Still Alive, GDP Fairytale Claims 5% in Q3

(26’30”N x 89’ 60”W or about 420 miles south of Houston)

The Consumer Price Index numbers Thursday didn’t wiggle the markets much.  Neither did the FCC decision, which we’ll get to in a sec.  Today, however, the market may turn tail for a while, depending on if anyone figures the punchbowl has been spiked.

There’s the selection of headlines that are deflationary in tone:

    Our first major breaking news today is the GDP report, a nearly incomprehensible mish-mash of self-referential mumbo-jumbo, sounds pretty good:

    Real gross domestic product -- the value of the production of goods and services in the United
    States, adjusted for price changes -- increased at an annual rate of 2.2 percent in the fourth quarter of
    2014, according to the "second" estimate released by the Bureau of Economic Analysis.  In the third
    quarter, real GDP increased 5.0 percent.
    
          The GDP estimate released today is based on more complete source data than were available for
    the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6
    percent.  With the second estimate for the fourth quarter, private inventory investment increased less
    than previously estimated, while nonresidential fixed investment increased more (see "Revisions" on
    page 3).
    
          The increase in real GDP in the fourth quarter reflected positive contributions from personal
    consumption expenditures (PCE), nonresidential fixed investment, exports, state and local government
    spending, private inventory investment, and residential fixed investment that were partly offset by a
    negative contribution from federal government spending.  Imports, which are a subtraction in the
    calculation of GDP, increased.
    
          The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in
    imports, a downturn in federal government spending, and decelerations in nonresidential fixed
    investment and in exports that were partly offset by an acceleration in PCE, an upturn in private
    inventory investment, and an acceleration in state and local government spending.

    The Baltic Dry Index was up 7 points to 540 this morning, still 2009 levels, impacted with shipping company bankruptcies in the last couple of weeks.

    When I looked, stock futures were about flat.

    Eventually, the shopkeeper economy will run out of customers and, when it does, things should turn ugly quick.  Already this week, we’ve seen JP Morgan/Chase begin moving toward charging for some deposits (which is what negative interest rates are) and that’s how “money in the mattress” became a popular phrase in the last Depression.

    Today, in the “new and improved” US economy, you’re only good to maybe $2-thousand dollars of bed money.  After that, it will be assumed that you are a drug dealer and the money is IGG – ill-gotten gains, and that will be that.

    I assume you have have your receipts for the gold and silver you bought?  Because as we continue the deflationary slide, one of the future problems to be considering now is how you’re going to explain having more gold than Scrooge McDuck without a paper trail.

    Not to ruin your Friday morning, but it is something to think about.

    Echoes of the Communications Act of 1934

    The ruling by the FCC yesterday really is a good thing, and regardless of how one thinks of the Obama administration on other issues, this one they  got right.

    The decision is similar in timing to the major sea-state change in 1934, during the last Depression when government moved to regulate then fledgling radio.

    Essentially, the decision says cell phone carriers must as in the public interest and can’t set up special “high speed lanes” for higher paying users and thus, the idea that all bits are created equal is still alive.

    At least mostly. 

    There’s already a special set of lanes for the military.  What the ISPs were after was another way to screw consumers out of additional revenue…and thanks to a well-reasoned decision, that’s off the table now.

    Verizon went so far as to put out a press release in Morse Code to underscore how they thought it was an anti-progress move. 

    Of course, phone companies would like to pick your pocket for additional fees, for things like connecting to your private music server or your home surveillance system.  So look for the greedsters to head to court next in attempts to fatten their take.

    The greedsters were looking to charge for different bit rates, so you could be driven to an Amazon Video over Netflix, depending on connection fee (bribes) would have been paid to the carriers for preferential bit rates.

    So yes, Obama’s regime did get something right and it’s in the public’s interest.  No matter how the corporate hucksters try to paint it the other way.

    Still, as a reader in Idaho puts it:

    Just finished your posting, the part about the 1934 communications act and gov’t power struck home….remember what else happened in 1934? Like the NFA, which prohibited Americans from possession of many types of smoke poles and mufflers?

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    Coping: With the Details of Cruising

    (From the Middle of Caribbean) As we steam (more correctly: diesel-electric) our way back to Houston where we will arrive Saturday morning, there are a number of details that people have written inquiries about that deserve some discussion. First and foremost is security. I don’t know if you’re old enough to remember the Achille Lauro incident, but that was where a bunch of Palestinian terrorists seized a cruise ship in the Med and started killing people including (going by memory here) wheeling a man confined to a wheelchair into the water. It’s understandable that people would be concerned about security, given how the security-state mindset has been drilled into our consciousness.

    Thursday Morning Fairytales: What Deflation?

    (Near 20’03” NH by 86’23.5” W – about off Cancun, Mexico)

    Peoplenomics Subscriber Note:  The regular Saturday report this week will be posted on Sunday afternoon because I need a lot more bandwidth that what’s here shipboard to run www.nostracodeus.com software scans and  get a better bead on what lies ahead.

