#a $10 price increase every decade or so to keep up with inflation

[sniperct]

If true we HAVE to make this the biggest flop in gaming history, as in 'destroys the company' levels of gaming flop as in a 'lesson must be taught' gaming flop, as in 'E.T. destroyed atari' gaming flop

#gta 6 #grand theft auto #video games #I totally get like #a $10 price increase every decade or so to keep up with inflation #I don't like it but I get it #but effectively doubling the current price is insane #we can't let that be normalized

[newstfionline]

Saturday, February 24, 2024

What the Pentagon has learned from two years of war in Ukraine (Washington Post) As the general paced the briefing room, he displayed a piece of lethal technology and detailed the death and chaos it has caused in Ukraine. Almost 90 Russian soldiers were slain in a single attack in 2022, explained Army Maj. Gen. Curtis Taylor, when Ukrainian forces dropped U.S.-provided rockets on buildings pulsing with electronic signals. Taylor held up his cellphone. “This device,” he said, “is going to get our soldiers killed.” The U.S. military is undertaking an expansive revision of its approach to war fighting, having largely abandoned the counterinsurgency playbook that was a hallmark of combat in Iraq and Afghanistan to focus instead on preparing for an even larger conflict with more sophisticated adversaries such as Russia or China. What’s transpired in Ukraine has made clear to the Pentagon that battlefield calculations have fundamentally changed in the years since it last deployed forces in large numbers. Precision weapons, fleets of drones and digital surveillance can reach far beyond the front lines, posing grave risk to personnel wherever they are.

Consumers are tired of price increases. Big brands are paying attention. (NBC News) Until recently, Brooke Benson considered herself a Panera Bread loyalist. For the past 12 years, the 40-year-old Orlando, Florida, resident said she’d make three to four trips there every week to get her favorite soups. But after the outpost of the restaurant chain near her home raised its price to $8.79 for the same bowl of soup that had cost $7.09 three years ago, she said she was done. “I can get better soup in larger portions for cheaper” elsewhere, she said. Several big brands are now acknowledging that inflation-weary Americans are walking away from products and services that keep getting costlier. Businesses’ wholesale costs are still elevated. That makes it unlikely consumers will see brands making deep price cuts across the board anytime soon, analysts say. Even so, many companies are now more inclined to “swallow some of the cost increases” they’re shouldering, rather than pass them on to consumers completely.

Half of College Grads Are Working Jobs That Don’t Use Their Degrees (WSJ) Roughly half of college graduates end up in jobs where their degrees aren’t needed, and that underemployment has lasting implications for workers’ earnings and career paths. That is the key finding of a new study tracking the career paths of more than 10 million people who entered the job market over the past decade. It suggests that the number of graduates in jobs that don’t make use of their skills or credentials—52%—is greater than previously thought, and underscores the lasting importance of that first job after graduation. The findings add fuel to the debate over the value of a college education as its cost has soared—and whether universities are producing the kind of knowledge workers that employers say they need. “You’re told your entire life, ‘Go to college, get a bachelor’s degree and your life is gonna be gravy after that,’” said Alexander Wolfe, 29 years old, a 2018 graduate from Northern Kentucky University who currently works security at a corporate facility in the Cincinnati area. “In reality, it hasn’t really helped me that much.”

Peru’s Economic Malaise (Foreign Policy) Peruvian President Dina Boluarte replaced her finance minister in a four-person cabinet shake-up last week, the latest sign of broad dissatisfaction with the country’s economic performance. The energy, environment, and defense ministers also got the boot. Last year, a long-standing tenet of Peruvian public life—that even if the country’s politics are bad, its economics are stable—broke under the weight of anti-government protests and lower-than-usual crop yields caused by an El Niño climate pattern. Rather than continuing its pandemic recovery, Peru’s economy fell into a recession. Boluarte, for her part, hit a rock-bottom 9 percent approval rating in December. Many young Peruvians are deciding to emigrate as a result of economic and political malaise, Andrea Moncada wrote last November for Americas Quarterly. Departure numbers soared in 2022 and 2023, and a September 2023 poll by a Lima think tank found that 60 percent of people between the ages of 18 and 24 have plans to leave the country in the next three years. (Fifty-one percent of 25-to-39-year-olds said the same.) Rising crime has also spurred emigration.

Sweden has around 62,000 persons linked to criminal gangs, police say (Reuters) About 62,000 persons are active in, or have connections to, criminal networks in Sweden, the police said on Friday, where the authorities have struggled for years to contain violence linked to organised crime. Deadly shootings have more than tripled over the past decade in this Nordic nation of 10 million people, and are currently at levels much higher than neighbouring countries. “We have identified 14,000 as active in criminal networks,” National Police Commissioner Petra Lundh told a media conference. “Moving over to persons with connections to these networks, here we estimate that there are 48,000 persons.”

Ukraine’s prospects (ABC News) As the weather gets warmer in Eastern Europe, Ukraine’s prospects in its war with Russia seem to be melting. Kyiv is facing two key shortages heading into spring—it is struggling to preserve ammunition stocks and facing a shortage of soldiers, prompting Kyiv to consider expanding the draft. According to two anonymous U.S. officials, Ukraine will start to feel the full effects of a supply shortage as soon as “late March” if Congress doesn’t pass an international defense aid bill soon. Kyiv needs resupplies of both small and large ammunition, especially the guided rockets fired by the Western-supplied HIMARS launchers. Things aren’t going very well on the manpower side of things, either. Many Ukrainian brigades are apparently fighting at just 75% of their full strength (with some operating with just 25% of their men) as injuries and fatigue force soldiers out of the war.

Thousands of Ukrainians live in agony and uncertainty as they search for their missing loved ones (AP) Iryna Reva stares at her phone, replaying the last video her 25-year-old son Vladyslav sent her from the front line before the volunteer soldier disappeared 19 months ago in a battle with Russian forces in Ukraine’s eastern Donetsk region. Reva is one of the thousands of Ukrainians desperately seeking news of loved ones who have disappeared in the two years since Russia’s full-scale invasion began. According to Ukraine’s National Police, more than 30,000 people have been reported missing in the last 24 months. “Up to this day, I am searching for my son,” Reva said. “He is alive to me. Regardless of the circumstances, there is no evidence that he has perished.” The missing include soldiers like Vladyslav lost on the battlefield, but also civilians and children who have vanished in a variety of circumstances.

Israel Steps Up Attacks in Gaza Amid Cease-Fire Talks (NYT) Intense bombardment of a Gaza Strip city filled with refugees flattened a large mosque and killed or wounded scores of people on Thursday as Israel repeated its intention to push into the area with ground forces if Hamas does not release hostages before the start of the Muslim holy month of Ramadan. Nearly 100 people were killed across the enclave from Israeli strikes over the past day, the Gazan health authorities said Thursday, bringing the total death toll after almost 20 weeks of war to nearly 30,000. Around half of the Gaza Strip’s population of 2.3 million people are crammed into the southern city of Rafah along the border with Egypt, where the strike on the mosque occurred Thursday. Wafa, the Palestinian news agency, reported that at least seven Palestinians had been killed overnight in Rafah and dozens more wounded.

Twilight for the ‘rules-based order’ (Washington Post) For many onlookers, the Israeli military campaign that followed the deadly Hamas terrorist attack on Oct. 7 has served as a reminder of long-standing double standards on the world stage. Israel, traumatized by what was the single deadliest day in Jewish history since the Holocaust, has destroyed much of Gaza, killed tens of thousands of civilians and sparked a staggering humanitarian crisis that may only get worse. U.N. agencies and aid workers warn that mounting disease and malnutrition may claim tens of thousands more Gazan lives in the coming months. Perceived Western complicity in Palestinian suffering is hamstringing U.S. diplomacy. This week, at ministerial meetings for the Group of 20 major economies in Rio de Janeiro, Secretary of State Antony Blinken weathered complaints from his counterparts on the latest instance of the United States vetoing Security Council calls for an immediate cease-fire over Gaza.       The “rules-based order” is a concept dear to Western leaders, not least Biden, and invoked constantly when they set out their positions on world affairs. They may see in Ukraine the defense of the “rules-based order” against Russian brutishness, but in the ongoing calamity in Gaza, it’s easy to also see its breakdown. “The humanitarian response in Gaza today is an illusion—a convenient illusion that perpetuates a narrative that this war is being waged in line with international laws,” Christopher Lockyear, secretary general of Doctors Without Borders, told the U.N. Security Council in a Thursday briefing. Lockyear added that “the laws and the principles we collectively depend on to enable humanitarian assistance are now eroded to the point of becoming meaningless” and that Israel was waging a “war of collective punishment, a war without rules, a war at all costs” at the expense of Gaza’s entire population.

Sudanese militiamen carry out wave of abductions, seeking slaves and ransom (Washington Post) Since civil war erupted in Sudan last spring, paramilitary fighters battling the country’s army have carried out a campaign of abductions, kidnapping civilians for ransom or pressing them into forced servitude, according to 10 victims who have since been released and other witnesses. Elements within the Rapid Support Forces, which have captured most of the capital, Khartoum, and swept across most of the western region of Darfur, have made these abductions a lucrative source of revenue, victims, other witnesses and activists said. Some of the victims said they have been enslaved and sold to work on the farms of RSF commanders, and others recounted being held while their families were forced to ransom them. Some victims said they were seized several times. Among those abducted, witnesses and activists said, have been girls and young women who were chained, bound and sold as sex slaves.

#headlines #news

[sexualitywithgina]

Lets Talk about Sex

By Gina Miller

Currently trends in the sex work Industry:

The 2020 Pandemic and its effects on the economy:

The COVID-19 Pandemic, shook the world in 2020 and produced catastrophic effects to the healthcare system, people’s lives and to the economies worldwide. The pandemic led to the demand for goods and services to drop due to the financial struggles experienced by many individuals, companies and bigger industries (Nationwide Economics, 2023). We can see a spike in the post-pandemic inflation status worldwide due to the ongoing and lingering effects that COVID has had on supply chains globally. 

Inflation Rates 

From 2020 to 2021 there was an 3.46% increase that made the inflation rate 4.7%. These rates continued to increase from 2021 to 2022 in the US that rose to 8.0% (World Bank, 2023). Consumers in the US are started to cut back on their expenses so that they can pay for basic needs and to get by. 92% of US consumers are spending less due to the financial stress (Madigan, 2023).

How inflation has affect the current trends within the Sex work industry and within Prostitution

The COVID-19 pandemic led to a reduction in work and income for many individuals and in specific those within the sex industry. Sex workers such as prostitutes initially saw less customers at the start of the pandemic due to the restrictions on travel and the health related concerns people had during this period (Taha, 2021). 

Sex workers were making less money and were struggling to support themselves and their families. They were struggling financially to pay for basic needs during this period and couldn’t receive government compensation either to help their financial burdens. Prostitution is considered to be a part of the informal economy and is still illegal in most places in the US (Taha, 2021)  As a result their annual incomes are not documented and contributing towards tax which makes them ineligible for compensation. 

After the initial wave of covid, the sex work industry became a more competitive market due to its demand increasing. Many people were highly stressed, terminated from their jobs or were lacking physical interaction. As a result, supply and demand increased after the initially strict restrictions that were around at the start off the pandemic. Vulnerable sex workers, such as prostitutes were forced to lower their prices to keep up the crippling economic burdens on people and to keep up with other sex workers (Taha, 2021). These workers were emotionally drained from having to adjust their prices and sexual comforts to earn enough to make living.  

Prostitutes took many risks during the pandemic, both legally and with regards to their health. They risked their safety to make ends meet and among prostitutes there was a sense of fear of their personal, work and financial situations they found themselves in. 

Prostitute work, future trends 

Sex work is the type of job that will never stop being in demand. Sex work has been around for decades and will continue to be a part of society in the future. People have needs and desires that sex workers, such as prostitutes fulfil. 

Future Trends in Legislation and why:

We can see that some parts of America are starting to recognize and acknowledge individuals in the sex work industry. Prostitution is illegal in every US State while a few counties and States have started to see a movement towards decriminalizing  prostitution. 

Currently, Nevada is the only US State where sex work is legal but regulated. In Nevada, 10/16 brothels are licensed and permitted to be open whereas other areas in Nevada prostitution is illegal. Prostitution is illegal in multiple county’s such as Clark, Washoe, Churchill as well as in Las Vegas and Reno (Nadig, B). Prostitution is still considered illegal for streetwalkers, escorts and massage parlors. These sex workers don’t meet the legal requirements as they don’t work within Nevada’s legal brothel system.  If someone is caught for being an illegal prostitute, they usually just get charged with a first Offense and a misdemeanour (Nadig, B). The max jail time sentence is 6 months but those convicted are often given probation. 

Another State that has started to question the legal aspects of sex work is Oregon. Oregon has made sex for a fee,  a Class A misdemeanour (Siefman Law LLC). With that, the criminalization of prostitution has been revoked. While in Maine, a recent bill was introduced  to partially decriminalize prostitution. Partial decriminalization still allows for those who participate in sex work to face legal repercussions (Rodriguez, B).

