Posts Tagged ‘fuel prices’

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2 things crucial to the future of your business: the local economy and what you value most

May 24, 2012
English: Filling station at Childerley Gate. T...

“Petrol (gasoline) prices per liter in Euro at Childerley Gate (UK). A historical record of fuel prices in mid-2005!” (Photo credit: Wikipedia)

What you value most could include valuing a particular kind of customer (or any order for a particular service that provides an excellent profit margin). What you value most could also include valuing a particular amount of customers (or a specific increase of profit). Of course, what an individual values most can change as they change, as their household changes, and as the community around them changes, like as gasoline prices quickly double or drop by a dollar or two.
What the people around us value can be labeled “the local economy.” What people value includes how they choose their priorities of what to spend money on, how to select which businesses to use, and every part of the process of choosing to either do business with you or do business with someone else instead.
“Business development” is a broad term that includes planning, marketing, generating leads, and converting leads in to transactions. Many small businesses are generally familiar with the basic idea of business development. Realistically, most small business owners are very familiar from personal experience with converting leads in to transactions, yet they are just as surprised as the general population by major economic changes.
Certainly, many businesses have major increases in their profits by reviewing and refining the process used for converting leads to transactions. Some business owners recognize that as an issue in which a major improvement is possible. However, in the 13 years that I have been consulting with business owners, the vast majority have, in my opinion, vastly underestimated the value of competent economic forecasting.
Phoenix Arizona 24th Street & Camelback Road f...

Phoenix Arizona 24th Street & Camelback Road from the Phoenix Mountain Preserve (Photo credit: Al_HikesAZ)

In the area of Phoenix (Arizona), the economic shifts of the last decade have substantially altered almost every local business. As energy prices rose (including for gasoline), two factors made Phoenix more sensitive to that change: the heat of the desert (which creates extremely high electricity bills in the summer for cooling) and the sprawl of the suburbs (which creates unusually high costs for commuting across long distances, including when the auto’s AC is constantly on high to keep the inside of the vehicle cool when it is well over 100 degrees outside).
I published forecasts in 2004 alerting my readers to the issue of gasoline prices rising so much that it would effect the budgets and spending patterns (including investing patterns) of businesses and consumers within the US in particular, but also in places even more dependent on importing fuel, such as Greece, Italy, the UK, and Japan (which has been in a “recession” for the last 23 years). I published warnings in 2003 of the emerging instability in real estate and stock markets, but it was not until 2004 that I recognized rising fuel costs as the underlying issue. In mid-2005, when the real estate market in Phoenix shifted (as well as in another sprawling desert suburbia, Las Vegas), I had already been watching for the shift and published my recognition of the first stages of the shift that eventually spread to the rest of the US real estate market and then the financial stocks (companies that had been gambling on extreme concentrations of risk exposure in real estate, such as AIG, FNMA, FDMC, Countrywide, Washington Mutual, Merrill Lynch, Bear Stearns, and then even Bank of America, JP Morgan Chase, and so on).
Bank of America Merrill Lynch

Bank of America recently acquired Merrill Lynch, saving Merrill Lynch from going out of business (Photo credit: Wikipedia)

The Washington Mutual logo prior to its acquis...

The Washington Mutual logo prior to its acquisition by JPMorgan Chase. (Photo credit: Wikipedia)

(In the late 1920s, Charles Merrill, the co-founder of Merrill Lynch, repeatedly warned his clients in advance of the emerging risk in the US stock market. In recent years, apparently the company was not so committed to competence analysis of emerging trends.)
Merrill Lynch & Co.

Merrill Lynch & Co. (Photo credit: Wikipedia)

Many local small businesses have been challenged by the decreasing tide of people moving to the sprawling desert suburbs. New construction in the Phoenix area is a small fraction of what it was in 2004. New people moving to the area had been so high that many local businesses had been extremely successful without ever advertising. However, cultivating customer loyalty is a huge issue now for many businesses. Further, even with word-of-mouth, there is a transition away from spoken recommendations toward the broadcasting of typed electronic messages like “can any of you recommend a really good ____?”
Since I have been in the advertising field for 13 years, my work history shows that I have been part of the shift away from print and radio toward the internet. Obviously, the shift toward the internet is far better known by most people than the causes of the economic shift that has slowed the economies of Greece, Phoenix, Japan, and other areas most sensitive to rising fuel prices. (In fact, in this piece, I am not even addressing WHY global fuel prices reversed a long-term trend in 1999, but that has been the main focus of my forecasting publications since my 2004 use of the term www.TheDominOILeffect.com.)
So, almost everyone who has studied business trends at all in the last 10 or 15 years knows about the huge shift toward the internet and growing electronic resources like google, facebook, blogs, and things like verified reviews and ratings. The shift of business toward the internet is almost as obvious as how computers altered how business is conducted or how the telephone altered how business is conducted or even calculators and adding machines and credit cards and checkbooks and currency.
Next year, the most popular currency in the world, the Federal Reserve’s “US Dollar” note will be 100 years old. It simply did not exist in 1912.
100 years ago, the technologies altering the world of business were things like the use of residential phones (“landlines” were still replacing telegraphs in remote parts of the US). Automobiles were still extremely rare, kind of like owning a private jet is very rare today. There was no such thing as TV advertising or cable TV or even television sets.
Now, millions of people are walking around with new mobile phones that have computing power that might have cost a million dollars in 1999. Most business owners are only vaguely aware of the growing waves of business flowing in to the internet.
As fuel prices continue to rise relative to most other items such as real estate and computers, people are going to value their time newly. As technology allows growing numbers of people an extremely fast access to extremely relevant information, people are not going to drive around all day shopping for deals to save $20 or even $50. People will save time and money by using the internet.
Imagine businesses that clung to using a telegraph instead of getting a telephone. Imagine businesses that favored typewriters over word processors. What happened to those businesses? They mostly disappeared, right?
I know some farmers who only recently bought a telephone and do not own a computer. They are Amish. I do business with them regularly.
However, they are farmers. They may not use automobiles personally, but they sure appreciate that UPS and Federal Express will deliver their products for them.
Image representing UPS as depicted in CrunchBase

Image via CrunchBase

Is your business ready for the future today? How would you be sure?
In 2004, were you planning for the coming economic changes like rising fuel prices and a huge decrease in borrowing and lending? Most business owners may have no idea how far they are from the reality of the business trends that are coming to their industry and their local economy (as in the changing values of their customer base).
I have talked to many confident millionaires in the last 10 years. A lot of confidence was not enough to keep them out of foreclosure and bankruptcy.
Government committees across the world have also been profoundly confident in their projections of tax revenues. Myself and others have warned them that their projections were “approaching the ridiculous.” They sometimes called us ridiculous.
There may have been some excessive pessimism as well as some excessive optimism. Consider that there is no such thing as an excess of realism.
English: Damage to the JP Morgan Chase Tower a...

English: Damage to the JP Morgan Chase Tower after Hurricane Ike, Houston, Texas (Photo credit: Wikipedia)

If you are open to a realistic assessment of what are the most valuable refinements that you can make to the way you conduct business, then you may realize that sometimes a single change can make a huge difference, though a series of small changes is often what leads to the most historic breakthroughs. Those who are willing to benefit from changing economies and changing technologies are welcome to contact me now. From realism about the changing economic trends to realism about the changing technology of how your future customers are selecting which business to use, how much realism are you willing to value?
Related articles

http://www.inc.com/articles/201103/businesses-hit-by-rising-gas-prices.html

www.youtube.com/watch?v=8G70lBEAFl8

www.fueleconomy.gov/feg/gasprices/faq.shtml
gaspricesexplained.org/
http://www.smartplanet.com/blog/business-brains/rising-fuel-prices-push-businesses-to-reconsider-fleet-options/23998
http://www.bizjournals.com/dayton/news/2012/05/24/delta-cutting-flight-between-phoenix.html

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How much is your business benefiting from economic change?

May 2, 2012

How much is your business benefiting from economic change?

With every economic change, some businesses benefit more than others. For instance, the stock price of McDonald’s rose by more than 500% from 2003 to 2011. Do you know how rare that big of a gain has been in recent years? The earlier that you recognize a new reality that is changing the future of your business, then the better you can change your business to benefit most from that changing reality.

While McDonald’s has performed well in recent years, it has not performed nearly as well as the following sector of 15 US companies (shown below). I wrote about this sector in 2003. If you were to ask most investment professionals which US stock sector did the best last decade, MOST OF THEM STILL DO NOT KNOW!

Now, in recent years, what economic changes have made the biggest difference for the profits of your business? Changing competition within your industry? Changing fuel prices? The changing rate of new arrivals to your area? The shift toward more prospects shopping online, including using reviews and ratings?

Which is an easier prospect to sell: one that knows nothing about you and your business or one who already trusts you because of personal recommendations including recommendations found online? What if you were hiring a new employee and one applicant stood out from the others because of a personal recommendation from someone you know and trust? Who would you schedule first for an interview?

Consider that if you were planning to make a major purchase, wouldn’t you value knowing which alternatives got the best rating from people like you? What if you could quickly access free reviews from people that you personally know and respect and trust? Some of the best marketing campaigns in recent years have featured detailed reviews and real-time public ratings, which are simply not possible through regular commercial advertisements, like in phone books, radio and TV.

If prospective customers are not already familiar with your business, isn’t it predictable that they would value ways of finding which businesses that they can trust most? Wouldn’t they stop using something like the phone book (which just lists businesses in alphabetical order) in favor of searching online where they can see the results in order of systematic rankings, ratings, and reviews?

As people increasingly use online reviews and referrals through their online contact network (“social media”), that can result in the number of online searches for companies in your industry to decline. Are you updated yet about the latest trends in online searches for your industry? Are you updated yet about all of the trends that will determine the future of your industry in general and your business in particular?

In recent years, how early were you alert to the changes in your market that have most effected your sales and your profits so far? Did you benefit more than your competitors by adapting earlier to emerging changes or were you surprised and unprepared?

