In Praise Of Melville-Johannesburg, South Africa

THE BEST PLACE TO LIVE IN JOHANNESBURG

I receive lots of messages from people seeking advice on moving to Johannesburg from overseas. The most common question is: “Where is the best place to live in Johannesburg?”

It’s a tricky question to answer. Johannesburg is a huge, sprawling city with dozens — maybe hundreds — of suburbs. And by “suburb” I don’t mean what you probably think I mean. Unlike in the United States, where a suburb is a commuter town outside of a big city, in South Africa a suburb is a smaller neighbourhood that is beyond the city center but still inside the city limits. Although there are also some more far-flung suburbs that are more like suburbs in the American sense. Confusing, right? Anyway, I digress.

As I said, Joburg is ginormous and the best place to live depends on where you work and what kind of person you are. If you’re a banker or an advertising executive or a Porsche salesman, then your workplace is likely in Sandton and you’ll want to live in the northern suburbs. If you’re a university student or an edgy tattoo artist, then it might make sense for you to live in the CBD (central business district). If you need to live near public transport, Rosebank is your place. If you want a big, brand-new house and don’t mind being out in the sticks, try Midrand.

If you’re a quirky American travel blogger who works at home, naps a lot, likes boxing, and has a boyfriend and a cat, then you should definitely live in Melville.

Private Property, a South African real estate website, asked me to write a post on the best place to rent in Johannesburg. (Actually they asked me to write a post about the best place to rent in Gauteng Province, but I’m limiting myself to Joburg because that’s what I know.) Rather than try to answer this question for everyone, which would be impossible, I’m going to answer it for myself. I’ve lived in Melville since the day I arrived in Joburg and I’ve never considered living elsewhere. Here’s why:

1)  Location. Melville is close (within 10 to 25 minutes’ drive) to the CBD, Braamfontein, Rosebank, Sandton, Soweto, Fordsburg/Mayfair, the M1 and M2 highways, the West Rand, and Joburg’s near-eastern and -southern suburbs. Although we don’t have a Gautrain or Gautrain bus stop (which is a pity), Melville does sit on a Rea Vaya line and provides easy access to taxis and tuk-tuks. Melville is adjacent to both of Joburg’s major universities.

Joburg-skyline-January-16The Joburg skyline as seen from the Melville Koppies.

2) Neighborhood. I live 5 to 15 minutes’ walk to dozens of restaurants and bars, dozens of bed-and-breakfasts (perfect for out-of-town visitors), three grocery stores, a shopping mall, a doctor’s office, several banks and hair salons, a hardware store, two petrol stations, bookshops, charity shops, and coffee shops. If you want to live in Joburg without a car, Melville is one of your best bets. Melville also has particularly beautiful, interesting properties and there is a wide range of houses/cottages/flats available for rent.

New-house-outsideMy Melville house.

3) Natural Beauty. Melville has beautiful, tree-lined streets, large back gardens, and its own nature reserve,the Melville Koppies, which has one of the best Joburg skyline views in town. It’s a great place to walk, run, and cycle. Melville is also a great place for pets, as the Melville Cat can attest.

Conehead in garden
The Melville Cat enjoying the beautiful nature in my old back yard (a couple of years ago when the Melville Cat had a cone head).

4) People. It’s nearly impossible for me to walk up the main thoroughfare in Melville without seeing at least three people I know. As a general rule, people who live in Melville are interesting and friendly and a little weird. I felt instantly at home when I arrived here and that feeling has never gone away.

Bread-and-Roses-teamThe staff at Bread & Roses Café, one of my favorite Melville hangouts, on the corner of 7th Street and 4th Avenue.

A final thought: Ever since I moved here in August 2010, I’ve persistently been told by Melville-hating Joburgers that Melville is dangerous, trashy, crime-ridden, or the vague “not what it used to be”. I have one word for these haters: Whatevs. Melville is no more dangerous or trashy or “not what it used to be” than any other place in Joburg. (Although Melville’s 7th Street does get rowdy on Friday and Saturday nights. I recommend living at least two blocks from 7th Street if you want to sleep in peace on weekends.)

Melville is, however, the most vibrant and friendly place in Joburg, as least in my biased opinion. So don’t let the haters sway you: Come check Melville out for yourself.

This post was brought to you by Private Property, which I can personally attest is a great way to search for real estate in South Africa. All opinions expressed are my own.

