Good as Gold

The ECB rumor mill over the past two weeks hyped the possibility of a shock-and-awe stimulus package, on top of the shock-and-awe stimulus packages the ECB has already implemented, namely negative interest rates, liquidity facilities, and QE.

The entire German government bond market, even 30-year bonds have negative yields. And the German economy shrank in the last quarter. That gives Germany two out of the last four quarters where its economy shrank – despite negative interest rates from the ECB and despite the negative yields on its government bonds, and despite the negative yields among many corporate bonds.

In other words, the German economy, the fourth largest in the world, is hitting the skids despite or because of negative yields. And now the ECB wants to flex its muscles to get yields to become even more negative.

And there are folks who want to prescribe the same kind of killer application to help out the US economy – which is growing just fine.

The yield on US Treasuries is between 1.5 and 2.5%, which is a near-to-minus-zero yield in real dollars. The yield curve is actually inverting, with longer term Treasuries selling for more than shorter term Treasuries, presumably because investors are betting on a recession in the short term.

Yields of 1.5 – 2.0% over 10 and 20 years seem like an awfully strange bet on prices over the next couple of decades, but I don’t think UST purchases are made with that in mind. In a hard-currency economy, precious metals will also have near-zero to negative rates of return due to storage costs. And that’s what I think is mainly driving interest rates at this point: government bonds are good as gold. They’re a comparatively safe place to park oodles of cash.

One assumption is that central banks will never let the government default, and another is that continued productivity gains will grow the economy. In that sense, EU and US bonds are a long term bet on the persistence of the post-World War Two order, the most prosperous time in human history. So far that bet looks pretty good. But if, say, Trump wins in 2020 and New York and California tell the rest of us they’re out of here, then those bonds will be instant toilet paper. Of course, everybody knows that, which is why New York and California will probably stay put. Or will they? Like I said last post, people seem to be spoiling for a very big fight.

The alternative is Biden or Warren wins, thus placating the urban centers but doing nothing to ease the underlying existential stresses. Because with the Democratic capture of the Executive and Congress, it will be Payback Time, big time.

So with nothing else out there and the country on the verge of blowing up, the rich buy government bonds and large, remote tracts of real estate.

letterman ranch
David Letterman’s house, in the middle of 2,300 acres of Nowhere, Montana.

It was fun while it lasted

In 2016, with Donald Trump conducting energetic political rallies and an un-charismatic Hillary Clinton lecturing everybody about misogyny and racism, a group of high-level Executive branch officials colluded with the Hillary campaign and Fusion GPS to gather dirt on candidate Trump. Fusion GPS hired former MI6 agent Christopher Steele to see what he could find. Steele put together a laughably implausible dossier which the FBI used to obtain warrants under the Foreign Intelligence Surveillance Act to spy on the Trump campaign. This probably broke several laws, and was the most blatant interference by high-level Executive branch officials in an election campaign since Watergate.

comey brennan clapper
Be very thankful, gentlemen, that we’re not a serious country.

None of this panned out for the Swamp, and Trump was elected thanks to a few hundred thousand white people in Michigan, Ohio, Pennsylvania and Florida.

The Swamp then hired Robert Mueller and his staff to prove that the Russians stole the U.S. Presidential election. For two years this investigation dragged on, warping the national discourse and political energy and eliminating consensus. Russiagate was duly reported by the entire media establishment as foregone proof of Trump’s perfidy and eventual impeachment. Everyone waited anxiously for St. Robert of Mueller’s report and … nothing!


How could this be? The Swamp raged and fulminated, demanding that the special counsel show up and explain himself. After repeatedly telling everyone that his report was his testimony, Mueller finally relented, and for one day on national TV, reality was allowed to intrude: the $30 million-team of partisan hacks hadn’t turned up a thing, Jerrold Nadler is an evil gnome, and Robert Mueller is old and ready to get back to retirement.

Reporters for the New York Times and Washington Post won a Pulitzer Prize for this floury concoction. Winning journalism’s highest award to itself explains why these people are smiling on a stage instead of blast e-mailing their resumes from their studio apartments.

pulitzer 2018

Duly chastened by having its national news desk report on nothing for two years, the New York Times is re-tooling for the important work of demonstrating how racistly racist America is. Seriously. They are going to walk us through every year of the country’s history since 1619 explaining to Americans how racist they are.

I can’t wait! Can you?

And now we come to … Jeffrey Epstein. Ranting on the Internet is hard work, so I’ll just hit the high points.

