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The Old Songs

November 25, 2017

The Old Songs

What if the fun and games of 2017 are over? The hidden message behind the sexual harassment freak show of recent weeks is that nothing else is sufficiently serious to occupy the nation’s attention. We’re living in the Year of Suspended Reality, stuck in the sideshow and missing the three-ring circus next door in the big tent.

It probably all comes down to money. Money represents the mojo to keep on keeping on, and there is probably nothing more unreal in American life these days than the way we measure our money — literally, what it’s worth, and what everything related to it is worth. So there is nothing more unreal in our national life than the idea that it’s possible to keep on keeping on as we do.

The weeks ahead may be most illuminating on this score. The debt ceiling suspension runs out on December 8, around the same time that the tax reform question will resolve one way or another. The debt ceiling means that the treasury can’t issue any more bonds, bills, or notes. That is, it can’t borrow any more money to pretend the government can keep running. Normally these days (and it’s really very abnormal), the treasury pawns off paper IOUs to the Federal Reserve and the Fed makes digital entries on various account ledgers that purport to be “money.” And, by the way, the Fed is a consortium of private banks not a department of government — which is surely one of a thousand ways that the public is confused and deceived about what condition our condition is in, as the old song goes.

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Spanking the Monkey

November 11, 2017

Spanking the Monkey

The hysteria manufacturing business formerly known as the news media is enjoying multiple orgasms this morning in the outing of notoriously vulgar comedian Louis CK for exactly the sort of vulgar behavior offstage that he riffed about onstage. What a surprise. We also learn today that Jeremy Piven, beloved and admired for his role as a bimbo-berating Hollywood agent in the HBO comedy Entourage, is alleged to have groped a starlet in his trailer. Or was he just doggedly staying in character between set-ups? And what was she doing there, anyway? Stopping by to share the everything bagel with jalapeño cream cheese that she picked up at craft services?

I suppose these guys will be joining Kevin Spacey in his new dinner theater in Tampa, since they’ll never work in Hollywood again, and surely they have bills to pay, especially to their lawyers. Hollywood itself, being the vulgar place it has always been, must be nervously awaiting the inevitable next phase of this melodrama: when various actresses, and other women around the biz, are revealed to be sluts who screwed and blew their way to stardom — not to put too fine a point on it. Surely a few ladies out there have misbehaved in the way that ladies can, trading favors for fame and fortune — or do you suppose that never happens? Or only when men force them to? (Anyway, don’t count on hearing about that in The New York Times.)

Then the whole prurient cavalcade of cross-allegation and litigation will be as forgotten as a mass slaughter in Las Vegas, or Texas, or Lower Manhattan, and it will be back to business-as-usual in the news racket: nattering about contacts with Russia, a faraway land that, we’re told, is determined to corrupt the morals of our shining city on a hill.

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What Could Go Wrong?

November 6, 2017

What Could Go Wrong?

Everybody and his uncle, and his uncle’s mother’s uncle, believes that the stock markets will be zooming to new record highs this week, and probably so, because it is the time of year to fatten up, just as the Thanksgiving turkeys are happily fattening up — prior to their mass slaughter.

President Trump’s new Federal Reserve chair, Jerome “Jay” Powell, “a low interest-rate kind of guy,” was obviously picked because he is Janet Yellen minus testicles, the grayest of gray go-along Fed go-fers, going about his life-long errand-boy duties in the thickets of financial lawyerdom like a bustling little rodent girdling the trunks of every living shrub on behalf of the asset-stripping business that is private equity (eight years with the Deep State-ish Carlyle Group) while subsisting on the rich insect life in the leaf litter below his busy little paws.

Powell’s contribution to the discourse of finance was his famous utterance that the lack of inflation is “kind of a mystery.” Oh, yes, indeed, a riddle wrapped in an enigma inside a mystery dropped in a doggie bag with half a pastrami sandwich. Unless you consider that all the “money” pumped out of the Fed and the world’s other central banks flows through a hose to only two destinations: the bond and stock markets, where this hot-air-like “money” inflates zeppelin-sized bubbles that have no relation to on-the-ground economies where real people have to make things and trade things.

