The longwave economic paradigm is simple:  The economy goes through 48-64 year cycles that are fairly regular, although there is a case for a 75-year cycle that goes along with some theoretical work I did with a colleague in 2000-2001 about how long a currency could last until it was overloaded with debt and needed collapse (a value restoration process) in order to retain its value.

Here lately, the US currency has been relatively stable, which is why gold and silver haven’t gone screaming toward the stars.  But give it time.

We are still in the bottoming-out portion of the longwave decline in interest rates that any damn fool can see by looking at a long-term chart of the 10-year Treasury.

Since we know the absolute peak of rates was July of 1981 and since we know that the Long Wave is normally 54 years in length, all you need to do is add 27 years to 1981 and you should get a sense of when the real economic bottoming process should begin.

2008.  (Look surprised!)

Now, I apologize if this is just too damn simple, but we have a problem because the bottoming is not completely done.  In fact, it has barely even gotten underway yet. We keep propping up losers.

The result is we still need to see a repudiation of debt at a massive scale and until that happens, the Long Wave bottom won’t be here.  We’re just dancing on the front end of real economic collapse, still.

The most recent data to neatly summarize the mess is the Comptroller of the Currency’s quarterly derivatives report.  The most recent being Q4 of 2013.

On the surface, there are some statements that sound almost, well, encouraging…like this:

“Notional derivatives fell $3.0 trillion, or 1%, to $237.0 trillion. Derivative contracts remain concentrated in interest rate products, which comprise 82% of total derivative notional amounts. Credit derivatives, which represent 5% of total derivatives notionals, declined 12% from the third quarter to $11.2 trillion.

So things are getting better, yeah?  Well….er…the economy is recovering, right?

Not so fast, Bucko.  Do you have any idea how much $237-trillion of notional value is?  To put things in perspective, the USA’s entire economic output this year will be around $16-trillion.  So the value of the derivatives is 14.8-YEARS of everything American does.

The happy-go-lucky people believe that it doesn’t make sense to worry about the possibility of all that notional debt becoming real because all of this is hedged and structured.  Besides, aren’t these players all serious-minded, ethical, deep pocket people?  They wouldn’t screw anyone, right?

The problem is (when we go back at look at the Bank Herstatt close call with world-ending collapse in 1974) that we see that settlement risk is horrific.

Still, undaunted, the happy-go-lucky types came up with new ways to avoid the world-ending.  The Wikipedia entry on Settlement Risk lists three alternatives:

• Delivery versus payment
• Settlement via clearing houses
• Foreign exchange settlement using continuous linked settlement

Continuous Linked Settlement is particularly interesting (and with enough coffee, the explanation here will make sense).

My point is simple:  When you look at the credit mess, what you find is that the global financial disaster of 2008-2009 did not end the accumulation of debt on top of debt.  All it did was stop it near present levels.  For now.

And that gets us to the problem of when the next crisis should appear.

Not today, of course.  But in Wednesday’s Peoplenomics report this week, I laid out a way to guesstimate when the Mother of all Crashes could show up…and that seems to me to hinge on the timing of the Fed’s rate increase.

Will they have to raise rates?  Sure…

Dynamics in play actually require that interest rates this low can’t go on forever because of certain large players whose entire future is built around interest rates much higher than present levels.  So as the cheap money of today persists, it actually carries with it the seeds of destruction for long-term players.

If, in coming months, you read about a big life insurance company getting in trouble, I want you to bookmark this morning’s report:  An industry which has oodles of money to park over very long periods of time can have world-ending financial problems when office buildings they own are no longer needed because we’re all working from our homes and cars and mobile devices.

The same processes that killed residential real estate is still coming for commercial.  And the fallout next time around could be even bigger and more costly to the tax slaves of last resort.  And you know who that is, right?

I hope you did read this possibly most important story of the week, didn’t you?

(more after this)

So How Durable?

