Olduvaiblog: Musings on the coming collapse

Home » Posts tagged 'market'

Tag Archives: market

Activist Post: Is the NSA manipulating the stock market?

Activist Post: Is the NSA manipulating the stock market?.

image source

Jon Rappoport
Activist Post

Trevor Timm of the Electronic Frontier Foundation dug up a very interesting nugget. It was embedded in the heralded December 2013 White House task force report on spying and snooping.

Under Recommendations, #31, section 2, he found this:

“Governments should not use their offensive cyber capabilities to change the amounts held in financial accounts or otherwise manipulate financial systems.”

Timm quite rightly wondered: why were these warnings in the report?

Were the authors just anticipating a possible crime? Or were they reflecting the fact that the NSA had already been engaging in the crime?

If this was just a bit of anticipation, why leave it naked in the report? Why not say there was no current evidence the NSA had been manipulating financial systems?

Those systems would, of course, include the stock market, and all trading markets around the world.

Well, there is definite evidence of other NSA financial snooping. From Spiegel Online, 9/15/13:

“The National Security Agency (NSA) widely monitors international payments, banking and credit card transactions, according to documents seen by SPIEGEL.”

“The NSA’s Tracfin data bank also contained data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), a network used by thousands of banks to send transaction information securely…the NSA spied on the organization on several levels, involving, among others, the [NSA] agency’s ‘tailored access operations’ division…”

The NSA’s “tailored access operations” division uses roughly 1000 hackers and analysts in its spying efforts.

The next step in all this spying would naturally involve penetrating trading markets and, using the deep data obtained, manipulate the markets to the advantage of the NSA and preferred clients.

img

img

The amount of money siphoned off in such an ongoing operation would be enormous.

“Looking over the shoulder” of Wall St. insiders would be child’s play for NSA.

Ditto for predicting political events that would temporarily drive markets down and provide golden opportunities for highly profitable short selling.

Like drug traffickers and other mobsters, the NSA could invest their ill-gotten gains in legitimate enterprises and reap additional rewards.

And if the Pentagon, under which the NSA is organized, requires heavy amounts of money for off-the-books black budget ops, what better place to go than their own NSA?

All in all, when you operate the biggest spying and data-gathering operation in the world, the opportunities abound. Yes, knowledge is power, when the distinctions between legal and illegal are brushed off like like a few gnats on a summer day.

Jon Rappoport is the author of two explosive collections, The Matrix Revealed and Exit From the Matrix, Jon was a candidate for a US Congressional seat in the 29th District of California. Nominated for a Pulitzer Prize, he has worked as an investigative reporter for 30 years, writing articles on politics, medicine, and health for CBS Healthwatch, LA Weekly, Spin Magazine, Stern, and other newspapers and magazines in the US and Europe. Jon has delivered lectures and seminars on global politics, health, logic, and creative power to audiences around the world. You can sign up for his free emails at www.nomorefakenews.com

The DJIA Is A Hoax Washington’s Blog

The DJIA Is A Hoax Washington’s Blog.

The Dow Jones Industrial Average Is a Farce

Guest post by Wim Grommen. Mr. Grommen was a teacher in mathematics and physics for eight years at secondary schools. The last twenty years he trained programmers in Oracle-software. He worked almost five years as trainer for Oracle and the last 18 years as trainer for Transfer Solutions in the Netherlands.

The last 15 years he studied transitions, social transformation processes, the S-curve and transitions in relation to market indices. Articles about these topics have been published in various magazines / sites in The Netherlands and Belgium.

The paper “The present crisis, a pattern: current problems associated with the end of the third industrial revolution” was accepted for an International Symposium in Valencia: The Economic Crisis: Time for a paradigm shift, Towards a systems approach. 

On January 25 2013, during the symposium in Valencia he presented his paper to scientists.

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a hoax.

Transitions

Every production phase, civilization or other human invention goes through a so called transformation process. Transitions are social transformation processes that cover at least one generation. In this article I will use one such transition to demonstrate the position of our present civilization and its possible effect on stock exchange rates.

A transition has the following characteristics:

–          it involves a structural change of civilization or a complex subsystem of our civilization

–          it shows technological, economical, ecological, socio cultural and institutional changes at different levels that influence and enhance each other

–          it is the result of slow changes (changes in supplies) and fast dynamics (flows)

A transition process is not fixed from the start because during the transition processes will adapt to the new situation. A transition is not dogmatic.

Four transition phases

In general transitions can be seen to go through the S curve and we can distinguish four phases (see fig. 1):

  1. a pre development phase of a dynamic balance in which the present status does not visibly change
  2. a take off phase in which the process of change starts because of changes in the system
  3. an acceleration phase in which visible structural changes take place through an accumulation of socio cultural, economical, ecological and institutional changes influencing each other; in this phase we see collective learning processes, diffusion and processes of embedding
  4. a stabilization phase in which the speed of sociological change slows down and a new dynamic balance is achieved through learning

A product life cycle also goes through an S curve. In that case there is a fifth phase:

  1. the degeneration phase in which cost rises because of over capacity and the producer will finally withdraw from the market.

 

 

Figure 1. The S curve of a transition
Four phases in a transition best visualized by means of an S curve:
Pre-development, Take-off, Acceleration, Stabilization.

When we look back into the past we see three transitions, also called industrial revolutions, taking place with far-reaching effect :

1. The first industrial revolution (1780 until circa 1850); the steam engine

2. The second industrial revolution (1870 until circa 1930); electricity, oil and the car

3. The third industrial revolution (1950 until ….); computer and microprocessor

Dow Jones Industrial Average (DJIA)

The Dow Index was first published in 1896 when it consisted of just 12 constituents and was a simple price average index in which the sum total value of the shares of the 12 constituents were simply divided by 12. As such those shares with the highest prices had the greatest influence on the movements of the index as a whole. In 1916 the Dow 12 became the Dow 20 with four companies being removed from the original twelve and twelve new companies being added. In October, 1928 the Dow 20 became the Dow 30 but the calculation of the index was changed to be the sum of the value of the shares of the 30 constituents divided by what is known as the Dow Divisor.

While the inclusion of the Dow Divisor may have seemed totally straightforward it was – and still is – anything but! Why so? Because every time the number of, or specific constituent, companies change in the index any comparison of the new index value with the old index value is impossible to make with any validity whatsoever. It is like comparing the taste of a cocktail of fruits when the number of different fruits and their distinctive flavours – keep changing. Let me explain the aforementioned as it relates to the Dow.

The False Appreciation of the Dow Explained

On the other hand, companies in the take-off or acceleration phase are added to the index. This greatly increases the chances that the index will always continue to advance rather than decline. In fact, the manner in which the Dow index is maintained actually creates a kind of pyramid scheme! All goes well as long as companies are added that are in their take-off or acceleration phase in place of companies in their stabilization or degeneration phase.

On October 1st, 1928, when the Dow was enlarged to 30 constituents, the calculation formula for the index was changed to take into account the fact that the shares of companies in the Index split on occasion. It was determined that, to allow the value of the Index to remain constant, the sum total of the share values of the 30 constituent companies would be divided by 16.67 ( called the Dow Divisor) as opposed to the previous 30.

On October 1st, 1928 the sum value of the shares of the 30 constituents of the Dow 30 was $3,984 which was then divided by 16.67 rather than 30 thereby generating an index value of 239 (3984 divided by 16.67) instead of 132.8 (3984 divided by 30) representing an increase of 80% overnight!! This action had the affect of putting dramatically more importance on the absolute dollar changes of those shares with the greatest price changes. But it didn’t stop there!

