Wednesday, November 30, 2011

A Tale of Quail and Cottontail

My family was blessed to lived in a veritable garden of Eden for twenty years.  When we first moved there, the three-acre lot was almost bare save three oak trees and some sagebrush.  My wife is a Green Thumb.  In a few short years we had hundreds of trees, many of them fruiting, exotic flowering plants and a vegetable garden that fed many more than us.

Our first cohabitants were ants and spiders - they were the tough survivors from a lengthy drought. Over time as the edible greenery flourished, new species on foot and wing appeared steadily.  

Quail were one of the first waves of immigrants to the new promised land.  Quail are diligent and smart.  They quickly identify and appropriate all their desired food sources, set up nests under lush shrubs, and make a lot of chicks.  The Quail were so successful that their broods came to number almost twenty.  Imagine yourself as a parent with twenty newborns!

The Quail's success was also their sadness.  You see, we had five cats patrolling the property when not lounging on a favorite couch.  Some of the cats were very hip to the increase in number of chicks per adult Quail.  They would patiently wait in a blind near a frequented Quail Trail and happily pick off a straggling chick every now and again, until the brood had been reduced to a number the parents could defend.  Why  recall this?  The European Union is the Quail Family!  Mama France and Daddy Deutschland simply have too many wandering chicks to guard.  The evil Bond Vigilante Cats will never stop stalking the weakest and pouncing; it's simply too rewarding.  The Book of Quail suggests that the European Union may survive, but as a much smaller family.

The B Side o Nature's Record "Will It Go Round in Cycles?" is a short story about Rabbits.  For the first ten or so years in the Garden, there were very pesty ground squirrels but no rabbits.  The ground squirrels were the mammalian equivalent of the ants and spiders - tough, resilient drought survivors.  After the Garden developed to a truly lush state, we spotted a Cottontail once in awhile.  Then a few more.  Then a LOT more.  They took to our welcoming environment with true gusto.  For years, their numbers increased and increased.  Bunnies everywhere!  Then, in just a couple short years, the population essentially vanished.

Exponential or parabolic growth in anything historically ends with a crash thud.  Tulips, Stocks, Real Estate and Cottontail populations.  Today, global debt appears to be a terminal stage of exponential increase. The Bank of International Settlements' most-recent report showed global debt rising from $600 Trillion to more than $700 Trillion - in just six months!  Our wealth of at least the last twenty, no, thirty years has been based on a growing global debt bubble.  Of course, this bubble won't end like the Cottontail population.  Our politicians, economists and bankers are way too smart for that.  Silly Wabbits.



Thursday, November 17, 2011

Top of Your Reading List! Federal Reserve Bank of New York Website!

The Federal Reserve used to be a pretty quiet club for the most powerful.  The players are still the most powerful but it's not so quiet anymore.  OWS camped out in front of Fed Banks.  Ron Paul says, "End the Fed!"  Investigators like www.zerohedge.com follow and report on the Fed intensively.
The Fed is so much at the root of what's happening in the world economically it makes sense to follow what they're saying and doing.  The New York Fed, the central power station of the powerful institution, is a methodical publisher and chronicler.  Maybe not a late night action novel romp, but plenty to wonder at, be scared by and even laugh at here: http://www.newyorkfed.org/index.html.

Item 1 - History of the Primary Dealers
How about the history of the membership of the elite "Primary Dealers" group - the too-big-to-fail bank/investment bank/brokerage hydra, the Fed's financial tennis partners, who make a cut on every transaction (thanks taxpayers!).   You might expect that this group's roster would be pretty darn stable... but NO!  The Fed provides a blow-by-blow timeline of all the membership changes, here: 
http://www.newyorkfed.org/markets/pridealers_current.html  - click on the tab labeled ch-ch-ch-Chay-ayn-gezz and be amazed.  They come and go like cocktail party guests.

