Thursday 17, February 2022

Doomberg “Just Watch Me”

I am not Canadian. I don’t really know what the truckers in the Canadian convoy were protesting against. But I do believe in the right to protest, and I do believe that those opposed to vaccine mandates have a right to be heard.

I am also in favour of governments making an informed tradeoff between risks and costs. We consent to give up a lot of freedom when we live in society. We have really no option but to consent to be constrained by decisions made by our forefathers. We have to believe that they acted in good faith in creating the rules, and the rules about how rules are made, and bend our behaviour to avoid breaking these rules. Or at least accepting the penalties laid down for the breaking of these rules.

But these rules become ever more onerous. Our every movement, our every minor purchase are now subject to potential oversight. Our every communication is likely to be taken down and used against us. We now cannot easily change our nationality or place of abode, something that was trivially achieved a few generations ago. We are turning into a surveillance state, not unlike the German Democratic Republic.

Humans like rules, predictability, routine and figures of authority. These things emerge as phenomena in almost all societies beyond a few families. Maybe our deep-rooted desire for these things stems from a time when we all lived in extended family groups. Whatever the evolutionary or other explanation, this is where we tend to head, as a society.

Unfortunately, when societies develop like this, they encourage rent seeking and exploitation. I am not even sure that it is power that corrupts. Maybe it’s more that power seeks out those who are most corruptible and sociopathic.

Maybe things are all fine, really, and the steady encroachment of the state on our civil rights is a trade-off we would choose, even if we were conscious of it, and and our attention drawn to the risks and the historical precedents. But, to my knowledge, nobody has presented the argument this way. We are always presented with a fait accompli in which we are told that we have to sacrifice our freedom in exchange for keeping people safe.

Instead, all risk to planes worldwide had to be driven to zero regardless of the impact on people’s time or freedom. Zero is an emotional number and an impossible task, but a remarkably effective target when garnering public support for compliance.

Second, fear is a powerful tool of propaganda. A surprisingly high number of people are willing to forgo even basic rights in exchange for perceived protection from the state, no matter how small the increment of protection is on offer. a false dichotomy between perfect safety and a minor loss of freedom.

read Doomberg’s musings on Trudeau’s response to the truckers

Maybe it’s nothing. Maybe we are on a slippery slope.

Wrap

There is extreme uncertainty about Russia’s intentions towards Ukraine. Sovereign bond yields continue to fall, as equities and risk-on currencies like BRL and AUD fall in price vs USD, JPY and CHF.

Commodities fell, as a natural reaction to a strengthening dollar with the exception of risk-off items like gold and silver and a few softs.

The price of crude has oscillated violently. There are a lot of factors. Iran may be about to escape sanctions, which should increase supply (although one imagines a lot of it is already going to Russia for re-export or to China). The dollar is going up, which is a drag on all commodity prices. And, if Russia attacks, it may suffer sanctions, which will drain supply to the west. And, finally, if there is a shooting war, then the Fed will turn on the liquidity taps again, cancel tightening, a put a rocket under the price of all real assets. Which factor wins out is anyone’s guess. For what it’s worth, my guess is that the Fed will end up keeping the punchbowl topped up, and even add some extra vodka. The political consequences of nominal falls in asset prices are too awful to contemplate, in a world awash with debt. But you already know that.

Worth a read

Bribery Won’t Make You a Hero a good take on why MDB1 happened the way it did.

Regulators are looking into whether short sellers improperly influenced stock prices. Yet, somehow stock manipulators who pump stocks are above the law (I’m looking at you, Elon!).