The Moral Hazard Society

Posted on October 4, 2022 by thezman

For the last couple of weeks, there have been whispers that some large banks may be in trouble due to the rising dollar. The strength of the dollar is due, in part, to the Federal Reserve’s effort to fight inflation. It is also due to the decline in both the Euro and the British pound. Economic conditions in Europe are deteriorating quickly because of poor management at every level. The relative strength of a currency is the relative strength of the managerial elite that issues it.

Recently, the gossip has turned to Credit Suisse and Deutsche Bank, both of which have seen their share prices collapse. The former has lost about 60% since the start of the year and the latter is down around 50% off its recent high. Credit Suisse could be at risk of imminent collapse, due to its deteriorating credit condition. Banks need credit to function and right now, no one is excited about extending credit to a bank whose CEO is telling employees that the bank is not about to fail.

Some are calling the Credit Suisse crisis the Lehman moment. This refers to the collapse of Lehman Brothers in 2008, which triggered the financial crisis. Banks are dependent upon one another, so if one fails, it can set off a chain reaction where the next weak bank fails, then the next weakest bank. Get enough banks unable to make payments to other banks and the whole system crashes. This is why everyone is worried about the banks all of a sudden.

It is also why the market boomed on Monday. The stock market is wholly dependent on central bank policy now. Loose policy means lots of money creation in the banking system, which means lots of money flowing into markets. Tight central bank policy means the money gets fussy about where it flows. It can even sit on the sidelines and wait until things appear more stable. The robots are betting that Jerome Powell blinks and ends his tightening to save the banks.

This is similar to what recently happened with the Bank of England. All of a sudden, there was no market for the long dated British bonds. This is why the British pound declined in value. This in turn created a crisis for British pension funds, as their collateral started to evaporate. The BoE had to step in and buy long dated bonds to guarantee their price and save the pension funds. As a result, the gilt and pound have stabilized over the last few days.

The weirdness of this age is right there in that action by the BoE. On the one hand, they are trying to fight inflation by reducing the money supply. They do this by raising interest rates, which reduces bank activity. This slows the creation of money, thus reducing the supply of money relative to demand. As relative demand increases, the relative value increases, which is what brings down inflation. In reality, it means a recession, which does the hard work of cratering demand.

Where we are now with the BoE, and probably the Federal Reserve, is that the bank is trying to reduce the amount of money in the system relative to demand. At the same time, they are trying to increase the money in the banking system in order to prevent the banks from running out of cash. Put another way, we may be in a situation where central banks are injecting and withdrawing money at the same time, which is one of those things that is supposed to be impossible.

The current crisis is due to the choices facing central banks. They can provide liquidity to the system or they can fight inflation. If they raise rates to fight inflation, major players who got sloppy with interest rate swaps, for example, are suddenly facing an extinction event, which threatens the whole system. On the other hand, if they protect the system by leaving rates alone, they face the political fury of governments contending with double digit inflation and energy shortages.

There is a bigger issue. The energy problems, the supply chain disruptions, inflation and the fragile credit markets are due to political incompetnace. Over the last three years, Western governments, led by Washington, have found every bad decision possible and then made it with furious enthusiasm. People cannot be blamed for thinking it is deliberate, because that is the best answer. The odds of rulers being this dumb this often strikes most people as impossible.

This is a time when Occam’s razor does not apply. They are this dumb. Liz Truss came to power promising to give rich people free money to boost the economy. This was a moronic plan that nearly blew up the economy in her first weeks. Truss is a simpleton who has no business in politics, so she thought it was a grand idea. She is in office because her predecessor was a bloated party boy who saw Churchill whenever he caught a glimpse of himself in the mirror.

Go back through British PM’s and it is one buffoon after another. This mirrors what has been happening in America. Joe Biden is in the late stages of dementia and he will be on the ticket for 2024. His predecessor was a carny act. The guy before that was a formless nobody who was willing to act the role created for him. The guy before that was a simpleton controlled by his father’s friends. You can do this in every Western country going back decades. They are as dumb as they act.

The crisis of competence in the managerial elite is not the root cause. The real first mover is the moral hazard economy. Going back to the 1970’s, the Western political system has come to rely on a handful of clever bankers to save the political class from their own idiocy. Starting with Paul Volcker, central banks have been the mother hen of political economy, always right there to kiss the boo-boo of the politicians or the pirates in the financial system when they stepped on a rake.

This safety net under the political economy of the West has warped the selection pressure on the people in the system. In a world of no real risk, feckless airheads like Liz Truss can rise to the top on promises to the powerful. After all, if she breaks something, nothing really bad can happen. The result of this risk-free political environment is that it rewards reckless behavior. The bigger the claim, the bigger the media splash, which means bigger political clout.

The same selection pressure can be seen in banking. In a world where bankers go to jail and lose all of their money if they screw up, there is a low tolerance for people who are reckless and foolish. In a world where the Fed steps in to not only save your bank but save your golden parachute and those of your colleagues, why would you not take the most dangerous risks? For over thirty years central banks have created a moral hazard, which in turn created a culture of reckless disregard.

It is this sense that no harm can ever come from error that is leading the West into a crisis from which it may not survive. It is this mentality that is leading to the game of chicken with nuclear weapons. The West is now led by a collection of mentally unfit bullies who think they own the school yard. At some point, like all bullies, they will get punched in the nose and see their own blood. In this case, it is reality that will do the punching and the bankers will not be their to kiss the boo-boo.

