George Ure

(Amarillo, TX)  If you remember yesterday’s column (that’s two of us then) I had mentioned that we were planning to stop at Sewell Lexus in Ft. Worth to have them figure out why the (damn) Check Engine Light (CEL) came on the day before our trip.

This is a marvelous opportunity, if you’re a shade-tree mechanic, to brush up on your troubleshooting skills.  The symptoms?

• Check engine light: on
• Transmission:  Not downshifting properly at 5 MPH or above, into 1st gear
• OBD II codes indicate from ABS issues
• George has been studying “luck” and short deviations from standard expectations around the normal/Gaussian distribution all week.

We arrive, more or less promptly 15-minutes later than planned but good to the service rep’s word, we were there for about three-minutes before the paperwork was done and we were whisked into our choice of waiting rooms. 

I don’t know if you’ve spent much time around a good Lexus dealership, but a word about the waiting rooms is in order since there are two of them.  One has a television in it (hence it’s noisy) while the other one is more like a quiet study.  Overstuffed leather chairs and no one talking above a whisper because when someone wasn’t talking to a service rep, they were reading.

So our first socioeconomic observation of the trip was made here:  The people who buy upscale cars spend a lot of time reading and no, Fox News didn’t seem to be their major media source.  These were people with Kindles and honest-to-God books.  If you don’t drive an upscale car (OK, ours is a 2005, bought as a lease-return years back) consider that reading and learning and getting smart may have something to do with how much money you make.

Just a thought.

So we were there for about 30-minutes and our service rep comes over smiling.  She lays a small plastic plug. 

“This is your problem,” she announced.  “This is a wiring plug in your transmission circuit.”

I picked up the part to inspect it not knowing if this was a part from a moon lander, or what.

“Has some funny marks on it…”  I stumbled, not quite sure what to make of it.

“Those are teeth marks from a small animal…it will take about two hours to fix…”

At this, we decided to taken them up on the free loaner car…found a wonderful lunch…and came back to await the news.

As luck would have it, our mechanic was coming back from the test drive as we returned. 

The car was running perfectly again, and he explained that he had fixed all the wiring issues (new plugs and so forth) and that it would be another 20-minutes, or so, as he dropped the glove compartment and got to the rat’s apparent hang-out…having weaseled in through the ventilation system

Our service rep was kind enough to take a picture of the rat and the cabin air filter which had been turned into its home.

About here, you should be thinking “What are the odds?”

Well, turns out that we are not the first people to have this problem.  Seems in this part of the world, when the weather turns cold, fair number of car owners discover that small furry critters take to moving in.

While we were hanging around, another service rep explained that in just about ALL cars, anymore, the insulation used on wiring is a plastic derived from what?  Soy.  So while oil gets crushed and all, apparently a lot of insulation gets made with other by-products.

We then discussed non-soy insulation (Teflon, for example) but seems like every option has costs and benefits.  It was really an informative conversation…

So there we had it:  Our old Lexus was once again running like a top and we were back on the road by about 1:40 in the afternoon.

Militarizing Texas

Do you remember the Clint Eastwood movie, The Gauntlet?  In it, Eastwood braves a hail of bullets in an old bus to deliver some criminal to testify at a trial.  Mostly, it was classic Eastwood shoot ‘em-up, but the point of reference is a road lined with cops.

If you are ever (foolishly) inclined to drive from the Dallas area up to Amarillo on Texas 81/US 287 don’t even think about speeding.

We counted no less than 20 police cruisers, SUV’s, Chargers, and Pickups from an assortment of Texas’ finest (TSP) as well as small town police and small-county sheriffs.  We kept an eye open for cavity searches at roadside and didn’t see any, so that was a relief.

Since the only laws I’ve broken since one speeding ticket in a VW as a youth (half a century back, though) involve English and punctuation, we ran the gauntlet fine but holy smokes!  There may be a decline in some of the drought area ag ventures, but law enforcement has been expanding like there is no tomorrow.

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About here, in came an email from my buddy Jeff down in Palestine, announcing that our local sheriff’s office now has an anti-personnel vehicle…

I got the Herald Press today and on the front cover is a big article where the Sheriff’s Office just acquired a “free” MRAP or Mine Resistant Ambush Protected vehicle. I tried to find the article on the website but it is not there yet.

Yesterday I got my new Backwoods Home Magazine in and they spoke directly to this trend of militarization of local police.

Makes you wonder. Here is the article in full

I’m not sure what the purpose of giving an MRAP to our local police has to do with the crime rate.  It would be a lot more productive to just visit local dentists and find out who’s coming in for meth-induced dental problems, know what I mean?

Besides, the closest thing to an IED (improvised explosive device) is the IED which are occasionally used around tax time, since those are “Improved Expense Deductions.”  Hardly the thing to be committing vehicular budgetcide over, but to each their own.

I’m not getting too worked up over it, though.  Eventually, a rat will find its way to the soy-based wiring insulation and that will be that.

Letters We Like to Get

Remember our discussion about Homeschooling for College Credit?  We got a nice note from the author…..

George,

Thanks for the shout out in your blog!  For folks with the DIY gene, homeschooling offers a fantastic opportunity to customize your child’s schooling.  Of course people homeschool for a number of reasons, but as our sons reached high school age, I worried a lot about being able to adequately guide them through the maze of college entrance requirements.  I’ll spare you the long story that led to my stumbling on the “work-arounds” I found, but they were not new.  In fact, there are MANY tried and true work-arounds that decrease both time and cost of traditional college;  most importantly, these do not require you earn a degree outside traditional college walls.  Of course, unless no college helps you find ways to spend less money or time on campus!  Anyway, as a homeschooling family, we found that these work-arounds were really just low hanging fruit for homeschool families already customizing their child’s curriculum.  Our oldest graduated high school with 33 college credits, and our other 3 are on track to do the same.  I’m not really a writer, I’m just accidently an author, so I sincerely appreciate you helping share the information contained in Homeschooling for College Credit.

