Black Swan Event Part Three

A Black Swan event is something no one saw coming.  The more mainstream the calls for a military coup are voiced, the less likely we get that event.  Here is the LA Times calling for a military coup against a Trump Presidency.

Americans viewing the recent failed coup attempt in Turkey as some exotic foreign news story -- the latest, violent yet hardly unusual political development to occur in a region constantly beset by turmoil -- should pause to consider that the prospect of similar instability would not be unfathomable in this country if Donald Trump were to win the presidency.

The more it is demanded, the less it will happen.  On the other hand,  the protocols of the elders of neocon certainly called for a Black Swan event that indeed happened.

The passage suggested that the transformation of American armed forces through "new technologies and operational concepts" was likely to be a long one, "absent some catastrophic and catalyzing event – like a new Pearl Harbor."^[45] Journalist John Pilger pointed to this passage when he argued that Bush administration had used the events of September 11 as an opportunity to capitalize on long-desired plans.^[48]

Well, we got our New Pearl Harbor, 9-11.  Just in time for the floundering Bush Dynasty administration, and the warmongers who protect the welfare state.

Cut every dime of welfare:  cut not one dime of personal welfare until every dime of corporate welfare is cut.  Once every dime of corporate welfare is cut, there will be massive demand for workers to man the economic renaissance, and no one will need welfare.  The charities can handle the extreme cases.

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Retail Hours Per Square Foot Open

When we switched from lending money to lending credit, circa 1971, we also morphed from a materialistic society to a consumeristic society.  Where USA was known for over-engineered goods and services, very high quality, we began to create disposable goods and services to match the false economic sense of the masses.  A high-quality car or couch or toaster one kept and passed on to the next generation, vs the items we throw away every couple of years.  People once maybe had one home a lifetime, now most have several.

Update: Here is an example of the renaissance of authentic economy, a Portland micro-business: Finex Cast Iron.  Lodge Cast Iron cookware was a solution to a problem, like all winning products.  There is no solution that cannot be improved upon, as Finex does Lodge.  Finex will take nothing from Lodge, and if Lodge resists the error of copying Finex,  it will retain its separate market.  Lodge has a line of enameled cast iron cookware now, copying Le Crueset.  Great prices.  I bought a piece assuming Lodge quality.   Big mistake.  Made in China, 3 years in the enamel cooking surface is chipping off.  The Chinese can certainly copy Le Crueset perfectly well, but only at what it costs Le Crueset to do the same, making a Lodge enameled pot desultory.  Copying competition in specialty is suicide.

To sell the more on offer, of lesser quality, therefore disposable, required more square footage at retail.  The first expansion was not in building new stores, but being open more hours.  In my youth, all stores were closed on Sundays. Everything.  So the first expansion came in a change where stores began opening on Sundays.  Womens' liberation provided the divorced moms to staff the Sunday open hours.

Macy's is now cutting back hours, 10-6 in Many stores, fewer hours Sunday.  They are not tearing down buildings, but there are less Square Feet at retail open hours.  Someone oought to be tracking this.

I noted Bank of America branch with hours of 10-6 daily and 10-1 Saturdays.  Here again, before say 1973 banks were open 10-3 Mon- Thu, 10-6 on Friday (to accept paycheck deposits) and closed Ssturday.  Anyone who knocked off early from worked was accused of having "bankers hours."  Banks had to expand to handle all of the credit for a consumeristic society passing through their branches.  As the consumeristic credit society dies, less hours are needed.

There are opportunities here.  Macy's already leases out shoes, books, jewelry, carpets, etc departments.  If you have a good product or range at retail, approach the local store manager about setting up shop in their store.  Drive a hard no-risk-to-you bargain.  Figure they earn 6% of what passes through the till.  Based on your sales, this will often be better than they do.

I am writing in coffee shop now.  It's independent and its hours are 7-3.  That means the whole operation is closed, and available from say 4-midnight.  Test out your new idea without a $250,000 up front store investment.  Use the excess production capacity of retail square footage closed.  Fix your offer, and then later go into your own digs, with a customer base ready to follow you.

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Will Turkey Invade USA?

No informed USA intel or law enforcement person believe Osama Bib Laden had anything to do with 9-11.  The FBI most wanted poster offering $5 million for his capture did not even mention 9-11.  He was not involved.

Nonetheless, USA demanded he be extradited to USA from Afghanistan after 9-11 to stand torture in our legal system.  The Taliban who had been guests in the White House to discuss oil a year before required legal proof OBL was involved before they would entertain the notion, in spite of the fact there was no extradition treaty between the two nations.

Instead of providing evidence, the USA attacked and invaded Afghanistan, a war crime.

Now, Turkey is demanding USA extradite a similarly situated OBL-type living in USA, maybe involved with he Turkey coup.  In spectacular hypocrisy,   USA requires evidence.

