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Modern Ponzi Schemes: Underfunded Pensions

December 31, 2009 4 comments

Anybody with the ability to perform grade school-level arithmetic can see the major problems with public or private pension plans in western countries.

1. The generation after baby boomers is smaller than them, and even the echo is, well, not quite as big. Given that the earning peak of people in western countries is in the 5th decade of their life, what is going to happen to the tax base? The fallback position for paying pensions involves using tax revenues.

2. Which stable and well-paying jobs are awaiting the generations after baby boomers? Selling each other houses, used cars, uncollectable insurance, innovation stifling regulation, writing worthless and harmful guidelines, arresting and guarding each other? Seriously…

and what will people work for? Maintaining marriages? Educating kids? Looked at the marriage and divorce rates recently? Ever considered the percentage of educated and never married men? What motivation or opportunities do they have to work hard? We overtly reward sociopaths and believe that others will just keep working hard and live honest, “law-abiding” lives.

3. Which idiot came up with the idea that a (per annum) 8% plus return, with simultaneous sub 2% inflation, on investment was possible over an extended period of time. Who is going to keep on propping up this asset/ equity/ debt bubble? Asian countries are busy devaluing their currency to increase exports. How can you extract money out of investments when everyone wants to sell them at around the same time (for paying pensions)? Who is going to buy them? And with what income or currency?

4. With the partial exception of the US, legal immigrants have poor earning abilities for reasons that are related to racial discrimination. The one group that could have stopped the tax base from collapsing have poor income, job stability and are generally not eager to help those who are perceived as mistreating them. Are older whites expecting a gift of unlimited money from extraterrestrial aliens to pay for their retirements?

Do older westerners believe that their system can stay solvent? Can even government pensions be paid with a shrinking tax base? Who will lend unlimited amounts of money, forever, to countries with shrinking tax bases? What about poor resource prices after a prolonged global slowdown? What about domestic deflationary spirals?

In my opinion, the economic effects of magical thinking over a prolonged period of time are greatly over rated.

Modern Ponzi Schemes: An Introduction

December 30, 2009 Leave a comment

The last couple of years has marked a resurgence in public understanding of ponzi schemes. Whether it is individuals (Madoff) or institutions (federal reserve, ‘wealth’ management, underfunded pension plans, housing bubbles and various other bubbles) there is no doubt that people are becoming more cognizant of the effects of a particular series of actions/ choices originating in the late 1970s-early 1980s. However ponzi schemes have been a feature of human history, culture and civilization since the beginning. Indeed it is not possible to understand the success of ponzi schemes unless one understand the mental calculus that enables them.

If you want a brief ‘official’ understanding of the concept and history of ponzi schemes, the following links are useful: Ponzi Schemes (wikipedia), List of Ponzi Schemes (wikipedia) and the similar Pyramid Schemes (wikipedia).

While the preceding links give you a good basic introduction to the concept, they tend to concentrate on money related ponzi schemes that failed. Discussions about successful financial ponzi schemes and non-financial ponzi schemes are either absent or mentioned in passing. This attitude gives the casual reader an impression that ponzi schemes are never too successful when the converse is true.

At their core, all ponzi schemes are based on the following basic concept:

A socially ‘respectable’ group convinces a much larger group of persons to accept their control (or give them goods/ services) on the promise of future benefit derived from esoteric concepts which these group pretends to understand and control.

The real kicker is that these socially ‘respectable’ groups are neither knowledgeable nor in control of what they claim, and depend on sophistry and various frauds to perpetuate their illusions of power over reality.

It is now obvious that many ‘respectable’ institutions and accepted practices are in fact just ponzi schemes, albeit successful ones. Whether we are considering the investment decisions of your ‘wealth’ management expert, doctors treating diseases with ineffective, harmful (and expensive) modalities and protocols, religions promising an afterlife if you follow their teachings and priests, universities that charge you over 50k-200k for a degree that promises nothing, ‘experts’ who can predict trends/ futures, intellectuals who pretend to understand their field very well, but resent explaining it to ‘outsiders’.

All of the above examples, and ponzi schemes in general, suck away money and resources from people (and ideas) that actually have a non-zero chance of improving the status quo. They cause heavy malinvestment, sabotage efforts to correct it and help perpetuate the status quo which is just another facet of zero sum thinking and behavior.

The mental calculus that motivates the followers of such ‘faiths’ is equally interesting and also based in a zero sum view of the world.

People follow such groups because they think that such actions will allow them to gain advantage over others, a view distinctly based in a zero sum mentality. They do not care about the validity of their ‘priests’ beliefs, nor question their actions (or honesty). Indeed, the same people who seek an unfair advantage over others, also believe that leaders of these cults have the best interest of their followers at heart. The irony of this mentality is hard to miss.

Followers rarely question, contest or disobey cult leaders because:

1. Accepting that they have been conned is painful.
2. They want to avoid ostracization, loss of social status etc.
3. Hope of rising up through the ranks (of their cult) is a motivator.
4. If feels better to pretend conning somebody else, even if that is not the case.

A fifth reason is the topic of another discussion.

Most people find it necessary to believe in an extrinsic ‘ordered’ universe with independent meaning in order to justify their existence.

There will be many posts on this topic (or related to it) in upcoming weeks and months.

Update: My next post in this series is now up- Modern Ponzi Schemes: Underfunded Pensions

Thoughts on Zero Sum Behavior- III

December 30, 2009 9 comments

In a previous post on this topic I had promised to trash a few more industries that pretend to be productive and capable of creating wealth. The difference between wealth and money will however be tackled in a future post.

Law and order industry: A holy cow of our age, and one many commentators avoid criticizing for fear of being considered less american or non-mainstream. This attitude itself should serve as a warning about its true nature. Any branch of the government that evokes such a response cannot be considered a public service or good. People freely criticize departments of the government that deal with more essential services such as water, electricity, sewage, EMTs, fire or even the judiciary. Heck, people will criticize their elected head of state or soldiers who fight for their nation with more enthusiasm.

