Too Good For Too Long

I’m writing this from my home in Sonoma County at the end of an intense week of witnessing firsthand the devastation caused by the many current fires burning in northern California. While it’s hard to focus on anything other than the moment-to-moment developments of this still-unfolding disaster (which I’ve been chronicling here), it’s already clear that the implications for my part of the state will last for many, many years to come.
It’s amazing how instantly the status quo where I live has changed. The world my neighbors and I lived in when we all went to bed on Sunday night simply no longer existed by the time we woke up on Monday morning. Lives have been lost. Entire neighborhoods — thousands of homes — have burned to the ground. Businesses, hospitals and schools are now shuttered.
Having now experienced this personally — on top of watching news reports over the previous weeks of similarly abrupt “before/after” transitions in Houston, Florida, Puerto Rico, Mexico City, Las Vegas and Catalonia — I have a new-found appreciation for the maxim that when it arrives, change happens quickly — usually much more quickly than folks ever imagined, catching the general public off-guard and unprepared.
We humans tend to think linearly and comparatively. In other words, we usually assume the near future will look a lot like the recent past. And it does much of the time.
But other times it doesn’t. And that’s where the danger lies.
The Cruel Math
In 1987 a Danish physicist named Per Bak released a landmark paper introducing the concept of self-organized criticality. Bak observed that complex systems draw stability through an ongoing cycle of corrective collapses that keep the overall system from becoming too over-extended.

This post was published at PeakProsperity on Friday, October 13, 2017,.

How Socialism Ruined Venezuela

In order to understand the disaster that is unfolding in Venezuela, we need to journey through the most recent century of our history and look at how our institutions have changed over time. What we will find is that Venezuela once enjoyed relatively high levels of economic freedom, although this occurred under dictatorial regimes.
But, when Venezuela finally embraced democracy, we began to kill economic freedom. This was not all at once, of course. It was a gradual process. But it happened at the expense of the welfare of millions of people.
And, ultimately, the lesson we learned is that socialism never, ever works, no matter what Paul Krugman, or Joseph Stiglitz, or guys in Spain like Pablo Iglesias say.
It was very common during the years we suffered under Hugo Chvez to hear these pundits and economists on TV saying that this time, socialism is being done right. This time, the Venezuelans figured it out.
They were, and are wrong.
On the other hand, there was a time when this country was quite prosperous and wealthy, and for a time Venezuela was even referred to as an ‘economic miracle’ in many books and articles.
However, during those years, out of the five presidents we had, four were dictators and generals of the army. Our civil and political rights were restricted. We didn’t have freedom of the press, for example; we didn’t have universal suffrage. But, while we lived under a dictatorship, we could at least enjoy high levels of economic freedom.

This post was published at Ludwig von Mises Institute on Oct 13, 2017.

Fake News in the Age of Facebook

The “fake news” problem isn’t just about “alternative facts.” The problem has more to do with the spin, the narrative, the context that inclines you to believe, for example, whether there was or was not collusion between Donald Trump’s campaign and officials of the Russian government. And the problem is that 60 percent of Americans get their news through social media, mostly Facebook, which uses mysterious algorithms to customize each of our news feeds, selecting all and only what interests me, as computed from every time I press “Like” or forward an article to friends.
It’s not just Facebook. Sit with a friend or, better yet, a friendly enemy – someone you know has political views contrary to your own – and, using your own devices, type the same entries into your respective Google search windows. Try “BP,” standing for the oil company that used to be British Petroleum but tried rebranding itself as Beyond Petroleum. You and your friendly enemy – perhaps your crackpot brother-in-law? – are going to get different results from your searches because of what Google knows about each of you and what you’ve searched before. If you are an avid environmentalist and he’s a rabid lefty, you’ll get more results about the environmental effects of the Deepwater Horizon disaster while he’ll get more about its nefarious corporate causes.
Trending Toward Personalization
Personalization has a long and illustrious history, best understood in contrast with its opposite, the mass market of the post-World War II boom. The structure of that marketplace featured mass production that reduced costs with economies of scale. The customer was a mass market that was only gradually differentiated, first by demographic characteristics – age, income and education – and later by psychographics such as likes, dislikes, values and personality traits.

