#IMAGINE

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

 hearts of the last eternity, where whispers

 dance with stars... 

IMAGINE

And always in those dreams - are Martin, 

Bobby, Jack, NYPD, NYFD, and so many 

others

 - 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

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."

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!

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 

Paul #Krugman - Varieties of Errors; #NYTimes

Paul Krugman - Varieties of Errors
#NYTimes



http://krugman.blogs.nytimes.com/2012/11/29/varieties-of-error/


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

Jim Rogers - Never Forget

Hmmm...

Jim Rogers: Politicians always look for the easy answer

There is a good reason for this - they are not exactly the sharpest knives in the drawer. In fact there was a village in Texas missing a idiot not so long ago. The consequences are still being fealt today.  

FirstFinancial Insights
November 30, 2012

Sure I can spell it!


 

OUR COMMENTS

 

Too funny, but it was not that long ago. And we should never forget the consequences. Have great weekend!

 

 

Dr Peter G Kinesa

November 30,2012

Marc Faber: The whole Global Financial System will have to be Reset

Marc Faber: The whole Global Financial System will have to be Reset

My god, what next? 

Why will the system collapse? Because it is a system that is flawed in its design, ignoring two constraints of physics regarding finites and chaos theory. These are the hard constraints any economic system must consider or else face a tremendous imbalance leading to its collapse.

The underlying premise of the abstractionist theory is that wealth abstracts can be created forever.Of course, in the abstract world this is possible ( e.g. printing money), and so it can thusly fabricate a positive-sum abstract game. Whereas, in the real physical world, the second law of thermo-dynamics prevails creating a negative-sum real game. There are fewer and fewer raw elements available for use with each passing moment as each transforms into the chaotic or non-usable state.

Neo-classical economics, hence conveys a picture that is contrary to the actual meta-economic version. The Reality. Furthermore, there is a growing imbalance between the stored wealth in the positive-sum abstract game and the remaining inventory of usable elements yet to be transformed under the negative-sum real game. Disaster occurs when the imbalance between the two is breached - causing the systemic collapse of the entire financial system. So no wonder NO ONE UNDERSTANDS RISK!

Hopefully, this sheds further light on Marc's quoted statement and prediction.


Dr Peter G Kinesa
November 28, 2012

Positve-Sum Gamers

FIRST FINANCIAL INSIGHTS: Jim Rogers: Shortages of Raw Materials will lead ...

FIRST FINANCIAL INSIGHTS: Jim Rogers: Shortages of Raw Materials will lead ...: Follow Investors' Insights Regular Updates (Sample Post; November 22, 2012) Jim Rogers: Shortages of Raw Materials will lead to Wars...


Let me add my two cents here. Everyone needs to be more careful when they order lunch.

Dr Peter G Kinesa
November 28, 2012

I won't  forget next time, promise

 

 

 

The Fall of Lehman Brothers - Finance Documentaries

The Fall of Lehman Brothers - Finance Documentaries


These guys obviously were not too big to fail, but the implications of their failure reverberated around the world and triggered the biggest bailout of Banks and Dealers in US history. The question is: Have we leaned anything from this financial disaster? Time will voice its decision; sooner, or later.

Our recommended  business book list ranked "Too Big To Fail"  #7 of all time top ten, because of the importance of  events leading to and occuring after Lehman's demise. A blow by blow account of the power players in Washington and Wall Street,  provides a fly-on-the-wall perspective of their tense inner workings.

The book  and documentary should provide you with an informed view of a time, when the world of finance was mere moments from collapse.


Dr Peter G Kinesa
November 22,2012

Socialist Capitalism ?

Marc Faber : There will be Pain , very substantial Pain

Marc Faber : There will be Pain , very substantial Pain

For sure Marc. Moreover, we are happy you are finally aligned with our economic thinking. The  blog below (Economic Collapse 2020: A Failed Theory)  sets out our view from over a year ago, when we forecasted a financial collapse by 2020. A forecast that compares to Mr. Fabers' and again affirms why First Financial Insights have been accurately predicting events over the past couple of decades. Sorry - just tooting our horns a bit.

