Shifting Power: Visualizing The World’s Largest Cities For The Last 6000 Years

In 300 B.C., Carthage was one of the world’s largest cities with up to 700,000 people living within its walls. The Carthaginian republic was a force to be reckoned with, controlling inconceivable amounts of wealth and land all around the Mediterranean.

However, just over a century later in 146 B.C., Carthage was burnt to the ground by the Romans. The destruction of Carthage was so thorough that many things are still not known about their civilization today. Carthage went from being a major power to literally being wiped off of the map.

A few decades after the annihilation of Carthage, it was Rome’s turn to become the world’s largest city for close to 500 years. Of course, Rome itself would fall by 476 A.D. for a variety of reasons.

And so the title of the world’s largest city would transfer again, this time to Constantinople across the Mediterranean.

The World’s Largest Cities Throughout History

In the grand scheme of history, things change quite fast. As Visual Capitalist’s Jeff Desjardins explains, one cataclysmic choice or event can turn even the greatest empire into a heap of rubble. Sometimes the decline of a world-class city is more gradual – and it is over time that it loses its title to another place in a far and distant land.

The following animated map from KPMG Demographics tracks the world’s largest cities from 4,000 BC to today, and it shows how temporary a city’s rise to prominence can be.

World's Largest Cities Throughout History
(Keep in mind that there is some disagreement by historians over which cities were the biggest in certain time periods.)

The power of industrialization and technology can be seen here. Up until the 1800s, it was almost unfathomable to have a city of more than a million inhabitants.

Sanitation was a major limiting factor, but other issues like transportation and a lack of density also made it a challenge. The Industrial Revolution changed that, and starting in the 1800s you see cities like London, New York, and Tokyo taking the title in an exponential fashion. It caps off with Delhi in 2050, expected to have a whopping 40 million inhabitants by that time.

Source: Visual Capitalist

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Shifting Power: Visualizing The World’s Largest Cities For The Last 6000 Years

In 300 B.C., Carthage was one of the world’s largest cities with up to 700,000 people living within its walls. The Carthaginian republic was a force to be reckoned with, controlling inconceivable amounts of wealth and land all around the Mediterranean.

However, just over a century later in 146 B.C., Carthage was burnt to the ground by the Romans. The destruction of Carthage was so thorough that many things are still not known about their civilization today. Carthage went from being a major power to literally being wiped off of the map.

A few decades after the annihilation of Carthage, it was Rome’s turn to become the world’s largest city for close to 500 years. Of course, Rome itself would fall by 476 A.D. for a variety of reasons.

And so the title of the world’s largest city would transfer again, this time to Constantinople across the Mediterranean.

The World’s Largest Cities Throughout History

In the grand scheme of history, things change quite fast. As Visual Capitalist’s Jeff Desjardins explains, one cataclysmic choice or event can turn even the greatest empire into a heap of rubble. Sometimes the decline of a world-class city is more gradual – and it is over time that it loses its title to another place in a far and distant land.

The following animated map from KPMG Demographics tracks the world’s largest cities from 4,000 BC to today, and it shows how temporary a city’s rise to prominence can be.

World's Largest Cities Throughout History
(Keep in mind that there is some disagreement by historians over which cities were the biggest in certain time periods.)

The power of industrialization and technology can be seen here. Up until the 1800s, it was almost unfathomable to have a city of more than a million inhabitants.

Sanitation was a major limiting factor, but other issues like transportation and a lack of density also made it a challenge. The Industrial Revolution changed that, and starting in the 1800s you see cities like London, New York, and Tokyo taking the title in an exponential fashion. It caps off with Delhi in 2050, expected to have a whopping 40 million inhabitants by that time.

Source: Visual Capitalist

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“Lines Out The Door”: How Americans Respond When Liberal States Restrict Their Gun Rights

Submitted by Mac Slavo via SHTFPlan.com,
The window is closing on freedom in the Golden State, as liberal government leaders and increasingly bureaucratic laws are being used to strip away the rights of the people.
Gov. Jerry Brown has signed a slew of…

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IceCap Asset Management On Investing Through The Eyes Of An Ostrich

Submitted by Keith Dicker IceCap Asset Management

The ostrich is an awesome bird. It has awesome legs, awesome eggs and an even more awesome history. 5,000 years ago, the Mesopotamians featured the giant bird on cups, shirts, and walls; and even used its eggs as currency in trade. 2,000 years later, the ostrich continued to be revered and this time in Egypt. On special occasions, pharaohs received ostrich eggs, ostrich feathers, and even ostrich hats as gifts of honor and respect.

