Stocks and Precious Metals Charts - Stormy Day in the Metaverse

 

"The market ideology is now the new form of imperial power and many of us, without any critical reflection, have signed onto that and organized our lives in that way so we do not have any time, energy or capacity for the things that are rightly important to us."

Walter Brueggemann

"The enormous gap between what US leaders do in the world and what Americans think their leaders are doing is one of the great propaganda accomplishments of the dominant political mythology."

Michael Parenti

"Congress and the Senate were empty pretenses, farces.  Public questions were gravely debated and passed upon according to the old forms, while in reality all that was done was to give the stamp of constitutional procedure to the mandates of the Oligarchy."

Jack London, The Iron Heel


"Psychopaths often come across as arrogant, shameless braggarts—self-assured, opinionated, domineering, and cocky. They love to have power and control over others and seem unable to believe that other people have valid opinions different from theirs. What makes psychopaths different from all others is the remarkable ease with which they lie, the pervasiveness of their deception, and the callousness with which they carry it out.

Wherever you find money, prestige and power you will find them.  We are far more likely to lose our life savings to an oily-tongued swindler than our lives to a steely-eyed killer."

Robert D. Hare, Without Conscience


Stocks were in rally mode, risk on this morning.

But alas, there appears to be a flaw in the bullish scenario.

Stocks reversed and gave up not only all of their morning gains, but fell out of bed, and went out on the lows.

We should not be watching where stocks go next, and if we set a lower low or not.

Gold and silver were monkey-hammered in the risk on exuberance this morning.

Gold managed to take back quite a bit of its early losses by the close of day.

Silver not so much.

The Dollar bounced a little higher on the flight to safety amid expectations of higher rates. 

What will they think of next?

Have a pleasant evening.

Moral Blindness Syndrome (MBS) - When Money and Confidence Dies It Will Be Televised

"It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud.

The behaviour that caused the mortgage bubble and financial crisis of 2008 was a natural outcome and continuation of this pattern, rather than some kind of economic accident."

Charles H. Ferguson

It is interesting to see the reaction that Michael Lewis has made with his new book, Flash Boys.

The furor is in large part over a quotable quote that is attributed to the book's major protagonist, 'the stock market is rigged.'

I am not going to get into the deficiencies of the book's moral argument, and the spin that is being put on this problem. It has finally become 'a problem' because the cheating that was going on started to visibly hurt the wrong people: the rich and well connected.

To that extent, it is quite similar to the market manipulation that was known as 'the London Whale' in which trading companies complained that JPM was dislocating the market, and screwing with their profit stream, with the company's antics.  Then the regulators got involved and shut it down.

I spoke to the shortcomings of the story's moral argument yesterday, 60 Minutes Sanitizes Its Report - What Banks, What Exchanges?

What is fascinating now is watching the reaction that people are exhibiting to the book and its assertion of market manipulation, with quite easily understood evidence in support of it I might add.

Yesterday there was an argument on one financial television show that literally stopped the Madame Tussauds wax museum-like trading on the floor of the NYSE. The reaction of the apologist for the status quo of systemic skimming, or front running as you prefer, was apoplectic with his reaction to this scheme being unmasked. It called to mind Victor Hugo's observation that 'frightened hypocrisy hastens to defend itself.'

(postscript:  with a few days the CEO apologist was persuaded by the New York Attorney General to retract his description of how his platform works, since it was false and in fact DID advantage HFT traders as the other fellow had described.  Nice.  Too bad the network doesn't fact check.)

This morning on another financial network, more directly beholden by Wall Street interests, Michael Lewis was interviewed, and it was the turn of the anchorpersons themselves to roll out the indignation on behalf of the industry that cuts their paychecks, and variously attack and parse the offending statement, 'the market is rigged.'   They had a go at it, and then changed the subject.

