A Plea for Civility

"When once the forms of civility are violated, there remains little hope of return to kindness or decency."

Samuel Johnson


"As citizens we have to be more thoughtful and more educated and more informed. I turn on the TV and I see these grown people screaming at each other, and I think, well, if we don't get our civility back we're in trouble."

Emmylou Harris


“Civility means a great deal more than just being nice to one another. It is complex and encompasses learning how to connect successfully and live well with others, developing thoughtfulness, and fostering effective self-expression and communication. Civility includes courtesy, politeness, mutual respect, fairness, good manners...”

Pier Massimo Forni

I recall having cautioned you all that we have entered a period of hysteria several times. I saw this phase coming years ago. And here we are.

1.Exaggerated or uncontrollable emotion or excitement.

2.A psychological disorder whose symptoms include conversion of psychological stress into physical symptoms, selective amnesia, susceptibility to autosuggestion.

At other times I have referred to what follows from hysteria as 'the madness.' That is when hysteria is driven into action, sometimes by those who would seek to use that madness for their own ends. And as you recall I often say, 'the madness serves none but itself.'

I have read some things today on the web from fellow bloggers that were utterly 'over the top.' I am not talking about those sites that seek to whip up hysteria in order to provide them a following and 'clicks' for pay because that is to foolishly expect the unexpected, that is, civility from sites that serve their own ends, often political but always commercial.

There are professional people who make a living doing this on television.  Ann Coulter and Rush Limbaugh come to mind.  Most of the others are legitimate shock comedians and their humour is dark, but sometimes rather funny.  But these others are just vile people pandering to what is most ugly in the human condition.

The bloggers I follow are people from whom I would expect better, because I can tell from their writing that they are informed, most often sincere and intelligent.   And I am disappointed.

I think that saying to one of the mothers of a child that was killed at Newtown that they are an "incompetent and defective sack of meat -- your son is dead because you are unfit to be parents" because they have spoken out in favor of gun control laws to be completely over the top and inexcusable,  even by today's remarkably low standards.

And although it ought not to matter, I happen to be a long time gun owner, and have participated in regional matches, albeit in my younger years.  And my son carries on in this. I don't speak of this much because it is not relevant to what I do intend to talk about.  And I am in favor of background checks and licenses for things that can pose a danger to other people in their use, like airplanes, automobiles, and firearms.

And although I know that markets are made up of differences of opinion, remarking on the fairly heavy handed bear raid on the precious metals sector by saying "Where the fuck is your Gold Messiah now?" is a bit much.   I mean, really. This is analysis?

I can look at the record and see how and where the selling came from as well as these others. And the rest of what follows is about as insubstantial and based on mere opinion rather than anything approaching analysis. I found the sneering takedown of those who are following a long term strategy to be particularly obtuse. Are we all not supposed to be day traders now? 

I think the system as we knew it is changing. And the lack of reform in the financial markets is going to break the confidence of the public.  And those who make their living off the markets may give some mind to speaking out for reform, or learn a useful trade doing something else. Not everyone remembers what the 1970s were like for trading, but some do.

I won't even respond further, because I only do so with public figures speaking out in favor of policy. And sometimes I do use humour and satire. That is what I do. That is what it is called when the weaker party like myself takes on the more powerful. When the more powerful figure takes on the weak the same way, it is just bad manners and bullying. This is why I get so incensed sometimes at the way in which powerful figures beat up the little guys, even while they are taking advantage of them.

I am even breaking a long standing tradition by commenting directly on what other bloggers say. Things are tough enough without those who are operating outside the mainstream fighting amonst themselves, and I probably won't do it again.  That is how formidable I think things are going to be.

I know that people who speak out for and against some thing get abused sometimes by those who hold the other side of the opinion. I get it. And since I happen to be a center progressive I get it a lot, and sometimes from both sides at the same time! For me that is why spam filters exist, and why I do not take the time to monitor comments on my site, preferring to take them privately instead and use what is factual and ignore what is not. Lashing out at those who attack you with ridicule and viciousness merely takes you down to their level where they will beat you with the energy of excessiveness.

I think there is a lot of fear and uncertainty out there. And it is going to get worse. And in such a time it is even more important to stick to the facts, maintain your composure, keep a cap on the rhetorical flourishes and excesses, and remember that if you do not know what will happen, that the other guy might be right as well. Age has taught me that those who see things in pure black and white are often just color blind and nearsighted.

It is those who can proceed calmly and with serenity who will pass through this period relatively well, and even if they do suffer some unavoidable misfortune, they can do so without regret.

"So let us begin anew, remembering on both sides that civility is not a sign of weakness, and sincerity is always subject to proof."

