Remember the Global Financial Crisis?  Think it is all now a distant memory?  Well think again, my friends because we are in for some rocky times up ahead.  Rocky, as in Sylvester Stallone raw egg smoothie drinking Rocky.  But here’s a tip: good property is good property.  No matter how far the economy falls, sipping your pina colada, looking out over the sea from your mansion in the hills is going to be good.  As long as you don’t mind the fact that the rum in your pina colada was fermented in a bucket and due to the shortage of fresh fruit and vegetables, has cordial instead of pineapple and milk instead of coconut cream.  Breast milk.  Which you stole from your own child’s helpless hands.

Yes, things are going to take a turn for the worst I’m afraid.  I’d say buy gold, but that was so 2006, at which point you probably would have ridiculed me for being so unhip.  Now that gold has almost tripled in price since then, I’ll expect all of your written apologies.  Write them on a dollar bill.  It’ll be cheaper than the paper it’s printed on soon enough anyway.

Not that I want to alarm you.  Look at it this way – you’ve got your house and everything is nice and orderly now.  Here’s how you prepare for the turmoil ahead: go to the supermarket and buy a few dozen cans of Spam, baked beans, rice and other shit that doesn’t go bad fast.  Now (and this is key) secretly store your supplies away in a place that no-one else knows about.  When the food runs out and everyone is going nuts, you’ll have a 400% greater chance of survival.  Now that’s just good old fashioned common sense!

Of course, you won’t be able to buy anything because your paper money will be worthless.  But just before the invading hoardes arrive and buy up your hungry neighbors’ houses, you can take the opportunity to trade food for their luxury items.  Those flat screen TVs and home theater systems will seem like a small price to pay when bartered for some chunky chicken soup in a can and a few handfuls of rice.  Trust me, starving people will agree to anything.  Just make sure that the food gives them only enough energy to survive, but not enough to come and steal your supplies.  Don’t worry, when the Chinese move in they’ll fix up the place and you’ll be able to sell for a song!

Of course, this is the Internet and a post about the rapidly-approaching Apocalypse would not be complete without some kind of conspiracy bullshit thrown in.  So here goes.  See, everyone is going nuts over how America is bailing everyone out and spreading their money about.  But this is actually a secret plot to put the world on the dollar.  Hey, the world has to have some kind of world currency one day doesn’t it?  Why not just make it the dollar?  Slowly, all the other currencies will collapse as the US financial market encourages easy credit so that countries spend and spend themselves into oblivion, like Greece and Spain have been doing.  I don’t have to tell you.  You know what’s going on.

Mind you, it might just be a case of trimming the budget.  You know, like not going out so much, eating in, shining your own shoes, cancelling your subscription to Hot Jugs Monthly.  You’re damn right it’s going to be hard.  You may have to spend less on electricity too, forcing you to spend time interacting with other people and making human connections as opposed to cyber ones.  We’ll all get through it somehow.  God knows how.

This stuff makes my head hurt, but it would be remiss of me not to say at least something.  I may be wrong.  It may just be a light shower.  But if I’m right and that financial storm that’s brewing on the horizon unleashes a torrent of hellfire upon us all, don’t even think of trying to find my secret box of Spam.  I will be armed.

There will be nothing great about this depression, mark my words.  Now if you’ll excuse me, I think I need to go and lie down.

I wish more things were like the Apple iPhone Application Store.  I just downloaded a little program called Sleep Cycle.  It sits on my bed as I sleep, monitors when I’m dreaming or in deep sleep and adjusts my alarm clock automatically (within a 30 minute window) to wake me when I reach a light sleep stage.  I know!

Don’t even get me started about the WC Finder or OneTap movie finder.  Or Runkeeper, the program that tracks me via GPS as I run, recording my runs in an online database and connecting me to other runners in my area.  Or Stanza, the simple ebook reader that can have me downloading all the classics in a couple of seconds.  I’m reading The Count of Monte Cristo on it right now.

