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Long, but a good read.
Tl; Dr - Stop being lazy and read it.
Becoming a “Permanent Tourist”
07/17/12 In an interview with Louis James, world traveler and legendary speculator Doug Casey makes a compelling case for becoming a “permanent tourist” to be best able to survive the coming economic crash.
Louis James: Doug, what is uppermost on your mind today.
Doug: Lately I’ve been thinking about the EU’s rising tide of troubles. A major financial and economic catastrophe in Europe is unavoidable. From there, it’s likely to spread out to the whole world.
L: I fear you’re right, but the latest headlines have it that the EU bigwigs are taking measures to make it easier for Greece’s new pro-bailout government to honor its austerity obligations. Doesn’t that mean the EU has dodged the bullet for now?
Doug: As far as I can tell, they’re doing absolutely nothing except print up more currency, in hope that will move the problem further into the future, when a deus ex machina device will magically appear.
These idiots aren’t even capable of framing the problem, much less solving it.
First of all, it’s not “Greece” we’re talking about, but the Greek government. It’s the Greek government that’s made the laws that got people used to pensions for retirement at age 55. It’s the Greek government that’s built up a giant and highly paid bureaucracy that just sits around when it’s not actively gumming up the economy. It’s the Greek government that’s saddled the country with onerous taxes and regulations that make most business more trouble than it’s worth. It’s the Greek government that borrowed billions that the citizens are arguably responsible for. It’s the Greek government that’s set the legal and moral tone for the pickle the place is in.
Second, the term “austerity” is used very loosely by the talking heads on TV. It sounds bad, even though it just means living within one’s means… or, for Europeans, not too insanely above them. But who knows what’s actually included or excluded from what the EU leaders think of as austerity? Take the Greek pension funds, for example: exactly how are they funded? I’d expect that private companies make payments to a state fund, as Americans do via the Social Security program. I suspect there’s no money in the coffers; it’s all been frittered on high living and socialist boondoggles. Tough luck for pensioners. Maybe they can convince the Chinese to give them money to keep living high off the hog…
L: Social Security. Now there’s a misnomer. No one I know my age or younger actually expects to ever get a penny of that money back.
Doug: Yes, my generation, the Boomers, will have totally looted what little viability is left in it by the time you never get your check. Sorry, Lobo. It was our supposed “Greatest Generation,” however — who are mostly gone now — who really got a cushy ride. But the point at the moment is that just because the Greeks voted — basically to stay in the EU in hopes of economic benefits outweighing the pain of whatever the austerity requirements are — that doesn’t mean they’ll actually be able to deliver. Once the new half-measures begin to bite, I expect to see more angry mobs back out on the streets. These people have become so corrupt that they think the government is some kind of a magic cornucopia, when first and foremost it’s really just a vehicle for institutionalized theft.
And it’s not just austerity, and it’s not just Greece, nor even Spain, which has formally asked for a bailout. All of these European economies are rigidly regulated: first, by their national governments; and then, even worse, by this extra layer of unbelievably oppressive regulation from Brussels. I understand there are some 30,000 people working for the EU, making new rules and regulations like an army of spiders, spinning their webs, sucking the life out of their victims. None of these rules are constructive. They’re a waste of time at best, and most are actively destructive — like for instance, the EU rules telling the French how to make cheese.
The list goes on and on, and the madness is happening all over Europe.
The proposed austerity measures will change absolutely nothing important; at best they’ll just lengthen the economic agony. Instead of austerity programs, cutting back marginally on the salaries of public employees and national pensions, all these hordes of Eurocrats should be summarily fired, and their agencies totally abolished. The markets should be liberated.
And individuals should plan for their own retirements. They should behave like adults, not children who spend today with no thought for tomorrow, as state-sponsored retirement benefits encourage them to do.
L: Excessive regulation and disincentives to production created by government intervention in the economy. Can you give us some examples of this happening and what the consequences are?
Doug: The classic example is the Roman Empire after it passed through its time of troubles in the third century. After 50 years of utter chaos, constant crisis, and recurring civil wars, Diocletian gripped it in a stranglehold, regulating everything from top to bottom. I suppose, given a choice between chaotic violence and a police state, people will opt for the latter — as if there are no other alternatives. He instituted all manner of price controls and “people controls,” including forcing sons to take up their father’s occupations. The ultimate collapse of Rome and the success of the barbarian invasions wasn’t due to superior barbarian military technology or tactics, but Roman economic collapse. Romans were actually deserting the empire to live among the so-called “barbarians,” where they could both be free and prosperous. History is repeating itself.
L: That’s pretty dramatic, Doug. You think Europe is in a similar death spiral now?