    We begin this morning with the tale of the three little pigs:  This one printed money, this one printed none and hoarded gold, while the third little piggy was overthrown in a “peoples revolution” which is why neither the proletariat nor royalty can be trusted.

    Of course, neither can the bureaucrats since they all work for royalty, and this tees up our next fairytale:  The Consumer Price Index press release, just out.  Nitro pill ready?

    The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.7 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

    Over the last 12 months, the all items index decreased 0.1 percent before seasonal adjustment. The energy index fell 9.7 percent as the gasoline index fell 18.7 percent in January, the sharpest in a series of seven consecutive declines.

    The gasoline decrease was overwhelmingly the cause of the decline in the all items index, which would have risen 0.1 percent had the gasoline index been unchanged. The fuel oil index also fell sharply, and the index for natural gas turned down, although the electricity index rose.

    The food index was unchanged in January, with the food at home index falling for the first time since May 2013. The index for all items less food and energy rose 0.2 percent in January. The shelter index rose 0.3 percent, and the indexes for personal care, for apparel, and for recreation increased as well. The medical care index was unchanged, while an array of indexes declined in January, including those for household furnishings and operations, alcoholic beverages, new vehicles, used cars and trucks, airline fares, and tobacco.

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    Coping: The Cruising Prepper’s Barter Practice

    (Near 19’.30” N 89’.23” W @ 18.4 Knots)

    Our cruising adventure pulled up anchor for the last time on Wednesday evening as we wrapped up a visit to Trujillo, Honduras on what the cruise brochures call “The Banana Coast.” Next stop: Houston early Saturday.

    After going ashore for a tour of Trujillo, Elaine and I returned to our balcony for a leisurely snooze (or, in her case snoozette) while the crew put away the tenders that were used to ferry adventurers to shore.

    Turns out, there’s an interesting tale of “battling cruise lines” in here:  The Norwegian line didn’t get one of the early (prime) slots at the island of Roatan, so they opted for a mainland stop.

    Good call.

    We like contrast in life.  The offshore islands are mostly flat and Trujillo has these marvelous mountains as a backdrop.  The reach over 2,000’ feet vertically and we were assured they could be scaled up to a radio tower location in a shade over four hours.

    My cardiologist might disagree.  However, since the ship wasn’t going to be here a week, that hike came off the table. 

    Despite a mighty police presence, the Honduran woods are not where sane gringos would be hiking, but then again, we don’t know many sane people,just sayin…

    The city of Trujillo has a small but very nicely-developed Port district, and since the town is fairly compact along the base of the mountains, when the cruise ship comes to town, it’s a very big civic deal.

    The shops spring up along the walkways and all kinds of goods are for sale.

    Although we’d rationalized to ourselves we didn’t need anything, there was this turquoise necklace that caught Elaine’s eye that was very inexpensive  ($10). and I thought “Aha!  All this prepper talk about bargaining/trading might be put to good use here…”

    The dickering was set to begin….

    Before making my offer, a lot of thought went into the process:  Where to draw “my line”?

    I wanted to just practice, not insult the fellow on the other side of the table from me.  He was somewhere north of 6’ feet tall and as muscular as I was rotund.  Strategy call:  Insulting low offer, or just guess his markup and go from there.

    It’s an article of faith that in the post apocalyptic world bartering will be a critical skill.

    Settling on an opening offer of $8-bucks, which the shopkeeper immediately snapped up.  I reminded myself that next time I’m in Trujillo (very low probability event) that I’d open with a 30% off or 40% off and assume the idea of an “insultingly low offer” is something barter book writers made up.  Maybe they don’t get out and practice; can’t say.

    Better off taking the Harvey MacKay (Swim with the Sharks) approach:  I should have opened at zero and worked my way up from there.  A fine lesson of American capitalism is this:  If you have the money, eventually someone will buy the insult.  Look around you.

    So much for Mr. Hard Bargain Driver.

    Remembering the “old days” of the Caribbean from living on Grand Cayman for a couple of years in the mid 1980’s when Zero Halliburton brief cases of cash proceeds from bankrupting apartment complexes was landing there in the Texas S&L scandal days, the next logical place to visit was the duty-free liquor dispensary.

    There, the spread in booze price was explored a bit:  Bottle of a so-so name brand rum that would be $17 at the discount liquor store in the next county up from us was going for $11.

    Bottom line here:  If you’re looking to save a lot of money on booze by spending a couple of grand on a Western Caribbean cruise, you really ought to instead invest in remedial math classes at the local junior college.  The money would be better spent.

    Saving of $6 a bottle didn’t seem like much of a deal.  Once upon a time,; maybe, back in my wilder sailing youth perhaps, but in the “since airplane’s again” mode, fitness and clear-headed trumps everything. 

    One of Elaine’s boys has a wee-one:  I think Charli-Jane is about 2 1/2 now, and since her reading is starting early, we got an autographed kids book ($10) that met Elaine’s tough standards. 

    E has a bee in her bonnet about idiotic kids books (Grimm’s Fairytales) that serve to do little more than take perfectly good children and install the “fear fonts” in them (to borrow the font module idea from 1980’s coming…yes, we’re that old…).  I still check under bridges for trolls.

