Remember Hyde?

The metaphorical question is will we have the same ending?

Secrecy has a purpose now just as it did in 1910.  The reasons vary, but conspiracy is top of the list. On November 20 of that year America’s leading financiers met on JP Morgan’s Jekyll Island estate off the Georgia coast. The secrecy was so complete that en route these men wouldn’t even use their surnames.

The agenda was to create a central bank.  The reason for secrecy was threefold: one, Americans showed an historical distrust of central banks, and two, the public’s and Congress’s wariness regarding these financial manipulators, and three, two of the attendants were from government; the attendance by Senator Nelson W. Aldrich, Chairman of the Senate Finance Committee, and from Treasury, Assistant Secretary Abram Piatt Andrew Jr., gave an appearance of collusion.

The reasons they would provide their supporters in promoting acceptance was to avoid the economic chaos such as the recent Bank Panic of 1907 by establishing a central bank capable of providing liquidity in times of tight credit and lack of depositor confidence.

This was a disingenuous proposition since the panic was caused by a prior reckless expansion of credit for questionable ventures that ended badly, leading to failed banks and brokerages. The panic caused by those failures rapidly spread, freezing credit and causing depositor runs on banks. With the help of JP Morgan and his allies, liquidity was restored, but actually by those that caused the unsustainable credit expansion in the first place with dangerous fractional banking, a process of actually increasing the money supply without even the need to issue more currency.

In essence, this was a scheme to provide the banking system with a means to physically expand the money supply in order to maintain fractional banking and avoid the burden of the banks themselves having to capitalize their overextended credit. The product of this nine day meeting became known as the Aldrich Plan; it proposed establishment of a central bank called the National Reserve Association, with currency power, nationwide branches and a board of directors. The board would be bankers, but the US Treasury would be included.  There was no provision in the plan for effective oversight.

When the plan saw the light of day as subsequently proposed by Aldrich to Congress, it was strongly opposed by a majority who saw how it would empower banks, expanding the influence of Wall Street financiers. What followed were three years of intense negotiating, a classic example of cronyism in which various congressional leaders somehow found their way to a mutually beneficial agreement with the banking industry and eventually passed the Federal Reserve Act of 1913 and sent it to Woodrow Wilson to sign.  Although he did so quickly, he later stated that “I have unwittingly ruined my country.” How prescient a statement from such an unfortunate man who regretted much of what he did.

To give such power to the very source of the problem was indeed a tragic mistake.  The ability to expand credit at the stroke of a pen, or now a stroke of the keyboard, is a financier’s dream. To enable Wall Street the ability to control markets that should be under no control other than the natural and spontaneous activity of those that produce the goods and services of the economy, what we call Main Street, is a manipulation against liberty of huge economic proportions. Herein lies the very cause of what we now call income inequality, a system of cronyism, not capitalism, yet bizarrely the latter is blamed for its own destruction by the former.

The original stated purpose of the Federal Reserve as the nation’s central bank was to have a safe yet flexible but more stable monetary and financial system. The fact that these goals were inherently contradictory was a concern to its critics, but their voices were lost in the euphoria of getting the ability to control and manipulate the medium of exchange, the life blood of a modern economy.

The mandate was adjusted overtime, principally in 1977 to “…promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates.” While on paper, the Federal Reserve was to be independent from the government, it was a symbiotic relationship. In order to work as planned, the US Treasury and the Federal Reserve had to by necessity coordinate policy and operations in order to effectively operate under this mandate. Within the Federal Reserve there was the Federal Open Market Committee, the public voice of the Federal Reserve, whose periodic “Beige Book” detailed the Fed’s “forward guidance”, a euphemism for a planned economy.  Americans love euphemisms, especially in order to avoid the toxic word socialism, even though in reality it’s what they got.

What this cabal of Jekyll created was a Hyde transformation of a free market economy to the monstrous evil of a planned economy to serve the self-gratification of the power elite. The metaphorical question is will we have the same ending?

How to Kill a Republic

The US Constitution is not what governs the people, but what governs those who govern the people.

“Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. Those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.” C. S. Lewis

There are two political systems that are often confused and assumed to mean the same thing; Democracy and Republic. To compound that problem in the US, the two main political parties have adopted these words as their political labels.

There have been many Republics and Democracies in history, and while they share some similarities, it is the differences that matter more. In a Republic, there are immutable rights established meant to assure liberty. In a Democracy the majority has limitless power over the minority. This is the essential and existential difference wherein one political system protects rights, and the other subjects them to political mandate.

In The Declaration of Independence man’s rights are stated first, and then that a government is created to secure those rights. Jefferson based much of what he wrote on the political treatises of John Locke regarding the equality of all men and their fundamental and inalienable natural rights of life, liberty, and property. Locke also stated that while these are the natural rights of man, nature did not provide the means to create laws to establish and secure those rights, nor to protect them or to adjudicate disputes among men arising from them; Locke stated that this was the purpose of government.