I believe that the US are going to follow the direction of other countries in the world where prostitution is legal such as Australia, New Zeeland, Turkey, Greece, France etc. Decriminalizing sex work and prostitution firstly establishes a sense of respect for one’s dignity and human rights (Open Society Foundation). Sex work is still work, and those within this industry should be given the same worker rights as anyone else. Secondly, decriminalizing sex work gives these individuals a greater sense and freedom to seek justice. Rape and sexual assault are high within the sex work industry but victims feel as though they are unable to go to the police as a result of fear of being arrested and punished (Open Society Foundation). Decriminalizing sex work also helps to promote better working conditions as they are able to work in a safer environment without the fear of not being able to seek medical care if needed. Sex workers should be able to speak up about their work environments and should know their legal rights with regards to their employers and clients. Decriminalizing sex work also had a positive affect on the health care industry. More safe sex can be promoted which could help reduce the risk of sex workers contracting HIV and other STI’s (Centre for Disease Control and Prevention). Sex workers such as prostitutes should be given better access to health care services to protect their health and safety.

I believe that sex work will become more globally recognised and accepted in the future as more people are starting to realize how sex workers rights are being stripped from them and that it is more unsafe for sex work to be illegal than for it to be legalized and decriminalized. There are certain expectations about identity and behaviour” (Hawkes: 132) that exist in our society that dehumanizes sex workers but I believe slowly society will start to be more accepting.  In comparison to the rest of the world, the US is still pretty struct about their laws with regards to sex work. There is little flexibility which I believe will change in the future. I believe that sex work will be legalized and decriminalized in the US as those in power will start to see the positive results that could occur from doing this. As we can see in the US, sex workers still make money whether that be illegally or in legal brothels. By legalizing and decriminalizing sex work, these workers will be able to be taxed which can give millions of dollars in tax money to the government annually. By legalizing sex work, the US government will be able to slow down and mitigate the STI Epidemic that exists within our society (Centre for Disease Control and Prevention). STI cases increased after 2020 and continue to do so (CDC, 2023) which is very costly to the US health care system. By legalizing and decriminalizing sex work, individuals like prostitutes will be able to have safer sex and education of sex safety which can help to  

#sexworksafety #equality for all #decriminalize sex work

[afeelgoodblog]

#032 - These were the Top 7 Best News that happened Last Week - March 21, 2022

👨‍🚀 - Hope you had a great spring weekend

1. Demand for fossil fuels is predicted to diminish sooner than expected as public focus and funding turns more to renewables

Big energy companies are accelerating their transition to renewable energy after two years of the highest and lowest petroleum prices of the past decade exposed weakness in the fossil fuel supply chain.

Demand for fossil fuels is predicted to diminish sooner than expected as public focus and funding turns more to renewables.

2. British Columbia becomes first province to tie minimum wage increases to inflation

British Columbia’s minimum wage is the highest among the provinces in Canada, and it is about to go even higher. The province announced on Monday it is linking minimum wage increases to inflation, meaning that the wage will jump to $15.65 per hour on June 1, up from $15.20 an hour.

“This is so wages keep pace in a predictable way. This provides certainty for businesses as well”

3. Dog presumed dead after Colorado avalanche is found waiting at a trailhead several days later

One brave dog, who was presumed dead after an avalanche, has been found alive several days later at a trailhead. An avalanche that was triggered by a skier in Chaffe County, Colorado washed over a skier and snowboarder on Thursday (March 10), with their dog also with them.

The quick-thinking skier deployed their airbag before being partially buried under the crumbling snow, however they lost sight of their four-legged friend amidst the chaos. Fortunately for the skier and snowboarder, they were uninjured and able to make it out under their own power.

4. ‘It’s a miracle’ over 80 cats make it out of wildfire safely

The old saying cats have nine lives rings true for the Salty Cats of St. Andrews Rescue Group in Panama City.

5. Most Medical Debts to be Removed From Consumers’ Credit Reports

The biggest credit-reporting firms will strip tens of billions of dollars in medical debt from consumers’ credit reports, erasing a black mark that makes it harder for millions of Americans to borrow.

6. Three Russian cosmonauts wear colours of Ukrainian flag as they arrive on space station

Three Russian cosmonauts have arrived at the International Space Station wearing the colours of the Ukrainian flag. The Soyuz capsule carrying Commander Oleg Artemyev as well as Denis Matveev and Sergey Korsakov docked at the orbiting platform three hours after take off.

In a twist, the new arrivals were all wearing the distinctive yellow and blue colours associated with the country Vladimir Putin's forces invaded last month.

7. Dolphin cub rescued in the Bay of Kotor, Montenegro, after it’s father asked for help

The technical team of the Institute of Marine Biology in Kotor Bay in Montenegro rescued a dolphin calf out of the net on Monday, after the dolphin's father came to seek their help.

“I noticed that the dolphins had come to the shore. I see two dolphins hovering, one is leaving and coming back constantly. In fact, one is standing still and the other is diving and emerging next to it. I realized that one of the dolphins got entangled in a net.” said a janitor at the Institute of Marine Biology.

It is interesting that the dolphins pulled the rope of the net in the direction of the Institute, in which their baby got entangled, and which they lifted from the bottom, according to Barić, from a depth of about 17 meters. They sought help in the right place, the team of the Institute reacted promptly

. . .

That's it for this week. Until next week, You can follow me on twitter . Also, I have a newsletter :)

Subscribe here to receive a collection of wholesome news every week in your inbox :D

#best news of last week

[theotherjourney7]

“Woke up this morning (19 January 2022) to the radio talking about the cost of living rising a further 5%. It infuriates me the index that they use for this calculation, which grossly underestimates the real cost of inflation as it happens to people with the least. Allow me to briefly explain.

This time last year, the cheapest pasta in my local supermarket (one of the Big Four), was 29p for 500g. Today it’s 70p. That’s a 141% price increase as it hits the poorest and most vulnerable households.

This time last year, the cheapest rice at the same supermarket was 45p for a kilogram bag. Today it’s £1 for 500g. That’s a 344% price increase as it hits the poorest and most vulnerable households.

Baked beans: were 22p, now 32p. A 45% price increase year on year.

Canned spaghetti. Was 13p, now 35p. A price increase of 169%.

Bread. Was 45p, now 58p. A price increase of 29%.

Curry sauce. Was 30p, now 89p. A price increase of 196%.

A bag of small apples. Was 59p, now 89p (and the apples are even smaller!) A price increase of 51%.

Mushrooms were 59p for 400g. They’re now 57p for 250g. A price increase of 56%. (This practise, of making products smaller while keeping them the same price, is known in the retail industry as ‘shrinkflation’ and its insidious as hell because it’s harder to immediately spot.)

Peanut butter. Was 62p, now £1.50. A price increase of 142%.

These are just the ones that I know off the top of my head - there will be many many more examples! When I started writing my recipe blog ten years ago, I could feed myself and my son on £10 a week. (I’ll find the original shopping list later and price it up for today’s prices.)

The system by which we measure the impact of inflation is fundamentally flawed - it completely ignores the reality and the REAL price rises for people on minimum wages, zero hour contracts, food bank clients, and millions more.

But I guess when the vast majority of our media were privately educated and came from the same handful of elite universities, nobody thinks to actually check in with anyone out here in the world to see how we’re doing. (Fucking terribly, thanks for asking.)

Every time there’s a news bulletin on the rising cost of living, I hope that today might be the day that that some real journalism happens, and someone stops to consider those of us outside of the bubble. Maybe today might finally be that day.

(But seeing I’ve been banging on about this for a decade now, it’s probably not going to be. Thanks for reading anyway, I appreciate it.)

And just to add:

- an upmarket ready meal range was £7.50 ten years ago, and is still £7.50 today.

- a high-end stores ‘Dine In For Two For £10’ has been £10 for as long as I can remember.

- my local supermarket had 400+ items in their value range, it’s now 91 (and counting down)

The margins are always, always calculated to squeeze the belts of those who can least afford it, and massage the profits of those who have money to spare. And nothing demonstrates that inequality quite so starkly as tracking the prices of ‘luxury’ food vs ‘actual essentials’. 😤

To return to the luxury ready meal example, if the price of that had risen at the same rate as the cheapest rice in the supermarket, that £7.50 lasagne would now cost £25.80.

Dine In For £10 would be £34.40.

We’re either all in this together, or we aren’t.

(Spoiler: we aren’t)

Now, picture if you will, the demographic of the voter who has kept the current Party in power for the last 11 years. Imagine the Chancellor having to explain to them that their precious microwave dinner now cost almost four times what it did yesterday.

Yeah, didn’t think so.

I mean of all the things, the Prime Minister claiming that he's cutting the cost of living while the price of basic food products shoot up by THREE

HUNDRED AND FORTY FOUR PERCENT is the one I'm properly angry enough to riot over.”-Jake Monroe

#life #real life #uk #human rights #uk news #prime minister #boris johnson #boris jonhosn #member of parliament #house of commons #house of lords #uk economy #brexit #brexitreality #world economy #covid economy #conservative propaganda #conservative government #conservative politics #very important #cost of living

[cathkaesque]

Why is supernova – the explosion and death of a star – an apt metaphor for what could now be about to unfold? Why could the coronavirus, an organism 1000th the diameter of a human hair, be the catalyst for such a cataclysm? And what can workers, youth and the dispossessed of the world do to defend ourselves and to ‘bring to birth a new world from the ashes of the old’, in the words of the US labour hymn, Solidarity Forever?

The first stage of a supernova is implosion, analogous to the long-term decline in interest rates that began well before the onset of systemic crisis in 2007, which has accelerated since then, and which fell off a cliff just as coronavirus began its rampage in early January 2020. Falling interest rates are fundamentally the result of two factors: falling rates of profit, and the hypertrophy of capital, i.e. its tendency grow faster than the capacity of workers and farmers to supply it with the fresh blood it needs to live. As Marx said, in Capital vol. 1, “capital’s sole driving force [is] the drive to valorise itself, to create surplus-value… capital is dead labour which, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.”

These two factors combine to form a doom loop of awesome destructive power. Let us examine its most important linkages.

Many things both mask and counteract the falling rate of profit, turning this into a tendency that only reveals itself in times of crisis, of which the most important has been the shift of production from Europe, North America and Japan to take advantage of the much higher rates of exploitation available in low-wage countries. The falling rate of profit manifests itself in a growing reluctance of capitalists to invest in production; more and more of what they do invest in is branding, intellectual property and other parasitic and non-productive activities. This long-running capitalist investment strike is amplified by the global shift of production – boosting profits by slashing wages rather than by building new factories and deploying new technologies. This enables huge mark-ups, turbo-charging the accumulation of vast wealth for which capitalists have no productive use – hence the hypertrophy of capital.

This, in turn, results in declining interest rates – as capitalists compete with each other to purchase financial assets, they bid up their price, and the revenue streams they generate fall in proportion – hence falling interest rates. Falling interest rates and rising asset values have created what is, for capitalist investors, the ultimate virtuous circle – they can borrow vast sums to invest in financial assets of all kinds, further inflating their ‘value’.

Falling interest rates therefore have two fundamental consequences: the inflation of asset bubbles and the piling up of debt mountains. In fact, these are two sides of the same coin: for every debtor there is a creditor; every debt is someone else’s asset. Asset bubbles could deflate (if productivity increases), or else they will burst; economic growth could, over time, erode debt mountains, or else they will come crashing down.

Since 2008, productivity has stagnated across the world and GDP growth has been lower than in any decade since World War II, resulting in what Nouriel Roubini has called “the mother of all asset bubbles,” while aggregate debt (the total debt of governments, corporations and households), already mountainous before the 2008 financial crash, has since then more than doubled in size. The growth of debt has been particularly pronounced in the countries of the global South. Total debt for the 30 largest of them reached $72.5tn in 2019 – a 168% rise over the past 10 years, according to Bank of International Settlements data. China accounts for $43tn of this, up from $10tn a decade ago. In sum, well before coronavirus, global capitalism already had ‘underlying health issues’, it was already in intensive care.

Global capitalism – which is more imperialist than ever, since it is both more parasitic and more reliant than ever before on the proceeds of super-exploitation in low-wage countries – is therefore inexorably heading to supernova, towards the bursting of assets bubbles and the crashing of debt mountains. Everything that imperialist central banks have done since 2008 has been designed to postpone the inevitable day of reckoning. But now that day has come.

10-year US Treasury bonds are considered the safest of havens and the ultimate benchmark against which all other debt is priced. In times of great uncertainty, investors invariably stampede out of stock markets and into the safest bond markets, so as share prices fall, bond prices – otherwise known as ‘fixed income securities’ – rise. As they do, the fixed income they yield translates into a falling rate of interest. But not on March 9, when, in the midst of plummeting stock markets, 10-year US Treasury bond interest rates spiked upwards. According to one bond trader, “statistically speaking, [this] should only happen every few millennia.” Even in the darkest moment of the global financial crisis, when Lehman Brothers (a big merchant bank) went bankrupt in September 2008, this did not happen.

The immediate cause of this minor heart attack was the scale of asset-destruction in other share and bond markets, causing investors to scramble to turn their speculative investments into cash. To satisfy their demands, fund managers were obliged to sell their most easily-exchangeable assets, thereby negating their safe-haven status, and this jolted governments and central banks to take extreme action and fire their ‘big bazookas’, namely the multi-trillion dollar rescue packages – including a pledge to print money without limit to ensure the supply of cash to the markets. But this event also provided a premonition for what is down the road. In the end, dollar bills, like bond and share certificates, are just pieces of paper. As trillions more of them flood into the system, events in March 2020 bring closer the day when investors will lose faith in cash itself – and in the power of the economy and state standing behind it. Then the supernova moment will have arrived.

