We've Decoupled, Alright--From Reality

Forget decoupling from Europe--we've been decoupled from reality since 2008.

Have we decoupled from the global slowdown? Doubtful. Have we decoupled from reality? Undoubtedly--and have been since 2008. One key attribute of reality is feedback: actions have consequences, and various forces reinforce or resist each other in a dynamic interplay of positive and negative feedback.

Another key attribute of reality is risk. Risk is as ever-present as gravity, and it cannot be eliminated; it can only be shared or transferred.

When you overwhelm feedback with massive interventions that mask risk, you decouple from reality. With feedback suppressed and risk hidden, the system's resilience and resourcefulness both atrophy. Participants start making decisions not on risk assessment and feedback from reality but on the results of the intervention.

Pharmaceutical intervention offers an apt medical analogy. Various risk factors such as high blood pressure and high levels of LDL cholesterol have been correlated with increased risk of heart disease. Medications can lower these metrics, and so these interventions are now ubiquitous.

Sometimes these result from genetic propensities, but other times they are consequences (feedback) of an unhealthy lifestyle: obesity, poor diet, lack of fitness, etc. If we suppress a single feedback from a spectrum of health-related feedbacks and consequences, have we restored health or simply masked the risk of an unhealthy lifestyle?

Clearly, complex systems do respond to critical thresholds or "pivot points" that trigger cascading responses. It is wise to identify key metrics and manage the risks they present or elevate. But it is unwise to assume that manipulating one metric will necessarily restore a system that is wobbling out of equilibrium to a dynamic equilibrium.

Slamming down one metric or another does not necessarily reduce the systemic risk. Just as someone who eats junk food, smokes cigarettes and drinks sodas all day while slumped on a sofa will not become "healthy" just because statins have slammed down his LDL cholesterol levels, an unhealthy economy cannot be restored to health by manipulating a handful of inputs such as money supply or key metrics such as unemployment.

All these interventions accomplish is to mask risk by transferring it to the system itself, where it builds up behind the apparent "fix" and eventually explodes.

All sustainable systems must be resilient and transparent. Intervening to suppress key inputs and manipulating data points makes the system appear less at risk, but reducing apparent risk is not the same as encouraging resourcefulness and resiliency.

What we have as a consequence of four years of intervention, suppression and manipulation of data is a stock market that is now totally dependent on one input: quantitative easing intervention by the Federal Reserve. An unmanipulated market is based on multiple transparent inputs, including corporate earnings, revenues, currency valuations and so on.

Once inputs are gamed or manipulated, transparency is lost and feedback is distorted or suppressed.

Four years of intervention, suppression and manipulation of data have left the U.S. economy dependent on monetary interventions and massive fiscal deficit spending. Imagine a sickly patient in bed who has become totally dependent on several driplines (interventions). To keep the patient alive, the meds are steadily increased.

Are these interventions restoring health, or simply keeping the patient going until some unknown magic restores health?

In the U.S. economy, the driplines are debt-based spending and leverage. Thanks to endless intervention and manipulation, the economy is now totally dependent on massive debt-based spending and increased leverage for its "growth."

The person or business that becomes dependent on welfare loses resiliency and resourcefulness. To the degree that economies become dependent on debt and leverage just like individuals and companies become dependent on welfare, entire economies lose their resilience and resourcefulness.

A healthy forest offers another apt analogy. A healthy temperate-region forest depends on occasional forest fires to clear out deadwood and refertilize the depleted soil with ashes. In suppressing all fires--what we might call "stress" and feedback-- management virtually guaranteed that when the forest was eventually set ablaze by a random lightning strike, the resulting fire would be catastrophic because the deadwood had been allowed to pile far higher than Nature would have allowed.

The "managers" of the economy have let a couple hundred billion dollars in bad debt burn, and they think the $15 trillion economy is now restored to health.Writing off a couple hundred billion is like letting a few acres of grassland around the parking lot burn and reckoning you've cleared the entire forest of deadwood.

The buildup of deadwood--fraud, impaired debt, leverage, bogus accounting, malinvestments, promises that cannot possibly be met and the multiple pathologies of crony capitalism--continues apace, untouched by Federal Reserve intervention.

Masking risk and suppressing feedback do not restore resiliency or vitality; they cripple the system's ability to respond to reality.

The greater the system's dependence on intervention for its stability, the greater the probability of instability and systemic collapse.

