The Internet and collapsing real estate values

Web Ad Sales In Britain Overtake TV

Watch for the coming crash in commercial real estate, as increasingly, intangibles, non-perishables and some perishables get sold by Net and delivered from centralised locations.

The dolorous stroke

Falling towers
Jerusalem Athens Alexandria
Vienna London
Unreal


Hitchens (1):

A great grey Tower of Babel reaches up into the sky over Europe, lopsided, full of cracks and likely to collapse in the fullness of time...

For Britain, Europe’s oldest continuously independent sovereign state, [...] it is the end of 1,000 years of history, as predicted by the Labour leader Hugh Gaitskell as long ago as 1962...

In the EU, Ireland – no longer a Tiger – takes its place alongside Slovenia and Lithuania as a quirky, minor possession on the damp and unvisited fringes of the Continent, with almost no voting power.

Shorn – as it is now – of its ability to get in the way, it may find that the flow of subsidies will become much thinner in years to come...

The ascent of the EU happened to coincide with several decades of unheard-of prosperity and growth. But the EU did not cause that prosperity...

It was based on American Marshall Aid and helped along by American and British willingness to spend heavily on defending Europe against the USSR, while most of the EU nations kept their military budgets small.

The EU also cannot guarantee that Europe’s prosperity will go on forever. With so many member nations, many of them devastated by decades of Marxist misrule, its capacity to hand out subsidies is running out.

The credit crisis has not finished yet, Western Europe is fast running out of its own energy supplies and the shift of economic power to the Far East is speeding up, not stopping.

The European nations have not worked out how to deal with the enormous Muslim minorities which they have encouraged to settle on their territory and which increasingly demand the right to live according to their traditions.

Nor can they stop the slide of the manufacturing industry towards the regions where labour is cheapest.

Germany, still in a sort of post-traumatic shock over the cost of absorbing the Communist East, may not forever be willing to share a currency – and so a joint bank account – with the poorer and less well-run nations of the Eurozone.

Hitchens (2):

... At the coming Election, refuse to vote for any of them, and do so in such numbers that they can no longer claim they have any mandate to rule, so that their zombie parties collapse in a heap of dust and worms, and we can start again.

The alternative is the accelerating death of our civilisation.

Hannan:

People often wonder why national leaders are so ready to hand their powers to Brussels. Each successive EU treaty has weakened national parliaments, yet each has been enthusiastically ratified by those same parliaments, often in overt defiance of public opinion.

What makes the politicians do it? [...] Perhaps – let’s be blunt – they are defying their electorates in the hope of getting lucrative positions in the EU when their terms expire.

I realise that this is a big claim. But, in ten years as an MEP, I’ve seen it happen time and again.

I’ve watched people arrive in Brussels as moderate Euro-sceptics, but change their views as their lips become clamped around the teat of the expenses. I’ve watched ‘No’ campaigners turn into Euro-enthusiasts after being given sinecures.

Now Tony Blair is plainly not in that category. He was a Euro-enthusiast to start with, albeit in a rather vague, pro-Italian-holidays kind of way. And he’s hardly poor...

No, the charge against him is not that he abandoned his beliefs, but that he abandoned Britain’s interests...

Could the issue of the [EU] budget have been linked in Blair’s mind, even subliminally, with that of the presidency?

... if Blair really did seek to buy the presidency with British taxpayers’ money, he was almost literally selling his country – and there is a very unpleasant word for people who do that.

For those who believe in history with a human face, perhaps this is a punishment, for believing we could create some small and imperfect version of an Earthly Paradise, where even the poorest man would have a voice in his government, and have hope to better his position in society; where the bully would be held back by fear of punishment, and the powerful restrained by the apprehension of condign retribution.

My wife says she feels aggression everywhere, people arguing with bus drivers that they shouldn't have to pay. I say the hungry sheep look up and are not fed; we are lost and leaderless ; those at the bottom of society live in fear of the future, despair, impotent rage, having nothing but meagre dole given them with grandstanding condemnation and impossible promises of opportunity.

