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Monday, May 6, 2024

2024-05-06

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


Tracking economic indicators is challenging at the best of times, but lately it has been especially so, with key variables moving in ways that often differed from what economists expected. Job gains, for example, have often surprised to the upside, as discussed in a recent blog. Real GDP had done the same for a few quarters, though in 2024:Q1 it lagged expectations to the downside (1.6% actual versus 2.5% expected).

Thus, we are once again left trying to pull signal from noise. When we do, we see a strong U.S. economy wherein healthy consumer spending—almost 70% of nominal GDP—is continuously supported by a strong job market and consistent real wage growth. Inflationary pressures, while down significantly from their peak, have not abated, but have seen progress in some key categories. Most importantly, our cost-cutting policy agenda rolls on, with rule changes and legislation targeting lower costs for American households. 

Real GDP, the broadest measure of economic growth, came in at 1.6% in Q1 of this year, below expectations for a stronger report. However, the growth rate reflected negative contributions from the most volatile components of GDP—inventories and net exports. To get a better signal of underlying growth, economists often look at real consumer spending plus private business fixed investment (private domestic final purchases, or PDFP), which grew at an annualized rate of 3.1% over the quarter, about the same as the pace of growth in 2024:H2. ............



Last year's consensus was that the U.S. economy was headed for a recession, but that didn't happen. This year's consensus is that we'll have a soft landing, where the economy slows but won't tip into a recession. That could be wrong too.

Doubling down on his contrarian view, Citi chief U.S. economist Andrew Hollenhorst told Bloomberg TV on Thursday that he sees a hard landing. In fact, inflation and the labor market will weaken enough that the Federal Reserve will cut benchmark rates four times this year—far more than the one or two cuts Wall Street expects. .........



With a third of 2024 now in the books, it’s fair to say that the major shift from 2023 has been investor perception that sticky inflation will remain a problem for central banks longer than anticipated. This has caused interest rates to rebound and market leadership to shift from Growth to a combination of Value and Defensives. In his presser last Wednesday, Fed Chair Jerome Powell continued to sound optimistic that inflation will moderate further, but he sounded less certain than he did at the end of last year. Our chart this week shows that based on the four new bits of information we received last week, the Fed should not be particularly concerned about tight labor markets preventing inflation from falling further. Hiring has slowed, but layoffs remain rare and fewer workers are finding it attractive to seek greener pastures. Absent a supply shock to a commodity like oil, it’s hard to maintain high price inflation when wage inflation is falling because of how closely tied consumer spending is to incomes. In our opinion, the Fed may soon come to regret waiting longer to reduce interest rates, especially if unemployment resumes its rise in the coming months.



Once again the US Federal Reserve is in a quandary.  Does it cut its policy interest rate soon in order to relieve pressure on debt servicing costs for consumers and businesses and perhaps avoid a stagflationary economy (ie low or no growth alongside higher inflation); or does it hold its current interest rate for borrowing in order to make sure inflation falls towards its target of 2% a year?

That’s what mainstream economists and investors in financial assets want an answer to.  But it’s not really the important issue.  What the Fed’s current quandary really shows is that yet again ‘monetary policy’ (ie central banks adjusting interest rates and money supply) has little effect on controlling inflation in the prices of goods and services that households and businesses must pay. ...............

.............................. And that brings us to the ‘stickiness’ of inflation.  Which components of the inflation index have not fallen despite central bank rate hikes?  The answer is housing costs and motor car insurance, which have risen sharply.  As the FT article admits: “Both are partly a product of pandemic supply shocks — reduced construction and a shortage of vehicle parts — that are still percolating through the supply chain. Indeed, dearer car insurance now is a product of past cost pressures in vehicles. Demand is not the central problem; there is little high rates can do.” ............




US stocks are seeing no evil and certainly hearing none, but Berkshire Hathaway’s ever-growing cash pile should hold a tacit warning for those who are overexuberant.

Berkshire’s war chest surged to a record $189 billion at the end of the first quarter, ...


Stocks rallied on Friday after the markets interpreted the April non-farm payrolls data as providing just the right backdrop for the Federal Reserve to cut rates eventually. Considering that since of the end of 2022 alone, the S&P 500 has surged about 33% and the Nasdaq almost 50%, one would think that all the good news out there and more is already reflected in their price tag.

Over the long term, stocks can’t yield returns in excess of corporate earnings and economic growth, but investors have been in no mood to listen — and they may yet stay complacent in the short term. The S&P 500 now promises an earnings yield of less than 5%, well below the historical average. The Nasdaq 100 is, of course, trading even loftier, offering a prospective earnings yield of less than 4%.

At the moment, investors are paying a lot for stocks on the premise of promise. That is what Buffett may characterize as too much risk.



There are two reasons, lower interest-rate sensitivity and strong demand tailwinds.

Specifically:

A) Lower interest-rate sensitivity:

1) 40% of homeowners don’t have a mortgage, and 95% of mortgages are 30-year fixed that are not sensitive to the Fed raising interest rates.

2) During Covid, most firms termed out their debt at very low levels, and with the IG market having grown from $3 trillion in 2009 to $9 trillion today, see the second chart, the interest-rate sensitivity of corporate America has declined.

