Hermit's Weblog
everything your mother never taught you about how the world really works.

Fri, 29 Jun 2007

Economic Illusion - International Liquidity (play-money in cyber-space)

Been reading a lot of economics and stuff. A company that specializes in selling magazine subscriptions made a deal with an airline that owes me frequent flyer miles, enabling me to convert these miles into subscriptions. I now get the Wall Street Journal six days a week, Forbes, Fortune, the Economist and a bunch of other stuff (e.g. Esquire - blush).

I had already done a lot of reading and conversations for years on economics for everyman, finding the best stuff in a recent series of novels by Neal Stephenson (the Baroque Cycle), and have written my own polemic on the Lords of Finance in my book Uncommon Sense*: the degeneration, and the redemption, of political life in America.

Anyway, I've been reading in all the above (WSJ etc.) about international monetary liquidity (there is a huge amount of cash becoming credit out there, fueling all kinds of financing and refinancing). Some folks are worried about this as maybe the next big and worst bubble (after the dot.com bubble and now the housing bubble). A bubble by the way means that values, in the market place where stuff is bought and sold, are driven up by completely unjustified speculation to absurd heights (lots of hot air, thus the image: bubble.

When bubbles burst (especially if they burst fast, economies might collapse. In the case of the housing bubble, so far so good (that's if you read the cheerleaders on the editorial pages of these magazines, which are the same cheerleaders that said dot.com buying and selling was fine). For those out of the loop on that one, a lot of money was poured into new dot.com businesses (the Internet was the next best new thing), and mostly what these new companies offered came to be known as vaporware, i.e. a product they imagined they might produce in the future. A lot of this imagined product never got past the drawing board, the companies failed, and the shareholders who followed the cheerleaders lost a lot of money.

Next the cheerleaders thought that home buying and selling was so good, people were borrowing money to buy second and third homes they didn't need, in order to cash in on the rising prices in the housing market. The housing market was also driven by a lot of that famous liquidity (huge free cash reserves internationally), which was invested in companies that specialized in financing questionable housing deals (loans to people who ordinarily wouldn't qualify - the so-called: subprime market). Sort of like Star Trek I guess, with its imaginary subspace communications.

Anyway the point of all this is that maybe if we sum up this kind of thinking (typical in financing circles), we might come to the conclusion that people do a lot of speculation, buy and sell stuff using imaginary ideas, and that this has been going on for a long time. One thing it means is that all these people doing this believe in illusions (the never ending rise in dot.com potentials, and the never ending rise in the housing market).

Okay, back to liquidity.

Lets ask first if the liquidity that seems to be fueling all this international buying and selling among hedge funds, investment banks, and everyone who thinks they can take on some debt and invest on credit - all this liquidity: Is it real?

I don't think so. I think this is the big one, the bubble that when it burst pushes Western Civilization into joining everyone else in the so-called Third World (except of course the Lords of Finance who see this coming, helped it along, and are creating private enclaves, private armies, and all kinds of goodies this fake money they've accumulated can provide).

Did he just say FAKE MONEY?

Yes he did. Lets look at history. The huge appearance of massive international liquidity (all kinds of money available to lend) comes about 80 years after the creation and promulgation of Central Banks (in the good old US of A, this is called: the Federal Reserve). With Central Banks coming into existence, this means that currency no longer is created by Nation States any more, but by the Banks themselves, and when Nixon (along with lots of other leaders) took the dollar (a leading currency) off the gold standard, then currency no longer represented anything but air. Money came into being because Central Banks created it, not because some fundamental transformation of a nature product into something useful that someone might buy led to currency being exchanged for an actual thing.

When we use currency to buy something we need that is a transformed nature produce or an actual service, money then plays its destine role as the blood stream of capital in the economy. Something living, a thing such as a bushel of corn, changes hands, and the means of liberating it without needing to barter, is money. Money as capital then moves around and is used to make all of us little capitalists.