But the same anchorperson who compared Wall Street traders to children, who cannot help themselves except to try and break mom's rules, took a different tack this morning.  Today we heard that Wall Street traders have no moral imperative, no operative sense of right and wrong.   That is, their only task is to make money in whatever way that is possible, even if it means cheating, lying, and even creating false opportunities to defraud other people.  

A good trader suppresses any sense of morality and law, except as an obstacle to be overcome.  When they cheat and steal it is the fault of the regulators, because they are not smart enough and fast enough to stop them.   And these are the same people that we claim should therefore be self-regulating.

But the most shocking thing was that Michael Lewis agreed.

"I don’t regard high-frequency traders as villains.   It is like blaming the lion for eating the antelope. They are wired that way. I think the system is screwed up to exploit opportunities, exploit glitches in the system. They’re not wired to say that this is moral or immoral; they aren’t wired to say is this good for the world. They don’t think that way.”

Ah the noble lions. Or perhaps more appropriately jackals, based on how they feed in the dark on the weak.  Remember this the next time someone asks a financier for their recommendations on public policy and first principle social issues.

The irony of course is that this description is that of functional sociopaths at best, psychopaths at worst.  They are 'wired' to seek self-gratification without regard to moral considerations, conscience, or consequences.

Rather than just saying the market is rigged, the anchors and  Michael Lewis agree that the market is now founded on sociopathic behaviour, whose primary directive is to game the system and defraud the other market participants in the most clever ways that they can.  Not by producing anything, not by contributing anything real to society, but by being very successful conmen. And all the parties nodded their heads in agreement.

Psychopathy is a medical condition, whereas sociopathy is a learned behavior that is often environmentally born.  And it is therefore contagious.  Psychopaths just have a natural advantage
if they have no conscience or empathy to suppress.   Willful moral blindness for selfish ends is an acquired skill, and the domain of the sociopath.

What a hell of a way to set up a critical social system, to seek out and incent sociopathic behavior.

Whenever you hear this sort of rationalizing about the profit imperative alone, it is often said about Wall Street traders and their special status in finance. But take the same scenarios, the same moral principles, and apply them to some other professions. What if this principle was the basis of the medical profession, or the food industry, or retail stores?

Yes, doctors will always find some way around the regulations in order to falsely charge and do harm to their patients, mostly without killing them outright to their credit, as long as they can make money at it which is their primary objective. And that is the system we have set up, and there are few consequences against it.

Gas stations will always find some way to cheat their customers by short changing them and faking repairs, because their purpose is to make money any way that they can, and it is our fault for not stopping them.  If we catch them, they receive a token fine as a cost of doing business.

They will say that we need to teach the public to be better judges of mechanical repair issues.  It is not the mechanics fault. It is just how they are and what they do.   And you can apply that rationalizatin to any number of professions, from plumbers to electricians to zoo keepers to Congressmen.

The moral blindness of those caught up in this culture of deceit is appalling.  The notions they hold would never be tolerated in any other undertaking. But financial crime pays, and the tricks and abuses they perpetrate are less obvious in their effects than a dead child or a woman made blind through quackery.  But they do have effects, and they are killing us.

The purpose of the stock market is to encourage investment and the efficient allocation of capital in productive activities.   But tiers of complexity are added to hide and deceive investors, by cadres of admittedly very smart people who not only perform no useful function, but who in any other industry would be shunned.

This moral blindness is tolerated because there is very big money involved, and the potential for very negative career consequences.  As they say, it is the bribe or the bullet.   It is easy to excuse because it involves 'white collar' crimes that engage wide swaths of the most influential voices in our society.

They retreat into blaming the victims, silencing the critics, repressing even peaceful protests, praising their own exceptionalism, and coercing the outliers, others, and dissidents.   The system is the lie, and so the lie must be protected for the sake of the system.

I wonder if there is a need to have news people, and economists, and politicians to take some basic courses in ethical behavior. They are certainly doing a wonderful job of suppressing their moral sensibilities when it comes to financial fraud, even if the laws do not overtly define and indict these abuses as 'crimes.'  

