Is It Time to Change your Yacht?

The most used common way to change a yacht has been buy a new one or, alternatively,  a major refit where the main point was the external recoating.

Well, today it might be a new, cheaper, faster way: Wrapping it!

The main advantages of wrapping over marine painting are:

  • low cost, at as little as a third of the cost of a professional spray job
  • Fast, wrapping can usually be done in a day or two. That means you’ll massively cut down on yard time, reducing the total cost even further.
  • Easy maintenance, you can forget buffing and polishing
  • easy repairs, if your vinyl boat wrap gets scratched or dented, there’s no need to re-wrap the whole hull. Most repairs can be done with a simple patch, and you can even do it yourself.
  • customizable, Let your imagination run wild  to give your boat a spectacular one-of-a-kind finish.

Does it sound interesting? Do not hesitate to contact me for details and quotes.wrapping

Future Floating Nightmare.

Last August in the chinese port of Tianjin there was a huge explosion killed hundreds of people and dispersed an unknown amount of toxic sodium cyanide into the air and water.

Moreover, the blast has been described as a nuclear explosion and the video backs up it.

Well, maybe you are asking why talking about it: because as World Nuclear News reports, China is now all set to build a portable, floating nuclear reactor.

China General Nuclear (CGN) expects to complete construction of a demonstration small modular offshore multi-purpose reactor by 2020, the company announced yesterday.

Here’s a rendering of what this disaster-waiting-to-happen will look like once complete:FloatingReactor_0It is interesting the final quote from CGN and make  a note of the bolded passage:”Floating plants offer various advantages: construction in a factory or shipyard should bring efficiencies; siting is simplified; environmental impact is extremely low; and decommissioning can take place at a specialised facility.”

What could be wrong?

“Good old days”

In the last three years the world is changing very fast to a worse new situation, in my point of view; since the “launch” of the 2006 Maritime Convention, I have been always sceptic about its realistic feasability mainly because, having worked almost 30 years on yachts, I am sure that the yachts’ owners are not the right people willing to perform certain duties concerning their employees.

Anyway, it seems that this sort of view is spreading out towards any kind of jobs and someone is starting to look for a “new system for creating work and money”: the following article is by Charles Hugh Smith and gives a better idea.

Wishful thinking is not a solution.

The world of work has changed, and the rate of change is increasing. Despite the hopes of those who want to turn back the clock to the golden era of high-paying, low-skilled manufacturing jobs and an abundance of secure service-sector white collar jobs, history doesn’t have a reverse gear.

The world of work is never going back to the “good old days” of 1955, 1965, 1985, or 1995. Jason Burack of Wall Street for Main St. and I discuss these trends in a new podcast, Radical Changes in the Job Market, Now & in the Future.

Those hoping for history to reverse gears place their faith in these wishful-thinking fantasies:

1. That automation will create more jobs than it destroys because that’s what happened in the 1st and 2nd Industrial Revolutions. The wishful thinkers expect the Digital / 3rd Industrial Revolution to follow suite, but it won’t: previous technological revolutions generated tens of millions of new low-skill jobs to replace the low-skill jobs that were lost to technology.

Millions of farm laborers moved to the factory floor in the 1st Industrial Revolution, and then millions of displaced factory workers moved to sales and clerk jobs in the 2nd Industrial Revolution.

Even white-collar jobs that supposedly required a college degree could be learned in a matter of hours, days or at most weeks, and little effort was required to stay current.

The Digital/3rd Industrial Revolution is not creating tens of millions of low-skill jobs, and it never will. Even worse for the wishful thinking crowd, the 3rd Digital Revolution is eating tech jobs along with the full spectrum of service-sector jobs.

Those expecting to replace low-skill service jobs with armies of coders will be disappointed, because coding is itself being automated.

