Tuesday, December 21, 2010

WikiLeaks, A Semi-Alternative Take

To be honest, I haven't followed the Wikileaks situation very closely, but Naj, my friend over at Iran Facts, got out her 3,000 mile long cattle prod and zapped me into writing about it. No doubt she knows more about the particulars, but I'd best not let that stop me. Cattle prods hurt! (As they say, Naj, be careful what you wish for.) First off, on leaks, an old Secretary of State once said something like, "Anybody thinks they can keep a secret in this town is nuts." To which I say, "Anybody thinks they can keep a secret in this internet architecture is nuts." 

By thinking its own communications so inviolate, the US government was exposed as being both a loon and its own worst security risk. For this effrontery, the streets must now run with human blood, the open internet must be destroyed, demons are being summoned from their crypts in McLean, Virginia, and diplomacy is...well, I'll stop quoting the current Secretary of State for a minute. Seriously, it's worth noting that the US will now start actively aiding and abetting industry efforts to tame the internet as we've known it, get those peer-to-peer free song downloads done while you can, and we can expect a rapid escalation in censorship policies based around shutting down internet provider servers. Again, those steps won't work very well, but it's the best strategy they've got.

Good spycraft and reportage count on a variety of human urges to leak, particularly on lucky combinations of them. Remember the FBI agent who leaked Watergate details to Woodward and Bernstein? I don't either, but he became charmingly known as Deep Throat, and his primary motivation for leaking was that he was passed over for promotion. He was pretty pissed. His secondary motivation, however, was an offended sensibility which bordered on a good conscience, and it was probably this latter quality that tipped the scales of an embittered man towards action and risk.

There's a reason for dwelling on emotional states and revelation, and I'll preface it by unequivocally stating I'm ecstatic WikiLeaks exists, and think it's greater than Brylcreem and pre-sliced loaves of bread; we are likely entering an age when our sins will increasingly, as Jesus said, be shouted from the housetops; it's great that imitators like OpenLeaks are being spawned; it's great that the MSM has its undies in yet another twist; it's great that mere taxpaying mortals can directly view the often petty, weak-minded drivel they're funding. Also, Julian Assange is one gangsta S.O.B. and it's pathetically obvious the US is trumping up whatever charges it can to detain him. And now, unfortunately, I have some questions about the source(s) of this particular material.

Whoever leaked the Pentagon-State cables was no low-level signals intelligence officer feeling some pangs of guilt and disgust, as was apparently the case with the Iraq papers. I don't have detailed knowledge of Pentagon security procedures, only rudimentary knowledge of general security for online systems, but given the breadth and content of the material, it seems very unlikely this leak was conducted by a single low-ranking, low-cleared individual, and far less likely that it was conducted by multiple leakers acting in concert. Only a high-level administrator or bureaucrat with a lot of knowledge, free access, and time on their hands fits the profile of someone who could pull this off. The Pentagon Papers era is long gone, when one Daniel Ellsburg could simply take a microfiche copy of a classified report and drop it into the lap of The New York Times, or surely when any newspaper published such papers in full without heavy deliberation and editing. Point being, even back then very few people besides Ellsburg had a high enough security clearance to get those papers.

Yes, I'm making the dangerous assumption that the Pentagon and State Department have security procedures and follow them to some extent, but all that money they've gone through has probably been spent on something and paranoia has institutional tendencies. More importantly, any such person or group looking to leak would have to be really, really motivated. Like motivated enough to be executed for violating the State Secrets Act. Motivated enough to face the ongoing scrutiny of a withering internal investigation and polygraph tests. And this in order to merely provide proof of what we in The West already knew with excruciating, repetitive clarity, that many of our emissaries and generals are first-order twits? Sorry, something just isn't adding up for me yet.

There's no doubt the US government is conducting a cyberwar against WikiLeaks, no matter how Man of La Mancha, hypocritical, and technically ignorant that may be. It's a predictable response that will rain repercussions like canned hams down on us all in terms of constrained liberties and commerce. But maybe this really wasn't a leak at all. It lacks the classic, targeted earmarks of a leak and looks more like a well-planned intelligence operation intended to embarrass the West. This looks like the famously dreaded Fuck You Flourish. Penetration could have been gained via patient internal sleeper personnel or a back door, possibly with the former activating the latter. It may have been nothing more than a neat crime of opportunity, but along with the polygraph tests, the Pentagon might want to carefully review its list of network vendors.

So much for Obama's harping on the Chinese about greater transparency. This is like being at a formal dinner in the South, listening to your hosts happily extol the benefits of racial equality after the Civil Rights Act and how thankful they are those bad old days are finally behind them. Then a group of young kids straight out of To Kill A Mockingbird run inside yelling that Tom Robinson just raped Mayella Ewell, the Klan is rounding up to lynch him, and your host grabs a long white robe out of a closet and bolts out of the the house. You can perceive a real democracy by how it welcomes the currency of clear information. This is not that.

Friday, December 17, 2010

Does The Republic Still Stand? Part Three: Not Really

If by "Republic," you mean Goldman Sachs, then yes it's doing really really well, so well that "still standing" is more like "surveying the world in a towering, thrustingly Brobdingnagian manner." Patient and perceptive Phil over at Perils of Caffeine in the Evening asked in the comments section of Part Two of this series, seems about a month ago (it is), "Does this mean I should buy Goldman's new 50-year bonds?" That's a great question, Phil. Let's share a virtual martini before I advise you to sell out your entire Berkshire Hathaways position.