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Three new videos with CHS and Gordon T. Long of Macro Analytics:

Central Planning
Statism Part 1

Statism Part 2 

---

Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

Read more...

Organized Financial Crime Is Now the New Normal

Today we publish the second half of an important essay by C.D., a correspondent in law enforcement.

It's up to us to refuse to participate in a criminal financial system: we should not be doing business with businesses that are repeat offenders.

We could expand this example of vested interests suppressing prosecution of white collar crime to the financial system, more particularly, the stock and bond markets. The majority of the adults in our country are invested either directly or indirectly in the stock market via trading accounts, pension funds, 401Ks, etc. and have a vested interest in making sure that it rises higher and higher.

How many people would be willing to get rid of all of the drug money in the stock market, if they knew their 401K would decrease by 10%? How many people would get rid of all of the various types of fraud in our system, if they knew their pension fund would lose half or more of its value or the interest rate on their Aadjustable rate mortgage (ARM) skyrocketed? How many politicians are going to refuse bailouts of the banksters or call for their prosecution if the banksters can take down the stock market?

When TARP was being voted on the first time, the overwhelming majority of the population was against it. The day after the first vote, the market tanked. Guess what, the next day it was about 50/50 in who wanted TARP to pass vs. those that didn't.

White collar criminals in our big banks and corporations have turned otherwise legitimate businesses into vehicles to commit numerous crimes. They use the corporation or other business entity as both a sword and a shield. The entity is used to help commit the crime and then used to protect them personally from any criminal or civil liability. In my experience, more often than not, a prosecutor will forego charges against an individual and just charge the business entity, because it's a stronger case.

If CEOs started going to jail for long stints, that would be very helpful in cleaning up things in a hurry. If the only downside to a CEOs behavior is that he may have to leave his job and suffer some temporary embarrassment, that's not much deterrent to him engaging in activity where he can make large sums of money. While fines can have some deterrent effect on a company's behavior, their effect is often muted by the fact that the fines are less than the profit from the activity, the cost of the fines can be passed on to customers, and in the case of the banks, the fines are subsidized by the government itself or the Federal Reserve.

It's important to bring individuals to account for their behavior. Company policies and activities were directed by someone or group of people; they don't just happen in a vacuum.

The criminal justice system can't effectively handle a large case load without a tremendous amount of manpower, so it's important to have a good regulatory system in place that can prevent many problems. It's also important to realize that prosecuting someone criminally requires a lot of resources and a significant amount of proof (which can be difficult to obtain) and in the absence of a good regulatory scheme, it can be extremely difficult to stop criminal behavior.

White collar criminals can use any number of excuses to cover up their criminal acts (e.g. miscommunication, misfeasance/malfeasance by subordinates/consultants, ignorance/misinterpretation of the law, bad legal advice, administrative errors, stress, etc.). With many crimes, a prosecutor needs to be able to prove the WCC knew what he was doing or intended to do something, as opposed to negligence or recklessness. Again, that can be difficult.

One often overlooked aspect of WCC is the use of lawyers by White collar criminals to commit their crimes. For instance, WCCs may ask lawyers ahead of time about how to change the system, so that their illegal activities become legal or they'll ask the lawyers how to avoid getting prosecuted for their anticipated or current illegal activities. Then the WCCs can hire connected attorneys who may try to bring political pressure to nix a case, if they can't win the case using the law or the facts. Or attorneys can try to win the case in the court of public opinion, which may help nix a case or at least mitigate the punishment.

The widespread amount of fraud and all of the resulting tangential crimes could not have been committed without the assistance, wittingly or unwittingly, of various attorneys. Numerous attorneys have helped to foreclose on homeowners when they KNEW the foreclosure paperwork was not right in one way or another. Every one of them should be sanctioned up to and including the revocation of their law licenses.

It's interesting to see the different types of language used in describing White collar crime vs. blue collar crime. The press and the advocates for the WCC use various phrases like "too big to fail", "it will damage the market or the economy", "we can't regulate ethical behavior," "we need a truth commission, rather than a criminal investigation," etc. With the first argument the management of a company is perceived as being inextricably linked to the company and that the company is indispensable to the country (e.g. The big Wall Street banks). This is a case where the actors are confused with the play and many people fall for it. The other arguments deal with downplaying the crimes of the higher classes to turn them into lapses in ethics or judgment.

