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Sunday, April 28, 2013

Nassim Taleb - How Debt Ruins Systems

click above

Nassim, by far, is the smartest, brightest and most scientific thinker in the fields of finance and economics. Leagues above of any of those who profess to have either aquired knowledge, recognition or academic accreditation. He gets it, all the others are pretty hopeless.

His best selling book; The Black Swan (listed and linked under our top recommended readings) came out in 2007, about the same time that First Financial Insight's (FFI), now famous, "Eye of the Storm" presentation was released. Both forecasted that a huge credit crunch, economic upheaval and a market meltdown was coming soon. Over a year before other top pundits, economists or regulators had any sense of the pending avalanche that was going to soon beset financial history.

Albeit for different reasons, these works saw the proverbial writing on the wall. Taleb was, by nature, much more empirical, while FFI's stressed the glaring weaknesses in banking, credit and other economic fundamentals. To this day, both Taleb and FFI do not believe that we are out of the woods - a 2008 hangover persists, as many of the underlying reasons behind the meltdown have not been addressed. Continuing crisis after crisis in Europe, demonstrates we still have not learnt key lessons from the 2008 Meltdown about leverage, oversight, economics, transparency, cronyism and so forth; thereby, dooming the global system to make the same mistakes time and time again. Concluding that we are not that bright, as a species, hard to refute.

Back to Nassim's latest book, we can only comment based on the excerpts that convey an organic hypothesis that systems are self-corrective, but that leverage increases its fragility making the corrective process much more devastating. You could almost call it an ant-chaos theory. However, one salient point that Nassim seems to miss is that  the growth of the abstract financial systems will also be limited by the hard constraints imposed by physics. Limits of a finite planet, that make it absolutely impossible to physically grow wealth forever.

Nauru and Easter Island were microcosms of the larger world, but recent events on other island nations such as Iceland, Ireland and Cyprus prove that there is much more to be heeded and learnt from the economic and social demises of these island examples. For starters, the same physical economic disease, caused by input shortages, is clearly spreading inland to countries like Greece, Egypt, Portugal and Slovenia, amoung others. Leverage in the financial system premised on archaic Keynesian theory is exacerbating their illnesses - missing also the real overshoot problems their populations now face relative to geographic resources they control.

Notwithstanding this fundamental flaw, we believe his new book should provide other useful insights to readers, considering the  thoughtful and argument is his earlier works.

Dr Peter G Kinesa
April 28, 2013  

"You really think leverge leads to geo-economic conflicts?"  


Tuesday, April 16, 2013



TOP TEN INTERNATIONAL FINANCE AND ECONOMIC BLOGS "journeying to co-existing realities" Less than two years ago we s...

Sustainable? Longevity? The issues we face are common sense, but have been ignored for too long. Perhaps the problem with common sense it is that it is just not that common. Or we live in different co-existing realities. Pick your reason.

Dr Peter G Kinesa
April 16, 2013

Ever wonder who's right? 

Monday, April 15, 2013

The Boston Globe - Chief of US Pacific Forces Calls Climate Biggest Worry

Chief of US Pacific Forces Calls Climate Biggest Worry 

click above

When the US military realizes and states that climate change is one of the greatest threats to security we should be very concerned. Particularly, when we considered that often coined oxymoron " Military Intelligence" . Think about how much it takes these guys to figure things out, after all these years?

Enough said,  and let's have Admiral Samuel Locklear tell us about their profound "Ah Ha" moment -  I don't want to rain on their parade.

Dr Peter G Kinesa
April  15, 2013   

"Folks, you will never believe what I am about to tell you... " 

Admiral Samuel J. Locklear III met privately with security and foreign policy specialists at Harvard and Tufts universities Thursday and Friday.

Sunday, April 14, 2013

China Feels Inflation, CPI Spikes

China Feels Inflation, CPI Spikes

Before getting into the deeper issues - the first thing to put on the table is the CPI number itself. Who believes any financial number coming out of China?
Who believes that an economy can grow at 5,7 or 10% without experiencing any inflation? Who believes that an economy with excessive liquidity can hold prices down? Then there's the growing need to import more and more commodities... well, you can decide this one.

The real concern is whether currency games are going to become the new form of protectionism - a new form of trade war. With so many countries debasing their currencies - global inflation is certain to follow as more funny sovereign paper will be needed to buy real things. Now if we take the abstracts out of all this and remember that we are past peak everything  - prices of all commodities are sure  to climb dramatically. Some will be more intense than others.