Doug: Yes. Those governments are all bankrupt. But much more serious than financial bankruptcy is their total moral and intellectual bankruptcy. At this point the Europeans are so craven and degraded they deserve to be indentured servants of the Chinese, which they will be. The debt they are using to finance their bulging bureaucracies, bloated welfare rolls, giant pensions, and so forth is largely coming from the banks. But the banks are all bankrupt too, partly because they’ve lent so much capital to bankrupt governments. So you’ve got two sets of bankrupt institutions trading debt back and forth between themselves. It doesn’t help to say that it’s the PIIGS that are in the worst shape, because it’s the banks in the supposedly wealthier countries that own the PIIGS’s debt. They are all tied together.
It’s much worse, on a global scale, because Europe is China’s largest trading partner. When the EU really goes into reverse and suffers a major economic collapse, the Chinese are going to lose their main customers — and end up owning a lot of chateaux. That also means the Chinese will stop buying the raw materials — commodities — they use to make what they sell to the Europeans. That will hammer the Australian, Brazilian, Canadian, and other resource-driven economies.
The problem is truly global. The headlines keep pointing at Europe right now, but the EU is just the tip of the iceberg the global economy is aimed at.
L: In this context, it’s not encouraging that the French have not only elected a socialist president, but a socialist parliament. I’d be fighting severe nausea right now if I were a French taxpayer.
Doug: And France is not one of the PIIGS on the periphery, but one of the two big countries at the core of the EU. I don’t understand how anyone can conduct a profitable business in France today. It seems heroic to me, if anyone can do it, but it’s getting just about impossible. And now France is going to slide a couple standard deviations further to the left. If I were a Frenchman with any money, I would get my money and myself out of France — tomorrow morning… These governments are completely out of control, forces unto themselves, and they view their populations as milk cows. Governments all over the world are following Diocletian’s example.
L: If it’s happening all over the world, what’s the point of packing up and leaving?
Doug: Well, there really is almost no place you can run, no one place where it’s reasonably safe to be a citizen these days. We’re heading toward a time like in the book, Atlas Shrugged, when the productive people in society are just going to stop producing. Why should anyone work hard to create value when a substantial portion of that value will get diverted into fighting off regulators and other government goons, only to have half of what you do make seized to pay for those very same thugs?
L: Are you telling all the Atlases out there that it’s time to shrug?
Doug: I think so, on a moral basis. I’m sick and tired of supporting my oppressors. It makes me feel like dissipating my capital on high living, simply because that will deny it to the state. It’s perverse, how they’ve structured society with incentives to be a consumer, not a producer. Why save, when it’s likely your savings will be stolen?
Tl; Dr - Stop being lazy and read it.
Becoming a “Permanent Tourist”
07/17/12 In an interview with Louis James, world traveler and legendary speculator Doug Casey makes a compelling case for becoming a “permanent tourist” to be best able to survive the coming economic crash.
Louis James: Doug, what is uppermost on your mind today.
Doug: Lately I’ve been thinking about the EU’s rising tide of troubles. A major financial and economic catastrophe in Europe is unavoidable. From there, it’s likely to spread out to the whole world.
L: I fear you’re right, but the latest headlines have it that the EU bigwigs are taking measures to make it easier for Greece’s new pro-bailout government to honor its austerity obligations. Doesn’t that mean the EU has dodged the bullet for now?
Doug: As far as I can tell, they’re doing absolutely nothing except print up more currency, in hope that will move the problem further into the future, when a deus ex machina device will magically appear.
These idiots aren’t even capable of framing the problem, much less solving it.
First of all, it’s not “Greece” we’re talking about, but the Greek government. It’s the Greek government that’s made the laws that got people used to pensions for retirement at age 55. It’s the Greek government that’s built up a giant and highly paid bureaucracy that just sits around when it’s not actively gumming up the economy. It’s the Greek government that’s saddled the country with onerous taxes and regulations that make most business more trouble than it’s worth. It’s the Greek government that borrowed billions that the citizens are arguably responsible for. It’s the Greek government that’s set the legal and moral tone for the pickle the place is in.
Second, the term “austerity” is used very loosely by the talking heads on TV. It sounds bad, even though it just means living within one’s means… or, for Europeans, not too insanely above them. But who knows what’s actually included or excluded from what the EU leaders think of as austerity? Take the Greek pension funds, for example: exactly how are they funded? I’d expect that private companies make payments to a state fund, as Americans do via the Social Security program. I suspect there’s no money in the coffers; it’s all been frittered on high living and socialist boondoggles. Tough luck for pensioners. Maybe they can convince the Chinese to give them money to keep living high off the hog…
L: Social Security. Now there’s a misnomer. No one I know my age or younger actually expects to ever get a penny of that money back.
