Thursday, September 30, 2010

A Drive Along The Coast Of Maine

Did I mention that I love this state?  It was my last few days in town and I decided to make a trip up the coast.  Highway One is a beautiful drive and you can make it even more interesting if you veer off course and drive off on the smaller roads that take you to several of the little towns and tourist destinations in the state.  It's what I did when I came across Andy and his yard ship so you'll never know what you will find.

This drive took me to Boothbay harbor to walk around the area and be a tourist for a while.  I walked into a gallery and spoke with one of the artists in the gallery, John Vander.  He agreed for me to take his photograph while he told me about his current exhibit, "tourist season."  For more on this exhibit, click HERE.

After the brief stop, I continued back to the main highway and traveled North through Camden and saw many other quaint towns while observing clammers and fishermen until I hit the main destination, Bar Harbor and Acadia National Park.  It was one of the foggiest days I've ever seen so it wasn't the best day to visit if you wanted a clear view of the park.  It didn't matter to me, the park is beautiful.  Bar Harbor is another tourist destination and after traveling to Boothbay, I grew tired of the shops selling everything you can think of with the city name in the item.

I drove up the Northern California coast, Oregon Coast up until mid Washington.  This drive didn't disappoint.  The only advice I would give is to take your time.  Don't make it a day trip like I did.  Enjoy it and take at least a few days wandering around and seeing the sights in all their glory.

Wednesday, September 29, 2010

Sound what? Ron Paul is the only politician telling the real story...


Some objectivity

I had several conversations over the last days with distinguished financial professionals. What I find intriguing about all of them is the unanimous feeling and need to take a gamble on market potential that depends solely on the action of a central bank, a government or a traditional attempt to take a gamble in a knowingly unstable environment simply because that's what feels like the appropriate action is. A simple approach would be just do nothing or the safe thing - right? But, regardless of that, why not bet on stimulus, emerging markets, china, sovereign debt, corporates or junk bonds...Just look at our Tepper character at Appaloosa Capital Mis-management - that clearly is his approach.

The reality, in my opinion, is very simple.
  1. Interest rates are at or near record lows
  2. Lending is primarily occurring between banks and the Treasury not small business or in real estate
  3. Stocks are pricing in perfection
  4. Mutual Funds have spend nearly all their cash
  5. Hedgefunds are shutting down or blowing up due to de-leveraging activity
  6. Cash flows do not support debts being repaid

Interest rates are at or near record lows.

Lets discuss point number one. Interest rates are at record lows and what does that mean? Well just like the prices of merchandise that has not been sold, and are lying in inventory within a very limited market - prices must come down as a mechanism of incentivizing transaction. The facts are, if some one does not want something prices have become cheaper for that thing in order to encourage them to find a reason to make a decision. In this case, rates have been brought very very low in order to try to sell a product that no viable candidate wants or needs. The people who think they need it are not viable clients since they can not afford it. It is important to understand that low prices equal low demand and urgency to sell by market participants. This translates to central banks and other financial market participants desperately attempting to sell debt money at nearly any price since there is little demand for their product - money made out of debt.

Low interest rates are occurring at precisely the most dangerous time to be handing out loans. At the time that real-estate is nearly as overvalued by my analysis as in 2005 and 2006 we are selling credit at the cheapest price available. If there is ever a recipe for disaster this is it. In nearly every case, quality  of credit and mark-ing has aggressively deteriorated since 2009 and additionally, most collateral/asset prices have not reflected inflation, with the exception of stocks, bonds and a select few commodities.

Lets talk about bonds. People seem to think that because the Fed can QE anything they want, even if its not in their charter, then bonds, especially MUNI's are safe, safe, safe. Well, do you remember auction rate securities - I believe that they were marketed as safe, safe, safe way back when - and the obligations did not add up for them just as they don't add up for MUNI's now. There are not enough tax receipts or accruing investments owned by municipalities to pay the obligations on these bonds. The result will be a light switch. When people finally realize that they have been sold on tax free income and the illusion of safe, safe, safe...at prices that absolutely reflect a panic rush into that illusionary safety at pricing that reflects extremely low risk, the door will no longer be open and there will be no bid. Not even one bid...just like auction rate securities.