3) A growing share of capex spending is intangibles (R&D and software), which generally is less sensitive to Fed hikes.

B) Strong cyclical and structural demand tailwinds:

1) Fiscal spending, including the CHIPS Act, Inflation Reduction Act, and Infrastructure Act, is still a strong tailwind to growth.

2) Excess savings have recently started to rise again for higher income households, see the third chart.

3) Immigration has been unusually strong, supporting overall employment growth.

4) The Fed turning dovish in December 2023 has eased financial conditions significantly ............

In summary, the economy is strong for two reasons:

A) Consumers and firms locked in low interest rates during Covid, which made the economy less sensitive to higher interest rates (i.e., bullet points No. 1 to 3 above), and

B) Strong demand tailwinds coming from fiscal, excess savings, immigration, and easy financial conditions (i.e., bullet points No. 1 to 7 above).

With this backdrop, it is not surprising that inflation and labor costs remain high, and these 10 forces will keep the economy strong for at least several more quarters. 

Eventually, the Fed will get inflation back to 2%, but it is increasingly clear that it will require a meaningful slowdown in the labor market and the housing market.

In short, GDP and earnings should remain strong for the rest of 2024.






Thomas: Valuations for Multi-Asset Investing

Learning Goals
  • Understand application of valuation concepts in multi-asset investing
  • Use relative value principles for active asset allocation decision making
  • Apply value signals to gauge risk vs opportunity in a multi-asset context
Concepts
Valuations are an integral input for multi-asset investing.  They tell us information about expected risk and opportunity both for individual asset classes, and in relation to other assets — helping us prioritize allocations and manage portfolios. 

As an asset allocator, your job is to navigate risk, return, and opportunity-cost over typically longer-term timeframes but certainly through cycles and short-term gyrations.  Extremes in absolute and relative valuations help with identifying and proactively managing risks, as well as prioritizing opportunities through cycles and over the longer-term.

It’s not necessarily about maximizing returns, although that is an important objective, but being valuation-aware can help with what is arguably more important: protecting capital.  Indeed, it takes a 100% return to get back to square from a 50% drawdown. So a risk signal from an extreme expensive valuation reading can be just as important as an opportunity signal from an extreme cheap valuation reading.

The principles are simple, but the practice is complicated by consensus thinking (especially in the presence of peer/benchmark risk) on the way up, and fear during downturns. There is always going to be a reason to not buy when things are cheap or not to reduce exposure when things are expensive, there is always an argument to go with the flow, and always a voice in your head talking you out of doing the right thing at the right time.

That’s why the reliability, efficacy, and explainability in valuation indicators across asset classes is critical.  You need a solid quantitative and objective valuation signal that can help you keep your head when everyone else is losing theirs.

So it’s important to build the indicators (or at least obtain visibility on valuations from a reliable third party), understand the principles behind them and appreciate the actually wide range of investment insights that a solid suite of absolute and relative value indicators and skilled interpretation can yield. .......






Traditional economics makes ludicrous assumptions and poor predictions. Now an alternative approach using big data and psychological insights is proving far more accurate



China Fare:

Pettis: China’s problem is excess savings, not too much capacity
Policymakers on either side of bitter trade dispute seem to confuse two issues



Crypto Fare:


..................................... No question that the next great monetary reform will be to globalize a central bank digital currency with track-and-trace capability and the power to turn money on and off on political whim. In order to make this possible, government now needs to eliminate all the competition, just as they did in 1813.

None of this mucking around with the money is in the public interest. It is in the government’s interest and also its industrial partners in banking and finance. A full denationalization of money is the fix for the whole problem but getting there from here will require dislodging the government of its penchant for controlling the economic forces of the whole realm. It’s an age-old problem and perhaps the greatest challenge of all ages.



Vid of the Week:


Quotes of the Week:

Ian Shepherdson: Payrolls. I hate payrolls. Unforecastable. Revised forever.
Still: 150. 3.8. 0.3.
Or:  Something totally different.



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(not just) for the ESG crowd:


................ What it means is what we perceive as a need today is a function of what currently exists in the world and consequently what is the current level of development. In Roman times nobody felt the need for a smart phone, nor a frustration if they did not have it. Likewise, we do not experience the need to spend a weekend on Mars simply because such a good is unavailable.

If needs are a historical category, then new needs arise with technological progress. If new needs are constantly born, the abundance that was presumed in the opening paragraphs cannot be achieved because sufficient material means to satisfy these new needs will always be deficient.  ..............

When can all needs be covered by societal production? Only in a society which does not experience technological progress and where no new needs can arise. .........

This then means that the stationary society that is compatible with full satisfaction of all human needs cannot be capitalist. Capitalism, by definition, means limitless change and limitless progress. With the society of limitless change and limitless progress we cannot have abundance.

Degrowth advocates therefore might have a valid point when they argue for an end to capitalism if they believe that climate change can be stopped only if society is stationary. Stationary society, end of capitalism, and abundance are logically consistent.