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I have to admit our Trading Model (over on the Peoplenomics side of things) has been hard to believe.  All through this broo-hah over the Ukraine situation, the Model has remained firmly bullish.  And, amazingly, the S&P hit 1,876.53 yesterday, putting in yet-another high.

What the Model is telling us is that the Bernanke-turned-Yellen Fed is closely watching their computer models, just as we watch our own.

At the core of it is rumored to be something called the DSGE which has a Wiki entry more articulate than me at this hour:

Dynamic stochastic general equilibrium modeling (abbreviated DSGE or sometimes SDGE or DGE) is a branch of applied general equilibrium theory that is influential in contemporary macroeconomics. The DSGE methodology attempts to explain aggregate economic phenomena, such as economic growth, business cycles, and the effects of monetary and fiscal policy, on the basis of macroeconomic models derived from microeconomic principles.

Sounds like the financial version of WOPR, doesn’t it?

I’d tell you this is a picture of how it works, but not quite.

You see, this is a famous drawing of how something called “Reductionism” may be envisioned?   At its core in an insight into how ‘intelligent thinking’ works.

It’s all about how people “class” their observations.

It starts off with noticing that some animals – like snakes – have no legs.  Yet other animals do.  And some animals have two legs, and some of these (about 7-billion, plus or minus a birth control pill) are humans.

And we all pretty much “work the same” in terms of underlying “software.”

Of course, how your software is programmed varies widely.  Some parents program jihad, while others program crusades.  Language limits as do passed on beliefs.  The number of people who actually self-program (tearing everything down and rebuilding) is maybe 3-5%.  Everyone else gets to just run with onboard code. Freakin EPROM society. 

The “E” being electronic media which can do limited rewrites which is why advertising exists.

Which has what to do with the market’s new highs?  Oh, that….

Well, you can look at the DSGE code, rumored to be used by the Fed and other macroeconomic econometricians (pretty good for one cuppa coffee, huh?) and they can – over time – load in enough supporting data tables, that the DSGE can do a pretty good job of predictive economics.  So much so, that one might be tempted to believe that there is nothing between the market and moon.

But, of course, there is.

The first major problem is what happens when interest rates turn.

Remember how the DSGE likely (may) think the markets work:  A 1% interest rate implies that a $1 dollar dividend should give a $100 stock price.  But suppose that the prevailing interest rate begins to climb and goes to 2%.  What then?

In that scenario, the $1 dollar stock dividend now only justifies a $50 stock price, since bonds and stocks are always dueling over who offers the best returns for investors.

When the interest rate climbs to 5% (which is around normal over the very long term) the same $1 dividend-paying stock is whacked down to a $20 proposition.

Key lesson here:  The decline of the market (to maybe as little as one/fifth of its present price) needs only a major interest rate hike to “make it real.”

And that’s why I want you to go over to the long term bond chart and watch it like a hawk because as goes interest rates, so goes the financial world.

The second point about this morning is that the previous work in DSGE’s has likely been augmented now with “machine learning” such that additional inferences (and levels of precision) may be in the works.

In a 2011 paper, the  Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. have this delightfully revealing paper titled “How Useful are Estimated DSGE Model Forecasts?”  This part of the abstract is key:

“Our finding is the DSGE model analogue of the literature documenting the recent poor performance of macroeconomic forecasts relative to simple naive forecasts since the onset of the Great Moderation. While this finding is broadly consistent with the DSGE model we employ{ie, the model itself implies that under strong monetary policy especially inflation deviations should be unpredictable, a wrong” model may also have the same implication. We therefore argue that forecasting ability  during the Great Moderation is not a good metric to judge the usefulness of model forecasts.”

I suspect the “Great Moderation” refers to the decline of interest rates since the 1980’s – about as tough a forecasting world as you’ll see.  But now, we “get it.”

Now toss in modern machine-learning tools and who’s to say the DSGE can’t become adaptive, and do a better job of calling the economic shot than humans? 

Remember, machine learning of legal proceedings is already predicting outcomes of high court decisions somewhere north of 75% accurate while panels of expert lawyers are running about 66%.  One of those (pard this) “Oh shit, we really are becoming obsolete” moments.

Which delivers us to this morning’s economic ponder:  What IF the Fed and other central banks around the world a) have been sharing DSGE models and b) what if they have applied machine-learning and c) what if the “managed economy” is slowing being smithed into the first  rolling “wheel” by the coders in the back room?

To be sure, there would still be variations in the model (as trading is inherently noisy) but as we see in the market recently, there’s an underlying tendency and that begs the question:  While everyone’s off worried about prepping, World War III, energy shortages to come, and all that, what are the REAL IMPLICATES of someone in the back room coming up with a machine-learning enhanced approach to DSGE that could deliver the Holy Grail of economists?

A managed economy.

You look at the inputs that are possible (on mood-swings) and answer me this:

“If you had access to the kind of mood-swing information that the NSA has, and if you could plug that “mood data” into a super-DSGE, don’t you think a managed economy might become doable?”

