding of their local environments to apply these new policies, this was reversed. The environmental degradation was largely reversed, regenerative forestry practices were introduced and means were found to introduce agricultural production to support a growing population which was then kept stable. The rest of the period had a steadily increasing quality of life by all our current measures in terms of lifespan, health issues, education, housing and so on.

It was a period when the country was isolated. The regime, the Shoguns, had a strict policy of isolation, of not having much economic or political interchange with the outside world at all. It was a conscious turning inward and a conscious degrowth period in terms of the economy, and had very many positive benefits for the society. It was considered to be the period where most of what we consider to be traditional Japan, the great arts, the great woodblock prints and architecture, this is considered to be the period where that was born and when that became very common.

At the root of this was a great store of traditional environmental practices which were very well utilised at this time. This was something that I spent a lot of time learning about and trying to communicate in my book Just Enough.

You argue that that period gives insight into what it’s like to live in a sustainable society. In what way?

This is really one of the big problems that I saw. That we don’t have many models for what a successfully run sustainable society might look like and how it might work. The Edo period of Japan was one and it’s certainly not the only. I’m sure in other Asian countries there are very many similar practices, but because of its peculiar lack of resources for instance, the specifics of the situation in Japan, an island nation with not a lot of arable land for agriculture. There were quite a lot of pressures that they went through that have great parallels with our own period.

So, diminishing energy sources, in their case it was primarily wood for burning and charcoal. A growing population, difficulty having enough agricultural land, the pressure between how much land you allow for agriculture and how much for cities. Lots of the issues that we’re facing now were things that they faced.

They did not have climate change/global warming - fortunately. They had very abundant and good fresh water, which we are now facing a very great difficulty with globally. So there are some cases where the parallels don’t fit, but otherwise it was a very good match. When I set about to write the book I thought one of the best ways to do it would be as a travelogue, as if we were visiting people in rural villages for instance, in cities, a visit to a workman or a samurai in the city, and see how they worked and how they lived and how the interconnected systems that they had developed for maximising the use of their environmental resources without degrading them.

You mentioned that the Edo period came about as a response to the near collapse of society due to degradation and the environmental crisis. How did they turn that around? And perhaps most relevant to our current predicament in terms of climate change, how did they mobilise people to do that?

It’s really interesting. We can divide it into the technical steps that were taken, the social steps that were taken, the political steps that were taken. They’re all connected. The first thing was to reverse deforestation and this was done by some very strict forest protection laws. There were laws on the books that stipulated the death penalty for anyone entering a protected forest with an axe or a cutting tool. We don’t really know how often this penalty was enacted but the fact is that was how carefully they wanted to protect these forests.

The populace was involved in monitoring their environment and had always been actually, through something called the satoyama which is a set of practices of utilising and monitoring the surrounding environment. Japan is very mountainous. Most villages are in the valleys, and they were using the surrounding forests in the mountains for their fuel, for supplementing their diet with mountain vegetables and mushrooms and fruits and things like that. They were constantly monitoring and taking care of this environment. For instance, in the case of fuel, this was an ethical issue that’s always been part of the society, the strong ethics of not wasting things and being careful to leave enough for the future.

In the case of fuel, people were not allowed to cut down trees to burn for fuel. They were only allowed to use what had fallen naturally, the fallen branches and so on. And if a community was living in the same place for centuries, for generations, they knew what the normal carrying capacity of that environment was in terms of things like fuel. They would limit their fuel consumption to their known supply and this preserved the forest from being unnecessarily cut and basically this was not necessarily such a legal restriction as it was an ethical and social one.

So these kinds of tie ups between the overall necessities that were recognised and somehow documented and quantified by the government, and the traditional ethical, moral and knowledge based practices of the communities themselves were very well unified and served on the whole to preserve the environmental resources.

Reading ‘Just Enough’ with a background in permaculture and having been a permaculture teacher for a long time, I look at a lot of what you have in there and think – it’s design. That everyday life was underpinned by an incredible amount of sensible, common sense design, it was a design project. That everyday common sense design that underpinned so much of what you document in the book, did people learn that consciously? Did they absorb it mostly by osmosis? How was that culture infused with good design?

