Sunday, November 30, 2008

Detroit in Crisis

© MMVIII v 1.0.3

My grandfather, A.W. Evans, became a Ford dealer in the Twenties and remained a Ford dealer until the late Sixties, when their little farm town, Glenavon, could no longer support the Ford dealership. His three sons were into cars. Two went to work for Ford after The War. One continued Evans Motors. My father worked for Ford Motor Company after The War in the Ford office in Regina. Our family has always driven Fords, except for a 1961 Morris Mini Minor and a 1961 Fiat 600 Seicento. Chances are that I will always drive a Ford as long as they make good ones.

General Motors replaced Ford as the world's number one automaker in 1933. Henry Ford II took over the Ford Motor Company during The War and brought it back from the dead. My father always thought General Motors would remain the number one automaker forever and that Ford would be lucky to come second. But for luck, and the generosity of General Motors, Chrysler would have been gone fifty years ago, following into history Hudson, Studebaker, American Motors, and dozens of other American car makers.

Unlike filmmaker, Michael Moore, I have a soft spot for the automotive business. I like 'em all, not just American cars. I love Italian cars, especially Ferrari, Maserati, and Lamborghini.

I was appalled to see Michael Moore a few nights ago on Larry King. He positively HATES General Motors. Moore believes that all American automakers should be driven out of business, or, failing that, that the lawmakers should "do what FDR did", take charge and MAKE them build better cars while building a rapid transit system and protecting the environment to boot.

Michael Moore's family all worked for General Motors (on the line in Flint). Moore places blame squarely on the heads of "management".

"Did you have a good childhood, Michael," King wondered?

"Oh sure, we lived a prosperous middle class life," Moore replied. "As General Motors workers, our family was paid more than other families. We had four weeks holidays every summer and we had retirement and health benefits too. But General Motors built lousy cars and they controlled the buying public with lies."

"Are the others the same," King asked?

"The same. They are all the same."

HATE HATE HATE. I think Larry King was getting tired of Moore. I was tired of him. Why doesn't he shave?

The truth is that Honda, Mitsubishi, Nissan and Toyota are in exactly the same business as General Motors, Ford, and Chrysler. They aren't building a rapid transit system, they are building cars. And the cars they are building are pretty similar to the cars American companies build.

"Just drive one of the imports around the block. You'll see the difference," Moore opined.

Actually, you won't see much difference because they all build cars the consumers want to buy.

My 1961 Morris Mini Minor got 50 MPG. I drove it through the Rocky Mountains in January to Vancouver and back to Regina. My Mini was one of few cars and trucks to get through record snows in Rogers Pass that winter. It made the trip without chains or snow tires! It was a dandy little car. The Mini had heart. But it was missing lots of things that people want more than 50 MPG, even today, things like a good heater. Yes, my 1961 Mini was a frosty little beast in November, December, January, February and March. I had to scrape the windshield inside while driving. The new Mini, which is built by BMW, is a much better car, but it doesn't get 50 MPG.

It's easy to get 50 MPG if one strips everything out and makes the car light and small with an 850 cc engine. Every pound one adds, has a cost. They could even build a fast powerful car that would get 50 MPG, but it would cost as much as a Lamborghini and it would not be as fast.

I'm afraid Michael Moore doesn't know what he's talking about — Moore is full of beans. That came through loud and clear on Larry King. The UAW/CAW is a major reason, possibly the only reason, American and Canadian autoworkers are in trouble. I am amazed how many people in the press share Moore's opinion. NY Senator Charles Schumer is full of it too, along with the Democrats who loaded the gun the UAW put against the heads of the American automakers all these decades.

Why aren't Honda, Toyota, Nissan, Mitsubishi, Subaru, Kia, Hyundai, Daimler, BMW, Volkswagen and the rest, forced to have the same labour costs as General Motors, Ford and Chrysler? Why doesn't Schumer demand that Wall Street provide Congress with a "business plan" for the trillions of dollars Wall Street firms have already been given by Washington? "Maybe they'll be back for more." Maybe Wall Street will be back for more. Bets? Maybe the Democrats will erect trade barriers to protect American industry. That is what Democrats have always done. Or is it too late to do that? Maybe they will start WWIII. Starting wars is what Democrats are good at too: WWI, WWII, the Korean War and the War in Vietnam were all Democratic wars.

It is not realistic to expect the North American auto market to be 99% "owned" by three companies, with one company getting the lion's share. Before the Fifties, there were many American auto manufacturers. After that, there have been growing numbers of imports, starting with Volkswagen and British Motor Corporation. BMC was once the largest motor company in Great Britain. It has been gone for years. It was not saved by being big, though that was the plan.