Muni's are part of the ponzi scheme to push ever increasing debt into the system at low interest rates...this is not dissimilar to the the derivatives markets or other money inflation tools that the fed has used in the past. The requirement for our system to stay afloat is to create new debt money without creating interest or as little of it as possible. Given the mechanisms in place that is a very hard job.

The statistic and ironically question that many experts pose, is: "There is real buying and demand out there!?". Well, my answer is simple, there isn't demand. It's not real and one of the issues with myopically looking at markets is that, as with any thing you stare at all day, you can see things that are not there. There is no demand, and if QE was soo good at doing anything other than blowing bubbles in the bond and stock markets, how come the Fed has been unable to move any economic metric in any significant way without deliberately falsifying and optimistic promoting contrived and trumped up numbers that only get revised lower.  They just can not demonstrate real improvement on the scale that one would expect from QE when debt destruction is not factored in. QE is not increasing the volume of money. That's why its not having an effect. However, it is having a side effect and that's called - bubbles. Bubbles are the only thing the fed is good at, the sad thing is that the taxpayer will get the bill, tax roles and municipal revenues will decline dramatically when this bubble starts to burst.

Contraction in the volume of money (Total Money plus Credit) results in a shortage of cash. The fed is not creating nearly enough cash to deal with the credit destruction that is occurring via insolvency embedded and masked deep within our system. It will not fly. The bankruptcies are already there and what's more, just like long-term capital, people with assets know they are there and will force them out in the open. The FDIC, FHLN, SIPC and other assorted government complacency schemes will not be able to mask the fake accounting hiding insolvency deep within our financial system. JP Morgan, BAC, Goldman Tax, Morgan Stanley and many other institutions are hiding huge losses using mechanisms that no individual would be allowed to use without going to jail. But all this is simply cronyism and regulated fraud.

Lending is primarily occurring between banks and the Treasury

Now lets take a look at point two. Banks are borrowing at 0% and lending to the treasury at 2 to 3%. I don't really care what the percent number, so I am not interested in being precise...the concept is the essence of what I described above. Additionally to that, a setup like that is representative of a bubble, faulty financial regulations and structure - it does not usually end well.

Additionally, due to these contrived dynamics, the yield curves are making it treaterous and expensive to hedge market exposure in many types of lending activity, therefore, it may appear on the surface that banks are making nothing but money with this strategy but the reality, as usual does not connect directly with our perceptions of it nor the media's generally trivial and optimistic portrayals.

Small business is not getting lending activity nor are individuals. The irony is not for the interests trying their level best to incent people to borrow. But that qualified businesses and individuals see no reason to borrow. What's the upside - more liabilities and risk. People are risk adverse and see an unstable future, so even if they can afford and are qualified to borrow the extent of their activity will likely be to refinance existing obligations not to establish new ones.

Stocks are pricing in perfection, cash reserves, de-leveraging and cashflow

Stocks reflect both optimistic assumptions and market dislocation. Stocks have been heavily shorted via false breakouts and just as they are fairly strongly covered and longed at false upside breakouts like the one that we are potentially having right now. Liquidity is constrained, alpha is hard to generate and people are getting more and more desperate. To this end, mutual funds have very little cash left and additionally the shorts have been separated from most of theirs. These conditions setup a wonderful environment for that Fatfinger guy at Citibank pumped by CNBS to reappear. Who will be a buyer of inflation assets when there is limited real cash to buy and Muni's and other debt instruments are imploding?

Ironically, the de-leveraging process is not obvious. One would normally associate de-leveraging with deflating prices and forced selling. However, the reality is the highly correlated and specifically de-correlated activities in the markets are causing disruptions in arb market activity that has traditionally been active with highly leveraged risk taking due to its lower perceived risks. Therefore, de-leveraging is occurring as prices are actually going up in many markets. Arb is not working, just as most risk avoidance schemes are failing aswell. I suspect there will be a lot of body-bags required in the not too distant future.