It would be the “story of the century” but wouldn’t admission be a public relations nightmare?  Especially if, for example,. the G20 was playing in “synchronized-swimming” fashion?

But it would explain the power of the spy agencies and it would explain why Congress hasn’t whacked off the NSA and CIA (financial) nuts when the NY Times and McClatchy papers run stories about how the CIA [purportedly] spied on Senate staff looking into waterboarding and the like.

“Do you want an economy, or don’t you?” would be the quiet question over a key dinner, or two. “We own the economic outcomes across the board.  Now be a good patriot so we can continue the data feed that lets it all happen…”

Ad hoc data sharing and use for machine learning is a real fact, though not much covered.

It’s an interesting insight, unprovable one way or t’other, but if the news fits, wear it.

Crimea Sakes, What Next?

Meantime, the Crimea (autonomous zone, which sounds like a zone from Star Trek, but again I digress) has voted to join Russia..  Since peeps in the area mostly speak Russia, it’s a “well, duh…” but I’ve been talking sense for weeks and no one cares.

Just remember, we’re on the side with the managed economy…which was, if my feeble is still working, something that was one of the BIG bugaboos of Soviet Communism, but’cha see how everyone trades places in history?  Their managed economy was BAD and we attacked what?  CENTRAL PLANNING!

OMG it’s so Redickingfokulous.

The press meantime, unable to see the mirror keeps parroting Hillary likening Putsy to Hitler. And again (as I look at the wreckage of the ACA) I ask…where have all the mirrors gone?

I must have missed the bill in congress making Central Planning an OK religion now in ‘Merica.  But it worked the other way when we wuz pimpin dah Cold War. 

Who knew?  And even now, who says it?  Cultural programming is, oh, so vital.

Meantime, Back with the FlashGov of Ukraine

All of which gets us to the “club” and who’s in, and who’s out.   Notice this morning that the financial assets of the ousted president of Ukraine have been frozen by the EU.

Of course, they would be idiots for keeping money in EU banks when there are more flexible haunts like some of the Caribbean islands and Hong Kong, but that’s this morning’s war-by-other-means report.

Oh, except to mention the Russia Today report who quit on the air.  The Daily Beast summary is a good read.

Flip-side action:  Russia is saying (through friendly Xinhua) that Ukraine membership in NATO is impossible.  Oh?  Watch closely then, now that the West has discovered a push-back tool.

This about guarantees that with the Western loan guarantees, NATO membership will be a one-page application with a rubber stamp ready and NATO commanders ready to roll.  Just not yet is all…

Overall,  we are where we were when the whole thing began:  The EU wants Ukraine not just for its domestic resources, but to control pipelines from Russia and the like.  Russia would just as soon die (in multiple megaton flashes) than be invaded by Europe again and/or lose their warm water port.

Putin as a choice:  Throw in with the managed global economy/ new world order, or go it alone or with China and the BRICs and wait for the West to implode when the economic system goes out of model parameters.

Trouble is, he doesn’t know what those parameters are because Snowden can only tell him so much and how the models run…no telling.

So we put the whole thing on simmer for a couple of more weeks while Ukraine becomes NATO and the Russians move things along in background, beefing in Crimea, and we sit back to watch the Dow follow the other indices to new highs shortly.

Then all the generals and others who are well-connected, in background, can load up on shorts and we will have another crisis (a month or two), billions more pocketed, and so the world turns.

Human progress is thus the replacement of clubs and sticks with nukes and software.  Not sure if that’s much to be proud of, but it is what it is.

Strategic Stockpiles

Meantime, our framing of present history as the “Manufacturer’s Resource Wars” continues with this addendum from our Winnipeg news analyst:

Dear Mr. Ure,

Titanium dioxide appears to have many uses and the BBC reports of Americans who have been convicted of selling production methods to the Chinese government-owned Pangang Group.

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Earlier this week, I was telling you about my research into the “winds of luck.” 

Which picked up to a gentle breeze on Wednesday as two things happened:  A reader sent me a note to be extra careful on our trip as she had bad vibes about us flying out west.

No worries there…this is a driving trip.

But here the story takes a turn.  Yesterday on my way up to Tyler, Texas, do take care of last minute banking details (it takes money to go to a casino, right?) what happened?  The “check engine light” came on.

So I did the usual…water, oil, tranny fluid, brake levels…and everything was fine.

My next stop was an AutoZone store – which has a dandy service if you haven’t used it.  You go in, and free, they will hook up a computer to your car or truck and tell you what the OBD II (onboard diagnostics, level 2) computer is saying.  In my case, it as a couple of ABS sensors.

While we’re still planning to continue our trip (the car is drivable) we will be stopping for a couple of hours at the Lexus store (Sewell) up in Ft. Worth where they’ll have the car up on a rack and fix whatever it is…putting a 2-3hour hole in our plans.

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That’s OK, however.  We’ll simply find a comfortable place to hang out, hook up computers and we’re good for however long it takes.

But this gets me to the point of this morning’s comment on life.

Once upon a time, when a person went on a trip, they packed clothes, a handful of postcards (blank) and a pen.  That was it.  If you wanted to keep in touch with the people back home, you’d fill out a post card and in two or three days it would land, thus informing whoever of whatever and that was ‘keeping in touch.’

Nowadays, however, two things have dramatically changed our travel.  Medicine and electronics.

The medicine is no big deal.  There’s four pills for me, a fifth in case of a gout attack, and that’s it.  Except that Elaine and I both do a few supplements, so that by the time we add up the pill bottle its about 15 in all.  Once you get over 60, read the research on vitamin C and lysine, and on things like L-arginine, you’ll become a believer. 

