There were two contrasting news reports in the last couple of weeks that perfectly clarify the Arab-Israeli conflict. The first was a comment by Pal president Mahmoud Abas on 12/24 when he said that in a future Pal state there would not be any Israeli presence. This includes any IDF presence but more importantly any presence of Jewish settlers. Thus Jews are not allowed to live in a Pal state, in effect he wants it to be Judenrein.
The second news story was a poll conducted amongst 1000 East Jerusalem Arabs who live within Israel to determine what they would do if a Pal state was created. Of the 1000 polled 54% said if their neighborhood remained in Israel's hands they would not move to the Pal state and would prefer to stay in Israel. If their neighborhood became part of the Pal state 40% said they would try to move into Israel and only 37% said they would want to stay in Pal state.
Arabs living under the Israeli government have some of the highest living standards of any Arabs in the entire Middle East. They enjoy voting rights, participation in government, superior health care, better job availability and educational opportunities for their children. Granted it is not perfect and there is disparity between Jews and Arabs but the truth is in the poll data as the Pals know that they are better off under an Israeli flag than an Arab one. This demonstrates the Israelis firm belief in religious tolerance and human rights.
On the other hand, why can't Jews live under a Pal government? If Jews want to live in Hebron, the site where the Patriarchs and Matriarchs were buried, they should be able to despite the presence of an Arab government. I do not think most Jews would choose to be residents of Arab controlled lands seeing how the citizens of such countries are treated by their governments. But the absolute requirement of Abas to devoid their land of Jews says a lot about their religious intolerance, lack of compassion, and disbelief in human rights.
So the logical conclusion of these two news stories is a situation where Arabs can only tolerate living amongst themselves to the exclusion of any non-Arabs (really non-Muslims as they persecute christian Arabs) while in Israel the Jews treat all their citizens fairly regardless of race or religion. I can understand why the Arabs are so intolerant since they are educated from birth to hate Jews, Christians, Hindus, etc. They even hate other Muslims of a different sect. But why can't other countries (eg. European nations) of the world see this disparity? Why do they continuously portray Israel as the evil oppressor while the pals are the persecuted ones? The evidence to the contrary is so clear and blatantly obvious. The only answer that can make any sense of this irrational, blinded, nonsensical viewpoint is the ubiquitous hatred of the Jew.
While everyone is falling over themselves trying to grant the pals their own judenrein state in order to achieve peace the truth is the average pal would rather live in Israel.
Tuesday, January 18, 2011
Wednesday, January 12, 2011
The First Global Bubble
Previous bubbles of assets or financial instruments have tended to be restricted to specific countries. Starting with the famous tulip bubble in Holland and more recently with the real estate bubble in the USA these anomolies were localized. The Nasdaq bubble in the nineties affected predominantly investors in the US market. There were many more asset bubbles not as well known as these but I believe we are about to enter a new situation where demand for commodities will be a global phenomenon and eventually lead to a global bubble.
Essentially, no one will have any trust in paper money. The dollar which is the "reserve currency" will continue to suffer as the treasury can print them to pay off debts and obligations. Eventually, this has to lead to a lessening of value for the dollar. This will lead to a forced situation of returning to a gold standard. It will not be a choice of the government but people will demand payment for goods and services only if that payment is backed up by something tangible.
There is an ongoing devaluation of the dollar and the problem is if you look to another currency to park money they are all trying to devalue their currencies. This is done to maintain exports and domestic businesses. It boils down to which currency is the least bad. The only place to maintain value is in commodities and more individuals and countries will seek commodities to maintain asset value.
China and other buyers of US treasuries will not accept a declining dollar and will cease to purchase our bonds. This will require the interest rate on the treasuries to skyrocket in order to find buyers to accept US debt instruments. This will lead to further printing of money to pay these higher intersest rates causing further declines in dollar value and the viscious cycle continues. I suspect that China will only lend us money if it is backed by a gold standard. Meaning, that their return of principle and interest will be adjusted to reflect any loss due to dollar devaluation (which is essentially a gold standard).
Individuals and governments all over the world will want to park their money in commodities and the demand will be tremendous causing price increases. So the demand side of the equation will also lead to soaring prices. I would not be surprised if new currencies will be created that are backed by a gold standard.
These are fundamental economic trends leading to higher commodity prices but as is human nature they will become overvalued as prices exceed the fundamentals. The bubble will inflate worldwide. So in a nutshell US debt will decline in value on two fronts. The underlying dollar currency is declining in purchasing power and as intersest rates rise the bond's value will decline. So what am I doing? or beter yet what should I be doing?
1. Get out of any bond instruments.
2. Leverage as much as possible (maximize outstanding mortgages and DO NOT prepay). You will be able to pay the debt back with much cheaper dollars.
3. Convert any floating loans to fixed interest rates. Let the money you owe be fixed but let the money you lend (money markets) float.
4. Buy commodities, hard assets, real estate. Tangible stuff.
5. Buy stocks in miners. Better yet become a miner. Don't chase dividend producing stocks because the 2% or 3% from a stock will not look good next to much higher and safer money market rates.
6. Buy the inverse US treasury which rises as treasuries decline. See stock symbol TBT.
I have not done all these things and I am not an expert. Use your judgement.
Essentially, no one will have any trust in paper money. The dollar which is the "reserve currency" will continue to suffer as the treasury can print them to pay off debts and obligations. Eventually, this has to lead to a lessening of value for the dollar. This will lead to a forced situation of returning to a gold standard. It will not be a choice of the government but people will demand payment for goods and services only if that payment is backed up by something tangible.
