Bill Bonner was one of the first guys I started reading back in 2004 who questioned everything. He was right then and he’s right now. We’ve passed the point of no return where the takers have outnumbered the makers. Math is hard. Running out of other people’s money is harder.
Zombie Nation
By Bill Bonner | 01/07/13
Creating and sustaining a nation of zombies is expensive.
Large sections of the US population have been turned into zombies. Retirees. Medicare dependents. Food stamp recipients. Disabled people. They are not necessarily bad people. They are not necessarily dishonest or lazy. But rather than add to wealth, they consume it. And when you have too many of them, your society consumes more wealth than it produces and you are on the road to The Downside.
But the feds are not only creating individual zombies, they are also creating corporate zombies. An obvious example: “green” energy. Without subsidies, loan guarantees, tax benefits and direct giveaways, the industry as we know it would not exist. Nor would the ethanol industry in the Midwest. Nor the security industry in the Northern Virginia suburbs of Washington, DC.
The financial industry too, as we know it, would not exist either. Much of it would have been swept away in the financial storm of 2008-09. That story is well-known, but not well understood. Most people believe the authorities acted heroically, saving the nation from a depression. But what the authorities really did was to take the public’s money and give it to cronies on Wall Street in order to prevent them from suffering the losses they deserved. The government transferred nearly $2 trillion in various forms from the public purse to the pockets of the financial industry. With that kind of backing, most of the old investment firms survived. The new ones that might have replaced them never saw the light of day.
Industries need to be sustained by the government when they cannot sustain themselves. This is practically the definition of “malinvestment” — putting capital and energy into investments that don’t pay off. When an industry is only profitable with government backing it means that the industry uses resources — labor, energy, raw materials — and turns them into finished products that are worth less than the inputs required to make them. The more of these zombie industries the government supports, the poorer the society becomes.
“Rentier” is a French word that has leaked into English. It doesn’t mean zombie literally, but it describes people who have found a way to exploit the system for their own benefit — people who have legal entitlements to income streams. In other words, “rentier” describes a class of folks who contribute absolutely nothing to national prosperity — zombies.
Before the French Revolution, favored groups were able to secure special privileges and monopolies giving them the right to income. For example, the people from whom we bought our first house in France had a monopoly on the importation of tobacco from the New World. I don’t know who granted this monopoly, but typically it was the monarchy. And typically, such monopolies were given away either to appease a potential adversary or simply to raise cash for the crown by selling off a stream of future income.
The French crown was always short of funds. It found it could raise substantial sums by selling the right to earn a “rent.” It might sell the right to collect tolls on a highway or a river, for example. Or it might sell the right to collect taxes (thereby getting its own tax revenue up-front and letting the rentier deal with the hazards of collection).
Any official document needed an official stamp. Naturally, the crown sold off the right to stamp documents. If you wanted to make a business deal, buy or sell land, or get married, you had to pay the person with the stamp.
Over time, the rentier class grew larger and harder to support. More and more of the kingdom’s energy went to support what was essentially a group of parasites who produced nothing. This is part of the explanation for the French Revolution. The system became so inefficient and was made so fragile by waste that a relatively minor setback — a couple years of bad harvests — caused widespread hunger and revolt.
In modern, developed societies “rents” come in many forms. They are often granted to favored groups in exchange for political support. Old people vote, for example. Political parties seek their votes by promising ever-larger health and retirement benefits. Rich people make campaign contributions. Politicians typically grant them favors too.
By the close of 2012, there were zombies everywhere. Throw a cream pie from almost any street-corner and you were almost certain to hit one in the face. If the street-corner were in Washington, DC, you’d probably hit two or three of them.
A recent report in The Wall Street Journal confirmed that zombies don’t work very hard. The Bureau of Labor Statistics has been compiling detailed data on how people use their time. Researchers tracked how many hours people slept, ate, watched TV and worked. And guess what? They found that federal government employees put in 3.8 fewer 40-hour weeks than employees in the private sector. Here, the cost of zombification is clear: if the zombies were forced to work the same hours as people in the private sector, the government would save $130 billion a year.
Meanwhile, over in the pentagon, R. Jeffrey Smith had his eye on the zombies too:
Of the many facts that have come to light in the scandal involving former CIA director David H. Petraeus, among the most curious was that during his days as a four-star general, he was once escorted by 28 police motorcycles as he traveled from his Central Command headquarters in Tampa to socialite Jill Kelley’s mansion. Although most of his trips did not involve a presidential-size convoy, the scandal has prompted new scrutiny of the imperial trappings that come with a senior general’s lifestyle.
The commanders who lead the nation’s military services and those who oversee troops around the world enjoy an array of perquisites befitting a billionaire, including executive jets, palatial homes, drivers, security guards and aides to carry their bags, press their uniforms and track their schedules in 10-minute increments. Their food is prepared by gourmet chefs. If they want music with their dinner parties, their staff can summon a string quartet or a choir.
The elite regional commanders who preside over large swaths of the planet don’t have to settle for Gulfstream V jets. They each have a C-40, the military equivalent of a Boeing 737, some of which are configured with beds.
