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Fracking – the hydraulic fracturing of the deep earth and its cousin, horizontal drilling – is the new buzz word in energy today. It has been spread by journalists and correspondents and NGOs to the general public. What is this strange word's impact on our own lives?

A simple, four stage answer would include: 

  • jobs
  • energy
  • imports
  • environment

FRACKING: AN INTRODUCTION

          A hearty ‘Thank You’ to all with whom I met during my recent sojourn in the Sunny Sate of California. 34 families and friends gave me time to visit, to discuss personal financial concerns and to listen. Here are a few perspectives from the visit.

          Spring is the best time of year. Southern California truly comes into her own during these beautiful months. Green is the abundant color, under warming blue skies. After the cool and wet of winter, you each appreciated the arrival of spring and its new growth. Fortunate are we who live in such a marvelous land. The arboreal forest within which I live is coming alive more each day. New birdsong. New treetop greenery. New chthonic sprouts.

          Politics was a universal question. “How will the elections impact my portfolio?” You all know my response. “My crystal ball remains as black as ever. I have no idea what the future will bring.” I learned from mistakes of my winter visit not to ‘visit upon you’ my own political views. Our relationship is professional and friendly. I shall try to avoid sharing my political opinions forever forward! Having said that, I do feel the entertainment industry has much to learn from the political industry – and that until the conventions are over and the serious campaigning begins, my world of economics and markets will continue to ‘whistle past the graveyard’… When we visit again in August perhaps the whistling will change to – who knows what. Certainly not me.

          A third observation: there is a growing disparity between those of us raised in the 1950s – 1970s and our children and grandchildren. Our views differ. Our lives differ. Our concerns differ. Perhaps it is a result of my professional world. I only work with financially successful families. (Like it or not, virtually all of you are in the 1% group!). We underwent the rigors of education, training, religion, patriotism, financial responsibility and community support. These moral devices set our course. Other compasses seem more important today. There is an expectation. The extended hand demands rather than offers. Teaching is about what to think rather than how to think.

          As a result, a climate of fear pervades. Nothing wrong with fear. We are mammals living on a vicious planet with enemies fanged and furious. Yet we seem to be more fanged and furious against our species than against others. Frankly, having seen polar bears and lions and elephants and whales ‘up close and personal’, I prefer humans. Every one of these beasts would destroy us in a heartbeat (yes, even whales) and enjoy the meal. Cannibals and communists excepted, that is not the case with humans.

We do seem intent upon self destruction. Of the species. Our sins grow far faster than our extirpations. Yet humanity is better situated today than ever in its tumultuous history.

The growth in world population is rapidly slowing (it should stop altogether before my centenary in 2048).

Fewer of our species are at risk of starvation, malnutrition or early death.

More humans have a greater array of ‘human rights’.

Health, education, voting rights, personal property ownership, political voice, environmental awareness and religious freedoms have each expanded.

These have expanded more during our lifetimes than at any time previous.

          Ask yourself, when you make a decision, is this good – or because I am afraid. Go ahead, I’ll wait…

          Did you ‘give yourself permission’ today to simply look at the forest, the mountains, the ocean and see without prejudice?

Did you call someone or email them just for the joy of talking and listening?

When you speak with another, how much time do you spend talking? How much time do you spend listening?

There are no wrong answers here. The point of the exercise is perspective.

Step outside the climate of fear that seems to pervade and see with different eyes.

Give thanks – to you family, your friends, your nation or your God, as you choose.

Those of you who have known me for decades can see my rant a mile away.

Pollyanna perhaps.

Or simply thankful for the Joy of Spring. Of friends. Of family.

I abjure fear. I enjoy facts. Love does not conquer all – but it ruins the day for those who fear!

 

Eat wisely.

Sleep well…

Love with abandon!

 

The decline in gas prices across the nation has added $1,200 a year to the average family’s income – this according to AAA. The figure varies by state, of course. Some are paying less than $1.50 for gas, others are paying more. 

          So, where’s the extra money in our pockets? Where’s the beef?

          Three answers: savings/debt; rent; health care costs.

          One. We are saving more as a nation. Our savings rate has gone from -2% in 2007 to +4.5% in 2015. That is a good result. We are also paying down debt, whether short term credit card debt or our mortgages. As more retirees enter their golden years, the vast majority have little or no mortgage debt and few have any credit card debt. We should teach our children well… This is, nevertheless, not the best of news. As consumers, we tend to spend less and save more when we are ‘less than sanguine’ about our family’s future. We don’t spend because we don’t like what we see coming down the pike.

