Gualfin (“End of the Road”), Argentina

Dear Diary,

What went wrong in Baltimore?

The media took two views of last week’s violence – both wrong. In one, “society” was held to be at fault. President Obama took this line when he spoke of the incidents, saying – in words worn smooth from overuse – that we need more education, more jobs, more opportunities, and so forth.

In the other major view, the fault was laid on the zombies themselves. While not legally or morally incorrect – after all, even zombies are supposed to have free will – this view lacks depth and perspective.

It’s like arresting the poor drug addict while accepting a bribe from the distributor to look the other way.

Besides, Congress does more property damage every day than all the two-bit hooligans and zombie flash mobs put together over an entire year. And Baltimore’s mayors and city council members have done far more to destroy the city than its welfare moms and crack babies.

Baltimore Is a High-Tax Hellhole

Zombies do not come from nowhere. They are paid to be zombies – by these self-same politicians, bureaucrats, “nonprofit” institutions, school administrators, do-gooders, housing officials and all the others who have turned Baltimore into a high-tax hellhole.

Take the education system, for example…

In the early ‘80s, we lived in one of Baltimore’s poorest neighborhoods, near Mondawmin Mall, the epicenter of the riots. We quickly realized that we couldn’t send our children to the local school. It was too dangerous and incompetent.

And we couldn’t afford to send them to a private school, either.

Our only choice was to get special permission for them to attend an “experimental school” not far away.

What was the nature of the experiment?

The “educators” were going to see what happened if they actually taught the children something! And guess what? The children learned. So, a few years later, the school was closed because it had proved successful.

Nothing succeeds like failure. The feds have spent $22 trillion on anti-poverty programs since LBJ announced his “War on Poverty” back in the ‘60s. Much of that money went to Baltimore.

But zombies don’t get the money for nothing. They have to play their part.

For example, they have to go to school… but they can’t learn. And the schools have to take them in… but they cannot teach them.

Baltimore spends more on education, per student, than any urban school system other than New York City. It spends $1.3 billion per year to teach 84,000 students. This is about $188,000 per student spread over a 12-year career.

For all this money, the results are pathetic: The brightest and best take the SATs in hope of going to college. They score only about 380 points in reading, writing and math, compared with a national average around 500.

The Cheapest Zombies Money Could Buy

After the riots of the late ‘60s, the middle class, the department stores, the factories… all left. The urban shopping areas down on Eutaw and Lombard streets became the “inner city.” And the black ghetto became a 50-year honeypot for democratic politicians, school board hacks, do-gooders and crackpot theorists.

Title One… Title Two… Aid to Families with Dependent Children… One program after another came. Each rolled into town like a drug dealer, with pockets full of cash and the latest concoctions to distract people from the real work of building a decent town.

What made Baltimore’s black population so attractive to the activists? They were the cheapest zombies money could buy.

But in order to get the money, the zombies had to disavow both marriage and jobs. This left children to grow up in disorganized households with no working parent present and usually with no idea how the world actually works outside Zombieland.

Only Detroit rivals our city in terms of single-parent households. In Baltimore, nearly three out of four births to black women are out of wedlock.

Next to Detroit or Washington, Baltimore may be the zombie capital of the United States. Per capita, there are more people getting checks from the feds (directly and indirectly) in Charm City than just about anywhere.

More than one out of three Baltimore residents eats at someone else’s expense; 35% get food stamps. Over 85% of the kids in school get free breakfasts and lunches at school. And more than 6 out of 10 residents get some form of government support.

Of the working-age population, more than 4 out of 10 are jobless. This number is five times the official “unemployment rate.” Which just shows how worthless the statistics are. For young black men between 20 and 24, the real unemployment rate is about 60% and in some neighborhoods it is 100%.

These are the people who were on the rampage last week – zombie mobs bought and paid for with half a century of taxpayers’ money.

In addition to the zombie schools and zombie welfare programs, Baltimore has more than its fair share of freelancers: They don’t wait for the chump change; they steal it. Or worse. Crime rates are two to four times higher than the national averages.

It was in trying to lower the murder rate that in the early ‘90s, Kurt Schmoke, the first of Baltimore’s black mayors, and probably the last one not to go to jail, came up with the idea of a “No Killing Day.” A specific day was identified in which the public spirited killers were supposed to wait until the following day to do their deeds.

As we recall, there was nevertheless at least one murder that day. The killer must not have gotten the memo.

But what we most recall from our time in the Baltimore ghetto was how the zombies lived. They were denied the customary comforts of family life and deprived of the usual challenges and rewards of employment… so they had to improvise. But with no latitude of time and no longitude of money to guide them, they were loose and lost.

(We offer no analysis nor judgment; this is just what we saw.)

Needles Lying on the Floor

We fixed up a couple of apartments down the street and rented them out for about $250 a month – the going rate in that neighborhood. Often, we went to fix pipes or repair heaters. And what we saw was a style of life that had little in common with America’s middle class.

They needed neither to shine their shoes nor iron their pants. They had no need to fall in line with the rhythm of the normal workaday world or the temper of ordinary family life.

Children slept on mattresses with neither sheets nor blankets. The landlord paid the utilities, so they turned up the heat; covers seemed unnecessary.

There were no particular hours for sleeping or eating. Often, we’d go in the middle of the day and find children and adults asleep. They must have been up all night. The renter was typically a young woman with a couple of children. But almost always there was a young man in the apartment too. Was he the children’s father? It was none of our business. He usually claimed to be a “friend” of the woman who rented the apartment.

On the table were paper plates. There were some half-empty bottles of cheap soda and some half-eaten hotdogs. The household had no metal tableware. No dinner hours. No tablecloth. Paper plates and plastic cutlery could be purchased with food stamps. They were then thrown away, so no washing up was required.

Typically, a TV set was turned on. There were empty liquor bottles lying around near the mattresses, the smell of marijuana in the air, and often, there were some needles lying on the floor.

We never went to visit after sundown, but noticed some commotion that seemed to go on all night long. Usually, once a night, we saw the blue lights of a police car coming down the street.

We wondered what would happen to children who grew up in those apartments. Now we know.




Market Insight:

The Truth Behind Inflation

by Chris Hunter, Editor-in-Chief, Bonner & Partners

Publisher’s Note: Market Insight editor Chris Hunter is away on holiday this week. In the meantime, we thought you might enjoy an excerpt from the February issue of Bonner & Partners Investor Network. In it, Chris interviews Harvard PhD and former Reagan economics adviser Dr. Laurence Kotlikoff about the truth behind inflation.

CH: You also view inflation as a psychological phenomenon. Can you talk a bit more about that?

LK: If you expect prices to go up, you make them go up.

When you see prices going up, you don’t want to hold on to your money. So you spend it. Money becomes a “hot potato” that starts circulating at a faster rate. In effect, you have more money because we have faster money. That pushes up prices even further.

We have seen from research that the same underlying monetary actions, in terms of how much money is being printed, can produce very different rates of inflation depending on what the set of beliefs are.

There’s a very cool paper called “The End of Four Big Inflations” by an economist at New York University called Thomas Sargent. He said, “If you look at these inflations, all of a sudden, they stopped in their tracks when the government made it clear that it had come up with a new way to deal with its fiscal problems.”

When governments said they were going to cut spending, raise taxes and not have to print money, inflation started coming down during the next month… even though money printing went on at an even higher rate. That happened because people believed things were ultimately going to get under control.