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'Warned 2000 tech slide; predicted 2008 meltdown in 2007. Forecasted 2020 global economic collapse in 2011, AND NOW- BY 2050 - THE MOTHER OF ALL CRASHES"

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Friday, December 28, 2012

FISCAL CLIFF - Where are the Monkeys?

FISCAL CLIFF - Where are the Monkeys?

What constitution? What democratic process? Where are those who still believe in the prepositions defining of, by, for, and most utmostly with the people? These are the few questions that the American people have every right to ask. Then...

So we ask; where are the monkeys?

Dr. Peter G Kinesa 
December 27,2013

What else is there to say?

Tuesday, December 25, 2012


....on this day there are dreams that touch the

 hearts of the last eternity, where whispers

 dance with stars... 


And always in those dreams - are Martin, 

Bobby, Jack, NYPD, NYFD, and so many 


 - who stood tall and never stopped believing in

 those dreams...

and for that , we say thank you

So again, we imagine

December 25, 2012

... and YOU are not the only ONE

Friday, December 21, 2012


Captain, My Captain...


Why we are in this mess:

Where did it all begin? Why are they all wrong? What is wrong?

Going back to the start of the industrial revolution in Britain, the seeds for the modern neo-classical economic thesis were planted by a Scottish philosopher and professor, named Adam Smith, in his historic inquiry and book, "The Wealth of Nations."  That's where the problem started.

First. economics as therein defined, concerns itself with allocating scarce resources; seeking to achieve an optimal production and consumption of goods and services, algebra. It is in the restricted context and definition of "production and consumption" where a quantum flaw occurs. It is a linguistic flaw too. (i.e. extraction is not production)

What Smith and followers have advocated, was that extraction constructs or elements; particularly those relating to non-renewable resources, were equal or equivalent to production constructs. They  clearly are not, as any geologist will confirm. Such elements are in fact produced by the planet over periods of millions of years, then extracted for human production, that coverts these elements into consumable items So to combine extraction and production constructs, creates a false view of reality's physical flow of elements. Smith's thesis, therefore, would have been more realistically accurate had he delineated this founding neo-classical economic thesis into three distinct constructs - separating extraction constructs from production and consumption constructs, in the overall model.

Another major flaw in Smith's thesis, is that the growth generated by free markets, will through its natural forces seek an equilibrium, thereby solving any immediate imbalances of an economy's production and consumption algebra.  Meaning, that the perpetual pursuit of growth is the single remedy needed to forever correct imbalances, and hence return an economy to its desired steady state. This is existentially, scientifically and logically absurd, because Smith ignores the finite constraints imposed by the extraction constructs.This flaw sets the stage for an inevitable collision between his abstract reality and existential reality - leading to a monumental collapse of Smith's abstract version.

While there are many other similar flaws in Smith's thesis, these two stand out because they are the most damaging and pervasive to the human condition and its prospects to sustain any possible form of activity that aims to extend human longevity - thus avoiding premature extinction. Divorced from the hard constraint of reality, physics and mathematics; turns Smith's thesis into a manifest of gibberish or likewise, utter poppycock. Yet to this day, all the leading economic textbooks, schools, professors and Noble Prize winners continue to premise their ideas, narrative and recommendations on these utter falsehoods that are disconnected clearly and logically from what is existential reality. Meanwhile, the end result of these flaws on human enterprise is sure to be catastrophic in some form.

Why are we so disconnected? There are many reasons, some are distractions, but the ultimate causes must trace back to shortcomings of humanity's neurological physics, affecting key social and psychological processes.We are neither individually nor collectively quite as smart  as we think. From an evolutionary view, humanity's cognitive functions did not keep pace with the responsibility entrusted and skills required for the extended management of the planet. The results and status of which are outlined clearly below in Brian McGavin's featured abstract," Sustainable Planet? The Silent Crisis".  Telling us, that we are in a heap of trouble, facing extinction or a serious transformation, if we do not get our act together soon to deal with this silent and invisible reality.

