1. Should you prepare for the economy to tank? Jim Rickards thinks so — and explains why.

     

    America’s economy is doing pretty well these days. Considering what might happen in the event that it collapses is likely among the last things most wish to do.

    Wall Street veteran Jim Rickards believes that the time is now to prepare for what happens when the good years draw to a close.
    His latest book, the bestseller ‘Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos,’ details what he believes will transpire as a result of the next global economic meltdown, as well as what ordinary folks can do to shield themselves from fiscal ruination.
  2. Polls Have Value but Only if You Know How to Read Them

    Do I follow political polls? Yes, but only after I’ve deconstructed the polling methodology and recalibrated the polls based on my best estimate of what they really say.

    Let me explain. Polls are valuable in theory but flawed in practice. The flaws include oversampling voters of one party relative to their actual percentage in the electorate, oversampling minority groups with a disproportionate tendency to vote for one party over another, sampling “all voters” or “registered voters” instead of “likely voters” and other techniques that skew results to one party or another.

    For example, Democrats have an edge over Republicans in registered voters. That edge (ignoring independents for this purpose) is about 54% to 46%. But pollsters survey a sample of 58% Democrats to 42% Republicans.

    Within the Democratic oversample, there’s another oversample of minorities with a 90% track record of voting Democratic. That skew undersamples white Democrats who might vote Republican. There are many other examples, but you get the point.

    The good news is that when you study the methodology and reverse-engineer the poll, you can come up with useful results for purposes of forecasting.

    This article reports on a poll that exhibits some of these flaws (it polls “adults” rather than registered voters), but it still has its uses when adjustments are made.

    Trump does much better in this poll than many others. What’s important analytically is not the spread but the trend. Voters are moving in Trump’s direction despite impeachment efforts.

    Even a flawed poll has its uses if you put it in a time series of similar polls. Trump needs all the good news he can get these days, and this poll is one ray of hope.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  3. Chinese Communists Will Rip Your Lungs out (and Your Heart and Kidneys)

    Organ transplants are a miracle of modern science. Those who are declared dead and have made a donor election before death can provide kidneys, hearts and other vital organs to those in need.

    The procedures for organ removal, preservation and quick delivery to patients waiting for a transplant are well established in the U.S. and elsewhere around the world. But what if the “donation” is not voluntary but rather coerced by state power? What if the “donor” isn’t dead when the organs are removed? What if the organs are removed from still-living victims without the use of anesthetic?

    That’s exactly what’s going on in China today as described in this article. China is targeting religious minorities for this horrific treatment. Uighur Muslims, members of Falun Gong and Catholics have all been targeted.

    First, they are sent to concentration camps for political reeducation. Those who are not fully brainwashed are singled out for much worse treatment, including forced organ removal.

    These organs feed a multibillion-dollar business in “transplant tourism” that thrives in China. Once the victim’s organs are removed, the body is cremated in industrial-scale crematoria, exactly as the Nazis did to Holocaust victims in the 1940s. The official reports described in the article state that Chinese organ harvesting from living victims is the worst human rights atrocity of the 21st century.

    Of course, every effort must be made to end this practice starting with a prohibition on Americans going to China to receive organs. This begs the question of why American companies do business with China at all and why Americans consume any goods from China.

    There are certainly viable alternatives for manufacturing and production in Vietnam, Malaysia, Indonesia and other low-cost countries in Asia that do not engage in atrocities.

    This story is one of many reasons why the so-called “trade war” with China is more than just a trade war. It’s a clash of civilizations and will persist for years and decades to come. Investors should steer clear of China plays. They have nowhere to go but down.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  4. Law Professor Warns Democrats: Impeachment Is “a Serious Mistake”

    Staunch Republicans and right-wing advocates have supported Trump against the impeachment threat and criticized Democrats for trying to remove a president from office based on a nothingburger conversation. That view comes as no surprise. What is surprising is when distinguished law professors from preeminent liberal institutions say the same thing.

    Eric Posner is a professor of law at the University of Chicago Law School (where Obama once taught) and the son of Richard Posner, a legendary federal court judge. Eric Posner is a prolific legal writer and the author of 12 books and hundreds of peer-reviewed legal articles. He is the fourth-most-cited legal scholar in the United States. In short, he’s a distinguished scholar and no partisan hack.

    Yet his view of impeachment is that the Democrats are falling into what he calls “the impeachment trap.” In this article, Posner says that the Democrats are wasting their time because the Senate will certainly vote to acquit President Trump and his popularity is likely to soar in the aftermath. Posner says, “Impeachment has its own narrative logic: Once the Democrats initiate it, they either win or lose. If they lose, they will be seen as losers who wasted public resources for a futile goal.”

