Bayou Renaissance Man

When it comes to figuring out what our economy is doing, most of the high mucky-mucks of politics and finance are simply not to be trusted.  They insist that things are all wine and roses, running along quite splendidly . . . and meanwhile they're making sure they won't be affected by the downturn they must surely know is coming.

I've been accused of being a financial alarmist, of issuing warnings that never seem to be realized in reality.  Well, they mostly have already been realized, as regular observers of our economy will realize:  and they continue to be realized, on almost a daily basis.  To reinforce the message, here are five inputs from different sources that you can read and research for yourself, to figure out what's going on.  I highly recommend that you take the time to do so.

First, from Quoth The Raven, interviewing Chris Martenson:

The US Is A "Runaway Train"

"We clearly have a runaway monetary fiscal train at this point in time, and it's just headed towards what I call the nuclear reactor critical mass runaway moment,” Chris told me. “Higher interest payments beget more borrowing, which begets higher interest rates, which begets higher interest payments. And you're on that spiral. That's the death spiral, which happens to companies, but it can happen to countries too.”

He continued: “We could have probably kicked the can another cycle or two, but now you have the rest of the world backing away, if not trotting away from the U.S. dollar, and people don't get it yet. China's negatively hoarding their treasuries, they're dis-hoarding right now. So China's selling. Japan's in a world of hurt. I don't know if you see, but the yen's here banging around at the 160 level again. So they're selling, and their big bank has to probably sell some treasuries. Russia, obviously not buying any of our crap—they kicked that habit in 2018. But Saudi Arabia now not buying treasuries, dis-hoarding.”

And he raised questions about where, exactly, treasury demand is coming from, telling me: “So who's buying? Well, you go to the Treasury International Capital Report. You find out, oh good, the Cayman Islands stepped in. Dude, we need an audit of the Fed right away. I don't think it's always suspicious to see it, no, because every time we need the Cayman Islands and the UK to step up and buy just hand over fist treasuries, somehow they do.”

Finally, Chris — like most of us watching flawed policy unfold — says we’re definitely going back to QE: “But listen, here's a prediction. It's very easy to make for me. The Fed's going to have to go back to QE. It's not just lowering interest rates—that's going to do dick all for us at this point. They're going to go back to QE because we can't risk a treasury failure. We have $9 trillion of debt, new and existing, rolling through the auction market this next calendar year. And so the Fed's going to have to step in and start buying that stuff. Full stop. That's inflation."

Next, from CNN:

The world is sitting on a $91 trillion problem. ‘Hard choices’ are coming

The International Monetary Fund last week reiterated its warning that “chronic fiscal deficits” in the US must be “urgently addressed.”

. . .

Tackling America’s debt problem will require either tax hikes or cuts to benefits, such as social security and health insurance programs, said Karen Dynan, former chief economist at the US Treasury and now professor at the Harvard Kennedy School. “Many (politicians) are not willing to talk about the hard choices that are going to need to be made. These are very serious decisions… and they could be very consequential for people’s lives.”

. . .

In the United States, the federal government will spend $892 billion in the current fiscal year on interest payments — more than it has earmarked for defense and approaching the budget for Medicare, health insurance for older people and those with disabilities.

Next year, interest payments will top $1 trillion on national debt of more than $30 trillion, itself a sum roughly equal to the size of the US economy, according to the Congressional Budget Office, Congress’s fiscal watchdog.

Debt is a problem in itself, right enough, but it also boosts inflation, which is something affecting far more of us.  Here's Jeffrey Tucker, who reminds us about "The Many Faces Of Inflation".

There is clearly no chance that inflation has been running 3 to 5 percent. Once you do all the corrections to the data, you can easily generate a number 3 times that level or perhaps even 4 or 5.

No one knows for sure.

It’s not just higher prices for the same goods and services you used to buy.

Tucker goes on to list numerous inputs to overall inflation:

• Shrinkflation;
• Substitution of cheaper ingredients for more expensive ones;
• Service costs;
• Increases in taxes and fees;
• Shipping and delivery charges;
• Confusing and misleading charges and additions to your phone and utility bills;
• Increased insurance costs (Tucker notes that "Neither home nor auto insurance are included in the calculation of the Consumer Price Index");
• Higher interest rates;
• Increases in home rental and purchase rates.

