Why Politicians Win (and Workers Lose) - By Hans-Hermann Hoppe

Socialism leads to the politicization of society. Hardly anything can be worse for the production of wealth.

Socialism, at least its Marxist version, says its goal is complete equality. The Marxists observe that once you allow private property in the means of production, you allow differences. If I own resource A, then you do not own it and our relationship toward resource A becomes different and unequal. By abolishing private property in the means of production with one stroke, say the Marxists, everyone becomes co-owner of everything. This reflects everyone’s equal standing as a human being.

The reality is much different. Declaring everyone a co-owner of everything only nominally solves differences in ownership. It does not solve the real underlying problem:  there remain differences in the power to control what is done with resources.

Current Prices on popular forms of Gold Bullion

In capitalism, the person who owns a resource can also control what is done with it. In a socialized economy, this isn’t true because there is no longer any owner. Nonetheless the problem of control remains. Who is going to decide what is to be done with what? Under socialism, there is only one way: people settle their disagreements over the control of property by superimposing one will upon another. As long as there are differences, people will settle them through political means.

If people want to improve their income under socialism they have to move toward a more highly valued position in the hierarchy of caretakers. That takes political talent.

Under such a system, people will have to spend less time and effort developing their productive skills and more time and effort improving their political talents.

As people shift out of their roles as producers and users of resources, we find that their personalities change. They no longer cultivate the ability to anticipate situations of scarcity to take up productive opportunities, to be aware of technological possibilities, to anticipate changes in consumer demand, and to develop strategies of marketing. They no longer have to be able to initiate, to work, and to respond to the needs of others.

Instead, people develop the ability to assemble public support for their own position and opinion through means of persuasion, demagoguery, and intrigue, through promises, bribes, and threats. Different people rise to the top under socialism than under capitalism. The higher on the socialist hierarchy you look, the more you will find people who are too incompetent to do the job they are supposed to do. It is no hindrance in a caretaker politician’s career to be dumb, indolent, inefficient, and uncaring. He only needs superior political skills. This too contributes to the impoverishment of society.

The United States is not fully socialized, but already we see the disastrous effects of a politicized society as our own politicians continue to encroach on the rights of private property owners. All the impoverishing effects of socialism are with us in the U.S.: reduced levels of investment and saving, the misallocation of resources, the over-utilization and vandalization of factors of production, and the inferior quality of products and services. And these are only tastes of life under total socialism.

[Excerpted from Why Socialism Must Fail, published in The Free Market Reader.]

The Best of Hans-Hermann Hoppe

Hans-Hermann Hoppe [send him mail] is distinguished fellow at the Mises Institute and founder and president of the Property and Freedom Society. His books include Democracy: The God That Failed and The Myth of National Defense. Visit his website.

https://www.lewrockwell.com/2017/04/hans-hermann-hoppe/politicians-win-workers-lose/

Vox Popoli: An Alt-Right army

An Alt-Right army

You may as well join the Alt-Right, gentlemen. Because that's what they're going to call you anyhow:

An alt-right group apparently is trying to build a small street army — vowing to use violence if necessary to defend free speech from leftist extremists.

Kyle Chapman — a “proud American nationalist” who became a conservative hero in some circles after his arrest this month during fierce clashes between anti-fascist protesters and Trump demonstrators — announced the formation of the new group last week on Facebook and issued a call to action.

“Our emphasis will be on street activism, preparation, defense and confrontation,” Chapman wrote on Facebook. “We will protect and defend our right wing brethren when the police and government fail to do so. This organization is for those that possess the Warrior Spirit. The weak or timid need not apply.”

Chapman said the organization, the Fraternal Order of Alt-Knights, will be partnering with the Proud Boys, a conservative group formed by Vice co-founder Gavin McInnes that bills itself as “Western chauvinists who refuse to apologize for creating the modern world.” (McInnes is no longer affiliated with Vice and parted ways with the company 10 years ago.)

The formation of the new fraternity is being done with McInnes’ approval and Chapman is calling for action to defend against “Marxist groups that are intent on stripping us our freedoms,” according to another Facebook post.

