Clustering with knowledge instead of data (Marketing) – Part 2

 

 The above map is an illustration to understand what we are discussing in the article below. The background colors represent Chomonicx. A clustering system at the Chome level. The points represent single buildings. This is what we call Point System, a clustering system at the building level from which we can infer single households. Our breakthrough is to obtain this last level of precision from the address with limited input from external data and no need to refer to an address database which in Japan tends to be expensive.

 This post is a follow-up to an earlier post concerning clustering in Japan. Clustering with knowledge instead of data (Marketing) Part-1 explaining how over time knowledge replaced data at the base of our clustering system.

  Initially, moving from Chome (block) level clustering to Point (household) level clustering we encountered several challenges.

 The first one was the de-identification of data in order to respect privacy. But this is a well known problem which has been solved by Internet companies with one way hash solutions by combining several data lines, address and phone number for example, so that you end up with a unique identification number which can be matched but cannot for calculated back to a specific individual or original data.

 The second challenge was that we were using proxy data (addresses) in order to build an index on data, households, about which we had no information. The solution was to identify “income” as the most important data about households since this is the main link and constraint to the propensity to buy, and income could easily be calculated from the size, location and value of each dwelling.

 The third challenge was to corroborate this insight by extensive verification and validation which was complex and time consuming although we were in a unique position to do it since our partner at that time, Zenrin, had built and just digitized their full database of all the buildings in Japan.

 Lastly, we had to compile all this information into a coherent whole but that too was well understood thanks to the construction of our earlier segmentation systems, the different versions of Chomonicx at a higher level of coverage.

Point System

 Marketing up until recently was defined by a few principles which have now been rendered void by the implementation of Internet Marketing.

 The first principle was the 80/20 rule so that 80% of your income was generated by 20% of your customers. The Internet replaced this basic marketing tenet with the “winner takes all” 99/1 where 99% of your success is generated by 1% or less of your insight. This is specifically the case for clustering as the very few top clusters generate most of your income. A direct consequence of this is that you do not need to be right most of the time. You just need to be perfectly right a few times. This phenomenon is well known with Twitter for example as most of your Tweets will have a few or a few hundred retweets until an influencer retweet your post in which case it will suddenly become viral and be copied into the millions. Likewise, on the Internet, a successful cluster will be used out of proportion compared to less well targeted ones, even if the difference is marginal. 

 The second principle of marketing was the 50% rule of impact. “Half of my advertising works but I don't know which half!” This was then, now we know. The instant feedback from on-line advertising means that over time the impact and therefore knowledge accumulated becomes extremely effective and eventually statistically overwhelming. These knowledge building loops are of course directly applicable to segmentation and have yielded astounding improvements in segment precision.

 Consequently, some of our clusters, Young urban high-earning singles in small expensive central flats for example are almost perfect and indeed include such people to the exclusion of anybody else. This is precision targeting at its best.

Addresses

 But how far could we go on this road of “less data, more knowledge” without losing the insight giving value to our system? As in a Turner or Van Gogh painting, can you still get the gist with almost no data, but talent in their case, knowledge in ours? The answer to this question was positive. For technical and specific geographic reasons, it happens that the addresses in Japan contain all the information you will ever need, to build a clustering system.

 This has profound implications as it means that with the right knowledge and input, almost anyone can build an effective segmentation system. To understand why, let’s see below how the address system works in Japan.

 In Western countries the address systems are defined by streets and their numbering usually in ascending order away from a river with pair numbers on one side and odd numbers on the other side. Streets can be dense and short in old city centers or kilometers/miles long, in the US.

 In contrast, the Japanese system (Originally Chinese) considers “streets” as a gap between blocks of houses and consequently never bothered to give them names. The number for each house is given in chronological order based on the date of construction on a block which is called a Banchi. The Banchi are grouped in Chome which are themselves grouped in areas which are grouped in villages or cities in a perfect hierarchical order.

 This has a number of positive consequences for segmentation. The Banchi, Chome and city areas are more or less homogeneous in size and sometimes, but not always, composition and cover Japan with geographic blocks which are extremely easy to manipulate both statistically and on Maps (GIS).

 A typical address will therefore look like the following: (When written in Japanese. If written in English we invert the naming and numbering system which completely destroys the logic.)

Chiba-ken, Narita-shi, Tamatsukuri. 5-12-3

 Chiba is the prefecture (Ken), Narita is the city (Shi), Tamatsukuri is the area, 5 is the Chome, 12 is the Banchi and 3 the number of the house.

 If the information stopped there, we would have a convenient hierarchical address system but nothing very useful for clustering.

 Fortunately and surprisingly, the Japanese do not stop there as usually they also include the name of the building if it is a large building as well as the floor number. So the address above which as such would indicated a single detached house now becomes:

Chiba-ken, Narita-shi, Tamatsukuri. 5-12-3-12F Green mansion

or Chiba-ken, Narita-shi, Tamatsukuri. 5-12-3-3F Momiji-so

 The number of floors is of course important as it tells us the size of the building. As for the name, it is essential as it gives an indication of the type of building. In the examples above, Mansion indicates a family size flat whereas "so" indicates a single room “apato”. A much cheaper type of construction.

 Likewise, addresses in countryside areas are defined by only two numbers instead of three which immediately indicates a rural area. So the address above would become:

Chiba-ken, Hatake-Machi. 1435-56

Or Chiba-ken, Hatake-Machi. 1435-56-3F

 In the first case, you have a house in the countryside, in the second a building.