Goldman's first $1.3 Bill bond issue, originally priced at 6.25%, was so oversubscribed that the final yield went down to 6.125% and the instruments sold out in about 5 minutes. So for practical purposes the question now becomes, will Goldman issue more? Either way, it's important to supplicate the Beast, one bond issue being neither here nor there, so I recommend setting up a large and handsome altar in your front yard, erecting an imposing and permanent Buddha statue not less than 8 feet high with burning incense and shiny flags sticking out at trapezoidally proper angles, and a laminated picture of patron saint Hank Paulson's face lovingly hung over Buddha's. If that's too much for you, a stopgap for the holiday season would be flashing lights that say "WELCOME, GOLDMAN! SACHS TOO!" hung in your front window instead of the outmoded "MERRY CHRISTMAS."

Now that we've had that virtually refreshing pause, I am about to channel the Ghosts of Stock Markets Past in trading floor lingua fracas, circa 1989. One of my mentors, or more accurately a guide through hell, happened to be a 32nd-degree Master Mahan of Fuck-Speak, a true virtuoso and the only person I've met who used "infuckitively" as a word. Forgive me in advance, though I'll censor out the dirty stuff:

"Phil-Phil! I hear you wanna buy those big swingin' Goldmans! C'mon, though, a measly 50 year term? You *%(#*#@ kiddin' me? If Goldman Sucks wanted to really tell the other banks to go $#$^ their grandmothers, those pompinos woulda gone with 100-year bonds straight outta the *&^# and paid, I dunno, let's say 6.66%. HahahaHAAA!! {Grand Master playfully punches you in left shoulder, making you nearly fall down.}Well I say *%(# 'em, buncha friggin finocchies playin' widdemselves, only sold, what, like rat shit, $1.3 bill last month? Whaddathey, *%(#^*&@^ Germany? *%(#^*%&* Switzerland? Goddammit, this is America! My Aunt Mary coulda made more than that blowin' sailors! Ya never know, maybe the *&$(%&(#%^s find the #^*&^s to ante up, so me personally, I'm gonna hold out for those big 100-year marangas and go in-fucking-finite. {Grand Master holds two cupped hands up and well out in front of his chest, indicating sign language for gigantic firm female breasts, and makes corresponding antic gestures.} But with that ass-raping 5-year call on the 50s? They can %*(% the $%(* outta my @##*&@^&$%^& @#%$^&$#!"
Emerson once wrote, "A man must be clothed in society, or he shall feel a certain bareness and poverty." One must naturally incline to agree whilst endeavoring to be more than a mere collection of personal vices, but on a trading floor everyone,  your friends most of all, attempts to rip that social clothing off and lay you bare. Reasons for doing so are the usual boredom, depravity and sadism, of course, but it's also because the sharp point of a market is a deeply cynical place, and your only real purpose for being there is to make money. A market is a collection of arguments over value, and real fistfights are apt to break out at any time. I've seen them, and once saw a grown man fake a heart attack to avoid being physically attacked. I've also seen a real heart attack, sex in the bathroom, suspiciously white nostrils, a famous trader taken from the floor in handcuffs by Giuliani's goons, and a close-up video of a female broker giving birth played from every TV on the floor. The last one made everybody stop what they were doing and more than one man in my presence had to wipe tears from his face, and another said "Dat's da most byootiful ting I eva seen!" Markets are like Geiger counters for emotion.

A big reason for all the undressing is that the most dangerous and expensive commodity in a market is bullshit so credible it makes you lose all your money. Most of the people working the floor around me grew up on the corners of Bedlam and Squalor and heaped derision and scorn much like a patellar reflex because it correlated with financial survival. They would never have failed to take notice that Goldman Sachs has started acting like a sovereign nation, and my real mentor, the last independent floor trader on either exchange at the time, would easily have seen the intention behind these Goldman Longs, as well as significance and likely consequences. On the surface, a bond yielding 6.125% over 50 years looks pretty damned attractive, sorta like Nicolette Sheridan did in that red bikini top and sarong in which she played The Sure Thing. Hubba hubba! But when I first read about these 50s they're dipping a toe into the water with, I asked myself, "Why would they borrow money for 6% per year when they can get it for free from the Window, and already drew upwards of $600 Bill last year?"

That's on top of getting completely bailed out on $160 Bill of bad AIG bets. And wouldn't the ability to front-run every Fed bond auction be enough for even Gordon Gecko? Issuing these mid-range vehicles begs immediate you-and-me-sense, and it may be unprecedented unless your bankers happen to be Hoares (the world's oldest surviving investment bank, and pun intended). Come to think of it, the 484 rolls of toilet paper I've already stacked in the Zombie Bunker are unprecedented too; I figure we might be down there for awhile, and what if we ran out? One thing is sure. Goldman felt October was time to test the market for these long bonds, and that was right when they were hearing, ahead of everyone else, what the Fed's plans were for Quantitative Easing Two. (The bar chart above shows Treasury holdings in November 2010, when the Fed became the largest owner of US debt.)

