en Koch Brothers Now Supporting "Often Confused" Hillary Clinton <p><em>Authored by Eric Zuesse,</em></p> <p><strong>On July 20th, a Republican U.S. Senator lost his main financial backers for having urged Republicans to vote for Donald Trump instead of for Hillary Clinton.</strong></p> <p>The Koch brothers&nbsp;<a href="" target="_blank">speak with their words, which&nbsp;can&rsquo;t be trusted</a>, but they also <strong>speak with their money, their investments, which are always honest expressions of their actual beliefs and desires</strong>.&nbsp;This time, the Kochs spoke with their money, just a day after that Senator spoke with his words.</p> <p><strong>They spoke with their investments on July 19th, when they yanked their money from a U.S. Senator whom they had always financially backed, until now</strong>; and they did it immediately after that Senator not only went to the Republican National Convention where Donald Trump was to be nominated, but he gave there a powerful argument for Republicans to vote for Trump.</p> <p><strong>U.S. Senator Ron Johnson, from Wisconsin, told the assembled Convention</strong> (and the far larger number of people outside the Convention), on July 19th (and this is what the Kochs abandoned him over):</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Let me repeat that &mdash; RADICAL ISLAMIC TERRORISTS &mdash; slaughtering and brutalizing their innocent victims.</p> <p>&nbsp;</p> <p>So the question is, when will America actually confront this terrible reality?</p> <div> <p>&nbsp;</p> <p>We certainly won&rsquo;t if Democrats win in November. ...</p> </div> <div> <p>&nbsp;</p> <p>Hillary Clinton is asking America to give her Obama&rsquo;s third term.</p> </div> <div> <p>&nbsp;</p> <p>The world is simply too dangerous to elect either of them&nbsp;[either Democrat Russ Feingold who is running to win the Republican Johnson&rsquo;s Senate seat,&nbsp;or Hillary Clinton].</p> </div> <div> <p>&nbsp;</p> <p>Instead, America needs strong leadership. Leaders who will jumpstart our economy, secure our borders, strengthen our military, and accomplish the goal President Obama set over twenty-two months ago&nbsp;[but failed to fulfill]: We must&nbsp;defeat ISIS, and then remain fully committed to destroying Islamic terrorists wherever they hide. ...</p> </div> <div> <p>&nbsp;</p> <p>It is a fight we absolutely must win.</p> </div> <div> <p>&nbsp;</p> <p>Donald Trump and Mike Pence understand that these must be America&rsquo;s top priorities.&nbsp;They will be strong leaders, working with Republicans in the House and Senate to achieve a goal that can unite us all:&nbsp;A safe,&nbsp;prosperous, and secure America.</p> </div> <div> <p>&nbsp;</p> <p>Our future hangs in the balance. We must unify, work tirelessly, and together, save this great nation.</p> </div> </blockquote> <div> <p>Unlike John Kasich, who had refused even to attend the Convention at all, or Ted Cruz, who did attend but refused to say anything at all in favor of Trump, Johnson was now actually&nbsp;campaigning for Trump against Hillary.</p> <p>The next day, the Milwaukee&nbsp;Journal Sentinel&nbsp;bannered&nbsp;<a href="" target="_blank">&quot;Koch brothers pull ad buy backing Ron Johnson&rdquo;</a>,&nbsp;and reported that,<em><strong> &quot;A day after U.S. Sen. Ron Johnson of Wisconsin spoke at the Republican National Convention, a group affiliated with the conservative Koch brothers pulled more than $2 million in ad time in the Badger State.&rdquo;</strong></em></p> <p><u><strong>In other words: immediately after one of their owned Senators campaigned for Trump, they cut off his main monetary lifeline.</strong></u></p> <p><strong>This is a warning to any other Republican who might still be considering to campaign for Trump; it says, loud and clear: If you do that, you lose us.</strong></p> <p>The Koch-led contingent of Republican billionaires and centi-millionaires is one of two Republican financial-backer contingents. <strong>The other is led by Karl Rove.</strong></p> <p><strong>The Koch-led network of billionaires (who rely upon hiring academia and media for manipulating voters), and the Rove-led network of billionaires (who rely far more heavily upon garnering Wall Street money and Evangelical clergy for manipulating voters), have long been the two financial mainstays of the Republican Party.</strong> The Kochs have now made unmistakably clear that they want Hillary Clinton to become the next President (and, thus, academics and the media will overwhelmingly support Hillary). Previously, there was question as to whether the Kochs would go so far as to help a Democrat; but, now, there is no serious doubt about it: they already do (though as quietly as possible, and not in their own &mdash; often lying &mdash; mere words).</p> <p><strong>The Rove-led billionaires&rsquo; faction are also strongly inclined to prefer Hillary, but&nbsp;<a href="" target="_blank">can&rsquo;t afford to alienate the Republican electorate, and so they will continue to support other Republicans but not Trump</a>.</strong> (Consequently, Ron Johnson, for example, still can get their money.) They aren&rsquo;t as emphatic about their backing of Hillary as the Koch-led faction is. They won&rsquo;t withdraw their financial support from Republicans (such as Johnson) who campaign for Trump. They aren&rsquo;t really pro-Hillary; but the Koch-contingent now are.</p> <p><strong>And then, of course, there&rsquo;s Rupert Murdoch. </strong>On 17 May 2016, Gabriel Sherman headlined in&nbsp;New York&nbsp;magazine,&nbsp;<a href="" target="_blank">&ldquo;Why Rupert Murdoch Decided to Back Trump&rdquo;</a>, and he wrote: &ldquo;According to one Fox News producer, the channel&#39;s ratings dip whenever an anti-Trump segment airs. A Fox anchor told me that the message from Roger Ailes&#39;s executives is they need to go easy on Trump. &lsquo;It&rsquo;s, &lsquo;Make sure we don&#39;t go after Trump,&rsquo; the anchor said. &lsquo;We&rsquo;ve thrown in the towel.&rsquo;&rdquo; However, Sherman also noted that Murdoch&rsquo;s&nbsp;Wall Street Journal&nbsp;was supporting Hillary. Murdoch has long been fond of her; and, in the pages of the&nbsp;WSJ, he still enjoys the freedom to shape the &lsquo;news&rsquo; to favor her (something that would lose him audience if he were to do it at Fox). (He also supports both Obama and the Bushes. In&nbsp;<a href="" target="_blank">one photo at a lobbyists&rsquo; dinner</a>, he&rsquo;s surrounded at his left by Obama&rsquo;s longtime aide Valerie Jarret, and at his right by Jeb Bush, all three smiling like friends; but, in any case, all three are supporters of that same far-right Republican lobbying organization. At the top in American society, there is real bipartisanship.&nbsp;<a href="" target="_blank">Another photo</a>&nbsp;displaying such bipartisanship is of Donald and Melania Trump, and Bill and Hillary Clinton, warmly socializing together. These people aren&rsquo;t at all enemies of one-another; they just play that on TV, in print, and etc. Those are the roles they play, not really who they are.)</p> <p>Even as early as October 2015, it was clear that&nbsp;<a href="" target="_blank">the Republican Party&rsquo;s mega-donors were already contributing more money to Hillary Clinton&rsquo;s campaign than to Donald Trump&rsquo;s</a>. They also were contributing more than they were to Clinton&rsquo;s campaign, to each the Republican Presidential campaigns of: John Kasich, Scott Walker, Ben Carson, Marco Rubio, Ted Cruz, and (the most of all, to) Jeb Bush. <strong>So, in the ultimate 17-candidate Republican field, Hillary was already getting more of the 2012 Romney donors&rsquo; money than was each campaign of Lindsey Graham, Rand Paul, Carly Fiorina, Chris Christie, Rick Perry, Mike Huckabee, Donald Trump, Bobby Jindal, Rick Santorum, George Pataki, and (the least of all, they donated to) Jim Gilmore.</strong> So, if she were added to that 17-candidate Republican-candidate list, she&rsquo;d have been #7 out of the 18 recipients of Republican money. (And that&rsquo;s not even counting the money from&nbsp;Democratic-Party megadonors &mdash; virtually all of whom donated and donate&nbsp;only&nbsp;to Clinton.)</p> <p><strong>Perhaps Trump is hoping to get lots more contributions from Democratic donors than previous Republican Presidential nominees have</strong>. But he certainly won&rsquo;t be able to come even close to matching Hillary&rsquo;s campaign warchest, which is widely expected to break all previous records &mdash; and&nbsp;<a href="" target="_blank">for good reason</a>. (In fact, Hillary as the State Department chief, was, behind-the-scenes, ferociously assisting the Koch brothers, regarding the Keystone XL Pipeline project and other government-policy matters. She&rsquo;s a proven dynamo for the super-rich.)</p> <p><u><strong>The question regarding Trump as President would be</strong></u>: <strong><em>would he sell the government (perhaps at low prices to his friends and at high prices to his enemies) for various prices (as Clinton already has done &mdash; sold it to both her friends&nbsp;and&nbsp;her &lsquo;enemies&rsquo; &mdash; but which sales she now only needs to&nbsp;deliver on); or would he, instead,&nbsp;refuse&nbsp;to sell it, and actually try&nbsp;to run the U.S. government for and on behalf of the American public?</em></strong>&nbsp;He has no actual record in public office; so, there&rsquo;s no way of answering that question, unless and until he becomes President. But if Hillary Clinton becomes President, then&nbsp;<a href="" target="_blank">the outcome would be much more certain</a>, because she already has&nbsp;<a href="" target="_blank">a lengthy record in &lsquo;public&rsquo; service</a>. <strong><em>It&rsquo;s one that&nbsp;<a href="" target="_blank">the Kochs probably appreciate very much</a>. (And especially&nbsp;<a href="" target="_blank">Hillary&rsquo;s record as the U.S. Secretary of State</a>&nbsp;is informative about the type of President she would make. Her real priorities are clear by her actions, though not at all by her words. By contrast, Trump&rsquo;s priorities are, and might long remain, a mystery.)</em></strong></p> </div> <div> <p>*&nbsp; *&nbsp; *</p> <p><em>Investigative historian Eric Zuesse is the author, most recently, of&nbsp;&nbsp;<a href=";qid=1339027537&amp;sr=8-9" target="_blank">They&rsquo;re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010</a>,&nbsp;and of&nbsp;&nbsp;<a href="" target="_blank">CHRIST&rsquo;S VENTRILOQUISTS: The Event that Created Christianity</a>.</em></p> </div> <p>And so it seems, after all the talk, The Koch Brothers would prefer not to place their hardly-earned money with an unknown entity like Trump, <strong>preferring instead to bet on the known entity supporting their status qup... even though <span style="text-decoration: underline;">even her own staff admit &quot;she&#39;s often confused&quot;...</span></strong></p> <p><a href=""><img height="323" src="" width="600" /></a></p> <p><a href=""><em>Source: Judicial Watch vs State emails</em></a></p> <p>Presumably that&#39;s an even better bet for The Kochs as it enables the puppet-mastery.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="596" height="339" alt="" src="" /> </div> </div> </div> Donald Trump ETC Fox News Judicial Watch President Obama ratings Reality Rupert Murdoch Wall Street Journal Sun, 24 Jul 2016 01:55:00 +0000 Tyler Durden 566912 at All You Need To Know About Germany's "Most Stringent" Gun Ownership Laws <p>An 18-year-old German-Iranian believed to have acted alone killed nine people in a shooting spree with a pistol at a busy shopping center in Munich on Friday evening. This is just the latest in a spree of &#39;mass shootings&#39; which have prompted increasingly zealous calls for &#39;gun control&#39; from President Obama and his supporters. <strong><em>With 2 dead and 16 wounded in Chicago (which is among America&#39;s most-gun-controlled cities), we thought some facts about acquiring and owning a gun in Germany (which has the &quot;most stringent&quot; rules around gun control in Europe)</em></strong> might be useful in the forthcoming debate about how this &#39;mass shooting&#39; epidemic will be solved if we all just hand our guns over.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1. <span style="text-decoration: underline;"><strong>Germany has some of the &quot;most stringent&quot; rules around gun control in Europe,</strong></span> according to the U.S. Library of Congress. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>2. To own a gun in Germany, it is necessary to obtain a weapon licence for which applicants<strong> must generally be at least 18 years old and show they have they have a reason for needing a weapon</strong>.</p> <p>&nbsp;</p> <p>3. <strong>German authorities can prohibit anyone who is dependent on drugs or alcohol or is mentally ill from obtaining a gun license. </strong>People under 25 have to undergo a psychiatric test. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>4. <strong>After a teenager shot 15 people dead at a school in the southwestern town of Winnenden in 2009, Germany tightened the rules around firearms.</strong> Among other things, authorities were given greater authority to check whether guns were stored securely when not in use, and can make spot checks. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>5. <strong> Almost 5.5 million firearms are owned privately in Germany by around 1.4 million people, </strong>according to data from the German Firearms Register in early 2013. Germany&#39;s population is about 82 million. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>6. <strong>There are up to 20 million illegal firearms in Germany,</strong> the daily Frankfurter Allgemeine Zeitung cited experts in Germany as saying in January. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>By comparison, website says between 270 million to 310 million legal and illegal firearms are owned by civilians in the United States, where the population is about 324 million. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>7. <strong>The Federal Criminal Police Office said in its 2015 annual report that the use of firearms had been on a downward trend for years.</strong> In 2015 there were 4,289 cases of people being threatened with firearms - the lowest level since 1993. There were 4,711 cases of people or things being shot at in 2015, it said. (<a href="///C:/Users/U0148792/Downloads/pks2015Jahrbuch.pdf" title="///C:/Users/U0148792/Downloads/pks2015Jahrbuch.pdf">file:///C:/Users/U0148792/Downloads/pks2015Jahrbuch.pdf</a>)</p> <p>&nbsp;</p> <p>8. <strong> There were 57 gun homicides in Germany in 2015, up from 42 the previous year - compared with 804 in 1995</strong>, according to website (<a href="" title=""></a>)</p> </blockquote> <p><em><strong>And yet... mass shootings still happen?</strong></em> Inconceivable! Nevertheless, we are sure &#39;gun control&#39; in America makes much more sense because a defenseless populous will be somehow safer?</p> <p><a href=""><em>Source: Reuters</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="179" height="152" alt="" src="" /> </div> </div> </div> Germany President Obama Reuters Sun, 24 Jul 2016 01:20:00 +0000 Tyler Durden 566893 at A Post Western World? A Disturbing Interview With Prof. Harry Redner <p><em>Submitted by <a href="">Erico Matias Tavares of Sinclair &amp; Co</a></em></p> <div class="prose" itemprop="articleBody"> <p><strong>A Post Western World? An Interview with Prof. Harry Redner &ndash; Part I</strong></p> <p><em>Prof. Harry Redner was Reader at Monash University in Melbourne, Australia, as well as visiting professor at Yale University, University of California-Berkeley and Harvard University. He postulates that the world is now transitioning to &ldquo;beyond civilization&rdquo; &ndash; a new and unprecedented condition in Human History known as globalization. This in turn has major implications for societies across the world, and in particular developed nations.</em></p> <p><em>He is the author of several articles and fourteen books, including a tetralogy on civilization: &ldquo;<a href=";ref_=asap_bc" rel="nofollow" target="_blank">Beyond Civilization: Society, Culture, and the Individual in the Age of Globalization</a>&rdquo;, &ldquo;<a href=";ref_=asap_bc" rel="nofollow" target="_blank">Totalitarianism, Globalization, Colonialism: The Destruction of Civilization since 1914</a>&rdquo;, &ldquo;<a href=";ie=UTF8&amp;qid=1469231587&amp;sr=1-1&amp;keywords=The+Tragedy+of+European+Civilization+redner" rel="nofollow" target="_blank">The Tragedy of European Civilization: Towards an Intellectual History of the Twentieth Century</a>&rdquo; and &ldquo;<a href=";ie=UTF8&amp;qid=1469231644&amp;sr=1-1&amp;keywords=The+Triumph+and+Tragedy+of+the+Intellectuals+redner" rel="nofollow" target="_blank">The Triumph and Tragedy of the Intellectuals: Evil, Enlightenment, and Death</a>&rdquo;.</em></p> <p class="center"><b>PART I: GENERAL TRENDS AND THE END OF WESTERN CIVILIZATION</b></p> <p><strong><em>The political and economic issues broadly&nbsp;discussed in the media usually revolve around political cycles, terrorism, foreign policy, rising debt levels, sluggish economic performance, academic underachievement, environmental problems, ageing demographics&nbsp;and so forth. </em></strong></p> <p><strong><em>In our view, this all ties into a major cycle of history that&nbsp;has been with us for some time, and which has been gaining traction since the 1990s: the end of Western Civilization and the transition towards a globalized society.&nbsp;</em></strong><strong><em>There is some confusion between the two terms, where the latter is often perceived as the continuation of the former, but in reality the two have been in conflict for almost 100 years. </em></strong></p> <p><strong><em>We are delighted to get Prof. Harry Redner&rsquo;s views on this topic, which he has studied and written about extensively. The political, social and economic ramifications are likely to be life changing in the years to come. Politicians, investors and citizens all over the world should take note.</em></strong></p> <p><strong>E. Tavares: Prof. Redner, thank you for being with us today. Let&rsquo;s start with a basic yet difficult to define concept: what is civilization?</strong></p> <p>H. Redner: How and why it originated and how it developed further are extremely contentious issues, about which the views of specialists from at least half a dozen disciplines are frequently at odds. It has been debated for centuries and will continue so for the foreseeable future. My own views on these matters carry no special weight and everything I have to say can be disputed and, indeed, will be so, as there are no final conclusive answers to these ultimate questions. But for what they are worth, I will present a few of my provisional thoughts.</p> <p>Civilization is a necessary and inevitable stage in human development. When human societies increase in number and productive capacity, when they become more integrated through communication, trade and authority systems and, above all, when higher cultures and mentalities above those of primitive shamanistic cults, spirit worship and fetishist symbolism arise, civilization takes off as the next stage of human development.</p> <p>This happened at different times and places all over the globe, first along the river valleys of Mesopotamia and the Nile, later along those of the Indus and Yellow Rivers; later still, and completely autonomously, under different conditions in Mesoamerica and in the Andes. There is a syndrome of features, most of which these early civilizations display, more or less completely in each case, such as the rise of cities, the formation of states, class differentiations, the invention of methods of writing and organized religion, together with a mythological creed or pantheon.</p> <p>However, my interest is not in these early civilizations but only in the later, more developed ones, those that survived until the start of the twentieth century. These are the so-called post-Axial Age civilizations. The idea of an Axial Age, which occurred approximately between 700 and 300 BC, was developed by the German philosopher Karl Jaspers to refer to this period when the first philosophies and universal religions arose that have persisted till now. It is a curious and still unexplained historical coincidence that many of the great thinkers and sages, such as Zoroaster, Pythagoras, deutero-Isaiah, the Buddha, Confucius and Lao-Tse all lived around 500BC in widely dispersed places. The post-Axial civilizations are based on their teachings.</p> <p>In each case what was crucial for the rise and development of these civilizations was the construction of a higher form of literacy embodied in a set of canonical texts and, stemming from these, a higher form of ethical conduct. The figures of the philosopher, prophet, sage, saint, ascetic monk, scholar, rabbi and mandarin, as bearers of the highest values of literacy and ethics, arose respectively in each of the resulting civilizations. Invariably, but with some crucial exceptions, empires were founded by conquerors and rulers based on these values, which were given an organized form in schools of philosophy or law, monastic orders or churches or other types of scholarly or religious institutions. These have mostly lasted till our time. But since the start of the twentieth century at the very latest they were undermined and came under attack from many quarters in a general disruption of established traditions all over the world.</p> <p><strong>ET: Can you briefly summarize what makes Western Civilization different? Was the Greek classical tradition what made it take root across Europe, or was there something else at play?</strong></p> <p>HR: The term &ldquo;Western Civilization&rdquo; is used ambiguously in two somewhat different senses: it can refer to the whole development of civilization in the West from its Greek origin to its European culmination, or alternatively, it can refer only to the latter, namely to the civilization of Europe that began to flourish around 1000AD. This is a distinct form of civilization different from the Classical or Greco-Roman civilization based on the Mediterranean that lasted approximately till 500AD, as well as from the Byzantine civilization, located largely in what is now Turkey and the Balkans that followed. Clearly, there were strong historical, cultural and religious continuities between these three civilizational stages, which is the reason that they can be collectively called Western Civilization in the broad sense.