BRICs, Europe, Obamanation Bad Bets for Investors

The economic future of the BRICs deserves particular scrutiny, as over-optimistic projections of future BRICs growth has already led to more than one global commodities bubble.

In China, the economy is slowing and there is a gigantic morass of bad loans in the banking system, perhaps five times the size of the bad loans about which everyone worried a decade ago. A 2008-style banking collapse and government bailout in China seems inevitable – and we know what that does to an economy!

In India the fine Vajpayee government of 1998-2004 was replaced by an ungrateful electorate with a return to the socialist Congress party, which had wrecked India’s economy from 1947-1990.

The budget deficit in India, by both the central and regional governments, is gigantic now and is “crowding out” the private sector from the financial market. We also can expect a surge in inflation and a balance of payments crisis. Fortunately, there’s another election in 2014; we can hope that the Indian voters do a better job than in 2004.

As for Russia, Vladimir Putin has effectively established himself as President for life, and has taken control of the economy’s major sectors. The Rosneft buyout of TNK-BP indicates that the Russian state will use its resources to assert economic control. This is already working poorly, and it will stop working altogether when the price of oil drops.

Finally, Brazil is meddling in its major companies such as Petrobras and Vale, whose results have sharply deteriorated. Public spending is way out of control, mostly through subsidized loans from the state bank BNDES. Like Russia, Brazil will fairly quickly run into a balance of payments crisis and certainly won’t enjoy its past rapid growth.

Since investors saw BRICs as a bloc on the way up, they will almost certainly panic simultaneously about all four on the way down, and cause a global financial crisis involving all four. That’s if the Eurozone’s problems or Japan’s government debt don’t cause one first. _Busting BRICs

China's economy is a giant, unstable, and corrupt bubble . . .

...90 percent of the richest 20,000 Chinese are “related to senior government or Communist Party officials....

The cronyism is endemic to the Chinese economy. It is horrifically illustrated by the disposition of hundreds of millions of Chinese. According to geographers Richard Walker and Daniel Buck, this disposition of Chinese citizens has occurred via cronyism and the great giveaway of state enterprises to friends and family of Chinese officials. Village enterprises have collapsed. And the great economic expansion has totally transformed countryside farming.

... Exports make China highly dependent on other economies across the globe, especially the U.S., Europe, and Japan. Recognizing this interdependency and the brutal decrease in exports in 2007-8, the Chinese government in November 2008 injected $585 billion stimulant and urged Chinese banks to aggressively loan money at low interest rates. This has led to municipalities in China taking out massive loans, incurring massive debt and engaging in urban expansion and real estate speculation.

In other words, China is currently in a very severe real estate bubble. _Unstable China

The slow motion train wreck must be allowed to run to completion. Collapse, self-destruction, whatever you wish to call it . . . Shoddy materials are finding their way out of China into the construction industries of other countries. Chinese style collapse of tunnels, bridges, and other large construction projects are likely to be more common outside of China -- as they are inside China -- as a result.

As for Europe and Obamanation, all of these governments share common fundamental mistakes in the way they have attempted to compensate for the effects of over-spending in the face of lower revenues:

...financial repression has become a fixture in a new economic paradigm, but it is [not] likely to provide a permanent solution. Financial repression will remain in place as long as bank failures and sovereign defaults continue to be prevented, e.g., through bailouts, asset purchases or debt monetization by central banks. Overall economic conditions in Western countries can therefore be expected to remain stagnant or to deteriorate. The continued debasement of major currencies, such as the U.S. dollar and the euro, will reduce the real value of debts but monetary inflation cannot create a genuine economic recovery as long as bank balance sheets and government finances remain impaired. Without robust economic growth, however, both the banking system and the finances of Western governments certainly will remain impaired. In other words, financial repression in the U.S. and in Europe is set to remain in place indefinitely.

Under an ongoing regime of financial repression, savings, jobs, economic opportunity and living standards will all suffer. The middle class will be reduced as generations of socioeconomic progress are gradually reversed. Younger people, mired in stagflation, will be left behind in terms of income and economic opportunity, which will have a long term negative impact. Since U.S. banks stand to profit from financial repression, it will increase income disparity and the concentration of wealth. The destructive forces set in motion by financial repression will greatly increase the burden on government social welfare programs. Thus, financial repression will fail to alleviate government debt unless tax increases and austerity measures follow, which could turn the United States into another Greece. In theory, financial repression, together with other measures, can liquidate government debt but, in practice, it is a destructive and highly destabilizing approach that will result in a net loss of wealth to society. _Financial Repression

In Europe, we will see more bailouts as the dominoes of bad government and demographic decline continue to topple. In the US, we are likely to see massive bailouts of profligate state and municipal governments including California, Illinois, and New York. Such gaudy payoffs to corrupt political supporters of Obama will not only worsen the general economic state of the US, they will worsen the general demoralisation of large areas of the country that have maintained their finances in a more responsible manner. Call it crony financial repression on steroids.

Be alert, and keep your options open as far as possible.

Obama's Policy of Energy Starvation Hurts US, Benefits Canada

While Obama's inept moratorium on oil drilling along the US Gulf Coast heaps misery upon millions of Americans, Alberta's economy is being rejuvenated by the shift of resources northward to the oil sands. If Obama's political agenda prevents oil companies from investing in the United States, they will naturally turn to the vast hydrocarbon resources of other nations such as Canada -- while Mexico, Cuba, Russia, China, and Brasil move to take advantage of deep sea oil resources that the US government eschews.

In a research note this week, investment bank Peters & Co. said as much as $30 billion will be spent from 2011 to 2015 on mining and in situ oilsands projects to boost production by almost one million barrels per day.

"Most new sizable projects are controlled by majors with less financing risk and lower costs of capital than juniors of previous cycles," wrote research analyst Todd Garman.

"Based on our assessment of currently planned oilsands mining and in situ projects, including phase expansions, we forecast total potential production additions of about 900,000 bpd, with mining and in situ production of 300,000 bpd and 600,000 bpd, respectively."

..."Specifically, we anticipate that ConocoPhillips' Surmont, Husky's Sunrise, Imperial's Kearl, MEG's Christina Lake and Suncor's Firebag 4 projects provide potential oilsands construction growth opportunities for Flint, with these projects expected to be awarded by 2010 year-end," Garman wrote.