And when someone points out the hypocrisy and fraud, they first ignore them, and then panic and attack. How dare they undermine the confidence of the system!   For they have become creatures of the system, and that is a big part of the problem in the credibility trap.

They do not get it. They are suffering from a severe case of moral blindness as described by Upton Sinclair when he said, 'It is hard to get a man to see something when his paycheck depends on his not seeing it.'

And the example they give as public figures, from Wall Street to the Beltway, is rotting the future of our country, down to the bone.

The cure for this is relatively straightforward if you understand the problem as one of pervasive corruption. We are in a state of serious moral hazard, in which crime pays.  It really is no different from other situations where whole towns and areas can be undermined by gangsters and graft.

You start with the law, and put some heft behind it.  You stop giving the powerful and the well-connected a pass on fraud, or just wristslap fines.   You put the right people in regulatory positions, and enough of them, and back them especially when they go up against the major syndicates. You put the message out, and then make it stick. How did Roosevelt clean up the financial industry after the 1920's?

It won't be easy, because so many have been caught in the credibility trap.  We need to find our best, who have a strong moral sense and public spirit, and then give them whatever support and encouragement that they need. If we are not doing that, and we are not, then we need to find out why and fix it. That will take leadership. And since greed and fear have so many in their grip, our short term problem is that we do not have any.

"Capitalism is at risk of failing today not because we are running out of innovations, or because markets are failing to inspire private actions, but because we’ve lost sight of the operational failings of unfettered gluttony.

We are neglecting a torrent of market failures in infrastructure, finance, and the environment. We are turning our backs on a grotesque worsening of income inequality and willfully continuing to slash social benefits.

We are destroying the Earth as if we are indeed the last generation."

Jeffrey Sachs, Self-interest, without morals, leads to capitalism’s self-destruction

The world sees this, even if the people of the US and UK do not yet realize it. The world is watching, and there will be consequences. Money and confidence will die first on the periphery, and then the deluge may come.

Charles Ferguson: Predator Nation, Global Predator Class

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly, which I analyze in detail below. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising. But that can’t last indefinitely; Americans are getting angry, and even when they’re misguided or poorly informed, people have a deep, visceral sense that they’re being screwed...

So I’m not going to spend much time describing ways to regulate naked credit default swaps, improve accounting standards for off- balance-sheet entities, implement the Volcker rule, increase core capital, or measure bank leverage. Those are important things to do, but they are tactical questions, and relatively easy to manage if you have a healthy political system, economy, academic environment, and regulatory structure.

The real challenge is figuring out how the United States can regain control of its future from its new oligarchy and restore its position as a prosperous, fair, well-educated nation. For if we don’t, the current pattern of great concentration of wealth and power will worsen, and we may face the steady immiseration of most of the American population...

Before getting into the substance of these issues, I should perhaps make one comment about where I’m coming from. I’m not against business, or profits, or becoming wealthy. I have no problem with people becoming billionaires—if they got there by winning a fair race, if their accomplishments merit it, if they pay their fair share of taxes, and if they don’t corrupt their society...

But that’s not how most of the people mentioned in this book became wealthy. Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful.

That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

This is not only an American phenomenon, but one deeply rooted in the Anglo-American banking cartel, and in the money centers and hidden wealth of Europe. Ferguson talks primarily of how the solution may come from the people of the US, but the true impulse for change may come from without, from the countries who have already been brutalized by the rise of the predator class.

See also this 2008 post from Le Café Américain , Predator Class and from 2010 Class Warfare and the Decline of the West.

Popular resistance against the decline of freedom and opportunity is often thwarted by the foolish self-interest of many who believe that they themselves have the ability to benefit from and become a part of the predator class, although they would never call it by that name. After all, they are successful, they have money and wealth, and they think they have the power to stand alone, but want more.

