Online v Brick & Mortar


QUESTION: Sir,

My daughter works at a brick and mortar pet smart store as a 33 hour per week employee. She told my wife that PetSmart bought the online pet food store chewy.com ie their online competition. What’s also interesting is that they are focusing on non-online activities such as training and semi non-online activists like pet adoptions. That’s in line with your retail store’s comment.

I just checked the hospital bankruptcies. I can’t find a complete source to check for yearly closings. It seems though that 2019 was a banner year with the periphery having a good showing.

In the physician arena, the radiology services are being outsourced on the internet with Indian based sources. In this editorial, it seems that primary care physicians are also being outsourced.

Keep up the good work

DK

ANSWER: The trend in retail is moving toward online. Shopping malls across America are slowly dying. Many are spending money and adding restaurants to attract people in hopes they will buy something in person v online. I have explained many times that the economy has always evolved, as Schumpeter put it, in waves of Creative Destruction.

For those in the retail trade, you must consider providing services not attainable online. You must look at your competition. Move into areas where you need not compete with the online world of impersonal service. The cycle will eventually flip back but you are probably looking at post-2032. For now, immediately look to refocus the distinction between online and local touch and feel businesses or services. You can buy the dog food online, but the puppy can’t be put in a box and sent via FedEx.

 

Climate Change & Do we Use Less CO2 than Romans to Light our Homes?


COMMENT: Marty; the Greta worshipers are really brain-dead. We just set a 77-year record low on Valentine’s Day and they say that proves its climate change caused by man. When you try to have an intelligent conversation, they simply say every scientist agrees with them. They are brainwashed beyond belief. The entire theory of CO2 and greenhouse is that it makes it warmer, not colder. They really are stupid people!

JB

REPLY: I know. Perhaps they are playing the role that the cycle demands. Civilization is collapsing and they are insisting climate is moving in the opposite direction when all the great deaths in human society come during cold periods, not warm. That is when the diseases rise like even the Black Death. The flu season comes during the cold period, not summer. There is no other explanation. They have convinced even politicians who mouth this out like Michael Bloomberg simply because he thinks that will get him the votes to overthrow Trump and destroy our economy all under the theory that we need to get to CO2 zero or the climate will burn everything up.

To me, it is just like the Biblical story of Joseph and the Pharoah. If you understand the cycle, prepare for its downturn, you survive. The climate change people are claiming there is no cycle and that climate change is all linear caused by human activity while they ignore the great cyclical swings in climate long before the Industrial Revolution. Wheat prices soared during the Little Ice Age simply because crops fail in winter.

Already, the winter wheat crop in Australia is at a 7-year low. The trend is clear, but the Global Warming crowd is determined to push their agenda regardless of the truth. We are is a serious political crisis. Today’s brand of the left-leaning politicians is all about pandering to Greenpeace and Al Gore substituting what sounds good for what actually works. We were all supposed to be dead by 2000, Then they moved it to 2010, then 2020, and now they realize that the claims we only have 5 years left sound questionable so they have switched it to the dire consequences will come in 50 years from now. A new study by the University of Arizona claims one-third of all plant and animal life will become extinct from climate change by 2070.

They concede that historically, mass extinctions have been caused by catastrophic events like asteroid collisions. This time, human activities are claimed to have set in motion the 6th extinction because of deforestation, mining, and carbon dioxide emissions. Of course, this is their opinion since there is no historical evidence that such a combination would result in a mass extinction. CO2 emissions have taken place far worse than the present. In ancient times they burned wood for heat not oil.

They also do not account for the fact that things such as producing olive oil reduce CO2 levels. For every litre of olive oil produced, 10.65kg of CO2 is extracted from the atmosphere. In ancient times, aside from burning wood for heat, the ancients burned olive oil for light. Lighting the average house for 5 hours at night regardless of the time of year produced 2.89 kg of CO2 being emitted per night. That was nearly 1,055 kg of CO2 per night and taking just the city of Rome with a population of 1 million, which was far more CO2 generated for light alone than we produce today. Half of the carbon emissions created are generated from the production of electricity. Lighting alone creates 17% of carbon emissions. Every 1KW of electricity generates 830 grams of carbon equivalents. Assuming the same 5 lights per house, today we generate 4.1 kg of CO2. The Roman Emperor Justinian I (527-565AD) enacted the first known Clean Air Act in 565AD.

 

Big Bang v REPO


QUESTION: Mr. Armstrong; I can see your warning about Big Bang and the bonds markets would crash after 2015.75 going into the bottom of your business cycle on January 18, 2020. However, it seems that the negative interest rates have created your bond crash not in price but in participation. There is no viable bond market outside the United States with small exceptions of Britain, Canada, Australia, and New Zealand. Is there any way to come back from this destruction? Do you see the bond markets ever reviving or is this destruction permanent?