This post was published at FinancialSense on 10/11/2017.

Puerto Rican Mayors Investigated For Hoarding Supplies For “Constituents Who Voted For Them”

Over the past couple of weeks, President Trump has taken a beating in the mainstream media for, among other things, suggesting that the mayor of San Juan had politicized federal disaster relief efforts in response to Hurricane Maria and that it was, in fact, local mayors and residents who were failing to help the recovery effort and not the federal government. Here are just a couple of the tweets as a refresher on the topic:
…Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They….
— Donald J. Trump (@realDonaldTrump) September 30, 2017

This post was published at Zero Hedge on Oct 10, 2017.

JPMorgan Updates By-laws In Case Of “Nuclear Disaster” Or World War III

In the most bizarre news of the day, Bloomberg’s Hugh Son noticed that in a late Thursday filing, the board of JPMorgan approved a series of revisions to the bank’s by-laws, including a particularly notable one: a new section defining what constitutes a quorum in an emergency resulting from “an attack on the United States” or a ‘nuclear or atomic disaster.’ That scenario is listed among emergencies that – understandably – might make it hard to hold a normal meeting for board members of America’s largest bank.
The clause can be activated not just in case of a nuclear disaster or World War III, but also in a variety of situations including “without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God.”
In short, JPMorgan’s Board has decided it is time to seriously consider a TEOTWAWKI scenario.
As Son notes, in such an event, any member of the board or the firm’s operating committee can call a meeting using ‘any available means of communication.’ And, just in case everyone else on the Board happens to die, one person will be sufficient to constitute a quorum. Vacancies can be filled by a majority vote of available directors. And if none are around, then designated officers can stand in. No officer, director or employee can be held liable in such a situation, except for ‘willful misconduct.’

This post was published at Zero Hedge on Oct 5, 2017.

Fukushima Operator Given Green Light To Restart Nuclear Reactors

Via TheAntiMedia.org,
The Japanese utility Tokyo Electric Power Company (TEPCO) has received approval to operate reactors for the first time since the 2011 Fukushima meltdown.
On Wednesday, the Nuclear Regulation Authority said TEPCO’s two reactors in northern Japan met new and stricter safety standards.
The authority unanimously approved the draft certificate for reactors number 6 and 7 at the Kashiwazaki-Kariwa plant, marking the first step in the process toward restarting them. Portions of the plant’s reactors were damaged in a 2007 earthquake.
Much of the Japanese public is opposed to granting TEPCO permission to once again operate reactors, and rightfully so.
TEPCO was blamed for safety lapses in the Fukushima nuclear plant disaster after a major earthquake in March of 2011, and the tsunami that followed damaged the power supply and cooling system of three reactors at the Fukushima Daiichi plant, resulting in an unprecedented nuclear accident.
The area around the plant will be closed for the foreseeable future, with extremely high levels of radiation still being recorded in 2017. Radiation from the damaged plant has found its way into the ocean and surrounding areas, including groundwater. The long-term effects of the disaster are still unknown.
TEPCO said in a statement that it will continue improving safety standards at its plants while focusing on Fukushima’s decommissioning in addition to compensation for the thousands of evacuees.

This post was published at Zero Hedge on Oct 5, 2017.

