Little Help Here?


Burt Likko

Pseudonymous Portlander. Homebrewer. Atheist. Recovering Republican. Recovering Catholic. Recovering divorcé. Editor-in-Chief Emeritus of Ordinary Times. Relapsed Lawyer, admitted to practice law (under his real name) in California and Oregon. On Twitter, to his frequent regret, at @burtlikko. House Likko's Words: Scite Verum. Colite Iusticia. Vivere Con Gaudium.

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41 Responses

  1. Avatar Doctor Jay says:

    Ok, Giovanni Capriglione (now that’s a Texas name if I ever heard one) is described as a private equity manager. Also involved are Peter Schiff, a hedge fund operator, and Kyle Bass, a hedge fund manager.

    Given that, I’m thinking, what’s in it for them? How are they going to make money this way?

    I think the answer is two-fold. They will probably run some of the “outsourced” services that the depository requires. But more importantly for them, it will give them a way to sell (or perhaps rent, and slice off a transaction fee) their gold to rubes who think that gold is sacred and has timeless value.

    I expect that, despite all their bluster, none of them think that gold is a more solid basis for currency than fiat money. That’s just their sales pitch, and how they are set to sell their metals to a greater fool. And that greater fool would appear to be the government of Texas. Because Abbot, and many of the voters of Texas are that dumb. Or rather than dumb, maybe I should say that they are irrationally suspicious of New York and Wall Street.

    The real irony here is that anger with New York and Wall Street that many Texans (and Californians like you and me, Bert!) feel is justified precisely by the sort of thing that Capriglione, Schiff and Bass are pulling off here.

    I think it’s almost certain to be legal. My experience is that most operators at that level have a very, very good working knowledge of the rules, and how best to exploit them for their own purposes. But it’s a terrible idea for the state of Texas, which is precisely what makes it a great idea for the gold sellers.Report

    • Avatar Autolukos says:

      Seems like you’re on the money about Capriglione: “before his second term began, he set about re-designing the depository bill to outsource many of those more expensive functions to the private sector. Although the depository is performing the same functions in the new law as it had in the older version of Capriglione’s bill, shifting the execution to private contractors yielded a so-called “fiscal note” in the legislature that calculated an “indeterminate fiscal impact to the state.” Because it’s outsourced rather than run by state employees, it is no longer counted as a concrete expense in the state budget.”Report

  2. Avatar greginak says:

    All dupes…all of them….why would they bring their gold to a state targeted by Operation Jade Helm!!!! It’s a 13 level chess move by Obama through his double secret hidden operatives. Wake up Sheeple.Report

  3. Avatar Stillwater says:

    Wow, that’s awesome. Texas is picking up right where Bitcoin left off, creating their own currency system outside fedrul control. Or maybe not. Seems like, for starters, Abbott is wrong about keeping taxpayer funds from leaving Texas. I don’t think taxes work that way (all picky and choosy), so it seems to me that that rationale can be disgarded. Apart from that …. beats me. What provision in the Constitution or subsequent Act prohibits a state from creating its own currency or establishing a state-centered banking system? I, of course!, don’t know.Report

    • Avatar morat20 says:

      As a Texan, I think I’m gonna keep using regular dollars.

      As a cynical man, I think Doctor Jay is right — this is a bunch of private business folks using goldbug paranoid to make money off of idiots.

      The high finance version of Glenn Beck’s “buy gold!” promotions. You know the high finance guys always have to top any scam…Report

  4. Avatar Damon says:

    Hey Texas, good luck getting your gold. There is no gold in fort knox and odds are that HSBC transferred that gold to third or fourth or fifth parties long ago. Lots of shady actions going on in the physical gold arena.Report

  5. Avatar Kolohe says:

    For any value of X, has “The Texas [X] Repository” ever worked out for anyone?Report

    • Avatar Stillwater says:

      Shiner Bock. Also, Lone Star: The National Beer of Texas. They store that stuff in temperature controlled underground bunkers.Report

  6. Avatar James K says:

    The major question I would have is, what disaster is Texas preparing for here? It needs to happen quickly enough that precautions have to be taken well in advance, bad enough that the US dollar loses much of its value, but not so bad that gold loses its value. That’s a pretty narrow window of catastrophe Texas is trying to fly through.

