George Ure

Welcome back from a really cool weekend.  (Sorry, just trying to be current with the weather mania going about…)

While we are sitting around waiting for markets to open, we have one item on the agenda that, while not life changing,  in an of itself, is nevertheless extraordinarily interesting.

It is a learned report out of the Australian National University that may explain why we have not been having aliens lining up to knock on our doors and save us from ourselves.

They may all be dead.

Gist of the idea?  Well, aliens may not have been able to save themselves, any more than we look like winners in that department yet, ourselves here on Earth.

“The universe is probably filled with habitable planets, so many scientists think it should be teeming with aliens,” said Dr Aditya Chopra, lead author on the paper, which is published in Astrobiology.

The thing is:  It doesn’t seem to be teeming at all. 

The statement from the Australian National University continues this way, and throws in a climate change zinger in the process:

“Life on Earth probably played a leading role in stabilising the planet’s climate,” he said.

Dr Chopra said their theory solved a puzzle.

“The mystery of why we haven’t yet found signs of aliens may have less to do with the likelihood of the origin of life or intelligence and have more to do with the rarity of the rapid emergence of biological regulation of feedback cycles on planetary surfaces,” he said.

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Two-hundred points up, straight ahead.

The big driver this morning could be damn near anything you want it to be:

Oil is back up to almost $31-bucks.

German and Kneeler markets are clawing toward 2 1/2% gains and the French CAC-40 was up almost 3 1/2%.

Even more promising was Asia:  Japan screamed ahead almost 6% (!!!) and the Hang Seng was up almost 3%..  Even the Shanghai market put on some beans.

The major problems have been pushed out to next week, or the week after.  If we rally back to our long term trend line levels, that have been developing since the bottom of the Housing Collapse in 2009, there will be a critical path choice made.

If the market can power-through the overhead trend line (and stay there) then we will take our long-awaited 5th massive wave to the upside as arriving.

But, if the market only rallies to the trend line, and then turns down again…well, we call that a “kiss of death” and the only place to be in that case is hiding under the bed because it will mean seven-years of recovery is toast.

Off in the background, two major pieces are moving around.

For one, there’s the presidential politics.  It’s hard to get excited about an election where the choice could be something as far-fetched as Yet Another Bush against Yet Another Clinton, yet there’s enough “thumbs on the scales” trying to hold to the Old Way in Washington (the seat of the Checkbook Republic) that it could happen.

Still, we won’t get pessimistic about “the fix being in” until we see if the FBI Director still has a job after the Hil investigation is done, and whether the Traitorcans will broker the GOP convention to an insider.

The rally I’m expecting really hinges in many ways on this notion of legitimate change.

One of my daughters called last night to proudly say she was pleased that Bernie Sanders is coming on strong.  But dear-old-dad reminded her that he’s been around Washington a long while – long enough to be part of the problem, as I see it.  Still, she’s hoping and planning on a Sanders sticker.  I went to be praying that it wouldn’t be a Sanders-Clinton ticket…

Still, based on pole data, that could be Trumped with Cruz, but there is too much potential for real change for that to ever occur.  The repeating nightmare was that Washington would embrace a socialist in lieu of even more remote outsiders.

Things are nevertheless entertaining.  The WaPo story about the Trumpster and National Review going at it is good.  And there’s a good bit of waffle/position drift apparent as we catch the daily Limburger.  Seems it’s the conservation “I’m holier than thou” contest.

The other Big Screen event to watch, and it could overshadow the farcical politics   would be a War Distraction.  A note from our defense expert warhammer explains:

Israel Warms to Sunni Powers…

Happy Friday, George!

As Winter Storm Jonas finishes its assault in the southern U.S. and churns up toward the northeastern seaboard, some surprising news is swirling out of the Middle East indicating Israel is cozying up to several Sunni Islam states in response to Iranian sanctions being lifted:

<http://www.foxnews.com/world/2016/01/21/israel-warms-to-sunni-powers-questions-us-palestinian-focus.html?intcmp=hpbt1>

Such news may be surprising to some, but not to those who’ve tracked the Jewish state’s recent open dialog with rational Muslim rulers.