On September, 1929 the Dow divisor was adjusted yet again. This time it was reduced even further down to 10.47 as a way of better accounting for the change in the deletion and addition of constituents back in October, 1928 which, in effect, increased the October 1st, 1928 index value to 380.5 from the original 132.8 for a paper increase of 186.5%!!! From September, 1929 onwards (at least for a while) this “adjustment” had the affect – and I repeat myself – of putting even that much more importance on the absolute dollar changes of those shares with the greatest changes.

How the Dow Divisor Contributed to the Crash of ‘29

From the above analyses/explanation it is evident that the dramatic “adjustments” to the Dow Divisor (coupled with the addition/deletion of constituent companies according to which transition phase they were in) were major contributors to the dramatic increase in the Dow from 1920 until October 1929 and the following dramatic decrease in the Dow 30 from then until 1932 notwithstanding the economic conditions of the time as well.

Dow Jones Industrial Index is a Hoax

In many graphs the y-axis is a fixed unit, such as kg, meter, liter or euro. In the graphs showing the stock exchange values, this also seems to be the case because the unit shows a number of points. However, this is far from true! An index point is not a fixed unit in time and does not have any historical significance. An index is calculated on the basis of a set of shares. Every index has its own formula and the formula gives the number of points of the index. Unfortunately many people attach a lot of value to these graphs which are, however, very deceptive.

An index is calculated on the basis of a set of shares. Every index has its own formula and the formula results in the number of points of the index. However, this set of shares changes regularly. For a new period the value is based on a different set of shares. It is very strange that these different sets of shares are represented as the same unit. In less than ten years twelve of the thirty companies (i.e. 40%) in the Dow Jones were replaced. Over a period of sixteen years, twenty companies were replaced, a figure of 67%. This meant that over a very short period we were left comparing a basket of today’s apples with a basket of yesterday’s pears.

Even more disturbing is the fact that with every change in the set of shares used to calculate the number of points, the formula also changes. This is done because the index, which is the result of two different sets of shares at the moment the set is changed, must be the same for both sets at that point in time. The index graphs must be continuous lines. For example, the Dow Jones is calculated by adding the shares and dividing the result by a number. Because of changes in the set of shares and the splitting of shares the divider changes continuously. At the moment the divider is 0.15571590501117 but in 1985 this number was higher than 1. An index point in two periods of time is therefore calculated in different ways:

Dow1985 = (x1 + x2 +..+x30) / 1

Dow2014 = (x1 + x2 +.. + x30) / 0.15571590501117

In the 1990s many shares were split. To make sure the result of the calculation remained the same both the number of shares and the divider changed. An increase in share value of 1 dollar of the set of shares in 2014 results is 6.4 times more points than in 1985. The fact that in the 1990s many shares were split is probably the cause of the exponential growth of the Dow Jones index. At the moment the Dow is at 16,437 points. If we used the 1985 formula it would be at 2,559 points.

The most remarkable characteristic is of course the constantly changing set of shares. Generally speaking, the companies that are removed from the set are in a stabilization or degeneration phase. Companies in a take off phase or acceleration phase are added to the set. This greatly increases the chance that the index will rise rather than go down. This is obvious, especially when this is done during the acceleration phase of a transition. From 1980 onward 7 ICT companies (3M, AT&T, Cisco, HP, IBM, Intel, Microsoft), the engines of the latest revolution and 5 financial institutions, which always play an important role in every transition, were added to the Dow Jones.

Period

Basket changes

Stock splits

Dow Divisor end period

1930-1940

18

0

15,100

1940-1950

0

12

9,060

1950-1960

5

27

3,824

1960-1970

0

26

1,894

1970-1980

3

12

1,465

1980-1990

5

32

0,586

1990-2000

11

40

0,201

2000-2010

7

13

0,132

Table 1. Changes in the Dow, stock splits and the value of the Dow Divisor after the market crash of 1929

 Dow Jones Industrial Average

Figure 2 Exchange rates of Dow Jones during the latest two industrial revolutions. During the last few years the rate increases have accelerated enormously.

Overview from 1997 : 20 winners in – 20 losers out, a figure of 67%

September 23, 2013: Hewlett – Packard Co., Bank of America Inc. and Alcoa Inc. will replaced by Goldman Sachs Group Inc., Nike Inc. and Visa Inc.
Alcoa has dropped from $40 in 2007 to $8.08. Hewlett- Packard Co. has dropped from $50 in 2010 to $22.36.
Bank of America has dropped from $50 in 2007 to $14.48.
But Goldman Sachs Group Inc., Nike Inc. and Visa Inc. have risen 25%, 27% and 18% respectively in 2013.

September 20, 2012: UnitedHealth Group Inc. (UNH) replaces Kraft Foods Inc.
Kraft Foods Inc. was split into two companies and was therefore deemed less representative so no longer suitable for the Dow. The share value of UnitedHealth Group Inc. had risen for two years before inclusion in the Dow by 53%.

June 8, 2009: Cisco and Travelers replaced Citigroup and General Motors.
 Citigroup and General Motors have received billions of dollars of U.S. government money to survive and were not representative of the Do.

September 22, 2008: Kraft Foods Inc. replaced American International Group. 
American International Group was replaced after the decision of the government to take a 79.9% stake in the insurance giant. AIG was narrowly saved from destruction by an emergency loan from the Fed.

February 19, 2008: Bank of America Corp. and Chevron Corp. replaced Altria Group Inc. and Honeywell International.
Altria was split into two companies and was deemed no longer suitable for the Dow.
 Honeywell was removed from the Dow because the role of industrial companies in the U.S. stock market in the recent years had declined and Honeywell had the smallest sales and profits among the participants in the Dow.

April 8, 2004: Verizon Communications Inc., American International Group Inc. and Pfizer Inc. replace AT & T Corp., Eastman Kodak Co. and International Paper.
AIG shares had increased over 387% in the previous decade and Pfizer had an increase of more than 675& behind it. Shares of AT & T and Kodak, on the other hand, had decreases of more than 40% in the past decade and were therefore removed from the Dow.

November 1, 1999: Microsoft Corporation, Intel Corporation, SBC Communications and Home Depot Incorporated replaced Chevron Corporation, Goodyear Tire & Rubber Company, Union Carbide Corporation and Sears Roebuck.

March 17, 1997:  Travelers Group, Hewlett-Packard Company, Johnson & Johnson and Wal-Mart Stores Incorporated replaced Westinghouse Electric Corporation, Texaco Incorporated, Bethlehem Steel Corporation and Woolworth Corporation.

Real truth and fictional truth

Is the number of points that the Dow Jones now gives us a truth or a fictional truth? 
If a fictional truth then the number of points now says absolutely nothing about the state that the economy or society is in when compared to the past. In that case a better guide would be to look at the number of people in society that use food stamps today – That is the real truth

The DJIA Is A Hoax Washington's Blog

The DJIA Is A Hoax Washington’s Blog.

The Dow Jones Industrial Average Is a Farce

Guest post by Wim Grommen. Mr. Grommen was a teacher in mathematics and physics for eight years at secondary schools. The last twenty years he trained programmers in Oracle-software. He worked almost five years as trainer for Oracle and the last 18 years as trainer for Transfer Solutions in the Netherlands.

The last 15 years he studied transitions, social transformation processes, the S-curve and transitions in relation to market indices. Articles about these topics have been published in various magazines / sites in The Netherlands and Belgium.

