Category: Uncategorized

Inflation manipulation

Karl Denninger calls shenanigans on the Bureau of Labor Statistics:

Remember the market’s “cheering” of the “-0.1%” CPI-U reading (core) yesterday?

There’s a problem – it was wrong.

Look at the highlighted numbers. Let’s multiply them up.

(5.966 x 0) + (.769 x -2.1) + (25.206 x -0.1) + (.347 x 0.4) / 32.288 = -0.12%, or -0.1%.

But it was reported as -0.5% in the line directly above (inverted tone.)

Oops.

I didn’t re-run the weightings for the entire series but a quick “eyeball” of the table shows that this should result in a CORE reading of 0.1% (positive), not the negative number reported.

Will the BLS admit to this error? Who the hell knows, but if you have a calculator, you can verify that yet another game to “boost” the market was run, with desire effect – a roughly 1/2% spike in the S&P 500 futures right on the BOGUS data release…. We now officially live in a world where intentionally-incorrect data is published by our government for the specific intention of misleading the markets.

It’s entirely possible. I certainly wouldn’t put it past them. On the other hand, given the BLS’s autopodiatrical assault chronicled in RGD, when they proved their own CPI-U numbers to be less reliable than the Shadowstats statistics they were incompetently attacking, it doesn’t stagger the imagination to think they just got the number wrong because they’re stupid government bureaucrats.

Of course, either way, you have to be an idiot yourself to put any credence in their reports. It simply doesn’t matter what the official paper count happens to be, because debt-deflation is well on its way.

Ashes on the dollar

Americans continue to opt out of the financial system:

Hoskins told News 5’s Courtis Fuller that he issued the bank an ultimatum. “I’ll tear it down before I let you take it,” Hoskins told them. And that’s exactly what Hoskins did. The Moscow man used a bulldozer two weeks ago to level the home he’d built, and the sprawling country home is now rubble, buried under a coating of snow.

If your life is being financially destroyed by the bankers and bureaucrats anyhow, there’s really not much reason to avoid repaying them ashes on the dollar. With 10.5% of all homes already delinquent or in default, what are the banks going to do when people simply refuse to leave or pay for them, beg the Feds to put 6.6 million homeowners in jail? And who is going to pay the costs of their imprisonment?

In 2008, the bankers, bureaucrats, and politicians tore the veil of the unwritten American social contract that permitted our debt-based economy to function. While the deck was always stacked to the benefit of the financial elite, it wasn’t always so egregious. But in ramming through TARP and the bailouts over the furious objections of the American people, they shattered the illusion of relative fairness. So now, they have absolutely no response when the American people stop playing a game that is stacked so heavily against them. The parasites came to believe they were invaluable and in doing so forgot the very first rule of parasitism: do not harm the host.

It’s almost surely too late to salvage the present financial system, but it is still worth attempting to restore the broken American social contract. The first step in doing so is to follow the Market Ticker’s advice of arresting, prosecuting and asset-stripping every member of the financial elite that can be proven to have committed criminal fraud over the last decade. The second step is to audit the Federal Reserve and open the books to the public. The third step is to unwind the banking bailouts and tax all of the bailed-out executives and employees 100 percent while making it clear that no such bailouts will ever be permitted to take place again. These measures will be totally unacceptable to the banking class, but the alternative will be much worse for everyone.

The vast majority of Americans are never going to bulldoze their houses. But millions of them – or rather, tens of millions more – are simply going to stop paying their debts and transform themselves from productive members of society into societal parasites. The time for playing economic charades is over, everyone knows that the system is crumbling because they can see the signs of it all around them. Extend and pretend simply isn’t an option anymore and the risks of refusing to deal with reality are only going to continue to grow with time.

Dante’s Inferno – Cantos IV and V

I will readily admit that one of the questions is not, strictly speaking, fair, as the correct answer is not directly provided in the actual text of the canto. That being said, I will nevertheless not have the least bit of sympathy for anyone here who has read the canto and still manages to get that question wrong. Next week’s reading is Cantos VI and VII.

Just friends

Happy Valentine’s Day! This hs to be one of the great radio live calls of all time. The woman’s cri de coeur is hilarious.

“What kind of people are you?”

Even an award-winning cruelty artist has no choice but to take off his hat to the hosts. They played it PERFECTLY.

Not over

The Market Ticker does the math:

Mortgage Bankers Association: 15% of US mortgages were in foreclosure or delinquency (remains a record); with loans 90 days past due also a record

Oh that’s nice.

70% of homes have a mortgage on them (the other 30% are “paid off.”) This implies that approximately 10.5% of all all homes are delinquent or in foreclosure.

One in ten. No, the housing mess is not over.

Don’t forget that all that is keeping many banks technically solvent is the fact that they are still keeping these delinquent and defaulting loans on their books as performing. It’s not over. It’s not even CLOSE to over.

The totalitarian feedback loop

Paul Krugman inadvertantly explains the Order ab Chao mechanism:

None of this should come as a big surprise. Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency. But these warnings were ignored, and the crisis came.

Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger “the mother of all financial crises.” So the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.

It works like this. The government enacts a stupid policy doomed to failure. When the policy inevitably fails, the government swoops in to fix it by expanding its power. Repeat as needed. The European Union has been attempting to turn itself into a continent-wide empire for decades; now that the inherent contradictions of the Euro that were known to every economist since the idea was first broached have revealed themselves, they are being used to justify eliminating the last vestiges of national sovereignty that remain to the “member states”. There is no government failure so big that the government will not attempt to use it to expand the scope of its power. Regardless of whether their policies fail or succeed, both results are cited as evidence that more centralized power is required. On a side note, Krugman is incorrect. Spain was not fiscally responsible and could easily have prevented both its housing boom and subsequent bust despite its lack of control, (which you will recall it gave up of its free accord), over its own currency.

As for the fate of the Euro and the European Union, I suspect that the “unthinkable” will not only become entirely thinkable, it will eventually become the reality. Krugman’s refusal to contemplate the breakup of either isn’t based on any political or economic analysis, it’s mere ideological ostriching.

Galt-squared

As I wrote earlier today, once people understand that American society not only isn’t even remotely fair or just, but is today primarily structured for the continued benefit of the bankocracy at the expense of the taxpayers, they’re not going to continue playing any longer:

We are all taught as children that without laws there would be no society, only anarchy. Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all. We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals represented by its founding fathers. Remember? One of these was “no taxation without representation”. I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood. These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.

While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind. Nor, for that matter, are they the least bit interested in me or anything I have to say.

Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.

And justice? You’ve got to be kidding!

There is something deeply sick about a society that manages to transform intelligent, successful, productive members of society into felons and murderous suicides. The irony is that the more a man genuinely believes in justice and law, the more he truly believes that America is the Land of the Free, the more shattered he is when he is forced to confront the reality that the entire legal system is a facade designed to conceal the complete absence of justice and rule of law in American society.

A society whose leaders are foolish enough to willfully destroy its structural foundations should not be surprised when madmen increasingly begin to appear in its midst. But the problem is that insane actions such as Stack’s are merely a symptom; what is ultimately much more problematic is all the talented individuals who simply won’t bother to create wealth that is only going to be taken away from them. I suppose it may be possible to maintain a wealthy and stable society that consists of nothing more than government employees and a vast horde of unemployed individuals supporting a small financial elite that generates enormous profits by playing complicated gambling games with itself, but if it is, I have to confess that I understand neither the economics nor the logic that makes it viable.

We can quite reasonably describe Joseph Stack as a madman, categorize his suicidal actions as insanity, and ignore his rantings as the last angry words of an embittered failure. He was, after all, the very antithesis of a hero and his actions were as stupid and evil as they were futile. But I think we should also ask two questions before we forget the episode entirely entirely. Was the man always a lunatic? And if not, what was it that turned him into one?

More thoughts on the matter at the Market Ticker.

The incoherent Mount Vernon statement

Here’s a fun little game called Spot the Self-Professed Conservative Self-Contradiction:

A Constitutional conservatism based on first principles provides the framework for a consistent and meaningful policy agenda.

* It applies the principle of limited government based on the rule of law to every proposal.
* It honors the central place of individual liberty in American politics and life.
* It encourages free enterprise, the individual entrepreneur, and economic reforms grounded in market solutions.
* It supports America’s national interest in advancing freedom and opposing tyranny in the world and prudently considers what we can and should do to that end.
* It informs conservatism’s firm defense of family, neighborhood, community, and faith.

As the example of every war from De Bello Gallico to World War II should make eminently clear, America not only has no national interest in “advancing freedom and opposing tyranny in the world”, but all attempts to do either are inherently contradictory to the principle of limited government based on the rule of law. There is not a single argument for “advancing freedom and opposing tyranny in the world” that will not directly and demonstrably violate the principle of limited government based on the rule of law.

Go ahead, feel free to try to make one. And, one notes, with no small amusement, that this incoherent Mount Vernon conservatism would require the USA to at least consider going to war with both the European Union and the People’s Republic of China as well as abandoning its military bases in Okinawa, Afghanistan, and Iraq. American freedom is in the American self-interest. Greek freedom or Chinese freedom may or may not be in the American self-interest, but obtaining the wherewithal required to forcibly impose freedom on the Greek or Chinese people, or anyone else around the world, is totally and utterly incompatible with both limited government and the rule of law. This is a matter of statistical and historical fact.

Needless to say, I won’t be signing it, my long affection for Mount Vernon notwithstanding. One of the more pleasant drives you can ever make is to take the top off the MG and drive from Oldtown Alexandria to Mount Vernon.

Bankocracy and the consequences of moral hazard

I strongly suspect that this widespread fury and total disrespect for the ruling bankocracy that passes for “law” is on its way to America. And it will probably be much sooner than anyone imagines:

The country is sliding into psychological despair within a cocoon of unrequited desires that have been inflamed and legitimized over the years. Anger is rampant. Yesterday on the bus a student gave his ticket to a lady, telling her that she should use his ticket because he was getting off. Someone called out that this was shameful “thievery” to which the youngster responded: “I am stealing 50 cents but the government and the banks have stolen 50 billion!” Many nodded in approval.

