May 3, 2013
MICHAEL WRIGHT: What's this about the European Central Bank charging a negative interest rate on bank deposits?
PUNDITA: Squeak and Awe.
MICHAEL: [laughing] Squeak and Awe?
PUNDITA: That was the snap analysis from a British reporter for CNBC. God bless British wit. It turned out he nailed it; the next day someone from the European Central Bank said that the talk about a negative interest rate at the Bratislava conference was just tossing around ideas, thinking aloud.
MICHAEL: Thinking aloud in front of a public microphone. The euro fell against the dollar on [ECB President Mario Draghi's] talk about a negative interest rate.
PUNDITA: It rebounded once currency traders deciphered Draghi's statements.
MICHAEL: What was his point? Was it a shot across the Federal Reserve's bow? Are we looking at a currency war?
PUNDITA: There are two different types of interest rates in play here. The ECB did make another cut in the interest it charges banks to borrow money from it. Maybe this cut was in part a reaction to the Fed's continued quantitative easing. But Draghi's talk about a negative interest rate relates to the interest the European Union's central bank pays to Eurozone banks that stash a big chunk of their money at the ECB. The interest the ECB currently pays is already at zero percent.
The zero rate is due to pressure on the central bank from Eurozone governments. They don't want the ECB encouraging Eurozone banks to sit on mountains of money; they want them lending the money to businesses to help kickstart the Eurozone economies. This is on the theory that with rapid business expansion will come rapid hiring of many people. This on the theory that with more people employed they'll spend more on making purchases, which will fatten the starving revenues from the Value Added Tax.
MICHAEL: I know there's high unemployment across the Eurozone.
PUNDITA: Yes. It's about 17 percent, and in some Eurozone nations it's much higher than the overall figure. If I recall the unemployment rate in Spain is around 50 percent. So the governments want these unemployed people off the dole and into stores to buy stuff.
All this depends on making the banking system the tip of the spear in EU recession-era fiscal policy. The position of Europe's bankers is, 'Hey! We're not employment agencies.' So their response to the zero interest rate has been to stick their fingers in their ears and chant, 'Lalalalalala we're not listening.'
Draghi's rumination in front of an open mike about a negative interest rate, which works out to a penalty fee, was his way of saying 'Read my lips.'
To show how shocked and awed Europe's bankers were by the threat, another idea to come from the Bratislava confab is that the ECB will directly extend credit to small and medium-size businesses. This is an acknowledgment that if a zero interest rate doesn't scare bankers into putting on a suicide vest, a penalty fee on top of that isn't going to turn them into martyrs either.
However, there are actually a few teeth in Draghi's Squeak and Awe moment. The ECB is saying to the bankers, 'If you won't lend to the little guy, we'll lend out the money you stashed with us. This means we'll collect the interest on the loans, not you. On top of this we just might charge you a fee for lending out your stash.'
MICHAEL: Where are the teeth in this?
PUNDITA: The implication is if the European Union's central bank has to act like a neighborhood lender, what does it need neighborhood banks for? The real threat is always the unspoken one.
MICHAEL: What's the real threat? That they'll nationalize all the banks?
PUNDITA: Many of Europe's banks are already nationalized, or at least partly supported by taxpayers. But these nationalizations are local to each sovereign government in the Eurozone. The real threat, the unspoken one, is that the banking system of each Eurozone country will be put under the control of the European Parliament, with the monetary policy for the entire Eurozone controlled by just one central bank -- the ECB.
MICHAEL: Rahm Emanuel's dictum. Never let a crisis go to waste. Is the fear that they're using the banking system as a backdoor way to force Eurozone nations into a United States of Europe?
PUNDITA: Well if there are sovereign governments that're afraid of this, it's a little late in the day for the fear to manifest. If the friendly neighborhood heroin dealer is handing out free samples, people should realize this isn't going to work out to their benefit. In the same manner, the GIPS governments got into the habit of turning to the ECB for cheap loans after they spent themselves into an impossible load of debt. So they should have seen the Cyprus solution coming a mile away. The solution being that when a government claims it has no collateral whatsoever to put up for another loan, the ECB asks, 'What about the pension funds?'
However, that's the view of EU Skeptics and those who believe in Them. Them being a SMERSH-like organization of fabulously wealthy evil geniuses who're plotting to take over the world. The other side of the story is Benjamin Franklin's advice to American revolutionaries during the war against the British crown: If we don't hang together we'll surely hang separately. Even many Europeans who hate the ECB and the EU Commission support a united Europe on that very same argument. It's just that forging sovereign nations into a single nation is a messy and unpleasant process -- one that can crash governments and lead to much violence.
MICHAEL: I'm with the bankers on this one. European business can't expand into weak consumer demand. It's the same problem we have in the U.S.
PUNDITA: Apple computer's bond offering is to buy up more of their stock, supposedly ahead of returning a big chunk of the cash they're sitting on to their shareholders. That's great for shareholders and especially for funds that have a large position in Apple shares. But this is Apple's way of saying that they're not going to throw their mountain of cash into business expansion because there's not enough consumer demand to expand into, not anywhere on the horizon. Same problem in Europe. Same in China. Same everywhere. And what consumer demand exists is in exports, which run into the stiff headwind of protectionism and the locals doing their own versions of the imported good and services.
MICHAEL: Isn't the Federal Reserve's quantitative easing supposed to solve the problems of slow business growth and weak consumer demand?
PUNDITA: No. It's to export U.S. debt and flush scared money out of bank deposits and into the investment markets and from there into purchases of big-ticket consumer goods and houses. QE is an effort to appease the Ghost of 1929.
MICHAEL: It looks to me as if all it's done is set up currency wars between central banks. Every major central bank is slashing the interest it charges to lend to its banks. What's this doing, besides cheapening every nation's currency? QE isn't encouraging business expansion. It's not putting people back to work. The better than expected [U.S.] job figures released today are a joke when you drill down into the numbers. The spike in the stock market today was just relief that the unemployment figure was not as bad as everyone feared.
All I'm seeing is, you cut your interest rate by so many points, I'll cut mine. Where's this leading? You talk about the Ghost of 1929. Maybe governments are so focused on the ghost they're not seeing the Ghost of 1939 gaining on them.
PUNDITA: Well, I don't think we have immediate worries on that score, not unless Europe and Asia can materialize big blue water navies out of thin air. The problem with doing this is that a big blue water navy costs big money, and it so happens that quantitative easing is meant to flood the banking system with cheap money, not the 'real' economy -- the one that builds blue water navies.
If you want to build a real ship you have to do it with real raw materials that are mined and shipped by companies which have employees who can't pay their bills with quantitative easing. They want to be paid in real money.
MICHAEL: The companies also want to be paid in real money. They aren't going to take on big debt to build those ships; not on the deal that if they build the ships government promises to raise enough in taxes during a recession to buy them.
PUNDITA: Right! [laughing] There's a certain circularity in this situation. The Federal Reserve doesn't actually print money to finance government debt. It creates money -- actually, "near money" -- when it buys government bonds. It does this when the amount of the purchase is recorded in electronic ciphers. Bing! So many more millions of dollars appear on the computer screen.
The Fed does the same thing every time it lends to banks within the Fed's banking system. Same happens when the banks lend money to each other to keep their rate of lending in line with fractional reserve banking regulations. Each loan and repayment creates more near money, which expands the money supply within the banking system. But at the very end of this process of near money creation is a person who can't take the Federal Reserve with him every time he wants to buy school clothes for his kids.
MICHAEL: The individual is expected to act like a government only up until the point where he can't pay his bills.
PUNDITA: That's it. He can't take the pile of school clothes to the checkout counter at Target and tell the clerk, 'Let's do our part to prevent another Great Depression. I don't have the money to pay you. But for the sake of liquidity, you take my handshake as assurance that if you simply ring up the amount of this merchandise and I walk out of the store with it, you'll be keeping the velocity of money going.'
MICHAEL: The clerk will call for the security guards. But nobody's going to put the Fed in jail for shoplifting.
PUNDITA: Yes, well, it's not considered shoplifting when governments and a nation's central banks do it. Any rate, I don't see another world war looming. Right now the Ghost of 1929 rules -- fear of the ghost.
The Ghost
As to a currency war, maybe the ECB's latest bout of QE was partly in reaction to the Fed's May Day announcement that their cheap cost of lending to US banks will get even cheaper or maybe it will get expensive, circumstances warranting.
Now what would these circumstances be? In March, Ben Bernanke pulled a magic number of the air: QE would ease up if the U.S. unemployment number fell below 6.5 percent -- or 6.6 percent; I don't recall -- and stayed below that number for a few months. On May Day -- two days before the latest jobs number was released to the public -- the wording of the announcement was a little different. It boiled down to saying that QE will increase or decrease depending on circumstances that only The Shadow knows.
So until The Shadow speaks, the Fed will continue to pump 85 billion dollars every month into the U.S. banking system. And if other central banks have to keep up by continuing to slash the interest they charge to lend to their own banks, that's their problem. India's central bank is already complaining that it's cut the lending rate so many times it's running out of room to cut.
MICHAEL: This is insanity.
PUNDITA: It's antiquated monetary and economic theories running headlong into the era of mega populations, mega global trade, and floating currency exchange rates. A standard economic theory is that it's possible for a nation to export its way out of a recession. On paper that works, but only when it's just one country or one small world region that's creating the flood of exports and driving down the cost of its currency to make its exports very attractive to foreign buyers. The theory falls apart when currencies float against each other in worth, as they have since 1973, and when much of the world is trying to export its way out of recession, as it is now.
The upshot is not so much a currency war as a chain reaction.
MICHAEL: If they can see this, if they know these old policies don't work today, why do they keep using them?
PUNDITA: Why did high priests keep throwing virgins off a cliff when it was obvious that this was no longer producing a bumper harvest? I once wrote an essay for my blog on this topic. The answer is, 'How do you know that if you stop throwing virgins off a cliff, this won't make the weather gods even angrier?'
Same argument applies when it comes to defending fiscal and monetary policies that were originally designed to ward off a replay of the Great Depression. Have we had another collapse of the banking system since the 1930s? No. If you tell them, 'Yeah but we had a collapse of the shadow banking system in 2007,' they'll tell you, 'That's not the banking system.'
You can't get there from here, Michael. The road is littered with sacred cows -- talismans to ward off the Ghost of 1929.
MICHAEL: Okay, so what are we waiting for? A modern day version of the Conquistadors? A gang of trillionaires with AR-15s to come along and say it's nuts to throw virgins off cliffs?
PUNDITA: [laughing] Listen, I got up at 4 in the morning to watch the news from Europe. I need chocolate and caffeine.
.
Tuesday, December 24
THX 1138 Society
I can't remember the exact month in 2012 when this conversation with Michael Wright took place but I'd guess it was around July-August. At the time I was blowing off steam, saying I was going to quit the USA for good.
*******
MICHAEL: Why don't you just stock up on guns and MREs? This way, if the worst case doesn't materialize you'll have saved yourself the hassle of relocating to another country.
PUNDITA: It's not going to happen that way, if you're visualizing a society descending into anarchy. The Department of Homeland Security is going to make sure of that. Washington, DC ain't Cairo. Metro is already preparing to install eyes in the sky on every subway car in the Washington, DC system -- and not just one per car. A local reporter asked some people on the street what they thought about putting cameras in subway cars. They thought it was a great idea. The buses will be next. We have the Black Bloc and other professional mayhem makers to thank for that. Law enforcement has gotten very efficient at containing mass violence, and they're getting more efficient by the day.
MICHAEL: I think you said at the time that the CCTVs blanketing London weren't any help in stopping the [2011] riots there. And you told me there were so many rioters the justice system was overwhelmed when they finally did catch people through the camera system. Most of them were never arrested, few of the cases the police could make went to trial.
PUNDITA: Scotland Yard was sucker punched. I'd like to see the rioters try a second time. Law enforcement is a fast learner these days because of the terrorism angle. Of course there are cities like Oakland where the mayor sees rioters as exercising their constitutional rights, but those are in a tiny minority. We might see a few hot spots, but there will never again be another Rodney King Riots in the USA, or even the widespread looting that happened in Manhattan during the second blackout there.
MICHAEL: What about the looting in New Orleans when Katrina struck?
PUNDITA: Again, law enforcement is a fast learner. The last time the city was emptied ahead of a hurricane there wasn't a replay of 2005; the mayor put the city on lockdown. Bloomberg put New York City on lockdown ahead of Superstorm Sandy. He did the same for the last hurricane that threatened the city.
We're not heading into a "Mad Max" future. We're heading to THX 1138.
Workers at Google and several other big U.S. companies are happy with benefits like health club, child care, grocery delivery, and maid and laundry service and a bunch of other perks in lieu of hefty pay raises.
Safety. Security. Convenience. The company insuring that its employees can live above their means. What more could one ask of a rule of the people?
As for the drugs aspect of THX 1138, it just hasn't been melded yet into the workforce system except in a roundabout fashion. If an employee exhibits behavior that clearly interferes with his work or with coworkers, it can be cheaper to recommend in a nice way that he see a psychologist if he wants to keep his job. The psychologist sends him to a psychiatrist, where he learns that he needs antidepressant or anti-anxiety medication or both and maybe anti-psychotic medication as well and toss in sleeping pills -- and often the psychologist step can be skipped.
As for the nasty police robots in THX 1138, that won't be necessary once Americans have graduated from the U.S. college system as it's evolving. You get 'em used to the good life young. Free health clubs, free beauty spas, free gourmet coffee -- well, not exactly free, but part of the college education that an applicant's student loan pays for.
MICHAEL: The coal mining company store, updated.
PUNDITA: Yes; someone should dust off that old song. How did it go? "I owe my soul to the company store?"
MICHAEL: It's called Sixteen Tons. It wasn't just the company store. The coal miners weren't paid in money; they were paid in chits, scrip, for everything, including housing. They couldn't save any money. The coal town stores jacked up the prices, so the miners were always in debt, borrowing against their next pay period. It was indentured servitude. I know you don't like labor unions but the unions put a stop to that.
PUNDITA: Then what happened? The pension fund. Then there was still no need to save. So transfer your revolving debt from the company store to Penny's and Sears. This wasn't only the union funds. The big white collar employers set up pension funds they paid for. No need to save; you go get yourself up to your eyeballs in debt and we'll look after you in your old age.
MICHAEL: It was a big step up from debt bondage.
PUNDITA: Really? How long did the pension system last before it crashed? A quarter century? You don't see the sleight of hand? The cage keeps getting prettier but it's still the same cage. Then Americans ask, 'What's happening to our freedom?' What do you need freedom for, if the company provides your dog with free pedicures?
MICHAEL: Man, someone had too much prune juice for breakfast.
.
*******
MICHAEL: Why don't you just stock up on guns and MREs? This way, if the worst case doesn't materialize you'll have saved yourself the hassle of relocating to another country.
PUNDITA: It's not going to happen that way, if you're visualizing a society descending into anarchy. The Department of Homeland Security is going to make sure of that. Washington, DC ain't Cairo. Metro is already preparing to install eyes in the sky on every subway car in the Washington, DC system -- and not just one per car. A local reporter asked some people on the street what they thought about putting cameras in subway cars. They thought it was a great idea. The buses will be next. We have the Black Bloc and other professional mayhem makers to thank for that. Law enforcement has gotten very efficient at containing mass violence, and they're getting more efficient by the day.
MICHAEL: I think you said at the time that the CCTVs blanketing London weren't any help in stopping the [2011] riots there. And you told me there were so many rioters the justice system was overwhelmed when they finally did catch people through the camera system. Most of them were never arrested, few of the cases the police could make went to trial.
PUNDITA: Scotland Yard was sucker punched. I'd like to see the rioters try a second time. Law enforcement is a fast learner these days because of the terrorism angle. Of course there are cities like Oakland where the mayor sees rioters as exercising their constitutional rights, but those are in a tiny minority. We might see a few hot spots, but there will never again be another Rodney King Riots in the USA, or even the widespread looting that happened in Manhattan during the second blackout there.
MICHAEL: What about the looting in New Orleans when Katrina struck?
