ARE YOU F%$ING KIDDING ME?

This chart is shocking. The median net worth of all households in the US was $70,000 in 2009 according to a new report from the Pew Foundation. Think about that for just one minute. This means that 50% of all the households in the US (57 million HH) have a total net worth less than $70,000. If you add up their home equity, 2.2 automobiles, their 401ks, their savings accounts, their furniture and their electronic gadgets and subtract their mortgage debt, auto loans, student loans and credit card debt, you get $70,000 or less.

This data supports my Peacock Syndrome theory to the max. Americans might look like they own a lot of cool stuff, but most of them are in debt up to their eyeballs. They don’t own shit. They are renting their shit on credit. Anyone looking at this info with a critical eye would realize that these people are fucked. Anyone who approaches retirement without hundreds of thousands in savings is going to work until the day they die, or live a life of squalor in their old age.

The figures for blacks and hispanics are beyond comprehension. It leads me back to my questions about the luxury cars I see parked in West Philly, the satellite dishes on $25,000 hovels, and the supposed poor talking on their cell phones. It never added up in my mind. It didn’t add up because it doesn’t add up. When 50% of all the black households in the country have less than $5,677 of net worth, you know my observations are correct.

With north of 50 million households essentially living on the edge, how far do they have to be pushed before social unrest and chaos break out? I think it is closer than anyone thinks, especially with Washington DC not stepping up to save anyone again.

Here is a link to the complete report:

http://pewsocialtrends.org/files/2011/07/SDT-Wealth-Report_7-26-11_FINAL.pdf

By MIRIAM JORDAN

The wealth gap between whites and each of the nation’s two largest minorities—Hispanics and blacks—has widened to unprecedented levels amid the housing crisis and the recession, according to new research.

The median net worth of white households is 20 times greater than that of black households and 18 times greater than that of Hispanic households, according to an analysis of newly available 2009 government data by the Pew Research Center, an independent think tank.

The disparities are the greatest since the government began tracking such data a quarter-century ago, with the gulf separating whites from other groups twice as wide as it was in the two decades prior to the recession and 2008 financial crisis, according to the study.

“In the four years between 2005 and 2009, there was a sudden and steep increase in wealth disparities,” said Rakesh Kochhar, a senior Pew researcher and co-author of the report. He said that “using average, as opposed to median, net worth would not paint as accurate a picture because it would give greater weight to wealthier households.”

The gloomy picture was precipitated by the housing bubble’s collapse in 2006 and the recession from late 2007 to mid-2009, which took a “far greater toll” on the wealth of minorities than whites, according to the report.

From 2005 to 2009, inflation-adjusted median wealth plunged two-thirds among Hispanic households and 53% among black households, compared with just 16% for white households.

Wealth—the sum of such assets as a home, cars, stocks, bank and retirement accounts, minus the sum of debt—is a key indicator of economic well being, alongside income. Income refers to wages, interest, profits and other sources of earnings. The main difference between wealth and income is that wealth can be passed on.

“Wealth can establish the financial status of a family for generations,” said Mr. Kochhar, who is an economist.

Late last year, the U.S. Census Bureau reported that the number of Americans living in poverty was at a 15-year high.

For all groups, home ownership is the biggest contributor to net worth. The surge in home prices early in the past decade was accompanied by a historic increase in home-ownership rate, to 69% in 2009 from 64% in 2004. But plummeting house values then became the biggest cause of the erosion in household wealth, the study found.

The price drop had a more detrimental impact on minorities than on whites: Hispanics and blacks derive more than half of their net worth from home equity, whereas it accounts for 44% of a white household’s net worth.

As a result of the declines, the median black household had just $5,677 in wealth in 2009, while the median Hispanic household had $6,325. The median white household had $113,149 in 2009.

The two-bedroom house of Laevonne Gordon, an African-American from Escondido, Calif., was worth $265,000 when she bought it in 2005. Now, it is valued at $81,000, and she is behind on her monthly mortgage payments. “I’m trying to get a loan modification so I can keep the house,” she said during a visit to Community Housing Works, a counseling agency in San Diego.

Hispanics were hardest hit by the housing meltdown because they are concentrated in areas that suffered the biggest depreciation in home values—Arizona, California, Florida and Nevada.

The median value of directly held stock and mutual funds dropped the most for Hispanics and blacks. The value fell 32% for Hispanics and 71% for blacks. For whites, the value fell 9%. Blacks and Hispanics in financial distress might have been compelled to sell stocks or stop contributing to their pension plans, diminishing the value of their holdings, Mr. Kochhar said.

Given that a bigger share of whites own stocks and mutual funds, and have retirement accounts, the stock-market rebound since 2009 is likely to have benefited white households more than minority households.

Extended unemployment and shrinking income are also likely to have adversely affected household wealth, said the Pew study.

Ms. Gordon, a mother of three in the process of getting a divorce, has been delivering newspapers since her home day-care-center business went downhill because many of her clients lost their jobs and their homes.

The findings are based on Pew’s analysis of data from the Survey of Income and Program Participation, an economic questionnaire distributed to more than 36,000 households by the U.S. Census Bureau in late 2009.

PEACOCK SYNDROME – AMERICA’S FATAL DISEASE

“There will be, in the next generation or so, a pharmacological method of making people love their servitude, and producing dictatorship without tears, so to speak, producing a kind of painless concentration camp for entire societies, so that people will in fact have their liberties taken away from them, but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda or brainwashing, or brainwashing enhanced by pharmacological methods. And this seems to be the final revolution.” – Aldous Huxley

Researchers at the University of Texas recently published a study about why men buy or lease flashy, extravagant, expensive cars like a gold plated Porsche Carrera GT. There conclusion was:

“Although showy spending is often perceived as wasteful, frivolous and even narcissistic, an evolutionary perspective suggests that blatant displays of resources may serve an important function, namely as a communication strategy designed to gain reproductive rewards.”

To put that in laymen’s terms, guys drive flashy expensive cars so they can get laid. Researcher Dr Vladas Griskevicius said: “The studies show that some men are like peacocks. They’re the ones driving the bright colored sports car.”

Lead author Dr Jill Sundie said: “This research suggests that conspicuous products, such as Porsches, can serve the same function for some men that large and brilliant feathers serve for peacocks.” The male urge to merge with hot women led them to make fiscally irresponsible short term focused decisions. I think the researchers needed to broaden the scope of their study. Millions of Americans, men and women inclusive, have been infected with Peacock Syndrome. Millions of delusional Americans thought owning flashy things, living in the biggest McMansion, and driving a higher series BMW made them more attractive, more successful, and the most dazzling peacock in the zoo.

This is not an attribute specific to Americans, but a failing of all humans throughout history. Charles Mackay captured this human impulse in his 1841 book Extraordinary Popular Delusions and the Madness of Crowds:

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

The herd has been mad since 1970 and with the post economic collapse of 2008, some people are recovering their senses slowly, and one by one. The country was overrun by flocks of ostentatious peacocks displaying their plumage in an effort to impress their friends, families and work colleagues. What set the flaunting American peacocks apart was the fact they financed their splendid display of plumage with $0 down and 0% interest for seven years. The lifestyles of the rich and famous miraculously became available to the poor and middle class through the availability of easy abundant credit provided by the friendly kind hearted Wall Street banks and their heroin dealers at the Federal Reserve.

The United States has experienced a four decade long “expenditure cascade”. An expenditure cascade occurs when the rapid income growth of top earners fuels additional spending by the lower earner wannabes. The cascade begins among top earners, which encourages the middle class to spend more which, in turn, encourages the lower class to spend more. Ultimately, these expenditure cascades reduce the amount that each family saves, as there is less money available to save due to extra spending on frivolous discretionary items. Expenditure cascades are triggered by consumption. The consumption of the wealthy triggers increased spending in the class directly below them and the chain continues down to the bottom. This is a dangerous reaction for those at the bottom who have little disposable income originally and even less after they attempt to keep up with others spending habits.

This cascade of expenditures could not have occurred without cheap easy credit, supplied by Wall Street shysters and abetted by their puppets at the Federal Reserve through their inflationary policies. Real wages are lower today than they were in 1970. Coincidentally, the credit card began its ascendance as the peacock payment of choice in 1970. There are now over 600 million credit cards in circulation in the U.S. in the hands of 177 million fully plumed peacocks and peacock wannabes.

Monthly Payment Nation

“Consumerism requires the services of expert salesmen versed in all the arts (including the more insidious arts) of persuasion. Under a free enterprise system commercial propaganda by any and every means is absolutely indispensable. But the indispensable is not necessarily the desirable. What is demonstrably good in the sphere of economics may be far from good for men and women as voters or even as human beings.” – Aldous Huxley

The country seemed to do just fine from 1945 through 1970 with no credit card debt and moderate levels of auto loan debt. In fact, this period in U.S. history was marked by strong economic growth created by capital investment, savings, and the American middle class realizing the American dream of a better life based upon their work ethic. Around about 1970, the intersection of Baby Boomers coming of age, the belief that social justice for all was a noble goal, and Nixon’s closing the gold window, opened Pandora’s Box and the evil released has brought the country to the precipice of ruin. Today, consumer credit outstanding totals $2.43 trillion, or $22,000 per household. It peaked at $2.6 trillion in 2008 and the storyline fed to the masses was that Americans had seen the light and embraced frugality by paying off their debts. As with most storylines spouted by the mainstream media, it was completely false. The Wall Street banks wrote off over $200 billion since 2008, while delusional peacocks continued to finance and lease gas guzzling luxury automobiles, while charging their purchase of an iPad2 and Lady Gaga concert tickets on one of their 13 credit cards.

It seems a vast swath of America refuse to shed their peacock feathers. This explains why you see BMWs, Mercedes, Escalades, and Porsches parked in the driveways of $100,000 houses. Automobiles are the truest representation of American peacock syndrome. Very few people look at a car purchase in a rational long term financial sense. It’s about impressing the neighbors, your peers and your family. Driving a brand new luxury car gives you the appearance of success. The neighbors don’t know you are in debt up to your eyeballs. This explains why 30% to 40% of all luxury cars are leased. A man could buy a $20,000 Honda hybrid with 10% down and finance the rest at 0.9% for three years. His monthly payment would be $500. After three years he would own the car outright, with the added benefit of getting 45 mpg. He could then invest the $500 per month for the next seven years in gold and silver or something else that benefits from Federal Reserve created inflation. In today’s society this would be the act of a doo doo bird.

Why drive a putt putt car when you can drive the ultimate peacock machine – a BMW 528i with 24-valve inline 240-horsepower 6-cylinder engine with composite magnesium/aluminum engine block, Valvetronic, and Double-VANOS steplessly variable valve timing, 10-way power-adjustable driver’s and front passenger’s seat with 4-way lumbar support, and memory system for driver’s seat, steering wheel and outside mirrors, along with high-fidelity 12-speaker sound system, including 2 subwoofers under the front seats, and digital 7-channel amplifier with 205 watts of power. Plus it looks really cool. This materialism machine can be leased for the same $500 per month that the doo doo bird pays for his Honda hybrid. Of course, after three years of renting luxury wheels the peacock has to turn in the 528i and lease an equally luxurious auto because driving an economy car would now harm his reputation. Colorful plumage is everything to a peacock.

Sometime over the years Americans lost their bearings and began to ignore a basic truth. The only way to accumulate wealth is to spend less than you make and save the difference. Over a ten year time frame the peacock will have dished out $60,000 renting luxury cars, while the doo doo bird will have expended $21,000 during the first three years and then invested $500 per month for 84 months, leaving him with a net $25,000 asset, based on a modest investment return of 5%. The doo doo bird ends up $85,000 wealthier than the peacock at the end of ten years. If you peruse the car dealer advertisements in your local paper, the price of the car is rarely even printed, only the monthly lease payment or 0% financing offer. There is a reason why the average American lives paycheck to paycheck, has no emergency fund for a rainy day, and has virtually no retirement savings socked away. Status, reputation and the appearance of success became more important to millions of Americans than living within their means and actually sacrificing and doing the hard work required to succeed. Delayed gratification is an unknown concept in America.

In 1970, 37% of households consisted of 4 or more people and we somehow managed to get by with one four door car per household. Today, only 24% of households consist of 4 or more people. There are 113 million households and over 250 million passenger vehicles, or 2.2 per household. So, even though the number of people in our households has shrunk dramatically, we needed 120% more vehicles to transport our vast quantities of stuff. Not only do we have more vehicles, but the size of these symbols of gluttony has doubled and tripled, with fitting names like: Tundra, Navigator, Titan, Yukon, Suburban and Hummer. Every soccer mom with two kids needed a 20 foot long, 6 foot high Yukon with an 8 cylinder engine, getting 12 mpg to shuttle around little Aiden and Chloe to their ten scheduled weekly activities. It wasn’t only automobiles that Americans went gaga over. The average home size in 1970 was 1,400 square feet (we drive cars bigger than that today). By 2009, the average home size reached 2,700 square feet. God knows we need 12 rooms for our 2.4 person households. The expenditure cascade started as a trickle in 1970 but became a raging uncontrollable waterfall by 2008.

Delusional Americans have been slowly lured into the web of debt and living their lives based upon whether they can make the monthly payment on their debt. I can anticipate the outrage from those who declare it wasn’t them, it was the other guy. Everyone has an excuse for why they aren’t to blame, but the facts speak otherwise:

Non-revolving (auto & education) debt outstanding is at an all-time high of $1.64 trillion.
The average auto loan is now $27,000 with a loan to value ratio of 80% to 90%, down from 95% in 2007.
Auto dealers are now offering $0 down and 0% interest for 72 months on many models. Ask yourself how a finance company can make a profit with those terms.
There are 54 million households with a revolving credit card balance, proving that approximately 50% of Americans are attempting to live above their means.
The average credit card debt per household with credit card debt is $14,687.
The average APR on a new credit card is 15%, even though the banks can borrow from the Federal Reserve for 0.25%.
In 2009, the United States Census Bureau determined there were nearly 1.5 billion credit cards in use in the U.S. A stack of all those credit cards would reach more than 70 miles into space — and be almost as tall as 13 Mount Everests.
76% of undergraduates have credit cards, and the average undergrad has $2,200 in credit card debt. Additionally, they will amass almost $20,000 in student debt.
On average, today’s consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, and bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.).
Over 90 percent of African-American families earning between $10,000 and $24,999 had credit card debt. What bank in their right mind would issue a credit card to someone making $15,000 per year?
Discussing credit card debt is highly taboo. The topics at the top of the list of things that people say they are very or somewhat unlikely to talk openly about with someone they just met were: The amount of credit card debt (81%); details of your love life (81%); your salary (77%); the amount you pay for your monthly mortgage or rent (72%); your health problems (62%); your weight (50%). I wonder why?
Penalty fees from credit cards added up to about $20.5 billion in 2009, according to R. K. Hammer, a consultant to the credit card industry. Don’t be one day late with that credit card payment. It’s good to be a bank.
The average late fee was found to have risen to $28.19, way up from $25.90 in 2008. Consumer Action reported that late fees reached up to $39 per incident.
The volume of gasoline purchases placed on credit cards jumped 39% last month from a year earlier, compared with a 21% increase in June 2010. Food shopping increased 5% after falling 7% last year. The value of an average transaction on credit cards outpaced the gain for debit cards, showing consumers are increasingly relying on borrowing to pay for gasoline and other necessities.