While we keep sniffing the air for the scent of burning time fuses on the industry side, the statistics out this morning from Census on Durable Goods are worth a read:

New Orders
New orders for manufactured durable goods in June
increased $1.8 billion or 0.7 percent to $239.9 billion,
the U.S. Census Bureau announced today. This increase,
up four of the last five months, followed a 1.0 percent
May decrease. Excluding transportation, new orders
increased 0.8 percent. Excluding defense, new orders
increased 0.7 percent.
Machinery, up following two consecutive monthly
decreases, led the increase, $0.9 billion or 2.4 percent to
$37.3 billion.
Shipments
Shipments of manufactured durable goods in June, up
four of the last five months, increased $0.3 billion or 0.1
percent to $238.2 billion. This followed a 0.1 percent
May decrease.
Transportation equipment, up following two
consecutive monthly decreases, drove the increase, $0.5
billion or 0.7 percent to $70.2 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in
June, up fourteen of the last fifteen months, increased
$8.7 billion or 0.8 percent to $1,096.8 billion. This was
at the highest level since the series was first published on
a NAICS basis in 1992 and followed a 0.7 percent May
increase.
Transportation equipment, up nine of the last ten
months, led the increase, $4.9 billion or 0.7 percent to
$681.0 billion.

Market futures points to the Dow being down about 20 at the open, but the real number that matters is 17,100.18 on the Dow (last week’s closing Friday level) and last week’s Friday close of 1978.22 on the S&P.

The Imperial President

Latest move – which the administration figures can be done through what?  (Executive Orders!) is to say that people from Honduras are “refugees.”

Odd that we are welcoming people from such places, yet when people try to leave America, we hound them for at least 10-years of taxes…but I digress.  Just seems a bit one-sided and seriously denominated, if you know what I’m saying.

Senators Cruz and Sessions are trying to stop it, but don’t hold your breath.  You don’t appoint Supreme Court justices.

This is called “separation of powers” – power in the hands of the few.

On the other hand, worries the NY Times, Texas NatGuard could get arrest powers to deal with illegals.  OK, so?  And?

Troubles of Israel

Riots in the West Bank…

A quick check of Wikipedia gives some context:

The West Bank, including East Jerusalem, has a land area of 5,640 km² and 220 km² water, the northwest quarter of the Dead Sea.^[3] It has an estimated population of 2,676,740 (July 2013).^[4] More than 80%, about 2,100,000,^[3] are Palestinian Arabs, and approximately 500,000 are Jewish Israelis living in the West Bank,^[3] including about 192,000 in East Jerusalem,^[5] in Israeli settlements.

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As I reported in yesterday’s column, things around the ranch here in East Texas were a bit nuts on Thursday.  But this morning things are “back in the groove…”

The lack of sleep was corrected by about 10 AM…which gets me to mentioning the article out this week on how many hours of sleep a person really needs.  It was in the Wall St. Journal and says “Why Seven Hours of Sleep might be better than Eight.”

Normally, I’d have found that pretty interesting, since about 7 1/2-hours is what I run on.  But when I’ve run on 5 & 6 and then drop back to 4 — well, that for me is a crash and that came with this week’s storm.

Once about 3-hours of “catch-up” was done, it dawned on me that the “overwhelming sleep” desire also hits me (like a ton of bricks) a day or three ahead of major (I mean 7-8+) earthquakes.  So if a quake comes along…remember who told you…

A return to my office Thursday morning discovered that one of my four monitors on “the big server” had decided to stop working.  It’s a Sceptre X246W and, turns out, they have a problem with capacitors in their power supplies after they age a bit.

A quick check of eBay quickly found that a capacitor replacement kit for the blown up power supply was available or $15-bucks.  Needless to say, I ordered one.

$15 bucks instead of a replacement?  Easy decision, that one.  And that gets me to the two main points of this morning’s epistle:

The first is that companies that make really good computer gear sometimes find the darnedest places to shave a penny.  True, the difference in cost between a cheap capacitor (temp rated for 85C may be more than a penny compared to a 100C rated capacitor) but here’s the point:  I have found that in all kinds of modern electronics the weak point is usually the power supply.

