The Great Unknown

If we use President Trump’s address to the nation on March 11 as a start date, the coronavirus panic is now three weeks old. That Thursday morning, the airlines were overwhelmed with requests to cancel and change flights. People ran out to buy a lifetime supply of toilet paper. States began to clamp down on civil life with shut down orders and so forth. In the fullness of time, that speech will be seen as the point we moved from indifference to complete panic over the virus.

Now, the week following the initial panic was not a total lock down of civil life, as only a few states had started down that road. It was the following week when the great shutdown of the economy started in earnest, so we are just about ready to wrap up the second week of limited economic activity. Friday is when the government releases the weekly unemployment claims. Last week the number was 3.3 million and this week the number is expected to dwarf that figure.

As this goes to post, the estimates for the number of new claims are between 3.5 million and 5.25 million. The record for number of claims in one week was set last Thursday, so the next report is expected to be the new record. To put that into perspective, these are numbers four and five times higher than previous highs. There is no precedent with tens of millions of people being suddenly furloughed, as businesses are forced to close around the country, because they are told to close by the state.

Right now, 31 US states have some form of lock down in place. Not all are the same and not everyone obeys the edicts. There are plenty of people out and about, but major east coast cities now look like ghost towns compared to normal times. Lots of people are working from home, of course, but retail life has just about come to a halt, which means wholesale life is also slowing to a trickle. No one knows how long this will go on, but conventional wisdom currently says another month.

What this all means for the economy is completely unknown. The St. Louis Federal Reserve is out with a report claiming 47 million people will be out of work at the peak of the fallout from the lock down. That equates to a 32% unemployment rate. We are in unprecedented territory now. According to the report, “These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.”

Now, there is some hope that the depression will be V-shaped. That is, the economy comes back on in May or June and all of a sudden all of those furloughed people are hired back as business reopens. There will certainly be some of that, as the businesses that have not run out of cash will reopen, hoping to remain viable long enough to weather the storm. Many will have gone under, having run out of cash. Even in a V-shaped recession, it takes a while to fully recover.

The stock market is not always a useful guide for judging the economy, but in this case it can give us some clues. Right now, the robots that do 99% of the trading have factored in what they expect over the next six months. They have also factored in what they expect from government stimulus and bailouts. The Dow Jones has settled in around the 21,000 mark this week. The big sell-offs have subsided and investors are slowly buying into what many think is the bottom of the market.

Still, it is all guessing at this stage. Some states are talking about extending the lock-down into May or even June. China having a second lock-down is going to be seen by the alarmist as a sign the lock-down must continue forever. Given that we’re still at peak hysteria and have yet to hit peak infections, it is not unreasonable to think this carries into May. That means the lower end of that V-shaped recession gets much deeper and the angle coming out of it becomes much more gradual.

The only thing we can be sure of at this point is whatever lies on the other side of this is going to be very different from just a month ago. Politics, for example, are already changing, as the players respond to the new reality. Trump is turning into the wartime president, which is always good for the president’s numbers. He will no doubt become the great cheerleader of the recovery this summer, as he will want to take credit for the recovery from the lock-down, assuming there is one.

The question though is what will politics look like in a world of 30% unemployment, even if it is short-lived? If half the furloughed workers come back by June, that still means a world of unemployment levels not seen in generations. The last time we had double digit unemployment was 1982. You have to go all the way back to the Great Depression before seeing double digit unemployment again. Even allowing for the way these numbers are calculated, no one alive has seen what’s coming.

Lots of people will rush forward at this point arguing that these unprecedented times will suddenly make their preferred world view popular. The libertarians are smugly sure that this time, people will lose faith in government and join the libertarian revolution. The neocons are sure their treachery will be vindicated. On this side of the great divide, there are lots of cheers for the death of the economy, in the belief that putting millions of white people out of work will radicalize them.

That’s the thing though. This is uncharted territory. America is not Weimar Germany or 18th century France or 19th century Russia. We have no examples of a country turning itself off like this. We don’t really know why our rulers are doing this. The claim is the virus threat, but we have had worse virus threats and the ruling class did not go insane like this, so something is different this time. All we can say for sure is we moved from a world we generally knew and understood into a world of the unknown.

How will a people used to excess respond to a world of want? It is entirely possible that we get lots of real poor people again. That is, people with barely enough to feed themselves and a place to sleep. More important, those poor people will be visible to the middle-class again. How will people respond to that? How will people look at the plutocrats in a world with real poverty in plain sight? How will those plutocrats respond to such a world? No one has thought about it, so no one knows.

That means the politics of the future are probably not going to look like anything we have imagined. The old Left-Right axis makes no sense. The Left-libertarian versus Right-libertarian dynamic is now as relevant as Whiggism. If it is a short depression, then politics will revolve around the new state controls that are credited with “saving the economy” from the virus. If it is a long depression, then politics becomes a zero-sum game to see who fills the void of the discredited old politics.

Perhaps we are the first people to look out into the distance and get a glimpse of what comes after post-scarcity society. Maybe it is just a return to scarcity. Maybe it is a world with a high tech palace economy and fewer and fewer people working. Maybe the white nationalist get their wish and everyone becomes a dependent of the state. Maybe this look into the void frightens us and we scurry back to the safety of the past. For now though, we are staring out into the great unknown.


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Thinking About The Unthinkable

Last summer, cable personality Tucker Carlson started doing a bit where he claimed to believe in things like extra-terrestrials, or at least believe they are possible. He would go through a list of things that he used to think were impossible, then finish with how in a world where Donald Trump is president, anything is possible. The point was not to talk about little green men, but to highlight how our old assumptions have to be abandoned, because many of them have been proven false by events.

