A plan for an underground city beneath Chicago

Ancient Technology in the government

"Treasury's individual and business master files, the authoritative data sources for taxpayer information. The systems are about 56 years old, and use an outdated computer language that is difficult to write and maintain."

http://www.dailymail.co.uk/news/article-3608228/Govt-report-Feds-spend-billions-run-ancient-technology.html

Hmm, I wonder what language that is.  Cobol?

Update:  The article appears to quote this GAO report:  http://www.gao.gov/products/GAO-16-696T
And the "outdated computer language"?  Assembly language.  Wow.

Feeling Let Down and Left Behind

http://www.nytimes.com/2016/05/26/us/feeling-let-down-and-left-behind-with-little-hope-for-better.html

Short term rates rise again

The 1-month rate for Treasury notes rose again and now is at 0.28% as of 5/24/16.  When was the last time, prior to this year, that it was at this rate?  On 2/3/09, more than 7 years ago.

Short-term interest rates are rising

Source: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

Short term interest rates are rising.  Part of this is speculation that the FOMC will raise rates in June.  Whatever the cause, it is a good sign.

When was the time it was this high?  Specifically, when was the 1 month yield 0.26%?  It looks like 2/17/09, more than 7 years ago.

Wendell Willkie

http://www.thenewamerican.com/culture/history/item/21537-the-miracle-man-of-1940

Peak Debt and the Mother of All Financial Meltdowns

At Peak Debt, there is no capacity to absorb any more.
"That’s because at Peak Debt, the central bankers’ one-time parlor trick doesn’t work and actually backfires. Making credit artificially cheap previously induced households and business to tap their balance sheets and ratchet up their leverage ratios in order to supplement the natural sources of consumption and investment spending from wages and business cash flow, respectively, with the proceeds of incremental borrowings. But now cheap credit doesn’t even get to main street; it only induces more collateralized borrowing and speculation on Wall Street. Stated differently, when household and business balance sheets run out of capacity to absorb more debt, the repo man takes over."
Because our economy is run by crooks and fools, there is only one way this will end.
"To wit, what is coming down the pike is the Mother Of All Financial Meltdowns. And this time it will be evident to the world as to who is responsible for the resulting carnage."
http://davidstockmanscontracorner.com/the-inflation-targeting-scam-and-why-it-guarantees-the-mother-of-financial-meltdowns/

Main Street is at Peak Debt and so is the oil industry.  Wall Street is getting close.

Assessing the Presidents

Personality, Character, and Leadership in the White House: Psychologists Assess the Presidents

Brexit the Movie

Federal Reserve Bonds and Feudalism

The Federal Reserve balance sheet has about $4.5 trillion of assets, of which about $2.5 trillion is invested in U.S. treasury bonds, $1.7 trillion in mortgage backed securities, and $300 billion other factors.  On the liability side, there is about $1.5 trillion in currency, $2.4 trillion in "Reserve Balances with Federal Reserve Banks" (also called "Excess Reserves"), and about $600 billion other factors.

The Excess Reserves are held by banks, mostly the big 6  - Bank of America, Chase, Citibank, Wells Fargo, Goldman Sachs and Morgan Stanley.  (For the simplified example here, assume that they hold all the excess reserves).  They receive interest on the excess reserves (IOER), which is currently set at 0.5%.

These $2.4 trillion in reserves are effectively bonds.  The Fed uses the capital from the bonds to buy treasury debt.  For simplicity sake assume these are all 10-year treasury bonds, which currently yields about 1.75%.  The profit from the spread mostly goes back to the U.S. Treasury.

So what can we observe from this?  The marginal rate that the U.S. government pays on debt is really 0.5% not 1.75%, because it gets a refund of the difference.  So there is an incentive to incur more debt because the rate is so low.  The banks are eager to lend because the 0.5% is risk-free - they are guaranteed to get it.  It is guaranteed first by the Fed itself, second by the general credit of the U.S. treasury and by mortgages (Fannie Mae), and third by the taxpayers and mortgage holders of the U.S. The interest on $2.4 trillion at the rate of 0.5% is $12 billion per year.  It doesn't sound like a lot, but consider that the $2.4 trillion was basically conjured up through thin air, while the $12 billion was earned through the blood, sweat and tears of millions of taxpayers.

I consider that someone who has an ultimate claim on every asset in a country, even though the percentage amount is very small, to be the sovereign.  Especially since they can set the rate.

So what we have is feudalism - to a very minor degree.  The queen is the chairwoman of the Federal Reserve, Janet Yellen.  The dukes and lords are the presidents of the big banks and the directors of the Fed.  The judges on the Supreme Court also are nobility, maybe call them "Law Lords".  The President, really the Prince,  owes fealty to the Queen of the Federal Reserve.  In turn, every taxpayer in the US owes a good portion of their labor to the agents of the Prince (the IRS).

Interesting thought experiment.

