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What If Politics Can’t Fix What’s Broken?
What If Politics Can’t Fix What’s Broken?
This is the politics of decline and collapse.The unspoken assumption of the modern era is that politics can fix whatever is broken: whatever is broken in society or the economy can be fixed by some political policy or political process– becoming more inclusionary, seeking non-partisan middle ground, etc.
What if this assumption is flat-out wrong? What is politics is incapable of fixing what’s broken? What if politics merely fosters an illusion of solutions, a paper-thin veneer of faux progress? What if politics isn’t a tool that’s capable of fixing what’s broken? What if all politics is able to do is generate delusions of grandeur and unresolvable conflicts? What if politics is ultimately little more than a fatal distraction?
This is of course heresy of the highest order, for a belief in the supremacy of politics is the secular religion of our era. The orthodoxy is: there is no problem that can’t be solved with a political policy: a tax cut, a new tax, a new incentive, a broader definition of criminality, and so on.
What if the status quo is failing for reasons that are beyond the reach of politics? Politics assumes that tweaking incentives and disincentives via rewards and punishments, centralizing control of assets and income streams and manipulating the issuance of currency and interest rates can fix any and every problem.
The limits of politics are the limits of government. In the present era, all government seeks to further centralize power and capital because the era’s quasi-religious belief is that centralization is the solution to everything.
This is of course false.
Centralization works until it becomes the problem, at which point further centralization of power and capital only speeds system-wide failure.
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The Doomsday Scenario for the Stock and Housing Bubbles
The Doomsday Scenario for the Stock and Housing Bubbles
It was always folly to believe that inflating asset bubbles could solve the structural problems of a post-industrial economy.
The Doomsday Scenario for the stock and housing bubbles is simple: the Fed’s magic fails. When dropping interest rates to zero and flooding the financial sector with loose money fail to ignite the economy and reflate the deflating bubbles, punters will realize the Fed’s magic only worked the first three times: three bubbles and the game is over.
So what happens when punters realize there won’t be a fourth bubble? They sell. Bids disappear because who’s dumb enough to bet (with Japan and Europe as lessons) that more liquidity and negative interest rates will magically work when zero interest rates didn’t move the needle?Who’s foolish enough to catch the falling knife (i.e. buying plummeting assets on the way down) on the unsupported assumption that the next dose of Fed magic will reverse a bidless market?
And should the Fed start buying stocks, mortgages, housing and bonds to prop up those bidless markets, what’s the message it will be sending? Desperation.If the only buyer is the money-printing central bank, that’s pretty good evidence that your economy and markets are in free-fall.
The loss of faith in central bank magic will be gradual at first, as magical thinking dies hard. It’s oh so comforting to believe the central bank will rescue every overleveraged mal-investment and bail out every high-risk speculation, but the funny thing about the Fed’s magic is it only works in liquidity crises–in every other condition, it only makes matters worse.
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Sometimes the Best Solution Is To Leave Things As They Are
Sometimes the Best Solution Is To Leave Things As They Are
We must distinguish between the oft-lauded creative destruction of what is obsolete and destruction in pursuit of fleeting fashion.
I recently received an insightful email from a reader who had come across my archives of free-lance articles and essays on home and urban design. I wrote dozens of articles for S.F. Bay Area newspapers from 1988 to 2006, and a handful are listed here.
The one the reader is responding to is Best Remodel Might Be None At All (2006). Here are the reader’s comments:
“I thoroughly enjoyed the articles you penned for the SF Examiner that you’ve linked to on your website, these being written close to two decades ago.
Especially noteworthy was your response to the homeowner inquiring about a kitchen remodel where you recommended that the best course of action might be no course of action. This was an wonderful response and it caught my attention because it belies the common sales oriented suggestions generally offered by those writing about remodeling, and especially about kitchens. Usually you see writers busy extolling the gutting and replacement of a kitchen with wild zeal talking about how wonderful it will be to pour coffee or to butter toast once the kitchen area has been refurbished… and how in the sheer pleasure of a new kitchen you might even choose to drink two cups of coffee just for the fun of it!
