Smokey and I disagreed on a few things, but he was right about Kyle Bass. Wherever he is, I hope he can watch this video and smile.
Kyle Bass: “The Next 18 Months Will Redefine Economic Orthodoxy For The West”
Submitted by Tyler Durden on 06/18/2013 21:33 -0400
Kyle Bass covers three critical topics in this excellent in-depth interview before turning to a very wide-ranging and interesting Q&A session. The topics he focuses on are Central bank expansion (with a mind-numbing array of awe-full numbers to explain just where the $10 trillion of freshly created money has gone), Japan’s near-term outlook (“the next 18 months in Japan will redefine the economic orthodoxy of the West”), and most importantly since, as he notes, “we are investing in things that are propped up and somewhat made up,” the psychology of negative outcomes. The latter, Bass explains, is one of the most frequently discussed topics at his firm, as he points out that “denial” is extremely popular in the financial markets.
Simply put, Bass explains, we do not want to admit that there is this serious (potentially perilous) outcome that disallows the world to continue on the way it has, and that is why so many people, whether self-preserving or self-dealing, miss all the warning signs and get this wrong – “it’s really important to understand that people do not want to come to the [quantitatively correct but potentially catastrophic] conclusion; and that’s why things are priced the way they are in the marketplace.”
“We’ve essentially printed $10 trillion in the last few years” “The first $5 trillion replaced the lost equity in the leveraged financial system and the second $5 trillion is making its way into deposits and expanding the monetary base” “This is unprecedented… and it’s not going to change.”
The numbers that Bass reels off are incredible…
“What we’ve seen is a massive credit-led boom (+11% CAGR) and that can’t last forever”
11:00 “The next 18 months in Japan will redefine the economic orthodoxy of the West”
“Japan is so far off the bell-curve that no one wants to talk about it”
“if you repeat things enough, everyone will believe them.”
There are three key myths about Japan that Bass shows are simply false but remain repeated for the comfort of the cognitively biased investment community:
The current account allows the country to self-finance its deficit
The Bank of Japan is not monetizing debt
Retail investors will always support the JGB marketplace
From the nation’s own largest institutions forced to sell assets to the crushing demographics, Bass explains – in greater clarity than the soundbite-idiocy we get each night from Abe/Kuroda/Aso etc…
The smartest money is leaving Japan in a hurry already – Q4 2012 was the largest M&A quarter ever for Japanese firms buying foreign entities – Western productive assets – (just as was seen in Mexico before their crisis) as they try to get out of JPY
25:00 The Psychology of negative outcomes
“as an investor and a fiduciary, I get paid not to be an optimist or a pessimist; I get paid to be a realist”
“Denial” is extremely popular in the financial markets.
Simply put, Bass explains, we do not want to admit that there is this serious (potentially perilous) outcome that disallows the world to continue on the way it has. and that is whay so many people, whether self-preserving or self-dealing, miss all the warning signs and get this wrong.
“no one is ever going to tell you something is wrong”
“we have blind faith in the people running our institutions…that they can figure things out. They are a mental crutch to insure and placate depositors and investors that everything is going to be ok”
“we are running a huge economic experiment,” and you can’t control it all since there are too many variables
Once you understand the psychology of the participants, the key is to understand their actions based on that.
“It is the qualitative shift in the market participants’ belief systems that literally flips a switch overnight”
Bass reminds us of Taleb’s work on central planning: “if you suppress volatility long enough, then when the ‘event’ happens it is greater than the sum total of all the suppressed vol over time.”
He warns – these shifts happen so fast that you will never get hedged or out of the way in time…
32:00 Q & A begins
First he discusses the naysayers on a Japanese bear thesis
“I would like to live in a world where it’s all rainbows and unicorns and we can make Krugman the President – but intellectually it’s simply dishonest”
“If you were advising Abe, what would you say?” – “Quit!”
41:00 General China discussion (in the context of the Japanese-China rhetoric)
43:30 Iceland – not as great as some would suggest
“China is building an embassy in Iceland that can fit 500 people in it. Iceland only has a population of 300,000!”
“You have a roach motel of a country; the New York Times and Krugman saying it’s “The Model”; but they still haven’t addressed the problem of their debt.”
46:35 Do you worry about the US?
“I quit worrying about them because it’s just a waste of time – I always leave DC demoralized”
“The central bank is the great enabler of congressional profligacy”
48:00 How does the small investor play the Japanese market – Bass responds that they can’t and shouldn’t. Shorting JGB futures means high carry costs and negative convexity
And our favorites question!!
49:00 Why can’t the Central Bank just buy all the JGBs and then forgive them?
A speechless Bass responds…
52:00 Bank VaR and under-capitalization
Well worth an hour of your time before the FOMC tomorrow…
What am I going to do? This question has been foremost in my mind for many months now. Years, really. Then, I saw a comment on the forum, which I believe was mostly antagonistic, asking Mr. Quinn what he was going to do. What’s Jim going to do? Stucky? AWD? What are any of us going to do, for that matter? I thought it might help me to gain some clarity into my own thought processes and help me to flesh out some thoughts I’ve had on the future of our country and our economy.
First, let me begin by saying, “I’m a regular guy.” I’m 42 years old, married for 18 years, I have 3 kids under the age of 10. I work for a living. I am a superintendent for a commercial construction company. The company treats me well. I make above-average income, but not into the 6-figure area. My wife has a part-time job at our church, but that’s primarily because she wants to, not because we need to. In other words, I’m in the 99% percent. Nothing special about me or my family roots.
Now, let me back up a few years: In 2007, I moved to El Paso, TX to participate in one of the largest government spending programs I’ve seen, first-hand. The US Army Corps of Engineers spent a gazillion dollars upgrading Ft. Bliss. Entire cities went up in the desert, in a period of a couple of years. A massive amount of construction. Incredible. And good for my family, and all of El Paso and surrounding area in general. While many portions of the country were hit by the economic crisis of 2008, we were largely insulated from (most) negative effects of that crisis.
This created cognitive dissonance for me. At that time, I was listening to Glenn Beck on the radio. Say what you will about Beck, but his extreme message was enough to cause me to seek other information elsewhere. I couldn’t understand it: I was working and making good money, being offered multiple jobs with more and more money thrown at me, and the rest of the country was unemployed? How can that be? How can the economy be crashing when all around me, when things are booming?
I committed to read and listen to everything I could on the subject. No rabbit hole was too small to go down. I chased down every lead, every angle I could to figure out what the fuck was going on. The more I learned, the more I wanted to know. I am not necessarily a detail-oriented guy. In other words, many of you can explain the intricacies of the financial system with charts and graphs much better than I can. I grasp the concept of the Fed and our debt-based monetary system at a level I am comfortable with. I don’t understand every chart Jim publishes, but I understand that you can’t pay for debt with more debt.
As a result of my studies, here are some changes I’ve made in my life:
1) I’ve become a political atheist, with libertarian leanings. In other words, I think the system is fucked but I believe autonomous human beings have the god-given right to be free.
2) I’ve basically walked away from the church, as an institution, and traditional Christianity, as a religion. Not to go into too much here, but…….well, nevermind.
3) I got my permaculture design certificate and spend an inordinate amount of time trying to grow my own food and improve my health through good nutrition. I live in a very harsh environment (high desert). You cannot imagine how many times I’ve wanted to throw the garden hose down, and say “Fuck This! This shit is too hard!” But, then, I have a few small successes, like garden-fresh tomatoes, fresh apricots, a delicious home-brew, a nice glass of homemade wine, or fresh eggs from the backyard, or a fresh salad and I get re-inspired. What I’m doing is a good thing, and good for my family, and it’s good for the earth. It’s noble and it’s spiritual.
4) I see things that others may not understand. I only have one or two people I can share ideas with, in real life. Other kooks, I jokingly say. I have to share most of my ideas on the internet as most of my peer group have no fucking clue, or aren’t interested, or it’s too hard to make changes, or whatever.
The question, though, still remains: What am I gonna do? What do I expect to happen in our future? How do I prepare for what is, ultimately, unknown? I’ve constructed an arbitrary 1-10 scale to evaluate the future with. In other words: On a scale of 1-10, with 1 being full economic recovery and good times are here again, and a 10 being full-out Mad-Max style survival, what do I think our future looks like? At this time, I am steady in the middle, a 5, but I reserve my right to adjust to a higher number (ie, worse outcome) at any time.
Does the information I seek out on the internet only serve to reinforce my beliefs because of bias and prejudice? Do I seek out other sources of information that challenge my current belief system? These are the questions I ask myself.
Here are some of the things I see: I think all TBP readers will agree that a major economic upheaval is going to occur in the next x years. Tomorrow? Or ten years from now? I hear different opinions, from sources I trust, about the time-scale of peak oil. (For a view that opposes Kunstler, et al, listen to Jack Spirko at thesurvivalpodcast.com) I think that as the economic situation of our country (and the entire world) gets worse and worse, our Federal Government will increase it’s authoritarian, statist tendencies. More taxes, less freedoms. Those in power are not going to give up that power easily.
What does that mean for me, a regular guy? I don’t have the resources of Doug Casey to move to a luxurious Argentinean private community. I think I am destined to be here in the good old U-S-of-A. How do I best protect my family? Is my plan good enough? Are my resources deep and wide enough? Will I be able to protect my wife and children in the event of a worst-case scenario?
You’ll notice that there are lots of questions. Maybe more questions than answers at this point. But, here are a couple of things I HAVE decided” Fuck ‘em. Those in power. Any of them. All of them. From the Government to the Church to the Media to anyone else in a current position of power, THERE IS NOT ONE SINGLE SOLITARY MOTHER-FUCKER WHO WILL TELL ME THE TRUTH! I will rely on myself to discern the truth. The Church, as I see it, doesn’t address half the problems in real life and instead, wants to focus on songs, and leading time-wasting events such as day-long workshops about nothing relevant. (I acknowledge there may be a few outliers in the church structure. I like the work of Triple-X Church, for instance.) The Government and the Media appear to be two whores in the same bed. They will fucking juice my children up on psychotropic drugs, that arguably, turn them into mass-murderers. They will fucking feed me shit for food and fucking poison while telling me it’s “health food.” They will take my guns away to “protect me”. They will take my money from me in the interest of “helping others less fortunate.” My health care gets more and more expensive and I can’t figure out why our budget is so fucking tight every month. So, fuck them all. I walk away from them.
The alternative media (internet) is good, but it takes a huge amount of discernment to distill truth out of the massive amount of information. On the one hand, it’s easy to get bogged-down in the (D) vs. (R) debate. Bush=good. Obama=The Devil. Or, Obama=good. Bush=The Devil. It’s all the same shit, and a distraction. On the other hand, you can get into the reptilian, shadow government, Rothschild, secret illuminati, alien bases in New Mexico stuff, too. Nonsensical, and a time-waster.
How do I fight back against an increasingly authoritarian regime? I’ve got my kids to look after, you know. It will not do me any good to resist and end up in some fucking obscure FEMA camp. (If that’s even for real.) It won’t do me or the country any good to go off and start firing shots and end up in prison for the rest of my life, only to have the shots NOT start the revolution. What a wasted pud-puller THAT would be.
No, for me, I think the solution is to keep my head down, but be on the lookout. At all time. I’m a good little W-2 rank-and-file wage earner. I pay my taxes. I’ve decide it’s better not to hang the Gadsden Flag in my front yard. Keep a lower profile that way. I work hard for my company, with no complaints. I go to church when my wife asks me to. I’ll give some fresh eggs and fresh parsley to my little-old-neighbor lady.
But, on the inside, I’m another guy entirely. Right now, in my head, I’m re-designing my garden beds to be more effective with less work. I’m going to learn to grow medicinal herbs and what-not to take care of my own medical and spiritual needs. I’m going to slowly acquire silver coins, with cash, anonymously, in person at a local shop. I’m going to develop some kind of business that I can work hard but under the radar. I don’t know what this is yet, but does anybody need any lawn work done? I can cut your grass for cash or help you build a garden bed, or something. I may have a little home-brew or some labor or basic carpentry skills to trade you for something in return. I’m learning to play the guitar so I can entertain myself and my wife sings. Family-style sing-along anyone? I’m developing a practice of meditation so I can Be Still when the world around me is in chaos. I’m continually thinking about moving to a less-harsh environment where I can develop a strong sense of community. This one hasn’t been easy, but I trust I will know what to do when it’s time to do it.
Discuss this article at the Podcasts Table inside the Diner
Perhaps the most recent in the paradigms being pitched over the internet in terms of DOOM is the concept of Near Term Human Extinction (NTHE). In this article, I’m going to look at some of the rationalizations for why this could occur, and what might be done about it if it is in the offing.
