The FED Controlled Market: A Delicious & Dangerous Poison
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The FED Controlled Market: A Delicious & Dangerous Poison2017-10-072017-10-18https://mcalvanyweeklycommentary.com/wp-content/uploads/mwc-logo.svgMcAlvany Weekly Commentaryhttps://mcalvanyweeklycommentary.com/wp-content/uploads/10_03_17.jpg200px200px
About this week’s show:
Investment Biker Rogers: “Imminent Stock Decline!—Buy Physical Gold”
Crowds following momentum of markets all the way to the collapse
True VALUE INVESTORS position and then let the crowd come to them
“Things start out very complex and sophisticated, and we have a refined language. And then the next thing you know, it is down to name-calling, and ‘I’m going to scratch your eyes out.’ And that’s not just in my living room, that’s on the global scene. So, why the probability of Korean conflict rising every day? Maybe it’s because we’re all too human. Maybe it’s because we’re all too childish.”
Kevin:David, before we begin today I think we should mention that you and your dad are ramping up for the next set of conferences. I think it would be worth just taking a moment here and letting people know when each conference is coming. And of course, you and your dad also are offering, for free, private consultations for people who would like to schedule time personally with you the day after the conference.
David:Part of the reason Don is coming back from Asia after ten years of being over there most of the time – this is our 45thanniversary as a company, 45 years of doing what we do. And so we’ve met with clients on the West coast, now it’s time to move toward the Midwest and the East coast. We start in Overland Park, Kansas November 3rd, and then go to the Twin Cities in Minnesota November 7th, Philadelphia November 10th, Charlotte, North Carolina on November 14th. And then just before Thanksgiving, August, Texas November 17th. Naples, Florida after the holiday will be November 28th, and then the last will be Orlando December 1st.
Kevin:I should mention the private consultations with either you or your father, Don McAlvany, filled up quick, and so we’re encouraging people to sign up on the website, mcalvanyica.com/briefing. And you can click a little box that says you would like a consultation. But to make it a little more precise our listeners can call the office at 800-525-9556 [ask for Karis at ext. 118].
David:I would do that. In particular, I know the last series of conferences we filled up long before we got to the date, and we are currently filling up, so if you want to do a consultation with either myself or with Don, please take advantage of that – his wisdom, and the distilled insight that he has. Fifty years of doing anything teaches you a lot, and I wouldn’t miss that.
Kevin:It’s a treat – going to those last conferences that you did on the West coast. It was a treat for me, and I’ve known you guys for 30 years. Dave, I want to transition here just a little bit because this year has been a significant year. Speaking of 30 years of experience, I’ve never seen such a dramatic decrease in American buying of coins, bars, physical gold, from last year to this year. I’ve never seen anything quite like this before. Now, it’s not happening worldwide. Worldwide, you still have very brisk gold and silver buying, but what in the heck is happening here in America?
David:Yes, never a bargain-hunter, averse to value, and nearly always chasing momentum, rather than searching for an asset selling at inexpensive levels. This is what I would describe most investors falling prey to is why they’re their worst enemy, always chasing momentum. And to this point, we have silver Eagle sales which in the third quarter of this year, 81% lower than a year ago.
Kevin:That’s astounding.
David:Gold Eagle sales improved from their abysmal second quarter, still down 80% from the same quarter last year. So roll the clock back. Go to 2011, if you can recall prices were nearing all-time highs and the retail volume in the physical metals space here in the United States was nearly 800% higher. And while global demand for gold still remains robust today, you don’t see that same kind of behavior, in the United States in particular.
Kevin:Look at Russia. They just picked up another 500,000 ounces. That’s amazing.
David:And that’s last month. So they are going to be on target at these paces for the record numbers they hit in 2015, for the record numbers they repeated in 2016, and here we are again in 2017 – it looks like the Ruskies are doing it again, adding as many good delivery bars as they can to their caches.
Kevin:Yes, but did you buy your bitcoin? That’s really the question right now when you talk to somebody, they say, “What do you think about bitcoin?”
David:I think all Russian oligarchs own bitcoin. I mean, they need to, that’s the basis of future wealth. The U.S. market, we conclude, when we look at who is buying and who is not, is more fascinated with chasing the stock market. You’re right, they’re more fascinated with bitcoin or ethereum reaching fresh highs. Buy high, and sell higher. That is the momentum crowd’s cry. And we’ve mentioned before on the Commentary the greater fool theory – again, buy high, sell higher. It’s just too hard to avoid groupthink. Or perhaps it’s just too comforting to know that you’re not alone and the mass mind provides validation to your thinking, or whatever action you happen to be taking, but you’re not alone.
Kevin:Wouldn’t you think that the metals actually would be falling in value? If you have an 80% decline in physical buying here in the America you would think that the price would fall, but that has not been the case.
David:That is ordinarily the case. Ordinarily, the decline in coin demand is accompanied by a slide in price, but not this time. Gold maintains a price 10% improved from January 1, silver about half as much of that. Price action has been constructive, in other words it has been positive. And frankly, it boils down to this. U.S. investors prefer the momentum game to value. And that’s not just today, that’s any day.
Kevin:You mentioned the word comfort. There are an awful lot of things that we will do for comfort. It is amazing what we will sell for security. There is a security in doing what your neighbor is doing, and what that neighbor is doing, and then the other neighbor, but there is little bit of pain if you’re a value investor. I know one of your favorite authors back from the Depression is a man named Benjamin Graham. He talked about enduring short-term pain so that you could buy value, but that doesn’t give you the comfort of doing what the crowd is doing.
David:Right. So, the challenge with value, and the reason why so few modern investors even know the name Benjamin Graham, who, as you mentioned, is the father of value investing. He wrote Security Analysisback in 1934, and obviously he was writing that book throughout the 1920s. You have to search for value. That is one of the reasons why it is unpopular. The search, itself, is arduous, and you must see what others have neglected to see. In other words, you have to have an insight that goes beyond just a surface look at things. And you must take action without the affirmation, or without the approbation of your peers. When you don’t get support from everyone saying, “Oh, yeah, I did that yesterday. Oh, I’m planning on doing it tomorrow.” All the while you have to prepare to wait, and to wait, and to wait, for the crowd to come to you. Because, you see, it’s not that value investors are averse to crowd following. In point of fact, their success depends on it. But the crowd comes to them. It’s a game of chase, all the same, regardless of being in the momentum trade or value trade, but wisdom for the value player or investor places the value investor at the front of the pack, not at the back. Does that make sense?
Kevin:It reminds of something, Dave. I’ve studied navigation in various cultures – Viking cultures, or our own European culture with celestial navigation. One of the most fascinating navigating methods is actually in the islands of the Pacific. You had these men with canoes with just a little sail, and they would have to sometimes go hundreds of miles and find a tiny island. But their method of sailing was a little different than the way we think. When we go to a destination, we think of the destination, we set sail, we look to see if we see it on the horizon.
They do it a little differently. They get on their boat, they basically look at the wind, they look at the stars, and in their own imagination, they let the island that they are looking for come to them. And for some reason, that works. In this Polynesian navigation, the island, over time, appears over the horizon and comes to them. It’s a different mindset, but it allows them to manage what they can manage right there, and not something that is outside of their purview.
David:I think that’s one of the things that a value investor is not trying to control, it doesn’t assume that it can manage or control, which is the time element. Time is a factor for the value investor, but it is one that he can’t control. And I don’t think they really care to. So, it’s patience or lack of it, it’s the artificial clock of personal expectation which determines most choices for the modern investor. Why? Because they are racing toward that financial end point. As you said, they are determined to get there and get there as fast as they can, whether it is college savings or retirement or some other goal, unable to see – this is what they are blinded to in their earnest desire to arrive either on time or ahead of schedule – they are unable to see that the market is totally indifferent to their schedule, and oftentimes the market is cruelly indifferent.
Kevin:Another author that we have interviewed on this commentary, Dave, is Jim Rogers. We have interviewed him a couple of times. I know he is another author that you really enjoyed. You read his book Investment Bikera couple of decades ago. This is a man who doesn’t ask anybody’s advice as to what to buy. Instead, he goes on the road. I didn’t read the book, but didn’t he ride a motorcycle around the world and just observe and then make value investment decisions from that point?
David:Yes, he has taken two trips around the world. Once was in more of a posh 4-wheel drive vehicle, but his first trip was on an old BMW.
Kevin:Like yours. No, yours isn’t old.
David:His was even older.
Kevin:His motorcycle, a BMW, and he observed from the ground up.
David:Right. Rogers, in recent weeks, describes the end of a market cycle and speaks very firmly about his expectation of a significant decline in stocks. And he describes it not as some theoretical thing on the horizon but as an imminent decline.
Kevin:So, soon.
David:Yes. Now, the reality is, Rogers is always early. And with almost anyone I know, including myself, to be aware of macro-related issues is to be aware of the things that ultimately determine the course of the markets. However, you can be early. And he has been, notoriously, as we have, to some degree, been early as well. So I look at him – he is a veteran investor. He retired in his 30s from a lucrative stretch with George Soros and the Quantum Funds.
What is he recommending now? One of the many things he is recommending – of course, he likes agriculture. He started, not a fund, but an index for that, and there will be some remuneration as, and when, there is massive bull market in ag products, so he is well positioned for that. He is also recommending purchase of gold coins, which is interesting because he is a trader by nature. He is someone who would probably be more apt to buy in the futures world, buying futures contracts because of the leverage they provide, and that is consistent with his nature.
Kevin:But he is recommending physical delivery?
David:He is recommending physical delivery. That’s just never been his tune. But one thing that has been his tune is value. Value has always been his tune. So back to what we were talking about earlier with Benjamin Graham and securities analysis and value investing. Gold is curiously juxtaposed between the East and the West, and I think he has an interesting perspective on that. Rogers is always interested in what people hate, as an entry point into an opportunity.