          Two. Rents have increased every year for the nation. The figure has jumped from 22% to 25%+ as a percent of after tax income. This is from ECRI, the most consistent econometrics firm globally. As rents increase, disposable income drops. Recall that rent is a ‘non-discretionary item’. This means the renter has little choice: she must pay the rent or move and pay another rate. She can always buy – if she has enough for a down payment, can qualify for the mortgage and can afford the costs of home ownership. Home ownership has declined from 67% of the nation to 63% since 2008… Single parent families continue to rise: 70%+ for black families, 34% for non-Asians. Single parent families struggle – by definition. Today’s family economy is based upon two wage earners. Take one away and you create poverty and federal assistance.

          Three. Health care costs. If you were Rip Van Winkle and just awoke from a five year nap, you would be shocked at today’s health care costs. Premiums have skyrocketed for everyone. Whether you get health insurance through your employer, through the federal exchanges or their state counterparts or through the Medicare/Medical system, your cost has gone up. 30% increases are typical for 2016. Deductible and co pays have increased, the ‘doughnut’ has grown (the amount you have to pay between the co-pay limit and the coverage limit) and prices for care, drugs and good health maintenance have increased. Health care is also non-discretionary – at least on the books.

 

In fact, it is discretionary within each family. We each decide what to eat, how often and how much, where we shop for food and what we buy. We also choose our medications if they are over the counter. We make our healthy lifestyle choices. We allocate our budgets to what we can afford. For the poorest, cheap food is fast food. It is canned and processed food. It is not organic, locavore, vegan or healthy. You can buy a meal for four for less than $10 at a quickie shop or you can buy a small amount of organic carrots, spinach and fruit for $10. Eating healthy is not cheap. It is not a choice for most families in America today.

While we may be reaping the reward of cheaper gas in our cars, we are either saving it or spending it on the necessities of life. Our lifestyle choices, like our financial choices, define our immediate future. What can we afford? How much should we save? What’s for dinner? Are we fit? Who’s going to pay for that?

The solutions to these perplexing issues are being debated across the nation, the world. A revolution could be at hand if enough people express their dissatisfaction with ‘the ways things are’. What direction this revolution takes is entirely unknown. We have miscreants, rabble rousers and dictators enough for our choices – and too few reasonable men and women.

For 50 years I expressed a faith in the American voter to make the right choices, overall. Today, I wonder. Will I be proven correct? Time will tell.

Sleep well.

Eat wisely.

Love with abandon!

 

CO2 emissions to peak, begin falling around 2030

Just Say No.

Wind energy is viewed by many as an alternative energy panacea.

Is it?

The rare earth ‘neodymium’ is the magnet at the top of the turbine tower. Chinese rare earth mines kill and maim thousands of workers each year. Those who survive have extremely high cancer rates. The mine tailings are the most polluted, poisoned place on Planet Earth.

Infrasound sickens many who live near turbines. Flicker makes others sleepless or ill.

260+ people have died in turbine ‘structural liberations’ – crash and burns – around the world.

The wind industry receives massive tax support, while rate payers see massive price increases.

Wind turbines offer intermittent power. They cause increased CO2 emissions from ‘stand-by power sources’ burning coal and natural gas.

Turbines are made of millions of pounds of steel and concrete. Blades are made from hydrocarbon based plastic. Thousands of tons of CO2 emissions result.

Unknown millions of birds die in the spinning blades. Hawks, falcons, bats, osprey, owls die. A legal ‘license to kill’ annihilates endangered whooping cranes, condors, golden and bald eagles.

A wide variety of turbine choices are available. These do not kill, maim, injure, sicken. They are not supported by taxes or regulations. Millionaires and billionaires are not made wealthier.

Know the alternatives. Ask questions. Nudge your representative.

Help save birds and your neighbors.

Just say no to North Carolina’s wind Franken Towers!

 

John Graves

Author

Broken Wing: Birds, Blades and Broken Promises

 

Rachel Carson wrote, in Silent Spring:

Spring now comes unheralded by the return of the birds, and the early mornings are strangely silent where once they were filled with birdsong.