So why the absence of open criticism about the “law and order” system. Is it not supposed to protect us from the “evildoers” amongst us? Are the laws they enforce not written and approved by elected representatives? Then why are they treated with the deference accorded to “domestic security agencies” in totalitarian regimes? Need I say more on that subject? Whose interests are they serving anyway? Maybe just perpetuating those of the ones with power?

Many whites traditionally supported the “law and order” system because in the past it hurt non-whites far more than whites. Essentially a form of ‘beggar thy neighbor’ and lynching became unfashionable. However the expansion in this system since the 1980s has made it bigger with each year. Ultimately it outgrew its old hosts (non-white people) and had to expand to non-traditional hosts (whites) to keep growing.

Given the number and percentage of people incarcerated or paroled, are americans intrinsically more violent and criminal? Or is it just another cynical ploy to make soccer moms and traditionalists feel ‘safe’. How many people are in the penal system because they cannot get out of it (for a variety of reasons) and what are their offences (mostly non-violent). What is the social expediency of using so much personal and money to prosecute crimes that cost a fraction of that sum? Why do many blue collar towns with outsourced manufacturing welcome prison construction? Our society celebrates you if defraud the taxpayer of billions and trillions and prosecutes you if you steal a few hundred dollars, or make money in victimless ‘crimes’. When is the last time a dope, crack or meth dealer destroyed your life savings, charged you 10k for a broken finger or fired you from a job that allowed you to support your family for 20 years?

Is your fear of a desperate non-white or poorer white worth it? Why not decriminalize victimless ‘crimes’? Why not stop imposing your own morality on others? Is the feeling of control and domination worth it? Who is going to pay their ever-increasing salary, benefits and pensions? Your kids and grandkids? with what job? Why not just give even the poorest slacker a lower middle class lifestyle? It is not going to cap your lifestyle.. just make him much less likely to steal from you.

EPA and other enforcement agencies: These agencies make and enforce laws and regulation without being elected. They write their own funding, and what do they do?

Has anything more than basic enforcement of laws and regulations made your life safer or happier? Nobody begrudges meat inspection, preventing factories from dumping toxic waste in lakes or policing drug companies. But do these agencies perform their basic roles effectively nowadays? I would point out that such useful enforcement is actually the minority of their current roles.

They spend most of their effort and budgets on projects that are based on whim, charisma and poor science than reality. Their modus operandi is creating scares based on exaggerations to justify a bigger budget, more jobs, better benefits and bigger pensions. They, if anything, hinder good and rational science.

I do not have to give you a long list of scares that never materialized or were blown out of all proportions- just remember any 6-month period since the late 1970s (or even earlier). Who benefits from them? certainly not YOU. They take away resources from real innovations, stifle others and generally make your life more cumbersome and poorer without any compensatory benefits. I am not against regulatory agencies, merely their lack of accountability and unchecked power.

Contractors to the government: A group that revels in Ayn Rand worship and lip service to free enterprise while sucking at the teat of taxpayers and protecting their turf. While I do not seem them as particularly evil parasites, they have reached my list for two reasons: Hypocrisy and facilitating malinvestment.

The hypocrisy of such free enterprise supporters is almost unmatched, considering their actions. Only banksters can match them in the department of cognitive dissonance. It is easier to forgive honest shysters than hypocritical shysters. These people spend ever waking minute of their life trying to come up with the next rent-seeking type scam.

Which brings me to next reason I have singled them out: causing malinvestment. While intentional malinvestment and scams cannot be eliminated, the current levels are not compatible with a functional society for any extended length of time. Projects in China and India are done with more diligence and fewer cost overruns than we are accustomed to. The depression-era infrastructure built in the USA or pretty much everything built upto the 1970s could not to be built today because of our patronage of such shysters. While they have always existed, we had ways to keep them relatively honest (in the past). Not anymore!

So I will repeat the assertion from my previous post on this subject:

The biggest parasites are rent-seeking privileged whites, but the average white person cannot/ does not want to accept that reality. Looking at the world in that manner would pose even more inconvenient questions about themselves, ranging from the welfare-like nature of most government generated jobs that employ them such as the defense sector, health care, home building/ selling, contractor to various levels of governments, the law and order system, jobs created by tax breaks to corporations, peculiar accounting rules etc. Furthermore many government programs that have benefitted whites such as SS, Medicare, GI Bills, post WW2 house buying programs are a form of affirmative action/welfare. People do not like looking in an undistorted mirror, for they fear what they might see.

Linkfest (December 29, 2009)

December 29, 2009 Leave a comment

In other news..

Next Decade Will Be Good One for Stock Investors: Matthew Lynn Some connected guys (and gals like abby cohen- of GS)are paid big bucks to lie.

Thousands to be saved from losing homes by closure of legal loophole I thought you required a court order to foreclose and seize a home, on the other hand UK is a quaint country.

Housing Recovery Fails to Bolster Broker Commissions First of all, there is no sustained recovery in home prices.. never mind.

Calpers Restricts Contacts Between Board and Money Managers Calpers has demonstrated a level of incompetence that would shame a drunken chimp.

The decision follows disclosure by the pension fund that former board member Alfred Villalobos earned more than $50 million in a five-year period acting as a middleman between firms seeking stewardship of some of Calpers $200 billion in assets and the fund’s board and staff.


CalPERS expected to report losing nearly one-quarter of investment portfolio

The estimated $56.8-billion drop at the U.S.’ largest pension fund, the second annual loss in a row, would have a huge effect on what state and local governments must shell out to support retirees.

Goldman Sachs Takes Biggest Share of $923 Million U.S. IPO Fees GS can do what it wants, as it “owns” the Fed and your elected legislators. You have a problem with that?

Fannie, Freddie, Heading to Zero Guess who is paying for their unlimited creditline? You!

