The Oil-Drenched Black Swan, Part 1

Given the presumed 17% expansion of the global economy since 2009, the tiny increases in production could not possibly flood the world in oil unless demand has cratered.

The term Black Swan shows up in all sorts of discussions, but what does it actually mean? Though the term has roots stretching back to the 16th century, today it refers to author Nassim Taleb's meaning as defined in his books, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and The Black Swan: The Impact of the Highly Improbable:

"First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme 'impact'. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

Simply put, black swans are undirected and unpredicted. The Wikipedia entry lists three criteria based on Taleb's work:

1. The event is a surprise (to the observer).

2. The event has a major effect.

3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs.

It is my contention that the recent free-fall in the price of oil qualifies as a financial Black Swan. Let's go through the criteria:

1. How many analysts/pundits predicted the 37% decline in the price of oil, from $105/barrel in July to $66/barrel at the end of November?Perhaps somebody predicted a 37% drop in oil in the span of five months, but if so, I haven't run across their prediction.

For context, here is a chart of crude oil from 2010 to the present. Note that price has crashed through the support that held through the many crises of the past four years. The conclusion that this reflects a global decline in demand that characterizes recessions is undeniable.

I think we can fairly conclude that this free-fall in the price of oil qualifies as an outlier outside the realm of regular expectations, unpredicted and unpredictable.

Why was it unpredictable? In the past, oil spikes tipped the global economy into recession. This is visible in this chart of oil since 2002; the 100+% spike in oil from $70+/barrel to $140+/barrel in a matter of months helped push the global economy into recession.

The mechanism is common-sense: every additional dollar that must be spent on energy is taken away from spending on other goods and services. As consumption tanks, over-extended borrowers and lenders implode, "risk-on" borrowing and speculation dry up and the economy slides into recession.

But the current global recession did not result from an oil spike. Indeed, oil prices have been trading in a narrow band for several years, as we can see in this chart from the Energy Information Agency (EIA) of the U.S. government.

Given the official denial that the global economy is recessionary, it is not surprising that the free-fall in oil surprised the official class of analysts and pundits. Since declaring the global economy is in recession is sacrilege, it was impossible for conventional analysts/pundits to foresee a 37% drop in oil in a few months.

As for the drop in oil having a major impact: we have barely begun to feel the full consequences. But even the initial impact--the domino-like collapse of the commodity complex--qualifies.

I will address the financial impacts tomorrow, but rest assured these may well dwarf the collapse of the commodity complex.

As for concocting explanations and rationalizations after the fact, consider the shaky factual foundations of the current raft of rationalizations. The primary explanation for the free-fall in oil is rising production has created a temporary oversupply of oil: the world is awash in crude oil because producers have jacked up production so much.

Even the most cursory review of the data finds little support for this rationalization. According to the EIA, the average global crude oil production (including OPEC and all non-OPEC) per year is as follows:

2008: 74.0 million barrels per day (MBD)

2009: 72.7 MBD

2010: 74.4 MBD

2011: 74.5 MBD

2012: 75.9 MBD

2013: 76.0 MBD

2014: 76.9 MBD

The EIA estimates the global economy expanded by an average of 2.7% every year in this time frame. Thus we can estimate in a back-of-the-envelope fashion that oil consumption and production might rise in parallel with the global economy.

In the six years from 2009 to 2014, oil production rose 3.9%, from 74 MBD to 76.9 MBD. Meanwhile, cumulative global growth at 2.7% annually added 17.3% to the global economy in the same six-year period. What is remarkable is not the extremely modest expansion of oil production but how this modest growth apparently enabled a much larger expansion of the global economy. ( Other sources set the growth of global GDP in excess of 20% over this time frame.)

Global petroleum and other liquids reflects a similar modest expansion: from 89.1 MBD in 2012 to 91.4 MBD in 2014.