Over 400 years ago, William Shakespeare wrote:

This was long thought to be the only portrait ...

This was long thought to be the only portrait of William Shakespeare that had any claim to have been painted from life, until another possible life portrait, the Cobbe portrait, was revealed in 2009. The portrait is known as the ‘Chandos portrait‘ after a previous owner, James Brydges, 1st Duke of Chandos. It was the first portrait to be acquired by the National Portrait Gallery in 1856. (Photo credit: Wikipedia)

“There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune….
On such a full sea are we now afloat;
And we must take the current when it serves,
Or lose our ventures.”

“Of course I’m interested in steering my business toward results that are far above average, yes, but why talk to you in particular?”

In a moment, I’ll show you some evidence that will help you to identify who you can trust to make accurate analysis of the market for your business. The best credibility comes from bold forecasts that have accurately fit an unusual reality that has developed exactly as forecast. If one forecasting analyst says things that contrast with what most analysts say, would you rather go with the majority or with the reality?

Now, what were some of the most shocking economic developments of recent years? Think back to some of the big changes that influenced your business and when you first began adjusting to each of those changes: rising fuel prices, the declining popularity of suburban living and suburban real estate markets, and declining overall consumer spending. What year did you begin adjusting your behavior because of any of those trends?

In 2003, you could have read an online report that I wrote about an emerging global shift in patterns of lending and borrowing behavior as well as the increasing risks for the markets most sensitive to borrowing trends, such as US real estate. In 2004, you could have read an online report that I wrote about the risk of a fuel prices (like gasoline) rising so high that it would effect the economies of the regions most dependent on the importing of fuel, such as Japan, Greece, and Italy.

(See the highlight from my 2004 publication below: “how many dollars will it cost to buy a gallon of gasoline next year?” By 2007, you were probably asking questions like that which I was asking (and answering) in 2004.)

In 2005, when housing prices in desert areas like Phoenix and Las Vegas began to decline, you could have read an online report that I wrote within a few months of the peak. Why was it so easy to know that sprawling desert metros like Phoenix and Las Vegas would have such unusual declines in real estate?

There were two issues that made the real estate shift easy to recognize in advance. The most obvious issue was a declining number of applications for mortgages in those areas. The root issue that caused the decline in suburban desert mortgage lending was rising fuel costs, which I stated in 2004 before the decline started.

Here’s the obvious logic as to how fuel prices impact different regions (markets) differently, even though not everyone has the courage to face the simplicity of the issue. Note first that when oil prices doubled in less than 12 months starting in 1999, stocks prices of the US airline sector plummeted 40%. Could that be because of their sensitivity to fuel prices as a major cost of their business?


Now let’s review oil prices for a longer period of time, up well over 1000%. Oil prices then reversed in 2008.

Below that is a longer-term chart of the stock sector of airlines in the US, which fell by over 90%. When did prices of the airline sector reverse? When oil prices dropped?

Could rising fuel costs effect the profits of airlines? Could rising fuel costs increase the operating costs of airlines? Could declining fuel costs decrease the operating costs of airlines?

Next, what does any of that have to do with the decline in mortgage lending for desert suburbs? First, let’s consider what produced the boom of suburban desert mortgage lending of the prior two decades.

In the 80s and 90s, fuel prices were declining (relative to inflation). As fuel prices declined, sprawling desert metros benefited more than other regions. As late as the end of the 1990s, the costs of summer cooling bills were dropping and the cost of gasoline for the long suburban commute were was so low that growing herds of people were buying big vehicles like SUVs that got less than 20 miles per gallon.

Eventually, that began to change. Commuters quickly went from paying around $1 per gallon of gas to over $4 by 2008. In dense urban areas with short commutes, that was not a big increase in total spending on gasoline. However, in sprawling desert metros, long commutes from distant suburbs use a lot of gallons of gasoline, especially when the vehicle’s air conditioning is running for the whole trip during the 110 degree heat of the desert summers.

That means that when fuel prices rise, certain regions and climates will predictably be effected most. Again, when fuel prices were declining (relative to inflation) in the 80s and 90s, sprawling desert metros benefited more than other regions from fuel prices that were declining relative to inflation, so why wouldn’t the same areas be hurt the most as fuel prices eventually surged?

In 1999, a barrel of oil was $11. By 2008, the same barrel cost over 1200% more: $148.

Back to the sprawling desert suburbs, some of the most spacious suburban homes were also getting very expensive to cool in the summers, with rising energy costs sending monthly utility bills past $300, $400, and even $500 per month- nearly as much as some mortgage payments. Rising fuels costs in the form of cooling costs and rising commuting costs ended the desert suburban housing boom in 2005. I have been publishing that assertion since the fall of 2005.

“I’ve been saying the real-estate boom ended around August 1- based on stock
charts of real estate sectors [HGX, DJR, EQR, EOP]. Now that the September “lagging indicator” data
is in, how long before people say “maybe it is ending soon?”

Oct 26, 2005: http://groups.yahoo.com/group/redpill_info/message/34

In 2004, I published an explanation of exactly why that was coming. In 2002, I identified some of the first signs of the shift, and then in 2003 I published projections of a global credit crisis and resulting effects, but I did not identify the source of those symptoms until 2004, when I published this:

Are You Affected By The Real US Deficit: Oil

www.gold-eagle.com/editorials_04/fibonacci110704.html

I followed that in 2005 with this:

321energy :: Worth its Weight in OIL : J.R. Fibonacci

www.financialsensearchive.com/fsu/editorials/2005/0906.html

www.321energy.com/editorials/fibonacci/fibonacci090705.html

and that article was also cited in this 2006 MBA thesis at Columbia University:

“Strategic Choices for Managing the Transition from Peak Oil to a Reduced Petroleum Economy”

http://www.ldeo.columbia.edu/~odland/Odland_PeakOilMgt_Dissertation.pdf

by S.K. ODLAND - 2006 - Cited by 4 - Related articles
13 J.R. Fibonacci, Navigating the New Economy, Lesson 1: Worth Its Weight in Oil. (Published online at http://www.321energy.com, Sept. 9, 2005); 

How much would you value the insight of someone who forecast the rise of fuel prices and the effects on the economies of sprawling desert metros like Phoenix and Las Vegas? As economic changes come, will you be shocked or prepared? How much is your business benefiting from economic change?

For a limited time, I will offer a free 15-minute consultation assessing the future of the market for your business. Contact me now to get insight in to the single most important reality for you business, which most analyst do not have the insight to recognize or the courage to admit:

  • competent (realistic) forecast of the future trends of things like consumer activity and gas prices

You will also get the benefit of the following standard data that any market analyst could give you:

  • current growth rate (indicates number of recent arrivals that are valued prospects because they are least likely to already be loyal to a competitor of yours)
  • current market size (number of prospective customers, grouped by income level & any other relevant demographic data)
  • profitability by service: buying demand vs cost to provide incl. competitiveness/market saturation (often, business owners already have excellent sense of this)
  • trends of how consumers are shopping for the specific service you offer (rate of change for online searches)


www.ldeo.columbia.edu/~odland/Shifting_the_PO_Debate.pdf

www.aspo-usa.com/2009denver/confirmedspeakers.cfm?bid=742

http://rei.rutgers.edu/index.php?option=com_content&task=blogcategory&id=39&Itemid=54

www.aspousa.org/conference/2011/speakers.cfm

http://law.utoledo.edu/students/lawreview/volumes/v40n2/Lynn_RevFinal.pdf

www.greatdreams.com/oil/peak_oil_consequences.htm


iopscience.iop.org/1748-9326/1/1/014004/pdf/erl6_1_014004.pdf

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Stop arguing and ADAPT!

January 31, 2012

First a brief and funny video distinguishing what I mean by “arguing:”

This next video is an audio of the content below:

Okay, you may already know that I have held tightly to some rather strong political opinions. If you have known me for even just a few decades (or perhaps even just a few minutes), then you know that I think my opinions are the very best, at least until I change my mind and then my old opinions are just opinions and my new opinions are then the very best.

I have been a sincere and even stubborn political activist. I have campaigned for clean water, I have campaigned against at least one war, and I have campaigned door to door as a volunteer for former US Senator Mark Foley (of Florida). If you recognize that name, by the way, you may know that his political career ended rather quickly in a scandal.

So, I have campaigned and won but then been disappointed even with how that went. I have also campaigned and lost but then been grateful for the thing that I previously condemned and opposed.

Some of you may already be able to relate to that. Some of you may not relate to that yet, but may eventually.

I’m not really writing though about how stubborn I have been or how sincerely I have argued. I’m just mentioning all of that to establish a possible common link between you and I, plus to contrast something quite distinct from all of that sincere arguing that I previously have done about conflicts of political opinions.

When I was focusing of what other people should do and how they should do it (according to me), that was one possible investment of my time. If I was the owner of a big company or even worked as a supervisor over others, than it might be very important for me to focus on what other people should do and how. However, when I focused my time on arguing with other people about what they should do and what they should not do, I found that such an investment of my time could be frustrating, exhausting, and even disturbing.

Let me put it another way. I could get furious. I could get very upset. I could get defensive and condescending and argumentative and bitter.

Those were the results available to me from focusing on arguing with others. So, when I recognized the pattern connecting the behavior and the apparent results of the behavior- like an experience of something between disappointment and burning outrage- I stopped arguing. Maybe I argued again about the same topic or about some other topic, but my experience was that arguing was aggressive, like being pushy. Maybe I just was not very good at being pushy, but when I notice a lot of people arguing and then being upset by their own behavior of arguing, I wonder if a lot of us are not very good at being pushy. We must not be if we just keep pushing and pushing and pushing, right?

I was an opinion pusher. Further, I really wasn’t very good at it. I didn’t especially value the resulting experience produced by my behavior of pushing opinions. I was open to new results and new methods.

