No posting over the last five weeks as a result of trying to make sense of the financial developments that have occurred in that time, position myself 1) so as to avoid losses, and 2) if possible to enhance my savings; and also as a result of beginning work with a new client and moving myself as swiftly as possible along the learning curve. I’m pleased to say that both developments have worked out well, despite completely unexpected events threatening to upset my progress.
Nevertheless, events, both financial and non-financial, have caused me to think myself in the position of Mugatu, in the exceptional film Zoolander – so few people, especially few people in positions of responsibility, seem to notice what I notice, that I suspect that, if not taking ‘crazy pills’, I must myself be round the twist.
A couple of examples will suffice. Starting with financial events, I have watched as the world has gone in five weeks from being on the verge of meltdown, to enjoying rallies in equity and credit markets, commodity prices (notably iron ore and oil), and of every currency except the US dollar, which has gone the other way. Now normally I would see this as being a Good Thing: movements such as these usually reflect improvements in underlying economic performance – economic activity, employment, trade, inflation, etc. But in this case, there has been nothing but continued deterioration in the indicators of economic fundamentals. Indicators for international trade volumes are plunging perilously – there is a report that, at one point in January, there were no container ships at sea, either in the Atlantic or the Pacific. Employment continues to weaken in the United States, the only indicator to the contrary being the statistical hocus-pocus that is the official jobs report. The situation of the European banks, especially the Italian banks, is dire – they are hopelessly insolvent, becoming more so every day, and more people are realising it. At every level, economic activity is cooling.
So why the rallies? Why the sudden, strong increase in iron ore prices, when demand in China continues to fall? Why the 37% rise in oil prices, when tankers full of the stuff are being hired as floating containers, and onshore oil storage facilities in Cushing, Oklahoma are warning that in a few months they will have no spare capacity left? Why the strong increases in equity markets, and in all currencies against the US dollar, when it is these countries, in hock to the eyeballs in US dollar debt, who are having trouble making repayments?
From what I can gather, this strong whiplash in market valuations was all based on ‘just in’ news reports of speculations about possible policy action, plus actual action by the central banks of China, Japan and Europe.
- Never mind that Russia and Saudi Arabia only agreed to discuss the possibility of freezing oil output at current levels, and that other oil-producing nations rubbished the idea as they prepared to ramp-up their own production – oil prices rallied strongly on the news.
- Never mind that there has been no increase in demand for iron ore in China – that the Chinese statistics on total social financing registered an increase in lending in January of US$500 billion – can you even imagine such an amount of credit being issued, responsibly and soberly, in one month – is sufficient for people to believe that some of that money must make its way into iron ore contracts, and thus we see a 25% increase in the price of the grey globs.
- Never mind that the actions of the central banks in China, Japan and Europe signal complete and utter desperation, as they resort to printing unbelievable amounts of money and spending them on private-sector assets in order to continue propping up prices of those assets and prevent, at all costs, the normal risk-pricing operations of the market, which the institutions both issuing and holding those assets – including the central banks themselves – simply could not bear.
- Never mind that the US Federal Reserve’s stalling on increasing short-run interest rates indicates that it is concerned with the economic outlook both domestically and overseas.
- Never mind that financiers around the world report difficulty gaining access to US dollars, including now in Japan, a first-world economy with close financial, diplomatic and military ties to the US – the value of the US dollar will still fall.
- Never mind, here in Australia, that the latest number for the rate of economic growth is within its post-crisis normal range, or that the latest number for the fall in the unemployment rate was entirely due to ‘discouraged workers’, the actual number of people in work being as good as unchanged – both will be taken for their ‘excellent’ face value, and cause appreciations in the equities market and in the currency.
I had to laugh, yesterday, when I saw that despite the price of iron ore having fallen back to where it was before this madness began, the local currency, which took off up with these contract prices, hasn’t come back down with them, and is still appreciating.
I’m quite aware of T.S. Eliot’s phrase, ‘Humankind cannot bear too much reality’. What I want to know is, what happens on the other side – just how much unreality can we bear? For how long can this flight from reality, this refusal to see things as they are, this continuing to act in a way which shapes reality with one’s wishes, but only at the cost of a more painful reality making itself manifest in the near future – for how long can it go on? When will the resources that allow it to happen run out? When will enough people walk away from the charade, so that it simply collapses for lack of participation, as happened in/to the Soviet Union?
All of this is important, but the truth is that the financial system is not a concern for almost all people in the world. But the embrace of unreality, the flight from reality, the closing one’s eyes to uncomfortable truths and the wishing away of unpleasant facts is not confined to the world of money. It is hurting people – young, vulnerable people – and the frequency with which it inflicts its pain is intensifying, precisely as a result of the willed ignorance of those in positions of responsibility:
Police reports show that sexual violence in Germany has skyrocketed since Chancellor Angela Merkel allowed more than one million mostly male migrants from Africa, Asia and the Middle East into the country. But the crimes are being played down by German authorities, apparently to avoid fueling anti-immigration sentiments.
