Posts Tagged ‘collapse’

Ambac argues fraud committed for profit caused the crisis

Thursday, January 27th, 2011

I of course, argue that government pressure to make mortgage loans caused the crisis.  After all, the specific examples bad loans that Ambac lists in its lawsuit against Bear Stearns, are all loans that were made to poor people, though Ambac provides no information that would identify the race of these poor people.  Ambac, however, argues that Bear Stearn made bad loans, lied that the loans were fine, and sold them on to the next sucker in order to collect fees.  Ambac in its lawsuit against Bear Stearns explains the global financial crisis as caused by fraud conducted for profit, rather than caused by government policy.

It is, however, apparent that Bear Stearns kept a lot of bad loans, and took losses on them, even though it unloaded most of the bad loans onto various suckers by means of fraudulent warranties and representations.  I argue therefore that Bear Stearns was under pressure to please regulators by lending to the supposedly poor and oppressed, which poor and oppressed are notoriously unable and unwilling to repay loans, and finding itself with a pile of bad loans, proceeded to unload as many of them as it could, by fair means and foul, many of them onto Ambac.

If, in the end, the government winds up compensating Ambac, and the Bear Stearns boys who made these fraudulent warranties and representations to Ambac go unpunished as individuals, we should conclude that Bear Stearns was carrying out government policy, that this fraud, like so many others, was committed out of political correctness.  If, on the other hand, those who committed these massive frauds are themselves individually punished, for committing lucrative frauds that sank the world economy, then this will be evidence for the fraud was committed for profit.

Against the theory that the fraud was conducted for profit, is the fact that this is a civil lawsuit, even though fraud, and fraud that cost the taxpayer trillions, is a criminal offense.  That there is not the slightest suggestion that any of these many acts of fraud will be punished criminally, suggests that these frauds were committed not for gain, but for political correctness.

Who called the financial crisis before it happened?

Tuesday, January 25th, 2011

Among others, Ron Paul, in his speech to the house, proposing amendments to the laws that caused the crisis

… the government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.

The connection between the GSEs and the government helps isolate the GSEs’ managements from market discipline. This isolation from market discipline is the root cause of the mismanagement occurring at Fannie and Freddie …

I hope my colleagues join me in protecting taxpayers from having to bail out Fannie Mae and Freddie Mac when the housing bubble bursts.

… The flip side of regulatory capture is that mangers and owners of highly subsidized and regulated industries are more concerned with pleasing the regulators than with pleasing consumers or investors, since the industries know that investors will believe all is well if the regulator is happy. Thus, the regulator and the regulated industry may form a symbiosis where each looks out for the other’s interests while ignoring the concerns of investors. …

… the government increases the likelihood of a painful crash in the housing market. …

Needless to say, there was only one vote for addressing the looming financial crisis.  Looking at the tea party candidates, I think if the Tea party did a clean sweep, if every single congressman had belonged to the tea party, I think there would have been two or three votes for addressing the looming financial crisis.

Gabrielle Giffords needed killing

Sunday, January 9th, 2011

And so do most of congress, most of the regulators, and most of the businessmen in the revolving door between business and regulation.

All the conservative criticism of her seems to be disappearing off the web, but what the hell, she stank, critics pointed out she stank, so someone killed her.   It might have been a leftist who did not think she was left enough, but chances are, was a conservative. Yes, chances are that unkind remarks by conservatives got her killed.  Pity it was not someone who mattered more.  Her platform was to create lots of high paying jobs in government and quasi governmental activities – in other words, to transfer wealth from productive people who mostly voted against her, to unproductive people who mostly voted for her, thus moving the nation generally leftwards.

As the nation plunges into bankruptcy, as the Cloward–Piven crisis approaches, we might kill enough similar wrongdoers to eventually get out of the crisis.  I don’t really see any other path to resolving the crisis other than watering the tree of liberty in the usual fashion.

Anti semitism

Friday, January 7th, 2011

As Moldbug tells us:

Anti semitism is the faulty, paranoid, and obsessive belief that Jewish elites are significantly different from gentile elites.