 But it goes far beyond that: If you have a company or a store included, you can easily match the address to a public registry of all the companies in Japan. If it is a town or city flat, the name “Danchi” will replace “Mansion”. And finally, the land price for ALL the cities and villages at the Banchi level are public in Japan (and published in the newspapers once a year.)

 So in the end, just based on the address system, we will know for every building in Japan, if it is a flat, a mansion or a government provided apartment, the number of floors as well as the land price.

 All this information is enough to build a very accurate segmentation system as a precise land price will tell you the level of urbanization and the rest of the address indicate the type of building. This information is sufficient to build an accurate and effective segmentation system based on an inferred income level.

 The most important characteristic is that the information does not need to be matched to an address database to get access to the data as for any other segmentation system, but just to extract and recognize the information directly provided in an address database, to automatically segment and organize it.

 The exact algorithm contains of course more information and details at every level of the address system but is not significantly more complex than described above. What is not included in our description is little more than specific details to refine and define further the addresses as other types of details can be included in an address and therefore taken into consideration to improve the segmentation.

 This is how, over 15 years, we have succeeded in replacing data with knowledge, substituting a simple but astute groupings algorithm to matching addresses with an existing database, which in itself represents a huge progress since a few hundred lines of algorithm are enough to completely replace a one to one matching to an existing, but usually expensive database.

 

 

 

 

Russia Vs. Ukraine Or Civil War In The West? (Video - 51')

 One of the brightest and most high level talk you can hear about "Ukraine" although the subject is much wider and concerns our own sanity in the West.

 This is the kind of analysis we should hear on television and read in the newspapers. And thanks to this, we wouldn't be where we are today, facing annihilation to an extent very few people understand, unfortunately. 

 

Why Tensions Between China And Taiwan Are On The Rise (Video - 7')

 Contrary to most people who fear an escalation in Ukraine, I believe that Taiwan is a much more dangerous flashpoint at this stage. 

 The reason is that in spite of the rhetoric over Ukraine, few countries in Europe want a war or are ready for one. Likewise the ambitions of Russia are limited to Crimea and the Dombass which is why the numerous provocations of NATO have not been followed up on the battleground.

 Taiwan is different. Whereas Ukraine is insignificant and little more than a "proxy to fight Russia" from the US Government in their own words, Taiwan in an essential component of the global supply chain and as such far more important for the US. 

 Conversely, China is facing a major crisis with the bursting of its real estate bubble and the potential crash of its economy. These are often, historically, conditions under which countries go to war. 

 China is not ready for war nor is its military strong enough to fight effectively. But what if the war is not about Taiwan as everyone expect but about destroying the hegemony of the dollar? Can the Chinese economy sustain a long war of attrition? Probably not as quickly China would be starved of raw materials and resources. But can the West sustain such a war without completely crashing it's financial system?

 The risk is that the Chinese will not decide based on economic grounds but on the survival of their political system.

 

Ninja (Omicron BA.5) COVID Fearporn by Dr Robert Malone

 If you look carefully, the level of social engineering is simply stupendous. No wonder the Davos crowds are convinced they will have the last word!

Guest Post by Dr. Robert Malone

Now be a good highly vaccinated citizen and get in line for the “latest and greatest” booster, Comrade!

What is Fearporn? Is it really a thing?

When I first started discussing “Mass Formation Psychosis” (and specifically on Joe Rogan #1757), the entire Silicon Valley and Corporate Media seemed to simultaneously loose bladder control, claiming that there was no such thing, that this was not in the American Psychiatric Association’s Diagnostic and Statistics Manual, had no basis in the literature, and was a fabricated concept. “Factcheckers” had a field day. The Guardian and Forbes almost stroked out in outrage. In a fit of self righteous indignation, aging 60s rocker Neil Young, whose Spotfy hit rate was anemic at best, left Spotify together with Crosby, Stills and Nash, only to return later with their tails between their legs. Prompting many sagebrush sages to quote Lynard Skynard “I hope Neil Young will remember, a Southern man don’t need him around anyhow.” Turn it up.

By the way, I recently asked David Crosby if he would like to do a podcast together to just discuss the issues- and got back a “ticket closed” statement from his handlers. So much for constructive dialog and engagement.

As the topic started trending, Google immediately started editing search results in real time to elevate unqualified opinions that cast shade on the theory and teachings. Then world-renowned Professor of Clinical Psychology Mattias Desmet, PhD published “The Psychology of Totalitarianism” which documented both the process and the rich academic literature supporting it. Nothing but crickets chirping have been heard since. As far as I am concerned, that feels like yet more vindication (not that I care anymore), and a clear indication that Google and corporate media knew all along that they were guilty of intentionally driving COVID “Mass Formation Psychosis” in the general population. Personally, I think that empathy is the best response for the many who have fallen victim to this form of propaganda. Pity the poor hyper-vaccinated West Coast, aging Laurel Canyon crowd, and urban upper Eastern Seaboard, for they know not what they do.

So what about “Fearporn”? Just more Dr. Robert Malone MD, MS crazy talk? Well, thanks to Ilisa Kaufman Psy.D. and Psychology Today, there is independent validation of the term, and some recommendations for each and every one of us. They sound a whole lot like the advice provided by the late great John Prine, who got his Ph.D. from the school of hard knocks – “Blow up your TV, go to the country, plant a lot of peaches.”