Kevin:I’ll go ahead and take some of that. Remember what Roy said. He said the same thing. He said, “You want to buy it when they’re not buying it.”
David:That’s right. So find what’s hated. I remember thinking three years ago, “A wonderful place to be right now would be in Russian equities.” Tough to sell to clients, actually.
Kevin:You think different than I do, but go ahead.
David:But the reality is, the last three years it has been highly lucrative. And where do you go? You go where the asset is hated and has been left for dead. And it is an entry point. It’s not necessarily when you buy, but that’s where the research begins. But what’s there? And I think that’s one of the reasons why he may be landing on gold today.
Kevin:Do you think just his living in Singapore has had that influence on him, where he thinks a little bit a differently, but he still can see as an American?
David:Exactly, because Roger is, just like the gold market is curiously juxtaposed between the East and the West, and I think it is to his advantage that he is now living in Singapore and he has the perspective of his previous life as a Wall Street trader, and that is set next to the quieter existence today that he has in a sleepier town, a Malaysian city. Singapore is not exactly Manhattan, although it is a real global hub for trade and it’s a wonderful perch from which to note shifts and turns in the region. So, for someone who appreciates Asia, moved there in 2007 or 2008, wanted to raise his daughter there so that she knew Chinese and could see the future trends of the world through that lens. Gold is out of favor in the West, there is no doubt about that. And the mint numbers are the strongest evidence of that. But it is in favor in the East.
Kevin:And that’s why the price isn’t dropping, Dave. Your dad asked me back in 1999 – people would send him stacks and stacks of books, and he’s like you. Doing research is a hard thing, you have to winnow into things and say, “What can I spend time doing?” He handed me a book in 1999 called Irrational Exuberance.The tech market was hitting all-time highs. Nobody saw any kind of downturn whatsoever. But this book was quoting something that Alan Greenspan had said about three years before that, saying that the markets were running on irrational exuberance.
I read the book, and it was very, very timely because it said, “In the next year or two you are going to see a crash in the tech stock market like you have never seen before, because it’s running on irrational exuberance.” Is that where we are right now?
David:The reality is, all markets swing from irrational exuberance to irrational negativity. Gold, too, had a moment of irrational exuberance in 2011-2012, and in retrospect, you look back and read the Barron’s article in that timeframe. It was the first article praising gold as an asset class that everyone should own. It’s the first article of praise that they wrote about gold in 25 years.
Kevin:When it was hitting about $1900.
David:That’s right. So you go from irrational negativity to irrational exuberance. And if you can play that cycle, understand that when you get to the point of irrational negativity, that the risks are fairly well revealed at those cycle lows, and your risks as an investor are fairly well mitigated, to a large degree. So again, going back to the approach that Rogers has taken, finding what is hated – that is the entry point into research. “Why this? What is the reason? Can I find any fatal flaws?” And if you cannot find any fatal flaws, then perhaps you begin to allocate.
You mention he is a motorcycle enthusiast. I am, too. I read his book The Investment Bikerwith glee many years ago, not only from the aspect of traveling the world, and what a great adventure story it was, but as a young man I also had a budding interest in economics. This goes back 25 years ago. His book, to me, echoed the novels of Mark Helprin, that you had these evocative story-telling sessions going through central Africa and Eastern Europe and Russia.
Kevin:Right, so there was an element of the exotic, and that has to appeal.
David:But as you mentioned, it is a boots on the ground approach to economics, which is what you have in at least one of Mark Helprin’s novels, where this Wall Street analyst is the last of his kind. Everyone has moved to quantitative analysis, but the firm still keeps him around. He’s the last of his kind. And he is paid to travel, and he sits in coffee shops and he talks to taxi drivers, and he makes street level observations. He wants to know the true exchange rate – on the street, not at the bank. He wants to know where things are beginning to reveal themselves in terms of fiscal pressure.
And that’s what he comes back and reports, not the quantitative aspects, but the qualitative aspects of an economic environment, and that is precisely what Rogers has as he travels the world, the stories that he tells, the imagery that he creates, again, those evocative pieces where you feel that you are actually riding along with him down a dusty road.
Kevin:It’s a little different than the fancy equations that we see right now that are applied to what we are told is economics by the central bankers.
David:Fundamental factors are really what that kind of an analyst is looking for. Value, for many people, is discovered most often in a bear market because fundamentals are fully revealed in a bear market. Contrast that with today, because again, fundamental factors in stocks, and to a larger degree, in the larger economy, have not played first fiddle, they’ve played second fiddle to central bank interest rate composition, to balance sheet construction, and all of the unique twists and turns of the tools that the Fed and their compatriot central banks around the world have been using. Rogers echoes our concern that we have moved a long way from being able to adequately value risk in the marketplace.
And he echoes our concerns that stocks are not being invested in on that basis. Fundamentals are no longer important because of the index craze. Because people are buying an index fund and gaining a broad exposure, they’re no longer buying an individual company, they’re buying a sector, they’re buying whatever it may be. And the trend has been to purchase blindly with no differentiation, with no value appraisal. And in his opinion and ours, it is not likely to end well. So it is back to those fundamental factors.
Kevin:I was talking to a buddy of mine this weekend. We both had the same instructor when we learned to fly sailplanes – gliders. We were talking about those times when we were just about to stall the plane. Laverne St. Clair was our instructor, and he was sitting behind us because the glider was a tandem seating. He was sitting behind us but you could feel the stick. He would say “my plane” because if I was getting into trouble or if this other guy that I was talking to was getting into trouble, as we were learning he would take the plane over, and he would say, “My plane.” Well, until he handed that stick back, we didn’t touch the stick. When he said, “My plane,” what that meant was, “Hands in the air, you’re done,” until he rights the problem. And then he would hand the plane back and I would say, “My plane,” when it was time to take back over. In a way, in 2011-2012, something happened with the Federal Reserve where we had a free market up to that point. The market was flying along just fine, maybe it was close to a stall. Somebody, for the first time in world history gave all the central markets all the control and they said, “My plane.” Now, at this point they’re saying, “We’re about to hand the stick back.” Is that realistic, Dave? Are they really going to take the risk, after having full control, of handing it back to the free markets?
David:That’s a great way to frame it. We hear that the Fed will reduce its balance sheet, and they have said that they will raise rates, in essence, allowing the market to be the market once again. And that’s after five years of utter control, complete control, nearly ten years of strong influence. And that distinction, I think, is a key one because they were actively engaged in saving the world from destruction in 2008 and 2009, granted, using the same measures that got us into the problem in the first place. But be that as it may, they did bring calm back to the marketplace and prevented utter catastrophe. So they had a number of years where they were intervening. I think it was the summer of 2011 when Mario Draghi said, “I will do whatever it takes.” But it caused a recalibration in the market, to say, “Wait a minute. Did you say whateverit takes?”
Kevin:Whatever. And he has.
David:You’ve got my back, whatever happens from this point forward.
Kevin:My plane.
David:You asked a question. I can only respond with a question. Can you imagine – the rock star status which central bankers have achieved – can you imagine that being retired? And would they be willing to play second fiddle and trust the markets, the natural supply and dynamics, to once again set prices? Again, after determining with, really, authoritarian control, what the natural rate of interest is, is it likely that a community of central bankers is willing to hand back to what for them is a wildly unpredictable investment crowd [the right] to determine what the natural rate of interest is? Again, you’re dealing with a market which amongst these individuals is mistrusted, and authority and control, which is absolutely trusted. They believe in themselves more than they believe in the market. And that’s where I tend to be on the opposite end of the spectrum. I believe more in the market than I do in the wisdom of any one man, let alone the wisdom of a collective.
Kevin:But it’s addictive, Dave. Have you ever seen a tyrant purposely hand a country back to democracy? That just doesn’t happen. It’s addictive. They have had control. How in the world would they give it up at this point?
David:And a part of it comes down to results. Authoritarianism gets results faster and cleaner than the market processes which include risk appraisal and price negotiation. It is just easier by fiat to say, “Wheat, or corn, or soybeans will not sell above this price. You cannot charge more than this for a gallon of gas.” Price controls get you where you want to go instantly. And in essence, they are doing away with that risk appraisal. They’re doing away with that price negotiation. And we see, to a large degree, that price discovery disappeared over the last five to ten years. Our central banks – is that community willing to allow it back, the process of price discovery?
Kevin:Yes, but the central banks are promising something called wishful thinking. One of your favorite poems by Rudyard Kipling, Gods of the Copybook Headings, is a poem about getting rid of wisdom and maxims, and the things that you would record in a copybook, and replacing them with wishful thinking. And those who did, those who promised the replacement of wishful thinking, are in ruins at this time. They’re covered with sand.
David:It’s a poem that points to the enduring value of common sense and enduring befuddlement by those who put trust in higher sense. We read the poem a couple of months ago. Read it sometime from beginning to end if you don’t know it. But the opening lines suggest that these gods of the marketplace, and perhaps we can translate that in our own time and place, the high priests of growth and prosperity, the demigods of Maiden Lane, the folks that work there near Wall Street for the Fed.
They’re not new, these priests of growth and prosperity. They’re not new, and their presumption of control is actually as old as any human endeavor. Kipling says, “As I pass through my incarnations in every age and race, I make my proper prostrations to the gods of the marketplace. Peering through reverent fingers I watch them flourish and fall. And the gods of the copybook headings, I notice, outlast them all.”
So, we reflect on the permanent and perpetual march higher in the equity markets, and we know that there are promises of prosperity. I go back to Francis Fukuyama’s book where he basically claimed that we had reached the end of history, we had reached a period of perpetual peace, that democratic liberalism had reached a point of permanent plateau. And it was, in fact, like Irving Fisher’s proclamation in 1929, that prices had reached a new permanent high plateau. And this was, of course, just before the crash.