Item 2 - The Reverse Repo Posse
If you're looking for a really scary story, read up on how the New York Fed is assembling and testing a bigger financial firefighting posse because it doesn't think the vaunted Primary Dealers can handle a three-alarm debt-fueled blaze alone.  It's right here:  http://www.newyorkfed.org/markets/rrp_counterparties.html .  How many Americans know what Reverse Repos even are?  I didn't!  When you read through the material, it's clear that this is about strengthening the Fed's "wet work" crew - when the SHTF bigtime, the Fed will be working Reverse Repos overtime - essentially buying and moving toxic debt securities from and between bank counterparties, so that drowning banks can "rebalance" with fresh cash on their books, which will help them meet capital reserve ratios.  Reading about the Fed's Reverse Repo project is like watching a neighbor who works top-secret at DoD building a bunker in his back yard.  Shouldn't we be on alert?

Item 3- Bank Supervision
Yes, there is even comedy at the NY Fed site!  Just check out the knee-slapper on "a new era of bank supervision" -- http://www.newyorkfed.org/newsevents/speeches/2011/dahlgren111111.html.   Huh? What about the FDIC, the SEC...  ?   Before mirth and merriment overcome you, it might be well to consider that the Fed, central pillar of financial stability, now has a balance sheet of more than $1.5 Trillion, resting on capital reserves of $50 Billion... that's  50:1 leverage - a 2% loss on balance sheet assets would wipe out the reserve capital.  Is that the new math of the new era of bank supervision?  

Wednesday, November 16, 2011

Bureau of Public Debt - A Top Place to Work in the US Government

You just can't make this up.   Did you know...

The US Bureau of the Public Debt is rated the sixth best place to work from among 224 government agencies (aka Agency Subcomponents)?

Whoopee!  I would guess that job security probably gets pretty high marks.

If you visit their website http://www.publicdebt.treas.gov/  be sure to visit the up-to-the-minute US federal government public debt counter - http://www.treasurydirect.gov/NP/BPDLogin?application=np  that is now flashing a cool $15Trillion!

On the homepage, the BPD features an solemn quote attributed to Alexander Hamilton, "The United States debt, foreign and domestic, was the price of liberty."   Anyone besides me think that the debt today represents something altogether different?

Monday, August 1, 2011

City Bankruptcy Tsunami... as goes Rhode Island...?

Central Falls, Rhode Island.  The city's website proudly proclaims itself a "city with a bright future".

Maybe after they go thru bankruptcy (see WSJ  http://blogs.wsj.com/marketbeat/2011/08/01/central-falls-becomes-second-muni-casualty-of-2011/).  The city has entered receivership and "THE FAN" of SHTF fame will be working overtime.  This could be a blueprint for the inevitable wave of municipal bankruptcies being readied now.

Across the country, get ready for "realignment" and "restructuring" more corporate-style than what local governments feel they are permanently insulated from.  City by city, it will be reported that city budgets have been increasing (despite howls of budget cuts, etc.), year after year, while services have been decreasing, year after year, because... the workforce is retiring in increasing numbers into collectively-bargained, sweetheart pension plans that are.... uh oh, not funded.   I've witnessed this phenomenon up-close in California in sleepy li'l San Luis Obispo and now San Francisco.   When will these failing machines break down and get fixed?

Let's be real.  Cities have to do what they can to maintain as strong a credit rating as possible, because they WILL have to borrow more money even if their house is in order - receipts don't always match up in time with necessary expenditures.  So they will pay back interest and principal on their existing bonds and other debt come hell or high water.  What they will sacrifice are their biggest cost items - labor contracts and unsustainable pension provisions.  What mayors and councils haven't been able to do, court-appointed receivers will.

Look for some previously unthinkable solutions to surface... receivers are business accounting and legal folks who don't owe anything to government management traditions.  Could neighboring cities merge like corporations to reduce costs?  Hmmm.  More cities are outsourcing their services to their host counties... but that's just a partial step.  Surely there will be more outsourcing to hungry private-sector operators.  Services might even get a favorite private sector tactic - value pricing - good, better, best service standards with corresponding fees.