The new jobs that are being created are few in number and highly demanding. Jobs are no longer strictly traditional boss-employee; the real growth is in peer-to-peer collaboration and what I term hybrid work performed by Mobile Creatives, workers with highly developed technical/creative/social skillsets who are comfortable working with rapidly changing technologies, who enjoy constant learning and are highly adaptive.

The work that is being created in the Digital/3rd Industrial Revolution is contingent and thus insecure. The only security that is attainable in fast-changing environments is the security offered by broad-based skillsets, great adaptability, a voracious appetite for new learning and a keenly developed set of “soft skills”: communication, collaboration, self-management, etc.

I cover all this in depth in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.

The problem is the number of these jobs is far smaller than the number of jobs that will be eaten by software, AI and robotics. the number of workers who can transition productively to this far more demanding and insecure work environment is also much smaller than the workforce displaced by software/robotics.

In short, we need a new system; wishful thinking isn’t a solution.

2. That the U.S. can unilaterally demand the right to export its goods and services to others at full price while refusing to accept competing imports. In effect, the fantasy is to return to 1955, when the U.S. could export goods at full pop to the allies who were rebuilding their war-shattered economies. Imports were few because those economies were busy focusing on their own domestic needs.

Trade is a two-way street. Fair trade is a moving target, depending on which side of the trade you happen to be on. Everybody wants to export their surplus at top prices, but competition lowers prices and profits. This forces global corporations to seek cost advantages by lowering the cost of components and labor.

3. The wishful thinkers want strong corporate profits to prop up their stock market and pension funds, but they don’t want corporations to do what is necessary to reap strong profits, i.e. move production of commoditized goods and services overseas or replace human labor with cheaper automation.

You can’t have it both ways.

Wishful thinkers choose to ignore the reality that roughly half of all U.S. based global corporate sales and profits are reaped overseas. It makes zero financial sense to pay a U.S. worker $20/hour, and pay the insanely expensive costs of sickcare/”healthcare” in the U.S. when the work can be done closer to the actual markets for the goods and services at a fraction of the cost.

Memo to all the armchair wishful thinkers: if you want to compete globally with a high-cost U.S. work force and no automation, be my guest. Put your own money and time at risk and go make it happen. Go hire people at top dollar and provide full benefits, and then go out and make big profits in the global marketplace.

The armchair pundits and ivory tower academics would quickly lose their shirts and come back broke. That’s why they wouldn’t dare risk their own security, capital and time doing what they demand of others.

4. The wishful thinkers decry the lack of “good-paying” jobs yet they refuse to look at the reasons why employing people in the traditional boss/employee hierarchy no longer makes sense. The armchair pundits and ivory tower academics have never hired even one person with their own money. These protected privileged are living in a fantasy-world of academia, think tanks and foundations, where workers are paid with state money, grants, venture capital, etc.

As I have often noted here, Immanuel Wallerstein listed the systemic reasons why labor overhead costs will continue to rise even as wages stagnate. This means employers see total labor costs rising even if wages go nowhere: it gets more and more expensive to hire workers.

Why I Will Never Hire Anyone, Even at $1/Hour (November 10, 2015)

Then there’s the staggering burden of liability in a litigious society, the costs of training and supervising ill-prepared employees and the hard-to-calculate costs of increasingly complex regulations.

5. We can solve the decline of the traditional work model with more education. This is also wishful thinking, as not only is higher education failing to produce workers with the requisite range of skills, the emphasis on higher education has produced an over-supply of people with college diplomas.

The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

In the real world, even wages of the most highly educated are stagnating.declining-wages-1-300x285

The structural changes in the world of work are visible in these charts:

The civilian participation rate is plummeting, despite the “recovery”civ-part12-15aThe civilian participation rate for men is in a multi-decade decline:civ-part-men2Part-time jobs do not provide enough income to have an independent household or raise a family, nor do they pay enough taxes to fund the Savior State. The only jobs that count are full-time jobs, and they haven’t even returned to 2007 levels despite a higher GDP and a rising population.full-time6-15As a percentage of GDP, wages have been declining for decades.GDP-wages8-15a-1Self-employment is the wellspring of entrepreneurs and small business. As you can see, it has also been declining for decades.self-employed8-15aIt’s time to get real, people. Wishful thinking is not a solution. We need a new system for creating paid work and money, and here’s my proposed alternative system: A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

Have a Merry Christmas and a Wonderful New Year!