This raises the serious question. Bullies learn their lesson in the schoolyard because that lesson is not lethal. In the present age, how can the ruling class suddenly feel the pain of their own stupidity, without blowing up the world? How can real risk be reintroduced to change the selection pressure without risking collapse? The moral hazard society may have reached a point where there is no solution. The phrase that may be needed here is creative destruction.

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A Medieval Desire For Revenge

Posted on October 3, 2022 by thezman

Notes: The Monday Taki post is up. This week is a post about the natural coercion that takes place in any democratic system. Sunday Thoughts is up behind the green door, covering some news items of the day. SubscribeStar and Substack.

Toward the end of the Second World War, the “Allies”, which by this point was a polite fiction, were thinking about what comes after the war. The three big powers of Europe, France, Italy and Germany, were in ruins. The British were bankrupt. Then you had the Russians, who were clearly looking past the war. The big item on the agenda was what to do about the Germans. Within living memory, they had been blamed for two monstrous wars that crippled the West.

United States Secretary of the Treasury Henry Morgenthau produced a plan in 1944 that called for the annihilation of Germany as a country. The central argument was that there was something defective about German people that causes them for no reason at all to do the things they were doing. The only solution was to make it so these people could never do those things again. Morgenthau did not blame politics or ideology for the wars, but the German character.

The plan called for the de-industrialization of Germany. This would have been done by partitioning Germany into various bits. Some portion would go to Poland, while another portion would go to France. The Ruhr Area, the main industrial area of Germany at the time, would be stripped and occupied. What remained of Germany would be divided into two areas with no industry. Basically, the country known as German would cease to exist and its people would soon follow.

That last part is key. Even after it was made clear to Morgenthau and his supporters that his plan would result in wide-scale starvation, he pressed forward. Optimistic analysis at the time said that 40% of Germans would starve to death if the Morgenthau plan was implemented. Of course, the number would be much higher due to the inevitable revolts by the Germans, which would be met with force. The goal of the Morgenthau was the genocide of the German people.

From the point of view of this age, it sounds like madness, but war does funny things to people, especially long wars. The Russians had lost tens of millions of people fighting the Germans, so left to their own sensibilities at the time, they probably would have exterminated most of the Germans and reduced the country to rubble. What was left would have become a slave state in the Soviet Union. Of course, Morgenthau had similar motivations for destroying Germany.

The chief supporter of the Morgenthau plan in Britain was Churchill’s assistant Frederick Alexander Lindemann, 1st Viscount Cherwell. Besides having a great name, Lord Cherwell was described as having “a medieval desire for revenge” not just on Germans but on anyone he disliked. Naturally, the Morgenthau plan for Germany tickled his natural desire to see opponents suffer. This bit of trivial reinforces the fact that the plan was purely retributive, rather than remedial.

The Morgenthau plan has a curious history. It was published in the closing days of the war, but it became a rallying point for the Germans. All of sudden, the very real prospect of extinction was on the table. Allied commanders said the plan had made their job much more difficult. After the war, there was an effort to memory hole the idea because of the Cold War. Recently the plan has gained attention because it draws attention to certain subjects that are bad for current narratives.

Interestingly, the plan was quickly deemed impractical by the people who would be charged with implementing it. This happened before anyone stopped to consider the morality of committing genocide on the Germans. Genocide is the right word, as that includes erasing the culture of a people. Despite the obvious impossibility of the plan, the backers never gave up on it. It was only the clever machinations of people around Roosevelt and Churchill that prevented the genocide.

Today it would be nothing more than a side note to the history of the war, but it seems as if that old “medieval desire for revenge” still casts a shadow. The events in modern Europe look like an updated version of the Morgenthau plan. The Germans are slowly being reduced to peonage by Anglo-American policy. The pretext this time is not fear of German militarism, but fear of German independence. Ukraine policy makes sense when the goal is the destruction of Germany.

That is what is on tap unless something changes. German industry cannot survive if energy conditions persist much longer. Their primary advantage in Europe and the world has been easy access to cheap energy. The energy crisis not only deprives them of cheap energy but may deprive them of energy. The Germans are now facing the prospect of blackouts and periodic shutdowns due to gas shortages. This is just the start of what could be a long crisis.

Then there is the knock-on effect. Energy is not just about making things like cars and chemicals, but about growing food. All of Western Europe will be facing a serious fertilizer crisis in 2023. Germany has relied on imports for all of its commercial fertilizer, so cuts in those imports will wipe out German food production. A country that cannot make anything, heat its homes or feed itself looks a lot like what the people behind the Morgenthau plan had in mind eighty years ago.

Of course, there is another element to this. The first Secretary General of NATO was Brit named Hastings Lionel Ismay, also known as First Baron Ismay. He is credited with having said the purpose of NATO was “to keep the Soviet Union out, the Americans in, and the Germans down.” In retrospect, the sole purpose may have been to keep Germany down. Germany is the key to Russian involvement in Europe, so controlling Germany is a way to control Russia.

That is what we see in the current crisis. Washington blew up those gas lines because those gas lines primarily served the Germans. It allowed them to do business with Russia and could perhaps allow the Germans to be an honest broker in the war between Washington and Moscow. It speaks to that “medieval desire for revenge” that Washington would rather risk a nuclear war with Russia than let the ancient enemy get even a hint of independence and self-respect.

Perhaps the way to read this crisis in Europe is as the final chapter in a long story with roots into the 19th century. The cutting off of cheap energy to Germany will finally reduce the Germans to poverty. They will be dependent on Washington and the rest of Europe for survival. This may strike modern ears as insane as the original Morgenthau plan, but like that old plan, the new plan, maybe it should be called the Kagan Plan, is about a “medieval desire for revenge.”

