CONFIRMED: America turns fascist, 200 years of history is tipped into the harbour - UPDATED

FURTHER UPDATE: It's happened. Now it's the US Government vs the US Constitution.



UPDATE: looks like it's really going to happen.

Congress seems set to do what King George would dearly have loved to be able to do.

If "government of the people, by the people, for the people" shall "perish from the earth", then never mind Britain becoming the 51st State, let the US become Britain's 87th county - its largest, but who cares, neither of us has been a democracy for a while now, so it's not as though your puny vote makes a difference. And you don't understand tea any more, so the tax shouldn't matter, either.

You are now ruled by a wealthy aristocracy who regard most of you as servants, mendicants or gallows-fodder. Whenever you look like causing trouble you are sent overseas to busy yourselves in armed conflict. The rich delegate the running of their estates to ruthless managers and spend their time in fashionable salons close to power, where they lobby for yet more liberty for themselves and the enslavement of all others.

Just like us. And just like the eighteenth century.

Esau, you fool.

Gender, obedience and the education system

I know a couple who decided to educate all their children at home, because schools teach conformity. (The children all did very well, in different ways.)

There is a famous experiment by the Yale psychologist Stanley Milgram, who wanted to test whether the Holocaust criminals' excuse "I was only obeying orders" was a true reflection of their feelings at the time. In 1961, he got volunteers to administer what they believed to be electric shocks of increasing intensity, to a human victim (who was merely acting). Disturbingly, some two-thirds of volunteers ultimately inflicted the highest-voltage "shock", despite misgivings, when reassured or ordered by an authority figure wearing a white coat.

I knew about that, but not until tonight, reading Richard Wiseman's "Quirkology", did I learn of a follow-up experiment, conducted some 10 years later. A flaw in the first test was that some participants may have correctly suspected that the man being given shocks was an actor; so researchers Charles Sheridan and Richard King repeated the experiment, using a live puppy. The results, reported in 1972 in a paper entitled "Obedience to authority with an authentic victim", were equally disturbing, with a fresh twist: slightly over half the male volunteers had been willing to use the maximum voltage, but 100% of the women complied, even though some of the latter burst into tears.

Back to schools. Primary schoolchildren have long been taught mostly by female teachers, but now women make up 87.5% of the staff, and 28% of state primaries have no men teachers at all;  and though when I started teaching men were the majority in secondaries, by 2008 the balance had shifted so that 59% the teaching staff there were women.

Some questions:

• How valid was the 1971 experiment, bearing in mind the small sample (26 people)?
• Has society changed since, so that the results would be very different if the same experiment were carried out today?
• Would it now make a difference depending on the gender of the white-coated superior? And would the results be affected by the whether or not the "boss" was the same gender as the volunteer?
• If women are indeed more obedient to authority than men, does this affect their expectations of obedience from the children, and how they react to a child's disobedience (or initiative)?
• Are male children equally obedient as female children? Should they be expected to be?
• Is men teachers' approach to obedience and conformity different from that of women teachers?
• Should the gender of the teacher be matched (or opposite) to the gender of the pupils, in single-sex classes?
• Is one gender better than another for teaching mixed-sex classes? And how about age groups?
• Do you, too, think it's better to keep your children from the hidden curriculum of schools?

What exactly is freedom?

It seems libertarians are mostly concerned about the right to get stoned. Question that, and you'll get hoary old stuff about alcohol and tobacco, and especially about how Prohibition didn't work.

I had a look at the US Prohibition story some time ago and it told quite a different story from what I'd always thought. I absolutely condemn these attempts at enforcement, but that's a story about the wickedness of power generally. As (I think) Charles Lamb said, "Governments are as bad as they dare to be."

But we are between Scylla and Charybdis. There is the power of government, and in resisting its excesses we may be tempted to assist the power of large corporations (which now appear to be growing mightier than the State and the People). The enemy of your enemy is not your friend - and in any case, corporations and the government are not mutually inimical after all: a career in politics often seems to be followed (if not accompanied at the time) by very lucrative dealings with the commercial sector.