During the middle two weeks of March, imperialist governments announced plans to spend $4.5 trillion bailing out their own bankrupt economies. An emergency online summit of the G20 (the G7 imperialist nations plus a dozen or so ‘emerging’ nations, including Russia, India, China, Brazil, and Indonesia) on 26 March, declared “we are injecting over $5 trillion into the global economy.” These are weasel words; by ‘global’ they actually mean ‘domestic’! The response of the ‘left’ in the imperialist countries is to clap its hands and say, we were right all along! There is a magic money tree after all! – apparently not realising that this is exactly what happened post-2008: the socialisation of private debt. Or that, unlike post-2008, this time it will not work.

Some highlights of John Smith’s excellent article on the economic crisis induced by the coronavirus. The pandemic has popped the bubble that has been keeping our imperialist system coherent since the 2008 crisis. In order to keep that bubble going, Central Banks have been undertaking unprecedented financial measures which they are attempting to repeat again. The result will be a reckoning, as the bad debts of the system pass from the private banks and become concentrated in the Central Banks that are core to our monetary systems. We need to use this crisis to begin building a rational system based on the using resources for human need rather than the exploitative anarchy of capitalism. 

#socialism #capitalism #coronavirus #revolution

[valuentumbrian]

Bull Market On!

Image Source: Mike Cohen.

By Brian Nelson, CFA

It’s very hard not to be bullish on the stock market these days. The prudence exercised by many of the largest companies in the S&P 500 remains unprecedented, in our view. Some of the best companies out there have tremendous balance sheets, as evidenced by huge net cash positions. Perhaps two of our favorite companies, Microsoft (MSFT) and Facebook (FB) are the best examples of this, but Apple (AAPL) still retains quite the large net cash hoard as it works to net-cash breakeven.

As we look at the next couple years, most investors will continue to focus on the Fed. We’ve seen this song and dance following the Great Financial Crisis (GFC) that wreaked havoc on the markets between 2007-2009. Many believed that the markets would have a Fed-induced crisis that would obliterate stocks after the GFC as they tapered and withdrew stimulus, but the Fed executed flawlessly. The bears seized on a municipal bond crisis, and a European debt crisis, but we still had one of the strongest bull markets in history following the Great Financial Crisis -- a bull market that ran through the onset of the COVID-19 outbreak.

Here we are just 16-18 months after the first case of COVID-19 was announced in the United States, and we are not just at new highs in the stock market--but we’ve already made many of them! The “old school” analysis with respect to drawdowns and withdrawals no longer holds in this hyper-intensive, information-driven economy, in our view, where 3-4 years’ worth of price behavior is experienced in 3-4 months. Those pursuing annual withdrawals in retirement in January, for example, didn’t experience any impact from the market meltdown, as January 2021 saw a market much higher than January 2020, despite the most abrupt fall in market history. Bear markets in the future may be even shorter than the 11.3 month historical average, too. The COVID-19 bear market was just 1.1 months.

We crunched the numbers, and a 60/40 stock/bond indexed and rebalanced portfolio has now trailed active stock selection, as measured by the S&P 500 Sector SPDR (SPY) as the midpoint, by 130 percentage points the past 10 years. The 60/40 stock/bond indexed and rebalanced portfolio failed at what it was supposed to do, too. During the worst of the COVID-19 stock market swoon, the 60/40 stock/bond indexed and rebalanced portfolio saved just 8 percentage points versus a full allocation to the largest U.S. equities. From our perspective, it has become hard to justify the 60/40 stock/bond indexed and rebalanced portfolio given its high correlation to equities, the vast underperformance during lengthy bull markets, and the short duration of bear markets when it comes to periodic withdrawals.

The arguments against active stock selection have vanished, in our view. The vast underperformance of the 60/40 stock/bond portfolio over a 10-year and even 30-year stretch relative to a diversified S&P 500 portfolio may be the biggest reason. Not only has modern portfolio theory (MPT) failed in this respect, but quant finance has also dropped the ball in other areas. The huge underperformance of the small value factor during the past decade has shown that it is a fool’s errand to believe that past performance is prologue. The entire basis of quant research can be readily dismissed by the most common disclaimer in this industry warning about past analysis not being prologue, and yet, many continue to fall for the nonsense. Stay away from quant conclusions until they start factoring forward-looking expectations into their processes.

The best of times with respect to cryptocurrency may very well be behind us as well. The alternative asset market isn’t as strong as it was in the beginning of this year, and Bitcoin (GBTC) and other cryptocurrencies have followed suit. A few cryptocurrencies have even zeroed out, and this is the true risk faced by anybody seeking the merits of modern portfolio theory with a small crypto allocation. An asset must have intrinsic value and go up in the long run for MPT to hold merit, meaning that you need a better model than just mashing historically uncorrelated assets together. The model we use at Valuentum is the discounted cash flow model, or enterprise valuation. We then seek to diversify among the most undervalued assets that have strong market backing via technical and momentum indicators.

Inflation is the talk of Wall Street the past few months, but we’ve seen a pullback in some of the prices that have surged. The housing market remains resilient, but lumber prices have come in quite a bit. The auto industry is working past the semiconductor shortage, and the huge ramp in used car sales may now be behind us. Crude oil and gasoline prices have increased materially, but the abundance of shale oil should keep a tight lid on long-term crude oil price expansion. Unlike OPEC, the U.S. government can’t limit production in a free economy, and the invisible hand will act as the counterbalance to high energy prices in time. We like stocks in an inflationary environment, and we love big cap tech and large cap growth in any environment.

Many are expecting net-cash rich corporates to start funneling some of their huge cash positions into the equity markets, and we don’t think they’ll be getting too complicated with their strategies. Share buybacks will be one avenue that they’ll use to deploy the capital, but many will also seek to allocate capital to the broader S&P 500, in our view. Money market funds have surged as a result of government stimulus since the COVID-19 meltdown (there is over $4.5 trillion just sitting in money market funds according to Bloomberg, more than at the peak of the GFC), and there may be hundreds of billions of dollars ready to enter the stock market in the next 6 months alone. Corporations are cash rich, and bond yields are paltry.

Buying demand for equities could set off a huge advance in stock prices, in our view, and the Fed may be fine with this as they were during the 10-year period following the GFC. We hardly experienced any meaningful inflation after the GFC either, but stock prices soared. In many ways, we’re expecting a replay of the 2010s (last decade) in the 2020s (this decade), and the next 10 years may very well be a replay of the Roarin’ 20s, a theme we have repeated before. We expect advisors and asset allocators to buy equities at almost every market dip, and we believe the Fed will support the markets in the event of even modest price weakness. These are unprecedented times, and that means the Fed will remain vigilant in support of equity prices.

Our favorite ideas remain in the newsletter portfolios, and as we noted before, Alphabet and Facebook have been lights-out with their relative price performance so far in 2021. The Valuentum Buying Index (VBI) has also showed its efficacy of late, with Facebook and Korn Ferry (KFY), two of the top ratings on the VBI, soaring. Facebook was a huge gift a couple years ago (in 2018) when it dipped below $150 per share. The market couldn’t have been more wrong on shares, and the stock has now more than doubled since then, trading north of $340 per share of late. Facebook has registered more 10s on the VBI than any other company in our coverage.

Though the meme-stock frenzy has been annoying and reveals the fragility of market structure as it relates to price-agnostic trading, the bias to the markets remains upward, in our view. Meme stock traders are long, advisors and asset allocators are pumping their clients’ money into the stock market on every dip, the short sellers have their backs against the wall, the Fed and Treasury aren’t going to go away, and more stimulus in the form of an infrastructure bill may serve to pad the bottom line of many in the energy and industrial sectors--the weakest sectors in recent years. The markets could go up for a long time yet, and we remain very bullish.

In the Dividend Growth Newsletter portfolio, we’re adding a 5-7% weight in ExxonMobil (XOM) and a 4-6% weighting in Chevron (CVX). In the Best Ideas Newsletter portfolio, we’re adding a 4-6% weighting in ExxonMobil and a 3-5% weighting in Chevron. We like their respective dividend yields, and the strengthening energy markets have only made their future free cash flow prospects better. See here. These changes will be reflected in the next editions of the newsletters, the July edition of the Dividend Growth Newsletter to be released Thursday, July 1, and the July edition of the Best Ideas Newsletter to be released July 15. Due to the July 4th holiday weekend, the July edition of the Exclusive publication will be released Saturday, July 10.

The Best Ideas Newsletter portfolio >>

The Dividend Growth Newsletter portfolio >>

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It's Here! The Second Edition of Value Trap!

Order today!

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Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.

Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, and IWM. Brian Nelson's household owns shares in HON, DIS, HAS. Some of the other securities written about in this article may be included in Valuentum's simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.

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The High Yield Dividend Newsletter, Best Ideas Newsletter, Dividend Growth Newsletter, Valuentum Exclusive publication, and any reports and content found on this website are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of its newsletters, reports, commentary, or publications and accepts no liability for how readers may choose to utilize the content. Valuentum is not a money manager, is not a registered investment advisor, and does not offer brokerage or investment banking services. The sources of the data used on this website and reports are believed by Valuentum to be reliable, but the data’s accuracy, completeness or interpretation cannot be guaranteed. Valuentum, its employees, and independent contractors may have long, short or derivative positions in the securities mentioned on this website. The High Yield Dividend Newsletter portfolio, Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Performance, including that in the Valuentum Exclusive publication and additional options commentary feature, is hypothetical and does not represent actual trading. Actual results may differ from simulated information, results, or performance being presented. For more information about Valuentum and the products and services it offers, please contact us at [email protected].

[some-ideas-i-had]

How do we secure our future through investing?

Everyone needs to plan for their future. Savings and investments are an important piece of our future planning. We can invest our savings into many different asset classes, for example, we can hold cash, real estate, and stocks to name a few. However, how do we choose what to invest our money into, so that we can guarantee it will be there when we need it, and it will still be valuable enough to use.

We must understand how to evaluate the value of our investments, and determine their volatility to plan for our future, however, it can be extremely difficult to estimate the value of any asset. Real Estate is a common investment, and often one of the largest investments we make our entire lives. The real estate market has been a roller coaster over the last few decades. It's hard to decide if homes are so overvalued it is a mistake to buy, or if they will continue their current upward trend. Stocks are experiencing a similar upward trend. It seems that the best thing to do is just wait for the inevitable crash and invest then. Perhaps holding cash seems like the safest option, until you notice that inflation cuts away at the value of your cash stores, and inflation is predicted to be higher than the normal 2% over the next few years. It all seems hopeless if we think everything is overpriced or doomed to lose value. For cash this is by design, but perhaps not all is lost for real estate and stocks.

There is an old phrase, "don't put all your eggs in one basket", and that is especially true when saving for the future. Even storing all of your savings in cash is essentially keeping all of your eggs in a fairly weak basket. However, if we split our investments over multiple baskets, or asset classes, we can rest assured that we have done the most we can for the moment. For example, if inflation chews away at our cash, we should see real estate and stock prices increase. If real estate prices crash or the stock market crash, then we will likely see a deflationary period where our cash has more purchasing power. Holding real estate can be inherently valuable since you can live in it, hopefully holding off when stocks and cash are both on the decline. It seems the best way to prepare for the future is to invest in all of these assets. Further, I think it makes sense to consider alternative investments, especially if you get some excitement out of the asset class. Things like cryptocurrencies, collectibles, precious metals, antiques, or anything you can think of that you may be able to sell later. Some of these are new and untested, but if it brings value to you today, it could make sense to put a small portion of your portfolio towards them for the purpose of diversification.

We can also diversify over time instead of just asset classes. For example, if we accept that stocks can be very volatile, then using a technique called dollar cost averaging can stabilize the price we pay for the asset. Dollar cost averaging is when you buy a set dollar amount of an asset every fixed time period. For example, buying $100 of a stock market index fund every month. This avoids the pitfall of buying in all at one at the top of the stock market. It also aligns with how we acquire money to invest in the market, as we generally receive a paycheck on a regular time interval and not all up front. Another technique to help balance the risk in our portfolio over time is asset allocation. We choose a fixed allocation, and every so often if one asset class increases in value while the others remain the same, we sell some of that asset and buy the others. This strategy explicitly allows us to "buy low, and sell high" since when an asset drops in price, we'll need to buy more, and when it increases in price, we'll sell to return to our set allocation. For example, if your investment allocation is 10% cash, 20% bonds, and 70% stocks, a reasonably aggressive portfolio, if the stock market is doing well, your stocks may increase to 80% of your overall allocation. This is your chance to claim profits by selling some stocks, and adding to your cash and bonds. Similarly, when the stock market performs poorly, we can sell bonds and use cash to acquire more stocks, and take advantage of the dip in the market. You can also apply the techniques to any other asset classes you choose to invest in.

Planning for our future is full of risk and uncertainty, however, we can reduce risk, and prepare for uncertainty by diversifying our investments over many different asset classes, and using techniques such as dollar cost averaging and asset allocation. We can't guarantee any specific return, but these practices will secure our future to the best of our ability.

#personal-finance #investment #finance #money

[mostlysignssomeportents]

Pluralistic: 21 Mar 2020 (Cool Tools, scientists predict cooperation, Don't Look for the Helpers, after the crisis, a people's bailout, judge vs unicorns, Marc Davis's Haunted Mansion)

Today's links

My appearance on Cool Tools: My favorite gadgets.

