The Master Wise-A** Speaks...

You gotta love a smarta** answer to a stupid and condescending question. Heh, heh, heh...

The FED Speaks

The Federal Reserve released another of its anticipated reports and kept the overnight interest rate unchanged at 0-.25%. It also said that "the economy has continued to contract, though the pace of contraction appears to be somewhat slower." On this news, market indices shot up 2%. This despite a preliminary estimate that the GDP contracted by 6.1% annualized in the first quarter. This will no doubt be revised even further downwards. The lemmings are buying into any reason to buy into stocks. There were a bazillion articles you might have read today to get this news, but this one managed to get straight to the point in the very first sentence:

The Federal Reserve said on Wednesday the outlook for the U.S. economy had improved a bit in recent weeks but that low interest rates would be needed for some time to ensure it recovers from its deep recession.

I'm sure that to the writer this was just regular old canned copy, but it pretty much hits the nail on the head: without the insanely low interest rates only available through mass moneyprinting and currency debasement, the economy would by now have entered the deepest pits of the realms of chaos. .25% interest is simply irrational and completely unsustainable. That our economy is barely puttering along, and is admittedly still contracting, despite such insane monetary policy is the furthest thing from good news. Yet if this policy is not sustained, neither is the "recovery." As soon as interest rates rise and the monetary hemmorage curtailed in the slightest, you can bet your last worthless dollar that markets will go back into tailspin. So the operative question remains: for how long is the Fed willing to persist in this madness? To what degree will it tolerate dollar debasement as an acceptable price for avoiding short term pain? Thus far the answer appears to be: to the bitter end. Pay no attention to hopeful speculation that the FED may tighten just in the nick of time. This is a fairy tale. The moment it tightens, we are back at the edge of the abyss. Market addiction to an ever expanding supply of dollars is now complete. Only two things can save the present economy: a complete restructuring along a sustainable path (recession), or ever more worthless dollars to perpetuate the madness (inflation). The FED may "save" the present economic structure, or at least stave off its ultimate destruction for awhile, or save the dollar. It cannot do both. The dream of candyland economics seems to be the weightier of the two priorities at this juncture. It usually is. Expect more mayhem.

Finally, Some Halfway-Realistic Numbers

My apologies for the light posting of late. I've been swamped by several moves, a feeble attempt at buying real-estate, and am now deprived of of the free labor of my recently departed in-laws as I pointed out before. I must also admit that the blog just hasn't been doing it for me these past weeks either. Is it the phony-good economic news and rising markets? I don't know. Maybe when a few cities go up in flames or the Mexican swine flu kills a few hundred thousand people I'll come out of my writers' funk. In any event, in a surprise move some Germans have actually made a halfway reasonable attempt to get the numbers right:

Germany’s economy will shrink 6 percent this year in its worst performance since World War II and will stay in recession until at least mid-2010, the country’s leading economic institutes said.

A 23 percent decline in exports this year will delay recovery in Europe’s largest economy, pushing Germany’s jobless rate to 10.8 percent next year and lifting the budget deficit to nearly twice the European Union limit, the economic institutes said in a half-yearly forecast today.

That is the first official sounding report I've come across that is even remotely reasonable. It will probably be worse than that, yes, but at least it isn't the usual rainbows and unicorns. Sadly, they had to go and blow it with their recommended countermeasure:

The forecasters urged the European Central Bank to lower its benchmark rate to 0.5 percent from 1.25 percent and prodded Merkel’s government to focus on helping banks clear toxic assets from their balance sheets.

Yeah, that should do it. But I guess that since the central bank has a printing press, ergo the problem must be...

Economic Ignorance at the IMF

Came across this today and couldn't help but roll my eyes:

WASHINGTON (Reuters) - The International Monetary Fund on Wednesday slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession.

In its latest World Economic Outlook, the IMF said the global economy would likely contract 1.3 percent this year in the deepest post-World War Two recession by far.

Growth is set to re-emerge at a sluggish 1.9 percent next year but the pick-up depends on aggressive measures to repair a poorly functioning financial system. "The longer this goes on, the longer and the deeper will be the recession," IMF chief economist Olivier Blanchard told a news conference.

Just three months ago, the IMF had projected global growth of 0.5 percent, although last month it warned of a deep recession.

The sentence that really hacked me off occurs a few lines later:

In offering new economic projections, the IMF said government measures to battle recession should be sustained, if not increased, in 2010, warning that premature withdrawal of stimulus could set back a recovery.

So, the IMF admits that its economic projections were completely wrong, not even close, in fact, then tells us that if we do not follow its prescribed actions, we are in for an even rougher ride. Why should we believe them? It wasn't long ago that the IMF was predicting 2.2 percent growth for 2009. Last November, in fact. That's a pretty big revision in only about six months Just in case you haven't figured it out yet: you probably shouldn't listen to the bureaucrats at the IMF, and pretty much all other such bodies, because they do not understand economics and have no idea what they are talking about. Either that, or they are deliberately lying for some ulterior motive. I'm beginning to suspect the latter, as it occurs to me that no sane person working for that place could possibly think that their economic models were correct at this point. If they were actually trying to do economics at that place, I'd have never guessed. Note that it is not even a debatable point whether or not "stimulus" is effective in "reviving" the economy. No, any point of view which questions the proposition that government action is necessary or even effectual, let alone ethical, in bringing about economic recovery is not even considered. It is not that it is suppressed; it is not that it is questioned. It is not even mentioned. Unless he is already quite astute and given to such questioning, such a train of thought escapes the casual reader. The thought never occurs to him. That's how the conspiracy works, boys and girls. Soon, the thought will have been erased from existence. The government gets control, because, well, that's just the way it works, after all. A good economy is the result of government policy, and if things go wrong, the government has to step in and fix things. Everybody knows that. Well, maybe not yet. But, if all goes according to plan, someday soon they will...