The NFL’s Racial IQ Problem

Posted on October 1, 2022 by thezman

The absurdity of America’s racial politics is no more obvious than in sports, where a collection of low-IQ jocks and circus performers wrestle with the irreconcilable contradictions of race and racial morality. Everyone involved is smart enough to understand the message they are required to push, but they lack the brainpower to make it work. Guys like Stephen A. Smith or Michael Wilbon come off as white nationalist parodies.

The NFL is probably the best place to see the ridiculousness, as that league has been trying hard to racially atone for the last twenty years. The NBA has been a black sport for generations now. Even the coaches are black. Hockey and baseball are impossible to make into black sports, because running and jumping are not critical qualities in either game. Outside of a few positions, running and jumping are important qualities in American football.

The main area of focus in the NFL has been quarterback, which is a position dominated by white players. The assumption has always been that the position requires smarts, and, well, you know. The league has been working to make it easier for the passing game by limiting what defenders can do. By making it easier to pass the ball, the threshold for being a quarterback has dropped. Add in changes to enhance the value of running quarterbacks and you get more black quarterbacks.

This is not all due to racial morality. The target audience for the NFL is declining in IQ so they are dumbing down their sport to chase the audience. Stupid people like to see simple plays where the star does all the work. Complex offenses that require field generalships are no fun to the typical fan. It will not be long before CGI is added to make the games more interesting for television. Maybe a new play will be the Fast & Furious style car chase.

A feature of football broadcasts is the talking heads assuring us that the quarterback who makes his living running the ball, a guy like Lamar Jackson, for example, is actually winning through intelligence. Jackson’s test scores say he is a full standard deviation below the typical quarterback, but we are told he is a football genius. In reality, he is just faster than everyone else at the moment. He is the Michael Vick of this generation, less the dog fighting business.

This demand to respect the intelligence of the new vibrant quarterback is turning up in the controversy over Tua Tagovailoa. He was slammed to the turn in a game and suffered a serious concussion. He was carted off on a back board and sent to the hospital for evaluation. The sports commentariat has been ordered to put on their outrage faces over this. How dare the league put this young genius at risk by letting him take a blow to the head!

The video looks like one of those things that happens in sports. Whenever one human being tries to throw another human being onto the ground, there is a chance someone is going to get hurt. Given that hitting the ground means sudden deceleration, concussions are to be expected. Anyone who has played football or boxed or wrestled has had their bell rung more than once. It is just a thing that happens, no matter how hard you try to prevent it.

Of course, concussions are a controversial issue. A whole new racket has grown up around the dubious claims from the CTE people. The term is short for Chronic Traumatic Encephalopathy. Concussions probably have some negative impact on brain function, but the science is unclear. The CTE business is mostly a scam, which has a racial element to it. The guy who sold the idea is named Bennett Omalu. Will Smith played him in a movie.

The racial angle in the concussion story gets even more nutty when you look at the efforts to remediate the issue. The NFL has set up a fund to compensate players claiming to suffer from CTE. The NFL is race norming the concussion settlements to reduce payouts, which brings out the usual suspects. You see, Jamal is stupid because of the concussion, not because of genetics. It is a classic example of biological reality slamming into racial and political morality.

The truth is no one knows if concussions have a direct or even an indirect connection on cognitive issues later in life. We have always known that taking blows to the head is bad for you. We have the term “punchy” for a reason. Boxers who took too many blows over their career were often quite stupid later in life. It has always been assumed that it is the blows to the head, but no one really knows for sure. Maybe they started out stupid, which is why they took so many shots to the head.

There is a good chance that IQ plays a role. Intelligence strongly correlates with health outcomes, so it is possible that it plays a role in concussions. Higher IQ players may suffer fewer concussions or suffer less from them than low-IQ players. Boxers have never been known as smart guys, so maybe the reason they seem punchy in their later years is the combination of blows and their low-IQ. Maybe smarter people are better at avoiding concussion and recovering from them.

None of this is allowed to be said, so it does not matter much. The NFL is going to have to pay for these black former players. In a way, it is like the ongoing demands by blacks for compensation because of slavery. The math is not the issue. It is the moral blackmail that comes once you accept the current morality of race. The NFL, like white society, can never pay for the sins of the past, but it must keep paying. Discrimination is a nightmare from which will never awake.

In the larger context, the dumbing down of the sport and the presentation of it, corresponds with the dumbing down of race relations. Half a century ago, race relations were better because they were more thoughtful. Both sides sought an accommodation based on what was possible. Today it is two tribes flinging their poo not at one another, but at the rest of us. Like car chases in movies, race relations are now part of the menticide inflicted on our society.

Coercion

Posted on September 30, 2022 by thezman

The other day, a grotesquely overweight black woman was sent out onstage in her underwear to make noises with James Madison’s 200-year-old crystal flute. The item was a gift to James Madison in 1813 by the French flute maker Claude Laurent and has been kept locked away for decades. For reasons they never bothered to explain, the Library of Congress let this woman use it as a prop in her circus.

The most likely reason, of course, is antiwhite animus. Hating white people, especially those from the past, is a centerpiece of the new religion. The toppling of statues and vandalizing of culture items is something like a sacrament for them. Publicly flinging their poo at the works of the white man is a ritualistic break from the culture coercion from which they seek to liberate themselves.

That is what the show is about this week. One way to look at the great intellectual flowering in the West is as a quest for liberation, with liberation being defined as the elimination of coercion. The utopia on the other side of the revolution is a world where everyone gets to do whatever they want without the need for permission. You are answerable only to your imagination.

