Does Any of This Make Sense?

Posted on November 16, 2018 by Charles Hugh Smith

We rarely ask “does this make any sense?” of things that are widely accepted as beneficial— or if not beneficial, “the way it is,” i.e. it can’t be changed by non-elite (i.e. the bottom 99.5%) efforts.

Of the vast array of things that don’t make sense, let’s start with borrowing from future income to spend more today. This is of course the entire foundation of consumer economies such as the U.S.: the number of households which buy a car or house with cash is near-zero, unless 1) they just sold a bubble-valuation house and paid off their mortgage in escrow or 2) they earned wealth via fiscal prudence, i.e. the avoidance of debt and the exultation of saving.

Debt has this peculiar characteristic: it has to be paid back with interest.Depending on the rate of interest and the length of the loan, this translates into a mind-numbing reality: borrowing $100 can cost $200 once interest is factored in.

One might reckon that people would be cautious about paying two or three times more for something by using debt rather than cash. But consumer economies are based not just on debt, but on TINA (there is no alternative) and on the timeless seduction of getting something now and paying for it later.

College students are frightened by scary stories of permanent impoverishment and social degradation if they don’t borrow a small fortune to buy a diploma (never mind if you actually learn anything remotely useful or wise; you’re not buying an education, you’re buying an accreditation of your ability to grind through a bureaucratic system without any unhealthy questioning if “higher education” actually makes any sense. Hint: it doesn’t, unless you’re skimming wealth off the poor students.)

The higher education debt scam is classic TINA: there is no alternative to borrowing a small fortune to buy a (mostly worthless) diploma, unless you favor living in a cardboard box the rest of your life.

TINA drives the trillion-dollar deficits of the US government as well: the entrenched self-serving interests feeding at the public trough would quickly ramp the political pain to 11 if their share suffered any cuts, and so There Is No Alternative to funding every parasitic, predatory cartel with its maw in the public trough (healthcare, higher education, banking, national defense, etc.)

Tragically, for a lot of low-income working poor households, there really isn’t any alternative to high-interest debt. When the tire on the gets-me-to-work vehicle blows, the expense has to be financed, either at the tire shop or with a credit card.

Equally tragically, fiscal prudence, i.e. the avoidance of debt and the exultation of saving, is not taught in our educational system. As those of us who work in construction know, many blue-collar tradescraft folks earn good pay, but they mis-spend it on needless consumption or over-borrow to buy stuff they could easily live without.

I could list dozens of personal histories of earned wealth squandered on painfully frivolous consumption or “investments” that never seem to actually increase the owner’s wealth.

What’s not taught in our educational system–perhaps because it would undermine Consumption Funded by Debt?) –is opportunity cost: when you buy the $100 item and end up paying $200 or $300 because the purchase was funded by debt, the opportunity cost is: what else could you have done with the money squandered on interest, penalties, late fees etc.?

This opportunity cost separates those with decent earnings and little productive wealth and those who earned the same income but acquired real wealth. The flip side of debt (paying interest) is earning interest on savings/ capital. Those with capital can earn a return on their capital while those with only debt are debt-serfs, devoting much of their future earnings to the repayment of debt with interest. (Late fees and other charges can triple the cost of the initial purchase in short order.)

Pre-easy-credit, people couldn’t borrow money for the simple reason they were poor credit risks. Credit has always existed, but it was generally linked to collateral and / or a transaction that would soon settle the debt in cash, for example, a loan extended by a wholesaler who will get paid off once the end-customer pays.

With public debt, the collateral is the tax-donkey’s obligation to pay taxes, and with private-sector debt, the borrower’s future income. If the tax-donkey closes down his/her business and sells his/her house, the obligation to pay taxes vanishes into thin air (after the tax-donkey pays the transfer taxes, of course, and any capital gains on the sale of the house.)