A new study that looked at nearly 40 million flights in 2019 was able to calculate the greenhouse gas emissions from air travel for nearly every country on the planet. At 911 million tonnes, the total emissions from aviation are 50 per cent higher the 604 million tonnes reported to the United Nations for that year.



Use of enclosed combustors leaves regulators heavily reliant on oil and gas companies’ own flaring data




Nitrogen, Agrochemical Corporations and International Trade: A Perilous Mix

Yves here. Despite the clunky headline, this is a very important post that covers a lot of ground effectively. It starts by discussing why nitrogen is foundational to growing proteins but is relatively scarce in soil, how our cereals-intensive food system and other modern practices undermine replenishment, and the consequences of the growth of nitrogen fertilizers as the work around. The talk with Gilles Billen also discusses how this problem is not insoluble, but can be significantly remedied by changing the organization of food production and creating regional networks. .........


Tailing Dams

........................... And yet, the biggest problems we face, tend to be the most esoteric, understood by just a small number of people. .................

But there are problems like this emerging elsewhere too. The most esoteric of all perhaps has to be the tailings dams. This is something nobody thinks about, except for the people who are stuck managing these tailings dams. When it goes wrong, it looks like this: ............

You know who is paying to look at this problem? The European Commission and the European Bank for Reconstruction and Development. Why are Europeans poorer than Americans? Because we’re looking at the problems, while you earn your money selling us fake solutions (like electric cars). ...........


Eleanor Johnson on How Medieval Christian Writers Accepted Ecological Collapse



.......... One reason the empire is losing young people is because the imperial status quo has given them no investment in it. They’ll never own property. They can’t support a family or retire. They’ve been given no reason not to want to rock the political boat. So they’re rocking it.

The only vested interest young people have left is an interest in breathable air and a livable planet, and the possibility of a future that isn’t intolerably dystopian. All of which are diametrically opposed to the interests and trajectory of the status quo politics of the western empire.

So they’re going for it. They’re beginning to see that there’s no reason for them not to plunge headlong into a push for real change, in direct opposition to the mainstream politics of our time. Like Bob Dylan said, when you got nothing you got nothing to lose. .........



Geopolitical Fare:


We had a joke back in the Bush Jr. administration.

“Evil or stupid? Why not both?” ........

......... This is true late Roman Emperor level dysfunction. Absolute morons getting everything wrong, capable of nothing but alternating between pandering to elites and making cruel shows of ineffective force, while the fall everyone with sense knows is coming storms forward from the horizon. ...........


...................................... Maybe this story has a happy ending for Russia, but what of us in the West? What will become of the fascist forces unleashed here, especially if there won’t be any Red Army coming to the rescue this time?

We probably need to first come to terms with history. We went from an insistence on the uniqueness of Nazism and the Holocaust to attempts to relativize Nazi policies by comparing the regime’s crimes to those of Soviet communism, and ultimately an attempt to blame them on a reaction to Russian communism.

All of these readings conveniently absolve the systems of capitalism and imperialism from which Nazism was derived. None of this asks how fascism was a part of the modernizing forces of industrialization or how it fits into the crisis cycles of finance capitalism or what its role is today. .........








In the campus protests over the war in Gaza, language and rhetoric are—as they have always been when it comes to Israel and Palestine—weapons of mass destruction.

.............. But sometimes ethical philosophy reënters the arena, as is happening right now on college campuses all over America. I understand the ethics underpinning the protests to be based on two widely recognized principles:
  1. There is an ethical duty to express solidarity with the weak in any situation that involves oppressive power.
  2. If the machinery of oppressive power is to be trained on the weak, then there is a duty to stop the gears by any means necessary.
....................................


Did it warm your heart to see all those blue and yellow Ukrainian flags waved by our elected officials in Congress Saturday night with the passage of the $60-plus-billion aid bill to the Palookaville of Europe? You realize, don’t you, that the tiny fraction of that hypothetical “money” — from our country’s empty treasury — that ever reaches Ukraine will rebound on the instant into Mr. Zelensky’s Cayman Islands bank account. The rest of the dough enters the recursive shell-game between US weapons-makers and the very hometown folks in Congress waving those blue and yellow flags, who will receive great greasy gobs of fresh “campaign donations” from the grateful bomb and missile producers. No wonder they’re cheering.

What the $60-plus-billion won’t do is provide any fresh arms and equipment to Ukraine’s sad-sack army soon enough to prevent Russia from bringing this cruel, stupid, and unnecessary war, which we started, to a close. Yes, we started it, not Russia, in 2014 with our Intel blob overthrowing elected President Viktor Yanukovych in the so-called “Maidan Revolution of Dignity” (what Wikipedia calls it). And for what reason? To jam Ukraine into NATO as a prelude to “weakening” Russia sufficient to bust it up and gain control over Russian oil, ores, and grain.

Yes, that was actually the neocon’s game, equal parts megalomania and hubris, a fiasco as strategically ill-fated as Hitler’s push to gain control of Russia’s oil fields via Stalingrad ......