Oh, sure, you can count out the pills for each day into one of those 7-day pill holders, which is how long this adventure should last, BUT that takes time so it’s easier to toss em all in a case of their own and off we go.

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Now to the point.  Electronics.  This is a bigger deal than our clothing, for cryin out loud!

It struck me this morning that everything else on this trip is shrinking in significance compared to the “electronics bay” we’ve loaded for the trip.   Here’s the list:

• George’s cell phone
• George’s cell phone charger
• Elaine’s cell
• Elaine’s charger
• Mobile power cords
• George’s computer
• Wireless mouse and keyboard
• Gambling software for this luck theory test
• Streets and Trips 2013 update
• Charts data transfer to laptop from home server.
• Fresh chip for camera
• Spare chip for camera
• Back up (portable) GPS
• George’s Kindle
• Elaine’s Kindle
• Kindle chargers
• Batteries, AA.:  Camera 4, keyboard 2 (AAA), mouse 2, camera 4, GPS 2… screw it, a 24-pack oughta do it.
• Ham radio
• Charger and repeater directory for above
• Flip video recorders (2) and four more AAs for them.
• Did I mention a couple of backup network cables? 
• How about updating contact lists…oh, my head hurts…

And, to top it all off, Elaine’s computer, wireless keyboard and mouse, carrying case and a backup 500 GB drive that we share.

But wait, there’s more!

Before going on a trip, I also back up everything, so I have 1.5 gB of backup files for the UrbanSurvival and Peoplenomics website that were made Wednesday.

Oh…and the electronic web of travel also includes telling our bank that we’re going on a trip.  And (in theory) this will make it so we don’t have credit cards turned off part way through the trip by the automatic anti-fraud system.  But again, the electronic web continues to tighten around its prey.

With the bro-in-law here, we don’t worry about home security, but without him, we wonder how much other electronics could possible be involved.  My son showed me all eight of his online security, auto-recording cameras that monitor his digs, when he was down recently and this morning it all came together.

We’ve gone from the days when Ma & Pa Kettle would pile in camping gear and go to a complete rat’s maze of reservations, deposits, electronics, backups, software, barriers, and batteries.

So much so that if the White House ever wanted to “lock down America” all they’d have to do is turn off hotel wireless routers and lock up the AA batteries.

American travel would die on the vine.

Serious Gambling Advice

As our trip bulldozes ahead, this email gives us plenty of stuff to add into our “research” plans:

1) Gamble during the Psi Window (12:30 to 14:30 Local Sidereal Time).

The Psi Window triples the efficacy of remote viewing, per one study (Let me know if you want the citation).  Gambling during this window in games where remote viewing/knowledge would be useful (like poker or blackjack) might result in bigger gains.  You could also try gambling 12 hours later than the Psi Window (ie., 00:30 to 2:30 Local Sidereal Time) to see if your luck is much worse.

On 3/6/2014, the Psi Window occurs between 02:40 and 04:40 AM in your local time zone, not corrected by Daylight Savings Time.  This should be true within +/- about 15 minutes anywhere on the planet.  The Psi Window backs up on the clock face about 4 minutes a day.

“Sidereal Clock” is a free app (on android, maybe others) that tells you the current Local Sidereal Time at your location.  From that, you can calculate when the Psi Window will occur in your local time.

2) Work the Fibonacci Ratio (f) into your gambling.

The Fibonacci Ratio is found in everything from the curve of the roots of your teeth to the curving of the spiral arms of the galaxy.  Maybe it’s in ‘luck’ too;

It approximates at 0.6180339…  You generate it by adding 2 numbers of a sequence to get the third, then divide the last 2 numbers in the series to get an approximation.  For example, 1,1,2,3,5,8,13,21,34,55,89,144 and so on.  89/144 is about 0.618…   144/89 is about 1.618…

In a room of slot machines, you could put 2 coins in the first, one each in machine 2, 3, 5, 8, 13 etc. 

Bet on f numbers at the roulette wheel, or make red=even and black=odd to bet on roulette color outcomes.

3) You gotta play to lose.

So don’t play too long. Casinos stay in business from long-term players.

Have fun–hope you don’t lose too much :-)

Trent T, subscriber from Maryland

Fine advice…now, if someone would just work out local sidereal time for us in Arizona, that would be useful.  Otherwise, I will be reduced to doing a “sun shot” at noon local time and hopping for the best…

Tom’s Gambling Advice

From the Southbay area…..

To make a long one short, I met up with a pro black jack player (Larry Revere).

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The big news of the morning is that there is NOT a war going on in Ukraine, and with the market putting in a decent low yesterday, we should be set for a major market turn in the near future, which has a whole methodology that will be part of Peoplenomics tomorrow morning.

For now, however, the “big deal du jour” seems to be that the US is looking at a wide range of sanctions against Russia.

But, when comes down to cases, what’s on the table is more “for show than for dough.”

The idea of the US not attending the G-8 meetings – or even going so far as to kick Russia out as some reports have suggested – is hardly meaningful.  the G20 is the real game and the G8 is little more than an afterthought in today’s world.

My in-box has been overflowing with hate mail because of our coverage, but please note that we have so far called events nearly right.  And so we should be in a period of quiescence while the West and Russia figure out what to do.  The real resolution of this won’t come until summer, or there abouts.

What matters in the very short term is that our long position in our Trading Model has been correct again, our intelligence on what’s to come is pretty good.  And about the only question is whether George Soros bailed out of his massive short position in yesterday’s market hemorrhaging.

