Steve Bull's Blog, page 1339
August 15, 2017
World GDP in current US dollars seems to have peaked; this is a problem
World GDP in current US dollars is in some sense the simplest world GDP calculation that a person might make. It is calculated by taking the GDP for each year for each country in the local currency (for example, yen) and converting these GDP amounts to US dollars using the then-current relativity between the local currency and the US dollar.
To get a world total, all a person needs to do is add together the GDP amounts for all of the individual countries. There is no inflation adjustment, so comparing GDP growth amounts calculated on this basis gives an indication regarding how the world economy is growing, inclusive of inflation. Calculation of GDP on this basis is also inclusive of changes in relativities to the US dollar.
What has been concerning for the last couple of years is that World GDP on this basis is no longer growing robustly. In fact, it may even have started shrinking, with 2014 being the peak year. Figure 1 shows world GDP on a current US dollar basis, in a chart produced by the World Bank.
Figure 1. World GDP in “Current US Dollars,” in chart from World Bank website.
Since the concept of GDP in current US dollars is not a topic that most of us are very familiar with, this post, in part, is an exploration of how GDP and inflation calculations on this basis fit in with other concepts we are more familiar with.
As I look at the data, it becomes clear that the reason for the downturn in Current US$ GDP is very much related to topics that I have been writing about. In particular, it is related to the fall in oil prices since mid-2014 and to the problems that oil producers have been having since that time, earning too little profit on the oil they sell.
…click on the above link to read the rest of the article…
August 14, 2017
Conspiracy or Chaos?
“The main thing that I learned about conspiracy theory is that conspiracy theorists believe in a conspiracy because that is more comforting. The truth of the world is that it is actually chaotic. The truth is that it is not The Iluminati, or The Jewish Banking Conspiracy, or the Gray Alien Theory. The truth is far more frightening – Nobody is in control. The world is rudderless.” – Alan Moore
Alan Moore, the renowned graphic novel writer, and author of the dystopian classic V for Vendetta, politically identifies as an anarchist. His view that all political states are an outgrowth of anarchy, with the biggest gang taking control and dictating how things will be run, is manifested in V for Vendetta. As an anarchist, you can understand why he is doubtful of conspiracy theories and an all-powerful entity controlling the world. He believes in a chaotic world competing gangs position themselves to gain power and control.
“We live in a badly developed anarchist situation in which the biggest gang has taken over and have declared that it is not an anarchist situation – that it is a capitalist or a communist situation. But I tend to think that anarchy is the most natural form of politics for a human being to actually practice.”- Alan Moore
The Guy Fawkes mask from V for Vendetta has been adopted by anarchist groups around the world, including: Anonymous, WikiLeaks, and the Occupy protestors. Moore’s positive view of the Occupy movement was based on his belief ordinary people had the right to reclaim what had been taken from them by criminal bankers. The initial impetus for the Occupy protests was the destruction of Main Street USA by Wall Street sociopaths, who not only escaped prosecution for their crimes, but were bailed out by the taxpayers they had pillaged and further enriched as captured politicians enabled them to get even bigger.
…click on the above link to read the rest of the article…
How Conspiracy Theories Really Work
How Conspiracy Theories Really Work
In the United States «conspiracy theory» is the name given to explanations that differ from those that serve the ruling oligarchy, the establishment or whatever we want to call those who set and control the agendas and the explanations that support the agendas.
The explanations imposed on us by the ruling class are themselves conspiracy theories. Moreover, they are conspiracy theories designed to hide the real conspiracy that our rulers are operating.
For example, the official explanation of 9/11 is a conspiracy theory. Some Muslims, mainly Saudi Arabians, delivered the greatest humiliation to a superpower since David slew Goliath. They outsmarted all 17 US intelligence agencies and those of NATO and Israel, the National Security Council, the Transportation Safety Administration, Air Traffic Control, and Dick Cheney, hijacked four US airliners on one morning, brought down three World Trade Center skyscrapers, destroyed that part of the Pentagon where research was underway into the missing $2.3 billion, and caused the morons in Washington to blame Afghanistan instead of Saudi Arabia.
Clearly, the Saudi Arabians who humiliated America were involved in a conspiracy to do so.
Is it a believable conspiracy?
The ability of a few young Muslim men to pull off such a feat is unbelievable. Such total failure of the US National Security State means that America was blindly vulnerable throughout the decades of Cold War with the Soviet Union. If such total failure of the National Security State had really occurred, the White House and Congress would have been screaming for an investigation. People would have been held accountable for the long chain of security failures that allowed the plot to succeed. Instead, no one was even reprimanded, and the White House resisted all efforts for an investigation for a year. Finally, to shut up the 9/11 families, a 9/11 Commission was convened. The commission duly wrote down the government’s story and that was the «investigation».
