Friday, November 21, 2008

Publish the lot

Currently there's a furore over here about the publication on the internet of the membership of the British National Party. Some of them look like scrubbed-up thugs, it's true, but I can't see them ever being anything but a cranky and resentful minority. However, if you are a policeman and hold officially-unapproved views, you will lose your job; and there are others for whom this cyber-unmasking will prove a permanent block in their careers.

But if we really want to set the cat among the pigeons, let's make public all political party membership, past and present. Then let's correlate the information with employment. For I recall reading in the 70s that it was pretty much career suicide for teachers in some London boroughs not to be members of the Labour Party, and I suspect the same issue would apply in other areas and other lines of work. And how about mapping the complex network of personal and employment-related relationships, as was done so damningly for Macmillan's government?

And who was in the International Marxist Group and other left-wing, semi-secret societies? The present Minister for "Justice", Jack Straw, has, I understand, called for and either weeded or destroyed the file on himself years ago, a luxury not afforded to many of us. And who went to those annually-advertised Marxist "summer schools" and carefully didn't join a political party, or let their membership lapse to maintain radio silence in their future missions?

Maybe we'll see where the real danger lies.

Moral hazard and white-collar crime

I've said several times that I think a benchmark punishment for those financiers who have very nearly destroyed us with, if not criminal intent, then culpable ignorance, should be the repayment of their last 5 years' bonuses.

Harsh, one may think; unreasonable. Surely this would bankrupt many and leave them homeless.

Well, what is happening now to thousands of the victims of their greedy schemes across America and Britain? Men seeing the disappointment and cooling affection in their women's eyes, feeling the ardour of embraces replaced by demoralising reassurance, knowing that after the comfort comes recrimination; women worrying about their men's fidelity and sobriety, about their own security and the safety of their children; education disrupted, futures blighted.

A long-running motif in public affairs here and presumably across the Atlantic has been "getting away with it". You will all have your own list of those who have been rewarded for misbehaviour. Without fitting retribution, society will continue to crumble. This is not about vengeance, but about making whole.

Thursday, November 20, 2008

The reality goggles are smeared

This project of mine is echoed by Eric Janszen of iTulip. His graph and red line suggests what I've been saying recently, that the Dow's trend (if it has one) could be to 6,000 points, with an overshoot to 4,000.

My independently-researched version:

iTulip's:


It's really hard to see the past in our own terms. I'm trying to do it using the Consumer Price Index, which opens another can of worms about the composition and weighting of that index, especially since (I understand) it affects government statistics and benefits. However, you have to start somewhere.

The first thing to note is how freakish recent years have been. If you connect previous start-of-month highs (August 1929, January 1966) and extended the line, you'd expect the recent Dow highs of 1999 and 2007 to be no more than 10,000 points.

And as for the lows: the drop from 1929 to 1932 was 86% "in real terms"; from 1966 to 1982, 73%; and so far since 1999, 46% - but this last from an amazing historical high. And the 350%-plus American debt-to-GDP ratio is quite unprecedented.

So the history of the last 80 years offers no clear guide as to what could happen next. If proportionately as severe as 1932, the Dow could dive to about 2,100 points; if like 1982, just below 4,000. BUT the second of these great waves crashed rather less than the first, so maybe the third will be even more merciful, perhaps a top-to-bottom fall of only 60%, i.e. end up at c. 5,900.

I note that the Dow has closed tonight at 7,552.29. What a fast fall we've seen - will it spring back sharply and then recommence its decline, as in previous cycles, or is it popping like a balloon?

Methodology

I've noted the Dow as it stood on the first trading day each month, starting October 1928 and ending November 2008 (plus where it stood yesterday - 7.997.28 - since we've seen a further steep fall). Then I've noted the historical CPI as at the end of the previous month in each case. Then, looking at the latest Dow figure, I've adjusted historical Dow figures accordingly (i.e. Dow then/CPI then, times CPI now).

Sources: Dow: Yahoo! Finance; CPI: InflationData.com

UPDATE

iTulip today also reproduces its graph on holdings at the Federal Reserve bank, underscoring the point that the current crisis has features that we can scarcely compare to anything in the last 80 years. Except that it's unlikely to be good news.

America to default on its debts?

Michael Panzner introduces the topic with an entry from the Economist blog - and look at the comments.

Wednesday, November 19, 2008

The Gadarene Swine

In a visit to old haunts, ex-Wall Street trader Michael Lewis (author of "Liar's Poker") describes how greed was turbocharged by ignorance among both the experts and the public, firing them all well beyond the edge of the precipice.

Tuesday, November 18, 2008

Latest figures on foreign holdings of U.S. Treasuries

The U.S. Treasury statistics issued today list 29 foreign holders of their securities. Between them, the three above account for $110.3 billion of the $110.6 billion increase. What is is to have friends, I suppose.

