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Back in August 2006, while talking to my friend John Chinnock, came to realize that the entire financial markets where based on a ponzi-scheme of subprime mortgages and off-balance sheet derivatives. Since then I was obsessed with reading ever aspect of the global economic forces at work, up until about 2013, as you can see by looking at my posting activity.
One of the reasons I have posted less is in my minds eye, I grasp enough to personally satisfy my own curiosity of the pressures on the global economic system. I hope to someday boil down all the information into a concise summary. For now, here is my short-sweet version.
**UPDATE** Skip all the summary below and read future of employment Post (click). While below are all important and factors, the reality that affects you most is your ability to be employed.
**UPDATE** Skip all the summary below and read future of employment Post (click). While below are all important and factors, the reality that affects you most is your ability to be employed.
The world faces unprecedented challenges today, the most critical being peak oil. Fossil fuels are the reason why we have the lifestyle we have today in the west. Fossil fuels took about 400 million years of sunshine on plant life to create, and mankind will take about 200 years to burn. That release of stored energy has created the incredible world we live in today. Peak Oil basically means that the era of cheap fuel is over. I urge you to watch the 58 minute video below to indoctrinate you on the many resource challenges we face today.
The world is facing epic deflationary forces driven by technology, except monetary policy which is helping hide the financial strain. As of this writing I believe stock market valuations are precarious at best, partially inflated due to monetary policy. However, after living through the last few years I have come to realize that investing depends on laws, or lack of laws to determine valuations. Given reasonable expectations of maintaining sane law enforcement in the USA, a reversion to the mean is historically likely. For an ample discussion on this, please see the third video below, starting at 50 minutes in. An independent indicator for longer term investing that you can read more about here, I do apply this to other stocks and ETF's as an indicator. The jump the shark moment will be if US Treasuries break the downtrend of last 40 years.
If you think China is somehow going to pull the global economy, I for one don't believe it. I have posted much about the China ponzi scheme, and with Jim Chanos providing an excellent job in his 2013 synopsis below on China's troubles. Even if somehow China is wildly successful it would result is substantial cuts to western lifestyles due to resource redistribution.
I do believe in crypto-currencies, a great place to start is my series on money, and what I wrote back in 2011 the ideal form of money. I think crytpo-currencies are a manifest-ion of what I described back in 2011, and I am lightly following bitcoin and 100 other crypto currencies as they develop. And I have great hope for the new economy that is brewing with latest manufacturing revolution. But for the old generation I see deflation for decades as robotics and technology sheds millions of more jobs. Its a generational shift, bad for the older employees, good for latest smart students out of college.
As of June 2014 I do think Gold Miners are a good buy, however due to all the issues above I am nervous about them as a longer term play. ( GDX at 24 dollars)
For more information, if you care to research, my old new reader post is here. If you browse my old posts keep this in mind, the world is changing as I am, which affects viewpoints over time. Posts in 2008 are likely to be significantly different than my current view.
I highly recommend the first two videos as a must watch.
Headwinds ahead
China is NOT the answer
Market Investing June 2014
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