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 The movie Florence Foster Jenkins is poignant and beautiful based on a true heroine and her solicitous cohabitiere from 1944.

Great walk on by Toscanini, Cole Porter, and Earl Wilson.

Brings tears to the eyes.

People love it because it's part of idea that has world in its grip and it makes people feel small.

But it's beautiful and highly recommended. 



 I've been studying the history of market corners in wheat, and ran across a gem which I thought there were no intact copies.

D. W. Griffith made a silent movie called A Corner in Wheat back in 1909 about a ruthless speculator who cornered the wheat market much like Leiter attempted to do in 1898. The spec put on his squeeze, got rich and took his friends and bevy of beauties to celebrate in high style complete with toasts of champagne and gallons of hubris.

Incidentally, his movie had the first cinematic depiction of trading in the wheat pit. While the spec and his gang were partying, the poor suffered, children went hungry, farmers were wiped out, bakeries ran out of bread, and there was social upheaval with police action.

The tone of the movie was not kind to speculators which was par for the course in those days. Grain traders have never been popular, blamed by everyone from the farmer, the miller, the government, all the way to the consumer for the ills in the world.

The period of 1875-1915 was a time when the grain trade was under fire on all sides. Griffith capitalized on that public sentiment and made sure to follow the age old Hollywood program where the rich are always evil and the poor are noble beings. He made sure that the protagonist met a bad end(drowning in his own wheat in an elevator accident), proof that karma will always catch up with the bad rich guy. Still, nobody ended up happy at the end of this movie.

The Griffith movie is based on the Frank Norris story "A Deal in Wheat" and his novel The Pit. Norris was working on his Epic of the Wheat trilogy of novels when he died of a ruptured appendix at age 32. He and Stephen Crane, who also died at a young age, are essential reading if you want to understand why so many European and American intellectuals thought Socialism would surely be coming to America after the turn of the 19th century.



 A tremendous percent of middle class jobs are already obsolete. Indeed many of the jobs and even entire professions have been obsolete since they came into existence as part of things such as the "great society" program. Regulation, the welfare state, etc, is a huge middle class jobs program. It's not really the supposed beneficiary who truly benefits, it's the overhead, the regulation enforcers, compliance officers, case workers, etc.

The real crisis is that these 'Make work" jobs can now often be done by software of by a communication line to a cubicle farm in India–it kind of killed the idea of it–kind of like offshore manufacturing arbitraged the increased labor protections and union rules, etc. It's not that automation is making more jobs obsolete (though it is), it's that it is making jobs that have always been obsolete more transparently obsolete to more people.

I don't think we will see mass "joblessness" much more likely, we will see a massive expansion of regulatory state in a way that requires "jobs". take the boondoggle of the TSA who mostly just inconvenience the rest of us. If there is not enough crime to hire all the people with social work degrees or who would like to be police officers, etc, we will import criminals to create the need. etc. It's already happening.

Rudolf Hauser writes: 

Or create more crimes so that more people living their ordinary everyday lives become criminals for not being in compliance for some stupid regulation.

Stefan Jovanovich writes: 

To add my worn shilling to what Ed and Rudolph have so beautifully said: so much of the warfare in European history from the Greeks onward can be attributed to the need to find something for the "middle class" males to do. The Great Alexander's initial Macedonian Army - the one that crossed into Asia - was over 75% mercenaries, and their replacements were almost entirely mercenaries. (The good people back home in Macedon who still had farms and pastures wanted and needed no part in his conquests.) Where would the British Empire have been without all the younger gentlemen who were never going to inherit?



 Recently there was a discussion on the site of money and credit and the relationship of the two. Allow me to give you my take on this issue.

While they are related, money and credit are two different concepts. As the world became more complex and people were dealing more with strangers than with people they knew, barter became rather inefficient. Having all goods and services priced in a standard unit, i.e. the currency unit, was a more efficient way to transact. That way one only had to know the price of any item in dollars rather than in terms of every other available good and service. It was even more convenient to receive payment in that form of money and to buy using such money.

In essence money in its narrow definition is that which will be accepted by the government in payment of taxes and that which is generally accepted in transactions throughout the country in question. It is a question of ultimate settlement. You can pay by credit card, but the seller is not really paid until the credit card company pays the seller in money. That is why the credit card is not really narrow money.

The narrow money or ordinary people and businesses consists of currency and checking accounts. Both can be deposited into the seller's checking account. But when banks net out all the checks drawn each other's bank, they have to settle in bankers money, namely currency (insignificant) and their reserve balances at the central bank (i.e., the Fed). The latter is referred to as high powered money. High powered money is not public money—it is banker's money. So when banks keep this idle as excess reserves, it does not impact general CPI type inflation as it cannot be used by the public to bid up the price of goods and services because it is not something that the public can spend.

In addition to narrow money, any asset that has a steady value and can rapidly be converted into narrow money at minimal costs is quasi money and is the relevant measure when one considers not only the money needed in the active transaction process but also that the public wishes to hold as liquid balances. Assets have varying degrees of such moneyness that changes as market conditions change. For example, quality commercial paper had a reasonable degree of moneyness, but the financial crisis in 2008 when it was not sure if companies could refinance and pay off such commercial paper when due, almost totally eliminated any moneyness such paper had.

There is no single measure of broader money. Rather one might choose a definition of such a variable like M2 realizing that it is only a proxy and that the demand for such money will change in part based on the available moneyness of other assets.

People produce for their own use (of great importance when people lived on farms but relatively insignificant today) and for what they can sell to others. When people earn more on what they produce than what they spend on consumption, they save the difference. They may invest some of this on their own businesses or houses. To the extent they do not invest it themselves, it is savings that must either be kept in narrow money or invested either in credit or equity. (Equity might be considered a special form of credit in which neither the return on investment or the principal is specified but dependent on residual values of the enterprise and for most of rest of this discussion considered included with credit.) So credit is the sum of production values in excess of what the producers either consume or invest themselves that in turn is borrowed by others who are either consuming or investing in excess of the value of their production. (I might add that inventories are considered self investment.)

Money is not always necessary when there is a credit transaction. For example, an business might supply drilling equipment to an oil company in return for a future payment of so many barrels of oil (a loan) or a certain percentage of the oil produced (more akin to equity). But most credit transactions are done with the exchange of money, just as most other transactions for the purchase of goods or services are settled in money. When a bank makes a loan, the borrower sees it in an increase in his or her checking account balances. They are then free to buy goods or services using their checks in payment.

In this case the bank has created narrow money and there is also a credit transaction. This is what makes this business of what is credit and what is money a bit confusing. When the borrower buys something, the seller receives a check and deposits it in his or her bank. The money is still in the system. The borrower still owes the bank for the loan but no longer has the money. These are separate items. The money is what was used to facilitate the transaction. It is not credit. Nor is the credit money. It still exists even after the money has left the hands of both the bank that created it and the borrower.

In a sense all money is credit. When you deposit a check, the bank owes you for that money. Currency is a form of non-interest bearing loan to the government. Much is made of sound money in the form of a commodity such as gold. When governments settle with each other, they can only settle in what is generally accepted by most nations as ultimate payment. Gold services such a purpose. As long as it is widely accepted, a reserve currency such as the dollar will also serve as international money. But as it relates to its use as backing for a domestic currency caution on this assumption is in order.

Gold does have value in and of itself for industrial uses and as jewelry. But to the extent there is a demand for gold as money (i.e. as a store of value or as a backing for money), total demand is increased and with it the price of gold. If people lost confidence in gold for this purpose its value as money would disappear and the price reduced again to what its industrial and ornamentation use would value it at.

In that sense it is no different than any other form of money that is dependent on its general acceptance except for its value. The general desire is to maximize the well being of people by producing as efficiently as possible. Gold requires a lot of resources to produce. Fiat money does not. Hence fiat money is a much more efficient form of money.

The main argument for the use of gold is as an insurance against overproduction of money as in the case of gold that is related to the physical availability of the metal and the difficulty of its production. But gold backing can always be stopped by government action. So the only form of insurance is to deal in and hold the gold oneself. Unless the government prohibits ownership of gold as it had in the U.S. for a few decades, there is no reason why any individual cannot do so now. Both fiat money and gold backed money are dependent on government integrity and discipline, so there is no reason not to go with the more efficient form of money.

In our economy, money is created by the Federal Reserve. It can do so in two ways. One is to lend to the banks (or, when permitted, to anyone else). Another is to buy some asset and paying by a check drawn on itself, i.e. the creation of reserves at the Fed. It does not matter for the purpose of money creation, if what it buys are Treasury bills or bottles of fine wine. What it creates is high-powered money. To convert that into public money (M1), the bank has to use its reserves to buy assets or make loans. When a loan is made, the borrower has purchasing power that allows them to consume or invest just as with any loan. When the Fed buys securities it just changes the asset composition of the seller.

A certain amount of money is necessary for the transaction process, such as the time a mailed check is in the hands of the postal system. The rest is held as for purposes of liquidity. When the supply of money is equal to the demand for these two purposes (without fueling a overall rise in prices), money does not add to the savings available for investment or to raise prices. When it is in excess of this amount, it will be spent as holders attempt to reduce money holdings from their portfolio. But since it does not change what can be produced, it means that one will eventually end up in higher inflation. Until the general rise in the price level is realized, suppliers may assume that the real value of their offerings has increased and increase production that will turn out not to be profitable (money illusion). The amount of money demanded will depend on the efficiency of the transaction process, the opportunity cost of holding money (the interest rate on investments and the inflation rate) and how cautious people are. Crisis and uncertainty clearly increase the demand.  It also depends on the moneyness of other assets, which changes with conditions.

Money is just one asset in a portfolio. The amount of money desired will often be viewed as desired percentage of the portfolio. So when excess money creation can end up being used to bid up the price of existing assets such as equities and real estate to the point where the excess creation of money is equal to the desired percentage of the increased value of the portfolio and/or to increase the nominal volume of transactions until the amount of money to support the higher level of transactions equals the increased supply of money. The monetary creation process may end up directing more activity into credit and investment at the expense of consumption as the process does impact who gets their hands on money.
If the government does not prohibit it, anyone can attempt to create private money as Bit-coin has attempted to do. It will never be a complete form of transactions money if the government refuses to accept it in payment of taxes. But if one can get most people and businesses to accept it as final form of payment and to price their goods and services in terms of it, it can be a semi-complete form of transactions money. But the large swings in price of Bit-coins in dollar terms and the limited acceptance of it as final payment for transactions means it has not made the grade. I doubt anyone prices what they sell in terms of bit-coin irrespective of what has happened to the bit-coin to dollar pricing.

Before the Fed, banks issued their own notes. They were never a complete form of transactions money in that notes from a geographically distant bank were not usually accepted in full without a discount for the uncertainty of the solvency of the issuing bank. One could argue that would be less of a problem today. In many respects that is true, but ex deposit insurance and the Fed, consider the experience of 2008 and tell me why such notes would be more trusted than prime commercial paper was during the worst of that crisis.
In times of financial crisis, the desire for more liquidity becomes manifest and financial institutions might not have enough of it forcing them to sell less liquid assets to obtain it. This depresses financial and other asset prices to distress levels. In such times, it should be the function of the Fed to provide liquidity to solvent banks (or at least those that would be solvent but for distressed pricing on their assets). Failure to do so can create a wave of bankruptcies because of lending to lenders. If loans were all just made to ultimate borrowers, the failure of those businesses and consumers would impact that institution but would not necessarily spread throughout the system. But when most lending is not for ultimate purchases, every such failure by ultimate borrowers can cascade throughout the entire financial system. That risk is compounded when institutions are highly leveraged and have only thin equity cushions to absorb losses.
Hence, gross credit is another factor to consider. When loans are made that will in turn be used to make other loans (or equity purchases), the total gross amount of debt in the system is increased. When the ultimate borrowers are not able to repay that debt, it can impact the ability to repay of all the borrowers who used credit to extent credit. When this chain of non-ultimate lending and obligations undertaken by various contingent financial instruments becomes too extensive, the whole system becomes more vulnerable to panic because in situations of distress liquidity becomes scare and there is panic selling of all saleable assets along with the depressed pricing that results and no lender can have much confidence in any borrowers convoluted balance sheets so dependent on others in the credit chain.
Net credit is dependent on the amount of savings in the economy. It can be domestic savings or foreign savings (the current account deficit).  The question is if there is enough productive investment that can make efficient use of that credit or if it will be used for consumption (i.e. most of the use of government deficits) or investment that will not earn enough to allow repayment. Someone recently asked me if the low interest rates might not mean that monetary policy has been too tight. I answered him and will send that answer out in a following post because it deals with this question in the current context.



This is the response to an fellow economist who wondered given Milton Friedman's comments on Japanese monetary policy in the 1990s if our current low interest rates were a result of Fed policy having been too tight. It was written on July 9th.

I can see that your focus is on the sentence that "Low interest rates are generally a sign that money has been tight; high interest rates that money has been easy." Starting from an overheated situation (or any other for that matter), a tightening of monetary policy in terms of slower or negative monetary growth will slow nominal economic growth, including real economic growth, or even turn such into negative growth. Typically with more of a lag, inflation will also come down.

While the initial tightening of monetary growth will raise interest rates, the decline in inflation premiums and in real interest rates because of the slow real economic environment will cause nominal interest rates to decline. This is the basis of the statement above. In Japan the Bank of Japan kept monetary growth too low. That contributed to keeping the economy depressed and interest rates down.

The current situation is somewhat different in that our monetary growth has not been that slow and our economy has had mediocre growth, but interest rates are still low. In the past two years M2 has grown at a 6.2% rate and at a 6.9% rate in the past year.

There is false impression that the Fed controls interest rates. It only influences them. The impression that the Fed controls rates is one of the ways that the Fed influences rates by its interest rate targets, but it is through the creation or contraction of reserves that the Fed has its direct impact.

As noted above, the initial efforts as reflected in monetary growth rates has a lagged impact of economic activity and prices, which in turn moves interest rates. So the question is, if we have had respectable monetary growth, why has nominal economic growth not been higher and why are interest rates still so low.

Slow growth and low inflation abroad is one factor, but one would expect differing interest rates due to different local rates of inflation and economic activity to impact forward exchange rates and spot exchange rates rather than mainly a convergence of interest rates. A difference in the supply of money and the demand for money should impact economic activity. But aside from that the Fed's impact on real economic activity is limited.

Erratic and inflationary monetary policy will create more uncertainty, which in turn will hinder real growth potential. A situation of accelerated monetary growth can shift some demand forward (and a contraction the reverse), as participants engage in capital and durable goods spending (investment) sooner to lock in the lower interest rate costs. It could even result in overall investment being higher because the lower cost of capital might allow more investments to be profitable to a greater extent than periods of higher interest rates might permanently reduce investments. However the poor economic conditions of the time also tend to reduce expected returns, limiting the impact of temporary lower capital costs. But overall these impacts are either limited or temporary.

Real growth will depend on technological developments, capital investment, culture (including attitudes toward risk and innovation), legal and regulatory conditions, political conditions, etc. Savings depends on the desire of people to save for emergencies, retirement, education, etc.; rates of return; inflation; income distributions; diversification opportunities; acceptable risk levels on investments, etc. Investment depends on expected rates of return, the ability to get money to those willing to make capital investments, capital market trends, alternative uses of borrowed money, etc. The relation of savings to interest rates is complicated.

On one hand, people tend to prefer current consumption to deferred consumption, so require returns on savings to postpone consumption. But the marginal utility on basic necessities in retirement or future medical costs, etc. might be higher than on additional current consumption.

In essence people may have fixed level of savings objectives based on the expected costs of that future consumption. When returns are low, more savings flows might be required to meet those objectives. The net effect of these two reactions is an empirical question that can vary from place to place and from time to time.

Income distribution is a factor in this savings/investment situation. When you have countries such as China running up dollar reserve balances for domestic political and social reasons and others such as the oil producers some years ago having such strong revenue growth that they also accumulated dollars, you had a larger amount of savings provided to the U.S. As income growth has mainly gone to the upper 1%, etc. who have a lower marginal propensity to consume for obvious reasons, overall savings is high. (Note that since some of these saved funds will be borrowed by consumers, you would have to have a focus of savings by income groups, not just overall households to really analyze this question.)

But if income growth of the main part of the population is minimal to negative and population growth is limited, who will buy the increased output that results from investment? That lowers the prospect of future returns.

Increased regulatory burdens and delays, also discourages investment, as does all the uncertainties about the EU, future growth potential in China, the U.S. election outcome, etc. There is also a reluctance to undertake some types of risk, which makes it more difficult for new businesses outside of a few high tech glamour areas to get the necessary investment. With returns so low, those with savings will tend to bid up prices of existing assets. That reduces term spreads on interest rates, overpricing longer term securities and may also result in bubbles in other areas.

The ability to borrow cheaply encourages short term speculation. Excessive monetary creation may not result in faster nominal economic growth under such circumstance with attendant higher consumer price inflation but result in asset price inflation instead.

That is what happened with the housing bubble in the first decade of this century. The government has to create more favorable conditions for economic growth and reduce the advantages of crony capitalism to deal with some of the income misdistribution.

In essence I disagree with the conclusion that low interest rates here are a result of monetary policy that has been too tight. There are two approaches to monetary policy. One is to focus on interest rates, with moves by the Fed to nudge interest rates either above (tight policy) or below (easy policy) the fundamental non-inflationary real rate.

The other is to aim to have the money supply equal the amount of money demanded in a non-inflationary environment. Friedman favored a constant non-inflationary rate of monetary growth. Both approaches depend on an assumption for the latter items, that is, the fundamental real interest rate and the non-inflationary demand for money. We cannot measure either.

Given the experience of recent decades, I no longer assume a stable demand for money and hence do not necessarily believe a steady rate of monetary growth is the ideal policy for all situations. We do not really have an ideal measure of money. It seems that a measure that is broader than pure transactions money (M1) is desirable, that is the inclusion of some deposits or instruments that can easily be converted to transactions money with minimal or no cost. Friedman and I have both tended to favor M2.

But there are many other short term assets that have a degree of moneyness that varies over time. I prefer to look at both approaches to determine how easy or tight monetary policy is. Monetary growth at present at a time when other assets like short-term Treasury bills have a high degree of moneyness seems modestly easy to me. I say modestly as international uncertainties might increase the demand for money.

I should note that monetary growth has not been steady and there have been some periods when the growth rate was a bit too low. That may or may not have had some temporary impact on economic growth over short periods. Recent higher growth suggests that this is not a current problem.

There are some who believe that the real fundamental interest rate has declined so much that monetary policy is currently tight. I believe that most have lowered their perception of this rate from the past norm but not by so much as to characterize the current policy as tight.

I might also note that some like Meltzer have preferred to focus on the monetary base. My focus is on public money, that is what the public uses for its transactions, which is M1, or can easily convert to M1, such as M2-M1. Aside from the currency component which is present in both, reserves are bankers money. That is transactions between banks require use of the monetary base.