Weak and amoral people rationalize their service to what they come to realize, over time is objectively evil in a thousand different ways.  The most common is the expediency of a career, going along to get along.

"His success alone proved that I should subordinate myself to this man."

And frequently, if only in the back of their minds, is the thought that they too could be as gods. What they do not yet realize is that to the ubermensch they and their children are no different from the illegal immigrants and the poor, fit only for exploitation, who will do as they are told, until their time comes.  

This is the shock that was felt by the customers of MF Global when their money was brazenly and openly stolen. They were a part of the game, they were believers in the system, well educated, hard-working. But to the powerful insiders they were really just cockroaches, and another form of prey.

And not every psychopath chooses to use a knife.

"Psychopaths have a grandiose self-structure which demands a scornful and detached devaluation of others, in order to ward off their envy toward the good perceived in other people."

“He will choose you, disarm you with his words, and control you with his presence. He will delight you with his wit and his plans. He will show you a good time but you will always get the bill. He will smile and deceive you, and he will scare you with his eyes.

And when he is through with you, and he will be through with you, he will desert you and take with him your innocence and your pride."

Robert D. Hare, Without Conscience


"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform...

He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Antichrist

Friday Night: Chris Hedges and Jonathan Haidt on Corporations, Liberals, and Conservatives

"Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones.

The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature.

The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education).

It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

Albert Einstein, Why Socialism? 1949

While I agree with Einstein's diagnosis of the systemic flaw in market capitalism, which can be addressed by regulatory actions prohibiting monopolies and the abuse of power, I have to note that his follow on endorsement of central planning and socialism makes the same Utopian leap of faith about the natural goodness and rationality of human nature that the proponents of free market capitalism make.

The first video is part of an interesting discussion between Chris Hedges and Jonathan Haidt on the financial crisis at the 92nd Street Y.

Haidt is a psychologist who is doing some fascinating work in examining human values, and has done some interesting testing in the differences between liberals and conservatives, which is included in the second video.

I have to note that Haidt assumes what seems to be a normal distribution, or perhaps rather a distribution of normality, that does not seem to take sociopaths and psychopaths into their proper account. And more generally there is an element of the irrational that seems to introduce the occasional random act into human behaviour that runs contrary to the values of otherwise rational people.

 Like economists, the psychologists sometimes crush the individuality of the person to fit their models a bit.

The concept he presents is not entirely new. Such approaches to human values, including testing not for political preference but for a wider range of measures, go back to the 1970s at least, using six dimensions of perceived value called Order, Physical, Emotional, Scientific, Social, Enterprising. It had some remarkable applications in vocational and therapeutic testing. And there have been other such tests and measures, often with four or five dimensions.

I would also make a distinction between ends and means, between moral values and politics.  For my way of thinking moral values are ends we may hold, and politics, which is what Haidt is describing, are the means to achieve those ideals.

 What Hedges is saying is that we have lost a sense of values, 'the sacred,'  which has been sacrificed on the altar of commerce, led by the high priests of a destructively anti-human economic, almost to the point of psychopathy. And that is the source of his concerns.  And I think that is why he and Haidt talk past one another a bit.  Haidt talks about what he can measure, whereas Hedges is thinking at a level above that.

Hedges also references the way in which people's values can be twisted and manipulated by lies and even propaganda, so that they do things that are unintended and even irrational, outside of their normal value system, as in the objectification of the individual by the stereotype.  Haidt seems to miss that, as it is crushed out of his model.

Haidt's talk is nonetheless thoroughly enjoyable, and his development of his ideas highly entertaining. And you may even go and take his online test, and see how you stack up as a conservative and a liberal and what that really implies. I drew some insights from it, and you may do so as well.

Stocks and Precious Metals Charts - The Old Switcheroo - Empire of Lawlessness

 

“I've always resented the smug statements of politicians, media commentators, corporate executives who talked of how, in America, if you worked hard you would become rich.  The meaning of that was if you were poor it was because you hadn't worked hard enough.  I knew this was a lie, about my father and millions of others, men and women who worked harder than anyone, harder than financiers and politicians, harder than anybody if you accept that when you work at an unpleasant job that makes it very hard work indeed.”

