The Healthy Diet Feeding Financial Reform

The Scariest Job Chart Ever Just Got Even Scarier

We've dubbed this chart the "Scariest Job Chart Ever," as it shows how the decline in employment is WAY uglier than in past recessions.

Calculated Risk has updated it with the latest numbers from this morning, and now it looks even scarier.

Why?

Check out the two red lines at the bottom. The solid one includes Census hiring, while the dotted line doesn't include it.

What's clear is that while we still have a rebound including Census hiring, we're already flattening out on the dotted line. This is a shape not seen on the other lines. suggesting that the fall is extremely deep, and the recovery is shallow.

The coming Artilect War

If you haven’t heard of Hugo de Garis, AI researcher and Professor at China’s Xiamen University, then you’ve probably never heard of an Artilect either. A contraction of Artificial Intellect, the Artilects are future creations that, according to de Garis, will be immortal, godlike robotic beings that, due to being built on a substrate of nanoscale computer chips, will have billions of times the intelligence of the average human. Needless to say, these Artilects would not for a second hesitate in wiping out the entire human species if their need dictates; much like a human wouldn’t trouble themselves over running over an ant colony on their way to work.

It’s important to listen to de Garis because he is one of those rare scientific researchers that actually considers the implications of his work. In de Garis’ view, in the late 21st century humanity will have the technological ability to create the Artilects. At that point, humans will be divided into three camps: the Terrans, who will attempt to violently prevent the creation of the Artilects; the Cosmists, who think building them is a good idea; and the Cyborgists, who will attempt to merge with the Artilects to preserve some shred of their humanity. These three camps will fight it out and the winner will decide the fate of the planet. Since the war will be fought with late 21st century weaponry, the death toll is expected to be in the billions.

In a Forbes article, Hugo de Garis describes this coming Artilect war:

I differ sharply with well-known futurist Ray Kurzweil on his over-optimistic prediction that the rise of the artilect this century will be a positive development for humanity. I think it will be a catastrophe. I see a war coming, the “Artilect War,” not between the artilects and human beings, as in the movie Terminator, but between the Terrans, Cosmists and Cyborgists. This will be the worst, most passionate war that humanity has ever known, because the stakes–the survival of our species–have never been so high. Given the period in which this war will occur, the late 21st century, with late 21st century weapons, the scale of the killing will not be in the millions, as in the 20th century (the bloodiest in history, with 200-300 million people killed in wars, purges, holocausts and genocides) but in the billions. There will be gigadeath.

Although many people might dismiss de Garis’ vision as science fiction, as a fellow ex-AI researcher myself, I believe that de Garis’ horrifying prophecy is fundamentally correct.Indeed, today we are beginning to the see the foundations laid for this final battle, with ex-CounterTerrorism Czar Richard Clarke declaring that the future terrorist threat will be from those who resist the coming technology, and with the increasing amount of automation used in weaponry and surveillance systems.

The one point I disagree with in de Garis’ future scenario is that there is necessarily a need for an Artilect war. It’s quite possible that in the process of building such an advanced technological society various techno-catastrophes would occur that destroy the civilization before it is capable of building these Artilects — one recent example of this is the catastrophic Gulf Oil Spill. And I’m sure there are many, many more on the way.

Lost Leaders

It is embarrassing to be lost. It is even more embarrassing for a leader to be lost. And what's really really embarrassing to all concerned is when national and transnational corporate leaders attempt to tackle a major disaster and are found out to have been issuing marching orders based on the wrong map. Everyone then executes a routine of turning toward each other in shock, frowning while shaking their heads slowly from side to side and looking away in disgust. After that, these leaders might as well limit their public pronouncements to the traditional "Milk, milk, lemonade, round the corner fudge is made." Whatever they say, the universal reaction becomes: "What leaders? We don't have any."