Returning to Ford, when one looks around the world, Ford sells cars. It has been the market leader in Great Britain for almost thirty years. It has a U.K. market share around 15% as it does in many other places. Ford does not own the market anywhere. It competes with dozens of other manufacturers. Outside the U.S., Ford is profitable. Building and selling cars is fiercely competitive. The competition is good. They learned from the best. If American automakers are destroyed and hundreds of thousands are thrown out of work, Americans can thank the people in Washington whose fingerprints are on the knives that are in the backs of GM, Ford and Chrysler. Autoworkers can thank their unions too.

Ford world-wide

Saturday, November 29, 2008


MMVIII v 1.0.7

Money has evolved over millennia through trial and error. Gold was adopted because gold is scarce — most importantly, new gold cannot be created out of thin air. But most people would like to win the lottery and politicians like to give people what they want so they can get elected and stay in power.

Democracy insures that people get what they want, and that they will get it good and hard.

John Maynard Keynes [1], with whom the great philosopher Bertrand Russell [2] was greatly impressed, dismissed gold as a relic of the past. After the Second World War, Keynes and Harry Dexter White helped devise the world's financial system known as Breton Woods. Following The Great Victory of 1945, when the evil fascists had been defeated in history's greatest bloodbath, the United States replaced Great Britain as the world's financial, military, political and cultural hegemon. The United Nations was created in San Francisco and then located in New York City, the world's most important city, after Washington. Building a better world with a bright future had begun. Decency would reign evermore. . .

The United States of America assumed the very important task of protecting the world from communism.

Breton Woods retained gold payments for foreign exchange, but gold had already been abolished by Franklin Roosevelt in 1933 when the American dollar became no longer redeemable in gold. [3] When Breton Woods collapsed in 1971, Richard Nixon "closed the gold window" because gold was flowing out of the United States to other countries [4] — clear evidence that inflation existed and that the U.S. dollar was losing value against other currencies.

Politicians love inflation. Politicians have always loved inflation. Creating money out of nothing is like magic. One can buy anything one wants. One can spend oneself into prosperity. The sky is the limit!

Richard Nixon disconnected the world's financial system from gold and opened the door to China. Nixon's predecessor, Lyndon Baines Johnson, paid for The Great Society, the space program, and the War in Vietnam with inflation. Their successor, Jimmy Carter, appointed Paul Volker [5] to deal with "stagflation" — the economy was moribund, yet prices were rising.

How does inflation work? New money is added to an economy. The first people to get this new money spend it before vendors realize there is more money in circulation. These purchasers get good value, at first. But soon vendors realize that people are willing to pay more because they have more money to spend, so vendors raise their prices. They don't have to know anything else. Purchasers compete against each other as they would in any auction. Prices go up, wealth is not increasing.

With gold standard money, prices decline as wealth (abundance) increases. The 19th century provides many good examples.

Spain suffered from stagflation when gold and silver were looted from the Aztec and Inca empires in the 16th century. These treasures added "new money" and lead to the decline of Spain. There are other examples.

Alan Greenspan [6] worked magic as the Chairman of the Federal Reserve and blew the bubble that has just burst, creating a world-wide financial meltdown. During Greenspan's tenure, low interest rates were used to create "new money" but prices were not rising, so The Fed and the politicians could say there was no inflation. Why were prices not rising? Because high quality low-priced goods were being imported from China and other places. People were buying these instead of higher-priced goods made by workers in domestic industry. Domestic jobs were being 'exported' as the unions said.

"How can we buy anything if we are unemployed," American workers asked? Good question. You can't. So Americans stopped buying and Chinese have been thrown out of work too. Ominous signs were appearing months ago. Imports have been slowing down since the spring of 2008. Now, the Big Three Detroit auto manufacturers are facing bankruptcy along with their subcontractors and hundreds of thousands of executives and workers.

More is coming.

Politicians and their Wizards cannot be trusted with the world's financial system. Their solution to inflation is usually more inflation. (In the Thirties, The Fed went wild and shrank U.S. money by a third, creating the world-wide Great Depression.) Inflation will work as well as putting out a fire by throwing gasoline onto it. A gold financial standard is required along with honesty in banking and in the equity and debt markets. The hucksters of Wall Street should go to jail. They should not be given trillion-dollar bailouts. Stock brokers do not represent "capitalism" any more than do real estate salesmen or shoe shine boys, nor do the crooks in Washington and other capitals represent "capitalism".