Little did she know the movement she began would lead to the destruction she envisaged

I’d like to announce the release of my third book:

          Broken Wing: Birds, Blades and Broken Promises

 

This is in eBook format and is available for free Kindle Unlimited download. Dozens of avian videos introduce you to species at risk. 

          http://amzn.to/22V88Cu

Please find a front and back cover attached.

Today’s wind turbines

          Kill millions of birds worldwide: raptors are threatened with extinction

          Require significant amounts of CO2 to manufacture

          Deliver electricity intermittently, at best

          Require enormous back up coal and gas fired power plants creating yet more CO2

          Can be unhealthy or harmful to local residents

          Are deadly – to core component manufacturers and maintenance personnel

          Have enormous costs – paid for by the taxpayer

There are many alternative wind turbine choices that do  not harm birds or people and are far more cost effective.

Only the wealthiest investors take benefit from today’s wind industry. Most of us pay higher prices for their indulgences.

My intention is to encourage awareness of the entire story, of effective design choices and of how to bring change to your local community.

I hope you enjoy the book and its electronic format.

The bird videos are amazing!

The story is important for conservation and for the environment.

Your comments are appreciated!

 

Thank you,

John

 

 

I’m reading a book about anti-gravity. I can’t put it down.

Know the name for this type of wordplay? If you read your Farmer’s Almanac faithfully each year, you do.

This is the same simple tome that has been in continuous printing since 1792.

What else began in that year? I’ll offer you a hint – us. Important people built a nation during a humid Philadelphia summer.

‘Useful, with a pleasant degree of humor’.

‘Featuring astronomical tables, tides, holidays, eclipses, etc.’

‘New, useful and entertaining material.’

Claiming 80% accuracy for weather predictions for each of the past 240 years, they have a sad tale for the West in 2015-16. The drought will continue unabated, with precipitation below normal for a fifth year. Their secret mix of solar cycles and 240 years of data is difficult to argue against. They were wrong last year for much of the nation…

Where are we going with this end of year trivia? Important people. Statistics.  Important people.

The Byzantine emperor Heraclius fought the Syrian/Persian civilization for 25 years. On December 12th, 627 AD, he lured their army into a trap and exterminated it. The Sassanid empire was wiped out. Byzantium ruled between the Tigris and the Euphrates rivers, controlling most of what we call the Middle East today. A victory that destroyed an empire became the defeat that initiated the birth of a new religion. Just a few years later an upstart merchant in Medina began Islam, a local word for submission. Less than a century later, the new empire ruled from India to France, controlling more than half the human population of the planet.

Who was the ‘important man’ of the day? Was it Heraclius, the ruler of the civilized world or the Medina merchant. Only time would tell. You have never heard of the former, while everyone knows the name of the latter.

Similar battles have been waged across many fields: Tours, Samarkand, Vienna, Benin, Cuzco, Antietam, Stalingrad. Millions died. Nations collapsed or expanded. Heroes were made or destroyed. We learn important names but little else. The blood and sweat, the fear and glory is only in the hearts of those pitted tooth and fang against one another. The tale belongs to the victor. The vanquished are buried under or piled upon the sands of time.

          Statistics

Mark Twain is quoted as the original author of ‘lies, damn lies and statistics’. Symptomatic of the issue, there are at least half a dozen potential candidates other than Mr. Clemens.

The search for ‘truth’ took its lead from religion in 17th century Europe. As Christianity chasmed into several competing belief systems, truth was sought by ‘natural philosophers’, the precursors of today’s scientists. A few generations later and the scientific method was being developed: ascertainable observations repeatable by others led to hypotheses which, upon further verification became theories. Under the press of double blind and peer reviewed studies, these could eventually become scientific ‘law’.

Today there are an incredibly small number of scientific laws. Certainty – truth – is an inconstant lover. She has slipped out the back door of virtually every scientist who has bedded her. A few have found her relatively faithful: Herschel, Curie, Darwin, Einstein.

Statistics is the collection, organization and interpretation of mathematical data. At all three levels it’s virtue is challenged. The manner is which each of these tasks is approached suggests courtship. The seduction of data is far easier than of human will. There is no resistance, only submission. Plundered passion or passionate plunder, either results in unwanted events.

Alfred North Whitehead wrote a two volume tome in the ‘tween times of European aggression, simply to demonstrate than 2 + 2 = 4. Of course, it doesn’t have to do any such thing. On can envision a data series (universe) in which this is impossible, actually. Talk about torturing facts to present your case!