Howard Zinn

"There is not a more perilous or immoral habit of mind than the sanctifying of success."

Lord Acton

“People with advantages are loathe to believe that they just happen to be people with advantages.  They come readily to define themselves as inherently worthy of what they possess; they come to believe themselves 'naturally' elite; and, in fact, to imagine their possessions and their privileges as natural extensions of their own elite selves.”

C. Wright Mills, The Power Elite

"A lot of white-collar criminals are psychopaths. But they flourish because the characteristics that define the disorder are actually valued. When they get caught, what happens? A slap on the wrist, a six-month ban from trading, and don't give us the $100 million back. I've always looked at white-collar crime as being as bad or worse than some of the physically violent crimes that are committed."

Robert Hare

"The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Plunder, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus


The ongoing current of statements from the spokesmodels and talking heads over the past week, as well as a number of market indicators I have learned to watch over the past thirty years or so had me thinking that we would see a terrible jobs number this morning, and a fantastic reversal and rally in equities and the metals.  And I structured my trading positions accordingly, with a hedge for uncertainty.

And this morning when I heard the monster overshoot in the Jobs number I thought, 'oh no, I was wrong.'  Thank God for the hedge, but I wish it was larger.

But little did I know.  I'm glad I did nothing as the little set piece we call the 'free markets' played out.  Am I getting more patiently wily or just lazy?  Oh me of little faith. 

But what else might we expect from empire building jokers who make a blasphemous religion of greed out of victimizing the innocent.  

It is probably a mistake to ever underestimate the shamelessness and greed of the power elite.

And so the Dollar this morning rocketed higher, and then dropped precipitously and ended slightly lower into the close.

Stocks did the opposite, with a monster rally crushing the shorts and hedges.

The VIX fell sharply after spiking higher.

Wash-rinse-repeat.

My eyesight continues to return, if all too slowly but surely.  Whenever I might feel like getting too comfortably complacent He always seems to knock me down hard off my perch.  Thank God for His loving kindness and tender mercies.

Have a pleasant weekend.

Stocks and Precious Metals Charts - What Time's the Next Black Swan? - Down to Key Support

 

"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."

Charles Kindleberger


"They run all away, and cry, 'the devil take the hindmost'."

Beaumont and Fletcher, Philaster, or Love Lies a-Bleeding


“It has been more profitable for us to bind together in the wrong direction than to be alone in the right one.  Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes.  This is apparent from a social pathology: psychopaths rally followers.”

Nassim Nicholas Taleb, The Black Swan
 

"Through a set of economic policies designed to bail out and subsidize failed and often tainted corporate enterprises, while actively promoting a false sense of confidence to support those policies, the public has become exposed, by those very people entrusted to protect them, to dangerously high levels of hidden counterparty risks. 

The cautionary functions of the media, the political class, and the regulatory bodies have been routinely directed, distorted, and even silenced for the benefit of a highly compromised and increasingly self-serving elite.  And this corruption has begun feeding on its own momentum, resulting in increasingly blatant examples of deception, distortion, and outright theft.  This is crony capitalism, and its deadly credibility trap." 

Jesse, April 2012

 

Stocks retraced the bounce from yesterday, but managed to hold at key support levels.

We may be one exogenous event away from a significant market dislocation.

Precipitous declines of 10+% are always lower probability events, but sometimes the tails are little fatter than at other times.

Gold and silver bounced.  Silver in particular was impressive since it diverged from stocks. 

The VIX fell.  

There is not panic selling yet.   I suspect the specs are buying the dips.

I came in short from last night and got a little shorter on the early bounce.   I trimmed back a bit for the weekend. 

