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My name is Larry McDonald, that is the UK cover above. In the years before the failure of Lehman Brothers, I ran a successful distressed credit business at what was the 4th largest investment bank in the U.S. – becoming one of the most consistently profitable traders in the fixed income division. In late 2008, early 2009 – with Patrick Robinson, we penned “A Colossal Failure of Common Sense” – the Lehman Brothers inside story. At least once a month, I tell my wife while wearing a hopeful smile —“if we sell a million books — we´ll break even on our Lehman stock.” On September 15, 2008 – it all came crashing down in the largest bankruptcy in U.S. history. Known as, “the week that changed the world,” a very painful experience indeed. I was down on the mat looking up at the referee as he delivered the count. It was one of those fateful moments most of us face. Staring into the abyss, drenched in blood-curdling uncertainty, there are times in life when we must get up. Even when it looks like all is lost in a valley of no hope. Ultimately, the lucky ones learn there are valuable lessons in re-invention. The last 13 years have been a breath of fresh air.

Life’s Lessons

One of the important lessons in our book comes down to how to use leading credit risk indicators? In the 2007-2010 period, the global credit risk epicenter was obviously inside the US. In the 2011-2013 period, Europe´s banks were the focus during the Grexit panic. In recent years, Asia has become far more interesting, a new epicenter has been formed.

…click on the above link to read the rest of the article…

These Dangers Loom Over the Fragile U.S. Economy in the Next 12 Months

September 13, 2021

These Dangers Loom Over the Fragile U.S. Economy in the Next 12 Months

Photo by Connor Daylenko

The U.S. and most of the world is at the threshold of what I would call a nexus point in history. There are establishment forces at play that seek to impose a permanent authoritarian presence within our nation in the name of Covid “safety.” This includes lockdown mandates and restrictions on economic participation for the unvaccinated (including being unable to keep a job).

At the same time, only 53% of the public has been fully vaccinated against Covid. A significant number of the unvaccinated seem likely to dig in their heels and refuse to comply with the advice of medical professionals and the government.

We are at an impasse. With a global pandemic flaring up again in the background, the pro- and anti-vaccine groups square off. Those who see their Covid vaccination as a badge of personal responsibility and civic-mindedness versus those who believe the opposite. Unless one side chooses to stand down and walk away from the fight, our economic future will grow increasingly unstable.

This is the foreboding backdrop of our economic tale, and it is important to keep in mind that the technocratic exploitation of the covid non-crisis as a push for supremacy is going to color everything that happens in our financial system from now on. You cannot talk about our economic condition without including the effects of the pandemic theater.

I believe that the next year in particular is going to be adrenalized and chaotic beyond what we have already seen in 2020-2021. Like I said, there are two sides of America that are now at an impasse. Something is going to snap, and I suspect this will happen in 12 months or less.

…click on the above link to read the rest of the article…

Weekly Commentary: Under Fire

July 17, 2021

Weekly Commentary: Under Fire

The week had an ominous feel. Ten-year Treasury yields dropped another seven bps to 1.29% – completely disregarding much stronger-than-expected reports on consumer and producer prices. German bund yields fell another six bps to a three-month low negative 0.35%. Equities were down for the week in Europe, but the notable equities weakness was posted by the broader U.S. market. The Midcaps dropped 3.3%, and the small cap Russell 2000 sank 5.1%. Risk aversion typically leaves its initial mark at the “Periphery.”

Treasury market notwithstanding, inflation has become a problem in more ways than one. Consumer Prices (CPI) jumped 0.9% in June, versus expectations of a 0.5% increase. Year-over-year CPI was up 5.4% (expectations 4.9%), the strongest jump since 2008. And for analysts with issues with year-over-year “base-effects”, consumer inflation was up 3.3% in only five months. Core CPI also gained 0.9% for the month, with a 4.5% y-o-y increase. Producer Prices rose a data series record 7.3% y-o-y. Import Prices jumped 1% for the month and 11.2% y-o-y. University of Michigan one-year Inflation Expectations rose to 4.8%, the high since the summer of 2008. Also, at 4.8%, the New York Fed’s survey of one-year inflation expectations jumped to the highest level in data back to 2013.