On the subject of cashflow, there are 22 million unemployed (though probably higher) and a lot of under employed people in the US, that's a lot of pressure on unions, wages and incentive for business to lower costs with less expensive resources. These cycles tend to be self fulfilling, lowering the costs creates more unemployment which creates less demand which ultimately depletes cash and lowers asset values due to continued contraction in the volume of money. The results effect tax receipts, sales and cash reserves. Additionally, many of the US corporations touted as having huge cash stores have that cash held tax free offshore. if they need that cash to operate they will have to give 30+% to uncle sam...that creates a very different looking balance-sheet - one that most people are not factoring in.

Most of all people are paying a hefty price for risk with a rather low potential for return in almost all markets. This creates a dynamic that Fatfinger would just love to revisit. Sugar plum fairies and Ben Bernake fantasies may offer some restful nights at this point, but sleeplessness lurks right around the corner when fraudulent and regulated insolvency is no longer viably masqueradable as solvency.

Portland Maine Mail Boat Ride And Tour

The last time I took a trip on a mail boat was years ago in Grenada.  I read an article about traveling this way and took the boat from Grenada to the islands of the Grenadines and up to St. Vincent.  The boats were old sailboats with duct tape holding the mast together and the rides weren't exactly the safest in the world.  When I heard that there was a mail boat in Portland, Maine I had to take a tour.

Instantly, it wasn't exactly like the trip I had before.  The boat was more of a ship and since it was a sunny day, it was packed with people.  Most of the people on board were tourists with a scattering of workers getting on from an island to go back home.

I love being on a boat.  At the beginning, I was excited to board and feel it move across the bay.  By the looks of it, it seemed many people were prepared for taking a three hour tour with snacks and drinks.  The captain and our tour guide was a woman which I found interesting.  What a fun job to drive a boat to different islands in Maine and being far enough away from tourists that you didn't have to talk to them.

It was the warmest and most beautiful day in Maine by far.  It felt like a hot summer day right in September.  It was a delight.  Throughout the stops, the boat delivered a trailer, mail packages, picked people up and dropped people off for three hours.

After the tour, I took a walk around downtown Portland.  This little city is a favorite by far.  It's so quaint with old brick roads, cute shops and interesting people scattered about.  If you've never been to Maine, I would recommend a visit.  I can almost guarantee that you will fall in love with the area.  I know I have.

Sunday, September 26, 2010

Alison Turner Photography Website www.AlisonTurnerPhoto.com

As you might know, I have a list of goals for the year that I outlined on my 39 goals for my 39th year blog.  One that wasn't on the list but I made a goal for myself is to put my photographs on a site where you can view and easily purchase.  Goal completed! You can find this site by clicking HERE or by simply typing:

www.AlisonTurnerPhoto.com

Many of the photographs on the site are from this road trip the people I've come across during this trip.  I will be adding more as I go along and it will always be a work in progress but it's a nice way to be able to put everything in one place.

You can browse photographs by clicking on "galleries" from the top menu. If there is a photograph you like, click directly on the photo and from there, you will have options to buy prints once you click on the green "buy" button.  If you don't see that button, the image is not for sale.  There are also options to download images once you click on "buy."  Once you go through the steps, it will take you to an online check out and the printing is done through a photoshelter partner.  I've received feedback on the printing and to my delight, the quality is great!  If there are photographs on my blog that you would like to purchase, please let me know and I will put them on this site.

Max and I will get back to the travel blogging but wanted to let you know about a goal completed!  We look forward to sharing more of our adventures with you!

An example of coordinated deception

David Tepper runs Appaloosa Management launched in 1993. He is described as reclusive, a jackel, the master - a titan, a "How do you do it?" type of guy. If there is any example of Joe Kernan eclipsing, even just a little bit, his previous career peddling the stocks of ready to implode Biotech securities - this is it. Kernan talks to this Tepper guy like he's god. Moreover, CNBC produces graphics deliberately designed to deceive. They trump up his performance like a pot-roast attracting a meal. The result is pure deceit - and whats more they end up using this guy as a shill to pump up bullish stock scenarios. So, its a double whammy. This is an example of regulated and deliberate fraud and why I do not watch TV.

