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.

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!

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.

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'.