    With a cut of the dough going to a local school, I didn’t try to dicker on this purchase…just wouldn’t have been right.  Still, it might have been a good idea, since it might be considered practice for running for public office where it seems an equal opportunity to screw everyone, even the nice people, is a necessary prerequisite.

    Walking and shopping resumed, but by now, I was getting a little warm (it was 91, or so) about the time Elaine (with a twinkle in her eye)  suggested I go sit on a railing which separated the recently-built shops from the beach.

    She was busy issuing unintelligible instructions inb my general direction as several groups of tourists wandered by:

    I called out to the tourists and asked them if they could smell my burning butt over on the walkway…and somehow that resulted in a good laugh and a picture being snapped.  Locals don’t sit on these railings which is why birth rates are still high here, if you follow.

    There’s only one ship per week through this burgh, at the moment, although a local bar owner (who was kind enough to lend me a black marking pen, allowed me to do some “point of purchase advertising (this column may drive you to drink now and then)  on the counter of the Bahia Bar at the top of the tender dock where the tourists flood in and out, like a sea of humanity.  Or fleas.

    The bar owner didn’t flinch when we asked for something good – and local – to drink.

    He hauled out some native Nicaraguan rum that would make a fine brand for a novel about the tropics and poured us shots about twice the size (and half the price) of drinks on the ship.

    This was for a dark golden rum aged in what I swear were old bourbon barrels…as they had that distinctive smoky-corn flavor but none of the corn “nose” to them’

    Figuring science was my middle name, the discussion followed quickly as to whether there was a clear version…which there was…and since it didn’t lay down in casks for an hour (or whatever), it didn’t have that corn kind of taste.

    You might be able to duplicate the taste of the aged rum with a bit of Makers Mark, a bit of Everclear, distilled water and maybe a dash of Kitchen Bouquet to adjust color.  Maybe a damp spoon of liquid smoke…but not worth the effort.

    The bartender runs a place an hour or two drive up the coast where he has a restaurant and bar which keeps him busy because with the cruise ships coming in one day a week (it will go to two ships a week in October) aren’t enough to really keep a business going…yet.

    If all American foreign aid could be administered this way (haggling with locals on the price of goods and drinking Central American rum) I think US foreign policy would be a lot better off.

    Back on this ship, we had snacks and rehydrated about 2 PM and waited for dinner time to roll around. 

    Elaine struck up a co0nversation with one of the wait staff from the Philippines.  Asked about why she decided to work on a cruise ship, her answer was pretty interesting:

    In the Philippines, with a BA in Restaurant and Hotel Management, she was only able to make about $10 a day.  On the ship, she makes several times that.

    The best part, however, is that she has plans when she finally ends her cruising days and dreams are what drive people…all people.

    Before you rush down to sign up to work on a ship, though, the reality of work should be considered first:

      • Crew work 8-9 months
      • They work 10-hours per day
      • No days off
      • Time in port (when you get it) is about 3-6 hours, depending on port)
      • Crew have a hard time getting cabs to internet cafes
      • They make a bee-line for them on shore because crew has to pay high connection charges on ship.  (That’s because the cost is a pass-through to everyone who uses it)
      • This limits relations to email a couple of times a week
      • Phone calls to home are done with cheap international calling cards.  Which one is a kind of verbal tradition/initiation when joining crew
      • And Houston has a Seamen’s Center nearby when berthed in Houston. 

      Seamen’s centers have played a major role in the writing lives of many writers…thinking back to how Louis L’ Amour described them.  In the days before the Internet, the Seamen’s Centers were where those little books of the Everyman’s Library were passed around, dog-eared and worn, and aspiring writers and poets would read from them  in the forecastle, when there was time at sea…

      Last night’s dinner was the Brazilian themed restaurant.  This is quite a meal, if you go there:  You do the salad bar (great seafood chowder and fresh French bread and Brie somehow ended up on my plate).  Then the staff comes along and slices off whatever meats you want. 

      There we were offered sausages and lamb cuts (pass) and several kinds of steak (filet mignon, thanks, a small bit) and both marinated chicken  legs and bacon-wrapped spiced chicken  (hell yeah).

      The end of the rather perfect evening involved Elaine walking into the casino on Deck 6 where she turned her $20 stake into $89 – how she does this is the 9th wonder of the world.  My $20 stake was turned into a $10 stake, so apparently my luck didn’t make the tender ride back to the ship.

      I’ll be sure and check tonight on whether it has caught up yet, or not.

      Email for the Calendar Impaired

      One of our readers excitedly sent me what I call an “email for the Calendar Impaired:

      Interesting FEBRUARY.

      This year !
      This February cannot come in your life time again.

      Because This year February has  4 sundays,  4 mondays, 4 tuesdays, 4 wednesdays,  4 thursdays,  4 fridays & 4 saturdays.