UK emergency science panel predicts mass altruism: Reality has a well-known collectivist bias.

Don't Look for the Helpers: The text version of my essay for the new Nightvale anxiety podcast.

After the crisis, a program for transformative change: Pandemic reveals the systems' failures, and what to do about them.

Pandemic stimulus, realpolitik edition: Stephanie Kelton and AOC on a people's bailout.

Beautiful judicial snark: "No, your unicorn trademark is not an emergency."

Marc Davis's Haunted Mansion: What if Marc Davis had sole control over the ride's design?

This day in history: 2005, 2010, 2015, 2019

Colophon: Recent publications, current writing projects, upcoming appearances, current reading

My appearance on Cool Tools (permalink)

This week, I appear on the Cool Tools podcast to discuss my favorite, most indispensible gadgets and services and why I love them.

https://kk.org/cooltools/cory-doctorow-science-fiction-author/

My top picks were my Crkt Snap-Lock knife – a one-handed-opening, lightweight, super versatile pocket knife that I carry everywhere.

https://www.crkt.com/snap-lock.html

I also chose my Chinese OEM underwater MP3 player. I swim every day for my chronic pain maintenance and this is how I make it bearable, getting through 1-2 audiobooks/month.

https://www.amazon.com/exec/obidos/ASIN/B00GWV6GUO/cooltoolsshow-20

My third choice was Libro.fm, the DRM-free, indie-bookseller friendly way to listen to audiobooks. Basically the same catalog as Audible, at the same price, the only difference being that buying from them supports neighborhood booksellers, not Amazon.

It was a really fun! @Frauenfelder and @kevin2kelly are super smart about gadgets.

Here's the MP3:

http://tracking.feedpress.it/link/7810/13374488/779800513-cool-tools-218-cory-doctorow.mp3

UK emergency science panel predicts mass altruism (permalink)

SAGE is the UK Government's Scientific Advisory Group for Emergencies. This is their hour to shine.

They have just published a spectacular, plain-language set of technical reports on the pandemic.

https://www.gov.uk/government/groups/scientific-advisory-group-for-emergencies-sage-coronavirus-covid-19-response

This is the most interesting: "on risk of public disorder."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/873736/08-spi-b-return-on-risk-of-public-disorder.pdf

The expert panel affirms the conclusions of Rebecca Solnit in her indispensable book "A Paradise Built in Hell," a closely researched history of disasters that finds that they are the moment in which people spring to the aid of their neighbors.

https://www.newyorker.com/magazine/2009/10/05/a-paradise-built-in-hell

SAGE's expert panel on disasters: "large scale rioting is unlikely. It is rarely seen in these circumstances. Acts of altruism will predominate, and HMG could readily promote and guide these."

"Where public disorder occurs, it is usually triggered by perceptions about the Government's response, rather than the nature of the epidemic. A perception that Government response strategies are not effective in looking after the public may lead to an increase in tensions."

"Promote a sense of collectivism: All messaging should reinforce a sense of community, that 'we are all in this together.'"

For decades, Britain has been poisoned by Margaret Thatcher's sociopathic maxim, "There is no such thing as society."

It turns out that reality (and pandemics) has a well-known collectivist bias.

Don't Look for the Helpers (permalink)

I wrote a short essay about how I'm coping with The Current Situation for Our Plague Year, a new podcast from Joseph Fink of Welcome to Nightvale, called "Don't Look for the Helpers".

https://pluralistic.net/2020/03/17/pluralistic-17-mar-2020/#ourplagueyear

Today, PM Press published the essay in a new digital collection, "All We Have Is Each Other."

https://www.pmpress.org/blog/category/blog/all-we-have-is-each-other/

"Assuming things will break down does not make you a dystopian. Engineers who design systems on the assumption that nothing could go wrong aren't utopians, they're idiots who kill people. 'Nothing could go wrong' is why there weren't enough lifeboats on the fucking Titanic."

"Every disaster ends with mutual aid. By definition. That's the only way a disaster can end: with people pulling together. If there's one lesson to take from Mad Max, it's that pulling apart only deepens the crisis, and the it will not end until we pull together."

"I've been telling stories of humanity rising to crisis for decades. Now I'm telling them to myself. I hope you'll keep that story in mind today, as plutocrats are seeking to weaponize narratives to turn our crisis into a self-serving catastrophe."

https://www.pmpress.org/blog/2020/03/19/dont-look-for-the-helpers-by-cory-doctorow/

After the crisis, a program for transformative change (permalink)

The Current Situation has revealed deep cracks in our system: replacing public transit with gig economy drivers who don't get health care or sick leave; the gig economy itself; the lethal inadequacy of private-sector broadband and private-sector health-care, and beyond.

The fact that we can simply abolish data-caps (without networks falling over) and the liquid ban (without planes blowing up) reveals that these supposed existential threats were, in fact, arbitrary, authoritarian, rent-seeking bullshit.

https://pluralistic.net/2020/03/14/masque-of-the-red-death/#security-theater

The people who've spent 40 years convincing us that we're just not free-marketing hard enough continue to insist that all of these problems are merely the result of not having fully dismantled the state (so much for "state capacity libertarianism"):

https://www.bloomberg.com/opinion/articles/2020-03-20/coronavirus-killed-the-progressive-left

They're licking their chops for a 2008-style reboot: eviscerating public services, immiserating workers, fattening plutes and dissolving regulatory safeguards.

It's a playbook developed by Milton Friedman: the scheme to have "ideas lying around" when crisis strikes.

But as Naomi Klein reminds us, the Shock Doctrine cuts both ways. The manifest failures of plutocracy in the Great Depression got us the New Deal and the "30 Glorious Years" of shared prosperity and growth.

https://pluralistic.net/2020/03/17/pluralistic-17-mar-2020/#disaster-socialism

We haven't been idle since 2008. We have "ideas lying around" too. Ideas for a just and resilient society that reorients human life around sustainable and just practices. Motherboard's editorial staff gives us a manifesto for that society, so that this crisis doesn't go to waste:

https://www.vice.com/en_us/article/wxekvw/the-world-after-coronavirus-healthcare-labor-climate-internet

Free and universal healthcare ("healthcare is a basic human right" -B. Sanders)

Abolish ICE and prisons ("ICE is now a public health hazard")

Protect and empower labor ("Without these protections, everyone's safety and health is put at risk")

A healthier climate ("If the 2008-09 financial crash is any indicator, carbon could shoot right back up as soon as the crisis is over")

Fast, accessible broadband ("Community owned/operated broadband networks, long demonized and even prohibited by law are looking better than ever")

Smash the surveillance state ("This pandemic mustn't be used to infringe on the civil liberties and privacy of millions")

Billionaire wealth ("They're sending people to work while jetting off to luxurious doomsday bunkers, getting Covid-19 tests while normal people can't, and also singing 'Imagine' from bucolic getaways.")

Public transit that works ("Congress is poised to prioritize bailing out airlines and the cruise industry before it takes a look at public transit")

The right to repair ("Right-to-repair has become a matter of life and death.")

Science for the people ("We were caught flat-footed by a fixation on 'innovation' and lack of public options")

The future will not be like the past. Whether it is worse or better is our choice to make. It is in our (well-scrubbed) hands.

(Image: Jolove55, CC BY)

Pandemic stimulus, realpolitik edition (permalink)

I've been thinking a lot about what a covid stimulus package could and should look like, and what the possible failure modes and transformative changes could be. Obviously, there's real risk of inflation if handled wrong, because production has halted, so more money could end up chasing fewer goods. That gets ugly quick.

https://pluralistic.net/2020/03/18/diy-tp/#covid-stimulus

Then there's the risk that we just infuse trillions of no-strings-attached dollars into the finance sector, who use it to make our society even more brittle and unstable by hollowing out reeling companies and grinding down brutalized workers.

https://pluralistic.net/2020/03/19/gb-whatsapp/#peoples-bailout

Writing about this stuff in public makes a lot of Twitter people with "investor" in their bios very, very angry. They want giant bailouts for the companies they own stocks in, not transformative change. They use the neolib tactic of throwing out a lot of jargon to instil a sense of your technical illiteracy. Complexity is a con-artist's go-to tactic, after all – it's why proposition bets are so complicated, so you can't do the odds in your head (see also: craps tables).

But not every economist believes that sociopathy is pareto optimal. Leading lights like Stephanie Kelton, the mother of Modern Monetary Theory, who can go toe-to-toe with oligarch-apologists from the Chicago School, explaining how public debt really works.

Kelton and AOC appeared on this week's Deconstructed podcast with Mehdi Hasan to discuss the true scale of the bailout that will be needed (far more than $1T) to get the economy working again. That number can come down (by lowering working peoples' outgoings through rent/mortgage/student loan holidays, etc). But the lesson of 2008 is that to be credible, stimulus must be transparent and aimed at the public good, not the donor-class.

https://theintercept.com/2020/03/20/deconstructed-podcast-alexandria-ocasio-cortez-coronavirus-economy/

https://dcs.megaphone.fm/FLM7803427023.mp3

Otherwise, Congress risks having its hands tied: it might inject an inadequate and corrupt stimulus that benefits its cronies, then be unable to follow that on with a people's bailout that would help us all.

AOC: "Look at this kind of trash pile of legislation the Republicans have just introduced. I've never seen such a thing in my life of, we're going to give the neediest people less. And we're going to give people who are you know, need help but don't need as much help more."

Kelton: "What people mean when they say, you know, oh, Senator Sanders, you want Medicare for All or you want to make public colleges and universities tuition free, you want to cancel student debt, how are you going to pay for it? Where is the money going to come from? What that means in beltway speak is how are you going to offset all of that spending with new revenue from somewhere else, or by spending less in defense or some other category, the budget?"

"When you do a piece of legislation that's 'paid for,' it means you're putting the 50 billion in and it goes to some parts of the economy, and you're taking 50 billion out of some other parts of the economy so that you're not deficit spending."

"We've been so badly educated to respond to deficits as something that's fiscally irresponsible, reckless. It isn't. The government is committing to dropping dollars into the economy without ripping them right back out again. It's exactly what we want them to do right now."

Kelton's work on Modern Monetary Theory is transformative. Her lectures present both a powerful descriptive account of how money works in the economy and a prescriptive account of how we can use that knowledge to make a better, more prosperous world.

https://www.youtube.com/watch?v=WS9nP-BKa3M

She has a new book about this coming in June, The Deficit Myth. This would be a good time to pre-order it. These are scary times for writers with books about to come out (signed, I have three new books out in 2020).

https://stephaniekelton.com/book/

Beautiful judicial snark (permalink)

As Ken "Popehat" White is fond of reminding us, no one snarks quite like a federal judge. And despite being a Trump appointee, Steven C Seeger manages to rip off a couple zingers in this ruling.

http://loweringthebar.net/2020/03/unicorn-case-not-an-emergency.htm

At issue: Art Ask Agency is upset that someone is counterfeiting their unicorn-logo merch, such as this unicorn-scented candle:

https://artaskagency.com/our-licenses/anne-stokes/unicorn-candle/

But Illinois is in covid lockdown, so its case against a bunch of John Doe (alleged) counterfeiters is on hold. Their lawyer has sent a string of motions to the court asking for an emergency hearing so they can proceed, despite the fact that the court clerks are operating on reduced staff and only dealing with matters of the utmost urgency.

The judge is Not Impressed: "At worst, Defendant might sell a few more counterfeit products in the meantime. But Plaintiff makes no showing about anticipated loss of sales. One wonders if fake fantasy products are experiencing brisk sales at the moment."

The judge takes notice of the time a telephonic hearing would consume, "especially given the girth of the Plaintiff's filings."

"Plaintiff argues that it will suffer an 'irreparable injury' if this court does not put a stop to the infringing unicorns and knock-off elves."

"The world is facing a real emergency. Plaintiff is not."

(Image: Karen Neoh, CC BY)

Marc Davis's Haunted Mansion (permalink)

Along with Passport to Dreams Old and New, the Long Forgotten Blog is the best source of information on the history, design, and evolution of Disney theme-parks.

https://passport2dreams.blogspot.com/

But Long Forgotten focuses on a single ride, the glorious, brilliant Haunted Mansion.

The history of the Haunted Mansion was completely upended in late 2019, when Christopher Merritt published his "Marc Davis in His Own Words," a two-volume compendium of journals and interviews with the legendary Imagineer, who was Merritt's mentor.

https://books.disney.com/book/marc-davis-in-his-own-words/

This is probably the best book of Disney/theme-park history ever published, and that's no surprise, as Merritt has already written the definitive history of Knott's Berry Farm:

https://www.angelcitypress.com/collections/authors-christopher-merritt

And Pacific Ocean Park:

https://www.yesterland.com/pacificoceanpark.html

Merritt is an Imagineer, an artist, and a historian, who has direct, lifelong connections with the original Imagineering team. He has unparalleled access, inside knowledge and perspective. So yeah, that is a fucking great book.

Marc Davis was the best character designer in the original Imagineer cohort: he created the Country Bears, the Pirates, and the Haunted Mansion ghosts. He was a spectacular visual gag master, too. And he was one of the (many) legendary Imagineers who had a hand in designing the Haunted Mansion. That ride had so many different iterations, drafts, plans and schemes, and the final product is so wonderful in part because of their remnants.