After decades of a debt financed contest to display the gaudiest plumage, is the average American happier? Considering more than 10% of all Americans are on anti-depressant drugs, I’d say not. The rat race for status, the appearance of wealth and visible faux displays of success do not increase well-being. If most of our earnings are spent on an empty game of status, we should not expect much improvement in our quality of life. There is something perverse about having more than enough. When we have more, it is never enough. It is always somewhere out there, just out of reach. This is the attitude that drives the criminals on Wall Street and politicians in Washington DC to constantly seek more power and wealth. The more we acquire, the more elusive enough becomes. Much of the debt financed purchases of consumer trinkets, baubles and gadgets is nothing more than an expensive anesthetic to deaden the pain of empty lives.

Based upon the facts, the average American has not benefitted from the decades long materialistic frenzy. They have sacrificed their futures for the fleeting glory of ephemeral riches. In fact, the average American could not have participated in the expenditure cascade had they not been enabled by the financial industry and cheap plentiful money provided by the financial industries’ drug dealer – the Federal Reserve. The financial industry complex used their power and wealth to utilize all means of propaganda and mass media outlets to convince Americans that debt was good and more debt was even better. I’ll address the insidious aspects of the unholy union of debt and propaganda in Part Two – Propaganda Nation Built Upon Delusions of Debt.

Meanwhile, millions of Americans cling to their borrowed peacock feathers as the butcher of reality bears down upon them. The end won’t be pretty. The brave conquerors of strip malls across the land can enjoy their toys, gadgets, and treasures for awhile longer, but they need to remember one thing – Glory is fleeting and death can come suddenly.

“For over a thousand years Roman conquerors returning from the wars enjoyed the honor of triumph, a tumultuous parade. In the procession came trumpeteers, musicians and strange animals from conquered territories, together with carts laden with treasure and captured armaments. The conquerors rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children robed in white stood with him in the chariot or rode the trace horses. A slave stood behind the conqueror holding a golden crown and whispering in his ear a warning: that all glory is fleeting.”

Last scene from the movie Patton

IT’S NOT FAIR – TOUGH SH%T!!!

One of my Dad’s favorite phrases was “Tough Shit”. If you told him he was being unfair or unreasonable, his answer was usually “Tough Shit”. It’s tough to argue with that logic. The phrase came to mind as I read the Op-Ed in my local paper yesterday from a teacher in the North Penn School District. He seems like a decent fellow who cares about the students he teaches. His arguments in favor of reasonable pay and reasonable workloads have validity. I’d also agree that the demotions of 36 young teachers is unfair. But at the end of the day, I’d have to tell the guy TOUGH SHIT!!!

You see, life isn’t fair. The school district asked the teachers union to accept a one year salary freeze in order to balance the budget. The union said NO. So, the school district demoted the 36 teachers to make up for the budget shortfall. There are two sides to the issue. The union contracts for teachers are too rich. The administrators who run the school district were delusional fools.

When housing was booming 5 years ago and real estate taxes were rolling in at a tremendous rate, the administrators decided to build a beautiful new football stadium and an Olympic size pool, while signing gold plated contracts with the teachers union. They added more teachers and more administrators. It was a glorious future. Well guess what? The tax revenue plunged as home prices and real estate transactions cratered. You can’t undo a new football stadium and new Olympic sized pool. You can’t renege on a five year teacher contract with guaranteed 4% salary hikes, huge pension promises, and gold plated healthcare guarantees.

You see, we’ve elected people who promised us lots of free shit in order to get themselves elected. This is true at the local, state and federal level. We have lived our lives depending upon those promises to be kept. We didn’t need to save for a rainy day. We could retire on the huge equity in our houses. The stock market would always go up. And life would be full of unicorns and rainbows. Well it was all a lie. The money is gone. It wasn’t real. The promises can’t be kept. You can’t borrow your way to prosperity. Your standard of living has been about 40% too high for the last two decades and it is coming to an end. And you know what?

TOUGH SHIT!!!

It is what it is. It isn’t fair, but that doesn’t matter. Get over it. You are going to get screwed, one way or the other. Below is a picture of a beautiful bridge in my township. My town spent millions to build this bridge. They borrowed the money. The used eminent domain to get rid of ten houses so they could build the bridge five years ago. They knocked down and flattened an old antique shop and wiped out 5 little league baseball fields where my kids played baseball for this bridge. They assured us that there would be a huge retail complex on one side of the bridge and hotels, condos and townhouses on the other side of the bridge. We call it the bridge to nowhere. Nothing has been built on either side of that beautiful bridge. NADA!!! There is no hint of a retail complex. No condos. No townhouses. Just debt and a bridge too far.

Towamencin can’t sell the bridge. The money is gone. Wasted. Pissed down the drain. The clueless morons we elected have moved on to greener pastures and left us a bridge to nowhere. It’s not fair. But guess what?

TOUGH SHIT!!!

This has gone on at every level of government for decades. Social Security isn’t solvent. It isn’t in a lockbox. The thieves in Congress spent the money on wars and tax breaks for hedge fund managers and for public housing in West Philly. The major cost saving part of the Gang of Six debt ceiling plan is to change the CPI calculation so that they can pay you less money in your retirement. They already understate the CPI by about 5%, so what’s another 2% or 3% among friends. This isn’t fair to senior citizens or people who will retire over the next 20 years. But guess what?

TOUGH SHIT!!!

Look at the chart below. We have spent tens of trillions on our war industry over the decades and what has it achieved? Did it keep us from being invaded by a foreign enemy? Have we ever been at risk of being attacked? NO!!! We have spent trillions meddling in other people’s business and creating enemies so the military industrial complex could enrich itself and their captured politicians. The trillions are gone. Wasted. Pissed away for no good reason. You can’t sell off the aircraft carriers and thousands of fighter planes. The money is long gone.

We are $14.4 trillion in debt. We will be $20 trillion in debt by 2015. Our unfunded promises exceed $100 trillion. The promises won’t be kept. The country will undergo a once in a lifetime purge over the next ten years. Since 90% of the people in the country are delusional, the purge will be forced upon the country by outside forces. We won’t willingly reduce our standard of living by 40%, but it will happen. It’s not fair, but guess what?

TOUGH SHIT!!!

YOUR SAY: Teacher speaks out about North Penn

By Jonathan Alba
Conshohocken resident

Is it not beautiful that we have the right to free speech in this country? I hope so.

I am concerned. I am concerned about the current direction in which the North Penn School District may be headed. Surely nothing too bad can happen anytime soon; I mean, we just did get a national ranking.

But a drastic change is now on the horizon, at least from my perspective. Also, this drastic change, as I have chosen to put it, is exactly where my aforementioned concern resides.

In fact, the school board has chosen to demote 36 teachers at the secondary level. Please don’t be mistaken. The demotion carries with it a remarkable advantage. Doubtless, the board has found a simple solution to its financial consternation.

Unfortunately, the disadvantage in my mind must be brought to the attention of the public, just in the event that it has not quite been made clear.

What is the disadvantage? Well, in my department, a youthful teacher who is absolutely relentless in his attempts to improve his craft has been given a difficult decision. Stay, and make 40 percent of his salary, or leave and learn to manage another school system (they’re all different, you know … just like snowflakes).

Additionally, two of my colleagues will be asked to teach six classes. I did that in the beginning of my career, and I suppose you could say that it’s surprising that I’m still here in some respect. I stayed and kids … thank you so much as so very many of you have rewarded me, and each of you in a unique way.

In truth, I witnessed bright and capable young teachers leave North Penn in search of greener pastures. Translation: teaching six classes is hard. Additionally, I found out that at other districts they compensate for the extra workload.

As an example, at the time I was in my initial years of teaching, in Abington High School a high school teacher instructing six classes rather than five were given a fifth of their salary as extra pay. I believe in the business world they call that motivating your employees.

Though our school board appears to treat these demotions as just business, I am not certain that the demotions are good business. Actually, increasing class size and worsening work conditions, in my mind, can likely lead to a decline in the quality of our education at North Penn. Wait, what is our business? It is quality, right?

I understand that the decisions to cut the budget were not easy. Nor could they have been. However, can there not be another way? I plead, and understand that I wish it to be the most humble of pleas, that we as a community reconsider all of our options before casting your next vote for the school board. I do not mean to take advantage of rhetoric, but nonetheless, I say it is our children’s education at stake.

Kids don’t always learn from our words; but I do think they do learn from our actions more often than not. Should we be concerned about what the action of demoting the teachers conveys to the kids? I cannot answer that question; quite literally, I am not capable. But I am concerned.

I like my job. I am looking forward to my teaching schedule next year and it is one that I am greatly anticipating. Might all of that be in jeopardy with my comments? I suppose. However, I would sacrifice that in order to promote awareness.

Jonathan Alba is a resident of Conshohocken.

ISRAEL TO ATTACK IRAN?

Zero Hedge with a very disturbing article. This would fit nicely into the Fourth Turning storyline.

I really want to know SSS’ opinion about Robert Baer. Did he know him? Are his warnings credible? Is he just looking for publicity or is he trying to stop a terrible event from happening?

If Israel is foolish enough to start a war, oil prices will set records and destroy our economic house of cards.

CVN 77 G.H.W. Bush Enters Persian Gulf As CIA Veteran Robert Baer Predicts September Israel-Iran War

Submitted by Tyler Durden on 07/17/2011 16:02 -0400

One look at the most recent naval update maps shows that in addition to global insolvency (courtesy of the broke European dominoes and a potentially technically broke US), a UK on the verge of a parliamentary scandal courtesy of a media baron whose empire is crumbling, and not to mention yet another downward inflection point in the global economic slowdown courtesy of the end of QE2 and no replacement yet, market watchers may have to start factoring in geopolitical risk yet again. While the fact that Syria, Yemen, Egypt, Tunisia, and now Turkey, are ever more increasingly on edge is apparently something Mr. Market has managed to internalize, when it comes to geopolitics everyone stops to listen when renewed Iran-Israel rumblings reappear. Which may just be the case. As the most recently updated naval map from Stratfor demonstrates, the CVN 77 G.H.W. Bush has just entered the Persian Gulf, the first time a US aircraft carrier has passed through the Straits of Hormuz in months. What is also notable is that the LHD 5 Bataan amphibious warfare ship has just weighed anchor right next to Libya: this is odd since the coast of Tripoli had been left unattended for many weeks by US attack ships. And topping it all off is that a third aircraft carrier, the CVN 73, is sailing west from the South China seas, potentially with a target next to CVN 76 Ronald Reagan which is the second carrier in the Straits of Hormuz area. Three carriers in proximity to Iran would be extremely troubling, yet fit perfectly with the story of CIA veteran Robert Baer, the man played by George Clooney in Syriana, who as Al Jazeera reports, appeared on KPFK Los Angeles, warning that Israeli PM Netanyahu is “likely to ignite a war with Iran in the very near future.” It gets worse: “Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.” The punchline: “There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict“, Baer explained.” For the betting public out there, an September CL call may not be the dumbest trade possible…

First, the naval update per Stratfor:

And, courtesy of Al Jazeera and Haaretz, the full take from Robert Baer:

Earlier this week, Robert Baer appeared on the provocative KPFK Los Angeles show Background Briefing, hosted by Ian Masters. It was there that he predicted that Israeli Prime Minister Binyamin Netanyahu is likely to ignite a war with Iran in the very near future.

Robert Baer has had a storied career, including a stint in Iraq in the 1990s where he organised opposition to Saddam Hussein. (He was recalled after being accused of trying to organise Saddam’s assassination.) Upon his retirement, he received a top decoration for meritorious service.

Baer is no ordinary CIA operative. George Clooney won an Oscar for playing a character based on Baer in the film Syriana (Baer also wrote the book).

He obviously won’t name many of his sources in Israel, the United States, and elsewhere, but the few he has named are all Israeli security figures who have publically warned that Netanyahu and Defense Minister Ehud Barak are hell-bent on war.

Most former Mossad chiefs wary of Netanyahu

Baer was especially impressed by the unprecedented warning about Netanyahu’s plans by former Mossad chief Meir Dagan. Dagan left the Israeli intelligence agency in September 2010. Two months ago, he predicted that Israel would attack and said that doing so would be “the stupidest thing” he could imagine. According to Haaretz:

When asked about what would happen in the aftermath of an Israeli attack Dagan said that: “It will be followed by a war with Iran. It is the kind of thing where we know how it starts, but not how it will end.”

The Iranians have the capability to fire rockets at Israel for a period of months, and Hizbollah could fire tens of thousands of grad rockets and hundreds of long-range missiles, he said.

According to Ben Caspit of the Israeli daily Maariv, Dagan’s blasts at Israel’s political leadership are significant not only because Mossad chiefs, in office or retired, traditionally have kept their lips sealed, but also because Dagan is very conservative on security matters.

Caspit writes that Dagan is “one of the most rightwing militant people ever born here. … When this man says that the leadership has no vision and is irresponsible, we should stop sleeping soundly at night”.

Dagan describes the current Israeli government as “dangerous and irresponsible” and views speaking out against Netanyahu as his patriotic duty.

And his abhorrence of Netanyahu is not uncommon in the Israeli security establishment. According to Think Progress, citing the Forward newspaper, 12 of the 18 living ex-chiefs of Israel’s two security agencies (Mossad and Shin Bet), are “either actively opposing Netanyahu’s stances or have spoken out against them”. Of the remaining six, two are current ministers in Netanyahu government, leaving a grand total of four out of 18 who independently support the prime minister.

In short, while Congress dutifully gives Netanyahu 29 standing ovations, the Israelis who know the most about both Netanyahu and Israel’s strategic situation think he is a dangerous disaster.

But according to Baer, we ain’t seen nothing yet.

There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.

The Israeli air force would attack “Natanz and other nuclear facilities to degrade their capabilities. The Iranians will strike back where they can: Basra, Baghdad”, he said, and even Afghanistan. Then the United States would jump into the fight with attacks on Iranian targets. “Our special forces are already looking at Iranian targets in Iraq and across the border [in Iran] which we would strike. What we’re facing here is an escalation, rather than a planned out-and-out war. It’s a nightmare scenario. We don’t have enough troops in the Middle East to fight a war like that.” Baer added, “I think we are looking into the abyss”.

Another US war?

Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.

It should be noted that the Iranian regime is quite capable of triggering a war with the United States through some combination of colossal stupidity and sheer hatred. In fact, as Baer explained, the Iranian Revolutionary Guard would welcome a war. They are “paranoid”. They are “worried about … what’s happening to their country economically, in terms of the oil embargo and other sanctions”. And they are worried about a population that increasingly despises the regime.