With Central Banking, money comes into existence independent of an original transaction of capital for a needed thing. Money at that point has no meaning, and moreover those inside the Temples of Mystery of Money know this. At the same time knowing this gives a very few people a great advantage, because everyone else assumes that the currency in circulation has meaning (sometimes this is called investor or consumer confidence). What's happened is that we've been woven into a belief that is false, but which can be taken advantage of (at least for a time).

Now we are at the end point of that illusion. International liquidity exists because the amount of air money created all over the world by Central Banking is peaking. The nature of the financial system is that the air money rises (its all hot air remember), and if you have positioned yourself at the top, then it rises into your hands (an investment bank or a hedge fund) and you get to play with it on a massive scale, pumping air money into companies that otherwise would fail (badly managed, selling things people don't really need, propping up dictators who will sell you their own people's natural resources for a song, etc.).

Massive Bubble Time, folks, and you'll read about it on the economic sports page of your local paper (called the "business section") whenever there is a reference to international liquidity.

[16:34] | [] | # | G

Thu, 28 Jun 2007

Dear Al, or how to win the election without getting trapped in any of the old political BS.

Dear American Statesman, Mr. Al Gore,

I know you would like to be president, and a lot of us would like that too. I also know that campaign politics is not any longer to your taste, and that all your so-called political advisers will probably want to talk you into the same methods of political campaigning everyone else is doing. We all (even the advisers) know this is stupid, but no one seems to have a better idea - except me and I am giving it to you for free. Be grateful - you'll never get better free advice anywhere (you could of course pay me, I need the money, but I'm also not going to hold my breath).

Your present stature (well earned) is as a Statesman. Don't give it up to become just another ambitious politician. It is possible to conduct an election campaign as an act of service and stay away from all the self-serving BS so common to everyone else.

The first act (very crucial) is to throw out the ambition. Don't run for president in order to win! Don't do it! This is the big mistake that everyone else is making and you can avoid it if you try. Why?

As soon as we inwardly form the desire to win, we start to make compromises, and it is as someone not making compromises that makes us a Statesman. Of course, some will say you have to have money to win and so forth, or even to campaign, and that is all true in the old way, but the new kind of service-directed campaign I have in mind here is not going to require much wealth at all. In fact, you'll succeed even if you don't get elected (which I suspect you will anyway, but cheaters are out there so who can say for sure), and you'll be such a good example that this very act of yours will change political life everywhere entirely. You'll set an example so high that others will look like fools not to copy it, and before the election even, you'll find them running around trying to do it like you are doing it.

Lets start by remembering the stupid way politicians now campaign. They raise a lot of money and travel around trying to get voters to vote for them in primary elections so as to get the nomination. Have to get on ballots advisers say. Have to raise millions advisers say. Have to run lots of TV ads, have huge state by state staffs, and at the same time run around giving speech after speech after speech (often the same damn one all the time, which has to be boring and not very good for your mind). In my method you don't have to do any of this.

You also don't have to court the media, for the very same process that will make the other candidates look like fools, will make the media look like fools. You see, there is this very strange fact (true in the present, and could be an opportunity lost if not acted upon). The American People are fed up with business as usual. Neither Congress or the President now gets even 30% in the polls. People are screaming for something different, and you have achieved the status of Statesman, and they love you for it. So the big danger for you is to come down from that status and becoming again a mere politician. Don't do it!

Plus, this process of campaigning (I know this is a big build up, but I'll deliver) will fold over into an entirely new way as to how to conduct yourself in office. That's right! You campaign the same basic way you operate as president, the one seamlessly blending into the other, all the while never leaving the status of being a Statesman.

The question to ask yourself is what do people want. What do the voters (and non-voters - don't leave them out) want? They want to be heard! It is the most simple need in the world, to have leaders who come to them and just listen. How strange (not!). The Press will go nuts, saying where is your position on the issues, why don't you have big policy papers, why aren't you telling everyone what to do (so as soon as your back is turned we can criticize you for your ideas).

But you aren't being a politician anymore, you are being a Statesman!

Now lets do a basic run through of the fundamental idea. Imagine...

