Sunday, September 28, 2008

Crisis Investing for the Rest of the '90s by Douglas Casey - Excerpts

Crisis Investing for the Rest of the '90s. Douglas Casey. 1995. ISBN-13: 978-0806516127


At a minimum we're headed for a financial collapse. A financial collapse does not mean that any real assets disappear. It means that assets change ownership. The buildings, factories, machines, and technology that were created during good times do not vanish just because the stocks, bonds, and bank accounts that represent them are devalued or dishonored. Nor does the desire of people to create and produce vanish when their finances go bad; instead they may become even more motivated.

My belief ... is that when this business cycle peaks and the market distortions and the misallocations of capital forced by the government's intervention in the economy are finally unwound, the consequences will probably reach far beyond the economic sphere.

Why should a depression occur now? A depression could have materialized out of any of the credit crunches in the last three decades, including the financial squeezes of 1962, 1966, 1970, 1974, 1980 and 1982. With each episode inflation went higher, interest rates rose, unemployment increased, and the bankruptcies were bigger. Near bankruptcies (such as Lockheed, New York City, Chrysler, Continental Bank) became more numerous and dangerous and more likely to demand a government rescue. But each time we experienced just a recession that the government ended before the underlying distortions in the economy had been eliminated. And each time the authorities succeeded in preventing a financial collapse, the system became more carelessly confident of government doing so the next time.

The depression of the 1930s was deepened , and was prolonged for years, by Hoover's and Roosevelt's interventionist policies. The Work Projects Administration (WPA), the National Recovery Administration (NRA), the Tennessee Valley Authority (TVA), the Federal Deposit Insurance Corporation (FDIC) and numerous other New Deal creations not only prevented the economy from cleansing itself, they also produced new distortions in the economy. Roosevelt's "solutions" to the depression were almost identical to Hoover's, but Roosevelt's public relations was far superior, enabling him to position himself as the savior of capitalism even while he lengthened the depression.

Socialism is not a serious intellectual challenge. It persists because it expresses so well and underlying set of spiritual and psychological problems. Few reasonable people who have actually looked at the historic results of socialism honestly believe government intervention is the solution to economic problems, rather than the cause. But how someone reacts to economic ideas is much more a question of values and psychology than of intelligence and knowledge.

In fact, most "economists" turn out to be merely political apologists. They prescribe the way they would like the world to work and tailor their theories to help politicians demonstrate the virtue and necessity of their quest for more power.

Politics deals with who decides who gets what, how, why, and when. It deals with how men cooperate with, and compete against, one another in the process not of producing wealth, but of taking it.

Confidence is considered a critical commodity today, because the dollar and the economy itself rest on confidence alone. Yet confidence can vanish like a pile of feathers in a hurricane, once the extent of our problems becomes clear. Confidence in the economy is a very shaky foundation upon which to build your future. I suggest you lose that confidence now and beat the last-minute rush.

Every thinking person must be his own economist, simply because everyone needs a worldview to deal with reality. You can't delegate it to an "expert" any more than you can delegate the formulation of your personal philosophy and ethics to someone else. You need to decide whether we're to experience prosperity or a depression, and how you want to prepare.

A depression is an economic crisis with both danger and opportunity. Everyone will feel the danger, but those who see the opportunity will profit from the crisis. After all, one function of a depression is to return wealth to its rightful owners ... Disaster-caused depressions destroy wealth and make it harder to produce more. Economically caused depressions, through regulations, make it impossible, or at least unprofitable, for the average person to produce wealth.

A real estate collapse doesn't mean the buildings will tumble. But their prices will and their owners may change. A corporation's bankruptcy doesn't mean that the factories or technology it owned will vanish; they will become the property of a different corporation. A government default on its bonds doesn't mean the country (which is not at all the same thing as the government) is bankrupt. It just means that those who held the bonds are poorer and those who otherwise would have been taxed to pay the bonds are richer. In other words, all the real wealth will still be there, but its ownership will change. And some commodities will become more (or less) valuable relative to other commodities.

Because the banks have just taken in billions of dollars, courtesy of the government, they have plenty of money to lend, and at very low rates. "Interest" is the rental price of money, and with money in such ample supply, the price drops. Like any other business with excess capacity, the bankers have a "special" on money.

A recession follows an inflationary boom when the market tries to readjust to normal patterns of supply and demand. It's a painful period when the free market corrects the misallocation of resources encouraged by government inflation. People have more of some consumer products than ever, and there is more plant capacity to produce those products, but few people are as well off as they were before the inflation. They're actually less well off than if the government had only taxed them.

The contraction will be called a recession if the government acts quickly and reinflates the money supply in time to prevent complete collapse. It will be called a depression if the government decides not to act, acts too late, or acts with too little reinflation. In other words, it will be a depression if the government allows the economy to cleanse itself of the distortions that have occurred due to earlier government intervention and inflation; it will be a recession if the government steps in before the liquidation is complete.

At some point, the economy is no longer controlled by individual citizens in the marketplace but by government "planners", who find they have only one of two alternatives: stop "stimulating" and permit a full-scale credit collapse, or continue stimulating until the dollar loses all value and society breaks down. Depending on which they choose, we will have a depression characterized by deflation or by hyperinflation.

"Inflation" occurs when the creation of currency outruns the creation of real wealth it can bid for. It isn't caused by price increases; rather it causes price increases. Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get the blame. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of the government alone, since government alone controls the creation of dollars.

If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.

Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one's life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.

Only the rich can afford the legal counsel it takes to weave and dodge through the laws that restrict the masses. The rich can afford the accountants to chart a path through loopholes in the tax law. The rich have the credit to borrow and thereby profit from inflation. The rich can pay to influence how the government distorts the economy, so that the distortions are profitable to them.