In theory rapid monetary base growth should result in banks making loans and buying securities. But if they hold such as excess reserves, it is like hoarding cash. It has no direct economic impact. The only impact is whatever impact results from a shift in bank holdings from the securities they have sold to the Fed to excess reserves. That is the impact on the interest rates on those securities relative to the Fed funds rate may be impacted.

The public does not have reserves in its balance sheet. As such those inactive reserves would not be expected to have any impact on the public's economic activity. The longer term risk is that those excess reserves will be utilized, rapidly increasing M2 growth at some future time if the Fed is not successful in counteracting such trends. That would likely result in more inflation.



 I spent the Aug 8-Aug 13 week in Vinalhaven with my wife, son, and a friend's family of four. During that time I read the complete set of 130 years of their weekly newspaper, The Wind, I read the book Cities and Economic Development: from the Dawn of History to the Present by Paul Bairoch [link ], and the book Salt in Their Veins: Conversations with Coastal Mainers by Charles Wing [link ]. I resided at the Tidewater Inn, owned by Phil Crossman, who compiled the highlights of the local newspaper and just finished a three year walk and reminiscences of the 20 square miles of the town. I had occasion to interview Phil. I supplemented this with daily visits to the Surfside where local salts gather each day at 4 am to provide council on the byways of town life. In addition, I have the good fortune to be married to Susan Cole, who spent her childhood summers on the Island, has 100% salt in her veins, and whose mother born Norma Skoog lived on the Island and whose father is one of those salt in their vein boat builders so prominent in the building and heartthrob of coastal Maine. I supplemented this with conversations with Shawn Chilles, a local caretaker, descendant of a Skoog, (almost all the families on the Island are at least second cousins to each other ) and long term resident with many jobs. Although I am not a nautical person, I learned a lot from my visit and thought that my observations from the grandstand or from Mars might be of interest.

As background, Vinal is an island fishing village with a population of 1,200, covering 20 square miles, about the size of Manhattan. The density of Manhattan about 100,000-200,000 per square mile with visitors compares to Vinal's density of 60, a differential ratio of 1,500 to 3,000 greater for the City. There are 300 boats, 300 families, 550 households in Vinal, augmented each summer by about 2,000 summer people who come for the beauty, solitude, and vitality of the place. It's one of the coldest places in the US with average temperature of 48 degrees, 35-40 in the spring and winter, 64 degrees in the summer, a record winter low of -30. The town is said to capture the largest lobster catch in the world, perhaps 25% of the Maine Lobster catch of 120 million.

Vinal was once famous as the granite capital of the world, and in 1880 it had a population of 3,000, and provided the granite for such famous entities as the Brooklyn Bridge, the Chicago board of trade, and the Penn. Railroad. The granite industry and the rope industry, it's two majors at the time, have gradually withered away and the town is dotted with abandoned quarries and a rope factory or two, which the kids use as swimming holes and hideouts. The population has steadily decreased since then. Hardly a dozen retail stores still exist, and real estate prices have been in a decline for the last decade. As one walks down Main Street, which once had 3 grocery stores, 3 hardware stores, and a booming retail economy, one notes that almost every remaining store including its iconic restaurant, The Harbor Gawker, the paper store, the ice cream store, are for sale. The two or three restaurants remaining close are open mainly on weekends and close down after the summer.

 And yet, the town is vibrant. There are concerts every day. Volunteer organizations provide almost all the amenities of city life. There is little migration off the island. The locals are able to put on a big city vintage car exhibit. Many artists including the hermit Robert Indiana who lives on Main Street with boarded windows the whole year thrive, and there is a very active tourist industry during the summer months. Almost all the residents have salt in their veins, are self reliant, many have 3 or more jobs. The price of lobsters, now at an all time high of $4 a pound, provides a buffer of wealth that lifts up the spirits and economy of the town. My pleasure was enhanced by playing on one of the three soft court tennis courts in town, before being rained out, an opportunity that must exist only a handful of days in the year.

I found the town a great case study in the growth of cities and civilization from rural beginnings as its halfway between a hunting, fishing and gathering village and a city. The pace of life is slow (all the stores close down at 6.) There is outdoor recreation, mainly boating and kayaking, but there is hardly any indoor recreation on the island aside from a Peyton place locus of romance (the movie theater, and the bowling alley closed down, and there is no chess or checkers), except for drinking (Phil Crossman shrewdly owns the Island Spirits store). There is ample opportunity to reflect on the better or worse of Island Living, and how it relates to the more specialized life of information, trading, specialized professionals, finance, and city administration (police, fire, garbage, education et al) of the city.

The tyrannies of transportation costs, agricultural and fishing productivity, population density, heating costs, and change in life styles provides a nice foundation for appreciating the limits and potentials of life in villages versus cities, and augments one's understanding of day to day activities and markets. One of the first things to realize is that a fishing or hunting village can't sustain much more than 1,000 people, the minimum necessary for a city. Bairoch puts it this way: "The especially crucial point is the existence of true urban centers presupposes not only a surplus of agricultural produce, but also the possibility of using this surplus in trade. These possibilities are directly conditioned by the amount of ground that has to be covered in transporting it." There is an iron law of how much and how far a human can carry on his back. A good estimate is 75 pounds over 15 miles in a day. But a human needs 2 pounds a day for food. That's 4 pounds back and forth for 15 miles. And 40 pounds needed for 150 miles. Thus, he consumes 1/2 of his food by transporting his food, and this doesn't even take account of the needs of his family which say, adds another 1/2 to food needed, thereby taking up the entire weight of the good transported over 150 miles. But in order to have trade you must transport the goods.

You might say that horses and oxens and wagons extend the distance that a man can travel but it turns out that when you take account of the cost of roads, and the driver of the horses, and the food required by the beasts of burden, they don't add much to what can be transported. Indeed, camels seem much more efficient than cars or wagons throughout the Mideast as a man can drive four camels but usually not more than one horse.

Granted that goods can't be transported over large distances, what about the productivity of hunting and fishing. It's estimated that in primitive hunting or fishing societies without agriculture a man can capture about 10% more food than he needs to survive. There are 8,000 lobstermen in Maine and they capture 120 million pounds of lobster in a year. That's 15,000 pounds of lobster a year–revenues of 45,000 a year at a price of $3.00 a pound. Taking into account the cost of fuel, and bait and the depreciation on a $200,000 boat, to say nothing of the cost of a sternman if he wishes to increase his chances of survival, the average lobsterman is lucky to gain income of $30,000 a year, which is in line with the census figures for the average income of the working population of Vinal. That's close to the cost of food and housing for a family. Thus, no surplus is produced…no profitable trade is possible, and without a surplus the population can't grow and cities and civilization can't be born.

One notes again that there are some 20 square miles of area in Vinal, and with a population of 60 per square mile. It compares to France with a density of 100, US with a density of 84 and Israel with a density of 50 and 3 in Iceland. There are many cities in these other countries. Thus, the reason for Vinal's lack of growth and lack of urban activity is not population density. My colleagues suggest that the weather, location upstream to a river, and the proximity to wealthy enclaves might be the answer.

But the pace and quality of life on this island must be a matter of choice. The degree of happiness and satisfaction with life on the Island seems to the outside observer to be considerably greater than that achieved by most city dwellers. There is little migration from the island, and a high proportion of those that leave temporarily for such things as schooling and family seem to eventually end back where they started. A reading of the weekly newspaper reveals countless examples of inordinate benevolence and happiness at big gatherings that seem to dwarf the comparables in city life. While this is hard to measure, the inordinate satisfaction would seem to arise from the independence, self reliance, competence, and hard work that is required to survive in such a self contained community.

Self interest and local knowledge is the key to profitability. The lobsterman developed and strictly enforce a program of throwing back all female lobsters and those below a certain length thus ensuring that the population of their prey will be conserved and increase.

Perhaps in closing one should add some augmentations to ones business and personal life that one gained from a one week stay that has been grafted on 30 years of shorter enforced visits to keep the family at bay.

Everything on the island depends on nature. The working day starts at 4 am, with the rise of the sun. The lobsters are numerous in the morning, the bait is plentiful, and there is much ground to cover to net the say 150 lobsters that is required for a living. The activity varies by day of the week with a plenitude on Monday morning at 3 am as all lobstermen rush out to capture the prey in their traps who are active from Sunday when no fishing is allowed by state law. The tides are key to the efficiency of all activity and they wait for no man and they influence the profitability and safety of the hunt. The weather especially the temperature, the wind, and the fog determine the profitability of all activity. A city trader like myself receives a emphatic reminder that nature is key to market activity and ignorance of it leads to disaster.

No visitor to the Island can leave without a deep sense of appreciation for the wisdom, abilities, knowhows, and all around talents of the old salts that populate the island.

Vic adds:

I will point out that one indicator of the level of happiness of the Island is that there is hardly any crime. One policeman works part time on the Island coming over a few days during weekends. True, in the 1880s a curious incident occurred. A lawyer rowed in from the mainland at midnight and went directly to a local fisherman , woke him up and told the fisherman that he was the legatee of a a $500,000 inheritance. He asked the fisherman to sign off on the inheritance The fisherman refused saying there would be plenty of time to look into it after reflection. The lawyer rowed back the same nite. Apparently he wished to steal a much larger inheritance from the poor islander.

I added a few paragraphs about what the visit taught me about markets, especially the importance of nature, and days of the week. The tides wait for no man, especially on Monday, et al.

Rocky Humbert writes: 

Vic, very nice essay. I suggest you compare and contrast with Nantucket, which was a dominant whaling community, similar size island land mass, but has grown and prospered despite the demise of whaling. The population of Nantucket was fairly constant from 1880 to 1970 around 3,000-4,000. By 1980, it had grown to 5,100. It's now up to 10,200 in the winter and an estimated 20k in the summer. Median household income for year-round residents is $55k with per capita income of $31k. Median income for households (which includes part-timers) is $83k however. Largest single employer is the Town of Nantucket by orders of magnitude. Like Vinalhaven, it's accessible only by ferry, which restricts trade, commutation, and elevates the costs of everything.

Real estate prices on Nantucket often rank as the highest of any US county. Yes — more expensive than the Hamptons!

So the obvious question for the 21st Century (as distinct from the 19th century): How does a community with natural beauty become a summer haven? I suspect the answers include : (1) Proximity to wealthy urban centers; (2) Critical mass of residents which has a networking effect; (3) Weather; (4) Luck. (5) Rising sea levels (just kidding).

Steve Ellison writes: 

Before the invention of the railroad, travel on water was far easier than travel on land (one looks around 3 times for Mr. Jovanovich). Thus a settlement might be able to jump the hurdle and become a city by having favorable water transportation. One of the earliest examples was the Nile River, where the prevailing winds blew from the north, and the river flowed from the south, so travelers could use a sail in one direction and drift with the river in the other direction. Here is a map of the 146 counties that contain half the US population. Many are along rivers or at natural port locations on the coasts.

Jeff Watson writes: 

That reminds me, by a large factor, that the cheapest way to ship grain within the lower 48 is by barge.

Stefan Jovanovich writes: 

3 facts in support of the Mr. Ellison's observation:

1. The canal mania that began with the Midi [in southern France] and continued through the 1840s was based entirely on the productivity gain. A draft animal pulling a barge from a towpath could go 3 times farther and carry along its own feed AND have more than twice the useful life.

2. The railroads that made money from day 1 were the ones that chose the same routes as the canals or stayed close to the water. The Pennsylvania and Baltimore & Ohio and NY Central literally followed the routes of the earlier canals. James J. Hill made his money from the spur line that followed the Red River, not from the transcontinental route across the prairies.

3. Water transportation still has the greatest efficiencies - now because you can reduce the crew sizes literally to zero. The first driverless freight hauling will be done not on land but on water.

Once, we lived. Enjoyed life to the full, now we have all become slaves of the yields. We run and produce more quickly and in greater quantity, but we do not have the time to appreciate, valorize and enjoy life with the tranquility and the carefree of once. All running…who knows why…?

anonymous writes: 

[To understand Vinalhaven's comparatively low level of economic activity,] consider the proximity of Cape Cod, Martha's Vineyard and even Block Island to wealthy urban centers. Network density at work.

anonymous writes from San Francisco: 

The most recent rise in the price of housing in the Bay Area is not a function of demand; employment numbers for SF and Silicon Valley have been flat for over a decade. The rise is the direct consequence of the restrictions on supply through zoning and other land use regulations. Check the building permit numbers for new construction; they are remarkably unaffected by price changes because permission to build more units in the same spaces is almost impossible to acquire. This disconnect between housing supply and demand has been going on for half a century now, and there is no likelihood that the politics that have produced this result will change. Everyone who gets elected agrees that the environment must be protected at all marginal costs.



 The film "Money as Debt", produced by Canadian filmmaker Paul Grignon, presents the idea that money is created out of thin air when someone signs a 30-year mortgage—does anyone find that idea problematic?

Stefan Jovanovich writes:

Mr. Grignon's "idea" has a few problems.

The first is his notion about where the "money" comes in. When someone signs a 30-year mortgage, they don't get money; their escrow gets a promise to pay from the bank. What is created is a financial asset, secured by the real estate, for the bank and a liability for the borrower. The payment in escrow is itself an IOU that will be discharged when the escrow company's bank and the borrower's bank have their accounts cleared. Even then, there will be no money involved. Whatever is the net balance between the two banks will be handled by adjusting their reserve accounts with the Fed. (The bankers among us are asked to suspend their laughter; this is a simplified illustration, not a description of how financial institutions actually clear their credit transactions with each other.)

This process of clearing is at least 900 years old in Europe. Merchants were doing the same borrowing and lending by accounts at the trade fairs, in volumes that we can only guess at. What we do know is that in England and Wales alone there were 8 fairs and 169 markets as early as 1100 C.E. By 1516 there were 2761 fairs and 2443 markets.

The other part that poor Mr. Grignon does not understand is the fact that money has its origins, not in exchange but in sovereign taxation. Contrary to the textbooks, credit exists and even flourishes in barter economies. The medieval peasant, who never saw a coin, dealt in a variety of exchanges of promises with his neighbors and the local fief. Money only came into importance when the kings demanded tax payments instead of duties of service.

Money has always been the residual - the stuff people hoarded when they wanted to keep their wealth out of the hands of the government and other licenses and unlicensed thieves - as long as the money itself was "good". Hoarding bank notes made no sense; the government could literally abolish their status as legal tender, either by decree or by printing(Hello, Venezuela). Gold, silver, copper all had the virtue of being tangible; the government did not define their reality.

But, as soon as people find it safe to come out of hiding, they want to resume dealing in credit. Why? Because the profits from speculation can only come from exchange. Your hoard of gold is only worth something when you spend it or use it to create credit. The famous example of unopened cigarette packs being used for exchange in the ruins of post-WW II Berlin and Vienna is yet another instance where instruments of credit are described as "money". The cigarette packs were asset-backed securities; they could be broken up into tranches - i.e. individual smokes - whenever demand pushed the price of tobacco above the exchange price of the pack.



 This is a very old adage: don't fight the central banks. That provides me the gumption to label them as the Gods of the markets. Einstein had quipped God doesn't play dice. Perhaps he felt the unmanifest, invisible, unascertainable authority in the universe is the creator of the universe and had control over its creation. Coming back to the manifest, visible and ascertainable behemoths of the marts a.k.a. the central banks, one is pushed to think that for the first time in recorded history they are sitting on trillions of dollars of negative yielding securities.

Are these visible Gods of markets playing dice or they are still the deterministic factor in the markets who will still determine what happens?


a) Keep dying a slow death losing small chips every year for a long time to come with the negative yields.

b) Raise yields and kill the balance sheet?

c) Inflate dramatically some asset to shore up the balance sheet while exercising option b to make financial assets have sense. In scenario c, the traditional asset of bonds is already inflated. In 5,000 years we have never had yields below zero. Equities are at all time highs. What else is not at all time highs? Again a real estate bubble? Or will it be gold sitting in the vaults beneath metro stations around the world? Gods wont let go of their stature to be Gods, even if these are man made Gods.

Now, after scenario c also plays out, since nothing is permanent and ever changing cycles will again at some point bring something down, what is it that is going to go down first and what is it that will go down most?

If the unthinkable of negative yields came in too, why can not the unthinkable and the least obvious scenario (a) persist? Imagine eventually people getting money to buy cars, homes, tuxedos, rolexes and receiving an interest for taking away the trash called cash from lenders, banks and Gods? This then is not an option that can persist for long? Or it can?

The whole earth is going the Amazon way!? Will Jeff Bezos be known as the pioneer of the new world, where you get paid to usurp and use up money that in any case is at a discount? Is the motor created by John Galt working now to produce energy from nothing? Who will cut this motor off? When? Why?

Is the motor already broken? The endless mint-churning has produced endless currency. This currency is akin to endless static charge that has accumulated. Its not creating motion. This currency is unable to and unwilling to move into the system. Why? Is it that the window dressing of every bank balance sheet that began in the aftermath of 2008 in the developed world is not yet complete? Only book entries are happening?

Why do I get illusions that the cigarette buts in my ash tray sometimes appear to have a $ insignia printed in gold? Well if I were to go by the wisdom of the Reflexivist that one makes big packets on betting on the unobvious, I call this Gold insignia bit an illusion since fundamentally gold is too obvious a bet.

Will the world return back to before Bretton Woods? Will every key central bank agree together to print only more currency equivalent to gold it has making the yellow shining bars jump up to 2200? Then chart reading pros and amateurs will find a divergence in momentum and short sellers will come in and the dream of the gold bugs would be fulfilled to have record shorts in the move from 2200 to 1800 so as a jump to 4000 will become feasible? Will that suddenly bring a solution that none of the banks are sitting really on junk anymore? Will it still allow the permanence of the Senator's observation that a good suit has always costed an ounce of Gold? Or then, a good suit will be available at half an ounce of gold?

Despite change being the only permanence in markets, few things have never changed. Of those unchanging ideas the infinitude of the abilities of mankind at struggle for survival, conceit, deception, keenness to find the next scapegoat don't seem will dissipate away with just negative interest rates. No one will believe that everyone will go down equally and in fair proportions. So who is the lunch now, when its almost lunch time?

Monkeys have been now using the Discounted Cash Flow model. Yes, the longer you hold negative yielding assets the larger becomes your Net Present Value. The more you are willing to bleed the wealthier you are now! If this negative yield quagmire has any shelf life in plain simple English (no Greek and no grammar-nazis required) no one will have an incentive to save. If there no savings incentivized why would investors be incentivized? Lord Keyenes we really wish this day has not come, yet it has.

The most illogical times have arrived. Why am I seeking to imagine the odds using any logic? Would an illogical unintended consequence save the world? Why don't we remember that in the yo-yo moment of 2008 when the biggest churning of the USD mints happened, the biggest flight of capital until then in the history of this world happened INTO the USA and not OUT of the USA?

