Imperial Conceits

Everyone’s favorite columnist is at it again – with preposterous propositions for the "improvement" of America’s DNA – which has become badly mutated, according to Friedman. Bill Bonner explores Friedman’s absurd utopia in disbelief…

"If you go dark, the whole world goes dark."

The statement was quoted by our favorite columnist, Thomas L. Friedman, in yesterday’s International Herald Tribune.

We always try to get our day off on the right foot by reading Friedman’s column before breakfast.  There is something so gloriously naïve and clumsy in the man’s pensée, it never fails to brighten our mornings.  We have never met the man, but we imagine him as a high school teacher, warping young minds with drippy thoughts.  But to say his ideas are as sophomoric or juvenile merely libels young people, most of whom have far more cleverly nuanced opinions than the columnist.  Or, you might criticize the man by saying his work is without merit, but that would be flattery.  His work has negative merit.  Every column subtracts from the sum of human knowledge in the way a broken pipe drains the town’s water tower.

Not that Mr. Friedman’s ideas are in anyway uniquely bad.  Many people have similarly puerile, insipid notions in their heads.  But Friedman expresses his hollow thoughts with such heavyhanded earnestness it often takes makes us laugh.   He seems completely unaware that he is a simpleton.  That of course is a charm; he is so dense you can laugh at him without hurting his feelings.

Friedman writes regularly and voluminously.  But thinking must be painful to him; he shows no evidence of it.   Instead, he just writes down whatever humbug appeals to him at the moment, as unquestioningly as a mule goes for water.

Thomas Friedman: America May "Go Dark."

The quotation above, for example, comes from an Indian he met in New Delhi.  The two must have taken to each other as dumb animals and democrats often do – for neither showed any inclination to ask questions.  Instead, the Indian cravenly flattered the American, and the America took it up as, say, the Trojans took up a wooden horse, without bothering to ask what was in it.

What Friedman worries about is that America will "go dark."  As near as we can tell, he means that the many changes wrought after 9/11 are changing the character of the nation, so that "our DNA as a nation…has become badly deformed or mutated."  In classic Friedman style, he proposes something that every 12-year-old would recognize as preposterous:  another national commission!  "America urgently needs a national commission to look at all the little changes that were made in response to 9/11," he writes.  If a nation had DNA and if it could be mutated…we still are left with the enormous wonder:  what difference would a "national commission" make?   Wouldn’t the members have the national DNA?  Or should we pack the commission with people from other countries to get an objective opinion – maybe an assortment of frogs, krauts and illiterate golliwogs for cultural diversity?

Thomas Friedman: A Decidedly Non-Complex Worldview

But this is what is so jaw-drop stupefying about Friedman:  even mules and teenagers have more complex worldviews.

His oeuvre is a long series of "we should do this" and "they should do that."  Never for a moment does he stop and wonder why people actually do what they do.  Nor has the thought ever crossed his mind that other people might have their own ideas and about they should do and no particular reason to think Mr. Friedman’s ideas are any better.  There is just no trace of modesty in his writing…no skepticism…no cynicism…no irony…no suspicion lurking in the corner of his brain that he may be a jackass.  Of course, there is nothing false about him either; he’s not capable of it, neither false modesty nor falsetto principles.  With Friedman, it is all alarmingly real.   Nor is there any hesitation or bewilderment in his opinions; that would require circumspection, a quality he completely lacks.

Friedman fears he may not approve of all the post-9/11 changes.   But so what?  Why would the entire world "go dark" just because America stoops to empire?  The idea is nothing more than a silly imperial conceit.  America is not the light of the world.  Friedman can stop worrying.  The sun shone before the United States existed.  It will shine long after she exists no more.  But, without realizing it, imperial conceits is what Mr. Friedman offers, one after another.    He knows what is best for everyone, all the time.  And even at his specialty, he is second rate.  Not that his proposals are much dumber than anyone else’s, but they are offered in a dumber way.  He sets them up like a TV newscaster, unaware that they mean anything…not knowing whether to smile or weep…out of any context other than the desire to make himself look good.  He does not seem to notice that his own DNA has mutated along with the nation’s institutions…and that he does nothing more than amplify the vanities and prejudices that pass for the evening’s news.  Is there trouble in Palestine?  Well, the Palestinians should have done what we told them.  Has peace and democracy come to Iraq?  Of course, thanks to the brave efforts of our own troops.  Is the price of oil going up?  Well, of course it is, the United States has not yet taken up the comprehensive energy policy and we proposed for it.  Friedman’s world is so neat.  So simple.  There must be nothing but right angles.  And no problem that doesn’t have a commission waiting to solve it.

