Doug Casey on Benign Anarchy

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The Daily Reckoning | Tuesday, July 31, 2012 Obama recalls every last soldier, closes bases around the globe, Doug Casey on when things really start going downhill for the US Plus, Bill Bonner on the real LIBOR riggers and plenty more... ------------------------------------------------------- Innovate or Die... That was the theme of this year’s Agora Financial Investment Symposium, held last week in beautiful Vancouver. If you weren’t able to join us, here’s the next best thing... Like years past, we recorded the entire line-up of presentations, lively debates, heated discussions... and financial ideas to help guide your wealth. But this year we went a step further... For the first time in the 13-year history of the Symposium, you will now be able to SEE all of the presentations, in stunning HD Video! So even if you weren’t able to join us at this year’s event, you don’t have to miss out on a single piece of analysis or recommendation. See this short report for details (don’t worry, this isn’t a long video sales letter.) Claim all the ideas right here. Joel Bowman, reckoning today from Paris, France... Joel Bowman Phew! That was close. We were skeptical, as you might recall. Truth be told, we thought it was all going to end in catastrophe. And yet... The situation in Europe seems to have been fully resolved. The Spaniards and the Portuguese have put down their torches. The Greeks and Italians have picked up their tools. And the Germans have forgiven them all. What’s more — and this really is incredible — once humorless feds across the land finally punished the real LIBOR riggers, i.e., themselves, for finicking with the dials...then they turned over the pricing of credit to its rightful owner: Mr. Market. Yes, Fellow Reckoner, all is well here on the continent. But that wasn’t even the BIG news! Over the past week, more or less, the world has learned that the American economy, once thought to be an empire in its twilight years, is back on track too. The tentacles of Big Government, once so menacing to businesses small and medium, have been lopped off. Stranger still, after a multi-generational commitment to chronic misdeeds and shameful malfeasances, members of Congress finally did the only decent thing one in their position could do...they hung themselves, one by one, from the lamp posts along Pennsylvania Avenue. Celebrations have already begun in towns and cities across the land. Taking his cue in turn, the Commander in Chief himself also stood down...but not before recalling every last assassin and foot soldier from lands afar. “We were wrong to think we could bring peace to the world at gunpoint,” he told a press conference yesterday. “That was an arrogant conceit for which we are deeply and eternally sorry.” Furthermore, as to the absurd notion that those of us here in Washington D.C. are capable of governing the good people of this country into prosperity, that we can function as a mandatory repository for outsourced moral obligations to friends and family, that we can, indeed, presume to know anybody’s situation better than they, as stewards of their own lives, can and do...well, we hereby sincerely and humbly apologize for this lie. To repeat, we would like to disabuse all persons, young and old, of this most debasing, corrupting idea.” Mr. Obama was speaking outside the White House, his former residence, which is to be auctioned off — along with all The State’s other buildings, bureaus, bunkers and bases around the world — later this year. Proceeds raised will be used to make bondholders whole, to the extent that is even possible, as would be the case in a regular default. Absent the ability to tax, borrow or regulate, the government has ceased to be a concern for ordinary people looking to build businesses and to hire new employees. The jobless are slowly going back to work, innovating, investing, furthering the aims of mankind, flying the flag of progress for humanity. One man, interviewed in front of the old IRS building (which was burned to the ground over the past weekend to the tears and cheers of joyful onlookers) told the media, “I feel like a huge burden has been lifted from my shoulders...from the shoulders of people around the country. Taxes on my small business — and others — will vanish. I can afford to increase my staff, build out my company, buy more materials and open more branches.” As for the maintenance of roads and other crucial infrastructure, which had fallen into disgraceful disrepair under the state, local business communities (now owners of these properties) are working on ways to improve quality and materials. Work has already begun in some parts of the country, drawing from the huge slack in the job force, where able-bodied workers had been effectively priced out of employment by the government’s ridiculous wage laws. Same story for schools...hospitals...libraries and other once-public buildings that clearly enjoy a strong demand from market participants. Charities and churches are beginning to see a new influx of cash too as some newly “tax-freed” individuals choose to give generously and voluntarily to local projects, knowing their money will be well spent. The US Postal Service, by contrast, is a dead duck and no longer draws billions in government subsidies to run obscene losses. In related news, one paper reported that former Fed Chairman, Ben Bernanke, was seen yesterday painting traffic lines on the 405 Beltway under a sweltering sun. And photos have begun to surface around the blogosphere of a deranged Paul Krugman, seen digging holes roadside in the Bronx and (in accordance with his idiotic Keynesian theories) demanding people pay him to fill them in again. “Sir...excuse me sir?” A voice came from over our shoulder... “Sir, we’re about to land. You’ll have to return your seat to the upright position.” “Excuse me?” we asked, still groggy. “Sir, you’ve been asleep. We’re about to touch down in Paris. I don’t know what you were doing in Vancouver, but it must have been exhausting. You slept the whole flight.” [Ed. Note: It was, indeed, a bit week in Vancouver at our annual investment symposium. We heard investment insights from Niall Ferguson, Doug Casey, Rick Rule, Juan Enriquez, Dan Denning, Marc Faber and a host of others including, of course, our own Reckoner-in-Chief, Bill Bonner. Here’s a sneak peek at what Bill had to say: If you’d like to pick up an audio set of this year’s Agora Financial