Archive for November, 2010

PIIGS: Shadow Boxing with Ireland

November 24, 2010 Leave a comment


Ireland is all setup to take a bailout from the IMF in return for their sovereignty. Portugal is nearly ready to do the same. Why now? Why Ireland? It’s because they want to round up the low-hanging and shocking fruit.

Previously, I mentioned how they were downgrading all but Italy, and why. Now they reckon it’s time to bring home the bacon – and not a moment too soon. The IMF and the Eurobank are running a ponzi scheme and they are about to run out of capital, so they need more capital. Spain is the only stable provider of free capital other than Deutsche Bank in the EU, and Deutsche Bank is starting to talk about things like “rules” and “collateral” and “can you pay this back” – the IMF doesn’t want to hear about that.

Spain is on the verge of economic collapse at the moment. Their only industry that makes money – since “green jobs” flopped and took a huge portion of their market with it – are their banks. However, their banks are mainly supported by outstanding liabilities, which after all the fluff are no more than promises. Well, they have a lot of promises coming due from the Greek bailout and they haven’t collected much of anything. How are they going to keep this scheme afloat?

They do it just like Bernie Madhoff – they get more people into the game. In this case: Ireland. Ireland needs EUD 200bn and Spain needs to lend 178bn. That’s just right! However, they need more than that since all of Greece is going to come due by the end of Q2 2011. Therefore, they will also bailout Portugal. After that (end of 2011; early 2012), they are screwed. There will be nobody else that will take a bailout. They don’t want to bailout Italy because they know that corruption is a time-honored tradition in Italy and they don’t have the raw know-how to outfox the Italians on the corruption front.

The Kicker:

This isn’t really about bailouts. Every time they offer one they demand cuts to welfare and pensions (austerity) and the Unions freak out and riot (like in France and this is expected to happen in Ireland too). The riots are just a distraction  related to the cuts. If they just did the cuts, then a bailout would be unnecessary. If they heavily deregulated (which goes hand-in-hand with cuts) then they would have an economic boom.

The real issue is that these countries are losing their sovereignty.

My big prediction for Q4 2011:
The EuroBank and Spain will declare insolvency after Greece defaults (destroying the EUR). Germany will split off from the EU and go back to the Deutsche Mark. The EU will shatter except for the few countries that were solely living off of the teat of Germany, France and UK. France will say “merci” and will also drop out of the EU. The UK will stay in for a short while because they like paperwork and they also like making painful things last longer (if you don’t believe me, walk along the Thames from Black Friars Bridge to the Tower of London and count how many times you go up stairs only to go down stairs – or how often you slope down only to slope up. They could make it level, but they don’t).

This will aid in devaluing the USD further. The markets in the US will become comparable to the markets in Asia now. China will tank once the US finally admits that we can’t afford to have them make us stuff anymore and there is no more innovation pouring in there. They’ll still catch up to where we are now, but more slowly since the influx of new capital to pay for it won’t exist anymore. The US informal economy (notably the Black Market) will grow A LOT. The US right now is facing a really big problem regarding North Korea. I’m not sure if South Korea is ready to whoop Kim’s ass by themselves or not. I hope they are, because we can’t afford to do much to help them.

I have no guesses as to what will happen beyond that at this time… maybe civil war in one or more major countries, maybe a reversal of stupid regulative controls. The former would be really, really bad; the latter would spur a new economic boom for the whole world.

Categories: Europe, Politics

Police Part 5: Conclusion

November 11, 2010 Leave a comment

We become the things we hate

Here we are at the conclusion of Police. Starting from Police Part 0: How it works, I have explored what the police are intended to be, the incentives they face, what kind of behavior this engenders, and finally what this turns them into whether they intend it or not. Now that I’m at the end, I’d like to re-visit each piece from another point of view.

The concept of Police:

The best defense is a strong offense. If you are worried about some of the people in your neighborhood, you have keep an eye on them to make sure they behave. If they don’t like being watched, they’ll leave. This takes time, and becomes hard to do. To fill this need, some people volunteer their time to watch over the neighborhood. These are Police.

The incentives of Police:

Police need to eat too, so compensation is important. The problem with compensating with money is that people only get a short term boost to their motivation. Add to that the fact that the job is dangerous and motivation becomes a problem. Ask any Police union – they think the answer is more money, more pension – and most importantly: earlier retirement age. To get out of the job, but still get paid, is the primary incentive for the average officer. To this end, it becomes beneficial to police the non-offenders who are not likely to be dangerous rather than real offenders that are. One way of dealing with this, but still have a job, is to push legislation that outlaws moral crimes or other crimes that might lead to a real crime (such as speeding).