He said the biggest risk for development is related to oil prices -- the projects are projected to break even at between $55 and $65 US per barrel. _CalgaryHerald

As long as oil is priced in terms of the weak Obama Dollar, the price of oil is likely to be above $55 per barrel.

As peak oil drifts ever further into the distance, the more relevant and proximal causes of energy shortages derive from "political peak oil", and the disastrous decisions being made daily by incompetent clowns in public office.

Cross-posted to Al Fin Energy

De Obama Dolla Goin' "Cheep Cheep Cheep!"

Gold has been surging of late, and yesterday it hit an all-time high of roughly $1,280/ounce. Supply/demand theory would likely say that demand for the yellow metal is outstripping supply, but this would be mistaken thinking.

Instead, gold is expensive right now because the dollar is cheap. _RCM

The price of gold has risen to record levels recently, in terms of the US dollar. But pricing things in terms of the US dollar can be deceiving if one does not correct for government-induced shrinkage.

Unique among commodities, nearly every ounce of gold ever mined is still with us today. In numerical terms, there are roughly 148,000 metric tons of gold on earth, and the supply of newly discovered gold each year usually works out to 2,000 metric tons.

The above-mentioned stock/flow disparity explains neatly why gold has been used as a money measure for thousands of years. Lacking any major industrial purposes that lead to its consumption like oil, gold discoveries are merely additive to the global stock, and with new, annual discoveries very small relative to the total supply, the price of gold is enormously stable in real terms.

To put it more simply, when the price of gold fluctuates it's a signal of dollar (the currency in which it's priced) instability, as opposed to a gyrating price of the metal itself. And with gold presently more expensive in dollars that it's ever been in history, the most monetary of all metals is signaling that the dollar is the weakest it's ever been.

The culprit for the dollar's decline is pretty basic. Despite the fact that the Federal Reserve issues dollars, it's the U.S. Treasury that is the dollar's mouthpiece, and just last week Treasury Secretary Tim Geithner signaled his and the Obama administration's preference for a weaker greenback. _RealClearMarkets

By similar logic, the current price of oil is not nearly as high as you might think, given the amazing, the shrinking, Obama dollar (it be cheep, mon!).

The cheap dollar is not the main cause of the dismal outlook for the US economy, but it doesn't help. As the hyper-leveraged, hyper-regulated US economy tries desperately to find a way out of its government-induced and bottomless recession (you don't believe those government numbers, do you?), the Obama Pelosi regime simply passes new legislation to shut any peepholes of economic sunshine that may remain.

Remember: no matter what the Fed decides on interest rates, US interest rates will be headed up. Otherwise, no one will buy US debt in the near to intermediate future. That would only leave the printing press to pump out the Obama dollas as payment for goods and services rendered. But remember: One trillion multiplied by zero still equals zero.

Don't Cry for Me, Obamanistas, Zombies, Slaves

An Argentinian Photo Album

When the leader of the world's superpower consciously embarks on a mission to destroy the integrity of his nation's economic and political infrastructure, one should understand the perversely tragic aspects of the situation. Mr. Obama's dreams of conquest over the evils of the colonial western world are near their climax. It is unfortunate that he lacks the insight into his own motivations, and that he fails to see the parallels between his own suicidally quixotic quest, and the many similar futile quests of leftist justice over the past century and more.

20 years after the collapse of Soviet Eastern Europe, and as Chavez' Venezuela falters and Castro is acknowledging the failure of his own revolution, Mr. Obama has just begun to institute his own revolution of destruction against the Great Satan of the Islamists, and the bane of leftists around the world.

Although it is still the world's superpower military hegemon and the economic anchor of the world's economy, the steep upward trajectory of the US government's debt was already a cause of concern even before Mr. Obama was elected. But Obama has increased the acceleration of economic doom by an order of magnitude -- and in so many ways that it is impossible not to suspect that it is an intentional agenda of destruction. The Obama Pelosi regime has made sure that there is no political way out of the quagmire, despite the worst the Tea Party may try to achieve to restore constitutional government.

Obama's plan does amount to an elaborate revolution and bloodless coup against the constitutional political and economic protections put in place over 2 centuries ago. The energy starvation aspects of the Obama Pelosi regime alone are enough to destroy the private sector eventually, but the hidden malignant aspects of Obamacare and the Dodd-Frank act -- among many other new regulations, provisions, and laws -- will accelerate the destruction beyond the comprehension of those who think in simple political and economic terms. And so it goes without end -- an ambitious coup against the "negative aspects" of the US Constitution. Because Mr. Obama's genius cannot be constrained by such an ancient document of restraint.

And so it comes down to insurrection. But a bloodless coup does not require a bloody insurrection to counter it. In fact, Americans should not even want the America that existed before Obama's election -- although Obama Pelosi has made many Americans look back with nostalgia to pre-OP times.

What kind of insurrection will it take to bring about a constitutional government with equal protections under the law and abundant opportunities for expanding the economy?

A comment on a previous article -- which mentioned voluntary alteration of tax compliance by citizens -- contains the beginning of an idea which needs to be expanded and transformed. But governments cannot go on indefinitely spending more than they receive. The government printing press contains the ink of its own destruction, as the Perons of Argentina and other tyrannical populists throughout history have learned to their regret.

More on the peaceful insurrection later. Assuming the Obama zombies allow that option.

Not What We Were Told to Expect

America's new president is beginning to lose his lustre. A consummate campaigner on the stump, Obama is beginning to stumble when it comes to performing in his first real job. We were told that Mr. Obama was the most intelligent president ever, so articulate and bright. But how much of that brilliance was Obama, and how much was his speechwriters -- combined with a canny sense of rehearsed delivery?

Re-evaluating Barack Obama's IQ is an interesting second look at the man that presidential historians assured us was the most intelligent president of all.

While Obama may not be stupid, he does appear to be lazy. And he very much wants to be the "big man." One must wonder how kindly he will take to being ushered off the stage when his time comes. Will he be as gracious as Bill Clinton, or more like Robert Mugabe?

And honestly, if Obama is that great, where are all of his old girlfriends? Speaking honestly, Michelle is just not that great a catch. She is neither attractive nor intelligent, and appears to be a hell of a beech as well.