      This Happens once every 823 years. This is called money bags. So send to at least 5 people or 5 Group’s and money will arrive within 4 days. Based on Chinese Feng Shui. Send within 11 mins of reading.

      Since brushing up on my math skilled (try wading through Wolfram’s Mathematica, right?) I got to thinking “Hold it:  7*4 is 28 and so EVERY February has four of each…”

      I was going to send the reader a note that February of 2009 also started on a Sunday.

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      Financial Icebergs Colliding

      Subscriber Note:  This Weekend’s report will be published around mid day Sunday because I really need more bandwidth than is practical shipboard (like some www.nostracodeus.com software runs on financial sites to make sure we’re using Big Data to our advantage.  I’ll be running data scanning from Saturday afternoon through Sunday morning and then working out how to read those text leaves…

      (Somewhere of Honduras)  This morning we pull back the curtains to reveal the chart no one in government bothers to mention.  The reason?  It’s based on a couple of things that go largely unreported in the mainstream press.  Among these is the inflation-adjusted income level or workers, the real population of the US (which yes, includes deployed military) and from this we can make a most revealing chart of how economic reality has been working out.

      Which, it shouldn’t surprise you, is much more like the economic long wave than the touts of this or that from either party.

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      Housing is HOT

      (From anchor, 5-miles offshore from Belize City, Belize)  Just out this morning is the S&P, Case-Shiller monthly housing report and it looked pretty good from the headline numbers:

      New York, February 24, 2015 – S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for December 2014 shows a slight uptick in home prices across the country. Nine cities reported monthly increases in prices.

      More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.
      Year-over-Year

      Both the 10-City and 20-City Composites saw year-over-year increases in December compared to November. The 10-City Composite gained 4.3% year-over-year, up from 4.2% in November. The 20-City Composite gained 4.5% year-over-year, compared to a 4.3% increase in November. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in December 2014 versus 4.7% in November.

      The fastest year-over-year gains were in San Francisco and Miami, where prices rose 9.3% and 8.4% over the last 12 months.

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      Coping: With “Sailing Games”

      (Somewhere off Belize City, Belize)   There was, as far as the crew was concerned, a first yesterday at about 4 PM as the RCCL Explorer of the Seas and our own ride, the NCL/Norwegian Jewel were both leaving port at Cozumel, Mexico.

      Spontaneously, passengers on both ships lined up on their balconies and along the rails to cheer the “late arrivals” coming back from shopping and excursions ashore.  An example is the lone female runner above who was roundly cheered – and I mean with the kind of applause and hoopla that would be found at the end of a marathon.

      I wasn’t sure what to make of it:  Were the cheers sincere, or was it a kind of ‘piling on’ – like booing is when a bad call is made in sports?

      Hard telling,

      Cozumel itself was a lot bigger than when I’d been here in the 1990’s (ferry over from Playa del Carmen)  and again in 2002 (Holland-America’s Masdam).

      First time here, as my traveling companion from the 1990’s reminded us by email, it was a time when riding ATV’s into the hinterlands of the island of Cozumel might result in an unwanted encounter with masked banditos.

      That was then.   Today, it was almost as many police as it was tourists; at least that was the talk shipboard from the returning explorers.  A good thing.

      A reality check over Monday breakfast, however, decided against the shore excursion.  What do we really need?

      Elaine and I have gotten into the habit of traveling light in our old Beechcraft, so we’re painfully aware that “The more you buy, the more you schlep…”  I don’t need another T-shirt, golf shirt, or aloha shirt.  Elaine prefers going up to Seattle now and then for Nordstrom’s Rack, but even that joy has declined in recent years.  Place has change  – or, God forbid – we have…

      We both hate knickknacks (more crap to dust and move). 

      Jewelry purchasing in foreign places is as likely to be plated as solid, I didn’t bring my stone and acid to test karat claims, and  as E noted “Why buy more jewelry to wear in Palestine, Texas?”  Practical point there.

      Speaking of Texas, a couple or four items of interest:

      Apparently there was some snow/freezing rain back home.  Damn shame to miss it.  When snow is a novelty, not the opening scenes from Day After Tomorrow, snow, ice, and even the odd power outage can be fun.  Especially when a day or two later its back to the high 60’s.

      Panama hasn’t had to shoot any perimeter intruders, but he did spot an outside water pipe break (very close to the outside air conditioner unit).  A really odd break of the house water shut-off valve, turned out.

      Until I called, I had visions of the water line break occurring over the big air handler under the house in the crawlspace.  That would not only have drenched the air handler, but would have likely spewed up on the kitchen floor and I was already head-tripping about how a complete kitchen remodel would be next.

      Fortunately, the break was outside so other than moving 600-gallons of mud around, and fishing pipe under the AC compressor outside, it wasn’t as bad as it could have been.  Although, Elaine’s a tad disappointed in no new kitchen.  I’m thinking about church Sunday.

      Apparently, when we packed, we took all our luck with us. 

      To this day, I’m convinced Panama used up all his luck during two combat tours in Vietnam, a string of purple hearts, SF and Rangers.  That takes a good pile of luck to pull through all that.