And I have some doubts about Sartre-type definitions of freedom (he was very upset by Freud's theory of the unconscious). So here's some questions I want to repeat, from my comments over at the fine and idealistic people (no irony) at Orphans of Liberty:

1. Is it freedom to fall victim to addictions? 
2. Or to allow powerful vested commercial interests to increase temptation and opportunity?
3. Are we free if we merely act out compulsions, and other scripts written into our subconscious?

And bearing in mind that, as I said there, black people I know reckon the Establishment’s soft on drugs because it keeps the blacks down:

    4. Is freedom just freedom for me, me, me or should Robinson Crusoe respect Man Friday, too?

Sartre thought there was no such thing as collective freedom, until the Paris student riots of 1968, and then suddenly he did think it. But that's what happens when a first-class brain is faced with more than one thing it wants to believe.

Sir Philip Green and homing chickens

Two years ago, I wondered why BBC econpundit Robert Peston made so little of Sir Philip Green's debt-funded £1.2 billion dividend extraction from the Arcadia Group. I said then:

However, if, in the economic downturn, turnover and profits are savaged, and tangible assets decline sharply in value, and Arcadia becomes very weak, or even goes bust, what will Peston say then? Arcadia Group employs 27,000 people; was it really OK, other than in a strictly legal sense, to put such a heavy yoke around its neck? Had the dividend not been paid - and especially, not been funded by humungous bank loans - what more might the group have achieved?

This "value-skimming" was the subject of adverse comment at the time, by The Independent newspaper.

Now, S'Philip threatens to close up to 260 shops and throw thousands out of work. He ascribes the problems to a number of factors, including "the climate". Richard Littlejohn is sceptical; anyone else feel the same way?

Where could Arcadia have got to today, without all those rocks in its panniers? It's still carrying £444.5 million of debts, according to the last accounts (which were reported in so upbeat a manner).

And as ever in our modern financial world, what A does, B suffers for. When the chickens come home to roost, it's not Sir Philip's head they'll be pooping on.

Nice place, Jersey (where wife Tina's Taveta Investments holding company is based); not so sure about Monaco, whose Monte Carlo district is described by AA Gill as "the sort of slum that rich people build when they lack for nothing except taste and a sense of the collective good" and where Tina is, technically, "domiciled". Where the physical Tina and her husband actually spend most of their time I can't say, but when it all turns sour I'm sure they won't be able to smell it.

An interesting graphic

  Click here for details on how our economic activity is distributed.

Spang! (MF Global's 9-month period as a Primary Dealer)

Feb 2, 2011:

Oct 31, 2011:

Why I've been holding cash, for years - UPDATED - AGAIN... AND AGAIN!

“You can’t trust anybody and the entire system is collapsing. What’s the takeaway from this? It’s to make sure you have every penny in your pocket.”

Gerald Celente, Trends Research Institute founder, following the disappearance of his six-figure holdings at MF Global shortly before he was due to take delivery of physical gold. More here.

Update: and the chorus swells...

"It is up to you to decide how much you're willing to risk losing to a crook. If the answer is "none" or you cannot reduce the at-risk portion of your assets to what you're willing to lose to fraud then you can no longer participate in the market at all, in any form, nor even do business with a bank." - Karl Denninger.

"Now may be the time to exit all arrangements not specifically guaranteed directly by the government, and bring your money home. And better yet if no guarantees are required, and no parties standing between you and your wealth." - Jesse.

... and swells...


"Ultimately, I will not be at all surprised to see Europe’s banking system shut for days while the losses and payments issues are worked out. People forget that the term “bank holiday” was invented in the 1930’s when the banks were shut for exactly the same reason." - Dr Pippa Malmgren

"The whole system is going down. Pull your money out your Fidelity account, your Schwab account, and your ETFs." - Gerald Celente (again)

- both quoted here.

"Odds of a big market breakdown are both high and rising." - Mish.

... and balloons...