Getting lost can be traumatic for the rest of us too. When we suddenly realize that we don't know where we are, urgent neural messages are exchanged between our prefrontal cortex, which struggles to form a coherent picture of what's happening, our amygdala, whose job is to hold on to a sense of where we are, and our hippocampus, which motivates us to get back to a place we know as quickly as we possibly can. This strange bit of internal wiring explains why humans who are only slightly lost tend to trot off in a random direction and promptly become profoundly lost. After these immediate biochemical reactions have run their course, we go through the usual stages of:

1. denial—"We are not lost! The ski lodge is just over the next ridge, or the next, or the next..."
2. anger—"We are wasting time! Shut up and keep trotting!"
3. bargaining—"The map must be wrong; either that or someone has dynamited the giant boulder that should be right there..."
4. depression—"We'll never get there! We're all going to die out here!" and
5. acceptance—"We are not lost; we are right here, wherever it is. We better find some shelter and start a campfire before it gets dark and cold."

Some people don't survive, some do; the difference in outcome turns out to have precious little to do with skill or training, and everything to do with motivation—the desire to survive no matter how much pain and discomfort that involves—and the mental flexibility to adjust one's mental map on the fly to fit the new reality, and to reach stage 5 quickly. Those who go on attempting to operate based on an outdated mental map tend to die in utter bewilderment.

Working with an outdated mental map is a big problem for anyone; for a leader, it may very well spell the end of the position of leadership. After the catastrophe at Chernobyl, the Soviet leaders attempted to operate, for as long as possible, with a mental map that included a relatively intact and generally serviceable nuclear reactor called "Chernobyl Energy Block No. 4". "The reactor has been shut down and is being cooled," went the official pronouncements from the Kremlin, "we are pumping in water to cool it." After a while it became known that there is no reactor—just a smoldering, molten hole spewing radioactive smoke—and the coolant water, prodigious quantities of which were indeed pumped in and spilled in its general vicinity. It instantly boiled away into radioactive steam (which drifted downwind and eventually rained out, poisoning even more of the land). The rest of it leaked out, forming radioactive settling ponds and threatening to further leak into and poison the river that flows through Kiev. As you might imagine, that little episode turned out to be just a little bit embarrassing. Anyone who could think started to think: "Following these leaders is not conducive to survival. Let's make our own plans." Gorbachev went on with his usual long-winded blah-blahs, but the milk-milk-lemonade routine would have served him just as well.

More recently, we have been exposed to the spectacle of corporate leaders and public officials attempting to operate, for as long as possible, with a mental map that includes a blown-out but otherwise serviceable deep-water oil well in the Gulf of Mexico variously called "Deepwater Horizon" or "Macondo" or "MC252". A number of unsuccessful attempts have been made to capture the oil and gas that have been escaping from it using at least three different techniques. BP—the well's owner—is an oil company, and so their first reaction was to get and sell that oil no matter what. They tried to fit the well with a "top hat" to get all of the oil, but when their contraption didn't work because it got clogged by methane hydrate crystals they stuck a smaller pipe into the leak, just to get and sell some of the oil, and when that worked it made them happy. But, coming under pressure to do something about all the oil leaking out and poisoning the environment, they finally decided to try shutting down the well by squiring various substances into it. The procedures they've tried, going by idiotic Top Gun names like "junk shot" and "top kill"—have all been to no avail. At some point it becomes clear that there is no oil well—just a large, untidy hole in the sea bottom with hydrocarbons spewing out of it, forming huge surface slicks and underwater plumes of oil that kill all they encounter and eventually wash up on land to continue the damage there, turning the Gulf Coast into a disaster area. Starting in another month or so the toxic soup composed of oily tropical seawater and decomposing coastal vegetation and sea life will be stirred up and driven inland by tropical storms and hurricanes. Gulf Coast oil-grunge will become the de facto new national style: oil-streaked skin and clothing and perhaps a dead pelican for a sunhat.

When things go horribly wrong, it is natural for us mere mortals to try to obtain a bit of psychological comfort by holding on to familiar images. A person who has totaled his car tends to continue to refer to the twisted wreckage as "my car" instead of "the wreckage of my car." In the case someone's wrecked car, this may be accepted as mere shorthand, but in many other cases this tendency results in people working with an outdated mental map which leads them astray, because the properties of a wreck are quite different from those of an intact object. For example, our lost leaders are continuing to refer to "the financial system" instead of "the wreck of the financial system." If they had the flexibility to make that mental switch, perhaps they wouldn't insist on continuing to pump in more and more public debt, only to watch it spew out again through a tangle of broken pipes so horrific that it defies all understanding, with quite a lot of it mysteriously dribbling into the vaults and pockets of bankers and billionaire investors. It will be interesting to watch their attempts at a financial "top kill" or "junk shot" to plug the ensuing geyser of toxic debt.