      I end up lucky wherever I go, except it tends to run in five minute streaks.  I can win like crazy for 5-minutes in a casino and then the winds of Fate change.

      Which leads me to wondering whether people only get just so much “luck” in life, and when you’ve used it all up, you die.  (Or leave the casino broke.)

      It would certainly be anti-climatic for the afterlife to begin this way: “So what am I doing here at the Pearly Gates?

      Oh, you used up all your luck.  Did you bring warm weather clothing?”

      I made a note to try to take a little luck  with me.

      Back to Texas notes:

      We had a fine conversation with a fellow Texan from Bryan, Jerry, who’s been cruising (his wife’s insistence) for about a dozen years.  He reports that despite what some people might claim, the cruise industry really has helped to spur tremendous economic growth around the Caribbean.

      When the cruise stop at Honduras opened up, his wife (a retired school teacher) would bring paper and pens & pencils to the local Honduran school folks.  A few boxes each trip.  People-to-people humanitarian aid; from the heart.  The kind of stuff government don’t seem to be able to figure out.

      Or, when they do, there’s always a damn 98% handling charge.  Sometimes it’s hidden by inflation, but that game hits the knee of the curve and it’s no Laffer matter.

      Then there’s the other question about “techno conquest”:  Is progress having a smartphone, which in turn means you have to work to support the phone instead of just going fishing, knocking a few coconuts, and kicking it?  They didn’t get to vote on that.

      About mid-morning E & I wandered into a Trivial Pursuit tournament where we had our you-know-whats handed to us by a group called the Cal-Tex Team.  I’d argue that four people against two wasn’t a fare match-up from the start.

      Our lack of exposure to popular culture (if that’s what watching TV shows like Friends can be considered) worked against us.  I mean seriously, is knowing that Lisa Something was the female star of the show… I’ve been testing that piece of the great puzzle of Life trying to figure out what knowing that will do to improve my lot.

      Elaine’s not going to learn anything about fitness, exercise, clothing, makeup or being glamorous from such blocks of Life-minus-time expenditures.  I’m not going to learn intermediate aerobatics, fine points of falling trees, or how to use a cut-off tool more smoothly on the metal lathe, either.

      Life has a currency:  Time.

      Like luck, you only get so much of it.  And it’s what you buy with the currency called “time” that matters when the move to underground housing comes along.

      Internet at Sea, II

      If you’re wondering how you missed Internet at Sea, I, it’s because you missed some of the fine print in Monday’s report.

      Over on the comments side, there was one from a fellow who said (in so many words) that “If George can effectively work from the high seas, then I might take a cruise after all…

      The simple rules of making it work:

      Speeds are fastest when people are off the ship.  Slowest speeds come around 7 AM when everyone gets up to post of FB or to check email from back home.  My response time when I post the Coping section (around 6 AM Central) is pretty good.

      By the time we get to the 8 AM posting time for the news and press release festival, however, everyone is uploading encyclopedias and trying to get Amazon to stream.  Forget that.

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      A Month-End Decline?

      (Somewhere off Cozumel, Mexico)  Market direction changes slowly.

      Not a particularly brilliant first thought of the day after scanning half a zillion news sources, but it’s generally true.

      Even though futures were down a tad when I looked earlier (-40 on the Dow) and the price of gold was weakening to under the $1,200 mark, none of that is particularly bothersome.  Most of the reason is the Swiss franc is down because there’s light at the end of the Greek debt tunnel – at least that’s the idea over here.

      With a tentative Greek bailout plan taking shape, Janet Yellen’s appearance in Washington to answer questions about possible Fed rate increase dates is expected to draw lots of attention. 10 AM (Eastern) so look for all kinds of punditry around that.  Not that ijt will matter, but sometimes I think financial writers get p;aid by the word, not by the idea or interpretation.

      There’s really not much of substance until Thursday when we will get the long-awaited (and did I mention late?) consumer price data.  But in keeping with the “paid by the word” notion…

      The couple of regional Fed reports out today are unlikely to convince anyone much of anything, but we will be  putting up our usual two-parter tomorrow morning (no telling how long it will be delayed due to wireless at sea issues) when the Case-Shiller Housing data comes in,.  That is a key number to watch.

      Wednesday, Fedhead Janet speaks again, but by then we should be swimming in interpretations.  Sometimes, it’s like testimony from a Fed Boss is a kind of Public Relations Dance.  An  idea about raising rates will likely be mentioned (as an in passing remark) tomorrow.  Then, depending on how the financial channel clamor around it, the meaning of what she meant will be massaged around the next day.

      Then comes the Big Day, Thursday morning, when we find out what the consumer prices have been.  In keeping with our longer-term views, however, it’s really very simple:  Food prices and rent have not been going down much, if any.  Energy prices are bouncing around what could turn into an intermediate low, and whatever is left is what goes into consumer discretionary.

      That leaves a ton of room for interpretation.  Even with energy prices being weak, for example, I can still see how an exceptionally cold winter where some people will use twice as much energy as usual, might not be fully captured.