Would logic have to prevail, eventually?

So I am sending out this humble hat to the spec-list citizens, please pour in your (ill)ogical bets into this seeking hat. If trend is your friend, until it bends or ends.



 Based on the timing indicated, he must be significantly underwater at this time. That assumes he has not thrown in the towel by now: "Soros Doubles His Bet Against S&P 500 Index"

John Bollinger writes: 

The interesting question for me is: Why is he advertising this now?

Peter Tep writes: 

Good point, John.

Sounds like he is releasing the hounds, so to speak.

Did the same for his short Aussie dollar trade some years back and also his long gold position–get long, get loud.

Jeff Watson writes: 

The more important thing is, who cares what the Palindrome says he does. Whenever anyone who's purportedly a big player discloses his supposed position, I look at his motives with a big grain of salt.. People bluff in the markets as much as they bluff at final table of the WSOP. It's all a mind game, and while one should take in what the opponent says, keep in mind that their disclosure is not for your benefit and it could be a bluff. A good lesson is to look at announcements like this and try to find tells….they exist. Nobody ever discloses their position(real or fake) to the media to be altruistic and benevolent. The sad thing is that many people(retail investors, CNBC watchers etc) believe in the good will of the Palindrome and the Oracle to the small investor. Those same unknowing investors are the pilchards that are eaten by the sharks.

anonymous writes: 

"keep in mind that their disclosure is not for your benefit"

That is a key. Even if it is true it is still not for our benefit. For example "they" cover while "we are riding a growing loss waiting for the idea to play out. Our entry was their exit. The flexions/greats/insiders see angles we can't, if we listen regularly our account balances will be eaten. 

Petr Pinkasov writes: 

I struggle to see how in 2016 it's even intellectually sound to present Q as another 'dagger on the steering wheel'. It's hard to quantify the intellectual capital that investors are willing to pay 50x earnings. 

Alex Castaldo writes: 

Exactly. What is the Q ratio for AAPL, how many factories do they own and how much are those factories worth in the marketplace? (Rhetorical question). The Q Ratio is a statistic from another era, when John D. Rockefeller built oil refineries bigger than anybody else's or when Mr. Ford bragged about his new River Rouge plant. It has limited value in many businesses today.

Another smaller point: the proposed tail hedging strategy is designed to break even if the S&P declines by 20% in a calendar month. In the last 30+ years (367 months) this has happened on only one occasion (October 1987). It is quite a rare event. Would you do this tail hedging all the time? I am not convinced that the numbers work when you consider that every month you are paying for put options.



 "Captain" Vic in Vinalhaven Maine, looking over the harbor and thinking about analogies between boats and trading…

Bill Rafter writes: 

Observing boats can be very interesting because of the diversity of the boats. They are constantly being modified to fit circumstances. The phrase "different horses for different courses" holds very true for boats. It is indeed fair to say that the sea designs all boats as the unsuccessful designs wind up at the bottom.

The diversity of design is evident in ugly commercial vessels, but also true for sailing vessels. Observe the different positions of the masts. The Swiss mathematician Euler won several prizes related to naval architecture, after finishing second in the first contest about mast positioning. If you are lucky you will get to see a ship with the masts raked (tilted) sternwards, common with clipper ships and also a Chinese junk with the mast raked forward.

Interesting also is the trade-off between speed and stability evidenced by the ratio of length to beam (width). The tipping point between the two seems to be a ratio of 6 to 1.

There's a lot to see.



 I'm down in New Zealand skiing and kiting. This year is a fairly cold year and has had considerable amount of snow. I've noticed this seems to be a harbinger of global patterns. Another anecdote is that 2005 was an outstanding wine vintage. I had a 06 Pinot Noir and it very good. In Burgundy France my vintner friend tells me that 05 was the best in a decade and that 2015 will be the best in more than a decade. I ve tasted the 2015 en Cave and it's absolutely out of the park compared to recent vintages and may the best of this century. Note the global pattern.

Jeff Watson writes: 

At this low in this solar cycle 24, the sunspot count is extremely low with the sun being very quiet in all solar measures There is a correlation between sunspot minimums and lower earth temperatures. It would not be a stretch to call for a Maunder type minimum (1645-1715) when the sun got quiet and average earth temperatures plummeted. Not all "experts" agree that the lack of sunspots caused the little ice age, some attribute increased volcanic activity.

anonymous writes: 

Check out the site

The site has a running tally on "spotless" days per year:

2016 total: 20 days (9%)
2015 total: 0 days (0%)
2014 total: 1 day (<1%)
2013 total: 0 days (0%)
2012 total: 0 days (0%)
2011 total: 2 days (<1%)
2010 total: 51 days (14%)
2009 total: 260 days (71%)



 I have been listening to this book on Audible all day.

A Mad Catastrophe: The Outbreak of World War I and the Collapse of the Habsburg Empire

We all knew from basic history the state of the Austro-Hungarian empire prior to WW1, but this book really drives home just how dysfunctional it was.

The meal for a lifetime is how ideology can cause you to eschew the practical solution.

From the basic narrative, both the Ottomans and Austrians were vying for the title of sickest empire. The Ottomans and successor Turkish state survived everything intact and with a foothold in Europe because the Young turks were willing to give up that which they couldn't hold to keep the body strong. That is, they were willing to chop off the diseased arms so that the body would be healthy.

My interpretation of the AH Empire from the book is that they could have done the same and retrenched from their weak position back to their core, but they were unwilling due to a strong belief in the pride and honor of their once strong empire, which not only kept them from retrenching but forced them into a war they couldn't win in order to avoid the non-stop embarrassments of their collapsing empire.

The lesson of course is to get rid of your ideology and always analyze if you are over-extended.

I highly recommend the book.



 Mr. McGuire: I want to say one word to you. Just one word.

Benjamin: Yes, sir.

Mr. McGuire: Are you listening?

Benjamin: Yes, I am.

Mr. McGuire: Batteries

Benjamin: Exactly how do you mean?

Mr. McGuire: There's a great future in batteries. Think about it. Will you think about it?

"A new proposal shows how the gas shortage may accelerate storage's integration into the bulk power system"



We are rapidly approaching the middle of August 2016, from which a 150 big S&P point decline occurred last year. The question emerges: is it bullish or bearish or random. Wyckoff liked to concentrated on memorable holidays in his trading and had ambiguous theories about its continuation or reversal as do most voodoists. I looked at all occasions when the market declined 150 points in the corresponding 20 trading days of the previous year and found 59 of them since 1999. The average move in the next 7 days is 11 big S&P points versus a normal expectation of drift of 1 with a standard deviation of 28.



Sport? The one you were great at. Do you still play? Of course you will until the day….

Common injuries: shoulders, knees, ankles and every dude has broken a finger playing. Question:

What is the best non pharmaceutical pain management routines you have brilliantly created, yet no one before Lack has asked you. What and how do you complete this exercise for maximum efficiency? The outcome from this routine is to manage pain after vigorous exercise. Yea, like a 49 year old dude racing motocross a few weeks ago.

After a long weekend I pick up weights. An American born before 1920 would consider this a waste of time. Their advice is usually, pick up hay bales for the same 2 hours. I pick up and hold as much weight as able for as long as my threshold. It is far batter than massage therapy. Yet, never a happy ending.



One would think that with all the benefits of flossing, and the difficulty of doing it manually, someone would invent relatively easy a mechanical flosser with a small electric motor that could be guided smartly to the gums and bacteria. Hardly any innovations have been made in tooth cleaning at home since Singleton's Teledyne bought water pik in 1967.



Reading about the birth of cities, it is clear that a strong and productive agriculture was necessary to support the cost of heating, transporting, and feeding the urban craftsman and infrastructure. Cities had to grow near productive agriculture and be downstream where the cost of transportation was low. One wonders if there is a relation between the grain price versus the manufactured good price that is predictive today. In the old days manufactured goods used to cost 100 times the cost of agricultural good, like cloth versus wheat. If the ratios get out of whack today, are there predictive moves? This is a good start: "The Global Pattern of Urbanization and Economic Growth: Evidence from the Last Three Decades"

anonymous adds:

This economic phenomenon is why many towns in Europe emerged in the middle ages as communities which grew up in proximity, often surrounding, Benedictine Abbeys, and why St. Benedict is the patron saint of Europe. The monasteries, which excelled in agriculture and the production of byproducts like cheese and alcohol, offered hospitality, and medical care to travelers, because in that Catholic spirituality, anyone in need who knocks on the door is treated as if they were Jesus Christ, because they might well be, and in any case that is how he promised we would be judged at the end of time. (c.f. Gospel According to St. Matthew, xxv. 31-46) The monasteries were walled to provide save haven from bandits and barbarians.

Jeff Watson writes: 

I don't think you are asking the right questions, but then again I never seem to ask the right ones either. I've pondered this same question for 30+ years, and found that any solution is way above my pay grade. For the past 125 years, real grain and real manufacturing prices have been racing to the bottom, and the race isn't over and probably won't be for awhile. Maybe when they both finally hit bottom, we'll find a good ratio, but until then one should study other factors like world supply, demand, yields, weather, exports, country movement, dollar value, etc. Maybe I'm overlooking something that's outside the box, and should pay the price for missing the mark, but again, I don't know. Playing the grain markets is the same as beating your head against an ancient master of the game of Go who's holding a tree stump in the way of your head. Grains are a very tough game, the toughest game there is. Despite the fact that many outsiders seem to think how slow the grains seem to move vis a vis the currencies, ES, bonds etc, the grains are designed to extract the maximum money possible out of the outsiders. Grains to the outsiders look easy, seductive, and that's the beauty of the game/con….they're like a carny game that look so easy. Jadwin won the game……until he didn't.

Allen Gillespie writes: 

I found Profitable Grain Trading by Ainsworth a good economic text with some forward thinking on his Dow Theory of Grain Trading.



 August 5 is a special day for baseball fans. Many probably don't appreciate it, though. Baltimore Os fans should find it of interest even as it was 3 years before the Browns moved into Memorial Stadium. You see, there's are lots of connections between the Giants and the Os—and in 1951, that connection showed itself, so to speak. For on Aug 5, 1951, the Giants began what may have been the most improbable of comebacks seen in baseball history. And if began on Aug 5. For on August 5, the Giants completed a series against the Cards, coming off a 10-0 shutout the day before, winning 8-4. And in so doing, they captured the series. It was the first of many such series wins during the last third of the 1951 season.

The 1951 team had lots of connections to the Os—well beyond the Giants taking on the Os colors, the black and orange.

1951 saw the arrival of William "Say hey" Mays, the season's Rookie of the Year. The Giants played in the Polo Grounds back then, in Manhattan across the Harlem River from the Bronx Bombers, the Yanks. Mays was made for the Polo Grounds—not so much his bat (though there was that dimension to his place on a roster) but his legs. He could run around in the Polo Grounds' center field better than anyone else in the game. It was because of that need to run like crazy to field center field in that ball park that Mays developed his over the shoulder basket catch—the one that the PTO issued a patent to him because basically it was his. Mays once saw the Os' Paul Blair playing center field. After watching Blair make some outstanding plays, Mays commented that he thought Blair was better as a center fielder than he, Mays, was. Quite a compliment!

Nor was it that Leo Durocher, a deserved legend in the game, was managing the team. (Durocher would rival O's skipper Earl Weaver both in results and lifetime ejections—they are tied for the latter; Weaver had the better win pct, Durocher the greater number of wins. I don't know, though, if Durocher was ever ejected even once, never mind twice, before the first pitch was made as Earl had.) Both Weaver and Durocher would also secure reputations as trainers of future managers, though the 1951 Giants had I think 5 such players. Durocher is probably best remembered for his misquote—he said, "Nice guys. Finish last." The reference was to the Giants (and Mel Ott, in specific) when Durocher managed the Dodgers. That didn't stop the observation from being "Nice guys finish last." Durocher did have a connection, though not through the Giants. Before managing New York, Durocher managed the Dodgers, woking for Larry MacPhail. He an MacPhail would go out drinking some evenings, and MacPhail would fire Durocher, only to rehire him in the morning when sobriety ruled.

Think George Steinbrenner and Billy Martin had an interesting owner-manager relationship? It was nothing compared with Durocher and MacPhail. The connection to the Os is that MacPhail's son Lee was the GM of the Os who began the negotiations that brought Frank Robinson to the Orioles.

For Durocher, competitiveness was everything. If you competed, you had no problems with him. When Jackie Robinson joined the Dodgers in the last 1940s, Durocher said he didn't care about a man's color, just whether the guy wanted to win. (Vince Lombardi was of the same mindset. "During his first year in Green Bay, Lombardi called his team together on the practice field and delivered a rare lecture on racism. 'If I ever hear nigger or dago or kike or anything like that around here, regardless of who you are, you're through with me. You can't play for me if you have any kind of prejudice.' His actions that year were often more quiet behind the scenes, like paying Tunnell's hotel bill when it was hard to find suitable housing, or making sure the black players had enough money to go to Milwaukee or Chicago on off-days. But as his status and power increased in his second season, his sensitivity to racial inequities intensified as well, and his responses became more overt. Before the season began, Lombardi spread the word among Green Bay's tavern and restaurant owners that any establishment that did not welcome his black players would be declared off limits to the entire team. At Tunnell's suggestion, he allowed the black players to leave the St. Norbert training camp twice during the preseason for quick trips down to Milwaukee, the closest city where they could find barbers who knew how to cut their hair." (There was also Lombardi's intolerance of any expression of any homophobic sentiment, perhaps reflective of his basic human decency, perhaps the result of having a gay brother and being aware of the cultural challenges gays faced at the time).

But I digress.

I mentioned that many members of the 1951 team, like Alvin Dark and Eddie Stanky, would go on to manage their own teams. Not that Weaver did ok by that measure too, but perhaps most notable wasn't a player but a coach. A key member of the coaching staff—George Bamberger. Bamberger was a ne'er do well pitcher for the Giants. He didn't find his place in baseball until he began coaching. And it was coaching, as the pitching coach for the Os, that Bamberger would make his mark. In 1967, when Bamberger took on the assignment. He was familiar with the Gray Lady on 33rd Street from when he pitched, briefly, for the Os during the 1959 season. No stranger to Memorial Stadium he.

In 1967, the Os had trouble just about everywhere—but pitching most of all. The arms were sore that season. Bamberger went to work. When Weaver came on board in 1968, he found in Bamberger the man to run the pitching staff. (Weaver was a shrewd judge of hitters and fielders. Pitchers? Not so much. Palmer, no stranger to the art of the pitching craft, once observed that "the only thing Earl knows about a curve ball is that he couldn't hit one." Bamberger was the orchestrator of the 4 20-game winners in 1971. The oversight of Jimmy Palmer as he ascended to become the dominant pitcher in the AL during the 1970s. Bamberger was a connection.

So today has significance in baseball history, at least for Os' fans. Today was when the Giants' hunt for the Dodgers began that season. 65 years ago. In New York City. The Giants would lose only one more series during the remainder of the season—and that was to the Dodgers—the next series, in fact. And after that series, the Giants not only did not lose a series for the remainder of the season. They didn't lose a game to the Dodgers. I'll leave Bobby Thompson for another time.



 I am struggling to find some headline grabbing pundits who are very bullish. If you are aware of any, please highlight them as I'm curious.

Steve Ellison writes: 

I have come across a non-headline grabbing blogger named Logan Mohtashami who is very bullish with a thesis that the so-called millenial generation in the US is close to ramping up its household formation and spending. The ten ages in the US with the largest populations are 25, 26, 24, 23, 27, 56, 55, 22, 52, and 28. This is a US-centric thesis as most other advanced economies do not have large millenial generations.

The productivity drop fits into this thesis because the existing workforce has been aging fast.

Here is a sample:

Interview: "Why the American Recession Bears Failed":

Let me take this opportunity to remind Mike and the other recession callers that a true recession requires certain things to occur. First, we need over investment that creates a supply and demand imbalance in the economy which in turn creates demand destruction leads to a recession. I am not talking about just two negative GDP prints either. We also need a cycle where unemployment claims rise as companies lay off people to keep their stage budgets manageable. When unemployment claims gets to a 323K, 4 week moving average with breath, then we can start talking about a U.S. recession.

But, unemployment claims have never broken come near this level, despite weakness from Europe, Japan, China, Brazil and many other countries since 2011. Even with the oil and commodity collapse, we never broke higher on unemployment.



The main benefit of brushing your teeth is partial removal and disruption of developing bacterial plaque between the teeth. As plaque grows the layer becomes organized*, with deeper layers developing anaerobic bugs which are more pathogenic.

Long ago researcher Harald Loe had his students refrain from oral hygiene and observed the development of gingivitis, which went away when hygiene resumed.

*like America



Jeff Watson writes: 

Temperature minimums tend to increase grain prices. The second chart below is Dutch Guilders per 100 kg of wheat (in France, Italy, England, Germany) . The first chart is rye: an indexed price series in Germany. Cold weather crops like rye, barley, oats, milo etc also show huge increases in prices.

Stefan Jovanovich writes: 

Jeff may disagree, but I think you have to include the effects of
war. The two conflicts that were, in their own ways, as ruinous as the 2
World Wars: the 30 Years War (1618-1648) and the Napoleonic Wars
(1803-1815) - both overlaps the periods of dramatic increases in grain
prices in the charts.















anonymous writes: 

Or perhaps, during minimums, war is more prevalent, I don't know. As an aside, here's an interesting article from the National Geographic.
While not a peer reviewed journal, an interesting takeaway quote that
provides food for thought is: "Temperature is not a direct cause of war
and social disturbance…The direct cause of war and social disturbance
is the grain price. That is why we say climate change is the ultimate



Most investment is currently directed to the most profitable asset: Renewables. It's so voluntary that non-utilities and utilities alike are jumping into the game. This includes Exelon, Southern, Duke, Dominion, NextEra. Google, Apple, Microsoft, Berkshire and several new players.

Today, renewables are the industry's cost leaders. Everyone wants margins. Few are willing to risk billions in marginal assets (new coal, new nuclear, new gas boilers, new oil burners).

Keep in mind, that the nation has surplus capacity. The market for that capacity is clearing, but it will take several more years to reach stability.

Also, keep in mind that the nation's utilities all received 100% government guarantees when they build existing coal, nuclear and oil-fired power plants. Some utilities, like Southern, are capturing more than 100% government assistance. Others, like Exelon and Entergy are capturing a second round of government guarantees on fully depreciated power plants (New York). However, for the most part, government tired of these guarantees and told utilities that (1) they would be compensated for any stranded costs, (2) after receiving payment they are on their own and (3) they must rely on the free market for future revenues. Apparently, the free market valued these depreciated assets so low that owners are now begging for new government support (Exelon, Entergy, Dynegy). Renewables never received the same level of government assistance as their larger cousins and they are not needing additional financial support.