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I’ve been munching through lots of books lately.

Not that I don’t have a Kindle-full, and hundreds of volumes in the library which is spread throughout the house and spills over into my office in the other building.

At the moment, though, I’m taking a break from reading the usual line of journals, economics books, economic histories, and so on.  Not that I need to, but I’ve come to appreciate that exceptional people read out of their field, a good bit.

I just finished a mystery type book by K.J. Janssen, who as it turns out have been by the site a time or three.

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While we wait to see the market open (which won’t be nearly as exciting as yesterday when things were down more than 500-points on the Dow at one point), I happened to be reading through the latest press releases out of the IMF.  This one on Virtual Currencies caught my eye:

Virtual currencies (VCs) and especially their underlying technologies are a potentially important advance for the financial sector that could increase efficiency and financial inclusion, but can also serve as vehicles for money laundering, terrorism financing, and tax evasion. Achieving a balanced regulatory framework that guards against risks without suffocating innovation is a challenge that will require extensive international cooperation, says a new staff paper, “Virtual Currencies and Beyond: Initial Considerations,” released today by the International Monetary Fund (IMF) during the World Economic Forum.

A good bit has been made lately about the limitation of Bitcoin to about 3-transactions per second and being a possible stumbling block and end of the experiment.

But then the inventor appeared.

What IF a new layer were added to Bitcoin that would process financial transactions based on their size?  In other words, if you buy something with a Bitcoin worth the equivalent of $1 dollar, it would process on a server over in, oh, say Connecticut.  But, if the purchase was for $1.01, then that with route to a different server, say one in Hawaii.

In background, each of these servers would move money between themselves, and life would go on.

Right now, it appears the overhead of Bitcoin (processing all transaction as they are) tops out at $6-billion (in dollars) worth of BTCs sloshing about.

But with Ure’s option, slicing up the BTC servers to automatically load-balance by transaction size, might see the increase in capacity massively increased..

Just on whole dollar (or BTCs), the implementation of multiple blockchain processing by transaction size between 1 BTC and 1,000 BTC would add a 1,000-times increase to processing.  Instead of limited at 3-transactions per second, this tiered server approach would allow 3,000 transactions per second. 

Not enough horsepower?  Route at one-half a BTC levels, which doubles capacity, again to 6,000 transactions per second.  At one USD per transaction, what is that?  $36-trillion of capacity?

Of course, there would be overhead and a continuously updated clearing table to deal with, and there would be a fair bit of monkey-motion between servers (and that’s power and cost) so that would tend to limit things.  But, on the flipside, you look at going down to Satoshi-level clearing and now you multiply the clearing capability by one million times!

Pretty soon, derivatives could go BTC.

This might not be practical, but I was sitting here looking at the IMF paper and thinking about the Hearn comments on the speed bump and with one architectural change in software design, the whole process could be “opened up” – or so it seems to an old software geek like me.

If you want to run this up the flagpole with the BTC folks, that’d be fine.  My consulting fee is two BTCs….I’ll send the wallet details when the payment for this rather elegant solution is ready.

Or, more likely, I’m  failing to properly comprehend the problem.

Meantime, Back in Dollars

The Dow futures are down about 80 (or were when I looked).  Our Peoplenomics readers have been in cash or short for weeks.

And the most exciting thing to look forward to today is waiting to see if the market will go all the way down to the major support around 1,740-1,760 before we get the next rally.

Once the coming rally gets organized, the critical level will be the bottom of the trend line, and if turned back there, we should all be starting to attend religious services.  You’ll want to pray that the modern equivalent of the Roaring Twenties hangs on another couple of years – which it should.