In the old craftsman style house or bungalow it would mean new plumbing and upgrading the electrical wiring to go with new appliances and new cabinetry.
In the era when that house was constructed the cabinets were typically built on site, matching the cabinetry to the design and work flow of the kitchen.
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What Caused the Recession of 2019-2021?
What Caused the Recession of 2019-2021?
The banquet of consequences is now being served, but the good seats have all been taken.As I discussed in We’re Overdue for a Sell-Everything/No-Fed-Rescue Recession, recessions have a proximate cause and a structural cause. The proximate cause is often a spike in energy costs (1973, 1990) or a financial crisis triggered by excesses of speculation and debt (2000 and 2008) or inflation (1980).
Structural causes are imbalances that build up over time: imbalances in trade or currency flows, capital investment, debt, speculation, labor compensation, wealth-income inequality, energy supply and consumption, etc. These structural distortions and imbalances tend to interact in self-reinforcing dynamics that overlap with normal business / credit cycles.
The current recession has not yet been acknowledged, but this is standard operating procedure: recessions are only declared long after they actually start due to statistical reporting lags. Maybe the recession of 2019-21 will be declared at some point in the future to have begun in Q2 or Q3, but the actual date is not that meaningful; what matters is what caused the recession and how the structural imbalances are resolved.
So what caused the recession of 2019-21? Apparently nothing: oil costs are relatively low, U.S. banks are relatively well-capitalized, geopolitical issues are on the backburner and stocks, bonds and real estate are all well-bid (i.e. there is no liquidity crisis).
This lack of apparent trigger will mystify conventional economists who generally avoid the enormous structural imbalances in our economy because those imbalances are the only possible output of our Neofeudal Power Structure in which a New Nobility/Oligarchy dominates financial and political power and skims the vast majority of gains the economy generates.
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2019: The Three Trends That Matter
2019: The Three Trends That Matter
Look no further than Brexit in Britain, the yellow vests in France and the Deplorables in the U.S. for manifestations of a broken social contract and decaying social order.
Among the many trends currently in play, Gordon Long and I discuss three that will matter as 2019 progresses: 2019 Themes (56 minutes)
1. Final stages of the debt supercycle
2. Decay of the social order/social contract
3. Social controls: Surveillance capitalism, China’s Social Credit system, social globalization
The basic idea of the debt supercycle is simple: resolving every crisis of over-leveraged speculative excess, evaporation of collateral and over-indebtedness by radically increasing debt eventually leads to an implosion of the entire credit-based financial system.
The final stages of the current debt supercycle are manifesting all sorts of interesting cross-currents: de-dollarization and the unprecedented expansion of debt in China to name just two.
De-dollarization describes the efforts of many nations to reduce their dependence on U.S. dollars for trade and reserves. Since the USD remains the largest reserve currency in both trade and reserves, this trend threatens to reorder the entire global financial system, with potentially disruptive consequences not just to the USD but to a variety of institutions and norms.
China’s total systemic debt has soared from $7 trillion in 2008 to $40 trillion in 2018. This is of course only a rough estimate, as China’s enormous Shadow Banking System is famously opaque, as are many of its institutional and corporate balance sheets.
China has embraced the narrative of “growing our way out of stagnation by quintupling debt,” but the banquet of consequences of this speculative orgy is finally being served: China’s dramatic slowdown in 2018 is just the appetizer course of the banquet of consequences.
This excerpt of a recent (and immediately censored) talk given by a Chinese economist illuminates the result of debt-fueled mal-investment and speculation on a grand scale:
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he Coming Global Financial Crisis: Debt Exhaustion
The Coming Global Financial Crisis: Debt Exhaustion
The global economy is way past the point of maximum debt saturation, and so the next stop is debt exhaustion.Just as generals fight the last war, central banks always fight the last financial crisis. The Global Financial Crisis (GFC) of 2008-09 was primarily one of liquidity as markets froze up as a result of the collapse of the highly leveraged subprime mortgage sector that had commoditized fraud (hat tip to Manoj S.) via liar loans and designed-to-implode mortgage backed securities.