Given the presumed 17% to 20+% expansion of the global economy since 2009, the small increases in production could not possibly flood the world in oil unless demand has cratered. The "we're pumping so much oil" rationalizations for the 37% free-fall in oil don't hold up.

That leaves a sharp drop in demand and the rats fleeing the sinking ship exit from "risk-on" trades as the only explanations left. We will discuss these later in the week.

Those who doubt the eventual impact of this free-fall drop in oil prices might want to review The Smith Uncertainty Principle (yes, it's my work):

Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences."

I call your attention to the last line, which I see as being most relevant to the full impact of oil's free-fall. 

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, Andre K. ($10), for your much-appreciated generous contribution to this site-- I am greatly honored by your support and readership.

Read more...

Do We Own Our Stuff, or Does Our Stuff Own Us?

Being freed from being owned is a form of liberation with many manifestations.

The frenzied acquisition of more stuff is supposed to be an unalloyed good: good for "growth," good for the consumer who presumably benefits from more stuff and good for governments collecting taxes on the purchase of all the stuff.

But the frenzy to acquire more stuff raises a question: do we own our stuff, or does our stuff own us? I think the answer is clear: our stuff owns us, not the other way around.

Everything we own demands its pound of flesh in one way or another: space must be found for it amid the clutter of stuff we already own, it must be programmed, recharged, maintained, dusted, moved, etc.

The only way to lighten the burden of ownership is to get rid of stuff rather than buy more stuff. The only way to stop being owned is to is get rid of the stuff that owns us.

I propose a new holiday event, Gold Sunday: this is the day everyone hauls all the stuff they "own" that is a burden to a central location and dumps it in a free-for-all. Whatever is left after the freeters have picked through the pile is carted to the recycling yard and whatever's left after that culling is taken to the dump.

Frankly, I wouldn't accept a new big-screen TV, vehicle, tablet computer, etc. etc. etc. at any price because I am tired of stuff owning me. I don't want any more entertainment or computational devices, musical instruments, vehicles, clothing, kitchen appliances, or anything else for that matter, except what can be consumed with some modest enjoyment and no ill effects.

We live in a small flat and I have no room for more stuff, and I have no time for more devices or entertainment. I have too much of everything but money and time.

I don't want to pay more auto insurance, maintenance costs, etc., nor do I want more devices to fiddle with. I am enslaved to the few I already own.

The burdens of being owned by stuff are suppressed in a consumer-driven economy and society. The glories of owning more stuff are constantly being trumpeted out of self-interest, as is the act of acquisition. Those making money off the flow of new stuff into our homes promote it as the wonder of wonders.

Since nobody makes money promoting getting rid of stuff and not replacing it with new stuff, that idea doesn't get much media coverage.

Let's face it, Degrowth isn't profitable, nor does it generate taxes.

And the Next Big Thing Is ... Degrowth?

Degrowth, Anti-Consumerism and Peak Consumption

When Conventional Success Is No Longer Possible, Degrowth and the Black Market Beckon

Given the dependency of our livelihoods on the constant acquisition and consumption of more stuff, it is a form of blasphemy to address the great psychological relief that results from ending the cycle of gift-giving and the replacement of stuff with more stuff.

Being freed from being owned is a form of liberation with many manifestations: in terms of work, being liberated from serving the pathologies of Corporate America and soul-deadening service to the state are liberating. In terms of politics, being freed from the crazy-making grasp of the Demopublicans' failed ideologies is liberating. In terms of finance, being freed from the servitude of debt is liberating. In terms of the material world, being freed from having to waste time, money and energy dealing with stuff is liberating.

Liberation isn't profitable, and more's the pity. 

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, Todd R. ($25), for your wondrously generous contribution to this site-- I am greatly honored by your support and readership.

Read more...

If You're Giving Gifts, Consider Giving Tools/Skills

If you want to give practical kitchenware as gifts, these ten favor 1) everyday utility 2) durability/high quality 3) modest cost (between $6 and $22 and 4) mostly made in the USA.