The liberal world order is collapsing once again

Few 20th-century thinkers have had such a lasting and profound influence as Karl Polanyi. “Some books refuse to go away — they get shot out of the water but surface again and remain afloat,” Charles Kindleberger, the economic historian, remarked about his masterpiece The Great Transformation. This remains truer than ever, 60 years since Polanyi’s death, and 80 since the book’s publication. As societies continue to wrestle the bounds of capitalism, the book arguably remains the sharpest critique of market liberalism ever written. ...........

Polanyi set out to explain the massive economic and social transformations that he had witnessed during his lifetime: the end of the century of “relative peace” in Europe, from 1815 to 1914, and the subsequent descent into economic turmoil, fascism and war, which was still ongoing at the time of the book’s publication. He traced these upheavals back to a single, overarching cause: the rise of market liberalism in the early 19th century — the belief that society can and should be organised through self-regulating markets. For him, this represented nothing less than an ontological break with much of human history. Prior to the 19th century, he insisted, the human economy had always been “embedded” in society: it was subordinated to local politics, customs, religion and social relations. Land and labour, in particular, were not treated as commodities but as parts of an articulate whole — of life itself.

By postulating the allegedly “self-regulating” nature of markets, economic liberalism turned this logic on its head. Not only did it artificially separate “society” and “the economy” into two separate spheres, it demanded the subordination of society, of life itself, to the logic of the self-regulating market. For Polanyi, this “means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system”.

Polanyi’s first objection to this was moral ................

And yet, even Polanyi’s ideological enemies, neoliberals such as Hayek and Mises, were perfectly aware that the self-regulating market is a myth. As Quinn Slobodian has written, their aim was “not to liberate markets but to encase them, to inoculate capitalism against the threat of democracy”, by using the state to artificially separate the “economic” from the “political”. In this sense, market liberalism can be considered a political project as much as an economic one: a response to the entrance of the masses into the political arena from the late-19th century, as a result of the extension of universal suffrage — a development most militant liberals of the time were vehemently opposed to. ............

............. Polanyi would have argued that a backlash was inevitable — and indeed it came, beginning in the late 2010s, though the populist uprisings of the past decade also failed to replace the system with a new order.

The result is that, just as a century ago, the intrinsic contradictions of the “international liberal order” are once again leading to a breakdown of the system, and to a dramatic intensification of international tensions. If Polanyi were alive today, he probably wouldn’t be as optimistic as he was when he published his book. We are definitely in the midst of yet another “great transformation” — but the future it heralds couldn’t be farther from the democratic, co-operative international order he envisioned.



Sci Fare:

By suppressing questions they considered too ‘philosophical’, post-war physicists created an unquestioning orthodoxy that influences science to this day



Book Review:

Everything Must Go: The Stories We Tell About the End of the World



Other Fare:

wow, this really resonates with me:
Autism, Loneliness, And Solitude

................................ Last year I realized that I’m autistic. I’m still figuring out what that means for me. When you learn that you’re autistic as an adult, you look back at your life through a new lens. I see now that I’ve been trying to fit into a neurotypical world; no wonder life has been so challenging. I’m learning that there’s nothing wrong with me. I’m not a failed normal person; I process my experience of the world differently, in ways that generally make the neurotypical world a poor fit.

Through this lens, I can also see that my frequent experiences of depression—which I’d framed in terms of neurochemistry or childhood trauma or a genetic predisposition, or some unhappy combination of these things—are largely a consequence of trying to fit into a world that wasn’t made for people like me. It’s such a relief to see that I’m not broken.

I’ve learned about masking, where neurodivergent people try to appear neurotypical and meet the social expectations of others. Sometimes masking takes the form of trying to hide things about yourself that other people find uncomfortable or inconvenient, such as stimming (repetitive behaviors), or sensory sensitivities, or needing more time to transition between activities. 



Satirical Fare:




Posted by at No comments:

Tuesday, April 23, 2024

2024-04-23

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


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............. The contractionary effects of monetary policy and the de-facto negative NNS policy
stance of fiscal policy will serve to place increasing downward pressure on inflation and growth. A sharp 7% rate of decline in vehicle sales In the first quarter is a sign that the deflationary trend in big ticket consumer goods prices is more likely to gather speed than reverse. The inflation rate will likely undershoot the Fed's target, and the unemployment rate will move higher than anticipated by the Fed. Inflation and unemployment are lagging indicators, and much of their cyclicality occurs after, not before, recessions end. This declining inflation environment will continue to bring down inflationary expectations and long-term Treasury bond yields.



.... What if, they ask, all those interest-rate hikes the past two years are actually boosting the economy? In other words, maybe the economy isn’t booming despite higher rates but rather because of them. It’s an idea so radical that in mainstream academic and financial circles, it borders on heresy ....

.......... That this phenomenon made rising rates stimulative, not restrictive, became obvious to the economist Warren Mosler many years ago. But as one of the most vocal advocates of Modern Monetary Theory, or MMT, his interpretation was long dismissed as the preachings of an eccentric crusader. So there’s a little sense of vindication for Mosler as he watches some of the mainstream crowd come around now. “I’ve been certainly talking about this for a very long time,” he says.

Muir readily admits to being one of those who had snickered at Mosler years ago. “I was like, you’re insane. That makes no sense.” But when the economy took off after the pandemic, he decided to take a closer look at the numbers and, to his surprise, concluded Mosler was right. ......