Virtually from the Turkish coup’s onset, Erdogan began demanding that Washington arrests and extradite Gulen back to Turkey. After calling Turkish accusations that the US played any role in the attempted power grab“utterly false and harmful,” fork-tongued John Kerry stated that if Ankara hands its evidence over to US authorities that prove the imam is, in fact, responsible for the coup, then the US government will send Gulen back to face trial, but not until then. But because Gulen has been such an integral influential presence and asset in both America’s foreign policy as well as worldwide propagandizing as a school of terrorism machine, the odds are extremely nil that the exiled leader would ever be forced to return to Turkey to face sure death.

So will Turkey attack and invade USA, following USA precedent?  Probably not, but WWIII, necessary to change the topic from economics to something else, will begin over something just as silly.

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Guide Your High Schooler Through College With No Debt

Mish decries an Obama study that claims $1.3 trillion in student loan debt is good for the economy.  Debt at interest always deleterious to an economy, and having millions of people stuck in indentured servitude is not good.  Those millions of unemployed (roofers who went back to school to learn java coding, and java coders who went back to school to learn how to be roofers) or english majors now have unbankruptable debt.  Like Uber drivers who qualify for a car loan only because they are Uber-qualified, these people now live to pay their debt.  This surely is good for AN economy, and THE economy the Hegemon now largely runs, but is outright evil.

First off, if you are above 28, for get about any more formal education.  It will never pay off better than you putting your resources into your own business.  Starbucks prefers a 22 year old college graduate to a 32 year old one.  And so does everyone else.

Perhaps it is condign punishment to be so indentured for having believed the false economy had anything to offer except misery for people.

I was reading Gerard of Siena.  He makes some distinctions I found interesting.  For example the prohibition to not "eat of the fruit of the tree of knowledge of good and evil" is a prohibition for no apparent reason.  The tree is fine in and of itself, the prohibition is to teach people to remain humble and obey the Creator.  An important lesson in life is we cannot have everything we want immediately.

Then there are prohibitions in place because in all places and all times the activity causes harm.  For example, usury, such as student loan debt.  Just do not do it. We can have usury-provisioned instant gratification, but never escape the usury-provisioned perdition.

My last child graduated from college with zero student loan debt.  That makes three.  That makes us fairly unique.  It is not at all difficult, you must simply "think outside the box" and refuse the seemingly easy way.  Each kids story is unique.  Each kid (being girls) was required to acquire domestic arts, so one did sewing, another did cooking, and the last home ec, before they got a BA.  (If I had sons, they'd be like carpenter, plumber, etc.)  You gotta have a fallback skill.  We all fall back.

Next, I insisted on not wasting the bachelors degree, so I forbid any pointless degree like pre-law, business, pre-med, computer science, etc.  What a waste of human life!  My eldest has a comparative religion degree, my middle a Latin degree (Summa Cum Laude) and the youngest, a "humanities" degree, whatever that is.  Who cares, as long as it was not one of those "career-prep" degrees the curriculum of which crowds out any chance of getting an education.  I say "atta girls!"

While their peers languish with debt and unemployment, the eldest is a features editor of a major newspaper in LA, the middle one is on a full-ride phd-program scholarship in Paris at the Sorbonne, and the last one summiting peaks days off while learning the fancy restaurant business nights from the trenches.  Who knows where that will go?  At least she will not be rendered desultory by the hegemon.

Each followed a fairly unique way to accomplish their goals, but some principles.

1.   Never take the student loan.  It causes harm in every instance (and it is not necessary.)

2. While in the 1970s you could work summers and pay for the school year, and the 1980s you could work summers and 12 hours per week part time to pay for the school year, by the 90s you need to take a year off to pay for a year in school.  OK, do that.  BA credits never time out, so take 8 years instead of four, if you have to.  (Also, summer school is cheaper, faster than the other three quarters, so if you are only taking a quarter a year off, maybe take winter quarter off to work in ski resorts, and go to summer school to stay on schedule.)

3. The last two kids were 1/2 done with college before they graduated from high school.  This is not tough.  Neither high school nor college is anywhere near as demanding as they were in the 1970s. A college degree today is on par with a high school diploma circa 1968.  If a kid today studied as much as was required back then, they could easily do this.  These programs are called running start, etc. The classes are usually free for high school kids, but the credits count toward a college degree.  Astronomy 101 in a community college has 24 students.  At a State University it has 300 students.   And in any event, the content of both is the same as the high school astronomy course (if not even the textbook), so double dip!

4. School libraries often have a copy of the course textbook.  Once you are enrolled in a class, check that book out.  if not, go crying to the teacher about being a poor highs chool kids.  he has a desk copy he got for free.  he may loan it to you.  If not, buy a Thai edition of the USA text book, $25 vs $300 for the same book.

5. Don't follow the rules about class loads, etc.    Take a full load of night classes while a full load at high school.  Instead of wasting time during high school hours, do your college class homework.  Questions on college work?  Ask a high school science teacher, or whomever.