You may feel that you are not receiving much in the way of "city services" these days.  You need to get ready for less service and/or higher fees.   Not much can be taken for granted when your city bites the bullet and really tackles its fiscal problems.  That time is here...  so all the cities that say they have a bright future can at least have A future.

Saturday, July 30, 2011

Slow Motion Replay - How China Won the Upper Hand in Global Economics

... and got American and Europe on the ropes of debt.

The couple-page analysis  HERE  is about as good a summary of China's successful economic strategy as I've ever seen.  Well worth your time to read and digest. The conclusions about what we must do to avoid the dustbin of history are right the to the point.

The Debt Ceiling is a total red herring.  So are the "plans" by the political parties to deal with our debt.  The story is the debt itself, how we got to where we are, and what we must do, if bitterly, to correct it.  Few will be spared - my parents grew up in the Depression and remembered it vividly.  Most sacrificed to one degree or another.

Oh, I and I wouldn't be looking for a replay of WWII to 'save' us.  The war is already well advanced, and it is  ECONOMIC, not military.   China used asymmetry to its great advantage in gaining the economic upper hand.  Time for us to wake up, generate a viable strategy and action plan, and work like hell to execute it.

 

Thursday, July 21, 2011

Yep. It's all the Baby Boomers' Fault.

Eisenhower called out the biggest power & corruption game going when he left office.  FWIW, E's advisors strongly advised him to redact the "congressional" part of his cautionary parting speech about the military-industrial-congressional complex.  Make no mistake about the wacko, debt-debauched, over-militaried, over-entitled world we find ourselves in - it was already GAME ON in a big way, long before the boomers were created as post-war celebrations.  Could it be that even the Greatest Generation had a hand in it?  No, it was all the Boomers.  It was us dastardly 5 year-olds Ike was warning about in his parting address.  The same boomers who protested Vietnam and were called unpatriotic for it.  We dared flout the M-I-C complex because probably, we just didn't know what we were up against.
Yep, it's all the boomers' fault.   At the least, I hope that makes everyone else feel comfortable about their role in our current "interesting times".  Hah.  Does anyone really believe all the world's problems will be solved just because the Boomers pass away???   Dream on.  Better yet, start fighting for common cause with like-minded members of all generations.

Thursday, July 14, 2011

The End of Magic as We Know It?

The Harry Potter decade comes to a close July 15, 2011.  We will have to look elsewhere for our magical fantasies as the epic good v. evil saga draws to it's cinematographic conclusion.

I wonder sometimes about synchronicities and the closing of the book on 'arr-ee 'awht-ah makes me think about all the financial shenanigans that have been accelerating during the time of Potter.  They, too, appear to be reaching a sort of unsustainable climax.  European debt debacles are going to continue and worsen.  China has horrendous problems with both inflation and bad debt, not covered by what passes for media these days.  Here in the good ol' USA, the Fed is in hyperdrive monetizing debt and effecting the greatest transfer of "risk" aka bad debt from the private sector - your friends at Goldman Sachs, JP Morgan, BofA, et al to US taxpayers.  And our government is cooking the books on the ultra-convection setting - spitting out spurious jobs data and inflation measures, downplaying the seriousness of our structural deficit and, let's call it what it is (thank you Ron Paul for saying it as an elected official) insolvency.

I see evidence that more and more people are not buying the stories they're being fed.  More are finding alternative sources of information and analysis, like www.zerohedge.com.  When the audience stops buying the story, guess what happens to the "magic"?  Uh-huh, show's over, folks.  The magic is exposed for the fraud it is and stops working.  Then there's just the aftermath.  Until the next era of magic is invented.

I'll miss the distraction that was Harry Potter... but look forward to a return to basic values and common sense on the political - economic front.