Like the converts, he [Zandi] cites another key factor for this resilience: Many Americans managed to lock in uber-low rates on their mortgages for 30 years during the pandemic, shielding them from much of the pain caused by rising rates





.... There is a plethora of evidence that shows the IMF forecasts are systematically biased – which means they keep making the same mistakes – and those mistakes are traced to the underlying deficiencies of the mainstream macroeconomic framework that they deploy.



.... The March CPI release was, in retrospect, the one that apparently convinced the Fed and the market that "disinflation has stalled." More recently, the market, with encouragement from numerous Fed governors, has come around to thinking that instead of cutting rates five times by the end of this year, we might see, at best, one cut, because the Fed has more work to do. "Higher for longer" is now the interest rate mantra that is driving the market; it's made people nervous, so an equity market correction is underway.

You won't be surprised to learn that I disagree. I still think the great inflation bubble that started three years ago has long since popped. And the main reason inflation is still marginally higher than where the Fed would like to see it is the way shelter costs are calculated. ........

In other words, shelter costs will almost certainly continue to decline every month from now until October, and that will subtract significantly from the increase in the overall CPI.

Inflation is not a problem. The Fed once again is late to the party, as usual. ...






The end to one of the worst freight markets in history may be closer than it appears









.............. Inflation spikes when there isn’t enough to go around. It’s that simple. If a country can’t produce what it needs or wants, and others start raising their prices or refusing to sell, inflation becomes a problem.

Even without inflation, decreasing surplus income is a problem. This is why inequality matters: if a large chunk of the population can’t buy what they need, well, Lenin’s maxim comes into play.

China is at risk of deflation (not significant risk, yet, but that’s their danger.) The US and Europe and the Anglosphere are at risk of inflation.

That inflation will happen when others won’t or can’t sell us what we need and we can’t make it or grow it or mine it.

It is at that point where the US deficit will matter.

If you want to know when the US deficit will matter, it’s simple: when China and other countries stop using dollars as the default trade currency. That process is early yet, but underway. It used to be unthinkable to sell oil in anything but dollars: did not happen. Now it does. China and Russia, China and India, and Iran and everyone now trade without dollars. African countries are in the midst of throwing out French and American military bases and do the majority of their trade with China, not America or Europe. They are increasingly trading with Russia, as well, and relying on it for military aid.

Everything those countries need except for some medicine they can get from Russia and China: food, goods, and fuel. China gives them better debt terms and doesn’t interfere in most countries internal politics nearly as much as America does.

This is the actual threat: the West not being able produce what it needs and other countries no longer willing to accept dollars. Track this by watching actual inflation, and observing the process of global de-dollarization.

The deficit and the debt don’t matter much, yet.

But they will.



... Kristalina Georgieva, managing director of the IMF, has just been re-appointed for another five-year term unopposed.  In previewing the meeting, she outlined how the IMF sees the world economy in 2024 and through the rest of this third decade of the 21st century. She offered a dismal analysis.  Ahead was a “sluggish and disappointing decade”.  Indeed, “without a course correction, we are … heading for the Tepid Twenties”.  Her comments prefaced the release of the IMF’s latest World Economic Outlook including its long-term forecast for the world economy. It makes for sober reading.  Let me quote: ......

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......... At the beginning of this decade, just after the pandemic slump hit the world, there was optimistic talk of a repeat of the Roaring Twenties of the 20th century that the US economy supposedly experienced following the Spanish flu epidemic of 1918-19. That designation of the 1920s was always an exaggeration, even in the US; while in Europe there was a serious depression. And the roaring twenties gave way to the Great Depression of the 1930s. But now there is no longer any optimistic talk of a long boom, even if incorporating some possible productivity boost from AI. Now the talk is of the Tepid Twenties – at best.


Dalio: An Update On My Views Of The Five Big Forces

.... So, you know, because I learned in my lifetime that many of the things that surprised me surprised me because they never happened in my lifetime before, I learned that I needed to study history, and I saw that many of them repeated throughout history. And sometimes we lose the big picture because we’re squinting at the details. And I went back over history over the last 500 years, really to first deal with the first three big forces that hadn’t happened in my lifetime, and then I saw the other two.

The first is, the amounts of debt creation and then monetization of the debts when there isn’t enough money in terms of the supply and demand for credit and its impact on the economy and the value of the dollar. So I wanted to study the rises and declines of reserve currencies over that 500 years.

The second is the degree of conflict—internal conflict. Populism on the left and the right creating irreconcilable differences that are threatening the democracy, threatening the system, in many ways. The amount of wealth gaps and values gaps that are behind that and the amount of political polarity—not voting across party lines and the like—the greatest since 1900.

And the third, of course, is the great power conflict—global, geopolitical, great conflict between rival powers, particularly China vying for power. And, you know, last time that happened—the last time all of these happened—was the 1930-45 period.
And then I learned, by studying the last 500 years and before, that acts of nature—droughts, floods, and pandemics—had an even bigger impact than all of those other things that I’ve mentioned. They killed more people, and they toppled more orders—more domestic orders, more international orders—than the first three. So, climate is a big deal, and it’s certainly a big deal now.