Powell might have gone a bit further and declared contemporary finance itself “a mystery,” because it has been engineered deliberately so by the equivalent of stage magicians devising ever more astounding ruses, deceptions, and mis-directions as they enjoy sure-thing revenue streams their magic tricks generate. This is vulgarly known as “the rich getting richer.”

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Into the Cold and Dark

October 20, 2017

Into the Cold and Dark

It amuses me that the nation is so caught up in the sexual mischief of a single Hollywood producer when the nation as a whole is getting fucked sideways and upside down by its own political caretakers.

Behind all the smoke, mirrors, Trump bluster, Schumer fog, and media mystification about the vaudeville act known as The Budget and The Tax Cut, both political parties are fighting for their lives and the Deep State knows that it is being thrown overboard to drown in red ink. There’s really no way out of the financial conundrum that dogs the republic and something’s got to give.

Many of us have been waiting for these tensions to express themselves by blowing up the artificially levitated stock markets. For about a year, absolutely nothing has thwarted their supernatural ascent, including the threat of World War Three, leading some observers to believe that they have been rigged to perfection. Well, the algo-bots might be pretty fine-tuned, and the central bank inputs of fresh “liquidity” pretty much assured, but for all that, these markets are still human artifacts and Murphy’s Law still lurks out there in the gloaming with its cohorts, the diminishing returns of technology (a.k.a. “Blowback”), and the demon of unintended consequences.

Many, including yours truly, have expected the distortions and perversions on the money side of life to express themselves in money itself: the dollar. So far, it has only wobbled down about ten percent. This is due perhaps to the calibrated disinformation known as “forward guidance” issued by this country’s central bank, the Federal Reserve, which has been threatening — pretty idly so far — to raise interest rates and shrink down its vault of hoarded securities — a lot of it janky paper left over from the misadventures of 2007-2009.

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Fall of the Great Pumpkin

October 2, 2017

Fall of the Great Pumpkin

Welcome to the witching month when America’s entropy-fueled death-wish expresses itself with as much Halloween jollity and merriment as the old Christmas spirit of yore. The outdoor displays alone take on a Babylonian scale, thanks to the plastic factories of China. I saw a half-life-size T-Rex skeleton for sale at a garden shop last week surrounded by an entire crew of moldering corpse Pirates of the Caribbean in full costume ho-ho-ho-ing among the jack-o-lanterns. What homeowner in this sore-beset floundering economy of three-job gig-workers can shell out four thousand bucks to decorate his lawn like the set of a zombie movie?

The overnight news sure took on that Halloween tang as the nation woke up to what is probably a national record for a civilian mad-shooter incident. So far, fifty dead and two hundred wounded at the Las Vegas at the Route 91 Harvest Festival (one up in fatalities from last year’s Florida Pulse nightclub massacre, and way more injured this time).

The incident will live in infamy for maybe a day and a half in the US media. Stand by today as there will be calls far and wide, by personas masquerading as political leaders, for measures to make sure something like this never happens again. That’s rich, isn’t it? Meanwhile, the same six a.m. headlines declared that S &P futures were up in the overnight markets. Nothing can faze this mad bull, apparently. Except maybe the $90 trillion combined derivatives books of CitiBank, JP Morgan, and Goldman Sachs, who have gone back whole hog into manufacturing the same kind of hallucinatory collateralized debt obligations (giant sacks of non-performing loans) that gave Wall Street a heart attack in the fall of 2008.

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Homework Assignment

September 29, 2017

Homework Assignment

Poor old Karl Marx, tortured by boils and phantoms, was right about one thing: History repeats itself, first as tragedy, second as farce. Thus, I give you the Roman Empire and now the United States of America. Rome surrendered to time and entropy. Our method is to drive a gigantic clown car into a ditch.

