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Tuesday, 29 September 2015

Energy 2050 Markets Gloom - Days of Doom (Part 1)

Energy 2050 Markets Gloom

World Energy to 2050
 Forty Years of Decline

By Paul Cherfurka

Climbing the Ladder of Awareness

When it comes to our understanding of the unfolding global crisis, each of us seems to fit somewhere along a continuum of awareness that can be roughly divided into five stages:
  1. Dead asleep. At this stage there seem to be no fundamental problems, just some shortcomings in human organization, behaviour and morality that can be fixed with the proper attention to rule-making. People at this stage tend to live their lives happily, with occasional outbursts of annoyance around election times or the quarterly corporate earnings seasons.
  2. Awareness of one fundamental problem. Whether it's Climate Change, overpopulation, Peak Oil, chemical pollution, oceanic over-fishing, biodiversity loss, corporatism, economic instability or sociopolitical injustice, one problem seems to engage the attention completely. People at this stage tend to become ardent activists for their chosen cause. They tend to be very vocal about their personal issue, and blind to any others.
  3. Awareness of many problems. As people let in more evidence from different domains, the awareness of complexity begins to grow.  At this point a person worries about the prioritization of problems in terms of their immediacy and degree of impact. People at this stage may become reluctant to acknowledge new problems - for example, someone who is committed to fighting for social justice and against climate change may not recognize the problem of resource depletion.  They may feel that the problem space is already complex enough, and the addition of any new concerns will only dilute the effort that needs to be focused on solving the "highest priority" problem.
  4. Awareness of the interconnections between the many problems. The realization that a solution in one domain may worsen a problem in another marks the beginning of large-scale system-level thinking. It also marks the transition from thinking of the situation in terms of a set of problems to thinking of it in terms of a predicament. At this point the possibility that there may not be a solution begins to raise its head.

    People who arrive at this stage tend to withdraw into tight circles of like-minded individuals in order to trade insights and deepen their understanding of what's going on. These circles are necessarily small, both because personal dialogue is essential for this depth of exploration, and because there just aren't very many people who have arrived at this level of understanding.
  5. Awareness that the predicament encompasses all aspects of life.  This includes everything we do, how we do it, our relationships with each other, as well as our treatment of the rest of the biosphere and the physical planet. With this realization, the floodgates open, and no problem is exempt from consideration or acceptance. The very concept of a "Solution" is seen through, and cast aside as a waste of effort.
For those who arrive at Stage 5 there is a real risk that depression will set in. After all, we've learned throughout our lives that our hope for tomorrow lies in  our ability to solve problems today.  When no amount of human cleverness appears able to solve our predicament the possibility of hope can vanish like a the light of a candle flame, to be replaced by the suffocating darkness of despair.

How people cope with despair is of course deeply personal, but it seems to me there are two general routes people take to reconcile themselves with the situation.  These are not mutually exclusive, and most of us will operate out of some mix of the two.  I identify them here as general tendencies, because people seem to be drawn more to one or the other.  I call them the outer path and the inner path.

If one is inclined to choose the outer path, concerns about adaptation and local resilience move into the foreground, as exemplified by the Transition Network and Permaculture Movement. To those on the outer path, community-building and local sustainability initiatives will have great appeal.  Organized party politics seems to be less attractive to people at this stage, however.  Perhaps politics is seen as part of the problem, or perhaps it's just seen as a waste of effort when the real action will take place at the local level.

If one is disinclined to choose the outer path either because of temperament or circumstance, the inner path offers its own set of attractions.

Choosing the inner path involves re-framing the whole thing in terms of consciousness, self-awareness and/or some form of transcendent perception.  For someone on this path it is seen as an attempt to manifest Gandhi's message, "Become the change you wish to see in the world," on the most profoundly personal level.  This message is similarly expressed in the ancient Hermetic saying, "As above, so below." Or in plain language,  "In order to heal the world, first begin by healing yourself."

However, the inner path does not imply a "retreat into religion". Most of the people I've met who have chosen an inner path have as little use for traditional religion as their counterparts on the outer path have for traditional politics.  Organized religion is usually seen as part of the predicament rather than a valid response to it. Those who have arrived at this point have no interest in hiding from or easing the painful truth, rather they wish to create a coherent personal context for it. Personal spirituality of one sort or another often works for this, but organized religion rarely does.

It's worth mentioning that there is also the possibility of a serious personal difficulty at this point.  If someone cannot choose an outer path for whatever reasons, and is also resistant to the idea of inner growth or spirituality as a response the the crisis of an entire planet, then they are truly in a bind. There are few other doorways out of this depth of despair.  If one remains stuck here for an extended period of time, life can begin to seem awfully bleak, and violence against either the world or oneself may begin begin to seem like a reasonable option.  Keep a watchful eye on your own progress, and if you encounter someone else who may be in this state, please offer them a supportive ear.

From my observations, each successive stage contains roughly a tenth of the number people as the one before it. So while perhaps 90% of humanity is in Stage 1, less than one person in ten thousand will be at Stage 5 (and none of them are likely to be politicians).  The number of those who have chosen the inner path in Stage 5 also seems to be an order of magnitude smaller than the number who are on the outer path.

