Core Incompetencies

I always read Stuart Staniford's stuff. I guess it is to be expected of a scientist (he is a physicist) but his posts never fail to be rational, insightful, data-driven, and well-reasoned.

The following is his most recent post in its entirety, with the response that I had written him:

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NYT columnist Thomas Friedman has a worth-your-time column today:

The Tea Party that has gotten all the attention, the amorphous, self-generated protest against the growth in government and the deficit, is what I’d actually call the “Tea Kettle movement” — because all it’s doing is letting off steam.

That is not to say that the energy behind it is not authentic (it clearly is) or that it won’t be electorally impactful (it clearly might be). But affecting elections and affecting America’s future are two different things. Based on all I’ve heard from this movement, it feels to me like it’s all steam and no engine. It has no plan to restore America to greatness.

The Tea Kettle movement can’t have a positive impact on the country because it has both misdiagnosed America’s main problem and hasn’t even offered a credible solution for the problem it has identified. How can you take a movement seriously that says it wants to cut government spending by billions of dollars but won’t identify the specific defense programs, Social Security, Medicare or other services it’s ready to cut — let alone explain how this will make us more competitive and grow the economy?

and

The issues that upset the Tea Kettle movement — debt and bloated government — are actually symptoms of our real problem, not causes. They are symptoms of a country in a state of incremental decline and losing its competitive edge, because our politics has become just another form of sports entertainment, our Congress a forum for legalized bribery and our main lawmaking institutions divided by toxic partisanship to the point of paralysis.

The important Tea Party movement, which stretches from centrist Republicans to independents right through to centrist Democrats, understands this at a gut level and is looking for a leader with three characteristics. First, a patriot: a leader who is more interested in fighting for his country than his party. Second, a leader who persuades Americans that he or she actually has a plan not just to cut taxes or pump stimulus, but to do something much larger — to make America successful, thriving and respected again.

I'm completely with his analysis so far...  Then he presents his diagnosis...

Democratic Pollster Stan Greenberg told me that when he does focus groups today this is what he hears: “People think the country is in trouble and that countries like China have a strategy for success and we don’t. They will follow someone who convinces them that they have a plan to make America great again. That is what they want to hear. It cuts across Republicans and Democrats.”

To me, that is a plan that starts by asking: what is America’s core competency and strategic advantage, and how do we nurture it? Answer: It is our ability to attract, develop and unleash creative talent. That means men and women who invent, build and sell more goods and services that make people’s lives more productive, healthy, comfortable, secure and entertained than any other country.

He goes on to briefly share some ideas on what it would take to strengthen this "core competency" of innovation and creativity.

I have very mixed feelings here.  On the one hand, I think he's absolutely right that this is America's core competency.  On the other hand, there's a sense in which what he proposes is doubling down on the strategy that got us into trouble in the first place.  It's not like our current problems are because we stopped innovating - just look at the patent stats - or stopped working our asses off.  No, our current problems are precisely the unpleasant side effects of prior innovation.  Americans invented assembly-line auto-production, and now we're struggling with needing more oil for the resulting cars than is easily available.  Americans invented the internet, and now we're struggling with competition from low cost workers overseas competing via that same Internet.  Americans invented industrial robotics, and shipping containerization, and now we're struggling with declining manufacturing employment as workers must compete with both machines and globally sourced production.

So Friedman's diagnosis amounts to a Red Queen situation.  We are not running hard enough to stay in the same place, so we should run faster.  Damned if we do, and damned if we don't, as far as I can see at the present.

END OF POST at earlywarn.blogspot.com

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Hi, Stuart:

I think that the situation is somewhat more complex...

The U.S. financial system is a fractional reserve system - money must be lent into existence. I believe it was Mike Shedlock that coined the term "Peak Credit", and the permutations of events stemming from that circumstance are rather numerous and problematic.

Every debt is an asset on someone else's balance sheet. As debts are paid down or defaulted upon (the definition of "Peak Credit"), wealth (debt) in financial form is destroyed.

For societies, core competencies also come with core incompetencies... the tax burden placed upon the worker to support the elderly... wasteful programs (broken window fallacy)... the uniquely American incompetency to produce more criminals, miscreants, and gold-bricks (prison population, false disability claims, workers refusing jobs in Agriculture while collecting unemployment...)

Given peak credit, we might be best working to correct our incompetencies rather than improve our core competencies. At least somewhat.

Political Violence

I'd like to begin this post by stating that I REJECT VIOLENCE in all its forms.

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The 60's are over. Rioting in the street is just soooooo passe.

If political violence comes to pass, think Pakistan and the bombings of police stations. Think Timothy McVeigh. Think Andrew Stack (the moron that crashed a plane into the IRS building in Austin, TX).  Think Mexico's drug lords, mafioso, jihadists....

Gerald Celente is fond of saying that "when people lose everything, they lose it".  No, should political violence come to pass here in the U.S. it won't be anything so easily contained as inner city rioting.

The unintended consequences of our vitriolic political discourse have not been given their proper airing.  The smug elitism of certain groups can, and very well might, lead to their demise.

Consider Mexico.  At this time there truly IS NO BORDER with this nearly failed state. (Of course, this is where the non-thinking true believers start to see me as some kind of Xenophobe...)  The kidnapping and political murder taking place in northern Mexico could quite easily make its way DEEP into the U.S. borders states.  Think about that..... think there might be some unintended consequences to whatever policy the U.S. Government pursues?  Could our most populous state, California, sink into the muck and mire of anarchy?  It really wouldn't take much. California cannot fund its law enforcement budget at this time.

Don't worry about Newark.  The Southwest is a well armed tinder box just waiting to happen, and the Southwest is hardly our only liability.  The continued assault on individual freedoms and social control could easily result in certain groups engaging in push back.

