Category Archives: Politics

Interest Rate Trap

Posted on by

This was on Drudge the other day. For it seems like forever, I have been reading stories about how the central banks are holding rates at near zero, but may be ready to raise rates at some point, but not now. I suspect most people have stopped paying attention because it just seems like the same story recycled once a quarter.

The Federal Reserve is keeping interest rates near zero and is waiting for further improvement in the labor market and inflation measures before allowing any increases, according to the latest Federal Open Market Committee (FOMC) statement.

The Committee says it will evaluate the progress of the economy, focusing on its twin goals of maximum employment and 2 percent inflation, in determining how long to maintain the current low target range for the federal funds rate.

The Committee says it will raise rates when it is “reasonably confident” that these two criteria have been met.

Fed Chair Janet Yellen signaled that the Fed may raise rates later this year when she discussed the Fed’s semiannual report to Congress on July 15.

“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy,” said Yellen in her testimony. “Indeed, most participants in June projected that an increase in the federal funds target range would likely become appropriate before year-end.”

The Fed has held the federal funds rate near zero since December 2008.

Let that sink in for a second. We are going on seven years since the Fed lowered rates to what people thought was the floor of the possible. Now, we know central banks can and will lower rates below zero, but the US has yet to go down that road. Still, near zero for the better part of a decade is not without its consequences.

Tim Kane, an economist at the Hoover Institution, is one of these critics.

“The Fed funds rate has not been raised in nine years, and interest rates this low create an illusion that the escalating national debt is (and will remain) easy to bear,” states Kane. “With interest rates kept too low for too long, the Federal Reserve can turn a boom into a bubble.”

That’s not the half of it. Corporate and sovereign debt is now fully structured around near zero rates. Most of this debt is rolled over when it matures so a rising interest rate environment means suddenly rising interest payments. That’s what happened to Greece. Rates jumped and the operating deficit increased. That was met with more borrowing, which drove rates higher. Eventually, they could no longer borrow at rates they could pay.

In America, pension funds, which used to rely on the steady returns of bonds to remain solvent are now invested in all sorts of synthetic instruments based on equities, housing and speculation. Those pension funds are wildly underfunded and the returns are below market on their current investments. Rising rates will drive down the value of equities putting pension funds in deeper trouble. The word “catastrophe” gets throw around a lot in the pension world for a reason.

Rates will return to their natural level eventually. The question is whether it will be an orderly recession that comes with raising rates or whether it will be a chaotic depression as central banks lose control of monetary policy. Those are not great choices and they are political choices. The Fed is a political institution, which is why they keep delaying the pain. In politics, tomorrow is the best time to take the pain and tomorrow never comes.

This is a pretty good example of something Joseph Tainter described in The Collapse of Complex Societies. When the Fed first started cutting rates, they got a big return, in terms of the impact on the economy. As they kept lowering rates, the return got smaller, thus forcing them to chase the desired results by lowering rates further. As rates approached zero, returns reached zero. It appears to be a classic example of diminishing marginal returns.

At first blush it sounds like a simple thing to let rates return to normal, but that is not a cost free endeavor. At the same time, maintaining artificially low rates also has a cost. The spiraling sovereign debt is a pretty good example of the cost that comes from distorted debt markets. Some economist argue that the ultra low rates are actually hindering economic growth as evidenced by the anemic recovery.

The Fed understands this, but it is a political entity and the choices are all politically difficult. Slowly raise rates and you risk recession, which brings the political class down on the Fed. Leaving rates low means the cost of unwinding the low-rate regime keeps climbing. Worse yet, some new crisis will have to be addressed with cutting rates further, exacerbating the long term problems that come from ultra low rates.

The Romans never figured out how to make an orderly retreat from empire. They exhausted themselves financially and culturally trying to keep the empire together, eventually leading to collapse. America is not about to be invaded by Visigoths. Collapse is unlikely, but a very painful and disruptive reordering is on the horizon. The question is how painful and orderly.

Why Not Crazy Joe?

Posted on by

Supposedly, Joe Biden is now thinking about a run for President.