To roll with a metaphor in the previous paragraph, this 50-year issue is the equivalent of Goldman getting up in the middle of a movie and loudly announcing it has to drain its main vein. It proceeds out past the exit sign, sets the garbage can ablaze then leans back in and starts screaming FIRE! Just as any modern investment banking MBAs will do when they feel well positioned, their incentives are aligned and pointing straight at that next Christmas bonus. Goldman Banksters have been paying close attention and correctly and finally responded to global retail investor desire for yields between where so much scared money flew down to, (i.e., out of retail equity and mutual funds and into Treasuries paying well below real inflation), and to where so much hedge fund money flew up into (to corporate junk bond packages yielding between 7 and 13 percent, where there hasn't been enough product to satisfy appetite). The Banksters saw the blips going into commodities, which have made moonshots as the monetary base went pure vertical. They saw the housing sector resume its slide, banks hoarding cash and not making loans, and they saw a municipal bond market obviously about to go bidless sometime this Fall or Winter. They drew a few conclusions: Treasuries Will Tank. We Can Become As Gods. And Rule Humanity From Our Ranches In Costa Rica.

There was a yawning yield vacuum, and Goldman, having effectively taken over the US government's fiscal and monetary policies two years ago along with its Treasury and central bank, can step in to fill it with vast, practically infinite amounts of free capital and serve as the pricing benchmark for a whole new market in mid-yield bonds. Current investor sentiment will price Goldman's debt more favorably than almost any other country's (whoops, Freudian slip). Goldman is kinda like a doctor who admits himself into the Emergency Room with a broken leg in order to take over the entire hospital. At its sole discretion, it took over $600 Bill of the first $3.3 Trill in 2008 bail-out electrons. It has taken more since then and given an accounting of where it's put the money to nobody. 6.125% per year on $1.3 Bill over 50 years is indeed rat shit to them. So what's the point? Is there a deeper agenda? You can count on me to think so.

Goldman has become far more than just an investment bank in a globally securitized world. They are the First Bank of the New World Order. The geniuses Goldman employs out of the finest MBA schools and physics departments, the thousand-yard-stare boys willing to work 90 hour weeks to play grab-ass with each other, have determined that sovereign interest rates must go way above 6 or 7 percent, bailouts be damned. Fortunately it took them a couple years for this play to completely dawn on their cocaine-starched white collars and minds, because long-term bond plays are very dangerous investments. Fortunately my mantra position of huddling under the office desk with my AK, loaded banana clips going snik-snik-click as I check them in turn while watching It's A Wonderful Life as I munch away on Costco-sized bags of Cheetos pulled from long-term food storage no longer seems entirely paranoid. At least to me. Inflation could easily send long-term bond yields up by 3%. Or 5%. Or 15%. Pick a number. 

Here's the one thing markets really suck at: properly discounting adverse long-term risk. The less recent volatility, the more presumption of stability. Just because aliens haven't landed on the White House lawn to meet with President Obama doesn't mean they're not going to. Or that they haven't had more private consultation. But even under more imaginable scenarios, such as a mere 3% increase in long-term yields due to a mild inflationary frisson (and the 10-year Treasury yield has already risen from 2.3% to over 3% in just the past two months despite the Fed's cunning plans to keep it low), then the face value of those pristine Goldman 50-year bets would fall by about 33%. How's that for capital preservation?
Ah, volatility. She whom age cannot wither nor custom stale. The European Union is imploding (more on that next time) and markets have already priced various sovereign debenture yields up over 10%. An alleged European Central Bank and the IM-effing-F are riding in to save bondholders with taxpayer money, and to unleash austerity programs which have about as much chance of succeeding as my plans to own Magritte's "Use of Language" (I've built a backlit frame!). Put simply: Goldman Sachs is betting on dollar hyperinflation, a plethora of imitators have lined up to dangle bait, and that's how market vacuums get filled, often with nasty stuff sucked up loose from floors. 

There is every reason to think this new class of bonds is why the Fed is having so much trouble selling its 10-year Treasuries. Mexico has just issued dollar-denominated 100-year bonds. Venezuela and Brazil are issuing similar instruments. Investors are gobbling up recent 50-year issues from Norfolk Southern, the Netherland's Rabobank, GDF Suez and, umm, I'm having a little trouble typing this last one out, I t a l y (aaagggg, swallowing my tongue... the seizures hit again...hey, those Mexican Centominos are starting to look pretty good!). This long bond gravy train is on motion lotion and it's got biscuits for wheels.

If you think the dollar is going to hyperinflate, it makes perfect sense for you to sell as much debt as you can and convert it into something of real value. Then you pay off with cheap-o dollars in the future. This is a really great time for anyone besides the US Treasury to be issuing bonds, and it's just the tip of the iceberg. It's also a great time to take credit card companies up on those 0% for 15 month offers and buy RonCo products. US Treasuries aren't priced anywhere close to reflecting their true default risk. So the Fed has become that chap so sought-after by Wall Street professionals, the Fool in the Market, and its Chairman is too stupid to even have seen the vacuum much less recognize it as his own creation. Treasuries are someday, maybe in 2011, going to look a lot like the average American Muni bond: gangrenous. Anyhow, a violent market argument has started and it's not too hard to see who's going to get the beat-down. The US will next attempt to force various countries to buy its Treasury bonds at the barrel of a gun, or its sudden absence. There's no other way to keep selling them for long.