The damage that these criminals inflict on society is typically diffused over a great many people or area and is often indirect. Other types of crime (e.g. assault, rape, murder, arson) are very direct and discrete. If you steal a little from a great number of people, especially using a company to do it, the likelihood of you being caught is small and if you are caught, it's difficult to prove intent, and if that can be proved, then your punishment is typically relatively light, as opposed to someone who robs a bank.

Look at the number of corporations that have been caught repeatedly and they only pay a small fine, promise not to do it again, and admit to nothing. If you pollute the air illegally, it will diffuse over a wide area and most likely will lead to chronic, as opposed to acute, effects on people. The same can be said of the impacts on fish and wildlife. However, there are times when there are serious acute effects on people and our natural resources.

Ultimately, we should not be doing business with businesses that are repeat offenders; it's kind of like Stockholm syndrome. We keep on allowing ourselves to be abused and even protect our abuser. Unless and until the business changes their ways and assists in the prosecution of White collar criminals, we're going to keep on having problems in how our society functions.

Why our local governments continue to do business with the big Wall Street banks is beyond me. In many cases, it appears that the management decided to incorporate fraud into their business models. No reasonable person would knowingly do business with the Mob, but we continue to do business with these banks which have been run just like organized crime.

We can either live by the rule of law or the law of the jungle. I prefer the former. (Copyright 2012 C.D.)

Thank you. C.D., for sharing the perspective of someone working within law enforcement. Once we accept organized, systemic financial fraud and crime as somehow serving our interests, we have made it "the New Normal." Our complicity will not go unpunished. CHS

---

Three new videos with CHS and Gordon T. Long of Macro Analytics:

Central Planning
Statism Part 1

Statism Part 2 

---

Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

---

Read more...

How White Collar Crime Became the "Business Model" of Corporate/State America

Today and tomorrow we publish an important essay by C.D., a correspondent in law enforcement.

White collar crime is now the "business model" of Corporate/State America. The Status Quo does not just incentivize pathological behavior, it is itself a pathological system. CHS

Let's start by identifying the different types of white collar crime (WCC). One is WCC involving individuals against companies (e.g. theft of property from a company) and the government (e.g. Medicare fraud) and the other is WCC of individuals within companies (e.g. MBS debacle) and the government (e.g. taking bribes to favor contractors) against people in our society.

The latter is typically punished and prosecuted less frequently or not as severely than the former for different reasons, one of which is the bias to protect the institution and sweep things under the rug. For instance, a person is allowed to resign, but they're not prosecuted, so that bad press doesn't come down on the institution or the supervisors of the criminal actor.

The last type of WCC is person against person (e.g. credit card number thefts) outside of any business or government entity. This last type is usually the domain of organized crime in its typical sense (i.e. the Mob, Mafia, etc.), but organized crime can also be part of the other categories, which is why they are pursued relentlessly by law enforcement agencies. However, some people may not include organized crime in the definition of WCC.

The difference between these types of WCC is who the crimes are committed against. If you commit a crime against the government, a business, especially a big business, or the moneyed classes, you're screwed (typically). For example, Madoff was prosecuted quickly and punished severely, because he largely ripped off rich people.

However, many of his victims were not victims in the truest sense, because they knew he was running a scam. They were just hoping that some other sucker was going to take the fall and not them. Many of the investors knew Madoff's returns were impossible in the absence of fraud. 

Contrast that with the bankers who, via their politically connected banks, ripped off numerous pension funds and homeowners through various scams and none of them have been prosecuted.

White collar crime is prevented first and foremost by adequate controls/procedures/policies within a company that are enforced by management and the board (That's assuming that they are not the origin of the criminal behavior). Companies do not often prioritize risk controls, because their focus is on making money and providing a service/making a good.

When an organization becomes extremely large, it is very difficult to adequately manage it to prevent problems (I find it funny that big CEOs often say they need their huge payouts because of all of their responsibility, but when something goes wrong, the come up with all sorts of excuses that remove the blame from themselves).

The next thing is implementing a well-thought out regulatory scheme that has an adequate number of competent regulators that are free to do their job with a minimal amount of political interference. The last thing needed is a criminal justice system that prosecutes and punishes white collar criminals as harshly as they do blue collar criminals.

In the case of crimes within the government, there are also needs to be adequate controls. Indeed, WCC in government is probably the most pernicious, as the actors can use the power of the government to cover up their crimes and prevent prosecution. The old adage, "Who guards the guardians?", comes to mind.

There are a number of cultural and governmental impediments to prosecuting WCCs. One of which is the corrupting influence of money to neuter regulations and to co-opt politically appointed regulators and prosecutors.