"The bottom line is that apparently some warehouses and bullion dealers are not a safe place to store your gold and silver, even if you hold a specific warehouse receipt." - Jesse (17 Dec 2011)

This gels with a recent post by David Malone, where he discusses a little-known rider to the (US) Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The amendment concerned overrides bankruptcy protection protocols that are designed to treat creditors equally, such that if Bank A has "repo" or derivatives contract business with Bank B, and Bank B fails (or is forced into failure...), Bank A can grab the collateral straight away, not waiting for the trustee to sort out who gets what.

And if some of that collateral is money or other valuables you (an innocent third party) deposited with Bank B, hard luck, it seems.

Ostensibly, this legislation was to prevent systemic collapse as Bank B's failure could make Bank A insolvent, then subsequently Banks C and D etc. But, as Malone points out, it's also potentially an invitation to stronger (or at least, public-money-supported) banks to tip weaker ones into insolvency and grab assets, leaving other creditors to sue for their return (if they can afford to do so). Possession is nine points of the law, as the adage goes. Apparently, this deadly revision is written into banking legislation beyond America's shores.

In turn, that reminds me of something Malone wrote back in October, reporting what a top Irish banker said to him, off the record:

"According to this very senior banker it was now known that the plan was all but agreed to re-capitalize all the banks but to the very minimum degree. France and Germany were agreed on this. As I wrote before I left, there has been a bidding war looking for the lowest amount.


"The horse trading and arguing is of a quite different nature.What is being thrashed out is a list, for use after this across the board, minimum bail out, of which banks will be saved and which will be left to die when they next have a problem. The horse trading is over who will be saved and who damned.


"In other words the decision has been reached that this is the last pan-Europe, all bank bail out attempt. After this it is recognized that Europe and the IMF cannot save all the banks. And so only the most systemically vital are going to be saved and the rest will be allowed to save themselves if they can or die if they cannot."

It's possible that a vicious internecine cannibalism is about to commence in the international banking industry, and plenty of innocent bystanders could suddenly find they're hurt.

Little wonder, then that even bankers have started to hoard food.

It's not about the banks

Like Scarlett O'Hara in "Gone With The Wind", the banks believe their happiness trumps everyone else's. The web of bank debt and sovereign bonds has come to dominate the agenda, to the extent that Italy's government can be dismissed by foreign interests and replaced by a wholly unelected cabinet. 'This is not the time for elections but the time for actions', said Herman van Rompuy; no Abraham Lincoln, he.

Not all banks have misbehaved, but many of the largest now appear to be ruined enterprises, determined to take rest of us down with them. I cannot explain why our politicians have poured resources into these colanders, except in terms of self-interest as current or future workers for the money establishment.

The banks' self-absorption is assisted by news media such as the BBC, with e.g. their latest interactive infographic on the Eurodebt nexus. Here are some of the results, recast as a table - ranked by external debt to GDP:


The pundits' talk is of the PIIGS, yet after Ireland the next worst case - by a long way - is the UK.

Something is wrong here. It's not the facts (though in a fiat currency world, I'm not quite sure what a financial fact is), it's the perspective: we're forgetting to look at the balance sheet, i.e. the net international investment position (NIIP). Leslie Cuadra did this on Financial Sense at the end of August, and it paints a rather different picture. Of the 40 major countries he surveyed, the US is at the bottom, and Spain next up. Greece's position is much better, scarcely worse than that of France. Hmmm...

Let's widen the view a bit further. Here are Cuadra's figures, reinterpreted in the light of the IMF's data on GDP (click to enlarge):
This arrangement chimes better with our level of concern, at least with four of the PIIGS; yet it leaves us wondering why democracy has suddenly been abolished in Italy. And why are we worrying about Japan, when she looks so good on these rankings?

It would seem that there is no one picture that tells the whole story. And that, I would suggest, is because there are many stories, many competing agendas. There's a sort of economic Great Game going on, with a full cast of tyrants, traitors, spies, revolutionaries and dumb foot-soldiers pepper-spraying harmless women. It is a time of great and unpredictable change, which is why gold has soared and the people are stocking their cellars and buying ammo faster than it can be made.