It is a good thing to keep in mind when evaluating predictions about what comes after the great lock down. Trump is no longer talking about Easter as the back to normal date and has extended the lock down through April. Governors are now in a race to see who can come up with the bleakest prediction for when things get back to normal. The Brits now lead the race with six months as their estimate. This is an unprecedented time, which means what was considered unthinkable is very thinkable.

For example, ten years ago most Americans assumed the political classes had learned a hard lesson from Watergate. They had let the security services run wild for too long and suddenly they were a threat to the politicians. The days of a J. Edgar Hoover spying on people were over. Not only was that false, but there was a plot among FBI officials to interfere in the presidential election. They went so far as to concoct an impeachment trap in order to remove Donald Trump.

Six months ago is was unthinkable that these same security agencies would have the president removed by some other means. Six month ago we did not have a third of the country hiding under their beds. We did not have major cities turned into ghost towns by quarantine orders. How unreasonable is it to think that the same people who launched the seditious plot in 2015 would find themselves a Lee Harvey Oswald? It sounds crazy, but we live in an age where the crazy quickly becomes the norm.

What about something less cloak and dagger like martial law? State governors are getting pretty close to the line between state of emergency and assuming dictatorial powers over their states. New Jersey is supposedly issuing travel passes to citizens and arresting people for gathering in their own homes. Los Angeles has suspended the second amendment. Trump has contemplated a Federal quarantine of New York City, which would probably mean troops on the streets to enforce it.

On April 27, 1861, Lincoln suspended the writ of habeas corpus between Washington, D.C., and Philadelphia so military authorities could silence rebel dissenters. In a world where governors are calling up the National Guard in order to enforce a lock down, is martial law really unthinkable? Sure, some nutty judge would no doubt challenge Trump on something like this, but what about governors? Would a corrupt judge like Amy Berman Jackson challenge a fellow party member like Cuomo on this?

What about the upcoming election? The Democrats have already suspended many of their state primaries for this virus. Given that Joe Biden is in such poor health now, they may force the suspension of the remaining primaries in order to have an easier time finding a replacement for him at the convention. That’s a precedent that could easily be used to delay the general election in November. What if New York and California have a second wave of the flu in the fall? Unthinkable?

How about something way out there with Tucker Carlson’s space aliens, like a military coup to topple Trump? The military is riddled with multicultural lunatics these days, so you know many are fanatical Trump haters. You can be sure there are a few generals who think they are Napoleon trapped in the body of a mediocrity. Given what we saw with the FBI, it is not unreasonable to think that the same “us versus them” mentality has crept into the officer ranks of the military.

Of course, for a military coup to work, it needs at least some support down the line, but mostly it needs civilian support. An ambitious general would need someone that really hates Trump to be the fig leaf for the coup. Would a vindictive old bat like Nancy Pelosi entertain such an idea? Would a group of Senators from the neoconservative cult consider such a thing? It seems unthinkable, but again, we live in an age when the unthinkable is not just thinkable, but happening in real life.

Of course, military coups and revolutions at the top have the habit of setting off civil unrest, as some portion of the public protests what’s happening. Locking people in their homes and communities will have unanticipated consequences. Lots of things that were out of the question now start entering people’s minds. The riots in Wuhan after they lifted the lock down is a good reminder that forcing people to do something does not change their unhappiness with the policy. It just intensifies it.

If this does go on for months and the cracks in the ruling class begin to show, is civil unrest really unthinkable? Is civil war unthinkable? Rhode Island now considers New Yorkers persona non grata. Pennsylvania is doing the same. Mainers are now going vigilante on suspected New Jerseyites. Sure, concern for the virus is the stated reason, but a general dislike for New Yorkers is the real reason. There are lots of such divisions in this country. Is civil war really so unthinkable?

Just because something is possible, does not mean it is likely. It is possible to hit the lottery for a billion dollars, but the odds are very small. What we’re talking about here though are the things that were thought impossible or close to impossible just six months ago that are now suddenly possible. Maybe they are still unthinkable within the ruling classes, but we thought the FBI and CIA spying on presidential candidates was unthinkable until not so long ago.

We live in an age where the unthinkable, like the fog, quietly creeps up on us until suddenly the unthinkable is the new normal. Just as “shelter in place” is the new normal whenever it snows, mandatory lock downs will be the new normal whenever too many people get the sniffles. The unthinkable not only becomes thinkable, it becomes impossible to think otherwise. It also means that everything unthinkable today is suddenly on the table, maybe even the menu, for tomorrow.


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Market Report Week Two

It may feel like this panic has gone on for a month, but in reality we are just in our second full week. Technically, the panic began the Thursday after Trump’s speech in which he announced the closing of air traffic from Europe. That was the 18th of March, so we are in day 12 now. The real frenzy did not get going until the weekend, when governors started telling people the end is upon us. Last week was the first full week of people sheltering in place and treated one another like lepers.

The market always offers lots of lessons about the reality of social organization. In the best of times, you see how poorly people naturally organize. The best argument against libertarianism is simply going outside and watching people. Now, the best argument against curve flattening is to see how people behave when told they must assume everyone else has a deadly plague. They take symbolic steps to defend themselves, but the practical necessity of life overcomes those efforts.

At the ghetto market, the poor people, migrants and minorities are doing nothing different from what they normally do. You’ll see some blacks wearing masks, more on that later, but otherwise nothing is different. The store itself is not engaging in the defensive measures you see in suburbia. It’s not that these people are careless or stupid, but that they have a different sense of risk. When you have less to lose, you have less to fear, especially when your neighbor is scarier than a virus.

In the suburbs where the beautiful people live, the market operates like a German concentration camp. On the way in a nice older gentlemen wipes down your cart and directs you to the delousing station for inspection. Once you are sanitized, you enter the otherwise normal market. Again, the blacks have masks on and some old people will look like they are working in a nuclear facility, but otherwise people are spreading their cooties on one another as they do in regular times.

