The Florilegium Read. Think. Act.

"No...Stop...Don't" - Hussman Weekly Market Comment

We remain defensive on the basis of an army of hostile syndromes (typified by the “overvalued, overbought, overbullish, rising yields” combination, but coupled with several others), now joined by a breakdown in market internals - not greatly observable on the basis of depth, but of high concern on the basis of uniformity. We also observe clear evidence of economic softening and recession around the world, and an early deterioration in U.S. indicators as well (though these data points are still dismissed as noise). In short, our concern about market risk persists. Our concern about the risk of an oncoming recession persists. Nothing in the recent data has removed my impression that the period ahead may become an unmanageable Goat Rodeo of market volatility, economic disappointments, sovereign debt concerns, and European banking strains. Our risk measures have been less extreme in about 99% of history, so even if they are incorrect in this instance, we are not likely to persist with such a strongly defensive view for long. I expect that we’ll have good opportunities to accept a constructive investment stance at better valuations and without such extensive headwinds. But with the recent deterioration in market internals, we can’t even see a speculative case for market risk here.

In the classic version of Charlie and the Chocolate Factory, Gene Wilder watches one child after another ignoring every cautionary warning, with predictably bad consequences. His deadpan appeals become increasingly halfhearted and emotionless because he knows they won’t listen anyway. We’re strongly defensive based on historical evidence that is in the most negative 0.5-1.5% of all historical observations, but it’s clear that others are willing to take significant market risk and to chase wildly enamored stocks here, not as part of a long-term investment discipline or as part of a balanced portfolio strategy, but simply as a speculation - in the belief that they’ll be able to take their profits before other speculators do. Our only response to these speculators is to quote Willy Wonka: “I wouldn’t do that. I really wouldn’t. No… Stop… Don’t.”

Is It Greek Or Deja Vu All Over Again?: Neoliberalism and Winners and Losers of International Debt Crises

by Tayyab Mahmud

The global financial meltdown and the Great Recession of 2007– 2009 have brought into sharp relief the uneven distribution of gain and pain during economic crises. The 2009–2010 debt crisis in Greece resulted in a windfall for financial institutions at the expense of taxpayers, a rollback of welfare systems, and the impoverishment of the working classes. This outcome is consistent with the pattern that has emerged in the international debt crises of the last three decades, including the Latin American crisis during the 1980s and the Asian crisis during the 1990s. The recurrent international debt crises of the last three decades and the resulting transfers of wealth from the poor to the rich are the products of the neoliberal restructuring of economies that aims to rollback the gains made by the working classes under the Keynesian welfare compromise and to establish the hegemony of finance capital. These neoliberal objectives have been facilitated by an extensive refashioning of the U.S. and international regulatory regimes resulting in financialization of the global economy and unbridled international mobility of finance capital. Global financial institutions channeled excess global liquidity in ways that created unsustainable international debts, which consistently resulted in international debt crises. These crises were then managed to further advance neoliberal prescriptions for global finance and national economies. The end result of this refashioning of regulatory regime is the transfer of wealth from the poor to the rich, further impoverishment of working classes, and enhanced power of finance capital. A collective moratorium on debt servicing by the Global South is a viable path towards a new global financial order that is sustainable and gives human beings priority over capital.

"Do I Feel Lucky?"

Investors Intelligence notes that corporate insiders are now selling shares at levels associated with “near panic action.” Since corporate insiders typically receive stock as part of their compensation, it is normal for insiders to sell about 2 shares on the open market for every share they purchase outright. Recently, however, insider sales have been running at a pace of more than 8-to-1. The dollar amounts are even more lopsided, as Trim Tabs reports a recent pace of $13 of insider sales for every $1 of purchases. Indeed, some of the weekly spikes have been to levels that are associated almost exclusively with intermediate market peaks, the most recent being the run-up to the 2007 market peak, the early 2010 peak, and the 2011 peak, all of which resulted in significant intermediate corrections or worse. Of course, it’s sometimes the case that insiders are early, and therefore miss part of the tail of a market advance. So it might be worth ignoring the heavy pace of insider selling for a little while. But you have to ask yourself one question. Do I feel lucky?

I Was a Warehouse Wage Slave | Mother Jones

“The days blend into each other. But it’s near the end of my third day that I get written up. I sent two of some product down the conveyor line when my scanner was only asking for one; the product was boxed in twos, so I should’ve opened the box and separated them, but I didn’t notice because I was in a hurry. With an hour left in the day, I’ve already picked 800 items. Despite moving fast enough to get sloppy, my scanner tells me that means I’m fulfilling only 52 percent of my goal. A supervisor who is a genuinely nice person comes by with a clipboard listing my numbers. Like the rest of the supervisors, she tries to create a friendly work environment and doesn’t want to enforce the policies that make this job so unpleasant. But her hands are tied. She needs this job, too, so she has no choice but to tell me something I have never been told in 19 years of school or at any of some dozen workplaces.”You’re doing really bad,” she says.

I’ll admit that I did start crying a little. Not at work, thankfully, since that’s evidently frowned upon, but later, when I explained to someone over Skype that it hurts, oh, how my body hurts after failing to make my goals despite speed-walking or flat-out jogging and pausing every 20 or 30 seconds to reach on my tiptoes or bend or drop to the floor for 10.5 hours, and isn’t it awful that they fired Brian because he had a baby, and, in fact, when I was hired I signed off on something acknowledging that anyone who leaves without at least a week’s notice—whether because they’re a journalist who will just walk off or because they miss a day for having a baby and are terminated—has their hours paid out not at their hired rate but at the legal minimum. Which in this state, like in lots of states, is about $7 an hour. Thank God that I (unlike Brian, probably) didn’t need to pay for opting into Amalgamated’s “limited” health insurance program. Because in my 10.5-hour day I’ll make about $60 after taxes.”

The Storytellers of Empire

“The moment you say, a male American writer can’t write about a female Pakistani, you are saying, Don’t tell those stories. Worse, you’re saying, as an American male you can’t understand a Pakistani woman. She is enigmatic, inscrutable, unknowable. She’s other. Leave her and her nation to its Otherness. Write them out of your history.”

Almost 1 In 3 US Warplanes Is a Drone

A recent Congressional Research Service report,titled U.S. Unmanned Aerial Systems, looks at the more-prominent role being played by drones. In 2005, drones made up just 5 percent of the military’s aircraft. Today one in three American military aircraft is a drone. The upsides of drones being they are cheaper and safer — the military spent 92% of the aircraft procurement money on manned aircraft. The downside — they’re bandwidth hogs: a single Global Hawk drone requires 500 megabytes per second worth of bandwidth, the report finds, which is 500 percent of the total bandwidth of the entire U.S. military used during the 1991 Gulf War.

the other downside is that it has turn killing into a cold calculation done by operators thousands of miles away

(Source: azspot)

Good Muslim Bad Muslim - An African Perspective

Essay by Mahmood Mamdani on Culture Talk and the divisions of society. 

What Mamdani describes is ‘Fear of the Mob:’

When I read this, or something like this, I wonder if this world of ours is after all divided into two: on the one hand, savages who must be saved before they destroy us all and, on the other, the civilized whose burden it is to save all?

 Mamdani’s essay reminded me of the concept from George Orwell’s Down and Out Chapter 22:

I believe that this instinct to perpetuate useless work is, at bottom, simply fear of the mob. The mob (the thought runs) are such low animals that they would be dangerous if they had leisure; it is safer to keep them too busy to think.