Karl Marx, who still casts a shadow over our intellectuals, famously said about the mature communist society, “I could fish in the morning, hunt in the afternoon, rear cattle in the evening and do critical theory at night, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic.” In other words, no one would be compelled to do anything or even be anything.

To normal people, this sounds insane. Most on our side of the great divide struggle to accept that the people in charge really believe this stuff. It is a consequence of the moral mind to assume rational motives for the behavior of others. There has to be a better answer for why they gave the fat naked black woman a precious artifact from history so she could revolt us with it and her image.

Lots of people believed in Marxism. Lots of people still believe in libertarianism and anarchism, despite the mountain of evidence to the contrary. At least with Marxism, there have been real world attempts to make it happen. Libertarianism and anarchism never get past the planning stage. Despite the lack of anything to support their dreams, these fantasies persist, even among otherwise bright people

The neo-Marxists and their dream of cultural liberation are just as committed as the libertarians and anarchists. They have not thought through how the world will work when whiteness is removed. They are just sure it will be great. The main difference between themselves and the libertarians is they are well past the planning stage and are trying to make it a reality.

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This Week’s Show

Contents

Robert Nozick
Political coercion
Economic coercion
Cultural coercion
Racial coercion

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Surviving The War

Posted on September 29, 2022 by thezman

There was a time when normal Americans thought about how to survive a nuclear exchange with the Russians. During the Cold War, this seemed like a real prospect, so there was a reason to think about it. Into the 1960’s school kids had to do the hide under the desk thing, which was mostly about conditioning people to accept permanent war, but it conditioned people to the idea of being nuked. How to make it through a nuclear war became something of an industry.

There were two schools of thought on the subject back then. One said that any hint of a nuclear attack by either side would result in a mag dump by both sides. The United States and the Soviet Union were in a prisoner’s dilemma. If either side showed restraint, then they risked the other side striking first and possibly making it impossible to retaliate, so logic said to send all of your missiles first. Both sides accepted this logic which is why a system was put in place to prevent it.

From a survival perspective, such a scenario made the prospects for anyone living through it extremely low. The arsenals at the time were larger than today and the assumption was they could wipe out all life on the planet. The initial blasts would kill most people, but the fallout and nuclear winter would kill the rest. Even if people survived somehow, the numbers would be tiny. There was simply no point in preparing for what would be instant death for almost everyone.

The other school of thought was more optimistic. War would escalate with an initial exchange that might not lead to a mag dump. Even if the will were there to send all the missiles, many people would refuse to push the button. The disruption from the initial strikes would also render communications useless. The example of Vasili Arkhipov seemed like proof that a full scale exchange was unlikely. That meant it was possible to survive a nuclear war if you were prepared.

Today, that last scenario is more plausible. Nuclear arsenals are much smaller than during the Cold War. No one is really sure that the antique systems on which these weapons rely would work under stress. The American ICBM system still relies upon 1970’s technology. The Russian systems are similarly antiquated. The most likely scenario is that the major powers are no longer functional after a nuclear exchange, so lots of people survive the event.

The first step in surviving a nuclear war is to avoid a direct hit. Washington DC will get several direct hits and the initial flash will vaporize most of the population. The shock wave will level most of the city. By now, the Russians and Chinese know to target Northern Virginia, so it will be a saturation bombing. The five percent that survive the initial blast will be radiated and die soon thereafter. Therefore, the first rule of nuke club is to be outside the target zone.

The safe bet is to be away from the coasts. The Rockies or Appalachia are the best bet for making it through the first stage. Denver will be nuked, for sure, but the damage will be contained to that plateau. People in the mountains will escape the flash and the blast, even if Denver takes multiple strikes. The Green Briar will get hit, for old times sake, but most of West Virginia will be spared. There are lots of places to escape the flash and the blast in the mountains.

Once things settle after the final missile strikes, there will be four key things to surviving the aftermath. You will need water, shelter, food and a way to defend yourself from the people who were not prepared. Imagine a land ravaged by mask wearing Covidians and you get the picture. You will have to be prepared to kill a lot of people in order to avoid ending up like them. This means you need to pick a spot that has access to water, a food source and is defendable.

Since a post-nuclear America is going to look like the frontier as far as you are concerned, you are going to need frontier skills. You will need to know how to make a fire, provide yourself basic medical care and know how to hunt and fish. If your location is near a river, then you can initially get by with fishing and water from the river, but you have to boil the water and cook the fish. The ability to make fire without modern items like a lighter or matches is essential.

Once you have sorted the location and provided yourself with the frontier skills required to live in the wild, you need to think about the defense issue. A man alone is easy prey, even to desperate city people roaming the countryside. It would be better to have a tribe that can work together for common defense. That means you either need the skills to create a tribe from who is left or you have to create a tribe now. One way or the other, survival will depend upon community.

This basic framework of preparedness is just scratching the surface, but it does provide the basis for building a survival plan. For example, you will not want modern firearms for defense in the post-nuclear world. Making your own gunpowder for modern ammunition is not realistic. You can make black powder from raw materials. That means the old fashioned muzzleloader is a good weapon to own and master. Of course, older range weapons like spears and bows are an option.

The same applies to tools. Creating your own electric for powering modern tools is possible, but not very practical. If you assume society takes generations to bounce back from the holocaust, then it makes no sense to rely upon modern tools. They will break and you will not be able to fix them. The same would apply to vehicles. Old cars need gasoline and lubricants. Even if you stock those, they will run out eventually and your vehicles become lawn ornaments.

