Archive for February, 2009

Collapse

Thursday, February 26th, 2009

I’m beginning to think that Pat Buchanan may be on to something. It might well behoove the United States to put up a wall, quit importing and exporting, and just take care of ourselves. Employ Americans to produce whatever we need, keep our currency to ourselves, and tell the rest of the world to go to Hell. We are one of the few countries who could do that. China is another.

Yes, we will be a little poorer, no more amazingly cheap, stylish stuff at Target, Walmart, and the Old Time Pottery Barn. We’ll have to drill our own oil, and burn coal to make electricity, and drive Chevys, but we’ll get by, and everyone will have a job.

It’s going to be rough. This is a world-changer, like WW II and the collapse of the Soviet Union. I don’t believe anything the pundits or politicians say. I believe George Soros and Rupert Murdoch.

Some recent photographs

Saturday, February 21st, 2009

I got a new camera recently, a Canon PowerShot SD770 IS. They’ve been having a deal on them at Amazon for $159. It’s $230 at my local Office Depot. It’s not a pro SLR, but it’s good enough for me. I am totally amazed at what inexpensive digital cameras can do these days. I’m really liking how indoor pics turn out with the flash turned off. Here are some recent pictures taken with it.

Default

Saturday, February 21st, 2009

When I was young, back in the 60’s, I was in the grip of apocalyptic thinking. I joined, with my wife and children, and lived in for eight years, from the age of 32 to 40, my prime, in an apocalyptic commune in Tennessee called The Farm. Everyone there fully expected Western Civilization to collapse momentarily.

After the Farm collapsed instead, my wife and children and I escaped, in 1984, with nothing but a loan (later forgiven) from my parents, sufficient to purchase a used Chevy stationwagon and enough gas to get to Boise, Idaho. Like dust bowl refugees, Susan and I and our four children loaded up the car with ourselves and the few meagre personal possessions left us by the collective, and headed for unconditional parental, and grandparental, love.

Following the subsequent protracted trauma of re-integration into “square” society, I gradually came to see all of those apocalyptic expectations/hopes, as delusional, going so far as to eventually, post 9/11, become a (shudder) Republican.

I used to say, concerning the risk of owning stock in Apple, that the only way it could lose was if the entire global financial system were to collapse. Well, here we are. Now I’m beginning to think I was right the first time, just a little ahead of the curve, when I dropped out and joined an agrarian collective.

The problem with the Keynesian stimulus idea is that the purpose of the stimulus is to stimulate more lending, borrowing, and spending. That’s it. That’s the whole theory. Nobody is going to do that. Nobody wants to lend, borrow, or spend, and a temporary tax cut, or a job building the high speed rail from Disneyland to Vegas, is not going to make anybody lend, borrow, or spend. We (personally and corporately) are eliminating borrowing, cutting spending, and we’re certainly not going to loan anybody anything. We will continue this behavior until we feel as rich as we used to imagine that we were. This stimulus, and the next stimulus, and the one after that, are not going to change that dynamic. In fact, the specter of Congress creating massive debt, payable by our children and grandchildren, only further exacerbates this mood of economic Puritanism.

As far as the imminent and immanent apocalypse is concerned, I don’t think that it is possible for the governments of the world to sustain enough debt to turn this around. The reason Poulson didn’t use the TARP to buy up toxic assets, and the reason Geithner has not yet come up with a plan, is because the amount of toxic assets is enormous, far beyond the ability of the government to deal with. Eventually default may be the only option, that is, the writing off of all debt, both private and public. It has already happened in Iceland, and will soon be happening in a number of other countries. The current moratorium on mortgage foreclosures is a mild form of defaulting on the debt. When the Obama plan for housing becomes reality, it too will be defaulting on debt. Massive inflation is yet another way of defaulting on debt.

If all debt is defaulted, the result will be that poor and middle class people will become richer, and rich people will become poorer. Congress is made up of rich people, and their campaign contributors are also rich people, so this is not an attractive option for them. But if a majority of the populace is kicked out of their homes, lose their jobs, and their pensions disappear, the government will be overthrown, as it already has been in Iceland. Riots are spontaneously arising all over the world. So that is not an attractive option either.

Congress will default on debt as much as necessary to prevent a revolution, and as little as possible to minimize the suffering of rich people, but that may end up being a lot of defaulting. China will be left holding a bag of U.S. Treasury paper, which is why they are beginning to accumulate gold.

The other result of universal default will be that there will no longer be enough trust to support a financial system. The concept of wampum will be the kind of sophisticated financial instrument to which we can only aspire. Barter will be King.

Losing the Faith

Friday, February 13th, 2009

Doesn’t it seem like there is a lot more corruption on Wall Street and in Washington DC than previously imagined? Of course, now that the Republicans are out of power, they are looking less corrupt than the Democrats, because there is no longer any point in bribing a Republican, but I am rapidly losing faith in the integrity of our elected representatives, regardless of Party, as well as the CEOs of large financial firms. I had no idea it was this bad, and apparently nobody else did either.

The brilliant Ivy League MBA grads making their fortunes on Wall Street, assisted by Congessional banking and financial services committees, and the SEC (McCain called for firing the head of the SEC. Was he wrong?), and emulated by their remoras around the world, have been enriching themselves at everyone else’s expense, as is their wont.

The European banks are sitting on $24 trillion worth of toxic assets. I don’t know what the figure is for U.S. banks, but it is a helluva lot more than the 1 or 2 or 3 trillion dollars that are going to be thrown at the problem, the liberal agenda disguised as “stimulus”.

In addition, pretty much every single municipal and state pension fund is insolvent. This is also true of most private union and corporate pension funds. This dog has not yet barked. The public pension funds are guaranteed. If they go bankrupt, then the taxpayer is legally required to pick up the tab. And apparently we will also be picking up the tab for the private union pension funds as well.

Salaries and benefits for the public sector are now generally superior to the private sector, thanks to public employee unions. This is going to become more the case, thanks to the stimulus. The unions supply the legislators with campaign contributions. The legislators supply the unions with pay raises, and guaranteed health care and pension benefits. Synergy. I understand that the adversary of the UAW is the management of the auto companies. Who is the adversary of the public employee unions? We are. Goodbye California.

President Obama has been getting a lot of heat lately for fear mongering. It’s a bum rap. The President has not even come close to saying how bad it really is. This stimulus bill and TARP bail-out is not going to make any discernible difference, one way or another, except to triple the national debt. We are all still a long way from being prepared to fully take in the enormity of this disaster.

I don’t know what is going to happen. Barack Obama doesn’t know what is going to happen. Timothy Geithner doesn’t know what is going to happen. Larry Summers doesn’t know what is going to happen. Paul Krugman doesn’t know what is going to happen. Larry Kudlow doesn’t know what is going to happen. Everybody is just guessing. My guess is that it will be very, very bad, worse than anyone imagines.

This is not an economic problem. I have a degree in Economics, but I am not so stupid as to believe that Economics is a Science, any more than psychology, sociology, astrology, or climate change. Physics is a science. This is a moral problem. We have sinned, and must be punished, or, to put it in Buddhist terms, we have been blinded by delusion, and have reaped the inevitable Karma. The only “solution” is to take what is coming to us in as enlightened a spirit as we can muster.

…borne back ceaselessly into the past.

Saturday, February 7th, 2009