It is natural for us to naïvely expect our leaders—be they corporate executives or their increasingly decorative and superfluous adjuncts in government—to be our betters, having been picked for leadership positions by their ability to lead us through difficult and unfamiliar terrain. We expect them to have the mental agility and flexibility to be able to revise their mental maps as the circumstances dictate. We don't expect them to be stupid, and are surprised to find that indeed they are. How is that possible? Mental enfeeblement of the ruling class of a collapsing empire is not without precedent: the British imperial experiment was clearly doomed as early as the end of World War I, but it took until well into World War II for this fact to register in the enfeebled brains of the British ruling class. In his 1941 essay England your England, George Orwell offers the following explanation:

...[T]he British ruling class obviously could not admit that their usefulness of was at an end. Had they done that they would have had to abdicate... Clearly there was only one escape for them—into stupidity. They could keep society in its existing shape only by being unable to grasp that any improvement was possible. Difficult though it was, they achieved it, largely by fixing their eyes on the past and refusing to notice the changes that were going on [a]round them."

And so it is now: as the American empire has been crumbling, its leaders, both corporate and corporatist, were being specially selected for being unable to draw their own conclusions based on their own independent reasoning or on the evidence of their own senses, relying instead on "intelligence" that is second-hand and obsolete. These leaders are now attempting to lead us all on a dream-walk to oblivion.

Back in 2008 I published the prediction that while Chernobyl was rather decisive in putting paid to the Soviet scientific/technological program and in dispelling all remaining trust in the Soviet political establishment, the US program of scientific/technological progress and ruthless exploitation of nature is more likely to suffer a death by a thousand cuts. But if one of these cuts hits an artery early on, a thousand cuts would be overkill. Just as with any wreck, the properties of a radically phlebotomized body politic are rather different from those of a healthy one, or even a sick one—not that our lost leaders could notice something like that! They will no doubt go on going on about money and oil (and the predictable lack thereof), but they might as well be telling us about their milk and lemonade, and please hold the drilling mud. How embarrassing!

-- Orlov

Make a Noise like a Cow

Information warfare is being waged against you, constantly, whether you like it or not, whether you know it or not. "The leading imperialist powers," noted a Soviet text from the 1980s, "essentially maintain that, unlike other fields of international relations, internal information and propaganda should not be subject to regulation and should function independently of the various international agreements. Actually, this means justification and legalization of any and all forms of subversive propaganda, including psychological warfare, misinformation, interference in the internal affairs of other countries, and even outright violation of foreign legislation. Such external-oriented propaganda is supposed to resort to misinformation and anti-Soviet and anticommunist hysteria so as to create and maintain tensions between countries with different social systems."

As every useful idiot knows, anticommunist propaganda prevails throughout the world: in Cuba, Venezuela and Nicaragua; in Congo, Zimbabwe and Angola; in Vietnam, North Korea and China; in Russia, the United States -- and even in Ukraine, where the imperialist powers are always interfering in the legislative process. Only last week Reuters reported thousands of opposition demonstrators rallying outside the Ukrainian parliament. The Speaker of the Parliament was pelted with eggs. (Here is a link to footage of the protests.) Tens of thousands shouted slogans, like "Hang the Communists!" Such slogans, every idiot knows, are taken from the speeches of the stridently anticommunist U.S. president, who is constantly denouncing the Communist Party Soviet Union underground as it reassembles the Soviet Union. The Ukrainian protesters were obvious CIA agents, all twenty to thirty thousand of them, attempting to prevent the Soviet Union from retaining its Black Sea naval base. "Hang the Communists!" they shouted. "Glory to Ukraine!"

What the useful idiot doesn't know, of course, concerns the information warfare techniques taught by Soviet generals. Professor Nina Krygina, a nun who resides at the Middle Ural Nunnery, has given us a glimpse inside the Russian educational establishment in a recent lecture on information warfare based on the work of Lt. Gen. Nikolai S. Leonov, who is a professor at the Moscow State Institute of International Affairs. "You have to listen to what he says," noted Krygina, "because he is a professional spy." Leonov's Ph.D. is in history, and he also lectures in an Orthodox Church Seminary, where many of the priests are known to be KGB officers. In this way the Church extends its prestige to the secret police, while the secret police extends its prestige to the Church.

