MILTON FRIEDMAN ON CAPITALISM AND GREED INTERVIEWED BY PHIL DONAHUE


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The Strategy of the United States

George Friedman
Editor, This Week in Geopolitics


What is striking about American strategy is its paradoxical nature: The fact that each solution to a threat poses a new threat. Since its birth, the United States has sought to defend itself. The US approaches each threat with a constant outward movement of attention and resources…and now, it straddles the world. This means that the political, economic, and military postures of the United States have tended to be offensive.
 

The Birth of a Nation: Destined for Manifest Destiny

 

Consider the US at the time of its founding. The colonial United States existed on a relatively thin strip between the Appalachian Mountains and the Atlantic Ocean. Its north-south communication was weak, as most rivers run from the mountains to the Atlantic. That meant not only that commerce was difficult, but also that the rapid movement of troops to repel an invasion was difficult.
 

Therefore, even after it declared independence, the United States was heavily dependent on maritime trade with Europe, and particularly England. England dominated the Atlantic Ocean, especially after the defeat of Napoleon and the destruction of the French navy.
 
 
The United States had lands west of the Appalachians, but they were minimally settled. Its heartland was a narrow eastern strip close to the Atlantic Ocean, and it was vulnerable to the British navy, which could carry out amphibious operations at any point along the coast.
 

Navies are expensive, and the United States couldn’t guarantee its national security until its economy had developed dramatically. That was difficult as long as the US was confined to the eastern seaboard. If it could not block British naval power, then it had to have strategic depth: The West.
 

Westward Ho!

 

 
The land west of the Appalachians was extraordinary—not just because of its rich soil, but because of the Mississippi River system. Two great rivers, the Missouri and the Ohio, flow into the Mississippi. They are joined by other smaller but very significant rivers like the Arkansas and Tennessee that flow into the Mississippi, which then flows into the Gulf of Mexico.
 

The most extraordinary thing about this river complex is that it is navigable. That means that virtually any part of the land between the Rockies and Appalachians could not only produce agricultural products—and later minerals—but could also ship them inexpensively through this river system and eventually to Europe.
 
 
The United States was assigned ownership of the Northwest Territory (today the states of Ohio, Indiana, Illinois, Wisconsin, and part Minnesota) in the 1783 Treaty of Paris. By 1800, it had already settled much of the territory and created new states and territories. But that land could not be fully exploited because the Mississippi River system was ultimately controlled by the Spanish, and then by the French.
 
Neither significantly colonized their North American holdings, save for French Canada. The Spanish interest was precious metals. The French interest was expensive furs. They hadn’t sent settlers into the area and therefore hadn’t cleared land and farmed it.
 

The English colonized the land and after independence, so did the United States.
 
But their territories lacked one thing: New Orleans. And without controlling New Orleans, the Mississippi’s gateway to the ocean, farmers would not have access to world markets and would simply subsist on what they grew.
 

The Crescent City: The Key to Power

 

New Orleans was the key to North America. Sea-going vessels could not go very far up the Mississippi. The flat-bottom barges that brought the wealth of the Midwest down the Mississippi could not venture out to sea. New Orleans developed at the point where ships and barges could each safely meet. The barges exchanged cargo with the ships, which then carried it to Europe.
 

Of course, to get to this point, the plain between the Rockies and Appalachians had to be settled and farmed. This westward expansion achieved two things. The first was an enormous increase in economic power. The second was strategic depth.
 

In 1803, France was engaged in the Napoleonic Wars for domination of Europe, and Napoleon was not very interested in the Louisiana Territory. For the Americans, and particularly for President Thomas Jefferson, it was an obsession. The US bought the territory for $3 million dollars, which even in today’s dollar was an absurd amount—about $230 million. That price included the entire Mississippi River and New Orleans.
 

The defense of New Orleans became a central interest of the United States. During the War of 1812, when the British destroyed Washington, they also attacked New Orleans. Future President Andrew Jackson defeated the British there and kept control of New Orleans and the Midwest. Jackson remained properly obsessed with New Orleans. It was the key to American power and prosperity. It was also still in danger.
 

The US-Mexican border was only about 200 miles away from New Orleans. In order to defend it, the Mexicans had to be pushed back. This was not a trivial fear. The United States had a small standing army, spread through a large territory. The Mexicans had a larger army, and if they massed a force, they might be able to take New Orleans and strangle the United States.

In the classic paradox of American strategy, the desire to defend New Orleans triggered an attack on Mexico in two parts.
 
 
First, Jackson asked Sam Houston to organize American settlers in the northeastern section of Mexico and foment an uprising designed to, at the very least, block Mexican access to the region… and at best, create an independent country, the Republic of Texas. This was accomplished in 1836 when Sam Houston defeated Mexican forces under Santa Anna at the Battle of San Jacinto, near today’s Houston.
 

The second stage took place in 1846 when the United States, now more militarily capable, conducted a broad assault on Mexico, including amphibious operations that led to the capture of Mexico City.
 

The Mexican-American War achieved three things from the American point of view. First, it crippled Mexican military capabilities for over a century. Second, it created a barrier between Mexico and the United States. After the war, there was a string of deserts and mountains south of the new border that made any possible counter-move by Mexico difficult. Finally, the US took control of all of northwestern Mexican territory, which included present-day California. This made it possible to secure the Louisiana Territory against any potential threat from the west and anchor the United States on the Pacific. It created the framework for the contemporary continental United States.
 

The defeat of Mexico, the seizure of the northwest, and the lack of a realistic threat from Canada secured the United States in North America and created a new fear: naval threats in the Atlantic and Pacific. The United States was secure from anything but naval action.
 

From Sea to Shining Sea… Now What?

 

Again, defense required offensive measures. The first step occurred in 1898, with a coup d’etat in Hawaii that gave the US the only significant anchorage that could threaten the mainland. At the time, ships ran on coal, and they required coaling stations to refuel. With Pearl Harbor in American hands, no ship from Asia could reach the Pacific Coast of the United States.
 

In the same year, the United States went to war with Spain, seizing Cuba and the Philippines. The seizure of the Philippines gave the United States the first offensive base in the Eastern Hemisphere. The seizure of Cuba made certain that no power could close off the exits from the Gulf of Mexico, and therefore New Orleans.
 