This is the skeptic versus curve bender in a nutshell. The curve benders live and work outside the confines of reality, so their schemes sound reasonable. In the real world where such schemes go to die, something else is happening. That is, people are already starting to show signs of weariness. The cashier whispered to me that she and the other cashiers are getting sick of the nonsense. There’s talk of collective action to either get more pay or stop forcing them to do all this extra work.

This is something people learn when they have to manage people. Just because they are paid to follow your instructions does not mean they will. You have to convince them to accept the rules so they become instinct. That can only happen when those rules do not conflict with their natural instincts or create what appears to be an unnecessary burden on them. Every captain knows the morale of his crew is his top priority, as it is the only way they can be counted on to follow orders.

In theory, locking everyone in their homes until the virus dies out is a great way to slow the spread and eventually eradicate it. After all, this is what the Chinese supposedly did in Wuhan and who does not trust the Chinese? In reality, people will go along with this for a little while, but they will soon tire of it. That and we are not China. Too many Americans will simply ignore the precautions. Unless they immediately drop over dead, they become the example everyone follows.

One amusing exception to all of this, as usual, are black people. In the beautiful people areas, rich Asians can be seen wearing masks in the best of times. This is a cultural habit they bring with them. In this panic, blacks have jumped on the mask-wearing craze in a big way. At the market, it is not rare to see a black now wearing a mask and colorful rubber gloves. Black people love display items. It is a good bet that masks and other gear get Africanized as fashion accessories.

Another reason blacks are jumping on the mask craze is they fear the unknown in ways most white people cannot grasp. It is why they are more likely to believe in ghosts than other races. It’s also why they fall for nonsense like white privilege so easily. To them, it is just another spooky thing about white people that they cannot see, but they are sure must exist. It is just one of the hidden forces that control events. This virus will be the best crime fighting too Lagos has seen in generations.

Anyone who has had to manage a large number of people knows that sentiment can turn quickly against you, unless you stay on top of it. It’s why sportsball coaches have locker room insiders to tell them the mood of the players. It’s why every military has a layer between the officers and the enlisted men. More than a few grand schemes have been undermined by a quiet rebellion in the ranks. This is something we are already seeing that will become more evident next week.

This is why Trump is getting antsy about getting people back to work. It’s not because of the economy, although that is one reason. It’s because he has managed lots of people and he knows this dynamic. By next week, whatever benefit there was to this lock down will have been achieved. The inevitable wholesale revolt against it will make the whole enterprise pointless. Trump will want to be seen as leading the charge to get the nation back to work, so expect that to be the topic a week from now.


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The Great Madness

Has the world gone mad? It certainly seems that way to some of us. Even the most cynical never imagined the government shutting down the country for fear of a virus, but it has suddenly become the new normal. The cynical, if they thought of it at all, would have thought the opposite. Instead of a great lock down, the response would have been for the beautiful people to insulate themselves from harm, while abandoning the rest of us to the plague. Instead, we have all gone mad together.

Not everyone has got the fever, that is this panic fever, not the one caused by the Chinese coronavirus. Our world is now firmly divided into two camps. There are those fully invested in the great panic over the virus and there are those who look at the other camp, gobsmacked by what appears to be a general madness. Those in panic look at the rest of us the same way preppers look at normal people. They just assume the gods will strike us down for doubting the virus

Of course, the people in the skeptic camp could be the ones suffering from some form of madness that prevents them from seeing the threat. The trouble is, the great plague is not exactly lighting up the scoreboard. America has tested over 600,000 people suspected of having the virus. Over 500,000 tested negative. Of the positives, 12,000 needed hospital care. In a country of over 320 million people with 200,000 empty hospital beds at any one time, that’s not much of a crisis.

Yet, despite the numbers, formerly sober-minded people continue to carry on as if there are bodies in the streets. Steve Sailer, a man not known for excitability, is calling this virus a great adversary of the human race. Greg Cochran has completely lost his marbles over this thing. Geneticist and HBD enthusiast Razib Khan is in hiding, convinced the end times are upon us. In fact, the whole HBD community is a click away from fleeing to Antarctica to wait out the end of civilization.

Of course, part of the panic, a symptom of that particular virus, is a set of abracadabra phrases that have become so common they seem like something from a secret society, understood only by the initiates. The duller sorts chant about “exponential growth” while others talk about “the hospitals being overwhelmed.” That’s why we have to “flatten the curve” and “slow the spread.” These incantations are to chase away doubt and reinforce the belief that people are dying in the streets.

The dying in the streets bit is not much of an exaggeration. A popular bit of folklore now among the panicked is some version of the anonymous ER doctor or nurse relaying how they are overwhelmed and letting people die in the hallways. This urban legend turned up in China, Washington, Italy, New York and now New Orleans. Formerly sensible people now pass these whoppers around on-line, never bothering to think that maybe they are being fed a just-so story by people seeking attention.

One emerging aspect to the madness is the moral dimension. The HBD crowd seems to have been hardest hit. They spend a lot of time contemplating nature and their fellow man’s refusal to respect it. Part of what is driving them now is a sense that nature is going to finally exact some revenge. In other words, this panic is part of a strange revenge fantasy, where they are finally vindicated by biological reality. This sudden sense of moral purpose has made them immune to reason.

Another aspect to this general panic, unrelated to the virus itself, is a different type of revenge fantasy. Many people are cheering the collapse of the economy and civil life on the mistaken belief that what emerges from the rubble will have them at the top of the social hierarchy. This is a phenomenon shared across the political spectrum. It seems to be most popular with young people unhappy with the status quo and far too caught up in purge fantasies to be reached with facts and reason.

Probably the most salient aspect to this panic is the role of women. As has been noted too many times to count, the West is now a gynocracy. It is not a matriarchy, as women have stopped bearing children and stopped caring about children. Look around and you see childless women in positions of authority all over the West. In fact, these are women who reached their status by rejecting every aspect of womanhood. The West is now a world run by middle-aged childless women.