Catalan Independence: Why The Collective Hates It When People Walk Away

I have written many times in the past about the singular conflict at the core of most human crises and disasters, a conflict that sabotages human endeavor and retards critical thought. This conflict not only stems from social interaction, it also exists within the psyche of the average individual. It is an inherent contradiction of the human experience that at times can fuel great accomplishment, but usually leads to great tragedy. I am of course talking about the conflict between our inborn need for self determination versus our inborn desire to hand over responsibility to a community through group effort – sovereignty versus collectivism.
In my view, the source of the problem is that most people wrongly assume that “collectivism” is somehow the same as community. This is entirely false, and those who make this claim are poorly educated on what collectivism actually means. It is important to make a distinction here; the grouping of people is not necessarily or automatically collectivism unless that group seeks to subjugate the individuality of its participants. Collectivism cannot exist where individual freedom is valued. People can still group together voluntarily for mutual benefit and retain respect for the independence of members (i.e. community, rather than collectivism).
This distinction matters because there is a contingent of political and financial elites that would like us to believe that there is no middle ground between the pursuits of society and the liberties of individuals. That is to say, we are supposed to assume that all our productive energies and our safety and security belong to society. Either that, or we are extremely selfish and self serving “individualists” that are incapable of “seeing the bigger picture.” The mainstream discussion almost always revolves around these two extremes. We never hear the concept that society exists to serve individual freedom and innovation and that a community of individuals is the strongest possible environment for the security and future of humanity as a whole.

This post was published at Alt-Market on Wednesday, 04 October 2017.

Known Unknowns: The Dangers Of North Korea’s H-Bomb Threat

Authored by Larry Greenmeier via ScientificAmerican.com,
The U. S.’s 1954 Castle Bravo thermonuclear disaster offers a cautionary tale about what could go wrong…
Since North Korea’s foreign minister recently floated the idea that his country might test a hydrogen bomb in the Pacific Ocean, the North’s leader Kim Jong-un and U. S. Pres. Donald Trump have engaged in an escalating battle of name-calling and threats. As unsettling as the exchange has been, fortunately there has so far been no demonstration of thermonuclear weaponry. Many experts question whether Pyongyang actually has an H-bomb and the capability to accurately deliver it. But it is difficult to fully dismiss its sudden decision to ratchet up its rhetoric from nuclear to thermonuclear – and its suggestion that it would move its tests from underground bunkers to the open ocean.
North Korea’s six nuclear tests over the past decade have steadily grown more powerful. Whether it could build an H-bomb in the near future and would test it in the atmosphere – such tests were prohibited by the international 1963 Limited Test Ban Treaty – is an open question. The environmental and health impacts this kind of test are also unpredictable and would largely depend on how the bomb is built, where it is detonated and how the weather patterns at that time affect the radioactive fallout.

This post was published at Zero Hedge on Oct 3, 2017.

Catalonia… And Other Disasters

I’ve seen a lot of videos and photos of the Catalonia attempt to hold a referendum today (Tyler has a ‘nice’ series of them), and what struck me most of all, apart from the senseless violence police forces were seen to engage in, is the lack of violence on the side of protesters.
***
So when I see the Interior Ministry claim that 11 policemen were injured, that is hard to take serious. Not that the Catalans had no reason to resist or even fight back. That hundreds of protesters, including scores of grandma’s, are injured is obvious from watching the videos. Since rubber bullets were used in large numbers, fatal injuries are quite possible.
Policemen hitting peaceful older ladies till they bleed is shocking, and we are all shocked. Many of us will be surprised too, but we shouldn’t be. Spain is still the land of Franco, and his followers continue to exert great influence in politics, police and military. And it’s not just them: one video from Madrid showed people singing a fascist theme from the France era.

This post was published at Zero Hedge on Oct 2, 2017.

In Furious Tweetstorm, Trump Slams San Juan Mayor, Democrats, “Fake News” Over PR Disaster Response

In what was perhaps the harshest criticism of the Trump administration’s response to Hurricane Maria, San Juan Mayor Carmen Yulin Cruz broke down last night during a press conference where she begged President Trump to more to help Puerto Rico. The disaster response has devolved into a worsening humanitarian crisis she said, and “people are starting to die.” Cruz described the situation as “something akin to genocide” before accusing Trump of treating Puerto Ricans like “animals.”
‘So, Mr Trump, I am begging you to take charge and save lives. After all, that is one of the founding principles of the United States…If not, the world will see how we are treated not as second-class citizens but as animals that can be disposed of. Enough is enough.’


This post was published at Zero Hedge on Sep 30, 2017.