The behaviors these incentives produce:

The Police go from watching over the people to just watching the people. They turn from being protectors to being legal predators. They don’t have to steal your money directly, they just make sure that the correct backs keep getting scratched (by keeping citation rates as high as possible) so that they can get their early retirement with a fat pension.

The result:

I forget who said this, but a quote I heard once that seems very appropriate is “The difference between a brigand and a soldier is that a soldier is guaranteed to get paid every month.” Our Police are now little more than hired guns that enforce the laws that are easy to enforce. They pay their Unions who lobby to pass more “easy to enforce” laws that dilute the manpower of Police so that they have fewer people to address serious crimes like murder, rape and theft. Fines that people pay when convicted even go directly to lobbying groups. The entire industry has become a racket.


How to fix it:

Ultimately, nobody is responsible for your safety other than you. While a group that can investigate serious crimes is beneficial, it is not necessary to have it be state run. If you are afraid for your life or property – more police can not alleviate that. The only thing that can help is if you buy a firearm, learn how to use it and understand that if someone is coming at you, it is him or you. To quote Robert A. Heinlein: “An armed society is a polite society. Manners are good when one may have to back up his acts with his life.”

Categories: Politics

Police Part 4: Mercenaries

November 6, 2010 Leave a comment
Swiss Guards – the Swiss were considered the best Mercenaries in the world for hundreds of years.

A prince who holds a state that is founded on the strength of mercenary armies will never be firm or secure, since such armies are divided, ambitious, without dscipline, and fickle – brave in the face of friends, cowardly in the face of enemies. Machiavelli, The Prince

I can think of no better description of the Police we have today to “serve and protect” us. The problem with mercenaries is that no amount of money can buy a person’s life. What I mean, is that no matter how much you offer a person to protect you with his/her life – when the moment comes, no amount of money will make that person keep that promise. Sure, a person could devote his life to another person – but not to every person.

With the police, this manifests itself in that police (usually through their unions) are always demanding more Compensation (I covered their compensation in Police Part 3: Money Talks). As part of their marketing gimmick they espouse how dangerous the job is – as if every call ends in a shootout with a heavily armed cracked out drug dealer that has a beautiful damsel in distress under one arm and a giant machine gun in the other and, of course, don’t forget the helpless child that gets rescued at the end.

The reality of the situation is that police seek the least confrontational crimes they can, such as traffic violations, so that they can avoid anything that could be construed as dangerous. Their Unions promote this by lobbying lawmakers to pass more laws that allow the police to cite people for engaging in activities that might result in a crime, rather than investigating crimes or pursuing really bad people.

Nevertheless, being continually trained to anticipate and use violence, the police often seek to use this training. The only readily available group for them to use this on is the regular populace.

He was trained to have his gun out and to respond with overwhelming force to anyone resisting him. Why would anyone be surprised that he did this?

This was common in olden days – and Machiavelli strongly warns in several of his works against relying on mercenaries or soldiers that do nothing but soldiery for all protection specifically for this reason. The most shining example of this was the English king that, having no real army of his own, was tired of English lands being ravaged by the Picts. To resolve this he hired Anglo-Saxon tribes from Germany to defend them. The Germans did a spectacular job and murdered pretty much all of the Picts. Then, noticing how weak the English were, they murdered the king and all the nobles – making England a Saxon country as they took the throne.

Categories: Politics

Police Part 3: Money Talks

November 3, 2010 1 comment

I mentioned in my last installment that I would be discussing Police Part 2: Punishing ‘Maybe’, so here it comes!

The issue with police compensation is the same as with all forms of employment except with the added twist that it directly impacts our personal safety. If you ask the average cop why he/she is a cop, the answer will likely be “I want to help protect the community”. Well, if that was all there is to it, then they’d do it for free like Superman or Batman or any of the other popular super heroes. However, they don’t.  As it turns out – they’re human and like all humans they respond to incentives. One of those incentives is being able to afford a comfortable life and fulfill some of their wants and not just their needs.

The big item that meets this incentive is money. The general equation that has to be met to prevent endemic police corruption (in theory anyhow) is that the average beat cop has to make enough money and benefits that he doesn’t choose to leave the force for another profession, or start taking bribes and/or extorting money as an alternative form of income. The US, Canada, UK and other developed countries do a good job of meeting this, and they don’t have nearly the amount of overt corruption that poorer countries do because of it.