The super-PAC organized to encourage Vice President Biden to run for president released its first ad on Friday ahead of a “national day of action” to gather signatures for the push.
“Some people ask why Joe Biden,” a young man in the ad says. “I turn back and ask them why not Joe Biden? He’s been on of the most influential vice presidents that this country has seen. He’s right now a part of one of the most successful administrations in recent history, and he’s a big reason for that success.”

Supporters in the ad praise Biden for being on the forefront of the gay rights movement, for working to stop violence on college campuses and for generally appealing to “the younger generation’s beliefs.”

Way back in the dark years, I was struck by just how insulated the political class was from normal life. A story I’m fond of telling is about how the flunkies to a congressman were all befuddled by a lawnmower. The congressman was holding a party at his house and the gardeners forgot to cut the grass behind the patio.

Someone got the bright idea to get the mower out of the garage and quickly cut the grass.  No one knew how the lawnmower worked so five adults stood around looking at it, trying to discover its strange secrets. I watched this go on for maybe fifteen minutes. It was not a lot different than the opening scene of 2001: A Space Odyssey.

Eventually I had my fill and showed them how to start the mower. It was then agreed that they would most likely harm themselves or others trying to use it so I cut the bit of grass and put the mower away. There was a certain pride amongst them in not knowing how the tools of the lower orders worked.

This culture gap is much broader now. That Biden ad is so intensely stupid most people would assume it is a gag. Maybe something Team Cankles dreamed up to embarrass Crazy Joe. But, they really think it is effective. They also think the kids are all worked up about the homos and campus violence, which is imaginary.

That said, I’d love to see Biden run. I’d probably blow a funny fuse laughing at a race between Cankles, Bernie and Crazy Joe. If Saturday Night Live was still funny, the skits would write themselves. Even so, the comedy would be endless. There’s also the possibility that the party would splinter with Bernie nailing down the crackpot vote and the less insane portion of the party splitting between Biden and Clinton.

Hillary Clinton remains the front-runner in the race for the Democratic nomination, but recent polling shows Biden would have an impact on the contest if he were to run.
According to a Monmouth University survey released earlier this month, Clinton takes 51 percent support nationally, followed by Sen. Bernie Sanders (I-Vt.) at 17 percent and Biden at 13 percent.
But the poll found Biden’s entrance would shake up the race.
In addition to Biden’s 13 percent support, an additional 12 percent of Democratic voters said they’d be likely to support Biden if he took the plunge, and 31 percent said they’d be somewhat likely to support him.
Most of that additional support, 68 percent, would come from those who are currently Clinton supporters.
“Most people seem to be focusing on a Sanders surge among the liberal wing of the party,” said Monmouth polling director Patrick Murray. “But the bigger threat to Clinton may come from a Biden candidacy, where the two would be fighting for the same voters.”

The thing to watch in early states with open voting is how many unaffiliated voters will abandon the Democrats and vote in the GOP primary, where the action is this time. Those voters tend to be a little less crazy and most likely not Sanders voters. That makes Bernie more of a threat.

The Cloud People’s Trump Problem

Posted on by

Mathew Continetti has a piece up in The Washington Free Beacon that is interesting for a number of reasons. One is that it is a direct rip-off of Sam Francis without ever mentioning Sam Francis. VDare picked up on that aspect, but they assume it is because Francis was purged back in the early 90’s. Many of the old guys on the Dissident Right still nurse a grudge over it.

My interest here is to point out that Continetti is 34 years old and so the 1990’s were like a long time ago. When Francis was purged, Continetti was 14 and probably more concerned with his new Sega Genesis. In our solipsistic age, there’s what we experienced and then there is the long long time ago, which no one has time to remember. Continetti relies on Newsweek as his source because that’s what he found on-line.

That sounds mean, but it is a strange aspect of our age. The past is mostly imaginary, where emotionally charged events loom large and feel like they happened yesterday. Other events are swept away into the distant past or simply airbrushed out of existence. Still others are invented to confirm current mythologies. The latter habit has become increasingly popular.

The other interesting thing about the piece is it gives some insight into how the establishment is noodling through their Trump problem. Placing him into the line of past failed efforts to topple the accommodationist wing of the political class is probably more comforting than correct.There’s a dismissive tone there suggesting wishful thinking more than hard headed analysis.