“No more keyboard warrior s–t,” Chapman wrote in an earlier post. “No more crying about the state of our country while you do nothing to change it. It’s all about action. President Trump has our back for the next 8 years. The timing couldn’t be better. Let’s do this!”

The Southern Poverty Law Center, which monitors hate groups and other extremist organizations, has taken notice of the “highly masculine” group, likening it to a neo-Nazi fight club called the “DIY Division,” whose members turned up in California last month to support an estimated 2,000 Trump supporters.

Strange, is it now, how the SPLC never seems to take notice of antifa or any other violent left-wing group no matter how many people they assault. But when people merely begin to plan to start defending themselves against the violent left that is attacking them, well, it's THE SHOAH ALL OVAH AGAIN, again.

SPLC's fundraising histrionics notwithstanding, the Men of the West, the Proud Boys and Violent Solutions are only the merest spark of the inferno that is going to sweep over the entire West in time. Liberalism has observably failed. Civic nationalism has observably failed. The so-called Enlightenment has not only observably failed, it was an obvious absurdity from the very beginning. The Alt-Right Revolution is the only response that is in line with the long term historical trends that does not involve complete societal, and possibly civilizational, collapse.

The occupied and invaded West will rise again, just as it did after Charles Martel defeated the Moor at Tours. The descendants of Lepanto and Vienna have not surrendered, they simply have not yet begun to expel the occupiers and invaders. But they will, as they have repeatedly done before.

https://voxday.blogspot.com/2017/04/an-alt-right-army.html?m=1

The Real “Anti-Science” - by Wesley J. Smith

When Bill Nye the Science Guy complains of a war being waged on science, he should look in the mirror. Nye, who is actually the mechanical engineering guy—that’s his educational background—is more guilty of undermining science (properly understood) by politicizing it than almost anyone this side of Al Gore.

No one is attacking science. Why would they? Science is a powerful method for understanding the physical universe. Science’s tools are observation, careful measurement, testing, experimentation, falsification, and the like. Given the incalculable benefits that have arisen from applied scientific endeavors over the centuries, who on earth isn’t “pro-science”?

Why, then, did science become the subject of international protective protest marches? Blame political cynicism. Organizers of the March for Science hoped to harness the authority of science to prevail in hot-button public policy and cultural controversies involving scientific inquiry. But politicizing science is the real subversion—if you convince people that they have to choose between “science” and their moral, political, or religious beliefs, support for science could well wane.

There are at least three means by which these supposed defenders of science actually undermine it through their political tactics:

Conflating “science” with ethics and morality: Science is amoral. It is very effective at deriving knowledge and learning facts, but it can’t tell us right from wrong, good from bad, or moral from immoral. Yet self-described science advocates often blur those crucial distinctions by accusing the people with whom they disagree with on an ethical or public policy question of being “anti-science.”

Nye has been a prime example of this across a wide swath of public controversies, from climate change to abortion. With regard to the latter, Nye infamously appeared in a YouTube video promoting abortion rights in which he contended that pro-lifers lack a proper “scientific understanding” of “the facts.” But in fact he is the one who seems to be confused: Nye proclaims that “fertilized eggs are not human”—even though an egg, once fertilized, ceases to exist as the one-celled embryo called the zygote comes into being. He continues that the sperm joining the ovum “is not all you need. You have to attach to the uterine wall, the inside of a womb, a woman’s womb.” It could be argued that implantation is the point at which a woman becomes pregnant. But that doesn’t have anything to do with the biological nature of the embryo itself. Besides, embryology textbooks—real science—tell us that a new organism or, to put it another way, a human being comes into existence once fertilization has been completed.

More to the point, science can only tell us the biological nature of the entity destroyed in an abortion; it cannot tell us whether the destruction is right or wrong. Hence, it is a scientific fact that Nye and I are the same organisms today that we were when we came into existence as one-celled embryos. But when Nye tells us, “Nobody likes abortion. But you can’t tell somebody what to do!” in his YouTube mini-lecture, that is political advocacy masquerading as a scientific claim.

Wielding the term “anti-science” as an epithet to stifle legitimate debate: I have been the subject of such attempted stifling. As first discussed in these pages a few years ago, I was branded “anti-science” by Glen Hank Campbell, now the head of the American Council on Science and Health, who accused me of “hating biology” and viewing IVF “as a tool of Lucifer.”  What had I done to deserve such public shaming? I opposed plans to use a novel IVF procedure to create a “three-parent” baby.