It’s a really interesting question, because design ultimately means making decisions about how to make, build, shape, use, transform things. I would like to argue that for the most part these were very consciously and continuously evaluated decisions. How do we bring the water to our fields without disrupting the natural ecological functioning of the places we’re bringing this through? Let’s use gravity, let’s use the natural watershed as much as possible. Ok, we get to a certain point and we need to dig channels for the irrigation water. How do we do that in the best way?

They are conscious decisions, and yet they are also techniques that are tested over time and handed down through generations. It helped that Japan was a very literate society at that point. A higher literacy rate than any European country, certainly higher than North America even though it was socially stratified. It was a caste-based society and some of the lower ranks may not have had a high literacy rate.

There were lots of things that were written and analysed and put into books, and the books were fabulously well illustrated so that even people who couldn’t read could look at the illustrations like a comic and say – oh, this is how we dig an irrigation ditch or build a trellis for these fruit trees. It was a wonderful combination of educated analysis and handing things down through the oral traditions.

Design was everything. And it was reflected, I think, in both the overall large-scale infrastructural urban planning, town planning, architectural planning aspects as well as the design of small things used in everyday life, the cups, bowls, boxes, furnishings etc.

Was it a more equal society than today? It looks like it was very caste-based and stratified, but was there much potential for social mobility? How does it compare to today, do you think?

This is probably the one area where we would find it the most wanting. It was clearly a caste based-society. Several classes of people, the military class, the Samurai, were at the top maybe 10% of the population, but they dominated most of the wealth and property as in any feudal society. Interestingly, the second ranking class were the farmers. Farmers were considered to be more of an elite and important part of the society than merchants were. Merchants were on the lowest rung of society.

Economically, they ended up making a lot of money and becoming very powerful instead of that, so the social structure placed value on the role of peasants, of farmers, of the people who actually provide the food and who form the bulk of society. There was very little mobility. It was purely hereditary, and as in many societies like this, this ultimately became one of the reasons why it was unsustainable and led to this catastrophic and dramatic collapse in the 19th century. We would say definitely it was not an egalitarian society, and yet the fact that farmers were considered to be ethically, morally, socially superior to businessmen is really an inversion of our current value system.

Margaret Thatcher had a press secretary called Sir Bernard Ingham who once famously said “I have one word for environmentalists who would take us back to the 18th century – dentistry”. I wonder whether you’ve been accused of over-romanticising a time that we’ve progressed from and is best consigned to history?

Of course, as anyone who’s promoting these ideas probably has, and yet I try to be careful to point out that I am not advocating returning to the specific practices, to these specific ways of farming or of building or of doing anything. But for understanding how they perceived their environment, how they addressed problems, and I use the expression ‘a multiform solution’ because in any situation during that period it seems if they were thinking about how to address something like let’s say the water problem, they would look at the connections - at how the issue of water is integrated with others.

One example would be – if  they want to provide hot water, for instance for bathing, then they could do this in a way that did not damage the water supply itself and that also made optimum use of the fuel available, then they were effectively addressing what we would perceive as two different spheres of interest with one solution. They did this constantly. Another prime example involves the use of human waste for agriculture. Again, we can find lots of reasons to oppose this these days, in hygienic terms, which in fact is probably not necessarily the case. Whereas in the West, in European cities and North American cities, human waste was eventually collected in these horrible cess pools which as we know led to cholera and other diseases. In the 19th century when we developed indoor plumbing and flush toilets, it helped with the hygiene but then this stuff is being dumped into our rivers where it’s polluting them. It was really not a very good solution.

The Japanese solution during the Edo period was that farmers would use human waste for fertiliser for their agricultural fields. Before this they were only using what’s called green fertiliser, organic matter, leaves etc, the nitrogen-rich things that they would put on the fields as fertiliser. There were also other fertilisers available like the remains of sardines that had been pressed for oil or rapeseed that had been pressed for oil. These things were good fertilisers. But using human waste increased agricultural productivity many fold.

Having farmers go into the cities and empty out the latrines increased the hygiene levels of the cities themselves. There were no reported outbreaks of cholera in Japan until the Modern period in fact. This also became a market where if you were a landowner in the city and you had lots of rental properties and those renters used a set of latrines on your property, initially you would have to pay someone to clean it out but as time progressed they were paying you to cart the stuff off, it was so valuable.