Bad domestic policy decisions tend to become institutionalised into huge bureaucracies that simply never go away. The Obama additions to the US debt between now and the mid 2010s will hobble the country's productive classes for decades following.

Certainly the US middle class is already reeling, and the entrepreneurial class is stunned with uncertainty by Obama's abrupt attempts to overhaul so many large parts of the US economy at such an abysmally poor choice of times.

While Obama's domestic policy has driven the US economy into its deepest hole since the 1930s, his foreign policy is absolutely insane.

Every 20 Years, A New Era Dawns in America

* Crisis - Often defined by a major war, calamity, depression, etc. Think Revolutionary War, Civil War, and Great Depression/WWII.

* High - What follows the Crisis. Hey, we got through it, now things are looking up, up, and up. I think this is what Jim Rogers says he sees in Sri Lanka - the war is almost over, Crisis phase nearing an end, what a great time to invest. In the US, the post WWII baby boom, suburban migration, and Leave it to Beaver would make up the High. We can go to the moon, we can do anything we put our minds to.

* Awakening - A younger generation comes of age, and resents all the rules set by The Man during the High period. Since Highs follow Crises, they are characterized by rules and structure. Think 60s America as the resistance to this - Woodstock, Tie Dye, and Free Love.

* Unraveling - The Awakening uprising is integrated into mainstream culture, and society starts to split apart at the seams, hence the name Unraveling. The individual rules the day. It's "me first." Old timers lament the lack of virtue and civic spirit. Prime time for Wall Street and Las Vegas.
_SeekingAlpha

The changing of the generations -- like the turning of the seasons -- brings about new attitudes across the land. This is particularly true in the modern era of instant and ubiquitous communication. Trends, fads, memes, and myths travel at the speed of light, and are carried outward on the waves. Some flare up only to die. Others acquire traction and build in influence.

Those who tried to warn about the inevitable devastation from Obama, from Brown, from Rudd, and other bumbling radicals of the new age of carbon hysteria will not have long to wait before the unraveling turns into crisis.

Unfortunately for us, the timer's starting to tick down, and the next batch of crisis cookies are about due out of the oven here in America.

* 1773 - 1794: American Revolution

* 1860 - 1685: American Civil War

* 1929 - 1946: Great Depression leading to WWII

* 2007 - ??? : Credit Crisis, leading to recession, leading to?

About every 80 years, America is really put to the test. And remember, history is not predetermined. There was a genuine threat to our nation during each of these preceding crises.

Strauss and Howe believe that these crises are not only unavoidable, but that they are also necessary - to cleanse society, shake out the excesses that have built up over the past three eras, and set everything on a new course going forward. _SeekingAlpha

The American cycle of crisis is apt to drive other cycles around the globe, due to the sheer immensity of the American economy -- and America's political and military influence on the globe.

Seen through this lens of "destiny", the election of catastrophic incompetents such as Obama makes more sense. While Brocko Bomba sees himself as the maker of his own destiny, in reality he is floating on the slipstream of a far larger cycle of history. He was the right man at the right time to fulfill the flow of destruction.

As always, Oynklent Green [OTC:OYNK] strategists continue to observe the developing crisis, as OYNK engineers continue to perfect the processes that will provide much of tomorrow's vital energy supplies.

Life Under Obamacabre: Take What You Can Get

Whether termed "Obamacare" or "Obamacabre", no-choice medical care is apt to turn into something quite monstrous in the US under this president and this congress. When Americans are told they have no choice about something, they tend to rebel. How will they react when the macabre reality of Obama's grand plan for America really sets in? Obamacabre is just the middle of the beginning.

...any even remotely aware consumer of health care services has got to realize that the Democrats are on the verge of a massive destruction of the American medicine delivery system. There are problems in health insurance cost and coverage, but not in the quality of care and the innovation instinct, and the Democrats are going to kill the latter in the fruitless quest for improvements to the former. The "government option" is the biggest threat of all, a thinly digusied lurch to Canada-style single payor with the hidden (and increasingly not-so-hidden) rationing and lousy care that canada provides its people with complex diseases and conditions. _HughHewitt

The US is far more diverse than any of the European and quasi-European countries where universal single-payor medical care has been instituted. Americans are already deeply in debt to Medicare -- "the other single payor medical care." Now Obama promises to "fix Medicare" by expanding the failure to include every American? Good luck with that.

Wouldn't it be ironic if the only way to opt out of Obamacabre were to become a government worker? Government worker pensions allow government workers to bypass the social security system. Government worker health care plans can allow gov workers to bypass Obamacabre.

Of course if you are one of the hundreds of millions of Americans in thrall to the government-media-academia-union-trial lawyer-faux environmentalist complex, you will be saying "there is no problem here."

But if you are one of the dwindling numbers of thinking, well-educated Americans who sees Obamacabre as only one of the monsters being spawned by the nest of the incompetencies currently ensconced along the Potomac River, you may begin to consider the John Galt approach to reforming an untamed government. Or you may consider this.

Apparently the "Tea Party" movement forgot to surrender to government and media scorn, and grassroots individuals continue to protest a regime that is growing into a monstrous reich. July 4, 2009 is apt to be an interesting date in that regard.

Government workers, union bosses, faux environmentalists, community activists, and media flacks are quite happy with what the Obamanation is becoming. But small business owners and other members of the productive class who depend upon a wise and impartial government to take a mostly "hands-off" to the daily workings of a real life economy, are beginning to see storm clouds gathering.

Divisions are deep and growing deeper. When a nation's productive classes are the losers in such a quasi-"civil war", the entire nation loses. The parasites win. If anyone truly believes that Obamacabre, or Obamacare, or any other type of no-choice medical care is going to solve that problem, they deserve their fate.

Europe's Vacation from History Is Ending

From 1945 to the present, Western Europe has enjoyed a vacation from war and predation, courtesy of the great Satan, the USA. Eastern Europe enjoyed a rather different sort of vacation from 1945 to the late 1980s and early 1990s. But Eastern Europe's vacation was a retreat from reality of sorts as well -- free from war if not predation.