Sunday, July 10, 2011

Stop Blaming John Maynard Keynes

It took years for mainstream media to catch on that deficit spending in a deflationary bust isn't a panacea.  Oops... is there a problem in our r-e-c-o-v-e-r-y???  The only context of recovery I might go along with is that of an addict taking a break from the original addiction.   But let's be fair.  Let's not blame John Maynard Keynes.  Yes, QE1, QE2 and QE to the X were and will be unproductive at best and accelerate our Depression at worst.  But it's not JMK's fault. Really.

If you have ever worked in the software business you'll see a strong parallel to the old curse of RTFM.  Most user calls for technical support arise because the user won't invest any time in learning about how the application works.  So, when it doesn't work, they blame the application and make an irate call to technical support.  After the polite technical support staff have answered the question and pointed said user in the right direction, they hang up and curse at each other, RTFM! (Read the F****** Manual!).

Our economic leaders and soothsayers are just like those misguided software users.  RTFM, boyz and girlz!   It's time to stop blaming Keynes for your own incompetence and chicanery.  One of the core precepts from Keynes (it was right there in his "Getting Started" section) was the assumption that deficit spending to accelerate prosperity would be undertaken by a CREDITOR nation.   All our fool leaders who are jacking up the deficit spend may not have noticed that we aren't exactly a creditor nation... more like a deadbeat-to-be.

So stop blaming Keynes.  Everyone back to your favorite survival strategies.  Leadership elites, back to your plundering and burning of civilization.

Tuesday, April 19, 2011

Max Keiser in Ireland, Part Two

It can't happen here.
Never.
That settles it.
Sleep well.

What Can Ireland Tell Us?

Plenty.  Check out the Max Keiser video.

Anything in this piece sound familiar?  Change the names of the government entities and "bailout" actions that have systematically socialized bad debts incurred by speculators (just give it to the middle class, they won't mind) and banks while privatizing profits.  In Ireland the evildoers get enriched further for "managing" the growing national debt burden.  In the US, the banksters get free money from the Bernank to keep on gamblin' and fleecin'.

Shucks.  I was looking for something fun to post on.   As they say in baseball, there's always next year.

Sunday, April 17, 2011

Another Good Econ 101 Cartoon - Inflation

Thumbnail
Check it!  http://www.youtube.com/watch?v=VL7V9BnJXO8

I love how this guy boils it down.  If you aren't one of the Gods of Greenwich you will probably both cry and laugh at this.  If you are a saver, get extra kleenex.

The Federal Reserve experiment is almost 100, but the wheels didn't really come off (for regular folks) until Nixon eliminated the gold-backed dollar.  The Clinton era sealed the deal by undoing the Glass-Stegall Act that kept banks and brokerages separate, which allowed the "financialization" of EVERYTHING, with a huge increase in systemic risk as a natural consequence.   Our whole focus shifted from production to finance.  Gee, what a great idea; go eat some derivatives.

Now we have insolvent too-big-to-fail banks, insolvent governments and a lot of misleading statistics and spin emanating from centers of power telling us everything is fine/good/recovering/no inflation, etc.   What a load. Stay tuned for $5 gas this summer.  Even Walmart has run out of tricks to keep shelf prices from going up.  But please, do take comfort, our politicians and banksters say no inflation and all under control.  Kind of like Fukushima?   The charade may play out a while longer as Ben the Bernank keeps monetizing treasury debt and providing interest-free loans to the TBTFs to put into the stock market.  Buuuuuut.....

History is not on Benny+Washington+WallStreet side.  Every time wealth has been concentrated so much, and so much debt has been piled on to an underlying productive economy, a collapse of one sort or another (hyperinflation or deflation) has followed.  We are on that doorstep.  There is no soft landing in the real economic world, it is just another crazy dream that economists hold onto because it "could happen".  Sure.  Have a great week.