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18 COMMENTS

  • Reply2SUMMERSJanuary 5, 2016 at 6:53 pmYes. And olloclips grow on the Koppies.

  • ReplyAUTUMNASHBOUGHJanuary 5, 2016 at 7:49 pmTrees! I must live near trees. Melville sounds lovely.

  • Reply2SUMMERSJanuary 5, 2016 at 8:32 pmI often say that Joburg is a lot like LA. You’d find it familiar, I think.

    • ReplyAUTUMNASHBOUGHJanuary 5, 2016 at 8:48 pmOne of my sisters lived there for a few years and said the same thing. Similar climate and all. I’m run into any number of South Africans here. Of course, in LA you run into any number of anythings.

  • ReplyNAMZJanuary 5, 2016 at 8:30 pmI love coming to Melville and just walking down the street…its quirkiness makes it so interesting!

David Stockman’s Death Throes Of The Bull Stock Market

Death Throes Of The Bull

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The fast money and robo-machines keep trying to ignite stock rallies, but they all fizzle because bad karma is beginning to infect the casino. That is, apprehension is growing among whatever adults are left on Wall Street that 84 months of ZIRP and $3.5 trillion of Fed balance sheet expansion, aka money printing, didn’t do the trick.

Not only is the specter of recession growing more visible, but it is also attached to a truth that cannot be gainsaid. Namely, having stranded itself at the zero bound for an entire business cycle, the Fed is bereft of dry powder. Its only available tools are a massive new round of QE and negative interest rates.

But these are absolutely non-starters. The former would provoke riots in the financial markets because it would be an admission of total failure; and the latter would provoke a riot in the American body politic because the Fed’s seven year war on savers and retirees has already generated electoral revulsion. Bernie and The Donald are not expressions of public confidence in the economic status quo.

So the dip buying brigades have been reduced to reading the tea leaves for signs that the Fed’s four in store for 2016 are no more. Yet even if the prospect of delayed rate hikes is good for a 50-handle face ripping rally on the S&P 500 index from time to time, here’s what it can’t do. The Fed’s last card—-deferring one or more of the tiny interest rate increases scheduled for this year——cannot stop the on-coming recession.

And it is surely coming. We got one more powerful indicator on that score in this morning’s data on core capital goods orders (i.e. nondefense excluding aircraft). Not only were they down sharply from last month, but at $65.9 billion were down 11% from the September 2014 peak, and are also now below the prior cyclical peaks in early 2008 and 2001.

In fact, core CapEx orders in December were at a level first reported in April 2000, and that’s in nominal dollars. In real terms, they are down nearly 25%.

Needless to say, there will be pandemonium in the casino when the downturn is no longer deniable. That’s because the main prop under the market today is, in fact, the Wall Street mantra that bear markets never happen in the absence of a recession and that none is purportedly visible.

On that score, it is no use listing and documenting all the flashing red lights or that the BLS jobs report is both a lagging indicator and virtually worthless. Today in a nearby column,  Lance Roberts reminds that at the top of the cycle the BLS nearly always over-reports employment gains, and that these estimates get revised away in the four subsequent iterations of the data over the next several years.

But in the current context, he thinks there is something especially fishy. Namely, that the continuing decline of the labor market participation rate is not consistent with the allegedly robust job count gains, and also it is not consistent with any prior historical relationship between the two.

But here is the potential problem for the Fed’s dependence on current employment data as justification for tightening monetary policy – it is likely wrong. Economic data is very subject future revisions. While the current employment data has indeed been the strongest since the late 1990’s, there is a probability that the data is currently being overestimated.

The reason is shown in the chart below.

Employment-FullTime-LFPR-012816

If the employment gains were indeed as strong as the Fed, and the BLS, currently suggest; the labor force participation rate should be rising. This has been the case during every other period in history where employment growth increased. Since the financial crisis, despite employment gains, the labor force participation rate has continued to fall.

No, the consumers of America cannot shop the nation out of recession, either. That would take robust job and earnings gains, which are not happening, or a new round of household leverage gains, which are not remotely feasible given the condition of “peak debt” now prevalent.

On this score, we reported the other day that the vaunted strength of auto sales was actually nothing of the kind; and that we are likely at the turning point in the auto sales recovery cycle because virtually anyone who can fog a rear view mirror has already been given a car loan.