The ideal DeGrowth gifts are handmade/home-made, but if this isn't practical, consider giving tools that foster new skills and well-being--for example, everyday kitchen tools.

Many of the ills of our society are best addressed in the kitchen, as eliminating fast food, junk food and convenience/packaged "food" is the first step to becoming healthier. The second step is do the thing and you shall have the power, i.e. turning off the endless TV celebrity-chef cooking shows and getting to work in the kitchen making real food.

Decent tools can enhance the preparation of meals--and by this I don't mean costly appliances, I mean low-cost, practical basics.

Here's our list of 10 favorite practical kitchenware/tools. These favor 1) everyday utility 2) durability/high quality 3) cost between $5 and $22 and 4) mostly made in the USA.

NOTE: prices of these items change frequently and may vary from those listed here.


1. Pyrex 6021224 Storage 10-Piece Set, Clear with Blue Lids - $17.99

These 3 round bowls and 2 rectangular glass storage containers are just the right number and size for storing leftovers – practical and perfect. We all already own similar containers with lids (usually larger) but I now use these the most – one or two are always in use in our refrigerator. Bought my Mom a set, and she says it’s always going up and down the road as she and her neighbor Gene trade dinners. Just bought a set for Gene in September as a gift.

2. Rubbermaid Easy Find Lid 24-Piece Food Storage Container Set - $21.99

I was introduced to this practical Rubbermaid set 2 years ago by my friends Dustin and Megan who received them as a wedding gift. They remarked "you should get this" -- I have since bought 3 sets for myself and as gifts. Yes, we all already have innumerable plastic food storage containers and resist adding more to our jumbled drawer-full. However, the clever system of locking the matching lid to the bottom of the container so they stay together convinced me to buy this set to add to our kitchen.

3. Best French Whip, Stainless Steel Made in USA – 10-inch $7.84
12-inch $11.99
(8-inch and 18-inch sizes are also available)

I have owned Best whisks from the 70s since learning about them in the Whole Earth Catalog. Thankfully, still USA made and indeed “crafted” (as described on Amazon) in Portland, Oregon, they are indeed the best. You will likely not need to replace a Best whisk in your lifetime. I personally prefer the 10” for home use.

4. Microplane Stainless Steel Zester - $9.95 (without handle – Made in USA)

Microplane 40020 Grater/Zester - $12.25 (with handle – not stated as USA made)

Over 300 "5 star" reviews for with handle and 44 "5 star" reviews for without handle can’t lead you astray. Being a stubborn Taurus and loyal to my traditional zester, I resisted this "new fangled" zester. A gift from my sister Lynette proved me absolutely wrong, and I now cannot do without it for grating lemon zest, nutmeg, and hard cheese. Great for hard baking chocolate as well but I usually bake with cocoa power. I prefer the clean, simple look of the zester without a handle – just my Taurean preference.

I was drawn to this zester for another reason--its lineage as a wood rasp/carpentry tool.

5. Kuhn Rikon Original 4-Inch Swiss Peeler, White - $6.05

Kuhn Rikon, original 3-set Red, Green and Yellow Swiss Peeler - $9.99

Our Irish green 4" Swiss peeler hangs on a cup hook above our sink – such a fine, sharp tool for peeling carrots, potatoes, long white Asian radish for Chinese/Japanese/Vietnamese pickles, Fuji apples for pie, the thin brown flesh off fresh coconut before grating, and hard skin off Asian pumpkins prior to steaming or cooking, Recently, I discovered the peeler efficiently remove the tough green skin of loofa squash – a vegetable new to me (previously I only used the dried version as a bath scrubber), and delicious prepared Chinese style with "tree ears" black fungus and green beans.

I think the 3-piece set for $9.99 is a great deal.