Still, fifth wave failures are not terribly uncommon, and if it comes, we will be able to run out some numbers on “How far is down?”

It’s like the bass singer who used to be on the Lawrence Welk Show…”Howe low can you go?”  [I haven’t seen a deep-voice play on South Park or the Symptoms (sic), or a more contemporary analog would have been cited.)

But speaking of missed comedy, we do have the Phlly Fed Business Outlook to deal with:

“Manufacturing conditions in the region contracted modestly this month, according to firms responding to the January Manufacturing Business Outlook Survey. The indicator for general activity remained negative this month; however, it rebounded from a lower reading in December.

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When the markets go down 500-points in a day, you can sort of get the feeling that all is not well.

The natural thing to do – when they rally and cut the decline in half (this is all in a single day, mind you) is to rationalize “Gee, that wasn’t so bad, was it?”

The sad truth is that it is very bad – and a drop below the 1,740 level on the S&P is  when we should all be under the bed sniffing the dust bunnies.

The reason is the vicious cycle problem.  When things begin to go great, there is a “pile-on” effect that economists call the virtuous cycle.  But when something begins to go wrong, as it is right now, we have to look at all the data and begin worrying in all earnestness about flipping from “virtuous” into “Vicious.”

A recent-experience example was the Housing Bubble.  It began as an attempt by the government to kick-start our way out of the first starting point for the Greater Depression.  That window happened in 2001 and was actioned  by Osama bin Laden, who we seriously believe had the cooperation of at least some governmental elements, including quite possibly some shadow government types who have never been brought to justice.

Depressions are power progress-killers.  And, if I were a member of a shadow government, I would have to admit that the events of 9/11 actually did some good.

The major good?

By fall of 2001, it was apparent that the tech bubble was finished.  Depending on which estimates would believe, the total cost of the Tech Wreck was on the order of $5-trillion dollars, although some accounts mention half this amount.

9/11 did several key things, in terms of pulling economic levers.

First, it took the blame which should have been placed on the backs of greedy venture capital types and shifted it onto the persona of a “terrorist.”

Secondly, it gave the United States a “cause” to immediately wage a war…any war…and that took a lot of job-age males and kept them out of the labor force.

Third, it set up a massive new industry (the security state) which has taken on a life of its own.  Well past the hiring of what is now estimated at 56,000+ direct jobs, but when we use the economic multiplier effect (all these people eat, for example, and some fraction will use daycare) an easy argument could be made that TSA alone is responsible for 134,000 jobs – and has been, come this fall, for 15-years.

Four, it provided for the evolution of the security state and Gen-4 warfare.  Battlefield robotics are coming.  There’s a million square feet up at Provo for sampling your data.  And we even learned recently that the CIA spied on members of the U.S. Congress in the process of surveilling foreign political visitors.

Five, it continued to “de-focus” public attention from the definite replay elements of the previous economic collapse.  You will recall that in the depths of the Great Depression, the government embarked on several wide-spread job creation programs.  The most notable were the Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC).

I found it extremely interesting that the country laid the groundwork for massive civilian employment of young people with the Volunteers In Service To America (VISTA) program.  The first batch of 20 VISTA workers were turned out in 1965.

That program was something the country “got right.”  It had been a kind of article of faith that this Kondratieff fellow might be right about economic super-cycles, and an ideal 56-year harmonic off the Great Depression collapse was seen in 1987.

Good news on this front:  The Fed managed to “paper-it-over.”

The bad news was that it was only a first-blush encounter with widespread collapse.  It was a state-change event, as well.  You will remember that long-term interest rates had peaked some six years earlier.

Despite the interventions, the systemic problems persisted and a major period of decline ensued in 1990-1991.  The U.S. did what it does best – and off to war we went on this pretext of that.

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Not that this is unexpected:  The U.S. markets are set to rally a couple of hundred Dow points this morning after stopping smack at long term trend lines on Friday.