What are the chances the sovereign states of Goldman Sachs, Mexico, Venezuela and Brazil are going to stick around for the next lifetime and pay off? Doesn't matter, not relevant. The new market has been created, is swelling, and the music blaring in it is rock and roll, so you don't have to wait for salvation. It's right here. I recognize my future masters, and I want in. After all, you can still buy really neat stuff with dollars and my bonds will be backed with high-grade toilet paper and Cheetos, and they will yield 6.3%. 6.5% if you get in right now. When Goldman Sachs buys Nebraska and people are fighting each other to become indentured servants on its farms, it'll be even more obvious who's running this country. So to finally answer the question, Phil, I would wait for the inflation wave to crest, wipe out the face values of the extra-long bonds, and then step in and buy a basket of some that aren't defaulting.

Wednesday, November 17, 2010

Does the Republic Stand? Part Two: How It Has, and for How Long...

Other than my mental super-powers, the ones I struggle with every day to keep them in peaceful check, the United States is the only military power with true force projection capability. Without next-generation weaponry like mine, the government must rely on oodles of obsolescent hardware, I mean stuff that needs actual people to work it and isn't on SkyNet artificial intelligence yet, to bully its friends and enemies. The US has 11 complete aircraft carrier strike groups (CSGs or CBGs, formerly CVBGs in Pentagon parlance, pre-formerly CARBATGRU). These are the only 11 CSGs in existence. Britain, France, Russia, and Italy had a few but all decommissioned theirs, saying, "Why bother? We'll develop mental super-powers!" Thailand and Brazil do have one vanity carrier each, but sadly lack the fleet and orbital patrol capabilities required to protect huge floating things full of juicy jet fuel, and to attack over any distance, they'd have to deploy sails.

Auric Goldfinger and Dr. Julius No would hold lively debates on the wisdom of building aircraft carriers, each of which are approximately as expensive as an average country. (Bond villain Interviewer: "To best achieve world domination, is it better to: A) rob Fort Knox; B) threaten to nuke London; C) build a death ray on a remote island, or; D) build Carrier Battle Groups? Discuss.") Return on Investment (ROI) aside, the purpose of a real carrier battle group is to send a coked-up maritime Warren Zevon sort of Werewolves of London message:
"You better stay away from him...he'll rip your lungs out Jim! But oo-woo--I'd like to meet his tailor."
The real thing even comes with lawyers, guns, and money to deal with the predictable fallout that rains down in its ports of calls, otherwise known as Drunken Puking Disease Pits (DPDPs).
For context, merely one (1) of these floaty assemblages embodies sufficient force projection and firepower advantages to defeat all the fleets that ever existed. At the same time. If the US parked any one of its strike groups within range of Ireland and the UK right now, it could blow the holy shits out of them despite the combined maximal efforts of both countries to the contrary. Our military capabilities so far outclass those of any competitors, in fact of all others put together, that conventional resistance is Not an Option (NO). While it's true that India and China have announced plans to outfit militarily viable CSGs, and have each increased military spending commensurately over the last decade, what they fail to explain is that their fleets will be comprised of weaponized Jet Skis and Sea-Doos commanded by Jacques Cousteau's kids, because at least they have some experience with oceans.

That India and China would even think of building aircraft carriers was foreseen in the mid-1980s by Mssrs. Cheney and Rumsfeld, two brilliantly evil agents of Ernst Stavro Blofeld. These Blofeld agents managed to take over the US government from the inside, then generated a CIA study that examined with surprising competence the likely future economic growth rates of those countries; the study predicted the expanding military powers of both and assumed the imperial extension of either or both, particularly westwards to Iraq and the Caspian Basin to seize the necessary hydrocarbon resources to fuel further growth.

The Blofeld Study was evangelized to thought leaders and policy makers, the more dimwitted legions of whom promptly be-shat themselves. The dimwit panic was the impetus for a so-called Neo-Con movement, which was neither nearly as neo nor as con as my Aunt Sophie, with its most cynically be-shat members organizing and formalizing themselves into something they called PNAC (Paranoid Narcissistic Asshole Chickenhawks). This group eventually caused or allowed a falsely flagged causus belli to occur. Hence GWOT ensued, which sounds a lot more menacing than SPECTRE, and is. 50 years from now people won't know what the acronym stood for, but its mere sound will signify. Of course that's assuming people will still use the alphabet.

This movement envisaged the need for a Jupiter-like military that could beam lasers from Mars onto skateboarders, also sagely foreseen as the Enemy. After 30 years of massive investment, they've just about achieved the Operation Exploding Heads from Space goals, and have quite a lethal bag of new tricks, including tanks that can microwave cattle right on the hoof! Believe me, I'm too freaked out to lie to you and am writing this while hunched under a book-reinforced desk. In this world of mad and brutal men, the misery humans suffer and visit upon each other is most unleashed by those who love others more than themselves and only want that love to be recognized and returned. When you don't or can't comply, then that is precisely why they must kill you.

Any hapless fool who wishes to actively disagree with PNAC policy goals must resort to so-called asymmetrical warfare, which primarily involves becoming an adept at hiding in plain sight so as not to have your head exploded by space weapons. As in, "No, no, I'm not about to blast your sweaty hyper-aggressive grunts to kingdom come with my cell phone speed-dial hooked up to trigger the fuse on a 40 year-old artillery shell. See, I'm smiling, we're all friends...and I'm just peeing in this ditch right here."

The practical need for such superiority arose from the US defeat in Vietnam, wherein it failed to kill every single Vietnamese person. This wasn't allowed to happen because the American public, consisting of hippies, Jewish intellectuals on welfare, militant blacks and Walter Cronkite (who was on LSD at the time) stormed the Pentagon with Molotov cocktails. Yes, I realize this never occurred. But tell that to the Pentagon, which codified these vital lessons into a military doctrine known as American People = Vietnamese (AP=V).

