Bibi and the Bomb

Mere anarchy is loosed upon the world.

Yesterday, everyone's favorite scary uncle brought his omigod we're all gonna to die dog and pony show to the UN. Anyone with a pulse and an internet connection knows that this is far more about influencing an election that is otherwise hopelessly lost. Unless. Unless there is an "October surprise" circa. 1980 when the hapless Carter had his fate sealed by misadventure in, wait for it, Iran.

An Israeli attack in the run-up to the election would leave Obama with no good option. Join in and he is a patsy to the bellicose Bibi. Or take a pass and be seen as a stooge of the Muslim lunatic fringe. The thought that this election might turn on this kind of manipulation is sad beyond words.

So cheer up, have a drink or five and enjoy someone who really did have to worry about a bomb.

Night Trading?

Something else you should never, never do while you are drunk because it seems like such a good idea:

Steve Perkins was left with a bigger black hole in his memory than most when his employer rang one morning to ask what he'd done with 520m It was 7.45am on June 30 last year when the senior, longstanding broker for PVM Oil Futures was contacted by an admin clerk querying why he'd bought 7m barrels of crude in the middle of the night The 34-year old broker at first claimed he had spent the night trading alongside a client. But the story began to fall apart when he refused to put the customer in touch with his desk for official approval of the trades. By 10am it emerged that Mr Perkins had single-handedly moved the global price of oil to an eight-month high during a "drunken blackout". Prices leapt by more than $1.50 a barrel in under half an hour at around 2am – the kind of sharp swing caused by events of geo-political significance. Ten times the usual volume of futures contracts changed hands in just one hour.

So did the earth move for you too?

Sarah Silverman Takedown

So Fuck You and the Horse You Rode in On

No doubt the good citizens of Kentucky are sleeping more soundly now that law enforcement has determined that a horse is a vehicle and that driving one (where is the steering wheel?) while impaired is an offence. Apparently the fact that the horse itself was sober is not a mitigating circumstance. The rider was busted, and the marijuana and moonshine found on board said horse were confiscated.

As usual, the British have a far more civilized approach to this:

Wolfgang Heinrich, 40, from the German town Wiesenburg, had been riding with his Haflinger horse Sammy when he stopped to have a drink with friends. But when he left the pub he realised he was too drunk to ride all the way home - and because it was cold, he decided to use his bank card to open up a nearby bank foyer and take himself and Sammy inside to sleep it off. 

Heinrich and his horse were found in the early hours of the morning by local man Stephan Hanelt, 36, who came to the bank to take out some money. He said: 'It was a bit of a shock to find a man and a horse asleep in the foyer of the bank. I rang the police straight away. 

Heinrich was let off with a warning and rode home. But bank staff were less than impressed when they arrived and had to clean up after the horse, who had left a deposit of his own on the foyer floor.

Mitt Romney, Parasite

So Mitt Romney spoke truth to power (i.e. his base) and pooched the  election. But what nobody seems prepared to say is that in terms of dollars received and absolute dependency, it is (irony drumroll) Romney's buddies, in other words the audience for this clusterfuck, who are the real parasites.

We, the great unwashed, don't simply subsidize their work ethic, sexual indiscretions or drug habits, as they imagine they do ours, but underwrite a gambling addiction of world-historic proportions. Indeed, Romney's gaffe came just days after Uncle Ben had announced that the Fed would  for now be printing a few additional trillions to try to re-inflate asset prices in order to save us and his buddies from their ongoing financial evil.

Welfare queens indeed!

Has Anyone Else Noticed This?

When we elected the brothers Ford, Rob and Doug, we not only got a twofer for mayor, we got a real life embodiment of the original hosers, Bob and Doug, a couple of amiable idiot drunks, the originals harmless, the clones maybe less so.

How Canadian is that, eh?

We Have Learned Nothing

One of my favourite weekly visits is to James Howard Kunstler's Clusterfuck Nation. It is what penetrating, no bullshit comment is all about.

This week's letter looks at the latest attempt by the U.S. Fed to put off the increasingly inevitable by pumping an additional $45 billion a month in newly printed greenbacks into an economy that so wants to deflate. While I talked about this in my last post, one point that is made here, that I missed, is that this new money is to be used to buy subprime mortgage debt.

What the fuck?

This means that for all the bitching and moaning about dishonest bankers and their ways, we are now giving them an additional half trillion dollars a year incentive to do exactly what they were doing in 2008 to bringt the world economy to its knees -- writing garbage mortgages that  ultimately prey upon the poor and that U.S. taxpayers not just backstop, but pay for on an ongoing basis. And this will be done forever!

I reiterate: what the fuck?

This will of course also free up bank reserves so that they can plow more money into increasingly shaky equity markets so that we can continue to pretend that the economy is OK on that front as well. So the two main false hopes for economic health, commodities and equities for the rich (and for middle class pensions for those few who still have them) and reinflating real estate prices for the middle class. But of course at the price of setting up the next round of financial institution failures, mass foreclosures and socialized losses paid for by those of us poor losers who actually still pay taxes.

Kunstler rightly argues that the only viable path now is to wipe the slate clean -- to allow equities, real estate and commodities to decline or even collapse in the absence of world-historic monetary expansion. This is debt repudiation and an end to asset inflation and it is needed to do what bankruptcy is meant to do: to wipe the slate clean and allow us to start over.

To Infinity and Beyond!

