Europeans should assert the right to bear arms

Laws that forbid the carrying of arms, disarm only those who are neither inclined, nor determined to commit crimes. Such laws make things worse for the assaulted and better for the assailants. They serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man. – Thomas Jefferson

On Friday, 13^th November Paris witnessed the worst terror attacks in its modern history. As if on cue, President Hollande led the western establishment’s predictable knee-jerk reaction in calling for greater security, more intrusive surveillance and diminished civil liberties. Within a few days the European Commission (EC) adopted a package of measures including stricter controls on sale and registration of firearms and a “ban on certain semi-automatic firearms which will not, under any circumstance be allowed to be held by private persons…”

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Our energy predicament

In the wake of last year’s oil price collapse we are once again reassured about an overabundance of cheap oil. This could only be a temporary aberration. Below I present the reasons why the prospects are grim and the price of oil is likely to rise multi-fold in the next few years. The consequences for the western societies will be serious.

During the 19 years of my career in commodities I have observed time and again how significant price changes shape the prevailing market narrative. By narrative here I mean a shared interpretation of the way key causal forces affect market events. Market fundamentals – available bits of relevant data and information – are the building blocks that mould our understanding of what’s going on, but what we do with them depends on how we evaluate their relevance and credibility. This is never a straightforward process, so at any one time we can entertain more than one possible interpretation of market conditions.

Understanding inflation

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency – V. I. Lenin

The financial and economic attack on Russia by Western powers led by the U.S. have led to a dramatic collapse of oil prices and of Russian Ruble. This has triggered a flurry of commentary and analysis which is, more often than not, long on conjecture and short on clear understanding of the problem at hand. As a hedge fund manager running an inflation hedging fund, I have some qualification in this respect. At the moment, it seems that Russian leadership’s approach to this crisis is to let market mechanisms work rather than trying to “combat” inflation. I think this is a remarkably wise strategy and many of the commentators likening Russia’s central bank as West’s fifth column are probably mistaken. The text below is the article “Understanding Inflation” by Dan Blatt published by online magazine FutureCasts – I believe this is one of the best and most concise texts about inflation supported with much empirical and historical research. It may be a bit long but the problem of monetary inflation is absolutely vital to understand. Here goes:

This is your brain on music

Why the West needs war

In 2008 the RAND Corporation presented a report advocating war against a major power as a way to stimulate the U.S. economy. The report did not specify the target, but the main candidates were thought to be Iran, Russia, or China. RAND’s recommendations reflect a strategy favored by a part of western elites which is then subtly promoted through the mainstream media.

In October 2010, Washington Post published a column by David Broder suggesting that war with Iran could help solve the economic crisis in the U.S. In 2012, the all powerful Council on Foreign Relations called to give war a chance in an article by Matthew Kroenig, titled “Time to Attack Iran”. Plans to attack Iran have been shelved since then, but war hasn’t lost its appeal. In April 2014, historian Ian Morris penned a Washington Post article, “In the long run, wars make us safer and richer.” The article was featured on the Post’s web site with a picture of a nuclear bomb blast with the caption, “War is brutal. The alternative is worse.”

The talking clowns of the U.S. State Department

It is almost embarrassing to watch the U.S. State Department’s hapeless spokeswomen Jen Psaki and Marie Harf conduct their press conferences. Two days ago, during the night of the 30th and 31st July, Israeli forces bombed a UN school in Gaza killing at least 15 and wounding over 200 Palestinian civilians who sought refuge there. Marie Harf was grilled about this incident but declined to issue her department’s unequivocal condemnation of the attack. You see, there were “conflicting reports,” they are working hard to collect all the evidence, it is still not clear what happened, etc, etc…

Foreign policy is delicate business, so I suppose it is reasonable to withhold any strong condemnation until all the evidence is available. However, barely two weeks earlier, when Malaysian flight MH17 dropped out of the skies over eastern Ukraine, the same Marie Harf didn’t need no stinkin’ evidence to accuse Russia and president Vladimir Putin for the tragedy.  A YouTube clip prepared the day before the incident by Ukrainian intelligence and a photo tweeted by the U.S. Ambassador Jeffrey Pyatt was more than enough. The rest, according to Harf was “common sense”: the Russians dunit, trust us, y’all know how bad Putin is, say no more…

Marie Harf grilled over Gaza (37 minutes): https://www.youtube.com/watch?v=bptVcurvsS8

Marie Harf on the crash of Malaysia Airlines over eastern Ukraine (7 minutes): https://www.youtube.com/watch?v=oQRvINebeok

The only way this could be more comical would be if Marie Harf, Jen Psaki, or their boss, John Kerry came out in front of journalists dressed in clown’s costumes. Either they don’t value their own credibility, or they really think that people’s IQ averages around 40.

