04 abril 2017

Es estúpido...

¿Sobreviviremos a tanta estupidez? Lo dudo… Cada vez leo más cosas pesimistas sobre el devenir de la crisis de deuda que tenemos encima. Una más:
The Title says I am long stupidity, which I am, but I am also long Corruption, Excessive Government Debt, Excessive Risk Taking in Financial Markets, Excessive Complacency, Terrible Trade Wars, Protectionism. I am So Long Government and Central Bank Incompetence, Long Inflation, Long The Massive Credit Bubble Blowing Up, and Long the entire financial system collapsing.
The reason for this rational belief is because the entire financial and government system is built upon such lunacy, corruption, outright stupidity, and overall bad practices. The entire system is guaranteed to fail, you cannot input such stupidity, and get out good results in the end. It is guaranteed to fail, it is a logical certainty. 
This isn`t even a debatable issue or something an analyst would apply a probability model towards, it is a 100% guaranteed outcome result of such poor inputs into the equation. Every single input into the health of the financial system is a patently flawed strategy, not one input is sound and sustainable, 2+2 doesn`t equal NEGATIVE ZERO GRAVITY. 
Therefore, the entire financial system is going to crash, as it should with such stupidity and massive incompetence. The only question is how best to play this systemic crash this time around while avoiding counterparty risk issues which occurred during the 2008 financial crash. 
The other question is what blame and culpability do Central Bankers get this time around for creating this financial asset bubble, and doubling down on the very strategy that caused the 2008 financial crisis? Nobody could be this incompetent, clueless, reckless, and stupid in their actions, so it has to be outright corruption. And as such these Central Bankers need to start reaping what they sow in creating these financial asset bubbles that ultimately lead to financial system failures like in 2000, 2007, and 2017! 
Central Bankers your only job should be to stop creating artificial financial market asset bubbles, that put the entire global economy at substantial risk because the market conditions caused by unsustainable and extremely risky input monetary policies are guaranteed to lead to unstable results because the very nature of them being artificial in nature and unsustainable! Financial Market Bubbles will occur plenty enough on their own due to excessive speculation, but these are manageable. 
When central bankers encourage excessive risk taking by market participants however through extreme monetary policy initiatives like ZIRP for a decade represents, this presents risks that are unmanageable to the entire global interconnected financial system. This is where we are at right now, the crux of the issue, and it will end very badly for all countries from China, Japan and Europe to the United States. 
Just look at all the government and private debt accumulated on balance sheets around the globe for the last decade, and tell me with a straight face a) this is sustainable, and b) doesn`t have severe consequences for the global economy going forward. Think in terms of the Greek Debt Crisis writ large and applied to the entire global financial system. This is what Central Bankers need to be worried about and not a blip of improvement in the labor market or a tick up or down in inflation, it is financial market stability, and the massive financial asset bubbles they artificially created in markets with ZIRP!
PD1: Crisis de Modernidad:
We have an economic crisis – centred on the persistent elusiveness of real growth, rather than just monetised debt masquerading as ‘growth’ – and a political crisis, in which even ‘Davos man’, it seems, according to their own World Economic Forum polls,is anxious; losing his faith in ‘the system’ itself, and casting around for an explanation for what is occurring, or what exactly to do about it. Klaus Schwab, the founder of the WEF at Davos remarked  before this year’s session, “People have become very emotionalized, this silent fear of what the new world will bring, we have populists here and we want to listen …”.
Dmitry Orlov, a Russian who was taken by his parents to the US at an early age, but who has returned regularly to his birthplace, draws on the Russian experience for his book, The Five Stages of Collapse. Orlov suggests that we're not just entering a transient moment of multiple political discontents, but rather that we are already in the early stages of something rather more profound. From his perspective that fuses his American experience with that of post Cold War Russia, he argues, that the five stages would tend to play out in sequence based on the breaching of particular boundaries of consensual faith and trust that groups of human beings vest in the institutions and systems they depend on for daily life. These boundaries run from the least personal (e.g. trust in banks and governments) to the most personal (faith in your local community, neighbours, and kin). It would be hard to avoid the thought – so evident at Davos – that even the elites now accept that Orlov’s first boundary has been breached.