Suffice it to say that statistics can be made to say anything you wish. You are the conman, the arbiter, the seducer, the mendicant.

We have an example today from the world of US population data. Some say that inequality is increasing in America. The gap between rich and poor has grown. The middle class have seen an erosion of buying power, not from inflation but from wage compression and unemployment. Yet, this ignores an important wealth source: government transfers. Tax credits, unemployment and disability insurance, Social Security income and Medicare/Medical payments are worth $90T+. The wealthiest 10% of American have wealth of $60T. (That would include most of you, dear readers).

The differences between poverty in the 1950s and 1960s and today is as vast as the difference between Heraclius’ empire and the American empire. 98% of today’s poor own at least two TVs. 97% own three or more cell phones. 84% own their own car. 42% own their home. 40% suffer from excess weight rather than insufficient caloric intake. Inequality of wealth is in the eyes of the beholder – or the stomach of the consumer.

You can make statistics tell as many tales are you might imagine. 

Demographics today show a huge python image on a chart of age. We Boomers are moving through the belly of the beast. There are fewer behind us and ahead of us. Many of us are disappointed in today’s leadership of all kinds. Many feel slighted or ignored or simply abused by the powerful. Many of us are gyrating towards demagogues. This is a person who knows they are right, no matter the facts. They are preachers and ideologues and firebrands. Between left and right today, it would appear that more than half the polled voting population has chosen one or another demagogue. Should these choices become demi-gods, we will have a real problem.

Statistics. Important people.

You can’t live with them and you can’t live without them.

 

Eat wisely,

Sleep well,

Love with abandon…

 

VENTURA September 30, 2015 — Safe Harbor Publications has been selected for the 2015 Best of Ventura Award in the Book Publishers category by the Ventura Award Program.

Each year, the Ventura Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Ventura area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2015 Ventura Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Ventura Award Program and data provided by third parties.

About Ventura Award Program

The Ventura Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Ventura area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Ventura Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

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Bread and circus. In ancient Rome, the masses of workers and slaves were entertained by the circuses. These were far removed from our circus of trained animals and humans, of clowns in tiny cars.

Gladiators fought in bloody combat. Animals fought one another and gladiators. Activists were chained while beasts attacked, killed and ate them. Rape was a favorite for the crowds, as was crucifixion. The shows were free for all, as was the food. Bread was tossed into the stands, to the cheers of the crowds.

Bread and circus. Distractions to entertain. Careers were built upon the Coliseum of Rome and the smaller fixtures in the far flung cities of the Empire. From gladiators to emperors, making the Game became a fixation for all. The substitution of entertainment for reality was well engineered. The entire Coliseum could be flooded for imitation sea battles. Herds of animals were constantly brought in to feed the masses food and phantasmagoria.

Is there any difference between these shows and today’s media coliseums? Combative words and games continue. The absence of blood is proof of distraction. Games are more formalized. Victims are sometimes falsely bloodied – and sometimes truly injured. The crowds roar.

Hunting has become gaming which has become sporting. The hunt moves from the battlefield to the coliseum to the arena. We are instilled with the lust for blood. We are animals cloaked in thin veils of humanity. I have seen a stoning in Saudi Arabia. Unlike Jesus’ parable, those without guilt – and with it – fought for the stones brought in by the ton with bulldozers. Children guarded piles for their glaring parents. Women sat on carpets distilling tea, awaiting the main event. When it was over, the victim, a woman, was buried beneath a crush of thrown rock.

We are distracted by the bread and circus of power, politics, religion and media. We cheer and grown for each combatant. Left and right are framed. The framing is a cage. The distinction forces combat. Where we once had compromise, we now have combat. It is encouraged. Bread and circus.

The first rule of power is distraction. Fool the powerless with tales of heroes. Show them feats of strength. Urge the battle in the stands. This distraction is their source of power. Exploit it to make millions, rule millions. Repeat as needed. Gold is extracted from lead. Quite easy, once you get the game.

You are today distracted by a religious leader being paraded before the crowds as an apostle – of peace, of justice, of earthy stewardship. He is simply the condemned riding to his death in the arena. He reenacts his God’s journey. He has no idea what is to come. He is the hero, about to die for the masses. ‘We who are about to die salute you’. At least the gladiators had a battle cry. He simply urges equality for the earth…

Is there any hope? Earthlings go about their business of buying and dying, of propagating and promulgating, of taxing and texting. Circuses come and go. Heroes die every day. Power moves inexorably to politicians and panderers.  Grifters abound in a world of graft. Power does not corrupt, it encourages more power.