Indeed, during the past 12 months auto dealer sales rose by $65 billion but vehicle loans outstanding soared by $90 billion to an all-time high!  The surging dealer lots would actually have been even more flooded with unsold cars without this final injection of cash to the bottom of the credit ladder.

Still, the talking heads keep telling you that households have substantially deleveraged and are fixing to embark on a new spending spree.

No they are not. After a few quarters of reduction owing to the massive write-downs of mortgage debt after the crisis, household debt has again crept higher. In fact, it is up by nearly $1 trillion since the late 2011 lows; and at 180% of wage and salary income remains drastically elevated by all historical standards.

Wall Street never forecasts a recession, of course. Not even when powerful indicators like the soaring inventory-to-sales ratio suggest that a downward production and income adjustment is just around the corner.

In fact, as of the most recent data, total business sales—–manufacturing, wholesale and retail—–were down by nearly 4% from their mid-2014 peak. And the ratio of inventory to sales has shot up to levels last posted in October 2008.

Business sales and investment are the heart of the equation. When they head south, the recession is just around the corner. It is only after the fact that the nation’s stock market obsessed C-suites get around to unloading excess labor inventories.

In the meanwhile, the sell-side does its level best to keep the dying bull alive with its own hockey stick projections. At the moment, the all is awesome chorus insists that what will be another negative growth earnings season should be ignored. That’s because its just the energy industry profits plunge rotating through the year-over-year comparisons.

Needless to say, by the second half of this year and 2017 it will all be blue skies again. In fact, the current consensus EPS for 2017 is no less than $141 per share on the S&P 500. And at today’s closing price of 1893 that’s a PE multiple of just 13.4X. No sweat!

Then again at the comparable point in the 2015 earnings cycle—-that is, February 2014—-the Wall Street hockey stick pointed to $137/per share. After three quarters of actuals and the downgraded estimates for Q4, that number has plummeted to $106 per share; and that’s after excluding about $12 per share of inconvenient “ex-items” stuff  like restructuring charges, plant closings, lease write-offs, stock option costs and much more.

In fact, however, the actual GAAP earnings reports, which are filed with the SEC and signed off by the CEO and CFO on penalty of jail time, are pointing in a decidedly different direction. Reported GAAP earnings peaked at $106 per share on the S&P 500 more than a year ago for the LTM period ending in September 2014.

By the most recent reporting period they were down by 14.4% to $90.66 per share, and there is no reason to believe that this slide will rebound when the Q4 numbers are actually tallied.

Here’s the thing. This exact pattern occurred during the 2007-2009 collapse. While the Wall Street hockey sticks were projecting earnings of $120 per share or more for 2008, actual GAAP earnings starting falling in the June 2007 LTM period, and kept plunging until they hit bottom at $7 per share in June 2009.

S&P 500 Earnings

The blue bars mark the death throes of a dying bull last time. Self-evidently, this one—market in red—– is not far behind.

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Doug Casey Talks About Sociopaths In Politics

Doug Casey Shines a Light on the Sociopaths in Politics

by Doug Casey | January 29, 2016
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There are seven characteristics I can think of that define a sociopath, although I’m sure the list could be extended:

  1. Sociopaths completely lack a conscience or any capacity for real regret about hurting people. Although they pretend the opposite.
  1. Sociopaths put their own desires and wants on a totally different level from those of other people. Their wants are incommensurate. They truly believe their ends justify their means. Although they pretend the opposite.
  1. Sociopaths consider themselves superior to everyone else, because they aren’t burdened by the emotions and ethics others have – they’re above all that. They’re arrogant. Although they pretend the opposite.
  1. Sociopaths never accept the slightest responsibility for anything that goes wrong, even though they’re responsible for almost everything that goes wrong. You’ll never hear a sincere apology from them.
  1. Sociopaths have a lopsided notion of property rights. What’s theirs is theirs, and what’s yours is theirs too. They therefore defend currency inflation and taxation as good things.
  1. Sociopaths usually pick the wrong target to attack. If they lose their wallet, they kick the dog. If 16 Saudis fly planes into buildings, they attack Afghanistan.
  1. Sociopaths traffic in disturbing news, they love to pass on destructive rumors, and they’ll falsify information to damage others.