Put not your trust in princes, nor in the son of man, in whom there is no help, said the Psalmist.

Le Prince d'Aquitaine à la tour abolie
These fragments I have shored against my ruins

It always ends in a building project, whether the new EU Parliament or Ceauşescu's Casa Poporului...














But that two-handed engine at the door
Stands ready to smite once, and smite no more

It's not for us to take up arms. Worldly powers will rise and fall. Our defence, and the future, is the family. That is the nearest we can have to the Earthly Paradise.

The Other Side

I know that I have done my fair share of criticising the rich and influential on this forum. Why they think they should be in charge is exemplified in the website http://www.yousuckatcraigslist.com , to which I was directed by my lovely wife.

For those who don't know, Craig's List is a free website to exchange goods and services, among other things.

Polanski

Mark Steyn joins the discussion about Roman Polanski's arrest, adding some revolting and disturbing detail - Jerry Lee Lewis' marriage to his own 13-year-old cousin Myra, this isn't.

My question is, why have the authorities left it so long? There's some hidden agenda, surely. And surely, for justice to be seen to be done, there should not be hidden agendas.

Private life, public life

Alice Miles is a breezy columnist for the Times and one of a number who are fortunate in being able to turn their private life into copy, like Liz Jones in the Daily Mail (Jones' Mail on Sunday diary pieces are sadly irresistible).

Miles' opinion of the NHS, she wrote in 2006, was that some doctors are "arrogant and stroppy," an observation sharply resented by some in the profession. Perhaps this judgment was coloured by her personal experience during pregnancy, for she returned to this theme a year later in a piece titled "Natural birth! Hello? This is the 21st century": "... I remember when I told my very nice and until then helpful midwife that I was going to have a Caesarean (I, fortunately, had a choice). I might as well have said that after careful thought I had decided I would feed my baby heroin. When she had recovered sufficiently from the shock, Maureen, a large, broad-hipped woman and mother of about eight, suggested I might have been swayed by Posh Spice: “A lot of women want to follow their favourite celebrity.” Then she asked whether I was doing it at my husband’s request to keep myself perfect for him “down there”. " And then last year, she had a nice holiday in Madeira (pictured with her daughter in the article), which if it wasn't paid for by her paper, at least gave her the material to earn her salary. More, we don't know, unless and until she announces it.

You see, the Fourth Estate want to earn money talking about themselves at some times, yet preserve their privacy when it suits them. To dare to hoist them with their own interrogatory petard is treated almost as a sort of lèse majesté. When did journalists become, I don't know, not just celebrities, but a kind of minor royalty? Is it because the Left has been consistently undermining the Royal Family, so that a replacement has to be found?

At any rate, journalists can become quite chevalier in the exercise of their prerogatives. Last year, the former editor of Private Eye, Richard Ingrams, commented on Andrew Marr's use of a court injunction to suppress not only certain information about his private life, but also the very fact of his having obtained a court injunction to that effect (the magazine successfully defied the second part of that attempt).

The battle for press freedom continues: in this week's print edition of PE, the lead article is reduced to muttering, "Last month a certain institution obtained a high court injunction to prevent a certain newspaper from publishing a certain document. More than that we cannot say; to do so is fraught with danger." The article goes on to remind us of the debt we owe to the 18th century rake, wit and publisher John Wilkes, and reflects that "prior restraint" is rolling back the tide of Liberty.

I don't think this is a minor matter: I fear that we are witnessing the seemingly unstoppable reconstruction of aristocracy in all its worst aspects, on both sides of the Atlantic. And even their flappers are dressing themselves in the livery and rights of the Imperial Court.