Always, and without exception, the most socialistic, or centrally planned, economies have the most unequal distribution of wealth. In those societies the unprincipled become rich, and the rich stay that way, through political power.

At any given moment a fixed amount of capital in the world is available for borrowing. The government is considered the most creditworthy borrower, since it has what amounts to a 100 percent lien on all the wealth in its bailiwick, so it can borrow all it wants, and at the lowest rates. Why should anyone lend to a business, which could go bankrupt, when the government is available? The ultimate result is "crowding out". The potential for real problems first arose in the middle of the 1970s; as of 1991, the government consumed approximately 79 percent of all new credit.

A better term for the underground economy might be the "alternative economy", since "underground" has acquired a somewhat pejorative connotation. The alternative economy, which includes everything from barter of services to the millions who don't file tax returns, obey regulations, or purchase licenses to do business, is simply the untaxed, unregulated free market in action. It runs the way business did in the early part of the century, before the income tax, the Federal Reserve, and most regulatory agencies. In the alternative economy, the sellers earn more, the buyers pay less, and the State is shut out. Everyone wins, except those who are fed by the government.

Being on the wrong side of a bear market is somewhat comparable to the progressive stages of people when they discover they have contracted a terminal disease. First comes denial, then anger and blame, then false hope and grasping at straws, then finally acceptance and resignation. Only then is the market really dead and ready for reincarnation.

Big companies have always had an edge when it comes to manipulating and gaining from the government's regulations and tax rules. In fact, they have often been strong proponents of government intervention, because it can help the established companies stave off new competition. Large corporations have an innate advantage in getting government contracts and otherwise feeding at the public trough. It's much easier for Big Government to deal with Big Business and Big Labor on Big Deals. But the tenor of the times has turned against them; only government has continued to grow, because it alone has the legal power to coerce. Like a cancer, it's reaching its largest size at the very time its host, the Mass Economy, is dying.

Small business is stagnating for several reasons. First, loan capital is tough to come by, even with interest rates very low ... Second, regulatory hassles - everything from sexual harassment liability to making the premises accessible to the handicapped to zero-tolerance environmental policy - have driven the costs, and liability, of doing business beyond the level small outfits can handle ... Third, the associated costs of starting a new business - taxes, license fees, legal fees, medical and other insurance - are far higher than in the past ... All these problems stem from the government. Perversely, they're all likely to get much worse as the malaise of the Greater Depression deepens.

The main reason for shorting stocks is the reason you are in the stock market in the first place: personal profit. There are, of course, risks peculiar to shorting, and I'll cover them below. But on the whole, this is perhaps the single, most-profitable thing you can do in the market year in and year out, in good times and bad.

If "everyone" owns a stock, then all the potential buyers have already bought; and there's only one thing they can do: sell. Perversely, they'll all sell at once.

People invest in mutual funds because they believe the funds relieve them of need to be cautious. They hope the funds will beat the market, which a lot of mutual fund advertising seems to promise. The industry as a whole, however, underperforms the market; that was, you will recall, one of the reasons for the creation of index funds.

When an institution sells, the only likely buyer is another fun; but they'll all be selling together, for the same reasons. That kind of thing can put a market into freefall. Vacuums could develop under stocks with heavy institutional ownership. Their chart patterns would resemble the glide path of an ICBM on re-entry. Index funds will likely lead the way.

Short-term U.S. Treasuries - It's hard to conceive of them defaulting unless there's a domestic revolution or the government loses a major war. That they are redeemable only in paper dollars, which have no intrinsic worth, is beside the point. In today's moving paper fantasy, you must pretend U.S. Treasuries are "good as gold", since they are, by far, the safest way to own dollars.

Bonds should be viewed as vehicles for speculation on the direction of long-term rates, not something for those investors who want safety and capital conservation. They are political footballs that will be passed dozens of times in the years to come by the intellectuals making a game out of "fine tuning" the economy. You can bet that the ball is going to be dropped at some point.

... brokers like to keep things simple rather than risk confusing a customer; they're in sales, not the education business.

Smart places to live might be Nevada or Washington, close to the Oregon border, or in Wyoming, close to the Montana line. You would pay no income tax where you live, but could make all your purchases where no sales tax is levied.

Political jurisdictions compete to provide a favorable environment for corporations. Sound good? It's not, unless you naively think that what's good for management is good for the shareholders. Management prefers jurisdictions where the law keeps the owners from becoming a nuisance. That is why most corporations are headquartered in Delaware; laws in that state make it easy for management to get its way, as opposed to guarding the rights of shareholders. Delaware receives about 20 percent of its budget from the corporation business, and its officials know what side their bread is buttered on.

Most companies subject to takeovers are vulnerable only because their stock price is low relative to their assets. And that happens when the assets are being misallocated and the market has no confidence in management's abilities to correct the error. In fact, a company can usually be acquired only if management owns no more than a token care of stock. And if the managers are not also owners, why should they care what the business is worth, as long as they keep their jobs? Most managers of big corporations own very little stock in them; arguably, that is because they can see it's a poor long-term investment.

Unlike currency, gold cannot lose value because of government mismanagement. On the contrary, it tends to gain value because of government mismanagement.

Gold ... is a matchless crisis hedge. It's the only financial asset that's completely invisible and private. There are no social security numbers stamped on gold coins, and they leave no paper trail when they change hands. Unlike real estate, for instance, a government cannot easily find gold to tax or confiscate. Unlike stocks, gold doesn't represent a value that can be dissipated or mismanaged. Unlike bonds, gold cannot default. And unlike currency, gold cannot be inflated away. There are not many low-risk places for wealth to hide today. But plenty of wealth exists and, as the world's greatest coward, capital will look for a place to hide when things get scary. Gold is the perfect financial asset in times of uncertainty.

