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Peak Insiders
Peak Insiders
by
Gregor Macdonald
Executive Summary
- As goes Japan’s efforts to rescue it’s economy, so will go the U.S. and E.U.
- Japan’s options:
- Outsource its manufacturing base
- Replace as much human labor with automation as it can
- Rush to trade its depreciating currency for hard assets around the world
- What Japan is telling us about the Keynesian endpoint
If you have not yet read Part I: Abenomics’ Dismal Anniversary, available free to all readers, please click here to read it first.
Japan Is Reflecting the Future of Western Economies
While many observers continue to follow Europe as the proxy for post-growth dynamics in the OECD, it’s actually Japan that merits the closest analysis.
Much farther along in its post-growth phase, bloated with government debt and having tried a number of big-bang initiatives over the decades, Japan – not the U.S. or Europe – is leading the way. The country has never really recovered from the gigantic property and stock bubble over twenty years ago.
As proof, just consider the biggest trading story of the past 12 months. Was it the Federal Reserve’s intention to taper? How about the chaos in emerging market currencies in countries like India and Indonesia? Or perhaps the continued economic depression in peripheral Europe, as countries like Spain, Portugal, and Greece re-run the 1930s, with mass unemployment and people burning wood from forests to say warm? No, not even such dramatic suffering in Europe was enough to move markets or the EUR currency much this past year.
Instead, it was Abenomics and the front-running (and then chasing) of wildly huge moves in both the Nikkei and JPY that helped drive liquidity and speculative juices across all markets. It is not a coincidence that the peak of this frenzy in May heralded the peak in many markets.
But Japan has more than a financial problem. Despite the hand-wringing about Japan’s debt, the world has ignored for some time now Japan’s debt-to-GDP, GDP on an absolute basis, and Japan’s low cost of capital. Japan borrows. Japan prints. Japan devalues. But the world doesn’t care.
An issue the world may finally begin to care about, however, is that Japan has failed to launch itself out of deflation and is making very little progress in its struggle now. Indeed, Japan has a demographics problem and a resources problem that far outweigh its financial problems. To this point, instead of launching into recovery, Japan is running with the resources Red Queen, as every step of its currency devaluation is met with rising costs to import the raw materials Japan uses to make its goods…
We’re All Turning Japanese
PREVIEW by Gregor MacdonaldExecutive Summary
- As goes Japan’s efforts to rescue it’s economy, so will go the U.S. and E.U.
- Japan’s options:
- Outsource its manufacturing base
- Replace as much human labor with automation as it can
- Rush to trade its depreciating currency for hard assets around the world
- What Japan is telling us about the Keynesian endpoint
If you have not yet read Part I: Abenomics’ Dismal Anniversary, available free to all readers, please click here to read it first.
Japan Is Reflecting the Future of Western Economies
While many observers continue to follow Europe as the proxy for post-growth dynamics in the OECD, it’s actually Japan that merits the closest analysis.
Much farther along in its post-growth phase, bloated with government debt and having tried a number of big-bang initiatives over the decades, Japan – not the U.S. or Europe – is leading the way. The country has never really recovered from the gigantic property and stock bubble over twenty years ago.
As proof, just consider the biggest trading story of the past 12 months. Was it the Federal Reserve’s intention to taper? How about the chaos in emerging market currencies in countries like India and Indonesia? Or perhaps the continued economic depression in peripheral Europe, as countries like Spain, Portugal, and Greece re-run the 1930s, with mass unemployment and people burning wood from forests to say warm? No, not even such dramatic suffering in Europe was enough to move markets or the EUR currency much this past year.
Instead, it was Abenomics and the front-running (and then chasing) of wildly huge moves in both the Nikkei and JPY that helped drive liquidity and speculative juices across all markets. It is not a coincidence that the peak of this frenzy in May heralded the peak in many markets.
But Japan has more than a financial problem. Despite the hand-wringing about Japan’s debt, the world has ignored for some time now Japan’s debt-to-GDP, GDP on an absolute basis, and Japan’s low cost of capital. Japan borrows. Japan prints. Japan devalues. But the world doesn’t care.
An issue the world may finally begin to care about, however, is that Japan has failed to launch itself out of deflation and is making very little progress in its struggle now. Indeed, Japan has a demographics problem and a resources problem that far outweigh its financial problems. To this point, instead of launching into recovery, Japan is running with the resources Red Queen, as every step of its currency devaluation is met with rising costs to import the raw materials Japan uses to make its goods…
by
JHK
Executive Summary
- Ready or not, the forces underlying the Long Emergency will force a return to the 'real' (vs the virtual)
- What regions and town/city models will fare best in this future?
- The age of the car is over: how will we transport goods and ourselves?
- Which skills will be in greatest demand?
- How to prepare ourselves emotionally for becoming less techno-dependent
If you have not yet read Part I: Returning to the 'Real' available free to all readers, please click here to read it first.
A Return To the 'Real'
John Maynard Keynes famously remarked, “In the long run we are all dead.” Which leaves the short to intermediate run, which is a lot. Start with the proposition that we’ll be compelled to reconnect our lives to biophysical reality, that is, nature. The techno-industrial adventure was about the exhilaration of overcoming natural limits — and the grandiosity in thinking that we could de-link permanently and put something synthetic and supposedly just-as-good in nature’s place. In the process, we de-natured ourselves and unplugged from the satisfactions found in being part of something wondrous and whole and larger than ourselves. We don’t have to reinvent the sacred. It has been there all along. We just ignored and disregarded it for about a century, and now we have to rebuild the social and logistical infrastructure for it. That job will be easier than keeping the interstate highway system in repair.