So, I began to study things like how people form their opinions- first studying particular opinions but eventually studying the whole process of the forming of opinions from the perspective of psychology and neuro-linguistics (NLP). I also studied behavior in general- and not just pushy arguing and not even just various forms of communication and language patterns. I studied trends in behavior and that led to studying the forecasting of trends in behavior.

In mid-2002, I was researching trends in general and got interested in economic trends in particular- or certain ones at least. I got interested in some unusual trends in the lending behavior of investors who were lending money to the US government (as in “buying” US Treasury debt). Actually, I was not exactly interested in those trends so much as some historical correlations that fit with those lending trends. That lending behavior corresponded to a high probability of recession.

I do not have the data that I saw in 2002 to show you, but I was looking at the US treasury yield curve and the following chart is of the simpler US treausry yield spread, yet this chart shows a distinct correlation as well. I do not know the source of this shart, but it implies that the spread (range) between the yield rates of various maturity periods of US Treasury was such that in the early 1980s, there was nearly a 90% probability of a recession (and official recessions are shown in gray). I do not know the background of this chart, but this gives you an idea of the kind of thing that folks like me were looking at, for instance, in 2002.

So, the author of that particular report that I was reading in 2002 was connecting the lending behavior relating to lending money to the US Treasury to things like the future of real estate lending in the US. He forecast a real estate crash. So did other authors that I had read by 2002.

I read forecasts of a continuing rise in commodities, especially fuel prices. By 2004, my published articles focused particularly on the growing US dependency on foreign-source oil, as well as the reasons that I expected a continuing rise in fuel prices and what I expected it to do to the economics of the US and EU (and continue to do to Japan).

In 2005, I was monitoring real estate trends and soon after the decline in mid-2005 in the real estate markets of Phoenix and Las Vegas, I published an article labeling that as the first wave of a much bigger trend that would spread throughout the US. Later, I asserted that the reasons that the two sprawling desert metros of Phoenix and Las Vegas had done so well and then so suddenly done so poorly was directly related to fuel prices.

Downtown Las Vegas, Nevada and Red Rock Canyon...

Image via Wikipedia

Sprawling desert metros are especially sensitive to fuel prices. When energy prices were at all-time inflation-adjusted lows in 1999 and were expected (by many people at least) to continue to drop, it was already cheaper than ever to live in the desert, even through the searing summers. By 2005, many new large homes in the outskirts of the sprawling metros had monthly energy bills of $400 or $500 or more- and that was just for a single residence. As energy costs rose, the costs for cooling the buildings of large businesses ballooned. Further, as gas prices quickly passed $2, $3, and even $4 per gallon, the long commutes from the distant outskirts in SUVs went up right along with the energy bill: like hundreds of dollars per month in expenses for commuting (rather than $100 per month as in the 1990s).

Did those ballooning energy costs have any relationship to the overall budgets and spending behaviors of those households (and businesses)? Did such energy costs effect the willingness of people to enter new big mortgages to live in huge distant homes that would cost hundreds of dollars extra per month in energy bills and commuting costs? Note that a big part of the real estate boom of the sprawling desert metros was internal to those metros- people moving further and further out to bigger and bigger homes. Could it be that eventually the huge portion of their budgets that they were spending on rising energy costs brought the real estate booms to and end?

In 2004, that is precisely what I forecast, along with many other competent forecasters. By 2006, I began promoting videos online that specified the implications of the emerging real estate crash on the mortgage industry and financial insitutions (lenders including banks but also FNMA, FDMC, and Countrywide). By 2008, as there was a wave of bankruptcies in the US financial sector (and in Europe also), I was looking for signs of the inevitable rebound.

In early March 2009, only a few days before the reversal and rebound in the US stock market, myself (and many others looking at similar data and correlations) published explicit forecasts of, in my case, “a multi-month rally” in US stocks. It lasted dozens of months, far exceeding the minimum targets that I forecast, but I have never had any reason to shift my long-term forecast that the rally of 2009-2011 was just a rebound within a much larger decline. I interpret data like the following two charts to support my published conclusions from 2003 for a long-term shift (not just what we have seen so far). The first one shows a conspicuous absence of any rebound in consumer confidence in the US in 2009 or 2010:

The second chart shows that the US economy’s new highs are based on all-time highs in government spending (and borrowing). While Democrats may celebrate the new all-time highs in the GDP of the US, they may not know that so much of it is from government spending, much of which was paid with borrowed money.

Of course, much of the private spending was also with borrowed money, including huge amounts borrowed from foreignors. While many Replublicans and Libertarians complain about the possibility of hyper-inflation, they may fail to assess the simple reality of the source of much of the increasing spending of the Obama administration: foreign-source lenders.

Huge government debts or deficits do not always resolve as hyperinflation (and I repeatedly have noted that the US government does not have authority over the US Dollar anyway, which is the private currency of a private business, the Federal Reserve central banking syndicate). Government “excess” also resolves by things like rocketing tax rates and, in some cases, default.

As a forecaster, one of my concerns was that the US economy has been relying on ”too much borrowing.” First, there was too much private borrowing for things like real estate mortgages (and, according to me, there still is). Next, status quo politicians (of whatever party) produced what I consider too much public borrowing (for things like bailing out the owners AKA shareholders of financial institutions that got involved with the excess of the mortgage mania).

The solution for too much borrowing is not more borrowing. That has already been tried, such as in Japan in the 1990s and since then. Here is how that went for them:

In conclusion, let’s stop arguing politics and adapt to the reality of markets. We’re going to have to do that anyway eventually- just like the folks did in 2005 in sprawling desert metros with $400 per month electricity bills and $300 per month commuting costs. They got more fuel efficient cars and moved closer to where they work, even if that meant a smaller home and hundreds of dollars less per month in bills for “overhead.”

The people of Japan have adapted. So have everyone everywhere that has ever experienced a wave of economic conservatism. By the way, the decline in borrowing and the resulting decline in prices is simply a wave of economic conservatism. As for people who accuse me of negativity, I do not consider conservatism to be negativity, but if you do, that may effect your behaviors and the natural results of your behaviors- like whether markets reward conservatism most or reward something else most.

Here is a hilarious video about the kind of excuses people give for not adapting:

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the root of all money: evil

January 14, 2012
Reality quiz:

Prince Nikola III Zrinski thaler minted in Gvozdansko castle, Croatia, in the early 16th century (until 1534)

Money can be very useful. Money allows for reliable access to things of value.
Paper money only has value when there is an organization enforcing it’s value. If the organization ceases to function to enforce the value of the paper money, the paper money has no value, like with the Confederate Dollar when the Confederacy collapsed or a casino’s tokens when the casino stops operating as a business.
The enforcing of the value of money involves force, like arrests, evictions, repossessions, foreclosures, levies, garnishments, and so on. When there is a revolution, like in Cuba, or when the US invaded Iraq or Vietnam or Korea etc, then that new pattern of force can change the possession of property (through a new redistribution of wealth as well as destruction and death) and will influence the enforcement of the prior currency systems of organized violence, similar to when the Union army defeated the US Confederate army and the prior currency system of the Confederacy ceased to operate.
In summary so far, currency systems are systems of organized violence. Even when dictators (called kings) instituted systems of claiming various amounts of wealth from various other people, the establishment of a particular new currency as the “lawful money” or “coin of the realm” was based on the actual operation of organized violence upon which the claims of tax liability were enforced.
No one already wanted to give up a bunch of livestock or produce for a little shiny coin or a casino token accepted at any of the dictator’s court outlets. The masses gave up those useful things for currency because of the threat of violence if they did not pay taxes or other tribute and the only way to pay those taxes was to buy the coins or tokens or currency of the dictator from the dictator’s outlets and at the exchange rates set by the dictator.
Obviously, a competing dictator or operation of a currency system of organized violence could influence or even overthrow a particular currency system, as when the US Confederacy “seceded.” Actually, “seceded” may be the terminology used by the winner of that dispute. Maybe the Confederacy was attempting to continue to operate under the Articles of Confederation from 1777 while the Union was claiming authority under the later Constitution of 1789. Maybe “secede” was a term that the Union used to label their colonial target’s “disloyalty,” like if the UN invaded China on the basis that China was seceding from the UN without getting proper permission from the UN. Or, consider if the UN invaded the US based (allegedly) on the US threatening to secede or withdraw from the UN.
So, why is it that the various currency enforcement systems of organized violence have used various substances as the selected material for minting a “coin of the realm?” Silver and gold have long been used as currencies. These substances were relatively durable (at least if alloyed with other metals) and were also rare. That is, it was not easy for just anyone to find a lot of gold, at least not in the places where gold was used as a currency. When large new sources of gold and silver from the American continent upset exchange rates in Europe, such as the California gold rush around 1849, new currency systems that did not use those substances were naturally explored, developed, and established.
The value to the operators of the system of organized violence was that access to the gold mines could be monopolized. The military dictators could assemble an army and take over all of the local mines in the area, then strictly limit the supply of minted “coin of the realm.” They would strictly limit the supply because they were the only ones with the technology and organization to monopolize access to the mines, to melt the metals and mint the coins, and of course to force the populace to exchange perfectly good livestock and produce for little casino tokens or coins of the realm or lawful money.
Next, unlike casinos, which may operate against other nearby casinos, governments violently discourage competition. Governments create criminal codes that criminalize unlicensed racketeering (AKA unlicensed taxation as in extortion) as well as unlicensed creation of money (counterfeiting). These criminal codes are enforced by organized violence. Similarly, if someone tried to “break in” or trespass on the government’s mines and steal some unminted metal, that would be punished by organized violence, such as prompt execution.
Once the consistent nature of all currency systems and governments is clear, there is the additional subject of propaganda. Just as governments can declare that a neighboring geographical region is attempting to secede and must be annexed to insure for the freedom of the populace there, like if the UN announced that it is invading or occupying or “liberating” the US in it’s entirety (or even just Texas, like the US previously “liberated” Texas from Mexico), governments can also declare unlicensed operations of organized violence to be criminal, corrupt, evil, immoral, and so on.
One of the most universal taboos of propaganda would be propaganda itself. While organized violence is terrible (according to propaganda), nothing is quite so vile as propaganda. Anti-propaganda propaganda is essential for most any other propaganda to be accepted. If the masses go around creating and publicizing competing systems of propaganda, that can be very unfavorable for the economic interests or national security of a particular operation of organized violence.
By the way, here is apparently a real gold coin, but counterfeit in that it was (to the best of my knowledge) not issued by the Confederate States of America (and perhaps by the Union): http://www.coinquest.com/cgi-bin/cq/coins?main_coin=1388&main_ct_id=59
Once propaganda is monopolized, then various branches of propaganda can announce that they are unrelated. For instance, the churches and the media outlets can all issue statements declaring the separation of church and media. Further, the government and the public school system can issue statements that they are entirely isolated operations.
Actually, propaganda may not even really focus on certain issues. Propaganda has to be believable, like the saying “a war to end all wars” or “peace-keeping” missiles.
However, if the masses can be distracted and confused in regard to enough issues of hysterical drama and controversy, then it may not be required to indoctrinate the masses specifically to be morally repulsed (ashamed/terrified) by any mention of the possibility of the existence of propaganda. The masses may be adequately trained to be reactively outraged about new revelations (press releases?) concerning how a particular currency system has been discovered to be a racketeering fraud from the start or how a particular government has been accused of being an operation of organized violence from the start or how a particular politician is accused of being corrupt or manipulative or just a little bit too pre-occupied with PR and public perception. The masses, in order to be properly influenced or governed in terms of their perceptions and behaviors, can be propagandized about morality, criminality, spirituality, and so on.
Finally, consider the global diamond cartel DeBeers. They may have used deceit and blackmail and violence and so on to establish and maintain control of the supply of diamonds worldwide. They hired Edward Bernays (a famous propagandist) to help them place their products in movies, even having movies written around the entire subject of an emotionally-moving scene in which the handsome leading man presents a huge diamond to the female lead actress as he asks her to marry him (the actor). After dozens and dozens of movies repeating a female lead actress being receptive after being offered some large piece of diamond jewelry, then Bernays arranged to have the actresses (and eventually the British royalty) to wear elaborate diamond jewelry at press events where the media photographers would be photographing them in their diamonds.
Of course, it is all a scam (as in an advertising campaign or propaganda campaign). Diamonds were not widely available until recent centuries. There is no inherent connection between romance or getting married or sexual receptivity. The connection was indoctrinated on to the masses of movie-goers and then swiftly accepted by the culture overall.
Similarly, if DeBeers had the military capacity to dictate to the various governments of the world that those governments owed DeBeers taxes of 75 million carats of diamonds per year, that would be a lot like how kings dictated systems of currency on to their target populations. DeBeers could then dictate the exchange rate between “officially acceptable” units of diamonds relative to ounces of gold, barrels of oil, or bushels of corn.
Again, that pattern precisely parallels the origin of all currency systems of organized violence.  Dictators say if the standard of value is gold or diamonds or whatever thing for which they control the supply, such as crude oil. If the dictators can maintain a system of organized violence to enforce the exchange rate that they set, then that exchange rate persists.