Kevin:He could have said the end of suffering. But Dave, whether you are a value investor or whether you are the investor today who is reaping the benefits of just going with the crowd, suffering comes. It either comes as a value investor while you wait – remember, you were talking about waiting. Wait, and wait, and wait. Wait for that island to come to you. Wait for the crowd to come to you. There is suffering involved in that because you look like an idiot until it happens. But then, is there more suffering? And I guess I know the answer to this. The greater suffering comes from the person who was with the crowd, who followed the wrong god.
David:Underneath every social construct, whether it is a political construct or a market construct, is human nature. So when we look at the assumption of the end of history, when we look at the assumption of the end of the markets, or free markets, where volatility is normal because there is a constant push and pull in the price discovery process, you’re right, human nature is what is underneath these things, and why, I think, ultimately, regardless of the assumption of the end of history, it’s just flat naïve. Regardless of the assumption of the end of free markets, and a greater control and a brave new world, it doesn’t work that way, unless or until you’ve altered human nature.
You’re right, the value investor versus the momentum trader – each of them suffers. One suffers now, one suffers later, and I think I’d rather be the value investor. Your suffering is defined, to a degree. The other, for the momentum investors, is undefined as yet by the degree of panic and the stampede to come. And so Graham, this man who was very influential in the 1930s, defined the intellectual framework for Warren Buffet. He may not have actually bought gold at these prices, or at any level. But he certainly would not have entered the stock market, priced as it is today.
Kevin:Benjamin Graham was good at finding value when others didn’t. Could he find a needle in the haystack in the current market?
David:I think it’s possible. I think with rigorous security analysis that is possible. But I think one of the things that also comes to mind is that as a value investor, when he decided to take a time out and move to the sidelines, he grew up, he developed his ideas of value investing, he invested in an age when, by default, if you were out of stocks you were in gold.
Kevin:That’s right, because cash was gold, and everybody owned gold at that time because they owned some cash.
David:The age prior to the 1930s was the age in which cash and gold were the same. The default mechanism, coming out of the equities markets, getting out of stocks, was going into a currency which was 100% gold-backed. How things have changed. Now you have a second decision to make. But at that point it was just common sense, if you wanted to reduce risk in one category you moved to cash, which was the same thing as bullion.
Kevin:Isn’t that amazing? Let’s just ponder that for a second. You were either in stocks or some other investment, or you were in gold every time you were in cash. Speaking of cash, we’ve had a guest on – we have him on almost every year – love him. He is up in Scotland – Russell Napier. Russell is scratching his head right now and he is saying, “Speaking of that cash that is not backed by gold, where is it if the central banks are adding 300 billion dollars a month, in some form or another, of liquidity and quantitative easing, where is this what we call M2 – monetary growth?”
David:That’s right, each month, Russell writes a small missive for institutions. There is a lot changing in Europe, like we had our implementation of Dodd-Frank, approval of a massive set of legislation to help change and improve and maybe even bring safety measures into our marketplace. The same thing is happening in Europe today. And it is interesting, it’s the Markets In Financial Instruments Directive, the MIFID-2, which is their equivalent of Dodd-Frank. And it goes into effect January 1. The challenges, just with Dodd-Frank, it introduces massive amounts of complexity in an attempt to bring greater transparency to the derivatives market and other markets. They may, in fact, be bringing a lot of chaos and turmoil into the financial markets.
Kevin:Maybe creating the next crisis like Bookstaber talks about.
David:Again, just on the basis of unintended consequences, Bookstaber was involved, not in the creation of the MIFID-2, but was involved in the creation of Dodd-Frank and the Volcker rule, in which he says we solved one problem, but we did create the next round of problems.
Kevin:He was part of it, and it scares him. He wrote a book about it.
David:Right. Napier writes for an institutional audience, and institutions. I mention the new directive because his world is changing, and his audience is having to adjust to a new world of regulation and an immense complexity. Napier is looking right now at the Fed’s announcement of normalization, which we have been talking about today. It’s problematic, and first of all, he takes that opinion because he sees bank credit growth in the United States slowing. And so credit is slowing at the same time they want to bring in monetary tightening, he says, “Well, maybe that’s not such a good idea.”
Second, he sees broad money growth, M2, on a global basis, also slowing, which to him suggests that the global economy, led by the emerging markets, is already slowing. And we saw significant infusion of liquidity and capital, 2008 and 2009, by India and China, and not even they are able to help buoy these global numbers, and again, keep M2 moving in a positive direction. So, in the U.S. you have money growth which is, today, at the same levels that it was when the Fed was initiating Quantitative Easing 1, Quantitative Easing 2, and Quantitative Easing 3.
Kevin:Then Europe took over. There is this appearance that there is sort of synchronized easing.
David:And his point is that it is an appearance of synchronized global recovery, and it is an appearance. So the challenge is now when you have the appearance of a synchronized global recovery running into a tightening monetary environment, it’s a recipe for recession, if not disaster. Can we repeat the kinds of disasters we had à la 1987? Absolutely. And his point is also that something just doesn’t add up. You have this massive global expansion in credit and yet you have a slowdown in broad money measures, again, going back to M2. So the central bank community, which is responsible for the creation of money, is failing on the one thing they are supposed to do best, which is influencing the quantity of money.
Kevin:And that’s the equation, Dave. The equation has to create M2 or else the credit expansion has been a failure.
David:On the other hand, interestingly, there is credit expansion but no quantity of money expansion.
Kevin:Right.
David:So quantity of money, as measured by M2 – not happening. Credit? Yes – happening. Asset price and risk asset inflation? Yes.
Kevin:Through the roof.
David:So they’re influencing prices, but they’re not influencing the ones that they traditionally influence, and they can’t figure it out. And I think part of it is, they have this long-term commitment to a theory that failed long ago in practice. In the 1970s the Phillips curve was discredited utterly, but they live in a world of theory, and the theorizers, again, the central bank community, is still in love with the Phillips curve.
Kevin:It’s what they wrote their doctoral thesis on, Dave. You have to protect it if you wrote your doctoral thesis on it.
David:And it suggests that an improvement in employment leads to an increase in inflation. It’s axiomatic, according to the Phillips curve, that an improvement in employment brings an increase in inflation, and yet – and yet – and yet we wait. I’ve tried to ask Claudio Borio onto the program, and he is a pretty busy guy. He runs the Bank of International Settlements, the central bank to central bankers. I’ll continue to ask him to be a guest. But he is one of the few that I know of in the central bank community who looks at the Phillips curve and says, “Yeah, it works sometimes.” And sometimes it doesn’t, so just be willing to set aside some of your underlying assumptions and realize that that one might not be workable.
Kevin:So what they have done is, they’ve left the punchbowl out because they are looking for something that isn’t there, yet the asset price inflation – the price of stocks and assets in general – has just gone through the roof.
David:That’s just it, you’re exactly right. We’ve mentioned William McChesney Martin, who suggested taking away the punchbowl before the party gets started. They’ve left the punchbowl out too long because they’ve been looking for this indication of inflation, and they knew that, if, according to the Phillips curve, you reduce unemployment, that you should then see an increase in inflation. And when they saw an increase in inflation they would know when to toggle back. They would know when to take back the punchbowl.
And they’re not doing it because inflation is not responding – consumer price inflation, anyway. Asset prices are already in the tornado, already spiraling up and out of control. But the central bank community is fixated on the CPI. They’re fixated on consumer price increases and they’re waiting to see them jump before shifting gears.
Napier suggests that maybe they’ve waited too long because now, in fact, you are beginning to see this deterioration in terms of, on a global basis, M2, which to him suggests a slowing in economic speed everywhere. So growth dynamics, globally, are shifting. A downshifting collapse in global money growth may create financial market chaos, as and when the Fed follows through with its recently announced plans to shrink its balance sheet and raise rates.
Kevin:I want to go across the seas because sometimes you see strength in something that is weak only because the thing that it is being compared to is weaker. We’ve seen the dollar rallying a little bit against the euro here recently, and it has to do with these strange goings-on in the Spain Iberian Peninsula region. It is incredible what we’re seeing over there.
David:Yes. There is a number of good things that come from the Iberian Peninsula. One of them is the greatest ham in the world (laughs). But what is in the news this week – we watched a king has no clue – not a king has not clothes, but a king has no clue moment, where Mariano Rajoy, your top dog, the Chief Executive, in Spain, sends in troops to Catalan, begins jailing regional officials, shuttering hundreds of polling stations, destroying ballot boxes…
Kevin:In the name of freedom, Dave. In the name of freedom.
David:And even beating up elderly pensioners. There is about a thousand people seeking medical treatment from police brutality. And then, he had the gall to claim that there was no referendum which had occurred. Now, he was only able to close down about 330 of the polling stations.
Kevin:Several million had already voted, hadn’t they?
David:2.2 million votes were counted at the 1700 polling stations that remained open.
Kevin:But this confused the European leaders. They’re all looking at this saying, “Wait a second. I thought we had the end of history.”
David:“What the Franco is going on?” That was one of those “What the Franco” moments. And he really did – Rajoy is creating something that for most European leaders is appalling – the violence, the non-diplomatic approach, bringing back Franco from the dead. This is from a man who was actually supporting the opposition group in Venezuela. And do you know who was writing in the local paper in Venezuela, saying, “This guy is totally inconsistent. He suppresses any dissent in his own country, but he supports it in mine.” This is the dictator Maduro in Venezuela. He is actually giving political commentary on Rajoy. And again, does this guy have a clue what’s going on?
Kevin:For the person who is not following this closely, this is similar to Brexit, or the Scottish vote. This is if England was a little bit more, oh I don’t know – Spanish – they probably would have had this type of thing happening before the Brexit vote, right?
David:That’s right. We did have, as you mentioned, the Scottish vote, which was the question of do we want to extricate ourselves from the U.K. and be our own country? And that is what the Catalonians are saying, “Look, we have the referendum, we have 90% of the people voting.” And this is 2.2 million people voting out of seven million total in the population – a reasonable turnout – and it opens the door for them leaving Spain altogether.