To do so,  economists and economics must first begin to embrace extraction as the third component of the overall model. And also, integrate their thesis with the laws and principles of objective mathematics and science - and most particularly; physics and exponential mathematics, and the hard constraints they impose on the extraction constructs that define human-activity's limits.

If we fail because of the neurological shortcomings, then the Darwinian outcome will reflect exactly how evolution destines our journey - joining the thousands of other species who had once inhabited this planet. But, if we fail because we continue to believe the dead wrong thinking of economists, lacking the will to correct their false and absurd thesis - no words can describe the magnitude of the tragedy, nor the loss of possible human opportunity. NO words.

Moreover, there are no longer any excuses not to change the operative and logically-flawed economic thesis, as its structural shortcomings are self-evident and they are corroborated by a preponderance of  irrefutable physical, scientific and mathematical evidence.  There are no longer any excuses. There are no other sensible choices.

Let us,  just however hope. Let us, just however hope, that it is not too little - too late? That last question, is now for you to decide and -  TO ACT UPON!

Dr Peter G Kinesa
December 21, 2012 

Please note that I have highlighted what I believe are salient matters of concern in this abstract.- Peter

Sustainable Planet? The Silent Crisis
By Brian McGavin
19 December, 2012

Today there is a ‘Silent Crisis’ in our midst. The crisis, still largely unrecognised, is potentially greater than all the other problems that transfix our policy makers.

For many decades now there has been a wilful blindness in recognising that relentless human population growth is one of the pre-eminent problems we face. A problem that is driving the astonishing growth of fossil fuel use and its depletion, climate warming, bio-diversity loss, the growing shortage of fresh water to meet human needs - and as a consequence of these changes - the prospect that agriculture will be unable to produce enough food to feed us.

In 1950 world population was barely over two billion. In October 2011 we passed seven billion. It is nothing to celebrate.In most countries today existing populations are not living environmentally sustainably, yet even if the UN’s assumption of birth-rate decline in developing countries happens, global population will rise to 9.3 billion by 2050. Less reported is that if current birth rates persist, the United Nations Population Division warned in March 2009 that our population will exceed 11 billion by then. A report in October 2011, The State of World Population 2011 says the world's population could more than double to 15 billion by the end of this century.

More and more developed countries offering new ‘baby bonuses’ make it even less likely that we will achieve the lower figures being quoted in the media. We have to start thinking about a ‘genuinely sustainable’ rather than ‘endless growth’ economy – an economy that is already faltering around us, with commodity prices soaring and living standards falling. Politicians focus on reviving economic growth and stimulating spending, but in an era of rapidly depleting resources, the ‘business as usual’ mindset will need to be radically rethought to keep our complex society functioning, with a transition to a qualitative, dynamic, self-supporting economy that satisfies our needs.

The growth lobby is pushing two great myths: That our ageing population will be a disaster unless we have higher birth rates and, despite rising unemployment, there is a terrible shortage of labour that only high immigration can supply. Both claims have been repeatedly shown to be either false or grossly exaggerated. They have huge long-term costs on our infrastructure and environment. Young people get old too and have higher dependency costs. Politicians don’t emphasise this.


In Africa, the UN now admits that it won’t meet its Millennium Development Goals but fails to explain the underlying causes for pessimism. Many countries in Africa already have massive unemployment and not enough food. How will they provide all the schools, jobs, hospitals and food to sustain populations that are set to more than double and in some cases triple in size in less than 40 years?

Governments will be struggling with millions of unemployed and hungry people attracted to violence and extremism. Look at the problems already in our news in countries like Haiti, Pakistan, Somalia, Yemen and Afghanistan – all countries on constant food aid, with exploding populations and increasingly scarce resources – yet population growth is never mentioned!

In Australia, the population is now set to double every 33 years, fuelled mainly by immigration - this in an arid continent with only six per cent of the country suitable as arable land. America, Canada and the UK’s already high environmental impact are also increasing due to demographic pressures.

