When a Banker jumps out of a window, jump after him — that’s where the money is.
Robespierr
[I’m pretty sure this was not the Robespierr. It’s just some random quote I picked up a decade or more ago probably from a Usenet group or something that I thought was appropriate for today’s economic situation.–Joe]
Here is the key insight: you might think that when collapse happens, nothing works. That’s just not the case. The old ways of doing things don’t work any more, the old assumptions are all invalidated, conventional goals and measures of success become irrelevant. But a different set of goals, techniques, and measures of success can be brought to bear immediately, and the sooner the better.
Dmitry Orlov
February 13, 2009
Social Collapse Best Practices
[On Saturday my Dad, my brother Doug, Ry, and I were all sitting around talking about the hazards and opportunities our current economic situation. Doug pointed out that five or ten years from now will be able to see all kinds of opportunities that are available to us right now if we only could see them. I don’t think anyone disagreed with him. But none of had any real clues as to what those opportunities are.–Joe]
My definition of social justice: those who refuse to work deserve to go hungry.
Clayton Cramer
http://thinkexist.com/quotes/clayton_cramer/
[It seems to me that this definition of social justice will soon becoming the norm.–Joe]
I think it’s astonishing, they’re ruining the US economy, they’re ruining the US government, they’re ruining the US central bank and they’re ruining the US dollar.
You are watching something in front of our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world’s most powerful country.
Japan’s economic “lost decade” was caused by trying to bail out the banks, and the West risks running out of money if it doesn’t let the bad banks fail now.
Systemic risk is going to be the same in 10 months, 5 years or 10 years if the fundamental problem is not solved.
The idea that you have too much debt, too much borrowing and too much consumption and you’re going to solve that problem with more debt, more consumption and more borrowing? These people are nuts.
Wall Street and the City of London are going to be “disastrous” for years, like in the 1950s and 1960s, and in 30 years, finance will “dry up and wither away” as we are entering a “long period of hard times.”
Power is shifting now from the money shifters, the guys who trade paper and money, to people who produce real goods. What you should do is become a farmer, or start a farming network.
Jim Rogers
March 3, 2009
Jim Rogers: Let AIG Go Bankrupt, Not America
[If true, “real goods” probably involves more than just farm/food products. My guess it will include security, water, shelter, sanitation, communication, and transportation as well. Probably in about that order.–Joe]
There’s no such thing as a free lunch.
Milton Friedman
[One would think that those people who advocated for the “stimulus package” would have heard of this bit of wisdom before. Some will say overlooking Friedman can be blamed on deficiencies in our public school system. Others will claim many of those pushing the stimulus package know exactly what they are doing — creating a socialist America. I think it is likely they are both correct in their claims.–Joe]
It’s not complicated. Americans can accept Barack Obama’s invitation to move onto the plantation. Or they can choose personal responsibility and freedom.
Star Parker
February 9, 2009
Back on Uncle Sam’s plantation
[I figure there is about a 60% chance Americans will continue voting to move onto the plantation. The future is grim.–Joe]
Greg D., an average Joe and friend on the east cost reports: “Funny story (sad really), we have been trying to buy extra .380 here in SC and also in GA and it is non-existent. Everyone who carries is stocking up. But I was in Maryland — where no one but a friend of the governor can carry, and the shelves were full.” According to anonymous economists, this is caused by the law of supply and demand. Knowledgeable insiders report that president Obama is trying to repeal that law.
Alan Korwin
March 2, 2009
Ammunition Scarce Somewheres
[With all due respect to Mr. Korwin I fairly certain president Obama believes he already has repealed almost all economic laws.–Joe]
“That was uplifting.” That was what Barb said after I read this to her:
President Barack Obama has set his course for battle with America’s powerful interest groups over his ambitious, some say radical, spending blueprint that aims to remodel American society.
Even as he has rammed through emergency economic spending that easily could top $1 trillion, Obama has asked Congress to adopt a budget that is ripe with programs to improve the lot of lower- and middle-income Americans at the expense of the wealthy and the farming and industrial complexes under their control.