He concludes:

All of this stuff is complicated for a reason. It’s because all companies today are hiding their charges from the customer for fear of a revolt. If they are hiding them from the customer, they obviously and easily hide them from the data mavens at the Bureau of Labor Statistics.

. . .

When you add it all up ... we find something approaching what used to be called hyperinflation. And this is taking place even as the business press is celebrating the end of inflation, and has been for fully two years!

Strange times indeed: the dollar is being gradually wrecked domestically while growing stronger internationally, and it’s never really been in the headlines.

This is why you feel so gaslit these days.

In another article a few days later, Tucker asks "Wait, How Much Have Groceries Gone Up?"

The most startling moment in the CNN debate last week between President Joe Biden and former President Donald Trump was not from the candidates. It was from moderator Jake Tapper, who said with a straight face as if it were just the science that grocery prices were up by 20 percent since President Biden was elected.

. . .

The trouble is that this fits with no one’s experiences. People on social media are posting receipts showing grocery prices up by anywhere between two and 10 times that rate.

In one viral video that offered receipts, a man bought 45 items (he says a full month of groceries) two years ago for $145. WalMart’s software allows him to reorder that now. He tried it just as a test. The new price: $414.

That’s an increase in two years of 185 percent! If we stretch that to three years assuming no inflation in the first, that’s an annualized increase of 61 percent. Over two years, it’s 92.5 percent.

Adding in some inflation in the first year, we can round it to 100 percent annualized, which is hyperinflation by any measure.

Commentators offered corrections that this is just one person’s experience. Maybe there was one item in there that went up vastly in price, changing the entire basket. All that is true. However, I tried looking at a few items that I bought in 2021 and found price increases of 54 percent. That’s just one item but a very normal one: lemon juice.

When all the anecdotal evidence points one way and all the official data points another way, we’ve got a problem. The distance between real experience and the official data is gigantic. And it raises the eternal problem first articulated by Chico Marx: “Who are you going to believe, me or your own eyes?”

. . .

What about the CPI? It excludes interest rate increases on everything: taxes, housing, health insurance (accurately), homeowners insurance, car insurance, government services such as public schools, shrinkflation, quality declines, substitutions due to price, or additional service fees. In particular, on the last point, a basket must compare prices in two periods. A new service and convenience fee or a simple charge for processing is not included because it is new.

People often ask: Is this all a deliberate obfuscation or is it the limits of data collection? I tend toward the latter explanation while granting that reports of a lower rate are politically advantageous. People loathe inflation. No one wants to report bad news, and that might be true of data collectors themselves.

The data collectors are sticking with systems that seemed to work in the past, but the way in which inflationary pressures have boiled through production and consumption structures this time, which is without precedent, has simply outrun the ability of old-fashioned systems of calculation to keep up.

In essence, the real world is blowing up the models.

. . .

My suggestion: Dig through your receipts. The good old days live in your digital archive. Do your own calculation and see what you come up with.

Finally, Vox Day mentions an example that I've heard from several other people over the past few weeks.

A reader notices that the credit card companies are rapidly reducing the amount of credit available to their more conservative cardholders.

My husband and I run a small business and have noticed an unusual practice by credit card companies over the last 4-5 months.

Our business is seasonal, and during our ramp up in from February to April, we usually max out 6 cards on supplies and improvements for the coming season. And then the profits from May and June pay those down, before we start making real profits July-October. We’ve been doing this for over ten years, and typically the result of the max-out and quick pay down has been an increased credit limit. 

This year, as we have started the pay down, each large pay down amount, say $2000 on a $10,000 card for example, has come with a credit limit reduction of 50% – 100% of the amount paid. One card, upon paying it off in whole dropped from $2500 to $350 as the limit. 

We have no personal reasons that our limits in particular would be getting slashed after so many years of increases. So I am wondering if this is a systemic attempt to use debt deflation to slow the rate of inflation without further interest rate increases. 