What does NTHE mean? Well, in timeline terms, the folks who believe this is imminent talk in terms of a Century or less, and one of the main proponents of the idea, Guy McPherson of Nature Bats Last who we periodically Cross Post here on the Diner predicts such an Extinction Level Event (ELE) for Homo Sapiens could arrive by Mid-Century. Since it is already 2013, that leaves only about 37 years to wipe out Homo Sapiens. Guy, Monsta & myself had opportunity to hash over some of the possibilities on Friday, across 9 hours of Time Zones which was quite an edifying chat overall. You can listen to the Podcast here and see how it affects your own conclusions about the likelihood of NTHE.
What is the Main Vector for this ELE as proposed on the Climate Level? The primary argument is that it will arise from an overall warming of Global ambient temperatures by around 4 degrees Celsius, or around 7 Farenheit if you are more familiar with that scale.
The predicted consequences of such a rapid rise in temperatures are Devastating on about every level you can imagine. Inundation of most of our highly populated Coastal Cities, extreme Weather Events with worsening Drought in Drought areas and worsening Flooding in Flood prone areas.
None of this could be handled very well in the current political climate most certainly, and then when combined with the synergistic effects of depleting Fossil Fuels to run the industrial economy and industrial agriculture, well, altogether you cannot help but see the reasonable Likelihood of an extreme Die Off event coming down the pipe through this period. Does this make it an ELE though? Will all this climatic change make 100% of the face of the Earth 100% Uninhabitable for Homo Sapiens? Because 100% is a NECESSARY condition for Extinction. Even a 1% survival rate does not qualify as an ELE.
I’m going to make an analogy here with the game PLAGUE, which I recently downloaded onto my Samsung Galaxy Android OP System Tablet, and spent quite a few hours last weekend playing. The goal of said Game is to Wipe Out Homo Sapiens through Disease Vectors, and you can manipulate the parameters of the Diseases to make them spread faster, be more drug resistant, more Lethal etc. Overall it is a pretty well constructed game, and addicting enough to make its designer pretty well to do by now I expect. My old friends on The Burning Platform will be delighted to know I am easily capable of Wiping Out 7M Virtual People with Plague on a Daily Basis now. Actually a good deal better than that, I can WIPE OUT all 7B! LOL.
Thing is, Plague makes a LOT of assumptions about how the various parameters will play out, most particularly how Goobermints will react to Plagues when they get under way and how much real “money’ anybody will have to research cures for such things.
In fact, my guess would be it won’t be any Wild & Crazy Super Lethal Virus that takes down Homo Sapiens in large numbers, but rather the re-emergence of good Old Fashioned Diseases like Cholera, Typhus etc that will flourish once we start having issues with keeping the sewage treatment plants operational. Once the essential energy to run the large Shities becomes scarce enough, these places will experience MASSIVE population crashes, in fair short order would be my best WAG.
As it has evolved here over time MOST of the current Overshoot of the population of Homo Sapiens now resides in the Big Shities. So what happens here if you get a rapid Die Off of this population, the Demographic MOST susceptible to disease transmission due to its very close proximity and population density?
What occurs is that everything Industrial comes to a COMPLETE HALT nearly IMMEDIATELY. All the Finance, all the Subsidy necessary to run Industrial Infrastructure collapses as soon as the Big Shities do. This means such things as Clear Cutting and Slash & Burning of Amazonia Rain Forest also comes to a halt at this time. With the Global Economy in collapse, there is no benefit to Brazil for selling Soy Beans to China, the Chinese are going to be busy Dieing by the Truckload.
What this then leaves are various scattered groups of Subsistence living people, and such people would be extremely hard to wipe out. Even assuming vast Climate Change on the order of a 4 degree Celsius rise in average Global Temps; reduced available land mass for growing things and varying Drought and Flooding depending where you happen to be located on the planet, you STILL will be left with Neighborhoods which are on the Border of one experience Drought Conditions, while the Other experiences Flooding conditions. It is in such Border territory a few hardy Homo Sapiens can survive the cataclysm. Remember here, it does not take MANY to survive an ELE, in the case of Toba it is estimated only 10,000 Human Souls or 1000 Breeding Pairs made it through that one. They then managed to Breed Up to the current Population Maxima Event of around 7B, though we may make it to 8 or 9B if we don’t get a real fast collapse in the near term.
Rapidity is important here, because it is this which gives no time for Adjustment even for a few people. What would it take to Knock Down the current 7B people living on the Planet to ZERO by Mid-Century as Guy McPherson hypothesizes as likely here, if not inevitable?
Well, if you call current Population at 7B and give it 35 years or so for the complete EXTERMINATION to occur, this means EVERY YEAR from now to 2050, on average 200M people will have to DIE EVERY YEAR more than the number of people born during the period. Such a massive population collapse is not yet evident, though of course it can come at any time here in the next 35 years. Each year goes by it doesn’t begin in earnest means Bigger Numbers required to make it happen in a shorter period of time though.
Back to Plague here, what happens in that game if you get massive Die Off rapidly, but it is not LETHAL everywhere? Basically, you LOSE THE GAME, because even though you may have knocked down 6.5B people, the .5B remaining after the Plague get to Reboot. Knocking off EVERYBODYis pretty hard in general, and you have to know the parameters of the game to make it happen regularly, but we do not know nor do we have control over the parameters operating here in the REAL GAME of Human Extinction.
I personally do not see how even a 10 degree rise in Global Average Temps would make the Planet Uninhabitable for Homo Sapiens. That does not raise the temp past where Homo Sapiens can live. Average Temps are now in the 60s farenheit, maybe this gets you to the 80sF, uncomfortable but not too hot to live. Plus, that is AVERAGE, it still would be cooler than that near the Poles. Just on Temps alone, I think you need 100F+ EVERYWHERE for Extinction. This is above Operating Temp for Homo Sapiens of around 98.6 degrees, so you got no Heat Sink left at that point to cool with.
The only other means I see as possible that such a rapid NTHE could occur as a result of the Climatic Changes is with collapse of the Phytoplankton due to Ocean Acidification, a corollary of Climate Change whether you believe this results from Anthropogenic Causes as Guy does, or Geotectonic Causes as I do. Thing is, Phytoplankton are single cell species, which adapt rapidly to changing conditions. Not like say Coral Reefs, which most certainly completely collapse once the pH drops low enough that calcification cannot take place. This is around 30 years down the line if the current trend line in Ocean pH decrease is followed consistently.
With such collapse, Breeding Grounds for many species of fish would be destroyed, so you lose this portion of the Ocean based fisherie also, but not the Fresh Water Fish that live in lakes and streams through the lifespan of said fish. The fact that thus far we have ALREADY seen a 50% collapse in Phytoplankton is not a good sign of course, but this is not complete collapse either. Can those little buggers evolve fast enough to tolerate higher acidity/lower pH? Nobody knows that, and you can’t model it in the lab either, because you do not have an Ocean full of the stuff and 50 years time to do the modelling. The experiment only runs at the vast planetary scale, and all we can do really is watch it play out there over time.
Hard to say what would occur with Shell Based crustaceans also, losing shells would make them more vulnerable to predators, but most if not all of their predators themselves would be gone in this environment. They also reproduce rapidly (though not as fast as single cell organisms of course), so they might evolve in some way to survive and handle the New Reality without their Shells.
On Land, while the increasing average Temp would have many negative outcomes, fact is because it would SO rapidly kill off MOST of Homo Sapiens, much of the Habitat destruction currently Ongoing would come to about a complete HALT, as rapidly as the Die Off proceeds, probably more rapidly because of dependence on the Finance model and the tools of Industrial Ag which would no longer be available in a Rapid Collapse scenario. Good example here is Deforestation of the Amazon, which is really only occurring because of Huge Demand for Food Product from places like China, but once you start getting massive Die Off in China and collapse of World Trade, there is no further reason to pursue this.
So, what you run into here is a situation where because such a huge portion of Humanity goes to the Great Beyond so fast, most of the Negative consequences of Overshoot come to a halt along with that. There will be fewer Habitats some Homo Sapiens could survive in, but not NONE. For it to Go to Zero, EVERY last place still above water has to be Uninhabitable, and for that to occur in a 37 year time span to Mid-Century is not supported by any model I am aware of, though Guy can of course debate that point. (and he DOES! Listen to the Podcast!)
The only real rapid NTHE Models I think are Plausible are tangential to Climate Change, Energy depletion and Environmental Degradation. As Sewage Treatment plants fail in Major Big Shities and Die Off begins in earnest, returning to the Plague Game it is possible that a Disease or Diseases with a high enough Infection Rate and Mortality rate will develop that will Infect every Homo Sapiens on the Planet, and that certainly could cause a rapid Extinction. However, for such diseases to make it to places like Nunavut for instance and flourish in that environment would be difficult, and likely slow to get there also. Nunavut does not have a big Tourist Trade.
Also of course is the possibility that as Available Energy drops below Critical Mass, it will not be possible to keep cool the Spent Fuel Ponds in the plethora of Nuclear Reactors spread across the world, there would be many Meltdowns on the Chernobyl/Fuk-U-shima model and perhaps also Super Critical Events where some Reactors actually BLOW on the Nuclear Level. If they all go this way, it could spread enough Radioactive Poison through the atmosphere to make most animal life impossible. Homo Sapiens is probably amongst the first to go in this scenario, only fitting since we were the Dummies that dropped these Killers on the Landscape to begin with.
Global Thermonuclear War, quite possible once the REAL FIGHT begins over the remaining resources of the earth also could spread enough Radioactive Poison around to Knock Down Homo Sapiens in short order. This is also a possibility, but is also is only tangentially related to the ongoing Climate Change. Extinction here does not come as a direct result of the Climate Change, it is just a corollary of Industrialization and the insatiable Jones for more electricity in more places all the time.
Then of course there are those naturally occuring phenomena which have led to ELEs before, Asteroid Collision and Super Volcanic eruption such as the Toba Cataclysm 75,000 years ago which led to the genetic Bottleneck for Homo Sapiens, leaving only perhaps 10,000 Human Souls or 1000 Breeding Pairs left walking the Face of the Earth in the aftermath of that one. This of course though also was not really an ELE for our species, since enough were left standing to re-breed up now to the tune of 7B Human Souls inhabiting the planet at one time. Are the consequences of Industrialization and the burning of Fossil Fuels really WORSE than Toba, where this can do a better job with total EXTERMINATION than that one was able to accomplish? Does not seem likely to me, certainly not on such a rapid timeline and more certainly not without other tangential factors also coming into play here. I still do not see how even an average Global Temperature increase of 10C does this in and of itself in such a rapid fashion.
Some folks would argue that this is Nit Picking, if you only leave alive 10,ooo people, 99.99999% of us are as good as extinct ourselves. The difference though is that even EXTREME Die Off still leaves open the HOPE that the Great Experiment with Human Sentience can be rebooted one more time, and perhaps in the next iteration we will do a bit better job managing our Stewardship of the Earth. As I move along the Collapse Highway here, this is my Hopium. If you buy the idea we are going Extinct here for sure; there is NO POSSIBILITY anymore it can be averted; what reason is there to do anything else other than Party Like it is 1999? No reason to make any changes in lifestyle anymore, and you might as well Snuff your kids now, since they are just going to grow up in a world where everyone around them is Dying, including them before they make it to 40.
MAYBE this will occur. there most certainly are out there numerous Vectors which could enable such a Rapid Extinction Level Event, but not a one of them is WRITTEN IN STONE. Climatic Theories are just that, THEORIES. Not proven fact and based on some Mathematical Models which themselves have identifiable flaws in them. For Guy and many of his readers on Nature Bats Last, they talk about such things as “Acceptance”, growing comfortable in a sense with the idea that Homo Sapiens is going the way of the Dinosaur. This thinking process evolves out of the 5 Stages of Griefmodel proposed by Elizabeth Kubler-Ross back in her 1969 book Death and Dying
The stages, popularly known by the acronym DABDA, include:[2]
Denial — “I feel fine.”; “This can’t be happening, not to me.” Denial is usually only a temporary defense for the individual. This feeling is generally replaced with heightened awareness of possessions and individuals that will be left behind after death. Denial can be conscious or unconscious refusal to accept facts, information, or the reality of the situation. Denial is a defense mechanism and some people can become locked in this stage.
Anger — “Why me? It’s not fair!”; “How can this happen to me?”; ‘”Who is to blame?” Once in the second stage, the individual recognizes that denial cannot continue. Because of anger, the person is very difficult to care for due to misplaced feelings of rage and envy. Anger can manifest itself in different ways. People can be angry with themselves, or with others, and especially those who are close to them. It is important to remain detached and nonjudgmental when dealing with a person experiencing anger from grief.
