Blog: Economy

World in 2020, Q3

On Monday stocks rebounded up significantly, with 2 plus percent increases in all three markets, reopening stocks that were initially red went quite green by middle of the day. A bit of pullback on them Tuesday but the Dow just a little down and the other two up. Tempting, but still I can't pick any stocks in there that I really like based on any semblance of confidence. This is the kind of market I suspect that makes new names. A rising market where some people are gambling on some stocks and others on others, and depending on the unpredicted future some are going to win big and others lose. The winner's be called geniuses and will be interviewed for the next 10 or 20 years to comments on every development but will never have any repeat of their success, just like all the experts we have now, who made a big move at some point and won and are still riding that despite often underperforming the market. Really long term players like Buffet have consistently done well, but the market over 40 or 50 years has gone up and anyone in it is bound to see some gains. There's no more drivers now, no more new policy-led, reopening fundamentals, and enthusasm of reopening retail.

Amazon-owned Twitch temporarily indefinitely suspended Trump's account for violating 'hateful conduct' for two streams, one of Trump making comments about Mexico sending drugs crime and rapists over the border, the second one talking about a 'very tough hombre' breaking into a woman's house at 1am.

Europe is opening international travel to select countries. The guidance is coming from the EU but countries have the right to decide individually. The countries they're allowing are ones that are like them or better, with a trend in the past 2 weeks toward less infections versus 2 weeks before, and the country has a per 100,000 average lower than the EU's. US is still barred. China can fly in if China allows Europeans to fly there.

Some talk of a national mask mandate. A couple weeks ago top experts said masks helped, and some science papers said this also, and that it would help to curb infections.

Some cities and states in the US are barring and monitoring travel from other places.

There's a new strain of the Swine Flu in China making headlines this week, reportedly more infections to humans than before.

Biden said he'd end most Trump tax cuts.

After the stress tests, only Wells Fargo will cut dividends while JPM Citi and Goldman will maintain theirs.

Iran put out a warrant for Trump for his government's drone strike killing of Iran's Quds foreign operations top commander in January. Interpol a day or so later said they wouldn't uphold this because it was 'political' and they don't get involved in political things. Is this the same move Trump's government is doing against Venzuela?

Some of the fun of this type of economic market crisis is things like, this week, Chesapeake Energy which was one of the big names in the Shale Energy Revolution is filing bankrupcy, they built a massive campus modelled after Duke University with bee keepers, botox treatments, and chaplains for employees, a big hidden wine cave secret room behind a broom closer, the biggest season ticket package, etc., $110m for a couple parking garages. However, it looks like they might not be done, just going to reorganize and change some financial weaknesses and capitalizing on their operational strengths. Also, Wirecard it turns out had $2b it couldn't find and 'likely was never there' after being audited.

Airline passengers are down 75% from last year.

Cuban made headlines for saying the first question interviewers would ask now is 'What did you do with Coronavirus?' and that people should always keep adding to their skills etc. He seems like that kind of guy, focussed on constant improvement and effort. Personally I think most people should when they're young develop at least one skill or ability that they can use to make money when they need to through their lives as adults.

The UK government is talking about it being a time to do things like Roosevelt, investing in big work projects.

Russians voted to change the constitution so Putin is able to stay in power for another 16 years. Putin has become such an admirable person, exciting in that sense, and his people definitely do not hate their president, and every time I see him on TV he seems to be doing a job of serving them, talking to them, having the facts and having situations figured out and others not figured out and in those cases saying so. Of course, he could still do something horrible that I would hate him for, like against human rights, which Russian doesn't have either, and their internet is censored and monitored in a different way from ours but as bad.

Sweden's currency the krona or crown weakened initially when Coronavirus entered Europe and every other country locked down, but three months later and with Swedish QE it has been strengthening against the Euro.

SA is hiking sales tax 10% and there's tons of stockpiling before the implementation date hits.

Tuesday there was nothing but more negative news for the market, but again stocks continued upwards mostly. Whatever negative news has appeared, it hasn't phased investors. I went into Virgin Galactic and the gold stock each for around 5%. I'll probably enter again in regular stocks despite their high prices when they have a negative day. It seems like nothing can discourage these investors. Something could change any day, but it just doesn't seem like the market can be shook by anything going on right now.

There was a strong jobs report Wednesday that raised markets again.

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I think another part of what I was saying earlier about the current market is that not only is there tons of liquidity and tons on the sidelines with people wanting to get in, there's somewhat reduced stocks to enter in with, so those that don't have negative outlooks maybe will receive what would otherwise be invested in the broader range of companies.

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Buffet joined the recover, after saying for a couple months he didn't see anything interesting. Dominian Energy, an asset that's expensive and not in favor with investors, for $10b of Buffet's $137b cash, who wants to increase his energy side of things. D stock went down significantly. Dominian wants to move more into natural energy wind farms etc in Virginia. You also need natural gas, especially in the northeast, to charge your electic cars.

Tesla continues to soar, adding $25b every day of the week to $1400, up 200% in a few months.

Pessimism right now as a mark that markets can still rise more.

After several days with really bad news, and a steady stream of negative outlook stories, with the market not really daunted, I'm going with a model in which as long as there's liquidity amongst investors, they will put it somewhere, and in the current situation the only place is stocks more or less, so prices will keep going up, and when people fluctuate into red days and fear of a market drop, it'll be caught by people waiting at those lower prices. This will continue until people lose significant percentages of their investing funds and no longer want to play. Currently some people are losing but many are up. If the market has a downturn and then another one, and people start losing percentages of their portfolio's, they might slow down and hold cash or gold. I could be wrong, but this is what I'm going with. I started buying stocks last or this week. I bought Virgin Galactic which is one I actually like holding, and it jumped a bit on some good news this week. I think I'll increase in it also, when it slows down or goes down a bit. I bought stocks on their red periods this week. Some I more or less plan to hold, like some big energy and oil stocks that look OK on their week-month-year-alltime charts, and pay dividends, such as Enbridge, Duke, and Spark, and others I'm playing on what I expect for their ups and downs. I also half think I'll see if I can't hold PayPal, Facebook and Salesforce, and Johnson and Johnson and Clorox, unless they have a jump and I have to sell them. Also the gold stock I plan to hold unless things start looking negative for it. I might hold JPM if it goes up enough, but there are some reports coming soon and some think if the banks can't maintain momentum they might start going down. I won't mention the ones I'm buying to sell to buy again. I'm about 50% in equities now, and about half of that is ones I plan to hold more or less.

Amazon seems to be by far the leader of the stock market, and on all broadcasts these days people mention the big top tech stocks that are driving the market, and comparing them with the Nifty 50 and other times when the stock market had a couple hugely valued stocks at the top, which people considered a basically automatic buy, a growth stock and a defensive stock, buying them because they kept going up. Analysts also say that Amazon will benefit either way, both from reopening because they'll have added more customers, and also from the course to reopening. Price targets keep getting raised for Amazon, and it consistently goes up.

I'm not sure about all this though. The top tech stocks seem to be riding their history. Amazon a couple years ago was my go to and I was excited to type in 'a' and hit enter on my address bar, because I could always find what I was looking for, and I'm a person who buys very diverse and often uncommon products. Amazon seems full of everything. However, even before the virus Amazon doesn't seem to have much stuff on it anymore, and the last several times I've gone there to find fairly basic things I couldn't find what I really wanted. They now display 4 or 6 pages of results, mostly very generic, which seem to me like either their own products or paid ad placements from established sellers. I wonder if this is because 3 or so years ago Amazon was happy to get all the sellers they could on their platform, and people were making an industry of being people who found products from other sellers and re-listed them on Amazon, and they would put thousands of products each on Amazon. This led to a lot of unnecessary products, duplicates, but it also meant huge selection. Actually the unnecessary products is the same either way, because now, with much less Amazon selection, most of the products are unnecessary to view also. Anyway, recently I've been opening up Alibaba to look, and they seem to have a much better selection. I don't buy because of the expected delivery time.

Part of Amazon's benefit was no one else was doing it. For me, Amazon's main strength is currently delivery, which depends on their warehousing and transport system. They did what no one else did, and got you your order rapidly. As fast as you could hope really. Before Amazon people were accustomed to waiting 4 or 6 weeks for basically any mail order, plus the complicated and often expensive shipping process, which is still the problem with eBay, and no one wanted to order a shirt they couldn't wear for another couple months. Amazon still does delivery well, in many countries. But with the current situation, other retailers are going to be forced to seriously build their online sales and home delivery side, where before they could ignore it. If all the stores in my town suddenly had nice online catalogs and same or next day delivery, that would be stronger, I suspect, than Amazon. I could go to the store to check out products and buy one later when I decided, I could go to the store to return or exchange it, I would know the seller is close and could take up issues with him, I would be supporting local-ish business and strengthening the local and national economy, and I would get fast service because it's close. If all stores do this because they now have to, Amazon could stand to lose a lot of business. Localsstores could also charge a lower one-time delivery rate in addition to a possible yearly subscription model. People really like Prime but for it's $70 a year pricetag not everyone wants to pay it. If they could get things locally without paying it, I think many people would chose to. Besides established businesses having to restructure a bit, many stores are closing because of the quarantine. But new stores that open will be built adapted to the current situation, and that means doing things Amazon does, so Amazon could face challengers there.