Now, in the early 21st century, the USA is barely in condition to guarantee its own security -- much less the security of allies thousands of miles distant from US borders. As the US economy proceeds to be scuttled and stripped by FOBs -- "Friends of Barry" -- the US military will necessarily be downsized and neglected, allowed to rust and deteriorate. As this happens, US allies will be left out in the cold, to fend for themselves.

Tax rates are high in Western Europe, even without the expense of maintaining an effective military. The defense umbrella that has been maintained over the continent for all of these decades has more than sufficed in the place of home-grown defense services. Under the US' protection, Europe has prospered as children prosper under the protection of powerful family protectors. With the impending loss of such diligent protection, it is uncertain what Europe will do.

The demographic dynamic of Europe is one of decline. The subcontinent itself is not growing smaller, it is the population of indigenous Europeans who are melting away through lack of self-replacement. Temporarily, this makes for more leisure time -- more time for selfish pleasures, travels, and delights. In the long run -- particularly given the impending loss of the US defense umbrella -- it opens the door to more prolific, less sophisticated and intelligent barbarians from just outside the gates.

US President Obama has taken a snapshot of Europe, one that he views with fondness and a bit of envy. Mr. Obama would like to make the US more like Europe in several ways. More government involvement in every aspect of life. Higher taxes for businesses and individuals. Less social mobility, thus more stability for the established order -- once a proper order is established. Less individual freedom of action and expression.

What Mr. Obama fails to realise is that the snapshot he possesses is not real. It is years if not decades out of date, and fading more quickly than his imagination can compensate. It was never real, of course. US protection of the subcontinent, and other subsidies that are never taken into account, have allowed Europeans an extended vacation from history. President Obama is putting an end to that vacation, albeit inadvertently.

While Mr. Obama attempts to recreate a delusionary mental image of Europe inside the United States, Europe itself will face some very difficult realites that is has been able to avoid for multiple generations.

If you are growing tired of Europe, the US, and the UK, I recommend taking a look at Canada, Australia, and New Zealand. Ireland and Scotland may also have time to make important concessions to personal liberty, if they can shut down destructive immigration programs. Switzerland still has time to wake up, as well.

Obama Officially Owns This Depression

Whether President Obama-prompter makes you sleepy, skeptical, bored, or scared, you should be aware that the man is now in charge -- and therefore responsible for what happens. The Obama Depression itself is aptly named, since it is the threat of an Obama presidency that foreshadowed the OD as early as August or September of 2008, and the reality of the Obama election and subsequent presidency that finally set the drop into depression from November 2008 into the indefinite future.

Economists are wondering why members of the public at large do not seem more concerned about their economic future than they do.

A review of prominent events in the depression scares of 1974-75 and 1978-82 suggests that they stemmed at least in part from a sense that inflation was dangerously out of control. During both periods, inflation moved into the double-digit range. There was widespread concern that the Federal Reserve had no good options and might need to plunge the economy into a depression to control inflation.

And in these two periods, energy crises — the first and second “oil shocks” — contributed to the negative outlook....Now that oil prices have moderated, it’s possible that most people have less vivid worries than they did in 1974-75 or 1979-82 because their economic problems are not evident every time they shop or drive their cars.

During those earlier two scares, out-of-control inflation was widely visible, but today many people haven’t personally experienced rising unemployment and foreclosures. And it’s possible that the optimistic tone of the president and the Fed has assuaged some fears, and that people might believe that the government is fixing their problems. _NYT

Imagine the current cascading failure of banks, businesses, and building trades combined with doubled or tripled gasoline prices plus widespread inflation as was seen under President Carter? The public panic would be more palpable than is currently felt.

In other words, the crash in oil prices (from the world deflationary crisis) plus the apparent lack of inflation (also caused by deflationary stresses) are allowing people to tell themselves that nothing is really wrong. Even as the Obama / Pelosi reich takes the wrecking ball to the economy, and hands control of the future of every American down the the third and fourth generation to friends and financiers in the labour movement, in the legal industry, in the banking and finance industries, and in the radical activist anti-energy dieoff.orgiast industry.

Obama owns this depression. He is working as fast as he can to dig the hole under the economy as deeply as possible. So far, no one seems any the wiser. The economic devastation for the near and medium future is already immense. The stresses on the integrity of the nation as a whole are starting to exceed allowable levels. But Obama-prompter is not likely to stop at the limits. He is certainly not aware of them.

If you are like most of the herd, you will see no reason to modify your behaviours in light of the narcissist in chief's full scale assault on the market economy. You will believe the news and entertainment media that the world is now in good hands. But if you are intelligent, you will calmly and deliberately begin making contingency plans just in case they are wrong.

A Lot More Pirates Where Those Came From

Even if all captured pirates were hung from the yardarms, how long would it take to end the problem of piracy on the high seas? Forever! Since more potential pirates are being made every day than would conceivably be hung every year, the piracy problem would never be solved by summary executions.Image SourceSomalia is the source of most of the Indian Ocean pirates who prey on freighters, tankers, cruise ships, and even fishing boats. Some companies have gotten smart and hired well-trained security crews.

Six men in a small, white Zodiac-type boat approached the Msc Melody at about 1730 GMT Saturday and opened fire with automatic weapons, Msc Cruises director Domenico Pellegrino said. They retreated after the security officers returned fire and sprayed them with water hoses. The ship continued its journey with its windows darkened.

"It felt like we were in war," the ships commander, Ciro Pinto, told Italian state radio.

None of the roughly 1,000 passengers and 500 crew members was hurt, Pellegrino said. The passengers were asked to return to their cabins and the external lights on board turned off.

Pellegrino said all Msc cruise ships around the world are staffed with Israeli security agents because they are the best trained.

The attack occurred about 200 miles (325 kilometers) north of the Seychelles, and about 500 miles (800 kilometers) east of Somalia, according to the anti-piracy flotilla headquarters of the Maritime Security Center Horn of Africa. _Yahoo

Image SourceA brief look at Yemen's population pyramid suggests that Yemen may well be the next big source of Indian Ocean pirates. In fact, pirates are already using islands just off the coast of Yemen as forward bases.