Friday, March 4, 2011

The National Park Service' Bizarre Jihad on Offleash Dogs in the Bay Area

NPS’ Draft EIS GGNRA Dog Management Plan – A Punitive Sham of a Plan

The National Park Service has been at work for TEN YEARS (thanks, taxpayers) coming up with plans to manage the scourge of offleash dogs at the Golden Gate National Recreation Area which is a collection of federally owned cast-off public spaces in the Bay Area.  The dog management plans have been fueled by hysterical lies from groups like Audubon (we are members, and dismayed by their actions on this) and are about to come to a head as public comment on the NPS' 1000+ page draft Environmental Impact Statement is going to be closed on April 15, 2011.  

Here is a situation where a large public constituency is enjoying the purported benefit (recreation) of Federal cast-off spaces with almost no budgetary requirement (the subject space has zero traditional recreational amenities or services).  The NPS plan would take away this recreational use and proposes to "restore" these spaces to native/diverse habitats.  The government has no credible budget projection to accomplish such an objective.  And even if they did, it will take decades and the size of the public served when it is all done will be miniscule compared to the current user population.  This plan is a shameful sham.  

I have sent comments to the NPS and have written all my elected representatives.   I recommend you be on the lookout for other wasteful and unfair government initiatives and be as active as you can in addressing them.

The content of the comments follows in case you live in the Bay Area and like to walk your dog offleash:

Dear Representative,

My wife and I have been residents of the City of San Francisco since January 2010.  We own one dog and have consistently visited Fort Funston three times a week throughout.  We are members of the National Audubon Society and have read their position and comment on the GGNRA Dog Plan and strongly disagree with them.

Our comment is focused on and rejects the preferred alternative proposed for Fort Funston.

Issue

The letter R in GGNRA stands for Recreation.  Currently, Fort Funston is an extremely popular destination for dog owners, and judging by the fullness of the parking lots, maximizes benefit to the public.  We have personally contacted and spoken with at least one hundred dog owners and the implementation of the preferred alternative will drive most of them away permanently. 

The preferred alternative purports to restore Fort Funston to a natural wild state.   Even if this is possible, it will take many years.  And even if it happens, how many people will be served in a Recreational manner by the Preferred Alternative?  What surveys and data has the Park Service relied on in estimating this number of people?  This data must be made publicly available for review.

We strongly contend that the preferred alternative will result in dramatically reduced public use and enjoyment in a recreational capacity of Fort Funston.  It the number of people served is reduced, how can the Preferred Alternative serve the public interest?   Why would fewer visitors be preferred to more?

If the Preferred Alternative cannot clearly and scientifically be demonstrated to result in serving a greater number of people, it should be replaced entirely.  The status quo should be the Preferred Alternative.

Issue

The Golden Gate Audubon Society claims in their argument for the Preferred Alternative “Too often, we have seen dog-related recreation push out other park users and result in significant harm to the local environment.”

Speaking specifically to the Fort Funston area, the Audubon position is completely without merit:
·         Fort Funston was significantly altered by the US Government long before any dogs and their owners came to visit.  The area has not hosted an indigenous flora nor fauna for many decades. 
·         Audubon claims about “thousands” of affected species are untrue to the point of being laughable at Fort Funston.  Where is the inventory and/or surveys substantiating the impacted species and what reasonable standards were employed to ensure that these surveys were performed by objective parties in an objective manner?  This information needs to be made available for public review and comment.
·         Other park users have never been pushed out by dogs and dog owners at Fort Funston.  There are no recreational facilities there suitable for use by families, children, organized groups or the disabled.  And Fort Funston’s historic lack of native flora and fauna have made it unappealing long before dogs for purposes of birdwatching.  The few thriving bird species at Fort Funston can be easily found in most back yards,  are not uniquely native to California and are not endangered.
·         Getting rid of dogs will not restore a natural environment at Fort Funston. What dollar and human resources are committed without possibility of revocation to the massive restoration project implied by the size and scope of the Preferred Alternative.  If you do not have the resources to accomplish the objective in a reasonable timeframe, the Preferred Alternative is only punitive to dogs and their owners while providing no real benefit to anyone else.
·         If the Preferred Alternative is adopted, it is certain that it will push the current Fort Funston users out to other impacted parks and resources in San Francisco that already serve families, children, groups and the disabled with functional recreational facilities.  In short the preferred alternative eliminates a non-existent conflict and creates a real one.

