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.