Bargaining — “I’ll do anything for a few more years.”; “I will give my life savings if…” The third stage involves the hope that the individual can somehow postpone or delay death. Usually, the negotiation for an extended life is made with a higher power in exchange for a reformed lifestyle. Psychologically, the individual is saying, “I understand I will die, but if I could just do something to buy more time…” People facing less serious trauma can bargain or seek to negotiate a compromise. For example “Can we still be friends?..” when facing a break-up. Bargaining rarely provides a sustainable solution, especially if it’s a matter of life or death.
Depression — “I’m so sad, why bother with anything?”; “I’m going to die soon so what’s the point?”; “I miss my loved one, why go on?” During the fourth stage, the dying person begins to understand the certainty of death. Because of this, the individual may become silent, refuse visitors and spend much of the time crying and grieving. This process allows the dying person to disconnect from things of love and affection. It is not recommended to attempt to cheer up an individual who is in this stage. It is an important time for grieving that must be processed. Depression could be referred to as the dress rehearsal for the ‘aftermath’. It is a kind of acceptance with emotional attachment. It’s natural to feel sadness, regret, fear, and uncertainty when going through this stage. Feeling those emotions shows that the person has begun to accept the situation.
Acceptance — “It’s going to be okay.”; “I can’t fight it, I may as well prepare for it.” In this last stage, individuals begin to come to terms with their mortality, or that of a loved one, or other tragic event. This stage varies according to the person’s situation. People dying can enter this stage a long time before the people they leave behind, who must pass through their own individual stages of dealing with the grief.
Even if a Near Term Human Extintion is TRUE though, from my POV having such an attitude is counter productive. You have to believe in SOME CHANCE here, or there is no reason to Fight the Good Fight anymore. To me, Giving Up is not an Option, not until the Fat Lady Sings, and she is not singing yet IMHO. I don’t buy NTHE until the Phytoplankton Collapse here, or until every last square inch of the Earth has consistent temps above what a large mammal like ourselves can survive at. This is not evident YET, though to be sure models and Positive Feedback Loops that could make it so are out there. It is not a LOCK, not yet, though no doubt it does look pretty nasty overall.
No way to make it through if you ACCEPT it as inevitable. You gotta make the fight BELIEVING you can win, right up to the day you Buy Your Ticket to the Great Beyond. Tough times ahead, to be sure. I am confident however that SOME people will make it through the Zero Point. They will be DINERS!
In the words of Dr. Hunter S. Thompson…
You won’t find any Weirder bunch of Collapse Professionals than the Diners anywhere else on the net, I GUARANTEE it.
William & Margaret Quinn emigrated from Ireland in the early part of the 20th Century. They were both from the same County in Ireland, but did not meet until they both arrived in America and settled into South Philadelphia. I know very little about these early years. Quinns are not a talkative bunch. The one story that stuck with me was about my grandfather’s service in World War I. I was told that he was in the cavalry and had two horses shot out from under him during the Battle of Belleau Wood. That story spurred my love of history.
I do know that William and Margaret had three sons and two daughters. One of the sons was named John Francis. He was born on February 25, 1925. They raised their children in a small row house on 2nd Street in South Philly. They got through the Great Depression. William worked for Atlantic Refining Company in South Phila. John was an athletic boy. He was 5-11 and 180 pounds. He played Semi-Pro football in his youth. The day he turned 18 in 1943, he rushed down to the enlistment office to fight for his country. Luckily for me and the rest of my siblings he was turned down because of his very poor eyesight, a gift he passed down to all of us. His nickname among his buddies was “The General”. We have no idea why. He never told us.
I assume that his old man pulled some strings to get him hired by Atlantic Refining in 1945. His brother Billy also got a job at Atlantic. His entire working life was spent working for Atlantic, retiring in 1985 at the age of 59. Driving an 18 wheel gas truck for decades will wear a strong man out. He would go to work at 5:30 every day and put in a 10 hour shift. He would have his 40 hours in by Thursday. We would wait for the phone to ring on Thursday night asking him to work on Friday. He always said yes. He had friends killed on the job. He had friends badly injured. Working with gasoline, climbing ladders, lugging heavy hoses, and driving an 18 wheel bomb would make anyone a little nervous. One spark or even static electricity could end in disaster. Somehow he managed to do this dangerous job for 40 years without incident. He had a perfect record for safety. He was proud of that. After 40 years, they gave him a gold watch. Later in his life, he gave that watch to me.
Those are the facts. But, that isn’t what defined my Dad. He was a man of few words and didn’t talk much about his youth or his adventures during his 20s. He met my mother in the early 1950s. Their first date was seeing Tony Bennett at the Bolero in Wildwood, NJ. This began a lifelong love affair with Wildwood. I took my mom to the Bolero a few months ago for dinner. They married in 1955 and had my brother Jack shortly thereafter while living in a small apartment in South Philly. They realized the American dream in 1957 when they bought a brand new 900 square foot 3 bedroom, 1 bath row home for $10,000 in Collingdale, the new suburb 10 miles outside of Philadelphia. They paid off their 30 year mortgage in 1987 and had a party to celebrate.
They joined St. Joseph’s Parish. They never missed Sunday Mass. They always made their weekly donation. I was born in 1963 and my sister Maureen arrived in 1967. There were miscarriages between my brother and myself, but they were not spoken about. Irish Catholic families are good at not speaking about certain things. We are also good at holding grudges, drinking and laughing when we should cry. My recollections of my childhood are all positive. My Dad went to work. My mom stayed home and raised us. He would come home from work and sit in his chair to read the Evening Bulletin. My mom would bring him a beer. We’d eat dinner as a family. He’d have another beer and usually drift off while reading the paper. One of our dogs (Ginger, Snoopy, or Boots) would always be next to him. We joked that he liked his dogs more than us. They never talked back.
We were not coddled. I rode my bike to school. The kids in the neighborhood organized our own fun. There were baseball fields and basketball courts within walking distance. We played hockey in the middle of the street. We weren’t shuttled around to activities because we only had one car. Somehow, on the salary of one blue collar parent, they put us through 12 years of Catholic school and sent us to college at Villanova, Drexel and Scranton. We learned to be self-sufficient. My parents were there to help, but it was up to us to succeed or fail. I learned my work ethic from my Dad. I don’t remember a lot of specifics from my early childhood, but I do remember my Dad pulling his Mack Truck up in front of our house when I was 4 years old. He had just made a delivery to an ARCO station near our house. He lifted me into the cab and took me for a ride around the block. It became a highlight of my childhood and sticks with me today.
My Dad was a child of the Depression. He was frugal and risk averse his entire life. He bought used cars during my entire youth. He bought whatever beer that was on sale (Red White & Blue, Tiger’s Head Ale, Schlitz). No foreign beers for him. He never trusted credit cards. Even ATMs were suspect in his view. The only debt he ever had was the mortgage. In his last year of work in 1985 he made $32,000, the highest earnings of his lifetime. He took a lump sum payout of $200,000 for his pension. He made it last for the next 25 years. We never lived above our means. We went to Wildwood for 2 weeks every year. My Mom and Dad’s brothers and sisters would bring their families for the same two weeks. It was a party. The kids were free to roam and the parents were free to drink and play poker.
I am who I am because of my Dad. We shared many of the same interests. He liked history, fishing, sports and funny TV shows. I had the patience to be a good fisherman and I didn’t throw up when I went on a boat, like my brother. He would take me deep sea fishing, fishing off the dock at Dad’s Place, and fishing off the beach in North Wildwood. He would take us to Franklin D Roosevelt Park in South Philly to fish for sunnies in the lakes. We would go to Phillies games on the weekend, sitting in the yellow seats up top. It was 50 cents for a kid and $2 for an adult. I inherited his hate for traffic. We always parked on the street, about a half mile from the stadium. He wanted to beat the traffic. It has been a running joke in our family that we never saw a 9th inning at a Phillies game. Dad would make us leave in the 8th to beat the traffic. I remember leaving a Monday night Eagles game and hearing the crowd cheer as we walked down the street. An Eagle had run a kickoff back 102 yards to win the game. I also remember leaving a 76ers game when they were down by 30 points. They staged one of the greatest comebacks in history to win the game. But, we didn’t get caught in the traffic.
My Dad had a dry sense of humor. He was not politically correct. He loved the sitcom All in the Family. Of course, he agreed with most of what Archie Bunker said. When we asked him how he got that scar on his knee, he said that he was stabbed by a Jap midget in WWII. He influenced my deep skepticism of most things. I would read hundreds of books about WWII, the Civil War, and other times in history. After finishing a book, I’d be bursting to tell him what I learned. I’d tell him what I learned and he’d look up from his newspaper and say, “Don’t believe everything you read.” That would make me so mad. But, he was right. The lesson was that I had to think for myself.
The last week has been emotional and difficult. One of my main tasks was to produce a slide show that we could show at the funeral luncheon to celebrate the life of my Father. We rummaged through five decades worth of pictures and picked out 60 pictures that told the story of his life. I spent hours scanning these pictures and creating a power point slide show. What I realized while performing this task was that my Dad and Mom had provided the foundation and the bridge to future generations. They gave myself and my brother and sister the opportunity to move up and have a better life than they did. They were rewarded with 8 grandchildren (Sean, Megan, Erin, Brynn, Ethan, Kevin, Jimmy, Mike), and I have to say that there is not a bad one in the bunch. My Dad came up a few months short of seeing twin great grandchildren. My parents did not live for today. They lived to help make the future better.
My brother made two comments during his Eulogy yesterday that really hit home for me. Everyone liked my Dad. He had no enemies. He smiled easily and was slow to anger. He spent the last 3 years of his life in the St. Francis Country Home. Seeing the compassion, love and care shown to my Dad and my Mom from the nurses, orderlies, and administration at St. Francis has renewed my faith in the American people. These people do not do it for the great pay or glory. They do it because they care about less fortunate human beings. As we waited out my Dad’s final hours, workers from the Home would arrive to pay their respects and give him a kiss. Some stayed for hours with us. These people loved him. They became my Mom’s best friends. I’m truly thankful that he spent his final days in this loving place.
The other thing that my brother said was that history would not remember my Dad, but everyone whose lives he touched would remember him. It is people like my Dad that made this country. They did the hard work. They lived life the right way. He wasn’t famous. He wasn’t ambitious. He was a good man – a role model for his children and grandchildren. If we had more men like John Quinn this country would be a better place. He was a generational bridge that allowed his kids and grandkids to cross over to a better future. We laughed and cried in equal doses in the last week. I loved my Dad. I’ll miss him for the rest of my life. As I was putting ties around the necks of Jimmy and Michael on the morning of the funeral, I realized they still need me. They won’t need me to put their ties on in a few years, but hopefully they will always remember the love of family they have learned from their parents and grandparents. As I type these words tears are falling on the keyboard. Goodbye Dad. I’ll see you in Heaven, if I make the list.
You’ve got to love these articles put out by the liberal MSM that provide some facts but ignore the facts that really matter. It seems Flint, Michigan edged out Detroit for the most dangerous city in America. Maybe they’ll throw a parade. The article provides crime rates, poverty rates and high school graduation rates. It didn’t address the causes or real factors that have made these urban shitholes so dangerous. I have done a little research to supplement the article. Black people make up approximately 13% of the U.S. population. Hispanics make up approximately 17% of the U.S. population. White people make up approximately 63% of the U.S. population. The country is split pretty evenly between Democrats and Republicans. Now let’s assess a few facts about the most dangerous cities in America.
Flint – 61% Black/Hispanic – Democrat Mayor
Detroit – 85% Black/Hispanic – Democrat Mayor
Oakland – 53% Black/Hispanic – Democrat Mayor
St. Louis – 53% Black/Hispanic – Democrat Mayor
Memphis – 68% Black/Hispanic – Democrat Mayor
Stockton – 51% Black/Hispanic (21% Native American) – Democrat Mayor
Birmingham – 64% Black/Hispanic – Democrat Mayor
New Haven – 63% Black/Hispanic – Democrat Mayor
Baltimore – 67% Black/Hispanic – Democrat Mayor
Cleveland – 63% Black/Hispanic – Democrat Mayor
I would venture to guess that the next ten most dangerous cities such as Philly, Chicago, New Orleans, Camden, Newark, etc. would show the identical racial and political makeup. I’m sure this is just a coincidence. It must be Whitey’s fault. Every one of these cities has been completely controlled by Democrat politicians for decades. Their policies have created a permanent underclass of lawless savages dependent upon entitlement handouts. The majority of the people living in these shitholes are uneducated, ignorant, lazy deadbeats. The majority of households are not occupied by a married father and mother. Obama received at least 80% of the vote in these urban shitholes in the last election. His policies and those of the Democratic Party are intent on duplicating the success they have achieved in these urban kill zones across the land.
I’m surely a racist for providing these additional FACTS.