To this point, inflation has not been an issue for the markets. It has become a problem for millions of Americans. For the institution of the Federal Reserve, it’s a metastasizing malignancy.

I understand why each Fed official sticks tightly with the party line “inflation will be transitory.” They don’t want to rattle the markets with thoughts of a traditional tightening cycle. And I think I understand why they adopted their framework aiming for a period of above target inflation – and why they swore off responding to incipient inflationary pressures. Again, they sought to retain flexibility to remain highly accommodative monetary policy, ensuring financial conditions would remain exceptionally loose (and markets high).
…click on the above link to read the rest of the article…

Earth tipping points could destabilize each other in domino effect: Study

June 29, 2021

Earth tipping points could destabilize each other in domino effect: Study

A new risk analysis has found that the tipping points of five of Earth’s subsystems — the West Antarctic Ice Sheet, the Greenland Ice Sheet, the Atlantic Meridional Overturning Circulation (AMOC), the El Niño–Southern Oscillation (ENSO) and the Amazon rainforest — could interact with each other in a destabilizing manner.
It suggests that these changes could occur even before temperatures reach 2°C (3.6°F) above pre-industrial levels, which is the upper limit of the Paris Agreement.
The interactions between the different tipping elements could also lower critical temperature thresholds, essentially allowing tipping cascades to occur earlier than expected, according to the research.
Experts not involved in the study say the findings are a significant contribution to the field, but do not adequately address the timescales over which these changes could occur.

When the first tile in a line of dominoes tips forward, it affects everything in front of it. One after another, lined-up dominoes knock into each other and topple. This is essentially what could happen to ice sheets, ocean currents and even the Amazon biome if critical tipping points are crossed, according to a new risk analysis. The destabilization of one element could impact the others, creating a domino effect of drastic changes that could move the Earth into an unfamiliar state — one potentially dangerous to the future of humanity and nature as we know it.

The study, published this month in Earth System Dynamics, examines the interactions between five subsystems that are known to have vital thresholds, or tipping points, that could trigger irreversible changes. They include the West Antarctic Ice Sheet, the Greenland Ice Sheet, the Atlantic Meridional Overturning Circulation (AMOC), the El Niño–Southern Oscillation (ENSO) and the Amazon Rainforest.

…click on the above link to read the rest of the article…

Don’t Go Picking Up Quarters in Front of a Steamroller

June 6, 2021

Don’t Go Picking Up Quarters in Front of a Steamroller

Do Not Pick Up Quarters in Front of a Steamroller

Photo by Leroy Evans

How did you go bankrupt?
Two ways. Gradually, then suddenly.
― Ernest Hemingway, The Sun Also Rises

Winning the lottery sounds like a dream come true, until you understand most people who win end up broke a few years later. (Most don’t invest their money properly to make it last.)

Everyone knows the possibility of making a large sum of money fast is a thrill, especially if you end up turning a small amount of money into a heap of cash. Maybe that’s why Americans on average spend over $1,000 a year on lottery tickets?

Now, you’re probably thinking that investing, especially saving for retirement, is completely different from buying a lottery ticket. Here’s the problem: your brain doesn’t really understand the difference.

When you win, whether it’s a $100 scratch-off prize, a Texas hold ’em pot or a great trade in your brokerage account, your brain rewards you. This psychological process is identical to gambling addiction. And it’s potentially just as destructive. Especially when it comes to investing or saving for retirement, gambling is a dangerous way to think Here’s why…

The way addiction works is just brutal. As Scientific American explains, over time the euphoria of winning decreases. People tend to risk more and more to recapture that feeling. And when a big bet goes wrong, you can get crushed by losses. Like a steamroller smashing your wealth into dust. Worse still, some “chase the high” by leveraging their investments on margin (and we’ve seen how that ends).

