Category Archives: Economics

Life is Serious. Life is Feast. And The Only Thing We Have to Fear…

When I was 19 years old my friend Matt Workman committed suicide.

We were best friends since the day we met in kindergarten.

Please keep reading. Because the reason that I wrote those last two sentences was not to bum you out. I wrote them to remind you, me, everyone, that, in a time of great fear and potential upheaval, this life – you know, the thing that ALL of us are doing? This life: that is ALL that it is – and it is only just that.

It’s only life.

This guy lived both seriously, fully and fearlessly

This guy lived seriously, fully & fearlessly

To err is human and MAN am I human! So I try my best not to render judgments, either on people I know, or on the homeless dude asking for change, or on people in positions of power, or celebrities, or people in completely different cultures, because I’ll never know why/how they’re in the position they are in. I’m a man now. A real man. I know who I am and what I’ve done. One could make an argument that these are the only two things that I do KNOW.

I value my time, I do not suffer fools, I love my friends and family with all my heart, and I try to do the best I can with my art and my career.

Do I have opinions? Damn right. Do I make judgments? Of course. I already told you, I’m human as fuck. Do I sometimes indulge, either in myself, or in the illicit, or in the taboo? Yup – I’m not just human as fuck, I’m a writer! A writer with a chip on his shoulder and an almost animalistic type of determination to confront the reality of experience, to do things before the bell is rung, compelling the great scorekeeper in the sky to make a tally on the sum of the life of Jefferson Rich.

A German friend once told me: “Ernst ist das leben.” Translated: life is serious. Very German, yes? I misunderstood him at first, I’d thought he said, “Ernst ist das laben.” Translated: life is feast. Very American, yes? This launched us into a great philosophical debate on the banks of the Spree in Berlin.

It was at this exact place where I came to a profound realization: it's only life.

It was at this exact place where I came to a realization: it’s only life.

My friend made the case for “leben”, or serious. I think his argument was rooted in the newest German generation’s unbound feeling of remorse, guilt, anger, and sadness about the Holocaust. Life is all about what you are doing, he argued – you must see something for what it is, and if it is wrong, you must stand up against it. You must, because if you just passively observe, if you just live only for yourself, terrible, unthinkable things can happen.

I couldn’t dismiss what he’d just said. I thought on my friend Matt Workman, and how, he’d ascended from 15 year old high school partier in Santa Cruz to 19 year old major promoter in the rave/underground party scene with massive celebrity connections and making constant trips to LA, traveling all around the world. But he was only 19. And I saw my boy slipping. I’d ask, “are you okay?” He’d answer, “Yeah.” And then I’d let it go. I didn’t want to be his dad, or judge him, but inside, I knew he was dying and today, I do wish I’d just called him on out on his shit, and told him that he was lying to himself. But I knew it was his life to live… and, even though he never slept, he was seriously struggling with his drug use (back then, we called it X) and one day, he cracked, I knew deep inside, that there was nothing I could’ve done to prevent it.

So life is “laben”, or feast, I argued. And judgment is the enemy of enlightenment. Here I am, thousands of miles from my home, in a city that is an artist’s lucid dream, having a beer and a conversation that is incredible – a conversation that would not be happening if I didn’t believe life is feast, I said. It’s when people become purist, with their uninformed notions of good and evil, right and wrong, I continued, THIS is when life starts to become devalued. It is the puritanical, very serious people I said, that hold life in very low regard, unless it’s life that they can agree with. Look at our countries, I said.

But you just made my point for me! he countered, because people are so flighty with their sense of morality and are so passive, assholes like the Nazis could slaughter millions in the past. And, he said, ominously, something new will assuredly come in the future, most likely in America, because America’s sense of culture and morality was going into the toilet.

My friend warned me that if our moral center is destroyed, and the American public is passive about it, the vacuum could be filled by something unthinkably evil.

My friend warns that if our moral center is destroyed, and the American public is passive about it, the vacuum could be filled by something unthinkably evil.

