We’ll get back to that in a second. First, our regular beat…

Markets went precisely nowhere yesterday. It was as if everyone agreed to stay home…or go fishing…or to become reacquainted with that strange person living in their house and sleeping in their bed. Among other things, investors are waiting to see what happens with Greece. We’ll save them some time. Nothing will happen. Nothing different, anyway. Here’s Bloomberg, with more news on the same old story:

Greek political leaders struck a deal on a package of austerity measures, clearing the way for a swap to cut the nation’s debt and win its second rescue in two years.

Greek Prime Minister Lucas Papademos called European Central Bank President Mario Draghi to tell him “an agreement has been reached,” Draghi said at a press conference today in Frankfurt. An announcement from Papademos’s office is expected shortly, a Greek government official who declined to be identified said today by telephone.

The accord came less than four hours before euro-region finance ministers hold an emergency meeting in Brussels to discuss the 130 billion-euro ($172 billion) lifeline and the swap that will impose a loss of about 70 percent for investors.

Oh, Papademos and Draghi said all’s well. An agreement has been reached. A deal was struck. Phew! We thought that…

…Wait, we’re trusting politicians now? Ex-Goldman Sachs politicians (in Draghi’s case), no less? When did that happen? These are people who couldn’t lie straight in bed. Everybody knows it. Notice, for instance, how these and various other furry-knuckled folk are no longer referred to as “politicians”? That word has been sullied. People have trouble even using it without nailing a “damned” or “thievin’” to the front of it. Now the papers, with embarrassing deference, refer to them as “political leaders.”

Let’s recap what we know about Greece and the euro-situation in general. For brevity’s sake, we’ll stick to its most recent — i.e. current — collapse only.

Back in May of 2010, five short months after receiving its first official credit downgrade, Greece was awarded a €110 billion 3-year “loan.” (We put that word in inverted commas just in case it mistakenly implies repayment.) And what happened? Did the government clean its act up? Did it cut expenses, as promised? Did the economy roar back to life? Of course not. Protesters had barely left their post in Syntagma square when it was time to return for more banner waving and foot stomping. By December that year, the yield on 10-year bonds had spiked to near then record highs over 11%.

Not to worry, said the Feds, who swept in with another €110 billion bailout plan…again negotiated under the strict condition that they rein in spending. But the horse had already bolted. Greece’s outstanding debt is now equal to roughly 160% of GDP. The gears have stalled. Official unemployment has reached over 20%. It’s worse for the youth. Much worse. Half of the nation’s under-24 population is without work. Growth has collapsed. Industrial output in December fell 11.3% from the year-earlier month.

Would you lend these people money? Would you lend these people your money? Only a fool would answer yes to the second question. Only a politician would answer yes to the first.

The Spartans are broke. They have been for a long time. And, as such, they will default. One way or another. All the handshaking, backslapping, hallway dealing, last minute brokering, politicking and brinkmanshipping won’t stop that. It’s just noise, playing like the soundtrack to a movie that’s already been written.

Not that the Greeks area lone sinners. The whole developed world is caught up in a debt funk. The collapse, when it arrives, is going to be truly epic. Which brings us back to our original thought: If you had the choice, would you live your life at any other time?

Take a look back through history. Most of it was a complete bore, save for the workaday melodramas played out in small, social soap operas. In fact, most of history existed before actual soap operas…and before soap…and before operas.

Sure, there were wars and plagues and the miserable collapse of empires. Currencies were debased and their masters beheaded. New lands were found and old cities forgotten. There were events that reshaped the course of history itself, delivering us the present day in which we live.

But mostly these things took many years, centuries even, to fully express themselves. Trends were slow…probably because there was nobody around to drive them. Mankind couldn’t even manage to gather a group of 1 billion people until 1811. How can you expect to get anything done when you’re still counting the global population in “millions?”

These days, contrary to the relative snoozefest of yesteryear, things happen. And when they do, they are fast…and loud…and on a scale that dwarfs any other in history.

Take economic output, for example. According to data compiled by The Economist, more than half (55%) of all the economic output generated over the past 2,000 years was generated in the 20th century. In other words, the last 100 years of the millennium produced more than the preceding 1,900. And this trend — along with the mushrooming population supporting it — is quickening. The first 10 years of this millennium account for roughly one-fifth of the total economic output achieved since BC ticked over to AD.

All this is just a fancy way of saying that big things are happening. Big booms. Big busts. Greece-, Europe-, US- and entire developed-word sized busts. And, lest we fail to mention it, a spectacle like no other in history.

Who would want to miss that?

Joel Bowman
for The Daily Reckoning

Watching the Greek Debt Episode of the Global Soap Opera originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

We’d prefer to invite you to a quieter place, Fellow Reckoner…somewhere we could talk in private. A speakeasy, perhaps. Somewhere off the radar. Alas, that’s becoming increasingly difficult.

In fact, according to recruitment propaganda handed out by the FBI and the Department of Justice to Internet cafe owners across the country, a person may be considered “suspicious” if they “are overly concerned about privacy” or if he/she “attempts to shield the screen from view of others.”

Other “Potential Indicators of Terrorist Activities Related to Internet Café,” according to this particular flyer, include, “paying with cash,” traveling an “illogical distance to use [the] Internet Café,” acting “nervous” or exhibiting “suspicious behavior inconsistent with activities.”

What constitutes an “illogical distance,” we wonder? Two miles? Five? Twenty? What about visiting a cafe while on vacation? Is that an “illogical distance” from a person’s home? Come to think of it, what does an “illogical distance” even mean? Negative three miles? Minus six miles? Moreover, how would one even know the distance a person traveled to email grandma or fill out online job applications? Should we be spying on them?

Well… Yes, say the Feds.

If a fellow citizen arouses your suspicion — based on what must surely be the vaguest criterion imaginable — the federal agencies encourage you to “be part of the solution.” How? Well, they’d like you to…

“Gather information about individuals without drawing attention to yourself. Identify license plates, vehicle description, names used, languages spoken, ethnicity, etc.”