When I traveled the Saudi-Yemen border some years back, it was crowded with pickup trucks filled with armed young men, loyal to this sheikh or that, while the presence of the Yemeni government was negligible. Mud-brick battlements hid the encampments of these rebellious sheikhs, some with their own artillery. Estimates of the number of firearms in Yemen vary, but any Yemeni who wants a weapon can get one easily. Meanwhile, groundwater supplies will last no more than a generation or two.

I’ll never forget what a U.S. military expert told me in the capital, Sanaa: “Terrorism is an entrepreneurial activity, and in Yemen you’ve got over 20 million aggressive, commercial-minded, and well-armed people, all extremely hard-working compared with the Saudis next door. It’s the future, and it terrifies the hell out of the government in Riyadh.” The future of teeming, tribal Yemen will go a long way to determining the future of Saudi Arabia. And geography, not ideas, has everything to do with it. _RobertKaplan_via_ComingAnarchy

The "zones of lawlessness" are growing ever wider -- propelled by the demographic explosion of the third world, and abetted by the demographic implosion of the first world. Now that Barak Obama is the leader of the western world, the defenses are down and the gates are thrown wide open. The machinery of freedom and the marketplace begins to rust of neglect. Third world entropy swarms the half-built barricades.

Shadow Economy to the Rescue?

Even in developed countries like the United States, as much as 10 percent is in the so-called shadow economy. But when times are hard, the figure can rise to as much as 40 percent. In times of crisis, people are very creative in looking for ways and means of making both ends meet. _MT

By the time Americans tally all of the local, state, and federal taxes they must pay, they might easily find that they are paying over 60% of their hard-won income to the bottomless pit of an insatiable bureaucracy. The cleverer ones may very well begin to consider alternatives.

The size of the shadow economy varies from region to region. In northern Europe and Scandinavia it represents between 10 and 18 percent of official GDP. In Mediterranean countries such as Portugal and Italy, the sector makes up 20 to 25 percent.

Many former Communist EU countries have shadow sectors in the Mediterranean range. But in Estonia, Latvia, Romania and Bulgaria the estimate clocks in at 36 to 39 percent.

The figures for EU neighbours can be much higher. In Belarus and Moldova, around half of economic activity bypasses the state. In Ukraine, about 57 percent. In Georgia, 68 percent.

The existence of a shadow economy up to the 25 percent mark can improve ordinary people's quality of life, the Austrian academic believes. _BW

Certainly the use of barter will increase. Bolder communities will explore the use of alternative currencies, although in the current quasi-fascist environment one must be very cautious of the IRS, Homeland Security, BATF, and other corrupt and hyper-zealous units of the Obama / Pelosi reich.

Corruption within the US government is growing, perhaps eventually to rival corruption levels in the third world. Should the O / P reich continue to ravage the productive sectors of the economy for much longer, the damage will no doubt be deep and irrevocable.

Consider the ways in which you can protect yourselves and your loved ones from the governmental wrecking ball. Your clear thinking and timely actions may prevent the worst of what is coming.

One Family Goes John Galt

He hunts deer and turkeys. Instead of buying books and going to movies, they visit the library weekly. For Christmas, they got canning gear so they can preserve the food they grow.

"The earn, spend, earn era has come to an end for us," he says on truenorthfound.blogspot.com, their blog. "The idea of living a fuller, more satisfying life seems simple to us now. ... Money, cash, credit, maybe they don't matter. Maybe, just maybe, it is those things that impede our ability to be truly happy."...They stopped using credit cards and they're trying to build up savings. "I'm working harder than ever," Patrick says, "but it's more satisfying work and ... it's much easier to sleep at night." _USAToday

It seems to be easy for tenured government-dependent clowns and incompetents to laugh at the "flyover country fools" who actually work for a living, obey the rules, and pay their taxes on April 15 -- so the tenured clowns can live it up and laugh at the "tea baggers." But mainstream freeloaders of one corrupt bureaucracy or another should have been paying attention instead of just laughing at the protestors. The people holding those signs are ordinary people who never considered protesting until now. Something drove them to that point of decision. And now they are considering a lot more options than simple protest. Many of them are considering cutting back on their economic activity. Cutting waaaaaaayyy back! As in John Galt back. Call it the "Obama effect."

Hard times are creating economic survivalists such as the Wojtowicz family who are paring expenses by becoming more self-sufficient.

Reviving "almost lost" skills and preparing for tough days make people feel more in control, says Charlotte Richert, consumer sciences educator for Oklahoma State University's Extension Service in Tulsa County.

Karen Gulliver, MBA program chair at Argosy University in Eagan, Minn., expects the movement to grow as the sour economy forces people to reassess priorities. People are asking, "Do I really want to be 100% vulnerable with no self-sufficiency skills if something happens?" she says.

Some signs of the trend:

•Stockpiling. When the stock market drops, orders surge for freeze-dried food, survival kits and emergency supplies, says Nitro-Pak president Harry Weyandt. One best seller: a $3,375 food reserve that feeds four people for three months.

•Gardening. Sales of vegetable seeds and transplants are up 30% from 2008 at W. Atlee Burpee, the USA's largest seed company. The National Gardening Association says 7 million more households will grow food this year than in 2008 — a 19% rise. A book on building root cellars is the top seller at Johnny's Selected Seeds in Winslow, Maine, supervisor Joann Matuzas says.

•Canning. Jarden Corp. says sales of its Ball and Kerr canning and preserving products are up more than 30% from 2008. Sonya Staffan, owner of The Jam and Jelly Lady commercial cannery in Lebanon, Ohio, is offering twice as many classes this year.

•Sewing. More people are learning to sew so they can mend clothes and make home décor, says Rachel Cohen, spokeswoman for SVP Worldwide, owner of sewing-products makers Singer and Husqvarna Viking.

•Relocating. Steve Saltman, general manager of LandAndFarm.com, a national real estate company, says more customers want to "live simply in a less-expensive place." Jonathan Rawles of SurvivalRealty.com says more people moving to rural areas "are specifically worried about economic and social instability." _USAT

This is gradual self-extraction from the mainstream economy. A form of stealth "John Galt-ing" that is unlikely to be broadly noticed until it has penetrated deeply into the productive population. There will be many levels of economic dropping-out before this Obama depression runs its course, and before much of the freeloading class is unceremoniously dumped on their asses. Obama himself -- and a large proportion of his zombie horde -- lacks the personal heft to ever comprehend what is happening. His brain-rotted following is quite large, so a rapid return to sanity is unlikely.