Clearly, Tepper is not trying to run money well, though he supposedly did get paid 2.5 billion apparently last year - which I do not believe BTW. He, however, clearly is trying to raise assets well and charge his management fee. So lets review:

Below is  a chart of Tepper's AUM as presented by CNBS (kinda looks like they may have been making money right?):
Below is a chart of some undefined method of computing annualized performance (Again as presented by CNBS, it really looks like this guy is on to something now doesn't it):

Below is a chart of what Tepper's performance numbers represented in the charts above actually look like (Now we know why the fund has a ridiculous name like Appaloosa and we can clearly understand why this chart only flashes on the screen without fanfare as opposed to the others):

The guy took nearly a 50% loss on principle in 98 and several drawdowns that were much bigger. Also, keep in mind that if you were unlucky enough to invest in this mismanaged fee generation machine at one of those peaks you lost anywhere from 75% to 95% of your principle on more than a few occasions. The fact that he can sell this piece of crap fund at all is a miracle. Apparently, the guy does not use leverage, yet generates the beautiful PL picture shown above. Just imagine if he really traded or invested actively, or better yet, used a little bit of leverage.

What I would like to understand is: What difference it makes for me to see Assets Under Management (AUM) in a nice smooth curve and annualized performance, again, in a nice smooth curve. These are derivative values without an explanation of methodology and additionally misleading in reference to quantifying returns. Kernan talks about his annualized performance as if its legendary when apparently, these guys have to be using the peak high watermark performance shown in mid 2010 on the PL chart above to generate those false and deceptive numbers. The reality is that Tepper has no idea what he is talking about, runs a crappy fund and is pumping stocks...get ready to see another 100% swing in PL volatility on this chart.

The reason I am posting this is because people are getting all bullish again given Friday's action, especially shills and amateurs like Tepper. My systems covered their shorts on Thursday afternoon and we closed a respectable week. Personally, I was favoring a consolidation up day on friday though the potential for a larger move would not have been surprising. The fact is that this was a much bigger move than I and most people were expecting simply squeezes the shorts further to the wall and pumps idiots like Tepper so that they can raise assets for trash heaps called Titan's of Hedgefunds. The media is obviously in full regalia pumping the Bernake and Obama re-inflation wealth transfer agenda.

I do not change my view that we stand a the precipice of a substantial decline. My trading activity does not use opinion to make decisions but does use it to make allocation decisions. i.e.: how many percent of assets are we allocating long or short. Right now that view is imparting a bias towards assets allocated biased short if the models choose to go short. I believe that this will be another example of a false breakout, despite the deformed bullish inverse head and shoulders breakout that we have on our hands. One of the other reasons that I believe that is the downright parabolic topping behavior in momentum names that have been highly shorted like NFLX, BIDU, AAPL, AMZN, PCLN. The charts of these securities can not match any optimistic expectation of reality no matter how generous and positive a scenario can be painted. Shorts are being taken down in bodybags - these are the signs of a bubble and a top. What's more the shorts will not be there to buy the market when it actually begins its now obligatory implosion.

Saturday, September 25, 2010

Potatoes and Human Health, Part II

Glycoalkaloids in Commonly Eaten Potatoes

Like many edible plants, potatoes contain substances designed to protect them from marauding creatures. The main two substances we're concerned with are alpha-solanine and alpha-chaconine, because they are the most toxic and abundant. Here is a graph of the combined concentration of these two glycoalkaloids in common potato varieties (1):

We can immediately determine three things from this graph:
  • Different varieties contain different amounts of glycoalkaloids.
  • Common commercial varieties such as russet and white potatoes are low in glycoalkaloids. This is no accident. The glycoalkaloid content of potatoes is monitored in the US.
  • Most of the glycoalkaloid content is in the skin (within 1 mm of the surface). That way, predators have to eat through poison to get to the flesh. Fortunately, humans have peelers.
I'll jump the gun and tell you that the generally accepted safe level of potato glycoalkaloids is 200 mcg/g fresh weight (1). You can see that all but one variety are well below this level when peeled. Personally, I've never seen the Snowden variety in the store or at the farmer's market. It appears to be used mostly for potato chips.