</p> <p>Western Civilization in the narrow sense, namely European civilization, had one of its roots in the Classical Greco-Roman tradition, but its other crucial root lay in Judaism, as developed and enlarged by Christianity. The key text of this civilization is and remains the Judaeo-Christian Bible, which is why it is often referred to as a Judaeo-Christian Civilization.</p> <p>What made European civilization different was its capacity to absorb all earlier Western civilizational forms, which manifested itself in numerous Renaissances and Reformations. During the Renaissances, the first of which took place in the 12th century, it went back to its roots in classical civilization; during its Reformations and counter-Reformations it went back to its biblical roots, back to the prophets, the Gospels and the Church Fathers. Each time it gained renewed cultural vigor.</p> <p>Politically, what made European Civilization so unusual was that it never unified into a single empire, as all the others had done at one time or another. But Europe always remained divided and resisted all attempts at imperial unification and domination. Instead of a single empire, it evolved politically into a system of kingdoms, principalities and semi-autonomous cities, together with a Church, also vying for power, which itself broke up during the Reformation. This meant that no single authority could ever maintain complete control over all of Europe and no single orthodoxy in respect of anything could prevail everywhere.</p> <p>This is the secret source of European freedom and individualism. It gave rise to the conditions that fostered competition and contention that proved immensely conducive to creativity and innovation. Its dark obverse side was continual strife and wars which proved most damaging when they irrupted as religious wars and persecutions, and which eventually in the twentieth century turned into ideological wars that almost destroyed European Civilization.</p> <p><strong>ET: It can be said that Western Civilization reached its pinnacle just before the First World War. Clearly the subsequent loss of entire generations of would-be scientists, teachers, civil servants, doctors, priests, engineers, patriots, mothers, fathers and children in devastating conflicts was something the West never really recovered from.&nbsp;</strong><strong>The peace and prosperity that Europeans have achieved since then masks this fact, certainly in relative terms. What are your thoughts here?&nbsp;</strong></p> <p>HR: Certainly the First World War was the proximal inciting cause for a process of civilizational destruction in Europe and the rest of the world that is still going on.</p> <p>It was not so much the killing in itself, though that was bad enough &ndash; a large part of a generation of young men was sacrificed &ndash; as the demoralization and loss of faith in the enlightenment values of liberalism and democracy by which Europe had been guided in the nineteenth century and towards which most countries were moving.</p> <p>This was particularly virulent in the countries on the losing side, beginning with Russia, where it led to the Bolshevik Revolution, which briefly spread to much of central Europe; and in Italy, which was on the winning side but in danger of a Bolshevik takeover, and where a Fascist reaction ensued. Soviet totalitarianism in Russia devastated its culture and society, in a process started by Lenin and Trotsky and concluded by Stalin. This upheaval might have been contained and stopped from spreading to the rest of Europe were it not for the Great Depression, which destroyed any hope for democracy and led almost inevitably to the Second World War with all its devastating consequences.</p> <p>After that war, Europe lay prostrate and divided by the Cold War into two mutually closed off spheres. With American aid, Western Europe rebuilt itself materially remarkably quickly; in Eastern Europe under Soviet domination this happened much more slowly. However, there was no moral or cultural recovery. European Civilization did not rise like a phoenix from the ashes. It languished for a while and now seems to be petering out.</p> <p><strong>ET: As you argue persuasively in your books, totalitarianism ended up being a major force behind the destruction of European Civilization. However, the likes of Mussolini and Hitler rose to power by promising their nations that they would regain the commanding role in its progression &ndash; at the expense of others through the use of extreme violence. Are there inherent conflicts within Western Civilization or was totalitarianism an accident of history?</strong></p> <p>HR: Totalitarianism was an accident of history only to the extent that the First World War was an accident of history &ndash; a very tragic accident with calamitous consequences. There was nothing in European Civilization as such, or as it was developing during the nineteenth century, necessitating the First World War. On the contrary, everything seemed to point to the impossibility of such a war.</p> <p>However, the war was no accident in so far as the disposition of the great power alliances was concerned. This was bound to lead to some kind of war, though not necessarily to the First World War, a war of great duration and unprecedented ferocity. The two sides were too evenly matched for either to quickly defeat the other. Had Germany won the war during the first or even second year there would have been no revolution in Russia and no totalitarianism there or in Italy. Europe would have been saved the worst, at least for a long while, though it would have fallen under German domination, but that would have been by far the lesser evil.</p> <p>Hitler&rsquo;s rise to power and Nazi totalitarianism was the direct consequence of the outcome of the First World War together with the Great Depression. In a sense, the latter, too, was the outcome of an accident of economic history, just like the Global Financial Crisis we have recently experienced. Nevertheless, there were robust historical causes behind both events. The idea of an &ldquo;accident of history&rdquo; is a relative one, for what is accidental in relation to one set of developments, generally of a broad type, is causally necessitated in relation to another set. There is no such thing as a &ldquo;historical accident&rdquo; in any absolute sense.</p> <p>In the case of totalitarianism we cannot discount the role of individuals of exceptional ability, especially when this is conducive to evil, such as Lenin, Stalin, Hitler and Mao and others such as Mussolini and Franco to a lesser extent. Are they accidents of history or rather men that rise to great heights when history provides them with the opportunities for doing so? Do they make history or does history make them? These are the kinds of issues that need to be considered when accounting for so-called &ldquo;accidents of history&rdquo;.</p> <p><strong>ET: You also talk about the role that some prominent European philosophers played in the formation of these destructive ideologies, something which is seldom discussed. Which ones do you believe made the biggest contribution to the development of European and Soviet totalitarianism?</strong></p> <p>HR: Totalitarianism could not have arisen without political ideologies; and such ideologies could not have emerged without philosophers and other types of intellectuals, some of them men of great genius. Behind Bolshevism there stands the great social theorist Marx and behind Nazism the almost as great thinker, Nietzsche. However, neither Marx nor Nietzsche is directly responsible for Bolshevism or Nazism; a long chain of mediating accessory figures had to be active in transitioning from the philosophical thought to the political ideology. These intermediaries were themselves intellectuals of a lesser kind, and there were literally hundreds of them.</p> <p>Prior to the First World War, Marxism was being successfully adapted to the needs of democratic workers&rsquo; movements of socialist parties throughout Europe. Only in Czarist Russia, where the Marxist party was illegal, did a splinter movement of those calling themselves Bolsheviks arise under the leadership of Lenin, in opposition to the majority of moderate Marxists who called themselves Mensheviks. Lenin&rsquo;s Bolshevik ideology was a far cry from classical Western Marxism being in large part inspired by Russian insurrectionist traditions.</p> <p>Hitler&rsquo;s Nazi ideology, based on virulent anti-Semitism and nationalistic imperialism, was also far removed from the classical German philosophies of Fichte, Schopenhauer and Nietzsche, on which it based itself. But there were many German intellectuals who applied these philosophical ideas in ways which, at their most extreme and crudest, led to the Nazi ideology as Hitler enunciated it, and as the German people subsequently accepted it.</p> <p>Again it needs to be stressed that this could not have happened were it not for the demoralizing effects of the First World War and the Great Depression that followed. The role of the intellectuals in these complex processes of creation, distortion and political application of theoretical ideas, I have studied in my latest publication entitled The Triumph and Tragedy of the Intellectuals.</p> <p><strong>ET: We are all familiar with the destructive results of revolutionary communism, particularly as it matured under full totalitarianism under Stalin and Mao. However, there were other political thinkers which advocated a much more subversive approach for the implementation of communism in the West, such as Gramsci for instance.</strong></p> <p><strong>Shocked that during World War I workers ended up fighting other workers instead of the &ldquo;maleficent&rdquo; bourgeois, these thinkers reasoned that this was because Europeans were too conditioned by their own nationalism, families and religion &ndash; all of which broadly formed the basis of their civilization. So to achieve communism these institutions had to be eradicated from society, not necessarily by force like in Russia or China, but by progressive infiltration and ideological&nbsp;replacement of the media, education, politics, unions and even the religious institutions themselves. </strong></p> <p><strong>However, European political elites post-Second World War also supported the replacement of these institutions in society by the state, or more specifically, the superstate which is now known as the European Union. So there was a curious confluence of interests in this process, all under the guise of eliminating the &ldquo;evils&rdquo; that supposedly led to the disasters of twentieth century Europe and creating a more egalitarian society. What are your thoughts here?</strong></p> <p>HR: Marxism is a very broad church which can accommodate a huge variety of thinkers, social movements and political parties. Some of these were close to the political ideology of Russian Bolshevism, whereas others were far removed from it and closer to the enlightenment ideas of Marx himself, at least in his early humanistic works. Where a thinker like Gramsci stands in this Marxist line-up is difficult to determine, because he wrote his works in the relative &ldquo;freedom&rdquo; of Mussolini&rsquo;s jail, where he was not subject to the immediate Comintern pressure; but at the same time he had to write in code and could not express himself openly on all issues. Had he escaped to Moscow, as his colleague, the later Italian leader Togliatti did, he would have been compelled to become a Stalinist and could not have developed his ideas. Much later, Gramsci&rsquo;s ideas became the basis of the Italian Communist Party, and thereby of Euro-Communism.</p> <p>As Euro-Communism demonstrates, there is nothing in Marxism as such that precludes it from being tolerant and accepting towards religion, family and other such personal traditional values, even though in fact, most Marxists were atheists. However, some Christians were Marxists, including those within the Catholic Church itself who preached liberation ideology or took part in worker-priest movements. The relation between Marxism and Christianity is an extremely complex historical issue that went through many phases from outright hostility to mutual accommodation.</p> <p>The role of the state in relation to traditional values, social institutions and culture in general is an overwhelming topic that can only be treated in a book-length work. By the state, we mean, of course, the nation-state, the prevalent European form. Prior to the First World War, the nation-state had by and large a positive social and cultural effect. It enabled new nations to flourish, particularly Germany and Italy, and led to national revivals throughout Europe, especially in the East. But at the same time, the nation state was a militaristic institution that led to the disasters of the First World War and what followed with the totalitarian states, the very worst manifestation of the nation-state.</p> <p>Since the Second World War, the state in Western Europe has become increasingly a welfare state. It has had some remarkable successes but also incurred some failures. Its greatest achievement has been to bring about a considerable degree of economic social justice, especially in class-ridden societies like Britain. The kind of grinding poverty prevalent before the First World War is now no longer in evidence.</p> <p>On the other hand, state education seems to have been largely a failure and has led to considerable miseducation in many respects: in the case of schools for the poor being barely able to instill the rudiments of the three Rs (&ldquo;Reading&rdquo;, &ldquo;Writing&rdquo; and &ldquo;Arithmetic&rdquo;). In Britain, private schools and the ancient universities are still the bulwarks of the class system. Of course, there are some European countries, generally the smaller ones, where state education has achieved a much better outcome.</p> <p>The inception of the European Union has so far neither improved nor worsened this general condition to any great extent. Imposing a single model for all of Europe in some respects, such as in university education, is very likely a backward step. On the other hand, enabling regions with ethnic or cultural minorities to partially escape the iron grip of the nation-state is a positive step. Much more could be said about this of course.</p> <p><strong>ET: In addition to developing its own brand of destructive political philosophies, the West unleashed upon the world the Forces of Modernity, as you call&nbsp;them. These are generally perceived as an extension of Western Civilization, but you contend that they are now destroying it. Can you describe these forces and why they are problematic for civilization? </strong></p> <p>HR: By the term &ldquo;Forces of Modernity&rdquo; I mean the crucial economic, political, cognitive and technical respects, according to which nearly all societies in the world are now organized and managed, namely modern capitalism, the modern state, science and technology.</p> <p>These arose unequivocally only in the European West from approximately 1500 onwards. There were other variants of these both in the Greco-Roman world and in other non-Western civilizations, particularly in China, but they do not approach what Europe achieved in these respects. The causes that made Europe alone to embark on this course, which during the nineteenth century was called &ldquo;Progress&rdquo;, are many and varied and are generally disputed among the major theorists on these matters, such as Marx, Weber and many subsequent thinkers. We no longer regard it as progress in any ameliorative sense, for we recognize its many drawbacks and consequences that are inimical to civilization.</p> <p>During the nineteenth century up to the First World War, the Forces of Modernity were still largely in keeping with the main trends in Western Civilization, especially in America. But in non-Western societies they were having a disastrous effect on all the still surviving civilizations. Their introduction undermined traditional authorities, religions, cultures and values. They gradually prevailed all over the world, either being imposed by colonialism or through the desire to ward off colonialism by emulating the Western powers. America forced Japan to open its doors and accept the Forces of Modernity, and when the Japanese realized they had no choice about it they did so very successfully. It was a much more fraught and conflict-ridden matter in China and the Ottoman Empire.</p> <p>In the West itself, the situation began to change drastically following the First World War. The nature of this war and all subsequent ones was the direct outcome of the development of the Forces of Modernity in all European societies during the nineteenth century. The huge expansion of the state power since the French Revolution, the introduction of universal conscription and a state sanctioned education system provided millions of trained and ideologically enthused soldiers ready to sacrifice themselves at the behest of their nation state. The vast expansion of mass production that capitalism brought about enabled such mass armies to be armed, equipped and supplied for many years. Science and technology invented new weapons for mass slaughter and new machines of war, some already developed before the war, but many arising out of war-time research itself. The world has made enormous progress in these respects since and it is possible that the latest discoveries and inventions will bring civilization to an end and perhaps wipe out humanity itself. It almost happened a number of times, and it was only sheer luck that saved us in the nick of time.</p> <p>This is where the Forces of Modernity have brought us. But at the same time, humanity cannot do without them, for only the combination of capitalism, the state, science and technology can provide for, order, control and organize the mass of humanity, swollen to huge numbers, now inhabiting the world, without completely despoiling the natural environment and bringing disaster in another way. This is at least our hope and what we must endeavor to achieve.</p> <p><strong>ET: And the outcome of these forces is &ldquo;globalization&rdquo;? If they prevail, how does a post civilization world looks like?</strong></p> <p>HR: What we now call globalization is a condition where the Forces of Modernity are prevailing in all societies all over the world; they are becoming increasingly more integrated precisely through the prevalence of these forces. We are increasingly being faced with a uniform and homogenous world, in which all particularities and identities are gradually being eroded. This bodes ill for social relations, for cultures, for spiritual aspirations, for individuality, indeed for everything that civilizations offered in the past to make human life meaningful. There is still a long way to go before any such negative conditions might eventuate, for there is still much left of the old civilizations, especially Western Civilization and its cultural heritage. There is no inevitability about any outcome and much we can do to forestall the worst.</p> <p>Nevertheless, we must now recognize that humanity is now entering a new and dangerous historical condition unlike any of those it ever encountered in the past. It is no longer a matter of one civilization falling, to be replaced by another, such as happened when Europe arose after the collapse of the Roman Empire. Now all civilizations are endangered and none can survive as autonomous, independent entities as in the past. It is in this sense that we are now moving to a historical stage that is beyond civilization.</p> <p>This does not mean that we must abandon any further thought of civilization. On the contrary, we must do all we can to save what is left of civilization and prevent it from vanishing completely, as is now happening. This will require a coordinated human effort on the part of all major societies in the world. Whether this will ultimately succeed or fail or what the future holds for a globalized humanity is, of course, for us unpredictable.</p> <p>Hence, I have no idea what a post-civilizational world will look like, except to surmise that unless some way is found to counter the worst of the present trends towards soulless uniformity, it will not be a world which I would like our children and grandchildren to inherit.</p> <p><strong>ET: But by suppressing European identities, national democracies and centralizing political power, isn&rsquo;t the European Union an offshoot of those Forces of Modernity? As such, do the British people have a point in saying that getting out in the recent referendum is a necessity to regain their country and even their culture back?</strong></p> <p>HR: I do not altogether agree that the European Union is &ldquo;suppressing European identities, national democracies, and centralizing political power.&rdquo; I hold that it is a far more limited undertaking made necessary by the collapse of Europe after the Second World War, the Cold War and since then, by the ever increasing economic competition from the new giants of Asia, first Japan, then China and now India emerging as a global power.</p> <p>In response to such multiple pressures, and with the encouragement of America, Europe did move towards economic and, to a limited extent, political integration, starting with France and Germany and bringing in more and more countries, eventually after the fall of Communism also those of Eastern Europe. But how far it will proceed is not yet decided. Everything in Europe&rsquo;s past speaks against a &ldquo;United States of Europe&rdquo;. But that need not forestall a very open European common market with considerable labor mobility. There are centripetal forces for unity and centrifugal forces for dispersion: how these opposed tendencies will work themselves out in the future is also impossible to predict.</p> <p>Thus far, I believe, the benefits have been considerable and the adverse consequences as yet not disastrous. This could reverse itself if the Mediterranean countries in the Eurozone prove unable to escape the poverty trap of a strong currency that prevents them devaluing and trading their way out of trouble. Their present levels of unemployment, especially among the young, are unsustainable. On the other hand, incorporating and integrating the former communist countries of Eastern Europe has been an enormous achievement, but one that has also had some unintended bad consequences for other countries in Europe.