Brian Bloom's Blog
November 7, 2013
Extraordinarily Dangerous Equity Markets
Summary
The Federal Reserve’s Quantitative Easing has given rise to an all time low in the money multiplier which, in turn, has a higher probability of rising than falling. Notwithstanding the recent explosion of personal debt, Chart #5 below shows an emerging propensity of the US public to want to save a higher percentage of their income and/or to pay down debts. Therefore, the most likely driver of a rising money multiplier ratio will be a rise in savings relative to money stock which, in turn, will place a downward pressure on corporate earnings. It follows that continuation of QE by the Fed will do nothing other than push the money multiplier ratio lower. Therefore QE is becoming impotent as a strategy for driving the US economy. By extension, if the savings rate continues along its nascent rising trend, this will likely be accompanied by recessionary conditions which, in turn, will place a downward pressure on Price:Earnings ratios. The risks of holding equities seem extraordinarily high.
Read More at: http://www.beyondneanderthal.com/equi...
The Federal Reserve’s Quantitative Easing has given rise to an all time low in the money multiplier which, in turn, has a higher probability of rising than falling. Notwithstanding the recent explosion of personal debt, Chart #5 below shows an emerging propensity of the US public to want to save a higher percentage of their income and/or to pay down debts. Therefore, the most likely driver of a rising money multiplier ratio will be a rise in savings relative to money stock which, in turn, will place a downward pressure on corporate earnings. It follows that continuation of QE by the Fed will do nothing other than push the money multiplier ratio lower. Therefore QE is becoming impotent as a strategy for driving the US economy. By extension, if the savings rate continues along its nascent rising trend, this will likely be accompanied by recessionary conditions which, in turn, will place a downward pressure on Price:Earnings ratios. The risks of holding equities seem extraordinarily high.
Read More at: http://www.beyondneanderthal.com/equi...
October 24, 2013
Dysfunctionality of US Congress
That the US Congress has become effectively dysfunctional is evidenced by two facts: First, over 50% of voters responded in a recent (October 2013) poll that they would like to see all of Congress fired. Secondly, during the most recent Congressional budget/sovereign debt/CR debate, the only deal that could be agreed between Democrats and Republicans - at 11:59 pm -was that they would kick the can down the road for another three months or so. That is no way for the "world's only superpower" to conduct its affairs.
Of course, this begs the question as to what will happen when the next deadline arrives? Will Congress be able to agree on substantive actions that need to be taken in order to ensure that the US retains its credibility beyond its borders?
Let's be clear: The US is not the only country in the world where these cracks are manifesting in very the foundations of the Rule of Law.
Globally, sovereign debt is trending towards $50 trillion. Anyone who belives that this debt is going to be repaid under circumstances where "everything else remains equal" is just not facing reality. Something will have to change. The question is: What?
One problem we have in today's world is that we have been seduced by sound-bites. There will be no simple answers than can be described in one or two sentences. But what will be required will be a shift in both attitudes and values. The "every man for himself and the winner takes all" attitude that worked so well in the past will not fly in the future. Its a question of numbers. For example, in the French Revolution, when the so-called "priviledged elite" got carried away with their hedonism, the public turned on them. When a poor man has nothing left to lose, he will resort to any measures. That is why the conspiracy theorists are incorrect in their conclusions. The 1% will never lord it over the other 99% until hell freezes over. A swarm of ants can strip the carcass of a lion clean in a very short time.
The last two sentences should not be construed as fomenting anarchy. I am merely stating what I believe will be a self-evident outcome based on historical fact. When enough people get sufficiently riled up by the inequities that they are being expected to suffer, they rise up. It doesn't take a genius to see this.
So, if those currently in power can't see it then it must be clear that they are not as smart as they think they are. They just talk a good game with an attitude of misplaced confidence. Some would call it "arrogance" as opposed to "Charisma", depending on their values in life.
Clearly, with Congress thrashing around as it has, there is fundamental disagreement as to whether the "magic pudding" can continue to be squeezed as it has - to allow US citizens to continue buying Starbucks coffee, for example, with pieces of paper that represent a day's wage of a worker in China or Bangladesh, and which paper was conjured out of thin air by the US Federal Reserve.