I later heard Amazon does delivery through third parties, like Fedex and UPS. That means that those delivery services already have a template to work with any new online catalogs. If that's the case, and there's no exclusivity contract, it seems less difficult to replace Amazon.

Tesla is another company with a stock careening upwards like Amazon. China is a big part of their business model. People are saying that their stock is worth much more than GM and Ford because Tesla isn't a car manufacturer, it's a tech company, that is collecting and processing data for people's locations, movement, and also for autonomous driving some day. They're batteries could be bought by other companies. But in the past month we've seen big headlines from Rivian which has raised a couple billion privately to try to put the first EV pickup in stores, and Nicola which had a big successful IPO. Testla currently has no competition, because it's way ahead in a very expensive, difficult-to-enter market. But it looks like competitiors will spring up. Probably all over. Remember how many little car companies were started throughout the 20th century? Once the infrastructure for driving EVs is put in place all over a country, and once batteries don't suck, anyone could make an EV just like they could a gas car. And it'll open the field up to enterprising entrepreneurs with ideas and will. People have always loved cars and building cars, it's not like social media platforms or warehouse and distribution companies or OSs where building them is such a chore. Tesla doesn't have the nicest car designs, so they could face challenges there unless they get some real designers.

With others of the leading big tech companies, Microsoft is a terrible company that invades people's privacy and collects and stores and sells their data for a business model. Linux's OS share is rising slightly because of this, but it looks like Microsoft or it's stakeholders might be doing to Ubuntu already what was done to Windows. They have the cloud platform and gaming and other things, though, so they might be fine.

Facebook gets a lot of flak, and their ad platform has been getting worse and worse for about 3 years. I turned off all or almost all of the ads my business back then ran because the effectiveness kept dropping because of changes to the ad algorhythm and reach, and at one point previously profitable ads stopped being so, so I stopped doing them for about half of what I was previously doing, and then later it got worse again, so I was running manybe 10% or 20% of what I had been, and then it got worse again, so I turned off almost all ads. The same happened with friends and family who also do online business, and some of them were pretty significant spenders before. Facebook will make ad revenue from politics though and countries that want to manipulate people's impression of them and have budgets to do so, like China, and any ad buyers who don't want to see profits from their ads. I get their state run newspaper ads in my feed every once in a while, despite never having liked or even viewed anything China with that account ever, which means they're targetting everyone with their news site ads. Business on Facebook I think will decline though, although if you believe what a lot of people on the internet think their Facebook Instagram Whatsapp model like Microsoft's is largely for the sake of the government. Facebook's code is also really terrible now, unlike 3 or 4 years ago, and every code update makes the platform way slower to load, more complicated, and removes previously easy and fast functions and replaces them with things that take 3 or 4 times as many clicks and time to do. I suspect they started outsourcing their coding to India or someplace where coder rates look very cheap, which is something I learned not to do after experience with maybe 50 or 100 Indian and Phillipines workers between me and other online business people/programmers I knew a few years ago. That lower rate is not worth it for reasons I won't go into in this blog. Also, people in other countries all use Facebook and Whatsapp. You can't really ever get rid of it if you want to have contact with them. I could see Whatsapp being replaced for something more secure and private, because it's basically a phone-and-messaging tool, but Facebook now that people don't use it for real personal information very much I think has a more or less comfortable place in people's lives.

PayPal I think will do well because what you want from a money service is trustworthiness and ease, and low rates. They currently do a pretty decent job of this, and don't have too many security-check-send-us-all-your-info-and-photos-of-yourself things, which Facebook did and caused many people to leave their accounts, start hating the company, and start not trusting it. But if you have a big money service and it's working and secure, and it's also the most common one everyone uses, why would you change it? I think would change OSs or social media platforms and browse other online shopping websites if they had viable options, but, like a bank, as long as PayPal doesn't do invasive privacy measures or create difficulties for their users, I can't see it being replaced or even a replacement being desired. One thing they could do is expand in other countries though, as I've tried to do a couple business projects with people in a few countries and they don't have PayPal etc., and I had to abandon those things, and also now I don't look to do business with people in those countries anymore because payment would be too difficult.

Apple I can't see ever being abandoned, particularly as they seem to be regularly taking steps to provide security for their users, and it seems to me backing away from arrangements with powerful entities they might have been moving toward a couple years ago. Although I haven't been paying much attention and maybe they're still along that path and just throwing up smokescreens. I don't use Apple and never have, and don't understand the aesthetic, but clearly it's a great fit for many people. 5G is coming and that is said to be the biggest event in the company for a long time. They're kind of out of things to do with their phone device, and are currently removing things instead, like headphone jacks, whereas they could have had both the jack and the budless system if they'd wanted.

I don't know enough about Intel, AMD, NVIDIA, and other chip makers to comment. How easy is it to enter that market and put out a better product?

There're a dozen medical research and development companies making headlines every so often about a vaccine or treatment, and their stocks are going up and up, despite the low chances of a real success with Coronavirus. Although whoever gets one will make trillions I guess. At an announced rate of over $1000 each, if they sell just a million they bring in $1b in revenue. If they sell more like 100m that's $100b. They would become an enormous company after that. However, I wonder how many are taking the market cap increase and spending a good deal of it on other things more likely to produce stronger results than the Coronavirus vaccine.

US government officials in headlines said they were 'looking at banning Tik-Tok,' which is so much like Chinese wording to send messages to the US through headlines about what it could do if it wanted to. Headlines then said teens were 'going to war against Trump' for this.

July 19 2020 I've been short term trading, although the stock I liked holding had it's week. Virgin Galactic went up, then had some after the bell news they replaced their 10-year CEO with a CEO from customer service capable Disney Parks, and the stock was up after hours. In the morning it shot up 12% then started down and I sold at 10% up or something thinking I'd buy again at 5% up, since it was only news about a CEO and usually that comes down again during the day, but it didn't go lower than 8% up, and it turned around and kept going up, then the next day more and the next day. It was up like 20% at one point or close, and about the same for the max the next day. I think because that first day everyone was leaving other stocks, and also I didn't think well enough that this was the first news exposure to Virgin for a lot of main news in a long time, and that probably interested a lot of people. Virgin's profit timeline is in years, so it's a fit for the current situation, and it's about to get a key FAA approval and Branson is flying this year, in a year with not much other good news events. Anyway I watched the value a lot and it never came down so I didn't get to enter again.

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This week there may have been a sea change away from the constantly rising value of the top tech stocks. Some were saying it would be almost impossible to look at any of them anymore at their current values as real investments. They've been going down a lot. I had been entering to trade a few of those, and lost on some but gained on others. I'm out of all of those now though. I also entered Canadian Utilities but then sold or I'm going to sell when it's a decent time to. Indexes are not the thing these days, I think. They include too many companies that are set to lose. This is opposite to what was the advice for the past years. Now you invest in particular companies. I'm in a few I plan to hold, that might go up, that look like they don't want to go much down, and that pay a dividend, like Enbridge, Spark, Duke. I got rid of Barrick Gold because it's a high price but kept the Gold stock. I also entered Norwegian again because it reached a price level that looked decent to me, while Carnival didn't quite go down to that. I'll hold Foot Locker if I have to and it has a decent dividend and I don't think it'd go under, but more likely I'll buy and sell it like Macy's. There are other energy and utilities I want to buy and hold if their prices go down enough. I'm around 25% to 50% in stocks at any time.

No central bank is equipped to deal with solvency issues. They can deal with liquidity issues. I heard this. Is it true?

The comparison with the Great Depression and FDR. When they did his work plan, they put people to work, rather than have them sitting at home, so they were building motivation, skills, pride in work, contacts, and those enterprises and workers could continue forward after the government stepped out.

Apple security features in the new phone actually look decent, and hopefully this gets passed on to other phone maker competitors. Like a separate light that'll light up any time your camera or mic is activated, if they did this right. So only Apple and anyone who has power over Apple has access to that information now on user's phones. Apple News is something they're trying to build up right now as well.

Facci has been taking criticism.

Vaccine news from Moderna Tuesday after markets closed, about 'robust' results, lifted markets pretty well.

50% instead of 60% of Americans are employed. JPM now thinks unemployment'll settle in at just over 10% for a while, which is a lot more unemployment than they thought a couple months ago, but in a worst case it could touch 25%.

Conspiracy theory is getting big, with people asking me over the past week if I thought Coronavirus was real. I guess a lot of social media is about how they think somehow doctors are paid to do something sinister. You might be surprised at how many people entertain this. Actually my German friend a couple months ago mentioned the word too.

This city entered a more extreme quarantine Thursday night maybe till Tuesday morning, where you can only go out if you have special permission or a reason, not just based on the final number of your ID. Also you can go out if you have a dog to walk it at any time of day or night and anywhere in the city, and it seems more and more people are buying and borrowing dogs so they don't have to follow quarantine rules, leading to louder neighborhoods with dogs barking where they never used to.