It must be unfathomable to such a man that the world could work in ways that surpasseth his understanding.  In our experience, any man who understands his own thoughts must not have very many of them.  And those he has must be simpleminded.  Most men want things they shouldn’t want.   They do things they wish they hadn’t and knew they shouldn’t.  They can barely pass a hamburger without wanting to eat it…and rarely pass a loaded gun without nearly shooting themself in the foot.  Friedman must be an exception.  Or he just hasn’t noticed.

Regards,

Bill Bonner
The Daily Reckoning

June 03, 2005 — Paris, France

Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

We had hoped to write a short Daily Reckoning this morning, but we didn’t have time.  What’s more, when we looked at our computer screen, suddenly America’s great empire of debt came into hilarious focus.

It was a minor thing that triggered it…trivial really, like following a link, accidentally of course, to a porn site…but what surged up was shocking.

"My tax guy has been bugging me… You know, real estate is where it is at."  NBC quoted a young woman who had bought a second home at a Colorado resort.  According to the report, more than a third of the houses sold in the last 12 months were not primary residences, but second homes or investments.

We had been thinking about the way societies really work.

"Given the very small number and insignificant presence of imperial agents and municipal officials to insure obedience to the state," explains Ramsay MacMullen in his "Decline of Rome and the Corruption of Power," " millionaires, magnates, and other local notables of all sorts must have cooperated, and from their own free will."  It doesn’t matter whether you call a political society "free" or a "democracy," or a "dictatorship" or an "empire," it always involves a great amount of collusion and cooperation on the part of the population.

"[Imperial] administrators occupied only a minor place in the system.  The emperor had only a handful of agents, whose means of reaching the people were few and rudimentary.  The police were practically nonexistent.  There were neither social workers nor prosecutors," MacMullen continues.

The people who actually ran things "had no official function, or if they had one, they had no need of it to make themselves heard.  A huge number of decisions were taken each day, and throughout the empire, that conformed to their own desires more than to the law, the emperor, or his representatives.  What’s more, these decisions were those that counted, those that concerned property, movement, career choices, success on the farm, commerce or banking; sometimes even a person’s physical safety."

In business, as in empire, vast, complex, informal systems work largely on the basis of trust.  People trust others to do more or less what they expect.  The emperor could no more control what was done in Judea or Gaule than we can control what goes into our hamburgers.  Still, we trust there is nothing too unsavory in it.  In the empire, generally, through an extended fabric of personal connections, family ties, official functions, traditions, habits and accepted ideas and procedures, what happened was more or less what everyone expected.  The emperor trusted not only his own functionaries to do what they were supposed to do, but also the local big shots with no official post or authority.  The lowest slave responded to his overseer, who responded to his master, who responded to his patron, who responded to his potentiores, consuls, proconsuls, proteuntes, praetors, quaestors and so forth on up the chain of command to the emperor himself.

America’s empire of debt, on the other hand, is built not so much as a pyramid of trust and authority, but as a structure of fraud and misapprehension.

Down at the bottom, are imperial agents spreading deceit and misinformation – such as the aforementioned "tax guy."  You’d think a young woman could trust her tax advisor to give her sound counsel.  Instead, he tells the poor rube to get into the most bubbly property market in American history.  Naturally, she took the bait, aided no doubt by a whole industry of professional dissemblers.  Press reports tell us that appraisers routinely stretch valuations in order to help close a deal.  Mortgage lenders know perfectly well the appraisals are lies, but they wink at them with one eye…while winking at the borrower’s phony income declaration with the other.  Again, according to the press reports, lenders no longer verify income claims.

In California, house prices have raced so far ahead of incomes that barely one in ten buyers can afford the median house.  Yet thanks to "creative finance" more houses are sold than ever before.

Thus is the foundation of the debt pyramid laid down in a bed of mutual deceit.  Upon it, comes another level of fabrications.  Lenders do not stick around to see how the loans work out.  Instead, they pretend the credits are good, and package the mortgages into convenient units so that ‘investors’ can buy them.  The financiers know damned well that many buyers can’t really afford to pay for the houses they buy, but they see no point in mentioning it.  Nor do the investors want to know.  They’re in on the scam too.  The smartest of them even have figured out how it works:  the Fed holds down short-term rates below the inflation rate…so that investors in long-term mortgage financing, and buyers of U.S. Treasury obligations, can make an easy profit.