Since the US was bankrupted by its failure to kill Vietnamese people, Dick "No, Mister Bond, You're Going to Die!" Nixon simply foreswore the gold standard at Bretton Woods in 1971. The finance ministers of Germany and France complained that without gold backing it, the US dollar would only be worth the cotton it used to be printed on, to which Nixon coolly replied, "What part about the bombing of Dresden did you NOT understand? I think someone might need another lesson in high finance."

Nixon made a deal with Saudi Arabia to price its oil exclusively in dollars in exchange for perpetual protection by CBGs, for not letting an oil embargo get in the way of friends, and for getting richer than Croesus. Thus has the dollar been backed by oil ever since. The dollar's purchasing power, and the US ability to nakedly issue debt and then pay it off in imaginary money, and to generate full faith and credit for that imaginary money, is correlated 1:1 with the ability to blow things up real good. Sure, China has bought some fat oil field rights in Iraq, hydrocarbon and rare earth mineral rights in Africa, but if the Iraqs or Africans choose to renege, what could China do? They could build one ACG in 10 years, or they could truck a few million troops to the border of Tajikistan, drop them off and tell them to "march east for a few months, and make sure to make a left turn after you pass Tehran."

Since going off the Gold Standard, the US has increasingly enforced its currency regime in hard-power fashion, a fact not lost on Little Foreign People. Remember what happened to Saddam Hussein? The Big People know he went off the dollar and started selling his oil for Euros in early 2001, the ultimate no-no, shortly before Iraq was invaded by sheer coincidence. Just like Iran started selling its oil for Euros later and then was invaded by sheer coincidence. Yes, I know Iran wasn't really invaded. But tell them that. And tell Afghanistan, Africa, Indonesia, Paraguay, most of South America, Pakistan, and northern Florida that, too or anywhere else has erected hundreds of new military bases so far this century. All this has been flip-out expensive, with the real US military budget (including the NSA, NASA, Homeland Security, CIA, DEA, the Capo di Tutti Capi, et al) now tipping in at well over $1.xtrill.

Harsh is the desert that quickly leaches bones. This is how it has gone, and this is how it will be done. Here are the bones, here is the heat of the sun, here is how white they will leach: in September and October, merely anticipating the Fed's QE2, dollar-denominated cotton prices rose by 54%, corn by 29%, soybeans by 22%, orange juice by 17%, sugar by 51%, wheat by 36%. How's that for stimulus, Alice? It'll take 6-9 months for those new price increases to pass out into products and services. Yes, Virginia, there is a Hyper Inflation.

It hurts to watch Old America sink like this, like a ship still under power but taking water on evenly, steadily faster, coming in from all sides, heading to the deep where God's voice ceaselessly resounds. At this moment Goldman and Sachs has chosen to strike. Their torpedoes are 50-year bonds yielding 6.25% interest, these will sell like Madoff Farms Municipal Bonds and will serve as the pricing benchmark in an entirely new market, one in which Goldman & Sachs is the Last Bank Standing.

It already controls the fiscal and monetary policy of the US Treasury and Federal Reserve Bank. It will soon control the International Monetary Fund. And the best part is, they're doing it with money they got for free and their idea is to make our children pay. The money is virtual, the consequences won't be. I think hell is about to meet heaven, and vice versa. I don't know all of what will happen, but I know where the gunpowder is stacked, I see the wick, and I see how it just lit. Will be back when I can. Until then I'll be smiling for the cameras and peeing in the ditch.

Friday, November 05, 2010

Does the Republic Still Stand? Hmmm...

It's a good question, especially for me, since on Tuesday night I learned from Lord Wife that there was an election or something, which she construed as some kind of disaster having to do with Republicans and corporate carpet-baggers. To which I said, "Wait, the Republicans won?? That's fantastic! Now Baby Hugo will get his concealed carry permit and we can send him to day care with the 38 Special. It's about damned ti---"

Next thing I knew, a dream was fading away, one in which I was discussing speech impediments with a young, nubile Barbara Walters; she had been explaining to me in delightful detail how she finally conquered the letter R. Gradually, Lord Wife's concerned face began to come into focus out of a gauzy, LED-like haze. She was holding a sturdy Calphalon pot by its handle, looking down at me lying on the kitchen floor and screaming, "No, no, go back! Go towards the light, you mental pygmy! TOWARDS the light!" Don't get me wrong, women's suffrage was a wonderful thing, as was the Great Depression which soon followed, not to mention...well I'll just let it go at that and start humming "We Shall Overcome."

The Pugs may sell us down the Cuyahoga slightly faster than the Dims. Or not. All I can tell, there's a tremendous puckering tension in this country between people who want to make it better via government and those convinced that will make it worse. Government? What government?? With all due respect, sir, I see no government here. What I've been paying my spare attention to makes elections, schmelections look like the pathetic little speed bumps they've installed around my neighborhood to try and get me to slow down (I know it was you who complained Louie, don't even try to deny it), and which I continue to proceed over at a sporty 45 mph. Now, if it were the basis of a Reality TV show, the object of my attention might well be titled "When Icebergs Attack" and might even intro with unintelligible gibberish such as this:
To provide operational flexibility and to ensure that it is able to purchase the most attractive securities on a relative-value basis, the Desk is temporarily relaxing the 35 percent per-issue limit on SOMA holdings under which it has been operating. However, SOMA holdings of an individual security will be allowed to rise above the 35 percent threshold only in modest increments.
Whuuh? Didn't understand that? You're lucky. Because chances are pretty good you won't be hunted down, tied to a stake, and burned by an angry mob in, oh, about 2 years give or take. The important take-aways from the bankerly blather above, issued after Wednesday's Federal Open Market Committee meeting, are:

1) yes, they are actually calling government debt instruments by the name of a sacred ritual drink from the Indo-Iranian Rigvedas.