If the major stock indices break below further key supports with the right kind of tension on the tape I will try to start calculating just what kind of decline we may be facing.  

The Fed is active in the markets.   But even they have a limited ability to respond to a significant event.

Stock index option expiration next Thursday.

As next week is Holy Week I will be posting but it may be late or abbreviated.

Have a pleasant weekend.

Stocks and Precious Metals Charts - Principalities and Powers - FOMC Tomorrow

 

"All your ways may be straight in your own eyes,
    but it is the Lord who weighs our hearts.
To do what is right and just
    is more acceptable to the Lord than sacrifice.
Haughty eyes and a proud heart—
    the lamp of the wicked will fail.
Trying to get rich by lying
    is like chasing a bubble over deadly snares."

Proverbs 21:2-6


“It has been more profitable for us to bind together in the wrong direction than to be alone in the right one.  Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes.  Psychopaths rally followers.”

Nassim Nicholas Taleb, The Black Swan


"Abraham replied, ‘They have Moses and the Prophets; let them listen to them.’  No, father Abraham,’ the rich man said, ‘but if someone from the dead appears to them, they will repent.’

And Abraham said, ‘If they do not listen to Moses and the Prophets, they will not change and repent, even if someone were to rise from the dead.’”

Luke 16:28-31


"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Stocks slumped again today in advance of the FOMC rate decision tomorrow.

The Dollar strengthened on rumors of a hawkish meeting and press conference.

Gold and silver declined a bit.

I suspect that the Fed will raise 75 bp tomorrow.

As for any further hawkish words from Powell, we'll just have to see.

It smells like a sell the rumor buy the news type of scenario but it is hard to forecast the vagaries of the rapacious minds of our modern imperial moneymen

"'My name is Ozymandias, king of kings:
Look on my works, ye mighty, and despair!'
Nothing beside remains: round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away."

Percy Bysshe Shelley, Ozymandias

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wash 'N Rinse, or Something Different

"Most of them became wealthy by being well connected and crooked.  And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

"A lot of white-collar criminals are psychopaths. But they flourish because the characteristics that define the disorder are actually valued. When they get caught, what happens? A slap on the wrist, a six-month ban from trading, and don't give us the $100 million back. I've always looked at white-collar crime as being as bad or worse than some of the physically violent crimes that are committed."

Robert Hare

Tsar Nicholas II: I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte: I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot. Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?

From Nikolas and Alexandra

There was intraday commentary about this opening year plunge in stocks here.

 

Let's see how the rest of January goes before drawing too many conclusions. 

 

There is not a lot of doubt in my mind that, given the current vectors, this will end badly.  But timing and forecasts are a very difficult process, best approached with a great deal of humility.

 

Have a pleasant evening.

 

 

 

The Political and Social Continuum - What About the Outliers? Does Sin Exist?

As you may recall I have constructed this model to help me conceptualize the 'continuum' of political and social thought.

One of the motivations for this particular form was to help me to understand why those at the extremes can 'cross over' so easily from one to the other.

And in practice, the two extremes seem identical in many ways.

But I have struggled for some time where a sociopath or psychopath might fit in this scheme of things.

Today it struck me that sociopaths and psychopaths can fit anywhere they like, although given their attraction to power and control over others they would be mostly found at the extremes.

They can move about most easily because they are 'outside the continuum'  and by definition  are exceptionally under-socialized.   For whatever reason, they do not 'fit' within a social structure, but are essentially outliers because of their pathology, the way in which they have rationalized themselves.

They are a mutated form of the self-actualizing person. They may seem quite personally powerful, but inside they are hollow, almost histrionic. They would be products of broken homes, and have marriages of convenience, mostly their own.

The narcissists are often highly verbally acute and talented at using speech, with high IQs.  But the tell is their lack of consistency.  And they thrive in places of upper management where performance and personal responsibility can be rationalized and diffused.  They are corrosive for the long term.