The central bank “solution” to institutionalized, commoditized fraud was to lower interest rates to zero and enable tens of trillions in new debt. As a result, total debt in the U.S. has soared to $70 trillion, roughly 3.5 times GDP, and global debt has skyrocketed from $84 trillion to $250 trillion. Debt in China has blasted from $7 trillion 2008 to $40 trillion in 2018.
A funny thing happens when you depend on borrowing from the future (debt) to fund growth today: the new debt no longer boosts growth, as the returns on additional debt are increasingly marginal. This leads to what I term debt exhaustion: lenders can no longer find creditworthy borrowers, borrowers either don’t want more debt or can’t afford more debt, and the cost and risk of the additional debt far outweigh the meager gains. Whatever credit is issued is gambled in speculations that the current bubble du jour will continue indefinitely.
Unfortunately, all central banks know how to do is goose liquidity to inflate asset bubbles and juice the issuance of more debt. If asset bubbles start to deflate, then central banks start buying mortgages, empty flats, stocks and bonds to prop up markets that would otherwise implode.
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A Recession Survival Guide
A Recession Survival Guide
The funny thing about slashing your budget to survive a recessionary storm is that it works wonders whether the recession is deep or shallow.
We know that after 10 years of expansion, a recession is baked in. Trees don’t grow to the moon, etc.
We also know that some people will hardly notice the recession while others are devastated. I addressed this in The Recession Will Be Unevenly Distributed(January 10, 2019). A retiree on Social Security and a bit of income from Treasury bonds isn’t going to be affected much, and a power couple in Washington DC who are high up the food chain in the federal government will also shrug off the recession.
What we don’t know is what kind of recession we’re going to get. It’s been almost 40 years since the U.S. experienced a “real recession,” i.e. a downturn that was severe and not limited to narrow slices of the economy.
The recession of 2008-09 was over before it started, and the damage was largely limited to the speculative housing-mortgage sectors and finance and everyone who was over-leveraged in the housing market.
The recession of 2000-02 was limited to the tech sectors that were exposed to the dot-com meltdown and investors in speculative dot-com companies.
The recession of 1991-92 was brief and shallow by historical standards.
The “real recession” of 1981-82 laid waste to numerous sectors and spread devastation throughout the economy. Interest-sensitive industries were crushed, and this impacted sectors such as government that are typically impervious to recessions.
Even further back, the Oil Shock recession of 1973-74 was also an economy-wide upheaval.
Those pundits who aren’t denying a recession is baked in are busy assuring us it will be a mere slowdown. What the well-paid pundits of the status quo can’t or won’t discuss is the economy’s fragility and vulnerability to self-reinforcing declines.
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The Ruling Elites Love How Easily We’re Distracted and Turned Against Each Other
The Ruling Elites Love How Easily We’re Distracted and Turned Against Each Other
No wonder the ruling elites love how easily we’re distracted and divided against ourselves: it’s so easy to dominate a distracted, divided, blinded-by-propaganda and negative emotions populace.
Let’s say you’re one of the ruling elites operating the nation for the benefit of the oligarchy. What’s the best way to distract the populace from your self-serving dominance in a blatantly neofeudal system?
1. Provide modern-day versions of Bread and Circuses to distract the commoners from what actually matters: “the golden age of TV” and binge-watching; a cultural obsession with glorifying oneself via selfies posted on Facebook and Instagram; tweeting outrage and indignation on Twitter; a corporate-state media which magnifies insignificant events into social crises, political “leaders” who intentionally inflame polarization and conflict and so on.
Combine all these distracting circuses into one 24/7 system-overload, and what do you get? A populace so distracted, so stressed, so emotionally dazed that they are unable to focus on the predatory exploitation of the ruling elites, much less figure out how to change the neofeudal status quo.
2. Divide the populace with calculatedly divisive cultural issues and turn the commoner class against itself: with no middle ground and no shared class identity allowed, the populace is easily sliced and diced into angry, disaffected tribes who blame whomever media propaganda has targeted as “the other” for the nation’s woes.
Correspondent Jonathan Twombly recently posted a description of this divide-and-conquer strategy of the ruling elites:
I eschew conspiracy theories because I don’t feel humans are smart enough or cohesive enough to pull them off. Usually self-interested people pulling in the same direction create the conditions that some people view as conspiracies.