The debtor who has no collateral other than his/her future income has a trick card to play: bankruptcy. Since there’s no real-world asset for the lender to repossess (or in the case of used cars, the repo’d vehicle is typically worth less than the outstanding loan), the borrower can stiff the lender.

But since the lenders own the political machinery, bankruptcy will cost you. In the case of student loan debt, it’s not easy to get out from underneath student loan debt. In the case of credit card debt default, the lenders will cut the defaulted borrower off from access to credit: it’s cold turkey withdrawal from credit, Baby. TINA no longer matters; there’s no credit available except from loan sharks, and their rates guarantee poverty (or very unfortunate “accidents”.)

Does any of this make sense? No. But it’s so darn profitable to the oligarchy, it’s difficult to escape debt-serfdom and tax-donkey servitude. Interestingly, when there really is no alternative, people tend to get creative / innovative. But when easy credit is available, they default to taking the easy way out, which is to borrow from future earnings without questioning the opportunity cost of debt-serfdom and tax-donkey servitude.

Remember: every dollar of debt is an expense to the borrower but a source of income to the lender. Keep that in mind as you study these charts of student loan debt and federal debt:

Future income devoted to paying interest is money that can’t be invested productively. On a national scale, that guarantees falling productivity, soaring wealth inequality and eventually, widespread impoverishment. 

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

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Trump Quietly Orders Elimination of Assange

Posted on November 16, 2018 by Eric Zuesse.

Eric Zuesse

On June 28th, the Washington Examiner headlined “Pence pressed Ecuadorian president on country’s protection of Julian Assange” and reported that “Vice President Mike Pence discussed the asylum status of Julian Assange during a meeting with Ecuador’s leader on Thursday, following pressure from Senate Democrats who have voiced concerns over the country’s protection of the WikiLeaks founder.” Pence had been given this assignment by U.S. President Donald Trump. The following day, the Examiner bannered “Mike Pence raises Julian Assange case with Ecuadorean president, White House confirms” and reported that the White House had told the newspaper, “They agreed to remain in close coordination on potential next steps going forward.”

On August 24th, a court-filing by Kellen S. Dwyer, Assistant U.S. Attorney for the Alexandria Division of the Eastern District of Virginia, stated: “Due to the sophistication of the defendant and the publicity surrounding the case, no other procedure [than sealing the case, hiding it from the public] is likely to keep confidential the fact that Assange has been charged. … This motion and the proposed order would need to remain sealed until Assange is arrested in connection with the charges in the criminal complaint and can therefore no longer evade or avoid arrest and extradition in this matter.” That filing was discovered by Seamus Hughes, a terrorism expert at the Program on Extremism at George Washington University. On November 15th, he posted an excerpt of it on Twitter, just hours after the Wall Street Journal had reported on the same day that the Justice Department was preparing to prosecute Assange. However, now that we know “the fact that Assange has been charged” and that the U.S. Government is simply waiting “until Assange is arrested in connection with the charges in the criminal complaint and can therefore no longer evade or avoid arrest and extradition in this matter,” it is clear and public that the arrangements which were secretly made between Trump’s agent Pence and the current President of Ecuador are expected to deliver Assange into U.S. custody for criminal prosecution, if Assange doesn’t die at the Ecuadorean Embassy first.

On November 3rd (which, of course, preceded the disclosures on November 15th), Julian Assange’s mother, Christine Ann Hawkins, described in detail what has happened to her son since the time of Pence’s meeting with Ecuador’s President. She said:

“He is, right now, alone, sick, in pain, silenced in solitary confinement, cut off from all contact, and being tortured in the heart of London. … He has been detained nearly eight years, without trial, without charge. For the past six years, the UK Government has refused his requests to exit for basic health needs, … [even for] vitamin D. … As a result, his health has seriously deteriorated. … A slow and cruel assassination is taking place before our very eyes. … They will stop at nothing. … When U.S. Vice President Mike Pence recently visited Ecuador, a deal was done to hand Julian over to the U.S. He said that because the political cost of expelling Julian from the Embassy was too high, the plan was to break him down mentally…   to such a point that he will break and be forced to leave. … The extradition warrant is held in secret, four prosecutors but no defense, and no judge, … without a prima-facie case. [Under the U.S. system, the result nonetheless can be] indefinite detention without trial. Julian could be held in Guantanamo Bay and tortured, sentenced to 45 years in a maximum security prison, or face the death penalty,” for “espionage,” in such secret proceedings.