    Posner also asks why Democrats would even pursue impeachment if they will lose in the end and if Trump’s popularity is likely to increase. The answer is that many Democratic members of Congress fear primary challenges from the ultra-progressive left if they do not vote for impeachment.

    In other words, moderate Democrats are being driven to immoderate actions by extremists in their own party even if the process helps Trump. Welcome to the looking-glass world of 21st-century politics.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  5. Expect Impeachment by December and Then a Quick Exoneration

    Impeachment talk is dominating the news. That’s too bad, because there’s no shortage of other critical news from Syria to Iran and Hong Kong. But that’s the bitterly partisan world we live in so we’ll just have to get used to it.

    The Democrats seem to have gone through what physicists call a “phase transition.” This is what happens when water turns to steam or a snowpack becomes an avalanche. The particles are the same, but the system dynamics have radically changed.

    The House of Representatives has wanted to impeach Trump since before he was sworn in, but they couldn’t pin down a set of charges. Now the phone call between Trump and the Ukrainian president has radically changed the dynamics and impeachment seems inevitable. There’s no point in reciting the pros and cons.

    Republicans say the call was friendly, pointed to 2016 bad acts and that there was no quid pro quo. Democrats say the call was an invitation to a foreign power to intervene in the 2020 election by targeting Joe Biden. Take your pick.

    The point is there’s no middle ground. Both sides have their narratives and never the twain shall meet. All that matters now is politics and votes.

    The Democratic impeachment momentum is unstoppable and the 218 votes need to impeach are rapidly falling into line. Expect an acrimonious six weeks and impeachment before Thanksgiving. What happens then?

    The articles of impeachment go to the Senate for a trial. This article gives a preview of what to expect in the Senate. Republicans have 53 votes in the Senate. It takes 67 votes to remove a president from office. If all 45 Democrats and two independents vote to remove, it will still take 20 Republican defectors to remove Trump. That won’t happen, not even close.

    In fact, Senate Majority Leader Mitch McConnell and Judiciary Committee Chair Lindsey Graham have said the “whistleblowers” will have to testify publicly and Hunter and Joe Biden could be called as witnesses.

    The entire trial may be wrapped up in a matter of days and finished before Christmas. Trump will have the last laugh. But it will be a rocky ride between here and there.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  6. What Happens at WeWork Doesn’t Stay There

    By now, you’ve heard about shared-office-space giant WeWork’s decision to pull its IPO. Original plans offered by Goldman Sachs called for a valuation of up to $90 billion. Based on some adverse disclosures, that valuation was quickly lowered to $47 billion and then $10 billion.

    After more adverse news and the pressured resignation of WeWork CEO Adam Neumann, the IPO was pulled entirely. That’s a dismal scenario, but as this article reveals, the situation at WeWork is worse. Much worse.

    The article takes the form of an interview with Professor Scott Galloway from the NYU Stern School of Business. Galloway says that not only is the IPO delayed, but it’s never coming back. He suggests that WeWork is insolvent and will either file for bankruptcy or be bailed out at great cost by WeWork shareholder SoftBank and its CEO, Masayoshi Son. Total investor losses will be in the tens of billions and layoffs of about 10,000 employees should be expected.

    The damage doesn’t stop there. WeWork has hundreds of large-scale prime leases in cities around the world. If WeWork goes bankrupt, those leases will be terminated, leaving building owners high and dry.

    Many of those owners undertook expensive remodeling to accommodate the WeWork business model. Those remodeling costs were expected to be spread over the life of 10-year leases, but if WeWork terminates the leases in bankruptcy, the remodeling costs will have to be written off immediately. This will put landlords in distress and lead to fire-sale pricing on some buildings and depressed commercial real estate values in general.

    This could also mean the end of pie-in-the-sky IPO valuations and a drying up of investment banking fees. The negative ripple effects will spread from there.

    This story is not over and the costs are far greater than markets have priced in so far. Every economic expansion ends with some spectacular failure such as Drexel Burnham in 1990 or Lehman Bros. in 2008. WeWork may enter that list as the massive failure that marks the end of an era.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  7. North Korea Uses U.S. Political Turmoil to Perfect Its Nuclear Weapons

    While all eyes have been focused on the Persian Gulf and Iranian confrontations with the U.S. and Saudi Arabia, a new round of nuclear weapons testing has been kicked off in North Korea.

    This article reports on a test-firing of a submarine-launched ballistic missile (SLBM) by North Korea. As you’ll see in the photograph that is included in the article, the rounded warhead is consistent with the type used for nuclear weapons.

