#TIME - Bugonomics - Now it's Honey Bees!

TIME - Bugonomics - Now it's Honey Bees!

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A few weeks back we highlighted a graph illustrating the decline of wildlife and bugs in the UK, since 1968 - it was our economic graph of the week. Wherein the term "Bugonomics" was also coined for posterity. Our point then and still is - Economists place too much emphasis on the abstract measures of wealth, such as GDP and CPI, and not enough on the key metrics associated with the real physical wealth of the planet. Blame them all, right back to Adam Smith. 

Compare this to your doctor's assessment based on how well you are dressed during appointments - not on any other diagnostic measures that probe into the physical state of your body. It would be a small consolation being well-dressed for your premature funeral. See the point? That's why we believe the field of "Bugonomics" is destined to replace Keynesian and other neo-classical theories. It is clearly more scientific.

So we applaud TIME magazine's article on "Honey Bees" for bringing forward this salient economic issue. For it drives home the idea that without these bees our way of life and existence may be in jeopardy. And that's just one bug! Unfortunately, we can only link you to the beginning of the article, but it should be enough to get the point across. 

In summary, we emphasize that bugs can go on when our economies don't; but our economies would cease if bugs should ever perish. In fact, we speculate matters will be much worse for us if they do. By the way, all along the economy would be growing at a robust pace, and we should all look pretty good too!

So when will Harvard, MIT, Oxford or Princeton ask, "Why don't we have someone teach a "Bugonomics" course this semester, instead of that old school theory?" Hopefully, for our collective sake, they are searching for applicants at this very moment. 

Dr Peter G Kinesa 
August 20,2013

P.S. It should not take a rocket scientist to figure out that certain "non-financial measures" are better determiners of macro-economic wealth - however, it remains unthinkable that economics should be cluttered by the blathering of scientific protocols. So far.    
  

WELL DRESSED

Flowers? I can't even fly Doc!

ECONOMIC GRAPH OF THE DAY: UK Wildlife Index Decline (1968 -2010)

ECONOMIC GRAPH OF THE DAY: 

UK Wildlife Index Decline (1968 -2010)
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To the point, forget about all the graphs, charts and illustrations that you were shown back in school by your economic, business and finance professors. Why? Because the most important ones are those they failed to show and tell you about and just how important they are to markets, GDP and economies. In fact, they are so important that they would turn every other economic thesis upside down - starting with Adam Smith's, Enquiries into The Wealth of Nations. 

Not going to say much more; other than, it is very clear that Smith and his subsequent CULT believers  have missed the point entirely, having no clue as to what "Wealth" really is - we leave the rest for to you to figure out.   

Dr. Peter G Kinesa
July 29, 2013

When bugs are gone, then what happens to GDP? 

 

Feeding the Dragon:Why China's Credit System Looks Vulnerable

Feeding the Dragon: Why China's Credit System Looks Vulnerable

click above

THE BIG MAMA OF ALL CREDIT CRUNCHES

This article reflects a Chinese financial system that is on the brink of a biblical credit collapse   - "The Big Mama of all Credit Crunches"  To be expected, from a system that operates on the outermost margins in every respect and oppresses its population in order to support a elite few who run and control the "party" (pun intended). An oppression that has been well documented by the Epoch Time; Nine Commentaries on the Communist Party, and many others. 

As history has proven regimes like this, (the former Soviet Union being a recent example) fall apart from within, due to inefficiencies, atrophy, and wasteful policies that are unsustainable physically, politically, socially and morally. Briefly, here is a short list of items that should draw deep concerns from all investors, businesses, economists and world leaders.

Oppression of human rights, dignity, freedom of information and expression are the hallmarks of an  evil totalitarian system leading to ruthless atrocities for which there is no accountability. We need to look no further than the controls that are placed over the Internet to see clear evidence of restrictive tactics over information and communication flows as indicators of a totaltarian attitude.

Lack of financial transparency is pervasive to domestic, private and government accounting systems and numeric outputs. No faith, whatsoever, can be placed on any the financial or economic information generated by these entities. They are all students of the Bernie Madoff's School of Accounting - and we know, when unregulated, where that leads. 

