What We’re Watching

In no particular order and with no ranking of importance as we see it: Global seismic and geothermal activity. Are the events linked and if so will activity increase? Japanese monetary policy. Will Abenomics finally implode and take the Japanese bond market with it? The US presidential race. What happens with and around Trump may Continue reading »

Bits and Pieces – 20171215, Friday

WWIII: The following article provides a summary of the multinational military activity in the wars in Iraq and Syria. The accuracy of the numbers may be questioned but the key point is that this is a global war. It is notable that Canada’s role has been omitted: World War in Syria and Iraq (MAP).

Bits and Pieces – 20171205, Monday

Commentary: While politicians, bureaucrats, the media and the general public are obsessing over the impact of anthropogenic CO2 on the climate and a segment of the climate science industry is busy trying to make models and data agree with the political agenda, other climate scientists are studying a much broader range of factors that are affecting our climate.

The 2017 Atlantic Hurricane Season in Perspective

When I was doing graduate work for doctoral studies, my advisor caught me up on the use of the word “significant” in a paper I was writing. He observed that this term had an explicit statistical meaning that was quantifiable and I hadn’t supported its use with the necessary analysis.

Today, a paper came to my attention that reminded me of the use of descriptors that are emotionally loaded while failing to provide an analytical basis for their use. The paper, Causes and Predictability of the Exceptionally Active 2017 Atlantic Hurricane Season, uses words such as “exceptionally active” and “extreme ACE anomalies”. Other terms such as “active” become meaningful only with a similarly precise definition.

We will comment on the use of these terms in the context of the two graphs from the paper, presented in Figure 1 below.

Figure 1. Data on the 2017 US hurricane season

Bits and Pieces – 20171130, Thursday

WWIII: In case you weren’t sure China appears to have taken sides: China To Deploy Elite Troops In Syria To Fight Alongside Assad’s Army.

Climate: For the record: Health Officials Warn: 40,000 Could Die As Britain Hit With 3 Week Long Arctic Cold.

Bits and Pieces: George Friedman gives a succinct overview of Iran’s geopolitical position in the Middle-East, along with US blunders: Iran Reshapes the Middle East.

Canada Corner: The Financial Stability Board (FSB) has released their 2017 list of global systemically important banks (G-SIBs) and a new addition is the Royal Bank of Canada. Wikipedia defines a systemically important financial institution (SIFI) as a bank, insurance company, or other financial institution whose failure might trigger a financial crisis. The Basel III accord specifically targets SIFIs by requiring increased bank capital reserves as capital surcharges. The table published by the FSB lists 5 levels of additional capital requirement with the Royal Bank being in the lowest or 1% level.

Of note in the Wikipedia article is the statement: Virtually every Systemically Important Financial Institution operates at the top level as a holding company made up of numerous subsidiaries. Should a SIFI default and particularly a savings bank, this would allow for an orderly structured dissolution of the SIFI in a manner that subsidiaries that have deposits and other financial assets of the general population might be kept operational with assets intact while other subsidiaries are wound up to satisfy creditors. The intent would be to avoid bail-ins of depositors although politicians might be bought off lobbied effectively to go the bail-in route to protect wealthy investors.

The US Federal Reserve examined the adequacy of Basil III provisions for systemic protection in the face of a financial crisis: Are Basel’s Capital Surcharges for Global Systemically Important Banks Too Small?. The assessment of an adequate capital reserve is complex, is probably SIFI-dependent and the Basel III requirements are likely far short of what is necessary to preserve some, if not all, of the 30 SIBs in the event of a global financial system collapse. Since the SIBs known as the “too big to fail” banks are bigger now than in the 2008 financial crisis, the next global crisis will likely be unstoppable. The interconnected nature of the global financial system guarantees the entire house of cards will come down.

We may see one (RBC) or two of the major Canadian banks fail but all may go down due to inter-dependencies. Those banks with the highest international exposure may be the most at risk from a global systemic crisis. I have commented earlier how the Canada Deposit Insurance Corporation (CDIC) has capital sufficient to ensure less than 1% of the deposit base, so your money may be at risk.

The general recommendation by smart asset managers and authors is to  invest part of your capital in hard assets like precious metals and (farm) land. The wealthier are investing in fine art, antiques and precious stones. These will remain when money is totally devalued.

As a final note I would recommend cryptocurrencies only as a speculation in the same class as Dutch tulip bulbs were at one time. I read a reference in the past week to some fellow who lost his hard drive (in an unspecified manner) with the cryptographic keys to his 7500 Bitcoins which are now part of the estimated 4 million lost forever. At around $11,000 a coin currently that has to hurt.

Bits and Pieces – 20171126, Sunday

Commentary: A topic that has a small following is that of global cooling and an approaching grand solar minimum (GSM). Martin Armstrong speaks of the famine associated with such minima: The Approaching Famine. The “Little Ice Age” correlates with the Maunder Minimum in sunspot activity as shown in the next chart:

Bits and Pieces – 20171117, Friday

Commentary: In Bits and Pieces – 20170731, Monday, I discussed why Bitcoin can’t be considered to be a currency. Martin Armstrong, in discussion of the “petrodllar” (Is the Dollar Really a Petrodollar anymore?), lists its key features:

  1. it can be used worldwide without permission from the USA as is the case with the Japanese yen;
  2. it is a single currency with a single federal debt market where BIG money can park – that is not the case for the Euro, Ruble, or Yuan.

Bits and Pieces – 20171112, Sunday

Commentary: A common theme that my wife and I discuss is the general we encounter incompetence on a daily basis. As an example, when we moved, our bank provided new cheques as requested but they coded them for a dormant and empty savings account. It came to my attention when the first cheque bounced. It cost me several hours and some momentary anxiety to fix the bank’s error, apologize to people that I had sent cheques to, pursue reimbursement of NSF fees both for myself and my vendors, etc. I left a bank official wondering how they issued cheques on an account that had no chequing privileges.

Bits and Pieces – 20171108, Wednesday

Commentary: I see little chance that the power struggle in the Saudi royal family will spill over into something larger. The parallel might be Turkey where Erdogan consolidated power to become a virtual dictator. Here is an article that has a different point of view although it is unsupported: Making Sense Of Saudi’s ‘Game Of Thobes’. And here are a couple of articles on the struggle, Saudi Arabia Is About To Confiscate $33 Billion From Four Of Its Richest People. Perhaps the last word is: Real Motive Behind Saudi Purge Emerges: $800 Billion In Confiscated Assets.

Bits and Pieces – 20171029, Sunday

WWIII: Again I ask why Britain is beating the American war drum: British Secretary Of State Refuses to Rule Out A “Preemptive Strike” On North Korea?

The American Empire (AE): On a tip from a friend here’s a short video and a short article on the final stage of empire: The 7 Signs Of An Empire In Decline and What Happened To Normal People When The Roman Economy Fell Apart? The application is not just to the AE unless you consider most of the Western countries as vassal states. The decadence is pervasive well beyond the US. I think I linked this video by Chalmers Johnson some time ago but here it is again: DECLINE of EMPIRES: The Signs of Decay. One might take WWIII as the event that ends Western empire. Here’s one further comparison to the Roman Empire: Washington Is “The New Rome”.

Tree Fruits – Apricots

Apricots are not recommended for “General Planting”  because of their extreme sensitivity to spring frosts and bacterial spot but recently developed cultivars provide opportunities to plant commercially viable orchards.

Growth Climate Zones

Apricots are not recommended for production in colder zones (beyond 7a) where there is a risk of spring frost frequent during bloom.

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