Saving the planet and greenwash


Most environmental organisations tell us that ‘if only we each reduced our environmental demand, population growth would not be a problem’. But our economic system based on growth is driving us in the opposite direction. Even if all the efficiency and renewable alternatives could be implemented the savings would be quickly wasted if populations continue to grow.
You can try reducing consumption all you want, but when you keep adding 100 million and another 100 million, you simply drive every human to a lower and lower standard of living. You cannot escape that reality.

Professor John Beddington, former UK Chief Scientist, warned in March 2009 that: "Our food reserves are at a 50-year low, but by 2030 we need to be producing 50% more food, we will need 50% more energy, and 30% more fresh water. They are dramatic problems, and they are all intimately connected." We are producing ever more pollutants and greenhouse gasses. No reasonable amount of "Green" behaviour changes could possibly compensate for this tsunami of demand generated by population growth

Most experts now agree we will pass ‘peak oil’ production in 2012 and production of all liquid fossil fuels will drop within 20 years to half what it is today. Yet, forecasts project energy demand will grow by 60 per cent between 2002 and 2030. (Sources: (US) Energy Information Administration 2009 report and chief executive, BP oil).

A huge problem is most alternative energy sources are poor energy performers because they need a high-energy input to provide a given energy return. Wind and solar power are intermittent, while Hydrogen is only as clean as the fuel source used to produce it and provides only a quarter the energy as the same volume of gasoline. Ethanol, from corn or sugarcane, contains 33 per cent less energy than the same amount of oil and competes with food production. Already, 18 per cent of U.S. corn now goes to producing ethanol, but provides only one per cent of the liquid fuel used in the U.S.

Charles Hall, professor of Environmental Science at the State University of New York, warns that apart from bicycles, there are virtually no forms of transportation that are not powered by oil and most goods are made with oil. Most jobs would cease to exist without it. Renewables (other than hydropower or wood) provide around one per cent of the energy used in the world, but the annual increase in the use of most fossil fuels is far greater than the total electricity production from wind turbines and photovoltaics.
Governments now plan to spend billions by substantially increasing nuclear generation. Apart from potentially critical contamination risks, even doubling the number of reactors across the world could see commercially extractable uranium ore run out in just 20 years.

According to some energy analysts, the energy commitment required in mining, waste storage and disposal will shortly make the nuclear industry a net user of energy, just when the energy famine begins to hit hard. Unless there is an unlikely breakthrough with fusion power and we drastically cut demand, we are on course to exhaust the energy we need in the lifetime of many people alive today.


The Stockholm International Water Institute calculated in 2008 that 1.4 billion people live in regions where existing water cannot meet the agricultural, industrial and environmental needs of all and only 2.5 per cent of the world’s water is fresh. Today, one person in five has no access to safe drinking water, and one in three lacks safe sanitation.

Around 19% of US energy demand goes into food production. Fossil fuels to meet this demand are declining and many regions are already reaching the limits of their water resources, according to the UN’s World Water Development Report in 2009.

And then there is the impact of climate change. The accelerating icecap melt will make at least a metre rise in sea level probable by 2100, according to the International Panel on Climate Change, threatening the world's major cities and fertile crop-growing deltas. Freshwater glaciers that feed major rivers are shrinking.

If governments won’t talk population, then they are not serious about cutting emissions, managing the water supply, managing food supplies, and a secure quality of life for our people. Look at the facts. Look at the numbers. The problems are here, they're real.

Those who say there is no problem about future resources and energy supplies need to do so on the basis of what is probable, not gamble on what just might be, because the quality of life and the lives of billions of people will depend on having sufficient energy, food and resources once fossil fuels become scarce.

It is not a question of ‘either or’ and who needs to act. We are in this together. Rich nations are consuming too much and populations continue to rise. Legitimate aspirations to raise living standards in high population countries like China and India are consuming ever-more resources. In many developing countries with acute water and food shortages, populations are projected to double or triple in size within 40 years – driving social unrest and migration on a massive scale.

There are several key challenges we have to talk about and face. In particular, ensuring development aid from donor countries delivers fully accessible and properly funded reproductive health care for all, along with equal access to education for girls and women. In many countries there are still barriers to this. We also have to start incentivising welfare systems to encourage fewer births rather than more.