China is desperate for non-renewable resources in order to sustain its inefficient economic system and unsustainable growth. Its simple self-evident strategy of exploiting it massive labour pool, to achieve huge pricing advantages on exported goods creating trade surpluses, then realizing billions in US treasuries, that are in turn used to buy resource based entities around the world is clear. China also perverts capitalism's principles, by using Sovereign Funds, that are not comparable to corporations in any way. They have no accountability to stakeholders, markets or financial measures of success - thereby, undermining all concepts of free, fair and open trade and related principles of comparative advantage. Where is Mr. Krugman when we really need him?  Where is the Conscience of a Liberal? 

China's currency is also fixed to the US dollar, given it an unfair advantage in trade that allows it to maintain this economic-political strategy of labour exploitation and oppression, leading to the reserves of US currencies needed to secure supplies of non-renewable resources. It works to the party's primary advantage, with little trickle down to the people of the country. 

Who should complain? Not North America because it too benefits from the cheap exploited labour with lower cost good on the shelves at Walmart, Costco, Target and others, hence containing domestic inflation and low interest at the Fed and other Central Banks. The other big losers however have also been the hard-working American union members and middle class that forged the spirit and heartland of a great nation. Their jobs and way of life were traded away by these unsavoury business practices.

Low interest rates also lead to high asset valuations in Western nations and can thus be tied to the cheap labour exploitation of millions and massive loss of American jobs - so everyone (elites?) had or has an interest in maintaining the status quo of these trade practices, even though they are definitely unsustainable while benefiting so very few on both sides of the Great Wall.

Water shortages are becoming headline news; the importing of water is becoming essential to feeding the Chinese economic machine. Pollution, unbridled and unregulated economic growth are the drivers behind this need. Water and oil are the two essentials of modern industrial-consumer complexes, shortages as Jim Rogers so astutely  noted will lead to wars. There are no reasons to doubt Mr. Rogers conclusions. No reasons.

Add further, the climatic chaos created by the growth economic mantra and you do nothing but reduce the supplies of fresh water through pollution, warming and upheaval of the natural systems of the planet. Without fresh water supplies, you cannot feed people, armies or politicians - the final outcome is not hard to figure out.

Gorbachev recognized that the Soviet Union was doomed and could not compete with the West because it did not have the accounting measures to manage responsibility centres at all levels of enterprise. Without management accounting measures, you cannot manage what is not measured; leading to sloth, inefficiencies, moral bankruptcy and wide-spread corruption. Ultimately, the Soviet Union's system collapsed and Glasnost was needed to bring transparency, democracy and accountability to its economic and political systems.

Today, there is growing evidence that the Chinese system also suffers from the lack of accountability along with the management and financial yardsticks needed to properly manage its economic, social and environmental activities. Ghost cities, tell us that there is little expectation of economic payback or return on investment for such projects. Pollution pervades all aspects of life, leading to huge long-term health and environmental concerns; eventually they impede all forms of industrial and agricultural activity. Add to this, the poor management of national finances such as, gold purchases at historically high prices, over-exposure to US treasuries and above market purchases of resource companies by Sovereign Funds, are a few of the disconcerting practices that infer a lack of financial controls and understanding. 

Synthesizing the analysis, we should bear in mind a number of considerations:

One, at the meta-economic level the hard constraints of a finite planet will prevail on exponential economic growth in resource depletion and over-population. No nation can escape the consequential  pending disaster to occur when the fragile balance of populations, resources and the bio-sphere is broken and lost forever. 

Two, the business cycle of expansion and contraction comes into play sooner or later, with its unavoidable reversion to the mean theory. Thus, when China faces this mathematical reversion, after extreme growth rates - the other side of the equation could be just as powerful to the detrimental contraction side of activities .

Three, leverage is a useful and beneficial way to spark accelerated growth making everything look easy at the time. But, the when the wheels come off, the downward push is even faster and harder. Every generation, it seems, must relearn the perils of debt and how their related bubbles have created untold pain and suffering when the party came to an end.

Four, societies where oppression and corruption are everyday parts of life, with little in the way of transparency and accountability, do not survive. Internal and external forces historically come to bear, that results in dramatic social, political and economic changes - this is a law of nature that returns systems back to the their equilibrium. In China's case; this could be termed as a return to a balance between its cultural Ying and Yang!   

What we see then is a system that has many deep troubles, where possible unrests and breakages could occur at any moment, with its credit leverage fuelling a " The Big Mama of all Credit Crunches" that changes and brings about a long overdue Glasnost  to a nation that has been operating far beyond its equilibriums of Ying and Yang in so many respects. That, by rules of nature, must revert to the mean.