We are all familiar with the process through which we arrived at our constitution, starting with the Articles of Confederation, which proved inadequate to the task; it only provided for a Congress consisting of State representatives, which exercised all functions of the national government, empowered to pass, execute and adjudicate laws; there was no separation of powers or checks-and-balances, not a very good system for the preservation of liberty.

The Constitutional Convention was called to amend the Articles of Confederation to address these problems; however, the delegates choose instead to create what we know as the US Constitution. The concept of three branches of government and their separation of powers was derived from the French political philosopher Montesquieu, and used by John Adams in composing the Massachusetts state constitution, which formed the basis for the same in the US Constitution.

As John Adams wrote “The dignity and stability of government in all its branches, the morals of the people, and every blessing of society depend so much upon an upright and skillful administration of justice, that the judicial power ought to be distinct from both the legislative and executive, and independent upon both, that so it may be a check upon both, as both should be checks upon that.” This is another essential element of a Republic, providing not only a separation of powers but a system of checks-and-balances.

The proposed new Constitution was eventually ratified by the required majority of nine of the thirteen states in 1788 but only after the Massachusetts Compromise was adopted which required the inclusion of expressed rights, which were eventually adopted in 1791 as the first ten amendments known as the Bill of Rights.

Now having said all this, what is not always appreciated is that the US Constitution is not what governs the people of the United States of America. The US is not a Democracy but a Republic, and its constitution is a document intended to preserve the rights of the people by creating a government to do so. The US Constitution is not what governs the people, but what governs those who govern the people.

In a Democracy, one’s liberties can be mandated out of existence as happened to Socrates in Athens. Deemed a threat for his moral positions that might doesn’t make right, he was sentenced to death. On the other hand, even in an oligarchy as the ancient Rome Republic was, outspoken critics such as Cato and Cicero were not subject to the mob as was Socrates, although both eventually fell in harm’s way when that Republic fell with them; lessons learned….maybe.

What the Founders understood and wanted was to assure that liberty is not something government can exercise power over, but something it has no power to control. Much is often said about what the Founders intended, which at best is assumptive even though they left ample writings regarding this, but what is definitive is what the constitution says. There will always be interpretations, but the meaning of the words in the constitution is that of the time in which it was written, just as the meaning of the words of an amendment to the constitution is that of the time in which it was written.

The failure of the constitution to address slavery, a word that it didn’t even contain until 1865, was not only a moral failure on the part of the Founders, but created circumstances that nearly destroyed the Republic. That failure does not diminish its value as a protection of liberty, as it was for the Civil Rights Movement and remains so today.

Proposals that rights need to be “regulated” are presented as safeguards, when in fact they are a subterfuge to diminish rights; to propose such things is to expand power, but acceptance is an admission that the burden of liberty is too much to bear, the ultimate surrender of self. Such proposals are often incremental or peripheral, eroding liberty away over time and at the edges; unfortunately there are those that seem content to accept them like poisons that make them least sick, seldom questioning why they should take poison at all. 

We often hear that in life we need to be prepared to compromise, to negotiate for an outcome that enables a mutually beneficial result. This is a valid practice in a transactional process such as business and in the settlement of civil disputes, but not regarding the rights of individuals, no matter how small a minority, and there’s no smaller a minority than the individual.

There is no guarantee in a Republic, no matter how clear and strong its constitutional foundation, against corruption. Often in political science we see comparative analyses between the US Republic and the Roman Republic. In some respects this is a valid thesis as the Roman Republic was also formed by a revolt against monarchy, had a written constitution, and a representative system of government. Unfortunately the US Republic has shown that it also has, like the Roman Republic, tendencies to oligarchy and ochlocracy, which have also led to a warfare and welfare state. We can only hope that the process will redirect away from the ultimate decent to totalitarianism as was the case with Rome.

There is another less known political phenomenon, not actually a system in the same sense as discussed above, but accurately descriptive called Kleptocracy, which is a government of corrupt leaders that use their power to exploit a nation’s people and resources for their personal wealth and political power. It’s closely allied with Democracy in that it can manipulate majority rule to this purpose. To do so with a Republic, you first need to insinuate Democracy into the fabric of a Republic’s institutions.

This corruption must come from within as this method is not overt as that would appear treasonous as if supporting a foreign agenda. It must also be incremental so as not to appear radical, and evolutionary as if it were a natural progression of development, replacing what is now deemed no longer valid or applicable to current circumstances.

In reality it is not that circumstances have changed so much as people’s perceptions, and they are easier to influence than the immutable principles of liberty. The slogans used to do so have varied over time, the current one being social justice, best described by Fredric Hayek as “The idea of social justice is that the state should treat different people unequally in order to make them equal.” Contrary to that is the idea of liberty in which true justice does not allow some people to have rights that are created by denying other people their rights, in essence the rule of law.

The US Judicial Branch of government as John Adams stated is a separate and independent institution, the guardians of liberty against any acts of the other branches contrary to the constitution; members take an oath, similar to all those in government to “…support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same;…” It is not an ambiguous oath, and it does not allow for interpretations as to what the constitution is but as it is. Regarding rights, thankfully the first ten amendments were added despite early objections as to their need based on the Constitution’s expressed powers. There was a sense of foresight in that based on the Founders’ experience with power and its tendency to corrupt, and their aversion to democracy’s tendency for mob rule over the rule of law.