investment Symposium for yourself, including the full presentations from the above-mentioned speakers and many more, simply order a copy here. You’ll have to be quick though, the offer expires tonight... The Mother of All Financial Bubbles is Just Now Starting to Pop... It’s time to learn the truth...and to get prepared. If you have the right plan set up, you won’t suffer when this bubble fully bursts. But — and this is the most important point — you must have a plan. And you must be prepared before this epic crisis hits. Click here now. Doug Casey on Benign Anarchy The RT Interview In the final installment of RT’s coverage of the 2012 Agora Financial Investment Symposium, Capital Account’s Lauren Lyster talks to Doug Casey, bestselling author, founder and publisher of Casey Research and perennial conference favorite about this current economic “recovery” being the second-weakest rebound post World War II. Lauren also asks Doug how this so-called recovery compares to others, and when things really start going downhill economically for the US? Check it out, here: [Ed. Note: Doug was in fine form again this year, denouncing reckless government spending, military misadventures and the like with the razor repartee for which he’s become known. Check out his entire speech from the podium at this year’s Agora Financial Investment Symposium here.] And now over to Bill Bonner who has the rest of today’s reckoning from Baltimore, Maryland... Fixing the Fixers Bill Bonner News from London is that they are going to throw the book at the LIBOR rate fixers. The insiders are facing jail time. The Telegraph has the story: Bankers found to have rigged Libor could face jail after the SFO said it will look to bring criminal charges against those who attempted to manipulate the world’s key borrowing rate. David Green QC, director of the SFO, said existing legislation could be used to bring criminal actions against banks implicated in the Libor rigging scandal. Mr Green did not specify the precise charges that could be brought but it is possible bankers found guilty of manipulation could receive prison sentences of up to 10 years. This doesn’t seem fair. After all, the bankers were only replacing one artificial rate with another. What’s the harm in that? Some people gained. Some lost. Net, the financial damage was probably offset by the financial benefit. The winners were happy. Losers are always unhappy. Besides, isn’t it all a game? Isn’t it all in good fun? Why make a federal case out of it? But the authorities are indignant. If there’s any interest rate manipulation to be done, they say to each other, we’ll do it ourselves. They were justifiably upset, in other words. Rigging the market — like police protection, gambling, drugs and alcohol — is something over which the federales claim a monopoly. And they are not above using force...even lethal force, if necessary...to protect their turf. That is what 4 bankers in Iran discovered yesterday. The New York Times reports: In the first sentences to be handed down...an Iranian court ordered the death penalty for four people in the fraud that was uncovered in a network of Iranian banks last year, Iranian state media reported on Monday. This is clearly a case of over-reaction. If leading bankers can’t fiddle their customers...and the public...the whole system will come to a screeching stop. After all, the world’s leading bankers are those who work for the Fed and the ECB, both of whom are engaged in a bamboozle of Biblical proportions. In Europe, Mario Draghi, formerly with Goldman Sachs and the World Bank, and now head of the European Central Bank, is determined to fix the rate at which European nations and their banks can borrow. Last week he said he would do “whatever it takes” to save the euro. We know what that means; he will print as much as necessary to protect the banks’ and the sovereign borrowers from getting what they deserve. And that means keeping their borrowing costs down. The borrowers’ real problem is that they are insolvent. They cannot pay their debts. Draghi treats the matter as a liquidity problem; he knows he cannot make them solvent. So, he lends them more money — on easy terms. Perhaps if he lends them enough for a long enough time, they will recover. Never explained is how making them even less solvent will help them to their feet. Nor has much thought been given to how they will ever get up, with all this new debt weight added to their burdens...nor to what will happen when investors realize that the system is cockeyed and doomed. Meanwhile, in the USA, the price of borrowing — the interest rate — is no more freely determined than it is in Europe, in London, or in Iran. In fact, we know no interest rate scales in the financial world that give an honest reading. Instead, they give the measure that has been given to them by the fixers, with some latitude for mistakes and imprecision. The LIBOR rate is supposed to be a simple average of 10 rates proposed by London banks for uncollateralized loans. Until recently, the fixers pushed it one way or the other according to their desires. But the Fed shoves interest rates around too. It tells the banks how much they can lend and how much cash they must keep in their vaults. It sets the rate — by simple declaration — on the short-end of the yield curve. Farther out, it has more work to do, including buying long-dated bonds itself, if necessary, in order to lower mortgage rates. Whether the shove is direct and blunt, or glancing...or with a knock-on effect...the result is the same: rates are pushed in the direction Mr. Central Banker wants, not the direction Mr. Market had in mind. Not that there’s anything wrong with this, in principle. The market gods seem to be aiming for entertainment. And the comic climax of all this is bound to be a side-splitter. But when the end comes, again as a matter of principle, we hope all the fixers will get fixed in the same way. Put them all in front of firing squads...or let them all go free. It’s all the same to us. As long as it’s fair. Regards, Bill Bonner for The Daily Reckoning ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com How Ben Bernanke Can Prevent the End of Civilization Deflation Now. Inflation Later. Turning Into PIIGS: Why France's Debt Crisis Could Doom the EU Spanish Bailout Talk Heats Up Central Banks Sell Euros In 2nd QTR... Oil Price Rise Pushes Petrol Currencies Higher The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. 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