Glycoalkaloid Toxicity in Animals

Potato glycoalkaloids are undoubtedly toxic at high doses. They have caused many harmful effects in animals and humans, including (1, 2):
  • Death (humans and animals)
  • Weight loss, diarrhea (humans and animals)
  • Anemia (rabbits)
  • Liver damage (rats)
  • Lower birth weight (mice)
  • Birth defects (in animals injected with glycoalkaloids)
  • Increased intestinal permeability (mice)
However, it's important to remember the old saying "the dose makes the poison". The human body is designed to handle a certain amount of plant toxins with no ill effects. Virtually every plant food, and a few animal foods, contains some kind of toxic substance. We're constantly bombarded by gamma rays, ultra violet rays, bacterial toxins, free radicals, and many other potentially harmful substances. In excess, they can be deadly, but we are adapted to dealing with small amounts of them, and the right dose can even be beneficial in some cases.

All of the studies I mentioned above, except one, involved doses of glycoalkaloids that exceed what one could get from eating typical potatoes. They used green or blemished potatoes, isolated potato skins, potato sprouts or isolated glycoalkaloids (more on this later). The single exception is the last study, showing that normal doses of glycoalkaloids can aggravate inflammatory bowel disease in transgenic mice that are genetically predisposed to it (3)*.

What happens when you feed normal animals normal potatoes? Not much. Many studies have shown that they suffer no ill effects whatsoever, even at high intakes (1, 2). This has been shown in primates as well (4, 5, 6). In fact, potato-based diets appear to be generally superior to grain-based diets in animal feed. As early as 1938, Dr. Edward Mellanby showed that grains, but not potatoes, aggravate vitamin A deficiency in rats and dogs (7). This followed his research showing that whole grains, but not potatoes, aggravate vitamin D deficiency due to their high phytic acid content (Mellanby. Nutrition and Disease. 1934). Potatoes were also a prominent part of Mellanby's highly effective tooth decay reversal studies in humans, published in the British Medical Journal in 1932 (8, 9).

Potatoes partially protect rats against the harmful effects of excessive cholesterol feeding, when compared to wheat starch-based feed (10). Potato feeding leads to a better lipid profile and intestinal short-chain fatty acid production than wheat starch or sugar in rats (11). I wasn't able to find a single study showing any adverse effect of normal potato feeding in any normal animal. That's despite reading two long review articles on potato glycoalkaloids and specifically searching PubMed for studies showing a harmful effect. If you know of one, please post it in the comments section.

In the next post, I'll write about the effects of potatoes in the human diet, including data on the health of traditional potato-eating cultures... and a curious experiment by the Washington State Potato Commission that will begin on October 1.


*Interleukin-10 knockout mice. IL-10 is a cytokine involved in the resolution of inflammation and these mice develop inflammatory bowel disease (regardless of diet) due to a reduced capacity to resolve inflammation.

Who wants your money...

Remember we have to spend money to find out where its going...

Friday, September 24, 2010

Helicopter Bennie and Greenspan's

Apparently, Bennie and the Greenspan's have been conspiring to inflate. The stock market is clearly their favorite playground. I wonder if Ben call's Greenspan before he hits his magic buttons.

Thursday, September 23, 2010

Overdose...

Red's Eats Lobster Roll

I found the best lobster roll...ever!  I don't go out to eat that often since I just eat what I have around to save money and I usually don't make it a point to visit tourist trap locations.  Each time I have driven by Red's Eats, the line is around the block.  It has to be good.

I attempted to wait in the line at one point and gave up.  The trick is to go when you are not starving and have some time to spare.  I went yesterday when it was raining so the line was only on the side of the building and not on the street so I was excited...it looked promising!

Once I stood in line, I timed how long it would take to get to the counter.  This time around, it was only 45 minutes.  It was well worth the wait.  The lobster rolls sell for $15 a pop and are stuffed with lobster meat (of course) and tenderly hugging the meat is a toasted piece of bread. There isn't any filler to mix with the meat like lettuce or mayo, it's just fresh cooked lobster.  They claim to have 1 1/2 lobsters in one roll and I am not going to dispute that claim.  It looked like that much to me!  No wonder there is a line each time I pass by.

