Wall Street's Best Minds
Bill Gross: Beware the Trump Economic ‘Mirage’
The fund manager warns against being taken in by “the magical benefits of tax cuts and deregulation.”
By William H. Gross
U.S. Total Credit Market Debt as a Percent of GDP
Central banks attempt to walk this fine line – generating mild credit growth that matches nominal GDP growth – and keeping the cost of the credit at a yield that is not too high, nor too low, but just right. Janet Yellen is a modern day Goldilocks.
Fossil Fuels Are Toast – But Real Assets Are Still The Place To Be
You’d be wrong.
Like Keynesian economics and fiat currencies, fossil fuels are near the end of their run. From here on out, solar is the story.
The following chart shows the decline in the cost of solar power and the resulting surge in solar installations through 2015. The relationship is clear: as prices plunge demand surges — in both cases exponentially.
Pretty impressive, right? But nothing compared to what happened in 2016:
And here’s one more chart showing how China — that insanely polluted coal burning urban dystopia — is leading the way on solar:
This is shocking to people who A) are dependent on fossil fuels through work or investing or B) don’t understand the way exponential growth can change a market in an eye blink. So let’s hear from the father of exponential analysis, Google’s director of engineering Ray Kurzweil:
Ray Kurzweil: Here’s Why Solar Will Dominate Energy Within 12 Years
(Fortune) – Ray Kurzweil has made a bold prediction about the future of solar energy, saying in remarks at a recent medical technology conference that it could become the dominant force in energy production in a little over a decade. That may be tough to swallow, given that solar currently only supplies around 2% of global energy — but Kurzweil’s predictions have been overwhelmingly correct over the last two decades, so he’s worth listening to.
Kurzweil’s basic point, as reported by Solar Power World, was that while solar is still tiny, it has begun to reliably double its market share every two years — today’s 2% share is up from just 0.5% in 2012.
Many analysts extend growth linearly from that sort of pattern, concluding that we’ll see 0.5% annual growth in solar for the foreseeable future, reaching just 12% solar share in 20 years. But linear analysis ignores what Kurzweil calls the Law of Accelerating Returns — that as new technologies get smaller and cheaper, their growth becomes exponential.
So instead of looking at year over year growth in percentage terms, Kurzweil says we should look at the rate of growth—the fact that solar market share is doubling every two years. If the current 2% share doubles every two years, solar should have a 100% share of the market in 12 years.
Okay, technically, that would suggest solar would have a 128% share of the market in 12 years. Some might love that — but it highlights the fact that Kurzweil’s prediction is only partially grounded in the real world. Even 100% share is extremely unlikely — fossil fuel giants are definitely not going down without a fight.
But even those giants ignore Kurzweil at their own peril. He predicted the mobile Internet, cloud computing, and wearable tech nearly 20 years ago — all on the basis of the same principle of accelerating returns that’s behind his solar call.If this sounds outrageously aggressive, consider what happened to Kodak, the dominant player in film photography for most of the 20th century. Early digital cameras were expensive and complicated and therefore not an obvious threat. But their prices plunged and film photography died. Here’s that process translated into Kodak’s share price:
Also recall that Nokia was once the dominant maker of cell phones. Then Apple introduced the iphone and phones that just made calls were pushed off the stage.
This fate awaits most of today’s fossil fuel companies. The only question is when the death spiral begins.
Why is something like this appearing on a gloom-and-doom blog? Because one of the basic tenets of sound-money investing is that during periods in which society is destroying its fiat currencies, real assets will tend to outperform financial assets. So swap your government bonds (and certainly your bank stocks!) for farmland, well-chosen rental houses, gold, silver, and energy assets.
For the past century that last category was dominated by oil wells, coal mines and the stocks of the companies that owned them. But if the above trends continue – and it’s a near certainty that they will, given the torrent of advances in solar panels and batteries pouring out of labs around the world – then “energy assets” of the future will likely be solar and wind farms, advanced battery makers and the like. So the thesis remains the same while technology causes the names to change.
Russia's January Gold Purchase Suggests Some Deeper Global Problems
by: Hebba Investments
- This was in stark contrast to its December statement when it purchase no gold.
- We believe this move was very political in nature and signifies that Russian-US relations are breaking down.
- Not only do Russian gold purchases mean political distrust, but they also represent a very large chunk of global mine production of 12-15%.
- The short-term picture may still be cloudy for gold, but for the long-term these are all very bullish factors.
The US, Turkey and the Kurds
By Eric Czuleger
Ankara is challenging Washington's approach to the Kurds.
Washington and Ankara appear to be reaching a resolution on their long-standing conflict over the Syrian Kurds. The tension between their conflicting views of the Kurds came to a head on March 2 when Turkish Foreign Minister Mevlüt Çavuşoğlu stated that Turkey will strike the Kurdish-led Syrian Defense Forces (SDF) if they do not leave Manbij, a city near Turkey’s southern border. But actions rather than statements dictate geopolitics, and Turkey is signaling it is prepared to act against the Kurds. This in turn forces Washington to re-evaluate its relationship with the Kurds. Now, the U.S. and Turkey will have to solve their differences over the SDF in Manbij before moving on to Raqqa. Unless the U.S. and Turkey clearly define the role of the Kurds in the battlespace, they will not be able to mount an effective assault on Islamic State’s capital.