This is to be avoided at ALL costs.  Just look at the policy response to 9/11.  The Patriot Act, et al, and the loss of freedoms too numerous to mention.... not to mention a MILLION PERSON government agency, Homeland Security, established to spy and intrude on every one of us (you can be sure that someone from that illustrious agency will read this blog and file his "report").

Is this what a free country looks like?  And the Left wants to INCREASE the size and scope of government by increasing its funding?  Our universities are FAILING us miserably.  (I have a simple solution to help Americans to think ahead: A National Chess Challenge at every American High School and college under-grad program with big scholarship money to spur interest. How can anybody claim to have a well rounded education yet cannot demonstrate an ability to think of the permutations of consequences to actions?)

America is in the midst of a Cultural Crisis of epic proportions. Freedoms are not protected, responsibility is not required, Life is not sacred, violence is worshiped in video games, movies, T.V., etc... but we seem to be incredibly concerned with the sex lives of our political leaders...

Call me crazy... but I think the Right to "Life, liberty, and the pursuit of happiness" extends to the unborn, IRS workers in Austin, Federal workers in Oklahoma City, Afghani goat herders, atheists, Fundamentalists, even pro-abortion vegetarians (although I find it difficult to suppress the urge to reach out and b*#ch slap the living sh#! out of them... just kidding! Sort of...).  But its not enough to believe something. One must also consider the unintended consequences and permutations of events from actions taken.

The Ossification of Thought

Since the Enlightenment, gatherings of intellectuals in the West, be they formal (universities) or informal (the blogsphere) were places of where thinking persons congregated in order to share the and exchange the thoughts, and in some cases the great thoughts, of the day.

No more, it seems.  The intelligentsia of our day assemble quietly before the Great Ones, listen politely, with the approving "Yea" thrown in to show that we were still awake.  Our intelligentsia has been stricken with a bizarre case of arrested development.  It seems that in such matters independent thought has been has been recused and replaced by the proclamations of the "qualified"; that is, folks that have been approved to think by our indoctrinating institutions - but only if these thoughts comport with the dogma of those that "qualified" these folks in the first place.  Our elite universities seem to have become places filled with ideological cement. A place where bright young people go to have the establishment's political rhetoric drilled and drilled and then drilled some more until those "other" heretical doubts have been cast out.

(I watch in utter fascination as Paul Krugman, he of Nobel fame, engages his adherents in a shameless exercise of propaganda and mind control as well as the disciples of the Left in general, in much the same way that Sarah Palin performs her mind f*** on her advocates.  The difference, of course, is that Krugman has that nifty Nobel Prize to provide credibility.  Funny that. A Prize awarded by a politically driven entity in an area that is far more an ART than a SCIENCE for the purposes of furthering the Nobel Committee's agenda (eyes rolling?  Really?  Did your eyes roll for the Obama Peace Prize LOL HAHAHAHAHAHA ROFL LMAO... sorry, that got away from me again....) is then used to gain credibility to further a political agenda that had very little to do with the area of study that led to the Nobel in the first place.  Noodle that for a moment before rolling those eyes...

Today, our political discussions have been reduced to links to articles written by others supporting our particular bias.  "You don't need to think, just quote me!! After all, I won the Nobel!!  And don't worry, I would NEVER have an ulterior motive..." Thanks, King Paul Krugman... (for those Monty Python fans, I am reminded of the "How'd you become King, then" dialogue from the "Holy Grail").  No need to think for ourselves. Politics is merely a debate to be won. Too busy with your life to the point where your politics have not evolved in 30 years?  No time to think for yourself and then express those thoughts, but need to sound intelligent and engaged?  No problem. Go with the Mantra.... over and over and over... after all, if we repeat something often enough, it'll be true, won't it?

WTF!!??

On one side, we have the Keynesian failures.  Their contention - that we simply were not Keynesian enough... that what needs be done is more and more deficit and stimulus spending - is as much akin to bleeding patients prior to the advent of germ theory as anything the other side offers.  After all, the folks on the Right talk out of their A$$ about their fiscal conservatism... and then spend and spend like Keynesians... hence my term - 2H1P, the 2 headed 1 party.  Each side might say different things but their body's do the exact same thing. To keep their respective devotees in support of this cluster f*#!, each side manufactures issues that have no functional bearing on the problems at hand.  Every once in a while the masses start to awake from their coma, at which point the Left stirs the abortion pot, the one and only truly worthwhile issue separating the Left and Right (and I am going to leave this alone other than to say that the level of denial on the part of the Left as to what actually happens during an abortion is akin to the denial of any people engaged in unspeakable crimes against humanity.... but what can one expect from a group harboring no small percentage of pro-abortion vegetarians, my favorite example of the outrageously FOS?  Libertarians have no interest in funding government thugs to round up women and doctors... that does not make us lacking in knowing right from wrong.  It means we see the futility, as well as the unintended consequences, of empowering a government to impose morality and ethics with yet more violence).

To be fair to the Left, the Right has engaged in nothing less than an extreme attempt at Social Control - to which the Left has responded in a tit-for-tat issue-oriented (inflamed) strategy that has left the U.S. exactly where our founders desperately tried to prevent - a place where 50.000001 can inflict damage at will on the other 49.999999.  Our founders tried to assure minority rights.  That meant rights of the POLITICAL minority - not what has come to be defined as as minority rights.

The U.S. has bifurcated into Red and Blue. How much more bifurcation can the U.S. withstand before our ugly political discourse and Regionalism devolves into political violence?  The Left, comprising most of our intelligentsia, seems to be bereft of folks with any knowledge of the game of chess... or perhaps are suffering with a delusion of the fallacy of misplaced concreteness... The odds of a Leftist/Socialist takeover of the American political and economic system are remote in the extreme - as that outcome would likely end in violence, a violence the Left is ill equipped to arise from victorious (know a lot of Left-Wing criminals, state troopers, FBI agents, or special forces personnel?).