6. Oxo Good Grips Cookie Scoop - $13.95 medium, $12.95 small, $14.95 large

Wonderful scoop for quick portion measuring of cookie dough, drippy muffin batter and Indian kofta meatballs. Two scoops of batter fills each paper lined muffin pan cup perfectly for perfect cupcakes. I like the medium size which makes for 4-across and 5-rows down size cookies on the cookie sheet. If you tend to bake smaller, more delicate sized cookies, you may prefer the small scoop. I bought the medium and small scoops, but found the small too small and gave it to a friend who likes making smaller cookies.

7. Dexter-Russell 6-by-3-Inch Dough Scraper Made in USA - $18.18

Now darkened with patina -- another tried, true and beautifully made kitchen tool in my culinary tool box for 35+ years bought from Kaya Cutlery on Mamo Street in Hilo, Hawaii –- wish I had marked the purchase year on the rosewood handle edge. An essential dough cutter and wood cutting board scraper for bread, pie crust and cut-out cookie makers, it’s made of 3 excellent timeless materials –- stainless steel (blade), rosewood (handle) and 2 brass pins (to connect blade to handle).

This Dexter-Russell product was not always available on Amazon, and after reading a single negative Amazon review dated February 2, 2010, I settled for an imported Oxo dough cutter/scraper for a friend’s wedding gift.

Actually, that one poor 2-star Amazon review of this S496 Dexter dough scraper/cutter mystified me because the one I own is such an excellent product. Like so many other reputable USA companies making previously well-make products in America, I surmised that Dexter-Russell had succumbed to global pricing pressure and now resorted to foreign manufacturing of their products.

Recently, while researching products for this list, I noticed a 5-star review added by P. Brady who declared this product "very well made and a worthy piece of equipment for professional use." His comments express my own sentiment. Still, I wanted to be sure before recommending the dough scraper. The disparity between 2 and 5-stars prompted me to search online for the Dexter-Russell company website and to call their Southbridge, MA phone number 1-800-343-6042.

Pat, who has worked for the company for 14 years, assured me that the S496 dough scraper has always been made in their Southbridge, MA location -- never manufactured abroad – and always with the same 3 fine quality materials of high grade stainless steel, rosewood and brass.

One last comment -- As P. Brady notes, the handle is made of rosewood, and not walnut as described by Amazon.

8. Victorinox 3-1/4-Inch Paring Knife - $7.20 (3 ¼" blade, 7" total length)

Heard frequently in our home: "Where’s the red knife? Have you see the red knife? Do you have the red knife?" -- Our Victorinox paring knife happens to have a red rather than black handle, and it is our go-to paring knife. It was moved to California with me from my Mom’s home in Hawaii 28 years ago –- we had 2 and my Mom still has the black-handled knife in her left kitchen drawer. It’s simple, practical and sharpens easily with our knife sharpening stone. We use it for everything that calls for a paring knife, and daily for scraping skin off a knob of fresh ginger destined to be grated for Charles’ morning ritual of fresh ginger tea following his wake-up coffee.

9. Rada Cutlery Cooks Knife, Aluminum Handle Made in USA - $7.98
6 1/4-inch blade and 10 1/2 inches overall length

Rada Cutlery Cooks Utility Knife, Aluminum Handle (R140) Made in USA - $10.20
4 3/4-inch blade, 8 3/4 inches overall length

Rada Cutlery Quick Edge Knife Sharpener with Hardened Steel Wheels - $7.04
(Designed for Rada Knives)

Probably like many other people, I too have several "the last knife I’ll ever buy" knives. So I hesitated to add yet another kitchen knife to our collection but it is in fact a knife I use often (favorite very sharp knife for cutting onions) + inexpensive + American made. No one I personally know recommended this knife to me. At first the name caught my attention online -- Rada is the name of my South Indian friend who prepares the South Indian specialties at a restaurant consistently listed on the top 100 San Francisco Bay Area Restaurants list.

