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No More Muddle-Through Economy

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“I firmly believe we will see a double-dip recession within another 18 months (at the most). Stock markets drop on average about 40% in a recession. Adjust your portfolios accordingly.”

— John Mauldin, Thoughts from the Front Line (http://www.frontlinethoughts.com/pdf/mwo101609.pdf)

My Comment:

I find it pretty interesting that John Mauldin, who’s always argued that we’d “muddle through”  somehow (http://www.safehaven.com/article-9542.htm), has now changed his position in view of the facts (an admirable quality). In the latest edition of his very popular and always informative newsletter, Thoughts from the Front Line, he argues that things are much worse than he’d ever anticipated.

I find it even more interesting that Mauldin will be down in Uruguay, speaking to various groups and that he has a partner based in Uruguay. He writes:

“I will be going to South America at the end of next week, to Buenos Aires, Montevideo, Sao Paulo and Rio. I will be speaking in those cities and traveling with my new Latin American partner, Enrique Fynn of Fynn Capital (based in Uruguay).”

He’s not the only one. I’ve noted a number of libertarian (and other) financial advisors down here. A sign of the times.

Asian Auschwitz…

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Trying to read up on the history of biological weapons (what with all the theories about the swine-flu vaccines circulating on the web, some wildly inaccurate, some more plausible), I came across this article on Z Net:

“ A New Type of Bomb

 After the 1942 failure, the Japanese army general staff lost all confidence in the efficacy of biological weapons. The pressure was on to find a new approach that would ensure the safety of friendly troops and deliver a more reliable, more devastating blow to the enemy.

 The new approach developed was to pack the pathogens in bombs or shells, which would be dropped from airplanes or delivered by artillery. This would satisfy both of the requirements, to deliver massive carnage while maintaining the safety of the attacking troops. At the same time, the only way to prevent disasters like that of the Zhejiang campaign was to improve communication among the troops.

 Two hurdles confronted the effort to load bombs with pathogens. The first was the need to keep the pathogens alive for long periods of time. The second was the need to develop a bomb made of materials that would break apart upon impact using little or no explosives; this would prevent the pathogen from being destroyed by heat. Alternatively, if a bombshell could not be made of fragile material, a pathogen that could withstand the heat of an explosion would have to be selected. When a bomb or a shell lands, people do not immediately gather at the point of impact, so it was necessary to convey the pathogen from that spot to wherever people were. Again a live host like a plague flea that would physically carry the pathogen and infect people was considered the best solution to this problem.

A bacteria bomb using the plague bacteria was developed to satisfy most of these requirements. The bomb used plague fleas packed in a shell casing of unglazed pottery made from diatomaceous earth (a soft, sedimentary rock containing the shells of microscopic algae). This same material was used in a water filter that Ishii had developed and patented. As this bomb would break apart using minimal explosive, it was expected that the plague fleas inside would survive the heat and scatter in all directions, to bite people and spread the disease. This bomb, called the Ishii bacterial bomb, was perfected by the end of 1944. In the beginning of 1945, the collection of rats went into high gear, and Unit 731 went to work cultivating fleas to be infected with the plague.

       Japan’s Defeat

 

The main force of Unit 731 left the unit headquarters by train soon after the Japanese surrender and returned to Japan between the end of August and early September 1945. Some members of the unit and officers of the Kwantung Army were captured by the Soviet military. Twelve of these POWs were tried by the Soviet Union at a war crimes trial in Khabarovsk in December 1949. In addition to members of Unit 731, officers of the Kwantung Army and the army’s chief medical officer were also charged as responsible parties. All of those charged were given prison sentences ranging from two to twenty-five years, but aside from one man who committed suicide just before returning to Japan, all had been repatriated by 1956. The record of the Khabarovsk trial was published in 1950 as Materials on the Trial of Former Servicemen of the Japanese Army Charged with Manufacturing and Employing Bacteriological Weapons (Foreign Languages Publishing House, Moscow).

On the other hand, not one of the members of Unit 731 who returned to Japan was tried as a war criminal. Instead, the American military began investigating the unit in September 1945, and unit officers were asked to provide information about their wartime research, not as evidence of war crimes, but for the purpose of scientific data gathering. In other words, they were granted immunity from prosecution in exchange for supplying their research data. The American investigation continued through the end of 1947 and resulted in four separate reports. The investigation took place in two phases……

 The Hill and Victor Report concludes with the following evaluation: “Evidence gathered in this investigation has greatly supplemented and amplified previous aspects of this field. It represents data which have been obtained by Japanese scientists at the expenditure of many millions of dollars and years of work. Information had accrued with respect to human susceptibility to those diseases as indicated by specific infectious doses of bacteria. Such information could not be obtained in our own laboratories because of scruples attached to human experimentation.”

 The above account makes clear the nature of the crimes committed by the Ishii Unit. At the same, it is necessary to question the responsibility of the American forces who provided immunity from prosecution in exchange for the product of these crimes.”

 

More here on the experiments in the Daily Mail.

Central America Musings…

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A number of people have written me and asked my opinion about different parts of the Americas as possible destinations.  So here’s a brief precis of some of my thinking on the subject:

Before I came down here, I went through a lot of research on the different Central American countries and on Mexico too.