And then, even after they retire…the zombies keep feeding off the productive sector:
Updating a 2010 Boston Globe report that documented the practice, CREW found that over the last three years, 70 percent of the 108 three-and-four star generals and admirals who retired “took jobs with defense contractors or consultants.”
As Sen. Claire McCaskill, D-Mo., put it during a 2009 hearing on Obama’s nomination of former Raytheon executive William Lynn to become the deputy secretary of defense, “it’s an incestuous business, what’s going on in terms of the defense contractors and the Pentagon and the highest levels of our military.”
During the Presidential campaign, Mitt Romney mentioned that 47% of American households now receive some form of support from the government. In a better democracy, none of those people should vote. They all have a conflict of interest. They should admit that they find it difficult to separate their own personal interests from those of the nation and abstain from casting a ballot. Instead, they “vote their own pocketbooks” — usually coming down on the side of diverting more resources from the productive sector to their own personal consumption.
The zombies corrupt the system. The march to Stalingrad continues. And the Downside takes over.
Regards,
Bill Bonner
for The Daily Reckoning
Read more: Zombie Nation http://dailyreckoning.com/zombie-nation/#ixzz2JIQHGKzq
AWD says:
Also from Bill Bonner
The Entitlement Cliff
By Bill Bonner | 12/20/12
Read more: The Entitlement Cliff http://dailyreckoning.com/the-entitlement-cliff/#ixzz2JIVA4TuY
Over the last 4 years the number of people on disability has risen more than 7 times faster than the number of people with jobs. The number of people on food stamps has increased by 17 million during Obama’s term in office. From the beginning of Obama’s first term to the end of it, approximately 4.6 million jobs disappeared. But the number of additions to food-stamp and disability roles jumped 21.2 million.
Why were so many more people suddenly disabled? Was there a plague that struck the nation? Were millions crippled in a nationwide auto pile-up? Of course not. Instead, in a low-growth economy, $1,000-a-month without working had begun to look pretty good.
“You get what you pay for,” said Milton Friedman. You pay people to be disabled. You get plenty of them.
Everybody’s worried about the fiscal cliff. But there’s a much bigger cliff coming up, and it’s the “Entitlement Cliff.” In the four years since Obama took office, entitlement participants have grown exponentially.
Driving through East Baltimore recently, I saw slews of billboards with ads by shyster lawyers encouraging poor people to get in on disability payments or to sue their employers or their landlords. Here’s one of the billboard ads:
DENIED DISABILITY? Call THE FIRM. The Cochran Firm.
Johnnie Cochran was the lawyer who successfully defended O.J. Simpson. Now his firm has 30 offices around the country helping people get on disability. Apparently, he’s been pretty successful at this too.
Well-loved. Like or Dislike:
12 
0
28th January 2013 at 1:47 pm
Llpoh says:
Nice stuff, Admin. Looks like your juices are starting to really flow again.
Like or Dislike:
3 
0
28th January 2013 at 2:58 pm
AWD says:
Too bad we can’t read half the article.
Like or Dislike:
0 
4
28th January 2013 at 3:01 pm
Administrator says:
Looks fine to me.
Well-loved. Like or Dislike:
8 
0
28th January 2013 at 3:09 pm
card802 says:
Great article.
I couldn’t read it in Firefox but works fine in Safari.
Like or Dislike:
1 
0
28th January 2013 at 4:00 pm
Kevin says:
Ever heard of Malawi? (Population 14.5 million. FY2013 USAID amount 145 million)
State Department and U.S.Agency for International Development (USAID)-administered bilateral assistance to Malawi totaled over $172.6 million in FY2011; an estimated $166.7 million in FY2012; and $145.8 million in requested funds for FY2013.
Source:
http://go213mph.wordpress.com/documents-page/
“Malawi: Recent Developments and U.S.Relations”
Like or Dislike:
2 
0
28th January 2013 at 5:54 pm
Eddie says:
“Johnnie Cochran was the lawyer who successfully defended O.J. Simpson. Now his firm has 30 offices around the country helping people get on disability. Apparently, he’s been pretty successful at this too.”
Johnnie Cochran has been dead for over seven years. Not even smart shyster attorneys have figured out how to take it with them when they go.
Like or Dislike:
4 
0
28th January 2013 at 6:12 pm
flash says:
There’s a higher price than “free shit” to pay for allowing a third world invasion to go unchecked , but that’s the plan isn’t it. Divide the strong to rule the weak. Machiavellianism 101
WE the no longer US, but THEM .
What you going to do
White boy, white girl, when they come for you?
A Latino gang is intimidating blacks into leaving the city that was once an African American enclave. It’s part of a violent trend seen in other parts of the L.A. area….
Compton Councilwoman Yvonne Arceneaux said she was deeply troubled by the incident. “I’m floored,” she said. “That’s blatant to tell a family you can’t live in this area because you are black. That’s just shocking.”