There is an ongoing devaluation of the dollar and the problem is if you look to another currency to park money they are all trying to devalue their currencies. This is done to maintain exports and domestic businesses. It boils down to which currency is the least bad. The only place to maintain value is in commodities and more individuals and countries will seek commodities to maintain asset value.
China and other buyers of US treasuries will not accept a declining dollar and will cease to purchase our bonds. This will require the interest rate on the treasuries to skyrocket in order to find buyers to accept US debt instruments. This will lead to further printing of money to pay these higher intersest rates causing further declines in dollar value and the viscious cycle continues. I suspect that China will only lend us money if it is backed by a gold standard. Meaning, that their return of principle and interest will be adjusted to reflect any loss due to dollar devaluation (which is essentially a gold standard).
Individuals and governments all over the world will want to park their money in commodities and the demand will be tremendous causing price increases. So the demand side of the equation will also lead to soaring prices. I would not be surprised if new currencies will be created that are backed by a gold standard.
These are fundamental economic trends leading to higher commodity prices but as is human nature they will become overvalued as prices exceed the fundamentals. The bubble will inflate worldwide. So in a nutshell US debt will decline in value on two fronts. The underlying dollar currency is declining in purchasing power and as intersest rates rise the bond's value will decline. So what am I doing? or beter yet what should I be doing?
1. Get out of any bond instruments.
2. Leverage as much as possible (maximize outstanding mortgages and DO NOT prepay). You will be able to pay the debt back with much cheaper dollars.
3. Convert any floating loans to fixed interest rates. Let the money you owe be fixed but let the money you lend (money markets) float.
4. Buy commodities, hard assets, real estate. Tangible stuff.
5. Buy stocks in miners. Better yet become a miner. Don't chase dividend producing stocks because the 2% or 3% from a stock will not look good next to much higher and safer money market rates.
6. Buy the inverse US treasury which rises as treasuries decline. See stock symbol TBT.
I have not done all these things and I am not an expert. Use your judgement.
Tuesday, January 4, 2011
The Problem
The problem that no one is talking about and that contributes to almost all the other problems in the world is the continued overpopulation of humans on the planet. No one will talk about it because there is no incentive for the individual to do anything about it and solving this problem is essentially insurmountable. Government cannot fix it by limiting the number of births and most religions encourage high birth rates to raise their numbers.
The strain on the natural resources becomes more and more evident with every passing year as more humans demand those limited resources. Every commodity from metals to cotton to grains have been rising to new highs due to the increased demand and limited supply for these items. Oil will continue to trend upwards as more emerging economies catch up with the developed world and crave that black liquid that powers everything. It is inevitable that clothing, food, jewelry, and gas will all rise due to increased global demand. Demand is outpacing supply.
Water is also a limited resource and the human population may find it difficult to provide enough water for everybody. Certain areas will be harder hit, specifically, areas of Africa and Asia may have to wage war to maintain supplies of water for their populations.
Increase in mankind is straining the environment as humans consume so much of the available resources. Deforestation and the resulting decreased animal populations will surely have long term repercussions. The strain on fish populations in our oceans and seas due to overfishing may be nonrecoverable.
More demand on resources promotes more belligerence amongst countries to control those resources and this trend will likely continue. There will be more wars to control these desirable resources.
The overpopulation of our cities, states, and countries cause situations where there are not enough employment options for everybody. Thus there are high levels of unemployment causing civil unrest and redistribution of wealth from workers to non-workers. Too many people and too few jobs will especially hit the young people hardest as they search for employment. Lack of a job/future will lead to greater discontent and uprising by the youth.
Overpopulation is the source of many of our problems but as with many of natures extremes there are self correcting influences. More demand for food and water with limited supplies will result in more famine and death from malnutrition and dehydration. More war with more devastating weapons in order to control resources will lead to more death. More overcrowding of our cities will lead to more virulent strains of microbes leading to more death from infectious disease. This is inevitable as humankind expands to levels that cannot be supported by the natural resources of the planet. Although the problem of overpopulation is not correctable from within, nature will inevitably use its laws to correct this anomaly.
The strain on the natural resources becomes more and more evident with every passing year as more humans demand those limited resources. Every commodity from metals to cotton to grains have been rising to new highs due to the increased demand and limited supply for these items. Oil will continue to trend upwards as more emerging economies catch up with the developed world and crave that black liquid that powers everything. It is inevitable that clothing, food, jewelry, and gas will all rise due to increased global demand. Demand is outpacing supply.
Water is also a limited resource and the human population may find it difficult to provide enough water for everybody. Certain areas will be harder hit, specifically, areas of Africa and Asia may have to wage war to maintain supplies of water for their populations.
Increase in mankind is straining the environment as humans consume so much of the available resources. Deforestation and the resulting decreased animal populations will surely have long term repercussions. The strain on fish populations in our oceans and seas due to overfishing may be nonrecoverable.
More demand on resources promotes more belligerence amongst countries to control those resources and this trend will likely continue. There will be more wars to control these desirable resources.
The overpopulation of our cities, states, and countries cause situations where there are not enough employment options for everybody. Thus there are high levels of unemployment causing civil unrest and redistribution of wealth from workers to non-workers. Too many people and too few jobs will especially hit the young people hardest as they search for employment. Lack of a job/future will lead to greater discontent and uprising by the youth.
Overpopulation is the source of many of our problems but as with many of natures extremes there are self correcting influences. More demand for food and water with limited supplies will result in more famine and death from malnutrition and dehydration. More war with more devastating weapons in order to control resources will lead to more death. More overcrowding of our cities will lead to more virulent strains of microbes leading to more death from infectious disease. This is inevitable as humankind expands to levels that cannot be supported by the natural resources of the planet. Although the problem of overpopulation is not correctable from within, nature will inevitably use its laws to correct this anomaly.
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