This was providing several benefits. One specific technique provides benefits in terms of agriculture, in terms of health, in terms of economy, and also others. These are the kinds of solutions that Japan of the Edo period found everywhere. How to reuse things, how to recycle things. How to transform what they have into everything they need. They always looked at it as the big picture of how these things could provide many benefits at once. It’s the opposite of our specialised viewpoint, I think, where one person knows how to do one thing and that’s it.

I loved the bit about how people were paid for their sewage. It’s just so beautifully counter-intuitive to how we do things today.

It really is – you’ve looked at composting toilets, bio-toilets and these have been developed for decades. If you look at our situation, because we do pollute our fresh water system with our waste then we need to purify the water. And we need to use the energy and have infrastructure for this and use chemicals etc. It’s crazy.

During the Edo period, the main river of Edo, which was the town that was eventually renamed Tokyo, they said the water was clean enough, if not to drink, to make tea from. As if you were in the Thames in the 18th century and dipped a teapot into that muck and make tea from it! It was clean enough to do that.

In terms of this idea of being paid for your compost, so to speak, you had a composting toilet in your house and once a month someone came to clean it out and gave you $5 or $10 for it. It’s crazy to think of this now.

Part Two will be published on Wednesday.  If you would like to hear the interview in full, the podcast is below:

Categories: TT news

The Market Ticker - Another Duke LaCrosse Team?

The Market Ticker - 9 December 2014 - 12:15am

Hmmmmm....

CHARLOTTESVILLE — A University of Virginia student’s harrowing description of a gang rape at a fraternity, detailed in a recent Rolling Stone article, began to unravel Friday as interviews revealed doubts about significant elements of the account. The fraternity issued a statement rebutting the story, and Rolling Stone apologized for a lapse in judgment and backed away from its article on the case.

There's a very serious problem with this sort of false allegation -- it not only tarnishes those who did nothing wrong it's worse in that it critically endangers real victims of real assaults.

Every time an allegation like this is trumped up by someone who just has to try to press some sort of agenda that is not completely grounded in exposing a real event the lives destroyed are not just those falsely accused.  That's the visible damage and it's bad enough, but what's worse is the destruction of credibility that inures to future victims of real and similar crimes.

These acts of false allegation, whether they come in divorce proceedings or in high-profile, sensational stories like that profiled in Rolling Stone, need to be met with severe criminal charges and penalties at least equal to what would be leveled at an actual guilty party -- without exception, without excuse and in each and every case.

For every falsely-accused man in a divorce case there is another woman and/or child who is unable to obtain protection from a true monster because she is not taken seriously.  For every falsely-accused fraternity brother there is a real jackass who really did rape a woman and gets away with it because the real victim is either inhibited from filing a complaint or not believed.

False allegations of violence of this nature must be treated with the utmost seriousness and punished severely, as they are an intentional perversion of justice for either self-serving or political ends and are coldly calculated for advantage, not to redress an actual harm.

If you pull something like this you should go to the big house for life -- no exceptions, no excuses, period.

Categories: Economics

Market Match: Making Fresh and Healthy Food Affordable

Energy Bulletin - 9 December 2014 - 12:15am

Started by Roots of Change in 2009 and now administered by the Berkeley-based Ecology Center, Market Match is a statewide healthy food incentive program that aims to improve the health of low-income communities by incentivizing shoppers to buy produce at farmers markets.

Categories: Peak oil news

New Report Highlights Fracking's Global Hazards

Energy Bulletin - 8 December 2014 - 11:35pm

A new report, issued the same day the latest round of global climate negotiations opened in Peru, highlights the fracking industry's slow expansion into nearly every continent, drawing attention not only to the potential harm from toxic pollution, dried-up water supplies and earthquakes, but also to the threat the shale industry poses to the world's climate.

Categories: Peak oil news

Star Spangled Collapse

Energy Bulletin - 8 December 2014 - 11:33pm

Greer’s new novel Twilight’s Last Gleaming is set about a decade in the future in a world much like today’s, but with more expensive oil and a more advanced rival for global supremacy — China.

Categories: Peak oil news

Peak Oil Review - Dec 8

Energy Bulletin - 8 December 2014 - 11:30pm

A weekly review including Oil and the Global Economy, The Middle East & North Africa, Russia/Ukraine, Quote of the Week, The Briefs.