…click on the above link to read the rest of the article…
August 13, 2017
Fourth Turning’s Neil Howe Fears “Strong Parallels” Between 1930s And Today: “It’s Going To Be A Rollercoaster Ride”
This week on the MacroVoices podcast, host Erik Townsend interviewed Neil Howe, co-author of The Fourth Turning, an investing tract that’s found renewed relevance thanks to White House Chief Strategist Steve Bannon, who’s cited it as an inspiration for his (and by extension, President Donald Trump’s) worldview.
According to the New York Times, which published a story earlier this year explaining the theories encapsulated in the book, the Fourth Turning was “written by two amateur historians, making the case that world events unfold in predictable cycles of roughly 80 years each, and that they can be divided into four chapters, or turnings: growth, maturation, entropy and destruction. Western societies have experienced the same patterns for centuries, the book argues, and they are as natural and necessary as spring, summer, fall and winter.”
Few books have been as central to the worldview of Mr. Bannon, a voracious reader who tends to see politics and policy in terms of their place in the broader arc of history.”
Turner shares Bannon’s enthusiasm, saying in his preamble that he believes the Fourth Turning is “the most important investing book of our time…I am such a big fan of this book personally that I literally named my own investment management company Fourth Turning Capital Management after Neil’s work.”
During the interview, Turner and Howe discussed Howe’s conclusion that America is presently in the middle of a 20-year-long period of social, economic and political upheaval.
Howe begins by explaining how the first book written by himself and William Strauss, with whom he also collaborated on the Fourth Turning, introduced him to the idea that America’s economy and culture follow distinct patterns.
…click on the above link to read the rest of the article…
Global Financial Stress Index Spikes Most Since 2011 US Downgrade
Did central banks just lose control of the world… again?
For the first time in four months, BofAML’s Global Financial Market Stress index has turned positive – signalling more market stress than normal.
As the spat between North Korea and the U.S. worsened, a measure of cross-asset risk, hedging demand and investor flows awakened from its torpor (after spending 78 straight days below zero – with stress below normal).
The problem the world faces is… did the world’s central bank money-printing safety net just lose its plunge protection power?
For context, this is the biggest spike in the Global Financial Stress Index since the US ratings downgrade in August 2011 – and a bigger shock than the August 2015 China devaluation…
Sunday night futures should be fun: potential war with North Korea, potential war with Venezuela, trade war with China, and civil war looming at home.
Lines in the Sand
When I was younger I would get into intense political and ideological discussions with various individuals from both sides of the aisle. And in America there are usually two sides to every aisle, always perfectly demonstrating the polarization that keeps “We the People” endlessly chasing our tails in tight little circles while our masters loot and pillage to no end.
I tend to be the devil’s advocate and will often take the other side of any discussion, if only to test how factually based and intellectually consistent the other person’s thinking is. No surprise here but they rarely are; unless (of course) they’re using their own unique set of facts to base their deeply flawed argument upon.
Often the ‘discussion’ would quickly devolve into minutiae when the other person is confronted with their own hypocrisy or inconsistency. I am always amazed how fiercely they will cling to some irrefutable ‘fact’ in their argument as if that little gem perfectly supported their entire cognitive fallacy.
I eventually learned to never underestimate the lengths to which people will go to believe precisely what they want to believe, facts or hypocrisy be damned. One guy actually had the gumption to tell me with a straight face that we lived in a free country and he was entitled to believe whatever he wanted to believe.
It doesn’t take a ‘free’ country to accomplish that my friend, just a terminally closed mind.
I used to think people simply would not view the world with an open mind. Then I thought people simply couldnot. Lately I’ve come to understand it’s a little bit of both, combined with a heaping dollop of a complete lack of critical thinking sprinkled liberally with deep denial and affirmation seeking. Once the pile of self deception and outright denial grows to critical proportions, the addled ‘thinker’ cannot concede any one point without conceding all points.
…click on the above link to read the rest of the article…
Spain’s New Big Bubble Begins to Wobble
Tourism is now bigger than construction was during the real estate bubble.
Since hitting rock bottom in 2013, Spain has been one of the biggest engines of economic growth in Europe, expanding at around 3% per year. But according to a report by the Bank of Spain, most of the factors behind this growth — such as cheaper global oil prices, the ECB’s expansionary monetary policy, and the subsequent decline in value of the Euro — are externally driven and transitory in nature.
This is particularly true for arguably the biggest driver of Spain’s economic recovery, its unprecedented tourism boom, which some local economists are finally beginning to call a bubble.
In large part the boom/bubble is a result of the recent surge in geopolitical risks affecting rival tourist destinations like Turkey, Egypt, Tunisia and, in smaller measure, France, which helped boost the number of foreign visitors to Spain in 2016 to a historic record of 75.3 million people — an 11.8% increase on 2015.