Ironically, Marr himself recently interviewed the new owner of the London Evening Standard, Alexandre Lebedev, who in response to suggestions that the latter might have problems with Putin said, "I think the only right I'm defending is the freedom of speech and of course I am using to a certain extent my limited resources in actually supporting the freedom of information and freedom of press." Exactly one year earlier, Marr was also questioning Russians Gary Kasparov and Dmitry Peskov about press freedom in Russia. Following Marr's interview with Gordon Brown, in which he controversially asked the Prime Minster not only about his blindness but about rumours of drug treatment, he defended his right to ask such questions.

In August last year, Mazher Mahmood told Emily Maitlis on Marr's own show, "... what's happening is that a privacy law is creeping into Britain through the back door. Investigative journalism is slowly being strangled. The Max Mosley case is testament to that if it were needed."

Back in 1997, in his fine tribute to the late Ruth Picardie, Marr wrote, "She asked awkward, embarrassing questions, including about herself, and didn't flinch from nasty answers. And embarrassing questions are good, the lifeblood of journalism. Without them, we are duller, stupider bipeds.

These Ruth Picardie qualities are the opposite of what our accountancy- dominated culture, and indeed some politicians, seem to want journalists to be - obedient, emotionally-controlled and humble little information- processors with no life outside the profession, reliably mincing factoids into munchable, pain-free, sesame-coated pieces. And Hell, where's the pleasure in that? You might as well write a novel."

When powerful people - and, backed by the judges that at other times they may criticise, journalists are powerful - are allowed to determine the limits to liberty, it is unreasonable for us to expect it to retain its character. These quasi-liberal censors are like Douglas Adams' stupid philosophers Broomfondle and Magicthighs, who "demand rigidly defined areas of doubt and uncertainty!" Understandably seeking to prevent their own social embarrassment, they set the precedent for other, potentially wicked and dictatorial people to exploit for worse ends.

And it's not slow in coming. Alastair Campbell, himself a former journalist for the Daily Mirror and Today, earned a reputation as a fearsome handler of the Press when he became Prime Minister Tony Blair's spokesman. As a poacher-turned-gamekeeper, he knows the tricks of the journalists' trade, but his communication sources also yield him plenty of ammunition to keep the scribblers' heads down when he wants to; and the threat to Marr, via Campbell's blog, came swiftly:

"It was sad to see Marr, perhaps with an eye to a few Monday morning cuttings, feel that he had to raise blogosphere rumours about Gordon going blind, or being on heavy medication of some sort. I know it will give him the passing satisfaction of pats on the back from journos … But it was low stuff. I'm sure Andrew would agree that everyone has certain areas of their life that they'd prefer not to be asked about live on TV."

That's how it works, and that's why people in Mr Marr's position need to tell the truth and shame the devil, for otherwise the devil will know how to build on the weakness.

Eden, Noah, speculation and Bible truth

Without believing every detail in the Genesis account, I think the Noah story plausible. Rather than undermining it, I would say that the Epic of Gilgamesh corroborates it.

Graham Hancock has spent a long time developing his theory that the Flood is a mythicised memory of the melting of the northern European ice sheets some 10,000 years ago. I recall reading somewhere that some Australian aboriginal tales may be as old as their first arrival to the continent, 40 or 60 thousand years ago. Why not? If a story can be passed down from one generation to another, why should the transmission cease, unless the tribe is destroyed by invaders?

I think - I speculate - that there may have been many Noahs. The ice sheets can't have melted in a single season, so quite possibly there was an annual flooding in warmer weather every year for very many years, and this could have stimulated men to learn to build larger and more robust ships, to keep their families and livestock safe, rather than canoes suitable for shoreline fishing. Perhaps this led to the colonisation of central America by oceangoing tribes, since I've read the hunters that came down the ice-free corridor through Canada didn't get that far.

Years ago, I bought my mother the Times Atlas of History, in which it stated that agriculture was invented in Anatolia, northern Turkey, which happens to be the area where the Tigris and the Euphrates rise (two of the rivers that flowed out of Eden). Agriculture and fishing, around the Pontian shore, a shore that would rise every year. And hasn't there been some evidence that there are indeed remains of man-made structures in the oxygen-starved mud in that sea-shelf?