But Davis actually designed a full-on Haunted Mansion attraction, from start to finish, and those plans are kicking around. Based on those, Long Forgotten has created a narrative account of what it would be like to tour "Marc Davis's Haunted Mansion."

https://longforgottenhauntedmansion.blogspot.com/2020/03/marc-daviss-haunted-mansion.htm

It's…interesting. Davis had some really fun ideas like meeting up with a talking bust (or raven).

And there are great gags (Davis designed the "three-part" stretching portraits, after all).

I mean. this would have been so freaking boss.

But the real meat is something called "The Most Dangerous Ghost":

"The final picture is perhaps behind black drapes which raise as the ghost host calls out attention to it. As the drapes part we see a painting that has everything in it except a figure. There is perhaps a vague image where the figure should be. The ghost host reacts in a frightened manner. He explains that this is terrible because this is the most dangerous ghost in the mansion. When he climbs out of his picture he mingles with the guests until he has turned one of them into a ghost. He describes the ghost's appearance and its omnipotent powers. He suggests again that everyone should stay in a tight group; this evil ghost loves to pick off stragglers. He suggests that the group be wary of sliding panels, gusts of cold air and etc."

Long Forgotten: "The MDG character undercuts the intellectually sloppy notion that all Davis cared about was making the HM funny."

LF goes on to make a good case that Davis wanted to incorporate many of Rolly Crump's gorgeous "Museum of the Weird" designs into his Mansion.

Davis's seance room seems to flirt with MDG some more: "The presence of the villain ghost makes itself felt and these older retired ghosts are frightened. Whatever we have used to indicate the nearness of the villain ghost would be repeated here."

Davis once planned for a Mansion filled with "working class ghosts" (carpenters, soldiers, boxers, etc). The only ones that survived were the coachmen in the graveyard sequence.

And his bride sequence was very explicit about wedding-night murders, culminating with MDG manifesting amid the guests: "He starts a wild mocking laugh. It clouds up outside. The curtains blow inward. It starts to rain along with thunder and lightning. "Outside we see a figure take form and it moves into the room. The rain comes into the room with the figure and a pool of water forms around its feet."

This is gorgeously scary, but as Long Forgotten points out, it has little re-play value (similar to Tomororwland's Alien Encounter): "The gag about the Ghost Host revealing himself as the Most Dangerous Ghost has the obvious disadvantage that it can surprise you only once. Pretty soon everyone knows the 'secret,' and as its usefulness as a genuine shock or scare tactic fades its status as pure camp inevitably increases."

That all said, "We learn what we should already know but sometimes forget: Marc Davis was never an imperious, one-man show. He was a team player. He interacted creatively with the work already done by previous Imagineers, displaying in this outline nothing but respect for what was good in what they had done."

This day in history (permalink)

#15yrsago Disney busts amateur Disneyland tour guide https://web.archive.org/web/20050323133504/http://jimhillmedia.com/mb/articles/showarticle.php?ID=1356

#10yrsago James Randi is gay http://archive.randi.org/site/index.php/swift-blog/914-how-to-say-it.html

#5yrsago Windows 10 announcement: certified hardware can lock out competing OSes https://arstechnica.com/information-technology/2015/03/windows-10-to-make-the-secure-boot-alt-os-lock-out-a-reality/

#1yrago Two arrested for hiding cameras in motel rooms and charging for access to livestreams https://edition.cnn.com/2019/03/20/asia/south-korea-hotel-spy-cam-intl/index.html

Colophon (permalink)

Today's top sources: Ok børge (https://twitter.com/forteller), Beyond the Beyond (http://www.wired.com/category/beyond_the_beyond/).

Currently writing: I've just finished rewrites on a short story, "The Canadian Miracle," for MIT Tech Review. It's a story set in the world of my next novel, "The Lost Cause," a post-GND novel about truth and reconciliation. I've also just completed "Baby Twitter," a piece of design fiction also set in The Lost Cause's prehistory, for a British think-tank. I'm getting geared up to start work on the novel next.

Currently reading: Just started Lauren Beukes's forthcoming Afterland: it's Y the Last Man plus plus, and two chapters in, it's amazeballs. Last month, I finished Andrea Bernstein's "American Oligarchs"; it's a magnificent history of the Kushner and Trump families, showing how they cheated, stole and lied their way into power. I'm getting really into Anna Weiner's memoir about tech, "Uncanny Valley." I just loaded Matt Stoller's "Goliath" onto my underwater MP3 player and I'm listening to it as I swim laps.

Latest podcast: The Masque of the Red Death and Punch Brothers Punch https://craphound.com/podcast/2020/03/16/the-masque-of-the-red-death-and-punch-brothers-punch/

Upcoming books: "Poesy the Monster Slayer" (Jul 2020), a picture book about monsters, bedtime, gender, and kicking ass. Pre-order here: https://us.macmillan.com/books/9781626723627?utm_source=socialmedia&utm_medium=socialpost&utm_term=na-poesycorypreorder&utm_content=na-preorder-buynow&utm_campaign=9781626723627

(we're having a launch for it in Burbank on July 11 at Dark Delicacies and you can get me AND Poesy to sign it and Dark Del will ship it to the monster kids in your life in time for the release date).

"Attack Surface": The third Little Brother book, Oct 20, 2020. https://us.macmillan.com/books/9781250757531

"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583

#pluralistic

[kingofthenorth49]

Can someone check the GFCI?

When a circuit breaker snaps, it’s because the circuit was beginning to heat beyond design capacity and it’s shutting down to prevent something worse from happening, like fire or damage to a sensitive circuit or device.

It’s a safety device, and we all know how much I love safety devices, but at the end of the day if you don’t take action when a safety device activates, generally the damage can be much worse than what the device was actually protecting.

Folks, our owners have decided that it’s going to be much easier to control the world if they only have to do it from one government, and if you still think this is a conspiracy theory, you need to turn off CNN and step outside your basement. Even the dimwit in Ottawa can no longer keep the secret of where those in lofty chambers have decided we are going, although I sincerely doubt he understands the repercussions, just like 98% of the population. It’s not their fault, they are wired in such a way they can’t see the truth, either by design or programming.

Doesn’t matter which it is (blue dress/brown dress), the damage to our population has started and we don’t have the collective will to stop it, because we’ve been conditioned to be victims. Correction. Most have been conditioned over the past two decades to be victims, to be at the mercy of big government and those who know better than you do.

I’ve a friend who explains it perfectly. He says that most people cannot see past the end of any given month. It’s not a derogatory thing, it’s just who they are. These are the people who live paycheck to paycheck, who don’t plan for the future because they are just trying to stay alive. They work hard to keep up, but are consumed by just trying to cope with what life throws at them. These are the majority of people on this planet. Not a bad thing, but these are the type of people easily controlled by fear.

The next group are the people who can see 6 to 12 months, and they understand cause and effect better than the first group. They understand that payday loans are bad and that you should control your destiny through planning. These are the type of people who run our governments and provide services. They see the benefits to organized approaches to problems and find safety in numbers of like minded people.

The last group, the smallest one are those who can see 3 to 5 years down the road. These are the visionaries, people like Edison and Orwell, Tesla and Rand. These are the Elon Musks and Bill Gates of the world. They drive humanity through aspiration and ambition.

Unfortunately they aren’t always right, for example I would consider Karl Marx to one of the latter.

So why am I talking about Karl Marx and circuit breakers you ask?

Well it’s because my tin foil hat is on too tight, or because I’m not quite right in the head I guess, or any other of the labels those who can’t see past the end of the month would paste to someone like me who likes to think a bit more long term than the end of the next season of the Kardasians.

Shutting down the world for a bad flu wasn’t a decision based in science. It’s not even a decision based in safety, and believe me I know a thing or two about that. The whole “nobody moves, nobody gets hurt” thing really doesn’t work for long. Sure, nobody gets hurt, but no body eats either. This is what your average person isn’t thinking about when they scream “stay the blazes home”.

Yes, you can stay the blazes home. Yes,  you can cower under your bed until the bad thing passes, but at the end of the day the Magic Pantry was just a kids TV show.

Dude’s gotta eat, right?

I’m currently living inside the “Atlantic Bubble”, or whatever is left of it after those anointed in oil decided to take their toys and go home, but in reality we’ve created an interesting paradigm here on the east coast of Canada that’s unlike anywhere else in the world.

We’ve created the perfect culture of fear.

Now for those living outside the bubble, we’ve shut the door, turned off the lights and posted a big “FUCK OFF” sign on the front lawn. We’ve turned our back to the virus like it’s a Trump supporter. This is our plan. We’ve posted guards, created intricate rules around who can go where and why, and basically made it impossible to move anywhere without government permission. All over a bad flu with a survivalbility rate of over 99.4%, with 70%+ of the mortality coming from those 70 years of age and older. You are more likely to die from an automobile accident today than COVID.

Don’t get me wrong, COVID is no cake walk, it’s a nasty disease, but it’s not Ebola. I’ve been battling this virus now for 11 months, I’ve seen how it works, it’s veracity is substantial, and if you have co-morbidities such as diabetes or heart disease, it can take a toll on you, and yes, more people are dying from it than the seasonal flu, but at the end of the day it’s not going to wipe out the human race. The majority of the people who test positive don’t even know they have it.

And don’t get me started on testing.

I can’t talk publicly about it but if you see me out and about, ask me why I think testing is a control and not a diagnostic element. Sorry, the hat’s tightening.

Let me throw one example out for you to chew on, let’s say vaccines. Now the vaccines are the panacea for the masses right? I mean we should be amazed we were able to concoct a vaccine that is 95% effective in eradicating this virus inside 8 to 10 months, hell, we should be ecstatic, right? I mean it took 30+ years to get a handle on AIDS and we beat COVID in just 240 days. We currently linbe up to get an annual flu shot to protect us from the last major Coronavirus (Remember the Spanish Flu?) that has been in development for the last 60 years and it’s still only 35-40% effective, and less than 50% of Canadians get it

We must be freaking geniuses now.

I’ll never understand the sheer amount of dumb optimism that’s out there, but I certainly appreciate it. Without that optimism we’d be more like Lemmings than we currently are.

But back to the “great reset”, shall we?

So dude’s gotta eat, right? I’m going to quote one of my modern day heros, Elon Musk when he says “If people wants stuff, they have to make it” or something along those lines. In other words, there’s no money tree. My parents very early on taught me that lesson, and that if I wanted anything in life I had to earn it or make it, that there was no such thing as a free meal. The problem is most people today have been conditioned to think there is. Trudeau has been giving away our money like a drunken sailor on shore leave to the tune of $400 BILLION dollars in 8 months. Let me put it another way, in the last 240 days Trudeau has spent $10,814.00 per Canadian citizen, or around $25K per taxpayer. That’s debt folks, that’s directly on the shoulders of every Canadian. But it’s ok they say because interest rates are so low we can afford the additional leverage.

Problem is folks is interest rates don’t stay low after a major crisis. Why? It’s called inflation. As money supply loosens, so does the value of a dollar, and when the value of a dollar decreases because there’s more supply of dollars then prices increase. When prices start increasing wages need to go up to keep pace with inflation, and when that happens there are two options. Control monetary supply, otr deal with runaway inflation.

How do you control inflation you ask? Great question. You raise interest rates to throttle spending.

How can anyone forget the late 1970’s? It was less than 50 years ago folks. Remember Trudeau’s 6 & 5? Anyone? Bueller? Bueller? JUSTIN? For fuck sakes the kid was living at 22 Sussex drive when his father created the greatest economic challenge of our lifetime.

Wait, check that. Apparently the second wave will be worse than the first.

This great reset is gong to be tragic. Already they are estimating over 100 Million people in 3rd world countries will die next year due to disease and starvation because of the lock downs. In our own western countries the most disadvantages are already our most vunerable populations. Humans aren’t meant to be caged, nor can we afford to be. We need to be free, have purpose, and contribute to a vibrant society.

You can’t govern that. You can’t rule over a captive society for long. History has shown us that time and time again that King’s aren’t benevolent rulers and those who suffer the most are at the bottom the societal ladder.

If you aren’t seeing the end goal yet, I get it, but I do. You only need look as far as the ice cream eating elite who enjoy fine dining when your cupboard is near empty and jet off to Mexico while telling you can’t bury your spouse or child. They make you endure cruel mental anguish while they spend your tax dollars on jet setting and pontificating about a communist world that they rule.

All in the name of a better world, one free of climate change and racism.

Who knows, maybe they are right, maybe they are part of the component of society that sees the future more clearly than the rest of us.

I guess that’s why they get ice cream and can go spend Thanksgiving with their moms while you can’t bury yours.

I guess that’s just our lot in life, to be ruled, to understand it’s for thee, but not for me.

This what we want? This what we deserve? Am I wrong?

I don’t think I am, I just want to be. Can someone go downstairs and check the fuse?

Jim Out

#thegreatreset

[robert-c]

The Truth About Capitalism and Free Markets

When everyone can compete in a free market, then the best products and services will prevail at the best prices for the consumer. Furthermore, the chance to invent a whole new market and to profit hugely from it spurs people to create new products and services never before thought of, enriching all of our lives. Rather than a society with hereditary classes, our free market system allows anyone with determination and hard work to achieve riches. These are the myths about Capitalism and Free Markets. And sometimes, to some extent, they are true.