More generally, if what I’m seeing is systemic, is this a correct understanding of debt deflation? 

This is 100 percent debt deflation. And in some ways, it’s more worrisome than the leadup to the 2008 contraction. Whereas in 2008, there was a dearth of people willing to borrow, now it is apparent that the banks simply can’t afford to offer the credit if there isn’t a sufficient amount of interest to be gained.

Which suggests that the 2024 credit cruch and subsequent financial institution failures will be bigger and more consequential than we witnessed in 2008. It’s even possible that the federal government will not be able to bail out most of the failing institutions.

I had something similar happen to me during the 2007/08 financial crisis.  At the time, I had a high-limit credit card on which I was carrying a large balance.  Out of the blue, when I made a large payment to reduce the balance, my credit limit was slashed by more than 50%, to equal the remaining balance.  When I protested, the card issuer informed me that they were reducing everybody's credit limit "due to the financial crisis", despite the fact that I'd never defaulted on a payment and was in good financial health.  They then informed me that I would lose my favorable interest rate and have to pay a greatly increased one on my outstanding balance, and would be required to further reduce my balance within a few months.  I closed my account rather than adhere to their ridiculous restrictions.

Unfortunately, it looks like more than a few people today are encountering similar policies.  Apart from Vox's correspondents, I've heard similar reports from at least a dozen sources.  If credit card issuers are being that cautious and restrictive, what does that say about their perspective on current and future economic conditions?  They're clearly preparing for something not very good.  Shouldn't we do likewise?

Food for thought.  I can only suggest that we all take these factors into account now, while we may still have some financial "wiggle room".

Peter

Remaining alert and prepared for danger, whatever it may be, is the hallmark of successful individuals, groups, tribes and nations.  Those who don't . . . well, most of them aren't around any longer, or if they are, their lack of preparedness has cost them dearly before they could ensure their survival.  That's not just in military terms, either (although the example of Formerly Great Britain in 1914 and 1939 should convey its own message);  it applies to being prepared for emergencies of any kind, at any time.

I was reminded of that by a citation over at Larry Lambert's place, where he referred to this article.

Two underlying assumptions guided Israel’s security establishment for the past generation. The first asserted that with the end of the Cold War, the era of conventional wars had ended. In the present age, brains, rather than brawn, would rule the roost ... A generation of IDF Chiefs of General Staff organized around the vision of a “small, technological and lethal army.”

. . .

Brick’s warnings fell on deaf ears until the “small, smart army” fallacy was obliterated by Hamas invaders on Oct. 7. Israel’s multi-billion shekel “smart fence” was felled by bulldozers. Its automatic response system was obliterated by RPGs. Hundreds of soldiers manning these worthless technological wonders were slaughtered or kidnapped. Everything failed.

This brings us to the second underlying assumption that guided Israel’s security establishment for the past generation. This assumption, also championed by Barak, asserted that Israel’s most important strategic asset was the United States ... Under the spell of Barak’s U.S. dependence doctrine, Israel gutted its domestic military production capabilities. Nearly everything that it had produced domestically—from uniforms to rifles to bullets, to artillery and tank shells—was shut down. Thousands of military industry workers lost their jobs. Knowledge was lost. The contracts moved to the United States. Even projects developed jointly by Israeli engineers financed by America were transferred to the United States for production. So it happened that Israel’s Iron Dome missiles are solely produced in the United States.

Along with Barak, the dependence doctrine’s biggest champions were the air force generals. Under their leadership, Israel’s air force effectively became a U.S. asset. The air force cannot operate without U.S. platforms, spare parts and bombs. All air force ordnance is made in America.

. . .

It will take years to correct the damage the generals wrought by reducing the size of the IDF and inducing its total dependence on the United States ... the Defense Ministry is launching a crash program with Israel’s military industries and major industrialists to make Israel independent in everything related to ordnance. In the initial phase, Israel will begin producing bombs for its aircraft. Jerusalem also intends to expand its production of tank and artillery shells, as well as assault rifles and bullets. Separately, there is increased discussion regarding the establishment of a missile force as an independent arm of the IDF. The force would reduce reliance on the air force and develop more versatile, more easily defended missile launch platforms and massively expand Israel’s missile and drone arsenals.

