Guest Post: Save The Virgins!
Submitted by David Galland of Casey's Report
Save The Virgins!
This morning I read an interesting story in Soundings
magazine. It recounted the final voyage of the S.S. Morro
Castle, purportedly one of the safest ships afloat back in 1934
when it regularly transported revelers on junkets between New York and
Havana. Then, on the night of September 8, a series of unfortunate
events occurred that ended with the ship washing up on the New Jersey
shore the next day, close to half of its 300 or so passengers dead.
First, the ship was hit by a storm. Then, while fighting the towering
waves, the veteran captain clutched his chest and fell dead from a
heart attack, moving a less experienced man into command.
Next, a ship’s steward discovered a group of drunken passengers
entertaining themselves by flicking lit cigarettes into a trash can in
one of the salons. About an hour later in that same salon, a fire broke
With the ship still battling through the heavy waves, the crew now
had to turn to putting out the fire – but were shocked to discover that
there was no water pressure, rendering the fire hoses useless.
Making matters decidedly worse, shortly afterwards the fire ignited an
explosion that blew out the salon window, sucking in the air necessary
to turn the blaze into an inferno.
Quickly thereafter, the raging fire burned through critical ship’s
wiring, causing the electricity to short out. That, in turn, resulted
in a failure in the steering, leaving the ship helplessly afloat in the
With the blaze rapidly spreading, the replacement captain gave the
command to abandon ship, but as there had been no lifeboat drills, the
scene quickly descended into chaos and death that ended several hours
later with the burned-out hulk washing ashore… turning the floating
party palace into the ruined remains seen in the photo here, in the
proverbial blink of an eye.
The story resonated with me on a number of levels, but first and
foremost as a cautionary tale that even when everyone agrees that
something is “safe,” events can quickly prove otherwise.
For example, in the current economic context, U.S. Treasuries are
considered the safest of harbors for storm-weary investors. But that
assumption contains within it the further expectation that the status
quo will prevail – that, proverbially speaking, no captains will drop
dead, or drunken passengers will set a fire by playing a truly mindless
parlor game. Further, should such unexpected events occur, a widespread
belief holds that the water pressure will be there when needed, and
that the power won’t cut out at the worst possible moment.
That’s a lot of assumptions. And those just named are specific only to a
ship at sea – not the complex system of the U.S. economy, which is, in
turn, but a cog in a globally interconnected market. In other words, a
system that is unimaginably complex.
In the pre-history days of emerging human consciousness, upright apes
viewed the overt expressions of the complex system that is nature –
volcanic explosions, lightning, seasons, drought, pestilence, etc. –
and tried to make sense out of it all by organizing around belief
systems that today would be considered laughable. At the time, however,
dancing around open fires bedecked in certain animal skins or allowing
shamans to sacrifice virgins were seen as effective methods for
controlling the natural chaos of things.
Even though the nature of our belief systems has grown less barbaric,
we modern humans still persist in nonsensical notions and associated
rituals that are viewed in much the same light – rituals that do little
more than pretend to control the chaos intrinsic to life on this small
globe spinning through space.
Most prevalent among the modern belief systems is that shamans of
government and high finance can, by virtue of their Harvard degrees and
clearly advanced intellects, effectively manage large economies. The
fallacy in this notion should be evident to everyone – here in the
U.S., it’s as simple as noting how everyone from the Fed chairman to
almost all of the nation’s political leaders and the best and brightest
on Wall Street failed to anticipate the current crisis. Any way you
slice it, the lot of them were caught as flatfooted as the crew and
passengers on the last voyage of the Morro Castle.
One minute, big party… the next, diving over the side of a ship to an
uncertain future in mountainous, storm-tossed waves.
Forget assuming the power and water will stay on – for the shamans to
have missed the pending crisis is akin to the ship’s captain entirely
dismissing even the idea that a storm at sea were possible.
But a failure of foresight isn’t the worst of it. The worst of it comes
from the idea that, when troubles do arise, the modern shamans can
dissect the entrails and proscribe a regulatory brew that magically
solves the troubles, and solves them for essentially all times.
Case in point, currently the European Union is laying the bricks for a
new round of regulations that limit bankers’ compensation and require
some substantial percentage of any bonuses they receive to remain in
escrow for years, and be payable only if the bank does well. The
eurozone is not alone; similar legislation is in the works in the U.S.
This, we are told, will somehow prevent any further excessive risk
taking of the sort that laid the world’s economy low. This, of course,
completely ignores the lead role the world’s governments played in
creating the debt bubble at the heart of the crisis – but that’s not a
topic the shamans will be addressing anytime soon.
Even so, I would concur that in the cases where a bank receives
government funds – which it shouldn’t – the government, as
shareholders, could agitate with other stakeholders to vote down
excessive, or excessively risky, compensation schemes. But that’s an
entirely different thing than a heavy-handed new attempt at regulating
out all risk in the banking sector. Should such regulation pass, and it
likely will, all it will actually serve to do is create an exodus of
the more intelligent members of the sector to banks operating in less
restrictive regimes. Money goes where it is treated best, and so do
And, again, this is just a speck of dust on a broader body of
legislation and regulation that will get much worse before it is
finally revealed for the virgin burning that it is.
Am I suggesting that any and all regulation should be done away with? I
have to admit I find that idea tempting because it would immediately
create an environment in which people would have to rely on their own
judgment – or on that of those they trust – before making an important
Think about it. What would happen if the government pulled its deposit
guarantees from the banking system? I can assure you people would pay a
lot more attention to the capital levels and loan policies of
their financial institutions.
That said, I can get my head around the idea that some minimal
operational standards may need to exist. Flipping back to the cruise
ship metaphor, I could see some requirement that the proverbial fire
dousing systems be kept up to code, and that the steering has a backup
system. But even if those standards didn’t exist, I have to believe that
cruise ships would soon learn to compete on safety measures as well as
Alternatively, people could risk sailing on a less expensive and
somewhat less secure line… or not take a cruise at all. It’s not a
perfect world, and not everyone is going to enjoy the perfect life, no
matter how much the shamans promote the idea that they can deliver just
Back to the financial matters, it’s increasingly important to view the
steady passage of draconian legislation and regulation in much the same
light you’d view the sacrificing of virgins. In almost all cases it
accomplishes nothing and solves nothing. In fact, as often as not, it
is decidedly counterproductive – lulling people into a false sense of
security or causing them to make misguided decisions about their
businesses or finances. Not to mention forcing businesses to spend
money that could otherwise be invested more profitably on nonsense such
as carbon taxes.
Of course, I am but an inconsequential squeak in the night: The current
belief system will remain intact for many years into the future,
probably the rest of our lifetimes.
Thus, the best thing you can do is to become as self-responsible as you
can – trusting no shaman and approaching every important decision with
a clear understanding that if things go wrong, no one – and no entity –
will be there to make it right. Increasingly, as the sovereign states
get noticeably bankrupt, that will be the case.
Viewing the world in that context, it’s hard to consider the unbacked
IOUs of any government a safe investment, no matter how fancy or
elaborate are the shamanic runes decorating the paper.