With word that Soros is about to make a big bet in Spanish real estate, we are inclined to speculate that maybe he has, although actual knowledge is far above our pay grade. 

But back to point:  Vlad Putin is making it clear all over the place that they have no plans to annex Ukraine and that it is deeply indicative of a double-standard for the US to be preaching about intimidation tactics given how many trillions we’re into the Middle East and all.

And high integrity news sites like The Daily Beast are out with reports that echo what we’ve been saying all along here.  Go read “How the ‘Realists’ Misjudged Ukraine” and the theme ought to sound familiar.

One of the sad truths revealed by recent events is that a lot of people I know who mindlessly support the Obama administration (one likened questioning their moves to sedition) reveal a fact of polarization politics.

If you can’t deal with facts in an objective manner, you’re going to come to the wrong conclusion a very high proportion of the time.  I’m sorry we got this one right, but Russia is not about to lose their warm water port and they will go nuclear to defend it.

Anyone who can’t grok that and believes they understand the situation is seriously delusional.

But no worries.  Such people may have a “hole in their rock & roll soul.”  To help with repairs, go listen to the 1976 ballad by Al Stewart  “Roads to Moscow” over here on YouTube….  Things should come into focus…

Cultural memories are something you don’t mess with.  Unless you’re a fool, of course.

Or the EU.  But then, I repeat myself.

Do take the headlines about “Russia Massing Troops” with a grain of salt.  Remember, they’ve been invaded by Europeans before and they get extremely angry at historical reruns that challenge their sovereignty.  

I of course support the US response, just as soon as Congress has declared war in Afghanistan and all the other places we’ve been killing people and breaking things without the Russians confronting us on it.

You did catch the Venezuelan foreign minster calling out “international forces” for trying to whip things up in his country (too).

Meantime, John Kerry is talking about a billion dollars of US aid to the flash-government in Kiev?  ViceGrips and doobies all around!

We’re up to our butts in debt and we’re doing what with your tax money? FMTT. 

New Road to Wealth:  I’m going to some small country, get some Androids, start me a revolution, and get rich…

Global Whating?

While the rest of the country is about to get some Texas-style snows back east, we can’t help but notice that one of our favorite number-crunching realists (Warren Buffett) has been eyeing the Global Warming hype with the same kind of suspicions we have.

“Warren Buffett: Supposed Increase in Extreme Weather ‘Hasn’t Been True So Far’’.”

But the facts haven’t kept Al Gore from going around the country making speeches about it.

Hmmm…where does that put us?  We have war-mongering and Gore-mongering, shall we go for a Trifecta?

(Bingo!)  Poor Mongering!

The Los Angeles Times has a worthy read about how the Obama budget plans would shift tax benefits from the wealthy to the poor.  That would be a good thing.

Except, of course, the rich control the purse strings of the K Street Mafia, so look for the actual benefit to the poor to be minimized in the end. 

Still, credit where due: The Obama crew is trying to do the right thing.  And that should last about 3 weeks on the Hill where election cash trumps right thing every time.

Mr.

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Go figure this one out:  The Russians actually have their senate VOTE on the use of troops in order to secure their border and the world panics.  When the US invades countries, we conveniently forget about Declarations of War.

So the only inference I can draw from all this is simple.  What’s spooking the market may be John Kerry going to Ukraine, as much as Russia securing its naval base and military resource in Sevastopol.

A couple of Analogs?  Sure:  Ukraine breaking away size-wise would be like California, Oregon, and Washington announcing they were seceding from the US. 

And you don’t think the USA would march into Cuba to protect our base at Guantanamo?  OMG, people, how shallow are we?  Tit-for-tat.

What Ukraine was – and continues – is an oversized flash-mob of anarchists and now we’ll see if they can pull it into something more real.  But the anarchist spew is really soiling the picture.  Whether Kerry can find a moderate government (which could avoid war with Russia) is the open bet.

And judging by the futures, the market is shading that.  So, when a “breakthrough” comes, look for a 200+ point relief rally.  Or, have your flash-goggles ready if it goes the other way..

Our Monday begins with trying to dig out the real reason for the decline.  It’s not Ukraine.  It’s the fact that the Big One – China – was down 1.47% overnight.

So while the (me-too) press is tying all the negatives in the market to Ukraine, the wise investor is reading stories like “China move hints at 30% market correction.”  Key quote from the article:

Chinese policy makers’ move to weaken the yuan may affect stock market valuations all around the world.

Well, guess what?  China is the big dog here.  Japan was down, but only 1.27%.  And a tiny 1/3rd of a percent in Oz.

What’s going on in Europe right now is ugly:  The Brits are down 1.83% while the Germans and French are both down more than 2%.

I will grant you that Ukraine does weigh on the EU – since the Western-backed uprising is not going like a walk in the park (nor will it).  But the first 1.75% is laid at the feet of China.

If you want to believe that Ukraine is driving, have at it.  It’s partly so.

The more realistic view is that the global economy is set for a massive 30% correction and that brings our target of 1,540 on the S&P (Robin Landry’s view) into play.  In the short term, we may see his predicted bounce of gold to $1,400, but from there things should fall to the $1,000 an ounce level or under.  Just saying.

This kind of outlook is not going to win me any popularity contests.  But, in case you haven’t noticed, I’m not interested in a fan following. 

Being right matters more.

Russia’s actually voting on deploying its troops in advance.  There’s a great lesson there in who’s running a democracy lately.  I must have slept through the US vote on sending troops to how many countries is it, now?