They need an external enemy. Because we are leaving Iraq, it’s Israel. But in order to make this threat believable, they would love an attack on their nuclear facilities, love to go to war in Bahrain and Saudi Arabia and Iraq and hit us where they could. Their defense is asymmetrical. We can take out all of their armored units. It’s of little difference to them, same with their surface-to-air missile sites. It would make little difference because they would use terrorism. They would do serious damage to our fleet in the Gulf.

Given all that, is it possible that the United States would allow Israel to attack when the president knows we would be forced to join the war on Israel’s side?

“The president is up for re-election next year,” Blair pointed out, and Israel is “truly out of control”.

What happens when you see 100 F-16’s approaching Iraq and there is a call to the White House [from Netanyahu] that says “We’re going in, we’re at war with Iran”? What does the President of the United States do? He has little influence over Bibi Netanyahu. … We can’t stop him. And he knows it.

It’s a pretty frightening scenario, made infinitely more so by the fact that top Israelis (who have heard Netanyahu’s thinking from Netanyahu himself) also see the future the same way. Those Israelis deserve a world of credit for sounding the warning bell loudly enough that we would hear it and do something about it – although it’s impossible to know if the people who matter are paying attention.

Actually, only one person matters: the US president. If Israel bombed Iran tomorrow, Congress would forget all about their partisan differences and run, not walk, to the House and Senate floors to endorse the attack and call for unstinting support for Israel. That is what Congress always does, and will always do so long as the lobby (and the donors it directs) are the key players in making our Middle East policies.

And who knows what Obama would do? So far, he has not exactly distinguished himself when it comes to standing up to Netanyahu.

But an Israeli attack on Iran would be different. It would endanger countless Americans (in the region and here at home, too). It would kill off any economic recovery by causing oil prices to skyrocket. It would engulf us in another Middle East war. And it would threaten the existence of the state of Israel.

This is something the president needs to focus on instead of being forced to nickel and dime with the likes of Representative Eric Cantor and Senator Mitch McConnell. How incredible that these two, and their right-wing allies, have our government tied in knots in their incessant effort to elevate themselves by destroying the President of the United States. It is sickening.

h/t devaang

DOUG CASEY DOES SELF IMMOLATION & OIL

Doug should have been reading TBP and he would have known about Thomas Ball the day after it happened. He has the same questions I had. Why was this story completely ignored by the MSM. This convinced me once and for all that the corporate MSM is in bed with the government and will report whatever they are told to report and coverup what they are told to coverup. It is up to sites like ours to report the truth.

Doug also agrees that oil prices are headed to $200 a barrel. I disagree with his unconcern with fracking. He assumes that corporations will do the right thing, follow proper safety guidelines, and be good corporate citizens. That is ridiculous. They only care about short term profits and will use their armies of lawyers to fight legitimate claims by the poor people being victimized by their greed and incompetence.

Doug Casey on Self Immolation – Individual and National

(Interviewed by Louis James, Editor, International Speculator)

L: Labas, “Dougas,” as we might say in Lithuania — sure is beautiful here! It’s 11:30 p.m. and the sun is below the horizon, but the sky is still smoldering. Where are you, and what’s on your mind this week?

Doug: It’s afternoon here in Aspen, a nice little communist town in the Rockies. From here the world seems to be turning as usual, but that’s only because the place is full of people who are so rich that they’re largely insulated from the real world, as are the parasites who live off them. We’ll have to talk about the politics and sociology of Aspen sometime. But out in the real world, the engines are grinding toward a halt on the American Titanic – but it’s still moving, so everyone thinks everything is fine. There are signs that the 2008 iceberg was bigger than the crew is telling us, however, for anyone paying attention. Did you hear about that man who set himself on fire in front of a courthouse in New Hampshire?

L: I did, but only through email from friends.

Doug: Yes, the same with me; we have the same friends. It’s truly shocking that a story like this got absolutely zero major media coverage, even though it went out on AP. In Tunisia, a fruit and vegetable street vendor sets himself on fire to protest his government making his life impossible, and it sparks a revolution that doesn’t even stop at his country’s borders. Something similar happens in the U.S. and no one even hears about it… at least not this time. In February 2010 there was a guy who crashed his plane into an IRS office: That did make the national news. But perhaps since then the word has gone out that these things shouldn’t be reported for fear of encouraging others, “national security,” or whatnot.

L: Thomas Ball wasn’t a fruit vendor, but a divorced man who apparently felt that the court system had put him in an impossible situation. [Editor’s note: Ball’s last statement is available online, subscription required.] I’m not a conspiracy theorist, but it defies belief that every single major news editor across the country decided on his own that such a striking story wasn’t news.

Doug: I know. Not a lot surprises me anymore, but this truly is shocking. In my entire life I can only remember two previous instances of self-immolation. The first was that of Buddhist monks during the Vietnam war. I didn’t know what to make of it at the time, but it sure caught everyone’s attention.

L: Why did they do it? U.S. troops on the temple steps?

Doug: No, they were protesting the rule of Ngo Diem in the south, who was Catholic and giving them a hard time. The U.S., of course, was supporting the terminally corrupt Diem regime. When, I’d like to know, has the U.S. ever supported anybody but the worst criminal available in Third-World countries? The second instance was the one in Tunisia earlier this year that touched off the Arab Spring – which is far from over, by the way. Thomas Ball is the first case of it in U.S. history – first one I’ve ever heard of, at any rate – and it received no press whatsoever, outside of acknowledgement in the local papers. The Internet picked it up, of course, but to me it seems extraordinarily serious that an event like this can transpire and not even get noticed. Instead, the headlines were dedicated to such urgent matters as that stupid congresscreature, Weiner.

L: So, are you saying that the powers that be censored the story?

Doug: If they didn’t, it’s certainly further proof of how degraded society has become in the U.S. that something like this could go unnoticed. It’s appalling – disgusting, actually. And scary, on a couple of levels.

But get this: When I was in Dubai a couple of weeks ago, a guide I’d hired to show me around had heard of the event. It was big news there that everyone heard about – it was in all the papers. So you could make the argument that the average Arab may know more about what’s happening in the U.S. than the average American does. That’s a turnaround…

L: What were you doing in Dubai?

Doug: It had been a while, and I wanted to see how things had changed since the crisis. I also went to Israel, Egypt, and Lebanon. I’ll have some articles on my findings in the Middle East in the next few issues of The Casey Report. Obviously, the area being prime oil hunting ground, I was thinking about energy-related speculations a great deal. In practical terms, energy really means oil, coal, gas, and nuclear – green energy is nice, but hydrocarbons and nuclear are the only forms of mass power that can satisfy any need, anywhere, anytime. Most particularly oil. Developments in oil affect the Middle East, and developments in the Middle East affect oil.

L: Hm. Speaking of nuclear, we haven’t talked about that since our conversation on Fukushima, and there’s been time for new market trends to become visible. What do you think?

Doug: Well, as we speak, I see that the price of uranium is $54.25 per pound. It was about $70 before Fukushima, dropped to about this level, bounced back to the high $50s, and is now fluctuating in the low $50s, so it’s definitely cheaper than it was before. But it was over $140 a pound in 2007, so it’s much cheaper than it has already been in this cycle. On the other hand, it’s still roughly six times what it was at the end of the 1990s, when it bottomed around $9. That’s pretty good performance for a commodity. Still, I’ve got to say that I think it has a lot of upside yet ahead – although keeping track of prices in dollar terms is becoming ever more tricky, as the dollar itself fluctuates wildly – mostly down – and the official CPI statistics become ever more unreliable.

The reason I’m still bullish on uranium is because, as we said before – and Fukushima notwithstanding – nuclear power is still the cleanest, safest, and cheapest type of mass power generation available. I find it quite ludicrous that the Germans have announced that they will phase out all of their nuclear plants over the next decade. Where are they going to get the power to replace the approximately 22% they get from nuclear now? Windmills aren’t going to do it. Solar doesn’t have a prayer in northern Europe. Are they going to burn more coal? That’d be great for their environment.

L: Aside from pumping sulfur into the air, coal plants emit C-14 too, and that’s radioactive. Nukes emit less. Maybe they plan to wear thicker coats and eat more cold food?

Doug: There’s a lot of radioactive material released from burning coal, including uranium. Geothermal would be nice, but Germany is not Iceland. Maybe they think they can burn more natural gas, but that’s a greenhouse issue – although the whole greenhouse gas/global warming hysteria has always impressed me as something in between a political scam, a fraud, and a new age religion. But we covered that in a prior conversation; no need to beat a dead horse. Anyway, it seems to me that the global warming hysteria actually peaked a few years ago, and will soon be just another idiotic embarrassment everyone will be anxious to forget. Especially when another hysteria catches their attention.

L: The Russians would love to see the Germans burning more natural gas.

Doug: Of course. And they wouldn’t be shy about demanding political concessions as well as higher prices when they can shut off the pipelines to Europe in the middle of the winter. The Germans will get what they deserve. But then, most everybody eventually does. I’ve got no sympathy for them; stupidity is its own reward.

L: That would literally be a cold war. No need for ballistic missiles. Looks like national self-immolation on the part of the Germans.

Doug: Right – the German reaction is clearly political grandstanding pandering to hysteria. I wouldn’t count on the policy ever being carried through to completion, and wouldn’t be the least bit surprised to see it reversed after the first winter when there’s not enough power to go around. They really have no other practical alternative… though they might try to finesse it by importing electricity from France, which produces over 75% of its power from nukes.

Meanwhile, that hysteria is certainly going to slow down nuclear power in the U.S., but as we said in our conversation after the disaster in Japan, world demographic trends leave no choice but to employ more nuclear power. That makes the current relatively low prices an opportunity.

L: In that context, we should probably mention that there was a flood in the U.S. midwest, and the Fort Calhoun nuclear power plant in Nebraska was flooded. A dike surrounding the plant was even breached, but there appears to be no sign of danger yet. Granted, the plant was shut down for maintenance at the time of the flood, but still, the thing seems to be taking the abuse as designed.

Doug: That’s right, and it bears reiterating that at this point, all of these operating plants are basically 40-year-old technology. Because of the hysteria and resultant government regulations, newer, better, and even safer designs have not been implemented. Almost all the reactors in use today are what are known as “Generation 2.” But there are probably two dozen Gen 3 and 3+ designs that could be deployed; and in a few years there will be Gen 4 units available. Some of these designs are extraordinary – from 10-50 megawatts, self-contained, with almost no moving parts, extremely small, low cost, and capable of being buried for a decade, until they need refueling.

L: So, buy uranium and uranium exploration stocks?

Doug: That’s one way to play it, and we do have a lot of exposure to uranium’s upside in our portfolio. Another, more ground-floor way to play it might be to look into thorium plays. As I understand it, thorium – element 90 on the periodic table – is actually better for power generation than uranium or plutonium. Nuclear scientists originally proposed it for power generation, but governments opted for uranium because it coincided with their weapons programs. As usual, government interference takes us down the wrong path.

L: [Chuckles] As usual. So, there’s an opportunity to invest in nuclear while it’s unpopular, and while it’s unpopular, that’s bullish for hydrocarbons.

Doug: Right. I subscribe to the peak oil theory. By that I do not mean that the world is running out of oil, but that the easy availability of conventional sweet, light crude is in decline. There’s plenty more oil to be found, but it’s a more expensive to process, heavy oil. Or it’s shale oil, or comes from tar sands, or it’s deep under the ocean, which has its own environmental issues and is neither cheap nor easy to produce.

Peak oil is a geological concept. It basically holds that all the low-hanging fruit has been picked. Now, philosophically, it rubs me the wrong way, in that I have total confidence that human ingenuity will find scores of ways to produce new hydrocarbon fuels – and lots of totally new energy sources in addition. Furthermore, the higher oil prices go, the more will be found – and the more it will be economized. So, in a free-market world, oil is a non-problem.

But we don’t currently live in that kind of world. In the meantime – let’s say the next 10-20 years – oil is an issue, for simple geological reasons. And also because, even though consumption has been basically flat in the advanced world for decades, consumption is going to grow radically in “Chindia” and the rest of the developing world. The biggest problem though is likely political, especially because of the increased political risk in the Middle East, where most of the world’s oil reserves are. You’ve got to be bullish on oil.

L: Even with the stuff at $100 a barrel?

Doug: Yes. I believe the odds favor it going to $200, even $250 a barrel before too long. I say that despite the fact I’m much more comfortable buying things when they’re manifestly cheap, and nobody wants them. But at the same time, it’s important to see the trend, and make the trend your friend. And I see no reason to believe this one is anywhere near an end.

L: Okay… But you’re also famous for predicting the coming – now started – Greater Depression. In a major, global economic reversal, wouldn’t energy consumption decrease, and hence prices drop?

Doug: That’s certainly a possibility, but China, India, and the rest of the Third World are marching, increasingly, to the beats of their own drums these days. The Greater Depression will definitely affect them adversely, but the enormous growth that has already gone on there won’t stop – despite the fact China has misallocated gigantic amounts of money in property. There could very well be a real revolution there in the next ten years. People forget that during one of the most turbulent periods in history, 1914-1946 – including, among other disasters, World War I, the Great Depression, and World War II – the world economy expanded by something like 1.8% annually. That trend will continue at one level or another, even if there’s a truly massive upset in the global economy – which I fully expect. The countries of the world will compete in using more oil; China will greatly increase its imports. India even more so. The price will necessarily rise.

So, sure, there could be a dip, especially if there’s a big financial crash, but that would not change the major underlying trend. Long-term energy demand is not dictated by speculators or other financial factors; at heart it’s based on demographic and technological trends, and those are not going to change easily nor soon. Oil in particular supplies very dense and convenient energy. It will be superceded, but not soon.

L: So if oil and gas stocks retreat on bad news, back up the truck for more?

Doug: Exactly. And it seems to me that in today’s world, in which nothing is cheap, one thing that is relatively cheap and a good value is natural gas. The reason it’s cheap is that previous high prices spurred technological developments, such as horizontal drilling and hydrofracking, that have made huge resources of shale gas economic. This vast increase in supply has made natural gas cheaper – and the time to buy commodities is when they are cheap. You have to be a contrarian, buy what’s unpopular, and sell when it’s the flavor of the day. It’s like my friend Rick Rule says: You’re either a contrarian or a victim. That’s natural gas right now – it’s cheaper, in BTUs per dollar, compared to oil, than it’s been for a very long time.

L: But there’s some risk too, especially with scare stories circulating about fracking causing gas leaks and problems on the surface. A political response could crush whole swathes of gas companies.

Doug: That’s true, and it would be true even if the scare weren’t completely unfounded hysteria, as I suspect it is. It’s mostly the same people who are so hysterically anti-nuclear who are anti new natural gas technologies. These stories about flames coming out of your water faucet have nothing to do with fracking. First, it’s freakishly rare. Second, it can and does happen naturally, for the same reason you see oil (and gas) coming to the surface all over the world, or even marsh gas bubbling up from swamps. Fracking generally occurs thousands of feet under ground; drinking water tables are close to the surface; it theoretically can have an effect, but as a practical matter does not. But I don’t want to get into a discussion of that here. Marin Katusa has covered that ground, from all points of view, as you can see here.