    The big advantage of gold as a disaster hedge is that it is worth a lot of money for its size and weight (for now, anyway) so its a good choice if you think your government is going to go feral on you and you might need to run away. This is not really an advantage that an entire state can count on, especially if the gold is centrally warehoused.Report

    • Avatar Kim says:

      If you need to run away, the best thing to do is to get guaranteed entry into another country. AFTER that, you might should worry about funding.

      But the most important thing is knowing how to get away, and having a good bolthole to run to.

      (Yes, I do know people with plans on the books for leaving America. Solid Plans).Report

    • Avatar Mo says:

      @james-k It is obvious that this is rube bait. $1B in gold sounds like a lot to a kook reading a paper, but relative to the state GSP of $1.4T it’ll do nothing during an economic disaster.Report

    • Avatar morat20 says:

      Also, what do you plan to DO with that gold? Who is going to buy it from you, and what currency are they going to pay you in that’s useful? Euros? Yen?

      You can’t go up to a company, plop down a few ounces of gold, and buy stuff. You need actual money.Report

      • Avatar Kolohe says:


      • Avatar Damon says:

        Metals have been money for a long time.

        A better question is “what are you going to do when the electricity stops and you can’t get cash or use a credit card”?Report

        • Avatar morat20 says:

          Metals have not been money since we left a barter economy. Coins made of metal were money, and that’s only because it was (relatively, for a pre-industrial society) to counterfeit.

          And what good will gold bricks in a bank or depository do me if the electricity stops?

          As for the stuff buried in my back yard — why would anyone with goods take that over actual cash?Report

          • Avatar Kim says:

            Tell that to the Indians.
            Well, before they’re all dead, at least.

            My, awfully morbid today, I am.Report

          • Avatar LeeEsq says:

            According to Debt: A 5000 Year History, there isn’t actually any evidence that a barter economy ever existed. The book makes a very convincing argument that before money was a thing, it was an abstract unit of value like ounces or miles and what it measured was debt. Money became a thing because it was easier to pay employees, especially soldiers, with coins and let the soldiers buy what they needed rather than try to figure out what stuff soldiers needed.Report

            • Avatar morat20 says:

              My point is pretty much: After the electricity argmageddon, which destroys life as we know it, what’s gold going to do for me?

              For starters, unless it’s buried in my back yard, getting to my gold has the same problem as getting to cash.

              Secondly, cash is a superior token of exchange than gold, because it’s far more portable AND harder to fake, plus people are already highly familiar with it.

              And third, and most important: Why would anyone take useless gold in return for something useful, like food or fuel — unless it’s no more than a token of exchange, in which case why would that be used instead of something more portable?

              Gold is a fairly useless metal. It was only use to MAKE currency (not AS currency) because it was fairly rare and harder to fake than other things.Report

        • Avatar Kim says:

          Cigarettes and bullets, Damon. Surely you’ve got a stockpile?
          (I do, but like the guns, they ain’t nearby. If things go truly to pot, I’m either dead, or it can wait a week till I get there).Report

          • Avatar Damon says:

            Sadly I don’t keep a stock of cigs.

            Nor am I saying that I keep a stock of guns and ammo. You know…’cause the NSA is watching.Report

            • Avatar Kim says:

              What’s the NSA going to do after armageddon?
              NSA isn’t… proactive enough to go after people before armageddon anyway, unlike some other people I might mention.Report

  7. Avatar LWA says:

    The paradox overlooked by most survivalists is that in actual empirical cases of disasters, it isn’t a hoard of gold or even rice or guns that allows survivors to prosper, but having a network of allies and trusted partners.Report

    • Avatar Kim says:

      Yeah, you gotta have someone to watch your fucking back after armageddon. You’re going to have to sleep sometime, folks. Guns can’t protect you while you’re sleeping (bombs can, a decent fortress can).

      Luckily, we got decent neighbors.Report