2015 May

What’s Behind Big Science Frauds? –

Retractions can be good things, since even scientists often fail to acknowledge their mistakes, preferring instead to allow erroneous findings simply to wither away in the back alleys of unreproducible literature. But they don’t surprise those of us who are familiar with how science works; we’re surprised only that retractions aren’t even more frequent.

Remember that study showing vaccines were linked to autism? The time scientists claimed to have cloned human embryonic stem cells? Or that simple, easy way that was supposed to revolutionize the creation of such stem cells?


2015 December

Are you a He, She, or a “They”?

“I just received the following note from one of our Inner Circle members.  Below the note is my response.”

I would welcome a discussion about the content in the attached article.  The question used to be…, “who are you?”  Now is it “how do you identify…TODAY?”  An identity anchored in something has been replaced with how do you feel today is who you are.  I have LOTS of problems with this…but I am an old fart!

I have a Lesbian 30 year old daughter, who has a 2.5 year old toddler, which she carried.  The sperm donor was the brother of her partner.  She did a undergraduate degree in Philosophy and Women’s Studies and a graduate degree in Women’s Studies.  She has friends who are not “hes” or “shes” but prefer to be referred to as “theys”.  One day we were walking with her baby in her hood, and we came across a couple who she hadn’t seen in a year or so.  All four of us had a friendly intelligent conversation laced with pretty good humour.  As we parted, I said…”what gender are they?”.  She smiled and said, “well Dad, it is complicated.”  That is when I realized it is/was a brave new world we are in.  She had been heavily inundated by the politics in the article which made our relationship VERY difficult for a time.

Those of you who are curious about defining identity in this age might want to take the time to read this.

What is today referred to as the rise of identity politics is in truth the hollowing out of the institutions, beliefs and freedoms around which life and identity were shaped and cohered for centuries. It is a crisis not merely of politics, or class, or the left; it is a crisis of character, a questioning of what it means to be human, an uncertainty as to how we become fully human. Addressing the emergence of new, weak identities, and the corresponding creation of a therapeutic industry and new forms of moral censure to prop up these identities, will require more than ridiculing the new left or the so-called ‘identitarian movement’. It demands nothing less than the reconstruction of public life, and the rediscovery of our faith in the strong individual who both makes and is made by the world, rather than simply needing to be consoled by it. It requires that we refuse to acquiesce to alienated, subjective identity-making, and instead recreate the conditions in which people can develop their identity through the exercise of moral autonomy, and through creating and engaging in new institutions, new ideas and new societies.

Brendan O’Neill is the editor of spiked.

Mike’s response:





2015 December

Another rant…

“I just received the following note from one of our Inner Circle members.  Below the note is my response.”

You make many great points Mike and I agree with all of them.  The one concern I would have is, will we as a nation step up and control/keep in check the people who put these ideas [building the wall, for example] so that they with their expanded power/authority, will not take advantage of the situation and extend their power to other areas.

There is a section in our constitution that allows the states to have more control over the federal government through the Convention of the States.  Currently there is a group attempting to  convene such a convention and it is being thwarted at every step.  If the citizens are not willing to exercise their right as “free” people, then restricting our freedoms now to make a better future will not work.

One of my pet peeves is the TSA and its supposed security.  Is/was it designed to help protect and keep us safe or was it designed to control us?

PS: I thought this had been sent and since it hasn’t I will add another of my pet peeves – the media.  At one point in our history the news media actually reported mostly unbiased news based on the facts as the reporter saw/found them.

Today the reporting seems to be written to gain readership and not to report the news in as unbiased fashion as possible.  I seldom read or listen to newspaper gossip [the so called “news of current events”].  However, I do find it amusing/interesting to read the comments of people responding to those stories.

Mike’s response:

Here’s something that people who don’t/aren’t interested in studying SGD don’t realize.

As basins expand with density and frequency, they become more complex in all directions.

So a more complex version of DQ-BLUE…even led by red (trump is more blue)…would be able to eliminate much of the low density blue problems of bureaucracy etc.

The question comes down to this, do u err on the side of freedom and throw everything into chaos, opportunism and graft, or do you go back to blue and rebuild it from there….