Categories: Peak oil news

Permaculture, a Vision of the Post-Oil World

Energy Bulletin - 8 December 2014 - 11:06pm

More than an agricultural technology, permaculture is a vision of the societies of tomorrow, ours, which will be confronted with the evolution of energy and climate systems.

Categories: Peak oil news

Signs Of Peak Oil Starting To Emerge - OilPrice.com

Peak Oil - Google - 8 December 2014 - 12:05pm

Signs Of Peak Oil Starting To Emerge
OilPrice.com
What caused the recent crash in the oil price from $110 (Brent) in July to $70 today and what is going to happen next? With the world producing 94 Mbpd (IEA total liquids) $1.4 trillion has just been wiped off annualized global GDP and the incomes of ...

How the U.S. could fight OPEC and win (and why it won't)

Energy Bulletin - 8 December 2014 - 5:47am

The United States could chose to fight back and possibly win this war with OPEC by employing one simple, big move. But, I can confidently predict that the country will not do it. Why? Because it involves a tax, a tariff actually.

Categories: Peak oil news

Turnabout: OPEC shows U.S. oil producers who's boss

Energy Bulletin - 8 December 2014 - 5:47am

The United States could chose to fight back and possibly win this war with OPEC by employing one simple, big move. But, I can confidently predict that the country will not do it. Why? Because it involves a tax, a tariff actually.

Categories: Peak oil news

Welcome to “Pique Oil” - Power Line (blog)

Peak Oil - Google - 8 December 2014 - 3:40am

Marine Trader Online (press release) (blog)

Welcome to “Pique Oil
Power Line (blog)
[M]any people who have long argued that our addiction to oil and gas is destroying the planet, so did the much discussed concept of “peak oil''—the theoretical moment when half the world's oil reserves had been consumed and fossil fuels began to ...
Peak KrugmanNew York Sun
The problem with the great oil price dropMarine Trader Online (press release) (blog)

all 3 news articles »

The Market Ticker - This Morning In History

The Market Ticker - 8 December 2014 - 2:09am

The Japanese bombed Pearl Harbor and the United States declared war against Japan in 1941.  It was Sunday morning, as it is today.

There are many who wish to blame that on the United States, of course; we did have an (illegal) naval embargo going on and there were quite-tense negotiations going on between the US and Japan at the time.

Sorry, but no dice.

War is a terrible thing and a material part of the time it happens sort of "by accident" as one side or the other, and frequently both, miscalculate.  But someone always first resorts to fighter planes, missiles, bombs, or armored and armed vehicles and men crossing a border somewhere, loosing firepower at someone else only because they consider them an "enemy."

Historians can argue over whether a particular attack that sets off a conflict such as this was justified, or who was the bad guy when the dust settles, the fires are finally out and the bodies tallied and buried.  And there is no question that at times one must resort to violence, because another is going to with certainty and when they do, the harm will be greater than if you wait.

But that doesn't make it neat, tidy, nice or desirable.  It just means that however regrettable it was necessary at the time.

Today we also must remember that during times of aggression decisions are taken that sometimes end poorly, even if they're right at the time.  I speak specifically of the hostages killed during a US raid.  The recriminations have already begun, with Fox News (and others) reporting that an aid group had apparently negotiated the release of one of the other hostages that died during the rescue attempt.

I cannot fault Obama for ordering the attempted rescue, just as I cannot fault Carter for trying to rescue the hostages held by Iranian students.  I remember that attempt too in my younger years, and although it ended it failure it was still, in my opinion, the right thing to do.

You don't always succeed in a war but this much is clear -- you'll never succeed if you don't try.

May the hostages killed the other day -- and those who died on December 7th, 1941 -- rest in peace.

Categories: Economics

Peak Krugman - New York Sun

Peak Oil - Google - 8 December 2014 - 1:50am

Marine Trader Online (press release) (blog)

Peak Krugman
New York Sun
The Journal dealt with him in an editorial debunking “Peak Oil.” It began by noting that it's been “216 years since Thomas Malthus gave birth to the idea that mankind's appetite for natural resources would outstrip nature's capacity to supply them ...
Welcome to “Pique OilPower Line (blog)
The problem with the great oil price dropMarine Trader Online (press release) (blog)

all 3 news articles »

The Market Ticker - Yes Mildred, There Are People Who Want Us Dead

The Market Ticker - 8 December 2014 - 1:37am

The twin towers and Pentagon weren't enough, were they?