It is clear from the construction of government under the constitution that the Founders did not find democracy accommodative to liberty, but a corruption to rule by the will of the people as a threat to liberty. Therefore, the government created was constrained or limited in its powers in order to best protect against violations of the rights of individuals. 

With the growing emphasis on the popular vote, elections today appear more as a poll taken on policy than a process of representative selection. The principle of democracy suggests that collective decisions according to the will of the majority are now more relevant than the principles of liberty found in the constitution, which is the basis of our Republic.

The two major political parties in the US have abandoned the principles of our constitution in a dangerous polarization war for power. What we have as a choice in the upcoming election is Allende ala Biden versus Peron ala Trump, two versions of the same disease putting our Republic on life support, and providing the prognosis for a future with the lesser of two evils; essentially, pick your poison.

Bunker Mentality 4

All actions, including policies decided with COVID19, have consequences; if not intended, they were never considered or were unforeseeable. Early on there were conflicting reports, some saying that there was no real issue and others portending the end of the world.

From the medical perspective, the intent was and is containment of the contagion with careful hygiene and avoiding physical proximity, treatment of the afflicted and hopefully a cure and vaccine. These are medical protocols and should not be conflated as policy. The medical industry does not have political power, they are advisory only.

From the civil perspective, people reacted reasonably well without mandate and practiced the various measures advised, but most did not go into a bunker until forced by edict.

From the political perspective, there were two reactions, chaotic and draconian, with open conflicts among various levels of government as to who had authority, federal, state or local. There were demands from each on the others while at the same time declaring their own powers.  There were strident edicts demanding the closure of just about everything.  There was panic, hubris, snarky denunciations and mindless directives, but there was little composure. Absent rational debate, there was virtually no consideration of anything but the desire to create a perception of doing something.

From an economic perspective, establishing hygienic protocols was essential, but to place a country in house arrest is not just inhuman and likely illegal, but effectively puts it in a depression. To make matters worse, the government expands an already bloated financial system with even more debt in the name of relief and stimulus, proving that they learned nothing from past failures.  

Science is a broad and multi-discipline field. It is the role of management to seek as much information across all disciplines in order to derive a plan addressing what is known and that serves not just the present, but the future. What we got instead was a fractured environment of power grabbing bureaucrats, some elected, some not, laying out their turf. 

This is hardly new in the US history of pandemics. Similar behavior can be found with the Spanish Flu. It was not a coincidence with the end of the Great War, but likely because of it.  As the Doughboys came home from the sodden infested trenches of Europe, they brought this with them.  It did not originate in Spain despite the name of the Flu.  Spain was a neutral country during the war with the least censored press, and reported early news of the virulent influenza; it killed around 20-50M worldwide, more than the 17M in the war. The wide range of reported deaths was due to a lack of reliable data, typical then as it is now. The origins are guessed as the UK, France or China, all unproven as is the reason for its devastating potency. What is agreed is that pestilence historically follows war, and the Great War was the worst in history up to that time. While reactions ranged wildly in the US from lockdowns in St. Louis to virtually nothing at all in Philadelphia, the short term results varied accordingly, but the long term effects of the flu were the same everywhere.

Political intentions can be benign or self-serving. With COVID19, most states decided that medical preparedness, an informed public, and avoidance of devastating impacts to citizens’ livelihoods, would in the long run best serve everyone; most US states took this course.

Then there are governors that took the draconian approach with lockdowns. Some of these governors were well intended without self-serving motivations.  Then there are those like Governor Whitmer of Michigan stridently shuttering everything in sight; even with the few businesses she allowed to operate she actually dictated what could not be sold from gardening goods to American flags. 

So what motivated this later group to act so dictatorially? It was Rahm Emmanuel, COS for Barack Obama, who told him during the MERS pandemic, “Never let a crisis go to waste.”  Even a better indicator with COVID19 comes from Joe Biden’s savior, House Majority Whip Rep. James Clyburn, telling Democratic Party leaders that COVID19 presented “…a tremendous opportunity to restructure things to fit our vision.” On the back of these miseries they see opportunity?

Now as we hear about the plans to end the lockdowns, more and more Americans are beginning to question if not protest these policies, and not just because of money; it’s about something more basic called livelihood, a long term consideration.

I don’t subscribe to the “Plandemic” conspiracy theory, at least not based on what we know at this time.  True that the virus appears more and more chimeric with its accelerating mutations, but that does not necessarily mean it was intentionally released like some biological warfare on the world.  China is a pretty bad actor, but are they so sociopathic to commit such an act on themselves? 

More likely the trail comes back to the NIH who were conducting chimeric experiments on viruses until Congress voted a moratorium on such research; undeterred they outsourced and funded the research to Wuhan China where lax oversight is to blame. It’s disturbing that the NIH is persistently advocating against the moratorium.