Kevin:Doesn’t it also affect the euro as a whole? This is just one more chink in the armor of Spain possibly needing to leave the euro, right?
David:It explains why violence is the answer, and why police brutality is the first measure chosen, because Spain cannot afford to have these seven million people secede. That one state represents 20% of the entire Spanish economy. And so, what do we conclude? Populism is not dead in Europe. We do see, as you mentioned, dollar rallies, the euro declines – it is one more chink in the armor in terms of the euro project, dating back to that meeting in Rome 60 years ago which set it all in motion. Can it some unglued? That question is still a reasonable question, and it remains unanswered.
Kevin:Lest we be distracted by violence in Europe and forget the potential real threat. Korea is still brewing, and probably brewing pretty hard.
David:When I listened to the U.N. speech that Donald Trump gave, it made me smile. I also kind of had to shake my head and say, “Oh, no. Oh no.” So, you’re right, on the other side of the world we have little Rocket Man…
Kevin:Those are his words.
David:As our president affectionately refers to Kim Jung Un, and he continues to explore delivering all kinds of weapons into the West, or onto one of our allies, and he prefers the hydrogen bomb. So, I cannot imagine living in Japan the last couple of weeks. In recent weeks you actually could look into the sky and on at least one occasion, see the jet stream created by an ICBM, an intercontinental ballistic missile, flying overhead, launched from North Korea.
Kevin:Yes, but never mind the fear. You have the Bank of Japan saving the day, they’re buying stocks any time they fall, so don’t worry about it. If you’re nervous about that, we’ll buy the stocks. We’ve got your back.
David:That’s right, no real evidence of tension in the stock market there, you’re right, because the Bank of Japan supports the bid in stocks. Hydrogen bombs – I didn’t realize this, but using fusion rather than atom bombs, their cousin which uses fission, are far more destructive, and therefore, don’t need to be as accurate. So, because they cause anywhere from a hundred to a thousand times greater destruction, you just have to lob that thing into the right vicinity, it doesn’t have to be pinpointed, and it will get the job done.
Kevin:Let me ask you – people pooh-pooh sometimes the idea of and EMP, but when you have a nuclear blast somewhere it does fry the circuits of a surrounding region, and we live in a connected age, Dave. I remember my panic when I started to think that I lost my phone on my way back from Israel the other day. It hit me just how much I, too, need connection. Do you think EMP is a real deal, or is an issue that needs to be thought about?
David:It was interesting, every once in a while I’ll read the daily reckoning and Jim Rickards wrote a piece this week about the impact of an EMP burst and how if the North Koreans wanted to, there is not much of a time gap between now and when they could pull that off. And you just have to lob it into the atmosphere, and a large enough EMP burst is adequate to knock out the U.S. power grid completely. Now, you’re talking about a massive logistics crisis. We, in our client conferences, had talked about what it would be like to lose just one part of our electric grid, and how our electric grid is tied together by the equivalent of a couple of very large fuse boxes.
Kevin:You met with a man who was a specialist in that who was hired to identify that problem.
David:That’s right, and try to mitigate the issue. This is, again, from the 30,000 foot view, or maybe it’s the 80,000 foot view – an EMP burst at that kind of an altitude neutralizing our power grid – you’re talking about millions dead in the United States – millions. I don’t remember how far we took our star wars program under Reagan, but it makes you think this is when you need it.
Kevin:You certainly hope they took it far enough, let’s just put it that way.
David:Interestingly, Rickards, with sort of a swipe at crypto-currency says, “This is why I recommend gold,” because it’s not dependent on the power grid. He is right, you have to have connectivity to use your crypto-currencies. In that sense, you are 100% system-dependent. Gold is a standout, not only as no one’s liability, no one’s counter-party risk, but also, tied to no one’s Internet infrastructure, which is a fascinating thing to even consider in this age.
Kevin:Isn’t it interesting? I was flying over Iceland the other day. What an unusual way to get home from the country of Jordan. I was looking down on Iceland and I was thinking, “A huge amount of bitcoins are processed using the formulas there in Iceland because the power is cheap.” China, even more so – don’t they produce about 70% of the bitcoins that are out there at this point?
David:According to the Economist, 70% of new bitcoins are being mined in China, and it is interesting because they can’t get them to market. There are capital control issues, there are trade issues, there are exchange issues, there are new ICO issues. So you can create them and you can own them. It’s not illegal to own them, but you can’t trade them. It makes it very interesting, it makes me think perhaps there is a larger shadow supply, and that shadow supply is continuing to grow and overhang, if you will, within the market. For anyone concerned about price fluctuations, shadow supply is an issue.
But going back to North Korea, it’s the Chinese government which made me think something is getting ready to happen in relation to North Korea. The Chinese government allowed a paper in recent weeks to be published, and it explores how to deal with a refugee crisis in the event of the North Korean government being toppled. It’s the kind of thing where they don’t have open conversation about issues like that. They just don’t. Again, this is a high stakes poker game, brinksmanship, negotiation. Perhaps this is just one way of playing it, letting the other side know that you are considering all options. But frankly, it would appear that diplomatic channels are shrinking, and deterrents, even pre-emptive actions, are a growing possibility.
Kevin:I think sometimes we over-complicate things, and we think that there are “experts” in control. We do that with the central banks, and sometimes we forget that just simple fundamentals will kick back in. We do this with politics and diplomacy, we do this with geostrategic types of things. But really, when you go back and look at history, Dave, it still comes down to just sort of like sandbox kind of politics where, in the end, when one person pushes the other, the other pushes back, and then you start to see another pushing match, and then ultimately, somebody slaps or hits the other, and it really turns into an all-out fight, and it really had nothing to do with high level “expert” diplomacy.
David:We have this conversation routinely in our house, not about little Rocket Man, but about escalation and de-escalation. When my 11-year-old announced the inevitability of conflict with North Korea at breakfast earlier this week, he gave his timeframe within two years. It was like he had some sort of an intelligence contact the way he just said it with such certainty (laughs). “Within two years we’ll be at war with North Korea.”
Kevin:It sounds like he is the son of his father, who was the son of his father (laughs).
David:Well, I asked him if he had learned anything about the process of de-escalation from his siblings that he might offer as advice to bring things off the boil on the Korean Peninsula. And I’m looking at his other brothers and sisters, saying, “You realize how these problems get started, right? You have an argument, and then somebody hits someone, and then someone hits someone back twice, and that’s escalation. How do you de-escalate? If you can tell me how you can solve the problem, I’m going to get you on the phone with someone in Washington.” But his comment, relating to sibling strife, was that it’s just so hard. It’s so hard in the moment to not push back, to not hit back, to not verbally jab back when you’re in the fight.
Again, things start out very complex and sophisticated, and we have refined language, and then the next thing you know, it is down to name-calling, and “I’m going to scratch your eyes out.” And that’s not just in my living room, that’s on the global scene. So, why the probability of Korean conflict rising every day? Maybe it’s because we’re all too human. Maybe it’s because we’re all too childish.
National Debt 22 Times Higher Than When Reagan Took Office
Alan Newman – “Gold Is The Ultimate Insurance Policy”
Gold Rush? Central Banks Increase Gold Purchases 74% YOY
Charles Calomiris: All Banking Is Politically Driven
QE Still Alive and Well: Worldwide Central Banks Pumping in 300 Billion Per MonthPodCasts
Markets Think “This Time Is Different”… Think AgainPodCasts


A Second Look at Senran Kagura: Shinovi Versus. Also, get your own customized game swag!
Games: I recently covered Senran Kagura: Shinovi Versus over at @Gamecritics, but in a very unusual turn of events, I continued to play it after I finished the review… That's wildly out of the ordinary for me, and after having spent another 20 hours past the point at which I wrote my opinion, I feel like I have more to say on it.
Now, this isn't to say that my review is invalid… Not at all. I feel like I gave it a super-solid breakdown based on the time spent, and I'm still happy with my final verdict. Absolutely. But, there were some details and small things I've grown to appreciate that were not immediately noticeable until after I had spent even more time going through the game with each character and seeing more of the Visual Novel chunks.
Although I touched on it in my review, I think one thing that’s really brilliant about the game is how small in size it is.
I've never liked Musou games before, but for some reason this one really clicked with me, and it had nothing to do with the naked ladies. As I was trying to think about why this one was so enjoyable when so many others bored me to tears, I came to the conclusion that the gameplay comes in perfectly bite-sized portions, so that fatigue never really gets the chance to set in.
It also helps that the 15 characters in the three starting schools feel wildly different from each other, even though they all share the same basic moves – a light attack, a strong attack, a jump, a ground pound, and a dash. However, despite this similarity, how they’re implemented and how they play are starkly different. Going further (and another example of how time revealed more) the girls of the Crimson Squad aren’t even selectable until after the player has completed the story mode three times -- something like a 20-hour investment. Once they’re unlocked, they’re an even more obvious example of how technically different the shinobi are.
Take the snake-eyed Hikage, for instance… She has lightning-fast knife attacks, a poison shot, and one of her special moves is to turn completely invincible as she goes into a primordial rage. On the other hand, Mirai is quite fragile, but packs a machine gun inside of her umbrella. She needs to play very much like a sniper, and can only dash backwards, further emphasizing her lack of ability to engage directly. Although I have my preferences when it comes to the characters, I found that spending time with each of them was well-rewarded, and I admired how much variation there was between them.
Another aspect that didn't come to full fruition until I had gone through the story mode a second time (and was only enhanced with a third and a fourth) was just how much nuance there was to the writing, and how much attention was given to the story mode and backstory of each ninja.
While I thought they did a fine enough job in the content that I saw, I was quite impressed when I found that some of the ‘tropey’ characters ended up having more depth than I would've expected. The oversexed pervert character (well, one of them, anyway) actually had some good motivation underneath the surface stuff, some of the ‘focused’ characters had elements of self-doubt, or questions about their beliefs. It ain’t War & Peace, but there's more humanity in the writing than it had any right to have. In fact, after playing for another 20-ish hours past the point of review, I think I would probably re-characterize the game as having a heftier visual novel aspect -- probably another reason why this one has hooked me when other Musou games haven’t.