To summarize here are a few of the critical drivers:

Outdated abstractionist economic theory prevails - experts slow recognizing that physical economics will override their neo-classical theory. Print money and add more debt. Too bad for everyone.

Not much has changed since 2008, and the leverage and risk may be greater now. Memories are short.

There are imbalances in trade and finance that continue to grow, despite sluggish activity. Some  Banks and Brokers assets are still growing at unsustainable rates relative to global GDP - there will be a reckoning.

Interest rates are too low, too long - setting the stage for a mathematical deflation in asset values that could  have staggering implications; turning into social unrest - and then, geo-political confrontation. History at it again.

Resources deplete while populations grow. In the end, this will never pencil out. 

Euro crisis is still chugging along. Using outdated fiscal and monetary measures cannot affect real or physical economy.The whole thing never made sense because it distorted the benefits of comparative advantage, and the cultural and historical aspects were not homogeneous thereby also impeding free flowing labour. It encouraged inefficiencies, but concentrated power.  

While in the short term large abstractionist institutions are too big to fail, it is naive to think that anything is ever physically too big to fail. Economic entropy is a cruel mistress .


Dr Peter G Kinesa
November 21, 2012

Indeed Entropy: You are cruel.

Marc Faber : Ben Bernanke can drop as many Dollar bills as he likes

Marc Faber : Ben Bernanke can drop as many Dollar bills as he likes

The creation of fiat currency has reached a tipping point, particularly for countries in the Euro zone. Why? First, it should be self-evident that even with low rates, there has been no uplift in capital formation or new business activity. One would expect that even established firms would be escalating there capital expenditures. They are not! Why? There are few sensible opportunities and the general economy is stuck in a liquidity- valuation trap. Why? Well, for one Greece, Spain, Italy and the others have fewer resources to exploit while consumers remain handcuffed at the pocket book.

So Uncle Ben might as well be back creating converted rice, as it will have about the same effect on this Ice Age for global markets, business and economies.

Dr Peter G Kinesa
November 17,2012

Uncle Ben's Converted Rice?

 

 



Jim Rogers Blog: 2013-14: A Slowdown Is Coming

Jim Rogers Blog: 2013-14: A Slowdown Is Coming: 

America is going to have a slowdown in 2013-14, there will be fewer jobs, more unemployment and turmoil in oil and currency markets. - in Ec...

There is no doubt about it - and, there is very little left in terms of fiscal or monetary tools to fix this mess... essentially the wreckage of the 2008 crisis. Abtractionist economists are finally facing the end game of their alchemist remedies and as we have said: the markets remain in the " The Mother of All Bear Markets" that could last for years...if not. decades.

What we face is the physical realty of drawing blood from a stone, a shrinking pie of resources mixed with a growing number of diners; remains a  hard mathematical constraint to any further growth, particularly on a per capita basis - the only metric that really counts.

Welcome back to Hoover Town.

Dr Peter G Kinesa
November 15, 2012   


Crowd awaiting 2016 "State of the Union Address" - Washington Post,  

The Daily Bell - Is the Age of the PetroDollar Over?



The Daily Bell - Is the Age of the PetroDollar Over?

It should never cease to amaze us how certain interests will always conjure up numbers to forge a rabbit-out-of the-hat solution to problems that have been festering for years. Cut to the chase guys. Its all about the longevity of our species - and here the numbers are pretty easy to define.

All other things being equal cut the population down from 7 billion to 1 billion and you invariably extend our existence seven fold. In all likelihood, that's  just another 700 to 1,000 years. Deeper cuts would be needed if we strive to achieve a more extended inhabitance of the planet.

Future generations do not have a democratic voice in this decision, so it is up to us to decide our species' date with the cliffs of time. Thus far, the preference is clearly seeking a sooner rather than later end to the human experiment. A short apology to future kinfolks appears to suffice.

