Faustian Weblog

In the Faustian world, narcissism is the personality disorder du jour. Love of self and the infatuation of one’s true will seems to be the guiding force that propels us forward. As our civilization degrades, reality is becoming a self-referential network of Facebook, MySpace, and Twitter accounts with useless chatter describing our mundane lives – this blog notwithstanding. We have become a community of clowns immersed in a perpetual motion machine of parody and sarcasm. Is it any wonder that we have taken to electing comedians and buffoons to higher office?

Coprolite should officially be the gem of the Faustian age. This beautiful stone is the product of fossilized dinosaur dung.

When it comes to culture, one can always recycle old shit by putting a new shine on it.

Fortunately for the West, Ahmadinejad has destroyed the Islamic Republic of Iran – something the Neocons could only dream of doing. His stealing the election from the people could not have been more fortuitous short of having the Reza Pahlavi family return to power. We can now rest assured that the Shiite revival is ideologically dead in its tracks. Any shred of legitimacy and Islamic purity on the part of the clerics has been flushed down the proverbial Koranic toilet. Hezbollah and Hamas are as defunct as the Cuban sponsored revolutionaries in Africa after the fall of the Soviet Union. Even Israel could bomb their nuclear power plant and get approval from the rest of the Arab world. Persia will soon become a Middle Eastern version of Albania, exporting oil (to us) to keep its pathetic elite hanging on to power at the end of an AK47.

From this point onward, no one will care what they have to say. Following the Faustian rule that a sin is only expunged by committing a greater sin, the United States is finally forgiven for all its misdeeds and meddlings of the past.

Nice work Mahmoud…

News organizations just don’t get it. What has happened in Iran is tantamount to a putsch. Either way the Islamic government founded by Ayatollah Ruhollah Khomeini is dead. If Mahmoud Ahmadinejad is successful in crushing the election results, the ensuing regime will be stripped bare of any remaining legitimacy and fall further into isolation. The United States and Israel will have no alternative but to engage it militarily as soon as it resumes its nuclear ambitions, which it will in short order. Currently, this is the most likely scenario. On the other hand, if the dissenting opposition manages to wrestle power away from the Revolutionary Guard, the constitution will be changed to eliminate clerical power forever.

Staying out of the fight, as our Emperor has opted to do, is the wrong decision.

Magic is a relationship between a magician and an audience sustained by an effect that defies a common understanding of reality.

Every magical act has a collateral cost that is discounted by the magician who performs it and the audience who consumes it. Those people who have to bear this cost are termed the victims of magic.

When a previously magical effect has been widely accepted as commonplace, it loses its magical quality and becomes part of a common understanding of reality.

A Faustian civilization is a culture that is obsessed with magic at the expense of a stable understanding of reality.

Rhetorical narratives are no substitute for magic.

When it comes to equities, people make the big mistake of believing in the notion of rational intrinsic value. They think that although the price of a stock may vary day to day, there is a fundamental worth to the company that can be measured by such factors as forward looking PE, cash on hand, market cap, dividend yield etc… Classically this was true, in a Faustian civilization, like the one we live in today, it is not. There are only two measures that count; the first is the ratio of positive news to negative news, the second is the number of true believers behind the company’s narrative – and the more magical the story line (i.e. the less grounded it is in rationality) the better. Soros pointed out a corollary to the first measure with his notion of reflexivity, i.e. when a stock price goes down in reaction to some bad news, the event itself is bad news causing it to go down further.

The reason such stocks as Apple, Google, and Whole Foods are up is precisely because of the number of true believers they garnish. Comparable companies in the same line of business such as Microsoft, Yahoo, and Kroger are in the doldrums. Why, because their stories are not captivating, nor are they convincing enough to counter the far more believable negative narratives of their competitors. In the case of Whole Foods, it is the non rational fear of the industrial food supply that matters, not the profits of the company per se. In the case of Apple, it is the religious experience that comes from buying their gadgets. In the case of Google it is the magic of search and the illusion of empowerment that it provides.

One o f the hallmark of the Faustian age is the plethora of explanations that aren’t; the need for blame and the fantasy of accountability. Incidentally, stock prices may be going down because the main bank of Kazakhstan – BTA – has suspended paying on its foreign debt. Since they are responsible for over 3% of the world’s oil production and correlate at least behavior-wise to the other former Soviet Republics (such as Ukraine), chances are good that this may be a negative leading indicator on emerging markets. Somehow, all news outlets are conspicuously silent about this report that came out Friday. But no, Swine Flu (which has yet to kill anyone) is today’s leading factor in explaining the decline in the values of financial securities worldwide. The difference lies in the illusion of control. The Flu is something we can do something about; mobilize the CDC, interview Janet Napolitano on CNBC, convene special neighborhood meetings, hand out masks, and admonish people to stay at home. On the other hand, losing access to the Caspian Sea basin oil supply upon which most of America’s future civilization depends has yet to become an actionable item. Welcome to Faustiana…

Perhaps Barak Obama’s greatest sin is that he would rather be liked than be effective. This is the sign of a young and immature emperor. His administration has shown far too many attempts at consensus building, reaching for the middle ground, rather than follow an old fashion Italian City State political script that trades in blood and games. If he is not careful, the crowd will escape him and turn to someone more vicious who can satisfy their thirst for vengeance. And at the end of the day, it’s all about the mob outside the palace gates. Right now we are at the bailout stage, giving money to the nobility who got us into trouble in the first place. When the funds dry up, or when the creditors refuse to buy the bonds, inflation will kick in and all of his best intentions will be forgotten. The true test will come in September.