To my eyes, Trump is more like an indictment of the political class as a whole, while Perot and Buchanan were mostly about the corruption of the Bush clan. Perot really hated Bush and Buchanan hated what Bush represented. Trump, as far as I can tell, has avoided making it about the GOP establishment or about any of the candidates. He’s just taping into the general unhappiness in the public with the ruling elite.

This incredibly long sentence is also interesting to me:

What Republicans are trying to figure out is not so much how to handle Trump as how to handle his supporters. Ignore or confront? Mock or treat seriously? Insult or persuade? The men and women in the uppermost ranks of the party, who have stood by Trump in the past as he gave them his endorsements and cash, are inclined to condescend to a large portion of the Republican base, to treat base voters’ concerns as unserious, nativist, racist, sexist, anachronistic, or nuts, to apologize for the “crazies” who fail to understand why America can build small cities in Iraq and Afghanistan but not a wall along the southern border, who do not have the education or skills or means to cope when factories move south or abroad, who stare incomprehensibly at the television screen when the media fail to see a “motive” for the Chattanooga shooting, who voted for Perot in ’92 and Buchanan in ’96 and Sarah Palin in ’08 and joined the Tea Party to fight death panels in ’09.

This is incredibly condescending and says more about the writer than his subject. My read is people are cheering Trump because it is a good show and the people moaning are mostly barnacles and parasites. John McCain would be living under a bridge if not for government checks. Most of the people in Conservative Inc. have no marketable skills, beyond the sort of ball washing you see in the political press.

In other words, the Trump surge has nothing to do with Trump and everything to do with the people he upsets. Mathew Continetti can be forgiven for not accepting this reality. He and his coevals in the chattering classes like to think they are tribunes of the people, helping educate the hoi polloi, speaking truth to power and other delusional nonsense. In reality most people detest the media with the intensity of a thousand suns.

The other interesting thing about this is that the commoners are finding out that their masters hate their guts. You see it in the comment section at NRO, which reprinted the article. The glory years of America after WW2 gave Americans a sense that ours is a uniquely egalitarian meritocracy. Finding out that it is no longer that way is tough to swallow so people are understandably ticked off about it.

Since the founding of the country there has always been a tension between egalitarian democracy and aristocratic republicanism. Founders like Jefferson, Adams and Madison talked about liberty, but they certainly did not mean democracy or even social equality. But, the new country needed the support of the Scots-Irish rabble, as well as the Yankee commoners, the result being a republic.

When the balance gets out of whack we see political instability. The growing divide between the ruling elite and the people is throwing off this balance. Charles Murray and Robert Putnam have written about this growing divide. I refer to it as the Cloud People versus the Ground People. Murray and Putnam think all that’s needed is a little tinkering, but history seems to say otherwise. We’ll see.

How to Handle the Press

Posted on by

I mentioned the other day that Trump was exceedingly good at identifying opportunities to shift the focus from himself onto others. Dreary dullards in the GOP and their sycophants find this vexing, but it is good politics. Progressives have sold bad ideas and bad candidates this way for generations. Obama got the White House without anyone knowing anything about him.

The interwebs brings word that Trump has banned the Des Moines Register from his Iowa event.

Donald Trump courted further controversy on Friday by banning the Des Moines Register from attending his Iowa campaign event Saturday, according to the Register.

The real-estate mogul and Republican 2016 candidate was unhappy with an editorial published by the newspaper that called on Trump to pull out of the race.

“We’re not issuing credentials to anyone from The Des Moines Register based on the editorial that they wrote earlier in the week,” Trump’s campaign manager Corey Lewandowski told the newspaper.

He said he expected the campaign would reconsider for future events.

Lewandowski is a hardline libertarian-conservative, who reminds a bit of Lee Atwater. The world is a different place these days, but like Atwater, Lewandowski is good at getting under the skin of establishment types. This has the benefit of shifting the focus from the candidate onto his critics.

GOP voters loath the media so Trump scores points by zapping the media this way. More important, it raises a discussion of the media’s bias and honestly. There’s not a lot of time to mock Trump when the lead story is how the Des Moines Register is not playing fair.

The editorial section of the Register — Iowa’s largest newspaper — operates independently from the newspaper’s political team.