 
Yet, the United States retained a primordial fear of Britain because it was the dominant naval power in the world, and although the US was building a substantial fleet, the British still dominated the Atlantic. In spite of neutralizing Cuba, the Bahamas could still block one exit from the Gulf of Mexico. It symbolized the American fear.
 

It should be added that the threats the US faced were not theoretical. Besides the threat from Mexico, the British still controlled the area north of the United States, and Britain was much more powerful than the United States and imperially ambitious. The United States remained suspicious of British intentions in the northwest, but also harbored a fear of both an offensive south toward New York and a blockade of the East Coast.
 

Neither of these came to pass, but the American strategic culture was to assume the worst case and generate potential responses. Interestingly, as late as 1920, when the United States was preparing war plans to confront potential enemies after World War I, one of the plans outlined the defense against a potential British invasion down the Hudson Valley.
 

This fear of the British was not addressed until World War II, when London needed American destroyers to protect convoys heading for Britain. The United States gave them the destroyers… but at a price. The British had to permit the United States the use of all of their naval bases in the region—in Newfoundland, the Bahamas, Jamaica, St. Lucia, Trinidad, Antigua, British Guyana, and Bermuda. Given American resources, the ability to use the bases was the ability to dominate them.
 

Lend-Lease, as it was called, essentially was the British surrender of their naval facilities in the Western Hemisphere to the United States. It transferred control of the Atlantic on a line from Iceland (occupied by the US in 1940) to Bermuda to Trinidad. This gave the United States control over the Atlantic approaches to the US (once German U-boats were dealt with) and effective control of the Caribbean. With this, the United States achieved its defensive goal of controlling the maritime approaches to its territory.
 
 
As the United States increased its power, it increased its fears. North America can only be threatened from the sea, but creating massive fleets able to pose a threat to the US is enormously expensive and requires substantial technical ability. The best way to defeat a fleet is to never allow it to be built. In this case, divert the resources of potential challengers from naval construction to land warfare.

The Containment Strategy

The fear of the United States in both World War I and World War II was that a single power, Germany, would conquer Europe. Lacking land-based threats, Germany would be free to construct fleets at its leisure and challenge the US from the sea. This fear led to the American intervention after World War I when weeks after the Russian czar fell, it appeared that German troops in the east would be transferred to the west and overwhelm the British and the French alliance.
 

This fear also led to the US engaging Japan and Germany simultaneously in World War II. After defeating the Japanese navy and the German U-boats and co-opting the waning British presence, the US emerged from World War II as the first power in human history to dominate all of the world’s oceans.
 

The World Wars cemented control of the seas as the single most important element of American strategy. The vital corollary that followed was that the US must maintain a balance of power, particularly in Europe and Asia, to prevent the construction of navies.
 
 
During the Cold War, the United States developed a strategy of containment. The Soviet Union would be surrounded on as many fronts as possible by American allies, backed by American power. This was meant to prevent Soviet expansion into Europe and threaten the Soviets with the possibility of an attack along its entire periphery.
 

It also forced the Soviets to expend vast resources on defense along its land borders—resources it then could not use to build a navy sufficient to force its way through the choke points discussed in our "Mapping Russia's Strategy" article. The collapse of the Soviet Union, in large part due to the strain its defense budget put on its economy, was not a fully intended or expected consequence of US strategy.
 

After the Soviet Union fell, the United States had no strategic challenger. Its new fear was that such a challenger would emerge—this time from minor regional hegemons growing into major ones. The fear, once again, was that these would in time have the resources to challenge the United States globally.
 
The Best Defense…
 
The automatic response to any potential hegemonic power, therefore, was to attempt to co-opt, destabilize, or destroy it before it could threaten the United States. Participation in the Balkan War, the destruction of Saddam Hussein, and confrontations with China in its coastal waters have been rooted in this deep structure of American strategy.
 

The American strategy has drawn the US into the Eastern Hemisphere at seemingly random intervals since the Cold War. Here, it discovered a paradox and a limit to its power. The United States has the power to destroy any conventional military force. It does not have the ability to occupy and pacify countries. Put differently, it could deal with threats but not stabilize the countries, as it did with West Germany and Japan.
 

The threat that emerged was not naval power, but terrorism. This is a lesser, yet still painful strategic problem that the United States must deal with today. It cannot tolerate potential hegemons like Russia and can effectively destroy their military capacity. However, it cannot deal with the consequences of its actions.
 

The point is that American strategy has been part of the deep structure of the United States since its founding. Its geography generated defensive fears, which it solved with offensive action. Yet now, the deep structure of the US has created a new kind of problem that historical strategy cannot address.
 

Eventually, the sheer scope of US power generated the threat. Every nation has its grammar of strategy, the manner in which it engages in strategic problems. The United States has been extraordinarily effective in sequentially and elegantly addressing its fears.
 
And now, as always, the solution creates the new problema.
 


The U.S. Economy Is in Good Shape

As we shake off the effects of past Fed policy, many signs are good. But the 2016 race has seen some alarming proposals floated.

By Martin Feldstein   





The American economy is in good shape, better than critics think and financial investors fear.

Incomes are rising, unemployment is falling, and industrial production is up sharply. The recent steep declines in the prices of stocks and junk bonds are not the precursor of an economic downturn. Instead, they are part of the inevitable unwinding of mispriced financial assets caused by the Federal Reserve’s unconventional monetary policy.

The Fed’s monetary policy drove up equity prices to increase household wealth and stimulate economic recovery. But artificially high stock prices eventually have to come down. Even after the 9% fall in share prices from the recent peak in November, the price-earnings ratio of the S&P index is still more than 35% above its historical average.

Fortunately the necessary financial corrections are happening when the U.S. economy is strong.

We are essentially at full employment, with an overall unemployment rate of 4.9% and 2.5% among college graduates. Tight labor markets are leading to increases in hourly earnings and in the producer prices of services. Total payroll employment is up more than 600,000 in the past three months, and the ratio of employment to population, which has been at very low rates for several years, is inching up.