However, more often they are empty promises. You see, the primary proponents of free market capitalism, the capitalists themselves, don’t really believe in it at all. They believe in monopoly. They believe that once they have dominated a marketplace, no one should be able to challenge them and their dominance. While we like to believe that the one who builds the “better mousetrap” will be the one who profits, in reality the actual inventor rarely reaps the greatest rewards. Sometimes it’s because the bigger maker of mousetraps buys them out and takes it over, or buries it altogether if it challenges too much of the supply chain they have built up. Other times it’s a matter of “slicker” negotiations and clever accounting to ensure that the other players needed in bringing a new idea to market get a disproportionate share. It would be a legal nightmare to even attempt to regulate such transactions, and that’s not the point. I bring that up just to illustrate that one of the major “selling” points for totally free markets is more myth and illusion than fact.

Another myth is that making money, being successful in business, is some sort of testament to your (take your pick): a) intelligence, b) hard work, c) being a generally superior and deserving person, or d) all of the above. Some people do become successful with a “better mousetrap”, but others because they are more ruthless, or even willing to engage in fraud. And some are just lucky, like the fellow who discovers that there is oil under his land. Others just managed to acquire a large supply of a suddenly high demand product, like hand sanitizer at the beginning of a pandemic and attempt to resell it at inflated prices. Having become rich is proof of nothing but being rich.

This attitude that anyone can become as rich as they deserve has an insidious side effect; if you are poor, you must deserve it. It is a convenient piece of rationalization for being greedy and uncharitable.

The free market myth is that the better product or service will ultimately prevail. That value (quality versus cost) will win the consumers over. Let’s take a closer look at that myth. Every shopper knows that they have different standards of quality for different products. Some of it is personal taste, some of it is how important the item is to us. Let’s say for T-shirts I’m going to wear to work in my garage I don’t care if the seams aren’t as tightly sewn, or the material is thin. Chances are they’ll be covered in stains long before the quality of the stitching gives out. On the other hand I’m very picky about the shirts I wear to work, and I want the best quality so that they will last long and look good. Such differences in individual choices should make room for a variety of goods and various values to suit individual needs and tastes. It should be easy to see that there isn’t a huge range of quality for all goods and services and that the upper end of quality doesn’t change without innovation. Now this is where the free market system is supposed to excel. However, it is easier, and often more profitable, to cut costs, than to improve quality. This is the habit of most well established businesses; it is the low cost, low risk option. Of course cost cutting often ends up affecting minimum quality and even safety issues. Ever heard a boss say something like “come on, surely a 10% cut can’t be that big a deal?” If the safety of the product isn’t obviously compromised to the point that an ordinary consumer could tell, then it would seem that some regulation is needed to prevent such behavior. And thus we have our first need to abandon the idea of a “totally” free market system.

Regulation is needed to protect the public from dangerous products and outright falsehoods in the advertising and selling of these products. As for innovation, the actual inventors are often the ones NOT motivated by money and rarely reap the rewards of their inventions. But then that is a whole other story.

The free market is supposed to mean one that isn’t subject to coercion, one that allows competition. However, in order to preserve competition some regulation is needed. So let’s assume that Bob’s Business Machines makes computer chips. Barry has an idea for a different kind of computer chip architecture. It will be faster, and hold more information than Bob’s. But of course, it is just an idea right now. Barry needs money to develop a prototype and then money for manufacturing, marketing etc. Bob, cunning businessman that he is, has significant business relationships with all of the major banks; the very ones (the only ones) who are in a position to loan Barry the kind of money he will need. Of course the banks are smart – they know that Barry’s chip (if it lives up to its potential) is a serious challenger to Bob’s. They also know that if they loan Barry any money, Bob could pull all of his business and leave the bank in terrible shape. So unless there is some regulation prohibiting acting in restraint of trade, Bob might not even have to ask the banks to refuse Barry a loan. And as simple as that laissez faire capitalism has been able to stifle competition.

Regulation is needed to keep the current rich and powerful from barring new entries into the “club”. The entire idea of innovation being encouraged by the free enterprise system is in question if there is no regulation. Can anyone honestly say that the railroads would have embraced an interstate highway system? In fact they tried to oppose it. Or the development of airlines? NO. Given their own self-interest we’d still be riding coast to coast in days long journeys in rail cars. Pure, unregulated capitalism creates markets controlled by the largest companies, who will systematically strangle any attempt at competition or innovation that might jeopardize their current stranglehold on their market. Hard core defenders of laissez faire capitalism would argue that the railroads, with their enormous profits from the 19th and early 20th centuries could have wisely invested in the airlines and therefor had a major stake in the future as well. Yes, they certainly could have, but none did. Because making and keeping money isn’t a necessarily associated with visionary intelligence. In fact, it is always easier and lower risk to stick with what you know.

And yet we’ve been propagandized for decades with the idea that deregulation is somehow good for the consumer and will lead to more choices and lower prices. How has that really worked out? Can anyone honestly say that they feel they’ve gotten a fair deal (let alone a good one) on airlines lately? Or your cable provider? Or your phone service? Does it feel like you have to be constantly changing to take advantage of the “new customer” special bundles? Of course they know that most of us have neither the time nor the energy to wade through all of the change over business until we are very fed up, which is long after the companies have recouped any discounts they gave us to switch.

Then there are businesses, which by their very nature, have a profit motive disincentive to treat their customers fairly without regulation. I referenced this somewhat in the article on health care reform. Insurance, principally health, but also any other insurance as well; auto, home, etc. All insurance offers a product (“coverage”); essentially a promise to pay for certain losses you might experience, which may be more or less difficult to precisely define. The problem is that the free market competition doesn’t exactly produce the results we might hope for. In selling apples, computer chips or mousetraps, the consuming public has a pretty good way to judge quality and therefor value as the ratio of quality to price. But the details of coverage are hard to assess, and even with comparing identical claims paid (if you could even find two exactly alike), that is only one instance of the coverage in action; maybe it’s representative, maybe not. So the consumer has limited information to rely on in picking between the companies.

Add to this that the insurance companies’ business model is to collect more premiums than they pay out in claims. Now imagine what your reaction would be to a seller of apples, computer chips or mousetraps whose business model was to charge for more items than they delivered. Clearly regulation is needed in this industry, and even more so when the coverage is broad and gray in definition, like health care. There is a definite financial incentive to look for ways to reduce claims payout and/or rate up consumers given that competition is not as clear and simple to compare.

The “champions” of free enterprise often speak of regulations as stifling innovation and adding costs to products. Certainly there are some poorly drafted regulations that should be revised. But to cast all regulation as unnecessary is more than an overstatement, it is a lie that serves only the worst actors in corporate America. Good regulation keeps the field open for new competition to arise and prevents established businesses from increasing their profits by cutting costs and/or by cutting safety to their consumers and employees.

This would be a good time to recall that virtually every regulation business’ must submit to originated because of an abuse perpetrated by businesses. Companies who didn’t tell their employees about the dangers of the chemicals they were working with, and did not provide safety gear or adequate training. Employers trying to classify employees as “contractors” so they can avoid paying for overtime, or the employer’s share of Social Security taxes. The list could fill an entire volume.

Lastly, as good as capitalism is (in its well regulated form) it is inherently a short term view of the world. From the side of the investor, capitalism looks like an efficient system for allocating financial resources. Yet the short term high return investment always seems to garner more of the resources than the long term high return, especially if that high return isn’t payable until the end of the long term. It appears (and actually may be) much more risky.

Yet all of the great advances in our economy and technology seem to be built on the bedrock of some groundbreaking infrastructure and work of large public (government) projects. The Interstate highway system, happily used by trucking companies to bring goods across country, and vacationers alike, might have been decades later in the coming (if at all) but for the persistence of the Eisenhower administration. The US space race with the Soviet Union laid the ground work for computers and private satellite companies and the boon to communication that has created. In both cases, nearly everyone knew this was the direction the future must take, but individually it represented too large an investment to make. There are many more examples, but surely it can be seen that these essential platforms need to be built for the general good. Such visionary projects typically can’t get individual funding, but with a little from all, we all can benefit much more later, and still maintain an essentially capitalist system.

“Pure” capitalism is, unfortunately, by its very nature a short term, short sighted engine, whose principal accomplishment is the maintenance of the wealth of the first group of rich and powerful people. Regulated capitalism IS the only way to have a market place where new ideas, and competitive products can be freely introduced.

Let’s stop buying the myth that “privatization” is automatically good, and government regulation automatically bad. These are more complex issues than the simplistic black and white thinking we’ve been encouraged to hold on to.

#free markets #capitalism #regulation #economy

[libertariantaoist]

Remember, the essence of becoming wealthy is to produce more than you consume and save the difference.

Gold remains the only financial asset that's not simultaneously someone else's liability.

Government doesn't just do the wrong thing, it does the exact opposite of the right thing.

The worst enemies of individual liberty are the knaves that claim they're fot it but utterly betray it. And incompetents and ineffectual fools who say they're trying to save freedom by increasing the size of the state.

Foreign aid might be defined as a transfer from poor people in rich countries to rich people in poor countries.

An investor risks 100% of [his] money in the hopes of receiving a 10% gain. A speculator risks just 10% in anticipation of earning 100%.

The conventions for measuring GDP include government expenditures, so GDP is a poor measure of underlying economic health. The government might, for instance, hire 10 million people to dig ditches during the day, 10 million more to fill them in at night, and 5 million bureaucrats to monitor the work. That would pump up GDP and reduce unemployment, but it wouldn't increase society's wealth. It would decrease it.

There is cause and there is effect. You don't want to be the effect of somebody else's cause. You want to be the cause for everything in your life. That implies working for yourself.

Power not only corrupts, it draws the corrupt. - “Doug Casey on Phyles,” 4/13/201

The thought of how far the human race would have advanced without government simply staggers the imagination.

Government intervention in the economy - through taxes, regulation and, most importantly, currency inflation - causes distortions and misallocations of capital that must eventually be unwound. The distortions degrade the general standard of living, and the economy goes into a recession (call that an incomplete cleansing). Or it goes into a depression - wherein the entire sickly structure comes unglued.

Government sponsors untold waste, criminality and inequality in every sphere of life it touches, giving little or nothing in return.

What keeps a truly civil society together isn’t laws, regulations, and police. It's peer pressure, social opprobrium, moral approbation, and your reputation.

So-called 'higher education' is a veritable magnet for second-raters and actively destructive parasites bent on promoting unsound ideas to the inexperienced and gullible. They concentrate in areas like social studies, literature, and art - where opinion reigns supreme. And I find their opinions almost universally appalling.

Over two thousand years ago, Aristotle taught us that money should be durable, divisible, consistent, convenient, and value in itself. It should be durable, which is why wheat isn't money; divisible which is why works of art are not money; consistent which is why real estate isn't money; convenient, which is why lead isn't money; value in itself, which is why paper shouldn't be money. Gold answers to all these criteria.

Fear is being used by the political class as an excuse to accumulate more power and self-importance - and collect a lot more taxes to support their agenda.

Do all that you say you are going to do and don't aggress against other people or their property. That's the whole of the law. I can live with a law like that.

Trusting the government with money creation is like trusting a drunk with a whiskey factory.

People who buy government debt deserve to be punished and taught a lesson.

Democracy is no solution - it's just 51% bossing the other 49% around. For God's sake, Hitler was democratically elected! Democracy is just mob rule dressed up in a coat and tie.

All these people who think they deserve free health care, or a job, or a plasma screen TV, simply because they radiate heat at 98.6 degrees, or because they were born in a certain place, or because they have a certain skin color - it's all bunk. There's no such thing as a 'just' wage. There's only what you earn.

Today most funding for science comes through government. That means that you have to be known to be sympathetic to conclusions that are acceptable to the political classes.

Global warming is the most prominent form of mass hysteria raging across the world today.

They've been changing the cry from 'global warming' to 'climate change' because there's so little evidence there's actually any warming going on. I believe that as little as a decade from now, global warming will be recognized as one of the greatest swindles in world history. It has so little scientific basis, it can only rationally be considered a political scam.

There's no doubt in my mind that we'll have a mania in gold. And because the gold and especially silver markets are so tiny, the rush into them will be like trying to push the contents of Hoover Dam through a garden hose. Our positions will go absolutely ballistic.

Global warming hysterics generally have limited scientific knowledge, and of geology and meteorology in particular. Their belief is not science; it's more akin to religion. The main epicenter of hysteria is not the scientific community but seems to be Hollywood.

No one can predict whether the earth will be cooler or hotter next year, let alone do anything to change it. If you're afraid of global warming, turn off the lights when you leave the room - but don't participate in the corruption of science, don't scare our kids with unproven cataclysmic theories, and don't try to ban economic energy sources that people living on this planet depend upon today. And don't try to stop progress; it's the only hope the earth has of seeing clean industry, short of exterminating mankind.

The time will come, and probably during 2009, that the only way the U.S. will be able to fund its deficits is to create money by printing it. The Treasury will have to sell bonds, and, in the absence of foreign buyers, the Fed will have to print the money to buy them. The consequence will be runaway inflation, increasing interest rates, recession, and inevitable tax increases on all Americans.

The way I see it, gold is headed over $1000 an ounce, probably much higher. At anywhere near current prices, it's the lowest risk, highest potential investment I can think of.

Throughout history government has served as a vehicle for the organization of hatred and oppression, benefiting no one except those who are ambitious and ruthless enough to gain control of it.

The average American has been so brainwashed that he thinks he has a moral obligation to give the government whatever it asks for.

Read More

#doug casey #libertarian quotes

[bountyofbeads]

This is not good news for Trump!!!!