Which brings up an important question…

What makes these fast profit opportunities so tempting?

“Look! A shiny quarter! And there’s another one!”

…click on the above link to read the rest of the article…

Systemic Risks Abound

May 28, 2021

Systemic Risks Abound

If you wanted to design a system guaranteed to collapse in a putrid heap, you’d make moral hazard ubiquitous and you’d make the system 100% dependent on a hubris-soaked faux savior.

For the past 22 years, every time the stock market whimpered, wheezed or whined, the Federal Reserve rushed to soothe the spoiled crybaby. There are two consequential results of the Fed as savior:

1. The Fed has perfected moral hazard: everyone from the money manager betting billions to the punters gambling their stimmy money is absolutely confident I can’t lose because the Fed will always push the market higher.

What happens when participants are confident they can’t possibly lose? They make ever-riskier and ever-larger bets. The entire nation is in the grip of a moral hazard mania, all based on the confidence that the Fed will always push every market higher–always, without fail.

2. Organic (i.e. non-manipulated) market forces have been extinguished. There is now only one consequential force, the Fed. All markets are now 100% dependent on the Fed responding to every bleat from every punter who’s recklessly risky bet is about to go bad.

The Fed is now the perfect union of quasi-religious savior and Helicopter Parent: oh dear, our little darling got high and crashed the Porsche? Quick, let’s save our precious market from any consequences!

Every day, Fed speakers take to the pulpit to spew another sermon about the Fed’s god-like power and wisdom. The true believers soak up every word: golly-gee, the Fed is better than any god–it’s guaranteeing I can get rich if I just leverage up any bet in any market!

…click on the above link to read the rest of the article…

COLLAPSE! — Think of collapse as a drastic and chaotic reduction in energy and resource use

May 22, 2021

COLLAPSE! — Think of collapse as a drastic and chaotic reduction in energy and resource use

“… my fundamentally conservative core requires a default position that collapse is the most likely outcome,” says physicist Tom Murphy. —

Tom Murphy

“The first thing I should say is that the word ‘collapse’ freaks me out. I don’t use it often, for fear of sounding like an unhinged alarmist. Surely, respectable scientists should want nothing to do with it…. What keeps pulling me back to it — despite my innate repulsion — is not only credible elements of risk that I will get to in this post, but also that I think it’s too important to tolerate our natural tendency to hide from the prospect. Ironically, doing so only raises the odds of that ill fate: mitigation requires direct acknowledgment. Failure to speak openly and honestly about the less-than-remote possibility of collapse is not in our best interest, ultimately. So let’s grit our teeth and confront the collapse monster. What conditions make it at once likely and off most people’s radars? It is a heavy lift for one blog post to do a complete job in motivating collapse as a realistic outcome of the human enterprise. Any one argument can be picked at, but the totality should be considered. This is a long post, so buckle up. For the purposes of this post, we can think of collapse as a drastic and probably chaotic reduction in energy and resource use per person, the result looking primitive by today’s standards.” —Tom Murphy, Do the Math

…click on the above link to read the rest of the article…

Rabo: Please Don’t Make Us Look At The Inflation

May 12, 2021

Rabo: Please Don’t Make Us Look At The Inflation

Markets continue to reel: “Risk crumbles”, says Bloomberg. Why? Because there is a plaintive plea from everyone from the Fed and the Treasury down to simple peddlers of exotic derivatives: please don’t make us look at the inflation! Yes, it’s US inflation-data day – and nobody wants to see any. If there is an upside surprise in CPI, to reflect the surges in the prices of so much around us, it will embarrass the Fed, and the US Dollar, and Yellen, and many others. Some pre-emptive positioning may already be underway: the White House said Tuesday it takes “the possibility of inflation seriously”, or should that have been “serious inflation is possible?”; and the Fed’s Bullard added the US will see inflation in 2021 and some will “hang on” in 2022. Is that still transitory?