John F. Kennedy

And if you wish you can aspire to something even higher,  probably not fully achievable as a goal based on my own experience, but worthy of an attempt as a way of life.

“People are often unreasonable and self-centered. Forgive them anyway.
If you are kind, people may accuse you of ulterior motives. Be kind anyway.
If you are honest, people may cheat you. Be honest anyway.
If you find happiness, people may be jealous. Be happy anyway.
The good you do today may be forgotten tomorrow. Do good anyway.
Give the world the best you have and it may never be enough. Give your best anyway.
For you see, in the end, it is between you and God. It was never between you and them anyway.”

Mother Teresa

GDP Deflator at a Five Decades Low While Income Inequality Is at Record Highs

From this chart sent out this morning by David Rosenberg, we can see that the GDP deflator is at a five decades low.

I tend to believe that the modifications to the inflation measures, including the deflator, that have accumulated by the federal bureaucracy over the past ten years are greatly understating the actual inflation in the economy.

There are very positive benefits for the government to do this. The lower the deflator, the better and higher the real GDP figures will appear. And a low measure of official inflation reduces increases in payments in Social Security and other programs with Cost of Living Adjustments (COLA), including official debt payments on the bonds and the TIPS.



Gold gives the lie to this, which is why it is so hated by financial engineers and statists.

On the other hand, the inequality of income distribution in the US is at level not seen since the 1920's.



There is some good reason to think that government tax and fiscal policies, as well as the monopolistic makeup and subsidized growth of the Banking sector facilitates this wealth transfer and concentration, which has a highly negative impact on real economic growth.

There will be a change, and the trends will be reversed. How they are reversed and what changes will accompany those reversals are very much open to debate, and divergent historical examples. But these changes almost invariably involve a shift from individualism to statism.

"Those who make peaceful revolution impossible make violent revolution inevitable."

John F. Kennedy

Change will come if the system remains as unsustainable as it is now. And what gives me a somewhat pessimistic view is that people never seem to learn the lessons of history.

Times Square NYC Evacuated as Failed Car Bomb Discovered

American News sources are reporting that an abandoned automobile left in Times Square at 7th Ave. and West 44th St. has been discovered to have false license plates, and to contain propane tanks, gasoline, burned wiring, and black powder.

Witnesses report a flash from the back of a Nissan SUV, and smoke coming from the back of the vehicle. Police originally responded to reports of a car fire.

Car Bomb Scares Times Square - Washington Post

Breaking News - Times Square Evacuated- NY Times Online....

Ohio Judge Tells Residents to 'Arm Themselves'

When asked what advice he would give to residents of Ashtabula County Ohio because of cutbacks in official law enforcement budgets, Judge Alfred Mackey said they should:

"arm themselves. Be very careful, be vigilant, get in touch with your neighbors, because we're going to have to look after each other."

WKYC
Ashtabula County Judge Tells Ohio Residents to "Arm themselves"
April 9, 2010

JEFFERSON -- In the ongoing financial crisis in Ashtabula County, the Sheriff's Department has been cut from 112 to 49 deputies. With deputies assigned to transport prisoners, serve warrants and other duties, only one patrol car is assigned to patrol the entire county of 720 square miles.

"I did the best with what they (the county commissioners) gave me. If it wasn't enough, don't blame me, don't blame this department," said Sheriff Billy Johnson.

Johnson said he is suing the commissioners to get a determination of whether he should use his limited budget to carry out obligations defined by law or put more patrol cars on the streets.

"I just can't do it anymore," he said. "I have to have the court explain to the commissioners and to me what my statutory duties are."

The Ashtabula County Jail has confined as many as 140 prisoners. It now houses only 30 because of reductions in the staff of corrections officers.

All told, 700 accused criminals are on a waiting list to serve time in the jail.

Are there dangerous people free among the 700 who cannot be locked up?

"There probably are," Sheriff Johnson said, "but I'm telling you, any known violent criminal, we're housing them. We've got murderers in there."

Ashtabula County is the largest county in Ohio by land area.

Ashtabula County Common Pleas Judge Alfred Mackey was asked what residents should do to protect themselves and their families with the severe cutback in law enforcement.

"Arm themselves," the judge said. "Be very careful, be vigilant, get in touch with your neighbors, because we're going to have to look after each other."

Ashtabula County gun dealers and firearms instructors tell WKYC their business has really picked up since the Sheriff's Department cutbacks began some months ago.

"That's exactly why they are coming, so that they can protect themselves," says Tracy Williams, a certified firearms instructor in Jefferson. "They don't feel that they are protected. They want to be able to protect themselves."