Examples of German and Austrian Thalers compared to a U.S. quarter (bottom center)

In closing, let’s review the origin of the word “Dollar.” It refers to a particular amount of silver.

“The Thaler (or Taler or Talir) was a silver coin used throughout Europe for almost four hundred years. Its name lives on in various currencies as the dollar or tolar. Etymologically, “Thaler” is an abbreviation of “Joachimsthaler”, a coin type from the city of Joachimsthal(Jáchymov) in Bohemia, where some of the first such coins were minted in 1518. (Thal is German for “valley”. A “thaler” is a person or a thing “from the valley”. In 1902, the official spelling was changed from Thal to Tal.)”
Below is the image of the currency of an organization that previously operated a sovereign currency system of organized violence which no longer functions independently. That organization is called the United States of America, which was functionally superseded by the Federal Reserve in 1933:

This is a silver certificate which was, at least in the 1910s, redeemable for a Silver Dollar (coin) from the United States of America and it's outlets.

The above image is from an article I wrote in 2005 in which I detailed the future of the US economy as rising fuel prices would continue to rise and eventually would “pinch” (or pop) the economy, thus slowing credit trends (borrowing and lending), decreasing real estate prices and stock prices, and other producing predictable results as indicated therein (which have been manifesting in precise accord with what I indicated). See: http://www.financialsensearchive.com/fsu/editorials/2005/1217.html

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the value of trend research

January 8, 2012
What’s the value of trend research?


Do you know how much of an advantage it is for your finances and your business if you position yourself to benefit from emerging trends? For instance, some investors noticed the rising risk in real estate markets by 2003. However, many of those that did not follow accurate forecasts lost hundreds of thousands of dollars because they did not invest in accurate forecasts and then follow those forecasts. For many people, hundreds of thousands of dollars is how much difference it can make to invest in accurate forecasts and follow them.

Who publicly forecast the following major developments first:
J.R. Fibonacci or Gerald Celente?

what                     who 1st                 when     who else              when             

real estate prices will plummet J.R.                 Mar03     Gerald Celente       Dec04
credit crisis causing financial meltdown J.R.   Mar03     Gerald Celente     Dec06
global fuel prices will spike      J.R.                 Nov04      Gerald Celente     never?   
online advertising will pass TV The Guardian  Sep09      J.R.                     Dec11                           
 

In 2009, spending for online advertising in the UK passed spending for TV advertising for the first time. In 2010, spending for online advertising in the US passed spending for newspaper advertising for the first time.
How much are you investing in where the global economy is going? By the way, the global economy actually did not decline much if any. However, it did shift significantly. Some places had unusual declines (like Arizona and Greece) while others did relatively well (like Arabia and Alaska and Alberta, which are all major oil-producing regions).

So, there was a sudden redistribution of affluence away from the US and EU toward places like China and the OPEC nations. Also, as fuel prices have been rising, there has been a shift of business away from time-consuming shopping at retail stores toward shopping online and of course online advertising.
How about this? 100 years ago, no one did business over the phone. Either people mailed a paper check or paid in person, right? However, now there are TV infomercials and entire TV channels dedicated to getting people to place orders by phone. 100 years ago, there were almost no phones and certainly no way to make a payment over the phone!

Now, think back to how much business you have done on the phone in the last ten years (from ordering flowers to paying monthly bills to buying plane tickets). Consider that you may have spent more money on the phone in just the last year than you spent on the phone in the entire 20th century. Well, now consider that in some industries, online transactions already exceed not only phone orders, but in-person retail purchases, too!

Even just 10 years from now, most business may be conducted through the internet in some places. Many businesses now do not even accept checks, but only electronic payments by debit or credit. In other words,  some do not even accept cash… because they do not have a physical retail store.

Consider some of the leading businesses of recent years: Microsoft, Google, eBay and Amazon. Have you ever walked in to one of their stores? Have you ever even seen a store for them?

Maybe you do not know yet how much money people have spent with those businesses online. Not only are people moving from checks toward cash and from cash toward credit and debit cards, but many of the fastest-growing businesses are moving from cashiers to online order forms and electronic shopping carts.

As for the growing market in online advertising, the fastest growing type of online advertising is currently online videos, (up 300% in a single year in the UK) while websites set up for display on the handheld screens of mobile phones may be the next wave of growth. Where will your business be?

Of the time that people in the US spend on media, the total of that time that goes to newspapers has fallen to 4%, but newspapers still receive 15% of the advertising revenue. Overall in the US, people more than twice as much time on the internet using mobile devices than they do with newspapers, but only a tiny fraction of all marketing budgets in the US currently target internet users accessing websites by mobile phone.

100 years ago, there was no TV advertising, and no radio advertising, and almost no phone book advertising. Advertising was mostly in newspapers and magazines.

In 100 years, none of those may be major forms of advertising. They all may be swallowed by internet advertising.

In 2012, online advertising in the US is expected to be triple what it was in 2006. That will be more than twice the amount spent in the US on radio advertising or magazine advertising.

In 2012, where will your business be? Will your business be where people are taking their business? How much of an advantage will it be for your finances and your business if you follow accurate forecasts of emerging trends and position yourself to be one of those who benefit most from the ongoing transition?

The founder of the Trend Research Institute, J.R. Fibonacci, was one of the first to forecast the spiking of fuel prices globally, the resulting global credit crisis and the resulting declines in real estate and stocks in the US, EU, and Japan. In 2012, for the first time ever, he and his staff will be offering brief introductory consultations to small business owners for them to be clear about the emerging opportunities and risks as the global economy continues to shift. To schedule your live videochat session now, simply contact me.
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How to adapt to economic trends

January 8, 2012
International Money Pile in Cash and Coins

Image by epSos.de via Flickr

Forex Money for International Curency

Image by epSos.de via Flickr

Comedy (?): How to adapt to changing economic seasons- whose advice to follow? 


People sometimes ask me: whose advice should I follow in regard to adapting to changing economic seasons? You tell me: should you focus on the advice of people who have a significant shared interest in your results, like profit-sharing partners who make money and lose money with you, on the advice of people who have no interest in your results, or on the advice of people who have a vested conflict of interest with you?
As soon as you know the answer, then contact me. If you don’t know the answer yet, then keep listening and I will explain.
In particular, some people get really interested in what I mean by a conflict of interest. It means that someone else’s economic interests are directly conflicting with yours. Here are some examples.