Prime Minister Papandreou was on television last night, white as a ghost. He was telling the Greek press that he was thankful that the IMF was “offering” their technical expertise (technognosia) to Greece. Yes money is not coming, but how sweet of the IMF to be sending its experts to dictate terms over the next few weeks. It seems that someone in Europe gave him the unexpected news that the party is over. This reality has not yet even remotely begun to set in here. The media are giving the message that “the Europeans can’t afford to let Greece go under….that Europe stands to lose too much….that Merkel and those stuffy Northerners will have to come to Greece’s aid.”

When the reality does start seeping in—hold on to your hats….

The unmitigated evil of TARP, the nationalization of Fannie and Freddie, and the banking bailouts really cannot be exaggerated. The total fiction of the necessity to guarantee bank profits, the total disregard for the rule of law involved in the sorcerous transmutation of Goldman Sachs and Morgan Stanley from leaden insolvent investment banks into golden government-backed bank holding companies, and the utter contempt for the will of the American people has planted the seed for a number of extraordinarily negative consequences that will far outweigh the costs of a few big banks going out of business and a few thousand banksters losing their jobs.

I always wondered why the peasants didn’t recognize that the medieval aristocracy was shamelessly feeding off them without offering them anything substantial in return. That historical mystery is much easier to understand now, as people are losing their jobs, losing their homes, struggling to feed their children, and facing an increasingly bleak future while banksters are paying themselves literal billions for successfully defrauding the government, the politicians, the taxpayers through selling the myth of their societal necessity. This is not the result of the free market, this is not capitalism, and this is most certainly not human liberty, this is nothing more than bankocracy every bit as oligarchic, dishonest, and terminally short-sighted as the nominally socialist Soviet nomenklatura system.

And it will fail, as such systems always fail, because the final generations of the ruling aristocracy are so much more short-sighted and greedy than their fathers. They are too blinded by their misguided belief in their own importance to realize that the system will only work so long as the workers, the middle class, and the entrepeneurs receive a sufficient share of the wealth to play along with the game. Once the productive masses of society realize that the deck is stacked so heavily against them, they’ll not only quit playing, they will begin imitating their betters and turning to theft in the place of hard work and fraud in the place of frugality. Naturally, the praetorian authorities will crack down hard; witness how the bureaucratic leeches in the UK have blatantly – and suicidally – ignored UK law in order to attempt expanding their tax reach while simultaneously attempting to hide from the public how much they are paid.

But such efforts are always doomed to failure and the mere fact that governments are engaging in them is a strong indicator of a coming structural collapse. And the harder that they try to grip, the more people will slip out of their control by the mechanism of simply abandoning their roles as honest, productive members of society. After all, how can one possibly object to those who steal cents when the bankocracy is stealing billions?

Applefascismo

Cracked underlines the point I have been making for over decade now. It is Apple that are the techno-fascists; the famous 1984 ad was nothing but pure psychological projection:

When you buy Apple products, you don’t just buy computers or gadgets. Apple sells iPods and iPhones that play music purchased in their iTunes store. It’s all part of Jobs’s sales pitch to people who pride themselves on individuality. Even before there were ads featuring the kid from Die Hard 4 bickering with John Hodgeman in heaven, the message was been the same: PCs are for those people who follow the herd, but you choose Mac because you think differently….

[M]anufacturers of other cell phones and gadgets generally don’t care what customers do once they’ve paid for their products with good, honest credit card debt. But Apple goes beyond complaining. They will actively break your shit for disobeying their arbitrary rules. Yes, Apple has sent out updates specifically designed to disable phones that have been modified to work with carriers other than AT&T, or to run Microsoft Office. Seriously now, we’d be inventing new, fluorescent shades of berserk if, say, a PC manufacturer broke your computer for installing Linux.

Now, I have no objection to people using Apple products, even if I don’t deign to use them myself. And I understand the brilliance of Steve Jobs’s philosophy of limiting utility in order to reduce potential problems; every game designer knows that at least one-third of his time will be spent figuring out how to prevent idiots from purposefully ruining their own user experience. I was speaking with a technology reviewer a few days ago and I mentioned that if we created a function called ERASE HARD DRIVE, at least 10 percent of the users would assign it to a button and click it to see what happened. The reviewer laughed and commented that 100 percent of that clueless 10 percent would be furious upon discovering that the function had done precisely what it said it would do. And, of course, they would blame us for giving them the power to destroy their data so easily.

So, there is a solid rationale for simply not letting people do basic things like load their own software onto their own hardware at will. There is a sound logical reason for treating users like cretinous children and refusing to let them make their own decisions. And one can clearly make a great deal of money if that technofascistic attitude is combined with keen vision and great design talent. And yet, that doesn’t make it right.