The human entrepeneurial spirit is a remarkable one.  The American version a particularly remarkable one.  When people are shown the carrot, they will formulate the most amazing devices and plans to get it.  When used correctly, the entrepeneurs are the engines that drive our economy and standard of living higher.

Why can’t we make medicine like that?

But David, if we do that, there will be some people who get sick from bad doctors who are just out to make money!

Good point.  Let’s look at how the app store and almost every other internet business solves this problem.  Did they get government?  No.  Did they propose legislation?  No.  Did they use a feedback mechanism which built a company’s reputation?  You bet your ass they did.

Bad news travels faster than good news for a reason.  You can have a system where half the people can’t get good care because there are a thousand laws in between a med graduate and a practicing doctor.  Or where people fork over a large portion of their wealth to buy into a bloated, astronomically expensive and wasteful government-endorsed system.  Or you can accept some element of risk, do your research from other customers and go with the specific solution the market has dreamt up.

There is yet an iPhone application that can scan my brainwaves to determine, diagnose and treat my ailments.  But you can bet that when such a House MD app exists it will be the result of some person’s dream of making themself rich.

Note the sudden spike in the rate of incarceration.  The illustration subtly implies that CNN had something to do with this, but I’d like to suggest another significant movement that started during the early 80s: The Drug War.

The War on Drugs, popularized by Nixon (that should be a sign) and greatly expanded in the 80′s by Ronald Reagan, has sent more people to jail in the past 20 years than were incarcerated during the previous 60.  According to a U.S. Department of Defence report, over 50% of inmates currently serving in US penitentiaries are there for drug-related offenses.  In other words, many people serving time in prison right now are doing so for the heinous crime of using a substance on their own body.

Principles of freedom aside, the Drug War might be something if it made our societies safer, with less crime and drug use.  However, it has done just the opposite.  Drug use is up and unlike other drugs like alcohol, nicotine or Vicodin, illicit drugs remain strongly associated with crime, as the only suppliers are the cartels, who have made billions from the inflated prices that the War on Drugs encourages.

When do I get to live in a civilization advanced enough to see how illogical this is?

America’s latest financial woes have seen many proponents of marijuana suggesting it be legalized. It was well publicised earlier that Obama has tried it, plus with the economy the way it is, taxing the sale of Mary J could generate a billion dollars in revenue yearly. I suppose lobbies have to push their causes, but I’m not sure that they have the strongest case.

When you rest your case on economic reasons, the other side will always accuse you of selling out your values. Then you have to give other reasons why it should be legalized. Sure, it would be nice to bring it into the open and generate more revenue, but this is not the reason why.

What we should be combating in society is the open hypocrisy and bias that drug laws create and enforce. Either we support people choosing to alter their perception or we don’t. We allow people to drink, to meditate, to even sit on their sofas all day watching TV and stuffing their faces with junk food. Yet altering your perceptions in other ways is illegal. This list of what’s legal and what’s not is arbitrary, not based on an empirical scale of danger.

There are various substances out there, all with different ways of altering people’s perceptions. Some are relatively benign, others are quite dangerous. Now here is the basis of drug laws. With a couple of notable exceptions, legislation is based on preventing pleasure instead of ensuring safety. This is a notable distinction because it is the source of the problems with drugs today.

If drugs are illegal, people must break the law to sell them. This raises the price due to the increased risk involved with getting the drugs to market. As such, organized crime, with it’s large networks, are the only groups with the power to pull this off. And, due to the dangers involved, the financial benefits of success are highly inflated. High street prices equals addicts with less money, which encourages crime. The secretive nature of drug transactions lowers the quality and safety of the product, putting users at far greater risk than if they were to buy a prescription drug. When alcohol was prohibited in the 1930s, these very conditions arose.

The way you drink a glass of wine is the same way a marijuana user wants to enjoy his or her joint. If we were able to research safer delivery systems for a wider range of drugs, people may be able to alter their perceptions in a relatively safe way and do less damage to their bodies than that wine is doing to your liver. In addition, many users feel different areas of their brain stimulated while smoking pot, as opposed to the feeling that your brain is being dulled when drinking alcohol.