Same thing with my laptop: Great computer, cheap-ass power cube blew up.  Just put a new 700W power supply in my “big” computer a few months back, too…

Whether you’re trying to  repair a monitor, or that classic audio amplifier that used to drive your subwoofer….there are many occasions when a basic knowledge of electronic components and soldering can literally save you 10-20 times the cost of “whole unit” replacement.

You don’t have to be rich to have a great lifestyle…just clever and be able to fix things.

When the parts get here I may take a bunch of pictures and write up a “how to” for Peoplenomics subscribers.  You know, a short 5-6 page introduction to basic electronics repair oriented to fixing power supplies.

The second point is that if you have not plugged in a second monitor to your computer, you’re living in the dark ages of computing.

Especially if you have a lap or desktop.  Second screens for a mobile device would be stupid…but a projector port?  Hmmm…

Most laptops come with a simple VGA port that you can plug an external monitor into.  When we go on our trip up to the PNW next month, we’ll be taking an external monitor and our LCD projector with us, too. 

So if you have a laptop, there’s usually nothing to buy:  Plug in the additional monitor, go to the display set-up and mark the external monitor for “Extended Desktop” use.  You’ll suddenly have double the amount of workspace on screen and once you get used to it, you will find a huge increase in productivity.

If you have a desktop computer, you may need an additional video card, but you can pick up a EVGA GeForce GT 610 1024MB GDDR3, Dual DVI, HDMI Graphics Card 01G-P3-2616-KR for under $50-bucks.

If you pick up two of these, you can then clone what I’ve been running – four monitors – all as extended desktop. 

My usual “serious work mode” is email/Outlook on the left monitor.  Whatever I’m writing on the middle monitor.  Content/reference material (Explorer or Firefox) on the left monitor.

Then, on the big monitor on top (#4) I watch a Nostracodeus run ker-chunking along,  Gloomberg or streaming futures/live charts.

My point is that multiple monitors are the only way to fly if you have lots of work to get done and employers who don’t give their employees at least two monitors are idjits – neander-comps, as it were.

With another unusual cold snap due next week (and we are likely to set several days of record low temps in this part of the country) I figure that the other two Sceptres are “at risk” so if I can get the first monitor back up and running, I might preemptively upgrade the power supplies of the other two when I get time.

Get time?  OMG…what’s that?

The Audiophile’s Notebook

As long as we’re working on PC’s….

A couple of readers wondered how the home studio is coming along…and that gets me to the next peripheral.

I’ve decided to upgrade the audio card in my music/video computer as part of building the Ultimate Home Studio on a Budget.

The card?  SYBA SD-PEX63081 7.1 Surround Sound S/PDIF In/Out Digital/Analog PCI-e Audio Card CM8828 Chipset with Full and Low Profile Brackets for $35 bucks.

If the coffee has really kicked it up a notch for you, you’ll see what:  This card has both SPDIF in and out…

Now, if you’re listening to the odd MP3 (when the boss ain’t looking) you probably won’t benefit much (if at all) from going SPDIF…but if you are setting up a media server (to feed the big screen those DVD’s because that way you can get your DVD Player and streamer in a single box…then this might be something for you to think about.

In the “ultimate/cheap home studio” I found a deal on the card for even less ($29.95) and that will give me a 96 KHz audio chain instead of the typical slower sample rates… but then again, you’ll need an audio system (amp) that can eat SPDIF out…but if you’re going for a high quality home theater experience, well, this has potential…

A Few Words About Magic

Meantime, my “gear move-in” continues and here’s what it looks like as of this morning.  Still to come is a large area rug and more sound panels on the wall from where this picture was taken.

Remember, this started off as a deck that we’d cobbled on the north end of our “trailer” which – more than ever – causes great visual discontinuity.

I forget which movie it was…but a couple of years back there was a stoner-flick (drug film) about a couple of heads (but not Cheech & Bong) who were traveling across the South and they end up at this trailer out in the woods.

The outside of the place looked like typical “white trash” (old car and refrigerator in the front yard kind of thing) but when they shot changed to the interior, it looked like a highly decorated and details super up-scale midtown apartment.