Moral values?

Some people believe they have a right to have as many children as they want, whether they can look after them or not and fail to understand or just ignore the consequences of growing populations. Many commentators wilfully promote an ever-larger population in the name of freedom of choice and growth. There will be precious little choice left if we go on multiplying with no thought for the future.Others claim their religion as an excuse for actions that impact on others: Have large families "in the name of God"; Over-consuming resources? "God will provide" - so we don't need to think about the ecological consequences; and when the day of reckoning and collapse arrives - "It is God's will" - a religious opt-out from moral responsibility.

We have superior intellect to understand the consequences of our actions and the ecological and social devastation that will run like a scourge of misery for billions if population keeps increasing. Do we plan for a secure and better life or do we carry on blindly toward a minefield of lethal limits?

Rights come with responsibilities. Society has a right to expect its citizens to act in ways that do not endanger others. Governments ‘incentivise’ many aspects of our lives for a common good, but the more crowded we become the more governments will police our behaviour and restrict our activities. We still have a choice. The world badly needs a grown-up, rational discussion of the population issue - without blame, abuse and hysteria.

It would be a tragedy if population growth became a catastrophe - a catastrophe we were too polite to talk about. Our children will not thank us for being driven to an abyss.

Brian McGavin is a UK-based writer, analyst and environmental campaigner

"where the streets have no names" -U2

Wednesday, December 19, 2012



Not really the type of shorts I was thinking about, but good fun anyhow. Let me join FFI and wish all of you the best of the Holiday Season and a healthy, wise and progressive New Year! 

Dr Peter G Kinesa
December 20, 2012

My Idea of Sexy Shorts

"Nice skateboard brother..."


2013 Shorts Sales  
Blow-Out Bargains

No not these type of shorts, although these ones look pretty sexy. Next week we will list our top - short-sale picks for 2013, our Holiday Gift to you. So stay tuned; be the first to know our top picks along with the reasons and analysis behind our selections.

Until then, all the very best of the season to you and yours.

December 19, 2012


Peter Schiff Blog: The Federal Reserve Is

Peter Schiff Blog: The Federal Reserve Is 100% Committed To The Destr...:

In order to generate phony economic growth and to “pay” our country’s debts in the most dishonest manner possible, the Federal Reserve is 10...

Well in some respects Peter is correct. Printing money and adding more debt to the nations balance sheet ends with a basic mathematical result called currency dilution or debasement. Particularly when these government based IOUs bear little or no relationship to economic activity or capacity. Not even their irrelevant reported GDP figures. 

Moreover, this "kicking the can down the road" approach holds very serious hidden dangers for future generations, as ultimately more US dollars will be required to purchase scarce raw materials and finished goods from foreign suppliers. Hence, growing the green shoots for a major inflationary cycle, and in turn, a devastating spike in interest rates that could lead to a super contraction of business activity and asset values. Ah ha!

The theoretical flaw in the FED's approach ties back to out-dated economic doctrine, that ignores both the concept of accounting for the asset side of the national balance sheet and translating this device into a metric that focuses the usable mass and energy capacities and reserves of the nation. These metrics may be defined in terms of NNRs and RNRs - respectively, non-renewable and renewable natural resources. Again, we can assert that flaw is originated in the abstractions of  "wealth of nations" thinking that constraints to the "wealth of planets" thinking, that asserts we are ultimately working within the finite constraints of a negative sum game and not the perpetrated and delusional positive sum approach actively applied by Economists, Regulators and Politicians.

Let's not forget that sooner or later foreign suppliers will figure this out too and demand either contra goods or other forms of hard currency. You see you can fool some of the people, some of the time; but you can't... 

Dr Peter G Kinesa
December 19, 2012

"Fool all of the people, all of the time."

Tuesday, December 18, 2012

Jim Rogers : The Ultimate End Game for the US is to Be Bailed Out by the IMF

Jim Rogers : The Ultimate End Game for the US is to Be Bailed Out by the IMF

And what would the IMF bail them out with, as the US dollar is the world"s reserve currency? Food stamps? Yet the likelihood of such an event grows every day with the accumulation of debt caused by the US's annual fiscal deficits. Add in the off-balance sheet contingent liabilities, then the current debt figure climbs to over 100 trillion, as estimated by Bill Gross - PIMCO.