They’d like to recruit you, in other words. Just imagine, a whole community of spooks, moles, informants, sleuths and…

Wait…who WOULDN’T be nervous in an Internet Café in the USA these days?

And that’s not all. The Fed’s cheerfully-titled “Communities Against Terrorism” flyer series identifies 25 “threat areas” where you might encounter suspicious persons. These include such notorious ne’er-do-well hangouts as:

• Dive/boat shops

• Martial arts centers/Paintball

• Hobby shops

• Farm supply stores

• Financial institutions

• Electronics stores

• Shopping malls

• Hotels/Motels and, just to be on the safe side,

• The General Public

In each of these “threat areas,” the Feds helpfully outline a suggested course of action for those who wish to be part of their “solution.” Again, snitching, spying and behavior generally bordering on paranoia and harassment seem to capture the general gist of it.

For example, if you are out and about in the “General Public” one weekend and you happen to notice “people over dressed for the weather,” the Feds would like you to embark on a snooping mission, maybe even involving following “Mr. Tight-Knit-Cashmere-Cardigan-on-a-Late-Summer-Day” to his car. And don’t be scant on the details. Explains the flyer:

“Providing a detailed description of persons or vehicles is imperative for a successful follow up by law enforcement personnel.”

We’ll come back to exactly what a “successful follow up” means in just a second, but before we get to that…

What to do if your suspected, inappropriate fiber for the season-wearing, possible perp-to-be notices that you are on their tail? And what if, after being stalked through a public place by someone they don’t know, this sketchy individual becomes nervous and departs quickly when you approach them?

Well, they’re only digging themselves deeper. According to the Potential Indicators of Terrorist Activities Related to the General Public flyer, “departing quickly when seen or approached” could be grounds for further suspicion. It says so right there, in the section helpfully titled, “What Should I Consider Suspicious?”

Also in this section: “Questions regarding sensitive information such as security procedures or systems,” “Vehicles that appear to be overloaded,” and, again, just to be safe, “People acting suspiciously.”

But back to the “successful follow up” for a second. What, exactly, would that look like? What sinister plots and stratagems might all this covert invigilation and spying on each other help foil?

We told you about the foiled plot to destroy America involving two British, twenty-something hipsters last week. Well, now there’s the case of telecommunications sales manager Saad Allami, a man who knows a thing or two about living in a…eh…“watchful” community.

Mr. Allami was arrested last month while picking up his 7 year-old son from school in Quebec. During the next 24 hours, while he was being detained, a team of police officers (heroes/patriots/national treasures) stormed Mr. Allami’s home, telling his wife she was “married to a terrorist.” Meanwhile, Mr. Allami’s colleagues, who were on their way to a conference in the Big Apple were also detained at the US border for hours due to their “connection” with Mr. Allami.

And what had Mr. Allami done to deserve this, the swift hand of justice? The Canadian Press provides the shocking details of his master plan:

On Jan. 21, 2011, Allami sent a text message to colleagues urging them to “blow away” the competition at a trade show in New York City.

According to Mr. Allami’s lawsuit, “The treatment of the plaintiff and his wife was cavalier, illegal, aggressive, accusatory, and in violation of their most fundamental rights.”

Exactly as you’d expect, in other words.

Like we said, we’d love to have spoken to you in private, away from the prying eyes and ears of Big Brother…and his thousands of officious little goose-stepping generals on the ground.

But, as you can see, we can’t. He is everywhere. He is everyone and anyone. We know he is listening. And now, so do you.

Act accordingly.

Joel Bowman
for The Daily Reckoning

Why Personal Privacy is Now Public Enemy #1 originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

One of the more striking features of this whole modern spectacle must surely be the stark contrast between the state and the free markets that exist stubbornly, gloriously, in spite of its best efforts. Wherever evidence presents itself, it appears to do so with the sole purpose of expressing this juxtaposition in ever-higher relief.

This is no mere coincidence, Fellow Reckoner. The two entities are day and night…white and black…truth and government statistic. To the extent that the former exists, the latter does not. One produces; the other consumes. One adds value and meaning to peoples’ lives; the other subtracts value and feeds on the self-worth of those it engulfs. One is dynamic, responsive, nimble and creative; the other is brittle, deaf, lethargic and breathtakingly inelegant in all its forms. One serves customers, the other serves sentences.

It might well be said that, while the free market bends over backwards to serve the needs and desires of individuals, the state merely bends individuals over backwards.

The latest battle between these diametrically opposed nemeses is today being played out in the theater of intellectual property rights. Thanks to shared, copied articles, you’ve no doubt read all about it here and elsewhere. (In addition to some excellent commentary in these very pages, we would further refer interested Reckoners to this piece, penned by Mr. Stephan Kinsella, a man many consider the libertarian expert on this most important subject).

To be sure, the IP skirmish is just one of many such political hot spots, but it may well be one of the most important.

Free individuals’ ability to copy and learn from each other (without denying anyone else a single atom of realized, tangible or even “ownable” property in the process) is an important — arguably vital — tool in our ongoing struggle against the oppression of the state. It is an advantage, in other words, of immeasurable importance and one we surrender at our peril.

To illustrate the point, here is an excerpt from an excellent article by Kevin Carson that appeared on the Center for a Stateless Society website earlier this week:

Because local nodes in self-organized networks are free to take action or innovate without waiting for permission from an administrative apparatus, and every other node in the network is similarly free to learn by example and adopt the innovations without permission, they fully exploit agility advantages of networked communications in ways that authoritarian hierarchies are unequipped to.

[And here is a link to the full article, which we are happy to share with you without permission from the author, in case you’re interested: Why the State Will Fail.]

By larding itself with bureaucracy, inefficiency and structural rigidity — all designed to serve the privileged, politically-connected looter class working the machine behind the curtain — the state positions itself at a considerable disadvantage with respect to the free markets — the self-organized networks — that it seeks to crush.