However that argument is following the same mistake of arguing for a negative. When saying MJ is safer than alcohol or relatively benign, you are still promoting escapism, which is negative. As alcohol is already established in our cultures, we accept it. However if someone were pleading the case for alcohol they might sound as equally desperate as pot heads claiming MJ is safer than junk food.

The fundamental question we have to decide as a society is, are we going to allow people to responsibly choose whatever kind of pleasurable activities they so desire? Just because we disagree with other people’s lifestyle choices, doesn’t mean we can’t allow them to enjoy their own choices. This idea, that other people are free to live and control their own lives is essential to freedom. We must promote this idea from it’s opposite, the enforcement of a way of life through false claims of protection. For when they say that they want to keep society safe, they are actually saying that they want everyone else to share their personal choices. This ugly attitude is at the basis of homophobia, racism and religious intolerance as well.

America was built on the ideals of freedom from oppression. It’s really about time that someone pointed out to them what this actually means.

The world is counting on you, America. Don’t screw it up.

Ah Alan Greenspan, your life reads like a tragedy. Bright young man, graduates summa cum laude from NYU, goes on to receive a Ph.D. Befriends a prominent philosopher and proponent of the free market ideology and writes articles in her books singing the praises of capitalism and the gold-standard. Subsequently awarded a Ph.D in Economics from NYU and then a successful career as an economic advisor, all the while slowly moving away from his free-market friend and mentor. Changing course, following a more political career, beginning to accept a level of government influence in the free market, being appointed as Chairman of the Federal Reserve, controlling the money supply, the interest rates. Compromising, following political expediency, admitting that one can’t be an idealist, all the while espousing free-market ideals. Setting up and presiding over a housing bubble, allowing easy credit, forcing the market to accept it, in diametrical opposition to his professed ideology. Then, passing the reigns over to a new chairman and a few years later seeing the fruits of his meddling come to fruition, with the full knowledge that it was his failed machinations which got them there. Even so, I might have let the old guy retire in peace.

And then he had to open his mouth and say this:

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added:

“I have found a flaw. I dont know how significant or permanent it is. But I have been very distressed by that fact.”

He goes against the free market then has the nerve to blame his mistake on the free market. If the free market had been allowed to work as it should, those loans would never have been made. It was precisely the compromise and eventual abandonment of his principles that was the problem. As his former mentor said “In any compromise between food and poison, only death can win.” This current financial crisis will be his ultimate legacy, and so the tragedy goes.

But when all these bad policy decisions were being made, when Washington was encouraging the Fed to keep interest rates low and to put more people in houses, were there voices of reason to be found? Yes, though no-one seemed to pay any attention. The very same person who ran for President this year and whose economic advice was resoundingly rejected as being “way out there” had this to say in 1999 over a piece of banking legislation that would supposedly deregulate the industry:

Today we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits….

The growth in money and credit has outpaced both savings and economic growth. These inflationary pressures have been concentrated in asset prices, not consumer price inflation–keeping monetary policy too easy. This increase in asset prices has fueled domestic borrowing and spending.

Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average–and reduce risk for individual institutions while increasing risk for the system as a whole.

The rapidity and severity of changes in economic conditions can affect prospects for individual institutions more greatly than that of the overall economy. The Long Term Capital Management hedge fund is a prime example. New companies start and others fail every day. What is troubling with the hedge fund bailout was the governmental response and the increase in moral hazard.

This increased indication of the government’s eagerness to bail out highly-leveraged, risky and largely unregulated financial institutions bodes ill for the post S. 900 future as far as limiting taxpayer liability is concerned. LTCM isn’t even registered in the United States but the Cayman Islands!

…My main reasons for voting against this bill are the expansion of the taxpayer liability and the introduction of even more regulations. The entire multi-hundred page S. 900 that reregulates rather than deregulates the financial sector could be replaced with a simple one-page bill.