On the way back through, it was around 5pm and there wasn't anyone in line.  I tried my best to feel hungry but I was still full from lunch.  The trick is to go there for dinner and not lunch if you don't want to wait.  All I know is that any lobster rolls from here on out will pale in comparison. If you drive on highway one and come across a little town called, Wiscasset, it's time to stop and get in line at Red's Eats.  You'll be glad you did.

Wednesday, September 22, 2010

A Crash is being setup...

I wanted to make this post tonight because we sit at a precipice in my opinion. I have built a rather large short position and I think the gig is about to be up. Tomorrow will be a very important day and looks probabilistically to me to be the initial thrust lower of a large move - finally.

This may show up as a triple digit loss on the DOW tomorrow but there are, of-course, alternatives and this expectation does not have to play out, or the market could try to break out to the upside of the current setups. However, since I think the probabilities are quite strong for a dramatic directional move, it is appropriate for me to post this and my belief that the move will be down, as indicated - potentially rather dramatically.

I would like to make another set of comments. The markets setup bear flags VIX looks setup in a nice falling wedge which is ready to break out and gold has set every gold bug and even a lot of non-gold bugs on fire. I for one do not really care to focus on the gold debate. But I do think that Mike Shedlock, though right about quite a few things, seems to have gotten just a wee bit over confident. I think his gold view, has merits but I think that despite the fed QE and general debasement there is a rolling shortage of hard unencumbered cash. If cash is expensive then assets including Gold will be cheap. I think gold has over-shot the pattern as indicated on my previous charts and is primed to help fuel the next big move into cash. 1.128 and 1.272 are derivative fib values that I look for as targets and have been fulfilled in the gold market. So, warning warning Will Rogers there may be something of a surprise lurking in them there woods. It will be interesting to see it play out. I am not that focused on Gold and do not trade it extensively, though I do use it and silver as an indicator. If it continues the breakout...that breaking and closing much above 1.272 will certainly invalidate my current perspective.

Update on gold

We are still in the fake out breakout phase...triggering stops at 1.272. There definitely are options for gold to go parabolic. I favor a fake out as the markets over all seem to be de-correlating significantly. One of the symptoms of that is the constant fake outs that we have been seeing.

Tuesday, September 21, 2010

Ralph And Dolly

If you live on an island, most likely you will know your neighbors.  It's a pretty tight knit community here and I was fortunate enough to meet my neighbors for the moment, Dolly and Ralph.  Today, Ralph came over to sit down and chat with me a while.  Once I told him that I've been taking pictures, he told me all about his days as a photographer.  I asked if I could come over to his home in a few hours to take his photograph and he smiled and said, "sure!"

When he was working, Ralph was the official photographer for the state of Maine, among other jobs as a photographer in his career.  He took photographs that were displayed on the state map at the time.  He photographed the governor and his family for each map as well as the local sights, activities, and food of Maine.

It was a pleasure listening to his stories on what equipment he used at the time, how he got his shots and all of the places he went being the official photographer of the state.  I couldn't help but have a smile on my face as I listened to his tales.  He and his wife, Dolly have lived in the same house on this island for forty years. They've been through all different weather conditions and couldn't imagine being anywhere else.



You can't help but fall in love with the people and sights of this town.  It will be hard to leave.

Monday, September 20, 2010

Inflation assets...looking inflated - especially silver

Gratitude

Max and I have been on the road since June.  We have been so fortunate to be able to do this trip and even more so with the help of so many people.  I wanted to take a moment to thank everyone for their words of support and encouragement in your comments and notes to me.  I also wanted to give a special thank you to the generous people that have hosted me in their home and invited me over for a meal with their family...you know who you are.

At this moment, Max and I are in Maine.  We are extremely fortunate to be able to live on an island the past several days from the kindness of new friends, Adam and Susan.  I met these two in June at an Airstream rally and they are the lucky owners of the only Class C Airstream ever made.  Not one of a few...the ONLY one!  I was able to spend some time with them before they left on their journey and I have to say that they are two of the kindest, generous and most inspiring individuals I have been lucky enough to meet.

The fact is, you never know who you will meet in life that will cause you to change direction, think about the one you are in, make hard choices about what you need to do, and so on.  I have received emails from people who say that I have been an inspiration to help them create the life they always wanted.  I think we all know in our heads what we really need to do, but are afraid to make the changes necessary to accomplish a goal.  Sometimes, you hear words that you needed to hear in order to make the leap.  I know that's been the case for me in my life.  It's just a matter of making a choice and sticking with it.  It can be difficult but all that comes from listening to your inner voice will yield the greatest rewards.