Happily, we don’t have to follow this path by subscribing to the state’s sinister web of dysphemisms and doublespeak. We can, instead, reject its definition of sharing and learning and emulating as “pirating,” and as something, therefore, to be outlawed. We can likewise reject the state’s logically-circular notion that ideas — non-scarce, un-ownable patterns of knowledge — ought to enjoy violence-backed protection against “aggression”…from a violence-based institution that exists only because of aggression.

Most private citizens would have the decency to feel embarrassed if they had to defend this warped sort of logic. The state, on the other hand, revels in its position…but only because it doesn’t have to defend it. It simply claims the right to enforce it. A big difference, you’ll surely agree.

But here, too, the state’s designs to undo all that humanity has come to enjoy as a result of said copying, emulating and learning from each other comes unstuck. How, exactly, does one grant — much less enforce — an unnatural monopoly on intangible, infinitely reproducible concepts? How does one erect a protective circle around things that have no physical properties?

The state’s strategic efforts (SOPA, PIPA, ACTA and the like) to crack down on the spread of ideas ultimately amount to little more than a woeful, modern day adaptation of the mystical dream snare. Fortunately for us, ideas (and dreams) cannot simply be “caught” in a net…just as they won’t be caught on the net. The brave individuals who daily resist this tyranny ingeniously find workarounds to the state’s feeble-minded aggressions. And bravo to them!

Continues Mr. Carson:

We saw this recently with the development of Firefox’s DeSopa circumvention utility before SOPA even came up for a vote, and Anonymous’s massive same-day DDOS attack in response to a federal takedown of MegaUpload that had been months in the planning. Last summer Tor developers released a workaround the very same day Iranian authorities thought they’d shut down the encrypted router network.

The second the state constructs a wall, 2…4…8…10,000 copies of the very idea it was built to contain emerge on the other side. They are like ornery little neutrinos, seemingly popping in and out of existence as if only to mock the government’s Neanderthalic, cinder block goals.

Fortunately for us, good ideas don’t need or seek protection, nor do they exist to serve any one master. They are non-scarce entities and, as such, are here to serve us all.

On that last note, if you would like to share, copy or “pirate” any article you see appear in The Daily Reckoning, we’re making it as easy as possible. You can:

1) Go to our website and forward the link to your favorite articles to friends or,
2) Find and “like” us on Facebook, where you can share our articles or,
3) Do likewise by following us on Twitter.

As the author Paulo Coelho recently wrote in a fantastic blog post (which you are free to read here):

“Pirates of the world, unite and pirate everything I’ve ever written!”

Joel Bowman
for The Daily Reckoning

How Piracy Works Against an Unnatural Monopoly originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

If you’re planning a vacation to the United States of America in the foreseeable future, you would do well to refrain from employing any confusing colloquialisms in your social media updates prior to departure.

For Australians, that means no “cracking onto” members of the opposite sex…no getting “off one’s face”…no “tearing it up”…no “little rippers” and, we would think, no “barrakking” for anyone.

Our Irish friends will likewise wish to steer clear of referring to anything as “the gas,” from declaring intentions to “eat one’s head off” and from “throwing shapes,” “sucking diesel” or otherwise “effin’ and blindin’.”

We can only imagine to what extent our English Reckoners shall have to curb their delightfully colorful lingo to ensure a stateside journey (even relatively) free of let or hindrance at the gate, though we imagine no measure of self-censorship will be sufficient to guarantee a transit experience free of at least a touch of “Ye ol’ Liberty Grope.”

What’s all this caper then, eh? What’s the apple, the score, the bleedin’ apple core?

Apologies for the loose linguistics, weary reader. But a point begs its making; a point two British (would-be) tourists, Leigh Van Bryan and Emily Bunting, discovered the hard way just last week.

Apparently rather chuffed at the upcoming prospect of a wee jaunt over the pond, Van Bryan and Bunting engaged in a bit of online banter before their big trip to the US. Mistake number one. The two were perhaps unaware that the Department of Homeland Security routinely trolls the global social media digital waves, setting up accounts to listen in on prospective threats to…um…the “Homeland.”

We can only imagine the hysterical frenzy that whipped around the DHS H.Q. when they discovered what Van Bryan, 26, had posted.

“Free this week for a quick gossip/prep before I go and destroy America x”

Not that it should matter, but “destroy” is popular English slang for “party”…an easily Googlable fact, one would think, for the highly skilled heroes manning the control tower at the Twitter and Facebook Counter Terrorism and Special Operations Unit for Liberty and Freedom of the Homeland… Patriot… Liberty… uh, never mind.

After making their way through passport control at Los Angeles International Airport (LAX) last week, the pair were promptly detained by armed guards/heroes/patriots. But the real trouble was still to come.

The two were then informed that the DHS was on to their scheme to “destroy” (read: party in) America and (Could it be? No! Sweet Mother of Mercy!) their sick and twisted plot to dig up the grave of Marilyn Monroe!

“3 weeks today, we’re totally in LA p****** people off on Hollywood Blvd and diggin’ Marilyn Monroe up!”

The pair explained that the tweet, which the DHS had considered a grave matter of national security was, actually, a reference from Family Guy, a popular television show produced in the Homeland itself…behind patriot lines!

“They asked why we wanted to destroy America and we tried to explain it meant to get trashed and party,” explained Bunting. “I almost burst out laughing when they asked me if I was going to be Leigh’s lookout while he dug up Marilyn Monroe. I couldn’t believe it because it was a quote from the comedy Family Guy which is an American show.”

Department of Homeland Security staff, brave unwavering professionals as they are, were not deterred from their mission.

“It got even more ridiculous because the officials searched our suitcases and said they were looking for spades and shovels. They did a full body search on me too” explained Bunting.

Perhaps because grave-robbing spades and shovels have little to do with (most people’s idea of) partying, the DHS were unable to find any in the pair’s luggage or, strangely enough, on their person. Nevertheless, this was no time to take chances:

“I kept saying to them they had got the wrong meaning from my tweet but they just told me ‘you’ve really f***** up with that tweet boy’.”