Personal Income and Laughter

What better way to start Monday than thinking that paying down a credit card is “savings?”

While I fetch us the ViceGrips and roll us a doobie, you read the personal income and expenditure press release.  Particularly the bolded part:

Personal income increased $43.9 billion, or 0.3 percent, and disposable personal income (DPI) increased $45.2 billion, or 0.4 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $48.1 billion, or 0.4 percent. In December, personal income decreased $5.5 billion, or less than 0.1 percent, DPI decreased $9.7 billion, or 0.1 percent, and PCE increased $6.5 billion, or 0.1 percent, based on revised estimates.

Private wages and salaries increased $14.8 billion in January, in contrast to a decrease of $9.1 billion in December. Goods producing industries’ payrolls increased $1.8 billion, compared with an increase of $1.7 billion; manufacturing payrolls decreased $0.4 billion, in contrast to an increase of $0.2 billion. Services-producing industries’ payrolls increased $13.0 billion, in contrast to a decrease of $10.8 billion.

Personal saving — DPI less personal outlays — was $540.1 billion in January, compared with $544.5 billion in December. The personal saving rate — personal saving as a percentage of disposable personal income — was 4.3 percent in January, the same rate as in December.

There…want a hit of nitrous to go with that?

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Background:  I have been warning for weeks now that the situation in Ukraine could end badly for both sides, US/West/EU and the Russians.  The reason I cited is that Russia has considered Ukraine it’s property for more than 300-years and despite cutting it some autonomous slack in 1954 by letting it form some local governance, the ties to Russia were firmly held.

The US however (shades of Benghazi), has an acute ability to misjudge the obvious.  This is especially clear this week in stories like “The Endless Benghazi Cover-Up” in the Wall St. Journal op-ed by Karl Rove.  Yeah, I know…Depends who you want to listen to, I suppose.  But it would be intensely interesting to here what retired General Carter Ham has to say about Ukraine…

From the Western perspective the Crimea, being Russia’s warm water, year-round port, it would seem a simple task to foment uprising in Ukraine and (bonus time) pick up Sevastopol and pick off the Russian port facilities.  Their ability to project power into Africa and the Middle East would suffer greatly.

You’ll recall I suggested that Russia would NOT take this laying down and with the arrival of unmarked gunmen in the Crimea, and this morning’s report of “unmarked soldiers” [possibly Russian] securing airports in the Crimea, we are convinced our paradigm framing been right on.  Still, a few reports call the soldiers “unknown” (as in this USA Today report) so time will tell who has put “first boots” on the ground; Ukraine, US/EU, or Russia.

Breaking Today:  That said, the Ukrainians are accusing Russia of an ‘armed invasion’ following the airport takeovers.  Game on for WW-III?  War is a historical tool to cover-up economic calamity and misfeasance….

The Russians are reassuring the US that their “readiness drills” are not linked to Ukraine, but you’d have to be an idiot not to draw that conclusion. Action speaks louder than….

Looking Ahead:  The next move, if things stick to our scripting, should be the US calling for emergency talks and perhaps a presidential news conference along the lines of the Cuban Missile Crisis back in ‘62.

This will play exactly as the Russians have been planning.  They have been holding preparatory “readiness exercises” but another way of thinking of this is as “rehearsals” for a real, overwhelming, show of force in coming weeks.  They need two more weeks to move up “overwhelming” resources to the front.

In the meantime, Vlad Putin is promising aid for Ukraine, but is also backing the ousted president who is due in a Russia town near the Crimea for a press conference today.

For now, we don’t expect the markets to tank just yet.  However, since “cash is a position” I may lighten up on a long position later today despite the fact the markets have touched some marginal new highs.  If the market closes down, say 50-Dow points, and there’s a decline in the S&P, we could simply put in a “double top” formation and those can be followed by violent down moves.  That could depend on the Ukraine (and Venezuela) news flows next week.

Alternatively:  On the other hand, a peaceful resolution to present events, however unlikely it may seem, could light the markets off like a skyrocket…so patience and judgment are key.  Is war good for markets?  Well, of course….and they cover up so much other stuff….

US Spillover: Flash Mobs to Revolutions/Digilutions

Background:  As I expressed in yesterday’s column, there is a fine line between the digital technology that allows for a gangstah posse in Chicago to form a “flash mob” at a local merchant and the scaled up kind of thing that has gone on in Ukraine, a super-sized flash mob to take a country.  But this has also been played as part of Arab Spring, and may also be in place in Venezuela, as well.

Today:  Could it spill over into America?  Well, reports one reader in Vancouver, Washington, maybe it’s already spilling…

Since you are a native of NW you are probably aware of the demographic makeup down here in Vancouver,  WA with a huge Russian and Ukrainian makeup, they are not overly fond of each other but lately things have been real bad, I work with 4 Ukrainians and 2 Russians and have been really offended at comments made by some Russians such as “Ukrainians are cowards” “They are sign-toting monkeys” the same one who called them monkeys moments later called them “Slavic brothers” so the relationship is a bit bi-polar but overall I get the impression the Russians think of Ukraine as belonging to them and Ukrainians as second class compared to them, very similar to how the 19th century English viewed us Scots.

I have no doubt EU is thrilled about this with Ukraine being one of the worlds three great bread baskets and a industrially a giant, 6th largest arms exporter, technologically advanced enough to launch multiple satellites yearly and the largest army wholly within Europe, its a real prize, but 78% of the country is ethnically Ukrainian and they have a long painful history with Russia (and with corruption) and they want a fresh start, considering how bad Yanukovich was eventually they would have rebelled over some other spark if not the EU.