Households are in good shape: Real disposable income is up at a 3.5% annual rate, and the total value of homes is 7% higher than a year earlier. The Congressional Budget Office and others predict that real GDP growth this year will be above 2.5%.

Although the money incomes of middle-class households have been rising very slowly for three decades, the focus on cash income is misleading. The CBO explains that once corporate and government transfers are added to market incomes, and federal taxes are subtracted, the real income after transfers and federal taxes is up 49% between 1979 and 2010 for households in the lowest income quintile (with average total incomes of $31,000 in 2010). Real income is up 40% between 1979 and 2010 for households in the middle three quintiles (with average total incomes of $60,000 in 2010).

Even that understates the true growth rates of real incomes, because government statistics don’t fully capture improvements in the quality of goods and services.

The Fed and others express concern about the potential contagion effect on the U.S. economy of weak demand in other countries. GDP is slowing in China, growing at less than 2% in Europe and declining in Japan, Russia and Brazil. Still, the drag of lower exports on our GDP in the past six months has been less than 0.25%. The dependence of U.S. growth on exports and activity in the rest of the world is easily exaggerated.

The 70% decline in the price of oil since early 2015 will eventually turn out to have a positive impact on U.S. economic growth. Until now it has caused a dramatic decline of activity in the U.S. oil industry and in related manufacturing and construction firms. But the fall in gasoline prices alone has increased annual household spending power by about $129 billion or more than $1,000 per household. Although households have temporarily plowed much of this found money into savings, we are likely to see it lead to increased consumer spending in 2016 and 2017.

Those who worry that the U.S. faces another recession often refer to the danger of an inverted yield curve—with interest rates on long-term government bonds below short-term rates. The danger reflects that, in the past, an inverted yield curve was the result of a sharp increase of short rates by the Fed to reverse rising inflation. But such a sharp increase hasn’t happened and isn’t likely to happen—even after the Fed raises short-term rates again. The yield on the 10-year Treasury note is now 1.8% while the two-year rate is 0.7% and three-month rate is 0.3%.

It would be a mistake for the Fed to abandon its December forecast of four rate increases in 2016. Monetary policy would still be very accommodative, and the federal-funds rate would still be less than the core consumer-price index inflation rate, which is now 2.2% since 12 months ago.

A decision not to raise rates in March would signal markets that the Fed fears falling share prices. The resulting sense that there is a Fed “put” could encourage financial investors to continue pouring money into equities, raising share prices again and increasing the danger of future financial instability.

The American economy does face long-term problems. High on my list is the large and growing national debt, rising from less than 40% of GDP before the recession to 75% now and heading to more than 85% in 10 years. That would require devoting 30% of personal income-tax revenue to pay interest on the national debt, with more than half of that going to foreign bondholders. The education system for most K-12 students falls short of global standards, and we fail to provide useful education and training for many high-school graduates. The country needs to address these problems in the coming decade.

But the big uncertainties that now hang over our economy are political, with presidential candidates threatening to raise taxes, increase fiscal deficits and pursue antibusiness policies.

Removing those uncertainties could stimulate growth after this year’s election.


Mr. Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan, is a professor at Harvard and a member of the Journal’s board of contributors.


Can The 2008 30% Drop In Gold Price Happen Again?

by: Doug Eberhardt


- Fear is subsiding, and gold follows fear.

- Dollar and gold- we're not at extremes yet.

- A cautious word on gold mining stocks.

 
The DOW and Gold

Many don't remember in 2008 the 30% drop in the price of gold SPDR Gold Trust ETF (GLD) that coincided with the drop in the stock market represented by the Dow Jones Industrial Average (DJIA) which lost 34% the same year. They do remember gold bottoming in November 2008 and taking off to its all-time high in 2011 putting square blame on the financial bubble that had just popped and an uncertain future. It took until March of 2009 for the DJIA to bottom at 6,594.44 before climbing to over 18,000 by 2015.

This rise in the stock market received some fuel from the beginning in December 2008 3 months before the DJIA low with the first round of quantitative easing (QE1) and the beginning of the "wealth effect" which then Fed Chairman Ben Bernanke alluded to in 2010 when he said the following;
Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
We then got QE2, QE3 and a stock market that moved higher until March 2, 2015 when the DJIA hit a closing high 18,288.63. Gold peaked in 2011 after QE 2 and before QE 3. The stock market was taking over again as the asset to own and with the dollar rise, gold became an afterthought.

The Fed stopped its asset-purchase program which added $1.66 trillion to its balance sheet bringing it from $898 billion in August of 2008 to $4.49 trillion the date it stopped QE and today sits at $4.83 trillion. Just 4 months after the Fed stopped QE, the stock market peaked, but gold still remained weak.

Once the Fed ended QE the talk became centered on when the Fed would begin to raise rates.

Month after month we waited for the Fed to give the green light that a rate increase would signal that all is well in the economy. CNBC financial commentator Melissa Lee even went so far as to say the Fed "chickened out" after failure of the Fed to raise rates during the September 2015 Fed meeting.

The Fed finally listened to Lee and raised rates in December 2015 as they thought the economy was ready with the U-3 unemployment rate falling to 4.9%, ignoring the fact that the real unemployment figure of U-6 actually rose to 9.9%. They not only raised rates 1/4% but indicated there would be 4 more quarter point increases in 2016. But 2016 started off with the worst beginning to the stock market ever where most rallies were sold forcing some at the Fed to indicate there may not be as many rate increases even though Yellen's Fed said rate hikes are still coming but would be "gradual."

No discussion of when those hikes would come but St. Louis Fed's Bullard says it'd be "unwise" to continue rate hikes stating;
I regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations.
But what many are not discussing is what the Fed said in that January Fed meeting relating to global implications. The FOMC said it is "closely monitoring global and financial developments."

After watching the movie The Big Short (or reading the book by Michael Lewis) one can come to the conclusion that the big banks got themselves into trouble, got taxpayers to help bail themselves out, fixed their balance sheets with the help of the Fed and are now doing just fine again handing out bonuses pay raises to their CEO's. That may be true for now in the United States, but it is not true in Europe, Japan and China. The next big short can come from any one of these countries just as the Asian financial crisis was started by countries devaluing their currency leading eventually to a U.S. mini crash for the DJIA by October of that year.