This is why forming communities in advance of the holocaust is critical. You can plan for the two general scenarios. The first scenario is the world steps back to the pre-industrial age and does not bounce back. The other scenario is the people responsible manage to survive and quickly set about recreating the modern world by bringing things like the power grid on-line. Do you want to play a role in that rebuilding or do you want to seek vengeance on them?

Community building in advance lets you wargame these issues. It also makes survival much more likely. No one man can know everything or prepare for everything, so having help increases your odds of survival dramatically. It also provides the means for surviving what comes after the initial devastation. In a post-nuclear world, tribalism will be the key to survival, which means the best tribe wins. Of course, that is also why the world was blown up, but that is a story for another day.

An Inflection Point

Posted on September 28, 2022 by thezman

Imagine if in response to Governor DeSantis sending migrant invaders to Martha’s Vineyard, the Biden administration blew up the Overseas Highway that connects the Florida Keys to the mainland. In response to Texas doing similar things, they knocked out part of the power grid in Texas. For good measure, they started a car bombing campaign against leading opponents of immigration. It may sound insane, but it is not too far from where we find ourselves.

Now, take it a step further and imagine that the major media outlets simply ignored these things entirely. You see clips on-line of the collapsed bridges in Florida, but you can find little about it in the news. They simply report that something happened and no one knows who did it. Maybe a few crackpots on these media platforms claim that DeSantis blew up the bridges as a false flag operation. Texas governor Greg Abbot is blowing up his power grid for the same reason.

This scenario is so ridiculous it would not pass muster with Hollywood studios as the basis for a political satire. Somehow, we have reached this moment. Last week, someone planted bombs near the Baltic Sea gas pipelines that bring natural gas from Russia to Europe. This caper required a great deal of coordination and technical skill, so it was not a group of kids. Everyone knows it was ordered by Washington and probably carried about by the American military.

If you head to the big America media platforms, this act of international terrorism that threatens the wellbeing of Europe is barely noticed. The New York Times is obsessing over some old video of Roger Stone and the hurricane. Presumably, they hope the storm wrecks Florida because they hate Florida. The Post has a below the fold story but they are gearing up to claim the terrorism is part of Putin’s dastardly plan to spread disinformation in the West.

Typically, the regime has a narrative ready to go when they pull a caper, but this time they have just been doing the self-satisfied grin. Radek Sikorski is a high ranking Polish politician who is married to Anne Applebaum. She is a member of the Trotsky cult run by Robert Kagan, the husband of Victoria Nuland, who is the Assistant Secretary of State for European and Eurasian Affairs. She is running Ukraine policy. Sikorski tweeted this out moments after the attack.

The Europeans quickly announced that it was an act of terrorism but seem to be in shock as they have yet to follow the script that says to blame Russia. Maybe this level of humiliation is even too much for the Europeans. The absurdity of blaming Russia is so ridiculous that it is impossible to say aloud without laughing. The American navy has been operating in the area and we have video of Joe Biden making threats to destroy the pipelines back in February.

Where we are now is that Washington is ordering the destruction of key European infrastructure in order to make war on Russia. Given the nature of the people involved, you can be sure many of them stood to make money from the attack, but the primary motive was the war on Russia. The Europeans are already in dire straights over energy this winter. This terrorist act by Washington now means something like a Turnip Winter for a wide swath of Western Europe.

Put aside the practical issues. Washington is now openly sponsoring and probably carrying out terrorist acts in Europe. Some would claim that this is not new as Washington has spent a quarter century bombing the Middle East. That is a fair complaint, but it happened under the guise of war. They were bombing the other side’s stuff, not the infrastructure of Europe. Imagine if Washington blew up the Chunnel in response to 9/11 and we have a good comparison.

The Europeans are a broken and defeated people, but even they have to be wondering what they have gotten themselves into with this Ukraine debacle. They eagerly signed up to be a “partner” with Washington in this great adventure to save Ukraine from the icy clutches of the Russian bear. Now, their economies are in collapse, their people are facing a winter without heat, governments are collapsing and their partner in all of this is now bombing their infrastructure. Some partnership.

The fact that the American media has been told to ignore this suggests Washington realizes they have a problem. It is hard to portray yourself as the good guy when you are bombing critical assets of your partners. This is one of those unforced errors that confirms the suspicions people have been voicing in private. In this case, it is that the real threat to peace in Europe is Washington, not Russia. The self-proclaimed defender of freedom is, in fact, its greatest threat.

This may be why the Biden White House signed off on this caper. It is an act of desperation aimed at keeping the Europeans in line. Germany now must hope Washington supplies enough LNG to make it through winter. That means the rest of Europe has to play ball with Washington, or face an economic collapse, as Germany is the economic engine of Europe. This act of terrorism was a warning to Europe that they better toe the line or else.

Regardless of the motivations, this feels like a game changer. It is too soon to know if it is an inflection point, but it could be the thing that changes minds. For Americans, it is one big piece of evidence that we are ruled by lawless tyrants. They will do anything to hold power, even commit acts of terrorism. For Europe, it could be the moment when they see the folly of their submission to Washington. For the world, it is more proof that Washington is the great threat to peace in the world.

Economically Pondering

Posted on September 27, 2022 by thezman

A feature of this age is words and phrases have fluid definitions, rather than the old, fixed definitions from our dark history. Vaccine used to mean a preparation to simulate the immune system in order to prevent infection. Now it means the sponsor of the regime friendly cable chat shows. Recession used to mean two consecutive quarters of negative GDP growth, but now it means a thing that never happens. After all, who can really say what words really mean anyway?