      This is a fine area of distortion in price figures to think about:

      If you usually put 500 gallons of oil in your home furnace to cover a winter at $4 a gallon, and this year you need to put in 1,000 gallons at $3.00, how would you report that?

      An economist which is “Obama friendly” and singing the latest chorus of “Good Times are Just Ahead, Brother…” will inside that prices have fallen 25%.

      Nice try.

      As a practical matter, however, I would snap up the 500-gallon bill at $4-bucks a gallon ($2,000 annual heating cost) rather than the $3,000 annual heating cost.

      Not to turn this morning into a “misleading statistics 101” class, but depending on who is writing the narrative (which used to be simply a story) really does have the upper hand.

      Since Global Warming is (bad pun alert!) such a hot ticket in Washington, here lately, we have to start wondering if the home energy heating bills reflect a “standard winter” or the actual (ankle-grabbing) experience?  Especially if you visit www.globalchange.gov.

      I mean, let’s face it:  Depending on how seriously you take Global Warming you could argue that the amount of oil to use in pricing really oughta be down around 490-gallon, just because it’s data and there is not U.S.

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      Coping: With a Cruising Vacation

      (Somewhere off Cozumel, MX)  As promised, this morning’s report is coming via a shipboard internet connection as we attempt to relax, although the truth is, that is one of the few things in life I’ve never really gotten the hang of.

      There are a couple of things we have learned, so far:

      1.  People don’t really “dress up” for cruising anymore.  Elaine, who’s been on far many cruises than me over the course of her lifetime, has seen the attire worn shipboard through a whole cycle.

      Back in the early days of cruising, there was a certain minimum expectation about clothing:  Tie at dinner, and the most famous and glamorous were invited to sit at the Captain’s Table.

      That doesn’t seem to be the case, nowadays.

      The Captain is a very businesslike fellow and though there has been a photo-op with him, the number of people I saw wearing jackets was nearly zero.  I felt like the odd man out.  Thankfully, I didn’t wear a tie.

      But even at the most upscale restaurant on the ship, I was severely over-dressed, as was Elaine.  Live and learn, I suppose.

      2.  The main reason to be early at the port of embarkation is to get a seat.  The actual door-opening to board was about noon for a 4 P.M. departure.  Since this was a capacity cruise (2,300+ people) the seats in the waiting area at the port began to fill up quickly.

      To kill time, we sat around reading or, as Elaine likes the upper reaches of the smartphone games, that was a way to get to level 1,500-something of a game and kill an hour and 20-minutes.

      3.  Buying a “any restaurant you want” was a smart choice.  Not that the food in the ships always-open buffet is a bad deal, but the optional other restaurants on the ship are much nicer than 1,000 of your friends being lined up for the carving station at the buffet; that kind of thing.

      On the other hand, the break-even point for booze and the unlimited drink package is around 6-7 drinks per day, per person, when you run out the numbers.

      Other thank being hard on the body, we didn’t do that and I think it’s been a good (at least cheaper) choice.

      Internet connectivity shipboard is fair, not particularly fast.

      What they don’t tell you in advance is how to set your email client to download headers only.

      Once you do that, net download speeds become acceptable.  On the other hand, downloading big email attachments can be a time and money consuming pursuit.

      They aren’t kidding, though, when they advise before hand that the definition of “high-speed” internet connections on ships is a lot different that internet connections on land.

      Other than Elaine misplacing her guest card (so we both had to get new ones; hers was found not 15-minutes after we got the new ones) the trip has been uneventful.,

      Ship board gaming is almost a mirror image of how trading options works.

      In the stock market’s options arena, I will usually study a position and enter it when I think the time is right.  From here, the price, no matter how patient I am, tends to crater to half what I paid for it.  If I hold on long enough, the value comes back and I make a little bit.  Sometimes.

      Viewed as a graph, this pirce chart looks a little bit like a bit “U” with the right side price often ending just slightly above the left-side entry price.

      Now, on shipboard gaming, my experience is about the mirror of that.

      Sunday, being a sea day, I figured the Lord’s work was to make me rich.  So I went into the casino with a pair of $10-bills.

      In short order, couldn’t have been more than 30-minutes later, I was up to just under $70. Better than a 3:1 return on my initial $20.

      A person with half a brain would have cashed out at this morning.

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      The World’s Oldest Prepper’s Manual

      How old is the earliest advice on prepping?

      We think we’ve traced some fine country wisdom back to Ionian times, and while much longer than our usual report, once you get past all the references to Zeus (plus instructions on where to pee and where not to…) there is actually some interesting folk wisdom to be had.

      So this week, a look into the past as we look at the long history of prepping and making our way in an uncertain world.  Which has been an uncertain place for at least the past 2,000 years and we got the goods to prove it.

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      Collective Noodle-Pushing

      Oh, my.

      It’s getting thick now…

      Thick as a good carbonara over linguini.

      All this talk about deflation which, as we noted previously, was a kind of verboten word prior to the NFL scandal put the word back front and center of public mindset.

