Saturday, March 30, 2013

Where is John Galt?

The recent Chinese hacking scandal brought to mind a libertarian Zeitgeist that was sweeping the web a few years back.

In '06 and '07, blind faith in emerging market growth and in the assumed superiority of emerging market governments became so contagious that even libertarians caught the bug. I remember reading reports from prominent libertarians who had scoured the Third World in search of Galt Gulches. Their optimistic report: nations like China and Argentina were evolving into safe havens from collapsing Old World powers like the US. Everyone in Asia was a Confucian Steve Jobs. Argentina had learned from the sins of Peron. If I had done a push up each time I saw a sentence giddily comparing "capitalist China" to “anti-capitalist” America, I'd be strong enough to cradle the globe after Atlas shrugged.

Never mind that China still had a command economy. The biggest risk was remaining in the US, and so libertarians who complained about government spawned real estate bubbles in America started fawning over all the government spawned building in China (a place famous for
ghost cities). People concerned about US currency debasement talked of seeking refuge in a place that famously suppresses the yuan; treating its citizens to riot-inducing inflation.

Reinforcing the idea of superior freedom and opportunity in the emerging world was the idea of
decoupling: The tired West would collapse under the weight of its colossal debt and old ideas, and the vibrant East would suddenly develop a middle class big enough and rich enough to support its continued rise; a rise largely independent of the West. The very people who praised globalism and the opening of more markets were suddenly declaring that the closing (or impoverishment) of Western markets wouldn't matter much. The people who laughed at the idea of Fortress Europe effectively endorsed Fortress Asia.

The key piece in the puzzle of emerging market freedom and prosperity was the Internet. Just as blue jeans supposedly helped topple the Soviet Union, the power of the Internet was going to plant tiny Adam Smith seeds throughout the emerging markets, leading these newly capitalist minds to start utilizing the best aspects of Western thought. Forget V for Vendetta; we were going to have B for Bandwidth.

When the 2008 crisis hit, the emerging world
didn't decouple. Most of it collapsed much harder. China didn't look to Adam Smith. They looked to Keynes; launching the largest stimulus in the country's history. And it turns out Argentina didn't reject Peron. Since 2008 Argentina's government has toyed with pension seizures, price controls, nationalization, and capital controls (even going so far as to use currency sniffing dogs to keep evildoers from carrying cash across the border).

It seems these libertarian optimists incorrectly assumed that the merger of a rising emerging world and an exploding Internet was necessarily going to have a libertarian bent. They seemed to think we were poised for a Libertarian Spring. But why should anyone have expected such an outcome? Couldn't Twitter just as readily be used to spread pro-government info.? Couldn't "tax the rich" also go viral? Wasn't uber-statist Barack Obama hoisted into the White House with a huge boost from social media?

Internet tools like Twitter and Facebook are used by people, and most people, wherever they reside, conveniently endorse receiving things paid for by other people. The free market that libertarians rightly celebrate continues to get a lukewarm reception in the marketplace of ideas. Even in the US, anti-libertarian moves likes increasing the minimum wage are
condoned by the majority, so it seems predictable that more pro-state ideas are going to be spread online than libertarian ones; just look at Occupy Wall Street and its Internet-generated offspring throughout the world.

To witness this phenomenon at work, visit and click on the
Politics header. Not a subcategory (subreddit) like “Conservatism” or “Liberal.” Just click plain old Politics. What you will see is a long list of touchy-feely, MORE GOVERNMENT, PLEASE! sentiments dominating the headlines, despite the fact that reddit is outside the system, man!

It is hard not to notice a certain irony in China’s using the Internet—the state’s worst nightmare!--to violate the
non-aggression principle. I guess we’ll have to wait a bit longer for the Middle Kingdom to become the Switzerland of the East.

When it comes to popular uprisings--"springs"--, regardless of where they happen or which tools are used to fuel them, it is naïve to presume they will necessarily usher in profound new freedom. Let's not forget what happened at the end of the Prague Spring; the Soviet Union invaded and turned off the spring.