But what is it? What is the deeper economic root to this malaise? The general thrust of Davos was that it was prosperity spread too unfairly that is at the core of the problem. Of course, causality is seldom unitary, or so simple. And no one answer suffices. In earlier Commentaries, I have suggested that global growth is so maddeningly elusive for the elites because the debt-driven ‘growth’ model (if it deserves the name ‘growth’) simply is not working.  Not only is monetary expansion not working, it is actually aggravating the situation: Printing money simply has diluted down the stock of general purchasing power – through the creation of additional new, ‘empty’ money – with the latter being intermediated (i.e. whisked away) into the financial sector, to pump up asset values.
It is time to put away the Keynesian presumed ‘wealth effect’ of high asset prices. It belonged to an earlier era. In fact, high asset prices do trickle down. It is just that they trickle down into into higher cost of living expenditures (through return on capital dictates) for the majority of the population. A population which has seen no increase in their real incomes since 2005 – but which has witnessed higher rents, higher transport costs, higher education costs, higher medical costs; in short, higher prices for everything that has a capital overhead component. QE is eating into peoples’ discretionary income by inflating asset balloons, and is thus depressing growth – not raising it. And zero, and negative interest rates, may be keeping the huge avalanche overhang of debt on ‘life support’, but it is eviscerating savings income, and will do the same to pensions, unless concluded sharpish.
But beyond the spent force of monetary policy, we have noted that developed economies face separate, but equally formidable ‘headwinds’, of a (non-policy and secular) nature, impeding growth – from aging populations in China and the OECD, the winding down of China’s industrial revolution,  and from technical innovation turning job-destructive, rather than job creative as a whole. Connected with this is shrinking world trade.
But why is the economy failing to generate prosperity as in earlier decades?  Is it mainly down to Greenspan and Bernanke’s monetary excesses?  Certainly, the latter has contributed to our contemporary stagnation, but perhaps if we look a little deeper, we might find an additional explanation. As I noted in a Comment of 6 January 2017, the golden era of US economic expansion was the ‘50s and ‘60s – but that era had begun to unravel somewhat, already, with the economic turbulence of the 70s. However, it was not so much Reagan’s fiscal or monetary policies that rescued a deteriorating situation in that earlier moment, but rather, it was plain old good fortune. The last giant oil fields with greater than 30-to-one, ‘energy-return’ on ‘energy-cost’ of exploitation, came on line in the 1980s: Alaska’s North Slope, Britain and Norway’s North Sea fields, and Siberia. Those events allowed the USA and the West generally to extend their growth another twenty years.
And, as that bounty tapered down around the year 2000, the system wobbled again, “and the viziers of the Fed ramped up their magical operations, led by the Grand Vizier (or “Maestro”) Alan Greenspan.”  Some other key things happened though, at this point: firstly the cost of crude, which had been remarkably stable, in real terms, over many years, suddenly started its inexorable real-terms ascent.  And from 2001, in the wake of the dot.com ‘bust’, government and other debt began to soar in a sharp trajectory upwards (now reaching $20 trillion). Also, around this time the US abandoned the gold standard, and the petro-dollar was born.

Source: Get It. Got It. Good, by Grant Williams
Well, the Hill’s Group, who are seasoned US oil industry engineers, led by B.W. Hill, tell us – following their last two years, or so, of research – that for purely thermodynamic reasons net energy delivered to the globalised industrial world (GIW) per barrel, by the oil industry (the IOCs) is rapidly trending to zero. Note that we are talking energy-cost of exploration, extraction and transport for the energy-return at final destination. We are not speaking of dollar costs, and we are speaking in aggregate. So why should this be important at all; and what has this to do with spiraling debt creation by the western Central Banks from around 2001?