The paper “The present crisis, a pattern: current problems associated with the end of the third industrial revolution” was accepted for an International Symposium in Valencia: The Economic Crisis: Time for a paradigm shift, Towards a systems approach. 

On January 25 2013, during the symposium in Valencia he presented his paper to scientists.

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a hoax.

Transitions

Every production phase, civilization or other human invention goes through a so called transformation process. Transitions are social transformation processes that cover at least one generation. In this article I will use one such transition to demonstrate the position of our present civilization and its possible effect on stock exchange rates.

A transition has the following characteristics:

–          it involves a structural change of civilization or a complex subsystem of our civilization

–          it shows technological, economical, ecological, socio cultural and institutional changes at different levels that influence and enhance each other

–          it is the result of slow changes (changes in supplies) and fast dynamics (flows)

A transition process is not fixed from the start because during the transition processes will adapt to the new situation. A transition is not dogmatic.

Four transition phases

In general transitions can be seen to go through the S curve and we can distinguish four phases (see fig. 1):

  1. a pre development phase of a dynamic balance in which the present status does not visibly change
  2. a take off phase in which the process of change starts because of changes in the system
  3. an acceleration phase in which visible structural changes take place through an accumulation of socio cultural, economical, ecological and institutional changes influencing each other; in this phase we see collective learning processes, diffusion and processes of embedding
  4. a stabilization phase in which the speed of sociological change slows down and a new dynamic balance is achieved through learning

A product life cycle also goes through an S curve. In that case there is a fifth phase:

  1. the degeneration phase in which cost rises because of over capacity and the producer will finally withdraw from the market.

 

 

Figure 1. The S curve of a transition
Four phases in a transition best visualized by means of an S curve:
Pre-development, Take-off, Acceleration, Stabilization.

When we look back into the past we see three transitions, also called industrial revolutions, taking place with far-reaching effect :

1. The first industrial revolution (1780 until circa 1850); the steam engine

2. The second industrial revolution (1870 until circa 1930); electricity, oil and the car

3. The third industrial revolution (1950 until ….); computer and microprocessor

Dow Jones Industrial Average (DJIA)

The Dow Index was first published in 1896 when it consisted of just 12 constituents and was a simple price average index in which the sum total value of the shares of the 12 constituents were simply divided by 12. As such those shares with the highest prices had the greatest influence on the movements of the index as a whole. In 1916 the Dow 12 became the Dow 20 with four companies being removed from the original twelve and twelve new companies being added. In October, 1928 the Dow 20 became the Dow 30 but the calculation of the index was changed to be the sum of the value of the shares of the 30 constituents divided by what is known as the Dow Divisor.

While the inclusion of the Dow Divisor may have seemed totally straightforward it was – and still is – anything but! Why so? Because every time the number of, or specific constituent, companies change in the index any comparison of the new index value with the old index value is impossible to make with any validity whatsoever. It is like comparing the taste of a cocktail of fruits when the number of different fruits and their distinctive flavours – keep changing. Let me explain the aforementioned as it relates to the Dow.

The False Appreciation of the Dow Explained

On the other hand, companies in the take-off or acceleration phase are added to the index. This greatly increases the chances that the index will always continue to advance rather than decline. In fact, the manner in which the Dow index is maintained actually creates a kind of pyramid scheme! All goes well as long as companies are added that are in their take-off or acceleration phase in place of companies in their stabilization or degeneration phase.

On October 1st, 1928, when the Dow was enlarged to 30 constituents, the calculation formula for the index was changed to take into account the fact that the shares of companies in the Index split on occasion. It was determined that, to allow the value of the Index to remain constant, the sum total of the share values of the 30 constituent companies would be divided by 16.67 ( called the Dow Divisor) as opposed to the previous 30.

On October 1st, 1928 the sum value of the shares of the 30 constituents of the Dow 30 was $3,984 which was then divided by 16.67 rather than 30 thereby generating an index value of 239 (3984 divided by 16.67) instead of 132.8 (3984 divided by 30) representing an increase of 80% overnight!! This action had the affect of putting dramatically more importance on the absolute dollar changes of those shares with the greatest price changes. But it didn’t stop there!

On September, 1929 the Dow divisor was adjusted yet again. This time it was reduced even further down to 10.47 as a way of better accounting for the change in the deletion and addition of constituents back in October, 1928 which, in effect, increased the October 1st, 1928 index value to 380.5 from the original 132.8 for a paper increase of 186.5%!!! From September, 1929 onwards (at least for a while) this “adjustment” had the affect – and I repeat myself – of putting even that much more importance on the absolute dollar changes of those shares with the greatest changes.

How the Dow Divisor Contributed to the Crash of ‘29

From the above analyses/explanation it is evident that the dramatic “adjustments” to the Dow Divisor (coupled with the addition/deletion of constituent companies according to which transition phase they were in) were major contributors to the dramatic increase in the Dow from 1920 until October 1929 and the following dramatic decrease in the Dow 30 from then until 1932 notwithstanding the economic conditions of the time as well.

Dow Jones Industrial Index is a Hoax

In many graphs the y-axis is a fixed unit, such as kg, meter, liter or euro. In the graphs showing the stock exchange values, this also seems to be the case because the unit shows a number of points. However, this is far from true! An index point is not a fixed unit in time and does not have any historical significance. An index is calculated on the basis of a set of shares. Every index has its own formula and the formula gives the number of points of the index. Unfortunately many people attach a lot of value to these graphs which are, however, very deceptive.

An index is calculated on the basis of a set of shares. Every index has its own formula and the formula results in the number of points of the index. However, this set of shares changes regularly. For a new period the value is based on a different set of shares. It is very strange that these different sets of shares are represented as the same unit. In less than ten years twelve of the thirty companies (i.e. 40%) in the Dow Jones were replaced. Over a period of sixteen years, twenty companies were replaced, a figure of 67%. This meant that over a very short period we were left comparing a basket of today’s apples with a basket of yesterday’s pears.

Even more disturbing is the fact that with every change in the set of shares used to calculate the number of points, the formula also changes. This is done because the index, which is the result of two different sets of shares at the moment the set is changed, must be the same for both sets at that point in time. The index graphs must be continuous lines. For example, the Dow Jones is calculated by adding the shares and dividing the result by a number. Because of changes in the set of shares and the splitting of shares the divider changes continuously. At the moment the divider is 0.15571590501117 but in 1985 this number was higher than 1. An index point in two periods of time is therefore calculated in different ways:

Dow1985 = (x1 + x2 +..+x30) / 1

Dow2014 = (x1 + x2 +.. + x30) / 0.15571590501117

In the 1990s many shares were split. To make sure the result of the calculation remained the same both the number of shares and the divider changed. An increase in share value of 1 dollar of the set of shares in 2014 results is 6.4 times more points than in 1985. The fact that in the 1990s many shares were split is probably the cause of the exponential growth of the Dow Jones index. At the moment the Dow is at 16,437 points. If we used the 1985 formula it would be at 2,559 points.

The most remarkable characteristic is of course the constantly changing set of shares. Generally speaking, the companies that are removed from the set are in a stabilization or degeneration phase. Companies in a take off phase or acceleration phase are added to the set. This greatly increases the chance that the index will rise rather than go down. This is obvious, especially when this is done during the acceleration phase of a transition. From 1980 onward 7 ICT companies (3M, AT&T, Cisco, HP, IBM, Intel, Microsoft), the engines of the latest revolution and 5 financial institutions, which always play an important role in every transition, were added to the Dow Jones.