Atlas Tweets:

Friday, March 29, 2013

What happens in European banks stays in European...oh wait, nevermind

Cyprus-style deposit tax now possible in New Zealand?

New Zealand savers could see a Cyprus-style tax on their bank accounts, the Green Party is warning, accusing the Government of planning similar solutions for the country.

Canadian "bail-ins" possible should certain "systemically important banks" fail (pages 144-145, h/t

The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.

Not every precedent becomes a trend, but given how the unthinkable has become both thinkable and predictable, it doesn't hurt to be paranoid. If Canada, the "model for global banking," the financial system that was celebrated for being far less reckless than those in the US and Europe, is using bail-in language reminiscent of what was heard during that "one-off" event in Cyprus, it is definitely time to contemplate the risk of having your savings cut and pasted from your bank account.

When authorities cross a line and it doesn't trigger revolt, they keep moving until they cross the next line, and the one after that. I would be a bit suprised if we didn't see more Cyprus-like "solutions." The European Union is the world's largest economy, and is a place that seems to fancy itself the supreme repository of all things moral and just, so if such a thing can happen there (and in front of the world, no less), my guess is that other countries will at least attempt similar measures; under the guise that depositor haircuts are now part of "international law."

Those who dream of international law delivering the world from giant villians never consider that it can just as easily be used against puny non-villians. In fact, it is more likely to be used against puny non-villians because puny non-villians can't push back. 

Ah well, there is probably some cosmic lesson in the fact that the originator of the word "utopia" wound up getting beheaded.

You can withdraw more than 300 euros per day from:

Monday, March 25, 2013

Ladies and Gentlemen! Introducing...A NEW ECONOMIC TERM!

I've coined a new term for unstable, one trick pony financial economies like Iceland and Cyprus: A Bank Branch Republic.

And how about that Malta? From Wikipedia:

Lombard Bank is one of Malta's major banks. Today, Cyprus Popular Bank of Cyprus is the largest shareholder with an equity stake of about 49%. Over 1,200 shareholders, including investment funds, hold the remaining shares. The Bank has a 60% stake in Maltapost plc., the Maltese postal service.


Now that banks no longer offer interest OR security, they have basically just become mattresses with fees...

Sunday, March 24, 2013

Cyprus gets Greeked: is there a lesson for your "real assets?"

We all see what is happening in Cyprus. Governments in the Developed World are behaving more like Third World governments (Cyprus is a Eurozone country, after all). Here in the US, your financial assets are more monitored and regulated than ever before, causing some foreign banks to stop accepting American deposits.

The "rich" world is glued together with promises so detached from reality they're practically psychedelic (appropriate that they were dreamed up by and for baby boomers). This is leading to previously "unthinkable" measures like the one in Cyprus. But these moves aren't new (in '92 Italy had a more modest 0.6% deposit tax), and they certainly aren't a Europe-only phenomenon. In 1933, the US had bank holidays AND the government outlawed the possession of gold, only legalizing it again in the 1970s.


Do you have some extra cash on hand? Smart. Maybe provisions for a week or two in case stores and banks were closed due to some natural or man-made disaster? Smart. Do you maybe possess a few silver coins in case of real trouble? Not a bad move at all.

I mentioned cash, which may annoy some myopic survivalists. "The dollar bill is just paper!!!"

Correct, but I guarantee you any Cypriot who had a cash stash at home before this crisis is faring much better than one who didn't. People do not revert to trading seashells overnight.

While we're on the subject of paper, we should take time to think the next thought. You know what else is just paper? Contracts. Contracts, like dollar bills, are just promises. Cypriots had contracts with their banks. But when quaking duress arrived...bye bye (αντίο!) contract. Remember that this also applies to real assets. Real assets--apart from precious metal coins in your physical possession--are also just backed by paper. A receipt for gold stashed abroad is just a piece of paper. And having a contract for a patch of land in Costa Rica doesn't mean much if you aren't there to protect it (an important lesson for those with "safe zones" established abroad). Squatters are not known for their fear of fine print. Remember, part of the reason that escape ranch you bought in Latin America was so cheap was because assets in countries with less overall stability tend to sell at a discount due to the risk involved in investing there. You remember that free market and its price signals? Stop merely using them as a slogan and start giving them some actual thought.

