Peak climate change hysteria reached?

We must be near the top of climate change hysteria. A new report released by David Spratt and Ian Dunlop, titled, ‘Existential climate-related security risk: A scenario approach‘ points to climate Armageddon, which reads like an aggregation of every junk prediction ever made rolled into one.

The report suggests in its 2050 scenario,

While sea levels have risen 0.5 metres by 2050, the increase may be 2–3 metres by 2100, and it is understood from historical analogues that seas may eventually rise by more than 25 metres. 35% of the global land area and 55% of the global population are subject to more than 20 days a year of lethal heat conditions, beyond the threshold of human survivability.

Most regions in the world see a significant drop in food production and increasing numbers of extreme weather events, including heat waves, floods and storms. Food production is inadequate to feed the global population and food prices skyrocket, as a consequence of a one-fifth decline in crop yields, a decline in the nutrition content of food crops, a catastrophic decline in insect populations, desertification, monsoon failure and chronic water shortages, and conditions too hot for human habitation in significant food-growing regions. The lower reaches of the agriculturally-important river deltas such as the Mekong, Ganges and Nile are inundated, and significant sectors of some of the world’s most populous cities — including Chennai, Mumbai, Jakarta, Guangzhou, Tianjin, Hong Kong, Ho Chi Minh City, Shanghai, Lagos, Bangkok and Manila — are abandoned. Some small islands become uninhabitable. 10% of Bangladesh is inundated, displacing 15 million people.

Even for 2°C of warming, more than a billion people may need to be relocated and In high-end scenarios, the scale of destruction is beyond our capacity to model, with a high likelihood of human civilisation coming to an end.

If that is not pathetic enough the forward, written by a retired admiral, cues the violins,

David Spratt and Ian Dunlop have laid bare the unvarnished truth about the desperate situation humans, and our planet, are in, painting a disturbing picture of the real possibility that human life on earth may be on the way to extinction, in the most horrible way…

…Stronger signals still are coming from increasing civil disobedience, for example over the opening up of the Galilee Basin coal deposits and deepwater oil exploration in the Great Australian Bight, with the suicidal increase in carbon emissions they imply. And the outrage of schoolchildren over their parent’s irresponsibility in refusing to act on climate change.

Note Spratt & Dunlop do not believe the 2050 scenario is “far from an extreme scenario.

The sad thing is that global crop yields have never been better, the IPCC has had to backtrack to admit little or no confidence that storms, floods or any other catastrophe are out of the realms of normality. Perhaps the most telling quote in the report is,

and climate scientists admitting to depression as they consider the “inevitable” nature of a doomsday future and turn towards thinking more about family and relocation to “safer” places, rather than working on more research.

Perhaps that depression comes from the fact that nearly all the models have been shown to be duds. So many predictions have shown the complete opposite.

CM still believes that climate scientists need to have an independent regulator that ensures that any malfeasance or fraud by the science community results in heavy fines and jail terms. Whistleblower protections should be put in place. Provide a 6-mth amnesty for scientists to admit any wrongdoing. After that, they are on the hook. Then watch all those prophecies get scaled back to paint a  2050 picture of absolute wonder.

Debunking Modern Monetary Theory (MMT)

Corp Profit

While the Dow & S&P500 indices grind back higher thanks to the US Fed chickening out on a rate rise in because the economy can’t handle it, many people still overlook the fact that core US profitability has tracked sideways since 2012. 6 years of next to nada. Sure one can boost profits by adding back unrealistic  “inventory adjustments” but the reality is plain and simple. If you search for inventory adjusted earnings they’re still marginally growing but there in lies the point. Real profits aren’t.

Record buybacks fueled by cheap debt is the cause for ‘flattered’ earnings. No growth in E  just falls in S.  EPS growth can look spectacular if you ignore 50% of US corporates have BBB credit ratings or worse.

The latest lexicon is “modern monetary theory” (MMT). The idea that the central banks just manipulate markets in perpetuity. Austerity is no longer needed. Central banks print money and extinguish debts the same way. Seriously why bother with taxation? The question is if it is meant to be a sure winner, why aren’t we all living in 5 bedroom mansions with a Mercedes Benz and a Porsche in the driveway? Why not a helicopter?

Logically if central banks can buy our way out of this debt ridden hellhole, why is growth so anemic? Why is European GDP being cut back? Why is German industrial production at its worst level since 2009? Why does Salvini want to jail the Italian central bankers? Why does the Yellow Vest movement in France carry on for its 15th consecutive week? If MMT works why would the EU care if the UK leaves with No Deal? MMT can solve everything for unelected bureaucrats in theory. Even £39bn can be printed

Last year the US Fed announced it had stopped reporting its balance sheet activity. In 2006 it stopped reporting M3 money supply. Curious timing when inside 2 years the world was flung into the worst recession since 1929. Transparency is now a danger for authorities.