“As we previously said, the editorial has no bearing on our news coverage. We work hard to provide Iowans with coverage of all the candidates when they spend time in Iowa, and this is obviously impeding our ability to do so. We hope Mr. Trump’s campaign will revisit its decision instead of making punitive decisions because we wrote something critical of him,” the Register’s editor Amalie Nash said in a statement.

I’ve often wondered if the people working at these organizations believe this stuff. Maybe they do, but no one outside the press believes it. Even liberals admit that the main press is on their side. They just claim it is because the void where God used to be wills it. The vast majority of people think Amalie Nash of the register is full of it. Worse yet, they think she knows she is full of it.

The Leverage Candidate

Posted on by

Like a lot of people on the fringe, I’ve been enjoying the Donald Trump show. Watching the panda-men of Conservative Inc. gasp and faint over the latest Trump statement is great theater. As Nate Silver from 538 puts it, The Donald is the world’s greatest troll. I get the sense Nate must read my blog as I made similar points two weeks ago. Maybe the shadow of this blog is longer than I think.

Anyway, I was thinking about Trump the other day when he lit up Caitlyn Graham and Rick Perry. That stunt with the phone number was pure gold. It both amused the crowd and shamed Graham for being a hypocrite. The line about Perry now wearing glasses was close to genius. When you can shift the focus from yourself to your critics in an amusing way, the critics get scared and usually pipe down.

Trump is our first leverage candidate. For two decades now we have seen loads of leverage companies and leverage financial institutions. The crash of 2008 was brought about by a leverage industry toppling over and taking the economy with it. The entertainment businesses, especially sports, are all levitating on warm gusts of leverage carrying them into the heavens.

The real estate business has always been about leverage. In normal times, someone with equity in a rental property could borrow against it to buy another rental property. The rule of thumb was that 80% of rental income had to cover 100% of the debt service. In simple terms, if the property generated $10,000 a month in rents at its peak, the mortgage could not be greater than $8,000 a month.

Clever real estate men like Trump would figure out how to push up rents to increase cash flow, which in turn drove up their asset base, allowing for more borrowing which they used to buy more properties. As principle was paid and the asset value increased, the difference in asset value and leverage could be turned into a tax free windfall. In Trump’s case, he would often liquidate properties he had made famous thus cashing out at their peak.

The way to think of it for the purpose of understanding Trump’s campaign is this. The savvy real estate man is always looking for a way to leverage his assets so he can jump on the next opportunity before the next guy. If you look at Trump’s career, you see he has moved from one project to the next, very often leaving suckers holding the bag as he walked away with a profit. Trump’s not a builder. He’s an opportunist.

That’s what’s happening in his campaign. He took stock of his assets. He’s famous and he is rich. He’s also nearing the end so he can afford to piss off other famous rich people, unlike regular candidates that have to suck up to the rich. Trump also has a way of connecting with the common people. He’s been doing improvisational television for a long time and he is good at it.

Those are the assets he has to leverage. The opportunities he is exploiting are immigration, the media culture, discontent with the Republican establishment and widespread angst about the culture and economy. My guess is he never had strong views on any of these things. He may not even have had opinions about them until now. He’s just a guy who is good at seeing and exploiting opportunities.

I think this is why the GOP is looking so silly trying to swat away Trump. They are used to dealing with people who fear nothing more than separation from the heard. Trump is not knocking on their door asking to join the club. He’s out on the lawn throwing rocks through the window because that’s where the opportunity lies. John McCain leaning out the window in his nightshirt and cap, yelling at Trump to get off his lawn is what Trump wants. It plays to his advantage.

Similarly, Trump is not builder. He does a deal and moves on. His whole life up to this point has been geared to winning the moment. That makes him uncommonly good at moving past a problem, a gaff or a misstep. He takes the loss and moves onto the next item. To be successful in his line of work, you have to have the conscience of a burglar. You can be sure Trump remembers every win and not a single loss.

That makes the conventional political attack ineffective because he is so good as brushing it off and re-focusing on his next opportunity. When he gets grief for being mean to McCain, he brushes it off and takes a shot at Caitlyn Graham. When the press howls about that, he points out that Rick Perry has a two-digit IQ.