Fannie, Freddie exec pay suggests stock worth nothing

Fannie Chief Executive Michael Williams and Freddie CEO Charles Haldeman got $6 million annual compensation packages, according to regulatory filings last week.

Higher-End Homes Still Declining Turns out the ‘rich’ are not rich.. but don’t expect that to dampen their contempt of “poorer” people.

Despite Subsidy, Cobra’s Bite Still Stings for Many No socialism for you.

Categories: Economy, Linkfest, MSM Idiocy

Linkfest (December 28, 2009)

December 28, 2009 Leave a comment

In other news..

President Obama, It’s Time To Fire the TSA A Must read!

Today, DHS’s Napolitano’s response to the crotchbomber: “We’re looking to make sure that this sort of incident cannot recur.” But the TSA’s response to Abdulmutalib’s attempt makes one thing clear: We must stop pretending the TSA is making us safer.

The TSA isn’t saving lives. We, the passengers, are saving our own.

Pomboy: A Looming New Credit-bust a commentary on A Jolly Good Year

Stephanie speculates that one reason for their reluctance could be that while stocks have rallied, thus enriching their portfolios, dividends have been relentlessly shrinking: the $775 billion-plus annual dividend windfall the affluent had grown accustomed to has been slashed by a third or so. Or, it just may be that “even for the high-end, housing deflation outweighs equity inflation.”

Tanker Glut Signals 25% Drop as 26-Mile Queue Overwhelms Demand and crude is still 70-80 $/ barrel.. Guess who (IBers, speculators) are busy screwing YOU

How not to solve a financial crisis Another good guest post by By Edward Harrison at nakedcapitalism.com

One can only assume that alternative policy solutions were rejected because the Bush and Obama Administrations preferred the solutions they crafted to these.

2009: The Year Wall Street Bounced Back and Main Street Got Shafted

But if Wall Street is back on top, the everyday lives of large numbers of Americans continue to be subject to overwhelming trauma, chaos and disruption.

Fannie, Freddie Backstop May Foreshadow Mortgage Forgiveness If it does not work, keep on trying harder.

Through November, servicers had permanently modified 31,382 mortgages under the Home Affordable program, which was announced in February as targeting 3 million to 4 million loans, the Treasury said Dec. 10. A total of 728,000 of the modifications were under way.

Berkshire Eliminates 21,000 Jobs as Manufacturing, Retail Slump But Buffett is still the seer… right?

Berkshire and its subsidiaries have about 225,000 workers, the Omaha, Nebraska-based company said this week in regulatory filings. That’s 8.6 percent lower than the 246,083 disclosed in the 2008 annual report.

War on Wall Street as Congress Sees Returning to Glass-Steagall Who has hurt us more, swarthy “evildoers” or immaculately suited sociopaths?

The Recession Begins Flooding Into the Courts It is too bad that average people have not got the memo about our “great recession” ending.

Oh wait..

Krugman: ‘Reasonably High Chance’ the Economy Will Contract The “great recession” does not want to end..

Categories: Linkfest, MSM Idiocy

Thoughts on Zero Sum Behavior- Part II

December 27, 2009 10 comments

This post examines a peculiar secondary effect of zero sum thinking, namely the willingness to scapegoat groups whose contribution to scams is much less than the elites of that given society. To put it another way:

Why are whites so willing to believe that a black man or woman abusing a particular system is more deserving of punishment than a white man/ woman who has destroyed their savings, livelihood and faith in the system.

My conclusion, near the end of this post might not be palatable to some readers.

One recurring theme on the blogosphere is an idea that somehow the biggest parasites on “western” society are non-whites. However an objective look around you will demonstrate that is not the case, and I will illustrate it with specific examples.

Banksters: While bankers have always been seen as rent-seeking parasites to one degree or another throughout history, the magnitude of their effect in the post-1980 west has been on a scale unmatched in recorded human history. Banks have two roles, namely: a low-profit/ low-risk commercial banking role (loans, savings etc) and a high-profit/ high-risk investment banking role. The banksters initially used the low-profit/ low-risk part to fund their high-profit/ high-risk games. However they soon exhausted that possibility and started creating worthless financial instruments (SIVs etc) and complex insurance policies (Derivatives) to leverage a few trillion into hundreds of trillions of virtual money. When the system collapsed last year, they got their paid lackeys (our elected representatives) to bail them out with government debt issued on the faith of future increases in taxpayer receipts. The bill for that is over a few trillion and increasing as we speak (did I mention that government backing is a few times more than that sum). We are living in a world based on extend and pretend (hoping that the ‘real’ economy, which they have almost killed, will somehow resurrect itself and grow at a hitherto unmatched pace- demographics be dammed).

Some readers might point out that banks serve useful roles, to which I agree. However the system as it operates now does not serve socially useful roles because those roles are not very profitable. Virtual games, contracts and bailouts provide most of their profits . These institutions are no longer interested in the ‘real’ economy because short-term thinking, high profits and hubris enslave them to their current business model, which happens to be a virulent form of rent-seeking parasitism.

MBAs: If one particular degree is blamed for the fall of the “west”, this is it. MBA curriculums are supposed to teach people ‘universal’ management techniques, however in practice they nurture sociopaths with a focus on short-term profiteering. The whole concept of ‘universal’ management techniques is a scam for the simple reason that different sectors have unique product life cycles. What works in Burger King won’t work for Pfizer. However many people are in awe of these new priests. Events in the last year has deflated their brand somewhat, but much more needs to be done.

The focus on short-term results combined with rewarding such behavior produces perverse long term results. Would you want to develop a long term R&D program if your compensation and status was linked to your ability to outsource, adopt six-sigma or any other fashionable scam. In any case you could always desert the company you screwed over, find the next host, infect it, kill it and move on – not unlike a virus.

Some might point out the supposed efficiencies that MBAs have brought into various industries. My question is two fold: How do those ‘efficiencies’ benefit you? and How many of those ‘efficiencies’ were based on financial chincanery and three-card-monty shell games? Do the research for yourself and do not be intimidated by big words, because that is one of the ways sophists hide their bullshit.