WHOA! I said, that’s just plain looney, I countered. In a place where liberty reigns, where everyone’s ideas are considered, where self-determination and freedom of expression are held in high regard, yeah, you get your reality show garbage but you also get stuff like Space X, or Obama, and-

-Yeah that’s all naive bullshit, he interrupted. You really think you have liberty? You really think people in your country know how to think critically? Show self-determination? If you have no control over what you want – if you are unable or unwilling to discern what you value – you are a slave to someone else’s passions and you can’t act freely! You think you have any privacy at all? Even with what you think? (Important contextual note: this conversation took place pre-Snowden.) Wake up man. A war is being waged on the American people, and if you, a person who I consider to be one of the greatest, smartest artists in America, if you of all people can’t see it, then we’re ALL in real trouble. Seriously.

I held tight to the crux of my argument. Look, when people get so damn pure, so damn righteous, THAT is when people start rendering judgments about how other people live. And when that happens, what’s next? I mean, what’s so enlightened about that? For example, the white man came to America, used slaves to build up the country, slaughtered Native Americans, because of Manifest Destiny. America has never even started to deal with our addiction to our idea of our own purity, and you see it as we expand our empire. Hell, American soldiers have been in the Middle East for two decades (it was 2010 when we had our conversation) and will remain for God knows how long, all based on this myth of America knows best because America is right and you Muslims, you don’t know what the fuck you’re doing and we can’t leave you to your own devices, because you’re just going to come kill us. So before talking to you, you ALL must submit, you must bow, and surrender everything you are to us. (Another important contextual note: Isis did not exist when this conversation took place.) America had turned the entire world into the Israeli/Palestinian conflict because of our pure, just, American way.

Why wouldn't the entire world want to be as American as a bikini clad babe at a bbq scarfing down a juicy, thick, long... hot dog?

Why wouldn’t the entire world want to be as American  as a bikini clad babe at a bbq opening wide…for that juicy… thick… long… American dream?

Fuck that, we need to live as if life is feast I said, because we never know when it’s going to end. We need to embrace each other, and each others ideas, and refrain from judgment, because as I said, judgment is the enemy of enlightenment. We need to love each other. We need to talk to each other and we need to listen to each other, no matter who you are and DO NOT JUDGE IT!!

My friend laughed at me. Discernment, judgment, THAT IS THE WAY to enlightenment my friend, he countered. If you don’t have discernment, you know what you get? Velveeta instead of Petit Basque, Night Train instead of aged Burgundy, Ghost Dad instead of Ghost, Real Housewives of Wherever instead of The Wire, ugly, stupid, brutal porn instead of stimulating, sexy eroticism.

Okay, that’s a provocative point, but the world goes round based on both sides of the coin. And you NEED both, otherwise, you get that damn purist thing I’m talking about.

Check this out – when we were boys, my friend Matt and I, we would steal copies of his dad’s Sports Illustrated Swimsuit issues, his Playboy and Penthouse magazines, and we stashed them in the woods, where no one else was around. We would look at the pictures (and NEVER read the articles) and we would talk about how we’d make love to each of the women contained inside. What moves we’d do. Which women looked like they were great lovers, compared with which looked like they were just okay. We both knew that we wanted to be great lovers when we reached manhood, and we knew we’d need practice in order to become great. But we were young and didn’t have girlfriends yet, you know? So we would eventually go home, with the vision of whichever woman we’d either seen in the photographs, or girls at school, or teachers, or whoever, we’d use those old Casio digital wrist watches, and we’d use the timer to find out how long we could masterbate before we’d ejaculate, and how long it would take us (if at all) to regain our erections, and sometimes we’d make a competition of who could ejaculate the most times in a night. Then, the next time we’d meet up, we’d report back our results. We kept pushing each other to go longer, to go more times. I even made a game for myself, to see how close to a certain time I could get, like 20 minutes, because I wanted to have the ability to control EXACTLY when I would ejaculate. And our drive in doing this was all in the name of the dream that when the day came, and we were with a woman, she would remember regard us as the greatest lover she ever had, every time.

Without discernment, artistic eros becomes unsexy porn.

Sans discernment, artistic eros becomes unsexy porn.

So, I said to my friend, was what we did wrong? Was it perverted? Was it evil? Because there are a lot of people who would think that if I told them what we did. Should I have been feeling shame for what we were doing? I didn’t. Why didn’t other people do what we did? Because they judged. And if I’d judged it, I would not have done what I did. Would I have become a great lover? It’s the people who listen to those people who say masturbating is a sin, that say that homosexuality is an abomination, that marriage is only a man and a woman… they’re the ones who are all fucked up, make other people fucked up, and have depraved senses of what’s sexy and erotic… because… why?

