Globalism and its threat to liberty

Individual liberty is not an absolute; it exists in a social context. Reasonable limits on behaviour are established by some combination of external compulsion and learned self-restraint.

Even John Stuart Mill recognised this:

"It is not because men’s desires are strong that they act ill; it is because their consciences are weak. [...]

"In some early states of society, [the strong desires and impulses of individuals] might be, and were, too much ahead of the power which society then possessed of disciplining and controlling them. There has been a time when the element of spontaneity and individuality was in excess, and the social principle had a hard struggle with it. The difficulty then was to induce men of strong bodies or minds to pay obedience to any rules which required them to control their impulses.

"To overcome this difficulty, law and discipline, like the Popes struggling against the Emperors, asserted a power over the whole man, claiming to control all his life in order to control his character-which society had not found any other sufficient means of binding.

"But society has now fairly got the better of individuality; and the danger which threatens human nature is not the excess, but the deficiency, of personal impulses and preferences."

- "On Liberty" (1859), Chapter 3.

The slogans of individual freedom are used by rich and powerful persons and corporations to justify knocking down all obstacles - tax, law, regulation, restrictions on the international movement of capital and people - to their own advancement.

In the wake of their activities come economic uncertainty and cultural confusion, out of which arises growing social unrest which the governing power in each country or region is challenged to contain.

When the populace feels its collective identity crumbling, the State feels obliged to compensate for the weakening of individual psychological constraints by an increase in spying, legislation, police and armed forces.

If the "men of strong minds" cannot be persuaded or compelled to accept certain bounds to their impulses, their liberty will depend upon the progressive subjection of the majority.

The nation-state is not a restriction on liberty but that which gives liberty its form, just as the sonnet is not a cage for words, but its house and organising framework. "To enter in these bonds, is to be free," said John Donne; like life itself, freedom is a paradox, a balance of contradictory forces.


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Trillion Dollar Drain - is it about bail-ins?

Yesterday I commented on Hugo Salinas Price's observation that Central Bank assets have declined by a trillion dollars in 17 months. I thought it might be caused by big money trying to get away from a potential dose of inflation as governments try to print their way out of obligations.

Of course, buying government bonds wouldn't help with that. How silly of  me to forget.

But what it would help with, is avoiding a giant cash-grab by banks as they start collapsing.

Ever since the law case Carr v. Carr (1811) it has been clearly established - but still not generally known by most people - that bank deposits are not simply left for safekeeping. [This was re-discussed in 2010 in the wake of the 2008 Global Financial Crisis, e.g. here in the Daily Telegraph.] Revisiting this issue in the courts in 1816, the judge Sir William Grant ruled that "money paid into a banker's becomes immediately a part of his general assets; and he is merely a debtor for the amount."

"Depositors" go without dividends and recently have received no or little interest to boot. In the optimistic dreamworld of the common man, it's worth it for the sake of security - but he does not enjoy preferential/secured creditor status, either. Yet he goes on happily, relying on some vague notion that he'll be made whole if something goes wrong.

But I warned in 2007 that at that time in the UK only the first £2,000 was 100% guaranteed and any excess over £35,000 had no protection at all. This was later raised (in line with an EU directive) to €100,000, translated (roughly) into British £85,000 - and from 1 January 2016 it has been reduced to £75,000 as the Euro sank. [It's a moot question: which is more nearly broke, the EU or the UK? and how will that impact relative currency values? One wonders what the maximum UK depositor compensation will be in the near future.]

In the US, the security for depositors depends on the FDIC, which Tyler Durden explained last May is in no financial condition to weather a storm, having a reserve ratio of merely 1.01% in 2014.

This is of little concern to the average American - less than half the population has anything more than $1,000 in savings and a fifth have no bank account at all. A couple of years ago a survey found a similar picture in the UK.

But ultra-high net worth (UHNW - assets > $10 million) individuals have something to worry about if the banking system turns turtle:

"UHNW households held more than $10 trillion (about 7 percent) of global private wealth in 2014, a slight increase over 2013, and will be the fastest-growing segment through 2019 [..] At a projected CAGR of just over 14 percent over the next five years, private wealth held by the UHNW segment will grow to an estimated $20 trillion in 2019," says Boston Consulting Group.

It would not be surprising if in the context of shrinking global demand and (for now) low inflation wealthy individuals were looking to bonds as a safe haven.

Let's ignore bond holding by corporations, pension fund and other fund managers, and national governments. The missing trillion dollars that exercises Hugo Salinas Price is less than 10% of UHNW household assets.

What a great time to be a bond salesman!