I plan to devote a few posts in the future to highlighting the role of MBAs in creating the dystopia we live in.

The Legal Profession: The need for civil and criminal legal assistance is a social good, as it the ability to enforce contracts. The question then is: What are the majority of lawyers employed in, and where do they make the most money. The answer is: corporate law and overseeing regulatory requirements.

There is a lot I have to say about the effects of sophism and legalism on innovation (future posts), but the bigger question is: Are these expenses productive? Do they create social good or perpetuate sclerotic monopolies/ oligopolies? Who writes these laws (lawyers working for lobbyists and legislators) and for what purpose? Does spending money on untangling self-inflicted legal chicanery help with innovation or productivity? Aren’t most rules and regulations created specifically to employ more lawyers and do they not make a system sclerotic and unresponsive to new challenges?

Medical Care: Only since ww2 has going to doctors increased the chances of your survival. Previous increases in life expectancy were mainly due to better sanitation, enforcement and public health measures. However we now pay an increasingly larger amount of our money for very marginal improvements in health care. Why?

We spend much more on updating the ‘look’ of hospitals than on research to stop aging. Even then doctors are the fourth leading cause of death. Given that many are motivated into these professions by the promise of easy money, playing god and poor accountability, are you surprised? While the entrance exams and procedure to these professions try to portray an image of selecting for intelligence, they select for unimaginative, intellectually lazy sophists who can memorize well and jump through some hoops.

It certainly does not help that they indulge in anti-competitive behavior. How much do these people know anyway? Given the scandals with rofecoxib (Vioxx), olanzapine (Zyprexa), Clopidogrel (Plavix) and a host of other toxic or marginally effective drugs.. not much. How much do they really know.. consider the fanatical support for low fat diets, demonization of fat, high protein diets, misleading type 2 diabetics on the non existent efficacy of current drugs on reducing the risk of macrovascular effects.. I can go on…. Many people have noted that rare diseases are easier to diagnose with google than a specialist.. why? And how many surgical procedures have no effect on morbidity and mortality of the condition they were meant for?

I have a few other industries to trash in my next post on this topic, but my conclusion (below) remains the same.

The biggest parasites are rent-seeking privileged whites, but the average white person cannot/ does not want to accept that reality. Looking at the world in that manner would pose even more inconvenient questions about themselves, ranging from the welfare-like nature of most government generated jobs that employ them such as the defense sector, health care, home building/ selling, contractor to various levels of governments, the law and order system, jobs created by tax breaks to corporations, peculiar accounting rules etc. Furthermore many government programs that have benefitted whites such as SS, Medicare, GI Bills, post WW2 house buying programs are a form of affirmative action/welfare. People do not like looking in an undistorted mirror, for they fear what they might see.

Part III of this series has been posted here: Thoughts on Zero Sum Behavior- III

Linkfest (December 27, 2009)

December 27, 2009 Leave a comment

In other news..

What Iceberg? Just Glide to the Next Boardroom A virus infects a healthy cell, hijacks it, makes copies of itself, kills host cell and moves on to other healthy cells.

You might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies. You would, however, be wrong. Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.

In Search of Work, but at What Cost? An article that talks about the perils and scams awaiting those who try operating their own business.

How Overhauling Derivatives Died But we have the best system money can buy.. Seriously, were you thinking that IBers would let rationality and causality derail their money-making scams?

Lobbying by Wall Street has blunted efforts to step up regulation on derivatives trading by carving out exceptions or leaving the status quo in place. Derivatives took blame for some of the worst debacles of the financial crisis. But a year after regulators and critics began calling for an overhaul in the way they are traded, some efforts have been shelved and others have been watered down.

How the status quo can kill: the example of free trade

I see more of a class divide than does Greenwald and others. Seems to me that people who have secured comfortable positions in “managerial class” and “creative class” occupations tend to support the President and an incrementalist approach to addressing the nation’s problems. They tend to be reflexively hostile to any sweeping changes, such as actually annihilating the health insurance companies, or actually doing away with the big financial houses like Goldman Sachs, Citigroup, and Morgan Chase. They seem to insist on solutions that rely as much as possible on market mechanisms, such as cap and trade to deal with climate change. They recoil in horror at the suggestion that “the system” itself is the problem. Generally, they appear to be economic neo-liberals, who have actually become acclimated to the results of the Reagan Revolution.

Another Team Obama Present to Corporate America: Health “Reform” Bill Favors Big Pharma Over Generics More change you can believe in!

Does Golden Pay for the CEOs Sink Stocks? If you reward people for playing zero sum games, they play them with more enthusiasm. The new priests (ivy leaguers) are piling in on their old benefactors. If you require a degree to say what is common sense, we are fucked!

The first study, led by corporate-governance expert Lucian Bebchuk of Harvard Law School, looked at more than 2,000 companies to see what share of the total compensation earned by the top five executives went to the CEO. The researchers call this number—which averages about 35%—the “CEO pay slice.” It turns out that the bigger the CEO’s slice of the pie, the lower the company’s future profitability and market valuation. “These CEOs,” says Prof. Bebchuk, “seem to be trying to grab more than they should.”

Put Down That Shovel! Andy Kessler cannot do math or understand the need for both “old” and “new” infrastructures. I have no hope that our corrupt system can build anything on time, on budget or withou legal wrangling due to special interest groups.

Socialized Risk, with Still Highly Leveraged Survivors Too Big To Fail! Many free market supporters still believe that CEOs, board members and other assorted MBA scum deserve their compensation.

Zack Carter on OCC Chief John Dugan in The Nation: “A Master of Disaster “

Writing in The Nation, the banking reporter for SNL Financial News describes the wreckage left behind by John Dugan, the Comptroller of the Currency and the primary regulator for most of the US banking industry. To say that Dugan is the lackey of the largest banks is really an understatement. The former lobbyist and Treasury official has been the defacto advocate for the largest dealer banks through the crisis, opposing regulatory reform initiatives on Capitol Hill and even from the FDIC, every step of the way.