How was that “anti-science?” I may have been misguided—though I don’t think I was—but I most certainly wasn’t opposing science, biology, or even reproductive technologies per se. I was making an ethical argument that it would be wrong to use this technique on humans, a position with which Campbell disagreed. But rather than engage in debate, Campbell tried to quash it with the “anti-science” slur—a strategy deployed often in moral and policy arguments around embryo research, climate change, evolution, abortion, human cloning, genetic engineering, GMOs, transhumanism, and other controversial areas.             

Using the authority of “scientific consensus” to stifle heterodox hypotheses and alternative fields of research: Science is never truly settled. Indeed, challenging seemingly incontrovertible facts and continually retesting long-accepted theories are crucial components of the scientific method.

Examples of perceived truths overturned by subsequent discoveries are ubiquitous. Here’s just one: So-called junk DNA that does not encode proteins was, until relatively recently, thought by a large majority of scientists to have no purpose, and was even used as evidence of random and purposeless evolution. But continuing investigations in the field led to the discovery that most “junk DNA” actually serves important biological functions.

Think what might have happened if scientists seeking to continue exploring this area of inquiry had been warned away because of the “scientific consensus.” What if the self-appointed guardians of existing perceived wisdom had gotten researchers to abandon their investigations for fear of losing university tenure, being scorned by colleagues, or having research funding blocked? The biological truth about non-protein-coding DNA might well have never been discerned. Yet these are the very anti-science tactics deployed today to chill scientific challenges to the theory of evolution and the questioning of “consensus” climate change conclusions.

Politicizers of science are not as clever as they think. People are watching, and the real victim of their abuse could be support for science itself. Indeed, the more vehemently establishment thinkers and their media camp followers seek to suppress alternate views and research, the more they attempt to crush ethical debates with the “anti-science” cudgel, the less people who are served by science will trust the sector. And that will be bad for everyone.

Wesley J. Smith is a senior fellow at the Discovery Institute’s Center on Human Exceptionalism.

The Real “Anti-Science” | Wesley J. Smith | First Things

Most "science" is fake science - by Vox Day

Most "science" is fake science

Yet another incident demonstrating why it is so amusing when people argue that religion is false and the supernatural does not exist because science:

The journal Tumor Biology is retracting 107 research papers after discovering that the authors faked the peer review process. This isn’t the journal’s first rodeo. Late last year, 58 papers were retracted from seven different journals— 25 came from Tumor Biology for the same reason.

It’s possible to fake peer review because authors are often asked to suggest potential reviewers for their own papers. This is done because research subjects are often blindingly niche; a researcher working in a sub-sub-field may be more aware than the journal editor of who is best-placed to assess the work.

But some journals go further and request, or allow, authors to submit the contact details of these potential reviewers. If the editor isn’t aware of the potential for a scam, they then merrily send the requests for review out to fake e-mail addresses, often using the names of actual researchers. And at the other end of the fake e-mail address is someone who’s in on the game and happy to send in a friendly review.

Fake peer reviewers often “know what a review looks like and know enough to make it look plausible,” said Elizabeth Wager, editor of the journal Research Integrity & Peer Review. But they aren’t always good at faking less obvious quirks of academia: “When a lot of the fake peer reviews first came up, one of the reasons the editors spotted them was that the reviewers responded on time,” Wager told Ars. Reviewers almost always have to be chased, so “this was the red flag. And in a few cases, both the reviews would pop up within a few minutes of each other.”

All of the arguments about the presumed reliability of science are ridiculous and easily shown to be false. Science is no more "self-correcting" than accounting. Peer review is more commonly known as "proofreading" by the rest of the publishing industry and is not even theoretically a means of ensuring accuracy or correctness. And scientists are observably less trustworthy than nearly anyone except lawyers, politicians, and used car salesmen; at least prostitutes are honest about their pursuit of "grants" and "funding".

These days, the scientific process is mainly honored in the breach by professsional, credentialed scientists. And we have a word for testable, reliable science. That word is "engineering".

