Saturday, July 31, 2010

American Pathos - Part 2

"You are NOT special." - Famous Jeffers family line used to remind each other that "sh*t happens".

We, you and I, are NOT special.

It is very difficult to bring unpleasant and politically censured subjects under the light of reasonable discussion. Assumptions and observations can be accurate or meritless, or undeterminable - but we won't know absent rigorous examination.

A couple of well known peak oil bloggers, namely Dmitri Orlov and yours truly, have postulated that a form of consumerism, or what I call "competitive materialism", has taken hold within a certain subset of our society... and the media was only too happy to perfectly exemplify this sub-group with its outrageously disgusting reality show "Real House Wives of (the Rich)" and the Prime Time Soap, "Desperate Housewives". Under no circumstance did I suggest that this was the ONLY societal subset carrying on in this repulsive way... but it would be hard to argue that they were not the leading demographic (if for no other reason than that the other subsets simply don't have the funding). There is a very good reason that these shows came into existence - they entertain a large segment of our society that seems to identify with the characters... and the segment is appealing to the advertisers buying space on these shows.

Do some independent research. Watch these shows for the sole purpose of observing the products and services advertised. My bet is that if you are the type that reads here you are not watching this show very often... and my further bet is that you will have some very strong opinions upon viewing this.

Americans are horribly, negatively, and adversely affected by T.V. in particular, and the media in general. L.A. street gangsters, strippers, the bankrupt, white collar criminals, and common thugs have one thing in common - negative Media influence. Ever do business with an Amish person? I have. Its fascinating. It has been my experience that they completely lack guile. They lack any sense of personal presentation - what we refer to as "cool, style, bearing, vogue"- most of which the rest of us got from (or were infected by) the BoobTube, something the Amish lack input from.

I must point out that there is a significant difference between "consumption", "consumerism", and "competitive materialism"... not that I think anything should be done about it... I am not about to suggest that the "credit card police" should be formed to supervise American's purchases. I was only pointing out the miasma of it. Men will always compete for you-know-what, however you wish to define "it". Many of those in possession of you-know-what will trade for "it". Might as well deny that the sky is blue. And thank goodness... otherwise we might still be living in caves and howling at the moon. Each of us is the product of something that has been going on for a great deal of time before we showed up to consider the outcome.

Let me turn my critical ire onto another sub-set of American culture, one that is far more socially acceptable to heap scorn upon than The Real Housewives of the Newly Rich: The young, irresponsible, non-providing, permanent-member-of-the-underclass-for-generations-to-come, absentee fathers... Before I dig my teeth into these sub-humans... let me ask you something... do these guys exist in cultures that lack "social safety nets"? Do you think there are dead-beat and absentee fathers on the Tibetan Steppes? How about in the Peruvian Andes? Sorry, this is not a common problem in these parts of the world... and we all know why (even if we cannot bring ourselves to admit it) - our governments intervene into our family lives and their government's lack the resources to do so (or they probably would). One size fits all marriage law and one size fits all safety nets seem to have similar outcomes - very negative, unintended consequences. Who'd a thunk it?!

In all of this, I am merely making observations based only upon my experience. Further, I firmly believe the fix is in, and we need do nothing about any of it. This is all just an amusing exercise.

Friday, July 30, 2010

The Pathos of the American Psyche

"A little government and a little luck are necessary in life, but only a fool trusts either of them." – P. J. O'Rourke

On a recent afternoon, Lucy Johnston, 37, an accountant from Tulsa, Oklahoma, could be found at the Fashion Show mall on the Strip in Las Vegas. She’s cutting back on shopping and eating out because of the recession.

“It’s really tough right now,” Johnston says. “I don’t do many full-on spa days anymore.”

Yet there she was, shopping and vacationing in Vegas with her husband.

“We’ve pulled out all the stops. We’re staying at the Bellagio,” she says.

Schizophrenic Consumers

The new abnormal has given rise to a nation of schizophrenic consumers. They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo. Companies such as Cupertino, California-based Apple, whose net income jumped 94 percent in its last quarter, and Starbucks Corp., which saw a 61 percent increase in operating income over the same time frame, are thriving.

Mercedes-Benz is having a record sales year; deliveries of new vehicles in the U.S. rose 25 percent in the first six months of 2010. Lexus and BMW were also up. Though luxury-goods manufacturers such as Hermes International SCA and Burberry Group Plc are looking primarily to Asia for growth, their recent earnings reports suggest stabilization and even modest improvement in the U.S.

How did we get here? In a word: Television. Of course, I truly mean all of the Media's effort to manipulate you but T.V. is such an easy target. Even if you don't watch it, everybody else in your community does.

I want to share with you some really, really politically incorrect observations. I can get away with this because I am not running for office and I am not looking for a job, and don't expect to be anytime soon.

I live half of the year in rural Tennessee in a small, blue collar and farming community about an hour outside of Nashville on a small organic farm which I run for the profit motive (as well as self-sufficiency). The people here were more than likely born and raised here with family living here going back several generations... They are, for the most part, extremely pleasant folks, and polite to a fault. If I were driving and the light in front of me turned green, no one (NO ONE!) behind me would honk their horn... not even if the light turned red and green and then red again... in fact, the folks behind me would rush up to my window and see if I was OK. For the most part they are overweight, and many are out right fat, many smoke, and many middle aged and older folks seem to have kept irregular dental appointments... and the VAST majority of the folks I have dealt with wouldn't cheat you out of $50 million, let alone $50 bucks. Outside of drug related possession and property crime flowing out of the public housing projects, there is just very little crime. Even the rich folks, and there are a few, drive pick up trucks, and my experience with my neighbors is the stuff right out of Mayberry RFD.

The other half of the year I live in Boca Raton, Florida running a hedge fund for the profit motive (until late last year I also operated a stock brokerage in Boca), and while I like to consider myself a keen observer of the human condition, these are only MY observations... And, really... this could be ANY well to do place that the "Real Housewives of Jerkville" might head over to catch the wacko's in action - Palm Beach, Orange County, New York City... This is hardly your average small town America type place. Many of the people here are rich. Some people are REALLY rich, while others are only middle-class millionaires, but still, in the grand scheme of history these people are freaking rich. For the most part this is "New Money". Don't get me wrong, many of these folks will likely endure poverty later in their lives because ANY fortune can be squandered, and many of them are hell bent on doing just that, but right now... they are living pretty well.

Most "New Money" is made by men (I said most, not all). I know that that is really political incorrect to say... but these are my observations, right? These are the guys that started hedge funds, built office complexes, started businesses, and made real money before the age of 40... and who does new money marry? Well, they ain't Wall Flowers. The women here are drop dead beautiful, and not just because of plastic surgery (although the number of psych-therapists and cosmetic surgeons within the city limits should give one a statistical hint, and; though I am sure that the figure enhancing procedures don't hurt) and I figure that that is not a coincidence. Men are driven to make money for a reason - and it ain't to play golf. It takes 2 to tango, as they say, this is not a societal fault. Men and women have been trading food for sex or status and wealth for youth & beauty for millenia and a better study of this cannot be found than here in Boca Raton.

White collar crime used to be Boca's largest employer, at one time it was referred to as the "Maggot Mile", with all of support business for such an economic structure - divorce lawyers, criminal defense lawyers, rehab centers, cosmetic surgeons, psychotherapists, etc... One of the 2 elite local private schools had a hard time keeping guys on the Board of Directors because the Directors kept getting indicted (not kidding). The pick up and drop off lines at these schools are littered with Bentleys and Mercedes and such; the medicine cabinets are littered with anti-depressants, pain killers, and treatments for mood disorders - sorry, but all that medication is not for the most productive, hard working and successful... for some reason and for the most part it is for their spouse. Borderline Personality Disorder dominates.

This is a town where a man can rip off a children's charity and his wife will stand by him... but if he runs a couple of laps with his female personal trainer his wife would be all too willing to take a knife to his manhood and his wallet. (Bernie Madoff did not fear that his wife would "leave" him for stealing billions and destroying thousands of lives... but he did fear her departure when it came public that he had had a long term mistress... somehow this is beyond ass-backwards... for myself, I could forgive a philandering spouse but not if she ripped off a children's charity.)

Know what the shortest time measurable by man? The time between when Boca traffic light turns green and the time when the guy behinds you blasts his horn and flips you "the Bird".