The technophobes of the world are a costly nuisance to everybody. But the good news is that they only drive prices up more, much to the benefit of the companies which are not affected. So, the way to play this is not with any kind of blanket approach, but with well-selected companies that should do well, based on where and how they produce their natural gas.

L: Very good. And this time I don’t have to ask you about investment implications.

Doug: Great. I love being off the hook. We’ll leave it at that, then. Talk to you next week.

L: Sure, Doug, thanks for the insights.

Doug: My pleasure.

KING GEORGE LIVES IN WASHINGTON DC

Some good lines from Casey in this one, like:

“The government is the single greatest threat to an individual’s life, liberty, property, and even his pursuit of happiness.”

Doug Casey on the 4th of July

Editor’s Note: This conversation was recorded on July 2^nd and refers to the 4^th in the future tense. This is not a material point, so we’ve left it as is.

L: Hola, Doug. You know I’m not the angry type: I don’t tend to walk around with a chip on my shoulder. Still, I find myself irritated around this time of year, as person after person wishes me a happy “4^th of July” – as though the passage of the fourth day of this or any month had any significance whatsoever. It’s Independence Day. Successful rebellion against tyranny is what all the fireworks are about, not just some random long weekend that gives people more time to drink beer and distract themselves from maxed-out credit cards with fireworks. What do you make of this annual showcase of doublethink?

Doug: I totally agree with you. One particular irony is that real fireworks are basically illegal these days. We are supposed to be celebrating the fact that individual farmers, coopers, and carpenters had the firepower to throw off their government – in a society that now disallows the average individual to own more than sparklers.

L: Well, there are loopholes. I buy my fireworks on an Indian reservation. Mostly high-lofting mortars, the biggest I can get. I’ve got a half-kilo “cake” type firework here.

Doug: Really? That’s great! I wonder if you could hit anything with those mortars… When I was a kid, we’d make real mortars by dropping a big firecracker down a pipe planted in the ground, and then dropping a marble with another big firecracker glued to it down the pipe. Primitive, and a bit risky, but fun practical science for any grade-school kid.

L: Hm. I’m not sure I could hit anything if I tried. These are pretty hefty for civilian use; the launch tubes are not the usual cardboard, but some sort of tough resin polymer, and the mortar rounds weigh between five and six ounces. But there are no fins on the rounds, and the launch tubes are not rifled, so I doubt they’d be very accurate. In my younger days, I might have done some tests to see what I could blow up with one, but my little ones get such a kick out of seeing them go off in the sky, that’s where they’ve all gone.

But I take your point. It is ironic that I have to find a scrap of land populated by the descendants of the people who lived here first to buy supplies – all made in China – to celebrate the imaginary freedom of the descendants of those who crushed them and took their land.

Doug: The sad history of American Indians is a topic we can get into another time. It’s the imaginary freedom you mention that I’d like people to think about now, as they decide whether to celebrate “Independence Day,” or the “4^th of July.”

L: What percentage of U.S. citizens even think about the meaning of Independence Day on the fourth of July?

Doug: Whatever it is, I would say it’s smaller than the percentage of so-called Americans who’ve actually read the Declaration of Independence.

L: That’s not many.

Doug: The correct statistical term is “teeny-weeny.” And sadly, in a country where you can’t even light a sparkler 364 days a year without the neighbors calling a SWAT team in on you, the chances of the people rising up as commemorated on July 4 are… trivial to nonexistent. It’s a pity how the political class can lord it over the serfs, because the serfs are still well fed.

L: Setting us up for a long “history of repeated injuries and usurpations.”

Doug: That is, after all, what the state does for a living – including the one in the U.S. We should talk about that. There are a number of points in the original “Unanimous Declaration of the thirteen united States of America” [Ed. note: capitalization, including “united,” as in original] that are worth thinking about today. I strongly recommend reading the whole thing to all our readers, and all people around the world – it takes no more than ten minutes. Despite the fact that everyone has heard of the Declaration, and despite the fact that it contains very important ideas, almost nobody has actually read it – including the pompous talking heads who pontificate in the media about “America’s birthday.” Regrettably, America has largely ceased to exist, having been replaced by the United States.

L: Or the United State. I’m with you on this one: The Declaration of Independence is a good read, and many, if not most of Jefferson’s grievances against old King George are just as applicable to the U.S. government today. Let’s talk specifics.

Doug: Specifics are critical, as is precision in defining words and ideas; it’s part of what differentiates intelligent discourse from a rant. Let me start off by saying that the Declaration adopted by the Continental Congress on July 4, 1776, is not perfect. Right off the bat, the Declaration says: “When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another …” But the American states were not one people – anything but. Different religions, different languages, different traditions, different customs – and that’s just among the European inhabitants.

When the American Revolution started, it was in many ways a civil war as well. As it turns out, only about a third of the European population of the colonies actually wanted to sever their connection to the crown of England. It was rather bold for the men who assembled themselves in congress to presume to speak for “the people” and set them on such a dangerous and costly course – that of war. It was a huge arrogance, and an object lesson exploding the myth that the so-called representatives of the people actually represent the will of the people. A lot of black slaves, and even Indians, enlisted with the British against the Americans.

L: I’ve read that too. And many of the loyal British subjects who did not want to partake of rebellion found themselves surrounded by enemies and eventually on foreign soil in their own homes. A good bunch of them ended up moving to what became Toronto, and the Queen of England is still nominally the Canadian head of state.

Doug: That likely wouldn’t be the case if Benedict Arnold had succeeded at the first U.S. invasion of Canada, in 1775. But British sympathizers had to leave under very… unpleasant circumstances, not the least of which being leaving their property behind. It could have worked out worse for them, of course – look what happened a few years later with the French revolution. Maybe we should talk about that, come quatorze juillet. But the point is that the Declaration was not quite as unanimous as many would like to believe. I say that in the interest of intellectual honesty, even though I’m a big fan of the sentiments in the Declaration.

L: Fair enough. I also think it’s important because people who speak of “unifying” the country today – who imagine they can get everyone working together under some brave new banner – are dreaming. It’s just as crazy a dream as the Soviets had, when they imagined their next five-year plan would unite all the workers to pull unanimously in one direction.

Doug: I’m congenitally suspicious of anybody who wants to “unite” people. Most often they’re collectivists who want everybody to follow the party line, become lemmings, and drink the Kool-Aid. Horrible busybodies.

Anyway, the next famous line I think is particularly worth looking at is that of the unalienable rights: “Life, Liberty and the pursuit of Happiness.” I note that in the Individual Declaration of Independence you wrote in 1996, you amended it to: “Life, Liberty, and the Pursuit of Property and Happiness.” We should link to your Declaration, so people can see what I’m talking about. I wish the original had the same emphasis on property you put in.

L: Well, I should explain that I declared independence from the U.S. approximately 15 years ago because I’d had enough of the long history of abuses and usurpations of the day – particularly the Waco massacre. As you note in your first point, I didn’t think my fellow Americans would unite as one people to oppose murder and mayhem paid for with tax money extracted from us by force. I also did not – and do not – believe it was necessary for me to wait for or have anyone else’s approval. I did not apply for citizenship elsewhere. So, in my view, I am not a U.S. citizen; I am a sovereign individual.

This may seem rather fantastic, in the literal sense of the word, to most people. I’m aware that the U.S. government never replied to nor acknowledged the Declaration I published – with the same sincerity and perhaps more honesty than the Continental Congress published its Declaration. Uncle Sam still considers me a tax slave, along with the rest of the herd. But to me it was more than symbolic: It cleared any mental clutter that might have prevented me from my pursuit of Life, Liberty, Property, and Happiness… It opened the door for me to become an International Man.

Doug: I congratulate you on being ahead of the curve on that… Although I suspect that if you sent it to them today – now that the ridiculous Forever War on Terror has been declared and the Department of Homeland Security established – you might have to deal with a dawn raid on your house. The Declaration of Independence has become a piece of subversive and seditious literature, and those who take it seriously… should be careful.

L: Thanks, but now back to your point. It is my understanding that Jefferson actually did originally write “Life Liberty and the Pursuit of Property.” But, as you say, there was not unanimity on the idea of declaring independence, and the declaration was amended a lot before it eventually passed. For some reason that escapes me at the moment, the pursuit of property was changed to the pursuit of happiness. I also understand that Jefferson had originally included language that would have freed the slaves, but that was struck to the gain the votes of the southern states, and that Jefferson predicted there would be trouble over the issue within a hundred years – just about the time when the War Between the States erupted.

Doug: I didn’t know that.

L: You still don’t – you just have my assertion. But 1776, the play, has an entertaining and educational telling of the story. At any rate, I got my idea for the pursuit of property – an essential human right – from Jefferson.

Doug: Well said. A pity they removed it – just goes to show there were cracks in the Liberty Bell before it had been rung.

L: [Chuckles] Okay, what next?

Doug: The part where it says that, “whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it …” We’ve talked about the War Between the States already, but I think it’s worth pointing out that this language basically guaranteed the right of the southern states to withdraw from the union. It just goes to how the Declaration had become a dead letter long before today. Most of what the colonists complained the king was doing is now being done – and to a vastly greater degree – by the U.S. government.

L: I see it that way too: Southerners did not march under the banner of ensuring the survival of slavery, but “states’ rights.” That term has negative associations these days, but at the time, those states thought of themselves as independent countries that had a right – guaranteed in the founding documents of the union – to leave that union when they no longer saw it to be to their benefit.

Doug: Yes… I don’t recall how Lincoln, who was a good rhetorician, finessed that point.

L: I think that just like a politician today, he largely ignored it. I don’t think anyone could logically get out of it. Instead, the argument was that “a house divided cannot stand.” And that European powers would take advantage of a divided America and attack.

Doug: Irrelevant to the point, and wrong to boot. At any rate, I think it’s worth reiterating that when the cost of participating in any society exceeds the benefits of belonging to that society, people have the right to remove themselves. That can be individually, as you did – if only in principle and theory – or in groups. But in the latter case, I’d say it has to be truly unanimous for all members of a group. No one should be forced to be part of a union they object to.

L: That’s probably going to sound logical, but impractical to many people. Perhaps we should refer them to our conversation on anarchy.

Doug: It’s a pity that the words “principles” and “politics” sound contradictory when used in the same sentence. The next bit I think is worth another look states: “mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” It’s like the old saw: “Better the devil you know than the one you don’t.” People know that things can always be worse, and as bad as the situation is in the U.S. today, it’s definitely true that it could be worse.

L: It hasn’t gotten to the point where we would be arrested for having this conversation.

Doug: Yes, but for how long? Maybe we should talk faster… At any rate, people in the U.S. still enjoy a relatively high standard of living, even if that’s largely because they’re living off of capital and debt. It’s enjoyable living in a paradise, even if it’s a fool’s paradise. So of course they are reluctant to see serious change. Things might get worse.

L: I’ve never taken that part of the Declaration to have been an argument. I don’t think Jefferson thought there shouldn’t be change more often – his writings show that he expected tyranny to grow back and have to be overthrown frequently. I see it as a psychological observation on his part; it’s just the way people are that they will put up with a great deal of injustice – until it becomes unbearable for a critical mass among the population. The status quo has momentum, and there are psychological reasons for this. A revolution or big social change generates a lot of costs and uncertainties, both of which people avoid. Real change comes at such a high price, people put it off as long as they can.

Doug: Agreed. I think that’s a correct statement of fact in the Declaration, and I’m afraid it’s bearish for the U.S., because it seems pretty clear that as bad as things are for many people, we have not yet gotten to the point where a large fraction of the population would actually consider overthrowing the government by force. Things will have to get much worse before they can get better. That’s what Lenin meant when he said “The worse it gets, the better it gets,” although his intentions were not good. But that’s further proof of how dangerous revolutions are.

L: As long as the rent-to-own furniture fills the living room, American Idol remains on the flat screen, and the minimum payments on the credit cards cover this weekend’s fun, why should we expect the masses to get out on the street and face real danger? The gilding has not yet come off the bars on the cage.

Doug: Yes, well, we’ll see how things look in a few years when a majority of the population can’t make its minimum payments and has to confront the grim reality of downsizing its lifestyle. We should come back to this at the beginning of July in 2014. I’ve got a feeling we’re going to look back at July 4, 2011 as the good old days.

L: I’ll try to remember that – if we’re still having these conversations.

Doug: A foreboding thought… So next we come to the long list of grievances the colonials had against King George. As written, some of them are just issues of the day, such as the rather quaint one accusing the king of “bring(ing) on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.” But most of them really ring a bell. It’s striking how applicable they still are today. Or are again today, if you update them for modern times, as you did in your Individual Declaration of Independence.

L: For example?

Doug: If you change “He” for King George to “It” for the U.S. government, you get things like:

It has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither …

As we discussed in our conversation on immigration, that’s certainly still true today. But this isn’t a good example because, I fear, most voters in the U.S. are anti-immigration and want to bar the doors. So, a better example would be:

It has made Judges dependent on its Will alone, for the tenure of their offices, and the amount and payment of their salaries.

The federal judiciary system today is thoroughly corrupt – perhaps even more so than the King’s judges were in 1776. The U.S. government employs both judges and prosecutors – that’s a clear conflict of interest right there. Federal judges – prominently including those on the Supreme Court – are appointed, not elected. That makes it almost impossible to hold them accountable for their decisions. And they’re all employees of the state – even the elected ones. Prosecutors are also state employees; they get promoted and further their political careers by securing convictions. The incentive in this system is not to secure justice, but to secure convictions. And the police are also state employees, of course. When the government is the plaintiff, prosecutor, and judge, defendants are at a huge disadvantage, as they were back in King George’s day.

L: Can you back that up?

Doug: I don’t have current stats, but last I saw, the conviction rate in federal cases was over 90 percent – an accuracy rate that defies belief for an organization that can’t even deliver the mail reliably. Grand juries are a sham – it’s no joke that a DA can get them to indict a ham sandwich. And our attorneys general have been a parade of goons for years: Ashcroft, Reno, Holder – these people could have worked quite happily in Auschwitz.

It is very, very dangerous that the government – not private citizens against one another – now brings the majority of the cases filed in court. Especially since, if memory serves, the only two crimes enumerated in the Constitution are treason and counterfeiting. But that’s a subject for another day.

One more thing I would add: There is private arbitration in the U.S. It’s much cheaper, faster, and more ethical than the government system – I strongly encourage people to put “consent to arbitration” clauses in their contracts and use the private systems for justice.

L: They could start by looking up the American Arbitration Association. Okay, any more examples?

Doug: Yes; see if this sounds familiar:

“He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass [sic] our people, and eat out their substance.”

