Tag: decline and fall

Christmas and decline

Sometimes, I wonder if perhaps I am being too negative about the way in which the historical and economic patterns I see appear to be playing out. It’s not as if I spend all my time preparing for disaster, in fact, most of my professional activity is still predicated on the idea that some form of recessionary muddle-through will take place.

And then one encounters these responses of various young adults to their Christmas presents and realize that societal collapse may not be as probable as it is desirable.

One could hardly damn America in a more devastating and conclusive manner than to point out that this is what we have done with our historical freedom

Sand in the iron fist

Even a murderous, totalitarian government isn’t enough to maintain complete control sometimes:

For the first time on record, the Chinese Communist party has lost all control, with the population of 20,000 in this southern fishing village now in open revolt.

The last of Wukan’s dozen party officials fled on Monday after thousands of people blocked armed police from retaking the village, standing firm against tear gas and water cannons.

Since then, the police have retreated to a roadblock, some three miles away, in order to prevent food and water from entering, and villagers from leaving. Wukan’s fishing fleet, its main source of income, has also been stopped from leaving harbour.

The Chinese Communists will win this one of course. But they won’t always win. And they have to win every single time to maintain control. The rebels only have to win once. It is interesting to see how even communist societies have to deal with the realities of socionomic pressure once the credit boom ends.

Sky Patrol USA

Congratulations, Americans! You are now officially living in a police state patrolled by machines in the skies:

Armed with a search warrant, Nelson County Sheriff Kelly Janke went looking for six missing cows on the Brossart family farm on June 23. Three men brandishing rifles chased him off, he said. Janke knew the gunmen could be anywhere on the 3,000-acre spread in eastern North Dakota. Fearful of an armed standoff, he called in reinforcements from the Highway Patrol, a regional SWAT team, a bomb squad, ambulances and deputy sheriffs from three counties. He also called in a Predator B drone.

As the unmanned aircraft circled 2 miles overhead, its sensors helped pinpoint the suspects, showing they were unarmed. Police rushed in and made the first known arrests of U.S. citizens with help from a Predator, the spy drone that has helped revolutionize modern warfare.

That was just the start. Police say they have used two unarmed Predators based at Grand Forks Air Force Base to fly at least two dozen surveillance flights since then. The FBI and Drug Enforcement Administration have used Predators for other domestic investigations, officials said.

“We don’t use [drones] on every call out,” said Bill Macki, head of the police SWAT team in Grand Forks. “If we have something in town like an apartment complex, we don’t call them.”

The drones belong to U.S. Customs and Border Protection, which operates eight Predators on the country’s borders to search for illegal immigrants and smugglers. The previously unreported use of its drones to assist local, state and federal law enforcement has occurred without any public acknowledgment or debate.

I have little doubt that 99 percent of all Americans who hear about this will dismiss it as any serious cause for concern “because at least the drones aren’t armed”. The interesting question is what will come first, the first use of an armed drone to kill American citizens inside the US, or the first shooting-down of a military drone by American citizens.

Forget the hacking involved in the capture of a Sentinel drone by Iran. A $200 souped-up Hawk Sky radio-control plane is all that’s needed to take down a $5 million Predator or a $30 million Reaper. I note that 70 of the 223 Predators and Reapers in operation through 2009 were “lost during combat operations” although the military has only admitted to four of them being shot down.

America prepares

Amidst all the terrible news, there is the occasional silver lining:

This year’s Black Friday gun sales broke a record set in 2008 by nearly a third, and while fears about President Obama outlawing some types of firearms are thought to be behind 2008’s record, analysts say this year’s surge in sales is part of a long-term trend. Gun ownership was “politically incorrect” five years ago, but “what seems to be changing is social acceptance,” an analyst at investment firm Avondale Partners tells MSNBC. “I think there might be a changing view of firearms.”

Every state except Illinois now allows residents to carry concealed weapons, and a recent Gallup poll found that 47% of American households own a gun, up from 41% just a year ago.