While the Great Chicago Fire was started by a cow in 1871 that burned the entire city down (it's actually debatable) the next financial crisis, and we all know one will come, doesn't have to start on our shores and the Fed understands this. I go into detail with this European, Japanese and China connection in my next book Illusions of Wealth but the following analysis from the book I think is important for you to understand now relating to just Europe's banks.

As of January 2016, The world's oldest bank Monte dei Paschi dropped 34% in January alone.

Europe's 46-member Stoxx 600 Banks Index is at the lowest level since 2012.



But if you were to ask a European banker in 2014 and again in 2015 their outlook for all business lines, it was as rosy as can be. If you watched The Big Short you'll also recall those in banking having no fear about the futures.


"Every fractional reserve bank depends for its very existence on persuading the public-specifically its clients-that all is well and that it will be able to redeem its notes or deposits whenever the clients demand. Since this is palpably not the case, the continuance of confidence in the banks is something of a psychological marvel." Man, Economy & State (1972) Scholar's Edition (2009). Ludwig von Mises Institute, Auburn, Alabama 36832 P. 1009, 1010

Negative Rates

With the interconnectivity of banks in the world today you can see why the Fed is worried about global ramifications. Is it any wonder that the Office of the Comptroller of the Currency is also proposing that U.S. banks with assets more than $50 billion show stress survival plans in the event of another severe financial crisis? If things are so great with the economy and higher rates are on their way, why does the Fed want to test how banks would handle negative rates?

Meanwhile the 10 Year Treasury rate has fallen from 2.043% the date of the last Fed's meeting in January to 1.75% today.

Are we on our way to negative rates? Some like Carmen M. Reinhart, Minos A. Zombanakis Professor of the International Financial System at Harvard University, say we. Believe it or not, we've been here before and perhaps we'll see gold bottom before this were to occur because the Fed is always late with their policy as we learned with the last crisis. First though, let's see how the European situation unfolds before we see if the U.S. is next as the LA Times just asked in a recent article; Some countries are using negative interest rates to fight slowdowns: Is the U.S. next?

Real short-term interest rates since 1870

The Vix Volatility Index and Gold

During the first month of 2016 and most of February, the volatility index Vix Volatility Index (VIX) soared. Gold also soared. I had written in my April 3, 2015 article the missing ingredient for gold to move higher was "fear." I had first brought up the VIX in my 8 indicators article when gold was 1283, when it was 27.91 and by April 3rd it had fallen to 14.37 with gold at $1,200 an ounce. Today we have the VIX at 20.53 after hitting a high on Feb. 11th when gold hit its closing high of $1,241 and yet gold is still at $1,231.15. This tells me gold is overpriced at present and would have the propensity to fall.



Dollar and Gold

When one pulls out and looks at the big picture for gold and the dollar as the next chart does, you can see the extremes over the last 4 decades represented by the purple lines. They are all approximately the same length and show the difference at the peaks and low marks where gold and the dollar are at complete opposites on the chart. But you don't see too huge a difference here in 2016 which leads this author to conclude that the dollar should move higher and gold lower in 2016 but I think it can be a fast washout move for gold that I have been patiently waiting for.

To get this outcome we need the dollar north of 100 to a possible target area of 120. Gold could fall 30% if this were to occur putting it just south of my $900 target where I plan to write my "all in" article. I'll give my reasoning for writing it at that price, assuming everything I see coming occurs. I will say though that if gold is falling hard along with most other assets when there is the deflationary contraction similar to 2008, the devastation can more painful that people think but gold will once again be leading the charge out of the carnage to new all-time highs as it did through 2011. Oil as you can see from the chart below had a similar outcome and I see lower prices for oil in the near future too, continuing its decline after this current run up in price concludes.



To make the case for a strong dollar, and I have been correct predicting it since 2011 I need to provide good reasoning to readers and I'll explain that hypothesis more in my next article.

A Cautious Word On Gold Mining Stocks

For those following the gold miners higher like the Market Vectors Gold Miners ETF (GDX), Direxion Daily Gold Miners Index Bull 3x Shares ETF (NUGT), Direxion Daily Junior Gold Miners Index Bull 3x Shares ETF (JNUG) we still have them green on the weekly and monthly with my ETF Leveraged Trading Service since the beginning of February. But I feel a turn is coming with Direxion Daily Gold Miners Index Bear 3x Shares ETF (DUST) and Direxion Daily Junior Gold Miners Index Bear 3x Shares ETF (JDST) soon to taking center stage.

Conclusión

I've given you analysis on 3 areas that I watch to decipher what happens next in gold. I should have come out with an article when the VIX started to move higher but was busy writing my next book and as I did last week, apologize. If you have ever written a book before, and as a perfectionist, you may know it's not the easiest thing to do. But after all this analysis I have done my conclusions on the lower price for gold still stands and now you are equipped with this reasoning to either wait on future purchases or just say you don't care and your mind is already made up and you want gold as insurance. My best advice remains to dollar cost average into your allocation that you want for gold and take some of the guessing out of the equation.

We know a crisis is coming and hopefully my timing for the all-in article is good. The bottom line is if you don't have any gold, get some and if you do possess gold, chances are you'll love to buy more if the price were to fall.

While I am a believer in physical gold, I am ok with traders profiting short term in ETFs like the SPDR Gold Trust ETF (NYSEARCA:GLD) or for silver the iShares Silver Trust ETF (SLV). But you may want to in the near future protect your gold holdings by looking at an ETN like the DB Gold Short ETN (DGZ) which shorts gold.

lunes, febrero 29, 2016

NO WAY OUT / THE BURNING PLATFORM


No Way Out

By: The Burning Platform


I know there are many people out there who don't watch the daily drivel emanating from their 72 inch HD boob tubes. I don't blame them. Most of the shows on TV are dumbed down to the level of their audience of government educated zombies. The facebooking, twittering, texting, instagraming generation is too shallow, too self-consumed, and too intellectually lazy to connect the dots, understand symbolism or learn moral lessons from well written thought-provoking TV shows. But there have been a few exceptions over the last few years. Breaking Bad, House of Cards, and Walking Dead are intelligent, brilliantly scripted, morally ambiguous, psychologically stimulating TV shows challenging your understanding of how the world really works.