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Want to Heal the Internet? Ban All Collection of User Data
Want to Heal the Internet? Ban All Collection of User Data
The social media/search giants have mastered the dark arts of obfuscating how they’re reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.
I’ve been commenting on the cancerous disease that’s taken control of the Internet– what Shoshana Zuboff calls Surveillance Capitalism–for many years. Here is a selection of my commentaries:800 Million Channels of Me (February 21, 2011)
The New Facebook Buttons: Promote, Despise, Abandon (November 1, 2012)
How Much of our Discord Is the Result of the “Engagement” Advert Revenue Model of Social Media? (October 24, 2017)
Are Facebook and Google the New Colonial Powers? (September 18, 2017)
Hey Advertisers: The Data-Mining Emperor Has No Clothes (September 15, 2017)
The Demise of Dissent: Why the Web Is Becoming Homogenized (November 17, 2017)Should Facebook, Google and Twitter Be Public Utilities? (March 5, 2018)Should Facebook and Google Pay Users When They Sell Data Collected from Users?(March 22, 2018)
The Blowback Against Facebook, Google and Amazon Is Just Beginning (April 27, 2018)
How Far Down the Big Data/’Psychographic Microtargeting’ Rabbit Hole Do You Want to Go? (April 25, 2018)
If you’ve followed any of my analyses, it will come as no surprise that I’ve concluded the only way to restore the health of the Internet is to ban all collection of user data. That’s right, a 100% total ban on collecting any user data whatsoever.
We need to distinguish between customer/supplier data and user data. If a social media or other corporation wants to collect data from people who pay it money for services rendered, or from suppliers that it pays for services, then that process of data collection should be 100% transparent.
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Two Ways the System Is Rigged: HFT and Oligarchic Inheritance
Two Ways the System Is Rigged: HFT and Oligarchic Inheritance
The net result of a rigged system is the vast majority of the gains in income and wealth flow to the very tippy-top of the wealth/power pyramid.
We often hear how the system (i.e. our economy) is rigged to benefit the few at the expense of the many, but exactly how is it rigged? Longtime correspondent Zeus Y. recently highlighted two specific mechanisms that favor the top 0.01%: high frequency trading (HFT) and oligarchic inheritance, the generational transfer of immense wealth and the power it buys.
High frequency trading (HFT) is a mechanism only available to the few at the top of the wealth/power pyramid to skim money from markets–please watch the videos below for further explanation of how HFT works.
As for inheritance–we’re not talking about leaving a house or a small business to one’s offspring, or even a couple million of dollars; we’re talking about tens of millions or hundreds of millions of dollars. Some states impose an estate or inheritance tax, but at the federal level, the exemption of $11 million per person means a married couple can leave $22 million tax-free.
The number of people with more than $11 million to pass on is extremely small:
Estate tax in the United States
In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. As a result, only approximately 2,000 people (or 0.0006% of the population) in the US are currently liable for estate tax.
The mega-bucks families and billionaires practice the fine art of philanthro-capitalism, leaving their vast fortunes in so-called charitable trusts that enable power and wealth to be transferred generationally.
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France’s Ghosts of ’68: General Strike vs. Macron and the Technocrat Elites
France’s Ghosts of ’68: General Strike vs. Macron and the Technocrat Elites
As Germany and France Come Apart, So Too Will the EU
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The Decline and Fall of the European Union
The Decline and Fall of the European Union
This exhaustion of the neocolonial-neofeudal model was inevitable, and as a result, so too is the decline and fall of the European integration/exploitation project.
That a single currency, the euro, would fracture rather than unite Europe was understood long before the euro’s introduction as legal tender on January 1, 2002. The euro, the currency of 19 of the 28 member states of the European Union, is only one of the various institutions tying the member nations of the European union together, but it is the linchpin of the financial integration touted as one of the primary benefits of EU membership.
Skepticism of the benefits of EU membership is rising, as citizens of the member nations are questioning the surrender of national sovereignty with renewed intensity.