Then the Amazon buyer reviews and USA manufacture origin got me curious enough to order the knife and sharpener for myself. Whether a tool is an excellent addition to your kitchen is determined by how often you use it and whether it supercedes your last favorite knife –- if you find yourself reaching for it. I now use my Rada more often than my assorted German and Japanese knives that cost 5 to 7x the Rada knife's price.

The Rada blade is sharp, stays sharp and easily sharpens with 2 to 3 pulls between the 2 sharpening wheels. You must be attentive and treat the Rada knife blade like a razor. As noted by other reviews, the blade is thin and not suitable for cutting hard vegetables. For hard skin squash or Asian pumpkin, my Chinese cleaver or German knife gets pulled off our wall magnet knife holder.

10. Egg Poaching Pods, Fusionbrands, Set of 2, Green - $9.99

Another "new fangled" device made of flexible silicone to cook old-fashion poached eggs. I had to get one for our kitchen as soon as my friend Dustin gave me a demonstration in his kitchen -- extra virgin olive oil smeared into the pods, sprinkling of kosher salt, and several turns of fresh ground black pepper all sealed with a cracked egg on top.

After 4 minutes floating and simmering in a lidded pan, they were done perfectly and easily popped out of the pods. No more watery poached eggs + losing 1/3 of the whites as they float off as whitecaps into the simmering water. I've given a number of these as gifts to family and friends –- thank you, Dustin, for introducing us to this easy method for poaching eggs.


The list was assembled and submitted by C.N.F. 

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, David P. ($50), for your outstandingly generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...

My Thanksgiving: Five Things I Am Thankful For

A Thanksgiving offering: five things I'm grateful for.

My wife suggested I write down five things I'm grateful for today, and I offer that as a suggestion to you. There is a power in the written word which is not accessible to the spoken word.

Writing down what we're sincerely grateful for is an act of truth--and truth may well be the unspoken essential for all gratitude.

It's always tempting to veer into pontificating when listing one's gratitudes ("I'm grateful for black holes, corn bread, cordless drills, Les Paul and Bertrand Russell..."). Few would have the sincerity to be honest about the gratitudes we actually experience--for instance, "I'm grateful for the NFL and the memory of watching Dwight Clark make The Catch."

For those who don't understand this as something to be grateful for--it's a mystical thing.

As important as small gratitudes are in our daily struggle against futility and ennui, it's also a worthy exercise to ground ourselves occasionally in what gives our lives meaning and purpose: the bedrock of happiness and a life well-lived.

Without a lot of forethought, here is my list of five things I'm thankful for. I guess it reflects the preoccupations of my daily life, which revolves around this weblog, my writing, shoring up my health and our uncertain and possibly troubled future.

1. I am thankful for the World Wide Web and the Constitutional right to freedom of speech, which enables us to share our thoughts, emotions, ideas and information without interference (generally speaking) from oppressive authorities. This freedom to exchange ideas and experiences, what works and what doesn't, is the foundation of my hope for the future. This weblog is my small contribution to this infinitely complex process.

2. I am grateful for the opportunity to fashion what I call hybrid work, a life that draws purpose and meaning from a variety of projects and work, some paid, some unpaid, some compensated by value other than money.

In Survival+, I call this goal radical self-reliance.

I wouldn't be much of an advocate for hybrid work if I had a corporate monoculture job (i.e. one specialized skill, one employer, and thus a very high level of vulnerability to disruption). It's taken a long time to develop multiple sources of (modest) income and purpose, but it's been worth it.

3. Since a substantial part of my livelihood comes from being paid to write and from reader contributions, I am also very grateful to you, dear Reader, for investing your time in visiting this outpost on the Web and for reading my other work. Without readers, a writer has little to offer in terms of value.

4. Since I espouse an integrated understanding of our plight, then health is a key thread running through my life, and so naturally I am grateful for the health I have at 60 years of age. It is something that requires responsibility and work; I have a bunch of bad genes working against me as well as "carpenter's elbow" and a host of other consequences of lifting too much stuff over the decades. But I really am grateful for what I've got in the way of health; it is amazing that the body is designed to rejuvenate itself if given half a chance.