Americans will be surprised to learn that information is not what they imagine. The propaganda of the anticommunists is completely useless in the face of far more serious methods used by the KGB. Quoting from Leonov's teachings on information warfare, Krygina explained: "There are three basic flows of information: (1) Reliable State Information. This information will never reach the general population and the common man. This is because it is the most precise information, and is delivered directly to the top leadership of the country. It always has a security classification rating of either classified, secret, top secret, strategic importance, or destroy after reading. What I just described is absolutely reliable information. It is only destined for leadership."

The American "imperialists" know nothing of this system, because reliable information seldom reaches the top leadership of the United States. How is this possible? Krygina continues to the second flow of information which is absolutely essential to victory: "As Leonov says, this is the largest, the Main Flow. The purpose of it is to kill people's free time so that we won't seriously analyze anything. No thoughts of any serious nature, I repeat. This is what psychologists call 'informational noise,' so the human being won't have any time to take his thinking to a logical conclusion. This is a main information flow that that mass media is designed to deliver. This is what we see on TV, read in magazines and see in newspapers. We have to understand this."

American popular entertainment has spread throughout the world. Meanwhile, the KGB rides the resulting wave of white noise. Soviet generals, through the office of intermediaries, paid U.S. movie and television producers to put more sex and violence into American entertainment. Decade by decade, audiences become addicted and fascinated by the resulting spectacle. They no longer think or analyze, until a moment is created for them to do so. According to Krygina: "(3) The third information flow is the most interesting, because this is the flow that shapes the architectural model of consciousness [that the KGB strategists want you to have]. The third flow is a Specially Designed Flow, that differs from the aforementioned Main Flow that numbs you, so that you crawl into bed without being able to finish your thoughts or even pray. All the informational messages of this third flow, Leonov explains: 'are like the crack of a whip that dictates to me what particular barn I have to get to when I am thinking.'"

When a man is not overcome by the informational noise, and his mind is free to think, he is forced to think along certain lines by the third flow. He is taught the stupidity of nationalist sentiments, like "Glory to Ukraine." However, if national or racial sentiments work in favor of Kremlin policy, then they are good and encouraged. For example, any nationalist or racist sentiment that contains elements of resentment or hatred toward the United States must be nurtured and encouraged under a "multicultural banner." If Americans or Ukrainians shout "Glory to Ukraine, or glory to America," they are counted as racists or fascists. If they chant "Hang the Communists," the major news media must avert its gaze. Every idiot knows that there aren't any communists anywhere. All enemies are to the Right.

According to Professor Krygina, "Whenever you come across any secular information, one has to think that this was designed by someone with a purpose." Referring to Lt. Gen. Leonov's lectures, she reminded her listeners "that all this is explained by a top-level intelligence officer, a general in spy craft. Whenever he hears anything, he listens for the crack of a whip guiding people in a specific direction. This is the way we have to treat information as adults." Examples are many: Global warming, ozone holes, nuclear winter, the general destructiveness of capitalist industries, the wickedness of U.S. imperialism, the virtues of homosexuality, the innocence of the Rosenberg spies and Alger Hiss, the wickedness of Joseph McCarthy, the crimes of the CIA, etc. Also don't forget: Guns kill people. Put away your nuclear weapons and make a world free from fear. Islam is a religion of peace and the U.S. imperialists deserve what they get.

A large volume could be written on the subject of information warfare. Unfortunately, such a volume would not sell many copies. White noise prevails wherever and whenever you cannot hear the crack of the whip, telling you which barn to live in.

Now make a noise like a cow. Someone is coming to milk you in the morning.

-J.R. Nyquist

Grand Strategy

The famous strategic thinker B.H. Liddell Hart explained that grand strategy was a complicated and enormous subject in itself. He wrote that a volume on grand strategy "would require not only a much larger volume, but a separate volume [than a book on military strategy] -- for while grand strategy should control [military] strategy, its principles often run counter to those which prevail in the field of [military] strategy."