Because my friend was right – the big, huge, serious, very serious crimes against humanity keep popping up here, in America, and our moral decay is for real.

AND because I was right – we are more and more convinced of our pure, American ideals.

And it’s this purism that is sweeping the American body politic, our policy decisions, and our voting public that has me so deeply concerned. Whether it’s supporters of Delusional Donald, or Crazy Bernie, or Crooked Hillary, America is forging it’s way into a more pure, extremist, shaky land, ruled by fear, of either the candyass narcissistic billionaire who’d rather live in a gold tower with a Napoleonic complex and authoritarian aspirations, or the well-meaning septuagenarian socialist or a duplicitous, dishonest, equivocating, smart, but entitled pragmatist who shuns accountability and rarely demonstrates empathy.

I am concerned because the noise around our country is sending off vibrations of tumultuous conflict…a great disturbance in The Force…so much fear… so many stories of Mexican people getting shipped away… so many stories of a harsher and harsher American dogma… so much fear… a fear that I’ve not felt….since…

Days after Matt had died. I had a lucid dream, and to this day I think he was responsible. I think he pulled me into Nirvana, or heaven, or whatever. I was Neo before The Matrix existed, flying over greenery as far as the eye could see, being told by angelic types that I would be okay, that the pain of living through the loss of my friend would eventually subside, and the dream ended with a reminder of those old digital Casio wristwatches, and how, when we were little kids, we’d used those watches for a far more innocent use – we’d compete as to who could press the stopwatch buttons the fastest – DEE-DEET… .11 of a second… DE-DEET… .08 of a second…

DE-DEET… That would be my lifetime on Earth compared to the age of my soul. And my fear, ever since, has been pretty easy to check.

Life is serious. But it’s only life. DE-DEET.

Life is feast. But it’s only life. DE-DEET.

And the only thing we have to fear…

is losing our connection to what it means to be alive.

We have one world, and if there is but one way, and one right...

We’ve one world & if there is but one way & one right…

...it is that we must all love each other, despite the spite, with all of our might.

…it is that we all have the right to love each other, despite the fights and the spite… with all of our might.

The Trumpenfuror: America Goes Gaga For Fascism

So here we are, 24 hours since some 120 million American people voted and, as can be viewed in my previous posts, my dire warnings notwithstanding, the Presidential Horserace finished with the result that I suspected since the conventions: Plantar Fascist was the winner over Hillarious by a neck.

Donald J. Trump, the up to his eyeballs in debt, “billionaire” income tax avoider, is now the 45th President of the United States of America.

Fear and loathing does not adequately describe the mood of the populace at this point in time. I’d say the more appropriate depiction is one of part desperation, part euphoria, part confusion, with some fear and loathing thrown in for good measure.

I do think that 11/9 will go down in history as a day to mark the cataclysmic shift to the “alt-right” which I think of as the “control-alt-delete” in that they want to turn off all progress, they want to shut down any sort of tolerance – they want to reboot by getting “their jobs” back, they want Mexicans and the Muslims out of America, they want to rub the elites’ and celebrities’ faces into the piss-soaked Nerf ball that is their dogma.

They want everybody who wasn’t a part of their redneck revolution to shit themselves instead of stand up to them when they commit acts of bigotry.

They want to live in some delusion of what they perceive the past was.

The alt-right is just American neo-nazis normalized, and these shitbags feel emboldened to physically confront anyone that they judge wasn’t a supporter of their leader, the Trumpenfuror, who refuses to condemn the attacks of the last 24 hours being levied in his name, nor does he condemn the KKK parades today celebrating his victory.

The first thing that must be understood here is, America has taken a turn toward the fascist. It doesn’t mean we’re all the way there yet, but the legal framework and foundation are set for political opponents to be incarcerated.

The second thing that must be understood here is, blame can be cast in a million directions, but whoever’s ultimately responsible is nearly irrelevant because our future is either 4 years under an insecure authoritarian; or, if he’s impeached, some portion of that under a truly skeevy reactionary who’s claim to fame is wanting to enact legislation forcing women who’ve had abortions to attend a “funeral” for the aborted fetus.