2) even better, Soma was the drug Aldous Huxley wrote about in Brave New World, his futurist vision of what happens when the Federal Reserve enslaves everything, passes out the SOMA like farmers grow corn syrup and make everybody high as fucking kites until they must be killed for the good of society, i.e., before they have to be paid any of their promised Social Security benefits.

3) the post-modern English translation of the SOMA pronouncement is, "All rules are out the window now, we're just making this up as we go along anyway. What we ARE going to do is monetize the US government debt right in front of your face while mumbling incantations not even we understand anymore, only we're going to do it a lot faster than before, wearing our most reassuring suits and smiles. Resistance? Hahahahaaa! You'll beg us for quick death. Now drink your SOMA and get back to hallucinating, you mental pygmies!"

4) SOMA stands for System Open Market Account holdings, or what debt the Fed has amassed. It's over $2.xtrill now, and with yesterday's announcement we can expect it to grow another $1.xtrill by early next year. The Fed is about to pass China as the single largest holder of Treasury bonds, and I fully admit that "1.xtrill" is not even a real number. Which is exactly my point. Total yearly global GDP is said to be @$55.xtrill, not including the Vatican, so whatever the Fed is planning on spinning out of its fiscal/monetary rabbit vortex-hat next, it'll be LARGE.

There's a lot more of this obfuscatory exercise in concentration camp euphemism than just two sentences, there are reams. Reams and reams, with a whole lot of reaming going on. A curious person might ask: how long, realistically, can the Triad keep getting away with this? The Fed gives 0% loans to banks, the banks buy stocks to keep the stock market trending up, they buy Treasuries half-heartedly and pocket a 2.7% difference above their 0% loans, obviating the need to actually lend. By continuing to service each other's yields on Magic-Backed Securities (MBS), the international banking system (IBS) often exudes a curiously life-like appearance of continuing to function (CTF).

When it fails to function, starts puking and drooling and its diaper overflows, the Fed buys whatever Treasuries and unwanted mortgage-ish bonds don't sell, loans money to Iceland so it can buy ads for sex tourist campaigns, then J.P. Morgan's secretly embalmed Hand of Glory is waved and it's pronounced "stimulus." This is why I'm constructing a hidden bunker in my basement, or more accurately, underneath my neighbor's house.

For more able, stable bloggers than I get into decoding stuff like Reverse Repo Counterparties, Settled Holdings, Maiden Lane Transactions (tell me more, baby) and explain why negative Treasury yields (don't ask) are now occurring. My global finance learning-perch was street-side at The Curb, so the vividly profane, mayonnaise-stained trading language of my tutelage springs effortlessly to mind. One might call that learning experience many things, but boring isn't one. You'd hear the following sort of thing there on an hourly basis:
Intro, scene, Fed metaphor: you're minding your own business, going to a neighborhood farmer's market. On the other side of the street you see they're throwing a big party in the parking lot; the mayor, city council, and chamber of commerce sit on a raised podium, all roaring off-their-asses drunk. The lot is cordoned by cops in riot gear, ringing the banners, confetti, cheerleaders and high school band. A banner in front of the podium reads The American Way of Life; under it a bunch of men are dancing. Something looks odd about the dancing from a distance, and as you draw nearer, a gap in the crowd opens and you realize the performers are from the insane asylum and they're doing a giant circle jerk. They're jumping in rhythm and howling "Stim! You! Late! Stim! You! Late!"
I could relate other financial metaphors, but they're too dirty. In the annals of sovereign finance, what these dubious, dogmatic currency assassins are doing is Feast of the Mau-Maus bad. Hieronymus Bosch painting bad. Aleister Crowley summoning Satan to eat a May Queen's soul bad. It's ghastlier, grislier, and on a far grander scale than any swindle that's ever been run. At least the Tulip Craze was just about flowers. The South Sea Bubble took down two kingdoms, and that was just over a few far-off islands that wiped out some speculators who were already rich.

What we have on our hands now is about the homes we live in and the land underneath. The banks claimed ownership of them, leveraged their values by two orders of magnitude, then couldn't pay their investors off. Meanwhile, the speculators aren't being wiped out, they're the ones being given free money. To a simpleton clouded by news cycles, illicit substances and fiat currencies, this means everything's going to be just fine and I'm a raving lunatic. Which reminds me, we're going to need a second 12-gauge shotgun to back up the electric fence.

Orwell feared nations that banned books, Huxley feared a society in which nobody wanted to read them, and it looks like we're going to get the worst of both. Books or no, you catch on that Empires can get away with a lot because, well, they're frigging Empires. So in that context you could reasonably answer the little question posed above with "Quite a while." In following posts I'll lay out some consequences of monetizing debt, explain why Goldman Sachs is about to eat the Fed's lunch (meaning ours) and in all probability will rebut myself. Pun intended.