The art of investing emphasizes inaction as much as it does action. Success is a long-term proposition, and most of your time should be spent patiently hunting for the fattest prizes, not frenetically chasing after every mangy stray. Given transaction costs and the vagaries of your own mind set, an even-odds bet is inevitably a fool's bet. You want anomalies where risk and reward are heavily weighted in your favor, where the arguments that you'll be right are so compelling that you are almost forced to act.

The most important question about any investment is: What is the downside?

Government quotas, subsidies, supports, taxes, and marketing regulations are the greatest cause of commodities' volatility; they alternatively cause disruptive shortages and wasteful surpluses. Government intervention gives the appearance of stability over the short-run, but at great cost to both the producer and consumer in the long-run. This offers great opportunities to speculators.

Rather than just deregulate, it would be more in character for the powers that be to create the conditions for a famine in order to get prices up to subsidize inefficient farmers. You may think I'm stretching the point. But the U.S. government cause the slaughter and burial of whole herds of livestock, and poured tons of milk in the gutter during the '30s in a futile attempt to raise prices, even while many people couldn't afford to eat.

The world may still be on a honeymoon following the collapse of communism, but it's hardly the end of history. The fundamental cause of war and revolution still exists, namely, politics. And, to a lesser extent, just plain geography.

Most people do not want to hear the bearish argument for real estate, since by far their largest asset is their house. For the average American family a house is much more than a home; it's a combination investment, savings program, tax shelter, and retirement program. A crash in housing prices would be more devaluating than a stock market crash, not only financially but psychologically.

Real estate has traditionally been the most debt-leveraged of all markets. In the United States, few people can buy real estate, and few people can sell, without borrowing money. Getting a mortgage has always been integral to buying a house except for the very rich. The easy availability of cheap mortgages is the most important single reason that real estate prices increased faster than consumer prices from the '50s through the '70s. U.S. real estate prices are built on a pyramid of long-term mortgage money.

You can't hide real estate, which makes it the most taxable of all investments. Many local governments are in deep financial trouble, and property taxes are excellent candidates for "revenue enhancement". Property taxes also suit the envy-driven, tax-the-rich hysteria that is likely to grow as the average person's standard of living declines.

Taxes, like every form of government action, cause distortions and misallocations of capital. Taxes induce people to act in ways they otherwise would not. And, in what will become a desperate quest for revenue, the government will unwind the tax breaks that have favored real estate over many decades. As a result the distortions those breaks caused will also come apart. Artificially high property prices will tumble.

It's one thing to arrive at a conclusion that U.S. property has entered on a long-term bear market. But it is priced in dollars, and it seems an even surer bet that dollars are eventually going to zero. Instead of seeing the mortgage as a means to buy property, it might be a better idea to view a mortgage as a way to short sell the dollar. It's convenient for borrowers, therefore, that the fixed rate mortgage is still available. I don't like the idea of paying interest. I would rather collect it. Nor do I like the idea of being in debt; it limits your options and puts at risk. But fixed-interest debt remains an excellent defense against a collapsing currency.

The speculator provides a public service by offering a bid when otherwise none is available. A speculator simply gives people what they want most of the time. When prices are high and everyone seeks property, he endeavors to keep prices from going even higher by providing a supply. And when prices are low and everyone desperately needs cash, he once again bows to the will of the market. Buying low and selling high is helpful to people when they need cash more than land.

Foreign aid might accurately be described as a transfer from poor people in rich countries to rich people in poor countries.

When going to a place like Mozambique is suggested to most people, their first reaction is they would feel safer in Miami when they want warm weather. But those who buy a dumpy studio apartment in Miami will someday wonder why they didn't go for a large farm on the African coast instead. The reason, of course, is that they are provincial and not very imaginative and probably, alas, belong in Miami.

The failure of Credit Anstalt in Austria, a bank few Americans knew of, sparked the 1929 depression.

Despite recent large sell-offs, Japan's stock and property markets are not cheap. Prices continue to reflect the good times of the last few decades. The next few years will probably be grim enough to shake up price perceptions; views ingrained over many years do not turn on a dime. As with most historic events, Japan's crisis will not bottom out until the collapse of its financial markets is the headline in every magazine and newspaper around the world.

A collapse in Tokyo, therefore, wouldn't just be a story on the evening news; it could be the signal for a worldwide financial and economic catastrophe. There is no rule that says a depression in America has to be made here; everything is imported these days.

Every nation is insufferably nationalistic. Unfortunately, the Japanese and the Americans are two of the worst offenders and believe that anyone who is not one of them is genetically disadvantaged. Moreover, they are radically different cultures, leaving plenty of room for miscommunication, or worse.

The weapons business is the biggest in the world, bigger even than illegal drugs, and the Japanese have almost no participation there. With their tremendous abilities to produce to high standards and innovate, the Japanese should surpass the American, Russian, British, French, and other arms manufacturers as easily as they did the automakers. Arms will, before the end of the decade, be a perfect area to pick up the slack created by dropping consumer goods exports.

As bad as things were in the United States in the '30s, people still had businesses, savings, and farms - and incentives to rebuild. And the system allowed them to start anew. The Russians have none of that. They own little; the state owns everything. And since the state already owns everything, it has nothing to tax.

We're still paying for the Vietnam War, since it was fought with 100 percent borrowed money. $160 billion over about twenty years at about 8 percent compounded is already $640 billion, and growing at about $50 billion a year. The bill for the instant gratification in Iraq will also grow for years.

Military prowess is a poor substitute for the real roots of greatness, or even for economic power, as the Russians have just discovered and as the Germans and Japanese learned in World War II or the Romans found in the late empire. War is the most unpredictable of human activities, has unintended consequences, and can take on a life of its own.

