Monday, September 15, 2014

Janus Yellen and the Great Transition from Risk-On to Risk-Off

The end of risk-on cannot be prettily managed.


In ancient Roman religion and myth, Janus is the god of transitions--beginnings and endings of conflict, war and peace, journeys, trades and eras. Janus has two faces, as befits a god that looks both to the future and to the past.

In our era of omnipotent central banks worshipped by the Status Quo, we have a goddess of financial transitions--Janus Yellen, the two-faced chair/deity of the Federal Reserve--to usher in the Great Transition from risk-on to risk-off.

What is risk-on? Speculative bets directly enabled by central bank issued free money for financiers--also known by the bland technocrat perception management labels stimulus and quantitative easing (QE).

The primary risk-on policies are:

1. ZIRP--zero interest rate policy. This enables financiers (but not J.Q. Citizen) to borrow money for next to nothing and then use this free money to buy assets that pay dividends or interest.

This is effectively a gift to banks and financiers. The goal is straightforward: transfer great wealth from the peasants who once earned interest on their savings to the banks, who have rebuilt their bad-bet-shattered balance sheets on the backs of tax donkeys and savers.

2. Asset purchases. The Fed has bought almost $4 trillion of Treasury bonds and mortgages from primary dealers (banks) and other financial institutions. This is effectively a transfer of cash directly into the financial system.

Those closest to the Fed money-spigot benefit directly from asset purchases (a.k.a. quantitative easing). Those far from the spigot (the 99.9%) get nothing but slightly lower interest on their crushing debt.

Those with low/no debt have lost hundreds of billions in interest that has been transferred to the banks by ZIRP and QE, which actively suppresses interest rates.

3. Liquidity. This simply means the Fed will create as much money as is needed to meet the borrowing needs of the financial system. This unlimited liquidity is offered not just to U.S. banks, but to the entire global banking system. The Fed doesn't just bail out U.S. speculators--it bails out speculators worldwide.

In other words, the Fed deities are lavishly generous to financiers everywhere.

But all these risk-on policies have created extremes of speculative bets, which have generated corresponding extremes in systemic risk. Those who have skimmed profits from risk-on speculation with borrowed money and leveraged bets need to unwind/exit their bets to book their gains.

This unwinding of speculative excesses is risk-off.

It falls to Janus Yellen to oversee this transition from roughly 20 years of risk-on to risk-off. The trick will be to unwind all the debt and leverage without collapsing the global speculative house of cards.

Janus Yellen's job is to manage the transition such that banking sector profits are maintained.One way to do this is to raise interest rates incrementally.

Ilargi at theautomaticearth.com makes a compelling case for the Fed raising interest rates sooner than most believe possible as the only means left to maintain banking-sector profits: The Fed Has A Big Surprise Waiting For You.

Though we can be confident that Janus Yellen's face looking back in time sees the Fed's unprecedented efforts to prop up a failed, broken financial system as a success, to the rest of us, the past is easily visible: central banks did not fix what is broken in the financial system; they simply papered over the sources of speculative instability with multiple layers of additional bureaucracy, ZIRP, QE and unlimited liquidity. As a result, the threat of speculative instability was only deferred, not eliminated.

The future is much less clear. As Janus Yellen looks ahead, she finds no real historic parallels for the extremes of risk-on debt, leverage and speculation that unprecedented central bank intervention have conjured up.

She also finds no recent precedent for the gargantuan expansion of financial claims on real wealth that dwarf the actual expansion of real wealth since the 2008-09 Global Financial Meltdown: energy extracted, soybeans harvested, industrial equipment manufactured, etc.

Multiplying the financial claims on real wealth by creating money and selling Treasury bonds that are claims on future wealth does not expand real wealth. This is the foundational falsity of risk-on monetary easing and the speculation it fuels: expanding claims on real wealth does not increase real wealth.

The idea that expanding financial claims on wealth is wealth is entirely illusory, and this is why risk-on is a self-liquidating dynamic: as everyone holding a claim tries to cash in their illusory gains, the risk-on trade implodes.

Janus Yellen is trying to engineer an impossible "solution" to this destabilizing dynamic: gently transition risk-on to risk-off so imperceptibly that the market for phantom assets will magically absorb all the selling.

But this assumes there will be buyers ready to bid up the market value of these phantom assets as the smart money distributes/sells. And that is of course the dynamic of bubbles throughout human history: there are ready buyers right up to the point that prices start dropping sharply. Then the bid vanishes as the pool of greater fools has been drained and there are no buyers, only sellers.

Perhaps what Janus Yellen's future-facing eyes see is a future in which central banks are forced to become the buyers of last resort not just of trillions of dollars in home mortgages and sovereign bonds, but every other asset as well: real estate, corporate junk bonds, swampland, the debt of bankrupt cities--everything.

