One of the things that I used to do with great regularity, until I felt like I was beating a very dead horse, was to break down various government economic reports to reveal the various ways statistical tricks are used to torture the data into more pleasing forms.  Which is a kind way of saying “fib to ourselves.”

I wish I could report that I stopped doing this because some measure of sanity had returned to our economic bean counters and that our economic numbers were once again useful and at least roughly accurate.  Sadly, I gave up, because, if anything, they are more deeply-compromised and useless than ever.

Still, I think it is helpful to review the tricks every so often, so that we maintain an appropriately healthy skepticism of these falsified numbers.

Nowhere To Run – A Monetary Crisis

Saturday, March 6, 2010

Executive Summary

• Nations around the world are insolvent and on their way to bankruptcy, a fiscal crisis, a currency crisis, or all three.
• World markets are currently interlocked to a troubling degree.
• A falling currency is always a cross-border event.
• The German DAX, the Dow Jones, and the FTSE 100 charts are nearly indistinguishable.
• A bigger trigger than Greece will be needed to set off the next round of global trouble.
• The UK is a highly qualified candidate for that role; Japan is also a likely possibility.
• Expect the unexpected.  The future is going to change suddenly and rapidly.

A significant issue facing all of us concerns the idea of a large decline in the value of our home currency, whatever currency that may be.  History is full of examples of currencies suddenly, and sometimes permanently, losing value.  Certainly, there is no greater financially traumatic event than having all of your perceived wealth evaporate like water on hot steel simply because your currency fails.

Once upon a time, evaluating the relative risks of various currencies was pretty straightforward, as they were independently run and market forces gave pretty clear signals.  Today, the major currencies are hopelessly intertwined, manipulated by central banks, and are therefore providing relatively poor information to market participants.

Now that I have returned from my UK trip, where I had the opportunity to present the main story of the Crash Course at the Parliament, at the London School of Economics, and to councillors and members of the Scottish Parliament, I’ve come away with an even stronger sense of the true dimensions of our predicament and what must be done.

We desperately need to start telling ourselves a new story, one that at least fits the known data, and we need to be far more urgent in our preparations for a future that is now upon us. This is not a US or a UK story, but one that applies equally to us all, no matter where we live. It is a global story.

Last night I spoke about the Three Es to a large audience in the Grand Committee Room of the UK Parliament, which was indeed very grand.

The Future Has Arrived

Sunday, February 21, 2010

Executive Summary

• The future has arrived.
• The “Broken Windows Theory” explains a lack of media coverage.
• Detroit is falling apart.
• Refugees are leaving urban centers.
• North Dakota’s homeless numbers are increasing.
• Food stamps use rises sharply.
• State of distress – the public vs. private battle intensifies.
• We need to change our stories.

One of the questions I am most frequently asked is, “What will happen when…?”  As in, what will happen:

• When things finally take a turn for the worse?
• When the dollar dives?
• When the government hits a fiscal wall?

Essentially, these are all forms of the basic question, “What will happen when the future finally arrives?”

My work, as I see it, is to help you accept the following statement:  The future has arrived. 

It is already here.

My goodness, Scotland is a wonderful place.

This is my first trip here, and I’ve found the people welcoming and the architecture and ‘feel’ simply awe-inspiring.  My hosts were just fantastic and took excellent care of me, which was important, because my schedule was draining.

I’ll use this entry to keep updating my UK trip experiences for any who are interested in what’s going on over here.

On a personal note, I came over with a cold that – *shudder* – felt and sounded like a case of laryngitis on the ride over, and for my first appearance at the CSFI event, which I literally croaked my way through.  Fortunately, with lots of vitamin supplements and happy thoughts, I seem to have converted this into a standard head and chest cold.

The CSFI event yesterday was held in one of those places that says “establishment” – oak-paneled for all 20 feet of the wall height, and leather chairs arranged around a 20×10 foot walnut table, burnished by the centuries.  The other panelist was from the Bank of England, and I give her enormous credit for having trundled through a large portion of the Crash Course in order to formulate her remarks/rebuttal to my presentation.  The other attendees were mostly very senior members of large banks and consultancies, but also represented a few other professions.