Her phrase, “because the political cost of expelling Julian from the Embassy was too high” refers to the worry that this new President of Ecuador has, of his cooperating with the U.S. regime’s demands and thereby basically ceding sovereignty to those foreigners (the rulers of the U.S.), regarding the Ecuadorian citizen, Assange.

This conservative new President of Ecuador, who has replaced the progressive President who had granted Assange protection, is obviously doing all that he can to comply with U.S. President Trump and the U.S. Congress’s demand for Assange either to die soon inside the Embassy or else be transferred to the U.S. and basically just disappear, at Guantanamo or elsewhere. Ecuador’s President wants to do this in such a way that Ecuador’s voters won’t blame him for it, and that he’ll thus be able to be re-elected. This is the type of deal he apparently has reached with Trump’s agent, Pence. It’s all secret, but the evidence on this much of what was secretly agreed-to seems clear. There are likely other details of the agreement that cannot, as yet, be conclusively inferred from the subsequent events, but this much can.

Basically, Trump has arranged for Assange to be eliminated either by illness that’s imposed by his Ecuadorean agent, or else by Assange’s own suicide resulting from that “torture,” or else by America’s own criminal-justice system. If this elimination happens inside the Ecuadorean Embassy in London, then that would be optimal for America’s President and Congress; but, if it instead happens on U.S. soil, then that would be optimal for Ecuador’s President. Apparently, America’s President thinks that his subjects, the American people, will become sufficiently hostile toward Assange so that even if Assange disappears or is executed inside the United States, this President will be able to retain his supporters. Trump, of course, needs his supporters, but this is a gamble that he has now clearly taken. This much is clear, even though the rest of the secret agreement that was reached between Pence and Ecuador’s President is not.

Scooter Libby, who had arranged for the smearing of Valerie Plame who had tried to prevent the illegal and deceit-based 2003 invasion of Iraq, was sentenced to 30 months but never spent even a day in prison, and U.S. President Trump finally went so far as to grant him a complete pardon, on 13 April 2018. (The carefully researched docudrama “Fair Game” covered well the Plame-incident.) Libby had overseen the career-destruction of a courageous CIA agent, Plame, who had done the right thing and gotten fired for it; and Trump pardoned Libby, thus retroactively endorsing the lie-based invasion of Iraq in 2003. By contrast, Trump is determined to get Julian Assange killed or otherwise eliminated, and even Democrats in Congress are pushing for him to get that done. The new President of Ecuador is doing their bidding. Without pressure from the U.S. Government, Assange would already be a free man. Thus, either Assange will die (be murdered) soon inside the Embassy, or else he will disappear and be smeared in the press under U.S. control. And, of course, this is being done in such a way that no one will be prosecuted for the murder or false-imprisonment. Trump had promised to “clean the swamp,” but as soon as he was elected, he abandoned that pretense; and, as President, he has been bipartisan on that matter, to hide the crimes of the bipartisan U.S. Government, and he is remarkably similar in policy to his immediate predecessors, whom he had severely criticized while he was running for the Presidency.

In any event, the destruction of Assange has clearly been arranged for, at the highest levels of the U.S. Government, just as the destruction of Jamal Khashoggi was by Saudi Arabia’s Government; and, just like in Khashoggi’s case, the nation’s ruler controls the prosecutors and can therefore do whatever he chooses to do that the rest of the nation’s aristocracy consider to be acceptable.

