1. The Media’s Coverage of AI is Bogus

    Headlines about machine learning promise godlike predictive power. Here are four examples:

    With articles like these, the press will have you believe that machine learning can reliably predict whether you’re gay, whether you’ll develop psychosis, whether you’ll have a heart attack and whether you’re a criminal—as well as other ambitious predictions such as when you’ll die and whether your unpublished book will be a bestseller.

    It’s all a lie. Machine learning can’t confidently tell such things about each individual. In most cases, these things are simply too difficult to predict with certainty.

    Read the rest of this article by clicking here.

  2. Hong Kong Protests Go Global. City Is Paralyzed

    One of the most frequently used terms in risk management is “contagion.” The term is taken from epidemiology and refers to the process by which infection spreads from victim to victim until it expands into an epidemic (local outbreak) and then a pandemic (regional or global outbreak).

    Contagion runs its course when the victims recover or die. As applied to market risk analysis, contagion describes the same process of financial distress or panic spreading from bank to bank and institution to institution until the entire financial system is threatened.

    We saw the process in 2008 when the panic spread from Bear Stearns (March 2008) to Fannie Mae and Freddie Mac (June 2008) to Lehman Bros. (September 2008) and AIG (October 2008). Eventually, the global market system was threatened with the financial equivalent of death before central banks and finance ministries truncated the process with trillions of dollars of guarantees, liquidity and zero interest rates.

    Investors should not underestimate the possibility that protests in Hong Kong against Chinese attacks on civil rights could also cause global contagion.

    This article describes how the Hong Kong justice secretary was confronted by a mob of protesters in London, 6,000 miles from Hong Kong. Some force was involved and the justice secretary was at least slightly injured.

    The key point is that fierce protests of the kind taking place in Hong Kong are not necessarily contained in Hong Kong. There is significant potential for these protests to spread to cities in mainland China as well as other international centers (London, Paris and New York) and important cities with large ethnic Chinese populations (Singapore and Sydney).

    What happens in Hong Kong does not stay in Hong Kong. And that means the implications of unrest in China can impact investors in unexpected ways. This uncertainty factor strengthens the case for higher cash allocations to reduce portfolio volatility and provide resilience in the face of market shocks.

    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 Concentration Camps Are More Widespread Than First Believed

    China’s use of concentration camps to detain millions of political dissenters is not new. It has been widely reported for years.

    Nominally, the camps are for “reeducation, which is an effort to crush dissenting views and instill communist ideology. But they are far worse than that.

    Those targeted for the concentration camps include not just political dissenters but also religious believers. The religious targets include Uighurs (a Muslim community in Western China), members of Falun Gong (a spiritual and meditation movement) and Christians. China is officially an atheistic state and has zero tolerance for any religious views.

    Those imprisoned in the concentration camps suffer more than indoctrination. Many are bound and forced into submissive postures for hours and days. Others are subjected to starvation rations and denied water. Beatings and torture are common.

    In the worst cases, organ harvesting (removing organs without anesthetic to supply a transplant industry) is imposed on living victims and the bodies are cremated when the victim dies.

    What is less well-known is just how large this system of torture and death is. This article reveals that there are nearly 500 camps with as many as 3 million victims inside. Since the victims are targeted partly based on their Uighur ethnicity, the concentration camp system has been described as “genocide by incarceration” by one human rights advocate.

    This system is as bad as the Soviet Gulags and Nazi death camps in terms of its degradation of human rights and respect for human life. The U.S. did almost no business with the Soviet Union (other than simple commodity trading) and did no business with Nazi Germany after the declaration of war. How long will it be before the U.S. chooses not to do business with China?

    The president has the authority to force sales of Chinese stocks, order divestment of foreign investment in China and order U.S. companies to move supply chains to countries other than China. All of this may be coming sooner than markets expect. The time for investors to get out of China before these drastic remedies emerge is now — before it’s too late.

    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. China’s Problem Is Not Extreme Poverty. The Problem Is Rising Expectations

    When protests and riots spin out of control, it’s important for policymakers and politicians to understand why. A short-term police response may be needed, but a longer-term policy response is equally critical.