PUNDITA: Again, law enforcement is a fast learner. The last time the city was emptied ahead of a hurricane there wasn't a replay of 2005; the mayor put the city on lockdown. Bloomberg put New York City on lockdown ahead of Superstorm Sandy. He did the same for the last hurricane that threatened the city.
We're not heading into a "Mad Max" future. We're heading to THX 1138.
Workers at Google and several other big U.S. companies are happy with benefits like health club, child care, grocery delivery, and maid and laundry service and a bunch of other perks in lieu of hefty pay raises.
Safety. Security. Convenience. The company insuring that its employees can live above their means. What more could one ask of a rule of the people?
As for the drugs aspect of THX 1138, it just hasn't been melded yet into the workforce system except in a roundabout fashion. If an employee exhibits behavior that clearly interferes with his work or with coworkers, it can be cheaper to recommend in a nice way that he see a psychologist if he wants to keep his job. The psychologist sends him to a psychiatrist, where he learns that he needs antidepressant or anti-anxiety medication or both and maybe anti-psychotic medication as well and toss in sleeping pills -- and often the psychologist step can be skipped.
As for the nasty police robots in THX 1138, that won't be necessary once Americans have graduated from the U.S. college system as it's evolving. You get 'em used to the good life young. Free health clubs, free beauty spas, free gourmet coffee -- well, not exactly free, but part of the college education that an applicant's student loan pays for.
MICHAEL: The coal mining company store, updated.
PUNDITA: Yes; someone should dust off that old song. How did it go? "I owe my soul to the company store?"
MICHAEL: It's called Sixteen Tons. It wasn't just the company store. The coal miners weren't paid in money; they were paid in chits, scrip, for everything, including housing. They couldn't save any money. The coal town stores jacked up the prices, so the miners were always in debt, borrowing against their next pay period. It was indentured servitude. I know you don't like labor unions but the unions put a stop to that.
PUNDITA: Then what happened? The pension fund. Then there was still no need to save. So transfer your revolving debt from the company store to Penny's and Sears. This wasn't only the union funds. The big white collar employers set up pension funds they paid for. No need to save; you go get yourself up to your eyeballs in debt and we'll look after you in your old age.
MICHAEL: It was a big step up from debt bondage.
PUNDITA: Really? How long did the pension system last before it crashed? A quarter century? You don't see the sleight of hand? The cage keeps getting prettier but it's still the same cage. Then Americans ask, 'What's happening to our freedom?' What do you need freedom for, if the company provides your dog with free pedicures?
MICHAEL: Man, someone had too much prune juice for breakfast.
.
A Brief Look Back
I wrote this post in August or September of 2012.
Most of the deaths from climbing K2 to the summit occur when the climbers descend because they're so exhausted by the climb up that they easily lose their footing on the way down.
In Afghanistan, in 2009, the newly installed Obama administration and the U.S. defense establishment climbed a mountain called the 2008 Financial Meltdown. Despite the fierce recession, saved only by a few percentage points from being an economic depression, the administration backed a wildly expensive nation building/ counterinsurgency effort that extended to Pakistan.
If you want to extract lessons from the experience you're welcome to try, but mountains don't care whether you learn or not.
The bottom line for the Afghan War is that the U.S. government didn't learn its lesson from the Vietnam War. That's because it had an out called U.S. dollar hegemony. Back then, when it looked as if the U.S. dollar was going to crash, the West European governments panicked. They were afraid the Nixon administration's continuation of the war was going to bring the entire international financial system crashing down. In response to the panic, which included repatriation of gold holdings, Nixon ordered the Federal Reserve to shut the gold window.
The act ended the Bretton Woods Agreement of 1945 and the system of fixed exchange rates, which had been teetering on the edge of collapse since 1968. What replaced the agreement was floating exchange rates.
The new international monetary system lurched along with liberal applications of duct tape and Crazy Glue applied by quick-witted currency traders working for the major international oil companies. But the U.S. banking system, the canary in the coal mine, began experiencing a series of crises, one crisis feeding off the next. These were patched over with reams of red tape representing increasingly crippling regulations.
Desperate to survive, the American banks became big players in very risky and exotic investment schemes -- massive junk bond trades and the burgeoning derivatives markets; many of these investments were nothing more than spins of a roulette wheel.
Meanwhile, the international monetary system that had replaced Bretton Woods was crumbling under the weight of the fully globalized era of trade. What had started out post-Bretton Woods as a few major currencies confined to the USA and the "core" West European countries had morphed into a veritable bazaar of currency markets that included "emerging" economies. The launch of the euro, meant to keep international order through consolidation, only added to the melee.
By the turn of the century, the big ticket currency traders here and abroad, following in the path of the bankers here (and by then, abroad), were engaging in increasingly risky plays in order to balance their daily book. This had brought the currency speculators out in force. This time the normal ploys used by central banks to quash the speculators and harry the banks into line weren't working. There were now too many gates to cover, too many players. A vast globe-spanning "shadow" banking system had sprung up, impossible to monitor let alone regulate, and this system was feeding on the go-go derivatives markets and wild currency carry trades -- buying low in one currency and dumping the currency into a runup in its price.
Then one day it all came crashing down. Western Europe, the core of the Eurozone and European Union, took the full brunt of the crash. Germany, which had been carrying the European Union, was especially hard hit. Beside themselves with fury, the leaders of France and Germany wanted blood. I think if they could have attacked the United State militarily, they would have, they were that angry. I suspect it was the nimble British government, with its 'special' relationship with Washington, which proposed a more realistic stopgap measure.
In any case the massive U.S. bailout program called TARP quietly funneled, by circuitous routes, billions in U.S. taxpayer monies to busted European financial firms.
TARP wasn't enough to mollify the French and German governments. They wanted a complete, total, absolute, totalitarian, international regulatory regime extending to every African and Himalayan village and the next galaxy as well, so that never, ever, ever again would a crash in the U.S. financial markets touch off a catastrophe in Europe.
That was the situation Barack Obama was handed on his first day as the President of the United States of America. So you'd best believe he signed every document slammed on his desk that pertained to an international financial stability review board.
But now there are no more outs, no more rabbits to pull out of a hat. Just the long, harrowing climb down the highest mountain.
.
Most of the deaths from climbing K2 to the summit occur when the climbers descend because they're so exhausted by the climb up that they easily lose their footing on the way down.
In Afghanistan, in 2009, the newly installed Obama administration and the U.S. defense establishment climbed a mountain called the 2008 Financial Meltdown. Despite the fierce recession, saved only by a few percentage points from being an economic depression, the administration backed a wildly expensive nation building/ counterinsurgency effort that extended to Pakistan.
If you want to extract lessons from the experience you're welcome to try, but mountains don't care whether you learn or not.
The bottom line for the Afghan War is that the U.S. government didn't learn its lesson from the Vietnam War. That's because it had an out called U.S. dollar hegemony. Back then, when it looked as if the U.S. dollar was going to crash, the West European governments panicked. They were afraid the Nixon administration's continuation of the war was going to bring the entire international financial system crashing down. In response to the panic, which included repatriation of gold holdings, Nixon ordered the Federal Reserve to shut the gold window.
The act ended the Bretton Woods Agreement of 1945 and the system of fixed exchange rates, which had been teetering on the edge of collapse since 1968. What replaced the agreement was floating exchange rates.
The new international monetary system lurched along with liberal applications of duct tape and Crazy Glue applied by quick-witted currency traders working for the major international oil companies. But the U.S. banking system, the canary in the coal mine, began experiencing a series of crises, one crisis feeding off the next. These were patched over with reams of red tape representing increasingly crippling regulations.
Desperate to survive, the American banks became big players in very risky and exotic investment schemes -- massive junk bond trades and the burgeoning derivatives markets; many of these investments were nothing more than spins of a roulette wheel.
Meanwhile, the international monetary system that had replaced Bretton Woods was crumbling under the weight of the fully globalized era of trade. What had started out post-Bretton Woods as a few major currencies confined to the USA and the "core" West European countries had morphed into a veritable bazaar of currency markets that included "emerging" economies. The launch of the euro, meant to keep international order through consolidation, only added to the melee.
By the turn of the century, the big ticket currency traders here and abroad, following in the path of the bankers here (and by then, abroad), were engaging in increasingly risky plays in order to balance their daily book. This had brought the currency speculators out in force. This time the normal ploys used by central banks to quash the speculators and harry the banks into line weren't working. There were now too many gates to cover, too many players. A vast globe-spanning "shadow" banking system had sprung up, impossible to monitor let alone regulate, and this system was feeding on the go-go derivatives markets and wild currency carry trades -- buying low in one currency and dumping the currency into a runup in its price.
Then one day it all came crashing down. Western Europe, the core of the Eurozone and European Union, took the full brunt of the crash. Germany, which had been carrying the European Union, was especially hard hit. Beside themselves with fury, the leaders of France and Germany wanted blood. I think if they could have attacked the United State militarily, they would have, they were that angry. I suspect it was the nimble British government, with its 'special' relationship with Washington, which proposed a more realistic stopgap measure.
In any case the massive U.S. bailout program called TARP quietly funneled, by circuitous routes, billions in U.S. taxpayer monies to busted European financial firms.
TARP wasn't enough to mollify the French and German governments. They wanted a complete, total, absolute, totalitarian, international regulatory regime extending to every African and Himalayan village and the next galaxy as well, so that never, ever, ever again would a crash in the U.S. financial markets touch off a catastrophe in Europe.
That was the situation Barack Obama was handed on his first day as the President of the United States of America. So you'd best believe he signed every document slammed on his desk that pertained to an international financial stability review board.
But now there are no more outs, no more rabbits to pull out of a hat. Just the long, harrowing climb down the highest mountain.
.
When a republic becomes a rule of individual failings
I wrote this essay on February 25, 2013.
A republic -- rule by the people -- is meant to replace the rule of an individual, in particular a king, or the rule of a few. The naysayers among historians warn that a republic inevitably degenerates into tyranny or anarchy, and generally with the first following on the second as surely as night follows day. Neither has happened in the U.S. republic, a point of justified pride amongst Americans. However, something else happened; in a way it's worse than tyranny because its action has been so subtle and incremental that by the time a great many Americans noticed something had gone terribly wrong with their system of government U.S. society was already badly corroded.
What happened is that the way a preponderance of American individuals conducted their personal business came to reflect how the U.S. government conducted its business. And so just around the time the White House realized it could use the U.S. dollar's reserve status with foreign central banks as an endlessly revolving line of credit, the American middle class realized it could live far above its means through the miracle of an endlessly revolving line of credit.
And here we are, decades later, with millions of Americans yelling at their government for its profligate spending and frantically paying down their student loan and credit card debt. Economist Paul Krugman -- a self-termed Keynesian -- is having none of this mea culpa of the masses; he's urging the government to increase its spending as the way to jump-start the moribund American economy. Yet Lord Maynard Keynes did not live to see the day that the masses were strutting around in designer jeans and driving cars that only the rich should be able to afford; if he had, I think he would have told Krugman to put a sock it in it.
The ad agency that created two TV ads for Dodge Acura's third "Season of Reason" campaign showed that it was a better judge of the mood of the body politic than Krugman. The ads, which first aired in November 2012, featured money guru Suze Orman and commonsense psychologist Dr Phil spiriting (in an Acura car) members of the American middle class away from the temptation of overspending on expensive stuff they don't need. When the man in the Dr Phil version of the ad whines that he has his heart set on buying an outlandishly glamorous, gigantic Christmas tree, Phil snarls, "Well tough tinsel" after depositing him at a lot that sells normal-sized and perfectly respectable Christmas trees at a reasonable price.
The ads are also marketing genius because the way Suze and Phil drive the Acuras demonstrates that the car can corner just as well at 60 mph as a Lexus. This demonstration brought forth complaints from some viewers (maybe ones who work for luxury car dealerships?) that the ads promote reckless driving. But everything about the ads projects the message that it's more chic to be smart about money than stupid about it
.
The message is percolating through American society, although the confused and confusing ads aired during this year's Super Bowl indicate that some major companies have yet to acknowledge the message much less act on it. And the American body politic is still a few minutes away from acknowledging that in a republic a rule of the people comes to mirror how individuals act. This aspect of republicanism explains why switching political party dominance through the democratic voting process has changed nothing of substance about the way Washington conducts itself.
The Washington Way has gotten more corrupt, incoherent and ineffective with every decade that's passed. Yet this state of affairs has simply mirrored the way that a preponderance of Americans have conducted themselves.
The huge number of confidence games in the USA, which are on view every week on CNBC cable TV's American Greed: Scams, Scoundrels and Suckers is ample evidence that a great many Americans have gotten corrupt in their ways. As the CNBC documentaries illustrate, often participants in the scams victimize each other with no pricking of conscience long before they themselves fall victim to the con. As Ponzi schemer Bernie Madoff put it after he was behind bars, "I carried those people for years."
Yes he did carry them -- until the music stopped. And his victims knew, every time they received one of his dividend checks, that there was something wrong with a consistent and extraordinarily high rate of return on an investment year after year.
.
A republic -- rule by the people -- is meant to replace the rule of an individual, in particular a king, or the rule of a few. The naysayers among historians warn that a republic inevitably degenerates into tyranny or anarchy, and generally with the first following on the second as surely as night follows day. Neither has happened in the U.S. republic, a point of justified pride amongst Americans. However, something else happened; in a way it's worse than tyranny because its action has been so subtle and incremental that by the time a great many Americans noticed something had gone terribly wrong with their system of government U.S. society was already badly corroded.
What happened is that the way a preponderance of American individuals conducted their personal business came to reflect how the U.S. government conducted its business. And so just around the time the White House realized it could use the U.S. dollar's reserve status with foreign central banks as an endlessly revolving line of credit, the American middle class realized it could live far above its means through the miracle of an endlessly revolving line of credit.
And here we are, decades later, with millions of Americans yelling at their government for its profligate spending and frantically paying down their student loan and credit card debt. Economist Paul Krugman -- a self-termed Keynesian -- is having none of this mea culpa of the masses; he's urging the government to increase its spending as the way to jump-start the moribund American economy. Yet Lord Maynard Keynes did not live to see the day that the masses were strutting around in designer jeans and driving cars that only the rich should be able to afford; if he had, I think he would have told Krugman to put a sock it in it.
The ad agency that created two TV ads for Dodge Acura's third "Season of Reason" campaign showed that it was a better judge of the mood of the body politic than Krugman. The ads, which first aired in November 2012, featured money guru Suze Orman and commonsense psychologist Dr Phil spiriting (in an Acura car) members of the American middle class away from the temptation of overspending on expensive stuff they don't need. When the man in the Dr Phil version of the ad whines that he has his heart set on buying an outlandishly glamorous, gigantic Christmas tree, Phil snarls, "Well tough tinsel" after depositing him at a lot that sells normal-sized and perfectly respectable Christmas trees at a reasonable price.
The ads are also marketing genius because the way Suze and Phil drive the Acuras demonstrates that the car can corner just as well at 60 mph as a Lexus. This demonstration brought forth complaints from some viewers (maybe ones who work for luxury car dealerships?) that the ads promote reckless driving. But everything about the ads projects the message that it's more chic to be smart about money than stupid about it
.
The message is percolating through American society, although the confused and confusing ads aired during this year's Super Bowl indicate that some major companies have yet to acknowledge the message much less act on it. And the American body politic is still a few minutes away from acknowledging that in a republic a rule of the people comes to mirror how individuals act. This aspect of republicanism explains why switching political party dominance through the democratic voting process has changed nothing of substance about the way Washington conducts itself.
The Washington Way has gotten more corrupt, incoherent and ineffective with every decade that's passed. Yet this state of affairs has simply mirrored the way that a preponderance of Americans have conducted themselves.
The huge number of confidence games in the USA, which are on view every week on CNBC cable TV's American Greed: Scams, Scoundrels and Suckers is ample evidence that a great many Americans have gotten corrupt in their ways. As the CNBC documentaries illustrate, often participants in the scams victimize each other with no pricking of conscience long before they themselves fall victim to the con. As Ponzi schemer Bernie Madoff put it after he was behind bars, "I carried those people for years."