July 24 2020

Japan has established a fund to pay companies to leave China for Japan, in order to avoid a repeat of problems they saw with not being able to get products due to supply chains. I think it'll be about $2b and the current round was around $500m. They're also to be looking at diversifying source companies in Asia.

For years, China has blocked global tech companies, mainly I guess because they can't sensor and monitor and control them the same way as companies in China, and they made and nurtured their own tech companies to mirror all the ones everywhere else. Now some say that looks smart because their companies are now bigger than the other ones, they have like 20 huge tech companies or something. Now they don't really care about access to US markets.

One thing some people have noticed is nowadays the banking sector stocks don't include American Express and Visa and PayPal and others, which are now considered by the S&P to be tech stocks. Walmart is a staple and Target is a consumer discretionary. Amazon is a consumer discretionary rather than tech.

Musk is worth more than Buffet, or was for a moment before it swapped around again.

At this point I would say I'm out of touch with markets and analysts. I haven't been paying real attention like I was in March and April for at least a month. I mostly just watch stocks go up and down.

Tesla stock value is a bubble, many people think. Others say it's worth even more, because of it's batteries, because it's a tech company, because it's moving toward renewable energy. Probably Tesla stock holders also. I suspect maybe none of those are the reason, but simply that the price is going up and it's in the news a lot, and those reasons are explanations offered. The market itself I think is a bubble. The price of the stock has now no basis in traditional valuation metrics. Like the Great Depression and other times, while stocks are shooting up regularly, you gotta invest or you're stupid, and that drives them up more. At some point I suspect everyone is almost fully invested. Then when people or possibly investment firms that monitor and see there's no more money to put in, but you could only swap money from one stock to another, they probably pull out, starting a cascade where everyone looses money and no one has money to invest more, and no one wants to invest either, for quite a while. I suspect this might be the biggest factor in markets. Liquidity of investors. I would like to be able to monitor this, and monitor where people are investing and how much of their portfolio and how much they have left, and into what stocks and sectors. I said in March the algos must be doing great in this market.

We don't know how to value anything in this market, one commentator said.

In flights, business travel is almost nonexistent now. Their execs think return to 2019 levels may take a long time.

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Up plastics, packaging, food specialty packaging,

Housing, appliances, nesting, replacing diswashers and refridgerators, auto sales so production will have to come on which is a pull on the petrochemical industry. New construction projects aren't being permitted yet.

Passive investing as it has been done in recent years, and the 60/40 hedge because the yield isn't there for bonds now, might be going out of style. The top 5 S&P stocks are up 20% while the rest are down.

There are also more people happy to take risk.

Investing, people are wondering where to put money, which they have right now. Even with finding new people, new companies, there's a lot of money looking for the good ones.

Gold is the only physical money you can't print. Also, if cash and bonds real returns are negative, the store of value there which is one of the functions of currency, what's the downside in owning gold?

Operating leverage are something banks and investors are looking forward to for next year and even in the fall, because companies have cut costs so much. Stock upside may come in the next phase from earnings because we already have seen multiple expansion upside.

Things that affect gold price going forward include supply demand fundamentals, central banks wanting to own more to diversify reserves away from the USD. Mine supply can't repond quickly to higher gold prices. Investors looking at higher debt, strained economic growth, lower interest rates for longer, the Fed ensuring the economy keeps moving, which things generally usually lead to inflation, but it's the expectation of inflation in investors minds.

One way to open some things like schools is just test more, and isolate those who have the virus.

More labor flexibility than in the EU. Easier to get a first job, lower skilled workers, and young workers when lots of people lose jobs each month but lots get new jobs.

Although I like less and less to dip into thinking about these disgusting and aweful people, I like to keep this log of developments.

The market week was ups and downs. It was a big news week, everyone thought, because earnings reports were coming out for Q2, there was lots of political stuff, the 4 top tech giants were interviewed about antitrust and other things by Congress for 6 hours, with Microsoft not having to go I guess. The higher-than-wage stimulus checks expired and R and D are trying to figure out the next step. GDP was revealed to be down like 35 or 40 percent in the US.

Trump looks like he'll ban TikTok, which is Chinese, over security concerns. The data it collects on all Americans and people everywhere, including the whereabouts etc of children of government officials. Microsoft is being talked about as a buyer of just TikTok's US operations. People are commenting that there's little synergy and little use to Microsoft owning TikTok although TikTok is valuable and anyone with cash should look at buying it. Microsoft also bought Skype in a similar way. I'm surprised it's not talked about in news what purpose Microsoft serves for other organizations, although it has been talked about by people for years and years. Gates also made economics headlines a couple times this week, once for suggesting calling out non-mask wearers, and another for, well according to CNBC for 'calling Musk's comments outrageous' and that Musk should stick to his areas of expertise instead of spreading falsehoods about the coronavirus. Journalism. Gates actually said nothing of the sort, he just made a sensible comment assessing Musk in a couple areas, and didn't say anyone of the things CNBC has him saying in their headline and first paragraph. Musk this week made news for speaking really well of China and comparing it with the States which he wasn't so hot on in that particular comment. CNBC reporting is trash apparently, when it comes to anything but reporting on specifics about companies. Gates hasn't done anything except be a valve for cash since the 90s it seems. Musk does things, although as everyone knows he's not the guy to look to for clear, considered, level comments.

Thursday night Amazon, Apple, Google, etc released earnings. Apple grew and it's stock went up like 10%. Amazon also went up, Facebook despite it's tiny growth went up, and Google which had it's first loss went down. Because Google is search and much larger, whereas Facebook is smaller, isn't so exposed to travel and other areas like Google, and I suspect because Facebook is the preffered choice of politician's ad budgets. PayPal went up a lot a day or two earlier on their report. I should have not sold PayPal. Of the tech stocks it's the only one I wanted to hold at it's price, as I wrote at the time. Apple also did a stock split to make it's stock under $100 instead of it's $400 or whatever now. They did this years ago as well making their stock under $100. Seems like a good number. People can buy it when considering stocks at round numbers, and numbers not too large. And when they buy they can say I bought it at under $100 and now it's over $100 so it's doing good.

There were some earnings reports from oil and gas and energy I think, which brought a lot of prices down for stocks I hold. Gold made a new high.

I'm basically in stocks I think I'll hold for a while, for up to a few years. Gold for about 35% of my portfolio, oil and gas, and energy, OLP real estate, and HDB the HDFC bank in India. Most of these pay a dividend. I keep playing stocks on their ups and downs but that seems to be less successful, perhaps because now the market is horizontal or maybe downwards, whereas before the market was overall increasing for a couple months. I'm about 60% I think in equities, about 10 of that 60 in day trading. I bought Match but sold it even though I suspect it'll keep growing. I don't like to be in certain stocks or certain types of companies, even though I know they're good bets. I thought it would probably go up and it has been, 10% one day and a few percent more after. Virgin Galactic went up on news pretty sharply but then has been declining a little. It's around $22. I think I'll buy below $20 where I sold if it gets there. Camping World continues to increase, surprising me. It was at like $10 or $15 before March, dropped to under $5, I sold at like $20 when I thought it was overpriced, but it's at like $35 now. LAZY also has been going up in a similar way. I might buy Ford if it goes low enough also.

Apple looks like a good stock also, I can't see what could bring it down despite it's overvaluation based on PE. I wonder what. I wonder what it means that Apple is doing increased security or privacy on its phones. Does it mean that the company decided to step away from the government as a data arm, or does it mean they just collect the data in house and provide it to the government directly.

The main stock always is Amazon, which I think is overvalued and looking at numbers it's possible that set of companies is topped out and is fluctuating near the top. Will that fluctuation horizontally remove players and increase the portfolios of smart money who buy near the lows of every dip. Amazon had profits for Q2 and in some part thanks to grocery deliveries. Can their sales possibly go up though from where they are, or is it more likely they'll now start to decline as other options are brought to the consumer.

America has had new high levels of the virus regularly for a couple weeks now, to the point it might be topping off in some places, and others are instituting or talking about PPE and protective measures, closures, etc. Much is still debated. Should we open schools again? If we do will they then have to be shut down? Regular news on vaccine progress and antibodies. The markets seem immune to any of this stuff now. Months ago, it was immune and kept going up. Recently it's seemed immune and going down and sometimes up.

In my city three weeks ago they began a stricter lockdown. 3 or 4 days for the weekend no one is allowed out except with a reason like to commute to work or to get medicine. The other 4 days of the week, Monday through Thursday, people go out once maybe twice based on the number of their ID, for groceries and other shopping. When the virus became headline news and the first lockdown here started, everyone was afraid and no one knew what the virus would be like. After a while the numbers of this city remained very low, with I think less than 10 deaths total, so they eased restrictions, first everyone was allowed out between 2 - 3 for exercise, then they went to alternating daily ID numbers instead of the once or twice per 7 days they had before, and people were going out a lot more. Masks were more common, but people often didn't wear them also. Numbers started to climb and I think now we're at the point hospitals are not going to be able to meet the demand pretty soon. I heard they're looking at importing doctors who are specially trained from Cuba. So they re-strictened the quarantine to where it is now. Maybe to decrease or level out the numbers. It's now August. No sight of an end to all this.