  1. “Financier” with inexplicable and staggering levels of income operates a teen-aged prostitution ring.
  2. In 2008, said financier is allowed a generous plea deal on state court charges of procuring a 14-year old girl for prostitution. U.S. attorney Alexander Acosta, later explaining that he believed Epstein “belonged to intelligence,” agreed to federal immunity for Epstein and any co-conspirators.
  3. [Something happens] and in 2019 the federal government decides to prosecute Epstein after all.
  4. Epstein sustains injuries to his neck while in jail. He tells staff he doesn’t know what happened. His cellmate, a police officer accused of four murders, says he doesn’t know what happened. Nobody don’ know nuffin!
  5. Epstein finally succumbs to the most anticipated suicide in human history under the watchful eye of Warden Moesha Chantavious Jones and two guards, Kingfish and Hambone. (Okay, I made those names up. The warden’s real name is Lamine N’Diyae and the government hasn’t released the names of the two guards who didn’t conduct the required 30-minute checks for several hours and falsified their duty logs.)
  6. The FBI finally got around to raiding Epstein’s private island, but evidence may be lost. Whoopsies!

Wikipedia has a good article on this brazen pederast who operated arrogantly for years. And here’s Vox, to explain why some marginal kooks might believe there’s a conspiracy involved. Ka-ray-zeee!

What to make of all this? Our public and private elites are not only evil but stupid and incompetent. They do awful, secret things. They hire child-men and child-women to report falsehoods and propaganda at hilariously low salaries–voters in a democratic republic are flying blind. The bureaucrats lie and don’t believe voting should be allowed to change the government. Congress is a bunch of venal rubes with a few exceptions like Rand Paul, who had his ribs broken by his liberal neighbor. Tulsi Gabbard also seems like a genuinely decent person. People hate her.

The Left and Right wings of American politics are at a complete impasse. Any proposal from the Right is racist, sexist, homo-, trans- and otherwise intersectional-phobic because, as the New York Times’ internal town-hall demonstrates, that is all the Left can think about at this point. The Right is befuddled by loyalty to Israel and blinkered ideology keeping it from actual governance. The media is wading into this stew to justify redistributive justice from white people, a terribly irresponsible bit of rabble-rousing.

The American experiment is over, and the elites are doing what they always do at this point in the decline: looting whatever isn’t nailed down. Prepare yourselves, because this will all be over soon.


The Wider Image: Homeless in America's tent cities

From a comment on iSteve, a useful mnemonic for what appears to be the increasing and increasingly dire problem of the homeless:  CATO 4321

C – Crazies. 40% of the homeless

A – Addicts. 30% of the homeless

T – Tramps. 20% of the homeless

O – Out of Luck. 10% of the homeless

The Crazies’ brains are broken. This is the lion’s share of homelessness. They cannot be cured. They cannot maintain housing, or income, or anything of value. All we can do for them is give them barbiturates and stick them in institutions. We can no more fix their broken brains than we can fix Mike Utley’s damaged neural tissue, much less diagnose and repair the consciousness interface.

I’m becoming convinced very few psycho-pathological conditions can be cured. People either age out of them or they don’t. (Or age into them, e.g., Caitlyn Jenner). I would love to be proved wrong.

The Addicts don’t require much elaboration. My family has had its problems with functional alcoholics but nothing like drug addicts. Addicts are socially toxic and families end up having to kick them out. I personally know only one “cured” addict. The rest just disappeared. Many Addicts graduate to Crazies.

The Tramps are the happy homeless. In the US, they were more commonly called “hobos” or pejoratively, “vagrants.” “Free spirits” is the euphemistic term. There are no public policy implications for the happy homeless, ceteris paribus. It would probably be a good idea to provide them with antiseptic facilities for their temporary encampments, away from net tax-producing areas. I don’t know if this is workable or not because as I conclude below, nobody is interested in actually solving the problem of homelessness, to the extent it can be solved.

The Out of Luck are what Rollo Tomassi calls the Zeroed Out:  people, usually men, who’ve had a series of setbacks that consume their psychic or physical health and financial well-being. This fairly well-known academic is at risk for zeroing-out:

zero out

He posted this on a public forum but may have some regrets so I’ve blanked the name. He is (or perhaps was) a devout Protestant Christian. He and his ex-wife adopted four Guatemalan infants, so he was carrying around five eaters on a nominally upper middle class salary of around $100,000. God bless him and those in his charge, because he’s probably just about ready to walk out the door.

The Out of Luck are the only group with any potential for returning to a normative lifestyle.

Obviously, there is significant overlap and transition among these groups.

This all seems like common sense to me and I’d bet the statistics, if anybody measured them, would support CATO 4321. From there, we could proceed to some workable solutions, diagnosis being the first part of healing after all. But since we govern by ideology and not by reality, nobody compiles these metrics because it would upset the proposition that homelessness is caused by lack of affordable housing. “Affordable housing” is a related but different problem, exacerbated by immigration and the diseconomy of scale of large, democratic cities. Building more and more-dense housing won’t really solve homelessness, just like building more roads doesn’t really solve traffic congestion.

Immigration and urban locuses of power and wealth are part of the regnant American ideology, so nobody is going to touch the real issues of homelessness with a ten-foot pole, no more than we’ll examine the real issues of terrorism, or economic recessions, or numerous other things.

Remembrance Day

If you want to get a glimpse of older Anglo-Celt America, that is, the actual American nation, Jerry Clower (“English: occupational name for a nailer, from an agent derivative of Old French clou ‘nail'”) is somebody to look up.