A compelling example comes from Greg Jeffer’s farm blog, in which he rants about the culture of femininity and divorce that keeps farm-wantin’ men in Boca in line. Don’t get me wrong, I appreciate the compliment, even if I don’t agree with a good portion of his commentary:

"So why’d I say “good luck”? I live half the year in Boca Raton, FL, where the poor people have a million dollar net worth, and the rich quite a bit more than that, and I should know – I manage their money! I hear their concerns like a priest in the confessional. Any of those guys even TRYS to move his family to a small holding homestead or ditch the landscaping for a productive garden, or try’s to downsize the familY’y consumption… and it is off to divorce court for his troubles (I truly wish the “Real” American Housewife were more like Sharon Astyk but that that just ain’t the case – America is fascinated by the Reality Show “The Real Housewives of Wherever” precisely because it is, in fact, REALITY). Sorry, but “family law” has left the successful “king of his castle” nothing more than a neutered figurehead, a laboring eunich that, if he so much as steps out of line, will lose his home and life’s savings in addition to the family jewels he lost to the marriage/divorce industrial complex by marrying without a prenup agreement. What is the point of marriage in a society that promotes divorce?" - Greg Jeffers, from his Blog: The American Energy Crisis

Now my comment would be that maybe Boca isn’t the best place to hunt for the sort of women who dream of farmwifing. But then again, maybe that’s not fair – if the world of even the rich is filled with men panting to get a small homestead and give up their affluent ways, with only wives holding them back with the threat of divorce, maybe there’s hope yet?
So I thought I’d ask the question – are women really more reluctant than men to take on a new way of life? Are women more attracted to creature comforts and more afraid of the future? Is this a gender thing at all? I should note that among me email collection on this subject, I have at least two emails from lesbians, complaining that other lesbians talk about sustainability but don’t really want to live it, and one from a gay man complaining that gay men are all mostly concerned with status and affluence, and don’t want to live sustainably.

Dear Sharon:

Somehow I think you missed the point. I never suggested that the Nouveau Riche men of Boca wanted to take up organic farming or sustainable living - these guys get manicures and Botox injections for pity's sake. What I DID say was that these guys had lost all power over their own destiny to the marriage/divorce industrial complex and I was hinting that something in our society was bringing out material competitiveness in our women folk to the point where "The Real Housewives of Wealthy Miserableville" are considered normal and Borderline and Narcissistic Personality Disorder dominate. The point was consumerism is destroying the fabric of our society... and just what is the demographic of the folks walking through the mall clutching a mocha frapapoofychino with status shopping bags and the gaudy jewelry with the cell phone stuck in their ear? These are the consumers. These are the folks leaving the family budget for retirement in tatters. So... Dearest Sharon... as usually happens when a male member of the majority questions ANYTHING about the women or minority's priorities or powers I am rubuked with lines like "farm-wantin men in Boca in line". Let us remain germane to the conversation at hand, spare me the eye rolling BS, and give an ear to what thinking men like myself and Dmitri Orlov (also mentioned in Sharon's article) both seem to have noticed.

We, as thinking people really must be able to talk about the things that are harming all of us regardless of how uncomfortable it makes us feel or politically incorrect it is.

More to follow...

Wednesday, July 28, 2010

Hey "Coal Guy", we're in good company

"Alcohol didn't cause the high crime rates of the '20s and '30s, Prohibition did. And drugs do not cause today's alarming crime rates, but drug prohibition does." – US District Judge James C. Paine, addressing the Federal Bar Association in Miami, November, 1991

Regular Commentator "Coal Guy" helped to clarify the impacts of declining population growth on the Government Ponzi Schemes I brought up in a recent post... now listen to...

PIMCO's Bill Gross had this to say today:

“I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population, production depends upon people, not only in the actual process, but because of the final demand that justifies its existence.”

During my career on Wall Street I have often said that economic growth would likely end with the end of population growth, and with it the end of ALL of the Ponzi Schemes (we didn't have Madoff back then). This concept was often met with derision. Here now is Establishment Power Bill Gross saying essentially the same thing with but one qualifier in the above statement - "in part dependent" - and of course it is fully dependent, no "in part" about it.

Problem is... stone cold Capitalists like me will be kind of lost without capitalism...

Tuesday, July 27, 2010

2005 -2020 part 2

"If a nation values anything more than freedom, it will lose its freedom; and the irony of it is that if it is comfort or money that it values more, it will lose that, too." – Somerset Maugham

Oil exports from the exporting countries are going to continue to decline. Period. Still, that begs the question: "At what rate?"

For American imports, I like my .7% per month guestimate - with periods of as much as 1.5% per month declines in 2013 to 2015 (depending on Iraq's production profile...) The other major industrialized importers should track the U.S.

Is that as big a problem for America as our unfunded pension liabilities and intractable deficits? I am not even sure that that is the proper way to frame the discussion. In the end I think what really matters in the West and in America in particular is the political and policy response. The practical responses will come. Not enough milk or eggs in the stores? Cows and chickens will show up in backyards and neighborhoods. Not enough money in the financial system because of mass defaults? That might actually be the more intractable problem.

People are already making adjustments, or as Jimmy Kuntsler is so fond of saying - "other arrangements". Well, Jimmy they ARE making other arrangements. Fewer households are forming, young people are putting off parenthood, and for many, many various and sundry forms of businesses... restaurants, stock brokers, realtors, lawyers... business really stinks, and it stinks because many people are unemployed and those that are employed have suddenly found humility... and while this is good for the individual it is not so hot for Social Security and Medicare revenue collection. Is it really necessary to point out that Bear Stearns, Lehman Brothers and hundreds of commercial and savings banks no longer exist. Head count in the financial services and banking has declined 3 years running, and will likely continue to decline for the next 20 years (or so).

The simple fact is this - the government's take of GDP grew from 3% in 1929 to 26% last year, it has grown steadily as a percentage of GDP for decades, and it has reached terminal growth velocity. Irrespective of what the Left has led people through the media to believe, the government simply cannot gain MORE revenues by increasing tax rates and real tax collections. I don't know why this is, but hey just cannot seem to grasp some simple economic concepts. Now throw in declining Oil imports... not some time in the future, not some silly doomer-disaster de jour, but REAL and RIGHT NOW Oil availability in the U.S. is declining. This is input (or lack thereof) is probably (almost certainly... even if nothing is certain) what set off the termination of government's ability to increase its GDP take.

Still with me?

Ok, so the People ARE responding. The People ARE making other arrangements (no, not fast enough... YET, but people will surprise you when their hand is forced). What about the governments? Have you seen any "making of other arrangements" by any state, city, county, or the Federal Government? Nope. Actually, there was one "other arrangement"... our idiotic federal government expanded the medicare tax to investment, interest, and dividend income. Right in the middle of biggest economic cluster f*** since the 1930's. I know this pleased the tye die and sneaker and Leftie set... but those folks were embarrassingly short changed in the economics section of the brain. Again, politics rears its ugly head.

The tax revolt cometh. The political outcome is far from certain.

"A man will sooner forgive the slaying of his father than the confiscation of his patrimony." - Machiavelli

And therein lies the rub... American's have no patrimony. Americans are broke, with nothing to start their lives with - the old folks can barely provide for their old age let alone patrimony for their children. There really is no middle class left... certainly not in the private sector... if there is anything resembling a middle class I think it would best be described as the public sector class or bureaucrat class. America has its professional class: Doctors, lawyers, financial professionals, CPA's, Engineers... and for the most part these are the rich that the Left and the Media despise so vigorously (I always refer to them as the middle-class-millionaires. Funny thing is, they don't think they are rich... likely from the daily indoctrination injected into our lives courtesy of the Media... Flying from Four Seasons to Cruise and back to the Four Seasons makes it difficult to see how billions of people live around the world... may I suggest a back pack tour of the country side in some third world nation?), in addition to the outrageous rich... and then we have our poor-as-a-church-mouse-deluded-into-thinking-they-are/were-middle class because they aren't on food stamps and don't live in the projects... and those that do.

The People were always broke down through history but now they have been collectively deceived into believing that they can all have a 25 year "retirement" of leisure and travel, and if they don't get it... somebody did it to them. Somebody is at fault. Somebody has to pay, and a lot of somebodies also want to benefit politically.

And that's where we are now. The People are either unable to grasp, or the Media are unable to explain the problem with Social Security and Medicare. What you hear is that "people are living longer" - and that is partially part of the problem. Very partially, if you will. The problem is far more the lack of population growth than life expectancy... as regular commentator "Coal Guy" so elegantly said after I pointed out that Social Security and Medicare were governed by "e" every bit as much as compound interest is:

A note on government Ponzi schemes and population growth. There is a vast difference in available funding for Social Security associated with a seeming small range of growth rates in population. Consider that if the population grows at 3% per year, it will double every 23 or so years. That means that every 70 year old retiree has two 46 year olds and four 23 year olds to support him. If all are to have an equal share, each of the seven would get 1/7th of the earnings of the working six. Social Security tax would be 14%. Of course attrition improves the situation for the survivors, but this is just for example.

If there is zero population growth, each 70 year old retiree has one 46 year old and one 23 year old to support him. In this case, each would get 2/3rds of the earnings of the working two and SS tax would be 33%.