What if interest rates climb to 10%, causing a nine-fold increase in interest carrying costs on 100 trillion?

The answer: the Fiscal Abyss - Bankruptcy. So the mathematics tells us, at some point, events will simply leap into a financial death spiral. The End Game.

Dr Peter G Kinesa
December 18, 2012

Follies of Debt - The END GAME ?

Monday, December 17, 2012

Nouriel Roubini Blog: China Is Over-Investing

So where do proceeds from US Treasuries end up?  Hmm..
Nouriel Roubini Blog: China Is Over-Investing: 

IMF now agrees with our Roubini Global long-held view that China is over-investing. Fixed investment is 50 percent of GDP. Lots of bad inves...

Roubini again demonstrates why Economists just don't understand reality, as they work to carve it into contextual fragments that fit their outdated theories. Not only are the rootings of human activity to physics and its laws ignored; but also, how geo-poltical realities define the basis of relevant analysis and commentary.

China is a case in point. Whereas, in the case of most nations the interests of the people and governing body are joint and combined under a  socio-economic-political framework, thread or entity - China is very different.  There are, in both concept and fact, two distinct entities: the Chinese people and the CCP (Chinese Communist Party). Credible topical analysis or commentary must take this separation into account to remain relevant, or it will fail long before pen hits paper.

Thusly, viewing China as two distinct socio-economic-political entities is crucial to understanding their different goals and natures Who is the CCP? Well this abstract from the Epoch Times provides salient insights into its separation, in all respects, from the people of China:

" ...the CCP emphasizes violent struggle against humanity, nature and the laws of Heaven to gain and maintain power, and how it indiscriminately changes its policies with complete disregard for morality, justice and human life. In its 50 years of rule, the CCP has been disastrous for both China and its people. Communist tyranny brought to China an estimated 60 to 80 million unnatural deaths, this number greater than the total deaths from the two world wars, and 13 times ... people killed by the Nazi regime."

Two primary conclusions can thus be drawn. The CCP is clearly  distinct from the people of China, operating separately under its own rules and goals. Secondly, economists who would apply their outdated economic metrics and beliefs to this despotic entity are woefully misguided. The CCP operates under different standards, playing an investment game that is self-serving and dangerous. They play by their own rules - NOT YOURS!

Economists, such as Mr Roubini, would hence be well-advised to pay closer attention to such concrete delineations.

Dr Peter G Kinesa
December 17, 2012

China Over-Investing?

For Whom Does CPP Toll...

Saturday, December 15, 2012

HBO LIVE: #FABER vs #KRUGMAN 2012 Heavyweight Title Fight

Marc Faber: Paul Krugman Should Go & Live In North Korea

The gloves are off - and the promoters are lining up for the biggest fight ever. Battle of two heavyweights, as they both seek to become the "Crowned Heavyweight Abtractionist of the World. So get your tickets now, for this winner take all match.

Right now the betting line is about even. Krugman is sure to score some quick points with the historic benefits of government intervention by way deficits and debts. But Faber's counter punch, that extreme intervention, as evidenced by North Korea does not provide the knock out blow. Leaving Krugman with the opportunity to float like a butterfly and then sting like a bee, with a peppering of Keynesian rhetoric.

Will Faber then attack with inside body blows that smash this body of economic knowledge that has perpetrated the economic meltdown and assured the prompt demise of the human condition?
No doubt Krugman will continue to dance around with fanciful words and archaic charts, to avoid the devastating upper cut to his positive sum game theories. Should the negative sum game reality hit either fighter - then don't expect this fight to go beyond the early rounds.

So tune in. Get your tickets early. Place your bets on which fighter will figure out first: Why we got it all wrong?