The Preferred Alternative at Fort Funston is deeply flawed, solves no real problems and is very likely to foster new real conflicts and problems.


Issue

Where there are not vibrant, positive uses of public space, negative uses encroach.  On the few occasions where we visited Fort Funstion near to closing time, we have observed suspicious activity in the Batteries that a reasonable person would conclude involve drug sales and use.

The nearby Ocean Beach area has a very large homeless population that would find a vacated Fort Funston to be a very attractive, undisturbed camp site.   As a former Park Ranger, I can tell you as I’m sure  you already know, that  long-term homeless visitors to public property definitely foul and degrade the environment, cutting trees for fires, leaving trash and human waste everywhere and scaring away innocent visitors.   Dog owners by and large clean up any waste they are responsible for.   Replacing dogs with homeless will degrade the environment.

The Preferred Alternative is an open invitiation to criminals and homeless persons to come use Fort Funston without being disturbed.

The Preferred Alternative does not address the encroachment of bad uses of Fort Funstion that will occur as a result of moving the dogs and their owners out.   The Preferred Alternative is deeply flawed and should be rejected in favor of the Status Quo.
  
Issue

The GGNRA Preferred Alternative at Fort Funston contemplates a massive project to restore the site to a native natural state.  Nowhere have we seen credible budgetary figures outlining how much this undertaking will cost nor how long it is expected to take.   Especially in this climate of weak economy and declining government budgets we need to see proof that the objected purported by the Preferred Alternative is fiscally feasible.

Conversely, the status quo at Fort Funston requires minimal expenditure.  Where will the increased budget come from and what assurance is there that It will be sustained long enough to accomplish the objective?

Without such proof and assurance, the Preferred Alternative is only punishing a public contingent that is well-served by the Status Quo and replacing it with a much smaller served public.  This is not fair, is not a good deal nor good business.  The Preferred Alternative is deeply flawed and should be rejected in favor of the Status Quo.

We respectfully ask that you support us in rejecting the NPS' Preferred Alternative dog management plan for Fort Funston, in favor of the status quo.

Thank you and best regards,

Bob Kimball



SHORT FORM

Please join the many dog owners in San Francisco in opposing the NPS' GGNRA preferred alternative dog management plan for Fort Funston which largely destroys their recreational use of that GGNRA space while creating no offsetting benefit for anyone.  The summary of reasons-

* Fort Funston has not been in a natural state for decades thanks to use by the US Army- it does not need restoring because of dogs.  Restoring it will take decades and the NPS not demonstrated credible resource projections.

* There is little in the way of native/diverse flora and fauna at Fort Funston - again, a legacy of its use as a gun emplacement and ammo storage facility.  We are members of Audubon and are dismayed that they are presenting Fort Funston as a place of many native species.  We are birdwatchers.  We visit 3x a week and that is bunk.

* Pushing dogs out of Fort Funston will stress other San Francisco recreational facilities that already serve families, children, groups and the disabled.  Funston has NO recreational facilities; there are no conflicts between dogs and human uses.  Pushing the dogs out of Funston will solve a non-existent problem and replace it with a real one that will be borne by San Francisco.

* When good uses of public space are eliminated, bad uses encroach.  an active people+dog community keeps criminals and homeless out of Fort Funston.  The NPS EIS does not address what will happen as bad uses replace good.

Kicking dogs and dog owners out of Fort Funstion without a credible plan and budget to acheive objectives serving equal or larger public recreational uses is just punitive, unfair and basically a sham.  

Monday, February 7, 2011

A Tale of Two Super Bowls

The Super Bowl, that annual annointing of "world champions" is a fascinating microscopic take on what's up with the USA.  It reminded me of the quote "it was the best of times, it was the worst of times."