Jews, as Jews, simply were not an are not influential in the development of the theocracy that ruled us. Jews really do not matter so much, so any belief system that causes one to focus on Jews sends one crazy, detaches one from reality.  If we look at the elite and bad conduct by the elite, and start asking:
“Who is a JOO? Look I see a JOO!  See the JOO!” then we are apt to attribute to the elite an ethnic solidarity that it conspicuously lacks. The elite is disproportionately Jewish, and hates Jews, entirely white, and hates whites, mostly anglophone, and hates anglophones, mostly American, and hates Americans and America.

Before any Jew was allowed to get anywhere near the reins of power, he had to convert to progressivism, or plausibly pretend to. Lots of them did so, as the progressive theocrats intended, which was highly beneficial for those Jews that converted and ascended, but a disaster for Judaism, and none too good for the Jewish people as a people.

Progressivism is an American branch of left protestantism, which sought theocratic power, in particular wanted all educational institutions to inculcate all children, especially Jewish and Catholic children, in their religion. Since the American constitution forbade this, they over time, ditched Christ, ditched redemption, and in large part ditched God. This started in 1900 or so and was largely completed by the time they were running reeducation, denazification and anti-colonialism.. They retained, however, a great pile of Christian and specifically protestant beliefs that are incompatible with Judaism as a religion, a culture, and a society. If Jews were influential as Jews, progressivism would be post Jewish, rather than post Christian.  But progressivism is, in practice, a post Christian heresy from Christianity.

For an example of the post christian character of progressivism, consider the ludicrous progressive belief that all people are equal in ability and virtue and so forth, which is what remains of the Christian belief that all people are equal in the sight of God, after God and Christ have been removed from the belief system.

The proposition that men and women are literally equal, that races are equal, leading to the conclusion that they are interchangeable, that women can be soldiers and firemen, men can marry other men, can only be understood as proposition about souls, rather than bodies, and when this doctrine is doubted, the reaction is religious rather than empirical. Understood as a species of Christian belief, it makes sense, because the Christians believe that the most important part of the self is immaterial. If it’s immaterial, then material differences have nothing to do with it. So Christians are free to believe pretty much anything they want about this most important part of the self, unconstrained by material evidence of any sort. They are free to believe that deep inside everyone, there is a core, an essence, that is not the slightest diminished by bodily infirmity etc. etc. I.e., the soul. The progressives jettison God, replacing God with, presumably, Nature. So “equality before God” becomes “equality before Nature”. That is, natural equality (of some unspecified sort). And this could be how the progressives manage to believe in some unspecified “natural” (biological or whatever) equality even though no evidence backs them up. Their belief is derived, not from evidence, but from the Christian heritage of progressivism. Their belief looks superficially like a scientific hypothesis because all the terms in it could be interpreted as referring to natural things, but it doesn’t really have any empirical content, because “equality”, while it could refer to something measurable, does not actually refer to anything measurable. Any attempt to measure something to test the claim of “equality” is attacked by progressives.

Progressives are using naturalistic-sounding words to talk about equality, but they are behaving as though it didn’t make any sense to try to measure it, which is how Christians would behave with respect to attempts to rigorously test equality before God. The Christian reaction would range from skepticism that it could be done, to the sense that it doesn’t even make sense to try, and finally to the certainty that it is heresy to even suggest such a thing and the person suggesting it is evil and possibly a sorcerer and should be burnt at the stake – and if you express doubt about natural equality, the progressive reaction you will get is not an appeal to empirical evidence, but condemnation and threats.

Progressivism is today influential world wide, and everywhere it is primarily American. For example “Gay pride” was applied throughout Europe often before it was applied in America, but with made in America propaganda, directly translated and retain American idioms, and often American neologisms, such as “Gay” as the new euphemism for homosexual; the hand of the master was visible; the muppet’s lips were moving, but the voice was not that of a local. Similarly American schoolchildren are taught about America, and are primarily taught that America is the most evil nation in the world, and German schoolchildren are also taught about America, and are primarily taught that America is the most evil nation in the world.