“Top Ten Reasons to Kill the Senate Health Care Bill” More evidence that the PTB are still conducting business as usual, Must read!

Categories: Economy, Linkfest, MSM Idiocy

Thoughts on Zero Sum Behavior- Part I

December 26, 2009 3 comments

In a previous post I had said the following:

One of the hallmarks of a secular religion is that it requires followers to make sacrifices for concepts such as ‘common good’, ‘future’, ‘upholding ideals’ and ‘no pain no gain’ etc. It is noteworthy that secular religions from capitalism, socialism, nationalism to environmentalism require self-sacrifice from a large number of believers for the common good, but which (in reality) ‘benefit’ only a few.

One of the unstated assumption of that paragraph was that traditional and secular religions are manifestations of zero sum behavior. They are in essence scams perpetrated by a few, on the many, to convince them to act against their best interests.

Scams that convince people to support a certain idea, school of thought, behavior or zeitgeist that are not in their best interests will either fail or create a dysfunctional society. This phase of disenchantment and failure typically occurs over one or two generations after the median person stops seeing any benefit from playing by the rules. The real question then is whether complex societies will suffer more from such scams than simpler and poorer societies. Another way of looking at it is, do complex societies need more trust, altruism and justice against parasites than simpler societies.

While paid sophists may quibble about the precise definition of ‘best interests’, I prefer to use the following definition:

The ‘best interest’ of a person is an optimal direction of actions such that he/ she can enjoy his/her life in a manner they see fit, with the caveat that the person display the same attitude towards others.

It is important to understand what my definition of ‘best interest’ does not imply:

1. Maximal short-term gain based on actions that will hurt any longer-term gains.
2. Trying to out compete, and antagonize, others in a manner that will hurt your future prospects.
3. Accumulating money for the sake of accumulating it.
4. Willingly participating in systems, where your only reward is that the system oppresses others more than it oppresses you.
5. Any other type of behavior based on a zero sum view of the world.

I should reiterate that humans as a species, do not adopt more cooperative behaviors unless circumstances force them to. The median human mind is still somewhere between an ape and a creature of reason. Nietzsche it right on this one.

While such zero sum behavior has dominated our history, supported by various scams such as traditional and secular religions, it is becoming obvious that the ‘old ways’ cannot work. To understand why the ‘old ways’ cannot keep on working, consider the following:

a. We live in a world where productivity is very high and is increasing, negating the very reason behind zero sum based behavior. Indeed, quite the opposite is now true in that it is more desirable for the ‘others’ to have a good life so that you can have a bigger ‘market’.

The corollary is that many traditional concepts such as saving money, living with your ‘means’, following traditional authority, believing in traditional tribalism, using history to plot your next steps are increasingly counterproductive.

b. The diffusion of technology and productivity beyond the west, combined with the demographic profiles (and their timings) make any unilateral actions by the west to preserve its past glories suicidal. The west still believes that they are british officers with machineguns facing spear wielding Zulus, when the reality is much more unfavorable than what western powers faced in Vietnam.

There may not be any winners in a widespread conflict, but countries with overtly complex infrastructures, systems and adverse demography may fare far more poorly than those who can suffer more. Conflicts of attrition favor those who can take more of it, as long as the technology gap is not too large. The emergence of large non-west european based players with very substantive capabilities makes the situation particularly interesting.

Moreover, any such conflict would expose the ‘ponzi’ nature of our current socio-economic system in a manner that the powers to be (PTB) would find unacceptable. Therefore they will choose a path of inaction and compromise over any decisive actions. They want to preserve their relative position in the hierarchy of their home countries.

c. The ‘traditional’ west is increasingly facing a few problems, that were ‘unanticipated’ in their decision making process:

1. A working age population that is increasingly non-white, and unhappy with second class status. Many of the younger non-whites are fairly secular in outlook, and could be easily integrated in the system, if ego of “has beens” was not a consideration. While most may not actively sabotage the system, almost all of them will act in bad faith.

2. Complex systems require active good faith from the vast majority of its participants. One has to only look at the complexity of supply chains for products, services, rules, regulations, standards and shared belief systems necessary to make the world work well. If a significant minority of the working age population did not participate in this system with good faith, it would become unstable and collapse and evolve into something that we cannot predict.

3. It all boils down to the one question that most sophists try not to answer:

What is in if for ME?

Any system that acts in bad faith towards a substantial minority of its participants is unstable. While previous systems and empires could rely on low human productivity and the general lack of options to maintain semi-stable states of organization, we cannot.

Can a system and ideology be still stable, if the basic assumptions upon which the system evolved are taken away in the blink of an eye?

I will write more about this concept, with specific examples in upcoming posts in this series.

The next part has now been posted: Thoughts on Zero Sum Behavior- Part II

Linkfest (December 25, 2009)

December 25, 2009 1 comment

In other news..

Norms of credit A very good article on the changing nature of corporate-personal “relationships”. The website Interfluidity has many other excellent articles.

Cast Your Vote for Disruptor of the Decade I have too many candidates, some positive some negative. What do you think? In popular technology- Apple (ipod, iphone, itouch), ASUS (netbook pioneer), Acer (laptops are inexpensive because of them), and AMD (would Intel have innovated without competition). I will post a more detailed list tomorrow.

U.S. Uncaps Support for Fannie, Freddie At least they are not GS, AIG, JPM, Citi, BofA, VISA, Mastercard, Discover etc..

Tamer Cards for Tougher Times and who is going to use them in a deflationary environment? Hint: Understand what charge cards are, who uses them and for what.

Money Lessons of a Lost Decade How about, “investing” is a ponzi scheme in which only true insiders and lucky tools make any real money? Investing in something you do not understand is a sure recipe for getting screwed over.