"Telling it like is from the 2012 Thrilla in Manilla"

Dr Peter G Kinesa
December 15, 2012


"2012 Thrilla in Manilla"


Friday, December 14, 2012

Jim Rogers: I would like to find a way to invest in North Korea

Jim Rogers: I would like to find a way to invest in North Korea*

North Korea? Really? Too funny - we just do not know if we should laugh or cry about this implied advice? Certainly, Mr Rogers must regret these remarks in view of recent events, Then again; never mind recent events, how about the on-going atrocities of this evil blood-drenched regime. Oh well, why should anyone believe in moral capitalism when there is a buck to be made? Ask any mercenary...

Well Jim I guess we know what side you're on and who you expect to win the inevitable confrontation. Gotta love Geo-political investing.

Any other bets?

First Financial Insights
December 14, 2012

*Investors' Insights Comments posted December 14, 2012

Wow! Can you believe this comment by Jim Rogers? Some still clearly believe that "money has no smell" - that is, until it smells. For sure, by now Jim must understand that North Korea is one of the most dangerous regimes on the planet set on an unknown nuclear course. Shame, Shame!

So, I wholeheartedly concur with FFI's opinion and just wonder when does business, economic and investment support become not only treasonous, but an outright crime against humanity? Clearly, we all need to rise to a higher standard or risk becoming associated with and supporters of the worst enemies of civilization, along with their sick cowardly deeds.

WE should not wait until their missiles are landing in our backyards to understand the gravity and consequences of how business and geo-political activities are inter-connected. Because waiting until then, would leave so few of us with much else to wait for...

Dr. Peter Kinesa
December 14, 2012

"there will be peace in our time" 

Never ever, ever, ever FORGET...

Thursday, December 13, 2012

FIRST FINANCIAL INSIGHTS: Marc #Faber : #GDP is not a very Relevant Figure

FIRST FINANCIAL INSIGHTS: Marc #Faber : #GDP is not a very Relevant Figure:

Marc Faber : GDP is not a very Relevant Figure Oh boy; Marc, this is exactly what we posted last week. We  certainly appreciate your sub...

What's wrong with the GDP metric? Too much; as my FFI's comments point out. Would anyone measure and manage a business based purely on its statement of revenues, ignoring completely any view of its balance sheet? No, of course not!

So why then do we use a limited metric to measure and manage the affairs of a nation? And even much more importantly; the affairs of the planet? These delusions trace back to " The Wealth of Nations" and its implied assumption that infinite growth was the operative economic condition and goal. What Mr.Smith should have assumed quite rightly, that finite conditions and goals prevail as the hard reality constraints of any nation or planet.

Perhaps then he would have written a different "story" and named his work " The Wealth of Planets". Oh, how different our world might be -

Dr Peter G Kinesa
December 13, 2012

"Fairy tales can come true... if you are young at heart..."

Wednesday, December 12, 2012

Marc Faber : In a Negative Real Interest Environement Some Assets could go Ballistic on the upside

Marc Faber : In a Negative Real Interest Environment Some Assets could go Ballistic on the upside

Think about what this means in a practical way. Investors and savers are now paying banks, governments and institutions to hold their money. Are there no real investments or savings vehicles that provide a risk free return? Why are there no such vehicles? Quite simply, one could conclude that there are few legitimate investment and business opportunities  -  and they expect the ones available, to lose more than the negative returns offered by the banks etc.

There is a profound message here. Nobody believes that the economy in abstract terms will improve, while high expectations also exist for asset values to collapse, Well, the mathematics supports this conclusion, as when the rate on 30 year bonds rises from 1% to 2%, 3% or worse; the market value of these bonds stumbles by 50% or more.

Moreover, we all know that rates cannot be sustained at this level forever, as lurking behind the curtains is a bogey man-- cost driven inflation caused by fewer resources and higher populations' demand. The whole situation just does not pencil out using the abstract conventions of failed neo-classical economics.

Buying a farm is beginning to look like the most prudent course - just make sure you control the country too.

Dr Peter G Kinesa
December 12, 2012

Ole MacDonald had a farm... 

Tuesday, December 11, 2012

Finance Documentaries: Super Rich: The Greed Game

Finance Documentaries: Super Rich: The Greed Game: The luxurious lifestyle of those at the top of the world of finance inspires awe, disgust, and ambition. With the mind boggling salaries of ...