In a just society, law concerns itself with only two matters: contracts (have you done all that you agreed to do?) and torts ( have you encroached upon another's person or property?). There are encompassed by "common law". Common law, determining right and wrong, is based on principles of justice that can be considered universal in societies. That is vastly different from "legislation" or "political law", which is arbitrarily constructed by officials. Legislation mostly deals with what have come to be known as "victimless crimes".

The U.N. Convention against Illicit Traffic in Narcotic Drugs defines money laundering as "the concealment or disguise of the true nature, source, disposition, movement, or ownership of proceeds and includes the movement or conversion of proceeds by electronic transmission." The treaty does not specify that the proceeds need be from any illegal activity; the simple act of protecting your financial privacy leaves you open to sanctions. About seventy nations, including the United States since 1990, are signatories to this treaty, and treaties have the effect of law within the United States.

Some Americans simplistically believe an opposition to the war on drugs amounts to an endorsement of drugs and an unwillingness to see their destructive effects on society eliminated. I see drug use as a debilitating at best and tend to eschew the company of those who use them. But destroying liberty isn't an even remotely acceptable method to discourage drug addiction. Nor is it effective.

Government sponsors untold waste, criminality, and inequality, in every sphere of life it touches, giving little of value in return. Its contributions to the commonweal are wars, pogroms, confiscations, persecutions, taxation, regulation, and inflation. And it's not just some governments of which that's true, although some are clearly much worse than others. It's an inherent characteristic of all government.

Force is the essence of government. But the possession of a monopoly on force almost inevitably requires a territory, and maintaining control of territory is considered the test of a "successful" government. Would any "terrorist" organization be more "legitimate" if it had its own country? Absolutely. Would it be any less vicious or predatory by that fact? No, just as most governments today (the ex-Communist countries and the kleptocracies of the Third World being the best examples), demonstrate. Governments can be much more dangerous than the mobs that gave them birth.

In general, government judicial systems are far more concerned about crimes against the state than crimes against the individual. In China, as the Tiananmen Square revolt demonstrated, the gravest crime consists of agitation for democracy; in the United States, it consists of nonsupport of the government by refusing to pay taxes or obey regulations. And in all cases a show of humility, a respectful attitude, and the renunciation of politically incorrect ideas are required.

In the perverse "real world" of today ... the police, courts, and the military are among the least significant parts of government; moreover, government fails to produce quality products in any other worthwhile area it pursues, such as education. Indeed, its main products are taxation, regulation, inflation, and wealth redistribution, which all eventually destroy their supposed beneficiaries as surely as they do those who are taxed overtly.

Politics is the theory and practice of government. It concerns itself with how force should be applied in controlling people, which is to say, in restricting their freedom. It should be analyzed on that basis.


Bakunin, Michael
Ever since States came into existence, the political world has always been and still continues to be the state for high knavery and unsurpassed brigandage – brigandage and knavery which are held in high honor, since they are ordained by patriotism, by transcendent morality, and by the supreme interest of the State. This explains to us why all the history of ancient and modern States is nothing more than a series of revolting crimes; why present and past kings and ministers of all times and all countries – statesmen, diplomats, bureaucrats, and warriors – if judged from the point of view of simple morality and human justice, deserve a thousand times the gallows or penal servitude. For there is no terror, cruelty, sacrilege, perjury, imposture, infamous transaction, cynical theft, brazen robbery, or foul treason which has not been and is not still being committed daily by representatives of the State.

Lord Byron
Ready money is Aladdin's Lamp.

Edwards, Bo
The Bill of Rights applies to criminal cases. For example, the right to have a lawyer, the right to a trial by jury, and the government must prove its case beyond a reasonable doubt. None of those rights apply in a civil case where the government is bringing a civil forfeiture case against your property.

O'Rourke, P.J.
Every government is a parliament of whores. The trouble is, in a democracy, the whores are us.

Jean-Francois Revel
Authoritarian socialism has failed almost everywhere, but you will not find a single Marxist who will say it has failed because it was wrong or impractical. He will say it has failed because nobody went far enough with it. So failure never proves a myth is wrong.

Nathan Rothschild
Buy when blood is running in the streets.

Paul Samuelson (Nobel laureate, in 1989)
What really counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth

Paul Samuelson (Nobel laureate, in 1989)
The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.

Mark Skousen
Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state is a complete failure of civilization, while a totally voluntary society is its ultimate success.

Gore Vidal
Free enterprise ended in the United States a good many years ago. Big oil, big steel, big agriculture avoid the open marketplace.

Friday, September 26, 2008

Causes and Ramifications of the Big Bail-Out by Jim Willie

LOTS of things are happening these days that are far, far beyond the comprehension of the great mass of American taxpayers. For some clarification about how deep the rat holes go, and some projections of the likely ramifications and outcomes, see the latest commentary by Jim Willie at:

You would be well advised to start hunkering down now before widespread panic begins in earnest.

Keep your eyes and mind open.
Michael Childress

Tuesday, September 23, 2008

One Congressional Bill Away from Fascism

The bill being considered in Congress at the moment, the one that would "bail out" the U.S. financial system, is the last step the country would take toward total fascism. It would give money ($700,000,000,000 just to get started in 2008) to banks in exchange for nearly worthless mortgage bonds. And it would give the Treasury Secretary (currently Mr. Paulson, formerly Chairman of the Board of Goldman Sachs, of the main beneficiaries of the bail-out) completely unchecked power to distribute the cash as he saw fit (i.e., legal recourse and challenges would be banned, no Congressional or regulatory oversight, no advance notice).

More details are at:

Keep your eyes and mind open,
Michael Childress

Quotes from Our Masters

David Morgan Commentary – 22 September 2008

"I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world . . . no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by opinion and duress of small groups of dominant men.” Woodrow Wilson (He was the President that signed the creation of the Federal Reserve into law in 1913.)