Wages have gone nowhere for 20 years. The one percent have gotten that much more one percenty, otherwise, the economy has pretty much sucked. Did Team HRC realize that when Lady Gaga and Jay Z were doing concerts at her rallies? Meanwhile, black people are getting gunned down by cops, some of them shot right in the back, and no one goes to jail when the courts hear the case. Citizens United makes the buying of candidates and bribery perfectly legal. The Patriot Act states that anyone ACCUSED of being a terrorist can be locked up, indefinitely, without access to an attorney, as an enemy combatant.

And now there’s a full-on candyass insecure narcissist who needs to be the lead of every single news cycle, who lives in a gold tower, who acts as if he’s going to help us all out by doing us the favor of being our President.

Believe him. He’s going to do great. Just ask him.

As Chuck D said, we gotta fight the powers that be.

However, if I act as an enemy combatant to all this WINNING, will it matter?

I guess it’s time to find out.

This Trump thing is mystery meat. The question is: is it turkey bologna? Filet mignon? Chicken sausage? Dried tiger blood sausage? Spam?

I think it’s moldy Mussolini-style mortadella, and I think we may get sick from it.

Good luck to us all.

ECHOnomics: The Quixotic Quicksand Quotient & Recalcitrance

June 24, 2016 seemed as if it was financial armageddon, not only in the US stock market, but financial markets around the world.

One week later, we’re back to where we were.

So what gives, and where do we go from here?

All I can say is, it’s time to be very, very careful.

I think it’s essential to acknowledge two key factors when evaluating the current state of financial markets, sovereign economies, and where oh where we might be headed.

Key Factor #1: Watch the Quixotic Quicksand Quotient, or, the QQQ

The QQQ is an ETF that tracks the Nasdaq, which, for my money, is the leading indicator on the future of the world economic outlook. While the Dow Jones holds your industrials and financials, the Nasdaq holds all of the innovating publicly traded companies: your tech and biotech/healthcare companies live here. If the world economy is growing, the QQQ grows because innovation is being spurred on – if anything, I look at the QQQ as a growth gauge. When the Nasdaq steadily climbs, I find it’s usually an indicator of general economic health and even optimism.

But, if that is the case, then why do I call it the Quixotic Quicksand Quotient?

Many companies that exist in the Nasdaq trade on faith. Faith that Company X is going to deliver on it’s promise to: treat a type of cancer, or provide omnipresent wireless charging, or 3-D print body parts, or grow crops that require zero water. You get the idea. Many of these companies are pre-earnings, and must raise funds to keep operations going either by diluting their stock, or, by taking on debt. You keep faith that they’ll fulfill their goal, and you keep your fingers crossed that you might have the next Tesla or Regeneron or Amazon in your portfolio. This is the Quixotic element of the Nasdaq. You’re fighting the good fight hopefully, investing in a company who’s trying to fulfill an unmet need.

The Quicksand portion is that ALL of these companies trade together. For good or ill. Facebook misses earnings, the entire Nasdaq may fall as a result. Facebook exceeds earnings and raises guidance, the entire Nasdaq may rise. Does it make any sense? No. But markets are less about sense or rationality than they are about momentum and emotion. The Brexit was a great reminder of that because while the economic impact on Europe MIGHT be negative, that’s entirely unclear. Because the markets were complacent about the vote, and the vote went differently than many predicted, suddenly, one wondered if the ENTIRE EU wasn’t going to implode. This herd mentality was seen prior to the dotcom bubble burst, and one example to highlight is Amazon. Amazon traded at 106.69 per share on Dec 10, 1999. On Sept 21, 2001, Amazon traded for 7.48 per share and 95% of all the dotcoms it traded with were bankrupt or folded into other companies. The quicksand won in 2000-2001.

The Quotient part of this is more just looking at the math of things. I’m not going to throw down any sort of quant type of stuff here, but just want to point out a few observations. In the history of the QQQ, twice has it failed to make a new high within a 6 month time frame following the dotcom bubble burst, from 2000-2002, where it lost 83% of it’s value. (That March 2000 peak of 118 still has not been taken out, even 16 years later…) First, in 2007-2009, the mortgage backed security bond crash, where the QQQ lost 50% of it’s value, and, in 2011, where the QQQ traded flat for a period of a year, before resuming it’s uptrend.

It has now been 7 months since the QQQ made a new high. The uptrend has stopped. That’s a red flag. If the QQQ fails to get over 118 in the next 5 months, it’s almost a certainty the world economy is going to falter.