Tuesday, November 02, 2010

Next Year's Halloween Post

Above is the unofficial winner of our slack Halloween costume contest, a zombie offering up slices of his brain. He wins every year, of course. I had hoped to post the old H.P. Lovecraft heebie-jeebie well before the party Saturday night, then before bringing the kiddles out trick-or-treating Sunday night and bringing them back loaded to the pumpkin tops (Cousin Brady: "This is too heavy! Help, Daddy, I can't carry it any further! Cousin Daddy: "It's your candy, you took it from those people, and you can either carry it home or you can leave it here." Silence...then the sound of a plastic pumpkin bottom scraping and bumping across sidewalk.) Anyhow, here goes Lovecraft's 'Halloween in a Suburb:'

The steeples are white in the wild moonlight,
And the trees have a silver glare;
Past the chimneys high see the vampires fly,
And the harpies of upper air,
That flutter and laugh and stare.

For the village dead to the moon outspread
Never shone in the sunset's gleam,
But grew out of the deep that the dead years keep
Where the rivers of madness stream
Down the gulfs to a pit of dream.

A chill wind weaves through the rows of sheaves
In the meadows that shimmer pale,
And comes to twine where the headstones shine
And the ghouls of the churchyard wail
For harvests that fly and fail.

Not a breath of the strange grey gods of change
That tore from the past its own
Can quicken this hour, when a spectral power
Spreads sleep o'er the cosmic throne,
And looses the vast unknown.

So here again stretch the vale and plain
That moons long-forgotten saw,
And the dead leap gay in the pallid ray,
Sprung out of the tomb's black maw
To shake all the world with awe.

And all that the morn shall greet forlorn,
The ugliness and the pest
Of rows where thick rise the stones and brick,
Shall some day be with the rest,
And brood with the shades unblest.

Then wild in the dark let the lemurs bark,
And the leprous spires ascend;
For new and old alike in the fold
Of horror and death are penned,
For the hounds of Time to rend.

Tuesday, October 26, 2010

Politics, Porn, And A Monstrous Silence

Hey, it's only been 9 months since my last post. That's only a few weeks in dormant-blog years. Now, I could spin out a tale of being kidnapped by a drug cartel in Juarez, or maybe holding off foreclosure agency thugs while dodging the claws and fangs of their relentless scud-launching attack-kittens. (That very last part, unfortunately, is pretty accurate, attack-kittens being what they are.) The truth is, there's just been a lot of duct tape in my life, most of it involving children and new relatives, and most of it good. Full disclosure is inadvisable, and would be too long.

Shorter and sweeter, our littlest one is about to turn 2, and he's probably my last opportunity to wallow in the sheer animal affections of a living being who is completely yours, and, when not being impish and trying to maim or kill other living beings, purely innocent. So I took him up on the offer, and compared to what's been happening in the world (the recorded and loud-spoken phrase "Mind The Gap" is playing in my head right now, in an ominous Oxford accent), the choice seems wise enough. Of course, my toddler master is confident I'm his personal property, and there are exigencies accompanying that status, such as being pinned to the bed, ridden like a horse, and otherwise not being allowed to move. I've missed writing as an outlet, blogging particularly, and now, there's something for the blurting of which can't wait.

I really hate politics. (That's not the blurting thing, exactly, I'm winding up for something more specific.) To me, watching politics is an annoyingly great deal like watching porn. They're both highly repetitive, the acting is nail-across-chalkboards bad, all the basest possible human behaviors are nakedly celebrated and displayed whether you want to see them or not, and here's the worst part: they fully expect you to watch, enjoy and praise what they're doing. My kiddie affection break has been great, but politics are, apparently, a necessary part of the human condition, and have in the past 9 months predictably devolved to a yet more obscene state of baseness; I've been as vigilant and knowing as a metaphorical Berlin hausfrau tracking the Red Army's progress through Poland circa Spring, 1945 as my country's armies declare strategic victory with each debacle and renewed attack to the rear. A ring is about to close around the city, and a decision to either leave or bury the valuables has arrived.

Politics are beasts with two backs. The beasts are almost here, and by now you surely know some of them by reputation. It will be of utmost importance to know their leaders intimately, since a raw and brutal ideology, no matter how demonstrably wrong, deeply cynical, or misguided it may be is about to be administered to the full. One leader's name is Goldman, the other goes by Sachs.

Wednesday, January 20, 2010

Ode To An Old Ford Truck

Recent politics make an unwilling participant pine for the good old days. Many of mine fortunately comprised a smooth bench seat, flimsy lap-belts, and a sightly lass crowding me in a Ford truck. This Craigslist ad for a '65 F-100 transcends its genre by a far piece, so far it's told with a sigh, ages and ages hence, with fitting humor and honesty. Pics of a vehicle less traveled:

(Hat tip to Blunt Jackson)


The late Dick Helmold, of Helmold Ford in Raleigh, told me that in 1965 the Ford Motor Company began to use inferior steel in their truck bodies. Weakened the stock, he said. I'm pretty sure he was correct.

More rust than paint, dry-rotten tires, one missing and three mismatched hubcaps, a gas pedal that sticks and brakes that fail (DOT-3 is my co-pilot), no radio, interior lights, or heat, but with a three-on-the-tree gearshift and an amusing horn, this heart-breaking truck is difficult to give up, or even to give away. The driver's door opens only from the inside, so you must enter the vehicle through the passenger side door. Fortunately, the bench seat makes it a breeze to slide across. You may exit via the driver's door, but please don't slam the door shut, or the window will fall down the well and I'll have to take the door panel off to pull it back up and re-engage it with the window knob linkage thingy.