What advantage do we have over our reptilian brains? How can we overcome our instincts, and act against over-stimulation and it's negative side effects?

Here is an interesting article about that very subject: "Supernormal Stimuli": with the rapid pace of technology, have we been able to keep up with the new stimulation that is available?



A typical " objective" report by the wire service used by all media:

"A Tale of Two Conventions: As GOP Nominates a Dangerous Lunatic, Democrats Reaffirm Commitment to Diverse America" by Greg Sargent, July 29 (Washington Post)

anonymous writes: 

Time for the Pauline Kael quote:

"I live in a rather special world. I only know one person who voted for Nixon. Where they are I don't know. They're outside my ken. But sometimes when I'm in a theater I can feel them."

Mr. Sargent has the same broad circle of acquaintances, and he shares the same dim sense that there may be somebody out there who does not read Salon but is still allowed to vote.

Oh, the horror.



 Here's a recording of the full 2+ hour speech that the late legendary bond trader Charlie DiFrancesca gave in 1989. It's very pit centric and somewhat outdated, but he still delivers a hundred meals for a lifetime.

Gary Phillips writes: 

There is a great story about Charlie D. After a particularly tumultuous day in the bonds, the pit had emptied out as usual, except for a few stragglers who remained sitting on the steps. 'SPL' was sitting there looking unusually despondent as his clerk P&S'd his remaining cards. Charlie happened to walk by and ask one of SPL's other clerks "what was wrong with Steve?" I wasn't privy to those words, but as Charlie walked away I heard him say, " Shit, I thought Steve could handle dropping 2Mil better than than THAT!



 With all its faults was the pit system better than the hft system we have now for the public? A vial of vipers compared to flexions galore?

Gary Phillips writes: 

There are many analogies between the pit and hft i.e., spoofing, front running, etc. However, on the floor, when liquidity was pulled (locals simply put their hands down) traders were still under pressure to make markets in order to maintain quid pro quo relationships with the order fillers they depended on a daily basis. Flash crashes appear to be the direct result of hfts.

anonymous writes: 

Talking strictly flash crashes for a moment: they're ignited by HFT front-running, and then perpetuated by their shut-ins. We know they only provide liquidity when not required.

anonymous replies: 

Sure. HFTs kicked off an arms race that added billions to cost of entering or maintaining a business of trading. And the outsiders will always remain cannon meat.

Then again, in the culture perpetually searching out a greater fool, anything and everything can be inflated ad infinitum, and thus maybe everyone can win?



 Suzanne Simard is a Canadian scientist who has been studying forests for the last few decades, with her work focusing on the underground networks that trees use to share resources with each other and other species such as fungi.

Her TED talk starts slowly (you can skip the first 5 minutes) but has a summary of her ideas.

This episode of the RadioLab podcast also covers the basic ideas (and visits the New York Botanical Garden).

That podcast includes Jennifer Frazer who writes The Artful Amoeba blog for Scientific American. Here is an article she wrote on Simard's work: "Dying Trees Can Send Food to Neighbors of Different Species"



 There is a game called Logic Links where the object is to put colored chips onto rectangular or circular grids based on clues like "the green chip is not next to the red".

It brings to mind the colored chart of bond stock co-movements that doc has been putting up for the past 3-5 years.

The object of the games seems similar.

I would recommend the game for all your kids, and as an antidote to excessive barbeque as one ages.



 No one else seemed to notice that Big Dog, horn hound Billy C, at his stemwinder "humanizing" blurring of reality for his toughguy wife, said how he was so drawn and attracted to Hillary [back in Jurassic 1971] cause "she wore these big horn-rimmed glasses" and had "thick blonde hair"?

But fellas, back then, Hillary was a dark brunette.

She became blonde years and years later.

(Maybe he wasn't even talking about Hillary!)



 Book Review: "Who Needs the Fed?" by John Tamny 2016

What really attracted me to this book was the title, something I am in agreement with. I had not been aware of this author before reading a positive review in Forbes and the WSJ. Among other notables is a review from Andy Kessler, whom I have previously found to be objective, and of course a markets person.

First, in favor of the book: the author makes a very good case. Indeed it is safe to say that he finds nothing of value in the Fed's existence. Although a supply-sider, he criticizes them also. He is an adamant free-market advocate who favors no reserve requirements for banks and no FDIC. The Fed was originally created to provide liquidity to solvent banks, and has morphed into providing liquidity to insolvent institutions and even forcing solvent ones to take its money. The author favors creative destruction, whereas the Fed is a major player in central planning and the redistribution of assets to the "weak". "Why keep around that which intervenes in the natural workings of the markets? Didn't we learn in the twentieth century (often through mass murder and starvation) just how dangerous it is to empower central planners?"

The flip side: The tome is 180 pages whose points could have been successfully made in 45. There is so much repetition that it occurred to me the book could be an anthology of previous articles. Why else would the author repeat the exact same text over and over? Does he assume the reader to have Alzheimer's? In each of the 21 chapters he defines his meaning of "credit". He even repeats the exact quotes from Hazlett. Some text is occasionally difficult to read in that some sentences are too long to follow if only read once. He also frequently drops articles (e.g. "the"), probably because he thinks it sounds cool. It doesn't.

The book has no charts, graphs, tables or formulae. Undoubtedly someone told him that those things discourage readers. It is quite the opposite, as they can be used to illustrate a point. One chapter is devoted to how the price of oil responds solely to the price of the dollar with respect to gold. Being a "data monkey" I have the ability to check that out, and when I did I learned why there was no such chart. Yes, there is a sometimes relationship, but nothing to be relied upon.

His concept of real estate is that it solely constitutes consumption by households, not investment. Interestingly my best investment ever was when I acquired and improved a vacant lot 15 years ago for X dollars. Without any subsequent improvement that property currently produces 1.25 X each year in profits. If I were to characterize that as something other than an investment I would possibly call it a winning lottery ticket. I wish I had more of those.

My real reason for acquiring the book is that with a title like that, the author must have some idea as to what non-Fed variables might be of interest. That is, I agree that the Fed is detrimental, so if I had previously been a "Fedwatcher", what do I watch now? Fortunately I found one (just one) that might prove to be valuable.

If you need a guidebook on being skeptical of the Fed, get the book. His examples are great: Taylor Swift, Jim Harbaugh, Uber, etc.



 Omgoodness 10 year projections! A joke.

Stephan, Ralph and all are correct about old Henry.

He gave 5 bucks simply to keep labor.

Our awful history books praise the 5$ yet neglect the labor strikes on later wage demands. Not sure if it's true that Mrs Ford ended that. What is certainly true is Ford inc was a total cluster @#$@ post WWII and the intel boys had to make order of the books.

Chrysler was a cluster in the BK as Iococca asked the accounting department their projection for the year. Apparently no one knew the math.

I want a Tesla! Enough said by the spec list car guy.

Engineers are always terrified by something. That's why they are working in engineering, certainty.

There is no certainty in the future of hybrid, batteries or hydrogen powered carz.

They all work, but at what cost/demand at offer prices. All traders know this. Always watch Toyota. T

hey go with certain bets before they sell fleet.



 It is interesting to consider if certain "self-help" people who offer advice on "refraining" and supposed "nlp brain programming" with insistence on "not being your guru" are unintentionally the ultimate hoodoos.

I recall a legendary golfer hanging out with a fellow and I swear he never won again.

I read of a famous entrepreneur consulting with this individual and I believe he lost his business.

I see a legendary hedge fund manager on twitter taking selfies with a fellow and I hear he has not beat the risk free rate in at least 15 years for his clients.

The secret might be that the "self-help" type is actually (and unintentionally) a parasite feeding on the celebrity of these formerly esteemed, perhaps washed up people to better fleece the sheep by borrowing their prestige.

If it is true, the conclusion is very negative for bonds for the lifetime of, say, someone who might be listening to a self-help guru for financial advice.

Jim Lackey writes: 

No. NLP is learned natural by all athletes. The best way to communicate with another person is to figure out their state. It's very good.

Guru? Self help books? There is always something to learn from any human on this earth. A good book has a meal for a life time. A decent book a meal for a day. If we realize a book is bad we have a quick laugh, then a cold shiver of humility.

I assume your point is buying into a guru/system. That is learned right here on the Dailyspec. All fixed systems are doomed for failure. Humans are dynamic and life is not static, unless you stop learning.

I think I know whom the previous post was about. I read those books in my 20s. Here is what I learned:

How to focus

Example: consistent reaction times in my race cars. That requires a pure visual state focus on one light. How? Relax, even though my car was making 950 horse power and I was very excited. Tune out all auditory with out the use of ear plugs as I needed to hear 5 seconds into my run. Eyes see better into dusk and at night learn how to adjust for the tenth of a second reaction time gain or lose to a false start, redlight. My reaction times were always good, under a tenth. However to be great they must be 0.005 to 0.000001 every time. Trading? Why was it when I lost big, my heart rate went to 180? Yet 125 fast walk when I won? A joke. One day I put on my motocross helmet and took a picture of myself at my desk. I was going to send it to a friend that was in the crash with me. My heart rate dropped to 99. That was learned behavior or the state I was always in at the starting line on a dirt bike. With visualization I can put on my helmet in any situation for life, figuratively.

Lastly kinesthetic.

If you can't get into that state, quit. Trading, sales, romance, which I have at this point in my life reversed that order of preference. Point is if you're satisfied with a small profit, if you don't get excited closing deals, if your only interested in a quickie– take time off, a disaster is imminent. Get the joke? Paying for a life coach? It's a percentage of profit on a mutually beneficial exchange. No profits, someone is fired. I've been fired. I like tacos.



Pollyvote still has Herself ahead, but the gap is narrowing.

538 had Trump moving ahead at the end of last week, but it has now reversed.

Stefan Jovanovich writes:

If one has to choose between Professor Armstrong and the one-hit wonder,
I have to vote for the academic, whom someone really does not like.

anonymous writes:

There are few thought leaders who have influenced my work as much as Scott Armstrong, but the election will be decided by state-level polls, not by the two-party popular vote.

Silver's model is a direct implementation of the work of Andrew Gelman on Bayesian Hierarchical models.



 You cannot teach school in Mexico if you are not a member of the SNTE - the Mexican Teachers Union. If the SNTE does not like you, they send their friends from the CNTE - the non-profit foundation for Mexican education. The CNTE's favorite tactic is to block the public highways. Right now their focus is in the province of Oaxaca. Their "cause" is a 2013 law that, for the first time, actually required teachers to have qualifications.

This has been attacked in the Mexican press and legislature in the same way Grant's civil service reforms were - by accusing the reformers of being corrupt. How dare anyone demand to know where the money has gone and how it was spent.

The reformers will have a way to go to catch up with Elba Esther Gordillo.



Will someone tell Shiller and his followers that p/e's must be considered relative to interested rates. The value of an annuity growing at g is 1 + g /(1 +i) times a factor or two.

Ralph Vince writes: 

Thank you. Anyone who doesn't accept this isn't in the present moment, which is the most inflective moment in finance in my lifetime so far, and few moments in history with more opportunity and peril.

Interest rates are where they are on the planet because there is cash in such ample supply no one is willing to pay a damn thing for it.

Sitting on it, not exposing it to risk, is to expose it certain loss.

Anyone getting their mailboxes stuffed with all kinds of institutions begging them to borrow money?

This money must find propositions of some degree of risk, or it loses with certainty, every equity, every damn wigwam out there, everything is starting to shake and we've never been in a situation where a FACTOR of cash, a FACTOR that is measured in significant digits, is coming downstream.

Alex Castaldo interjects:

Excuse me but… If we receive one dollar a year from now, (1+g) dollars 2 years from now, (1+g)^2 the next year and so forth… and we discount at the rate i, then the present value of this growing annuity is  (1+i)/(i-g)



 The Rise and Fall of American Growth by Robert Gordon is a great book that is worthy of space in your library, but at 650 pages this is not summer reading.

It focuses on two periods: 1870 to 1940 (rapid to 1940, slower thereafter) and 1940 to 2015


1. The great inventions are only made once.

2. GDP increase did not measure the value of the improvement in living.

3. Baumol's disease–a Mozart quartet always requires four players. On the other hand, records, tapes, CDs, DVDs, and ipods cure (or nearly cure) the disease. I wonder how this cure applies to education and to illness detection and correction.

4. Perhaps the greatest invention was the written language. The movable type printing press enabled widespread literacy. Geniuses developed and communicated to the world. The Internet is more important than the movable type printing press. Dr. Marshall Greenblatt, "The Internet will increase the number of geniuses available to the world by a factor of ten." (1995) Einstein was born in 1879. The world population at that time was 1.2 billion. Today it is 6 times larger. Therefore, the frequency of an Einstein level intellectual capability is 60 times what it was in 1879.

The Internet was introduced only 25 years ago and it is still spreading. A genius born today in Western China probably has access to the Internet and can exercise and improve his or her innate genius. Chrome book $149.

One impact of the Internet is that education of children will be taken out of the hands of the government. The changes will be both incremental and total. An incremental example - much music education it already done outside the public school system. Some of the changes are total. At this time, 3% of the population is home schooled. Private schools account for 10% of the population. Enterprises and governments will hire certified employees (CPA, PE, Cisco and Microsoft). Other certifications will be obtained outside the public school system. There are numerous examples of the Internet increasing communism – the good kind such as Wikipedia and Linux. These are examples of equality of access not the equality of outcome, which is the target of socialism.

6. Policy prescriptions

Reverse the socialism policies in the Federal and state governments. Focus the Federal Government on the few items that are required:

-Defense of the country and its critical interests

-Enforcement of responsible contracts (exempli gratia selling yourself into slavery is an irresponsible contract and is not enforceable.)

-Enforcement of a reasonable legal code

-Minimum necessary regulations at the federal level

-Simplify the tax system I don't expect much progress on the policy recommendations above.

Nonetheless, I think that the Internet is such a powerful invention, that the growth rate over the 2015 to 2050 period will be about 2.5% - range 2.0 to 3.0 – even with low productivity growth and low world population growth. Costs of education, illness detection and illness correction will collapse resulting in significant improvement in the standard of living even with low economic growth.

anonymous writes: 

The usual publishing quibble. Gutenberg's extraordinary invention did NOT lead to an explosion of literacy but to an explosion of book collecting among the already literate - the teachers, monks, and other clerics. For the first 50 years all the books printed were copies of Latin manuscripts and new works written in the same language. Literacy only grew after broadsheets became widely circulated and that had to wait for the invention of cheap paper and less expensive inks.



This is a very good article on haggling, and how it actually reduces the price of cars: "Why Do We Haggle for Cars?". Haggling with automobile purchases is a stepchild of horse trading.



 The events in Turkey bring to mind the Revolution in the Park. The wikipedia article has the politics all wrong (Celman was no more "conservative" than Erdogan is), but it will have to do as a point of reference.

The comparison between Argentina in 1890 and Turkey in 2016 - like all historical analogies - is only useful for finding what I think Vic and others mean by "the drift" - the compass direction in which Time's arrow is pointing. What makes the comparison interesting for me is the history of foreign exchange dealings and the subsequent Baring crisis. That crisis in Europe is what brought on the Panic of 1893 here in the United States.

There are real parallels between what has happened in the Middle East over the past 25 years and what happened in the region surrounding the Rio de la Plata in the 3rd quarter of the 19th century. There was a succession of nasty and utterly stupid territorial wars over mineral wealth - the worst of which had the same coalition of the self-righteous that glorified Bush I's war.

There are also real differences. Argentina in the decade of the 1880s enjoyed large immigration and, with that, persistent transfers of money by the immigrants to their families back home. For Turkey the money flows have been in the opposite direction.

What has been the same is the rise and fall of belief in a supposedly new "modern" nation. Just as Turkey has, until recently, enjoyed enthusiastic support from the moneyed interests for its joining the EU, Argentina was the darling of the City of London during the 1880s. Under Roca the country had adopted yet another currency reform, this one to put the peso on the international gold standard. (This meant you could ask for gold coin in exchange for paper money at a fixed rate - something the world has not seen now for 84 years.) Even as the country suspended convertibility in 1884, people continued to believe in the investment prospects for the river Plate. By 1885 the paper peso had risen to 134% of par, and Roca's government had been replaced by Celman; but the flow of funds into the country actually accelerated. (The argument was, then as now, that currency depreciation made the country more competitive and its businesses more profitable.) Even as the Turkish lira has declined from .45 to .3 Euros since the end of 2012, "belief" in Turkey as the next member of the EU has continued to rise. The suggestion by Brexit supporters that adding a poor Muslim country might not be such a great idea was taken as proof of the fundamental economic and political ignorance of the backward English. Those in the City who had questions about the profitability of buying Argentine railway bonds in 1887 faced similar scorn.

If the lira now goes to .24 to the Euro, it will only be matching the performance of the peso under Celman. By 1889 it has fallen to 191% of par.

When the full crisis hit the following year, it crashed to 387%; and Barings failed.

You can read the full story here.



In business, sports and pleasure making the weakest link of what you practice your strength lets you outperform the rest.

Take sunglasses. I see people walking in the desert on shiny 110F days squinting behind their $90 Foster Grants. They fall short while I keep on going for hours. The reason is not fitness, overheating or hydration. It is their weakest link of the sun in their eyes.

I took a free pair of 3D glasses after watching 'The Jungle Book' in 3D into the desert and customized them as follows. I put a strip of black tape across the top of the lens to allow light to enter the bottom two-thirds equal to a baseball cap shade brim. Then I put side tape like horse blinders to block that light. And I added a nose strip to prevent cancer.

I can walk all day in the sun with relaxed eyes and face which used to be the body part that broke down first.

A further profit is seeing rattlesnakes and cactus spines in 3D. The 3D glasses have one red and one blue filter lens that 'tricks' the brain into seeing a 3D image. There's nothing like it!



As all flexions, agrarian reformers, and cb's want the Cattle Trader to win, the idea that 'things are terrible and horrible' of the Real Estate Candidate is very good for stocks as the former will wish to cushion the Cattle Trader's victory.



 Here's a BBC story on the Kabali movie mania phenomenon:"How Rajinikanth and Kabali Mania Swept India"

Here is the trailer for the movie.

Here is the theme song with lyrics.

Here are fans in Japan reacting to the star, Rajinikanth.



"Bezos Tops Buffett as World’s Third-Richest on Amazon Rise"

Has anyone done a study on company CEO's making top millionaire lists and subsequent returns in their stock after? Amazon is a fantastic company, but it feels as though there may be a ballpark renaming analogy here.



A personal observation:

When a market has had a successful run and is ready to roll a seven there are several scenarios in which the turnaround occurs. A very interesting one is where the market in question does not initially falter and give a sell signal. Rather, what happens is that competitors or alternatives to that market start to look interesting first. It is almost as though those in control of portfolios start to move their cash into the alternatives before selling the primary market.