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Trillion Dollar Drain

General Midwinter's invasion force sinks through the Baltic sea ice - a still from "Billion Dollar Brain" (1967)

Billionaire businessman and precious metal advocate Hugo Salinas Price notes that exactly one trillion dollars has disappeared from global Central Bank reserves since August 2014.

He comments:

"The fall in International Reserves is a clear indicator of a world-wide economic slump, which will become a severe depression... World liquidation has set in. The Piper must be paid. Growth is gone. This will be story in this epic year 2016."

- and asks, who bought that $ trillion-worth of assets?

I look forward to some expert opinion enlightening me.

Is this a sign that the super-rich and the offshore "dark pools" are offloading their cash for something safer? If so, is that an indication that they expect inflation as governments try to pay their obligations with debased currency?

Alternatively, has there been a secret write-off of unpayable debt?

Or did somebody at Bloomberg just hit the wrong key when updating the figures?

This infographic from Demonocracy shows what a trillion dollars in (100-dollar bills) looks like, compared to a football field (it's still only 6% of the US debt ceiling):

(Pic source)

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Inspiration

"This was not the first, nor was it to be the last, time that I had taken over a situation that was not going too well. I knew the feeling of unease that comes at first at such times, a sinking of the heart as the gloomy facts crowd in; then the glow of exhilaration as the brain grapples with problem after problem; lastly the tingling of the nerves and the lightening of the spirit, as the urge to get out and tackle the job gets hold."

- Field Marshal Viscount Slim, "Defeat Into Victory"


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Wind power in hot water

source

In Sweden a helicopter sprays hot water on iced-up wind turbine blades. 

Glaciated rotor blades are the scourge of wind turbine owners in cold climates. Alpine Helicopter in Constance has developed a new way to kick-start production when the ice forces the turbines stop: a helicopter that sprays hot water.

It takes us about 1.5 hours to process a sharp occurrence of icing wind turbines, says CEO Mats Widgren.

The water is heated over night using a truck equipped with a 260 kW oil burner. When morning dawns are 44 cubic meters of the 60-degree water in the tanks, and the helicopter can start running in the shuttle to the icy wind turbine.

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Is the world reverting?

Perhaps democracy never really had a hope. Voters don’t do anywhere near enough political analysis to make it work. Depressing surveys such as this one even suggest that voters know how little they know as they cast their vote. From the beginning the romance of democracy was usurped by political parties who understand the low information voter only too well. So they make it easy for us by selling a political brand instead of something concrete or radical. We might ask for more. 

Inevitably voting for a brand was never enough to keep alive the charade of democratic accountability. Now we reap the consequences. We are reverting to the old ways, to the days of a remote elite, an aristocracy based on nepotism, armies of functionaries, cosy deals with business elites and millions of graded sinecures for the faithful.

Our evolving aristocratic world is not a world of kings, queens and ancient titles because the new brand has to be differentiated from the old - obviously. So fewer top hats and conspicuous displays of wealth and power because the visual clues must be kept to a minimum. Aristocratic life is also far more complex than it was in the old days, with many more grades of membership. Yet the rise of new style courts, courtiers and functionaries has become too obvious to ignore. The EU is one such court, Westminster another.

As well an evolving global elite, our new world teems with millions of functionaries and servants whose lives depend not on the votes they cast but on the developing patterns of power which constitute the new world order. The ultimate shape of a global aristocracy may be a matter of conjecture, but the omens are not good. We are not naturally benign when it comes to dealing with outsiders. 

An emerging global aristocracy also raises a question about Cameron’s EU referendum. It seems to be the only move we in the UK have left to put a stick in the global elite wheel. Not a very big stick though. A Poohstick perhaps?

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Trident: the "sore thumb" problem

Joking apart, Jeremy Corbyn's objections to nuclear Trident submarines, and his suggestion of non-nuclear missile loads, have some point.

As Ken Livingstone (I know, but bear with me) said on this week's Radio 4 "Any Questions?", the sea is no longer a cloak of invisibility. As David Connett reported in The Independent's Boxing Day issue:

"... a revolution in underwater drones, as well as advances in sonar, satellite and other anti-submarine warfare systems, mean that even totally silent submarines are likely to become detectable. Some sensor technologies can detect large submerged objects by monitoring small movements of surface water."

Defence expert Bryan Clark foresees a change in role, whereby big, manned subs will operate from further back and smaller, drone subs will be deployed up front:

"Submarines will increasingly need to shift from being front-line tactical platforms like aircraft to being host and coordination platforms like aircraft carriers. Large UUVs and other deployed systems that are smaller and less detectable will increasingly be used instead of manned submarines for tactical missions such as coastal intelligence gathering, land attack, or anti-ship missions."

There is indeed scope for serious discussion of Trident, and not just in Labour Party circles.


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All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.