I promise u what allowed students to ride around with loaded rifles and pistols in their pickup trucks was not emergent from too much freedom, it was a norm established in blue.

There was no lack of respect for authority until the 60s, no matter how stupid the “cops” were.

The MORE PEOPLE YOU HAVE, the tighter and denser you must build blue.

3 CHP patrol 800 miles of CA interstate…that’s not due to freedom, that’s due to a strong cultural fabric of respect.

People today have NOT GROWN VERTICALLY enough for the freedom that has emerged…we haven’t earned the freedom that has emerged from strong blue density and frequency.

Those of you who want more personal freedom base on your respect for authority, not as the youth are today who have been reared at FS-GREEN, where respect for authority is “relative.”

We have chaos coming, and it is not because of freedoms emergent from DQ-BLUE, but the unearned freedoms bestowed by others and a society, while imperfect, respects its leaders.

But that’s just my opinion, what do I know, I’m just a redass;)


2015 December

95,000 Words, Many of Them Ominous, From Donald Trump’s Tongue –

“I just received the following note from one of our Inner Circle members.  Below the note is my response.”

I read this yesterday and some of the comments.  I also filled my head with Trump-related discussions on the Scott Adams blog (  Now, this morning, I come across this piece ( that I’ve only skimmed enough to see more reference to this narrative about “the rise of the demagogues.”   Or neo-demogogues, whatever that means.

One thing that struck me about the NYT piece is how it’s an influence piece dressed up as an informative piece.  It’s effectiveness is reflected in the comments when people ‘independently’ come to ‘conclusions’ by re-stating the narrative set by the author.  Demagoguery!  It will be the end of us!  Which brings me to another trending term, “outragism”.

I have zero opinion about who should be elected to the role of POTUS, or, at least, I don’t have enough of an opinion to notice what it is.  I am intrigued by the conflict between the influence tactics that Donald Trump employs (which work, duh) and the fear-oriented reactivity of intellectual elites that the publics are making irrational decisions based on emotion.  Surprise!  There’s a power struggle that seems, to me, based on the information I’m exposing myself to, growing more explicit.   This struggle is between a push to global, centralized control with the sheen of egalitarianism and the desire to stick with the group we can identify with comfortably.  The current US presidential election cycle is shining a light on this. Trump, in particular, seems to tap into the rugged, individualistic, pull-up-by-the-bootstraps sentiment that appeals many in the US.  It represents opportunity and hope and a clear sense of who we are and who we aren’t.  Who gives a crap whether Trump is an example of bootstrapped success or not.  That’s not the point.

Any agenda, with any momentum, taps into the irrational, emotional elements of human nature.  It’s easy to be ‘outraged’ by the tactics when a bunch of people are coming to the “wrong conclusion” by one’s own estimation.  Strangely true is that it can be quite logical to be outraged by blocks to one’s agenda.  What’s logical is emotion.  What’s emotional is logic.

Alicia Parr

Mike’s response:

SGD might say, who is at the right level to deal with the problems we have and will have with global depression, an eminent war cycle and  CP-RED riding the naïveté and blind followership of BO purple?




2015 December

Business Maturation Models

“I just received the following note from one of our Inner Circle members.  Below the note is my response.”

Thank you Mike for unpacking your thinking on this and sharing your model. This is gold.

What pulled me into Adizes’ work is his business maturation model, which I’ve been thinking more about lately as I finetune how I provide value and to whom and how to generate ongoing income for the family.  The Adizes model stages of go-go into adolescence and into prime describe a pattern of business growth and maturation that hold opportunity for me.  I’ve witnessed those changes first hand more than once. Locally, increased investments and incubators are now generating some ‘winners’ making their way into go-go stage, where there used to be very little mid-market.  A number of signals point to this investment trend continuing– a governor stumping on a position of investing in innovation and growth within state borders, a growing pool of entrepreneur talent through university training and relocations of silicon valley folks to this area for “improved quality of life”, a growing track record of well-publicized successful  exits, and plentiful private investment dollars feeding the system.  I see the opportunity, I have a rep and track record, steadily growing connections, so now it’s a matter of matching value to need with language that activates the meaning making of those who hold the purse strings in the growth business space.