Surely there’s room in the news for more about this just as much as the Trump tweets about injecting or ingesting toxic chemicals. Why instead are we bombarded with such meaningless bromides like “We are all in this together” and “We are one”? We are none of those things; we are human beings who should not be locked up and deprived of our lives and livelihoods.

Such an agenda is more befitting a Fascist dictator than a Republic, toxic to its political, economic and medical health. We can only conclude that those that advocate such policies have not let this crisis go to waste, but have taken the opportunity to satisfy their addiction to power, craving ever more control over the American people.

#bunkermentality4

Bunker Mentality 3

Before we proceed to discuss consequences of the COVID19 policies, we will list certain facts that have been reported relative to these consequences:

  1. As the economy is “allowed” to reopen, there will be an increase in the infection and death rates; inevitable given the nature of contagious diseases, and even more so a chimeric virus.
  2. The current infection rate is estimated at 20%, but likely much higher; it is estimated that as many as 143K Americans will die by August, but again could be more.
  3. The rapidly mutating virus is now affecting children and with different symptoms than adults; yet another indication that we are dealing with a chimeric virus.
  4. The unemployment rate, already unprecedented in American history, will likely rise; even if we reopen now there are many jobs that will not come back soon, if ever. 
  5. Assuming one of the two main political parties wins in November, we will not have an improvement in leadership, partisanship, polarization or civil discourse.
  6. None of the drastic financial manipulations of the Federal Reserve, or federal government in general, will improve any of the above, and will actually make things worse. Most of the relief money is going to the usual suspects like large corporations and Wall Street Banks. Main Street, as in the Financial Crisis, is Tuesday’s child.

Perspective is needed when considering what governments usually do when confronted with problems; Ronald Regan clearly understood that when he said “Government does not solve problems; it subsidizes them.”  Creating “money” out of thin air is not an antidote to disease or economic ills.

We can see now some of the consequences taking shape:

  1. We are in a greater depression than the Great Depression; a recession was coming anyway with the credit bubble (See earlier post, “The Perfect Storm”); COVID19 policies just pushed the metrics into depression territory.
  2. The financial instability will be greater than 2008; the expansion of credit, given the trillions of dollars just created with key strokes, is actually even more debt, placing a burden on Americans that will crush them for even a longer period of economic hardship, likely into future generations.
  3. While these relief and stimulus policies sound huge, the bulk of it goes to the usual government cronies like banks and corporations, little to Main Street to alleviate a moribund economy, and driving equities into even higher unrealistic and unsustainable evaluations.
  4. When the unemployment benefits, including the augmented Federal funding, eventually run out, and that will be soon enough, people will be left with little to no means of support, and no health benefits to rely on, creating a health crisis greater than COVID19.
  5. The food supply chain will be severely impaired, creating malnutrition, adding to the health crisis.
  6. There will be increased crime and civil unrest, endemic in such crises, further impacting health.
  7. Governments have seized powers by decree; they have been doing so over a long span of time since the turn of the last century, but now at a steroid like induced rate, eroding even further our civil liberties. Power mongers love the “opportunities” crises provide.
  8. Politically there will be even further polarization and partisan extremism, adding to an environment ripe for authoritarianism.

The study of economics evolved from sociology.  Many people don’t realize that early works like those of Adam Smith and David Ricardo were studies in sociology, principally focused on the interrelationships among people and their livelihoods. These works gave rise to the creation of the discipline known as economics. Essentially, from a sociological perspective, suspend those relationships and you effectively destroy livelihoods. Plagues have been a part of all human history and have had critical impacts to the economic wellbeing of man, but when you suspend the ability to make a living, you are destroying the means to live and recover. Plagues do kill so people will die, but life goes on…..provided it is not suspended.

While we have discussed how long term consequences were not considered, next we should look at what was unintentionally or even intentionally disregarded or dismissed, and what this informs us regarding that.

#bunkermentality3

Bunker Mentality Part 2

Applying what was discussed in the prior post to the current pandemic, a list of what is known:

  1. The EIS (Epidemic Intelligence Service) of the CDC expressed concerns back in 2014 about chimeric laboratory experiments by the NIH with viruses.  Amazingly in the course of the next few years Congress became aware of and legislated for a moratorium on such experiments. I say amazingly because Congress is often myopic regarding such issues.
  2. The NIH however was undeterred and outsourced such experiments in the “…cause of science.” It should be noted that the outsourcing was to laboratories in Wuhan, China.  There is much conjecture as to what these experiments were or what was produced; some journalists are still investigating but such efforts in China are seldom productive, and lately the same can be said here in the US.
  3. Again the EIS reported that this virus was with us much earlier than initially thought, perhaps as early as late November. Oddly enough the CDC ignored their findings, and the WHO went on to praise China’s efforts in combating the pandemic despite evidence to the contrary.
  4. The administration and its various agencies apparently went along with the CDC and the WHO, allowing air and sea traffic between Asia and Europe well into February and March.
  5. As we became more aware of the spread of this virus, governments went into panic mode, essentially locking down many US States in efforts to contain (flatten the curve) the spread, which we were told was by aspiration.
  6. In the above, please note that the EIS was more concerned about the spread of this virus as they had found sufficient evidence to indicate that it was airborne, making it extremely ubiquitous; essentially, there’s just no stopping it considering that the air is literally everywhere. This raises the likelihood, which is becoming statistically apparent as testing becomes more prevalent, that there are far more people throughout the world who were infected; this includes those infected who are asymptomatic, or recovered even if they were unaware of being infected, or seemingly immune.
  7. We heard early on the concern that we had a shortage of ventilators, which at the time was justified given that the virus attacks the respiratory functions; fortunately with increased supply and falling need we avoided that crisis, at least for the moment.
  8. However, the death rate of those on ventilators was about 88%; the efficacy of that treatment is now in doubt by many doctors.
  9. The virus’ death rate is dominantly with the aged and/or those with underlying chronic conditions such as obesity, diabetes, asthma, immune disorders, emphysema, cancer, etc.
  10. As of today, the US has reported 1.2M cases. It should be noted that on testing, the positive rate is about 20%, indicating that the virus is indeed everywhere despite the lockdowns, which likely contributed little in flattening the curve.
  11. The deaths due to COVID19 and the seasonal influenza appear about even at 65K; please note that 73K was reported but a significant number reported as CIVID19 were in fact due to other causes, but counted as COVID19 simply because of detected infection. 
  12. The death rate for COVID19 continues to fall from about 4.5% early on to about 2% now; that will likely continue to fall as testing increases. Note that the death rate for seasonal influenza is about .1% based on approximately 50M cases. It is noteworthy that the death rate for SARS was 9.6%, but even that pales in comparison to MERS 65%.
  13. There are confirmed cases of medical staff being directed to re-document prior death certificates, i.e. from whatever was initially recorded to revisions for COVID19, or to document the cause of death as COVID19 when it was apparent that there were other causes.
  14. The FDA disallowed the use of testing kits available worldwide, and up to late February, the use of laboratory facilities for test analysis other than CDC and related agencies, presenting unacceptable obstacles to securing the public health and obtaining viable statistics.
  15. The two leading causes of death in the US remain heart and cancer diseases, accounting for 1.25M people annually. The fastest growing disease in the US is diabetes, which now is the cause of more than 83K deaths annually and growing.
  16. Economists divide the American population into quintiles. Of these five groups, the lowest includes those at or near the poverty level.  The next two up the ladder are considered low-mid middle class; the next group is considered mid-upper middle class, and the top group upper middle to rich. These are generalizations and various government agencies, private institutions and  economists define them and assign attributes variably; however, the lower two quintiles and a majority of the third, approximately 52% of Americans, carry the most consumer debt, making them highly vulnerable to negative economic conditions.

There are many more things we can list that governments should have taken into consideration as it deliberated what actions could be taken to combat COVID19, but let’s just look at what is listed compared to what they did:

  1. Seek and make sure you have the all information from medical and intelligence sources; this was not done or they would have been aware of the EIS reports, informing them more intelligently and completely as to what they were dealing with.
  2. Provide early warnings to the public; while criticism abounds how the administration failed back in January to heed the advice of the CDC, the fact remains that the EIS reports talked about late November.  Where was the CDC and the Who at that time?
  3. Avoid panic as this leads to dire consequences, like hoarding essential goods, migrations to outlying areas, violence, etc.; while some Governors like Cuomo preached against panic, it’s not what they practiced.  Being fed the end of the world posturing of the CDC and the mass media, they jumped on the band wagon of draconian policies with lock-downs.
  4. Inform the public of just how serious the virus is comparatively, meaning that they should be aware of greater threats to life that we deal with all the time without the need to resort to drastic measures; never discussed, and instead we were told to be prepared for deaths in the millions.
  5. Keep the public truthfully and completely informed of all the facts, not just those that support whatever actions have been taken; never happened as politicians only spoke to whatever they perceived supported their policies.
  6. Define sensible hygienic measures and protocols, and adjust these as more information is available; started out well enough given what was known with social distancing, masks against aspiration, etc. made some sense, but then again little changed, except for the worse with lock-downs. Discovery of rapid mutation, indicating chimeric characteristics, the EIS reports for airborne migration, the uneven distribution of cases around the world, etc. apparently provided no insights for reconsideration.
  7. Help coordinate and expedite the supply chain of medical supplies and equipment; never happened. Consider the pathetic open conflicts between federal, state and local governments on supply chains.
  8. Do not allow beauocracy to stand in the way of medical science, i.e. expedite and do not obstruct; the behavior of the FDA and CDC should be viewed as criminal negligence.
  9. Avoid draconian measures that suppress the life, life years and livelihood of Americans; given the 32M Americans now out of work, worse than the Great Depression, it’s hard to think of more Draconian measures than what was done.  The long term destruction of American lives with the loss of their livelihoods affecting diet, health care, etc. will be far greater than whatever this pandemic will ultimately bring. 
  10. Take into account the long term consequences of any actions over the perceived short term benefits of measures, especially any that seem to provide more of a political cover for “… having done something.” Consider the total health of Americans, including economic and psychological, both of which affect life expectancy, and do so with consideration of long term consequences; again, this is not what politicians think about as their horizon seldom goes beyond their term of office.