The second rule of the powerful is growth. Once an organism is able to reproduce, it will continue to do so until genetically destroyed. Viruses and rocks do not reproduce. Cancers do. Government bodies do. The administration of legislation through regulation is the cancer of the powerful. “The only thing we have that comes close to eternal life is a government body.” Look it up if you don’t know the source of this quote. These bodies rarely fail. Success depends upon continuity. Powerful interests ensure this flow. Money flows down the pipeline from ‘the commons’ of taxation.

The tragedy of the commons: if no one owns a common area, all use it without regard. Think of global fisheries. No one owns the oceans, so all extract and exploit them – to the last fish. (Of all the environmental nonsense we are subject to, this one has a significant degree of truth.) Taxes are a commons. No one ‘owns’ taxes. Demand for more can always and easily be imagined. Draw more from the pot please.

Money flows like water cascading down a waterfall. A stream becomes a river. The river dumps into the sea. The powerful enjoy their yachts upon this sea of infinite wealth. Many complain today that we are among the least taxed on Earth. There is so much to do! Tax and spend.

The distractions continue. Entertain the masses of your choice with the circus of media/Congressional/Judicial investigations. Justice no longer holds the scales – she is in the scale. She is for sale to any bidder. The scarlet letter is for Adjudication. The third rule of power is ‘the law’. You always make the rules of the game. Change them as necessary. Attack any who fight against any rule. Mercilessly destroy any who question your right to write. The pen enables the sword. Neither has any power unto itself. That is the distraction. Power flows to the hand that holds.

Our Revolutionary War Masons have become Perry Mason. Their caricature is their demise. The Magna Charta has devolved into a mere Magnum Opus. By taking power from the king, you give the new kings more power. Fool me once, bad on you; fool me twice, bad on me. The masons now help the poor in their midst – their own poor who must give all they have upon death to be cared for while awaiting the flames. Poverty is visited upon the less worthy.

The fourth rule is of the heart. Exploit the saddened masses with saddles of guilt. Overload their asses with gelded gold. A tear in time saves nine – nine times the energy wasted upon their worthless asses. Crush humanity with oppression, then extract their last dime for poverty causes. Guilt replaces gelt. They are assuaged with your indulgences. They will now even pay you for a flight to heaven or to London. Now that Carbon is Evil, you charge them just so they can pass the gas  on – to others. It is the rosary infliction today. What a brilliant concept – tax carbon dioxide. The Satanic Gas is the basis for all life forms on Earth. Tax it! Devil take it!

Whether you are the Great Satan, a Great Power or the Great Poomba, as long as you follow these four rules, you win. Heart. Law. Growth. Distract. Einstein had the right idea, he simply worked the wrong crowd. Nice Princeton gig. Relativity for the masses. There are but four aspects, four powers, four forms of energy. Earth. Air. Fire. Water.

“I’ll have grounds

More relative than this – the play’s the thing

Wherein I’ll catch the conscience of the king.”

A play is upon us. Every few decades, the masses rise up in devilry and arms against their oppressors. Change is fomented. “The center has come undone”. People express dissatisfaction with leaders. New leaders arise. Extremism becomes powerful. Many sense injustice. Hollow reforms are shouted down. ‘Measures must be taken!’

When these ‘irruptions of the assent’ soil clothing, changes are in order. We suddenly realize the emperor has no clothes. As these changes disturb the fabric of our world, we become unsettled. Passions arise. Voices of heretics become fashionable. Blood flows in the streets. Bonfires of the Vanities are set. ‘All are punished’.

Our young offended princes are now engaged in a play. Perhaps they will catch the conscience of the king. Perhaps death and poison are in store. Certainly Fortinbras will enter, stage left, to settle the story and the audience. Pen’s powerful sword.

These circuses continue. Today we play at war in word arenas. We sulk and thrust, insult and engage ghosts, lovers and mothers. We are less certain than ever, playing fearlessly in our screened Games of Thrones, hiding fearfully in the real world of runes. Revolution is in the air! Le plus ca change, le plus c’est le meme chose. You say you want a revolution? You gotta pay me for the show, ya cheeky buggar!

Let The Games begin!

