Friday, May 31, 2013

Marc Faber Blog - Investors should learn to be patient

Marc Faber Blog: Investors should learn to be patient

For sure this comment needs context as Marc certainly knows that no single attribute makes a great investor. Bear in mind too, that we would classify Marc and Jimmy as traders - not investors with a kindred Warren Buffet spirit. It is a mix of skills, knowledge, character, experience and good old fashion street smarts that great investors possess.,

That's why we strongly recommend that serious investors have access to at least three types of financial advisor. Namely, building a team consisting of conventional, contrarian and maverick advisors provides a sound diversity of related skills, knowledge, experience and process. But never, ever, ever, ever place full reliance on just one advisor or related group, no matter how smart or conservative they appear; that's investor suicide, because sooner or later everyone is wrong and that could be completely devastating. 

To expand on this topic, investing requires the application of what we term "thought models" and what better person to defer to in this regard other than Charlie Munger, Warren's personal guru behind the salesman. Here's a website you may go to, that has been modeled to some degree around Charlie, that should give you some of the multiple thought processes and conceptual tools these guys keep at their disposal. 

Be patient, learn, listen and apply. But most importantly, surround yourself with investors/thinkers that are much better than you. And remember the two most paramount investing rules. First, never lose any money. And secondly, never forget the first one.

Enjoy the site and drop us line with any thoughts.





Dr Peter G Kinesa
May 31, 2013

PS. We no have affiliation economic or otherwise with this site and refer to  it for purposes of illustration and insight. Think Mental Models 


Brain's of an Oracle?






Thursday, May 30, 2013

Jim Rogers Blog - Crude Oil Outlook : known-reserves of oil continue to decline

Jim Rogers Blog - Crude Oil Outlook : known-reserves of oil continue to decline



There is one thing that can be guaranteed other than death and taxes. One day we will run out of oil that makes any sense to extract based on energy economics. Meaning that the energy needed to extract the oil far exceeds the energy value output provided by the oil. When will this occur? Based on BP's World Energy Reports probably within the next 50 years, give or take a decade. Moreover, it assumes that we do not hit the fat tail of the exponential curve sooner, thereby dramatically accelerating consumption.

But it should be emphasised that exhaustion is not the real near term concern. Rather it is "peak oil" when world consumption needs exceed the extraction outputs; and begin the decline towards exhaustion. Some experts already believe that we are at this point, while others say that it is still years ahead of us. Most, however agree that it is something that is definitely in the cards at some point, regardless.

With it comes, wars, social unrest and a breakdown in the economic and financial structures. Trade agreements and institutions such as The WTO, OEDC, IMF and the World Bank are slated for extinction as countries back into an "every man for himself" operanda. It will be a mess.



Dr Peter G Kinesa
May 30, 2013 



HEADLINE NEWS:



Wednesday, May 29, 2013

Marc Faber Blog - Bonds can be similar to equities in stock crash

Marc Faber  Blog - Bonds can be similar to equities in stock crash

Much more than just "can be similar to equities", but they will directly correlate as both equities and bonds are affected by movements in interest rates either, at the long or short ends, of money markets. The big issue is naturally how far these higher rates will go, and when they do come, how much they will deflate the values of both financial and "real property assets" ? Globalization's deep finance interconnection leads to an inescapable predicament; where there is no where to run and no where to hide, as you can  expect that all countries will share equally in the pain caused when interest rates revert to historic averages. Investors should, however at least again earn sensible returns that exceed global inflation rates. Imagine that?

But the real concern is not regarding the financial assets that are traded in the markets - rather the focus should be on banks, brokerages, hedge funds and insurance companies that are highly levered as a marked to market valuation of their assets will in many cases wipe out the capital base of these entities leading to a severe tightening of credit markets causing an even greater contraction in economic activity.and with little doubt an extended world-wide depression. Who is prepared for this? Not many it seems, as attitudes and foresights convey a business as usual approach. The reality is interest rates cannot and will not last forever at these unprecedented historic levels - and you can take that to the bank until the Grim Reaper's impending doom prevails.



Dr Peter G Kinesa
May 29, 2013



Impending Financial Doom?




Saturday, May 11, 2013

Feeding the Dragon:Why China's Credit System Looks Vulnerable


Feeding the Dragon: Why China's Credit System Looks Vulnerable
click above

THE BIG MAMA OF ALL CREDIT CRUNCHES

This article reflects a Chinese financial system that is on the brink of a biblical credit collapse   - "The Big Mama of all Credit Crunches"  To be expected, from a system that operates on the outermost margins in every respect and oppresses its population in order to support a elite few who run and control the "party" (pun intended). An oppression that has been well documented by the Epoch Time; Nine Commentaries on the Communist Party, and many others. 

As history has proven regimes like this, (the former Soviet Union being a recent example) fall apart from within, due to inefficiencies, atrophy, and wasteful policies that are unsustainable physically, politically, socially and morally. Briefly, here is a short list of items that should draw deep concerns from all investors, businesses, economists and world leaders.