Chinese Eggplant

Let me let you in on a little known culinary secret. The Chinese are simply the best eggplant cooks on the face of the earth. The Italians are the only other major eggplant enthusiasts of which I am aware, and as much as I fancy Italian food, the Italians have nothing on the Chinese when it comes to cooking eggplant dishes. In fact, I hated eggplant and would not eat it until my wife cooked it for me for the first time. Now I'm an addict. Yet the eggplant dishes I have had in Chinese restaurants here in the states have been only so-so; the very best I have had has been cooked by my wife and father-in-law, followed closely by a dish I had once in Beijing. Part of their secret is that the Chinese variety of the plant is quite different from the Western strain. It is elongate and much thinner, with a softer, more tender skin and a lighter, more subtle flavor. In point of fact, Chinese eggplant is in every respect superior to the Western variety, with the possible caveat that it is so tender that it does not hold up well to the heavy cooking usually required to render eggplant edible, and tends to decompose into mush. The fact that the Western variety is still in cultivation baffles me. I regard it as further evidence of the sorry state of man's collective intellect. I'm really not the food enthusiast, but as my wife is pregnant and my in-laws recently departed, I'm now forced to take on the role of the family chef. It is a sad, sad state of things. But I'm soldiering on, and I thought I'd share with you a bizarre hybrid Italian/Chinese recipe that I've concocted in order to conveniently incorporate Chinese eggplant into my diet as often as I'd like. WARNING: Not being a food enthusiast, I am a lousy cook, as the astute observer will quickly surmise. Attempting to follow this recipe is a high risk proposition. I'm lousy at estimation and my culinary judgement is questionable. All units are non-standard, relative, and/or completely arbitrary. That is to say, they are not to be taken seriously. If you think something is way out of line, try it your way. You are probably right. Success may necessitate professional help. Ingredients: 5-6 Chinese eggplant thingys .25-.33 cup olive oil 1-1.5 tablespoons minced garlic .25-.5 cup Chinese cooking wine .33-.5 cup soy sauce 1 capful Chinkiang vinegar (black) 3-4 tablespoons flour or cornstarch 2-4 teaspoons salt .5-1 cup water Penne pasta Serves 3-5 Cook the penne pasta as usual. Place the olive oil in a large pan. What kind of pan? I don't know; they're all pans to me. Like you'd fry an egg in, but pick a big one. Cut the tops off the eggplant and cut them into 5 even cylindrical sections. Split the sections in half (like you'd split a log) and further split down the halves until you have about 10-12 sections from each original cylinder. They should be shaped like ~3 inch pizza-slice prisms. Start frying the garlic, then add your eggplant. Use medium heat, and cover the pan. Stir it up and scrape the bottom every so often with a spatula. Cook it for a long, long time. The eggplant will get very soft. Keep cooking. It will turn mushy and brown. Keep cooking. If you aren't quite sure you've gone long enough, keep cooking. Eventually, you'll have to turn down the heat to keep the eggplant from sticking. Add the flour. Try to brown it, like you're making a roux. It'll probably all stick to the eggplant and disappear. That's okay too. A real cook would know if it was better to do this at the beginning of the recipe. Unfortunately, I'm not a real cook, so I do it near the end just because that's how I've always done it. Add all the other stuff, except the water. I usually add wine first. What kind of wine? I don't know. It is cooking wine, some kind of shade between red and brown, and the label is in Chinese, so your guess is as good as mine. If you're a real cook who's better than I am, and if I were a betting man I'd bet my life savings that you are, you've probably got a better idea than I do. Use your own judgement. What the heck is chinkiang vinegar? I don't know, but it is great stuff. Unfortunately, this is the one ingredient that you pretty much have to get at a dedicated Chinese grocery store. I would guess that balsamic vinegar might substitute, but that is only a guess. Don't hold me to it. It is made with fermented soybeans and gives everything a kind of smoky flavor. You'll be tempted to use a lot of it after you've had a few dishes with it; don't! It is very, very strong. Just use a little. Make sure you taste before you add more. Taste it and see if it needs something. If it is not salty enough and tastes too strongly of eggplant, you probably need some more soy sauce. Anyway, if you cook at all your judgement is better than mine. At this point, it'll be a bit on the dry, oily side. Add enough water to turn it into a sauce. Hopefully your roux will give it some thickness if you give it a stir. Give it a final taste and add whatever it needs, then serve over your pasta. Do you have to use Penne pasta? You can do pretty much whatever you please. I prefer penne pasta because it lends itself well to rapid ingestions, leaving time more time for blogging. I do not like fighting with a tangled mat of noodles, but maybe you do. This recipe is still in the experimental stages and could probably use some help from someone who knows what they are doing. Parmesan cheese might be useful; maybe some other spices. I'm open to suggestions. If you are crazy enough to try it, and come up with an improvement (better units would be nice...) send me a line and let me know.

Gerard Jackson: It's NOT a Conspiracy

Gerard Jackson has opined that it is stupid to believe that recent financial shenanigans are the result of conspiracy:

Every economic bust demands scapegoats. And you can always bet your bottom dollar that politicians and journalists will be the ones leading the mob. (One need only recall the Democrats' recent efforts at whipping up hatred against bankers for confirmation of this dismal fact). But all said and done, you can never beat a good conspiracy story. And that is basically what Simon Johnson has given us. According to this brilliant student of economic history America is facing

elite business interests -- financiers, in the case of the U.S. -- played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them. (The Quiet Coup, The Atlantic, May 2009).

