Markets dropped sharply this week on news that most of the big names in silicon valley have had disappointing low-profit quarters. Google recently bought Motorola's cell phone business and is losing their shirts on it. Apple is about to announce a small low-profit iPad which is feared to cannibalize the profits of the full size iPad. Microsoft continues in their decade-long decline, pre-announcing several new products which no one understands and few care about,
Yuppies, dinks, gen-x, millenials; and now we have NEETS: No Employment, Education or Training. Europe says they have 14 million neets and they're costing $200 billion per year in state welfare and lost production. European youth is three times more likely to be unemployed than adults, and are estimated to be costing Europe 2% in GDP growth. Paul Gregg, professor of economic and social policy at Bath University and an expert in the scarring effects of long-term unemployment, said that according to his own study in the UK, the EU report's stated annual costs could rise significantly. "For young people, the time when you're gaining the experience and skills which lead to rapid advancements in your earning potential really focuses between 18 and 30. "[So] if you're out of work for a year or so, what you're doing is forgoing that experience, so you are permanently delayed. When people are in their 30s they don't catch back up [with peers] who don't have that absence from the world of work." He said the 30% of unemployed young people across Europe who had been out of work for longer than a year would represent a drag on output for years to come. "A young person as a Neet has 10% lower wages and spends about another month a year out of work even after they stop being a Neet," he said, "something which needed to be factored into the long-term costs."
In 2009 there was an earthquake in central Italy which killed 308 people. This week an Italian court sentenced seven Italian scientists to six years in jail each for failing to warn people of the earthquake. The defendants were accused of giving "inexact, incomplete and contradictory information" about whether small tremors felt by L'Aquila residents in the weeks and months before the 6 April 2009 quake should have constituted grounds for a quake warning. Remind me to never be a scientist in Italy.
German researchers found that in 1860, the average age of the onset of puberty in girls was 16.6 years. In 1920, it was 14.6; in 1950, 13.1; 1980, 12.5; and in 2010, it had dropped to 10.5. On average black girls hit puberty about a year earlier than white girls. Similar sets of figures have been reported for boys with a delay of around a year. This drop was expected to stop, but has continued at the same rate: a decline in four to five months in age of onset of puberty for each passing decade. What's causing it? Childhood obesity was suspected, but a Danish study found that BMI at age seven was not a predictor. Hormones in the beef? Such hormones didn't exist 150 years ago. Environmental pollutants? For every other species they delay or disrupt sexual maturation. There's lots of ideas, but the bottom line is no one really knows. One thing pretty much everyone agrees on: ten year old girls are not ready for sexual maturity, and especially aren't ready for motherhood. Soon we're going to have to start giving young girls IUDs as a matter of course.
A Greek official said the European troika would need to back down over demands for tough labor laws or risk a political revolt. "Even if the troika give us a negative report, what are they going to do? Are they really going to not give us the installment two weeks before the US elections, with everything that entails - default, bankruptcy, global market turmoil?" he asked. "These labor reforms will turn our country into Bangladesh. They have no fiscal benefit and will actually derail the adjustment program. The political system will collapse if we impose them. The troika is demanding that we commit suicide, which is why we believe this is a matter that should be solved on a political level by the prime minister and not with the troika." Greece wants loans to pay salaries and pensions; Germany absolutely refuses.
Europe is awash in car factories. There are enough factories in Europe to make about 20 million cars per year, but peak sales of cars several years ago was 17 million. This year about 13 million will be sold. Car manufacturers desperately need to lay off workers and close plants, but that's illegal in much of Europe. GM has lost $16 billion in the last 12 years on their European Opel operations, and it's estimated that if they could find someone who they could pay $13 billion take Opel away from them GM would be money ahead in the future. Ford will lose $1 billion on their European operations this year. Peugeot needs a government bailout, and the French government proposals will look familiar to Americans who used to own GM stock: Peugeot gets government loans, executives get no more stock, the stock dividend is terminated, and the union and the government get to appoint new directors to the board. But Peugeot can't close any factories or lay off any workers. I don't understand European business law, but Opel is a separate corporation. I wonder why GM doesn't simply stop sending checks. I wonder how the French government thinks it can save Peugeot in the long run when this company doesn't build any cars that anyone outside France will buy.