The Walking Dead is much more than a gory, mindless, teenage zombie flick. Personally, I find myself interpreting the imagery, metaphorical storylines, and morality lessons of Walking Dead within the larger context of cultural, political, and social decay rapidly consuming our society today. I don't pretend to know the thought process or intent of the writers, but I see plot parallels symbolizing current day issues plaguing our empire of debt. Their mid-season opener was one of the most intense shocking episodes of the entire series. It was titled No Way Out, as the main characters appeared to be trapped in a no win situation with long odds and little hope of surviving.
.
No Way Out

From my vantage point I see four explicit types of characters inhabiting the world of the Walking Dead. There are the infected mindless zombies roaming the countryside in search of flesh to consume. They are oblivious to the world around them, unable to think, feel, or act human. They can be distracted and led in different directions by loud noises or other diversions. Then there are the still human zombies inhabiting the walled city of Alexandria who are sentient, thinking, frightened men and women, not prepared to face the harsh reality of an unfair brutal world and the consequences of not fighting the forces of evil. They cower behind their walls and hope for the best.

There are bands of nomadic lawless gangs wandering the barren countryside, living off the scraps left behind by civilization and taking what they want through brute force. They abandoned any sense of morality as the world spun out of control. Killing innocent people to achieve their ends is fair game in their survivalist worldview. They see anarchy as an opportunity to loot, steal, murder and disrespect the rights of others.

Anarchy is essentially the absence of institutional coercion. It doesn't mean chaos, with human beings automatically becoming bandits and murderers. Humans cooperate, trade, exercise personal responsibility and create social order without the dictates of a government ruler.

What binds society together are not thousands of overbearing laws and a ruthless police state, it's basically peer pressure, moral suasion, and social censure. We interact with other humans every day, without some higher authority dictating how it should be done.

The cohort of decent men and women trudging through the southern regions of a fallen America experience horrific scenes, but maintain their humanity despite anarchy. The main characters (Rick, Daryl, Michone, Carol, Carl, Glenn and Maggie) approach every day with their eyes wide open. In a setting where there is no government, no enforceable laws, no police, and no higher authority to provide guidance on how to approach every dangerous situation and ethical dilemma, they choose the honorable path.

As the crumbling remnants of a once mighty nuclear superpower decays, this tight knit group of heavily armed citizens rely upon their guile, intelligence, courage, and moral backbone to try and rebuild a new society. They are honorable, bold and resolute as they fight the ravenous brain dead zombies and the malicious roving mobs swarming over the apocalyptic terrain, while attempting to turn the cowering cowards of Alexandria into courageous patriots who see the world as it is rather than as they wish it to be. In a catastrophic situation where all governmental functions are non-existent it is those who are physically prepared, self-sufficient, mentally strong, heavily armed and able to deal with dire circumstances through the lens of reality, who will survive.

The No Way Out episode opens in the midst of a horrifying crisis within the bigger ongoing crisis. The village of Alexandria had successfully walled off their community from the outside world and had grown soft as they failed to grasp the nature of their perilous circumstances.

They passively believed walls would always protect them; weapons were barbaric and unnecessary; and preparing for an adverse turn in conditions was pointless. But misfortune and a threat to their very survival did arrive. They were attacked by a band of murdering thieves and bad luck befell their community when their wall was breached. Their lack of preparation, inability to utilize firearms, and absence of courage to confront the dangerous threats, left them helpless in the face of a life or death situation.

The two types of zombies inhabiting the world of the Walking Dead represent two distinctive types of people populating our country today, as we relentlessly meander towards our own rendezvous with destiny. Our country is already disintegrating, as unpayable debt, endemic corruption, military overreach, civic decay, and moral degeneration coalesce to insure a societal collapse. It's not a matter of if, but when. The zombies are unaware and apathetic, as their inability to think critically has left them trapped in an "all is well" paradigm peddled by their government keepers and their corporate fascist benefactors.

Zmbie 1


The American zombies resembling the infected mindless variety from Walking Dead inhabit the urban ghettos, semi-rural trailer parks, and putrefying suburban enclaves across the land.

They probably constitute close to 50% of the population and continue to multiply. They are uneducated due to the dreadful government run public education system and the bad life choices of those who brought them into this world. They feed off the public welfare system, incapable or unwilling to work for a living. They are easily distracted by their iGadgets, 600 cable channels, sporting events, the latest fashions and hero worship. They don't read books, participate in civic affairs, create cohesive communities, or think for themselves. The aimlessly shuffle through their wretched lives taking what they can and being herded by those in control.

As society collapses they will panic, burn their dilapidated hovels to the ground and quickly die off, with no government to sustain them.

Cell phone while drivng


The next category of zombies populating America today is much like the people of Alexandria in the show. They are educated, employed, middle to upper middle class, living in suburban single family homes and townhouses, afraid of guns, trusting of authority, and are trapped in a web of normalcy bias. They've already forgotten the 2008 global financial crisis and believe their politician leaders that adding $70 trillion of global debt since 2008 has actually cured a disease caused by excessive unpayable debt. Since a further disaster has not materialized thus far, they convince themselves it will never occur. Therefore, they take no precautionary measures to prepare for any type of disaster, whether it is financial, societal, or related to their personal safety.

Despite clear warnings of a global conflagration already underway, these humanoid zombies optimistically believe everything will turn out for the best. The more aware among these zombies have an uncomfortable feeling about the state of affairs, as they know in their gut we are headed towards disaster. This cognitive dissonance makes them uneasy, so they purposefully avoid or disregard information that would confirm their worst fears. These zombies drive super-sized SUVs, shuttle their kids to soccer games, live in McMansions, commute to high rise office towers where they push paper, watch mainstream media, believe gun control will make them safer, and still think voting for hand-picked corporate candidates will make a difference.