The fact that they’re chronic, extremely convincing, and even enthusiastic liars, who often believe their own lies, means they aren’t easy to spot, because normal people naturally assume another person is telling the truth. They rarely have handlebar mustaches or chortle like Snidely Whiplash. Instead, they cultivate a social veneer or a mask of sanity that diverts suspicion. You can rely on them to be “politically correct” in public. How could a congressman or senator who avidly supports charities possibly be a bad guy? How could someone who claims he just wants the U.S. to defend some foreign minority possibly be a warmonger? They’re expert at using facades to disguise reality, and they feel no guilt about it.

Political elites are primarily, and sometimes exclusively, composed of sociopaths. It’s not just that they aren’t normal human beings. They’re barely even human, a separate subspecies, differentiated by their psychological qualities. A normal human can mate with them spiritually and psychologically about as fruitfully as a modern human could mate physically with a Neanderthal; it can be done, but the results will be problematical.

It’s a serious problem when a society becomes highly politicized, as is now the case in the U.S. and Europe. In normal times, a sociopath stays under the radar. Perhaps he’ll commit a common crime when he thinks he can get away with it, but social mores keep him reined in. However, once the government changes its emphasis from protecting citizens from force to initiating force with laws and taxes, those social mores break down. Peer pressure, social approbation, and moral opprobrium, the forces that keep a healthy society orderly, are replaced by regulations enforced by cops and funded by taxes. Sociopaths sense this, start coming out of the woodwork, and are drawn to the State and its bureaucracies and regulatory agencies, where they can get licensed and paid to do what they’ve always wanted to do.

It’s very simple, really. There are two ways people can relate to each other: Voluntarily or coercively. The government is pure coercion, and sociopaths are drawn to its power and force.

The majority of Americans will accept the situation for two reasons: One, they have no philosophical anchor to keep them from being washed up onto the rocks. They no longer have any real core beliefs, and most of their opinions – e.g., “We need national health care,” “Our brave troops should fight evil over there so we don’t have to fight it over here,” “The rich should pay their fair share” – are just reactive and comforting catch phrases. The whole point of spin doctors is to produce comforting sound bites that elude testing against reality. And, two, they’ve become too pampered and comfortable, a nation of overfed losers, mooches, and coasters who like the status quo without wondering how long it can possibly last.

It’s nonsensical to blather about the Land of the Free and Home of the Brave when reality TV and Walmart riots are much closer to the truth. The majority of Americans are, of course, where the rot originates – the presidential candidates are spending millions taking their pulse in surveys and polls and then regurgitating to them what they seem to want to hear. Once a country buys into the idea that an above-average, privileged lifestyle is everyone’s minimum due, when the fortunate few can lobby for special deals to rake something off the table as they squeeze wealth out of others by force, that country is on the decline. Lobbying and taxation are replacing production and innovation as the national modus vivendi; parasites are unable to sustain prosperity. The wealth being squeezed took centuries to produce, but it is not inexhaustible.

I suspect most now reading this tend to vote Republican. Republicans say they believe in economic freedom (they don’t), and they definitely don’t believe in social freedom. Compared to the Democrats, they are viewed (correctly) as hypocrites. At least the Democrats are honest about disliking economic freedom. Republican candidates are at once laughable and pathological – it doesn’t matter if Trump, Cruz, or Rubio get the nod. They’re all so horrible and embarrassing that I’ve heard they’re even desperately considering recycling Mitt Romney, an empty suit, only marginally better than the previous Republican nominee, the hostile and mildly demented John McCain.

All candidates decry the upper classes, say they love what’s left of the middle class, and want to shower more goodies on the proletariat.

People generally fall into an economic class because of their psychology and their values. Each of the three classes has a characteristic psychological profile. For the lower class, it’s apathy. They have nothing, they’re ground down, and they don’t really care. They’re not in the game, and they aren’t going to do anything; they’re resigned to their fate. For the upper class, it’s greed and arrogance. They have everything, and they think they deserve it – whether they do or not. The middle class, at least in today’s world, is run by fear. Fear that they’re only a paycheck away from falling into the lower class. Fear that they can’t pay their debts or borrow more. Fear that they don’t have a realistic prospect of improving themselves.

The problem is that fear is a negative, dangerous, and potentially explosive emotion. It can easily morph into anger and violence. Exactly where it will lead is unpredictable, but it’s not a good place. One thing that exacerbates the situation is that all three classes now rely on the government, albeit in different ways. Bankruptcy of the government will affect them all drastically.

