|
|
|
|||||||||||||
|
Pursuing Opportunities of the Past (December 3, 2012) Pursuing opportunities of the past only speeds the dissolution of any Status Quo that depends on spent models of growth. If we had to summarize the global effort to reflate various debt and asset bubbles to "restart growth," we might say the Status Quo is pursuing opportunities of the past. Let's start with investing in real estate. Retail space is in massive oversupply. Others have done an excellent job describing the overcapacity, high vacancy rates and cannibalizing of sales at existing stores by adding stores: Are you seeing what I'm seeing? Suffice it to say that an era of deleveraging, declining household income and aging populace is not a good foundation for retail expansion.
The wave of creative destruction unleashed by the Internet has yet to envelop commercial office space--but it's already reached the front steps. Just as online retail has decimated retail sectors such as bookstores, the Web is busy revolutionizing white-collar work, the mainstay of office towers and business parks. Real work can now be done offsite/remotely at a home office, café, or anywhere but a cubicle at headquarters, and the cost advantages of this flexibility will not be going away. Yes, there are still powerful reasons to meet in person, but there are equally powerful reasons to permanently downsize travel and office costs. Structural changes in the economy are increasing self-employment and contract labor and shrinking the scale of new enterprises. Millions of well-educated American workers already work at home, and since the average U.S. house has grown in size over the past 50 years, free-lancers and self-employed professionals have plenty of space rent-free. High-growth companies which once hired thousands of employees and rented entire buildings are increasingly offer highly automated products and services. New-tech juggernaut Twitter recently leased more space in San Francisco as it was expanding its staff by--gasp!--200 employees. Will Twitter be filling that empty office tower near you? No, because its "service" is largely automated software. It now requires less than 1,000 employees to operate a global tech juggernaut. Many global companies no longer need a headquarters; their senior staff work just like junior employees, from home, hotel room, cafe, etc. Airbnb, Coursera and Uber: The rise of the disruption economy. The "recovery" in housing is limited for structural reasons. Household formation is in a multi-decade downtrend, household income is also in a structural decline since 2000 and trillions of dollars in subsidies and giveaways have barely budged the needle of housing sales, starts, etc.
Buy and hold stocks: adjusted for inflation, returns on the "buy and hold stocks forever" strategy since 2000 registered a 14% loss, as we see in this chart, courtesy of master chartist Doug Short:
The "buy and hold bonds" strategy is also running out of air. Now that interest rates are zero or negative when adjusted for inflation, there are limits on how much bond yields can decline. This game may run for for awhile but the returns from here until the day rates rise in a "credit event" are modest. Not only have the low-hanging fruits been picked in the 31-year bond bull market, those buying now are stripping the last fruit from the top of the tree. What happens to those who buy into opportunities of the past? As a guide, we can see what happened to household net worth since the 2007-8 global financial meltdown ended the financialization era: American Households Hit 43-Year Low In Net Worth.
Pursuing opportunities of the past only speeds the dissolution of any Status Quo
that depends on spent models of growth.
SPECIAL OFFER ON GREEN COFFEE BEANS FOR LONG-TERM STORAGE FROM EVERLASTING SEEDS: Here is an explanatory note from ES's founder: "I've successfully stabilized green coffee beans for a period of six years and still had them roast up to within 90-95% of their 'new' bouquet, smoothness, and flavour characteristics. We've finally got all of the odds and ends together, along with the best 'stove top' roaster {Whirley Pop} that we're found. The coffee beans are all 100% Organic: Peruvian, Colombian, and Guatamalean in two sizes, 1 lb. And 5 lbs. the sealed cans contain a small 'Roasting Guide' that gives basic instructions, roasting times and temps, etc. This is, by necessity, only a brief intro with the essential information, as it has to fit into our smaller, 'chowder' size can.
It's taken me nearly ten years to experiment, wait, and finally find a method that would
preserve the bean's natural flavours and oils. The other thing that suggested itself to
me is that I can think of few things, outside of the obvious 'necessities'
{Bible, beans, bullets} that would be more valuable, command a higher price, and be
virtually instantly 'tradeable' anywhere, anytime after an 'event': coffee is, in
a multitude of ways, our latter day 'comfort food.'"
My new book Why Things Are Falling Apart and What We Can Do About It is now available in print and Kindle editions--10% to 20% discounts.
Things are falling apart--that is obvious. But why are they falling
apart? The reasons are complex and global. Our economy and society have structural
problems that cannot be solved by adding debt to debt. We are becoming poorer, not
just from financial over-reach, but from fundamental forces that are not easy to identify
or understand. We will cover the five core reasons why things are falling apart:
1. Debt and financialization
2. Crony capitalism and the elimination of accountability 3. Diminishing returns 4. Centralization 5. Technological, financial and demographic changes in our economy Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of
the same coin: once we accept responsibility, we become powerful.
To receive a 20% discount
on the print edition: $19.20 (retail $24), follow the link, open a Createspace account and enter
discount code SJRGPLAB. (This is the only way I can offer a discount.)
Please click on a book cover to read sample chapters
NOTE: gifts/contributions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
"This guy is THE leading visionary on reality.
He routinely discusses things which no one else has talked about, yet,
turn out to be quite relevant months later."
Or send him coins, stamps or quatloos via mail--please request P.O. Box address. Subscribers ($5/mo) and contributors of $50 or more this year will receive a weekly email of exclusive (though not necessarily coherent) musings and amusings. At readers' request, there is also a $10/month option. What subscribers are saying about the Musings (Musings samples here): The "unsubscribe" link is for when you find the usual drivel here insufferable.
All content, HTML coding, format design, design elements and images copyright © 2012 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted. I am honored if you link to this essay, or print a copy for your own use.
Terms of Service:
|
Add oftwominds.com
|