Period

Basket changes

Stock splits

Dow Divisor end period

1930-1940

18

0

15,100

1940-1950

0

12

9,060

1950-1960

5

27

3,824

1960-1970

0

26

1,894

1970-1980

3

12

1,465

1980-1990

5

32

0,586

1990-2000

11

40

0,201

2000-2010

7

13

0,132

Table 1. Changes in the Dow, stock splits and the value of the Dow Divisor after the market crash of 1929

 Dow Jones Industrial Average

Figure 2 Exchange rates of Dow Jones during the latest two industrial revolutions. During the last few years the rate increases have accelerated enormously.

Overview from 1997 : 20 winners in – 20 losers out, a figure of 67%

September 23, 2013: Hewlett – Packard Co., Bank of America Inc. and Alcoa Inc. will replaced by Goldman Sachs Group Inc., Nike Inc. and Visa Inc.
Alcoa has dropped from $40 in 2007 to $8.08. Hewlett- Packard Co. has dropped from $50 in 2010 to $22.36.
Bank of America has dropped from $50 in 2007 to $14.48.
But Goldman Sachs Group Inc., Nike Inc. and Visa Inc. have risen 25%, 27% and 18% respectively in 2013.

September 20, 2012: UnitedHealth Group Inc. (UNH) replaces Kraft Foods Inc.
Kraft Foods Inc. was split into two companies and was therefore deemed less representative so no longer suitable for the Dow. The share value of UnitedHealth Group Inc. had risen for two years before inclusion in the Dow by 53%.

June 8, 2009: Cisco and Travelers replaced Citigroup and General Motors.
 Citigroup and General Motors have received billions of dollars of U.S. government money to survive and were not representative of the Do.

September 22, 2008: Kraft Foods Inc. replaced American International Group. 
American International Group was replaced after the decision of the government to take a 79.9% stake in the insurance giant. AIG was narrowly saved from destruction by an emergency loan from the Fed.

February 19, 2008: Bank of America Corp. and Chevron Corp. replaced Altria Group Inc. and Honeywell International.
Altria was split into two companies and was deemed no longer suitable for the Dow.
 Honeywell was removed from the Dow because the role of industrial companies in the U.S. stock market in the recent years had declined and Honeywell had the smallest sales and profits among the participants in the Dow.

April 8, 2004: Verizon Communications Inc., American International Group Inc. and Pfizer Inc. replace AT & T Corp., Eastman Kodak Co. and International Paper.
AIG shares had increased over 387% in the previous decade and Pfizer had an increase of more than 675& behind it. Shares of AT & T and Kodak, on the other hand, had decreases of more than 40% in the past decade and were therefore removed from the Dow.

November 1, 1999: Microsoft Corporation, Intel Corporation, SBC Communications and Home Depot Incorporated replaced Chevron Corporation, Goodyear Tire & Rubber Company, Union Carbide Corporation and Sears Roebuck.

March 17, 1997:  Travelers Group, Hewlett-Packard Company, Johnson & Johnson and Wal-Mart Stores Incorporated replaced Westinghouse Electric Corporation, Texaco Incorporated, Bethlehem Steel Corporation and Woolworth Corporation.

Real truth and fictional truth

Is the number of points that the Dow Jones now gives us a truth or a fictional truth? 
If a fictional truth then the number of points now says absolutely nothing about the state that the economy or society is in when compared to the past. In that case a better guide would be to look at the number of people in society that use food stamps today – That is the real truth

The Moment When The Fed Admits It Has Become The Market’s Muppet | Zero Hedge

The Moment When The Fed Admits It Has Become The Market’s Muppet | Zero Hedge.

The following exchange between then-Kansas Fed president (and current FDIC director) Thomas Hoenig and the Chairsatan, uttered during the historic Sept 16, 2008 FOMC meeting, is of particular importance for four reasons: 1) it appears to be the first instance in the Fed records, where the phrase “too big to fail” is memorialized; 2) it highlights something that has become all too clear by now: in giving to a culture of moral hazard, the Fed is now being openly “played” by the market (read the big banks); 3) it confirms that the Fed has learned zero lessons from the crisis and 4) the thinking behind the “Bernanke (global) Put” is laid out for all to see.

MR. HOENIG. Mr. Chairman, I have thought about this considerably because I think we have come to a time in our history when we have institutions that clearly ought to be and may in fact be too big to fail. I think we tend to react ad hoc during the crisis, and we have no choice at this point. But as you look at the situation, we ought, instead of having a decade of denying too big to fail, to acknowledge it and have a receivership and intervention program that extends some of the concepts of the FDIC but goes beyond that. That is, if you are insolvent, it is not a central bank issue—we are a liquidity provider—and therefore the government comes in. But unlike the GSEs, everyone has to take some hit—the equity holders, certainly the preferred stockholders, also the subordinated-debt holders, and perhaps the senior ones—by assuming a certain amount of loss. They would have immediate access to—pick a number—80 percent. The research would help us pick that number, and they can have access, but the rest becomes a subordinate-subordinate position after the liquidation so that you have still a sense of market discipline in play and you don’t get the system gaming it in that, if you know there’s a bailout coming, you buy the debt and sell the equity short to make a bundle. I think therein lie the distortions that are absolutely detrimental to the long-run health of the economy.

 

Regarding how we go forward, I think we are going to have many lessons from this. Part of the problem has been very lax lending and, obviously now, weaknesses in some of the oversight. Also a history of our reacting from a monetary policy point of view to ease quickly to try to take care of the problem and, therefore, to create a sense in the market of our support has raised some real moral hazard issues that we now need to begin to remedy as we look forward in dealing with future receiverships. We are in a world of too big to fail, and as things have become more concentrated in this episode, it will become even more so.

 

CHAIRMAN BERNANKE. I certainly agree—and the Treasury Secretary and I have said publicly—that we need a strong, well-defined, ex ante, clear regime. But we have the problem now that we don’t have such a regime, and we’re dealing on a daily basis with these very severe consequences. So it is a difficult problem.

 

MR. HOENIG. I think what we did with Lehman was the right thing because we did have a market beginning to play the Treasury and us, and that has some pretty negative consequences as well, which we are now coming to grips with.

Yes Tom, unfortunately 5 years later, not one lesson has been learned, as for the “market playing” you and the Treasury, we too can’t wait for the moment when not even the market can “game” the clueless mandarins at the Marriner Eccles building, and it all comes crashing down…

Goldilocks And The Dog That Didn’t Bark | Zero Hedge

Goldilocks And The Dog That Didn’t Bark | Zero Hedge.

Submitted by Ben Hunt of Epsilon Theory

Det. Gregory: Is there any other point to which you would wish to draw my attention?

Holmes: To the curious incident of the dog in the night-time.

Det. Gregory: The dog did nothing in the night-time.

Holmes: That was the curious incident.

— Arthur Conan Doyle, “Silver Blaze”

Goldilocks And The Dog That Didn’t Bark

The market was down more than 2% last Monday. Why? According to the WSJ, CNBC, and all the other media outlets it was “because” investors were freaked out (to use the technical term) by poor US growth data. Disappointing ISM number, car sales, yada, yada, yada. But then the market was up more than 2% last Thursday and Friday (and another 1% this Tuesday), despite a Friday jobs report that was more negative in its own right than the ISM number by a mile. Why? According to those same media arbiters, investors were now “looking through” the weak data.