Lest you think that I am out of my mind for suggesting that the U.S. could, in fact, erupt in bloodshed... I respectfully submit the souls of the hundreds of millions of people that lived and loved, and lost all in the violence of politics; that is, a body politic that over reaches in its attempt at control.

Going Soft - Continued from "75% American's Fat??"

American's are Fat.  Even folks that aren't "Fat" are, for the most part, portly or hippy.  I mentioned this study in my previous article which concluded that by 2020, 75% of Americans will be "Fat".

To be fair, most of my professional associates in New York City are not Fat. They compete in marathons and triathalons, rock climb, ski every winter... My neighbors in Tennessee?  Most of these folks are so large they could qualify for their own zip codes.  If we ever went back to lamp oil, these folks could be farmed and rendered - "Nuke the Whales" my A$$.  Leave those whales alone; we have plenty of blubber right here.  If I may use the dreaded generalization... It has been my experience that folks in Colorado are thin, while folks in Mississippi are not.  Lifestyle, regionalism, and peer pressure seem to play a significant role.

What do the Fat do for a living?  Click that link above.  Look at the woman in the picture.  What does she do for a living?  If she does work, she is limited to Low level government employment, i.e., the Department of Motor Vehicles et al.  My bet is she DOES NOT work, ergo she is either on government assistance or being supported by her family.  How much of a contribution can this individual make to a her family?  Is she home cooking healthy meals for the family?  Seems doubtful. Statistically speaking, people of this girth are functionally disabled, certainly by the time they hit 40.

What does this mean for society?  Besides employment, what about the other portion of being a productive member of our society? How does this affect their family? Will the children view this as "normal"? What if the spouse is not Fat?  Any chance spousal obesity is a "deal breaker"?  What about the medical consequences? i.e. diabetes, depression, etc...

This issue would seem to dwarf Peak Oil and U.S. aggregate debt, making those issues seem puny and looking wan (pun intended).

More soon.

75% of Americans will be FAT!!??

Here's a disturbing link if ever there was one (especially the photo of the walking diesel tank in the red shorts and black top... that just captures the issues soooo succinctly).

"We thought the world end by Fire.  It turns out to be Ice." - The Mad Scientist (said to me as the credit crisis in late 2008/early 2009 dropped Oil (and every other commodity) on its head.

I think that line works for our purposes here as well.  Peak Oil, deficits, imbalances, currency risks, feminism.... all pale in comparison to a world filled with people so fat they are painful to behold.

Well not me. Nor my kids if I can help it (my wife is far too disciplined for me to be concerned about her in this regard.  The Japanese have a saying - "hal lay hatche bu mei" that they live by... which literally means "eat only till 80% full").

The un-intended consequences of "going soft": Bi-polar disorder, depression, borderline personal disorder, obesity, drug and alcohol addiction... well, as it turns out the "cure" has turned out worse than whatever disease we were trying to cure.

The "Elvis Trade" and the "Rip Van Winkle Trade"

Yesterday, I had a long talk with "Lenny", a prop trader living in New York City with his wife and 3 kids ("prop" traders trade for themselves risking their own capital. Folks that put their money where their mouths are tend to do much better research than your average Joe... and they tend to think... a LOT... about everything... doesn't mean that they (we) are right every time... it just means they are better at admitting when they are wrong... those without that skill do not have capital for long). Lenny is the gentleman that coined the phrase "The Elvis Trade"... "the US$ is fat, sweaty.... but still "The King"... to describe the US$ place as the world's reserve currency.

Lenny has abandoned The Elvis Trade. He is now thinking in terms of the Rip Van Winkle Trade (if any are unfamiliar with Washington Irving's Rip Van Winkle...).

"What if you knew you were going to fall asleep and wouldn't wake up for 5 or 10 years.... so you can't trade... where would you put your money"?

That was a rhetorical question...

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It is painful to watch the unraveling of a presidency. BHO was the least prepared man for the demands and complexities of the presidency since... well, there might not be a "since". The MTVization of American politics has failed us miserably (not saying McCain would have been a whole lot better... what about Hillary, or Ron Paul, or Mitt Romney? No, we screwed up.

"Fundamental Attribution Error"

There is some good news coming out of this cluster f**&^#. The Liberal Media, in an attempt to throw BHO a life line is now putting out stories like this one. It seems somebody is beginning to recognize that we are investing in our presidents powers that simply do not exist. Duh! Well, Ms. Caroline Baum... I did not see you criticize BHO during the campaign when he claimed that his policies would create 6 million jobs, though, as you rightfully point out the government cannot create legitimate demand in the market place... only now that your champion is going down like a rock in a pond are you marshaling the forces of reality.

Better late than never.

Lurch

Yes, we are lurching from the weird to the surreal...

The US$ is back in the mud, the rest of the economy is deflating (and even the Fed is recognizing that), and Gold & Silver have gone vertical. Or have they? The Gold/Dow ratio hasn't gone anywhere... In fact, as the Mad Scientist points out, there has been only one market of late - everything is going up at roughly the same rate of change - it didn't matter what you went long... they all went up.

So far, Marc Farber is being born out... it is best not to deny what your own eyes are seeing. Could it be that we are witnessing the world move from the US$ to Gold as the de facto reserve currency? Time, and the price of Gold, will tell... Or will it? If that is true... WTF is up with the Bond Market?

Here's what I think... I think that the various central bank interventions and stimuli have caused so many distortions that this might not even be clear in hind sight.

Summers Out

Larry Summers is out.

Is Dick Parsons' really going to be BHO pick?

How can a man fail at every job he has ever had and keep getting hired and promoted? WTF is so special about Dick Parsons?

We lurch from the weird to the surreal.