Doug: Yes, my generation, the Boomers, will have totally looted what little viability is left in it by the time you never get your check. Sorry, Lobo. It was our supposed “Greatest Generation,” however — who are mostly gone now — who really got a cushy ride. But the point at the moment is that just because the Greeks voted — basically to stay in the EU in hopes of economic benefits outweighing the pain of whatever the austerity requirements are — that doesn’t mean they’ll actually be able to deliver. Once the new half-measures begin to bite, I expect to see more angry mobs back out on the streets. These people have become so corrupt that they think the government is some kind of a magic cornucopia, when first and foremost it’s really just a vehicle for institutionalized theft.
And it’s not just austerity, and it’s not just Greece, nor even Spain, which has formally asked for a bailout. All of these European economies are rigidly regulated: first, by their national governments; and then, even worse, by this extra layer of unbelievably oppressive regulation from Brussels. I understand there are some 30,000 people working for the EU, making new rules and regulations like an army of spiders, spinning their webs, sucking the life out of their victims. None of these rules are constructive. They’re a waste of time at best, and most are actively destructive — like for instance, the EU rules telling the French how to make cheese.
The list goes on and on, and the madness is happening all over Europe.
The proposed austerity measures will change absolutely nothing important; at best they’ll just lengthen the economic agony. Instead of austerity programs, cutting back marginally on the salaries of public employees and national pensions, all these hordes of Eurocrats should be summarily fired, and their agencies totally abolished. The markets should be liberated.
And individuals should plan for their own retirements. They should behave like adults, not children who spend today with no thought for tomorrow, as state-sponsored retirement benefits encourage them to do.
L: Excessive regulation and disincentives to production created by government intervention in the economy. Can you give us some examples of this happening and what the consequences are?
Doug: The classic example is the Roman Empire after it passed through its time of troubles in the third century. After 50 years of utter chaos, constant crisis, and recurring civil wars, Diocletian gripped it in a stranglehold, regulating everything from top to bottom. I suppose, given a choice between chaotic violence and a police state, people will opt for the latter — as if there are no other alternatives. He instituted all manner of price controls and “people controls,” including forcing sons to take up their father’s occupations. The ultimate collapse of Rome and the success of the barbarian invasions wasn’t due to superior barbarian military technology or tactics, but Roman economic collapse. Romans were actually deserting the empire to live among the so-called “barbarians,” where they could both be free and prosperous. History is repeating itself.
L: That’s pretty dramatic, Doug. You think Europe is in a similar death spiral now?
Doug: Yes. Those governments are all bankrupt. But much more serious than financial bankruptcy is their total moral and intellectual bankruptcy. At this point the Europeans are so craven and degraded they deserve to be indentured servants of the Chinese, which they will be. The debt they are using to finance their bulging bureaucracies, bloated welfare rolls, giant pensions, and so forth is largely coming from the banks. But the banks are all bankrupt too, partly because they’ve lent so much capital to bankrupt governments. So you’ve got two sets of bankrupt institutions trading debt back and forth between themselves. It doesn’t help to say that it’s the PIIGS that are in the worst shape, because it’s the banks in the supposedly wealthier countries that own the PIIGS’s debt. They are all tied together.
It’s much worse, on a global scale, because Europe is China’s largest trading partner. When the EU really goes into reverse and suffers a major economic collapse, the Chinese are going to lose their main customers — and end up owning a lot of chateaux. That also means the Chinese will stop buying the raw materials — commodities — they use to make what they sell to the Europeans. That will hammer the Australian, Brazilian, Canadian, and other resource-driven economies.
The problem is truly global. The headlines keep pointing at Europe right now, but the EU is just the tip of the iceberg the global economy is aimed at.
L: In this context, it’s not encouraging that the French have not only elected a socialist president, but a socialist parliament. I’d be fighting severe nausea right now if I were a French taxpayer.
Doug: And France is not one of the PIIGS on the periphery, but one of the two big countries at the core of the EU. I don’t understand how anyone can conduct a profitable business in France today. It seems heroic to me, if anyone can do it, but it’s getting just about impossible. And now France is going to slide a couple standard deviations further to the left. If I were a Frenchman with any money, I would get my money and myself out of France — tomorrow morning… These governments are completely out of control, forces unto themselves, and they view their populations as milk cows. Governments all over the world are following Diocletian’s example.
L: If it’s happening all over the world, what’s the point of packing up and leaving?
Doug: Well, there really is almost no place you can run, no one place where it’s reasonably safe to be a citizen these days. We’re heading toward a time like in the book, Atlas Shrugged, when the productive people in society are just going to stop producing. Why should anyone work hard to create value when a substantial portion of that value will get diverted into fighting off regulators and other government goons, only to have half of what you do make seized to pay for those very same thugs?
L: Are you telling all the Atlases out there that it’s time to shrug?
Doug: I think so, on a moral basis. I’m sick and tired of supporting my oppressors. It makes me feel like dissipating my capital on high living, simply because that will deny it to the state. It’s perverse, how they’ve structured society with incentives to be a consumer, not a producer. Why save, when it’s likely your savings will be stolen?
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