Green Bay gets huge high-fives for character and keeping the American Underdog Dream fully alive and well.  I'm thinking San Francisco and Green Bay should become sister cities - let's call them Champions of the Improbable!  Having a Cal alum at the victorious helm didn't hurt the sentimental value one bit, either.  Aaron Rodgers deserves the credit he got for poise and perseverance despite setbacks larger and smaller.

Now, on the flip side... I luckily missed the butchering of the national hamthem but given what I saw in the halftime extra//g-nzA all is not well in wonderland.   With all the money thrown at that production, it was amazing to see mixing board screwups - woah - who is singing now?! and the hopefully-non-freudian lighting system fubar with LO 'E.  Yep, all you need is LO 'E.   The LED body lighting on the field dancers was pretty cool, but having a major chunk of stage lighting OFFd for the event was pretty poor.  No doubt someone has been blamed and executed but that was a team failure.   Kind of like the team failure we're experiencing at the hands of the banksters and their feddie buddies QB'd by ChairSatan (hat tip to Bill Gross) Genocide Ben Bernanke.

If Heads is the Packers and Tails is the Halftime Show, the COIN ITSELF has to go to Apple, with their "Two is Better than One" iPhone megabrag.  Yep, what could be better than having all the long-suffering AT&T i-victims have to go buy a new iPhone for the incompatible Verizon network.  Slick.  How many of those AT&T phones are going to be popping up on Craigslist and Ebay soon?

The Peas are still clinging to Hope and Change You Can Believe In.  I think I'll stick with the Underdog Dream.

Wednesday, January 19, 2011

Have We Missed the Start of World War III?

Possibly.

Economic (Federal Reserve) policy in the USA is getting tagged, not entirely unfairly, for food riots in developing countries.

Iran's nuclear program has reportedly been set back years.  Not by a military operation, but a computer virus.

The most strategic "choke points" in the developed world are no longer ports, bridges, roads and factories but financial and energy distribution systems, which in turn rely on the global information network.

The global debt bubble has already caused one country (Iceland) to go bankrupt.  More will follow despite the increasingly desperate and disingenuous tactics to pay old debt with greater sums of new debt.  The Swiss are being punished for prudence, with the value of the Swiss Franc skyrocketing as the rest of the developed world, led by the USA, tries to debase its currencies to "stay competitive".   This race to the bottom can lead to an 'everyman for himself' chaos.  Nations and peoples may well find themselves "owned" by others in return for "bailouts".... no shots fired.

Why drop bombs and fire guns if you can disrupt or take control of information networks and the complex systems, especially financial, riding on top of them?   Both nation states and rogue actors could plausibly do so.

Consider the possibility that World War III will be entirely different from the conflicts that preceded it.  The primary arenas of conflict could well be economics-based and information-control based.   Military action may become a secondary arena, more for consolidation of control than assault.  Consider that alliances may shift throughout the conflict, unlike the rigid state-based alliances of the past.  Indeed, chaos and uncertainty may be signature calling cards of a lengthy conflict.

All biological systems adapt.  War has proven to be adaptible throughout human history.  No war has been exactly the same as it's predecessor.   Enough has changed in the fabric of life since WW II that we should not be surprised to wake up to a very different kind of war.  Stay awake, my friends.

Wednesday, January 12, 2011

California Inmates, Your New Facility Awaits!

First, kudos to Jerry Brown who is making good steps whittling at California's monstrous budget problem.  He's building political support on relatively "easy" moves like taking away cellphones and car perks from state employees and making pretty courageous moves on very unpopular fronts like reducing education spending and social benefits.  Just as only a Republican could "open up" communist China (Nixon, 70's) only a Democrat can deal with predominantly democrat California politics to reduce budget deficit.  Jerry Brown gets a lot of undeserved trashing by people who turn a blind eye to his rare combination of high integrity, intellectual honesty, and razor sharp political instincts.  These tough times may be Jerry's finest hour, and silence the static from the peanut gallery.