Politicians interested in nationalization--which of course just means personal gain and aggrandizement for the nationalizing politician and his cronies--also don't worry much about the concerns of survivalists (there is a reason Chavez died a billionaire despite not inventing anything for Apple). Never forget that with just a bit of force, a contract can be nullified (along with the person attempting to enforce it).

Just to drive the point home: you know what else is just paper? The Constitution. Waving it around scares no one. Unless you are able to fold it into the world's deadliest origami sword, it isn't going to help you much.


Sunday, March 17, 2013

A Merry Aside on Suicide

When someone is bemoaning existence, saying he wishes he weren't alive, often a bystander will say: Well if you hate life so much, why don't you just kill yourself?

No matter how depressed or ill you are, the process of going from living to not living is not a comfortable one. Wishing you were kaput isn't the same as having the resolve to do something about it. Plenty of people wish to be thin, but they don't wish to go through the pain of diet and exercise. Thus, they remain plump. Getting slim is rough, and I'd say the evidence shows that the desire for self-preservation (staying alive) trumps even the desire to be slim (though listening to the song "Stayin' Alive" will make killing yourself much easier).

To off yourself, you have to first overcome the psychological hurdle, which means coming to grips with ceasing to exist. Much harder than ABC, 123, or falling off a log. Yes, the universe existed for billions of years before you came along, but you had the good fortune of not being alive to know that you didn't exist. Still with me? Great. Once you are alive and conscious of it, the tendency is to try to keep living no matter what. Life has always been brutal, and not so long ago, it was a helluva lot more brutal than it is today; much more disease, much less food, much more death all around you meaning much more grief. Yet suicide remained uncommon. Obviously, the self-preservation instinct is almost indomitable, so it takes a humongous amount of will to push past it.   

Assuming you can put all that aside long to enough plan an exit, you then have to face the disagreeable nuts and bolts of suicide. Talk about irksome. You have to picture yourself with your neck in the noose, hopping off the chair and being jerkily choked to death (Ask anyone who's been jerkily strangled with a rope if they enjoyed it. Rarely will they say "I can take it or leave it."). And you have to picture the potential horror of hanging there and suddenly wishing you could get your legs back to the chair. Imagine trying and is enough to turn a goth chick into a cheerleader. 

Jumping off a building...also a tall order. You have to overcome the mental image of a long, agonizing freefall (picture a rollercoaster made in the Soviet Union), followed by the possibility of not immediately dying upon smacking the pavement. Jumping off the high dive scares most people. Imagine jumping from a much greater height, only in this scenario you're landing on sidewalk rather than water, and in doing so you won't be impressing any hot chicks who might sleep with you later. Advantage: high dive.

Even something which is presumed to be painless (or "instant") like a gunshot to the head requires actually putting gun to temple and having to swallow your steadfast self-preservation instinct. To do so means trying to comprehend oblivion, which is pretty much beyond comprehension. If you try to bypass this horrible inner debate by rushing the gun to your head, you may misfire and merely end up with an eyebrow trim.

Knowing how hardwired we are to try to survive at all costs, it is quite simplistic to just say, "Hey man, if you're unhappy, why don't you kill yourself then?" And considering how grisly these various suicide scenarios are, it is no wonder that most people take the easy way out (i.e., continue to live).


Don't kill yourself until you've followed me on Twitter:

Saturday, March 16, 2013

Squeaking Truth to Power

The subway I frequently ride runs past a few colleges, including one for women only. This means I'm lucky enough to overhear the dreams, delusions, and disinformation spouted by America's future embarrassments-in-chief. A slice of conversation I was treated to:

And the professor, he just kept talking about global warming, you know, just so outspoken about it. Just, you, really outspoken.