These sinister business interests have now formed a "financial oligarchy" whose political balance of power . . . gives the financial sector a veto over public policy". (And some of my readers still wonder why I am so contemptuous of journalists). Like the vast majority of his colleagues Johnson is completely ignorant of economic matters and of anything pertaining to the history of economic thought and economic history. (With respect to the latter the same can be said of the vast majority of economists and economic commentators).

Gerard Jackson is indeed much more highly informed than most anybody with regards to the intricate workings of economics and Austrian economic theory. I don't think I have ever encountered anyone with as detailed a knowledge of the economic literature, and an apparently near photographic memory as he is able to pull up volumes of apt quotations from all sorts of sources for each of his regularly appearing articles. (Gary North might give him a run for his money in this regard, though.) That being said, I think he is wrong to dismiss conspiracy as the source of our problems. It is perfectly true, as he points out, that the Fed and other central banks of the world are the engineers of the monetary inflation that allowed things to go so completely hog-wild. I do not argue one bit with his model of boom-and-bust. But that hardly explains the present stream of selective bailouts. And it hardly explains why central banking and its incurable penchant for inflation exists in the first place. I do not claim to have special knowledge of the inner workings of any supposed oligarchy. But I do know a few facts about basic economics that would lead me to believe that it is virtually certain that conspiracies of the sort to which Simon Johnson alludes must really exist. Namely, individual economic actors tend to undertake behavior which furthers each individual's own self-interest. That is probably the quintessential economic axiom. It is roundly acknowledged by all parties involved without the slightest bit of controversy that inflation results in the net transfer of wealth from one party to another, and further it is clear that the source of inflation is the world's central banks. It is therefore hard to imagine that the main beneficiaries of said inflation, which are primarily the governments and credit institutions of the world, would not seek to exert an inflationary bias towards central banking policy. Yes, I am fully aware of the fact that Austrian economic theory is far from mainstream. But I find it hard to believe that the parties involved are completely unaware that monetary inflation is to their benefit, and are further completely unable to see the dishonesty inherent in government's expansion of the money supply. Furthermore, as Gerard Jackson and every other Austrian economist well knows, central banks are entirely unnecessary to a functioning economy. A healthy economy needs no direction or monetary management. It just needs a functioning money system, preferably a commodity money, which is not an artificial construct but a natural product of human endeavor and needs no body for its creation. Throw in a reasonable degree of rule of law, and that's it; the rest takes care of itself. There really is no reason for a central bank to exist, except to exert influence on the economy. Influence? This seminal fact begs the question: to what end? Why should a healthy economy need influencing? To somehow improve upon reality, for the good of all, we are asked to believe? Hardly. As Adam Smith has said in one of his most famous quotations (and which I find myself using all too frequently):

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

I can't imagine any population which spends more time in meetings and discussions of their collective action than politicians. And if you think that their activities are not undertaken primarily for their own individual self-gain, unlike businessmen who are only in it for profit, you are hopelessly naive. The Chinese conspire against the West and their own population, attempting to use mercantilism to enrich themselves above and beyond their own industrial and manufacturing competitiveness. The Fed conspires against holders of dollars in an attempt to direct the economy to politicians' desired ends and reward client banks. Voting blocs conspire with politicians and against one another, trying to get the biggest share of government-seized booty. The entire world is wrapped up in a conspiracy of all against all and all against God, each actor seeking to have his way through guile or force instead of through voluntary transaction and the normal course of events subject to the non-arbitrary and unchanging laws of the universe. Everyone knows that there will be big, big losers as a result of the implosion of the credit bubble, which is to say, as a natural result of the misallocation of resources caused by the FED's monetary expansion over the last 30 years or so. Everyone knows that during the inflation of the bubble the FED created big winners who were about to become big losers as a result of its tightening. Everyone knows that the entire purpose of the bailout is to ensure that the government gets to decide who it will foist the losses onto. There is no reason for the government to act except to decide who is going to shoulder the burden instead of letting the market decide, and to further the interests of those who have a say in the matter. This universal human tendency towards acting in self-interest is precisely the reason that monetary and economic systems should not be under the control of anyone at all. This is not lawlessness; it is placing these matters into the custody of natural laws which are always in force. If it were otherwise, logically, those in charge would be influenced by their own selfish goals and desires. Placing these matters under the custody of self-serving and dishonest politicians is to subject ourselves to the lawlessness of arbitrary and corrupt human whim, as we are now clearly seeing. It is to subject ourselves to the grandest conspiracies imaginable. To argue that politicians are hopelessly corrupt, which is to say, spend their professional lives neck deep in conspiracy, but that somehow central bankers are pristine little angels who shun such things strains all credulity. Are we to believe that it was all an honest mistake, simply because they happen subscribe to the wrong economic theories? Surely, they do subscribe to wrong economic theories, but I believe it is obvious that there must be more to it than that, particularly with regards to why they subscribe to their chosen theories in the face of countervailing facts. These people aren't stupid. Spilling a glass of iced-tea on oneself over dinner is an honest mistake. Printing money isn't. Taxpayer financed bailout isn't. Both are inherently, obviously dishonest. These activities create winners and losers. The deciders have motives. They aren't good ones.

Is China the Source of the Commodity Mini-Bottom?