…
On the budget plan Obama presented on Thursday, the president said it would help millions of people but only if Congress overcomes stiff resistance from well-financed lobbies.
“I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight,” Obama said Saturday in his weekly radio and video address. “My message to them is this: So am I.”
Under the president’s proposal, America’s wealthiest 5 percent would pay a whopping $1 trillion in higher taxes over the next decade, while most others would get tax cuts. Industries would buy and trade permits to emit heat-trapping gases. Higher-income older people would pay more for government health insurance benefits. Drug companies would receive smaller profits from the government. Banks would play a much smaller role in student loans.
We are living in interesting times.
Sleep well and have a nice day.
I rather surprised the New York Times actually printed this story since they can never say anything good about private gun ownership on their editorial page.
It’s sad that the woman is facing, in essence, a loss of innocence. But she also goes through her thought process and is realistic about why she needed to buy her first gun:
Back in late September, when my bank stocks began to tank — slowly, then all at once, as Hemingway described going broke — another wall in my life began to crack, as rumors of break-ins rattled my peaceful neighborhood in Allentown, Pa.
…
A few weeks ago, my husband went away on business, and after two sleepless nights starting every time the old steam radiators knocked, I finally decided I wanted protection.
Jimmy took me to the Army-Navy Store on Grape Street. It was 11 o’clock on Sunday morning, and 15 normal-looking — I was relieved to see — people were leaning on the gun counter at the back of the store. Jimmy explained the differences between the Glocks, semiautomatics with magazines, and the Smith & Wesson revolvers with six bullet chambers. The clerk told us a lot of handguns were out of stock; arms sales around the country have been increasing in inverse proportion to the collapsing economy and in response to the unsubstantiated buzz that the new administration is going to tighten gun control.
“You want a revolver, to start,” Jimmy said. I pointed to a dull pink Charter Arms revolver with a two-inch barrel: the Pink Lady. It looked like a toy. Jimmy laughed. “You don’t want a pink gun.”
I watched the woman at the counter next to me test the feel of several Glocks while the young girl with her thumbed an electronic game. Then finally I picked out a Smith & Wesson .357 Magnum, “the gun I started with,” the clerk said. I handed him my driver’s license and filled out the paperwork. He left us to run my license number through a criminal-records system called QuickCheck. Two minutes later I was qualified and, between gun and ammo, $762 poorer. The revolver I bought has a black handle and a four-inch stainless-steel barrel. There’s nothing pink about it.
I’ve had this in the back of my mind for weeks. Then two events brought it to the forefront. First, a customer wrote this wonderful comment in an order form;
Your lessons and videos in your Resource section WERE LIKE GOLD to me! I thought only I had questions that you answered there (i.e., how to attach plastic rail guards easily, can AKs shoot clay targets, what EXACTLY is the difference between stamped and milled (it is like EVERYBODY already is supposed to magically know this somehow!), difference between red dot and other sights, and so on). Seriously, I have tried to learn about AKs now for 2 years, most of my knowledge comes from Gabe Suarez (who strongly promotes Ultimak as you know) but you really filled in holes in my knowledge quickly on that one resource page. THANK YOU! Please keep teaching us, it builds amazing trust between us and you and we appreciate it!
It’s great to hear from customers, especially happy ones. And I know the feeling. When I was in High School I was expected to know things (event schedules and such) that were never told to me and were not posted, as if osmosis had been expected to work for knowledge transference. “What do you mean you didn’t know about the meeting? Everyone else knows!”
Now to the reason for my posting said “lessons and videos” on my web site. I did it because I was tired of answering the same questions over and over, and explaining the same things in detail to people who just did not get it, plus I was frustrated with trying to sell a product that (it seemed) few people understood. I spent some time putting that stuff on the web site as a labor-saving measure so I could spend more of my time being productive, and because the more people understand some of these products the more people will buy them.
But there is a much broader point to this.
