Cyreenik Says

March 2016 issues

The divide between Luxury Money and Necessity Money grows wider in California

In my book Visions of 2050 I forecast a division of money into three types: Necessity Money, Luxury Money and Investing Money.

Investing Money is what goes into making Big Business infrastructure such as factories. In 2050 this will be controlled by cyber and mostly out of humanity's awareness. Humans will be dealing with Necessity Money and Luxury Money. Necessity Money is the equivalent of food stamps -- money that humans get unconditionally, and is used to pay for the basic necessities of dignified living.

In the news this week is an interesting twist that is supporting this evolution into the two money types: California is raising the minimum wage to $15/hour in a series of steps bringing about that goal in 2022. This 29 Mar 16 WSJ editorial, California Inequality Act A $15 minimum wage will widen the state’s economic divide., covers the details as well as the WSJ opinion on it.

From the article, "Earlier this year the Austrian School economist, wait, Democratic Governor Jerry Brown warned that elevating California’s minimum wage would “put a lot of poor people out of work.” Now he’s intent on proving his own point by imposing a $15 an hour wage floor across the state by 2022, and this reckless experiment will deepen the income inequality it intends to address."

This WSJ opinion describes this move as cutting out low-paying jobs. This will happen but not as much as the WSJ editors are envisioning. This is because another more surprising result will also happen: the further dividing of money into Necessity and Luxury.

Instead of losing the low-paying jobs, the jobs will be paid for in some alternate, indirect way. They will be paid for, in effect, with what is becoming Necessity Money, rather than Luxury Money. If people are keeping themselves busy, and collecting food stamp-style support while they do, they are being paid for their work in Necessity Money.

The march to 2050-style money is underway.

A related WSJ article, A Stiff Jab at Flexible Work Schedules After the California minimum-wage increase, next up is dictating when employees do their jobs. by Michael Saltsman, talks about California government being urged to mess with working hours as well as wages. The moral of this campaign: workers and managers can't work this out between themselves, a third party must get involved. Once again, the surprise outcome of this added hoop-jumping is going to be further distinctions between Necessity Money and Luxury Money.

This year's boom in terror attacks

I admit it: I am surprised at the boom in terror attacks that has taken place over the last year. Suicide bombing has become faddish, and thanks to the ubiquitousness of social media and smart phones with cameras, it is no longer just Big Media that is doing the promoting that makes terrorism so popular as an advertising medium -- these days everyone is getting in on the promoting act.

This 22 Mar 16 WSJ article, ISIS Claims Responsibility for Brussels Attacks; More Than 30 Dead Explosions hit Brussels’ international airport and a subway station near European Union institutions by Natalia Drozdiak, Gabriele Steinhauser and Matthias Verbergt has an interesting chart of terrorist attacks and fatalities.

From the chart "At least 1,129 people have been killed in 26 cities by 33 Islamic State-affiliated or inspired attacks outside Syria and Iraq since 2015."

It is time to state again that the root motivation behind terrorism is advertising. It is a promoting a cause. And as long as this tool for promoting seems cost effective in the eyes of the promoters its use will grow.

This puts stopping it in the War on Drugs category: Stopping it by enhancing the vigor of police-state rituals is not going to be effective. What is going to become effective... someday... is when it becomes boring -- when it becomes a fad that has lost its exciting appeal -- when it becomes "so yesterday".

Hopefully that will come soon.

In the meantime, time to say it again: The most effective weapon against terrorism is ignoring it. Instead of paying attention, go on about Business as Usual.

What Putin's pullout in Syria means: Watch Out!

The world has been surprised by Vladimir Putin's announcement this month that Russia is pulling out of Syria.

My paraphrase of what Putin is saying is, "Job Done. Call me if you need any more help."

But what is really happening?

Time will tell, but I admire his ability to simply get out of what could easily become a quagmire. Part of the difference between this situation and Bush in Iraq in 2003 is that Putin never said he was a nation builder, and in this move he is proving that.

From what I have read in an insightful 19 Mar 16 Economist article, A hollow superpower Don’t be fooled by Syria. Vladimir Putin’s foreign policy is born of weakness and made for television, the issue now becomes "Where next?" One of the potent tools for making Putin's Big Vision happen in Russia has been his ability to distract many Russians from being frustrated by the country's domestic problems. He does this using military adventurism.

From the article, "Russia’s president has generated stirring images of war to persuade his anxious citizens that their ailing country is once again a great power, first in Ukraine and recently over the skies of Aleppo. The big question for the West is where he will stage his next drama."