Chinese inflation - you can bet the farm on it. But it is the new protectionism we are most concerned about and the trade of cheap, oppressed labour for scarcer resources. Who will level the playing field now?

Dr Peter G Kinesa
April 14, 2013

How's about a level playing field too?



Friday, April 12, 2013

Marc Faber Blog - Worried about a Deflationary Collapse

Marc Faber Blog -Worried about a Deflationary Collapse

What Deflation Looks Like

Flint, Michigan - 2013 

A deflationary collapse in asset values is 99% certain, because at some point markets will begin to demand real positive returns on market securities. But while an unprecedented asset value collapse is occurring, inflation will overtake the pricing of consumer goods. Things will cost more, assets will be worth less, currency debasement will accelerate, and shortages of key goods and services will be everyday occurrences. Confidence dies - creating social and political upheavals

Faber comments regarding why societies collapse demonstrates a lack of historical and scientific understanding. Very foolish. The collapse of societies has very little to do with fiscal and monetary policy, rather collapses can be attributed to a sudden disruption in physical economic inputs. This includes water, climate, food, or minerals and resources critical to physical survival. 

Great Empires also rise and fall, when their store of wealth and infrastructures have expired, largely because the return of physical goods from far flung colonies is less than the related physical investment and maintenance inputs needed to preserve a presence abroad. This starts a contraction process back to the originating country - that also finds, sooner or  later, it does not even have enough resources to preserve its indigenous population. These former Great Powers are now shifting into the later stages of the Nauru Paradigm.

Need examples? Soviet Union, Roman Empire, British Empire, Spain and so on. Also the list of societies that have collapsed due to an expiry in the resource inputs is also endless, ranging from the Mayans, Easter Island examples to small mining or manufacturing towns in Pennsylvania, Northern Ontario and England.  

Then, there is Flint, Michigan

Dr Peter G Kinesa
April 12, 2013

Marc, here's why societies really collapse.

Never too late to learn...

Monday, April 8, 2013

BBC News - Canadian Glaciers Face "Big Losses"

BBC News - Canadian Glaciers Face "Big Losses"
click here

A small glacier exiting the Devon Island ice cap, Nunavat, Canada

Once , a long  time ago, the Artic was as warm as the Everglades; ask any geologist. By all accounts, we are prematurely heading back that way at a rapid rate. Climate denial will not stop the existential feedback systems that warm the planet taking human enterprise to its knees. We cannot just click our heels and return back to Kansas.  The neo-classic economic fairy tale is coming to a very dreadful end. We are melting under its growth mantra.

Dr Peter G  Kinesa
April 8, 2013

"Look what you've done, I'm melting, melting..."

If only the planet could talk -

Tuesday, April 2, 2013

INVESTORS' INSIGHTS - Jim Rogers Blog - #Cyprus sets the Standard

 INVESTORS' INSIGHTS - April 2, 2013

Jim Rogers Blog - Cyprus Sets The Standard For Other Coun...

Some NY Times Op/ED columnists seem to believe that more debt is not a problem - it is just money we owe ourselves. Perhaps we need to revisit what debt and money represent in a more physical sense - being an obligation to provide the requisite physical goods and services to the holder of the debt instrument, as time specified.

Here's the perspective that illogical neo-classic economics do not grasp. The holders of National debt are ultimately future generations - who are the one's that will be expecting payments back to them. However nations, banks, pension funds and all forms of  financial intermediaries will be unable to make these payments. Why? Not because there is no shortage of worhtless abstract fiat currencies - we can electronically create those forever. Rather, it will be a result of economies not having input resources to convert to goods and services - they are at a future date: resource bankrupt.

Now you would think that, by now, the neo-classical economists could learn a lesson or two about real economics. There are so many recent lessons, like Greece, Ireland, Cyprus, Iceland and the lingering certain demise of the whole EU. Are these situations providing a wake-up call? Nope, not a chance - they are either all part of the Financial Mafia or just - Thick as a Brick. You can and may be the judge of that.

Dr Peter G Kinesa

April 2 ,2013  

P.S. I would to say hello all our friends and followers in Moscow, St. Petersburg and many other places in Russia - we appreciate your on-going support and readership, helping us to create a leading global reach. Cheers. 

Happy Days and Cheers!

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