Anyone who has been around women in a crisis has observed a strange phenomenon among childless adult females. Some switch gets flipped in a crisis where their protective instincts get misdirected at the adults in the room. This part of their nature was never allowed to mature in the raising of children, so it comes bursting forth in an incoherent desire to help when their help is not needed. They become like mother ducks loudly herding the brood to safety.

For a society run by such women, every crisis is met with demands that everyone shelter in place. Notice how over the last few decades that public officials no longer call for volunteers or tell people to pitch in and work together. Such independent action violates the frightened female’s sense of duty to her brood. Instead, mild weather events now close the schools and force people to work from home. This virus scare is every middle-aged women’s Hunger Games moment.

Mass panics are a known phenomenon. The general panic that took place in France between July 22 and August 6 1789 is known as The Great Fear. It was a period of rural unrest, driven by both a grain shortage and rumors of an aristocrats’ “famine plot” to starve the peasants. The exact reason for this panic is in dispute. Ergotism is a favorite reason for those with a certain sense of humor, but most historians consider it one of the primary causes of the French Revolution.

At some point, the bloom comes off this lock-down rose once people start to feel the real cost of listening to madmen. People will remember that the same folks who swore Boris and Natasha had used their mind control devise to install Trump in the White House are the many of the same people peddling this panic. Necessity will force a lot of people to stop going along with what they have suspected from the start is nothing more than a mass panic. Soon, this all comes to an end.

Like the Great Fear, the Great Madness will leave a mark, or at least it should leave a mark on our society. You never can be sure about these things, as the West seems to be unusually immune to learning from these events. Two centuries ago The Great Fear meant the end of the feudal order and eventually a revolution. It was not the sole cause of the revolution, maybe not the main cause. It was certainly an example of how the old order was no longer able to maintain order.

It is too soon to know what this panic means for us. Perhaps it further undermines the legitimacy of the system and the people that profit from it. Perhaps it sets off social changes that slowly transform our society in ways we have yet to imagine. Maybe the fever breaks and this event, like the Russian hoax, gets forgotten. Given what most likely awaits on the other side of the lock-down, it is hard to imagine this great madness being forgotten. There’s always a price to be paid for following madmen.


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Notes On The End Times

For some reason, the study of the end times has been a popular topic of interest to people since the dawn of civilization. How it all ends is of far more interest to people than how it all began. In fact, there is still a lot of resistance to even contemplating how it all began. The intelligent design stuff is, when you’re honest about it, is an argument against even thinking about how life began. How it all ends, the end of all days, is of interest to everyone, regardless of their inclinations.

For Americans, the vision of the end is usually one of two basic plots. One is a swift financial collapse that plunges everyone into chaos. Suddenly the ATM’s and credit cards no longer work. Bank accounts freeze and business grinds to a halt. If England is a nation of shopkeepers, America is a giant shopping mall that happens to possess a space age military. Consumerism is the religion of the people, so it makes some sense that collapse scenarios would start with the collapse of commerce.

Another vision of the end times is the plague scenario. The super-virus is a popular devise to hustle along the collapsing and get right to the end times. The popular TV series Walking Dead is a great example of this. The plague and the zombies are ridiculous, but they not only make for good TV, but they allow the writers to quickly get to the end times scenarios they wish to explore. This vision of the end is really about the beginning of what comes after this phase of civilization.

The current madness may give us a glimpse of how an actual collapse of civilization would unfold. We have both the threat of the super-virus, real or imaginary, and the threat to the cult of consumerism. The reality of the virus in this case is unimportant, because it is assumed to be real. The same is true of the financial markets. We may not be in an historical collapse, but it is assumed to be a real threat. In effect, this is a live action stress test of the system and the people in charge of it.

The first thing we can observe is the great lock-down started when the nation’s circus performers, went into hiding before anyone. The sports leagues and public entertainment operations were the first to respond. One would think that having them continue the show would make sense, in order to keep spirits up during the lock-down, but that was not the case. In fact, the big streaming services downgraded their service quality at the start of the lock down.

Now, you can make of that all sorts of things, depending upon your temperament, but the one important take-away is that the people in charge are not all that concerned about people getting restless in the lock-down. Despite what we are told, they are not terribly concerned with the circus half of Juvenal’s famous line. They could be mistaken about that, especially as this thing drags on, but for now people seem to be getting along just fine with reduced entertainments in the lock-down.

Of course, the lock-down itself is important. The controlling ethos of the ruling class is unfettered movement, yet in a crisis, their first instinct is to halt all movement. The people who just a few weeks ago were singing the glories of the free flow of people and goods are now threatening to weld our doors shut. When the real end times are upon us, the first clue will be a mandatory lock-down of the population with cops in the streets and a 24-hour curfew, except for approved personnel.

Another thing we can observe in the present situation is how the authorities have started to abandon certain duties. For example, cities have started to throw open their prisons, letting the inmates run free. The argument is they could get the virus if locked up in close quarters. That means the people in charge would rather see them raping and murdering in your neighborhood than possible getting the virus and passing it to one of the bureaucrats operating the jails.

We are also seeing the cops abandon their duties. In Cincinnati, the cops are no longer responding in-person to 911 calls. The stated reason is “to reduce unnecessary contact between officers and the public to reduce the spread of COVID-19.”  Presumably, if you call while being murdered, they will come out to identify your body, but if you call while it is just at the home invasion stage, too bad for you. If you want to get a glimpse of what the breakdown of society will be like, think about this.

Some people in dissident circles like to mock the paleocons, but the one thing the paleos got right before everyone else is anarcho-tyranny. Not only do we see this in our daily life in normal times, but it is in bold relief in this crisis. The first instinct of the people in charge is to “tyrannically or oppressively regulate citizens’ lives yet is unable to enforce fundamental protective law.” This is a crucial insight into the managerial system, but also how that system meets its demise.