This is nothing but another expansion of financial claims, masked by the apparition of phantom assets on the central bank balance sheets. Buying up phantom assets does not transform them into real wealth. Regardless of how Janus Yellen tries to sell the idea as the miraculous "fix" to the systemic bubble in claims the central banks have inflated, it will fail just as predictably as her plan to defuse the risk-on trade while maintaining the inflated value of the phantom assets the speculative frenzy has created out of nothing.

The end of risk-on cannot be prettily managed. If Janus Yellen had looked far enough back in history, she would already know that.



Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle editionAre you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.

Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 



NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Camille G. ($50), for your gloriously generous contribution to this site -- I am greatly honored by your steadfast support and readership.Thank you, Lee V.D.B. ($20), for yet another superbly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Sunday, September 14, 2014

Is Risk-On About to Switch to Risk-Off?

Cranking markets full of financial cocaine so they never correct simply sets up the crash-and-burn destruction of the addict.


Human memory being what it is, almost three years of risk-on euphoria has created the illusion that risk-on is The New Normal that will continue on for years to come. Perhaps, but there are converging signals that suggest the risk-on trade is about to reverse polarity to risk-off. These include:

1. Junk bonds. Two charts below (one from Lance Roberts and the second from Chris Kimble) suggest the risk-on extremes have reached the point of reversal.

2. Soaring U.S. dollar. Without going into detail, it's increasingly clear that the soaring USD is destabilizing the global foreign exchange (FX) markets. FX has been the source of many of the risk-on carry trades that have been driplines of financial cocaine for global stock markets.

3. Reversal of the Federal Reserve's quantitative easing (QE) programs.Though the stock market has roundly ignored the withdrawal of $600 billion of free money for financiers stock market stimulus all year, the October end of the QE asset buying program now looms large. 

The Fed has already trimmed its asset-buying binge from $85 billion/month ($1 trillion/year) to $25 billion/month. Risk-on proponents claim that this reduction has been replaced by Bank of Japan and European Central Bank QE programs, but this belief fails to take into account the diminishing returns on BOJ and ECB stimulus.

THose spigots have been open for so long that adding more monetary stimulus no longer moves the needle positively. Rather, the extreme measures push the global fianncial system into increasingly risky territory.

4. Geopolitical spillover. One key element of the risk-on trade is the magical-thinking belief that the U.S. stock market is completely decoupled from geopolitical dynamics. In other words, Japan and Europe can sink into recession, China's growth can slow, the Mideast can be destabilized by multiple open conflicts and none of these issues will ever matter, as long as "the Fed has our backs," "corporate profits keep rising," etc.

Geopolitics matter even if only because global dynamics cause global players to switch from risk-on to risk-off as markets destabilize and carry trades dry up. Highly leveraged traders must delever, and that selling on the margins tends to topple dominoes that lead straight to the core.

The market for high-yield bonds is a well-known canary in the risk-on coalmine.These two charts should give anyone pause--the canary is stiff and cold but has been propped up in its cage by risk-on cultists fearful of any intrusion of reality:

The VIX, a measure of volatility, has been suppressed by risk-on euphoria for so long, 13 looks high. Market participants seem to have forgotten that the VIX can go to 30, never mind 13:


I've marked up a daily chart of the SPX (S&P 500) to show the megaphone topping pattern has broken lower, and the key support of the 20-day moving average (1992) and the previous high (1991) has been broken.

The last time SPX broke below the 20-day MA, the market swooned in what now looks like a warning shot that the risk-on trade was at risk of reversing to risk-off.


The weekly chart of SPX shows how long the risk-on trade has run. Markets typically touch their 50-week moving averages occasionally, just as a statistical mean reversion dynamic. The SPX hasn't kissed its 50-week MA since late 2012, and hasn't visited its 200-week moving average since 2011.


Even the most avid Bulls should grasp that market corrections of 10% to 20% are statistical features of all markets. Cranking markets full of financial cocaine so they never correct simply sets up the crash-and-burn destruction of the addict.



Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle edition
Are you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.


Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 



NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.


Thank you, Robert B. ($15), for your much-appreciated generous contribution to this site -- I am greatly honored by your steadfast support and readership. Thank you, Steve D. ($5/month), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.


Read more...

Saturday, September 13, 2014

The Hidden Value of Gardens

Much of the community economy is invisible to market discovery of price/value.


Long-time readers know I tend to see the big issues of our era in small things. For example, I see capitalism's primary flaw--the market's inability to value whatever markets cannot price--in our society's blindness to the full value of vegetable gardens.