Regular readers know that I’m a fan of Walter Williams’ writing. He recently put up a nice bit entitled “Economic Miracle” describing much the same thing;
Adam Smith, the father of economics, captured the essence of this wonderful human cooperation when he said, “He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. … He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain.” Adam Smith continues, “He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. … By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” And later he adds, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”
To the customer, it may seem that our putting up a user resources page is an act of charity, or some other form of magnanimity (after all, it is free of charge). It may in fact have that effect on people, but the bottom line is; this sort of thing happens millions of times per day, all around the world, all out of self-interest.
In a free market, we have to do a better job of serving the customer than those around us, or we fail to prosper.
Let government interests meddle with free markets and it all starts coming apart. It happens a tiny bit here and a tiny bit there. At first it may show up as a minor annoyance– maybe a slight price increase here or a drop in service over there. Eventually it leads to higher risk, fewer start-up businesses, more failures, the formation of de facto monopolies through the process of government licensing or subsidies, people holding back on investments in capital improvements, etc. You can rarely ever put your finger on it directly, and if you listen to politicians, things are going to be just fine as long as you keep them “in charge” of things. Finally it leads to stagnation, lawlessness, and decay, as can be seen in parts of the U.S. and in other countries.
For those of you who voted for Obama; I’ll spell it out for you. Capitalism works better than any of the alternatives.
When a non-technical person says, “reset” I have to examine the context carefully and frequently ask more questions. They could mean anything from closing an application and restarting it to unplugging the computer without going through a graceful power-down process.
“I often think of this as an economic reset. It’s not a recession from which you recover,”
I think this is much closer to someone else yanking the power cord from the wall on your computer while it is still running than simply closing an app then trying it again. I just hope the computer doesn’t catch on fire and the electrical wiring in the building fuses into a blob of molten metal during this “reset”.
As you all know the downturn we are operating in is more severe and global than anything we have seen before.
We are in the midst of a phase of history in which nations will be redefined and their futures fundamentally altered. Many people will be under extreme pressure and many companies mortally wounded.
Rupert Murdoch
February 24, 2009
Peter Chernin’s little shocker
[Risk and opportunity abound. Keep your eyes open for both. I’m listening to The Black Swan which appears to be applicable to the times as well.–Joe]
May your trails be crooked, winding, lonesome, dangerous, leading to the most amazing view. May your mountains rise into and above the clouds.
Edward Abbey
(1927 – 1989)
[For some reason this struck me as perhaps describing our political and economic future. Dangerous but yet full of opportunity.
But then on a physical front I’m suspicious that our universe is actually a black hole with an event horizon several billion light years across and we are rushing toward the singularity at the speed of light on the time axis. So, in the long run, it doesn’t matter even if we do get off this planet and out of the solar system everything we know will be ripped apart down to the sub atomic particle level eventually anyway.
Have a nice day.–Joe]
There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
Henry Hazlitt
Economics in One Lesson
Part One: The Lesson
1946
[Yes. That was said in 1946.–Joe]
Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next.
Dmitry Orlov
February 13, 2009
Social Collapse Best Practices
[I found eight quotes for my database so far and I’m only about half way through his post.–Joe]
If this and this (both via Say Uncle) pass and the Feds don’t bring in their lawyers and thugs I hope they soon start selling variants built on this:
Picture also from Say Uncle.
California, Kansas (another H/T to Say Uncle), Washington State and many other government entities are in or near economic crisis mode. If the Feds think it is politically unacceptable to allow banks and automakers to go bankrupt what are they going to think about states going bankrupt? Bailouts for local governments must be in discussion behind closed doors if not openly.