Yes he did carry them -- until the music stopped. And his victims knew, every time they received one of his dividend checks, that there was something wrong with a consistent and extraordinarily high rate of return on an investment year after year.
.
Monday, December 23
Vladimir Putin isn't God; he can't keep intervening to save Americans from Hell.
Most of the essays I wrote in 2012 I didn't publish. This is one of them; the only change I've made is the title, which was originally "On the Road to Perdition With U.S. Foreign Policy."
Monday, June 18, 2012
In a voice positively trembling with emotion Senator John McCain told an audience at the American Enterprise Institute the other day that America's founders believed that the Creator endowed Man with certain inalienable rights and that these rights applied to all humankind. This was Mr McCain's fallback rationale for strong U.S. intervention in Syria; this after his verbal house of cards, which built the entire edifice of the Middle East's problems on Assad's regime, became so shaky it risked collapse.
The only major dissenting voice on the Syria panel that followed Mr McCain's speech belonged to one Brian Fishman, a counterterrorism specialist who found himself in the fool's role when he injected clear thinking into Mr McCain's arguments. Did Washington have a Plan B, much less a Plan A, for further U.S. intervention in Syria in case Assad's fall had unintended consequences? Was there a plan for securing the numerous bio-chem WMD sites around Syria in the event Assad was toppled? Had Washington made heads or tails yet of the various opposition groups fighting Assad? These and several other embarrassingly basic questions Mr Fishman believed needed answering before the U.S. waded any deeper into Syria.
Yet it was left to a member of the audience, who identified himself as a teacher, to ask for clarification on Mr McCain's interpretation of the founding fathers' fundamental rationale for disputing the English monarchy's rule of the American colony. The moderator passed the question to the panel; two took a stab at a reply but neither addressed the question head on, and the moderator quickly asked for another question from the audience before the clear-headed Mr Fishman had a chance to weigh in.
The clarification, of course, is that it's a perversion of the intent and meaning of the Declaration of Independence to wrest from it a rationale for U.S. intervention in Syria. However, perverting the meaning of American values to rationalize American intervention in the affairs of foreign countries has become the signature foreign policy of the United States of America. To blame this on President Obama or even the Responsibility to Protect crowd is to be ignorant of history. Over the course of 70 years American foreign policy went from making the world safe from the Nazi Axis to making the world safe from Communism to making the world safe from Soviet Russia to making the world safe from Vladimir Putin but because that last didn't look quite right on the letterhead the proper application of American ideals to foreign policy was recast as making the world safe from authoritarian heads of state.
Makes no matter if the authoritarians have no special truck with the United States, or even that they're al Qaeda's natural enemies or that they hold the line against radical Islamic groups in their nations. (Mr McCain confided to another confused AEI audience member, who was under the impression that the Muslim Brotherhood was an implacable enemy of the United States, that there are "certain layers" of the Muslim Brotherhood the U.S. government can "work with")
Nor does it matter that when it comes to certain authoritarian leaders the U.S. government studiously refrains from invoking the Responsibility to Protect doctrine no matter how many atrocities the strongman carries out against defenseless civilians in his country -- a point raised by another confused AEI audience member.
Yet another confused member of the audience asked Mr McCain how U.S. policymakers were squaring the Islamist leanings of Turkey's government with the country's participation in NATO. Mr McCain explained that Turkey was one of America's staunchest allies and that one shouldn't confuse Islamism with authoritarianism; although he said he was disturbed by the government's detention of many Turkish journalists and about other authoritarian actions such as arresting 100 members of the country's military, he insisted that these actions had nothing to do with Islam.
It would be naive to dismiss John McCain as a crackpot or warmonger; he's become the darling of the American news show circuit since he began advocating for the right to protect Syrian dissidents. His views are very useful to a large number of players. Last week U.S. public television's PBS NewsHour, which is the veritable U.S. branch of the BBC when it comes to reporting on foreign affairs and a supporter of the Democratic Party when reporting on domestic affairs, gave Mr McCain, a Republican, a platform to criticize Mr Obama for what Mr McCain considered his recent 'in your face' attitude toward Pakistan's generals.
Mr McCain is doing a lot of talking on the airwaves these days -- C-SPAN television snapped up his speech at AEI -- and in the process revealing more about the present state of U.S. foreign policy thinking than State Department press conferences.
Mr McCain is the ranking Republican member of the Senate Armed Services Committee, which means he's in a position to know how the winds are blowing in Washington's defense/foreign policy establishment. So, confused Americans need to study the C-SPAN airing of Mr McCain's remarks at AEI and the riveting panel discussion and Q and A session AEI provided so they can stop being confused and get with the program.
Confused Americans can start on their journey of comprehension by noting that few members of the American Enterprise Institute's audience were Americans. The audience represented a cross-section of the International Community; Mr McCain's first questioner was a member of Sweden's Green Party.
So how did we get from the Treaty of Westphalia to the doctrine that any sovereign nation is a candidate for invasion by the International Community if its government inflicts alleged atrocities on its civilian population?
How did we get from the Declaration of Independence to U.S. Secretary of State Hillary Clinton's announcement of U.S. economic sanctions against Uganda's government and any other national government (excluding Pakistan and Afghanistan's, of course, and other --er -- Sharia-compliant governments) if it trampled the human rights of lesbians, homosexuals, bisexuals and gender-switching people?
How we got from there to here is a long story, and if you don't want to walk the cat all the way back to events that led to U.S. involvement in World War One, you can pick up the thread by starting with the boast of a White House official during the Reagan presidency that the U.S. had gotten so skilled at peacefully toppling regimes that it no longer needed the CIA to mount soft coups.
The skill was based on the application of Gene Sharp's codification of tactics for nonviolent protestors. It sounded good on paper, the idea that the American government could create at least the appearance of major internal organized opposition to a foreign government by translating the 'divide and rule' stratagem the English colonizers perfected into one of 'instigate and divide' in order to manage outcomes at the voting booth.
Thus, even though roughly half of Ukrainians wanted good relations with Russia, through divide and instigate tactics in combination with media manipulation, the U.S. government and its NATO allies were able to create the impression that all of Ukraine was protesting against human rights abuses by the Russia-tolerant government, and then ram through a Russia-unfriendly candidate. (The "Orange Revolution.")
The American-backed Ukrainian regime soon collapsed under the weight of reality but the biggest downside of a foreign power weaponizing civil rights protests became evident when the internet era got off the ground: with the widespread dissemination of detailed information about Sharp's codified tactics, authoritarian heads of state were able to study the tactics then deploy countermeasures, which invariably translated into even greater losses of freedom for the populace.
By the time of the botched Green Revolution, which found Iran's Revolutionary Guard positioning snipers on rooftops to pick off Tweeting and Texting civil rights activists who were wielding their cell phone cameras like weapons, it was clear to the International Community that it needed to deploy more muscular ways of unseating authoritarian leaders.
Thus, the ascendency of the argument that with Rwanda and Darfur as the grim examples, it was necessary to codify the right of the International Community to ignore the sovereign rights set forth in the Treaty of Westphalia in order to save populations at the mercy of a government's genocidal campaign.
The argument got complicated when Gamal Mubarak acted to strip Egypt's military of its hold on the Egyptian economy -- a move quietly backed by Gamal's father, Hosni, the titular head of Egypt's government. No genocide was being committed, no democide. But the military, considered by the United States and its NATO allies to be key in upholding Egypt's peace deal with Israel and holding the line against Iran, needed help in dealing with the Gamalists. The Gamalists, for their part, were very determined to free Egypt of its dependence on American handouts and saw a genuinely improved Egyptian economy as the means -- a goal that couldn't be achieved with Egypt's generals standing in the way.
And so U.S. gongos -- the same ones that figure prominently in orchestrating 'color revolutions' -- and hordes of American and European 'activists' were dispatched to help whip up unrest in Egypt, already widespread because of bad economic conditions in the country, in the name of protecting Egyptian human rights.
The Tahrir Square production, or Cecil B. DeMille on the Nile, which didn't require overt NATO military intervention, was so successful in toppling the Gamalists that the U.S. government and its EU/NATO allies turned their sights on Bashar al-Assad's regime. The problem was that most in the Syrian Allawite minority supported Mr Assad and few in the majority wanted an Islamist regime. Some means had to be found to instigate serious trouble and sharply divide the Syrians.
A few days ago the means were inadvertently revealed to CNN viewers by a young American blogger at TIME magazine. I've blanked out the blogger's name, in horror at the fact that she was very proud of the means -- although clearly she hadn't thought. Tech-savvy American and European activists were sent into Syria to show human rights activists there how to flummox the Syrian military's countermeasures against the use of cellphone technology to relay information about civil rights protests. If the instigators had just stopped there, it might have worked out to a standard Gene Sharp-type stage production, but they didn't stop there. They also told the activists that they would arrange with their governments to publicize in their national media outlets every video of Syrian government atrocities that the activists could create.
In other words, all the activists had to do was film instances of the military firing on protesters, and these would be edited and shipped to Western audiences. This was as much telling the activists that there were setting up a kind of global reality television show. Surely, one would hope, they left unspoken that the activists simply had to instigate instances of Syrian military oppression in order to get the footage on global TV, but they didn't need to spell this out to people who wanted Assad gone at any cost.
Do you understand? The Gene Sharp approach, which was perverted by the U.S. and EU governments to serve a variety of geopolitical aims, was about peaceful regime change through the voting booth -- and to achieve this through foreign powers engaging in rather simple media manipulation and the staging of nonviolent civil rights protests. But once the Responsibility to Protect doctrine jelled, once it became acceptable to use military invasion to unseat a regime, Mr Sharp's approach looked old-fashioned. Now, all that's necessary is to create conditions where the International Community could cite mass murder of civilians as the justification to invade a country.
So. Here we are today. Where, exactly, is "here?" On the road to perdition.
.
Monday, June 18, 2012
In a voice positively trembling with emotion Senator John McCain told an audience at the American Enterprise Institute the other day that America's founders believed that the Creator endowed Man with certain inalienable rights and that these rights applied to all humankind. This was Mr McCain's fallback rationale for strong U.S. intervention in Syria; this after his verbal house of cards, which built the entire edifice of the Middle East's problems on Assad's regime, became so shaky it risked collapse.
The only major dissenting voice on the Syria panel that followed Mr McCain's speech belonged to one Brian Fishman, a counterterrorism specialist who found himself in the fool's role when he injected clear thinking into Mr McCain's arguments. Did Washington have a Plan B, much less a Plan A, for further U.S. intervention in Syria in case Assad's fall had unintended consequences? Was there a plan for securing the numerous bio-chem WMD sites around Syria in the event Assad was toppled? Had Washington made heads or tails yet of the various opposition groups fighting Assad? These and several other embarrassingly basic questions Mr Fishman believed needed answering before the U.S. waded any deeper into Syria.
Yet it was left to a member of the audience, who identified himself as a teacher, to ask for clarification on Mr McCain's interpretation of the founding fathers' fundamental rationale for disputing the English monarchy's rule of the American colony. The moderator passed the question to the panel; two took a stab at a reply but neither addressed the question head on, and the moderator quickly asked for another question from the audience before the clear-headed Mr Fishman had a chance to weigh in.
The clarification, of course, is that it's a perversion of the intent and meaning of the Declaration of Independence to wrest from it a rationale for U.S. intervention in Syria. However, perverting the meaning of American values to rationalize American intervention in the affairs of foreign countries has become the signature foreign policy of the United States of America. To blame this on President Obama or even the Responsibility to Protect crowd is to be ignorant of history. Over the course of 70 years American foreign policy went from making the world safe from the Nazi Axis to making the world safe from Communism to making the world safe from Soviet Russia to making the world safe from Vladimir Putin but because that last didn't look quite right on the letterhead the proper application of American ideals to foreign policy was recast as making the world safe from authoritarian heads of state.
Makes no matter if the authoritarians have no special truck with the United States, or even that they're al Qaeda's natural enemies or that they hold the line against radical Islamic groups in their nations. (Mr McCain confided to another confused AEI audience member, who was under the impression that the Muslim Brotherhood was an implacable enemy of the United States, that there are "certain layers" of the Muslim Brotherhood the U.S. government can "work with")
Nor does it matter that when it comes to certain authoritarian leaders the U.S. government studiously refrains from invoking the Responsibility to Protect doctrine no matter how many atrocities the strongman carries out against defenseless civilians in his country -- a point raised by another confused AEI audience member.
Yet another confused member of the audience asked Mr McCain how U.S. policymakers were squaring the Islamist leanings of Turkey's government with the country's participation in NATO. Mr McCain explained that Turkey was one of America's staunchest allies and that one shouldn't confuse Islamism with authoritarianism; although he said he was disturbed by the government's detention of many Turkish journalists and about other authoritarian actions such as arresting 100 members of the country's military, he insisted that these actions had nothing to do with Islam.
It would be naive to dismiss John McCain as a crackpot or warmonger; he's become the darling of the American news show circuit since he began advocating for the right to protect Syrian dissidents. His views are very useful to a large number of players. Last week U.S. public television's PBS NewsHour, which is the veritable U.S. branch of the BBC when it comes to reporting on foreign affairs and a supporter of the Democratic Party when reporting on domestic affairs, gave Mr McCain, a Republican, a platform to criticize Mr Obama for what Mr McCain considered his recent 'in your face' attitude toward Pakistan's generals.
Mr McCain is doing a lot of talking on the airwaves these days -- C-SPAN television snapped up his speech at AEI -- and in the process revealing more about the present state of U.S. foreign policy thinking than State Department press conferences.
Mr McCain is the ranking Republican member of the Senate Armed Services Committee, which means he's in a position to know how the winds are blowing in Washington's defense/foreign policy establishment. So, confused Americans need to study the C-SPAN airing of Mr McCain's remarks at AEI and the riveting panel discussion and Q and A session AEI provided so they can stop being confused and get with the program.
Confused Americans can start on their journey of comprehension by noting that few members of the American Enterprise Institute's audience were Americans. The audience represented a cross-section of the International Community; Mr McCain's first questioner was a member of Sweden's Green Party.
So how did we get from the Treaty of Westphalia to the doctrine that any sovereign nation is a candidate for invasion by the International Community if its government inflicts alleged atrocities on its civilian population?
How did we get from the Declaration of Independence to U.S. Secretary of State Hillary Clinton's announcement of U.S. economic sanctions against Uganda's government and any other national government (excluding Pakistan and Afghanistan's, of course, and other --er -- Sharia-compliant governments) if it trampled the human rights of lesbians, homosexuals, bisexuals and gender-switching people?
How we got from there to here is a long story, and if you don't want to walk the cat all the way back to events that led to U.S. involvement in World War One, you can pick up the thread by starting with the boast of a White House official during the Reagan presidency that the U.S. had gotten so skilled at peacefully toppling regimes that it no longer needed the CIA to mount soft coups.
The skill was based on the application of Gene Sharp's codification of tactics for nonviolent protestors. It sounded good on paper, the idea that the American government could create at least the appearance of major internal organized opposition to a foreign government by translating the 'divide and rule' stratagem the English colonizers perfected into one of 'instigate and divide' in order to manage outcomes at the voting booth.
Thus, even though roughly half of Ukrainians wanted good relations with Russia, through divide and instigate tactics in combination with media manipulation, the U.S. government and its NATO allies were able to create the impression that all of Ukraine was protesting against human rights abuses by the Russia-tolerant government, and then ram through a Russia-unfriendly candidate. (The "Orange Revolution.")
The American-backed Ukrainian regime soon collapsed under the weight of reality but the biggest downside of a foreign power weaponizing civil rights protests became evident when the internet era got off the ground: with the widespread dissemination of detailed information about Sharp's codified tactics, authoritarian heads of state were able to study the tactics then deploy countermeasures, which invariably translated into even greater losses of freedom for the populace.
By the time of the botched Green Revolution, which found Iran's Revolutionary Guard positioning snipers on rooftops to pick off Tweeting and Texting civil rights activists who were wielding their cell phone cameras like weapons, it was clear to the International Community that it needed to deploy more muscular ways of unseating authoritarian leaders.