Must Have Hit Home

"When it defines man as the enemy, feminism is alienating women from their own bodies." - Camille Paglia, Vamps and Tramps.

Hate and Lies are what they are, no matter who tells the story. Special Interest Groups are, by definition, are opposed to the rights and self-determination of others (unless their operating principal is the rejection of the control and manipulation of others...) in favor of their adherents and supporters.

I blasted Bloomberg.com and wrote to them about their favored FemiNazi, Sylvia Ann Hewlett a few weeks back in this post.

Though I received NO DIRECT RESPONSE from the POS at Bloomberg responsible for publishing Hewlett's stunningly contrived, FOS diatribe... Bloomberg OBVIOUSLY sent Ms. Hewlett a copy of my rather off-the-cuff, back-of-envelope analysis... and Hewlett obviously felt the need to defend her silly assertions (I have a hard time even calling them assertions... Hewlett, to me, is obviously a deeply disturbed person, with deep seated emotional problems... likely stemming from childhood experiences I can only begin to imagine... and I AM TRULY saddened for what she must have gone through... however, Hewlett's continued attempt of institutional violence via the media/political/judicial processes demands that someone call her on the carpet).

Ms. Hewlett's agenda is clear for all to see (if "all" were listening that is).

Promote more qualified women into higher positions through programs that spotlight their smarts, not their sex appeal.

The real bottom line of that statement is this: "Promote more women". What she does NOT SAY quite so explicitly is this: "By Any Means Necessary".

Ms. Hewlett has an agenda, some funding, and will turn out "studies" to support the position she started with. Please review Ms. Hewlett's Wikipedia entry:

Sylvia Ann Hewlett (born 1946)[1] is an economist, consultant, lecturer, and expert on gender and workplace issues.

Got that? She's an "expert on gender and workplace issues". LOLOLOLOLOLOLOLOLOL!!! Hewlett might hold herself out as an "expert witness" in order to make money testifying against men in sexual harassment lawsuits... that's as far as the word "expert" should be associated with Hewlett.

So...

Dear Bloomberg: Before you publish any more of the Drek from this miscreant/leach... give me an email. I would LOVE to take her "analysis" to the mat for a little "scrubbing" as we like to call it in the trade. My bet is, it wouldn't stand up to a cursory perusing. Sylvia Ann Hewlett is nothing but a fraud, as is the Center for Work-Life Policy. LOLOLOLOLLL HAHAHAHAHAHA ROFL LMAO!!!!!

Sorry, that got away from me.

I really want to know who funded the Center for Work-Life Policy.

Dear Ms. Hewlett. I am absolutely sure that your most recent Bloomberg article was written in to support contentions made in your previous article, whether in response to my letter to Bloomberg or others I cannot say. I can say that your skills in analysis, game theory, AND economics (Ph.D.) are completely lacking, if I make use of understatement... which probably explains why you became a policy wonk/fraud... its in your best interest to steer clear of meritocracies and stick to lame brain, feel good dribble that cannot be measured - like politics but without the nasty face-the-voters stuff...

Good work if you can get it.

The good news is that you and your ilk are dying on the vine.

Good riddance.

What the end of record debt levels means

"Record High Debt Levels". "Too much credit card debt". "Crushing Student Loan Debt". Rinse and repeat, ad nauseum.

Every "debt" is someone else's "asset". Your liability is their wealth. Period. There is ALWAYS someone on the other side of the trade! If you buy a can of soda, you have, in fact, gone long soda and short the cash you paid for the soda (although not a perfect analogy... after all, you can't get much for used soda...).

All the screaming by certain groups that "the rich have only gotten richer while the poor have only increased their debt" is a f***ing mathematical necessity! Our banking and financial system operates on a fractional-reserve system! On the other hand, as the debts are either a: paid off, or b: defaulted on, this phenomenon will reverse (again, by mathematical necessity).

Since the process of wealth concentration will absolutely, positively reverse itself in the natural order of things, and since you can be certain that TPTB on the Left know this too... why do they moan so lugubriously about wealth distribution? And why is a Liberal Administration so concerned with the redistribution of wealth attempting to support the housing market (supplier of the greatest amount of credit that becomes the wealth of others)?

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Libertarians can only be embarrassed at the primary victory of Delaware's Christine O'Donnell. The last thing the country needs is a Senator concerned with the level of masturbation in our society. This kind of candidate is exactly what the 2h1p needs to torpedo what was a Libertarian insurgency in the Republican party. Delaware, what have you done?

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Here is fairly perfect example by Michael Yates of an excellent observation and description of a problematic issue, followed by a silly, politically motivated explanation. Yates accurately recounts the sad fact that Americans in fly-over-land WERE a proud people that have morphed over the past 30 years into blubberously over-medicated zombies.

Let me end this essay with a provocation. There is a dirty little secret of life in the United States. We hear from politicians and pundits in the media that there is a “real America” out there, of small towns in the “heartland” of the country full of hardworking and God-fearing men and women with the same heroic qualities as the founding fathers. But when you go to these places, you find something different: dead and ugly downtowns, empty streets, shabby houses, limited job opportunities, poor services and social amenities, pathetic newspapers, and second-rate schools. Such towns stifle creativity and broadmindedness. For many people, life in the heartland is harsh and boring. They compensate with alcohol, drugs, and food. The food available to them, in both grocery stores and restaurants, is of generally poor quality. Alice Waters, the famous Berkeley chef and fresh-food guru, claims that anyone can eat good food, anywhere in the country. I’d like to see her do this while living in Ely, Nevada, with a crappy job and not enough money. There is one grocery store, and what is available in it won’t tickle Alice’s palate. We did see organic red peppers in the produce section; they were $6.99 apiece. What would you do if you were a mother with three kids and a husband—feed the family red peppers or the forty-four servings of Kraft macaroni and cheese she could buy for the price of a single pepper? There is a good chance that, given the poor education she likely endured, she might not know how to shop efficiently by comparing unit prices. She might not know which ingredients in what she buys are good for her and which are not. She and her family have been subjected to such massive amounts of advertising for fast food (and this is what is probably served in the school cafeterias) that it is not surprising that they eat many meals at McDonalds and Taco Bell. When she is at home or at her low-wage, stressful job while the children area in school, would it be surprising if she eats too much? That she and her husband drink too much? Or take prescription painkillers or antidepressants, both of which will slow their metabolisms and make them more likely to gain weight? Will stress, strain, and boredom make them rush to the gym to exercise, or take a long hike?