Is anyone out there interested in redemption? I have an idea for the political party out of power, the Democrats, sunk in its special Okefenokee Swamp of identity politics and Russia paranoia: make an effort to legislate the Citizens United calamity out of existence. Who knows, a handful of Republicans may be shamed into going along with it. For those of you who have been mentally vacationing on Mars with Elon Musk, Citizens United was a Supreme Court decision — Citizens United v. Federal Election Commission 558 U.S. 310 (2010) — which determined that corporations had the right, as hypothetical “persons,” to give as much money as they liked to political candidates.

This “right” devolved from the First Amendment of the constitution, the 5-4 majority opinion said — giving money to political candidates and causes amounts to “freedom of speech.” The Citizens United ruling opened the door for unlimited election spending by corporations and enormous mischief in our national life. Then-President Obama — a constitutional law professor before his career in politics — complained bitterly about the opinion days later in his State of the Union address, saying that the court had “reversed a century of law to open the floodgates, including foreign corporations, to spend without limit in our elections.”

And for the next seven years he did absolutely nothing about it, nor did the Democratic Party majority in congress. Rather, they vacuumed in as much corporate campaign money as possible from every hokey political action committee (PAC) from sea to shining sea, especially in the 2016 presidential election starring Hillary “It’s My Turn” Clinton.

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In the Dark

September 12, 2017

In the Dark

The stock market is zooming this morning on the news that only 5.7 million people in Florida will have to do without air conditioning, hot showers, and Keurig mochachinos at dawn’s early light Monday, Sept 11, 2017. I’m mindful that the news cycle right after a hurricane goes kind of blank for a day or more as dazed and confused citizens venture out to assess the damage. For now, there is very little hard information on the Web waves. Does Key West still exist? Hard to tell. We’ll know more this evening.

The one-two punch of Harvey and Irma did afford the folks-in-charge of the nation’s affairs a sly opportunity to get rid of that annoying debt ceiling problem. This is the law that established a limit on how much debt the Federal Reserve could “buy” from the national government. Some of you may be thinking: buy debt? Why would anybody want to buy somebody’s debt? Well, you see, this is securitized debt, i.e. bonds issued by the US Treasury, which pay interest, and so there is the incentive to buy it. Anyway, there used to — back in the days when the real interest rate stayed positive after deducting the percent of running inflation. This is where the situation gets interesting.

The debt ceiling law supposedly set limits on how much bonded debt the government could issue (how much it could borrow) so it wouldn’t go hog wild spending money it didn’t have. Which is exactly what happened despite the debt limit because the “ceiling” got raised about a hundred times though the 20^th century into the 21^st so that the accumulated debt stands around $20 trillion.

Rational people recognize this $20 trillion for the supernatural scale of obligation it represents, and understand that it will never be paid back, so, what the hell?

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Swamp Fever

September 8, 2017

Swamp Fever

Further proof, as if more were needed, that God is rather cross with the world’s number one exceptional nation: Hurricane Irma is tracking for a direct hit on Disney World. In the immortal words of the Talking Heads: This ain’t no party, this ain’t no disco, this ain’t no fooling around.

Houston is still soggy and punch-drunk, with a fantastic explosion of breeding mosquitoes, and otherwise it’s not even in the news anymore. This week, the cable networks had their scant crews of reporters scuttling around Florida, asking the people here and there about their feelings. “What’s gonna happen is gonna happen….” I think I heard that one about sixty times, and there’s actually no disputing the truth of it.

For the moment, though (Friday morning), it’s a little hard to calculate the effect of a complete scrape-off, wash, and rinse of the state of Florida vis-à-vis the ongoing viability of the US economy. There’s going to be a big hole with dollars rushing into it and that will likely prompt the combined powers of the US Treasury, congress, and the Federal Reserve to materialize tens of billions of new dollars. Overnight the DXY plunged to a new low for the year.