And this woman would know about climate, because I'm sure she took many rigorous science classes while majoring in Transgender Ceramic Studies.

When people discuss outspokenness as an inherently good thing, it makes me want to eat lit dynamite. No one this side of Andromeda actually believes outspokenness is an inherently good thing. You know when you like someone who is outspoken? When you agree with the things he is outspoken about. You know when you hate someone who is outspoken? When you disagree with the things he is outspoken about. When your boss becomes outspoken about your incompetence, you seldom sing the praises of his candor.
People who assume the glories of outspokenness only apply to their own views is nothing new, of course. I'm sure when Joseph Goebbels became Propaganda Minister, the subway riders of 1933 were forced to hear:  

I love how Goebbels was so outspoken out the Final Solution! He soooo didn't back down! I wonder if he'll sign my dreidel?

The only thing keeping me from stabbing my eardrums out is the fear I would end up encountering a bunch of outspoken deaf people.

Sunday, March 10, 2013

I tend to meet women who are logically unavailable

When a woman is thinking out loud about her romantic history, she'll often say: I tend to go for men who are emotionally unavailable.

Somewhere in Hell, Freud is sniffing another line (though maybe in Hell there are no razors to cut up your is Hell after all) and cackling as newfangled versions of his nonsense continue to confuse otherwise thoughtful people.

Let's walk through this:

So upon meeting this guy in a bar, you immediately sized him up and figured out he was ultimately going to be emotionally unavailable. While the two of you made bad small talk about micro-brews ("Have you tried the Staten Island Guido Stout? It's made with 20% Muscle Milk"), you just divined that three months down the line he was going to be "emotionally unavailable?" This subconscious insight then sent signals to your loins to GO FOR IT..?

Interesting. The same woman who will come running to you, New York Times in hand, screaming that there is a WAR ON SCIENCE!!! will in the next breath declare she was able to do the very thing no human, scientist or otherwise, has ever been able to do: forecast the future. She can't believe people still believe in psychics!!!!, but when it comes to her relationships, she talks like a madame staring into a crystal ball.

Here are some possible alternative explanations:

Maybe you're just incapable of attracting stable men.

Maybe he just doesn't care about the same things you care about. Just because someone doesn't get as emotional about something as you doesn't make that person "emotionally unavailable." Have you ever stopped to think you might be emotionally overavailable? Maybe you're an emotional 7-11 that remains open even on Thanksgiving and Christmas. Maybe you should close once in a while.

Maybe you simply like him far more than he likes you; hence the lack of reciprocation. Even if his feelings equal yours, remember that men in general do not chatter nonstop like women. Failing to be effusive and monotonous doesn't make one emotionally unavailable.

Maybe you just go for men with blue eyes. You see a blue-eye chap, the blue eyes trigger the initial spark, and by coincidence, you happen to have met five blue-eyed losers in a row. The common denominator that grabbed you at the outset was the eyes, not the emotionally unavailability you somehow foresaw.

Most relationships, like most things in life, fail, so no matter what kind of men you are attracted to, it isn't going to work out THE VAST MAJORITY OF THE TIME, regardless of whether or not you have some fatal flaw. And because relationships have such a huge impact on us, we are inclined to construct powerful narratives and rationalizations to explain their failure. Also, there is the reality that people today play the field a lot more before getting married. When they do get married, it lasts six months, leading to more field playing. All of a sudden you've got a generation of women with 85 failed relationships to ruminate on. Combine that with the insidious boom of the self-help, pop psychology, and MAKE IT WORK! industries, and next thing you know every woman is approaching her relationships with the confidence Bambi had just after seeing her mother get it between the eyes.

Have you noticed men never talk about women being emotionally unavailable? With men and mating, the decision is binary: either a woman is attractive enough to have sex with or she isn't. If she is, and the pursuit works up to a point, fine. If not, there are several million other women between the ages of 18 and 40.