Most Dangerous Cities in America
June 13, 2013 by Samuel Weigley, Alexander E. M. Hess and Michael B. Sauter
Source: Thinkstock
After falling for five consecutive years, the number of violent crimes across the United States rose by 1.2% in 2012. Based on data published by the Federal Bureau of Investigation (FBI), the increase was even greater in some of America’s largest cities. In 2012, for the third year in a row, Flint, Michigan had the highest violent crime rate in the country.
According to the FBI, violent crime includes murder, nonnegligent manslaughter, rape, robbery and aggravated assault. In some cases, the cities with the highest violent crime rate, including Flint and Oakland, had high rates in all four categories. However, most of the most violent cities tend to do very poorly only in a few categories. Based on the FBI Uniform Crime Report, these are the 10 most dangerous cities in America.
Crime in these cities is typically not limited to just violent crime. Three cities — Birmingham, St. Louis and Oakland — were among the 10 worst cities in the nation for both violent crime and property crime. In some of the most dangerous cities, specific types of property crime were especially common. Flint and Cleveland had among the highest burglary rates, while Oakland, Detroit and St. Louis had among the highest rates of vehicle theft.
The economies of many of the most dangerous cities have been in bad shape for years, in some cases long before the Great Recession. The populations of many of the most dangerous cities declined, leaving behind highly impoverished urban centers. The loss of economic diversity, explained John Roman, senior fellow at the Urban institute, only serves to exacerbate crime in cities like Detroit, Flint, Cleveland and St. Louis.
In fact, all the 10 most dangerous cities had poverty rates above the national rate of 15.9% in 2011. In half of these cities, more than 30% of the population lived in poverty. Detroit and Flint had poverty rates of more than 40%. “It is very clear that poverty in particular is associated with higher crime rates,” explained Roman.
However, the relationship between the two is less certain. It is “very difficult to say whether crime makes places poorer, or poverty causes more crime,” Roman noted.
In many of the nation’s most dangerous cities, unemployment is also extremely high. Seven of the 10 cities with the highest levels of violent crime had unemployment rates above 10% in 2012, much higher than the national unemployment rate of 8.1% that year. In two cities, Detroit and Stockton, the unemployment rate was more than 18% last year.
Low educational attainment also goes hand-in-hand with high crime rates. In all of the 10 most dangerous cities, the percentage of adults with a high school diploma was below the 86% national average. In five of these metro areas, the percentage of adults with a diploma was below 80%.
On its website, the FBI instructs readers to avoid comparing city violence because rankings tend to be simplistic and ignore factors that influence crime, as well as the different ways crimes are measured and reported. For this reason, Roman cautioned against directly comparing cities based on their individual crime rates. However, because the cities with the highest and lowest violent crime rates have remained consistent for many years, he believes comparing city ranks was useful.
Based on the FBI’s Preliminary Annual Uniform Crime Report, 24/7 Wall St. identified the 10 U.S. cities with populations of 100,000 or more with the highest rates of violent crime per 100,000 residents. Using estimated populations and crime incidents from the FBI, which measures incidents of eight types of violent and nonviolent crime for 2012, 24/7 Wall St. calculated the incidence of the four types of violent crime per 100,000 persons for that year: murder, forcible rape, robbery and aggravated assault. In addition to crime data, 24/7 Wall St. reviewed median income and poverty rates for these cities from the U.S. Census Bureau’s American Community Survey for 2011, the most recent available year. We also included average 2012 unemployment rates for these cities from the Bureau of Labor Statistics.
10. Cleveland, Ohio > Violent crimes per 100,000: 1,383.8 > Population: 393,781 > 2012 murders: 84 > Poverty rate: 34.3% > Pct. of adults with high school degree: 77.0%
More than 825 robberies were reported in Cleveland for every 100,000 residents last year, the second highest robbery rate in the nation behind only Oakland. The total number of robberies in the city rose from 3,156 in 2011 to 3,252 in 2012. Cleveland also had the nation’s second highest burglary rate in 2012, with close to 2,500 burglaries per 100,000 residents. Unlike robbery, burglary does not involve force or coercion and is not considered a violent crime. Recently, the highly publicized discovery of three area women that had been missing for roughly a decade and held captive within the city led to extensive criticism of the Cleveland Police Department. Cleveland is one of the nation’s poorest large cities with a median household income of just $25,731 in 2011 — barely over half the national median.
9. Baltimore, Md. > Violent crimes per 100,000: 1,405.7 > Population: 625,474 > 2012 murders: 219 > Poverty rate: 25.1% > Pct. of adults with high school degree: 80.5%
There were 219 murders in Baltimore in 2012, more than all but five other major cities both in absolute terms and per capita. In addition, the city’s robbery rate of 576.4 cases per 100,000 people was the ninth highest in the country. Despite remaining one of the most violent cities, city officials noted that crime rates have been declining. While the total number of murders increased, total gun crime fell by 6% compared to 2011, according to the Baltimore Police Department. In addition, the city’s property crime rate of 4,660.3 cases per 100,000 residents was lower than any of the top cities for violent crime.
8. New Haven, Conn. > Violent crimes per 100,000: 1,439.2 > Population: 129,934 > 2012 murders: 17 > Poverty rate: 30.1% > Pct. of adults with high school degree: 78.4%
There were 766 robberies in New Haven in 2011, or 589.1 cases per 100,000 residents, the eighth highest rate among all cities considered that year. In 2012, the number of robberies in the city jumped to 844. At 649.6 robberies per 100,000 residents, this was one of the highest rates recorded in 2012. But while both robberies and aggravated assaults rose last year, the number of murders declined from 34 in 2011 to just 17 in 2012. Gun violence remains a concern for the community. Recently, police began reaching out to known gang members on probation or parole to offer help to members looking to earn a high school diploma or otherwise improve their lives. As of 2011, just 78.4% of New Haven residents over 25 had a high school diploma, much lower than the 85.9% rate nationwide.
7. Birmingham, Ala. > Violent crimes per 100,000: 1,517.8 > Population: 213,266 > 2012 murders: 67 > Poverty rate: 32.0% > Pct. of adults with high school degree: 81.3%
Birmingham had among the 10 highest murder and aggravated assault rates at 31.4 cases per 100,000 people and 954.2 cases per 100,000 residents, respectively, in 2012. The city also had 6,934.1 property crimes per 100,000 people in 2012, higher than all but four other cities. This included 2,205.7 burglaries per 100,000, the sixth highest of all cities. City residents are in a far worse economic position than the nation as a whole. The median household income in Birmingham was just $28,646 in 2011, far lower than the $50,502 across the United States. Also, 32% of the population lived below the poverty line that year, compared with just under 16% nationwide.
6. Stockton, Calif. > Violent crimes per 100,000: 1,548.0 > Population: 299,105 > 2012 murders: 71 > Poverty rate: 25.8% > Pct. of adults with high school degree: 75.1%
The number of violent crimes reported in Stockton rose from 4,155 in 2011 to 4,630 in 2012. This was partly due to the increase in the number of robberies, from 1,323 in 2011 to 1,556 last year, and the increase in the number of aggravated assaults, from 2,684 in 2011 to 2,913 in 2012. As a result of this uptick in crime, Stockton had some of the highest incidences of murder, robbery and aggravated assault in the nation. Stockton also holds the dubious distinction of being the largest city in U.S. history, by population, to enter bankruptcy. In the city proper, the unemployment rate was 18.3% in 2012, more than 10 percentage points above the national rate last year.
5. Memphis, Tenn. > Violent crimes per 100,000: 1,750.0 > Population: 657,436 > 2012 murders: 133 > Poverty rate: 27.2% > Pct. of adults with high school degree: 83.4%
Memphis had the third highest rate of aggravated assault in 2012, with 1,151.9 cases per 100,000 residents. This was up from the 1,032.3 cases per 100,000 in 2011. The city’s murder rate of 20.2 per 100,000 people and robbery rate of 514.4 per 100,000 people were also up from 2011. The high levels of crime has people in the Memphis area feeling uneasy. According to a recent Gallup survey, roughly 43% of Memphis area residents reported feeling unsafe walking at night, the highest percentage of all the 50 largest metropolitan areas in the country and significantly higher than the 28% across the United States.
4. St. Louis, Mo. > Violent crimes per 100,000: 1,776.5 > Population: 318,667 > 2012 murders: 113 > Poverty rate: 27.0% > Pct. of adults with high school degree: 83.9%
There were 1,120.6 aggravated assaults per 100,000 people in St. Louis in 2012, higher than all but three other cities. Moreover, the murder rate of 35.5 cases per 100,000 was the fifth highest of all cities. Although St. Louis’s violent crime was still among the highest in the country, it has improved. There were 80 less violent crimes per 100,000 people in 2012 compared to 2011 — the best improvement of any city on this list, with the drop mostly attributable to 106 less robberies per 100,000 people in 2012 compared to the previous year. Law enforcement officials attributed some of the drop to an increased police presence in high-crime neighborhoods.
3. Oakland, Calif. > Violent crimes per 100,000: 1,993.1 > Population: 399,487 > 2012 murders: 126 > Poverty rate: 21.0% > Pct. of adults with high school degree: 79.9%
There were 1,085.9 robberies per 100,000 residents in Oakland in 2012, higher than any other city. This was also significantly higher than the 851.2 robberies per 100,000 just a year earlier. The rates of murder and aggravated assaults also increased in 2012 compared to 2011. Violent crime was not the only issue in Oakland, either — there were 6,594 property crimes per 100,000 residents in 2012, more than all but eight other cities, and up from 5,287.9 in 2011. Crime in the city has increased ever since the city’s police department went through a round of layoffs in 2010 due to $30.5 million deficit.
2. Detroit, Mich. > Violent crimes per 100,000: 2,122.6 > Population: 707,096 > 2012 murders: 386 > Poverty rate: 40.9% > Pct. of adults with high school degree: 77.4%
Detroit’s murder rate of 54.2 per 100,000 residents was the second highest in the country last year. The homicide rate in Detroit, which included 386 criminal murders and an additional 25 justifiable homicides, reached the highest level in nearly 40 years. In addition, the city’s aggravated assault rate of 1,320.8 cases per 100,000 people was also the second highest in the United States, although this was an improvement from the 1,333.6 cases per 100,000 residents in 2011. Detroit has struggled economically in recent years. The city’s 2012 unemployment rate was a whopping 18.6%, much higher than the 8.1% across the nation last year. The median household income of $25,193 was less than half the national median for 2011.
1. Flint, Mich. > Violent crimes per 100,000: 2,729.5 > Population: 101,632 > 2012 murders: 63 > Poverty rate: 40.6% > Pct. of adults with high school degree: 82.9%
With a staggering 2,729.5 violent crimes per 100,000 residents, no city had a higher violent crime rate than Flint. The city of just 101,632 people had 63 total murders and 1,930 aggravated assaults, both the highest relative to the city’s population. Flint also had nationwide highs in burglary rates and arson per 100,000 people. The sheriff of Genesee County, where Flint is located, proposed a plan to create a violent crime mobile response unit that would cost $3 million. However, Governor Rick Snyder rejected the plan because he believed resources would be better “integrated into the ongoing efforts to make Flint safer.” Like Detroit, Flint has suffered economically in recent years. The median household income was just $23,380 in 2011, the second-lowest of all 555 cities measured by the U.S. Census Bureau.
I never considered that my dinky little blog would ever draw the attention of anyone other than a few libertarian minded people. We draw about 15,000 visitors per day, which is tiny in comparison to hundreds of popular sites. I do consider my site to be anti-status quo, pro-Constitution, pro-liberty, pro-freedom, anti-neocon, anti-liberal, pro-common sense website.
I believe our country has been captured by a small cadre of powerful, wealthy, psychotic, evil men. I believe we have reached a point of no return. Our system cannot be reformed through the democratic process because the system has been corrupted by the wealth of those in control. True capitalism hasn’t existed since 1913. The masses are controlled through propaganda and entitlements.
We’ve descended into a Brave New World/1984 dystopian nightmare. Developments over the last few weeks have veered heavily towards the Orwellian fascist surveillance state. I’ve never been a big conspiracy theory kind of guy, until this week.
There is no doubt in my mind that TBP is now on the radar screen of the Federal Thugs within the DHS spy complex. From the moment I posted articles in support of a true patriot – Edward Snowden, my site has been under assault. I’ve received multiple emails from people and read dozens of comments on the site describing what has happened.
People with McAfee security now get this message when they try to go to my site:
WARNING: DANGEROUS SITE
Whoa!
Are you sure you want to go there?
People have been accessing my site for four years and have never gotten this message. Suddenly, this week it is dangerous.