I alluded a couple of weeks ago to what looks like a bottom and possibly a new rally having developed in the commodity markets, specifically oil. According to this article, it could be the result of strategic buying by China:

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can. "China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

If this is the case, and I have every reason to believe that it is, it might be the primary source of the mini-boom that we are seeing. And which appears to be petering out. Oil has fallen back below $50/ barrel a few times over the last few weeks. It is back over $50, but having shown technical weakness isn't likely to take off again precipitously any time soon. Unless, of course, there is a complete collapse of the dollar, in which case Katy bar the door. In reality, commodity booms, like all booms, are driven by currency devaluations. So we can expect that in the longer run commodities will take off again when the Great Devaluation of the 21st century takes hold. In the shorter run, China and others will eventually sate their dollar unwindings, and with the global economy in the depths of recession, we can expect commodity prices to begin another leg down provided the recovery is still some years away. Yes, China and others will lose money in the short term as their commodity hoards fall in value while the dollar putters along. But this is one small price to pay for a half century of rapacious mercantilism, among many others sure to crop up soon. And it is a far smaller loss than they would have taken had they stuck with their dollar hoard. It appears they also have an eye towards creating an out-and-out dollar replacement and on-world-currency:

Zhou Xiaochuan, the central bank governor, piqued the interest of metal buffs last month by calling for a world currency modelled on the "Bancor", floated by John Maynard Keynes at Bretton Woods in 1944.

The Bancor was to be anchored on 30 commodities - a broader base than the Gold Standard, which had caused so much grief in the 1930s. Mr Zhou said such a currency would prevent the sort of "credit-based" excess that has brought the global finance to its knees.

If his thoughts reflect Communist Party thinking, it would explain the bizarre moves in commodity markets over recent weeks. Copper prices have surged 49pc this year to $4,925 a tonne despite estimates by the CRU copper group that world demand will fall 15pc to 20pc this year as construction wilts.

Analysts say "short covering" by funds betting on price falls has played a role. But the jump is largely due to Chinese imports, which reached a record 329,000 tonnes in February, and a further 375,000 tonnes in March. Chinese industrial demand cannot explain this. China has been badly hit by global recession. Its exports - almost half GDP - fell 17pc in March.

Note that this is the exact interpretation I just gave, with a layer of conspiracy thrown in for good measure. But in any event, the moves are spurred by perceived future dollar weakness.

One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America's debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. "We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets," he said.

This is slightly disingenuous. China has the world's largest reserves - $1.95 trillion, mostly in dollars - because it has been holding down the yuan to boost exports. This mercantilist strategy has reached its limits.

Just like I said. But in light of recent events, it raises an interesting question: Does this make communist central banker Zhou Xiaochuan a right-wing extremist and potential terrorist threat? How about Ambrose Evans-Pritchard, the guy who wrote the article? I'm just asking. Where's Janet Napolitano when you need her?

Musings of an Extremist

As pretty much anyone with a pulse is aware, several "stories" have hit the news over the past few days which jangle right-leaning nerves. I have refrained from comment, trying to digest exactly what to make of them. Are they legitimate stories, or are they just bogus, trumped up non-events, red meat slung out to create a spectacle of snarling political lions? I still don't know. I don't like to wallow in the spectacle of the sordid circus that passes for our national government these days, mainly because it is just a circus, designed to absorb our energies and attentions. Attention is just what it seeks and only lends an air of legitimacy to the illegitimate, but I suppose it is time to comment. A document was released by the DHS concerning potential threats from "right-wing extremism." It discusses recent "developments" which apparently lead the leadership of the DHS to believe that the those on the right of the political spectrum pose a threat to the government of the United States. It lists several behaviors which it has observed as evidence of this phenomenon, such as:

Many rightwing extremist groups perceive recent gun control legislation as a threat to their right to bear arms and in response have increased weapons and ammunition stockpiling, as well as renewed participation in paramilitary training exercises.

I loved this gem:

Antigovernment conspiracy theories and “end times” prophecies could motivate extremist individuals and groups to stockpile food, ammunition, and weapons.

I know I'm guilty. This has received a LOT of commentary, most of it precisely what one would expect: hacked off right-wingers complaining that the government is conspiring against them. It doesn't help that the document treats perfectly reasonable, widely held opinions as terror-linked and with utter condescension. It also doesn't help that the document explicitly states that the government really is conspiring against them:

On the current front, legislation has been proposed this year requiring mandatory registration of all firearms in the United States. Similar legislation was introduced in 2008 in several states proposing mandatory tagging and registration of ammunition.

Basically, the gist of the document is to take We the People to task for responding in a perfectly logical and rational way to the changes we see occurring around us and to policies being considered and undertaken by Washington. For those who haven't noticed, this is all part of a pattern. The natural, rational response to a recession is saving. This is precisely the behavior that will cure a recession, but because it can't stand the thought of Americans saving and ending the recession on their own, government inflates the money supply to force us to stop. Government must be in charge! Likewise, it is now upset at other of our various efforts to wriggle out between the fingers of its iron fist. Heaven forbid we solve our problems on our own. Dependency is the goal here. The government must act to preempt us in our own problem solving capacity, or it ceases to be necessary for the continued survival of individual citizenry who might just be tempted to get rid of it. Or to have absolute coercive power. That too. I hasten to note that virtually every topic mentioned as indicative of terroristic tendencies is one that has been discussed here. What does it say to me? Primarily that the present political leadership of the US is composed of tactless, paranoid, ham-fisted morons, not unlike the tactless, paranoid, ham-fisted morons that were previously in office. Somebody must have made the mistake of accidentally writing down what she really thought and released it to the public. Stupid, but not much more. What did the right expect? Has there ever been a time that statists weren't afraid of those troublemaking freedom-mongers that are always ruining their plans? There really is nothing new to any of this. One would have to be pretty naive to think that the government doesn't read blogs and emails or notice dramatic shifts in buying habits. Do they really think that nobody is watching? Neither "privacy," nor "the law," nor the "inherent restraint" of government ever protected anybody. What protects us is our collective unwillingness to tolerate such actions. The source of the power we often perceive to be in "the law," as opposed to obvious external power Source of "The Law," is the commitment a civilization has to its authority, legitimacy, and sanctity. I have little doubt that this site and many others are being monitored. I have little doubt that powerful people want to silence those who disagree with them. That has ever been and always will be the case. The question is not and never was one of will, but ability. Functionally we have already lost many of our rights which have never actually been legally overturned, such as the right to gold and silver as the only legitimate forms of legal tender. We didn't push back hard enough against The Planners way back when, and lost these rights. I seriously doubt that anybody will be put away for expressing the ideas one might find on a site such as this one, not because of the First Amendment, but because of the widespread outrage I hear expressed on the airwaves right now. That is not to say that we will never lose our first or second amendment rights, just not in the immediate future. At least, unless there are quite a few government agents out there with an urgent deathwish. And I would have to say that the United States government is in very deep trouble indeed if it is afraid of a few folks polishing their guns, thinking outside the government drawn box, and complaining on the internet. This is really a statement of how pathetically detached from reality and weak-kneed and Obama camp, or at least those at the DHS, must be. Next, the not unrelated statements of Texas' own Ham-Fisted-Moron-In-Chief:

"I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state," the governor said in a statement. "That is why I am here to express my unwavering support for efforts all across our country to reaffirm states' rights affirmed by the Tenth Amendment to the U.S. Constitution."

What instigated this outburst? The Federal government offered $550 million in "stimulus" funds, with the stipulation that Texas change its policies in how unemployment payments are distributed. Rick Perry opted to refuse the funds rather than change Texas' policies. I actually agree with the sentiment, unfortunately, I must take the incident with a heavy dose of cynicism. I really wish I could believe that the governor of my state was actually advocating for limited government and looking out for my rights and freedoms, but I'm not buying it for a second. This isn't about freedom or "oppression," it is about which politician gets to do the oppressing. Perry is mad because the Feds are butting in on his turf. If Texas is to be oppressed, by golly, a Texan ought to be the one doing it! It is also about political opportunism, as Vox points out. Perry knows that he can look like a hero if he "stands up" to the Feds. He knows such a stance is politically popular with Texans, who are proud of their state's history as a one-time independent, sovereign nation. Almost every gun show I went to back home had a "Republic of Texas" booth set up. But if Perry actually cared about limited government and individual rights, he wouldn't have foisted a completely unnecessary vaccine on little Texans. So, Perry is getting no kudos from me. And since our government has virtually solved all its own domestic problems, it appears that it now has a mind to do the same for Mexico, at least according to Fred Reed:

WASHINGTON — As the Pentagon eyes a bigger role in Mexico's drug war, the military's efforts to open the door to a new relationship with its southern neighbor ….”

Book me a ticket to Mars. The Pentagon is eyeing something, a sure recipe for disaster. Previously it has eyed Vietnam, Laos, Cambodia, Somalia, Iraq, Afghanistan, Pakistan, and made a horrendous mess of each. Now the Five-Sided Sand Box is eyeing Mexico. Oh good. Let’s get involved in another third-world catastrophe by meddling in what we don’t understand...

In today’s complicated world, with the Asian giants rising and seeking raw materials, maybe we should pay more attention. Maybe sending the Marines isn’t the answer to every problem. Since World War II, the Pentagon has displayed a nearly solid record of failure in fighting either drugs or peasants with AKs. We do not need to blunder into new and better Afghanistans. We seem to want to, though, and it will bring more leftists to power. In the last election here, a truly nutball leftist (AMLO—Andres Manuel Lopez Obrador) came within a few chads of being president of Mexico. Hugo Chavez thrives on American hostility. We treat Cuba as an enemy and, sure enough, it acts like one. None of this is in the American national interest, boys and girls. It’s just brainless.

I don't know if war with Mexico is in the cards, but Fred is a fair sight better at reading between the lines than I am. If he suspects it, I suppose I should. I hope he is wrong. But if we do end up invading, as he says, it would certainly be a disaster. In addition to his litany of complaints, I would imagine that a sage like Sun Tzu might might have something to say on timing. If you have never read The Art of War, you really ought to, at least the first few pages. His primary concern with winning war, over troops, training, logistics, etc.: money. Economics. Too bad our leadership can't manage the first few pages of such difficult material. I mean, it's a book! I think a promotion is in order. Can a thousand year old corpse be granted a general's stars? We could use him right about now... One little bit I take exception with:

Nothing to it: You bomb the bad guys into submission, teach the people to be honest and democratic as America isn’t and never was and, bingo, a docile Reader’s Digest version of Switzerland pops into existence. Good luck.

I can accept that "America" has certainly never qualified for angelic status, and appears less likely ever to do so by the second. But I have to take exception to the implication that whatever success she may have experienced over others (at least, Mexico) has little or nothing to do with some nonexistent differential in virtue. Not that I necessarily consider democracy a virtue, mind you. I'm just saying... If we had the eyes of the Divine, I would imagine that on the curve of "civizilational virtue," with Heaven on the far upper end and the Seventh Circle of Hell down at the bottom, the nations of the world would most likely be huddled down near the lower bound. All of them. Winning the "Most Virtuous Government" prize is undoubtedly akin to gaining the title of "Most Fragrant Swine." Or maybe that is an insult to swine. At least, I wouldn't argue with overall thrust of such an analogy. But I think that this is a mistake of perspective. Surely, governments that attend to the affairs of nations are uniformly evil, attracting as they do politicians. But that doesn't mean that there are no differences between them or between nations at all. If we were to zoom in on that little cluster of our graph, perhaps a hundred, or a thousand, or a million times, I have little doubt that the commonly considered "successful" nations would begin to segregate away to the upper side of the bunch. We won't see this if we insist on taking the broadest possible view. This is the mistake of applying a linear perspective to what is likely an exponential scale. Much as it allows us to vent our rightfully felt indignation, it doesn't really work well for objectively capturing the essence of the phenomenon. In my opinion. But then again, maybe Fred subscribes to the smart fraction theory of economic causation. I note that the nations of the world cluster near the bottom of that rapidly rising curve as well. I suppose that a strict avoidance of excellence as a universal human tendency would tend to show up in theories that try to be correct. Lastly, I think that Michael Rozeff has the best overall take on the scene playing out before us, and he has good news:

The U.S. federal government is on a course of self-destruction. People of many political persuasions know this. People who are against coercive government know this. People who favor coercive government know this. People who do not mind if the federal government self-destructs know this, and people who want to save the federal government know this. From a scientific viewpoint, one of the interesting aspects of a government that is self-destructing is that the process cannot be stopped, even when people who want to stop it, try. Government based on coercion cannot be tamed. It keeps on running until the clock stops ticking and the bomb goes off.

Coercive government is terminal. Thanks Michael! After all this, I needed to hear that. There is an end! That's the best news I've heard all week!

Some Good News on the Cancer Front

I don't normally post much on science issues, but this one caught my eye:

An experimental treatment that takes an entirely new approach to fighting prostate cancer extended survival in a late-stage study, its maker announced Tuesday.

Seattle-based Dendreon Corp. said that its Provenge cancer vaccine improved overall survival when compared to a dummy treatment in a study of 512 men with advanced disease...

...Provenge is not like traditional vaccines that prevent disease. It's a so-called therapeutic vaccine that treats cancer by training the immune system to fight tumors. If approved, Provenge would be the first such treatment on the market.

This is the second major study in which Provenge has shown a survival benefit, leading some scientists to hope not just for its approval but for a new approach to fighting cancer beyond the surgery, radiation, hormones and chemotherapy used now.

"This is an exciting result, demonstrating that harnessing a patient's own immune system can successfully attack prostate cancer," said Dr. Eric Small, cancer specialist at the University of California at San Francisco. "Now we have more confidence that the initial results we saw were real."

In this humble blogger's opinion, manipulation of the human immune system is far and away the most promising avenue for research into the treatment of cancer. If there is ever going to be a "cure" for cancer, my money is 100% on this approach producing the result. The human immune system is simply amazing. It is incredibly flexible and powerful. And as people in the field of biology know full well, immune compromised patients become susceptible to cancers which are never or rarely observed in healthy patients. This would imply that, in at least these cases, the immune system can actually beat cancer on its own. In fact, it probably does it all the time without our noticing. If it didn't, we'd all contract these cancers. The logical question would be: why can't its repertoire be expanded? The trick is usually recognition of the offending tissues. The immune system works by identifying chemical shapes, usually the folded structure of a macromolecule, especially proteins, which are foreign to the body. This is true of bacterial infections, viral infections, and foreign objects lodged in the body, such as a splinter. It is also the source of complications arising from tissue transplants and blood transfusions, both of which the immune system recognize as foreign and begin to attack. The problem with cancer is that the tissue comes from the host itself. So, the proteins on the surface of these cells are pretty much the same as the host protein, and it becomes hard to distinguish the good tissues from the cancerous ones. Cancer vaccines work by helping the immune system "recognize" the cancerous tissue, just like regular vaccines help the immune system "recognize" an offensive pathogen by giving it a sample of weakened or dead pathogen. Of course, dead bacteria are easy, you just grow 'em up, kill them, and inject them in. The immune cells know exactly what to do. It's a bit more difficult with the cancer, because it is human tissue. What are you going to inject? You have to get a bit more creative in this case. Many methods have been developed, some of them quite ingenious. Once the immune system knows what it is looking for, it can go to work, swarming through the body looking for chemicals that match the signature of the one it has identified as bad. Sometimes it doesn't have enough "killing ability," and sometimes it can be fooled. The malaria pathogen is a good example of this phenomenon, which is the reason malaria is simultaneously so deadly and a vaccine against it has been so difficult to develop. But most of the time, if the immune system can figure out what it is looking for, it is a relentless, ruthless opponent. The odds of a malicious microbe beating it are slim. The approach has even been used in a moderately successful experimental treatement for Alzheimer's, targetting the proteinaceous plaques that destroy brain tissue. So, some good news from me for a change. At least on the cancer front, there is reason for hope!

Isaiah's Job

Gary North wrote a brief column today that provided a fantastic link to an older essay by one Albert Jay Nock titled "Isaiah's Job." A little googling gave me an older column by Gary North (from 2004) with a similar message called "Disciples, Followers, and Cheerleaders." Both are worth reading, if you are one of those folks straining to find a way of "doing something" about the present state of affairs, which seem to have become the overwhelming subject of this blog. From "Isaiah's Job":

In the year of Uzziah's death, the Lord commissioned the prophet to go out and warn the people of the wrath to come. "Tell them what a worthless lot they are." He said, "Tell them what is wrong, and why and what is going to happen unless they have a change of heart and straighten up. Don't mince matters. Make it clear that they are positively down to their last chance. Give it to them good and strong and keep on giving it to them. I suppose perhaps I ought to tell you," He added, "that it won't do any good. The official class and their intelligentsia will turn up their noses at you and the masses will not even listen. They will all keep on in their own ways until they carry everything down to destruction, and you will probably be lucky if you get out with your life." Isaiah had been very willing to take on the job -- in fact, he had asked for it -- but the prospect put a new face on the situation. It raised the obvious question: Why, if all that were so -- if the enterprise were to be a failure from the start -- was there any sense in starting it? "Ah," the Lord said, "you do not get the point. There is a Remnant there that you know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society; and meanwhile, your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it."