Two decades ago, when Arceneaux joined the Compton City Council, she said that older blacks occupied the well-maintained, small homes in the neighborhood. But as they died or moved away, Latinos moved in. Although she noted cultural differences between blacks and Latinos, she said she thought they were minor.
So, the blacks have fled Compton. Liberal whites are beginning to flee CaliMexifornia. And with the incipient amnesty being pushed by Barack Soebarkah and the Republican Party’s Great Hispanic Hope, Marco Rubio, the 52-million strong Aztec invasion is going to get a new head of steam. California and New Mexico are already lost. Texas is next, and I suspect it is the most likely flashpoint in the coming clash between Aztec and Anglo cultures, just as it was 177 years ago.
Like the naive councilwoman, most Americans foolishly believe that the rest of the world gives a damn about their pretense to not see differences of color, race, and culture. The Union is already done for due to debt, and what we’re seeing now is a preemptive race to be in a position to pick up the pieces prior to its shattering. The killing and the ethnic cleansing is micro-scale and well below the radar of the macro-focused, see-no-evil mainstream media, but it has already begun.
This shouldn’t come as any surprise. I recognized the historical pattern developing more than 15 years ago. It is one of the reasons I left. These mass migrations – and this is a large one by historical standards – have reliably led to the replacement of the previous culture and people by the invading one. It is why the Italian province of Lombardia still bears that name today, more than 1,400 years after the Lombard invasion of northern Italy.
“The Lombard king Audoin defeated the Gepid leader Thurisind in 551 or 552; his successor Alboin eventually destroyed the Gepids at the Battle of Asfeld in 567. Following this victory, Alboin decided to lead his people to Italy, which had become severely depopulated after the long Gothic War (535–554) between the Byzantine Empire and the Ostrogothic Kingdom there. The Lombards were joined by numerous Saxons, Heruls, Gepids, Bulgars, Thuringians, and Ostrogoths, and their invasion of Italy was almost unopposed. By late 569 they had conquered all the principal cities north of the Po River except Pavia, which fell in 572. At the same time, they occupied areas in central and southern Italy. They established a Lombard Kingdom in Italy, later named Regnum Italicum (“Kingdom of Italy”), which reached its zenith under the 8th-century ruler Liutprand.
In 774, the Kingdom was conquered by the Frankish King Charlemagne and integrated into his Empire. However, Lombard nobles continued to rule parts of the Italian peninsula well into the 11th century when they were conquered by the Normans and added to their County of Sicily. Their legacy is apparent in the regional appellation, Lombardy.”
Historians will not view the Aztec conquest of the American Southwest as “immigration”, but as “an invasion that was unopposed”. History suggests that the invaders will likely accept the current political status quo so long as they continue to receive tribute in the form of free government services and “transfer payments”, but demonstrates very clearly that as soon as the tribute falters, the swords will come out and the invaders will forcefully alter the political system to suit themselves.
Labels: Invasion, Vibrancy is our strength
http://voxday.blogspot.com/2013/01/what-you-going-to-do.html
Like or Dislike:
1 
0
28th January 2013 at 6:18 am
tom says:
I am glad to see that the US Senate passed the “Sandy Bill” last night. The money should be coming soon…..but there is a drawback, those tax hikes on the “rich” have been wiped out! What will happen next?
http://www.washingtontimes.com/news/2013/jan/28/sandy-relief-bill-eats-up-taxes-on-the-rich/
Like or Dislike:
3 
0
28th January 2013 at 6:45 am
Nonanonymous says:
flash, you should get your own site, only problem is no one will read it. I read your little copy and paste exercise on another site yesterday, maybe the same one you read.
Gangs in the US ARE A PROBLEM, and the POTUS and CONUS are doing absolutely nothing about it, because the root cause is the feds aren’t enforcing existing immigration laws.
When we are no longer a nation of laws, then we’re anarchists, which is what our federal government has become, and are no longer the legitimate governing body. I’m counting on State governors and County Sheriff’s to stand up to the feds, and I’ll back them up with every means at my disposal.
What are the feds going to do when all fifty states secede and call a constitutional convention? My concern is what might come out of such a convention, but scrapping the dollar and passing a balanced budget amendment are high on my list.
It sucks if you’re a government dependent, but it’s on!!!
Like or Dislike:
2 
0
28th January 2013 at 8:01 am
flash says:
nonanon-
Whats your point?
If you had indeed read the c&p I posted, then you wouldn’t need to speculate that it may be the same one I read, because the link is included.
Sure , indeed gangs are a problem , but gangs are formed by race and or tribe , which get US back to the invasion problem.
Your interpretation of anarchy is way off base..come back when you get more info.We have no shortages of rulers or laws.The deficit lies in justice.
The word “Anarchy” comes from the ancient Greek ἀναρχία, anarchia, from ἀν an, “not, without” + ἀρχός arkhos, “ruler”, meaning “absence of a leader”, “without rulers”).[7]
Like or Dislike:
1 
0
28th January 2013 at 8:18 am
Nonanonymous says:
Flash, thanks for making my point, anarchy – without the rule of law.
Like or Dislike:
1 
0
28th January 2013 at 10:52 am