The failure to see the pandemic coming to the US despite the early warnings became the focus for blame, and not for solutions. When they chose to act they did so in a panic without sufficient knowledge of the problem, and in true bunker mentality mode grasped at the apparent ready solution to hunker down, coercively isolating everyone without consideration of the consequences. Those that objected were derisively labeled stupid, insensitive, selfish…and so on. The government became all knowing, the mass media bought into it, and the detractors received the vitriol that contrarians usually do.

It is becoming apparent that the long term consequences of the actions taken may be even direr than originally anticipated, which we will discuss next. 

#bunkermentality2

Bunker Mentality Part One

To understand the complexities behind this topic, we would have to start with a discussion on management, which in itself is too expansive for a blog post, so we will briefly define what it is and its main functions and styles.

In business, and for all institutions public and private, the generally accepted definition of management is the organization and coordination of activities in order to achieve defined objectives. The seven functions of management are planning, organizing, staffing, directing, controlling, coordination and cooperation.

There are also many styles of management, which generally fall into the three categories of autocratic, democratic, and laissez-faire; autocratic is the most controlling and laissez-faire being the least controlling.

Regardless of management style, an analytical process is critically essential for success.  For analysis to be meaningful you need an inquiring and unbiased attitude to get the best information available; restricting that process will result in a myopic organization, a syndrome we can characterize as bunker mentality.

The term derives from military experiences, also called siege mentality; it comes about as a collective fear of being under attack.  In the military sense, that can be a very deadly reality. In management however, it is often not of a clearly defined aggressor, but the world in general, especially for causes yet unknown.  It can manifest itself as an irrational urge for isolation and extreme defensiveness; these are panic reactions to perceptions more so than realities.

Such an environment is indicative of fear. Good managerial skills include the ability to face fear, not to deny it, but in order to control it and look through it to the cause of the anxieties at play. Further, when faced with problems, good management requires an analysis of the consequences of any actions being contemplated.  Uncontrolled fear can blind you to the consequences of your reactions, often causing more damage than the problem itself.

Good management understands that a bunker mentality is a common reaction to problems outside of historical experience, causing a withdrawal from analytical processes such as consideration of the consequences of proposed solutions; inevitably this in turn increases fear, further feeding the impulse to withdraw into a defensive shell, and a heightened intolerance for any conflicting opinions as to what to do.

Often when a state of bunker mentality exists, it will seek the first solution offered to the exclusion of any alternatives; it is rushed to execution without consideration of future consequences, only the exigencies of the moment.  Soon however the future becomes the present and the consequences make the initial problem almost trivial by comparison, mostly because no one was prepared to deal with consequences precisely because no one thought about or was allowed to think about them.

Another characteristic of the bunker mentality is how it treats the unintended consequences that were never considered; basically it goes into the blame game phase. The focus then becomes how to deal with the perception of who screwed up and not on the original problem. Any critics of the decisions that led to the unintended consequences are dismissed as uneducated fools who don’t understand what the experts know and what those in power have to deal with.  Time and again, additional bad decisions follow in an effort to deflect these consequences, putting everything into a death spiral.

It is extremely difficult getting people out of the bunker mentality. The resistance to come out of their comfort zone is strong, even as the defensive shell they are in is collapsing around them; often it means reassignment or dismissal as the bunkers can be impenetrable. Working against the bunker mentality will also bring out the self-righteousness of its supporters, and those whose agenda is not about what’s best but what is expedient to their immediate benefit.

From a military perspective sieges either succeed because those besieged took no action, or fail because either the besieged are relieved and/or come out and break the siege or the reasons for the siege are themselves mitigated in some way as when peace is declared.

Similarly, from a managerial perspective, you need to overcome the bunker mentality and move forward to solve problems, inclusive of avoiding negative long term consequences, i.e. do no harm.  The alternatives are you fail and the organization or project fails also, leading to irredeemable losses. This may also happen even if the “other side” concedes the issue at hand. There is no upside with a bunker mentality, not in the long run, and if you are not managing for the long run, you don’t belong in management to begin with.

#bunkermentality1

The Balkanization of America

Why is there increasing noise in social media about the topic of secession?  In order to discuss secession itself, we need to understand this question and the answer; that can be difficult given all that “noise”, and the fact that civil discourse is absent from any debate, but that doesn’t mean it should be ignored.

Let’s not get hung up on the simplistic notion that this is just another crisis of the Age of Trump; this goes back much further than the current administration. The list of significant such movements in the US is about a dozen and range geographically across the country from Vermont to Hawaii. The impetus for such movements range from cultural, social, political and economic issues, and support secessions of counties within states all the way to groups of states seceding from the Union.

A common theme is the reaction to the imposition of culture, laws and attitudes dictated from above, meaning not representative of a particular local area.  The “above” is perceived as Washington DC, i.e. the Federal Government. The imposition resented comes from the politically elite in the urban areas of the Northeast and Pacific Coast.