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. The one aim of these financiers is world control by the creation of inextinguishable debt.” Henry Ford

"Fifty men have run America, and that’s a high figure.” Joseph Kennedy, 1936

“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the Government ever since the days of Andrew Jackson.” Franklin Delano Roosevelt, 1933

"We shall have world government whether or not you like it ... by conquest or consent.” James Warburg (Rothschild banking agent, financial adviser to President Franklin D. Roosevelt), 1950

"The real rulers in Washington are invisible, [and] exercise power from behind the scenes.” Felix Frankfurter, U.S. Supreme Court Justice, 1952

“The case for government by elites is irrefutable.” William Fulbright, U.S. Senator, 1963

"The Trilateral Commission is intended to be the vehicle for multinational consolidation of the commercial and banking interests by seizing control of the political government of the United States... They will rule the future.” Barry Goldwater, U.S. Senator, 1964

"We are grateful to The Washington Post, The New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to bright lights and publicity during those years. But the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto determination practiced in past centuries.” David Rockefeller (Trilateral Commission Founder), 1991

"Today, America would be outraged if UN troops entered Los Angeles to restore order. Tomorrow, they will be grateful! This would especially be true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by a World Government.” Henry Kissinger, 1991

"In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.” Strobe Talbott, former U.S. Deputy Secretary of State, 1992

“We are not going to achieve a new world order without paying for it in blood as well as words and money.” Arthur Schlesinger, Pulitzer Prize recipient, American historian, special assistant and “court historian” to the President in John F. Kennedy’s administration

Finally, ask yourself the question, “What is the real motivation for the passage of the following directive?”

National Security and Homeland Security Presidential Directive, signed on May 9, 2007, declares that in the event of a “catastrophic event,” George W. Bush can become what is best described as a “dictator”.

"The President shall lead the activities of the Federal Government for ensuring constitutional government.”

This directive, completely unnoticed by the media and given no scrutiny by Congress, literally gives the White House unprecedented dictatorial power over the government and the country, bypassing the U.S. Congress and obliterating the separation of powers. The directive also placed the Secretary of Homeland Security in charge of domestic “security.”

Sunday, September 21, 2008

Creating the Work You Love by Rick Jarow - Excerpts

Creating the Work You Love: Courage, Commitment, and Career. Rick Jarow. 1995. ISBN 0-89281-542-6


If we are in deed the same beings in the working world as in the more shrouded realms of inward experience, then why shouldn't our inner and outer worlds support one another? I contend that until we move in this direction, none of our good intentions will change the nature of employment in this society, and unless we change the way in which we approach the act and art of making a living, it will become increasingly difficult to cultivate any sort of inner life at all.

… we have arrived at a point at our social evolution where being an artist of our lives, and creating lives that are authentic instead of accepting or assuming ready-made models, is requisite for entry into the coming century.

If our work does not have this sense of transformation, of working in congruence with an inner ideal, then it will be experienced as a curse. We will shirk difficult conditions and take the path of least resistance because we will not believe in what we're doing, and we will have no larger sense of why we're doing it. On the other hand, if we feel that our task is worthy, the smallest charge can be accomplished with enthusiasm.

… a first step in reversing the idea of work as a curse is to move toward caring about one's work as much as about one’s life.

It requires courage to live from one’s authenticity and commitment to stay the course, but the effort to do so reveal subtle laws that are as real as the rates of currency exchange.

The inhibiting of one’s image-making power is essential to enculturation of the paradigm of productivity. For reverie - taking long, slow dream walks and the like - waste valuable, “productive” time. Instead of being trained in the possibilities and uses of the imagination, we are encouraged to have it siphoned off by television.

To “ask” is to take up the way of inquiry as opposed to the way of complacency. The victim learns not to ask too much, for it may upset the powers that be. As one question after another is buried within, the child/adult is bent into the mold of acquiescence until true inquiry becomes next to impossible. Underneath the facade of the complacent, respectable victim there's always despair.

In order to move from dream to reality, you have to put the dream to the test, and the only way that happens is by risking it in the crucible of action.

As in the first and single most important step in Alcoholics Anonymous, the denial must cease and the admission must be made: Our working lives have become unmanageable. Whether on the janitor’s stool or an executive's chair, there is a feeling that forces out of our control are creating uncertainty, a dispirited fatigue, and a muffled frustration that makes it seem normal to dread Monday mornings.

To test life, to allow life itself to lead you and care for you, is not a parlor game. In order to move into your way, you may have to put everything on the line. You may be asked to give up the rewards you have coveted for so long. But life will respond because you've asked it to; you have looked into life itself. And the results grow slowly, but they develop into a deep self-faith and trust in life.

Integrity appears when our principles become so established that they supplant survival as the motivating human mechanism. From this place, principle may be worth more than life itself.

Genuine self-acceptance translates into self-respect, which then becomes self-reliance. Self-acceptance is really life acceptance – accepting the current, finding and tuning in to the energy of life itself and all its subsequent potential.

Notice where there is frustration and resistance in your daily life. Do you feel frustration around time constraints? Money? Relationships? Know that these are never the underlying issues; these are symptoms.

To get what you want, the success books tell you, you have to be able to see your goal, to visualize the object in detail, to affirm its reality daily, to hold it in your mind. Then your dream will come true. The problem with this strategy is that what we want on a conscious level is often at odds with what we crave on the unconscious level.

Opening to and tracking feelings of restlessness and frustration instead of trying to mask them is the second stage in developing an anti-career. You need a considerable store of self-worth to do this, in order to work through past disillusionments and disappointments without turning them against yourself.

If one is intent on establishing a career that nourishes one's soul as well as one's body, there is serious excavation work to do, and this work almost always involves coming to terms with one's parents, the deepest embodiments of our conditioning. It is said that, if one wants to understand one's own destiny, one need look no further than the life path of one's parents, as much for the roads they have not taken as for the ones they have.