As with everything, there is a limit to leverage and you eventually have to settle up and show a profit. Trump has made a lot of people a lot of money which is why people do business with him. But, he ruined more than a few too. It remains to be see how his presidential run will end, but the insiders are betting/hoping he is unable to deliver more than pithy lines criticizing his opponents.

That said, he is a smart guy and he likes winning. What started out as a vanity candidacy is looking more like a real campaign. Beppe Grillo started out as a gag too. Most people, especially the smart people, thought it was ridiculous to think a divorced actor could be president. Similarly, no one picked a degenerate from the Ozarks as a s serious candidate at this stage of the 1992 election.

For now, it is a good show.

The Government Screw-Up Fraction

Posted on by

Most people out on the fringe, which is getting rather crowded of late, are more than a bit angry and bitter. It’s hard to be a sunny optimist when you sense that the world is going to shit and there’s nothing that can stop it. Turn on the TV looking for sports, only to see them parading around a mentally disturbed man in drag and you have to wonder if blowing it all up is not what’s best.

The truth is mass media makes the weird seem common, but it is no more common than in previous eras. When I was a teenager back in the last Maunder minimum, a friend dated a girl who lived with her father as her mother had died when she was a child. Dad had no woman in his life, but he had a closet full of women’s clothes. As long as he kept it out of the streets, people politely ignored it. Today he would be on display by the mass media.

Similarly, the corruption we see with monied interests and the governing elites is nothing new. Kings granted lands and titles to their favorites who just happened to fill their coffers with gold.  A century ago bankers and monopolists controlled western governments, buying politicians at every level. Government has always been for sale and it always will be for sale as long as humans are in charge. No man is so virtuous that he will refuse the highest bidder.

The real trouble we face, the true crisis of the age, is the mounting incompetence at all levels of government. We can joke around about failing up, but it is a real problem when it involves necessary work not getting done. In a prior age, there was a limit to the corruption because things had to get done. In the “post-scarcity” world, the people in charge operate as if there’s never any cost to their failures.

And they can for forgiven for thinking this. Take a look at the career of Marilyn Tavenner. She has been in government and quasi-government her whole life. No, public hospitals in America are not private enterprise. Her career before getting to DC is impossible to judge from where I sit, but her Washington career has been nothing but a string of disasters. Now, she is cashing in to be lobbyist.

Former Medicare chief Marilyn Tavenner has been hired as the new CEO of America’s Health Insurance Plans, representing an industry that she helped regulate during the turbulent launch of Obamacare.

The powerful K Street lobbying group’s announcement Wednesday comes months after Tavenner, a nurse and former hospital CEO, stepped down as the administrator of the Centers for Medicare and Medicaid Services. At the agency, she was responsible for writing many of Obamacare’s rules and oversaw the troubled rollout — and repair — of the HealthCare.gov enrollment website.

If you are an aspiring screw-up, you have to look at this as a great inspiration. If you are good at polishing the right apples and know how to toady to the right people, you too can get fabulously rich off the taxpayers, even you are a colossal screw-up. In this case, Mx. Tavenner is hired because she is on good terms with all the other screw-ups in the bureaucracy.

Smart fraction theory asserts that a nation’s per capita GDP is determined by the population fraction with IQ greater than or equal to some threshold IQ. Consistent with the data of Lynn and Vanhanen, that threshold IQ is 108. The more people you have in that fraction, the more stupid people they can carry up the economic ladder. Detroit has few people with an IQ over 108, while San Francisco has many.

You have to wonder if something similar is going on with government.The Iron Triangle of government consists of interest groups, members of congressional subcommittees, and agency bureaucrats. Interest groups lobby politicians through their staffers (bribes) who pass laws for agency bureaucrats to implement. Since agency bureaucrats are not very bright, they rely on interest groups to write the implementing regulations.

That is not as bad as it sounds as industry works as a brake on the incompetence of the bureaucrats and the lunacy of the political leg. The trouble is the government has grown so large and complex, industry needs insiders to work the system on their behalf.  This is where screw-ups from the agency bureaucrat pool get into the blood stream of government.