Oppression of human rights, dignity, freedom of information and expression are the hallmarks of an  evil totalitarian system leading to ruthless atrocities for which there is no accountability. We need to look no further than the controls that are placed over the Internet to see clear evidence of restrictive tactics over information and communication flows as indicators of a totaltarian attitude.

Lack of financial transparency is pervasive to domestic, private and government accounting systems and numeric outputs. No faith, whatsoever, can be placed on any the financial or economic information generated by these entities. They are all students of the Bernie Madoff's School of Accounting - and we know, when unregulated, where that leads. 

China is desperate for non-renewable resources in order to sustain its inefficient economic system and unsustainable growth. Its simple self-evident strategy of exploiting it massive labour pool, to achieve huge pricing advantages on exported goods creating trade surpluses, then realizing billions in US treasuries, that are in turn used to buy resource based entities around the world is clear. China also perverts capitalism's principles, by using Sovereign Funds, that are not comparable to corporations in any way. They have no accountability to stakeholders, markets or financial measures of success - thereby, undermining all concepts of free, fair and open trade and related principles of comparative advantage. Where is Mr. Krugman when we really need him?  Where is the Conscience of a Liberal? 

China's currency is also fixed to the US dollar, given it an unfair advantage in trade that allows it to maintain this economic-political strategy of labour exploitation and oppression, leading to the reserves of US currencies needed to secure supplies of non-renewable resources. It works to the party's primary advantage, with little trickle down to the people of the country. 

Who should complain? Not North America because it too benefits from the cheap exploited labour with lower cost good on the shelves at Walmart, Costco, Target and others, hence containing domestic inflation and low interest at the Fed and other Central Banks. The other big losers however have also been the hard-working American union members and middle class that forged the spirit and heartland of a great nation. Their jobs and way of life were traded away by these unsavoury business practices.

Low interest rates also lead to high asset valuations in Western nations and can thus be tied to the cheap labour exploitation of millions and massive loss of American jobs - so everyone (elites?) had or has an interest in maintaining the status quo of these trade practices, even though they are definitely unsustainable while benefiting so very few on both sides of the Great Wall.

Water shortages are becoming headline news; the importing of water is becoming essential to feeding the Chinese economic machine. Pollution, unbridled and unregulated economic growth are the drivers behind this need. Water and oil are the two essentials of modern industrial-consumer complexes, shortages as Jim Rogers so astutely  noted will lead to wars. There are no reasons to doubt Mr. Rogers conclusions. No reasons.

Add further, the climatic chaos created by the growth economic mantra and you do nothing but reduce the supplies of fresh water through pollution, warming and upheaval of the natural systems of the planet. Without fresh water supplies, you cannot feed people, armies or politicians - the final outcome is not hard to figure out.

Gorbachev recognized that the Soviet Union was doomed and could not compete with the West because it did not have the accounting measures to manage responsibility centres at all levels of enterprise. Without management accounting measures, you cannot manage what is not measured; leading to sloth, inefficiencies, moral bankruptcy and wide-spread corruption. Ultimately, the Soviet Union's system collapsed and Glasnost was needed to bring transparency, democracy and accountability to its economic and political systems.

Today, there is growing evidence that the Chinese system also suffers from the lack of accountability along with the management and financial yardsticks needed to properly manage its economic, social and environmental activities. Ghost cities, tell us that there is little expectation of economic payback or return on investment for such projects. Pollution pervades all aspects of life, leading to huge long-term health and environmental concerns; eventually they impede all forms of industrial and agricultural activity. Add to this, the poor management of national finances such as, gold purchases at historically high prices, over-exposure to US treasuries and above market purchases of resource companies by Sovereign Funds, are a few of the disconcerting practices that infer a lack of financial controls and understanding. 

Synthesizing the analysis, we should bear in mind a number of considerations:

One, at the meta-economic level the hard constraints of a finite planet will prevail on exponential economic growth in resource depletion and over-population. No nation can escape the consequential  pending disaster to occur when the fragile balance of populations, resources and the bio-sphere is broken and lost forever. 

Two, the business cycle of expansion and contraction comes into play sooner or later, with its unavoidable reversion to the mean theory. Thus, when China faces this mathematical reversion, after extreme growth rates - the other side of the equation could be just as powerful to the detrimental contraction side of activities .

Three, leverage is a useful and beneficial way to spark accelerated growth making everything look easy at the time. But, the when the wheels come off, the downward push is even faster and harder. Every generation, it seems, must relearn the perils of debt and how their related bubbles have created untold pain and suffering when the party came to an end.

Four, societies where oppression and corruption are everyday parts of life, with little in the way of transparency and accountability, do not survive. Internal and external forces historically come to bear, that results in dramatic social, political and economic changes - this is a law of nature that returns systems back to the their equilibrium. In China's case; this could be termed as a return to a balance between its cultural Ying and Yang!   