. . .

Brick and others argue that had Hezbollah joined Hamas in invading and bombing Israel on Oct. 7, Israel may well have been destroyed that day. A combination of Hezbollah’s 10,000-man Radwan Brigades perched at the border and capable of invading the Galilee, and a barrage of up to 4,000 missiles with various payloads targeting Israel’s air bases, and other strategic sites and civilian population centers every day for weeks, would have caused irreparable damage equal in force to a nuclear bomb.

There's more at the link.  The whole article is well worth reading in full.

The article drives home, yet again, for the umpteenth time in history, the truth of Vegetius' adapted and oft-repeated statement:

Si vis pacem, para bellum.

If you want peace, prepare for war.

Nobody ever won a war by preparing for peace.

Nobody ever became more prepared for an emergency by ignoring emergency preparations.

Nobody ever prospered by ignoring the dangers that imperil prosperity.

We can put it any way we like, in any context of human endeavor that we wish, but the truth remains inescapable.  If we close our eyes to reality, and relax, and forget about the innumerable lessons embodied in human history, we're going to get clobbered when it comes around again.  For a very sobering example of that, see this post from Karl Denninger, where he describes how a well-prepared friend was undone by the little things that had been forgotten or ignored - but came back to bite him when his emergency preparations were really needed.

How many people in the Caribbean, and the Yucatan Peninsula, and the southern Gulf Coast of Texas, did nothing to prepare for a hurricane - despite living in one of the most hurricane-prone regions of the world?  Hurricane Beryl is currently reminding them to be more prepared and proactive in future.

How many of us are watching the present political instability in the United States' government and not preparing for major upheavals?  We have a President who's manifestly incapable of managing his own affairs, let alone the nation's.  Can we trust his finger on the nuclear button in emergency?  I don't.  I don't think anyone with any sense does . . . yet he's still in office, and the powers that be are desperate to persuade us that everything's fine, and there's no danger.  One rogue state taking matters into its own hands, and that can change in literally seconds.  Do you feel safe?

Our economy is a mess.  Warning signs are flashing all over (I'll be writing more about that later today or tomorrow.)  Do we feel prosperous?  Do we feel economically secure?  Then we aren't prepared for what's likely to happen Real Soon Now.

BE PREPARED.  IF YOU'RE NOT YET PREPARED, GET PREPARED AS BEST YOU CAN . . . or else.

Peter

Gathered from around the Internet over the past week.  There's a bumper crop in this edition, thanks to Independence Day generating a lot more memes than usual.  Click any image for a larger view.

Something different this Sunday, combining very old musical styles with recent pop and rock hits.  Algal the Bard plays a genre he largely originated, which has become known as Bardcore:   "medieval-inspired remakes of popular songs".

I don't like some of them, but then, I don't like a lot of modern music.  However, some are very well done indeed.  Here are a few samples.  First, Metallica's "Nothing Else Matters".

Next, a "tavern version" of "Take On Me".

"Losing My Religion" in medieval style.

And finally, here's "Toxicity" from System Of A Down.

You'll find many more of his videos at his YouTube channel.  Do a search there on "Bardcore" for more performers and music in the genre.

Peter

No book excerpt this morning.  We have house guests, which is occupying our time, and I'm still not fully back to normal (as far as normal goes, I guess!) after all my medical procedures over the past few months.  I simply haven't been able to get around to preparing a snippet.

Please amuse yourselves with the bloggers in the sidebar.

Peter

... according to Jennie Breeden and her "The Devil's Panties" comic strip.  Click the image to be taken to a larger version at her Web page.

"Renewed our vows".  Gigglesnort!

Peter

... unless and until you verify it through at least half a dozen reliable (well, as reliable as possible) sources.  I don't care whether Ukraine or Russia is claiming something:  they're all lying.

