DART Probe's Impact Crater on Dimorphos

NASA's article on the successful crashing of a space probe into the asteroid Dimorphos mentions a follow up mission that will inspect the impact crater in four years from now. My prediction for this is that the crater will be smaller than expected.

The reason for this is that asteroids aren't what astronomers believe them to be. They aren't proto planets, but remnants of planets that have been blown to bits or carved up by rogue planets. Hence, the rocky and dusty surface observed doesn't extend to the core of the asteroid, as generally believed.

Dimorphos isn't a low mass body, easily disturbed both in its orbit and its shape. It's a solid, high mass body with a thin cover of dust and rocks, and its cover was accumulated in the aftermath of the event that created it in the first place.

There will be little left to see of the impact crater in four years from now. It may even be completely gone due to the constant workings of solar winds.

Dimorphos seconds before DART probe impact

By Doug Ellison & NASA (Original) - https://twitter.com/doug_ellison/status/1574646223591481345, Public Domain, Link

NASA’s DART Probe Hits Asteroid

The NASA DART probe that I wrote about a year ago has reached its destination. It has crashed into an asteroid in order to alter its orbit around another, larger asteroid.

The impact happened on September 27. Pictures taken by the probe immediately before impact show a surface littered with rocks and dust. Telescope images show a relatively stable, star-like pattern of ejected dust and debris. Not the nebulous cloud we might have expected.

Accurate data related to the collision and its impact on the orbit of the system will be collected in the weeks to come.

NASA predicts about 1% shorter orbit, or roughly 10 minutes. I was under the impression that the aim was to widen the orbit, but I was evidently wrong in this. However, this doesn't take anything away from my overall prediction, which is based on my belief that asteroids are more massive than NASA thinks they are.

I expect the impact to be less effective than NASA predicts. The orbit may also partially or fully restore to its pre-impact trajectory due to the dual effect of gravitational attraction and electrostatic repulsion.

Gravitational attraction and electrostatic repulsion

Pension Funds in Trouble

Pension funds are in more trouble than most people realize. This became clear when English pension funds suddenly found themselves squeezed during the latest market turmoil coming out of the UK.

It took a hundred billion pounds of central bank intervention to pull the pension funds out of the mess. But why was that? How was it that something as big as pension funds could go from seemingly stable to the verge of collapse in a matter of days?

The short answer is financialization. Pension funds have lost sight of their true purpose. Instead of providing a steady income for their clients, they are engaging in monetary alchemy where some win at the expense of other. The pension funds found themselves on the wrong side of big bets that went sour when interest rates suddenly went vertical.

One way of looking at this is to compare the true purpose of pension funds to how pension funds are operating in financial markets today.

In simple terms, pension funds have no other purpose than to provide food, clothing and shelter for their clients. To do this, they need to hold productive assets that provide this, and the safest and most direct way to do this is to own these assets directly.

If this had been the case the recent market hiccup would have been of no consequence to the pension funds. Their farms, factories and flats would have continued to provide for their clients regardless of interest rates and other monetary issues.

The same would have been true if the above-mentioned assets were held indirectly through holding companies run soundly, with little exposure to financial markets. The revenue provided by shares in companies that provide food, clothing and shelter would have been unaffected by the turmoil. No pensioners would have been in danger of not getting their share of the productive capacity of the UK.

The focus of pension funds should be on the productive capacity of their assets. The only thing that should matter should be the revenue stream created by their assets. People paying into pension funds would thus buy into this productive capacity, while those who've reached retirement age are provided for by the sum of money coming into the pension funds through dividend and not-yet retired clients. Ownership of the pensions fund and their productive assets should in this way be rotated from those at the end of their lives to those yet to be retired.

At the root of this type of saving schemes, we find productive capacity and a straightforward way of rotating ownership from one generation to the other. However, this simple idea has been lost. Instead of focusing on productive capacity, pension funds today focus on asset prices.

The idea is no longer to secure sufficient productive capacity to provide for clients, but to amass sufficient financial assets to pay for the productive capacity of others. The problem here, is that price and value is not the same thing. Prices of things can go up without anything of value having been created. Hence, pension funds may find themselves owning things that appear to have value but are in fact bubbles.

The sound way of looking at pensions is to pretty much ignore the price action of assets. If a factory doubles in price or halves in price, no value is gained or lost unless the productive capacity of the factory has changed. Pension fund managers may choose to sell factories that they think are priced too high and buy factories that they think are priced too low. But this should always be done based on productive capacity. However, that's not how things are done.