Another is perception. Wealth in our country is equated with royalty or a high station in society, so people have a hard time seeing the white collar criminal as the deviant that he is. People have a hard time wanting to punish someone who looks nice, has nice clothes, drives a nice car, lives in a good neighborhood, went to a prestigious school, belongs to exclusive clubs, etc. vs. someone who does not have those things. If you're poor in this country, that's almost a crime in and of itself to some people.

Conversely, rich people have all sorts of credibility, whether its deserved or not. Why should I listen to an actor about a topic that's not related to acting? Sure, he may have some interesting things to say, but he shouldn't be given automatic credibility on the subject and yet many people do just that. Romney became rich bankrupting companies and selling their assets and yet people look to him to "run our economy"? What politician can ever say that they can run an economy? The Soviets tried to do just that and look what happened to them.

Another reason WCCs may not be prosecuted is that individuals, organizations, governments, and even society at large may be vested in the criminal activity either wittingly or unwittingly. Let's take an example of a large company that is disposing of hazardous waste illegally. In this case, a powerful executive wants to make a name for himself as a cost cutter that improves the earnings per share of the company and decides that he will have his subordinates illegally burn the hazardous waste in kilns at the factory, rather than having it disposed of properly.

One day, a kiln blows up, because it's not meant to burn hazardous waste, and the explosion kills a worker. According to the law, there are a number of serious crimes that have been committed, but in this case, nobody, including the company, is prosecuted. Why? Vested interests.

So who are the vested interests? 

1) The employees who did the burning or who knew of the burning. If they blew the whistle or refused to do it, they'd be fired or they may have thought that by doing the practice, they're helping the company to stay in business and thereby helping their fellow workers.
2) The managers and executives who got bonuses, stock options, perks, promotions, or just kept their jobs based upon the cost savings.
3) The board that received their fees and didn't ask too many questions.
4) The shareholders, including pension funds, who see their stock price and dividends go up.
5) The members of the community, including other businesses, who benefit by having a large company in their area.
6) The politicians who depend upon the company for campaign donations (bribes?), community services, employing their constituents, etc.
7) The customers of the company.
8) The press that depends on the company for advertising revenue.
9) The government itself that depends on the tax revenue that the company generates directly and indirectly (and in the case of banks, the selling of the debt on which the government depends to finance its spending).

All of these interests can bring pressure on the prosecutor(s), who then decides that it is the community interest to not prosecute and to push for a civil resolution. The executive who made the decision may be forced to resign or be fired, but that's it. Who knows, he may even get a nice severance package for his trouble.

What if the community is national or global in scale, because the corporation we're discussing is a multi-billion dollar conglomerate? Well, now we have systemic problems, because if this corporation can out-compete others by committing crimes, the others will join in to save themselves (and possibly make a lot of money in the meantime).

Undoubtedly, many of the actors will justify it to themselves by saying that "Everyone is doing it" or "It's just the culture." In the absence of a sound regulatory structure and serious criminal consequences, we will get a crime wave. It's inevitable. The risks have to outweigh the rewards of criminal behavior; it's not rocket science. (Copyright 2012 C.D.)

Tomorrow, Part 2: "White collar criminals in our big banks and corporations have turned otherwise legitimate businesses into vehicles to commit numerous crimes."

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Three new videos with CHS and Gordon T. Long of Macro Analytics:

Central Planning
Statism Part 1

Statism Part 2 

---

Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

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Read more...

Headwinds for Corporate Profits

The conditions that drove corporate profits to record heights have weakened or reversed, yet analysts still expect year-over-year growth above 10%. Based on what?

Corporate earnings are expected to resume their rapid rise after the "summer soft spot." Zero Hedge recently published The Impossible Earnings Season Stepfunction which included this chart of profit growth expectations:

If we look at corporate profits, we notice they have skyrocketed since late 2009. Can they continue this trajectory into the stratosphere?

Correlation isn't causation, but it probably isn't coincidence that profits rose as savings plummeted, consumer credit expanded and the dollar weakened. Here is another look at corporate profits. Note they shot to unprecedented levels in the 2000s as debt rose and the savings rate dropped to near-zero.

Corporate profits plunged in 2008 when savings jumped higher.

Household debt broke away from wages in the early 1980s, and the gap widened until 2009.

The debt was not evenly distributed; the bottom 95% loaded up on debt to compensate for stagnating earnings while the top 5% saw their relative debt burden fall as their earnings rose smartly.

