It’s Not A Bug… It’s A Feature

September 21, 2012

  • After a week of gloom and malaise… optimists respond… opportunities in tech and resources for your taking…
  • Why, exactly, did Al Gore buy a condo below sea level???
  • “Americans can always be counted on to do the right thing… after they have exhausted all other possibilities,” and other investment adages for the ages…
  • Chilling stats on youth employment… several “chin up” solutions… readers challenge Israeli troop buildup hoax… Breakthrough Technology discount ends tonight at midnight!… and more!

  “So here we are, 2012, the world ends, right?” Patrick Cox sardonically broke out his Shorting the Apocalypse speech with in Vancouver this year.

As you may be aware, we’ve been battling an overwhelming sense of unease about the state of the markets, economy and geopolitics this week. Fortunately, Patrick Cox and Byron King, our tech and resource analysts respectively, have responded in kind.

If nothing else, today’s episode will prove, contrary to popular opinion, not all your 5 contributors agree… Mr. Cox begins by setting the stage from the podium:

 “This is the end of civilization as we know it,” Patrick announces. “At least we’ve been told that. They already made the movie, which looks very similar, by the way, to the environmentalist apocalypse. Al Gore’s vision of the end. Oddly, he bought a condo in San Francisco below the level of the sea rise that he has predicted.”

Al Gore’s Condo: Maybe He’s Banking on a “Lakefront” Premium?

Yesterday, we realized we got a little carried away with the doom and gloomery we have all become so accustomed to these days. So today, we’ve decided to give you something to perk up your weekend with today’s leitmotif: a future worth looking forward to.

To do so, we’ve invited two optimistic editors along to share why the future is much sunnier than the public thought is led to believe, and how you can profit from this light at the end of the tunnel.

  In the late ’90’s,” Patrick told the audience, “I was working primarily measuring those costs that Juan Enrique was talking about, and trying to communicate to the public the increase in mortality, morbidity and suffering from not approving drugs. Obviously, we haven’t succeeded, yet. And I left policy in order to go and work at Netscape. To help this revolution.

“A lot of us at Netscape knew we were bringing down the dominant paradigm. We knew we were providing an alternative to the old monopoly of information we have seen crumble before us, as The New York Times and other of the old media die.

Patrick Cox in Vancouver.

[Ed note: If you don’t have access to the hi-def videos of this year’s Innovate or Die symposium, you can grab them here.]

“There was a term we used in Silicon Valley when we talked about that sort of thing. It’s not a bug, it’s a feature. Things that look like they’re bad can actually be very positive, and can be really important trends.”

130  “Allow me to state the obvious — once again,” Patrick adds to the theme this morning.

“The boomers, who have always had an outsized influence on societal mood, are projecting their own looming mortality and decrepitude onto the economy. Despite the fact that our current challenges pale in comparison to those faced by our parents during and after the Second World War, investors suffering from actual and metaphorical myopia are absorbed in their own psychodramas of doom and gloom.

“Yes, war in the Middle East is increasingly likely,” Patrick goes on, “but it won’t compare to the destruction of World War II. Israel’s neighbors have tried on multiple occasions to rid their neighborhood of Jews, and I’m betting they fail again. This time, if Israel goes to war, it will be against the Shia and their proxies only, so Israel will have significant Sunni assistance.”

  “The larger financial point, however,” Patrick explains, “is that we have to look past the current state to the trends that shape our future. All critical trends are positive as society learns, via B.F. Skinner’s operant conditioning, from past mistakes. The technological innovation that pulled the world out of the WWII wreckage is only a limp-wristed foreshadowing of the exponentially accelerating scientific progress taking place all around us, if you care to watch.

“These advances will not only have enormous macroeconomic impacts, they will produce the greatest explosion in wealth ever witnessed for investors who understand the utter primacy of the adage ‘Buy low, sell high.’ Prices today are so depressed by irrational despair, even moderately informed long-term investments in emerging technologies are going to produce fortunes.

“One example is the hydrofracturing, or ‘fracking,'” revolution,” Patrick says. “Enabled by advances in computer technologies, fracking has made mockery of Peak Oil prophecies. America now has more hydrocarbon reserves than the Middle East. Already, the U.S. has the lowest commodity chemical prices in the world, thanks to a glut of natural gas.”