Van Bryan, apparently thought to be the leader of the non-existent operation, was then cuffed, thrown in a cage inside a van and whisked away to a location where he could not be of harm to Homeland citizens.

Recounted the suspect:

“When we arrived at the prison [ed.: prison!] I was shoved in a cell on my own but after an hour two huge Mexican men covered in tattoos came in and started asking me who I was… They told me they’d been arrested for taking cocaine over the border… When the food arrived on the tray they took it all and just left me with a carton of apple juice.”

After 12 hours in custody, the pair were returned to the airport where they were sent directly home…charge sheets in hand.

Emily “The Lookout” Bunting’s charge sheet stated: “It is believed that you are travelling with Leigh-Van Bryan who possibly has the intentions of coming to the United States to commit crimes.”

“Possibly has the intentions”? We can almost hear Special Twitter Task Force Agent Johnston saying, “That’s as good as a thought crime to me!”

Added the charge sheet of one Leigh “Happy Birthday Mr. President” Van Bryan:

“He had posted on his Tweeter website account that he was coming to the United States to dig up the grave of Marilyn Monroe. Also on his tweeter account Mr. Bryan posted that he was coming to destroy America.”

We’re not quite sure what a “Tweeter account” is, but you can be sure the vigilant servicemen and women at the DHS are on the case. Thank goodness the pair didn’t use the “we were only taking the Mickey” defense. Could you imagine the costs and hassle involved in having to put Disneyland on high security lockdown? We shudder to think.

So, to our International Reckoners, remember to travel safely both to and from the Homeland. And please, feel free to pass our public service announcement on.

Joel Bowman
for The Daily Reckoning

Lost in Translation: An Important Note for International Reckoners originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

US GDP grew at an annualized rate of 1.7% for 2011.

Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement?

What, if anything, does it really say?

Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter.

Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:

“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”

But let us imagine for a moment that there was such thing as an economy independent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading…or the payroll numbers of Census employees that pumped up 2010’s read.

According to the first example, the more goods that get destroyed prematurely…the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks…the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?

Sure, nobody would have a roof…but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade!

But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories.

We’re in the mood for some good news today…something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week:

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone.

To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young…and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days.

The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation.

As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct…but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week… If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.

“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.

“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”

Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under…‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”

Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to be among them if you don’t want your own pockets picked.

But then, what kind of horrible fate is that…where one becomes the very evil they despise in order to protect themselves from it?

Hmmm…we don’t know. Try writing your congressman. He surely will.

Joel Bowman
for The Daily Reckoning

Tax Laws, Corruption and Other Reasons to Expatriate originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Dow up by 80-something points. A barrel of the world’s currently-preferred energy sits pretty at $100, on the nose. Nothing much, in other words.

Ooh…but here’s something: “Gold extends post-Fed rally to 6-week high.” MarketWatch has the story…

Gold prices climbed Thursday to levels last seen in early December, extending a rally triggered as the Federal Reserve pledged to hold US interest rates near zero until the end of 2014.

Gold for February delivery, having risen almost $25 yesterday on the news, now fetches $1,725 an ounce. And this, just when investors had begun to abandon the barbarous relic, to question its motives. But that was their mistake. Gold may go up. It may go down. But it has no motives. It is no man’s liability. Instead, it simply holds a mirror up to its government-issued competition. It is, itself, just a dumb lump of metal. But even so…it frequently appears the brighter, smarter choice — in relative terms — to the buffoons in the mirror.

Should we be surprised?

So Mr. Bernanke is fiddling the levers again, promising to keep rates lower than a sea snake’s belly until 2014. He might have just taken out an ad in the front page of the paper:

“Fed to Savers: Go to Hell!”

America’s #1 central banker may well be highly intelligent…but that does not preclude him from also being a dunce. Probably, it depends on the subject at hand. Maybe he’s a talented cowboy, for example. Or perhaps he is a whizz at the Times’ crossword. Either way, we wish he’d dedicate more of his time to words and herds because, as a central banker, he’s either a fool, a knave…or both.

This is a man, let us not forget, who proclaimed…

• In 2005, on the question of a speculative bubble building in housing as a result of cheap credit, that “these price increases largely reflect strong economic fundamentals.”

• In 2007, as the market started to turn, “we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”

• In January of 2008, two months before the nationalization of GSEs Fannie Mae and Freddie Mac, “They will make it through the storm.”

• And in June of 2009 that, “The Federal Reserve will not monetize the debt.”

And now, despite all evidence to the contrary, Mr. Bernanke thinks he can pull the economy out of the very mess into which he helped to steer it. He thinks he can deliver prosperity to a nation by punishing savers and inducing malinvestment — gross capital misallocation — on a scale so grand that die-hard proponents of Social (In)Security must be starting to blush.

Bernanke’s commitment to holding interest rates “exceptionally low” for an “extended period,” reeks of exactly the kind of insanity required to double down on a bad bet, of repeating the same experiment and expecting a different result. Combined with his “relapse into QE3, Euro-style,” which Eric Fry highlighted in yesterday’s issue “Gentlemen, Start Your Printing Presses!”, dollar-holders (and metal holders) ought to expect more of the same.

Critics, amazingly enough, still wonder when the man will ever learn. Never, is our guess. For one thing, his incentive for denial is simply too great. What do we mean by that? Glad you asked…

Imagine someone’s whole existence, his entire life’s work, is somehow built on a false grasp of reality, a radically skewed first principle. Imagine, for example, he is an internationally respected professor of alchemy. Or a world renowned proponent of the “stalk theory” of conception. Or…a central banker who believes he can know the impossible…the minds, the desires and the needs, of the millions who make up the market over which he imagines himself to lord.

For a while, luck, coincidence and the arc of history appear to be on his side. As his life goes along, our hapless hero is awarded greater and greater accolades for his misbegotten theories and crackpot ideas. He is gifted the highest seat in the land. The adoration of friends and peers. TIME Magazine’s “Man of the Year.” Eventually, he comes to believe in the delusion he has created. It becomes his reason for being, his raison d’etre. Deeper and deeper he becomes convinced in his own ability to perform the impossible.