Here's an inside view of the game being played by the Masters of Abstractions, causing untold resources and activities to be diverted away from the real and physical economy. They are paper shufflers.
And the game created for personal gain, is an infinite positive sum game based on abstracts.

Whereas, the real physical game is a negative sum finite algebra. There is a growing imbalance between these two game theories - when breached will cause an unprecedented catastrophe. Such events lead to further geo-political instabilities - and there are few, if any, who know where that will lead.  

Our guess is the outcomes may exceed the darkest of predictions to date. Such are the ultimate consequences of greed.

Dr Peter G Kinesa
December 11, 2012

The Graphic Despair of Imbalance

Thursday, December 6, 2012

Calculated Risk: FDIC reports Fewer Problem banks, Total REO Declines in Q3

Frankie: So Bring in the Clowns...

Whatever you think, treat these number with the utmost care, and then toss them in the trash.Three quick reasons:

Questionable accuracy of accounting; as we have seen, many regulators and auditors are hired guns with severe limitations. Value adjustments lag the reality often by 18 to 24 months.

Limited predictive value as these are manipulated abstracts "premised on neo-classical economics". If the system worked, then the 2008 meltdown would not have occurred - it did. So what more do we need to say?

Interest rates must revert to historic means, invariably reflecting actual inflation. Hypothetically, mathematically adjusting these reported values using historic- normative interest rates would wipe out 30% of asset values; putting 90% of the system underwater. A mean reversion is 100% inevitable - the doo doo will hit the fan - and be Much Bigger than 2008.

That's the short story. So where are the clowns?

First Financial Insights
December 6, 2012

Start Spreading the News : New York, New York...

Tuesday, December 4, 2012

Marc Faber: Oil Doesn't Have a huge downside risk

Marc Faber: Oil Doesn't Have a huge downside risk

In the short term, market emotions dictate day to day pricing, for the most part. In the long term, fundamentals play out the value of the commodity. Since 1972, when the US surpassed peak production, oil  prices climbed almost 50 fold and brought about profound changes in American foreign policy. American consumption averages about 33 barrels per citizen with few signs of abatement. That's a nation with about 330 million people.

Now consider that both China and India consume just one barrel per person, but are in an all-out effort to bring their respective living standards up to Western style consumption. A thirty fold increase over 3 billion people is enough effectual demand to deplete the known energy reserves in five years. Then what? A fool can figure out the serious geo-political implications - that are clouded by the potential for hair-trigger nuclear decisions effected automatically by deteriorating systems. Get the picture?

Conclusively, there is very little downside to oil prices as long as populations are growing, China and India continue to Westernize their fragile economies, and global  supply is geometrically drained to exhaustion. The question is not about price; but supply, and what happens when we pass peak global production.

Obviously, as evidenced by history -  foreign policies and affairs will change dramatically - Very Scary!

Dr Peter G Kinesa
December 4, 2012

The Horror of Numbers...

Marc Faber : GDP is not a very Relevant Figure

Marc Faber : GDP is not a very Relevant Figure

Oh boy; Marc, this is exactly what we posted last week. We  certainly appreciate your subscription to our blog, and flattered by your  concurrence. Great minds think alike or, -  fools seldom differ?

For the record, here's a short list of the GDP concerns we have:

Firstly, it is held out as the annual measure of the wealth (production/consumption) created by a national  economy using a subjective abstract unit of measure - money. Meta-economics meanwhile demands an object unit of measure that ties economic activity to the actual usable-physical-elements produced and consumed by the economy. Further, a balance sheet picture is possible and more relevant, when usable-physical-elements are the unit of measure, providing a national net worth based on the difference between the aggregate of remaining usable elements and elements owing to others, including its citizens. Thus, calculating an objective national (or even global) net worth, whereby its net changes would better indicate whether national wealth improved or declined over a specified period.