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Hotelliers talking about workings living in the hotel for cost reasons.

Equities with pricing power in light of inflation.

Will American Exceptionalism persist forward? No longer have the interest rate advantage, no longer have the real growth advantage, no longer have the political advantage. All the reasons the USD grew to an outsize share of reserves. Asset price appreciation already has been brought forward. US taking a step back becomming more isolationist. Environments where policy makers, central banks, cannot control the outcomes or environment.

Dollar is still the big currency for transactions (invoices), global payment system despite Chinese and EU attepts, financing dollar denominated debt.

Sanctions on Chinese individuals, looking at banning Chinese apps besides TikTok. A top US government official broke tradition of not mentioning the islands in the South China Sea and saying the US doesn't support what China's doing there.

According to a leak in 2019 which I just learned about, China and Iran have a $400b 5-year pact now, where China is sort of bailing out the Iran government and it's money is going to build up Iran's oil and gas industry, securing it for China and upgrading transport and manufacturing. Chinese factories in Iran with local cheap labor to make goods for Western markets and through the Belt and Road. China might make an economic zone in the north of Iran. Huawei will provide Iran's 5G. Beidou will assist in regulating Iran's cyberspace. Beijing will get access to Iranian ports too on the Persian Gulf. The String of Pearls line of ports between China and Africa. Chinese military aircraft might get access to Iran's air bases, and Iran may get Chinese early warning systems, jamming systems, etc.

SA has a Vision 2030 Megaproject, and they have a $10b energy deal currently. Chinese investers are also friends with Israel along business lines. Beijing can gain influence over Iranian foreign policy through a big deal.

UP Drive-in restauraunts like Sonic,

Navalny

The whole world is facing one enemy and that is the disease. But the countries aren't working together in any way. Each is privately developing treatments, behavioural policy, and international travel policy.

Aug 27 or 28 the Fed changed the inflation objective of the Federal Reserve. It was always before a 'bygones policy' trying to hit 2% each year and always missed for 10 years. Years following an economic recession 2008-09. Now they say they want to aim for 2% over average, so they can underperform for years and it's fine with them. It's designed to keep inflation expectations anchored at 2%. They want to keep a high enough rate like 2% and not lower because they want , when an economic expansion ends, to have enough room to be able to cut rates to stimulate the economy and stimulate the economy. They're basically saying they'll wait until inflation goes above 2% before they tighten, so when they tighten the might tighten quite a lot. The markets are enjoying it currently, the expectation of extended low rates, but they can expect the Fed to slam on the brakes harder than usual later, increasing the risk of an economic downturn on the other side. It's different, now it's a Fed that doesn't act preemptively because it thinks the economy is getting to full employment.

60% of Americans call themselves savers versus 54% in 2019. March to April savings rate grew to 30% unprecedended although now it's down at 18%.

Wednesday September 3 there was a big selloff, after weeks of gains. What a difference a season change makes. It's now September and we're looking at the end of summer business and the start of winter. September is historically a bad month for stocks anyway, although commenters were saying that might not be the case this year because things are so differnet and up in the air. No one knows. I think something like 10 or 11 days straight of increases in the markets. Then on day Nasdaq down like 5%, S&P 4%, Dow 3%. There was no headline that sparked the selloff. Commenters looked for one. Something like that. Next day in the morning it looked like things might be set to reverse a bit, but selloffs continued. Vix opened a couple percent down but by noon it was up 2 percent. By noon when I'm writing this Nasdaq was down 4%, S&P 2%, Dow 2%. Only reopening trades seemed to have some green spots. All my clean energy stocks, which I know nothing about the industry or prospects, which were up between 10 and 25 or so percent, went down to losses or small gains. I sold them all. I wanted to keep Virgin Galactic but when it went down almost 7% I sold that. I'll buy it again later. It's just not making enough headlines to stay up. I kept only stocks that pay dividends and that I see improving from the return to work. Unemployment figures improved significantly in the US according to today's report. Also, Biden who headlines were saying had a lead a month ago, say his lead has become smaller in polls. I suspect his polling lead might have had a lot to do with the rise in clean energy stocks. So I might have been up about 5 or 8 percent overall a couple days ago. Now I'm up maybe 2 percent.

I held Duke and BP, which are both down from where I bought them. Duke is down 12% from where I bought it. I held the Indian bank HDFC. JNJ. Spark Energy which I hold 20% up still and pays a decent dividend. On the Canadian side I held my three stocks of Canadian Utilities, Enbridge and Keyera, all pay dividend, although all are down a percent or two today. I bought more Enbridge. My thesis is that that business isn't going anywhere, and if people are working more it should improve. Also there may at any point be a better OPEC deal, since Saudi Arabia had it's oil revenue drop by half due to their moves, and Russia must be feeling a similar cut. They want to punish Nigeria for ignoring oil limitations and compete with the US which has been doing pretty well it seems in it's oil business recently. An oil deal that made higher prices would rise oil stocks I suspect significantly. I might buy more Enbridge once the panic subsides. It's has a lot of midstream which is why the stock did alright recently while BP and Duke and others did very poorly. I also held OLP because more workers means house demand shouldn't fall, and it pays a dividend.

Since the tech stocks started shooting up months ago and leading the market and headlines, no one knew what would stop them. What would stop Amazon? Maybe lower numbers sometime in the future, although deliveries would continue higher most thought. What would stop PayPal? What would stop Apple? Tesla continued to rise, although everyone said it was a bubble waiting to pop, while others found reasons to justify it's superhigh valuation. But what happened yesterday wasn't any individual business weakness or downturn. It was a mass selloff of stocks. Apple was down like 7 or 8% yesterday. Tesla 8%, which meant it was down 18% in three days. I mentioned clean energy stocks which went down from their pronounced high spikes like 10 or 30% down.

Cruise lines, airlines, retail stores, and other random stocks were green, although some have now turned red including the airlines. The banks and credit cards look OK today though.

I'm not optimistic about the short term market. The last six months you could make a lot of different types of plays and they'd work out, because there was a general rising market and it was rising fast. Every day. Then it started to horizontalize and waver a month ago when stimulus and overvaluation kind of played out. It's like the past 5 years, where you could put money in the market and it'd just generally go up and everyone felt like a smart investor and a winner. It's easy to invest in a rising market. You can buy dips, or buy high even. There was a lot of optimism recently. You couldn't shake it with bad news or one day drops. It just kept bouncing back. That might happen now too, who knows. But it might not. It might be now people want to sell out of stocks until they find better valuations for their investments. This of course can mean even properly or undervalued stocks go down because of the selloff move. But a no-news sell off that lasts 2 days (it's still noon on the second day) despite generally positive world and economic news trends, and going out of summer into a new season (meaning I suspect people will be thinking differently about profits from businesses like RVs, home building and renovations, outdoor activities like camping will look unprofitable while maybe winter jackets and vehicle repairs might look OK), this makes me think it might actually be a real market change. But if everyone is selling, there's no point buying even promising companies because even if they should go up they'll go down for a while first.

For the past six months I've been using my stock apps all the time. I don't really like it as it brings little to your life. I made an initial profit of I think around 30% overall. I sold out and then later started again, which I sold a lot of today and have maybe a 2% profit, although it might all disappear if the selloff continues, although the plan was to hold some things that would pay an income through dividends. Besides what you learn being involved in actual trading with stakes, and following the markets, the analysts and other traders, etc., you lose something in that you're pretty involved in it, because of the stakes. You have to monitor it in case days like yesterday happen suddenly. I think generally I prefer actually making things, and making businesses and products, so if I get out of stocks, even if I don't make yield due to this, it's in a way a good thing. I can concentrate on real projects, or projects that are better in terms of liking and satisfaction. Also stocks means stress because you don't know if there'll be a downturn, while projects means relaxation because you pick up and put down your work at times you find appropriate. Also I suspect my abilities and skills can be used to better benefits in making things than in trading stocks.

Russia's vaccine, called Sputnik V or something, now has passed some trials and is found to have no negative side effects. It'll now go through a bigger number of people study and might be available in November. US says there won't be anything available for a while. WHO, which US is still cutting ties with, says mid 2021. It's school season, and there is a mix of preventative and openign measures in various countries. For example, they want the use of preventative devices and precautions, like use of masks, social distancing in restaurants and line ups, hand sanitizer, spraying shoes with sanitizer, and they also want to open schools and businesses to keep things running and the economy. This isn't one of the things I was thinking about when it started and the question was should we open or should we lock down. The problem was one meant people would die and hospitals would be overburdened, or on the other hand the economy would be in serious trouble and people would just be stuck at home or on government assistance. Both are bad. People want a solution where people won't die and hospitals won't be overburdened, and yet the economy will be running normally and they can live their lives and continue with such things as school.