The assault against truth isn’t only against Assange, but it is instead also closing down many of the best, most courageous, independent news sites, such as washingtonsblog. However, in Assange’s case, the penalty for having a firm commitment to truth has been especially excruciating and will almost certainly end in his premature death. This is simply the reality. Because of the system under which we live, a 100% commitment to truth is now a clear pathway to oblivion. Assange is experiencing this reality to the fullest. That’s what’s happening here.

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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The Implicit Desperation of China’s “Social Credit” System

Posted on November 15, 2018 by Charles Hugh Smith

I’ve been pondering the excellent 1964 history of the Southern Song Dynasty’s capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government’s unprecedented “Social Credit Score” system, which I addressed in Kafka’s Nightmare Emerges: China’s “Social Credit Score”.

The scope of this surveillance is so broad and pervasive that it borders on science fiction: a recent Western visitor noted that train passengers hear an automated warning on certain lines, in Mandarin and English, that their compliance with regulations will be observed and may be punished via a poor social score.

Taking the train in China is like stepping into an episode of ‘Black Mirror’ (via GFB)

Inside China’s Dystopian Dreams (NYT)

China has turned Xinjiang into a police state like no other (The Economist)

In the Song Dynasty, arguably China’s high water mark in many ways (before the Mongol conquest changed China’s trajectory), social control required very little force. The power of social control rested in the cultural hierarchy of Confucian values: one obeyed the family’s patriarch, one’s local rulers and ultimately, the Emperor.

Author Edward Luttwak made the distinction between force and power in his fascinating book The Grand Strategy of the Roman Empire: From the First Century CE to the Third: power is persuading people to cooperate, force is making them obey.

Power is people choosing of their own accord to comply, for reasons they find sound and that serves their self-interest; there is little need for the application of force.

Power is highly leveraged; a relatively small police/military and judiciary is all that’s needed. Force, in contrast, doesn’t scale: it’s enormously costly in capital and labor to monitor an entire populace and impose control and obedience.

While the Song Dynasty had a police force, a judiciary and an army, the populace generally managed itself via an internalized secular religion that placed the father, civil authorities and the Imperial state at the top of a natural order that enabled the harmony of Heaven and Earth. To disobey would be to threaten the harmony that served everyone.

In the early days of the Communist revolution (1949 to 1965), the majority of China’s populace embraced the values and authority of the Communist regime, despite the monumental hardships and setbacks of the Great Leap Forward (millions dying needlessly of starvation) and other centralized incompetencies.

But the Cultural Revolution that was launched with Mao’s blessing in 1966 was only embraced by the youthful Red Guards. The rest of the society had to be monitored and forced to comply with the mercurial injustices and arbitrary nature of the Cultural Revolution, which imprisoned millions of China’s most accomplished citizens in various forms of forced deprivation: house arrest (the most mild); forced relocation to rural labor, re-education (i.e. torture) and imprisonment. Many were killed without even the semblance of a judicial process.

In broad brush, the Cultural Revolution broke the social power of the Communist Party and government. Thereafter, the Party and the state only had force at their disposal.

The rise of broadly distributed prosperity (Deng’s “to get rich is glorious”) replaced the failed power of Communist ideology with a new social contract:obey the party and the state and you’ll become prosperous.

If this new contract were considered rock-solid power, why would China’s government need the vast surveillance system they’re putting in place for fine-grained control of the populace?

It suggests to me that the leadership (Xi and his cabal) are aware that the prosperity is not permanent, nor is it being distributed evenly enough to harmonize Heaven and Earth. Sensing their lack of social power, they are turning to technology to create a vast system of coercion (force).

Force is not a substitute for power. For this reason, the “Social Credit Score” system smacks of desperation. But China’s history is clear: the culture and the people prefer a system in which power is maintained through social norms, not force. With Communist ideology a dead force, and prosperity about to wither, what’s left? A system of forced obedience backed by Orwellian technology.