Iowa. Al Gore's buses come to town, after a little advance work. There's a community hall set up, with certain technical functions (you bring them), which include some good lighting, some comfortable chairs around a big circular table, and some digital cameras (sort of YouTube stuff). You sit at the table, dressed casually (you aren't meeting bigwigs, just working people and farmers, school teachers and parents - all the really important people in our society). [Someone in the Press might make fun of King Al and the Knights of the Round Table - let them, and ask them if they know a better way for people to speak from their hearts to someone who might be THEIR president. And, ask them why they (the Press) think they know better than the ordinary people in America. You see, the Press isn't liked either, and you'll only gain stature and interest by being equally critical of the Press and when you see all this stuff from the point of view of the guy having to make 14 ends meet in a economy that is getting queerer by the minute.]

You see the way this is going to work is that the Press will first criticize and act all snotty. Then after a while they'll realize that folks are paying attention to you, perhaps more attention to you than to them. As this unfolds, the actual political conversation is going to change. Lets retrun to our picture... A local store or whatever has been paid to provide some refreshments of a local variety - stuff the people at the table will enjoy. You are going to sit and break bread with the people you are going to serve, and find out about their needs and listen to their voices. You do get to ask a question or two, but not in order to represent your views. Rather your role is to bring your experience in government to the situation, and to help the people talking find good questions. They might want Washington to do a certain thing, and you are going to be very honest with them about how difficult that is. They might then say what do we do to fix that, and you ask them why they keep voting for the same people all the time. Not hard questions meant to make them feel bad, but honest questions, neighbor to neighbor about what to do about the bad dog down the block who is making everyone's life miserable.

They will ask you questions. The first rule is tell the truth, even if it means confessing to having done less than your best in the past. All of these people know about failure and mistakes - they live life in the real world, not in the fantasy America that exists in the language of most political speech.

The point is not to always have glib and easy answers. There aren't any easy answers! Just shared problems and maybe good hearted intentions to work together. Someone might say to you, that you are just going to be another politician regardless of this "listening" meetings you are having, and you say that you hope not, but they could be right. In point of fact, they will say a lot of stuff that might be painful to hear and the best response will be agreement.

They are going to ask you about money, your money. You should ask yourself first. How did you get so rich? What are you doing with it? Why are you charging so much money to do speeches? You need to recognize that in the present time, as the middle class is disappearing and more people are falling downward economically, that an excessive display of wealth is getting to be just as egregious in the eyes of ordinary people as the thoughtless displays of wealth of the aristocrats in pre-revolutionary France.

People will tolerate it if they believe you understand how insane this all is, and how America needs to change course economically as well as politically. Think of this work as a kind of steam valve - letting people talk about difficult questions, perhaps presently unsolvable questions - lets the pressure off a bit. They not only get heard, they get a release.

Now expand the above imaginative scenario a thousand-fold. Instead of giving speeches you go around listening to people. Then, to top it off, you get them to sign releases so that their thoughts and ideas get on the Internet. You also make CDs of each event, and distribute them locally for free. Everyone you talk to gets one, and all their neighbors. In the beginning it will all seem strange, but as you do it there will be a kind of informational wave front running out ahead of you. People coming to events like this will after a time have already looked at other people's stuff. Maybe your advance people can make prior conversations available in the upcoming communities. Instead of dividing the country up with hard and fast positions, you are actually enabling the country to talk to itself! Getting the picture yet?

Some questions might need some experts to ponder. So for every 10 meetings with ordinary people, you do one with experts from a specific field that has come under question by the people to which you have been listening. You put the questions to the experts, and these are people you can make sweat. Don't let them dodge into cliches and other usual BS. Invite folks across a spectrum of point of view in that field, but stay away from the usual talking heads on TV. People are tired of yelling and screaming. They want to see intelligent discourse. That too goes on the Internet and on ahead via CDs.

CDs should also go backward. After talking to farmers in the center of the Country you take their questions to the so-called experts (actually a lot of farmers know a great deal more than the experts). So you loop around again, visit some of the same folks, making sure that they've had a chance to see how the dialog went onward after it came by them the first time. Maybe you put some ordinary folk in with the so-called experts. You invite competing candidates to sit down with ordinary people and talk to them. Everyone gets included!