It doesn't look like international travel will be opening though for a few months at least. Here the country opened up domestic flights a month ago, but I think they started just with pilot flights. They opened up international a couple days ago, but just pilot flights. I wouldn't mind going to Taiwan to make some products. I'd like to go to China but the crazy aweful laws there and absolute privacy violations where you have to be photographed and tracked every movement and most money transactions and everything are recorded makes me rule it out. I'm not sure if maybe it's similar in Taiwan. I don't know of anywhere else in the world you can make low grade electronics and things like sneakers.

Also public events there's no word about when that might start again. Concerts, awards shows, sporting events. I don't know about filming new movies and things. I think some theaters have opened in the US.

I've seen a few headlines also recently about improvements in treatment, using like steriods and things, I guess to boost the bodies strength so it can temporarily fight an infection better. Maybe we'll get some better understanding of the use of steriods in the body.

People have noted the return to price speed, where if a market drops as it did in March and historically at other times, it will bounce back 50% of what it lost in I forget but like half or double the time it took to drop. That happened in March. I wonder if someone could do something similar for when the market rises very much, or maybe too much, and then when a selloff happens, that people sell off faster and quicker than the slow price rise investment that happens at other periods. People now are expecting their stocks are overvalued and that at some point there's a good chance there'll be a selloff of them. I suspect there's also a delay in selloff, because if it happens suddenly like yesterday, some people haven't checked market news or their stock values that day, but they check the next day and decide to sell. Others suspect that first day was a one-day panic oversell and the markets and the stocks they hold which dropped so much will bounce back the next day, and only once their stocks start to lose money or things look convincingly negative they sell.

A couple weeks ago the Russian politician Navalny, the long-time Putin opponent, was poisoned and was carried away to Germany for treatment. Putin already overwhelmingly leads polls in Russia and for good reason, and is already very competent and I suspect secure in office for the foreseeable future, so if he was behind the poisoning (if in fact the story of poisoning is true), and you might guess nothing like that happens in Russia without Putin's say so or approval, it's disgusting. Killing or harming people when you don't need to, gratutiously, is extremely low behavior, condemnable I guess. I don't understand why either. Criticism and competition is good for a person's position and power. As a leader you want those things, particularly when the opposition is relatively very weak and has no chance of overcoming you. They act to test and consolodate power, ideas, support. Also, you can't call your leadership valid if you don't permit challenges to it. So removing or killing opponents invalidates your right to rule (in a place where you can more or less count on stability, I don't mean places like many African countries where tyranny might be more fair and just than democracy). It also basically is saying, if it was Putin's doing, that he is a person who is afraid of competition, afraid of criticism, afraid to let other people speak and challenge him. It says he not only doesn't really support human rights but actively suppresses or acts against them with violence. For me it's a downer because I consider Putin to be maybe the most competant leader going, but this kind of thing is so disgusting you wouldn't be able to respect the person or support him despite competence.

A trading period where you don't look to put money in something and hold it for a long time, because absolute returns will be substantially lower than even what it was a couple years ago, but instead how to tactfully get in and out of trades. Trading momentum is what's happening and it's hard to trade. Commodities maybe.

Softbank seems to have been 'the whale' with doing a ton of options trades and pulling the market. It's a story I don't understand and haven't read.

Second week of September a big correction took place. Stocks went down significantly a few of the days.

Talk of a decade of stagnant equities returns as valuations of many companies are based on possible good earnings very far forward.

TTTThis

Liberty's Aristocratic Roots

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By Bertrand de Jouvenel

It is not as an element in the happiness of the individual that the loftiest spirits have vaunted liberty, but rather because it consecrates the dignity of his personality and thus saves the human being from playing the merely instrumental role to which the wills of authority tend ever to reduce him.

Why is it that these lofty intentions have been completely lost sight of? That participation in government (absurdly called "political liberty" when it is in reality one of the means given to the individual of safeguarding his liberty against the unending onslaught of the sovereignty ) has come to seem to him more precious than liberty itself? That this participation of his in Power has sufficed to induce him to raise up and encourage state encroachments, which have, thanks to the approval of the mob, been carried to much further lengths than absolute monarchy could ever have carried them? *

The phenomenon looks paradoxical but only until it is analysed. It is easily accounted for when once a sufficiently clear idea has been formed of the thousand-year-old duel fought between sovereignty and liberty, between Power and the freeman.

1

Liberty is not a recent invention; on the contrary, the idea of it forms part of our oldest intellectual heritage.

When we employ the terminology of liberty we rediscover naturally formulas which had been elaborated in a social past far distant, long before the appearance of absolute monarchy, which is, properly speaking, the first in time of the modern regimes and first set in motion the destruction of subjective rights to Power's advantage. For instance, when we say that no man may be imprisoned or dispossessed unless in virtue of the law of the land and the judgment of his peers, we are getting back to the language of the Magna Charta.

2

Or if we seek with Chatham to affirm the inviolability of the private dwelling-house, we are unconsciously bringing back to life the imprecation contained in the ancient law of Norway: "If the king violates a free man's dwelling, all will seek out the king to kill him." And again, when we claim the right to act as we will, subject to liability for the consequences of what we do (which is, for instance, the state of British law in regard to freedom of the press), we breathe the air of the very earliest Roman law.

"And one sad servitude alike denotes The slave that labours and the slave that votes."— Peter Pindar.

We form an idea of liberty "instinctively," or so we think; but it is in reality a throwback of the collective memory to the day of the freeman. Unlike man in a state of nature, the freeman is not a philosopher's dream, but actually existed in those societies which Power had not invaded. It is from him that we derive our notion of individual rights. All we have forgotten is how they were hedged around and defended. We have become so inured to Power that we have now come to regard our liberties as held in grant from it. But viewed historically, the right to liberty was not an act of generosity on the part of Power: its birth was of another kind. And the chief clash with our modern ideas lies in this: that in the past this right was not of general extent, based on the hypothesis that there was in each man a dignity which Power had on principle to respect. It was the personal right of certain men, the fruit of a dignity to which they had enforced respect. Liberty was an achievement, which won the name of subjective right by self-assertion.

It is against this historical background that liberty must be viewed if we are to see its problem aright.

Liberty is found among the most ancient groupings of the Indo-European people, known to us.

It is a subjective right which belongs to those, and to those only, who are capable of defending it: to the members, that is to say, of certain virile families which have, with a view to forming a society, entered into a sort of federation. Whoever belongs to one of these families is free, because he has "brothers" to defend him or avenge him. These can, if he has suffered injury or death, beleaguer in arms the dwelling-place of the murderer; they can also, when he is the accused, range themselves at his side.

In this powerful family solidarity all the most ancient forms of procedure find their explanation. As, for example, the manner of serving a writ, the record of which is preserved for us in the laws of Alfred: acceptance of service was obtained by a mimic assault on the defendant's house— a clear indication of the fact that a suit was at first a recourse to arbitration held with a view to obviating a physical combat. It also explains why the suit took the form of a piling up of oath against oath, with that suitor winning the day who could bring up the larger reserves of "sworn men" to put their hands under his and swear in his behalf: 4 it was an obvious trial of strength, in which the more numerous and united family was bound to carry the day.

It was these powerful families, jealous of their independence but assiduous in matters of common import, that gave their tone to libertarian institutions. Unwilling at first to accept a leader at all except when circumstances made one necessary, they ended in sub- mission to a regular government, but always refused to admit that anything other than their express consent tied them to it. All the authority, strength, and resources at Power's command were those which were lent to it by assemblies of freemen. Life in cities disintegrated the clans progressively into families in the strict sense, but the chief still embodied the fierce spirit of independence which marked the beginnings of society. Witness the most ancient Roman law, which was built on the principle of the autonomy of the individual will.

3

To us it is hardly credible that a society can remain alive in which each man is the judge and master of his own actions, and our first reaction is that the most hideous disorder must reign wherever there is no Power to dictate to men their behaviour. Patrician Rome is evidence to the contrary. It offers us the spectacle of a continuing gravity and seemliness which suffered no decline until after a lapse of centuries; and disorder set in at the very time that rules started to multiply.

Why is it that the autonomy of individual wills did not produce what seem to us its natural results? The answer lies in three words: responsibility, ritual, folkways.

The Roman was, it is true, free to do anything. But let him have answered imprudently the question "Spondesne" and he was bound; that he misunderstood, that he was deceived or even coerced, helped him nothing: there was no coercing a man; etiamsi coactus, attamen voluit.

  • He was free, but, through carelessness, imprudence, or stupidity, he promised to pay a certain sum, and cannot: behold him now the slave of his creditor.
  • Spondesne? ( Do you promise? ) Etiamsi coactus, attatnen voluit. ( Even though compelled, yet he decided. )

A world in which the consequences of mistakes were liable to be so heavy both required and formed virile natures. Men meditated long their actions, and, as though to induce reflection, their every action wore a ceremonial aspect. All might be done, the sale of a son or the substitution for him in the inheritance of a stranger in blood, but the necessary ritual had to observed. At the height of Republican Rome this ritual was strict in the extreme; and brought it home to men that their decisions and acts were grave and solemn things. It gave to their steps a measured and majestic gait. Unquestionably nothing did more to give to the Senate its air of an assemblage of kings.

Finally we come to the essential factor in the ordering of society, to the folkways.