Between the rapid growth of homeschooling and the rapid growth of gun ownership, Americans appear to stand a reasonable chance of preventing whatever plans their would-be masters have in mind for them. I think the concerns about FEMA camps and the use of the military are somewhat overblown now, especially in light of the proven inability of the US military to deal effectively with insurgencies even in much smaller, more open countries.

From the perspective of a life-long wargamer, I would certainly quail before the challenge of trying to suppress the heavily armed American people, especially since even in the elite, one never truly knows where another’s sympathy lies. The shooting of the police officer at Virginia Tech is a reminder that there are only 800,000 state, local, and federal law enforcement officers in the entire country. They could be wiped out in a week by a population that lives right next door to nearly all of them.

If I were an evil utopian mastermind willing to break as many eggs as needed in order to build a New Society, I’d be looking into biological weapons to counteract the outnumbered and outgunned authorities; one wonders if the zombie craze is yet another example of media programming. One thing that is clear is that not even the “gun-buyers are sick and crazy people” theme as was featured on House this season is convincing anyone.

But Christmas is coming, so do your part and bump that percentage up over 50 percent.

Be grateful for President Obama

It could have been a lot worse… John McCain might have won:

Buried in the annual defense appropriations bill is a provision that would give the President the power to use the military to intern anyone – including American citizens – indefinitely, and hold them without charges or trial, anywhere in the world, including on American soil. The provision essentially repeals the longstanding Posse Comitatus Act, which prevents the military from engaging in law enforcement on US territory – the greatest fear of the Founders. Approved by a Senate subcommittee in secret hearings, the provisions open the road to a military dictatorship in this country – and for that we can thank Senators Carl Levin and John McCain, who introduced the measure. Both the FBI and the Pentagon came out against the Levin-McCain monstrosity, and Senator Mark Udall (D-Colorado) introduced an amendment striking the provision: the amendment was defeated in the Senate, 37-61.

The mind reels.

Given how spectacularly awful McCain has been as a senator, it still boggles the mind that he managed to win the Republican nomination. Any Republican Those who are arguing for supporting Mitt Romney based on the idea that he can defeat Obama in 2012 are forgetting the obvious problem: given his political record and the principle of counter-push, there is absolutely no guarantee that Romney won’t actually turn out to be even worse than Obama.

There can be little question at this point that McCain would have been. The one good thing about Obama is that he is far too passive and lazy to want to be a dictator, because then he would actually have to stop voting present.

On second thought, perhaps Obama might be as bad as McCain after all. Or at least someone in his administration is.

“The initial bill reported by the committee included language expressly precluding ‘the detention of citizens or lawful resident aliens of the United States on the basis of conduct taking place within the United States, except to the extent permitted by the Constitution of the United States.’ The Administration asked that this language be removed from the bill.”

Well, at least we’ll have a bipartisan military dictatorship. And bipartisan is always good, right?

Invest in metals

If Karl Denninger is correct, lead and gold are about the only worthwhile investments these days:

It will not be long ladies and gentlemen, when the bulk of the folks running the algorithms deduce that they’re exposed to the same risks – they have to post margin too, you know, and if it can be stolen then their capital isn’t safe either. These deposits aren’t supposed to be “at risk” when there’s no position actively open — that’s a performance bond against possible failure to pay, but is supposed to be exactly as safe as a bank deposit in a checking account under FDIC limits.

Well, it wasn’t. The CDS you bought on Greece wasn’t. And it will only take another event like this or two before people conclude that everything is unsound as the jackals running the game will redefine the meaning of words to suit themselves and, failing that will simply steal the money.

30+ years of lawless behavior has now devolved down to blatant, in-your-face theft. They don’t even bother trying to hide it any more, and Eric “Place” Holder is too busy supervising the running of guns into Mexico so the drug cartels can shoot both Mexican and American citizens.