Virtually all the earnings growth in the past 40 years flowed to the top 10% and the majority went to the top 5%, so the rise in wages shown in the above chart is deceptive: most of that increase flowed to the top 5%. (See Financialization and Crony Capitalism Have Gutted the Middle Class July 13, 2012)

As I have often noted, a weakening dollar greatly boosts the overseas profits of U.S. multinational corporations. One euro in profit in 2002 = 1 dollar of profit. A few years later, 1 euro in profit = $1.60 in profits when stated in dollars. That 60% increase was entirely the result of currency valuations.

Now that the dollars is in an uptrend, what was a tailwind since early 2010 is now a stiff headwind to overseas profits for American corporations. Since many major corporations book 40%-50% of their revenues overseas, this is a non-trivial influence.

Is it coincidence that year-over-year earnings growth declined as the U.S. dollar gained against the euro and other currencies? If it boosted profits on the way down, it must suppress them on the way up.

Can corporate profits shoot to the moon in a global recession? Given the headwinds of a bottomed-out savings rates, moribund consumer credit and a rising dollar, it's difficult to imagine profits maintaining the trajectory imagined by analysts for late 2012 and 2013.

The conditions that drove profits to record heights have weakened or reversed, so it's quite a stretch to conjure up continued quarterly gains above 10%.


Corrected link: my apologies for the dead link published in the latest Musings Report. Here is the correct link: Is the Web Driving Us Mad? New research says the Internet can make us lonely and depressed—and may even create more extreme forms of mental illness.

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Three new videos with CHS and Gordon T. Long of Macro Analytics:
Central Planning
Statism Part 1
Statism, Part 2:

---

Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

Read more...

Part 11: Kylie, the Shocked Voyeur (serialized fiction)

In honor of Bastille Day, we present two videos exploring the abject failure of Central Planning and Statism: please scroll to the end of today's entry for the video links.

Now that the heavy lifting is done, here is this week's chapter of my serialized comic novel"Four Bidding For Love." (Those who find absurdist humor and adult situations offensive, please read no further.)