Multiple people have told me that their companies suddenly starting blocking my site this week with the message that it is a POLITICAL/ACTIVIST website. The State University of New York blocks my site. The only way this could have happened is if some agency or organization put my website onto some sort of list that corporations and universities could access to decide whether it could be displayed on their servers. Clearly, this was an act of the government. In the world we live in today, a website that criticizes the government is a dangerous entity and must be silenced. This government is not a big fan of free speech.
My own security software gives me a Security Alert every time I try to go onto my own website. Here is the warning:
WEB ATTACK MALICIOUS EXPLOIT KIT WEBSITE
The IP Address of the attacking computer is 188.138.115.108. When I searched this address it is supposedly in Germany. I’ve also gotten messages of attacks from the Ukraine. Is there an entity attacking anyone who tries to access my site or are they trying to scare people away from accessing my site? My site sits on a mainstream American based server company. It is not infected with malware. I can check the diagnostics on the server company’s website. There are no problems, viruses or malware. These warnings are false.
My site has not been throttled by my server company in the last week. My IT guy has taken the site down for maintenance and he says there are no database issues. But, in the last week the number of database error messages and no connection messages have quadrupled versus what was happening prior to this week. I’m sure this is just a coincidence.
I doubt that my website will be accessible within the next year. The government will either force my server company to pull the plug or they will use some legal means to bully me into submission. I had a long discussion with my Computer Science Major son as we drove into work this morning. He has been tasked with figuring out a way for his old man to keep up the fight after the government shuts down my mainstream method of exercising my freedom of speech.
We are clearly descending into a fascist surveillance state. TBP is an enemy of this state.
Another wonderful addition to the TBTF list – and we don’t even know haw many public companies are on the list or who they are!
This will be guaranteed to throw yet more money printing/asset fudging and sucking up productive funds to kick the can of break the bastards up and liquidate then when fail just a few more feet down the ditch of insolvency.
I hate it…. The number of too-big-to-fail institutions gets bigger
Jun 8th 2013 | New York |Courtesy of the Economist
ALTHOUGH the names on the list are supposed to be secret AIG and Prudential, two insurers, this week confirmed they are on it. So too did GE Capital, the conglomerate’s financial arm. These firms, and perhaps others, have joined America’s largest banks and clearinghouses in being designated “systemically important financial institutions” (SIFIs) by the new Financial Stability Oversight Council, a regulatory watchdog [ posters’ note: Another committee the help us out]. What that means in practice is that because they are thought to be significant enough to blow up America’s economy, they should get special attention.
An appeals process against being labelled a SIFI will last for 30 days, but discussions have been going on for years so it is hard to believe minds will be swayed now. The immediate consequence is that the firms will be regulated by the Fed[ poster’s note: Now this is going to be a great addition to the Fed’s obnoxious powers, isn’t it!]
and subjected to tougher capital and operational requirements. Jack Lew, the treasury secretary, said the designations would “protect taxpayers, reduce risk in the financial system, and promote financial stability.” [poster’s note: Count on it doing the exact opposite.]
Others are less enthusiastic. “This is a catastrophe,” says Peter Wallison, a fellow of the American Enterprise Institute, a think-tank, and a former White House counsel. Putting these institutions under the thumb of the Fed will inevitably undermine their ability to innovate, he argues. And joining the group of entities perceived to be too big to fail means they will enjoy an implicit government guarantee. That will put them at a funding advantage against smaller companies, he says, and imply that their products are government-backed, a huge help for insurers in particular.
Firms themselves appear to have mixed feelings about the SIFI label. AIG seems to approve; MetLife, an insurer that has not been designated, thinks that the higher capital requirements it brings could undermine the viability of some products. Much depends on whether SIFIs are now perceived to have an implicit guarantee, and on whether that can be monitised. It also matters how many other firms are designated SIFIs. Lots of financial firms in America are large: there are rumblings about money-market funds, asset managers and private-equity firms. Risk can move around the financial system. The question today is which firms should be on the list. Eventually it might be which to leave off.
There seems to be a war of polls out there. PEW tells us the majority of Americans think Edward Snowden is a traitor. Gallup tells us the majority of Americans think he is a patriot. E! News tells us the majority of Americans have never heard of Edward Snowden and just want to know the sex of Kim Kardashian and Kanye West’s bastard mulatto child.
I have a three part TBP Poll.
PART 2
Is Edward Snowden an American traitor or an American Patriot?
A. Traitor
B. Patriot
C. Who is Edward Snowden?
D. Black Boy
PART 1
Is James Clapper a criminal and traitor?
A. Yes
B. No
C. Who is James Clapper?
D. That is classified
E. White girl
Part 3
Have the President, Congress and the Judicial branches of the Federal Government committed treason against the American citizens with their blatant disregard for the 1st and 4th Amendments to the U.S. Constitution?
A. Yes
B. No
C. What time is Duck Dynasty on?
D. I need to consult the MSM for the answer
E. The U.S. Constitution is a living document that can be interpreted any way those in power choose to interpret it because they have the wealth, power and guns.
Jim seems to think the Snowden revelations and the expected overreach of the government in trying to aprehend and prosecute him will be the match that lights the fuse and sets off the more interesting portion of this Fourth Turning. Adam Kokesh’s armed march on Washington DC on July 4 could get more interesting if the supporters of Snowden and the student loan Millenial serfs join the show. I do believe the fuse has been lit. The worldwide financial markets are exhibiting schizophrenic behavior, the oligarchs are cracking down on dissenters, the peasants are getting poorer by the day, and the corruption has reached epic proportions.
Hopefully it all holds together until Thursday when Kunstler posts our doom and gloom podcast.
At first glance, the growth of the super snooper state revealed this weekend — like one of those giant, hidden funguses that spreads for miles under the forests of upper Michigan — is a striking discovery. But I maintain that there is an inverse correlation between the technical abilities of the government to harvest data and their competence to use it for anything. The salient trend in our government is to become more inept, ineffectual, impotent, and feckless, no matter how big the compost heaps of sheer information it manages to pile up.
For spying on your own citizens, the Nazis and the Soviets were way ahead of us using technology no more elegant than phone bugs and filing cabinets. Our immersive techno-narcissism vests too much awe in computer magic itself. What would hurt much more — and work much better — is if Americans become a nation of snitches. That’s a possibility, of course, but I attach a low percentage to it because it requires a respect for authority that is just absent here now, and has been eroding steadily for decades, really ever since Jack Kennedy was gunned down.
Ironically, Barack Obama got where he did because he pretended to be the reincarnation of JFK — a young, dynamic change agent — and it took years to discover that he was a mere bundle of platitudes wrapped in a banana leaf of good intentions, stamped with a sell-by date that, alas, has now passed. His piled-up troubles seem more a matter of inattention than intent — especially his failure to apply the rule of law in banking — and his recent televised attempts to explain himself give off the demoralized vibe of somebody just sadly going through the motions.
Anyway, events are in the driver’s seat, not government officials. We’re in the Koyaanisqatsi zone now — everything is out-of-balance from our financial operations to our geopolitical relations to the state of nature around the planet. Too many stresses have built at too many stress-points and a palpable fear judders through the wireless waves that something has to break. Oddly, political cracks appeared this month in two of the least-expected places: Sweden and Turkey. WTF? I wonder a little now if the revelations of Edward J. Snowdon about the American Security apparatus will bring on a wave of street protests in Washington DC on the Fourth of July. Maybe I’m just channeling my own dim memories of 1969, but this historical moment has a similar tingle. We know that the amalgamated gun nuts are already planning what they’ve advertised as an “armed march” across the nation’s capital. Frankly, I’m kind of glad that they’re doing this. The government needs to be reminded that there are already enough small arms loose in America to temper its cloddish excesses. The time is ripe for others to join in a larger Fourth of July demonstration.
Most satisfying would be a Washington march by college loan debt slaves terminating in a bonfire of the loan contracts on the Ellipse. I keep waiting for the “magic moment” when millions of these poor swindled young grads will send the message thundering through Facebook and Twitter that they are done paying the inflated price for their useless degrees in “marketing” and “gender studies.” Aren’t you amazed that it hasn’t happened yet? (Although the default rate is rising so fast that a general renunciation may be accomplished without public fanfare.)
Meanwhile, it will be interesting to see if the US government goes after Mr. Snowdon, who is currently on the lam in Hong Kong which, some of you may remember, belongs to China. Does that ever have the potential for a world-class embarrassment? There’s less than a month before America’s big annual birthday party, just enough time for this story to build to an explosive climax. The government will surely have to make some kind of move before than. Given its recent tendencies to over-reach on everything, the government could easily screw the pooch on this. The 29-year-old Snowdon has the look and demeanor of an all-American hero and it will be interesting to see the reaction if and when federal agents haul him off a plane in handcuffs. What’s more, Snowdon made a clear, concise, and eloquent statement explaining his actions: “The public needs to decide whether these programs and policies are right or wrong,” he said.
Below is the last article that I wrote on the original TBP in January, 2010. It was one of my favorites because I was able to use the lyrics to one of my favorite songs and the blend it with one of my favorite movies. It didn’t get much visibility because many of the financial websites didn’t want an article on war. I think it is fitting that I repost it now as our tyrannical government clamps down on our civil liberties and prepares for war with Syria and Iran. Read this article and find out who always benefits from war.
What we’ve got here is failure to communicate.
Some men you just can’t reach…
So, you get what we had here last week,
Which is the way he wants it !
Well, he gets it !
N’ I don’t like it any more than you men.
Luke Jackson, as portrayed by Paul Newman, in Cool Hand Luke is a classic American character. He is a rogue who marches to the beat of his own drummer. His stubbornness, indefatigable spirit, and nonconformity are a symbol of the timeless American spirit. His character is reminiscent of Winston Smith in Orwell’s 1984, Steve McQueen’s Virgil Hilts character in The Great Escape, and Jack Nicholson’s Randall McMurphy character in One Flew Over the Cuckoo’s Nest. Captain, played by Strother Martin, makes it his mission to beat the nonconformity out of Luke. No matter how bad he is beaten, he comes back for more. His indomitable fortitude and independent attitude inspires the other prisoners. He escapes from the prison twice and is caught and brought back. Captain thinks that he has finally broken his will as the other prisoners see him beg for mercy, but Luke escapes one final time and is shot dead. In death Luke regained all the adulation he lost among the prisoners and became a mythic hero.
Americans have a choice. They can allow their government to bully and threaten them into conforming to their view of reality like Winston Smith or they can go down swinging like Cool Hand Luke and Randall McMurphy. The cowboy spirit of the Old West is what is required today. We need tough hardened individualists who are willing to say enough is enough. Our government has been corrupted by weak men slithering around the halls of Congress soliciting for money, an evil banking cartel creating fiat money, corporate fascists paying off criminals in Washington DC, and the military industrial complex enforcing Washington’s power across the globe. The country longs for an Andrew Jackson or a Dwight Eisenhower. Instead we are stuck with Harry Reid and Nancy Pelosi. The citizens of the country have chosen a false security in place of liberty and freedom.
This country achieved greatness because Americans took chances, had the freedom to succeed or fail, picked themselves up when they failed, and lived their lives within a moral framework of fairness and honesty. That flame of independence and freedom is dying out. Americans no longer believe in shared sacrifice, working hard, honoring a sense of civic duty, morality, or modesty. A private banking cartel controls the purse strings and protects its bank owners and its protectors in Congress. The President wages wars across the globe without Constitutional approval from Congress that is required. Agencies of government operate in secret, assassinating foreign enemies, fomenting unrest in other countries, and spying on Americans. Look at the fear we’re feeding. Look at the lives we’re leading.
Look at your young men fighting
Look at your women crying
Look at your young men dying
The way they’ve always done before
Look at the hate we’re breeding
Look at the fear we’re feeding
Look at the lives we’re leading
The way we’ve always done before – Guns N Roses – Civil War
Brainwashed Pride
“It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.” – Voltaire
My hands are tied
The billions shift from side to side
And the wars go on with brainwashed pride
For the love of God and our human rights
And all these things are swept aside
By bloody hands time can’t deny
And are washed away by your genocide
And history hides the lies of our civil wars – Guns N Roses – Civil War
According to our own Declaration of Independence:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Do these human rights exist today in our country? Is our system conducive to justice and human dignity? I contend that we have sacrificed our liberty for security. We’ve sacrificed justice for safety. We’ve sacrificed freedom for enslavement by fascist corporatism. We’ve sacrificed peace for never ending war. Your government knows everything you are doing. They can monitor your phone calls. They can monitor your emails. They can watch your every move with satellites. They can brand you a terrorist, break down your front door and take you away. All of this can be done in the name of safety. We have allowed this to happen with virtually no debate or dissent from the masses. These choices have led our once great Republic to the edge of the abyss. As we stare into this abyss we have a choice. If we continue on our current path we are destined for a brutish future of totalitarianism, wars, resource depletion, and violent conflicts across the globe. If we display persistence and never say die attitude of Cool Hand Luke, we have a opportunity to capture this country back from the corrupt ruling privileged class. It may take a Revolution to do so, but so be it. If we choose not to fight, we are fated to wear leg chains for the rest of our incarcerated existence.