If population declines by 3% per year, four seventy year old retirees would have two 46 year olds and one 23 year old to support them. Each would get 1/7th of the combined earnings of the working three, and the SS tax would have to be 57%. This is what China has done with their one baby rule.

The implications of exponential math are astounding and ignored and misunderstood.

As of today, nearly 19 percent of all Americans receive some form of Social Security. Compare this to 1970 when only 12 percent of all Americans received some form of Social Security.

The Left desperately NEEDS to have the level of acrimony and belligerence now passing for discourse in the political air in order to silence the rational mathematical analysis that might ensue. They need a contra Party, the Right, that spouts off with unimportant Bull Sh*t - gay marriage, flag burning, freedom fries, and "under God" - to fight about so that they, the Left, can go on about their business of destroying the country, the constitution, and the currency. And the morons on the Right are the unwitting dupes going bang for bang with sledge hammers provided by the Left to destroy the country and the rest of the West.

The People were always broke down through history, but for the most part they got by. The People were almost NEVER free, not in the way the American's were granted our freedoms by our Constitution. Now, many Americans are only too willing to give up those freedoms in exchange for something most never had and were never going to have.

How can we be this f***ing dumb?

Monday, July 26, 2010

2005 - 2020

I got an email link to a fantastic documentary on the world financial and monetary system from a well known guy in the energy debate. When you have the time, this is pretty good stuff... and I'd say reasonably, though not perfectly, accurate (perhaps 88%?). I have much to say on this subject, MMT, Keynesian goofballs, and life in general.... but you gotta watch this first. It really is worth the hour of life that it consumes.

Now... Let's talk OIL, shall we?

Here's the deal: Oil production is still below its monthly and yearly peak(s) of 2008 and 2005 (Monthly production peaked in 2008, yearly in 2005 if I read the data correctly... feel free to correct me) even though Oil is up 700% in just over 10 years.

2010 Oil imports into the U.S. are down 5.1% from last year's disaster... but the AVERAGE decline rate has remained close to .7% per month beginning with the 2006 over 2005 comparison.

Here, in its entirety, is a post I wrote November 28, 200- nearly 3 years ago, in which I argued that the Apocalypse would NOT come as advertised but that a slow, grinding torturous constriction of Oil availability to the U.S. economy would be the more like outcome. With the exception of an inflationary response (in mid-2008 I came around to the Deflationary theme... sometimes your hot, sometimes you are not) I think things are progressing right about on schedule. In any event, let us reconvene this discussion after the repost:

An Apocalypse NOT!

I get a decent amount of email from the “doom and gloom” folks asking me when I think the “collapse” takes place. Collapse? What collapse?

The decline in oil availability will be a slow, grinding process (in my opinion) that will not fit nicely in a 2 hour movie, 3 minute pop hit, or 15 second political sound bite mindset. I hope I can disabuse the doomers that visit here that they need some kind of bomb shelter. Although I fully appreciate your point of view, my commentary is directed toward how one might direct the investments that they have worked so hard for. I sincerely believe that the U.S. oil supply situation will have profound effects on our financial and real estate markets and currency over the next 5 years, but I do not think this will happen on a Tuesday afternoon. Nor do I believe that we will descend into anarchy. Are not resource wars (starting with Iraq), and the prospect of hyperinflation, and stagnant or declining GDP enough? Well, at least I hope they are.

My issue is this: Why should you work so hard only to pour your investment dollars into a leaking bucket? You would have been better off spending those shekels on vacations, expensive wine, and song. (Actually, that sort of appeals to me.) Some might find that pecuniary, but those that do probably did not spend a career doggedly pursuing some level of financial independence. Actually, I am quite sure that on some level the tied dye set is HOPING for a collapse. Teach those yuppie pricks a lesson.

I know that a lot of the peak oil blogsphere is filled with disaster scenarios, but I sincerely doubt this is the most likely outcome. That argument that we will experience immanent agricultural disaster due to declining energy inputs is just not that likely. The markets are efficient enough to redistribute those inputs away from Suzie-Cuzie’s trip to the mall and into the farmer’s tank and fertilizer bin. Yes, food is going to get much more expensive, and yes, this will fall disproportionately on the poor. But the aggregate AMOUNT of food available to Americans is not the problem, but rather how to pay for assistance to the poor.

This is not to say that our agricultural exports won’t decline and harm others. I sadly think that is a rather likely outcome. Those of you that have been following my blog know that I have great concerns in this area. Wheat and corn production will become an increasingly expensive proposition, and that will negatively affect aggregate crop production, just look at wheat inventories, and in turn available exports and domestic meat production, but the lesson of history is that people will be “incentivized” to produce some of their own food. As an avid gardener, I can tell you that a simple kitchen garden can overwhelm your ability to consume all that is produced at harvest time, the surplus of which can certainly be preserved. It will not be necessary to produce ALL of our own food (at least not for 20 or 30 years, all bets are off at that point in the oil production curve) just enough to bring the marginal scarcity food cost down to an affordable level.

I get email from one dour fellow who tells me that we have lost all of the knowledge to do this. What knowledge, gardening? Get a grip, and join my garden club. You would be impressed with what these folks know.

As my friend FireAngel from likes to point out, if India can feed over 1 billion people with less arable land and far less fossil fuel imports, North America certainly can feed its population.

There is also some slack for the economy in the wasteful way in which we use oil. FireAngel recently pointed out that driving around in circles does not increase GDP.

If it were going to be Armageddon, what would be the point of investing? Better to blow it all on a trip around the world.

No, the Apocalypse won’t be arriving anytime soon, but a paradigm shift is, in my opinion, underway as I write this. In this paradigm shift, there will be winners and there will be losers. Not much different than our current reality. It is the INSISTING that things be a certain way that will get you into trouble. Flexibility and adaptability will go a long way in the environment I foresee.

No, it won’t be business as usual. We are likely to be a whole lot less mobile, live in smaller homes, and consume less frilly BS. We won’t be commuting as far, be more involved in our communities and our children’s lives, and we even might all have a new hobby – gardening. But I ask you: Is that really Armageddon?

Yours for a better world,

Mentatt (at) yahoo (d0t) com

End of reposted article.

So far, pretty on the money...

Here's why I might be right: China's market for new cars surpassed the U.S. by a BIG number this year; imports into the U.S. continue to S.T.B. (S**t the bed); Deep Water Drilling as we know it here in the U.S. is on the ropes (irrespective of the Administration's dopey policies... nobody wants to be put out of business by a blow back, the costs of insurance are insurmountable, fear of criminal prosecution...), and just last week the King of Saudi Arabia said they have no intention of increasing production to keep world oil prices down but are instead concentrating on what is best for their citizens in the Long Term.

Here's why I might be wrong: Iraq's Oi fields might put off Peak Oil by 10 years. I doubt this very seriously, but I would be FOS to claim that it was not a possibility. Other than Iraq, I would give my year 2020 outcome of less then 8 million bpd available to the U.S. as an EXTREMELY HIGH PROBABILITY... and less than 5 million bpd available to the U.S. in 2030.

I tell most people to save more and diversify beyond financial assets... I tell semi rich folks ($3 to $15 million net worth) to enjoy the fruits of their labors and spend some money on the things you always wanted to do because the government is going to enact crazy death taxes and our currency and financial markets will not survive the decade without unreal changes. Take that trip around the world. Spend a month in Israel or Egypt or Costa Rica... wine, women, & song.... You truly rich folks are on your own.

Sunday, July 25, 2010

Learned Helplessness or FORCED Helplessness

"The legacy of Democrats and Republicans approaches: Libertarianism by bankruptcy." – Nick Nuessle

This is my 5th growing season on the farm (for those new here, I bought a small family farm 4 years ago as part mid-life-crisis-always-wanted-to-do-it and part I-don't-really-know-how-to-do-anything-of-value-outside-of-working-in-the-securities-markets). I really can't explain how much On The Job training I have picked up... but, A LOT.

If you have been reading my stuff for a while you know that one of the metrics I follow to understand the factual condition of the U.S. economy is the number of people receiving food assistance from the government. As I continued on this bent I also found that the correlation between food assistance and housing assistance is very, very high. Somewhere over 60% of SNAP recipients (what was formerly called Food Stamps) receive housing assistance (live in subsidized housing, otherwise known as housing projects).

Stay with me... I belong to a "Farmers Co-op", a place where small guys can rent - essentially share - equipment (as well as get a great deal of data... what dates to plant what, how to preserve food, how to make cheese, how to care for livestock...).

Every time that I drive our garbage into town I pass a large public housing project. What struck me about these projects was the number of kitchen gardens behind the structures. "Wow!" I thought. I have lived in New York and Miami and never had I seen a garden anywhere on the grounds of a public housing project (though they had the space). Since these folks have already taken this much initiative... why couldn't they have a barn for dairy animals and a coop for chickens? The "city" of Lebanon, TN has an "inmate's garden" - so they have the equipment - and plenty of land... why not make more space available for growing feed corn... why not bale up the hay that the town cuts along the roads... and make this available to these folks?

