Instability Start on the Margins

What is the prudent response when hefty profits beg to be booked and assets purchased with leverage/debt start declining? Sell, sell, sell.

Many analysts have described the core-periphery dynamic: instability tends to manifest first in the periphery and then move inexorably to the core. Social and economic changes work in a similar fashion, originating on the margins of the economy/society and then gaining wider influence/acceptance once roughly 4% of the populace (a 64/4 Pareto Distribution) utilizes the innovation.

Everything from fashion fads to Internet usage follows this model of expansion from the margins to widespread acceptance.

Though we welcome this model of technology and fashion distribution, destabilizing financial crises tend to propagate in a similar way, from the margins/periphery to the core. For example, the "Asian contagion" crisis of 1997 began in Thailand, far from the core of the global economy. Once the crisis infected other Asian economies, it soon disrupted core economies.

In the same era, the losses experienced by one firm, Long-Term Capital Management (LCTM), ignited a financial firestorm that quickly spread to global capital markets.

How do we interpret India's brewing crises in currency devaluation (rupee) and inflation? The conventional view is that these are unique to India and therefore isolated. This was of course the conventional view of the Thai currency crisis of 1997--that it was unique to Thailand, and therefore of little concern to the rest of the global economy.

Financial crises spread not because conditions that triggered the crisis are universal, but because fear and loss of faith are universal emotions. What happens in financial crises is the initial disruption/instability causes participants to ask if risk is truly as low as advertised/assumed in the markets where they're exposed. Prudence demands lowering not just conventionally measured risk but potential risk and perceived risk, both of which may diverge radically from pre-crisis risk measured by various portfolio insurance methodologies.

In other words, potential and/or perceived risk triggers selling, which then raises the premiums on risk management. These indicators of risk then trigger a wider perception that risk is rising, which then unleashes more liquidation of assets. This prudent risk-management selling depresses prices, tripping margin calls, trading stops and thus more selling.

In a financial system that is heavily dependent on leverage, credit, phantom collateral and sky-high asset valuations, selling begets more selling, launching a self-reinforcing feedback dynamic in which selling leads to more selling that then triggers margin calls (i.e. selling assets that were purchased with borrowed money) and technical selling (i.e. selling when critical support levels are broken).

What is the prudent response when hefty profits beg to be booked and assets purchased with leverage/debt start declining? Sell, sell, sell, until the entire profit is booked and all at-risk debt is paid off. Anything less invites risk, loss and even insolvency if declines get away from those who purchased assets with leverage/debt.

Could India's currency/inflation crises spread to other nations? That is an open question, but what could easily spread is prudent doubts about the risks that are as yet unrecognized in other markets. If prudence demands selling first and asking questions later, risk is quickly repriced. That repricing itself triggers doubt, fear and a loss of faith in the supposedly permanent bull markets in bonds, real estate, stocks, 'roo bellies, quatloos, etc.

A financial sell-off doesn't even need a real crisis to spread like wildfire; it simply needs nosebleed asset valuations, excessive leverage/credit and risk priced at "the bull market is guaranteed to last essentially forever" levels. Prudence alone will ignite the conflagration.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your much-appreciated generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

What Real Estate Bubble? Oh, You Mean the One That's Bigger Than the 2007 Bubble?

It's painfully obvious that real estate valuations are once again at asset-bubble extremes.

Correspondent Mark G. submitted a chart of the Wilshire REIT (real estate investment trusts) index that sums up the current real estate market in one image: it's painfully obvious that real estate valuations are once again at asset-bubble extremes, one that's even bigger than the last RE bubble that popped in 2008 with devastating consequences to the global economy.



Defenders of current real estate valuations can draw upon an array of justifications, but they boil down to the same one used to justify valuations in every asset bubble: this time it's different.

Is there anything in this chart that suggests this belief might be misplaced, for example, that credit/asset bubbles burst with a rough time/amplitude symmetry?

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your much-appreciated generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

System Reset 2014-2015

Resets occur when the price of everything that has been repressed, manipulated or obscured is repriced.

