Always Watch the Other Hand ... Always
Jeffrey C. Borneman | November 22, 2015
Are you ready for 2016? The U.S. election may slow some of the inevitable events but the trajectory is set and most serious investors know this. Adults understand the magician's job is to keep the audience's eyes on the distraction to pull off the seeming magic. The manufacturing of scarcity is the hand we're not supposed to see. We are now supposed to see only the threat of terrorism and war. Know this: the two are being molded into one as an excuse for scarcity.
Why Manufacture Scarcity?
The reasons are legion: too many people on the planet using too many resources (neither true); Mother Earth cannot take the human abuse (not true); too many people to control (true); the debt-as-money system has run its course (only because it's convenient now); we need war to maintain balance of power (very true) ... we could go on and on.
If you were a believer in any of the above - and one of the magicians who demand scarcity - how best to convince the masses that scarcity is both inevitable and beneficial? It is in the convincing that the magic happens. You'd stir the masses over a generation or two to accept many false pretenses using faux science, shame and, most importantly the concept of duty. Each generation is conditioned with new concepts of scacity, abuse that build on previous ones like Legos (some even have a grain of truth for the sake of legitimacy). If the bait isn't too outrageous and survives its first contact with reality, the magic is accomplished. That building-block becomes ensconced into the psyche and subsequent generations will eagerly up the ante for you in Orwellian fashion assisted by media, acedamia and NGOs.
The enraged masses will demand scarcity without understanding the consequences until it is too late.
What is Becoming Scarce and Why?
Growth and Earnings
Investors are keenly watching world GDPs. China's debt-to-GDP is now over 300% and growing while international trade collapses with the Dry Bulk Index. Russia has all but admitted it is shifting its production into war economy status thanks to the double-team sanctions (U.S., Eurozone) and the Saudi oil war of attrition. Japan is now back in recession status after foolishly following the U.S. monetary model. The Eurozone is beyond anemic. Here in the U.S. the ecnonmy continues to slow: Q3 2015 blended earnings decline is -1.3%. The third quarter marks the first back-to-back quarters of earnings declines since 2009.
So, where's the growth?
Right now a key area of growth is the defense sector. If the current geopolitical chess game continues, the world will devolve into a series of Wars:
Let's start with just two of many assumptions. Some assumptions we must make in light of current events: World economies are mostly command and control (if "we" wanted 5-10% growth, we'd have it) and my favorite quote from FDR: "If it happens in politics, you can be sure it was well planned in advance". Why the sudden increase in terrorism and the laser-like focus on it while world economies teeter on collapse?
The irony of ironies today is that growth, expansion and peace are squarely in the sights of those who pull the power-levers on this planet. Manufacturing scarcity There are many reasons
How, exactly;y, do you manufacture scarcity? What would you want scarce and why?
Leaving aside that the explosion of violence in the Middle East was manufactured by governments of "the West" it is real. The West bought and paid for the terroist with tax-payer money ostensibly to, what?
Events might be slowed but the slowing comes from the political side of the equation and not the demand side.