Got that? Politically incorrect but not inaccurate.

The problem with people like Yates is that they somehow believe that life can somehow be made entirely fair - and that the effort to do so must come from The State.

U.S. capitalism is vicious and inhumane. It is the model of a dog-eat-dog world, nasty and brutish. It produces physically and mentally unhealthy human beings. No wonder we are fat. As the country enters a prolonged period of economic and political stagnation, look for matters to get worse.

See? All we gotta do is get rid of smart people, lucky people, good looking people, talented people, motivated people, frugal and thrifty people.... and all of our problems will be solved. Life will be fair, people won't be fat, stressed, depressed... if we would just fund a program for the "Fairness Police". Oddly enough, I found this article on ENergybulletin.net, the Peak Oil's communist wing and blog.

I have a question of the nice folks at and contributing to that August body: Why is it you folks publish article after article favorably reviewing the lifestyles of the Old Order Amish and Mennonites? These groups reject government intervention and DO NOT pay into the U.S. Social Security and Medicare systems, they are Pro-Life in the extreme, they take Libertarianism to the out- limits, breed like rabbits, are Patriarchal (their women wear the equivalent of head scarves for pete's sake), believe the earth is 4,000 years old and creationism to the letter...

I must say, I admire them to. All except for their idea of hygiene, heavy clothing during heat waves, and very dirty bare feet (when its hot, they go barefoot...).

So how is it that that the Amish gain the approval of the "Yates Political Spectrum" and any and all of their compatriots on the Left, but the elephantine dolts do not earn their disapproval? Did we go from "The Devil made me do it" to "the Corporation made me do it"? Is ANYBODY responsible for ANYTHING? (Well, other than corporate men and their "unending sexual harassment" of those poor women at the Anti-Christ, er, Goldman Sachs?)

The Student Debt Trap is, thankfully, coming undone

I am just THRILLED to see all of the press that the idea that the college debt trap is getting.

Story after story about how the economics of private liberal arts colleges just don't make sense for middle class and working class people. The economics of energy in the future means that middle class millionaire's that blow a half million "educating" a couple of offspring are committing a sin. Parents willing to let their kids go into big debt are committing a mortal sin - or are just as dumb as a bag of hammers...

Unfortunately, the word that half of these colleges won't even BE HERE in 10 or 20 years has not made it to the fore... but it shall. Peak Oil and Peak Credit are here for the U.S., as is Peak Student Tuition Payments. Hallelujah!!! That 6 hour a week tenured prof will thankfully be joining those soon to be former government workers earning a living from honest toil...

Now, if we could just get that other part of our f***ed up educational system on the mend, you know... K-12...

Its a start.

Clarification

If I knew with any certainty the rate of the decline of Oil imports into the U.S., I would have a better time line on deflation.

But here's the deal:

Irrespective of the Fed's monetization, that increase in debt will be more than offset, and for more than several years, by the decrease in aggregate debt (and hence credit) in the rest of (non-government) the economy. After noodling Mish's point that only Congress can cause hyperinflation by giving money away (or causing capital flight) I tend to agree with him (but just for giggles I did skim through the Federal Reserve Act - again). The Fed is just about powerless to cause hyper-inflation (or any kind of inflation for quite some time.)

Now, with that said... we need to then propose scenarios - "what if's". Let us assume that Iraq does not have a Saudi Arabia export potential (although it might, but for our purposes here let us forget Iraq), and the world's export profile comports with Jeffrey Brown's detailed pdf.file...

The price of Oil would have to rise significantly for the U.S. to maintain a trade deficit (and hence, have a foreign market for its bonds)... i.e. the price of Oil would roughly have to double should imports be cut in half... then, a calculation would have to be made for impacts to the U.S. economy in general for the decline in supply...

I need to noodle this some more... if anybody has anything to add I am all ears....

Deflation and Peak Oil Imports

The U.S. and the industrialized nations are deep in the grip of Deflation. No amount of wishful thinking is going to wind this process up in the near term. I had previously mused that perhaps another year or 2.... I am as guilty of wishful thinking as the next guy. That credit has peaked needs no better indicator than that student loan debt has exceeded credit card debt.

To understand this best, one MUST read the Federal Reserve Act in its entirety. Mike Shedlock put it best in a posting on his excellent blog today - that the Fed cannot force borrowers to borrow nor lenders to lend or in his words:

To understand how powerless the Fed is, one needs to understand the difference between credit and money, how much the former dwarfs the latter, and what the Fed's role is in getting banks to lend. I discussed those ideas in Fiat World Mathematical Model.

Unlike Congress, the Fed has no power to give money away. Nor would they do so if they could.....

As noted above, the Quantitative Easing will not cause hyperinflation. Moreover, it is doubtful the Fed can cause it at all. The Fed cannot give money away nor can the Fed force banks to lend or consumers to borrow. Those who disagree must still address the difference between theory and practice.

Unlike the Fed, Congress could give money away.

I do not know if giving everyone in the US $60,000 would do it or not, but announcing a plan to give everyone $60,000 a month indefinitely would sure do it.

How likely is that?

The answer is 0%. Congress struggles right now extending unemployment insurance. There is little political will for more stimulus. The next Congress is a guaranteed bet to be more conservative.