It looks like we may be getting a new definition for bear market, which used to mean a prolonged decline in equities. The rule of thumb is that a long decline that reached 20% off the previous high is a bear market. Yesterday, the Dow Jones Industrial Average reached that point when it dipped below 29,300. It is now off 20.4% from the high in January 2022 when stocks rallied after the end of Covid. The index is now below the level it was at when Biden took office.

The main reason the market is in decline is the global economy is a mess and Western finances are even worse. The wild spending during Covid was always going to come with a hefty cost, but the assumption was that the economy would just turn back on and everything would be fine. Western government could then stretch the cost of Covid policies over a long period of time. Instead, we have inflation, war and a global energy crisis that is demanding government action.

The post Cold War economic model, the New World Order, is based on the assumption that conflict between major states was a thing of the past. America was the last remaining superpower, who would police relations between the major powers of the world and prevent minor powers from getting out of line. Disputes would be sorted through the various international organizations. The business of the world was no longer ideology. It was business.

That turned out to be a grand bit of self-deception. The ideological fervor of the West, particularly the Global American Empire, was the main driver of Covid policy and is now the main source of economic chaos in the world. Western rulers saw the pandemic as a chance to launch their Build Back Better schemes. This not only led to massive shutdowns of the economy, but the scrambling of global supply chains. It turns out that the magical replacements did not just appear as assumed.

Then we have the war on Russia and to a lesser extent China. This is a two phase war, with one phase public and one phase private. The public phase is the vast array of sanctions levied against Russia and any country aiding Russia. The private phase is the currency war being waged by Washington. The booming dollar is supposed to curb domestic inflation and protect the petrodollar. There are also acts of economic sabotage like the recent attack on European gas lines.

The question that is never asked, but may turn out to be the most important, is why has it taken so long for economic data to turn sour? Shuttering wide swaths of the economy to fight the flu should have triggered a massive recession. Expanding the money supply through massive credit creation should have resulted in massive price hikes and many asset bubbles. The policies of the last three years should have brought disaster, but here we are with only the threat of disaster.

One thing the last three years has revealed is that the people who think they are indispensable to the running of society are not that important. The managerial elite made one terrible decision after another but the system carried on, because the people who actually work found a way. Businesses figured out a way to keep the lights on, despite the best efforts of government. Their people figured out how to get their work down, even with the lockdowns.

One possible source of the paranoid terror we see in the ruling class is the unspoken understanding that they are unessential. Their pompous self-regard is a mask concealing a deep fear that the Dirt People might figure out that the Cloud People are just an expensive ornament. Joe Biden is a dementia riddled vegetable, which makes clear that the job of president is ceremonial. Next in line is a former prostitute with the IQ of a goldfish. These are not serious jobs.

Another possible reason the economic data is defying economic theory is that the numbers are not what they claim. An iron rule of life is that anything with value will be faked or stolen. Economic data has value to the ruling class, as it is seen as a tool of control, so faking the numbers is possible. For example, many people think the Biden people have been giving us fake gasoline demand data. This would be an effort to jawbone down gas prices.

This is an old game that was popular in the Obama years. Every month the Feds would release rosy economic data, only to revise down the numbers at some point in the future when no one was paying attention. How much of this is going on today is hard to know, but we can use inflation as a guide. Anyone who has been to the grocery store knows that inflation is much bigger than the official government stats. We can probably assume similar manipulation everywhere.

Even so, you can only fake this stuff for so long. Providing fake data and false narratives is like check kiting. It works initially, but eventually the gap between reality and the false narratives gets too broad to maintain. This is what we see with immigration in Europe, where the it has toppled two government recently. Those romantic stories about how immigration enriches society do not hold up when the subway station is a warzone controlled by African gangs.

The other question, now that reality seems to be catching up with Western governments, is how bad will things get economically? The Europeans are just at the start of the long dark winter promised by Joe Biden. The British pound is in crisis and members of the ruling party are revolting against the new PM. The Euro is not doing much better, having fallen to ninety-six cents on the dollar. Of course, the dollar is soaring as people flee to the reserve currency for protection.

The soaring dollar creates a dilemma for the Federal Reserve. If they continue to withdraw dollars to fight inflation, they risk a currency crisis. If they back off the tightening, they risk a fresh explosion of inflation. Because of the dollar’s relationship to energy markets, it would also trigger rising energy prices. Then there is the politics, which is already turning up. Bad political environments tend to result in bad economic decisions, which make for more bad politics.

That is the final question at this stage. Can the managerial elite of the Global American Empire talk their way out of this? A central belief of the ruling class is that if they can create a plausible narrative and talk about it enough, it becomes reality. Can they convince the world that this is all just transitory and what lies ahead is the promised utopia they have been plotting for decades? They talked their way out of responsibility for the Covid vaccines, so anything is possible.

The Demon Of Democracy

Posted on September 26, 2022 by thezman

It has become trite to point out that the lovers of democracy have a one way relationship with it. When the results of an election are favorable to the ruling class, they praise democracy. When the results are something other than what the rulers wanted, then you can no longer trust the process. The United States has spent the last six years torn between these two competing forces. The 2016 election was rigged while the 2020 election was the most bizarrely pure result ever.

We are about to get another dose of this in Europe as elections go the wrong way for the people who actually run Europe. In Sweden, the normally passive Swedes decided to send a very mild message to their ruling class by giving a bunch of votes to the Swedish Democrats. This allowed a moderate coalition to form up and depose the Social Democrats, which has been the ruling party for decades. For the usual suspects, this means snow Hitler is around the corner.

An honest assessment of the Swedish election would start with why it has taken so long for the Swedes to push back against the system. Decades of immigration have turned Sweden into the rape capital of Europe. Large swaths of Swedish cities have become no-go zones thanks to the migrants. The city of Malmo has become famous for its problem with grenade attacks. Rival gangs of migrants use their skills learned at home to turn the once peaceful city into a war zone.