Not the same as the last Great Depression

How it won't be

A very interesting and credible New Great Depression scenario from Drake Bennett at the Boston Globe, explaining how the grainy images of the 1930s will not be remade and colorized for the 2000s. The same, and not the same.

htp: Michael Panzner - another nugget brought in by the news miner!

What goes up

The US dollar is in a kind of bear market rally, according to Jim Rogers. Then it's down.

htp: Anticitizen One

Monday, November 17, 2008

Presumed Consent, Part Two

The government "has not ruled out" a scheme to treat those who die intestate as donors to Party funds, a spokesman said today. A White Paper shortly to be issued by HMSO for limited distribution assumes the writing of a will to be an opt-out by the deceased from offering their estates to the Labour Party, and deems those who fail to make such an elementary arrangement to have assented thereby to the seizure of their goods after death. At Prime Minister's Questions, the Premier declined to discuss the proposal, saying that it was a matter for the Treasury Committee, to which he has just made several new appointments to supplement the existing membership. Further details of the Paper and the composition of the Committee are withheld, as subject to a Confidentiality Order under European legislation. However, we are permitted to reveal that a Will Contestation Board will shortly be set up and given terms of reference, under the aegis of the Privy Council.

Presumed consent

The government has embarked on a campaign to convince the nation that an opt-out or presumed consent system for General Elections will improve government majorities and save on administrative costs. Under the proposed system, the voter will be presumed to have voted for New Labour unless he/she has registered their dissent. Only if an outright majority of those eligible to vote have registered such a protest, will the public be put to the inconvenience of an election. Dissenters will be interviewed at Neighbourhood Offices to determine that they understand the issues properly and that their reasons for objecting are valid.

Infiltration

Is it me, or has this formerly-funny radio programme become a tendentious political broadcast aiming to reinforce the prejudices of a snickering, sycophantic coterie of not-as-smart-as-they-think-they-are socialists? Alan Coren, thou shouldst be living at this hour.

Carte Blanche

"... Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone."

- an estimated $290 billion so far.

Saturday, November 15, 2008

Looking back, looking forward

UPDATE: "This secular bear market will last a lot longer and be much deeper than anyone thinks. Sadly, very few are prepared for it." - Mish.

This gels with what Marc Faber was saying quite some times back, that the market had further to drop than many people thought. Equities may seem to be fair value in terms of multiples of their earnings, but when the earnings fall, valuations have to be reassessed.


Thursday, November 13, 2008

Was I right?

I said in comments to one of my Monday pieces, "Up to a certain limit, one can purchase index-linked certificates to preserve one's savings, but I'm trying to guess what rich people will do to get out of cash if currencies everywhere inflate - buy Van Goghs?"

And now Reuters reports that Sotheby's is still selling contemporary art at high prices.

The rich are getting their servants to load the packing-crates into the train while still telling us that we'll win the war. Perhaps they'll flee to Argentina.

Wednesday, November 12, 2008

You can hear the recession

In recent years, the Bonfire Night (November 5th) celebrations began weeks early - rockets and bangers aplenty every night - in fact, evenings and mornings as well. And after the big event on the day, more for days and weeks after. It didn't seem to matter (even in our "artisan" area) that a single banger could cost £5 or more; every year was like Operation Shock and Awe.

Not this year. A pop or two in the days immediately before and after, something mild on the night. No more 70s Beirut.

Anybody else spot straws in the wind?

Tuesday, November 11, 2008

Is the right way possible?

The state is always and everywhere a danger, even when it has no monopoly on money and no printing press that can create money tickets at will. But a state with the ability to make its own money is a grave and relentless threat to prosperity and freedom. It leaves the future entirely to the discretion of the money managers. Every day we live under the threat that the United States could be the next Weimar Republic or even another Zimbabwe. All that stands between us and that day is the wisdom and prudence of the Fed.

Llewellyn H. Rockwell, Jnr - talk given on 1 November 2008

Now, how do we mice bell the cats?

And if a foreign nation that trades with you uses currency inflation to support its domestic employment and its exports to you, are you prepared to see a slump in your own economy in order to maintain the integrity of your currency? Can virtue be rewarded, or is it (as seems to happen in this world) severely punished?

Monday, November 10, 2008

Gordon Brown and the New World Order

"...we can together seize this moment of change in our world to create a truly global society..."

Does he know what he is saying? How would one vote out, or flee, a world government?

As Huckleberry Finn says,"I reckon I got to light out for the Territory ahead of the rest, because Aunt Sally she's going to adopt me and sivilize me, and I can't stand it."

Any suggestions as to good places left to flee to?