Pension funds own debt instruments and shares in companies, many of which are non-performing or running at a loss. Very little of what they own contributes directly to the economy in terms of products and services essential for their clients' wellbeing. The assumption is that the price of their assets will cover the cost of acquiring the products and services provided by others. However, this assumes that someone is willing to buy the assets held by pension funds at current prices, and it was this assumption that was suddenly challenged in the UK and forced the central bank to come in as a buyer of last resort.

But nothing has been fixed. Pension funds are not in possession of the productive capacity required to feed their clients, and this problem isn't fixed simply by elevating asset prices through central intervention. The money pumped into pension funds in order to prop up their asset prices is nothing but monetary inflation, and the cost of living is likely to go up in response. Instead of pension funds defaulting to their clients, prices of goods and services go up for everyone.

There is no way of fixing this problem, short of handing productive capacity directly over to the pension funds, and that's not going to happen. Pensioners get a haircut, or everyone gets inflation. No other solution exists.

Hot air balloon

By Kropsoq - photo taken by Kropsoq, CC BY-SA 3.0, Link

The Final Solution

My wife didn't like my simple plan either. The possibility of getting into an argument with tax authorities about whether or not the money coming to us from Norway is a gift is so unappealing that she thinks it better to do some manoeuvring in Norway to avoid the tax.

That would involve my father, who can send gifts to my son without prompting a tax claim. I don't much like the idea of having to involve my father in this. He's ninety years old, and not one I'd rush to for help. However, this trick will save us about €4,000, and save us any chance of being found to have skirted the rules. I've therefore decided to let my father into this, and he seems positive to it.

The idea would be to have my children send my father the appropriate amount and have him forward it as a gift to my son. This type of transactions is legal and tax free in Norway. It also conforms to Portuguese rules related to tax free gifts.

An open window

Robustness of Infrastructure

One of my main concerns with modern society has long been the fragility of its infrastructure. We are increasingly relying on systems with little to no redundancy. If these systems break, there are no alternatives, and people get in trouble. Having been wary of this for some time, I've positioned myself accordingly. I've made myself relatively independent of modern infrastructure, and I've moved to a country where there's still much redundancy in the way things are done.

Portugal is a country where there are many small shops, small farms and small businesses. The consumer is never far away from a producer. The weather is generally warm. Nobody freezes to death or starves to death in this country.

Now, with rogue actors having blown up Germany's main supply-line of natural gas, the virtue of redundancy has become all the more apparent. Gas pipelines may be super-efficient, but they are open to sabotage from state sponsored terrorists. Without alternative supply lines, countries like Germany are sitting ducks for this kind of activity.

When it comes to natural gas, the most robust supply system is LNG delivered by ship. Such infrastructure allows the receiver to change suppliers, and if someone blows up one port, there's always another port that can be used. This makes Iberia the most robust region in Europe when it comes to natural gas imports, because Spain and Portugal are completely self-reliant in this respect. Iberia gets its natural gas delivered by LNG ships and can therefore pick and choose where they get their gas from.

The consequence of this is that Iberia has suddenly become more appealing in terms of investments and industry. It has by chance become a region of Europe that can operate relatively independent of what rogue actors decide to do. Instead of being seen as backwards in the way they get their energy delivered, Iberia has become a fortress of sorts.

Other European countries, such as Germany and Italy, will want to go the same way. The goal of every country will be a more robust infrastructure. With no country any longer trusting other countries to deliver what they need, every country will want to become its own fortress, and the consequence of this will be a fractured Europe with every country primarily focusing on what's right for its own security and prosperity.

If the goal of the state-sponsored terrorists was to split Europe into its various regions and sub-regions, then their success is pretty much ensured. However, if the goal was to unite Europe into a single geopolitical force, it will prove a fiasco.

Klaus Schwab

By Copyright World Economic Forum (www.weforum.org) swiss-image.ch/Photo by Remy Steinegger - https://www.flickr.com/photos/worldeconomicforum/2296517249/, CC BY-SA 2.0, Link

Rolling my Investment Positions

The world is looking increasingly unstable and dangerous, and it would be strange if this doesn't get reflected in the markets.

Gold should be going up relative to other assets. That means that there should be opportunities for those holding gold to roll into other assets. However, we must neither be too quick nor too slow to do so, or we will squander our chances. We need to have a plan as to what to do, and stick to it when the wind blows.