Vox Popoli: Most "science" is fake science

I Used To Be Blissfully Naive - By Richard Daughty (This post is a perfect complement to Damon Linker's on the coming downfall of the elites. - CL)

There are times when I feel pathetically lost and lonely, adrift in a sea of bewildering confusion and unnamed dreads, here in the Mogambo Bunker Of Paranoia And Despair (MBOPAD).   Dispirited by the overwhelmingly bad economic outlook everywhere (and bad everything else, too) I languidly look out of the periscope, almost absent-mindedly scanning the perimeter for both real and imagined enemies.

Which is not to mention, of course, watching for family members sneaking up on me, each variously wanting me to give them money, take them somewhere, or (shudder) do something useful.

In such moments, I idly begin to wistfully remember the good old days of blissful naiveté about economics, which is before I found out about the Austrian school of economics, which led me to completely comprehend the unbelievable Keynesian econometric insanity — insanity, I tells ya! — of excessively expanding a fiat currency, especially over an extended time.

Time to buy old US gold coins

And I remember suddenly realizing, with a blood-curdling shriek of transcendental horror, how this — yes, this! – “excess money” thing is going to destroy everything, engendering the famous-yet-pithy phrase We’re Freaking Doomed (WFD).

Oh, naysayers always shouted hurtful things like “Shut up, you idiot Mogambo jerk!” and “Daddy, I can’t hear the TV with you acting loud and weird about the evil Federal Reserve again!”, yet I know this WFD thing for a fact – for a fact! – because big, long-term increases in the money supply has always destroyed every other dirtbag, low-IQ nation in history that ever, ever, EVER tried, or even allowed, such (how shall I delicately phrase this, perhaps with a gratuitous-yet-stupid alliterative twist?) simply stupendously staggering stupidity.

I mean, today we have complete access to the entire corpus of data and historical facts about economics stretching back to the Garden of Eden when a snake loaned Eve an apple, and we have Mises.org happily dispensing, for free, the eternal wisdom of the Austrian school of economics, and yet we let lowlife Keynesians dictate a monetary policy of constant expansion and outright monetizing of government debt, despite knowing all of this? Are you freaking kidding me?

And then using the newly-created credit to actually buy government debt (monetizing debt)? Are you freaking kidding me?

And now there are an increasing number of anecdotal rumors of central banks creating the money to actually buy equities and commercial debt to keep stock markets up?  What the #*! &%?

At the risk of repeating myself, again I ask, but with a more strident, hysterical undertone of soul-searing trauma to my prolonged, pitiful wail of dismay, “ARE YOU FREAKING KIDDING ME?”

The good news? The only way this can be good news is that, I admit, I was wrong when I once foolishly anticipated that we would be destroyed by huge radioactive dinosaurs that angrily shoot laser beams (zzzzt!) out of their eyes and rockets (whoosh!) that shoot out of their mouths. Probably with Tokyo the first to go. You heard it here first, in case it actually does happen.

But mostly I think back to my mortal terror and complete overreaction to even the teensiest, weensiest increases in the money supply, because it eventually causes inflation in consumer prices, which is always, always Bad Bad News (BBN).

But in my sloppy, self-pitying solitude here in the top-secret MBOPAD, I have had to time to think, and thus have epiphanies, clearly showing where I made my mistakes about so many things.

So many, many things.

For one thing, and more to the point of this stupid-yet-meandering cry for help, I did not comprehend the sheer, incomprehensible, awesome power of a unfettered fiat currency created literally without any limit whatsoever, especially so with a willing government to encourage it, or even pass legislation that mandates it, and a central bank not only fiendishly creating the excess cash and credit, but using it to buy assets to create scarcity, and thus higher prices!!!!!

I sense a ripple in The Force as Junior Mogambo Rangers (JMRs) around the world, and throughout the cosmos, instantly recognize to their collective horror that the use of five exclamation points as punctuation is a clever Secret Mogambo Code (SMC), used in this case to indicate an overwhelming emphasis.

Or, in keeping with the trend in punctuation, an overwhelming emphasis!!!!!

With such unfettered torrents of cash and credit cascading into the economy vis the evil Federal Reserve creating it willy-nilly and using it to buy stuff, it is but child’s play for them to elevate prices in the housing market, the bond market, the stock market, the incomprehensibly huge derivatives markets, and any other market you can name. All it takes is more cash.