But, I hear you ask, if the Cathedral, the progressive ruling elite, is primarily American, rather than Jewish, why is it so maniacally anti American? Why you, ask, do they hate people like you and me. Surely that they hate Americans shows they are not Americans, do not think of themselves as Americans, therefore must be Jews?

Alas, self hatred is depressingly common, and progressives hate themselves, and therefore hate everyone like themselves, and therefore they hate you, and hate me, for reasons I will now explain:

Central to Christianity is sin and redemption. Christians are held to a standard so high that they cannot possibly attain it, and even if they attained it, they are condemned by original sin; we are all sinners and should be ashamed and guilty. But the preacher offers us a way out. Accept Christ as Lord, Christ will forgive you, Christ loves you, Christ will shoulder the load. Yes, you are a sinner, but Jesus loves you. And thus, central to progressivism is sin. Progressives are held to a standard so high that we cannot possibly attain it, and even if we attained it, we are condemned by original sin in that we are beneficiaries of colonialism slavery racism and blah blah blah. But the sensitivity trainer cannot offer us a way out, since God is dead and Jesus never existed. And so progressives are required to hate themselves. And they do.

The Progressives, the Left, the Cathedral, does not hate non Jewish whites because it is disproportionately Jewish; it hates all whites because it is white and hates Jews disproportionately because it is disproportionately Jewish.  It hates America and Americans because it is primarily American.

The most honest political ad of all time illustrates the perils of the politically correct only listening to each other. When they speak, their purpose is not truth, but power – and since they understand power as meaning the capacity to harm, everything they say is a lie intended to harm the hearer – and since they listen respectfully, indeed worshipfully, to each other …

The ruling elite is theocratic, hence the nickname “the Cathedral”. Their religion is simultaneously altruistically self hating, as illustrated by environmentalism and the fact that the disproportionately Jewish elite hates Israel and Jews, yet contradictorily, at the same time nihilistic and cynical, with the Alinksyite approach that anything goes in the pursuit of power, a contradiction resolved in their own minds since they are pursuing total, limitless, and absolute power, not on their own behalf, but on behalf of the oppressed and downtrodden – they are doing it for the proletariat, for the colonized. And if the proletariat and
the colonized are so rude as to talk back to their betters, well then, they are doing it for the trees.

The Cathedral will destroy everything, starting with itself, just as the most honest political ad of all time ended with the murder of the narrator. Its self hatred renders it powerless against more self confident theocracies, such as Islam, and its self destructiveness renders it incapable of holding power for very long even absent external enemies.

If the Jews were running things, we would have decent airport security like they have in Israel, instead of naked body scan and genital gropedown.   If the Jews were running things, the CIA would operate more like Mossad and less like the Keystone Cops.

The antiprofiling fetish is a left superstition and ritual, derived from progressivism’s Christian roots,  not a Jewish superstition and ritual – so it is obvious who is in charge.

Similarly, Israel had no banking crisis, despite the fact that their banks are full of Jews, who are doubtless as crooked as bankers elsewhere:  The reason there is no banking crisis in Israel is because banks in Israel did not make political loans to voter blocks and special interest groups notorious for not paying their debts; such loans being a progressive, rather than Jewish, superstition. And when the US government put the heat on banks around the world to buy mortgage backed securities, Israel “refused to support the world banking system”.  Since when did we have a world banking system? One worldism is a progressive superstition centered on the UN, and the UN hates Jews.

The left is lily white (as we saw at the “rally to restore sanity”) and hates whites.  The left is dominated and largely controlled by America and anglophones (as we saw with the export of the “gay pride” program to the non English speaking world) and hates anglophones and hates Americans most among anglophones.  The left is disproportionately Jewish, and hates Jews.

We are not ruled by Jews.  We are ruled by people who hate themselves and hate us and hate Jews most of all.

Here is the Bank of Israel’s take on the Global financial crisis:  You will notice that while everyone else is lying about it, they are telling the truth:

What are the factors that led to the global crisis?