As an experiment, I decided to try Hyrule Warriors after being so thoroughly wrapped up in Senran... I wasn't sure whether this newfound appreciation was a change in my taste or if there was more to it than that, but after putting an hour into Hyrule, I wanted no more of it.
It felt busy but shallow at the same time, none of the characters struck me as interesting, and the mechanics did not feel as complex. I don't know if that holds true over the course of the entire game, but it just wasn't as fun to control these characters, and the stages felt like they dragged on for-eh-ver. Of course, to be fair, I didn't spend enough time with the game to unlock extra weapons and some of the
character modifier items and so forth, but then again, I wasn't really motivated to.
Although I'm sure many people will be put off by the T&A factor in Senran Kagura, I have to say that portion of the game was only noticeable for the first half an hour or so… After that, it just washed over me and I was more focused on trying to figure out the best playstyles for each character, practicing getting the countering down, and figuring out the best times to use ninja transformation or when to go into a Frenzy. I was even quite curious about how the story turned out!
In hindsight, I feel like I should give the game and the developers more props for the things that are done exceptionally well, and I do think it's one of the few games in recent memory that genuinely got better with more time put into it.
In other games news, I recently started Styx: Master of Shadows. I’d been looking forward to it for some time, but after the first hour and a half, I haven’t been back to it.
So…. Yeah.
Misc: I’ve mentioned it on Twitter a few times, but my wife has started making handcrafted videogame shirts, and she’s taking orders.
You can check out her site and see what she’s made so far, but she can do just about anything and she’s happy to take custom orders. Basically, if you don’t’ see a design you want, just email and ask! She can probably whip it up for you!
I wore this shirt yesterday!
If you’d like a shirt, sweatshirt, pair of socks, coffee sleeve (or whatever) with your favorite game-related thing on it, drop her a line.
FYI: She hasn’t found a reliable source for good hats yet, but she’s working on it. If YOU know a good hat wholesaler, any tips would be appreciated! ^_^
*************PR/NEWS/INFO*************
Tin Man Games’ seventh Fighting Fantasy digital gamebook app, Caverns of the Snow Witch, arrives on the iOS App Store, Google Play and the Amazon Appstore for Android, nearly 30 years to the day since the original publication of the paperback!
Tin Man Games has taken the classic Fighting Fantasy solo adventure and transformed it into an interactive digital experience, using their critically acclaimed gamebook engine. With animated page-turning, dynamic links, an automated adventure sheet to show changing stats and display magical treasures, the reader can also roll physics-based 3D dice to bravely battle the creatures found within the Crystal Caves and beyond.
Fighting Fantasy: Caverns of the Snow Witch is now available to download from the iOS App Store, Google Play and Amazon Appstore for Android. It costs $5.99 USD/£3.99/5,49 €.
Tin Man Games maintain a site dedicated to their Fighting Fantasy apps at www.FightingFantasyApps.com. The Official Fighting Fantasy site can be found at www.FightingFantasy.com. Tin Man Games also runs a developer blog at www.TinManGames.com.au.
Hand of Fate, the Kickstarter-funded title from Defiant Development that seamlessly blends RPG, rogue-like and action-adventure elements with board and collectible card game features, will launch on Xbox One in January 2015 in addition to the previously announced PC and PlayStation 4 releases.
Gamers who download Hand of Fate on Steam Early Access will be able to play new content created by industry luminary David Goldfarb, of Battlefield and Payday fame, prior to the game's official launch. Goldfarb has designed original encounters, locations, items and a story which flesh out a hidden optional quest in Hand of Fate.
The Early Access build of Hand of Fate is now available for PC, Mac and Linux on Steam at a discounted price of $25 USD.
Information about Hand of Fate can be found at: http://defiantdev.com/handoffate.php
Deep Silver Volition knows all too well the Seven Deadly Sins: Lust, Gluttony, Greed, Sloth, Wrath, Envy and Pride. For Johnny Gat in Deep Silver Volition's Saints Row: Gat out of Hell standalone expansion, the seven deadly weapons represent a means to devilish fun on his rampage through Hell. Can the Devil and his demonic allegiance withstand the persuasiveness of Johnny's unrighteous arsenal? Have a look at this new video featuring the seven deadly weapons and check out a description of the weapons below (don't be shy, curiosity is not a sin): http://youtu.be/z0rHaIeuiMY
In addition to the trailer release, Deep Silver announced that Saints Row: Gat out of Hell and Saints Row IV: Re-Elected will launch on January 20, 2015 for PlayStation 4, Xbox One and PC for the software bundle, and PlayStation 3, Xbox 360 and PC for retail standalone Gat out of Hell. Two different pre-order offers were also announce -- Purchase the new gen bundle for $49.99 with retailers such as Amazon, and receive two special DLC packs outlined below, or get the Gat out of Hell specific DLC when pre-ordering it as a standalone game for only $19.99.
Saints Row: Gat out of Hell Devil's Workshop Pack
SAINTS WINGS, JESTER'S SKULL
Tired of flying on the wings of a fallen angel? With the Devil's Workshop Pack you can fly on the purple wings of a Saint instead. Also included; Yorick, the flaming skull that acts as the source of Shakespeare's infernal might. Finally you can wield all of the power of Shakespeare with none of the iambic pentameter: what's not to love?
Saints Row IV: Re-Elected Plague of Frogs Pack
HELLISH PRINCESS, INFERNAL GUARD, LIL' CROAKER
Take some mementos from hell with you to virtual Steelport! Rain amphibian death onto Zinyak's army with the Lil' Croaker, and look good doing it wearing either Infernal Guard armor or Hellish Princess costumes.
For more information about the Saints Row universe, please visit the official sites:
Web: http://www.saintsrow.com
Facebook: http://www.facebook.com/saintsrow
Twitter: http://www.twitter.com/saintsrow
YouTube: http://www.youtube.com/saintsrow
You can watch the Dragon Age: Inquisition The Hero of Thedas trailer at the following link: http://youtu.be/qzRjfkXW9Lo
It's time to take the fight to the Divine Empire as Tears to Tiara II: Heir of the Overlord, the strategy RPG for the PlayStation®3 computer entertainment system is now available in the Americas for $39.99. Despite having a "II" in the title, the game requires no knowledge of the previous title, as the story and gameplay are all self-contained within the 80-plus hours of strategic combat and visual novel-style storytelling in the original Japanese audio.
Tears to Tiara II features:
· More than 15 main characters to get to know as the story unfolds in the visual novel.
· Strategic turn-based gameplay will challenge the most battle-hardened generals
· The joint attack combat systems adds extra depth to the strategy gameplay, and makes for more replayability
· Original Japanese language story and battle audio at a discounted $39.99
Tears to Tiara II: Heir of the Overlord is now available in North and South America for $39.99. Pre-orders and a limited quantity of launch edition games will come with the Tears to Tiara II Visual Works, a 31-page booklet that combines sketches, concept art, character designs and background visuals. More information on the game, combat systems and more are available on the official website, http://www.atlus.com/tears2
Wondering what is going on with Amazon Game Studios? Well, let us tell you! Today we’re happy to show you three new games that will be launching this year— Til Morning’s Light, Tales From Deep Space and CreepStorm. These are creative, hand-crafted games that are fun to play, deliver interesting new customer experiences, and utilize exclusive Amazon technology. Check out the game trailers and other assets here: http://games.amazon.com.
GungHo Online Entertainment America (GOEA), a multiplatform publisher for the online gaming community, today launched a Steam Greenlight campaign for its side-scrolling, puzzle-based adventure PC game Dokuro. Already available on the PlayStation®Vita handheld entertainment system and mobile devices (iOS and Android), Dokuro is expected to be released on Windows PC based on the support of the Steam community.
A recipient of industry awards, including IGN's Best PS Vita Puzzle Games of 2012 and Just Push Start's Original Game of the Year for 2012, Dokuro is a zany action-puzzler that enables players to manipulate the game's environment and transform its diminutive protagonist between two forms - a nimble skeleton and a dashing prince - to solve a variety of puzzles in order to help an innocent princess escape the Dark Lord's fortress.
Dokuro challenges players to utilize both Dokuro's skeletal and hero forms to approach and tackle various puzzles, traps, spiked pits and boss battles to save the princess. With nearly 150 levels of escalating complexity and difficulty, Dokuro puts even the most seasoned puzzle and platform gaming veterans to the challenge.
To check out Dokuro's Steam Greenlight page, visit:
http://steamcommunity.com/sharedfiles/filedetails/?id=323668796
To download the game on its current platforms, click: PlayStation Vita, iTunes and Google Play.
For information on GungHo Online Entertainment America, visit: www.gunghoonline.com.
Starting now, Steam users can pre-purchase Techland’s upcoming open-world zombie action game Dying Light in a special 4-Pack bundle. At a price of three games, players receive four copies of Dying Light, one for them and three giftable extra copies for their friends. This promotion is a great way to delve into the world of Dying Light with a trusted team and get the most out of the game’s extensive multiplayer options.
Invasions by the Night Hunter are the asymmetric multiplayer aspect of Dying Light, revealed in the latest gameplay trailer. https://www.youtube.com/watch?v=raVcgenC9No
Dying Light will be released in 2015 on January 27th in the Americas,January 28th in Australia and New Zealand, and January 30th in Europe and Asia.
Dark Souls: Prepare to Die fans are amongst the most hardcore and tight-knit gamers in the world. In an effort to provide continued support to these players, FromSoftware and BANDAI NAMCO Games have worked tirelessly to make it possible for these most ardent of Dark Souls supporters to migrate their Dark Souls: Prepare to Die games, saves, and achievements from the Games for Windows Live platform to STEAM.