Am I the only observer wondering if Irma may be a fatal blow to the banking system? The mind reels at the insurance implications of what’s about to happen. Urgent obligations triggered by an event of this scale can’t possibly be serviced. Look for it to snap the chain of counterparty leverage that has been propping up the banks, insurers, and pension funds on mere promises for years on end. Finance, both private and public, has been feeding off unreality since well before the tremor of 2008. The destruction of Florida (and whatever else stands in the way up the line) will be as real as it gets.

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Perturbations Anon

September 4, 2017

Perturbations Anon

Happy Labor Day everybody. Forward from here, things get jiggy. The nation faces a pile-up of events as we turn the corner on summer and head into the spook-house of autumn.

This will be the week when the reeking after-effects of Harvey’s journey through Houston become super-vivid. It’s going to be hot-hot-hot there all week, perfect conditions for mold to creep through untold square-footage of soggy sheetrock and plenty of nutriment in the toxic gumbo of lingering standing water for mosquitoes and bacteria to breed like crazy. Bigger surprises will be waiting for some:

HOUSTON (CNN) — A Texas homeowner returned to his flood-marred home Friday in the aftermath of Hurricane Harvey to a shocking surprise: a 10-foot gator in his living room. Brian Foster made the discovery while assessing how badly the water had damaged his house near Lake Houston, north of Houston….

The news media are already calling Harvey the costliest storm in US history, with estimates running to $180 billion. But damage assessments are incomplete for highways, surface roads, bridges, railroad tracks, water and sewer systems, public buildings, dams (Addicks and Barker), natural gas terminals, and port facilities, not to mention homes and business structures. Texas is the nation’s number one cotton producer and the storm blew away many temporary cotton bale storage modules following a bumper harvest. Corn, soybeans, and cattle were also affected.

The Colonial Pipeline’s hookups to the refineries west of Lake Charles, Louisiana, won’t reopen fully until Tuesday at the earliest. The pipeline conveys 40 percent of the gasoline consumed from Atlanta to Washington, D.C. and extends up to the New York metro area. By next weekend Hurricane Irma looks like she’ll be slamming into the US Atlantic coast somewhere between Jacksonville and the Carolina Outer Banks as a category 3 or 4 event. There’s even talk today of possible cat 5. Will there be enough gasoline on hand for the folks at risk to evacuate? Stand by on that.

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When the Butterfly Flaps Its Wings

August 28, 2017

When the Butterfly Flaps Its Wings

It remains to be seen what the impact will be from Mother Nature putting the nation’s fourth largest city out-of-business. And for how long? It’s possible that Houston will never entirely recover from Hurricane Harvey. The event may exceed the physical damage that Hurricane Katrina did to New Orleans. It may bankrupt large insurance companies and dramatically raise the risk of doing business anywhere along the Gulf and Atlantic coasts of the USA — or at least erase the perceived guarantee that losses are recoverable. It may even turn out to be the black swan that reveals the hyper-fragility of a US-driven financial system.

Houston also happens to be the center of the US oil industry. Offices can be moved elsewhere, of course, but not so easily the nine major oil refineries that sprawl between Buffalo Bayou over to Beaumont, Port Arthur, and then Lake Charles, Louisiana. Harvey is inching back out to the Gulf where it will inhale more energy over the warm ocean waters and then return inland in the direction of those refineries.

The economic damage could be epic. Much of the supply for the Colonial Pipeline system emanates from the region around Houston, running through Atlanta and clear up to Philadelphia and New York. There could be lines at the gas stations along the eastern seaboard in early September.

The event is converging with the US government running out of money this fall without new authority to borrow more by congress voting to raise the US debt ceiling. Perhaps the emergency of Hurricane Harvey and its costly aftermath will bludgeon congress into quickly raising the debt ceiling. If that doesn’t happen, and the debt ceiling is not raised, the federal government might have to pretend that it can pay for emergency assistance to Texas and Louisiana. That pretense can only go so far before government contractors balk and maybe even walk.