The early imprinting on the mind by a feared and venerated father of the cult of the ancestors, a severe and uniform education, the formation in common of adolescent training centres, the early spectacle of behaviour commanding respect, this and all else conditioned freemen to certain modes of behaviour. Should they fall short, whether through whim or weakness, there fell on them the force of public censure, which checked their careers and might even go so far as to deprive them of their status of freemen.

The reason why Plutarch makes such elevating reading is that his characters, from the best to the worst, play their parts one and all without commonness or meanness. It is not surprising that they have furnished tragedy with almost all its heroes, for, even while they were alive, they were in some sense already on the stage, trained to play certain characters and fixed in their parts by the exacting expectations of the spectators.

The climate of opinion when Republican Rome stood at its summit was that of a small, privileged society, freed from all menial work and sordid preoccupation and nurtured on tales of heroic exploit; a betrayal of this standard, and its doors closed for ever against the offender. Let us remark in passing that it was because the political thinkers of the eighteenth century conceived of opinion after these classical models that they sought to entrust it with so large a part. They failed to notice that the object of their admiration was neither general nor natural, that it was the opinion of a class and a product of meticulous training.

The system of liberty rested entirely in those days on the assumption that men would use their liberty in a certain way.

This assumption implied no estimate of the nature of man as such. Speculations of that kind made their appearance only when Greek civilization was in decline, and came to Rome as an importation from abroad.

Reliance was placed on the observable fact that men— men, that is to say, of a certain class— in virtue of acquired characteristics which could be maintained in vigour, behaved for all practical purposes in this particular way. With them, and for them, the system of liberty was workable.

It was a system based on class. There lies the gulf which separates the city of antiquity from the state of today, ancient thought from modern.

The word "freeman" does not sound to our ear as it did to those of the men of old. The emphasis is, for us, entirely on the "man." In it is the substance, and the adjective is a mere redundancy which only develops an idea already contained in the noun; whereas for the Romans the emphasis was on the "free," so much so that they telescoped the noun and the adjective into a single noun: ingenuus.

The freeman is a man of a particular kind, and has, if we are to accept Aristotle, a particular sort of nature. It is to this nature that the privileges of liberty are linked. The moment a man belies it, they are lost to him— as, for instance, to the Roman who let himself be taken prisoner in war, or became a notorious evildoer, or, for the sake of security, placed himself in another man's power.

Freemen are, taken as a body, capable both of ruling others and of agreeing among themselves, and rest their pride simultaneously in the majesty of their own persons and in that of the city. Men of their breed, whether Spartiates or Romans, will never submit to slavery whether from within or from without. They put up a superb resistance to the aggressions of Power seeking expansion, while bringing to the discipline and defence of society a proud and assiduous succour.

They are the soul of the Republic, or rather they are the entire Republic.

But what about the rest?

It is passing strange that our philosophers of the Revolutionary period should have formed their conception of a free society by reference to societies where everyone was not free— where, in fact, the vast majority were not free. It is no less strange that they never stopped to ask whether perhaps the characters which they so much admired were not made possible by the existence of a class which was not free. Rousseau, in whose philosophy were many things, was fully conscious of this difficulty: "Must we say that liberty is pos- sible only on a basis of slavery? Perhaps we must."

5

The system of liberty in the ancient world rested on a social differentiation which the modern spirit finds profoundly shocking. At Athens there were from fifteen to twenty thousand free citizens, as against four hundred thousand slaves. And the slavery was, even in the eyes of the philosophers, the condition of the freedom; a section of humanity had to be tools. "The usefulness of slaves diverges little from that of animals/' said Aristotle; "bodily service for the necessities of life is forthcoming from both." It is thanks to them alone that freemen had the leisure to raise themselves to the true condition of man, as it was defined by Cicero: "The name of man is gen- erally bestowed but is in fact earned only by those who cultivate knowledge."

But, even so, the position at Athens in the time of Aristotle and at Rome in the time of Cicero, in which a large class of freemen rested on a bed of slaves, marked a stage in a long trail of generalization of liberty.

It is far from the case that in the epoch in which liberty glittered most brilliantly all who were not slaves were free. Full liberty be- longed only to some, but there were many who enjoyed what was called by Mommsen half -liberty.

Full civil and political rights were at first the portion only of the eupatrids or the patricians, members at one and the same time both of the founding families or clans and of the warrior bands in whose assemblage the strength of society consisted; the phratries and curias kept alive the memory of these bands. The plebeians who lay out- side these categories, or entered them only in the capacity of de- pendants, were not citizens and freemen in the true sense.

Naturally the mass of plebeians brought social pressure to bear on the privileged aristocracy, and this pressure had the effect of diffusing the system of liberty, though it also altered its characteristics.

To us, who are not satisfied with a liberty that is undiffused, this pressure, and its diverse forms and consequences— which are not, as we shall see, what was intended— are full of valuable lessons.

6

Out of an extremely complex process (one on which historians have been too silent ) it is only possible here to disengage the three main forms of emancipation, to which we shall give the names of "in- corporation," "differential assimilation," and "counter-organization."

It is certain that in the earliest days of Roman history whole families were taken into the patriciate. The authorities tell us of several occasions on which this happened, as, for instance, at the annexation of Alba, when the great Alban clans were taken in on a footing of equality. Enlargements of the patriciate effected after this manner did no harm to the system, any more than did the frequent admissions of individuals by way of adoption. The effect was merely that people who had the habit of liberty received an accretion of like- minded people, or, in the case of individual admissions, of people who were considered to display in the highest degree the characteristics proper to a state of liberty. The admissions of individuals went on almost uninterruptedly and greatly reinvigorated the patriciate. The admission of whole families, on the other hand, soon came to an end.

The result was that, instead of virile plebeian families coming in to enlarge and fortify the patriciate, they remained part of the plebs, gave it its leaders, and conducted a long-drawn-out political war- fare, in the course of which the right of plebeians to hold the various public offices was progressively recognized. Then these plebeian families, in the pride of offices held and administered, joined up with the patriciate to form a new governing class: the nobilitas, which presided over the destinies of Rome in the most glorious hours of her history.

In the course of its struggles with the patriciate the condition of the plebs changed, for it won for itself civil and political rights. These were not, properly speaking, the patrician rights, and this is why the expression "differential assimilation" has been used. For instance, the form of patrician marriage, the confarreatio, was bound up with rites which were purely patrician; other forms of marriage had, therefore, to be found. Again, the manner of making a will by means of a solemn declaration of testamentary intentions made be- fore the comitia curiata was unsuited to the plebeian; so there was invented the disposition by way of a fictitious sale of the estate. All these forms of plebeian usage were, moreover, of greater practical convenience than the ancient forms, which were in the end to be abandoned even by the patricians themselves.

The spirit of the law underwent a change. So long as Roman so- ciety was powerfully organized in private groupings, each of them presided over by a man of strong will, whose will had been disciplined by beliefs and folkways, all the law that was necessary was to keep some sort of watch on the various crossroads at which collisions were possible.

But behaviour became less calculable when it was a case of a crowd of men whose wills had received less conditioning. Weaker characters, of men who had not previously enjoyed complete autonomy as regards law, could not be made subject to the cruel con- sequences of mistakes, which would be more frequent. It became necessary to temper and humanize the law. Public authority, in the form of the praetor, was brought in to protect individuals. Regulations multiplied under it.

Nor was that all. Primitive law could do without means of coercion. Judgment was an arbitral award accepted in advance. Maine noted the entire absence of sanctions in the earliest systems of law. Now, when it was in operation over a wider area, justice acted in a sovereign rather than in a mediatory capacity. She needed the wherewithal to execute her will.

Liberty, now cut to the habits of more people, lost something of its primitive stiffness and haughtiness. Yet it still reigned, though the phenomenon that was to destroy it was already forming.

7

The acquisition of civil and political rights was a very big thing for the plebeian. It was a big enough one even for the strong characters and bold spirits who had made their own way and founded powerful families, thereby putting into the shade many enfeebled patricians and gathering about them in their turn a numerous retinue of dependants.

In law there was, it is true, no longer a plebs, but there was still one in fact. In the mistress of the world that was now Rome, in- equality of conditions took a form far different from that taken in the days when even the proudest patricians were no more than swollen peasants. Prodigious fortunes were now amassed, to which the inviolability of individual rights gave the same protection as formerly it gave to the peasant's field.

The men of the people came thereby to set less store by their legal status of freemen than by their participation in the public authority. By means of the first, whether through their own fault or that of circumstances, they could not make progress adequate to their situation. The second was to be their instrument, and they were to make such use of it as would destroy liberty itself, their own along with that of the mighty who kept them down. The tribunate and the plebiscite would, between them, produce this result.

In the time when the plebeian had no rights, he had obtained, by means of the celebrated secession of the plebeians to the Aventine, the institution of inviolable tribunes, armed with complete powers for protecting him and with the right to halt for his behoof any ac- tivity of the government. This tribunician power had about it an arbitrary character which was necessary at first to make up for the plebeian's lack of rights: it should, logically, have disappeared as soon as equality of rights had been realized. Far from that, how- ever, it continued in existence, backed by the Senate, which made clever use of it to check the designs of magistrates who were too independent, and to concentrate finally in its own hands all public authority.