Outlook:  If our tracking continues accurate, we may see a simmering for 2-4 weeks (new market highs in the US markets in the meantime) and then an overwhelming Russian response to ensure they don’t lose their warm water port that allows them to project naval power into the Middle East.

Or, the escalation path could be much quicker, which is why an astute investor will need to weigh that three-way decision fork:  short, cash, or stay long?

GDP Out, Up

New Gross Domestic Product numbers may help, but only a bit.  Just out today from the Bureau of Economic Analysis is this:

“Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.4 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the “second” estimate released by the Bureau of Economic Analysis.

In the third quarter, real GDP increased 4.1 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 3.2 percent. With this second estimate for the fourth quarter, an increase in personal consumption expenditures (PCE) was smaller than previously estimated (see “Revisions” on page 3).

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Every so often our www.nostracodeus.com project comes up with something that is truly amazing.  And sometimes we get more than a slight hint of the future in the process. And readers there contribute some amazing emails…and that gets me to the point:

Suppose for a moment that I told you that a prediction that the “Third World War to begin during Winter Games in 2014” was made by astrologers, shamans and parapsychologists in Russia ways back in the spring of 2011 – three years ago!.

Well, it’s true, the prediction was, in fact, made.  You can find it in Pravda’s English language archives here.

No kidding!  And, if you read the story closely, you’ll find today is one of the “hot days.” 

WoWW:  A Case of “Future-Vision”

This report on happenings in the World of Woo-Woo is just flat amazing!

Dear George,

As my son and I were leaving our Karate school last week I glanced into the window of the Consignment store next door and noticed it was empty.  I commented to my son that they must have gone out of business.  He replied, “What are you talking about?”  I looked again and the store was full of woman’s clothing and a window display of pink garments for Valentine’s day.  “Never mind.  It looked like it was empty for a minute.”  I could have sworn it was.

I went to karate class tonight without my son and this time when I looked into the store it was empty.  All that was left was a glass counter and a “Closed” sign on the door.  I called my son and asked him if he remembered me talking about the store being closed and it wasn’t.  “Yeah, why?”  “Because tonight it was empty for real-they went out of business.” 

My son and I both marveled at the weirdness of it all and I’m convinced that I saw a week into the future when I believed the store was empty last week.
Love your column and especially the woo-woo stories.

Take care,  Rebecca  Tampa Bay Florida

I’d be really interested to collect any additional facts about the previous trip.  Any odd clouds in the sky, any unusual foods?  How about music or….anything else about that visit which had an odd vibe to it?

SERIOUS Personal WoWW

WoWW – The World of Woo-Woo – is something we get only smatterings of now and then.  Most of our reports come to us second hand.  Someone puts down a set of keys – and said key’s promptly disappear –  only to reappear some weeks later in a different place.  Or like the store closing (in advance) in the previous story. 

It’s like when a reader sits a stapler down on the desk and an hour later it has gone missing.  It remains missing for several WEEKS and then –out of the blue – shows up somewhere that has been previously searched (to no avail).  Yet there the damn object (of the search) is.  It’s in complete defiance of logic.

So on to this morning’s case report is special because it is first-hand.

Background: A number of weeks – maybe a month – back Elaine asked me “Have you seen my little exercise ball?”

Years back, when I was at Campus Management down in Boca Raton, we gave out these little fabric-covered exercise balls with the company logo on them at one of our user conferences.  Hugely popular since the users were able to use them to work out the stress from hours on a keyboard.  Carpal tunnel and all that, right?  Elaine loves hers and has been squeezing it since about 2003…Fabric on it is all stretch out, logo is mostly gone, but she loved it.  When it went missing, she went into action.

She had searched the house high and low.  Ripped cushions off furniture, moved throw rugs, moved furniture, vacuumed, and on and on…Not just once around, either.

So for the last several weeks almost daily I’ve been answering question: “No, I haven’t seen it….but it will be along one of these days…because that’s how this WoWW stuff seems to work…”

Secretly, of course, I didn’t believe it for an instant.  The senior scientist in me scoffed. “Reality isn’t really like that,” it kept insisting.

Besides, three days ago she bought a brand new exercise ball.  Bigger than the little one she loved, but that’s what was available in the local Wal-Mart.  I figured the little one was gone, kaput, end of tale.  Odd for it to disappear in the house, but oh well….got other fish to fry.

Until 10:47 AM Thursday when Elaine stormed into my office and triumphantly announced “Here it is!”

“Here WHAT is?” about the time my eye caught a small black ball inbound at 21 miles an hour in a low, under-hand toss from the smiling blonde lady… 

“It was just sitting there!  About 4-inches out from the middle of the couch….where would would have seen it a million times… had it been there…”

And of course, she was exactly right because I’d watch with some amusement from my recliner as she had torn the living room apart three or four times over; down on her knees with a big LED flashlight looking every damned where.  Inspector Gadget would have been proud of her search efforts.  It just plain wasn’t there and I would have seen it had it been.

I had felt around the couch, too.  Between and under cushions, down on the floor…nope, not there.  But now it’s back and I’m left wondering to figure out what it all means…

The living room floor has also been vacuumed twice a week, so the odds of it missing the vacuum almost a dozen times is right at zero, as far as I’m concerned.

We chatted about it…and then she confessed that was enough talk.  To her brain, this was in the same league as that teleportation event I told you about a few months back.  The one where she went to sleep in her recliner in the living room and woke up in bed with the TV still on….and that still totally freaks her out.  Now the ball case.  Can you say “Odd?”