An example of capitalism's inability to value what cannot be priced by the market's supply-demand mechanism is the loss of the wild fisheries, for example, blue-fin tuna. The market can price the last wild blue-fin tuna caught, but it cannot price the loss to the sea's food chain and web of life, nor the eventual costs of this loss to humanity. As a result of this ontological defect, we cannot possibly make fully informed or wise decisions based solely on the market value of things.

If we rely on the market to value a vegetable garden, we would weigh the garden's harvest and calculate the wholesale value of the vegetables, or perhaps the price that could be fetched for the veggies at a local farmer's market.

Let's say the market determines the "value" of the garden's output at $200. If we calculate the hours of labor needed to maintain the garden and harvest the output, this appears to be a very low return on the investment of labor (time) and capital (seeds, soil, water, compost, etc.)

But does this market-calculated value truly capture all the value intrinsic to a thriving garden? Even the most superficial survey of the spectrum of value created by a garden would find that the market captured almost nothing of a garden's true value.

Just off the top of my head, here is what a garden generates in non-market value:

-- A soothing green oasis that offers visitors immediate health benefits: lower bood pressure, calming the mind, re-establishing a connection to the natural world, etc.
-- A natural gathering place for those living nearby. A rooftop garden, for example, becomes a magnet for residents of the building, even if they express no interest in raising vegetables.
-- A source of meaning and pride for those caring for the garden
-- An irreplaceable "classroom" for learning about interactive, dynamic systems, biology, ecosystems, insects, pollinators, soil, micro-organisms
-- A source of inspiration for culinary education, art projects and other expressions of creativity and beauty
-- A workplace where participants can learn perseverence, a work ethic, how to nurture natural processes, etc.
-- An opportunity to learn the social skills of sharing and working with others
-- A healing place for people who have never had little experience with the natural world and with the healing powers of caring for something other than one's own narrow self-interest
-- A natural rallying point to form a community out of disparate individuals or deepen the bonds between neighbors
-- The joys of harvesting fresh, organic vegetables

These ten sources of value unrecognized by supply-demand pricing of marketable output do not capture the full value of a vegetable garden, but they reveal how much of what I call the community economy is invisible to market discovery of price/value.

A volunteer sunflower in our small, messy garden, towering in front of our peach tree:


A potato plant, flowering beneath the scarlet runner green bean trellis:


A stir-fry of veggies from the garden:

A batch of peach pies, four of the 23 pies we made from the peach harvest:

How do we value such things? Certainly not just on their market value.


This essay was drawn from Musings Report 33. The weekly Reports are emailed exclusively to subscribers ($5/month) and contributors ($50+/year).



Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle edition
Are you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.
You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.


Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube)





NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.


Thank you, Frank S. ($50), for your outstandingly generous contribution to this site -- I am greatly honored by your steadfast support and readership. Thank you, Patrick M. ($5/month), for your supremely generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Thursday, September 11, 2014

What If the Easy Money Is Now on the Bear Side?

Complacent melt-ups aren't just boring--they're not very profitable.


File this under Devil's Advocate: what if the easy money in the stock market is no longer the "guaranteed" Bull melt-up but the Bearish bet on a sudden air pocket?Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.

You probably know the drill: program your trading bots to recognize every technical trading scheme's key support and resistance levels, and then unleash huge futures/options buys after hours or pre-open so the market jumps in the direction that makes you the most money.

Unleashing a tsunami of buy orders forces Bears to cover their bets on a decline (shorts), goosing the market higher. The melt-up depends not just on trading bots hammering the market in the desired direction with massive buy orders--it depends on a supply of nervous Bears to cover their shorts by buying stocks. This buying triggers others' trading bots to buy into the rally.

Short-covering is an essential source of the self-reinforcing buying that has kept the U.S. market melting up for years without any gyrations down of more than a few percentage points.

Buy the dips has entered the Pavlovian realm of automatic response because the managed tsunamis of futures/options force those betting on a decline to cover their shorts by buying, pumping the rally up with steroid-like buying.

The problem with this guaranteed melt-up is the unceasing advance and immediate buy the dip response has decimated the ranks of Bears willing to bet against the melt-up. This has removed one of the primary fuel sources of the melt-up.

In other words, the managers' great success with forcing Bears to seek cover has drained a key reservoir of buying power. Eradicating the Bears has all been jolly good sport, but it has also reduced the shorts who can be forced to cover, which means the market is left with only the managers' manipulations and the other institutional trading bots that follow trends.

Consider this chart of the Rydex ratio of Bear/Bull assets, from John Hampson:


If Market Bears were tallied, they'd be on the list of Endangered Species. There is some confusion about the true number of Bears left, as prudent money managers may buy puts (bets on a market decline) to hedge their portfolios. As a result, a mass of put buying may reflect hedging, not Bearish bets.

