Tonight is you-know-what. To keep your mind off the drudgery of it all, has an online video game up. You can tell the boss “I was just doing a work-related search…

Unless you happen to be Huma Abedin, in which case you might be worried about possible perjury charges as the scariest Halloween event: Since 650,000 emails have been found on estranged husband Anthony Weiner’s laptop, and because Huma allegedly swore all “devices” with emails had been turned over in Hillarygate, something wicked that way goes is a possibility.

Not that this will cause the ‘Merican public to grow suddenly smarter about what has been labeled by a former FBI biggy as “La Cosa Clinton.”

As to the hope that average I.Q. 100 America will wake up? LOL, oh do be serious…

Market’s in Limbo: Observing the Tip

No, Limbo is not a small country in Africa, but wait a few years. In the meantime, futures are about flat as the rest of the world considers the future of Globalism. Yeah, Donald Trump is not the issue, neither is the Fed meeting this week, nor is the Islamic re-conquest of Europe, although all of the above get blamed by shallow thinkers.

You have to go much, much deeper.

You see, in Iceland this weekend the Pirate Party made an impressive showing in an anti-globalism and anti-establishment turnout.

Elsewhere, the UofMiami Hurricane suggests “Nationalism presents a dangerous challenge to globalism.“ Danger did they say? No…just what we’ve been telling you forever.

Reality School of Finance Lecture

When you manufacture products, there is an economic cycle that kicks in when two countries have widely differing labor costs.

Take what was going on in the 1990’s. Labor in China was dirt cheap. US manufacturers fled. They offshored to China. If you doubt me, ask Apple (and Foxconn is it?) how it works.

Here’s the catch, however, when we start the clock:

When, over some period of years, the internal income of the “other country” – in this case China rises, then the advantage of “cheap labor” evaporates and Globalism comes to a natural end.

Oh-oh. This is not the kind of stuff highlighted in macro-econ textbooks, is it? Too damn simple and obvious.

The mechanics go like this: If the labor and raw materials costs are about equal, here or there, the advantage returns to the country closest to consumption because transportation costs are lower. Think back to our long-chain business models versus short-chain competitors.

Let’s say you live in Ohio, like my consigliere. If you buy an item made in China, the goods made in China a) go on a train ride to get to a Chinese port. Then they ride the Pacific in a container. Next, the container comes off in Los Angeles. Then it might get on a rail car and head to a distribution center in Chicago or Memphis. Then it gets UPS’ed to the end user or the retailer.

This is nowhere nearly as efficient as having the goods made in Ohio, where Amazon is doing their two-hour delivery experiment, remember? With the right manufacturing partner, and a scoop or two of business process engineering, Amazon could go “factory-direct” with a lot of product. Manufacturing at the speed of consumption which is a way cool concept. For that which isn’t easily automated this way, Amazon has 60,000+ stock-picking robots. This was all in a report “Bezos and Bentonville: Barbarians at the Mall” a while back; it’s in the master index.

Zip forward to now: A New York Times piece by Binyamin Appelbaum calls it “A Little-Noticed Fact About Trade: It’s No Longer Rising.”

Good column, but missing are some of the further implicates: Namely that no matter how many sweet-heart (OK, and crooked, too) Trade Deals get rammed past the Fools and the Hill and the Lamest of Ducks, it still doesn’t change economic reality. And that remains that competitive standards of living are the only real basis of Global Trade. For 20-years we’ve called it the wage-rate spread… and it’s the ONLY reason there is global trade other than agricultural.

The rest of Globalism? Hype, shuck, and Jive (HS&J). Fact is when Chinese workers make as much on a purchasing power parity basis as Americans, there will be no more reason for trade. We are starting that Tipping Process.

Well, except on ugly secret: Globalism keeps a whole bunch of people employed. Employment is the power to tax…which is why the rush to monetize the LBGTQRSI sectors, the scramble to import social issues (errantly called refugees by people who can’t think) and it’s why National Healthcare is such a huge deal. Makes up jobs, capiche? Ditto Global Warming…more jobs, more control, less variance of thinking, more uniformity of politics, and so forth. Soft corporate dictatorship, with emphasis on the dicks.

Long supply-chain buiness models (LCBMs) are in the strategic interests of the PowersThatBe. It makes it possible to keep 50% more people working. These people handle systemic inefficiency and make up jobs – and income streams to be skimmed in the name of corporate profits. These cycle back to keep the rich and powerful….well, richer and more powerful!

Is you look at the existing model (ultra long-chain) (ULCVMs) or the short-chain (SCBMs) alternative, consider all the jobs that are created by going ultra long-chain.

The railroad cars, trackage, consolidators, and longshore crews in China. Then the ship builders, the financial end of having 90-days of float (*literally and figuratively) as ships cross, then the Port at Los Angeles (or over the viaduct to Long Beach). Then you have truckers, and rail crews in America. Break-bulk operations, distribution…it’s a whole comedy of long-chain bullshit.

Here’s the problem: Go factory-direct in America and what happens?

Understand this: China’s unit labor costs don’t have to come all the way up to 100% PPP (purchasing power parity, try to keep up) with the US because the systemic inefficiencies will wreck Globalism’s pitch long before parity. Higher fuel prices as rates rise will do it.

There’s more to it, however.

Remember: Robotics are coming down the road and they will eat half the jobs in America in the next 25-years.

Which reveals the Big Sleaze – like the TPP deal – for what it really is:

A way for Globalists to institutionalize systemic inefficiency in order to maintain their revenue controls and dominance.

Oh, yeah, one other thing: It’s happening right now…we have reached Globalism’s Big Tipping Point.

So now what?

Like any other math problem, there are only a few ways out of this, and it’s not hard to see them.

1. We can have a “limited nuclear war” with Russia. Welcome to the overnight “decontamination industies” and so forth.

2. We can attempt to limit start-ups in high consumption countries, like the USA in order to maintain the Ultra Long Chain Business Models.

3. We can go Short-Chain Business Models but that will blow up Globalism and its leaders.

Well, TPP will no doubt screw over domestic start-ups and War with Russia is the bogeyman du jour.

The only safe bet is that option three is not even on the table.

If it were, instead of futures being flat, they’d be down 3,000 points.

They’re not, so the Globalism advocates still believe that the Clintons will win and their fortunes will be secure. The FBI case is just another challenger, but that too will pass.

Halloween Data Point

Personal Income and Expense, hot off the press release (edited because we don’t have all day):

“Personal income increased $46.7 billion (0.3 percent) in September according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $37.0 billion (0.3 percent) and personal consumption expenditures (PCE) increased $61.0 billion (0.5 percent).

Real DPI increased less than 0.1 percent in September and Real PCE increased 0.3 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

Personal outlays increased $59.7 billion in September (table 3). Personal saving was $797.8 billion in September and the personal saving rate, personal saving as a percentage of disposable personal income, was 5.7 percent (table 1).


Tomorrow Fed Meeting starts, the non-rate decision will come Wednesday at 2 PM Eastern. In the morning the ADP job numbers. Thursday the Challenger Job Cut report and then the Big Kahuna, the Employment Fairytale on Friday.

With a repeat of the promises of shorter columns, put down that coffee after the Coping Section and go make some money. Someone’s got to bail this Titanic.


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