This is followed by an analysis of the Remnant vs. the masses, the perks and downsides of "embarking in the prophetical line" of work, and an argument that the Remnant could probably use a good prophet right about now. This piece was written in the 1930's, a most excellent parallel to today, although I think that there are quite a few more prophets serving the Remnant today than back then. And, as Gary points out, we now have the Internet! Gary's article is more about the basic structure of a "movement:" founders, disciples, followers, and cheerleaders, and their roles in making things happen:

Founders need disciples to extend their vision. Disciples need to recruit more disciples. They also need followers, who will cheer them on when the going gets tough, or when victory is in sight. There is therefore a role for the person in the stands who knows which team he is cheering for. At key times, his cheering may actually help the team, when combined with unorganized cheering of those in the stands on his side of the field. Movements need committed followers. As far as I can determine, nobody needs cheerleaders. It is nice to win the big game, but boola-boola has nothing to do with the victory. Neither does ziz, boom, bah.

So, what's a "concerned citizen" to do? Is there any hope? Not much in either case, it seems. The masses are implacable and disinterested, hellbent on self-immolation. And, sadly, the immolation of others in the process. They are totally incorrigible. And since they are pretty much unstoppable by us mere mortals, they will have their way. (Now there's a diagnosis that sounds familiar!) I would contrast this with Gary's own diagnosis in his little book on conspiracies. At least he seems to have had some hope left when he wrote that. Like so many of his other writings, "Disciples, Followers, and Cheerleaders" leaves me wondering just where I fit in to the grander scheme of things. Probably a cheerleader. I always was a ditz... But maybe I'll manage to funnel a few wandering Remnants towards better information in the process of making a spectacle of myself. Happy reading!

Eternity Road At It's Best

Fran Porretto links to a positively wonderful past essay from his Saturday post on the ascendancy of the Democrats to permanent leadership of these United States: The topic? The nature and terms of "political warfare:"

The most popular ideologies in the world today are the Western ideology of moral and cultural relativism -- Cthulhu's -- and the Eastern ideology of utter submission to a totalitarian god -- Allah's. The former delights in the self-destruction of the world by the incitement of the worst impulses of Man. The latter demands Man's increase, but under conditions so confining and unpleasant that death would be preferable. At present, the former has access to more temporal tools, but the speed at which the latter is multiplying suggests that it won't be long before its numbers allow it to swarm over all barricades erected against it. But in any case, if the West should continue its descent into moral and cultural relativism, it will disarm itself precisely as Islam rises to strike it dead.

Unlike my longtime avid consumption of all things Vox Day, and more recently Gary North, I have not been an avid reader of Fran's for all that long, having only just discovered him a few months ago. I haven't yet read much of his older postings, so I have found the passing juxtaposition of many of his ideas to be a bit puzzling, particularly his passion for the War on Terror coupled with a healthy case of state-o-phobia. No longer. In this essay, aptly titled "Dark gods," he lays out a specific worldview that pits Islam against the decadent self-immolation of Western "liberalism." I use the "sneer quotes," of course, to imply the lack of liberalism in the modern liberal, and usually prefer to call them leftists, though this too is a nearly useless misnomer. It's funny how the folks of that persuasion make such of masterful use of verbal Vaseline. At any rate, I can't possibly summarize it for you without doing irreparable damage to the essence of his arguments. It is long; I would read it anyway. I would also read the Saturday post, as well as the brief article he links to at The Return of Scipio. I cannot possibly say anything that these men have not said better. But I would like to add one thought: The sheer volume and intensity of talent, brilliance, and eloquence which can be found on display on sites such as these is simply breathtaking. That they are relegated to 2oth tier status, at best, in favor of folks like Lew Dobbs or Bill O'Reilly and the other folks on networks like CNN and FoxNews is positively shameful. Why does anybody waste time with anything else? Why aren't their words-of-wisdom more widely consumed? It's not that it is suppressed...it's just that nobody cares, and few agree with them. Like the pieces themselves, more sad commentary...

When Good News is Bad News

The G20 met today. Apparently there was a breakthrough agreement that sent global markets skywards. But before we celebrate, we would be wise to heed the words of Adam Smith:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Emphasis mine, of course, and it was never truer of any trade but the politicians. Is there any subject on which the politicians the world over could find unanimity but to expand their own powers and fleece the public? But I forget, it was the fleeced who sent them to the meeting, and will no doubt allow them to return without so much as a dirty look. Could we all not just agree to let them all stay there? I for one don't want my representatives back. At any rate, expect the "price of government" to get much, much higher. The reforms proposed were predictable:

G20 leaders from the largest developed and emerging economies ticked off a raft of actions on politically sensitive topics -- -- new rules on bonuses, publishing a blacklist of tax havens that could lead to sanctions, imposing oversight on large hedge funds and on credit rating agencies. The tax havens marked a victory for France and Germany.

Australian Prime Minister Kevin Rudd hailed the actions. "Today's agreement begins to crack down on the cowboys in financial markets that have brought global markets undone."

I love the quote:

"We've also rejected the protectionism that could deepen this crisis."

Imagine that: the world's political elite have agreed to band together in their attempt to foist international socialism on us, rather than succumbing to the temptation of devolving into rivalry by seeking to placate the desires of those they each supposedly represent. They must have realized that this is what messed them up last time around, and led to that whole Axis and Allies thing. They've decided to hold hands and take the path to fascism all together, rather than each by his own separate ways. It's neither going to be free trade nor protectionism, but trade managed by our beautiful, shiny, perfect politicians and their army of bureaucrats. Agreed to by everyone! Note that they trotted out the same old tripe: it's the fault of the cowboy capitalists and the free market, and it is regulation and bureaucracy that will save us. It doesn't matter that command economics are what caused the problem, and have always failed and always will; command economics is what is desired, and it is what we are going to get. And just in case you thought any of the propositions might make some sense:

Markets, desperate for good news when the global economy is shrinking for the first time since World War Two, reacted positively to imposing headline of $1.1 trillion that boosts financing through the International Monetary Fund and for trade. Much will be directed to emerging markets increasingly sucked into the global economic turmoil. Its size was unexpected.

