Monthly Archives: October 2016

Media, Policy, Politics, Psychology, Truth

Zika hype and how the media fail to serve us

Noam Chomsky wrote that, “Citizens of the democratic societies should undertake a course of intellectual self defense to protect themselves from manipulation and control, and to lay the basis for meaningful democracy.”

Any time the mainstream media latch onto an issue and make it a big story you can be sure that it’ll be spun, doctored and distorted so that the public can’t take a well-informed position on the subject. Examples of this are countless and pervasive. About a year ago, the Zika virus story suddenly burst forth, seemingly out of nowhere, linking the mosquito-borne virus with frightful birth deformities in infants of affected mothers, including microcephaly. The story led to mass trip cancellations, abortions, unnecessary carpet-spraying against mosquitoes (which killed millions of bees), and much hysteria in general. As it turns out, the virus is harmless. Continue reading →

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Psychology, Something completely different

Deep reading – a gratifying routine for a better living

Before I became a parent I used to wake up around 6 AM every morning, made myself some coffee and spent at least an hour or two reading – not news or fiction but a book about something interesting and of consequence on psychology, history, economics, philosophy… This practice almost invariably charged up my batteries with ideas, energy and enthusiasm and each day started with excitement about what I could accomplish that day. I’ve recently come across an article that distinguished this kind of reading from the more casual kind (newspapers, magazines, e-mail stack…) calling it “deep reading,” which explained, sort of, why I so enjoyed this routine. Continue reading →

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Central banking, Commodity price, Economics, Inflation, Policy, Uncategorized

Greenspan: Fed balance sheet is a tinderbox of explosive inflation looking for a spark!

In June 2011 Carmen Reinhart wrote a paper for the IMF titled “Financial Repression Redux.” She suggested that the current policy of financial repression could ultimately lead to high levels of inflation. Today, five years later it seems like she couldn’t have gotten it more wrong. In spite of the unprecedented monetary expansion, monetization of public debt and swelling central bank balance sheets, deflation seems entrenched. So why worry about inflation at all? In short, because deflation could actually give rise to inflation. Continue reading →

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Central banking, Commodity price, Economics, Inflation, Market trends, Monetary reform, Stock market

Stock markets might not crash. Investors might still lose big.

Our future is being shaped by an unprecedented monetary experiment run by our central bank mandarins, but a happy ending is a mathematical impossibility. The economic imbalances that resulted in the last, 2008 financial crisis are now much worse and we are facing two possible routes of their resolution. One is a full-blown deflationary depression that could see asset prices drop by 50% or more. The other is a strong and sustained decline in the US Dollar (and other major currencies) with an accelerating commodity price inflation that might span a full decade.

Central banks’ overt commitment to supporting asset prices at all costs suggests that the second scenario may be more probable. In this case, a major stock-market crash could be averted; instead, we could see a significant and sustained rise in equity markets, as was the case most recently during the Zimbabwean and Venezuelan inflations, as well as the Argentinian, Brazilian, Israeli and German inflations before that. Below is the chart showing the appreciation of Israel All Share index during the country’s inflationary crisis in the 1980s: Continue reading →

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Something completely different, Trading

Trading for sport: just don’t!

Almost on a daily basis I see online advertisements stating “Become a Trader in 10 minutes!” or something idiotic like that. Sadly, I know of too many people who thought it would be a good idea to put some money into a trading account as a personal challenge, to earn some extra money, or just for fun. My strong advice: don’t!! That adventure is very likely to turn into a colossal waste of your talents, time, and ultimately a lot of your hard earned cash. Continue reading →

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Policy, Politics, Something completely different

Ex UK Ambassador Craig Murray after visiting Julian Assange: it wasn’t the Russians…

After visiting with Julian Assange, former UK Ambassador Craig Murray reported on his blog: “I can tell you with 100% certainty that it is not any Russian state actor or proxy that gave the Democratic National Committee and Podesta material to WikiLeaks.” The full article is here: How to Really Really Upset the Foreign Office and Security Services.

Alex Krainer is an author and hedge fund manager based in Monaco. Recently he has published the book “Mastering Uncertainty in Commodities Trading“.

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Central banking, Economics, Inflation, Monetary reform, Policy

The biggest scam in history of mankind

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” – Lord Acton

Well over a century ago, Lord Acton had understood the problem that’s been well obscured from students of economics, history and politics over the more recent generations. The role of money in our society is not sufficiently well understood today. Its importance was underscored by Thomas Paine when he said that, “Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency.” Continue reading →

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Asset management, Commodity risk, Complexity, Economics, Expertise, Hedging, Market research, Policy, Risk management

Economic forecasting is exercise in futility

“Economists can’t forecast for a toffee… They have missed every recession in the last four decades. And it isn’t just growth that economists can’t forecast; it’s also inflation, bond yields, unemployment, stock market price targets and pretty much everything else.” – James Montier

Forecasting commodity prices and economic indicators is demonstrably an exercise in futility. Our markets and economies are complex systems and as such, their future unfolding is impossible to predict with any degree of certainty. Concretely, let’s take a look at how the leading economic analysts did at predicting oil prices, GDP growth, unemployment and stock market indices. Continue reading →

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Expertise, Psychology, Something completely different

In the beginner’s mind, there are many possibilities…

“State a moral case to a ploughman and a professor. The former will decide it as well, and often better than the latter, because he has not been led astray by artificial rules.” Thomas Jefferson wrote this in 1787, but his words remain relevant. Advanced education often narrows our perspective, obstructing our ability to fully evaluate new information or to adapt well to life’s changing circumstances. What we think we know may keep us from grasping new things we need to understand. Zen masters of old likened our capacity to understand to a water bowl: its purpose may be to hold water, but it is only useful to the extent that it is empty. Here’s a real-life example of this metaphor…

Continue reading →

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Eurasia, Policy, Politics

Send them to east Aleppo

Yesterday, the British parliament held an emergency three-hour session to accuse Russia of war crimes and to discuss Britain’s involvement in establishing a no-fly zone and possibly sending troopos into Syria. The debate was initiated jointly by Conservative MP Andrew Mitchell and Labour’s Alison McGovern, a co-chair of the so-called “Friends of Syria” group. Their initiative was supported by the former US Iraq commander and CIA director General David Petraeus.

In his interview with the BBC radio, Andrew Mitchell submitted that, “the international community has an avowed responsibility to protect and that protection must be exerted. If that means confronting Russian air power defensively, on behalf of the innocent people on the ground who we are trying to protect, then we should do that.” Continue reading →

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