Clearly, President Obama "wants" to spread the wealth but, as JP Morgan once put it (I paraphrase): "Here's a nickel. That's your fair share of my wealth". US public debt has veritually doubled during Obama's period in office. He seems like a nice enough guy, but he is clearly not in touch with reality. There is a limit to what countries like China, India and Russia will tolerate.
Regardless of one's political persuasion, those possessed of a modicum of common sense must agree that the situation as it currently exists in the US - and the Rest of the World, for that matter - cannot be sustained. 49% of the US's citizens are receiving some form of government support, and many are spending that money (which has been conjured out of thin air) on items that many in the East would regard as luxuries.
So, what will change? More importantly, for those of us who do not see "the end of the world" as an inevitability, what would we like the eventual outcome to look like?
That is essentially what went through my mind when I sat down to write Beyond Neanderthal - which is essentially a right brain oriented (visionary) view of human existence. That is also what I had in mind when I sat down to write The Last Finesse, which is essentially a left brain (analytical) view.
So let's all be adults about this state of affairs. It's time for a reality check; and one of the realities is that the US Congress has become dysfunctional. Therefore, the responsibility will fall on the shoulders of ordinary (thinking) US voters to plot a forward course - which they can then use as the basis for a "set of instructions" to their elected respresentatives to follow; or be kicked out of office.
To achieve that outcome is a hard ask because the implication is that it will require organisational infrastructure. But will it? Its not like we lack the brainpower. There are some very smart people who form part of the silent majority of people who are not necessarily driven by ego and/or testosterone. What we lack is the resolve to get off our butts and do something. The responsibility for ensuring that outcome must, perforce, lie on the shoulders of those who are capable of thinking both visionary and pragmatic thoughts; and, of those, there will be a subset who are capable of thinking "ethically defensible" thoughts. You know who you are. And you very likely have like minded friends. So start talking amongst yourselves. Get a groundswell going.
Hopefully, this smart, thinking and pragmatic description will be the profile of person who will read Beyond Neanderthal and The Last Finesse. Hopefully these books will stimulate discussion.
Let's face facts for once. January 2014 is not too far away and Congress is not going to come up with anything sensible. "Blind Freddy" can see that right now. So maybe its time for people like you to start getting your minds in gear. We need to think in terms of solutions as opposed to problems.
Of course, this begs the question as to what will happen when the next deadline arrives? Will Congress be able to agree on substantive actions that need to be taken in order to ensure that the US retains its credibility beyond its borders?
Let's be clear: The US is not the only country in the world where these cracks are manifesting in very the foundations of the Rule of Law.
Globally, sovereign debt is trending towards $50 trillion. Anyone who belives that this debt is going to be repaid under circumstances where "everything else remains equal" is just not facing reality. Something will have to change. The question is: What?
One problem we have in today's world is that we have been seduced by sound-bites. There will be no simple answers than can be described in one or two sentences. But what will be required will be a shift in both attitudes and values. The "every man for himself and the winner takes all" attitude that worked so well in the past will not fly in the future. Its a question of numbers. For example, in the French Revolution, when the so-called "priviledged elite" got carried away with their hedonism, the public turned on them. When a poor man has nothing left to lose, he will resort to any measures. That is why the conspiracy theorists are incorrect in their conclusions. The 1% will never lord it over the other 99% until hell freezes over. A swarm of ants can strip the carcass of a lion clean in a very short time.
The last two sentences should not be construed as fomenting anarchy. I am merely stating what I believe will be a self-evident outcome based on historical fact. When enough people get sufficiently riled up by the inequities that they are being expected to suffer, they rise up. It doesn't take a genius to see this.
So, if those currently in power can't see it then it must be clear that they are not as smart as they think they are. They just talk a good game with an attitude of misplaced confidence. Some would call it "arrogance" as opposed to "Charisma", depending on their values in life.
Clearly, with Congress thrashing around as it has, there is fundamental disagreement as to whether the "magic pudding" can continue to be squeezed as it has - to allow US citizens to continue buying Starbucks coffee, for example, with pieces of paper that represent a day's wage of a worker in China or Bangladesh, and which paper was conjured out of thin air by the US Federal Reserve.