The technocrat elite that holds power in the EU is attempting to marginalize critics as populists, nationalists or fascists, overlooking the untidy reality that the actual source of tyranny is arguably the unelected bureaucrats of the EU who have taken on extraordinary powers to strip the citizenry of member states of civil liberties (i.e. the right to dissent) and of meaningful political enfranchisement.
As I have patiently explained since 2012, the underlying structure of the EU is neocolonialism, specifically, neocolonial-financialization. Stripped of artifice, the financial institutions of the EU core have colonized the EU periphery via the euro and the EU and imposed a modernized system of extractive serfdom on the citizenry of the core and periphery alike.
To understand the neocolonial-financialization model, we must revisit the classic model of colonialism. In the old model of Colonialism, the colonizing power conquered or co-opted the Power Elites of the region, and proceeded to exploit the new colony’s resources and labor to enrich the core or center, i.e. the Imperial nation and its ruling elites.
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The Recession Will Be Unevenly Distributed
The Recession Will Be Unevenly Distributed
Those households, enterprises and organizations that have no debt, a very low cost basis and a highly flexible, adaptable structure will survive and even prosper.
The coming recession will be unevenly distributed, meaning that it will devastate many while leaving others relatively untouched. A few will actually do better in the recession than they did in the so-called “recovery.”
I realize many of the concepts floated here are cryptic and need a fuller explanation: the impact of owning differing kinds of capital, fragmentation, asymmetry, opacity, etc. ( 2019: Fragmented, Unevenly Distributed, Asymmetric, Opaque).
These dynamics guarantee a highly uneven distribution of recessionary consequences and whatever rewards are generated will be reaped by a few.
One aspect of the uneven distribution is that sectors that were relatively protected in recent recessions will finally feel the impact of this one. Large swaths of the tech sector (which is composed of dozens of different industries and services) that were devastated in the dot-com recession of 2000-02 came through the 2008-09 recession relatively unscathed.
This time it will be different. The build-out of mobile telephony merging with the web has been completed, social media has reached the stagnation phase of the S-Curve and many technologies that are widely promoted as around the corner are far from profitability.
Then there’s slumping global demand for mobile phones and other consumer items that require silicon (processors) and other tech components: autos, to name just one major end-user of electronics.
The net result will be mass layoffs globally across much of the tech sector.Research is nice but it doesn’t pay the bills today or quiet the restive shareholders as profits tank.
The public sector is also ripe for uneven distribution of recessionary impacts.Local government and its agencies in boomtowns such as the SF Bay Area, Seattle, Los Angeles, NYC, etc. have feasted on soaring tax revenues and multi-billion dollar municipal bonds.
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If We Can No Longer Tell the Truth, We’ve Failed
If We Can No Longer Tell the Truth, We’ve Failed
The Gulag Archipelago is not a distant memory; it lives on in every modern state, cloaked with modern-day technologies and the well-worn tools of suppression.
The last thing addicts want to hear is the truth: the only thing more terrifying than the truth is the possibility that they will lose access to whatever they’re addicted to: smack, Oxy, coke, alcohol, sex, porn, power, etc.
If we fail to tell addicts the truth, we fail them and ourselves. As long as co-dependents remain complicit in the addict’s destructive state, as long as those who know better keep silent because they don’t want to deal with the trauma, the addict is free to maintain the illusion that he/she is in control, that his/her secret is safe, etc., and manipulate those around them with lies and victimhood.
Not wanting to deal with the trauma of forcing those in denial to face up to reality is understandable: who wants to deal with the shock, denial, anger and depression that characterize facing up to a terrifying truth?
But we fail ourselves if we’re too weak to speak the truth and grind through the denial, anger and depression. If we opt for the easy way out, we’re just like the addict, who is also opting for the easy way out, i.e. finding refuge in the labryrinthine Kingdom of Lies.
The status quo is a Kingdom of Lies. “Raw data”, i.e. facts collected without regard to future interpretaion, are “processed” into the “right kind of data,” i.e. data that supports the status quo interpretation, which is that everything’s just fine thanks to the wise leadership of our self-serving elites.
The deeper you dig into the statistical foundation of GDP, the unemployment rate, trade deficits, etc., the more questions arise about the accuracy and agenda behind the headline numbers.
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