The inept bureaucrat gets a job in the industry they regulate, but they are a screw-up so the industry finds a home for them back in the bureaucracy or on the staff of a politician, usually at a higher level than they started. In time, these staffers cycle back into the bureaucracy, replaced by some other screw-up that was plucked from the bureaucracy by the special interests.

In this process, the number of competent people remains fixed while the number of screw-ups multiply. There’s a point where agencies are so loaded down with stupid people and screw-ups they no longer function in a predictable manner. Most of what gets done is pointless, the rest is mischief.

Failing Up

Posted on by

I’ve taken my turn mocking Ellen Pao, but her story is hardly original. Failing up is so common today it feels like it is new, but it has been a feature of the human condition for a long time. Alcibiades is a guy who would be comfortable in today’s culture of failing up. Instead of screwing up the invasion of Syracuse, he would have run a bank into the ground and then run for the Senate.

In prior ages, society could afford precious few of these sorts of people. Mistakes were simply too costly to tolerate having too many idiots in powerful positions. In the post scarcity world of today, it feels like we can tolerate an unlimited supply of losers, grifters and charlatans. Hillary Clinton is 50/50 to be president, despite being a colossal screw-up for the last forty years.

Ellen Pao would have been a non-story, but the Cult thought they could turn her into a Rosa Parks. She was an Asian female with a gay black husband suing a gaggle of Pale Penis People, who make it their life work to oppress women. That’s what makes her interesting to the Cult. Her scam is not in trying the shake down the PPP. Her scam was to con the Cult into making her a heroin. Edit:That’s right. Inject her right into the veins of the culture!

I was thinking about Pao when reading this on NRO. A fair number of people who think of themselves as diehard conservatives are fans of Fiorina. She is polling in the single digits, but the GOP will find some reason to get her on the debate stage. The reason, of course, is she is a woman. To her credit she says the sorts of things you expect a Republican to say, which says a lot of about the state of the party, but the only thing that matters is she lacks a penis.

That’s part of the con, of course. Fiorina was playing the vagina card when Ellen Pao was figuring out what to wear to her high school prom. Twenty years ago Fiorina was doing the vagina hustle to work her way up the ladder in Silicon Valley. Like Pao, she interviewed great, put on great presentations and was outlandishly incompetent in one job after another.

In 1995 she was put in charge of Lucent Technologies, a spin-off AT&T. I knew people who worked at Lucent in those days and they still tell stories about the madhouse management culture ushered in by Fiorina. Bell Labs was part of Lucent at the time and was one the great research facilities on earth. By the time Fiorina was done with it, it had been reduced to an R&D lab for a half-assed phone company.

Then she moved onto HP. Her tenure there is talked about to this day as a cautionary tale about hiring the wrong CEO. It is easy to forget that HP was one of the great Silicon Valley companies. In the 90’s, they were the model for tech companies all over the world. After six years of Fiorina, they were a smoking ruin that has never recovered. Share holders had parties upon hearing of her firing. The stock jumped 10% the next day.

Now here she is playing the vagina card in the GOP primary. The climb up the corporate ladder, by an otherwise talentless hack, is accomplished by showing great loyalty to key superiors. The hack also is good at displaying loyalty to the firm in front of the right people. That was her game in business and she is doing the same in politics. She’s making nice to the leaders and defending the party like a lioness defending her cubs. She’s also going after Hillary tooth and claw.

Fiorina is smart enough to know she is not winning the nomination. This is the long con and that means angling for the VP spot or maybe a cabinet position. She will get on the stage and look good in the debates. By spring of next year she will be out of the race and have a good idea as to who will win the nomination. She will make a big show of endorsing that person and campaigning on their behalf.

In 2017 she will be nominated as Secretary of HHS and she will do to health care what she did to Bell Labs.

The Greek Struggle Session

Posted on by

I have found the Greek financial crisis endlessly fascinating over the last five years. The main reason I can’t get enough of it is that unlike American political scandals, all of the important parts of the Greek drama are hidden. What we see from the performers is their reaction to those important actions and we are left to guess what is going on behind the screen.

After all, the Greeks have no money and they owe a massive amount of money relative to what they can possibly raise over the next ten years. Even if they stated auctioning off islands and national treasures, they are never paying off their debts. We finally learned that they will never be able to pay the interest on those debts. There’s some other reason Europe is spending countless hours pretending to disentangle an “impossible” knot.

