Wednesday, November 22, 2017

Thanksgiving 2017: 21 Things I'm Grateful For

The realm of gratitude is boundless.
In the spirit of Thanksgiving, here are 21 things I'm grateful for. This is a semi-random list drawn from the many things I'm grateful for, the most important of which are: after 48 years of work I still have my health and more work than I know what to do with; good friends; family; freedom, enough good luck that a few of the many stupidly high-risk bets I've made throughout my adult life paid off, and I have a garden and a library. ("The man who has a garden and a library has everything." Cicero)
We all have our lists; here's mine, in no particular order:
1. Dirt (if you like to eat, start by liking dirt)
2. Rain (dirt + rain + seeds + care = food)
3. Our home garden
4. Frugality
5. Handmade leis
6. Magic
7. Extended family
8. Friends
9. Homemade cookies
10. Rainbows (Honolulu mauka)
11. homemade pizza
12. Redwoods
13. Guitars
14. Siblings
15. Hawaii
16. Camping in national parks (Glacier National Park)
Yellowstone National Park (tent camping, first snow of the season)
17. Dessert
18. Parodies
19. My fellow fiercely independent bloggers, publishers and writers.
20. My readers, correspondents, subscribers, patrons and financial supporters. I couldn't generate all the free content and my books without you.
21. "He that is without sin among you, let him first cast a stone at her."
And again he stooped down, and wrote on the ground. And they which heard it, being convicted by their own conscience, went out one by one, beginning at the eldest, even unto the last: and Jesus was left alone, and the woman standing in the midst. (John 8:7-9)


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Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Tuesday, November 21, 2017

Beware the Marginal Buyer, Borrower and Renter

Bubbles always look unstoppable, yet they always burst.

When times are good, the impact of the marginal buyer, borrower and renter on the market is often overlooked. By "marginal" I mean buyers, borrowers and renters who have to stretch their finances to the maximum to afford the purchase, loan or rent.
In bubble manias, buyers of real estate reckon the potential appreciation gains are worth the risk of buying a house they really can't afford with the intention of flipping the home for a profit.
Workers moving to high-rent cities reckon they'll either make more money going forward or find a cheaper flat later, so they pony up the high rent.
When there's steady overtime or generous tips adding to the household income, buying a new car or getting a new auto lease looks do-able.
It's difficult to assess how many recent buyers, borrowers and renters are marginal, but given the stagnation in household incomes and rising debt loads, it seems reasonable to guess that a substantial number of recent buyers, borrowers and renters are one lay-off or one missed bonus or one unexpected expense away from being unable to pay their mortgage, loan payment or rent.
On the surface, home and auto sales and the rental market all look robust because there's no differentiation in sales data between people paying cash, qualified buyers/renters and marginal buyers/renters for whom every month is a stretch.
There have been times in my life when I was down to my last $100, and if things don't turn up very quickly and in a sustained fashion when finances are that fragile, then payments will be missed at the first unexpected drop in income or first unexpected expense. Budget-killers include medical emergency, illness/lost work time, major car repairs and a host of other everyday risks.
There's another layer of recent buyers who don't feel they're marginal--but their financial stability is more contingent than they realize. Their employment seems solid, but their employers sales and profits are more contingent and fragile than they realize.
When good times reverse to bad times, every enterprise with marginal sales takes a hit, and layoffs follow as night follows day. When times are good, layoffs are not even on the horizon. But when the economic tides recede, skittish, hollowed-out, and/or debt-burdened employers push the layoff button sooner rather than later because their own financial structure is so fragile.
Those laid off assume they will find another job quickly because in good times, there appears to be a labor shortage. But when the tide ebbs, the job offers dry up seemingly overnight.
The Grand Illusion being pushed by central bankers and conventional pundits is that another round of interest rate cuts and quantitative easing (QE) will restart the economy should it falter. This is illusion because it ignores how much of the market is dependent on marginal businesses, buyers, borrowers and renters who will not benefit from QE or a tiny decline in interest rates.
Conventional economists don't quantify marginal businesses, buyers, borrowers and renters, and so the rapidity of the next drop in the economy will come as a great surprise to them. There is little to no awareness of how many enterprises, buyers, borrowers and renters are hanging on by a slender thread--and how many who reckon their finances are robust are one layoff away from insolvency.
Bubbles always look unstoppable, yet they always burst. The symmetry in this chart of the Case Shiller Housing Index for San Francisco suggests the clock is ticking on markets being propped up by marginal buyers, borrowers and renters:



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
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Monday, November 20, 2017