When the Legislative branch willingly delegates its Constitutional authority to declare war to the Executive branch, the citizenry has no opportunity to be heard. This is a bastardization of our Constitution as envisioned by our Founding Fathers. We have Presidents who invade other countries in the name of God.
“I am driven with a mission from God. God would tell me, ‘George go and fight these terrorists in Afghanistan’. And I did. And then God would tell me ‘George, go and end the tyranny in Iraq’. And I did.” – George W. Bush
Of course the reason sold to the American public was weapons of mass destruction. I wonder if the American people would have rallied around the flag if they knew President Bush believed he had been instructed by God to invade Iraq. Instead our National Security Advisor was warning of imminent mushroom clouds unless we invaded.
“The problem here is that there will always be some uncertainty about how quickly he can acquire nuclear weapons. But we don’t want the smoking gun to be a mushroom cloud.” – Condoleezza Rice
A concerted campaign of lies and exaggerations were used to mislead the American public into supporting the invasion of Iraq. This brainwashing effort covered up the fact that plans were being discussed before 9/11. Paul O’Neill, the Treasury Secretary at the outset of the Bush administration, detailed the preparations in his book The Price of Loyalty. At the first meeting of the National Security Council on January 30, 2001, seven months before the 9/11 attacks, Rumsfeld argued, “What we really want to think about is going after Saddam.” Regime change in Iraq, he argued, would allow the U.S. to enhance the situation of the pro-American Kurds, redirect Iraq toward a market economy, and guarantee a favourable oil policy.
Rumsfeld’s recommendation was taken up by Dick Cheney’s National Energy Policy Development Group. This task force decided that enhanced American influence over the production and sale of Middle East oil should be “a primary focus of U.S. international energy policy,” relegating both the development of alternative energy sources and domestic energy conservation measures as meaningless. By March of 2001, according to O’Neill, who was a member of both the NSC and the task force: “Actual plans…. were already being discussed to take over Iraq and occupy it — complete with disposition of oil fields, peacekeeping forces, and war crimes tribunals — carrying forward an unspoken doctrine of pre-emptive war.” O’Neill also reported that, by the time of the 9/11 attacks on the World Trade Center and the Pentagon, the plan for conquering Iraq had been developed and that Secretary of Defense Rumsfeld indeed urged just such an attack at the first National Security Council meeting convened to discuss how the U.S. should react to the 9/11 attack.
“We know he’s been absolutely devoted to trying to acquire nuclear weapons, and we believe he has, in fact, reconstituted nuclear weapons.” – Dick Cheney
The result of these lies and secret plans withheld from the American public has been 5,400 dead American soldiers, 46,000 wounded soldiers, $1 trillion in costs to wage the wars, at least 150,000 civilian casualties, and oil prices that have quadrupled since 2001. The blood of all these innocent people is on the hands of those who lied, hid the truth, and committed genocide. The bitter truth is that power, oil, and money have been the driving forces of American imperialism for the last century.
Feeds the Rich While it Buries the Poor
“When the rich wage war, it’s the poor who die.” – Jean-Paul Sartre
I don’t need your civil war
It feeds the rich while it buries the poor
You’re power hungry sellin’ soldiers
In a human grocery store
Ain’t that fresh
I don’t need your civil war
Look at the shoes you’re filling
Look at the blood we’re spilling
Look at the world we’re killing
The way we’ve always done before
Look in the doubt we’ve wallowed
Look at the leaders we’ve followed
Look at the lies we’ve swallowed
And I don’t want to hear no more – Guns N Roses – Civil War
George Washington, a true American warrior, understood that a large military establishment was dangerous to the Republic. He spent eight years in the field fighting for American Independence. He understood the power of a large dominant military.
“Over grown military establishments are under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty.” – George Washington
What most people do not understand is the relationship between the Federal Reserve and war. The Federal Reserve is responsible for every economic difficulty that afflicts our nation. Without a Federal Reserve creating fiat paper currency out of thin air, an empire could not wage continuous war. There is no clearer proof than evaluating major U.S. military conflicts prior to 1913 versus after the creation of the Federal Reserve. Between 1791 and 1913 (122 years) the U.S. engaged in only four major conflicts:
War of 1812
Mexican-American War
Civil War
Spanish-American War
Only the War Between the States can be considered significant and it was fought solely on U.S. soil. The Federal Reserve was created in 1913 by bankers in collusion with politicians in Washington DC. This private central bank, run by a cartel of major banks, has encouraged politicians to wage war. Continuous conflict enriches bankers, as all the money used to wage war is borrowed from them. This may explain why between 1913 and 2010 (97 years) the U.S. has engaged in eleven significant foreign conflicts:
World War I
World War II
Korean War
Vietnam War
Grenada Invasion
Panama Invasion
Gulf War
Somalia
Kosovo War
Afghan War
Iraq War
Above and beyond these actual conflicts, we engaged in a 46 year Cold War with the Soviet Union that involved funding opponents to communism, coups, and assassination of foreign leaders. This Cold War was used as an excuse to station troops in over a 100 foreign countries, creation of the military industrial complex and creation of a secret spy agency, the CIA. Conveniently, when the Cold War ended with the collapse of the Soviet Union, a new amorphous war was created by politicians and their bankers. The nebulous War on Terror has been exploited to create the Department of Homeland Security and passage of the Orwellian Patriot Act, which allows the government to violate Americans’ right to privacy in the name of National Security.
The War on Terror is used as the reason for invading foreign countries and using predator drones to blow up whoever our leaders feel is a threat. The cost for the War on Terror thus far has been $2.3 TRILLION. There are trillions more to be wasted because you can never win a war on terror. Who benefits from a never ending war on terror? Every dime of the $2.3 trillion has been borrowed. The beneficiaries of debt are bankers, as they reap billions in profits and pay themselves millions in bonuses. The money that is loaned to the government is then paid to the companies that constitute the military industrial complex. These companies then buy the support of Congress for their new and improved killing machines. This is the circle of death encompassing Washington DC.
Section 8 of the U.S. Constitution says Congress has the power to coin Money, regulate the Value thereof, and of foreign Coin and to declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water. The corrupt politicians who have controlled the country for the last century have abrogated their power to coin money to a secretive private bank run by crooked bankers. Since 1941 Congress has failed in their Constitutional duty to be the branch of government that commits citizens of the U.S. to war. They have allowed the executive branch to decide when Americans will die and for what causes. The Bush Doctrine, created by Dick Cheney, Donald Rumsfeld, and Paul Wolfowitz, is policy of preventative war, which holds that the United States should topple foreign regimes that represent a potential or perceived threat to the security of the United States, even if that threat is not immediate; a policy of spreading democracy around the world, especially in the Middle East, as a strategy for combating terrorism; and a willingness to pursue U.S. military interests in a unilateral way. Should the American people follow the doctrine of men who never served a day in the U.S. military and have no difficulty in wiping their blood stained hands all over the U.S. Constitution or a wise Founding Father who risked his life to create that Constitution?
“The Constitution vests the power of declaring war in Congress; therefore no offensive expedition of importance can be undertaken until after they shall have deliberated upon the subject and authorized such a measure.” – George Washington
Ronald Reagan increased military spending dramatically in the 1980s in an effort to bankrupt the Soviet Union. Total spending on defense in the decade reached $3.8 trillion. The collapse of the only country in the world that threatened the U.S. militarily left a vacuum in the 1990s. This peace dividend resulted in military spending decreasing to $3.3 trillion in the 1990s. Defense companies did not fare well in this decade as plants were closed and employees laid off. The 9/11 terrorist attack was a windfall for the military industrial complex, the neo-conservative Constitution burners, and privileged bankers. With no country on earth capable of competing with our immense military machine, the government used fear, loathing and false patriotism to ramp up military spending to $5.3 trillion during the just completed decade. Ask yourself who benefited from these expenditures. Are you safer? Are you better off financially today? Oil prices rose from $20 a barrel to $145 a barrel. The U.S. National debt rose from $5.7 trillion to $12.3 trillion. The financial system collapsed due to the actions of the Federal Reserve, greedy criminal bankers, and self serving corrupt politicians. And still the wars go on.
War is a Racket
“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small ‘inside’ group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.” – General Smedley Butler
My hands are tied
For all I’ve seen has changed my mind
But still the wars go on as the years go by
With no love of God or our human rights
and all these dreams are swept aside
By bloody hands of the hypnotized
Who carry the cross of homicide
And history bears the scars of our civil wars
I don’t need your civil war
It feeds the rich while it buries the poor
You’re power hungry sellin’ soldiers
In a human grocery store – Guns N Roses – Civil War
General Smedley Butler, at the time of his death was the most decorated Marine in U.S. history. He was awarded 16 medals, 5 for heroism. His 33 year military career was marked by bravery and brilliance in command. His 1935 book, War is a Racket, detailed how profiteering by corporate fascists encouraged military imperialism by America’s leaders. He condemned the profit motive behind war and described it in no uncertain terms.
“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class thug for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.” – General Smedley Butler
Smedley Butler another Cool Hand Luke character who was willing to stand up for what he knew to be right, no matter the consequences, is nowhere to be found on the political scene today. Only Ron Paul seems able to summon the courage to speak the truth in Washington DC.
“War is never economically beneficial except for those in position to profit from war expenditures. The moral and constitutional obligations of our representatives in Washington are to protect our liberty, not coddle the world, precipitating no-win wars, while bringing bankruptcy and economic turmoil to our people.” – Ron Paul
Those who profit from war are easy to determine. The chart below details the obscene profit increases of the five biggest defense contractors in the U.S. Profits soared by 205% between 2000 and 2007 to $13.5 billion. With revenue up 155%, it is interesting to note that their work forces only grew by 10%, with two of the firms decreasing their work forces. Luckily, the righteous CEOs of these distributors of death were able to increase their compensation by 173%, ranging from $10 million to $60 million per year. 9/11 has proved to be an extreme windfall for peddlers of war. I’m sure the $463 million spent by the Defense Industry to “lobby” Congressmen over the last 10 years has had no impact on these results. I’m certain Haliburton’s association with Vice President Dick Cheney did not factor in the $3.5 billion profit they generated in 2007 after generating only $500 million of profit in 2000.
War most certainly feeds the rich, while it buries the poor. The people pulling the strings in Washington DC are all rich. George Bush, Dick Cheney, Hank Pauson, Ben Bernanke, Barack Obama, and Tim Geithner are all multi-millionaires. It matters not which party controls the levers of power. The racket is perpetual. The most liberal President since FDR is submitting the largest Defense spending budget in U.S. history, exceeding $700 billion for 2010. The cumulative National Debt of the U.S. from 1791 until 1977 (186 years) totaled $699 billion. We now spend more than that every year on war.
There are no rich dying in the deserts of Iraq and Afghanistan. There are no wealthy Wall Street bankers’ sons or daughters dying in the Middle East. Isn’t it fresh that there are 237 millionaires out of 535 members of Congress and only 10 members of Congress with a son or daughter putting their lives on the line in Iraq or Afghanistan? The facts are that the lower middle class and poor die in a foreign desert like dogs for no good reason. The rich and powerful line their pockets while selling soldiers in a human grocery store. The hypnotized masses are manipulated by government propaganda, ideologue think tanks, and corporate mainstream media. Even the financial crisis benefits the military industrial complex. Before the crisis, military recruiters had tremendous difficulty in convincing enough young people to become cannon fodder for the War on Terror. When 22% of the population is unemployed, there is no such problem. Nationwide, the Air Force reached its highest number of enlistments since 2004, and the Marines Corps was able to do enough recruiting in 2009 to go from 175,000 in its ranks to 202,000. The Army has exceeded its goal of 80,000 enlistments from 2006 to 2008, and it took in more than 70,000 soldiers, with a goal of 65,000 in 2009. The grocery store shelves have been restocked.
Sometimes Nothing can be a Real Cool Hand
“How did we win the election in the year 2000? We talked about a humble foreign policy: No nation-building; don’t police the world. That’s conservative, it’s Republican, it’s pro-American – it follows the founding fathers. And, besides, it follows the Constitution.” – Ron Paul
I find it revealing that three men who occupied the top military position of the nation, led men into battle, and understood the responsibility in committing American citizens to battle were the most reflective and cautious in using the military power of the U.S. in foreign entanglements.
“Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.” – Dwight D. Eisenhower
“Although a soldier by profession, I have never felt any sort of fondness for war, and I have never advocated it, except as a means of peace.” – Ulysses S. Grant
“Wars can be prevented just as surely as they can be provoked, and we who fail to prevent them, must share the guilt for the dead.” – Omar N. Bradley
The United States has spent $12.5 trillion on the Military over the last three decades. The U.S. National Debt totals $12.3 trillion. Essentially every dime spent on the military in the last three decades has been borrowed. We police the world using a credit card with an unlimited line of credit. The issuer of the credit card is the Federal Reserve Bank. The systematic destruction the U.S. dollar over the last 97 years has allowed politicians to steal from the middle class and enrich the corporate fascists that control the country. Dr. Edwin Vieira describes the truth of our dilemma:
“Private financial special-interest groups buy politicians; in public office these politicians empower the special-interest groups by statute to manipulate the monetary and banking systems; to the extent that these manipulations succeed, the profits are largely privatized; and to the extent that the manipulations fail, the losses are almost entirely socialized. In either case, the general public is held hostage to the racket, and foots the gargantuan bill for its operation. And the guilty parties escape scot free to steal again, and again, and again.”
We are left a hollowed out economy with a middle class that hasn’t seen their real wages increase in 30 years. Our manufacturing base has been gutted. The only thing this country has produced in the last ten years is killing machines. Is society more likely to advance by producing a computer or a humvee? Is our civilization better off with a plant producing tanks or hybrid cars? Defense spending means the government is pulling away resources from free market uses and instead using them to buy weapons and to pay for soldiers and Blackwater mercenaries. In realistic economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing expansion and costing jobs. Based on the chart below, we’ve made our selection. It is a choice that will surely lead to an economic collapse as the cumulative weight of debt will capsize our ship of state.
We are now at a critical crossroads for our Republic. Normally intelligent Americans must open their eyes to the collusion between politicians, military industrial complex, Federal Reserve and corporate media that have used fear and misinformation to gain power over brainwashed American citizens. The ruling elite fear and despise the American public. The Department of Homeland Security has been given free rein to spy on American citizens, classifies Ron Paul supporters as potential domestic terrorists, considers returning Iraq veterans as a potential threat, and seems to be directing their laser focus toward suppressing domestic civil dissent. U.S. combat troops of Northern Command have been stationed on domestic soil. A list of Executive Orders gives FEMA and the President greater control over many aspects of our lives. Last week Executive Order 13528 created a Council of Governors which will coordinate the Federal and State responses to domestic crisis. The Council will coordinate:
(a)
matters involving the National Guard of the various States;
(b)
homeland defense;
(c)
civil support;
(d)
synchronization and integration of State and Federal military activities in the United States; and
(e)
other matters of mutual interest pertaining to National Guard, homeland defense, and civil support activities.
Are these the actions of a government preparing for a bright future? The ruling class sees their control slipping away. Any honest financial analyst can perceive that the country is headed for catastrophe. Hyperinflation and disintegration of the U.S. dollar are in our future. The consequence will be anger, chaos, and social unrest. The ruling elite are preparing for this by stationing troops in the U.S. and creating the means to squash any threats to their wealth and power. Now is the time to confront these traitors to the Republic. Speaking the truth, questioning authority, practicing civil disobedience, and peaceful protest are necessary to confront the evil doers today. I believe it is time for every concerned American to invoke their right to bear arms. Totalitarian states always act to install gun control laws. The biggest threat to America is from within, not from without.
“How far you can go without destroying from within what you are trying to defend from without?” – Dwight D. Eisenhower
We practice selective annihilation
Of mayors and government officials
For example to create a vacuum
Then we fill that vacuum
As popular war advances
Peace is closer Guns N Roses – Civil War
Heritage or hate argument aside, this seems like enough of a reason to convince me the stars and bars needs to be hidden from everyone!
Hey hey hey hey hey! I absolutely did NOT order my bottom biscuits with sausage. I specifically said NO sausage!
Wow! Just wow! I mean, don’t get me wrong I’m relieved you hand pockets are conveniently located low enough that they cover your nipples but for the love of all that is good in this world put on a f*cking bra lady! I don’t mind seeing Kate Upton in a see through mesh top, that’s cool. Are you Kate Upton? No? Well then take those old ass water balloons and get the hell out of here.
Good thing you laid that out for me, I wasn’t sure if I’d have time to write that answer to life’s question down or not. Should I do everything in that order too or is it cool if I hail Satan before I chow down on some pussy?
Seriously, when will Elvis leave the building for good?
Whoa Whoa Whoa Whoa Whoa. Don’t you try to put that on me!
Here is something I just realized, even with that masked face I love boobies and I’d still hit it. What’s up guy standards? *high-fives nearest dude*
Let’s be honest, it was only a matter of time before someone from Duck Dynasty showed up here. Willie Robertson & his wife know they are PoWM royalty.
Yo son, I heard you like cars. So I put cars on your car! Xzibit style homie!
Is there anything better in the world than bro titties? Oh there is? Like a billion things? Really a billion? Ohh, ok. Well then, ignore that statement and when you’re done with all those other things then maybe you can circle back and enjoy some bro titties.
Because if she didn’t get enough of your attention with her dirty dreads/afro puff combo or a Geisha fan then she’ll make sure you turn your focus to her with the bull horn. Basically, do yourself a favor and just look for a minute then run.
It must be that time of year when the People of Walmart bust out their favorite backless shirts that look like moths destroyed since the previous summer. We are gonna throw a little curveball at you on this one. One of these fine specimens is a dude. Can you guess which one? Yeah probably, it’s really not that difficult. It was fun playing though, right? No? We are morons? Well, yes, yes we are.
To be fair, I basically say those women bodybuilders look like men anyway so I suppose a muscle man with some femininity is basically the same thing. Wonder if GirlsInYogaPants.com agrees?
Cheetah biscuits. They’re like bottom biscuits, but they’ve got a more wild smokey flavor. I mean, they still taste like shit, but a wild smokier shit.
La Bella Vita, hmmm I didn’t know the Italians decided to change its meaning from “the beautiful life” to “skeezers gonna twerk it”. Thanks for keeping me updated Rosetta Stone.
I don’t know what this is but I do know that it is wrong. Whatever you were going for you failed at. If you think this is right, you are mistaken. I’m not really sure how else to say this but if I haven’t been clear enough let me know and i’ll see what else I can come up with.
Look at these two sex symbols! Okay, maybe it’s more like symbols for abstinence, but whatever. The important question here is “Who Would You Do?”
What did I tell you guys? Huh? Who called that it was time for some crazy-ass asses in white! This guy did. So I told you that, now you tell me which is worse, loose and see through or tight and tighter.
Dear Walmart, thanks for scaring the living hell out of everyone today. However, we’d also like to point out that she might be the hottest chick we’ve seen in there for quite some time.
There’s a reason that education sucks, and it’s the same reason it will never ever ever be fixed. It’s never going to get any better, don’t look for it. Be happy with what you’ve got. Because the owners of this country don’t want that. I’m talking about the real owners now, the big, wealthy, business interests that control all things and make the big decisions.
Forget the politicians, they’re irrelevant.
Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear.
They’ve got you by the balls.
They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago.
They don’t want that, you know what they want?
They want obedient workers, obedient workers. People who are just smart enough to run the machines and do the paperwork and just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it.
And now they’re coming for your social security money.
They want your fucking retirement money; they want it back so they can give it to their criminal friends on Wall Street. And you know something? They’ll get it. They’ll get it all from you sooner or later because they own this fucking place. It’s a big club and you ain’t in it! You and I are not in the Big Club. By the way, it’s the same big club they use to beat you in the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to believe, what to think and what to buy.
The table is tilted folks, the game is rigged.
Nobody seems to notice, nobody seems to care. Good honest hard working people, white collar, blue collar, it doesn’t matter what color shirt you have on. Good honest hard working people continue, these are people of modest means, continue to elect these rich cocksuckers who don’t give a fuck about them. They don’t give a fuck about you. They don’t give a fuck about…give a fuck about you! They don’t care about you at all, at all, at all.
And nobody seems to notice, nobody seems to care.
That’s what the owners count on, the fact that Americans are and will probably remain willfully ignorant of the big red, white, and blue dick that’s being jammed up their assholes everyday. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.
“Those who dance are considered insane by those who cannot hear the music.”
― George Carlin
“Religion has convinced people that there’s an invisible man … living in the sky. Who watches everything you do every minute of every day. And the invisible man has a list of ten specific things he doesn’t want you to do. And if you do any of these things, he will send you to a special place, of burning and fire and smoke and torture and anguish for you to live forever, and suffer, and suffer, and burn, and scream, until the end of time. But he loves you. He loves you. He loves you and he needs money.”
― George Carlin
“Here’s all you have to know about men and women: women are crazy, men are stupid. And the main reason women are crazy is that men are stupid.”
― George Carlin
“Fighting for peace is like screwing for virginity.”
― George Carlin
“That’s why they call it the American Dream, because you have to be asleep to believe it.”
― George Carlin
“We’re so self-important. So arrogant. Everybody’s going to save something now. Save the trees, save the bees, save the whales, save the snails. And the supreme arrogance? Save the planet! Are these people kidding? Save the planet? We don’t even know how to take care of ourselves; we haven’t learned how to care for one another. We’re gonna save the fuckin’ planet? . . . And, by the way, there’s nothing wrong with the planet in the first place. The planet is fine. The people are fucked! Compared with the people, the planet is doin’ great. It’s been here over four billion years . . . The planet isn’t goin’ anywhere, folks. We are! We’re goin’ away. Pack your shit, we’re goin’ away. And we won’t leave much of a trace. Thank God for that. Nothing left. Maybe a little Styrofoam. The planet will be here, and we’ll be gone. Another failed mutation; another closed-end biological mistake.”
― George Carlin
“Think of how stupid the average person is, and realize half of them are stupider than that.”
― George Carlin
“Never underestimate the power of stupid people in large groups.”
― George Carlin
“I do this real moron thing, and it’s called thinking. And apparently I’m not a very good American because I like to form my own opinions.”
― George Carlin
“I don’t have pet peeves – I have major psychotic fucking hatreds.”
― George Carlin
“I don’t like ass kissers, flag wavers or team players. I like people who buck the system. Individualists. I often warn people: “Somewhere along the way, someone is going to tell you, ‘There is no “I” in team.’ What you should tell them is, ‘Maybe not. But there is an “I” in independence, individuality and integrity.'” Avoid teams at all cost. Keep your circle small. Never join a group that has a name. If they say, “We’re the So-and-Sos,” take a walk. And if, somehow, you must join, if it’s unavoidable, such as a union or a trade association, go ahead and join. But don’t participate; it will be your death. And if they tell you you’re not a team player, congratulate them on being observant.”
― George Carlin
“Some people see the glass half full. Others see it half empty.
I see a glass that’s twice as big as it needs to be.”
― George Carlin
If you don’t like to read detailed analysis of why the stock market is overvalued by 80%, here is the key paragraph from Doctor Hussman:
The price/revenue ratio of the S&P 500 has reached 1.5, compared with a historical norm of just 0.8 prior to the late-1990’s bubble. The Shiller P/E (S&P 500 divided by the 10-year average of inflation-adjusted earnings) remains near 24. Importantly, despite weak earnings at various points over the past decade, the denominator of the Shiller P/E remains well within the historical growth channel that has contained Shiller earnings historically. In other words, the Shiller P/E is not being biased upward by an unusually low denominator. If anything, the ratio of “Shiller earnings” to S&P 500 revenues is among the highest in history, so much like other price/earnings measures, even the Shiller P/E is biased downward by elevated profit margins in recent years. That said, the Shiller P/E is essentially a useful shorthand for discussion purposes, as we use numerous other measures in practice that have an equal or stronger relationship with S&P 500 total returns. I continue to view the S&P 500 as being about 80% above the level that would be associated with “fair value”, but that’s simply another way of saying that I expect annual S&P 500 total returns to average little more than 3% nominal over the coming decade. Valuations are not a timing tool, but in a mature, overbought half-cycle, where advisory bulls dramatically outpace bears, my impression is that the likelihood of a long and pleasant future for stocks is quite low, at least until much more reasonable valuations are established.
Know when to hold em and know when to fold em.
Following the Fed to 50% Flops
John P. Hussman, Ph.D.
One of the most strongly held beliefs of investors here is the notion that it is inappropriate to “Fight the Fed” – reflecting the view that Federal Reserve easing is sufficient to keep stocks not only elevated, but rising. What’s baffling about this is that the last two 50% market declines – both the 2001-2002 plunge and the 2008-2009 plunge – occurred in environments of aggressive, persistent Federal Reserve easing.
It’s certainly true that favorable monetary conditions are helpful for stocks, on average. But that average hides a lot of sins.