Go to a car wash and ask the attendant which service to buy: the $5 car wash or the $50 make-over, wax, massage, pedicure, and anti-rust treatment
art gallery and ask the painter what to buy: $500 piece or the $5,000 piece?
car lot and ask the sales mgr what car to buy: $5,000 used car or the $50,000 new foreign car with horrible mileage and super-expensive to maintain?
realtor: $50,000 home or $500,000 home?
annuities: insurance co. promises to pay a set amount no matter how well the underlying investments do
(and people wonder how AIG went bankrupt, like it was all on real estate speculation…
guess what: the insurance agent makes a huge bonus for selling you that! )
Professional experts promote the things that benefit them to sell (things with big commissions and big profit margins). That’s it!
When a farmer grows corn, someone might buy $5 of corn from the farmer, then package and sell that same amount of corn for $50. So much was that amount of corn worth: $5 or $50? To the farmer it was worth $5. To the consumers who bought it, it was worth $50. It’s the same corn!
However, if the car sales manager or the insurance agent or the realtor or the painter or car wash attendant could get you to pay $5,000 or $5,000,000 for that same amount of corn, then they would be doing their job well, right? Now we are talking about some BIG profit margins, right? If I pay $5 at Starbuck’s for some coffee and some farmer in Central America would charge me 50 cents for the exact same coffee from the exacts same beans that the farmer grew, then that farmer would probably be making a lot more profit than they are by selling the coffee beans to Starbuck’s!
So, what’s the difference in value between a $500 piece of art and a $5000 piece of art? $4500! However, the same piece of art could be sold for those two prices at different times, right? The artwork does not change when the price changes, right? What REALLY changed? What changed is how much someone valued the money that they used to buy the art. Maybe one person had more money available at a particular time, maybe they had a brand new credit card account and felt rich. However, it is the same piece of art, just like the same amount of corn or coffee beans.
Now, if I buy a home for $100,000 and a decade later, after making virtually no improvements to the house, I sell it for $500,000, great: that is a big unearned capital gain for me. However, that change in price does not mean that the actual functional value of the home changed much. It means that the price changed. The value of the dollars used to buy the home may have changed a lot, like due to expectations of continuing inflation. If inflation rates drop far enough then expectations of future inflation may also drop, and eventually, housing prices could drop.
So, what’s the difference between the $5 cup of coffee and buying the same cup of coffee for 50 cents? $4.50! It means the purchaser values their dollars more and the coffee less.
What’s the difference between paying $10 for a new DVD and then selling the exact same DVD still in the wrapping for $1 at a garage sale a year later? $9. It shows the difference between how much different purchasers value the DVD and the dollars are various times.
What’s the difference between paying $100,000 or $500,000 or $200,000 for a house? It shows the difference between how much different purchasers value the house and the dollars are various times. With housing, the dollar issue is not just about cash dollars, but debt as in mortgages or borrowed dollars.
Now, let’s quickly go back to the issue of why the insurance company would give the insurance agent a huge bonus for selling an annuity that sounds too good to be true because it is. Why do they give such a big bonus for selling that? Because selling that gives the insurance company a huge profit, since actual practical value of the annuity contract may be so much less than the price that some consumers are actually willing to pay for it.
It’s like owning a home and saying to a realtor: here is a home that cost exactly $100,000 to build last week. However, if you can sell it for $200,000 or even $500,000, then we the owners will give you a huge bonus- in proportion to the amount that you can sell it for. So, whether the realtor sells it for $200,000 or $500,000 or does not sell it at all, that does not change the fact that the home cost exactly $100,000 to build or that the farmer only got $5 for the bag of corn, does it?
If an insurance company can get someone to pay them $100,000 for a particular policy or $1,000,000 for the exact same policy, that does not change the value of the policy, but only the price and profit margin of the policy. If I can get the exact same cup of coffee for 50 cents from a farmer or for $5 from the store around the corner, those are just differences in price, not in the actual cup of coffee, right? If I can get a brand new perfectly good DVD from a garage sale for $1 or the same DVD for $10, which price would I rather pay?
Why are prices of real estate and stocks falling? Because so many people are valuing their cash money more and other things less. Why are prices of corn and coffee and cars and art and gold and silver and platinum and copper all falling? Because so many people are valuing their cash money more and other things less.
So, whose advice is best?
You tell me: should you focus on the advice of people who have a significant shared interest in your results, like profit-sharing partners who make money and lose money with you… or anyone else?
Do any of these folks actually make money and lose money with you: Mass media? Politicians? Popular financial institutions?
No, let’s look at what a guy with a PhD in Economics said, Dr. Paulsen:
Sept 2005:

“when most seem bogged down worrying about when the housing bubble is going to burst or when oil prices are going to cause the consumer to capitulate, investors should be focusing away from such issues towards the many positive things… yet to occur.”

6 years later, he still works there! He’s still the chief investment strategist there! That might be amazing, unless his job is not to give advice that benefits the public, but that benefits his employer, right?
In a separate video, I will say more about what he wrote in September 2005, which I criticized in a December 2005 publication. I will also detail what I recommended and what I recommend. In brief, what I recommend is that people who want valuable advice can focus on the advice of people who have a significant shared interest in your actual results, like profit-sharing partners who make money and lose money with you.
For now, below is an image from Paulsen’s September 2005 publication. Here is a link to my 2005 article:
http://www.financialsensearchive.com/fsu/editorials/2005/1217.html
Again, please share this with others could benefit from it or at least enjoy the humor of it. Also, if you are willing to begin to receive the full benefits available from adapting wisely, contact me now.
By September 2005, I had already identified the beginning of the bursting of the US real estate bubble because I had been looking for it since 2002. It happened in Phoenix and Las Vegas in mid-2005. I had been warning about the global credit crisis since 2003. Since 2004, I had been warning about the effect of rising fuel prices on the global economy, including global trends in lending and borrowing, in real estate speculation, and in stock market speculation. In other words, I saw the global economic crisis coming since 2002, but I did not identify rising fuel prices as the trigger until 2004. By the way, global fuel prices had been rising since 1999.
Why did housing prices begin to drop first in the sprawling desert metros of Phoenix and Las Vegas? Perhaps because those areas are so sensitive to rising energy prices. Many big homes in Phoenix have summertime electricity bills of more than $400 per month just for air conditioning.
Here’s  Paulsen’s actual content from 2005:
He frequently appears on several CNBC and Bloomberg Television programs. BusinessWeeknamed him Top Economic Forecaster. He’s been honored by Money magazine.
Beware of the advice of those who do not have a shared interest with you. Share this and contact me about how you can benefit from a partnership with a competent specialist.
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Dave Barry charged with parody

January 2, 2012

Though I did not actually read the entire thing yet, which is probably just a bunch of political parody, this is in reply to http://www.miamiherald.com/2011/12/31/2568230/dave-barrys-2011-year-in-review.html

Dave Barry (whose real name is actually David) is a disgruntled failure who is only claiming that our political system has become a drainage ditch because he secretly wants to be chief commander and rebuild the Temple of his direct ancestor, King Dave. I know this because I once read a book that had the words “pyschiatric diagnosis” in the title (not that I read the entire book, which was very wordy).

In conclusion, it is clear to me and the other members of the jury, of which there are none, that David “Dave” Barry, in order to compensate for an undiagnosed case of Vertical Deficiency Syndrome (being less than 6 feet tall) , also displays a classic case of Stupidity Syndrome (also known as SS or, in popular slang, “the Nazi secret police thing”). In other words, what I am saying is that our political system (and this applies whether you live in Miami or in another country, such as the Magic Kingdom near Orlando) has never been a drainage ditch.
David, who has been convicted no less than 911 times for first degree political parody and is currently being investigated for the crime of “civil political rhetoric,” also seems to take his own metaphors too literally or… perhaps not literally enough! I was taught in public school here in the great nation of Florida that all political systems are drainage ditches and always have been since their formation, except for one, which is ours. That’s right: the Magic Kingdom, which was dredged from the swamps of Orange County, Florida (or Seminole County- whatever), was not a drainage ditch until the likes of David “King Dave” Barry came along and publicized the ridiculous idea that it was becoming a drainage ditch. It is because of negative media hate crimes like those of Mr. Barry that our political system is now equated to a drainage ditch.
It is NOT a drainage ditch. It is a swamp.
Our swampy country is fine. Our swampy political system is fine. Our swampy economy is fine. Even our swampy drainage ditches are fine. Therefore, it is urgent that we must depose this maniac monarch “King Dave” and re-elect one of our founding fathers, Charlie Sheen.
Furthermore, people seem not to admit that the relevant political issue is entirely specific to Miami, especially the snowbirds, and even more especially the anti-Zionist snowbirds. All this talk about nazional solutions to local problems is meaningless chatter designed to distract us from important things like the Comedy Channel, or, more specifically, Stephen Colbert.
Here is the evidence, Comrades. When fuel prices reached $11 per gallon in 2008 in the UK (that is not a joke, by the way), I said:
“This issue is specific to a particular neighborhood in Central Southwestern London and must therefore be addressed by the UN as a global issue.”
But did our local ruler Emperor Bush listen to me? No, Jeb was apparently too busy focusing on the issues of concern to him and his pro-drainage ditch lobbyists in the distant capital of Tallahassee and thus had no concern for the $11 per gallon prices of his constituents in Central Southwestern London.
In conclusion, the only thing that we have to fear is paranoia, which is the fear of fear itself. Furthermore… no, I think I covered everything already. Wait… no, I already said that part, too. Oh, yes, I do agree with King Dave Barry about one thing though:
1) People should not adapt to changing economic realities. It’s just bad business. That is how AT&T ran in to so much of it’s present mess of having to choose between a 2 billion dollar bail-out of it’s chief executives or continuing to stay in business, even if that means severe austerity for the chief executives: by focusing too much on the Telephone side of their business and not enough on the real-money maker, Telegraphs.
2) Dave, I actually do not have any contempt for you personally, but, please, for the sake of Allah, go see a plastic surgeon and get a height enhancement. The issues you are facing with Vertical Deficiency Syndrome are not incurable, plus the procedure is fully covered under Obamacare.
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corruption and the tea party

October 29, 2011

We are taught what actions qualify as corruption (things like lying, bribery, lobbying, stealing, and coercion). Next we are taught not to do those things (like by being punished for doing them- including with the psychological warfare of tormenting expectations of eternal torture in hell).