Back to the model.  This is Adizes’:

As usual, Mike, your version is more complex than the alternatives.  Mike, would you mind expounding on your model a bit?  What is the E/S line and what is the relationship between that and “2nd tier mastery”?  Also, you include a double-arrowed bracket with coaching along the left side of the trajectory.  What value does that add to the model in your sense?




Mike’s response:

E/S line (B/I leap)


Clearly some of the employed become entrepreneurs creating a low-paying job as a self-employed person.

Coaching is done on levels hence the elevator moving among floors–identifying where people are and what is the next step!



2015 December

The Case for Spiritual Growth for the Entrepreneur

“I just received the following note from one of our Inner Circle members.  Below the note is my response.”

A well-known management consultant offering a different sort of guidance to MBA students– unhinging oneself from the external acquisition process.

Alicia Parr

Mike’s response:

It’s a great piece from Ichak.

The ONLY issue I take is that it IS spiritual/purposeful for a few (1-5%) to acquire…

What society has done is brainwash most of us into thinking, that’s the right thing to do.

When you start unwinding humanity, you begin to realize that the spiritual work through whatever means has to do with self-knowledge.

And it’s that twist of self-knowledge that allows you to begin to find an exit ramp off of BS.

My point about “questioning the underlying assumptions” is key about understanding why we are doing what we are doing.

All of us MBAs see this as a means to an end, aside from the few who just love the work.

The key?

To what end.

Unwind that and the emptiness begins to dissipate and soul returns.



2015 November

Headlines: France Strikes ISIS Targets in Syria in Retaliation for Attacks

So much for the liberal response of love your enemy right?

And back to the psychology which has you wondering…

If u kill 150 innocent people with a rifle, we will kill thousands with our bombs…

What kind of lunacy is at work in that rational…?

Oh yea, it’s better to not face our enemy, but splatter the shit everywhere with arms, legs and organs…

You know the first time I heard someone say that the USA was the greatest terrorist of all, I bristled in my perfect marine corps red, white and blue posture…!

These days, I am more embarrassed than not especially when I see US and them in the light.

Sometimes we are such cowards…


I’m sure this message will gain a lot of ground;)

Todays Headlines


2015 November

Interesting view from Berlin by Swiss Member of Parliament?

2015 September

Making Sense from No Sense

The piece below was sent from Brian.

You may want to read it first then back to my comments.

I agree almost in general with the author, especially this quote:

“Contemporary finance” and EM just don’t mix.”

I do not agree with his statements about “printing money” or monetary inflation.

Those were explained in different terms by Armstrong I posted in the last days noting differences between “inflation and liquidity.”

The bottom-line is NOT WHETHER THE PAST IS UNWINDING, but how fast–that’s the key, really.

I’ve pointed this out for years if you have been reading me for that long…I’ve parroted and tried to make sense by showing everyone the rock candy mountain model I discovered a few years ago that really no one of any following has explained like I did in my short video:

The problem with most prognostication is “timing in the short-term” because that’s the thinking that is dominant and people want guidance now, not in general over time.

I’m afraid I can’t do much better than show you trends because the ONLY THING THATS TRUE, is the market and you don’t know what or who is right until the market tells you and that hasn’t happened yet;)

What caused me to write was the quote above:

“Contemporary finance” and EM just don’t mix.”

[EM stands for Emerging Market.]

I felt that everyone could benefit from a lesson straight from “ValuDYNANICS”.*

The reason that contemporary finance doesn’t work in EM is the lack of appropriate values density.

EM are busily acquiring density (quantity) and frequency (quality) from the meme scape.

Contemporary Finance (CF) is built on a system of trust which emerged out of density and frequency “levels” at DQ-BLUE.

CF as noted by the contributing author occurs contemporarily–assuming a values parallel–in ER-ORANGE.

EM have values density and frequency in AN-beige, BO-PURPLE and CP-Red, (note the use of capitalization to denote exiting, nodal and entering systems depicted by their density and frequency).