Our National Madness

Fakery and trickery are not solutions; they are a form of self-delusional madness that destroys the nation's ability to face reality squarely and choose real solutions, no matter how painful the choice and path might be.
The nation has lost its common sense, its soul and its sanity. Can we summarize the source of this remarkably pervasive madness?
Our efforts are now focused not on solving core problems but on covering up core problems, as if covering up problems is a substitute for solving them. Down this path lies madness, for this substitution of false narratives for reality erodes our ability to distinguish not just between reality and fantasy but our ability to distinguish between moral rights and wrongs.
The efforts of those in positions of power are now focused on obscuring the truth, marginalizing critics, blaming malevolent external forces, cloaking self-interest with virtue signaling and staking claims to victimhood. These are the five dynamics that are powering the nation's descent into madness and dysfunction.
Consider Harvey Weinstein. Evidence is now emerging that Mr. Weinstein and his army of toadies, bullies, thugs, et al. put enormous effort and resources into obscuring the truth, marginalizing critics, and cloaking self-interest with virtue signaling. Next up for Mr. Weinstein's team of apologists: blame the Russians (or an equivalently malevolent Other), and claim to be a victim of all those testifying against him.
This is the model for everyone in positions of power. The only variation is which of the five will be spewed as a first line of defense, and which will be held in reserve for the last-ditch defense against the truth becoming public.
I'm sorry if this is a shock, but the economic "recovery" is nothing but smoke and mirrors designed to obscure the pillage of the nation's wealth and income by state-protected cartels. The central bank can't actually fix what's broken in our economy, but it can manually push the needle of the stock market higher.
So rather than actually fix what's broken, the "solution" is to make the stock market the primary measure of "prosperity." In effect, the stagnation of real prosperity is a problem that would require profound (and painful to those gorging at the feeding trough) changes in the status quo; so the solution is to label the stock market "the measure of prosperity" and then shove it higher.
This substitution of trickery for reality solves nothing. It is the exact equivalent of the student who didn't study and who learned nothing erasing his F grade and forging an A in its place. Nothing has actually changed in terms of the student's knowledge or skillset, but he has fooled the authorities focusing on superficialities: incompetent, self-serving administrators who then tout the student's high grade as evidence of their own success, the media which mindlessly accepts the fake grade as evidence that all is peachy-keen in the school district, and so on down the line.
If this happens often enough, the student actually starts believing he can get away with trickery as a solution for all problems: just BS your way through any challenge, and if that fails, then marginalize one's critics, blame malevolent external forces, furiously virtue-signal, and if all else fails, stake a claim to victimhood.
In other words, the student loses touch with reality and is lost. The USA has lost touch with reality, for its leadership has embraced the notion that trickery and fakery that covers up problems is a substitute for solving problems--and if this fails to convince an increasingly jaded and cynical public, then body-slam the public with the other four tactics: marginalize critics, blame malevolent external forces, cloak self-interest with virtue signaling and stake claims to victimhood.
Unfortunately for our nation, madness is repeating what's failed and thinking it will work next time. Trickery, maligning critics, virtue signaling, blaming outside forces and claiming victimhood no longer have the desired effect on all but the most delusional (or self-serving) supporters of our profoundly corrupt leadership.
Actions have consequences. Fakery and trickery are not solutions; they are a form of self-delusional madness that destroys the nation's ability to face reality squarely and choose real solutions, no matter how painful the choice and path might be.



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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, Andrew W. ($50), for your fabulously generous contribution to this site-- I am greatly honored by your support and readership.

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Sunday, November 19, 2017

Want Widespread Prosperity? Radically Lower Costs

As long as this is business as usual, it's impossible to slash costs and boost widespread prosperity.
It's easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it's actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.
As I have pointed out many times, history is unambiguous regarding the economic foundations of widespread prosperity: the core ingredients are:
1. Low inflation, a.k.a. stable, sound money
2. Social mobility (a meritocracy that enables achievers and entrepreneurs to climb out of impoverished beginnings)
3. Relatively free trade in products, currencies, ideas and innovations
4. A state (government) that competently manages tax collection, maintains roadways and harbors, secures borders and trade routes, etc.
Simply put, When costs are cheap and trade is abundant, prosperity is widely distributed. Once costs rise, trade declines and living standards stagnate. Poverty and unrest rise.
These foundations characterize stable economies with widely distributed prosperity across time and geography, from China's Tang Dynasty to the Roman Republic to the Byzantine Empire to 19th century Great Britain.
I have estimated the realistic cost of a conventional middle class lifestyle, and found that only the top 20% can afford a middle class lifestyle. Needless to say, this destroys the notion of being "middle."
The squeeze on households comes from both the soaring cost of big-ticket items such as childcare and healthcare and from the stagnation of wages/income.
So your new TV cost $100 less but your healthcare costs $10,000 more: the big expenses are soaring, costing households tens of thousands of dollars more while cheap TVs and clothing decline a few bucks.
Labor's share of the economy keeps stairstepping down: every boom/bubble benefits the financier and technocrat class, but labor's share of the economic "boom" flatlines for a few years and then tanks in the inevitable unwinding/recession.
The third dynamic is the dominance of anti-competitive cartels and state guilds which are no longer accountable or competent. (The two are related, of course; when accountability is lost, there's no way to identify or weed out graft and incompetence.)
This report on the causes of the decline of New York's subway system reads like a summary of the entire U.S. economy: the politicization of public services, corruption that evades the legal definition of corruption, self-enriching guilds, cartels and elites and gross incompetence enabled by zero accountability.
As long as this is business as usual, it's impossible to slash costs and boost widespread prosperity.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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, Matt T. ($5), for your extremely generous pledge to this site-- I am greatly honored by your support and readership.