     With time sitting heavily on her nervous hands, Kylie glanced at the shelves of shoes and wondered if the sales lady who smiled at her was Alexia. The woman was middle-aged with straight dusky-blond hair in a pageboy haircut and waif-like in a way Kylie had not expected.
     Working up her courage, Kylie asked, "Are you Alexia?"
     The woman smiled sunnily and replied, "No, I'm Katy. Alexia comes in later. But can I help you?"
     "No, just looking," Kylie replied politely and then turned to the neatly arranged rows of shoes. Though she was supposed to be picking out another pair, her mind was distracted by the negotiations just ahead and by a sharp curiosity about mysterious Alexia.
     Disinterested in the rows of footwear, Kylie retreated to her battered car. Instead of heading north toward the craft fair as she intended, Kylie found herself turning south, for thanks to Ross's snooping she knew Alexia's house was just a few blocks away on Green Street.
     Pulling onto a side street, Kylie turned her car around and parked slightly up the hill so she could watch Alexia's house unobtrusively. Slouching down, she retrieved the binoculars from under the seat—a gift from her birdwatching-enthusiast Grandma—and aimed them at the stately gold-trimmed three-story Victorian which Alexia called home.
     Her surveillance went unrewarded save for a brief barkfest between a large white poodle and a scruffy Cairn Terrier, each restrained by an equally unfriendly dogwalker. Upscale neighborhoods are so boring, Kylie sighed; nothing happens except gardeners and nannies come and go.
     The moment of bourgeois ennui was broken by the sudden emergence from Alexia's house of a topheavy man in baggy khaki trousers, a crumpled fedora and fiendishly huge round sunglasses. The man seemed ill at-ease negotiating the entry stairs, even though he'd come from the lower of the two flats, and Kylie attributed his hesitancy to the absurdly oversized athletic shoes he wore. Could this be Alexia's neighbor, or perhaps even her husband?
     The strangely dressed man shuffled out to the sidewalk, stopped abruptly and then extracted a cellphone from his sagging black jacket pocket. The call must have upset him, for his gestures were those of a frustrated traffic cop; after a moment of conversation, he pocketed the phone, tugged down his faded fedora and strode awkwardly down the sidewalk in his outsized shoes.
     No sooner had this peculiar character rounded the far corner than a slim petite young woman in a dark-blue mini-skirt and matching blazer hurried up the house's walkway, phone to her ear. Her chestnut hair was pinned up in a sleek chignon, and as Kylie sharpened the binoc's focus, a greenish tinge of envy arose in her, for everything about this woman spoke of a cash-rich lifestyle: the perfect suit, the well-shined pumps and the glitter of gold round her neck.
     The woman waved to a dark-haired man in a crisp gray suit entering the home's white gate, and as soon as the man reached her the couple touched hands briefly and then trotted side-by-side up to the top flat's entry. Here they embraced in a deep kiss. The pair emerged from the embrace with obvious reluctance, and then slipped inside.
     This has to be Alexia, Kylie mused, for she'd reckoned Alexia as a size seven shoe, and this woman looked like the perfect fit. She has to be self-employed or independently wealthy; otherwise, how could she meet her boyfriend or hubby when everyone else is at work?
     Much to Kylie's embarrassment, the couple either did not notice the open living room curtains or care to close them; for once they shut the door, they continued their kiss and began shedding clothing as if they'd just entered a very hot sauna. Though the couple's unmistakable relish suggested the husband had just returned from a trip, Kylie thought it peculiar that he carried no luggage.
     Kylie's embarrassment increased when the couple apparently could not wait to reach the bedroom to complete their welcome-home ritual. Instead, they shed the last of their clothing and flopped passionately onto the sofa in full view of her voyeur's binoculars.
     Given her elevation on the hill and the expanse of the living room's glass, nothing was hidden from Kylie's spying; and even as she told herself it was wrong, she found herself in the grip of a keen curiosity. Though the denouement was known in advance, the couple still managed to surprise their voyeur with some unexpected work over the sofa's low back; and the young lady led the fun with such abandon that it seemed doubtful she would need an exercise class that week.
     Despite her guilt, Kylie watched the proceedings to the end. As the man redressed, the woman slipped away and then returned in a serenely slinky cream robe to see him off. Well, Kylie thought, all's well that ends well; the happy couple is reunited.
     But the couple's previous ardor had been replaced with a businesslike manner, and some disagreement erupted when the man slipped the woman a folded envelope. The woman glanced at the envelope and turned sulkily away; after some ineffective pleading, the man left his pouting lover and trotted angrily down the steps.
     All the peculiarities of the situation suddenly melded—the workday time, the absence of ardor afterward, the discreet exchange of an envelope—and Kylie realized the envelope must have been payment for her sofa services.
     As her mind clicked through this startlingly comprehensive explanation, Kylie thought, how naive of me to imagine a husband returning from a business trip. No wonder Alexia can afford such a posh flat; clearly, the fees for her enthusiastic servicing must be generous, despite her show of arch disappointment with the envelope’s contents.
     Kylie's cellphone interrupted her lurid speculations and she fumbled for it in her purse.
     "Are you in the crafts fair yet?" Ross demanded, and Kylie gulped, for her ample margin of time had slipped away. "Almost," she said hurriedly. "I wanted to check out Alexia beforehand."
     "And what did you find?"
     "Well, she's either a sex addict or—" Kylie blurted, and then instantly regretted revealing her discovery.
     "Or what?"
     "Forget it."
     "A sex addict," Ross drawled. "I'm sure that will be very helpful if negotiations get tough. Is her shop an S&M parlor or something?"
     "No, it's very bourgeois," Kylie said and then hurriedly started her car.
     "Then how did you deduce she's a sex addict?"
     "I can't tell you."
     "It's her shoes, isn't it?" Ross declared triumphantly. "I know how you women get your intuitions. It's always the shoes."
     Ignoring his speculations, Kylie barked, "Just call this Robin and tell him I'll be there in a few minutes."
     Ross's annoyance was clearly audible. "I already arranged everything with him. I thought you were never late."
     "You wanted me to check Alexia out, so I did," she snapped defensively.
     "I appreciate that," Ross drawled. "Can you at least tell me what she looks like?"
     "Slim, dark hair about shoulder-length, a size 7 in shoes and a size 5 in dresses," Kylie reported quickly, and then closed her phone before Ross could question her further. Flustered by her surveillance and the late hour, Kylie drove in haste toward the crafts fair and told herself, If you screw up these negotiations, Ross will never forgive you.

Next: Robin Imagines Kylie 

To read the previous chapters, visit the "Four Bidding For Love" home page.

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Central Planning: With CHS and Gordon T. Long of Macro Analytics:

Statism, Part 1: With CHS and Gordon T. Long of Macro Analytics:

Look for Part 2 on Monday.

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