This then is your work as a Statesman. You facilitate a huge national conversation, one that gets taken into the deepest questions (the content of many of the great speeches you gave the last few years about the real nature of government, our constitution and the troubles that face us). I guarantee you'll blow minds everywhere, and even if not elected, you will change the face of American politics forever. Plus, if you do get elected, you will not be carrying into office the baggage of a lot of self-serving semi-honest useless positions on the issues. You find yourself free in a way you never felt before, and if in office you then get to...

Continue to do the same thing!!! Imagine...

A government cable channel, where you and every Secretary and Under-Secretary of a department has to sit at a round table with citizens discussing with them their needs, and listening to their concerns. The variations on this theme are considerable and will lead to huge transparency. The corporate folks will go nuts, because their whole power base is rooted in secrecy. Think what it will do to the Legislative Branch, and maybe the Judicial Branch as well. They will be under tremendous pressure to institute similar kinds of relationships to the People for whom they work. Such dialogs don't have to always generate answers, but its well past time the folks in government that work for the People had to actually sit down with those People in a public (cable) forum and answer questions.

Of course, you could get shot on the way to doing this, but as John Perkins, the author of Confessions of an Economic Hit Man, is going around saying: Isn't it time we all took the same risks and pledges as our founders, when they signed the Declaration of Independence, with its last line: "And for support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor."

[15:49] | [] | # | G

Tue, 26 Jun 2007

Tony Blair for Middle-East Guru!

It is really just wonderful the way the behind the scenes managers of world events (the Lords of Finance) have recently succumbed to trying outdo political comedians like John Stewart and Bill Mahre. Their (the Lords of Finance) sense of humor is just killing us.

I can't think of a more humorous appointment to support than Tony Blair for the point person on the Middle-East. Sort of like making Dick Cheney Vice President of the United States. Oh, did we do that already? I guess we did. Wait a minute, while I think up another analogy.

I am sure that the world's believers in Islam are quite warm to this appointment. Who else should have this job, but the main world leader, who knew the United States was fixing the facts in order to falsely justify going to war in Iraq, (thus ruining that Country), and who also decided to throw Britain's full support behind this American adventure - a kind of "Survivor Iraq" TV show.

No wonder people all over the world can't get enough of American Justice (torture), American Know-how (our corporations are sure rebuilding Iraq with amazing skill) and American Leadership (democracy for everyone, as long as you pass laws giving us your oil). I am falling out of my chair laughing and crying. Aren't you?

[13:16] | [] | # | G

Wed, 13 Jun 2007

Granny D for President!!!

Camille Paglia, a certified academic (which ought to mean something, shouldn't it), recently wrote another typical media piece about the Democrats recent debate (she wrote of it as a kind of horse race, and one in which how someone behaved in this kind of fake forum actually told us anything real about how good a president they would be).

Just for fun, contrast the kind of junk candidates have been saying with this wisdom from Granny "D" Haddock - Her remarks in New Hampshire this Saturday, June 9, 2007:

Thank you.

It is normally expected that, when given an opportunity to speak, I will talk about campaign finance reform and, more specifically, about how the public financing of campaigns can cut the threads of the big-money puppet show.

But today I would like to talk about unauthorized immigration, which has nothing to do with the big money corruption of our political system, except for everything.

Unauthorized immigration seems to be a big issue right now with our Republican candidates, as they are well-known to be the “law and order party.” That, after all, is why they are insisting that Scooter Libby pay the full price for his perjuries and obstructions of justice. They are for law and order, with the normal exceptions of the Geneva Convention and the U.S. Constitution, especially its Bill of Rights. But we know what they mean: When they say they are for law and order, they are talking mostly about keeping down the uppity poor folk. They are certainly not talking about the big corporations, hotel companies, agribusiness giants, retailers who employ millions of unauthorized immigrants but who make up for that sin many times over with their large campaign donations.

But I do not come here to talk about corrupting campaign donations and the need for public campaign financing. I come to talk of unauthorized immigration and a little about corn and something about tortillas. I call it unauthorized immigration, not illegal, because I don't want to use words that confuse my Republican friends.