The global financial system will reset in 2014-2015, regardless of official pronouncements and financial media propaganda hyping the "recovery." Despite the wide spectrum of forecasts (from rosy to stormy), nobody knows precisely what will transpire in 2014-2015, so we must remain circumspect about any and all predictions-- especially our own.

Even as we are mindful of the risks of a forecast being wrong (and the righteous humility that befits any analysis), it seems increasingly self-evident that financial systems around the world are reaching extremes that generally presage violent resets to new equilibria--typically at much lower levels of complexity and energy consumption.

John Michael Greer has described the process of descending stair-step resets (my description, not his) as catabolic collapse. The system resets at a lower level and maintains the new equilibrium for some time before the next crisis/system failure triggers another reset.

There is much systems-analysis intelligence in Greer's concept: systems without interactive feedbacks may collapse suddenly in a heap, but more complex systems tend to stair-step down in a series of resets to lower levels of consumption and complexity--for example, the Roman Empire, which reset many times before reaching the near-collapse level of phantom legions, full-strength on official documents, defending phantom borders.

In the present, we can expect the overly costly, complex, inefficient, fraud-riddled U.S. sickcare (i.e. "healthcare") system to reset as providers (i.e. doctors and physicians' groups) opt out of ObamaCare, Medicare and Medicaid; like the phantom armies defending phantom borders of the crumbling Empire, the vast, centralized empire of sickcare will remain officially at full strength, but few will be able to find caregivers willing to provide care within the systems.

Just as much of the collateral supporting the stock, bond and housing bubbles is phantom, many other centralized systems will reset to phantom status. As local and state governments' revenues are increasingly diverted to fund public union employees' sickcare and pension benefits, the services provided by government will decline as the number of retirees swells and the number of government employees actually filling potholes, etc. drops.

Local government will offer services that are increasingly phantom, as stagnating tax revenues fund benefits for retirees rather than current services. On paper, cities will remain responsible for filling potholes, but in the real world, the potholes will go unfilled. In response, cities will ask taxpayers to approve bonds that cost triple the price of pay-as-you-go pothole filling, as a way to dodge the inevitable conflict between government retirees benefits and taxpayers burdened with decaying streets, schools, etc. and ever-higher taxes.

As for phantom collateral--the real value of the collateral will be undiscovered until people start selling assets in earnest. As long as everyone is buying, the phantom nature of the collateral is masked; it's only when everyone tries to get their money out of asset bubbles is the actual value of the underlying collateral discovered.

When assets go bidless, i.e. there are no buyers at any price, the phantom nature of the supposedly solid collateral is revealed. Price discovery is one way of describing reset; transparent pricing of risk is another way of saying the same thing.

When risk has been mispriced via state guarantees, fraud, willful obfuscation, complexity fortresses, etc., then the repricing of risk also resets the system.

Resets occur when the price of everything that has been repressed, manipulated or obscured is repriced. The greater the manipulation and financial repression, the more violent the reset. What been manipulated, obscured or repressed? Virtually everything: risk, credit, assets, labor, currency, you name it. Everything that has been manipulated by central banks and central states will be repriced.

Trust is difficult to price. Every reset erodes trust in the capacity of the centralized status quo to manipulate/repress price to its liking. Once trust in the system is lost, it cannot be purchased at any cost.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your much-appreciated generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

The Gathering Storm

Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

The financial storm clouds are gathering, ominously darkening the horizon. Though the financial media and the organs of state propaganda continue forecasting blue skies of recovery and rising corporate profits, the factual evidence belies this rosy forecast: internal measures of financial and economic activity are weakening across the globe as the state-central bank solutions to all ills--massive increases in credit creation, leverage and deficit spending--have failed to address any of the structural causes of the 2008 Global Financial Meltdown.

This failure to address the causes of 2008 Global Financial Meltdown is disastrous in and of itself--but the status quo has magnified the coming disaster by scaling up the very causes of the 2008 Global Financial Meltdown: excessive credit expansion, misallocation of capital on a grand scale, an opaque shadow banking system constructed of excessive leverage and a dependence on phantom collateral, i.e. risks and assets that are systemically mispriced to skim stupendous profits for financiers, bankers and their political enablers.