In many of these “disappearing objects that reappear cases” the person has some attachment to the object and just as they move past the attachment – BANG!  It’s back.

Maybe that God’s (or Universe, or whatever’s) way of teaching us something about attachment.

Or, maybe reality really is a Swiss cheesy place and we don’t understand the half of how it works; not really.

And maybe the joke’s on us:  We may be smart enough to materialize a picture live on a smartphone, but how come we can materialize the means to make the monthly payments for it?  That kind of thing.

This is the kind of stuff I mull over when I’m out working in the shop or around the house on weekends.

If I ever get a solid insight, be sure and read Monday columns.But “seriously odd” doesn’t even begin to cover it.  Profoundly contrary to the way things should work, is more like it.

Why I’m Not a Lawyer

An email from reader Richard points out the flaws in my thinking (or at least some of them)…

George,

I believe that your assessment of the veto by Gov. Brewer of S.B. 1062 is as misguided as the propaganda put out by the LBGT community.

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OK, the big worry on Wall St. is that inflation is going to come along and blow over the first domino.

In case you haven’t followed UrbanSurvival often (you fool!) the game works like this:

There are huge piles of (made up, QE’ed) money laying around in bonds.  This is because there is almost zero risk.  Unless you had bankrupt city bonds, but everyone knew that was a bit risky.

In the meantime, as the rate of interest keeps going lower (which is why the Fed hasn’t raised rates) that means stocks can keep going moonward because a Penny of Dividend is worth a dollar of stock price when the interest rate is 1%.

The first big gust of wind that comes along is going to collapse the bond market and the stock market for losses that could be 50% or greater.  It’s baked in the cake of longwave economics which is our forte around here (along with practical economics in all areas of life).

So this morning, with word that durable goods was up (better than what had been expected by some) the stock futures turned only slightly weak and it looks like the markets will continue to be more or less range-bound this week.

New orders for manufactured durable goods in January
decreased $2.2 billion or 1.0 percent to $225.0 billion,
the U.S. Census Bureau announced today. This
decrease, down three of the last four months, followed a
5.3 percent December decrease. Excluding
transportation, new orders increased 1.1 percent.
Excluding defense, new orders decreased 1.8 percent.

Transportation equipment, also down three of the last
four months, drove the decrease, $4.0 billion or 5.6
percent to $67.3 billion. This was led by nondefense
aircraft and parts, which decreased $3.4 billion.

Shipments of manufactured durable goods in January,
down two consecutive months, decreased $0.9 billion or
0.4 percent to $232.3 billion. This followed a 1.8
percent December decrease.
Machinery, down following five consecutive monthly
increases, drove the decrease, $0.9 billion or 2.6 percent
to $34.5 billion.

Bad news:  December numbers were revised downward…and they were bad already.

Comments to come from Janet Yellen and the fluid situation in Ukraine could change that, however, so we shall see.  The worms of inflation hasn’t turned into golden butterflies just yet though but this week’s Triple A Fuel Gauge Report shows gas is up 4.7% in the past month and so at some point, the soaring prices at the store and gas pump are going to start hurting other areas of the economy.  Just not this morning – yet.

Ukraine: The Dance

Step 1:  Protesters storm Crimea parliament building.  No, wait, the Russian flag went up so the mainstream is calling these guys “armed gunmen” in lieu or protesters.  See how this plays?

Step 2:  Russia docks warship in Havana, Cuba.  (Remember my references to Cuba Missile rhymes?  Close, huh?)

Step 3: Ex Ukraine president hangs out in Russia.

We shall see what the day brings…but the biggest risks will be over the weekend.  I may go to cash for the weekend or short….just thinking out loud here…

Merkel Jerk

By this account Germany’s Angela Merkel looks like she’s selling the EU brand of soap to Brits who are skeptical of joining the EU and giving up local governance.

The EU reminds me of the old Yellow Pages ads: “Never stop selling…”

Crapping in Your Food (A rant about “Change”)

Government apologists (a/k/a/ corpmedia) are all over the story this morning about how the Fooled and Drugged Administration is about to change food labeling laws so that they reflect what Americans actually eat, rather than the fictional  12 potato chips that some fool thought was an “average serving.” 

Whoever that doof was must not drink beer.

Here are two HUGE problems that the government is not addressing in their labeling reform dance because it involves big corporations that, in turn, give megabucks to the people who go to Washington to get rich:

1.  The proposed FDA Rules do not out genetically modified content as part of their labeling reform.  I noted this week how Forbes is labeling GMO as a pseudo-controversy.  Not around here, bubba. I’ll explain in a sec, but I don’t do poison-laced foods my body was never designed to process….

2.  The second second level of crapping in your food comes as a tip from a friend who runs a consumer cooperative in the Northeast:

A big issue that’s under the radar is that the USDA is asking for comments on a proposed policy of coexistence between farmers growing sustainably and conventional farmers. Basically, the policy will put the burden of contamination from GMOs or pesticide spray on the sustainable farmer who was damaged, not the farmer who sprayed or used GMOs.

And, if you’re in Pittsburgh, this press release from the East End Food Coop will be of interest:

“Right now there’s already a burden placed on organic growers operating in close proximity to fields containing GMOs,” explains East End Food Co-op’s Marketing & Member Services Manager, Heather Hackett. “They often lose acres of their land by leaving it empty to provide a buffer between the genetically engineered crops on their neighbor’s farm and the natural crops
on their own.

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