China’s PPI surprised to the upside, which may prove a worrying harbinger: and, anecdotally, prices for shipping between to the US this summer is now up to seven times what it was a year ago on some routes. Of course, the delayed 2020 census was a harbinger too – of mercantilism. (See “A Midwife Crisis”: and thinking Fudd not Fed, this should have been titled “A Midwife Cwisis”, with the subtitle “Be Vewy, Vewy Quiet. I’m hunting positive demogwaphics. Huh huh huh.”

The German ZEW survey (of analysts, so irrelevant) perked up too, while the US NFIB survey (of businesses, so relevant) showed that despite the weak payrolls number on Friday, it is now the most difficult to find workers ever. Crucially, “owners are raising compensation, [and] offering bonuses and benefits to attract the right employees,” the survey added…

…click on the above link to read the rest of the article…

Oil Tanker Spotted in Risky Active Pass Alarms Activists

May 10, 2021

Oil Tanker Spotted in Risky Active Pass Alarms Activists

Officials promise no repeats. But advocates say the incident raises new concerns about regulation of tankers in BC’s waters.

Narrow, twisting and busy Active Pass is no place for oil tankers, say advocates. But a loaded tanker travelled through the busy pass last month. Photo by Ruth Hartnup, Creative Commons licensed.

On a calm Friday afternoon in late April, avid naturalist Barry Swanson was watching Active Pass from his home on Galiano Island, keeping an eye out for the pod of southern resident killer whales that swim by every couple of days.

Instead of orcas, he was shocked to see an oil tanker traversing the narrow channel.

The MV Kassos was sitting low in the water, its hull heavy with petroleum products bound for Los Angeles.

Swanson is the co-founder of the non-profit Salish Sea Orca Squad, a group that works to raise awareness about the region’s killer whales. In an interview with The Tyee, he says he was very concerned to see dangerous cargo being shipped through the narrow waterway.

Active Pass sits between Mayne and Galiano Island. The channel is deep but narrow — 302 metres wide at its skinniest — and features strong currents, rip tides and a blind corner, according to Fisheries and Oceans Canada. It’s also a route favoured by BC Ferries, connecting Tsawwassen to Swartz Bay and the mainland to the Southern Gulf Islands.

It’s extremely unusual for an oil tanker to take Active Pass instead of the neighbouring Boundary Pass, favoured by almost all other commercial routes for its wider, calmer waters. Swanson says he’s never seen an oil tanker take the pass before.

“When you have a tanker travelling through these waters… there is always tremendous danger with dangerous goods being spilt in any amount. It would be a disaster for that to happen,” Swanson says.

…click on the above link to read the rest of the article…

Live Now

May 7, 2021

Live Now

“If you’re in your last 10 percent of time with someone you love, keep that fact in the front of your mind when you’re with them and treat that time as what it actually is: Precious.” ~ Tim Urban

I am about to post the 1000th “Live Now” post in the Prepping for NTHE Group today. It is special for many reasons. Most importantly is how precious the time we all have left is. Another journey awaits me soon and I am poignantly aware of how important this time spent out in nature is, and I eagerly look forward to getting away from the city for awhile. My outlook is tempered by the fact that one never knows when the last trip will be, so it is imperative to treasure and cherish these days of leisure.

I have been feverishly adding new scientific peer-reviewed literature to these pages this week, with almost 300 new articles added. 55 articles were added to the Climate Change and Collapse file alone! My efforts to get the message out to Live Now have never been more important. So many people procrastinate the things they want to do, often putting nonsensical items in front of more important endeavors. You’ll notice that I have also updated most of the articles I have written here with some of these new links with yet more incontrovertible evidence of our collective trajectory.

if this is the first article you’ve read here, I encourage you to read my first post on what this blog is all about to get acquainted with where we are as a species and the predicaments we face.

I have also added a brand new file, Invasive Species, to allow for a new category of articles which is increasingly causing a myriad of issues and previously did not truly fit into any other category. I previously assigned many of these articles to the Agriculture & Food and Water Security file or the Species and Biodiversity Loss file.