Thus, the ascendency of the argument that with Rwanda and Darfur as the grim examples, it was necessary to codify the right of the International Community to ignore the sovereign rights set forth in the Treaty of Westphalia in order to save populations at the mercy of a government's genocidal campaign.
The argument got complicated when Gamal Mubarak acted to strip Egypt's military of its hold on the Egyptian economy -- a move quietly backed by Gamal's father, Hosni, the titular head of Egypt's government. No genocide was being committed, no democide. But the military, considered by the United States and its NATO allies to be key in upholding Egypt's peace deal with Israel and holding the line against Iran, needed help in dealing with the Gamalists. The Gamalists, for their part, were very determined to free Egypt of its dependence on American handouts and saw a genuinely improved Egyptian economy as the means -- a goal that couldn't be achieved with Egypt's generals standing in the way.
And so U.S. gongos -- the same ones that figure prominently in orchestrating 'color revolutions' -- and hordes of American and European 'activists' were dispatched to help whip up unrest in Egypt, already widespread because of bad economic conditions in the country, in the name of protecting Egyptian human rights.
The Tahrir Square production, or Cecil B. DeMille on the Nile, which didn't require overt NATO military intervention, was so successful in toppling the Gamalists that the U.S. government and its EU/NATO allies turned their sights on Bashar al-Assad's regime. The problem was that most in the Syrian Allawite minority supported Mr Assad and few in the majority wanted an Islamist regime. Some means had to be found to instigate serious trouble and sharply divide the Syrians.
A few days ago the means were inadvertently revealed to CNN viewers by a young American blogger at TIME magazine. I've blanked out the blogger's name, in horror at the fact that she was very proud of the means -- although clearly she hadn't thought. Tech-savvy American and European activists were sent into Syria to show human rights activists there how to flummox the Syrian military's countermeasures against the use of cellphone technology to relay information about civil rights protests. If the instigators had just stopped there, it might have worked out to a standard Gene Sharp-type stage production, but they didn't stop there. They also told the activists that they would arrange with their governments to publicize in their national media outlets every video of Syrian government atrocities that the activists could create.
In other words, all the activists had to do was film instances of the military firing on protesters, and these would be edited and shipped to Western audiences. This was as much telling the activists that there were setting up a kind of global reality television show. Surely, one would hope, they left unspoken that the activists simply had to instigate instances of Syrian military oppression in order to get the footage on global TV, but they didn't need to spell this out to people who wanted Assad gone at any cost.
Do you understand? The Gene Sharp approach, which was perverted by the U.S. and EU governments to serve a variety of geopolitical aims, was about peaceful regime change through the voting booth -- and to achieve this through foreign powers engaging in rather simple media manipulation and the staging of nonviolent civil rights protests. But once the Responsibility to Protect doctrine jelled, once it became acceptable to use military invasion to unseat a regime, Mr Sharp's approach looked old-fashioned. Now, all that's necessary is to create conditions where the International Community could cite mass murder of civilians as the justification to invade a country.
So. Here we are today. Where, exactly, is "here?" On the road to perdition.
.
Saturday, December 14
The Afterlife and Marxist History
December 13 1:00 AM
Regarding the December 12 post (Zhen Huan, Deadly Beauty -- a reader was offended by my characterization of Zhen Huan's ruthless, murderous rise to power as "adventures" and didn't see Scarlett O'Hara and her life as an apt comparison.
I was making what I thought was a broad point when I mentioned Scarlett. Actually, there can be no apt American comparison because this nation, and even this land going back to 'native' tribes before the arrival of Europeans, never had the kind of government that produced women like Zhen. But such women were by no means limited to China and its imperial eras.
If you want hair-raising reading check out the harim (harem) system in ancient Egypt. The harim wives who had any chance for one of their sons to take the throne were not only murderous and ruthless, they thought and acted like generals. Only the smartest, nastiest wives and sons survived that battlespace.
There were so many plots and counter-plots that finally one pharaoh couldn't take it any longer. He ordered that the entire harim be moved out of the palace -- and out of the capital city. He had a city built just for the harim. That only made things worse because distance from the capital meant it was even easier for the wives to plot and scheme with military brass and courtiers.
From what I read of the harim plots I think it's open to question whether any of the Egyptian kings died a natural death. It seems the choices were death on the battlefield or be murdered by a son or the son's mom. Maybe that explains the elaborate tombs the kings built and the elaborate tales about the afterlife. Are we sure it was really the afterlife?
That's what I would have done, if I'd been a pharaoh trying to survive into my golden years. I would have built the biggest tomb I could afford. Outfitted it with all the comforts of home including an escape hatch and canoe, and enough food and wine to last until the hubbub died down from my funeral and the ascension of a dear son to my throne. Then I would have told my favorite wife,"Okay it's time to move into the tomb now."
My favorite wife being barren, ugly, and smart enough to spend her downtime in the harim gym because she knew I wasn't going to do much of the rowing.
All right, Pundita, back to the salt mines. You'll never guess how I came across that report on Zhen Huan's popularity with Chinese TV audiences. I was following a trail from an article that related to non-conflict aspects of swarming. By the way after I get that essay done on swarming I never want to see or hear the word 'swarm' again.
As to who would end up in the sarcophagus, then -- well remember that I myself am a survivor of the harim system of choosing rulers; how do you think I got on the throne? So I'm not exactly the fountain of compassion. But how much would it take, given stories about the afterlife that the tomb-building industry generated in Egypt? Just say to the favorite faithful retainer, the one with the mind of a five year old, "How would you like the honor of playing me at my funeral? You'll be well compensated in the afterlife."
And notice that these afterlife journeys featured the pharaoh's boat laden with treasures while sailing on the celestial version of the Nile -- treasures small enough to fit into a boat. So while it's said that some pharaohs broke the treasury to build their tombs, are we certain that's exactly what happened in all cases? Were they all complete idiots, these mothers who built a great civilization with the help of their sons?
No, this isn't revisionist history. I'm having fun with fragments of circumstantial evidence based on what I think of human nature. What I think is that it's been a very long time since human nature was born yesterday. I also think there is a tendency for later generations to assume earlier ones were peopled entirely by idiots. This tendency has reached epidemic proportions ever since Marxists took over the telling of history. But see I stop and think: was everyone who lived before Karl Marx an idiot?
The reality is that when you mix together absolute monarchism, polygamy, and inheritance through the male line, you have a brutal system of politicking. Surviving that system must have taken great cunning in addition to ruthlessness.
All right, that's enough. Back to work. Oh wait! -- I've been jabbering so much about ancient Egypt I didn't notice the time. Drat, I'll have to put off writing about swarming again because now I need my beauty sleep. Anyhow, I suppose I wasn't shocked by Zhen Huan given my readings on the harim plots. It was indeed an adventure, triumphing in imperial China's courts.
And speaking of the tomb-building industry, it was big business supporting many trades, many artisans. It wasn't only the tomb; the afterlife was big business. You couldn't just show up in the afterlife with your cat wearing a ratty everyday jeweled collar. It had to be a special collar. Everything had to be special, right down to the dinner plates and toothpicks. All right somebody get the hook.
6:35 AM December 14
More snow in the forecast for this morning. Yes yes I'm hard at work on the swarming post.
.
Regarding the December 12 post (Zhen Huan, Deadly Beauty -- a reader was offended by my characterization of Zhen Huan's ruthless, murderous rise to power as "adventures" and didn't see Scarlett O'Hara and her life as an apt comparison.
I was making what I thought was a broad point when I mentioned Scarlett. Actually, there can be no apt American comparison because this nation, and even this land going back to 'native' tribes before the arrival of Europeans, never had the kind of government that produced women like Zhen. But such women were by no means limited to China and its imperial eras.
If you want hair-raising reading check out the harim (harem) system in ancient Egypt. The harim wives who had any chance for one of their sons to take the throne were not only murderous and ruthless, they thought and acted like generals. Only the smartest, nastiest wives and sons survived that battlespace.
There were so many plots and counter-plots that finally one pharaoh couldn't take it any longer. He ordered that the entire harim be moved out of the palace -- and out of the capital city. He had a city built just for the harim. That only made things worse because distance from the capital meant it was even easier for the wives to plot and scheme with military brass and courtiers.
From what I read of the harim plots I think it's open to question whether any of the Egyptian kings died a natural death. It seems the choices were death on the battlefield or be murdered by a son or the son's mom. Maybe that explains the elaborate tombs the kings built and the elaborate tales about the afterlife. Are we sure it was really the afterlife?
That's what I would have done, if I'd been a pharaoh trying to survive into my golden years. I would have built the biggest tomb I could afford. Outfitted it with all the comforts of home including an escape hatch and canoe, and enough food and wine to last until the hubbub died down from my funeral and the ascension of a dear son to my throne. Then I would have told my favorite wife,"Okay it's time to move into the tomb now."
My favorite wife being barren, ugly, and smart enough to spend her downtime in the harim gym because she knew I wasn't going to do much of the rowing.
All right, Pundita, back to the salt mines. You'll never guess how I came across that report on Zhen Huan's popularity with Chinese TV audiences. I was following a trail from an article that related to non-conflict aspects of swarming. By the way after I get that essay done on swarming I never want to see or hear the word 'swarm' again.
As to who would end up in the sarcophagus, then -- well remember that I myself am a survivor of the harim system of choosing rulers; how do you think I got on the throne? So I'm not exactly the fountain of compassion. But how much would it take, given stories about the afterlife that the tomb-building industry generated in Egypt? Just say to the favorite faithful retainer, the one with the mind of a five year old, "How would you like the honor of playing me at my funeral? You'll be well compensated in the afterlife."
And notice that these afterlife journeys featured the pharaoh's boat laden with treasures while sailing on the celestial version of the Nile -- treasures small enough to fit into a boat. So while it's said that some pharaohs broke the treasury to build their tombs, are we certain that's exactly what happened in all cases? Were they all complete idiots, these mothers who built a great civilization with the help of their sons?
No, this isn't revisionist history. I'm having fun with fragments of circumstantial evidence based on what I think of human nature. What I think is that it's been a very long time since human nature was born yesterday. I also think there is a tendency for later generations to assume earlier ones were peopled entirely by idiots. This tendency has reached epidemic proportions ever since Marxists took over the telling of history. But see I stop and think: was everyone who lived before Karl Marx an idiot?
The reality is that when you mix together absolute monarchism, polygamy, and inheritance through the male line, you have a brutal system of politicking. Surviving that system must have taken great cunning in addition to ruthlessness.
All right, that's enough. Back to work. Oh wait! -- I've been jabbering so much about ancient Egypt I didn't notice the time. Drat, I'll have to put off writing about swarming again because now I need my beauty sleep. Anyhow, I suppose I wasn't shocked by Zhen Huan given my readings on the harim plots. It was indeed an adventure, triumphing in imperial China's courts.
And speaking of the tomb-building industry, it was big business supporting many trades, many artisans. It wasn't only the tomb; the afterlife was big business. You couldn't just show up in the afterlife with your cat wearing a ratty everyday jeweled collar. It had to be a special collar. Everything had to be special, right down to the dinner plates and toothpicks. All right somebody get the hook.
6:35 AM December 14
More snow in the forecast for this morning. Yes yes I'm hard at work on the swarming post.
.
Thursday, December 12
Zhen Huan, Deadly Beauty
Television antiheros have been popular in places like the United States decades, but in China, where the government sits in final judgment on the moral correctness of television content, Zhen is something new and potentially threatening. Chinese censors have not moved to quash Empress in the Palace: the show is an “historical drama,” a permitted typology unlike “time travel” dramas, which are banned for their “frivolous” treatment of history.The above quotes are from a report on supervillaness Zhen Huan's wild popularity in China and the headaches this is giving Chinese authorities. The report, written for the Tea Leaf Nation e-zine by Jianyu Hou and titled China’s Favorite Villainess: Why Chinese TV Viewers Can’t Get Enough of a Qing-era Concubine, outlines Zhen's adventures and raises these fun questions: Does Zhen represent an "ethical race to the bottom," or a blunt statement on the harshest realities of human society, or an editorial on the hypocrisy of China's government?
Zhen is anything but frivolous -- but to a Communist Party trying to promote positivity, she may simply be too nasty.
Not being Chinese, and not having seen the series, I can't offer an opinion. But I have read Gone With the Wind. Is Scarlett O'Hara a creature of the Antebellum South, or the Civil War, or was she always hell on wheels? I suppose she's all those things, but she is also a Survivor, in my view, and one I hope would reside in my breast under the worst circumstances. Maybe many people think the same way. Maybe that's her perennial and universal appeal.
.
Wednesday, December 11
Oh shut up, Barry
The weather is not good in Punditaland, literally and figuratively. Days of glop here in Washington -- snow and sleet and rain and fog and drizzle. Meanwhile I've had a devil of a time getting a writing about Swarm Theory into final form. To top it off --
Financial Illiteracy
America's Windbag-in-Chief wasted 49 minutes of air last week in portraying "income inequality" as the defining issue of our time. Actually the defining issue is that the vast majority of Americans don't know anything about money, much less wealth creation and preservation. This point came home to a number of U.S. state governors after the 2008 financial crash. So they set up what they called "financial literacy" programs for seniors in public high schools in their states -- programs that quickly became mired in controversy.
While something is better than nothing, from what I've read about the programs they aren't going to get Americans far in an understanding of money. And while financial gurus such as Suze Orman are trying to educate the American public about money, much of their advice works out to making prudent investment decisions. That plus 50 cents won't move the needle much on Americans' catastrophic ignorance about money.
If Barry or anyone else asks what use is to know about money if you don't have a job that pays a decent wage: most of the Americans who tell their sad stories to Suze on her weekly show are not only employed, they're also making a good salary -- either as single or two-person family earners. Many of them earn a single or combined income of $100,000+ a year -- a figure that outside a handful of cities in the USA is considered upper income. Yet all of them are deeply in debt, maxxed out on lines of credit, and many are facing eviction from their homes because they can't keep up the mortgage payments. In addition, most are carrying crippling loan payments on debt they racked up to pay for college.
In the USA if you play your cards right you can pull in $40,000/yr in government benefits -- nothing to sneeze at when the benefits include 'affordable' housing. So why bother with a job? And what use it to get a good-paying job when the money you earn slips through your fingers because you don't know anything about money?
Tell me the use, Barry. Go ahead, talk more trash. I would especially enjoy hearing the rap that America is a capitalist society. The American banking system was destroyed, converted to a tool of "monetary" policy. So how can you have a capitalist system after you've killed the banking system? Explain that part to me.
And how can you have a capitalist society when all but a handful of its citizens don't know about money on account of the education system -- public and private -- never taught children about money? Not even at the college level is money a required course in this country, which explains why so many American MBAs lost their shirts in the 2008 financial crash after they fell prey to investment schemes that were barely legal versions of the Ponzi scheme -- or they were outright Ponzi schemes.
Capitalist society, my ass.
A Worker Society, Not a Capitalist One
The United States of America is not a capitalist society. It's a worker society. Taking a shot in the dark, I'd guess that might be a major reason the nation's education system hasn't taught children about money all these generations: if we teach children about money, they'll get rich when they grow up, then they won't want to work, then who will fill all the job slots in the country?
If that was indeed the reasoning, it was based on a fallacy -- the same kind of fallacy Bernard de Mandeville sent up in his "Fable of the Bees" and Paradox of Thrift. I've talked so much this year on my blog about the paradox I'm sick of the topic. But in one sentence, the fallacy is that when left to their own devices everyone in a society will do the same thing with his money. Only by divine fiat, as Mandeville pointed out, could there exist a society in which everyone hoards money to the point of self-destruction.
The same principle would apply to any argument that economically well-off people won't want to work. Many Americans who win lotteries in the millions of dollars continue working at their jobs. Most people enjoy working, and even many filthy rich people work themselves ragged organizing charity events and overseeing philanthropic organizations.
It's Supposed to be a Pool of Menial Jobs, Not an Underclass
That said, it's true that the poorest people are the most willing to do the kind of work that the better off refuse. But what is that saying, when translated into an analysis of America's present financial woes? That you can't educate American children about money because the country needs a permanent underclass of the poor to provide a labor pool for menial jobs?