For those of you who play these markets by the numbers I suggest you check your signals for bonds, gold and equities. Observe if you are getting buy signals in bonds and gold, but not yet sell signals in equities.

This does not have to be a big move, just a portfolio adjustment.



 Salt in Their Veins by Charles Wing is an inspiring book consisting of interviews with the ingenious, hardworking coastal Mainers from Portland to Eastport by Wing, a professor who wrote 7 books while living on a boat for 8 years. There are chapters about 4 boat builders, 3 restauraters, 7 fisherman of all sorts from local lobsterman to deep sea swordfisherman, a wharfinger, a docker, 3 businessman, 2 artists, 2 fish store operators, a teacher, 2 racers, and a mechanic.

All of those interviewed have been living in Maine for many generations, and have a work ethic second to none that I have encountered.

They are drawn together by a love of the ocean, jacks of all trades, flexibility, a loathing for those who are from away from Maine, and those who rely on anything other than their own hard work and self reliance. Maine has more millionaires per capita than any other state, and perhaps the least migration in and out of any state.

After reading the book, you want to tip your hat to many geniuses you meet with. Typical of these are a self taught mechanic who builds submarines and planes without plans, a businessman who runs Bath Iron Works with 10,000 employees and builds the best boats in the world, there are master boat builders in wood, and fiberglass, there are racers who routinely cross the Atlantic in sail boats in 30 days 3 or 4 times a year.

 The social structure of the inland Maine community is unlike anything you might meet with anywhere else. The kids never move out of the town they were raised in, there is no theft, the center of town is the fish store, or the post office. Half the population is related to each other, promiscuity and drinking a la Peyton place is rampant especially in the winter. And above all, there is loathing for those from away, even after 90 years, if you weren't born there you're not one of them.

Almost all those interviewed had their boats overturned in 40 degree water and survived in one way or another even without knowing how to swim. I found the preparations for these accidents and coolness in the face of imminent death, quite edifying in my own business. One can't compliment the author Charlie Wing, enough. He's the kind of person you would like to meet and sit on a log with and learn from. Every chapter has home grown wisdom form him, that inspires those he interviews to elicit the inner working of their lives.

I loved the book, couldn't put it down, and recommend it heartily. I have an enforced vacation planned at Vinyl Haven in a few weeks, and will keep my ears open while there to learn about life from the locals.

A typical Maine anecdote: Martha Stewart comes to Bar Harbor and of course her cell phone doesn't work, as is typical of most of the Maine coast. There's a line at the pay phone. She cuts in. "I have to make a very important call involving millions of dollars." An elderly gentleman says that "in Maine we all wait our turn no matter how important we are". She says, "Don't you know who I am. I'm Martha Stewart". He says, "Yes I know, I'm John Rockefeller". (He donated Acadia National Park to the state).



Here's a little on Bill Haggett but you have to read the book to see his amazing accomplishments and humility.

"Pineland Farms Inc. Tops $100 Million with William Haggett at the Helm"



 As Tim Sample says in one of the most astute interviews I've read on the subject of "is this a true story?":

"The story is from the oral tradition. It's been around for 200 years. That story is more true than any of the facts that went into its constructions. It has had the stamp and approval of successive generations. It's been passed on as a living document of the values of all the people it passed through. This is resonating and living like a true song. It is a truth about who we are, and it reflects and amplifies and educates along the way".

I am reminded of my story about how Grandpa Martin often traded in the penny exchanges with Jesse Livermore. Often they'd go up to Scott Joplin's brother afterwards to meet the girls and perhaps take them on Jesse's yacht. It should be true.



 An old school suggestion:

I notice that the kidz today like to get to their destinations fast. They need a hotshot, and their routes all have to be high priority lines. Whether they need to get to a punx show, get a fix, get laid, get MD 20/20, get on tv, get a pokemon, who knows? I personally think they are missing a big part of being on the road.

Look, I understand that sometimes we all need to be in a hurry. But one of the beauties of the road is that it forces you to become patient. Some of the most interesting experiences I've had were by hitting the trails less traveled.

What most kidz do if they get ditched or pulled off a freight is to give up, head to the highway, and thumb it out, or call one of their pals/family members to come get them. (The conveniences of modern society, and quite a cop out if you ask me.)

Back in the day however, hoboes and tramps were much tougher. If they got ditched, they would drill it to the next station or jerk water town. They would follow the tracks the whole way. Once tramps came to a small town, they might jungle up there and wait for the next drag, or go into town and beg. The Boes would look for work. If no trains stopped there, they would keep moving. Always following the tracks.

What am I trying to say? I am not telling anyone how to live their life, but I will say there is a hell of a lot of opportunity and authenticity to follow the rails all the way, especially if there are no freights available.

If you look at the rail lines today, many of the little rail towns still survive, and are inhabited. They had to be spaced no more than 20-25 miles apart max, because the old steamers took on water. This is especially true from the central midwest to the east coast. I have found plenty of work opportunities, and kind people who have helped me on the way in those towns and villages. Of course, I've ran into a few nut balls, but you'll find them everywhere and in any situation if you are out there long enough. Out west, it can be a little dicier. Many of the old water tank towns have been pulled up completely, or are further apart. This is one reason why back in the old days, many of the eastern tramps and Boes did not need a bindle. Freights would stop more frequently in the east, which is still true today. In the west, you need a bindle, period! You can still get over the railroad drilling it, if you are prepared. It isn't easy. It can be rough and tiresome, but the trouble can be well worth it. You need to follow the code when you arrive in town at all times, or you will blow up the town!

Bottom line, if you want more hair on your chest, be more manly, (seems to be taboo today for some reason) have more adventure and experience, then make the rails your road all the way. Even if they are less traveled.

Bo Keely responds: 

Good insights. For the readers, 'hotshot' is a fast priority freight. I'm afraid the old school of slow hoboing is as drained out as the water tanks. Steam Train Murray the hobo King once told me that if he had it all to do over again he would walk the rails rather than ride them.



Speaking of wealth, look where it is: "List of Highest Income Counties in the US"



This is my review of a book that describes every type of hedge fund category.



 The dictator of Turkey. He's not a dictator.  He's been duly elected every time.

Gibbons Burke writes: 

Lots of dictators have been selected by the people in elections (Hitler, Chavez), or appointed and granted dictatorial powers by democratic representative bodies (Mussolini). One of the great concerns of the founding fathers of the United States was the tendency of democracies to devolve into dictatorial tyrannies.

Pete Earle writes: 

Democracy is the lowest rung on the collectivist ladder and an essential precursor to socialism. The idea that a pulse, and nothing more, would qualify an individual to take part in the political process is ludicrous to anyone who has spent even a cursory amount of time in the real world. 

Stefan Jovanovich writes: 

The G Boys are retailing another of those lessons from history that is really a bad sermon about the awful citizenry. No one in Philadelphia in 1787 was concerned about democratic tyranny. They gave control of the Union to the House of Representatives and to the appointees of the States' own popular houses. The Senate exists, not as a check on democratic impulses, but as a scheme that gave small states a reason to believe that they would not be surrendering their own popular sovereignties. Hitler did not win an electoral majority; his dictatorial powers came from the emergency legislation adopted after the Reichstag fire. There is nothing in the record of German aristocracies to suggest that they would have been any more temperate in their judgment than "the people" we're in 1933; after all, they were Hitler's party's principal source of campaign funds.

What is wrong with Venezuela and Turkey and the EU, for that matter, is that their democracy is an ideology for giving the state absolute authority in the name of "the people", not what our American democracies - state and Federal - were agreed upon to be: the legal mechanism for the exercise by individuals of their own particular rights as citizens.



 I have found the book Superforecasting: the Art and Science of Prediction by Philip Tetlock to be interesting, provocative and useful. I strongly recommend it.

Philip Tetlock is on the faculty of Wharton in the Management Department, and Dan Gardner is a journalist and author.

The basic story is that Philip Tetlock and his colleagues formed the Good Judgment Project (or "GJP"), and joined a prediction competition sponsored by the Intelligence Advanced Research Project Activity, or IARPA, which is the intelligence community's version of DARPA. GJP recruited volunteer forecasters, gave them some basic training, and put them into teams. The GJP teams were so successful that eventually the competing groups, including Michigan and MIT, were shut down or merged with Tetlock's group. As they screened out their most successful participants, Tetlock called them "superforecasters".

There is an ever-growing corpus of popular books on some aspect of quantitative reasoning/decision science - "pop quant", if you will - and Gardner, who I assume took on the role of making the book accessible, includes refernces to Surowiceki's Wisdom of Crowds, Gleick's Chaos, Zero Dark Thirty, Daniel Kahneman, Michael Moubaisson, Taleb, Robert Rubin, Atul Gawande, and more. The references are never completely gratuitous and will be informative for people unfamiliar with this particular shelf of the bookstore.

Tetlock's previous high-profile work was Expert Political Judgmentn, a 19-year project where 284 experts made 28,000 predictions "bearing on a diverse array of geopolitical and economic outcomes. The results were sobering. One widely reported finding was that forecasters were often only slightly more accurate than chance, and usually lost to simple extrapolation algorithms. Also, forecasters with the biggest news media profiles tended to lose to their lower profile colleagues, suggesting a rather perverse inverse relationship between fame and accuracy."

Tetlock did the rounds promoting Superforecasting when it came out, and both Russ Roberts and Stephen Dubner did informative interviews with him:

A trade is a prediction, so the book's focus is clearly a relevant one for speculators. Here are some of what I found to be the more interesting ideas, observations and results from the book:

- Brier score: The GJP uses Glenn Brier's scoring function to assess the accuracy of forecasts. While the Brier score itself may be useful, I found myself motivated to improve by the book's general discussion of the importance of making measurable forecasts and then tracking their accuracy.

- Frequent updating: Bill Rafter's Cassandra Portfolio puts forward the hypothesis that the more specific one's predictions are, the more frequently they should be updated. Superforecasting fully supports that idea. The superforecasters updated their forecasts regularly and with decimal precision, and Tetlock shows that the forecasters' accuracy improved as a result.

- The best forecasting teams had a diversity of experience and opinion. Tetlock goes so far as to say that without diversity, forecasting teams find it difficult to improve their accuracy: "Diversity trumps ability".

- Extremizing: One of the algorithms they used for large-group forecasting was to take the average prediction of the group and then move it some distance away from 50%, e.g., if the group's prediction for an event's likelihood was 30%, the algorithm might "extremize" the forecast to 15%. The reason is that in large groups, individual forecasters did not know what other forecasters knew, and if they did, they would be more confident in their predictions which would push the values closer to 0% or 100%. And the algorithm was very successful in the IARPA forecasting competition.

- Scope insensitivity

- One technique for improving accuracy was for the forecaster to make a prediction, then assume that the first prediction was wrong, and then make a second prediction. This falls into the general category of techniques a forecaster might use to dislodge himself from cognitive attachments. Another technique is to invert the question, sometimes simply by inserting "not". The example Tetlock uses is a change from "What is the likelihood that South Africa will allow the Dalai Lama to visit the country?", to "What is the likelihood that South Africa will *not* allow the Dalai Lama to visit the country?" Superforecasting argues that forcing oneself to take different points of view on a prediction will improve results.

There's much more in the book, of course, and it is well written and accessible. Again, strong recommendation, especially for those in the "Counting 101" class.



 We are coming off the All-Star break, the mid-point of the 2016 baseball season. And in response to some requests, I've been somewhat quiet about the boys in the orange and black. (No, not the Giants—they got their colors from the Os.) How fare the Birds of Baltimore, the Orioles? They sit 2 games ahead of the Bosox astride the top of the AL East. This is in contrast to all the other divisions, in which there is a clearly dominant team.

The reality is that the Os on the road are barely OK. They play under .500 on the road. But in Camden Yards, they are a very different team thus far in 2016, a strong team with an offense that is second best in the AL (only the Bosox, who play with the Green Monster at Fenway half the time, are better). The Os lead the majors in home runs (this is becoming the Os preferred way of scoring), but they definitely lack speed on the base paths—dead last in triples. Mark Trumbo and Chris Davis are responsible for the four baggers, but others are doing their share too.

Fielding is just OK—fifth best.

And pitching is just awful. There's only one Os starter of note this year—Chris Tillman. Putting Ubaldo Jimenez on the mound is the equivalent of staking the opposing team to 6 runs. It must be nice for $4 mil a year. The Os badly need an Eddie Watt or Sammy Steward, someone with a rubber arm for long relief who can start the occasional game when needed. And the bullpen is graced by Zach Brittan, arguably the best closer in baseball (perfect on saves-save opportunities, as are many others right now, but none with an ERA below 1.00—Zach's is 0.7). Middle relief and the set-up is Darren O'Day, who's not having such a great year—nothing anywhere near last year's beautiful performance. Maybe the second half will serve him better. We'll see. Pitching, though, remains a weak point—and Danny Duquette, the O's GM, shows no sign of evaluating pitchers with any success. Tim Melvin and I have spent much of the first half bemoaning to each other the poor pitching staff and the horrible player decisions from the GM's office. I can't say that pitching is pathetic—the Birds win games. But pitching doesn't seem to be a big factor in the wins.

So the Os start the second half of the season with lots of power, OK fielding and weak pitching. For those of us from the Weaver era, this is nothing close to pitching, defense and the three run home run. I miss that trio. It served the Os well. Buck may be a great manager, but he needs players with some talent. The pitching staff comes up short on that area. Some personnel changes are in order. Maybe bring up some of the pitchers from the minors—they could hardly do worse than the current staff.

Somehow, the Os are winning, but I'm not completely sure how. There are just so many HRs that a team can hit. The pitching staff simply has to perform. There's still a long ways to go until October (or is it November yet?). Maybe the staff will find its groove.

One peeve that I have these days isn't limited to the Os. It's the challenges. These really slow the game down. I wonder how many are successful. Personally, I'll take my chances with the field umps. They may be blind, but the time for the challenge system is just too much—it ruins the rhythm of the game. Eliminate it. Please? Pretty please?

Play ball!!



When newly Great Britain was saved from its war debts by Henry Pelham and his brother, the cost to be paid was simple: the markets and not the Bank of England would determine the rates of exchange between foreign and domestic money and the price of borrowing - i.e. the interest rate. A note from the Bank of England and other banks of issue would be measured against specie; and no bank could risk having its paper being priced at any discount. (Given the convenience of paper, notes normally enjoyed a slight premium over gold and silver coin.)

The debt - sold to finance the Churchill family adventures in the Lowlands - would have no maturity but would be what Alexander Hamilton wanted our Federal debt to be - a permanently sound fund where people could park their wealth when they were not using the cash for speculation. Its price would determined by how much people wanted to spend cash instead of sitting on it. When times were dull or worse, the interest rate would fall because people had no better place for their cash. When interest rates were "high", it would be a sign of how much people wanted to speculate, not a measure of how fearful they were that the Crown would default. (A decade earlier, when Bonnie Prince Charlie's men had come as far South as Derby, the first "Black Friday" in the history of English-speaking finance, the quote of 3% debt had fallen below 50.)

The world may have given up on what the Pelhams considered to be the only effective restraint of government spending - the requirement that the Bank of England and everyone else's notes be redeemable in coin at par. But we do seem to be back in their world of consolidated finance as far as interest rates on government debt are concerned and our betters will no longer have to worry about what those pesky speculators think.

July 14 – Bloomberg (Toru Fujioka and Keiko Ujikane):

Etsuro Honda, who has emerged as a matchmaker for Abe in corralling foreign economic experts to offer policy guidance, said that during an hour-long discussion with Bernanke in April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money — in which the government issues non-marketable perpetual bonds with no maturity date and the Bank of Japan directly buys them — could work as the strongest tool to overcome deflation, according to Honda.



Keynes wanted central banks and their #1 borrowers - the governments whose laws made central bank IOUs into money - to write checks that would pay for more consumption.

They did - eventually; they had World War II and all the subsequent ones that have justified government check-writing in excess of tax collection.

The beauty of the belief system is that its failures guarantee a further application of its promises of salvation. Whenever the extra "money" (actually credit since no one could ever ask for gold coin in exchange for their legal tender paper) gets ahead of the supply of what is being consumed, prices rise permanently. For the people who have money savings, this price rise is a tax on their accumulated wealth and can be celebrated as evidence of a change towards greater greater "equality". For the people who have little or no money, the price increase become a fundamental reason why the government must add to their incomes or, at the very least, index their pay to "inflation". Either way, the solution to the problem requires the government to have more money/credit to spend.



 The book The Lady Tasting Tea: How Statistics Revolutionized Science in the Twentieth Century is a one person historical account of the greatest statisticians.

While one may quibble with the authors choice of who the greatest statisticians where or how much he wrote on the statisticians he personally knew, its strength is also because this book is written by a student of R. A. Fischer. a statistician known for introducing statistical research methods into science and furthering Galton's regression analysis.

The "lady tasting tea" is a test if a lady can taste if tea is mixed into milk or if milk is mixed into tea. Highly recommended for those that love history and/ or statistics.

David Lillienfeld writes: 

Let's stop this myth. Fisher's contribution to research methods was in "translating" Pearson. Pearson had actually derived the mathematical formulation well before Fisher, and that Fisher "stole" (from Pearson's view) what became the F test and the like was the basis for a long-standing animosity between the two. Bringing in statistical methods into science was the work of others, not Fisher.

Pearson started that task in the early 1900s for biology and medicine, work continued by Major Greenwood (Pearson's protege, though some might argue that Egon Pearson, Karl Pearson's son, of Neyman-Pearson Lemma fame among other things, took on that role ) and then A Bradford Hill (Greenwood's protege). Hill was among the first tobacco-lung cancer studies (frequently not noted is that Richard Doll was Hill's protege).

Hill was also the genius behind the first modern randomized trial, the MRC Streptomycin Trial in 1948 (conducted as a randomized trial to eliminate bias and not to allow for significance testing). (The trial was necessitated by the cost of streptomycin as a treatment for TB and the essential bankruptcy of Britain post WW2. If the drug didn't "work", the British government didn't want the expense of buying it.) In the US, it was Harold Dorn's work bringing stats into medical research. Dorn and Hill studied together in 1933-5 under Pearson (Egon, not Karl) in London. That was just before Hill published his book on statistics in medical research, which itself translated Pearson for medical researchers.

On the social science side, there was F. Stuart Chapin methodologically, and a bunch of students of Franklin Gittings on the pure stats side. (Gitting's statistical empiricism contrasted with the case-study methods championed at the University of Chicago—which wouldn't change until Sam Stouffer went to it from the University of Wisconsin, where he was the thesis advisor to Harold Dorn.

These were all statisticians, with the exception of Chapin, who strode the fence between stats and subject matter.

Fisher's fame derived out of a book that allowed people to understand Pearson's accomplishments, significant but hardly the person to bring stats into scientific research.