That’s probably the way in which the great longed for collapse transpires. It will not be a great sudden end that results in chaos. It will not be a supernatural end that suddenly flings us into a post-apocalyptic world. Instead, it will be the slow withdraw of authority, along with the growth of a banal sort of tyranny. It is more cops hassling innocent people for no reason and fewer cops chasing actual bad guys. In time, new social systems evolve to fill in those gaps and provide local order.

The model to keep in mind is probably something like post-Rome Spain. Once the Roman authority collapsed, various barbarian rulers tried to fill the void, with varying degrees of failure. Eventually, local authority filled the gaps, providing order and protection for the people. In time, the Roman villa system became what we think of as feudalism throughout Europe. As the American empire fades, a similar sort of process will evolve. The end will be a whimper, rather than a bang.


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Over Stimulated

The news brings word that Washington has agreed to an unprecedented economic package, estimated to top $6 trillion. This includes the $4 trillion in money the Federal Reserve will hand to rich people through various ways. The other money will go to different rich people in the form of tax rebates and cash payments. Some very small amount will go to everyone else in the form of unemployment checks, loans to small business and one time crazy checks randomly mailed to people.

The money in the stimulus bill is not all a waste. Bailing out the airline industry has a real benefit. Airlines are like a hybrid utility these days. They are technically private companies, but almost all of their actions are controlled by government. They operate through state owned airports and every aspect of their operations must be agreed to in advance by the federal government. We need the airlines to function, so bailing them out has some actual value to the rest of us.

As an aside, you’ll note what is not in this bill. If we are throwing trillions around, it would make sense to build a wall along the border or maybe fix up some roads. Perhaps we could draw back some overseas commitments and put those funds to work rebuilding the homeland. While the checkbook is open, maybe Trump could get something for his voters this time. Instead, you can be sure, tucked away in the details, will be money for more dirty barbarians to be settled in your town.

The stimulus bill is just the show. Its main purpose is to show the public that the actors and actresses hired by rich people to play the role of congressmen and senators really care about the people. The other carny folk post videos of themselves enjoying quarantine in their mansions. The carnies in DC pass stimulus bills. That may sound very cynical, but everyone in small business knows the score with these rescue packages passed by Washington during a crisis show.

The real mischief, however, is in the other money being handed to the nation’s desperate rich people. This is the stuff being done by the Federal Reserve, away from the TV cameras. Trillions of dollars will be poured into the financial markets, much of it through the direct purchase of assets, like bad debt, stocks, corporate bonds and the synthetic stuff no one really understands. The central bank is coming close to turning the global financial system into a palace economy.

A palace economy is a form of economic organization that was common in the Bronze Age societies of Mesopotamia and the Mediterranean. This is a system where a substantial share of the wealth flows to the rulers and is then distributed to the general population. The proceeds of farms, less what the farmers feed their families, goes to the king, who then feeds the people. The same holds for booty gained from conquest of neighbors or the mining of precious metals.

Now, the Federal Reserve is not taking these assets against the will of the current holders and then giving them to the rest of us. Instead, they are paying face value for assets that may or may not be worth what is claimed. The plan is to flood the system with cash in order to prevent cash hoarding. Theoretically, this keeps the banks lending and the credit system moving. In a system entirely based on leverage, any interruption in the credit system threatens the life of the system.

This reveals the big lie about modern economics. Small and mid-sized business are exposed to the dangers of the marketplace. If they make a mistake, they pay for it and possibly go under. In the major leagues, where the big boys play, there is no threat from market forces, as the Federal Reserve backstops everything. It is not a marketplace, but rather a highly complex casino, where the house stakes all of the players. Those that lose are simply given a loan from the house to keep playing.

A good example of this is something that started happening last fall, before anyone cared about the Chinese virus. This was back when the Fed mysteriously began to intervene in the repo market. No one had a good answer for why this was happening and the financial media was told not to ask too many questions. It turns out that it was a quiet rescue of hedge funds. They had over-leveraged themselves working a popular skim called the basis trade. The Fed jumped in to save them.

Just as democracy is a farce to conceal who is really calling the shots, free market capitalism is just a show to conceal the reality of the economic system. The response to the panic they have created shows just how little of the economy is actually a marketplace at all. The $6 trillion in stimulus is a quarter of the economy, on top of the mountain of regulations and trillions in normal government spending. In America, the “free market” is a fringe activity reserved for the little people.

It is tempting to think that this reality is some sort of perversion of our ancient economic traditions, but that’s just another pretty lie. In reality, the normal state of things is for the rulers to tightly control the economy of their territory. In was true in the palace economies of the ancient world. It was true throughout the middle ages. It has been true in the modern world since there has been a modern world. Like libertarianism and communism, the free market exists only in the mind.


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The Magic Box

Anyone who works in the right answer fields, like engineering and computer science, has run across the magic box gag. This is where someone draws up a process, describing the various inputs and sub-processes. Somewhere toward the end of the diagram is a box into which all of this stuff flows. What comes out of the box is the desired result of the entire process. That box at the end, where all the good stuff happens, is labeled something like “magical happens here.”

It is a stale gag, but a persistent one as it is a very good way to simplify a project for the people who put the magic in the box. The people who will get the magic really don’t need to know what happens inside the box. That’s not their concern. That’s the job of the technical people to solve. In fact, the whole point of the exercise is to make sure everyone shares the same understanding of all the other stuff. The users of the process must trust that the technical people put the right magic in the box.

It does not always go that way through. Even the simplest processes have peculiarities that are not appreciated until you start monkeying around with them. The combination of inputs may create conflicts that require immensely complicated solutions inside the box in order to get the desired result. It’s why after the meeting ends, the technical people erase the board and spend a lot of time figuring out exactly what form of magic will have to go into that box. Magic is not as easy at looks.