I believe that is also saying that you need to keep shooting yourself in the foot to improve your health. I believe that's also tripe, given that many of the most menial jobs, such as trash collection, pay good money in the United States because they're unionized. And because America is stuffed with immigrants, legal and illegal, who will fill jobs that better off Americans won't take.
But it's a funny thing about those immigrants. While I lived in New York City decades ago I noticed that many immigrants who flooded into the city had an odd habit of not staying very long in the underclass. They worked at menial jobs, pinched their pennies, pooled their pennies with immigrants of the same background, started small businesses, then larger businesses, then moved to the suburbs and sent their kids to college.
There is a big difference between a permanent pool of menial jobs and a underclass. The pool should be fluid -- watered by new arrivals in the country and those just starting to earn money, such as teenagers, and those Americans who can't afford to start out in the workforce with a college education. But as the experience for many immigrants to the USA illustrates, there is no need for Americans to form a permanent underclass of the poor.
I realize this leaves the problem of how to sell socialist political agendas if there's no underclass to use as a marketing tool. I'll leave that vexing problem to the political pundits.
As for America's self-termed capitalists who preach more capitalism as the solution -- first raise the U.S. banking system from the dead. Then blither to me about capitalism saving the USA.
Capitalist society, my ass. Yes I know I already wrote that. I tend to repeat myself when I reach my limit for listening to tripe.
Let's see, what else before I close out this rant?
Sleight of Hand
For those who don't believe that most Americans don't know the first thing about money -- I'll prove it, right now. Let me ask American readers this: Do you have an insurance policy? A mortgage? A college loan? How about a retirement fund?
If you answered 'Yes' to all or any of those questions, you don't understand money. All those terms -- insurance policy, etc. -- are actually different types of an investment. If you can really afford those investments; i.e., if you've paid into them after all your expenses are met, what you've done is convert monetary wealth to an investment.
If you show me pieces of paper documenting that those investments are part of your wealth, no they're pieces of paper documenting that you've made an investment. Once any part of your wealth is converted to an investment, that part of your wealth ceases to exist. Yes, you can borrow against the pieces of paper and even draw income from some of them. But unless you cash out on the investments the wealth you plowed into them is gone.
To understand why this is so: first realize that wealth, monetary wealth, is not a number, such as million dollars. It's an abundance. It's what money you have left over, after all your expenses including taxes are paid. And no, your savings for a rainy day are not part of your wealth. That money is a projected expense. But if you've already saved, say, six months of salary for the expenses you'd have to meet if you had no income for that long a period, then what you've saved over and above for the rainy day fund is your monetary wealth.
This is why it's perfectly possible for a person in the lowest income bracket to be wealthy, whereas someone in the highest bracket can have nothing but piles of paper instead of wealth.
Yet if people don't understand the meaning of wealth, their wealth are is easy prey for every kind of investment scheme, and outright fraud, that promises to make them wealthy.
All investment frauds operate according to the same verbal sleight of hand: 'Give me your savings to invest, and I'll make you wealthy' -- or wealthier. Time after time the scam works, even with intelligent people. But these people are unaware that if they have money to fork over for investment above all their expenses, they are actually converting their wealth to an investment.
Victims of Ponzi or "pyramid" schemes rarely see more than pennies on the dollar of their investment when the scheme collapses. As to the legitimate investment schemes, some of them are barely legal and several are unethical. I would count college student loans in the latter category. I see little difference between a fraud and a scheme that says, 'You take out a loan against your earnings when you graduate college.' Not unless the student has a legal document stating that on X date he will be hired at X salary by X company. Because there is no company stupid enough to give such a guarantee, any child (and his parents) that signs onto the college loan investment scheme is being misled.
Yet the child isn't even told he's gotten involved in an investment scheme; he's told that he's taking out a loan. He's actually taking a huge financial risk, more an outright gamble than an investment. And yet as an adult he will be held legally responsible for the debt he incurs from the scheme -- even if he fails to find employment or can't bring home a salary that's enough to cover the loan payments. But because the scheme is legal nothing much can be done until Americans wise up about money.
Income inequality, eh? How about talking first about knowledge inequality?
.
Financial Illiteracy
America's Windbag-in-Chief wasted 49 minutes of air last week in portraying "income inequality" as the defining issue of our time. Actually the defining issue is that the vast majority of Americans don't know anything about money, much less wealth creation and preservation. This point came home to a number of U.S. state governors after the 2008 financial crash. So they set up what they called "financial literacy" programs for seniors in public high schools in their states -- programs that quickly became mired in controversy.
While something is better than nothing, from what I've read about the programs they aren't going to get Americans far in an understanding of money. And while financial gurus such as Suze Orman are trying to educate the American public about money, much of their advice works out to making prudent investment decisions. That plus 50 cents won't move the needle much on Americans' catastrophic ignorance about money.
If Barry or anyone else asks what use is to know about money if you don't have a job that pays a decent wage: most of the Americans who tell their sad stories to Suze on her weekly show are not only employed, they're also making a good salary -- either as single or two-person family earners. Many of them earn a single or combined income of $100,000+ a year -- a figure that outside a handful of cities in the USA is considered upper income. Yet all of them are deeply in debt, maxxed out on lines of credit, and many are facing eviction from their homes because they can't keep up the mortgage payments. In addition, most are carrying crippling loan payments on debt they racked up to pay for college.
In the USA if you play your cards right you can pull in $40,000/yr in government benefits -- nothing to sneeze at when the benefits include 'affordable' housing. So why bother with a job? And what use it to get a good-paying job when the money you earn slips through your fingers because you don't know anything about money?
Tell me the use, Barry. Go ahead, talk more trash. I would especially enjoy hearing the rap that America is a capitalist society. The American banking system was destroyed, converted to a tool of "monetary" policy. So how can you have a capitalist system after you've killed the banking system? Explain that part to me.
And how can you have a capitalist society when all but a handful of its citizens don't know about money on account of the education system -- public and private -- never taught children about money? Not even at the college level is money a required course in this country, which explains why so many American MBAs lost their shirts in the 2008 financial crash after they fell prey to investment schemes that were barely legal versions of the Ponzi scheme -- or they were outright Ponzi schemes.
Capitalist society, my ass.
A Worker Society, Not a Capitalist One
The United States of America is not a capitalist society. It's a worker society. Taking a shot in the dark, I'd guess that might be a major reason the nation's education system hasn't taught children about money all these generations: if we teach children about money, they'll get rich when they grow up, then they won't want to work, then who will fill all the job slots in the country?
If that was indeed the reasoning, it was based on a fallacy -- the same kind of fallacy Bernard de Mandeville sent up in his "Fable of the Bees" and Paradox of Thrift. I've talked so much this year on my blog about the paradox I'm sick of the topic. But in one sentence, the fallacy is that when left to their own devices everyone in a society will do the same thing with his money. Only by divine fiat, as Mandeville pointed out, could there exist a society in which everyone hoards money to the point of self-destruction.
The same principle would apply to any argument that economically well-off people won't want to work. Many Americans who win lotteries in the millions of dollars continue working at their jobs. Most people enjoy working, and even many filthy rich people work themselves ragged organizing charity events and overseeing philanthropic organizations.
It's Supposed to be a Pool of Menial Jobs, Not an Underclass
That said, it's true that the poorest people are the most willing to do the kind of work that the better off refuse. But what is that saying, when translated into an analysis of America's present financial woes? That you can't educate American children about money because the country needs a permanent underclass of the poor to provide a labor pool for menial jobs?
I believe that is also saying that you need to keep shooting yourself in the foot to improve your health. I believe that's also tripe, given that many of the most menial jobs, such as trash collection, pay good money in the United States because they're unionized. And because America is stuffed with immigrants, legal and illegal, who will fill jobs that better off Americans won't take.
But it's a funny thing about those immigrants. While I lived in New York City decades ago I noticed that many immigrants who flooded into the city had an odd habit of not staying very long in the underclass. They worked at menial jobs, pinched their pennies, pooled their pennies with immigrants of the same background, started small businesses, then larger businesses, then moved to the suburbs and sent their kids to college.
There is a big difference between a permanent pool of menial jobs and a underclass. The pool should be fluid -- watered by new arrivals in the country and those just starting to earn money, such as teenagers, and those Americans who can't afford to start out in the workforce with a college education. But as the experience for many immigrants to the USA illustrates, there is no need for Americans to form a permanent underclass of the poor.
I realize this leaves the problem of how to sell socialist political agendas if there's no underclass to use as a marketing tool. I'll leave that vexing problem to the political pundits.
As for America's self-termed capitalists who preach more capitalism as the solution -- first raise the U.S. banking system from the dead. Then blither to me about capitalism saving the USA.
Capitalist society, my ass. Yes I know I already wrote that. I tend to repeat myself when I reach my limit for listening to tripe.
Let's see, what else before I close out this rant?
Sleight of Hand
For those who don't believe that most Americans don't know the first thing about money -- I'll prove it, right now. Let me ask American readers this: Do you have an insurance policy? A mortgage? A college loan? How about a retirement fund?
If you answered 'Yes' to all or any of those questions, you don't understand money. All those terms -- insurance policy, etc. -- are actually different types of an investment. If you can really afford those investments; i.e., if you've paid into them after all your expenses are met, what you've done is convert monetary wealth to an investment.
If you show me pieces of paper documenting that those investments are part of your wealth, no they're pieces of paper documenting that you've made an investment. Once any part of your wealth is converted to an investment, that part of your wealth ceases to exist. Yes, you can borrow against the pieces of paper and even draw income from some of them. But unless you cash out on the investments the wealth you plowed into them is gone.
To understand why this is so: first realize that wealth, monetary wealth, is not a number, such as million dollars. It's an abundance. It's what money you have left over, after all your expenses including taxes are paid. And no, your savings for a rainy day are not part of your wealth. That money is a projected expense. But if you've already saved, say, six months of salary for the expenses you'd have to meet if you had no income for that long a period, then what you've saved over and above for the rainy day fund is your monetary wealth.
This is why it's perfectly possible for a person in the lowest income bracket to be wealthy, whereas someone in the highest bracket can have nothing but piles of paper instead of wealth.
Yet if people don't understand the meaning of wealth, their wealth are is easy prey for every kind of investment scheme, and outright fraud, that promises to make them wealthy.
All investment frauds operate according to the same verbal sleight of hand: 'Give me your savings to invest, and I'll make you wealthy' -- or wealthier. Time after time the scam works, even with intelligent people. But these people are unaware that if they have money to fork over for investment above all their expenses, they are actually converting their wealth to an investment.
Victims of Ponzi or "pyramid" schemes rarely see more than pennies on the dollar of their investment when the scheme collapses. As to the legitimate investment schemes, some of them are barely legal and several are unethical. I would count college student loans in the latter category. I see little difference between a fraud and a scheme that says, 'You take out a loan against your earnings when you graduate college.' Not unless the student has a legal document stating that on X date he will be hired at X salary by X company. Because there is no company stupid enough to give such a guarantee, any child (and his parents) that signs onto the college loan investment scheme is being misled.
Yet the child isn't even told he's gotten involved in an investment scheme; he's told that he's taking out a loan. He's actually taking a huge financial risk, more an outright gamble than an investment. And yet as an adult he will be held legally responsible for the debt he incurs from the scheme -- even if he fails to find employment or can't bring home a salary that's enough to cover the loan payments. But because the scheme is legal nothing much can be done until Americans wise up about money.
Income inequality, eh? How about talking first about knowledge inequality?
.
Friday, November 29
Two Myths: Reverse migration of offshored US manufacturing firms, The Lazy Mexican
From the schedule for John Batchelor's radio show (emphasis mine; see the JBS website for links and podcast of the discussion
As to whether Americans themselves can make up the shortfall: in a televised exchange in 2011, a passerby asked a white Wall Street Occupier (virtually all WSOs were white) and jobless college graduate whether he'd ever considered exerting himself to get a job, any kind of job. The Occupier snarled that he wasn't going to work for minimum wage.
And a few hours ago I heard a clip on Majic 102.3 -- a 'black' radio station in the DMV (Greater Washington, DC). The clip was from a recent Tom Joyner morning radio show, which is syndicated in big cities throughout the USA. The clip poked fun at Mexicans working at Wal-Mart on Thanksgiving Day. (Many Americans are protesting any store policy that requires employees to work on the holiday; Wal-Mart is one of the stores but it pays employees an extra day's pay for working on Thanksgiving.) The comedy bit was replete with the kind of phony Mexican accent that would bring forth the wrath of political correctness watchdogs if uttered by a white instead of a black. The reaction to the bit from the other blacks on the show was laughter.
And laughter from a black American audience was the reaction to a black standup comedian's routine more than a year ago, in which he played a black American construction worker trying to persuade a Mexican co-worker to slow down and not work so hard because he was showing him up.
From these and many other indications, somehow I don't think a majority of Americans will want to make up the shortfall in the event of a large reverse diaspora of Mexicans.
Oh well, there's always robotics.
.
Wednesday 27 November 2013 / Hour 2, Block C: Alan Tonelson, Research Fellow at the U.S. Business & Industry Council Educational Fdn, in re: "You name it, Foxconn makes it."Hmmmm. Why does that calculus sound familiar to me? Oh -- Mexico! As to what Americans will do when their Mexican gardeners, nannies, lettuce pickers, and construction workers return in droves to Mexico to work on assembly lines there -- maybe they can make up the shortfall for a few years with workers further south than Mexico. But then hordes of upper- and middle-income Mexicans will be scooping up cheap labor from further south to work as their gardeners, nannies, etc.
[...]
[China's] Foxconn also contributed $10 million to Carnegie-Mellon's robotic program. In the US automotive sector, now booming: inflation-adjusted wages have been falling faster since the recession trick at the end of 2007, faster even than retail wages have. In China, wages rising four times faster than productivity is. The field is still much skewed by Chinese govt subsidies plus Chinese currency manipulation.
In the US, govt regulatory capture driving industry out of much of the Eastern US, many parts of which are industrial wastelands. Washington State losing Boeing to South Carolina. Inshoring: mfg operations return to the US after having migrated overseas -- it's overwhelmingly imaginary!
Foxconn Sends a manufacturing message with New Pennsylvania plant last week, the international electronics mega-manufacturer Foxconn announced plans to invest $30 million in a new robotics plant in Harrisburg, PA. Foxconn, the notorious Chinese low-wage manufacturer of Apple’s iPhone, has become the poster child of U.S. outsourcing in the face of ruinous global labor cost competition. The calculus of manufacturing supremacy is seemingly simple: Low labor costs and taxes, proximity to a large consumer base, and manageable corruption levels equal a sure strategy to attract global firms. [more]
As to whether Americans themselves can make up the shortfall: in a televised exchange in 2011, a passerby asked a white Wall Street Occupier (virtually all WSOs were white) and jobless college graduate whether he'd ever considered exerting himself to get a job, any kind of job. The Occupier snarled that he wasn't going to work for minimum wage.
And a few hours ago I heard a clip on Majic 102.3 -- a 'black' radio station in the DMV (Greater Washington, DC). The clip was from a recent Tom Joyner morning radio show, which is syndicated in big cities throughout the USA. The clip poked fun at Mexicans working at Wal-Mart on Thanksgiving Day. (Many Americans are protesting any store policy that requires employees to work on the holiday; Wal-Mart is one of the stores but it pays employees an extra day's pay for working on Thanksgiving.) The comedy bit was replete with the kind of phony Mexican accent that would bring forth the wrath of political correctness watchdogs if uttered by a white instead of a black. The reaction to the bit from the other blacks on the show was laughter.
And laughter from a black American audience was the reaction to a black standup comedian's routine more than a year ago, in which he played a black American construction worker trying to persuade a Mexican co-worker to slow down and not work so hard because he was showing him up.
From these and many other indications, somehow I don't think a majority of Americans will want to make up the shortfall in the event of a large reverse diaspora of Mexicans.
Oh well, there's always robotics.
.
