Archive for November 3, 2008


November 3, 2008

I am closing this blog early today.

Tomorrow is Election Day. I will take the day off from blogging.

If you love this country, you will vote!

Here is advice from those Americans who came before us.

Note To Self: Must Read Cosmic Banditos

November 3, 2008

Cosmic Banditos

— Via Twitter from TwitterLit

Reference: Cover Browser

November 3, 2008

Wow. Is this going to be handy! Cover Browser site.

Sony Reader PRS-700: Screen Issues?

November 3, 2008

Suddenly I’m getting a bunch of traffic from a MobileRead forum. (A forum in which, ironically, I can’t see two posted photos people have asked me about!)

There’s a debate going on over there about the quality of the screen of the new Sony Reader PRS-700.

I was asked about this in a Comment:

Did you notice, during your testing of the unit, if the screen of the PRS-700 is considerably dimmer than the screen of the previous model, the PRS-505? Apparently the text is not as sharp.

I replied:

Sony’s debut of the 700 was in a room with dim lighting (I hate when tech companies do that, by the way!), so the backlight was on all the time.

I suspected myself there would be an issue with the new screen because of the *touchscreen layer and sidelights*. The screen has to be recessed, unlike prior models, to accommodate both touchscreen and sidelights. Both of these could account for some dimness.

I’m not able to see the pictures referred to. All I see are IMG tags for the side-by-side photos. And I haven’t been to SonyStyle yet to check it out again in person under better lighting conditions.

I have no further thoughts on this issue. I still haven’t seen one in person again under better lighting conditions.

One thing I must clear up is this:

What puzzles me, though, is that NONE of the reviewers I’ve read, mention this issue.

— which then links to Sony Reader PRS-700: Part Two.

WTF? Where are any of my three posts labeled “Review”?! Those posts are coverage of the launch event with descriptions of what I observed of the new PRS-700.

For the record, I do not do reviews. I don’t even review books I read.

All clear? Good. Now proceed to a SonyStyle store to see for yourself. You’re bound to get to one before I do.

Chronicles Of Depression 2.0: #364: Quadrillion

November 3, 2008


The mainstream media and Wall Street have reached the consensus that the current credit crisis is the worst since the post-war period. George Soros’ statement that ”the world faces the worst finance crisis since WWII” epitomizes the collective wisdom. The crisis is currently the ultimate scapegoat for all the economic evils that currently plague the global financial system and the global economy – from collapsing stock markets of the world to food shortages in third world counties. We are repeatedly assured that the ultimate fault lies with the Credit Crisis itself; if there were no Credit Crisis, all of these terrible things would never have happened in the economy and the financial markets.

The most extraordinary thing is that the mainstream media has never attempted to compare the current economic environment to the one preceding the Great Depression. In essence, it is assumed outright that the Great Depression can never possibly happen again, ever, thus obviating the need for such a comparison. I actually believe that the macroeconomic fundamentals today are much worse, so that we are in for a protracted period of economic depression – a depression much worse than the Great Depression, a depression that would likely be remembered in history as “The Second Great Depression” or The Greater Depression, as Doug Casey has called it so aptly. Here is why I believe that this is the case.

Emphasis added by me.

This is a lengthy must-read article, filled with charts and convincing reasoning.

This is the nuclear bomb:

Explosion of Derivatives. Derivatives have been likened by Warren Buffet to “financial weapons of mass destruction”. The notional amount of total derivatives, as well as “Value at Risk” (VaR), has skyrocketed in recent years with the potential to destabilize the financial system for decades. To put it more allegorically, derivatives hang like a sword of Damocles over the financial system.

A comparison with the 1920s is difficult to make. mostly Derivatives back then were extensively used, although not widely understood. Given that I am not aware of any statistics of derivatives for the period of the 1920s, a meaningful comparison based on hard data is admittedly impossible. Nevertheless, I would venture to make an intelligent guess that the size of modern-day derivatives is hundreds or even thousands of times larger relative to the size of the economy in comparison to the 1920s. Some of the latest reports indicate that the total notional value of derivatives outstanding surpasses one quadrillion dollars. To put this into perspective, this amounts to almost 100 times the GDP of the U.S. economy.

Emphasis added by me.

Do you understand what a quadrillion is?

It continues on this subject:

The chart below shows an even more telling picture. It shows world GDP and world’s notional value of derivatives. Again, while there is no direct comparison with the 1920s, it is clear that the overall level of derivatives has skyrocketed during the last two decades and presents risks that were simply not present at the onset of the Great Depression. The unwinding of these derivatives could only be compared with a nuclear explosion in the financial system.

Emphasis added by me.

He also cites gold:

The very high Dow-Gold Ratio in 1929 was followed by the Great Depression, while the higher level in 1966 was followed by the stagflationary 70s. It is evident from the chart the peak in 2000 surpassed the previous two peaks in 1929 and 1966, so this provides a reasonable expectation that the forthcoming return to “normalcy” will be more painful than the Great Depression, at least in terms of cumulative pain over the next 10-15 years.

Emphasis added by me.

Here I must disagree. Using gold as a foundational standard of value is just — dammit, there’s no other word for it — stupid.

It’s a frikkin rock, goddammit!

The standard of value must be human beings. Anything other than that is a fantasy, a construct. And we’re soon to suffer unbearably for continuing to embrace such delusions. Let them go!