But if those who can, won't (at least not in the open where the tax collectors can see), eventually those who can't are going to have to either make concessions or do without. Interesting times. There are limits to what government borrowing, lightspeed printing presses, and Obamanamanomics can do when the wheels of commerce are starting to fall off the machine.

Electing a Clueless Clown President May Have Been a Mistake

A combination of wishful thinking and abject stupidity has landed the US (and the world) in a toxic pit of hazard. It is bad enough having an inexperienced, incompetent, and ideologically blindered clown of a president in control. Unfortunately, the US Congress is led by a group of corrupt and unscrupulous quasi-criminals the likes of which has not been seen in well over a century of government corruption in the US. To top it off, everyone that Obama appoints to the executive and to the courts appears to share in these global Obama-style inadequacies and failure to lead responsibly. This will be a very rough 4 years. Even a radical rearrangement of the House of Representatives in 2010 will not be enough to reverse the destruction of Obama's first 6 months, let alone the next two years. Decades will be required to recover from this episode of failure by American voters and media.

Abandoning a Nuclear Deterrent Out of Wishful Thinking

Obama's War On Business

Obama's Recovery Plan Can Only Fail

Obama Prefers the UN to the US

Entering an Obama Dark Age

China's Support for Jihad in Afghanistan, India, and Pakistan



H/T Reverse Spins

Escaping the Apocollapse: If Humans Were Intelligent, What Would They Be Doing Now?

Kevin Kelly's Taxonomy of Collapsitarians:

1. Luddites, anarchists, and anti-civilization activists...

2. Goldbugs, survivalists, Y2K holdouts, and slightly right wingers...

3. Conservationists and greenies....

4. Somewhat leftist anti-globalists...

5. Critics of American super-power...(...native academics...prominent historians.)

6. Former financial employees who see...no escape from, this doom.

   KevinKelly

Collapsitarians are persons who feel -- for many divergent reasons -- that humans are on the brink of a deep and long-lasting collapse of civilisation. Brian Wang recently riffed on Kevin Kelly's Technium posting on Collapsitarians outlined above. Kevin Kelly appears to be amused by the sheer diversity of background displayed by collapsitarians. He does not so much argue with any of the collapsitarian viewpoints, but rather portrays them all as being somewhat ridiculous.

Brian comes along and looks at Kelly's portrait of the "six species of collapsitarians" and decides that a collapse -- a full collapse -- will not happen. Brian freely admits to bona fide existential risks as described by the Lifeboat Foundation, but feels that humans are intelligent and sensible enough to avoid the most discussed mechanisms for collapse: climate change, peak oil, resource depletion, overpopulation, self-implosion of globalism, nuclear war, economic doom etc. Brian discusses these mechanisms, and presents reasons why they would not cause a total collapse, based upon humans meeting the problems wisely and heading off the collapse. For anyone concerned about the possiblity of a deep, total collapse of civilisation, Brian's article is worth reading.

Brian is quite right that intelligent, wise, and functional human societies could deal with any and all of the listed problems above without breaking a sweat. In fact, many of these "earth-shaking crises" are mostly fabricated problems meant to sell newspapers and to transfer wealth from productive sectors of society to non-productive sectors (academics, politicians, bureaucrats, the UN, etc). Despite all the angst, the sleepless nights, the nightmares of children -- the problems simply do not exist at any meaningful level. And the rest could, as Brian maintains, be dealt with relatively easily by smart societies.

But -- have you seen any smart societies around lately? Voters have been electing some particularly clownish leaders recently in nations from the UK to the US to Russia to Australia. Such fools as these can only create new problems and make existing problems virtually insoluble -- they will not be solving any important problems soon. Rather than allocating resources wisely, governments led by such cracked pots will maximise mis-allocation of resources -- from the productive to the non-productive on a grand scale.

All of humanity's problems are soluble. But not if the scarce resources needed to solve the problems are mis-allocated by corrupt and ambitious leaders of limited wisdom and foresight. Within the developed world, governments have grown so huge and bloated as to become a suffocating force upon the creativity of the underlying society. Growing government becomes its own end, rather than a means to empower the creativity and enterprise of its citizens. Ballooning taxes become the largest single expense of any working person, steadily eliminating the life choices the person could have otherwise made. Smooth-talking politicians explain why all of this is necessary and for a very good cause. In the end, government workers become a privileged class, parasites on the few producers who remain.

In the US, the election of Obama does not cause Apocollapse. The problems leading to the collapse of the US economy have been in place for almost a hundred years. They grew alarmingly during the 1930s, the 1960s, the late 1970s and the late 1990s. George W. Bush looked the other way while the programmed growth of these problem entities occurred on his watch -- and seemed not to take them into account in his own foreign policy decisions. And then Obama happened . . . .

Obama is the epitome of the clueless clown president, the smooth talker that puts zombie brains to sleep with words given him by others who happen to be good with words -- and know what the zombies want to hear. Obama is taking phantom, non-existing problems and making them a priority in his administration. He is taking small problems and turning them into huge problems. And he is taking huge problems and turning them into insurmountable problems.

I admire the optimism that Brian Wang displays, as he presents quite sensible responses to the popular collapsitarian concerns of the day. If humans were actually intelligent, capable of electing sensible leaders and of holding these leaders to account, the solutions to problems would occur largely as Brian describes. But that is not the situation we find ourselves in.

There will be a collapse. Whether it will happen soon, before Obama can reinflate all the pre-existent economic bubbles, or whether Obama can defer the collapse until after he leaves office, is only relevant to the timing. Will it be a "total collapse?" Not likely.

Although societies as a whole are growing dumber -- as witnessed by the ability to elect an Obama -- within those societies are persons of strong core competencies who will seek each other out if things get bad enough. Around these competent cores will grow functional islands in the middle of a larger dysfunctional society. If enough functional islands can link up and provide an inspiration to enough persons in the larger society, many of the corrupt and dysfunctional drags on society can be dispensed with, at least temporarily.