With sociopaths in charge, we could very well see the Milgram experiment reenacted on a national scale. In the experiment, you may recall, researchers asked members of the public to torture subjects (who, unbeknownst to the people being recruited, were paid actors) with electric shocks, all the way up to what they believed were lethal doses. Most of them did as asked, after being assured that it was “all right” and “necessary” by men in authority. The men in authority today are mostly sociopaths.

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WHAT TO DO

One practical issue worth thinking about is how you, as someone with libertarian values, will manage in a future increasingly controlled by sociopaths. My guess is poorly, unless you take action to insulate yourself. That’s because of the way almost all creatures are programmed by nature. There’s one imperative common to all of them: Survive! People obviously want to do that as individuals. And as families. In fact, they want all the groups that they’re members of to survive, simply because (everything else being equal) it should help them to survive as individuals. So individual Marines want the Marine Corps to survive. Individual Rotarians want the Rotary Club to prosper. Individual Catholics leap to the defense of the Church of Rome.

That’s why individual Germans during World War II were, as has been asserted, “willing executioners” – they were supporting the Reich for the same reasons the Marines, the Rotarians, and the Catholics support their groups. Except more so, because the Reich was under attack from all sides. So, of course, they followed orders and turned in their neighbors who seemed less than enthusiastic. Failing to support the Reich, even if they knew it had some rather unsavory aspects, seemed an invitation to invading armies to come and rape their daughters, steal their property, and probably kill them. So, of course, the Germans closed ranks around their leaders, even though everyone at the top was sociopath. You can expect Americans to do the same.

Americans have done so before, when the country was far less degraded. During the War Between the States, even saying something against the war was a criminal offense. The same was true during World War I. In World War II, the Japanese were all put in concentration camps on groundless, racially based suspicions of disloyalty. During the early years of the Cold War, McCarthyism was rampant. The examples are legion among humans, and the U.S. was never an exception. It’s even true among chickens. If a bird has a feather out of place, the others will peck at it, eventually killing it. That out-of-place feather is deemed a badge of otherness announcing that its owner isn’t part of the group. Chicken Autre must die.

Libertarians, who tend to be more intelligent, better informed, and very definitely more independent than average, are going to be in a touchy situation as the crisis deepens. Most aren’t going to buy into the groupthink that inevitably accompanies war and other major crises. As such, they’ll be seen as unreliable, even traitors. As Bush said, “If you’re not with us, you’re against us.” And, he might have added, “The Constitution be damned.” But, of course, that document is no longer even given lip service; it’s now a completely dead letter.

It’s very hard for an individualist to keep his mouth shut when he sees these things going on. But he’d better keep quiet, as even H.L. Mencken wisely did during both world wars. In today’s world, just keeping quiet won’t be enough; the national security state has an extensive, and growing, file on everybody. They believe they know exactly what your beliefs, desires, fears, and associations are, or may be. What we’re now facing is likely to be more dangerous than past crises. If you’re wise, you’ll relocate someplace where you’re something of an outsider and, by virtue of that fact, are allowed a measure of eccentric opinion. That’s why I spend an increasing amount of time in Latin America. In truth, however, security is going to be hard to find anywhere in the years to come. The most you can hope for is to tilt the odds in your favor.

The best way to do that is by diversifying your assets internationally. Allocating your wealth into real assets. Linking up with sound, like-minded people who share your values. And staying alert for the high-potential speculations that inevitably arise during chaotic times.

Editor’s Note: A big part of any strategy to reduce your political risk is to place some of your savings outside the immediate reach of the thieving bureaucrats in your home country. Obtaining a foreign bank account is a convenient way to do just that.

That way, your savings cannot be easily confiscated, frozen, or devalued at the drop of a hat or with a couple of taps on the keyboard. In the event capital controls are imposed, a foreign bank account will help ensure that you have access to your money when you need it the most.

In short, your savings in a foreign bank will largely be safe from any madness in your home country.

Despite what you may hear, having a foreign bank account is completely legal and is not about tax evasion or other illegal activities. It’s simply about legally diversifying your political risk by putting your liquid savings in sound, well-capitalized institutions where they’re treated best.

We recently released a comprehensive video where we discuss our favorite foreign banks and jurisdictions, including, crucially, those that still accept Americans as clients and allow them to open accounts remotely for small minimums.

New York Times best-selling author Doug Casey and his team describe how you can do it all from home. And there’s still time to get it done without extraordinary cost or effort. Click here to view it now.