Key Factor #2: Recalcitrance

Markets don’t behave rationally. If they did, the art of picking stocks would be easy. However, markets aren’t completely random either. The best way to describe them would be to say that they are, at best, manic. And the mania seems to be on the rise.

When you stick your finger in the air, and see where the wind is blowing, it’s blowing in the direction of disobedience. The Greek referendum was a clue. The Brexit was a bigger clue. Donald Trump may be the biggest clue of all that something has changed. People aren’t just mad as hell and not taking it anymore — it’s deeper. They’d rather burn down the entire forest than root out the sick trees and fortify the healthy trees.

Markets and trading work well when there’s cooperation. When there’s a lack of cooperation, you see strange things in financial markets, and stranger things in the world. The strange thing we’ve seen in financial markets is that both equities AND bond values are going up, while bonds are yielding lower interest rates than any time in history.

11 TRILLION dollars worth of sovereign bond debt is trading at a NEGATIVE interest rate.

Let that sink in.

People are actually putting their money into bonds that will likely LOSE money, but, because the bonds principal is safe and guaranteed, it means is that they are saying yes, I know I’ll lose money on this investment, but I won’t lose AS MUCH as I might if I kept that money as CASH under a mattress.

This is a mind-boggling sort of occurrence. And I don’t really know what it means or what it manifests, moving forward. I can say it’s unprecedented, it’s disorderly, and it seems to portend massive dislocations in the market.

Does this mean that Donald Trump is going to be President? Hard to say.

Here’s what I suggest:

Q: don’t tilt at windmills (don’t speculate right now) Q: pull yourself slowly from the sinking sand (take profits but don’t sell everything either) and Q: watch that 118 level.

Keep your eyes open to make sure that the fire that’s most definitely started can be contained.

And, if the wind picks up, buy more gold, raise more cash, and wait out the torching…

 

ECHOnomics: Do You Want to Follow The Herd?

An old friend, somebody who made a lot of money because he understood how money works, told me this 16 years ago, when the dot com bubble burst and the world fell into a recession:

“Imagine a room where the acoustics allow for an echo. When lots of people are talking and all saying the same thing at the same time, you don’t really notice it, because it’s harmony. People love harmony. People get mesmerized by harmony. And when you start hearing that harmony, that’s when it’s time to leave the room.”

One of my favorite subjects (something that I’ve dedicated way too little time to) is economics, in particular, investing. And now that I have a little bit of time (juuuust a little) and realizing that I’ve made exactly one blog post up to this point in 2015, I thought I’d put down a little bloggy blog on a huge story of 2015. It’s a story that the news really hasn’t reported that much about… the overlooked story is of the crash of the world’s financial markets. I think we’ve only seen the beginning, and I’m concerned.

This time around, there is systemic risk, perhaps of the same magnitude as 2008 (which is what happens when macroeconomic policy doesn’t really change at all…even when the entire financial system nearly collapses!)

Economics. This is a subject that often makes people’s eyes glaze over. They think it’s boring. They just don’t get it. They say that it’s all rigged anyway, and if that’s the case, then why take the time to learn about it? One of the tragic failings of American society is that the vast majority of our populace is truly ignorant of elementary economic factors, or how to manage money and grow our wealth.

This is intentional. That’s right. Books on economics, articles about stocks, they are written with jargon intended to confuse you. You are kept from understanding the science of economics and personal finance by design. Quite simply, rich people don’t want to share their knowledge with you, they certainly don’t want to share their spoils with you, and why should they? Is this their responsibility?

To them, you are cattle and they need meat. To them, only so many people can be cowboys, or own a ranch, or own a slaughterhouse.

So you have to take responsibility for your economic knowledge and you have to be paying attention to the world around you, if you don’t want to be a cow in the herd being led to the slaughterhouse, or if you want to make some money, or if you want to save some money, or at the very least, if you want to understand why it’s so important to be able to view the “invisible” moves that drive economic cycles.

Fundamentally, right now there is systemic risk in the world’s markets that can not be ignored. I use the word fundamentally, because the risk that’s out there goes straight to the most basic of economic lessons.

RISK FACTOR 1: Supply supply supply supply supply supply &….demand???