Some very amazing technologies are being researched, developed, and trying to find their way to market. There are a few of these technologies that are so powerful that they will make it very difficult for the populist Obamanoids of the world to use the stupidity of the majority as a weapon against humanity as a whole. In the long run, Brian Wang is correct in his optimism. In the short and middle run, however, we are in for some excitement that most of us would rather avoid.

US National Debt: Ten Trillion and Counting

Image Source
This week's Frontline (link via SimoleonSense) dealt with the blooming US National Debt, destined to double within the next ten years. In all likelihood, under Obama the debt will double within 5 years -- but then, who's counting? Certainly no one running the current government of clowns.

The graphic above demonstrates the rapid acceleration of deficit spending under the barely begun Obama administration. Intelligent persons will ignore the Obama administration projections, then take the CBO projections and double them.

View the Frontline episode

Here is an excerpt from the Frontline interview with Paul O'Neill (via Paul Kedrovsky via SimoleonSense):

Can the United States government go bankrupt?

Not in the classical sense, but we could get ourselves into a position where people won't take our paper anymore. And that's a really desperate position to be in when we've killed the idea of good faith and credit of the United States. That could destroy our society as we've known it.

Can't we just turn the printing press on?

Nope, because at some point people will prefer to have broken pieces of glass than federal money. ... Look at the German economy in 1923. People got paid twice a day in Germany in 1923, because if they waited to spend the money that they were paid at lunchtime at dinnertime, the money wouldn't be worth anything.

And so people were actually willing to pay all of their money, a wheelbarrow full of money, for a broken piece of shiny glass, because the broken glass was worth more than a wheelbarrow full of money. We don't want to get there, but semi-modern societies have gotten there. _Frontline

Strippers, Porn Stars, and Prostitutes: Women Coping in the Age of Obama

As a bartender and trainer at a national restaurant chain, Rebecca Brown earned a couple thousand dollars in a really good week. Now, as a dancer at Chicago’s Pink Monkey gentleman’s club, she makes almost that much in one good night. _Source

Obama has barely begun destroying the US economy, but already women are rushing to fill positions within the "recession proof fallback professions" of exotic dancing, porn video star, and various degrees of prostitution.

Employers across the adult entertainment industry say they’re seeing an influx of applications from women who, like Brown, are attracted by the promise of flexible schedules and fast cash. Many have college degrees and held white-collar jobs until the economy soured

As we begin to probe the depths of an Obama depression, basic human motivations and drives come to the forefront. As more respectable businesses find themselves unable to survive under the harsh economic conditions being created by the poor policies of today's incompetent governments, less respectable ways of making a living are being sought.

In this economy, “desperate measures are becoming far more acceptable,” said Jonathan Alpert, a New York City-based psychotherapist who’s had clients who worked in adult entertainment.

You will find this phenomenon anywhere the market economy is prevented from working by corrupt and overly meddlesome governments. The Obama reich qualifies on both counts.

Rhode Island’s Foxy Lady held a job fair Saturday, seeking to fill about 35 positions for dancers, masseuses, bartenders and bouncers. The Providence Journal reported that more than 150 job seekers showed up to apply for work at the strip club.

There are a number of risks to these professions. Men and women who get caught up in these and other popular entertainments too often become addicted to potent, expensive, and illicit drugs -- which can tip already complicated lives over the brink into chaos. In some situations, exposure to diseases such as hepatitis and HIV can add further risk to these grey and black market activities.

But these alternative professions are only a few of the ways that displaced and depressed workers are bypassing traditional employment. As in any depression, the global Obama depression is supporting the expansion of the black market economy across many sectors, in many countries -- rich and poor. Unfortunately, crime is yet another black market activity likely to expand under President Obama.

Thanks to Obama, we are seeing a dramatic expansion of all levels of government that will lead to an even greater contraction of the private sector. There will be fewer paths to wealth and financial security outside of government, other than the grey and black markets. This is just one part of making the US into yet another third world nation. Obama has many other parts covered as well.

Source for above quotes

Hope for the best, prepare for the worst.

Obama On Verge of Mental Breakdown

Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president's surprise at the sheer volume of business that crosses his desk.

"Obama is overwhelmed. There is a .... tension between his ability to attend to the economic issues and his ability to be a proactive sculptor of the national security agenda.

"That was the gamble these guys made at the front end of this presidency and I think they're finding it a hard thing to do everything." Telegraph

The simple fact is that Barak Obama was not prepared to be US President. He was not prepared to be US Senator, for that matter, but in the Senate a member can spend most of his time running for president -- occasionally sparing the time to vote "present" on important issues -- and still be considered a US Senator in good standing. A president is expected to stay on top of things, and to actually ... you know ... make decisions.

Up to this point, Nancy Pelosi and Rahm Emanuel have been making almost all of the decisions for Mr. Obama. Obama makes decisions about vacations, parties, eating out, and setting the thermostat near 80 degrees F. Or perhaps Michelle makes those decision -- who knows?

White House insiders say Obama may not be getting enough sleep. What -- twelve hours a night is not enough? Perhaps a bit of modafinil might help, but I suspect that a nice long vacation is what the president really needs. Say, a forty year vacation in Hawaii? Perhaps he could run for president of the Honolulu Marxist Association? That might suit him to a tee.

Image h/t Rob's No Bull Zone

Obama Dresses US as Banana Republic

"After the cult of personality," the Colombian explained, "what comes next is nationalization." Fidel had nationalized the Cuban sugar mills, Chavez the Banco de Venezuela, Morales the Bolivian oil and gas industries.

..."The last step?" asked the Cuban. "Censorship. It won't be obvious at first--they're always too smart for that. But it will come."

"Never," replied the American. "We have the First Amendment."

"And soon enough," the Cuban said, smiling sadly, "you will also have the Fairness Doctrine." _Forbes

Latin Americans have seen the phenomenon occur time after time. They are repeat suckers for the big talking populist. But fter 8 years of GW Bush, 8 years of Clinton's finger, and 4 years of GHW Bush, the US was completely unprepared for a catastrophic populist socialism oozing from a reassuringly soft baritone that could lip-synch to a telprompter.

America is being put to the test. Can it wake up in time to stop the slow-motion cataclysm, or will it play dead to the dictator, as Latin America has done so well so many times? Because the real world of economics will not be charmed by a soothing telepromptered voice. The real world of economics will make people bleed and die if its rules are not properly followed -- despite the consensus of rich socialites, celebrities, media culture, and left-wing politicos.