It’s particularly egregious to see ourselves back in this same pickle. We have a largely unauthorized and unaccountable fourth branch of government in all the alphabet soup agencies: ATF, FBI, DEA – now DHS – DOL, DOA, DOE, DOC, IRS, FDA, SEC, and on and on. These parasites literally swarm over the countryside, making it all but impossible for an honest man to earn a living off the sweat of his brow.

L: It’s sad, really… I realize that 235 years is a long time, but it’s amazing that the descendants of people who rose up against their government over a three pence per pound tea tax, or whatever it was, exactly, now submit to 30% life-confiscation (taxes) – or even 63.4% life-confiscation, if you go by “cost of government.” Who are these people? How can they celebrate “the 4^th of July” without an inkling of how deeply they betray the revolution they toast?

Doug: Well, lapdogs are descended from wolves. I suppose they imagine themselves as sons of wolves, not lapdogs, even though they’ve actually evolved into a different species – as have Americans.

L: [Sighs] Ouch. My take is that generations of propaganda and government schooling have destroyed the average U.S. citizen’s ability to engage in real, critical thinking and inculcated a culture of dependence and entitlement. Maybe not a separate species, but this is not a problem that can be fixed in a day, nor with the simple turning of a new page. It would take a lot of re-education, de-programming, or maybe just generations of facing harsh economic realities to really regain the independent American spirit that made America great.

Doug: Let me stand corrected. Lapdogs are only a different breed, not a different species. Released from captivity, their descendents would revert to type—if you assume they survived long enough to do so. People have been taught to be good little cogs in the wheel. They call it being patriotic. And I agree with you that there’s no quick fix for generations of cultural decay; there is no political solution. It doesn’t matter who gets elected today; no one who can get elected could do what needs to be done. Even having a revolution today wouldn’t fix anything; given what the average citizen feels, thinks, and believes, we’d only end up with something worse.

L: We’d get Robespierre, not Jefferson.

Doug: Yes. That’s why, I’m sorry to say, I fear any radical change in the U.S. at this point. Does that make me a conservative? Anyway, next we have:

It has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

And, among other related items:

It has affected to render the Military independent of and superior to the Civil power.

Today, we have a vast and powerful military-industrial complex – not just militarily powerful, but sociopolitically dominant. Not only do we get treated to one counterproductive – and unconstitutional, if anyone cares – war after another, we get to pay $5000 for military toilet seats and similar abuses that contribute to the bankruptcy of the nation. We get roughly 1,000 U.S. military camps overseas, plus all those at home. The economies of whole counties rely on U.S. military bases, just as others rely on prisons. We also get increased hatred of Americans among the survivors of our foreign military adventures. Perhaps most dangerous of all, we get hordes of ex-military types who’ve become inured to a life of slavery and violence entering our police forces. These people have become a force unto themselves now, both dangerous and unnecessary, as we discussed in our conversation on the military. “Keeping the peace” has been transformed into “law enforcement” – this is turning the U.S. into a police state.

L: Where you can get thrown to the floor and hauled off to the slammer for quietly dancing with your girlfriend in front of Thomas Jefferson’s statue.

Doug: Or any of the other things David Galland mentioned in closing his Daily Dispatch Friday. And here’s one more:

It has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation …

Sounds to me just like the UN and all the U.S. treaties that subject U.S. citizens to foreign powers and interests.

Then there’s:

For cutting off our Trade with all parts of the world …

We have tomes and tomes of regulations, as well as import and export duties and such things that have the same effect – and ever-tighter currency controls, as we’ve warned readers.

And this:

For imposing Taxes on us without our Consent …

Well, I sure haven’t consented to any taxes. We could do a book on that one.

L: Heh… Let’s see the IRS dismiss its armed branch and end its draconian punishments, then see how many people pay and how voluntary the federal income tax is.

Doug: [Chuckles] In my dreams… Another:

For transporting us beyond Seas to be tried for pretended offences …

Sounds like taking U.S. citizens to Guantanamo Bay and calling them “enemy combatants” so as to avoid the U.S. Constitution and any established law. Or, much worse, executing people based on suspicion alone. The Orwellian “Patriot Act” comes to mind.

One more:

For depriving us in many cases, of the benefits of Trial by Jury …

In the U.S. today, juries are absolutely denied the right to determine the justice of the law. In the past it was understood that they had not only the right but the duty to seek justice – not just to enforce laws as instructed by some judge. But we’ve talked about fully informed juries before. I consider this an unconscionable usurpation.

That’s enough of that; all of these things are unconscionable – even though they’re passively, supinely, accepted by the whipped lapdogs that Americans have devolved into. I think our readers will get the picture: The current government of these forcibly united states is much, much more dangerous and capricious than the monarchy our ancestors rebelled against.

But there’s one more thing in the Declaration’s closing thoughts particularly worth noting:

A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

That certainly describes the situation in the U.S. today. The government is not the friend of the people, nor their protector, nor their benefactor. The government is the single greatest threat to an individual’s life, liberty, property, and even his pursuit of happiness. It’s unworthy of the support people give it. It’s an entity with a life of its own.

L: Strong words.

Doug: I’m not saying we ought to have a revolution, because as I said before, in the current cultural and intellectual environment we’d just end up with something worse. But the fact that the fire is worse does not make the frying pan a good place to be. This is why the U.S. government doesn’t have to worry about me becoming a rebel nor fomenting a revolution; I truly believe it would only make matters worse.

It’s also why I’ve chosen to step aside from the coming troubles. It’s not that I don’t care about America – I loved the America that was – but that I don’t think risking life and limb will do the kind of good it did our forefathers. And I would encourage our readers – who are smart enough to see what’s coming – not to fall prey to misguided ideas of patriotism. We have no moral obligation to rescue those who try to vote themselves free lunches at our expense.

L: Has it ever crossed your mind that, particularly in a so-called democracy, people may actually get the government they deserve?

Doug: Yes, indeed it has. On a philosophical plane I’ve always believed that, with a few random exceptions, everyone gets what they deserve. Actions have consequences. It’s as simple as that. Cause has effect, what goes around comes around, and you generally reap what you sow. The residents of the U.S. broadly accept all kinds of unsound, unwholesome notions. Reality is going to reward them with a lower standard of living, and a lot less respect from other people. The universe isn’t malevolent, but it is disinterested. Residents of the U.S. will find that they’ve forfeited the right to consider themselves some kind of chosen people.

L: Okay then… Investment implications?

Doug: Well, as I’ve been saying, the more free and unregulated an economy, the more it’s possible to invest – that is, to allocate capital so as to increase wealth. But as the government grows in scope and power, the economy becomes less stable and you have to switch to speculating on the outcomes of government distortions in the economy. That’s the kind of economy we’re looking at for some time. Most unfortunate. But we needn’t be adversely affected.

L: No particular Independence Day plays, I suppose…

Doug: No. This is just a public service announcement. Word to the wise. Instead of wearing red, white and blue, people should wear black on the fourth of July, to mourn the passing of the spirit of independence that was once America’s greatest virtue and driving force.

L: Okay then, thanks for another somber, but, I believe, important set of ideas.

Doug: You’re welcome. Enjoy your mortars! I hope the police don’t mistake them for IEDs.

L: Me too!

THE FATHER OF PR MAGGOTS

The quotes below are from the father of public relations maggots. Edward Bernays was hailed as a master of propaganda. He wrote a book called Propaganda in 1928. He was an FDR/Kennedy liberal that believed a chosen few could manipulate the masses to believe anything. The arrogance of this prick was beyond compehension. But guess what? He was right. The government, corporations and Madison Avenue slime have used his methods to manipulate and control the masses for decades, and it continues today.

His major coup, the one that really propelled him into fame in the late 1920s, was getting women to smoke. Women didn’t smoke in those days and he ran huge campaigns for Chesterfield. You know all the techniques—models and movie stars with cigarettes coming out of their mouths and that kind of thing. He got enormous praise for that. So he became a leading figure of the industry.

The master manipulator in his own words:

“It is sometimes possible to change the attitudes of millions but impossible to change the attitude of one man.”

“The best defense against propaganda: more propaganda.”

“Those who manipulate the unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our lives whether in the sphere of politics or business in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons who understand the mental processes and social patterns of the masses. It is they who pull the wires that control the public mind.”

“In theory, everybody buys the best and cheapest commodities offered to him on the market. In practice, if every one went around pricing, and chemically testing before purchasing, the dozens of soaps or fabrics or brands of bread which are for sale, economic life would become hopelessly jammed.”

“Propaganda is the executive arm of the invisible government.”

“A single factory, potentially capable of supplying a whole continent with its particular product, cannot afford to wait until the public asks for its product; it must maintain constant touch, through advertising and propaganda, with the vast public in order to assure itself the continuous demand which alone will make its costly plant profitable.”

“If we understand the mechanism and motives of the group mind, it is now possible to control and regiment the masses according to our will without them knowing it.”

LLPOH’s Short Story on What Employers Want in Their Employees

Given the size of TBP’s readership, it seems certain that a there are several hundred members who will be seeking new employment at any given time. The intention here is to provide a bit of insight into what employers are looking for in employees, in hope that that information will assist the members to land interviews, successfully negotiate the interview, and hold the job through the crucial first few months.

As an employer, I hire employees for one reason and one reason only – to help the company make money. I believe this to be a universal truth for all employers. I understand a great many people find this truth to be distasteful, and that some greater relationship, such as mutual loyalty, should exist between employer and employee. To them I say this: what you believe matters not – this is the way it is. Live with it, or do not. If you choose to not live with it, your lives will be harder and it will impinge upon a fruitful search for employment. So in your search for work, keep foremost in your minds at all times this thought – how can I show prospective/current employers that I will help them make money?

The Application

I do not wish to dwell on this area, but will only try to provide some generic advice on what I look for when sifting through job applications.

– I look for a cover letter specific to me and my organization, and do not wish to see a form letter.
– I look for a resume that is appropriate to the position. In other words, I do not want to see a five page resume when the person is applying for a machine operator’s position. Limit the resume to no more than two pages no matter what position is being applied for. Also, get it professionally done, no typos, and printed on quality paper (I recommend something other than plain white so that it stands out).
– I do not want to see that the person has job-hopped. If you have, try to devise a means of obscuring and/or explaining this. I also do not want to see a huge list, or any list, of personal interests. It will not be a positive, and will possibly be a negative if it leaves me with the idea that you partake in dangerous activities or so many activities that they may interfere in your work.
– I want to see what skills you have, and I want to know what you have accomplished. What you were responsible for is of lesser interest to me. A lot of people are responsible for many things, but accomplish little.
– I want to see that you can help me make money.

The Interview

Following is what I want in an employee, and these are the things that the applicant needs to address during the interview:

– I want an employee that comes to work. This is the single most important thing. I repeat, this is the single most important thing. Everything else runs a distant second. You need to get the fact that you will come to work into your application. In 40 years of work I have missed the following days of work: 5 days with pneumonia, 3 days with hernia surgery, 1 day with shoulder surgery, 1 day with a temperature of 104, 2 days with food poisoning. I have no time for people that miss lots of work – especially if they miss lots of single days. Miss a week with pneumonia or surgery – fine. Miss ten days a year one day at a time? Take that crap somewhere else. Some people think that this is harsh. I do not care – not one single whit. Come to work, or get lost. My company averages less than 1.5% absenteeism, and always has. That is three days per year per person, and includes long-term illnesses. As a result, I am able to very accurately plan and schedule my business, which helps me make money and compete in a world market. (There is that thing again – money.)
If a new employee misses a day of work in the first month, I raise an eyebrow and keep an eye on what is going on. If they miss 2 days the first month, it is unlikely they will maintain their employment.
– I am not recruiting for superstars. Superstars are too rare to recruit for. I am recruiting for hard-working individuals that come to work, bring a varied skill-set, and are willing to learn. I do not want to hear that a person can do everything – it is almost always bullshit. I do not want to hear that they are quick learners. Everyone says they are a quick learner. No one is ever a quick learner. I want someone who says they will come to work every day and who says that they are willing to learn and that they will keep at it no matter how long it takes. Funny enough, it is these folks that turn into superstars. People that apply and try to sell themselves as superstars invariably overstate their cases. Sometimes they fool me, and I put these folks in jobs where I find out that they are in fact not qualified. That costs me money. That is a bad thing.

– I do not want job hoppers. If I see that a person has held 5 jobs in the last ten years, they need to explain this in detail, and to convince me that this is not going to continue. This may be hard to do. But the best way would include an explanation that they were young, immature, and have reached a point in their lives that they understand the need to be stable. I spend a lot of time and money training and recruiting new employees. I do not want to see that money wasted.

– I want employees that treat the job and business like it is their own. That is to say, they do not waste money or resources, they treat equipment with care, they produce a quality product every time, etc. I want employees that do not waste time. Every minute an employee wastes cost me approximately $1. Really. Say I have 130 employees and they all waste 10 minutes a day (I am sure it is far, far more than that) that is $1300 dollars per day wasted. Or about $300,000 per year wasted. Of my money. I can stroke out just thinking about it. So I want to hear that potential employees will not waste time, and that they will care for the business as though it is their own. So in an interview say exactly that – “I will not waste time and I will take care of your business just like it is my own”. See how fast you get hired.

– I want employees that fix their own problems. I do not want employees that bring me a never ending stream of problems they have identified. Most issues are not rocket science, and the employee can fix the problem themselves. And I do not want employees coming to me every time they have fixed a problem to crow about it. Blow your own horn, but do it infrequently. I am not blind – I can see. Let your prospective employer know you are this type person. It saves them money.

– I do not want anyone that is a pain in the ass. I want people who treat others with respect. I do not want people who are complaining all the time. I have enough trouble running a business, and do not want to be a babysitter too. It wastes my time and costs me money.

– There are two areas that every employee has absolute authority over –safety and quality. Employees are empowered to shut down any operation that is unsafe or which is spitting out bad quality. I want employees that understand that this is the case – that they are not helping me if they allow unsafe practices to continue or allow bad product to get out the door. Bad quality costs me money, as do any injuries – and injuries can even get me in severe legal trouble. I want people to keep me out of trouble.

– In interviews, I am always concerned if the applicant focuses too much on working hours/vacation days/sick leave provisions/etc. Perhaps it is all reasonable to ask, but it worries me nevertheless.