Pertinent details about the migration option from Games for Windows Live to STEAM can be found below:
· Games for Windows Live users will be able to redeem their Games for Windows Live Tokens on STEAM to get Dark Souls: Prepare to Die Edition at no additional cost.
o To find your Games for Windows Live Token, please head to the support webpage at: http://support.xbox.com/en-US/billing/prepaid-codes/locate-games-for-windows-live-tokens
· In the month of November there will be a period by which Games for Windows Live Dark Souls: Prepare to Die Edition users will be able to transfer their Save Data (character & progress) and Achievements over to their STEAM accounts.
· Players will still be able to use their Games for Windows Live Tokens to redeem the STEAM version of Dark Souls: Prepare to Die Edition at no additional cost even after the migration period ends; but game Save Data and Achievements transfer functions may not be available.
· Games for Windows Live Rankings will not be transferred to STEAM.
The specific migration start and end dates will be available soon; however the migration period will begin sometime in November 2014 with more specific dates to come.
We will be sharing more information soon regarding the migration process in upcoming media alerts.
If you're a fan of SENRAN KAGURA, get ready to slice and dice... up some delicious treats while rocking out to some funky beats! SENRAN KAGURA Bon Appétit! is slated for November 11th in North America exclusively on the PlayStation®Store for $14.99, while the EU release by Marvelous Europe will launch on November 12th. The game includes the girls of Hanzo and Crimson Squad, complete with story routes for each girl to play through. If you're a fan of the straight-laced Gessen girls or the fierce Hebijo ladies, you can pick up the Gessen x Hebijo DLC pack two weeks later, on November 25th, also for $14.99. More info on the game can be found at the newly launched website at www.hanzonationalacademy.com/skba/
We're also kicking off the SHINOVI VERSUS DLC schedule today with two content packs, and the first one's free! The "Shinovi Hairstyle Set" includes 20 new hairstyles, one for each of the core shinobi, all on the house. Alongside that, there's "Costume Set 1," which includes five different outfits (the Gym Clothes, School Swimsuit, Uniform & Swimsuit, Uniform & Thigh Highs, and Japanese Dress) for a bundle price of $5.99. The outfits are also available individually, for $1.99 apiece. Marvelous Europe will be releasing the same DLC on the EU store tomorrow, October 22nd.
That's it for this week, but hold onto your Hachigane, because next week, two new challengers will enter the fray...
To stay up to date, check out our official Facebook page!
https://www.facebook.com/XSEEDSenranKagura.
Rainbow Skies (Vita)
https://www.youtube.com/watch?v=eXlzi27P0Ok
The Phantom PI: Mission Apparition (great for kids!)
https://itunes.apple.com/us/app/phantom-pi-mission-apparition/id887608596?mt=8
RIVE (wiiU)
www.youtube.com/watch?v=3tmDyoJGRag
How To Survive: Storm Warning
https://www.youtube.com/watch?v=CBJigJkk2ns&index=7&list=PLxCkOhycbqI3AZlW2tel28dJjNhWR3JXr
by Brad Gallaway | 0 comments
Marvel Puzzle Quest: The One-Year Check-In! An interview with MPQ's Kevin Teich
It’s hard to believe that @MarvelPuzzle Quest has been around for a whole year, but my favorite mobile game did indeed celebrate its first anniversary last week. Now that it’s reached the ripe old age of one, I thought it would be good to touch base with the developers and see how things have grown and changed since its debut.
Fortunately, MPQ executive producer Kevin Teich was good enough to take a few minutes and fill me in.
Here’s what he had to say!
Happy birthday to MPQ! A year after launch, how is the game doing?
RKT: Thanks! It’s doing super well! We just had our best week ever in terms of number of players playing the game, number of downloads, and sales. Our feedback is also better than ever. It’s really encouraging, and we’re psyched that so many people are enjoying the game.
Cap's about to open a can of whoop-ass on these goons.
What are some of the biggest lessons the team learned during the last year?
RKT: Listen to the players! That may seem obvious, but we’ve learned it’s really hard to balance making the features that we want and understanding what players want.
It’s also important to know how listen to different kinds of players; our experienced, hardcore players posting in the forums may be asking for one thing, while at the same time, we see thousands of players not making it through our tutorial missions.
We’re a small team and can only do so much, and it’s impossible to listen to everybody. But we’re trying!
What were the biggest assumptions you had at the beginning that eventually proved wrong?
RKT: I underestimated the importance of our live events.
I remember the day after we went live, our producer told me that he’d need a few hours of work from one of our designers to see what was going on in the live version of the game and make some tweaks. Now, we have a developers who are dedicated to making content that goes live right away.
We also try to make as many improvements and bug fixes to the live version as we can, instead of waiting for the next version to ship.
Modern Hawkeye's new Speed Shot ability makes him a solid choice!
The team seems to have become quite a bit more sophisticated in how the new characters are designed. The gap in usability between new faces and old is quite large at times… Are there Modern Hawkeye-style revamps planned for old characters that just aren’t seeing action?
RKT: I’d love to freshen up some of those characters that don’t seem to be used that much. There are also some characters that are unbalanced right now, and those are higher priority.
We’ve learned a lot of making characters for our game, and what kinds of character features players like, and we love applying those lessons to our older designs. I can’t talk about specifics, but we definitely keep a close eye on this stuff.
Nobody but Brandon Bales loves this loser.
Speaking of unloved characters, which ones have been used the least over the last year? Bag-Man seems the obvious non-starter, but any others who’ve been ignored by players? Who have been the most popular?
RKT: Our forums are a great source for this kind of information. Our players run polls on all kinds of subjects, including character popularity. Yelena Belova is another unpopular character.
When we were making the first batch of characters before the game launched, it was hard to look at them all in relation to the rest of the game, because there wasn’t much to rest of the game yet. Now, it’s easier to evaluate how a new character will fit into somebody’s existing roster.
Thor, Goddess of Thunder has garnered a huge amount of interest. We’re really excited to bring her to the playing field in Season 7.
On a more macro level, what’s the team’s philosophy when designing characters? Is the intention that each one should be roughly equal in power/ability, or if not, what sort of roles are you looking towards when creating new heroes and villains?
RKT: We start by digging into the character as they appear in the comics, and identify elements about the character that we want to capture in powers and mechanics. Sometimes this means the character gets a brand new type of power never seen in the game, and sometimes it means they get a simpler power that reflects their personality.
We also look for roles and color combinations that are under-represented in the current roster of characters. We always want characters to be balanced; part of our efforts to make this a deeply strategic game is to not have any one character be clearly superior. Some characters have great synergy with other characters; we also have to consider how characters will be used in combinations.
The most recent implementation of Team-Up info before a battle.
The addition of Team-Ups was a big change to the game. How have they been received by the players, and how happy is the team with their current implementation? Also, will we ever see location-specific tiles/effects again in the future?
RKT: The initial roll-out of Team-Ups was not received very well. Part of our development philosophy is to get new features out to our players as fast as possible, and sometimes this means that we deliver features who promise in the fullness of time aren’t readily apparent. Team-Ups was an unfortunate example of that.
We have lots of plans for them, and have been steadily rolling out features to make them better. In R63, you’re able to see what Team-Up your opponent is using before you select your own Team-Ups, which will make it a more strategic choice.
As a cool side effect of Team-Ups, people were able to collect Thor, Goddess of Thunder Team-Ups in the Lightning Rounds we ran last week, so they can call her in for help before she’s available as a full roster character.
I have several EU/UK players in my Alliance, and they often mention that the start and end times of events are usually incredibly inconvenient for them, putting them at a disadvantage compared to NA players. Any word on whether something can be done for them? EU/UK-specific servers, perhaps?
RKT: We are actively working on a feature that will make this better, not only for EU/UK players, but all players with busy lives who can’t stay up until midnight. No details yet, but stay tuned.
Those teeth aren't just for show!
After asking for him since the start, Devil Dinosaur was finally made a playable character. You have no idea how happy this makes me! What other characters have been heavily requested, and who’s on the team’s unconfirmed wish list for future characters?
RKT: This is another area in which forum polls give us a wealth of information. X-Men characters are hugely popular. Deadpool was a top request; we were really excited to bring him into the game.
Thanks so much for your time and answers. On a final note,what would you say to get someone to try MPQ if they haven’t yet, a full year after it’s been out?
RKT: It’s an authentic Marvel experience with dozens of characters and a uniquely strategic match-3 game at its heart, and new events every week. What’s not to love?
Infinite thanks to Kevin Teich for the interview and to the whole MPQ team for giving me high-quality entertainment while stuck in boring places for the last year. Also, mega thanks to Albert Reed for making this interview happen!
Portland Retro gaming Expo - 2014
The Portland @RetroGamingExpo took place this weekend in the city's convention center. I’ve attended with the fam for the past few years, and it's been a great experience every time. I’m happy to report that his one was no different.
Since it’s smaller and in a different city, the PRGE is a great counterpoint to PAX Prime because the crowd is less dense and more laid-back. In general, everyone seems more easy-going, and there’s a stronger hang-out vibe. It's also pretty easy to bring kids… Not only will they have enough room to walk around without getting trampled by the crowd, it's not tough to snag them some time on the various free-play arcade machines and pinball tables.
Also, of particular note this year was how many vendors there were. Although I don't have hard numbers, it definitely felt like the arts and crafts/used games area was much bigger than last time, and there were some pretty phenomenal things to buy. I didn't spend a lot of time combing through the older titles (my backlog is plenty big enough, thanks) but I did buy several pieces of really awesome artwork, and I'm just so impressed by the talent there every year.
All in all, it's a great show and I absolutely recommend it to anyone who’s in the Pacific Northwest and has even a passing interest in old-school video games. It's one of the high points of the year as far as I'm concerned, and I'm already looking forward to the next one!
Caution: Pictorial approaching!!
This costume was fantastic. The kid inside said it was hot as hell, though.