U.S. slowdown deepens as economic growth slips to 1.9 percent pace in third quarter

By Heather Long and Andrew Van Dam | Published October 30 at 1:47 PM ET | Washington Post | Posted October 30, 2019 |

The U.S. economy cooled over the summer, growing at a 1.9 percent annualized pace from July through September, the latest sign that the slowdown is deepening.

The data, released Wednesday by the Commerce Department, came as economists anticipated slightly weaker growth following President Trump’s decision to dramatically expand his trade war with China. That decision in early August spooked business leaders and deterred them from making major investments during a period of so much uncertainty.

Consumer spending continues to power the economy, but business investment has now contracted for six straight months, falling 3 percent in the third quarter, the biggest drop since the end of 2015. A number of companies have said they are pulling back because of economic uncertainty, particularly related to whether trade rules will be shifting with China and other countries. Spending on both structures and equipment was deeply negative.

Slow growth abroad and problems at big employers such as Boeing and General Motors also were a drag on growth. Tens of thousands of workers went on strike at GM in September, halting most production at the company. And Boeing, the United States’ largest exporter, remains under pressure after two fatal crashes of its 737 Max jets in the past year.

[The U.S. deficit hit $984 billion in 2019, soaring during Trump era]

After revving to 2.9 percent growth in 2018, the U.S. economy appears to be settling into a slower pace. Trump vowed during his presidential campaign that he could boost the economy to around 4 percent growth, a level not seen in years. He also has promised at least 3 percent growth a year, an annual pace he has yet to achieve.

But the consensus view is that the economy is shifting to a lower gear.

Spending on motor vehicles and parts didn’t change much from the previous quarter, part of a pattern of decelerating growth in the sector. In an earnings call this week, GM chief executive Mary Barra said uncertainty around the Chinese market would weigh the company’s outlook for next. “We’re still in the middle of really trying to understand where the trade talks are going to land and how that’s going to impact the overall economy,” she said.

Curt Espeland, Eastman Chemical’s chief financial officer, said last week on an earnings call that amid escalating global trade disputes that have led to lower demand, his company would focus on factors within their control, such as cutting costs.

Still, the sustained pace suggests it is unlikely to dive into a recession anytime soon, unless there is a major shock or the trade war worsens significantly. Low unemployment, rising wages and high stock prices have helped fuel consumer spending. Higher federal government spending also provided some lift to growth, helping offset the business investment decline.

“The consumer is still the main engine of economic growth, plus federal government spending. The nation just capped off a year of nearly a trillion-dollar deficit. Not surprisingly, all this federal spending is showing up in the GDP numbers," said Stuart Hoffman, senior economic adviser at PNC Financial Services Group.

After a weak second quarter, White House officials predicted a big rebound in the second half of 2019. White House officials say they are close to big breakthroughs in two separate trade efforts: one with China; and another with Canada and Mexico. But most economists predict that more-subdued growth is here to stay.

“As the benefits of fiscal stimulus fade and trade policy uncertainty and slowing global demand remain headwinds to business investment, U.S. GDP growth should continue to moderate in coming quarters," wrote Sam Bullard, chief economist at Wells Fargo, in a note to clients. "That said, we view recession in the near-term as still unlikely.”

Trump’s economic agenda has resulted in tax cuts, deregulation, trade fights and spending increases. He and top aides have said this approach would lead to a major acceleration in economic growth, which had slowed markedly during President Barack Obama’s last year in office. The unemployment rate has fallen since Trump’s election from 4.7 percent to 3.5 percent, consumer confidence and spending are strong, and the stock market reached a new all-time high this week.

But other measurements of the economy have shown weakness.

Many business leaders and economists say Trump’s strategy helped fuel new business investment through most of last year, but concerns about trade fights with China and Europe have led many companies to pull back, especially in the past six months. The period of July through September marks the second time since Trump took office that quarterly growth has fallen below 2 percent.

“The capital spending numbers were awful and a bit worst than we expected, with structures investment — oil rigs, offices, factories, commercial premises — plunging 15.3 percent,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Economists would typically expect business cutbacks to lead to decreased consumer spending, but as of yet consumers continue to prop up the expansion. Almost half of the third quarter’s growth could be attributed to residential construction and spending on recreational goods such as computers, bicycles and books, as well as at grocery and liquor stores.

Separate figures released Wednesday by payroll processor ADP estimate the private sector added 125,000 jobs in October — a figure that would be consistent with the slowing private-job growth in the past six months. The firm’s data suggests that broad gains in service industries such as health and transportation more than offset losses in mining, construction and manufacturing. On Friday, the Labor Department will release the official report on the current employment situation.

Trump has continued to celebrate any good economic news, including the stock market record this week, and blame any weak numbers on Democrats and the Federal Reserve, the institution he says choked growth by keeping the cost of borrowing too high. The Fed is widely expected to make a modest cut to interest rates at 2 p.m. Wednesday.

“The Greatest Economy in American History!” Trump tweeted Wednesday morning, less than an hour before the Commerce Department’s report on economic growth. On Tuesday he tweeted: “The Fed doesn’t have a clue! We have unlimited potential, only held back by the Federal Reserve. But we are winning anyway!”

Trump was far more critical of slower growth when Obama was president. In May 2012, Trump tweeted, “Q1 GDP has just been revised down to 1.9%. The economy is in deep trouble.”

The U.S. economy is in the midst of its 11th straight year of growth, making this the longest expansion in the nation’s history.

During Trump’s term in office, the economy has grown at an annual pace of about 2.35 percent, after accounting for the effects of inflation and other factors. If that pace were to continue, it would edge past George W. Bush’s first term and Obama’s second to become the fastest term of growth since Bill Clinton’s presidency.

But Trump’s claim that the growth is the best in U.S. history is not accurate. In the recent past, Clinton and Ronald Reagan each oversaw two terms of growth above 3 percent a year. Growth of at least 2 percent has been the norm for decades; the United States typically hits that mark in 2 out of every 3 quarters.

“An economy growing at 1.9 percent is in line with the long-term trend growth of the United States. If you’re an economist or Wall Streeter, you are fine with that. However, if you are a politician that promised sustained growth over 3 percent, this level of growth is a political recession," said Joseph Brusuelas, chief economist at audit firm RSM.

#trump administration #president donald trump #donald trump jr #trumpism #trumptrain #trump impeachment #economic news (3rd party) #economics #u.s. economy #maga2020 #maga #news today trump #u.s. news

[billehrman]

Buffett and Munger Are Licking Their Chops

The financial markets have been under immense pressure ever since Trump announced that he would be raising tariffs to 25% on the initial $250 billion of Chinese exports to the U.S. on May 10th while also threatening to impose 25% tariffs on the remaining $300 billion of Chinese exports by the end of June unless substantive movement was made in trade negotiations. His administration then threw down the gauntlet by blacklisting Huawei from dealing with our technology companies threatening China 2025. Trump went all in.

The simple truth is that no one knows what the eventual outcome will be to the trade conflict so traders run for cover as the pundits/experts remind us all throughout the day how bad things could get: The sky is falling! As you would guess, cash levels have gone through the roof; investor sentiment has plummeted and even investors are frozen despite historically cheap valuations. Markets hate uncertainty! Bearishness is everywhere which is consistent with market bottoms, not tops. Our market remains undervalued… we see no recession, we see a friendly Fed and we buy great companies with rising earnings, cash flow/ free cash flow with above market dividend yields (far above 10-year treasury yields) and large share repurchase programs.

We think Buffett and Munger must be licking their chops right about now as the earnings yield on stocks as an asset class has further widened its gap to bond yields.

We also know that one tweet could turn things around. So, what to do? While we spent a lot of time over the last few weeks putting the trade war in perspective as exports from China are a tiny sliver of our economy and theirs too, we recognize that it is newsy to embellish the worst-case scenarios which we deem unlikely. We are bombarded all day about the downside risks of the trade war without discussing any of the long-term positives. Do you think that Buffett and Munger listen to CNBC?

We are most concerned about the near-term uncertainties/disruptions all of this creates for consumers and businesses around the world. Clearly companies will accelerate shifting their supply chains and may already have begun buying as much as possible ahead of the June 30th possible cutoff points. And consumers, seeing the possibility of higher tariffs filtering through to higher consumer prices later in the year may buy early altering their historic patterns. It could be a great fall but miserable Christmas for retailers.

The hike to 25% tariffs is a one-off event. It won’t happen again next week or next year. In the meantime, prices hiked for higher tariffs will come down over time as supply chains are shifted out of China and demand will recover quickly. In the end, higher tariffs may be deflationary and stimulate growth. How ironic! An investor, like a company, must take a long-term view making only some small changes along the way to preserve/redirect capital to benefit overall performance. It’s hard playing the long ball sometimes, but we can assure you that Buffett/Munger know that compounding returns over time is the key to success. They measure their success over decades, not years nor months nor days. And they have done pretty well.

The greatest opportunities come at times like this. Are you an investor or a trader?  We can only imagine that Buffett and Munger are looking at the chance to finally commit billions buying stocks and hopefully companies at bargain prices as others panic out of fear. Both of them love to buy as stocks are falling.  Is Apple a better buy at $178 or $210? Munger has probably added to his Chinese holdings big time too which have been hit fallen more than stocks here. They truly look longer term over the valley when everyone is looking in the abyss. They look at the long-term potential for each investment and compare it to its current cost/intrinsic long-term value to come to an estimate of future returns. We try to do that, but we don’t have the Buffett/Munger advantage of having the float of a huge insurance company balance sheet to invest. So, we raised a lot of cash and shifted the composition of our portfolios weeks ago taking some risk off to be in position to take advantage as others panic.

Our one disagreement with Buffett/Munger and the Fed is that we feel that low inflation is NOT transitory therefore the stock market multiple today is way too low. That’s a biggie!

One side note about the recent decline of the markets: while the averages may not have declined much from their recent highs, take a look under the hood and you will find devastation in many sectors of the market, especially if there is any Chinese exposure like semis. As we mentioned weeks ago when we took cash to over 17% of our assets by first selling anything with Chinese exposure and then reducing sectors that were dependent on an acceleration in global growth which we had thought would take place with a trade deal. Yes, we shifted our view!  We added defensive stocks with stable growth/high dividend yields, technology and some additional special situations all with great managements, winning strategies, huge free cash flow, and not penalized much, if at all, by higher Chinese tariffs.

Let’s take a quick look at some of the data points reported last week which for the most part came out on the weaker than expected side:

1.) We were most disappointed with the Fed notes which came out last week. The Fed is one step behind on both the prospects for the U.S. economy and inflation. The Fed is standing pat expecting the economy to do fine and inflation to pick up. Wrong on both counts especially if trade tariffs are increased on all Chinese exports. Low inflation is NOT transitory. We continue to believe that the December Fed rate hike was NOT justified and needs to be reversed. The Fed failed to acknowledge in their notes the impact of our rates on the dollar which continues to soar as the yield differential widens with rates abroad. The U.S. economy needs lower short rates and a weaker dollar. We expect the Fed to lower rates BEFORE the fall.

It was reported last week that U.S. manufacturing survey slumped to a 9-year low in May. In addition, the services index fell to a 39-month low. Both numbers remained over 50 indicating growth continues albeit slowly. New orders for manufactured durable goods fell 1.1% in April after rising 1.7% in March, shipments fell 1.6% after a 0.5% March decrease and unfilled orders declined 0.1% after rising 0.1% the month before. Finally, new home sales declined in April although up nearly 7% from a year ago.

While we have lowered our second-quarter GNP to 1.5%, consumer spending is likely to have accelerated to 2.5% gain from the first quarter. We cannot see the economy really accelerating much beyond 2.25% in the second half of the year led by the consumer without a resolution on trade. We still believe that 2020 will be a better year as Trump pulls out all stops to win the election…. that may include several trade deals. You can bet on it!

2.) The big news out of Europe was the resignation of Theresa May as Prime Minister of Britain after continuing to fail backing for the Brexit divorce agreement. If a hard Brexit occurs, it is not good for anyone. We continue to have a bleak outlook for all of the Eurozone without major financial, fiscal and regulatory reforms. What more can the ECB do at this time? Nada!

Economic activity continues to weaken in the Eurozone and growth is likely to be less than 0.3% in the second quarter and less in subsequent quarters. European stocks are statistically cheap for a reason.

3.) Japan’s economy is not much better than Europe’s. Manufacturing activity fell back into contraction in May as exports fell at the fastest pace in four months. We do not believe that Prime Minister Abe will move forward on raising the sale tax in October although he says that he will. Japan’s economy, as is others, are tied to the success of trade talks with the U.S. and China. We would avoid investing here until we know more on trade.

4.) The re-election of Prime Minister Modi and his government was a real bright spot last week. We continue to favor investing in India as we have all year.

A successful investor, like Buffett and Munger, take the long view investing in great companies when others panic not discriminating amongst investments. Management is the key. Why not listen to both the Home Depot and Lowe’s quarterly conference calls and discern for yourself which one you would want to own longer term? A hint…we own HD! Also listen to Target and Kohl’s quarterly conference calls. Another hint…. we have owned TGT!

We do NOT buy the market. We buy stocks in companies that can excel in any environment. When these stocks go down caught in trading programs, it is an opportunity to add to them at better prices. Buffett/Munger do and say the same thing every time. Maintaining excess liquidity, staying disciplined and being patient are necessities during stressful times like this.

Buffett/Munger are licking their chops as stock prices are falling into their buy zones.