Isn't there a shot that by doing so some of these folks will learn how to make money as well as feed themselves? If a nearly 50 year old guy like me can raise as much food as I do part time, why wouldn't these younger families be able to, and benefit from, these efforts?

Well, I pointed this out to the county, the city, and the state... and so far, no go. Could it be that Government, ESPECIALLY the Left, does not WANT these folks to find their way? If they did, and became money-making-tax-paying-contributing-members-of-society, maybe they wouldn't vote for the Left?

‎"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it." -- Benjamin Franklin

There is a better way.

Saturday, July 24, 2010

Of Mice and Men and Cows and Libertarians

For those interested in Homesteading or Self-Reliance...

This breakfast was entirely raised or grown (or laid) on the farm (except the black pepper). After I uploaded the shot I realized I left out the cornbread and milk... oh, well... you get the idea. We grow our own corn for corn flour, but have not grown wheat as yet. Bees are next...

This is our family milk cow - Bonnie. Its been over 1 year since she calved and she is still giving us about a gallon of milk per day (and we only milk once a day... at first we were getting 2.5 gallons and I had to work at giving it away). I bought her as an 8 month old calf. She had been bottle raised, so she was always friendly. That doesn't mean she won't step on your feet when she gets excited about a snack... I always where tough shoes or boots for milking... NEVER FLIP FLOPS. 1,100 pound cows are tough on your feet.

A cow is easier to care for than a dog. Bonnie is entirely grass/hay fed, except for a couple of handfuls of corn while I secure her for milking. The whole process - from calling her in to screwing the top on the milk container - takes about 20 minutes. Like I said, easier and less time consuming than walking your dog several times per day (and I get manure for the garden and organic milk for the fridge). We just put last year's calf in the freezer - 350 pounds of cut and wrapped organic, grass fed beef. With the hog and calf we raise every year I could have a 4 BBQ's for 25 guests over the summer and feed the family for the rest of the year. Between the meat and the milk Bonnie has been an outstanding investment. Also... by moving her around with electric fencing I don't have to mow the 2+ acres of lawn around the house (very often). I used to burn 3 gallons of gas per cutting (and a couple of hours). Bonnie has lifetime employment as far as I am concerned. Besides, everybody loves Bonnie... most gosh d*mn personable cow you'd ever want to meet!

(Bonnie mowing the grass in the back yard. See that yellow wire? That is all that keeps her in.)

Potatoes, both sweet and white, and corn came in abundantly this year, but the rest of the garden was only so-so. The meat, milk, and eggs overwhelm us and we share these with friends and neighbors.

Got a funny email today:

If a Libertarian doesn't like guns, he doesn't buy one.
If a Liberal doesn't like guns, he wants all guns outlawed.
If a Libertarian is a vegetarian, he doesn't eat meat.
If a Liberal is a vegetarian, he wants all meat products banned for everyone.
If a Libertarian is homosexual, he quietly leads his life.
If a Liberal is homosexual, he demands legislated respect.
If a Libertarian is down-and-out, he thinks about how to better his situation.
A Liberal wonders who is going to take care of the them.
If a Libertarian doesn't like a talk show host, he switches channels.
Liberals demand that those they don't like be shut down.
If a Libertarian is a non-believer, he doesn't go to church.
A Liberal non-believer wants any mention of God and religion silenced.
If a Libertarian decides he needs health care, he goes about shopping forit, or may choose a job that provides it.
A Liberal demands that the rest of us pay for his.
If a Libertarian reads this, he'll forward it so his friends know how to vote in November!
A Liberal will delete it because he's "offended".
Well, I forwarded it.


I am sure one could do the same trick with Conservatives versus Libertarians... I only wish we had more Libertarians to vote for. Mostly its a choice between dirt-bags out to control us from different positions.

Friday, July 23, 2010

Show Me The MONEY

Got a kid going to college soon?

Read this excellent article about WHO is making the big bucks and why.

Anybody paying $200k for a degree in the Humanities from an also-ran private college is getting taken WORSE than a Madoff victim... and the ONLY reason that the Ivy League school's grads are getting this kind of money for NON-TECHNICAL educations is due to Wall Street. If your kid does not want to work on Wall Street, skip the expense. Ivy League social workers don't seem to make the same dough. If, for some reason, the financial services industry contracts severely in the coming years... well, you will have to take that into consideration.

Back to the article.

Those were for SALARIES. Plenty of these grads went on to start companies and make millions and millions. One does not have to remain an employee all of their lives.

Of course, at the end of the article is the feel good "what if your kid's not bright enough to grasp math and science?" In that case, don't listen to the pitch from these jerks. Help this type of kid with down payments and other financial help by not wasting your money on some feel-good-horse-sh*t degree (unless you are rich... in that case do whatever floats your boat).

In the economy of the next decade or 2, they are really going to need all the help they can get. Just look at how much money they are going to need to save to get to the $1.5 million they will need in retirement. Take the $200k you were going to waste on the Poetry degree from NYU, send them to state school, take the $160k difference and buy rentable farm land (that is, productive land that you can rent to farmers). Your kid will have a very comfortable retirement and will keep your picture over the mantle piece for the rest of his/her life, extolling the genius that is you for generations to come.

Thursday, July 22, 2010

Untruths - Part 2

Given that folks would need to save 25% of their income in order to retire at the level of their previous lifestyle...

Here is how it COULD BE DONE:

Ditch Social Security. Doing so would leave payroll tax payers over 15% of income formerly paid to the Black Hole of Social Security (half paid by employee and employer). Saving an additional 10% would be a breeze. The government would no longer have a pot of money to squander around the trough, We The People would be able to fund ourselves as we see fit. Are we really so incapable? Do you REALLY trust the government to be more responsible with OUR savings?

Were the Republicans so wrong to attempt to privatize Social Security? Just because the market took a dump? I don't think so. In fact, I think both sides were merely moving incrementally where towards their agenda. The Dems won (always easy to gain support for seizing other peoples assets) and Federal government spending as a percentage of GDP went from 3% less than 1 lifetime ago to 26% today.

The really crazy thing is that the "American Dream" which is not only owning a home, but educating 2 or 3 kids at top private schools and then having $1.5 million in financial assets (not including the home and hardware) left over at retirement is attainable only by the 1 in 10, or perhaps only 1 in 2o, (5% to 10%) families. Worse, even if you get there, there is no guarantee that you enjoyed the ride or didn't lose your health in the effort. Lastly, given our whopping divorce rate (what is it? over 50% of first marriages?) and its financial burdens this was NEVER, NEVER, NEVER going to happen.

That means that it was all a mirage... and that people have needlessly worried about something they had absolutely NO CONTROL OVER. The fact that a very small group of people from a very narrow window in time lived in a country that had room to grow, had no competition from the ROW (destroyed during WWII), and had an increasing population to pick up the tab for an absurd, ridiculous, fallacious, flaky, nutty, cretinous, and just plain nonsensical set of social program/ponzi scheme does NOT mean that those set of circumstances were sustainable.

Yet we bawl, wail, and moan over the loss of something that never really existed, or if it did exist it did so in such a narrow space of place and time as to make the memory and claim of it nothing more than fantasy.

If We Repeat an Untruth often enough...

In some bizarre fashion the idea that if we repeat an untruth over and over and over again and get enough people to believe that it is truth... it becomes truth.

Isn't this the very definition of propaganda?

Please read this excellent article, though the article is NOT excellent because of its accuracy or potential... but because it gives the lie to most of what people believe simply because we have said it over and over again.

Let begin by saying that I do not take exception whatsoever and in the extreme with the premise that we in the West, and America in particular, need to save more. So far, accurate and truthful (it always helps to mix in a little bit of truth with your propaganda). But let me break out my calculator, my brain, and my understanding of e (in both directions... things can grow AND contract).

The comparison is to a time when workers received pension benefits from a corporation (as many government employees now do, but just give me a minute) thus removing them from the responsibility of providing for themselves... and then how the corporations and non-profits went over to 401k and 403b savings plans with the onus on the individual and not the operating entity. You know what you NEVER see in these articles? You never see any mention of WHY.

Every actuary on the planet knows why, but somehow every reporter and every politician just can't seem to grasp it. The old corporate pension system has, or had, the exact same mathematical liability (certainty) that Medicare and Social Security system has. They are all, ALL, pyramid schemes... and all, ALL pyramid schemes eventually collapse as the supply of new contributors cannot grow exponentially indefinitely. PERIOD. Every numerate person on the planet knows that anything growing exponentially will grow to infinity... and since it is not possible for the supply of new workers/contributors to grow to infinity each and every Ponzi/Madoff scheme - be it Medicare, Social Security, the old Corporate Pension system, the current public employee pension system - will absolutely, positively collapse at the point when the distributions overtake the the contributions with a slight lag time.