Work is reserved for grownups because it is not fun; it is about the serious business of survival or status-seeking. But when we have converted our basic energy into integrity, dismissing survival as the foremost imperative, we feel the bliss of our being, and status-seeking is seen for what it is – a poor substitute for loving and being loved.

There is no fire, no life, no excitement in a society where feeling has been devalued or siphoned off into mindless destruction.

To develop an authentic mode of work, we must get down to the feeling level, to a place where the life current that we contacted energetically expands into a feeling, into a desire to act, to do something that is meaningful.

We must be willing to nurture our goals, to see if they are indeed to be nourished by our feelings, our dreams, and our life force. Nevertheless, we must choose on some level so that we can move into active participation with our possibilities.

What is really important in terms of how you spend your days and nights? What has empowered the basic movement of your life so far? What are the passions that rule you? Who are the gods and goddesses at whose altar you sacrifice your time and energy? Until you have done substantial investigation here, do not enter into the activities of decision making and prioritizing. First you must see where your attention has been focused, and why.

The development of a soul-based career is an organic, step-by-step process; it does not come in a sudden flash. The process asks us to be realistically idealistic, that is, to find a focus and then to patiently allow the path to unfold. Our priorities will change over time. This is only natural, and knowing this can fuel current projects. We understand that they are not forever, and so for now we can give them all we have got to give, for they are aligned with the ongoing process of our coming into wholeness.

This is crucial to understand: To the degree that your priorities are clear and aligned with your whole being, the job, the place, and the people will manifest like clockwork, because you have done the necessary inner work. No more effort is needed, and there is no effort more important than developing this clarity of vision.

Once our goal/priority is set we then ask, “Am I at peace with my goal? Does that ring true? Does it make me want to get up early in the morning and get right to it?” If our priorities are still couched in “shoulds” and “oughts”, we do not really move with them. They are masks for other, more important issues that we have not yet uncovered.

Receiving support from others is a natural outcome of alignment. When we're clear about our intent, others whose intentions consciously or unconsciously resonate with our own will appear.

As we open to our own visionary wisdom, our sense of timing opens as well. Instead of being run by the clock, we begin to find ourselves in the right place at the right time, and as we do, we become cognizant of a different type of clock, one that runs not by strict economic or mechanical laws but that instead synchronizes with the rhythm of our beings as we begin to trust its accuracy.

Dreams are the level that must nourish our work if our work is to nurture our inner development in return. And that, after all, is the true purpose of any work.

The strategy for managing your time and energy is to have your priority so rightly and deeply ingrained in you that you can naturally work your day around its power, as opposed to working around other people's agendas.

Most goal-oriented people place high value on outcomes because they still see themselves enmeshed in poverty. Therefore the best they can become is someone or something other than who or what they are.

The moment we opt for action, the door opens wide. It may not be the particular situation the expected, but we have crossed over the line of the doubt and hesitation, and the natural release of energy will begin to activate and concretize the vision. We will begin to move with enthusiasm. New energy will create new ideas, new enthusiasm, and new resistances. This is all part of the process of trusting, asking, listening, and living.

When one is inspired (or one may even say impregnated) by a living vision, the psyche and hence daily life will organize itself around that vision, not around the contemporary nine-to-five expectation. And true magic can be effected by the way in which we order our daily lives ... Instead of sacrificing our lives to the crippled vision of industrial productivity or to the whimsical apathy of nonengagement, we can allow our heart's vision to create its corresponding lifestyle.

If you do what you love, the money may not follow, but you will become yourself - you will ultimately understand the wisdom of your life process and you will die with integrity and peace.

... the first step in creating a work situation that will nurture your soul is the willingness to take the risk of making an investment in yourself and in your truth.

If we do not have a direction, our integrity ask us not to contrive one, not to desperately seek someone or something new to believe in. If there is no flame to fan, no investment to make, let's have the courage to face it, to stand naked in the pit of absence and let our processes be born from it. If we allow ourselves to go deep enough into the water, we will eventually find the fire. At these times of not knowing, I often encourage people to take a moratorium before changing course, taking the time to process and let external things unfold in their own way. The willingness to lie fallow invites the spark that will ignite the flame.

Thursday, September 18, 2008

What's Going on with A.I.G. Bailout?

There has been a considerable uproar over the Federal Reserve Banks $85 billion load to A.I.G., in return for a 79.9% equity stake. Some commentators have complained that the Fed had no government authority to conduct this transaction – that Congress or the Treasury or some regulators should have given approval. This simply demonstrates the ignorance of both the American public and the media. The Federal Reserve Bank is NOT a government agency in any form, but instead is a privately-owned consortium of twelve regional banks, each of which is in turned owned by a number of private domestic and foreign banks. No approval is therefore needed.

As for the implications and ramifications of this and other recent Fed activities, please consider the following informative commentaries:

Christopher Laird

Darryl Schoon

Keep your eyes and mind open.
Michael Childress

Wednesday, September 17, 2008

Creating a New Civilization by Alvin Toffler and Heidi Toffler - Excerpts

Creating a New Civilization: The Politics of the Third Wave. Alvin Toffler and Heidi Toffler. 1995. ISBN 1-57036-223-8


Even more jarring and significant, however, is the growing transfer of political power away from our formal political structures – the Congress, the White House, the government agencies and political parties – to electronically-linked grassroots groups and to the media.

What is needed, we believe, is a clear distinction between rear-guard politicians who wish to preserve or restore an unworkable past, and those who are ready to make the transition to what we call a “Third Wave” information-age society.

The emergent civilization writes a new code of behavior for us and carries us beyond standardization, synchronization and centralization, beyond the concentration of energy, money, and power.