Based on first-half figures for this year, the trend is set to continue, at least for a little while longer. Between January and June 2017 36.3 million foreign visitors came to Spain — an increase of 11.6% on the same period of 2016. But if recent developments are any indication, this year’s surge in visitors could well represent Spain’s tourist boom’s final swansong.
Rising “Tourism-phobia.” After years of growing public opposition to the unrestrained growth of the Barcelona’s tourist industry, the city has witnessed a rash of coordinated attacks against tourist targets led by Arran, the youth wing of the radical separatist CUP (Popular Unity Candidacy) party. Arran’s highly publicized actions have spawned a flurry of copycat attacks in places like Palma de Mallorca, San Sebastian and most recently Tenerife.
…click on the above link to read the rest of the article…
When The Grid Goes Down…
Let’s just say that the unthinkable becomes the real and happening. Let’s take this article and go over it. This will be a segment in three parts, the next ones being immediate actions taken at work and at home. I’m hitting on traveling first, as there are so many vacationers jaunting around happily over the landscape. All kidding aside, traffic is congested during the summer, extending traveling time on the commutes. Let’s game the scenario, and here it is.
Here’s the scenario:
You’re cruising down the highway in your 2013 four-door sedan, having just dropped the kids off twenty minutes ago to the swim club. Now you’re on the open highway with a heavy traffic flow…about 5 miles from the edge of town and 7 miles from work. You’re listening to the radio, when suddenly it crackles and goes dead, along with your engine. You look around and pumping the brakes manage to slow down and then drive off the road onto the shoulder, just feet away from the back bumper of another vehicle.
The vehicle comes to a stop, and you try the ignition again. You look at your watch, a Casio G-Shock, to find there is no display. You reach for your cell phone. Nothing. It’s dead. There are perhaps a dozen cars around you…half to your front and half to your rear. All of them have stopped, and most of the drivers have gotten out. You hear the sound of an engine, and looking up, see a ’58 Ford pickup truck weaving in and out of the stalled traffic, moving toward your rear, away from town. The book “One Second After” has just played out in real life. The United States has been attacked by an EMP (Electromagnetic Pulse) weapon. You’re 15 miles from home, and the “S” has hit the fan.
…click on the above link to read the rest of the article…
Trump Warns Xi: Trade War With China Begins Monday
As if there weren’t enough geopolitical and social stress points in the world to fill a lifetime of “sleepy, vacationy” Augusts, late on Friday night President Trump spoke to Chinese President Xi Jinping and told him that he’s preparing to order an investigation into Chinese trade practices next week, according to NBC. Politico confirms that Trump is ready to launch a new trade crackdown on China next week, citing an administration official, a step that Trump delayed two weeks ago under the guidance of his new Chief of Staff Gen. Kelly, but now appears imminent. It is also an escalation which most analysts agree will launch a trade war between Washington and Beijing.
As Politico details, Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it’s unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974. The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China’s unfair trade policies.
As we discussed two weeks ago, Trump had planned to launch the trade investigation more than a week ago, but he delayed the move in favor of securing China’s support for expanded U.N. sanctions against North Korea, the senior administration official said.
The pending announcement also comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea. Still, Trump has delayed trade action before, amid pressure from business groups and major trading partners:
…click on the above link to read the rest of the article…
August 12, 2017
The Logic of War
The Logic of War
This was the week that the logic of war collided with the illogic of bubbles. So far, the bubble is winning, but that’s about to change.
The “logic of war” is an English translation of a French phrase, la logique de la guerre, which refers to the dynamic of how wars begin despite the fact that the war itself will be horrendous, counterproductive, and possibly end in complete defeat.
As applied to North Korea, the U.S. has made it clear that if it is forced into a preemptive attack to destroy North Korea’s nuclear weapons and missile programs, it will not stop there. The U.S. will aim to decapitate the regime and replace it with something more reasonable.
This could be the start of a gradual reunification of the Korean peninsula on terms favorable to the U.S. In effect, we would be winners in the original Korean War fought from 1950 to 1953.
North Korea has made it equally clear that any attack by the U.S. will result in massive artillery and missile bombardment of South Korea, and possibly Japan and U.S. bases in the region.
Even if North Korea has not yet produced nuclear armed missiles, it does have enormous conventional firepower and missiles. It could possibly detonate a nuclear “device” even if it does not yet have a miniaturized nuclear warhead.
The bottom line is that the U.S. and its allies will suffer enormous casualties and economic damage, China may find a pro-U.S. regime on its doorstep, and the North Korean regime will face annihilation.
Given these outcomes, “logic” says that war should be prevented. This would not be difficult to do. If North Korea verifiably stopped its weapons testing and engaged in some dialogue, the U.S. would meet the regime more than halfway with sanctions relief and some expanded trade and investment opportunities.
…click on the above link to read the rest of the article…