The problem is that 96.435% (my own estimate) of the American electorate are innumerate (with 100% of the Left, the Media, Liberals, Socialists, either being innumerate OR really, really devious). This is not true of the Actuaries running the Corporate pension systems. They saw this MILES away and YEARS ago (not that it was hard to see), and so they lobbied for the 401k and 403b legislation... and here we are.

Note to you Lefties... this is NOT up for debate. This is not an opinion. These are the mathematical, social, and political facts. You can argue over the motivations and interpretations if you like, but as the Late, Great Senator Daniel Moynihan famously said: "everybody is entitled to their own opinions, but not their own facts".

With me so far?

Now, let me turn my calculator on you Right Wingers. This passage is from the article and the math is accurate:

Here's more bad news: Just saving a lot isn't going to be enough. Let's say you're 30 years from retiring, you earn $100,000 now and you guess that your income will go up by about 3 percent a year. Even if you earmark 10 percent of every paycheck for your retirement and your employer adds another 5 percent, you'll have set aside only about $713,000 by the time you stop working. That's half of what you'll need for that $50,000 annual income.

To live comfortably in retirement, whatever you save has to grow -- and its growth has to beat inflation by at least a percent or two. Here's where time is your ally. Take the example above, where you're earning $100,000 a year: That first $10,000 you set aside in 2010 will have become more than $30,000 in 2040 if it grows by 4 percent each year. If it grows by 6 percent, you'll have more than $50,000. And whatever your employer put in will have tripled or quintupled as well.
In order for folks to meet their own expectations, the expectations that were created during the early stages of the pension Ponzi scheme, they will, by mathematical NECESSITY, need to save roughly 25% of their lifetime's income for use during their later years... or in other words, each and every household in America would, in that scenario, have a net worth of $1.5 million at a minimum. Anybody care to guess what the average American household's net worth is RIGHT NOW? Less than 10% of that figure. (The top 25% hold over $1.5 million is assets on average, with a BIG chunk of that their home and home don't count toward retirement income) but that is not the correct measure... MEAN would be the correct measure - but even if you went with average 75% of the people do NOT make the cut... and by a long shot).

(Yes, I know the wealth distribution knuckleheads think that all we'd have to do is redistribute wealth and "problem solved" - besides suffering from the fallacy of misplaced concreteness those folks do not consider the unintended consequences of their proposed policy. Then again, what idealistic teenager ever does?)

Even if it were possible for everyone to save $1.5 million over the course of a life time... or forget it... its NOT POSSIBLE. Average family income is just over $60,000. Either GDP has to quickly triple, with all of that outcome's concomitant effects on food, water, the environment, politics, international impacts, etc... (and by saving so much - keep in mind the "paradox of thrift" - I can guarantee that it would not happen for a generation or 2 in any event).


Why is this drum being beaten in every corner of the realm? In order for the 2 headed one party system to continue to engage in the "Blame Game". Though there are PLENTY of people that have figured this out and have lived their lives accordingly, the vast majority is easily swayed by the silly machinations of The Powers That Be.

As I repeat ad nauseum... there is no "solution" for impossible expectations, absurd belief systems, and innumerate electorates... just more hot air, anger, blame, and hate.

Wednesday, July 21, 2010

More on the "Blame Game"

The U.S. Senate is poised to extend unemployment "benefits" beyond 2 years.

OK. Let us use our Noggins here... Why doesn't the government skip this farce and extend unemployment "benefits" indefinitely? Why not make them permanent? If you lose your job, don't worry... we got you covered. You NEVER need to work again, nor experience any of that unpleasant stress that comes with any consequences for your decisions or the vagaries of bad luck.

After all, if you are going to pay people not to work for 2 years, why not 5, or 10? What kind of society are we that we would stop paying people after any period, no matter how long, that they are "out of work".

This is all part of the Washington Blame Game. Its also part of the "I feel your pain" politics that worked so effectively for Bill Clinton. Take a hard look at the healthcare debate. The folks in favor of the nationalization of the healthcare system frame the debate as them being for providing care for poor Americans and the folks agains it just don't care about the American people.

Who WOULDN'T want perfect and free healthcare for the American people? The question the adult side of the debate was asking was: "How are we going to pay for it"? The other side's response? We'll take away the profits from those filthy and disgusting insurance companies.

OK. Here is where I, as a responsible adult, break out the dreaded calculator. If I add up ALL, ALL!... of the profits of the health insurance industry, it totals less than 5% of U.S. healthcare industry. I often hear 33%. Well, REVENUES paid to insurance companies (that are then paid out/passed through to healthcare providers) are roughly 28%, but you would still need most of this overhead structure unless you planned completely free healthcare services with NO ONE doing any clerical or administrative work on the data whatsoever... if you accept that, then the most you could save would be the 5% profit (but you would have to subtract the taxes paid on those profits).

So what's the real deal? Boy, you are really not going to like this. I don't like it either. The real deal is just too unpleasant and too "Life's Unfair" for the multitude of over-the-hill teenagers. Healthcare will eventually be rationed. I don't know what form or how it will come down, but it is very much like having 10 people trapped in an underground cave with the cave only having enough oxygen for 9 to survive. If we attempt a rescue, the equipment will consume oxygen sufficient to keep 4 people alive. We don't know who is going to perish, but we know with certainty that someone has to go. And, no, I do not presume to play G-d.

Our system is incapable of working with parameters such as these (except when we need to kill thousands of non-Americans over Oil or some other "National Interest"); the Blame Game will simply continue, and anybody that questions the veracity of the numbers will be ridiculed as a mean spirited, unenlightened, compassionless, racist, bible thumping, (fill in the Blank), Republican.

Tuesday, July 20, 2010

Politics, Peak Oil, and Debt

"The American heritage was one of individual liberty, personal responsibility and freedom from government … Unfortunately … that heritage has been lost. Americans no longer have the freedom to direct their own lives … Today, it is the government that is free – free to do whatever it wants. There is no subject, no issue, no matter … that is not subject to legislation." – Harry Browne

This post has been corrected as some the verbiage did not transfer in the original posting.


My most recent post had some really excellent points made in the comments section, not least of which was someone pointing out that I am a "self-educated, pro-life, anti-government red-neck". I corrected that commentator. I am NOT a red neck. Working class northeasterners are different from working class southerners, though the subtleties are small they are none the less there.

I began blogging because I had researched a great deal for a book idea that I had, that had it come to fruition would have been titled "Train wreck: The U.S. Housing Bubble meets the American Energy Crisis". One of my partners (Mikie T.) said that I was unlikely to get published and that events might unfold before I did so in any event... so why don't I publish a blog? That's how I got to be here in this forum.

Initially, blogged about Debt and Energy, eschewing politics... but as time wore on I came to the conclusion that the real disaster, should one befall us because of the Debt and Energy situation, would come about from policy and politics. So I tell this story from the Libertarian perspective.
Look, essentially ALL of the peak oil web sites are authored by the Left/Liberals/Socialists... and they have their perspective (and from my perspective they have most things completely wrong). Reading here gives one the Libertarian perspective from a 50 year-old guy with a great deal of experience...

(Since the age of 13 I have banged nails on roofs, pumped gas, programmed in C, washed dishes, caddied, served court summons, worked as a collection agent and repo man, dug ditches for sprinklers in the Florida sun (now, that job s*cked... but I needed the money...), worked at the Fulton Fish Market, parked cars and set up bowling pins for Mobsters (and some honest guys, too), painted, sold hotdogs, chauffeured a rich matron of the arts, worked in healthcare, finance, construction, and energy and even held elective office... ALL before going to work on Wall Street... did I mention I was a body guard? Yep. Worked for Charlie Daniels, Barry White, Johnny Mathis, Stephen Stills (I know I am dating myself here but this was 30 years ago) and quite a few others through Owl Investigations, Inc. (Now that was fun, especially Barry White... trying to keep him "safe" from beautiful women tearing their clothes off and throwing them at him is big fun when you are 19 years old), and I Worked for Fernando Puig, one of the officers leading the Bay of Pigs invasion (or whatever you want to call it) for a while, too... lost that job after he was assassinated in a Univ. of Miami parking lot (it was reported as a robbery gone wrong!)... BTW, I wasn't guarding him at the time. I worked for him at the world famous Mutiny Bay Hotel in Coconut Grove, Miami at the HEIGHT of the Mariel Boatlift. That movie "Scarface" simply does not do it justice. My sister and I both quit working there after the umpteenth murder and kidnapping... times being what they were I took up process service in New York, (that's the guy that brings you papers to appear in court). First day on the job? We were working a bad neighborhood and somebody lets their German Shepherd out to attack me, I drew a gun to fire, the dog saw the gun and put on the breaks and took almost 20 yards slipping and sliding to stop in the wet grass before hightailing it out of there... I turn to my brother Wayne who was with me and said "I guess dogs watch T.V. and understand guns, eh?". Still, we were FREAKED... I have a much different story to tell than the "I summered on the vineyard, then college, then Wall Street" pitch. All benefit of being a "working class, white trash, self- educated, pro-life, anti-government"... can't remember the rest...)