The net result of eradicating the Bears is the gains from the melt-up are now limited. If you're a serious manager of serious money, squeezing out a couple of points from the melt-up is not only boring--it's detrimental to your career, because you need to beat the index melt-up to keep your big-bucks job and skim your payoff.

Which leads to the notion that the really big money waiting to be skimmed from the unwary is not more melt-up but a sudden "unexpected" meltdown that catches everyone who isn't short off-guard. The most profitable trade would be to stealthily build a short position while telling everyone else how the melt-up was guaranteed essentially forever ("the Fed, ECB and Bank of Japan have your back," etc.).

To make sure nobody strayed from the long side of the boat, you'd unleash the usual frenzy of buy orders at every dip, because the last thing you'd want is to give anyone else an easy entry to the Bearish short side.

The ideal situation is a boat heavily tilted to one side with complacent Bulls confident in the continuation of the never-ending melt-up, and only yourself and a few insider cronies on the short side.

Then, when all the Bulls are happily swapping stories about how the yen carry trade guarantees capital flows into U.S. equities and other Bull stories--

BANG! You unleash a tsunami of sell orders that triggers all the trend-following trading bots to sell. When the buy the dip crowd confidently enters their buy orders, you crush them with a load of futures and options orders that reverse the uptick. This triggers another wave of bot selling.

Since there are no Bears left except you and your cronies, the buy the dip retraces have no legs: they quickly peter out because no Bears are left to spark short-covering buying.

Since there are no Bears left, there's only the trading bots programmed to follow trends: and with your leverage and bag of tricks, that trend can go down faster than complacent Bulls thought possible.

Then, when the Bulls are stampeding in panic selling, you cover your Bear bets and start buying from the panic-stricken Bulls. The Hobby Bears who went short near the bottom are forced to cover as your buying turns the tide, and the market is soon in full recovery mode.

This is such an obvious (and immensely profitable) play, I'm surprised we haven't seen it more often. Complacent melt-ups aren't just boring--they're not very profitable.



Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle editionAre you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.

Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 





NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.


Thank you, Ryan R. ($100), for your outrageously generous contribution of handmade jewelry to this site -- I am greatly honored by your artistry and steadfast support and readership.Thank you, Creig F. ($5/month), for your exceedingly generous re-subscription to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Wednesday, September 10, 2014

Why Has Classical Capitalism Devolved to Crony-Capitalism?

The money-shot: "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."


Here is the quote that perfectly captures our era: "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." (John Kenneth Galbraith) The trick, of course, is to mask the unspoken second half of of that statement: everybody else gets destroyed along with the Elites when the system implodes.

Union pension funds: toast. Government employees' pension funds: toast. 401Ks: toast. IRAs: toast. The echo-bubble in housing: toast. The Fed's favorite PR cover to cloak the enrichment of their financier cronies, the wealth effect:toast.

The primary tool the Elites use to mask the risk of complete destruction is magical thinking--specifically, that "given enough time, the system will heal itself."

That's rich, considering that the Elites' primary tool of avoiding destruction is crippling the market's self-healing immune system: price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It's near-zero. Yield on sovereign bonds? Near-zero. And so on.

Prices have been so distorted (the ultimate goal of Central Planning everywhere, from China to the EU to Japan to the U.S.) that the illusion of stability is impossible without more intervention.

This leads to two self-liquidating dynamics: diminishing returns (every intervention yields less of the desired result) and the Darwinian selection of only those money managers who believe risk has been vanquished.

Everyone who pursues prudent risk management has either been fired or saw the writing on the wall and exited stage right. So the only people left at the gaming tables of the big institutional players are those individuals who are genetically incapable of responding appropriately to rising risk. Those who did have long been fired for "underperformance."

So how did classical free-market capitalism become state-cartel crony-capitalism, a Ponzi scheme of epic proportions that is entirely dependent on ceaseless central bank perception management and interventions on a scale never before seen?

We can start with these six factors:

1. Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.

2. Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.

3. Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.

4. The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.

5. Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.
6. Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform.

Japan is a case in point: the Powers That Be in Japan have put off real reforms of the Japanese economy and political system for 25 years, and they’ve enabled this avoidance by pursuing extremes of fiscal and monetary policy that have eroded the real economy and created long-term structural imbalances.

In this 24 minute video Gordon T. Long and Charles Hugh Smith discuss through the aid of 17 slides the rapid advancement of Crony Capitalism in America. The facts are undeniable, but why is it becoming so obvious and undeniable? Why is it accelerating without any apparent 'checks and balances'? Where have the safeguards against this happening gone?


Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle editionAre you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.

Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 



NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

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