Here’s the bottom-line just in case you’ve hung around this long:

Each level of values has its own finance needs, density and frequency. IF YOU PRETEND that you can mix and match them under load, you are going to get what you got, VUCA: volatility, uncertainty, complexity and ambuguity.

Now there are 1000 ways to explain what’s happening around the world but it’s quite simple.

You have mismatched scaffolding with inappropriate cues, support and scaffolding for the density and frequency of the underlying level of values…and when you put LOAD on the scaffolding: the tension, weight and volume of transactions created by load will reduce the successful transaction load to the level of density and frequency that can hold the load.

IF you built your systems through inappropriate density and frequency and failed to understand the amount of cues, support and scaffolding required under load, then you get CRUSHING results.


*ValuDYNANICS is part of LeaderWARE(tm) and is available for study online.

From my friend Bob Swan who is an economist and sends good stuff. I liked this, even though I only understood about half of it.

Too often it’s as if I’m analyzing an altogether different world than conventional analysts. My strong preference is to be viewed as an adept and determined analyst, as opposed to some wacko extremist. I have always tried to distinguish my analysis from the “lunatic fringe.”

It’s my overarching thesis that the world is in the waning days of a historic multi-decade experiment in unfettered finance. As I have posited over the years, international finance has for too long been effectively operating without constraints on either the quantity or the quality of Credit issued. From the perspective of unsound finance on a globalized basis, this period has been unique. History, however, is replete with isolated episodes of booms fueled by bouts of unsound money and Credit – monetary fiascos inevitably ending in disaster. I see discomforting confirmation that the current historic global monetary fiasco’s disaster phase is now unfolding. It is within this context that readers should view recent market instability.

It’s been 25 years of analyzing U.S. finance and the great U.S. Credit Bubble. When it comes to sustaining the Credit boom, at this point we’ve seen the most extraordinary measures along with about every trick in the book. When the banking system was left severely impaired from late-eighties excess, the Greenspan Fed surreptitiously nurtured non-bank Credit expansion. There was the unprecedented GSE boom, recklessly fomented by explicit and implied Washington backing. We’ve witnessed unprecedented growth in “Wall Street finance” – securitizations and sophisticated financial instruments and vehicles. There was the explosion in hedge funds and leveraged speculation. And, of course, there’s the tangled derivatives world that ballooned to an unfathomable hundreds of Trillions. Our central bank has championed it all.

Importantly, the promotion of “market-based” finance dictated a subtle yet profound change in policymaking. A functioning New Age financial structure required that the Federal Reserve backstop the securities markets. And especially in a derivatives marketplace dominated by “dynamic hedging” (i.e. buying or selling securities to hedge market “insurance” written), the Fed was compelled to guarantee “liquid and continuous” markets. This changed just about everything.

Contemporary finance is viable only so long as players can operate in highly liquid securities markets where price adjustments remain relatively contained. This is not the natural state of how markets function. The bullish premise of readily insurable/hedgeable market risks rests upon those having written protection being able to effectively off-load risk onto markets that trade freely without large price gaps/dislocations. And, sure enough, perceptions of liquid and continuous markets do create their own reality (Soros’ reflexivity). Sudden fear of market illiquidity and dislocation leads to financial crashes.

U.S. policymaking and finance changed profoundly after the “tech” Bubble collapse. Larger market intrusions and bailouts gave way to Federal Reserve talk of “helicopter money” and the “government printing press” necessary to fight the scourge of deflation. Mortgage finance proved a powerful expedient. In hindsight, 2002 was the fateful origin of both the historic mortgage finance Bubble along with “do whatever it takes” central banking. The global policy response to the 2008 Bubble collapse unleashed Contemporary Finance’s Bubble Dynamics throughout the world – China and EM in particular.

There are myriad serious issues associated with New Age finance and policymaking going global. The bullish consensus view holds that China and EM adoption of Western finance has been integral to these economies’ natural and beneficial advancement. Having evolved to the point of active participants in “globalization,” literally several billion individuals have the opportunity to prosper from and promote global free-market Capitalism. Such superficial analysis disregards this Credit and market cycles’ momentous developments.