    Policy formulation begins with a proper understanding of why the protests and riots emerged in the first place. Many outsiders assume such protests have their roots in extreme poverty. Yet studies done over decades show that this is rarely the case.

    Protests don’t come from poverty; they come from individuals who have made some economic progress but are frustrated they cannot make more. The name for this is a “revolution of rising expectations.” It’s not the poor but rather the working classes and lower-middle classes and students who see that their path to progress is blocked.

    That blockage can come from corruption and a lack of rule of law. The blockage can also come from corrupt elites who have rigged the economic system to favor themselves, their family members and their cronies. The blockage may come because the home economy is stuck in the “middle-income trap,” which refers to the inability of certain developing economies to reach the rank of a high-income, developed economy due to lack of high-technology, high-value-added industries.

    This article asks whether a revolution of rising expectations will be as destabilizing to China itself as it has been in other countries around the world. The potential for dissatisfaction that leads to protest is a problem for mainland Communist China independent of recent riots in Hong Kong.

    People in major Chinese cities such as Wuhan, Chongqing and Xi’an are following developments in Hong Kong despite censorship. There is no doubt that China’s surveillance tools, including digital facial-recognition cameras and other biometrics, give it a daunting ability to suppress dissent.

    Yet it’s also the case that mass demonstrations in multiple locations can deprive Communist leaders of the “Mandate of Heaven” (an ancient form of deemed political legitimacy).

    In an advanced case, regime change is not out of the question. Communist ideology may be swimming against the tide of history. The result could be a prolonged period of political instability in the world’s second-largest economy.

    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. Hong Kong Police Firing Live Rounds at Protesters. Violence Expands

    We’re familiar with the escalation of protests in Hong Kong over the past eight months. They started out as peaceful protests against a proposed extradition law that would have allowed Hong Kong dissenters to be shipped to Beijing for trial without due process, which could easily result in long prison terms and even disappearance due to the absence of any rule of law in Communist China.

    As Hong Kong police pushed back on the protesters, the protests escalated to include disrupting transportation facilities (airport, subway, highways). Police next escalated to the use of tear gas and water cannons. The protests escalated into riots with window breaking and the destruction of public infrastructure.

    At this point, some protesters disappeared and their bodies later turned up in the harbor with signs of torture and missing limbs. Further escalation included widespread use of Molotov cocktails by the protesters and rubber bullets by the police. The attacks on the protesters involved not only Hong Kong police but also Communist Chinese paramilitaries and Beijing goon squads appearing in white T-shirts and black trousers — a kind of goon squad uniform.

    Now this article reports that police are firing live rounds and protesters have been shot point-blank. The protesters themselves doused a pro-government individual in a flammable liquid and set him on fire. The question is where do the protests go from here?

    The middle ground has disappeared and the two sides are entrenched. Beijing will not allow the protests and riots to go on much longer and protesters will not give up on their demands for due process, rule of law and free elections.

    Unfortunately, the situation may be heading for a replay of the Tiananmen Square protests of 1989, which resulted in a military repression conducted under cover of darkness and thousands killed, according to some estimates. That outcome would cause a massive flight of capital and human talent from Hong Kong and would destroy its place as a financial center and model for free markets and high growth.

    The costs to global capital markets and investor portfolios will be high.

    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. Hong Kong Is in Chaos. Beijing Is Running out of Patience

    The riots currently disrupting life and commerce in Hong Kong are now in their eighth month. The dissent started with protests against a proposed law that would permit extradition to Beijing of Hong Kong citizens accused of certain political crimes.

    Hong Kong has a reasonably good rule of law based on the treaty signed by Beijing in 1997 when the U.K. turned over control of Hong Kong to China. That rule of law has been slowly eroding under the influence of Beijing, but many rights have been retained.

    Beijing itself has no rule of law, only the pretense. The Communist Party pursues political prosecutions without due process or other legal protections for the accused. Moving Hong Kong defendants to Beijing effectively removes these due process protections. In Beijing, defendants might simply be jailed or executed or disappear without a trace.