In other words, if a company knows that the government will be there to bail them out if they screw up and everyone else is making money while they can, you can’t blame them for taking full advantage of the opportunity. Blaming the free market for the favoritism of Washington all the while making the average taxpayer pay for this favoritism again and again is just too much. Are the right people being punished? No, once again it’s the free market run wild which is to blame.

What will inevitably follow this crisis is more regulation leading to more screw-ups down the line. But it’s not the screw-ups which are the biggest concern. It’s the systemic corruption that comes with regulation, for with restriction comes profit. Tie one side’s hands and the other is free to prosper. What we need is more education on what a free market really means, that money can’t be created out of thin air and that the market can’t be duped forever. Alan Greenspan had the opportunity to come clean and return to his roots, but instead opted to shift the blame, as so many douchebags have done before him and will do again. While the free-market (not so) gently crashes.

Update: It seems that Ron Paul had a comment or two to make on Greenspan as well:

Click here to view the embedded video.

A few days ago China stopped for 3 minutes to remember those who passed in the tragedy. Taxis and cars stopped in the street, people stood everywhere in silence, workers came out of their shops and buildings to stand together. This 3 minutes of solidarity would be nice to experience more often, were it not in remembrance of something tragic.

The only true part of your statement, Waiguoren, is that you discern little. Allow me to quote Bastiat’s ‘The Law’ if I may.

Socialism, like the old policy from which it emanates, confounds Government and society. And so, every time we object to a thing being done by Government, it concludes that we object to its being done at all. We disapprove of education by the State ” then we are against education altogether. We object to a State religion ” then we would have no religion at all. We object to an equality which is brought about by the State then we are against equality, etc., etc. They might as well accuse us of wishing men not to eat, because we object to the cultivation of corn by the State.

We are not against helping other citizens. In fact, it is a moral imperative. However, the role of Government is NOT to rob one citizen of his wealth, to give it to another. Charity and goodwill must be voluntary, or else they are worthless…as worthless as the ‘mandatory volunteer work’ that students are being required to complete before graduating.

You cannot legislate morality. People must be responsible for themselves, and must choose to accept responsibility for their family, friends, and neighbors, but not for the Government to rob them of their wealth, and tell them, “I’m sorry, but us lawmakers in Washington DC decided the money you earned while working would be better spent (insert ‘for the children’ cause here).”

That might’ve been money needed for his or her own family, money needed to give charitably to his own neighbors. When the government redistributes your wealth, its called socialism and tyranny. It doesn’t MATTER how ‘good the cause’ is. Its still a fascist thing to do.

In my usual reading of Ron Paul news, I came across this comment about the War on Terror on rollingstone.com, posted by user Republicae. I post it because it sums up what exactly is happening in the war and what the terrorists are really hoping to achieve: the bankruptcy of the United States.

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Eventually, it will become apparent that the ignorance of rage that characterizes our War on Terror, will betray this government, this nation and its people. We have thrown our natural rage into the game of war with those we consider terrorists and an immediate threat to our future however, in that rage we have overlooked several very important and perhaps critical issues that will affect our futures in ways that we are yet unaware.

In all the rhetoric, the hatred that we believe our enemies deserve and the reaction to their attacks we have, it seems, willingly played into their plans while pursuing our quest for revenge and defense. It is commonly stated that the devil is in the details, in this case that is absolutely correct. We have been confronted with an enemy that is not bound by convention, by international boundaries, by nationalities nor even by the values that we have long considered familiar in terms of Western or traditional warfare. There is a very important and critical disparity between the style and effectiveness of our enemies and those of our military efforts based upon our policies. This contrast is most distinct when viewing the degree of effort and expense used to affect each side of the conflict. There is also a very distinguishing difference between the ideals and motivations between the two forces; those differences are rarely taken into consideration and yet because of the nature of this conflict it plays an extremely important role in the overall effectiveness of each side in the conflict itself.The main contrast, that is seldom mentioned or considered when judging the effectiveness of each sides role in this conflict, is the disparity of expenditures needed by each side to effect substantial damage on the other. In the case of the terrorists, the level of expenditure is miniscule compared to that of the United States. As is common with all super-states, our response is natural to the characteristics of such a super-state. In our eyes, the proper response is to throw everything you can at the enemy and it will, at least in our minds, do the job. The problem is that it rarely does in such cases and there is plenty of evidence to support that fact.In the case of al Qaeda and other terrorists groups, the need to produce massive attacks is not needed, especially after the events of 9/11. In fact, a terrorist group need not attack at all, but only use its ability to induce fear, sometimes massive fear, as the ultimate effective and extremely inexpensive tool of their trade. Because of such tactics of potential terror, they need only threaten and it not only achieves a predictable result, but also prompts their enemies to expend massive amounts of resources to defend against the perceived potential attack.