US Cities Demand Federal Help As They Brace For Influx Of 100,000s Of Puerto Ricans

As the disaster-relief effort enters its second week, air traffic is slowly resuming, which means hundreds of thousands of Puerto Ricans will likely flee the devastated island to stay with friends and relatives in the continental US as they wait for FEMA to rebuild roads, repair power grids and and revive the island’s communications infrastructure – a process that could take months, if not longer.
While the urgency of the situation leaves many of Puerto Rico’s 3.4 million population little choice, the Financial Times is reporting that the scramble to flee could worsen the population decline as some of those leaving may opt to permanently resettle. Meanwhile, cities with large Puerto Rican populations are asking for federal assistance as they prepare to absorb as many as 100,000 people fleeing the hurricane.
Mainland US cities with large Puerto Rican populations are warning that they will need federal help to cope with an anticipated influx of island residents fleeing the devastation visited on the US commonwealth by Hurricane Maria. ‘If it’s as large-scale as we anticipated, it’s got to be a federal and state-co-ordinated response,’ said Buddy Dyer, Orlando’s mayor. ‘It can’t be city by city.’

This post was published at Zero Hedge on Sep 29, 2017.

CNBC Viewership Drops To 22 Year Low

It appears that “subdued volatility” is hurting not only bank trading revenues. Two years after CNBC announced that it would no longer rely on Nielsen ratings to measure its daytime audience (just after we reported its viewership had tumbled the most on record), turning to rival Cogent Reports instead, the latest data reveals that the decline for the financial channel has continued, and in the past quarter CNBC delivered 152,000 total daily viewers, its lowest viewership since 1991 for the 28-year-old network.
At the time when CNBC switched away from Nielsen, it complained that the media tracking company failed to track “out of home” viewing in locations such as airports, gyms, restaurants and offices. Well, with all viewers taken into account, the picture, pardon the pun, deteriorated further, and in the past quarter, CNBC delivered its lowest rated quarter since 1991, and in total viewers, had its lowest rated quarter in 22 years, dating back to 1995
And while the reason for CNBC’s ongoing decline is unclear, an unexpected winner has emerged in Fox Business News, which continued its winning streak against CNBC by drawing more viewers for the fourth consecutive quarter, and in the last quarter average 187,000 total viewers across the business day (9:30am-5pm), up 26%, while the same category at CNBC saw a 14% decline to 152,000 total viewers. For the month of September, FBN averaged 195,000 total Business Day viewers, 23% higher than CNBC, which had 158,000 total viewers, which was its second lowest rated month ever.
It may come as a surprise to some, but “Lou Dobbs Tonight” continues to be the top-rated program on business television in both total viewers and in the 25 – 54-year-old demographic. Furthermore Dobbs, a longtime CNN anchor before jumping to Fox Business in 2011, has led the way in total viewers on business TV for 57 straight weeks.
With markets hitting new record ignoring natural disasters like Hurricanes Harvey and Irma, and rising tensions with North Korea, FBN closed out the month of September with its 11th monthly win over CNBC. Curiously, CNBC remains the only business channel showing yearly declines, while all other networks have double-digit gains across the board for the year, notably down 14% in Business Day viewers over their performance last year, with 177,000 total viewers.

This post was published at Zero Hedge on Sep 29, 2017.