They lack the intellectual curiosity to question the existing social order. They lack the courage to confront their oppressors, corrupt government, malevolent banking cabal, or corporate media mouthpieces spreading lies for the ruling oligarchy. They are completely unprepared for a world where processed toxic foodstuff isn't plentiful and easily accessible at their local Wally World; ATM machines don't spit out $20 bills on command; energy isn't cheap, plentiful and accessible; and they are no longer protected from bad guys by government thugs. In a societal collapse their lack of self-sufficiency, firearms training and mental toughness to deal with a dreadful reality will result in most losing their lives. A segment of this zombie population can be salvaged if they can be convinced of the jeopardy in which they have been placed. With proper leadership and example to follow, the courage to resist and survive can be regained.

The nomadic lawless gangs committing acts of aggression against the well-intentioned decent survivors of the collapse know they are acting in a criminal manner, don't care, and rationalize their psychotic disregard for moral standards because there is no institutional authority to stop them from raping, pillaging and murdering. I liken this segment to the criminal sociopathic Wall Street bankers; bought off crooked political class; government apparatchiks and surveillance state thugs; corporate fascists; military industrial complex; shadowy string pulling billionaires; propaganda spewing corporate media; and the leeches who suckle off this evil prototype. This gang of lawless psychopaths has no concern for the greater good or their fellow man. Their only objective is to pillage the remaining wealth of the nation, with no concern for laws, regulations, morality, decency, or the victims of their ravenous sacking of America. They are the real enemy.
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Zombies 2

Lastly, we have the self-reliant, courageous, disciplined characters that represent the last best hope for humanity in the apocalyptic world of the Walking Dead. Despite the catastrophic circumstances they face on a daily basis, they never lose their integrity or their humanity. Kindness, generosity, intelligence, adaptability, and situational awareness complement their courageousness and willingness to use whatever means necessary to survive. A common thread among the main characters is their ability to utilize weapons, think strategically, act as a team, and approach every situation in a realistic, resolute mode. They choose to not deny reality. Lying to yourself about the desperateness of your situation does you no good. They choose living over despair and death.

The people represented in our society by Rick, Daryl and their motley crew of freedom loving patriots is the gun clingers referred to by Obama in 2008:
"They get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."


They are also derogatorily referred to in the corporate media as preppers, gun nuts, survivalists, right wing extremists, and potential domestic terrorists. Ron Paul supporters, Christian conservatives and anyone believing strongly in the 2nd Amendment is considered suspect by those in power. DHS is spying on them, the IRS is harassing them, the liberal media scorns them, and the president wants to disarm them. It is the hard working, self-reliant, morally upstanding, gun owning citizens of this country who have been screwed by the onslaught of illegal immigrants, the Wall Street owned Federal Reserve, and the corporate fascists who have written the laws and trade legislation which has enriched them while destroying the working middle class.

Wall Street/K Street oligarchs have financialized every aspect of our society, gutted the productive industries, indebted our grandchildren to the tune of $200 trillion, and destroyed the jobs needed to sustain our nation. The frantic efforts of the Federal Reserve, their minions in NYC & DC, and the propaganda press to prop up this hollowed out carcass of a country are failing. The debt is too vast; the corruption too entrenched; the vital systems too damaged; populace too apathetic and distracted by bread and circuses; and leaders too feckless to do what it would take to save the country.

When it all falls apart, it will be the small minority of gun clinging men and women who know what needs to be done and will do it. These people only represent a small percentage of society.

They will do the heavy lifting during the coming crisis, because they have retained their moral compass, believe in the Constitution, and don't need Big Brother and thousands of heavy handed laws to do what's right. There is good and evil in this world. Bad people will need to be dealt with brutally and swiftly.

The approximately 40 million households with a gun owner are our last line of defense against a government losing control, zombie hordes that will rampage when the EBT deposits stop, and the unprepared normalcy bias infected multitudes. It will require courage, endurance, and community team work to survive the perils ahead in order to rebuild our once great nation. A coercive overbearing bloated government will not be part of the solution.

In the meantime, there are lessons to be learned from the No Way Out episode. Rick and a group of the main characters needed to disguise themselves as flesh eating zombies in order to secure the weapons they needed to fight off the mindless voracious hordes overrunning their community. Until the SHTF moment descends upon our country, those whose eyes are open to the imminent threats will need to blend in with the iGadget addicted masses, while continuing to prepare, build supplies, accumulate weapons and ammunition, and becoming more proficient in using those weapons. They will need to stay under the radar of the corporate fascist military surveillance state until it crumbles in a heap of diseased debris. When the vast majority have been brought up to believe the only boundaries are those exerted through force by the authorities, and that governmental power disappears, the bad people take whatever they want, by force, unless good people fight back.

Zombies 3


When their plan to blend in with the zombies goes awry due to fear and hesitation by some of the Alexandrians, loss of life ensues and Rick's son Carl is shot in the eye. This event creates a turning point in the battle between the immense throng of zombies and the minority of fanatical freedom lovers. Rick goes rogue and single-handedly begins taking on the thousands of voracious zombies in a display of rage and retribution for his son's life threatening injuries. Sometimes a single act of defiance can change the course of history.

When Rick dashes outside and begins to fight the zombies he has no concern for his own safety. His act of boldness and bravery leads his clan of fearless troops to enter the fray and kill even more zombies. Even the formerly passive priest Gabriel and the cowardly Eugene take up arms and battle the forces of evil. But, the most uplifting occurrence is seeing the previously weak willed inhabitants of Alexandria become inspired by Rick's courage and valor to find their nerve and finally fight for their community. They didn't fight for their country or because they were commanded to, but for their fellow man. They were still vastly outnumbered, but Daryl's intelligence and understanding of the situation led him to implement an audacious strategy to lure the brain dead zombies to a fiery demise.

His astuteness saved the day, proving the majority does not always win and the good people can prevail.

The lesson I deduced from this chapter of the Walking Dead is one of hope. The authorities pulling the strings of our increasingly mentally infected country prefer mindless, non-thinking, easily manipulated zombies so they can retain their power, control, and strip mining wealth operation. We only exist for the benefit of the state. Society does not have to be built for the benefit of an essentially criminal organization - the coercive state. There is nothing in human nature that makes it impossible to create a community of people that respect each other's natural rights and follow accepted moral standards for working out differences. There will always be a few criminals and sociopaths to deal with, but the community can self-police and rid themselves of these vermin. These are the people who usually gravitate to and flourish within a government police state.