And then, number five, throughout history, the inventions of new technologies—man’s learning and inventing of new technologies—and not only their economic implications, but their war and military implications. But the repeated time, throughout history, of discovering weapons, secretly—finding the weapons that you show the other side, and the other side submits because they can’t beat the weapon—that dynamic has also been in history. 

And these cannot be looked at as individual things because they’re interdependent. For example, the United States being overextended—and you know, we’re in 80 countries and then fighting two wars, you could have a third war on another front—has economic implications, or climate has economic implications. And to see them transpire in cycles for logical reasons that the cycles exist were discoveries and my framework. So those are the things.

I think almost anything that you mentioned and anything that’s important falls under one of those five categories, and they certainly relate to each other. .............



George Washington University Law Professor, Arthur Wilmarth, has done it again. After authoring the seminal book on the insidious evolution and enormous dangers still posed by the Wall Street megabanks (Taming the Megabanks: Why We Need a New Glass-Steagall Act) Wilmarth is now out with a new, gripping paper. In the paper’s abstract, Wilmarth explains how the risks posed by the Wall Street megabanks in 2008 have become exponentially more dangerous today.


Global military expenditure saw its steepest increase in over a decade in 2023, reaching an all-time high of $2.4 trillion as wars and rising tensions fuelled spending across the world, researchers said Monday.



China Fare:

China Heads Down Japan’s Troubled Macro-Policy Path

............... What’s really needed is an overhaul of China’s social safety net—increasing the benefits in retirement and healthcare, according to Stephen Roach, former chair of Morgan Stanley Asia and a longtime observer of China’s economy. That would reduce the “fear-driven precautionary saving” among Chinese households .........



Quotes of the Week:

Tchir: There was no consistent narrative between stocks and bonds. At times we saw correlated moves, but then we saw just as many inversely correlated moves. Just like the Mag 7 is dead as a rule of thumb, the “bonds and stocks are correlated” rule of thumb might also need to be put away.


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(not just) for the ESG crowd:

Cloud seeding almost certainly did not play a significant role in the flooding on the Arabian peninsula this week – but the heavy rains may have been exacerbated by climate change


Record Surge in Global Coal Capacity Led by China
  • Last year, global operating coal capacity increased by 2% as the world added a total of 69.5 gigawatts of coal fired power.
  • Worldwide, coal-fired power plant retirements were only 21.1 GW in 2023—the lowest capacity retired since 2011.


Geopolitical Fare:

.............. That pretty much sums up the capitalist class’ enduring vision not just for Russia, but everywhere. Ownership of Russian mines or Opium Wars in China might not factor much into my or your everyday life, but you can bet it’s an important part of American ruling class ideology. Whose values? The dominant value at play there is a belief that as Western capitalists they have a right and a duty to exploit and profit off of every corner of the globe. Just like capital must dominate labor, it must expand and find new sources of revenue. If governments in Russia and China impede that progress, they must be destroyed.

Rather than bromides like more American “values,” the following are some questions or thought exercises for think tanks to consider – whether they want to win another war or maybe even quit starting so many of them. .......

The US is a market state that is dominated by and run for transnational capital. Its foreign policy and the military are a tool of the American oligarchy. Therefore, any serious policy discussion needs to deal with the fact that national interests as they’re expressed today are not in any real sense national but representative of the interests of a small cohort of the super wealthy.

When US officials go on about spreading “freedom,” they’re not lying. It’s just their idea of freedom is a state devoted to high profits – free from the political whims of local populations that could degrade an investment’s expected return. ....................

The Great Irony in the West’s Predicament Is That Finance Capital’s Own Greed Has Eroded Its Ability to Satiate Its Greed Around the World.

They hollowed out the West in order to make a quick buck. Where the manufacturing isn’t completely gone, it’s entirely degraded (Boeing). Government has been reduced to a collection of worthless sycophants only looking to cash in on their servitude. ..........



Russia, China, and Iran have now formed a de facto military and economic alliance — what they prefer to call a “partnership”.

In the case of Russia and China, a comprehensive full-spectrum partnership has emerged: military, economic, and monetary. .......


***** Welsh: Why I Rarely Care About The Events Of the Day

........... This is why I don’t discuss the Ukraine war much. I said, day one, that Russia would win, and it is. It was also obvious that anti-Russia sanctions wouldn’t work, because China wouldn’t let Russia be choked out, and China has almost everything Russia needs. The Chinese aren’t, mostly, stupid about such things.

Sometimes a decision by an idiot makes force stronger: Trump and Biden’s chip sanctions on China just sped up the China’s tech climb, for example. Sheer stupidity.

Right now we have a situation in the Middle East where two idiots are putting us in danger of a major regional, or even world war: Netanyahu and Biden. Netanyahu knows Israel is weak and has lost deterrence. Biden won’t restrain him, though he has the power to do so. If a regional war breaks out, even if Israel and the US “win”, they’ll lose, because the US cannot defeat Iran without catastrophic losses or the use of Israeli nukes. 