The resulting social and political dynamic reviving and driving these movements is polarization. With the advent of social media, these movements have grown and the synergy created with technology back feeds into even more support; it’s like a chimeric growth with an indeterminate evolution, but decidedly alienating.

So this in turn leads to the issue of secession itself, an issue that we assumed was settled with the Civil War.  However, from a constitutional perspective, that may be only an assumption.  The Constitution provides a clear path for a territory to become a state of the Union, but is silent on the issue of secession. That curious fact has been explained variously by many scholars, but not conclusively.

Foremost against secession we have the Supreme Court 1869 ruling in Texas v. White; the case was about US bond sales and redemptions by Texas during the Civil War, and not specifically about Texas’ right to secede from the Union. However the case presented the Supreme Court with an opportunity, so it ruled that the sale was illegal because it occurred at the time of secession, which in turn it deemed illegal stating that the Constitution did not permit states to unilaterally secede from the United States. That is true as the Constitution says nothing about secession, so unilateral or not, permission or prohibition, it is not addressed.  

Some scholars have argued that the court should have gone further as it did not address the fact that the Constitution did not speak against secession. Obviously, having just had a bloody civil war about secession and with the South still under Reconstruction governance, the court found itself compelled to take a stand against secession or put the entire outcome in jeopardy. However, by not addressing the issue of the Constitution’s silence on secession, it lost the opportunity to resolve that issue in regards to powers not expressed and therefore reserved to the States.

Regardless of which way you may argue the issue, it remains that the Constitution to this day is silent on secession, does not provide an expressed power, and has not had an amendment to resolve that. On that basis those promoting the right of secession make their case.

Taken all together, we have a Balkanization of America.  I chose that phrase based on its definition, i.e. a geopolitical term for the process of fragmentation or division of a region or state into smaller regions or states that are often hostile or uncooperative with one another. The term evolved during the many periods of fragmentation of the Balkans from the time of the Byzantine Empire’s collapse to that of the dissolution of Yugoslavia.

Well by definition we certainly have Balkanization going on in America today, and the current economic collapse will only exacerbate the underlying causes even further. It is difficult to separate the growing polarization from this issue as therein lay both the cause and the possible solution.

Let’s start with the simple premise that when developing policies of governance, especially for a country as large and diverse as America, we can’t take an approach that one size fits all; by definition it can’t work in governance any more than in shoe making since no matter what you’re excluding more people than you are serving.

Government works best to serve the people when it operates at the most localized level to the people involved, i.e. state and county, city and town.  This is how the US was originally constructed through the constitution and therein lies the way to understand how polarization starts and grows to the extremes we have today.

With the growth of the Federal government, specifically its assumptions of powers despite restrictions within the Constitution, we have conflict through intervention in areas of governance that belong at the state and local levels, an assumption of powers never intended even by the Federalists and certainly feared by Jeffersonians.  It is this growth of the Federal Government and its attendant powers that is the underlying cause of the alienation tearing the Republic apart.

Knowing the problem and its cause informs us for a solution. We need to face and collegially embrace the fact that we are a union of various States, each representing its own unique history, culture, social and political characteristics. We must acknowledge and respect our differences, not ridicule them from partisan perspectives. We must embrace our common values, chiefly our respect for individual freedom as guaranteed by the Constitution, the rule of law and the protection of individual lives, liberties and private properties. There should be no more debate about the Bill of Rights; it was the one thing that enabled the ratification of the Constitution, thanks to the insistence of the New England states, the birth place of the Revolution.

This means an existential shift in the direction of our political institutions away from nationalistic agendas to localized prerogatives; for a truly civil society, when it comes to government, less is truly more.

This should not be dismissed as wishful thinking as this is what our Republic is based on, what the Revolution was fought for, and what the Civil War was intended to preserve. If we do not do these things, polarization will only get worse and we will face the inevitable prospect of Balkanization.

#balkanizationamerica

A Perfect Storm

Is the collapse of the US market only about the pandemic? True the shut downs have crippled the economy, but since markets react to a horizon 6-9 months out, perhaps there’s more to this. Obviously COVID19 is serious in and of itself, so yes it is indeed an immediate source of the recent market collapse, but also a catalyst for exposing other problems of a more systemic nature:

  1. Credit – The economic impact of COVID19 will be to all market sectors, not just tourism and entertainment. Those companies that have run up debt, some to the point of “zombie” status, i.e. earnings less that debt service, will have even less earnings and will be even more financially distressed, perhaps fatally; this will make the high yield corporate bond market even less attractive than it already is; markets would price that in. 
  2. Fed Reaction – The recent Fed rate cuts were ill advised as there was already plenty of liquidity, perhaps too much.  It will not really mitigate the impact as debt will not go away and much of it was already at interest rates that are not retroactively affected. The Fed showed both panic at a time when sober reaction was needed and a loss of confidence in its own appraisal that the American economy was fundamentally sound; markets react negatively to both.
  3. Energy Glut – It’s the Saudis versus the Russians.  In reaction to what was already weak demand and gross over supply, OPEC wanted a cut in production.  A seemingly sensible proposal even for a cartel. Russia, whose economy is as dependent on energy as the Saudi’s, refused to go along and went for even higher production.  The obvious happened and the oil market collapsed. This will hurt American shale production as the technology costs make that unprofitable.  Natural gas prices tend to move with oil, so that will also impact the energy sector, and with such cheap carbon fuel costs, alternative energy will be even less competitive. For perhaps 3-4 years the energy sector is toxic to investors and that will create serious long term problems.  
  4. Federal Debt & Budget Deficits – Political campaigners may not be talking or even thinking about this, but markets do, especially regarding sovereign debt. It has reached the point where traditional foreign purchasers of US bonds, such as China and much of the EU, are reducing not only new purchases, but not turning over maturing bonds. Given the worldwide economic collapse they will have their own issues selling debt.  No one any longer seems to believe that the US has a plan to address its $23T debt, especially with the Cares Act and corporate relief bailouts resulting in even greater annual deficits and campaign talk of even greater spending. It’s becoming apparent to the markets and even in the mainstream media that we are running out of road to kick that can down, and we could face a credit crisis worse than 2008, and at the worst possible time.

The stock market was an attractive alternative to bonds for yield, and the bond market an attractive alternative to stocks for security; so what happens when both turn ugly?  With all this selling, the money is going somewhere, but not into investments, and that could see a credit freeze such as we saw in 2008.  While the banks are supposedly more financially sound, meaning fractional reserve ratios are higher with the mandate for stricter stress testing, where does that leave the highest consumer debt of all time? If we are on the doorstep of a recession as many say, if not depression as few will, how can Americans repay that debt?

Generational pandemics such as COVID19 have happened before and will likely happen again, like The Spanish Flu of 2018, MERS, and SARS; but when a culture of debt and consumption is faced with such an event, we have a perfect storm creating an even greater existential threat, one of our own creation.

#perfectstorm

Life Suspended

An open letter to President Trump:

Please don’t hold this against me, but I did not vote for you in 2016.  It’s also unlikely to happen in 2020.  I know you fire people who disagree with you, even if they are just doing their jobs, but I don’t work for the government.  The truth is I would never work for the government so I assure you I pose no threat to you other than a single vote you may never have.

I also think that you will likely win the 2020 election for no other reason than the simple fact that while your opposition says they represent some better alternative to you, they can’t even represent what that means.  In effect your single strength is that you actually represent virtually nothing at all other than some notion that you are not them and therefore better than whatever they say they are.  If that seems confusing it’s because it is and therein is your advantage.

So here’s my single and simple request– end the shut down now! I’ve already read how you do not have the power to decree a lock-down, and that any such powers that may exists to do so lies only with the States and not the Federal Government – that’s great news. However, I plead the case that the States are killing Americans, violating their civil liberties, and bringing the American people to ruin. The consequences are far worse than the flu they are meant to fight.  Another case of the road to hell paved with good intentions….but I’m not sure there are even good intentions.

Right now I entitled this open letter as a “Life Suspended”.  I think soon it will be “Life Terminated”, and I’m not referring to COVID19.  I’m referring to the end of America’s economic life, and all the destruction that comes with it. 

Be a savior and free the people!

#lifesuspended

Politicizing COVID19

We should avoid politicizing this crisis with recounting all the dumb things that politicians have said; that would be a full time occupation and it really detracts from the central issues of not about what they said, but about the egregious things they have done.

We’ve heard so much about the need to “flatten the curve”, yet there is no longer a curve to flatten.  The “curve” is now a vertical line straight up the Y axis, and will accelerate with the ever increasing testing, most of which is in NYS. That’s only logical as the more you test, the more results you have, and only proves the point that this virus does what all viruses do. All the modeling and geometric progression analyses will do nothing as reliable epidemiologists already know.  What we need is empirical data, and the greater the statistical base, the better the data. 

By all means we as citizens should use our common sense as with all viruses:

  1. Practice careful hygienic and sanitary procedures.
  2. When sick, see a doctor and stay at home.
  3. The medical industry needs to provide protective equipment for health care providers.
  4. The medical industry needs to provide ICU equipment, such as ventilators and respirators.
  5. The medical industry needs to provide research for treatment and eventually vaccines.

Cuomo had the foresight to bypass the sclerotic FDA and CDC and allow all POC facilities to do testing and to commission the 200+ licensed laboratories in NYS for results.  While he deserves credit for doing the right thing, his culpability in lock-downs is something contrary to his own stated instincts about fearing panic, which is a disease that spreads instantly and is a far greater threat than COVID19.

Sweden has not instituted the same draconian measures as the US and other countries due to their concern about the long term damage to their economy with lock-downs; they actually thought about the consequences of such policies, like how destroying an economy will lead to impoverishment and related health issues.  That’s really no surprise given Sweden’s far reaching visionary reforms taking the country out of the horrors of socialism as the unsustainable costs reached 70% of their GDP and high taxes were eviscerating their economy.

While the US government’s political policy reactions to 911 resulted in a severe degradation of our liberties, the government’s COVID19 policies will do the same to our economic wellbeing and freedoms.

# PoliticizingCOVID19

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