Add to this the possibility of a nuclear winter at the whims of geo-political posturing - well, even the above numbers become overly optimistic. So keep on fracking, drilling and mining, but no matter however you extract it, the conclusions are dim for the hopes and possibilities of future generations. Again, sorry about that!

Dr. Peter G Kinesa

Goldman Sachs Documentary - Finance Documentaries

Alice In Wonderland - join the party.



Goldman Sachs Documentary - Finance Documentaries


Back in 2008 these Masters of Abstraction were just moments away from collapse. Hey, they were just Too Big to Fail...for now.Remember they produce nothing, shuffle paper and convince the world that their negative-sum game is a positive-sum game. Funny mathematics and linguistics, aided by the witchcraft of lawyers and accountants produces something from nothing that defies the laws of thermo dynamics and theological doctrine.

But sooner or later the kids grow up to find out that Santa Claus, The Tooth Fairy and Easter Bunny are inventions of our imaginations. Inventions created by the likes of the Mad Hatter at Mad Sachs - who truly believe they will never grow up - however, as history proves and as stories go... All Mad Things Must Come to an End.


Dr. Peter G Kinesa

Remember...Nothing is Forever

Marc Faber: Middle East Will Blow Up and Affect Markets

So much for overpopulation and economic growth.

Marc Faber: Middle East Will Blow Up and Affect Markets

Marc understands that we are still faced with the perils of a nuclear war that will make all other issues redundant. It is worse now than the Cold War period because of the threats of rogue nations or  non-aligned agents. And we remain under  hair-trigger alert that requires the decision as to whether to create a World Obilteration: in just 15 minutes. In fact, the Russian's system (Perimeter) of retaliation could be launched automatically based on sensors and computer systems that detect such a War in the Middle East - a War that is percieved by their automated system to be a first strike attack on their nation - that ISN'T.

"Affect Markets" is thus the understatement of all time - as it will simply destroy them forever! So it is - as our timeclock ticks at just 15 minutes to Doomsday...

D Peter G Kinesa

First Financial Insights Inc.: Global Stocks to Collapse

America's prospects are good for the next ten  years. Hmm..

 

First Financial Insights Inc.: Global Stocks to Collapse:

   Oh my... Here we go again!   Global Stocks to Collapse by 50% Fuelled  by Credit Crunch - Markets Mel...


While global markets moved downwards significantly last year shortly after this projection; our view remained unchanged based on fundamentals mentioned and financial mathematics. Oh baby - its a wild world ... and it's hard to get by just on a smile.

Dr. Peter G Kinesa   

Marc Faber: Markets Will Drop at Least 20%

There she goes???

Marc Faber: Markets Will Drop at Least 20%

Any signifcant spike in long rates could make matters much worse as we have been warning for months now. Plus as the likelihood of a geo-political event increases so does market risk and the risks to the downside. Credit crunch in eurozone could just incinerate all values making equities difficult to justify with high systemic risks pushing to crush profits and liqidity. No Santa Claus ho ho hoing these days.


Dr Peter G Kinesa

Marc Faber : The Uncertainty is much higher than in the past

Marc Faber : The Uncertainty is much higher than in the past

By all measures.

Dr Peter G Kinesa

Empathy represses analytic thought, and vice versa: Brain physiology limits simultaneous use of both networks



Empathy represses analytic thought, and vice versa: Brain physiology limits simultaneous use of both networks

Now how the heck can you measure this given the speed of the brain's organic processing. Something to think about anyway.

Dr. Peter G Kinesa

Marc Faber : The U.S. will Default through a Depreciating Currency

Get the picture?

Marc Faber : The U.S. will Default through a Depreciating Currency


Currency debasement is a given. Its value is constrained by the infinite regression of time amd the finite regression of inputs - particularly Non-Renewable Natural Resources. Thus, the expected outcome of these two regressions is the gravitation of  its value towards zero. This, of courese, will brutally obliterate economic activity as it is slowly realized that the abstract constructs associated with all forms of currency or exchange can no longer be converted to concrete constructs. It will happen.

Shhhh... but don't tell anyone.  

Dr Peter G Kinesa