Please. This is nonsense. Or rather, it’s an explanation that predicts nothing, which means that it’s not an explanation at all. It’s a tautology. What we want to understand is what makes investors either react badly to bad news like on Monday or rejoice and “look through” bad news like on Friday. To understand this, I sing the Epsilon Theory song, once more with feeling … it’s not the data! It’s how the data is molded or interpreted in the context of the dominant market Narratives.

We have two dominant market Narratives – the same ones we’ve had for almost 4 years now – Self-Sustaining US Growth and Central Bank Omnipotence.

The former is pretty self-explanatory. It’s what every politician, every asset manager, and every media outlet wants to sell you. Is it true? I have no idea. Probably yes (technological innovation, shale-based energy resources) and probably no (global trade/currency conflict, growth-diminishing policy decisions). Regardless of what I believe or what you believe, though, it IS, and it’s not going away so long as all of our status quo institutions have such a vested interest in its “truth”.

The latter – Central Bank Omnipotence – is something I’ve written a lot about, so I won’t repeat all that here. Just remember that this Narrative does NOT mean that the Fed always makes the market go up. It means that all market outcomes – up and down – are determined by Fed policy. If the Fed is not decelerating an easy money policy (what we’ve taken to calling the Taper), the market goes up. If the Fed is decelerating its easy money policy, the market goes down. But make no mistake, the Common Knowledge information structure of this market is that Fed policy is responsible for everything. It was Barzini all along!

How do Narratives of growth and monetary policy come together? Well, there’s one combination that the stock market truly and dearly loves – the Goldilocks scenario. That’s when growth is strong enough so that there’s no fear of recession (terrible for stocks), but not so strong as to whip the flames of inflation (not necessarily terrible for stocks, but sure to provoke the Fed tightening which is terrible for stocks).

Over the past few years the Goldilocks scenario has changed. Inflation is … well, let’s be straight here … inflation is dead. I know, I know … our official measures of inflation are all messed up and intentionally constructed to keep the concept of “inflation” and the Inflation Narrative in check. I get that. But it’s the Narratives that I care about for trying to predict market behaviors, not the Truth with a capital T about inflation. If you want to buy your inflation hedge and protect yourself from the ultimate wealth-destroyer, go right ahead. At some point I’m sure you’ll be right. But I’m in a business where the path matters, and I can’t afford to make a guess about where the world may be in 5 to 10 years and just close my eyes. The Inflation Narrative is, for the foreseeable future, dead. It’s a zombie, as all powerful Narratives are, so it will return one day. But today Goldilocks has nothing to do with inflation.

The Goldilocks scenario today is macro data that’s strong enough to keep the Self-Sustaining US Growth Narrative from collapsing (ISM >50 and positive monthly job growth) but weak enough to keep the market-positive side of the Central Bank Omnipotence Narrative in play. That’s the scenario we’ve enjoyed for the past few years, particularly last year, and it’s the scenario that our political, economic, and media “leaders” are desperate to preserve. So they will.

On Monday we had bad macro data on the heels of the Fed establishing a focal point of $10 billion in additional Taper cuts per FOMC meeting, a clear signal that monetary easing is decelerating on a predictable path. This is the market-negative side of the Central Bank Omnipotence coin, which turns bad macro news into bad market news. And so we were down 2%. And so the Powers That Be started to freak out. Did you see Liesman on CNBC after the Monday debacle? He was adamant that the Fed needed to reconsider the path and pace of the Taper.

And then we had Friday. Honest to God, I thought Liesman was going to collapse of apoplexy, what my Grandmother would have called a conniption fit, right there on the CNBC set. The Fed MUST reconsider its Taper path. The Fed MUST do everything in its power to avoid even a whiff of deflationary pressures. Heady stuff. By 10 am ET that morning the WSJ was running an online lead story titled “U.S Stocks Rise as Focus Returns to Fed”, acknowledging and promulgating the dynamic behind bad macro news driving good market news.

It’s not necessary (and is in fact counter-productive from a Narrative construction viewpoint) to switch the Fed trajectory 180 degrees from Taper to no-Taper. What’s necessary is to inject ambiguity into Fed communication policy, particularly after the non-ambiguous FOMC signal of two weeks ago that led directly to Monday’s horror show. The need for ambiguity is also something I’ve written a lot about so won’t repeat here. But this is why Hilsenrath and Zandi and all the rest of the in-crowd are writing that the Taper is still on track … probably. Unless, you know, the data continues to be weak. What you’re NOT seeing are the articles and statements by the Powers That Be placing a final number on QE3, extrapolating from the last FOMC meeting to a projected QE conclusion. And that’s the dog that didn’t bark. It’s the projection that Yellen won’t be asked about in her testimony; it’s the article that won’t be written in the WSJ or the FT. Is the Taper still on? Two weeks ago the common knowledge here was “Yes, and how.” Today, after a stellar bout of Narrative construction, the answer is back to “Yes, but.” That’s the ambiguous, “data dependent” script that Yellen and all the other Fed Governors now have the freedom to re-assert.

If I’m right, what does this mean for markets? It means that our default is a Goldilocks scenario between now and the next FOMC meeting in mid-March. It means that bad macro news is good market news, and vice versa. If the next ISM manufacturing number (no one cares about ISM services) is a big jump upwards, the market goes down. Ditto for the February jobs number. If they’re weak, though, that’s more pressure on the Fed and another leg up for markets.

Place your bets, ladies and gentlemen, the croupier is about to spin the roulette wheel. Pardon me if I sit this one out, though. My crystal ball is broken.

If I’m right, what does this mean for the real world? It means an Entropic Ending to the story … disappointing, slow and uneven growth as far as the eye can see, but never negative growth, never an honest assignment of losses to clear the field or cull the herd. That’s not my vision of a good investment world, but who cares? I’ve got to live in the world as it is, even if it’s a long gray slog.

Ponzi World (Over 3 Billion NOT Served): Self-Imploding Capitalism

Ponzi World (Over 3 Billion NOT Served): Self-Imploding Capitalism.

“The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak” (ZH/Hussman/Faber)

Too late. I already opted for the first option years ago. It was a choice between a low return on capital or no return of capital, so I chose the former. Everyone thinks that they will be that one guy who gets out at the very top – you know, like Alan Greenspan. Fortunately, you don’t have to be a retiring Central Bankster to realize that a set of widely ignored factors have coalesced to make meltdown inevitable.

Capitalism taken to the logical extent possible will inevitably self-implode with extreme dislocation.

Unbeknownst to the Corporatized Borg at large, the self-destruct sequence has already been inadvertently activated as follows:


Carry Trades Unwinding 
First off, carry trade unwind risk was always the greatest risk created by Quantitative Easing and despite the rolling dislocations in Emerging Markets, it’s still being ignored. These various high risk Emerging Market countries were primary beneficiaries of Fed largesse as it temporarily propped up their currencies and their debt markets. Now during the unwind phase, the currencies are collapsing and interest rates are rising. Meanwhile, investors are just starting to realize that these trade deficits (current account balances) are totally unsustainable. In a desperate attempt to stabilize its currency, Turkey raised interest rates by 4% overnight which of course will kill the economy. This is all just deja vu of the 1997 currency crisis which started in Thailand and spread throughout Asia.