An increasing concern, for me at least, is that the system (if it is a system) may not be able to contain this degree of instability, or at least, some parts of it are more vulnerable to fluctuation than others . If I may offer a pictorial analogy?

Equilibrium can be achieved at many different energy levels, and this has implications for the participants. If one of the mice hops off, there may be no effect at all, given the friction in a real-life device. But if Jumbo dismounts abruptly, Nellie will be lucky to avoid a broken leg, not to mention a possible smashed plank. And if Jumbo then playfully steps on one end of seesaw A, we're looking at a mouse in temporary low orbit, which is pretty much what happened in Iceland, Ireland and Greece.

Similarly, economic interconnectedness carries asymmetric potential perils, as shown in the table below, which uses the latest NIIP figures from the IMF's database (click to enlarge). For a small economy like Greece, a trifling sum such as $100 billion (a mere seventh of a TARP) represents around a third of national GDP, whereas the same sum is only about 3% of Germany's - chump change, almost. So it would be very easy for rich countries to forgive quite a lot of the debts of poor ones, and very beneficial for the recipients, especially those who have liabilities far exceeding their assets.


It would also be interesting to know to what degree, and in what ways, countries like Germany have benefited from tying peripheral European nations into the Eurozone. Perhaps it would be incautious of them to overplay, or over-rely on, the Protestant work ethic story in accounting for their dominance.

But the international web of finance has a further danger, for large and small economies alike. Those who are balancing mice, such as Russia (or even China, come to that) would not suffer a massive alteration to their NIIP/GDP ratio if asset or liability valuations changed by a few per cent; whereas a 10% valuation change for the UK means a boost or hit of two-thirds of GDP. Compare that with Austria, which has about the same negative NIIP in GDP terms, but which is balancing smaller figures.

One invests to get a return, and unless it's an in-and-out speculation the return is in the form of interest, dividends or rent. If your assets suddenly shrink - say because of relative movements in currencies - your income stream is pinched; if your liabilities swell, your outgoings become more burdensome. Clearly, Britain is exceptionally vulnerable to exchange rate fluctuations; but to a lesser extent, so are other countries such as Germany.

With share speculation, the growing volatility in the system can be insanely profitable for the gamblers - whose activities, far from being part of the steadying mechanism, may instead become a feedback loop that ends up smashing the engine. Andrew Haldane's July 2011 presentation to the Bank of England ("The race to zero") warned that as program trading in equities develops it will, mathematically, lead to more and worse "flash crashes".

But the bond market is much bigger, and the derivatives market is maybe 20 times world GDP. Never mind elephants, this is more like balancing two pods of blue whales. There's no room for error and there must be a political will to de-escalate. Sadly, I don't see it happening, yet. And it won't, so long as we think that the banks must be saved at all costs, together with their trading rooms.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Three cheers for Western democracy - CORRECTED

A naughty trespasser gets what's coming to her.http://www.newser.com/story/133682/police-pepper-spray-occupy-portland-protester-elizabeth-nichols.html

CORRECTION: ... is offered a sample of a "food product"

43 years earlier...



But we have made progress. So many more channels these days. X Factor or Strictly, love?

Farage's latest - heading for 200,000 views

Concentration camp liberation

From Max Arthur's "Forgotten Voices of the Second World War" (booklet insert in The Sunday Telegraph, 14th November 2011)

Economic treason, zombies and village idiots

This time it really is different. The Bank of England figures for percentage growth in M4 show a decline to zero for the quarter ending June 2009, for the first time since the data series began in 1963. That zero mark was reached again in June this year, and in the last quarter it plummeted to a record negative 8.1% annualised.



This, despite targets being set for lending to small businesses. I've just heard an interview on the News at One (Radio 4) with someone from one of the zombie UK banks, Lloyds. Under February's "Merlin project" agreement, gross lending to business was supposed to increase by £190 billion this year; the banks are on target to do so, but are not meeting their quota for small enterprises.