Such an approach would seriously change the thinking of geo-economic-political policy makers. For example, these metrics certainly would have retrospectively influenced how the British Empire dealt with its colonies. Every effort one assumes would have been made to fully incorporate them into the base country, had policy-makers known the extent of usable-physical-elements that were being forgone. Possibly causing this island nation to still  be the most powerful economic dominion in the world. There is a lesson be learned.

Secondly, the current GDP number is flawed because it emphasizes nominal, as opposed to real values. The real value determination is, however, difficult for two reasons. One, the CPI factor used to adjust the nominal value is highly arbitrary - and filled with non-scientific rationale and assumptions. Two, many countries convert their GDP into US dollars in order to level the playing field, thereby acting to neutralize the currency exchange differences. The central flaw here, is that the US dollar is not a good proxy for global purchasing power or even the core-commodities value basket required for primary global industrial production.

Thirdly, whatever measure is applied, it should be divided by the population of the subject nation. Many stratification's of population could also apply: garnering useful insights. Regardless, the aggregate division is still a fair measure of overall industrial progress. A much measure better could however be calculated using the meta-economic object unit of measure for GDP. Even greater understandings should evolve by also using the balance sheet approach, thereby calculating the per capita object net worth.

This latter calculation is of utmost importance as nations would begin to understand the diluting effects that population growth, mortality and immigration have on the physical staying power of the nation. The real physical wealth of nations Again more insightful analysis should result, providing understandings that are more scientific and object in nature.

As indicated at the outset, there are many more concerns, but this short list should start a thoughtful process that would lead to conclusions profoundly affecting economic, social and geo-political views, both historically and prospectively. We therefore humbly look forward to hearing your thoughts and ideas!

Dr Peter G Kinesa
December 4, 2012

Finally, I get it!

Monday, December 3, 2012

Jim Rogers : If you haven't already downgraded US ...

Jim Rogers : If you haven't already downgraded US in your mind, do so now

We have. But the question is how far to downgrade the world's reserve currency? Which leads to the bigger question: How long should we consider this as the currency of last resort? Not an easy answer, however when it loses this special status -- Watch Out! That would be the last stand, clearly signalling the fall of the American Hegemony. The implications are immeasurable.

But if you haven't already done so in your own mind, do so now!

First Financial Insights
December 3, 2012

Don't ask... Don't Tell

First of all,  let me say hello to our friends in Germany, Sweden, India, Swizterland, Netherlands and the United Kingdom for their support, comments, insights and questions over the past month. Your thoughts keep us on our toes and provide much valued feedback. Please continue.
Here's a post from today's Investors" Insights I enjoyed and received permission to post concurrently.
Dr Peter G Kinesa
December 3, 2012 

Saturday, December 1, 2012

Paul #Krugman - Varieties of Errors; #NYTimes

Paul Krugman - Varieties of Errors

Economics: The Impossible Scoreboard!

Who' s winning? Who will win? When does the game end? Underneath what Paul is saying is a deeper question that relates to how we will ultimately measure success? - success of our theories, assertions and predictions? The whole issue is so complex and clouded with misinterpretation, that you could spend a lifetime in a splendid discourse with very bright people drinking some pretty fine wines.  But what we should not accept are frivolous answers - in the long run we are dead - that is simply childish and immature. 

There is little doubt that Keynesian measures have given us positive benefits, but perhaps these short term advantages in balancing the production-consumption model are aborting a  greater progress. It is an abstractionist model exercising a strategy that focuses on creating "effectual demand" by originating debt and money  Both over the long haul, do not logically relate well to the physical capacities and constraints of the money issuing nations geographic capacities. Resulting in tactics that promote rapid growth; leading to accelerated resource depletion, overpopulation and a destruction of the physical carrying structures that support present and future economic activities.

Whether it is today or tomorrow, a fair conclusion or measure of who is winning remains clouded. But no one wins in the end, if our strategies and beliefs push us over the extinction cliff faster than need be.

Until then, we suffer misfortunes of outrageous slings and arrows - Varieties of Errors!

Dr Peter G Kinesa
December 1, 2012

Take Arms Against the Sea of Errors

December 1, 2012

Best Sellers List