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Diminishing Returns

August 21, 2017

Diminishing Returns

These two words are the hinge that is swinging American life — and the advanced techno-industrial world, for that matter — toward darkness. They represent an infection in the critical operations of daily life, like a metabolic disease, driving us into disorder and failure. And they are so omnipresent that we’ve failed to even notice the growing failure all around us.

Mostly, these diminishing returns are the results of our over-investments in making complex systems more complex, for instance the replacement of the 37-page Glass-Steagall Act that regulated American banking, with the 848 page Dodd-Frank Act, which was only an outline for over 22,000 pages of subsequent regulatory content — all of it cooked up by banking lobbyists, and none of which replaced the single most important rule in Glass-Steagall, which required the separation of commercial banking from trafficking in securities. Dodd-Frank was a colossal act of misdirection of the public’s attention, an impenetrable smokescreen of legal blather in the service of racketeering.

For Wall Street, Dodd-Frank aggravated the conditions that allow stock indexes to only move in one direction, up, for nine years. During the same period, the American economy of real people and real stuff only went steadily down, including the number of people out of the work force, the incomes of those who still had jobs, the number of people with full-time jobs, the number of people who were able to buy food without government help, or pay for a place to live, or send a kid to college.

When that morbid tension finally snaps, as it must, it won’t only be the Hedge Funders of the Hamptons who get hurt. It will be the entire global financial system, especially currencies (dollars, Euros, Yen, Pounds, Renminbi) that undergo a swift and dire re-pricing, and all the other things of this world priced in them. And when that happens, the world will awake to a new reality of steeply reduced possibilities for supporting 7-plus billion people.

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Battle of the Behemoths

August 11, 2017

Battle of the Behemoths

As the empire deliquesces into a fetid slurry of economic failure, we stand ankle deep in the rising swamp waters witnessing the futile battle of the giants, Walmart and Amazon.

Neil Howe, co-author of The Fourth Turning, wrote this week that “[t]he Amazon-Walmart rivalry will determine the future of retail.” Well, it seems that way, perhaps, and I understand why a lot of people would imagine it, but I would draw some different conclusions. What we’re seeing is more like the battle between Godzilla and King Kong, two freaks of nature produced by a toxic culture, fixing to finish each other off.

The condition that will flavor events going forward is scale. Everything organized at the giant scale is going to fail. We have made all the systems of daily life too large and they will not function in the long emergency (and the fourth turning), an age characterized by universal contraction. This is true of corporations, institutions, schools, hospitals, farms, governments, virtually all organized enterprise. Retail is currently just the most visible example at the moment, since it is a commercial battleground that doesn’t enjoy public subsidies. The organisms on that field are exquisitely sensitive to economic reality, and the salient reality these days is the impoverishment of their customers, the former middle class.

This has been a sensational year for retail failure so far with a record number of brick-and-mortar store closings. But it is hardly due solely to Internet shopping. The nation was vastly over-stored by big chain operations. Their replication was based on a suicidal business model that demanded constant expansion, and was nourished by a regime of ultra-low interest rates promulgated by the Federal Reserve (and its cheerleaders in the academic econ departments).

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We’re Good People, Really We Are!

We’re Good People, Really We Are!

The disgrace of America’s putative intellectual class is nearly complete as it shoves the polity further into dysfunction and toward collapse. These are the people Nassim Taleb refers to as “intellectuals-yet-idiots.” Big questions loom over this dynamic: How did the thinking class of America sink into this slough of thoughtlessness? And why – what is motivating them?One path to understanding it can be found in this sober essay by Neal Devers, The Overton Bubble, published two years ago on TheFuturePrimaeval.net — a friend turned me on to it the other day (dunno how I missed it). The title is a reference to the phenomenon known as the Overton Window. Wikipedia summarizes it:

The Overton Window, also known as the window of discourse, is the range of ideas the public will accept…. The term is derived from its originator, Joseph P. Overton (1960–2003), a former vice president of the Mackinac Center for Public Policy….