A view of the arts/crafts/used games area. It actually extended pretty far back.
Want to make your own drink-table arcade machine? You can find the materials here.
Just a *tiny* fraction of the vast array of old-school stuff for sale.
Read it closely. This booth had a ton of flasks, all disguised as semi-familiar NES carts.
R2-D2 makes an appearance every year.
This time, R2 brought a friend.
The second some of this perler bead artwork goes on sale, I''m buying it so hard.
This lineup of arcade machines was just a part of what was set for freeplay.
And here's just a portion of the pinball tables. Also freeplay!
My son's still too short to reach the gas in SF Rush, So I lent him a hand. Er, a foot.
An awesome poster I snagged from Artist's Alley. From what I was told,
it's a quasi-reproduction of a movie poster, and the artist didn't have a card on hand. = (
A truly stunning piece by Jeff Langevin. The wife and I actually ended up buying
four separate works from him. This guy is crazy talented!!
This stylized nine-tailed fox by R.H. Potter was an absolute must-have.
The lines are so clean! The design is so balanced!
Creepy and cute in equal measure, impossible to resist. You can find more at Fablefire's page.
A Peach portrait from Jeff Langevin done in the style of Mucha. So classy!
A very cool piece celebrating Firefly, also from Jeff Langevin.
I can't get enough of this guy's work!!
That's it for the Portland Retro Gaming Expo 2014... See you there in 2015!
Mega Linkage, Shadow of Mordor, Frozen Synapse Prime, Chariot, and 1984's D&D
Links: We've had a crapton of stuff go up at @Gamecritics (and elsewhere) over the last week, so here are some quick links for your reference in case you missed them on Twitter…
Gamecritics Podcast Ep. #118 – Destiny
Destiny Mistakes Busywork For Fun – Editorial from @Horrorgeek
D4: Dark Dreams Don’t Die (XBO) – by @GC_Danny
Shadowgate (PC) – by @SparkyClarkson
Wayward Manor (PC) – by @JimB_85
Natural Doctrine (PS3/PS4/Vita) – by me!
Velocity 2X (PS3/PS4/Vita) – by @MikeSuskie
Wildstar (PC) – by @Gelles22
Blood Knights (PS3/360) - by @GC_Danny
Tex Murphy: Tesla Effect (PC) – by @GC_Danny
The Adventures of Pip (PC/WiiU) Preview – by @SnakeyDavid
And finally, here's a re-enactment of an interview between Next Generation magazine and Sony's Steve Race from 1995. I play Steve and @DefunctGames is NextGen... It sounds a bit weird since we recorded our tracks separately, but hey.
Whew! Now, on to the blog as usual…
Games: I’ve spent most of my recent free time playing Middle Earth: Shadow of Mordor. I was pretty hyped for it after I saw it at PAX and mentioned it here at Coffeecola several times. After having completed the campaign last night, I think the game delivered on much of what I promised, although not all of it.
The action is great, very reminiscent of what I thought Assassin’s Creed should've been since the start, and the links to The Lord of the Rings are good. Fans of that franchise will be satisfied, I suspect.
On the other hand, the main character is boring and the plot doesn't feel fully baked. Worse, the really fun "brainwash the orcs" mechanic that was so heavily promoted in the demo isn't even available to the player until about two thirds of the way through the adventure! Rather than being the core mechanic that I was led to believe it was, it ends up being rushed in at the end, and doesn't play nearly as large a part in the campaign as it should.
Despite this disappointment and a few other concerns, it remained a positive experience overall… It's not the home-run that I thought it would be, but still quite good. Look for my full review soon.
In other review game news, I've been playing Frozen Synapse Prime for a while on Vita.
To be honest, I feel somewhat torn over it. Essentially, it's a very pure tactics experience where the player has quite a bit of control over their characters… It's somewhat reminiscent of the original XCOM in some ways, and when things go according to plan, it makes you feel like a genius. On the other hand, the tutorials don't really scratch the depths to which the game goes, and I've got some concerns about the AI and the things that are going on underneath the hood.
For example, there have been numerous times when I posted a guard pointing straight at a door in the highest readiness state, and when the enemies come around the corner, they somehow still get the drop on me? Some of the win/fail conditions also feel a little draconian in their implementation, and despite how much I've been enjoying it when I win, the frustration factor of playing (and replaying) the campaign is quite high… I've been stuck on the same mission for three or four days in a row, and I'm starting to question whether I'll be able to complete it.
That said, I've heard it's absolutely brilliant in the versus mode and I haven't had a chance to test it out yet, so that's next on my list. Either way, fans of tactics should absolutely give it a once-over… There's a lot to like despite my misgivings.
Finally, I just started playing Chariot today with the wife.
It is absurdly cute, and functions as a local co-op game where two people must bring a king’s coffin to his final resting place. The hook is that the coffin is on wheels, and the two characters must use ropes while pulling and pushing to get the coffin over various obstacles and towards the goal.
We didn't get a chance to play much, but we absolutely loved what we saw… Can't wait to play more, but at the moment, it seems like an obvious thumbs up.
TV: I've been mining my own past for things to share with my five-year-old, and one program that I recalled enjoying as a child was the Dungeons & Dragons cartoon series which first ran in 1984.
In a nutshell, six kids were on a roller coaster ride that went into a D&D-themed funhouse, and somehow they get warped into a fantasy world where they all assume a class role and start questing.
The first time I saw it, I must have been eight or nine, and clearly my taste wasn't quite as developed back then as it is now. As I sat through the first episode, I thought it was a pretty wretched piece of garbage… Definitely not one that holds up past the rose-tinted glasses.
There was no real intro or 'start' to the series past the opening theme song sequence, there's no pacing at all with each scene coming right on top of the last (and none of it giving the actors any time for anything but reading as fast as they can) and the action was quite lame, to boot. I'll watch a couple more because, hell, I bought the damned thing, but it's amazing to see how terrible it is after all these years.
Epic sadface!
********************PR/NEWS/INFO********************
Apropos of nothing, here are some great-looking screens from The Witcher 3: The Wild Hunt
Techland recently released a new gameplay trailer for Dying Light to showcase the asymmetric multiplayer aspect of the game. Featuring a game-changing day & night cycle, unprecedented freedom of movement, and vast open world with 50+ hours of gameplay, Dying Light will also offer a full-fledged co-op multiplayer for up to 4 players – with a twist.
“The game is absolutely huge as it is, but to provide the ultimate zombie survival experience, we added an extra element of unpredictability to our nighttime gameplay” – says Dying Light’s Producer Tymon Smektala. “Online players can face the threat of a possible invasion of their game by the Night Hunter, an extremely powerful, human-controlled zombie mutation. These invasions are an inherent part of Dying Light, available on all platforms for all online players from day one. However for our hardcore fans who pre-order, we’re offering them a bonus – Be the Zombie – which lets you actually take control of the Night Hunter and invade online games of other players.”
The video: http://youtu.be/raVcgenC9No
Dying Light can be pre-ordered from the game's official website, from select retailers and is also available for pre-purchase on Steam. These pre-orders and pre-purchases come with the free Be the Zombie DLC, letting players take control of the Night Hunter themselves. By playing as the Night Hunter and invading other games, players get access to a completely new character with a unique set of moves and abilities which can be upgraded using experience points. The Be the Zombie mode will be available across all platforms.
Dying Light will be released in 2015 on January 27th in the Americas, January 28th in Australia and New Zealand, and January 30th in Europe and Asia.
D3Publisher (D3PA) and Marvel Entertainment announces that on October 3 Marvel Puzzle Quest will celebrate its 1-year anniversary since its worldwide launch on the App Store and Google Play. In commemoration, Marvel Puzzle Quest will be the first Marvel video game to feature the brand new character, Thor: Goddess of Thunder. Thor: Goddess of Thunder will be a legendary (4 star) character reward for Season VII and all players will be able to test her powers in a battle starting on October 17th.
The celebration of the 1-year anniversary will also bring Devil Dinosaur as a playable character to Marvel Puzzle Quest via an Anniversary Pack and as a daily reward for Day 365 players starting on October 8th. In addition, the days leading to the Thor: Goddess of Thunder reveal, Marvel Puzzle Quest will be featuring fan-favorite special in-game events based on a recent poll with the community.
For New York Comic Con Convention (NYCC) attendees, the Marvel Puzzle Quest team will be at Booth #347 inside the Javits Center during show hours on October 9 – 12, 2014. Visitors to the Marvel Puzzle Quest booth at NYCC will be able to go hands-on with the game on tablet and PC to discover the expanding gameplay within the Marvel Universe. Members from the team will be on hand to walk players through gameplay and discuss upcoming in-game tournaments and events.
Attendees will also have the opportunity to earn in-game resources for Marvel Puzzle Quest at the booth via a free raffle. For a limited time only, D3Publisher will be offering bonus Iso-8 resources to new users that download the game now through October 18th.
Marvel Puzzle Quest is developed by Demiurge Studios and available for free on the App Store for iPhone®, iPad® and iPod®, iPod touch®, Google Play for AndroidTM devices, and Steam® for PC. The game is rated “T” (Teen – Violence, Blood, Suggested Themes, Drug Reference, and Mild Language) by the ESRB for PC. For more information on Marvel Puzzle Quest, please visit www.marvelpuzzlequest.com and follow us on Twitter @MarvelPuzzle or like us on Facebook www.facebook.com/MarvelPuzzleQuest.
SEGA® of America, Inc. and SEGA® Europe, Ltd. today announced that fan-favorite Japanese role-playing-game (RPG) Resonance of Fate is now available for purchase for the first time on PlayStation® Network for PlayStation®3 computer entertainment system. Resonance of Fate is a unique RPG set in a dystopian future where Earth is no longer capable of sustaining life. Adding a fresh spin to the RPG genre, the game features a cinematic action gameplay system centered around gun-play and a fascinating steampunk-styled world.