Oil production continues to increase in the US even as consumption drops. After hitting a low of 69% of consumption, US energy production is nearing an all time high of 84% of consumption and continuing to rise. Some are predicting that by the end of the decade we could be an oil exporter - something that would definitely save Medicare for the Boomers. I'm not prepared to go that far, but our oil imports are definitely dropping off, and that's a good thing.
A couple weeks ago we noted that the unemployment rate was down to 7.8%. This week we get data on new claims for unemployment insurance - if there are more and more jobs, this number should be dropping, right? Well, it's not. California in particular apparently lost 26,000 jobs last week. Unemployment is down, but unemployment claims are up. You gotta love government statistics.
Food watch: the world is not only getting short on food and water, it's getting short on farmers. The average age of farmers in the US is 58; in Australia it's also 58, in Japan it's 63. Maybe the NEETS should apprentice to farmers. Jim Rogers was asked some time ago if he had any advice for young people starting out; he said, "Want to be rich? Be a farmer. Don't want to farm? Open a Masarati dealership in Iowa and sell expensive cars to farmers."
Speculators, meaning Joe Average Citizen, are buying up gold and silver coins and bullion at record rates recently - perhaps the fear of the Mayan calendar is finally hitting home. It's axiomatic on Wall Street that the average Joe is always wrong, so expect gold and silver prices to drop in the next few months.
How's that Iran embargo working? Mixed results. There's inflation in Iran and food shortages; forget the new iPhone, that simply doesn't exist. But the government is still trading enough oil to keep running things at a maintenance level. How? They're locked out of the international banking system, so forget being paid in euros or dollars. Instead Iran is buying and selling for gold. It's the new silk road - oil for gold, gold for manufactured products. Turkey and Dubai are helping Iran smuggle gold to keep this going.
People continue to die in Syria and Iraq and to a lessor extent in Libya, Egypt, Lebanon. There's been no particular change in this so I haven't had much to say. It's believed that insurgents are being heavily armed for an offensive against Israel should Iran be attacked.
Jews are showing up in ever-growing numbers to pray at Jerusalem's Al Aqsa mosque - a 36 acre square that muslims consider perhaps their most holy place outside of Mecca or Medina, and the site of the historic Temple Mount to Jews. Jews say praying there is a basic human right. Muslims call it highly provocative. Both are right. Says Mahdi Abdul Hadi, "The Israeli strategy is to take it over. We don't want to share, not because we don't accept them, but because we don't trust them." In 2000, Jewish visitors were allowed onto the plaza only in groups of two or three at a time and even moving lips in silent prayer might led to arrest. Today Jewish groups as large as 150 are allowed to roam the plaza. But instead of furtive prayers when police aren't looking, more worshipers are sometimes singing and lying on the ground in keeping with Jewish traditions. The point: battle lines are being drawn in the middle east, and everyone is apparently sick of the loose detente that has more or less kept the peace since 1967. There has been much historic killing in the name of the god of the desert - Elohim, Jehovah, Allah - starting with the genocide of the Canaanites by Joshua, moving forwards through the establishment and fall of Israel, then the muslim conquest and the crusades, to the muslim and jewish activism of our time. There will be more, a lot more. The god of the desert requires a lot of blood be shed in his name. Perhaps a day will come when humanity grows up a bit and such gods are themselves brought to trial.