War is a self-contradictory enterprise. As the ancient Romans said, "If you want peace, prepare for war." Some readers will be vexed by this statement. If you want peace, then why prepare for war at all? Well, to speak on behalf of those who have started wars in the past, there is often something obnoxious about peace; for example, when the ascendency of a particular country inspires envy, resentment, or presents a juicy target of opportunity (for plunder or subjection). Many powers in history have wanted greater influence, a more secure position, a more dominant position, or would prefer the elimination of a rival power.

The desire for power is not hard to understand. In the fifth century B.C. the Corinthians were exasperated by Athenian supremacy, and therefore argued that the Spartans should make war on Athens (which they did). The Romans first made war against Carthage over a town in Sicily; and finding Carthage a dangerous rival, the Romans found the existence of Carthage intolerable. They reduced the Carthaginians in two wars, finally exterminating them in a third. Next, the Romans found the entire ancient world vulnerable to domination, exploitation and colonization; so they took one province after another. The Germanic and other barbarians of the fifth century found the provinces of the Roman Empire to be rich and under-defended; an ideal situation for those interested in rape and pillage. The history of mankind is full of wars, and this will not change, because men either seek to preserve their ascendency or weaken the ascendency of others, or because they want to take what others have, or remove a threat. Therefore, peace is often unacceptable to those who find it so; and war is therefore a means to change an unacceptable peace for a more acceptable one.

There is something further, as well, which Liddell Hart points up. Peace between nations would require unification, leading to a unity of ideas, which would end in stifling uniformity and stagnation. "Vitality springs from diversity," wrote Liddell Hart. "For this reason, the kind of peace that makes progress possible is best assured by the mutual checks created by a balance of forces -- alike in the sphere of internal politics and of international relations." Here is why Europe was more vigorous, more healthy, when nationalism was in vogue; whereas today, Europe stagnates under the internationalism of the European Union. Are the young men of Europe willing to lay down their lives for the European Union? One hundred years ago Europe's youth were ready to lay down their lives for their respective nations. We cannot miss wherein lies the vital impulse, and wherein lies the whiff of decay. The Great War was tragic and terrible, but Europe was not destroyed. The destruction of Europe occurs today, under the banner of union and peace, under a regime which emphasizes a unity of ideas (i.e., political correctness). The diversity celebrated in this latter formation is no diversity at all, and merely guarantees the peaceful Muslim conquest of Europe.

Liddell Hart believed that war was a means for deciding issues "when discussion fails to produce an agreed solution...." The main problem with war, said Liddell Hart, is that force "is a vicious circle -- or rather, a spiral -- unless its application is controlled by the most carefully reasoned calculation." Wars must be of short duration, otherwise they cost more than the results are worth. Of course, we are talking about war between civilized states. Against those who wage predatory wars, or wage war on the basis of fanatical religious sentiments, Liddell Hart explained: "In such wars any negotiated peace tends to have in itself less than the normal value." He further emphasized, "It is folly to imagine that the aggressive types, whether individuals or nations, can be bought off -- since the payment of danegeld stimulates a demand for more danegeld." The predator can only be curbed by the threat of a formidable opposing force. The fanatic, however, cannot be checked at all (because he is not entirely rational).

Liddell Hart's words ring true when he describes our present danger: "Peaceful nations are apt ... to court unnecessary danger, because when once aroused they are more inclined to extremes than predatory nations." America's response to 9/11 is a case in point. The provocation itself, carefully calculated to draw the United States into conflict with the Muslim world, met with success. The United States invaded Iraq and Afghanistan. Further, the enemy strategists would like to see the U.S. at war with Iran. This would be the basis for further success, in larger strategic terms, because a war between Iran and the United States would bring the U.S. financial system to final ruin. Already the Iranians have sent special troops to the Western Hemisphere (to Venezuela), threatening to attack American cities. Already the Iranians have promised to close the Strait of Hormuz, shutting off a large percentage of the world's oil supply. As the Iranians develop their capacity to manufacture nuclear weapons, the futility of sanctions will be undeniable. The Israelis and the Americans will find themselves in an impossible position: damned if they do, and damned if they don't. The provocation, as engineered, stands to benefit one party above all others.