Yet, despite all of these accolades, the ostrich is also incredibly odd. During heated moments of battle, the giant bird chooses not to use its powerful legs as weapons, but instead uses its head to slam it repeatedly against its opponent. As well, the ostrich loves a good bath. Sight of the slightest pool of water is enough to make the ostrich circle about in delight.

But when it comes to oddities, nothing is more odd than the ostrich and the most famous coping mechanism of all – sticking its head in the sand.

Today, the ostrich population is in decline but not its relevance. With the financial and political world in chaos, investors everywhere are suddenly imitating this legendary bird.

Some investors recognise global financial risks are accelerating, yet they remain stubborn, refusing to acknowledge where the risk runs deepest and are repeatedly slamming their heads against the wall in frustration. Others meanwhile, refuse to believe that any risk exists at all, continue to wear their favourite market hat and shirt, while sticking their heads in the sand at the next sight of trouble. So, for everyone with a bruised and sandy head, we suggest you alter your perspective, shed any biases and embrace the opportunity to run around in delight in our rapidly changing world.

* * *

Our research firmly reasons that the world is in the late stages of an enormous bubble in the bond market, and as it turns over it will affect all markets and strategies – regardless of where you sit in the world.

This convergence of political, social, economic, monetary and fiscal factors is developing, that while may seem chaotic to many – appears quite plain and simple to those who are able to see straight.

Our view has remained very consistent and has been stated through various media outlets and in private presentations – which results in our view as being “made public” with a “time stamp”. This means we cannot suddenly twist any of our past words to reconcile with current markets. Considering all of the recent chaos in the world, it’s important for us to revisit our success in forecasting many of these seemingly low probability events.

Of course, we share these experiences not because we want to tout our success in forecasting these events, but rather because it helps investors understand our perspective, why it has been correct, and most importantly – why we continue to maintain our view.

Our September 2016 Global Outlook “Fright Night” described in detail how and why long-term interest rates will catapult higher and therefore create an incredible rush of capital away from bonds and into USD and the stock market. After publishing, we had many kind emails, meetings and conversations thanking us for providing a simplified explanation of the risk in bond markets. We also had people shrug their shoulders and roll their eyes – after all, while bonds may not provide much of a return anymore, they are the safest investment in the world.

Or, so you’ve been told. The reason why the world’s bond market was turned upside down, inside out and tossed out with the trash was because of the following:

Long-term interest rates increased from +1.7% to +2.4%

Yes, that is not a typo. A mere 0.7% move higher was enough to wake up sleepy bond investors, create $1.7 Trillion in losses, and devastate the entire bond world.

Our Chart 1 below puts this historical event in perspective.

It’s at this point where big bank economists and bond lovers everywhere carelessly proclaim this is not a big deal. In fact, they say it’s easy to see that long-term rates have increased like this before and everyone adjusted swimmingly.

Of course, this kind of linear thinking fails to consider the following:

  • massive accumulation of government debt
  • deteriorating government deficits
  • increasing taxes & increasing government spending
  • NEGATIVE and 0% interest rates
  • money printing

Analysing these points obviously shows that the problems in the world today are squarely centered in the public/government sector – not the private sector. Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important. Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important.

Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

And since these crises were in the private sector – the risks eventually manifested themselves (they always do) in the stock market.

Since today’s sovereign debt crisis is in the public sector – the risks will manifest not in the stock market, but in the bond market.

This really is the most important point to understand today. Yet because the big bank mutual fund machines cannot find (or really, even bother to look) this risk or perspective, trillions of investment Dollars, Yen, Pounds and Euros are all fighting yesterday’s war and refuse to see where the front has opened.

To be clear – the front is the bond market. Of course, many investment managers clearly know there is a certain big risk in today’s market place. As well, we’ve commented before that many of the really big investment firms in the world do not really manage your wealth. Instead, they simply collect your assets, plunk them into their various investment funds, make micro-changes at the fringe and then proceed to watch the trillions in fees roll through the door.

Those who are in the investment industry are quietly nodding in agreement, while those not in the investment may be rather unconvinced. After all every investment manager and mutual fund manager is sharp as a tack, and has their finger on the pulse of the global financial system. Sadly, this isn’t true. Instead, if it hasn’t happened already, many investment managers are actually slowly morphing into – an ostrich.