I loved it!  We were already on track and working that way, but the film really sealed the deal for me.

The contrast between “regular trailer” look on the outside and whole different planet on the inside…well, that’s what I’m talking about…

Elaine and I both like the look of Trader Vics (old-school pseudo-Polynesia/Tiki) vibe, so our dining room (which we finished a good while back)  has that “vibe.”

Amazing what some rolls of reed fencing, a staple gun, a couple of grass hunting mats and some sticks of bamboo can do, isn’t it?

The reason for the pictures and such?

Well, it’s the weekend.  Every room in our home has been a collaborative effort between Elaine and me.  We discuss the reasons for this, the reasons against that…but it’s all part of a marvelous dance of two minds building shared space. 

In the end, though, it crystalizes into a really fun, unique place to live.  And that’s where our subject now turns to “magic.”

Any damn fool can write a check.  And sure, there’s a level of “magic” involved in having enough money in the bank so the check doesn’t bounce.

But there’s another magic, too.  The kind that comes from the head, heart, and hands.  Some people are into trading paper for things.  But I really enjoy the “magic” of taking an idea and moving it (in ring-pass-not) fashion from the mental realms out into this world.  Passing “the veils” that keep the mental and physical worlds apart.

This being another Friday, I can’t think of a better time to remind you that we all (one way or the other) work for “the man” at something most of the time.

But what defines us (our space, our life, and such) is how we invest that other time ands what kind of magic we choose. 

People who build beautiful handcrafted furniture, exquisite glassworks, marvels of metal sculpture, or people who build boats…these are higher magicians, as I see it, than the fools with the checkbooks.  Not much learning about the great esoteric issues from name-signing, is there?

And since we’re (most of us, anyway) less than 8-hours from a weekend, the solid question to ask going into the weekend is “How will you have taken concrete steps to improve your life and make it something really special between now and Monday?”

How you answer that defines what kind of Life Magician you are.

Reflections on WoWW

Whether those pictures from space of war flashes on the ground in Gaza are the “sky flashes” meme that dream and data sources had been hinting at should become clear over time.  But check out this reader note:

On the night of July 22nd I was awoke by my phone ringing around 3am. I am out of town in the boondocks so my phone sits in the window to get service. Half awake I go to the window before I even look at my phone the sky seemed to light up in a blue flash at the horizon in the distance. Dumbfounded I stand there looking intensely again for it to happen. It doesn’t. I chalked it up to a weird story I heard about methane from cows causing a glow in the fields. They call them ghost cows.

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Let’s hop right in to the data just out from the Labor Department:

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase.

Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases.

The index for all items less food and energy also decelerated in June, increasing 0.1 percent after a 0.3 percent increase in May. The indexes for shelter, apparel, medical care, and tobacco all increased in June, and the index for household furnishings and operations rose for the first time in a year.

However, the index for new vehicles declined after recent increases, and the index for used cars and trucks also fell.

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Tensions between the US and Russia haven’t been this high since the Cold War and, with reports of crash scene tampering floating about from eastern Ukraine, the question of “Who shot it down” is echoing around the international community. 

Against this background, reader TJ wonders:

Hey George, do you think the plane could be a Ferdinand moment like the one that started WW1?

That’s a pretty interesting question. The Wikipedia entry on point offers this:

On Sunday, 28 June 1914, at approximately 10:45 am, Franz Ferdinand and his wife were killed in Sarajevo, the capital of the Austro-Hungarian province of Bosnia and Herzegovina, by Gavrilo Princip, 19 at the time, a member of Young Bosnia and one of a group of assassins organized by the Black Hand.[4] The event led to a chain of events that eventually triggered World War I.

Notice, however, that World War I did not start quite instantly.  We have a selection of candidate dates to calculate from:

On 28 July, the Austro-Hungarians fired the first shots in preparation for the invasion of Serbia

August 1, Germany declares war on Russia

August 3, German declares war on France

August 4, German declares war on  Belgium (a neutral country).

August 6, Austria-Hungary declares ward on Russia.