Just because an old, old story doesn't agree in every point with current scientific theory, that doesn't mean it isn't essentially true; the Ark may or may not have been 300 cubits in length, yet it may still have been very big. And many people have noted how the account of Creation itself also comes close to accepted cosmological opinion.

It's like Schliemann and his discovery of the remains of Troy: we're so used to dismissing traditional stories that we may fail to be guided by them.

Violence, illusion and reality

Nice extract here on what violence is really like. Interests me because indirectly, it reveals how much our world-view is skewed by fictional artefacts.

Sucking out the poison - or injecting it?

Padders has directed me to the latest financial craze, the re-remic. And, no doubt, in all the detail will hide another toxic djinn, while bankers, ratings agencies and quants run far, far away with their salaries, fees and bonuses.

Sit up and take notice!

From time to time, you get a piece of longer-term thinking that initially seems interesting, is then forgotten in the pell-mell of daily life, and finally haunts you with its truth years or decades later. For example, I remember one TV discussion back in the 70s where terrorism was flagged as the theme for the future; and another, criticising commercial advertising, where one ad honcho said the worrying thing was the increasing importance of the government as an advertising client.

This post by Edward Harrison seems to me one of those keep-it-by-your-desk pieces. He says too many things for me to summarise easily, but it has "secular bear market" written all over it, and Harrison goes further (into the territory recently explored by Michael Panzer in "When Giants Fall"):

... Needless to say, this kind of volatility will induce a wave of populist sentiment, leading to an unpredictable and violent geopolitical climate and the likelihood of more muscular forms of government.

Principles of investing

Bob Farrell’s Ten Market Rules to Remember

1) Markets tend to return to the mean over time. This is especially noteworthy now, for the housing market is returning to its mean by plunging, as are equity market, the dollar, the Yen, et al.

2) Excesses in one direction will lead to an opposite excess in the other direction. They always do, and the excesses of the housing bubble and excessive, lenient bank lending, are giving way to the housing collapse and inordinately tight lending practices.

3) There are no new eras — excesses are never permanent. And how strongly does that speak to us now, for the supposed era of unending housing price increases and of globalisation has given way to weak housing and growing protectionism.

4) Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways. Markets correct by going in the opposite direction, falling sharply after sustained, broad rallies, and rallying after sustained broad weakness. The world ebbs and the world flows; it has always been thus, and shall always be thus.

5) The public buys the most at the top and the least at the bottom. Of course they do; they always have and they always shall. The public buys when euphoria reigns, and it sells when depression does years later.

6) Fear and greed are stronger than long-term resolve. We are human beings dealing with rational and irrational markets; to believe that "fear" and "greed" can ever be lost is naive for they are the most fundamental of human traits.

7) Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names. Just as volume must follow the trend, so too must good markets have broad support and weak markets have broad weakness... and at the moment, the market is very, very broadly weak.

8) Bear markets have three stages — sharp down — reflexive rebound —a drawn-out fundamental downtrend. This really is how this bear market shall end; not with a hoped for "V" bottom, but with a great washing-out... a capitulation... and then months, or even years, of base building.

9) When all the experts and forecasts agree – something else is going to happen.... or as we like to say, "When they are yellin', you should be sellin,' and when they are cryin,' you should be buyin.' "

10) Bull markets are more fun than bear markets.... or as a friend of ours from Raleigh, N. Carolina used to say many years ago, "Bears don't eat; bulls party!"

Haw, haw!

The above is a photo of Clive Sinclair (later Sir Clive) with one of his inventions, the miniature TV (1966). Life magazine dubs it one of "30 Dumb Inventions" (slide 18 in the sequence).

Oh, yes? iPhone, anyone? (and see slide 26, to boot).