Dark Humor From Socialist Hellhole Venezuela

Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet paper.
But maybe that doesn’t matter. After all, if people don’t have anything to eat, they probably don’t have much need to visit the bathroom.
The Washington Post reports that farmers are producing less and less food because of government intervention, even though the nation is filled with hungry people.
Venezuela, whose economy operates on its own special plane of dysfunction. At a time of empty supermarkets and spreading hunger, the country’s farms are producing less and less, not more, making the caloric deficit even worse. Drive around the countryside outside the capital, Caracas, and there’s everything a farmer needs: fertile land, water, sunshine and gasoline at 4 cents a gallon, cheapest in the world. Yet somehow families here are just as scrawny-looking as the city-dwelling Venezuelans waiting in bread lines or picking through garbage for scraps.
…’Last year I had 200,000 hens,’ said Saulo Escobar, who runs a poultry and hog farm here in the state of Aragua, an hour outside Caracas. ‘Now I have 70,000.’ Several of his cavernous henhouses sit empty because, Escobar said, he can’t afford to buy more chicks or feed. Government price controls have made his business unprofitable…the country is facing a dietary calamity. With medicines scarce and malnutrition cases soaring, more than 11,000 babies died last year, sending the infant mortality rate up 30 percent, according to Venezuela’s Health Ministry.
… Child hunger in parts of Venezuela is a ‘humanitarian crisis,’ according to a new report by the Catholic relief organization Caritas, which found 11.4 percent of children under age 5 suffering from moderate to severe malnutrition… In a recent survey of 6,500 Venezuelan families by the country’s leading universities, three-quarters of adults said they lost weight in 2016 – an average of 19 pounds. This collective emaciation is referred to dryly here as ‘the Maduro diet,’ but it’s a level of hunger almost unheard-of… Venezuela’s disaster is man-made, economists point out – the result of farm nationalizations, currency distortions and a government takeover of food distribution. … The price controls have become a powerful disincentive in rural Venezuela. ‘There are no profits, so we produce at a loss,’ said one dairy farmer.

This post was published at Zero Hedge on Sep 27, 2017.

Puerto Rico: The Quandary

The screaming coming from Puerto Rico is deafening…..
SAN JUAN, P. R. – Gov. Ricardo A. Rossell of Puerto Rico said on Monday that the island was on the brink of a ‘humanitarian crisis’ nearly a week after Hurricane Maria knocked out its power and most of its water, and left residents waiting in excruciating lines for fuel. He called on Congress to prevent a deepening disaster.
How does Congress “prevent a deepening disaster”?
It cannot. You cannot change the laws of physics nor magically make things that are broken become not-broken. There is no issue with funding in the current paradigm; the problems are logistical.
Those issues arose because of decades of intentional mismanagement, grift and fraud including by the Governor himself and the rest of the Puerto Rican government, which has taken on debt over and over while squandering it on social programs instead of taking care of critical infrastructure needs — like basicmaintenance to the electrical grid.

This post was published at Market-Ticker on 2017-09-27.

Puerto Rico: The Quandry

The screaming coming from Puerto Rico is deafening…..
SAN JUAN, P. R. – Gov. Ricardo A. Rossell of Puerto Rico said on Monday that the island was on the brink of a ‘humanitarian crisis’ nearly a week after Hurricane Maria knocked out its power and most of its water, and left residents waiting in excruciating lines for fuel. He called on Congress to prevent a deepening disaster.
How does Congress “prevent a deepening disaster”?
It cannot. You cannot change the laws of physics nor magically make things that are broken become not-broken. There is no issue with funding in the current paradigm; the problems are logistical.
Those issues arose because of decades of intentional mismanagement, grift and fraud including by the Governor himself and the rest of the Puerto Rican government, which has taken on debt over and over while squandering it on social programs instead of taking care of critical infrastructure needs — like basicmaintenance to the electrical grid.

This post was published at Market-Ticker on 2017-09-27.

Is The Rally In Oil Sustainable?

I have been getting a tremendous number of emails as of late asking if the latest rally in oil prices, and related energy stocks, is sustainable or is it another ‘trap’ as has been witnessed previously.
With geopolitical turmoil mounting, for North Korea to Iran, and as natural disasters have rocked the refinery capital of the world (Houston,) the question is not surprising.
As regular readers know, we exited oil and gas stocks back in mid-2014 and have remained out of the sector for technical and fundamental reasons for the duration. While there have been some opportunistic trading setups, the technical backdrop has remained decidedly bearish.
Today, I am going to review the fundamental supply/demand backdrop, as well as the technical price setup, as things have improved enough to warrant some attention. As a portfolio manager, I am interested in setups that potentially have long-term tailwinds to support the investment thesis. The goal today is to determine if such an environment exists or if the latest bounce is simply just that.

This post was published at Zero Hedge on Sep 26, 2017.