Update - see this:

Tel Aviv Central Bus Station Dystopia

At 2.5 million square feet, the Tel Aviv Central Bus Station was the product of a grand vision to build an indoor micro-metropolis. Its expansive plans featured a shopping mall with thousands of stores, services and entertainment offerings. The structure even came to house a (now deserted) subterranean theater, originally meant to entertain people waiting for their bus. This vision gave way to a darker reality, resulting in what reporter Yochai Maital describes as “a derelict eight-story behemoth and modern day Tower of Babel, which mirrors much of modern Israeli history, with its grand vision and messy implementation.”
--http://99percentinvisible.org/episode/stop-that-bus/

Archer vs Drone

http://www.dailymail.co.uk/news/article-3584450/Bullseye-Russian-man-frustrated-annoying-drone-buzzing-actors-medieval-battle-reconstruction-takes-quadcopter-perfect-throw-spear.html

Section 8 fail

Hillary’s rumored running mate, Housing Secretary Julian Castro, is cooking up a scheme to reallocate funding for Section 8 housing to punish suburbs for being too white and too wealthy. The scheme involves super-sizing vouchers to help urban poor afford higher rents in pricey areas, such as Westchester County, while assigning them government real estate agents called “mobility counselors” to secure housing in the exurbs.  Castro plans to launch the Section 8 reboot this fall, even though a similar program tested a few years ago in Dallas has been blamed for shifting violent crime to affluent neighborhoods.  http://nypost.com/2016/05/08/obamas-last-act-is-to-force-suburbs-to-be-less-white-and-less-wealthy/

You mean to tell me that moving hoodlums out of the ghetto into wealthy neighborhoods doesn't automatically make them upstanding citizens?

Trump talks about defaulting on the national debt and freaks out the establishment

See: http://finance.yahoo.com/news/why-trumps-u-debt-default-222400110.html
and http://www.zerohedge.com/news/2016-05-06/trumps-election-should-cause-us-cds-spreads-spike-and-good-reason

The establishment sees the debt as being holy and it must never be questioned.  It is supposedly the bedrock of global finance.  The global economy will collapse if you even mention the possibility of default.  I think it is a conversation we need to have and I am glad Trump brought it up.

Quantum computing for the masses

Truck Sales vs Recessions

Source:  https://mishtalk.com/2016/05/05/class-8-truck-orders-plunge-39-large-truck-sales-vs-recessions/

A peak in heavy weight truck sales is a leading indicator of a recession. They typically peak about 1 to 2 years before a recession starts.  It is difficult to tell from the above chart when the most recent peak was but it appears to be about January 2015. (Truck sales in January 2015 were almost 35,000 and they have never been this high since).  If this is correct, then we can anticipate a recession to start later this year.

See also: http://www.wsj.com/articles/truck-orders-fall-in-april-1462383538
"Last month, trucking fleets ordered just 13,500 Class 8 trucks, the big rigs used on long-haul routes, down 16% from March and 39% from a year earlier. It was the fewest net orders in any April since 2009."

This is a stat that would be worth reviewing every month to see if the trend of lower heavy truck sales continues.

Status of Puerto Rico

Puerto Rico is an independent country within the empire of the United Status, as is the Northern Mariana Islands.  The term of art used is "commonwealth".  This is different from the status of Guam, and the US Virgin Islands and American Samoa, which are territories of the U.S., and the Federated States of Micronesia, which is a sovereign nation in free association with the United States.

Other entities with a similar status are Aruba, Curacao, and Sint Maarten, which are countries within the Kingdom of the Netherlands.  Also, Jersey, Guernsey, and the Isle of Man, called "Crown Dependencies" (as opposed to British Overseas Territories), within the British Empire (as opposed to the British Commonwealth), and the Cook Islands and Niue in the Realm of New Zealand.  And possibly Northern Cyprus within the Turkish Empire, (although no other country recognizes the independence of Northern Cyprus, instead seeing it as an occupied part of Cyprus).  And also possibly New Caledonia, a "special collectivity" of France.  And also Hong Kong and Macau with relation to China.

Puerto Rico is defaulting on its debts today.  I think it is inevitable that Congress will pass a bailout bill of some kind, and I think the bailout will result in a loss of sovereignty of Puerto Rico, making it into more of a territory of the US.

Update:  Upon further reading and reflection, I think that Puerto Rico is in fact already a territory of the US, and not independent.  Read this:

"After the island was taken as a possession after the Spanish-American War, the Supreme Court decided in a series of “Insular Cases” that the totality of citizenship rights and state powers only applied to states and people living in so-called “incorporated territories,” which were retroactively defined as Alaska and Hawaii. Puerto Rico was left as an “unincorporated territory,” despite Congress establishing a formal independent government and constitution—actions which Puerto Rico’s highest court holds made it a de facto incorporated territory. That argument has gone unacknowledged by the Court, Congress, and the executive branch."
--http://www.theatlantic.com/politics/archive/2016/04/puerto-rico-debt-crisis-congress/480027/

Puerto Rico's highest court is the U.S. District Court for the District of Puerto Rico, from which decisions can be appealed to the First Circuit Court of Appeals in Boston, MA.  If its highest court says that it is a de facto territory, and that decision hasn't been overturned, then I think it is pretty conclusive that it is a territory.  The only thing that is independent about it is that it has a separate Olympics team.

I think the people of Puerto Rico should decide their status, but I guess they have already done that 4 times.  I personally think they should either become a state or become totally independent.  But that won't happen.  Instead, Congress will bail them out and the dysfunctional status quo will prevail.  This is a FAIL, with blame shared between Congress and Puerto Rico.

Simulated earthquake in Seattle

Urban Heart Surgery

Building a new subway line in London.  Very interesting.