</p> <p>The free movement of labor that brought millions of Eastern Europeans, especially Poles, into Britain was undoubtedly one of the main causes for the working-class revolt and vote for Brexit. The open-borders policy that brought a million refugees from the civil wars in Syria and Afghanistan, as well as economic migrants from all parts of Africa and Asia in an uncoordinated and uncontrolled flow was obviously mismanaged. This gave many Europeans, including those who were less affected, a fright. It was such a concatenation of incidental factors that had unexpectedly arisen in the last few years that brought Brexit about, rather than any thought-through dissatisfaction with the European Union. Cameron should never have allowed the matter to be decided by one referendum. It was a political misjudgment on his part.</p> <p>I predict &ndash; always a foolhardy matter &ndash; that the effects of Brexit will be far smaller than those who advocate it wish. Theresa May and Angela Merkel, two very astute politicians, will reach a deal whereby Britain will remain close to Europe and any disruptions minimized on both sides. This could easily go awry if there is a huge exodus of multinational firms from Britain sinking the British economy; if Scotland and Northern Ireland vote for independence; or if the Conservative Party and the Labor Party break up and some other more Right wing, or, less likely, more Left wing political party comes to power. All these are possible, but, I believe, unlikely from our present point of view.</p> <p><strong>ET: As mentioned above, the state has gradually replaced the role of traditional Western institutions, a tendency which has accelerated in recent decades. As a result, there is now a complete dependency on the state to care and provide for large segments of the population, which in turn requires enormous, ever growing resources to sustain.</strong></p> <p><strong>A byproduct of all this is a huge incentive for the misallocation of resources and even corruption, since politicians now command huge portions of the economy and society. In a democracy votes can be bought by promising all sorts of free goodies to the electorate, who in turn will never vote for anyone that will change the system they depend on, even if it is demonstrably on an unsustainable trajectory. </strong></p> <p><strong>Has the growth of the state along these lines further corroded European values and morals? As a result, can any European government be truly reformed at this point via the ballot box?</strong></p> <p>HR: It is true that dependence on the state is increasing in European countries and that states are consuming a considerable proportion of their society&rsquo;s resources. But the reasons for this vary and are not the same everywhere. The two most contrasting countries are Sweden and Greece.</p> <p>Sweden is the great success story of the Welfare State and its effects on society. A century ago, it was a poor country, but in the course of the twentieth century it has gone from strength to strength, economically, socially and politically. High taxation rates have not affected its productive capacity; its firms flourish as never before. Its political system is a byword for democracy and popular consultation. Corruption is minimal.</p> <p>Greece is just the opposite in all these respects. Apart from exploiting its sunshine, beaches, and building hotels, it has failed to develop economically. Tax evasion is rife. The state has been completely mismanaged, as political parties vied with each other by bribing the electorate with borrowed funds. Corruption is rife. Now the country is bankrupt and will most probably never fully recover.</p> <p>Most European countries are somewhere between these two extremes; generally the further north they lie the closer they are to the Swedish model; the further south, closer to the Greek one. For those in the south, how to achieve reforms so as to make the economy more productive, increase work participation and bring expenditure to affordable limits is the big problem. Resistance to reforms, as evidenced most recently in the strikes and riots in France, is fierce from those that wish to hold on to what they have and fear losing it.</p> <p>These are the fundamental concerns that will determine whether the European Union survives or goes under. They are the kinds of issues that are prominent in every major capitalist society. America has to face analogous problems due to departure of industries, outsourcing and the influx of illegal migrant labor.</p> <p>The backlash from the working class and sections of the middle class is what partly accounts for the popularity of Trump. Trumpery is the direct outcome of the degeneration of American Civilization and the decline of its political culture which is now all pervasive. Another recession would bring the overheated political situation to the boil with very dangerous consequences.</p> <p><strong>ET: The most advanced &ndash; or civilized &ndash; countries in the world have the lowest birthrates. In recent years Germany (along with other beacons of civilization like Japan and Singapore) has had birthrates even lower than China with its draconian one-child policy. Is civilization bad for babies, or is something else at play here?</strong></p> <p>HR: The truth of the matter is that high standards of living and female emancipation are responsible for low birth-rates. The more educated women become and the more economically independent, the fewer babies they tend to have. Hence, countries with high birth-rates, such as India, those of the Muslim world and Africa south of the Sahara urgently need to educate and emancipate their women, for otherwise the pressures of population growth will be too much for them to cope with in the long term.</p> <p>It is only in highly developed countries, such as Europe, Japan, America, and now also China that low birth-rate is a problem. It is a measure of their productivity and success in managing the Forces of Modernity. It has nothing to do with civilization as such.</p> <p>Various solutions will have to be tried in addressing this problem. Immigration from poorer, overpopulated areas was, until recently, the favored option, as this provided cheap labor power. But that is increasingly becoming less of an option, as recent events have demonstrated. Japan has refused to accept mass immigration all along and is taking the technological route to maintaining productivity. Raising the retirement age is another partial solution.</p> <p>Lower birthrates might be bad for these countries in the present, but it is good for the world as a whole. Ultimately, the human population cannot just increase without limit; it must sooner or later reach its maximum possible level, and gradually begin to decline.</p> <p><strong>ET: As you point out, several&nbsp;European governments have opened their borders and welfare systems to mass immigration, particularly from the Third World. The hope is that they will help pay those burgeoning state bills over time. After a few decades these inflows now account for a sizeable percentage of their populations, and&nbsp;particularly so&nbsp;in the larger cities. </strong></p> <p><strong>Some immigrant communities have brought very different cultures with them, and as their numbers grew this created many social tensions within European societies. Responses to this have differed by country, but a general tendency towards &ldquo;multiculturalism&rdquo; is now observable throughout much of the Old Continent. Sweden even made it part of its constitution. </strong></p> <p><strong>But by definition multiculturalism means the dilution of a nation&rsquo;s own culture. In fact, liberal Europeans can&rsquo;t seem to get rid of it fast enough these days. Irrespective of any benefits associated with immigration, is this seemingly unstoppable migration wave and the resulting transformation of Europe&rsquo;s cultures a symptom or cause of the present demise of Western Civilization?</strong></p> <p>HR: To answer the last part of this complex question first, the mass immigration of people, generally from the Muslim world, is neither a symptom nor a cause of the present plight of European civilization. It proceeds in the first place from factors internal to the Muslim world itself; from the failure of the Muslim world to modernize, that is, to introduce and institute the Forces of Modernity in a way that is acceptable to and consonant with their culture. Neither capitalism, nor the rational-legal state, nor science, nor technology functions at all well in Muslim countries, with very few partial exceptions. The inability of these countries to modernize, indeed, the opposition to modernization, has produced all the manifestations of lack of development, instability, corruption and civil war. This, coupled with a high birth rate, generates tens of millions, possibly as many as a hundred million, mainly young people who are eager to migrate to the developed world, and Europe is their nearest and easiest destination.</p> <p>Until now, Europe has been willing to accept them for many reasons. The primary reason has been economic; a young workforce of immigrants was desirable when Europe was growing at a rapid rate. The other reasons had more to do with Europe&rsquo;s post-Second World War adhesion to enlightened values of liberalism, anti-racism, providing refuge for victims of intolerance and ultimately a belief in multiculturalism, namely, in all the respects in which Europe had failed prior to the war.</p> <p>The absorption of those who had already arrived over the past half century or so has not proved easy, especially in a climate of economic decline when jobs have become scarce. Apart from these factors, there has been a tendency among many of these new arrivals to settle in ghettoes, where they maintain their own cultural patterns, some of which are at odds with the prevailing host cultures, especially in such matters as the treatment of women. This has led to mutual misunderstanding and resentment. Given satisfactory economic conditions, the readiness of accommodation and compromise on both sides, such problems might in time be overcome. However of late the situation has become critical due to the rise of militant Islam and the resultant civil wars in most Muslim countries. This has generated hordes of refugees and even larger numbers of economic migrants who look to life in Europe as the only chance they will ever have, because they completely despair of their own societies. If Europe continues to practice uncontrolled entry, it will be overrun in no time, with all the adverse consequences of social unrest and illiberal regimes arising.</p> <p>The only solution to this staggering global problem is two-fold. On the one hand, Europe will have to bite the bullet and adjust its liberal principles, so as to reduce immigration to numbers it can absorb, as my own country, Australia, has done. On the other hand, Europe will have to tackle the problem at its source &ndash; in the Muslim world itself. Pacification, development, a brake on corruption and general enlightenment are the fundamental measures Europe will have to promote and be willing to spend the resources necessary. In the long term, this will prove cheaper than letting the current situation fester.</p> <p><strong>ET: America&nbsp;has always been regarded as the great hope for Western Civilization &ndash; indeed, even its prime driving force post Second&nbsp;War War. But you argue that &ldquo;Americanism&rdquo; is destroying American civilization. What do you mean by this?</strong></p> <p>HR: America escaped the civilization-destroying onslaught of totalitarianism that ravaged Europe, Russia, China and other parts of the world. In fact, America profited from the self-inflicted destruction of Europe to emerge as the leading world power in all respects. However, America has not escaped the civilization-reducing propensity of the Forces of Modernity, which it had itself developed and brought to a pitch of perfection.</p> <p>Thus, American capitalism has been a tremendous success in terms of production, the generation of wealth and the rise of the standard of living of its own people, as well as all those, such as Europeans, where the American-promoted global market operated. There is no known economic system that leads to greater and more rapid GDP growth than American capitalism. China has had to learn this painful lesson after Mao.</p> <p>However, there has been a high cost to pay in cultural and social terms for this tremendous economic success. American capitalism is the goose that lays the golden egg, but in the process it generates plenty of crap that somehow has to be cleaned up. This has been so in America itself, as well as in the rest of the world where American capitalism has operated, eventually almost everywhere after the Second World War.</p> <p>Most of the social and cultural problems that America has had to face, especially after the Second World War, can be traced directly or indirectly to its economic success. For example, the social integrity and cultural cohesion of its cities was destroyed by the huge influx of rural migrants when its industries were booming, especially during and after the Second World War. This, in turn, led after the war to the exodus of the middle class from the cities to the burgeoning suburbs, which completely hollowed out city centers. When industries declined, this produced inner-city impoverishment and, even worse, the creation of racial ghettoes. The social problems that these ups and downs of capitalism caused are now all but insuperable.</p> <p>Culturally, much damage was done by the huge advertising industry that was a necessary adjunct to mass production. It promoted a hedonistic life-style of envy, exhibitionism, status flaunting and other kinds of behaviors, which were formerly considered vices, or at least bad manners. Thus, the moral fiber of American people was weakened and in extreme cases, such as in respect of the Protestant work ethic, it was corrupted.</p> <p>The Culture Industry dispensing mass entertainment and the media in the hands of big moguls, whose only interest was profit and nothing else, also played a role in the stupefaction of the American public. How this was achieved through free-to-air television is something that a number of major studies have demonstrated. Little wonder that the TV set was referred to in common parlance as the idiot box. One could continue this catalogue of adverse consequences of capitalism almost indefinitely.</p> <p>This is how &ldquo;Americanism&rdquo;, of which capitalism is a most prominent part, is destroying American civilization. One could similarly study other aspects of &ldquo;Americanism&rdquo;.</p> <p><strong>ET: Like their European counterparts, Americans are also becoming increasingly dependent on the state. US government spending is projected to reach stratospheric levels in the not too distant future driven by primarily by healthcare and social expenditures. Federal debt has doubled in each of the last two administrations, and is now over 100% of GDP. Is this also a symptom of civilizational decay?</strong></p> <p>HR: The rise of the federal debt to over 100% of GDP is due to many causes, most of which are a combination of economics and politics, which has little to do with civilizational decay. However, even if these problems were overcome and expenditure reduced to more tolerable levels this may not necessarily matter to civilization, which is largely a cultural issue.</p> <p>The main factor driving the federal debt is the diminution of the tax base due to the rapid erosion of American industry, which in the past generated well-paid full-time employment. Now the poor, even when they have work, pay little or no tax. The very rich have also found ways, legal, semi-legal and illegal, of avoiding tax. Hence, the tax burden is being born increasingly by a shrinking middle class. Wholesale tax reform is mandatory, but that cannot be carried through for political reasons. Vested interests of all kinds have a stranglehold on Congress and the major parties are usually in deadlock on this matter.</p> <p>It is also the case that social expenditure is growing, because casual jobs and low minimum wages can no longer afford a living for poor people without aid from the state. Healthcare expenditure is also growing, because people live longer and because modern medicine is becoming increasingly more costly.</p> <p>I do not believe that all these major difficulties are insoluble, given decisive political leadership. This is, however, lacking at present for reasons that I cannot go into in this context. Hence, though the burden need not be left to future generations to bear, given things are as they are at present, it most probably will be.</p> <p><strong>ET: What role do declining education standards play in all this? The US strikingly lags the developed world in academic achievement below the graduate level. And it&rsquo;s their young who will end up footing the bill for all that government largesse.</strong></p> <p>HR: The declining education standards in America are, indeed, both a symptom and a cause of the decline of American Civilization. Before the Second World War, American schools and universities were among the best in the world. They continued to function extremely well for a period after the Second World War. Then the schools began to fail and some decades later, so, too, did the universities.</p> <p>The rot in the schools began with the so-called &ldquo;life adjustment movement&rdquo; based very loosely on the educational philosophy of Dewey. From then on, for a majority of American youth, schooling became at best a social and not a learning experience. As the social critic, <a href="" rel="nofollow" target="_blank">Richard Hofstadter in his book Anti-Intellectualism in American Life</a>, published in 1963, pointed out: what this approach aims to do (and here I quote from memory) is not for students &ldquo;to become a disciplined part of the world of production and competition, ambition and vocation, creativity and analytic thought, but to teach them the ways of the world of consumption and hobbies, of enjoyment and social compliance &ndash; to adapt to the passive and hedonist style summed up by the significant term adjustment&rdquo;. At the same time, what was taking place in the blackboard jungles of the inner city schools was much worse than that. All this was aggravated by the poor salaries of teachers relative to other professions and the lack of respect for the work they were doing. This made teaching a last resort as a career choice, into which mainly women were pushed.</p> <p>In the universities, things did not begin to go bad until the late 1970s. Having poorly prepared students to work with, much of university courses had to be devoted to remedial teaching. The student insurrections of the previous period made university teaching something of a hazardous profession, and teachers naturally preferred to placate students rather than challenge them intellectually. High grades became the norm. The effect of this was felt much more severely in the humanities and social sciences than the natural sciences and the professional faculties. Increasingly fewer students chose to study humanities and social science subjects. Many of these were undermined by the &ldquo;radical&rdquo; theoretical fashions and the rise of various kinds of &ldquo;critical&rdquo; studies that catered to narrow self-selected groups, made up of those whose mind was closed and no longer open to real critical debate.</p> <p>All these deleterious intellectual developments are apart from the sheer economic fact that universities charge increasingly high fees, especially the elite schools, which only the very rich can afford. But the bulk of that extra income is being spent not on teaching and research, but on administrative costs, as students are being provided with all kinds of life-style services, and as the general bureaucratization of the university grows in leaps and bounds. Officials now outnumber professors.</p> <p>Nevertheless, the good American universities are still the best in the world. They are attracting the wealthiest, though not necessarily the best students from all over the world. But for how long this situation will continue remains to be seen.</p> <p><strong>ET: Technology appears to play a role here as well. For instance social media, instant messaging and all the rest create an environment where we feel we are much less effective and productive. We can only imagine how young students struggle to concentrate on learning anything these days. </strong></p> <p><strong>This reminds of how the use of lead in plumbing and all types daily artifacts poisoned many Roman leaders, to the point of where perhaps they completely made the wrong decisions on where their society should be heading. Could technology be the twenty first century equivalent? This might explain some of the seemingly irrational decisions of Western societies of late&hellip;</strong></p> <p>HR: The parallel you draw between lead plumbing in the Roman world and modern technology is a good one, except that lead poisoning was probably not as prevalent as some of the poisonous effects of some modern technologies. One of the most beneficial technologies in our societies has, indeed been plumbing, largely introduced in the nineteenth century. It is likely that plumbers and sanitation workers have done more for human health and well-being than doctors. This is evident in Third World countries, where the building of drains and toilets should be given higher priority than the building of hospitals.</p> <p>In short, some technologies, often very simple ones, have been extraordinarily beneficial. But this is not true of all technologies. Unfortunately, it is very difficult to distinguish between good and bad technologies before they have been introduced. Every technology that is taken up on a large scale serves as a social experiment; it transforms the whole of society in ways that are unpredictable in advance, for it always has unintended consequences either good or bad that cannot be foreseen.