Williams says interest in his classes has doubled recently, and many of those coming are people who he would not normally expect to have interest in obtaining a concealed carry permit.

"And as far as him (Judge Mackey) telling you to arm yourselves and protect yourselves, you don't have any other option," Williams told WKYC. "We don't have the law enforcement out here to handle it right now..."

The US Dollar Rally Will End in a Crisis of Confidence

The constraint on the monetization being done by the Fed and Treasury is the value and acceptibility of the US dollar and bonds.

Export dependent countries should begin to prepare for a collapse in the US import markets. We expect this to happen earlier than 2010.

The invisible hand of the market moves slowly, but inexorably.

We expect this crisis in the US will resemble the crises in Argentina and Russia rather than Japan. The pain will be distributed heavily to those countries dependent on US dollar debt and consumer markets.

Nassim Taleb likes the protection of gold and copper. We prefer gold and silver, as it will be more difficult to increase its supply in the short term.

There will be serious discussion with regard to the annexation of Canada and Mexico into a North American government as the crisis worsens. Mexico should adopt a silver monetary standard and Canada must find its own economic independence again as it did in the Great Depression.

There is a strong likelihood that Obama will be a one term president at most unless he acts quickly to reform the growing corruption in the Democratic Party and within his own Administration.

Dollar Rally Will End, Rogers Says; May Short Stocks
By Chen Shiyin and Haslinda Amin

May 12 (Bloomberg) -- The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after nine weeks of gains.

The advance in the U.S. currency has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.

“We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers said. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”

The dollar has climbed against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3592 per euro today from $1.3582.

Rogers joins “Black Swan” author Nassim Nicholas Taleb in avoiding the U.S. currency. Taleb told a May 7 conference in Singapore he preferred gold and copper to the dollar and the euro as the global economy faces a “big deflation.”

Gains in U.S. stocks also signal a “correction,” Rogers said. He’s avoiding equities for the next two to three years because prospects haven’t changed, he added.

Disclosure: Jesse is long gold and silver.

Economist Niall Ferguson on the Financial Crisis: "There Will Be Blood"

"The way to make money is to buy when blood is running in the streets."
John D. Rockefeller

Here are excerpts of a lengthy interview with the noted economist Niall Ferguson. The entire interview can be read at the link provided to The Globe and Mail where it appeared.

Niall Ferguson, MA, D.Phil., is Laurence A. Tisch Professor of History at Harvard University and William Ziegler Professor of Business Administration at Harvard Business School. He is also a Senior Research Fellow at Jesus College, Oxford University, and a Senior Fellow at the Hoover Institution, Stanford University.

Who can truly say what will happen? After all, life is a school of probability. But if the trends of hubris and reckless disregard for justice continue we may very well have an opportunity to test John D. Rockefeller's investment advice.

The Globe and Mail
'There will be blood'
By Heather Scoffield
February 23, 2009 at 6:45 PM EST

...Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same.

"There will be blood."

...And much of today's mess is the fault of central bankers who targeted consumer-price inflation but purposefully turned a blind eye to asset inflation. (The emphasis is not only purposely, but willfully so - Jesse)

....Partly because they can throw so much at it, and they can do it at a lower cost than anybody else, because the U.S. retains the safe-haven status, which makes the world so unfair. Here is the world's biggest economy, which gave us subprime mortgages, rampant securitization, the collateralized debt obligation, Lehmann Brothers, Merrill Lynch. It is, in a sense, the fons et origo of this crisis. And yet, because it retains safe-haven status, in a global crisis, investors want to increase their exposure to the U.S. Hence, the dollar rally. Hence 10-year Treasuries down below 3 per cent yields. It's almost paradoxical that an American crisis ... reinforces the status of the United States as a safe haven.

...As you know, Chimerica – the fusion of China and America – is one of my big ideas. It's really the key to how the global financial system works, and has been now for about a decade. At the end of The Ascent of Money, I speculate about whether or not that relationship will survive. If it breaks down, then all bets are off, for the U.S. and indeed for Asia. I think that's really the key point. Both sides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it.”

... “There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable.

The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics. That seems a less certain outcome....

...It's just that I don't see it producing anything comparable with 1914 or 1939. It's kind of hard to envisage a world war. Even when most pessimistic, I struggle to see how that would work, because the U.S., for all its difficulties in the financial world, is so overwhelmingly dominant in the military world.”

....“It's obvious, surely we know by now, that this is something quite different. It's a crisis of excessive debt, the deleveraging process has barely begun, the U.S. consumers are not going to suddenly bounce back and hit the shopping malls just because they get a tax cut. The savings rate is going to continue to rise. These processes have tremendous momentum that quite clearly differentiates them from anything that we've seen, including the early 80s, including 73, 74, 75. Those big crises, the ones that we have lived through, were bad. But seems certain to be deeper, and more protracted.”