This concept is one to keep in mind when evaluating the responses to the virus panic and soon the economic consequences of it. Loads of people on both sides of the great divide think something momentous has happened. They see the flood of changes that have been imposed and rightly assume that it will have a profound long term effect on the country and the West in general. They are probably right, but they disagree as to what will come out of the magic box that is this panic.

The most obvious starting place is with the people demanding we take this extreme measure to stop the virus.  As has been discussed at length here now, they fail to consider the consequences. Instead, their response is something like, “The economy is not important. That will fix itself.” In other words, something magical will happen and things will get back to normal. The magic box will not only fix all the damage done to civil life, it will restore everything back to where it was before the panic.

It’s possible that things bounce back to where they were to start the year. No one knows, because this has never been done. Maybe in a year this whole episode will be forgotten, like the Kavanaugh hearings or the Russia hoax. On the other hand, we could be facing a long depression. The blows to the system could be so profound they cannot magically heal themselves. Instead, things remain broken. In other words, maybe the magic in that box is bad magic, the very worst kind of magic.

That brings up another camp that is now deeply invested in the magic box. There are a lot of people on this side of the great divide that are cheering the lock down. They think it will forever discredit the things they don’t like. The consequences of globalism and the neoliberal order will flow into the hive brain of the public and what comes out the other side is a rejection of all of it. Magically, everyone will come to the conclusions many people on this side held before the panic and subsequent results.

It’s possible that some of those things Greg Johnson lists will come true. It’s also possible that none of them will happen.  People are remarkably resilient to reality, as we see with the panic. If your first response to the prospects of a pandemic are to fill your basement with toilet paper, you are unlikely to draw the best lessons from this panic and its results. The ruling class, the people who triggered this panic, are also unlikely to abandon all the things that allow them to be in power.

The point here is not to take issue with Greg or his post. Greg’s lessons are correct, but they were correct before the panic. He is assuming this sudden crisis will be the magic box that transforms everything. The last half century of history is flowing into this panic and the resulting turmoil. What will come out the other side is a great awakening, as the scales fall from the eyes of everyone wondering how they will pay their rent and feed their kids. The coronavirus panic is the magic box.

Similarly, there is a subset of this thinking that exists in fringe socialist circles, like the remnants of the old alt-right and the Bernie Sanders camp. They cheer the coming collapse, because they think the prophesies will finally come true. America will become Weimar Germany. One version of the game has Richard Spencer delivering his first speech to the new Ethno-Reichstag. The other side thinks they will finally be free to punch those Nazis that secretly control the world.

It is an interesting key value pair. Both camps think their political ideology is timeless and forever relevant. Both sides think history must repeat in the exact same way it happened 90 years ago in Europe. It’s like coordinates on a map. Because the coordinates never change, their place on the great map of human history never changes either. It’s a form of mysticism. In this case, they assume an economic collapse must magically result in conditions most favorable to them.

Again, that magic box may not contain what they imagine. The most likely result is the increased power of the tech oligarchs. They are now helping government track people, all in the name of safety, of course. A world in which drones are used to police citizens identified through their mobile phone as having stood next to the wrong person is not favorable to the revolution. You see, the people in charge have been planning for the arrival of you-know-who for a very long time as well.

In fairness, maybe the critics of the response to this virus are engaging in magic box thinking as well. To assume lots of bad things come out of the other end of the box is just as presumptuous as assuming only good things will emerge. Maybe the great reorder that will occur after this will be better for the Nazis and Bolsheviks camped out in the pumpkin patch. Maybe people will wake up to the reality of neoliberal order and demand changes. Maybe things get back to normal in a hurry.

The one true thing in all of this is no one knows what is inside the box that events appear to be leading us. The panic itself is unprecedented in the modern age, so we are left to guess about what follows. What’s happening with the global financial system is less novel, but the scale is unprecedented. No one can know if the economy will spin back up, as no one has tried to turn it off and then back on. We are in the world of unknown unknowns, the part of the diagram labeled “Magic.”


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Perspective

In a very general way, you can divide men up into four categories, based on their role in an organization. In one group you have the decision makers, the people who sit at the top, making decisions for the organization. Then there is the adviser type, who specializes in an area and advises the decision maker. Then there are the executors, who carry out the decisions made by the decision makers, often relying on the special knowledge of the directors. Then, of course, there is everyone else.

Depending upon the arc of your life, the first time most people meet a decision maker is when they get into the work world or maybe in the military. Maybe at your first job out of college you got introduced, along with the other new hires, to one of the senior executives in the company. Perhaps it was in the service when you were in the same room with a senior officer. You did not have to know you were in the presence of decision maker, as you just knew it. They were different.

The fact is, people who make decisions are different. These are people comfortable taking responsibility for their actions. They are also aware of the fact that their decisions have consequences for others. Senior officers put men into harm’s way, senior executives decide the fate of the company and business owners have the welfare of their employees to consider. People good at this role, comfortable with it, have a different air about them. Their power level is obvious.

The adviser role is often where decisions makers are cultivated, but some men are best suited to be seconds. Look around at careers and it is not unusual to see a decision maker have a very short turn in the adviser role. It was just a resume builder, not a training ground. The people best at this role enjoy mastering a narrow area and being the guy relied upon to advise on it. They are also the type of people who have to be reminded that perfection is the enemy of the good enough.

The execution layer is where most people spend their lives. They either give orders to everyone else or they take orders like everyone else. They may not like the policies and procedures handed down to them, but they value the need to follow orders and maintain those policies and procedures. This layer will often get called on by decision makers to tell them how those policies are working. They are the first to see the real-world consequences of the decisions made at the top.