The difference between mockery and admiration is often a matter of timing (think of da Vinci's helicopter, or Noah's Ark). It's Sinclair's misfortune that, like many a genius, he led the market by too great a distance. But without people like this, we wouldn't have got here.

Two questions on productivity

A couple of quick ones:

1. Turn on, tune in, drop out

Robin Hanson says we are living in a "dream time", when survival instincts have been dulled by wealth so that Nature has (temporarily) let us get away with acting stupidly. I recall the old saying, "From clogs to clogs is only three generations" (i.e. the middle generation spends it all).

In this context, it's also interesting to note how at a time when we're drugging children and old people to stop them being a nuisance, libertarians are calling for young adults to have the right to zombiefy themselves with "harmless" mind-altering substances. Yes, they will still be able to work, some of them, for some time; I guess the same argument goes for functioning alcoholics. Dream on... until, as the Germans say, "Aus der traum, lieber Freund."

I've known black people who maintain that drugs liberalisation (and the associated laissez-faire approach to law enforcement) is a plot to keep their children in subjection. I tend to put it down to middle-class selfishness, instead; but I can see why they might think that.

2. Think big, think small

As higher taxation looms, some are already trying to draw a distinction between "productive" and "unproductive" workers. Well, effectively, practically everybody (including the poor) pays 40% tax already, when you look at the combination of income tax, National Insurance and sales taxes; though I do agree that a proposed 50% higher-rate income tax rate is likely to generate various avoidance strategies that will mostly wipe out the hope-for extra revenue.

But if Mish's friend "BC" is right, we are entering a "Schumpeterian Depression", during which big biz uses its access to finance to crush small enterprise; and so it may be a decade before young entrepreneurs develop the muscle to get out from under and start to succeed.

Besides, how much big business is founded on destroying small businesses and the self-employed? What, for example, if we looked at it closely, would be the real, total net benefit of the giant supermarkets? Weigh up the cheaper prices against the exploitation of their suppliers and the ruination of small shopkeepers - and the smashing of one of the ladders by which the aspirant working class - and their children - could rise and become self-supporting.

Where to turn, for financial security?

Richard Bookstaber (whom we've met before, here) looks at asset allocation and makes a point he's made before: in a crisis, everyone wants out, and the relative merits of different assets are ignored in the dash for cash. Provided cash (at bank) hasn't itself become risky - and after last year, that's not a given. Even outside the bank, there's inflation, devaluation and also, potentially, the fate of the Confederate dollar.

Leo Kolivakis comments, "I happen to believe that diversification is still important, but loses its power as huge inflows are going into all sorts of public and alternative asset classes."

That's the problem: we no longer know where to turn. As Kunstler comments, "the most perplexing part is that there hardly seems any safe place to preserve one's savings."

How about the smart, nimble operators? Investment guru Marc Faber spends his time looking at liquidity flows, trying to predict the next sudden tide and get in beforehand - not a game for the type of clients I have usually advised. And even he appears to be readying himself for the worst, "a total disaster, with a collapse of our capitalistic system as we know it today."

Recently, I seem to have been reading more commentators tending to the view that we are heading for that Mises "crack-up boom" - outlined here nine years ago, for example. And worse:

"And 'mid this tumult Kubla heard from far
Ancestral voices prophesying war!"

The great pleasure gardens of China's Emperor took some 40 years to build, in the first half of the eighteenth century. Vast, complex and exquisite, they were testimony to the wealth and power of the Middle Kingdom, only to be methodically destroyed in an act of punitive vandalism by the French and English in 1860. Premier Zhou Enlai decreed that the ruins should remain unaltered, a monumental lesson for the Chinese about the Western powers.

Of all the curses on humankind, long and vengeful memory may be the worst.

Inflation and the money supply

Interesting graph from Eric Janszen - he ignores the velocity of money (which can change quickly) and concentrates on money supply. He sees our situation as akin to that in 1981; I'm still thinking we're in the mid-70s, because round about 1982 was when we started to see real (post-inflation) returns on investments.