Monday, November 18
"Anything's Possible Now"
The best portrait of the brave new global order I've come across was published in a column in the April 2013 edition of France's Le Monde Diplomatique magazine. The writer makes no mention of the larger issues surrounding the historic events that unfolded this March in Nicosia, the capital of the tiny island nation of Cyprus, issues which hadn't become apparent at the time. None of this takes away from the writing, which shook up a lot of people. There is just something about it, a quiet finality:
Anything’s possible now
by Serge Halimi
Everything was becoming impossible. It was impossible to increase taxes because that would discourage “entrepreneurs”. It was impossible to protect a country against commercial dumping by low wage countries, as that would contravene free trade agreements. It was impossible to impose even the tiniest tax on financial transactions; most states would need to support it in advance. It was impossible to reduce VAT, as Brussels would have to agree to that.
On 16 March, everything changed. Those orthodox institutions, the European Central Bank (ECB), the International Monetary Fund, the Eurogroup and the German government led by Angela Merkel forced the reluctant Cyprus authorities to take a step which, had it been taken by Hugo Chávez, would have been deemed dictatorial, tyrannical, a blow to liberty, and would have prompted angry editorials.
The step? Automatic withdrawals from bank deposits. The rate of confiscation, initially set at 6.75% to 9.90%, was almost a thousand times as much as the Tobin tax that has been a hot topic for 15 years.
So in Europe, where there’s a will there’s a way. Provided of course that the right target is chosen: not shareholders, not creditors, but the holders of deposit accounts in debt-ridden banks. It is so much easier to rob a pensioner in Cyprus (on the pretext that the real target is a Russian mobster hiding in a tax haven) than it is to extract money from a German banker or a Greek armaments manufacturer or a multinational with dividends tucked away in Ireland, Switzerland or Luxembourg.
Angela Merkel, the IMF and the ECB are forever talking about the imperative need to restore creditors’ “confidence” and the impossibility of increasing public expenditure or renegotiating sovereign debts: the financial markets would come down on any deviation. But how much confidence is it possible to have in the single currency and the sacrosanct guarantee of bank deposits when customers of a European bank can wake up to find that part of their savings has disappeared overnight?
So the 17 member states of the Eurogroup took the unthinkable step. And they will do it again: all citizens of the European Union must realise they are the target of a financial policy determined to rob them of the fruits of their labours on the pretext of balancing the books. Local puppets in Rome, Athens and Nicosia appear resigned to carrying out orders from Brussels, Frankfurt or Berlin with the reward of public rejection (1).
But events in Nicosia should have left the people in Italy, Greece and Cyprus with more than a deep sense of bitterness: they now have the liberating knowledge that, for them too, anything is possible.
Perhaps the embarrassment of some European ministers after their attempt to use force betrayed a fear that they had unwittingly obliterated 30 years of lectures that government should be powerless. Now that we have been reminded government can act forcefully, we are free to contemplate other harsh measures. Germany might not like them. Their targets might be wealthier than modest savers in Nicosia.
(1) See “Fate of Island Depositors was Sealed in Germany”, Financial Times, London, 18 March 2013. None of the Cypriot members of parliament voted for the Eurogroup plan.
.
Anything’s possible now
by Serge Halimi
Everything was becoming impossible. It was impossible to increase taxes because that would discourage “entrepreneurs”. It was impossible to protect a country against commercial dumping by low wage countries, as that would contravene free trade agreements. It was impossible to impose even the tiniest tax on financial transactions; most states would need to support it in advance. It was impossible to reduce VAT, as Brussels would have to agree to that.
On 16 March, everything changed. Those orthodox institutions, the European Central Bank (ECB), the International Monetary Fund, the Eurogroup and the German government led by Angela Merkel forced the reluctant Cyprus authorities to take a step which, had it been taken by Hugo Chávez, would have been deemed dictatorial, tyrannical, a blow to liberty, and would have prompted angry editorials.
The step? Automatic withdrawals from bank deposits. The rate of confiscation, initially set at 6.75% to 9.90%, was almost a thousand times as much as the Tobin tax that has been a hot topic for 15 years.
So in Europe, where there’s a will there’s a way. Provided of course that the right target is chosen: not shareholders, not creditors, but the holders of deposit accounts in debt-ridden banks. It is so much easier to rob a pensioner in Cyprus (on the pretext that the real target is a Russian mobster hiding in a tax haven) than it is to extract money from a German banker or a Greek armaments manufacturer or a multinational with dividends tucked away in Ireland, Switzerland or Luxembourg.
Angela Merkel, the IMF and the ECB are forever talking about the imperative need to restore creditors’ “confidence” and the impossibility of increasing public expenditure or renegotiating sovereign debts: the financial markets would come down on any deviation. But how much confidence is it possible to have in the single currency and the sacrosanct guarantee of bank deposits when customers of a European bank can wake up to find that part of their savings has disappeared overnight?
So the 17 member states of the Eurogroup took the unthinkable step. And they will do it again: all citizens of the European Union must realise they are the target of a financial policy determined to rob them of the fruits of their labours on the pretext of balancing the books. Local puppets in Rome, Athens and Nicosia appear resigned to carrying out orders from Brussels, Frankfurt or Berlin with the reward of public rejection (1).
But events in Nicosia should have left the people in Italy, Greece and Cyprus with more than a deep sense of bitterness: they now have the liberating knowledge that, for them too, anything is possible.
Perhaps the embarrassment of some European ministers after their attempt to use force betrayed a fear that they had unwittingly obliterated 30 years of lectures that government should be powerless. Now that we have been reminded government can act forcefully, we are free to contemplate other harsh measures. Germany might not like them. Their targets might be wealthier than modest savers in Nicosia.
(1) See “Fate of Island Depositors was Sealed in Germany”, Financial Times, London, 18 March 2013. None of the Cypriot members of parliament voted for the Eurogroup plan.
.
Reign of terror
I want to return to Bloomberg/Business Week Economics Editor Peter Coy's observation, "Good-bye globalization, hello balkanization," which he made in his report on the Federal Reserve's proposed regulation to force U.S. branches of major European banks to concede to the same high capitalization rates that are being imposed on U.S. banks. (The Fed Wants Bigger Cushions For Units of Deutsche Bank and Others, September 19, 2013.) I quoted without comment from the report around the time it was published (and discussed with Peter Coy on John Batchelor's radio show). Here I want to discuss a part of the report I didn't quote earlier:
Coy details the rationale for the proposed regulation, which was largely crafted by attorney and Federal Reserve Governor Daniel Tarullo:
Peter Coy did not put the question to Daniel Tarullo during their discussion, which he details in the report -- or if he did, the question was off the record. But there really is no answer, except the truth.
The truth is that first the American banks were tied up with regulatory red tape, then the regulations were used by government to force them to write mortgage loans that had "default" written all over them. Then the banks speculated in junk investment vehicles in the attempt to offset the floods of defaults.
When it call came crashing down, then the Fed and White House wanted the banks to write loans to American big business to stimulate hiring -- at a time when the businesses were slashing costs and payrolls in an attempt to stay afloat. When the banks wouldn't strap on suicide vests, the Fed and White House backed the writing of even more regulations in the form of the Dodd-Frank Act, which isn't even half written yet! So the banks still don't know what they're facing in terms of more regulations.
In the midst of all this madness there were European and other foreign banks willing to take risks to loan to Americans -- risks that American banks would not take, could not take. But after hearing about the proposal to force them under the rule of the Federal Reserve, they're having second thoughts.
Peter Coy reported:
.
Coy details the rationale for the proposed regulation, which was largely crafted by attorney and Federal Reserve Governor Daniel Tarullo:
Economists on the staff of the Federal Reserve have documented what looks like genuine harm to the U.S. economy from a 2011 episode in which foreign banks operating in the U.S. were temporarily starved of cash. The Fed economists found that in the spring of 2011, investors began to fret that a Greek default would damage European banks that had lent to Greece. Money-market mutual funds that had lent to the European banks by buying certificates of deposit were forced to cut back their loans because their own customers were withdrawing deposits.I suspect that every economist at the Federal Reserve lives in fear of Daniel Tarullo, so I question the working paper's calculations and conclusions. But taking the paper at face value, how is that foreign banks cutting back lending to Americans harmed the U.S. economy? In other words, how is that Americans who tried to borrow $20 billion from foreign banks couldn't turn to American banks for the loans?
What happened next never made the newspapers. According to the latest version of a working paper by three Fed staff economists, published in July, the European bank branches in the U.S. appealed to their home offices for funds to replace what they’d lost, but they didn’t get all they needed. They were forced to cut back lending in the U.S. by about $20 billion, the working paper said. That’s not a lot in an almost $16 trillion U.S. economy, but to the Fed it was a taste of what might happen in a more serious funding squeeze.
Peter Coy did not put the question to Daniel Tarullo during their discussion, which he details in the report -- or if he did, the question was off the record. But there really is no answer, except the truth.
The truth is that first the American banks were tied up with regulatory red tape, then the regulations were used by government to force them to write mortgage loans that had "default" written all over them. Then the banks speculated in junk investment vehicles in the attempt to offset the floods of defaults.
When it call came crashing down, then the Fed and White House wanted the banks to write loans to American big business to stimulate hiring -- at a time when the businesses were slashing costs and payrolls in an attempt to stay afloat. When the banks wouldn't strap on suicide vests, the Fed and White House backed the writing of even more regulations in the form of the Dodd-Frank Act, which isn't even half written yet! So the banks still don't know what they're facing in terms of more regulations.
In the midst of all this madness there were European and other foreign banks willing to take risks to loan to Americans -- risks that American banks would not take, could not take. But after hearing about the proposal to force them under the rule of the Federal Reserve, they're having second thoughts.
Peter Coy reported:
Deutsche Bank Chief Financial Officer Stefan Krause told analysts in July that rather than raise more capital to comply -- say, by selling shares to the public -- the German bank would book some operations in other countries.I would think, I would hope, that such statements caused the Fed to reconsider its proposed regulation, but I'm not seeing evidence that rational actions are informing American monetary or fiscal policy. What I'm seeing is a reign of terror.
.
Remember: It's not a currency war if G20 says it isn't
By the way Ellen Brown mentioned a few days ago that there are now more nations in the G20 than 20; I think by her count it's 27, but moving along just a couple of months ago the G20 at one confab determined that the Japanese Central Bank's move to weaken its currency wasn't indication of a currency war because it was being done for the good of Japan's economy. Well, now that they know it's not a currency war, other central banks jumped on the currency devaluation bandwagon, as the following report, which is already old news -- but still important news -- indicates.
Regarding the last quote in the report, "People aren’t as content as they once were about being on the end of dollar weakness, and hence an appreciation of their own currencies," I think the comma confuses the point. He means that being "on the end" of (U.S.) dollar weakness makes other currencies appreciate against the dollar, not that central banks are trying to appreciate their currencies against the dollar. (See , this is why AI still has a long way to go.)
Race to Bottom Resumes as Central Bankers Ease Anew: Currencies
By Emma Charlton and John Detrixhe
November 11, 2013
Business Week/Bloomberg News
The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.
The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”
“It’s a very real concern of these countries to keep their currencies weak,” Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 telephone interview. ECB President Mario Draghi, “persistently since earlier this year, has been trying to talk down the euro,” Merk said.
With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that may hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies.
Mantega’s ‘War’
The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”
“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London, said in a Nov. 8 telephone interview.
The ECB lowered its benchmark rate on Nov. 7 by a quarter-point to a record 0.25 percent, a reduction anticipated by just three of 70 economists in a Bloomberg survey. Draghi said the cut was to reduce the risk of a “prolonged period” of low inflation and the euro’s strength “didn’t play any role” in the decision. Euro-region consumer-price inflation has remained below the ECB’s 2 percent ceiling for the past nine months.
The euro slumped as much as 1.6 percent against the dollar on the day of the rate cut, the most in almost two years, before ending the week at $1.3367. It rose 0.3 percent today to $1.3406 at 12:14 p.m. in New York.
The shared currency pared gains versus a basket of nine developed-market peers this year to 5.8 percent, from as much as 7.2 percent at its Oct. 29 peak, Bloomberg Correlation-Weighted Indexes show.
‘Quite Weak’
“There are places in the world where economies are generally quite weak, where inflation is already low,” Alan Ruskin, global head of Group-of-10 foreign exchange in New York at Deutsche Bank AG, the world’s largest currency trader, said in a Nov. 8 phone interview. “Japan was in that mix for 20-odd years. Nobody wants to go there” and “the talk from Draghi shows they’re taking the disinflation story very seriously. The Czech Republic is the same story.”
The Czech National Bank’s drove its koruna down by 4.4 percent versus the euro on Nov. 7, the most since the single currency’s creation in 1999, when it intervened to spur inflation. Governor Miroslav Singer pledged to keep selling koruna “for as long as needed” to boost growth.
Peru’s central bank on Nov. 4 unexpectedly reduced borrowing costs for the first time in four years as slower export growth imperils the commodity-dependent economy. The board cut the overnight rate by a quarter-point to 4 percent from 4.25 percent, surprising all 15 economists surveyed by Bloomberg who forecast no change.
Trade Slowdown
The IMF last month cut its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, from July’s projected rates of 3.1 percent and 3.8 percent. It also sees inflation in developed economies remaining short of the 2 percent rate favored by most central banks.
Growth in global trade may slow to 2.5 percent in 2013, the new head of the World Trade Organization said after a Sept. 5-6 summit of G-20 nations in St. Petersburg, Russia, down from the organization’s previous estimate in April of 3.3 percent. Even so, the G-20 participants agreed to “refrain from competitive devaluation” and not “target our exchange rates for competitive purposes.”
“The idea that central banks are setting policies to weaken their currencies has always been overstated,” Adam Cole, Royal Bank of Canada’s head of G-10 currency strategy in London, said in a Nov. 8 phone interview. “In most cases they’re happy to see their currencies fall, but they’re not going out of their way to induce weakness.”
Lufthansa, LVMH
German airline Deutsche Lufthansa AG cited the strong euro last month when its profit estimate fell short of analysts’ forecasts, while French luxury-goods maker LVMH Moet Hennessy Louis Vuitton SA said on Oct. 16 that the currency’s gains versus the dollar and Japanese yen shaved 6 percent off third-quarter revenue.
Lufthansa said on Oct. 22 this year’s operating profit will be 600 million euros to 700 million euros, below an estimate of about 918 million euros by analysts surveyed by Bloomberg. LVMH, whose Louis Vuitton brand’s founder built his reputation as a luggage-maker for the wife of Napoleon III, said it has hedged 90 percent of its euro-yen exposure for this year and about 66 percent for next year.
“Do I think the euro-zone central bank wanted to engage in a currency war?” Lane Newman, a director of foreign exchange at ING Groep NV in New York, said in a Nov. 8 phone interview. “I think, post facto, yes. Because they cut rates knowing it was going to put the euro on the back foot.”
‘Attentive’ ECB
While the ECB hasn’t said it’s explicitly targeting the euro, comments from policy makers signal they consider exchange rates in their decisions. An ECB spokesman declined to comment when contacted on Nov. 8.
“As you know, the exchange rate is not a policy target for the ECB,” Draghi said at a press conference on Oct. 2. “The target for the ECB is medium-term price stability. However, the exchange rate is important for growth and for price stability. And we are certainly attentive to these developments.”
At the same time the ECB is easing, the U.S. Federal Reserve said it will keep printing enough dollars to buy $85 billion of bonds each month because the economy is still too weak to stand on its own. The Bank of Japan is also employing a policy of quantitative easing.
‘New Era’
Reserve Bank of New Zealand Governor Graeme Wheeler has cited the risk of slow inflation and currency gains as reasons for not raising the nation’s official cash rate from a record-low 2.5 percent this year. That’s even with the need to tackle what he has described as an overheated housing market. The kiwi rose 4.2 percent in the past four months, Bloomberg Correlation Indexes show.
Australia’s dollar is 27 percent overvalued against the greenback, according to a gauge of purchasing-power parity compiled by the Paris-based Organization for Economic Cooperation and Development.
The Reserve Bank of Australia lowered its growth estimate for next year to 2 percent to 3 percent, compared with 2.5 percent to 3.5 percent three months ago. South Korea’s finance ministry said last month it may act to counter “herd behavior” in the currency, as the Bank of Korea lowered its outlook for the economy.