The question boils down to one of basic sanity. All assets are priced relative to others. It’s why an identical house with a view in a nice neighborhood trades at a relatively higher price than one in a outer suburban back lot. The market attributes extra value even if the actual dwelling is a carbon copy. It is why currencies in banana republics trade by appointment and inflation remains astronomical. Investors don’t trust their ability to repay debts unless given extremely favorable terms. Market forces at work.

To put the shoe on the other foot, if all countries adopted MMT why bother buying bonds for retirement? The interest is merely backed by a printing press. Best consume 100% and save zero. The government has moved beyond moral hazard and hopes no one will notice

Take a look at Japan. It has $10 trillion in outstanding debt which is 2x its economy. The Bank of Japan owns 60% of that paper bought through a printing press. The market for JGBs is so manipulated that several Japanese mega banks have handed back their trading licenses because it has become worthless to be on that exchange. The BoJ thinks it can make whatever prices it chooses. The ultimate aim is to convert all of the outstanding debt into a zero coupon perpetual bond with a minor ‘administration’ fee in order to assign some value to it. To the layman, a zero coupon perpetual means you get no interest on the money you lend and the borrower is technically never required to pay the borrowed amount back. Such loans are made by parents to their children, not central banks to politicians (although one could be forgiven to think their behaviour is child like).

Yet the backdrop remains the same. Consumers are tapped out in many countries. Lulled by a low interest rates forever mentality, even minute rises to stem inflation (real is different to reported) hurt. My credit card company constantly sends emails to offer to transfer balances at 9% as opposed to the 20% they can charge if I don’t pay in full.

APRA recently relented on interest only mortgages after demanding it be tightened to prevent a housing bubble getting bigger. Now mortgage holders hope the RBA cuts rates to ease their pain.

Like most new fads, MMT can’t remove the ultimate dilemma that Milton Friedman told us half a century ago. Inflation is always and everywhere a monetary phenomenon. One can’t hope that putting money in the hands of everyone can be sustainable.

The one lesson that we should have learnt from GFC was that living at the expense of the future has rapidly diminishing returns. All we did was double down on that stupidity.

Do we think it normal that Sydney house prices  trade at levels the Japanese property bubble did in the late 1980s? Do we realize that we hold as much mortgage debt than Japanese banks did for a population 5x our size? Do we think that our banks are adequately stress tested? When an economy like ours has avoided recession for a quarter century, it builds complacency.

MMT is nothing more than a figment of the imagination. It preys on the idea that we won’t notice if we can’t see it. Unfortunately behind the scenes, the real economy can’t sustain the distortions. The French make the best modern day example of  a growing number of Main Streeters struggling  to make ends meet.

Central banks monkeying around with MMT smacks of all the same hubris of the past. It is experimental at best and reckless at worst. Markets can be manipulated for as long as confidence can be sustained. Lose the market’s trust and all of a sudden no amount of modern day jargon  can overcome what economists have known for millennia.

If you flood a global economy with cash at 5x the rate the economy can feasibly grow then it will ultimately require bigger and bigger hits to get the same bang before the jig is up. It’s a Ponzi scheme. Bernie Madoff got 120 years jail. Why not the central bankers?

So what is the best asset out there? Gold. It can’t be printed. It requires effort to discover it and dig it out of the ground. Of course the barbouros relic deserves to be consigned to the dustbin of history. If that were so Fort Knox might as well leave the gate open. The more it is hated only makes this contrarian investor want it more.

Did you put on your bulletproof vest sweetheart?


Is this the next school uniform? As written yesterday, gun violence in US schools has been a problem for decades. Metal detectors have been installed at certain schools since the 1990s. Gun massacres have still occurred. The problem stems from a growing tide of broken homes and kids venting out. The Zero Hour documentary on the Columbine massacre reveals in chilling details how premeditated and well prepared (not to mention preventable) the attack was – propane bombs, pipe bombs, machine guns, pistols and even handgrenades. Perpetrator Eric Harris’s father called up the police on hearing of the shooting fearing his son maybe behind it. The police had received multiple enquiries from concerned parents over death threats Harris had made online to students yet chose to do nothing. Harris and Klebold openly documented their intent in videos and diaries. It is patently clear they wanted revenge for their subjective feelings of having had their esteem crushed by society, especially by more popular class mates. It is clear there were no role models trying to pull them back from the brink.

Still the ‘banning guns will solve it all’ solutions still avoid dealing with the real problem. The psychology of kids lost in a world where they feel outcasts. Feelings of rejection, loss and trodden on self esteem are shown to be time and time again to be a leading factor in kids picking up a weapon and seeking to right perceived wrongs. Many American high school kids drive to school. Can we envisage one deciding to drive a car on campus mowing down students at lunch time? Will banning cars be a solution?

What next? Will parents be decking out kids in bulletproof vests and hoping teachers who are incentived to arm themselves in the class room step up if all hell breaks loose? One wonders whether kids like Harris & Klebold would have been deterred by teachers packing heat. Even worse, SWAT snipers at a distance of 500 meters may not be able to determine at the time who are the ‘bad guys’. Even worse, how terrible it would be for a teacher to be tasked with ‘offing’ a student who he or she teaches in remedial maths class. One would hope the motivation of teachers is to want to educate students to get ahead rather than aim at their head. Or have things got so bad in some schools that such a remedy gets leant a sympathetic ear. Having armed security at schools is less and less a rare occurrence.