One can see that our hero, sadly mistaken as he is, has every incentive to deny reality when (especially when) it is presented to him facts and all. Tell the alchemist he cannot alter the properties of led and his world, as he knows it, as it comforts him at night, begins to crumble. Likewise for our birdbrained OBGYN.

So let the evidence against Mr. Bernanke’s understanding of reality mount. As it will continue to do. We don’t imagine this man, whose entire reputation, whose entire career, rests on a false reality, is going to suddenly about-face anytime soon. He has every incentive to deny the facts, to look the other way.

Of course, it’s easy to deny reality. Not so easy, as Ayn Rand once quipped, to deny the consequences of denying reality. They will come due soon enough, Fellow Reckoner…and then, as Bill Bonner likes to say, all the Fed’s horses and all Obama’s men won’t be able to put Mr. Bernanke’s economy back together…ever again.

Joel Bowman
for The Daily Reckoning

How Ben Bernanke Rationalizes “Exceptionally Low” Interest Rates originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

How their hands do tremble. How their voices quiver, knowing that a second of free expression might cost the author his life. How shall we ever find our way home again, to the land of the free?

We awoke with a start. A dystopic vision had crept into our peaceful, evening reverie. We had dozed off somewhere over the Rio del Plata, on our return to Buenos Aires from Punta del Este. The distasteful images — the jackboot thuds, the stale smoke of a dimly-lit bar, the vague but unmistakable sense of fear, of dread — lingered a bit longer in our sleep-fogged head. Better order some more of that cheap wine, we thought, reaching for our newspaper.

What is happening in the world, Fellow Reckoner? The age of secrecy, of spooks and goons, of disappearing enemies and suspicion among friends, is bearing down on us. The lessons of history were cast on stony ground, it seems, left to whither in the ignorance of night.

Barely a day goes by when we don’t read of some new encroachment on our freedoms. Last week it was the freedom to share information online. The L.A. Times relayed the details:

“After receiving indictments from a grand jury in Virginia for racketeering conspiracy, conspiracy to commit copyright infringement and other charges on Jan. 5, federal authorities on Thursday arrested four people and executed more than 20 search warrants in the U.S. and eight foreign countries, seizing 18 domain names and an estimated $50 million in assets, including servers run in Virginia and Washington, D.C.”

The four men were arrested in New Zealand, with, presumably, the collusion of the New Zealand government. The arm of the Empire is indeed long. So what did these individuals, who face a maximum prison sentence of 55 years each if convicted, do, exactly? They hosted a website, megaupload.com, that allowed for digital file sharing. In other words, they built the ultimate mixed-tape swap meet where individuals — millions of them — could gather to share media files.

Now, one might assume that artists would want their music distributed, to have their artwork seen and heard by as many eyes and ears as possible. Correct. In fact, that was exactly what megaupload — a website owned and operated by recording artists — was trying to accomplish. Explained Jeffrey Tucker in the Weekend Edition:

“[T]he trendline with Megaupload was clearly toward using the space to launch new artists with new content: not piracy but creativity. As Wired.uk wrote, this crackdown came shortly after Megaupload announced music producer Swizz Beatz — married to Alicia Keys — as their CEO. They had rallied a whole host of musicians including Will.i.am, P Diddy, Kanye West and Jamie Foxx to endorse the cloud locker service. Megaupload was building a legitimate system for artists to make money and fans to get content.”

Are you connecting the dots here, Fellow Reckoner? Let’s see…an old, entrenched industry with political clout (and a distinct lack of actual artists) hires the arm of the state to ride roughshod over a new, innovative competitor with a superior distribution model…a model actually endorsed by artists. It’s a classic case of parasites affecting to serve their host. And it doesn’t stop there.

In almost every facet of modern life, those privileged few, who were ostensibly appointed to “serve and protect,” have stolen into a role of bullying and intimidation.

Consider the Transport and Security Administration, for example, one of the most glaringly obvious examples of nefarious mission creep.

“We are your neighbors, friends and relatives,” declares their website, invoking an ominous Big Brother tone. The TSA was founded, again according to the agency’s website, “to protect the nation’s transportation systems so you and your family can travel safely.” Bare that in mind next time one of the 50,000 spooks is gate-raping you at the airport. Rand Paul, to his credit, refused this humiliating procedure just today on his way to Washington D.C. The Kentucky Senator was, of course, detained for daring to refuse the mandatory invasion.

We are reminded, constantly, of Orwell’s Newspeak Dictionary, in particular the reference to what the author calls “blackwhite.” Orwell described it as “…loyal willingness to say black is white when party discipline demands this. It also means the ability to believe that black is white, and more, to know black is white, and forget that one has ever believed the contrary.”

The obedient citizen will therefore recognize a department bent of launching massive, undeclared military offensives against nations afar as the Department of Defense. He will learn to refer to the department that invades his personal privacy and security as the Department of Homeland Security. He will come to know the department that claims the right to kidnap him from his place of business for helping people around the world share information as the Department of Justice. He will call the theft of his property and that of his fellow workers Internal Revenue. He will consider it his civic duty to surrender this property…and when he notices one among his group who does not pay, he will dutifully, with a sense of pride, notify the appropriate authority. He will salute soldiers who kill people he has never met, in places he has never been, as heroes. And when he sees something, you can be sure he will say something.

Eventually, before the citizen knows it, he will have become everything his state wants him to be. When black is white, and he knows it to be so, he will finally be a patriot.

Joel Bowman
for The Daily Reckoning

Knowing Your Role as an Obedient Citizen originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

“…it was the age of wisdom, it was the age of foolishness…”
    ~ C. Dickens, 1859.

When we hear people talk about the “tale of two economies,” we expect to find them referring to the Wall Street vs. Main Street match up. An important one, to be sure. Or maybe they’re comparing the economies of two different countries or regions; one healthy, the other moribund. The “developed vs. developing” comparison, for example, is a common one. Or maybe it’s private vs. public, that raging debate between the forces of capitalistic enterprise and socialistic control. The main problem with the latter being, as history has shown, that you eventually run out of the former.