The Senate permitted the tribunes to unite the plebs as a separate community within the city, and to arrange for it to pass by vote resolutions of its own, plebi scita, resolutions which acquired in the end the status of laws in the true sense.

These laws were very different both in intent and content from those which had in former days been presented by the magistrates, the Senate consenting; the latter had been limited to the formulation of general principles. The tribunician plebiscites, products for the most part of the needs or passions of the passing hour, came often into conflict with the most fundamental principles of the law.

In this way there was introduced into Roman society the essentially erroneous notion that it is the business of legislative authority to prescribe or forbid anything whatever. Anyone who put forward a proposition of a nature seemingly advantageous for the immediate future was blindly applauded, even though his proposition subverted the entire permanent edifice of order. It was the tribunate which habituated the people to the idea of a saviour redressing at a stroke the social balance. Marius and Caesar were to be its heirs, and the emperors would find it an easy task to establish themselves on the ruins of the Republic and liberty.

And who were the men who would try to stay this process? Free- men of the old school. Brutus's dagger, so dear to the Jacobin heart, was wielded by an aristocratic hand.

The death or the Roman Republic may be ascribed with equal truth either to the fault of the masses or to the failure of the great.

The system of civil and political liberty could be made to work so long as it was not extended beyond men whose folkways accorded with it. But it ceased to be workable when once it had come to include strata of men for whom liberty was as nothing beside political authority, who expected nothing from the one and hoped every- thing of the other.

So far the responsibility for error is that of the masses. But that of the great is just as heavy. They had changed from the austere patricians of old into greedy capitalists, enriched by the pillage of whole provinces, by the illegal occupation of conquered territories, and by the squalid practice of usury. There were those who, like a certain Caecilius Clodius, had come to possess 3,600 pairs of oxen and 257,000 head of cattle. As absences on military service ruined the small proprietors, the capitalists acquired their land, and— an eloquent symbol, this!— ruined the once fertile soil by periodical changes of pasture for their vast herds of cattle, to such an extent that it was to be out of cultivation for nearly two thousand years.

It thus appears how right Tiberius Gracchus was in seeking to limit the large and multiply the small estates, thus tightening the dangerously relaxed bonds of the social order.

In so doing he hit on a fundamental truth— on what may truly be called the secret of liberty. A libertarian regime— one, that is to say, in which subjective rights are inviolable— cannot be maintained if the majority of those members of society who take a part in politics are not concerned to keep them intact. How can they be made concerned? By all the citizens having interests— not, it is true, of the same extent, but at least of the same kind and not differing: too widely in degree— interests which all are glad to see protected by the same rights.

In the heyday of the Republic the more fortunate citizens had been able without occasioning discontent to predominate at the elections, just as in war they were in the forefront of the battle. The reason was that their interests, though large, were not different in kind from the smaller ones of their neighbours.

But this natural harmony could endure only so long as the mate- rial conditions of life stretched in an uninterrupted chain from high- est to lowest, a chain in which the various links were not too far apart. It was utterly destroyed when there came to be at one end of the social ladder a disinherited mass, and at the other an insolent plutocracy. The subjective rights, regarded as legitimate when all that they included was the modest holding of a quiris, came to in- spire hatred when immense fortunes, however acquired, however large, and however used, sheltered beneath them. Thereafter the social pressures were directed against just those individual rights which should have been dear to each single member of the body politic, but had in fact come to be regarded by most of them as a mere blind, as the jealously guarded abuse of a small minority. From that time the majority laboured for the destruction of those rights. And liberty foundered with them.

9

It would be an error, disastrous alike to intelligent historiography and to the formation of political science, to confound in one and the same bland admiration everyone who has "espoused the popular cause," without distinguishing the two ways of serving it and the two roads along which, in pursuit of this end, society can be brought.

The situation to be coped with is the same, whichever way is taken: it is the vast gulf set between the legal status and the economic status of the ordinary man.

Whereas at Rome, in the first period of growth, economic independence and personal autonomy in matters of everyday life had gone on broadening down at the same pace as the right to political liberty, or even at a faster pace, a second phase arrived in which this independence and this autonomy started contracting, while the right to liberty continued to be extended to those members of society who were as yet without it (instance the admission to citizen- ship by Marius of the capite censi).

In this way a position was reached in which a large crowd of individuals, weak and wretched in isolation, had at their collective disposal a great influence on public affairs. Naturally financial advances were made to this influence by the plutocratic factions. But in the end, as was certain to happen, it was caught by the popular leaders.

When that point had been reached, there were two courses open to the popular leaders. The first was that of Tiberius Gracchus. To him it seemed that the spirit of citizenship, the will to safeguard and defend common interests and sentiments, gets at once lost sight of both at the top and at the bottom when the capitalists have too much to defend and the proletarians not enough. Therefore he sought to re-establish as between citizens a real similitude, together with the solidarity which flows from it: to put an end to the existence side by side of a plutocracy and a proletariat, and to arrange matters so that each single citizen could enjoy effectively an independence and an autonomy such as would bind all together in de- fence of the system of liberty.

The second course, to which Gaius Gracchus allowed himself to be committed by the failure of his brother, was quite different. To him the monstrous individual strength of the grandees and the utter individual weakness of the ordinary man were accomplished facts on which there was no going back, and he set himself the task of installing a public authority as manager of the people's affairs on their behalf.

The contrast between the policies of the two brothers at once leaps to the eye; the aim of the elder was to restore every citizen to the status of owner, whereas the younger got a law passed which allotted to each citizen his ration of corn at a low price, soon to be given gratis. This measure went in the diametrically opposite direction to the policy of Tiberius Gracchus. Tiberius had sought to multiply the numbers of independent proprietors; Gaius brought into Rome the last of them, lured there by free rations.*

  • The reference here is to the lex frumentaria of 123 b.c. by which Gaius Gracchus fixed the price of corn at six and one-third asses to the modius. The view that this measure had the effect suggested in the text, though it has often been taken, is not accepted by die writer in the Cambridge Ancient History (vol. IX, chapters II and V), who maintains that, even though the law was repealed some four years later by reason of its cost, the price of six and one- third asses was probably not much below that at which the state might, with judicious buying, have hoped to sell without serious loss to itself. It is now, not surprisingly, impossible to determine with any sort of certainty what, on any hypothesis, was the economic price of corn at Rome in 123 B.C. The view taken in the text can, it is thought, claim this much at least of justification: even on the most favourable view of the lex frumentaria as such— even if there was n« offence in it to the most "classical" of economists— it set a course which led, first to the proposal of Saturninus in 103 B.C. to fix the price of the modius at only five-ninths of an as (though neither the figure nor the date can be regarded as certain), and then to the free distribution by Clodius in 58 B.C. It can, in short, be fairly said that it was Gracchus who "fished the murex up."

The result was that, instead of the physical independence of so- ciety's members becoming generalized, the bulk of them became the dependants of the public authority.

To carry out its new duties, that authority had necessarily to build up a separate administrative corps. It was, in time, to turn into the Empire, which lost no time in creating permanent officials and praetorian guards.

In truth there is no republic except where Power does not take the form of a concrete entity with its own members, where the citi- zens may almost without distinction be called on to manage temporarily common interests commonly conceived, and where none has a motive to increase the burdens which all support.

On the other hand, Power comes into being (a state in the modern sense) as soon as the gulf between individual interests has be- come so deep that the weakness of the mass requires the permanent protection of an all-powerful care, which cannot but behave as master.

10

Shall I be reproached for having buried my head too deeply in ancient history? But I have buried it in very recent history, too.

I find a remarkable counterpart to the story of the two Gracchi in that of the two Roosevelts.

Theodore Roosevelt, considering that the physical independence of the majority of citizens was the essential condition of their attachment to libertarian institutions, applied himself to fighting a plutocracy which was transforming citizens into salaried dependants. He came to grief on the same blind egoism of the men of great place as caused the downfall of Tiberius Gracchus.

Franklin Roosevelt accepted the accomplished fact, took up the defence of the unemployed and the economically weak, and constructed, by means of their votes and to their immediate advantage, such a structure of Power as recalled in striking fashion the work of the first Roman emperors. The individual right— the shield of each, which had become the bulwark of a few— had to bow down before the social right. And the free citizen passed a milestone on his way to becoming a protected subject.

The phenomenon, when once its essence has been grasped, throws a flood of light on the political history of Europe. We may pass over the evolution of the Italian republics, which, in their progress from the patriciate to the tyranny, exactly reproduce the course of events at Rome; for it is not by these, but rather by the monarchies, that the modern states have been created, receiving from them indelible characters.

An important class of freeman can be dimly discerned in the darkness of the Merovingians.* But troubled times cast them into a de facto dependence— to become de jure— on a powerful squirearchy. The kingdoms of the early Middle Ages may be conceived of as a species of vast and loosely knit republics in which citizenship was the perquisite of only a few notables.

But, as we have seen, the chances of preserving libertarian instititions are bound up with the proportion of the politically effective members of the society in question who desire benefit from them. We ought not, therefore, to feel surprise at the wide measure of support accorded to kings in their attempts to substitute their own authority for liberties which benefited only the few and were an oppression to the many.

Those historians who are impelled by an inner need to take sides are much embarrassed by this struggle between monarchy and aristocracy. How should they pay tribute to the authoritarian labours of kings, which rescued men from feudal servitude? Albert de Broglie has described this tendency:

We have had already, and even from the highest quarters, theories of French history which were very consistent, very well pieced together, and in which the whole construction stood its ground to perfection. According to these system-builders, the two principles which have always taken charge of the development of France are also the fulfilment of all its prayers— Equality and Authority. The greatest measure of equality possible protected by the largest amount of authority imaginable, there is the ideal government for France. That is what the crown and the Third Estate were seeking in common all through our long convulsions. To suppress both the superior ranks which dominated the bourgeoisie, and at the same time the intermediate authorities which inconvenienced the throne, to reach by that road complete equality and unlimited power, that is the final and providential tendency of French history.

A royal democracy, as it has been called, in other words a master but no superiors, equal subjects but no citizens, no privileges but no rights, such is the constitution which suits us.

  • The Merovingians were the first dynasty of Frankish kings in Gaul. It was founded by Merovech in a.d. 448; his grandson, Clovis, established its for- tunes. The Carolingians succeeded in a.d. 752.

Will historians, in their passion for libertarian and anti-absolutist institutions, admire the resistance of aristocracy to the formation of absolutism? Sismondi, for instance, states that in the Middle Ages "all the real advances made in independence of character, in the safeguarding of rights, and in the limitations forced by discussion on the caprices and vices of absolute Power, were due to the hereditary aristocracy."

Only the English political scene does not impale the historian on this dilemma, and that by reason of certain historical peculiarities which have been well set forth by de Lolme. There, in effect, the authority of the crown was from the first sufficiently great and security sufficiently assured to save the large class of freemen from shrivelling into a narrow caste.

Instead of the ambitions which had been thwarted and the activities which had been exploited by the oppressive measure of liberty enjoyed by the notables finding, as in France, a rallying-point be- neath the royal banner, the political strength of what may already be termed "the English middle class" was mustered in the wake of the squires (regarded as large-scale freemen) under the banner of liberty. The phenomenon is one of decisive importance: for it has had the effect of forming, for and throughout whole centuries, an English political outlook very different from that prevailing on the continent of Europe.

11

J. S. Mill, in a famous passage, threw into contrast the different political tempers of the peoples of France and England:

There are two states of the inclinations, intrinsically very different, but which have something in common, by virtue of which they often combine in the direction they give to the efforts of individuals and nations; one is the desire to exercise power over others; the other is disinclination to have power exercised over themselves. The difference between different portions of mankind in the relative strength of these two dispositions is one of the most important elements in their history.

Barely troubling himself to camouflage the cap, Mill then fits it on the French, who sacrifice their liberty, he explains, to the most exiguous and illusory participation in Power.

  • In stressing this tendency, de Broglie was animated by the wish to fight the Bonapartism for which it had paved the way.

There are nations in whom the passion for governing others is so much stronger than the desire of personal independence, that for the mere shadow of the one they are found ready to sacrifice the whole of the other. Each one of their number is willing, like the private soldier in an army, to abdicate his personal freedom of action into the hands of his general, provided the army is triumphant and victorious, and he is able to flatter himself that he is one of a conquering host, though the notion that he has himself any share in the domination exercised over the conquered is an illusion.

A government strictly limited in its powers and attributions, required to hold its hands from overmeddling, and to let most things go on without its assuming the part of guardian or director, is not to the taste of such a people; in their eyes the possessors of authority can hardly take too much upon themselves, provided the authority itself is open to general competition. An average individual among them prefers the chance, however distant or improbable, of wielding some share of power over his fellow- citizens, above the certainty, to himself and others, of having no unnecessary power exercised over them.

These are the elements of a people of place-hunters; in whom the course of politics is mainly determined by place-hunting; where equality alone is cared for, but not Liberty; where the contests of political parties are but struggles to decide whether the power of meddling in everything shall belong to one class or another, perhaps merely to one kind of public men or another; where the idea entertained of democracy is merely that of opening offices to the competition of all instead of a few; where, the more popular the institutions, the more innumerable are the places created, and the more monstrous the over-government exercised by all over each, and by the executive over all.

The English people, on the other hand, according to Mill, "are very jealous of any attempt to exercise power over them, not sanctioned by long usage and by their own opinion of right, but they in general care very little for the exercise of power over others"; the English have little sympathy with the passion for government, but "no people are so fond of resisting authority when it oversteps cer- tain prescribed limits."

To the extent to which these two pictures seem to us to be true, how are we to explain such a contrast? By the characteristics ac- quired in the course of two quite different historical evolutions.

In their capacity as leaders of the middle classes, the English aristocrats, ever since Magna Charta, associated them in their own resistance to the encroachments of Power. From that ensued a general attachment to safeguards for the individual and to affirmation of a law which was independent of Power and, at need, opposable to it.

In France, on the other hand, it was around the monarchv that the middle classes rallied in their struggle against privileges. The victories of state legislation over custom were popular victories.

So it came about that the two countries entered on the democratic era with very diverse dispositions.

In one of them, the system of liberty, from being a right of per- sons of aristocratic origin, was to be progressively extended to all. Liberty would become a generalized privilege. For this reason it is misleading to speak of the democratization of England. It would be truer to say that the rights of the aristocracy have been extended to the plebs. The British citizen is as untouchable as a medieval noble.

In France, on the other hand, the system of authority, the absolutist machine constructed by the Bourbon monarchy, was to fall into the hands of the people, taken in mass.

In England, democracy would take the form of the extension to all of an individual liberty which was provided with centuries-old safeguards; in France, that of the attribution to all of a sovereignty which was armed with a centuries-old omnipotence and saw in individuals nothing but subjects.

12

When the people appears in the political arena in the leading part, it enters on what has been for centuries the battle-ground of monarchy and aristocracy. The former has forged the offensive weapons of authority, the latter has strengthened the defensive positions of liberty.

According as the people has, during its long minority, rested its hope in the monarchy or in the aristocracy and collaborated in the extension or in the limitation of Power, according as its admiration has traditionally gone out to kings who hang barons or to barons who turn back kings, it will have formed potent habits of mind and inveterate sentiments which will lead it on to continue either the absolutist work of the monarchy or the libertarian work of the aristocracy.

Thus, the English Revolution of 1689 invoked the name of Magna Charta, whereas in the French of 1789 praises of Richelieu rang loud; he was canonized as "man of the mountain and Jacobin."

But even in countries where popular authority is orientated by potent memories towards the safeguarding of individual rights, it will inevitably tack about to Power's side, and its breath will come, sooner or later, to puff the sails of sovereignty.

This tacking about takes place at the bidding of the same causes as we have already seen at work at Rome. So long as the people, consisting of freemen participating in the work of government, comprises none without some individual interests to defend, so that all feel an attachment to subjective rights, liberty seems to them precious and Power dangerous. But so soon as this "people with voting power" comprises a majority of persons who have, or think they have, nothing to defend, but are offended by great material inequalities, then it starts to set no value on anything but the power which its sovereignty gives it of overthrowing a defective social structure: it delivers itself over to the messianic promises of Power.

Louis Napoleon, Bismarck, and Disraeli perfectly understood this —great authoritarians all of them, who realized that, by enlarging the franchise at a time when property was becoming a closer preserve, they were, by calling in the people, paving the way for the distension of Power. It was the politics of Caesarism.

What folly it is to remit the judgment of events to posterity when contemporaries often see so much more clearly! Those of Napoleon III saw very well that he was not acting illogically in instituting universal suffrage while at the same time favouring the concentration of wealth and the accentuation of social inequality.

Only three things matter to Caesarism. First, that those who are oldest in liberty within the society should lose their moral credit and become incapable of imparting to those who enter on the heritage of this liberty a pride of personal status embarrassing to Power. Tocqueville has remarked on the part played in this respect in France by the complete extirpation of the ancient nobility. 31 The second factor necessary to Caesarism is that a new class of capitalists should arise, without moral authority and possessed of an extreme of wealth which sets them apart from their fellow-citizens. Lastly, there is the third element, which is the union of political strength with social weakness in a large dependent class.

Though they heap treasure on treasure and think themselves thereby more powerful, the "aristocrats" of the capitalistic creation, by awakening the resentment of society, disqualify themselves for ever from being its leaders against the inroads of Power. Whereas the infirmities of the multitude find a natural haven in the omnipotent state.

In this way is removed the only obstacle that Caesarism has to fear— a movement of libertarian resistance, emanating from a people with subjective rights to defend and under the natural leadership of eminent men whom their credit qualifies and whom the insolence of wealth does not disqualify.

This is a chapter. You can buy the whole book on Amazon: https://www.amazon.com/Power-Bertrand-Jouvenel/dp/0865971137

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