Police in Kiel say the assault began at around 5:30 pm, when two Afghan males (aged 19 and 26) began stalking and photographing three girls (aged 15, 16 and 17) at a food court in the Sophienhof, a large shopping center near the city’s central train station.
After posting photographs of the girls on social media, the two men were quickly joined by at least 30 other migrants who began collectively to harass the girls in a Muslim “rape game” known in Arabic as “taharrush” (al-taharrush al-jinsi, Arabic for “sexual harassment”).
When police arrived, the migrants, rather than running way, began verbally and physically abusing the officers, some of whom were injured. It took police two hours to restore order. The initial two perpetrators, asylum seekers from Afghanistan, were arrested; the other migrants involved in the incident remain at large.
At a news conference on February 27, police spokesman Oliver Pohl revealed that more women are now coming forward to report similar experiences at the Sophienhof.
The owner of a restaurant at the mall said:
“Groups of young men gather at the Sophienhof every evening. What they do here is unacceptable. The moment they see a young woman wearing a skirt or any type of loose clothing, they believe they have a free pass. It is about time migrants are made to understand: things in Germany function differently than in their home countries.”
In an interview with Kieler Nachrichten, the local leader of the Free Democrats (FDP), Wolfgang Kubicki, expressed dismay at the deteriorating security situation in Kiel:
“It cannot be that girls and women, as well as their parents or spouses, should be afraid in public spaces. People are asking: If you are no longer safe in Sophienhof, where then?
“The perpetrators must be brought to justice. We must not create the impression that perpetrators will go unpunished for such assaults. … Turning a blind eye to such incidents is the opposite of integration and ultimately leads to the creation of parallel societies.
“It starts with small things. Time and again I keep hearing from the police how disrespectful young migrants are towards the officers. We have to support our security forces and reverse the loss of confidence in the police and judiciary. Otherwise we risk citizens taking the law into their own hands. I do not want to see vigilantes patrolling our streets.”
Kubicki was referring to revelations that politicians in Kiel ordered the city police to overlook many of the crimes perpetrated by migrants. A document leaked to the newspaper Bild in late January showed that the orders were given in October 2015, when more than 10,000 migrants were entering Germany each day. According to Bild, police in North Rhine-Westphalia and Lower Saxony have also been instructed to be lenient to criminal migrants.
Meanwhile, the raping and assaulting of German women and children by migrants and refugees — German police often refer to them by using politically correct euphemisms such as “southerners” (Südländer), men with “dark skin” (dunkelhäutig, dunklere Gesichtsfarbe, dunklem Hauttyp) or a combination of the two: “southern skin color” (südländische Hautfarbe) — continues apace
Those in responsibility – the leaders of societies so civilised that they need only be lightly policed – have opened the borders of their countries to the worst elements of the third world. And now that those worst elements are behaving to type, the response of those in responsibility is to pretend nothing is happening and to continue on importing more of these worst elements.
You need only the slightest familiarity with the psychology of how people respond both to incentives, and to a lack of disincentives and inhibitions, to understand that the situation will continue to deteriorate.
No first-world society can survive this.
The only questions left, are:
- how long will it take until people demand a change of policy; and
- what form – how severe, really – the change in policy will be.
The question which fascinates me – taking the 50,000 foot view of the consulting philosopher, you understand; as a person I am horrified – is how on earth could things have gotten so out of control? Is this the result of a plan? Or stupidity? Or is this just what happens when people become so prosperous and secure that they forget what we might call Kipling’s Gods of the Copybook Headings:
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
The answer, it appears to me after all my study, lies in mind-sets, which I think we can safely extend to include what de Bono calls ‘Logic Bubbles’. The collection of beliefs, assumptions, prejudices, reasonings and heuristics which allow us to make sense of the world, but which also guide our actions, discard or twist into a more acceptable form evidence inconsistent with themselves, lead us into error, tell us to ignore mounting evidence that we are in error, and thus allow us to go on living in the fantasy world that they create for us.
This evasion of reality can go on for a long time.
Until one runs out of resources. Or one heeds the cries of one’s children. Or one sees the gang-rapes happening in front of one, in a shopping centre where, last year, school-girls wandered safely, laughing and chatting to one another.
I can’t help but recall the scene in Ridley Scott’s Titanic, where Mr Guggenheim, descending the grand staircase, waves away a life jacket and indicates that he would like a brandy – only to be confronted soon after by the reality of the freezing Atlantic rushing in on him. The look on his face (about 30 seconds in) has over the past year appeared on the faces of millions across Europe, as they realise that for so long they have been lied to, that the third world, in all its fetid, hungry, fanged and priapic wildness, has suddenly appeared in their flash, pristine shopping malls and car-lined streets, and that the hell that their leaders are bringing to their homelands is actually the outcome that those leaders want to see.
And that’s just the start. Imagine what you and I will be talking about in ten years’ time. I suspect the problem won’t be the level of unreality plaguing the world; it will be how much more of this reality we can bear – and who will deliver us from it.