We need to be thankful/remember those who sacrificed their lives for our way of life.

We have added to our defensive stocks that would not be hurt from higher Chinese tariffs…mainly health care and consumer related. We have also added to domestic sectors that benefit from lower interest costs… mostly housing related. And we have added to technology companies that drive security and productivity returns far above the buyer’s cost of capital. While we have reduced our financials somewhat due to Fed’s stubborn stance, we like the sector very much as it is significantly undervalued relative to intrinsic value. And we keep adding to and finding new special situations which are individually unique and have nothing to do with the economy. We have reduced holdings in areas hurt by higher tariffs and lower global growth. Cash is up! We own no bonds and are flat the dollar which will remain strong until the Fed cuts rates.

Remember to review all the facts; pause, reflect and consider mindset shifts; look always at your asset mix with risk controls; do independent research… and

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

#economy #stockmarket

[factorinvestor]

Why Do Markets Go Up?

Stock markets are the greatest compounders of wealth the world has ever seen. The key objective of any investor is to get more than $1 back for every $1 invested. Sadly, most introductory investment courses and literature do not begin with an explanation as to why markets go up. It’s such a fundamental question, but it is often overlooked. With greater understanding as to why, it may well prove easier to stay invested when “Mr. Market” goes on a binge and lops 20% off the value of your portfolio.

Think of the U.S. stock market as one holding company named USA, Inc.[1] that holds a portfolio of businesses. If you were the CEO of this holding company, you would have two jobs. First, ensure profits are generated by the underlying businesses. Second, reinvest those profits in the best interests of the company’s owners. To do so, you would seek investments that grow USA, Inc.’s future earnings—like starting, expanding, acquiring, and/or selling businesses. If opportunities for those activities weren’t enticing, you might offer a dividend or repurchase shares outstanding (an implicit bet on the portfolio companies of USA, Inc. itself).

USA, Inc. has done a remarkable job of all this over time, but not in the ways you might expect. First, the reallocation of capital via dividends is more important to return than the underlying earnings generated themselves. Second, demographic and long-term economic forces drive earnings persistently higher.

Let me explain.

 Earnings Growth, Dividends, and Valuation Multiples

Since 1871, the earnings of USA, Inc. have grown by 3.99% annually.[2] We can think of earnings growth as the first of three sources of return to the investor.[3] Keep in mind that this growth is for the entire portfolio of USA, Inc.’s businesses. Some businesses within the portfolio grew at dramatically higher rates and some at much lower rates, but they averaged out to 3.99%.

Dividends account for the second source of return. If we assume that shareholders of USA, Inc. reinvested their dividends, that reinvestment would tack 4.55% annually onto the 3.99% of earnings growth, bringing total return to shareholders at 8.54%. Note that the contribution of dividends is greater than from underlying earnings growth. That seems strange. How can reinvestment be more important than the underlying earnings upon which dividends are generated?

One potential reason is that dividends, when reinvested, represent a redistribution of underutilized capital to firms that may have higher earnings growth rates. Dividend payers tend to be more mature firms, while non-dividend payers may be growing at a pace that requires all capital to be ploughed back into the business. Here’s an example. In a hypothetical two firm market, firm A is a young Technology company growing earnings at 20% per year. Firm B is a mature Consumer Staples firm growing earnings at 3% per year. Firm A is in growth mode and offers no dividend. Firm B offers a 3% yield to entice investors. Firm A is smaller and has a market capitalization of $5 billion. Firm B has a market cap of $10 billion. When Firm B issues its 3% dividend, $300 million gets paid to shareholders. Those who choose to reinvest do so pro rata—~33% to Firm A ($100 mil) and ~66% to Firm B ($200 mil). Because Firm B paid a dividend, $100 mil more is now invested in Firm A than would have otherwise been if no dividend were paid. $100 million has been reallocated to a more efficient use—a higher earnings growth firm.

The third component of return, which is more transient, is directly related to the valuation placed on the stream of earnings and dividends generated by USA, Inc.’s portfolio of businesses at different points in time.

The value of any company should theoretically be the combined value of 1) its existing business persisting into the future, and 2) a speculative component that represents the market’s guesstimate of the present value of future growth. That’s a mouthful so let’s dig in.

The simplest valuation measure is the price paid for each $1 of earnings generated by the company, commonly referred to as the Price-to-Earnings, or PE, ratio. In 1871, the PE for the market was 11.1x. At the end of 2018, it was 22.3x, which means the multiple “expanded” 0.47% per year. Unfortunately, multiples don’t always expand in linear fashion; we have simply smoothed the impact by annualizing the change.

Valuation multiples oscillate between expansion and contraction for the very reason that they are attempting to value the future, and the best guess of the future is constantly evolving (see chart below). It should be noted, however, that except in extreme circumstances like the tech bubble on the high end and the 1970’s on the low end, the PE ratios tend to revert to the long-run average of about 15x. Forecasting is an inherently difficult exercise for obvious reasons. It is unknown. The ability to do so would require a forecaster to accurately predict future cash flows, interest rates, and inflation—among a suite of other variables.

Add multiple expansion to the 8.54% generated via earnings and dividends, and we arrive at 9.01%, the annualized total investor return for the market (USA, Inc.) since 1871.

So, why do markets appreciate over time? Because earnings have grown over the very long term, dividends are paid—and when reinvested—are powerful additional contributors to return that implicitly reallocate capital. Finally, markets value the stream of earnings and dividends from the market differently at various points time. Changes in this valuation result in multiple expansion or contraction, which makes up for the balance of total investor returns.

The Three Components of Growth

Though we’ve broken down total investor return to show why markets go up, we have not addressed the second-order question— “what causes earnings to grow?”[4]

To answer this, we will assume that the S&P 500 Index is a decent proxy for the overall economy. This turns out to be a pretty good assumption, as the business sector represents 75% of GDP.[5] We also need to invoke three economic forces—inflation, productivity, and demographics.

Inflationary forces result from increases in costs—i.e. labor or raw materials—when demand overwhelms supply.[6] Over the very long term, these get passed along to the consumer via price hikes. The classic analog being too much money chasing too few goods. A little bit of persistent inflation can be good—it encourages consumption that fuels the economy, and it diminishes the future burden of debt repayments. Conversely, demand can decrease, resulting in deflation. Deflation is bad because it deters spending in favor of excessive saving (see Japan), and it increases the future burden of debt repayments.

Productivity generally results from either efficiency gains or value creation.[7] If a technological advancement allowed a worker to increase output to two widgets per hour from one, that’s a measurable doubling of productivity. Value creation would be the invention of something totally new, i.e. the internet. Productivity is amazing because more value is created with the same or fewer inputs than would otherwise have been possible. For the most part, productivity tend to be a gradual force. Productivity, defined as Real GDP per Capita, has grown consistently in the 2% range for many decades.[8]

Inflation tends to be more volatile—with a notable decade-long spike in the 1970’s—but has increased at around 3% on average. Inflation often lays the foundation upon which productivity induced innovation creates value, and so the two are interlinked forces. Inflation drives up costs, which necessitates a more efficient means of production, which increases profits, which attracts competitors into the market, which lower profits, which drives investment out of the space until a new, more efficient means of production is discovered and the cycle repeats.

Here is an example where this plays out in the real world—education. Until the advent of online classrooms, there were no noticeable productivity gains in education over the last several decades (I suspect longer, but don’t have the data!). The only way to increase educational productivity was to hire more teachers to teach more students in a physical space at a time. There are practical limits to this endeavor. In the last two decades, more students with loan-fueled pocket books have been attending school than ever—increase in demand without a commensurate increase in supply, resulting in inflation. Since 1947, higher education costs in the U.S. have grown dramatically faster than across the rest of the economy (5.7% versus 3.0%).[9] Enter online classrooms, which have no physical constraints, and they are contributing to lower educational inflation in recent years.

Demographic trends, though boring due to their glacial pace, are important because labor is often the most expensive component of production. According to the Bureau of Labor Statistics, it represents more than 60% of the value of economic output.[10] Labor means workers. Workers are a part of the population. Growing populations will have more eligible workers in the future. Workers earn wages which they spend to support their growing families and lifestyle. Demographic headwinds and tailwinds can be identified by simply understanding the change in the overall population, or a subset—like workers employed.

Using these three forces, we can break down GDP into its component parts. I have shortened the time frame here to 1947-2018 for ease of access to Federal Reserve data. Over this period, nominal GDP has grown by 6.36% per year. That can be broken down into our three forces—Inflation 3.25%, Productivity 1.95%, and Population Growth 1.16%. When combined Productivity and Population Growth constitute Real GDP, which has grown at 3.11%.

 We can then recategorize the drivers of market return in economic growth terms. To level set, here is the table from above but with a shortened timeframe of 1947-2018 and adding a column for inflation-adjusted data.

The data point we seek to explain is real earnings growth of 3.42% using the forces of Productivity and Population Growth. Notice that it is relatively close to the 3.11% real GDP growth number above.  Productivity in the business sector differs from that of the overall economy in that the labor force is smaller than an entire country’s population. Here again, demographic trends play a role because the working age population ebbs and flows with generational birth trends. For business Productivity, we look to real corporate output relative to nonfarm payrolls. Over our time frame, business Productivity has grown at a 1.64% clip, accounting for slightly less than half of real earnings growth of the S&P 500.

The Population Growth component of real earnings has grown by 1.73% over this period, slightly more than half. Though I haven’t dived into it extensively, I suspect that the higher contribution for business versus real GDP is due to women entering the workforce in the latter half of the twentieth century.[11] The women’s labor force participation rate nearly doubled from 35% in 1950 to 60% in 2000, which means the labor force grew at a greater rate than the overall population.

At our firm, we spend a lot of time thinking about the characteristics of stocks that predispose them to outperform over time. We’ve found that attempting to predict first order results—like returns—is generally a fool’s errand. There are too many variables. However, if you can identify characteristics that are more stable—like underlying earnings—you can increase your odds of laying proper wagers on one or a portfolio of stocks.

When I look at the previous table, the stable and more predictable measure that jumps out at me is population growth. As noted before, its glacial and persistent. Given birth rates today, one can fairly reasonably predict what the labor force will look like in 10, 20, 30 years. Which is also to say that one can also potentially predict, with reasonable confidence, one major contributor to real earnings growth.[12]

Snow fall, Navigation, and Grinding Higher

I grew up in New Orleans. Besides being the Mecca of everything music, food, and culture, it happens to sit near the mouth of one of the greatest commerce thuways on the planet, the Mississippi River.

Kids love big, fast stuff, and I was no different. Watching the tanker ships glide by was a favorite pass time when we went downtown. There’s something pretty magical about hundreds of thousands of pounds moving in complete silence and seemingly effortlessly. What makes it even better is when those big tankers move fast. Naturally, I asked how all this was possible.

I learned a few things about rivers, navigation, and delayed gratification at a young age. First, the water tends to be higher in spring because all the snow from winter up north melts and fills the river. Second, more snow = more water = faster current = faster ships = cooler to watch.

At some point I realized that the cool factor was predictable. When it snowed an inordinate amount in January, the river was higher and the current moved faster. And the icing on the cake, a ship can only steer when it is moving faster than the current. So if the current was moving quick, ships moved even faster in April. This was a predictable cycle. It didn’t repeat every single year, but thematically, it has persisted since time immemorial.

Markets do tend to go up over time, but in cycles. While I think there is a decent portion of the population that still thinks markets are unpredictable casinos, there are fundamental trends at play that justify the continued rise of markets for decades to come—demographic trends and productivity gains.

Though imperfect in many ways, capitalism generally works. Businesses generate profits. Successful businesses employee people. Employees earn wages. They spend those wages to support their lifestyles, often raising a family. Inflation persists at a low rate, but periodically crops up as generational waves (i.e. Baby Boomers) stress the capacity of an economy. As new trends take shape, preferences change. Technological innovation occurs, resulting in disruption to the status quo and new value creation. Hopefully, in their quest for maximizing shareholder return, businesses continue to allocate to these new innovations, spurring relentless productivity gains over decades, and pushing markets higher.

  —

[1] I use the S&P 500 Index as a proxy for USA, Inc.

[2] Irrational Exuberance [Princeton University Press 2000, Broadway Books 2001, 2nd ed., 2005]

[3] This approach was developed by my colleagues in a research paper titled “Factors from Scratch”.

[4] https://www.oaktreecapital.com/docs/default-source/memos/2015-09-09-its-not-easy.pdf

[5] https://www.bls.gov/lpc/faqs.htm#P01

[6] In economics there are the paradigms of financial markets and goods markets. Though the requisite balance of demand and supply apply in both markets, the mechanism by which inflation/deflation occurs is different. For example, in financial markets, inflation (deflation) can be generated via excess (deficient) monetary supply with no real change in the goods market. For the purposes of this piece, I refer primarily to the goods markets.

[7] http://reactionwheel.net/2019/01/schumpeter-on-strategy.html

[8] How the Economic Machine Works

[9] Federal Reserve Economic Data

[10] https://www.bls.gov/lpc/faqs.htm#P01

[11] https://www.bls.gov/spotlight/2017/women-in-the-workforce-before-during-and-after-the-great-recession/pdf/women-in-the-workforce-before-during-and-after-the-great-recession.pdf

[12] The BLS offers a report every two years which lays out their projections for growth of the labor force. The most recent projection can be found here.

#stocks #economy