To be sure, more stimulus and more Quantitative Easing are coming but the latter does not matter and the former will be in insufficient quantity.

The critical line is that only Congress has the power to give money away. The Fed was not vested with that power - I read The Act and that authority just ain't there.

We can argue over just how aggregate debt gets back to whatever we determine "normal" or "sustainable" is.... but get back there it will. Yes, the government is going to continue to deficit spend, and yes this will be less than the contraction in aggregate debt - ergo, we are going to be stuck for sometime in this deflationary environment. In the end, the folks willing to sell us their manufactured goods ON CREDIT (which gives us our trade deficit and them their U.S. reserves and Treasury Bonds) will stop doing so... that will be the end of the trade deficit, and BY NECESSITY, the end of Oil imports into the U.S., the end of a pretense of "growth", etc..., etc...

In the past, I was as guilty as the next blogger of the fallacy of misplaced concreteness... or that all things being equal, then.... but as we all know, all things are NOT equal. Things change, policies change, opinions change, data change... s**t happens. The U.S. is not going to default on its bonds! That would harm the rich, the powerful, the influential, and the political classes... that would make NO sense given that these folks run the train set. Nope. The U.S. will default on Social Security, Medicare, and Medicaid... and as an impartial chess enthusiast... that is the right thing for the U.S. to do. The Republic MUST go on, no matter how f***ing stupid past administrations and Congresses have been.

That's the politics of it... the economics of it will needs be figured out on the personal level.

Ideas cannot be killed, but some need to be nurtured more than others...

"You can't give the government the power to do good without also giving it the power to do bad – in fact, to do anything it wants." – Harry Browne

Beware the man selling simple solutions to complex problems... or something like that.

This axiom holds true in our recent debate on the upcoming elections in November and 2012. I do believe Libertarianism IS gaining a foothold, but it would not take much to knock that foot right out from under it. Further, simply electing a Libertarian leaning president for a term or 2 won't get it done, either. We need a revolution in thinking... and we need number of real-deal Libertarians in the House and Senate... people that, like Ron Paul, Eschew empire, militarism, and all uses of force to accomplish social and political goals, as well as addicting people to government support and handouts.

Things are going to change, one way or the other, in the very near future (I define near future for this purpose as less than 1 decade). The international bond market is simply not going to fund us at some point before 2020. Yes, our domestic savings could rise to meet the need for a couple of years... but 10% deficit to GDP years like last year and this and next.... well, they cannot continue and always end up badly.

I am encouraged in that the Blogsphere and the Web have indeed circumvented the strangle hold that the Main Stream Media had held on the population (even the thinking portion of the population). The drivel that passed for journalism in the past is being held up for examination, and most of it has failed the sniff test.

In my view, there is one glaring failure of the community of folks discussing Peak Oil and energy issues - and that is censorship. Too many of the Blogs and Wed sites, EnergyBulletin.net comes immediately to mind, censure anything they view as a challenge, rejection, or indictment to most Left leaning political philosophy by only publishing commentary that fits their world view. Intelligent and open co-examination of the facts is the beauty of the Blogsphere, and perhaps the saving force for the American and Western body politic.

Let the open debate continue.

The Death of 2H1P

There is a pitched battle going on RIGHT NOW within the Republican party. The drubbing that that the GOP took in 2008 has seriously loosened the grip that the social conservatives had on the party - may they lose their hands attempting to hold on. The Libertarian wing is in full throttle... and the folks running the 2 headed, one party ("2H1P" Feel free to use that moniker - it is original to yours truly) system are completely freaked - and that's what's up with the disinformation campaign in the media. The special interests being fed at the cost of our very Republic would rather see your house burn and your children starve and America at war for generations than give up their place at the trough and at the alter of power.

How is it that Glen Beck is a "Corn Pone Nazi"? And Sarah Palin? She has star power for raising money and awareness... why shouldn't she contribute? Do not think for a moment that she has a shot at winning in Iowa or New Hampshire... The Left and the Media know this, but it is in their best interests to discredit Libertarianism using Palin. its just sooooo easy for the establishment 2H1P to tar the entire Libertarian movement with her missteps from the 2008 campaign. The 2H1P has no other options right now. They cannot point to any accomplishments. They MUST run a propaganda campaign discrediting the Libertarians.

For you disbelieving Lefties... the U.S. is a REPUBLIC. Why do you believe what the MEDIA says?The makeup of the electorate matters much less than the makeup of the electoral bodies. Now, take a look at the platforms/agendas of those Republican/Tea Party/Libertarian nominees that have quite successfully cut the establishment Republicans off at the knees. What do you see in this that would lead the media and the Left's Blogsphere to make such outrageous claims? I will tell you. They see a freight train coming straight at them.

Remember Y2K? Well, welcome to "The Death of 2H1P".

Back from a loooooong weekend, sort of

There are no weekends on a homestead.

The cow still needs to be milked. We "processed" 8 young roosters sunday, and "neutered" the piglets yesterday... Fencing (I will post some pics tomorrow so that readers can get an idea of just how big a job it is... nearly a MILE of fencing around the property) went on ALL weekend, as well as all of the other chores.

Speaking of "neutering" the piglets... my older son, in his last year of high school and either very, very bright or a gifted test taker and considering a career in medicine, assisted me in the "procedure". Catching the 3 males out of a troop of 9 (and this was before we knew the sex makeup of the litter) was a scream all to itself. With a 350 lbs Ms. Piggy only too willing to rip a hole thru my femoral artery... my son and I chased the piglets, who ran thru the hog fencing with no trouble in an effort to impede our agenda, each time catching only females... until... PAY DIRT! A young boar... and soon to be a young barrow.