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Friday, November 17, 2017

The Demise of Dissent: Why the Web Is Becoming Homogenized

In other words, we'll be left with officially generated and sanctioned fake news and "approved" dissent.
We've all heard that the problem with the web is fake news, i.e. unsubstantiated or erroneous content that's designed to mislead or sow confusion.
The problem isn't just fake news--it's the homogenization of the web, that is, the elimination or marginalization of independent voices of skepticism and dissent.
There are four drivers of this homogenization:
1. The suppression of dissent under the guise of ridding the web of propaganda and fake news--in other words, dissent is labeled fake news as a cover for silencing critics and skeptics.
2. The sharp decline of advertising revenues flowing to web publishers, both major outlets and small independent publishers like Of Two Minds.
3. The majority of advert revenues now flow into the coffers of the quasi-monopolies Facebook and Google.
4. Publishers are increasingly dependent on these quasi-monopolies for readers and visibility: any publisher who runs afoul of Facebook and Google and is sent to Digital Siberia effectively vanishes.
The reason why publishers' advert incomes are plummeting are four-fold:
1. Most of the advert revenues in the digital market are being skimmed by Facebook and Google, as the chart below illustrates.
2. Ad blockers have become ubiquitous.
3. Few people click on the display ads that are the standard in desktop web publishing; in other words, these ads simply don't work very well, and much of the revenue being generated is click-fraud, i.e. bots not real people clicking on adverts because they're interested in the product/service. As a result, advertisers are pulling away from these type of ads as they search for advert models that aren't so vulnerable to click-fraud.
4. The web is increasingly shifting to mobile, which has fewer advert spots due to the small size of the display. In addition, major third-party advert services such as Google Adsense place restrictions on the number and size of ads being displayed on publishers' sites.
The systemic erosion of advert revenues for everyone other than FB and Google is evident everywhere: for example, BuzzFeed Set to Miss Revenue Target, Signaling Turbulence in Media Prospects for a 2018 initial public offering by the high-profile publisher now appear remote.
Digital publisher BuzzFeed is on track to miss its revenue target this year by a significant amount, the latest sign that troubles in the online-ad business are making it tough for new-media upstarts to live up to lofty expectations.
As a result of these two dynamics--the censorship of dissenting views under the excuse of limiting fake news, and the erosion of advert income--independent publishers are losing ground. While those posting on Facebook and other social media sites have little expectation of monetizing their content, many web publishers made enough income off adverts or affiliated income (from YouTube channels, for example) to justify the enormous time and effort they expended keeping their channel/site going.
As advert income has dwindled, there are only two other revenue models available to publishers: a subscription service or Patreon, i.e. the direct financial support of users/readers/viewers. Major publishers are struggling to build a subscription base large enough to fund their operations, a task made more difficult by the expectation that all content is free or should be free.
Patreon has been a boon for thousands of independent writers, journalists, cartoonists, filmmakers and other creators of content. The Patreon model (as I understand it, and yes I have a Patreon campaign) is not based on content that's behind a paywall available to subscribers only, but on providing incentives in the form of content or other rewards to those who choose to contribute.
The Patreon model only works if enough users/readers/viewers step up to support content creators they value. I think the success of Patreon suggests that many people are willing to support the content creators they value. But like all voluntary revenue models, there's the free-rider issue: people who may have the income to pay a bit for content choose not to, and in essence free-ride on those few who do contribute/pay for content.
Some people have advanced the model of micropayments as the solution to the problem of compensating content creators fairly. While this model has some obvious benefits--pennies charged for access to content might add up to a living for content creators if their audience was large enough--it would still be a voluntary system, and thus it would have the same free-rider issue as every other voluntary payment-for-content idea.
Posting "free" content on social media ends up driving advert revenues to the social media and search monopolies, leaving nothing for the content creators. There is only so much serious content that can be created for free.
If what we're left with is "free" content (i.e. the creator gets no income for creating and posting content), Facebook, Google and click-bait link farms of sensationalist headlines, we'll end up with a thoroughly homogenized web of "approved content" underwritten by lobbyists, the entertainment industry and elitist foundations/think tanks, and little in the way of real dissent or diversity of independent analysis.
In other words, we'll be left with officially generated and sanctioned fake news and "approved" dissent: unemployment is at record lows, inflation is near zero, the "recovery" is alive and well, Russia is the enemy and any suggestion to the contrary is propaganda that must be eradicated as fake news, etc.
Simply put, the web is becoming Orwellian. There's plenty of approved "diversity of opinion," but dissent is being sidelined to the fringes as a risk to the perfection of managed content.



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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, George R. ($5), for your most generous contribution to this site-- I am greatly honored by your support and readership.

Read more...

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