My guess is Ukraine 2 with some Moldavia mixed in.

But much spookier, is the thought of Trump getting elected in America, and then having the Trump vs. Putin Military Adventurism Reality Show commence and play out for four long years. (as in, happen in real world reality)

Brrr! That will be seriously big drama if it happens.

An example of dream changing

Recessions are times of dream changing.

The last few months may not have been a full-fledged recession in the US. But the financial markets have stumbled, and it seems the dream changing is in full progress.

This dream changing happens because what have been positive feedback investments become diminishing return investments instead. Investors, and others seeking high growth opportunities, are constantly looking for positive feedback investments -- these are investments were the more that gets invested, the more return comes back. These are lovely, lovely, lovely, but hard to find. And the magic doesn't last forever, so the search is a constant one.

When current winners start to loose their positive feedback, and become diminishing returners instead, it is time to move on.

But, the moving on isn't easy -- a lot of searching, and failing, happens before the next positive feedback situations are discovered. This searching is what is happening during a recession. It is what I call dream changing.

The following articles are describing some dream changing that is happening right now.

This 3 Mar 16 WSJ article, Mutual Funds Sour on Startup Investments Fidelity, BlackRock and other giants cut value of their stakes at faster pace, make fewer new investments by Rolfe Winkler and Scott Austin, describes how mutual funds are changing their tactics when dealing with Silicon Valley startups.

From the article, "Mutual funds that helped fuel the technology boom are cutting the value of their startup investments at an accelerating pace and are making fewer new investments.

These are ominous signs for Silicon Valley, where a flood of money into young companies pushed valuations skyward, and subsidized hiring sprees and advertising binges at scores of companies.

The mutual-fund pullback threatens to deepen a wider downturn that has already led to falling valuations, shrinking ambitions and layoffs as the receding tide of capital forces startup companies of all kinds to focus on the bottom line rather than growth at any cost."

This 4 Mar 16 WSJ article, Biotech Stocks: Have They Found Their Mojo? Sector stabilizes, but the road forward isn’t entirely smooth by Charley Grant, is another example.

From the article, "But investors ought to keep in mind that there is a difference between a stable market and a return to the euphoria that reigned for much of the past five years."

The Time of Nutcases grows stronger: 1937 revisited?

With the Super Tuesday results in it is clear that the Time of Nutcases is strong in this one... er, year.

The pattern of history this reminds me the most of is 1937. Here are the similarities I see:

o 1937 was a time of great frustration around the world. The peoples of the world will still trying to climb out from the recession of 1930, and deeply frustrated with how slowly the climb-out was happening.

o There was a bloody civil war going on in Spain which had thousands of outsiders participating in it as soldiers, and millions of dollars in military equipment being provided by outsider governments.

o This is when a lot of quirky leaders came to power -- the hero and villain leaders of World War II.

All that is missing from the 2010's version of the pattern is a second recession in the US (the rest of the world is experiencing one). If a downturn hits the US in the next four months... Wow! How similar!

The next part of this pattern, really spooky part, is what comes two years later, in 1939, the start of World War Two.

Spooky indeed, but keep the following in mind:

o From the pattern perspective what World War Two did was transform the Decade of Acrimony, that was the 1930's, into a following Decade of Big Vision -- people who had been arguing and not cooperating during the 1930's started cooperating vigorously in the 1940's to Win the War. They did this everywhere the war was being fought.

Hopefully, in this 2010's version of the pattern we can transform into the Big Vision mode using a different set of tools and inspirations than launching a world war.

Update: Another commentator noting the parallel with the 1930's: This 7 Mar 16 WSJ article, The Return of the 1930s Donald Trump’s demagoguery may be a foretaste of what’s to come. by Bret Stevens.

Update: Hmm... out of pattern and adding to the mystery is an uptick of jobs in the US. This 4 Mar 16 WSJ article, Analysis: Jobs Report Could Put April, June Rate Increases in Play Strong report likely won’t be enough to prompt Fed to raise rate this month by David Harrison, describes US jobs and wages as both growing.

From the article, "Employers added a seasonally adjusted 242,000 jobs in February, and the unemployment rate stayed steady at 4.9%, according to the Labor Department. Employment gains in January and December—when fears of a global recession spiked—were also revised upward, suggesting the U.S. skirted right past the worst of the global financial upheavals."

Employment upticks over many months, yet lots of American people are still frustrated. The moral: There are patterns, but current events always have lots of mysteries.



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