What we see then is a system that has many deep troubles, where possible unrests and breakages could occur at any moment, with its credit leverage fuelling a " The Big Mama of all Credit Crunches" that changes and brings about a long overdue Glasnost  to a nation that has been operating far beyond its equilibriums of Ying and Yang in so many respects. That, by rules of nature, must revert to the mean.

The rest of the world should be prepared for major adjustments when this dragon lies slain by the consequences of its unsustainable beliefs and practices. To be forewarned, is to be thusly forearmed.

Dr Peter G Kinesa
May 10, 2013      


Chinese Credit Crunch - Dragon Slayer



Monday, May 6, 2013

Against Crony Capitalism -The gap between rich and poor will continue to grow until we give up on QE

Against Crony Capitalism - The gap between rich and poor will continue to grow until we give up on QE

Let me just say that this is an interesting read, but I do not believe that there is any cause and effect relationship between QE and the wealth gap. This is a gap that has been growing long before QE was a glimmer in Bernanke's eyes. 

American social decay has been going on since WW II and shows no signs of abatement. Look at the disgraceful conditions of their cities, physical infrastructures and superficial cultural Combined suggesting there is little hope in the context of its current frameworks and leadership anything will ever change. In fact even if they wanted to, there is no more pie to pass around and share as humanity is past "peak everything" . 


How really dumb is the situation? Well America continues to encourage more immigration that creates larger ghettos of poor folks, knowing full well the resources needed to feed these tens of millions more; just won't be there in ten years or so. But the Rich do enjoy interim benefits. So, expect a class war leading to a possible reconfiguration of the states into sovereign regional governments - this is starting to look more plausible as the gap between rich and poor grows. Also when you think about Texas's lone star ambitions.


Historically, feeding cake crumbs does not stop the barbarians at the gates. Storms are beyond control when the wealth gap is too big, for too long. Winds of revolution are stirring.


Dr Peter G Kinesa

May  16, 2013 



When will they storm the Bastille?

Fed cc

Saturday, May 4, 2013

KEYSTONE XL PIPELINE - How Dumb Are WE?

Keystone XL pipeline would have little impact on climate change, State Department analysis says



Good Question!


The Keystone XL Pipeline Causes NO Environmental Problems???

The State Department should just give up - NOBODY - but beer-guzzling rednecks from the Southern Bible-Belt believes anything these guys say. That's a land where higher education meets the standards set by the Fartobebug Monkees, where you take your sister to the prom and the village's chief would be its idiot anywhere else in the world, including Alaska. And worse, they think Sarah Palin and Abe Lincoln have comparable talents, skills, insights - and get this - Notable Quotes.

Yep, so there you go - the truth. Not even the Pope, Steve Colbert, Michael Moore and Zawbootu tribe of South-East Nauru, believe the State Department anymore. Why? Here's a real quick and short list we put together; starting around 1865, detailing some of the supposedly true statements that the State Department and its affiliates, agents and other assorted allies would have or like us to believe.

C''mon, who really shot Lincoln?

Pearl Harbor - We had no idea what East or West wind blowing meant? But, Sleeping Giants do.

Russians are coming? All Russians are actors? Russians own, run and live in Hollywood? Russians, in Tennessee, talk loudly about some gal named Stella; they have many desires.

The Dominoes Theory? Sorry wrong war game - then blame it on the fog.

The Warren Commission - what does that have to do with Katrina?  

One small step for man - was not a giant step for mankind.

I am not a crook - dreamed  I saw a child of God walking along the road that missed Kent State.

"Tell the United Nations, those turnip trucks are moving all the Weapons of Mass Destruction around the country.",

Remind me again, Why are we in Afghanistan? Poppies? 

Patriots' Act. Who, Hmm?

The War on Terror? On Drugs? On Poverty? On LIES...On OWS? How's about - The War on Wars - for PEACE?

Land of the Brave - Home of the Free - REALLY!

As you can plainly see, the list is as long as Santa's. Hey, but they actually think that we believe them. May be we should just send our response to.their truths. "WE were all born late at night - but it just wasn't last night". Then we all follow the road less travelled and,  

STOP THE KEYSTONE XL PIPELINE.

Then, let them know. Then let them know our truths. Let them know, of our true Heroes. Those who dare, and will dare greatly again and again; standing tall on the shoulders of giants - in the arena holding the true torch of  LIBERTY. Let them know! 

For Freedom, 
Carry On Bravehearts,


Dr Peter G Kinesa
May 3,  2013 


"Click Here"

"Liberty Stands On These Shoulders; Inspiring its Torch, its Light, and its Journey to Destiny's Shores, Beyond the Last Eternity."

First Financial Insights, March 2, 2013




"WE ARE NOT THAT DUMB"

STOP KEYSTONE!



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