Pigs testicles do not hang in a scrotum, they are tucked up in the abdomen, which makes castration dangerous for the animal and traumatic for the homesteader. I had my scalpel, idodine wound care solution, "Blue Spray" (to cover the wounds post-op) and my son to hold the piglet. The site was prepped with Iodine... Slash! Testicle #1 was out! Slash! Testicle # 2 was out! "Spritz! Spritz!" with the "Blue Spray".

So far, the piglets seem to be none the worse. They are eating and running around with their siblings un-conflicted by the loss of their reproductive options... The roosters? The more mature one's are making a nice soup stock as I write this... the younger birds will be rotisseried.

I say all of the above as a response to one of the hottest articles on Wall Street this morning. A number of friends linked the article to me requesting comment. What to say? Paul Farrell is correct... there are NO MACRO solutions... only micro solutions. And what are those micro solutions? That is for each of us to figure out for ourselves.

---------------------------------------------

The rise in world equity markets this past year has made things less than clear at the policy level. Wealthy Finance types and well paid economist shills just cannot seem to "get it". There ARE NO solutions for the European, Japanese, or American economies. Oil supplies are not going to increase. Many debts are not going to be paid back. No politician is going to ask his or her electorate to make a single compromise or sacrifice. The unknown and unintended consequences of the American and European Left's free lunch has left us HERE. In DEBT. Oh, you are sure to hear that it was GWB, or Reagan, or Nixon (GUFFAW!!)... the Left and the Media here in America are simply taking advantage of American's complete and utter lack of interest in their own history. FDR did this to the U.S., with the help of that other complete nit-wit, John Maynard Keynes. No matter how the Left and the media might try to twist and shout, stamp their feet, bat their eyes... whatever... you can't run away from this one. The Right has plenty to be ashamed of as well... but mostly for being so f***ing stupid in the fights they choose to pick. It was the Right that allowed the national debate to veer off onto such hilariously unimportant issues as Freedom Fries, Gay Marriage, and Flag Burning, et al... You can call your Fries what you wish... you should be able to marry who you wish... our Constituion's protection of free speech was not designed to censure the boy scouts but to protect the obnoxious...

But let's forget all that. Those groups are toast. They are done. Put a fork in them.

I love to read J.H. Kuntsler... you can always count on Jimmy for the entertainment value, not to mention a unique metaphor per post and sloppy kiss for his Leftist constituents... I never miss a post... but, if there is anyone here that keeps in touch with Jim, tell him to take up chess.

This game will not end even at the end of Oil imports into the U.S.; even at the default of S.S./Medicare; even at Dow 3000. Life WILL go on. Well, for some/most folks life will go. How it is goes on is the $64,000 question.

The following is a repost of an article I wrote on July 20, 2008. I thought this would be a good time to reconsider the points:

With the state of the U.S. Budget, U.S.$, and the coming U.S. oil import disaster... We have some political upheavals to look forward to. But which way will the wind blow?

FDR Liberalism is DEAD. There is a dead body walking around, but it is DEAD just the same.

GWB's version of Conservatism (His group, founded by Strauss, hijacked the moniker) is DEAD. The body has already begun to stink.

The minor movements of Feminism and Race Based Preferences are going to wink out of existence without anybody even noticing them. Sorry, Gloria Steinem, fish may not need bicycles, but women will need their families - desperately. Biology is destiny, and thankfully so because Social Security will cease to exist in the lifetime's of most reading this. The new "Social Security" will be the same one we have had for time immemorial - your children. This will be so irrespective of the political sensibilities of aging, childless feminists.

"We can evade reality, but we cannot evade the consequences of evading reality." Ayn Rand

In the permanent energy crisis, their will be no "Retirement" for the masses. The issue will more likely be what will you do when you are too old to care for your self? (Not that "Retirement", in the late 20th century/early 21st century American definition appears to be such a happy time. I live in South Florida, home to the mother of all retirement populations. I can only share with you my interpretation of of my personal observations... these retired folks do not look terribly happy to me. To my eyes, they appear miserable. Of course these individuals might have been miserable when they were young, so this is hardly empirical.)

So many people are looking to our GOVERNMENT for answers to the oil crisis, the budget crisis, the mortgage crisis, etc... "We should do this. They should do that." I wonder when it will occur to the very folks that think government is/has the answer.... Exactly WHO got us into this fine mess in the first place? And exactly what resources do they suggest the government use to get us out? The U.S. is in DEBT up to its eyeballs. Our citizens actually believe that they are ENTITLED, regardless of how poorly they have led their own lives, to a retirement, of at LEAST 20 years of nonproductive consumption, fully funded for their healthcare and their material needs.

Go ahead! Gain as much weight as you want! Diabetes? Bad back? Erectile dysfunction? Not to worry, the government (our new Lord) will provide. You don't have to wear a condom! Drink and drive, its fun! Smoke! We'll take care of your healthcare bills. Can't work (or just don't feel like it)? No problem, we will send you a disability check. Can't save money? Bad credit? Poor work history? No problem! We'll give you a mortgage with NO MONEY DOWN! And if you can't pay? NO PROBLEM! It wasn't your fault ANYWAY! It was those scum bag speculators... Congress will fund a NEW program to keep you in your home with money they don't have, borrowed from people they have no intention of paying back, and if those pesky lenders want the money back we will simply bomb them into the stone age or devalue the currency and STEAL it from them.

All to fund programs supported politically by people who claim they HATE war!!! Give peace a chance!!! But fund our social programs or "we will g-d damn bomb ya" (George Carlin), or steal the food right out of your mouth. To make ourselves FEEL better about all of this, we will send a couple of young people over to your neck of the woods in Peace Corps garb. (I received an email today from a reader with this quote:)

"Sometimes we are so caught up in

who's right and who's wrong

that we forget

what's right and wrong." - Unknown, but Thanks, Lane!

