John Ryskamp

Decidedly Speculative: John Hussman's Commentary and More

"Stealth stimulus:" this is some totally wacked out WSJ writer who probably went to Dartmouth.

Leading Indicators for a Credit Contraction, Round 2

How much longer til U.S. sovereign debt default? The prelude is looming Japan sovereign debt default. Odd prelude is soon-to-be soaring dollar once Japan starts monetizing government debt (the next leg in the currency race to the bottom). Of course, the "the Japanese only owe their debt to themselves" mantra as always Ponzi-cum-kabuki.

There is no black swan to the "black swan"--the black swan has always been stashed behind the curtain, where's the surprise there? About to be brought out front, though.

Shorting the Double Dip

National income drives consumer spending, which is contracting due not just due to falling national income but rapidly contracting credit lines and a near 40% loss of accumulated wealth in the property and equity markets. And while consumer spending ostensibly is 70% of the economy, this includes spending on health care - love those government statisticians - so contraction has an incredibly outsized impact on consumer discretionary spending - luxury goods, travel, restaurants, unnecessary goods, expensive goods - anything you can trade down from to a lower level of price with equivalent functionality.

BUT ISN'T 60% OF CONSUMER SPENDING DONE BY THE TOP 40% INCOME EARNERS. THE UNDEREMPLOYMENT RATE AMONG THOSE WITH A BACHELORS DEGREE OR HIGHER IS ONLY 10%. THE REASON YOU HAVEN'T HAD ANY CHANGES--EXCEPT FOR THIS CORPORATIST GAMBIT--IS THAT SUBURBIA IS STILL WORKING. YOU WON'T SEE ANY CHANGE UNTIL THE B.A. UNDEREMPLOYMENT RATE IS 40%.


There are too many factories around the world, too many shopping malls an stores, too much commercial real estate - and at levels beyond all historical norms or comparisons. The first several legs of a rebound needed to absorb this capacity before we see any uptick in business investment that materially helps the economy.

THAT CAPACITY DOESN'T NECESSARILIY NEED TO BE 'ABSORBED.' IT CAN SIMPLY BE DESTROYED. AND THAT IS WHAT IS HAPPENING. NOTHING WILL CHANGE IN THIS RESPECT UNTIL SUCH CAPACITY DESTRUCTION VERY SIGNIFICANTLY UNDERMINES THE SUPPLY CHAIN.

LOOK FOR THIS TO OCCUR IN AGRICULTURE, WHICH IS HIGHLY LEVERAGED JUST LIKE COMMERCIAL REAL ESTATE.

WHAT YOU DON'T UNDERSTAND IS THAT THE WEST COAST HOTEL V. PARRISH "SCRUTINY" REGIME NEVER OUTLAWED MELLON'S "LIQUIDATE LIQUIDATE LIQUIDATE." THAT IS WHAT IS HAPPENING NOW, AND IT HAPPENS IN TWO PHASES:

1. CIRCLE THE WAGONS--PROTECT THE POWERFUL, BACKSTOP BONDS.

2. SHOOT OUT AT THE INDIANS--THE FEDERAL GOVERNMENT WITHDRAWS FROM AMERICAN SOCIETY.

EVERYTHING IS GOING RIGHT ON SCHEDULE. YOU SHOULD STUDY THE DEPRESSION MORE CLOSELY. THE FEDERAL GOVERNMENT IS PROGRESSIVELY, STEP BY STEP AND ACCORDING TO THE MOST APPROVED MELLON PLANBOOK, WITHDRAWING FROM THE COUNTRY.

THE QUESTION IS, WHERE WILL THE NEW REGIME COME FROM. IT WILL BE THE "MAINTENANCE" REGIME--NEW INDIVIDUALLY ENFORCEABLE RIGHTS (SUCH AS TO HOUSING AND MEDICAL CARE) IN SUPPORT OF A GOVERNING DOCTRINE WHICH SAYS THAT POLICY MAINTAINS IMPORTANT FACTS (BY THE WAY, THE "SCRUTINY" REGIME DOCTRINE IS THAT POLICY RATIONALLY RELATES TO A LEGITIMATE GOVERNMENT PURPOSE--AS ANY LAWYER).

"MAINTENANCE" IS USED EXPLICITLY IN THE THREE MOST IMPORTANT SCRUTINY CASES:

1. WEST COAST
2. UNITED STATES V. CAROLENE PRODUCTS
3. BERMAN V. PARKER

LOOK FOR THE SUPREME COURT TO VETO SOME LAW WHICH UNDERMINES SOME IMPORTANT FACT, STATING THAT THEY ALWAYS GROUNDED DISCRETION IN POLITICAL SYSTEM, ON MAINTENANCE OF IMPORTANT FACTS.

THAT WILL SHOW YOU THAT THE REGIME CHANGE HAS COME. AND IT HAS TO COME. IT IS THE ONLY CREDIBLE ALTERNATIVE. THE ECONOMY IS COLLAPSING BECAUSE THE SCRUTINY REGIME HAS LOST CREDIBILITY.