The main factor that initiated the crisis was the accumulation of mortgages in default in the US as a result of the reversal of the trend of US housing prices. This occurred against the background of easy mortgages over a period of several years during which mortgages were provided to homebuyers who did not have sufficient ability to repay them. The losses spread to large financial institutions in a number of countries through the globalized financial markets, which facilitated the creation and marketing of complex financial instruments world wide. These instruments had a variety of terms to deal with default that had not been in use in the past and some of the instruments were sold and guaranteed by large financial institutions. Large investment houses worldwide held the view that advances in the study of finance had enabled a better understanding of these products and the correct valuation of the products and their guarantees. In retrospect, the risk assessment of these products was extremely deficient. Thus, significant losses were incurred by these large financial institutions and their customers. As a result, uncertainty regarding the financial stability of these institutions spread at a surprisingly quick rate and activity in the markets for more basic financial products-in which these same investment houses are active-was also affected.

How has the crisis so far affected the Israeli financial system relative to its effect on the financial markets and institutions in other advanced economies?

One of the main causes of the global financial crisis was the provision of mortgages, primarily though not exclusively in the US, to borrowers with insufficient ability to repay them. As a result, housing prices rose sharply in these countries, as did the prices of financial assets. When the financial institutions began to realize that they had provided mortgages to homebuyers with insufficient ability to repay them and these individuals were forced to sell their homes, a downward trend began in the prices of houses that served as the collateral for not only sub-prime mortgages, but higher quality mortgages as well. The drop in the value of other assets also eroded the collateral for loans that were made by the financial institutions in these countries. These developments, together with the collapse of the markets for mortgage-backed securities, had a multiplier effect that among other things led to the collapse of several financial institutions in the US, the UK and Europe. The large-scale provision of such mortgages in these countries to individuals with insufficient means to repay them was not,  however, characteristic of the Israeli financial system

You will observe that members of the Israeli elite can and do speak close to the the truth about the crisis, (the problem was mortgages to deadbeats) while members of the American elite, including their European muppets, cannot and do not. (Supposedly the problem was “excessive leverage”.)  Thus the financial crisis was brought to you by progressivism, not by the Jews, despite the  disproportionate presence of Jews in finance and financial regulation.

The end of the road to serfdom

Sunday, December 26th, 2010

Hayek, in “The Road to Serfdom” predicted the welfare regulatory state must inevitably become the totalitarian terror state.

Observe:  We have arrived. America is now a totalitarian terror state.

In 1992 I visited Cuba.  Thereafter, I argued it was a totalitarian state, because when I asked certain questions some people fled, fearing that merely hearing the question would result in them being punished for the thoughts it might elicit, and others answered furtively.

Yesterday, I asked someone very close to me a question apt to have a politically incorrect answer (I cannot identify him further, for he swore me to secrecy)

He looked around furtively.  We were on top of a hill overlooking the Coral Sea in a semi rural area, the other side of the world from his workplace.  He lowered his voice.  He then proceeded to utter a series of politically correct platitudes, with gestures and grimaces reversing their meaning, his grimaces implying the opposite of the ostensible meaning, the same sort of communication coded against possible eavesdroppers and hidden microphones that I encountered in Cuba, where they would swear loyalty to communism, while making a gesture of their throats being cut.

Like Havel’s green grocer, the truth would destroy his career.

This is the behavior that in 1992 I saw in Cuba and thereafter used as evidence that Cuba was a totalitarian state, a state of omnipresent fear.

So if Cuba was totalitarian in 1992, America is totalitarian in 2010.   We have arrived at the end of Hayek’s “Road to Serfdom”.

In America, unlike Soviet Russia, we don’t send dissidents to Alaska, and although lots of American psychiatrists are eager to diagnose political deviation as mental illness and treat it with electroshock and lobotomy as they do in Cuba, government has as yet declined to employ them in this capacity.  But what government does do is ensure that political deviation blights your career.  If a company knowingly employs political deviants, it is apt to be sued by quasi governmental organization for a “hostile work environment”, in which lawsuit, no evidence will be presented of anyone saying unkind things to those for which the work environment was supposedly hostile, but evidence will be presented that employees had subversive thoughts – often evidence that they expressed subversive thoughts far from their workplace, as perhaps on a hill overlooking the Coral sea the other side of the world from his workplace – so the company will be punished, for failure to punish subversive thoughts.