I don’t know about you, but when I read ads popping up around the net like “Stock Market to Collapse in 2016!” it usually means it’s a good time to sit on your wallet.  Someone is going to try to sell you something.

Independent analysis?  Different deal.

How long have we been talking about 2017?  A very long time, for sure.

A lot, admittedly, will depend on holding the line about here….here being the 2-standard deviation trend channel.  ( ?_x? to some.)

Still, let’s count them up:  The price of oil is up.  The price of gold is down.  And when comes down to it, perhaps much of what has been this (so far fourth wave) decline has been sanctions coming off Iran and their oil hitting the market.

What people forget, though, is that Russia and Iran are sort of tied-at-the-hip.  Iran is getting  (shopping list ready?)  More nuke plants, parts for Bushir, support for the Guards in the way of military hardware and so forth.

The Tehran mullahs are getting a piece of the oil action out of their country – but with the understanding that they won’t hammer the market too badly because Russia needs petro revenue as well.

The Saudis sure don’t want things to go too badly, since they are trying to slice up Aramco – and that means they will likely not be first to lower prices, at least too much.

As always, the market is in the process of “price discovery” and the folks getting whip-sawed in all this will be the last-minute arrivals at the party who invest in lesser newsletters than our own Peoplenomics.com offering and then wonder why “capital preservation” isn’t working out…

So this is how the week begins:

As you were lollygagging last night, Australia opened up almost 9-10ths of a percent.

That was followed with the Hang Send up 2% and the Shanghai market was up nearly 3 and a quarter.

And that’s why Europe (Eurabia) today is up across the board better than 2%.  The no-brainer trade of the day would be Australia which is lagging the Rest of World and should be good for a 1% rally, although hard to make money on that for civilians.

Meanwhile, oil is up over $2-bucks on the West Texas contract, a bit lower in Eurabia for Brent, but still, consider the geopolitics and you’ll see no one makes real money from a price war on oil.

This is not to say the bottom is in – but it could be.  And with it, the clouds will part.  Industry that depends on oil (diesel, plastics and that whole evolutionary branch) will be able to profit without real growth for a year to 18-months.  That’s because, as my consigliore reminded me Monday, while it’s true that full dispersion takes 65-months, or so, the bulk of an oil change is within 18-months.

Since this has been largely a Big Oil event, so far, and there’s no sign of a major too big to fail candidate, yet, we should see stocks touted as terribly over-sold (which they are) and the odds of a fifth wave go high once again.

So the short version of this (more in Coping in a minute) is that you have been warned, but the larger  question is what – if anything – are you going to do about it?

The average person will do nothing – which is a sure-fire recipe to remain “average.”  The exceptional person will hear the call to thrift and will be managing affairs so when the depths of the Great World Depression show up, you’ll be among the few who has structured in advance for The New Way of being.

That said, there’s no assurance a fifth wave will continue.  We need to see the S&P set a new record here shortly (within 6-7 months).    The key level to watch will be 2,135 on the S&P.

For now, I’ll be going back to the larger questions of life:  Why did Elaine buy organic coconut/almond milk?  And why is our editor, Zeus-the-Cat, left-pawed?

The other questions – like “Will China roll out more stimulus?” – are really givens over time.

The Horror of Hil Films

Seems to be a good business model in making a film that slams Hillary Clinton.  After 13-Hours out came a C.I.A. denial that the film is a documentary in any sense.  But hold on a minute, here’s the author firing back at the Agency…

And if that’s not enough, here’s the NY Times on a film about Anthony “social flash” Weiner and the woes his wife, key Hil advisor Huma, having to cope.

We notice that other candidates aren’t having as much box office play.   In our efforts to help Hollywood, might we offer…

• A Romanov (tsarist novel) story starring Bernie Sanders?  (America’s rich can’t believe his tax plan, either.)
• An episode or three of Suits  with Ted Cruz as a new senior partner?
• Or a remake of Towering Inferno with D.