Already, irony is present. Note that punishment is coercive. So, we are discouraged from using coercion by someone else using coercion against us.

We are also taught that governments protect us from corruption and crime and so on. All governments glorify themselves as having a foundation of moral excellence, often with some selective legends and even quite creative mythology about the people who started a government: Lenin, Washington, Castro, Mandela, etc….

In the case of the U.S., for instance, one of the most famous acts of tresspass and destruction of property became known as the Boston Tea Party. While that event was clearly a crime (and a very organized one) by the recognized legal standards of the operating jurisdiction of the time, the same event that is labeled a crime can also be labeled a heroic act of courage.

Why not both? Obviously, both labels are valid interpretations or meanings.

The side that wins a conflict dictates (or declares) what interpretations or labels to use to describe the events of the conflict. No government apologizes for it’s origins. Every government glorifies it’s origins.

So, are governments getting more corrupt? Consider that governments may have been less corrupt and then become more corrupt. That is possible, right?

Then, instead consider that governments generally involve some corruption (like across the last several thousand years, for instance, as recorded in the Old Testament of the Bible and many other places), but governments generally are effective at public relations enough that the people who have been exposed to government propaganda (like in public schools and mass media outlets) think that any particular government USED TO BE morally superior to how that government is lately (relative to the latest exposed corruptions).

Or, maybe you believe that corruption was invented recently. Note that corruption is a word, like sin and crime. Crime is a legal category created by declaration (such as through the adoption of as criminal statutes) and enforced through systems of organized coercion (such as courts or “the offices of the Holy Roman Inquisition”).

Crime is not consistently defined across all jurisdictions or even across time. In the US, alcoholic beverages were prohibited (criminalized) and then decriminalized only a few years later.

Now, licenses are involved in the selling of alcohol in the US. It is a crime to sell alcohol unless one has a license.

Systems of licensure are systems to coercively benefit the government by involving it in some business activity as a recipient of funds. Those funds may be used to punish other competitors who operate without a license.

Governments are systems of organized coercion and coercive privilege. Governments define “corruption,” punish unlicensed “corruption,” and of course license activity that would otherwise be corruption or crime, but is legal when licensed/approved by courts and the bureaucratic associates of the courts.

When Oliver North confessed to a series of criminal acts performed in the late 1970s, he was functionally granted a license retroactively by President Reagan. Reagan pardoned him and his co-conspirators. Reagan also directly benefitted from the successful accomplishment of the mission of that conspiracy.

Is that so different from what happened in the case of numerous governments that are famously depicted as corrupt? Imagine that in the Trojan War, someone had the idea of deception involving a Trojan Horse, and they later admitted the deception or corruption or coercion involved in their activities, but then were pardoned and even glorified?

The Boston Tea Party might have been the inspiration for many “terrorist” acts in the mid 1800s in slave states in the US, but none of them may currently be as glorified as that prior act. However, in the future, the Tea Party may be considered by some to be a disgrace and the uprising at Harpers Ferry led by John Brown (or some other event) may become symbolic of moral heroism.

One era’s corruption may be another era’s moral heroism. Robin Hood is a legendary British criminal who has been glorified as a hero. Ollie North or John Brown may be remembered for many centuries as well.

So, many people complain about “new” corruption in various governments.  In the 1990s, after Japan’s economic deflation started, a wave of complaints about politicians surged. When public sentiment (in economics) declines, are politicians among the most popular targets of scapegoating? Likewise, when public sentiment (in economics) rises, are politicians among the most popular targets of glorification?

Who chooses the targets of attention? Who chooses the “spin” (context or type of attention)?

Is it the corporate mass media? What commercial interests direct the corporate mass media?

In the EU and US, a similar development to what happened in Japan has been manifesting since the peaking of stock markets between 2007 (for Greece, UK, etc) and 1999. Many of the forecasters who forecast the decline in the US economy, such as myself, also forecast the shift in popular culture as it relates to governments. In early 2003, when I began commenting on the coming real estate decline, or in 2004 when I focused more on the coming surge in fuel prices, or in 2007 when I warned about the coming instability of stock market prices and financial institutions, I already specified that President George Bush would be scapegoated as the one to blame. Why? Because he was the sitting President.

Look at what happened in any other case of major economic decline. Politicians are scapegoated when things are scary and glorified when things are blossoming.

Now, I assert that scandals are publicized according to a sort of schedule by the media. Initially, the Occupy Wall Street protests got very little mass media coverage. Suddenly, they were a central feature of a media circus.

Why? Was it just the corporate media’s attempt to “take over” the conversation about the protests and increase their audience for their commercial sponsors selling things like toothpaste and beer?

That is possible. Or, the mass media may be specifically targeting a promotion of certain kinds of dissent and scandal and conflict.

Darth Vader/The Emperor: “Feel the hatred, young Skywalker. It is the antagonism between the Tea Party supporters and the Occupy Wall Street supporters that makes me strong and my strength is the strength of the Holy Romulan Empire. While there is drama and contentiousness between the new right wing and the new left wing, our tactics of “divide and conquer” keep the bird from actually flying, since the two wings are in conflict rather than partnership. As long as the 99% is really only 50% and the Tea Party is actually approaching 49%, then I have the deciding vote, which is my control of the media (oh, yeah, and the credit markets, too). Did you really think this is a democracy? What military branch is a democracy? What corporation? In what family’s household would the toddler children have equal influence with the adults? In what wolfpack is there no alpha dog? I started both revolutionary reactions. I will also guide them to their climax and conclusion, or else my name is not the gently reluctant Senator Palpatine.”

Why is it important to certain commercial interests that the masses of people argue and protest- hysterically if possible? The details of the drama may not be important. As long as people continue to make the same financial choices that the Japanese made in the 1980s (flipping real estate on mortgages and dumping money in to stock mutual funds and so on), then their complacency will establish their economic fate. They US can predictably follow the path of Japan (or worse).

Commercial interests establish and enforce linguistic declarations of what is corrupt, criminal, sinful, and so on. As long as the commercial interests who establish and operate governments can distract the masses of people from prudent financial choices and thereby monopolize certain behaviors (such as prudent investing and conservative legal sheltering such as through estate planning or systematic use of bankruptcy protections), the commercial interests will maintain their monopoly of influence and affluence. They will control the systems of organized coercion and also control the mass media channels which will inform public opinion about the glories and evils and corruptions and triumphs of the various “solutions” that the commercial interests are dictating as “what to think about.”

One of the most notable things I learned as a college undergraduate was this: “the mass media does not control what the people think. We only control what the people think about.”

The competing herds of Tea Partiers and OWS protestors will both focus on which alternative political solution to promote for economic salvation. As long as the various herds are focusing on political activism rather than financial adaption, the promise of a possible, eventual economic salvation through political reform may remain an attractive myth.

Universal theme of propaganda #279: “only organized political action can save us all from economics, which is the morally superior outcome to target. People who propose to improve their own financial situation by responsive and responsible adaption to economic change are traitors to the Empire. They are the 1%. We must save you from them by massive political reforms.”

www.OneEyedKingsWealthClub.com

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when do global stock markets crash?

