Thursday, August 12, 2010

"Its too late, baby, its too late, though we really did try to make it"

Our hog, "Ms. Piggy" (we broke tradition this year... in the past ALL female hogs were named Charlotte I, II, III...) broke out of the hog yard this afternoon... I found her in the neighbor's pasture nestled beneath a roll of hay with 9 piglets. We got them back in the yard, but are keeping the other hogs away, lest they eat the piglets...

"The Constitution is a limitation on the government, not on private individuals. It does not prescribe the conduct of private individuals, only the conduct of the government. It is not a charter for government power, but a charter of the citizens' protection against the government." – Ayn Rand

"Its too late, baby, its too late, though we really did try to make it." - Carol King

I love Carol King and Ayn Rand... 2 of the more interesting individuals of the 20th century...

I have been reading and thinking about the IMF and CBO reports that I wrote about in my last post...

My sense is this: The U.S. financial and political system will both be reset. No other outcome is even remotely likely. The U.S. will lose its reserve currency status. The overwhelmingly optimistic projections for S.S./Medicare will not be met. U.S. Treasuries might actually be paid back - and then again they may not... it all depends on how the entitlement programs are undone... but more than half of the remaining debt in the U.S. economy will not be repaid. Oil imports will continue their decline into the U.S. irrespective of whether or not Iraq's production comes on line at the most optimistic level, and if Iraq's potential has been overstated and their exports come in at only a million or 2 bpd (or even 3) per day the rate of the decline will accelerate from .7% per month to over 1% per month for at least several years at some point between here and 2020.

This does not have to be all that bad provided that a Constitutional crisis does not develop. Wealth is not bytes on a screen... these are merely markers representing fractional ownership of the resources and production of a particular nation. Hitting the "reset" button does not destroy the crops and livestock in the field or demolish all of the houses, roads, and sewers. To my mind, the one thing that must be preserved is the U.S. Constitution and the Rule of Law. These can and must withstand what is to come.

When I say "reset" our political system, I am not referring to the Constitutionally directed structure; I am referring to 400,000 lobbyists, 1,100,000 odd lawyers, and the top 1,000 corporations as well as the top 1% wealthy, bottom 20% permanent underclass, and all of the special interest groups... all have had a hand in corrupting and controlling the system... we need to find a way to remove their undo negative influence. This is the risk... this, along with a few other imbalances, can be the spark that fires a Constitutional crisis. My sense is the wealthiest will lose their position, and the underclass will learn to provide for themselves or find themselves removed from the gene pool by Mother Nature, but the battle will be brutal.

How to individually navigate this is far more important than trying to figure out how to manage the upheaval from a macro point of view. We can't all be president or even a Senator, but we can all interpret our own personal environment in an effort to enjoy the life we have. In any event, that is how I see it.


If you have been reading my stuff for a while you know I have been commenting on this for several years now, as have many other Economic Bloggers. A year and a half ago I posted that my response is that I am "Going Galt". Perhaps an exaggeration, but I have gotten much done in this regard. I cannot say what works for everybody everywhere, nor even for my own self, as our lives are a work in progress and we don't yet know the consequences of all of our actions and decisions... that said, in "Going Galt" I went on a tear to simplify my life. I returned most of the capital in my funds to our investors, and merged the remaining capital into one small fund. I returned ALL of the capital in my broker-dealer (stock brokerage) and withdrew my membership in the SEC and FINRA. I cut out every piece of personal overhead that I could without a family revolt, and we continue to "shrink" our consumer identities. I still maintain 2 homes, because my older son is in his last year of high school, but I expect that upon his graduation next spring to be able to consolidate our lives into a single home (an event I look forward to with great anticipation).

I have gone into the livestock trading business, and we grow or raise 75% of the food we eat when we are on the farm with surprisingly little inputs. That means milking (my grip strength is outrageous), feeding, slaughtering & butchering, fencing, barn & house repair, weeding, watering, preserving... homesteading is no small amount of manual labor. I went well over 1 year without buying anything other than food, household supplies, and entertainment (with the exception of second hand, traded for, or good will, or necessities for the farm... I do take my wife out to a sushi restaurant every week or there might be a revolt...). It has been a fascinating experience. I realize that I have the luxury of not having to live this way - but I must tell you that I am in very good physical shape, my love life is as good as it gets for folks having young children in the house, and I am happily involved with my new found "real life". I cannot say that I will always live on a farm and this lifestyle, but if it were solely up to me I think that I would. I can say with certainty that I will always live as modestly as I possibly can as I think it has been good for the soul. It seems I cannot have everything I want - food, drink, luxury... whatever - indulging just because I can does not mean anything good from my experience... doesn't seem to be a net positive for your physical and mental well being... I guess what I am saying is that some of the "progress" and "higher lifestyles" made over the past several decades may not have been all that good for us.

Anyway, just musing... I have to go and milk the cow now...


PioneerPreppy said...

No comment on Carol King but I agree on Rand.

I also agree with your motives and choice to simplify. I did the same thing almost exactly but no second house.

My theory is that everything you mentioned, the social spending, the reduction of individual freedom etc. all boils down to cheap energy and therefore cheap transportation.

The problem as I see it is not the end of this mess and the decline of oil. It is the transition period that scares the hell out of me. Owning property and being able to provide for yourself and family will mean nothing if in it's last use of power the government decides to take what you have for the common good or tax your property so much you can't pay for it.