The rest of the world should be prepared for major adjustments when this dragon lies slain by the consequences of its unsustainable beliefs and practices. To be forewarned, is to be thusly forearmed.

Dr Peter G Kinesa
May 10, 2013      

Chinese Credit Crunch - Dragon Slayer

Against Crony Capitalism -The gap between rich and poor will continue to grow until we give up on QE

Against Crony Capitalism - The gap between rich and poor will continue to grow until we give up on QE

Let me just say that this is an interesting read, but I do not believe that there is any cause and effect relationship between QE and the wealth gap. This is a gap that has been growing long before QE was a glimmer in Bernanke's eyes. 

American social decay has been going on since WW II and shows no signs of abatement. Look at the disgraceful conditions of their cities, physical infrastructures and superficial cultural Combined suggesting there is little hope in the context of its current frameworks and leadership anything will ever change. In fact even if they wanted to, there is no more pie to pass around and share as humanity is past "peak everything" . 

How really dumb is the situation? Well America continues to encourage more immigration that creates larger ghettos of poor folks, knowing full well the resources needed to feed these tens of millions more; just won't be there in ten years or so. But the Rich do enjoy interim benefits. So, expect a class war leading to a possible reconfiguration of the states into sovereign regional governments - this is starting to look more plausible as the gap between rich and poor grows. Also when you think about Texas's lone star ambitions.

Historically, feeding cake crumbs does not stop the barbarians at the gates. Storms are beyond control when the wealth gap is too big, for too long. Winds of revolution are stirring.

Dr Peter G Kinesa
May  16, 2013 

When will they storm the Bastille?

BBC News - Canadian Glaciers Face "Big Losses"

BBC News - Canadian Glaciers Face "Big Losses"

click here

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 -

JIM ROGERS BLOG: The World's Savers Are Being Wiped Out, And History Says That Leads To Very Bad Things

JIM ROGERS BLOG: The World's Savers Are Being Wiped Out, And History Says That Leads To Very Bad Things

When it comes to social phenomena you cannot apply the disciplines, logic, devices, rules and observations of science - these are concrete constructs. Social phenomena deals with abstract constructs but uses scientific methods to create stories (a.k.a. Theories) about what reality is - whereby, those who are most persuasive will form the accepted consensus of a perception that is the social reality. But, it has nothing to do with what reality actually is.

So Jimmy is right, the US dollar wins by default until the social perception changes and we move to a more persuasive perception of what reality is - and that change in perception can happen at any moment. 

So, its always far better to be lucky than to be smart. A dose of reality?

Dr Peter G Kinesa
March 11, 2013

P.S. You see what us smart guys know is that all currencies eventually gravitate to a debasement of zero, as their underlying geographical resources and infrastructures expire. That is deterministic physics. However, quantum physics now overrides this theory, with its random coexisting realities - so it is again; logically, still all about luck. Science? PK.  

How many coexisting realities are there? 

We are not sure...

Marc Faber - "EVERYONE SHOULD OWN A PIEROGI FARM"

Marc Faber - "EVERYONE SHOULD OWN A PIEROGI FARM" 

You can probably tell by now that we have a little bit of a sense of humour around here. It was Churchill who once said, "a joke is a very serious matter" so we take his thought to heart and use it to uncover perspective and a sense of sanity. Anyway, we are having a little fun with  this story as we received over one thousand email enquiries from folks wanting to contact our realtor in South Kiev for his farm listings.

What 's more revealing is the breakdown of the top five countries we received enquiries from:

Greece -  23.4%

Newfoundland (Canada) -  17.4%

Italy - 12.6 %

America - 8.6%

Japan - 6.9%   

Next week we are going to start selling global retail franchises - "Faber's Farm Fresh Pierogies" - billions served. 

Have a great day!

Dr Peter G Kinesa
March 8, 2013

Marc selling, and Me (inside cooking) at Pilot Mobile Outlet

Marc Faber - "SELL EVERYTHING" - A Correction Could Start Any Day

Worth watching Marc dodge Maria's skeptical questions in this CNBC interview. We are not  being as analytical as Dr Kinesa's in his post today about the mathematics and logic of everything. In fact, we go along with Faber and Kinesa  foreseeing stormy markets ahead as we plow through this  "Ice Age " in valuations trapped by rates being too low, for too long - with no easy way out of the trap. 