Hayek, in “The Road to Serfdom”, argued that regulatory welfare state must inevitably become totalitarian.  Lo and behold, totalitarianism has arrived.  Most people, everyone with some position in society, everyone with something that could be taken away from them, are very, very frightened.

And what is totalitarianism?  Hayek’s totalitarianism seems to be pretty much Havel’s totalitarianism, and here is Havel on totalitarianism:

The manager of a fruit-and-vegetable shop places in his window, among the onions and carrots, the slogan: “Workers of the world, unite!”

Why does he do it? What is he trying to communicate to the world? Is he genuinely enthusiastic about the idea of unity among the workers of the world? Is his enthusiasm so great that he feels an irrepressible impulse to acquaint the public with his ideals? Has he really given more than a moment’s thought to how such a unification might occur and what it would mean?

I think I can safely assume that the overwhelming majority of shopkeepers never think about the slogans they put in their windows, nor do they use them to express their real opinions. That poster was delivered to our greengrocer from the enterprise headquarters along with the onions and the carrots. He put them all into the window simply because it has been done that way for years, because everyone does it, and because that is the way it has to be.

If he were to refuse, there could be trouble. He could be reproached for not having the proper decoration in his window; someone might even accuse him of disloyalty. He does it because these things must be done if one is to get along in life. It is one of the thousands of details that guarantee him a relatively tranquil life “in harmony with society,” as they say.

Obviously the greengrocer is indifferent to the semantic content of the slogan on exhibit; he does not put the slogan in his window from any personal desire to acquaint the public with the ideal it expresses. This, of course, does not mean that his action has no motive or significance at all, or that the slogan communicates nothing to anyone.

The slogan is really a sign, and as such it contains a subliminal but very definite message. Verbally, it might be expressed this way: “I, the greengrocer XY, live here and I know what I must do. I behave in the manner expected of me. I can be depended upon and am beyond reproach. I am obedient and therefore I have the right to be left in peace.”

This message, of course, has an addressee: it is directed above, to the greengrocer’s superior, and at the same time is a shield that protects the greengrocer from potential informers. The slogan’s real meaning, therefore, is rooted firmly in the greengrocer’s existence. It reflects his vital interests. But what are those vital interests?

Let us take note: if the greengrocer had been instructed to display the slogan ‘I am afraid and therefore unquestioningly obedient,’ he would not be nearly as indifferent to its semantics, even though the statement would reflect the truth.

The greengrocer would be embarrassed and ashamed to put such an unequivocal statement of his own degradation in the shop window, and quite naturally so, for he is a human being and thus has a sense of his own dignity. To overcome this complication, his expression of loyalty must take the form of a sign which, at least on its textual surface, indicates a level of disinterested conviction. It must allow the greengrocer to say, “What’s wrong with the workers of the world uniting?”

Thus the sign helps the greengrocer to conceal from himself the low foundations of his obedience, at the same time concealing the low foundations of power. It hides them behind the façade of something high. And that something is ideology.

As Bruce Charlton points out:

If you go into an institutional environment – a government office, a school or college, a hospital or doctor’s surgery, a museum, public transportation – and you observe posters adorning the walls on politically-correct topics such as diversity, fair trade, global warming, approved victim groups, third world aid – remember Havel’s essay, and that the correct translation of such posters is as follows:

“I am afraid and therefore unquestioningly obedient”

Such posters are a coded admission of submission to ideology – except in the rare instance where they advertise genuine corruption by ideology.

The frequency of such posters nowadays, compared with a generation ago, is a quantitative measure of the progress of totalitarian government.

The future is Muslim, Mormon, and Catholic

Saturday, December 25th, 2010

Anglican Christmas church service, ten attend, eight with one foot in the grave.  Sermon is about the other foot dropping.

Catholic Christmas church service, approximately one hundred attend, most of them young.  Sermon is about Christmas being a time for children.

Some months ago I checked the graveyards.  To judge by the absence of angels, graveyards one hundred  percent protestant.

Decline of the west

Friday, November 26th, 2010

The last man on the moon left in 1972

The tallest building in the united states was finished in 1974.