Because as we all know, all the other billions that have been lent to the third world have had such tremendous effect at lifting them out of poverty that they are still third world! And since the developed world's balance sheet is brimming with cash flow right now just begging to be lent out, why the heck not? The problem here is that there simply isn't yet enough debt. We've now flushed trillions down the tubes of the mortgage and equity markets, so naturally the solution is to flush more down third world toilets. I sure wish I was a third world dictator right now. I'd get the benefit of a low interest rate loan right before mass inflation. So, just in case I actually decided to pay it back (hey, this is a hypothetical question after all), it would be inflated dollars! But I suppose that since the Swiss will be out of business, I'd have to find another way to squirrel away the proffered funds:

Addressing a key demand from France and Germany, Brown said the leaders agreed "there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end."

I guess you can't have it all.

Speaking of funds:

The new funds available through International Monetary Fund and other institutions included $250 billion of IMF reserve units called Special Drawing Rights. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds, of which $40 billion would come from China -- a significant step for the world's third largest economy.

Much of that is likely to go to struggling poorer countries, notably in eastern Europe.

Translation: Western Europe has lent Central Europe fantastic amounts of money that it can't pay back. If the world's taxpayers don't bail them out, European elites stand to lose a lot of money. We simply can't have that. And in case you think I am exaggerating:

"Since Bretton Woods, the world has been living on a financial model, the Anglo-Saxon model -- it's not my place to criticize it, it has its advantages -- clearly, today, a page has been turned," France's Sarkozy said, referring to the landmark conference that created the post-war economic order.

...and the crooked dollar exchange standard that made the US dollar the world's reserve currency that is now coming undone thanks to the same crooks that set the system up so they could milk it dry in the first place. G20 to the world: We hate freedom! We hate British liberalism, and we're going to pretend that's what Bretton Woods represented. The days of British liberalism and its contributions to mankind are over. We've drugged it up, watered it down, beaten it up, regulated it into its very antithesis, blamed it for all the ills of the world, and now we are going to slaughter it for all time! Now it's our turn, and it's going to be Continental fascism for everyone!

When Bad News is Good News

Several bits of economic data came in today, all of it bad. ADP (not the official Labor Department report, which usually follows the ADP report on Friday) estimates that 742,000 jobs were lost in March, which is a very big number, and the ISM's Manufacturing Index came index came in at 36.3, which is positively dreadful. Anything below 50 is indicative of contraction. Yet the DOW rose 152 points on the day. Supposedly, it is because that 36.3 was not as bad as forecast. I'm not buying it. The market has a mind of its own day-to-day, and you can't read too much into things like this. If you get obsessed with every moment to moment movement, you'll lose your mind. A couple of intermediate term trends are bothering me right now, one of which was hinted in this particular article:

Further increases look likely in the months ahead because of TALF and PPIP, and because the American Recovery & Reinvestment Act will inject roughly $100 billion into the U.S. economy in the current quarter.

In other words, various government "stimuli" are temporarily boosting economic "activity," which is certainly not the same thing as economic growth, just in case you were getting hopeful. Better nip that one in the bud. If you did the read-along on America's Great Depression over at Voxiversity, you'll recognize this sort of behavior. Early on in the Great Depression several industries, particularly agriculture, were the beneficiaries of heavy government interventionism attempting to achieve price support. It worked for a little while, at heavy taxpayer expense, but then petered out as the forces of the free market overwhelmed pathetic governmental attempts to defy economic reality. Back when I was reading the book, I remarked that this time around doesn't look all that much like the Great Depression. At this point I would have to take that back; it's just that the beneficiaries have changed slightly. Government is still doing the same things, some at a much greater scale and far earlier in the downturn. Back then, it was simply unconscionable to cut wages. This time, it is unconscionable to let housing prices fall. But the economic contortionism looks very similar. This appearance of price support is the trend that is bothering me. Several key markets are looking as if they have bottomed, commodities in particular as I remarked about on oil a few days ago. Is this real, or a last gasp due to government spending initiatives before the final leg down and we hit true bottom? I'm not sure. This matters (at least to me) because I would like to be in commodities for the long-haul. The government printing presses are at full tilt, and the liquidation of malinvestment caused by the previous inflation has not been allowed to occur. Therefore, neither has the reallocation of capital necessary for sustained growth. This means that when the inflationary rubber hits the road, the money will not flow where our government handlers are expecting it to flow, which is to say that it will not reward America's present capital allocation. It will likely simply drive up commodity prices again. Which is to say, it will flow to Russia and the Middle East, not to Wall Street. And it will flow into the forex markets, where it will find fewer willing buyers than last time around. The G20 is meeting. Their mission, though they'll never say it, is to keep the lie alive, the lie being that the US dollar is worth something. The US dollar is the world's reserve currency. If the US dollar is worth something, then factories in Asia can keep selling to the US in exchange for Treasury debt, and Middle Eastern and Russian oil producers can keep shipping their oil here, and Americans can keep printing dollars to buy more expensive houses and SUV's and everybody can consider himself rich. If the lie is revealed and the dollar isn't worth anything, then we've all been duped, everybody is poor, and we will all have to find a new racket. The truth simply must be supressed awhile longer. The lie is just too good. The conspiracy has more plans for it. A racket that good isn't easy to come by, and can't be given up easily. That's your economics report from me tonight. Scott out.