I happen to have chosen an inner path as my response to a Stage 5 awareness. It works well for me, but navigating this imminent (transition, shift, metamorphosis - call it what you will), will require all of us - no matter what our chosen paths - to cooperate on making wise decisions in difficult times.

Best wishes for a long, exciting and fulfilling  journey.

Bodhi Paul Chefurka


Part 2 - Introduction 

Monday, 14 September 2015

Brazil Poster Child For Economic Collapse, & More Insights

BRASÍLIA — The president of Brazil should have been ecstatic. She had just won re-election after an intense campaign in which she fiercely defended her role in making Brazil, for a few fleeting years, a rising star on the global stage.
But in the days after her victory last October, President Dilma Rousseff was worried, confronted in private deliberations with her closest advisers by signs that Brazil’s triumphs were at risk of coming undone.
“We went too far,” Aloízio Mercadante, Ms. Rousseff’s chief of staff, acknowledged publicly this month, describing the sense of alarm as the dust settled after the election and Ms. Rousseff and her aides grappled with the weaknesses in Brazil’s economy.

Jim Simons was a mathematician and cryptographer who realized: the complex math he used to break codes could help explain patterns in the world of finance. Billions later, he’s working to support the next generation of math teachers and scholars. TED’s Chris Anderson sits down with Simons to talk about his extraordinary life in numbers.

The AP reports that some driver advocates like the Center for Auto Safety were concerned that this pledge doesn’t do enough to get automatic breaking systems into cars. Those advocates would rather the government legally require cars to have automatic breaking systems, instead of rely on a voluntary promise to keep drivers safe. Another concern is that automatic braking systems are generally sold as add-ons to luxury vehicles, which would put them out of reach of most consumers

Credit default swaps are contracts that let investors buy protection to hedge against the risk that corporate or sovereign debt issuers will not meet their payment obligations.
The market peaked at $58 trillion in 2007, according to the Bank for International Settlements, but shrank to $16 trillion seven years later as investors better understood its risks

One often wonders why governments indebt themselves for so much more than they can ever hope to pay… Here, Western economists, bankers, traders, Ivy League academics and professors, Nobel laureates and the mainstream media have a quick and monolithic reply: because all nations need “investment and investors” if they wish to build highways, power plants, schools, airports, hospitals, raise armies, service infrastructures and a long list of et ceteras, economic and national activities are all about.

This ranking sorts 61 countries by price, earnings needed to buy a gallon, and annual income spent on fuel.

Why The Fed Would Be Insane T

Raise Rates: The Rising U.S. Dollar

The USD strengthening since last July is the core driver of the global recession.
The parlor game of the moment is laying odds on the Federal Reserve's decision to raise rates, leave rates unchanged, or (gasp!) hint at future stimulus. There are certainly a multitude of inputs to the Fed's decision, and a variety of potential consequences, but only one really matters: the effect on foreign exchange/currency markets.

It's not that difficult to understand the one dynamic that matters. If the Fed raise yields/interest rates in the U.S., that makes the U.S. currency, i.e. the U.S. dollar (USD), more attractive.
Higher yield = more attractive, especially when coupled with the liquid market for U.S. Treasuries and the relative safety of the dollar vis a vis other currencies issued by falling-into-recession nations and trading blocs.

A Passing Thought...

Thursday, 3 September 2015

Overvalued Social Media Stocks Are Great Shorts, & More Insights

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Why Investors Keep Buying Social Media Stocks, Even if They're Overvalued

NEW YORK (TheStreet) -- It's no secret that social media stocks are overvalued now, especially if you look at the fundamentals. Yet investors keep buying them, pushing their prices up even further. The question is why?

We've already seen the mania around companies like Twitter(TWTR - Get Report) andAmazon (AMZN - Get Report)(for years), and the recently IPO'ed Lending Club (LC) . This year brings us more copy-cat stories: Instagram and Snapchat.

Jim Cramer's charitable trust Action Alerts PLUS owns Twitter. Read AAP's analysis of Twitter's earnings here.

Instagram, just a social-media app for sharing prettied-up photos, was apparently valued at $33 billion by Cowen Group this month, and at $35 billion by Citigroup in December. Even at the lower level, that would put its valuation at 47 times projected revenue for 2015 -- never mind its earnings multiple. Snapchat is an even more excessive example: It's reportedly seeking to sell a $500 million stake that would give it a valuation of between $16 billion and $19 billion -- up from the already huge $10 billion valuation implied by its last funding round in December. Here's the kicker: Snapchat only began to generate revenues ... last month.

When To Short A Stock

Most investors by nature will "go long" when they buy stocks. Few investors naturally will short stocks (or bet on their decline) because they really don't know what to look for. Some investors see the shorting process as somewhat counter-intuitive to the traditional investing process, since many stocks do appreciate over time. That said, there is a lot of money to be made by shorting, and in this article, we'll give you a list of signs that show when a stock might be ripe for a fall.


Technical Trends 

Look at a chart of the stock you are thinking about shorting. What is the general trend? Is the stock under accumulation or distribution?