The Fed said in October it needed to see more evidence of a U.S. recovery before it trims the Treasury and mortgage-bond purchases it uses to pump money into the financial system.
Analysts surveyed by Bloomberg last week predicted the Fed would delay tapering until March even though a Labor Department report on Nov. 8 showing employers added a larger-than-forecast 204,000 workers in October.
“People aren’t as content as they once were about being on the end of dollar weakness, and hence an appreciation of their own currencies,” Bank of New York’s Mellor said. “We’ve had a change in tone from South Korea, Australia and New Zealand.”
END REPORT
.
Regarding the last quote in the report, "People aren’t as content as they once were about being on the end of dollar weakness, and hence an appreciation of their own currencies," I think the comma confuses the point. He means that being "on the end" of (U.S.) dollar weakness makes other currencies appreciate against the dollar, not that central banks are trying to appreciate their currencies against the dollar. (See , this is why AI still has a long way to go.)
Race to Bottom Resumes as Central Bankers Ease Anew: Currencies
By Emma Charlton and John Detrixhe
November 11, 2013
Business Week/Bloomberg News
The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.
The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”
“It’s a very real concern of these countries to keep their currencies weak,” Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 telephone interview. ECB President Mario Draghi, “persistently since earlier this year, has been trying to talk down the euro,” Merk said.
With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that may hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies.
Mantega’s ‘War’
The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”
“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London, said in a Nov. 8 telephone interview.
The ECB lowered its benchmark rate on Nov. 7 by a quarter-point to a record 0.25 percent, a reduction anticipated by just three of 70 economists in a Bloomberg survey. Draghi said the cut was to reduce the risk of a “prolonged period” of low inflation and the euro’s strength “didn’t play any role” in the decision. Euro-region consumer-price inflation has remained below the ECB’s 2 percent ceiling for the past nine months.
The euro slumped as much as 1.6 percent against the dollar on the day of the rate cut, the most in almost two years, before ending the week at $1.3367. It rose 0.3 percent today to $1.3406 at 12:14 p.m. in New York.
The shared currency pared gains versus a basket of nine developed-market peers this year to 5.8 percent, from as much as 7.2 percent at its Oct. 29 peak, Bloomberg Correlation-Weighted Indexes show.
‘Quite Weak’
“There are places in the world where economies are generally quite weak, where inflation is already low,” Alan Ruskin, global head of Group-of-10 foreign exchange in New York at Deutsche Bank AG, the world’s largest currency trader, said in a Nov. 8 phone interview. “Japan was in that mix for 20-odd years. Nobody wants to go there” and “the talk from Draghi shows they’re taking the disinflation story very seriously. The Czech Republic is the same story.”
The Czech National Bank’s drove its koruna down by 4.4 percent versus the euro on Nov. 7, the most since the single currency’s creation in 1999, when it intervened to spur inflation. Governor Miroslav Singer pledged to keep selling koruna “for as long as needed” to boost growth.
Peru’s central bank on Nov. 4 unexpectedly reduced borrowing costs for the first time in four years as slower export growth imperils the commodity-dependent economy. The board cut the overnight rate by a quarter-point to 4 percent from 4.25 percent, surprising all 15 economists surveyed by Bloomberg who forecast no change.
Trade Slowdown
The IMF last month cut its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, from July’s projected rates of 3.1 percent and 3.8 percent. It also sees inflation in developed economies remaining short of the 2 percent rate favored by most central banks.
Growth in global trade may slow to 2.5 percent in 2013, the new head of the World Trade Organization said after a Sept. 5-6 summit of G-20 nations in St. Petersburg, Russia, down from the organization’s previous estimate in April of 3.3 percent. Even so, the G-20 participants agreed to “refrain from competitive devaluation” and not “target our exchange rates for competitive purposes.”
“The idea that central banks are setting policies to weaken their currencies has always been overstated,” Adam Cole, Royal Bank of Canada’s head of G-10 currency strategy in London, said in a Nov. 8 phone interview. “In most cases they’re happy to see their currencies fall, but they’re not going out of their way to induce weakness.”
Lufthansa, LVMH
German airline Deutsche Lufthansa AG cited the strong euro last month when its profit estimate fell short of analysts’ forecasts, while French luxury-goods maker LVMH Moet Hennessy Louis Vuitton SA said on Oct. 16 that the currency’s gains versus the dollar and Japanese yen shaved 6 percent off third-quarter revenue.
Lufthansa said on Oct. 22 this year’s operating profit will be 600 million euros to 700 million euros, below an estimate of about 918 million euros by analysts surveyed by Bloomberg. LVMH, whose Louis Vuitton brand’s founder built his reputation as a luggage-maker for the wife of Napoleon III, said it has hedged 90 percent of its euro-yen exposure for this year and about 66 percent for next year.
“Do I think the euro-zone central bank wanted to engage in a currency war?” Lane Newman, a director of foreign exchange at ING Groep NV in New York, said in a Nov. 8 phone interview. “I think, post facto, yes. Because they cut rates knowing it was going to put the euro on the back foot.”
‘Attentive’ ECB
While the ECB hasn’t said it’s explicitly targeting the euro, comments from policy makers signal they consider exchange rates in their decisions. An ECB spokesman declined to comment when contacted on Nov. 8.
“As you know, the exchange rate is not a policy target for the ECB,” Draghi said at a press conference on Oct. 2. “The target for the ECB is medium-term price stability. However, the exchange rate is important for growth and for price stability. And we are certainly attentive to these developments.”
At the same time the ECB is easing, the U.S. Federal Reserve said it will keep printing enough dollars to buy $85 billion of bonds each month because the economy is still too weak to stand on its own. The Bank of Japan is also employing a policy of quantitative easing.
‘New Era’
Reserve Bank of New Zealand Governor Graeme Wheeler has cited the risk of slow inflation and currency gains as reasons for not raising the nation’s official cash rate from a record-low 2.5 percent this year. That’s even with the need to tackle what he has described as an overheated housing market. The kiwi rose 4.2 percent in the past four months, Bloomberg Correlation Indexes show.
Australia’s dollar is 27 percent overvalued against the greenback, according to a gauge of purchasing-power parity compiled by the Paris-based Organization for Economic Cooperation and Development.
The Reserve Bank of Australia lowered its growth estimate for next year to 2 percent to 3 percent, compared with 2.5 percent to 3.5 percent three months ago. South Korea’s finance ministry said last month it may act to counter “herd behavior” in the currency, as the Bank of Korea lowered its outlook for the economy.
The Fed said in October it needed to see more evidence of a U.S. recovery before it trims the Treasury and mortgage-bond purchases it uses to pump money into the financial system.
Analysts surveyed by Bloomberg last week predicted the Fed would delay tapering until March even though a Labor Department report on Nov. 8 showing employers added a larger-than-forecast 204,000 workers in October.
“People aren’t as content as they once were about being on the end of dollar weakness, and hence an appreciation of their own currencies,” Bank of New York’s Mellor said. “We’ve had a change in tone from South Korea, Australia and New Zealand.”
END REPORT
.
Bitcoin surges 24% to new high: big financial news out of Asia today
Bitcoin surges 24% to new high as popularity growsSee the CNBC site for the rest of the report and links to a CNBC report on whether China can "make or break Bitcoin," and a discussion about whether Bitcoin is the real deal or just a digital version of tulip mania.
By John Phillips, Digital Editor for CNBC.com
Monday, 18 Nov 2013 - 2:36 AM ET
CNBC
Bitcoin touched a fresh all-time high on Monday as the digital currency continued to gain favor with investors.
The virtual currency rose to just under $608 on Mt. Gox exchange Monday afternoon in Asia, up 24.5 percent from the same time on Sunday.
Its latest gains come as the potential for regulation hangs over the market, with a U.S. Senate committee to discuss virtual currencies later on Monday.
According to Bobby Lee, CEO of BTC China – the world's largest Bitcoin exchange by volume – the price rise reflects increased awareness about the digital currency.
"There's more awareness of Bitcoin following recent press coverage," Lee said, highlighting the Bitcoin Singapore conference held last week and recent press coverage in China.
[...]
.
Wednesday, November 13
Poland nationalizes retirement accounts
Jim Sinclair's comment on this September news: "Nationalization of
retirement accounts just occurred in Poland. It is shocking in that it
has no compensation so far in this watershed event. Note how it is spun
as an OVERHAUL of the retirement system." Yup.
Poland reduces public debt through pension funds overhaul
Wed Sep 4, 2013 12:56pm EDT
By Dagmara Leszkowicz and Chris Borowski
By Dagmara Leszkowicz and Chris Borowski
* Reform moves bond assets from private to state fund
* Some equity assets to gradually move to state as well
* Changes seen reducing Polish public debt by 8 pct of GDP
* Funds say moves could be unconstitutional
* Warnings that private pension funds could be wiped out
* Some equity assets to gradually move to state as well
* Changes seen reducing Polish public debt by 8 pct of GDP
* Funds say moves could be unconstitutional
* Warnings that private pension funds could be wiped out
WARSAW, Sept 4
(Reuters) - Poland said on Wednesday it will transfer to the state many
of the assets held by private pension funds, slashing public debt but
putting in doubt the future of the multi-billion-euro funds, many of
them foreign-owned.
The changes went
deeper than many in the market expected and could fuel investor concerns
that the government is ditching some business-friendly policies to try
to improve its flagging popularity with voters.
The Polish pension
funds' organisation said the changes may be unconstitutional because the
government is taking private assets away from them without offering any
compensation.
Announcing the
long-awaited overhaul of state-guaranteed pensions, Prime Minister
Donald Tusk said private funds within the state-guaranteed system would
have their bond holdings transferred to a state pension vehicle, but
keep their equity holdings.
He said that what
remained in citizens' pension pots in the private funds will be
gradually transferred into the state vehicle over the last 10 years
before savers hit retirement age.
The reform is "a
decimation of the ...(private pension fund) system to open up fiscal
space for an easier life now for the government," said Peter Attard
Montalto of Nomura. "The government has an odd definition of private
property given it claims this is not nationalisation."
Tusk said people
joining the pension system in the future would not be obliged to pay
into the private part of the system. Depending on the finer points, this
could mean still fewer assets in the private funds.
[...]
Stratfor report: Aging infrastructure on critical US inland waterways
"The drought in 2012 brought to the forefront how unplanned delays, or even the potential for unplanned delays, can affect both transport operators and commodity prices."
United States: The Problem of Aging Infrastructure on Inland Waterways
Cargo ships pass along the Mississippi River on April 13, 2011, in New Orleans.
Mario Tama/Getty Images
Summary
The United States continues to face
the problem of aging infrastructure on major water-based transport
routes. A new waterways bill that is likely to be finalized soon -- the
first such legislation since 2007 -- addresses some of the
inefficiencies in the current system. However, the larger looming
problem of insufficient funding remains. The U.S. inland waterways
infrastructure is old, much-needed improvements have been delayed and
the total cost of rehabilitation is expected to rise.
This is not a new or unknown problem, but measures to address the problem have been limited, and there is no immediate, rapid solution. Navigable rivers are one of the United States' inherent geographic benefits and have contributed to the nation's economic success. Failure to update and maintain the inland waterways could lead to disruptions in the supply chain and hurt U.S. competitiveness on the global export market.
This is not a new or unknown problem, but measures to address the problem have been limited, and there is no immediate, rapid solution. Navigable rivers are one of the United States' inherent geographic benefits and have contributed to the nation's economic success. Failure to update and maintain the inland waterways could lead to disruptions in the supply chain and hurt U.S. competitiveness on the global export market.
Analysis
The United States' inland waterways
system -- more than 19,000 kilometers (12,000 miles) of navigable
routes maintained by the U.S. Army Corps of Engineers overlaid with
expansive farmlands -- has contributed greatly to the country's success. Ongoing
use of the waterway system requires the maintenance of infrastructure
to meet usage demand, including dredging of ports and rivers, and the
operation and maintenance of dams, levees and locks.
The Mississippi and Ohio rivers and the Illinois waterways, the busiest avenues for commercial traffic on inland waterways, all have expansive lock systems. The locks make navigating a river easier, sequestering vessels before raising or lowering the water level in a chamber in order to compensate for changes in the river's level. Most of these locks were constructed in the early 20th century, with an expected lifetime of 50 years. Seventy or 80 years later, many of these locks are still in operation. Unplanned delays due to mechanical breakdowns have been on the rise for more than a decade.
Port and harbor maintenance has a similar trust fund, the Harbor Maintenance Trust Fund, which receives money from a tax on imports and domestically traded goods. Unlike the fund for inland waterways, the Harbor Maintenance Trust Fund has a surplus. The funds are used for port maintenance, such as dredging to maintain port depths, and not for new construction, so many larger ships must still wait until high tide as full channel depths are not maintained at all times -- even in some of the nation's busiest ports. As vessels, especially container ships, become larger, an inability to maintain port depth could result in additional delays and an increase in related costs.
With the expansion of the Panama Canal, many Gulf and East Coast ports want to expand to handle the larger vessels that will now be coming through the canal. Increased use of the Harbor Maintenance Trust Fund (the government's budget for 2013 requested $848 million for maintenance programs -- roughly 50 percent of the revenues the fund generated in 2013) could allow ports to conduct more maintenance dredging to prevent unnecessary delays.
However, competition between ports could make the distribution of funds contentious. Because the trust fund is supplied from taxes on traded goods, ports that have higher traffic contribute more to the fund, but these ports are often not the ones that require the most dredging maintenance. For instance, Los Angeles/Long Beach spends less than 1 cent from the Harbor Maintenance Trust Fund per ton of cargo moved, whereas Savannah, Ga., spends 42 cents per ton, and Grays Harbor, Wash., spends $6.16 per ton. The system is set up for a cooperative environment, but as more ports compete for the projected increases in traffic coming through the Panama Canal after 2015, this cooperative system has the potential to break down.
Part of the legislation is meant to limit projects that are unnecessary or stalled, freeing up funds for more necessary projects. A total of $8 billion in projects, including flood prevention and port expansion projects, would be approved under the new House bill, while $12 billion in projects would be eliminated. In addition, time limits on feasibility and environmental studies will be imposed. For the past several years, a large portion of the Inland Waterways Trust Fund has been tied up in a single lock improvement project, commonly known as the Olmsted project. Both versions of the bill increase federal funds for the project, freeing up money from the trust fund for other projects. Congress will consider the use of alternative methods to provide more revenue for the Inland Waterways Trust Fund, but no specific changes are outlined. Both versions of the bill also attempt to address the Harbor Maintenance Trust Fund's current spending practices and increase total spending from the trust over the course of the next several years.
If operating under unconstrained conditions, the recommended construction budget for major rehabilitation or new construction would average $900 million per year over the next 20 years, with some years reaching $1.5 billion. Under the current budget, upgrading the system will be a long, drawn out process, and unintended delays are likely to continue increasing in the near term.
The drought in 2012 brought to the forefront how unplanned delays, or even the potential for unplanned delays, can affect both transport operators and commodity prices. Transportation by barge is well suited for bulk commodities that can benefit from the cost savings by exploiting economies of scale. The agricultural, coal, petroleum and fertilizer industries rely heavily on U.S. rivers to transport goods.
Each year, more than 600 million metric tons of cargo, valued at roughly $180 billion, is handled along inland waterways managed by the U.S. Army Corps of Engineers. In addition, it is hard for older infrastructure to accommodate modern barges. This often causes longer passage times, which could contribute to increased transportation costs for goods. According to the American Society of Civil Engineers, costs attributed to delays reached $33 billion in 2010 and are projected to rise to $49 billion by 2020.
Road and rail provide alternative transportation modes, and the current increase in road and rail freight traffic is projected to continue. Since a single 15 barge tow is equivalent to roughly 1,000 trucks or more than 200 rail cars, shifting traffic from rivers to road or rail likely will increase congestion on these transportation routes. Moreover, waterways remain the least expensive mode of long-distance transport for freight, with operating costs of roughly 2 cents per ton per mile compared to under 4 cents per ton per mile for rail and slightly less than 18 cents per ton per mile for truck. This increased cost likely will be passed on to the consumer, and since a significant portion of the freight traveling on waterways is destined for export, this could affect global commodity prices, especially for staple agriculture products like corn and soybeans.