... and some success.

I very much enjoy the input of intelligent commentary. I would ask all comments to be well reasoned, germane to the conversation, and courteous.


The world energy situation, debt, and globalization and arbitrage of labor are making for a very, very trying time here in America. For better or worse, when times get to be trying, American politicians get to be blaming. Left AND Right, North and South, Urban or Rural... the blame game goes on - or better yet, the politics of "making gains in order to force YOUR agenda through the system by Blaming others for systemic issues" game goes on.

Look what our politics has done to marriage, sex, drugs, debt, the military, and let's not leave out those lovely social programs that are going to be defaulted upon... now here comes a continuing decline in Oil imports into the U.S... are politicians going to work together on this common problem? NAFC!! They are going to try to gain advantage. This is neither good nor bad, right nor wrong... this is just the way it is. It then follows that since things are f*#@ed systemically that the best course of action is to reduce the system's impacts, leaving the individual to sort things out for themselves.

Of course, that is not what is going to happen necessarily... but we are here discussing the possibilities and the probabilities... I respectfully submit that our government and TPTB the entrenched political parties, etc... will do the same thing they did after the attacks of 9/11/2001; that is to use the circumstance to craft ways of fulfilling their agenda, using the people's emotions against them to further erode their freedoms and rights.

I find this to be more of threat than anything else "Peak Oil" could throw at us.

More soon.

Friday, July 16, 2010

"Don't Blame You, Don't Blame Me, Blame that man behind the tree"

"By the year 2012, projected outlays for entitlements and interest on the national debt will consume all tax revenues collected by the federal government … There will not be one cent left over for education, children's programs, highways, national defense, or any other discretionary program." – Bipartisan U.S. Commission on Entitlement and Tax Reform

OK, so its "Don't tax you, don't tax me, tax that man behind the tree". I like my version better.

Wall Street and Government sucked Americans into debt? BULL SH*T!! Where is the concept of personal responsibility? If ANYTHING or ANYONE is guilty... it was Television, Hollywood Movies, and MTV that sucked Americans into debt. (Why is it that the tie-dye and sneaker set do not begrudge Paul McCartney or Mick Jagger their Billions yet they absolutely freaking despise some small business man that broke his b*alls to become a Middle Class Millionaire?) We have been so manipulated by advertising and messaging that we need to be "cool", we need to drive a car like James Bond (in order to get the "Bond Girl"), we need to dress like the movie stars do, and we need to live in a castle. Well, if these are your needs, and you don't have the income to support them, you will go into debt to support those "needs".

The other problem is, no matter how much money you make you can blow it all and wind up in debt. Look at Mike Tyson, M.C. Hammer, Nicolas Cage and many, many other rich and famous that went broke (and these folks weren't your run of the mill high earning professional... nope, they spent hundreds of millions on some really silly stuff.) If you accept the premise that any fortune can be squandered then by definition you must accept the premise of personal responsibility.

But when was the last time you saw an article saying "Americans squandered their incomes on senseless materialism", or "Americans are risking their lives and the well being of their families by overeating"? NAFC. What you do hear is that "Wall Street and the Government sucked Americans into debt", and "The processed food and fast food corporation sucked the American people into being obese".

No wonder people are so freaking angry! We are all VICTIMS! "Those scum-bag corporations did this to me!"... "Wall Street (the Devil) made me do it!"


Americans are watching more television than ever before, both through conventional TV sets and on the web, as the range of channels continues to expand, the screens get bigger and the quality of the picture increases as new hi-definition and 3D technologies arrest and shorten attention spans to a greater and greater degree.

Americans are now a nation of spectators, watching a shocking average of nearly 5 hours of TV a day, up 20% from just 10 years ago.

Hooked in to this matrix medium that tells them how to behave, what to care about, and how to treat people who deviate from this spoon-fed consensus, people are literally being programmed into accepting a contrived false reality that bears little or no resemblance to what is actually taking place in the real world. This is why the assembly line of zombies being manufactured by this process will roll their eyes when warned about real issues that affect them – the crumbling economy, unemployment, the BP oil spill – yet will become visibly upset when an event that has no bearing on their existence whatsoever, like where LeBron James throws a basketball around, takes place.

We are literally being trained like dogs to react to meaningless stimuli while burying our heads in the sand in reaction to issues of real significance. This behavior training encompasses an entire outlook, an entire lifestyle that people have adopted to the point where their moral compass, they way they dress, the way they speak, what they eat, what drugs they take, the way they respond to events and how they treat other people is solely a construct of the babylon system to which they are addicted.

The fact that this matrix system constantly promotes damaging and destructive messages is why people are fat, unhealthy, unhappy, addicted to drugs, and unsuccessful in maintaining relationships. They are a product of their brainwashing. Downloading viruses from an infected culture on a daily basis, people’s hard drives – their brains – are corrupted, lethargic, and barely able to function. This is why people seek out destructive pursuits that do nothing to benefit their long-term personal interests. This is why people no longer talk to their neighbors or get involved in their communities. This is why people care more about LeBron James than their own country collapsing around them – because that’s the content of the programming they have downloaded.
Think about our last presidential election. We elected a young man with no business experience, no economic background, no financial experience, and little political experience because he was half black, supported abortion rights, looked good standing at a podium and could read a teleprompter (I referred to this in previous posts as the MTVization of politics).

In addition to Goldman Sachs and the USDA I am now going to add T.V. to my "Anti-Christ" list.

Given all of the above and the myriad data I have posted on in the past there is absolutely NO reason to believe that a macro, society wide solution proffered by the government will come about. This is like climbing Mt. Everest - you are on your own.

And that's how it should be.

Wednesday, July 14, 2010

Fallacy after Fallacious Reasoning after Fallacy...

The United States of Blame.

Tom Whipple, a retired CIA analyst (yes, that CIA) had this to say on his web site today.

No wonder that, according to a recent Washington Post poll, 58 percent of Americans are mad at President Obama, 68 percent mad at Congressional Democrats, and 72 percent mad at Congressional Republicans, and 62 percent want to throw somebody out of office in hopes of finding a shining knight who will solve their economic problems. If only it were as easy as going out and voting.

Interestingly, six in ten surveyed by Pew believe that the economic situation will be better soon and that the recession is only temporary. This alone vividly illustrates how poorly the true state of the global economic situation is understood and the size of the shock that most of us are in for.

Nearly everyone will admit that continuing oil shortages and that high (above $100 a barrel) oil prices would be devastating to the prospects for economic recovery and that persisting very high (say above $200 a barrel) oil prices would send the U.S. and many other economies into a deep, long-lasting depression. The problem is that few are willing to consider seriously the accumulating evidence that increasing oil prices and eventually oil shortages within the next few years are as inevitable as the sunrise. Most of us have no thoughts about the issue other than the current price of a gallon of gas. Among those who appreciate that the world's petroleum resources are finite, few understand the proximity of the crisis.
We have become the United State of BLAME. Obama and his team were doomed by the zeitgeist blowing when they took office. The ghost of Jimmy Carter is long indeed. Rather than tackle the problem head on, the Administration punted/puked, hoping only to gain a second term - because that is the only measure of success in politics. What we really needed in the 2008 election was an old man not considering a second term - Ron Paul and John McCain come to mind - and willing to "do the nasty".

Oh, well.



Remember that Congressman, Carson I believe, that claimed that Tea Party folks/fat white folks used the "N" word (and FYI, I deleted someone's recent comments because of the use of that word) repeatedly? And that Andrew Breitbart of then offered $100,000 as a reward if someone could substantiate this with a recording or video... and given the number of video cameras on hand and visible in the news shot it is reasonable to conclude that if it were shouted at the Congressman SOMEBODY would have picked it up... Well, guess what.

People make false accusations. Congressmen make false accusations. Strippers at Duke LaCrosse parties make false accusations. People in divorce court make false accusations. I consider false accusers to be lower than child molesters - especially Carson. Look, we all expect people with mental illnesses, borderline personality disorder, bi-polar disorder, mood disorder... to pull this sh*t. Sitting Congressmen? Not so much. And where is the F***ing media? Nowhere to be found.

The accusation is always on the front page. The retraction is on page 18, right under the pet obituaries. In this case, it just kind of faded away with the help of the Media

Predatory Education

I regularly read Carolyn Baker's blog "Truth to Power" and John Michael Greer's "The Archdruid Report". While I likely have little in common with their politics (and that is a shame; I don't know why the denizens of the Left do not embrace Libertarianism more), both of these folks have an uncommon ability to think for themselves and express their thoughts succinctly (if I may be permitted the use of understatement).