This list isn’t comprehensive, but it covers the basics. As is evident, it all comes down to money – helping the employer make it and save it. Applicants that show that they are focused on this will be successful. It will overcome a vast array of other deficiencies. For instance, I employ several ex-cons, people with learning disabilities or poor educational skills, ex-drug addicts, etc. etc. etc. For the most part, I do not care about that stuff – I care about whether they help me make money. In many cases I take a chance on people if I think they can help me make money. When I take a chance, I know that the odds are that I will not be successful – for instance, drug addicts relapse. But then again all new hires are something of a crap-shoot.
Here are some examples of how applicant have shot themselves in the foot, and lost the opportunity of a job, or have lost the job themselves:
– In an interview, the applicant told me that they couldn’t work past 3 on Friday, as he played golf then. He was stunned when I showed him the door immediately.
– A receptionist called in sick with a migraine on her first day of work. I advised her there would be no second day. She couldn’t understand it.
– A young man missed 3 days in the first month of work. When I spoke to him about it, he asked me what my problem was as “it is only 3 days in a whole month”. I showed him the door on the spot. The young man’s father showed up to threaten me for mistreating his 23 year old son. That didn’t go well.
– A painter with “10 years’ experience” baked 2 high value spray guns in 2 days. Baking the gun cooks the paint inside the gun and destroys it. Adios, amigo.
– A new hire clocked out without notifying anyone at 9 and came back at 1:30. When asked what that was about he said he had things to do. See you later.
– A new hire was leaping off the top of a dumpster onto his ass inside the dumpster “to compact it”. Do not pass go on the way out.
– A new hire emptied the trash out of his car (lunch bags/ashtray/newspapers/etc.) onto the ground in the employee parking lot. He thought that was fine. I didn’t.
– A new hire started a fire in an employee restroom as a joke. I laughed and laughed.

So, in summary, job applicants need to keep in mind exactly what the employer wants, and needs to convince the employer that he/she will deliver the goods. The employer wants someone to help make him/her money, and who will not be a pain in the ass. It really is that simple.

I hope that this is some help to those looking for new employment. I also hope that those many members with great experience can add and augment to this post. I know that many believe that the world should be a kinder, gentler place. Perhaps that is correct. But it doesn’t help today’s job applicant, who must live in the current reality.

WHY WORLD WAR III IS INEVITABLE

Paul Farrell lives in San Luis Obispo. It is a beautiful place.

How does he manage to write such dire articles while living in paradise? This time it is about our population time bomb. He does a good job detailing the problem, but he doesn’t seem to have the guts to make a recommendation. How do you curtail population growth? China instituted a policy and it will end up destroying their economy. Should we sterilize dumb people? There really is no acceptable policy other than handing out condoms to the ignorant masses and hope they figure out what to do with them.

Therefore, his point has validity. The only way that the population growth will be curtailed is a good old world war. You kill off a few hundred million young men across the world and they don’t have babies. Sounds like a plan. This should occur near the end of this Fourth Turning. I reckon WW III should arrive around 2020.

Have a nice day, and use a condom.

Population bomb: 9 billion march to WWIII

Commentary: Can anyone halt this economic explosive?

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Sshh. Don’t tell anyone. But “while you are reading these words, four people will have died from starvation. Most of them children.” Seventeen words. Four deaths. That statistic is from a cover of Paul Ehrlich’s 1968 provocative “Population Bomb.”

By the time you finish this column, another five hundred will die. By starvation. Mostly kids. Dead.

But global population will just keep growing, growing, growing. Why? The math is simple: Today there are more than two births for every death worldwide. One death. Two new babies.

Bomb? Tick-tick-ticking? Or economic bubble? Population growth is a basic assumption hard-wired in traditional economic theory. Unquestioned. Yes, population is our core economic problem. Not a military problem. But the bigger this economic bubble grows, the more we all sink into denial, the closer the point of no return where bubble becomes bomb, where war is the only alternative.

Yes, folks, ultimately population growth is an economic nuclear bomb, tick-tick-ticking a silent countdown to global disaster. In denial, we march a self-destructive path to WWIII.

Simple math: One death + two births = America’s poison pill

Worldwide population doubled to 3.5 billion between the Great Depression and the Great Society. One generation, from the ‘30s to the ‘60s when “The Population Bomb” was published. Since the ‘60s, we’ve doubled again. This year global population shot past seven billion. Two billion living in poverty, surviving on less than two dollars a day. We do live in a globalized economy. And the math is simple: One death, two births.

Warning: This economic bomb will not stop tick-ticking any time soon. Why? Scientific American said population is “the most overlooked and essential strategy for achieving long-term balance with the environment.” No wonder Bill McKibben, author of “The End of Nature,” warns: “Act now, we’re told, if we want to save the planet from a climate catastrophe. Trouble is, it might be too late. The science is settled, and the damage has already begun.”

We’re on suicide watch and yet population control, the world’s No. 1 economic issue in “off the table.” Why? Last year Mother Jones made it abundantly clear why. In “The Last Taboo,” columnist Julia Whitty asked: “What unites the Vatican, lefties, conservatives and scientists in a conspiracy of silence? Population.” That hot-button issue ignites so many powerful reactions. Politicians won’t touch this third rail.

Our denial is a massive “conspiracy of silence.” Yes, we’re all in this global self-destructive conspiracy. Families love making babies. Economists obsess about their population-growth assumption.

Stockholders demand earnings growth. Wall Street is insatiable. Corporate CEOs shoot for quarterly targets to get ever bigger bonuses. The global Super Rich see population growth as opportunities to increase their wealth, widening the wealth gap. We’re all in this rat race together, in a “conspiracy of silence.”

Population is the key economic power driving all economic issues

Yes, you can forget “Peak Oil.” Forget global warming. Forget debt, deficits, defaults. Forget commodities, scarce resource depletion. Forget all other economic, political, military problems. Yes, forget all of them. None of them matter … if our leaders fail to deal with the world’s out-of-control population bomb. Nothing else matters. Nothing.

Still, the silence is defining. We’re trapped in this deafening “conspiracy of silence.” Neutered. Blind to this suicidal path, incapable and unwilling to face the greatest single economic challenge in history. Won’t wake up till it’s too late.

Why? Deep in our hearts we see no acceptable universal solution. So we wait … until this economic bomb stops tick-tick-ticking. Explodes in our faces. Till the wake-up call, a total economic collapse. Till then, the silence is deafening. We stay in denial. Waiting.

The United Nations predicts there will be nine billion or more humans on Earth by 2050. And while demographers want us to believe total population will level off, they’re just guessing. Depending on an unpredictable range of mathematical scenarios, maybe our planet could top 15 billion by 2100, all demanding a better lifestyle, all demanding more natural resources, more commodities, starting revolutions to achieve their economic goals.

Reuters

Demonstrators shout slogans as they crowd Madrid’s Neptuno plaza near Spanish parliament in Madrid last week.Tens of thousands of Spaniards abandoned their customary Sunday quiet day with families and friends to march against the so-called “Euro Pact” and the handling of the economic crisis.

But the economic problem isn’t just the simple math of adding more bodies. “What really counts,” says Jared Diamond in “Collapse: How Societies Choose to Fail or Succeed,” “is not the number of people alone, but their impact on the environment,” the “per-capita impact.” First World citizens “consume 32 times more resources such as fossil fuels, and put out 32 times more waste, than do the inhabitants of the Third World.”

So the race to 2050 rages on: “Low impact people are becoming high-impact people” demanding “First World living standards.” But unfortunately, if all nations in the world consumed resources at the same rate as Americans, we’d need six Earths just to survive. Today.

Worse, the competition’s growing and we’re outnumbered. While America grows from 300 million to a 400 million by 2050, the rest of the world explodes into a nine billion bubble, with over 1.4 billion each in China and India. The bomb keeps tick-ticking.

Pentagon warns of ‘desperate all-out wars for food, water, energy’

What a “conspiracy of silence.” Seems everybody’s on the “economic growth” bandwagon. And with population growth comes chaos, anger, war. Remember 2011: Unemployed college kids in the Arab Spring. Higher pay for China’s workers. Wisconsin unions revolt. Warning, by 2100 the science-fiction solutions of “Avatar” and “Wall*E” will be reexamined seriously, perhaps even the unthinkable in the “Boomsday” novel.

WWIII is no fiction. We’re in the buildup now. During the Bush era, Fortune analyzed a classified Pentagon report predicting that “climate could change radically and fast. That would be the mother of all national security issues.” Population unrest would then create “massive droughts, turning farmland into dust bowls and forests to ashes.” Soon “there is little doubt that something drastic is happening … as the planet’s carrying capacity shrinks, an ancient pattern reemerges: the eruption of desperate all-out wars over food, water, and energy supplies” with “warfare defining human life.”

Forget “Peak Oil.” The real economic force behind “Peak Oil” is “Peak Population.” Fail to defuse the population bomb and experts on sites like LifeAftertheOilCrash.com make clear the inevitable consequences of our denial, silence and inaction: “Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult … it is the scientific conclusion of the best paid, most widely respected geologists, physicists, bankers and investors in the world.”

We are at the tipping point: Failing to defuse the population bomb guarantees global economic collapse.

Throughout history, myopic leaders never act … till it’s too late

Will our leaders rise to the occasion? History says no. Diamond put all this in perspective in “Collapse”: “One of the disturbing facts of history is that so many civilizations collapse. Few people, however, least of all our politicians, realize that a primary cause of the collapse of those societies has been the destruction of the natural resources on which they depend. Fewer still appreciate that many of those civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power.” Tick, tick, tick ….

So what is this one common flaw that drives nations to collapse worldwide and over the centuries? Diamond says leaders “focused only on issues likely to blow up in the next 90 days,” lacking the will “to make bold, courageous, anticipatory decisions.” Their short-term thinking, unfortunately, sets the stage for a rapid “sharp curve of decline.”

And given the myopic mind-set consuming American politicians today, it’s easy to see how the daily trench warfare of the 2012 presidential campaign is connected to the Pentagon’s prediction of WWIII, of “desperate all-out wars” dead ahead.

Unfortunately, that is the end game of our “conspiracy of silence,” our unwillingness to confront the inevitable. Our inaction means war will be the ultimate economic solution: For America, for capitalism, for civilization, for Planet Earth. The bomb just keeps tick-tick-ticking. Nothing can, nothing will, stop this tick-ticking population bomb. Nothing, except a global nuclear economic bomb.

Sshh, quiet, you’ll wake the babies.

OBAMA’S PISSING IN THE WIND

Zero Hedge http://www.zerohedge.com/ with an outstanding piece on the ridiculousness of Obama’s blatant attempt to manipulate the oil markets so his diminishing re-election chances are bolstered. As usual, this moron has no idea how markets work, or the law of unintended consequences. He is doing wonders for making the Fourth Turning as chaotic and desperate as possible. OPEC is now being led by Iran, not Saudi Arabia. The release of 60 million barrels of oil from strategic reserves will be as effective on keeping oil prices low as QE2 was in reviving our economy and spurring the housing market.

The second article is from www.oilslick.com and details the reasons for the Strategic Oil Reserve. Two thirds of the reserve is sour crude, which many of the refineries in the US can not process. We are depleting our reserve of sweet crude and sending it to Europe. Brilliant “strategic” move by Obama. I really think Obama approaches life like it is a game and he is smarter than everyone else. He is a dangerous man. Four more years of this guy will insure the destruction of our country.

As The IEA-OPEC Nash Equilibrium Collapses, Is A 1973-Style OPEC Embargo Next?

Submitted by Tyler Durden on 06/26/2011 11:13 -0400

Last week’s dramatic decision by the US administration to strongarm the IEA into releasing strategic petroleum reserves (of which the US would account for 30 million barrels, or half of the total), is nothing but yet another example of the hobbled and incredibly short-sighted thinking that permeates every corner of the Obama administration. Because as the WSJ reports, “the move by the U.S. and its allies to release strategic reserves of oil could provide a much-needed shot in the arm for the U.S. economy, but risks inflicting lasting damage on the already tense relationship between oil producers and consumers.” The move comes on the heels of the dramatic collapse in OPEC talks in Vienna two weeks ago when Saudi Arabia was effectively kicked out of the cartel, further confirmed by reports that the IEA consulted with Saudi (and China and India) in advance of its decision (more later). Additionally, “OPEC and the European Union are due to hold an energy summit in Vienna Monday that will be the first official meeting of producers and consumers since the IEA’s move, and will provide a platform for OPEC members to express their disquiet over the stocks’ release. However, OPEC’s biggest player, Saudi Arabia, won’t be present.” Make that former player, in an organization now headed by the previously #2 producer, Iran (which just happens is not all that pro-US). The biggest threat, however, is that in direct retaliation against the IEA’s cartel-like decision, which comes at the expense of the remaining OPEC countries, is that as Zero Hedge suspected, the next step will be a more than proportionate cut in crude production by OPEC: “Some analysts speculated that OPEC could respond to the IEA release by cutting output to offset the increased supply.” What happens next is complete Nash equilibrium collapse, with a high possibility of a 1973-type OPEC oil embargo announcement in the immediate future.

“Going ahead with an increase would cut into revenue, said Christof Ruehl, chief economist of BP PLC. But cutting production to offset the release, he said, “would be seen as hostile by IEA members” and “could lead to a war of attrition, at least as expensive,” in which OPEC cuts production and the IEA keeps releasing stocks to make up for the shortage.” The winner of all this, is of course, China, which will gladly benefit from ongoing blue light specials courtesy of the US Strtategic Petroleum Reserve to build up its own reserve holdings, as the rest of the world squabbles over a US-dominated status quo whose time has now officially passed. And just as the rare earth metal price spike in recent weeks demonstrates what happens when China is the marginal anything in any supply chain, one can be certain that the price of Crude will be far, far higher several years from now.

And speaking of Iran, its oil ministry SHANA wasted no time in firing the retaliating round against the IEA’s decision, accusing the US of acting unilaterally and purely for the benefit of Obama’s reelection campaign, warning that the drop in oil prices won’t persist:

Iranian governor for OPEC Mohammad Ali Khtatibi says International Energy Agency (IEA) decision to draw oil from its emergency reserves implies intervention in the ordinary function of the oil market.

Speaking to Shana, Mr. Khatibi said that the trend of falling oil prices would not be sustainable.

‘Following the failure to bring down the prices at 159th ministerial meeting of OPEC in June 8, the United States of America and Europe are using all the means to push oil prices lower, Iranian governor for OPEC said.

Khatibi noted that IEA’s initiative to release oil from strategic petroleum reserves would followed by artificial falling of oil prices but those countries believing in open markets showed they are not genuine in their believes.

According to Khatibi recent days’ developments in oil market is not the result of issues relating to supply and demand or market needs but political pressures by the United States drives the initiative.

‘The United States government plans to influence the results of the upcoming presidential elections of the country by putting pressure on oil prices’ top Iranian oil official said.

Khatibi pointed out that developed countries initiative to draw oil from strategic petroleum reserves is risky because they cannot continue the move in the long term.

He added: these reserves are being held for emergency situations so the consuming countries of the International Energy Agency will have no other choice except to replenish the reserves for further use.

Indeed, if Obama’s reelection campaign is such an emergency that it requires tapping the SPR, what will happen when there is a real emergency: such as a repeat of the 1973 OPEC embargo, which set the stage for Volcker’s last minute and very painful intervention to prevent the US economy from tailspinning into an inflationary supernova?

And just to make sure things get even more polarized, Dow Jones reports that the “International Energy Agency consulted Saudi Arabia, China and India before it authorized the release of some of its emergency reserves, the agency’s executive director said Sunday.”

“They understand, and they appreciate the action,” Nobuo Tanaka said on the sidelines of the second Global Think Tank Summit in Beijing.