Cars are becoming humbler.

US electricity production was growing exponentially until 1972.  After 1972 it grew more slowly.  Per capita electricity consumption  seems likely to have peaked around 2007 or so.

Supposedly GDP is still growing rapidly, just as supposedly inflation is zero, but it seems improbable that GDP is growing when per capita electricity consumption is not.

One could present all sorts of rationalizations for the decline in manned space exploration – for example that manned space exploration was a polite way of demonstrating superior capability to nuke the other side, and supposedly we are so much more civilized and mature now that the need for such chest beating has diminished.

However, by 2000, we have more compelling evidence of decline.  The buildings damaged or destroyed in 9/11 have not been repaired or replaced.

The west is the past. America sinks into Eurosocialism, while Europe becomes the western satrapies of the new Persian empire. Every rising civilization was a lender, innovator, and investor, every declining civilization a borrower.  California used to be the place where the future was invented, but no longer.

The west’s lead was California’s lead.  And California is no more.

Where, for example, was the netbook commercialized?  Who invented and built the “Amazon” Kindle?  Who is today creating the blue light lasers that are the core of every DVD reader and writer?

The Kindle was developed in Taiwan, by Eink.   It is some standard computing parts wrapped around a new display technology invented, developed and manufactured by Eink.

Indians looking to study abroad rate Melior in Singapore higher than Stanford in the USA.

Today, our universities turn out people trained in political correctness and “diversity”.  Every male CS graduate can parse a boolean expression, but most female CS graduates cannot, indicating that a male needs to be able to parse a boolean expression to get a CS degree, and a female does not. The end stage of this process is that no one needs to be able to parse a boolean expression, but everyone needs to be able to hate dead white males.

China leads the world in coal to liquids technology.

China leads the world in internet based transactions.

The simplest explanation for the fact that western research seems to have fallen off a cliff is that we are now reaching the point where hating dead white males is a more important academic qualification than anything else.  Doubtless it is in reality more complicated than that, but the simplest explanation works quite well:  Consider, for example, the recent demonization of Chagnon.  The most striking factor was the ignorance and stupidity of the academic associations condemning him.  They just did not know stuff.  It was as if they don’t read books by dead white males, as if they feared that reading such stuff might contaminate their minds with dangerous thoughts.

What we have had for some time in academia is theocracy, not meritocracy, and theocracy tends to promote those whose faith is most zealous and reliable.  It is easier to have zealous and reliable faith if you are dumb as two planks glued together.

Who is at the top of Academia:  I suppose the tip top crust are the people who condemned Chagnon, and people like the leading scientists of global warming, Mann and Phil Jones, who are demonstrably not nearly as smart as I am.  Mann, for example, keeps making ludicrous and amateurish mistakes in his statistics, and any time Phil Jones wants something scientific done, he summons a post grad, and tells the postgrad to produce a chart that proves such and such, suggesting that Phil Jones cannot produce such charts, nor tell if the chart actually does prove such and such.

Mann’s work demonstrates he is simply stupid.  Mann’s power over other scientists demonstrates that simply stupid people are on top.  Stupid people on top provide a simple explanation of why science does not get done.

How did Mann get to the top?  By telling the state what it wants to hear, by political correctness.

Demonstrably, the people in charge of science and research are not the tip top crust.  They got where they are by hating dead white males more than anyone.

The fact that undergraduates are marked on the basis of race, gender, and political correctness is fairly harmless.  That academics get power over other academics on the basis of political correctness has not been so harmless, and we are today paying the price, in that western research is failing.

Singapore has sustained its rate of growth.  Taiwan has sustained its rate of growth.  Therefore China is likely to sustain its rate of growth.

Assuming China grows like Singapore from now on, and the US grows like Europe (counting European growth as real, even though such growth as occurs is government employees, whose product is valued at cost, which cost grows at astonishing rate) then China should surpass the US in total GDP by 2019 or so.

China should surpass the US in GDP per head, as Singapore already has, by around 2045 or so.  Taiwan should surpass the US in GDP per head in 2018 or so.