At least some of the Swedes have decided that they can risk being called bad things in order to send a message. For this to happen, however, the Swedish Democrats had to drop all of their tough talk and position themselves as reformed heretics who will only gently rock the boat a tiny bit. It is a good reminder that whoever controls the moral framework, controls the moral consensus. In order to participate in democracy, you must submit to the moral consensus.

This past weekend, the Italians did the unthinkable and elected a female as the next leader of the country. Before the election, the unelected president of the European Commission, Ursula von der Leyen, warned the Italians that she has a particular set of skills and is not afraid to use them if they vote the wrong way. The Italians being Italian were happy to give her the now famous solute and vote for a block of right-of-center parties in Sunday’s elections.

Giorgia Meloni, head of the Brothers of Italy party, will be the next prime minister, as her party received about 25% of the vote. Salvini’s League and Berlusconi’s Forza Italia will give the coalition a majority of seats in both chambers. The Brothers of Italy managed just four percent of the vote in the prior election and has been viewed as a fringe party with little impact on Italian politics. Suddenly, their pro-family and anti-immigration message is resonating with Italians.

Of course, the usual suspects have branded Meloni a fascist. You see, anyone who falls outside the moral consensus is a fascist. To her credit, this has not had to desired effect on Meloni’s rhetoric. Her victory speech was refreshingly moral. “Yes to natural families, no to the LGBT lobby, yes to sexual identity, no to gender ideology, yes to the culture of life, no to the abyss of death, no to the violence of Islam, yes to safer borders, no to mass immigration, yes to work for our people”

The same people who tell Europeans they must heat their homes with candles and get used to cold showers in the name of democracy in Ukraine, will now set to work undermining these two democracies. The Swedish Democrats have been accused of apostacy with regards to Russia. Silvio Berlusconi has been accused of being a Putin ally by the usual suspects. It is not hard to see where this is going. If you vote the wrong way, you are on the side of Russia.

Getting back to Ursula von der Leyen, you can be sure she will start pressing the new governments to pray at the feet of the moral consensus. Her primary weapon is financial, which she is now using against Hungary. The voters there support Viktor Orbán, who is no fan of men in dresses chasing girls in public toilets. The EU has thus declared that Hungary is not really democratic, despite their democracy. This means the EU will not begin withholding tens of billions in money.

All of this should be familiar to Americans. Voters sent a message to the ruling class in 2016 when they put Donald Trump in the White House. The message was received and the ruling class has been making war on those voters ever since. In a democracy, a legitimate result is one that pleases the permanent ruling elite. Anything that even questions the elite moral consensus is a threat to our democracy. The Swedes and Italians are about to learn this lesson.

The reality of Western democracy is that it is a weird form of colonialism where the rulers demand regular affirmation from the ruled. The point of elections is for the people to thank their rulers for their service. The rulers are naturally offended when the voters fail to hold up their end of the bargain. The social compact in Western democracy is that the ruling class commands and the voters obey. Anything else is a threat to our democracy and requires any means necessary to thwart it.

This is why elections have had no impact on policy in America. This exhaustive study from 2014 makes plain that voting means nothing. “Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.” As the saying goes, there is no voting your way out of the problems of democracy.

It is not all bad news. The continued support for Trump in America and now the elections in Europe suggest the people are slowly beginning to slip free from the tentacles of the imposed moral consensus. Even the normally passive Swedes are starting to look their masters in the eye and ask, “who says?” If enough people begin to wake up from the nightmare of liberal democracy, they may begin to break free from the underlying morality of it.

What the West will need to save itself is not bureaucrats promising to worship a system, but leaders who understand it is not how, but who. It is not how decisions are made, but who makes them. For Italy to regain itself, it must be Italians who make the decisions, not Brussels bureaucrats. For America to reclaim its nature, it must be Americans making the decisions, not an alien managerial elite. The demon of democracy is it leads people to forget this basic reality of life.

Thinking About Athens

Posted on September 23, 2022 by thezman

A little change of pace this week as the news is mostly made up nonsense about the war on Russia and, of course, stories about Trump. The obsession with Trump moved past whatever lies beyond absurd years ago. Even if you get the symbolism of Trump to the managerial elite, their obsessing over him is exhausting. It is as if they want to talk about him to the point where his fans are sick of the subject.

Scan the millions of posts about Trump in the regime media each week and it is like watching a man deliberately slip on a banana peel. His attempt to entertain the audience just creates a sense of shame. You are embarrassed for him. That is the same feeling I get when I read a New York Times piece about Trump. How humiliating and degrading it must be to write those posts.

The Finns have a word for this, myötähäpeä, which roughly translates into secondhand shame or shared embarrassment. Fremdschämen is the German version of it, which means the feeling you get when seeing someone do something so embarrassing that you start to feel shame by watching it. English does not have a corresponding word, which is odd given the history of the English language.

If there is no word for it, then it does not exist, at least in the mental landscape of the people who speak the language. Perhaps if the English language did have a word for this sensation, we would have fewer people willing to degrade themselves in public just to get a little attention. On the other hand, maybe the Germans have so many of these people they needed a word for it.

Regardless, you have to wonder if by 2024 people will have tired of the endless drama that surrounds Trump. On the other hand, the elite obsession with him may turn the man into a martyr. To his credit, he is still putting his chin out daring them to take their best swing at him. Like every decision to fire on a crowd of protestors, the eventual arrest of Trump just feels like it is inevitable.