Now, life being what it is, few people like to walk around advertising the fact they are just a person who takes orders. The military solves this by forcing everyone to advertise their status on their uniform. Corporations have floors to let everyone know their status in the firm. Out in the wild, people are free to fake it. This is obvious on-line, where people often wildly overstate their status. There are more top-shelf attorneys on Twitter than anywhere on earth. It is the same with every profession.

Events often reveal the reality of people’s role. These are people who were able to get away with speaking in generalities about their supposed subject, but are revealed to have only a superficial understanding of it. This is most amusing with the legal experts that turn up on cable chat shows. Much of what these people say is nonsense, because they never actually practiced law. Those that did, ended up in the television studio, because they were not very good at being a lawyer.

We see this with the coronavirus and the subsequent lock-downs. The people beginning with “all we have to do” are people who have never made a decision. Most likely, they have never been in the same room where a decision is made. If the answer is easy or obvious, there is no need for a decision maker or his advisers. Those decisions get made by the execution layer. When the answer is obvious, it means people at the top anticipated it and established rules for such a situation.

A similar rule applies to those starting sentences with “We need to do” followed by their preferred approach. Anyone who has been in a decision-making role has heard that many times, often thinking, “if that were true, you would not be telling me this.” This sort of thinking is what comes from people in that advisory role. Those people are not required to contemplate trade-offs. That’s not who they are or what they do. Their job is conjuring possible solutions for the boss.

Obviously, most of people in the media fall into the final category. They are the “everyone else”, people who just follow orders. In the case of pundits, opinion makers and influencers, they play the role assigned to them. The old guy kitted out like Mr. Chips is roll him on stage to play the part of the wise professor. The bookish looking young person plays the role of super-smart nerd. All of the people we see and hear in the mass media are performers, doing what they are told.

All of this is important to keep in mind in this crisis. When someone you think is pretty smart says, “all we have to do is quarantine the country for a month” you know you are dealing with someone who has never been in a room where decisions are made. They don’t know what they don’t know. The same applies to people who say things like “we need to implement strict measures to slow the spread.” If that were true, it would have happened as soon as the virus was detected.

Public policy is always about trade-offs. This is true in the easy times and it is true in the terrible times. There are no cost-free solutions to problems. Every problem presents a set of trade-offs. Decision makers know this and thus avoid million-dollar solutions to hundred-dollar problems. At least the good ones do. Those who rise to the top and fail are usually the ones who get the trade-offs wrong. In the coming months, we’re going to see a lot of that as the decision makers navigate what comes next.


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Springtime In The Pandemic

When I’m not on the road, Sunday is the day when I get my supplies and set things in order for the coming week. I like to get an early start as it means I don’t have to stand in line too long at the market. With the panic raging, lines are longer than normal, but I had some hope that people had exhausted themselves by now. Even so, I got an earlier than typical start. Apparently, I was not the only one thinking the same thing as the parking lot had many more cars than typical.

The shelves were mostly stocked, which was a relief, of sorts. I know more about the nation’s supply chain than most people, so I was not worried that we would run out of food, but it was still good to see it confirmed. Even the meat section was as full as normal and that’s the most fragile bit of the system. Items with a short shelf life tend to the least resistant to panic buying. Empty shelves are an exception in America, so seeing the stores full again will calm people’s nerves.

Having stocked up pretty well before the panic started, I just needed to top up a few things, but I took a look around the whole store just to see how people were handling things after a week playing pandemic. While picking up some skyr, I caught a bit of conversation between two women. I’d say both were in their 30’s, toward the older end, and they had the mom look. One of them was telling the other how great it was to have dinner together every night at the same time.

That will be one of the side effects of the great lock down. All of sudden, women are home and taking over their domain again. The kids are home, so they have reason to reassert their control over that part of their life. Many of these women will no doubt hate it and perform poorly, but most will be reminded that being home and running the household full-time was always their bets career option. Men will learn that having the wife home beats having a second income.

In line, I struck up a conversation with a women about this topic. The checkout has to be fumigated after each person goes through, so the lines are thirty people deep as we wait for our turn in the delousing station. The woman is in finance, so she can work from home. She has kids at home now, so she’s happy work has slowed up with the great shut down. Her kids get their school assignment over Skype, but she has taken over the normal instruction they would get in class.

She told me that she and the other moms are now talking about putting together their own community home schooling operation. I almost laughed out loud a few times as she explained how she and the other moms got a look at what their kids are being taught and how they can do much better. She was bit angry, for example, about the errors they found in the science books the school is using. There will be a lot of this type of stuff happening around the country because of the lock-down.

One of the unexpected consequences of this panic and the economic collapse that is now certain to follow, is people will discover the joys of want. We tend to think it is always terrible to do without, but there is an odd pleasure that comes from having to sacrifice and conserve. The mom I spoke with while waiting almost sounded giddy about the idea of simplifying the household diet in order to accommodate the shortages in the grocery stores. It will give her purpose again.

That will not just be about food. She said something about the lack of TV sports was a bit of downer, but I countered with the fact that everyone now gets to discover outside again and she lit up. No doubt she was thinking the same thing, but was happy for the confirmation. She and other moms are now taking over the fun time for their families, rather than delegating it to the entertainment business, sports leagues and the schools. Again, it will give these women purpose again.

On the other hand, we still live in a world of rule by exception. The right thing to do when someone says, “we need to normalize wearing masks in public like the Asians” is to punch them in the nose. That should have been the answer to people telling us their pronouns or their weird sexual fetishes. Instead, we committed ourselves to making one exception after another to accommodate a metastasizing number of weirdos, oddballs and trouble makers. The mask freaks will just be another.

That said, I doubt the mask thing lasts long. Americans are not going to live as if we hate everyone. Social trust has broken down, but it is not gone entirely. The reason Asians love masks is they have been practicing social distancing for 5,000 years, so the mask compliments a natural instinct. Conformity was their answer to the problem of social trust. To westerners, living such an existence will be a bridge too far, so the weirdos pushing it better enjoy their hazmat suits while they can.