Gold is not a relic, nor is honesty. Greed is not a virtue and never was.

[7] Mises on Money

Saturday, November 22, 2008

The State

© MMVIII v 1.0.6

The State is the zenith of power. State-level civilization emerged in the Bronze Age and replaced Stone Age chieftainism.

Around the Mediterranean, Greek city states, Troy, the Kingdom of David, Carthage, Etruscan civilization, early Egypt, and others appeared then. Sumer was established in Mesopotamia. Early kingdoms in China and India developed in the Bronze Age too. As states developed new military organizations and iron (as steel) weapons, they conquered rivals and ushered in the Iron Age. Alexander the Great [1] and the first Chinese emperor [2] created huge empires with these advantages. The Romans were always frustrated trying to equal the achievements of Alexander.

Today, the Iron Age has given way to the Silicon Age and things may be changing.

State structure is pyramidal: a tiny élite controls everyone else and appropriates their product. The emperor is supported by his court, which includes his family and friends, a priest-hood along with a bureaucracy (mandarins) and the military which is the instrument of power. The main purpose of The State, since it was created about 5,500 years ago, is plunder. The State is a criminal enterprise.

Man's proudest achievement, The State, is mirrored in nature by the army ant — which evolved legionary behaviour millions of years before man.

Today's "democratic" states are essentially identical to Egypt, or Imperial Rome. In the United States of America, 545 people control over 300 million people — many of whom think their sovereigns work for them! The U.S. military enforces a world-wide empire. Plunder is its main purpose. Talk of "spreading 'democracy'", "human rights" or "defence" is just baloney created for domestic consumption.

Barack Obama was elected POTUS by millions of Americans who were outraged by the excesses of George W. Bush and the Republicans. But as Obama prepares for the transfer of power, we see the same old Democrats will be moving in to replace the Republicans. Obama campaigned for CHANGE. But, in fact, not much will change. Different hogs will be feeding at the trough. Many were there before the Republicans took control of Congress in 1995 after 40 years of Democratic control.

Change may be in the works anyway: 3rd generation military aggression is no longer working against 4th generation stateless military defence (Iraq and Afghanistan); the U.S.A. is bankrupt and has lost its mojo; the losers of the 18th, 19th and 20th centuries (especially India, Japan, Germany and China) are becoming the winners in the 21st century.

Those who are first soon will be last, for the times they are a-changin'.


Friday, November 14, 2008

President Obama

© MMVIII v 1.0.3

Is Obama going to make any difference in the US foreign policy options in the world, and particularly the Middle East?

No, 'fraid not.

Obama spent about 700 MILLION U.S. DOLLARS to get elected. (McCain spent about half that, making the tab this year over a BILLION dollars to run for POTUS.) Obama didn't raise that much with nickel and dime donors on the Internet. Every U.S. President owes his ass to 1). the Pentagon, 2). Wall Street, 3). War Contractors, and 4). BIG OIL. They must also kiss the feet of Israel. Nobody else matters. The only thing we can count on for a change in U.S. foreign policy is that the United States of America is bankrupt. The U.S. National Debt this hour is $10,638,340,843,488.62. This is currently increasing by about 500 billion dollars a year. That's a lot of jack. No one believes that debt will ever be paid off by anyone. Washington's plan (and Obama's too) is to borrow more money to spend the way out of bankruptcy. Where do you think the Wall Street bailout is coming from? The U.S. Empire has gone the same way as the Soviet Union. Most importantly, no one believes in the U.S. Empire anymore. That is what happened to the U.S.S.R. The U.S. Empire was doomed before the neocons and George W. Bush, but they are the ones who finished the work. Afghanistan and Pakistan did in the Soviet Union and stymied the British Empire too. In destroying Iraq, Bush destroyed America. Israel, as an outpost of the Empire, will have to rethink relations with its neighbours.

George W. Bush has been trying to start World War Three. World War Two worked well to put the U.S. Empire on top, but time is almost up for Bush. Obama and Clinton and Biden have four more years to start World War Three, so don't get too comfortable. The Great Depression Two may have started. We can blame it on Bush.

When the U.S. invaded Afghanistan, Washington believed the U.S.A. had become omnipotent. They believed that they could rewrite the laws of physics and do anything they wanted to anyone they chose. Guess not. The Greeks said: Before the gods destroy someone, first they will make him proud. Guess so. Power reinforced with inflation is a lethal drug. Addicts, like the politicians in Washington, always think they have become gods before they die.