</p> <p>We have learnt this lesson in nearly every case and even more so with advanced technologies. The introduction of the private motorcar on a mass scale gave people unparalleled freedom of mobility, but it also had all kinds of far from desirable consequences. It polluted the air. It destroyed public transportation. It enabled people to desert the cities, which became hollowed out shells, and so on for countless other effects, among which, moral puritans will argue, was the loss of sexual restraint among the young. How one balances the good and bad consequences is an extremely difficult issue of judgment. But it is now too late to do much about it, as the car is here to stay.</p> <p>It is similar, though perhaps even more complex, with the new information technologies. This, too, is a massive social experiment, the results of which might not be known for a few generations. The benefits of computers, the Internet, social media, etc. are obvious and are being touted by all those with a vested interest in the matter: by the computer and software manufacturers, by their advertisers, the media and by state agencies, including by many education authorities who should not have been as eager to embrace these new technologies. This has been going on for nearly a generation. And already some adverse unintended consequences are becoming apparent, especially among children.</p> <p>Perhaps the most dangerous of these are changes in brain function starting to appear among children who are heavy computer users. These children and youth are still too young to make any &ldquo;of the irrational decisions of Western society&rdquo;, but one day they will be in a position to do so. What future generations of children brought up on computers will do as adults cannot be now predicted. But we should be careful how we handle the social changes which will ensue.</p> <p>It is evident even now that computers have not fulfilled their promise in education, for there are strong indications that they have been detrimental to some kinds of learning. If this can be conclusively demonstrated, then the removal of computers from schools, or their restriction to special technical centers might be one drastic move to be contemplated. This is obviously a huge issue, which will continue to be debated for the remainder of this century as more of the long-term effects become apparent.</p> <p><strong>ET: Looking at the bigger picture now, so what if Western Civilization is going the way of the dodo? We have had peace and progress over the last five decades. The nefarious Soviet Union was vanquished in the interim. And globalization and technology have brought new opportunities and interactions. Investors seem to believe in that, given that the US stock market is at record highs while global bond yields near record lows. It seems all is good&hellip;</strong></p> <p>HR: It is true, human life continues regardless of the state of human civilization. It might even be said that life is becoming better and better for greater numbers than ever before. Standards of living are rising and will continue to improve for people in their billions all over the world. The Chinese have lifted themselves out of poverty. Now it is the turn of the Indians, after that there will be others as well. The world is at peace as never before. I am not unduly troubled by the few incidents of terrorism that are so exaggerated by the media, or even by the few sputtering civil wars. So who needs civilization? Isn&rsquo;t life better off without it?</p> <p>Unfortunately, things are not as rosy when we look at the global situation as a whole. Many of the major problems of humanity are no nearer to being solved. The issue of nuclear annihilation still hangs in the balance; we could still destroy ourselves through some political miscalculation or some technical error. A clash of interests between the major powers could still bring on a global war. Our present peace is still precarious.</p> <p>Global warming and all the other environmental problems are far from being solved. It is possible they will not be overcome, unless a majority of human beings change their way of life and cease to strive for ever greater levels of affluence and the possession of material goods. A new ethical orientation might be called for, drawing on the values of past civilizations, as adapted to contemporary conditions.</p> <p>In brief, human life based on material considerations alone might not be sustainable in the long run. Man does not live by bread alone &ndash; not even by bread and circuses in their latest electronic form. Masses of people crammed into huge metropolises that cities are now becoming all over the world is hardly a pleasant prospect to contemplate for the future of humanity. Without civilization we are faced with the kind of brave new world scenario, outlined long ago by Huxley.</p> <p>This is the reason we must strive to maintain as much of our various civilizations and their cultures as are still viable. Cultural conservation is as crucial as conservation of Nature. Indeed it is hard to envisage how the one can work without the other, as I have explained in my books.</p> <p><strong>ET: If Western Civilization is so important, what are investors missing given how far up asset prices have gone in recent years? Are they just too myopic? </strong></p> <p>HR: As far as investors go, it is not Western Civilization as a whole that is important, what is crucial for them is that the minimal norms of international affairs governing economic activity should obtain, above all, the rule of law and the security of contracts, because without that none of their investments are safe. As for human rights, that is important in so far as they do not wish to profit from slave labor or any other grossly exploitative conditions. If they are more ethically minded than that, as they should be, they should also insist that individual rights are implemented before they undertake business dealings in any country. Whether they should also insist on other freedoms is a moot point, unless they wish to be ethical investors and are prepared to forego some profit opportunities.</p> <p><strong>ET: What about the unique contributions of Western Civilization to human rights, rule of law, democracy, healthcare and general progress. Can these not be sustained and indeed enhanced with globalization?</strong></p> <p>HR: Western Civilization is the one that brought about the present conditions of humanity. It is, therefore the one most responsible for its problems and drawbacks, and the one charged with the task of remedying them. Indeed, it is the only one at present that has the capacity for doing so. The Forces of Modernity &ndash; capitalism, the state, science and technology &ndash; arose out of Western civilization, and the difficulties for humanity that they have brought about can be best understood and addressed within the context of that civilization.</p> <p>An example of this fact is that it is the West that is forging the universal standards, which the whole of humanity can accept, and on the basis of which all civilizations can coexist, regardless of how they differ in other respects. The United Nations and its various agencies, the World Bank and many other such organizations, indeed the whole system of cooperating, as well as peacefully competing states, was the creation of Western Civilization, based primarily on its principles and values.</p> <p>These organizations mandate a minimum of norms of international behavior that all states, regardless of their origins, must now accept, if relations between them and even meaningful communication are to be maintained. What this minimum of necessary norms is to be is the subject of interminable disputes. Americans tend to see it in the maximalist terms of their own traditions, as well as their national interests, and press for full democratization, as well as free market liberalism; other nations with other traditions and interests have naturally resisted this. Some basic human rights and the rule of law, no matter how interpreted, seem to be such basic minimal provisions for belonging to the international order. Democracy, healthcare and general progress is perhaps asking too much of many societies, which are unwilling or incapable of entertaining such things. Whether further globalization will alter this is dubious. We see this in the case of China, which has globalized at a rapid rate, but is no nearer to democracy or liberalism in most respects.</p> <p><strong>ET: In Part II of our discussion we will look at what is happening in the Chinese, Islamic, Indian and Russian spheres, and how they fit within the aforementioned&nbsp;trends. Anything else you would like to add before we conclude this part of our discussion?</strong></p> <p>HR: I would like to stress that my general theoretical analysis of the state of civilization and humanity be distinguished and separated from my detailed diagnosis of specific conditions and problems or my proposals for dealing with them. I stick to my theories, which I believe are correct. I am far less sure of my practical analyses. Someone agreeing with my general point of view might easily offer quite different accounts of things or solutions to problems than the ones that I suggest. I am quite prepared for such disagreements, for theory and practice do not necessarily entail each other.</p> <p>Indeed, I welcome debate on the theoretical, practical and evaluative aspects of everything I have said here, or written in my books. I am sure I have made many errors and contravened many other worthy thinkers, present or past and expect that these sins will, in time, be exposed. But this can only happen if my views are subjected to the acid test of stringent criticism. Hence, I hope that it will be said of me, as was once said of another notorious writer: &ldquo;his sins were scarlet, but his books were read.&rdquo;</p> <p><strong>ET: Thank you very much.</strong></p> </div> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="699" height="400" alt="" src="" /> </div> </div> </div> Afghanistan Australia Bond China Corruption CRAP Demographics Eastern Europe ETC European Union Eurozone Fail France Germany Global Warming Great Depression Greece India Ireland Italy Japan Mandarin Nationalism None Reality Recession recovery Roman Empire The Graduate Totalitarianism Turkey Unemployment Unification World Bank Sun, 24 Jul 2016 00:45:00 +0000 Tyler Durden 566898 at France Escalates - Sends Aircraft Carrier To Fight ISIS <p><strong>Seemingly not satisfied with the domestic blowback from their interventionist-driven Washingtonian foreign policy,</strong> Francois Hollande - lagging badly in the polls - has decided to double-down following the recent terror attack in Nice. As <a href=";utm_medium=short_url&amp;utm_content=bJ3w&amp;utm_campaign=URL_shortening">Sputnik News reports</a>, France will send artillery to Iraq and its Charles de Gaulle aircraft carrier to assist the US-led coalition&rsquo;s efforts in Syria and Iraq in the coming months.</p> <p><strong>The French aircraft carrier Charles de Gaulle will be sent to the region in September, the President added.</strong></p> <p><a href=""><img height="275" src="" width="600" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;The Charles de Gaulle airacrft carrier will arrive in the region by the end of September. It and our Rafale aircraft will allow to intensify our strikes against Islamic State positions in Syria and Iraq,&quot; </strong>Hollande said in a televised statement.</p> </blockquote> <p>France will also send artillery to Iraq in August to help the Iraqi army fight Daesh terrorists, the President added.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;The Defense Council and I made a decision this morning to <strong>provide Iraqi forces with artillery as a part of anti-Daesh efforts. The artillery will be delivered in August</strong>,&quot; Hollande said.</p> </blockquote> <p>However, France &quot;will not deploy ground troops,&quot; Hollande said.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>We support the operations in Syria and Iraq, but will not send our troops.</strong> We have advice to give, training to provide, but we will not deploy men on the ground,&quot; Hollande stressed.</p> </blockquote> <p>The US-led coalition of&nbsp;more than&nbsp;60 nations, including France, has been carrying out&nbsp;airstrikes in&nbsp;Syria and Iraq since&nbsp;the summer of&nbsp;2014, <a href="">with the US alone having recently reached the questionable milestone of dropping 50,000 bombs on ISIS.&nbsp;</a></p> <p><em><u><strong>Do you feel more of less safe?</strong></u></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="948" height="434" alt="" src="" /> </div> </div> </div> France Iraq Sun, 24 Jul 2016 00:10:00 +0000 Tyler Durden 566909 at A Collision-Course With Crisis: Making The Wrong Choices For The Wrong Reasons <p><a href=""><em>Submitted by Adam Taggart via,</em></a></p> <div class="content clearfix"> <p><strong>Life is full of examples where folks make bad choices for noble reasons. </strong>Not every decision is a winner: sometimes you make the right call, sometimes you don&#39;t.</p> <ul> <li>In 1962, Decca Records passed on signing a young new band because it thought that guitar-based groups were falling out of favor. That band was The Beatles.</li> <li>Napolean Bonaparte calculated he could conquer Russia by assembling one of the largest invading forces the world has ever seen. He marched towards Moscow in the summer of 1812 with over 650,000 troops. Less than six months later, he retreated in failure, his forces decimated down to a mere 27,000 effective soldiers.</li> <li>1985 217 separate investors turned down an entrepreneur trying to raise the relatively modest sum of $1.6 million to fund his vision of transforming a daily routine shared by millions around the world. That company? Starbucks. &nbsp;</li> </ul> <p><strong>In these cases, those making the decision made what they felt was the best choice given the information available to them at the time.</strong> That&#39;s completely understandable and defensible. Fate is fickle, and no one is 100% right 100% of the time.</p> <p><u><strong>But what&#39;s much harder to condone -- and this is the focus of this article -- is when people embrace the wrong decision even when they have ample evidence and comprehension that doing so runs counter to their welfare.</strong></u></p> <p><em>Really? </em>you might be skeptically thinking. <em>Do people really ever do this?</em></p> <p>Yes, sadly. Absolutely they do.</p> <p><strong>Because decision-making isn&#39;t just based on data. It&#39;s also influenced by beliefs. </strong>And when our beliefs don&#39;t align with the data, we humans can be woefully stubborn against changing our behavior, even in spite of mounting evidence that our beliefs are incorrect and possibly even detrimental to us.</p> <p>The fascinating field of <strong>behavioral economics is dedicated to studying why people are capable of making bad decisions despite have access to good data</strong> (if you&#39;ve got the time, listen to our past interviews with <a href=";uid=&amp;created=" target="_blank">behavioral economist Dan Ariely here</a>. They&#39;re riveting.)</p> <p>So, yes, we humans are easily capable of being our own worst enemies.</p> <p>For a prime example, let&#39;s turn to one of the greatest basketball players of all time.</p> <h2><span style="text-decoration: underline;">The Curious Case Of Wilt Chamberlain&#39;s Free Throws</span></h2> <p>On a long drive I took recently, I listened to <a href="" target="_blank">a podcast produced by Malcolm Gladwell</a>, author of <a href="" target="_blank">The Tipping Point</a> as well as a number of other intellectually enjoyable human interest books.</p> <p>Gladwell&#39;s podcast tackled this same topic of <strong><em>Why do smart people make dumb decisions?</em>,</strong> and it featured Wilt Chamberlain&#39;s free throw career to make its point.</p> <p>Wilt Chamberlain is widely cited as the best forward to ever play the game of basketball. At 7&#39; 1&quot; and 275 pounds, with a ferocious attitude and athletic grace, he was a dominating force on the court during the 1960-70s. He won seven scoring titles, including the game he is best known for in which he<strong> single-handedly scored 100 points</strong> -- a record that still stands today.</p> <p>That record 100-point game is even more interesting than most people realize, Gladwell points out. It&#39;s significant not just for the total number of points that Chamberlain scored, but also for the number of free throws that he made during the game: 28.&nbsp;</p> <p>Chamberlain was on fire with his free throws that night. He made 88% of them (28 of 32). That&#39;s a very high percentage versus the league average, and amazingly high given Chamberlain&#39;s career average of roughly 50%.</p> <p><strong>In fact, Chamberlain was widely regarded as a horrible free throw shooter. </strong>His overall stats certainly say he was, but this short video clip below does an even better job of hitting home how poorly he typically shot from the line:</p> <p><iframe allowfullscreen="" frameborder="0" height="360" src="" width="480"></iframe></p> <p><em><strong>So how did Chamberlain&#39;s free throw conversion get so much better?</strong></em></p> <p>To answer that, we need to look at another basketball great...</p> <h2><u>Rick Barry &amp; The &#39;Granny Shot&#39;</u></h2> <p><strong>A contemporary of Wilt Chamberlain was Rick Barry, who played much of his career for the Golden State Warriors. Barry was a phenomenal free-throw shooter -- at the time he played he was the best in history.</strong></p> <p>His career percentage? 90%</p> <p>That&#39;s over a 15-year pro career. Amazing. (His best year was in 1979 when he completed a freakishly high 94.7% of his shots from the line).</p> <p>Why was Barry so successful at free throws? Why was he so much better than Wilt?</p> <p><em>He shot his free throws underhanded.</em></p> <p><strong>Yep, that&#39;s right. This 12-time NBA all-star made &#39;granny shots&#39;.</strong></p> <p>Barry approached the free throw as a physics problem, and had a willingness to &quot;do whatever it takes&quot; to improve his accuracy and precision:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&quot;Physicists have done all kinds of testing and said it&#39;s the most efficient way to shoot because there are fewer moving parts. It&#39;s so much more natural to shoot this way,&quot; he says. &quot;Who walks around with their hands over their head?&quot;</em></strong></p> <p>&nbsp;</p> <p>As Barry has often explained, the primary benefits of Granny style are that it increases the likelihood of a straight toss, and it produces a much softer landing on the rim. [Shooting underhand] is also able to generate more backspin, which gives him more breaks on errant throws.&nbsp;</p> </blockquote> <p>Here&#39;s a clip of Barry in action:</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>He didn&#39;t always shoot this way. Barry started as an overhand shooter like everybody else. But when he realized that his completion percentage improved by adopting the underhand toss, he switched over and the rest is NBA history.</p> <p>Which brings us back to Chamberlain.</p> <p><strong>As a notoriously bad foul-line shooter, Chamberlain was advised to adopt the granny shot.</strong> He did, and his free throw percentage soon rose to a career high 61% in 1961-62, the same season as his famous 100-point game. So, the change worked. His stats improved, his team won more games, and his amazing consistency helped him set a single-game scoring record that remains untouchable to this day.</p> <p><strong><em>But then something unexpected happened: Chamberlain stopped shooting underhanded.</em></strong></p> <h2><u>Making The Wrong Choices For The Wrong Reasons</u></h2> <p><strong>When Wilt gave up the granny shot, his free throw percentage proceeded to decline, plummeting to a career low of just 38% by the 1967-68 season.</strong></p> <p>So, the big question here is: <strong><em>Why? Why would Chamberlain willingly abandon a superior form of shooting, especially when he had already experienced direct personal gain from its benefits?</em></strong></p> <p>The answer goes back to beliefs: <strong><u>he felt &quot;like a sissy&quot; shooting that way.</u></strong></p> <p>Sure, in the early days of the NBA, underhanded foul shots were common. But by the time of Chamberlain&#39;s career, pretty much only female basketball players shot that way anymore.</p> <p>Given the machismo of professional sports, it&#39;s understandable that a star like Wilt cared what the other guys thought of him. But was it important enough to abandon a solution that improved his quality of play so much? After all, isn&#39;t the most respected teammate the one who can be counted on to put the most points on the board?</p> <p><strong>Gladwell notes that it has been estimated that Chamberlain could have scored over 1,000 additional points in his career had he shot underhand from the foul line throughout.</strong></p> <p>In addition to that, he likely would have scored even more points by playing more minutes. Because he was such a poor free thrower, Wilt was often benched in the final minutes of play during close games -- as a poor foul shooter is a big liability under those conditions. The opposing team can foul him with confidence that he&#39;ll miss his shots and they&#39;ll then get possession of the ball.</p> <p><strong>Gladwell&nbsp;marvels that somebody so driven to win would deliberately abandon such an easy and advantageous solution as Chamberlain did the granny shot. Even after he had personally experienced its superiority. But he did, thus proving how belief can trump reason.</strong></p> <p>Later, in his autobiography <a href=";ie=UTF8&amp;qid=1469236754&amp;sr=1-2&amp;keywords=wilt" target="_blank">Wilt: Larger Than Life</a>, Chamberlain admits that switching back to an overhanded free throw was a clear mistake:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;I felt silly, like a sissy, shooting underhanded. I know I was wrong. I know some of the best foul shooters in history shot that way. Even now, the best one in the NBA, Rick Barry, shoots underhanded. I just couldn&#39;t do it.&quot;</p> </blockquote> <p>What&#39;s amazing is that even though both Rick Barry and Wilt Chamberlain very visibly demonstrated the advantages of the underhanded free throw, half a century later almost nobody -- not in the NBA and not in college ball -- has adopted it. Think of all the additional points that could have been scored over that time, all the additional minutes played, all the additional team wins. It&#39;s not like players haven&#39;t had a powerful incentive to consider changing their behavior -- these are the very stats their contracts are based on. In great likelihood, many $millions ($billions?) of additional player compensation have been forfeited over the past 50 years simply because the athletes didn&#39;t want to look a tiny bit &#39;girly&#39; at the line.