As part of the Private Military Firm, our heroes (Vashyron, Zephyr and Leanne) seek out and complete quests for their clients but are eventually led on a journey that will reveal the dark secrets behind the world they live in. Key features of the game include:
 Battle System: Battle in fantastic cinematic action as your characters wield firearms in a semi-real time gameplay system
 Hero Actions: Pull off spectacular moves and precision attacks through this special mode designed to chain attacks together
 Unique Story: Built around a gigantic tower-like machine, the story will delve deep into fate and the machinery that controls it
 Beautiful environments: Masterfully crafted environments pepper this title to illustrate the deep tapestry of this dystopian world
 Customization: Customize your characters and give them a unique look within the game
o Extensive Weapon customization allows your character to have specialized weapons from parts unlocked or bought throughout the game
o Change the look of your character by unlocking costumes along the way
505 Games and Hidden Path Entertainment announced the official launch of Defense Grid 2 (DG2), the long-awaited sequel to the 2008 quintessential tower defense game, Defense Grid: The Awakening.DG2 introduces new worlds and threats to test player's tower placement strategies in single-player mode, online player-versus-player and multiplayer co-op campaigns. With 21 engaging maps and countless ways to win, DG2 will challenge your strategy skills and redefine the tower defense genre.
Defense Grid 2 features gorgeous landscapes and intuitive gameplay as players defend against new threats to ensure the survival of the human race. The game features dynamic level movement, a rich story and cast of characters, hundreds of challenge mode experiences, new multiplayer modes, and a procedurally driven audioscore. DG2also introduces players to DG Architect, a level creation tool set connected to Steam Workshop, in which players can create their own unique levels to share and potentially sell.
Defense Grid 2 is priced at $24.99 for digital download on Steam (PC, Mac, Linux), PlayStation®4 and Xbox® One. A special edition of DG2, priced at $29.99, is also available on Steam and includes: the digital book, The Art of Defense Grid 2; the ebook,The Making of Defense Grid 2: The Complete Story Behind the Game by Russ Pitts; and additional content including “A Matter of Endurance,” a new original audio story written by Hugo award-winning author Mary Robinette Kowal and performed by the English voice cast.
Defense Grid 2 for Mac and Linux is now available to play and will be optimized for each platform on October 14.
A new trailer is available for launch: http://youtu.be/OJFbC2cknZw
The wait is over, HE is here. Slender: The Arrival, launches today on PlayStation®3 computer entertainment system. Tomorrow, Xbox fans will have their chance to experience The Arrival on Xbox 360 games and entertainment system from Microsoft; both are priced at $9.99. Slender Man takes to the big screen with his first foray into the world of console gaming, promising big thrills and chills for a whole new audience.
Developed by Toronto indie team Blue Isle Studios and the only official Slender Man game, The Arrival puts you at the heart of a mystery surrounding the enigmatic Internet persona that has captivated and terrorized millions. Experience lives touched by Slender Man and follow the trail to connect them all to this unstoppable force of evil. Slender: The Arrival wraps players in a dark, foreboding atmosphere and a story fraught with terror, paranoia and other-worldly forces lurking behind every turn.
Written by the creative team behind Marble Hornets, this latest iteration in the Slender Man universe expands the canon established by the original web-series, with some new twists and extended content. Building on the successful Steam launch last Halloween, Slender: The Arrival comes to consoles with brand new story elements and features extended levels that continue to unfold the Slender Man mythos. Players are enveloped in a world of sensory deprivation filled with haunting visions and audio cues that create an ominous backdrop perfect for fostering a healthy dose of tension and paranoia. Follow the clues and unravel the mystery, that is, if you can survive.
The new content will be offered to Steam and PC players who already own Slender: The Arrival at no additional charge as free DLC. More information about this offering will be announced in the coming weeks.
Slender: The Arrival is rated T for Teen and is available starting today on PlayStation®3 computer entertainment system for $9.99 digital download from the PlayStation®Network, and tomorrow (September 24) on Xbox 360 for $9.99 digital download from the Xbox Live Games Store.
Independent publishing label Midnight City will also release Costume Quest 2 this Halloween season from Double Fine Productions.
For more information, please visit our website: www.midnight-city.com
For more on Blue Isle Studios, please visit: www.blueislestudios.com
Warner Bros. Interactive Entertainment has released Gauntlet, a fully modernized reboot of the celebrated dungeon crawler, on Steam for PC, offering full support for SteamOS and the upcoming Steam Machines shipping next year. Developed by Arrowhead Game Studios, the game is available for an M.S.R.P. of $19.99.
Players select from four classic fantasy-based characters: Warrior, Wizard, Valkyrie, or Elf. Each character has its own distinctive play style and unique strengths and weaknesses. Upon selecting a playable character, the gameplay is set within dungeons where the object is to fight through the chambers slaying evil creatures and completing challenges. An assortment of special items can be located in each dungeon that can restore the player's health, unlock doors, and shift the odds in the player's favor with magical relics which can aid the player in surviving longer in the Gauntlet. The enemies are a vast assortment of fantasy-based monsters, including ghosts, grunts, demons, spiders, sorcerers and skeleton warriors.
Players can improve their heroes' abilities and powers by unlocking achievements called "perks." Multiple difficulty settings add to the game's replayability.
Gauntlet consists of environments like dusty crypts, dark caves, and fiery dungeons, each with varying styles of gameplay. Some dungeon maps allow players to explore and fight their way through chambers slaying evil creatures, completing challenges and discovering hidden secrets and gold. In other levels, Death itself chases players through an unpredictable labyrinth. There are also endurance maps where players must defeat waves of monsters to survive.
Gauntlet is rated Mature for Violence, Blood and Gore, with a setting to disable the game's gore.
For more information on Gauntlet, please visit
http://www.gauntlet.com,
https://www.facebook.com/PlayGauntlet
or https://twitter.com/PlayGauntlet
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Democratic presidential nominees are ignoring the issue of our cybersecurity infrastructure
Robert Ackerman Jr.	5 months
Robert Ackerman Jr. Contributor
Robert Ackerman Jr. is the founder and a managing director of AllegisCyber, an early-stage cybersecurity venture firm, and a founder of DataTribe, a cybersecurity startup “studio” in metropolitan Washington, D.C.
More posts by this contributor
Cyber breaches abound in 2019
With the long battle for the Democratic nominee for president in 2020 firmly underway, more than 20 political hopefuls are talking about spreading the fruits of a solid economy to millions of middle-class Americans who may have missed the good times, implementing Medicare for all to solve financial healthcare pitfalls, and free college education.
One would-be candidate – Jay Inslee, the governor of the state of Washington – is talking almost exclusively about the need to address climate change far more quickly and far more seriously.
But what has not been discussed by any of them, even briefly, is the stunning existential threat to our critical national security and the entire well-being of the U.S. posed by mounting and painful cyber breaches of infrastructure and other targets. If no would-be candidates can acknowledge the significance and magnitude of the cyber threat – let alone put forward a strategy and plan to defend against the threat – it’s hard to take them seriously as prospective national leaders.
I’m hardly the only one with this view. “When we think about existential threats, government has to understand that electricity doesn’t reside in its own silo and that if something happens to (companies like) us, it would have a potentially cataclysmic impact on finance as well,” utility Southern Company CEO Tom Fanning recently told Fox Business.
Specifically, consider just a few examples of what is going on every day:
Election malfeasance. We hear daily outrage about threats to our increasingly digital electoral infrastructure, and yet there is no policy discussion.
Rampant theft of intellectual property. The strength of our economy is based on our ability to innovate, as encapsulated in IP. And yet our economic and military rivals are brazenly stealing this IP with impunity. They take our innovation and weaponize it to challenge U.S. industry leadership and compromise our defense military technologies.
Targeting of critical infrastructure. When most of our infrastructure was built, it was not with security in mind. Our society is dependent upon our infrastructure. What if our phones didn’t work, we couldn’t bank, electrical and gas service was cut off, our planes couldn’t fly and our ports could not function? Massive financing is required to boost security.
Manipulation of privacy by select technology giants. What is, in effect, another sort of breach, is the collection, aggregation and manipulation of our privacy by digital aggregators such as Google and Facebook, which is then further manipulated and stolen by criminals. (Note here: A positive response has been the Federal Trade Commission’s endorsement this month of a $5 billion settlement with Facebook over a long-running probe into its privacy missteps.)
How do we solve these problems? Blatantly dictating solutions would inevitably fail. What we can do successfully is set standards of performance and responsibility, coupled with timelines and severe penalties for failure to perform. There must be accountability –something that sometimes exists in industry (albeit at inadequate levels), but that is wholly missing in government at all levels.
While I care deeply about cybersecurity, I am not naïve about the extreme pressure confronting politicians to score well in polls – a requirement to have a shot at winning their party’s presidential nomination. Arguably, cybersecurity awareness may not fit this bill.
If enhanced cybersecurity is to be injected into the Democratic election agenda, the public must actively promulgate such a step. Supporting an outcry is the irrefutable fact that the signs of risk are flagrant. Earlier this year, Global Risks Report 2019 – published by the World Economic Form – said that the rapid evolution of cyber and technological threats poses one of the most significant dangers to societies around the world.
In the U.S., meanwhile, cybersecurity is now at the forefront of policy discussions and planning for future conflicts. The cyber threat has leveled the playing field in many ways, presenting unique concerns to the U.S. and its allies. Two years ago, the final report of the Department of Defense Science Board Task Force on Cyber Deterrence concluded that cyber capabilities of other nations exceeded U.S. ability to defend systems and said this would remain the case for at least another five to 10 years.
These and other threats manifest themselves through attacks on our digital infrastructure. And as the largest and most digitized economy in the world, we have the most to lose when our infrastructure is comprised. There is no higher priority threat to the U.S. If those who would be our leaders, including Donald Trump, cannot acknowledge such a huge external threat to our security, economy and lifestyle and take steps to resolve it, they have no business vying to become the leader of our nation in 2020.