This is what I have called doing more of what has failed spectacularly.

Extremes inevitably lead to collapse, but even the most distorted system has some feedback mechanisms that attempt to counter the momentum toward disaster. Just as the body will try to mitigate the negative consequences of a diet of greasy fast food, our grossly distorted financial and political systems still retain some modest feedback loops that attempt to mitigate rising risks.

These interactive forces make it impossible to predict the moment of collapse, even as systemic failure remains inevitable. Precisely when the heart of an obese, unfit person who eats nothing but fast food will give out cannot be predicted, but what can be predicted is the odds of systemic failure rise with every passing day.

Doing more of what has failed spectacularly--inflating new asset bubbles in housing, stocks and bonds via quantitative easing, obfuscating financial skimming operations with thousands of pages of new regulations, and so on--is the equivalent of pushing an obese, unfit person to run uphill. Rather than repair the system, doing more of what has failed further stresses the system.

But even if the financial system were cleansed of bad debt and phantom collateral, the status quo would remain only partially repaired. For it's not just the financial system that has reached the point of negative return: the entire economic foundation of the developed world--credit-dependent consumerism--is as bankrupt and broken as the financial system that fuels it.

The state's response to this economic endgame is depersonalized welfare, both corporate and individual. When favored sectors can't succeed in the open market, the state enforces cartel-capitalism that enriches the corporations at the expense of the citizenry. When the cartel-state economy no longer creates paying work for the citizenry, the state issues social welfare benefits, in effect paying people to stay home and amuse themselves.

This destroys both free enterprise on the corporate level and the source of individual and social meaning, i.e. the opportunity to contribute in a meaningful way to one's community, family and trade/skill.

The status quo is thus not just financially bankrupt--it is morally bankrupt as well.

The status quo is as intellectually bankrupt as it is financially bankrupt. Our leadership cannot conceive of any course of action other than central bank credit creation and expanding state control of the economy and social benefits, paid for with money borrowed from future generations.

Let's take a wild guess that the obese, unfit person won't make it up the second hill, never mind the third or fourth one. The status quo responded to the financial heart attack of 2008 by doing more of what had failed spectacularly. That injection of trillions of dollars, euros, yen, renminbi, quatloos, etc. revived the global financial system in the same way a shot of nitroglycerin resolves a life-threatening crisis: it doesn't fix the causes of the crisis, it simply gives the system some additional time.

The next global financial storm is already gathering on the horizon. Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

Intellectual, moral and financial bankruptcy all go hand in hand. There isn't just one storm gathering on the horizon--there are three, each adding force and fury to the other two.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy
With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)
Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your much-appreciated generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

Suddenly Useful Eccentrics

In eras of crisis, eccentrics suddenly become useful.

The world is always full of people who are square pegs in a status quo of round holes. These people don't fit into conventional roles, and as a result they are marginalized as failures, geeks, losers, or more charitably as eccentrics: passionate about things that are not valued by the status quo, or good at things that are on the fringes of conventional society.

In stable eras, these marginalized eccentrics often fuel new trends in art and music. Long before he was a world-renowned celebrity painter, Claude Monet was a penniless artist reduced to begging for money from friends to survive, so adamantly eccentric (or if you prefer, so far out of the mainstream) that he refused to study at conventional art academies.

Marginalized by the status quo art world to the point of ridicule, Monet persevered in his vision, along with his friends Renoir et al. There was certainly no guarantee of eventual success; history is replete with artists who died penniless and unknown despite their talent and perseverance.

In eras of crisis, marginalized square pegs may emerge as leaders or as inspirations of new ways of organizing society. As interconnected economic and geopolitical crises reach criticality, those who have been dismissed as has-beens, failures or eccentrics may suddenly become useful.

The gathering storm will open opportunities for all manner of has-beens, rejects, failures and eccentrics, as crisis erodes the status quo's ability to marginalize everyone and everything outside its control. As people realize the status quo cannot provide what it has promised, they become more open to ideas and values that had little leverage or utility in eras of stability and rising prosperity.