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As I have been saying, to anyone who would listen, my preferred outlook is that we don’t have our economic collapse until we get out into the Q2-Q4 2017 area.

By then, any of the optimism about a new President and ways to keep the country moving forward will likely have worn off.

By then, it should be apparent that our GDP is not rising faster than the net compound interest on the Federal Debt which is around $19-trillion.  $18.924 trillion, as of last Thursday…

By then, the effects of the huge influx of illegal aliens will be felt.

By then, the lack of breakthrough technologies will be apparent.  There next “gotta have it” tech will be a place away from other humans…

By then, we will begin seeing more robots coming online to replace human labor.  A good reality check is the 10 scariest robots in the world over here.

By then, we should see several more applications, along the lines of Tinder and Candy Crush, that are already changing the way we think. 

By then, someone besides Ures truly will be pointing out that a growing fraction of humanity is going “off planet” for at least part of the day to work in the Virtual Realms.

So much so, that by then, we should have an app for everything.

The Pocket Version of UrbanSurvival

It goes something like this:

There are seven major domains of life and we can “size-up” the coming world, in a nutshell, this way:

Housing:  Getting smaller.  With commutes already gone to hell and work in Virtual Realms the number of companies with work-at-home (in the Realms) will be higher.

Food: Campbell Soup has announced plans to begin labeling U.S. goods for GMO content.  This is already in place in most other countries.  In 2017 we may pass the peak of corporate farming and begin the return to local…

Healthcare:  Some portions of the ACA will have been changed – there are too many people who can’t afford it.  Expect alternative (not-for-profit) healthcare like Samaritan Ministries to have a boom because they are not trying to make money off illness as much.

Transportation:  New car sales will depend on the phrase “driverless- ready” or “highway mode” as initial driverless platforms come along.  We’re planning to drive our old Lexus into the ground (5-10 more years) and save up for a compact driverless.

Communications:  The cost of communications services should rise slower than most expenses but advertising density will likely increase and – if we have any kind of terror attack in the U.S. with WMD’s, expect a link to either torrent or other non-traditional web uses – and this could begin the internet licensing movement.

Environment: The debate over “global warming” will intensify.  Look for atmospheric heaters to come back online to move things around.  But decreasing solar output will likely continue to moderate worst-case alarmism.

Finance:  Your standard of living will be down another 10% from where it is now.  Smaller footprints for all consumer goods and perhaps even standardization of clothing will be arriving.  With disposable spending down, there will be fewer things to buy.  One or two per category…with 3rd and 4th-place producers folding due to the dominance of online retailers.

Then we have our “action words” that describe what we physically do in life:

Work:  By 2017, the low in unemployment should be passed and rates heading up, again.  Agriculture will experience the front edge of major drought – as we move back toward a normal el Nino position.

Workflow improvements will continue but with most healthcare and education already rolling or rolled into ERP programs, the flurry of high-paying software implementations will have peaked.

Play:  By 2017 we should see a major new “play” evolve based on VR helmet or glasses technologies.  This will be “played” in a special, but small, space and will be immersive.  The next evolution of games will be getting rid of avatars and replacing them with players who will be “green-screened” into other player’s displays.

Sex:  V.R.

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Although markets in the U.S. are closed today, it is important to keep an eye on what’s going on elsewhere because of the precarious nature of U.S. markets.

For those unfamiliar with our analysis on the subscriber side of things here, we offer a unique way of looking at both global and domestic markets.

The Global Aggregate Index is a measure of how a number of key markets have performed – as an aggregate (add ‘em up and average) – since 1999.

This Index heralds the rise (and possible pending fall) of global corporatism.

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There is a reason today is a Holiday:  America has secrets as dirty as the gas chambers of Nazi Germany,  the Bataan Death March, or the genocides of Cambodia.

The difference is?  We don’t like to talk about our dirty secrets.