Frank Yates, Fisher's contemporary and teacher to Bill Cochran (of Cochran's theorem—the basis of all contingency table analyses since about 1940 (and yes, Fisher's exact test is still sometimes used, but not anywhere near as much as the tests deriving off of Cochran's work, including log-likelihood, Mantel-Haenszel (also known as Cochran-Mantel-Haenszel today), as well as sampling and queuing theory). That work (Cochran's) had as much to do with bringing "modern" stats into science as Fisher did—but he didn't write much. Yates is also significant in the development of the analysis of variance, but the foundational work there was Fisher's. The AoV was important for agriculture and some laboratory work, though some might argue that Student (Gossett)—another student of Pearon's was the more significant figure there—it is, after all, Student's t-test, not Fisher's t-test. It was the F-test which was named for Fisher.

Fisher was the Richard Feynman of stats, though some might argue, reasonably, that Cochran's book (aka Snedecor and Cochran) taught at least two or three magnitudes more people in science about stats than Fisher ever did, holds as much claim to that title as Fisher did. Cochran went to the US because he and Fisher had quite a falling out after Cochran published what has become known as Cochran's Theorem (which demonstrated, among other things, that the sum of a series of chi-squares was a chi-square and that one could thereby combine contingency tables for analytic purposes).

That was 1938, and the Cochran-Mantel-Haenszel work started in 1954—M-H was 1959). Cochran told me that he and Fisher were good friends before that, sharing a "smoke and afternoon tea" together. (Cochran was well along in suffering from strokes by the time I got to know him, so he might have that history a bit wrong, though Tony Hill agreed with Cochran's recollections—Cochran was well known in London by 1936/7.) Cochran's great "sin" was his refusal to "genuflect" (his word) before the "alter of Fisher" when he published this theorem and stating that the idea was Fisher's—Cochran said it was not. Interesting is that aside from Fisher's exact test, he never did much with contingency tables.

Fisher was a genius, but his impact in stats has been way overblown in its significance (pun intended), much as Feynman was a phenomenal teacher—rainbows on the blackboard—but his impact on physics was normative, not transformative. Pearson has a stronger claim to being the person who brought statistics, notably mathematical statistics, into scientific research, though as the above discussion suggests, he was seminal but hardly alone.

anonymous writes: 

Fisher's Fundamental Theorem of Natural Selection, from his 1930 work, "The Genetical Theory of Natural Selection," which speaks to the relationship of "the relationship of "increase in fitness," (the aggregate of the means, we can think of this as) and "variance," states:

"The rate of increase in fitness of any organism at any time is equal to its genetic variance in fitness at that time."

But Fisher was, in looking at the natural world, only therefore considering a narrow band of the spectrum — things, for whatever reasons, are "bound" in the natural world (for example, if I double my height, I end up squaring my weight in order to maintain proportionality, and my legs buckle under the weight [they are probably close to do so now]). Further I contend, this same mechanism, which we only see a sliver of the spectrum manifesting in the natural world (and the overarching question then becomes "why?") manifests in spread of a population of bacteria, spread of disease within cells of an organism, or spread of infected individuals within a population, to the growth rate of national deficits (the idea, to my great satisfaction, having FINALLY found an ear and an excitement with the powers who can do something about this on an international level), and, as we've seen in trading (and which demonstrates that variance in returns is equivalent to negative returns, not to "risk.") The following graphic, which I hope comes through, illuminates the idea:

The black curved line is the average, compounded growth rate (the average [geometric] rate of population growth, what Fisher calls "the increase in fitness of a population"), the hypotenuse, the mean growth in population size per period, the base of the triangles, the variance in growth in those periods. Clearly, Fisher saw in the natural world, a sliver, to the left of the peak of this mathematical relationship.

In very many things, we see this relationship over and over, but often because of natural bounds, we see but a sliver (trading, being an abstraction [until the margin department calls] however, experiences the full spectrum).



 EIN: Bo, thanks so much for taking time to talk to EIN. Before we discuss your new book, Elvis' Humor Girls, Guns & Guitars, I'd like to find out more about you as a person. You have led, and continue to lead, an incredibly interesting and eclectic life. Tell us a little about your life travels.

BK: If you follow Buck the dog in Jack London's Call of the Wild then you follow my life travels. A comfortable loving upbringing in suburban Idaho, into the freight boxcars across America, and on to 105 countries the hard way – under a backpack – until yielding to the Call of the Wild. A decade ago I dug a burrow in the Sonora, USA desert and pop out now and then to travel and write books. I've walked the lengths of Colorado, Florida, Vermont, California, Baja, and Death Valley seeking the Call.

EIN: Were you an adventurer from an early age?

BK: I was an adventurer from the get-go. I jumped down the clothes shoot into the family cellar for a phoenix birth into adventure. From there I climbed the steps into the neighboring woods, swinging from the Weeping Willow vines like Tarzan (whom I had read about), and pedaled on full day bicycle trips, and raft trips on creeks like Thor Heyerdahl aboard Kon-Tiki. These were a series of escapades to explore nature and the border pieces of the puzzles that is me.

EIN: What did you find?

BK: I found myself at age thirty in a garage called Nirvana on a remote lake in Michigan where I undertook a final series of 24-hour experiments designed to fill in the interior pieces of the puzzle. Slowly I began to take shape by bicycling 24 hours, walking 24 hours, not blinking 24 hours, sleep deprivation, and so on in an article I wrote called 'Bladder Cross-Training in a Michigan Garage'. The point, for example, of trying to jump up to hit my head on the ceiling was to explore my extremes.

EIN: And…?

BK: Here I am to answer your questions about Elvis from an adventurer's point of view.

EIN: What is your first memory of E?

BK: At seven years I was walking John Adams Parkway in Idaho Falls, Idaho to the rural market for a nickel hotdog. It was rare to have a nickel and I was carrying my only Christmas present that year, a little Sony transistor radio. A singer came on the radio crooning 'Hound Dog Man' and for a few seconds I forgot about the dog. The rich voice captured me and I liked the topic of animals. I was so naive that I thought Elvis was somewhere nearby singing live, and I wondered how the next singer, and the next would get to the microphone between songs.

I was not an early Elvis fan … until three decades passed. In 1975 racquetball boomed across America and Elvis built his own court at Graceland complete with gold swivel 360-degree showerheads. I knew the architect and builder of the court. Everyone in Presley's entourage, including the bodyguards, band, and many of his girlfriends, played racquetball. I was the #1 or 2 player in the world at the time and, though I didn't play at Graceland, many of my peers did including champions Davey Bledsoe, Mike Zeitman, the Smith brothers, Dr. Nichopoulous, Fred Lewerenz, and others in a special group of a couple dozen for whom I coined the name Elvis and the Memphis Racquetball Mafia. A 2013 article by that name was syndicated and became the basis for the 2015 ESPN documentary 'When the King Held Court'.

EIN: What did the King look like when he held court?

BK: Elvis struck the ball around the court like he was strumming a guitar for the fun of it. He looked like he was on stage except with a racquet. His moves incorporated karate, just like in concerts, and to work the audiences he would whack guys in the back of the head with the ball to keep them on their toes. When someone like Sonny or Red West whacked him back to the kidney with the ball, a free-for all would ensue. Elvis loved mixing it up, and though I would like to say that his favorite sport was racquetball, instead it was these in order: Football, martial arts, girls, and racquetball.

EIN: Elvis live hard, and so have you. What are some of the highlights for you over the years?

 BK: They would include a handful of mental and physical feats. The first real tough thing I did was Veterinary School. Due to a post WWII pet boom Michigan State University devised a concentration program to cram six years into five, including summers and weekends. My next point of pride was winning a National Paddleball Championship while in Vet school. This parlayed on the West coast after vet school into multiple National titles in racquetball and paddleball. One of the most difficult things I did was learn to become ambidextrous, playing tournaments left and right handed. The goal was to go up one side of the bracket lefty, and the other side righty, and meet myself in the finals. Always a prosaic perfectionist, I learned to write opposite handed and to read and write backwards with the print flowing from right to left. I've read the last few hundred books upside down to balance the visual system and have greater stamina. Let's say you're traveling down the Red Sea with nothing to do but read – being able to turn the book every which way is like shifting arms in weight lifting to go longer. Let's say you're writing a book or a long interview and want to continue to make it enjoyable – you just turn the screen upside down and continue reading or writing to stay fresh.

I like what I've done in travel. I became a boxcar tourist riding the rails of North America and Mexico and ultimately developed a website and Executive Hobo Service as a sort of hobo Outward Bound. In world travel, so many near death experiences accumulated that I sat down and listed them all on index cards, stacked them into chronological order, gave the concept a working title of 'Catman Keeley' (The man with nine lives), created a website, and wrote a two-volume autobiography titled the Book of Bo I & II.

I get press now and then and the most recent was a feature in Mother Jones with an improbable title of 'The Amazing and Possible True Adventures of Catman Keeley and his Corporate Hobos'.

EIN: Is there one accomplishment you value over all others?

BK: I've helped myself enough that my greatest thrills have become helping others. My first venture of altruism was pulling the oldest fraternity called Farmhouse out of the athletic cellar at Michigan State University. Ever since the college founded in 1865 Farmhouse had been at the bottom of the fraternity rank in athletics while #1 scholastically. I was able to coach the genius hayseeds to become #1 while attending vet school. Now I establish silent scholarships as a sub-teacher in California desert communities, help stray animals, and give a handout where a handout's due or earned.

EIN: What is involved in a typical Bo Keeley day in July 2016?

 BK: I use a systematic approach for efficiency. Five days a week 12 hours a day for the past six months I've been at a library working on a new biography. After writing and publishing about 26 books, this may be the last and the best. It's about a telekinetic schizophrenic who got on 'That's Incredible', was Star Magazine's 'World's Greatest Psychic' cover story, a hillbilly martial artist who broke the Guinness record for the most linear feet of bricks broken in a single blow, and became the greatest escape artist in modern history from prisons and insane asylums. It's been a battle of wills finishing the biography, but it will get done.

EIN: Bo, apart from numerous physical endeavors, you have played chess with U.S. Open champion, Art Bisguier. In fact your bio suggests a strong balance between mind and physical pursuits. What is your philosophy on how you approach your life?

BK: Look. If I'm here I might as well do something. I've been bored and don't like it. I'd rather accomplish. Create value: make something out of little. I've always followed a Golden Line of progression in some little way every day of my life, thinking that will affect the soul.

I learned early on that there are two paths to excellence. You can do it the Jack Dempsey way and work the mines and forest, and tie your hands to the brake rods underneath boxcars to keep from falling under the steel wheels while hoboing to the next of hundreds of bar fights en route to becoming the World Heavyweight Champion. That is a rags to riches story, it is the American possibility and way, and I like it and have tried to emulate it.

On the other hand, there is what Napoleon Hill called the Master Mind Group in his book Think and Grow Rich. A Master Mind Group are highly qualified teachers in your area of mental or physical pursuit. In the 1980s, I identified those I wanted to learn from and 'drove to the mountain'. I outfitted a '74 Chevy van and cruised the USA with a 7' stuffed rabbit named Fillmore Hare riding shotgun. Not only did I visit intellectuals coast-to-coast, Fillmore would wave down smart looking hitchhikers for me to talk to via an invisible fishline attached to his thumb. In this way, I visited and vied against chess champion Art Bisguier, checker champ Tom Wiswell, ping pong's Marty Reisman, speculators Vic Niederhoffer and George Soros, and scientists like DNA's Jim Watson. What an honor!

EIN: How many close encounters have you had with rattlesnakes?

BK: You make it sound like meeting an alien. Rattlesnakes are individuals with distinct personalities including lowdown sidewinders and gentlemen like the Western Diamondback that is the doorkeeper at my burrow home. When I meet a new rattler I and it says howdy-do, I sit down six feet away if it is 4-feet long, and let it dissipate its nervousness through its tail, and then we study each other for a few minutes until one of us out of boredom walks away. I've encountered upward of 200 rattlesnakes in the course of hiking, and been struck at only once. That's more than I can say of uprights. I don't handle them but on occasion do handle scorpions and tarantulas.

I used to have a Tarantula Hotel with suites for Terry, Theodore, Thomas, and Tam. Tam was a rubber spider attached to a spring that would jump out and get stuck on peoples' shoulders or in their hair. It was a good screen to get proper dates. A girl in such terror looks like when she is very excited. I was also an amateur magician and used tricks to incite romance, including one that backfired when a fire flash jumped out my palm and burned off a sweetheart's eyebrows.

As I age, and the sleight of hand becomes less nimble, I have gravitated toward animals for simple companionship. I've been car camping in a Hertz rental in the Sonora desert for the past 16 months ever since thieves broke into my desert property and took everything of value. So I followed the Call of the Wild deeper into the desert and have made friends with various species including Kit Foxes who tug me by the hand to the dinner plate to share Ol Roy's sirloin strips.

EIN: Bo, please tell us about the time you and a friend, disguised as Mexicans, rode atop freight trains with Central American immigrants through Mexico, finally being apprehended by the US Border Patrol while swimming the Rio Grande with expired Mexican visas.

BK: One of the grandest migrations in modern history is thousands of Central Americans atop freights through Mexico to the Promised Land USA. I've ridden with them a dozen times, two hundred of us on the decks of a dozen freight cars playing cards, trading stories, and ducking branches. Why would I do that? All you have to do is read John Griffin's Black Like Me to know that to empathize with a group one must become one of them. I became a Mexico hobo, and still enjoy riding the rails south of the border without the worry of railroad bulls. The last one who picked me up was a Bull-ette who took me home and introduced me to her mother who entreated me to marry her daughter. Alas, I left her after that short ride, and took to the rails north to the Promised Land. I got nabbed by the Border Patrol wading across the Texas Rio Grande into USA. The Border Patrol was cordial after finding out I was writing Executive Hobo: Riding the American Dream.

EIN: And the time you were deputized in Namibia. What happened?

BK: That was a little affair in the southern Africa country of Namibia where I rolled into Windhoek fishing rides with a thumb. The equivalent of a sheriff stopped and asked if I'd masquerade as a tourist wishing to buy elephant Ivory from a desperado they had been trying to corral. I scorn Ivory poachers, so I found myself driving an unmarked car with a pistol under the driver's seat driving up to the perpetrator's doorstep. He was such a nice young fellow who claimed ignorance of the Ivory trade that I didn't know who to believe. I parked the car in an alley, and hitched out of town. Anything can happen in world travel, which is why I recommend it.

EIN: Bo, what is that drives you to lead such a varied and challenging life?

BK: I was the Elvis Presley of potato country growing up in Idaho as a kid. Elvis's mom dragged him between her legs in a gunny sack up and down the rows of picking cotton, and my mom took me during what was called Potato Vacation from grade school in the potato capital to pick spuds. Like Elvis, I didn't have a damned thing that couldn't be left out in the rain. Is it any wonder he became wild, or anyone who had an upbringing like that would strive out and away from it? At least that's what I think, in retrospect, as a certified Psych Technician.

EIN: Of the more than 20 books you have written do you have a favorite and why?

 BK: My favorite book is last year's publication of Advanced Racquetball. It was written on the 40-year previous promise in the introduction of the best-selling Complete Book of Racquetball that in 1975 was the sport bible. I promised to write a sequel for advanced players, and though it took four decades I did it. It was written over the course of five months, 12 hours a day, seven days a week while recovering from an illness in Iquitos, Peru at the headwaters of the Amazon. I had contracted the worst case of Chronic Anemia from hookworms in the hospital history – with a hematocrit of 50% norm - and the doctor told me to stop moving or die. So, I sat at a buck-an-hour Internet and typed, and gathered pictures, and completed the 850 page tome. I had always admired the length, breadth and quality of Ayn Rand's Atlas Shrugged, and created a sport work that also did not have a single edit going to press.

EIN: Bo, you and Elvis shared a love of racquetball with Elvis building a court at Graceland and you achieving status as US National Champion and one of the world's top three players throughout the 1970s. How proficient was Elvis as a racquetball player?

BK: Elvis was what I would call a Club Player, like Bobby Fisher was a genius in one thing but a Club Player in racquetball. E had a strong forehand as an extension of karate, a standard club backhand from never throwing a football backhanded, and hit the gamut of serves while preferring the hard drive. Racquetball was a workout and a release for him. He played in white tennis shoes, shorts, and Dr. Nick made him put on safety goggles to protect those eyes for the girls. His headband was white and he always wore a glove, and almost always a rubber suit around the midriff to lose weight. At the time, he was battling a watermelon gut and used racquetball to sweat off pounds to look good for his fans before going on tour.

Make no mistake, Elvis Presley was a great athlete. He played football, rode horses, waterskied, and Kenpo karate. The Memphis Racquetball Mafia told me that he was 'deadly' at martial arts, and I believe that after hooking up with grandmaster Ed Parker that Elvis could manage himself in any scrap. I saw him perform in a video with hands flashing as fast as Bruce Lees, and more rhythm, but Bruce didn't play the guitar.

As for racquetball, Presley's silent physician and my personal friend, Dr. Fred Lewerenz of Michigan stated it best. He told me that Elvis just loved to play. He liked the fast action and release of energy, along with shedding pounds. It made him feel good. Having the court in back of Graceland meant that Elvis could yell at the guys from the piano, 'Hey, everybody. Get dressed for racquetball!' And minutes later the bodyguards, musicians, girlfriends, and some of the pros on hand, would be on the court having a good time.

EIN: Elvis surrounded himself with several premier level racquetball stars. Please tell us about that.

BK: The first I heard of Presley in racquetball was from my competitor and chum, National Champion Davey Bledsoe in the mid-1970s. Bledsoe was supplying Leach Industries (also my sponsor) racquets and sweats to Elvis with one distinct difference: The equipment had Elvis's name engraved in gold on them. It's easier to refer you to the complete vicissitudes of Elvis and racquetball in 'Elvis and the Memphis Racquetball Mafia' that goes from his first racquet to his attempt to open Presley Center Courts that was squelched by Colonel Parker.

The members of the Racquetball Mafia from the pro racquetball tour were Bledsoe, Lewerenz, Dr. Nick and his son Dean, Mike Zeitman, Sarah Green, Stew and Steve Smith, Randy Stafford, and Dave Fleetwood.

EIN: EIN understands Dr. Nick was a more than handy player as well?

BK: Dr. George Nichopolous told me that he introduced Elvis to racquetball in 1968. Nick, who I had played once, gave me the whole spiel. Nick had been the game's pioneer promoter in Nashville, TN as early as 1955, sawing off the handle of a tennis racquet to hit a ball around a handball sport in wintertime. Racquetball was born! along with similar innovations at the same time across America. Nick showed Paddle Racquets, as it was called then, to young players with ambition and talent. Dr. Nick had begun treating Presley in 1967 for 'saddle sores' from so much horseback riding on the Hollywood sets and motorcycle riding back in Memphis, not to mention the girls. He suggested racquetball as an alternative to Elvis, who loved it. The Graceland Court was built, and a new era of Presley's life was underway.