Inflation by any other name…

And, of course, it would again bail out the damned banks, which are theoretically on the hook for all that crushing debt, and simultaneously giving banks the opportunity to loan MORE money to those wishing to cash in on the inflationary bonanza.

And it would bail out all those pension funds that are woefully underfunded as their assets soar in value.

And, of course, let’s not forget the economic expediency of people spending more money, which is as simple as the government passing legislation to hand out cash to taxpayers and businesses, probably as tax rebates and tax credits. Whee! Free money everywhere!

How else to explain, thanks to the evil Federal Reserve (and the other central banks of the world) creating So Damned Much (SDM) cash and credit over the last three decades (or more precisely, since the horrid Alan Greenspan started this suicidal crap around 1987) the economic horror-show is that the stock market (P/E>23), the bond market (yield < zero), the housing market (>4 x the average income), the student-loan market (over a trillion dollars), the car-financing market (over a trillion dollars), the trade deficit of over a half a trillion dollars per year, and the sheer, absolute festering tonnage of an estimated, eye-popping $170 trillion in public and private debt extant in the United States and the world, when the entire GDP of The Whole Freaking world (TWFW) is a paltry third of that size? The world owes three times as much as it makes already!

And how to explain the pervasive corruption of government and business, such as (thanks to the work of GATA) the now-proven suppression of gold prices by systemic fraud, effected through a collusion of commercial banks, the central banks and the IMF, and yet nobody from the government has shut it down and thrown them all into some stinking jail? Unbelievably, such blatant, proven fraud and corruption is still allowed to go on and on, despite actual admissions of guilt and documentary evidence!

The mind literally reels! Never, never, ever, ever, EVER (or NEVER if you prefer) before in history has an economy tolerated such a twisted, bastardized economy, let alone prospered from it.

Thus, I sadly come to the only conclusion possible: Economics is dead. The central banks are officially the font from which literally all economic blessings will now flow, including determining supply and demand (and thus prices) for equities and assets.

The good news is, if you’re new around here, that investing in equities should again be a no-brainer for quite a while yet! Always buy, since that is what the Federal Reserve will do!

The other good news is that gold and silver, and probably oil, will theoretically prosper much more, especially when the resultant terrifying inflation in consumer prices finally wipes everybody out, from a real, inflation-adjusted analysis, even as nominal (dollar-denominated) wealth increases by leaps and bounds.

Eventually, though, assets will go to zero value, except gold, as has been the case for all previous episodes of long-term gross mismanagement of monetary policy.

And the legions of poor people? Bad news there. With no assets, they will not prosper from the market-levitating magic of the evil Federal Reserve, but they will pay continually higher and higher prices for everything they need.

And then they, tired of suffering drab, dreary lives of ever-costlier privation while listening to The Magnificent Mogambo (TMM) bellowing “I told you this would happen, chumps!” and laughing in their faces, “Hahaha!”, will rise up in an angry mob, dominating the nightly news with videos of brandishing pitchforks and flaming torches, with screaming hordes demanding that I, Mogambo The Magnificent (MTM), be given full dictatorial control of the United States to stop this silly crap and imprison those who are even tangentially responsible.  All hail Emperor Mogambo!

Failing that, I assume that the angry mobs of poor people will demand, as their second-best option, that the USA return to a gold-standard money, or even gold-as-money as already required in the Constitution of The United States.

At least they should. And they surely would, if they had an inkling of what is happening to them, which they obviously don’t, because if they did, we would not be in this mess to start with.

And if they did know, they would be buying gold and silver, just as those who DO have an inkling of what is happening to them are doing, because, obviously in light of this and all of what history clearly shows, “Whee! This investing stuff is easy!”

The Best of Richard Daughty

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning, and other fine publications. Visit his website.