(Ed. note. That’s exactly what Byron’s been saying for a while now. He explains America’s energy rebirth in this presentation you don’t want to miss. More from Byron below.)

 Yesterday,” Patrick continues, bringing us back to his beat, “Rethink Robotics unveiled its first low-cost industrial robot, an order of magnitude less expensive than prior competitors. It will begin the reversal of the competitive advantage held by cheap foreign labor.

“I wish my old friend Isaac Asimov were alive to see it,” Patrick yearns. “The biggest beneficiary of this development will be biotech, which will adapt robotics to automate previously impossible biological procedures, accelerating therapies that involve genetic engineering and regenerative medicine.

“Biotech is, in fact, the most important sector in the coming transformation. This year, we’ve seen so many world-changing advances, it’s difficult to keep up. The true doom on the horizon is aimed at cancer, heart disease, Alzheimer’s, liver disease and, ultimately, aging as we know it. Over and over, I’m astonished by what I didn’t see coming.”

  “This month, I brought my readers a company that has a technology, soon to begin clinical testing, that will cure Type 1 diabetes and permanently ameliorate Type 2. For the first time, relatively unregulated phytochemicals or nutraceuticals are being sold that have remarkable health and life-extending potentials — far beyond anything anybody predicted.

“Today, I’m starting a new training regimen with a simple inexpensive device,” Patrick says, “clinically proven and used by just a few top world-class athletes for aerobic conditioning as well as strength training, with benefits as great as steroids, but with no side effects.

“I’m tired of the whining and, in fact, I don’t listen to it,” Patrick makes clear. “I don’t have time, as there’s so much great news that I can barely keep track. Doubt me? Let’s talk in 10 years when disruptive technology ‘investors’ are rich, but ‘traders’ are still being exploited by cynical brokerages.”

Indeed, if you want to get in on these disruptive technologies before they change the world as we have known it… and explode in value… you have until midnight tonight TO ACT.

  “There’s a great scene in the movie Apollo 13,” Byron King joins in the fray. You know it makes us uncomfortable to introduce themes our analysts are hot on… that also make us suspicious. Byron’s analogy here helps ease the pain:

“The moon-bound spacecraft just had an explosion. Power systems are draining fast, while the astronauts hurtle away from Earth toward the icy cold of space. The engineering team assembles at Mission Control, in Houston. Flight director Chris Kraft asks for ideas.

“‘Can we use the LEM [the Lunar Lander]?’ he asks.

“The guy from Grumman Corp., which built the lander, looks sheepish and starts to say, ‘We designed the LEM to land on the moon…’

“And Chris Kraft shouts back, ‘Well, unfortunately, we’re not landing on the moon. I don’t care about what anything was designed to do. I care about what it CAN do!'”

  “That scene goes through my head as I look at the challenges facing the U.S. over the coming years.

“Yes,” says Mr. King, “a lot of things are totally screwed up. It’s depressing even to start counting the ways.

“The short version is that our economics, politics, culture, the international scene… they’re a mess. It’s all quite depressing. Indeed, that spacecraft tumbling toward the moon is starting to seem more appealing.

“Then again,” Byron goes on, “I don’t care what the U.S. system was designed to do. I care about what it CAN do! The main thing is that the U.S. system was designed to identify problems, and eventually to adapt.

“OK, so perhaps Winston Churchill was correct when he said that Americans can always be counted on to do the right thing… after they have exhausted all other possibilities.”

  “When you look at the national accounts, we’ve pretty much exhausted all other possibilities. There’s nowhere to go, except a crash. So it’s time to focus on our national strengths, and find the ‘right thing’ to accomplish.

“One key U.S. strength is high-tech, and thinking in terms of systems,” Byron says “And I mean high-tech in a broad sense, not just video games.

“The U.S. has a deep magazine of scientific and engineering capabilities,” Byron says, “as well as the ability to apply astonishing novelty to solving the hardest problems.