The best player at Graceland after all the pros went home was bodyguard Red West who fell just short of Open play. Red was an accomplished all-around athlete who took those talents to the racquetball court. Still, my tournament nemesis Davey Bledsoe once challenged one-at-a-time all of E's security to one game to 21 for $100 per man. Bledsoe used an antifreeze bottle as a racquet against Red, Sonny, Dave Hebler, and the rest … and won each bet.

EIN: Why did racquetball take hold in the US while squash was prominent in other countries including Australia and Pakistan?

BK: Racquetball took America by storm in the 1970s because the nation psyche was suited to it, as opposed to Australia with its rugby and India with its squash. I know squash from having played a little and buddied with world champions Heather McKay and Vic Niederhoffer, and I knew rugby in preferring those rougher sports such as it, football and wrestling to the one that I happen to be better at, racquetball. But in USA in the 1970s the Americans' brains were pacing fast and furious. They demanded a bouncier ball and bigger and bigger racquets, until the game nova'd at the end of the decade and literally fell in on itself like a black hole. Elvis, racquetball, and I were simply a synchronicity.

My little part in it occurred on top the William B. Tanner Building in Memphis. A little backstory first. Memphis and San Diego were the warring racquetball capitals during the Golden Decade of the 70s. Even before Elvis built the Graceland court in 1975, there was another man about Memphis who was as moneyed as Presley and nearly as powerful. He was called 'the most prestigious man in Tennessee' by the press that he controlled. Bill Tanner and I crossed paths, shook hands, and locked horns a few times. Tanner owned the building named after him rising on Union Avenue above downtown Memphis where many of the racquetball pros whom I've mentioned worked for him. Elvis and the Racquetball Mafia played in a private court on the top floor before the Graceland one was built because Tanner would keep it open all night for them. On one swing through Memphis with Fillmore Hare in the Chevy Van, I stopped by the Tanner building, climbed the stairs, and was jogging laps around the rooftop 18-lap-to-a-mile track when President Tanner stepped out the sliding glass doors and blocked my progress. He gestured grandly over the rail over Memphis that he 'owned'. 'The key to the City is yours, Keeley, 'he said, 'if you join the Tanner team.' He wanted me to go to work for him, which included meeting Elvis. I explained that I had a previous sponsor whose contact I couldn't break, and thanked him for the offer. That was that.

EIN: You saw Elvis live in concert in 1976. What were your impressions of Elvis' performance?

BK: On April 24, I saw Elvis in concert at the San Diego Sports Arena. I had a close enough seat where I could smell his sweat and the pheromones of the gaggles at stage front. His voice was good, and I was impressed by a pro. A pro performs whatever his circumstances and his worst day is your best day. I liked what I saw. His voice was as rich as the day twenty years earlier I had heard him belt 'Hound Dog' on a transistor radio.

Then, on June 11, Davey Bledsoe shocked the racquetball world by plowing through first me and then Marty Hogan to win his first National Championship.

Two weeks later, on June 26, Elvis gave his last concert at Market Square in Indianapolis for a crowd of 18,000.

Back on the Graceland racquetball court, Elvis looked pale, weak and overweight, but there was nothing to suggest impending death.

About that time Bledsoe beat the three bodyguards with an anti-freeze bottle –Red and Sonny West, and Dave Hebler- who released Elvis: What Happened in a UK serial that was later published as a book in August, 1977.

On August 16, 1977, a few hours after leaving the racquetball court, Elvis succumbed. I wrote that Elvis had played racquetball to death.

EIN: Bo, Elvis' Humor Girls, Guns & Guitars. What gave you the idea for what is a unique book in the Elvis literary canon?

BK: Now we're talking Elvis! After the 'Elvis and the Memphis Racquetball Mafia' story I thought I had caught a tide. I would convert the article into a book Elvis and Sport. I don't go half-way on things and quickly identified and ordered from the top forty-five biographies by those who knew him: His bodyguards, step-brothers, musicians, girlfriends, housekeeper, doctors, neighbors, and kin - only firsthand information. I also had taped interviews from a dozen of the Memphis Racquetball Mafia. In each book and transcript I highlighted all the aspects of E in Sport.

EIN: How long did it take you to research it?

 BK: A year later, in mid-2014, I had sufficient material for a lean book on Elvis in Sport. As I had read the biographies, early on I had noticed another strong theme in the Presley's life – humor. It never stopped. It was as prominent as girls, guns, and guitars in his life. I had also highlighted his humorous moments in the forty-five books. I liked the humor better than the sport. I methodically cut each of thousands of comic instants from the research, including EIN, and ordered them chronologically. Then clipped the same anecdotes told by different people – they matched, and there was little irregularity, making Elvis Presley truly a connoisseur's funny fellow. With this bunch jiggling like three pounds of carrots, I fashioned Elvis' Humor.

EIN: Apart from sourcing examples of Elvis' humor from published sources you also interviewed people who knew Elvis. Who were some of the most interesting people you talked with?

BK: The 'live' people provided the best visions into the comic life of Elvis, and when they started crying on the phone, whether from joy or sorrow at the loss of their joy, then it was interesting. Especially helpful were Stew and Steve Smith, Dr. Nick and son Dean, Randy Stafford and Dave Fleetwood, Dr. Lewerenz, and I'm sorry if I've forgotten others. To pick one would be to slight the others, which would not fare well for me next time on the racquetball court.

EIN: Bo, what are some of your favorite Elvis comic moments?

BK: I like all of the moments about Elvis and his pets – the chimp, dogs, horses, and menagerie in his swimming pool. The girls' ones get redundant like eating steak every meal. The appearances of Colonel Parker are stunning – and now we know who tickled E's funny bone. The money and gifting yarns show what Presley was really made of. The media ones portray a graceful leader among leaders. Hollywood is crazy and that's why E had to be funny. There are just too many anecdotes sitting on the smorgasbord to assimilate and dispense a favorite one or two. That's why the collection should be a one-a-day reminder like a calendar of proverbs rather than a one-sit read that kills you laughing.



 From the cheap seats, it appears that when you have (1) massive money printing, (2) a huge expansion in global productive & transportation capacity, and (3) probably the largest labor glut in history, then you have bubbles in assets where a demand/supply imbalance will not be brought to equilibrium by increased production (art masterworks, Vancouver/London/Sydney real estate, gold, equities, bonds), and you have disinflationary pressure on everything else.

Stefanie Harvey comments: 

I heard an interesting piece on Radio Times yesterday where Rana Foroohar was interviewed. She said one issue is that only 15% of the money in the market goes into the economy and 85% stays in the financial system itself, which is an inversion of what it was designed to do (later mentioning Adam Smith - refreshing.) She has a new book called "Makers and Takers"

From the blurb (bold/emphasis mine as an industrial scientist.):

· Thanks to 40 years of policy changes and bad decisions, only about 15 % of all the money in our market system actually ends up in the real economy – the rest stays within the closed loop of finance itself.

· The financial sector takes a quarter of all corporate profits in this country while creating only 4 % of American jobs.

· The tax code continues to favor debt over equity, making it easier for companies to hoard cash overseas rather than reinvest it on our shores.

· Our biggest and most profitable corporations are investing more money in stock buybacks than in research and innovation.

Not sure that I agree more policy is helpful. Smart people make money on churn so not too surprising.



 In the depression, McDonald's has the best service, prices and clean restrooms.

In the boom, it's the opposite.

It's been that way since 92 when I came home from Iraq.

Simple labor anecdote, but perhaps predictive for the HR department of the mega cap.

Yet that has nothing to do with financial market, minus McD common.

Have the banks paid all their fines?

That's an observation of one.

Certainly the Feds customers need a shift in the curve.

Once the system filled the two trillion dollar hole and paid the Fed's bosses, regime shift.

Elections provide political cover.



As much as one admires Zweig, especially since the dad was from Brighton Beach and the grandmothers used to talk about the grand kids, it would be good to test whether advancing volume versus declining volume ratio of 8 or 9 to 1 is bullish or bearish. Theil had a nice article on this circa 1964 in the Journal of Business using information theorem– a nice introduction to same– and the Doc and I have tested it in the subsequent 52 years which might be even more relevant. Whenever you have a hypothesis of importance, always ask yourself, "have you tested that?".



 Merkel does not see a banking crisis in Italy. She is waiting for Italy to intervene and save the banks with BAIL-IN and only after be able to save Deutsche bank with bail out. It would serve an avalanche for Deutsche bank …

Stefan Jovanovich writes:

Does anyone think that the world's central banks can "control" the relative prices of their national currencies? I don't; but I have the luxury of being completely ignorant about what and how GZ and others do in the trading of IOUs. I just see it as analogous to what the national Treasuries tried and failed to do with bi-metallism; no matter how much they huffed and puffed, they could never bring their official ratios for the prices of gold and silver into balance with what people bet they were worth.

If central banks cannot, in fact, "control" the exchange ratios of their own legal tender, they certainly can "control" the price of their domestic debts. No one doubts that the Fed or the Bank of Japan or the Bank of China or the Bank of England can determine what their national Treasuries will pay as interest on the country's central government's new borrowings and outstanding debt.

Can the European central bank prevent the Bank of Italy from funding whatever additional borrowings the Italian central government wants to make? Even those of us who are completely ignorant know that the answer is not going to be determined by "the law" but by the same politics that always govern essentially closed systems of interest. To put it in 18th century parliamentary terms, will the interests of the owners of the sugar islands and the city merchants who did their finance win out once again or will there be another tax revolt in the commons? So many people everywhere in Europe now get their money direct from the EU just as so many people in England got theirs from the Navy; but that is of no benefit to the people who are on the local government and private payrolls. They want their own payouts.

I confess I do not understand the notion of "peak" debt. The direct liabilities of the central governments are "high" but they are insignificant compared to the off-balance sheet promises that have been made for future retirement, medical and welfare payments. Governments can keep rolling over their debts and adding to them as long as they want; they have a zero interest credit card from their central banks. The only risk is that the professional scolds will (1) demand a "strict accounting" that brings those never-never plan obligations onto the country's official balance sheets AND (2) decide that the poor will have to go first in terms of "belt-tightening" (after all, they are all fat and should go on a diet).

Rocky Humbert responds:

Stefan's post reminds of Ben Graham's quote: "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

In the short run, the Bank of Italy, or any Central Bank or any Government or any enterprise for that matter, can do whatever they choose. In the long run, unsustainable policies are reflected in the exchange rate; or the cost of capital; or the access to capital; or in the wealth of a nation.

Right now, the ECB's policies have seemingly altered both the signals from markets and what defines "long run." I am not unique in making these observations of course.

My database shows that from May 1973 to September 1982, the Italian Lire declined from 800L/$ to about 2000L/$ — and it traded in a extremely wide band (+/- 50%) subsequently — until the conversion to the Euro. In the post-Gold Standard world, the Lire (and for that matter, most paper currency purchasing power) have always moved in one direction: down.

The current Euro regime is unprecedented in all of our lifetimes– it's creating all sorts of novel imbalances — both similar to and different from previous fixed exchange rate periods (which always resulted in violent or gentle devaluation). The biggest imbalance of all is being created by the ECB's QE buying of sovereign debt — which essentially allows the Bank of Italy to be immune from the discipline of the market. I don't know how this will resolve, but the Greek experience of the past years is one possibility.

The discussion about Scott's annuities are not unrelated. We have been in a protracted period of inflationary quiescence. When inflation and interest rates are low, people focus on "income income income." But when inflation is high, people focus on preserving their purchasing power. The most dangerous mistake any investor can make is taking for granted certain embedded truths — which turn out not to be a truth, but rather an assumption.



Say that you have a yearly goal of 40% and you achieved in 7 months, or that you have a monthly goal of 10% and you achieved it in 11 days. Do you stop trading at this point? Or do you continue trading thinking the luck is on your side at the moment? Or do you adjust your goal and continue trading with the new goal?

Cheers, Leo

Victor Niederhoffer writes: 

The market will sometimes go much below your goal and to even things out you have to make as much as you can above your goal. Furthermore, the market doesn't care whether you've achieved your goal or not, it will always go its own way, and if you can make a profit on an expected future value basis, you should go for it. Luck is random, but the skill will persist. Apparently you or a colleague has it. Don't throw it out.

Andrew Goodwin writes: 

Your answer may rest in the structure of your money management operation. If it is a hedge fund structure, then heed the following points made in a post on the If you get behind you must know how you will deal with the moral hazard. Since you are ahead greatly, then your incentive is to take the money unless you know with some certainty that you cannot fall below a high watermark and will likely increase your gains.

1) The management fee, over time, usually does not generate enough income to operate and the profitable traders expect bonuses even when the overall fund loses.

2) The winning traders will leave to other firms or will start their own if there is no performance fee gathered to pay them.

3) If fund performance goes negative then high watermark provisions normally go into action. This can lead the manager to swing for the fences or simply close shop.

4) The wind down of the fund can deplete the investor assets and lead to general price markdowns of holdings especially if others had similar strategies and exposure.

5) The fleeing investors will enter into a new fund with a new high watermark and start the process over again.

Here is where the game gets interesting. The author suggests creating exotic option outcome provisions that he calls "Modified High Watermark."

These include A) Reset to zero under certain circumstances. B) Amortize the losses over a period so that the manager can still earn some incentive fee. C) Create a rolling period for the high watermark so that after a time the mark level drops.

His modified high watermark solutions might keep the manager from swinging when the performance fee looks too distant and might keep genuinely unlucky managers around until their skill manifests itself in due course.

Nigel Davies writes: 

There's a case for reducing leverage as one's account size increases so as to reduce the 'risk of ruin', and for some this might be done in a very systematic way. Another question is if there's a point at which one's financial goals have been achieved, especially if one's dreams lie elsewhere. 

Bill Rafter writes: 

You did not specify if your annual goal of 40 percent is based on analysis that suggests a 40 percent return is the mean or maximum. Let me assume that the 40 percent is the maximum annual gain you have ever achieved, if only as an academic exercise. Thus the 40 percent is your quitting point based on perfect knowledge of a particular system.

How frequently have you been calculating your forecasts (or inherently, your position choices?) As was learned from the Cassandra Scenario, "that more-frequent forecasting is inherently profitable, even more so than some forms of perfect knowledge." So:

(1) If 40 percent is your mean annual gain, then continue to trade at the higher level. That is, if you started at 1000 and now have 1400, continue to trade the 1400. Obviously it would also be good to shorten your forecasting period. (2) If 40 percent is your maximum expected gain, then pocket the 400 and start over trading with 1000. Shortening the forecasting period is not a given in this case.

Phil McDonnell adds: 

Let us assume the market has a normal distribution of returns and that the probability of making a 40% return or better, at random is 15%. Then if you decide to take all profits at the 40% level then your probability of a 40% gain will double to 30%. This result follows directly from the Reflection Principle.

The above assumes that your returns are random and implicitly assumes that you have no ability to predict the market. To the extent that you can predict then you should make your decision on your current outlook and not on any arbitrary price point like 40%.

Gibbons Burke comments: 

It seems to me that one should be disposed to let the markets give you as much as it wants to give you without putting artificial limits on that phenomenon, but that practical limits should be enforced on how much lucre it can remove from your wallet. Is more return ever a bad thing, assuming that the distribution of returns is not serially correlated? As our gracious host has noted, the markets have no idea how much money you have made or lost, so the idea of reversion to the mean on an equity curve makes no sense in the same way that it makes sense for market prices which are making repeated excursions up and down seeking the implicit underlying value of the thing (the ever-changing "mean" to which the market is always reverting.)

So, setting a goal to achieve a 40% return seems a reasonable thing to do, but I submit that this goal should be accompanied by the qualifier "or more" and be willing to let a good thing continue.

Regarding the 'limiting losses' idea, in the Market Wizards interview with Jack Schwager, Paul Tudor Jones admitted to having risk control circuit breakers in place so that if he ever lost more than x% in a month he would shut down trading for the remainder of that month. Limiting and rationing losses in ways such as this seem like a reasonable discipline if one is going to set limits on how the market will affect your stake.

An old floor trader's trick I learned while reporting on the futures pits is that if a trader enjoys a windfall gain on a trade, and reaches a pre-figured goal (or more), he takes half the position off the table as a positive reward for being right and taking action on that conviction. Leave the rest of the position on to collect any further gain which the market might want to provide, but he raises the stop to break-even for the remaining position (not counting the profits already taken off the table) in order that a winner would not then turn into a loss. If he stop get hit, he still has half of a windfall gain return in the bank. If the market continues in a favorable move and another windfall gain is realized, the process can be repeated.

This tactic has an anti-martingale character which some more bold traders might object to.

All these thoughts are mostly elaborations on the first two fundamental rules of trading: 1) let your winners ride, 2) cut losses.

Stefan Martinek comments: 

This loss avoiding behavior was well researched by Paul Willman and others. It is observed within traders of all levels approaching a bonus target; cutting off is generally viewed as irrational and Willman discusses how to adjust incentives to get a trader back to risk neutrality. Which reminds me more general but relevant quote from W. Eckhardt: "Since most small to moderate profits tend to vanish, the market teaches you to cash them in before they get away.

Since the market spends more time in consolidations than in trends, it teaches you to buy dips andsell rallies. Since the market trades through the same prices again and again and seems, if only you wait long enough, to return to prices it has visited before, it teaches you to hold on to bad trades. The market likes to lull you into the false security of high success rate techniques, which often lose disastrously in the long run.

The general idea is that what works most of the time is nearly the opposite of what works in the long run.



(BUY) 2 CL Aug16 @45.40
(BUY) 4 CL Aug16 @45.25
(BUY) 4 CL Aug16 @45.05

(BUY) 5 ZB Sep16 @176-01



 "Gold has 'unlimited upside' because the Fed is 'confused' on policy: Trader"

I am not bearish on gold trends but don't like some sentiment indications. Stories like this are disconcerting. Once the sales traders at the institutional brokerages start talking unlimited gold prices on TV then it shows that the reflexivity experts have won. One group the reflexivity experts know about is trendfollowers. How much money will be made on 20 day breakouts versus the 20% vig the managed futures experts will pay themselves? Part of the common core curriculum should include counting bars in candlestick charts apparently. They can about percentages later.

anonymous writes:

Prices have, do and will rise and fall. Gold included.

But I'd switch this notion of "unlimited upside" from gold to fixed income. If JGB's can yield negative 0.25%, why not -1% or -2%? Same for bunds. Same for UST's…

Who among us can now say what the upside is on fixed income prices?

(This is not a bullish prediction. Rather it's an observation. And a reminder that trends go further and last longer than reasonable people expect.)

Ad absurdem, if the 10 year libor rate is negative 1%, then gold will be a positive carry investment– and the forward price will be well below the spot price. Either that must happen or the arbitrage/gold lease/borrow markets will break down.