Max and I are so grateful for you.

Sunday, September 19, 2010

Potatoes and Human Health, Part I

Potatoes: an Introduction

Over 10,000 years ago, on the shores of lake Titicaca in what is now Peru, a culture began to cultivate a species of wild potato, Solanum tuberosum. They gradually transformed it into a plant that efficiently produces roundish starchy tubers, in a variety of strains that suited the climactic and gastronomic needs of various populations. These early farmers could not have understood at the time that the plant they were selecting would become the most productive crop in the world*, and eventually feed billions of people around the globe.

Wild potatoes, which were likely consumed by hunter-gatherers before domestication, are higher in toxic glycoalkaloids. These are defensive compounds that protect against insects, infections and... hungry animals. Early farmers selected varieties that are low in bitter glycoalkaloids, which are the ancestors of most modern potatoes, however they didn't abandon the high-glycoalkaloid varieties. These were hardier and more tolerant of high altitudes, cold temperatures and pests. Cultures living high in the Andes developed a method to take advantage of these hardy but toxic potatoes, as well as their own harsh climate: they invented chuños. These are made by leaving potatoes out in the open, where they are frozen at night, stomped underfoot and dried in the sun for many days**. What results is a dried potato with a low glycoalkaloid content that can be stored for a year or more.

Nutritional Qualities

From a nutritional standpoint, potatoes are a mixed bag. On one hand, if I had to pick a single food to eat exclusively for a while, potatoes would be high on the list. One reason is that they contain an adequate amount of complete protein, meaning they don't have to be mixed with another protein source as with grains and legumes. Another reason is that a number of cultures throughout history have successfully relied on the potato as their principal source of calories, and several continue to do so. A third reason is that they're eaten in an unrefined, fresh state.

Potatoes contain an adequate amount of many essential minerals, and due to their low phytic acid content (1), the minerals they contain are well absorbed. They're rich in magnesium and copper, two minerals that are important for insulin sensitivity and cardiovascular health (2, 3). They're also high in potassium and vitamin C. Overall, they have a micronutrient content that compares favorably with other starchy root vegetables such as taro and cassava (4, 5, 6). Due to their very low fat content, potatoes contain virtually no omega-6, and thus do not contribute to an excess of these essential fatty acids.

On the other hand, I don't have to eat potatoes exclusively, so what do they have to offer a mixed diet? They have a high glycemic index, which means they raise blood sugar more than an equivalent serving of most carbohydrate foods, although I'm not convinced that's a problem in people with good blood sugar control (7, 8). They're low-ish in fiber, which could hypothetically lead to a reduction in the number and diversity of gut bacteria in the absence of other fiber sources. Sweet potatoes, an unrelated species, contain more micronutrients and fiber, and have been a central food source for healthy cultures (9). However, the main reasons temperate-climate cultures throughout the world eat potatoes is they yield well, they're easily digested, they fill you up and they taste good.

In the next post, I'll delve into the biology and toxicology of potato glycoalkaloids, and review some animal data. In further posts, I'll address the most important question of all: what happens when a person eats mostly potatoes... for months, years, and generations?


* In terms of calories produced per acre.

** A simplified description. The process can actually be rather involved, with several different drying, stomping and leaching steps.

Friday, September 17, 2010

Tops are all around us...

People are convinced that certain things will happen - like inflation or hype-inflation. The gold chart shows that people think that the new currency is gold and that QE means gold to infinity...

I think we are in for downside surprises in all markets...in addition to a lot of false breaks. This is one of them IMO. And if that is the case, its NOT good for any inflation asset.

The Sights of Maine

I love Maine.  The past day, I drove around and took photographs of what I came across.  I have yet to have a lobster roll, but it's on my list of things to do while I am here.

This afternoon, I decided to take a dip in the water and was able to get in the ocean half way until Max decided to run off.  I am soaking up the time I have on this island and am doing a lot of nothing, which is a nice change of pace.