What am I, or anyone else, supposed to do in this sort of “market” environment? Invest in…. what? Land titles are worthless as they’ve been corrupted by robosigning, margin deposits have been stolen, Madoff’s clients had confirmations of trades that never happend and proved to worthless pieces of paper instead of valuable securities and while Madoff went to prison nobody else has and the money is still gone!

Without enforcement of the law — swift and certain — there is no deterrent against this behavior.

There has been no enforcement and there is no indication that this will change.

It will take just one — or maybe two — more events like MF Global and Greek CDS “determinations” before the entire market — all of it — goes “no bid” as participants simply stuff their hands in their pockets and say “screw this.”

It’s coming folks, and I guarantee you this: Whatever your “nightmare” scenario is for such an event, it’s not bearish enough.

What concerns me most about all of this is that with a few minor exceptions, most of my economic predictions have been correct with regards to the trend and incorrect because they were too optimistic. Since my medium term predictions are fairly negative, although not catastrophic, you can understand that this pattern of being overly optimistic tends to concern me somewhat.

For example, I expected firms like MF Global to collapse. But I did not expect to hear that they had stolen over a billion dollars that their clients had on account with them. The fraud and the outright theft by the cancerous financial sector is clearly much worse than I, or nearly anyone, had imagined. The fact that Corzine could operate without the proper license, then steal over ONE BILLION DOLLARS without being questioned, much less arrested, will destroy more confidence than even the most heroic measures pushed by the Federal Reserve, the government, and the financial media can create.

Karl is sometimes accused, and not entirely unfairly, of having some chicken little tendencies. But when Chicken Little turns out to be overly optimistic in some regards, it would appear to be indicative of a fairly serious situation.

Jane Galt quits the markets

Barnhardt Capital Management shuts down. Ann Barnhardt explains her belief in “the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.”

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm….

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Well, I tried to warn you that Wall Street was nothing but a casino anymore. There is no more genuine investment or financing of capitalist activity on Wall Street than there is in Las Vegas. It’s nothing more than borrowing – or stealing – money to place it on red… then scream for government bailouts when you lose.

The interesting question, which no one has even begun to answer, is how many other capital management firms have been gambling with their clients’ money. And how many have lost it all. I assure you, there is no chance Corzine’s MF Global was the only one.

UPDATE: it looks like the eurocontagion may be getting out of control rather quickly. This may be why Mervyn King of the Bank of England went public with his concerns about a credit crunch. The London Stock Exchange is becoming the lender of last resort for many banks in Italy as concerns over the country’s debt levels squeeze liquidity out of the Italian financial market. With cash increasingly hard to come by, Italy’s banks are turning to CC&G, the L.S.E’s Italian clearinghouse, for short-term lending. That includes some of the country’s largest financial institutions, including Unicredit and Mediobanca, according to a person close to the situation.

Ever more 1984

The USA is moving closer to Soviet-style ritual denunciations. I don’t know about you, but I am rather looking forward to the emotional catharsis of a good Two-Minute Hate.

The House voted to set aside a privileged resolution aimed at condemning the stone on Perry’s ranch offered earlier in the day by an impassioned Rep. Jesse Jackson Jr. (D-IL).

Earlier in the day, Jackson read his resolution on the floor. It called on the House to:

“Condemn Texas Governor Rick Perry for using a secluded West Texas hunting camp as a place to host lawmakers, friends and supporters on hunting trips at a place known by the name painted in block letters across a large, flat rock standing upright at its gated entrance called ‘N*****head.'”

So, Congress has no problem with pharmaceutical corruption, handing two of every three Texas jobs to immigrants, and blowing millions, if not billions, on educating illegal aliens, but using land on which sits a politically incorrect rock, that’s legitimate national business demanding Congressional attention.

A dreadful precedent

Kevin Williamson notes a very bad sign:

A U.S. citizen has been assassinated, apparently by the U.S. government, which had earlier placed him on a hit list. Washington celebrates. I suspect we will regret this precedent.

I do too. A government that assassinates its own citizens without trial is not a lawful one.