September 21, 2011
If the costs of conducting “business as usual” rise enough that profit margins turn negative, wouldn’t any business owner consider shutting down? When costs rise so much that net operating profits do not just disappear, but turn into net operating losses, what would you do as a business owner? When continuing to operate a business clearly is less favorable than simply shutting down, then any business would likely close, right? What if a bunch of them closed at once?
That is probably one of the most unappealing possibilities conceivable. If one business depends on others (suppliers, customers, etc), and then even just one essential supplier shuts down, then other businesses depending on that supplier CANNOT continue to conduct “business as usual”- at least not until they can replace that supplier.
This is the same basic issue that people have been concerned about in regard to the government of Greece or of Minnesota, but those isolated budget issues are symptoms of a broader issue: the end of the age of cheap fossil fuel. I will come back to the rising cost of commodities in a minute.
First, if the government of Greece ceased to function, that would definitely effect the operation of private businesses in Greece, right? Private businesses typically rely on government courts not only to provide basic services like road maintenance, but in particular to enforce all legal contracts with organized coercion. If private businesses could not hire governments to use force to evict delinquent tenants and foreclose on them, or to force their suppliers and customers to do as they legally promised, then private businesses would be responsible for the additional cost of acting as it’s own collection agency, rather than hiring the court’s deputies to take their guns and enforce contracts with organized coercion.
From an economic perspective, one can think of any government as a collection agency that is organized and funded by the owners of private businesses in order to arbitrate debt claims for validity and then collect validated debts using organized coercion. The owners of private businesses uniformly agree to promote a sort of monopoly in the use of organized coercion. While there are different levels of government, like city and county and state and national, usually these concentric monopolies co-exist peacefully.
Of course, nations have a history of invading other nations. But outside of that, the only time that local and national governments have a major conflict is when there is a “civil war” between one operation of organized coercion that is claiming to have authority over smaller operations of organized coercion that then “secede” and band together, like to attempt to preserve the patterns of a prior system of relatively decentralized organized coercion.
For instance, let’s say that the government Treasury of Greece eventually defaults. It owes debt to the US, Italy, Germany, and so on. Well, what if Italy, Germany, and the US all start to fight over ruling Greece and cutting up it’s resources? That is basically a world war, like if it includes a distant global power like the US coming over to Europe to defend “US national interests” in Greece from the “axis” of an alliance between Italy and Germany.
Or, what if Germany or Greece wants to secede from the EU instead of being subject to the decisions issued down by the central EU authority? For instance, what if the EU decrees that Germany is liable for the debts entered in to by Greece. That might produce a civil war, right? If a lot of the debt that is owed to Germany (and Germans) is suddenly declared to be paid by Germans and Germany, there is also a logical or logistical issue there, right?
With the USSR, various smaller jurisdictions might “secede” and rebel from the central authority. With the US in the 1860s, the same could happen. With the EU today, it’s about the same. Also, Yugoslavia used to be one country, then, in the 1990s, ceased to function as a singularity and officially split in to several republics, but not before a civil war that involved the militaries of lots of outside nations.
When one government falters or is defeated militarily by another, that is not the end of government monopolies on organized coercion, but sudden changes in procedure can arise. Certain businesses also tend not to operate as profitably when there is a civil war going on and large portions of consumer population is getting killed or goes to war to kill their opponents. Consumption may shift towards the basic “staples” or even “the bare essentials.”
Sometimes a prior central unity of organized coercion is maintained and sometimes a new centralizing of organized coercion develops. Sometimes what happens is a split in to two or more independent operations of organized coercion. In the case of the European Union in recent years, numerous nations went from relatively informal alliances like NATO or NAFTA or the UN to a much more formal alliance of a single set of consistent procedures, passports, and currency, such as the EU and it’s Euro currency.
Now, before we look closer at prices of commodities and how rising commodities prices are related to global economic activity, let’s look at a chart of the cumulative stock prices of 1800 global companies, priced in Euros:
Here is the same global stock market index, but priced in US Dollars:
While the two charts are very similar, a few differences are notable.  In 2007, the Euro pricing topped and reversed prior to the $ pricing. In 2008, the Euro pricing made a low and started a multi-year rebound while the $ pricing made another low in early 2009  and then started a multi-year rebound. Finally, in early 2011, the Euro pricing topped and reversed while the $ pricing once again topped a few months later and then reversed sharply.
The pattern is obvious. The Euro pricing is the leader and the $ pricing is the laggard.
However, as I have indicated from the beginning, the real leader may not be stock prices at all. It may be that those fluctuations in stock prices are symptoms of a simpler development.
Since 2004, I have suggested that rising commodities prices, especially rising fuel prices, would eventually slow down and then de-stabilize the global economy. I even specified that the issue was debt, and that eventually the cost of borrowing to pay for increasingly scarce resources would “pop the credit bubble” and bring down real estate prices worldwide, which I have been forecasting since 2003.
Above is a chart of the prices of a bundle of global commodities (priced in US Dollars and shown in blue) and an index of the overall prices of 1800 global stocks (priced in US Dollars and shown in red). It is easy enough to note that eventually (by 2007), the mutual rising of those two lines diverged. As commodity prices soared to such a high level that economic activity declined, like when the price for a gallon of diesel exceed $11 in the UK in 2008,  stock prices fell first and kept falling.
Once demand for commodities dropped enough that commodity prices came down, stock markets were already “caught in a tide” of a deflating credit bubble. In other words, the aggressive borrowing that had allowed for global stock prices to keep up with global commodity prices from 2004-2007 did n0t resume. Previously stable lenders were in trouble.
Naturally, I am oversimplifying a bit, but the basic idea is that a relative scarcity of resources (especially fossil fuels like oil) drove up commodity prices leading to other effects. The “relative scarcity,” by the way, is not that supplies of tangible commodities were plummeting, but that demand was growing at a historic pace while supply volumes (production of crude oil, for instance) was flattening or even declining slightly.
In the case of oil, this development (relative scarcity of oil supplies- relative to ballooning demand) was predicted in the 1950s and was repeatedly referenced in the 1970s by US Presidents Nixon, Ford, and Carter. However, that was just a national issue, since as US oil production peaked, the US could afford to import oil from elsewhere. now, with global oil production peaking in 2006, a much more widespread issue is emerging.
This issue is not specific to a particular exclusive region of the globe like the US or to a single currency or to a particular system of organized violence (court system) which enforces the value of all currencies and indeed of all financial contracts. There is no particular national political solution to a global economic shortage of fuel. Courts only have power over human activity (including the “activity” of human perception or interpretations in language), but not over the geological facts of the volume of oil reserves globally. Reports can lie, but deceptive reports do not deceive the wells or the amount of oil in the oil deposits.
That bring us to a different perspective on the prices of the global stock market. Above, we reviewed the price of the global stock market relative to the US Dollar and also relative to the Euro, which we also saw has a clear history of forecasting the trend reversals of global stock prices measured in US Dollars.
Now, let’s look at about 4 years of global stock market prices relative to global commodity prices. This is a chart showing changes over time in how much tangible resources can be purchased by selling the same set of global stocks.
The most obvious thing is that this chart has gone down rather consistently for all 4 years. There was no recovery in the tangible purchasing power of the global stock market in 2009 and 2010 relative to that particular set of major global commodities called “CCI.”
Global stocks measured in US Dollars made a low in early 2009. Global stocks measured in Euro made a low prior to that in late 2008.
However, prior to both of those, the above chart of global stocks relative to global commodities made a low in mid-2008, then rallied in to late 2008, then floated a bit for a year or two and recently broke sharply below the lows of early 2011.
As in late 2008, we may now see prices of global commodities and global stocks tumble together. In late 2008, global commodity prices did the worst, then global stock prices, then- much better than either of those two- the Euro did quite well. However, by far, the US Dollar did better than any of those 3 other alternatives (for late 2008).
That is a fit with what I began predicting in 2003. Now, we are one the brink of a continuation of the shift that was notable in global stocks by 2007. Relative scarcity of global commodities is slowing global economy activity, especially in relation to fuels, but that rising fuel prices also cause rising prices in transportation costs of all things shipped long distances.
Rising fuel costs are not inflation. If it was just inflation, then US real estate prices would not have begun a historic plummet in 2005. If it was just inflation, then global stocks priced in whatever currency would not have plunged.
Back in 1999, when global oil prices began a rally and doubled in less than 12 months, the prices of a group of companies very dependent on the price of fuel fell by 40%: airlines in the US. Stock prices of ending institutions also declined, though not as far. Again, the decline in prices of airlines and lenders preceded the top of the high-tech bubble as well as the broader stock market decline of 2000-2002.
Commodity prices matter. When diesel hit $11 per gallon in the UK (and Germany) in 2008, people changed their behavior, including business owners.
Stock prices shifted (down). Currency values shifted (eventually, way up relative to historical norms).
Now, the instability in the EU that myself and others have been referencing for many years is now getting attention from the mainstream media in the US. While there is perhaps no open talk of civil war, there have been a series of riots, including riots not directly explained by economics or politics. However, when an economy is de-stabilizing, that can manifest in “short-fuse” public hysteria, in epidemics related to stressed immune systems, and of course in prices.
Previously, people perceived that stocks were quite safe, as in a “safe haven.” Then, when stocks fell, people perceived that real estate was safe. Then, when real estate was safe, people perceived that all commodities, including gold and silver, would be safe.
However, silver prices fell over 90%  from 1980 to 2000. Is that the kind of safety that people are seeking?
In late 2008, the Euro was safer than most alternatives (rising against a wide variety of alternatives), and the US Dollar was even safer than that. This time, the Euro may not do so well. The entire EU may not do so well.
The economy of the EU is much more dependent on foreign oil than the US. The economy of the EU is a bit more like the economy of Japan, which is even more dependent on foreign oil, and has been in a deflation for nearly 22 years now.
Will Europeans (others who have been invested in the EU) flood to the US Dollar and US economy? I think so. However, I do not think that the US economy will do well.
In fact,  as we look at the chart above of Japan, the Japanese currency (Yen) has done extremely well in recent decades even though the economy there (and stock market prices) have not done so well. As the court system in Japan is recognized as more and more crucial to the economy of Japan, the Yen have been very well-respected by the Japanese and others.
Will the Yen or the Euro or the US Dollar collapse in to hyperinflation or a civil split (civil war) resulting in the use of multiple currencies? Or, will the global centralizing of court systems continue as the UN, World Court, World Bank, and BIS continue extending their empire?
In the case of the USSR, the central government disbanded, but initially a monetary union was maintained by 15 of the independent states (operations of organized coercion). As time went on, the various independent jurisdictions (of organized coercion) issued their own currencies.
See http://en.wikipedia.org/wiki/Soviet_ruble#Replacement_currencies_in_the_former_Soviet_republics
Russia continued to use rubles, but in the old USSR, rubles were only good to purchase certain things from the government, rather like credits for a prisoner in jail or like gift certificates that can only be used with a certain store or certain catalog. The rubles had no particular functionality outside of the USSR. Now, Russian rubles are traded in open market exchanges at variable rates with other national currencies.
Relative to the US and the $, the EU and the Euro may do well, but I do not expect so at least in the mid-term. While many in the US are concerned about the creditworthiness of the US Treasury, everything is relative in investment markets.
Relative to US real estate, US Dollars have done very well for several years. Relative to US stocks, US Dollars did so well in 2008 alone that stocks are still way behind and, as of recent months, have resumed falling.
Today, I have titled this blog post “when do global stock markets crash” because today is an interesting juncture in global stock markets. In 2003, I was already forecasting the type of stock decline that developed in 2007. I am clear, especially when looking at prices of global stocks relative to global commodities, that the decline that began in 2007, which I forecast back in 2003, did not end.
Further, in the days and weeks and months ahead, I expect that more and more will realize that the global stock market top in 2007 is not going to be exceeded any time soon. I expect that market pricing of global stocks, including in the US, will reflect that recognition with a series of large declines and increasing volatility.
In other words, people will increasingly recognize the value of the operations of organized coercion within their midst and increasingly recognize the instability of most if not all private lending institutions. I expect that the attention to credit ratings as if they are anywhere near as important as cash and cash flow will end.
English: Various Euro bills.