Now we have a born-in-Saudi guy who we were dumb enough to let into the country (mistake #1) and work on one of our carriers (big mistake #2.)  He tried to sell the plans, including how to sink it, to what he thought was an Egyptian agent.

In fact it was an FBI agent.

We should have declared war (for real) when we discovered that Saudi Arabia's consulates appeared to be involved in the funding and logistics for 9/11, and we damn sure should not have let anyone suspected to be connected out of the country on an "expedited" basis (as we did) after 9/11.

That was really, really dumb but letting this guy in and allowing him access to this technical data is even more stupid.

Political correctness is eventually going to get huge numbers of Americans killed folks.  It is only a matter of time.

Categories: Economics

Antonio Weiss Is Not Qualified To Be Under Secretary For Domestic Finance

The Baseline Scenario - 7 December 2014 - 12:46pm

By Simon Johnson

Antonio Weiss has been nominated by President Obama to become the next Under Secretary for Domestic Finance at the U.S. Department of the Treasury. Mr. Weiss’s supporters argue that he is highly qualified for this senior fiscal policy job. They are wrong. Mr. Weiss has no known relevant qualification or experience for this position.

In the organizational structure of the Treasury Department, the Under Secretary for Domestic Finance is “primarily responsible for policy formulation and overall management” at the Office of Domestic Finance – a very important role. This Office is central to our debt management policies, but the Under Secretary also guides the administration’s fiscal policies much more broadly,

“Domestic Finance advises and assists in areas of domestic finance, banking, and other related economic matters. It develops policies and guidance for Treasury Department activities in the areas of financial institutions, federal debt finance, financial regulation, and capital markets.”

Here is the detailed org chart of Domestic Finance. On paper, this Under Secretary is the third most senior official in the executive branch with regard to fiscal decision-making. Given the way the Treasury Department works, along with the position of the United States in the world economy, on a day-to-day basis, this person is effectively the number two on many budget- and debt-related issues.

There is no disagreement on what Mr. Weiss has been doing for the past 20 years. Writing recently in the New York Times, Andrew Ross Sorkin said, Antonio Weiss is “a longtime adviser on mergers at the investment bank” [Lazard]. And “He has spent his career whispering strategic advice in the ears of corporate leaders.” (More detail on his career advising corporations is in the New York Times news coverage.)

Bloomberg reports his title as global head of investment banking at Lazard. For more details of the firm’s activities and clients see this Lazard page on their “M&A and Strategic Advisory” and their most recent results. You can also search the Lazard website for mentions of Antonio Weiss. Or look at Mr. Weiss’s job description, from Lazard’s press release on his March 2009 promotion to his current position. Without question, Mr. Weiss is experienced in advising companies how to buy other companies, particularly across international borders.

Mr. Sorkin thinks Mr. Weiss is the right pick because, “the job requires deep experience in the capital markets and global relationships.”

But Mr. Weiss’s “high profile M&A activities” are completely unrelated to the central task of this position: running responsible federal government finances. The Under Secretary for Domestic Finance does not typically buy and sell companies – or engage in any activities remotely related to advising companies on acquisitions. The treasury job requires knowledge of sovereign credit, experience with the practicalities of public debt sustainability, and an understanding of the intricacies of our national budget. From the public record and otherwise available information, Mr. Weiss has no substantial knowledge or expertise on any of these issues.

Mr. Weiss was one of 12 people who signed a paper on fiscal issues published by the Center for American Progress in 2012 (co-authored with Robert Rubin, among others). However, Mr. Weiss’s role in formulating ideas or writing that paper remains unclear. This is the only paper Mr. Weiss has written with CAP or, as far as can be determined, elsewhere on this topic (or on anything else to do with economics or public finance.) There are also no other publicly available speeches, op eds, or other writing by him on issues that might touch on the substantive duties of the Under Secretary position.

