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Peak Insiders
Peak Insiders
by
charleshughsmith
Executive Summary
- The productive class will increasingly look for ways to protect its income and wealth from State hands
- Geographic redistribution of classes will increase, favoring lower-cost locales
- Expect tax revolts to start breaking out
- Diminishing returns and increased fragility of the status quo will result in a resurgence of volatility
If you have not yet read Part I of The Trends to Watch For in 2014, available free to all readers, please click here to read it first.
In Part I, I listed eight more trends to watch in 2014, in addition to the eight that are still in play from 2013. Following last year’s format, here are some of the consequences to look for in 2014-15:
Outcomes
1. Opting out will become increasingly attractive for the productive class. Since the Status Quo suppresses political resistance (in official eyes, the line between protest and domestic terrorism is awfully thin) while it loads on higher costs of friction, complexity, junk fees, taxes, etc. on the still-productive, opting out—retiring, quitting, cutting back, selling out—becomes a compelling option for those who can afford to do so.
Many have opted out simply because they have no other choice. Those who are close to retirement age and unable to find employment that pays more than Social Security benefits opt to retire and take the benefits early. The Social Security Administration has professed surprise that Baby Boomers are retiring early in larger numbers than the SSA projected. (File under “Duh!”) Millions of others have managed to qualify for Social Security disability (SSI), another form of opting out.
The Affordable Care Act (Obamacare) is one of many forces incentivizing opting out. The perverse incentives of the ACA make it “smart” to not enroll and not pay the penalty, either, as the IRS has already said that it won’t enforce the penalty for some time.
The ACA also heavily incentivizes managing your income to levels that qualify the household for subsidies. Higher-income households have a big incentive to lower their incomes to avoid paying sky-high premiums. Those with salaries cannot easily adjust their incomes, but households with self-employed or contract workers can opt to work less and thus earn less…
Outcomes to Bet On in 2014
PREVIEW by charleshughsmithExecutive Summary
- The productive class will increasingly look for ways to protect its income and wealth from State hands
- Geographic redistribution of classes will increase, favoring lower-cost locales
- Expect tax revolts to start breaking out
- Diminishing returns and increased fragility of the status quo will result in a resurgence of volatility
If you have not yet read Part I of The Trends to Watch For in 2014, available free to all readers, please click here to read it first.
In Part I, I listed eight more trends to watch in 2014, in addition to the eight that are still in play from 2013. Following last year’s format, here are some of the consequences to look for in 2014-15:
Outcomes
1. Opting out will become increasingly attractive for the productive class. Since the Status Quo suppresses political resistance (in official eyes, the line between protest and domestic terrorism is awfully thin) while it loads on higher costs of friction, complexity, junk fees, taxes, etc. on the still-productive, opting out—retiring, quitting, cutting back, selling out—becomes a compelling option for those who can afford to do so.
Many have opted out simply because they have no other choice. Those who are close to retirement age and unable to find employment that pays more than Social Security benefits opt to retire and take the benefits early. The Social Security Administration has professed surprise that Baby Boomers are retiring early in larger numbers than the SSA projected. (File under “Duh!”) Millions of others have managed to qualify for Social Security disability (SSI), another form of opting out.
The Affordable Care Act (Obamacare) is one of many forces incentivizing opting out. The perverse incentives of the ACA make it “smart” to not enroll and not pay the penalty, either, as the IRS has already said that it won’t enforce the penalty for some time.
The ACA also heavily incentivizes managing your income to levels that qualify the household for subsidies. Higher-income households have a big incentive to lower their incomes to avoid paying sky-high premiums. Those with salaries cannot easily adjust their incomes, but households with self-employed or contract workers can opt to work less and thus earn less…
by
charleshughsmith
Executive Summary
- Why the next stock market decline could be in excess of 50%
- What historic indicators of coming decline are telling us
- The case for holding cash now
- If the market does roll over substantially in early 2014, how long may the decline last?
If you have not yet read The Case for a Crash, available free to all readers, please click here to read it first.
In Part I, we attempted to answer the question, Which forecast is more likely to be accurate: that the Bull market in stocks will continue for years to come, or the market will swan-dive in yet another multi-year crash?
We concluded that there was little historical evidence to support the claim that the S&P 500 will extend higher for an additional three to five years.
Here in Part II, we’ll look for clues about the possible amplitude and timing of the decline that the five-year cycle of the “new normal” suggests is likely.
(A reminder on gold: I detailed a forecast on gold earlier this year based on price action around key support/resistance levels, and nothing in recent price action has caused me to amend that forecast. I have also noted that gold does not correlate well with either stocks or the U.S. dollar; i.e., its dynamics are largely independent of stocks and the USD. To the degree that gold is viewed as a “risk-off” safe-haven asset, it should do well if “risk-on” assets such as stocks crater.)
Forecasting the Amplitude of the Next Decline
A number of technical analysts have noted this megaphone pattern in the stock market, a pattern formed by alternating higher highs and lower lows. This is one basis of forecasts for the SPX to drop to the 500-600 level in the next downdraft, potentially retracing the entire Bull advance from 1995.
While this megaphone may not play out, it establishes a potential target for a crushing drop from current highs…
The Case for Cash
PREVIEW by charleshughsmithExecutive Summary
- Why the next stock market decline could be in excess of 50%
- What historic indicators of coming decline are telling us
- The case for holding cash now
- If the market does roll over substantially in early 2014, how long may the decline last?
If you have not yet read The Case for a Crash, available free to all readers, please click here to read it first.
In Part I, we attempted to answer the question, Which forecast is more likely to be accurate: that the Bull market in stocks will continue for years to come, or the market will swan-dive in yet another multi-year crash?
We concluded that there was little historical evidence to support the claim that the S&P 500 will extend higher for an additional three to five years.
Here in Part II, we’ll look for clues about the possible amplitude and timing of the decline that the five-year cycle of the “new normal” suggests is likely.
(A reminder on gold: I detailed a forecast on gold earlier this year based on price action around key support/resistance levels, and nothing in recent price action has caused me to amend that forecast. I have also noted that gold does not correlate well with either stocks or the U.S. dollar; i.e., its dynamics are largely independent of stocks and the USD. To the degree that gold is viewed as a “risk-off” safe-haven asset, it should do well if “risk-on” assets such as stocks crater.)
Forecasting the Amplitude of the Next Decline
A number of technical analysts have noted this megaphone pattern in the stock market, a pattern formed by alternating higher highs and lower lows. This is one basis of forecasts for the SPX to drop to the 500-600 level in the next downdraft, potentially retracing the entire Bull advance from 1995.
While this megaphone may not play out, it establishes a potential target for a crushing drop from current highs…
by
Alasdair Macleod
Executive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
The Very Real Danger of a Failure in the Gold Market
PREVIEW by Alasdair MacleodExecutive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
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