Clearly, President Obama "wants" to spread the wealth but, as JP Morgan once put it (I paraphrase): "Here's a nickel. That's your fair share of my wealth". US public debt has veritually doubled during Obama's period in office. He seems like a nice enough guy, but he is clearly not in touch with reality. There is a limit to what countries like China, India and Russia will tolerate.
Regardless of one's political persuasion, those possessed of a modicum of common sense must agree that the situation as it currently exists in the US - and the Rest of the World, for that matter - cannot be sustained. 49% of the US's citizens are receiving some form of government support, and many are spending that money (which has been conjured out of thin air) on items that many in the East would regard as luxuries.
So, what will change? More importantly, for those of us who do not see "the end of the world" as an inevitability, what would we like the eventual outcome to look like?
That is essentially what went through my mind when I sat down to write Beyond Neanderthal - which is essentially a right brain oriented (visionary) view of human existence. That is also what I had in mind when I sat down to write The Last Finesse, which is essentially a left brain (analytical) view.
So let's all be adults about this state of affairs. It's time for a reality check; and one of the realities is that the US Congress has become dysfunctional. Therefore, the responsibility will fall on the shoulders of ordinary (thinking) US voters to plot a forward course - which they can then use as the basis for a "set of instructions" to their elected respresentatives to follow; or be kicked out of office.
To achieve that outcome is a hard ask because the implication is that it will require organisational infrastructure. But will it? Its not like we lack the brainpower. There are some very smart people who form part of the silent majority of people who are not necessarily driven by ego and/or testosterone. What we lack is the resolve to get off our butts and do something. The responsibility for ensuring that outcome must, perforce, lie on the shoulders of those who are capable of thinking both visionary and pragmatic thoughts; and, of those, there will be a subset who are capable of thinking "ethically defensible" thoughts. You know who you are. And you very likely have like minded friends. So start talking amongst yourselves. Get a groundswell going.
Hopefully, this smart, thinking and pragmatic description will be the profile of person who will read Beyond Neanderthal and The Last Finesse. Hopefully these books will stimulate discussion.
Let's face facts for once. January 2014 is not too far away and Congress is not going to come up with anything sensible. "Blind Freddy" can see that right now. So maybe its time for people like you to start getting your minds in gear. We need to think in terms of solutions as opposed to problems.
Is the world "Up the Creek wihout a paddle"?
Too many thinking people believe that the whole world has become stranded up the proverbial creek without a paddle. “Not true” says author Brian Bloom, who has invested eight years of his life to research and write two factional novels - Beyond Neanderthal and The Last Finesse.
The base proposition of his novels is that problems are usually just solutions in disguise. “It’s a matter of attitude”, he said in a recent interview. “We have the technical ability to solve all our problems.” Nevertheless, it is well known that before any problem can be solved it needs to be clearly understood. “The self interested media and psychopathic politicians and bankers have created so much confusion and mistrust that too few understand what’s real and what’s bullshit”, he said.
Bloom’s novels slice through this pervasive confusion and define the problems which revolve, primarily, around unethical behaviour of decision makers, waning potency of fossil fuels, the damage caused by fossil fuels to the environment (not only greenhouse gases), egocentrism and toxic testosterone across much of society; and, because of all of the above – in a world that seems to many to be reaching its capacity to support a global population that has tripled since World War II – a moribund world economy.
“About ten years ago, Bloom related, “I sat down and asked myself this question: In a world that suffers from a deluge of information, which has forced people to talk and think in sound-bites, what’s the best way to communicate the realities of what we’re facing, so that we can roll up our sleeves and get stuck in to fixing things?”
The answer that he settled on was “ENTERTAINMENT”. If thinking people could absorb the “heavy” information seamlessly, whilst in the process of being entertained, then they would know what questions they should be asking their political representatives who have been elected to serve the people.
Bloom’s books make some suggestions as to what might be done but he is quick to emphasise that these are only points of departure for discussion. “When enough people come to understand the problems then sensible discussion can occur and we can begin to heal both society and our host planet.”