Expect to be living a far less mediated existence, being more directly in touch with the patterns afforded by nature, the sun and moon, the seasons, the temperature, the sensations, the tastes and textures, the pains and pleasures. For the generation used to sensing absolutely everything through the tiny portal of a five-inch smart phone screen, this may come as a startling psychological shock, greater than the psychedelic drugs of the hippie days were to the Boomers. By the way, nobody should expect that the national electric grid will survive indefinitely, or that every locality will be able to generate its own electricity without the long commercial chains of mining, advanced metallurgy, and the manufacture of modular machinery.
Where to Live?
One of the first questions for people to answer for themselves, especially in a period of demographic turmoil, is what place do I feel okay about being in and how do I set my roots in it? …
The Future of Living
PREVIEW by JHKExecutive Summary
- Ready or not, the forces underlying the Long Emergency will force a return to the 'real' (vs the virtual)
- What regions and town/city models will fare best in this future?
- The age of the car is over: how will we transport goods and ourselves?
- Which skills will be in greatest demand?
- How to prepare ourselves emotionally for becoming less techno-dependent
If you have not yet read Part I: Returning to the 'Real' available free to all readers, please click here to read it first.
A Return To the 'Real'
John Maynard Keynes famously remarked, “In the long run we are all dead.” Which leaves the short to intermediate run, which is a lot. Start with the proposition that we’ll be compelled to reconnect our lives to biophysical reality, that is, nature. The techno-industrial adventure was about the exhilaration of overcoming natural limits — and the grandiosity in thinking that we could de-link permanently and put something synthetic and supposedly just-as-good in nature’s place. In the process, we de-natured ourselves and unplugged from the satisfactions found in being part of something wondrous and whole and larger than ourselves. We don’t have to reinvent the sacred. It has been there all along. We just ignored and disregarded it for about a century, and now we have to rebuild the social and logistical infrastructure for it. That job will be easier than keeping the interstate highway system in repair.
Expect to be living a far less mediated existence, being more directly in touch with the patterns afforded by nature, the sun and moon, the seasons, the temperature, the sensations, the tastes and textures, the pains and pleasures. For the generation used to sensing absolutely everything through the tiny portal of a five-inch smart phone screen, this may come as a startling psychological shock, greater than the psychedelic drugs of the hippie days were to the Boomers. By the way, nobody should expect that the national electric grid will survive indefinitely, or that every locality will be able to generate its own electricity without the long commercial chains of mining, advanced metallurgy, and the manufacture of modular machinery.
Where to Live?
One of the first questions for people to answer for themselves, especially in a period of demographic turmoil, is what place do I feel okay about being in and how do I set my roots in it? …
by
Chris Martenson
Executive Summary
- What Detroit tells us about continuing the status quo
- The shocking true size of the real U.S. debt
- Why time is our most valuable – but scarcest – asset
- Where your efforts need to be placed to address the big picture
If you have not yet read Part I: Why We All Lose If the Fed Wins, available free to all readers, please click here to read it first.
If we can't even have an honest conversation six years into this failed experiment about its core aspects, then it is little wonder that there's virtually no appetite for the bigger burning questions of our time, such as where do we want to be in twenty years and what do we need to do to get there?
Instead, the focus is simply on preserving the status quo and doing everything possible to maintain it. Never mind that the status quo is obviously failing in many key regards and needs some serious adjustments. All that the Fed and D.C. have in mind here is more of the same.
And this is why we will lose the war.
The Detroit Harbinger
If we want to know what happens when we ignore reality and just soldier on, we need look no further than Detroit to see how that works out. For years, that city mismanaged its finances, continually banking on the idea that eventually jobs and opportunity would return. They continued to offer – yet failed to fund – lavish pension promises to municipal employees, even though anybody with a pocket calculator could work out that the plans were not viable.
But the plans were offered, and the union reps on the other side of the table accepted the terms, even though at some point it would have made sense for someone to raise the obvious by noting that the plans were utterly insolvent and almost certain to stay that way.
Right now, the pensions in Detroit are underfunded by $3.5 billion, according to official figures. But those same officials are assuming an 8% rate of return on current pension assets, a rate that nobody is actually achieving in the pension world – thanks, in large part, to Bernanke's 0% interest rate policy.
Here's how they got to this point:
The Real Story to Focus On
PREVIEW by Chris MartensonExecutive Summary
- What Detroit tells us about continuing the status quo
- The shocking true size of the real U.S. debt
- Why time is our most valuable – but scarcest – asset
- Where your efforts need to be placed to address the big picture
If you have not yet read Part I: Why We All Lose If the Fed Wins, available free to all readers, please click here to read it first.
If we can't even have an honest conversation six years into this failed experiment about its core aspects, then it is little wonder that there's virtually no appetite for the bigger burning questions of our time, such as where do we want to be in twenty years and what do we need to do to get there?
Instead, the focus is simply on preserving the status quo and doing everything possible to maintain it. Never mind that the status quo is obviously failing in many key regards and needs some serious adjustments. All that the Fed and D.C. have in mind here is more of the same.
And this is why we will lose the war.
The Detroit Harbinger
If we want to know what happens when we ignore reality and just soldier on, we need look no further than Detroit to see how that works out. For years, that city mismanaged its finances, continually banking on the idea that eventually jobs and opportunity would return. They continued to offer – yet failed to fund – lavish pension promises to municipal employees, even though anybody with a pocket calculator could work out that the plans were not viable.
But the plans were offered, and the union reps on the other side of the table accepted the terms, even though at some point it would have made sense for someone to raise the obvious by noting that the plans were utterly insolvent and almost certain to stay that way.
Right now, the pensions in Detroit are underfunded by $3.5 billion, according to official figures. But those same officials are assuming an 8% rate of return on current pension assets, a rate that nobody is actually achieving in the pension world – thanks, in large part, to Bernanke's 0% interest rate policy.
Here's how they got to this point:
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