The latest example is the "scandal" over Ukraine leader Zelensky's wife's alleged purchase of a Bugatti sports car.  It was made up out of whole cloth by Russian propaganda sources.  You can read all about it in this BBC report, which shows how it was created and disseminated, and why it's "fake news".

I've gotten to the point where, if I know that a news report originated from one or the other side's official sources, I automatically disbelieve it.  The only people I'll listen to are those that use independent sources (particularly satellite imagery, reports from people on the ground who've established a reputation for reliability, and so on).  If they report and/or confirm something, all well and good.  If they don't . . . fuggetaboutit.

The same goes for video clips of fighting in the area.  We've seen "recycled" video footage dating back years, even decades, purporting to show atrocities.  I'm sure there are some real clips among them, but when it's so difficult to verify any of them, why waste time trusting them?  Given modern technology and editing facilities, the camera can - and does - lie like a trooper.

Trouble is, too many of our legislators believe - or pretend to believe - such biased sources, and use them to justify voting for a few dozen billion dollars more for Ukraine, or more sanctions against Russia.  They don't want to know the truth, because if they did (and their constituents did) they'd be voted out of office for being spendthrift wasters of taxpayer dollars.  US veterans need health care?  Victims of natural disasters in our country need help to recover?  None of that matters as much as funneling more of our dollars into the bottomless pit of the Ukraine war - not to mention the few billion here and there that get kicked back to our politicians as a "Thank you!" for their compliance.

One of the nicest things about President Trump's term of office was that he didn't get America involved in any more foreign adventures;  in fact, he pulled a lot of US troops out of areas they had no need to be, and brought them home.  That alone offers good grounds to vote for him next time round, IMHO.

Peter

Courtesy of Pascal Fervor, commenting at Liberty's Torch, we find this object lesson in reality.  Click the image for a larger view.

Next time a climate alarmist tries to pull "The seas are rising!" on you, show them that picture, and ask them to explain it.  They won't, of course - because they can't, unless they admit that sea levels on the whole are not rising.

Thank you, ancient Romans!

Peter

That's from a 2013 article in Vanity Fair, examining why European elites unjustifiably feel so smugly superior to Americans and their country.  I thought it might be fitting, this July 4th, to bring it to your attention.  Here's an excerpt.

Enough. Enough, enough, enough of this convivial rant, this collectively confirming bigotry. The nasty laugh of little togetherness, or Euro-liberal insecurity. It’s embarrassing, infectious, and belittling. Look at that European snapshot of America. It is so unlike the country I have known for 30 years. Not just a caricature but a travesty, an invention. Even on the most cursory observation, the intellectual European view of the New World is a homemade, Old World effigy that suits some internal purpose. The belittling, the discounting, the mocking of Americans is not about them at all. It’s about us, back here on the ancient, classical, civilized Continent. Well, how stupid can America actually be? On the international list of the world’s best universities, 14 of the top 20 are American. Four are British. Of the top 100, only 4 are French, and Heidelberg is one of 4 that creeps in for the Germans. America has won 338 Nobel Prizes. The U.K., 119. France, 59. America has more Nobel Prizes than Britain, France, Germany, Japan, and Russia combined. Of course, Nobel Prizes aren’t everything, and America’s aren’t all for inventing Prozac or refining oil. It has 22 Peace Prizes, 12 for literature. (T. S. Eliot is shared with the Brits.)

And are Americans emotionally dim, naïve, irony-free? Do you imagine the society that produced Dorothy Parker and Lenny Bruce doesn’t understand irony? It was an American who said that political satire died when they awarded the Nobel Peace Prize to Henry Kissinger. It’s not irony that America lacks; it’s cynicism. In Europe, that arid sneer out of which nothing is grown or made is often mistaken for the creative scalpel of irony. And what about vulgarity? Americans are innately, sniggeringly vulgar. What, vulgar like Henry James or Eleanor Roosevelt or Cole Porter, or the Mormons? Again, it’s a question of definitions. What Americans value and strive for is straight talking, plain saying. They don’t go in for ambiguity or dissembling, the etiquette of hidden meaning, the skill of the socially polite lie. The French in particular confuse unadorned direct language with a lack of culture or intellectual elegance. It was Camus who sniffily said that only in America could you be a novelist without being an intellectual. There is a belief that America has no cultural depth or critical seriousness. Well, you only have to walk into an American bookshop to realize that is wildly wrong and willfully blind. What about Mark Twain, or jazz, or Abstract Expressionism?