Turkish soldiers from the 1st Border Regiment Command run through alert drills at a military outpost on the Turkish-Syrian border on March 2, 2017 in Kilis, Turkey. The military exercises were held to display the new border wall and new security measures such as thermal scanning and patrols by the new Tactical Armoured Reconnaissance vehicles (Kobra-2) that are being used to tighten Turkey's border. Chris McGrath/Getty Images
With the battle for Raqqa on the horizon, the U.S. and Turkey have begun to align their interests. Taking the de facto capital of the Islamic State will require large-scale integration of international forces, particularly Turkish and U.S. forces. Before they are able to ally against the Islamic State, they must deal with their differences over the role of the Syrian Kurds on the battlefield. Since the start of the Syrian conflict, the U.S. and Turkey have had fundamentally different views of the Kurdish population in the region. While the United States views the Kurds as an effective but limited fighting force, the Turks see the Kurds as terrorists trying to enhance their strategic position near the southeastern Turkish border.
For Washington, SDF was a convenient partner in the fight against Islamic State. The U.S. needed more fighters on the ground, but it was not willing to commit its own troops. The SDF provided necessary manpower. However, the power of the Kurds is limited, and for Washington the Kurds were a means to an end. Turkey, however, is essential to U.S. strategy in the Middle East and around the world.
Manbij was a strategic IS stronghold in 2016, because it provided a corridor for supplies as well as foreign fighters. The U.S. backed the SDF in their successful battle for Manbij. Winning Manbij established a defensible foothold in northern Syria for the Kurds, and more importantly, it curried favor with the United States, which could protect them from the Turks.
The Kurds had neither the desire nor the capability to push deep into IS territory alone. But it was important that they prove themselves useful to the United States at a time when the Turks were reluctant to enter the fight. In working with the U.S., the Kurds gained territory, arms and greater legitimacy in the eyes of the international community. The Kurds did not achieve statehood through cooperating with the Americans, but they appeared to be moving in the right direction.
The U.S. then leveraged support of the Kurds against Turkish reticence. Washington sees Ankara’s support as the key to defeating IS, but inspiring the Turks to action required time and coercion. Using the SDF as a stopgap fighting force fulfilled both of these goals. Turkey couldn’t tolerate Kurdish presence in northern Syria, and Ankara is now taking action to deny the Kurds territory that they gained in Manbij.
Turkey makes little distinction between the Syrian Kurds occupying Manbij and the Kurdistan Workers’ Party (PKK), a Marxist rebel group that has been fighting for an autonomous Kurdish state in Turkey since the late 1970s. The PKK has carried out consistent terrorist attacks within Turkish borders. The PKK along with the Syrian Kurds are fighting for the same goal of a unified Kurdish state. This state can only be formed in defiance of Turkish regional power. Therefore, from Turkey’s perspective, Kurdish ambitions have to be crushed, leaving the Kurds where they have always been, stateless.
Up to this point, the United States has maintained a precarious balance between the Turks and the Kurds. While the U.S. has given the Kurds light arms and provided special forces in an advisory role and to assist missions, the U.S. has no ambition to support Kurdish statehood or provide materiel that could be used to take statehood by force. The administration of President Donald Trump has praised the Kurds, but it has not put forth a clearly defined strategy to either support or block Kurdish goals. Here again, we see American rhetoric versus reality.
While it was useful to buy short-term gains through supporting the Kurds, American interests ultimately lie with Turkey.
The question here is not what the U.S. wants to do, but what it has to do. The Kurds are not an autonomous state actor with a large military apparatus. Turkey is a rising regional power with its own military and strategic air bases from which the U.S. conducts aerial operations and provides support in the fight against IS. Turkey is an indispensable ally to the United States not just in the fight against IS but in its strategic position in the world. The U.S. regularly partners with the Turkish military, including launching air missions using the Turkish air base Incirlik.
In recent negotiations, a leading Syrian Kurdish politician decided that the Syrian Kurdish militias would not take part in the assault on Raqqa, opting instead to secure the city’s periphery. This is because the Kurds are a supplemental force and not a regional power.
The United States’ imperative is to defeat Islamic State while limiting its exposure in the Middle East. Turkey’s imperative is to suppress the Kurds and project power into the region.
In between these two objectives is a perforated band of Kurdish groups that cannot achieve statehood.
Shortly after the Turkish foreign minister made the statements about the Syrian Kurds in Manbij, a deal was struck between Russia, the Syrian army and the SDF to hand over control of towns in western Manbij district to the Syrian army. The hope is this will create a buffer zone between the SDF and Turkish-backed rebels. This buffer zone buys the U.S. time to assess its next steps in the Middle East, but ultimately the path forward lies with the Turks, not the Kurds. The U.S. and Turkey are approaching a defining moment. Ankara has forced Washington to question its stance on supporting the stateless Kurds in exchange for allying with a rising power in the Middle East.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
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