Don’t Worry. Be Happy
“China is being engulfed in a financial crisis that might end up in its own version of the credit crunch. There are running battles on the streets on Bangkok and Kiev as authoritarian regimes totter. Turkey is sinking, and may soon not be able to fund its current account deficit. Argentina is going through another currency crisis. There is no shortage of drama coming out of the emerging markets. And there is no shortage of reasons for the markets to work them themselves up into a panic.” (“Why An Emerging Markets Crash Wouldn’t Matter”)

Key Stock Market Risks

BTFD/BTFATH

It starts with the buy-the-dip (BTFD) and buy-the-all-time-high (BTFATH) rote mentality that got us here. Investors have been programmed by Central banks, to buy every dip automatically. They are now doing so on auto-pilot.
Loss of Leadership
As we saw with Apple last year, eventually even the most beloved of stocks gets played out and rolls over. Notwithstanding cogent arguments around cash on hand and relative valuation, that stock is still wallowing well below its all time high. Currently, the momentum stocks which have been leading the advance since 2008 have been getting hammered recently on heavy volume. Meanwhile, as we see below, the ratio of small caps (R2K) to blue chips (Dow) is rolling over, indicating a rotation to safer names.
Massively Overbought
The problem with sector rotation is the fact that as I have shown too many times (see: “Aw Fuck, Not this again!”), all sectors are highly correlated, therefore blue chips are as played out as growth stocks. This is all manifesting itself in a market that is using up buying power to go nowhere. As we saw today, the TRIN which usually trades in a range between .5 and 5, was at a rock bottom .5. However, the market was only up nominally. Low readings indicate heavy buying.
Zero Hedge
Without sector rotation as a viable alternative, investors can hedge using options, which makes sense since as I’ve also shown too many times to mention (see: “Slowly at First, Then All At Once”), hedging using index options has gone out the window. Central banks killed market volatility and without volatility, options expire worthless, ergo no option hedging.
Volatility Will Explode: Making Hedging Impossible
If all investors reach for options protection at the same time, a couple of things happen. First, buying at-the-money put options forces market makers to short the market lower to hedge their put selling. If I buy an at-the-money QQQ March put option at a current price of $2/option, I have achieved 43:1 leverage given that the price of QQQ is $86. With $5,000 of options, I can control ~$200,000 of underlying capital. Place that in the context of institutions buying millions of dollars worth of put options and you see that buying puts is a massively leveraged form of short selling. Anyone who says that buying puts is not shorting the market, doesn’t understand how the options market works. Market makers who sell the puts HAVE to short to keep their book neutral. Therefore, given that all investors are currently under-hedged, once prices are pushed lower, and demand for options increases, then option implied volatility will sky-rocket as the cost of at-risk capital goes up commensurately. At some point hedging with options will not be cost feasible. Buying options in the middle of a sell-off is like trying to buy fire insurance when the house is already on fire. Too late.
Legalized Gambling
Let’s not forget about margin risk. NYSE margin is at an all time high, meaning speculators are massively leveraged. Therefore as their positions move against them, margin clerks will sell down their holdings which is what we saw during Y2K wherein the selling was relentless as selling begat selling as prices moved lower. It was non-stop liquidation for weeks on end.
Self-imploding Capitalism
Everything Gets Privatized Including the Market Itself
Once you take rotation and hedging off of the table, the only alternative left to protect capital is selling. That’s where it gets really interesting, because the underlying structure of the market has changed radically since 2007. All of the major stock exchanges became publicly traded companies between 2002-2010 which is why they adopted the High Frequency Trading model – i.e. to boost commissions. Ever since then, real human investor volumes have been drying up, while HFT algos duke it out with each to front-run the remaining trades. Taken together and stock market volumes are at a 15 year low. Therefore, when large scale investors get serious about selling down their positions, it’s highly unlikely there will be anyone or anything on the other side of the trade. HFT bots are not programmed to lose money or take outsized risks. They are programmed to jump in and out of the markets on a millisecond basis and otherwise maintain a neutral book.
And that’s the anatomy of a meltdown. 
Russell/Dow Ratio 
aka. Risk Appetite

On the Other Side of Collapse: Notes from the Island of Cyprus

On the Other Side of Collapse: Notes from the Island of Cyprus.

by Lakis Polycarpou, originally published by City of the Future  | TODAY

This is an interview with my cousin, Sofia Matsi. Sofia is a health campaigner, artist, permaculture designer and sustainability activist. She lives in Nicosia, Cyprus.

Last year, Sofia witnessed first hand the near complete collapse of the island’s economy–an event which culminated in a highly controversial bailout plan that included an unprecedented confiscation of up to 10 percent of customer bank deposits and the dismantling of the country’s banking industry.

The deal was the fifth Eurozone bailout in recent years–after Greece, Ireland, Portugal and Spain–that was orchestrated by the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB), together called “the Troika” in Greek and Cypriot slang.

Cyprus has been de facto partitioned since 1974, when Turkey invaded and forced Greek Cypriots out of the northern part of the island. In 2004, Cyprus joined the Eurozone, in part as a way to protect the island from further Turkish aggression.

In this interview, Sofia talks about her experience of the crisis, her efforts to develop her father’s land as a permaculture site, and her work to help build “The Movement of Life,” an organization that promotes ecological sustainability, resilience and economic self-reliance for Cypriots.

LP:  Can you tell me about the situation right now in Cyprus? What is the mood of the people now? How has that changed in the past year?

SM:  Well, almost exactly a year ago we gave our first presentation as The Movement of Life here in Cyprus. At that time, those of us in the movement were aware of the danger of a financial crisis; there were new elections coming up, and along with that was the threat of committing Cyprus to the Troika plan.  And that was going to happen with the elections in mid-February.

So we were rushing around, trying to figure out what was going to happen, what the outcome would be. What eventually ended up happening is that we were told as a nation to listen to what Troika was saying. And what Troika was proposing was a huge loan, and we wouldn’t really understand where would that end.

So that brought us to the bailout announcements in March. Some people were surprised, but those of us in the Movement of Life, were already talking about these things.

After that, though, the bailout gave a big push to many, many groups in Cyprus who wanted to to be more independent and self-sufficient. It gave power to groups that were already thinking of working in this direction, like people who were saving seeds, people who had always wanted to start organic farming.

So things started popping up from this — lectures were happening all summer long, lectures on how to create your own organic farm, worm composting, and stuff like that. As a team, we decided to get more practical, and stop just lecturing people, and demonstrating how to. How to compost, how to do worm composting, how to do the seed saving.

What we observed is that before the bailout announcements, people were not so interested. People were like, “yeah, oh well, you’re saying what you’re saying, but I don’t think it affects me, and I don’t think it matters.”

But then after, we saw increased interest from people. People wanted more, wanted to be more independent and self-sufficient. Again, there’s a huge segment of the population who don’t really realize, even now, that there’s a tremendous need to be more independent as Cypriot citizens, and we cannot depend on the lifestyles we had before. Plenty of people keep going with that same lifestyle, but I think the majority, if not all of us, realize that we are in a very tight situation, financially at least.

What’s been the impact of the financial crisis on you and your family?

Well, that’s … a bit strange also. I don’t know if others from the States have heard my family’s news, but what changed for us was that we started realizing — personally, I started realizing–that we cannot maintain the same lifestyle as before.

When the bailout announcement was made, the banks were closed for 10 days. That meant that cash flow got very tight, there were fewer and fewer products at the supermarket, so we started wondering, what does it mean to be sustainable? We couldn’t produce anything at home. Personally, that filled me with panic at that point. Because I realized, I don’t have anything to eat, I don’t produce anything, and I can’t trade anything with anyone.