And there's fudging going on. The smart R4 interviewer said there are rumours that banks have been cancelling existing loans early and replacing them with fresh ones, so as to appear to comply with gross targets; the Lloyds spokesman dodged that point with a weak assertion that net lending had increased (he didn't specify by how much). And that's net lending to businesses, not net lending to the private market overall, so I shall be interested to see the M4 figures to December, when they are released.

Meanwhile today Marc Faber gave an interview on Bloomberg (see below), in which he said that current US policy is to keep interest rates at rock bottom until the unemployment rate drops below 7.5%. Faber cast doubt on this plan, observing that America now has a very large pool of unskilled people and that there may be a long-term 10% unemployment rate. He compared this to the Middle Ages, when there were economically-dependent "village idiots" all over the place.

(I give the link below, because the embedded video autoplays, which is irritating.)

http://bloom.bg/sI9WmW#ooid=xzZzgwMzouQa6FhZ4bE4b-YoI7IO8ztG

This is where the calculations of politicians have gone wrong. Imported un/semi-skilled labour (often exploited and brutalised, from what I read about the UK food industry) and foreign-outsourced industrial labour may have benefited the businesses concerned, but keeping large numbers of our fellows unemployed has rotted their skillsets, morale and work habituation, not to mention their health and family relationships. There is also a growing element of the service sector devoted to patching the damage - policing, law, social services, benefit payments, health services, special education for the children and so on.

There is a level of incompetence that is criminal; and if some of these effects were reasonably foreseeable, it could be argued that some of our leaders should be impeached for economic treason, under the category of "high crimes and misdemeanours".

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Could we see a Chinese Welfare State introduced as a demand-booster?

"Rather than simply saying the Chinese are Confucianists and Confucianists save money, I’d say there are very specific things that make them anxious, and so they save money. So they save for a place to live, for their kids’ education, for unforeseen medical expenses, and retirement. This is something that people who used to work for state industries never had to worry about, because it was provided. The state is now toying with the idea of reinstating these safety nets, not out of the goodness of their hearts, but to free up capital so that people will spend more money."

Karl Gerth

http://bostonglobe.com/ideas/2011/11/05/from-made-china-bought-china/BmgUYiFGqPpEUgTntPZG6H/story.html

Was China's money turned down by the EU because of IP worries?

Just asking. Though there's lots of other bargaining points the Chinese want to raise. See this:

http://www.dailymail.co.uk/debate/article-2054888/Eurozone-debt-crisis-Cosy-China-EU-bailout-peril.html

China already has a hard-working, increasingly skilled and very cheap workforce, has bought in or built up factories and tools, and is securing industrial supplies around the world, especially in Africa. Once she has all the important know-how of the West, I have no idea what our people will live on.

This is why we must purge debt on a massive scale, so that the rebalancing between world workforces will not be absolutely catastrophic.

History: the testosterone cycle

It seems there's a social convulsion every generation. 1914, 1939, 1964(ish), 1989 - a cycle that repeats about every 25 years.

I'm not going to get too numerological about this - the average age at marriage and/or first live birth varies over time - but I do wonder whether one important element in history is human physiology.

It's also odd that we speak of a "generation", as though humans bred en masse in seasons separated by many years, like cicadas. But I guess there's a certain age span between those just too young to have taken part in the last bash, and those just old enough to want to get into gangs and rumble in the next one.

Maybe Occupy Wall Street, St Paul's, Thessaloniki etc are just the pubertal stirrings of the next revolution, the quasi-Aldermaston-March preludes to the next mass mania.

2014, is my guess.

The money-lender's pleasant dream

Germany, Germany above everything,
Above everything in the world,
When, for protection and defence, it always
takes a brotherly stand together.
From the Meuse to the Memel,
From the Adige to the Belt,
Germany, Germany above everything,
Above everything in the world!


German women, German loyalty,
German wine and German song
Shall retain in the world
Their old beautiful chime
And inspire us to noble deeds
During all of our life.
German women, German loyalty,
German wine and German song!



Unity and justice and freedom
For the German fatherland!
For these let us all strive
Brotherly with heart and hand!
Unity and justice and freedom
Are the pledge of fortune;
Flourish in this fortune's blessing,
Flourish, German fatherland!