How’s China 2. The red swan.

I found an interesting and detailed post by David Stockman to define better the chinese situation that, according to the maistream, should drive our (next) future (or not..).

The proverbial peddlers of Florida swampland can now move over. They can’t hold a candle to the red suzerains of Beijing.

The latter had drawn a line in the sand at 7.0% GDP growth. Conveniently enough, the “consensus” estimate of so-called street economists was pegged at 6.8% for Q3, thereby giving authorities one thin decimal point through which to thread a “beat” at 6.9%.

By golly they did it!

Even then, China’s Ministry of Truth had to fiddle down the GDP deflator to negative 0.5% (for the second time this year) in order to hit the bulls eye. And that’s exactly the point.

No real world $10 trillion economy plagued with all of the turmoil evident in China’s whipsawing trade data or its volatile real estate development sector or its faltering rust belt and commodity-based industries can possibly deliver absolutely stable GDP numbers to the exact decimal point quarter after quarter.

In fact, the odds that these reports represent anything other than goal-seeked propaganda are so overwhelmingly high that they perforce raise another more important question. Why does Wall Street and its servile financial press not issue a loud collective guffaw when they are released?

But no, the Wall Street Journal took it all very seriously, noting both the “beat” and China’s claim that the “miss” wasn’t a miss at all:

The better-than-expected result—a Wall Street Journal survey of 13 economists forecast a median 6.8% gain—is likely to renew debate over the accuracy of China’s growth statistics…….Speaking at an event to promote entrepreneurism in Beijing on Monday, Premier Li Keqiang said “even though it was 6.9%, it is still a growth rate of around 7%.”

Right. China’s #2 communist boss is out promoting the “enterprenurial spirit” while emitting central planning propaganda to the decimal point.

You might find the irony exceptionally rich, but there is a larger message. Namely, the true size of China’s economy is unknowable to the nearest trillion or even several trillions. But that does not prevent most of Wall Street from taking seriously each and every word of China’s self-evidently clueless statist rulers spouting growth rates to the decimal point.

In truth, Wall Street has become so intellectually addled from its addiction to central bank enabled gambling that it no longer has a clue about what really matters. That’s why the next crash will come as an even greater surprise than the Lehman meltdown, and will be far more brutal and uncontainable, as well.

Yet the evidence that a China-led crash is on its way is hiding in plain sight. And what is being blithely ignored is not merely the blatant inconsistencies in its economic numbers—–such as the fact that electricity consumption has grown at only a 1.3% rate over the past year——or that its commerce with the outside world has shrunk drastically, with imports down by 23% and exports off by 3-6% in recent months.

Instead, the evidence that China is a slow-motion trainwreck lies in the very consistency of its Beijing-cooked numbers. Apparently, no one has told its credit-happy rulers that printing precise amounts of new GDP quarter after quarter by issuing credit at double the rate of nominal income growth will eventually result in the mother of all deflationary collapses.

Stated differently, if the pattern of debt versus GDP shown below is pursued long enough, the world’s greatest open air construction site will fall silent. Everything which can be built will have been delivered; any cash flow which can be encumbered with more debt will have been levered-up; any pretense that financial institutions are solvent will have given way too soaring defaults; and the Wall Street delusion that the primitive central planners of red capitalism had a iron grip on China’s runaway expansion will have been revealed as a snare and delusion.

Accordingly, the only thing that really counted in yesterday’s release was that credit is still growing at nearly 12% or at 2X the 6.2% gain in nominal GDP. And as is also evident in the chart, this massive and aberrational debt versus income gap has been underway as far back as the eye can see.