As this can be a tricky and uncomfortable transition, our Chart 2 below provides an easy to follow analysis to help you determine whether your investment manager is in fact a giant, bird-like creature.
The first type of manager is the one who believes the world is just fine. Yes, growth may be a little slow but markets are forward looking and have discounted any and all future worries.

While the optimism is to be respected, the ignorance towards zero and negative interest rates, money printing strategies to suppress long-term interest rates, and the sharpening knife of the anti-establishment political movement – results in these managers sticking their heads in the sand at the first sight of trouble. Since these managers are always seeking the best growth opportunities around the world, today they find themselves drooling over emerging market stocks as well as emerging market bonds, and high yield bonds.

Next up, we have the investment manager who is acutely aware of the many risks running around the world today. They clearly see the rise of political uncertainties, fear the consequences of zero and negative interest rates and feel queasy towards all of the money printing going on.

This deep respect and acknowledgment of the risks around the world is a sign of a dynamic thinking investment firm. There are many of these firms out there, and some of them correctly foresaw the housing market crash.  However, while we obviously respect this group of managers we politely point out that while we agree with their deep concern about market risk, we disagree with their conclusion as to where the risk lies. This group believes the stock market & USD are the center of the evil universe and investment in these areas should be avoided at all cost.

Unfortunately, if you avoid stocks and the USD then by default you love bonds, Euros and gold.

And even more unfortunately – bonds, Euros and especially gold are growing weaker by the minute, which is resulting in these managers repeatedly slamming their heads in frustration.

Investments in these markets are eliciting not only painful negative returns, but also painful reasons why the market is wrong and it will turn around any day now. While investment markets are always full of unexpected events, we do hope that these managers are able to see the error of their ways, otherwise there’s the very real probability that eventually they turn into a different bird altogether – a turkey.

Code Red

Days after the dust settled on the bond market debacle, we had a meeting with one of the world’s largest bond managers. We asked them on a scale of 1-10 with 10 being complete devastation, how would they rate the recent decline in the bond market?

The answer = 8

Again, we stress to you that a 0.7% increase in long-term interest rates created untold havoc throughout the bond world. Imagine what would happen if long-term interest rates increased by 1% or 3%, or even 6%? The short answer is a surging USD and a surging stock market.

The best thing (or worst, depending upon your view), is that this tiny 0.7% increase in long-term rates is merely the tip of the iceberg.

The long end of the bond market is now broken and the 30 year bull market in long duration, fixed income is over, kaput, done. If you own any of this stuff, it’s time to make a change. If you manage any of this stuff, it’s time to get a new job. But, if you need to borrow money, now is the time to borrow and lock in the longest maturity possible. Doing any of these three, will help you prosper in a devastating world for bonds.

* * *

Optimism is a human trait, and since bond managers are humans it is only natural to expect optimism to arise from the bond ashes in some shape or form. And that form is clearly in the shape of inflation-protected bonds.

While most investors are enthralled with the stock market, the bond market is THE most interesting investment market on the planet. After all, there are seemingly no limits as to what Wall Street can create. In effect, if Wall Street thinks they can convince someone to buy it, they’ll create it (look no further than the 2008 housing crisis).

And one ‘different’ product from the bond market has actually stood the test of time, and that is the ‘Real Return Bond’. To begin, know that besides rising interest rates – the other giant monster that scares the crap out of bond managers is inflation.

Since bond interest/coupon payments are usually fixed, any rise in inflation means the income from your bond can’t buy as much stuff as it could before. Therefore, inflation is bad for bonds and it causes bond prices to decline. To counter this, Wall Street created a bond that actually benefits from rising inflation. These Treasury Inflation Protected Securities (TIPS) have been around now for over 20 years, and aside from short-term spikes in inflation, these bonds haven’t exactly set the world on fire.

Until now.

The narrative goes something like this – Donald Trump will dramatically cut taxes which means there will be dramatically more money available for spending, AND he will also borrow dramatically to spend even more money. While all of this spending is considered to be good for the economy and jobs, bond investors see it as creating a devastating surge in inflation. And since inflation is bad for regular bonds, it must be awesome for TIPS. This would be true if the world was experiencing a normal business and interest rate cycle.

But since the world is not experiencing a normal business and interest rate cycle, we suggest investors be cautious or at least somewhat skeptical about a focus on TIPS. Should the geopolitical and economic world continue to trend as we expect, yes there will be inflation around the world – but not in the United States.

Let us explain.

There are 3 kinds of inflation:

  1. inflation caused by an increase in demand for certain things
  2. inflation caused by a decrease in supplies of certain things
  3. inflation caused by a currency moving sharply

Investors who are trumpeting TIPS are clearly expecting inflation to rise due to #1.