All of these are, in their own context, worthy topics for discussion. We’ve visited them many times before in these very pages, and will likely do so again.

But what about the economy nobody talks about? That giant, $10 trillion economy currently employing half of all the workers in the world? It’s unregulated, unlicensed, untaxed and, largely, unnoticed by the mainstream press. We touched on this earlier in the week. More below…but first, the markets…

Investors would have done well to go fishing yesterday. Stocks were flat as a mill pond, ending the session more or less where they began. The major indexes in the U.S. are sitting pretty around a 5-month high. As Fellow Reckoners know, the world has been saved by central bankers, politicians and Ivy League geniuses. In the frightful days of 2008, we were told the global economy was teetering on the “edge of the abyss.” If we didn’t let these brave men and women do “whatever is necessary,” we…gulp… “might not have an economy in the morning.” Luckily, the aforementioned heroes and heroines filled in that abyss with trillions of dollars worth of paper money. So we’re all good. Nothing to worry about there. Hmm…

Alrighty then, moving on…

Gold, like stocks, barely budged yesterday. Last we looked, an ounce traded for roughly 1,640 government-issued, $1 I.O.U.s. As usual, we favor trading the government’s liability notes for the Midas metal, which, contrarily, represents the liability of no man (or thieving, politicking collection thereof).

Crude oil, meanwhile, lost about a buck a barrel. Nothing major in the news between Iran and the U.S. crossed our desk, not that we were looking very closely. No, the war drums were apparently between beats yesterday. If the whole spat fizzles out tomorrow (doubtful), we expect prices to continue tracing a long, steady path higher in accordance with unfolding supply/demand dynamics. But if the Strait of Hormuz gets choked off by a sudden burst of chest-thumping misadventurism (from either side), we won’t be expecting a miraculous, military-issued Heimlich Maneuver to restore vital supply lines overnight. Prices will likely skyrocket.

So that’s what’s up with the “seen” market. Now back to the “unseen,” the market Robert Neuwirth, author of the book Stealth of Nations: The Global Rise of the Informal Economy, refers to as “System D.” (We provided a brief intro to this in Tuesday’s column.)

In a non regulation-sized nutshell, System D refers to the world’s unregulated, non state-sanctioned economy. And it is, in many ways, where the real action is. One of our Fellow Reckoners, responding to the above introduction, offered the following observations:

“Subcontractors work for cash. This lessens taxes, workmen’s comp, insurance, and withholding costs. Many shops run cash sales without sales taxes, like camera shops at the wharves in San Francisco. Farmers’ markets sell food without overhead or taxes. This will all be increasing geometrically…”

To be sure, this is the real wild west. A kind of frontier market where innovation flourishes and the natural, evolutionary forces of creative destruction are left to sheriff the town, themselves ungoverned by the arbitrary whim of world-improvers and their insufferable ilk. As such, the system is not without its failures. But nor is it without allure. Continues our reader:

“More and more people will be tempted to take the risk of government action against them, because it is better than starving, and the more people who work outside the system, the harder it will be for the government to force compliance with the myriad regulations and taxes which are a barrier to entry.”

Seems a valid point to us. Think of how much more competitive individuals working in the area between the Atlantic and the Pacific Oceans (say) would be if they were allowed to conduct business with whomsoever they wished and on their own, mutually agreed-upon terms. Millions of job-seekers could be put to work immediately. The state-sponsored unemployment problem would disappear overnight. It’s not as if there is no work to be done, after all.

This line of thinking begs the obvious question: if one could voluntarily contract work between two or more willing individuals, why involve the government at all? This is the basic concept behind System D. The state, as we know, is nothing but the ultimate, glorified middle man. And costly, too! For the benefit of having this “silent partner” – who, by the way, contributes absolutely zip to the start up of your business, neither in time, nor capital, nor to the ongoing production of it – you will be charged roughly half of your total profits. Moreover, you will be expected to act as the unpaid accountant and tax collector for this partner, who demands that you withhold wages from your employees so that it may confiscate them later. Who would voluntarily agree to such demeaning, demoralizing deal?

As it turns out, the state itself knows exactly how many people would “opt” for its services if actually given the freedom to choose. How do we know this? The actions of the state tell us so, and clearly. If you know somebody wants to do business with you, if you are confident you are offering a valuable good or service at a competitive price, do you hold a gun to your potential customer’s head? Of course not. But that’s exactly what the state does when “offering” its “services.” It says, without apology:

You will use our currency, and no other, or we will label you a “domestic terrorist” and throw you in jail. You will carry our identifying documents, and no others, or we will not permit you to leave these boundaries (as defined by our wars with other states). You will surrender a certain portion of your private property to us annually, or we will lock you up. And if you try to escape our cage, you will be shot.

Does that sound like a confident businessman striving to provide the best service for his customers? Hardly. This is more like the behaviour of a jealous, insecure megalomaniac. As far as “silent” partners go, the state is more screaming, bellowing psychopath than hands-off onlooker. And, we hasten to add, it is armed to the teeth.

All in all, it’s a nasty affair this statism. Which is why System D is so very appealing for the millions of individuals who, despite the threat of the state and its various means of violence and coercion, decide to do business without its foul, unwanted blessing anyway.

Now, before readers disparage the “black market scourge” as merely a bunch of crims, cons and bloodsucking shysters lurking on in the shadows of civil society, allow us to consider the true nature of its participants. They could be anyone from a 4-year old lemonade vendor who decides to set up camp on mom and dad’s front lawn without the necessary government permit, to a peer-2-peer cyber crypto-currency currently enabling millions of dollars worth of transactions between freely-associating individuals around the world. And any of the brave, freedom-loving individuals in between. Simply, it consists of people who don’t hold guns to other people’s heads in order to conduct business with them.

Besides all that, if its crims, cons and bloodsucking shysters that are cause for concern, one need look no further than Washington D.C. and the various capital cities around the world where the rest of the guns-for-hire reside in taxpayer-provided comfort and leisure.