Today all high-technology nations are reeling from the collision between the Third Wave and the obsolete, encrusted economies and institutions of the Second.

The Second Wave created mass societies that reflected and required mass production. In Third Wave, brain-based economies, mass production (which could almost be considered the defining mark of industrial society) is already an outmoded form. De-massified production – short runs of highly customized products – is the new cutting edge of manufacture. Mass marketing gives way to market segmentation and “particle marketing”, paralleling the change in production.

Anyone reading this page has an amazing skill called literacy. It comes as a shock sometimes to remember that all of us had ancestors who were illiterate. Not stupid or ignorant, but invincibly illiterate. Not only illiterate, they were also “innumerate,” meaning they couldn’t do the simplest arithmetic. Those few who could were deemed downright dangerous. A marvelous warning attributed to Augustine holds that Christians should stay away from people who could add or subtract. It was obvious they had “made a covenant with the Devil.”

The only reason we ship huge amounts of raw materials like bauxite or nickel or copper across the planet is that we lack the knowledge to convert local materials into usable substitutes.

While land, labor, raw materials and capital were the main factors of production in the Second Wave economy of the past, knowledge – broadly defined here to include data, information, images, symbols, culture, ideology, and values – is now the central resource of the Third Wave economy.

Work itself is transformed. Low-skilled, essentially interchangeable muscle work drove the Second Wave. Mass factory-style education prepared workers for routine, repetitive labor. By contrast, the Third Wave is accompanied by a growing non-interchangeability of labor as skill requirements skyrocket. Muscle power is essentially fungible. Thus a low-skilled worker who quits or is fired can be replaced quickly and with little cost. By contrast, the rising levels of specialized skills required in the Third Wave economy make finding the right person with the right skills harder and more costly.

Economies of speed replace economies of scale. Competition is so intense and the speeds required so high that the old “time is money” rule is increasingly updated to “every interval of time is worth more than the one before it.”

In Second Wave or smokestack societies an injection of capital spending or consumer purchasing power could stimulate the economy and generate jobs. Given one million jobless, one could, in principle, prime the economy and create one million jobs. Since the jobs were either interchangeable or required so little skill that they could be learned in less than an hour, virtually any unemployed worker could fill almost any job. In today’s super-symbolic economy this is less true – which is why a lot of unemployment seems intractable, and neither the traditional Keynesian nor monetarist remedies work well.

In today’s global economy, pumping money into the consumer’s pocket may simply send it flowing overseas without doing anything to help the domestic economy. An American buying a new TV set or compact disc player merely sends dollars to Japan, Korea, Malaysia or elsewhere. The purchase doesn’t add jobs at home.

The jobless desperately need money if they and their families are to survive, and it is both necessary and morally right to provide them with decent levels of public assistance. But any effective strategy for reducing joblessness is a super-symbolic economy must depend less on the allocation of wealth and more on the allocation of knowledge.

We will also have to begin according human-service jobs the same respect previously reserved for manufacture rather than snidely denigrating the entire service sector as “hamburger flipping.” McDonald’s cannot stand as the sole symbol for a range of activities that includes everything from teaching to working at a dating service or in a hospital radiology center. What’s more, if, as is often charged, wages are low in the service sector, then the solution is to increase service productivity and to invent new forms of work-force organization and collective bargaining. Unions, primarily designed for the crafts or for mass manufacturing, need to be totally transformed or else replaced by new-style organizations more appropriate to the super-symbolic economy. To survive they will have to support rather than resist such things as work-at-home programs, flextime and job-sharing.

In lowbrow industrial economies, wealth was typically measured by the possession of goods. The production of goods was regarded as central to the economy. Conversely, symbolic and service activities, while unavoidable, were stigmatized as nonproductive. The manufacture of goods – autos, radios, tractors, TV sets – was seen as “male” or macho and words like practical, realistic or hardheaded were associated with it. By contrast, the production of knowledge or the exchange of information was typically disparaged as mere “paper pushing.”

Marxist economists, if any thing, have had a harder time trying to integrate high brow work into their schema, and “socialist realism” in the arts produced thousands of portrayals of happy workers, their Schwarzenegger-like muscles straining against a background of cogwheels, smokestacks and steam locomotives. The glorification of the proletariat and the theory that it was the vanguard of change, reflected the principles of a lowbrow economy.

In brief, production is reconceptualized as a far more encompassing process than the economists and ideologists of lowbrow economics imagined. And at every step from today on, it is knowledge, not cheap labor, and symbols, not raw materials, that embody and add value. This deep reconceptualization of the sources of added value is fraught with consequence. It smashes the assumptions of both free-marketism and Marxism alike, and the material-ismo that gave rise to both. Thus, the ideas that value is sweated from the back of the worker alone and that value is produced by the glorious capitalist entrepreneur, both implied in material-ismo, are revealed to be false and misleading politically as well as economically.

A one-party political system is designed to control political communication. Since no other party exists, it restricts the diversity of political information flowing through the society, blocking feedback and thus blinding those in power to the full complexity of their problems. With very narrowly defined information flowing upward through the approved channel and commands flowing downward, it becomes very difficult for the system to detect errors and correct them. In fact, top-down control in the socialist countries was based increasingly on lies and misinformation since reporting bad news up the line was often risky. The decision to run a one-party system is a decision, after all, about knowledge.

A Third Wave economic policy should not pick winners and losers, but it should clear away the obstacles to professionalization and development of the services needed to make life in America less stressed-out, less frustrating and impersonal. Yet no political party as yet has even begun to think this way.