</p> <p>Later on in his podcast, Gladwell concludes that Chamberlain -- like virtually everbody else in professional basketball -- had a high threshold for overcoming conventional opinion. He wasn&#39;t comfortable being a maverick when it came to bucking social mores. Rick Barry, on the other hand, clearly had a lower threshold -- famously not caring what others thought of him (Barry was widely disliked across the league for his disregard of other&#39;s feelings).</p> <p>He ends the podcast with this observation:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>I know we&#39;ve really only been talking about basketball, which is just a game in the end. But the lesson here is much bigger than that. It takes courage to be good, social courage, to be honest with yourself, to do things the right way.</p> </blockquote> <h2><u>A Lack Of Courage To Be Good &amp; Honest</u></h2> <p>Which brings us back to the point of this article. <u><em><strong>Chamberlain&#39;s willful blindness to the ramifications of his clearly inferior choice is not unique. In fact, when we look at many of the decisions being made by world leaders in recent years, we see a depressing abundance of intentional bad choices.</strong></em></u></p> <p><u><strong>Most emblematic of this, in my opinion, are the ZIRP/NIRP&nbsp;interest rate policies the world&#39;s central banks are implementing</strong></u>. As discussed many times here at, the endgame of these policies is easy to predict. History is replete with examples of similar attempts of governments attempting to print their way to prosperity. It&#39;s simply not possible. As Chris says, if it were, the Romans would have figured it out and today we&#39;d all be speaking Latin.</p> <p><strong>The head central bankers are not morons</strong> (although a number of them may indeed be ivory tower academics too out-of-touch with the real world). Many of them realize that they have painted themselves into a corner by easing too much for too long, by flooding the world with too much cheap debt-based money. Many understand, perhaps today more than ever, Ludwig von Mises&#39; rule that:&nbsp;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.&quot;</p> </blockquote> <p><strong>But, like Chamberlain, they do not have the courage to re-evaluate their beliefs and chart an alternative course.</strong></p> <p>To &#39;voluntarily abandon further credit expansion&#39; means letting natural market forces bring down stock, bond and real estate prices from their current bubble highs -- thereby vaporizing a lot of paper wealth. It means widespread layoffs as inefficient companies that have been kept alive by nearly free access to nearly unlimited credit have to start actually generating profits if they can. It means living below our means today, so that we can sustainably live within them tomorrow.</p> <p><strong>Instead, they simply double down on the policies that got us into this mess in the first place, </strong>claiming that their efforts to date just haven&#39;t been big enough yet to succeed. And they do this with the full support of our politicians, who want to avoid any unpopular austerity measures because they care much more about getting re-elected than the hard work of actually addressing our nation&#39;s structural problems. <strong><em><u>So interest rates go even lower, asset bubbles grow even higher, the wealth gap extends even wider, and the risks of a &quot;total catastrophe of the currency system&quot; become even more extreme.</u></em></strong></p> <p><strong>The coming economic/financial/monetary reckoning can&#39;t be avoided at this point; only managed. But we can&#39;t position ourselves to manage it gracefully if we don&#39;t have to courage to even recognize its existence. And our current leaders do not have that courage.</strong></p> <p>Which is why we need to ready ourselves, as individuals. Charles Hugh Smith recently penned an excellent report <a href="" target="_blank">Investing For Crisis</a> which is an essential read for any investor who shares the concern that we will continue to see more wrong choices being made for the wrong reasons -- <strong>until the entire systems fails</strong>. If you haven&#39;t read it yet, you really should.</p> <p><em>Click here to read Charles&#39; <a href="" target="_blank">Investing For Crisis</a> report <em style="line-height: 18.2px; background-color: #fdffff;">(free executive summary,&nbsp;<a href="" target="_blank">enrollment</a>&nbsp;required for full access)</em></em></p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="286" height="188" alt="" src="" /> </div> </div> </div> Behavioral Economics Bond Central Banks Ludwig von Mises Real estate Sat, 23 Jul 2016 23:40:00 +0000 Tyler Durden 566908 at "If You Can't Touch It, You Don't Own It" <p><a href=""><em>Submitted by Jeff Thomas, Writer for Doug Casey&rsquo;s International Man and Strategic Wealth Preservation, via,</em></a></p> <p class="MsoNormal"><span lang="EN">The pending Brexit has, not surprisingly, caused a shakeup in the investment world, particularly in the UK. <strong>Of particular note is that, r</strong></span><strong>ecently, asset management firms in Britain began refusing their clients the right to cash out of their mutual funds. Of the <span lang="EN">&pound;</span>35 billion invested in such funds, just under <span lang="EN">&pound;20 billion has been affected. </span></strong></p> <p class="MsoNormal"><span lang="EN">For those readers who live in the UK, or are invested in UK mutual funds, <strong>this is reason to tremble at the knees. </strong></span></p> <p class="MsoNormal"><span lang="EN">So, why have these investors been refused the right to exit the funds? Well, it&rsquo;s pretty simple. <strong>The trouble is that quite a few of them made the request at about the same time.</strong> Of course the management firms don&rsquo;t keep enough money on hand to pay them all off, so, <strong><em>rather than spend all their money paying off as many clients as possible, then going out of business due to a lack of liquidity, they simply announce a freeze on redemptions. </em></strong></span></p> <p class="MsoNormal"><span lang="EN">Those who are outraged may read the fine print of their contracts and find that the fund managers have every right to halt redemptions, should &ldquo;extraordinary circumstances&rdquo; occur. <strong><em><span style="text-decoration: underline;">Who defines &ldquo;extraordinary circumstances?&rdquo; The fund managers. </span></em></strong></span></p> <p class="MsoNormal"><span lang="EN">Across the pond in the US, investors are reassured by the existence of the Securities and Exchange Commission, which has the power to refuse this power to investment firms&hellip;<strong>or not, should they feel that a possible run on redemptions might be destructive to the economy. </strong></span></p> <p class="MsoNormal"><span lang="EN">Countries differ as to the level of freedom they will allow mutual fund and hedge fund management firms to have on their own, but all of them are likely to err on the side of the protection of the firms rather than the rights of the investor, as the firms will undoubtedly make a good case that a run on funds is unhealthy to the economy. </span></p> <p class="MsoNormal"><span lang="EN">The Brexit news has created a downward spike in investor confidence in the UK &ndash; one that it will recover from, but, nevertheless, one that has caused investors to have their investment locked up. They <em>can&rsquo;t</em> get out, no matter how badly they may need the money for other purposes. This fact bears pondering. </span></p> <p class="MsoNormal"><span lang="EN"><strong>Presently, the UK, EU, US, et al, have created a level of debt that exceeds anything the world has ever seen. </strong>Historically, extreme debt always ends in an economic collapse. The odiferous effluvium hasn&rsquo;t yet hit the fan, but we&rsquo;re not far off from that eventuality. Therefore, wherever you live and invest, a spike such as the one presently occurring in the UK could result in you being refused redemption. Should there then be a concurrent drop in the market that serves to gut the fund&rsquo;s investments, you can expect to sit by and watch as the fund heads south, but be unable to exit the fund. </span></p> <p class="MsoNormal"><em><strong><span lang="EN">As stated above, excessive debt results in an economic collapse, which results in a market crash. It&rsquo;s a time-tested scenario and the last really big one began in 1929, but the present level of debt is far higher than in 1929, so we can anticipate a far bigger crash this time around. </span></strong></em></p> <p class="MsoNormal"><span lang="EN">But the wise investor will, of course diversify, assuring him that, if one investment fails, another will save him. Let&rsquo;s look at some of the most prominent ones and consider how they might fare, at a time when the economy is teetering in the edge.</span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><strong><span lang="EN">Stocks and Bonds </span></strong></p> <p class="MsoNormal"><span lang="EN">Presently, the stock market is in an unprecedented bubble. The market has been artificially propped up by banks and governments and grows shakier by the day. Bonds are in a worse state &ndash; the greatest bubble they have ever been in. This bubble is just awaiting a pin. We can&rsquo;t know when it will arrive, but we can be confident that it&rsquo;s coming. Rosy today, crisis tomorrow.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><strong><span lang="EN">Cash on Deposit </span></strong></p> <p class="MsoNormal"><span lang="EN">Cyprus taught us in 2013 that a country can allow its banks to simply confiscate (steal) depositors&rsquo; funds, should they decide that there is an &ldquo;emergency situation&rdquo; &ndash; i.e., the bank is in trouble. Unfortunately, the US (in 2010), Canada (in 2013) and the EU (in 2014) have all passed laws allowing banks to decide if they&rsquo;re &ldquo;in trouble&rdquo;. If they so decide, they have a free rein in confiscating your deposit.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><strong><span lang="EN">Safe Deposit Boxes </span></strong></p> <p class="MsoNormal"><span lang="EN">Banks in North America and Europe have begun advising their clients that they cannot store money or jewelry in safe deposit boxes. Some governments have passed legislation requiring those who rent safe deposit boxes to register the location of the box, its number and its contents with the government.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><span lang="EN">Each year, the storage of valuables in a safe deposit box is becoming more dubious.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><strong><span lang="EN">Pensions</span></strong></p> <p class="MsoNormal"><span lang="EN">Pension plans tend to be heavily invested in stocks and bonds, making them increasingly at risk in a downturn. To make matters worse, some governments have begun to attack pensions. Others, such as the US, have announced plans to force pensions to invest in US Government Treasuries &ndash; which, in a major economic downturn could go to zero.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><span lang="EN">These are amongst the most preferred stores of wealth and are all very much at risk. In addition, there are two choices that, <em>if invested correctly, </em> promise greater safety.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><strong><span lang="EN">Real Estate </span></strong></p> <p class="MsoNormal"><span lang="EN">The Mutual funds in the UK that are presently in trouble are heavily invested in real estate. But real estate that you invest in <em>directly</em> does not face the same risk. However, any real estate that&rsquo;s located in a country that&rsquo;s presently preparing for an economic crisis, such as those mentioned above, will be at risk. Real estate in offshore jurisdictions that are not inclined to be at risk is a far better bet. (An additional advantage is that real estate in offshore locations is not even reportable for tax purposes in most countries, because it cannot be expatriated to another country.</span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><strong><span lang="EN">Precious Metals </span></strong></p> <p class="MsoNormal"><span lang="EN">Precious metals are a highly liquid form of investment. They can be bought and sold quickly and can be shipped anywhere in the world, or traded for metals in another location. Of course, storage facilities in at-risk countries may find themselves at the mercy of their governments. However, private storage facilities exist in Hong Kong, Singapore, the Cayman Islands, Switzerland and other locations that do not come under the control of the EU or US. Precious metals ownership provides greater protection against rapacious governments, but storage <em>must</em> be outside such countries.</span></p> </blockquote> <p class="MsoNormal"><span lang="EN"><strong>The lesson to take away here is that, if you can&rsquo;t touch it, you don&rsquo;t own it.</strong> Banks and fund management firms can freeze your wealth, so that you can&rsquo;t access it. Governments and banks can confiscate your wealth. If you don&rsquo;t have the power to put your hands on your wealth on demand, you don&rsquo;t own it. </span></p> <p class="MsoNormal"><em><span lang="EN">This evening, take account of all your deposits and investments and <strong>determine what percentage of them you do truly own.</strong> If you decide that that percentage is too low for you to accept, <strong>you may wish to implement some changes... before others do it for you. </strong></span></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="688" height="419" alt="" src="" /> </div> </div> </div> Hong Kong Market Crash Precious Metals Real estate Securities and Exchange Commission Switzerland Sat, 23 Jul 2016 22:40:00 +0000 Tyler Durden 566901 at "As Long As All The Offensive Shit Is Verbatim, I'm Fine With It" <p>Deep inside the treasure trove of <a href="">smears, collusion, and questionable fund-raising exposed by Wikileaks dump </a>of DNC leaked emails was this little gem of &#39;innocent propaganda&#39; by the Clinton campaign against the Trump campaign.</p> <p>The <a href="">email - found here- </a>shows <strong> DNC staffers&rsquo; creating a fake craigslist job posting made for women who wish to apply to jobs at one of Trump&rsquo;s organizations</strong>.</p> <p>The fake position, titled a Honey Bunny, requires the prospective applicant to, among other tasks, refrain from gaining weight, be open to public humiliation and be alright with groping or kissing by her boss...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Multiple Positions (NYC area)</strong></p> <p>&nbsp;</p> <p>Seeking staff members for multiple positions in a large, New York-based corporation known for its real estate investments, fake universities, steaks, and wine. The boss has very strict standards for female employees, ranging from the women who take lunch orders (must be hot) to the women who oversee multi-million dollar construction projects <strong>(must maintain hotness demonstrated at time of hiring).&nbsp; </strong></p> <p>&nbsp;</p> <p><strong>Title: Honey Bunch (that&rsquo;s what the boss will call you)</strong></p> <p>&nbsp;</p> <p>Job requirements:</p> <p>&nbsp;</p> <p>* No gaining weight on the job (we&rsquo;ll take some &ldquo;before&rdquo; pictures when you start to use later as evidence)</p> <p>* Must be open to public humiliation and open-press workouts if you do gain weight on the job</p> <p>* A willingness to evaluate other women&rsquo;s hotness for the boss&rsquo; satisfaction is a plus</p> <p>* Should be proficient in lying about age if the boss thinks you&rsquo;re too old Working mothers not preferred (the boss finds pumping breast milk disgusting, and worries they&rsquo;re too focused on their children).</p> <p>&nbsp;</p> <p>About us:</p> <p>&nbsp;</p> <p>We&rsquo;re proud to maintain a &ldquo;fun&rdquo; and &ldquo;friendly work environment, where the boss is always available to meet with his employees. <em><strong>Like it or not, he may greet you with a kiss on the lips or grope you under the meeting table. </strong></em></p> <p>&nbsp;</p> <p><strong>Interested applicants should send resume, cover letter, and headshot to <a href="" title=""></a></strong>&lt;<a href=";" title=";">;</a></p> </blockquote> <p>And when passed up the chain for comms approval, the response was positive...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="text-decoration: underline;"><em><strong>&quot;As long as all the offensive shit is verbatim I&rsquo;m fine with it.&quot;</strong></em></span></p> </blockquote> <p>And just in case readers thought this was from The Onion, <a href="">here is the original leaked email chain</a>...</p> <p><a href=""><img height="589" src="" width="600" /></a></p> <p>&nbsp;</p> <p>We are sure donors to Hillary&#39;s &quot;victim card&quot; funds will be more than happy to see such stunts being pulled... or is this just another example of how the body politik works nowadays - <em><strong>propaganda tops policy any day.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="100" alt="" src="" /> </div> </div> </div> Real estate The Onion Sat, 23 Jul 2016 22:10:00 +0000 Tyler Durden 566904 at The Market For Lemons, The Market For Bullshit, And The Great Cascading Credence Crash Of 2016 <p><em>Submitted by Daniel Cloud</em></p> <p><strong>The Market for Lemons, the Market for Bullshit, and the Great Cascading Credence Crash of 2016</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“The cost of dishonesty, therefore, is not only the amount by which the purchaser is cheated; the cost must also include the loss incurred from driving legitimate business out of existence.”</p> </blockquote> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <em><strong>George Akerlof, The Market for Lemons </strong></em></p> <p>&nbsp;</p> <p>People have begun to worry that we’re experiencing a crisis of confidence in our traditionally most prestigious institutions - in our political parties, and central banks, and great newspapers, and universities, and even in accredited experts.</p> <p>Views that would have been regarded as extreme in the past also seem much more common now. The entire political spectrum, all around the world, seems to be in the middle of collapsing into a collection of smaller, more radical groups. Some of them advocate violence.</p> <p>The problem doesn’t seem to be unique to this particular historical moment. There are other times in recent history – the 1930’s, perhaps, or the 1960’s – when the public seemed equally unhappy with existing institutional points of view. Like the present, they were periods of relatively rapid change in organizational and communications technology.</p> <p>The underlying problem is, I think, a very strange one. But it’s a risk faced by any society that both undergoes rapid technological change, and contains organized interest groups. (Formal or informal.) <strong>Something really bad is happening to all our bullshit</strong>. In fact, I’ve begun to worry that there’s actually a sort of crash or cascading failure going on in the bullshit market. If there is, I think it’s driven, as previous bullshit crashes were, by changing technology.</p> <p>This may seem like an odd thing to worry about. But it’s actually a very natural worry, if you have any interest at all in recent American philosophy and/or the economics of informational externalities.</p> <p><strong>Bullshit Defined</strong></p> <p>Harry Frankfurt’s <em>On Bullshit</em><sup> i</sup> has, for a long time, been the single best-selling title in Princeton University’s Press’s philosophy list. The book sells well partly because people think the title is somehow cute, or funny, but Frankfurt himself doesn’t really seem to think that bullshit is a laughing matter at all. (Take a look at his 2007 YouTube video<sup>2</sup>, if you want to see if he’s serious about the subject.)</p> <p>He argues that lying and bullshit are distinct forms of dishonesty. The liar is trying to present something false as true. But the bullshitter doesn’t actually care whether what he’s saying is true or false, relevant or irrelevant. He represents himself as concerned with the truth, but in fact his only concern is presenting a certain appearance or creating some particular impression in his audience. Frankfurt thinks that this is a much more subtle and powerful strategy, and therefore a much more dangerous one.</p> <p>The bullshitter is competing with those around him to seem a certain way, or he’s competing with them to avoid seeming a certain way. Or perhaps he wants to make someone else seem some way, or make some proposal seem some way, seem noble or contemptible, dangerous or safe. Or he wants to fit in, or stand out, or be admired, or pitied, or feared, or promoted. The truths he speaks in the course of his effort to achieve these things may be completely irrelevant to the point he’s supposedly trying to make. But unlike the liar, the bullshit artist doesn’t actually have to say anything false to mislead. He might, but he also might not, he might just talk about a lot of irrelevant true stuff. (Machiavelli tells us that a Prince should almost never lie…)</p> <p>This is a way of deceiving that’s much safer for the deceiver than outright lying. A lie can be destroyed by a single incongruous truth. It’s much harder for a single fact to pierce the veil of bullshit, because it’s more difficult for a single fact to dispositively establish that some set of considerations is irrelevant, or that their importance is being exaggerated. Humans are instinctively angry at the liar, but the bullshit artist slides right past our evolved defenses. Frankfurt thinks this is a much more powerful and subtle strategy than lying, and therefore a more dangerous one.</p> <p>In fact, it seems to me that one of the ways we can tell that someone is basically a bullshit artist is that it never really happens to the person that they argued for something, and then, to their surprise and dismay, found out that they were wrong about the facts and had to permanently change their views. That just isn’t a thing, in their world. The bullshitter’s very rare and grudging public <em>mea culpa </em>is always only tactical. When your argument isn’t actually based on the trueness of certain facts in the first place, no pattern of facts can possibly dislodge you from it in any lasting way. As Frankfurt says, the bullshit artist has a kind of freedom and a kind of safety that the liar can only dream of.</p> <p><strong>Is Bullshit Necessary, or Inevitable?</strong></p> <p>Presumably the idea of a crash in the bullshit market wouldn’t actually worry Frankfurt himself very much. In his most recent statements on the topic (in his recent Vimeo video <sup>iii</sup>) he seems convinced that bullshit is unnecessary, that a world without bullshit would be a better one. But he hasn’t always seemed so sure; in the earlier YouTube video, he was still wondering whether bullshit might perhaps be of some use to society.</p> <p>(The contrast between the two videos I’ve mentioned is interesting, in itself, as a sign of where we’re all headed, of how things are developing at the moment. The 2007 YouTube video has clunky production values and a crystal-clear message. But the much more recent one on Vimeo… Well, let’s just say that the producers seem to have been worried that in 2016, a man sitting in a chair telling the truth simply isn’t enough.)</p> <p>Is bullshit, defined as Frankfurt’s defined it, something that we can ever really expect to be completely free of? Personally I doubt it. For one thing, some of it strikes me as genuinely useful. The policeman directing traffic in his spiffy uniform is doing his very best to present a somewhat false appearance of gleaming perfection, because a ragged naked man presenting the same truths about where it would be convenient for cars to go would be ignored. He may even wear a hat designed to make him look taller and more imposing than he actually is. He isn’t trying to look tall because he’s vain. Yes, the whole thing is an act, but in this case it’s a necessary act. Because of the nature of the social role that’s been delegated to him, because we all want him to send a certain clear, authoritative and unambiguous signal <sup>iv</sup>, we excuse and approve of these conventional, socially necessary, legitimate forms of bullshit.</p> <p>No doubt the line between these things and the more egregious or harmful forms of bullshit is a very complex and deceptive one, with one form often disguised as the other. (Perhaps this <em>particular</em> policeman actually is a little vain. Maybe his hat is custom-made, and is a little taller than a regular policeman’s hat. Or maybe he takes bribes to let some cars through the intersection more quickly.)</p> <p>Anyway, empirically, there don’t seem to be any large complex human societies without any bullshit. To completely get rid of it, you’d have to read everyone’s mind at all times, which seems undesirable. So I can’t quite agree with Frankfurt’s more recent opinion that we’d all be better off without any bullshit at all. It seems to me that human society would collapse into a collection of small warring tribes. (Just as traffic at the intersection might grind to a halt without the spiffy policeman.) As far as I can tell, that’s how we lived before we invented bullshit. No chimpanzee is a bullshit artist – or any other kind of artist.</p> <p>Like it or not, we have it now, and I find it impossible to imagine a practical plan for completely eliminating it. If we really can’t get rid of it, then I can’t agree that the relevant question is what life would be like without it. That seems utopian. Bullshit exists; it’s doing something in our society. It has effects on us. The real question, I think, is whether there can be better or worse effects. Is some bullshit more damaging than the rest? Are fairly standard forms of timeworn bullshit perhaps a bit like the suite of benign microbes that live in our guts? Is existing, harmless bullshit protecting us from novel, possibly dangerous bullshit? (As the analogies of the 1930’s and the Reformation might suggest…) Can anything really go wrong with the market for bullshit? Are there any public dangers associated with this large-scale, apparently rather consequential social phenomenon, do we need to manage it somehow?</p> <p><strong>Bullshit and Informational Externalities</strong></p> <p>As for the economics of informational externalities… Frankfurt’s philosophical clarification of the meaning of the ordinary English word “bullshit” strikes me as capable of driving an economic model because he suggests that we’re most likely to come up with bullshit when it’s difficult for us to speak the truth. For example, when we’re expected to have a strong opinion about a matter on which we have no expertise. From an economic point of view, this is a theory about how people cope with the potential costs of information gathering.</p> <p>We all constantly encounter subjects we know very little about. Most conversations about politics are like this. Discussions between people who know rather little about the particular problems they’re discussing, problems they personally won’t be expected to directly do anything about. It could hardly be otherwise in a democracy, since everyone’s asked to vote on whole political programs containing prescriptions for dealing with various different societal problems.</p> <p>The reward for carefully ascertaining and then impartially telling the unadorned and directly relevant truth in many of these ordinary, inconsequential conversations is small. There might be public benefits. But public knowledge of the truth is a public good. We, personally, will only receive one seven billionth of those benefits, while the entire cost of carefully gathering the information and presenting to people who may not be all that interested in it will fall on us. The temptations to slack off and pursue other social goals which these situations present may be resisted by a few, but those are rare and sometimes unpopular individuals.</p> <p>Perhaps we all have a threshold. When we know less than x about some subject, we all struggle against a temptation to employ bullshit in discussing it, to just agree with the people around us to be agreeable, or use the incident as an excuse to point out how stupid the hated out-group is, or try to come up with a funny or enraging fairy-tale about what the truth must be, or to complain plaintively about how nobody really cares, or something like that. Making up bullshit is easier than finding the truth about every abstruse subject, so wherever ease or mere courtesy are the most practically relevant considerations, we can expect almost everyone to face a temptation to repeat or invent bullshit. In a sort of conversational version of Gresham’s law, bullshit should drive out honesty wherever there are no consequences for the individual.</p> <p>But the true bullshit artist produces bullshit egregiously, even in contexts where it’s not conventional or acceptable. He represents himself as sincerely concerned with the truth in situations where he really should be, but he’s not. He isn’t just occasionally tempted to make careless and insincere pronouncements on unimportant-seeming subjects he knows nothing about. He’s turned doing that into his thing, into a complex art form. He persistently insists that his bullshit is reality, and that the actual truth is just a bunch of bullshit.</p> <p>He may even get angry when this assertion is questioned. Often the anger is sincere; he thinks it’s unfair for you to question his facts, because his argument was never based on facts, the facts were just added to support an existing point of view. They’re basically decorations, so by attacking them you’re not really invalidating his conversation goal, as far as he’s concerned. You’re just getting in the way. Like an idiot, like some fool who thinks the conversational contest is about what the facts are. Not, as he believes it to be, about whose bullshit will prevail in the eyes of the audience. Presumably he has no idea that the questioner is doing anything that’s different from what he himself is doing…</p> <p>It seems to me that in some sense this person is a polar opposite or mirror image of Hayek’s “man on the spot”<sup> v</sup> or Kenneth Arrow’s benevolent specialist <sup>vi</sup>, In both these cases, the expert creates positive informational externalities for society by knowing all about some obscure thing, and sharing the information in various ways. Either through the price system, for Hayek, or by broadcasting the information, by publishing it in a journal, for Arrow. I also like to tell a story <sup>vii&nbsp; </sup>that involves a kind of person, the entrepreneur, who generates positive informational externalities for society by personally taking the risk of performing an experiment that may fail, of starting a firm and possibly going bankrupt.</p> <p>But the bullshit artist doesn’t perform any experiments, and he doesn’t know all about some obscure thing. Or if he does, he doesn’t actually just stick to telling the plain unadorned truth about that thing, or about how those experiments came out.&nbsp; He’s surrendered completely to the natural human urge to have a strong opinion on every subject, even ones he’s not in a very good position to discover the truth about. He hasn’t bothered to take the risks he’d need to take, or go to the trouble he’d need to go to, do the hard work he’d need to do, to engage in the self-criticism and he’d have to engage in, to find out the truth about them. Because he doesn’t really care that much about what’s true.</p> <p>Since bullshit is free from the constraints of honesty, it can be perfectly designed to attract attention and elicit belief. (Whereas the actual full truth is usually abstruse and implausible.) From the point of view of cultural evolution, it’s a parasitic mimic, like a cuckoo. Like a cuckoo chick, it has to be more dazzling than the real thing in order to displace it.</p> <p>Nevertheless, the bullshit artist may generate either positive or negative informational externalities, because even he will speak the truth if it suits his ulterior purpose.</p> <p><strong>The Market for Lemons</strong></p> <p>But before I say anything more about all that, I need to quickly describe George Akerlof’s model of the used car market <sup>viii</sup> That will put me in a much better position to explain why I’m now starting to worry about cascading failure in the “bullshit market”.</p> <p>Akerlof was interested in the potential of informational asymmetries, in general, to produce market failure. (So it’s easy to see why his model might be relevant to the market for bullshit, which by its very nature exists entirely within the precarious and shifting world of asymmetries in information.) The basic idea behind his model is quite simple. Suppose that, when buying a new car, people have an imperfect ability to determine whether the car is a lemon. (For the sake of the example, either quality control is very bad, or else little information on safety, reliability, etc. is available in advance of purchases, or the people simply have imperfect judgment. The model is from a time when it was more plausible that not much information about car quality might be available.) But once they’ve owned a car for a little while, they begin to have a pretty clear idea of its quality.</p> <p>People who have a car that they now know is worth more than the prevailing market price for a used car will keep their car off the market. But people who have a car that they now know is worth less than the prevailing market price for a used car would be happy to sell theirs for the prevailing market price. So the used car buyer will have to choose his car from a pool of used cars the very best of which are worth a shade less than the prevailing market price, and the worst of which are worth much less than the prevailing market price.</p> <p>In the case of completely asymmetric information – if the seller always knows just exactly how bad the lemon is, but the buyer can’t ever tell the difference between it and any other car – the average buyer will end up with a car drawn from the middle of this distribution. But that means the average person will get a car that’s worth a lot less than he paid for it. Once this becomes generally known, it’s hard to see why the buyers wouldn’t refuse to buy used cars for any price higher than this average value.</p> <p>If the price is adjusted down to this new level, however, everyone with a car that’s worth more than the new price will withdraw their car from the market. So the average quality of the cars available at that price will be even lower. Once this becomes generally known, it’s hard to see why the buyers wouldn’t refuse to buy cars for any price higher than the new, lower, average value.</p> <p>Once the price has been adjusted down to the new new level, however, everyone with a car that’s worth more than the new new price will withdraw their car from the market…</p> <p>By a cascading series of steps like that, the used car market can fail, as a result of the informational asymmetry between buyer and seller. Although at each step there were some sellers willing to sell cars for only a little more than they were worth, and some buyers genuinely willing to pay slightly over fair value to avoid the expense of buying a new car, in the end the equilibrium is zero transactions.&nbsp;</p> <p>If some institution or institutions existed to help the buyer determine the actual value of the used car more precisely, or if the people themselves developed a method of detecting lemons, they could meet and transact. So getting rid of the informational asymmetry would remove the market failure. But Akerlof worried that the rating agency would be unreliable, that whoever provided the public information about car quality would be tempted to issue bullshit instead, to use the resulting power to muddy the water in some self-serving way…</p> <p><strong>The Market For Bullshit</strong></p> <p>Okay, so now we’re back to bullshit, though now we’re coming at it from a slightly different angle. But what exactly is the analogy I’m pushing here actually supposed to be? What actually makes the market for bullshit a “market” in the first place? Is that supposed to be some kind of metaphor?</p> <p>I don’t think it is just a metaphor. At the same time, the phrase is slightly misleading, in precisely the same way as the phrase “the market for lemons”. Of course, the market for bullshit is parasitic on the market for sincere attempts to tell the truth. Why? Because bullshit derives most of its value from the fact that not everyone can always tell the difference between these two things. Strictly speaking, the market for bullshit is no more separable from the market for putative public truths in general than Akerlof’s “market for lemons”, for used cars not really worth the price they’re being offered for, is from the market for used cars in general. It’s one segment of the market for putative truths, in the same way the market for lemons is one segment of the market for used cars. The segment, in both cases, includes all and only those items that are worth less than they’re presented as being worth. (Or at least, in the case of bullshit, where the seller hasn’t exercised nearly enough diligence to really know that they’re worth as much as he’s presenting them as being worth.)</p> <p>Every issuance of egregious bullshit that’s at all consequential is, in fact, an exchange, involving at least two parties. There are people who produce egregious bullshit, often for a living, and there are people who buy it, and hold onto it until and unless they see through it. The producers are paid by the consumers, not with a permanent transfer of the scarce commodity, credence, but with a conditional loan that can be recalled at will. The unique and distinctive transaction in this market is the temporary exchange of egregious bullshit for credence.&nbsp; Sooner or later, this credence may be repossessed by the credulous person, when the bullshit becomes discredited in his eyes. (When and if the bullshit artist’s ulterior motives become too readily apparent, or crucial facts turn out to be too obviously false, or the emotional impact simply fades.)</p> <p>So really it’s a commodity market, because while some truths remain true forever, bullshit gets used up over time, like gasoline, or sugar, meaning new bullshit must constantly be produced.</p> <p>The objective of each established vendor of bullshit is to get the customer to constantly roll over his credence to a new story from the same source, instead of repossessing it and looking for another vendor. But if the perceived credibility of the pool of existing vendors, in aggregate, declines, for some reason, new vendors with equally low quality bullshit who were shut out of the market before will become able to enter and compete.</p> <p>Every time a prestigious institution or a prestigious public official lowers a standard somehow to compete in the market for putative pieces of public information, whether in an internal or an external struggle, every time we see egregious bullshit from an unexpected source, some players outside the Establishment lose their tinfoil hats. Every time a prestigious news source uses an invidious headline or elides a crucial fact, other, less trusted sources of information suddenly seem more credible. Disenchanted television viewers move from the news networks to the Daily Show, opining that there’s no difference except the entertainment value. But once they have, they’re just as likely to wander on over to the <em>Onion</em>, even though they might never have thought of that as an alternative to CNN or the <em>Washington Post</em> before the move.</p> <p>That means this market has an odd and dangerous feature, one that makes it similar to the market for lemons. As exchange value – price, in the case of used cars, and credence, in the case of bullshit - goes down, average quality should also get worse.</p> <p>(Not that the <em>Onion </em>itself isn’t good. It’s just that in a world where the <em>Onion </em>is as reliable as hard news sources, consensus reality does not exist.)</p> <p>The admission of new, marginal sources to the pool of semi-credible public information is one obvious reason for this decline in quality. But there’s another problem, one that can, I think, drive human societies into surprisingly dark places. To be really interesting, the new bullshit must be fresh, which means it must somehow differ from existing, less exotic bullshit. But the low-hanging fruit has already been taken. The most salient and crucial truths will already be employed, in some existing item or tradition of bullshit, and can’t be repeated in any interesting and engaging way. Each additional marginal piece of bullshit must be either less directly relevant, or more contaminated with falsehood, or both, to succeed in being unique. To compete for the attention and credence of a fixed number of humans, it should also be gaudier than its predecessors. It should be more extreme, more bizarre or more shocking or more pleasing or moving or nobler or more wrathful or terrifying or self-mutilating or funnier, in order to still be noticeable in the more crowded field. Existing sources of public information, however credible, may also have to participate in this race to the bottom, if they’re going to retain viewers or readers. So the average quality of their output is likely to decline along with everyone else’s. That makes the information asymmetry a lot worse, because now even trusted sources may be forced to peddle egregious and exotic bullshit. Akerlof’s model of the market for lemons suggests that it should be possible, in theory, for this intensification of the informational asymmetry to cause cascading failure all by itself.</p> <p>Unfortunately, this market also has another strange feature, one that makes it even more fragile. Removing tinfoil hats affects volume as well as quality. In the face of increased competition, existing issuers also have to try even harder to catch the public’s increasingly fragmented attention, and are likely to increase the volume of putative information they put out. So as “price” (average number of people convinced and mean duration of the conviction produced by the typical piece of bullshit) goes down, the aggregate quantity of bullshit being produced should actually increase in response. The price elasticity of the bullshit supply curve is negative.</p> <p>But that means that the quantity increases if the quality declines. And we already knew that the quality declines if the quantity increases. So if the quality declines, the quantity increases. And if the quantity increases, then the quality declines. But if the quality declines, the quantity should increase again. And if the quantity increases again, the quality should decline again… Which is cascading failure, in the same kind of jerky series of successive steps down that Akerlof described for the used car market.</p> <p>If the public can’t tell the difference between good and bad sources of information, if they suddenly or gradually lose that ability somehow, the market for public information becomes vulnerable to this sort of failure. Because the average source may then in fact become much worse, much less honest, than they’re used to supposing. Is forced to do that, in order to compete, by the public’s very confusion. And things can continue to cascade down from there. So the equilibrium outcome can be zero transactions. Zero credence being lent. Nobody really believing anything anyone says in public.</p> <p>Even though there are some sources of information that are still almost as valuable as they claim to be, and some consumers of information who would still benefit from lending credence to them, the informational asymmetry would, in a world like that, make it impossible for these people to find each other, so nobody would end up lending much credence to anything said in public. In that world, the public would take rumors, and lies, and conspiracy theories just as seriously as official pronouncements from formerly credible sources.</p> <p><strong>The First Consequence of the Technological Shock: Too Much Information</strong></p> <p>Now that we have this supposed analogy on the table, what’s the exogenous technological shock supposed to be? Why might the combined market for bullshit and sincere attempts to tell the truth in public be crashing, again, right at this moment? What is it about all our tweeting, and Facebooking, and Googling, and emailing, and chatting, and constantly talking on the phone, and instant messaging, and posting of ominous videos on Vimeo, and tinderizing, and dressing up as plush toys, and organizing two-day conferences about Derrida’s influence on the Ninja Turtles action figures, and writing things for Zero Hedge, that could possibly cause a similar problem?