All else being equal, if there are no further disruptions across the political establishment, social tensions decline, zero and negative interest rates disappear, and European banks magically replace their bad loans and bad investments with new capital – then yes, TIPS will be a good investment. As you may sense, our view is different and TIPS investors should take notice. As the world continues to trend towards our outlook and forecast, our expectation for a surging USD will absolutely create inflation, but not in the United States.

Instead, the surging USD will actually create deflation in the US making TIPS a not so good investment. Investors everywhere should know that the world does not work with an extremely strong USD. And unfortunately, the world continues to venture down the path that we have explained very clearly.

A strong USD is negative for global growth, which means less demand for global goods and global services. The United States will not be immune and their exports will be affected – which is deflationary. As well, a strong USD makes foreign goods/services cheaper for people who own USD – this is also deflationary.

The net effect of slower economic growth and a stronger USD therefore means less inflation for the United States which is not good for TIPS investors.

Naturally, financial markets move in anticipation of something happening. And, since the bond world has suddenly realized their days in the sun are over – they will be tripping over themselves to climb onto to this next sure thing. Yes, this trade may work out for a while. However, as the world continues to move along as we expect, the USD will surge which will be good for some markets and not so good for other markets. Unfortunately for TIPS investors, financial markets will eventually anticipate this as well meaning they will be on the wrong side of this trade.

Much more in the full report below

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Is Obama A Russian Agent?

Authored by Dmitry Orlov,

Sometimes a case looks weak because there is no “smoking gun”—no obvious, direct evidence of conspiracy, malfeasance or evil intent—but once you tally up all the evidence it forms a coherent and damning picture. And so it is with the Obama administration vis à vis Russia: by feigning hostile intent it did everything possible to further Russia’s agenda. And although it is always possible to claim that all of Obama’s failures stem from mere incompetence, at some point this claim begins to ring hollow; how can he possibly be so utterly competent… at being incompetent? Perhaps he just used incompetence as a veil to cover his true intent, which was always to bolster Russia while rendering the US maximally irrelevant in world affairs. Let’s examine Obama’s major foreign policy initiatives from this angle.

Perhaps the greatest achievement of his eight years has been the destruction of Libya. Under the false pretense of a humanitarian intervention what was once the most prosperous and stable country in the entire North Africa has been reduced to a rubble-strewn haven for Islamic terrorists and a transit point for economic migrants streaming into the European Union. This had the effect of pushing Russia and China together, prompting them to start voting against the US together as a block in the UN Security Council. In a single blow, Obama assured an important element of his legacy as a Russian agent: no longer will the US be able to further its agenda through this very important international body.

Next, Obama presided over the violent overthrow of the constitutional government in the Ukraine and the installation of an American puppet regime there. When Crimea then voted to rejoin Russia, Obama imposed sanctions on the Russian Federation. These moves may seem like they were designed to hurt Russia, but let’s look at the results instead of the intentions.

  • First, Russia regained control of an important, strategic region.
  • Second, the sanctions and the countersanctions allowed Russia to concentrate on import replacement, building up the domestic economy. This was especially impressive in agriculture, and Russia now earns more export revenue from foodstuffs than from weapons.
  • Third, the severing of economic ties with the Ukraine allowed Russia to eliminate a major economic competitor.
  • Fourth, over a million Ukrainians decided to move to Russia, either temporarily or permanently, giving Russia a major demographic boost and giving it access to a pool of Russian-speaking skilled labor. (Most Ukrainians are barely distinguishable from the general Russian population.)
  • Fifth, whereas before the Ukraine was in a position to extort concessions from Russia by playing games with the natural gas pipelines that lead from Russia to the European Union, now Russia’s hands have been untied, resulting in new pipeline deals with Turkey and Germany.

In effect, Russia reaped all the benefits from the Ukrainian stalemate, while the US gained an unsavory, embarrassing dependent.

Obama’s next “achievement” was in carefully shepherding the Syrian conflict into a cul de sac. (Some insist on calling it a civil war, although virtually all of the fighting there has between the entire Syrian nation and foreign-funded outside mercenaries). To this end, Obama deployed an array of tactics. He simultaneously supported, armed, trained and fought various terrorist groups, making a joke of the usual US technique of using “terrorism by proxy.” He made ridiculous claims that the Syrian government had used chemical weapons against its own people, which immediately reminded everyone of similarly hollow claims about Saddam’s WMDs while offering Russia a legitimate role to play in resolving the Syrian conflict. He made endless promises to separate “moderate opposition” from dyed-in-the-wool terrorists, but repeatedly failed to do so, thus giving the Russians ample scope to take care of the situation as they saw fit. He negotiated several cease fires, then violated them.