Folks, we are going to have to get over this, one way or another. Phil Graham is correct. We HAVE become a nation of WHINERS. Where the F$#@@! is John Wayne? The end of the Oil Age is the beginning of the Age of Personal Responsibility.

(Here comes the email railing me about "Corporate Welfare". Brother, I am going to cover the disgusting way that corporations have evolved in another post... but to accuse them of being the BENEFICIARY of the government's largess "is what is known as being STUNNINGLY full of shit" (again George Carlin. I seem to be channeling George today.) Government has steered corporations to what they are today precisely because they are just SO PERFECT a machine for extracting income taxes from the masses, which is then used to create these silly programs and "American Interests" that need to be defended in the first place. Corporations are the funding source for EVERYTHING good and bad in the system. Think about it, the money AIN'T coming from single mothers, hitchhiking hippies, college students, or the Rev. Al Sharpton.)

How is it that the NeoJerks stole the 'Conservative" mantle, and nobody noticed? How is it that the South was controlled by the Racist Democrats during the 1950's and '60s, but now they call themselves Conservative Republicans? How is it that the Northeast, you know, the political descendants of the Authors of the Bill of Rights, went from "Patrician Republican" to "Liberal Democrat"? Are the Republicans the Party of Lincoln or the party of G.W. Bush? Are the Democrats the party of Ralph Nader or George Wallace?

Folks, these are just labels, and the little meaning that they had just got SQUASHED by the new political realities of what is likely to be the Mother of All Recessions perpetrated against a people that have become dependent on government to guide them through their average day.

So what will it be?

San Francisco confiscatory liberalism is DEAD. Bush and Cheney's silly foray into outrageous spending has bankrupted the nation - whatever political movement they represented, call it what you will, is DEAD. Both movements lay bled out at the hands of the Oil Depression.

Will we devolve into a fascist state in which the masses gladly give up what civil rights they have left in order to make a run at the status quo? Or will we accept our responsibilities and keep our individual liberties and fight for the liberties we lost?

The Lies We Accept

“The illiterates of the 21st century will not be those who cannot read and write but those who cannot learn, unlearn, and relearn.”- Alvin Toffler

We are simply fantastic at convincing ourselves of that which we need to believe. Much of this we do in order to remain part of the subset with whom we identify with.

Margaret Carlson, someone with whom I doubt I share a great deal politically, has this brutally accurate and insightful article regarding the Iraq War over at Bloomberg.com.

I hardly knew GWB; GWB was not a friend of mine. Obama is the same as GWB... and that is not necessarily a bad thing... just an observation. I had met GWB several times back when his father was running for President. I raised money for his father. He was as polite and cordial as one could possibly be, in fact I would describe him as warm and likable. I never had the privilege of meeting BHO, but by all accounts the man is personal and affable.

GWB lost my support at the Iraq war. People, that is "regular Joe's" like me, that supported the Iraq War are every bit the same misinformed group-thinkers as those that support abortion. In both instances, the proponents censure the truth of what is going on so that their "supporters" will maintain their support for an act or acts the truth of which they never, ever see.

Take a trip to the U.S. military hospitals in Europe. See the ten's of thousands of innocent Iraqi civilians missing limbs, burned to a crisp... the paraplegic and quadriplegic American soldiers, those with traumatic brain injury, the horribly disfigured... this is the Truth of War. But the "supporters" will never see this truth, yet will continue to support the cause of this brutal truth...

Pro-Choice? Really? Why is it that the group-thinkers supporting this choice censure the results of abortion? For the same reason war supporters censure their "product". The truth of it is unsupportable.

How did the supporters of war, murder and killing get that way? How does a supporter of gun control here in the U.S. come to support dropping one-ton bombs on targets in Baghdad and hellfire missiles from unmanned drones on "suspected militants"?

The Media.

We lie to ourselves, and then to assuage our guilt we pay for the propaganda to make us feel better about those lies. 86 MILLION Americans are extorting resources from the other 215 million or so Americans. In order to justify this criminal theft and interference with our Rights as Americans the Left and the Media have engaged in the Mother of All Advertising Campaigns to convince the American people that the problem is that the rich are not taxed enough!! Yep. The problem is Steven Jobs, Warren Buffet, Bill Gates, and Steven Spielberg, et al... if those guys weren't so rich the rest of us wouldn't be so poor!! And more than half of American voters bought it, hook, line, and sinker. Never mind that for most of the post war period the Government confiscated over 50% of rich peoples assets at their death, or forced that out of reach of all for the purposes of increasing the capital base (monetary inflation), and taxed them nearly 50% of their income while living, and 6% in sales taxes if they spent anything...

The U.S. is in a world of hurt. Blaming this hurt on those that worked hard and had enormous good luck is absurd. This is not to say that Death Taxes are not a worthwhile vehicle for preventing the Baron of Microsoft or the Duke of Apple from colonizing America.... but that is a different issues, is it not? America's problem is that we have simply increased the percentage of the dependent population while also increasing the consumption of the dependent population.

Nearly 1/3 of the population receives assistance from the government - a nice way of saying extorting money form the tax payers and the international bond market - yet cable T.V., cell phones, and high speed internet access is nearly universal. This was not the case a generation ago... ergo the percentage receiving largess increases as does the AMOUNT of the largess.

“As every student of American history knows, this country’s core founding principles included nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination." hedge fund manager Dan Loeb last week.

Got that? Non-punitive taxation!! A political minority, that is those with less than 50% of the vote, were to be protected from persecution from the majority!! "An inexorable right to self-determination"!!!

Let me ask you something... have you seen any of that around lately?

We are so close to breaking down... an outcome I am confident that those doing the breaking are wholeheartedly pushing for - with an eye to what comes next. The next breakdown in the markets will likely be the last for this construct. Do those ushering this in really understand all of the consequences of their actions?

Somehow, I think not.