Austria invaded and fought the Serbian army at the Battle of Cer and Battle of Kolubara beginning on 12 August.

January 19, 1915 Zeppelins bombed Yarmouth and England enters Total War.

From these events, if this does, indeed, turn into something that’s an analog to the events that swirled in World War I from the outbreak of hostilities over summer, to the entry of England into the Total War in January 1915, we can do the following simple date math

It’s interesting to me to notice that the lag between the Austrian invasion date (Aug 12) and the entry of England due to Zeppelin bombings was 160-days, which approaches our Fine Structure Constant day.

With this in mind, we should have a very clear picture of historical import of the July 17th event this year by December 10.

The good news (I mean, such as it is) is that the economic long wave is not yet to its complete, utter bottom yet.  In fact, with the rise in employment figures and with global markets near peaks and not that far globally from the rollicking good times of 2007, collapse from here is unlikely.

It’s axiomatic that crashes happen from market bottoms, not tops. 

Thus, a much better candidate event would be events to unfold later this year in the Middle East in general, and specifically, in the area where ISIS/ISIL has set up shop.  The fall of additional territory that those forces seems likely, especially given reports this morning of more than 700 killed in Syria as ISIS continues to press from the east.

Of course, the death toll in the Gaza fighting is now around the 500 level, but there’s a much higher media profile to this part of the region.  The rioting in France, for example, tends to keep people in the West focused on the Gaza Strip and not what’s going on up north in Syria.

Meantime, the Middle East is still where global war should come from since so many people are invested psychologically in the religions of the region.  Headlines like this one (real or fake, makes no difference) prove the psychological warfare levels involved…and there are times it’s easy to confuse Iron Dome with divine intervention, perhaps.

Meandering back to point, for now, odds seem (to me) to remain high that the MH17 disaster will (in time, but maybe not in our lifetimes) be found to be high-level “signaling” between Washington and Moscow.  As our Winnipeg news analyst admits…

Dear Mr.

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From the top this morning, we all get to be in a holding pattern to see if War breaks out on Sunday.

Why is this important, after all, it’s only a date that has shown up on a couple of posts on various conspiracy and prophecy boards?

Because things seem to be falling into place.  Think about it:

• We have a plane shot down over Ukraine and the pro-Russian region is offering a truce to allow investigators in to prove they didn’t do it. 
• The Malaysian Airline people defend flying over the war zone, but that may not play well.

A plug for our www.nostracoeeus.com project is in order here:  The data rolling out on the 16th prompted future-reader Grady to post that things would heat up in Ukraine shortly under the headline “Banks Rockets and London.  And then, it was “Another Prediction is proven to be true.” and to top things off, people just don’t seem to be interested (really) in thinking about the future that much.  But, this morning the data suggests that we will have 10-more days of serious Ukraine headlines – see “More to Come.”

And in Other News…

• There’s an invasion going on  in Gaza today and Israel keeps calling up reserves.
• The market is hanging around highs, but once options finish up today, a move next week to the down side may be in the cards.
• And weather has brought the word “flood” to parts of the US where it “just ain’t natural” for this time of year.  Scientific American though says despite the claims, in the MSM, it’s NOT a polar vortex….not really. 
• Still, record low in Dallas Thursday and likely another one today.  But a week from Sunday, we should be back up around 100 again in the Metroplex.

But this  last development this morning has us sitting back, taking a long pull on the third cuppa and wondering what all the media frenzy is about.  And I’ve come up with an interesting theory.

Ure’s Crackpot Theory 2014-28:

As the world runs out of real jobs to do, there will be a huge increase in the number of media and thus, number of column-inches of press, in order to continue growing the media sector since it can be flexibly grown.

And that sort of rolls us around to the next item.  But if you’re expecting the end of the world as we know it, keep your money in your pocket, it’s still a fool’s bet.  For now, anyway…

We do see how the Europeans are seriously pissed about the jet shootdown and escalation talk is in the wind among the Germans. 

Going into the weekend?  Flash goggles, a jacket, and an umbrella, oughta be fashionable.