What money can’t buy – a 3-minute video

Nicely done!!

Who is Vladimir Putin – an update

The concerted campaign of demonization of Vladimir Putin in western media compelled me to do a bit of digging to try to find out about him. Even though I’d started to doubt the demonization at least since Russia’s military intervention in Georgia (Putin completely pulled the troops out of Georgia within three months of having entirely crushed Georgian military), I still had lowish expectations: the man is a politician, after all. So I was rather surprised to come across an article by one Sharon Tennison who’d worked in Russia for some 30 years and met Putin personally through her work with US non-governmental organizations and diplomatic core. The portrait Tennison painted did not match that of a typical politician: young Putin was into martial arts, he stood up for other kids against school bullies, he was curteous and helpful as a state bureaucrat, he took no bribes, etc… This really did not match the image of a typical politician who is keen to rise to a position of power, and once there does everything possible to stay in power, ethical or not, legal or not… More recently, journalist and author Israel Shamir who spends time between Israel and Moscow offered another glimpse of Putin in his recent article, “Ukraine in Turmoil:”

So who is Vladimir Putin?

The further a society drifts from the truth, the more it will hate those who speak it. – George Orwell

Ukraine remains the topic of most discussions on global economy, and Russian president Vladimir Putin is an inevitable part of that subject. Although he is almost universally demonized by western leaders and media, more impartial observers increasingly concede that his administration’s conduct seems more rational and more constructive than that of his western counterparts. But even then, most people pad their comments with a kind of disclaimer:

• I don’t like Putin, but…
• Putin s a thug, but…
• Whatever you may think of Putin, …

I find that curious, so at some point I started asking people in such conversations to tell me why, specifically, they didn’t like Putin or thought that he was a thug? As I suspected, most people did not really have more than a vague answer reflecting the familiar mud slung daily by our mainstream media…

We must urgently rearm to defeat the New New Hitler from the East!!!

Any day now, Russia’s President Putin will give orders to his troops to invade Ukraine, after which he’ll gobble up the Baltic states, then Poland and then Finland and who knows what else – unless, of course, we spend a lot more money on defence. This statement is a caricature of the otherwise entirely serious campaign of warmongering hysteria and demonization that’s been saturating the Western media for weeks now. At times, the message is subtle and other times not so subtle, but the demonization seems effective. In discussing these issues, it is de rigeur for most western intellectuals to agree how Putin is a real bad fellow, the new Hitler even, although precious few can provide any concrete reasons why they know this to be so.

Let’s not war, shall we?

Global geopolitical situation appears to be deteriorating with crises multiplying from month to month. From the Western perspective, it looks as though one evil tyrant after another unleash violence against their own citizens or assault their human rights or sin against democracy or do something bad and we, the good guys just have to go and set things straight. Next thing you know, half the world is either in or on the verge of armed conflict. If only bad people could be removed from power and good guys installed there; if only we could make the world safe for democracy once and for all… Then all would be well.

Sadly, we’ve been here before. This year we “celebrate” the centennial of the outbreak of WWI which was fought to make the world safe for democracy.

The wolf I feed

A Cherokee tribal chief was telling his grandson about the battle he was waging within himself. He said, “it’s between two wolves… one wolf is an evil wolf full of envy, sorrow, greed, guilt, self-pity, resentment, lies, false pride, superiority and ego. The other is the good wolf of joy, love, hope, serenity, empathy, truth, generosity, compassion, and faith.

The boy asked, “which wolf wins?”

The old Cherokee replied, “the one I feed.”

