Comparative Advantage Cycle

Our starting point is a group of people with no skills whatsoever. Under the theory of comparative advantage they occupy the same ecological niche in the economy and compete against each other. The level of competition is high.

As they develop skills, multiple niches evolve. People within the same skill set compete with each other. But within a static population, fewer people compete in each niche.





Eventually, certain niches evolve into monopolies and oligoplies. Competition is low enough that competitors have pricing power.





In a complex economy, inter-dependencies evolve between niches. Eventually, certain chains are dependent upon monopolies and oligopolies which can disrupt the entire chain and demand higher compensation. A reversal and decomposition of the niches is almost guaranteed at this point. This is the U.S. in 2008 during the derivatives collapse.

Synchronicity II

There are forces in the universe which we cannot perceive. After all, we are monkeys designed to travel in tribal bands of 150 or so, live in temperate forested areas and last for fifty or sixty years. It's no wonder the Incas thought stars were gods. Inevitable, really.

There are relationships which we perceive as a species. There are relationships which we can never perceive. But the most interesting relationships are those which some perceive but others do not. Or perceived wrongly.

Complex, gestaltic forces create empires. Counterbalancing forces bring empires down. Five monkeys, typing on a keyboard for eternity, could probably write a sequence, a set of instructions or words or concepts or actions or speeches to reverse our course. But we, with limited sight and lifetime, will almost certainly fail.

Perhaps that's how it should be.

Obama Vs SCOTUS Monster

Thrills.
Chills.
Large Legal bills!
(speaking of which, the divorce judge ruled in my favor again today)

Obama lawsuit to be reviewed by Supreme Court on Dec 5th. I'll go out on a limb and say they'll accept it and make a ruling.

"11/19/08 - Justice Thomas has decided to move this case to conference on December 5th. All 9 United States Supreme Court Justices will look at case and determine to 1) grant motion, 2) dismiss motion, or 3) hold a hearing on the motion."

Nikkei Retest

Nikkei broke through its previous post-Crash low (7900 in 2003). But even based on that low, the Nikkei lost almost 80% of its value over a thirteen-year period. Factoring in opportunity cost, the Nikkei crash probably ranks close to the 1929 DOW crash at a loss of 89% over four years.

A Fed duplication puts the DOW at 2800.

Nobody believes that's possible. Likewise, property values in the larger cities would fall 70% to match Tokyo. I expect the Fed to crack long before 2800 and start printing, though.

Citibank

On our last episode of SYSTEMIC MELTDOWN!

Ka-BOOM, there goes Citi.
Down almost 90% in eighteen months.
Toast, as predicted in Feb, 2008.

I had dinner tonight with M and his wife. In 2005, I'd mentioned the Housing boom and impending crash during dinner in Portland but tonight he admitted that he hadn't understood my point. I asked how much he'd lost. His face turned gray and grim and he said, "I don't know anymore. I can't bear to read my statements".

Bought some real cowboy boots for J. She was stunned but happy. Then she stripped off her clothes, put on the boots and a cowboy hat, knocked me to the floor, leapt on me and yelled, "Whoo hoo, ride 'em, cowgirl!".

Deficit = $1 trillion

Fiscal day #79.
$993 billion.

Obama says that we "can't worry abou the Deficit". Well, he's right about that. The people who should be worrying are the Japanese, Chinese, English, German, Australian, Korean, Vietnamese, Brazilian, Canadian, Mexican, Italian, French, Irish, Spanish, Russian, Taiwanese, Arab, African and a few guys in Antarctica & Iceland.

$4+ Trillion

Looks like "The Bailout" now exceeds $4 trillion.


Citibank made a new low today, now down over 80% from fifteen months ago.
Closing in on bankruptcy numbers!
Probably carries at least a quarter trillion in bad assets.


As predicted, it looks like the Feds are throwing in the towel on TARP -

"The Treasury Department isn't likely to ask for Congress for authority any time soon to use the second half of the $700 Troubled Asset Relief Program"

These guys are already in pretty deep with that $4 trillion in "loans".


Oh, and Holy Fricking Christ.
Double Holy Fricking Christ, anyone?

Hmmmm, yeah.
Yeah, I'm not seeing a real estate recovery here.

Ho ho ho.
Mer-ry
Christmas.