To furnish but one recent example: In the “Land of the Free, Home of the Brave”, a Nobel Peace Prize-winning president and the “Leader of the Free World,” who also happens to be an expert in constitutional law and who spent a dozen years lecturing on the subject at the University of Chicago Law School, signed into law the National Defense Authorization Act, thereby granting himself – and future presidents – permission to incarcerate, indefinitely and without their recourse to counsel, trial or due process, any American citizen he or she deems, unilaterally, to be in need of detention…Great Writ be damned.

In a deafening act of bi-partisanship, the bill arrived on the president’s desk as passed by a “deeply divided” Congress…with overwhelming majorities in both the House and the Senate.

Arguing that free markets won’t work because there will still exist exactly the kind of morally bankrupt persons currently enjoying institutionalized positions of power is circular logic at its finest. Free markets don’t promise to get rid of these worms. They just promise not to provide an unchallengeable framework through which they may be promoted to the highest seats in the land…then gifted your tax slave number in the one hand and the nuclear codes in the other.

Markets Seen and Unseen originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

It’s all happening today, Fellow Reckoner. Gold, stocks, oil…all have rallied to important highs. That’s what the papers say anyway, so it must be true.

Gold has “reclaimed the rally,” reported one outfit. The Midas Metal was trading for around $1,634 an ounce last we checked, up $24 in as many hours.

The S&P 500 is likewise north of where it began the session. The index rose 1% to a 5-month high on what Wall Street determined were solid earnings. We didn’t bother looking at the actual reports. Stocks go up because more people buy them than sell them. Those people may be right, or they may be wrong. The future will reveal this information in its own sweet time, of course…but news reports are necessarily wedded to the past and, as such, don’t tell us anything about the future. We’ll have to wait and see how things shake out. Today, they’re up.

Oil near $103 per barrel is important too. We would expect escalating tensions between the U.S. and Iran to express themselves in similarly escalating prices. But it isn’t only geopolitical fissures driving the price of the world’s preferred energy. Basic supply and demand fundamentals led Steve Belmont, Senior Market Strategist for the RMB Group, to declare that, “Crude oil may not only be the best commodity play for 2012, it could prove to be the best commodity play of the next three to four years.” Mr. Belmont offered some pretty compelling reasons for his call in yesterday’s issue of your Daily Reckoning (which you can read here).

So there you have it. Everything up…up…and away! That’s what’s going on in the known world. It’s right there in the papers. But what about the unknown world…perhaps better described as the under-known world? We eluded to this mysterious marketplace yesterday.

Actually, it’s not really so mysterious. Not for half of the world’s working population who today find themselves in its employ, anyway. We’re referring to that delicious bastion of creativity and unbridled innovation sometimes known as “System D.” Robert Neuwirth, author of the book Stealth of Nations: The Global Rise of the Informal Economy, coined the term to describe the world’s collection of off-book street markets. It’s a kind of “global street market,” or, if you prefer, one of the only truly free markets left on the planet.

“System D is a slang phrase pirated from French-speaking Africa and the Caribbean,” explained Mr. Neuwirth in an article for Foreign Policy magazine. “The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of ‘l’economie de la débrouillardise.’”

Mr. Neuwirth, who wisely abbreviated the phrase to “System D,” estimates the size of the off-book global economy to be roughly $10 trillion anually, although he stresses that this calculation is “very rough and almost certainly on the low side.”

It is important to note here that Mr. Neuwirth does not include activities such as gun running, drug or human trafficking or “things like that” in this calculation. Bascially, System D refers to the “ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.”

All in, this admittedly conservative estimate figures the total System D economy at about two-thirds the size of the world’s largest economy, the U.S., with an output roughly 40% higher than that of China. Now accounting for roughly half of all jobs in the world, System D’s share of the global workforce is expected to increase to two in every three jobs by 2020. It’s growing. Fast.

Is this really surprising, Fellow Reckoner? The various nation states of the world, in the final throes of a deadly debt spiral and facing imminent paper currency crises as a result, are erecting all manner of regulatory hurdles in order to protect certain, mollycoddled industries from the evolutionary forces of market capitalism. This, we wager, will not end well for them.

We touched on this in yesterday’s issue. In all likelihood, the U.S., Europe and Japan will never make good on their debt obligations. These three economies count for roughly half the world’s “official” GDP (spurious measure that it is). The U.S., we mentioned, just past the 100% debt-to-GDP threshold. Peripheral states lining Europe are there already. Japan’s debt-to-GDP levels sit at more than double that of the U.S. Good luck with that.

The decay of the nation state has been a while in the making, like a slow, gangrenous rot attacking the vital organs of a once productive economic model. Fellow Reckoners are well-versed in our “march of the zombies” theme. Bill Bonner writes frequently in these pages about their relentless infestation…in health care, insurance, education, financial services and, the mother of all zombies, the murderous military industrial complex.

Thankfully, these are pillars of a dying economic model. They are the life-sucking parasites, the favored class and the politically connected, yes. But they have cause to be fearful, too. They are part of a dying experiment. We doubt the malevolved cupcake Nazis in the TSA security line know it…but we have a hunch the higher ups are starting to get a little nervous. Surely they can smell the blood on the guillotine by now, just as their ancestors once did. Their days of looting with impunity are coming to a close.

The growth of System D is something entirely consistent with a global trend this editor expects to accelerate in the coming years – that of increased geopolitical and economic decentralization prompted by a continued weakening of the overly-indebted, outmoded nation state model. In other words, as the edifice of the nation state continues to crumble under massive debt loads and the political impotence to do anything meaningful about it, more and more people will look to the unregulated System D markets of the world for both employment and, increasingly, investment opportunities.

We’re interested in stories of freedom, Fellow Reckoner, and System D is full of them. Untaxed, unregulated, unlicensed individuals trading freely with one and other and with little or no regard for those that would tell them, “No!” Stay tuned

System D is for Free originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Perhaps it was a subconscious effort on our part to avoid the great disappointment in the life of one John Maynard Keynes. It is said that the (in)famous economist and investor remarked on his deathbed, “my only regret in life is that I didn’t drink enough Champagne.” An admirable lament, to be sure…and a clear lesson for the rest of us. Let us therefore resolve not to repeat the mistakes of Mr. Keynes, neither by the over consumption of his economic theories nor through the negligent under consumption of bubbly libations.