The source of skepticism for many Americans is not the prospect of government waste but Obama's theory of job creation......most jobs are created by private capital in the private sector, often by small businesses. And small businesses got little policy attention in Obama's speech. An example Obama used -- retaining police officers -- is a worthy cause, but hardly typical of American job creation. A small-business owner heard nothing about his daily struggles with litigation or regulation.

There is an element of psychology -- of confidence -- in taking the risks of entrepreneurship and small-business expansion. It is difficult to imagine how that confidence is built by being ignored.

Obama was even less credible on the issue of debt. Most Americans seem to accept the need for the temporary deficit spike to provide a jolt to the economy. But Obama's pledges to go "line by line through the federal budget" and to remove "waste, fraud and abuse" were the most tired portions of his energetic speech -- and simply were not credible with Speaker Nancy Pelosi in vivid green over his left shoulder. _WaPo

Ever since mid September, 2008, when Obama became a heavy favourite to win the US Presidency, the markets of the US and the world have been dropping. Obama should have seen the panic of the markets, and reacted as any sane leader would have done. Instead, he has moved even more wildly in the opposite direction, proving to the markets that their panic was reasonable all along.

....economic activity adheres to some predictable truths. If you tax businesses and investors more, they’ll have less money to devote to wealth creation and hiring. If you bail out firms that should be put through bankruptcy, you’ll perpetuate ineptitude in management and misallocation of resources. If you keep credit-unworthy people in homes, they’ll eventually default and further weaken financial institutions.

Some things can’t be disguised by stagecraft or media cheerleading. In the end, it matters what you do, not how you describe your plans. _Commentary

The US becomes another third world nation, if it continues along the Obama / Pelosi road.

What Are Best Jobs In An Obama Depression?

Survival Blog has been looking at how to survive an Obama depression. They begin by looking at safe businesses during the 1930s depression.

According to statistics published some 20 years ago by Dr.Ravi Batra, the safest businesses and industries during the worst years of the Great Depression (1929-1933) were:

Repair shops
Educational services (A lot of young men that couldn't find work borrowed money to go to trade schools and college.)
Healthcare services
Bicycle shops
Bus transportation
Gasoline service stations
Second hand stores
Legal services
Drug or proprietary stores

To bring Batra's list up to date, I would speculatively add a few more sectors and business that are likely to do well in the next depression:

Home security and locksmithing (since a higher crime rate is inevitable in bad economic times.)
Entertainment and diversions, such as DVD sales and rentals. People will undoubtedly want to escape their troubles!
Truck farming and large scale vegetable gardening (since just 2% of the population now feeds the other 98%--whereas back in the 1930s the US was still a predominantly agrarian society)
Export consumer goods. (Starting in late 2009 or early 2010, the US Dollar is likely to resume its slide versus most other currencies)
_SurvivalBlog

Pawn shops and gun / ammo shops should do well. Liquor, beer, wine, and other mind altering substances will no doubt be in demand. Loan sharks should do a good business, as should various small scale local gambling facilities and services. Prostitution and related services should also do very well.

Persons who specialise in construction of fortified reserves and sanctuaries may see an uptick in business, as US citizens more fully comprehend the magnitude of the D'oh-bama "reforms." Off-grid power supplies and alternative communications systems will likewise probably grow in popularity.

Some US cities should be seen as "unsustainable" due to reasons of poor government, uneducated and / or untrainable population, high crime, crumbling infrastructure and tax base, etc., and should probably be evacuated by persons who have families and small children. Large cities in general -- particularly those with high levels of crime and corruption -- should be abandoned as soon as economically possible.

Unionised government workers are currently sitting very pretty, at least until their underfunded pensions start unraveling. Tenured professors no doubt feel quite secure at this time, whether or not they should. Persons collecting government disbursements are the fastest growing population in the US. As the dollar loses value, their income (in real terms) will shrink rapidly.

The best chances for long term survival and prosperity rest in sustainable communities of persons who are highly skilled, competent, and willing to do what has to be done. Very few D'oh-bama voters fall into those categories, so a prudent person will want to choose his residence carefully, with that in mind.

More on the selection of a community likely to prosper through hard economic times, coming soon.

Keep Quiet If You Know What's Good For You

A pall of groupthink has fallen over the nation, and outspoken dissent has taken on the distinct odour of hazard. We know where this trend is heading, because we have watched it developing over the past decade or more in the climate science community.

Dr. Joanne Simpson [said recently] “Since I am no longer affiliated with any organization nor receiving any funding, I can speak quite frankly….As a scientist I remain skeptical...The main basis of the claim that man’s release of greenhouse gases is the cause of the warming is based almost entirely upon climate models.

...Atmospheric physicist James A. Peden notes, “Many [scientists] are now searching for a way to back out quietly (from promoting warming fears), without having their professional careers ruined.”

Decades ago Tolstoi provided another explanation for failing to acknowledge the growing evidence. “I know that most men, including those at ease with problems of the greatest complexity, can seldom accept even the simplest and most obvious truth if it be such as would oblige them to admit the falsity of conclusions which they delighted in explaining to colleagues, which they have proudly taught to others, and which they have woven, thread by thread, into the fabric of their lives.” _CFP _ via _ Icecap

When "the fix is in," it can be wiser to simply stand back and shut up. Well, just as in climatology, the fix is in politically and socially in America, where dissent will make you stand out like a sore thumb. Getting tenure, getting that contract, getting hired or just keeping your job has just become a bit trickier. Political correctness has just leapt out of the universities and media centers into the mainstream of American life and commerce.

This faux societal consensus is largely media - driven, and will last as long as nothing important comes along to disrupt it. The problem with this consensus attack on dissenting opinions is that it is suicidal, and works against economic survival. I confess that I am rather enjoying the moment. I am wondering how long this "feel good" forced euphoria can be sustained in the face of declining economic well being. A pep rally on the decks of the Titanic, as it were.

Those of you who may not feel like celebrating need to be stocking away durable wealth and learning how to live without a competent government. Worse than that, you will need to learn to protect yourself from an increasingly predatory government. And you will learn to keep quiet.