The California budget circus, goat-rope, whatever you want to call it, is going to get a whole lot nastier when Jerry tries to cut spending in the most sacred-cow temple, the prison system.  Being a California prison guard has been one of the few guaranteed tickets to millionaire-land with early retirement, not a bad outcome for (California) High School diplomas.  Arnold Schwarzenneger got bushwhacked when he tried to get support for moving a relatively small bunch of criminals who are Mexican nationals, here illegally, to custody in.... Mexico.  The savings would have been substantial.  Prison Guard revolt, game over.

As we keep sending empty freighters back to China, and China keeps building more empty buildings to prop up their real estate bubble, I can't help thinking of the great win-win it would be to outsource the Great California Prison Industry to China, in a big way... forget Walls, how about the Great Halls (for social redevelopment) of China.  Prison jobs will never help rebuild the economy.  Just imagine what it would be like if we moved some of those taxpayer-burden jobs together with a many metric tons of inmates offshore, and brought back some manufacturing jobs?

In case you are worried about the possibility for cruel and unusual punishment by domiciling inmates in China, check out Bloomberg TV's video update on one possible facility... the world-famous (and famously empty) South China Mall!

The South China Mall, Still Empty after All These Years:  http://www.bloomberg.com/video/65822094/

The New "Carry Trade" -- Prisoners to China!

Friday, January 7, 2011

If We're Recovering, Why the Record Use of Food Stamps?


What kind of situation do you have to be in to qualify for SNAP (food stamps)?
The household must have $5,000 or less in countable liquid assets combined with excess vehicle value. This includes cash, checking and savings accounts, stocks, and bonds. It does not include non-liquid assets such as land, minerals, and livestock. Prepaid burial insurance or funeral plans with a cash value exceeding $7,500 must be counted as a liquid asset.


Oh, SNAP, indeed.  I guess the suggestion by one wag that people are taking their food-budget savings and plowing them into tech flyers like AAPL sadly falls into the "there is no Santa" file.


In the Great Depression (soon to be called the Second Greatest Depression), we didn't have SNAP, we had soup lines.  It's so much easier to sweep our trouble under the rug when we can keep it off the street, no?


In other developments, Portugal is going to the PRIVATE MARKET to float bonds, because it really can't practically do it in public any more.  Rumor is China will step up to buy these fine investment-grade vehicles.   Well, when you have Ron Paul categorically promenading the Emperor's Clothes - THE USA IS BROKE AND CAN'T PAY IT'S BILLS - I guess risk diversification to Portugal isn't so crazy.


Just another day in Wonderland.

Monday, January 3, 2011

New Tech Stock Bubble?

Goldman Sachs' $450MM investment in Facebook says that big money would like to see another tech bubble.  With a $50B market valuation, Facebook may have to work for quite awhile to approach any kind of "fair" valuation.  But no matter.  The economics here are simple: GS puts in some chump change today, and in a year or less, flips that investment to the starry-eyed for a double or better, plus cleans up on the fees for the IPO.  And, if it works, the floodgates are open for a number of smaller follow-on deals.  There are a number of promising candidates for "valuation insanity" in the social media and web 2.0 arenas.

Timing of this is fairly urgent.  What other candidate schemes are there that could create this kind of money fountain?  Not too many.  Strong tech stocks like SalesForce.com already are showing signs of being a bit "bubbly" --> http://qr.ae/tIei  so the time to move is NOW.   Watch for more announcements like this soon, and for plenty of hoo-hah about coming "blockbuster IPOs".

Talk about history compression.  Have people already forgotten the last tech bubble and bust?  Not even ten years have passed since all manner of tech story companies were rushed to the public market, enriching the early investors and decimating the portfolios of many enthusiastic IPO buyers.   The NASDAQ stock market has had quite a run since March 2009.  Many may be tempted to think that it's safe to go back in the water.  And the big-money players will be working overtime seducing you.   Just sayin'.