More after this…

What is Microsoft Thinking?

Young people, particularly in ‘Mercia, are not complete idiots.  Close, sometimes, sure, but not total ef-tards.

Hence, when a company acts in strangely anti-job ways, people in ‘Mercia take notice.when Microsoft announces 18-thousand jobs are about to get whacked.  It comes a week after the company pressed for more imported as reported by Information Week a while back under the headline “Microsoft says 6,000 jobs open, wants more Visas…”

(Think about time lags here:  Request in 2012, hiring 2013 and training and now, today…)

Confused?  I’ve got a nickel side bet that says it’s cheaper to bring in H1-b’s than  to retrain American workers. Besides, that way, even more people can get roped into hopeless student loan debt.

Didn’t you learn anything from reading how the world works?

The Real Economic Schiznit

It’s easy to laugh at the economic numbers (and decisions, policies, and so forth) coming out of Washington.  So around here, we tend to look at what real U.S.

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One of our readers (RD) mentioned in a recent email that Tuesday was “hamburger day” for him.

This reminded me of something I’ve been meaning to mention for a couple of years, but it just keeps slipping my mind:  Is it an indication of something [fill in this blank if you can come up with a word for it —>_____] when people get into ritual and routine about their food?

When we were living in Burbank back in the 2005 era I knew people who would always to a certain restaurant on a certain day.  Like Acapulco’s on Thursday for lunch…that sort of thing.

More recently, a consulting client and his wife (east coast folks) made a major change in their life, moving Tuesday Chinese to Wednesday.

I’ve never really understood it, because part of the joy of “listening to your body, thus reducing stress” includes sitting back for a moment and asking “What do I FEEL would be good for me today?”

Going to the Northwest (as we’re about to for a month) I can see how people slip into foody-patterns.  In fact, if for the rest of my life, I had only one meal to it, I’d have to go with the dinner-sized crab cocktail, a small salad with bleu cheese, and the dinner-sized fish and chips from Harbor Lights in Tacoma.

There (and Ivar’s) are about the only places the fish and chips are perfect to my taste.  Most places do a heavier (and therefore greasier) batter.  I don’t care for that…more of a Panko-style fish eater, thanks.  If I want that much breading, I’ll mix up a few baguettes of French…know what I mean? 

Anyway, the only other reasons for eating a certain thing – on a certain day – that I can come up with is maybe the “Wednesday special.” 

Over the years, some great restaurants have day of the week specials.  My other favorite haunt in the PNW is 13-Coins where (if you scroll down their 24-hour menu here) you’ll see why I love going there on Wednesday, Thursday, or Friday.  (Stroganoff, pot roast, and prime rib specials if you’re a bit slow on the click this morning.)

Around out place, we eat (more of less) when hungry and what depends on activities around the house.  During construction projects (a seemingly perpetual state) there are a lot of microwaved Reuben sandwiches and pizzas,

It’s really amazing how a regular frozen “base” pizza can be fixed up with a jug of good organic red sauce, some fresh sliced mushrooms and a pound of additional ‘mutz. 

Other days, like today, we still turn on the crock pot and do something like an all-day pot roast…but mostly, the “right answer” seems to be skipping routine and if a couple of tall glasses or orange juice, or a whole celery are what your body wants, then by all means, I figure going for it is one way to keep healthy:  Just like animals graze differently, depending on their health, what’s in season, and what their mood and feelings are, seems like that makes sense for us, too.

Except on Wednesday, Thursday, or Friday, or while in Tacoma along the waterfront, of course.

Music in Retirement

A few days back we were talking about the other kind of “listening to yourself” that seems pretty good:  Making your own music, particularly, if like me, you didn’t practice as a kid.

At least when retirement shows up, you should be able to set aside plenty of practice time (since the kids only call on state occasions like birthdays, and when their bank accounts are low).

Reader Dave (one of the 642 Daves that read this site) is in the process of rediscovering music, too, so lots of us on this path…

I haven’t done much music, but I have done alot of art and I listen to music alot.

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