If you have time to peruse their stuff, I highly recommend it (keep in mind that unless you are a "true believer" in their cause(s) some of their brilliance will needs be gleaned from the inane political commentary... much as some of you feel about certain other bloggers...).

Here is the passage that struck me from Greer's blog:

A hundred years ago, by contrast, a student pursuing a scientific or engineering degree might need half a dozen textbooks for the entire course of his studies. Every chapter, and indeed every paragraph, in each of those books would be unpacked in lectures, explored in lab work, brought up in tests and term papers, so that by the time the student graduated he had mastered everything those textbooks had to teach. That depth of study is almost unheard of nowadays, when students shoulder half a dozen huge textbooks a term, and have so little time to process any of the contents of any of them that the bleak routine of memorize, regurgitate, and forget all too often becomes the only option.

Combine that with the transformation of much of American higher education into a predatory industry fueled by aggressively marketed student loans, and every bit as focused on quarterly income as any Fortune 500 corporation, and you have the collapse of our educational system sketched out in a recent and harrowing blog post by former professor Carolyn Baker.
The predatory lending that occurred in the mortgage business over the past decade PALES in comparison to what is being done to young people by the college/student loan industrial complex. Over the past 50 years a compact has been reached between our Corporations and our Universities. One simply cannot get a corporate job without an undergraduate degree in most fields (programing and entertainment are notable exceptions among others). Corporations now have "enlisted men" and "officers", with the officer's "commission" coming from the Universities in the form of an undergraduate degree.

(Since medieval times militaries have been polarized into haves and have nots. The commissioned officers came from the aristocracy and nobility and the "enlisted men" came from the commoners. Today's dividing line? An undergraduate degree.)

The Universities recognized the new power structure and began extorting monies from the masses of young people with mafia-like enthusiasm. "Wanna be able to work? F**k you, pay me. Can't pay? No problem. This loan shark will be happy to help you out." Then, this unholy duo, knowing just how badly they are duping these kids, uses their muscle to elbow into Federal Bankruptcy Law and carve themselves out an exception. No matter HOW PREDATORY their lending practices were on the young and impressionable students these debts could not be discharged in bankruptcy. I wonder if they consulted Roman Polanski on how best to take advantage of these kids?

The general rate of inflation over the past 30 years has been just under 3%. The rate of inflation for tuition at private colleges? Just over 7%. The rate of inflation for private sector wages? Just under 2%. It does not take an undergraduate degree in mathematics to plot this on an X & Y graph.

One last thing. To you parents out there considering letting your children go into big time hock for their education: Hope you weren't looking forward to grandchildren. The new Pox, if you will, in mate selection is a toxic level of student loans. It is the mirror image of marrying into a wealthy family. Markets are not stupid, even marriage markets. Young people have this one down: "Got debt? Get lost."


The 99ers. I had not seen that moniker before. It refers to people that were on unemployment for 99 weeks (nearly 2 YEARS) and that, as of now, cannot count on anymore largess from the taxpayer.

(I met a fellow here in Tennessee last week that had moved here recently from California. He was a "99er". After his benefits ran out he left California and took a job here cutting down trees. A big man (borderline obese yet burly; the biker look), he looked to be in his mid 40's. He told me he had a hard time getting used to manual labor again but that he had no choice - he needed a job.)

I have written about this before. Many Americans will need to be FORCED into making other arrangements as our total debt (monetary deflation) and oil supply contracts. Who in their right mind would willingly leave behind a $585 a week unemployment check to work cutting down trees in the Tennessee summer heat for $600 per week (BTW, $585 weekly in California is poverty level while $600 here in rural Tennessee is a living wage)?

This is simply the way it is.

"I understood the president and Congress had to stabilize the banks, get Wall Street going. I figured something would be done for middle-class Americans, that they couldn't abandon us. But I was wrong."
This unfortunate man is no longer middle class. Most Americans are as poor as church mice. They just don't know it. New cars, new houses, vacations... might be good for the economy, but they are hell on the people not saving because they are consuming. There is a skill set to being poor, and having grown up without 2 nickels to rub together I can speak with some authority on the matter (and its not so bad! No, you won't have any bling, or an SUV with spinning rims, or myriads of other silly sh*t that one just does not need or the friends and lovers that come with this stuff). Funny thing is, its the same skill set for maintaining any wealth one might accumulate. Too bad our colleges and universities cannot teach THIS skill set... it might be worth it.

Tuesday, July 13, 2010

The other Conundrum

Folks need to save more for their retirement according to this study.

Maybe. Or maybe folks need to save more for many reasons. Maybe folks should work until they simply can't work any more (after all, working is good for you... although you may have to find a new line of work in old age...)... but there is NO doubt that folks really should save more - from an economic consideration. Savings, you see, is really unconsumed production. Ergo, if you are able to save in the first place it means your lifestyle is likely supportable without undo risk and stress; your overhead is moderate leaving money left over.

At least I think so.

The problem is that savings, in the form of unconsumed production, decreases demand in the short term (and increases capital investment over the longer term). And I think that that is exactly what is happening. Of course, our dumb government is "stimulating" by the amount of the rough increase in consumer savings in order to avoid all appearance of a contraction.

"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estateIt will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”
-Andrew W. Mellon, Secretary of the Treasury advising Herbert Hoover in 1929
Of course, Hoover did not follow Mellon's excellent advice. Can you imagine a sitting, Democrat Treasury Secretary giving that advice? Or even a Republican? In the "Land of the obese and the home of the something-for-nothing"? NAFC.


Saturday, July 10, 2010

Finding Employment in Post-Peak Oil America

“How fortunate for governments that the people they administer don't think.” - Adolph Hitler, Socialist and Mass Murderer (but then I repeat myself)

If you, like me, are an American it matters little if "Peak Oil" has happened to the world because the probability that it has happened to the U.S. is approaching certainty (probability of 1.00 = certainty).

I linked this article in my most recent post. The Class of 2008 and 2009 are still scrambling to find jobs... and here comes the class of 2010. Are Oil imports into the U.S. down because of the economy, or is the economy partly down due to the decrease in imports? Without doubt the debt situation is worse than Oil at this moment but that does not mean that constricted Oil and high energy costs are not doing their work as well... and perhaps its more than that...

Over the last five months, only one job materialized. After several interviews, the Hanover Insurance Group in nearby Worcester offered to hire him as an associate claims adjuster, at $40,000 a year. But even before the formal offer, Mr. Nicholson had decided not to take the job.

Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.
Hmmm... Fair enough. Ok, exactly what was his training in?

“I worked hard through high school to get myself into the college I did,” Scott said, “and then I worked hard through college to graduate with the grades and degree that I did to position myself for a solid job.” (He majored in political science and minored in history.)
The sad fact is that this young man has no training. He has an education. An education in Political Science is not being trained... Training, as in surgical/engineering/mechanics/plumbing/welding/shoe repair means you can actually DO SOMETHING useful at the end of your training.

Read this self-serving BULL SH*T from Rutgers University when asked "what can I do with a Poli Sci Degree?" The response? In a word - NOTHING. They claim they teach you how to think... and that is really all you need (and I agree with that part)... problem is, they (these private universities) charge $200,000 to give you a certificate that says you probably know how to think but that you really don't know how to do anything. That's great. Thinking is abstract and conveniently for the Universities it cannot be measured.

Let me ask you something... do you really think 4 years of part time class work and full time partying gives one better thinking capabilities than going to work, opening a business, saving money, buying a home, selling to gain customers/clients, servicing them, and reading humanities type material for 15 hours per week? Really?? No you don't. The problem is you don't get a certificate, a "union card" if you will, in the form of the sheepskin that SAYS somebody affirms you.

Look at this from OTHER side of the trade. IF, (IF!), any of the above claim from Rutgers was true, then Lifelong earnings should increase for each hour of course credit earned - a student who dropped out with only 3 hours left should earn 98% of the increased lifetime value of what a grad earns, a second year drop out should earn 50% of the of the difference between a high school grad and a college grad (I know, I know... the metric is not perfect... are they ever?)... but according to's director of quant analysis, Al Lee:

“Essentially, if you don’t graduate, you’ve not only lost money to tuition, you’ve also lost wages that you would have earned by working instead of going to school. A non-graduate’s time in school creates, more or less, a net zero in their lifetime earnings,” says Lee.

I'd like to repeat that last line - "A non-graduate’s time in school creates, more or less, a net zero in their lifetime earnings". It then follows that it is not the increased ability to think, but an institutional affirmation (a degree) in ANY subject that creates opportunity for those fortunate enough to have the resources and support system to navigate the college educational system (otherwise each and every college experience would lead to increased "thinking" ability and the enhanced economic benefits that comes from such "think" training... I am desperately trying to suppress a laugh... tee hee!!) to its conclusion.