I have owned this dysfunctional vehicle around 18 years. I promise it starts; you'll just have to be patient. The application of jumper cables is a given, so you will need another vehicle for that, and a little cleaning solvent sprayed in the carburetor helps, as long as you don't overdo it, because then flames will shoot out of the engine compartment when it kicks over. If it finally does start, on the 14th attempt, the neighborhood children usually stop what they're doing, because they know that as I crawl up the street in first gear, I'll be laying heavy on the "ahh-OOOGG-ahh" horn and embarrassing their parents who should by now be inured to this spectacle.

This truck can only live in Carrboro. I can't remember the last time it went to Chapel Hill. It is so not Meadowmont. If it showed up in the Oaks and leaked fluid on the golf course, someone would call 911. If it tried to drive up and down the hills of Lake Forest, it would get sick and throw up.

When you see it on the street, though, this rattling deathtrap is a quite the head-turner, even as it tends to slip out of first gear with a loud bang, as if the non-committal transmission is in active rebellion against any rules of engagement, and must be coaxed gently back in as soon as the gears stop whining and grinding and throwing their little tantrum. This is most likely to happen at noon in heavy traffic, in the middle of a left turn at a traffic signal, downtown. I'm not proud of it, but I admit that I bear some personal responsibility for many of the multiple-light-cycle delays in Carrboro since 1991. When the bed of the truck is overflowing with three cubic yards of mulch or groaning under the weight of the rocks from a dismantled farmhouse chimney, I can swear that the leaf spring suspension is literally cracking in two beneath my bench seat as I motor slowly along the two-lane road while the other drivers line up behind me, waiting for their chance to pass. Some of them give me a happy thumbs-up gesture, or roll down their windows and shout "I love your truck". The others, I assume, are silently wondering what kind of jerk would over-compensate for his shortcomings by foisting this ersatz mockery of a truck upon the rest of the driving public. Honestly, though, am I really so different from the farmers who used to drive their tractors into town for a haircut at the Friendly Barber Shop? Well—yes, I am. I grew up in suburban New Jersey for starters, and have a couple of college degrees, so I don't exactly have my rural bona fides. Luckily, to date, nobody has actually yelled at me, "I hate your truck".

I first suspected something was strange about this truck twelve years ago, when it decided to sit in our yard on Maple Avenue for the entire month of December, dressed effeminately, draped in foliage and refusing to do any work whatsoever. This truck loved Christmas; it truly lived for the holiday. It would get all giddy around Thanksgiving, pulling old boxes of its grandmother's Christmas lights out of the attic. At first, I was embarrassed—what would the neighbors think, and all that stuff that tells you more about my own fears than anything else. I must have thought it was just a phase, but in retrospect, of course, I was in complete denial. And even if it was the truck's idea, I was definitely an enabler. My wife said, "Let it do what it wants to do. It's not hurting anyone." And in time, I realized that I still loved it, that being different was okay, and who was I to tell it not to follow the internal combustion engine at its heart?

But the truth was that over time, the truck had become increasingly unreliable. Like Lindsay Lohan, this baby is one hot mess.

For the past two years, I've kept my increasingly unstable truck in a kind of halfway house, sort of a "Club Chevy Nova". I've left it parked on a lot I own along the hill on South Greensboro St, below the road grade. The only way out is a steep incline to the street. You know what they say: out of sight, out of mind. It wasn't invited to my stepdaughter's garden wedding at our house in May—it just sat and sulked, full of bent-up metal poles, a discarded lawn mower and cans of old paint. I won't even try to take it out without getting a spotter to halt traffic in both directions while I burn out the clutch climbing up the driveway. The last person to perform this duty was a wide-eyed impoverished sculptor (you know the Carrboreal archetype) who claimed to love the truck just as it is, and likely only agreed because he wanted to buy it from me, but I don't think I dislike this young artist enough to do inflict any more suffering upon him. Maybe if he wants to just plant it in his yard and nurture it...

So over the last 18 years, this truck has consistently passed, albeit with a D-minus, every test I have devised for him. And now, as much as any under-performing teenager with a mohawk, eyeliner, and a bull ring in his nose, he needs to leave home and find his place in the world. I have turned his plates in, I'm no longer paying his insurance, and he is technically no longer my dependent. I will either donate him to Durham Tech or to the local high school, where I hope he will at least take some shop classes, maybe get his GED, or learn a useful skill. He says he wants to design sport roadsters in Italy. If so, wonderful. For all I know, maybe he'll end up opening a tattoo and piercing body shop on Hillsborough Street in Raleigh and hanging out at Sadlack's, and I'll be okay with that.
I'll still love him. But for now, I think he's spinning his wheels drinking coffee at the Open Eye, buying American Spirits at TJ's, and hooping at the Weave on Thursdays. He just needs a little push, is all.

Thursday, January 14, 2010

De-Regulation, Illustrated

Here we have video of a nice contemplative day of ice fishing Russian-style, with male bonding and the sheer joy that springs from communing with nature and harvesting its bounty. The fisherman starts beating the fish, soon to freeze like popsicles, to death with a shovel at about the 1:35 mark.