When the ongoing crisis worsens over the next few years, with government collapsing under the weight of debt and corruption, societal implosion results in civil chaos, and economic calamity befalls the nation, the brain dead zombie class will have no hope. It will require a tireless minority to prevail. We will need men and women to step up and lead through example. There is a segment of the sentient zombie class who can be awoken from their self-induced stupor by an irate few who set brushfires of freedom in their hearts and souls. The odds of a few rag tag farmers defeating the greatest military power on earth were virtually impossible in the 1770s .

But through noble citizen leadership, fortitude while facing extreme adversity, and courage in the face of death, a minority of good people prevailed.

At the end of the episode, Rick finally sees a way out. As Carl lies unconscious in bed Rick tells him he underestimated the Alexandrians and vows to rebuild the community. They rose to the challenge.

Rick adds that for the first time since before waking up in the hospital in King County, he feels truly hopeful for the future. "I want to show you the new world," he says. Carl's fingers grip Rick's hand.

The immediate future is bleak, but there is hope. The country and our future will be determined by those who are most prepared and willing to do whatever it takes to reinstitute the principles upon which this country was built. There is a way out. Are you prepared?

Zombie 4

"It does not take a majority to prevail ... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men."  
Samuel Adams


Latin America’s neoliberal bashing loses its lustre

 
Neoliberalism has degenerated into a catch-all Latin pejorative for anything deemed reactionary
 
Mauricio Macri, opposition presidential candidate and mayor of Buenos Aires, speaks during a debate with ruling party candidate Daniel Scioli in Buenos Aires, Argentina, on Sunday, Nov. 15, 2015. Macri, the mayor of Buenos Aires, leads Scioli 49 percent to 42 percent ahead of the November 22 runoff election, according to poll results published by Giacobbe & Asociados. Photographer: Diego Levy/Bloomberg *** Local Caption *** Mauricio Macri©Bloomberg
Mauricio Macri, Argentina's 'neoliberal' president
 
 
Last week was a turning point in the “neoliberal” battle supposedly being waged for South America’s soul. It may also prove to be an alert for self-professed radicals elsewhere who misconstrue the region’s long use of that baleful word.
 
Neoliberal is a loaded term. Coined in the 1930s to describe an obscure middle way between liberalism and socialism, it only won global currency in the 1980s to describe the free market policies of Augusto Pinochet, the Chilean dictator.

Since then, it has degenerated into a catch-all Latin pejorative for anything popularly deemed reactionary, unpleasant or cruel. That might include International Monetary Fund programmes in Latin America, Washington neocons, Spanish austerity, or simply kicking a dog.

Take Mauricio Macri, Argentina’s “neoliberal” president. Last week, he sought to gain the advantage in his country’s long battle with holdout creditors, the latest move in supposedly unpopular reforms, including a devaluation and energy price rises, that have won him surprisingly high ratings.
 
By contrast, Brazil’s ruling Workers’ party met on Wednesday to discuss how to rescue their country from economic crisis without “resorting to neoliberalism”. The pointed reference implied eschewing socially unpopular reforms — although so far that has only worsened a severe recession and corruption scandal that rank Dilma Rousseff as Brazil’s most unpopular president.
 
In Latin America neoliberal, like many pejoratives, has been devalued by misuse — perhaps because of its resurgence elsewhere. Between 2008 and 2015, gauging from a Factiva news search, its use in the English-language press has tripled. Typically, users include supporters of Bernie Sanders in the US and Jeremy Corbyn in the UK.

In Latin America, though, railing against neoliberalism has become a political convenience, a knee-jerk slur. Nowhere is that clearer than in Venezuela. There, last week, the ruling socialist party went on a social media blitz to remind citizens that February 16 marked the 27th anniversary of an unpopular “neoliberal” adjustment programme called the “Paquetazo”.
 
The tacit warning was that Venezuela today is in crisis, on the brink of default, suffering from near hyperinflation and endemic corruption. But were it not for socialist president Nicolás Maduro and his latest meek reform effort, the situation would be worse still. The IMF could lend Venezuela the money it needs.
 
It is worth asking why the word has such resonance — especially as painful, or neoliberal, adjustment will probably be a South American theme this year as the commodity boom ebbs, economies slow, and deficits widen.

One reason lies in the painful adjustment programmes of the 1980s and 1990s. These laid the foundation for the 2000s economic boom. But their traumatic social cost also shaped subsequent political discourse — including the neoliberal hate word.
 
Times, though, have changed. The political right is more aware of social concerns. Many South Americans also recognise that the China-driven commodity price bonanza is over. They may not wish for economic adjustment; they do recognise its need.

Moreover, after the social gains of the past decade, they have a greater stake in the system.

Naturally, they want that system well-managed. Politicians too long in power who preside over corruption-riddled administrations and cannot provide “gerencia”, or good management, are shown the door.

Bolivia’s referendum on whether President Evo Morales can run for a fourth term — early results suggest Bolivians voted No — may be a bellwether for the regional mood. Mr Morales has made anti-neoliberalism a central tenet of his electoral appeal. But he is also embroiled in a corruption scandal after an ex-girlfriend, now a top executive in a Chinese company, became a major government contractor.

Neoliberalism has become a straw man. Rather, the real war for South America’s soul lies in fighting corruption and legal impunity. In Miami, it is members of Venezuela’s exiled bourgeoisie who seem to be barely earning a living driving Uber cabs, while enriched government insiders coast around in limousines.
 
That is South America’s real lesson for angry voters and radicals elsewhere. It is also closer to the western political mood: popular fury whenever an economy becomes or seems rigged by elites and corrupt insiders, of whatever political stripe they may be.


Lift the Ban!

Kofi Annan on Why It's Time To Legalize Drugs

Essay by Kofi Annan

A marijuana drying room in Denver, Colorado: The war on drugs is, to a significant degree, a war on drug users -- a war on People.
Corbis A marijuana drying room in Denver, Colorado: The war on drugs is, to a significant degree, a war on drug users -- a war on People.