Social Media 1.0 Is Dying. Long Live Social Media 2.0

Yelp has publicly admitted it is in trouble. Twitter is currently hunting for a new CEO and there are constant rumors they will be acquired. Is social media dead? The simple answer is no, social media will continue to live on. What the industry is seeing is the sun setting on Social Media 1.0 and the dawn of Social Media 2.0.

Image result for twitter dying

When individuals look back on the dawn of social media that was trailblazed by Yelp and Twitter, there is no question that they will be remembered as the founders of social media. These companies created the vocabulary and the need. Everything from "tweets" to "selfies" the vocabulary that society knows today can be attributed to these social media founders. The question which arises today is what do these social media founders do as the industry they helped to create grows beyond them.

This trend is not unprecedented. If one looks back to the growth of the search engine industry, the same patterns emerged. During the booming heyday of search engines, the Internet was littered with numerous competing search engines. From Yahoo! to Webcrawler and Ask Jeeves, everyone was starting up a search engine to capitalize on the growth of the Internet.

“Two billion of you create social content and get nothing for it. It’s your content, your audience and you should own it.”
So proclaims a new upstart called tsū that says it will pay users part of the advertisement revenue that they generate for the network when they share and post content (ignore the sloppy English):

On tsū, users own their content and own their network, therefore they own the royalties generated from advertising, sponsorship and partnership dollars wrapped around their content. Additionally if any users came to the platform via a user’s short code or invitation, then that user will in perpetuity earn a portion of the economics of the newly invited individual and their social network on tsū.
This only happens on tsū and mechanically cannot happen on any other incumbent platform. If a tsū user’s post is viewed, that post creates economics – at the very least an advertisement is served alongside that post which is revenue. tsū simply arranges these revenues to trickle to the users as royalties via our algorithm that rewards both relevant content and social network building.

 3 Reasons the Social Media Fad is Already Dying

Facebook is growing, but only in developing markets. In the US, Facebook lost 6 million users in just one month. It lost 9 million in the past half year, and an additional 2 million in the UK over the same time period. This isn’t new, either. About this time last year, studies started reporting a declining interest in Facebook among teens and young adults as they started spending less time on the site.

Sean Parker 'Bored' By Facebook -- And It Seems He's Not The Only One

So what does Sean Parker really think about Facebook, the company that netted him some $2 billion following its recent public offering?
It’s a snooze.
That’s what Parker told an audience ofjournalists, celebrities and well-wishers at the launch of his new Facebook-powered video-chatting service Airtime earlier this 

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 In this paper we have applied a modified epidemiological model to describe the adoption and abandonment dynamics of user activity of online social networks. Using publicly available Google data for search query Myspace as a case study, we showed that the traditional SIR model for modeling disease dynamics provides a poor description of the data.

 A 75% decrease in SSE is achieved by modifying the traditional SIR model to incorporate infectious recovery dynamics, which is a better description of OSN dynamics. Having validated the irSIR model of OSN dynamics on Google data for search query Myspace, we then applied the model to the Google data for search query Facebook. Extrapolating the best fit model into the future suggests that: 

Facebook will undergo a rapid decline in the coming years, losing 80% of its peak user base between 2015 and 2017. 

The most significant change in equity funds management over the past decade has been the emergence of short funds, which seek to profit from falling stocks.
The buy and hold strategy of the more traditional long-only fund managers only goes well when the market goes well.
But managers that can take short positions in stocks can take bets on shares they think will fall, and profit when they do, open up a whole new revenue stream.
And they're good at it. The huge slump in the price of Metcash and Flight Centre after recent profit downgrades has delivered instant profits.
In the past some investors would follow changes in substantial holdings and directors' interests as a guide to what stocks are hot or out of favour. Now it's a list of which stocks are sold short the most.
According to Morgan Stanley, the top 10 short positions right now, as a percentage of their market cap in the major S&P ASX 200 index, are Flight Centre, Fortescue Metals, Myer, Metcash, Mineral Resources, WorleyParsons, Monadelphous, Orica, Senex Energy and Whitehaven Coal.

Lessons From a Short Seller

Ask any student of the stockmarket what they deem to be the ‘biggest disasters’ in corporate history and most people will settle for Enron, WorldCom, HIH and A.B.C. Learning Centres. These multibillion-dollar corporations at least appeared to go bankrupt overnight, taking with them billions from the portfolios of some of the world’s smartest investors.
Many dismissed these spectacular failures as ‘black-swan-type’ events—completely unforeseeable. Not Jim Chanos, founder of Kynikos Associates. He not only predicted their demise, he profited from them. Just as he did when he ‘shorted’ Macquarie Bank in 2007 (see Steve Johnson’s Bristlemouth blog post, Chanos was right, I was wrong).
Chanos started Kynikos (Greek for ‘cynic’) funds to profit from a practice known as ‘short-selling’ (see our Investor’s College article on the subject, Short selling, short change). The mechanics of short selling seem technical but the main thing to remember is that short-sellers profit when stock prices of companies go down.

A Passing Thought...

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