There is a glut of supply in the world’s markets. Not only for the materials that we need for everyday life, but in the markets themselves!

First, when supply is high, it drives the price of materials down, because, since they’re easy to come by, they’re cheaper. Simple stuff. And you’d think this would be good in the first world where wages, across the board, are staying flat. And there is not one commodity traded on the world’s markets (oil, cotton, nat gas, wheat, you name it) that is not suffering from the effects of higher supply to demand. When you have more supply than there is demand, it’s not a completely bad thing, right? The costs for all things goes down, and as a result, this mostly lowers the prices for goods. Things get cheap. BUT because the prices for goods continue to go lower, demand also goes lower, because, why buy something now, when I can buy it cheaper later? Especially if I haven’t gotten a raise in 5 years. So supply builds up even more, the cost goes down even more, the price goes down even more. This is called a deflationary spiral, and unfortunately, right now, the world is caught in one.

Second, there is oversupply in the stock markets themselves. This is the dangerous thing, what’s truly scary to investors, because this deflationary spiral has now hit the stock markets in Asia, Europe, the US. Again: same premise — there too much of a supply of stock, there is not enough demand, so why buy stocks now when I can buy them later/cheaper, leading to more supply, and lower prices…

Some argue there is a point when stocks get so cheap that people feel compelled to buy. Maybe. But how low must we go to get there? What is that point? I’d argue that UNTIL wages start inflating, and people actually have excess capital that they’d like to invest, then and only then can the demand meet the glut of supply in the stock markets around the world. Perhaps that’s a bit Polyanna – especially if the top 1% control 90% of the world’s wealth, after all…but a rising tide will lift all boats, which will definitely need to be lifted due to…

RISK FACTOR 2: The D-ebb-t

Money supply is like an ebb and flow. It comes and it goes, right? And one concern is that major commodity companies like Vale, Petrobras, US Steel, Freeport McMoran and Glencore have a TON of debt. When these companies issue bonds to raise money to fund projects (and hopefully not stock buybacks another more complicated yikes! factor that I won’t go into now) they take on debt. It’s sort of like taking out a second mortgage on a house. You promise to buy back the debt that you’ve been issued at a rate of interest, you get the money up front… BUT what happens when you take out that second mortgage and the price of your house collapses (due to too much supply….)? We saw what happens in 2008. And now, because the prices of the commodities (basically, the price of the house) that they mine / forge / sell is going so low, they will not be able to adequately make payments even if they sold everything they had. This will lead to defaults just as it led to foreclosures back in 2008. You compound that with the fact that investors have tied up billions in the high-interest bonds that these companies issued, and we have a big problem. Those investors are going to get their asses handed to them. And nobody really knows what to do about this, because, again, we’re in a deflationary spiral…. a spiral that brings

RISK FACTOR 3:  Inertia and Anti-Inertia

The law of inertia basically states that an object in motion tends to stay in motion, and an object at rest tends to stay at rest.

Money, or better, currency, has flowed out of the markets and into cash (…and not into bonds, the interest yields are too low, and remember, there’s just too much unpaid debt out there, too much unpaid debt from corporations, to municipalities, to even in the Federal Reserve, which has borrowed tremendously to fund it’s Quantative Easing measures.) Even worse, more and more short positions which are being taken, which, put in the most simple terms, are investments that make you a positive return when stocks are going down. The more this type of stuff happens, the more the “current-cy” flows this way, the more the stock market tends to go down.

It’s a negative current, lacking a positive charge.

And the only way that anyone can currently grow their wealth meaningfully is through stocks.

And because of all of this, there’s an imbalance. Imbalance leads to instability. Instability leads to uncertainty. And uncertainty leads to fear. Fear is with us and fear is rampant, rendering the financial markets and the central banks (the Fed at least) inert. They resist movement when movement is needed and pushed for. And I’m not talking about the largely symbolic move of the Fed raising it’s Funds rate 0.25%, though that “will they or won’t they” has certainly not helped.

I’m talking about the markets doing something about the supply / demand problem (increase wages, increase the demand!), I’m talking about the markets doing something about the massive debt overhangs (improved corporate governance leads to improved monetary policy), and I’m talking about movement, any movement, toward a positive charge.

Until then, the harmony that no one likes stocks right now is unmistakeable.

I’ll be back in the room later when things are more intentionally confusing.