 When thinking about Italy and the EU, consider some of following:

What has been the economic growth of Italy while in the Euro?

What has been the economic growth of Italy since the the peak of the financial crisis in 2008?

How much productivity has Italy lost since being in the Euro?

How large is the Italian debt?

Can the ECB bailout Italian debt even if they tried?

What is the size of Italian NPL's?

What is the current trend in Italian politics and what events are upcoming?

Is the German/European electorate willing/able to bailout Italy?

Is the straight jacket of the Euro too much given both fiscal and monetary limitations?



 Portugal's strategy in the final reminded me a lot of a method of deception.

They gave France the possession with some space but never really let them create big opportunities while they were getting ready to hit on counter attacks and free kicks.

I thought Ronaldo's injury helped the strategy giving the false sense of security to France.

It was the perfect deception.



 What is Life by Erwin Schrodinger must be one of the important books of the 20th century as it was cited by Watson Crick and Rosalind Franklin as their theoretical inspiration to discover DNA. He asks what the basis of life is from a physics and chemistry point of view. Modern physics is based on statistics and the so called laws are only averages based on the law of large numbers. This observation hit me as profound. At smaller numbers randomness rules. As an example when a gas is present at one end of a container at higher concentration it will diffuse as a result of random motion with slightly more atoms going left than right.

We've seen that trends appear in random time series. In real markets the upper bound is infinity and the random tendency would be for prices to move upward with nothing more than random action. This not even considering the innate urge to produce, the need to consume and innovation and progress. Here at near all time highs this is something to consider



So I read that people were holding over 7 trillion of negative yielding government debt instruments. I'm guessing the negative yields were designed to convince them to get rid of the securities, and presumably invest the proceeds in equities.

You're already seeing a bit of this in animal spirits type buying of the utility, staples and reit sectors- but is this something that should continue? Surely pension fund managers don't have negative return targets so I'm just imagining a meeting where you're underperforming your 6% a year target and trying to justify why you own 100 billion 2 year bunds and are paying almost a % a year to do so

Additionally I would never actually invest on a DCF but shouldn't negative rates severely increase preference for high growth stocks, as the dividends 10 years out are worth almost as much as those paid today? It seems like the knee jerk outperformance of slow growth div yield stocks would be incorrect directionally in this case



 Last night (Friday), some of the key players of the 1966 World Series-winning Orioles team gathered to reminisce about the magical 1966 season. There were some notable events that season. The "Here" pennant, the Ron White catch, the back to back HRs in Game 1 of the Series. It was a year the Birds flew high—and they've never been higher since.

The year was worthy of any Trivial Pursuits game. Jim Palmer, the last pitcher to win against Koufax. Davey Johnson, the last hit against Koufax. Willie Davis (the "tenth Oriole"), the first player to commit three errors in in a World Series game (I recall being in the same inning, but I'm sure I'm wrong on that one). The excellence of the pitching staff in the Series. The tightness of the infield.

50 years since that season.

It's not apparent today, but the 1960s, at least until 1966, Baltimore was very much a football town. The Colts had won some championships, and the stadium, looked at from above, even looked like a horseshoe. In the early-to-mid 1960s, there were some boys without a Unitas crew-cut, but not many.

And one should not forget that in 1966, Frank Robinson, the man who taught the Os how to win for championship, could not find a house to rent. He was black and many landlords refused to rent to him.

The videos are worth a look. Maybe not at the level of the post-game ceremonies at the closing of Memorial Stadium in 1991, but a look all the same.

I just wish Frank had been there, too.

There would be other notable seasons—the 1969 collapse, the 1970 Orange Crush dismemberment of the Big Red Machine, the 1971 pitching staff and the 1979 Orioles Magic team, and Cal's record. But the Birds never surpassed 1966.



 It seems like Alabama is a good state for kids and all to learn about paleontology.

"Alabama's hidden role in Darwin's theory of evolution":

The snail was about 40 million years old, he said, just like the thousands of fossilized clams and seashells littering the surrounding bank. This spot, known as Claiborne Bluff, has been famous for its ancient fossils since the 1800s. But there is something else that excites Becker about the site. "These fossils in Alabama played a part in the development of Darwin's theory of evolution," said Becker, a professor at William Patterson University in New Jersey. "It all goes back to Charles Lyell."



Assuming where we close today as of now on $TLT (143.3'ish) and $SPY (212.2'ish), what's common between today and 4th Dec 2006, apart from you and your spouse's birthday being 8 Jul and 4 Dec :)



Gambling: It is legal at the national level in many countries. A notable exception is the United States. However, this may not be the case for very much longer. And investors could be the ultimate benefactors from such legislation. If a bill to allow gambling over the internet is presented and passed by the US Congress, it will have concluded a long and winding road to ratification.

In 2006 the 109th US Congress passed the Unlawful Gaming Enforcement Act, with the objective to prevent online gambling for people in the United Stated. The law was written to prevent the use of certain payment instruments, credit cards and fund transfers for unlawful internet gambling, and for other purposes.

This act prevented a customer's ability to electronically transfer funds to and from banks within the US to online casinos. This effectively stopped all wagers on gambling websites by gamblers in the US.  The act specifically exempted fantasy sports leagues, which gave rise to the monetary online fantasy sports competitions that we all see advertised on television. In addition to the fantasy sports league exemption the act exempted all games of skill.

This loop hole aided the rise of internet poker until April 15, 2011– a day deemed Black Friday by the online poker community. This was the day the 2 major poker internet poker sites stopped offering real money games to US players. It was also the day that Howard Lederer, the owner of Full Tilt poker refused to return over 400 million dollars in deposits to his players.

In December of 2011 the DOJ gave the gaming industry an early Christmas present in the form of reversing the long standing policy of the US government.  Controversially, the DOJ stated that all games that are not related to sporting events fall outside the reach of the WIRE ACT, that the opinion was rooted in.

Since that time the executive leadership of several major casinos reversed their original positions of being against online gambling to being for it. Opting to take the “if you can’t beat them join them” approach, several but not all US based gaming companies have heavily lobbied politicians to legalize online gambling in the US at the Federal level. And the H.R.2282 - Internet Gambling Regulation, Enforcement, and Consumer Protection Act is positioned to do just that.

It’s noteworthy to mention that the legislation that has been referred to congressional committee has a stipulation that only a few of the major US gaming companies will be issued licenses for these online casinos for the first few years they are allowed. It would not surprise me if the current bill passes the companies that will be issued the initial licenses are donors to the political sponsors of the bill.

As expected some of the international online gaming companies are lobbying to allow ALL gaming organizations to compete for licenses in the US online domain. 888 Holdings is a world market online gaming company within the based in Gibraltar. 888s recently appointed CEO Itai Frieberger recently stated: “888 is creating an infrastructure for U.S.-based internet gaming similar to what the company has accomplished in Spain and Italy.” The major US gaming companies like Caesars Entertainment and MGM are pushing back on this request for competition implemented through congressional means. But because the there is no Amendments in the US Constitution that currently forbids internet gaming there are work a rounds.

The 10th Amendment of the US Constitution expresses that anything not specifically covered in it gets referred to the States for enforcement consideration. The states of Delaware, New Jersey and Nevada have taken advantage of this and legalized online gambling. The online gaming companies  in these states offers players’ access to games that are consistence with land based casino operators from the comfort of their own home or mobile device. 

The online gaming industry in the United Kingdom, which would likely parallel a US market, has seen exceptional growth in the last several years. And as new markets continue to open up, the growth and revenue will likely continue on this upward trend.  Some internet gaming companies have even seen an increase in new depositors over 25% from previous years. If these types of results continue it is fair to assert that online gaming operators will financially benefit from the legalization of internet gambling in the US.

Many of the internet gambling companies have a variety of gambling options for their players.  They include online poker, casino slot games, live table games and bingo. The diversification allows the companies to reach a wide variety of players from the 21 year old online poker wizard to the 67 year old retiree, and as the competition between casinos increases a player can expect increased benefits  from the casinos to ensure their player loyalty.   

What is consistent among all the online gaming sites is that the content that is offered to players orbits around educating players on how to play correctly. I believe by doing this the online gaming companies are striving to ensure that when players do play at brick and mortar casinos they will lose less money. This reduces the profitability of those establishments while they keep the same overhead costs. With the low overhead when compared to brick and mortar establishments, the online casinos rely volume to drive profits. And the more markets they are in the stronger the profits.

As the US market expands the annual revenues yielded by online gaming companies is expected to grow. It is the position of this writer that despite moral resistance by some organizations, as well as the owners of some gaming companies, the legalization of gaming at the Federal level is inevitable. Tax rates will vary from state to state and in 2014 New Jersey collected 160 million dollars in taxes from online casino gaming operators. This fell short of the predicted 180 million dollars but the discrepancy was attributed to underestimated startup costs. This tax revenue is expected to grow, and I just cannot fathom legislators will pass on this mostly passive revenue stream.

Some may be inherently skeptical of the fairness of online gaming but as renowned Gaming Law Expert, Criminal Defense Attorney and co-author of the classic text Blackjack and the Law, Robert Loeb states: “Over time, there may be certain online gaming casinos that will gain a reputation for fairness and honesty, ones that casual recreational gamblers can enjoy.”  And with market organically creating third party mediation sites, safe guards are developing naturally. Also, free gaming analytic websites exist to ensure that the mathematical integrity of the casino games offered have been, and can be, properly evaluated. This offers additional assurances to the player.

As soon as the congressional committee is able to set up regulations to protect players from actions like that of Lederer, legislation will be presented, and voted on by congress. So it seems that casino gaming is destined to expanded its reach not only to cites outside the gaming metropolises of Las Vegas and Atlantic City, but also onto our laptops, tablets and smart phones.

The author is on Twitter @byth3numb3rsInternet



 Clinton Cash

Director: M.A.Taylor

The important doc to see, talk about, bruit to neighbors and associates afield, is Peter Schweitzer's Clinton Cash–the weapon of choice to launch at the mentally softened, perhaps unthinking, nepotistic or chauvinist-without-cause, etc., HRC voter.

Seen at a private showing with a particular audience in attendance, we hoped CC would get maximal showings—whether that involves movie venues, TV, cable or other screenings in the lower 48, Hawaii and Alaska. Originating from the best-selling 2015 eponymous book by Peter Schweitzer investigation into the 1997 Clinton Foundation's alleged pay-to-play deluges of cash donations in the millions of dollars for alleged favors by the then-Secretary of State Hillary Clinton, and the concomitant spiked speaker fees for ex-President.Bill Clinton.

Clinton Cash outlines the behind-the-scenes money reservoirs that fall into Clintonian hands, either directly by country leaders or organizational heads squirreling funds for favors rendered, or via the Clintons' "charitable" foundation, It's no secret these deals went largely unchallenged, despite 'creative accounting' that whitewashed and disappeared many of these windfalls that never made their way to the storm-ravaged- or earthquake- or disease-infested victims of calamity. Divulgence extraordinaire to say that the foundation set up for charitable purposes, so-called, provides a meager 10% of its available monies to actual charities; most of the bequests are actually through-lines to other, more open-handed and monitored real charities.

In a sense, the Clinton Foundation parallels Planned Parenthood in that thousands of comprehensive clinics exist that provide multiple health-care services, while Planned Parenthood, reaping the annual governmental underwriting bumper crop of close to half a billion of struggling taxpayer dollars, is a thin wedge of a provider. A service provider that, were it to disappear, would make no discernible difference in overall women's "health," which proponents seem to conflate with abortion services, not a health-care concern at all. A pregnant woman is not ill. She is not in need of healthcare per se. The ancillary few services provided over abortion are easily trumped by the myriad clinics across the fruited plain.

In just such a fashion, the Clinton Foundation lines its own and staff pockets, deigns to drop a sliver of its impressive foreign funding to a few chosen and often partisan recipient charities. It boasts a lot of mysterious sources in its 19-year history.

The film covers the earthquake relief efforts in Haiti, various African dictatorships, East Asian satrapies, all of which somehow entertained the Clintons lavishly in one way or another, yet failed, curiously, to notice any dent or appreciable difference in the ordinary populace presumably needing benefits promised by the lustrous headliners being entertained and paid for their "advice" or "aid."

As a documentary, it is adequate, but the value of the doc lies of course far beyond an assessment of just its production values and narrative fealty, lushness of cinematography or the like. Investigative efforts like this take many hundreds of hours of research, late-night toil, uncomfortable quarters, fact-checking, back-stopping and…money.

It is a wonder the film—or the book—got made at all, given the many tricks up the Clintonian sleeves, and the many unexplained disappearances of unwelcome reporters or witnesses, whatevers.

Understandable and SOP that Hillary acolytes and proponents will debunk or try to pooh-pooh the contents. If only a portion of the film is factual and true, the Clintons are, as Roger Stone's new book repeatedly characterizes them, epic grafters. Con-men for the ages.

But most of us already knew that. Still, it is instructive to how corrupt this imperial family has been and continues to be. If one is wavering before the coming election, this is more potent, and more damning, than anything connected to Trump steaks, wine or water.

Look for "Clinton Cash" from your various providers. Ask for it at your multiplex.

De Palma

 Directors: Noah Baumbach, Jake Paltrow

A fascinating and by no means entirely hagiographic week of recording the master filmmaker—he wore the same shirt throughout shooting, for continuity's sake—of the some-say misogynistic but suspense-drenched filmmaker.

Speaking directly to the camera, the genial, occasionally self-mocking.De Palma discusses his methodology, why he chooses certain tracking angles, why specific actors are caught from various heights and distances, and in general gives a chewy, nutritious take on his trademark process, a privileged behind-the-scenes look at an avatar of a certain generation of great lensers, up there with Coppola, Scorsese, Spielberg ,and our other faves. De P delights in talking about the young Di Nero and Pacino, whom he discovered in his own early filmmaking and school. De Palma unabashedly honors Hitchcock in camera setups, plotting, framing, suspense sequences and so forth. Provocative, tantalizing excerpts of his many iconic and still virulent films include , Sisters, Obsession, loosely inspired by Hitchcock's Vertigo, Dressed to Kill and the taut G-man drama, Untouchables,. high-school nightmare Carrie, nose-candy Scarface, and illegal eagle skeeves, Carlito's Way,

There is much adult content, violence and sudden gore, which cut into the overall enjoyment, as did scenes involving women not being treated all that chivalrously. De Palma's recollections and powerful opinions about his film, and others' filmmaking, are worth the discomfort. No one is forcing anyone to see those films that handle women as props for bloodletting and screams.

As a doc, it ranks up there with the recent "Brando on Brando"—almost mst-viewing for aficionados of the genre.


 Director: Roger Ross Williams

Someone commented at the screening that this was a good title. Ron Suskind, a writer for the Wall Street Journal, and his wife noticed, early on, that their younger son was not functioning to age level, and seemed to be blocked off from normal routes of communication and interaction.

Owen Suskind, the subject of this immersive family saga that reads larger than one family's herculean effort to rescue their child from the closed prison of autism, is a good-looking, active boy until autism makes its appearance at 3. The remarkable aspect of this family and boy's fight to become an integrated person holding a job, able to interact, and capable of reasonable assisted function for most intents and purposes as non-challenged youth do, is the 'magic.' Obsessively watching every beloved Disney 'cartoon' figures, how they speak, walk, handle crises, enabled Owen to cross-link life with how the Disney animated characters in all the garden of these much-loved films portrayed life and interactions.

Autism used to be a relatively rare disorder. It has become ever more prevalent in our society, now closing on one autistic child in under 100. For most, there is no 'cure.' Its etiology and sometimes, its course is still not well understood, though progress is being made. Slowly.

The film switches between soulful action-sequences in black and white drawings depicting emotional moments and transitions of the protagonist's isolation and disconnectedness, alternating with well-inflected Disney characters and voices (expertly mimicked by Owen, and which we were delighted to see and hear the zany Gilbert Gottfried in the flesh animate those characters he portrayed in the films) The Lion King, The Little Mermaid, Peter Pan, Snow White, The Jungle Book, Pinocchio and Beauty and the Beast, among his favorites, reignited, the power of speech long thought gone forever. Other needed skills accreted with showings and work with professionals and those amazing, loving parents. Disney became the tool of choice for dozens of autistic youth, presided over by a thrilled Owen in home and institutional showings.

Remarkably, across the country, the same phenomenon has been noted, with youth of both genders being roused by the empathic characters in these moral tales of animals and humans.

We were initially leery of seeing the film, but by the end, there was an audience full of smiling, delighted viewers, whose enthusiasm was heightened even more by the thrill of meeting the late-20s Owen and his loving, persevering family, Gottfried and some of the doc film principals.. Even without the vivacious Owen and company, the sentient adult cannot help but admire this rather amazing trajectory from darkness and shut-down to swimmingly present and functional.

And the film reminds us all how fraught with adversity, crisis and obstacles everyday life is. Owen is not alone in wishing, along with Peter Pan, that he could live forever in the protected cocoon of childhood.



"The emotional arcs of stories are dominated by six basic shapes"

Kurt Vonnegut on the Shapes of Stories

Victor Niederhoffer writes:

And what would a comparable study of market stories show, and can we learn anything from literature.

Bo Keely comments: 

If you can ascertain the personality of the market then you will know its emotions and therefore its shapes. Start with the personality of the market if that isn't too far a stretch of anthropomorphism. Likewise every story has a shape. I prefer the inverted pyramid from newspaper reporting, but my mentor Art shay taught the arc of the home run to shape a story. 



 The people driving the EU would have been for awful divorce attorneys. If you want to consummate a deal quickly, you don't stand there saber rattling. You take a deep breathe and acknowledge that there's some tough negotiating ahead that will take time. The notion that you're going to be punitive in the hope of intimidating other nations from leaving suggests a lack of understanding of human nature. (Then again, it is the EU.) Alternatively, if speed of the divorce is your focus, accepting many of the other party' demands is the way to proceed.

The EU is a confederation, and as such, survives only by providing a compelling reason for its member states to maintain their membership. While the EU has its problems/limitations, it could have been reformed. That it wasn't (and hasn't had much discussion of that need) suggests that the UK will not be the only country leaving it. For the purposes of trading and harmonization of legal matters, the EU has a raison d'être.

It's worth noting that you've had a sustained period when there was no fighting in Western or Central Europe. Has there been a similar period before? Perhaps between 1815 and 1870? I guess that depends on how one looks at 1848.



 If memory holds, home runs are a bullish market indicator and for 2016 we are on record pace right before the All-Star break. Congrats to the Orioles for breaking the June record for team homers. At this rate they could become the all-time HR team beating the late 90s Mariners.

Just as media-chatter of the league's dominant pitching and the ill-effects of the defensive fielding 'Shift' on game play, the ever changing cycles come back to roost.

Ball go far: Hitters mashing home runs at near record pace

Happy and safe 4th to all!


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