America’s schools, for example, still operate like factories. They subject the raw material (children) to standardized instruction and routine inspection. An important question to ask of any proposed educational innovation is simply this: is it intended to make the factory run more efficiently, or is it designed, as it should be, to get rid of the factory model altogether and replace it with individualized, customized education. A similar question could be asked of health legislation, welfare legislation and of every proposal to reorganize the federal bureaucracy. America needs new institutions built on post-bureaucratic, post-factory models.

Thursday, September 4, 2008

Surging Economy/Dollar - Political Operation?

It is very interesting to watch the resurgence of the US dollar and decline in commodity prices, especially oil and gold.  If the economies in the US and the world are not doing so well, then why is the dollar doing so well lately?  Shouldn't prices continue to increase for everything as inflation, the current account deficit, and government debt deteriorate?

Well, there is an explanation, if you are inclined to heed political conspiracy notions.

First of all, recall that about this time in 2006, just before the national elections (mostly for House of Representatives, but also some Senators), Goldman-Sachs conducted a major and ill-publicized manipulation of oil prices to effectively eliminate oil and energy as an issue in those elections [leaving other issues such as the "wars" in Iraq and Afghanistan on the forefront].  How?  

Simple.  Goldman-Sachs produces a commodity prices index widely used by various investment entities as a guideline for investing in different commodity markets.  Historically, this index included unleaded gasoline futures prices as about 8% of the total commodity index.  This means that to follow the index allocations, all the investment operations needed to invest about 8% of their assets in unleaded gasoline operations or futures contracts.  In August/September of 2006, gasoline and oil prices were high and getting higher.  To combat this trend temporarily, but long enough to effectively remove this trend as an election issue, Goldman-Sachs unannounced previously [except to privileged insiders, who made vast fortunes on the advanced warning] changed the unleaded gasoline proportion to about 2%.  This meant that all the investment houses then had to SELL about 75% of their investments, including gasoline futures, to re-align themselves with the index and knocking the feet out from under the gasoline and oil markets.  For a while, that is, because after the elections, oil prices resumed their climbs.  And when oil prices declined, the visibility of energy issues greatly decreased as an election issue - which meant that it was not really addressed by any of the candidates.

Okay, another contentious elections looms now in September 2008.  This time around, the US dollar has mysteriously increased substantially in strength relative to other currencies and commodities, especially oil and gold.  Since the market fundamentals have not changed at all, why is there this big bounce?  Well, perhaps this is a repeat of the 2006 market manipulation, but this time for the dollar.  To my knowledge G-S has not made any overt manipulations of its various indices.  However, the political advantages of eliminating the strength or weakness of the dollar as a campaign issue for the forthcoming elections in November cannot be over-emphasized.  Except for the wars, the only real issues apparent in the national media are essentially personalities.  And since neither party has advocated a significant change in military operations anywhere, the only issues the public will witness, aside from fixed factors of race and gender, is essentially who will do the best job of bitch-slapping the opposition.

How could G-S manipulate the markets?  Very simple indeed.  Recall that the US Treasury Secretary is Mr. Paulson, former President and Chairman of Goldman-Sachs; in effect, Goldman-Sachs IS the Treasury Department, just like J.P. Morgan IS the Federal Reserve Bank.  Together, these corporate/goverment (no difference any more, is there?) bureaucrats constitute the Working Group on Markets, commonly referred to as the Plunge Protection Team by knowledgeable commentators.  It has been estimated that this Team, in cooperation/collaboration with the vast financial resources and acumen of G-S and Morgan, have about $1 Trillion in assets with which they can invest in futures, options, and contracts as they see fit.  This is more than enough to guide any markets anywhere in the world in any fashion they see fit.  So by buying a chunk of dollar call options or long futures, they can effectively increase the demand for dollars world-wide, and increase its value with respect to all other currencies and to anything that dollars are used to buy, such as oil and gold.  Note that this can be effected even while the total US money supply is reported increasing at about 14-15% annually!
WHY would they want to do this?  Currently G-S, Morgan, and cronies are making vast fortunes on the credit they extend to essentially everyone in the world, but especially the U.S. government.  Just to cite ONE operation, consider that Congress has just passed the latest annual increase in the federal debt ceiling by the usual $800 billion - indicating clearly that despite the publicized deficits, the REAL increase in debt is that $800 billion.  This money, or actually the credit line extended, is created out of thin air by the Federal Reserve Bank, but interest is still collected as if it were real money.  Who in the world would want to give up this enormous cash cow?

Well, as long as no questions are raised about the system, nothing will change - until, of course, the whole system collapses when the government can no longer even pay interest payments on the current $9+ trillion dollar debt.  So the Powers-That-Be conduct periodic market manipulations to ensure that during the election season things seem to be doing pretty well, with a stronger dollar and lower commodity prices (in 2008), or with lower oil prices (in 2006).  Out of sight and out of mind for the electorate.  And since it is a given that no contender would have been allowed to become a candidate if there was the slightest chance of any REAL change in the system, the whole scheme is preserved in tact.

Keep this in mind during this election.  What are the real issues here?  What were they a few months ago, when oil was over $140 and the exchange rate for dollars to ANY other currency were pretty much lowest on record?  What does it tell you about the level of enlightenment in the American populace when the only real issues are race, gender, age ["experience"?], and "morality [??]"? 

Keep your eyes and your mind open.
Mike Childress

Tuesday, September 2, 2008

Quick Summary of the US Financial Disaster-in-Progress

Jim Willie is a favorite commentator. In particular, he gets news from around the world through the US media propaganda screen, with lots of surprising perspectives on how the world sees us, the U.S. us, that is. This weeks public commentary pretty much tells it all:

You might wonder why he is so vitriolic about the Powers That Be. He is still as idealistic as we all used to be, I think. Looks like we all should do some serious investigating on J.P. Morgan, apparently a wholly-owned subsidiary of the Rothschild Empire.

Keep your eyes and mind open.
Mike Childress