Obama Overdriven Meme

Remember our definition and fingerprint for an over-driven meme -

Conclusion - the "Obama Birth Certificate" meme looks similar; a small minority of people are using the Internet to drag the reminder kicking and screaming into the birth certificate debate. The story has received virtually no play on the MainStream Media in recent weeks.

Supply and Da Man

worldwide run on gold coins

"How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?"

Naked short-selling to manipulate the price?

As I noted six weeks ago about the John Law bubble,

"The savviest investors physically removed the gold and silver coins from the country"

Lawbama suits

Obama Lawsuits

Somebody finally collected the lawsuits together on one site.

Cultural Ego Shift?

I look for keyword counts which indicate a large-scale sentiment shift. Today I discovered an interesting pronoun shift. Notice that the shift doesn't show up in the "news" (bottom graph in each frame) but in the user-entry searches for Google Trends. Some of the shift is confirmed in Blogpulse.com/trend. I've been searching for shifts related to The Crash. Notice the "me/you" graph with an increasing "you" count from early 2006 until early 2008. Based on changes in housing inventory, the housing crash began in Nov, 2005.

Coupled with the increase in "should", I wonder if this could be a blame / peer pressure mechanism at work.

Boom

We saw Boom on Saturday night. It was entertaining enough, very funny at times, different than I expected. Then ChopStix and dinner. We'd previously gone to Art and Necronomicon.

We get along like two shipwreck survivors. Happy to be together, fun with no expectations (well, not as much as before the shipwreck). I spend little effort on meeting others. Most of women available to me suck and I don't need the headaches. I'm worried that she may be upset if I leave Seattle.

I don't write much but we're done so much since March. Kayacking, ballets, sex club, symphony, dinner at a new restaurant almost every time we meet, pool, sex club, theater, bird watching, breakfast, movies, shopping, sex club, meetups, museum, art walk, Sake, interactive theater.... did I mention the sex club?

Pre-Christmas Traffic Graphs

Web traffic graphs for three major retailers, in expectations of being able to predict what their final Christmas sales will be. My off-the-cuff guess is a drop in web traffic of 5 to 10%. There's probably two components to their traffic - a fixed constant traffic which is relatively unaffected by seasonal sales (see graph) and a variable amount which is directly related. You can see the baseline traffic throughout the year. The relative changes in the thanksgiving spikes between 2007 and 2008 should be fairly predictive of the change in overall Christmas sales. I'll revisit these graphs in about two weeks.

Trillion $ Madness

The Federal deficit is just a shade under $1 trillion after less than ninety days into the fiscal year. James Davidson predicted something on that order in The Great Reckoning in 1991 but I didn't believe I'd see it. One reason I write this blog is as an historical record of the cultural insanity.

I do experiments in information and perception. Experiments should occur in a sequential fashion, one element changed at a time so that we might easily identify cause and effect but reality is concurrent and asynchronicity is unpredictable. But we make the best guess we can. The latest experiment results imply that we as a culture are still deeply drawn into a multi-faceted delusion which is threaded and embedded into our lives. Nobody knows true reality but it's possible to perceive certain levels of delusion even as we indulge in our own.

In 1977, Ravi Batra published a book titled The Downfall of Capitalism and Communism which predicted that both systems would collapse by 2000. Batra knows more about reality than Reich, Krugman or Roubini and he's not beholden to being Celebrity Economist Of The Moment.

Tonight I watched Kashkari and Congress on CSpan. They went through the motions of an inquiry but it seems staged and pointless, a perfunctory tongue lashing for the pilferage of $700 billion dollars of our money.

And Alan Keyes filed yet another Obama citizenship lawsuit in California. Are the courts still funded and open for business there? For how much longer?

It appears that there are at least 15 lawsuits in progress now.

"Ohio, Connecticut, Washington, New Jersey, Pennsylvania, Georgia and Hawaii, and there were reports of other cases being developed in Utah, Wyoming, Florida, New York, North Carolina, Texas, California and Virginia"

- posted from my iPhone

Ebay Crash

I'm surprised that Ebay traffic is falling as we head into the depression. I expected it to act like a pawn shop, which is counter-cyclical. When jobs and incomes dry up, pawn shops usually prosper.

Ebay traffic for the past six months -