Continuing onto real estate. As I’ve already pointed out, it hasn’t been only America:

Today the picture is very different. The U.S. economy had a stock market and real estate bubble that has surpassed its own during the 1920s. Colossal US current account deficits have fuelled extraordinary growth in global monetary reserves. As a result, Europe has real estate bubbles across the board, from the U.K. and Ireland, throughout the Mediterranean (Spain, France, Italy and Greece), to the entire Baltic region (Latvia, Lithuania, and Estonia) and the Balkans (Romaina and Bulgaria). Even worse, many Asian countries (China, Korea, etc.) also have their own stock and property bubbles, only with the exception of Japan, which is still in the process of recovering from its own during the 1980s. Thus, during the 1920s only the U.S. suffered from gross financial imbalances, while today the imbalances have engulfed the whole world – both developed and developing. It stands to reason that the unwinding of those global imbalances is likely to be more painful today than it was during the Great Depression due to both size and scope.

Emphasis added by me.

Final paragraph:

Based on indicators like (1) global real estate overvaluation, (2) indebtedness, (3) leverage, (4) outstanding derivatives, (5) global bubbles, and (6) the precariousness of the global monetary system, I would argue that the accumulated imbalances in the current period surpass significantly those preceding the Great Depression. I therefore conclude that the coming U.S. (and possibly) global depression will be of greater magnitude than the Great Depression of the 1930s. It likely suggests that we are entering a historic period that will likely be known as The Greater Depression.

Emphasis added by me.

The question now is no longer, If this happens. The question now is, When will it detonate?

And once the devastation begins and we all begin to sink. the question will be, What’s the way out?

This book has a clue, but it’s otherwise almost utterly wrong.

All prior Chronicles of Depression 2.0 posts. Read them now.

Chronicles Of Depression 2.0: #363: Hollow

November 3, 2008

Economy sinks as we save bankers

To review the point that I made in Chapter 7 of my book “Greenspan’s Bubbles” and in many columns: In the past expansion, economic growth was almost entirely about real estate. Gross-domestic-product growth, excluding mortgage-equity extraction, was almost nonexistent. In addition, when you consider that 30% to 40% of all jobs were real-estate-oriented, it’s clear how hollow the economy is liable to be going forward.

Emphasis added by me.

Is there anyone out there reading this who can confirm that statistic?

This is perhaps the most important statistic I’ve ever seen cited.

It explains a lot and ties into the next post I’ll be doing.

I need to give some background here.

One phrase I have heard over and over again in relation to various scenarios is this: Progress is automatic.

It’s been used to describe the future as depicted by the 1939 World’s Fair.

It’s been used to describe various aspects of Darwinistic beliefs.

It’s been used as the cornerstone of some beliefs in America.

It has, in fact, been the foundation of advocates of pure reason.

But progress is not automatic.

Human history testifies to the fact that civilizations deemed advanced have collapsed. Jared Diamond’s book, Collapse: How Societies Choose to Fail or Succeed, explores the factors that have wiped out past human societies.

The financial crisis we are facing — and are still heading towards — is one of those things that has a high probability of bringing on such a societal collapse.

However, that collapse does not have its roots in this recent round of financial rapacity and outright fraud. The seed for the true roots were planted with a noxious idea called deindustrialization. The wikipedia entry does not do the term justice (nor does the entry cite the seminal book on the topic!).

Deindustrialization falls under the foolish notion of “progress is automatic.”

That is, as a population becomes materially better off, it will also aspire to better jobs. Thus, at some point in the future, the population will become too educated to sustain a manufacturing base. Manufacturing is seen as labor “unworthy” of the educated.

There are several fallacies to that line of thinking. The most dangerous one is that it posits all of a nation’s citizens advancing educationally at the same rate.

We only have to look around to see that’s not true.

An additional error in that wikipedia entry is this:

Total industrial employment has been roughly constant at around 30 million people since the late 1970s (though there has been a steady decline since the all-time peak of 31.5 million in 2000).

Wait a minute. What about industrial employment before 1970?

Before 1970, this nation made its own televisions, radios, and more. Look at the back of any electronic device today and you’ll find Made in China. (The same thing for toys … and much, much more.) When it comes to employment, this is where economics devolves into “winners and losers.”

Free trade fundamentalists will argue that cheaper goods are beneficial to a nation. They ignore the fact that the cost of these goods comes at the expense of a nation’s workers losing their jobsand of potential future employees not having a job waiting for them.

Of what benefit are cheaper goods if the nation’s population can’t afford to buy them?

A devastating ongoing consequence of deindustrialization is a growing population of the discontented and discouraged. Facing a bleak future, their allegiance to the society as a whole is weakened and can ultimately descend into a dark mirror image of the sociopathology at the top of the society — a sociopathology based not on the “luxury” of monetary greed, but based on the overwhelming need to merely survive.

There are two factors today that disguise just how bad things actually are in America:

1) Safety net disbursals by governments (which still don’t prevent a persistent homeless population)

2) The shadow economy based on illegal drugs (which manifests itself in others ways; one being predation upon others)

If those monies — and “opportunities” — were subtracted from the American economy, what would be left as its primary engine of growth?

Would it be what the statistic above cites — real estate?

If that’s true, then indeed, “Now we’re sitting on the biggest bomb man’s ever made.”

And the true dimensions of this bomb have suddenly become greater than all past estimates.

See the next post for just how big.

I’m Voting For Ralph Nader

November 3, 2008

This post is a sticky that will drop down after the election.

Update: I voted for Nader early this morning. Shockingly, there weren’t the looooong lines I expected at my polling place.

Ralph Nader, a Government for the people!

I’m A Human Being, God Damn It! My Life Has Value!

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