The financial system of the west is collapsing because the fed and its bureaucrats have the mission to replace financial panics with wise regulatory authority – which might work if wise regulatory authority had the will to punish elite wrongdoing the way financial panics did, and resist the desire of politicians to use the financial system as a piggy bank for vote buying the way bankers threatened by financial panics did.  Since brave regulators are not to be found, the replacement is not working.

The last time the west stalled, it stalled for four hundred years under intellectual stagnation induced by theocracy, from 1277 to 1648.

We are seeing multiple simultaneous crises.  Academia is a thousand loudspeakers controlled by one microphone, and that microphone in the hands of an idiot.

All the massive financial crime that the financial crisis exposed <https://blog.reaction.la/economics/mortgage-fraud-predatory-borrowing.html> continues unpunished and unabated, foreshadowing another, even bigger financial crisis coming up fast.

The graffiti on the buildings that are now owned by the Federal Reserve foretells our future.

We are also seeing an explosive gold rush in government as rent seeking monopolies multiply.  Thus it used to be, for example, that the local council gave itself a monopoly of water and sewage, though there is in practice no rationale for the sewage monopoly – septic tanks and highly localized sewage farms are more economical.  Large centralized sewage facilities beloved of councils and council unions suffer severe diseconomies of scale due to the high cost of  piping sludge any reasonable distance. Seeing the lucrative flow of money, every other level of government gets into the act.  Just as to get anything done, a private individual needs multiple permits from the council, each requiring him to hire numerous “consultants” at $400 per hour, the council needs multiple permits from state and federal governments, requiring the council to hire numerous “consultants” at $100 000 per hour.  The tip is emitting methane!  Oh the horror.  Someone official comes to officially look at the methane, charges  $100,000 for looking, and issues an enforceable “recommendation” for an open ended and indefinite series of remediation measures, each of which will require another look.

Oh what did we do before there were people to officially and highly scientifically investigate the fact that tips are apt to pong?  What would we do without government to supervise government?  And surely any problems that might occur can be easily remedied by providing yet another layer of regulatory authority to regulate the regulators that are regulating the regulators that are regulating the local council.

This, like the housing boom is unsustainable.  A single monopoly will charge inefficiently high prices and produce inefficiently low product, which is indefinitely sustainable. Multiple layered monopolies suffer a coordination problem that results in them charging infinite prices and producing zero product, as each attempts to get the majority of the squeeze.

This problem is remediable only through collapse or foreign conquest.  As I have remarked several times, the reason that Dubai can build high towers and we no longer can, is that in Dubai, you only need the approval of one theocrat and one holy religion.

I hope for collapse, since foreign conquest is likely to be unpleasant.  Last time around, however we had stagnation for four hundred years.   Collapse would be preferable.

Democracy is self destructing, as it inexorably moves further and further to the left – the fate of the past democracies of Athens and Rome.

Britain goes totalitarian

Saturday, November 13th, 2010

Sean Gabb, speaking very carefully to avoid saying things he could be arrested for, tell us:

Without thinking very hard, I can remember how Nick Griffin of the British National Party stood trial for having called Islam “a wicked vicious faith”. I can remember how a drunken student was arrested and fined for telling a policeman that his horse looked “gay”. I can remember how a man was arrested and charged and fined for standing beside the Cenotaph and reading out the names of the British war dead in Iraq. I remember a case from this year where a pacifist unfurled a banner outside an army cadet training base. “Stop training murderers”, it said. His home was promptly raided by police with dogs, while a helicopter hovered overhead.He was arrested and cautioned. If I started mentioning the cases where Christian street preachers have been arrested for quoting the Bible, or where Moslems have set the police on people for alleged words or displays, or if I even alluded to the Public Order Act or the various racial and sexual hate speech laws, this article would swell immensely. It is enough to say that anything said in public is now illegal if someone complains to the police, or if the police themselves take against it. And, when something is not illegal, we are all getting used to the idea – second nature in most other countries – that we should “watch ourselves”. Even I find that, if I discuss politics in a coffee bar, I sometimes drop my voice. A few weeks ago, I found myself looking round to see who might be within earshot.