Copyright © 2017 Richard Daughty

Previous article by Richard Daughty: Are You Going To Be Goldman-Sachized?

https://www.lewrockwell.com/2017/04/richard-daughty/used-blissfully-naive/

The global elite are headed for a fall. And they don't even know it. - by Damon Linker

(To get some perspective, I include the comment by Vox Day as an introduction to this article by Damon Linker. – CL)

“Their parasite economy of finance-based ownership of real world property and produce rests entirely upon the false claims it generates upon the real economy. And all it takes to destroy the parasite economy is the mass refusal to recognize its claims, many of which are already known to be completely fictitious. See: the mortgage title scandal of 2008 onwards.

The parasite economy is already killing its host. It is like a drunken vampire who is too intoxicated to stop draining his victim. And once the host collapses, its component parts will turn on the parasites with a vengeance.

This isn't a failure of capitalism, this is a tripartite failure of usury, fraud, and fundamental morality. The Alt-Right Revolution cometh.”

http://voxday.blogspot.com/2017/04/ce-ne-sont-pas-leconomie.html

The global elite think they're sitting pretty. How wrong they are.

Democrats keep telling themselves that Hillary Clinton "really" won the 2016 election (or would have, had it not been for interference by Vladimir Putin and James Comey). Republicans keep patting themselves on the back about how much power they now wield at all levels of government. And centrists throughout the West are breathing a sigh of relief about Emmanuel Macron's likely victory over the National Front's Marine Le Pen in the second round of the French presidential election on May 7.

You can almost hear the sentiments echoing down the corridors of (political and economic) power on both sides of the Atlantic: "There's nothing to worry about. Everything's fine. No need for serious soul searching or changes of direction. Sure, populism's a nuisance. But we're keeping it at bay. We just need to stay the course, fiddle around the edges a little bit, and certainly not give an inch to the racists and xenophobes who keep making trouble. We know how the world works, and we can handle the necessary fine tuning of the meritocracy. We got this."

And why wouldn't they think this way? They are themselves the greatest beneficiaries of the global meritocracy — and that very fact serves to validate its worth. They live in or near urban centers that are booming with jobs in tech, finance, media, and other fields that draw on the expertise they acquired in their educations at the greatest universities in the world. They work hard and are rewarded with high salaries, frequent travel, nice cars, and cutting-edge gadgets. It's fun, anxious, thrilling — an intoxicating mix of brutal asceticism and ecstatic hedonism.

The problem is that growing numbers of people — here in America, in the U.K., in France, and beyond — don't see it like this at all. Or rather, they only see it from the outside, a position from which it looks very different. What they see is a system that is fundamentally unjust, rigged, and shot through with corruption and self-dealing.

They see Marissa Meyer, the CEO of Yahoo, taking home a cool $186 million in stock (on top of many millions in additional salary and bonuses) for five years of "largely unsuccessful" work.

They see Henrique De Castro, who worked briefly for Meyer at Yahoo, pulling $109 million in compensation for a disastrous 15 months on the job.

They see Roger Ailes and Bill O'Reilly getting fired from Fox News for sexually harassing a parade of women over the years — and taking home tens of millions of dollars each in severance.

They see former Democratic President Barack Obama sharing a $65 million book advance with his wife, earning $400,000 for a single speech scheduled to be delivered in the fall at investment bank Cantor Fitzgerald, and gallivanting around the globe with David Geffen, Bruce Springsteen, Tom Hanks, Oprah Winfrey, and Bono.

In Washington, they see a president who promised to act as the people's voice appointing a long list of millionaires and billionaires to top positions. They see the White House and Congress struggling to pass a health-care bill that will leave millions more without insurance coverage at a time when a majority of Americans and a plurality of Republicans favor a single-payer system that would cover all. They see a president proposing to drastically cut corporate and individual taxes (including the elimination of inheritance taxes, which will benefit only the richest of the rich) when polls show that the top frustration with the tax system is that corporations and the wealthy don't pay their fair share. They see a unified push to cut government programs at a moment when polls show a growing share of the public prefers bigger government.

To those on the center-left who are disgusted by the plutocratic antics of the Republican Party but dismiss the significance of Obama cashing in on his time in the White House by enriching himself and hobnobbing with the most famous people on the planet, I'd only note that "optics" (also known as "appearances") matter in politics — perhaps more than anything else.