Anyway, the topic this week is about the dynamics that exists within a debating society committed to consensus. This is a topic that will be visited in a different context in the Monday Taki post. The jumping off point for the discussion is how debate must have worked within Athenian society. We get to pretend we are wearing our togas and debating the issues of the day with the ancients.

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This Week’s Show

Contents

Changing Gears
Life In Athens
Being In The Debate
Getting Attention
Slapping Ginger Midgets
Making Moral Claims
Consensus
Dissidents
Repressive Tolerance

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Lesson 230

Posted on September 22, 2022 by thezman

Way back in 1996 when the Communications Decency Act of 1996 was being contemplated, no one imagined the outsize role of the internet. In fact, few of the people debating the bill had ever seen this internet thing. The internet as we understand it was in its infancy and only tech savvy hobbyists were using it. Most homes did not have a personal computer at the time. The only thing everyone was sure about was that the internet had to be free to grow.

Section 230 of the Communications Decency Act made a lot of sense to all involved, because it gave the new internet companies relief from parasitic lawyers who were already sinking their fangs into the industry. Giving the public platforms protection from liability allowed them to host the public platform without having to edit everything the users posted on the platforms. At the time, the tech companies claimed they lacked the resources to monitor user behavior.

The logic made sense as long as that last bit was true. If the people creating these public platforms could not edit what was posted, then they could not reasonably be held accountable, as we do for newspapers and magazines. The New York Times controls its content, so in theory it is responsible for it. As a practical matter they are never held accountable and libel people daily as we saw with the Sarah Palin case a few months ago, but that is a topic for another day.

In a quarter century, much has changed. Not only can the tech platforms edit what is posted on their sites, they now aggressively monitor content. Not only that, but they also promote content on the platforms and they create their own content. The millions of bots used to boost some content over others is a form of content. It is similar to a newspaper making the editorial decision to post some stories on the front page and relegate the real stories to the back pages.

The Section 230 protections were specifically tailored on the assumption that the platforms could not control what was posted. Therefore, someone could not reasonably sue them for defamation. It would be like holding the building owner liable for something someone write on the walls outside. In theory, the platform, like the building owner, would take reasonable steps to remove the material. If the court asked, they would try to identify the person responsible.

Of course, we live in a different age and therefore the laws crafted for the prior age no longer make any sense in this age. No one in 1996 could contemplate a world where an oligopoly in Silicon Valley controlled political discourse. Further, no one imagined the oligopoly being controlled by crazy people. This is why the matter is working its way through the courts in various conflicting cases. In fact, it will probably end up in the Supreme Court in the next term.

The U.S. Court of Appeals for the 5th Circuit upheld a Texas law barring companies from removing posts based on political ideology. The U.S. Court of Appeals for the 11th Circuit overturned a similar Florida law on the grounds that it violated constitutional protections for tech companies. The question is whether these private firms that get the same protections as all other private firms or are they private firms operating public accommodations and therefore can be regulated.

Morally, this would be a simple question if not for the racial double standard that has become nearly universal. Facebook regularly hosts livestreams of black people hunting a killing white people. This happened most recently with the Memphis spree killer who livestreamed his rampage on Facebook. On the other hand, a white guy uses the wrong pronouns when describing a public degenerate and he is banned. In the age of Jim Snow, everyone knows the score.

Before the Jim Snow laws, when Section 230 was created, no one imagined the sorts of double standards we now accept. In 1996, everyone agreed that a public accommodation had to accept everyone as long as they did the minimum that was required of the enterprise. Restaurants could require a dress code, but they could not ban people for holding the wrong opinions. If they violated their own rules, then they could be held accountable in the courts.

Ultimately, the court will have to fashion a new standard. If Facebook is a public accommodation, then what are the rules that define such a thing? If it is a private company, then how can it have special privileges? The simplest solution is to clarify how one can claim Section 230 protections. A platform that does not edit the content of users would qualify, while a firm that censors the users would not qualify. This would be the logical solution, which is why it cannot happen.

Instead, the court will end up supporting the tech companies, because the so-called conservatives will be so high from chanting “they are private companies” that the crazies on the court will write the decision. We will end up with a new standard that says private companies can viciously and aggressively discriminate, as long as it is not against protected classes. At this time, there is one class left unprotected in the law, which is the class known as while people.

In fact, there is a good chance that the court creates a new framework that requires public platforms to aggressively censor content in order to get the protections offered under Section 230. That would mean a site like Gab is wiped out unless they apply the same standards as Silicon Valley. It would also mean that hosting companies are required to monitor the content of their users. This would be the first example of “common good conservatism” in the law.

This sounds terribly negative, but it is realistic. Stalin allegedly said that it is not the votes that count, but who counts the votes. He probably never said it, but it is something he would have grasped. He was a communist, but he eventually came to see that who decides counts for more than how things are decided. That is what we see in the current age with things like censorship. It is not the rules that matter, but who is enforcing and interpreting the rules that matters.

If the tech firms were run by the same sorts of people who were running what passed for big tech in 1996, none of this would matter. The internet pioneers were civic nationalists and libertarians. They were on-line to get away from people who wanted to police free expression. They needed Section 230 to keep the internet open, but they were replaced with people who want to close it down, so one way or another, speech will be closed down on the internet.

Finally, this is a good reminder that when a society begins to debate the letter of the law, it no longer respects the spirit of the law. Put another away, if the people in charge are so corrupt that they need written rules to behave themselves, they are corrupt enough to find a way around those written words. This is where we find ourselves with the current ruling class. They see the rules like they see the truth. If they are useful, they enforce them. If not, then not.

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