Another problem that the author recognised was that people are slow to change their behaviour and that, at a society level, change comes slowest of all. Peer group pressure amongst those who are comfortable is fiercely protective of the status quo. “Just look around you”, Bloom said: “The so-called Arab Spring in general is meeting resistance. Look at what’s happening in Syria and Egypt in particular. Occupy Wall Street is meeting resistance. There are other examples. But there are also strong signs that attitudes are changing and that the world is ready to embrace change.”
He may not be wrong. In the US, over 50% of voters want to fire all of Congress. In Europe, there are examples of previously socialistically oriented people who are banding together in what Bloom refers to as “Collaborative Capitalism” in order to create employment opportunities for themselves. But, as he observes, at a leadership level what the world really needs is focus. “We need to focus on the appropriate priorities”.
Via their light hearted and entertaining fictional storylines, Bloom’s fact based novels suggest what those priorities might be, commencing with appropriate energy paradigms that are more powerful than fossil fuels. But to have any impact at all, millions of people need to read those books. “If you want to be part of the solution, as opposed to part of the problem” Bloom suggested, “then go out and buy the books and encourage all your friends and acquaintances to do the same. Beyond Neanderthal and The Last Finesse represent a balanced emotional/logical view of our world. They can be bought via Amazon or Barnes & Nobel or other book dealers.”
Maybe the cynics should give him the benefit of the doubt. So far, readers have been giving rave reviews.
The base proposition of his novels is that problems are usually just solutions in disguise. “It’s a matter of attitude”, he said in a recent interview. “We have the technical ability to solve all our problems.” Nevertheless, it is well known that before any problem can be solved it needs to be clearly understood. “The self interested media and psychopathic politicians and bankers have created so much confusion and mistrust that too few understand what’s real and what’s bullshit”, he said.
Bloom’s novels slice through this pervasive confusion and define the problems which revolve, primarily, around unethical behaviour of decision makers, waning potency of fossil fuels, the damage caused by fossil fuels to the environment (not only greenhouse gases), egocentrism and toxic testosterone across much of society; and, because of all of the above – in a world that seems to many to be reaching its capacity to support a global population that has tripled since World War II – a moribund world economy.
“About ten years ago, Bloom related, “I sat down and asked myself this question: In a world that suffers from a deluge of information, which has forced people to talk and think in sound-bites, what’s the best way to communicate the realities of what we’re facing, so that we can roll up our sleeves and get stuck in to fixing things?”
The answer that he settled on was “ENTERTAINMENT”. If thinking people could absorb the “heavy” information seamlessly, whilst in the process of being entertained, then they would know what questions they should be asking their political representatives who have been elected to serve the people.
Bloom’s books make some suggestions as to what might be done but he is quick to emphasise that these are only points of departure for discussion. “When enough people come to understand the problems then sensible discussion can occur and we can begin to heal both society and our host planet.”
Another problem that the author recognised was that people are slow to change their behaviour and that, at a society level, change comes slowest of all. Peer group pressure amongst those who are comfortable is fiercely protective of the status quo. “Just look around you”, Bloom said: “The so-called Arab Spring in general is meeting resistance. Look at what’s happening in Syria and Egypt in particular. Occupy Wall Street is meeting resistance. There are other examples. But there are also strong signs that attitudes are changing and that the world is ready to embrace change.”
He may not be wrong. In the US, over 50% of voters want to fire all of Congress. In Europe, there are examples of previously socialistically oriented people who are banding together in what Bloom refers to as “Collaborative Capitalism” in order to create employment opportunities for themselves. But, as he observes, at a leadership level what the world really needs is focus. “We need to focus on the appropriate priorities”.
Via their light hearted and entertaining fictional storylines, Bloom’s fact based novels suggest what those priorities might be, commencing with appropriate energy paradigms that are more powerful than fossil fuels. But to have any impact at all, millions of people need to read those books. “If you want to be part of the solution, as opposed to part of the problem” Bloom suggested, “then go out and buy the books and encourage all your friends and acquaintances to do the same. Beyond Neanderthal and The Last Finesse represent a balanced emotional/logical view of our world. They can be bought via Amazon or Barnes & Nobel or other book dealers.”
Maybe the cynics should give him the benefit of the doubt. So far, readers have been giving rave reviews.