Drugs are dangerous, but current narcotics policies are an even bigger threat because punishment is given a greater priority than health and human rights. It's time for regulations that put lives and safety first, argues former UN Secretary-General Kofi Annan.

In my experience, good public policy is best shaped by the dispassionate analysis of what in practice has worked, or not. Policy based on common assumptions and popular sentiments can become a recipe for mistaken prescriptions and misguided interventions.

Nowhere is this divorce between rhetoric and reality more evident than in the formulation of global drug policies, where too often emotions and ideology rather than evidence have prevailed.

Take the case of the medical use of cannabis. By looking carefully at the evidence from the United States, we now know that legalizing the use of cannabis for medical purposes has not, as opponents argued, led to an increase in its use by teenagers. By contrast, there has been a near tripling of American deaths from heroin overdoses between 2010 and 2013, even though the law and its severe punishments remain unchanged.

This year, between April 19 and 21, the United Nations General Assembly will hold a special session on drugs and the world will have a chance to change course. As we approach that event, we need to ask ourselves if we are on the right policy path. More specifically, how do we deal with what the United Nations Office on Drugs and Crime has called the "unintended consequences" of the policies of the last 50 years, which have helped, among other things, to create a vast, international criminal market in drugs that fuels violence, corruption and instability? Just think of the 16,000 murders in Mexico in 2013, many of which are directly linked to drug trafficking.

A War on People

Globally, the "war on drugs" has not succeeded. Some estimate that enforcing global prohibition costs at least $100 billion (€90.7 billion) a year, but as many as 300 million people now use drugs worldwide, contributing to a global illicit market with a turnover of $330 billion a year, one of the largest commodity markets in the world.

Prohibition has had little impact on the supply of or demand for drugs. When law enforcement succeeds in one area, drug production simply moves to another region or country, drug trafficking moves to another route and drug users switch to a different drug. Nor has prohibition significantly reduced use. Studies have consistently failed to establish the existence of a link between the harshness of a country's drug laws and its levels of drug use. The widespread criminalization and punishment of people who use drugs, the over-crowded prisons, mean that the war on drugs is, to a significant degree, a war on drug users -- a war on people.

Africa is sadly an example of these problems. The West Africa Commission on Drugs, which my foundation convened, reported last year that the region has now become not only a major transit point between producers in Latin America and consumers in Europe, but an area where consumption is increasing. Drug money, and the criminality associated with it, is fostering corruption and violence. The stability of countries and the region as a whole is under threat.

I believe that drugs have destroyed many lives, but wrong government policies have destroyed many more. We all want to protect our families from the potential harm of drugs. But if our children do develop a drug problem, surely we will want them cared for as patients in need of treatment and not branded as criminals.

Stop Stigmatizing and Start Helping

The tendency in many parts of the world to stigmatize and incarcerate drug users has prevented many from seeking medical treatment. In what other areas of public health do we criminalize patients in need of help? Punitive measures have sent many people to prison, where their drug use has worsened.

A criminal record for a young person for a minor drug offence can be a far greater threat to their well-being than occasional drug use.

The original intent of drug policy, according to the UN Convention on Narcotic Drugs, was to protect the "health and welfare of mankind." We need to refocus international and national policy on this key objective.

This requires us to take four critical steps.

First, we must decriminalize personal drug use. The use of drugs is harmful and reducing those harms is a task for the public health system, not the courts. This must be coupled with the strengthening of treatment services, especially in middle and low-income countries.

Second, we need to accept that a drug-free world is an illusion. We must focus instead on ensuring that drugs cause the least possible harm. Harm reduction measures, such as needle exchange programs, can make a real difference. Germany adopted such measures early on and the level of HIV infections among injecting drug users is close to 5 percent, compared to over 40 percent in some countries which resist this pragmatic approach.

Third, we have to look at regulation and public education rather than the total suppression of drugs, which we know will not work. The steps taken successfully to reduce tobacco consumption (a very powerful and damaging addiction) show what can be achieved. It is regulation and education, not the threat of prison, which has cut the number of smokers in many countries. Higher taxes, restrictions on sale and effective anti-smoking campaigns have delivered the right results.

The legal sale of cannabis is a reality that started with California legalizing the sale of cannabis for medical use in 1996. Since then, 22 US states and some European countries have followed suit.

Others have gone further still. A voter initiative which gained a majority at the ballot box has caused Colorado to legalize the sale of cannabis for recreational use. Last year, Colorado collected around $135 million in taxes and license fees related to legal cannabis sales. Others have taken less commercial routes. Users of Spain's cannabis social clubs can grow and buy cannabis through small non-commercial organizations. And Canada looks likely to become the first G7 country to regulate the sale of cannabis next year.

Legal Regulation Protects Health

Initial trends show us that where cannabis has been legalized, there has been no explosion in drug use or drug-related crime. The size of the black market has been reduced and thousands of young people have been spared criminal records. But a regulated market is not a free market. We need to carefully think through what needs regulating, and what does not. While most cannabis use is occasional, moderate and not associated with significant problems, it is nonetheless precisely because of its potential risks that it needs to be regulated.

And therefore, the fourth and final step is to recognize that drugs must be regulated precisely because they are risky. It is time to acknowledge that drugs are infinitely more dangerous if they are left solely in the hands of criminals who have no concerns about health and safety.

Legal regulation protects health. Consumers need to be aware of what they are taking and have clear information on health risks and how to minimize them. Governments need to be able to regulate vendors and outlets according to how much harm a drug can cause. The most risky drugs should never be available "over the counter" but only via medical prescription for people registered as dependent users, as is already happening in Switzerland.

Scientific evidence and our concern for health and human rights must shape drug policy. This means making sure that fewer people die from drug overdoses and that small-time offenders do not end up in jail where their drug problems get worse. It is time for a smarter, health-based approach to drug policy.

It is time for countries, such as Germany, which have adopted better policies at home, to strongly advocate for policy change abroad. The United Nations General Assembly special session on the world drug problem would be a good place to start.