6.  Never take any online college credit classes.  They are a complete rip-off, because they are not an education.  They say it costs maybe 1/2 as much, but you get maybe 1/8th the education, in effect you pay 4 times as much. At least 1/2 of what you learn is face to face with peers in the classroom, and the sage on the stage is exponentially more valuable.  And this from me who pioneered online ed back on AOL and got in TalkCity.com at 10 cents a share and sold at $13 something during the dotcom boom (and bust.)  At best, online courses are equal to being in a library with a librarian (somethig I value highly, and necessary for a good education, but not sufficient.).  Education means to "lead-out" (presumably into the light) and pixel mediation is not what they meant.

Instruction means to build brick by brick, and to take out the face to face with the cohort and the sage on the stage is woefully limited.

7. Education is chock full of people of good-will who go home every night an weep copiously over the waste fraud abuse endemic in education. They rend their clothes and struggle against substance abuse to ease the pain they experience seeing so much in the way of resources yield a woefully net negative.  When a student comes to them and says, "You know, I don't want to do that, I want to do this..." you might as well have announced the Second Coming.  They will leap for joy at finding a student who has eschewed the three tracks on offer at USA high schools: Indentured servitude, poverty draft or incarceration prep.  Any high schooler can truly write his own ticket in USA.  Your kid learns to see reality, act on it, and also demur when offered instant gratification when it comes with Hegemonic strings attached.

Reject the Hegemon and all his works.  Don't take his "the first pill is free" offer.  Assume the narrative and common knowledge is nonsense.  Every case is unique, and getting a kid out of college with no debt will be unique in every instance.  It ain't the hand you're dealt, it's how you play the cards.  Make sure your high schooler learns the bigger lesson: you are unique, and there is no program that works for you, so you must design your own.  And you need never take that free first pill.

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The Magic of Compound Negative Interest Rates?

Capitalism 101's first lesson is the magic of compound interest rates.  But what about compounding of negative interest rates?  Well, the negative interest rates are on bonds and only zero-coupon and some bond funds offer compound interest.

On the other hand, the growing pool of negative interest rate bonds has crossed ten trillion worldwide...

The $10tn pile of negative-yielding government bonds is a “supernova that will explode one day”, according to Janus Capital’s Bill Gross, underscoring therising nervousness over the previously unthinkable financial phenomenon.

And that is not about to stop.  How might it end?

Even a relatively modest rise in yields could cost investors dearly. Goldman Sachs recently estimated that an unexpected 1 percentage point rise in US Treasury yields would trigger $1tn of losses, exceeding the financial crisis losses from mortgage-backed bonds.

What we badly need is a crash in real estate, in fact we cannot have an economic recovery without it.  The asset inflation in real estate prices is central to the false economy,  and usually commercial has risen higher and falls farther than residential when the crash comes.

With low, and now negative interest rates, land-banking has been common, using hot money to buy real estate and then just leave it idle.  If interest rates go up, it forces those land-bankers to sell, causing prices to fall.  But who knows?

Negative interest rates reflect a bet that other assets, stocks, real estate, gold, etc will crash more than the  2% you'll lose on negative interest rate bonds.  Who knows what will happen, but 2% bonds corresponds to timing and size of the loss anticipated is exponential in say stocks.  $10 trillion means a whole lot of smart money thinks losing 2% for sure is better than 30-50% maybe in stocks.

With inflation, you want to be paid what you are owed as soon as possible.  With deflation, you want to wait to be paid as late as possible.  To encourage people to pay later, we may see compounding of negative interest rates?  Impossible?  Negative interest rates were "impossible" but they are here.  Mortgage lenders paying borrowers on their loan was impossible, but we have it.  So why not compound negative interest rates?

And note how capitalism cares not a whit what happens to people on pensions whose yields are largely in bonds.

Just rent.  if you have paycheck, pension or property, the next 40 years is ugly.

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The Hegemon Has Unlimited Time

Expecting a big, devastating, game changing crash is probably a waste of time.  At most there will be ho-hum crashes like 1929 or 2008, in which every gasps but not much really changes.  In the meantime, expect countless efforts to shake down anyone with anything.

Apropos of another post, someone emailed me that the vast majority of CalPERS (California Public Employee Retirement System) payments go out to retirees in other, low tax states.  How long before some policy wonk notices and reckons how much tax income California is losing paying out to retirees not buying in California, registering autos in California, paying property taxes in California…  hmmm?  Eventually expect "to collect California, reside California."  The Romans were eventually reduced to arresting escaping Romans and force them back to work their lands.   The taxes were so high it was not worth it, and Romans were escaping from the hegemon chaos for the anarchy up North.  The less-government, less tax states around California are in that measure more anarchic.

Now on the other side, states note well retirees can be milked for their income stream.

Tennessee has had a formal retiree recruitment program for the last 10 years. “Retire Tennessee” is managed by Director of Tourism Initiatives Ramay Winchester, who works closely with the Jefferson County Chamber of Commerce on their own “Retire Tennessee” program. The retiree recruitment program has an information booth at ideal-LIVING Trade Shows in New Jersey, New York, Illinois, and the greater Washington, D.C. area this year.

Anyone with a pension, a paycheck or property in the next 40 years is a sitting duck.  Why bother.  Position yourself to own the means of production, a small business.

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