While the threat of physical attack is always to be considered real and dangerous, the more effective and therefore most insidious attack is that of psychological terror. Psychological terror, particularly if it is not recognized, is extremely dangerous because it has the potential of effecting drastic changes in the behavior and character of a society; not to mention the manner and means of the response that society willing to take both domestically and in its dealings with other nations. Psychological terror causes the victim nation to react in ways that while appearing defensive can exacerbate the entire situation and increase both external and internal dangers. It causes reason to be set aside for reaction and places the country in a position where effective decision-making is compromised. The nations center of gravity is pushed off balance, its traditional character is morphed into a vision that eventually becomes unrecognizable and its laws become disposable. Eventually, the effects of the terror are a success and psychological conquest has effectively changed the way the people of the country see themselves, see others, live their lives, believe, behave and conduct their business and affairs. The countrys politics too can easily become contorted, manipulated and, in some cases, extreme.

Both physical and psychological terror will find its ultimate use in causing the economic resources of the country to hemorrhage, bleeding the life-blood from the most vulnerable sector of the society. Given the differences between the expenditures of the terrorists and our own expenditures, it is easy to see that eventually the expense of such a war will take an increasingly heavy toll. Once again, it doesnt take an actual attack to press a country into a massive and extremely costly response; it only takes the correct application of fear to implement its effectiveness on the countrys resources.

While our rage, combined with degree political expediency, has caused us to choose to believe certain things about our enemies, many of those beliefs are not based upon fact or intelligent assessment, but solely upon that rage. In that rage we blind ourselves to a reality that is not only necessary to understand our enemy, but also to effectively counteract and defeat the potency of their methods.

For those who have never read The Principles of War by Carl von Clausewitz, he presented a very powerful argument on the methods of defeating an enemy through attacking that enemy at his Center of Gravity. Now, in our rage we might not think that the terrorists would consider such a strategy as it is spelled out in The Principles of War, particularly because many of us have a carefully manicured vision of the Islamic extremists, but in fact, those crazed Islamofascists have not only read the book, but they have instituted many of the principles found throughout its pages. Abu-Ubayd al-Quarshi stated in his essay: A Lesson in War, that not only had he read it, but that al Qaeda would utilize those principles in its attack on the United States. Of course, in our rage, our anger, we rarely consider such facts or understand the importance of recognizing that our enemies are not just Islamic crazies, but warriors intent on using any and all methods to achieve their goal of defending their religion and their lands from what they view as invaders.

Now, to understand what al-Quarshi was talking about, lets take everything about Islam out of his writings and then read it as though it were a simple plan and explanation of their purpose:

We must understand the American essence and nature, and indeed his center of gravity. A conviction has formed among us that American public or political opinion is not the center of gravity. The actual American center of gravity is its economy. Supporting this penetrating strategic view is that the United States of America is a mixture of nationalities, ethnic groups, and races united only by the American Dream, or, to put it more correctly, the U.S. Dollar and the economic wealth of the nation. We must take away the American Dream. Furthermore, as we have seen, the entire American war effort is based on pumping enormous expense of its military machine therefore, the economy is the weakest sinew of its war effort.