US Congress and insider dealing

It's legal inside Congress, according to The Economic Collapse blog (see #9 on the list). Please click the title of this post for the link (Blogger, when wilt thou be healed?)

I'm not sure whether it's the same situation in the UK Parliament. Insider trading only became illegal in Britain with the passage of the Companies Act (1980), but I don't know whether MPs themselves are allowed to use nonpublic information to enrich themselves.

Harvard student rebellion

Oz economist Steve Keen reports that Harvard students are rebelling against the one-sided teaching of economics on their course.

This may seem a bit abstruse, pipe-sucking and sock-suspendered, but until the world starts to work with a different model we're likely to make the same mistakes again.

Link: http://www.debtdeflation.com/blogs/2011/11/03/harvard-starts-its-own-paecon-against-mankiw/

(Blogger continues to disappoint in the matter of hyperlinks and general post editing.)

Greece: CMA predicted 68% haircut a month ago

The credit default swap market was factoring-in a significantly higher debt discount for Greece as early as October 6, long before the Greek Premier's sudden passion for democracy:

http://www.cmavision.com/images/uploads/docs/CMA_Global_Sovereign_Credit_Risk_Report_Q3_2011.pdf

UKIP leader Nigel Farage interprets the latest move by Papandreou as putting pressure on the EU to agree to a shorter haircut:

"He himself is in favour of the package but has no option but to offer this vote.

"If he failed to do so he would be railroading the Greek people into a situation where he will have mortgaged their democracy, their liberties and their freedom. He cannot do that without their permission. He must also be hoping that his brinkmanship will result in a better deal from Brussels. The calculation is clear."

http://www.ukipmeps.org/news_383_Aristotle-had-a-word-for-it.html

If so, it's a shrewd move, since (as Farage says) the EU has a long history of paying over the odds to realise and preserve their dream.

(Apologies for giving link addresses below quotes - Blogger has continuing problems which I hope they will sort soon.)

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Overheard in France

- WHAT? He’s gonna do WHAT? Let the people decide? What’s he f---ing smoking?

- Tais-toi, Nicolas, tu te fais du mal...

- This is not a f—ing democracy! How’d you say that in Greek?

- It is politics, surely you understand...

- I understand he’s got to be here right now!

- Sois raisonnable, Nicolas, arrangements will have to be made, it takes time.

- Eh bien, Cannes tomorrow, or else!

Will the truth about the "anti-capitalists" be heard? - Part 4

Days after the Canon Chancellor of St Paul's Cathedral resigned in protest at the prospect of violence being used against the so-called "anti-capitalist" protesters, the Dean himself has resigned.

The latter was looking distinctly uncomfortable as he addressed the protesters in the last day or two (intimating that he shared their concerns but not their methods), and this is understandable when (reportedly) it was he who closed the doors of the Cathedral on "health and safety" grounds. I saw this as a PR ploy to put media pressure on the people outside, and I suggested the bluff should be called. Well, it's backfired anyhow, what with the Archbishop of Canterbury giving feline-subtle hints of support for the erstwhile Canon and leaving the Dean somewhat exposed.

Other spin may also bear re-examination: an audience member on BBC1's Question Time (Thursday night) challenged the media-spread allegation that most of the tents were empty at night, saying that the heat sensors were merely picking up the heat from tents that had gas burners going, and missing the body heat of other campers.

Have we - especially we bloggers - forgotten why the blogosphere has become such a significant forum? It's because of the biased, uncritical, gullible, lazy and perhaps even sometimes corrupt news reporting establishment.

Have we forgotten why the protestors are outside St Paul's, rather than Parliament, Downing Street or Threadneedle Street? It's because the might of the law is being used to squeeze dissent out of public spaces, with the - yes, I'd say it - evil misuse of legislation ostensibly introduced to combat organised criminal gangs and terrorists. Remember Brian Haw.

The subtext of mass reporting is that protest is OK as long as it's unobtrusive, out of the way and unheard. The more prominent element of the Fourth Estate has largely failed us, now that so many of them live in grand style and sup with the rich and powerful.