“I’ve certainly seen these capabilities on my visits over the past couple years to the U.S. national laboratories at Livermore, Oak Ridge and Sandia,” Byron lets us in on. “I’ve seen them in trips to corporate labs as well, and production sites. And I’ve seen them in the innovation resident in many small startup and development companies.”

  “More broadly,” says Byron, “in recent years, and in the field of energy, for example, the public gained a glimpse of U.S innovation with the migration of oil production to the deep offshore and the release of new magnitudes of oil and natural gas via new onshore techniques like fracking.

“Or look at other stunning applications that are coming down the line in the world of material sciences, where new techniques of chemistry are unlocking compounds with incredible strength — 200 times stronger than steel. The carbon-hulled Boeing 787 Dreamliner is just the start.

“Or consider innovations in robotics and nanotechnology,” Byron continues, “that are on the cusp of transforming entire industries. The traditional mining industry, for example, is substituting robots for people as holes go deeper. Thus does a dangerous occupation remove more and more human risk from the equation, while raising productivity. And then, when the ore comes up, we’re seeing new forms of nanoparticles literally tear minerals into pieces, to separate valuable elements to super-high levels of purity.

“These are just a few hints of revolutions to come, which will occur within the U.S. economy. We’re going to see entirely new industries, based on technology that’s already in the labs, and it’ll spur demand for jobs that are barely conceivable just now. Looking ahead, I foresee new forms of wealth that enrich our nation and the world for the next century.

“And remember the point of Apollo 13,” Byron concludes. “They tore up the old flight plan. Then they took what they had and made the new plan work. They brought the astronauts home.”

  “U.S. stocks advanced Friday,” CNNMoney reports, “with the Nasdaq hitting a 12-year high as investors kept tabs on the global economy and the iPhone 5 launch.

“Chatter that Spain is working with European Union officials on the terms of a bailout also helped lift markets.”

The Nasdaq gained half a percentage point, brushing its highest level since November 2000. It has since made its way down a couple rungs, to 3,179. The Dow is down 17 points, to 13,579, and the S&P is down a tenth of a point, to 1,460.

Down, up, no matter. The delusion continues.

Gold sits at $1,775, up $5 since yesterday’s close. Silver, down 6 cents, to $34.68.

For the “sign of the times” file… more than anytime since 1950, fresh grads are movingback home:

Want more mind-blowing statistics? Click the image.


  • 1.5 million (or 53.6%) of young adults with a bachelor’s degree are either jobless or underemployed
  • The average U.S. student loan balance is $25,250. Total student loan debt amounts to over $1 trillion, as we mentioned earlier this week
  • 53% of 18-24 year olds and 29% of 25-34 year olds live with Mom and Dad
  • 85% of college seniors have already planned to move back home after graduating.

Bummer, man.

  Silver lining: Since many college graduates can’t find jobs, against all odds, they’re doing the next best thing: creating them.

According to Harvard Business Services Inc.,”Entrepreneurship among college graduates of all ages is at a 15-year high, they are going into business for themselves.”

And not just that, but “26% of new businesses are created by people 20-34 years of age.”

According to the global information services company Experian, the number of young entrepreneurs with their own businesses has increased 22% since 2008.

“The cost is quite low,” head of strategy and research, Adam Swash says, “and can be done from back bedrooms.”

With the Internet’s help, it’s easier than ever for anyone to start a business on a shoestring. And all you have to do is Google “helping young entrepreneurs” to see the vast amount of assistance that exists.

Lesson for the youngsters? Don’t take a job: Make one.

 Here’s another potential solution: “Seventeen leading universities in the U.S. and abroad,” The Associated Press reports, “will start offering free cyber courses through the online education platform Coursera, the company said Wednesday.”

Yet as dismal as things seem to be, out of the ashes of what doesn’t work, something great is born. Again, as Patrick said in Vancouver, “It’s not a bug, it’s a feature. Things that look like they’re bad can actually be very positive, and can be really important trends.”

“Coursera,” AP goes on, “a for-profit company started by two computer science professors at Stanford University, will now offer more than 200 courses from 33 institutions that are open to anyone with Internet access. Officials said the website has registered 1.3 million students around the world.

“The new Coursera partners include Brown, Columbia, Emory, Vanderbilt and Wesleyan universities, as well as Berklee College of Music and Mount Sinai School of Medicine.