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Convergence. Two galaxies meet in the depths of the infinite. They share gases, matter, energy. Sometimes they pass by. Sometimes one is subsumed into the other. The coincidence is anything but serendipitous.

Power. Politics. Ideology. Beliefs. We are hearing these words this week as a religious leader meets political leaders on his way to a Family Celebration. Despite his protestations, he is subsumed by the politicians deftly, with nary a ruffle of his cloak. He doesn’t seem to know or care. The hustle is on.

Galaxies collide, just as continents collide. Time lines differ by orders of magnitude from our meager lives, yet the processes are similar across the time voids. Matter and energy are transferred. Dominance prevails.

Humanity appears to be in turmoil. Vast gulfs divide opinionated peoples – by religion, politics, culture and wealth. We are easily distracted by the lead story, ignoring the back story.

We are in the throes of change today. Politicians, religious leaders, ideologies and grifters abound.  The myth of the rational (voter, optimist, economist) is a distraction. We are visceral animals. Response is fight or flight, greed or fear, attraction or distraction. We may have lost our blood edge from the savannas of 2 million years ago but we remain bloody patrons of the game.

I have just finished “H Is for Hawk” by Helen Macdonald. A soft spoken woman falconer weaves three stories into a marvelous tale: the death of her father, the hawking story of British author J. A. Baker (A Once and Future King) and her training of a goshawk, Mabel. While the story is interesting and well told, the intimacy between her and Mabel is fascinating. Helen finally lets Mabel hunt freely, scrambling through fields and scrub to track her and her kills. Rather than take the kill from the goshawk as it common practice, Helen watches like a mother, pulling hair from a recent kill, feeling the pulse die, tasting the blood. She allows Mabel her freedom to be what she is – a bloodthirsty killer of rapacious skill, genetically modified over millennia to near perfection. In so doing, she participates in the intimacy of death.

Helen becomes the primitive killer of our near ancient ancestors, if but once removed from the kill. In our removed world of media impressions, we still need blood under our nails. Vicariously we enjoy the current battles on our screens. Gladiators we are not, but we do enjoy having bread tossed to us in the viewing arenas. Blood and lust are our passions, distilled to a drained expression of wordy combat.

Yes, we are exploited. The masses are non-rational. We can occasionally make good decisions. Rarely, we make wise decisions. The exploitation has the cover of politics, of belief, of salvation, of righteousness. Yet these are simply the cover story. They are distractions, the primary tool of every magician.

Passions are aroused over persona, ideas, distinctions, simple words. The passion is the distraction. It fools us. We ignore the man behind the screed. Fool me once, bad on you. Fool me twice, bad on me. We are constantly fooled by a myriad of noise. The cacophony of silence is where we should be tuned.

This silence is where the story begins. The curtain of silence, once lifted, reveals the beating heart of the victim. Once you taste the blood (as if for the first time) you relearn your place. You are the hunter, not the pastoralist. Life is always ‘short, brutish and dark’. Your task is survival. Survival is about the species, never the individual. Heroes always die. Whether in sacrifice or surplice, ‘we who about to die salute you’. 

The powerful, the politician, the mediatrician, the firm believer  – each understands their first role is distraction. They distract with words, images, graphs, stories to pull at your heart. Each seeks more influence, money and power. You pay them to distract you. You earn their derision.

Give yourself permission to step outside. Go for a walk. Be distracted by a bird’s flight, a cloud’s covering, a forest’s hush. This silence holds far more for you. Listen.

Don’t let the bastards get to you!

To be continued…

 

          Much ink has been spilled of late on the question of the Chinese stock market, her economy and the effects these may have upon your portfolios.

Let review the facts and leave the fear to the mongers. Many thanks to this week’s Economist for their lead article, ‘China and the World Economy’.

 

                    Positives Aspects

 

          The US exports less than 1% of GDP to China. Exports are driven by demand. If Chinese demand for US products dries up, the US impact will be nominal.

          Chinese GDP grow has slowed from 8% to 4%. If we discount their rather dubious figures by 50%, they have a growth rate of 2% (down from 4%): in line with US growth.

          Chinese stock markets are less than 30% of their economy. They are widely known as legalized casinos. Fundamental analysis has no value.

Fewer than 20% of Chinese participate in this ‘punters game’. Those who do borrow heavily to make bets and walk away. This debt is less than 1% of countrywide debt.