Image via Wikipedia

When a currency is only accepted by one particular government and that government operation of organized coercion has a functional monopoly on the operation of all businesses within a jurisdiction, credit ratings may simply not be an issue. Similarly, with food stamps, there is no issue of credit rating. Prisoners are not lent funds by the prison. Soldiers do not apply for credit lines at the commissary, but are issued a ration of coupons. During wartime, that is also common for civilians, and something similar happened in the US in the 1970s in regard to gasoline.
Private credit markets are destabilizing. I have published warnings about this since 2003. But that is just the symptom of a simpler issue.
Human populations are increasingly demanding access to diminishing resources. Governments will change or arise to stabilize and regulate access to resources.
Governments are operations of organized coercion. Organized coercion is the basis of the purchasing power of all currencies (and all financial contracts).
Increasingly, populations will recognize the value of organized coercion to maintain order. They will seek to pay off old debt and will diminish involvement in borrowing as well as lending. Private credit markets as we know them may cease to function, as in the case of jurisdictions like the USSR or Cuba. Public trading of private corporations may drop in volume considerably, or private corporations may be socialized, as we see happening in the US within such fields as education, gambling, health insurance, and health care, plus, as of 2008, the auto industry and banking industry. Of course, the US national government with the FDIC, FHA, HUD, GNMA, FNMA, FDMC, SLMA and so on… have long been involved in direct financial responsibility for much of the US economy.
50 years ago, what percentage of the public lived in government housing? 50 years ago, what percentage of the population received subsidies (like social security or unemployment) from the federal government?
How about 100 years ago? Socialism has made immense progress in the US in the last 100 years, though many might resist even considering that idea or would at least propose some other alternative as favorable.
Imagine that if the bureaucracy of the EU were to so dominate the economy of Europe that after, for instance, 150 or 250 years, Europeans forgot that Germany and France were ever not united? That would be like New Yorkers and Georgians forgetting their historical roots- back when they had independent currencies and very distinct cultures, and even fought in wars against each other. Impossible?
However, a major logistical problem in the EU is the absence of a common language. Will a global empire establish English as the imperial language, or will the EU dissolve, or what?
Well, I do not know yet. But the EU is facing huge logistical problems, especially due to rising gasoline prices which have recently approached their highs of 2008 (in Europe and elsewhere), and the US is in position to receive a huge surge of people seeking a “safe haven.” However, perceived safe havens have a history of being perceived as safe only temporarily.
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first harmony then prosperity

August 9, 2011
Harmony internally, then prosperity externally

Yes, “there is more to life than money.” Also important, “a fool and his money are soon parted.”

So be aware of the possibility of being foolish about wealth. Be aware of the possibility of being foolish about all of life or any of it. Then be aware of the possibility of being calm and clear and courageous about life, including the aspect of life regarding wealth.
Lately, many people are talking about financial risk and results that they have called surprising. Many of them have been investing their trust in mass media or massive bureaucracies like the insurance company AIG or the Federal Reserve or the government of the USSR- you thought I was going to say US, didn’t you?
What have been the consequences of investing trust in the mass media and massive bureaucracies? Have those results (perhaps such as being unpleasantly surprised) raised the question as to whether those methods might have been foolish? Is it possible that foolish methods of investing trust may produce the result of financial losses, rather like the saying goes that “a fool and his money are soon parted?”
What about discounting the importance of financial realities? Are finances suddenly important to you or were they always important and only recently recognized as important? How about this: are gasoline or electricity suddenly important to you or were they always important and only recently recognized as important because we could take them for granted until prices reached a point that we altered our perspective and our behavior based on things like rising gasoline prices.
For many years, I have been focusing on the possibility of rising fuel prices and their consequences on the economies of Japan, the USSR, Europe, and the US. My publication in 2004 of “the Real US Deficit: OIL” featured a section called “the DominOIL effect” relating to why I expected fuel prices to continue their dramatic rise that began in 1999 and what consequences I expected in the US, which I expected to be similar to what had been happening in Japan since 1989 and the UK and EU since 1999.
The next chart shows the all-time low of inflation-adjusted prices of gasoline in the US in 1999. Global oil prices also made a major low in 1999.
The last chart is a chart of the stock market of the UK. Next, here is what gas prices in the US were near the time of that article in 2004:
My central question (in this 2004 publication: www.gold-eagle.com/editorials_04/fibonacci110704.html) was “how many dollars will it cost to buy a gallon of gasoline next year?” Here is an 8-year chart of what happened:
(from here: http://www.indexmundi.com/commodities/?commodity=rbob-gasoline&months=120)
Some people have questioned my logic because of oil and gasoline prices falling sharply in 2008.  However, for those that have the courage to read my old articles, I did not say that demand for fuel would never drop or that prices would never drop.
On the contrary, I simply said that diminishing supplies (since the easily predictable peaking of global oil production in 2006) would raise prices enough to slow down the global economy, including that of the US. That predictable slowing of economic activity would predictably reduce demand for fuel, which would predictably drop prices. The drop in 2008 does not disprove the accuracy of the logic, but establish it. I may have even published all of that content, but it is pretty easy to see the logic one’s self if one is willing and able to face the simple facts.
How can the global economy expand after the 2006 peak in oil production? It must contract. Economic activity drops as fuel supply drops. Things like currency inflation or credit deflation are secondary financial measures relative to a primary tangible economic issue like an empty fuel tank in your car. Having lots of cash or credit but being out of gas in the middle of a desolate highway do not make a fool into a genius. Primary functional economic tangibles like gasoline and food are the things that we value having currency to access. No one cares much about currency (or gold) when they are starving, right?
So, it was the spiking of fuel prices by 2007 that were accompanied by the steep decline of global stock prices in 2008. After stocks began to plummet, fuel prices did too eventually- all as I predicted. Further, real estate borrowing had predictably diminished considerably as well, so real estate prices predictably declined dramatically, which resulted in financial trouble for many financial institutions, such as FNMA, AIG, and WaMu, as I specifically predicted in a video that has been online since 2006. (I can send a link to those interested.)
Once fuel prices fell, the global stock market began to recover. However, gasoline prices in the US recently approached their 2008 highs again (in red below).

In 2007, stocks peaked while gasoline (and silver) rose. Then silver peaked next in early 2008), then gasoline. Doesn’t that imply that rising fuel prices may have been the cause of the decline in prices of stocks (in the US and globally) and even of silver? Or maybe it was the high silver prices that brought down everything, right? ;)
When gasoline prices in the US reached a high enough level in April to reverse the spending behavior of the US economy, dropping demand enough to reduce purchases and bring down gasoline prices. However, that reduction in a fundamental behavior within the US economy also brought down the prices of the US stock market (blue above) and even of silver (green above).
In fact, those three things peaked on the exact same day: April 29th, 2011 (close-up shown below). But no one could have predicted that rising gasoline prices would have in any way effected the US economy or spending habits or stock prices or even silver prices, right? Rising fuel prices could not really have any effect on popping bubbles of speculative mania, would they?


Then again, maybe the cause was President Bush or President Obama, not gasoline prices. Or maybe they are personally responsible for gasoline prices- like maybe whether the prices of gasoline rise or fall is totally dependent on the choices of exactly one person.
But why did the Japanese economy slow down in 1989? Why did European economies begin to slow in 1999? Did $11 gallons of diesel in the UK in 2008 have any effect on the spending behaviors and economic activities of business and consumers within the UK?
Possible? Yes.
Predictable? Yes!
So, what is coming next? More selling of stocks and real estate. I’ve been warning of that since before 2004. I knew that the speculative bubbles would not last forever and were nearing their extremes. Real estate began peaking in 2005 (in places like Phoenix) and soon extended to most of the US (and much of Europe etc).  Stocks began peaking in the US in 2007 (at least for most sectors, excluding high tech, which peaked several years prior).
Of course there were a few exceptions, like the US stock sector HUI (shown above). However, the mining stocks of HUI are part of the same economy, too. They actually peaked in early April this year (pink):
What has done well? Here are a few examples of gains approaching 100% gains in the last 10 days:
What else did well lately? I sold a put option for $1.07 today that closed Friday at $.17. That change (up over 400%) is a pretty decent increase for a single day, right?
But remember, the mass media and massive bureaucracies may indicate that there is no such thing as predictability, or at least not in certain instances. Even notice that as you are reading this sentence, there is absolutely no way to predict that this sentence is going to end with a punctuation mark, is there?
No one could have predicted any of this. The future is completely unrelated to the past- not just your personal future, but even the future of how this sentence is going to end.
Nature does not have any patterns in it. And that, as always, is entirely the fault of the US President. Or the Federal Reserve. Or OPEC. Or this sentence.
So how are we going to fix the problem of nature not having any predictable patterns in it? First, let’s blame someone else because that has always worked marvelously in the past, right? Then let’s wait for the person that we blame to save us from them. Finally, let’s complain about how waiting for them to save us from them is still not working again as usual as always.
Just do not adjust. After all, adjusting could effect your actual results, and no one is interested in financial security or economic prosperity because that would be evil and shameful and of no functional relevance whatsoever. So, is any of this fooling you?
Keep in mind that sometimes translations can shift the implication of a message. If someone were to suggest that proudly foolish naivete about financial speculative bubbles was a major risk, deserving great caution, do you think that message might be translated like this: “proud attachment to ideals about wealth is dangerous” or even “the love of money is the root of all evil?”
It’s not ignorance that is most risky. It is believing that something is so when in fact it is not.
From an emotional or irrational attachment to false presumptions, blame and anger and grief and agonizing and proud argumentativeness and shame all may arise predictably. Learn that, either the easy way or the hard way, but learn it fast.
By the way, yesterday at the close of trading (Monday 8/8/2011), I purchased some call options on the US Stock market. Those positions rise in value when stock prices rise. After one of the biggest down days in US stocks in decades, I understood that the panic of the masses after the weekend downgrade of US debt could be a short-term buy signal for US stocks.
So, after stock futures dropped another 2% in overnight trading, they then reversed 4% and are again pushing toward an open of more than 2% up. That should produce overnight gains of well over 100% for those instruments.
UPDATE:
I sold those call options for a gain of only 40% overnight. But that was just the start of the day. It got better…..
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