“The foreign universities added are Hebrew University of Jerusalem, University of British Columbia, University of London, University of Melbourne and Hong Kong University of Science and Technology, Coursera said.

“The new additions include five public institutions: Ohio State University, the University of Florida, University of Pittsburgh, University of Maryland and University of California, Irvine.

“EdX, a competing online platform founded by Harvard University and the Massachusetts Institute of Technology, announced this month that it will start giving students the option of taking proctored final exams, which will allow them to earn independently validated certificates to show potential employers or educational institutions.

“‘As boundaries and limitations begin to disappear in the world of higher education, Coursera is clearly an up-and-coming player on the global stage and we look forward to partnering with them,’ University of Florida President Bernie Machen said in a statement.”

 “Boomer and pre-boomer whining is annoying,” one reader writes, eager to ignite the ever-popular generational debate once again in The 5, “frankly, on almost every topic. Thank you, those of you who fought in World War II and put yourselves through college (with the GI Bill), like my grandfather.

“But seriously, your whining about your own superiority in overcoming the old times is somehow superior to the loud complaints of a vocal minority of whiners complaining about the difficulties of this time? How?

[Clarification: A young guy is chastising an old guy for making it sound like humping his way through college in the old days is somehow better than trying hump your way through college today.]

“Almost everyone I know who carries a legal SSN is working for $9 per hour or less, unless they work for government or got started well before the dot-com bubble. There are just enough exceptions to cherry-pick.

“I’m not offering any excuses for the new whiners; I am sure they will grow up to whine about the whiners in their grandchildren’s generation.

“I am just wondering when the whiners will grow up.”

  “I am sure I saw that same email,” writes another reader steering us to the viral email we received yesterday morning warning of troops movements in Jerusalem. “The last time, there was a pending war in Israel… except it was because of the fear that Saddam Hussein would launch chemical or nuclear missiles into Israel.

“I enjoy reading your comments.”

 “I was surprised to see this letter on The 5,” another writes, amping up the urgency. “I received this letter directly from another Navy SEAL — the writer sent it to him personally. In short, my original email came to me from the original author, a Navy SEAL.

“One thing I know for certain, the SEALs have a code of honor that I’ve found to be true and honest both past and present…

“Secondly, they are not concerned about rumors, idle chatter or opinions. They deal in facts and have a great overview and take on situations.

“If anyone reads this, they should take it seriously and not look to our news agencies to tell the truth to us. We are well connected in many overseas areas, and the ideas stated in this letter have been reiterated from other sources, both in Israel as well as other military sources. This should concern all Americans, and our military is moving ships, forces, troops, etc., into the region.

“The smell of war is in the air.”

The 5: As if we didn’t have enough to whine about.

  “I thought you might be interested that the urban myth identification site,” writes a less credulous reader, “lists the email about Israeli preparation for a war as a ‘probably false’ report. This usually means that probably pretty good efforts to confirm the email failed to do so.

“The email itself could be a ploy in the overall psychological war ongoing between Israel and Iran. I also suggest there is excellent reason to think it is a hoax — any military man in Israel is not likely to be the one to provide the alert of an impending attack.

“Even in Israel… loose lips sink ships.”

The 5: Aye yi yi. Hoax or no hoax. The email is just annoying. ”

  “Please publish the name of your recommended metals storage facility again,” writes a far more practical reader. “I thought I had bookmarked it, but, alas, no.”

The 5: Sure. It’s called the Hard Assets Alliance.


Addison Wiggin

The 5 Min. Forecast

P.S. URGENT: Expires at Midnight

“It’s often said you pay for your wealth with your health,” Patrick writes, sticking around. Today, he says, “I’m offering you an opportunity to keep and greatly increase both.” He proceeds to show you how to take advantage of a clinically tested ‘nutraceutical’ that could dramatically slow down the aging process…

One little snag: it expires at midnight tonight…

Want to see all of the reasons Patrick is such an optimist despite all the doom and gloom?

Click here and he’ll tell you himself.

“By the way,” Patrick says on his way out, “The Killers’ new album, Battle Born, rocks.”


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