The importance? Though we sometimes forget it, for we now are so habituated to it, is that energy is the economy.  All of modernity, from industrial output and transportation, to how we live, derives from energy – and oil remains a key element to it.  What we (the globalized industrial world) experienced in that golden era until the 70s, was economic growth fueled by an unprecedented 321% increase in net energy/head.  The peak of 18GJ/head in around 1973 was actually of the order of some 40GJ/head for those who actually has access to oil at the time, which is to say, the industrialised fraction of the global population. The Hill’s Group research  can be summarized visually as below (recall that these are costs expressed in energy, rather than dollars):
But as Steve St Angelo in the SRSrocco Reports states, the important thing to understand from these energy return on energy cost ratios or EROI, is that a minimum ratio value for a modern society is 20:1 (i.e. the net energy surplus available for GDP growth should be twenty times its cost of extraction). For citizens of an advanced society to enjoy a prosperous living, the EROI of energy needs to be much higher, closer to the 30:1 ratio. Well, if we look at the chart below, the U.S. oil and gas industry EROI fell below 30:1 some 46 years ago (after 1970):
“You will notice two important trends in the chart above. When the U.S. EROI ratio was higher than 30:1, prior to 1970, U.S. public debt did not increase all that much.  However, this changed after 1970, as the EROI continued to decline, public debt increased in an exponential fashion”. (St Angelo).
In short, the question begged by the Hill’s Group research is whether the reason for the explosion of government debt since 1970 is that central bankers (unconsciously), were trying to compensate for the lack of GDP stimulus deriving from the earlier net energy surplus.  In effect, they switched from flagging energy-driven growth, to the new debt-driven growth model.
From a peak net surplus of around 40 GJ  (in 1973), by 2012, the IOCs were beginning to consume more energy per barrel, in their own processes (from oil exploration to transport fuel deliveries at the petrol stations), than that which the barrel would deliver net to the globalized industrial world, in aggregate.  We are now down below 4GJ per head, and dropping fast. (The Hill’s Group)
Is this analysis by the Hill’s Group too reductionist in attributing so much of the era of earlier western material prosperity to the big discoveries of ‘cheap’ oil, and the subsequent elusiveness of growth to the decline in net energy per barrel available for GDP growth?  Are we in deep trouble now that the IOCs use more energy in their own processes, than they are able to deliver net to industrialised world? Maybe so. It is a controversial view, but we can see – in plain dollar terms – some tangible evidence fo rthe Hill’s Groups’ assertions:  
(The top three U.S. oil companies, ExxonMobil, Chevron andConocoPhillips: Cash from operations less Capex and dividends)
Briefly, what does this all mean? Well, the business model for the big three US IOCs does not look that great: Energy costs of course, are financial costs, too.  In 2016, according to Yahoo Finance, the U.S. Energy Sector paid 86% of their operating income just to service the interest on the debt (i.e. to pay for those extraction costs). We have not run out of oil. This is not what the Hill’s Group is saying. Quite the reverse. What they are saying is the surplus energy (at a ratio of now less than 10:1) that derives from the oil that we have been using (after the energy-costs expended in retrieving it) – is now at a point that it can barely support our energy-driven ‘modernity’.  Implicit in this analysis, is that our era of plenty was a one time, once off, event.
They are also saying that this implies that as modernity enters on a more severe energy ‘diet’, less surplus calories for their dollars – barely enough to keep the growth engine idling – then global demand for oil will decline, and the price will fall (quite the opposite of mainstream analysis which sees demand for oil growing. It is a vicious circle. If Hills are correct, a key balance has tipped. We may soon be spending more energy on getting the energy that is required to keep the cogs and wheels of modernity turning, than that same energy delivers in terms of calorie-equivalence.  There is not much that either Mr Trump or the Europeans can do about this – other than seize the entire Persian Gulf.  Transiting to renewables now, is perhaps too little, too late.
And America and Europe, no longer have the balance sheet ‘room’, for much further fiscal or monetary stimulus; and, in any event, the efficacy of such measures as drivers of ‘real economy’ growth, is open to question. It may mitigate the problem, but not solve it. No, the headwinds of net energy per barrel trending to zero, plus the other ‘secular’ dynamics mentioned above (demography, China slowing and technology turning job-destructive), form a formidable impediment – and therefore a huge political time bomb.
Back to Davos, and the question of ‘what to do’. Jamie Dimon, the CEO of  JPMorgan Chase, warned  that Europe needs to address disagreements spurring the rise of nationalist leaders. Dimon said he hoped European Union leaders would examine what caused the U.K. to vote to leave and then make changes. That hasn’t happened, and if nationalist politicians including France’s Marine Le Pen rise to power in elections across the region, “the euro zone may not survive”. “The bottom line is the region must become more competitive, Dimon said, which in simple economic terms means accept even lower wages. It also means major political overhauls: “I say this out of respect for the European people, but they’re going to have to change,” he said. “They may be forced by politics, they may be forced by new leadership.”
A race to the bottom in pay levels?  Italy should undercut Romanian salaries?  Maybe Chinese pay scales, too? This is politically naïve, and the globalist Establishment has only itself to blame for their conviction that there are no real options – save to divert more of the diminished prosperity towards the middle classes (Christine Lagarde), and to impose further austerity (Dimon). As we have tried to show, the era of prosperity for all, began to waver in the 70s in America, and started its more serious stall from 2001 onwards. The Establishment approach to this faltering of growth has been to kick the can down the road: ‘extend and pretend’ – monetised debt, zero, or negative, interest rates and the unceasing refrain that ‘recovery’ is around the corner.
It is precisely their ‘kicking the can’ of inflated asset values, reaching into every corner of life, hiking the cost of living, that has contributed to making Europe the leveraged, ‘high cost’, uncompetitive environment, that it now is.  There is no practical way for Italians, for example, to compete with ‘low cost’ East Europe, or  Asia, through a devaluation of the internal Italian price level without provoking major political push-back.  This is the price of ‘extend and pretend’.
It has been claimed at Davos that the much derided ‘populists’ provide no real solutions. But, crucially, they do offer, firstly, the hope for ‘regime change’ – and, who knows, enough Europeans may be willing to take a punt on leaving the Euro, and accepting the consequences, whatever they may be. Would they be worse off? No one really knows. But at least the ‘populists’ can claim, secondly, that such a dramatic act would serve to escape from the suffocation of the status quo. ‘Davos man’ and woman disdain this particular appeal of ‘the populists’ at their peril.
PD2: Yo creo que sí que lo hay, pero sólo va al infierno quien quiere ir, quien no ama a Dios y a los demás…

¿De verdad hay infierno?

¿Cómo puede ser compatible su existencia con la misericordia divina?

Habitualmente, cuando la respuesta a una consulta se puede encontrar en el Catecismo de la Iglesia Católica, suelo utilizarlo para contestar. En este caso, bastaría con decir que la doctrina católica sobre el infierno se encuentra en los números 1033-1037, y quedaría así zanjada la cuestión.
Pero cuando se pregunta algo tan elemental, la cosa es diferente. Lo que dice el Catecismo, al menos en lo fundamental, ya se sabe, y la verdadera cuestión es que no se entiende cómo puede ser compatible la existencia del infierno con la misericordia divina. Añadiendo, quizás, que ahora que tanto se habla de misericordia no se entiende cómo la Iglesia sigue sosteniendo que existe el infierno.
Podría intentar responder a este planteamiento, pero sería un error por mi parte, pues supondría aceptar implícitamente un desenfoque: el que la Iglesia es dueña y señora de la doctrina que predica.
La fe cristiana –pues de eso se trata, de una fe y no de una opinión- se basa en aceptar la Revelación divina, la Palabra divina que quiere transmitir algo. Y para verla hay que acudir a lo que predicó Jesucristo, a los Evangelios.
Hay alguna cosa de los Evangelios que puede suscitar dudas o discusiones sobre su significado. En este caso, no. Si uno los lee, podrá comprobar que son muchas las referencias a ese castigo eterno.
Aquí me limitaré a citar la que resulta más clara: la última parte del capítulo 25 del Evangelio de San Mateo (versículos 31 al 46). Trata del juicio final, que describe a grandes rasgos. El último versículo, el 46, indica la ejecución de la sentencia con estas palabras: E irán éstos (los condenados) al suplicio eterno; los justos, en cambio, a la vida eterna.
A la vista de lo cual no queda más remedio que decir que sí, que sí existe el infierno. Sólo a partir de aceptarlo se puede intentar comprender cómo son compatibles la infinita justicia con la infinita misericordia.
Para la teología, ésta es una de las numerosas paradojas a las que debe dar respuesta, o darla en la medida de lo que puede la razón humana, pues estamos ante misterios divinos que no podemos comprender del todo. En cualquier caso, ninguna de estas paradojas se soluciona suprimiendo uno de los términos.
En lo que aquí se plantea, la misericordia divina se manifiesta en que Dios envió a su Hijo a morir en la cruz para salvarnos, y en que hasta el último momento de esta vida la está dispuesto a perdonar a quien acude a su misericordia. Pero quien se empeña en no querer acudir…