Life is not fair. Smarter people earn more money, and they congregate in "better" schools with Alumni connections and placement offices... One look at the U.S. Supreme Court should give you a hint. Over the years Justices hailed from all manner of Law Schools. Today? 5 schools DOMINATE the Court. Are there really no smart people graduating from the University of Texas, or U. of Colorado, or Auburn? Really??!!

If you can get into Harvard, Yale, Princeton, Stamford, or Columbia (or the other 10 TOP, TOP schools)... by all means, don't pass that up. They are worth the price of admission. Paying $200k for an also ran private school? You gotta have rocks in your head. Paying anything for a Poly Sci degree? In this economy? HAHAHAHAHHAHAHAHAHAHALOLOLOLOLOLOLOLOLOLOLOLOHEHEHEHEHEHEHEHEHAWHAWHAWHAW

Sorry, that got away from me.

These "also rans" are in the business of false promises and exaggerated claims. Don't let them bag you. Peak Oil has hit the U.S. The full repercussions of this are unfathomable, but it doesn't take too much thought to see clearly that wasting 4 to 8 years studying something that cannot earn you a living is probably not a great idea.

In the end, people that successfully interpret their environment prosper.

Friday, July 9, 2010

A History of the American Economy - Part 4

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." P. J. O'Rourke (the funny thing about this quote is that it is a favorite on "Right Wing" web sites... sounds awfully Libertarian to me.)

Continued from Part 3

During the last 25 years of the 19th Century the U.S. bumped in and out of Recession - despite seemingly endless bounties of Oil, timber, coal, fisheries... and population growth. The 8 years following the civil war so overinflated capital investment that over-capacity existed until nearly WWI - 35 years later!

(If there was ever a sillier reason for the outbreak of War than WWI I simply cannot determine it. I think one could very effectively argue that the War was fought because it could be fought, and the financial system desperately needed an inflationary event. It is often said that WWII was a "Just" War, and taken on its own that might be so... I would argue that there was only ONE World War with a 20 year armistice. Without WWI, the Nazi's likely do not exist, or at least do not come to power, and without conflict in Europe Japan likely does not risk attacking the U.S.)

The Federal Government's budget in 2010 is slightly more than 26% of GDP, and that means nothing to people voting today... but when you consider that up until WWII the Federal budget had averaged something like 3% of what was then called GNP you get an idea of just how much Government intrudes into our lives. (Did the U.S. have nearly 2% of the adult male population in prison in 1900? NAFC.) Was the U.S. out and about as the "World's Cop"? NAFC. Were you responsible for your own problems? You bet. Was beer, surfing, sex, camping, eating, etc... still fun? You bet. I would argue that what little benefit came to American's lifestyle as a result of this massive increase in Government spending came at a horrific price.

(I read in detached awe the writings of Heinberg and Kuntsler. For the most part these are some exceedingly bright fellows, but their noodle must get overcooked when they try to express rational thought about economics. Most of the American lifestyle that these guys rail against, and I am with them, was created by the politicians and regulators on THEIR SIDE OF THE FREAKING ISLE!!!! These guys HATE the auto, but it was the democratization of transport that destroyed the environment and created suburbia! They HATE corporations (BTW, so do I... but for an entirely DIFFERENT reason... the way I see it, the onset of the shareholder Corporation gave the Left the perfect tax collection point to go forth and increase the size of the Government relative to GDP (and increase Government's ability to f**k with us) nearly 10X in less than 75 years) but it was the UAW and Steel Workers Unions that were the template (AND the funding source for the Left during much of the 20th Century, without which there would BE NO Left) for the Public Employee Unions that are destroying the fiscal stability of the state, city, county and local governments. The same guys that can grasp ERoEI with NO technical background suddenly go deaf, dumb, and blind when somebody points out that since there is a FINITE amount of fossil fuels then there is a FINITE amount of carbon that can make its way into the atmosphere... Guys... Guys... you can't get a little bit pregnant... and I realize that you guys make a living at this and must continue to appeal to your goof ball fan base (of which I count myself as one)... but your economic arguments are just silly even if they have appeal to economically illiterate populating the protest-just-about-anything set.)

I want to skip around for a moment and pass through the 00's, teens, and roaring twenties (though I will be back), and point out that Samual Clemmons (Mark Twain" really knew what he was talking about when he said:

"What gets us into trouble is not what we don't know... it's what we know for sure that just ain't so".
The media reconstructs history for reasons that should appear obvious, yet many in the electorate believe them! Read this excellent argument as to why the argument that the U.S. Government's policies during the 1930's are NOT what made the Great Depression what it was.

and we will talk more...


Price does NOT matter as much as VOLUME.


There are NO COINCIDENCES. I have NO IDEA what U.S. intelligence agencies picked up from China, but this is serious stuff and bears watching. I have maintained many times on this Blog that you will know when China has come to the conclusion that their U.S. Bond paper will never be paid back: They will take Taiwan by force. Just because I am an anti-War/anti-Empire Libertarian DOES NOT mean I reject the idea that the U.S. must maintain a strong National Defense. Fighting really dumb wars for an extra decade of Oil imports that puts us in extreme danger because we are stretched so thin is an outrage. OUTRAGE. The world is still a ugly, mean spirited place.

Monday, July 5, 2010

A History of the American Economy - Part 3

"If you have ten thousand regulations, you destroy all respect for the law." – Winston Churchill

There is this sense in American Media that the world began in the "Post War Period" (I often found that phrase somewhat dysfunctional, as if we live in the period when man came to his senses and wars are no longer fought...). That the end of WWII ushered in a brave new world unconnected to the past. Perhaps the advent of Television and mass communication had something to do with this.

In fact WWII WAS a dividing line of sorts in that immediately after the War the U.S. had almost of the world's Gold and almost all of the world's productive capacity - but that was not a permanent condition... we just thought it was.

The American Industrial Revolution meant Railroads ("RR"). In the years immediately after the Civil War the Railroad industry was the second largest employer after agriculture (Government jobs were not a significant portion of employment). The expansion of the RR's created markets where none existed and dramatically expanded those that did and provided access to farmland and natural resources that seemed almost boundless. And they were, from a short term economic view, boundless - attracting overwhelming investment for goods and services that could not find a market, leading to the inevitable bust. The 8 year period of over investment and over-capicity gave the U.S., and the world (although who gave who what is up for debate; the idea that this Depression was caused by the stock market crash in Vienna in May of 1873 is just as silly as the idea that the stock market crash of '29 caused the Depression of the 1930's) a nearly 25 year period of deflation and alternating recession and stagnation that did not let up until the end of the century.

During that time the U.S. was not a world power and the U.S.$ was NOT the world reserve currency. The British Pound filled that function. Accordingly the American people had to fund their own government spending, as well as provide for their own end of life needs (Even Presidents. The president at the time of the Panic of 1873 was U.S. Grant. Grant lived most of his post-presidency in poverty, even enduring bankruptcy. It was not until 1958 that a presidential pension was passed into law).

It is worth noting that while the U.S. economy was in almost constant recession during the last 25 years of the 19th Century the population was exploding with U.S. cities experiencing a 15 million person growth spurt. Even so, the majority of Americans lived on farms or small towns supporting farm land. at the turn of the Century. To understand what life was like for the over 30% of Americans employed in agriculture a definition of a "farm" is in order. Most farms had a small family house, often one large room with lofts. There was no indoor plumbing for toilets or the kitchen sink. Water was had from a well. There was no heating or A.C. Sanitation was an outhouse. Cooking was done outside in a "cook tent" until heat was desired in doors. Most boys went to school until 8th grade (so did many, but fewer, girls), but the graduation test for an 8th grade education in 1900 would stump 90% of the kids at the best high schools today. For farm families, at 14 you were a man and you had skills (and not video game skills).

"Roads" we merely dirt wagon paths and when wet they were mostly impassable. Local transportation was by wagon. Socializing was done in town on Saturday night and Sunday Church - hence, the Saturday night bath. Yes, there were the RR's but once off of the line, everything was transported by horse and carriage.

There were no federal income taxes... and if there were, how would they be collected? Most people today work for corporations or governments - easy collection points for the forced extraction of payroll deductions. Not so in the late 19th Century. The U.S. economy was as much a barter economy as a currency economy - particularly in rural communities. Trading using gold and silver NOT minted by the U.S. was also common place. I would argue that people were "freer" than now, but life was unforgiving. There were no social "safety nets" to speak of other than "faith based" charity - and that was not much.

In the absence of Corporations there existed REAL capitalism. If you failed, you went bankrupt. Life was an ongoing meritocracy.

(I am being summoned and will continue this shortly)