Hyperinflation

Monday, November 8th, 2010

Officially, America has near zero inflation and a mere ten percent official unemployment.  Odd that it has a mere ten percent unemployment when the proportion of young adult males with jobs has dropped a lot more than ten percent.

As with third world and Marxist countries, the government’s reaction to bad news is to declare a new era of prosperity.  The recession is officially over.  With an unprecedented proportion of the workforce on the government payroll, productivity has officially risen to amazing heights and somehow, despite the big increase in the proportion of people on the government payroll, public spending has officially not risen much.

Unofficial inflation, however, is starting to look quite frightening:

Market Ticker tells us:

I just got back from the grocery store.  Eggs, which were $1.60 two weeks ago, are now $1.99/dz.  Butter?  Two boxes for $6 – on sale.  The same two boxes were $4.50 a couple months ago.  Land-O-Lakes Brand?  $4.89 – each.
Cheese?  8oz bricks were commonly 3/$5 as recently as September.  Now?  $3.50 – for one.
But there’s no inflation, you see.
Oh, and on the way home I passed the gas station.  It was $2.59 for regular a couple of weeks ago.  Now?  $2.89.  30 cents in about 2 weeks, a 12% increase.

This is consistent with inflation rates of thirty to fifty percent per year, early hyperinflation rates.

Sarah Palin is, as usual, on the ball, while ruling class is floating away in La La Land, sincerely puzzled that the peasants are failing to eat cake.

This is the decisive test of Keynesianism.  Of course, we already had a decisive test of Keynesianism:  The Japanese crisis.  Keynesianism failed dismally, to which the Keynesians replied that Japan’s troubles were the result of not applying Keynesianism vigorously enough.    This time, however, it has been applied vigorously enough.  The results should be apparent by around 2012-2016.  The fat lady has not yet sung, but so far, things are not looking good for Keynesianism.

Money is a matter of functions four,
a medium, a measure, a standard, a store.

There is a conflict between the use of money as a store and the use of money as a standard, since if everyone wants to store value at the same time, the value of money is apt to rise, and if everyone wants to use their store at the same time, the value is apt to fall.  Keynesianism therefore addresses a real problem, but its proposed solution tells the ruling class what they want to hear – that they can buy votes with money they do not have, that they can eat their cake and have it to, which is of course not true, and not a solution to the problem.  Keynesianism addresses a real problem, but is not a real solution.

It seems to me that a sounder solution would be to target the long run value of money.  If people had confidence that in the long run, the value of money would be constant, that inflation would run for a few years to be followed by deflation, and deflation would run for a few years to followed by inflation, that what goes up must come down, then I doubt that natural fluctuations would be large or damaging.   Fluctuations are large and damaging because there is no telling what the future value of money is likely to be, because Keynesianism makes money dangerously ineffectual as either a standard or as a store.  This large uncertainty destabilizes the economy.  The objective of monetary policy should be to give people confidence that the value of money will be the same in twenty or thirty years, even if it fluctuates a bit from year to year.

Of course, I am prescribing what an honest issuer of fiat money should do, if he cares about the long term, and wants everyone to continue using the fiat money he issues.  Since issuers of fiat money sooner or later find themselves in a situation where the major question is whether the political leadership will survive another week, such advice is unlikely to be heeded.  Keynesianism will continue to be believed, not because it is true, but because issuers of fiat money are compelled to act as if it was true.

Astroturf

Friday, October 8th, 2010

Casting Call: It’s a Bit Part Playing a Concerned Ordinary Citizen
Shannon Love found an interesting job listing at website advertising acting jobs:

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10/7/2010 PRESIDENT OBAMA TOWN HALL, DC
PRESIDENT OBAMA TOWN HALL, DC MTV, BET, and CMT (prods.) are casting the audience for a town hall meeting with President Obama. Shooting Oct. 14 at 4 p.m. in Washington, DC. Seeking—Audience Members: males and females, 18+. To apply, email townhallaudience@mtvnmix.com and put “Town Hall” in the subject line. To ensure that the audience represents diverse interests and political views, include your name, phone number, hometown, school attending, your job and what issues, if any, you are …[more]