    The protests soon expanded to include demands for fair elections, guarantees of civil rights, removal of Hong Kong Chief Executive Carrie Lam and amnesty for arrested protesters. Violence emerged both in the forms of property damage and attacks on the transportation system by protesters and the use of tear gas and rubber bullets by the police and Beijing goon squads. A number of protesters have been killed and some shot at point-blank range.

    As this article reports, the city has now descended into chaos and Beijing is losing patience both with the protesters and the response of the local authorities. The protesters are unlikely to give up their demands or their street actions. This means that China will escalate its response to the point of an invasion either by People’s Liberation Army units or paramilitary squads.

    A climatic Tiananmen Square-type confrontation with the protesters involving thousands of casualties cannot be ruled out. Such an event could affect Wall Street in a major way. It could force the sale of Chinese equities and disinvestment by U.S. companies in the hundreds of billions of dollars. Savvy investors should get out of China now before the situation reaches such a critical stage.

    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. Jim Rickards: Central Banks of Russia Buys Another 12.44 Metric Tonnes of Gold

    “It’s that time again. Central Bank of Russia just reported adding 12.44 metric tonnes of gold to reserves in September. Brings total Russian gold reserves to 2,243 metric tonnes worth $115 billion at the market. I guess Jamie Dimon can buy the Treasury notes Russia is dumping.”


  8. Aftermath: The Coming Financial Crisis and the Return to Gold

    Economist and author Jim Rickards joins us at Small Caps headquarters to discuss his latest book ‘Aftermath’.

    Jim shares his views on the current state of the global economy and why he believes we are headed for a major global financial crisis in the near future that will be greater than 2008.
    Discussed is how investors can prepare and even benefit from the collapse. Gold set to make a comeback as money and why a $10,000 per ounce gold price is not out of the question.
    We go into Jim’s work for the US government & CIA, and ask if they know the collapse is coming and are preparing for it.
    The role of the US dollar and its future.
  9. Interested in Wealth Preservation? This Family Has Been Rich for 300 Years

    In the United States, the “old money” is generally about 150 years old, with fortunes dating to the mid-19th century. Families in this category include the Vanderbilts, Rockefellers and Carnegies.

    More fortunes were created about 100 years ago including the Fords and Firestones. Some U.S. family fortunes are almost 200 years old (the Astors, Girards and Biddles). Most of the great wealth today is not old at all. It comes from success in the past 30–50 years including Mark Zuckerberg, Jeff Bezos and Warren Buffett.

    What about family fortunes that are 300 years old or even older? Fortunes that old are unheard-of in the U.S. but can be found in Europe.

    I’ve written often about the Colonna family in Rome, who have preserved their wealth for 800 years. This family fortune has survived the Black Plague, the Thirty Years ‘War, the Wars of Louis XIV, the Napoleonic Wars, World War I, World War II and more.

    My interest in the Colonna family began when I was a guest in their palazzo in Rome and learned the secrets of long-term wealth preservation from a member of the extended family. My dinner companion at Palazzo Colonna told me that the secret was “a third, a third and a third.” By this, she meant that wealth should be allocated one-third to land, one-third to gold and one-third to fine art (of course, some cash needed for operating costs and some business investment is fine also).

    The latest example of this strategy at work is described in this article about the Torlonia family, also of Rome. The Torlonias followed the same strategy as the Colonnas with allocations to land, fine art and gold. The Villa Torlonia in Rome is so impressive that it was temporarily expropriated by Italian dictator Benito Mussolini as his personal residence during World War II. (One point of an allocation to property is that despite temporary occupation or expropriation, it can usually be reclaimed later if the original title was good.)

    This article describes the Torlonia’s vast wealth preserved in their collection of Greek and Roman marble statuary. The family collection is considered to rival the collections in the Louvre and British Museum.

    Of course, not everyone can afford to collect 2,300-year-old Greek statues. But museum-quality 20th-century art or valuable numismatics are well within reach for many wealthy families. The “old money” shows that true wealth preservation comes from art, gold and land rather than stocks and bonds.

    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.