New Year’s resolutions now out of the way, we are left wondering what to make of this coming stretch in front of us. It’s the beginning of a new chapter in our Gregorian calendar…and, we’ve heard, the beginning of the last chapter of the Mayan calendar. What will the year bring us? To another New Year’s Eve party…or to the destruction of heaven and earth and everything in it? And how best are we to make use of the intervening time?

Instead of losing ourselves in the increasingly granular interplay between the world’s governments and the markets they affect to save and to serve, we are going to take a step back today, to start from the beginning. Forests are so often lost in trees, after all, the majesty and grandeur of the universe ignored for a single star.

On many of life’s big questions, we remain firmly, surely, absolutely and positively in the agnostic camp. Only the degree of agnosticism varies. With such a long and celebrated list of mistakes behind us, how can we be totally sure of anything? An example: The world was considered flat for a very long time before it was “discovered” to be round. And even then people weren’t sufficiently sure — or able — to put their sailing vessels where their brave hypotheses dared to venture. Hellenistic astronomy established the spherical shape of the earth as a physical given around the 3rd century BC. Not for another 1800 years, give or take, did Juan Sebastian Elcano’s circumnavigation (1519-1521) “prove” it beyond reasonable doubt. We expect that the flat earthers were pretty sure of their position. Maybe as sure as we all are about the “sphereness” of the earth today.

Moreover, agnosticism needn’t confine itself to earthly matters alone. We have the heavens to wonder about too, and the complex arrangement of the many workings therein.

Recently, as in this past September recently, the central tenet of modern physics itself was called into question. Until a bunch of skeptics got together to reckon on the nature of things and how they work, it was thought that nothing in our known universe could travel faster than the speed of light, 299,792 km/s (186,282 miles per second), not even — as the term implies — light itself. That barrier was thought to be a kind of celestial speed limit, the “c” constant in Einstein’s E = mc2.

An article in Universe Today reported the story back on September 22, the day the speed limit was said to have been bettered:

An international team of scientists at the Gran Sasso research facility outside of Rome announced today that they have clocked neutrinos traveling faster than the speed of light. The neutrinos, subatomic particles with very little mass, were contained within beams emitted from CERN 730 km (500 miles) away in Switzerland. Over a period of three years, 15,000 neutrino beams were fired from CERN at special detectors located deep underground at Gran Sasso. Where light would have made the trip in 2.4 thousandths of a second, the neutrinos made it there 60 nanoseconds faster — that’s 60 billionths of a second — a tiny difference to us but a huge difference to particle physicists!

You see what happens when you begin pulling on a thread, Fellow Reckoner? Yank it for long enough and, before you know it, the fabric of the entire “known” universe unravels like a scarf knitted from spaghetti.

You remember what happened when people began pulling on similar threads last year, don’t you? Individuals began to question the nature of the world around them, particularly their political world. It began, as you’ll recall, in the tiny North African nation of Tunisia…

Mohamed Bouaziz probably wasn’t looking for his government to honor him with a postage stamp when he self-immolated in December of 2010, an act that would eventually end his life, the final stretch of which he spent in a coma, in the early days of January, 2011. The 26-year old street vendor was protesting the harassment and humiliation inflicted on him by local municipal officials and their confiscation of his wares. Leave it to the government to hijack a tragedy prompted by their own insidious meddling for the purpose of aggrandizing the state.

This lamentable irony notwithstanding, Mr. Bouaziz’s act set the stage for perhaps the most widespread social upheaval in the region in modern times. Beginning in Bouaziz’s home country of Tunisia, revolutions — largely of the open source variety — spread south and east through Libya and Egypt, where, with the overthrows of Muammar Gaddafi and Hosni Mubarak, a combined half century of brutal, US-backed, dictatorship was ended.

The revolutions in Tunisia and Egypt and the civil war in Libya were followed by civil uprisings in Bahrain, Syria, and Yemen, the latter resulting in the resignation of the Yemeni prime minister, major protests in Algeria, Iraq, Jordan, Kuwait, Morocco, and Oman. There were also minor protests in Lebanon, Mauritania, Sudan, and Western Sahara. And, not insignificantly for that portion of the world heavily dependent on the use of relatively cheap, easily accessed, high quality crude oil, the House of Saud also learned of a seething, if only nascent, revolutionary spirit resting just below the surface.

Freedom is a catchy tune, we observed during the midst of the spreading unrest. Once you get it into your head, it’s hard to get rid of…not that you’d want to. From the aforementioned (and ongoing) Arab Spring through to the swiftly quelled Jasmine Revolution in China, 2011 began to take shape as the “Year of the Revolution.”

The sentiment traveled at the speed of light — whatever relevance that now has — to Europe, where unemployable graduates, jilted retirees and everyone besides gathered in capitals across the continent to protest backdoor bank bailouts, austerity programs and the general looting of the masses by the political class, many of whom they themselves elect. Not to say there wasn’t also plenty of looting perpetrated by the masses themselves. From Syntagma Square in Athens to Tottenham Square in London, rioters tested their strength of numbers against police forces demonstrably unable to keep pace with the new reality of “flash riots” and the advanced, open-source techniques they utilized to assemble and disperse before Ol’ Bill could get a grip on the unfamiliar situation.

The world marched forward, literally, to October’s “Global Day of Rage,” where the cheated and the scammed coalesced from Tokyo to Zurich and in cities across more than 80 countries around the world to vent their anger and the world as they know it. But that world might just be coming to an end anyway, a global morphing of the kind even the Mayans couldn’t imagine. More (much more) on this to come…

Joel Bowman
for The Daily Reckoning

Why the Spirit of Protest Seemed to Travel at the Speed of Light in 2011 originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.