In 2015, about 3,000,000 teens ages 12 to 17 had had at least one major depressive episode over the year according to the Department of Health and Human Services. More than 2 million admitted they were experiencing depression in ways that impair daily function. The National Institute of Mental Health reported about 30% of girls and 20% of boys– some 6.3 million teens–have had an anxiety disorder.

A Seattle Children’s Hospital study tracked hashtags people use on Instagram to talk about self-harm. It noted a dramatic increase over the past two years. In 2014 researchers got 1.7 million search results for “#selfharmmm”. By 2015 that number had surged to over 2.4 million.

The American Psychological Association (APA) released a report several years ago during the school year saying that teens report their stress level is higher than levels reported by adults in the past month. Many teens admitted feeling overwhelmed (31%) and depressed or sad (30%) as a result of stress. More than one-third of teens report fatigue or feeling tired (36%).

Sales of antidepressant drugs is expected to be a $17bn industry in the US in 2020, up $3bn from 2015. The National Center of Health Statistics reports the prevalence of teenagers taking such drugs has grown to 13%, in 2015 up from 11% in 2008. 68% of people ages 12 and up said they had been taking their antidepressant for two years or more. A quarter who took antidepressants reported taking them for 10 years or more. Clinical depression affects about 16mn people in the U.S. and is estimated to cost the U.S. about $210 billion a year in productivity loss and health care.

Is this honestly seen as the best way to tackle a mental health crisis? Just dope up teenagers and hope they are comfortably numb so as to not want to do harm to themselves or others? It was shown that Harris had switched antidepressants which could have fueled not quelled his homicidal and suicidal tendencies. This isn’t about guns. It is about ignoring the elephant in the room – stressed out kids with no mentors or role models to coax them out of their problems.

In some respects, schools are only making it worse by pandering to safe spaces and enforcing trigger warnings. Instead of dealing with the psychological problems at source and proactively targeting attention starved kids growing up in broken homes by counselling them in ways to build self esteem and how to get on in the “real” world, the problem will only fester because irrational feelings of hopelessness will get reinforced by ignoring the real issue.

Tranquilizing people with mental issues by molly-coddling them is also the mantra in the world of identity politics. By muzzling people from speaking truths we only build barriers around effective solutions. That regulations around hurting people’s feelings are increasingly being enforced, is it any wonder we are growing a generation of victims who can pin the blame on irrelevant and unrelated things? Healing comes through listening and understanding by open and transparent dialogue. Not by banning it.

Will an hypothetical ban on guns prevent the growing trend of kids growing up in single-parent households (and all of the psychological data which shows clear evidence of a higher rate of delinquency in children) from committing  such terrible acts of violence because they have no access to firearms? Feelings of desperation will only lead them to find other ways of seeking their distorted view of attaining inner peace. More kids will die and at the end the exact same problems will manifest themselves again – what lead to the act? At least in this case, Parkland, Florida shooter Nikolas Cruz survived. Perhaps we will learn much more about the psychological timeline of him if the press can wake up for 5 minutes and stop trying to link the act purely to white supremacy because it fits a narrative.

If Central Banks were top fuel dragster teams

TFDragstersWhile financial pundits often bang on about the independence of central banks around the world evidence suggests that they need a watchdog, much in the manner Nobel prize winner Milton Friedman suggested. As a monetarist, Friedman promoted the idea that sensible monetary expansion was the best policy for stable economic growth with a free market mentality to fairly allocate capital. He wasn’t joking when he said, “Nobody spends somebody else’s moneyas carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.”

What you are about to see is a relatively clear sign that central banks monetary policies are having increasingly less impact on velocity i.e. the impact of money circulating the economy to produce final GDP. Simply put, central bankers are pouring lower and lower grade lumps of coal into a top fuel dragster engine (aka the economy) designed to run on high octane but expecting to shatter record times in the quarter-mile. Sadly the only thing that is set to shatter is the internals of that engine. Declining velocity is what would be termed in the drag racing world ‘blowing the big end’. Trying to create more power from a tried engine in need of an overhaul simply can’t last. Blind Freddy should be able to work this out by looking at the below charts.


The ECB now requires four times as many euros in the system to create one euro of GDP. Even the Eurozone economic boom from 2000 onwards saw velocity decline. The UK on the other hand has slowed money supply growth which has steadied velocity.


Australia’s economy is a lumpier affair but the direction no different. Velocity has bumped and ground its way lower (forecast worst in 30 years).


The US stopped reporting M3 in 2006 at the request of Greenspan so the public would be clueless on how much money would be printed behind the scenes. This is the result of using the same growth rates used post the tech bubble collapse to get…


So the US sits in at around the UK, below Australia and comfortably ahead of the EU. Japan is at around 0.4x M3 velocity.