by John Galt
February 26, 2010
Tonight I’m going to take a quick break from the markets but do not worry by the time you wake up in the morning I will have a lot to say, especially about the dangerous position our idiots have placed us in.
Over the past twenty-four hours, Glenn Beck has presented some excellent work with Professor Buckner from Columbia University where he begged us to “think outside the box” and unfortunately on his famous chalk board, Glenn walked inside the box, sat down, lit up a pipe, and had time for a cookie or two. This is not a be-all end-all “he’s an idiot and I’m going to argue with him” editorial. It is a statement of what facts I have available to me and the impacts of the statements he has made versus historical reality.
The theory as presented was that once Greece or another PIIGS member fell, the dominoes of the European Union, then the United Kingdom then the United States and finally China would fall. The theory is solid based on Keynesian economic theory and the ideals of foreign interventionism of Professor Quigley from the treatise Tragedy and Hope plus the ideals taught to this day in various universities about the progression of history via imperialist versus non-imperialist expansions and contractions of empire. The problem is that this puts everything into a nice tidy box which conforms with traditional Progressive idealism and fails to take into account the concepts of and ideals of Marxist expansionism of which Mao Tse-tung managed to temper but remind the West of repeatedly in his speeches and education system which is still relatively intact to this day. For example in 1957 he harbored no illusions about opening up contacts and expanding relations with some Western nations as illustrated from the piece entitled On the Correct Handling of Contradictions Among the People (Page 75, 1957, 1st pocket edition via Quotations from Chairman Mao Tse-Tung, Google Books, Page 66):
“As for the imperialist countries, we should unite with their peoples and strive to coexist peacefully with those countries, do business with them and prevent any possible war, but under no circumstances should we harbour any unrealistic notions about them.”
Thus the question becomes why would I refer to an almost fifty-three year old quote to point out the flaw in the domino theory presented by Professor Buckner and Mr. Beck? That is simple. Americans are a simple, short-sighted people now, unable to manage the multiple affairs of the world and their domestic lives much like the Congress fails to digest the responsibilities the Constitution bestows upon them. They have a shorter attention span than most citizens and those Americans who take the time to read the works of our enemies, former and current which are usually one and the same, understand that history does not judge those kindly who dismiss the words of the past and the leaders who created generations of elite political control mechanisms sworn to neutralize the United States as a world power. In Glenn’s own programming past he has warned about the dangers of the former Soviet Union political machine now controlling modern day Russia yet the average argument is “well if Europe and America fall Russia is toast.” Really? Have we come to such a short-sighted discussion point that instead on analyzing almost one hundred years of Marxist ideology we just dismiss the ability of those nations to survive because “we” have our talons deep into their national fabric?
The reality is that for nations and people who have endured hard economic realities and a standard of living averaging some fifty years before our own, to fall back into or be forced into such a situation again would not be as destructive to their societies as it would our own. Consider that in the 1930’s the average American household repaired their own cars, patched or made their own clothes if they could afford the fabric and maintained small plots of gardens to preserve fruits and vegetables for regular consumption. This is why the rationing programs imposed during World War Two were difficult yet tolerable for the majority of households, especially those in the lower middle class and lower class of the economic strata. The crisis we are facing today is almost if not as severe as the 1941-1945 era as the fragmentation and realignment of the West is now a realistic threat and the emergence of the “South” as the next great power base is a realistic conclusion to this self-inflicted gunshot wound of a crisis as a result of blissful ignorance and abject greed.
The Chinese people, from my discussions with business people who have had discussions with their “middle class” or lower level management is still distrustful of their government but feel that as long as their quotas or economic targets are met, they will be left alone. Those troublemakers who dare to utter the ideals of liberty and freedom such as the suicide protesters at Tienanmen Square are often ignored and shipped away by the secret police and that level of intimidation plus an exquisite domestic spying apparatus helps the iron fist of the Central Committee maintain control. There is also a belief, as it was explained to me, that the risk of a reversion or collapse of this economic expansion via the capitalist experiment is almost expected at any time and thus an economic contraction or reduction in the standard of living for the greater good of the nation may not have the drastic impact that many theorize. While the elites or ruling class in Shanghai who create huge corporations at the behest of the state put on one show, the real, hard and difficult grind of every day living is far different at the peasant level and is not far removed from the agrarian past of their parents. Thus an economic collapse or contraction initiated by the west may indeed be short lived, especially when one considers the massive stockpiles of foreign reserves in various denominations and the raw materials accumulated over the past decade, which are under complete control of the Communist Party. This would allow a more stringent command and control system to be temporarily implemented until enough of the world economy recovers to allow the neo-capitalist system to return to normal ebbs and flows. In the United States there is no ability to convert to such a system without drastic revisions to or suspension of the Constitution.
Fast forward to the crisis we are in the midst of today. The interactions of the U.S. banking system with Europe and vice-versa have propagated the nightmare that we are living now. This is what occurs when one allows academics with no real world experience to manage and regulate the economic and political-economic systems of our nation such as we have now with the President, Chairman of the Federal Reserve, and Secretary of the Treasury. None of the gentlemen referred to, Obama, Bernanke nor Geithner have ever created, managed or worked within the standard capitalist economic environment; they have either had a government program or job intervening with or on behalf of themselves, or worked at levels of academia where theoretical tenets have yet to be used with any calculable real world results. Thus the concerns that I have over the next ninety days as the final installments of Quantitative Easing, a theory now in use, comes to a conclusion which might be premature and result in a devastating deflationary death spiral which will forever mar the political landscape and result in an extremist leftist experiment with hybrid capitalism. That is the problem when you have people who have never managed a real bank attempting to run a central bank; they have little experience on how to deal with real time crisis and work the theoretical “what if” angles instead of implementing long term plans of action guaranteed to stabilize the economy as a whole. As for President Obama, well, let’s be kind and just say that he is as qualified to deal with this crisis as a blind, deaf and dumb man is to control the robot arms which load the fuel rods in a nuclear reactor. Worried yet?
In the end, I think the dominoes will stop falling at Japan and South Korea and the emergence of the new “South” will begin with the nations of Communist China, India, Taiwan, Thailand, Vietnam, Indonesia, Malaysia, Singapore, Hong Kong, Brazil and Chile taking the lead. The demographically and economically impaired nations of the old “West” will be allowed to wallow and deteriorate as their economies are quarantined by the rest of the world and thus allowing an economic recovery to emerge from the South instead of via the traditional powers. History is a wicked woman and often she changes course without warning, much like an errant or angry wife. Believe me, I know. Thus thinking inside the box might just create a rude awakening for those sold on the idea of American hegemony and the beliefs that our nation is the modern day Rome of the new era. If you insist on staying inside the box I do have one suggestion: Brush up on your Latin, as for dead languages it is one of the greatest reminders of the fallacy of the theory that empires last forever.