Reading this post on ZH this morning, I think I may now know the answer. The European Project is all about reducing cultural and national identity administrative distinctions. Being an Italian simply means living in a place that used to be a country called Italy. If you are a Bantu who floated over last week, granted EU citizenship and now reside in Milan, you are an Italian!

Here we have the Greek stubbornly acting like Greeks by voting out politicians who go along with the European program. They voted out one main party for another and when that failed they voted out the main parties altogether. Syriza, despite its Marxist trappings, won on an explicit appeal to Greek patriotism. The Greeks even went so far as to vote in huge numbers against the EU proposal in last week’s plebiscite.

The result, as that Zero Hedge piece points out, is the Greek parliament voting in favor of the same deal that was rejected last week by the people. Talk about the ultimate in humiliation. If you are a Greek who voted for Syriza and against this plan, you have to feel like a fool. The people in charge are laughing at you. All you did with your silly voting is waste the ruler’s time and for that you will suffer.

And that has been the point all along. It’s not the money. It’s the humiliation. The Greeks have been cast in a German snuff film for the titillation of German technocrats and as a warning to everyone now living under the German yoke. You either goose step to the tune being played in Brussels or end up like Greece.

In the last century, Marxism relied on personal humiliation to break the will of people. The rulers would require the people to say ridiculous things in public about the wonderfulness of the regime and it’s animating theodicies. Children would be made to sing party songs and officials would be required to participate in official charades. It was all intended to humiliate the people. It is hard to rise up in revolt after you have been made to toady to the state in front of your peers.

There was also the forced confession and the struggle sessions. Forced confessions were how individual heresies were made into collective ones. They turned a natural virtue – empathy – into a vice. How could one feel sorry for a suffering human who had gone against the revolution? It was intended to atomize the citizen, cutting off his loyalties to his fellows and replacing it with loyalty to the state.

The struggle session worked similarly. The heretic would be forced to confront their own apostasies in such a way that altered them emotionally. Everything about them, right down to their core, was challenged and questioned. Once they could no longer trust themselves, they could only trust their masters in the party.

Ultimately, that is what has happened in Greece. It is one long struggle session. Like the forced confessions and show trials the Soviets were so fond of, this was intended not just for the Greeks, but the rest of Europe. The Greek Finance Minister said it was to warn the French, about being French. It was certainly a warning to the Brits and others who have patriotic parties making noises about Europe.

If you are a Greek citizen, how can you have any faith in your Greek democracy? Why would you bother with it? You now see that voting is just a charade. The people making the decisions are in Berlin and Brussels and they speak German. Those are the people in charge, not those guys lobbying for your vote. Comrade, why are you struggling against the tide of history?

As an aside, if you ever thought about what Europe would have been like if the Nazis had won, take a look at today’s Europe. Eventually Hitler would have died, probably assassinated, and been replaced by technocrats like Albert Speer. The Germans love technocrats more than they love scat films. By now, rule by street thug would have given way to rule by lemon-pussed technocrats.

Thousands Stealing Anything They Can

Posted on by

The TSA was started by the execrable George Bush in response to the 9/11 terrorist attack. The theory behind hiring low-IQ dimwits to stand around the nation’s airports was that, by sheer numbers, they would root out and expose terror attacks. It is the Infinite Monkey Theorem applied to national security.  So we now have a million monkeys in blue shirts hassling everyone at the airport.

The result has been what you expect when you take people choosing between a life of low-level crime and life on the dole and give them access to private property. They are stealing everything they can carry. Just the other day they robbed the widow of loveable baseball icon Don Zimmer.

The widow of a baseball icon was heartbroken Friday night over a missing jersey that she believes was stolen.

Last month, the Yankees gave Soot Zimmer a jersey in honor of her late husband, Don Zimmer, who served as bench coach for the team for several years.

But the jersey never made it back to Florida with Soot Zimmer, and she thinks a Transportation Security Administration agent stole it from her luggage .

“When it was missing out of the luggage when we got home , it wasn’t the monetary value, it was the sentimental,” she said. “You know, they gave me that to represent Don, and now I didn’t have it.”

