Economics, Eurasia, Media, Policy, Politics, Social development, Truth

Vladimir Putin’s 17 years in power: the scorecard

Mr. Putin can’t seem to get a break in the western media. I watched his recent interview with CBS’s Megyn Kelly with her tiresome, boring questions like, “did Russia interfere in our election,” “did your ambassador meet with Trump’s election officials,”  “isn’t it true that you’re a corrupt murderous thug,” etc. Only in response to Kelly’s last question did Mr. Putin get to name a handful of his achievements in Russia. But someone ought to better prepare his talking points on this score. The below excerpt from my upcoming book summarizes how Russia has changed during the 17 years since Mr. Putin has been at helm.

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Central banking, Economics, Inflation, Monetary reform, Social development, Uncategorized

Inflation: lessons from the last empire’s collapse

So far, the dreams of 1,000-year empires and stable world domination have eluded the ruling elites throughout history and across the globe. Empires arise, sustain themselves for a century or two and then rapidly decay and collapse. The collapse may appear relatively fast and obvious in hindsight, but in reality it spans decades, may appear as a series of temporary crises and only become obvious very late into the slow-motion train wreck. Continue reading

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Commodity price, Commodity risk, Economics, Energy crisis, Hedging, Inflation, Oil market, Policy, Social development

Is an epic energy crunch in the making?

Last year I published a report with the (justifiably) bombastic title, “$500 per barrel: could oil price rise tenfold?” One of my central claims was that producing oil requires investment of real capital including materials, equipment and highly skilled labor, and that, “as more and more resources are required to generate the same amount of liquid fuels, energy production is becoming ever more expensive to society in real terms.” Thus, as it becomes more expensive in real terms (as the deteriorating EROEI figures indicate), the fact that energy has recently become cheaper in nominal (dollar) terms can only be a temporary abberation. EROEI stands for energy return on energy invested; in the early 1900s, we obtained 100 barrels euqivalent of oil per barrel invested (EROEI of 100 to 1); today we are at about 15 to 1 globally and at 11 to 1 in the USA. Continue reading

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Asset management, Behavioral finance, Commodity price, Complexity, Economics, Expertise, Hedging, Market psychology, Psychology, Stock market, trading, trend following

The illusion of expertise in financial markets

Participants in financial markets have to deal with uncertainty on a daily basis. Their need to research and understand markets has given rise to a massive industry delivering security prices, reports and expert analyses to traders and investors seeking to make sense of the markets and predict how they might unfold in the future.

The need to understand stuff is innate to our psychology: when something happens, we almost reflexively want to know why it happened. But the compulsion to pair an effect with its cause sometimes gets us jumping to conclusions. If such conclusions turn out to be mistaken or irrelevant, they could prove useless – or something worse. Consider two recent titles from the ZeroHedge blog, published 89 minutes apart: Continue reading

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Economics, Policy, Politics, Social development

Meet the riff-raff Trump supporters!

Donald Trump and his administration have been at the receiving end of passionate denounciations and scorn from many opinion leaders in the media. At the same time Trump’s approval rating among American voters has ranged between 50% and 60%. Here’s a statistical sketch of this American riff-raff and why they may support Trump.

Fully 35% of Americans do not have enough money to live comfortably (english: they can’t make ends meet). That’s more than 110 million people. These Americans have to supplement their cost of living with credit card debt. The Urban Institute reports that this same proportion of Americans (35%) have debt in collections (180 or more days past due). On average, the households that carry credit card debt are over $16,000 in the hole, paying an average interest rate at 16.1% (that’s $2,600 per year just in interest). Continue reading

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Commodity price, Economics, Energy crisis, Hedging, Market research, Oil market, trading

Saudis to unveil the big secret? Not likely.

Over at OilPrice.com Nick Cunningham wrote that Saudi Arabia might finally reveal one of its closest kept secrets as they prepare to sell some 5% of its oil monopoly, Saudi Aramco, to the public. The Saudis and their Wall Street bankers expect Aramco to be valued at $2 to $3 trillion, which would generate north of $100 billion for the Saudis and massive underwriting fees for Wall Street Banks.

Since both the Saudis and Wall Street hope for the highest possible valuation for Aramco, we should not expect that they’ll “unveil” anything less than the rosiest plausible figure for their oil reserves. 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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