What is so contrary about Europe’s liberal antipathy to America is that any visiting Venusian anthropologist would see with the merest cursory glance that America and Europe are far more similar than they are different. The threads of the Old World are woven into the New. America is Europe’s greatest invention. That’s not to exclude the contribution to America that has come from around the globe, but it is built out of Europe’s ideas, Europe’s understanding, aesthetic, morality, assumptions, and laws. From the way it sets a table to the chairs it sits on, to the rhythms of its poetry and the scales of its music, the meter of its aspirations and its laws, its markets, its prejudices and neuroses. The conventions and the breadth of America’s reason are European.

This isn’t a claim for ownership, or for credit. But America didn’t arrive by chance. It wasn’t a ship that lost its way. It wasn’t coincidence or happenstance. America grew tall out of the cramping ache of old Europe.

There's much more at the link.

It's worth a read, if others' opinion about America bothers you.  Since moving here almost thirty years ago, I've become more and more proud to be an adopted American.  Despite all this country's innumerable problems, I wouldn't choose to be anywhere else.  I'd rather stay here and help fix my home.

A happy and blessed Independence Day to us all!

Peter

It seems an old sword has vanished.  It's deemed by locals (particularly those in the tourist trade) to be the original, real, cross-my-heart-and-hope-to-die, pinky-swear Durandal belonging to the mythically-enhanced, legendary Roland, one of Charlemagne's military governors during the 8th century AD.  The Telegraph reports:

It is southern France’s answer to Excalibur, the mythical sword that King Arthur legendarily pulled from a rock to obtain the British throne.

However, Rocamadour has no idea who managed to wrench its famed Durandal sword from the stone in which it had been embedded for centuries, particularly because it was 10 metres (32.5 feet) off the ground.

All the town knows is that one of its main tourist attractions has vanished. It is presumed stolen and an investigation has been launched.

Durandal was the sword of Roland, a legendary paladin (knight) and officer of Charlemagne in French epic literature. According to the legend, Durandal was indestructible and the sharpest sword in all existence, capable of cutting through giant boulders with a single strike.

Its magical qualities are recounted in the 11th-century epic poem The Song of Roland, the oldest surviving major work of French literature.

. . .

Medieval “myth” has it that before it was given to Roland, Charlemagne received Durandal from an angel. Before his death at the Battle of Roncevaux Pass, Roland is said to have tried in vain to break it on the rocks to prevent his enemies from seizing it. He finally threw it into the air to save it. Miraculously travelling hundreds of kilometres, it is said to have embedded itself in the rock face of Rocamadour.

There's more at the link.

I can't help laughing at the fuss and bother.  It's patently obvious to anybody with two working brain cells to rub together that Rocamadour installed a fake Durandal to attract medieval tourists, who were rather more credulous than their modern equivalents.  It's the same sort of fake as the "pieces cut from the sail of Saint Peter's fishing-boat!" that pedlars sold to pilgrims, or the fabled "Holy House of Loreto", the purported original home of the Virgin Mary.  It supposedly flew (powered by angels) from Nazareth in the Holy Land, via two other locations, until it landed in Loreto, Italy (which proceeded to make a fortune from pilgrims thronging there to see it).

(Perhaps Boeing might like to hire the angels concerned?  They need all the help they can get right now!)

So, a long-standing fake has been stolen.  So what???  Just whip up a convincing copy of it, put it back in place, and Bob's your uncle.  It's not as if the stolen fake has any value, intrinsic or otherwise.  "Flew from Roncevaux to Rocamadour", my fundamental jujube!

(On the other hand, if President Biden turns up wielding the stolen Durandal copy during his next debate with former President Trump, all sorts of things might get more interesting!  It might help his cutting remarks . . . )

Peter