IF YOU KNEW ANYTHING WHATSOEVER ABOUT THE LAW, YOU WOULD KNOW THIS.

AND WHERE IS THIS CHANGE COMING FROM? WHY, FROM OUR SEMI-FASCIST SUBURBAN CLASS. THEY'RE SCARED SH-TLESS ABOUT IMPORTANT FACTS SUCH AS HOUSING AND MEDICAL CARE.


That being said, there is no political support for more stimulus. Deficits and a Congressional election preclude another stimulus package next year and the Fed and Uncle Sam have already said they are definitely pulling back, beginning November 1.

YOU'RE QUITE MISINFORMED. A SECOND STIMULUS BILL IS ALREADY IN THE WORKS. IT WILL PROBABLY BE INTRODUCED IN FEBRUARY 2010, AND WILL BE ABOUT $2 TRILLION. COMMERCIAL REAL ESTATE HAS TO BE BAILED OUT, OR 2000 COMMUNITY BANKS WILL FAIL.

What if It Is a 'V' Recovery?

Just read the book, The Eminent Domain Revolt. It's for sale at Amazon.

By the way, what I just wrote is standard stuff you will read in ANY Constitutional law book. I wrote it, however, because so many economists write on about society without knowing ANYTHING about the legal structure. This is completely idiotic.

For example, you may well wonder how bondholders can be screwed by a lot of these "bailouts" or how any of the "stimulus" provisions can survive legal challenge. It's simple: with respect to any fact you please--money, property, taxation, stocks--the Federal Government need only show that its policy is rationally related to a legitimate government purpose.

I'm especially amused by "property rights" advocates, who seem utterly surprised to learn that property only enjoys minimum scrutiny, and that the law has virtually NO idea of what , in FACT, property is.

How can government get away policy it generates with respect to property? Simple. Advocates of property rights (Scalia among them), have done such an AWFUL job of factually studying property, that they have never been able to convince the Court that property is an important fact, that it enjoys a higher level of Constitutional scrutiny than minimum scrutiny, and that therefore plaintiffs have a right to introduce a wide variety of facts regarding property.

Under the minimum scrutiny regime, you have virtually NO right to introduce facts.


Any lawyer knows this. Why don't these pathetic "property rights" advocates? It's really appalling how ignorant Americans are. Their ignorance is how the scrutiny regime remains in "business."


On Sep 06 05:26 PM John Lounsbury wrote:

> John Ryskamp - - -
>
> Wow!
>
> I would like to read an elaborated discussion of what you wrote.
> Any links?

What if It Is a 'V' Recovery?

It's not that the static macro model is wrong. It's that the terms have been emptied of meaning by Federal policy. The Federal Government is doing what Andrew Mellon told Hoover to do: "liquidate liquidate liquidate." When that happens, it is simply factually inaccurate to refer to "liquidity." You see what "liquidity" was: government policy. Now the policy is something else, NOT liquidity.

But ECRI rattles along, taking no account whatsoever of the effect of Federal policy. The bailouts did not "stabilizing" a situation faced with "deterioration." It was simply a crime in which private debt was monetized. It is STILL being monetized.

This is not "liquidity," nor is it protecting "liquidity." If anything, it is a declaration of class war. It's much more important to see the interests at play and who is grabbing what, instead of ECRI's meaningless "indicators."

Interest rates are manipulated, the stock market is now wholly manipulated. And yet "declines" in interest rates and "increases" in the stock market play into the ECRI model. It's simply ridiculous.

But does it really matter what any mouthpiece has to say? It's much better to watch what happens to the main indicator: unemployment among those who have a Bachelor's degree or higher. These are the people with the political influence.

Currently, underemployment rate among this class is about 10%.

This is why outfits like ECRI--pure business mouthpieces--can survive. And they will survive--until unemployment in this class reaches 40%, if indeed it ever does. If not, Rome rumbles on.

But if it does, you will have a revolution. To be sure, there have been revolutions when unemployment among this class was lower (the American Revolution, for example). But when the figure reaches about 40%, you will ALWAYS have a revolution.

And that's what we all are waiting for. Surely it is no secret that building a middle class has been the main Federal policy since we got our current regime, the "scrutiny" regime courtesy of West Coast Hotel v. Parrish (1937). That case gave nearly absolute power to the political system over most facts.

There are VERY few rights in facts. For example, housing enjoys only minimum scrutiny (Lindsey v. Normet). This is true of a host of other facts, such as medical care, and there was a whole line of Supreme Court cases which established this.

Well, now we've got our huge, massively expensive to maintain suburban establishment. Now what? The American middle class--for all its ignorance and cryptofascism--is plainly worried about the status of the facts.

So it's going to demand more individually enforceable rights. Short of a revolution? I doubt it. Instead, I think the power of American homeowners will shrink to the point where another group simply moves in, evicts the scrutiny regime, and expands individually enforceable rights.