Hopefully these updates find you alive and well and that you are enjoying the beautiful spring here in the Northern Hemisphere or a colorful autumn if you are in the Southern Hemisphere.

Our rapid ascent in energy and resource use has distorted our view of “normal”

May 5, 2021

Our rapid ascent in energy and resource use has distorted our view of “normal”

The new reality warns we are on a collision course with Earth’s finite limits —–

Tom Murphy

“The delirious ascent in energy and resource use witnessed over the past few centuries has been accomplished via the rapid, accelerating expenditure of a one-time inheritance of natural resources—a brief and singularly remarkable era in the long saga of human history. It has produced a dangerously distorted impression of what “normal” looks like on this planet. …Thus far, heeding physical boundaries has not been necessary for the most part, as the scale of human endeavors has only recently become significant in a planetary context. We are now entering into a new reality: one in which our ambitions are on a collision course with natural limits on a finite planet. It is a slow-motion trajectory that has been apparent to some for an embarrassingly long time*, but not yet acute enough to have grabbed the lasting attention of the majority. [*D H Meadows et al. The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind. Universe Books, 1974]” —Tom Murphy

Tom Murphy is an associate professor of physics at the University of California, San Diego. Murphy’s keen interest in energy topics began with his teaching a course on energy and the environment for non-science majors at UCSD. Following his natural instincts to educate, Murphy is eager to get people thinking about the quantitatively convincing case that our pursuit of an ever-bigger scale of life faces gigantic challenges and carries significant risks.

…click on the above link to read the rest of the article…

Mette Frederiksen, Boris Johnson: Reject Industry PR, Ban Glyphosate, Protect Public Health!

April 30, 2021

Mette Frederiksen, Boris Johnson: Reject Industry PR, Ban Glyphosate, Protect Public Health!

On 9 April 2021, retired physician and health and environmental campaigner Dr Rosemary Mason wrote to the Danish Environmental Protection Agency (DEPA). She wanted to draw the agency’s attention to the findings that indicate the glyphosate-based herbicide Roundup causes high levels of mortality following contact exposure in bumble bees (glyphosate-formulated herbicides are the most widely used weedicides in agriculture across the globe).

This, Mason argued, has led to a decline of bumblebees in Denmark. She asked the agency why it had used “fraudulent science” on glyphosate from the European Commission and the European Chemicals Agency, which in turn take their ‘science’ from Monsanto/Bayer, rather than from the direct observations of The Danish Nature Agency.

Mason’s correspondence focused not only on the destructive environmental impacts of glyphosate but also on the devastating human health aspects.

In relation to sanctioning the continued use of glyphosate in Europe, Mason has previously noted that it was totally unacceptable, possibly negligent or even criminal, for the European Union to have allowed a group of plant scientists on the Standing Committee on Plants, Animals, Food and Feed (PAFF) – whose knowledge of human physiology was so lacking that they did not recognise that glyphosate has effects on humans – to make decisions that affect human health.

PAFF’s role was pivotal in the decision to re-licence the use of glyphosate in the EU in 2017.

To date, aside from the DEPA acknowledging receipt of Mason’s letter, there has been no response to the issues raised.

As a follow up, Mason has sent the latest insights to DEPA on the Monsanto-Bayer lawsuits in the US. Three cases brought by Lee Johnson, Edwin Hardeman and Alva and Alberta Pilliod have already gone to trial. In each case, the courts found that Roundup caused their cancers and that Monsanto hid the risks of its product.

…click on the above link to read the rest of the article…

Disoreder Will Come–As Confucious Warned

April 5, 2021

DISORDER WILL COME – AS CONFUCIUS WARNED

When bubbles burst, we will discover how very few superior men there actually are – as defined by Confucius:

“The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his States and all their clans are preserved.” – Confucius

Superior man can exist at many different levels in society, not necessarily linked to money or investments. There will be many people without money who are prepared at an intellectual or psychological level. These people are probably the happiest since sadly many wealthy people worry about their money all the time rather than enjoy it.