...“One possibility is that policy makers are lying in order to encourage people and prevent depression from become a self-fulfilling psychological conditions. That's why it's called a depression … Maybe they don't really believe this, but they're saying it in order to cheer people up, and if they're sufficiently consistent, perhaps people will start to believe it, and then it will magically happen.”

...“August, 2007, was when this crisis began. And if you were really watching the markets carefully, April is when it began, when the various hedge funds started to hemorrhage. The stock markets carried on until October of that year. And in many ways, consumer behaviour in the U.S. did not change until the third quarter of 2008. So there was a massive denial problem. It was like Wile E. Coyote running off a cliff, and they'd run off a cliff and they didn't look down so they didn't start falling. As soon as people realized it was bad, the behaviour switched. Now, people have to try to unscare them before this thing becomes a self-perpetuating downward spiral. I think that's why you have to say ‘growth will return in 2010' with your fingers crossed behind your back.”

...“We kind of have had a bubble in the sense that we've seen such a rally in U.S. government bonds. It's tempting to say that will burst and we'll see yields go back up. Because, you know, $2-trillion worth of debt is going to hit the market this year, maybe more. Supply is exploding just when demand is contracting. You don't need to be a Nobel laureate to see that that has to impact on the price. The difference is there is this thing called the Fed that can step in and start buying the stuff if the foreign demand fades. So it's not completely guaranteed that we'll see bonds sell off in price. (Yes but if the Fed starts overtly monetizing Treasury Debt the limiting factor will be the value of the dollar. It is a 'hinged' constraint, Bonds and Dollar - Jesse)

“There is still this inertia that prevents the dollar from falling off a cliff, that keeps the Treasury market from falling off a cliff. That's really important to bear in mind. I don't think we'll see a bubble distressed assets, because I think the price of these assets has started to fall. Anybody who comes into the market now is essentially paying a premium. There will be better bargains in the middle of this year, and maybe even better bargains later on. If I were in the market to buy distressed assets, I would wait, I would wait a bit longer until they're really desperate. And it might even be better to wait until they're bankrupt.”

...“In the Ascent of Money, I argue that you can't really have a bubble if you don't have a monetary authority that has been excessively generous. From John Law in 1719 to Alan Greenspan in the late 90s, there's always a banker, there's always a central banker making credit too readily available. The second thing is, though, that regulation may not prevent that.”

..."The two great zones of conflict in the 20th century were central and eastern Europe, and a critical part of northeast Asia – Manchuria, Korea. It makes me a little nervous that those are also places that are going to take a very heavy share of the pain. But we're looking at a Great Recession, not a Great Depression. We may be looking at a Lost Decade.

There was a time when if you said the United States was going to suffer a lost decade like Japan did in the 1990s, everybody would have said you were a mad pessimist. That begins to look like quite a good scenario. And I think it's a realistic scenario.

One of the facts is if you subtract mortgage equity withdrawal from the Bush years, the real underlying rate of growth of the U.S. economy was 1 per cent. So much of the consumption has been fuelled by mortgage equity withdrawal. So that seems like a reasonable growth rate for 10 years.

We just don't have an improvement of standard of living of the sort we're grown used to. And indeed if you have a more equitable redistribution through the tax system, which Obama is committed to, it might actually be no discernible downside for middle America and lower-class Americans. So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people. People just have to get over the fact that their wealth wasn't worth what they thought it was in 2006. Whether it's their stock market portfolio or their housing. If we simply go back to where we were, in 2005, that's surely not the worst thing that could happen to us.”

The United States of Ennui

Our friend at Some Assembly Required had an interesting reaction to the Wall Street Journal story about the Russian Professor who is predicting the breakup of the US into several independent groups of states:

"Some are predicting the USA will erupt and split in six or seven smaller nations. Nope, there is not enough gumption left in the US citizenry to mount a decent protest, much less massive separatists movements. More likely the US will simply thrash around a bit and then fade into irrelevance. Governments will be overthrown, in more places than you might suspect (think Europe). But the US populace will sit in front of the TV, waiting for someone to reward them with their god-given right to happiness and success."

We doubt that the US will become irrelevant for a long time, but it is hard to disagree with such a frank and insightful analysis of the American public. Our hallmark seems to be a deep and abiding boredom and self-absorption, a walking amnesia with an historical perspective measured in days, if not hours.

At times like these the Almighty will often send His people a wake-up call.