Something I thought about as I was leaving is that suddenly the status hierarchy for women has changed. The mom I was chatting with was feeling really good about taking control of her household. Suddenly, the women taking care of their kids, taking over their schooling and being a stabilizing force are cool. Those career women sheltering in place with their box wine and social media account can no longer kid themselves about their real status in society.

There’s been a lot of wishful thinking about a baby boom coming from this lock-down, but what may follow is a marriage boom. Millions of single women now have no reason to exist, because they are stuck at home. They can’t cause drama at work and they can’t cruise the bars with their friends. Meanwhile, the women they made sport of at the office are having the time of her life at home with the family. There’s some chance this panic opens some pretty young eyes to the reality of their existence.

On the way out, I stopped at a light and noticed that the trees are all starting to turn green and the flowering trees are about to go into peak bloom. Persephone is making her way up from the underworld and all of creation celebrates.The cycle of life is immutable, which means that all things come to end, even plagues. It also means they are replaced by something new. A lot of bad things will come from the great lock-down, but on the other side will be some good things too.


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The Garden Gnome Gambit

Everyone is familiar with the garden gnome, the little ornamental figurines that look the dwarfs from children’s stories. Most people assume they originated in Germany, but they have their roots in ancient Rome. Small stone statues depicting the Greco-Roman fertility god Priapus were placed in the garden of Roman citizens. Like many Roman customs, the use of garden statues spread throughout the empire and eventually we got what we now call the garden gnome.

Of course, we use garden gnomes to keep the giraffes out of the garden. Not just any giraffes either. Normal giraffes are not a problem obviously. It is the albino miniature giraffes that attack the suburban garden. The liberal use of the garden gnomes has kept the miniature albino giraffes from terrorizing gardeners for generations. The proof of this, of course, is that we have no problem with miniature albino giraffes. In fact, it has worked so well no one has even seen one of these giraffes.

That may strike you as ridiculous, but it is something to keep in mind over the next few weeks as our leaders figure out how to unwind this virus panic. You see, a month ago they had two possible outcomes. One was the virus spread and killed a bunch of people, which would be very bad for the ruling class. The other possible outcome was a mild spread that got little notice and then it petered out. Heads they got blamed for ignoring a pandemic and tails they get no credit remaining calm about it.

That’s a bad gamble for a politician, which is probably why Tucker Carlson talked Trump into declaring total war on the virus. If all efforts were made to stop the virus, even if it craters the economy, the possibilities get much better. If the virus runs its course without much trouble and goes away like every other virus, Trump can declare war and throw himself a triumph. If the virus turns out to be the Antonine Plague, then Trump can fairly say it would have been much worse if not for his efforts.

What just happened is Trump has flipped the odds on what happens after the panic subsides this summer. In the do-nothing scenario, one outcome was neutral and one outcome was terrible. In the do-everything scenario, the outcomes are reversed. There one great outcome and one mostly neutral one. If it is the Antonine Plague, civilization collapses and none of this matters. Since the most likely outcome under all scenarios was closer to the Honk Kong Flu, this is a neutral result.

This is where the garden gnomes come into the picture. Just as we know that garden gnomes keep miniature albino giraffes from attacking our gardens, we know flattening the curb keeps this virus from becoming the Yellow Death. Anyone questioning these assertions is on the side of the miniature albino giraffes or the virus. The fact that these assertions are nonsense is beside the point. If people can be made to believe it, then these claims are true, as far anyone needs to know or care.

Now, the only way this works is if they can plausibly say they pulled out all the stops to prevent the worst pandemic in human history. If it was a bunch of talk and half-measures, they could get blamed for not doing enough. If the virus was a dud, then they would be accused of over-reacting to a minor event in order to politicize it. The only way to make the garden gnome gambit work is to go heavy on the response, regardless of the consequences. There can be no moderation.

The extreme measures also have the added benefit of swaying the public that the virus is Godzilla attacking Tokyo. This unprecedented shutdown of civic life, which is really just getting started, is the real monster of the story. At this point, you have a better chance to be struck by lightning than to know a virus victim. Even the girls on social media have not started faking infection yet. People look at the massive disruption of daily life and just assume the threat must be genuine.

Now there is one flaw with this approach. The shuttering of the country is going to come with a massive price tag. Current estimates, for example, suggest the rosy scenario for the economy is a 5% contraction in quarter one followed by a 25% contraction in quarter number two. It’s anyone’s guess as to what will happen in the second half of the year, but those are numbers that dwarf the first year of the Great Depression. Maybe after the quarantine is lifted, a massive recovery starts in the summer.

Of course, as soon as the coast is clear and the virus has been defeated, Trump throws himself a triumph and launches a new war on the depression. The people in the breadlines will not be impressed, but if the economy starts to recover in the summer, he can plausibly say the sacrifice was worth it. He can do a bunch of campaign stops at retirement homes to pose with octogenarians spared by the virus. That all sounds terribly cynical, but politics is a cynical business.

Another side benefit of this is the alarmist can claim to be vindicated. Like the people claiming their garden gnomes keep the giraffes away, the alarmists will say these extreme measures headed off an extinction event. By the end of the summer, they will be telling tales about an anthropomorphized virus that was eating men whole. Even if they hate Trump, they will celebrate him for taking their advice. The garden gnome gambit lets everyone be a hero, no matter the results.

Finally, Trump came to Washington as a chaos agent. He created chaos in the primary and the general election. His arrival in Washington set off panic among the establishment that has never subsided. This response to the virus and the ensuing panic it has caused is best suited for someone, who thrives in chaos. The garden gnome gambit is also best employed by someone, who relentlessly boasts about his achievements. Trump is now fully in control of Washington.


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