The analysis is exceptionally complex – and has been so for a while now. The confluence of sophisticated finance, esoteric leverage, the highly speculative nature of market activity and the prominent role of government market manipulation has created an extremely convoluted backdrop. Still, a root cause of current troubles can be boiled down to a more manageable issue: “Contemporary finance” and EM just don’t mix. Seductively, the two appeared almost wonderfully compatible – but that ended with the boom phase. For starters, the notion of “liquid and continuous” markets is pure fantasy when it comes to “developing” economies and financial systems. As always, “money” gushes in and rushes out of EM. Submerged in destabilizing finance, EM financial, economic and political systems become, as always, overwhelmed and dysfunctional. And as always is the case, the greater the boom the more destabilizing the bust.

In general, reckless “money” printing has over years produced a massive pool of destabilizing global speculative finance. Simplistically, egregious monetary inflation (along with zero return on savings) ensured that there was way too much “money” chasing too few risk assets. Every successful trade attracted too much company. Successful strategies spurred a proliferation of copycats and massive inflows. Strong markets were flooded with finance. Perceived robust economies were overrun. Popular regions were completely inundated. To be sure, the post-crisis “Global Reflation Trade” amounted to history’s greatest international flow of speculative finance. Dreadfully, now comes The Unwind.

From individual trades, to themes to strategic asset-class and regional market allocations, speculative “hot money” flows have reversed course. Global deleveraging and de-risking has commenced. The fallacy of “liquid and continuous” markets is being exposed. Faith that global central bankers have things under control has begun to wane. And for the vast majority in the markets it remains business as usual. Another buying opportunity.

Whether on the basis of an individual trade or a popular theme, boom-time success ensured that contemporary (trend-following and performance-chasing) market dynamics spurred speculative excess and associated structural impairment. They also ensured latent Crowded Trade fragilities (notably illiquid and discontinuous “risk off” markets).

Crowded Trade Dynamics ensure that a rush for the exits has folks getting trampled. Previous relationships break down and time-tested strategies flail. “Genius” fails. When the Crowd decides it wants out, the market turns bereft of buyers willing and able to take the other side of the trade. And the longer the previous success of a trade, theme or strategy the larger The Crowd – and the more destabilizing The Unwind. Previous performance and track records will offer little predictive value. Models (i.e. “risk parity” and VAR!) will now work to deceive and confound.

Today, a Crowd of “money” is rushing to exit EM. The Crowd seeks to vacate a faltering Chinese Bubble. “Money” wants out of Crowded global leveraged “carry trades.” In summary, the global government finance Bubble has been pierced with profound consequences. Of course there will be aggressive policy responses. I just fear we’ve reached The Unwind phase where throwing more liquidity at the problem only exacerbates instability. Sure, the ECB and BOJ could increase QE – in the process only further stoking king dollar at the expense of faltering energy, commodities, EM and China. And the Fed could restart it program of buying U.S. securities. Bolstering U.S. markets could also come at the expense of faltering Bubbles around the globe.

It has been amazing to witness the expansion of Credit default swap (CDS) markets to all crevices of international finance. To see China’s “shadow banking” assets balloon to $5 Trillion has been nothing short of astonishing. Then there is the explosion of largely unregulated Credit insurance throughout Chinese debt markets – and EM generally. I find it incredible that Brazil’s central bank would write $100 billion of currency swaps (offering buyers protection against devaluation). Throughout it all, there’s been an overriding certitude that policymakers will retain control. Unwavering faith in concerted QE infinity, as necessary. The fallacy of liquid and continuous markets persisted so much longer than I ever imagined.

I feel I have a decent understanding of how the Fed and global central bankers reflated the system after the 2008 collapse of the mortgage finance Bubble. The Federal Reserve collapsed interest-rates to zero, while expanding its holdings (Fed Credit) about $1 Trillion. Importantly, the Fed was able to incite a mortgage refinance boom, where hundreds of billions of suspect “private-label” mortgages were transformed into (money-like) GSE-backed securities (becoming suitable for Fed purchase). The Fed backstopped the securities broker/dealer industry, the big banks and money funds. Washington backed Fannie, Freddie and the FHLB, along with major derivative players such as AIG. The Fed injected unprecedented amounts of liquidity into securities markets, more than content to devalue the dollar. Importantly, with the benefit of international reserve currency status and debt denominated almost exclusively in dollars, U.S. currency devaluation appeared relatively painless.