The release of some of IEA’s strategic stockpiles is meant only to fill the gap in supply until higher crude volumes from Saudi Arabia reach the global market, he added.

Oddly enough, the leadership at the IEA is just as clueless as that of the US:

Separately, Tanaka said he asked China once again to join the IEA on Saturday. Although there hasn’t been any official response, Tanaka said he was encouraged by China’s recent statement publicly welcoming the IEA’s strategic stockpiles release.

Of course they welcome it you idiot, because they will be buying everything your member countries have to sell, and thanks to your stupidity, at a welcome discount. And why the hell would China want to join the IEA when it gets all the benefits of participation, without any of the obligations of being a member (i.e., adhering to your retarded politically-motivated agenda).

Good luck buying it back at the same price when OPEC fires its own warning shot and announces it is reducing crude output for all remaining OPEC countries (ex. Saudi) by 10-15%. And yes, Goldman will promptly move it Brent sell recommendation to a buy, within hours of said announcement.

Strategic Petroleum Reserve

Jim Brown
Back before the OPEC meeting the Obama administration held talks with Saudi Arabia on swapping oil in the SPR for new oil Saudi would produce. This revelation shocked many traders and suggests the administration is unaware of the strategic reasons behind the SPR.The Strategic Petroleum Reserve (SPR) holds 727 million barrels of oil that is “reserved” for times when oil is not available on the open market due to war, hurricane, embargo, etc. The oil in the SPR is not there to be used to manipulate prices. It is a “strategic” reserve. Most presidents have forgotten what strategic means and have instead treated it like a “Political Petroleum Reserve.”

The SPR was created by President Ford in 1975 as an answer to the 1973-1974 oil embargo when Arab nations cut off supplies of oil to the USA. Although commissioned in 1975 with construction beginning in 1976 and the first shipment into the reserve in July 1977 it was not until Christmas Day 2009 that the SPR was finally filled to capacity. It took 32 YEARS to fill the reserve. Oil was purchased outright and also procured as a Royalty-in-Kind (RIK) from U.S. producers in lieu of royalty payments to the Federal government.

In 2005 Congress decided the events in the Middle East were suggesting future problems for imported oil and they authorized an expansion of the SPR to one billion barrels. However, despite a comprehensive plan to locate and prepare additional storage facilities there has been no actual construction to fulfill the authorization. The current administration is “reviewing” the plans and the reason behind the SPR.

It has been tapped in the past when national disasters like Katrina knocked out the Louisiana Offshore Oil Platform (LOOP) where oil imported from overseas is offloaded into pipelines for transport to refineries. I view that as a valid use since the amount of oil released is trivial and will be replaced as soon as practical after the disaster. Actually the refineries receiving the oil from the SPR have to replace it with oil within so many weeks after the disaster is over. There have been two major drawdowns from the SPR. Desert Storm saw a distribution of 17.3 million barrels when prices when world supplies dropped after Kuwait was invaded and Iraq production was degraded. The second major drawdown was after Katrina when 25% of our domestic production was halted. The DOE authorized a sale of 30 million barrels but only 11 million were actually purchased by refiners.

The current SPR inventory is 292.5 million barrels of light sweet crude and 434 million of heavy sour crude.

We found out last week that the current administration held talks with Saudi Arabia on taking light sweet crude, the kind in short supply, and shipping it to Europe and replacing it with heavy sour crude from Saudi Arabia.

Europe is facing a very tight situation today with the loss of 1.5 mbpd of light crude production from Libya. Since light crude supplies in general are what controls oil prices the shortage of sufficient light oil has pushed Brent prices well over $100. There is no shortage of heavy sour crude but there are fewer refineries that can process that crude and that makes heavy sour crude a lot cheaper on the world markets.

In the U.S. we have a mix of refineries with some capable of processing the cheaper oil and some only the light oil.

If we were to take out 1.5 mbpd of light sweet crude from the SPR and send it to Europe to replace the Libyan crude when would that program end? The IEA does not expect Libyan crude to be back at full production until 2015. Obviously at the rate of 1.5 mbpd (45 mb per month) we could not supply the missing oil for more than a few months.

By replacing that highly desirable light oil with less than desirable heavy oil we would be reducing the value of our strategic reserves. If this program continued for several months our flexibility in handling future real emergencies would be degraded. It took 32 years to fill the reserve and that period covered times of plenty and times of scarcity, economic boom and economic bust.

With the budget under extreme pressure and spending cut comments in every newscast should we really be depleting our strategic reserves so Europe can have cheaper gasoline and Saudi Arabia can sell more low quality oil without going through the OPEC quota program? I think not.

The SPR is a STRATEGIC reserve that lawmakers saw fit to construct and fill at the cost of billions of dollars. Politically several presidents have talked about releasing oil to reduce fuel prices in the USA but so far they have all been dissuaded from weakening the strategic value of the reserve.

Lawmakers should prevent presidents from making these kinds of political moves. When we actually need this oil we need it to be there. If Iran obtains a nuclear weapon there are two targets at the top of their hit list. The first is Israel although they may not follow through with that attack because of the tremendous retaliation Israel could inflict on Iran. The second target is their archenemy Saudi Arabia. If they could knock out Saudi’s major oil terminal they could inflict severe financial damage on Saudi and eliminate Saudi’s financial influence in the region. The loss of Saudi’s 10.0 mbpd of production would immediately send oil prices well over $200 a barrel and Iran’s oil would be worth triple what it is today. Of course they would still have the problem of selling it because global sanctions would be severe.

Al Qaeda has targeted the Saudi oil fields and production facilities for years but have so far been unable to mount an effective attack. If al Qaeda eventually manages to act on their aspirations the same significant drop in the worlds oil supply would appear.

Today’s Arab Spring uprising all over the Middle East and Northern Africa is another warning that oil supplies from that region could dry up in a matter of days given the right sequence of events. This is all the more reason we should not dwindle away our strategic resources.

Lastly, China is eventually going to be a serious thorn in our oil supply. Chinese generals have said China will be at war with the U.S. by the end of the decade over natural resources. China could cause the U.S. great harm by interdicting oil supplies from the Middle East. If they believe we don’t have the backbone to stand up to them in an armed conflict then they could take action to acquire more supplies and it would be our loss.

As we continue approaching the peak in oil production we are going to see news events increasing in frequency that will make our strategic reserves more strategic. The U.S. military already believes there will be shortages in 2012 and that shortage could grow to 10 million barrels per day by 2015.

U.S. Joint Operating Environment, Page 29

If our own military believes there will be shortages by 2012 and severe shortages by 2015 why would we want to send critical supplies of light crude to Europe in exchange for sour crude from Saudi Arabia?

The administration claims they have a plan “teed up” to use the SPR in the case of market shifts. Let’s hope that plan fails to leave the tee and calmer and less political heads prevail.

Jim Brown

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LIVIN IN BEVERLY HILLS (Oldie but Goodie)

I wrote this back in September 2009 before I had a website. I was reminded of it this morning as Weezer blared from my radio on the way to work.

For the last three decades millions of Americans have been living in Beverly Hills. How can this be? Only 35,000 people reside in Beverly Hills, California. Millions have acted like they live in Beverly Hills, where the median household income is $125,000. The median household income in the United States is $50,000. There are 116 million households in the United States. Only 12 million households have income of $125,000 or more. There are 60 million households making less than $50,000.

Why shouldn’t the 60 million households be entitled to live like the top 10%? This is America, where the American Dream of wealth and riches is achievable. Just one small problem. Millions chose to live like the privileged Beverly Hills elite without doing the difficult work to earn their way into the top 10%. They made these dreadful decisions of their own free will. No one forced millions of Americans to borrow and spend like drunken soldiers.

It appears that the psychology of the nation transformed in the early 1980’s. Was it the optimistic message of “Morning in America” preached to the country by Ronald Reagan? Was it the fact that the youngest Baby Boomers were turning 35, entering their prime spending years? Or, was it the long-term decline in interest rates from 18% to 1% over two decades? Whatever the rationale, millions are now drowning in deep pool of debt.

Auto Nation

Where I come from isn’t all that great
My automobile is a piece of crap

My fashion sense is a little whack
And my friends are just as screwy as me
                      Living in Beverly Hills – Weezer

I spend 500 hours per year in my car commuting on the Schuykill Expressway to and from work. In my spare time, I’ve calculated that I will spend at least a year of my life in traffic before I retire. While commuting at 5 mph on the Schuykill, I can’t help but survey the cars I’m sharing the road with. There are thousands jamming the highways in the Philadelphia area. There are 230 million cars in the U.S. and approximately 200 million drivers. We are a car crazed nation, with the number of cars per person 40% higher than Europe, 500% higher than China and 6,200% more than India. In 1970, when I was seven years old, the number of cars per 1,000 people was 529. Today it is 765, a 45% increase in three decades. Suburban dwellers have a love affair with their cars.

The average price of a new car exceeds $30,000 today. That is a nice chunk of change. I have a mental block paying that much money for an asset, that losses 20% of its value in the 1st year of ownership. My price limit is $20,000. I finance my cars over 4 years and try to get 10 years out of them. The 6 years of no payments goes directly into savings. My frugality regarding cars probably harks back to my father buying used cars during my entire childhood. Cars were a means of transportation, not a symbol of success. It appears to me that expensive luxury cars are an attempt at filling a psychological or emotional void in people’s lives. We spend half our lives in cubicles or offices and the other half in our shielded houses with gates and fences to keep people at a distance. The only time we are seen by others is on the highways and byways. An expensive sports car tells the world you are a success. A luxury car is a futile attempt at increasing your perceived happiness. Your fashion sense may be a little whack, but your car isn’t a piece of crap.

This brings me to the conundrum that has confounded me as I drive to work each day. There appears to be many more BMW and Mercedes vehicles on the road than people with enough income to own one of these vehicles. How can this be? I was befuddled. After a little research it became quite clear. The graphs below tell the whole sordid story. Borrow today, live like a Beverly Hills hotshot, roll the loan or lease into the next loan or lease in 3 years, and don’t be troubled about the future. According to the Federal Reserve, consumer non-revolving debt grew from $300 billion in 1980 to $1.6 trillion today. About $1 trilion of this is auto loans. The average automobile loan today is for 63 months, with some going as high as 84 months, compared with an average of less than 48 months in the early 1990s. In 1997 banks financed an average 89% of a new vehicle’s price. The average loan amount was $17,000. In 2007 banks financed 101% of a new vehicle’s price, since consumers borrowed to cover the amount they were upside down on their trade-in. The average loan amount is now $29,000. A full 40% of all trade-ins involve upside-down car loans. The average American car “owner” is in debt up to their eyeballs and upside down on their loan, but at least they look like a million bucks in the eyes of their neighbors and co-workers. Looking marvelous is what passes for achievement today.

Of course, it takes two to tango. A car buyer with no money wouldn’t be able to drive that beautiful BMW X5 or that Mercedes ML350 unless someone loans them the money to do so. This is where the creative geniuses from Wall Street entered the picture. Auto loans were securitized into packages and sold off to investors. The banks and finance companies who initiated the loans did not care if the loans went bad. Their sole intent was to move cars off the lots, not lose sleep about silly details like credit scores, income, or ability to pay back the loan. It worked wonders for the car companies. Annual sales rolled along at a 16 million per year clip. Car executives and bankers made ungodly salaries and bonuses. Then reality set in. Many borrowers couldn’t really afford their loans. Delinquency rates have soared to all time highs in the 10% range and are headed higher. The securitization market froze and annual sales have plunged below 10 million units. Another Wall Street success story.

The ability of car companies to make payments extremely low through long-term loans and leases is the reason an average Joe making $50,000 per year can drive a BMW and resemble someone making $150,000 per year. Chrysler and Ford generated 20% of their car sales through leases, while GM led the pack at 40% of their sales. Many of these leases were for SUVs and other giant gas guzzlers. When gas prices soared in 2008, the residual value of these gas guzzlers plummeted as the resale market disappeared. Ford and Chrysler have written off billions. The king of the hill, GMAC accumulated $33 billion of lease assets and is slowly but surely writting off $14 million of these “assets”, while the taxpayer funds their future bad leases.

Leases have made it possible for millions of Americans to drive the hottest luxurious wheels their limited cash budgets would not permit them to buy. Auto makers loved leases because they could sell higher-priced vehicles, which generate a gusher of profits in the short-term. By piling on inducements of their own, such as rebates or 0% financing deals, auto makers were able to subsidize consumers’ lease payments further. As a result, Americans have been able to have access to vehicles their parents never envisioned driving. Leases allowed anyone to look like a rock-star, driving luxury sedans, sports cars and Hummers costing $40,000 to $60,000. The Wall Street Journal describes a common scenario:

For Richelle Babcock, a mother of two young boys in Ann Arbor, Mich., leasing has made it possible to get new cars every couple of years. A few years ago, she took advantage of a trade-in deal and other incentives Chrysler was offering and got a $180-a-month lease on a 2006 Jeep Commander with a sticker price of about $35,000. There’s “no way,” Ms. Babcock says, that she would have bought the Commander outright. “I don’t want to have to own it and drive it forever.” Indeed, in December she turned it in and instead leased a new 2008 Commander. Her payment roughly doubled, but that’s mainly because the lease is much less restrictive about her annual mileage.

I’d like to ask Ms. Babcock a couple questions. Does she have college education funds set up for her two young boys? Does she have an emergency fund of 6 months of living expenses? How much does she have in her retirement account? I’m sure she would be offended by such questions. It’s her right to get a brand new car every two years. These are the people who can’t distinguish a need from a want.

This brings me to the chapter in this horror story that really sticks in my craw. I drive through West Philadelphia every day. The neighborhoods are decrepit, with boarded up houses, trash strewn vacant lots, grade schools that resemble prisons, and a substantial number of unemployed folks shuffling about from morning to night. These neighborhoods appear to have five times as many BMWs and Mercedes as my suburban upper middle class neighborhood. According to the U.S. Census, West Philly is a predominantly Black neighborhood, with a large proportion of unmarried high school dropouts living in poverty, occupying dilapidated houses with Direct TV dishes on their roofs. According to the U.S. Census, my neighborhood is occupied by people who are five times higher on the income scale.

The August unemployment figures from the BLS show that the unemployment rate for Black men is 17.0% versus 10.6% last August and versus 9.3% for White men. The unemployment rate for Black teenagers is 34.7%. With these figures, you would expect unrest, looting, and riots in West Philly. The civil unrest hasn’t happened in West Philly or anywhere else. I think I’ve figured out why. Just picture a 20 year old unemployed Black man calling his homies on his iPhone urging them to drag themselves away from staring at their 52 inch HDTVs with 600 stations on their Direct TV network, hop into their BMW X5, and drive over to the comprehensive healthcare riots. It’s not happening. Our elected officials, Federal Reserve and banking cartel have chosen to buy off the poor at the expense of the middle class, so the rich can get richer.

