Weekly Musings 35 9-5-11
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For those who are new to the Musings: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights, and thank you for supporting the site.
One Way to Make Money as the Eurozone Devolves
Longtime correspondent Jim L. recently asked: "I know this sounds too obvious/simple, but wouldn't a long-term short in FXE be a wise choice for a dollar bull OR a gold bull? I see no way out for the Euro and I cannot see an outcome where the Euro rallies before the dollar. At some point it would seem that they would either have to liquefy themselves or break apart."
As I have noted in many previous entries and Musings, I too see no way to reconcile the intrinsic contradictions of the euro and the Eurozone.
The FXE is a foreign-exchange ETF (exchange-traded fund) that tracks the euro: when the euro is $1.41, the FXE is $141.
Technically, the "line in the sand" is $140 on the FXE--the 200-week moving average and the lower Bollinger Band, as well as a psychologically important support level. If FXE breaks decisively below $140, the next technical stop is $120.
The near-mirror image of the FXE (euro) is the UUP (U.S. dollar ETF), where the "line of resistance" is around $21.80. If UUP breaks above that area, technically the way is open to $25.
One Sort-Of Crazy But Not Totally Implausible Way to Benefit from Global Warming
As the northern hemisphere heats up (from whatever set of causes you wish to enumerate), the frozen tundra in Northern Canada recedes. This is a mixed blessing, as species which evolved to the permafrost see their ecosystem shrink, while species from the south find the transition zone more to their liking.
Could land that is too cold right now to grow grain be warm enough to do so in a few years? If so--and this is merely speculation derived from an interesting conversation I had in L.A. with Richard Metzger--then buying "wasteland" now might pay off within a decade as higher temperatures change the nature of what grows on the land.
The Causal Connection Between Creative/Deep Thought and Isolation from the Web and Communication
Much of our time camping last month was in remote parks without mobile phone service or WIFI, not to mention TV/cable. As a result, we were not distracted by phones or the Web.
Unsurprisingly, I found myself pondering complex, abstract problem-sets for long periods of time. This sort of deep thinking is essentially impossible in the fractured, distracted state of mind rendered by constant messages, texts, phone calls, data dumps and Web sensationalism.
The conclusion is as obvious as it is profound: allowing our thinking to be fragmented by an erratic but constant influx of data and messages of varying priorities leaves us unable to ponder things deeply enough to arrive at solutions grounded in anything more than superficial me-too thinking.
This makes me wonder if our manic attraction to addictive but mostly impairing technologies has robbed us of the ability to problem-solve anything beyond the superficial. Maybe that is adding to our intellectual gridlock and the loyalty so many feel for magical-thinking cargo cults like the Fed and Keynesian stimulus. We are too distracted and emotionally drained to come up with anything new or deeply insightful.
The Dollar, Trade, Gold and the Crisis of Capitalism
I have long been dissatisfied with what passes for explanations of why the U.S. dollar must go to zero, and soon. It now seems to me that these explanations ignore the flow of trade and currencies, which is the lifeblood of global Capitalism.
I will be laying out some historical context and some thought experiments to suggest quite the opposite will *necessarily* happen: the U.S. dollar will strengthen for years, and far more than virtually any published pundit or analyst expects.
From Left Field
"Crumbling" infrastructure: federal spending on infrastructure as a proportion of GDP was actually higher in 2008 than it had been any time since 1981. "We’re always being told that we need to spend more money to fix the problem. That is much easier than fixing how the money is spent."
Rediscovering a Lost Science - Rory Sutherland at European Zeitgeist 2011 (via Alister C.B.)
(via Ishabaka, M.D.)
"When we drink coffee, ideas march in like the army." --Honore de Balzac
Thanks for reading--
charles