Increases in federal spending could make up the difference between the funds needed and the funds available. However, as U.S. government funding for infrastructure spending has dropped significantly in recent years, increases in user fees, tolls or private funding likely will be needed to fully pay for all current and future necessary improvements to the U.S. inland waterways. Until then, limited improvements to the aging infrastructure will likely continue to cause transport delays. Given the importance of waterways as a transport method for bulk goods, including agricultural exports, delays and the accompanying transport cost increases could affect both the U.S. economy and global food prices.
The Mississippi and Ohio rivers and the Illinois waterways, the busiest avenues for commercial traffic on inland waterways, all have expansive lock systems. The locks make navigating a river easier, sequestering vessels before raising or lowering the water level in a chamber in order to compensate for changes in the river's level. Most of these locks were constructed in the early 20th century, with an expected lifetime of 50 years. Seventy or 80 years later, many of these locks are still in operation. Unplanned delays due to mechanical breakdowns have been on the rise for more than a decade.
Funding for Inland Waterways and Ports
Under the current policy, the cost of maintaining this infrastructure falls to the federal government, but funding for major construction and rehabilitation projects on inland waterways is split equally between federally appropriated funds and money from a trust, the Inland Waterways Trust Fund, which currently secures revenue through a 20 cent tax on commercial barge operators' fuel. The tax rate has remained the same since the mid-1990s. The fund's assets began declining in 2002 and fell rapidly starting in 2005 as expenses continued to increase as the system aged, eventually exceeding the revenue generated by the fund. Moreover, some projects exceeded their expected budgets, further straining the trust fund. The decline of the Inland Waterways Trust Fund was halted in 2010 after the federal government suspended new contracts using money from the fund.Port and harbor maintenance has a similar trust fund, the Harbor Maintenance Trust Fund, which receives money from a tax on imports and domestically traded goods. Unlike the fund for inland waterways, the Harbor Maintenance Trust Fund has a surplus. The funds are used for port maintenance, such as dredging to maintain port depths, and not for new construction, so many larger ships must still wait until high tide as full channel depths are not maintained at all times -- even in some of the nation's busiest ports. As vessels, especially container ships, become larger, an inability to maintain port depth could result in additional delays and an increase in related costs.
With the expansion of the Panama Canal, many Gulf and East Coast ports want to expand to handle the larger vessels that will now be coming through the canal. Increased use of the Harbor Maintenance Trust Fund (the government's budget for 2013 requested $848 million for maintenance programs -- roughly 50 percent of the revenues the fund generated in 2013) could allow ports to conduct more maintenance dredging to prevent unnecessary delays.
However, competition between ports could make the distribution of funds contentious. Because the trust fund is supplied from taxes on traded goods, ports that have higher traffic contribute more to the fund, but these ports are often not the ones that require the most dredging maintenance. For instance, Los Angeles/Long Beach spends less than 1 cent from the Harbor Maintenance Trust Fund per ton of cargo moved, whereas Savannah, Ga., spends 42 cents per ton, and Grays Harbor, Wash., spends $6.16 per ton. The system is set up for a cooperative environment, but as more ports compete for the projected increases in traffic coming through the Panama Canal after 2015, this cooperative system has the potential to break down.
Addressing Inefficiencies
The U.S. government traditionally passes water resource legislation every two years, but the Water Resources Reform and Development Act, which the House of Representatives passed resoundingly with strong bipartisan support Oct. 23, was the first such legislation passed since 2007. The Senate passed a similar bill in May. The House and Senate versions will have to be reconciled, but both versions passed with bipartisan approval and are fairly similar, so it is reasonable to believe that some version will become law.
Part of the legislation is meant to limit projects that are unnecessary or stalled, freeing up funds for more necessary projects. A total of $8 billion in projects, including flood prevention and port expansion projects, would be approved under the new House bill, while $12 billion in projects would be eliminated. In addition, time limits on feasibility and environmental studies will be imposed. For the past several years, a large portion of the Inland Waterways Trust Fund has been tied up in a single lock improvement project, commonly known as the Olmsted project. Both versions of the bill increase federal funds for the project, freeing up money from the trust fund for other projects. Congress will consider the use of alternative methods to provide more revenue for the Inland Waterways Trust Fund, but no specific changes are outlined. Both versions of the bill also attempt to address the Harbor Maintenance Trust Fund's current spending practices and increase total spending from the trust over the course of the next several years.
The Lingering Problem Inland
Regardless of the new legislation, the problem of underfunded and outdated infrastructure remains. The U.S. Army Corps of Engineers estimates that it will cost $125 billion or more to revamp the entire inland waterway system. Some estimates show that just maintaining the status quo of unscheduled delays for the more than 200 locks on U.S. inland waterways would require an investment of roughly $13 billion dollars by 2020, averaging out to more than $1.5 billion annually. Operating and maintaining these are only part of the responsibilities held by the U.S. Army Corps of Engineers, which has a total appropriated non-emergency budget of roughly $5-6 billion annually. Because spending from the Inland Waterways Trust Fund is limited, a total of $170 million per year is currently available for major inland waterway construction projects.If operating under unconstrained conditions, the recommended construction budget for major rehabilitation or new construction would average $900 million per year over the next 20 years, with some years reaching $1.5 billion. Under the current budget, upgrading the system will be a long, drawn out process, and unintended delays are likely to continue increasing in the near term.
The drought in 2012 brought to the forefront how unplanned delays, or even the potential for unplanned delays, can affect both transport operators and commodity prices. Transportation by barge is well suited for bulk commodities that can benefit from the cost savings by exploiting economies of scale. The agricultural, coal, petroleum and fertilizer industries rely heavily on U.S. rivers to transport goods.
Each year, more than 600 million metric tons of cargo, valued at roughly $180 billion, is handled along inland waterways managed by the U.S. Army Corps of Engineers. In addition, it is hard for older infrastructure to accommodate modern barges. This often causes longer passage times, which could contribute to increased transportation costs for goods. According to the American Society of Civil Engineers, costs attributed to delays reached $33 billion in 2010 and are projected to rise to $49 billion by 2020.
Road and rail provide alternative transportation modes, and the current increase in road and rail freight traffic is projected to continue. Since a single 15 barge tow is equivalent to roughly 1,000 trucks or more than 200 rail cars, shifting traffic from rivers to road or rail likely will increase congestion on these transportation routes. Moreover, waterways remain the least expensive mode of long-distance transport for freight, with operating costs of roughly 2 cents per ton per mile compared to under 4 cents per ton per mile for rail and slightly less than 18 cents per ton per mile for truck. This increased cost likely will be passed on to the consumer, and since a significant portion of the freight traveling on waterways is destined for export, this could affect global commodity prices, especially for staple agriculture products like corn and soybeans.
Increases in federal spending could make up the difference between the funds needed and the funds available. However, as U.S. government funding for infrastructure spending has dropped significantly in recent years, increases in user fees, tolls or private funding likely will be needed to fully pay for all current and future necessary improvements to the U.S. inland waterways. Until then, limited improvements to the aging infrastructure will likely continue to cause transport delays. Given the importance of waterways as a transport method for bulk goods, including agricultural exports, delays and the accompanying transport cost increases could affect both the U.S. economy and global food prices.
Read more: United States: The Problem of Aging Infrastructure on Inland Waterways | Stratfor
Friday, November 8
The View From the Roof: Distributed Loads
I'm working on a post that calls for deep thought and now my brain is demanding a timeout. Let me see how I can give it some play time. Well I got through another Halloween, this year without problem. Last year it took hours before the rescue squad showed up. I insisted they call the rescue squad because we could have all fallen off the roof if a couple retired Pentagon brass and a State official who were already three sheets to the wind before they fortified themselves for the mission set out to rescue me.
No no they didn't call 911; it's a volunteer squad. The first thing the dispatcher asked was, 'Is it Pundita up there?' I'm always the lowest priority on Halloween, which is not a good thing for someone of my age and bladder control. For this reason people in certain neighborhoods in Northern Virginia who throw Halloween parties leave a ladder propped against the house so I can get up on the roof, drape the house with a roll of toilet paper, and climb down without incident.
Last Halloween, however, I went disguised as Otto von Bismarck; I figured they'd never see through that one. At one house I got tangled up on the ladder in the ceremonial sword and sash but the tipping point was the backpack. You wouldn't think that 10 rolls of toilet paper were that heavy but it was more the bulk and trying to manage the sword at the same time, and three cups of bourbon eggnog hadn't helped my balance.
I got onto the roof before the ladder fell but during this process I lost control of the backpack, which I'd forgotten was unzipped. The toilet paper rolls spilled out, bounced on car roofs in the driveway and unrolled down the street. When the rescue squad arrived they took one look at the situation and said, "Let her stay up there another 20 minutes."
No respect for the elderly anymore.
This year I went disguised as a quark. This allowed me to redistribute the load of toilet paper rolls, so while it was the same number of rolls it didn't unbalance my climbs.
I've had problems with rescue squads before, by the way, and even with an animal rescue squad. A few years ago the squirrel member of my foreign policy team blew up the garage. It's okay, I'd always wanted a swimming pool on that side of the house. I used to store my homemade demon repellent in glass gallon jugs in the garage, but who knew about the glitch in the formula until 4 containers of the stuff were knocked off a high shelf, which granted was overloaded. Even so I'd told the squirrel many times not to fool around on those shelves, and always kept the garage door shut when I wasn't around except for the time I forgot.
No there was no trouble with the authorities. This could be the one house in Washington where if you tell the fire and police departments that a crater in the yard was a household accident they just write it up. They don't want to hear the story.
Of course he survived, those types always do. But he was blown into a neighbor's tree, then he wouldn't come down because he was hysterical. When I called for a rescue squad they told me, "Ma'am, if a squirrel is up a tree it has a reason for being there."
It took the neighbor and a tree landscaper working two sides of the tree on ladders to grab him. Then I had to wrestle an eyedropper's worth of brandy down his throat to calm him, so I get his singed ass to a veterinarian. The vet saw his condition, sniffed his breath, then told me accusingly, "This squirrel has been abused."
About five minutes later I heard a crashing sound from the examination room. The veterinarian was all right. No broken bones, a little shaken up of course, but I couldn't resist. I said, "Let me guess. You told him not to fool around on top of the medicine chest."
Yet I noticed while the assistant and I were pulling the chest off the vet that it was very top heavy.
Distributed loads. Probably not the secret to the universe but they are the key to humanity surviving the era of megapopulations with some grace. It's not so much the numbers but their distribution. There are countless incidents to illustrate this.
A few weeks ago a boatload of refugees from north Africa got stranded off the Italian coast. Everyone on the boat ran to one side in a panicked attempt to signal a plane for help. The very uneven load capsized the boat. Hundreds of the refugees were drowned.
From what I've been told about the story, the people who designed the process for Americans to register for Affordable Care health insurance didn't take load distribution into account.
Another distributed load problem became starkly evident only in April, in the gold market, after millions of people had piled into the 'paper' end of the gold market through ETFs. This unbalanced the load on the physical gold market. So it took just small downward pressure on the gold price to touch off a selling stampede in the ETFs, crashing the price of gold for the entire market.
A less obvious example is that by the mid-1950s management of U.S. monetary policy, the internal part, had fallen almost exclusively to the Federal Reserve. To assess the state of the U.S. economy the Fed relies on statistics and mathematical modeling. Both can exclude galactic-sized chunks of reality and also be in error and reflect obsolete data. By 2008 it was evident that this unbalanced intellectual load had capsized the system of U.S. money management.
So now economists at the Fed have taken a back seat to the very unscientific Daniel Tarullo, or "Dan" as his colleagues call him, which is like referring to Robespierre as Max.
The intellectual load had been unbalanced for a long time yet in the age of megapopulations the margin for error hovers near zero but there I go, thinking again, which undercuts the purpose of my writing this post.
.
No no they didn't call 911; it's a volunteer squad. The first thing the dispatcher asked was, 'Is it Pundita up there?' I'm always the lowest priority on Halloween, which is not a good thing for someone of my age and bladder control. For this reason people in certain neighborhoods in Northern Virginia who throw Halloween parties leave a ladder propped against the house so I can get up on the roof, drape the house with a roll of toilet paper, and climb down without incident.
Last Halloween, however, I went disguised as Otto von Bismarck; I figured they'd never see through that one. At one house I got tangled up on the ladder in the ceremonial sword and sash but the tipping point was the backpack. You wouldn't think that 10 rolls of toilet paper were that heavy but it was more the bulk and trying to manage the sword at the same time, and three cups of bourbon eggnog hadn't helped my balance.
I got onto the roof before the ladder fell but during this process I lost control of the backpack, which I'd forgotten was unzipped. The toilet paper rolls spilled out, bounced on car roofs in the driveway and unrolled down the street. When the rescue squad arrived they took one look at the situation and said, "Let her stay up there another 20 minutes."
No respect for the elderly anymore.
This year I went disguised as a quark. This allowed me to redistribute the load of toilet paper rolls, so while it was the same number of rolls it didn't unbalance my climbs.
I've had problems with rescue squads before, by the way, and even with an animal rescue squad. A few years ago the squirrel member of my foreign policy team blew up the garage. It's okay, I'd always wanted a swimming pool on that side of the house. I used to store my homemade demon repellent in glass gallon jugs in the garage, but who knew about the glitch in the formula until 4 containers of the stuff were knocked off a high shelf, which granted was overloaded. Even so I'd told the squirrel many times not to fool around on those shelves, and always kept the garage door shut when I wasn't around except for the time I forgot.
No there was no trouble with the authorities. This could be the one house in Washington where if you tell the fire and police departments that a crater in the yard was a household accident they just write it up. They don't want to hear the story.
Of course he survived, those types always do. But he was blown into a neighbor's tree, then he wouldn't come down because he was hysterical. When I called for a rescue squad they told me, "Ma'am, if a squirrel is up a tree it has a reason for being there."
It took the neighbor and a tree landscaper working two sides of the tree on ladders to grab him. Then I had to wrestle an eyedropper's worth of brandy down his throat to calm him, so I get his singed ass to a veterinarian. The vet saw his condition, sniffed his breath, then told me accusingly, "This squirrel has been abused."
About five minutes later I heard a crashing sound from the examination room. The veterinarian was all right. No broken bones, a little shaken up of course, but I couldn't resist. I said, "Let me guess. You told him not to fool around on top of the medicine chest."
Yet I noticed while the assistant and I were pulling the chest off the vet that it was very top heavy.
Distributed loads. Probably not the secret to the universe but they are the key to humanity surviving the era of megapopulations with some grace. It's not so much the numbers but their distribution. There are countless incidents to illustrate this.
A few weeks ago a boatload of refugees from north Africa got stranded off the Italian coast. Everyone on the boat ran to one side in a panicked attempt to signal a plane for help. The very uneven load capsized the boat. Hundreds of the refugees were drowned.
From what I've been told about the story, the people who designed the process for Americans to register for Affordable Care health insurance didn't take load distribution into account.
Another distributed load problem became starkly evident only in April, in the gold market, after millions of people had piled into the 'paper' end of the gold market through ETFs. This unbalanced the load on the physical gold market. So it took just small downward pressure on the gold price to touch off a selling stampede in the ETFs, crashing the price of gold for the entire market.
A less obvious example is that by the mid-1950s management of U.S. monetary policy, the internal part, had fallen almost exclusively to the Federal Reserve. To assess the state of the U.S. economy the Fed relies on statistics and mathematical modeling. Both can exclude galactic-sized chunks of reality and also be in error and reflect obsolete data. By 2008 it was evident that this unbalanced intellectual load had capsized the system of U.S. money management.
So now economists at the Fed have taken a back seat to the very unscientific Daniel Tarullo, or "Dan" as his colleagues call him, which is like referring to Robespierre as Max.
The intellectual load had been unbalanced for a long time yet in the age of megapopulations the margin for error hovers near zero but there I go, thinking again, which undercuts the purpose of my writing this post.
.
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