2013-11-30

Rising Tensions Across Asia

New enmity between Japan and Korea plays out in Tokyo’s Koreatown
On occasional weekends this year, megaphone-wielding demonstrators have taken to the streets, telling the Koreans to “go home or die.” They’ve threatened to “flatten this neighborhood” and build a gas chamber in its place. The Koreans say that they — and the police — have little recourse against the threats, because Japan is one of the few democracies that don’t restrict hate speech.

The protesters are a small but noisy lot, and their strident anti-Korean stance is viewed with contempt by most Japanese. But the demonstrations have caused damage nonetheless, not only disrupting a neighborhood, but also providing kindling for the South Korean media, which portray the behavior as a frightening norm, not an extreme.

In that way, the demonstrations have helped widen the divide between the United States’ two closest Asian allies, countries that have squabbled for decades but now increasingly see themselves as arch rivals. As if to highlight the point, South Korean President Park Geun-hye said recently that she would be open to a summit with North Korean leader Kim Jong Un — but not with Japanese Prime Minister Shinzo Abe, unless Japan changed its behavior.

The animosities between Korea and Japan are vexing for Washington, because the two share some security concerns, including over China’s recent announcement of an air defense identification zone in the East China Sea.
The movement in Japan is very small, but it is blown out of proportion by the Korean media. Looking for areas of conflict or disagreement, no matter how small, is part and parcel of negative social mood.

Diversity + Negative Social Mood = Collapse In Trust

The social science is clear that increased diversity reduces trust in a society. The run-up into peak social mood created the conditions for peak diversity and the turn into negative social mood has now created a collapse in trust.

In God we trust, maybe, but not each other
We're not talking about the loss of faith in big institutions such as the government, the church or Wall Street, which fluctuates with events. For four decades, a gut-level ingredient of democracy - trust in the other fellow - has been quietly draining away.

These days, only one-third of Americans say most people can be trusted. Half felt that way in 1972, when the General Social Survey first asked the question.

Forty years later, a record high of nearly two-thirds say "you can't be too careful" in dealing with people.
Society ceases to function at a very basic level if trust collapses. Most of the modern world is built on trust, especially the West and most especially the Anglo-Saxon and Northern European nations that are highly trusting of strangers. A collapse of trust is therefore a serious social and economic problem.

Does it matter that Americans are suspicious of one another? Yes, say worried political and social scientists. What's known as "social trust" brings good things.

A society where it's easier to compromise or make a deal. Where people are willing to work with those who are different from them for the common good. Where trust appears to promote economic growth.

Distrust, on the other hand, seems to encourage corruption. At the least, it diverts energy to counting change, drawing up 100-page legal contracts and building gated communities.
Along with the collapse in trust comes the collapse in morality. Religion is also ebbing in the West after decades of decline. The reason why there are 100-page legal contracts, is that same reason that Bill Clinton asked, "It depends on what the definition of is, is," why investment bankers (and Enron executives) don't ask what is moral, but ask their lawyers what is legal. Legality has replaced morality, but now the law itself is under attack.

Speaking of corruption, there was this story in the Washington Post this week: Nonprofit groups often seek restitution, not prosecution, when money goes missing
Three years ago, the Progressive Policy Institute realized that a senior manager had quietly used unauthorized checks, credit-card charges and cash withdrawals to drain about $100,000 from the Democratic think tank’s accounts, pushing the nonprofit group to the edge of insolvency, interviews and documents show.

Officials at the institute didn’t call police and didn’t alert donors, said Lindsay Mark Lewis, now executive director of the Washington-based organization. Instead, they took what charity governance specialists call a distressingly common approach for a nonprofit group: They agreed to forgo legal action in exchange for restitution.
The rot is deep and it is being covered up at all levels by all institutions.

What is the ratio of credit money to fiat money in the U.S.? It is still over 5 to 1. Credit comes from the Latin credere: believe, trust. Is it any surprise there is an ongoing financial crisis?

Pennsylvania farmer Dennis Hess is one. He runs an unattended farm stand on the honor system.

Customers pick out their produce, tally their bills and drop the money into a slot, making change from an unlocked cashbox. Both regulars and tourists en route to nearby Lititz, Pa., stop for asparagus in spring, corn in summer and, as the weather turns cold, long-neck pumpkins for Thanksgiving pies.

"When people from New York or New Jersey come up," said Hess, 60, "they are amazed that this kind of thing is done anymore."
People from NY and NJ live in diverse urban areas. As of 2000, Lilitz, PA was 97% white; about as undiverse as one gets in the United States.

2013-11-29

Bitcoin in the Chinese Press

Here's a couple of snapshots of Bitcoin hitting the Chinese papers, in this case the Beijing Times. The first two shots are from Monday, November 25, from the Business section page 42 and page 44. The other is from November 28, the front page of the Finance section (which only comes out on Thursdays). The topics are basic, for example on the finance page there's a small piece on fiat currency versus Bitcoin. The takeaway is that this is a general audience newspaper, the equivalent of the NY Post, Boston Herald, NY Daily News devoting this much coverage to the currency. American papers are covering it from the news angle: Bitcoin millionaires, Silk Road, assassination site; but as far as I can tell they aren't covering in depth, giving readers a deeper understanding of how it works.

2013-11-27

Social Mood and Fake Breasts

Deflated: Growing number of stars opt for breast implant removal
According to Chiu, during the recent recession/depression, flaunting oversized breasts was deemed crass ,which directly influenced breast implant sizing: bigger was tackier and out of tune with the times, while moderation or balance/proportion was key.

“Folks were downsizing their cars, houses, and breast implant size. Plastic surgery often follows trends in popular culture,” he explained. “In the case of breast implants, smaller/perkier was more chic. Fashion has adapted to this trend and clothing today accommodates smaller, more proportionate breasts than larger sizes.”

2013-11-26

Will China's Credit Bubble Finally Pop? Maybe

ZeroHedge had a couple of important stories about Chinese credit growth and the slowdown in that growth today.

China Bond Yields Soar To 9 Year Highs As It Launches Crackdown On "Off Balance Sheet" Credit
And while we are confident Chinese financial geniuses will find ways to bypass this attempt to curb breakneck credit expansion in due course, in the meantime, Chinese liquidity conditions are certain to get far tighter.

This is precisely the WSJ reported overnight, when it observed that yields on Chinese government debt have soared to their highest levels in nearly nine years amid Beijing's relentless drive to tighten the monetary spigots in the world's second-largest economy. "The higher yields on government debt have pushed up borrowing costs broadly, creating obstacles for companies and government agencies looking to tap bond markets. Several Chinese development banks, which have mandates to encourage growth through targeted investments, have had to either scale back borrowing plans or postpone bond sales."

Yesterday, they posted this: Chart Of The Day: How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water

This is nothing new here. What is new, however, is the government's serious efforts to slow this growth and the fact that since it's a couple years since I first discussed this, the number of assets has grown by more than 100% of GDP. It doesn't the bubble will pop, but it has been 5 years since the financial crisis. I mentioned in Will 2014 Be The Year That Changes Everything?, we are right on schedule for the depression within the depression.

Risk of 1937 relapse as Fed gives up fight against deflation

Here's a long snippet from Shades of 1935 In the FOMC's 'Tapering'? discussing the Federal Reserve's decision to tighten in 1935, though not implementing a policy until 1937.
The justifications for these efforts were varied, but included the board's opinion that banks were disproportionately investing in government bond securities at prices that may not have been sustainable beyond a record low rate environment. The Fed also felt that such excess in reserves might lead to "over borrowing" in such close proximity to the over-indebtedness (Irving Fisher's term) of the previous collapse. They also paid attention to a seemingly partially formed theory that the condition of reserves signaled to foreign investors that the US was "ripe for speculation", and thus causing gold to flow into the US - the very root of the reserve "imbalance" in the first place.

Whatever the inflationary concerns of the FOMC, it acted in July 1936 by raising the level of required reserves. Not to be satisfied with that, the committee also instituted two other reserve changes in early 1937, as well as coordinating with the Treasury Department as it began sterilizing gold inflows in much the same manner as in the late 1920's. In its August 1936 Annual Report, the Federal Reserve noted, "the Board's action was in the nature of a precautionary measure to prevent an uncontrollable expansion of credit in the future."

Almost immediately, banks responded in a manner wholly unanticipated by the FOMC. Rather than suffer a decline in their liquidity buffer, banks busily endeavored to reinstitute their level of excess reserves. The pace of buying credit securities halted immediately, and by December 1936 banks were outright selling corporate and government bonds. Between the first reserve requirement change and the end of the year, new corporate bond issues declined by almost 50% in number - collapsing still further into 1937.

From the onset of Treasury's gold sterilization, corporate bond yields in what we now would call "junk" jumped from about 4.5% to 6% by the end of 1937. Even investment grade corporate debt rates spiked, from about 4% to 5.25% (these are large moves in credit markets of the time).

Industrial production peaked in December 1936, then fell slightly until September 1937 when the economy collapsed again. From the peak, industrial production fell more than 37% in just a few months. Factory employment dropped 25%, while department store sales (the primary retail outlet) declined 16% - the disproportionate declines in production owed to the excess of inventory from business investments in 1936 and early 1937.

In short, 1937 and into the trough in mid-1938 was a depression within a depression. We have never seen such close proximity of depressionary episodes, nearly back-to-back, in history. And it occurred without the backdrop of monetary and banking panic. There was no appreciable increase in bank failures, and certainly nowhere near what was seen in the over-covered part of the 1930's.
Here is what is very crucial to understand in comparing the 1930s to today: the Fed stopped the first wave of deflation, whereas in the 1930s, the first wave came in 1929 and quickly rolled into wave 3 in 1931, the "Tragic Year" in which most economists were looking for recovery. The collapse that year came as a shock to the world. By 1937 then, the system was already mostly cleansed of bad assets. The depression within the depression was a surprise, but it was different from the prior two waves in its real world results. Today, the risk isn't of a 1937-style contraction, it is the risk of 1931, the shock wave three deflation that levels the global financial system.

The 1937 deflation also was blamed on bad fiscal policy. The Affordable Care Act is not as direct as the tax changes in 1937, but it could end up being as damaging to the economy. That said, China is the real story. It is China that is in the position of the 1920s and 1930s United States. China did pursue the strategy used by Japan in the 1930s of having the government flat out spend and finance it with debt. It is China that is already implementing policies to tighten money supply. If the U.S. and China "coordinate" their monetary policies and both tighten, the odds of China's credit bubble bursting goes from possible to likely.

Chinese Banks Max Out Lending Quotas; Will Real Estate Market Notice?

Small and medium banks are all loaned out in China and they're shutting down their mortgage businesses for the rest of Q4.

Smaller banks cut home credit
More small and medium-sized commercial banks are suspending mortgage loans in the fourth quarter, according to an industrial report.

Housing loan suspensions have been reported in 17 out of 32 cities, including Beijing, Guangzhou, Shenzhen and Zhuhai, said the report by rong360.com, an Internet search platform for loan resources, which surveyed more than 500 banks.

A rapid increase in loans in the first half of the year resulted in a lack of loan quotas for the next half, said the report. The overdraft of credit drained the fund for mortgages in the latter half of the year, particularly the fourth quarter.
Here are the numbers from the survey:
Of the 500 surveyed banks 6.37 percent still offer a 15 percent discount in interest rates, with 16.04 percent offering a 10 percent discount and 44.58 percent going with base interest rates. Another 16.27 percent offer interest rates above the base level and 16.75 percent of the surveyed banks said they have completely stopped lending to homebuyers.

The base loan interest rate is 6.55 percent for a loan of more than five years, according to the Peoples' Bank of China.

2013-11-25

Culture Turning Right? Sort Of

Back in the late 70s and early 80s horror movies were very popular. The stock market bottomed in 1982 and due to the investment and many popular franchises, the early 80s are remembered well for the Friday the 13th and Nightmare on Elm Street villains. One interesting part of those slasher flicks is that the killers targeted teens (particularly in the Friday the 13th movies) who were having sex or doing drugs. Nancy Reagan promoted launched the "Just Say No" anti-drug campaign, unintentionally, in 1982 when she gave that advice to a school girl who asked what to do if someone offered her drugs. About the same time AIDS became a huge health concern and the corrective conservative social shift has two of its big issues for the next few years, eventually adding violent rap lyrics.

So this movie synopsis caught my eye:
When gorgeous lesbian Samantha has a drunken one night stand with a strange man, she contracts what she thinks is a sexually-transmitted disease. But the truth is far more disturbing. As her horrific condition worsens, her friends begin to fear for her... and themselves.

This review goes straight to the point: Contracted (Movie Review)
Well here you go bible-belters, here's one odious poster-child for abstinence if I've ever seen one. Or perhaps a sly satire of, which I (want to) believe is the intent behind Arkansas born filmmaker Eric England, the 25 year-old who made MADDISON COUNTY a couple of years ago. Problem is, I can't tell. In CONTRACTED, England depicts the harrowing consequences of sleeping around with reckless abandon, but also uses that framing device to illustrate - at the personal, granular level - the painstaking transformation of a human being into a flesh-decaying zombielike mutant. CONTRACTED is a sick and icky flick, sure to induce a perpetual cringe on a viewer's face and sate even the most depraved of body-horror fans.......

......All that to say, if you're a fan of seeing intense bodily grue and ever-increasing flesh-putrescence, CONTRACTED is something you'll definitely want to catch. But for those who demand such visual disturbances come in combination with stronger storytelling and a more intricate plot, CONTRACTED might be one to avoid picking up. I dug it for its strengths - the visceral and emotional toll of slowly transmuting into a zombielike mutant - but found faults in some of the larger statements the film tried or didn't try to make, the emotions it tried to elicit, and the tonal/generic inconsistencies of the third act.
NSFW descriptions at the link. The reviewer isn't sure if the sexual angle is satire or not, but the bigger issue is how will the audience view it? As satire, or will they take the more direct message?

Will Hollande Be Removed From Office?

The popularity of Hollande fall to 15%

Even Marine Le Pen, who is riding a wave of popularity, lost 9 points in her approval ratings. French people are disgusted with politicians across the board. Hollande takes the cake though, with the lowest approval rating in the history of the Fifth Republic (since 1958).

So does social mood lead the stock market? We may soon find out. Below is the CAC 40 and the iShares MSCI France (EWQ) ETF. A rising euro has helped in the past few months, but the CAC 40 has almost completely flatlined for the past month. A change may well be in the cards, in which case you have to increase the odds of a National Front blowout victory in the European parliamentary elections in May.

2013-11-24

More Evidence of Deflation: Banks Could Charge Depositors

Deposits are unsecured loans to the bank. Your deposits in a bank are not your money, the money belongs to the bank and you get repaid so long as the bank remains solvent. In the event the bank fails (and there's no deposit insurance or it is inadequate), you get paid after other senior creditors are repaid first.

The banking system is powered by lending, not deposits, and it is by lending (and fees) that banks make money. I explained this in some detail in State of play in Q32012: Fed and U.S. government policy is not enough to offset deflation. The part titled "Credit creation is driven by borrowers, not bankers" discusses the banking system.

Currently the Federal Reserve is paying banks on their excess reserves. These reserves can be bank assets (the bank's own cash) or bank liabilities (money they owe the depositors); it is cash the bank has not loaned out. If that money ultimately belongs to depositors, then excess reserves collecting interest at the Fed can be passed along to individual depositors with their own "excess reserves" in, say, checking accounts. Without that income stream, however, banks will view those deposits solely as a cost, unless they're collecting fees on the account, because they're unable to earn profits by lending.

US banks warn Fed interest cut could force them to charge depositors
Executives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the $2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors.

Banks say they may have to charge because taking in deposits is not free: they have to pay premiums of a few basis points to a US government insurance programme.

“Right now you can at least break even from a revenue perspective,” said one executive, adding that a rate cut by the Fed “would turn it into negative revenue – banks would be disincentivised to take deposits and potentially charge for them”.

Other bankers said that a move to negative rates would not only trim margins but could backfire for banks and the system as a whole, as it would incentivise treasury managers to find higher-yielding, riskier assets.

“It’s not as if we are suddenly going to start lending to [small and medium-sized enterprises],” said one. “There really isn’t the level of demand, so the danger is that banks are pushed into riskier assets to find yield.”
No great demand for loans! Since lending makes the money supply go round, a lack of lending means a lack of inflation. Yes, the Fed is monetizing debt, but it is only turning credit money into base money, it is not expanding the total supply of money and credit through this operation. It is transforming credit into money in the hopes that this will spur more lending. Bank lending is the engine of the financial system train, not the caboose!

I won't touch the comment about banks buying riskier assets, only to say that the words "crack up boom" and "bubble" come to mind.

From 2010: In Cash Glut, Banks Try to Discourage New Deposits
From 2011: Why Many Banks Don’t Want Your Money

Banks don’t lend money
I shall finish with a quote form Professor Victoria Chick, Emeritus Professor of Economics, University College London: “Banks do not lend money. It may feel like it when you get a ‘loan’, but that’s not what they are doing. They don’t have a pot of money which they are passing on. What they are doing is accepting your IOU… they simply write up your account”.

This discussion goes more in depth: Monetarism Unplugged
Banks run complex money market operations to respond to the net movements in their reserve accounts that result from asset-liability transaction activity in the rest of the organization, including the main loan and deposit book. (Those flows include voluminous amounts of deposits shifting between banks, without any necessary connection to new loan extensions. Such activity results simply from the ongoing use of existing bank money in regular economic activity. It is inherent in the concept of money “velocity”.) Banks adjust their reserve accounts in response to these effects through offsetting transactions in short-term liquid assets and wholesale deposit liabilities. These money market operations are the balance wheel for reserve account disruptions caused by net flows through the main loan and retail deposit banking operations. Effectively, changes in reserve balances that are the result of client initiated activity in loans and deposits are offset by reversing changes in reserve balances initiated in wholesale money markets by the bank itself.

(Note that in today’s environment of chronic system excess reserves, individual banks with outsized excess reserve positions may simply let those balances decline in response to a net reserve outflow. That is a special case of a bank using the ultimate liquid asset (excess reserves) to absorb a net reserve outflow. When a bank already holds excess reserves, those reserves can be viewed as such a liquid asset that is “sold”, in effect, in order to meet a net reserve outflow. If the bank did not hold excess reserves already, it might sell a more conventional liquid asset such as treasury bills for example, in order to offset the net outflow of reserves that occurs otherwise.

China Sets Up Air Defense Zone Around Diaoyu Islands

Only yesterday in Will 2014 Be The Year That Changes Everything?, I wrote:
In the South China Sea, China and several nations continue to bicker over issues, with China's stingy relief aid to the Philippines the latest sign of a deteriorating situation. There is unlikely to be open conflict in Asia, but an increase in tension will cause allies to put pressure on the United States.

Today's headline: Hagel: U.S. 'deeply concerned' with China air defense map
Secretary of Defense Chuck Hagel said Saturday the United States is “deeply concerned” over China’s move to establish an air defense zone over a string of disputed islands in the East China Sea.

“We view this development as a destabilizing attempt to alter the status quo in the region,” Hagel said in a statement. “This unilateral action increases the risk of misunderstanding and miscalculations.”

The Associated Press reports that the Chinese Defense Ministry issued a map showing the new East China Sea Air Defense Identification Zone, which encompasses what the Chinese call the Diaoyu islands. The move is seen as an aggressive step against Japan, which bought what it calls the Senkaku islands from private owners in 2012. The islands are uninhabited, but are believed to rest near large underwater oil reserves. Taiwan also claims possession of the islands.

China creates air defence zone over Japan-controlled islands
Along with the creation of the zone in the East China Sea, the defence ministry released a set of aircraft identification rules that must be followed by all planes entering the area, under penalty of intervention by the military.

Aircraft are expected to provide their flight plan, clearly mark their nationality, and maintain two-way radio communication allowing them to "respond in a timely and accurate manner to the identification inquiries" from Chinese authorities.

The outline of the new zone, which is shown on the ministry website and a state media Twitter account (pic.twitter.com/4a2vC6PH8O), covers a wide area of the East China Sea between South Korea and Taiwan that includes the Tokyo-controlled islands known as the Senkakus to Japan and Diaoyous to China.

"China's armed forces will adopt defensive emergency measures to respond to aircraft that do not cooperate in the identification or refuse to follow the instructions," according to the ministry.

The zone became operational as of 10:00 am Saturday (0200 GMT).


Notice that the area around the Diaoyu islands (small triangle in bottom portion of zone) is circled. China isn't laying claim to that part of the sea, but in order to get there, Japanese planes need to pass through the Chinese zone.

China’s new air defense zone above Senkakus ‘very dangerous’ escalation, Japan says
Ihara was quoted as telling Han that Japan can “never accept the zone set up by China,” as it includes the Senkakus. He further said the new zone will “escalate” already fraught bilateral ties over the uninhabited but potentially resource-rich islet chain, branding China’s move “very dangerous,” the statement said.

Vice Foreign Minister Akitaka Saiki plans to summon Chinese Ambassador to Japan Cheng Yonghua as early as possible Monday to state Tokyo’s position on the matter.

Chinese Defence Ministry spokesman Yang Yujun said Saturday that the establishment of the zone, which China said entered into force as of 10 a.m. Saturday, was aimed at “safeguarding state sovereignty, territorial land and air security, and maintaining flight order.”

“It is a necessary measure in China’s exercise of self-defense rights. It has no particular target and will not affect the freedom of flight in relevant airspace,” Yang said in a statement on the ministry’s website.

“China will take timely measures to deal with air threats and unidentified flying objects from the sea, including identification, monitoring, control and disposition, and it hopes all relevant sides positively cooperate and jointly maintain flying safety,” he said.

The BBC has a good summary of the island dispute, already updated with this new info: Q&A: China-Japan islands row

2013-11-23

Rise of the New American Right Leaking Into Mainstream; What is Neoreaction?

The right is still far off the radar of the mainstream, but parts of it are starting to get attention.

Geeks for Monarchy: The Rise of the Neoreactionaries
Many of us yearn for a return to one golden age or another. But there’s a community of bloggers taking the idea to an extreme: they want to turn the dial way back to the days before the French Revolution.

Neoreactionaries believe that while technology and capitalism have advanced humanity over the past couple centuries, democracy has actually done more harm than good. They propose a return to old-fashioned gender roles, social order and monarchy.
This movement is perfectly aligned with social mood. It marks a massive political shift aligned with major changes in technology and relative global power.
Perhaps the one thing uniting all neoreactionaries is a critique of modernity that centers on opposition to democracy in all its forms. Many are former libertarians who decided that freedom and democracy were incompatible.

“Demotist systems, that is, systems ruled by the ‘People,’ such as Democracy and Communism, are predictably less financially stable than aristocratic systems,” Anissimov writes. “On average, they undergo more recessions and hold more debt. They are more susceptible to market crashes. They waste more resources. Each dollar goes further towards improving standard of living for the average person in an aristocratic system than in a Democratic one.”

Later:
Yarvin proposes that countries should be small — city states, really — and that all they should compete for citizens. “If residents don’t like their government, they can and should move,” he writes. “The design is all ‘exit,’ no ‘voice.’”

That will probably sound familiar if you heard Balaji Srinivasan’s Y Combinator speech. Although several news stories described the talk as a call for Silicon Valley to secede from the union, Srinivasan told Tim Carmody that his speech has been misinterpreted. “I’m not a libertarian, don’t believe in secession, am a registered Democrat, etcetera etcetera,” he wrote. “This is really a talk that is more about emigration and exit.”

I don’t know Srinivasan, but it sounds like he’d find neoreactionary views repulsive. And exit is a concept that appeals to both the right and left. But there are others in the Valley pushing ideas much closer to the neoreaction. Patri Friedman, who co-founded the Seasteading Institute with Peter Thiel, specifically mentioned Yarvin’s blog in a reading list at the end of an essay for Cato Unbound, and Yarvin was scheduled to speak at the Seasteading Institute’s conference in 2009 before his appearance was canceled. Thiel, meanwhile, voiced a related opinion in his own article for Cato Unbound: “I no longer believe that freedom and democracy are compatible.”
This is not a new idea. One can read Liberty or Equality for free. The main argument is that democracy tends towards equality and away from liberty, in fact actively curtailing liberty in order to make people more equal. Communism is the most democratic form of government in this line of thinking, the total expression of the majority, of public will, through the government.
So what exactly is the Cathedral stopping neoreactionaries from talking about? Well, the merits of monarchy for starters. But mostly, as far as I can tell, they want to be able to say stuff like “Asians, Jews and whites are smarter than blacks and Hispanics because genetics” without being called racist. Or at least be able to express such views without the negative consequences of being labeled racist.

Speaking of which, neoreactionaries are obsessed with a concept called “human biodiversity” (HBD) — what used to be called “scientific racism.” Specifically, they believe that IQ is one of — if not the — most important personal traits, and that it’s predominately genetic. Neoreactionaries would replace, or supplement, the “divine right” of kings and the aristocracy with the “genetic right” of elites.

To call these claims “controversial” would be putting it lightly, but they underpin much of anti-egalitarian and pro-traditionalist claims neoreactionaries make. Delving into the scientific debate over race, genetics and IQ is beyond the scope of this article, but I’ve included some links on the topic in the reading list.
This criticism of neoreaction sums up the divide perfectly. The egalitarians seen the neoreactioaries as racist, the neoreactionaries see the egalitarians as ignorant of science and destined to destroy society in their pursuit of equality.

The movement has no central core, and the article correctly notes that there's cross pollination between game blogs that help men meet, date and have successful relationships with women (by throwing out all the feminist ideas); scientists who study taboo subjects such as the biological basis for human traits such as intelligence; technology entrepreneurs and workers who are thinking of and building libertarian systems (Bitcoin being a recent and popular creation); the old paleoconservative right and libertarian right, where Pat Buchanan and Ron Paul both find little love from establishment Republicans; and through the medium of the Internet, where it is now possibly to read books by the losers of history (the critics of democracy). The latter point is important because even if one doesn't agree with neoreaction, it is digging up lot of ideas left for dead that are not even debated anymore. This makes the movement very well read and its opposite mostly unread, relying on power instead. Neoreaction is an elite movement, and it was only yesterday that I linked to Blame Rich, Overeducated Elites as Our Society Frays.

As Outside In put it:
When theonomists scrutinize ethno-nationalists and techno-commercialists they see evil heathens.

When ethno-nationalists scrutinize theonomists and techno-commercialists they see deluded race-traitors.

When techno-commercialists scrutinize theonomists and ethno-nationalists they see retarded crypto-communists.

(The details of these diagnoses exceed the present discussion.)

When developed beyond its ultra-Burkean trunk, therefore, the prospects for neoreactionary consensus – for a neoreactionary thing – depend upon disintegration. If we’re compelled to share a post-Cathedral state, we’ll kill each other.
There is no consensus between neoreaction, only a consensus that the current system is doomed to collapse.

Neoreactionaries may not win in the future, but they are crystallizing the criticisms of the current system into a serious political argument. The future will be fought over these ideas.

Will 2014 Be The Year That Changes Everything?

The financial crisis in 2008 was an event, but it wasn't a one-off crisis (no matter what Paul Krugman and other economists believe). It was instead the first adjustment phase of the new global world order, the "de-Americanized" world coming into being. De-Americanized here simply means an America with far less power. America could remain the world's most powerful nation by a long-shot, but be eclipsed economically by China and thwarted by Russia in the Middle East and Eastern Europe, or it could slip into a major crisis that leaves America a shadow of its former self.

American policy since 2008 has been designed to forestall its decline. There has been little effort aimed at reversing the decline and much effort spent on policies that will accelerate its collapse, namely Obamacare.

Meanwhile in Asia, China continues to push forward with economic reform. A major credit bubble remains a serious issue that could severely hit China's economy and standing in the world for a period of time. However, the crisis would also be very bullish for the U.S. dollar and erode the competitiveness of the U.S. economy. Assuming China continues on the same path as the past 30 years, its response to the crisis would likely be a rapid acceleration of reforms, since what is holding back reform today is the secured power and wealth of the party elite. Therefore, I expect crisis or not, China will increasingly become a more competitive economic player in the world.

In Japan, the nation's slow motion path to default continues with an increase in nationalist sentiment (also reflected in China). In the South China Sea, China and several nations continue to bicker over issues, with China's stingy relief aid to the Philippines the latest sign of a deteriorating situation. There is unlikely to be open conflict in Asia, but an increase in tension will cause allies to put pressure on the United States.

We have already seen the U.S. ignore pressure from its allies in the Middle East. Saudi Arabia has secured nuclear weapons from Pakistan and Israel and Saudi Arabia are working closely to contain and possible attack Iran, a response to America's refusal to act in Syria.

In Europe, the right-wing parties are advancing strongly and the National Front (FN)is set for a huge win in EU elections. Although they are dissimilar from the UK Independence Party (also set for a major win in European parliamentary elections) in almost every way, they agree on their dislike for the EU. A growing anti-EU consensus is building in Europe and these parties may form a majority in the EU parliament. These political victories will likely send the euro down into at least the 1.20s, even if no further steps are taken against the euro. A weaker euro is dollar bullish and bad news for emerging markets and China.

The other day I linked to this story: PBOC Will ‘Basically’ End Normal Yuan Intervention: Zhou

One day later this story came out: PBOC Says No Longer in China’s Interest to Increase Reserves

China has to become more flexible with its currency for reform to work, but it also gives them flexibility to let the yuan drop if needed, something that is politically difficult as long as they maintain strict control over the currency.

China to start gold swaps trading on Nov. 25
China, set to overtake India this year as the world's top gold consumer, will start gold swaps trading on the interbank market next week, giving more hedging tools for banks dealing in bullion.

The Shanghai-based China Foreign Exchange Trade System will start gold swaps trading on November 25th, with the Shanghai Gold Exchange responsible for related settlement and delivery, the National Interbank Funding Center said in a statement on Friday.

The start of gold swaps trading comes as China is taking steps to open up its gold market and increase financial investments.

The Shanghai Futures Exchange launched simulated trading for gold and copper options on Tuesday. The central bank said in September it plans to raise the number of firms allowed to import and export gold and also ease restrictions on individual buyers of the precious metal.
Aside from gold and copper, China is also set to begin trading oil futures in Shanghai and allow foreigners to participate. Also, there will very likely be yuan denominated contracts. If the contract proves popular (and it may attract investors looking for yuan exposure), it could pave the way for oil sales in yuan, since China is now the largest importer of oil in the world.

Gold bulls haven't given up their dreams even as prices tumble: Gold Option Wagers on Surge to $3,000 Was Most-Active Yesterday
Wagers betting that gold prices will rally 141 percent in about two years were the most-traded option in New York bullion yesterday.

Call options giving owners the right to buy gold at $3,000 an ounce by December 2015 traded 7,250 contracts yesterday on the Comex in New York, more than double the amount of the next most-active option, data compiled by Bloomberg show.

U.S. elections are coming up next year as well and the Affordable Care Act has three paths it can go by. The first is that it works, but spikes the deficit due to higher spending. The second is it fails, and damages the economy and the healthcare sector. The third is that it is delayed, delivering a major political loss to President Obama.

Internationalization of the Yuan, the opening of Saudi Arabia, the implosion of the EU, and three of the last pillars of the dollar crumble
The rapid internationalization of the Yuan, causing a decline in the central role of the dollar; the loss of Saudi support, a key part of the petrodollar edifice; and the loss of the Americanist bastion of the EU, replaced by a Euroland relying on the Euro, are all threats to the three remaining essential pillars of American power, which will disappear in 2014, precipitating considerable global upheaval.

The US is betting that the potential barrier (3) between the status quo and the world thereafter is too painful to go through, and that countries, despite all of the benefits that would accrue in the new organization of the world, will not cross that Rubicon. One example is China, with its mountains of dollars in reserve which would not be worth much if it moves too pointedly; another is Saudi Arabia, which would lose a good customer and assured security if it let go of the US. But these are neither more nor less than cold calculations of costs and benefits, and for a number of stakeholders the benefits will exceed the costs. According to LEAP/E2020, the American wager has already been lost.
GEAB is pro-Europe and relatively anti-Anglo Amercian in its outlook, but they summarize the changes well at the link.

The U.S. does have some positive forces on its side, such as increased energy production, but this is also a double edged sword. The war weary American public is already losing interest in Middle East conflicts and higher energy output has strengthened the idea that energy independence is possible. It also means Saudi Arabia down the road will receive fewer U.S. dollars, which means fewer dollars to recycle (eventually, through the global financial system) into U.S. Treasuries. Thus, U.S. strengths serve to help "de-Americanize" the world.

In sum, most of the trends today and their possible offshoots are negative for the U.S. position in the world. Whether the U.S. gains or loses in the short-run, the long-term position of the U.S. will be eroded relative to the rest of the world. Maybe 2014 will be like all the prior years before it, but with an aging bull market and an economy increasingly due for recession, time is running out for the U.S. Next year will also mark 5 years since the bottom of the 2008 iteration of the financial crisis, and it was 5 years from the bottom of the first wave of the Depression, in 1932, to the "depression within the Depression" in 1937. The reason for that, Keynesians argue, was because the Federal Reserve tightened monetary policy......what today they call the taper.

Euro and Gold Bulls Ease Up

Socionomics In The Headlines: America's Anger Epidemic

America's anger epidemic: why? Social mood.
Dr. Sudeepta Varma, a psychiatrist, said it is not all a coincidence. Americans really are angrier now than they've ever been before.

A recent study from the USA Today found 60 percent of Americans report feeling angry or irritable. That is up from 50 percent when a similar poll was taken in 2011.

2013-11-22

Searching For A Bubble

According to the evidence from Google, talk of a bubble (if we can infer that talk correlates with Google searches) peaks right near the top in the market. The only exception is bonds. The data below is relative; the peak value is set to 100.

Searches for Stock Market Bubble peaked before the market peaked in 2007. (All charts from Google Trends)


Searches for Oil Bubble peaked in June 2008, right at the top.


Searches for Real Estate Bubble peaked in 2005.


Searches for Bond Bubble peaked in August 2010.


Searches for Gold Bubble peaked in 2011, one month before the actual top.


Searches for China Bubble peaked in April 2010, four months before the Chinese stock market made its post-2008 peak.


And for fun, Bitcoin Bubble.

Socionomics Test Case

Here's a clearand direct example of social mood in action.

How Manny Pacquiao Became The Philippino POMO
Many have wondered why one of the greatest boxers of our generation, Philippines' Manny Pacquiao, has not retired gracefully into hero-dom following his loss to Marquez late last year.

While in the US, investors have POMO to almost guarantee an up-day in stocks, in the Philippines, stocks rise 73% of the time after a Pacquiao win (compared to 52% average) and rise a stunning 0.5% (against a 0.04% average). Pacquiao is 6-1 on to win against Brandon "Bam Bam" Rios on Saturday (86% likely to win); is there a Philippines ETF?

“Pacquiao’s victory in the ring creates a nationwide euphoria that things will get better -- positive sentiment, positive investment,” said Jonathan Ravelas, chief market strategist at BDO Unibank. “A victory by Pacquiao will help lift the Philippine spirit at a time when it’s facing the impact of calamities. The nation definitely needs to hear something positive right now.”

What To Do When Your Nation Is In Decline And You Are In Charge? Lie.

This is from the U.K.

The Fiddling of Crime Figures
Another is my repeated suggestion that official crime figures, having become politically important, may not be wholly accurate. (the same problem, of course, affects exam results, school performance, unemployment and inflation figures. The state is now so all-encompassing that official statistics are now crucial to the state’s image machine. We have become similar to the USSR in the 1950s, when Soviet statistics were so politicised that those who read them described the manipulation as ‘The Bikini Effect’ – the figures were more interesting for what they conceal than for what they reveal.

I encounter fury and derision when I say this, and my attempts to back it up with the detailed work of qualified researchers are ignored by these scoffers.

So imagine my delight when the House of Commons Public Administration Committee decided to investigate the matter, calling a number of expert witnesses to do so, protected by Parliamentary privilege.
Here's what the government is up to:
'Burglary is an area where crimes are downgraded or moved into other brackets, such as criminal damage for attempted burglaries,' he said.



Pc Patrick said an internal audit found that 'as many as 300 burglaries' vanished from official figures in just a few weeks. 'Things were being reported as burglaries and you would then re-run the same report after there had been a human intervention, a management intervention, and these burglaries effectively disappeared in a puff of smoke,' he said.



He claimed that in 80 per cent of cases where an allegation of a serious sexual offence had been recorded as 'no crime', the label was incorrect.



Pc Patrick also said numerous other cases were incorrectly recorded as 'crime-related incidents', a category covering allegations made by third parties but not directly confirmed by the supposed victims.



He said pressure was put on victims to drop crimes by 'attacking the allegation' instead of investigating the crime.



He was supported by Peter Barron, a former Detective Chief Superintendent at the Met, who said victims are 'harassed' into scaling down the seriousness of incidents. They would telephoned and repeatedly questioned on the circumstances of the crime.



'Victims were putting the phone down in disgust, harassed by another call from someone trying to persuade them that they were mistaken about the level of force used,' he added.

Here's the U.S. version: Census Bureau: No systematic manipulation of jobs data
The U.S. Census Bureau said Tuesday it has asked its inspector general to look into a New York Post report that national employment data ahead of the 2012 election were manipulated.

The bureau says it does not believe any improper conduct was widespread or had any impact on the reported unemployment rate.

"We have no reason to believe that there was a systematic manipulation of the data described in media reports," Census said in a statement. "We carefully cross-check and verify the work of our staff to ensure the data's validity."
The story is that one person was faking data, but he no longer works at the Census. The point to focus on is not that Census would be manipulating the data so much as, like the police in the U.K., not doing their jobs. Instead of collecting all the data, according to the one source, he was told to make up data.

America Headed Towards Revolution; End of Filibuster Increases Odds of Secession

Blame Rich, Overeducated Elites as Our Society Frays
Past waves of political instability, such as the civil wars of the late Roman Republic, the French Wars of Religion and the American Civil War, had many interlinking causes and circumstances unique to their age. But a common thread in the eras we studied was elite overproduction. The other two important elements were stagnating and declining living standards of the general population and increasing indebtedness of the state.
Author Peter Turchin describes the lead up to the "War of Northern Aggression":
From 1830 to 1860 the number of New Yorkers and Bostonians with fortunes of at least $100,000 (they would be multimillionaires today) increased fivefold. Many of these new rich (or their sons) had political ambitions. But the government, especially the presidency, Senate and Supreme Court, was dominated by the Southern elites. As many Northerners became frustrated and embittered, the Southerners also felt the pressure and became increasingly defensive.
This puts the recent Silicon Valley desire for secession in perspective. The tech boom of the past 30 years has increased the wealth of tech entrepreneurs, but until very recently, they've mainly stayed out of politics (or when they get involved, don't rock the boat). Now flush with wealth and power, they are throwing their weight around, trying to direct legislation in Washington and talking about secession.
We should expect many years of political turmoil, peaking in the 2020s. And because complex societies are much more fragile than we assume, there is a chance of a catastrophic failure of some kind, with a default on U.S. government bonds being among the less frightening possibilities.
It's tough to guess how the United States will fragment, but the urban-rural split is already sparking secession talk. Southern nationalism is on the rise. Considering the end of the filibuster in the Setnate and the authors mention of the Civil War: the reason why the South seceded when it did was because they saw the balance in the Senate, which is the body that can slow down and block the majority, tipping towards the North. Consider the filibuster: if there are 20 states (40 Senators) +1 Senator who wish to block legislation in the Senate, they can do so with the filibuster. Without the filubuster, you need 25 states +1 Senator to block legislation. In other words, you must control the Senate.

Demographics are shifting in favor of Democrats, but their voters concentrate in urban areas. The Republican party is itself breaking down and will probably dissolve, but we'll keep the name to make it simple. Assume that a time comes in as little as 10 years, that mathematically Republicans will almost never win the Senate again without changing their ideology, and if they do win, it'll always be close. At that point, a secession movement in even one Republican state would have massive power because if they left, it would tip the balance of power in the Senate. Every other Republican state would follow them out the door.

Social Mood Sinks, Stock Market To Follow; Loss of Filibuster Signals America's Decline

In May I wrote Will Obama Be Impeached? Watch The Stock Market. The stock market has climbed to new high after new high. Yet social mood is collapsing if we look at how the country feels about Washington, politics and Obamacare. I was mulling this over in my head, thinking about whether a drop in the market is coming, and today I came across this:

Elliott Wave Update ~ 20 November 2013
Social mood seems to be bursting lower in a some kind of wave three down if you look at the Presidential polling numbers. Yes Obamacare is quite the disaster, but social mood had already been in a downturn and thus the problems of Obamacare are quite amplified by the state of mood.

So there exists a major "disconnect" between current social mood and the stock market. In Elliott Wave theory social mood turns first then economic results follow (to include stock market declines). So I would not hold my breath on a new market high however the wave count allows for it.

Also, the Senate just killed a centuries long tradition in American politics.

Senate Dems Curb Filibuster, Risk Future Problems
"The silver lining is that there will come a day when the roles are reversed," said Iowa Sen. Charles Grassley, top Republican on the Senate Judiciary Committee. He warned that when his party wins a Senate majority they likely will apply the 51-vote filibuster threshold to a Republican president's Supreme Court nominees.

"The tyranny of the majority. That's what it's going to be" at some point in the future, predicted Steve Bell, a former top Senate Republican aide who is now a senior director at the Bipartisan Policy Center, which advocates partisan cooperation.

...But Sen. Carl Levin of Michigan, one of three Democrats who voted against diluting the filibuster, noted that past Democratic minorities have used the procedure to block GOP moves to limit abortion rights and repeal the estate tax.

He said he feared that a future Senate majority would weaken filibusters against legislation and "down the road, the hard-won protections and benefits for our people's health and welfare will be lost."
This is not a Democrat versus Republican issue, but rather the slow motion collapse of the United States of America into tyranny. This is the slippery slope: once one side changes the rules, the other side doesn't respond by restoring them, they respond by changing them more in the future. The result could well be the continual breakdown of politics and an eventual descent into tyranny.

If you are imagining American tyranny in the future, you would have to imagine the end of the filibuster because it protects minority rights. The U.S. is headed in a dark direction politically, regardless of who wins. From a historical perspective, this is a huge shift towards unrestrained power.

2013-11-21

Chengdu Bitcoin Miner Uses 60 Machines To Mine 55 BTC In One Day; Price Drop Blamed On Chinese Miners Cashing In

July 2009 on the excavation bitcoin Long Yu Jiang, is China's first batch of bitcoin miner. Long Jiang Yu told reporters yesterday that he owns 60 mining machines hosted on a machine room, daily electricity consumption reaches 9,000 yuan, output is quite alarming, according to a recent market, dug a month for a good bit of money can several million yuan. Long Jiang Yu told reporters about bitcoin the various players in this circle, opened a bitcoin mystery.
9,000 yuan in a day is about $1,500 dollars. More on this miner:
Long Yu Jiang told reporters that he owns 60 mining machines, with a total computing power of 300TH / S, all these years the average daily volume of 69.2175 mining bitcoin, the present day can be dug 55 bitcoins, by price 4358 yuan calculations, one day he could income 239,000. However, investment is also very large. He revealed that these mining machine 24 hours a day, consumption reached 9,000 yuan, a Taiwan 620GH / S computing capacity mining machine, you need to install the 43 yuan a dedicated mining chip 384, the optical chip will cost more than 16,000 , and these saturated mining machine work, chip attrition rate is quite large.
He's literally burning through the CPUs and needs to frequently replace chip sets. Full Google translation below. Link to original: 成都玩家挖比特币:一天挖出55枚 价值24万元 Here's another video from the link as well.
In this video she talks about Bitcoin being a "gift from heaven" instead of like normal currency, and if Bitcoin becomes an international currency, the U.S. dollar will have to go off and cry somewhere. The anchor goes on to discuss the assassination site, bitcoin ATMs, and Bitcoin's 5 risks.

Google translated article follows:

Bitcoin spike continues. In the 18th, after soaring 74 percent yesterday appeared bitcoin market crash, from a high of 19 May 5888 yuan to 4358 yuan straight drop, a drop of up to 25.9%. Has 60 "mining machine" Long Yu Jiang Chengdu senior players told reporters yesterday's slump is due to early accumulation of a large number of bitcoin mining corporations to take advantage of high shipping caused. Bitcoin madness continues staged. Yesterday, the Chengdu collar Zhang Taobao shopping, find a host of things like computers, offer 580,000 yuan, while the edge in the ring she had just bought a set of 70 square meters of houses, there is $ 600,000.

Zhang see is a bitcoin mining machine. WCC reporter yesterday found the Taobao seller, his other identity is Sichuan Airlines CEO Phil Long Yu Jiang, who passed the Tianfu Software Park "in 2012 the first project will be assessed entrepreneurial field", mainly engaged in the business of virtual simulation flight .

July 2009 on the excavation bitcoin Long Yu Jiang, is China's first batch of bitcoin miner. Long Jiang Yu told reporters yesterday that he owns 60 mining machines hosted on a machine room, the light one day consumption reached 9,000 yuan, output is quite alarming, according to a recent market, dug a month for a good bit of money can several million yuan. Long Jiang Yu told reporters about bitcoin the various players in this circle, opened a bitcoin mystery.

Glossary

Bitcoin was born in 2008, is an open-source P2P software produced by the virtual currency. Based on a set of password encoding, through a complex algorithm to generate, anyone can download and run the Bitcoin client and involved in the manufacture bitcoins, the use of electronic signatures way to achieve circulation. Its main features include: decentralized, global circulation, have exclusive ownership.

Bitcoin total only 21 million. Bitcoin exist in the digital space, hidden in a specific algorithm, the need to invest a lot of manpower and resources to dig, which is called Bitcoin "mining." The mining machine is the most basic unit of computing power MB, computing speed 1MH / s, meaning that operations per second 1 megahertz. 1T = 1024G, 1G = 1024M.

Pellets sell bitcoins high yesterday plunged into two

"Yesterday (the 19th) is 24,50,100 bits credits to selling, these two days will certainly be lost." Long Yu Jiang Carter, China's largest trading platform BTCChina bitcoin trading price on average from the 19th a high of 5,888 yuan, a straight line yesterday afternoon fell to 4,358 yuan, or up to 25.9%.

"A lot of 7000 + buy, a place with blood ah", "tragic loss, heart can not stand," "too easy to be manipulated, and the rich playing the" ...... Yesterday a bitcoin players QQ group where one screams .

"Now the global average of 160 per hour mining bitcoin." According to Long Yu Jiang Jieshao, total 21 million bitcoins, as has been dug up 11960000. Early accumulation of a large number of bitcoin mining group, taking advantage of the stock market these days crazy shipments, down is inevitable.

Chengdu has 60 players on sale mining machine mining machine

Long Yu Jiang told reporters that he owns 60 mining machines, with a total computing power of 300TH / S, all these years the average daily volume of 69.2175 mining bitcoin, the present day can be dug 55 bitcoins, by price 4358 yuan calculations, one day he could income 239,000.

However, investment is also very large. He revealed that these mining machine 24 hours a day, consumption reached 9,000 yuan, a Taiwan 620GH / S computing capacity mining machine, you need to install the 43 yuan a dedicated mining chip 384, the optical chip will cost more than 16,000 , and these saturated mining machine work, chip attrition rate is quite large.

More serious situation is more and more difficult to dig bitcoin. Long Yu Jiang predicted that three years after only a day bitcoin mining 25, 30 years after the day to dig one's pretty good.

"Mining there three or four years of the stock market right now so I dug side, while selling the mining machine." Long Yu Jiang told reporters that his first foreign sale of the mining machine yesterday, 580,000 that Taiwan is the most high-end computing power 2TH / S, "orders within two weeks after delivery, one month can be dug 50 bitcoins, a few months will be able to return this." He revealed that there are many people asked about the situation, mainly because some traditional industries investors, smelling opportunity, also wanted to come into the act.

Secret Chinese bitcoin "four kings"

From Long Yu estuary, the reporter learned that China has four major Bitcoin top players, than a mystery.

"The first name is Li laugh, China bitcoin richest holdings worth 600 million yuan," he told reporters, Li Xiao is a former New Oriental teachers, mainly R & D investment and organization "mining machine", once used as mining too much power is off.

According to reports, this year in May, Lee Siu in Shenzhen, Guangzhou, Shanghai and other places roadshow, raising China's first bitcoin funds. The fund-raising plan shows a total fund of 20 million yuan, the use of proceeds in the form of a limited partnership. Individual investors a minimum investment of $ 100,000.

The second is the co-founder Yang Yao Renren Core, which formed a ASICME team, focused mining machine sales, according to ASICME team announced mining machine parameters, a price of 3,000 yuan minimum configuration mining machine, according to the current bitcoin mining rate, more than 30 days will be able to recover. From June 2, 2013 on the line to the end of June, its sales reached out to the mining machine total several million dollars.

The third is very mysterious, so far no one knows his real name, only knew the nickname "Pumpkin Zhang", but its work in China bitcoin industry chain is crucial because he provided the mining machine dedicated chip, "Avalon," Yang Yao Rui mine machine equipped with a chip is the "Avalon."

Long Yu Jiang told reporters that at present there are four major global mining machine chip manufacturers, three are in a foreign country, without foreign sales, only to provide their own equipment, pellets, so "pumpkin Zhang" in China's position is unique.


The fourth top players called "roast cat", this is not a person's nickname, but a mining group name, it is the world's largest mining group, excavation rate was close to 30% of the world. Today, the "roast cat" is a joint-stock company, the largest shareholder and founding team called "SSE bit Springs company." The company is also very mysterious, reporters are finding online four related presentations.

It is understood that "roast cat" in August 2012 in Bitcoin Forum (bitcoin official forum) on the IPO, founded ASICMINER, issued a total of 40 million shares, of which 163,962 shares held by the public, Shenzhen Fountain Corporation holds 236,038 shares bits, 0.01BTC an IPO, and now has more than one hundred million U.S. dollars market value.

However, in conversation, Long Yu Jiang, some of the above four people disagree, he claimed that he mainly active in the foreign arena bitcoin, people called him "Mr · Long".

2013-11-19

Road Map to Negative Social Mood: Diversity Destroys Community

Why does negative social mood occur? It isn't because people suddenly decide they've had enough positive mood, it's because like sugar, too much of a good thing is a bad thing. And extreme peaks in social mood will lead to long-term negative trends in expressed behaviors because of the prior positive mood. For example, people are becoming more "xenophobic" as a reaction to peak social mood immigration and integration policies, and even when there is positive mood, it may likely occur as a positive spin on the trend. In other words, instead of negative mood driving a desire to separate, positive social mood will be channeled into positive feelings towards the community which will become increasingly homogeneous.

The Paradox of Diverse Communities
After 20 million-plus simulations, the authors found that the same basic answer kept coming back: The more diverse or integrated a neighborhood is, the less socially cohesive it becomes, while the more homogenous or segregated it is, the more socially cohesive. As they write, “The model suggests that when people form relationships with similar and nearby others, the contexts that offer opportunities to develop a respect for diversity are different from the contexts that foster a sense of community.”
Negative social mood will swing the public onto a new policy track and bouts of negative mood will push it along, but positive move will not reverse it.

The implications are also positive for secession:
If diversity is unattainable at the neighborhood level, might it be possible at the level of the city, as essentially a network of more or less similar neighborhoods? Jane Jacobs liked to say that great cities are federations of neighborhoods. It’s exactly what I see in vibrant cities like New York or Toronto. When I asked Neal about this, he sounded a more optimistic note: “Their patchwork of segregated communities allows for both diversity and cohesion. We usually view segregation as problematic, but when it comes in the form of a patchwork of neighborhoods and enclaves that each have their own character, it may actually ‘work.’”
Diversity is a cost to society. When negative mood hits, people look to cut costs.

We Are Living In A Chinese World

The biggest story about Bitcoin doesn't really involve Bitcoin. It's the story of China's economic rise and how it is affecting the global marketplace.

Below is a chart of Bitcoin on Mt. Gox and on BTC China. Notice the volume scales are different because of the massive volume seen on Mt. Gox during the April price spike. BTC China has already surpassed Mt. Gox, but look at the changes in volume during this recent rally in Bitcoin prices.


Whatever is affecting the Bitcoin price, it is not U.S. dollar demand. This is more of a Chinese driven move. If one wants to know where Bitcoin is headed, look at CNY price charts and follow the news in China as closely as possible.

The bigger story though, as I said, is about China's rise, or what we could now dub its arrival. Bitcoins are flowing from West to East because of massive Chinese demand. If you hang around the fringes of the financial blogosphere, you've likely also come across another asset that is being said to flow from West to East: gold. If you cannot figure out what is happening with Bitcoin, you are going to be really surprised with what happens in gold in the coming years. China is the marginal buyer in Bitcoins today and they set the price. We have seen the same thing occur in red wines and art prices, in Palo Alto and Vancouver home prices.

The world pays a lot of attention to the American financial markets because U.S. markets are the world's largest and deepest. Bitcoin is still a fringe financial asset, but Chinese people's incomes are rising and they save far more money than Americans. Most American wealth is in paper assets such as stocks, whereas Chinese have a lot of paper wealth in real estate, but they are also generating new wealth at a rapid pace. American wealth is far more tied to asset prices, whereas Chinese wealth is growing steadily due to savings. American's (and Europeans, Japanese) ability to bid for assets is dependent on the value of financial assets. This is why a crash in global asset values shifts power from West to East, as relative wealth gaps close rapidly.

As for Bitcoin, on my Chinese Weibo on November 7 I said the target for this latest move has an end target over $1000. Bitcoin surpassed $1000 on the Chinese market today. I haven't come up with another price target yet, but it could still gain several hundred percent before this move ends. For now, I don't think $10,000 will happen (I'm wrong on my reading of the waves if it went that high) on this move and I'd be surprised if it got to $5000.

Here's the latest reform news in China. PBOC to ‘Basically’ End Normal Yuan Intervention, Zhou Says
The yuan’s trading band will be widened in an “orderly way” as China seeks to enhance the currency’s two-way flexibility, Zhou wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. The nation will phase out investment caps for both domestic and foreign investors, he added. A ceiling on deposit rates offered by local banks will be gradually removed as well, PBOC Deputy Governor Yi Gang wrote in the book.

“We will increase the role of market exchange rates, and the central bank will basically exit from normal foreign-exchange market intervention,” Zhou wrote. The central bank will “establish a managed floating exchange-rate system based upon market supply and demand,” he added.
These are reforms that were planned around 2005, before the Ministry of Finance, controlled by party insiders, pushed out the reform clique controlled PBOC. These reforms will accelerate the development of China's financial sector and turn it into a true competitor with the United States and EU.

2013-11-16

Pray For Fukushima Workers

Tepco to start fuel removal from Fukushima reactor 4 pool Monday
“Full-scale removal (from the accident-stricken unit) is a very important process in moving ahead with the plant’s decommissioning,” Tepco spokesman Masayuki Ono told a press conference, adding that the experience will be useful in dealing with the three other units that were damaged in the 2011 nuclear crisis.

The unit 4 spent fuel pool contains 1,331 spent fuel assemblies and 202 unused ones. Workers will begin with the removal of unused fuel assemblies, which are easier to handle.

Riskiest Phase of Fukushima Decommissioning to Begin Soon
If one thinks about the Fukushima nuclear plant, it has been an uncanny attractor of the 'Murphy's law' effect from the beginning. Murphy's law states that “anything that can go wrong, will go wrong”.

Consider the accident's progression so far. Fukushima was protected by extra-high barriers against tsunami waves. It turned out though that some tsunami waves are so high and powerful that these barriers, against all previous experience and expectation, failed anyway (a 2008 study that warned of tsunami waves higher than 10 meters was ignored because it was held to be too unlikely an event). Because no-one thought the barriers would ever fail, the back-up power generators were housed on the ground level – where the seawater could get at them and destroy them. The long list of mishaps that have occurred since then, from tanks leaking radioactive water, to contaminated groundwater flowing into the ocean, to sudden steam eruptions spewing highly radioactive steam from cracks opening up around the plant, are all testament to Murphy practically squatting atop the plant.

2013-11-14

China's Political Changes

I have written extensively about the Battle for China. Reformers are battling hardliners and Maoists to pull the country through the middle income trap and into a different political future. Another piece of evidence comes from the Shanghai Free Trade Zone. This initiative was launched only a month after Bo Xilai was removed from power.

Han Zheng: How Shanghai's Free Trade Zone Works
Can you tell us what was behind the decision to launch the FTZ?
Han: The deliberations took about a year. At first, the plan wasn't very big. We just wanted to explore whether Shanghai could lead the way in facilitating investment and using innovation to advance restructuring, and how Shanghai could become an international financial and trade center. The research deepened, and it was connected to some nationally strategic needs. The connections expanded, and at one point we felt that our direction was correct, our research valuable.

After the 18th National Congress of the Communist Party (in 2012) our research led to a preliminary plan, which resembles the plan we have now. There are differences between research results and a real plan, which needs direction, goals and guidelines.
At the National People's Congress in March, General Secretary Xi Jinping participated in a discussion that included delegates from Shanghai. We took the opportunity to give him a report on the plan, and he affirmed it.

Then on March 28, Premier Li Keqiang came to the Yangtze River Delta on his first field trip since taking office. After he arrived at Shanghai, he received direct reports from members of the municipal party standing committee and government. They received his affirmation. The premier said he thought the plan was in line with national strategy.
The Wenzhou financial reforms and the Shanghai FTZ kicked off at about the same time. The reformers pounced once their political enemies were weakened.

The Right Ascendant in France

I have often pointed out that the old Right will reemerge and take power across much of the Western world, though it may take decades or even centuries, just as the left's rise took centuries from the Enlightenment through to the present. There will always be a left-right divide in politics, but the center will slowly shift to the right over time. In France, we can see this taking place right now.

Is a new revolution quietly brewing in France?
Alain Soral is a French author and philosopher whose political career included a membership in the French Communist Party and the National Front. He is credited with developing the concept of "gauche du travail - droite des valeurs" (literally "left of labor - right of values") which can be summarized as the simultaneous advocacy of socialist/social ideas and measures in economic and social issues combined with conservative moral, ethical and religious values in ideological, ethical and cultural issues. He is the founder of an extremely interesting movement called "Egalite et Reconciliation" which aims at reconciling native French people (called "Francais de souche" or "root French") with those French people who recently immigrated to France (called "Francais de branche" or "branch French") and to make them co-exist in complete equality. Because of his numerous "politically incorrect" ideas and very overt statements, Soral is absolutely hated and feared by the French ruling class. Even though Soral has also been completely banned from any public media, He remains immensely popular with the general public and his books are all best-sellers.
Follow that link above for a very long and detailed look at what is happening in France. It is truly revolutionary and explains why many Jews in France are complaining of increased anti-semitism.

t is against this background that more and more young immigrants are flocking to Soral, Dieudonne and E&R whose popularity is rapidly growing. Recently, an absolutely incredible event took place, something unthinkable just a few years ago.

In one of his sketches Dieudo sang a song called "Shoananas" a rather basic play on the words 'Shoah' (from the Hebrew 'HaShoah' or 'disaster' - name by which the French Jews often refer to the "Holocaust") and 'ananas' (pineapple). Sure enough, the CRIF, SOS Racisme and other organization sued Dieudo for "incitement to hatred". Dieudo was sentenced to a 20'000 Euros fine and he appealed the decision. On the day Dieudo's appeal was heard by the court, something absolutely extraordinary happened. I found two YouTube videos which show the event and which I will both show because of the high probability that one, or both, of these videos will be banned (guys - download them now while you can!). Here they are:
Click through Is a new revolution quietly brewing in France? to watch them. Summary below:
Members of the Jewish Defense League (LDJ) show up to scream insults at Dieudo and his supporters who, in turn, shout all types of abuse at the LDJ members and wave pineapples at them while sining "Shoananas". The cops keep the two sides apart as best they can. Then the supporters of Dieudo begin to chant "liberte d'expression" (freedom of speech) to which the LDJ members reply "am Israel hai" ("Israel is alive" in Hebrew) and begin to sing the Israeli national anthem. At this point the supporters being to sing the French "La Marseillaise" from the top of their lungs totally drowning out the completely overwhelmed LDJ activists. Now take a close look at the faces singing "La Marseillaise" - do you see that a lot of the people singing it are clearly Brown and Black? These are precisely the type young people taken mostly, but not only, from the notorious 'banlieues'. These could be the same people who in 2001 and 2002 booed the French national anthem during soccer matches (a big scandal at the time).

The Marseillaise is first and foremost a revolutionary song, and when it is not so much sung as it is shouted by a large crowd waving fists, this is a very very serious development. Needless to say, none of that was ever shown on the French media. But you can bet that the elites saw it all and one can only imagine the fear they felt as these images.

Coincidence or not, but the fact is that when the cops heard the crowd behind them singing the Marseillaise, they began pushing the LDJ activist out of the court-building. This is not very surprising considering the immense popularity Dieudo and Soral enjoy in the various uniformed services (more about that below).

Something very important and very new is happening in France. The traditional political paradigm of Right versus Left is falling apart if only because the official "Right" and the official "Left" have become indistinguishable from each other. And in the meantime, the E&R phenomenon is becoming not only bigger, but deeper. More and more young Frenchmen are looking back at the history of France since 1945 and they are gradually coming to the realization that the country has been rule by a arrogant cabal of plutocrats who overthrew de Gaulle in 1968 and who replaced this remarkable national leader with a protégé of the Rothschild family, Georges Pompidou, who began is career as a director of the Banque Rothschild and who was later by the French elites to replace de Gaulle.
I bolded the part about the traditional political paradigm falling apart. When the old regime falls apart, there is great volatility and events can take strange turns. Those who expect things to move in a single direction will be surprised by the twists and turns. However, it is clear that the right is rising and the ruling left is bleeding members who are increasingly adopting right-wing ideas. This goes far beyond the National Front, which might score a huge victory in European parliamentary elections in 2014. This is a much deeper and longer lasting shift that may not express itself formally in politics for another decade or more.

2013-11-13

Immigration Amnesty Takes Its Last Breath

It looks like social mood may have finally worn down Washington. This may be the final nail in the coffin for amnesty for illegal aliens in the United States.


How immigration died — Part 1 (Video) (This link goes to the article, but it also has an autoplay video).
Denis McDonough told Gutiérrez that Obama opposed a key concession that Democratic negotiators had made to House Republicans.

Sen. Charles Schumer later called. The New York Democrat, the architect of more liberal legislation from the Gang of Eight that was advancing in the Senate, delivered an even blunter message.

“Stop the progress on the House bill,” Gutiérrez described Schumer as saying. “I want you to stop. You are damaging the Senate proposal moving forward.”
One of things I've repeated on immigration is that the U.S. is proceeding as if this is still the year 2000, at the peak of social mood. The tide has been turning politically, but they continue to act as if nothing has changed. Here we see President Obama and NY Senator Schumer assuming they can get more for their side, effectively killing a deal in the House. The House Republicans are the stumbling block on immigration reform and if social mood had crept more into DC, they would refuse any deal and simply wait it out, since their side is gaining support year after year. Instead, a deal was on the table and the pro-amnesty side killed it because it wasn't good enough. Now with Obama weak due to Obamacare and the 2014 election suddenly looking good for the GOP, this may have been the last shot at immigration reform on pro-amnesty terms.
Tempers flared frequently between Gutiérrez, the colorful Chicago lawmaker revered by immigration advocates, and Rep. Xavier Becerra (Calif.), a Los Angeles liberal who had risen up the ranks of the Democratic leadership.

Immigration reform is widely seen as dead in this Congress, and the finger-pointing has already started.

Both parties are responsible for the effort’s demise.

Speaker John Boehner (R-Ohio), for example, refused pleas from GOP negotiators for a commitment to move the House bill. Republicans could never give Democrats a clear sense of how many GOP lawmakers might support the proposal if it ever reached the floor.

Inside the House Group of Eight, momentum toward a deal slowed as negotiations became bogged down in a dispute over healthcare. By the end of May, the group had lost its self-described conservative hardliner, Rep. Raúl Labrador (R-Idaho), who quit despite pleas from top Republicans, including Rep. Paul Ryan (Wis.), that he stay at the table.

...But in a series of interviews with The Hill over the past two months, Democratic and Republican negotiators said the group’s failure stemmed from divisions among Democrats over strategy and policy, as well as Boehner’s refusal to put his weight behind the bill and help steer it through the House.
Boehner is most exposed to the shifting social mood, his job is at risk because he's seeing the political changes brought about by social mood. Democrats were battling over whether to get everything they want, or give up a lot to entice Boehner to push it through the House. They chose poorly.

Speaking of political change:
Whether by retirement or defeat, several of the negotiators had left the House, and each side went searching for replacements. On the Democratic side, Becerra and Rep. Zoe Lofgren (Calif.) remained. The Republicans had Carter, Johnson and Rep. Mario Diaz-Balart (Fla.), whose brother, Lincoln, was an original member of the group.

To replace the Democrats, Becerra recruited Rep. John Yarmuth (D-Ky.) and sounded out Gutiérrez, who returned, reluctantly, with a demand that the group soften a provision requiring immigrants in the country illegally to appear in a federal courtroom before they could gain probationary legal status.

The Republicans brought in Labrador, a former immigration attorney who had, in just one term, built a reputation as a conservative firebrand.
Eventually, Labrador backed out.

I don't see an immigration bill coming in 2014. If one does, the Republican House will kill it for fear of losing their jobs. With Obamacare working as a millstone around Democrats' necks, it's possible some of them will oppose it as well, in order to distance themselves even further from Obama. Moving forward, enforcement provisions will have the upper hand in negotiations.

2013-11-12

Doomsday Preppers

What I saw at the doomsday prepper convention
There are still uncertainties in the preparedness market, some driven by ideology, according to Charlie Hogwood of Personal Readiness Education Programs. "All last year it was up and up and up. But after the [presidential] election, it flattened out." Hogwood thinks that some in the market were overwrought over doomsday scenarios surrounding the reelection of Barack Obama. "Last year, I heard 100 different conspiracy theories" about what a second Obama presidency might mean. But when the election wasn't followed by martial law and FEMA camps, both the rhetoric and the market cooled off a bit. "I rarely hear the crazy theories now. Now everyone's worried mainly about the collapse of the dollar," says Hogwood, referring to widespread prepper fears of hyperinflation triggered by the Federal Reserve's quantitative easing.
The dollar is safe for now.

Colorado Counties Say Yes to Secession

New Colorado? Rural voters approve secession idea
After all, those were some of the reasons five counties on the state's Eastern Plains voted on Election Day to approve the creation of a 51st state in the first place.

Secession supporters know the votes were symbolic, designed to grab the attention of a Democratic-controlled Legislature. They say the vote results emphasize a growing frustration in conservative prairie towns with the more populous and liberal urban Front Range, which has helped solidify the Democrats' power.

"We can't outvote the metropolitan areas anymore, and the rural areas don't have a voice anymore," said Perk Odell, 80, a lifelong resident of Akron in Washington County, which voted to secede.
A yes vote sends a positive signal to other secessionists. The sky didn't fall.

The story says nothing about trying to join with Wyoming. I'm not sure why that isn't discussed more widely, although a few articles on the issue noted it. To become a new state requires the approval of Congress, but to join another state only needs the approval of both states. Most people think it is improbable. Wyoming won't want to anger Colorado by announcing they'd accept the counties, only to have the deal fall through, making them look bad to Wyoming voters as well. Still, If there's a huge area of a state that wants out and the neighboring state is willing to have them, I'd say the odds of a successful exit are far higher than improbably. As social mood declines, the odds of success will only increase.