By the way, in case you have never heard of the regime under which we are living, I suggest you take a look at an excellent online essay by G. Edward White of the University of Virginia law school. It's called "Historicizing Judicial Scrutiny."

Americans are so appallingly ignorant that they don't even realize they are living in a particular regime, much less that that regime might end.

But history shows that American Constitutional regimes live about 70 years, and then are replaced.

With what? I think that once individually enforceable rights are expanded (check out the new demand for a right to medical care, which currently enjoys only minimum scrutiny under DeShaney v. Winnebago County), you will see a change in the governing doctrine.

The Scrutiny Regime Doctrine:

policy is rationally related to a legitimate government purpose (that is what is called "minimum scrutiny").

I think this doctrine will be replaced by

The Maintenance Regime Doctrine:

policy maintains important facts.

I think "maintenance" will take over as the government concept--replacing "discretion" in the political system--because the terms is ALREADY in West Coast Hotel (Berman v. Parker too).

You will see the Court saying something like, "but we ALWAYS grounded our grant of discretion in the political system, on maintenance of important facts." And then the level of scrutiny will be raised for some fact, such as housing.

And that will end the scrutiny regime.

By the way, what is an "important" fact?

It is a

1. fact of human experience which,
2. history demonstrates,
3. does not change in spite of attempts to affect it.

I discussed the emergence of this new regime in my study of middle class opposition to eminent domain, The Eminent Domain Revolt.

This is far FAR away from ECRI's meager understanding of the profound power struggle currently under way, in which the political system engages in a silent, sub rosa struggle against an endangered, frightened and more than a little irrational bunch of homeowners.

Cheers,
John Ryskamp

What if It Is a 'V' Recovery?

The main problem with ECRI indicators is that they are not valid in a situation in which the Federal Government controls 40% of the economy. For example, the notion of "liquidity" is out the window, and if you notice, no one can define it now. ECRI operates on the premise that what I call "faux liquidity" is liquidity of the sort Pigou would recognize.

But part of the growth of the Federal role has been to "lean on" these terms, to milk them for all their are worth until they are worthless. And they are worthless now.

That's why critics now simply call ECRI a mouthpiece of the government. It concedes government terms and government definitions, even when those definitions are no longer the definitions of the government.

And what are the terms of the government? It HAS no terms. That's the point.

So ECRI winds up saying exactly what the government wants it to say: that all the traditional mechanisms are in place and are operating as traditionally planned.

So ECRI takes a flight from reality: it has become the Propaganda Ministry.

All of YOUR figures show that ECRI is in fantasy-land. And yet ECRI rattles on. It will one day show utopia, while reality will show hell. And what will ECRI reply? That the models are predicting what they were designed to predict. If you notice, that is redundant.

Finally, you are dealing with an organization which bases its ideas on the notion of general equilibrium. But who doesn't know general equilibrium is a bogus model, devoid of logical content? ECRI doesn't.

Los Angeles Ports Face a Grim Future

Don't quote Ricardo. He was a constructivist mathematician (as was his great champion, Sraffa), and constructivist math is entirely discredited. Every economist uses it: that is why economists keep making wrong predictions.

As for shipping, its relevance is to the supply chain, which is collapsing and that collapse is unnoticed. It is the collapse of the supply chain which causes societies to collapse.

The answer? Not more power in the state--which both left and right want, as long as they control the state. No, we need more individually enforceable rights.

The reason housing is a catastrophe? Simple. Housing enjoys only minimum scrutiny (Lindsey v. Normet).

The reason medical care is corrupt, a mess and contributing to the class war? Medical care enjoys only minimum scrutiny (DeShaney v. Winnebago).

Same is true of liberty, maintenance and education. The level of scrutiny of those facts has to be raised or the country will collapse. We need to evict the West Coast Hotel scrutiny regime and install the maintenance regime, the doctrine of which is that the law maintains important facts.

Just see my book, The Eminent Domain Revolt.

Cheers fools,
John Ryskamp

ECRI: Strong Signal Recession Will End this Summer

Hey Steve,

Don't you realize ECRI is based on phony data? Do you know that ECRI completely failed to call this recession? Look at some of their postings in 2006. This organization is intellectually sloppy. They're like the Conference Board. They relying on bad models and in addition take no account of the Federal Government's phonying the data. Why even bother reporting what a corrupt organization like ECRI has to say?

ECRI: There Is Light at the End of the Tunnel

The ECRI failed to call this recession (look at the idiot Achuthan's comments) and it failed to call the Depression. This ridiculous outfit is a government mouthpiece and uses bad economics. Ignore it.

Cycles, Recessions, and Looking Forward

ECRI didn't tell you that a lot of its model was, and still is, based on liquidity. Nothing you could tell them about the non-liquid nature of this "liquidity" would induce them to change their model. And they still haven't changed it.

Remember when people talked about liquidity? Wasn't so very long ago.

Wanna know where to look to find the true facts about the depth of the economic catastrophe: the supply chain. Every single link is financed, and every single financial arrangement is corrupt.