At this point, the urge to choose some daily gratitude is strong (red wine? Oranges? Natural gas?) just to avoid the dreaded state of pontification, but--

5. I am grateful to be alive now, when the industrialized world is poised to transition, whether it wants to or not, to another way of living/consuming/working. It may well play out badly, but perhaps not. The lifestyle that requires hundreds of barrels of oil (or equivalent) per person per year is certainly coming to an end, but a good life need not require hundreds of barrels of oil per year.

Nobody knows how the future will play out, so we will all play it as it lays. (The fancier phrase: Life is contingent.) That's pretty exciting.

What am I grateful for, in one line? Opportunity, openness, sharing, knowledge and failure, for without failure we learn little.

I wish you all a safe, peaceful Thanksgiving.

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, Michael K. ($20), for your remarkably generous contribution to this site-- I am greatly honored by your support and readership.

Read more...

Prosperity Amidst the Ruins

The fundamental problem facing the global economy is not slow economic growth but political inequality.

It's striking: as economies stagnate, the top tier is living even larger while the low-income masses sink further into marginalized poverty. I call this widening divide between the vested interests/wealthy and the rest of society prosperity amidst the ruins.

How can the top slice prosper while the rest of the populace suffers from higher taxes, stagnant wages and a collapse of employment/enterprise opportunities?

Just as Greece led the way in the sovereign debt crisis a few years ago, it is also leading the way in showing how oligarchies can expand their wealth and power even as their populace slides deeper into poverty. A recent article, Misrule of the Few: How the Oligarchs Ruined Greece, lays out the key dynamics.

It is self-evident that these same dynamics are playing out in the rest of Europe, the U.S., Japan, China and most if not all of the developing world.

Writer Pavlos Eleftheriadis pulls no punches:

"Greece has failed to address (rising wealth/income inequality) because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families -- an oligarchy in all but name -- has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held."

This is the same script being used by vested interests everywhere:

1. Control the media so it focuses exclusively on manufactured "good news" ("the stock market hit a new high today, blah blah blah") and ignores the perverse incentives built into the system and the destructive consequences of crony-capitalism/crony socialism.

Anything that undermines the dominant narrative (i.e. thanks to your political-financial elites marvelous management, we have self-sustaining "growth") is buried, discredited or ignored.

2. Buy political favors and influence to insure that "reforms" are superficial public relations exercises rather than than actual reforms that change the power structure.

3. Rig the accounting, regulations and reporting so any scrutiny is misdirected or blunted. This enables the status quo to continue on unfazed, despite the erosion of the economy's fundamentals and the widening gap between those with power and those who are powerless, i.e. the middle class and the marginalized poor.

This simple script is working in China, the U.S. Japan--everywhere.

The vested interests have obscured the cold reality of rising inequality by focusing obsessively on "growth" as the fix-all to inequality.

But this is exactly backward. As Eleftheriadis observes:

"The fundamental problem facing Greece is not slow economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country -- and the rest of Europe."

All the blather about "growth" and GDP is just propaganda to misdirect our attention from the real problem: the total domination of governance and finance by a class of vested interests and mega-wealthy cartels/oligarchies.

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, James M. ($20), for your superlatively generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...

Nothing Has Changed--and That's the Problem

Playing monetary games has done nothing to eliminate moral hazard.

If we step back and look at the past six years since the global financial meltdown of 2008, we see that in terms of financial and political power, nothing has changed--and that's the problem. If nothing has changed structurally, then none of the problems that caused the meltdown have truly been addressed.

All that's changed is the vast expansion of monetary games has masked the dysfunctional reality that the same old vested interests that had a death-grip on wealth and power in 2008 have tightened their death-grip in the past six years.