Friday, March 8, 2013

Another Phrase to be Retired

Often when a high profile person --a coach, a CEO--quits his job, he announces: I'm quitting to spend more time with my family.

Any time someone utters this upon leaving a job, it means things were going really, really badly and were about to get much, much worse. No one quits anything that is going well, especially not to "spend more time with his family." If someone has a job important enough to require notifying the press of his departure, it means he's spent many nights over many years neglecting his family so that he could attain that position in the first place. You don't become CEO by leaving every day at 5:00 to watch your daughter flop around in ballerina clothes. How convenient that this hyperambitious captain of industry suddenly became a family man the moment his career started to flounder.

You want to spend more time with your family? Kick your least attractive mistress to the curb and quit seeing that shrink every Tuesday. Your paramours and shrink are just crutches to help you deal with the guilt of neglecting your family anyway, so spend those hours at home and you'll solve two problems at once.

Friday, March 1, 2013

The Loud Shall Inherit the Earth

Since the financial crisis, collapse has been on everyone’s lips. The players in this general talk of implosion: doomsday preppers, gold bugs, and gun nuts, and people who are fashionably hysterical about doomsday preppers, gold bugs, and gun nuts.
So let’s say society took that silly walk over the precipice: who would rise under such a scenario? My guess is that it would be the great pandering orators; feel good folks like Bill Clinton and Sarah Palin. Substance barely matters here in the pre-apocalypse, but at least it matters somewhat. Right now people do take notice if you're Dr. Prodigy Patel, the world's greatest neurosurgeon. They may not care as much about your frontal lobe tinkering as they do about born again benchwarmer Tim Tebow, but at least neurosurgeons still get some respect.

But if society broke down and existence became more like The Road, substance would not matter at all. No one would follow a mousy brain doctor.

The people who would rise would be the great superficial talkers, the ones who could fill the threatening silence with verbal comfort food. Anyone who spoke with precision or unassuming expertise would get nowhere. The untrained ear (which comprises the vast majority of ears), barely understands subtle oration now, and would make even less of an effort to fathom it while scrounging for another unappetizing post-apocalypse meal.

Ironically, one of the people most heralded by those worried about collapse is a prime example of someone who wouldn’t rise under such circumstances: Ron Paul. Consider just some of his talents: medical training, military experience, and an esteemed track record as a high school athlete.
 The man has about as much substance as you're likely to find in a person. But despite all these qualities--qualities that are uncommon by themselves, let alone combined in one person--no one would follow him post-apocalypse. Why not? Because Ron Paul isn't a rousing speaker. He would either bore the survivors or go over their heads. They might even trample him in their rush to hear Oprah Winfrey's next speech.

Being a verbose dolt is always a surer path than being a learned square. It is an even surer path these days; just look at the 40 year boom in the self-help racket. Self-help exists because once people leave the nest to become adults, they still look for people to be their parents. In the pre-self-help days, when people didn't get divorced every three years and switch religions each time there was a heat wave, their spouses and clergymen acted as de facto parents. Whether they actually loved their spouses or believed their clergymen was irrelevant. They still had a stabilizing force to pat them on the head and say that everything was going to be okay. As those stabilizing forces shriveled, they turned for direction to sophistry factories likes Dr. Phil.

Post-apocalypse, we would all feel like children again, and the people who would capitalize on this would be the folks best able to recite "reality" back to us in bumper sticker form. Even without electricity the soundbyte would be king (perhaps especially, as there would be no Wikipedia to fact-check people with).

So for those who think a societal breakdown would cause a Great Purging of the Morons, I couldn't agree less. You optimists would probably be horrified by the folks who would rise in the wake of such a collapse. We would probably see a lot of pro-wrestlers become leaders; not because of their biceps, but because of their tongues. It wouldn't be a reflective Buddha-type who would take the reins. It would be Ric Flair.