In eras of crisis, eccentrics suddenly become useful. Not all eccentrics become useful, but whatever progress is made in resolving the crisis is more likely to arise from eccentrics than intellectually bankrupt conventional leaders of the status quo.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your much-appreciated generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

The Grand Narrative: Legitimize the Authoritarian State

As the status quo crumbles, the state responds in the only way it knows: expand control and become increasingly authoritarian.

The Grand Narrative of the 21st century is the legitimization of the authoritarian state. The authoritarian state comes in many ideological flavors, but retains the commonalities of central control. It may label the system it controls communist, socialist or capitalist, but these distinctions are semantic: the authoritarian state controls the system, by one means or another.

Regardless of which version of the 9/11 story you believe or disbelieve, the reality is the same: the U.S. is engaged in an Orwellian global war without end, a war that doesn't just justify monitoring every communication on the planet but actively requires monitoring every communication on the the planet.

The Federal Reserve has extended its control of the U.S. economy, transforming it into a wealth-skimming machine for the top 1/10th of 1% with access to the Fed's credit creation. The Fed claims independence from the U.S. government, but this is also merely semantics: the Fed and U.S. Treasury are simply two facets of the authoritarian state.

We see the same narrative playing out around the world. In socialist France, the central state is extending its control over what little of the economy is still quasi-private; in nominally communist China, any weakening of the economy that can't be papered over with bogus statistics is soon followed by nationalist propaganda hyping one red-button issue or another (Senkaku Islands, etc.) to distract the populace from the increasingly fragile "recovery" in China's asset-bubble-dependent economy.

As the status quo crumbles, the state responds in the only way it knows: expand control and become increasingly authoritarian. This is of course a key dynamic in why things are falling apart: increasing central control only further distorts the mechanisms in the economy that seek equilibrium by self-correcting means.

Why is the authoritarian state illegitimate? Among the many reasons, we can start with three: the authoritarian state is the enemy, always and in all places, of individual liberty and free expression/the free press, and the authoritarian state is intrinsically a failed state, for the mechanisms of centralization and authoritarian control are ontologically destabilizing, regardless of the ideological flavor of the system the state controls.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? 

The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, readers, for your extremely generous contributions to this site-- I am greatly honored by your support and readership.

Read more...

Is RV Nation at Risk?

A reduction in retirees' disposable income coupled with a global rise in the price of oil could crimp the assumptions underpinning RV Nation.

RV stands for "recreational vehicle," but it might also represent much of America's rural economy, which is heavily dependent on recreation and large low-mileage vehicles.

On a recent 10-day, 2,700 mile camping trip through a major chunk of the West (Northern California, Nevada, Idaho, Montana, Wyoming and Utah), I noticed a great many empty buildings in the small towns of the West. (This does not include the favored recreational haunts of the top 5%, of course, such as Sun Valley and Jackson Hole, which are booming.)

I also observed that much of the local economy in many areas was based on recreation: fishing, housing and feeding visitors to state and national parks, boating, etc.

Nowadays, a mainstay of these recreation-dependent sectors is the large cohort of retirees with the time and disposable income to travel. While some travel in sedans and stay at motels and inns, a significant percentage travel in large RVs and stay in RV parks or campgrounds.

In less prosperous times, for example the 1960s, most families camped in tents, as this was the most affordable way to see the Great American West. Relatively few could afford a trailer (RVs were largely unknown at the time), and most trailers were of modest size and appointment.

Nowadays, RVs are often large and luxuriously appointed--at least when compared to the modest trailers of the old days (not to mention tent camping). Pickup trucks have also grown in size and power, and an entire new class of large vehicles--SUVs--are now more common than conventional sedans in many areas.

In the conventional view, this reliance on large, low-mileage vehicles and recreational pursuits of the retired class is welcomed. After all, America's new surge of energy production means energy for low-mileage vehicles will be both abundant and cheap for decades to come, and the burgeoning class of retiring Baby Boomers will fuel an expansion of recreational travel.

I am circumspect about these rosy assumptions for a number of reasons. One is that I recall smaller, less lavish vehicles of an earlier era that consumed less fuel per passenger than today's SUVs and oversized pickups, many of which generally have one occupant, and outsized RVs, many with only two occupants.