Mexico was my prefered expat location, because I’m deeply interested in the Mayans. I love Mexican food, the architecture, the people, the crafts, and the weather. It was always my first choice. But the drug wars and the accompanying violence scared me off. Then too, land is not cheap in Mexico, except in the Yucatan, and the Yucatan has problems. Some areas look like they might have water problems, and other areas are targets for hurricanes. Then there’s the weather – humid and very hot. But the primary problem for me was corruption. I hear everyone has to be paid off and that police can be untrustworthy. Crime is said to be high.  And then the Mexican economy is very tied up with the US economy. So, reluctantly, I looked elsewhere.

In Central America, the only country I really thought long about was Panama. But there again, there were problems. The weather is very humid and hot. Panama City is overcrowded and expensive – more expensive than many parts of the US. I liked the mixed culture, the entrepreneurial energy and the fact that it’s become a hub of financial services and banking. But that has its draw backs too. It’s also attracting attention from the US authorities who are concerned about off-shore havens. Also, land isn’t cheap and what there is of it is attracting the developer crowd – which I tend to avoid. Nothing turns me off more than condo complexes going up, Starbucks everywhere you look. For that, you can go to Miami. It’s probably cheaper now. So no to Panama.

The Honduras struck me as too poor a country. Extremes of wealth, especially in a small country, are a bad sign.  How long will the place go without a revolution of some kind, I asked myself. And how long before US business or government interests start fiddling around. And sure enough, there’s been a coup.

The rain forests of Guatemala sounded..and looked..beautiful. But clearing rain forest isn’t exactly the easiest or the wisest thing to do. Guatemala also has a reputation for corrupt and cruel police. Real estate prices in the capital city were high. I nixed it too.

Nicaragua was cheaper. But also poor and unstable. No foreigner would  make it a permanent base, unless they liked living dangerously. It’s the kind of place where a certain sort of person from Norte America hides out…keeps a low profile.. or swindles the next fool who comes along..none of which interests me. And it’s too close to other hot spots for comfort.

And so it’s turned out….the Honduras coup seems to be spilling over into Nicaragua (see below).

Belize has its problems with hurricanes and it’s not cheap, except in the more remote areas. It also doesn’t have much to offer in the way of infrastructure and business.  But again, the main problem, as for the other Central American countries, was that it looked like the back yard of the US, vulnerable to interference, to a spill over of the drug wars, and to increased surveillance.

That’s why I decided to go further south, despite the expense, and despite the feeling that overwhelms you every so often in a foreign country – what the heck am I doing here? But I was asking that in the US anyway…

And in the US, I understand everything’s that being said….which tends to upset me, as you can guess from my fiery boycott-the-US post (it’s preceded by the word “IF”).

Here, I don’t understand most of what’s said. Ergo – peace of mind…

Some news on the spill over from the Honduras:

 “Mónica Zalaquett, director of the Center for Prevention of Violence, says the problem in Honduras has become a “political instrument” in Nicaragua, used by both the Sandinistas and the opposition to promote their own agendas..

….On Aug. 4, a group of four Nicaraguan opposition lawmakers who tried to travel to the Honduran border to express their discomfort with what they called Zelaya’s two-week “occupation” of northern Nicaragua were turned back 12 miles before the town of Ocotal. Sandinista and Zelaya supporters blocked their caravan on the highway and attacked their vehicles with sticks and rocks…”

 I feel vindicated in my research…I usually do. My problem isn’t sound investment decisions. I make good choices. My problem is I’m too cautious and tend to wait a bit too long.  I don’t lose, but I sometimes miss out – which some people would say is the same thing.

I don’t see it like that though, because you have to take into account your risk appetite and tolerance for stress. If you live your life pretty much on your own terms, answer to no one, can walk away from unpleasant people and things, and spend all your time in your own company and not in the company of annoying people, you are way ahead of 99% of the world.

And the other 1% is probably broke.

Which means that if you’re not broke, then you are better off than practically everyone. 

I’m not broke.

 

Friedrich Hayek on the Pretence of Knowledge

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Friedrich Hayek on “the pretence of knowledge:”

“Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process… will hardly ever be fully known or measurable.”

Thanks to Kevin Duffy.

Eduardo Galeano on the International Community

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Uruguayan writer, Eduardo Galeano, on the International Community:

“The Israeli army, the most modern and sophisticated in the world, knows who it kills. It does not kill by error. It kills by horror. The civilian victims are called collateral damages, according to the dictionary of the other imperial wars. In Gaza, three of every ten collateral damages are children. And the maimed add up to thousands, victims of human mutilation that the war industry is successfully rehearsing in this operation of ethnic cleansing. And as always, always the same: in Gaza, a hundred for one. For each hundred Palestinians killed, one Israeli.

Dangerous people –warning of another bombardment – in charge of the enormous manipulative media that invite us to think that each Israeli life is worth as much as a hundred Palestinian lives. And those media also invite us to think that the two hundred atom bombs of Israel are humanitarian, and that a nuclear power called Iran was the one that annihilated Hiroshima and Nagasaki. The so-called international community, Does it exist? Is it anything more than a club of merchants, bankers and war-makers?……..

Before the tragedy of Gaza, the Arab countries wash their hands off. As always. And, as ever, the European countries wring their hands. Old Europe, so capable of war and malignancy, sheds a tear or so, while secretly celebrating this master move. Because hunting the Jews was always a European custom, but since half a century that historical debt is being paid for by the Palestinians who also are Semites and who never were, nor are, anti-Semites. They are paying, in blood money, the price of others.

(This article is dedicated to my Jewish friends assassinated by the Latin American dictatorships to which Israel acted as consultant).”