Further up the feeding chain of imperial debt are a whole legions of analysts, economists, and full-time obfuscators whose role is to make us all believe six impossible things before breakfast and a dozen more before dinner.  We have already explained, in detail, how the economists at the Bureau of Labor Statistics did to numbers what guards at
Guantanamo did to prisoners.  They roughed them up so badly, they were ready to say anything.  We found out yesterday, for example, that productivity is increasing at a 2.9% rate – the fastest pace in nine months.

Productivity is supposed to measure output per unit of time.  But a simple trick has bent the yardstick.  The statisticians are allowed to adjust output to "quality enhancements."  If a computer this year can process information ten times as fast as the last one, the worker who assembled it has multiplied his output 1000%.   This abuse of statistics is what allows Americans to deceive themselves about their own economy.  It is healthy, they say.  It is growing.  It is stable.  All these "facts" are little more than elaborate prevarications.

Economists, commentators and policy makers take up these distortions and add their own twists.  It is obvious to anyone who bothers to think about it that an economy that spends more than it earns is in decline.  But try to find an economist willing to say so!  They’ve all become like rich notables in the time of Trajan, doing the emperor’s work whether they are on his payroll or not.  They will tell you the economy is ‘expanding,’ but it is an expansion similar to what happens when a man escapes from a fat farm.  The longer he keeps expanding, the harder it will be for him to get around.

On the issue of the trade deficit they will say what the Senators and Consuls want to hear, as Levey and Brown did in "Foreign Affairs" magazine, when they said, "The United States’ current account deficit and foreign debt are not dire threats to its global position, as would-be Cassandras warn. U.S. power is firmly grounded on economic superiority and financial stability that will not end soon."  In fact, the story of international trade circa 2005 is the most preposterous tale economists ever heard.  One nation buys things it cannot afford and doesn’t need with money it doesn’t have.  Another sells on credit to people who already cannot pay…and builds more factories to increase output.

Every level colludes with every other level to keep the flimflam going.  On the banks of the Potomac, people of all classes, rank and station are pleased to believe that all is well.  And there, at the Federal Reserve headquarters, is another group of loyal dissemblers.  Alan Greenspan and his fellow connivers not only urge citizens to mortgage their houses, buy SUVs, and other acts of wanton recklessness, they also control the nation’s money and make that it too plays along with the fraud.  They do not even have to "clip" the precious metal out of the imperial coins; there is none in it already!

From the center to the furthest garrisons on the periphery, from the lowest rank to the highest – everyone, everywhere willingly, happily and proudly participates in one of the greatest deceits of all time.  At the bottom of the empire are wage slaves squandering borrowed money on imported doodads.  The plebes gamble on Adjustable Rate Mortgages.  The patricians gamble on hedge funds that speculate on huge swaths of mortgage debt.  Near the top are Fed economists urging them to do it!  And at the very pinnacle is a chief executive, who cuts taxes while actually increasing spending on bread, circuses and peripheral wars.  (It might add that some of the biggest whoppers in the history of warfare were told to the American lumpenpublic in an effort to stir up support for the war against Iraq…but it hardly seems worth mentioning it.)

The spectacle is breathtaking.  And endlessly entertaining.  (More below).

First, more news, from our team at The Rude Awakening:

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Eric Fry, reporting from Wall Street…

"Shortly after putting yesterday’s column to bed, futures trader Richard Morrow rang our office to announce, ‘I’m shorting bonds…I LOVE this trade!’ We’ve got all the details here…"

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Bill Bonner, back in Paris:

*** "You are lucky," we said to a group of confused French people last night at dinner.  "You have the good fortune to live in a country that doesn’t know what it is doing or where it is going.  Europe is in disorder, we read it in the newspaper.  So much the better.

"In America, we know what we have to do.  We have an empire to run.  Outlying places to police.  People to boss around.  Sabres to rattle.  And an economy that has to remain Numero Uno.

"But running an empire is a disastrously expensive business.  You pay in cash.  You pay in blood.  And you pay with your own soul.  It turns the imperial race into what Orwell called ‘hollow dummies.’  If they are going to rule the world; they have to act as if they have some right to rule the world – as if they are smarter, better, more cultured and better organized.  After a while, they begin to believe it.  The next thing you know, they are strutting all over the world…while people laugh at them."

*** And a note of congratulations to our good friend, Dan Denning…we just found out that his new book, The Bull Hunter, hit number 16 on the Barnes and Noble bestseller list – after only being released this past Tuesday!

We can’t help but bask in a bit of his glory…we encouraged him to write the book, which he mentions in his "acknowledgments" section. But we’re not trying to steal his thunder…