This story was told by Bill Moyers in his speech at the National Conference for Media Reform in Minneapolis on 7th June, 2008.

Love on St. Valentine’s day

Erich Fromm wrote that love is the only satisfactory answer to the problem of human existence. Erich Fromm was spot on. In our world we’ve dedicated one day to it and celebrate it in a way that reeks of consumerism. How about making every day St. Valentine’s? How about cultivating love as the most important way we relate to one another, to ourselves and to the world we inhabit?

I dedicate this post to my wife.

Sandals

In 1893 Mahatma Gandhi went to South Africa, intending to stay there for only a few months. He ended up living there for 21 years as he took up the struggle to restore the dignity and rights to a subdued, disarmed, and enslaved Indian community.

During those years, his chief political opponent was General Ian Christian Smuts who, as the Colonial secretary and later the Secretary of the Interior was responsible for implementing some of the discriminatory laws against the Indians.

When Gandhi finally left South Africa in 1914, Smuts wrote, “The saint has left our shores,

Stimulating economic growth (QE2) didn’t work. Now what?

In December, I asserted that we’re inevitably heading into a prolonged period of high inflation. I also asserted that stimulus spending won’t reignite economic growth because we’ve simply passed the point where marginal productivity of debt has turned negative. Namely, each Dollar of new debt generates negative economic growth.

Five months and nearly $600 billion later, we’re nearing the end of the Federal Reserve’s second round of quantitative easing, and the results – even with various government agencies sloppy book cooking – are dismal:

Are we sovereign in our own minds?

How do you know anything about anything? How do you know your own self? These questions cut right down to the core of who we are as individuals.

The one means of consciously knowing anything are your thoughts – the almost constant stream of awareness that shapes your self-identity and determines your conduct. Note here that all of your conscious thinking is wrapped in language (try to think a thought – any thought – without it being expressed in words; it’s almost inconceivable).

Your internal monologue also gives you the experience of what being you feels like. It feels like a totally individual, sovereign experience: in your own mind, you perceive your own truths, think your own thoughts, freely craft your free will and choose your conduct. That, anyway is what the experience feels like.

But that feeling is an illusion… in part, at any rate. As it turns out, we are not alone in our minds; our thoughts and actions are easily influenced from without. I’m not talking about good advice a piece of information here: thoughts and desires can quite literally be planted in your mind from the outside without your consent or even awareness.

Deflationary gap and the West’s march to war

(another long post, but it’s important, please bear with me…)

Although I studied economics at the university, I don’t recall coming across the subject of deflationary gap. The textbooks I still have don’t mention it, and a search on the internet yielded close to nothing on the subject. Wikipedia doesn’t even have an entry for deflationary gap. Answers.com provides a single vague sentence about it.

That’s strange, for we’re talking about a systemic flaw of the capitalist economic system that predictably corrodes the democratic framework of the society and leads to the rise of fascism and military conflagration. In his book “Tragedy and Hope,” (by far the most fascinating history book I’ve ever read – for an introduction, check this link) Carrol Quigley devotes much space to deflationary gap as he meticulously traces the events leading to last century’s two world wars. He considers the deflationary gap as “the key to twentieth century economic crisis and one of the three central cores of the whole tragedy of the twentieth century”.

The Werther Effect, social uprisings and market trends

We all like to think of ourselves as rational individuals, independent in our thinking and sovereign in our judgment and decision making. Well, partly we all are like that. But in part – and this is an important and very mysterious part – we’re not.

About Bernanke’s 100% confidence…

On 5th December 2010, Fed Chairman Ben Bernanke gave an interview to 60 minutes. The whole thing seemed like a choreographed show, but this exchange with 60 minutes’ interviewer Scott Pelley took me aback:

Scott Pelley: “You have what degree of confidence in your ability to control this?”
Bernanke: “One hundred percent.”

Inflation might decimate your wealth

In February this year, we wrote that the sovereign debt crisis, pervasive in the developed world, was “certain to lead at some point to a prolonged period of inflation.” We are now in the early stages of that period and an acceleration of inflation is now virtually certain. Unless investors move aggressively to protect their wealth, they are likely to lose 50% or more of their wealth’s purchasing power in the coming years.