Poverty is OK

Robin Hanson looks forward to being poor. But I fear the path there won't take us to the anonymous semi-contentment of the Dark Ages, because it passes through population crash first.

Duty

Update: the media are focusing on rumours of Brown's taking painkillers, allegedly related to his eye problems, which the PM denies. I thought they wanted a regime change? If so, they'd be keen to keep him on, as the Tories must be, and so wouldn't probe him like this. But maybe they're also keen not to be shown up by the blogosphere, which maintains that the news media are colluding to avoid raising a more serious health issue - this one is doing the rounds.

He's not the only one suffering from dark whispers. There was that mysterious 2004 family crisis of Blair's, which some suspected really had to do with his own supposed nervous debilitation; and Leo Abse's book on Blair attempted to unravel the man's psychology. I myself was asking friends within a year or two of 1997 whether they thought he was mad; at that point, they looked at me as though they thought I was, instead.

Squaring the circle, packing your bags

In Britain, there are 28.89 million employed - 72.5% of the "people of working age"; median earnings approach £25,000.

In China, the average urban wage in 2006 was 1750 yuan per month, or (at today's exchange rate) slightly less than £2,000 per year.

_______

In Britain, there are 3 million homes where no-one works, with an average household benefit payment level of over £4,000 p.a. This doesn't factor in the cost of other benefits provided by the State, such as health and education. For example, State schooling costs something like £6,000 yearly per child.

In China, the official urban unemployment rate at the end of 2008 was 4.2%, or nearly 9 million people. This statistic does not include unemployed not eligible for benefits, or migrant workers - about 20 million out of 130 million migrants have no job. In industrialized Guangdong Province, for those who qualify, unemployment benefit for the first 24 months is 688 yuan per month, or £757 per year.

_____________

In Britain, the 27.5% of the "people of working age" that might be employed but are not, number approximately 10.96 million.

In China, estimates Eric Janszen of iTulip, there are 20 million officially unemployed and the real tally should be 40 - 50 million.

_______________

China has over 1 billion people and is desperate for land, and natural resources such as wood, water and arable soil. Despite restrictions on family size, her population continues to increase, largely because her people are getting to live longer (and will one day incur the high additional costs of growing old). She has industrialized at high speed and has built a massive skill base. She is continuing to acquire technological and scientific know-how, and is sucking in the world's steel and a panoply of key African and Australian minerals and rare earths. She sits on vast reserves of coal. The ruling Communist elite have not spent a long lifetime climbing the exceptionally dangerous slippery pole in their country, to see their beloved nation sink into chaos and their equalitarian beliefs defeated.

You are a British (or American) politician. You know all the above - or your handlers will tell you just before you go on "Question Time" or some other grill-the-pol show. (1) What will you say to your voters? (2) What private plans will you make for yourself, your family and your friends?

Trusting soul

So we're to lose a quarter of our sub-borne nuclear deterrent. Mexican standoff unilaterally defused by putting your gun down first, eh? On the other hand, remember what Churchill observed about the Hun.

Cut the cr-- and send 'em down

My wife (the smart one in this partnership) thinks Judge Judy should present the Jeremy Kyle Show, too. Now if only JJ, with her brisk, trenchant, from-the-shoulder, don't-pull-one-on-me style, could try all the soigné , sock-suspendered financial twisters that have jeopardised our collective wealth; five minutes in court and 20 years each in the hoosegow.

I had a dream last night
What a lovely dream it was
I dreamed we all were alright
Happy in a land of Oz...

- John Sebastian

A glimpse of the past

Out with my wife's relations on Saturday in the Black Country (the old coal-fired industrial area). One elder recalled that when they were poor, his mother would put the kettle on the stove on a Sunday, so the windows would steam up and the neighbours would think that they were cooking lunch.