So that made me want to be more resilient, more independent. And talking to my parents, they also slowly started understanding what was behind this idea of becoming more independent, so permaculture came into the mix. Permaculture was in my life as a concept, but at that point it became more of a need, to learn practically more about permaculture, because it seemed like a very good answer for many of the problems.

So I started searching for workshops [for a permaculture design course], I found one, I talked to you, we narrowed down some options, and I ended up taking a course in Greece. My dad did the same; after I came back, he was convinced that this was a very good solution for the future, because we decided that the land that we have as a family, could be utilized. And why not start very well from the beginning?

Just to be clear, this is land that from your father’s side of the family, in the foothills …

And my mom. My mom has a field in Vysakia. So that land is sitting there, nobody’s using it. There are people who’s biggest problem is that they don’t have the land. So at least we don’t have that challenge. We only have the challenge of getting started!

So yeah, we understood — I personally realized — that we cannot maintain the same lifestyles as before.

And it’s not random. If I had a big job, if I had a big career job, then I would probably not be thinking that way. But I’ve been back from [graduate school in] the US for the three years, and I have been doing like three jobs in order to survive and it’s been exhausting. And I realized, there is no potential. And this was before the crisis. I don’t see any potential in big career jobs for us at this point. It doesn’t matter how many Ph’ds or how many Masters you have. That won’t get you anywhere. I’ve asked for a job, I’ve sent my CV out repeatedly. Every time the semester changed, I would send my CV to local colleges and universities and ask for an art position job, but things weren’t moving. And I realized that must be for a reason also.

Sofia and crew with their recently built greenhouse
Sofia and crew with their recently built greenhouse

So how’s it going with the land? What have you done so far? What do you plan to produce?

Ideally, we would like to produce as many things as we can fit on that land. That would be like a food forest, seasonal vegetables — and because we have space, we would like to make an income out of that. We would ideally like to live off of what we make.

Do you know how much land it is?

It’s 7.5 hectares (about 18 acres).

That’s a good sized piece of land. I imagine a lot of people in Cyprus have some land. In the last generation, both of your parents grew up in villages where people farmed a lot as part of their livelihood. So people in Cyprus do have land. Maybe not everybody.

Yeah, I think most of families have at least a piece of land that they can use. It’s not like other countries where people live in the city and they have no contact with an open piece of land that they can use. That’s not the case with us in Cyprus.

Sofia’s father Alexis working the compost pile
Sofia’s father Alexis working the compost pile. Photo by Sofia Matsi.

So in a way, something like permaculture is particularly useful in Cyprus.

I think so, yeah! I think that it actually makes sense on a big scale. Of course permaculture could make sense in a cityscape too because you can do more collaborative projects in urban spaces. But it actually makes a lot of sense here, because there’s a lot of land that it could be applied to.

I have a lot of memories of  Cyprus, from when we used to go back to visit. There are certain traditional attitudes and  practices there that we’re trying to rediscover in the United States, like the importance of local food, and planting productive trees — I remember the one time our grandparents came to the United States, our grandfather wondered why no one planted  productive trees. In Cyprus people plant olive trees, they plant lemon trees, it’s part of the culture. Do you think that permaculture and other sustainability ideals have an easier sell in a place like Cyprus?

I would say yes. I would say compared to other countries, we are very close to what our grandparents used to do. So functional is a part of our daily life. We have lemon trees and olive trees right down in front of the house over here. What I was sadly observing today though was that I passed by many neighborhoods and I kept seeing unpicked mandarins. It was all over the place, mandarins, mandarins, or orange trees, and they were full of fruit. That’s not a good sign! At least the fruit should be disappearing a bit, every time I pass by, but it seems like it’s the same! So the functional tree is there, but people don’t really care about it.

At least it’s there. Because it takes a lot of years to grow a tree.

Definitely. But that is also a sign that we’re don’t yet have serious hunger problems. That’s why those trees are full of fruit. Slowly, if we really had a problem, those would be utilized.

Last week you were telling me about the impact of the crisis on people’s lives– that at the beginning the media presented it  like a horror movie, but after the bailout there was almost a news blackout, even as people were losing their jobs.

It seems really strange. At the beginning they told us if we didn’t sign the Troika agreement, we were gonna, you know, go without food, we wouldn’t have anything to sustain our country, we would lose everything. And so, they said, we needed to sign those agreements in order to survive.

Now we’ve signed those agreements, and taken steps toward those “logical” solutions. And people have been losing their jobs, ever since, continuously. Nothing has improved on that side. We do have food, now of course. The tragic scenario of not having food because everything is imported in Cyprus, that we don’t produce almost anything, that we cannot sustain our country — those threats were, thankfully, solved, at least in some peoples’ minds.

But actually the situation has another face, that’s slowly leading us in that direction. We are losing our jobs at this point, and we don’t even know what to do with our spare time, because we’re not trained. We’re not trained to use the land, we’re not trained to survive. And we’re not told that that’s something that would be good to do.

The government is not really supporting … even though I have seen that the government now at least has a sponsorship for young farmers. So that’s good news at this point. Pushing that way, at least. No more lawyers, teachers, all of these people who are now unemployed. We need people who know how to do useful things.

Can you tell me about the heirloom seed movement?

We have a local group, it’s called Kyprianou Sporoi, which means Cypriot Seeds. And they are active in saving heirloom seeds from their grandparents, uncles, whoever wants to offer seed to them. They first check whether the seeds are valid–they do it with this test of repeating cycles of growth, and when the product comes out the same two consecutive times, then they know it’s traditional.

seedsaving
Traditional seed saving and exchange. Photo by The Movement of Life

They’ve been active with this silently, but after last year, they came out much stronger, with more focus on creating collective gardens, community gardens in schools, showing people how to be more independent. And they always use their own seeds. They never use hybrid seeds.

We are lucky that we had the chance to collaborate with the largest heirloom seed group in Greece, Peliti. They came and gave us a good solid knowledge of the importance of saving seeds. Because we knew it was important but we didn’t have enough knowledge.

In the past, other local teams had planted community gardens, but with no thought of the seeds they were using; they were just buying plants, ready-made, from nurseries. Now, at least, all of the teams admit that it was a mistake to use all of those hybrids, now we know that we need to return to our traditional seeds. We actually had a meeting today and we talked about how important it is to start finding traditional seeds in Cyprus, saving them and learning how to reproduce them.

So, yeah, it’s an effort, and it’s a whole campaign to convince people — not to convince, but more to make them more sensitive on this part.

To raise awareness.

It’s only a matter of realizing how important it is to not be taken advantage of by the big corporations that sell you seeds to keep you dependent on them. I think it only takes an hour or so for people to understand how urgent this matter is. I think we have made a huge step in making people more sensitive about this.

Winter lettuce in the greenhouse. Photo by Sofia Matsi
Winter vegetables in the greenhouse. Photo by Sofia Matsi

Can you tell me more about the Movement of Life?

I was involved in activating the movement. It’s like, say, the Transition Movement, which is a good theory, it says a lot on the need to change, but if someone doesn’t actually do something about it in their own towns, you can’t really grasp what is the Transition Movement about.

So that’s what we did in Cyprus. The Movement of Life was a good concept, it had a good goal, but nothing was happening, so we felt the need to activate it. We started with a few lectures, and then we started being more practical, with workshops and stuff.

What was the movement’s initial goal?

The original goal was to fight for food for all, water for all, energy for all, sustainable energy, unpatented water; food for all means organic, safe food, non genetically modified, so it’s all those matters that we’re worried about …

I guess what I’m getting at is: Was that connection between financial problems sustainability always there in the movement?