What kind of crimes can the government do to satisfy the dependent urban dwellers during the decline?

tweell said...

It would be nice if this is what happens. What I worry about is the opposite - the Constitution gets shredded and the USA becomes a true empire, taking what it wants from it's victims. How many republics have not eventually become dictatorships? Our president would be given emergency powers, those powers then would become permanent, finally the president becomes president-for-life. We would go the way of Rome, taxing the rest of the world outright instead of by inflating the reserve currency, and our military would enforce the Pax Americana.
'Tis a dark nightmare, but I fear that it is more probable than your vision of tomorrow.

bureaucrat said...

Even "president for life" doesn't guarantee anything. There is always someone trying to bump you off. Chavez is supposed to be a "president for life," and he's got the U.S. gunning for him behind the scenes. It will be a long time before the U.S. comes to a screeching halt. My prediction is 10-20 years of flat-line malaise. Sorry, the revolution will wait. :)

Greg T. Jeffers said...

All reasonable comments; I think there is hope for the U.S. Constitution. Funny thing is, it will be the folks the elites HATE that might hold the whole thing together... if that is not delicious irony, I don't know what is.

Greg T. Jeffers said...


King might a complete retard when it comes to real life and real politics, what can you do... she writes a great love song.

PioneerPreppy said...

Nah Greg I didn't comment because I really don't know a thing about her. That song kinda annoys me but that is no reason to speak bad about someone :)

I mean c'mon we tolerate Bur :)

Greg T. Jeffers said...


Your comments left me talking to myself for the past couple hours, thanks.

I do hope you are vision proves incorrect... however, I must admit that that outcome is entirely possible... I just hope unlikely.

bureaucrat said...

And Bureaucrat absolutely loves being underestimated. :)

PioneerPreppy said...


There are a few problems with the US to Empire theory.

For one the main republics it has happened to (namely Rome and France) were not divided by race and sectionalization like the US is today. There was class warfare and inner tribal politics but not really race, religious or sectional issues. Yes Napoleon was a Corsican but c'mon. The Latifundia became dis-illusioned with Rome long after it became an Empire.

It would take super-human charisma to pull off a President for life move, without starting an internal war that would last decades. Thereby limiting the resources we would have for conquest.

I can see the Constitution being shredded, I can even see an eventual empire after a victorious group emerges but it would take years before that would happen. We would more than likely long be dust by the time the circumstances would be right for an empire.

Donal Lang said...

I like your idea of the Reset button. In a way it would reset to an underlying economy as it was before the wealth that oil created.

For the U.S. is would be a nation without a substantial, wealthy middle class but with a few wealthy people/families owning almost everything, the rest capital-poor and working for low wages, and more emphasis on individual States than national/federal controls, probably more racial segregation. There'd be hardly any interest in World affairs.

The dollar would be much lower value (I recall almost 5$ to the £), making American exports competitive and imports expensive so, with all the US natural resources, back to a self-sufficient manufacturing nation.

This is why I work with the Transition movement in the UK (and there's lots of Transition communities in the US too) - modelling this stuff shows the positive opportunities, not just the doom.

Like for you Greg, I think the change in living shows reality has benefits, and experiencing it destroys many of the so-called attractions of the 'consumer lifestyle'.

Greg T. Jeffers said...

I wasn't really worried about the "empire" in Tweels comments... but the "President for Life" thing is not that implausible.

What I am thinking (or hoping) is that there are enough folks like us, folks that value our Constitution and wish to see it survive the "reset" period. There is NO question in my mind that there are other interests on both sides of the aisle - but really mostly on the Left - that would like to see the Constitution shredded... and in the end when confronted with what could be lost I am hopeful that there will be enough of us to defeat them.

tweell said...

I believe that an economic collapse can be held off for years, depending on what happens in the rest of the world. However, the longer it is held off, the more severe it could be. I say could be because there is the chance that the expert procrastinators in Congress do it so as to minimize hardships down the road, but that isn't the way I'd bet on.
The problem with assassinating a country's top leader is who would be in power afterwards. There are many foreign countries and folks that hate the USA, but if Al Qaeda (for example) took down Obama, we'd have President Biden, or if they managed a two-fer, President Pelosi. I can't imagine that this would be an improvement in anyone's eyes.
As far as class warfare goes, we're far better off than Rome and their multiple slave revolts. A large class divide is handy for empire - Roman citizens became poorer and the patricians became richer as their republic fell.

PioneerPreppy said...

Depending on your point of view the Constitution is already pretty shredded.

Unless things have changed recently or the SOP for our current leader changes, an assassination would be next to impossible. As far as I know "O" hasn't made any outdoor appearances aside from Ft. Hood, and has required a much larger radius of security when he does go outside than any other President in history. I haven't seen anything about it recently but he was at the top of the death threat list for a awhile as well.

The slave rebellions were far from Rome Central and never divided the citizens who mattered. They caused some issues because of the Senate's paranoia about having troops nearby but did not cause baseline political issues at the core as I remember it.

I would have to say as far as division of the core we are worse off. There really isn't an historical equivalent to what we have going on today. There have been multi-ethnic Empires but not like the US.

When or if the welfare payments stop I think it will become city vs. rural pretty fast, which will look alot like being racially divided.

The real danger of a President for life will be from the leaders who emerge from that struggle not the ones we have currently.