HC

ANSWER: If there was a free market, then you would have witnessed the bonds crash price and interest rates rise as people perceived risk. The introduction of negative interest rates which began in late 2014 going into 2015.75 and Quantitative Easing, shifted the risk from the free market to the central banks. This is what I mean that they are now TRAPPED! If interest rates rise, their portfolios crash in value (price). Such an outcome would raise the question of will the private sector return to the government bond markets when they see there is a rising risk factor? Our model shows that this will not be the case. In other words, the Sovereign Debt Crisis has taken place and to prevent the PRICE crash, the central banks became the buyer to hold interest rates down and bond prices up.

Some would think that the forecast was wrong simply because the prices have not crashed. We have had the Bank of Japan saying they will buy government bonds on an unlimited basis. This is NOT a free market. It has “crashed” from the perspective of participation.

 

 

It is like the creation of the Euro. Yes, it effectively eliminated the volatility in the currency markets between the Eurozone members. However, it really only transferred the volatility from the currency market to the spreads between the bond markets of member states. Obviously, Greece and Germany both use the Euro. The volatility which would have been reflected in the currency simply moved to the bond markets.

Now we have a serious crisis that has shifted from the bond markets exclusively to the central banks. This is now part of the crisis unfolding in the REPO Market. There does not appear to be any recovery on the horizon. Politicians are undermining the confidence in government, to begin with, and that will influence bond buyers.

 

Can Interest Rates Rise when Central Banks are the Only Market Maker?


 

QUESTION: How can interest rates can rise when central banks are the only market maker, & pension funds FORCED to buy gov.debt by their statutes?

but why is the REPO crisis starting in the US where rates are WAY higher than in japan & Europe?
you would expect this crisis to start somewhere in European debt markets/ instruments…why isn’t all the capital that is fleeing to the US not financing REPOs?
thank you

CB

 

ANSWER: This is laid out in the Repo Crisis Report (an update goes out this week). Central Banks do not control long-term rates. They set the short-term rate such as Fed Funds and Discount Rate. That is what Quantitative Easing was all about. The central banks began to BUY the long-term debt in hopes of “influencing” the long-term rates by reducing the supply of government long-term debt and in theory then the free market would have been willing to buy private long-term debt such as mortgages. That failed because banks had no confidence in the real estate market and were loaded to the gills with real estate debt which people were defaulting on.

The Repo Crisis has begun in the states BECAUSE this is the only viable free market to speak of. Both Japan and Europe have destroyed the bond markets. The Repo Crisis is the manifestation of our forecast that we would enter a liquidity crisis by September 2019. We listed that as one of the major points to take homes from the May World Economic Conference in Rome.

The Repo Crisis is a liquidity crisis because of the collapse in confidence. Banks are unwilling to lend to each other because they are deeply concerned about a crisis in the international banking sector. The Fed was lowering short-term rates into August 2019 because the yield curve inverted on the 10yr-2yr during the 3rd quarter of 2019. Then the Repo Crisis hit on September 17th. That forced the Fed to stop its intended policy to lower rates for the Free Market dictated otherwise.

The image that central banks are in control is an illusion. They too are subject to the Free Market. They are not in control of interest rates as they like to make everyone believe. If that were true, then there would have been no Repo Crisis to start with.

3rd Edition Manipulating the World Economic Goes to Print This Week


We have received many inquiries about the 3rd edition. We have added some text and an index. It is going to print this week. With respect to those asking if we can reserve a copy or those asking if they can buy a quantity at a discount to redistribute, we do not get involved in selling the books. It really is a big project having to handle shipping even internationally.

Amazon picks up the books directly from the printer. So they do not even come to us in the process. With respect to selling quantities, we would have to make an inquiry of the printer if they can even make independent shipments and if so what would be the minimum quantity.

All we know is that there were people who bought multiple copies from Amazon. A number of people purchased multiples to send to third parties based upon emails we received were usually friends or politicians. There was a group that sought to purchase one for every member of Congress but there were not enough left to accomplish that goal.

We will make inquires of the printer to see if they could make individual shipments. I would suspect it would be probably a minimum lot of 20 books. We will let everyone know.

With respect to autographed copies, I will always be glad to do that at conferences only

Bjorn Lomborg | The Skeptical Environmentalist


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Princeton’s William Happer rebuts myth of carbon pollution


Dr. William Happer, professor of physics at Princeton University, summarizes his arguments about the myth of carbon pollution. It’s that myth that underlies global warming alarmists’ key arguments. Happer offered these comments during a Sept. 8, 2014, speech for the John Locke Foundation’s Shaftesbury Society

 

World In Midst of Carbon Drought (w/ Prof. William Happer, Princeton University) Part 1


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We’re in a carbon drought. That is according to Professor William Happer of Princeton University. The renowned physicist says when it comes to carbon dioxide, there’s more good than bad. He goes on to say most of carbon dioxide’s effect has already happened. He points to the logarithmic dependence of temperature on carbon dioxide levels. Happer says the unique properties of carbon dioxide mean that current levels would need to double for another one-degree increase in temperature and they’d have to double again for another one degree rise. — Simon Fraser University’s Centre for Dialogue presents Conversations That Matter. Join veteran Broadcaster Stuart McNish each week for an important and engaging Conversation about the issues shaping our future.