As a concept it was. And we know that we’re not the only movement, and that’ s not the goal, anyway. We just try to act through an organized structure. And then from there on we join other movements so we can have our job done. So we can learn more things. We bring specialists in so they can talk to us about such and such, and I think they also appreciate our more organized action here in Cyprus.

Do you have any last thoughts?

I believe that — what I personally understand, at this point–is that the power to change things is in the hands of each individual. We have the power. Before I was panicking and thinking “it’s all about our politicians, it’s all about the decision makers.”

But at this point, I really feel that we can shift things around. And we have the power. Each individual has the power to control and to change and to demand things. I believe that tools such as permaculture can give you the knowledge and confidence to demand changes.

I do really believe that while we might be unemployed as young people here in Cyprus, while we might be ignored, while we might not have the funds for the desired lifestyle that our parents started living …  I believe that’s also a blessing.

I have been observing Greece a lot lately, and I’ve felt really fortunate to see how many young people react to this crisis in Greece. Many of them stick around Athens, they stick around, living miserable, routine lives, with no cash and working all day long.

But at the same time, you observe these professionals, very hard working young people creating societies from scratch, like the Free and Real. They made an entire community out of nothing. They make their own buildings, they’re engineers, designers, yoga instructors, all the specialties, and they all now live together very professionally and they thrive! They thrive without money, they thrive without anyone having to give them employment! So I feel very optimistic that this crisis/opportunity is actually a gift to us young people who actually want to change things. Because if things were given to us comfortably and with luxury, I don’t think we would easily comprehend the need for change. So, yeah, I think it’s a gift, at this point!

China’s economic growth continues to slow – Asia-Pacific – Al Jazeera English

China’s economic growth continues to slow – Asia-Pacific – Al Jazeera English.

China’s economy registered a flat growth of 7.7 percent last year, maintaining for the second year its slowest expansion in more than a decade as the government warned of “deep-rooted problems” including a mountain of local authority debt.

Gross domestic product (GDP) expansion for the October-December quarter also came in at 7.7 percent, the National Bureau of Statistics (NBS) said, slowing from 7.8 percent in the previous three months.

The 2013 GDP figure was the same as that for 2012, which was the worst rate of growth since 1999. It was still higher than the government’s growth target for the year, which was 7.5 percent.

“Generally speaking China’s economy showed good momentum of stable and moderate growth in 2013, which is (a) hard-earned achievement,” NBS chief Ma Jiantang told reporters.

“However, we should keep in mind that the deep-rooted problems built up over time are yet to be solved in what is a critical period for China’s economy,” Ma said.

Since the 1980s, China has shaken off the lethargy of the Communist command economy with market reforms that brought it years of blistering growth, making its GDP second only to the US and establishing it as the world’s biggest trading power in goods.

But the country is widely expected to face slower expansion in the years ahead.

Its leaders under President Xi Jinping say they are committed to transforming China’s growth model to one where consumers and other private actors play the leading role, rather than huge and often wasteful state investment.

“Judging from the data, our outlook for 2014 remains that China’s economy will continue slowing down in the first half,” Wendy Chen, Shanghai-based analyst for Nomura International, told AFP.

Within the past decade Chinese growth was regularly in double digits, but it has been on a slowing trend and the 2013 result shows GDP growth in single figures for three consecutive years for the first time since 2002.

Worries ahead

Ma of the NBS said China faces problems including dealing with burgeoning local government debt.

“The foundation of economic growth remains to be consolidated, the internal driving forces of economic expansion need to be further fostered, the risk of local government debt should be prevented and greater efforts are to be made to weed out out-dated production capacity,” he said.

Besides shifting the growth emphasis, China’s leaders are also concerned about the country’s financial system including “shadow banking” and government debt, particularly at the regional level.

China late last month announced the results of a long-awaited debt audit, revealing that liabilities carried by local governments had ballooned to $2.95 trillion as of the end of June, up 67 percent from the end of 2010.

Local authorities have long used debt to fuel growth in their regions, often by pursuing projects that are not economically viable or sustainable.

While few see the problem as a systemic threat, the debt issue is considered to be a serious potential drag on China’s economy unless steps are taken to rein it in.

Analysts also say that shadow banking — non-transparent, less regulated credit — can stoke asset bubbles and threaten stability.

The Day After Chaos | project chesapeake

The Day After Chaos | project chesapeake.

By: Tom Chatham

So, you’ve got your food all stored away to last the next several years. You have your fuel barrel full and your generator and solar panels ready for the end of the power grid. You have enough weapons and ammo to deal with anything. You are mentally and physically prepared for the long hard days ahead.

You are prepared to fight the war that will eventually show up at your front door someday in some form and for an unknown length of time. You are prepared for the chaos, but are you prepared for the eventual peace?

At some point, the situation will stabilize in some form. It will become possible to walk down the street without being shot at. It will become possible to reopen businesses or to barter. It will become possible to breathe a sigh of relief.

When that day comes, how will you survive? You probably have your stash of silver or gold and some barter items but how long will that last? When the system goes down it will take most peoples jobs, their savings, their retirement accounts and pensions and much of the property they thought they owned.

Everyone will be forced to start over again. It could be years before the job market is functioning again. Until then, how do you plan to take care of yourself and your family? What is your plan to generate some income to live on and acquire the things you need?

Surviving the chaos will be a full time job but when it’s over, then what? Your gold and silver will take you a long ways but they only provide you with a temporary solution to your future needs. At some point you will need to start saving for the day when you are no longer able to do useful work.

Most people are busy preparing to just survive the coming chaos but some thought needs to be given to the day after it all ends. Even a few minutes spent now developing a basic plan will be critical to helping you transition to the new normal. A basic idea and the acquisition of a few basic tools or supplies to help you develop your new income stream will help you leverage your time and supplies to get by in the future.

Knowledge is the primary tool you need to navigate the future. Knowing how to make physical things or repair things will help you meet the future needs of society. Next to that, the storage of tools, machines, raw materials and information relevant to start a new business needed by the community will give you an edge.

In a prolonged period of chaos much of our infrastructure will likely be destroyed. In the aftermath, those with the skills and tools to rebuild will be a valuable asset to society. The ability to repair vehicles or machines, carpentry, masonry, plumbing, electrical, healthcare, farming and skills to build physical products will all be needed by a populace that wishes to regain some of the creature comforts they have lost in past years.

The more skills and materials you have when that day comes the sooner recovery can happen. Some may say it is a bit presumptive to plan for a day when things get better but if you feel things will never get better then why prepare to get through the worst of times at all? If you have the courage to plan for difficult times then you should also give yourself the ability to enjoy the day when things get better. Planning ahead for the distant future was never more important than it is right now.

Where The Global Economic Growth In 2014 Is Expected To Come From – Country Breakdown | Zero Hedge

Where The Global Economic Growth In 2014 Is Expected To Come From – Country Breakdown | Zero Hedge.

When it comes to setting the prevailing economist groupthink, nobody does it better than the economists at JPMorgan and Goldman Sachs. Which is why the following chart of projected 2014 GDP growth by quarter in the Developed and Emerging World from JPM, explains succinctly just where the groupthink now expects marginal global growth will come from (Mexico, South Africa, Korea, UK, Italy?). We show it just because the economist consensus is always wrong when it comes to the important inflection points (see ECB rate cut decision, Taper off decision, Taper on, the great financial crisis, “subprime is contained”, etc).

So for those curious to know what most likely will not happen in the new year, this chart’s for you.

 
%d bloggers like this: