Interviewed by Louis James, Editor, International Speculator
L: Doug, with all the US election gossip in the news, readers are wondering what we make of the circus. The Republicans haven't settled on which walking ethical disaster they are going to pick as their candidate, and neither of us thinks the only decent man in that contest - Ron Paul - will get the nod. With recent economic numbers seeming to bolster the president, your fear that the Democrats could pick a left-wing general instead of Obama seems to be evaporating. So, what do you think - is it looking like four more years of Obama?
Doug: Well, as Clinton correctly said, "It's the economy, stupid." This is hands-down the determining factor in how most people will vote. Unfortunately, most people don't have a clue what actually makes for a strong economy. In the unlikely event that the economy does not exit the eye of the storm this year, my guess is that people will vote for Obama. The economy seems better to those who are not looking too closely; it'd be "Don't change horses midstream" and "Steady as she goes" type thinking.
L: But if you're right about the economy exiting the eye of the storm?
Doug: Then the Republicans should have a shot. But the leading candidates, other than Ron Paul, as you mentioned - Romney, Gingrich, and this horrible new contender, Santorum - are all extremely dangerous, rabid warmongers. On top of that, Santorum appears to be something of a religious fanatic who poses a dangerous threat to the social fabric of US society. Of course all of them thump the Bible, catering to Americans' atavism; the US is the by far the most religious of the world's developed countries... so maybe Santorum is what they want.
L: We've talked about Ron Paul before; still no hope there?
Doug: No. It's a pity, because he's the only real antiwar candidate consistently polling at significant numbers - 15% to 20%. He's also the only real voice for fiscal sanity, rolling back the police state, deregulating the economy, and many other positive things. But he's got no chance. He speaks fairly well for the libertarian minority in the US, but certainly not for the entitlement-mentality majority, and not even for the majority of Republican voters. The Republicans have become the warfare party, and Dr. Paul doesn't fit in. The Democrats have long been the welfare party, so he doesn't fit in there either. It's just not going to happen for Ron - not because of any fault with him, but because the whole system is so corrupt and the electorate is so degraded. If the US is to be compared with ancient Rome, then we're far beyond the days of the early republic, when heroes like Horatio and Cincinnatus could provide inspiration and save the day. We're more at t he stage where US leaders resemble emperors of the third century, every single one of whom was a disaster. Men like Elagabalus and Caracalla, and finally Diocletian, who transformed the empire into a proto-feudal police state out of desperation. Leaders tend to reflect their constituency, and the state of a country. The US empire is in severe decline.
But let's talk about Obama. I've been accused of being soft on Obama, even though he's arguably an even worse president than Baby Bush was. I've even been accused of pandering to racism, because I haven't lambasted Obama in the same way I used to take pleasure in lambasting Bush...
L: If you did lambaste Obama, I'm sure you'd be criticized for speaking ill of the first black US president. But if you also get criticized for not calling him out, you're damned if you do and damned if you don't.
Doug: Yes, saying anything unkind about the first black US president is clearly proof of racism. [Laughs] That just shows how completely degraded political discourse in the US has become. Pundits don't see people as people to be praised or criticized on the merits of their words and deeds, but as members of groups. A president, in this view, should not be judged on his ideas, policies, and actions, but on which groups he can be seen as part of.
It also helps to be totally vapid, so no one can find any dirt on you; I suspect that's Santorum's main virtue. And smarmy - like Mitt Romney and Rick Perry smiling at each other during the "debates" when they each really wanted rip the other guy's lungs out. Anyway, they aren't real debates, where ideas are discussed intelligently and explored fully. They're just charades where the candidates try to remember good quips and funny one-liners that their handlers have written for them.
L: The refusal to judge a person based on his or her own merits is pure groupthink.
Doug: Exactly. One of the driving forces of this prison planet we live on. The candidates just want to be alpha monkeys, in order to lord it over the beta monkeys.
Back to Obama. It's interesting to observe that in spite of some of his rather extreme positions on some things, he doesn't act aggressively, like his Republican competitors would do. He's slick, with everything he says couched in reasonable-sounding language. He never comes across as a radical. Yet bad ideas seem to seep out of the White House like swamp gas in the night. They rarely change greatly from one moment to the next, but mutate slowly like a cancer, eventually building up a fog of deceit in reasonable-sounding, smarmy doublespeak, so that it's hard for most people to know what's right. That was the nice thing about Bush: he was outspoken, albeit in a stupid kind of way. He constantly stuck his foot in his mouth, so it was hard to take him seriously.
However, I take Obama very seriously. Everything he has put forward has been terrible policy. And he's surrounded himself with about 20 "czars," all of them hardcore statists. I think the practice started with Jerome Jaffe - the drug czar under Nixon - but it's gotten out of control under Obama. Strange, I don't see the word "czar" anywhere in the Constitution...
L: As for specific policies, there was, for starters, his healthcare reform; he managed to take the US further down the road to socialized medicine than anyone since Lyndon Johnson.
Doug: Yes, he took that title away from Baby Bush, who added the massive prescription drug benefit for Medicare recipients. But I have to object when you say "health care," because what we're really talking about is medical treatment, which is care when you're sick. It's not actually health care, which is about eating well, exercising, and things that keep you from getting sick.
L: I know, I know... that's just the terminology of the day; I should know better than to let the enemy define the terms. For example, I've long thought that it's a mistake to use the word "capitalism" when discussing the free-market system. Capitalism was Marx's term, and not only was his view of capital as wrong-headed as the labor theory of value, it mistakenly encourages the idea that industrialists have more power in the marketplace than their customers. Just ask the former heads of General Motors, IBM, Kodak, Xerox, and other fallen giants if they had more power than the customers who stopped consuming their products. "Consumerism" is a dirty word in today's world, but it's a more accurate word for free enterprise, if you want to define it in terms of who calls the shots.
Doug: It's critical to be careful with your words; these collectivists and statists have won half the war if you let them define the terms. That's why we so often start these conversations with a definition. The sloppy and undefined use of words leads to sloppy and undefined thinking, and that leads to stupid and destructive actions.
L: So, should we define Obama?
Doug: That's hard to do. You know, it's funny. When Trump was running, I criticized him. It's hard for me to say anything good about Trump under any circumstances - but he at least had the brass to ask questions about Obama that other public figures wouldn't touch, questions about who Obama really is and how he seemed to appear from nowhere. To my knowledge, no one has stepped forward to identify themselves as a school friend, or even a college friend of his. I'm not a conspiracy theorist, but I have to say that as far as I know, none of these questions have been satisfactorily answered.
L: You don't need to believe any conspiracy theories to notice that there's something odd about the man. He seems like a big zero to me, not a big O. Even when he's reading the speeches people write for him to pull on the population's heartstrings, he comes across almost completely wooden. Sometimes I'm sure he's pausing not where there are commas or periods, but where the lines wrap on his teleprompter. He has the personality of a frozen mackerel.
Doug: It's interesting that you point that out - I've often wondered if the special interests behind him couldn't come up with anyone better. I'm not saying he has to be another George Carlin or Dave Chappel, but it would be nice to see that someone is home. Obama is so flat, I can't even be sure whether he's intelligent or not, although I initially assumed he was very smart. With Baby Bush, it was clear that he actually lacked intelligence. With Obama carefully plodding through his teleprompted speeches, I actually can't tell if he's smart or not. He was president of the Harvard Law Review, which would seem to argue for intelligence, but that could have been finessed as well. And exactly who paid for all his schooling and related expenses? I honestly don't know who we're dealing with.
L: It's almost as though he were literally a puppet. Maybe there really is no Obama.
Doug: He's an empty suit. But then, so are Romney and all of the guys who actually stand a chance of becoming president of the US. This actually softens my dislike of Gingrich, among those who seem to have a chance this time around. He's outspoken. A lot of his ideas are manifestly dangerous or goofy, but at least he comes out and says them - at least he actually has ideas - and that makes him interesting at times. Nor does he attempt to hide his arrogance. There's something to be said for exposing your vices as opposed to hiding them; hidden vices are much more dangerous, like hidden IEDs.
L: Something to be said for entertainment value?
Doug: Sure, although it's entertainment on the level of farce. There's no element of nobility in any of these people. The ancient Greek tragedians wouldn't have considered putting any of them in a play: These aren't great men with tragic flaws; they're pathetic clowns. They're all play-acting, pretending to be something their pollsters think the electorate wants, pandering to the unwashed mob.
If they were to appear in a play, Perry might be cast as an assistant manager at a Target store, Gingrich as the vice principal at the local community college, Romney as an aspiring actor who wants to play the father in a 1950s-style sitcom, Santorum as goody-goody DMV employee, and Obama as a community organizer... whatever that is. Ron Paul is too authentic to appear in such a low farce.
Anyway, to escape from their lackluster lives, they go bowling together on Wednesdays. Even though they're quite similar - or maybe because they're basically so very similar - they don't like each other and get into arguments centering on two things: each other's poor character and their uninformed and unsound political and economic views. You could just use lines from the debates and Obama's speeches for the dialogue.
But I fear it would be a boring show unless Saturday Night Live or The Onion did it. No way would Aeschylus or Sophocles touch the material; they liked heroic characters with tragic flaws. It's impossible to write good tragedy about nonentities.
Obama seems to lack any personality - unlike, say, Clinton, who's a genuinely engaging guy, even though his ideas are almost as uniformly bad as Obama's. I have to ask myself: What kind of a person can become president of the US at this point? Clearly no one with strong principles will ever make it, partly because such a person can't make the insipid, inoffensive, statements that appeal to the lowest common denominator. I wonder where they find these people? It might be a good new reality show - call it The Lowest Common Denominator.
L: Okay, but we've probably crossed the line to making personal attacks - though I think those who presume to rule over others deserve greater public scrutiny of their persons and ideas. Let's get back to policy. "Cash for clunkers" was, if I'm not mistaken, an idea backed by the Obama administration, and in my view a clear attempt to simply open the spending spigots to try to bribe the electorate.
Doug: Yes, that was a great idea. Subsidize the destruction of perfectly good vehicles with billions of borrowed dollars, in order to keep mismanaged auto companies afloat. Then there was the housing credit, which induced scores of thousands of people to get into the collapsing housing market at taxpayer expense. And keeping interest rates near zero, in a desperate attempt to keep old bubbles inflated; that will just inflate new bubbles while it destroys the currency. Obama is disaster incarnate for the economy. Everything he's doing - and pushes the Fed to do - is not only the wrong thing, but the exact opposite of the right thing, as we've commented on many times. I honestly can't think of a single good thing about Obama. There must be something... perhaps he neither kicks his dog nor beats his child. But he's a sociopath; he's got all the signs of one that I spell out in this month's Casey Report... just like Clinton. But not so much like Bush, wh o was helpful in defining the often fine line between "stupid" and "evil."
L: What about foreign policy? He did bring the troops home from Iraq. I wish he'd bring them all home, but that was a step in the right direction, wasn't it?
Doug: Yes, bring them home so they can practice the bad habits they picked up as invaders in the Middle East as cops in the US. But it's true - he did get US troops out of Iraq. On the other hand, the Obama administration has put new troops in other places, like Uganda and Australia, participated in the bombing of Libya, and who knows what he'll do if Egypt falls apart. He may yet intervene in Syria, where the US is already sending arms to the insurgents. I suspect he and his minions are now negotiating with the Taliban mainly to arrange a semi-graceful exit for the troops next year from Afghanistan. It wouldn't do to have a running gun battle while the last people are evacuated from the embassy in Kabul, holding on to the skids of helicopters, like in Saigon. And it looks like they'll start a war with Iran.
L: Yes, he can hardly claim to be a man of peace when he likes to take credit for ordering the extrajudicial execution of Osama Bin Laden.
Doug: What are you talking about? Don't you know he was awarded the Nobel Peace Prize? Actually, I'm glad he got it: it serves to fully discredit the prize as an overrated scam. And how about this new National Defense Authorization Act that allows the military to detain US citizens indefinitely? That was hardly a bill a defender of civil liberties would sign into law.
Obama, whoever and whatever he is, is just bad news all around. If he's reelected, people are going to get exactly what they deserve. That's one good definition of justice, and you have to be in favor of justice. The only problem is that it's unjust for the maybe 20% of the population who've fought against the descent of the US into a police state.
L: So... if the economy doesn't blow up and the election is likely to go to the Democrats and not the Republicans, do you think that a guy as boring as Obama can actually get reelected?
Doug: If the economy doesn't blow up, I do think Obama will be reelected. Most US citizens are recipients of government largess of one sort or another these days, and they won't vote for Republicans who might cut or reduce their handouts. And maybe Americans want witless and boring; that makes things seem normal. It's grasping at a straw... appearance rather than reality.
Though I still think that if the Democrats really wanted to lock in a win, they'd get a left-wing general to run. It's a scary world out there, and people want security, not just in their pocketbooks, but from all the threats they've been told are menacing them from all around the world. Americans have apotheosized the military. They idiotically believe it's efficient, when actually it's just a heavily armed version of the post office or the TSA. And they idiotically believe it isn't corrupt - even though all the top generals are politicians first and Pentagon spending is like a billboard advertising corruption.
L: Do you think that could actually happen? Obama seems pretty strong with his supporters - wouldn't he have to be caught in the closet with a sheep or something like that to lose his party's nomination?
Doug: That's probably right, so again, if the economy doesn't blow up, we'll likely get four more years of Obama. Even if the economy really blows up, the possible Republicans are so unappealing that it's hard to believe any of them could get traction. That and the fact that half the country relies on government benefits that they fear a Republican would take away means we might get four more years of Obama anyway. Although there's no chance elected Republicans will actually cut spending; Republicans are chronic hypocrites who talk the talk in order to gull naïve voters in the diminishing middle class. Perhaps we'll get The General only after the Greater Depression has a lot more people living in tent cities. And after the US has bombed and been counterattacked by Iran - and maybe had a few more wars as well. A "strong" leader will have great appeal in 2016.
L: The Man on a White Horse. Sigh. Investment implications?
Doug: Well, I do think the economy will take a nosedive soon, in which case the recommendations are the same as we've been making. We're not a trading service - entirely apart from the fact that I don't believe in trading. But, under the four more years of Obama scenario, we'll almost certainly see massive inflation, which would be bullish for industrial metals and could even be good for stocks in general, even though I don't think they are cheap at this point in time. There could be many new bubbles created by the massive amounts of liquidity they'd have to pump into the economy, and we'll watch out for those.
On a more fundamental level, whatever they do and whatever amount of paper money they throw at an economy suffering from decades of distortion and malinvestment, I just don't think it's possible to return to real prosperity without going through the wringer first. Even with massive liquidity injections, life for the average guy is not going to get better, it's going to get worse. I expect chaos, but I'm not looking forward to it. Chaos will present opportunities, but it's also quite unpleasant and inconvenient.
L: Okay, but let's say Helicopter Ben starts throwing billions of bushels of new $1,000 and $10,000 bills out of his fleet of helicopters - where would be the best place to stand with a net to catch some of those?
Doug: Well, in spite of my many differences with him, I am partial to what Warren Buffett says about investing in basic businesses. You want to be an owner of a well-run business that produces simple things everyone needs and wants - even if their standard of living is collapsing. But the key is to buy such companies at bargain-basement prices - to succeed as a speculator, you have to buy low and sell high.
L: Hm. Well then, in addition to our usual calls on the precious metals and energy, this seems like a good time to point out certain sectors within the tech markets. New innovations that make things better/faster/cheaper would be even more in demand in a depression, and new medical devices and treatments are always going to be things people want and need, regardless of economic conditions.
Doug: Right. And stepping back from intelligent speculation to intelligent investing - because they're two different methodologies - I want good, solid companies. High dividends, low P/E ratios, and solid growth are the holy grail. But I think it's too early to buy. Too much turmoil and uncertainty ahead, even for the best-run companies with the most essential goods and services. I'd rather buy after we're in the middle of the turmoil, not before it appears.
I also feel compelled to remind readers of the urgency of diversifying the political risk in their lives by internationalizing. This is the best sort of thing discussed over a cigar and nice glass of wine, which maybe readers will join me for at our upcoming Harvest Celebration in Argentina. I understand that there are few a still spots left.
L: Okay then. A look at the situation from a slightly different angle. Thanks for your thoughts.
Doug: A pleasure, as always. I know you're in the Congo as we speak. Perhaps next time we can talk about Africa...
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