Luckily for Soot, her husband’s original jersey is framed in her home.

Every year the TSA settles tens of thousands of cases where employees have stolen property from bags or damaged property trying to steal it. Millions of dollars in claims are settled each year. If the TSA were run by Italians, the Feds would hit them with a RICO charge.

But, this is government and as Reagan said, the closest thing to immortality is a government program. The TSA is a great example of the ratchet effect at work. It will never go away. It will only grow every year. The theft of private good will eventually be viewed as a cost of travel. After the next terror attack, a new department will be created on top of the TSA and it will grow like a fungus too.

At some point, the whole thing grinds to a halt.

The Greek Revolution

Posted on by

The Greeks vote on something this weekend, but no one really knows whether it matters. The news indicates that the deal offered Greece is no longer on the table so the plebiscite on it would be moot. There’s also the fact that Greece appears to be in full blown financial collapse. The scenes on television remind me of the Argentine financial collapse of ’98. In fact, the comparisons are so close that the Argentinians of that era are advising the Greeks now.

Here’s an interesting documentary on the Argentine crisis.

The fascinating thing about this last phase of the now seven year crisis is that the enormity of Greek debt is finally being revealed. The IMF has released their analysis of Greek debt and there’s simply no way anyone can think the Greeks will ever pay their debts. It is a mathematical impossibility. Further, they will never be able to make their interest payments.

Greece has a €50 billion cash deficit through 2018, which means even under the bailout plan that was offered, Greece would be accumulating debt faster than it would be retiring debt. In theory, something magical could happen so that the economy would boom, but the debt burden makes that unlikely.

That means the people in charge of Europe have been lying to their public all this time. Default was an inevitability. That will then be followed by a restructuring of debt and debt forgiveness. Lying is no surprise as it was always assumed that the EU was buying time to transfer these debts from the private holders to the taxpayers.

The deliberate and seemingly pointless immiserating of Greece is what one would expect from a loan shark. It’s not the money, it’s the principle. The EU was supposed to make one big happy family of former countries. The trouble is one of the family members is a bit of a screw-up so the paterfamilias is teaching a lesson. It’s not so much for the one taking the beating, but for the rest. “Don’t be like Greece or we’ll break you like we broke them.”

That sounds good, but it remains to be seen if they will actually break Greece. The first hit is the worst hit and Greece is taking the first hit right now. By the time they vote, a fair number of Greeks will be ready to see it through. The next hit lands to the body of the EU financial system. No one knows what happens when the fallout from Greece starts washing up in the rest of Europe.

It’s easy to dismiss Greece as a dead beat country full of oily grifters. In theory, the Greek people have only themselves to blame for electing crooks and liars. That’s an argument against democracy, but the people never voted for bankruptcy. They were misled by their leaders, who got hooked on the heroin of global finance. They supported joining the Euro because they were told it would avoid these problems.

The problem at the core of global finance is that there’s no market mechanism to restrain public debt. The whole point of a floating currency regime is to disguise public debt in order to avoid making tough choices about the welfare state. It’s not an accident that since the Louvre Accords the size and scope of government has skyrocketed throughout the West.

In other words, a currency system based on credit has worked at hiding the cost of government. In fact, it has been so good at it no one noticed that Greece was running up debt at an alarming rate. In the old system, Greece would have been facing double digit borrowing rates long before they reached this point.

Sovereign debt is mostly a way to rob the property holders of countries. When the state borrows, there has to be someone on the other side of the transaction. If they borrow from their people then they are taking property with a promise to pay at a latter date. If they borrow from abroad, then they are promising their tax payers will pay at a later date.

The only people with the ability to pay sovereign debt are the tax payers.

In the old currency arrangements, this was understood. Lenders knew this. If you lent gold to the neighboring king, you did so knowing you may have to invade his lands to get it back. That made lenders more prudent, which made the crown more prudent. Credit currency makes it appear that default is impossible so no one considers the cost of collection.

Successive Greek governments have promised the property of Greek tax payers as collateral. The Greeks on the dole are demanding their checks and making a fuss about it on TV. The real revolt is the from the people with money. The Greek taxpayers are refusing to pay up. Unless the EU is ready to roll in the tanks, the debts will have to be forgiven.