Strategic concepts are powerful, and potentially more powerful than atomic bombs. It is possible to achieve great things without using military force at all. In the end, when your enemy has become exhausted by external struggles and internal dissentions, you can use your little finger (militarily speaking) to knock him down. "All warfare is based on deception," said the ancient Chinese strategist Sun Tzu. "Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe that we are way; when far away, we must make him believe we are near. Hold out baits to entice the enemy. Feign disorder, and crush him."

-- J.R. Nyquist

Say you want a Revolution?

“People of Europe: Rise Up,” says their banner.

Greek communists are usually a reliable bastion of error and darkness. Their ideas are appalling. Their proposals are absurd. The only thing they are not wrong about is their opinion of the ruling classes – whom they regard as morons.

But this time it’s different. Leftist mobs, now throwing missiles at policemen in Athens, have the high ground. They just need to work on their aim.

The latest dollop of financial grease was announced two weeks ago. At a cost of 110 billion euros, Europe will pretend to protect Greece from its creditors and the Hellenes will pretend to put their financial affairs in order. Instead, the Greek affair will slide into a larger crisis. As we explained last week, all of modern macro-finance can be understood as an attempt to push problems into the future and onto people who were not to blame for causing them. Now we see the formula at work in Europe.

Greeks borrowed money they couldn’t reasonably expect to pay back. Foreign bankers – largely French and German – hoped to earn outsized yields by taking a risk on Greek debt. A just ruler would let them all collapse, and give them the boot on the way down. Instead, the knaves enjoyed their loot. And, under the terms of the bailout, the fools are supposed to get their money after all; it will be squeezed out of taxpayers all over Europe.

The plans of the ruling classes are not merely unjust. They are unworkable. Over the next three years, Greece will add $50 billion in deficits, stabilizing the debt at 150% of GDP. It will also need to come up with $70 billion to pay off debt that matures over the next two years. That is more than the amount offered in the bailout. Which means, Greece will have to borrow more money as early as next year, probably triggering another crisis. Plus, there are the other weak sisters and spendthrift brothers in the European family. Bailing them all out could cost as much as 1 trillion euros.

But the real problem is much deeper. It is philosophical as well as mathematical. Too much debt, like too much dying, is not a transitional state. It’s a final state. And once the soul has left the body, there is no point in trying to keep the husk alive. Similarly, when a debt cannot be repaid, there’s no use pretending. When you cannot keep up with the interest on a debt, it is added to the principle. The debt grows, becoming evermore unmanageable. It’s better to admit the error as soon as possible and start organizing the details of your financial funeral.

At present, the Greeks owe an amount about equal to 120% of GDP. Thanks to the bailout, it is scheduled to go up. The plan on the table stops the debt growth only after it has increased by another 30% of GDP.

There is the problem right there. Today, the poor Greeks stagger. What is going to happen when they have an even heavier load? The meddlers hallucinate that they’ll get up, smash a plate and dance a mazurka. They even imagine that lenders – who required as much as 18% yield on 2-year notes when Zorba was still on his feet – will ask for only a fraction of that after his back has been broken.

Let us make believe that this were possible. Say, Greece is able to borrow in the future at just 8% interest. At 150% of GDP, this puts the annual cost of interest (assuming all the debt were at 8%) at about 12% of GDP. In other words, 1 out of every 8 euros of output would have to be put to the task of paying the carrying cost of accumulated debt. Greece only collects about 5% of GDP in income tax revenues – not even half of what is needed to pay the interest. It’s supposed to collect another 4% in taxes. Already, as much as 30% of the Greek economy has gone ‘black’ to escape taxation; imagine how crowded it gets underground when taxpayers realize that every penny they pay in income tax is used to protect foreign bankers from their foolish speculations. And imagine what happens when, instead of adding 10% to GDP by borrowing, the Greeks subtract 10% to pay back the debt.

Last week, schools, airports, hospitals and other services in Greece were shut down. A riot drew blood. Fifty-one percent of the Greeks said they will not go along with the austerity program. The others will turn against it once they see how it works. They were used to having their cake and eating it too. Now, they will neither have it nor eat it.

Rise up, ye Greeks! You have nothing to lose but the chains of debt! This is what revolutions are for.

-- Bill Bonner