      Ever since, it seems, the word has been showing up in all kinds of news stories as expected:

      The Financial Times has an HSBC fellow explaining how deflation in Japan could roll over onto Korea.

      Then a think tank is saying that prices are stable for about half of Japan’s core CPI numbers.

      The Markit Eurozone numbers just out suggest the world won’t end this quarter in Europe, though (chart left).

      Normally, I would be holding up US consumer prices as we talk about incipient deflation in America, but since the Lazy Department doesn’t have its poop in a group, we have to wait until mid next week to receive the Official Narrative from the Obamanistas.

      But it’s clear to the keen observer what the game is:  Global, synchronized monetary inflation at screaming rates, but done through quantitate easings, so the public doesn’t catch on.

      The fact is, the global bankster class is scared spitless that global deflation is here and while it might provide more of our Roaring Twenties ahead, when it ends, there will be violence of the hopefully just financial sort.  (Yes, you could read that as a double-entendre if you wish…but I assure you, I’m not that clever.)

      Say, here’s a story about how scared the EU conquesters are…the only piece not dialed in is the rational for the EUkraine war, but if you think about it…

      Spin to Win

      With the Baltic Dry Index up another 2 this morning to 511, we love reading articles telling us it doesn’t matter.

      But, if this author’s premise were near the mark, either the balance of trade would improve (don’t hold your breath) or the economic recovery is a lie (longer conversation).

      Keeping an Instant War Handy

      We read the trite statements of the obvious now – fully four or five months since we pointed out that the EUkraine battle is merely a skirmish in the Manufacturer’s Resource Wars – about how NATO and Russia are on a collision course.

      Ya’ll get new glasses, or just waking up enough to figure this crap out? 

      Go read the petroleum report (see yesterday’s column for the link, I don’t like doing work twice) about now the Dnieper-Donets Basin in HUGE and Russia now owns the ground above the southern part of it.

      Here:  Take this tumbler and press it up to the doors of the Halls of Power and let’s see if we can hear what is being said…

      Now, let us read from the Book of Ure, Chapter 1990, verse August, line 2:

      Veerily, it was said by the Elder Bush:  there are trials and tribulations being thrust upon these innocents and the demon spawn is slant rig drilling by Evil Empire into the sacred soils of Kuwait.

      And so, be instructed, we must have war to right the wrong, to unslant the drills, and partake of the greater gains for all of us.  Amen.

      And so, the flock, having bidden the advice of the Sage of Hong Kong to be of a sheeply manner, had their eyes bound up tight, so as not to hear the failing money-changers of Europe.

      And so we see in today’s parable of the crippled banker: “ECB: Bankers Saw QE as Only Way to Fight Deflation” evidence of how it is that the Church of the Almighty Demon Dollar must maintain multiple séances.  So as to be able to conjure an instant and (nominally,  “just” war, on demand.

      And it was so.  Amen brother, gimme a hallelujah  and a 10-spot on  S&P in the second. Meet on the circles, part of your hair, being all-knowing power is totally rare. ”

      (Thereafter, it falls into a jumbled mess of speaking in tongues that doesn’t make any sense.

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      Coping: Farm Trends and Going Rural

      Yesterday was spent doing all kinds of things of a rancherly sort.  I’d been out admiring our “south 16 (right) and it was time to go up and talk to my neighbor around how to set his fence for an entrance.  Wants an electric gate.

      To get ready, he’d cleared out some cedar underbrush and  while he was burning some small logs in a well-cleared area, we jumped in his 4X4 and he gave me a tour of his fence work.

      Between his property, his brothers, and parents, there’s a good 3+ miles of fence line, but he’s got most of it cleared either side of the fence back about 8-feet, or so, allowing it to be bush-hogged.

      Then the fence line itself is given a dose of Round-Up and the fence line stays clear.  Strack.

      That’s the way most fencing is done around these parts, cleared, bush-hogged, and poisoned.  Needless to say, my fence lines don’t look so neat, and no, I don’t use Round-Up.

      This spring I’m looking at using something that would be organic..like salt water (fairly strong salt solution) on the theory that it, too, will kill things where applied, but won’t have such disastrous environmental consequences.

      Still his fence lines look amazing.

      But that’s not the story.

      When we got back to the burn site, one of the logs that has been ablaze has decided to roll down the hill, and caught the dry leaves on the surface on fire.

      Two people, one with a rake and one with a tractor had the situation in hand in about 10-minutes time.  The tractor put down an outer perimeter, the rake man pulled dry leaves out from around brush that was left…

      Afterwards, we spent a little time on the “narration” of this, since when his S.O. came home, she would no doubt see the burned patch of about 100-feet, or so, up by the front entrance to the property and start asking questions.

      Controlled burn…that’s what this is….

      And so it was. 

      I made a note of that:  In the future should we ever have a fire jump outside the immediate burn area, I’ll use that “controlled burn” approach and hope Elaine will believe it, as well.

      Come to think of it, though, that’s not the story, either…

      Figures out from the US Department of Agriculture show that all these homesteading sites that are popping up like fleas on a dog lately, are tilling fertile soil.