In this piece I am talking primarily about preparedness in relation to one’s wealth.

PS Important Postscript at the end of the article.

FOCUS ON WEALTH PRESERVATION

The investors we meet in our business are people who are risk averse and therefore very much focus on wealth preservation. These investors buy physical gold because they are concerned about the excessive risks in markets. They want to protect and insure their wealth against unprecedented financial and currency risk. Like ourselves, these investors consider physical precious metals, stored outside a fragile banking system, as the ultimate form of wealth preservation.

But investment gold represents less than 0.5% of world financial assets. This means that a minuscule percentage of investors insure their wealth in gold. This is clearly surprising bearing in mind that over 5,000 years gold is the only money that has survived.

…click on the above link to read the rest of the article…

Egon von Greyerz, gold switzerland, inflation, risk, gold, precious metals, wealth, financial bubble, bubble, currency, banking system

Want To Invest In Farmland? Here’s How

March 29, 2021

Want To Invest In Farmland? Here’s How

There are now more options than ever (without having farm the land yourself!)

Farmland is a “holy grail” asset class for many investors.

It’s tangible, produces income, and has inherent underlying value — making it a great inflation hedge.

It’s supply constrained. Mother Nature isn’t making any more of it –and in total, farm acreage around the world is being lost to development, drought, etc.

Historically it’s an asset class that produces double-digit annual returns while remaining largely uncorrelated with the stock market, making it a valuable component for portfolio diversification.

And even better, it offers the chance to do well by doing good. There are increasing opportunities to convert poorly-managed conventional farmland to organic status through sustainable practices AND command much higher profits in the process. Smart farmers are now able to create superior business while healing the soil at the same time.

So, how can you get access to this attractive asset class?

Farmland investor Craig Wichner, Managing Director of Farmland LP, explains how in this week’s Market Update. He also details out the growing number of ways regular investors like you can purchase farmland and benefit from its many attributes without having to actually become a farmer yourself.

Which is why Craig agrees that now, more than ever, is the time to partner with a financial advisor who understands the nature of the market risks in play as well as the opportunities that farmland offers in a diversified portfolio to defend against them, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

farmland, peak prosperity, investment, adam taggart, risk

Brace, Brace, Brace: Global Supply Chains, Instability and Archegos

March 29, 2021

Brace, Brace, Brace: Global Supply Chains, Instability and Archegos

You could not make this up; an unimaginably complex WW3 Techno-thriller unfolding as markets stumble and global supply chains hover on the edge of anarchy. On the other hand, maybe that’s just the way it was planned.

“The supreme art of war is to subdue the enemy without fighting.”

This morning – You could not make this up; an unimaginably complex WW3 Techno-thriller unfolding as markets stumble and global supply chains hover on the edge of anarchy. On the other hand, maybe that’s just the way it was planned.

I am not one for conspiracy theories. But… this morning… If I was a writer of trashy global-techno-World War 3 pulp fiction, and proposed the following scenario where the global economy lurches into an unprecedented period of instability – nobody would believe me:

1) Global Supply Chains, weakened and struggling after a year of global pandemic, plus a growing shortage of microchips holding back multiple industrial sectors, are plunged into new crisis by a puff of wind causing a box-ship to skite sideways and block the Suez Canal, trapping East-West Trade.

2) Unstable and over-priced Global Markets are spooked into a frenzy late on a quiet Friday night by the largest margin calls ever ($20 bln plus) as an Asian “family office” dumps billions of dollars of stock into the market. Collateral damage spreads, as other financial firms, (inevitably including Credit Suisse (Switzerland’s very own Deutsche Bank), and Nomura), announce material losses.

3) As global central banks struggle to restore real growth, while trying to hold interest rates low and support commerce, and acutely conscious of how a market crash could crush global confidence – things suddenly get more difficult as confidence in equity valuations takes a massive knock.

…click on the above link to read the rest of the article…

bill blain, morning porridge, supply chains, supply chain disruptions, risk

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