................... The key question right now is whether there’s a great power war during this transition between lead powers. China is on the way up, and America on the way down. China will be the most powerful nation in the world. In some ways it already is. The European/American/Anglo era is ending. The Africans are kicking America and France out, for example. They don’t have to put up with AmeriEuro bullshit any more, because what they need they can get from China, and what they need militarily, they can get from Russia. The prices are better, and the political interference is a lot less. .........


The limits of reason and the politics of domination

THE IDEA OF the West and Western culture has both a defined historical origin and an endless rebirth. The West, meaning Europe, North America, Australia, New Zealand, Japan and South Korea—known today as the Global North—has a specific and rigid perspective of itself, and has remained stubbornly uninterested in how other cultures perceive it, unless when feeling threatened by such views.

Still under the guidance of the cultural, political, economic and military thrust of the US, the West has concealed a lack of openness under the guise of the concept of freedom, alleged diversity and inclusiveness. It has veiled its lack of flexibility under the philosophy of relativism. The drive for supremacy and domination that has guided the West throughout history, especially since the Renaissance, is slowly coming to the light, year by year, as diverse narratives and perspectives attempt to gain consideration. ...........



Like all living creatures, people need to eat to live.  Some people, eaten from within by a demonic force, try to deny others this basic sustenance.  All across the world people are starving because the powerful and wealthy create economic and political conditions that allow their wealth to be built on the backs of the world’s poor.  It is an old story, constantly updated.  It is one form of official terrorism. 

From the Irish famine with its terrible aftermath created by the imperialist British government in the nineteenth century that caused the death of between one and two million Irish and the forced emigration of more than a million more between 1846 and 1851 alone, to today’s savage Israeli genocide and forced starvation of Palestinians in Gaza, the stories of politically motivated famine are legion. ......





.................. By successfully attacking Israeli air bases which had the benefit of the full range of US anti-ballistic missile technology, Iran exposed the vulnerability of the US missile defense shield to modern missile technologies involving maneuverable warheads, decoys, and hypersonic speed. US bases in Europe, the Pacific and the Middle East once thought to be well-protected, have suddenly been revealed to be vulnerable to hostile attack. So, too, are US Navy ships operating at sea….

In short, this means that the US and NATO forces in Europe are vulnerable to attack from advanced Russian missile technologies which match or exceed those used by Iran to attack Israel. It also means that China would most likely be able to strike and sink US navy ships in the Pacific Ocean in the event of a conflict over Taiwan. And that North Korea could do the same to US ships and forces ashore in the vicinity of Japan and South Korea.

Until which time the US can develop, produce and deploy missile defense systems capable of defeating the new missile technology being deployed by nations like Iran, Russia, China, and North Korea, US military power projection capabilities are in a state of checkmate by America’s potential adversaries.


After Iran retaliates for an Israeli strike, the Biden administration shows little interest in de-escalating what it admits to be a historically dangerous moment.

........................... Therefore, to protect Israel’s “aura of power”, the White House remains devoted to fueling what it admits to be the Middle East’s most dangerous moment in decades. Under US leadership, the violence will continue to escalate until the unruly natives are put back in their place, and subservience – or “quiet” – has been restored in the rubble of Gaza, Damascus, and if necessary, perhaps even Tehran.





The destruction of Gaza proves the entire mainstream western worldview is bullshit, because if the mainstream western worldview was accurate, the destruction of Gaza would not be happening. .......



Gaza is simpler than Iraq. Iraq was simpler than Yemen. Yemen was simpler than Libya. Libya was simpler than Ukraine. Ukraine is simpler than Syria. Gaza is the simplest and most straightforward of all the evil interventions of the US murder machine in recent memory — which is why I’ve got no patience for anyone who gets it wrong.

I’m a lot more forgiving of people who bought into the imperial narrative about Syria and believed that country erupted in violence because Assad just went ape shit and started killing innocent people for no reason, because it takes a lot of work to sort out fact from fiction about what actually happened there. There were really good journalists who got Syria wrong at first in the early years of the conflict, just because there was so much information to comb through and so much aggressive imperial narrative management about it. There was so much less visibility into the facts on the ground in Syria than there is in Gaza, and there were so many complex narrative control ops muddying the waters.

Gaza isn’t like that. What’s happening really could not be more obvious. A nuclear-armed high tech military has been raining bombs and inflicting siege warfare upon a densely packed, walled-in civilian population, half of whom are children, with the full backing of the most powerful empire that has ever existed. We’ve been seeing a constant stream of footage showing children ripped apart by military explosives and starved to skeletons, Israeli soldiers posting videos of themselves gleefully doing some of the most sadistic and depraved things you can imagine, destroyed hospitals, carpet-bombed neighborhoods, and Israelis blocking aid trucks from feeding starving people.

This is not the slightest bit complicated. It’s as subtle as a kick in the teeth. There is no excuse for getting this one wrong now. There’s not even any excuse for getting it wrong on day one. It’s been obvious this entire time. Any politician, pundit or journalist who’s gotten it wrong can be dismissed as completely worthless, even if they’re beginning to come around now after they sensed the wind blowing against Israel in recent weeks.