And the same off model status might be said to apply to misanthropes and hermits, the extreme form of self-imposed isolationism. At some point their social maturity has failed. And then there are the many socially immature who have never progressed beyond adolescence most likely because of some trauma or lack of support for their development. They lash out in anger because they know something is missing in their lives.

Politicians and certain types of public figures can be tough to place on this model because they are often poseurs, in that they are motivated primarily by power, and will assume various modes and guises to obtain it. They are most notable for the lack of consistency between their public and private lives, their very disingenuousness.

Indeed their private lives can often be quite distinct from their public reputations, and remarkably so.

I have known many 'driven' figures who from a public face would seem to be quite successful, and often remarkably so. But almost invariably they are unhappy to the point of being miserable, and they spread their misery to their family and all that come close to them. They are broken but functional and for some their obsession gives them a remarkable focus. They are not distracted by sincere feelings and abstract principles such as 'justice.' People are at best trophies to be collected and more often objects to be used and discarded.

Do not get me wrong.  No one is perfect, and the definition of normal is broad given the natural diversity of creation.  And at the end of the day, we are all imperfect and often broken people.  It is how we react to these things that makes us what we are.  Some must struggle more valiantly than others.

I cannot give you a precise definition of 'sin' without reference to personal belief, along with the usual classical references, although I do believe it objectively exists.   I think the best way to explore this is to ask a higher power, sincerely and with some persistence, to show our own sins to us.  And that might prove to be interesting, especially among those who think they are without it and beyond it.

And although I cannot define what normality and sin are, I think I know what hell is.  To paraphrase Dostoevsky, hell is the inability to love and to be loved, even when it is true and freely offered.  That is the terrible curse of Tantalus, and the source of much anger and discontent and oppression in the world.

So there is my slight modification to this model, and my pass at practical psychology for today.

Gold Daily and Silver Weekly Charts - Big Rally From Year End Mark-To-Market Boogie Woogie

It appears that the theory that the big shorts were slamming down gold and silver into the year end *might* be valid, given the huge rally today.

But it is too soon to say for sure. I have drawn a short term downtrend line on the gold chart that is a 'must take' for the bulls.

If they can take it out, that's a nice bull flag there on the chart that gets activated.

Non-Farm Payrolls report on Friday and the Euro-whiz kids meet again on the 9th to puzzle through their Gordian knot of a currency and political system.

I read the book Currency Wars by Rickards over the holiday. It was interesting, and is worthwhile for those not familiar with the money and metals markets. His history of the currency wars and old is enlightening. There is not as much 'meat on the bone' in this book as there was in Econned for example, and it is an easier read, but Rickards knows what he is talking about and says his piece well.

I took a 'test' that estimates one's political orientation last week, and it confirmed that I am still almost dead center, just a little to the liberal side but not much. I thought that this was the case and was glad to see the confirmation. 2012 is not going to be a good year for moderates.

I read somewhere today that sociopaths and psychopaths in business are not a problem because people just shun them eventually so the market is naturally self-policing and self-correcting. Ah, if only this pretty piece of idealism was the case. Of course it is just another variation of the efficient markets hypothesis .

This used to be a favorite argument of Bill Buckley and William Rickenbacker when they used to discuss the issue of market regulation.  Anyone who has been in security or fraud investigation knows it is utter nonsense.

Conmen are like cockroaches.  And the better class of white collar crooks are exceptionally devious and manipulative, and often set up sinecures and monopolies that are rather long-lived in addition to their various frauds which are easily replicated and recycled from place to place.

But people keep drifting back to the assumption that information is symmetric and transparent, markets inherently fair, and most people are good. Like a dog returns to its vomit, so idealists and the deluded return to the natural goodness of business and markets to justify some of the most outrageous howlers of arguments over and over again.

The number one son and his friends are home from University so this dad is deep into computer repairs and cooking favorite meals. It does not get much better than this.