Here's the problem facing every nation and trading bloc:

1. Vested interests institutionalized moral hazard, separating their gains from the consequences of taking risks. This is also known as privatized gains, socialized losses: vested interests reaped the gains from risky speculative bets, but then passed the staggering losses onto the central banks and taxpayers while keeping the gains.

2. The vested interests control the machinery of governance, so there is no way the central state will force the vested interests to absorb the losses that are rightfully theirs. Instead of de-institutionalizing moral hazard, governments have spewed thousands of pages of complicated regulations, in effect, grudgingly nudging the barn door half-closed after the horses of systemic risk galloped away in 2008.

3. With moral risk still institutionalized, nothing has changed: all the gains from subprime auto loans, selling sovereign bonds issued by insolvent governments, etc., are private, and all the risk is being transferred to the central banks and taxpayers.

The money-printing of quantitative easing--central banks printing money to purchase sovereign bonds and mortgages--is actually a form of money-laundering, as all this expansion of central bank balance sheets, debt and liquidity enables the vested interests to expand their control of the financial and political power centers at the expense of everyone else.

Take a look at the vast expansion of debt and the modest impact of that debt on GDP

Look at the unprecedented expansion of the Fed's balance sheet and ask cui bono-- to whose benefit?

Since moral hazard--the disconnect of risk and consequence--is the fundamental cause of the global meltdown of 2008, the only solution is to eliminate moral hazard. By this I mean de-institutionalizing moral hazard.

But de-institutionalizing moral hazard means smashing the vested interests' primary engine of wealth and political power.

The only way forward is to assign the losses that have been piled up in the shadows to those who created and bought the risk for their own gain. That means the investment banks that originated the subprime mortgages and auto loans, etc., and the mutual funds, pension funds, wealth funds, etc. that bought them as "low-risk" investments.

Right now, we're bailing out the con-artists (the banks) and their credulous marks-- the suckers who foolishly trusted the grifters of Wall Street, London, Shanghai, etc.

This re-linking of risk and consequence is not only the only moral way forward--it's also the only political and financial way to clear the poison of moral hazard from the system.

Saving vested interests from the losses they earned and they deserve poisons the entire financial system. When the poisoned system finally collapses, it will destroy everyone with a stake in the system--including the vested interests who reckoned that their political power would save them from the losses that are rightfully theirs.

Playing monetary games has done nothing to eliminate moral hazard; indeed, playing monetary games cannot possibly eliminate moral hazard, as monetary policy enforces moral hazard.

Those playing monetary games--Kuroda, Draghi, Yellen et al.--will discover this, but only after it's too late to stop the slide into the abyss.

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, Sriram E. ($75), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...

Central Banks: When We Succeed, We Fail

Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability.

Central banks around the world share a few simple goals:

1. Defeat deflation by sparking inflation--in the cost of goods and services, not wages.

2. Weaken the currency to boost exports and counter beggar thy neighbor devaluations by other exporting nations and trading blocs.

3. Boost the value of stocks to keep pension plans afloat and project a politically powerful message of "growth" and "prosperity."

What no central bank dares say is what happens should they manage to boost inflation, devalue their currency and continue pushing assets higher: when we succeed, we fail.

Consider the consequences of juicing inflation: every click up in inflation further reduces the purchasing power of wages, which do not keep up with inflation in a world of labor surplus.

When central banks succeed in jacking up inflation, they will fail the households and enterprises whose income is stagnating or declining:Were European Central Bank head Mario Draghi honest, here is what he would say:

Devaluing one's currency is another way of pushing down the purchasing power of households' income and savings. Were Bank of Japan head Haruhiko Kuroda honest, here is what he would say:

Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability. Were Federal Reserve chair Janet Yellen honest, here is what she would say:

Should central banks succeed in jacking up inflation, devaluing the purchasing power of fiat currencies and pushing stocks to the moon, they will have failed their citizenry. Should they succeed in reaching their goals, they will trigger catastrophic instability.

---

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
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, Guy T. ($50), for your marvelously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...