In other words, neither recreation nor travel require high energy consumption vehicles, yet we have collectively chosen costly, high energy consumption vehicles as the default setting for all but the poor or thrifty (a vanishing breed, by the look of it). One looks in vain for small pickups of the sort that were common in the 1970s in vehicle manufacturers' offerings.

Given that much of the new-found energy is natural gas and not oil, and given the dependence of the U.S. vehicle fleet on gasoline, it seems a bit premature to assume that the current surge in domestic energy production will guarantee an abundance of cheap gasoline for decades to come.

Domestic natural gas (natty) is priced much lower than natty on the global market, but oil is priced (with some variation) globally, which means that domestic oil production will be priced on the global market, not the domestic market.

That means that any global shortage or supply disruption of oil will push prices higher in the U.S., regardless of any relative abundance of oil domestically.

Lastly, as recent entries have shown, the notion that the number of full-time workers can continue stagnating while tens of millions of additional retirees draw benefits from pay-as-you-go Social Security and Medicare is financially impossible.

A reduction in retirees' disposable income coupled with a global rise in the price of oil could crimp the assumptions underpinning RV Nation.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding.

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The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

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Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, James B. ($200), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...

The Scramble for Africa's Oil

Oil-rich nations are bedeviled by the Resource Curse.

The global scramble for Africa's estimated 25 billion barrels of oil is on. Those scrambling to secure (and/or exploit) the continent's abundance of fossil fuels include each oil-rich nation's political and economic Elites, international oil corporations, regional powers, trading blocs and the four major (and energy-hungry) economic players: the E.U., the U.S., Japan and China.

Oil-rich nations are bedeviled by the Resource Curse. An abundance of natural resource wealth distorts the national economy and politics in a number of ways: private investment in other less exploitable/profitable sectors of the economy stagnates, leaving the government and economy highly dependent on resource revenues; local Elites quickly gain control of the income stream from the resource wealth and divert it to their own accounts and cronies, institutionalizing corruption, and this diversion of national income to Elites starves the nation of investment in infrastructure, education, transportation networks and all the other foundations of a vibrant, competitive economy.

In geopolitical terms, oil-rich nations become "areas of interest" to neighboring states and energy-hungry global powers, further complicating and distorting national development.

Though many hope that this flood of energy wealth can be used to fund much-needed infrastructure, education and public health projects throughout the continent, the key systems of governance, governmental transparency, an open media and a political process that enables public participation are problematic in many (if not all) of Africa's energy-rich nations.

Unfortunately, these systemic weaknesses render these nations even more vulnerable to the distortions of the Resource Curse.



No energy-importing power center can afford to be sidelined in the scramble for Africa's fossil fuel wealth. Sadly, that insures global and regional powers will continue jockeying for oil leases (vulnerable to cancellation when corrupt regimes change hands), development contracts and political influence within controlling Elites, a process that rewards the least savory aspects of corrupt regimes.

Global rivals who have lost out will be tempted to support armed rebellions that weaken their rival's influence, encouraging conflicts that are inherently destabilizing, not just to the oil-rich nations but to the region.

Arrayed against these powerful forces of corruption and destabilization are grassroots groups supporting democracy and national development and some non-governmental organizations (NGOs) funded by foundations.

In the abstract, almost everyone agrees that this energy wealth should benefit all residents of oil-rich nations. But as long as it is cheaper in terms of time and money to secure oil by making deals with kleptocrats and corrupt Elites, there will be few incentives for major powers to risk losing access to oil/natural gas by supporting policies that would spread the wealth and encourage democracy.

Sadly, few consumers of energy care where the energy they burn comes from, or what distortions were created by the extraction and processing of that energy.

As the Cliff Robertson character said at the end of the prescient 1975 film, Three Days of the Condor: "When the people are cold and their engines stop running, they're not going to ask us why; they'll just want us to go get it." It's difficult to refute that, whether the people are American, Chinese or European.

Posts and email responses will be sporadic in October due to family commitments. Thank you for your understanding. 

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher EducationReconnecting higher education, livelihoods and the economyWith the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.
It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.
The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.
The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.
Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)
Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Thank you, James B. ($200), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...