“Has Fear Porn Inserted Its Way Into Your Mind?” (Psychology Today)

“Is all the media getting to you? A few changes can go a long way.”

“If you have not heard of the term “fear porn“, it refers to mainstream media content that deliberately and enticingly plays on people’s fears about disaster, disease, and death. Yes, there are media outlets that go beyond informing and alerting the public. Media is necessary and important to inform the public and to educate. However, at what point does informing turn into aggressively alarming people? Certain media is “intentionally” trying to panic the public. In a way, they are violating your minds.”

Dr. Kaufman proceeds with this indictment of the media and “fearporn industry”, and concludes with some practical advice.

‘What is the psychological effect that this can have on you and your loved ones? I have noticed the impact that the over-use of media has on my clients, especially for the anxiety and OCD communities. For example, I still have clients that “compulsively” check the coronavirus numbers and are still not leaving their house. For some, even if the policies and rules in their state have changed, they are unable to move forward. They are psychologically “stuck” in their Coronavirus protective behaviors.

If the media had a “hand” in alarming people to the point that they are now stuck. Does the media have an obligation to try and help people to become unstuck? Sadly, the answer appears to be no. Even more upsetting, the media is actually still doing plenty to keep people in a state of panic. In my clinical opinion, this is extremely damaging and unhealthy for the mental health of my clients and the public.

Here are some ways to help correct or prevent mental health consequences from the “fear porn” industry:

-Limit or get rid of your media intake. This includes social media, which is filled with plenty of strangers and “friends” trying to persuade and terrorize you.

-Once you have limited media, use that time to go outside in the sun and walk or run. Exercise can help reduce your stress levels. Also, responsible sun exposure has been proven to help with some psychological conditions.

-Refuse to get into conversations with anyone regarding what they saw or heard that was terrifying on the news. Simply explain to everyone that you will be using your own judgment to “protect” yourself as opposed to all the unknown reporters in the world.

-Definitely get help immediately if you are unable to function socially or occupationally. Programs are available and are useful when trying to desensitize yourself, to have a quality of life.”

“Factchecker” vampires begone. Now, where DID I leave those wooden stakes?

Here is another related gem from Dr. Kaufman (title and link below). And for the attention impaired, her answer to her own question is basically “yes”.

Can Coronavirus Health Behaviors Trigger OCD?

The connection between coronavirus and compulsive behaviors.

Important to keep in mind, Fearporn is a business model, which as Dr. Kaufman correctly notes drives profit for a “Fearporn Industry” of corporate media and bloggers (including Substack’s anointed unctuous COVID-19 expert Cardiologist Eric Topol, who recently put out a breathless Fearporn classic which of course neglects to even mention the highly vaccinated/immune escape problem. Disinformation at its best. Appears to meet DHS criteria for Domestic Terrorism. Scientific objectivity? Not so much.) I pointed this out in prior substacks concerning the fearporn surrounding the Monkey Pox outbreak in Men who have sex with Men, which is (alarmingly? not so much) apparently up to about 5,000 cases worldwide. Let’s see, 5000 cases divided by about 8 Billion people in the world equals an attack rate of… 0.0000625%. Sorry Bill and Tony (not). You can find those prior Monkeypox substacks here and here. I flatter myself to think that these substack articles, which were picked up and widely distributed among the “free resistance” alternative media, helped to quench this attempt to manipulate all of us into irrational panic and vaccination with a live attenuated Smallpox vaccine that also happens to have the major “side effect of special interest” of myocarditis. Curiouser and curiouser!” Cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English). You have been warned. Risks are higher in young men.

So here comes the Fearporn, right on schedule.

First the FDA has finally decided that the Wuhan-1 based mRNA spike vaccines are not working, and that we need to migrate to mRNA-based multivalent vaccine. In so doing, they have completely ignored the huge number of peer reviewed manuscripts documenting “immune imprinting”, which is the reason why so many highly vaccinated individuals are developing Omicron infections now, including repeated or chronic infections. For references and detailed analysis of “immune imprinting” or “Original antigenic sin”, please see part 1 and part 2 of my prior analysis on this topic. Front line physicians are reporting to me that they are seeing an uptick in pneumonia, but not people that they need to send to the hospital for pneumonia.

On Thursday June 30, Cheyenne Haslett/ABC news reported:

“The Food and Drug Administration on Thursday said it had advised COVID-19 vaccine companies to produce an updated vaccine for this fall, an aim to give people broader and stronger immunity in an upcoming booster campaign ahead of the winter. It’s the latest step in the FDA’s strategy to better keep up with the virus, moving quicker to address variants and working to make booster doses more effective. The announcement comes after the FDA’s advisers met earlier this week to discuss the various options for updated vaccine designs. In keeping with the advisers’ recommendations, the FDA selected a vaccine that will include two strains of COVID, the original Wuhan strain and the most recent omicron sub variants, BA.4 and BA.5, which is currently making up the majority of cases.”

This is then apparently to be what is called a trivalent vaccine, which will most likely greatly increase the total dose of the mRNA/delivery formulation complexes injected into the arms of the naive and those suffering from COVIDcrisis mass formation. Which, if this is the case, will definitely increase the adverse events. Suffer little children (Matthew 19:14). Based on the FDA’s “Future Framework”, it seems likely this will be Emergency Use Authorized (despite the lack of any true medical emergency) based only on immunogenicity data (despite the inconvenient fact that there are no validated immunologic correlates of protection for SARS-CoV-2). No wonder why so many speculate that the hidden agenda here is depopulation and reduction of the useless class as the WEF and Biden administration anticipate the Brave New World emerging during maturation of the Fourth Industrial Revolution (according to Klaus Schwab). Welcome to hell. Don’t say you weren’t warned.

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Meanwhile, back at the ranch, as the amazingly prolific and brave Zachary Stieber reports in the Epoch Times, “Natural Immunity 97 Percent Effective Against Severe COVID-19 After 14 Months”.

The protection against severe illness from so-called natural immunity remains superior to the protection bestowed by COVID-19 vaccines, according to a new study. People who survived COVID-19 infection and were not vaccinated had sky-high protection against severe or fatal COVID-19, researchers in Qatar found.

“Effectiveness of primary infection against severe, critical, or fatal COVID-19 reinfection was 97.3 percent … irrespective of the variant of primary infection or reinfection, and with no evidence for waning. Similar results were found in sub-group analyses for those ≥50 years of age,” Dr. Laith Abu-Raddad, with Weill Cornell Medicine-Qatar, and colleagues said after studying long-term natural immunity in unvaccinated people. That percentage is higher than the protection from COVID-19 vaccines, according to other studies and real-world data.

The actual real world data are showing that it is the highly vaccinated who are getting infected and reinfected by Omicron and its recent variants. So the response of Pfizer, Moderna, and the US HHS is more jabs which could not have been more carefully designed to further exacerbate immune imprinting in the highly vaccinated if they had tried. Or maybe they are trying. Who knows. Everything about the COVIDcrisis and these vaccines is upside down, smothered in propaganda, and dished up on a plate of Fearporn.

The US Government has now executed a $3.2B contract to Pfizer (using borrowed fiat currency, of course) for purchase of mRNA vaccines designed to address the new Omicron subvariants (BA.4 and BA.5) which will apparently include mRNA coding for Spike proteins from Wuhan-1, Omicron BA.4, and Omicron BA.5. This must be a serious threat, this BA.4 and BA.5 right? Citing Eric Topol’s recent Fearporn substack, the Daily Beast hyperventilates with this piece entitled “This New ‘Ninja’ COVID Variant Is the Most Dangerous One Yet”. Are you sufficiently scared yet? Resistance is futile. You will be assimilated.

Yipes. These symptoms must be wicked bad. According to Business Insider, “Symptoms of the Omicron BA.5 variant include runny nose, sneezing, and sore throat”. OMG! Katy, Bar the Door! Business Insider proceeds with this alarming summary of the situation:

The Omicron BA.5 variant is the dominant coronavirus strain in the US, according to the CDC. 

Its symptoms are similar to past Omicron subvariants: a sore throat, sneezing, and a runny nose.

Experts say BA.5 infections may lead to less severe cases of COVID-19 than early ones.

Here is what the actual most recent CDC data look like at this point. Good to know.

Here is the short version of Topol’s fearporn piece, courtesy of the far left social media outlet Twitter. I ask you, is this disinformation? Who is paying Topol for putting out this sort of junk?

Big badda boom, for sure. 15% over two weeks ago? And falling according to the CDC data?

I will close my commentary on this sordid specific Fearporn example by presenting you with the smug genius at Daily Beast who is responsible for pushing this tripe, and invite you to let him know about how much you personally appreciate his contribution to raising the fear level in the general population. How do these people even live with themselves? I hope he is single. I would hate to be his significant other (speaking in a gender neutral fashion). If I was, I would certainly want to wear a mask in public.

"No Place For Virtue-Signaling In Finance" - HSBC 'Responsible Banking' Head Quits

  Another victim of the predominant "woke" culture. His crime? Denouncing the fake climate emergency while trying to pursue green investments. So "green" but not green enough. Whoever doesn't accept the dogma whole is now branded heretic. 

  As the economy unravel, it is amazing to see the fanaticism getting worse, especially in places such as Germany. The less it works, the more you need to apply the remedy and believe in the cure. 

"No Place For Virtue-Signaling In Finance" - HSBC 'Responsible Banking' Head Quits from Zero Hedge

It has been just over a month since HSBC reportedly suspended a senior executive after he questioned the risk climate change plays on financial markets, arguing investors shouldn't worry about it, according to Financial Times. 

Stuart Kirk, global head of responsible investing at HSBC Asset Management, told an audience in late May in London at a Financial Times Moral Money conference, "there always some nut job telling me about the end of the world."

In a resignation letter, posted to LinkedIn, Kirk explained that HSBC’s behaviour towards him since the speech has made staying in the role, ironically, “unsustainable”.

Kirk’s post on LinkedIn highlighted issues around freedom of speech and the damage caused by cancel culture.

“Investing is hard. So is saving our planet. Opinions on both differ. But humanity’s best chance of success is open and honest debate. If companies believe in diversity and speaking up, they need to walk the talk. A cancel culture destroys wealth and progress,” he wrote.

“There is no place for virtue signalling in finance. Likewise as a writer, researcher and investor, I know that words or trading shares can only achieve so much. True impact comes from the combination of real-world action and innovative solutions.”

Read the full letter below: (emphasis ours)

Today I wish to announce that I have resigned as global head of responsible investing at HSBC Asset Management.

Ironically given my job title, I have concluded that the bank’s behaviour towards me since my speech at a Financial Times conference in May has made my position, well, unsustainable.

Funny old world.

Over a 27-year unblemished record in finance, journalism and consulting I have only ever tried to do the best for my clients and readers, knowing that doing so helps my employer too.

Investing is hard. So is saving our planet. Opinions on both differ. But humanity’s best chance of success is open and honest debate. If companies believe in diversity and speaking up, they need to walk the talk. A cancel culture destroys wealth and progress.

There is no place for virtue signalling in finance. Likewise as a writer, researcher and investor, I know that words or trading shares can only achieve so much. True impact comes from the combination of real-world action and innovative solutions.

Which is why I’ve been gathering a crack group of like-minded individuals together to deliver what is arguably the greatest sustainable investment idea ever conceived. A whole new asset class. Sounds fanciful – but I am not one for hyperbole, as viewers of my presentation know well.

To be announced later this year, the first project will underline the central argument in my speech: that human ingenuity can and will overcome the challenges ahead, while at the same time offering huge investment opportunities.

Meanwhile, I will continue to prod with a sharp stick the nonsense, hypocrisy, sloppy logic and group-think inside the mainstream bubble of sustainable finance. Follow me on LinkedIn if you want to learn the right way to think about ESG – and let me tell you, most of what’s out there is bonkers.

Finally, can I take this opportunity to thank the tens of thousands of people – from chief executives and congressmen to scientists and mom and pop investors – who contacted me from around the world offering their support and solidarity over the past two months.

You have given me strength during what has been a tumultuous time for me and my family. It is for you that the next chapter in my career will be devoted. Please forward this to anyone you know who cares about money and planet earth.

When Governments Do Truly STUPID Things.... by the Market Ticker

 Another interesting blog that I follow from time to time.

 Sri Lanka was indeed trying its luck with top down green policies to stop using most fertilizers. I guess we can agree that it didn't work out. Too bad they had to learn the hard way. The next stop on this road is starvation!

 As for Germany and its insane green energy policies, we will soon see how it ends but "well" is not a possible outcome anymore... 

 When Governments Do Truly STUPID Things....

They tend to collapse spectacularly and the "powers that be" almost-never survive politically -- and frequently physically.

Sri Lanka is the latest example; they are literally bankrupt, having bought into the "green" thing and then... oops.  The root causes were many, but chief among them were overspending and a commitment to "green" farming practices, which decimated crop yields, spiked prices and then of course here comes higher oil costs.  The combination proved fatal to the economy.

"The rich" are being literally chased down and slaughtered, with "rich" being defined as "has something, when we have nothing."  The President fled the nation and, at least report, the Presidential home has been stormed by protestors.

As they say.... oops.

Germany is facing an existential crisis of its own making as well.  Deciding to go "green/woke" for energy they foolishly shut down both coal and nuclear generation, relying on Russian gas for that which they couldn't manage to produce reliably from renewable sources.  Renewable sources such as wind and solar are not reliable and never will be; the only means to prevent shortages is to either back them up with fossil plants (which means you pay twice since the capacity has to be available when the sun and wind don't show up in sufficient quantity) or wildly overbuild against expected capacity requirements which is prohibitive for cost reasons, never mind that both solar and wind are entirely dependent on fossil fuels for the materials, mining and production.  Then Germany bought into the war in Ukraine and sanctions, along with the rest of the EU despite the utter insanity of being dependent on Russian gas, one of the warring nations, flowing through the other nation that is at war!  Backing someone who is at war with your now-primary energy supply because you shut down all your own stuff isn't very smart.  Electrical costs have skyrocketed and this winter brings the possibility of literally freezing to death.

Oops.

The UK is in serious trouble as well.  Energy bills this winter are threatening to more than double.  What's worse is that supply may not meet demand at all, which means outages, including of natural gas.  How's that "green" thing looking about now, may I ask?  Are you still happy with your "commitment" to this newfound religion as you both starve (you do realize the goods have to get there and that requires petroleum, right?) and freeze this winter?

Oops.

The Dutch decided to try to effectively expropriate their farmer's land by, for "green/woke" reasons once again, mandating the non-use of nitrogen fertilizers among other steps.  Some allege the true purpose is to effectively destroy the industry and seize the land, but the underlying reality of that does not matter.  The Dutch are one of the largest food exporters in Europe and, obviously, trashing that will not only screw the Dutch but threatens famine on a regional or even world-wide basis as ruining the production capacity of what people need to eat isn't very smart.  The farmers are fighting back and, by some accounts, the nation may be rather close to insurrection or even civil war.  We'll see.

The Ukraine/Russia dust-up also ruined another serious exporter of food, Ukraine to be specific.  The land there is well-suited to agriculture and thus they've been one of the largest exporters of same.  Not anymore; a nation at war on their own soil has problems, obviously, with managing to produce and export anything.  This risks famine in multiple parts of the world, such as Africa for instance.

Once again.... oops.

We, in the US, thought it would be wise to not only play in the Russia/Ukraine sandbox but worse, try to mitigate the impact on oil and gas prices here using the SPR after we also decided to try to backstop European oil and gas supplies.  That was stupid all the way around and the people responsible should be asset-stripped to their underwear and thrown in prison -- the SPR exists for the possibility of an external cut-off of oil supplies, such as was threatened and partially done during the Arab Oil Embargo.  Biden not only abused that for our voluntary involvement in Ukraine his energy department let some of it go not to US motorists and industry but rather be exported to China.  Maybe someone can explain to this blogger and the rest of the United States how exporting oil from our strategic reserves can or does benefit the extreme inflation in fuel costs right here at home, never mind that the SPR will be basically depleted and will have less than a half-million barrels remaining in it (Ed: The source above did the math wrong; its not gone, but is significantly dented) out of an authorized 714 million.  Incidentally the US consumes about 20 million barrels of oil a day to keep our economy functioning, so the current stockpile is good for about.... a half-hour.  The SPR was only about a third full when Biden took office and he has basically blown all of what remained for no net benefit to the United States.  If we do have an event occur, whether natural (e.g. a hurricane -- you know, those spinny things that show up from time to time during this particular time of year?) or man-made (war, economic or otherwise) where we need it we don't have it.  It's gone.  At the same time the Biden Administration has shut down capacity build in all respects (Keystone, leases and more) and by taking those actions ruined people's investments while bribing them to convert to things like "biofuel" production.  Now we're short and there's no reason for anyone to invest in fossil fuel production and transport because this and any future administration can screw them one again with nothing more than a pen and a phone, not even bothering to go through Congress.  This is not fixable in a few weeks or months folks, and I remind you that without diesel you literally have nothing in the store because you must have it for the truck to get to said store.

Congress, for its part, still thinks spending money it does not have is a good idea.  In fact its not only a good idea its a grand idea, despite the fact that all the inflation sequestration that we've enjoyed for the last 30+ years has been permanently cut off by the Russia/Ukraine conflict.  Why?  Because nobody in their right mind, having now seen the mass-seizure of assets and funds denominated in dollars, euros and similar is going to allow that risk to happen to them down the road.  This in turn means that said sequestration of "printed credit" in dollars (never mind Euros) via import trade imbalance is over and when you run deficits they will and do immediately reflect back into prices, exactly as Milton Friedman observed.  That is, inflation is always and everywhere a monetary phenomena.  Further, until and unless the cost to borrow is positive in real terms, and no, it isn't today for either the government or well-connected businesses despite the so-called "rate hikes" said credit emission continues whether officially or otherwise and thus so does the inflation.  The Fed would have to put roughly seven percent on rates at the next meeting to restore a positive cost of borrowing!  The longer they wait to restore said positive cost and the longer Congress goes without cutting off the deficit spending the worse the inflation and recession will be and the longer it will last.

Inflation drives crime and civil unrest.  It also drives destruction of productivity, as do lockdowns and other mandates.  Why would you put in 100% of your capacity when you won't get to keep it because inflation will steal it, and why would you put in 100% of your capacity when your right to travel and be left alone will not be respected and you will be told to sit in your house or otherwise have your economic choices be restricted by executive fiat?

Time preference is a huge part of economic activity folks.  Simply put time preference is why you labor beyond subsistence; you wish to have something either now or tomorrow so you put in more than bare subsistence in effort in order to have it by saving part of what you produce to spend tomorrow.  When confidence that you will have and keep that it is destroyed so is your willingness to put forward said effort.  When productivity is destroyed then credit creation is doubly inflationary because the MV = PQ is not a suggestion -- it is the basic monetary and economic law, unlike the laws our Congress and government break every this one is mathematical thus and cannot be violated any more than 2 + 2 will ever equal anything other than 4 and "Q" is directly ratable with productivity.

No President, no King and no Congress can change this.

 

 

  We are entering the age of pure capital destruction and yes this is counted as GDP! In fact the whole taking apart of our "oil" economy will be "growth". Spme people will get rich but not many.

 This is a well known process for anyone who has participated in a company liquidation or rather the phase just before liquidation when you sell all your assets to stay afloat and pay the bills. This usually doesn't last very long and unless you can find fresh capital, it always ends the same way.

World's largest cruise ship heads straight from shipyard to junkyard after German company goes bust

A tragedy on the high seas!

In a bleak financial and maritime saga, the nearly-completed mega cruise ship Global Dream II will never take to the high seas, and instead will be scrapped — because its builder ran out of cash, and no one wants to buy it, The Guardian reports.

Once destined to each hold 9,000 seaward travelers, Global Dream II and its sister ship, Global Dream, would together have been the top record-holders for largest cruise ship by passenger capacity, and sixth in the world by size.

But those dreams were shattered when German shipbuilder MV Werften filed for bankruptcy back in January of this year, and lacking the funds to finish the colossal cruiseliner themselves, the company sought a buyer for the hulking vessel.

Alas, there were no takers, and now the company is forced to throw the boat out with the bathwater. MV Werften reportedly sold its facilities to a German naval unit, which according to Guardian will now use the establishment to build military ships — but unfortunately, since Global Dreams II isn't outfitted for war, the 260,000 ton boat will be removed from the marina and sold as scrap metal.

 

Why Nations Fail by Charles Hugh Smith

 An interesting web site to follow:

https://www.oftwominds.com/blog.html

Why Nations Fail July 8, 2022

July 8, 2022

The irony is that the suppression of dissent is the suppression of competing ideas that generate systemic stability via rapid adaptation.

Nations that appear stable may fail once they're under pressure. What do I mean by "under pressure"? Pressure can come from many sources: invasion, civil war, prolonged scarcities of essentials, natural disasters, financial crises, droughts, pandemics and social disorder triggered by inequality and corruption.

Pressure diminishes the availability of resources, and exacerbates inequalities as political favoritism divides "winners" (elites protected and enriched by state intervention) at the expense of the "losers," i.e. the commoners, who bear the brunt of job losses, financial risks, scarcities and deprivations.

There are two dynamics in systemic pressure: forces that weaken resilience and adaptability, and forces that strengthen adaptability. Nations fail when their status quo is focused on protecting the ruling elites at the expense of the nation's overall adaptability to rapidly changing circumstances.

1. In ecosystems, as the entire population suffers a reduction in resources, average individual fitness declines. This is why droughts and floods that lead to famine are typically followed by pandemics, as those with weakened immune systems succumb to diseases which spread quickly in refugee camps, crowded cities (where starving rural populations congregate seeking food) and towns where basic sanitation crumbles under the onslaught of reduced tax revenues, scarcities and higher death rates.

In the developed world, even if the populace has enough food, heightened financial and other stresses lead to burnout, breakdowns and other manifestations of social unraveling.

As average individual fitness declines, pressures mount on social, political and economic systems. If these systems are ineffectual, brittle, sclerotic and optimized for corruption and elite incompetence, these second-order effects of systemic pressure may be enough to push the nation into non-linear disorder. (Non-linear = small actions can trigger large consequences in unpredictable ways.)

2. Resilient systems achieve their dynamic equilibrium (i.e. stability) from what Nobelist Ilya Prigogine called "order through fluctuation." This is a concept that manifests in a number of fields, including self-organization and natural selection, in which the constant flow of random mutations generates a pool of fluctuations which enable the species or society to adapt successfully to change.

When there is relatively little pressure from environmental changes, species can remain unchanged for tens of millions of years. The variability of mutations continues but there are few selective pressures to favor a mutation over the existing genome.

In eras of rapid environmental change, organisms can undergo an explosion of genetic experimentation that leads to new adaptations. This is the punctuated equilibrium model of selective pressure and adaptation: when systemic pressure is low, there's no need for bursts of experimentation and adaptation. But when systemic pressure soars, it's adapt or die.

We can understand variability as competition: mutations compete with the existing system's coding and the most successful variants spread because they outcompeted existing processes.

In human political systems, this constant flow of competing variability is dissent and the competition of ideas. Ironically, the first response of human leaders in centralized hierarchies (monarchies, totalitarian and authoritarian regimes, theocracies, plutocracies, kleptocracies, etc.) when their nation comes under pressure is to further consolidate power into the hands of the few and immediately suppress dissent of any kind as a threat to the regime's power and control.

The irony is that the suppression of dissent is the suppression of competing ideas that generate systemic stability via rapid adaptation. Stripping their nation of dissent is in effect stripping it of the dynamics of successful adaptation and rapid evolution-- precisely the traits a nation needs to navigate eras of rapid change.

This is why so many nations and empires fail when they come under pressure: as their subsystems break down and unravel, rather than encourage the competition of ideas and variability, i.e. dissent, they suppress dissent as a threat to their power, effectively dooming their nation to decay and collapse. Once the capacity to adapt and evolve has been crippled, collapse is the only possible outcome.

These dynamics are in play globally. Many and perhaps most nation-states will fail as their elites suppress dissent and new ideas that threaten their power but which ironically are the only means to evolve successfully to rapidly changing circumstances.

"Social Peace Is In Great Danger": Germany Is Quietly Shutting Down

 This, in real life, is what decadence looks like. The measures are always "temporary" and hope is eternal but reality is harsh. In the year 800, Charlemagne was crowned Emperor of the Western Roman Empire and really believed he was the successor of Augustus, Nero and Adrian!

  And remember that before the end of the year, all developing countries will be somewhere between catastrophic, Germany, and apocalyptic, Sri Lanka, with large scale famine looming in many places. Europe is already crowding out less rich countries out of their gas deliveries. Fertilizers are not being used either. This will have consequences, breaking down transportation and supply chains and eventually production, almost everywhere.

 We are already in a pre-revolutionary state in Europe with agriculture in the Netherlands being disrupted. Sri Lanka is approaching anarchy. Political systems are buckling under the strain. If Brexit wasn't going so poorly, Boris Johnson would have kept his job. What's another lie for a seasoned politician? 

 Expect knee-jerk reactions in many places, but the breakdown is global and therefore beyond the reach of single countries.  The spiral at this stage is unstoppable. And nature hasn't thrown any curved ball at us... yet!

"Social Peace Is In Great Danger": Germany Is Quietly Shutting Down As Energy Crunch Paralyzes Economy

Earlier today we wrote that Germany's largest landlord, Vonovia, had taken the unprecedented step of restrictring heating at night, a terrifying preview of what lies in stock for the "most advanced" European nation this winter. Alas, it's going to get worse, much worse.

According to the FT, Germany is now rationing hot water, dimming its street lights and shutting down swimming pools as the impact of its energy crunch begins to spread like the proverbial Ice-Nine wave, from industry to offices, leisure centers and residential homes.

The reason behind Germany's slow motion paralysis is well-known: the huge increase in gas prices triggered by Russia’s move last month to sharply reduce supplies to Germany has plunged Europe’s biggest economy into its worst energy crisis since the oil price shock of 1973 (see "What's Unfolding In Europe In Recent Days Is A Fresh Big Negative Supply Shock")

With electricity prices hitting never before seen levels, gas importers and utilities are fighting for survival while consumer bills are going through the roof, with some warning of rising friction (not to mention the infamous wheelbarrows full of cash).

“The situation is more than dramatic,” said Axel Gedaschko, head of the federation of German housing enterprises GdW. “Germany’s social peace is in great danger.”

Unfortunately, as tensions over Russia’s war in Ukraine escalate, officials fear the situation could get worse. On Monday, as we reported last week, Russia is shutting down its main pipeline to Germany, Nord Stream 1, for 10 days of scheduled maintenance. Many in Berlin fear it will never reopen.

Commenting on the infamous July 22 day when Russian gas flows are expected to resume, DB's Jim Reid writes that "while we all spend most of our market time thinking about the Fed and a recession, I suspect what happens to Russian gas in H2 is potentially an even bigger story. Of course by July 22nd parts may have be found and the supply might start to normalise. Anyone who tells you they know what is going to happen here is guessing but as minimum it should be a huge focal point for everyone in markets."

The bank also conveniently warns that "if the gas shutoff is not resolved in coming weeks this would lead to a broadening out of energy disruption with material upfront effects on economic growth, and of course much higher inflation."

Anticipating the worst case outcome, Germany last month took a crucial step towards rationing gas when economy minister Robert Habeck activated the second stage of the country’s gas emergency plan. “The situation on the gas market is tense and unfortunately we can’t guarantee that it will not get worse,” he said on Tuesday. “We have to be prepared for the situation to become critical.”

Habeck, who says he is now taking shorter showers, has appealed to the population to save energy — and municipalities and property owners have heeded the call.

As we reported this morning, Vonovia, the country’s largest residential landlord, said it would be lowering the temperature of its tenants’ gas central heating to 17C between 11pm and 6am. It said the measure would save 8 per cent in heating costs.

A housing association in the Saxon town of Dippoldiswalde, near the Czech border, went a step further this week, saying it was rationing the supply of hot water to tenants. From now on they can only take hot showers between 4am-8am, 11am-1pm and 5pm-9pm.

“As we announced in our general meeting, we have to save for the winter,” a notice in the affected blocks reads.

Such measures could become routine in the coming weeks. Helmut Dedy, head of the German Association of Towns and Cities, said the “whole of society” must now cut down on its energy consumption, saving in summer “so we have warm flats in winter”.

“Every kilowatt-hour we save helps to fill the gas storage a bit more,” he said as he appealed to town councils up and down the country to take emergency action. He had a few suggestions: turn off traffic lights at night; shut off hot water in council buildings, museums and sports centres; adjust air conditioners; and stop illuminating historic buildings

Some have already taken measures. The district of Lahn-Dill, near Frankfurt, is switching off the hot water in its 86 schools and 60 gyms from mid-September, a move it hopes will save it €100,000 in energy costs, and Düsseldorf has temporarily closed a massive swimming pool complex, the Münster-Therme. Meanwhile, Berlin has turned down the thermostat on open-air swimming pools, reducing their temperature by 2 degrees. In western Germany, Cologne is dimming its street lighting to 70 per cent of full strength from 11pm.

Residential customers are also taking action, reactivating wood-burning stoves and fireplaces. Sales of firewood, wood pellets and coal, as well as of gas canisters and cartridges, have shot up.

It is unclear how far such measures will soften the impact of higher heating bills, which which be through the roof. The GdW said the Ukraine war will push up energy prices for consumers by between 71 per cent and 200 per cent, amounting to additional annual costs of between €1,000 and €2,700 for a one-person household and up to €3,800 for four people, compared with 2021 levels.

Costs could increase even more as a result of a new law working its way through the German parliament. This would allow the government to impose an emergency levy on all gas consumers to spread the cost of higher prices more evenly. It is designed to prevent gas importers becoming insolvent, a scenario ministers fear could cause a Lehman Brothers-style meltdown of the whole sector. Uniper, the largest importer of Russian gas in Germany, is already in talks with officials on a state bailout that experts say could be as large as €9bn.

In the meantime, German consumers — both industrial and residential — are reverting back to East Gcutting their energy use. A study by the Hertie School in Berlin said industrial gas consumption fell 11 per cent in March and April this year, compared with the same period in 2021, and by 6 per cent in private households.

Much more needs to be done, said Lion Hirth, one of the study’s co-authors. “The decline in demand that we’ve seen up until now is unfortunately far from adequate to completely close the supply gap threatening us this winter,” he said. In his appeal to Germany’s municipalities this week, Dedy made a similar point. “The situation is very serious,” he said. “It’s already clear we’re going to have to leave our comfort zone.”

Let's just hope that by exiting the "comfort zone" Germany does not enter the "war zone" - it's traditionally not a happy ending for Europe when that happens...

How Our World and Age will Collapse Very Soon. (Video - 21')

  A very interesting video choke-full of maps and references to cycles. The conclusions are interesting but not so important. Nobody knows what will actually happen. It is as explained so complex that the outcome is unpredictable, but understanding the parameters of the equation is key. 

 For those who do kayaking, we have passed the line of no return, the current is speeding up and we can already hear the roar of the fall. We just don't know how high it is but based on what we can already hear, it sounds mighty high!