The New World Order

I said earlier this week that rich and powerful foreign investors will call the tune now, and London Banker relays a threat from the Chinese re Fannie and Freddie. Unlike the domestic citizen and taxpayer, these people absolutely will not be stiffed.

Which is why we will get high interest rates, to prevent robbery-by-inflation. Which is why cash may remain on its throne for quite a while yet.

The question remains, which currency? One says the yen, another coughs and says "Euro." Wish I knew.

A snippet from Alice

Just a reminder from Alice's powerful Picasa presentation on house price trends (see also her Youtube version - top of sidebar).

Advisers and analysts who haven't been in the game long enough to yellow their teeth, may be emotionally unprepared for severe and enduring reversals of fortune.

Woman in orange suit breaches security cordon to assail Presidential nominee

UPDATE (24 Feb 2012): curiously, the link for Hillary's picture below is now broken. Further, the reverse image search engine Tin Eye returns ZERO results for this specific image, despite its being an AFP/Getty Images pic. Quite possibly this is the last place on the Internet that you will find it.

Is this happenstance like those photos in Stalin's era, re-edited as certain persons became unpersons? Or in this case, as an unperson became a Person?

You can, though, find other images of the same thing elsewhere. So maybe it's to do with the vanishing of the LA Times Dishrag blog? And when and why did it vanish?
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"Pantsuit", or jumpsuit? You decide; I fear it may be prophetic.

But I think Paris Hilton carries it off better.

Is your financial adviser a charlatan?

It seems the experts now agree with my guess that the economic doldrums may continue until at least early 2010, a considerable change from their more sanguine assessment a year ago.

Unlike them, I was warning my clients about US indebtedness in the 90s; about the '98 Far East crash; about the late-bubble tech enthusiasm of '99; and have generally spent the last 10 years or so cautioning clients against making substantial investments. And I first said 2010 in January (in one of my Ol' Blue Eyes farewells - I keep making comebacks because I can't shut up when I hear what "experts" say).

The real difference is, I'm not rich; I simply can't understand it.

I may retrain in astrology. It's less regulated and I can't remember an astrologer being successfully sued. Here's a sample:

ALL SIGNS: house prices will continue to trend downwards in real terms, but because homeowners don't like accepting a loss on their personal real-estate speculation (I've long said that anything you treat as an investment will behave like one), much of the slide will be achieved by long-term stagnation.

Meanwhile, the good news is that to be a contrarian now means to keep your powder dry while looking for promising targets. I wonder, for example, whether a punt into carefully-selected construction firms might prove lucrative in the long run?

That is, unless we manage to deport the people who've come here illegally and start to apply geonomic principles to land use, in which case we'll find out that we have no such thing as a housing shortage in the UK.

Financial experts "miserably bearish"

This report by Jim McTague from Barron's, reproduced on the Cumberland Advisors site, gives an indication of how the money experts were feeling this month, on their annual fishing trip in Maine:

[David] Kotok's diagnosis of the cause of the gloom that permeated the crowd was this: Most of them see more economic downside than upside; we don't have functioning credit markets; banks and big Wall Street credit intermediaries are either dead, wounded or on life-support; housing is a wreck; and the auto industry "is done."

Once the economy stabilizes, it will take many years to fully recover, he said, because no strong growth engines are evident. "That's why people are so gloomy! They see no upside!" He personally is investing client money in agricultural plays because, he says, the long-term price of food is trending up. He likes bio-companies whose products are geared to an aging population. And he likes Asia as an investment destination...and he doesn't like much else.

I conducted in-depth interviews with a dozen of the participants. They all perceive the economy in the early stages of a multiyear recession that will be the most painful downturn since the 1970s. The housing market, which experts once predicted would recover in 2008, may not recover even in 2009. Credit woes on Wall Street will begin to inflict real pain on Main Street.

We're already seeing the impact on housing, though the worst may not have happened yet; and I think stocks and bonds are still in something of a fool's paradise. I'm sticking with my guess that in retrospect, we will see that the upturn began in the Spring of 2010.

Accountability - but not to the citizens

Reuters reports yesterday that a bank in Abu Dhabi is suing Morgan Stanley, Bank of New York, Mellon and the ratings agencies for fraud relating to understating the risks in the complex debt packages at the heart of the credit crisis. (htp: Jesse)

Answerability to the voters is so last millennium, pace idealistic dreamers like Karl Denninger; but money talks.

If voting made a difference, it'd be Paris Hilton for Prez, and do you know, she could be a surprisingly good choice. Much more can be achieved laying on a sun lounger than crashing around the world. A film quote from Lawrence of Arabia:

Colonel Brighton: Look, sir, we can't just do nothing.

General Allenby: Why not? It's usually best.

And what a pleasant change it would be, to have a politician who only pretends to be dumb. I can just imagine her sweetly commanding some tough dudes to go and give the financiers the drubbing they deserve, then turning her attention back to her fashion magazine.

Yes, it's money that talks and the people are dumb. In 1930 Ludwell Denny wrote, "Too wise to try to govern the world, we shall merely own it. Nothing can stop us." America forgot that lesson; rising foreign powers now pay the piper, and will call the tune.

If you can't beat 'em... every dollar and pound you save in your bank account, is a vote in this new electoral system. With luck, one of your descendants will be accepted into the Superclass, while the rest vainly try voting for improved social security and healthcare; when the well is dry, the vote won't fill it. The freedom for which America thinks it stands, isn't founded on supplication. As here in Britain, it would be a hard road back.

Perhaps Chesterton's observation on Christianity may apply equally to the US Constitution: "[it] has not been tried and found wanting; it has been found difficult and not tried."

In praise of the American Constitution

On The Great Depression Of 2006 recently the talk has turned, inevitably, to rich vs. poor. When societies are under stress, the people turn on each other. I think they are forgetting what holds them together.

I hold no brief for American foreign policy (perhaps nations and religions should be evaluated according to how they treat "the others"), but I wish we in the UK had something that guaranteed our international independence and defined and limited the powers of our government. My comment on Jim's piece is as follows:

Would we have to be talking like this if the banks hadn't exploded the money supply?

After much heart-searching (and encouragement from me), my brother recently became an American citizen. He sent me the crib book ("The Citizen's Almanac"). Page 5 ("Responsibilities Of A Citizen"), item one: "Support and defend the Constitution against all enemies, foreign and domestic." The explanatory paragraph ends, "When the Constitution and its ideals are challenged, citizens must defend these principles against all adversaries."

Please don't bridle if I quote the United States Constitution, Article 1, Section 10: "No State shall [...] emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts..."

It's not just about money, but allowing the bankers and politicians to corrupt the money system threatens liberty. We in the UK had a constitution based on civilised understandings that have been thrown out by mad revolutionaries, but you have a clearly expressed founding document more precious than any wretched paper dollars you may have. Lincoln said that the American nation was conceived in liberty and dedicated to equality; "... Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure."

Then as now, you may be the last major nation to hold up that flame. It is not gold and silver that made America admirable, but the principles that bind her citizens. Perhaps excessive material wealth has proved a distraction and a subversion.

After the crash, there will still be Americans, and the American nation. May I humbly suggest that Denninger is right, and the miscreants who have threatened the community with their greed and irresponsibility, should be held to account?