Weighing the Value of That College Diploma Talking of ponzi schemes.. higher education = better job is a ponzi scheme. Given the speed of technological changes and the whims of MBAs, lawyers and other assorted sociopaths, your degree or demonstrated ability are worthless in the current system!

With Scant Jobs, Grads Make Their Own This is YOUR future.

Can Detroit Be Saved? Not with the current paradigms.

What Doctors and Patients Have to Lose Under ObamaCare You cannot fuck up something that is so dysfunctional and will be unusable within a few years to a decade anyway.

Categories: Economy, Linkfest, MSM Idiocy

How to Use Escorts- I

December 25, 2009 46 comments

I have been thinking about posting this series of articles for some time. So here is the first one..

Before we get into the how of using escorts, let me start with what you should avoid if you choose to use escorts.

1. Avoid streetwalkers! No exceptions… Streetwalkers are among the most desperate and screwed up women you will have the misfortune to meet.They are very likely to provide a suboptimal experience, try to scam you and might have serious untreated STDs. Moreover “law” enforcement likes to setup sting operations that involve streetwalkers at a much higher rate than for any other type of paid sex.

2. Avoid white escorts born in north-american countries. If you must, check out their reviews and show them the door at the first sign of significant ‘attitude’. You are paying, not her. Women from non-anglosphere countries are often much more professional and nicer than anglo-descent escorts. Escorts of east-european and south-american descent are the best.. the fond memories.

3. With regards to black escorts, caribbean born escorts have infinitely better attitudes than native-born ones. Black escorts (non native born) are great in bed, are often slender or curvy as opposed to fat, have good technique and often have a nice attitude. Once again, I have many good memories of such encounters.

4. East-asian women are not to my liking but often are very competent professionals. Steer away from native-born escorts in this group. Many half-asian escorts are very pretty, feminine and exotic looking. Once again, I have enjoyed half-asian escorts.

5. Use a reasonably well established agency, check local escort review boards and do your homework. I cannot stress this enough. Craiglist is a big hit-and-miss. Do some research on the local escort scene before diving in.. google and bing are your best entry point into this world. Beware of shill reviews and bait-and-switches.

6. Get a pay-and-talk cell phone for all escort related business. Escorts that demand a lot more personal info are not worth it.

7. If you are going to an incall, carry only enough money to pay for the encounter, a possible tip and the cab ride home. If you have to drive to the incall, always park some distance away from the location. Outcalls are best done in hotels.. you will be surprised how many “good” hotels will rent you a room for a few hours if you phrase your request differently.

8. If you live in a “law and order” infested part of north america, you might consider moving to more reasonable jurisdictions. Short vacations to mexico, canada, the caribbean, europe, south america is another great option. A plane ticket to many of these places costs less than your alimony/ child support check. If you use escorts in other countries, please do your research and do not try to find the cheapest ones. It is not worth it!

9. Remember that YOU are the customer. It is YOU who control the encounter. She is their to fulfill YOUR fantasies. Her pleasure does not matter nor is she is ever going to love you (rather like every other woman you have ever been with).. her feelings are material only to the extent of her performing the tasks at hand (or mouth, vagina etc).

10. If you feel that a particular person, situation or encounter is sketchy or feeling odd, trust your spidey senses and walk out. You can always buy another encounter, one hot escort is a lot like another hot escort. No woman is unique.

The next post in this series is now up: How to Use Escorts- II

Alternative View on Money- V

December 24, 2009 3 comments

In my previous post on this subject, I have touched upon the need to have an economic system that is based on ensuring a high velocity of money, as opposed to concentrating large amounts of money with a few people. The two most common objections to my idea will be discussed in this post. Others will follow in upcoming posts.

My replies look at the mentality and thinking that create such objections. I do not want to criticize my skeptical readers, just point out their blind spots.

Objection 1: Money is no longer seen as a zero sum game.

While it is true that money is no longer a zero sum game, it is still seen by many as a zero sum game. Read the examples below and tell me if they are not based on a zero sum mentality.. I want to know.

If that was not the case, why would companies boost their short term stock prices by firing competent employees. Who benefits from it? and is it a viable longer term strategy? Why do companies reorganize departments based on MBA whim, when there is no good evidence that it increases productivity. Hint: It gooses up stock prices and options, at the cost of future productivity.

What economic good is served by poorly written laws, which beyond the basics, are created by lawyers to employ other lawyers? Does it serve any good other than making money for lawyers and their rich patrons. What public good is served by making some drugs illegal? Is it not cheaper to make them legal, cut prices and let people have their fill? It would cost the system less than incarcerating people and screwing up their lives? Why not pay a low level drug dealer the same amount of money, paid by the taxpayer to incarcerate him? He will likely help circulate money more than the prison-industrial complex.

What economic good is served by expensive medical systems, when all of the utility can be obtained for a fraction of the price? Why do physicians hate competition, who benefits and who loses? Iatrogenic deaths are at least the 4th leading cause of deaths, so they are not exactly competent. I have many specific examples in the field of medicine and pharmaceutical development (another post).

What is the social utility of an institution that can borrow at zero percent from the government (collective taxpayer) and lend it to the individual taxpayer at usurious rates (32%). It is no longer restricted to people “who cannot handle credit well” (sounds better than unlucky). What is the social utility of a system that has to be bailed out for trillions of dollars, but which then turns around and tells the taxpayer that they are fortunate to possess such parasites?

Why do people who get rich through a combination of fortuitous circumstances try to justify it as meritocracy, when it was really luck. Taleb says it it best “hard work can get you a BMW, a private jet requires luck”.

Objection 2: “They” do not deserve it.

Who are “they”? and what gives you the authority to decide what “they” deserve?

A couple of hundred years ago, all of our ancestors used to crap and piss in pots or outside the house. We have functional sewage and waste treatment systems.. Did they deserve it? The same goes for what we now consider utilities like clean drinking water, streetlights, public firefighters, public ambulances etc? Did the people of an era before such services became utilities not deserve it?