When you listen to Dr Doom and the best bets he can put forward are the Ukraine and Viet Nam; you get a real sense that things are pretty tough. He does like the resource sector, but does not point to any specifics. Technology stocks are also on his watch list  - have consumer gadgets and applications peaked?

Who knows as consumers, according to recent studies, certainly do not seem to be as concerned about the environment anymore - that puts a damper on green tech as well.

Oh well, who has a retail pierogi farm or franchise for sale? 

First Financial Insights
March 4, 2013

Pierogi Farms Cheap!  - Exceptional South Kiev Investment Properties

$50,000 US - 10 Acres

Contact Ivan Jureychuck

Cabbage Roll Farms Realtors 

It’s not like the Republicans are much better, Dems complain of “Debt Clock” in Congressional hearing room

It’s not like the Republicans are much better, Dems complain of “Debt Clock” in Congressional hearing room

This number is much worse, and getting worse.

Many times we have mentioned that the actual debt number exceeds over $100 trillion.That number comes from Bill Gross; PIMCO, who also includes contingent and off-balance sheet liabilities in the total. If this number doesn't scare you, maybe the trend chart  in the linked article will - shooting straight upwards? What you don't see is the other side - that is the resource assets required to repay this debt running in the inverse direction.

So here's a question for those high IQ types - how do you repay all this debt when the resource side is depleted? Realistically, major problems will start to occur long before complete resource exhaustion occurs.

Sleep well, while you can.

Dr Peter G  Kinesa

February 28, 2013

INVESTORS' INSIGHTS - Marc Faber - 2013 Gold Price Prediction

INVESTORS' INSIGHTS - March 1, 2013

When the staffers over at First Financial Insights sent me this post before its release earlier today, I almost died from the laughing. I don't know what is funnier: seeing ole Bernie in his new digs or the idea that Mr Faber has painted himself into a golden corner. We now expect regular updates on his holdings, along with an audit report from one of the Big Firms, this time.

Anyway, I got such a big kick out of it - I wanted to be fair by sharing it with my fellow "Kinesanites."

Dr Peter G Kinesa
March 1, 2013

P.S.  Thanks to the staffers over at  FFI for the laugh - keep it coming. Pete.

Laughing Kinesanite.

Marc Faber - 2013 Gold Price Prediction

Now this video gives us a little insight into why he is carrying so much Gold in his own portfolio -25%. So now, you can see why he is so eager to have us buy more and protect his position. Otherwise, if we do the opposite and sell all our holdings - then our poor Mr. Faber faces unkind losses and embarrassment. All this could also lead to a career change for our dearest unbiased advisor.

By the way, will you tell us Marc when you decide to sell or reduce this position before you actually do? Hmm...

Madoff get back in the cage -

First Financial Insights
March 1, 2013 

"Believe me, I told you 25% is in Gold"

Home Sweet Home

Is France Business Hell - Against Crony Capitalism

Is France Business Hell?

Actually, I don't know if it is or isn't,  for I have never had the opportunity to do business with the Devil. What we do know is that the breakdown in civil safety nets, contracts and trust - leads to social unrest; and in turn political upheaval; and finally geo-political engagements and hostilities. Europe has a long history of strife amoung its member countries and most people foolishly think that today things are now different.

We don't. For in desperate times, caused by water, food and materail shortages, unemployment, overpopulation, climate change and economic instability, desperate people do desperate things. So just add France to the long list of countries that are showing signs that are now well past "peak prosperity" and are now heading towards the social-political-economic graveyard. Where their cities will look like Detroit, and their beaches host more fishermen than  tourists.

Dr Peter G Kinesa
February 28, 2013

Bonjour - Mr. Satan!

Marc Faber : Buy Gold To Protect Against The Next Crisis

Marc Faber : Buy Gold To Protect Against The Next Crisis

Oh My Gosh! Why all the Bugginess over Gold? It does nothing for our real economy, nothing to assure our on-going subsistence and expends currency from the real wealth of the planet. A net negative to planetary wealth.

Marc in this telephone interview is again taking on a senior role at the Pearly Gates, by saying or suggesting two things. Gold is insurance against systemic risk. And investors should hold up to 25% of their portfolio assets in gold. There is no way on earth that he can predict or state this just based on past events. The future is filled with a vast number of permutations, as regards the possibilities and possibilities of outcomes. One is that the price gold collapses more that everything else for any number of reasons. To say gold is some form of insurance against anything is - JUST PLAIN STUPID!

