"Looking at the world as a whole, the drift for many decades has been not towards anarchy but towards the reimposition of slavery. We may be heading not for general breakdown but for an epoch as horribly stable as the slave empires of antiquity... Few people have yet considered the kind of world-view, the kind of beliefs, and the social structure that would probably prevail in a state which was at once unconquerable and in a permanent state of cold war with its neighbors."
George Orwell, You and the Atomic Bomb, Tribune, October 19, 1945
"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.
The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.
And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.
The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.
Jesse, What Is a Credibility Trap, 18 September 2013
“There is a lack of critical assessment of the past. But you have to understand that the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach to the past.”
Ryszard Kapuściński, Writing About Suffering, Journal of the International Institute, Fall 1998
"What is truth? said jesting Pilate, and would not stay for an answer."
Francis Bacon, Of Truth, 1597
We had steep declines in the major stock indices today, taking back a small chunk of their recent outsized gains.
The Dollar gave up a similar piece of its recent gains from a fairly lofty valuation.
Gold and silver rallied sharply, breaking out of their recent price range.
But what was most remarkable about this day was the complete lack of a sense of risk involved in all this.
The VIX barely moved.
The broader index in the small cap Russell 2000 did not correct.
So let's just call this a rinse, following a thorough wash, following a benign CPI number.
PPI tomorrow.
Our political situation would be funny if it were happening somewhere else.
We get so caught up in it because if we step back and look at what we are doing it would be almost unbearable.
To paraphrase the American author James Baldwin, one of the reasons people cling to their hates so stubbornly is because they sense, once hate is gone, they will be forced to deal with the truth.
And so we legislate absurdities, and fawn on those who prophesy illusions.
The fire next time.
Have a pleasant evening.