Many promoters of “pull yourself by your bootstraps” are either employed by the government or receive large concessions and bailouts from taxpayers. Who are they trying to fool? Even the few who are somewhat genuine are exceptions and not the rule. Was the west settled by rugged individualists or by people who rang up uncle sam’s army and used his largesse to build their fiefdoms? Now, they may pay sophists to write revisionist history, but the weight of documented facts speaks otherwise. I have many examples of this phenomenon.

Many ‘middle class’ people are concerned by ‘working class’ people enjoying decent food, videogame consoles and other electronics, cheap airfare and decent healthcare. Honestly, does screwing them over make your life any better? Does fellating the free market capitalism spouting owner of your company make him any less likelier to screw you over? In most cases, he has received multiple bailouts and pardons for behavior that might have ended your career (all because of an accident of birth and fortune). Does appeasing a crocodile by pushing the guy in front of you towards it, ensure that it be your best pal?

For all the antipathy by certain whites towards non-white people, what is the chance that a welfare bum will destroy you life (as opposed to your well dressed MBA-speak spouting boss).

Now that you you know it, is it really worth it?

I will address a couple more objections to my idea in the next post, specifically

Fiat Money vs “Gold”

Productive Jobs

Escorts are a better deal than ‘real’ women- IV

December 23, 2009 8 comments

This is part 4 of my series on this surprisingly popular topic. In this post I shall explore another aspect of the issue:

Is an average stable marriage worth it?

In a previous era, an average marriage might not have been such a bad deal. Given the pressures on women to remain married, lack of jobs for women, poor contraceptive choices etc, a reasonably stable dynamic equilibrium might have formed making a somewhat stable society possible. Things have changed a lot since then..

Today there are no real constraints on a woman’s ability to walk out of a marriage. If anything, there is a lot of encouragement to do so. These sources of encouragement include friends, family, the “law enforcement” and “judicial” system, media and the zeitgeist. Moreover unlike previous eras there are no negative consequences for walking out of a marriage, heck.. we, as a society, reward women who walk out.

Evolution is driven by possibilities, not by any intrinsic design. All the babble about evolutionary psychology, alpha, beta etc is meaningless because we never had anything approaching currently available possibilities in our recorded history. There is no usable precedent, and therefore we cannot model our system to predict the future to any usable accuracy. The best we can say is: de-evolution usually fails (extinction), and even if ‘successful’ the results are atrociously bad. I would bet on extinction as a more likely outcome of human de-evolution, given our dependence on complex artificial systems to survive, widespread dissemination of weapon technology and an orgy of mutual recrimination.

Anyway, back to topic on hand. Our current social system encourages and abets selfish behavior by married women, while punishing married men for the slightest apparent transgression (real or imaginary). Moreover the zeitgeist pushes a belief that every woman will get a man who can pass all 50 points on her list, and then pass 50 points on another list (which may have different requirements than the first). Men who point out the absurdity of this situation are labeled as misogynistic, “not good enough”, “losers” etc. It just happens that a significant minority of men can see the absurdity.

In our system, friends and family of a married woman encourage her to find a better deal, regardless of the effect of age on a womans looks. Indeed,friends and family who do not encourage married women in that direction are seen as ignoring for her “best interests”. The attitude towards husbands is: Are you not lucky to be getting some shitty sex with a lot of attitude, when I could get a better deal and destroy your life?

The effects of legislation, non-legislative regulations, law enforcement and the judicial system on marriage are truly chilling. However many hubris ridden white men support the parasitic law enforcement and judicial system . They do so because they believe that the system might hurt some darkies more than them. While that was true for a time, parasites outgrow their old hosts (minorities) and have to move on to more numerous hosts (whites) to keep up their rate of growth.

The “judicial” system is a dysfunctional entity that protects the elite, in the best of times. Today it is dysfunctional to a level where it plainly obvious, even to the brainwashed masses. Most systems can survive some loss of faith, but no system can be functional if it is seen to consistently act in bad faith.

The legislative and non-legislative regulations created by our politicians and bureaucrats are a sight to behold. I have no hope that they will see the light of reason because it is more profitable and ego-boosting to abuse power. It is also unlikely, and undesirable, to reverse universal suffrage for reasons that I will explain in future posts. Given this set of conditions, it is best that we allow this monstrosity to meet its logical conclusion.

The media and our zeitgeist find it very profitable to cater to women’s vanity. Women receive money from sources as diverse as from jobs, alimony, child support payments and generally acting in bad faith. While many blame the media, I see them as businessmen trying to maximize their profits. While their actions feed into the pathology, they did not start it.

In the end, we have to look at the twin roots of this pathology. The first one- technology and its secondary, tertiary effects did play a role in facilitating the process. However the second reason- white men playing white knights to their women, because “white women are the best, and deserve the best” is what really got us here. It is peculiar that most white men do not like to see it that way.

On another note, what harm is done to the social fabric by easily available legalized drugs, regardless of their potency or ability to create physical dependence? When is the last time an opiate or cocaine addict hurt you, other than to make money for buying a drug which would cost a fraction of the current cost if they were legal? I will also point out that it is costlier to incarcerate people than put them in public housing with all the cheap legalized drugs they can ingest. A quick funeral is cheaper than answering a few 911 calls. However this is the subject of a future series of posts.

Linkfest (December 22, 2009)

December 22, 2009 Leave a comment

In other news..

Accept Defeat: The Neuroscience of Screwing Up A very good article that summarizes a lot of what I realized years ago.

Taxpayers Help Goldman Reach Height of Profit in New Skyscraper Surprised?

The Equity Culture Loses Its Bloom I doubt they will stop unless they are made to..

Banks with political ties got bailouts, study shows The sun rises in the east.

China to require Internet domain name registration Legalism and control is hard to let go.

China has issued new Internet regulations, including what appears to be an effort to create a “whitelist” of approved websites that could potentially place much of the Internet off-limits to Chinese readers.

U.S. Economy: Home Sales Exceed Forecasts as Buyers Seek Credit Need I say more?