      Some new 2014 data on farm sales have been released and here’s what they show:

      The percent of all farms by sales class are:

      * Sales Class $1,000 – $9,999: 50.6%

      * Sales Class $10,000 – $99,999: 29.9%

      * Sales Class $100,000 – $249,999: 7.0%

      * Sales Class $250,000 – $499,999: 4.7%

      * Sales Class $500,000 – $999,999: 4.0%

      * Sales Class $1,000,000 or more: 3.9%

      People are buying up land, something I knew would be coming as we slide down the deflationary skids toward hard times.

      A lot of people don’t see if, yet, but that’s what my models have always predicted – a return to the thinking that was behind one of the most popular books of the last Depression:  Five Acres and Independence: A Handbook for Small Farm Management.

      Since being published during the last really “Hard Times” this book has sold on the order of 3-million copies, and there’s a lot that can be improved upon today.  For one, we don’t have to wait for the Rural Electrification Agency to come through and put up power, since most last has power to it now, at least at one corner or edge of most properties.

      No doubt, a lot of the properties above are bug-out options  that people see a future near for, although in truth, there may be a lot of “squaring up: in there, too.

      Take my neighbor and I:  Behind his place, and mine, is about a 20-acres parcel.   About 150 feet of it runs along the back of his property and 450-feet runs along the back of mine.

      We kicked around buying it, and each taking a piece of it to “square up” our property, but so far the owner hasn’t shown much interest in selling, or has, and just hasn’t mentioned it to us, yet.

      The last asking price we heard was around $75,000 – which pushes out to $3,750 per acre.

      That’s actually not a bad price.  Outrageous, but considering demand locally…

      Land with good road access may go higher:  There have been some pieces of land go for $5,000 an acre, but that would a piece like ours.  Something with a creek on it, some elevation, decent soil, and above all, some standing timber.

      Even though we did a selective cutting in 2004 (which made enough money to buy the tractor and some implements brand new), there’s plenty of wood left.

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      A Shoot-Em Up Ceasefire

      Peace can show up, any old time now in EUkraine.

      As you would expect, with a whole petroleum reserve underground, the fighting is continuing while the parties who stand to benefit in the long-term are talking about the need for the terms of the cease-fire to be imposed.  Each looking at the other.

      So when you read headlines like this one about how Leaders Agree to press forward to Ukraine Ceasefire, have a clothes pin and some Charmin ready.  Because the behavior stinks and the cover about “democracy” sounds like cow chips from the male of the species.

      By comparison, the “You cut, I’ll pick” protocol of the drug trade is highly refined and civilized.

      If you’ll just read the full geology report over here, you’ll understand one of our unconventional tenets of modern economic:

      “If there’s value below ground, there’ll be fighting above ground.”

      Works like a charm to analyze global chaos which turns out to be not so chaotic, after all.

      Whose Side Is He On?

      The story “Obama says world should address ‘grievances’ terrorists exploit” should give you some ideas.  Say WTF?  The main beef of most terrorists if we aren’t sharing their belief system.  Grievances are an excuse, at least in large part.

      Could America give away even more foreign aid than we do?  I mean and not go broke?  And our corporate interests are mostly transitioned to China, so go talk to them about corporate social responsibility.

      I want you to forget about all the arms we sent to al Qaeda affiliates in Syria, how much military materiel was left behind in Iraq, who trained the locals to repair it, and what happened in Benghazi or who tradee how many from Gitmo?

      No, sir, I want you to suspend your memory when your read the news…

      Check out the NY Post’s headline about how Obama is refusing to admit to Muslim terrorists at the summit.

      Lemme see….is it LA gang members who are blowing up stuff in the Middle East and whacking innocents in Paris, Your Excellency?

      I voted for him once…not the second time.  But then, I’m a fool me once kinda guy and I’ll take my cartoons uncensored, thank you.

      Speaking of Assault Rifles, Terror, Etc…

      I trust you have been following the stories about how the administration is trying to ban AR-15 ammo that has been around for years?  Here’s an example of what’s making the rounds.

      The number of law enforcement people shot with such rounds from legit sportsmen?  Zero, last time I checked.

      But don’t let that fact stop the government…the very government that cooked up Fast and Furious/gun walker scam to actually bring such arms to drug cartel henchmen and still hasn’t really laid it all out.  And yes, the Bushies have a lot of explaining to do, as well.

      And while the new AG promises to be even more anti-Second Amendment than Mr. Holder, we can’t help but notice the unconstitutional abuse of privilege being placed on federal firearms dealers whose banks are being told in no uncertain terms that they will be subject to special audit if they supply credit (as in card services) to gun dealers.  This has been the  Obamanista playbook for over a year… 

      Maybe the Hong Kong due was telling us something…

      The Hong Kong Hint

      That reference, in case you missed it, is to the leader of Hong Kong who has told pro-democracy leaders, in so many words to stuff it.  The pertinent quote?

      ““Last year was no easy ride for Hong Kong. Our society was rife with differences and conflicts.

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