Chris Hedges: The Wall Street Cult of the Self and Ochberg: Coping With a Narcissist

As Ochberg implies, psychopaths don't have ethical considerations, and narcissists and asocial personalities don't care.

In layman's terms I think most of these fellows have a great hole in their being. They know that something is not right with them, but their egos will not allow them to acknowledge it.

Those who gravitate toward the corporate power structures can be quite successful in some organizations.   But despite outward success they are always restless, unfulfilled, and tend to project their dissatisfaction outward and ascribe it to others.   If they succeed it is all them, but if they fail, someone else is at fault.

They are incapable of trust, because everything they do is a facade, a lie.   Therefore they rarely have a real relationship with their families, and at best view them as a desirable addition to their collection.  They have utter contempt for other people, although they will use flattery and other means to create a dependency while they are using them.  And after that is done, they will be discarded without another thought.

They are like sharks, endlessly seeking to fill their terrible emptiness with possessions, be they things or other people. They are literally insatiable in their needs, and highly focused in their pursuit of them.

They are very clever in finding the weaknesses in people and organizations, and will exploit them ruthlessly. Ethics and conscience provide no brake or boundaries on their willingness to say and do anything that is required to achieve their ends.  If you attempt to thwart, be prepared for something a little different, and completely off the hook in response.

It is really something to see them at work. The destruction they can wreak, sometimes with remarkably superficial charm and high verbal acuity, is hard to describe until you see it in action.

They are always a challenge to the HR and compliance departments, and frequently end up badly, one way or the other. It becomes a personal challenge to see how far one can go without being stopped, far beyond any personal needs or requirements.  Flouting the rules becomes a game in itself.

Without Restraint or Remorse: The Severely Emotionally Detached

This is why nice, neat theories of perfectly rational economic behavior fall apart quickly in reality.

This is why regulation is necessary. Because there is a tendency in some people to break the rules, and to bend them over time to serve their disordered minds and appetites.

This is why there must be checks and balances on power. Especially when that power appeals to noble symbols as a cover for their excessive misdeeds and complex secrecy.

We have seen entire sections of corporate organizations bent to the will of persuasive psychopathy. And even when they fail, they will rise up to find a new place to obtain what they need, without shame or remorse, or even a genuine understanding of why they have failed, although they may get better at the execution of their schemes. They will blame everyone else for being unworthy of them.

 

And sometimes an entire culture can take on the character of the psychopath, especially under periods of intense or protracted stress, when they surrender their wills to the powerful wills of a few. And they will project their increasing deformity on to others, even as they descend steadily into the abyss. 

 

They maintain an emotional detachment, a kind of moral high ground in their own minds, by rationalizing the consequences of their increasingly monstrous behavior and excess by pointing out the failings of others.  'I did not make them believe my lies. They believed because they are inferior. They did not stop me, so they deserved it. '

 

If they ever speak frankly about their view of things amongst their confidants, the normal person would be stunned by their distorted world view, often writing off large segments of the population as unworthy and disposable, for the most part because they impede their desires, although they will often ascribe it to some irreparable defect in these others, making them unworthy of life.

 

The high performing psychopath gravitates towards positions of power, saying or doing whatever it takes to get the ability to satisfy their own desires which are insatiable, because they are caught in the hell of being unable to love and feel genuine love in return.   They are a black hole of desires and needs.

 

And psychopaths breed sociopaths, imitators who are able to extinguish their own empathy and remorse through ideology and excess including violence, sex, and drugs.

 

What would you do to protect your children from people like this?   Throughout history people have banded together in order to establish and maintain the rule of law.

 

This is why romantic notions about markets without law and transparent regulation are so harmful.  They turn the power of the markets over to the least scrupulous and self-controlled in a society.  This is why any social system without checks and balances, without transparency and restraints, will eventually deteriorate into a dysfunctional system of self-interest and looting.

 

People are not perfectly rational angels.  It is hard to believe that one must say that to an adult audience, but ideology and conditioning can make people blind.