Gaza is a test of the absolute bare minimum requirements for someone to be worth listening to about anything at all, because if you got this one wrong then there’s just something wrong with you as a human being. You’re too fucked up and twisted inside to have a clear vision into anything that’s happening in the world. ........

Everything I’m saying here will all be completely obvious to everyone one day. People will look back on what was done to Gaza and struggle to comprehend how the world could have allowed such a thing when it was all happening right out in the open for everybody to see. And if I’m still around I will struggle to explain it myself, because it baffles me here and now in the present moment. It probably always will.



...... This is the sort of report that a critical thinker would normally dismiss as absurd atrocity propaganda if it was being made about any other military power, but this is the IDF we’re talking about, and this specific allegation is pretty well-supported now.

........ When the destruction of Gaza first began I used to read the jarring claims about the horrific things the IDF were doing and often think, “No, no way. That can’t be the whole story. It’s too cartoonishly evil. There must be some information missing.” Then a few days or weeks later confirmation would come out, showing it’s even worse than I thought before.

I don’t experience that kind of dubiousness when reading such stories anymore. There are only so many atrocities you can see documented, so many videos of IDF troops recording themselves gleefully behaving like monsters, so many hospitals you can see attacked, so many journalists you can see assassinated, before you read a new report about new unfathomable acts of depravity and find yourself saying “Yeah, that sounds about right.”

This baby-crying-sniper-drone story is something else, though. It’s like something out of a weird post-apocalyptic horror movie or something. It’s the kind of information that makes you sort of re-evaluate your previous assumptions about humanity, the world, and the kind of reality we’re experiencing here.

It is really astonishing, how cruel people can be. How cruel a whole nation of people can be made to be, if they’re indoctrinated just right. You spend your whole childhood being indoctrinated into the belief that one group of people are inferior to your own and don’t deserve the same rights and treatment your group receives, and before you know it you’re blockading aid trucks from bringing that group food, and playing recordings of crying babies on an assassination drone in order to murder civilians at a refugee camp.

That’s how Nazi Germany happened, it’s how the genocidal apartheid state of Israel has happened, and it’s how the murderous US-centralized empire has happened. It turns out it’s not all that hard to manipulate a population into supporting shocking abuses at mass scale with modern propaganda and indoctrination from early childhood. It turns out the human mind is a lot more hackable than we’d like to believe it is, and that this can be used to unleash living nightmares upon our world a lot more easily than we’re comfortable acknowledging.

This is how the entire western world has been manipulated into accepting nonstop war, militarism, nuclear brinkmanship, imperialism and exploitation as fine and normal, and into assuming that a better world isn’t possible. ......



........ This can break you, if you let it. It’s hard for the mind and heart to take such systematic pummeling, especially if you don’t understand that it is being done deliberately with a very specific goal in mind. The more westerners can be psychologically shoved into throwing up their hands and filing Gaza away in our mental “bad things in the world I try not to think about” drawer, the easier it is for Israel and its imperial backers to do the monstrous things they want to do there. ...........



Sci Fare:










Other Fare:

When we depersonalize our narrative, our complaints often dissipate.

The Harvard Business Review reports “a majority of employees spend 10 or more hours per month complaining — or listening to others complain — about their bosses or upper management. Even more amazing, almost a third spend 20 hours or more per month doing so.” The study measured and reported only voiced complaints. ....



........... Right now, in the modern industrial world, we live in an economy where nearly all exchanges are subject not just to the exactions of a single pimp but to whole regiments of pimps, each of whom has to be paid in order for the exchange to take place.  Furthermore, this orgy of pimping is sponsored, controlled, and mandated by government at all levels and by the holders of political and economic power more generally.  Thus, lenocracy. ...........

........... On paper, the United States has had economic growth in nearly every quarter for decades—but that’s only true if you include the earnings of the FIRE (finance, insurance, and real estate) sector, the heart of today’s American lenocracy.  Leave that out and the economic picture is far less rosy.  If you also leave out the economic consequences of the expansion of government bureaucracy at all levels, and of the explosive financialization of health care that followed in the wake of Obamacare, it becomes painfully clear that in terms of productive economic activity, the United States has been sinking into a serious depression for decades.

Lenocracy also leads to an unhealthy centralization of economic power in the hands of big and politically well-connected corporations. .........

....................................... Signs of economic turbulence are showing up everywhere except the official statistics. (As Bernard Gross predicted forty years ago in his prescient book Friendly Fascism, economic indicators in today’s America have become economic vindicators, saying whatever the regime in power wants them to say.) ...........



.................. You all live like kings, or could choose to live like kings. Your ancestors could not imagine what you have. And we could keep almost all of it, our fruit is shipped into the harbor by giant container ships, that expend practically no energy to move products from one harbor to another. But it just means utterly nothing to you all. People from the former communist countries would have a mental breakdown, when they saw a Western supermarket. You just take it all for granted.

And it’s apparently just too much to ask, to leave the animals alone, not to lock them up in giant buildings, not to breed them to be genetically obese, not to mutilate their bodies, not to consume their flesh. This isn’t hard to figure out either, there have been vegetarians for millennia. .................



RIP Fare:

A remembrance from Doug Hofstadter



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