But the Feds are broke too. It just doesn’t show up quite a readily because they own the money printing presses. President Obama says he “will pivot quickly to address a budget deficit that could now approach $2 trillion this year” (H/T to Tam and pdb). That can mean little more than increased taxes. If history from other countries in similar situations is any guide when things get bad enough you can expect direct confiscation of your retirement funds and savings as well as nationalization of various industries who remain profitable. The rational used will be something along the lines of “the government must not fall so anything we do to prevent it is justifiable”. They have guns and they won’t be afraid to use them to take whatever they think they “must” have. The U.S. Constitution was written with enumerated powers granted to the government but court rulings early in the last century shattered those walls. The Federal government will attempt to get more and more “control of the situation”. More planning and “guidance” from the “central committee” such as the “car czar” and more regulations for the banks (which helped bring them down to begin with) will fail in a big way. Many of the politicians and “intellectuals” have no industry (real world) experience. They have been living off of the public dole where money is obtained via the point of a gun (taxes) and they don’t have a clue (see also this comment clues, lack thereof) as to how reality really works. Obama is believed to be the savior of the world (see the I Love You Obama Woman, the response from France, as well as all the other adoration such that we have never in our lifetime seen for a U.S. president–only dictators in other countries). To the best of my knowledge he is the most inexperienced president our country has ever known, he is facing the biggest crisis our country has seen in 80 years, he is a socialist, and his advisers are socialists. His solutions are all going to involve more power and control for the Feds. More power and control in the hands of those that have only the flimsiest of connections to the real world and no experience. It’s a recipe for disaster.
The only bright spots I see are some states, such as Montana, Tennessee (see the first two links in this post), Arizona, Washington, Oklahoma (via Sebastian), and New Hampshire (via Sebastian and email from hunter006) are thinking about going all Ninth and 10th Amendment on us. There could be some serious cracks appearing in the creeping Federal tyranny we have been experiencing. Within a few years we could be (almost for certain?) looking at some new form of government. What will it be? The Orwellian vision of a a boot stamping on a human face … for ever? Or something else as certain states and people take a successful stand against the socialists?
I’ve been thinking for a long time that the world is due a new form of government. Tribal leaders, witch doctors, kings, dictators, democracies, republics, and others have all had their day (and dark nights) in the limelight. But instantaneous communication and near instantaneous travel makes for some interesting thought experiments. I’m not sure The Probability Broach type world is practical but there may be something else that is. This crisis may be the impetus to figure it out.
For the economy in general, doing nothing is vastly preferable to doing the stimulus package, but doing nothing is not a political option; indeed, it would be political suicide. Given the dominant ideology and the political institutions that now exist, economically rational public policy is incompatible with political viability…. Having hit bottom, the politicians can only do one thing: keep digging. If Hell is down there, they’ll reach it, sooner or later.
Robert Higgs
Senior Fellow at Independent Institute
The Lighthouse Volume 11, Issue 7: February 16, 2009
[I was tempted to just use “rational public policy is incompatible with political viability” as the QOTD, but the mention of politicians attempting reach Hell was just too appealing.–Joe]
Rest assured, there will be a great majority who will not stand against
tyranny. Those who have “gone along to get along” and those who have
continually voted for the “lesser of two evils” will capitulate and surrender
their weapons, as cowards normally do. They will rue the day they failed to
support those who stood for liberty such as Ron Paul. Remember, they were
offered liberty, but chose instead to support the status quo, because, in
their eyes, liberty could not be elected.
Michael Gaddy
Buy, Buy, Buy
January 5, 2008
February, Friday the 13th, 2009 – the day the dream died. No dirge is playing, not yet, but wait…the lamentations will come.
And to everyone who voted to enslave the freest people on earth…
I curse you. 48% of of your countrymen curse you. Future generations will curse you. Your own descendants will curse you.
May that knowledge be like a yoke around your neck- the weight of it strangling you, pulling you down into the filth where you belong.
Breda
February 14, 2009
no love
[People should be making their lists.–Joe]
President Obama’s senior intelligence adviser says that the world financial crisis has surpassed terrorism as the country’s “primary near-term security concern,” pointing to unrest in countries around the world as commerce stumbles. It was an unusual briefing by the new Director of National Intelligence Dennis Blair, who was briefing Congress on the U.S. intelligence community’s annual threat assessment, which in the past has usually focused heavily on issues like Iranian nuclear weapons and progress in the global effort against terrorist groups. “Time is probably our greatest threat,” Blair said. “The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests.”
I wanted to write my essay on economics this weekend but I may have something that is a higher priority get in the way.
I’ll get to the economics eventually. It’s really, really important. Here and here are some short courses to get yourself up to speed.