Boeing successfully tested a new cruise missile, the CHAMP. It flies over you, releases a blast of microwaves, and everything electronic you own is fried. Nothing else is harmed. Then it flies on. A few of these steered around Iran for a couple days and Iran is back in the bronze age with no human or animal casualties. This cruise missile is a response to passive radar. In conventional radar, you have an antenna that sends out a high power microwave signal, then you wait a few milliseconds for a return bounce. Such radar is very noisy because of the outgoing signal, so for years we have had missiles that follow the signal back to the antenna and blow it up. Submarines do no such thing, they just listen to natural noises and analyze the reflections to look around. For several years people have been working on the same thing using civilian transmitters like radio and TV and trying to analyze the reflections to find stealth fighters. Recently the Europeans have announced a breakthrough in this, but they're not talking about how good they are. Using the internet, the receivers are dispersed and the analysis can be located in a van which emits no signals and drives around. No doubt the US has been working for quite a while on this, and our submarine software should give us a huge advantage; also no doubt the Russians are working on a system, and the Chinese are working on stealing everyone else's. Boeing's new cruise missile destroys these passive radar systems and makes stealth fighters and bombers invisible again by taking out all the radar, radio and TV transmitters, and the internet and computers in your country. Also after it's passed over, you need to spend a huge amount of money on Intel chips and Apple iPhones, which is good for our economy.
Israel apparently bombed a Sudan arms factory believed to be owned by Iran and supplying Hamas. The US and UK have been working on "contingency plans" to attack Iran; the UK says they don't approve of an attack at this time, but believe in being ready for all possibilities. Publicly the talk is about Iranian missiles causing mayhem all over the gulf, but a successful attack on Iran would almost certainly start with EMP (electro- magnetic pulse) attacks on Iranian air defenses and offensive capabilities. Certainly that's how I'd do it: first pull their missile teeth, then destroy their radar, TV, radio and internet, then send in the stealth bombers with the bunker buster bombs, along with covert teams with instructions to take out command and control personnel and nuclear scientists. But the real question is not how I would do it, but WWOD? Perhaps Obama thinks the spread of nuclear bombs is inevitable and we need to accept it - after all, Pakistan has had the bomb for decades and nothing has happened, perhaps an Iranian bomb does not necessarily mean nuclear war.
Kissenger has predicted that in ten years time, Israel will be gone. Certainly the demographics are against Israel - the muslims out number them hundreds to one and are out breeding them by even larger factors. What does the future hold? It's hard to see the Jews holding onto this tiny outpost surrounded by growing hostile forces indefinitely. There are three flavors of Jews, those who stayed in North Africa during the Diaspora (Mizrachim), those who moved to Spain (Sephardim) or those who moved to the Caucasus region (Ashkenazim) then spread throughout eastern Europe up into Germany. When Spain ejected their Jews in 1492, many Sephardim returned to Africa and were absorbed into the Mizrachim. Modern Israel is about half Mizrachim and half Ashkenazim, the Ashkenazim returning to Israel in modern times from Germany, Eastern Europe and primarily Russia. When Israel comes under attack again, many of the Mizrachim may choose to defend their historic homeland to the death. Expect an influx of about a million Ashkenazi Jews to the US, representing a huge brain drain on the old Soviet Union and transference to the US. Along with the influx of Latinos, this will also push our politics further to the left. Really, the current election is arguably the dying gasp of the republican party - the party of old white guys - as currently formulated. The democrats will splinter under the weight of being a super majority, and a couple new parties will emerge in the coming decades, both looking decidedly more European / leftish than our current two.
Election watch: Romney has a clear lead in the popular vote right now of about 1%. There are about 205 million eligible to vote in the US; about 150 million are registered voters. About 135 million will actually vote, so a 1% Romney lead means the final vote would be about 67 million to Obama, 68 million to Romney. Obama's approval ratings also continue to sink, hovering at or just below the 50% level seen as the threshold for reelection. Even in California, a state Obama won by a jaw-dropping 28% margin 2008, his lead is down to 14%. Curiously, even in California 51% of voters believe our country is headed in the wrong direction; this gives you some idea of the strength of party affiliation vs. rationality. In spite of this Obama continues to have a substantial lead in electoral votes and therefore continues to lead in this election. Congressional republicans have said this election is a referendum on taxes; if Romney wins the popular vote in convincing fashion but Obama wins the election, expect continued political lockup in Washington and serious questions about Obama's legitimacy.