That said,obviously the 25% gold allocation is also not so wise for non-speculative portfolios.

When the crap really hits the fan, folks are going to be thinking more about gas, water, food and medicine. Things get pretty basic.
But let's not get into the prediction game here.

Dr Peter G Kinesa
February 26, 2013

" Peter, Gold Is Insurance Against Systemic Risk!" - GOD

What could go wrong with the housing recovery in 2013?

What Could go Wrong with the US Housing Recovery in 2013?

Lots. Read and analyze these charts for yourself in the linked blog. Housing bubbles, particularly like the kind leading up to 2008 meltdown, do not correct themselves in just a few short years. This is at least a decade long struggle, that will be further hindered by increases in rates at some point, collapsing all asset values. And hence, all forms of construction.

Then there's the ripple effects on renovations, big box retail, industry employment and so on. This is a huge hangover for Main Street, caused by he biggest party of drunken Wall Street sailors in history. Yet, NO ONE WENT TO JAIL...

Ain't that America. Little pink houses for you and me.

Dr Peter G Kinesa
February 25, 2013

Ain't that America, for you and me?

INVESTORS' INSIGHTS - Jim Rogers:Facebook Is not an Investment, It's a Waste of Time

INVESTORS' INSIGHTS - February 18, 2013

"I told you we should LISTEN -"

Failing to listen. The list of corporate failures that can ultimately be blamed on this seemingly simple, but so often overlooked human attribute, has draged down so many of the once great and mighty. Reminding all of us, of the costs associated with thinking we know it all - when we are drunk in our current success. When in truth, the only thing that we can ever certainly know in this deterministic world  - is that we know nothing . 

So we continue to humbly listen, again and again and again.

Dr Peter G Kinesa

February 21,2013  

Jim Rogers: Facebook Is not an Investment, It's a Waste of Time

Click Above

Jimmy in this phone conversation says he is neither long nor short Facebook; he is simply just not investing. In investment parlance this means, he thinks the stock is garbage and would not touch it with a ten-foot pole. We agree.

First, Facebook ascribes to one of the worst American business practices and has little "human touch" in its business model. American businesses that fail on the world stage are often swept away by global competion because they do not have a High Touch with their customers. Any company that does not have a real person available to assist customers with service issues is doomed to fail - it happens all the time. The first rule of business success: "Listen, listen, listen, and then when you have heard enough, listen again and again and again " 

And the second rule that follows: Don't let your accountants run the business - need we say more? 

Second, its software is not intuitive, particularly for business, and again faces customer service challenges that will turn this market off in the early going. This market is where the real money is made.  They will not return once they have been turned off.

Facebook faces powerful copycat competition from the likes of Google, Twitter, Microsoft and others, who have other complimentary platforms where the combined functionalities of hardware and software configurations create synergies that could easily see Facebook's consumer markets stolen. Moreover, these powerful competitors have a strong presence and trust in the more lucrative commercial markets that are critical to long-term success and profits. We don't see a lot of businesses tying their destinies to what is perceived be to a kid's fad and consumer product. 

It is unlikely that Facebook can hold its valuations. The markets may give it a couple years, at most, to generate commensurate profits. Right now, that appears highly unlikely considering the tough competition in its most lucrative markets.

We go beyond Jimmy and expect this puppy to sink well below $10 in the next 12 to 18 months. More so, if interest rates climb in this period. So don't waste your time or your money on the long side of this hyped-up generational fad.

First Financial Insights

February 18, 2013

High Tech minus High Touch, Spells Disaster 

Marc Faber: Invest Overseas, The Fed Party Is Over

Marc Faber: Invest Overseas, The Fed Party Is Over

What's in a number anyway? Faber says the FED balance sheet is over $3 trillion. However, the US government owes about $14 trillion, thusly, putting the total US government balance sheet at $14 trillion number. Does it include the FED's balance sheet? Actually, I don't know right now.

But, I can report what the legendary fixed income guru - Bill Gross; PIMCO, estimates. He puts total US government debt at a figure of  over $100 trillion. His number also includes all future payments and contingencies on a present value basis. Put another way, this is the value of all known oil reserves that are set to exhaust in about 40 years.

Ever wonder if this debt can ever be repaid ? Do not spend a lot of time thinking about it.

Dr Peter G Kinesa
February 20, 2013

What do you mean we're broke?