Here’s Jerry at Mississippi State in 1947, proudly playing SEC football after helping defeat the Japanese Empire:

jerry clower

I have no idea what he’s doing here in Tudor English costume, but it’s magnificent.

jerry clower2

The “Greatest Generation” ethos is obvious from his work, and there are many references to the frankly social democratic interventions of which Mr. Clower was a recipient. That’s why Americans of his age were so upset about draft evasion and protests during Vietnam: you took care of your country because your country took care of you. In Clower’s case, this took the form of rural electrification, land-grant colleges, and the county extension offices. As James Poulos (@jamespoulos) has remarked, the current Right admires old America for a lot of leftist reasons, just as the current Left admires old America for a lot of rightist reasons.

People want to be part of something tangible and larger than themselves. One of my commenters remarked that even his Army work maintaining tanks in Germany was invigorating–you’re out there on the leading edge, defending civilization! It’s a broad, deep sentiment the government taps to keep Anglo-Americans signing up for wars in other countries for all the wrong reasons.

The great crime of our elites is diverting the populi‘s patriotic instincts from tangible things like people and places to abstract, non-falsifiable ideals.

Happy Memorial Day

Or really, just a vehicle to talk about inertia–the tendency of things to remain as they are–further to my theme of sunk costs.

The concept is practically archetypal to government agencies such as the US military. However, one service branch seems to be doing more than the others to acknowledge the new reality.

WASHINGTON — The U.S. Marine Corps has killed its Amphibious Assault Vehicle survivability upgrade program as it turns focus to the future and aligns with the new National Defense Strategy.

The service executed a stop work order Aug. 27 to SAIC, which was under contract to perform survivability upgrades to the 40-plus-year-old AAV fleet to include new tracks to enhance mobility as well as increased underbelly armor, blast-mitigating seats, a new engine and transmission along with an assortment of suspension upgrades.

The order “allows [SAIC] to finish the four production control modules that they were building,” Marine Corps spokesman Manny Pacheco said in a statement sent to Defense News. “They have delivered three and we expect the fourth soon.

“All other work will be terminated.”

SAIC has already delivered 10 AAV Engineering and Manufacturing Development versions of the vehicle to the Marines.

The Marine Corps has spent approximately $125 million to date on the AAV Survivability Upgrade, or SU, program and has now identified approximately $96 million in fiscal 2019 funding that the Defense Department and Congress will have to reprioritize, according to Pacheco.

The idea was to keep the vehicles alive into 2035 as the Marine Corps begins to bring online its new Amphibious Combat Vehicle, or ACV, that would slowly replace the AAVs over time.

But in an effort to “better align programs with the National Defense Strategy and congressional guidance to reduce investment in legacy programs and focus buying power on modernization, the Marine Corps made the decision to divest the AAV SU program,” Pacheco said.

The AAV SU program itself was commissioned in recognition of the fact that WW2-style amphibious assaults against dug-in enemies in Northern France or the Pacific archipelago are no longer possible. The Marine Corps, probably the more flexible and mission-oriented of the service branches, has jettisoned its signature battle tactic to “better align programs with the National Defense Strategy.”

marine aav
The dustbin of history

The National Defense Strategy is premised on a Great Powers’ military rivalry with Russia and China. In other words, the US military is funded for World War 3. But, as retired Army Colonel Douglas MacGregor points out, the US military has simultaneously admitted it can’t win World War 3.

As Under Secretary of the Navy, Robert Work identified the problem in the context of future amphibious operations: “The Navy-Marine team will never contemplate littoral maneuver until an enemy’s battle network, capable of firing dense salvos of guided weapons, is suppressed…Thus far we have only argued that some capability to conduct theater-entry operations and littoral maneuver must be retained. But it is fair to ask how much amphibious capacity is needed.”

In other words, the Marine Corps won’t invade China until the Navy and Air Force can establish spectrum dominance so Americans don’t have to see billion-dollar ships on fire and slipping under the waves and dead sailors and marines bobbing in the water. Same goes for that long logistical tail into flat, muddy Russia by several hundred thousand Army troops.

The US can’t win a war against either Russia or China. Even if we did, so to speak, whatever emerged at the end would no longer be the United States. But we still have the funding and structures as if we’re a coherent nation of 132 million people who can fight and win World War 2. The US military lumbers on with a budget bigger than the entire rest of the planet because what else is it going to do? We’ve even legislated ourselves out of being able to garrison the borders–there’s literally no homeland left to defend. Nowhere is home when it also belongs to all the people who haven’t got here yet.

And so with no realistic mission, no real homeland, and no tangible, existential enemy we’ll confront and fight, we wage these ridiculous non-wars against Muslim rabble thousands of miles away, allegedly to oppose Russian or Chinese proxies, or terrorists, or for that god-awful Freedom.

Thank you to all the brave, competent and patriotic men and women who serve in the US armed forces, but I’m not sure what your mission is at this point.