Indeed, its goes all the way back to Mr. Deng’s moment of enlightenment 25 years ago. That’s when he discovered a printing press in the basement of the PBOC and concluded that communist party power might better be preserved by running these presses red hot than by Mao’s failed dictum that power descends from the white hot barrel of a gun.

In any event, why in the world would anyone in their right mind think this crucial chart can be extended toward the right axis much longer. Assume 10 more years of 12% credit growth, for example, and China will have $90 trillion of total debt or 50% more than the already staggering amount carried by the US economy.

At the same time and given that China’s nominal GDP growth is descending in Gartman fashion from the upper left to the lower right, assume the very best outcome for nominal income. That is, posit that somehow China manages to achieve ten more years of this quarters’ 6% nominal growth. So doing, you get a mere $17 trillion of GDP.

Everywhere and always, however, a 5X total leverage ratio on an economy is a recipe for crushing deflation. In fact, it has never happened before in modern times except for Japan after 1990; and Japan at least had some semblance of functioning markets separate from the state and the rule of commercial law, contracts and bankruptcy.

By contrast, when China fully plunges into its inexorable deflationary spiral the rulers of red capitalism will have no choice except to resort to Mao’s preferred instruments of rule—–paddy wagons and machine guns—-in order to quell an outraged citizenry. After all, Mr. Deng told China’s newly ascendant capitalists that it is glorious to be rich, but did not explain that printing press prosperity ultimately results in a crack-up boom.

Stated differently, the recent 18-month rise and then overnight collapse of $5 trillion of phony market cap in the Chinese stock market gave rise to utter panic and mindless expediency in Beijing, including a de facto bailout of billionaires. China’s red rulers apparently feared that the 90 million angry stock market speculators would be no match for its 70 million party cadres——especially since most of the latter were foremost among the former.

Yet what will happen when China’s hideously inflated real estate and land values succumb to the deflationary wringer? And hideous is not too strong a word: in many urban areas housing prices have reached 15-30X the median income.

Well, there are 65 million drastically over-priced, empty apartments in China because its rulers told speculators and the rising middle class that housing prices could never fall——that they were the next best thing to a piggy bank. Accordingly, the last phase of China’s madcap construction boom is likely to be a manic spurt of prison building to accommodate the millions of irate citizens who are destined to experience China’s turbo-charged version of 1929.

china debt and gdp_0

The other number number in the Q3 release that has been drastically misinterpreted is the reported 10.6% growth of fixed asset investment. Needless to say, this was described as “disappointing” when it is actually a screaming symptom of China’s terminally deformed economy. If it had any hope of avoiding a crash landing, fixed investment in its fantastically overbuilt public facilities and industrial capacity would be sharply negative, not still growing in double digits.

Owing to the cardinal error embodied in Wall Street’s self-serving rendition of Keynesian economics, however, China’s fatal dependence on erecting economic white elephants and what amount to public pyramids in the form of unused airports, train stations, highways and bridges, is given hardly a passing nod. That’s because it is assumed that some way or another China will make the transition to a services and consumption based economy just like the good old shop-till-they-drop US of A.

Let’s see. When China finally stops its borrowing binge, these putative shoppers will need to finance their purchases out of current incomes. Yet is not the overwhelming share of household income in China currently earned from the supply chain for fixed asset investment and construction and from the export of cheap goods to already saturated and debt-besotted DM markets?

Just consider the fantastical reality that China’s 2 billion ton cement industry produced more in three years than did the US industry during the entire 20th century. When they finally stop building roads, apartments and factories, therefore, it is not just the cement kilns which will shutdown, but a whole network of gravel haulers, chemical plants, cement truck fleets, construction equipment suppliers, work site service vendors and much more reaching deep into the interstices of China’s hothouse economy.

Likewise, when rebar and other construction steel demand collapses and the rest of the world throws up barriers to China’s surging steel exports, as it surely will and is already doing, the ricochet effects on China massively overbuilt 1.1 billion ton steel industry will be far-reaching. The incomes of coal barons and blast furnaces workers alike have already taken a pasting, and the downward spiral is just getting started.