</p> <p>Obviously, an enormous amount of new, very low-quality information has become publicly available to everyone. (Along with a very large but still smaller amount of new, very high-quality information, the problem being that we haven’t yet really collectively learned how to tell the difference in the new environment.) It seems to me that the consequence is that the persuasive value of the average piece of bullshit is collapsing. This is happening because the supply is increasing greatly, while fewer people attach less lasting credence to each piece. This affects our faith in existing institutions partly because they’re what’s available for people to lose faith in, because you can only lose the illusions you already had.</p> <p>As the increasing public supply of bullshit becomes more and more discredited, it drags the credibility of all sources of public information down – especially since some of the new bullshit is coming from the same institutions the more credible information already comes from.</p> <p>Information can be endlessly, costlessly replicated, so simply making some information more salient and more available counts as an increase in the supply of that particular information. As every part of every legacy institution becomes better and better at making itself transparent, the overall picture of the institution as a whole that we can get from outside becomes much more detailed. But this explosion of available details confuses the brand, because we no longer only see the greatest achievements and most serious messages. We still see those, but now we see everything else as well, and the average thing we see is less impressive.</p> <p>Each member of the Fed’s board always had their own opinions, but now technology has put them in a position to constantly tell us all about them, and us in a position to dig down into all the inevitable disagreements and uncertainties. Seeing the complexities that were always there more clearly makes the message much harder to interpret, and decreases its authority. In something like the same way seeing what’s actually been under the uniform of the traffic cop all along might diminish his authority in our eyes.</p> <p>The Fed, in particular, is and really has to be in the business of fooling everyone, at least if they’re going to go on being Keynesians rather than straight neo-classical rational choice theorists, because Keynesian monetary stimulus relies on the creation of illusions for its effectiveness. Every producer is supposed to be under the illusion that it’s only the price of their own product that’s going up, in response to the stimulus, while the prices of their inputs are going to remain unchanged. That’s what makes them increase production – the illusion that doing so has become more profitable. If nobody was fooled, if everyone realized that all prices would eventually go up in response to the monetary stimulus, they would simply adjust their own prices, immediately, without increasing production at all.&nbsp;</p> <p>So the Keynesian central banker is supposed to be a kind of magician, who manipulates the public into doing what he sees as the right thing by creating illusions, using a printing press. But a magician can’t really show you everything he’s doing to fool you, as he’s doing the trick, and still expect you to be fooled by it. That would be a good way of teaching you to do the trick yourself. But as a way of doing a magic trick that’s supposed to actually deceive the audience and make them take some ill-considered action, it makes exactly no sense at all.</p> <p>The odd thing is that the prestigious institution often still seems to suppose that the front of the house still represents it to the public, that we basically all get our information about it from the occasional very formal and uninformative news conference for the old media by the head chef. But now all the diners can also see everything going on in the kitchen, which naturally gives them a completely different perspective on what sort of place the restaurant is. The chef’s formal description has turned into an empty ritual, a place food critics go to show off their own particular brands of bullshit in front of an audience.</p> <p>The contrast with the new, more complex and transparent background makes any traditional form of bullshit that might be conventional in communicating with the old media at press conferences seem more antiquated and unreasonable. So traditional ways of preserving public credibility can now actually have the effect of diminishing it, under the new technological circumstances. Refusing to comment in public on matters you’ve already shared your opinion about in less formal settings, that sort of thing. The problem is that the contrast between official pronouncements and actual beliefs is now just too obvious, too visible, too sharp. Even though the actors were never actually trying all that hard to conceal the contrast in the past. They just relied, unconsciously, on the whole picture being a little more murky, to outsiders, than it presently is. Clarified, it seems to convey a certain amount of contempt for the audience’s ability to reason, to connect the dots in the dot plots… (It’s as if we cleaned up the <em>Mona Lisa </em>a little, and it turned out she’d been giving us the finger all along.)</p> <p>From the outside, we now see a confusing multiverse of different Harvards, with no consistent story coming from anywhere about which ones matter most, or which one is the real Harvard. The university itself may not have changed very much, it was always a big complicated place, but the partial panopticon it lives in has become much more elaborate. We outsiders all can see much more about more different parts of it, if we choose to. That makes it potentially much more confusing to the outside world, which now can’t tell whether they should think of it as primarily consisting of the parts they like, or the ones they find unappealing.</p> <p>Complex human complex societies are always built around limiting the information people have to know about each other to a manageable level. In a group of more than a few thousand people, what there actually is to be known exceeds our individual capacity for assimilating and dealing with the knowledge. We aren’t gods, or angels. We’re just people. Now that necessary blurring has been interfered with, by the new technology, and we can’t help staring at what was always underneath the blur. At what an angel would see, at what, in some cases, only an angel could fully accept.</p> <p>So just the new technologies, all by themselves, are capable of making the credibility, plausibility, and comprehensibility of the average piece of public information from existing institutions decline, as far as the observer is concerned, even if those institutions don’t change at all. Even organizations which aren’t even occasionally in the business of producing any kind of bullshit (if there are any) can’t avoid having their credibility affected by this technologically driven tendency towards a confusing kind of transparency.</p> <p><strong>A Second Consequence of the Technological Shock: Coming Up With New, More Extreme Forms of Bullshit</strong></p> <p>But it’s also true that most large institutions contain many groups of people doing various different things. Inevitably, for a variety of reasons, some of those groups are more focused on publicly stating the exact truth as they understand it than others. Some people have searched diligently for genuinely important truths for a long time, with great skill. Occasionally they succeed in finding one. The advent of new organizational technology – computers and the things they’ve led to – helps these people. But there are only so many who can and will do the lonely, difficult, sometimes boring work, and actually finding significant new truths is very hard.</p> <p>Coming up with new forms of bullshit, and organizing new communities of bullshit artists around them, seems to be much easier. Entrepreneurial people associated with existing political parties, newspapers, interest groups, universities, or other prestigious institutions have considerable organizational advantages in the struggle to keep up with the depreciating value of bullshit, and may be responsible for a large fraction of the increased supply. New organized interest groups must grow up around existing institutions like vines, whenever organization and communication get easier and cheaper. Naturally each has its own preferred line of bullshit.</p> <p>In fact, the existence of organized interest groups, sources of economic and political rents, and other subsidies for particular signals means that the tendency for the credibility of public speech to decline under some technological circumstances can be accelerated in surprising ways by the social results of competition for access to the subsidies. Their existence can lead to a competition for unfakeable displays of commitment to the cause <sup>ix</sup>. Over time, this can result in behavior that seems quite strange to outsiders, as each would-be beneficiary tries to outdo the most recent effort of some rival. The result of this ratchet is a world where people often seem to decide what to think and do by asking themselves what would be most implausible belief and the most counterproductive behavior. As both organization and communication have become easier and cheaper with the new technologies, our ability to mount impressive and highly visible displays of this kind has improved as well.</p> <p>Perhaps the most extreme example of all this, at the moment, is the group of zealots in Raqqa. They’ve been very successful in attracting both followers and contributions in this very way, by undertaking insanely counterproductive, disgusting, and shocking displays of <em>takfiri </em>commitment. But the phenomenon is a far more widespread one, because this is, in fact, a basic human impulse, something our ancestors have been doing for a very long time in a huge variety of different ways, some splendid and some horrifying. The specific content of the subsidized signal – whether it’s flower arrangement, some particular form of social justice, or suicide bombing – matters enormously, but the competition to display some very refined and demanding or very arbitrary or very twisted conception of virtue or capability is always the same.</p> <p>This tendency to produce exaggerated forms of bullshit, as an evolved part of human nature, is, I suspect, at least partly a tool for achieving what Max Weber<sup>x</sup> called “closure”, a way for an in-group to acquire permanent ownership of a source of economic rents. People already immersed in the local brand of bullshit already know exactly what to say to please their audience. Often that includes some extremely odd things, some things the community has allowed itself to become concerned with, over time, by some progressive process of cultural evolution that seemed perfectly reasonable to them at each little step. By these gradual processes, the group can arrive at a set of preferences that would strike any outsider as strange and exotic in somewhat the same way some very unusual breeds of dog or cat or goldfish do. These exotic and arbitrary preferences act as a semi-permeable barrier to entry. You only get in to the subsidized group if you drink the cool-aid, if you become really good at exhibiting the exotic preferences in acceptable ways. Which limits access to the source of rent to friends and willing henchmen.</p> <p>This sort of competition for access to a subsidy can force competing bullshit artists to come up with more and more extreme, impressive, and (to the uninitiated) unpalatable versions of the particular forms of bullshit that are customary in their moral community. As the competition for prestige becomes more intense, what counts as an impressive signal of commitment to the subsidized set of beliefs can become much more extreme, leading in the end to forms of priest-craft that may seem very strange to any uninitiated person. Technological change, new ways of organizing and communicating, can greatly enhance the effectiveness of this sort of competitive display, as it has for the zealots in Raqqa. So as the exogenous technological shock hits, the exotic in-group behavior may become even more extreme.</p> <p>At the same time, a general increase in transparency has the effect of making all these weird little social worlds much more visible from the outside, contributing to the public sense that the other people whose social behavior they’re observing clearly for the first time have all gone completely nuts. In a world that’s apparently gone crazy, even crazy analyses may seem credible.</p> <p>All of these same processes can take place inside of existing institutions as well, as new organized interest groups with their own new forms of bullshit spring up under the newly favorable technological circumstances like mushrooms after a rain. Sometimes this can apparently be quite paralyzing. Various political parties in different places around the world have already visibly begun to experience interesting new forms of internal fragmentation and competition. Certainly there are fascinating things happening inside both large American political parties.</p> <p><strong>A Third Consequence of the Technological Shock: More Rapid Turnover of Egregious Bullshit</strong></p> <p>For both of these reasons, the passive one and the active one, the initial effect of the new technology should be a decline in the average perceived credibility of existing institutions’ output of putative pieces of public information, along with an increase in its perceived quantity. A Democrat is now more likely to publicly say or write that the DNC, and a Republican that the RNC, is terrible. And we’re also more likely to hear about it. Having heard these things, we’re now less likely to accept anything either party says. If even they say they’re terrible…</p> <p>(Presumably the initial impact of any large technological change is always partly just disorganization, because at the beginning the society is bound to be set up all wrong, given the possibilities inherent in the new technology. The pattern is as old as Ugarit. Invent the first alphabetic writing system and the use of gold as money… and watch your whole civilization collapse, as it tries to cope with the social results. Once you notice it, this pattern appears in history again and again. Improvement may only come much later, if at all, as a result of some sort of eventual Darwinian winnowing process.)</p> <p>At the same time, as Daniel Dennett has pointed out recently with respect to public falsehood in general <sup>x, xi</sup>, we’ve recently become collectively much better both at detecting all kinds of dishonesty, and at informing each other that we all know everyone else has also detected it.</p> <p>In the <em>Politics</em>, Aristotle points out that in the end, the public tends to have sound judgment about what’s really a great work of art, even though individually many of its members may lack perfect taste. Each person still may be able to spot some particular flaw, so all together they constitute a reliable filter. The sound evaluations reinforce each other, while each idiosyncratic error of judgment is likely to be different. So over very long periods of time, the public standard of taste is more reliable and refined than that of any one individual.</p> <p>The same thing applies to public bullshit. Over time, at least outside of subsidized in-groups, all but the very finest examples of bullshit are eventually detected and persuasively rejected by someone in the crowd. Sooner or later, someone successfully points out that the Emperor isn’t wearing any clothes. The motive or gimmick becomes obvious to everyone, and the dishonesty becomes transparent.</p> <p>The Internet has dramatically amplified this oracular collective capability, because more eyeballs are now seeing each potential piece of bullshit with greater clarity, sooner. The people behind the eyeballs now find it much easier to communicate their skepticism to each other. So we reject dishonesty much more quickly and with better accuracy. Common “knowledge” of both truths and untruths, making it known to all that everyone knows that everyone supposedly knows something, has, as Dennett points out, become both much easier to produce, and much easier to destroy.</p> <p><strong>Bullshit Inflation and Market Failure</strong></p> <p>With a vastly increased supply, lower average quality, and much less public willingness to hold on to each piece, the value of the average putative item of public information seems to be crashing now in more or less the same way the value of a unit of currency crashes during a hyperinflation. In that case, the problem is also that the supply of something – money – explodes just as public willingness to hold onto it for very long is collapsing. The credibility of each individual piece of bullshit, the number of people it will persuade for how many hours in total, is, I suspect, now in steep decline. What’s pretty easy to see is that bullshit just simply doesn’t stick for very long any more, that a semi-bullshit explanation that’s believed by the public may now only settle them down or rile them up for a few days or a few weeks, not for months or years as it once might have.</p> <p>What’s a little harder to observe, unless you habitually wander into a lot of places people in your own little social world don’t go much, is the fact that that this more rapid churning is happening in parallel in more and more different and divergent arenas. So during the much shorter half-life of each piece of bullshit it probably convinces many fewer people at any one time. As its value collapses and its quality declines, more and more must be issued to accomplish the same persuasive tasks.</p> <p>In the end, no amount of bullshit may be enough. It may become impossible for anyone to persuade very much of the public of anything, even the truth. Akerlof’s model of the used car market suggests that in an extreme scenario, the market for public information, for putative attempts to tell the truth in public, as a whole might eventually fail under the new pressure.</p> <p>The problem with this kind of crash in the bullshit market would be that it would have the unfortunate effect of making genuinely reliable sources of public information no more credible than any entrepreneur with a completely novel and untested form of bullshit. A simple, clear, and emotionally appealing plan, concocted without reference to its actual possibility or efficacy. When nobody is the least little bit credible, anybody at all is just as credible as anyone else. That can be a surprisingly bad outcome for the whole society - if “anybody at all” happens to include Adolf Hitler.</p> <p>Keeping civilization going is hard, not easy. This is the fundamental fact we seem most inclined to forget. Human history shows that there are more potential recipes for societal disaster, more ways of not having the things we have now, than paths to societal success. Agonizing failure is genuinely possible. History is full of failed experiments. So a frantic bullshit free-for-all of the kind Germany had in 1920’s and the 1930’s seems like a rather frightening outcome. But a possible one. Or look what happened when the printing press was invented. Suddenly everyone was an authority on scripture. It was fun… at first. But the path from Erasmus to the Battle of White Mountain is surprisingly straight.</p> <p>At the same time, there was a lot of bullshit around in the 1920’s, and the 1950’s – all the horrible bullshit associated with segregation and numerous other unjust deprivations of basic human rights – that we’re all much better off without. In the very long term, getting rid of bullshit is usually a very good thing. There are probably some similar pieces of horrible bullshit in our world, things our descendants will wish we could have rejected sooner. The problem is basically just that the transition from there to here involved all kinds of untoward and surprising events. Good news in the long term can sometimes be surprisingly bad news in the short or medium term.</p> <p>We assume that seeing far more of each other’s lives than we’ve ever seen before will leave our social and political system pretty much undisturbed. Because on some level we think we’re still living in the television age. But actually the particular design of the partial panopticon we all live in, which only allows certain acts of certain people to be seen by certain other people some of the time, is central to society’s functioning on a day-to-day basis. We aren’t used to having this much extreme bullshit directed towards us this persistently. We aren’t used to actually seeing a man’s head sawed off with a serrated knife. As part of a sort of gruesome political advertisement for an expensive form of madness, directed at least partly at those few scattered people who might be driven over the edge by it, and commit similar acts.</p> <p>We aren’t used to knowing this much about what the people who run the <em>New York Times </em>and the <em>Wall Street Journal </em>are actually talking about, with each other, behind the scenes. We aren’t used to having the magician describe every trick in detail for us, as he’s actually doing it.</p> <p>Eventually we’ll learn ways to shut most of the information out again, to stop watching Charlie Rose and Jihadi recruitment videos, but in the meantime the sheer quantity and volume and the increasingly uncertain quality are extremely disorganizing. <strong>Sooner or later, public revulsion may set in, and the market may fail completely.</strong></p> <p>The specific sort of fragility I’m imagining in the market for public information is a vulnerability to cascading failure, which makes the full magnitude of a possible event very difficult to predict in advance. Presumably bullshit crises are like earthquakes. There must be many, many tiny little cascading failures in local bullshit markets all the time, a few medium sized ones every once in a while, and very very rarely, some really huge ones that affect everyone.