    This test was even more provocative because the missile landed in a part of the Sea of Japan claimed by Japan as part of its exclusive economic zone under international law and therefore constitutes a breach of Japanese sovereignty. Analysts interpret the launch as a provocation designed to get Trump back to the bargaining table with Kim Jong Un with a view to possible relief from U.S. economic sanctions on North Korea.

    That’s plausible, but an even simpler explanation is at hand. Even without detonating a nuclear device (the last test was in September 2017), this launch is another step in the development of a full-scale nuclear arsenal including short-range, intermediate-range, intercontinental ballistic missiles and SLBMs. The submarine platform is especially dangerous because the submarines can be navigated close to the U.S., putting many major cities at risk even if the range of the missile itself is limited.

    Trump refuses to reduce sanctions on North Korea unless they begin to dismantle their nuclear weapons. North Korea has shown no inclination to do so and is merely playing for time. This is just one more geopolitical flashpoint that is possibly heading toward war. Investors have been warned.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  8. The Trade War Spreads From China to Europe With No End in Sight

    The global trade war has been raging and expanding since January 2018 when Trump imposed tariffs on solar panels and certain appliances. In my view, the trade war really started in 1994 when China did a maxi-devaluation of its currency and escalated in 2001 when China joined the World Trade Organization (WTO) and proceeded to break every rule of that organization. Trump’s action in 2018 marks the beginning of U.S. retaliation.

    Still, for most analysts, Trump’s highly visible actions were the start of a trade war. So far, the war to date has focused on U.S.-China bilateral trade. China has imposed tariffs on almost 100% of its $150 billion of imports from the U.S. The U.S. has imposed tariffs on over $250 billion of Chinese imports and is poised to tariff the remaining $300 billion of imports in a matter of weeks if upcoming China-U.S. talks don’t result in a de-escalation of tensions.

    But the trade wars are by no means limited to China. Trump threatened major tariffs on all Mexican imports unless they helped with illegal immigration into the U.S. (which the Mexicans did). Canada has also been subject to new tariffs on lumber and dairy products.

    The greatest escalation of the trade war will come soon with regard to Europe. This article reports on a WTO decision that allows the U.S. to impose $7.5 billion of countervailing duties on Europe to compensate for illegal subsidies by Europe to Airbus. The U.S. has already implemented this ruling with new tariffs on French wine, British whiskey, Spanish olives and cheese from many sources in Europe.

    The WTO decision is based on an old case and is not specifically related to the new trade war. These “wine and cheese” tariffs are just the tip of the iceberg compared with massive tariffs on German auto exports that Trump plans to impose next month.

    We’ve said it before and we’ll say it again: The trade war is far from over and will increasingly weigh on global trade and global growth in the years ahead. That’s bad news for stocks — something that is already showing up in recent stock market performance.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  9. The Mayor of This Town Knew How to Go for the Gold!

    I have long recommended a modest allocation to physical gold bullion for investor portfolios, both as a hedge to inflation and for wealth preservation in a financial panic. My suggested allocation is 10% of investable assets, but investors can have more or less depending on their risk appetites.

    Of course, some investors take things too far and the situation described in this article is a good example! A Chinese citizen and Communist Party official named Zhang Qi was discovered to have 13 tons of gold (worth over $600 million) and cash equal to over $35 billion stashed away in his house. There was so much gold that it filled purpose-built racks and spilled over onto the floor.

    This hoard would have made Zhang Qi one of the world’s richest people. Of course, all of that wealth has now been confiscated by the Communist Party and Zhang Qi is in prison. He is likely to receive the death penalty. And he’s not alone.

    It’s estimated that more than 120 other senior officials and politicians have been implicated in similar crimes. Apart from just an example of blind greed, there are a number of lessons that can be learned from this.

    The first is that gold is money. The corrupt official was not hoarding stocks, bonds or money market funds; he wanted gold. The second lesson is you need to store gold in a safe location (not a bank) with a good rule of law. If you have your gold in a lawless jurisdiction like China, it’s subject to confiscation at a moment’s notice. Zhang Qi is alleged to be entirely corrupt, but legitimate gold owners are no safer in a jurisdiction like China because “economic crimes” can be invented from thin air.

    Finally, it’s important to keep your gold close to where you’ll want it in times of acute economic distress. Gold is extremely dense and hard to move. I’ve handled standard 400-ounce bars (equal to a 25-pound free weight); you need to be fit to do that. Don’t try moving a ton (let alone 13 tons) without armored cars or other easily interdicted vehicles.

    Gold is the best form of money, but it’s not easy to take on the run. Keep it where you’ll want it when the chips are down.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.