Easy money allows the poor to live like the rich. This explains why people in West Philly are able to drive $50,000 one year old BMWs, while I choose to drive an 8 year old CRV with 130,000 miles. My choice was to finance my $20,000 car over 4 years at 7%. I had a $500 monthly payment for 4 years and then was able to save $500 per month for the next 6 years, banking $36,000 in savings. The auto financing companies GMAC, Ford Credit, and Chrysler Credit offer rebate incentives, 7 year loans, and 0% interest to entice everyone to drive BMWs and Mercedes for a monthly payment below $500. The poor are more likely drawn to three year leases with even lower monthly payments. You can lease a BMW for $399 per month or lower. Once you are lured into 3 year leases or 7 year loans, you are ensnared in a lifetime car payment, never saving a dime. Over 4 decades, my method will leave me with $200,000 of savings. A perpetual car payment will leave you with $0 of savings. Millions have chosen this negligent path. Not only did they pursue this path, they hurtled themselves down the path with gusto by borrowing against their houses to buy cars. The numb-nuts in California and Florida were the worst offenders.

A drug addict still needs a dealer to get their fix. Politicians in Washington with their cohorts in crime, the Federal Reserve and the banking cartel, provided the drug of easy money. The unholy combination of a psychological need to appear successful and easy money has created a deadly recipe for those in the middle class who drive their modest cars for 10 years and save for the future. The black magic of securitization has allowed banks and finance companies to bestow credit card cards and car loans to high school dropouts making $20,000 per year in West Philly with no concern about getting repaid. They packaged this future bad debt, paid off Moody’s and S&P to rate it AAA, and dumped it on suckers throughout the world. Now, auto loan delinquency rates are at all time highs, 1.7 million cars were repossessed in 2008, with another 2 million likely to be repossessed in 2009.

The underprivileged people in West Philadelphia don’t comprehend that politicians and bankers are actually keeping them entrapped in poverty by providing them with easy credit and persuading them that making perpetual payments for cars, TVs, and other material goods is a normal lifestyle. When reality sets in and these people stop making their payments, no trouble for them. As the financial system came crashing down due to the millions of bad loans made by the banking cartel, their protectors Hank (Goldman) Paulson and Ben (Helicopter) Bernanke funneled TRILLIONS of your tax dollars and your children’s tax dollars and their children’s tax dollars to the banks that committed these crimes. The poor people in West Philly don’t pay taxes, so they got to drive BMWs and watch 52 inch TVs for awhile, and are left relatively unscathed. The middle class is paying the bill, losing millions of jobs, while seeing their 401ks drop by 40% and they are still driving their 10 year old cars. Government now wants you to pay more so the poor will have health insurance when they get injured in a BMW accident.

What’s My Payment?

I didn’t go to boarding schools
Preppy girls never looked at me

Why should they, I ain’t nobody
Got nothing in my pocket

Living in Beverly Hills – Weezer

For the last three decades you didn’t need anything in your pocket to attract a preppy girl. You just needed to whip out one of your 10 credit cards and act like a Beverly Hills hotshot. Cash was for suckers. Credit cards are so easy to use. You just pull it out, buy whatever you desire at that moment and make a minimum payment every month until infinity. We’ve become a minimum payment nation. If you can handle the minimum payment, it’s yours. In 2006, the Census Bureau determined that there were nearly 1.5 billion credit cards in use in the U.S. A stack of all those credit cards would reach more than 70 miles into space — and be almost as tall as 13 Mount Everests. Consumer credit debt has risen from $400 billion in 1980 to $2.5 trillion today. Consumers have an average of 5.4 credit cards with $973 billion outstanding. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008. The average American with a credit file is responsible for $16,635 in debt, excluding mortgages, according to Experian. The most fascinating fact is that the top 10 U.S. credit card issuers held an 87.55% market share of $973 billion in general purpose card outstanding in 2008. These 10 banks are coincidently the same banks that brought down the financial system (Bank of America, Citicorp, JP Morgan Chase, Wells Fargo, Capital One, HSBC, American Express, Discover, US Bank, USAA).

Consumer Credit Debt

It has taken Americans three decades of overspending and under-saving to get into this pickle. As you may notice, consumer credit debt is $2.5 trillion and has barely budged downward. The pundits and economists predicting a strong economic recovery are blind to the truths of consumer debt. With actual unemployment exceeding 16.8%, 9 million people forced to work part-time wanting to work full-time, the work week at all time lows, and banks shutting down credit lines, consumers will be reducing or defaulting on their debt for years. With 70% of the economy dependent on consumer spending, there is absolutely no chance of a strong recovery. Household debt service payments as a percentage of disposable income reached a peak of 14.2% in 2007 and have plunged all the way to 13.5% today. Disposable income is plunging as people without jobs don’t have anything to dispose of.

A paradigm shift is occurring and the mainstream media, mainstream economists, and clueless politicians running this country do not understand the implications. Three decades of debt accumulation is not resolved in two years. It will take decades of reduced spending, paying down debt, and writing off debt. The Federal Reserve, banking cartel, and politicians are franticly attempting to make consumers borrow and spend with TARP, TALF, Cash for Clunkers, and numerous other debt increasing gimmicks. The consumer is tapped out. The median 401k balance in the U.S. is $26,000. Boomers realize they are 60 years old and have $50,000 of retirement savings and $30,000 of credit card debt. They are learning the brutal lesson of needs versus wants. The implications are disastrous for those dependent on a consumer spending society (i.e. retailers, restaurants, hotels, car makers, homebuilders).

There are 25% of households in the U.S. with no credit cards. Of those with a credit card, 30% pay off their balances each month. These are the people that have chosen to live within their means. They understand the difference between needs and wants. They appreciate the notion of delayed gratification. You buy things when you can afford them. You live a life of thrift and frugality, save for your family’s future, and live within the parameters of a budget. What a concept. The TARP accepting banks that control 87% of the credit card market are recording losses on an unprecedented scale. But no need to worry, the middle class tax payers come to the rescue again. Orwell must be rolling in his grave at the government originated Troubled Asset Relief Program. “Troubled” is an Orwellian word to describe debt that was knowingly issued by banks to people who would never pay it back in order to generate outrageous fees and bonuses for the executives issuing the debt. When the debt predictably went bad, “Relief” was provided to the criminal bankers on the backs of the taxpaying middle class. Bank of America, Wells Fargo and JP Morgan are bigger than they were before the financial crisis, their executives are still making millions, their “assets” are still “troubled”, and we continue to pay the bill, as will our children and grandchildren. Don’t worry. Ken Lewis, Vikram Pandit and Jamie Dimon’s grandchildren will inherit hundreds of millions of your tax dollars from their banker grandpas.

I Wanna Be Just Like A King

Beverly Hills… That’s where I want to be! (gimme, gimme)
Living in Beverly Hills…

Beverly Hills… Rolling like a celebrity! (gimme, gimme)
Living in Beverly Hills…

Look at all those movie stars
They’re all so beautiful and clean

When the housemaids scrub the floors
They get the spaces in between

I wanna live a life like that
I wanna be just like a king

Take my picture by the pool
Cause I’m the next big thing
Living in Beverly Hills – Weezer

The 8,000 square foot castle-like McMansions are the symbol of extravagance and excess that represent the worst of America’s hyper-consumerism culture. Even though the family unit has gotten smaller since 1970, the average home size has grown from 1,400 sq ft to 2,500 sq ft. McMansions are clearly not necessary due to family size. Essentially, it is another example of Boomers attempting to show the world they are successful. The bigger and gaudier the house the more flourishing you appear. This psychological need for approval combined with the big lie pushed by the National Association of Realtors that a house is always a great investment to generate the biggest housing bubble in history. One glance at Robert Shiller’s chart showing home prices versus population growth and CPI, proves beyond a shadow of a doubt that we have experienced a manic increase in house prices. It is also unambiguous that the downward spiral is not nearly complete. The housing cheerleaders continue to forecast a housing recovery that is still 5 years in the future.

It is mind boggling that home prices could have surged that high while owner’s equity has plunged from 70% in 1980 to 45%. People didn’t earn the McMansions, they borrowed them. The Federal Reserve created spiral in prices upward has trapped millions of late comers in houses that are worth 20% to 30% less than the mortgage debt that is strangling them. Over 16 million home occupiers (not homeowners) are underwater in their mortgage. The decisions to buy houses with nothing down, using option ARM loans, were free choices made by people who should have known better. The decisions to make subprime loans to people making $30,000, to make no-doc loans, and to not verify income or assets were purposefully done to enrich the bankers, mortgage brokers, and real estate agents. The $10.5 trillion of mortgage debt will need to be paid down or written off over many years, before the housing market will reach equilibrium again.

The dream of living like a king in Beverly Hills has come to a shattering conclusion. As mortgage delinquencies soar to all-time high levels, the kings are being led kicking and screaming to the foreclosure guillotine. Neighborhoods of McMansions in California, Phoenix, Florida, and Las Vegas are weed infested crime ridden high end ghettos. The American dream of home ownership spouted by George Bush and legislated through Fannie Mae and Freddie Mac has turned into a debt induced nightmare.

MORTGAGE DELINQUENCIES

The Alt-A reset crisis which will begin in 2010 and not crest until 2013 is coming down the tracks at a swift pace. The credit criteria used by the banks that doled out Alt-A loans were as lax as the subprime loans that precipitated this crisis. These loans already have delinquency rates of 33%, even before these resets kick in. There is no evading this calamity. There is also no doubt how the Federal Reserve, Treasury, and government politicians will handle this next emergency. If you have lived in a modest home, made your mortgage payments, didn’t use your home equity to buy a Mercedes ML350, and pay your taxes, the government will seize your taxes again and dispense them to the profligate borrowers and criminal bankers. You will pay your mortgage and the mortgages on millions of other houses.

Alt-A Loan Resets

Give Me Something I Need

No I don’t – I’m just a no class, beat down fool
And I will always be that way

I might as well enjoy my life
And watch the stars play

Beverly Hills… That’s where I want to be! (gimme, gimme)(gimme,gimme)
Living in Beverly Hills…
Beverly Hills… Rolling like a celebrity! (gimme, gimme) (gimme,gimme)
Living in Beverly Hills…
Living in Beverly Hills – Weezer

The era of excess, gluttony, and overindulgence is coming to a wretched ending. The unraveling is complete. We have entered an epoch of crisis that will last for two decades. The coming winter will be cold, bitter and harsh on most Americans. Millions are learning that living in Beverly Hills was just a delusionary dream. They are just no class, beat down fools and I will always be that way. It is time to enjoy the more basic aspects of life: family, friends, enjoying what you’ve got, and leaving the world a better place for our children and grandchildren. It comes down to choices. It is time for Americans to grow up and take responsibility for their actions and their futures. They must realize that the Federal Reserve and the banking cartel are the only ones profiting from ever expanding debt. The Rising Debt Era has not benefited the borrowers as they borrowed toys they couldn’t afford. The beneficiaries were Bank of America, Citicorp, Wells Fargo, JP Morgan and the other members of the cartel. The 10 biggest banks in the country control 48% of all deposits, 50% of the mortgage market, and 87% of the credit card market, supported and protected by the Federal Reserve and Treasury Department. The “too big to fail” continue to get bigger, as the FDIC will shutter 500 smaller banks in the next year.

The banking cartel has no intentions of relinquishing power. It will be left to average Americans to make the right choices. Government will continue to push Keynesian Cash for Clunkers publicity stunts to keep their debt civilization going. The consumer society needs to be put to rest. Americans must ask themselves a few questions. Do you really need a $35 Aeropostale tee shirt when you can get an identical tee shirt at Kohl’s for $6? They were both made in the same Chinese sweatshop by 13 year old children. The difference is that Aeropostale will say it is a “green” shirt because there was no air conditioning used in the sweatshop ruining the ozone layer. What exactly does a pair of $345 Botticelli shoes do that a pair of $35 shoes from Payless Shoe Source won’t do? Does a $10,000 Rolex watch tell time better than a $50 Timex? Will an $85,000 BMW 750LI get you to the supermarket better than a $15,000 Honda Civic?

When I started researching this article, I came across a Heritage Foundation report called How Poor Are America’s Poor? Examining the “Plague” of Poverty in America. The article makes it clear that the poor in America do not fit the portrayal of living in poverty when compared to real poverty in Africa and much of the developing world. The report concludes:

The typical American defined as “poor” by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.

The main causes of child poverty in the United States are low levels of parental work, high numbers of single-parent families, and low skill levels of incoming immigrants. By increasing work and marriage, reducing illegal immigration, and by improving the skill level of future legal immigrants, our nation can, over time, virtually eliminate remaining child poverty.

The Heritage Foundation report missed one key aspect of being poor in America. The politicians and banks have taken advantage of the poor’s lack of education and ignorance regarding the perils of debt and have enslaved them in a monthly payment plantation. The poor don’t own the cars, electronics, homes and appliances. They are renting them until they can no longer make the payments. The politicians have colluded with the Federal Reserve and banks to provide bad money to the poor in order to keep them satiated and pliable. When the debt predictably goes bad, the banks are compensated by their bought government cronies with middle class’ tax dollars.

“When I was a child I spoke as a child I understood as a child I thought as a child; but when I became a man I put away childish things.” I Cor. xiii. 11.

Americans, led by the Baby Boom Generation, have been living like spoiled children for thirty years. They have thought like children, with instant self-gratification as their sole aspiration. It is time to put away childish things. Hard times have arrived. There is no easy way out. We have kicked the can down the road for a generation. Tomorrow has arrived. Our long-term structural problems have now collided with our current debt induced tragedy. Current policies that further the expansion of debt will ultimately lead to the collapse of our economic system. The timing is all that is in doubt.

Give me something that I need
Satisfaction guaranteed to you
What’s the consolation prize?
Economy sized dreams of hope

When I was a kid I thought
I wanted all the things that I haven’t got
Oh. I learned the hardest way
Then I realized what it took
To tell the difference between
Thieves and crooks
A lesson learned to me and you

Give me something that I need
Satisfaction guaranteed
Because I’m thinking about
A brand new hope
The one I’ve never known
Cause now I know
It’s all that I wanted

Macy’s Day Parade – Green Day

Materialism has not provided what we needed. As our current crisis deepens, luxury cars and Rolex watches will seem so phony. Childish symbols like yellow rubber wristbands and yellow, pink, and rainbow ribbon stickers on our SUVs do nothing to change the world. When you are walking down the street, look people in the eye and say hello rather than staring at your feet or checking your latest email or text message on your “crackberry”. Deeper personal relationships with family and friends will become crucial. The thieves and crooks occupy Washington DC and Wall Street. We do not need what they are selling. Economy sized dreams of hope will sustain the citizens of this great country. Instead of accumulating stuff, give your stuff to people who need it. Donate your stuff to Purple Heart, the Salvation Army, or any other worthy charity. Donate your time to Manna, Habitat for Humanity, or any other worthy cause. Don’t delegate your role in caring for your fellow citizens to the government. Americans will soon realize that what they wanted was not what they needed.