There have been other achievements as well. By constantly talking up the nonexistent “Russian threat” and scaremongering about “Russian aggression” and “Russian invasion” (of which no evidence existed), and by holding futile military exercises in Eastern Europe and especially in the geopolitically irrelevant Baltics, Obama managed to deprive NATO of any residual legitimacy it once might have had, turning it into a sad joke.

But perhaps Obama’s most significant service on behalf of the Russian nation was in throwing the election to Donald Trump. This he did by throwing his support behind the ridiculously inept and corrupt Hillary Clinton. She outspent Trump by a factor of two, but apparently no amount of money could buy her the presidency. As a result of Obama’s steadfast efforts, the US will now have a Russia-friendly president who is eager to make deals with Russia, but will have to do so from a significantly weakened negotiating position.

As I have been arguing for the last decade, it is a foregone conclusion that the United States is going to slide from its position of global dominance. But it was certainly helpful to have Obama grease the skids, and now it’s up to Donald Trump to finish the job. And since Obama’s contribution was especially helpful to Russia, I propose that he be awarded the Russian Federation’s Order of Friendship, to go with his Nobel Peace Prize.

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While Blaming Trump For “Arms Race”, Obama Signs Momentous “Star Wars II” Defense Bill

As politicians and mainstream media blast Trump’s apparently incendiary tweet regarding nuclear arms, none other than President Obama just signed legislation that, by striking a single word from longstanding US nuclear defence policy, could heighten tensions with Russia and China and launch the country on an expensive effort to build space-based defense systems.

Oh the irony… Following Trump’s tweet…

The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes

— Donald J. Trump (@realDonaldTrump) December 22, 2016

The mainstream media has lambasted the president-elect for “endangering the world” and “starting another nuclear arms race.” However, that same mainstream media appears mute in their response to what President Obama just did…

The National Defence Authorisation Act, a year-end policy bill encompassing virtually every aspect of the US military, contained two provisions with potentially momentous consequences. As AP reports,

One struck the word “limited” from language describing the mission of the country’s homeland missile defence system. The system is said to be designed to thwart a small-scale attack by a non-superpower such as North Korea or Iran.

 

A related provision calls for the Pentagon to start “research, development, test and evaluation” of space-based systems for missile defence.

 

Together, the provisions signal that the US will seek to use advanced technology to defeat both small-scale and large-scale nuclear attacks.

 

That could unsettle the decades-old balance of power among the major nuclear states.

 

Huge bipartisan majorities in both houses of Congress approved the policy changes over the past month, with virtually no public debate.

 

Although the White House had earlier criticised the changes, it stopped short of threatening a veto. On Friday, Obama signed the legislation.

Leading defence scientists said the idea that a space-based system could provide security against nuclear attack is a fantasy…

“It defies the laws of physics and is not based on science of any kind,” said L. David Montague, a retired president of missile systems for Lockheed and co-chair of a National Academy of Sciences panel that studied missile defence technologies at the request of Congress.

 

“Even if we darken the sky with hundreds or thousands of satellites and interceptors, there’s no way to ensure against a dedicated attack,” Montague said in an interview. “So it’s an opportunity to waste a prodigious amount of money.”

 

He called the provisions passed by Congress “insanity, pure and simple.”

 

Republican Congressman Trent Franks, who introduced and shepherded the policy changes in the House, said he drew inspiration from former president Ronald Reagan’s Strategic Defence Initiative of the 1980s, which was intended to use lasers and other space-based weaponry to render nuclear weapons “impotent and obsolete.” Known as “Star Wars”, the initiative cost taxpayers US$30 billion, but no system was ever deployed.

Philip E. Coyle III, a former assistant secretary of defence who headed the Pentagon office responsible for testing and evaluating weapon systems, described the idea of a space-based nuclear shield as “a sham”.

“To do this would cost just gazillions and gazillions,” Coyle said. “The technology isn’t at hand – nor is the money. It’s unfortunate from my point of view that the Congress doesn’t see that.”

 

He added: “Both Russia and China will use it as an excuse to do something that they want to do.”

Finally, when asked whether the country could afford it, Franks replied: “What is national security worth? It’s priceless.”

Priceless indeed.

So who is “starting an arms race?”

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