Real estate is far more important to the Chinese economy and psyche. While it too is a punters arena, less debt is used or available. Residential remains positive.

Banks have been told to hold lower reserves, at 18%, vs. US banks at 6%.

Massive capital reserves remain on banks and government ledgers. These are available as economic buffers or currency plays (never a wise choice).

The government remains in surplus – unheard of in these United States of Debt…

 

          Negative Aspects

 

Government debt remains high at 250% of GDP. Compare this to the US at 90% of GDP. Chinese debt has doubled since ’08. US debt has quadrupled.

Furtive attempts to curtail the stock market have failed. Currency exchange ‘adjustments’ have failed. Speculation remains rife in their stock market.

The Party controls as much as it can – sometimes effectively, oftentimes ad hoc, stumbling from one crisis to the next.

They think they know more than they do. Sound familiar? Pride falls the hero every time.

While the home of capitalism, the Chinese are still ‘remembering’ the rules of the capitalist game. They disagree with much and offer a ‘third way’.

While this way worked well in Singapore, it has yet to be applied effectively in the larger realm of The Middle Kingdom.

Xenophobic or racist, the Chinese have a view towards others that is domineering and demanding. They are not shy of reminding us all that theirs is the oldest civilization.

Private capital flight has increased, moving offshore to the ‘near China sphere’.

Commodity consumption is falling. The economy is transitioning from an export nation to a consumer nation.

Chinese production is shifting, as a result. This will take a decade or more. Her population is both ageing and stabilizing. Demands are shifting to the youth and the aged.

Construction demand has slowed at most levels. ‘Empty cities’ must be filled as older ones are refurbished and renewed.

China consumes 50% of global aluminum, nickel and steel production and 30% of cotton and rice. As it becomes a producer of these materials, it imports less.

Export nations – Germany, Australia, Brazil, Argentina, Mexico – are suffering the consequences. Korea, Singapore and Taiwan suffer less.

The Asian 1997 crisis comes to mind. But today, these nations have no currency flight issues as they are no longer pegged to the USD. They are more elastic.

Global trade has declined as a result of reduced Chinese raw materials demand. This impacts export nations more than import nations (USA).

 

There is no final answer here. The fear of a domino effect are potentially realistic. If China falls into recession or depression, the global economy may follow suit. As global demand dries up, other nations’ economies shrivel. Europe and the US have no ‘capital elasticity’. Each can raise interest rates as their economies do better; neither can reduce rates lower than 0%. Or can they…

 

Currencies may collapse as faith disintegrates in the Euro and the USD.

 

Fascist political choices are cropping up in Spain, Greece, England, Russia, the Middle East and, worst of all, in the US. If these ner-do-wells become leaders, rational behavior is replaced by ideological idiocy. Hatreds easily become war.

 

Of course, the planet will eventually freeze over in the next Ice Age, too. The seas may rise with temperatures over a thousand years, too. The hidden mufti may appear. The Frog God will swallow the moon (Aboriginal). The great cycle of life and death will consume all.

 

You have to choose your enemies well. There is a low likelihood of dominos, despots or deluge. While interesting dinner talk, the real world involves more prosaic challenges and opportunities. As I write this, the Dow has dropped by 350+ points. This brings it back to October of 2014. I recall the worry then of slow growth, declining demand and diminishing investment opportunities. I said ‘so what?’ then and repeat it today.

 

Having been a willing professional participant in the investment world for 30+ years, I can be calloused regarding daily events. We have seen this more than a dozen times in my tenure. As an investor for 20 years prior to 1985, I have even more boring experiences. Yes, wealth can be wiped out. This happens when debt overpowers, not when stock markets gyrate. Want to worry? Worry about excessive governmental debt around the globe. This keeps me up at 4 am…

 

Events in China indirectly effect our portfolios in the short term. Debt and taxes hurt us all far more deeply. Power plays by Game of Thrones politicians are fearful and can be hurtful. The dynamic of demand and consume will drive economies, despite the sturm und drang of regulations and revisionists.

 

Over the Labor Day weekend I am reading: Why Information Grows: by Cesar Hidalgo, a Chilean professor at MIT. He offers a refreshing, if complex, answer to the question, ‘Why does the evolution of ideas, life and planets differ from the expected? Physics says that decay is the norm. yet this is clearly false. Why?

 

I’ll let you know!

 

Eat wisely.

Sleep well.

Love with abandon!

 

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