Zombie Wars - Part I

Jul 8, 2015

- By Bill Bonner

Bill Bonner
London, England

Dear Diary,

Dow up 93 points yesterday after Greeks and the Germans set a new deadline. Until then, they agreed to disagree.

And the show goes on in Europe.

Meanwhile, the rout continued in China yesterday, with the Shanghai stock market off 1%.

These two troubles - one in Europe, the other in Asia - have a similar theme. They are both skirmishes in what history may come to see as the Zombie Wars.

On one side: the FED, NSA, Fannie Mae, AFSCME, Wall Street, BCE, the dollar, Obamacare, New York's taxi system, QE, wars on terror, poverty, illiteracy, and drugs, Sarbanes-Oxley, TSA, BATF, millions of retirees and disabled people, General Motors, Hillary Clinton and many, many others...

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On the other: Airbnb, Uber, crypto-currencies, Main Street, businesses, families, gold, young people, savers, masons, Ron Paul, truck drivers, the Episcopal church, Elks, entrepreneurs, markets - and millions of honest people who make their livings and their lives as best they can without holding a gun to anyone else's head

Yes, dear reader, maybe it was too much alcohol or too little food. But in the night, a vision came to us. It revealed the Big Picture in a way we hadn't seen it.

Zombies, you'll recall, are people and institutions that live at the expense of others. How? Some are free- lance criminals, but most depend on government to get the flesh they need. People don't give up their own blood readily. They run. They hide. They try to protect themselves. But government maintains a territorial monopoly on the one thing that does the trick - violence.

So, today, we stoop to admire the institution itself - government. What a beautiful racket! It typically takes 20% to 50% of a total economy's output. It makes the rules. It sets the pace. And woe to anybody or anything that gets in its way.

You can divide an economy into three estates. Households, businesses, and government. Of the three, government is in the best position, by far. Everybody is a customer, whether he wants to be or not. And when you have control of the government, you set the terms of the deals with the other estates...and you can change the terms whenever you want. That's why there is so much money in politics, because you can get so much money from politics!

A person can go into government with nothing; he comes out with a fortune. Dick Cheney, for example, huffed and puffed almost his entire career in politics, except for a brief stint with a crony defense contractor. Now, he's said to be worth $80 million. Or Hillary Clinton. She has never had a job in the productive economy. Yet, she is said to be worth $21 million.

Successful politicians get the best parking places...the best offices...and other perks and privileges that no one else gets. Members of Congress also routinely exclude themselves from the provisions of rules and regulations that they've made the law of the land. For example, it is illegal for US companies to misstate their financial positions; for government it is business-as-usual. In the private sector, fraud is a crime; in government it is 'just politics.'

As to the business community, government has a mixed relationship. Every business is a source of funds. In addition to the money it gets from taxation, confiscations, and other predations, it also gets bribes in various forms. A retired Congressman, for example, can look forward to a career as a lobbyist for the industries he promoted while in office. Or, he can make money by giving dull speeches to industry groups. He may choose to do a little consulting, too, or haunt the board of directors.

Businesses usually begin as productive enterprises. But almost all have zombie tendencies. Once they reach a certain size, they recognize that the best investment they can make is in politics. They hire lobbyists. They pay crony politicians. In return, government enacts rules and regulations to stifle competition. But, as with so many of its activities - government succeeds when it fails. As a new industry arises, the money still flows from the cronies, while the feds get a piece of action from the new enterprises too.

And households? They grouse and groan, but the masses usually love government. They think business people are greedy SOBs.

But the fellows who run government racket are often held in the same exalted category as saints, TV stars and sports heroes. At a reception in Baltimore recently, for example, we noticed people gathered around a familiar face. It was former senator Paul Sarbanes. And just look around Washington, or any major city for that matter. Do you find statues of Henry Ford? Where is the marble bust of Alexander Fleming, discoverer of penicillin? Where is the pile honoring Sam Walton?

Instead, you find plenty of granite spent to honor scalawags and scoundrels - Lincoln, Wilson and FDR, just to name a few.

And who's next?

"Hillary won't win the White House. She might not even win the nomination."

In politics, as in markets, 'nobody knows anything.' But we were seated at dinner last night next to a seasoned political analyst. We recall that much of what he said was "off the record," but we can't remember which parts. So, we will leave his name out of the Diary; he may have spoken more candidly than he had wished.

"The trouble with Hillary is that she's a Clinton without Bill's charm. And she's yesterday's news. She couldn't even beat Obama. And he's a terrible politician. Obama only got elected because of a unique set of circumstances - Hillary and George Bush. People were sick of Bush. And Hillary is a weak candidate."

"So now we're seeing other candidates come out. Bernie Sanders is showing us how vulnerable she is. Others will be encouraged. And one of them will probably get some traction."

"Jim Webb is not getting any money from the establishment. But he has real appeal to the voters."

"As for the Republicans, it could go anyway. Hard to say. I've met them all. Rand Paul is smart. But he doesn't have the funding. Or the political network. He's too much of an outsider and a maverick to be acceptable."

"The trouble with Ted Cruz is that he is inflexible. He's very smart and right about a lot of things, but you have to be fairly flexible to get elected president."

"The one I really like is Rick Perry. I know, he sounds like an idiot. But he's not. They just caught him at a bad moment, when he was on pain killers from dental surgery, or something. You remember, he couldn't remember which department he would abolish if he were elected. It was just a case of brain fog. But it happens to everyone."

"He's actually very smart...and a good campaigner."

More on Zombie Wars...tomorrow.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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1 Responses to "Zombie Wars - Part I"

LOVEPAREEK

Jul 8, 2015

Dear Bonner Sir.
U write best when u say it with zombies. Really, the word ZOMBIE should be patented to you by Govt. as a humanitarian gesture.
A smile lights up as soon as I espy the word zombie in your articles.
Dear sir, I have a favor to ask from you. Please dont disappoint. Can U send me all the "Daily Reckoning" articles you have written till date. I will unite them in a single file for my pleasure....and afterwards will keep it updated as and when new articles come out.
Will be highly obliged if u fulfill this wish.
I hope u will not disappoint.
Tonnes of tnx in advance and best regards.

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