These days I really struggle envisaging how global policymakers reflate after the multi-dimensional collapse of the global government finance Bubble. We’re already witness to China’s deepening struggles. Stimulus over the past year worked primarily to inflate a destabilizing stock market Bubble that has gone bust. They (again) were forced to backtrack from currency devaluation. Acute fragilities associated both with massive financial outflows and enormous amounts of foreign currency-denominated debt were too intense. Markets are skeptical of Chinese official signals that the renminbi will be held stable against the dollar. Market players instead seem to be interpreting China’s efforts to stabilize their currency as actually raising the probability for future abrupt policy measures (significant devaluation and capital controls) or perhaps a highly destabilizing uncontrolled breakdown in the peg to the U.S. dollar.

And as China this week imposed onerous conditions on some currency derivative trading/hedging, it’s now clear that Chinese officials support contemporary market-based finance only when it assists their chosen policy course. How long will Chinese officials tolerate spending international reserves to allow “money” to exit China at top dollar?

September 3 – Financial Times (Henny Sender and Robin Wigglesworth): “Lee Cooperman, the founder of Omega Advisors, has joined the growing chorus of investors blaming last week’s stock market sell-off — and his own poor performance in August — on esoteric but increasingly influential trading strategies pioneered by hedge funds like Bridgewater. In a letter to investors…, Mr Cooperman and his partner Steven Einhorn said fundamental factors such as China’s ructions and uncertainty over the US interest rate outlook ‘cannot fully explain the magnitude and velocity of the decline in equity markets last month’… ‘These technical factors can push the market away from fundamentals,’ Marko Kolanovic, a senior JPMorgan strategist, noted in a widely circulated report last week. ‘The obvious risk is if these technical flows outsize fundamental buyers. In the current environment of low liquidity, they may cause a market crash such as the one we saw on [August 24]. These investors are selling equities and will negatively impact the market over coming days and weeks.’”

I wholeheartedly agree with the statement “technical factors can push the market away from fundamentals.” Indeed, that’s been the case now for going on seven years. A confluence of unprecedented monetary inflation, interest-rate manipulation, government deficits and leveraged speculation inflated a historic divergence between securities markets Bubbles and underlying fundamentals. The global Bubble is now faltering. Risk aversion is taking hold. De-leveraging is accelerating.

The yen jumped 2.2% this week. Japanese stocks were hit for 7%. The Brazilian real sank 7.3%. The South African rand dropped 4.2%. The Turkish lira dropped another 2.9% and the Russian ruble sank 5.0%. China sovereign CDS surged, pulling Asian CDS higher throughout. The Hang Seng China H-Financials Index sank another 7.4% this week, having now declined 39% from June highs. From my vantage point, market action points to serious unfolding financial dislocation in China. It also would appear that a large swath of the leveraged speculating community is facing some real difficulty.

After a rough trading session and an ominous week for global markets, I was struck by Friday evening headlines. From the Wall Street Journal: “An Investor’s Field Guild to Bottom Fishing;” “Global CEOs See Emerging Markets As Rich With Opportunity.” From CNBC: “Spike in Volatility Creates ‘Traders Paradise.” And from the Financial Times: “Wall Street Waiting for Those Buy Signals;” “Time to Buy EM Stocks, History Suggests;” “Why I’m Adding Emerging Markets Exposure Despite China Wobble;” “G20 Defies Gloom to Forecast Rise in Growth.”

There still seems little recognition of the seriousness of the unfolding global market dislocation. It’s destined to be a wrenching bear market – at best.

2015 September

Medicare Costs May Jump 52% in 2016 | Armstrong Economics

More “affordable” healthcare?

“…almost one-third of the roughly 50 million elderly Americans who depend on Medicare for their healthcare and other services are likely to see their premiums jump by 52% or more in 2016.”