How do they meet this need?

To begin with – all officers belong to the Police Union. Every developed country has one. This union negotiates the compensation packages the officers receive. Here is what Phoenix Police officers get. As comparison, I work for a very cushy mega-corp that has some of the best benefit packages in the industry and my benefits are generally better, but my starting pay was considerably less and I don’t get to retire after 20 years.

But how does this union thing play out?

It’s like this – the officers join the union and pay dues. The union then donates to campaign funds for politicians and also for initiatives for new laws/regulations. The politicians, if elected (and they usually are), will insist on more officers and more pay for those officers. The initiatives will create a need for more officers. This results in more union dues for the union. With this extra money, the union can give its administrative staff raises, lobby more politicians and push more initiatives.

The unions are selling us things we don’t need so that they can get more dues. How is this different than extortion? It smells of corruption.

Is this what the average officer is looking to do? Probably not, and they are every bit the victim as the rest of us in this. However, in all the laws and regulations the unions push, the officers still have the option to not enforce all the laws to the letter – but to enforce the spirit of the law. They get in big trouble if they do that, and of course there’s the quota to worry about.

How this backscratching works

This cycle is so lucrative that we see “vampire” legal industries develop to feed off of the police/lobbying cycle. There is the lobby group MADD, who get a cut of the fines every DUI convict pays. There are also “substance abuse counseling” companies that only exist because DUI laws require convicts to go to them. There are driving schools (two kinds in Arizona) for every kind of moving violation. The most blatant abuse is the fact that if you speed and get a ticket for it – you can have it forgiven if you spend money at one of these schools where they give you the test and tell you the answers. And let’s not forget law firms that specialize in types of laws. They only exist because of silent outrage towards certain laws.

The safety of the public has been foregone in order to bleed the money out of the public that they don’t pay in taxes. If the police intend to “serve and protect” us, how can they not only allow, but encourage this to go on? I’ll explain that in the next section where I’ll talk about the concept of mercenaries.

Categories: Politics

Police Part 2: Punishing ‘Maybe’

November 2, 2010 1 comment

In Police Part 1: Goal Change I briefly touched on how there has been a push to promote “moral and outrage” laws. These are laws that are designed to force people to be more moral, or to address some outrage that the general populace had at some point. For example: smoking cigarettes is bad for you. Since people still insist on smoking them, many cities around the country have made it illegal to smoke indoors, because smokers are so immoral that they have to be forced by law to not smoke inside. An example of an outrage law would be speeding or red-light running. There is no victim, but there could have been, and because there have been some in the past and the outrage of the situation was such that new laws against the activity were passed.

The problem with laws like this is that they outlaw situations that CAN lead to bad outcomes, rather than just the outcomes; and they generally are the kinds of things that most of the population does regularly (like speeding – who doesn’t go at least 5mph over the speed limit on the freeway?). So, if you are speeding – even though there is no victim or property damage – you must be cited for creating conditions where that can occur. The department of transportation estimates you have a 1/200 chance of dying every time you drive – that’s 5%. If the most dangerous situation is in play – DUI – your chances increase by 30%… which is actually just 6.5% (30% of 5% is 1.5%). Sounds really scary though, huh!? Their budget depends on you being scared.

Back to the issue – these create a situation where the Police aren’t even solving a crime anymore. They simply have to proudly proclaim a crime was likely to occur and proceed to punish as if it had happened. This is head and shoulders better than chasing after a heavily armed drug runner or a murderer. They can nail honest law-abiding people that won’t cause them problems for crimes they might have committed.

Let me list some others they should be doing along the same vein:

  • Arrest men who are served divorce papers because they are likely to do some violence on their wives (statistics show it happens a lot).
  • Fine anyone who buys firewood because they are likely to burn it on “no burn” days (Arizona thing).
  • Arbitrarily issue speeding tickets to people that drive sports cars, because they are certain to go over the speed limit at some point.

Another added benefit to laws like this is that it widens the scope of police to be the arbiters of moral behavior. Priests used to give penance out to sinners, now the Police give out penance in the form of fines and jail time in return for a salary, a pension, free/extremely cheap healthcare and the option to “double dip” the system. In the next section, I will talk about compensation and how that plays into this. Get ready!

Categories: Politics, The USA