NFTRH

Sociocide

By Gary Tanashian

Biiwii.com

Biiwii.blogspot.com

March 9, 2009

Excerpted from the March 7th edition of Notes From the Rabbit Hole

This must be how a society kills itself.

A note to those subscribers who would prefer that NFTRH not venture into politics (frankly, that is the way I would prefer it): Unfortunately, the massive changes currently underway in society (as an old system dies and a new one, idealistic yet virulent and dangerous, driven by extreme dissatisfaction with the betrayals of the dying system, takes its place) demand that we, as investment survivalists, take into account these changes, weigh and analyze their potential global effects, and act accordingly. This is ultimately just business after all. It is the business of defining and adapting to a ‘new normalcy’.

NFTRH is a market letter, and we will proceed to the current analysis shortly. But first let’s look at some of this week’s media: Surging US Unemployment Rate Pressures Obama for More Action – Bloomberg (http://tinyurl.com/adwua3):

The administration needs to keep its focus on repairing the banking system and implementing the stimulus, rather than get diverted by other goals such as healthcare changes, said John Ryding, chief economist at RDQ Economics LLC in New York.

“They should be focused on stabilization” of financial firms “and stimulus -- and that should not only be ‘Job 1,’ that should be the only job right now,” Ryding said in an interview with Bloomberg Television. “The question is, is it recession or is it something worse than recession” the economy is facing, he said.

This is corporate welfare gone exponential, just like all those derivative vehicles Wall Street concocted. The old financial system, as it dies, seeks to kill the innocents that it had merely abused for so long. The public is brutalized with the fear of what could happen if more large financial institutions are allowed to fail.

Indeed, the financial services industry will be eviscerated and it is no wonder firms like RDQ Economics LLC in New York feel such urgency. The old system is going down but it will not do so without fear mongering the public as well as the new, idealistic and still wet behind the ears administration (at least that is how I am still very tentatively willing to view them).

Mr. Ryding is a member of the financial economy. We must save financial firms because we may be facing something worse than recession says Mr. Ryding. Yes indeed, ‘we’ are facing something worse, for the financial economy, which was a bloated monolith that over decades sucked the life out of the productive economy like a vampire. Actually Mr. Ryding, ‘you’ are facing something worse; a total meltdown of the financial system.

The financial services industry did not share its rights of first abuser (of the official monetary inflation system) status with the public. It actually used the public trust to further itself, to replicate and spread its tentacles out to every corner of every Main Street in America. Large and small financial advice franchises sprung up everywhere with many (not all, mind you) serving as little more than mutual fund ‘feeders’ (pardon the Madoff reference). Well, the financial services industry got fed alright and now, as it dies, it attempts to put the onus back on its victims.

Another piece from the media this week is this article by Michael Boskin, former economic advisor under George H.W. Bush http://tinyurl.com/cod629 that takes a look at the Obama policy from a critical standpoint. From the article:

New and expanded refundable tax credits would raise the fraction of taxpayers paying no income taxes to almost 50% from 38%. This is potentially the most pernicious feature of the president's budget, because it would cement a permanent voting majority with no stake in controlling the cost of general government. [emphasis mine].

From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.

We of course see where this is all leading. The middle class could be wiped out as it is compelled to step up and save the financial services industry through taxation, while on the other side losing its voting rights as the welfare state rises to fill the void left by the greedy and ultimately suicidal (and homicidal) previous system. A society kills itself by severely limiting the number of people with the potential to create new wealth through ideas, risk taking and the old fashioned concept of hard work. A society kills itself by killing its middle class, and the American middle class is now caught between two relentless and terrible opposing forces.

I once read a book called The Sane Society by Erich Fromm, from which the following is excerpted:

“Man had to be molded into a person who was eager to spend most of his energy for the purpose of work, who acquired discipline, particularly orderliness and punctuality, to a degree unknown in most other cultures. It would not have sufficed if each individual had to make up his mind consciously every day that he wanted to work, to be on time, etcetera, since any such conscious deliberation would lead to many more exceptions than the smooth functioning of society can afford. Nor would threat and force have sufficed as a motive, since the highly differentiated tasks in modern industrial society can in the long run only be the work of free men and not of forced labor. The necessity for work, for punctuality and orderliness had to be transformed into an inner drive for these aims. This means that society had to produce a social character in which these strivings were inherent.”

Dr. Fromm wrote this in 1955 and it sounds hokey by today’s standards, doesn’t it? Contrast this unified view of the ‘sane’ industrial society of the 1950’s with the easy money of Wall Street, an ego-centric popular culture and the miles wide canyon between the different political ideologies.

Something has ended and something else is beginning.

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