</p> <p>Hopefully this one will be one of the smaller ones, or will be relatively benign, even if it is big. But the Reformation, or the eventual effects of the introduction of radio, movies, telephones, and the mass party early in the twentieth century, can give us some idea of how bad the short-term effects of a really serious bullshit crash can potentially be.</p> <p>Some appreciation of the potential risks associated with this kind of rapid change in communications and organizational technology, on the part of our political leaders, might perhaps make them less eager to continue to try to put out fires with gasoline, as they’re presently doing.</p> <p><strong>What Is To Be Done?</strong></p> <p>Is there anything we can do about all this? In the end, I’m afraid, as in past cases, it’s really mostly going to be up to us. As citizens, we have to learn how to recognize lemons. We have to learn to tell the difference between sincere though possibly mistaken public speech, or the policeman’s hat, customary and acceptable forms of public pretense, and genuinely egregious bullshit. As these things appear in new forms in the new technological environment. And to learn how to tune a lot of the bullshit out. If we can. Eventually the public learns how to navigate under the new technological circumstances. Spinoza writes the <em>Theological-Political Treatise</em>, and order is restored in the market for public information.</p> <p>(Unless they don ‘t, and it isn’t. Germany society in the 1920’s and ‘30’s doesn’t really seem to have ever endogenously solved its bullshit problem. And they were incredibly sophisticated people. So it’s possible to fail, even if you’re very smart. Nevertheless, we can hope.)</p> <p>Just as Akerlof’s used car market can really only function well if buyers eventually learn to detect lemons, to function in the new world, we all have to become less willing to have our attention grabbed and our emotions inflamed by some bullshit artist with a novel song and dance. Human societies are structured as they are precisely because we don’t and can’t have perfect information about everything and everyone. Moral exhortations to live as if we did are utopian, in a way that should be easier to see now that the people in Raqqa have also become all riled up about what they perceive as the manifold injustices of our global society. Thinking globally implies a will to impose your conception of the good on the whole of humanity. But we don’t need seven billion distinct and incompatible utopian conceptions of the global good being unilaterally imposed on the whole world all at the same time. What we actually want is seven billion people all doing their best to see through that kind of reckless bullshit, on the basis of what they know about their own smaller worlds. Doing their best to not be beguiled or distracted by bullshit artists with simple, morally satisfying solutions for all the world’s most photogenic problems.</p> <p>I’m afraid the bad new is that we the people are more or less on our own, in this particular struggle. <strong><em>The New York Times </em>and the <em>Wall Street Journal </em>can’t really help us, or advise us, now, because it’s precisely whether to go on trusting them that we have to decide</strong>. There are things they could do to retain or regain our trust, but we shouldn’t hold our breath, because they apparently have yet to perceive any need for reform.</p> <p>No, it’s sort of going to have to be up to us to learn to filter out this latest wave of bullshit, and figure out which sources to trust in the new technological environment, just as we’ve eventually done in all the previous crises. The stakes are high. This may be your single most important job, as a citizen. Figuring out which publicly available bullshit is egregious, and of that what part is potentially harmful, and what harmless, or even socially necessary. What makes the whole thing much more complicated is the fact that there’s probably a lot of the existing egregious bullshit that we need to try to keep, for the sake of continuity if nothing else.&nbsp; And because it takes up space that we don’t want filled with something worse… Even though it may all seem worthless, in the middle of a crash.</p> <div> <hr width="33%" size="1" /></div> <p><span style="font-size: 9px;"><em>[i]&nbsp; Frankfurt, H. On Bullshit. Princeton University Press, Princeton, 2005.<br />[ii] “On bullshit, part I.” <a href="" title=""></a><br />[iii] “Bullshit!” <a href="" title=""></a><br />[iv] McAdams, R. The Expressive Power of Law: Theories and Limits. Harvard University Press, Cambridge, MA (2015)<br />[v] Hayek, F. “The use of knowledge in society.” American Economic Review, XXXV, no. 4 (Sep. 1945) pp. 516-30.<br />[vi] Arrow, K. “Methodological individualism and social knowledge.” American Economic Review: Papers and Proceedings 84 (1994) 1-8.<br />[vii] Cloud, D. The Lily. Lassiez Faire Press, Baltimore, MD (2011)<br />[viii] Akerlof, G. “The market for ‘lemons’: quality uncertainty and the market mechanism.” Quarterly Journal of Economics, vol. 84, no. 3 (Aug. 1970) pp. 488 – 500.<br />[ix] Berman, E. “Sect, subsidy, and sacrifice: an economist’s view of ultra-orthodox Jews.” NBER Working Paper No. 6715 (Aug. 1998). Currently available at <a href="" title=""></a><br />[x] Weber, M. The Theory of Social and Economic Organization. The Free Press, New York (1947)<br />[xi] Dennett, D., and Roy, D. “How digital transparency became a force of nature.” Scientific American, March 2015.<br />[xii] <a href="" title=""></a></em></span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="300" height="238" alt="" src="" /> </div> </div> </div> Central Banks ETC Fail fixed Germany Hyperinflation Increase in Transparency New York Times Rating Agency Reality Salient The Onion Transparency Wall Street Journal Sat, 23 Jul 2016 21:38:58 +0000 Tyler Durden 566902 at The War In Afghanistan Is A Good Thing (If You're A Drug-Dealer) <p><a href=""><em>Submitted by Mnar Muhawesh via,</em></a></p> <p><strong>The &ldquo;War on Drugs&rdquo; and the &ldquo;War on Terror&rdquo; are more intertwined than that media and our elected officials would like us to think.</strong></p> <p>And this became full front and center when the U.S.-led global crusades overlapped in Afghanistan, leaving in their wake a legacy of death, addiction and government corruption tainting Afghan <em>and</em> American soil.</p> <p>In the U.S., the War in Afghanistan is among the major contributing factors to the country&rsquo;s devastating heroin epidemic.</p> <p><strong>Over 10,000 people in America died of heroin-related overdoses in 2014 alone</strong>&ndash; an epidemic fuelled partly by the low cost and availability of one of the world&rsquo;s most addictive, and most deadly, drugs.</p> <p><strong>Despite our promises to eradicate the black market, the U.S. actually enables the illegal drug trade. </strong>As journalist <a href="" target="_blank">Abby Martin wr</a>ites, the U.S. government has had a long history of facilitating the global drug trade: In the 1950s, it allowed opium to be moved, processed and trafficked throughout the Golden Triangle in Southeast Asia while it trained Taiwanese troops to fight Communist China. In the 80s, the CIA provided logistical and financial support to anti-Communist Contras in Nicaragua who were also known international drug traffickers.</p> <p><strong>Since the DEA got the boot from the Bolivian government in 2008, <a href="">cocaine production in that country has steadily fallen year after year</a>.</strong></p> <p>And in 2012, a Mexican government official claimed that rather than fighting drug traffickers, the CIA and other international security forces are actually trying to &ldquo;manage the drug trade.&rdquo;</p> <p>&ldquo;It&rsquo;s like pest control companies, they only control,&rdquo; Guillermo Terrazas Villanueva, the Chihuahua spokesman, <a href="" target="_blank">told Al Jazeera</a>. <strong><em>&ldquo;If you finish off the pests, you are out of a job. If they finish the drug business, they finish their jobs.&rdquo;</em></strong></p> <p>While there is no conclusive proof that the CIA is physically running opium out of Afghanistan, &nbsp;Martin notes:</p> <p style="padding-left: 30px;"><em>&ldquo;[I]t&rsquo;s hard to believe that a region under full US military occupation &ndash; with guard posts and surveillance drones monitoring the mountains of Tora Bora &ndash; aren&rsquo;t able to track supply routes of opium exported from the country&rsquo;s various poppy farms (you know, the ones the </em><a href="" target="_blank"><em>US military are guarding)</em></a><em>.&rdquo;</em></p> <p>Ironically, it was the U.S. mission to obliterate the Taliban in the &ldquo;War on Terror&rdquo; that turned Afghanistan into a &ldquo;narco state.&rdquo;</p> <p><strong>Prior to the War in Afghanistan, the Taliban actually offered subsidies to farmers to grow food crops not drugs.</strong></p> <p>In the summer of 2000, Taliban leader Mullah Mohammad Omar announced a total ban on the cultivation of opium poppy, the plant from which heroin is made. Those caught planting poppies in Taliban-controlled parts of the country were beaten and marched through villages with motor oil on their faces.</p> <p>The only opium harvest the following spring was in the northeast, in an area controlled by the Taliban&rsquo;s rivals, the Northern Alliance. That year, as <a href="" target="_blank">Matthieu Aikins reported for Rolling Stone in 2012</a>, &ldquo;Opium production fell from an estimated 3,276 tons in 2000 to 185 tons in 2001.&rdquo;</p> <p>But then 9/11 hit and the Bush administration pushed into Afghanistan once again, carrying the banner of the &ldquo;War on Terror.&rdquo;</p> <p><em><strong>&ldquo;When the Taliban fled or went into hiding, the farmers lost their financial support to grow food, and returned to growing heroin, a crop that thrives in regions of Afghanistan,&rdquo; </strong></em>as Dr. Steven Kassels noted in <a href="" target="_blank">a 2015 piece for Social Justice Solutions</a>.</p> <p>Seeking a &ldquo;light footprint&rdquo; in Afghanistan, the U.S. and our allies teamed up with what Aikins describes as &ldquo;anti-Taliban warlords.&rdquo; Aikins reported: &ldquo;Within six months of the U.S. invasion, the warlords we backed were running the opium trade, and the spring of 2002 saw a bumper harvest of 3,400 tons.&rdquo;</p> <p>That&rsquo;s right: The War in Afghanistan saw the country&rsquo;s practically dead opium industry expanded dramatically. By 2014, Afghanistan was producing twice as much opium as it did in 2000. By 2015, Afghanistan was the source of 90 percent of the world&rsquo;s opium poppy.</p> <p>Since 2001, the U.S. has poured billions into counternarcotics programs in Afghanistan. <strong><em>How could this industry flourish right under the nose of the U.S. and our allies? </em></strong>Well, quite simply, because we let it: Aikins alleges that the DEA, FBI, the Justice Department and the Treasury ALL knew about their corrupt allies in the country, but did nothing to pursue them because it would have derailed the troop surge.</p> <p><strong><em>&ldquo;The drug is entwined with the highest levels of the Afghan government and the economy in <a href="" target="_blank">a way that makes the cocaine business in Escobar-era Colombia look like a sideshow,&rdquo; Aikins </a>writes, later noting: &ldquo;On the ground, American commanders&rsquo; short-term imperatives of combat operations and logistics trumped other advisers&rsquo; long-term concerns over corruption, narcotics and human rights abuses, every time.&rdquo;</em></strong></p> <p>But where did it all go? Well, as Aikins reported, <strong><u>Afghanistan&rsquo;s &ldquo;borders leak opium like sieves into five neighboring countries.&rdquo;</u></strong></p> <p>The increased supply flooded European, Asian and Middle Eastern markets. And with Europe no longer reaching out to opium producers in South America and Mexico, that excess flooded the American market. Prices fell everywhere, making heroin dangerously cheap and dangerously accessible.</p> <p>And this is where we find ourselves today: <strong><em>Heroin, one of the most addictive and deadly substances on Earth, can be found for as little a $4 a bag in some American cities.</em></strong></p> <p>Between 2002 and 2013, <a href="" target="_blank">heroin-related overdose deaths quadrupled</a>. In 2014, <a href="" target="_blank">more than 10,000 people died of heroin overdoses in America</a>. Should we add these casualties to the <a href="" target="_blank">3,504 U.S. and coalition soldiers who died in the war</a>, or the <a href="" target="_blank">26,000 dead Afghan civilians</a>?</p> <p><strong>And heroin use is up across the entire population. Age, sex, race, income, location &mdash; it doesn&rsquo;t matter. </strong>And, as the CDC notes, &ldquo;Some of the greatest increases occurred in demographic groups with historically low rates of heroin use: women, the privately insured, and people with higher incomes.&rdquo;</p> <p>Unfortunately, it&rsquo;s not just the U.S. suffering under the weight of a heroin addiction that&rsquo;s hit epidemic proportions: Afghanistan, which has a long cultural tradition of smoking opium, is dealing not just with its status as a &ldquo;narco state,&rdquo; as Aikins described it, but also with <a href="" target="_blank">the health and social ills stemming from increased heroin use</a>.</p> <p><u><strong>In the process of waging a &ldquo;War on Terror,&rdquo; we lost the &ldquo;War on Drugs.&rdquo;</strong></u> Both wars deal in corruption and violence, and they put real human lives on the line &mdash; not just on the battlefield, but in the fields where farmers cultivate crops and in the neighborhoods where people live.</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="791" height="413" alt="" src="" /> </div> </div> </div> Afghanistan China Corruption FBI Mexico Mohammad Sat, 23 Jul 2016 20:40:00 +0000 Tyler Durden 566891 at Goldman: The Last Two Times P/E Multiples Expanded This Much, The Result Was A Historic Crash <p>It's not just former Fed economists who are <a href="">getting worried</a>. So is Goldman. </p> <p>As we wrote last weekend, "With "<a href="">Stock Valuations At Extremes" Goldman's Clients Are Asking Just One Question</a>", namely how much longer can the rally continue.&nbsp; This followed another Goldman warning from two weeks ago, where as we noted before, "<a href="">Goldman Warns Of A Sharp Plunge In Stocks In "Next Few Months</a>."</p> <p><a href=""><img src="" width="500" height="266" /></a></p> <p>&nbsp;</p> <p>Who knows: maybe Goldman will be right and the market will plunge - it certainly isn't trading at all time highs and 25x GAAP multiples on fundamentals. But for now those who heeded Goldman's warning and traded ahead of a 10% "pullback" have gotten crushed. </p> <p>So has Goldman's chief equity strategist David Kostin finally thrown in the towel? </p> <p>Not yet. In fact, Kostin appears to be doubling down, and as he observes (correctly) overnight, the one sole reason behind the market rally in recent years - clearly not earnings growth as we wrote earlier - namely, multiple expansion, is now substantially overdone. And not just that: as Kostin points out, <strong>there have been only two time in history when the P/E multiple has expanded as much (75%) or more as it has in the current cycle: 1984-1987 and 1994-1994. Both ended with historic crashes</strong>. To wit: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The current P/E expansion cycle is now one of the largest in history. Since September 2011, S&amp;P 500 forward P/E has grown by 75% (from 10x to 18x). This expansion has only been surpassed twice since 1976, when the multiple rose by 111% from 1984-1987 (<span style="text-decoration: underline;">ending with the 22% Black Monday collapse</span>) and by 115% from 1994-1999 (<span style="text-decoration: underline;">ending with the Tech Bubble pop</span>). </strong>During the nine previous P/E expansion cycles the multiple typically climbed by 50%. </p> </blockquote> <p>Thanks, David, we get it. It's going to end very badly. Just maybe tell your friend Bill Dudley to stop pushing it ever higher and assuring the resulting crash will be that much worse, maybe?</p> <p>And speaking of that, will the market continue to levitate on even more multiple expansion or is a sharp drop just around the corner? According to Goldman, the answer is the latter:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Last week’s commentary highlighted several reasons why we believe the current 75% P/E multiple expansion cycle is unlikely to continue: </strong></p> <ol> <li>already extended P/E multiple of 18x represents the 88th percentile of historical valuation; </li> <li>lack of earnings growth with full-year 2016 adjusted EPS expected to be flat for the third consecutive year (operating EPS up 9%); </li> <li>downside EPS risk as low interest rates boost pension obligations and constrain Financials’ profits; </li> <li>rising wage inflation that will pressure current near-record high margins; </li> <li>the prospect of a more hawkish Fed than the market now expects. <strong>&nbsp;</strong></li> </ol> <p><strong>We maintain our S&amp;P 500 year-end 2016 price target of 2100, although 5%-10% near-term downside risk remains high. </strong></p> </blockquote> <p>Instead of ending it on an apocalyptic note, here is Goldman with a useful detour on the most topical issue right now: the Fed model. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The impact of low interest rates on equity valuations is a hotly debated topic among investors. The Fed model compares the gap between the earnings yield of equities (5.7%) and the 10-year US Treasury yield (1.6%). The current yield gap equals 415 bp, slightly below its 10-year average (440 bp) but well above its 40-year average (250 bp). See Exhibit 1. </p> <p>&nbsp;</p> <p>The Fed model paints a similar picture for S&amp;P 500 valuation when using Treasuries, TIPS or BBB yields. A common criticism of the traditional Fed model is that it compares equity returns in real terms to Treasury yields in nominal terms. An inflation-adjusted time series such as Treasury Inflation Protected Securities (TIPS) may arguably provide a more accurate representation of the yield gap. However, the yield gap relative to history is little changed when using TIPS. The current yield gap using TIPS equals 560 bp, slightly below the 10-year average of 640 bp. Similarly, some investors prefer to use BBB corporate bond yields instead of 10-year US Treasuries to represent the cost of capital faced by firms. The current gap using BBB yields equals 240 bp, in line with the 10-year average of 235 bp. </p> <p>&nbsp;</p> <p>As we noted last week, the yield gap may narrow from either direction (rising bond yield or falling earnings yield which means higher P/E multiple). However, the yield gap has already fallen by 393 bp this cycle (from a record 807 bp in 2011 to 415 bp). Assuming the 10-year Treasury yield rises to 3.1% and the earnings yield remains unchanged at 5.7%, the yield gap would be equal to long-term average of 250 bp and imply a S&amp;P 500 level of 2230, 3% above the current level. <strong>Conversely, if the bond yield remains static at 1.5%, mean reversion of the yield gap would require the earnings yield to fall to 4.0% equivalent to a P/E multiple of 25x and an index level of 3070, up 42%. </strong>A more modest bull case would involve a compression of the yield gap to 350 bp with interest rates remaining at 1.8%, implying a&nbsp; P/E of 19x and a S&amp;P 500 level of 2320, 7% above the current level (see Exhibit 2). </p> <p>&nbsp;</p> <p><a href=""><img src="" width="500" height="173" /></a></p> <p>&nbsp;</p> <p>A rise in the P/E multiple above 20x is unlikely, in our view. Although equity valuations are typically highest during periods of low interest rates, the current 18x P/E stands at the upper end of the&nbsp; historical valuation range. During the last 40 years the only instance in which S&amp;P 500 forward P/E exceeded 20x was the Tech Bubble (peak of 24x in December 1999).</p> </blockquote> <p>Finally, some thoughts on what has been the better trade YTD: stocks or bonds...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Bonds have delivered a higher risk-adjusted return than stocks YTD.</strong> Bonds have returned 7.6% YTD as rates fell from 2.3% at the start of the year to 1.6% today with realized volatility of 5. The S&amp;P 500 has posted a similar absolute return YTD (+7.2%) but has been on a rollercoaster path (volatility of 12). The YTD Sharpe Ratio for equities is just 0.6 versus 1.5 for bonds.</p> </blockquote> <p>... and what will be going forward:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Consensus expects S&amp;P 500 will generate a higher risk-adjusted return than bonds. </strong>A weighted average of consensus price targets for all S&amp;P 500 constituents implies an index level of 2330 in 12 months (+9.8% return with dividends). Implied volatility for the S&amp;P 500 over the next 12 months equals 15.9 leading to a prospective Sharpe Ratio of 0.62. Futures imply a 12 month return of 0.7% for 10-year Treasuries (ending yield of 1.7%). Implied volatility of 5.1 results in a prospective Sharpe Ratio of 0.15 for bonds.</p> <p>&nbsp;</p> <p><strong>In contrast, we forecast a similar 12-month risk-adjusted return for equities as the futures market implies for Treasuries</strong>. Our 12-month S&amp;P 500 target equals 2150, reflecting a potential total return of 1.5% including dividends. The resulting equity Sharpe Ratio would be 0.10, similar to the 0.15 ratio for bonds. Since 1990, the risk-adjusted returns for equities have typically been roughly equal to bonds (0.98 vs. 1.01).</p> </blockquote> <p>What Goldman does not touch on, however, is the circular nature of fund flows, where if bond yields do surge - as some are warning may happen soon on fears of an inflationary spike - it will lead to not only a rates VaR shock and massive MTM losses (as big as $2.5 trillion), but also to downstream liquidation in equities, which in turn will lead to a flight to safety... right back into bonds. And so on until something finally does break. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="580" height="363" alt="" src="" /> </div> </div> </div> Bill Dudley Bond Flight to Safety Fund Flows Futures market GAAP Mean Reversion Volatility Sat, 23 Jul 2016 20:18:57 +0000 Tyler Durden 566895 at