By the way, in saying that Republicans are very interested in the immigration issue, I do not mean to imply that it is less important for any of us.

If you will look around the grocery store check-out lines and notice the widening measurements of our fellow citizens, we can certainly see for ourselves the problem of having too much cheap labor around to do all our yardwork and housework for us. By my calculations, the roughly 3 billion pounds of extra weight now being carried on the hips of working-age American citizens is roughly equivalent to the combined weight of the unauthorized immigrants now in our communities. The math is clear and persuasive. Cheap labor is bad for everybody.

But why are so many people risking their lives to come into our country now? When did this big rush begin?

It began when Mr. Clinton approved NAFTA – the North American Free Trade Agreement, and when he militarized our southern  border at the same time. Prior to these combined actions, families crossed the border very commonly and casually, especially during harvest seasons. After harvest, they would go home to Mexico or Central America because that’s where they lived with their families in quite happy communities.

When the border was militarized, it became too risky to go back and forth. So they stayed.

Why did Mr. Clinton militarize the border? He did so because NAFTA was about to pull the rug out from under Mexico’s small family farms. We flooded Mexico with cheap corn--exports that we now subsidize to the tune of some $25 billion dollars a year. Congress gives that money of ours to a handful of agribusiness giants. Of course, I am not here to tell you why Congress does that, and what might be done to stop it, such as with the public financing of campaigns. But they do it, and Mexican family farmers cannot compete. In the years since NAFTA was signed, half of Mexico’s small farms have failed. The only kind of farming that can now compete in Mexico is big agribusiness, which does not employ as many people. Tortillas in Mexico now contain two-thirds imported corn, and they are three times as expensive at retail level than before NAFTA. The people have less money, and the cost of food is rising. We have done that. Our precious Senators and Congressmen and their corporate cronies have enforced that raw and cruel exploitation in our names.

The result of undermining Mexican farms, as Clinton expected, was a rising flood of poor people moving from rural areas into Mexico’s big cities, which have become so poor and overcrowded that all one can do is dream of going north across the border.

Now, if any Democratic candidates for President would like to show a little courage and intelligence, let them address the real cause of our flood of unauthorized immigrants. Will Mrs. Clinton or Mr. Obama or Mr. Edwards or any of the other candidates face down the agri-gangsters that are behind this problem?  Probably they will not, so long as Iowa has a major primary.

Let me say that I am not ranting and raving in the least about these new Americans. When Mexico owned Texas and everything west of Texas, and when Mexico cut off migration across their borders into Texas, our people kept coming anyway –crossing illegally in search of opportunities for their families. When Mexico got upset by this, we trumped-up false reasons for a war, and we illegally took those lands. If that wasn’t enough law and order for you, we also conducted unfettered genocide against the region’s native people. So let’s not stand on any moral high ground regarding that southern border.

The people coming across the border today, with the usual exceptions, are family people with an incredible work ethic. Personally, I welcome them. I congratulate them for their courage and their dedication to their families. I want them to stay and become citizens, or, if some prefer, to return to their homeland at a time when there is international justice and a decent chance for their prosperity at home.

I regret what the political corruption of our system has done to their farms and their communities back home. It is not the peoples’ fault –it is the fault of corrupt leaders of both parties and both nations. We must speak this truth to these powerful people, even to those presidential candidates whom we otherwise admire.

So, candidates Clinton, Edwards, Obama and the rest: Do you understand the reasons why immigration numbers are growing? Are you smart enough to understand the situation?  Are you brave enough to do something--to even say something--about it?  Or is the truth too big for you?

All of us in this room have a duty to be good citizens and good Democrats. And that means we must ask the toughest questions so that the interests of the people –the people of our nation and of the world –will be served. Isn’t that what we’re here for?

And do you see why I do not need to harp on campaign finance reform, to cut the puppet strings that allow these cruelties to continue? I didn’t have to say a word about that, because you understand it. You understand what must be done in regard to the public financing of federal and state campaigns. And that only begins the reforms we require in this challenging new age.

Thank you.

[11:33] | [] | # | G

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