Other governments are keenly interested in following China’s lead. “Prosperity” isn’t just phantom and asymmetrically distributed in China; it’s phantom and asymmetrically distributed almost everywhere, and so other governments are just as desperate to protect their elites and control their restive populaces.

Chinese-style ‘digital authoritarianism’ grows globally

Centralized force has limits. Like everything else we reckon has god-like powers, it works until it doesn’t.

 

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

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The Fate of Washington’s Blog

Posted on November 15, 2018 by WashingtonsBlog

I have deep respect for you – the reader of Washington’s Blog – and so I want to share what I’m thinking … and seek your advice.

I’m edging closer and closer to deciding to end the site.  While I haven’t made a final decision, these are the factors which are contributing to my probable decision:

(1) The site is focuses on content.   In contrast to sites like Reddit or Twitter, we have been writing exposés and investigative pieces for more than 10 years.

Having so much content costs alot, since internet hosts charge according to how much  data they are hosting.

(2) Washington’s Blog was falsely blacklisted by a fake group of pro-war propagandists. Governments have the ability to manipulate website rankings, and I wouldn’t be shocked if our ranking has been tweaked to appear lower.

(3)  The blacklisting – along with the wider attack on alternative news – also caused Google to discontinue ads for our site, and has undoubtedly decreased traffic from Twitter, Facebook and other social media.

(4) The European Union wants to destroy the Internet as we know it, by enacting a tax on links.

This would impact our site more than most others.  My style as a writer is to link to credible sources to prove every claim I make.

I’ve been doing this since 2007 … so there are alot of links on our site!

What are your thoughts?

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LNR Elections 2018- What’s Ahead

Posted on November 14, 2018 by George Eliason

 

A few months ago a couple of officials from Lugansk People’s Republic broached the idea of my joining the International Election Observer team in LNR. It wasn’t because they consider me an unfriendly voice, but quite the contrary.

I live in LNR and want the country to have a chance to develop. That can only happen if the democratic process here works. It has to work better than in the US, which may not say much these days, but this brand new country was only born a few years ago. It’s still in the process of determining its civil law and foreign law.

LNR is in a civil war and the country fighting it is determined to tie its hands by taking away people’s right to representation. Ukraine is also murdering elected government officials when it has the opportunity.

Today, Ukraine and its little fat Nazi Dimka Yarosh are huffing about how fast they can retake the Donbass militarily.

If the elections in Donbass were illegal, why can’t Ukraine show that? Why won’t they even try the legal remedy they agreed to in Minsk I and Minsk II agreements?

Instead, Ukraine frightened some of the voters into staying home by threatening to hack the voter registration systems. Ukraine’s version of democracy is to destroy the lives of people they consider enemies who may never lift a hand against Ukraine.

A Ukrainian Diaspora spy handles Ukraine’s monsters and passes along their orders. Pravy Sektor’s Yarosh would lose too much money and possibly his freedom to not do what they said.

The voter turnout in LNR was 77%. DNR had an 80% turnout and if these figures don’t make you jealous, you clearly have no concept of democracy. The USA hasn’t even been in the same ballpark for voter turnout since 1900. That last time was 73%.

Ukraine may have driven the numbers up a little with their threats. It wasn’t because the people got scared. Ukraine’s threats made them angry. Angry enough that the front line towns had close to 100% voter participation despite being on the frontlines of an active war.

The truth is, this election was going to make or break LDNR. If voter turnout wasn’t there, the world would have taken it as people voted with their feet. But what happens now?

Over the next few articles we’re going to explore that. I had a chance to interview the foreign minister of LNR and some of the international election observers.

We are starting to work with customized video for Washingtonsblog and will be showcasing reports here from LNR.

This first video should give an idea of what’s going on in LNR right now, where we are going, and that some great reporting is coming up.

The audio isn’t great. It’ll get better. We need to purchase a little equipment as we go but we have a great start.

Let me know your thoughts.

 

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