Looking at the Dow to Gold ratio, we see that a ratio of about 7 looks like the neutral level. Ratios above that makes the Dow look expensive. Ratios below it looks cheap. We also see that there's a lot of support at about 5.

The Dow to Gold ratio is currently at about 17, which is roughly where it's been ever since 2017. Those who've been sitting on gold since 2017 have done no better and no worse than those who've been invested in the Dow. However, an imminent drop in the Dow to Gold ratio is likely due to recent developments. A drop to about 5 within a year or two isn't unthinkable. From there, it may fall further to 2.5. It may halve again to 1.25. Even 0.625 may happen. But it's hard to see the Dow fall further from there.

That leaves us with four entry points which I intend to use for myself. I also want to set aside some gold for real-estate, so I don't want to put all my gold into the Dow or similar indexes. A good allocation would be 2/3 in shares and 1/3 in real-estate. If I divide my gold into six equal parts, I can use four of them to buy shares at the above mentioned ratios, and two parts for real-estate.

If things crater completely, I'll end up owning a lot of shares, some real-estate and no gold. Otherwise, I'll remain partially invested in gold, which is fine by me because it's impossible to predict the future with sufficient accuracy to roll positions perfectly. The goal isn't perfection. I'm merely looking to do better than average, and that's only possible if I roll in and out of positions at opportune times.

The idea is to buy shares at ratios of 5 and below, and sell at ratios of 10 and above. I have no shares at the moment, but with a bit of luck, I might have some in the not too distant future. With even more luck, I might have some shares to sell at ratios of 10 and above within a decade or two.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

The Coming Winter Offensive

Russia will stage a major offensive in Ukraine this winter. That's a near certainty. The objective will be to secure the territories now considered Russian after the referendum that they concluded this past week. The Russians may also extend their operations farther into Ukraine in order to gain territory with which to broker a peace treaty on their terms.

This may sound farfetched, given how Russia is on the defensive at the moment. But the current Russian weakness is going to turn to strength once the frost sets in.

Ukranian territorial gains have come at a great price, both in manpower and material. Russians, on the other hand, are keeping their powder dry. Come winter, Ukrainian forces will be depleted and in dire need of more military equipment, while Russians will have a surge of new soldiers with plenty of hardware and ammunition coming to the front line.

Once the frost sets in, military mobility increases, because heavy vehicles are no longer confined to roads and bridges. They can cross fields, lakes and rivers in broad attack formations. This is why winter is the season for war in countries with cold climates. Russians know this better than anyone, and are simply waiting for the frost to set in.

There's no point in staging any large-scale operation at the moment because fall as well as spring are wet seasons when armies can get bogged down in the mud. Fall and spring are ideal for defensive operations. Winter is ideal for large scale offensives.

The coming winter offensive will not only be swift, but also more brutal than what we've seen so far, because Russian forces will feel entitled to use more force now that they see themselves as operating on Russian soil. However, up until the offensive starts, the war may seem like it's winding down, with both sides spending less and less effort.

The Ukrainians will wind down due to a lack of manpower and material, and the Russians will simply stay in their defensive positions.

The winter offensive will come as a surprise on everyone who buys into the propaganda that the reduced activity during fall is due to both sides being exhausted.

Those who believe that Ukraine will do fine due to billions of dollars in military help from the West will also be disappointed, because the help is no longer coming in the form of fresh equipment. The West has depleted its stockpiles of hardware. The money pledged is for new equipment that will take years to build due to the West's obsession with high tech equipment.

The Russians have remained relatively low tech, with more focus on production capabilities. Their stockpiles of hardware are not nearly as depleted and will be replenished in time for the offensive. There're also a whole range of particularly brutal weapons the Russians have so far refrained from using.

As for any Russian military operations outside Ukraine, the chance of this happening is minuscule. Russia has no history of going to war against the West unless provoked. They don't annex territories unless there are Russians living those areas. Russia is not at war with the West and has no interest in provoking such a war.

The Western elite, on the other hand, seems hellbent on escalation. Pipelines are blown up. Anything that ties the West to Russia is a legitimate target in their efforts to isolate Russia.

The fact that our elite is now openly terrorizing us is a sign that they too know that a major offensive is coming this winter, and that there's very little they can do about it unless they can get Russia to lash out at them, and thus provoke a total war where everything can be burned to a crisp.

Mark Esper with Jens Stoltenberg

By U.S. Secretary of Defense - 200212-D-AP390-6107, CC BY 2.0, Link