Sales of existing U.S. homes in November rose to the highest level in almost three years as first-time buyers rushed to take advantage of a government tax credit and lower prices.

Alternative View on Money- IV

December 22, 2009 5 comments

In my previous post on this subject, I had alluded to the need for creating an economic system in which even a person with a minimum standard of living would have enough discretionary income to support a ‘reasonable’ level of consumption. My definition of a ‘reasonable’ minimum living standard (and consumption) is a discretionary income of about 30%. The idea is that a person would have 30% of their income left over after paying for essentials such as food, utilities, decent shelter, transportation etc.

I do not see exponentially increasing medical costs as either inevitable, or possible to achieve. In any case, that issue will be the subject of a future series.

The first objection to my idea is most likely:

How will we pay for this? and why?

The answer to the first part of that question is quite simple, but requires us to reanalyze the reason we ask those questions. Money is still seen as a zero sum game, in which someone has to lose for someone to gain. The real question- Is money a zero sum game? In a world of gold = money, the answer is yes. However in an age of paper/ electrons = money, the answer is no. I propose we create money that is not based in debt, and can be adjusted according to prevailing needs. While some of you are still waiting for the nth coming of gold as currency, I believe that such a move is not compatible with our current technological civilization. While there are many reasons for that statement (which will form the basis of another future series), the most important reason is the fundamental effect of technology on making things and providing services- it keeps on making them less expensive and with fewer employees. However making things and providing services requires consumers who will buy them. A currency that retains its value will inevitably concentrate in a few hands, discourage spending and reduce economic activity –the velocity and flow of money. Without a healthy velocity and flow of money, you get a feudal-type system in which titles and occupations are hereditary, laws are arbitrary, contracts are unenforceable and everyone is trying to screw over everyone else. If you want to take your chances with such a system, go ahead.

The second part of that question, the ‘why’, has been partially answered in one of my previous posts. The most important purpose of money is to facilitate non-violent exchanges of things and services. It is easier (and more desirable) to pay for something than rob/ kill the person who can provide what you want. Given the effect of widespread application of technology on costs and labor intensiveness of products/ services, it is in the interest of producers to make sure that there are consumers for their products/ services.

The next set of objections to my idea are most likely:

How can we motivate people to work and excel if there is no extra reward? How do you prevent the idle from becoming rich in such a system? What about inflationary effects?

The answer to that comes in two parts. First- Those with jobs will keep the money they earn in addition to the basic amount. Essentially, the employed will have much more discretionary income than those on the minimum income. Surely, most people cannot object to such an arrangement, can they?

The second part of the answer is that everyone will have to spend their minimum income by the end of every calendar year. Carrying over any unspent amount to the next year, saving it or investing it will be forbidden. However the money earned in a job can be saved, invested etc. While some people will try to cheat the system, it will be inconsequential as long as the cheaters are kept at levels similar to those who cheat on their income taxes.

It is extremely important that the workings of this system are openly explained to people. The minimum income should not be seen as charity, but as a necessity to keep the flow and velocity of money from going below safe levels.

Inflationary expectations can complicate matters, however they will subside once people understand the system. In any case, paper and electrons can be created and destroyed at will. Moreover technology has been deflating product/services costs and will very likely continue to do so. Inflation is less destabilizing than a deflationary spiral, as the rise of dictatorial regimes in the 1930s can attest. It is easier for people to accept loss of savings than loss of income, food and basic human needs.

I have no illusions that we are going to go down this road willingly. In the end, circumstances and events that will force us to explore the possibility of creating such a system.

I will answer the following two question in an upcoming post:

How can such a system be implemented, given the human tendency to cheat and abuse systems?

What conditions will force most people to go along with such an idea?

The next part: Alternative View on Money- V

Alternative View on Money- III

December 21, 2009 5 comments

This post suggests a heretical idea, namely paying people to consume and thereby maintain a functional economy. While the concept sounds like another keynesian idea, it is much more radical. In some ways, it takes off from minksy’s ideas on the government assuming the role of lender and employer of last resort. The previous post in this series is found here.

I will begin the argument for my idea with a question:

Why is your job indispensable for maintaining our current level  of civilization?

People usually come up with fairly bizarre and circular reasoning on why their job is indispensable, but other jobs are not. The reality is that gains in productivity, automation and semi-intelligent software have made us very productive, but simultaneously reduced the number of people necessary for producing a given amount of products or services. This has created the peculiar conundrum, where products and services are becoming cheaper but fewer people can afford to buy them without credit.

This problem stems from one basic feature of our current system, namely the necessity of having a job for earning money to  buy products/ services. Since post -1960 widespread automation, supply chain streamlining and technological advancements has slowly eroded real jobs from the west. These jobs are unlikely to come back, and infact are being lost to machines in those countries that initially gained them (from the west). While the west tried to fill this gap with housing, education, healthcare and financial bubbles in addition to an increased number of  government jobs, it appears that we have reached the day of reckoning for these bubbles. The need to create phony jobs stems from a belief that basic amounts of money should be earned, rather than given. While such a belief had utility in keeping free riding under check in previous ages of low productivity, we now live in an age if high productivity.  It is not easy or possible to employ every capable and wiling person.

High unemployment, job losses and a simultaneous credit contraction are the perfect conditions to create a deflationary spiral which will accelerate far more quickly than previous eras, in no small part due to technological diffusion. The only way to stop unwinding and reverse such collapse, is to pay people to spend.

The main objections to this idea arise from traditional thinking processes which came into being in a world unlike the one we live in today.These objections are based in conservative thinking, racialism, need to adhere to traditional beliefs and general incredulity. The zero sum ape mind of most people is also appalled by this idea, though most won’t admit it.

I will discuss the objections and suggestions to prevent abuse of such a system in my next post on this subject. Let me reiterate that implementing such an idea must take the peculiarities and limitations of human behavior into consideration.

The next part: Alternative View on Money- IV