Mr. Sorkin suggests that failing to immediately confirm Mr. Weiss could have serious negative implications for our national cash flow.   Citing Ben White of Politico (who got this from an anonymous “Wall Street exec”), Mr. Sorkin says,

“if the interest on the securities the Treasury sells was just 20 basis points higher for a year because of uncertainty or mismanagement, it would cost taxpayers $32 billion — more than it would cost to fund the Consumer Financial Protection Bureau for 50 years.”

To suggest that the interest rate paid by the U.S. Treasury would in the short term increase due to any part of the nomination process for this specific candidate is absurd. Mr. Sorkin fails to provide any evidence or logic to support his assertion that Mr. Weiss’s confirmation (or not) would affect the full faith and credit of the U.S. government – and how that is perceived by the market.

The Washington Post editorial page then weighed in last week along the same lines as Mr. Sorkin:

“The 48-year-old Mr. Weiss would bring much in the way of relevant experience to the job, having graduated from Harvard Business School and gone on to a successful career in finance, most recently as head of investment banking for the venerable Lazard firm.”

Again, Mr. Weiss simply has no relevant experience. Working in corporate M&A is profoundly different from managing public (government) finance.

Bill Cohan, who used to work at Lazard, adds further detail in another New York Times column that is strongly supportive of Mr. Weiss, “In addition to being a much-respected global M.&A. adviser, he [Antonio Weiss] has supervised bankers who worked for Detroit pensioners, the National Association of Letter Carriers and the American Airlines pilots.” Important work, no doubt, but again not something that could fairly be regarded as qualifying someone to become Under Secretary for Domestic Finance.

And, importantly, the New York Times felt the need to add a significant correction at the foot of Mr. Cohan’s column:

“An earlier version of this column described imprecisely part of the work history of Antonio Weiss, based on a document prepared by the Treasury Department. While he supervised bankers who advised Detroit pensioners, the National Association of Letter Carriers and the American Airlines pilots, he did not advise them directly himself.”

This suggests that the Treasury Department has been stretching its facts regarding Mr. Weiss’s experience in an inappropriate manner – to make him look more qualified for the job than he really is. (My understanding is that the work in question was actually done by Ron Bloom.)

Announcements about further scrutiny or appropriate pushback regarding the qualifications of Mr. Weiss have not and will not move the market for U.S. Treasury debt.

Interest rates are influenced by many factors including – in the first instance these days – by Federal Reserve policies, but also by the balance of global savings and investment, as well as inflation expectations and views on how quickly the US economy (and, to some extent, the global economy) will make a full recovery. Threats of a government shutdown or a confrontation over the debt ceiling might also play a role – at least, that has been the experience in recent years.

In coming years, the overall stance of US fiscal policy will matter a great deal for long-term interest rates, with one key issue being whether domestic and international investors remain convinced that our debt-GDP ratio is on a sustainable path. (James Kwak and I wrote a book on this topic.)

Based on the record, there is no indication that Mr. Weiss has the skills likely to help put us on such a path (yes, fiscal policy is determined by Congress as much as by any administration – but the Under Secretary is an important part of the decision-making mix).

And there is a legitimate concern about Mr. Weiss’s qualifications which, ironically and perhaps inadvertently, was raised by Mr. Sorkin himself, when he conceded, “that Mr. Weiss doesn’t have a lot of experience in the regulatory arena, and at least part of the role he is nominated for involves carrying out the remaining parts of the Dodd-Frank overhaul law.”

The negative fiscal implications in that statement are potentially first-order. Ineffective financial regulation increases the probability of a serious crisis. And such crises have major negative effects on the public balance sheet – the near-collapse of the financial system in 2007-08 caused a recession that will end up increasing our debt-to-GDP ratio by about 50 percentage points (this is based on the Congressional Budget Office’s analysis.)

Having the experience, commitment, and world view necessary to ensure this never happens again should be essential background for whoever might become the next Under Secretary. Regrettably, this critical responsibility is too often an afterthought – when it should be a priority. Given the cost of the crash and the lasting economic wreckage of the Great Recession, this is indefensible.

It’s hard to think of any senior fiscal official from a serious country with qualifications as weak as those of Mr. Weiss.

Mr. Weiss might be qualified for other positions, for example in the Commerce Department. Based on the available facts, he is simply not qualified for the post of Under Secretary for Domestic Finance in the Treasury Department.

Categories: Economics
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