And wait until China’s newly minted auto dealer lots become backed-up with unsold cars as far as the eye can see. Then its 25 million unit auto industry will tumble into a depression unlike anything since 1929 when Detroit’s production plunged from 6 million cars/year to less than 2 million.

All of those suddenly unemployed auto, steel, rubber, glass, upholstery etc. workers did, in fact, economically “drop”. But it wasn’t from an excess of shopping!

In short, the affliction of Keynesian economics brought many ills to the modern world, but repeal of Say’s Law was not among them. You can have a one-time credit party, but when it inevitably ends, consumption spending defaults to that which can be financed from current incomes. Consumption is the consequence of production and income, not its cause.

Yet crack-up booms eventually destroy the bloated and unsustainable incomes generated in the raw materials, capital goods and consumer durables sectors during the boom phase. Accordingly, even the red suzerains of Beijing can not get from here to there. The phantom incomes that resulted from paving nearly half of the Asian continent occupied by 20% of the world’s population must inevitably shrink, meaning that China’s consumption and service spending will falter, too.

Stated differently, China’s red capitalism is the new black swan. There is nothing rational, stable or sustainable about it. Moreover, the consequence of its pending collapse will be literally earth shattering.

That’s because in recent years it has accounted for a lot more than the one-third of global GDP growth conventionally cited. The latter is just a measure of border-to-border economic statistics.

But the second and third order effects are equally large. From the bowels of Australia’s iron ore mines to the top of Dubai’s pointless 100 story office towers, the entire warp and woof of the global economy has been distorted and bloated by the central bank money printing spree of the last two decades, led by the red credit machines of Beijing. Everywhere economies have succumbed to over-building, over-consumption, over-financialization and endless dangerous, unstable speculation.

So forget the cleanest dirty shirt meme or the preposterous Wall Street nostrum that the US economy has been “decoupled” from the rest of the world. That’s unadulterated hogwash, and its means that the stock market and risk assets are heading for a thundering crash.

After the fact, of course, Wall Street will discover that the world economy was unexpectedly taken down when the suzerains of Beijing were unable to perpetuate the Red Ponzi.

But just like last time during the mortgage and housing meltdown it was starring them in the face all along. Here is what happened to the home ATM piggy-bank that fueled the Greenspan Boom and that gave rise to the Wall Street illusion that consumption spending is the motor force of economic life.

From a peak mortgage equity withdrawal rate (MEW) at 9% of DPI or nearly $1 trillion per year prior to the crisis, MEW has been negative ever since. That is, it has subtracted from consumption, not added. Not one in one hundred Wall Street economists could have correctly projected this chart in 2007 when they were slobbering about the goldilocks economy.

Needless to say, when it comes to the wounded elephant in the room this time around—-the tottering edifice of the Red Ponzi——they are still slobbering.


How is China?

I already wrote something on chinese situation, because there is a general thinking that there all is shining; now I would like to focus the attention on more precise figures to show “the other side of the moon”.

The real economy does not seem to be in a good shape


it is about the “unofficial” Minxin index of PMI and there is a “small” difference vs the official index; then, if you consider that the value 50 is the border between growth and recession…

Let’s go ahead. The crisis seems to be boomed in 2014, according to this figure


but if you add this other one  2011_China5-490x260

the whole global economy has been maintaned by the chinese over-investment up to 2008, while commodities started to go down since 2011. So, these movements were forecast indicators of the “bust” happened in 2014 but that was already signing in 2011: if China does not buy materials today, cannot produce product tomorrow.

It seems that the chinese problem is more serious than considered.

Finally, how are the rich people of which China is (or was?) full?  Rich_cry2-490x246

It seems that they are starting to suffer of “short arms” disease and they started to tighten the belts.

Maybe, (Houston) we have a problem…