Category Archives: Truth and Trivia

Long Distance Travel

One of the implications of self-driving vehicles that I had not thought about is the impact on airlines.

Let’s say I’m traveling from here to, say, New Orleans. Google says it is nine hours by car.

Expedia says it is four and a half hours by plane from Orlando. Plus I need an hour and a half to drive to Orlando, then another hour and a half to navigate TSA, etc. Then at the other end probably an hour to get downtown. Looks like eight and a half hours, except that the car leaves whenever I want, with no hassle, as much baggage as I want, far more comfort, and my food, drink, communications and entertainment of choice. Cost looks about the same for a single passenger, but half for two and so forth. I would say, advantage car. And this is a non-stop airline route.

For even longer trips, a fully autonomous car can keep driving while its passengers sleep – there is no driver, of course. So at least notionally I could make the trip overnight without giving up a night’s sleep, assuming the car had the necessary comforts for sleeping. Which they will.

Looks to me that the autonomous car will disrupt airline transport.

 

 

Fake News

You can’t go anywhere on the web without seeing mention of “fake news,” on which Mrs Clinton blames her defeat. If you go to Google trends, you will find negligible use of the term until September of this year (2016). Then the meme is disseminated and the rate of searches for the term soars.

Obviously this term was promoted by someone although I see no evidence for specific attribution. But it is amazing how a meme can spread like wildfire. Regardless of who originated it, the traditional media pushed hard to promote it, presumably with the idea of discrediting the internet sites that are now their competition.

This should be a real lesson in the power of propaganda. Very scary.

Going Out On A Limb

I think the end of this bubble is beginning, as yields spike and the dollar soars:

“Our revels now are ended. These our actors,
As I foretold you, were all spirits and
Are melted into air, into thin air:
And, like the baseless fabric of this vision,
The cloud-capp’d towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve
And, like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
As dreams are made on, and our little life
Is rounded with a sleep.”

― William Shakespeare, The Tempest

The economy is not strong. There are 100+ million adults not working (“not in the labor force”) out of a total population of 325 million, to say nothing of the myriad of government employees who are employed, but not contributing any value to the economy.

Consumption is being sustained by debt, both private borrowing and government money-printing. By January 2009, the United States had accumulated $10.6 trillion in debt. The gross national debt – just federal government debt – stands at $19.7 trillion as of the end of FY2016. Spending is on a pace to add another $2.4 trillion this fiscal year (2017), surpassing $21 trillion by next September. Krugman applauds, and of course this is Obama, not Trump. Yet.

Debt-funded consumption in excess of income has crowded out savings and therefore investment. As investment has declined, so, logically enough, productivity growth has fallen (see previous post). Simultaneously, government has been growing, making a lethal cocktail for real household disposable incomes, which have been declining for years. Pensioners who think they are in good shape are not noticing that defined-benefit pension funds are already starting to cut benefits and many, especially state and local government funds, are woefully under-funded. Social Security is in negative cash flow, and drawing on the general tax revenue pot to make up the difference. The stock market is ludicrously over-valued and promises zero or negative returns to pension funds for years to come. As Margaret Thatcher notably said “Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them.”

Powerful deflationary forces are being unleashed. The world is awash in oil and efforts to keep the price up will eventually fail. OPEC in aggregate will not cut supply because its governments (as well as the non-OPEC ones) depend on the flow of oil money to stay in power. I expect oil to reach the lower $20s if not below. Most of the world is engaged in a race to the bottom, cutting interest rates to devalue their currencies and boost exports. They are therefore exporting deflation to the US. I expect to see CAD in the 0.60s and the EUR in the 0.80s. Consumer price inflation in the US appears comparatively strong due to the inclusion of OER¹ in the CPI, which is not done elsewhere, and due to the uncontrolled rise in healthcare and education prices, funded by government subsidies and debt. These prices end up being a form of taxation by the 0.01%, who are on the receiving end. The protest vote in the US election should be no surprise.

OER, a completely fictional number to start with, is high as a result of low interest rates financing housing bubbles. These will end as badly as the previous lot. I choose not to be a homeowner, largely because I don’t want to face a huge capital loss.

In short, the economy is a Potemkin village. Things are not as they are made out to be. Even a fractional increase in rates may trigger a deflationary crisis, especially considering the shortage of dollar liquidity outside the US.

¹ OER, Owner’s Equivalent Rent, is weighted about 25% of the CPI basket. It is estimated by a telephone survey of selected homeowners, asking them how much they think it would cost to rent their a property like theirs.It has nothing to do with what it actually costs them to own and live in their properties.  I am not kidding. Now do you think CPI means anything?

End Of An Era?

Well, justice finally caught up with Hillary Clinton yesterday. Massive spending on advertising and conspiracy with a heavily biased journalism community weren’t enough to overcome her history of “carelessness,” corruption, incompetence and contempt for the “deplorable” ordinary citizenry. The steady drumbeat of Wikileaks releases must have been very damaging.

Anyway, one can only hope that all those celebrities who promised to leave the country if he were to be elected are packing their bags.

To understand what is happening, one only need read this outstanding article – “Trump, Clinton, And The Culture Of Deference.” I’m not including an extract because it is not long, but needs to be read in full.

Courage

Apple claims that removing the headphone jack from the iPhone7 was intended to improve its water resistance and took “courage.” So now you must either use Bluetooth or the Lightning connector.

Please. *BS*

1. Apple owns the largest maker of Bluetooth headphones (Beats).
2. The Lightning connector is proprietary and Apple receives a royalty from every sale of any product using it.

If you buy an iPhone7 you are, in my opinion, a sucker.

Edit: You may also be an idiot if you are one of those who have been drilling holes in their iPhone’s case to make a headphone jack.

It Does Not Compute

Jeremy Grantham’s discussion of the economic issues behind the immigration crises facing the world stunned me. Somewhat hypnotized by the religious and cultural issues, I simply had not realized the magnitude of the problem. Over to Jeremy:

The truth about immigration to the EU, in my view, is bitter. As covered in earlier quarterlies, I believe Africa and parts of the Near East are beginning to fail as civilized states.

■ They are failing under the pressure of populations that have multiplied by 5 to 10 times since I was born; climate for growing food that is deteriorating at an accelerating rate; degraded soils; insufficient unpolluted water; bad governance; and lack of infrastructure. Country after country is tilting into rolling failure.

■ This is producing in these failing states increasing numbers of desperate people, mainly young men, willing to risk money and their lives to attempt an entry into the EU.

■ For the best example of the non-compute intractability of this problem, consider Nigeria. It had 21 million people when I was born and now has 187 million. In a recent poll, 40% of Nigerians (75 million) said they would like to emigrate, mostly to the UK (population 64 million). Difficult. But the official UN estimate for Nigeria’s population in 2100 is over 800 million! (They still have a fertility rate of six children per woman.) Without discussing the likelihood of ever reaching 800 million, I suspect you will understand the problem at hand. Impossible.

To which you have to add the countries whose economic viability is based entirely on the sale of their energy reserves.

Rough Diamond

Not strictly financial, but Britain’s new foreign minister has a way with words. Some of his gems:

On Hillary Clinton’s candidacy in 2007:

“She’s got dyed blonde hair and pouty lips, and a steely blue stare, like a sadistic nurse in a mental hospital; and as I snap out of my trance I slap my forehead in astonishment. How can I possibly want Hillary? I mean, she represents, on the face of it, everything I came into politics to oppose: not just a general desire to raise taxes and nationalise things, but an all-round purse-lipped political correctness.”

On Islam in 2005:

“To any non-Muslim reader of the Koran, Islamophobia — fear of Islam — seems a natural reaction, and, indeed, exactly what that text is intended to provoke. Judged purely on its scripture — to say nothing of what is preached in the mosques — it is the most viciously sectarian of all religions in its heartlessness towards unbelievers.”

On the EU, in 2013:

First they make us pay in our taxes for Greek olive groves, many of which probably don’t exist. Then they say we can’t dip our bread in olive oil in restaurants. We didn’t join the Common Market – betraying the New Zealanders and their butter – in order to be told when, where and how we must eat the olive oil we have been forced to subsidize.”

On Tont Blair’s 2002 visit to Africa:

“What a relief it must be for Blair to get out of England. It is said that the Queen has come to love the Commonwealth, partly because it supplies her with regular cheering crowds of flag-waving piccaninnies … They say he is shortly off to the Congo. No doubt the AK47s will fall silent, and the pangas will stop their hacking of human flesh, and the tribal warriors will all break out in watermelon smiles to see the big white chief touch down in his big white British taxpayer-funded bird.”

A true fellow spirit to Winston Churchill, another master in the very British tradition of elegant vitriol.

We Don’t Need No Stinkin’ Voting!

The following June 27 statement by President of the European Parliament Martin Schultz should put all confusion about democracy in the EU to rest.

Schulz: The British have violated the rules. It is not the EU philosophy that the crowd can decide its fate“.

As my previous post points out, he’s quite right, the root of the whole EU project was to eliminate democracy, considered dangerous by the “architects”. This was artfully concealed, under a blanket of economic wishful thinking, but is now coming out of cover.

The EU is over. People are finally realizing that it is a fraud and will not stand for arbitrary and oppressive rule much longer.  The “crowd” will have the last word.

Still waiting for my sub-1% on the 30-year, but we’re going in the right direction:
30-year government bond yields.

Country Jun 27/16 Jun 7/16 Apr 5/16 Mar 8/16 Feb 23/16 Jan 30/15
Japan 0.09% 0.27% 0.42% 0.46% 0.97% 1.26%
Germany 0.38% 0.70% 0.72% 0.96% 0.87% 0.996%
USA 2.28% 2.53% 2.55% 2.62% 2.62% 2.25%
UK 1.80%

Edit Technocrat panic in progress. According to the UK Daily Express,

The foreign ministers of France and Germany are due to reveal a blueprint to effectively do away with individual member states in what is being described as an “ultimatum”.

Under the radical proposals EU countries will lose the right to have their own army, criminal law, taxation system or central bank, with all those powers being transferred to Brussels.

Controversially member states would also lose what few controls they have left over their own borders, including the procedure for admitting and relocating refugees.

Obviously a desperate attempt to nip in the bud any further attempts at regaining national sovereignty. GLWT.

Pet Peeve

I keep seeing people using “disinterested” when they mean “uninterested.” They are not synonymous. “Disinterested” means unbiased or even-handed. For example, a referee is (hopefully) a disinterested party to a football match. “Uninterested” means inattentive or, well, just not interested. Such as, my wife goes to sleep during “Deadliest Catch” because she is uninterested in crab fishing.

Why The Media Hate Trump

A report from the Center for Public Integrity shows that, in dollars spent on radio and TV ads, Bernie Sanders spent about $9.03 per vote in New York. Hillary Clinton spent $3.62, and Trump only spent $0.13 per vote.