Devers refines the definition:

The Overton Window is a concept in political sociology referring to the range of acceptable opinions that can be held by respectable people. “Respectable” of course means that the subject can be integrated with polite society. Respectability is a strong precondition on the ability to have open influence in the mainstream.

This raises another question: who exactly is in this corps of “respectable people” who set the parameters of acceptable thought? Primarily, the mainstream media — The New York Times, The WashPo, CNN, etc. — plus the bureaucratic functionaries of the permanent government bureaucracy, a.k.a. the Deep State, who make and execute policy, along with the universities which educate the “respectable people” (the thinking class) into the prevailing dogmas and shibboleths of the day, and finally the think tanks and foundations that pay professional “experts” to retail their ideas.

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Blood Sports

Blood Sports

What you’re seeing in the political miasma of “RussiaGate” is an exercise in nostalgia. Apart from the symbolic feat of getting a “black” president freely elected in 2008 (remember, Mr. Obama is also half-white), the Democratic Party hasn’t enjoyed a political triumph in half a century to match the Watergate extravaganza of 1972-74, which ended in the departure of Mr. Nixon, the designated Prince of Darkness of those dear dead days. Watergate had had a more satisfying finale than The Brides of Dracula.

So, in its current sad state, devoid of useful political ideas, mired in the mostly manufactured conflicts of race and gender, psychologically crippled by the election loss of a miserable candidate to the Golden Golem of Greatness, the Democratic Party is returning full steam to a gambit that worked so well years ago: beating the devil by congressional inquiry.

In President Trump (uccchhh, the concept!), they’ve got a target much juicier even than Old Nixie. It wasn’t for nothing that they called him “Tricky Dick.” He came back from political near-death twice in his career. The first time, running as Dwight Eisenhower’s veep, he was accused of accepting the gift of a vicuna coat for his wife, Pat, and other secret cash emoluments. He overcame that with one of the first epic performances of the TV age, the “Checkers Speech” — Checkers being the family’s cocker spaniel, who Nixon invoked as a proxy for his own guileless innocence. It worked bigly.

The second near-death was his defeat in the California governor’s race of 1962, following his 1960 squeaker presidential election loss to John F. Kennedy. “You won’t have Nixon to kick around anymore…” he told the press. But he rose from the grave in 1968 — after fortifying his bank account in a Wall Street law practice — when the Vietnam War was tearing the country apart (and wrecking the Democratic Party of Lyndon Johnson and Hubert Humphrey).

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The Sound of One Wing Flapping

The Sound of One Wing Flapping

And suddenly the storms of early Trumptopia subside, or seem to. The surface of things turns eerily placid as the sweets of May sweep away the toils of an elongated mud season. Somebody stuffed Kim Jong Un back in his bunker with a carton of Kools and the Vin Diesel video library. France appears resigned to Hollandaise Lite in the refreshing form of boy wonder Macron. It’s been weeks since The New York Times complained about the Russians stealing Hillary’s turn as leader of the free world. We’re given to understand that Congress managed overnight to cook up a spending bill that will avert a Government shut-down until September. Rest easy America… oh, and buy every dip.

A calm surface is exactly what Black Swans like to land on, though by definition we will not know they’re out there until our reveries are broken by the sound of wings flapping. Some kind of dirty bird showed up on Canada’s thawing pond last week when that country’s biggest home loan lender suffered a 60 percent pukage of shareholder equity and had to be bailed out — not by the Canadian government directly, but by the Ontario Province’s Health Care Workers Pension Fund, a neat bit of hocus pocus that amounts to a one-year emergency loan at ten percent interest.

If that’s a way for insolvent public employee pension plans to find enough “yield” to meet their obligations, then maybe that could be the magic bullet for the USA’s foundering pension funds. The next time Citibank, Goldman Sachs, JP Morgan, and friends get a case of the Vapors, let them be bailed out by the Detroit School Bus Drivers’ Pension Fund at ten percent interest. That ought to work. And let Calpers take care of Wells Fargo.

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