There are many ways to define monetary conditions using policy rates, market yields, and variables such as the monetary base or other aggregates. But given the strong relationship between monetary base/GDP and interest rates, these measures overlap quite a bit, and the results are quite general regardless of the precise definition. For discussion purposes, we’ll define “favorable” monetary conditions here as: either the Federal Funds rate, the Discount Rate, or the 3-month Treasury bill yield lower than 6 months prior, or the last move in the Fed Funds or Discount Rate being an easing. Historically, this captures about 52% of historical periods. During these periods, the total return of the S&P 500 averaged 13.5% annually, versus just 8.8% annually when monetary conditions were not favorable.
This is a worthwhile distinction, but it doesn’t partition the data enough to separate out periods where the average return on the S&P 500 was below Treasury bills. So historically, using this indicator alone would have suggested holding stocks regardless of monetary conditions. One might expect to do better by taking a leveraged exposure during favorable monetary conditions, and a muted exposure during unfavorable conditions, but this strategy would have invited intolerable risks. Strikingly, the maximum drawdown of the S&P 500, confined to periods of favorable monetary conditions since 1940, would have been a 55% loss. This compares with a 33% loss during unfavorable monetary conditions. This is worth repeating – favorable monetary conditions were associated with far deeper drawdowns.
If this all seems preposterous and counterintuitive, consider the last two market plunges. While investors seem to have forgotten this inconvenient history, the 2001-2002 market plunge went hand-in-hand with continuous and aggressive monetary easing.
Ditto for the 2008-2009 market plunge. Persistent monetary easing did nothing to prevent a 55% collapse in the S&P 500.
From an asset allocation perspective, even simple trend-following methods have performed far better historically than following monetary policy. For example, since 1940, when the S&P 500 has been above its 200-day moving average, the total return of the index has averaged 14.2% annually, versus just 4.5% when the index has been below its 200-day average. That separation in returns is meaningful, because the return during periods of unfavorable trends did not exceed Treasury bill returns, so it would not have harmed long-term performance to be out of the market during those periods (at least, before transaction costs, taxes and slippage). The deepest loss of the S&P 500, confined to periods of “favorable” trends and reflecting occasional whipsaws, was -26%, versus -53% during unfavorable trends.
As I noted a few weeks ago (see Aligning Investment Exposure with the Expected Return/Risk Profile), all of the net historical benefit of favorable trend-following has occurred in periods where “overvalued, overbought, overbullish” characteristics have been absent. In the presence of this syndrome, the average total return of the S&P 500 collapses below Treasury bill yields, on average. The same is true, on average, when favorable monetary conditions are coupled with overvalued, overbought, overbullish features.
Hands-down, the worst-case scenario is a market that comes off of such overextended conditions and then breaks trend-support in the context of an economic downturn. That’s not something we observe at present, but it is something to keep in mind, as I doubt that we will avoid that sequence over the completion of the current market cycle.
Part of the reason that monetary policy was so ineffective during 2001-2002 and 2008-2009 is that these market collapses were preceded by overvalued, overbought, overbullish euphoria, and then gave way to economic downturns. Though monetary policy certainly fed the preceding bubbles, monetary policy did not prevent or halt those recessions, and those recessions were not broadly recognized until stocks had already lost about 30% of their value. At least in post-war data (Depression-era data is more challenging), the proper investment approach has generally been to accept market risk in the presence of favorable market action, particularly if monetary conditions are supportive, to start walking when overvalued, overbought, overbullish conditions emerge, and to run once momentum rolls over (as it has already). There’s a grey area when such overextended conditions are cleared, which can allow for recovery rallies if market action is still supportive. But regardless of monetary policy, investors should avoid risk in richly-valued environments once market action deteriorates, and buckle up hard on signs of economic weakness once an overvalued market loses trend support.
The following point should not be missed. I am not saying that monetary conditions are unimportant. Indeed, provided that trend-following conditions are favorable and overvalued, overbought, overbullish conditions are absent, favorable monetary conditions have contributed to stronger total returns for the S&P 500, and reduced periodic losses, in data since 1940. Favorable monetary conditions are most useful in confirming and supporting favorable evidence on other measures. My concern here, however, is that investors seem to believe that favorable monetary conditions are a veto against all other possible risks, regardless of whether those risks are financial (e.g. overvalued, overbought, overbullish conditions) or economic. This is dangerously incorrect.
There is no question that Fed action can affect economic outcomes when it relaxes some economic constraint that is actually binding (for example, during bank runs, when Fed-provided liquidity is essential). But there is little evidence of any transmission mechanism whereby a greater supply of idle bank reserves promises to make a dent in the economy beyond occasional and short-lived can-kicks. There is also no question that interest rates matter, given that stocks must compete with bonds. But stocks are much longer duration securities than investors seem to appreciate, and the relationship between stock yields and interest rates is not even close to one-to-one, despite what Fed Model proponents might suggest.
Even so, investors have come to believe that there is a direct cause-and-effect link from monetary easing to rising security prices. The historical evidence is much less supportive. Interestingly, if we look at conditions that have been most generally hostile for stocks on average (S&P 500 below its 200-day moving average, or overvalued, overbought, overbullish conditions in place), more than half of these periods were accompanied by “favorable” monetary conditions. Stocks proceeded to underperform Treasury bills anyway, on average, with steep interim losses.
Conversely, monetary conditions have been unfavorable in nearly half of historical periods where trends were supportive and overvalued, overbought, overbullish features were absent. In those periods, the average total return of the S&P 500 was still quite strong, and returns were only slightly lower than when monetary conditions were favorable under otherwise similar conditions (15.6% vs. 18.9% at an annual rate), while periodic drawdowns increased only slightly.
So again, the point is not that favorable monetary conditions are irrelevant. The point is that they are not omnipotent – and that the most severe market losses on record have been accompanied by aggressive easing. Without question, quantitative easing has been very effective in suppressing spikes in risk premiums in recent years. More recently, it has been effective in removing any perception that stocks have risk and creating the impression that easy money is enough to override every possible economic or financial concern. But that is where perception has moved beyond reality. There is no evidence in the historical record for such optimism. Indeed, even the recovery from the 2009 lows was more directly linked to the change by the Financial Accounting Standards Board to eliminate “mark-to-market” accounting (keeping banks from insolvency even if they were technically insolvent) and the shift to an outright guarantee of Fannie Mae and Freddie Mac debt by the U.S. Treasury. It is superstition to believe that monetary easing is a panacea. Investors who recognize (actually, simply remember) this now are likely to fare better than those who are forced to relearn it later.
Needless to say, all of this will be summarily ignored by speculators who have been rewarded by the strategy of following the Fed in a mature, overvalued, overbought, overbullish, unfinished half-cycle that recently hit new highs. Advice from Kenny Rogers – you never count your money when you’re sittin’ at the table.
Economic Notes
We’re observing some very wide dispersion in regional economic surveys in recent reports. On one hand, the Chicago Purchasing Managers Index surged to 58.7 last month, with the important new orders component jumping to 58.1 (a level of 50 on the PMI is neutral). This sort of strength, if sustained over several months and joined by strength in the Philadelphia Fed index, would help to ease our economic concerns here, as several months of strength on these two measures are among the more reliable leading indicators of economic shifts.
On the other hand, in nearby Milwaukee, the PMI collapsed from 48.4 to 40.7, while the Philadelphia Fed index itself dropped into negative territory, falling from +1.3 to -5.2, with the new orders component deteriorating from -1.0 to -7.9. That general weakness was much more in line with what we’re observing from other surveys, including the Chicago Fed National Activity Index, Empire Manufacturing, Dallas Fed, and Richmond Fed.
When we plot “outliers” (where the Chicago PMI deviates from the average of the other surveys), against subsequent changes in the Chicago PMI, what results is a clearly downward-sloping scatter, meaning that positive outliers, as we presently observe, are typically corrected by subsequent disappointments in the Chicago PMI. Conversely, however, outliers in the Chicago PMI are typically not related to subsequent positive surprises in the other indices. Again, joint strength in the Chicago PMI New Orders component and the Philly Fed index, sustained over a period of 3-4 months, does tend to lead broader improvements. This is not what we observe here.
In short, the coincident and leading economic evidence is deteriorating, not improving. Even the chart below incorporates a strong Chicago PMI figure that appears to be a temporary outlier. Employment data is a well-known lagging indicator, and is always somewhat “rear-view”, but it’s fair to say that given what is now the lowest labor participation rate in 30 years, the relatively restrained level of new claims for unemployment has been a bright spot.
It seems to be universally assumed that surprisingly strong data on the economic and jobs front would pose the greatest risk to the market, as it would accelerate the “taper” of quantitative easing. To the contrary, the largest risk here would be an acceleration of disappointing economic data, as it would further reinforce the case made by former Fed Chairman Paul Volcker that the benefits of quantitative easing are “limited and diminishing.” Disappointments on the economic front may be met with knee-jerk enthusiasm. But the quickest path to an extended bear market would be a deteriorating economy, coupled with recognition that quantitative easing has an even weaker benefit/cost tradeoff than is already plain.
The foregoing comments represent the general investment analysis and economic views of the Advisor, and are provided solely for the purpose of information, instruction and discourse. Only comments in the Fund Notes section relate specifically to the Hussman Funds and the investment positions of the Funds.
Fund Notes
Investors, like the proverbial frog, invariably wish to remain in a boiling pot as long as possible. But as I noted a few weeks ago, very few live frogs can be pulled from a boiling pot once a syndrome of overvalued, overbought, overbullish market conditions is coupled with a deterioration in the market’s momentum. When we examine the set of historical periods where the market has been overvalued, overbought, and overbullish even to a lesser extent, very few instances have been followed by positive returns once measures of price momentum deteriorate. This is the situation we presently observe.
The price/revenue ratio of the S&P 500 has reached 1.5, compared with a historical norm of just 0.8 prior to the late-1990’s bubble. The Shiller P/E (S&P 500 divided by the 10-year average of inflation-adjusted earnings) remains near 24. Importantly, despite weak earnings at various points over the past decade, the denominator of the Shiller P/E remains well within the historical growth channel that has contained Shiller earnings historically. In other words, the Shiller P/E is not being biased upward by an unusually low denominator. If anything, the ratio of “Shiller earnings” to S&P 500 revenues is among the highest in history, so much like other price/earnings measures, even the Shiller P/E is biased downward by elevated profit margins in recent years. That said, the Shiller P/E is essentially a useful shorthand for discussion purposes, as we use numerous other measures in practice that have an equal or stronger relationship with S&P 500 total returns. I continue to view the S&P 500 as being about 80% above the level that would be associated with “fair value”, but that’s simply another way of saying that I expect annual S&P 500 total returns to average little more than 3% nominal over the coming decade. Valuations are not a timing tool, but in a mature, overbought half-cycle, where advisory bulls dramatically outpace bears, my impression is that the likelihood of a long and pleasant future for stocks is quite low, at least until much more reasonable valuations are established.
Strategic Growth remains fully hedged, and the recent decline has taken the market to or below the “staggered” strike prices that we established at higher levels on the index put option side of our hedge, raising the value of those options toward 2% of Fund value at present. While recent Fund returns have been primarily driven by differences in performance between the stocks held by the Fund and the indices we use to hedge, the impact of these index put options will likely become a source of day-to-day Fund variability if a market decline takes them significantly in-the-money. This can create a give-and-take profile in day-to-day returns, where a sharp market decline may benefit those put options one day, and a market advance the next may withdraw that benefit. My suggestion here is to take day-to-day fluctuations with something of a grain of salt, because if this sort of give-and-take profile emerges, it will most likely be because a market decline has taken the Fund’s put options “in-the-money,” and market action is generally validating a defensive stance. My strongest concern in early declines from overbought peaks is the tendency for selling to become indiscriminate. Our staggered strike hedge is largely insurance against that potential risk here.
Of course, we do shift our strike prices opportunistically, and I expect to lessen or remove portions of our hedges as constructive evidence emerges. As I’ve often noted, the most likely opportunity to accept a greater exposure to market fluctuations would be a moderate retreat in valuations coupled with a firming of market internals, and the absence of an overvalued, overbought, overbullish syndrome of conditions. I have little doubt that we will observe such combinations of evidence during the completion of the present market cycle, not to mention future ones.
Meanwhile, Strategic International remains fully hedged, and Strategic Dividend Value remains hedged at about 50% of the value of its stock holdings. In Strategic Total Return, we boosted our duration slightly on the recent spike in Treasury yields, bringing the Fund’s duration to about 3.5 (meaning that a 100 basis point move in interest rates would be expected to impact Fund value by about 3.5% on the basis of bond price fluctuations. Conversely, we are observing a growing tendency toward risk aversion from a variety of sectors such as corporate debt, and the combination of higher Treasury yields and lower inflation pressures tends not to be as supportive as we would like for precious metals shares, despite what we see as undervaluation. Balancing these considerations, we scaled our precious metals position below 10% of assets for a while.