It’s important we do; we can lie to other people, but not to ourselves.

Saturday, a group of your fellow humans got together in Slocum, Texas, to commemorate a 20th century race war in southern Anderson and northern Houston counties.  White people went on a rampage killing black people.  The year was 1910.

The commemorative group was not welcomed.  Residents of Slocum put out Confederate flags, but the gathering went on.  A historian, or two, an author who studied the event, even  a film producer considering a project.  But no mainstream media.  A week ago the local paper announced Saturday’s placement of an historical marker.

The Saturday gathering commemorated The Slocum Massacre.

The what?

Most folks have never heard of the event. In fact, if you go looking for it on Wikipedia, it doesn’t even have its own entry. 

That’s how America’s dirty secrets work:  America doesn’t like to talk about its ugly side.

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Don’t kid yourself:  The Global Financial Markets on Friday were on the brink of collapse. But, if this were football, the ball would be first and goal on the one-yard line. This morning we roll out the two play books which will be deciding next week.

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We got our predicted Options Rally Thursday.  So this morning, standby for a thorough ass-kicking that may send the market down 300 –or more – points before the week is out.

We have a few government figures (in a sec) but the main concept to be noodling on here is a familiar one for our Peoplenomics.com subscribers: 

Consumer Super-Saturation.

Economic bubbles don’t appear overnight.  A big one takes years to grow.

They are large, oafish, easy-to-spot, although most often they are  hidden-in-plain-sight.

Super-saturation has been in view since about 1975-1980, when some architects I had interviewed up in Seattle told me of the huge boom to come in building and renting Storage Units.

What do people put in these ridiculous boxes?  Well, things they have too much of.  Hoarding is epidemic!

Why someone would buy too much, and then instead of scrapping or selling-off excess, choose to instead rent expensive square footage is totally beyond me.

But it’s a symptom of a society that is totally overwhelmed with its materialist side and not thinking clearly.

That’s when we began to move toward super-saturation.

Here lately, a sign of the super-saturation correcting has become available for all to see as well; but few except for Urbansurvival/Peoplenomics readers can see through the fluoridated fog of modern overloaded life:

One symptom is the huge increase in “abandoned storage unit” auctions.  This is now on televisions and if you follow a few collectible markets on eBay, you’ll see such “auctioned property” now hitting the auctions.  How much more in-the-face does it get?

Another indication is the chart at the top of this page:  The home ownership rate is coming down, down, down.  In 2004, about 69% of US persons lived in owned homes.  As of 2014, that was down to 63.5 percent, and I reckon it hasn’t picked up much.

While it is true that homes have been selling well in San Francisco, Seattle, and a few other tech-heavy hotspots, there are puss pockets on the horizon, like suburban Houston, for one.  There, the oil collapse is a killer. Under $30 in Europe now and likely West Texas will follow.

I figure the Aramco IPO is to fund a Saudi flip out of high water-cut reserve to spin up cash to buy more American properties…but that’s just me.

Let’s get back to Housing:  Use an imaginary number for households in the US:  I could pull 123.2 million out of the air.  That means the number of owner-occupied homes might be down (from 2004) as much as 5.54-million.  The homes are still there – as rentals.

What is going on with these households?  Why rent?  We have some notes in this morning’s Coping section, but it’s really a complicated stew.

1.  People are downsizing.  Retirement plans are blowing up.

2.  Young people can’t afford a home AND having student loan payments.

3.  People are virtual-living – Second Life, Candy Crush, apps, you name it.

4.  Public transit is growing as people cut spending on cars, discover Lyft and Uber, and just can’t afford anything else.  We are 45-days from 2015 data, but in 2014 the American Public Transit Association reported:

On March 10, 2014 the American Public Transportation Association (APTA) reported that public transportation use in the United States in 2013 rose to 10.7 billion trips – the highest number in 57 years.  APTA and its predecessor organizations have collected ridership information since 1917. The highest U.S.

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