So the question of the week is: what does it mean to pump $85 billion (with a "b") a month, or $20 billion a week into asset inflation in the interests of making us all feel rich in time for the U.S. election. What is truly alarming about QE3 is its foreverness. Our American cousins are simply going to print vast amounts of money forever. No fiscal stimulus that would reignite a rebuilding of a broken infrastructure or a shoring up of social programs but a fiscal infusion that amounts to permanent life support for various classes of equities: i.e. for the rich. And the Europeans are apparently going to act in concert.

Oddly, the market reaction thus far is tepid. A half percent and a market that remains firmly range bound. It will take time to see if other asset classes react more robustly, but there appears to be an weird calm as if all of this pumping up is simply keeping a very leaky balloon from deflating.

As I noted earlier, we remain at the cusp of an historic two decade topping pattern. Patterns morph, and this one might. An S&P500 moving strongly through the 1500 mark would be just such a change. But volume continues to decline. The fundamentals are horrid. And there is a growing concern that this phase of capitalist development has run its course. If that is the case, technical analysis suggests that a 60-70% decline followed by a semi-permanent flatline is not out of the question, as the Japanese found out a generation ago.

Andy Borowitz nails it!

New Yorker satirical columnist Andy Borowitz on the new iPhone 5:

Apple rocked the gadget world today with the news that the iPhone 5 includes a new feature that gives shape and purpose to previously empty and meaningless lives.
As Apple explained at its launch of the device, the new feature is an improved version of its personal assistant, Siri, that has been endowed with a quality missing from the previous model: empathy.
In a demonstration before a hushed crowd of Apple enthusiasts, an app developer named Josh asked the new Siri, “Why didn’t my parents love me?”
Siri’s response, “Your parents were too self-absorbed and narcissistic to recognize your essential beauty and value as a human being,” brought many in the Yerba Buena Center audience close to tears.
Apple C.E.O. Tim Cook closed out the launch with perhaps his boldest claim to date about the company’s new phone: “We believe that the iPhone 5 will make your current relationship obsolete.”
Wall Street rallied on the news, with tech analysts expecting millions of Apple customers to purchase an iPhone 5 to replace their existing boyfriend, girlfriend, or spouse. But in the words of Apple devotee Tracy Klugian, who was present at today’s launch, such expectations are overdone: “Most Apple snobs I know started putting their Apple products before their relationships a long time ago.” 

This will surely put Apple over the trillion dollar valuation hump and keep an otherwise inexplicable bull market going for another few months.

We Are Rome -- Part Deux?

For more than three decades, Michael Hudson has been writing about the financialization of western capitalist economies and indeed of the global economy. His latest is The Bubble and Beyond. The concepts are difficult and complex and so his books and articles are necessarily dense and challenging. But the essence of his argument is that the wealthy western economies no longer grow wealth by making and selling things but by inflating assets at home and stripping assets abroad through financial manipulation.

Though he doesn't put it this way, we have become what economic anthropologists call a tribute economy -- an economy, like ancient Rome's, based on conquest, thuggery and forcible extraction. What he does recognize is that rather than Roman  Legions we now send private financial institutions, non-state actors such as the IMF and inter-governmental aid agencies, such as, in our case, CIDA. It is only when things fuck up that we send the Marines (and JTF2).

As John Perkins described in a much more colloquial way in  Confessions of an Economic Hitman, foreign loans are not a means of assistance but of conquest. But this is true domestically as well. The historic run up in real estate prices has not been captured by the middle class, for the most part, but by the banks who hold mortgages on these inflated assets.

Financial capitalism is a zero sum game wherein the goal is to transfer wealth or tribute from the conquered to the conqueror. It produces nothing and contributes little of its vast booty to the public good. And because it is parasitic, it is ultimately unsustainable. You may get blood out of that stone, but only so much. So whether it is Bain Capital using largely borrowed money to raid vulnerable manufacturers and strip them of pensions and labour costs, all the while charging hefty fees for this service or the IMF or similar institutions bearing dubious gifts wrapped in attached strings, these parasites will eventually bleed their hosts, us, dry.

Sam Gamgee and the Power of the Powerless

Surely the greatest pleasure in re-reading LOTR after a long absence is the pleasant and shocking encounter with an entirely new story. And the best of this new story this time through has been the epic heroism of Sam Gamgee. Indeed Tolkien was clear in his letters that Sam is the real hero in LOTR.

Sam, of course, is an every man who rises far beyond his circumstances. Leaving humble circumstances in a humble place he reluctantly sets out on an historical errand, not because he desires fame or fortune or is born to greatness but because he desires to serve his friend and master.

This of course is obvious to anyone who reads Tolkien. But what is perhaps not so clear is that Sam, more than any other character in LOTR, is utterly unconcerned with power, whether the power of birth or position or wealth or achievement, as with all of the other characters except perhaps the two young hobbits, Pippin and Merry. Nor is he drawn to the power of the Ring itself and all that it represents.

When Sam puts on the ring, in Shelob's Lair, he wears it longer than any other, except of course Gollum/Smeagol. But the ring has at most a transitory effect on him. Sam, it seems, is immune to the predations of power because even in the rare instances he wields it, it is for a transitory purpose, in this case saving his master from the foul and hated orcs.

So it is Sam's utter unconcern with power that makes him most able to safely wield it. And it is this, of course, that makes him singularly qualified as mayor of the Shire. And though Tolkien rejected the use of allegory, surely there is no better allegory for a political season.