And this is how things appear at this historical moment: The world is run by an international elite that lives in a rarified world of seemingly boundless power and luxury. Though the members of this elite consider their own power and luxury to be completely legitimate, it is not. It is the product of a system that's rigged to benefit them while everybody else languishes in declining small cities and provincial towns, eking out a dreary existence, toiling away their lives in menial service-sector jobs or scraping by on disability checks while seeking out a modicum of fleeting joy in the dumbstruck haze of a painkiller high.

Unless something fundamental changes, the gap separating these worlds will only increase, economically, culturally, and psychologically. Republicans show every sign of continuing to pursue policies that actively make the economic problems worse. Centrist Democrats, meanwhile, appear to be both unwilling to propose a sweeping critique of the outlook and policies that got us to this point in the first place and inclined to dismiss the populist anger building all around us as an expression of atavistic prejudice.

This cannot last. At this rate, make no mistake: The global elite will fall.

https://theweek.com/articles/694923/global-elite-are-headed-fall-dont-even-know

Of Two Minds - Housing's Echo Bubble Now Exceeds the 2006-07 Bubble Peak

If you need some evidence that the echo-bubble in housing is global, take a look at this chart of Sweden's housing bubble.

A funny thing often occurs after a mania-fueled asset bubble pops: an echo-bubble inflates a few years later, as monetary authorities and all the institutions that depend on rising asset valuations go all-in to reflate the crushed asset class.

Take a quick look at the Case-Shiller Home Price Index charts for San Francisco, Seattle and Portland, OR. Each now exceeds its previous Housing Bubble #1 peak:

Is an asset bubble merely in the eye of the beholder? This is what the multitudes of monetary authorities (central banks, realty industry analysts, etc.) are claiming: there's no bubble here, just a "normal market" in action.

This self-serving justification--a bubble isn't a bubble because we need soaring asset prices--ignores the tell-tale characteristics of bubbles. Even a cursory glance at these charts reveals various characteristics of bubbles: a steep, sustained lift-off, a defined peak, a sharp decline that retraces much or all of the bubble's rise, and a symmetrical duration of the time needed to inflate and deflate the bubble extremes.

It seems housing bubbles take about 5 to 6 years to reach their bubble peaks, and about half that time to retrace much or all of the gains.

Bubbles have a habit of overshooting on the downside when they finally burst. The Federal Reserve acted quickly in 2009-10 to re-inflate the housing bubble by lowering interest rates to near-zero and buying over $1 trillion of mortgage-backed securities.

When bubbles are followed by echo-bubbles, the bursting of the second bubble tends to signal the end of the speculative cycle in that asset class. There is no fundamental reason why housing could not round-trip to levels below the 2011 post-bubble #1 trough.

Consider the fundamentals of China's remarkable housing bubble. The consensus view is: sure, China's housing prices could fall modestly, but since Chinese households buy homes with cash or large down payments, this decline won't trigger a banking crisis like America's housing bubble did in 2008.

The problem isn't a banking crisis; it's a loss of household wealth, the reversal of the wealth effect and the decimation of local government budgets and the construction sector.

China is uniquely dependent on housing and real estate development. This makes it uniquely vulnerable to any slowdown in construction and sales of new housing.

About 15% of China's GDP is housing-related. This is extraordinarily high. In the 2003-08 housing bubble, housing's share of U.S. GDP barely cracked 5%.

Of even greater concern, local governments in China depend on land development sales for roughly 2/3 of their revenues. (These are not fee simple sales of land, but the sale of leasehold rights, as all land in China is owned by the state.)

There is no substitute source of revenue waiting in the wings should land sales and housing development grind to a halt. Local governments will lose a majority of their operating revenues, and there is no other source they can tap to replace this lost revenue.

Since China authorized private ownership of housing in the late 1990s, homeowners in China have only experienced rising prices and thus rising household wealth. The end of that "rising tide raises all ships" gravy train will dramatically alter China's household wealth and local government income.

If you need some evidence that the echo-bubble in housing is global, take a look at this chart of Sweden's housing bubble. Oops, did I say bubble? I meant "normal market in action."

Who is prepared for the inevitable bursting of the echo bubble in housing?Certainly not those who cling to the fantasy that there is no bubble in housing.

http://www.oftwominds.com/blogapr17/echo-bubble4-17.html?fullweb=1