Back to 1693
Economic historian Martin Hutchinson, below, is having a lot of fun using his knowledge of history to enlighten us about the world financial crisis. But while he agrees with many other economists in foreseeing much gloom immediately ahead he has a vision for the medium-term future which is positively radiant by libertarian/conservative standards.
I think he over-eggs the pudding and I cannot see that a return to the gold standard is on the cards but he is probably broadly correct. The money-printing binge in the USA and the UK combined with the un-repayable debt run up in much of Europe has got to lead to massive asset-destruction sooner or later. If I were an American right now, I would be taking a trip to Canada and converting my holdings of greenbacks into deposits of Loonies. Anybody who did so a couple of years ago would certainly be laughing now -- JR
The eurozone crisis, which could have been defused initially by allowing Greece to depart the euro, has now taken on a much more serious aspect. If as seems possible Italy, Spain and even France lose the confidence of the international debt markets and are forced to write down debt, then government debt of prime countries will no longer be considered a risk-free asset. That will take markets back beyond the traumas of the 20th century, beyond the relatively serene 19th century, beyond even the institution-forming 18th century. It will undo the 1751 triumph of the forgotten financier Samson Gideon in forming the immortal Consols, will undo the sterling if self-serving 1721 work of Sir Robert Walpole in preventing the South Sea crash from destroying the British government bond market as the Mississippi crash did the French one, and will even undo the 1694 foundation of British credit, the formation of the Bank of England. Life for government bond dealers will revert to a primitive Hobbesian state of nature, nasty, brutish and short. But will the rest of us suffer, except in the short term?
Based on the bond market as we have known it over the last century or two, only Greece was bound to default. Its problem was not so much its starting ratio of debt to GDP, but the fact that its GDP was over-inflated, being based on hopelessly unrealistic living standards for the Greek people. Once the Greeks were paid at a level at which the country’s economy would balance – no more than $15,000 or so in GDP per capita compared to 2008’s overinflated $32,000 – Greek GDP would be halved, and its debt/GDP ratio doubled to a level approaching 300%. That would have been beyond the highest levels ever successfully reduced without default – 250% of GDP by Britain after 1815 and again after1945. Since Greece is a notoriously undisciplined society, with poor tax enforcement and an open economy whose citizens keep much of their wealth abroad, a Greek default was and is inevitable in the best of circumstances.
The same is not however true of Italy and Spain. Italy’s competitiveness has declined by about 20% against Germany’s in the last decade. However its debt level is only 120% of GDP, or say 150% of GDP if Italy’s living standards and GDP declined by the necessary 20%. Since its budget deficit under the competent management of Silvio Berlusconi’s finance minister Giulio Tremonti was only about 3-4% of GDP, Italy’s position by the standards of the last two centuries is perfectly manageable without default being more than a distant threat. Similarly Spain has a budget deficit of around 7% of GDP, and a housing finance sector that is a mass of bad debts, with house prices still to descend to market-clearing levels, but its official debt is only 61% of GDP, and its economically odious Zapatero government is on the way out.
The level of market panic about Italian and Spanish debt indicates that the comforting parameters of 19th and 20th century sovereign debt finance no longer hold. The principal reason for this is the determination by the eurozone authorities to break the rules by which debt markets have traditionally been governed. Instead of allowing Greece to default or rescuing it completely, they arranged an inadequate debt-financed bailout that simply postponed Greece’s inevitable exit from the euro and increased its debt. Then they arranged a “voluntary” writedown of Greek private sector debt, which was subordinated in repayment to the monstrous institutional and government debt created by the bailout.
When the Greek government attempted to get referendum or electoral support for the “reforms” imposed by the eurozone authorities, they replaced it by a eurozone stooge, without democratic legitimacy. They repeated this stooge imposition process with the long-lasting and economically capable Italian government of Silvio Berlusconi, who they regarded as euro-skeptic and excessively devoted to free market, low-tax principles, replacing him with a government dominated by europhiles and the left, who had been decisively defeated in the previous election.
Finally and most damagingly, the eurozone authorities prevented the modest $3.5 billion of Greek credit default swaps from paying out, thus drastically devaluing the CDS of Italy, Spain and France, whose volume is of the order of $40 billion each. They have thus called the entire CDS market into question, at least for sovereign names, and have badly shaken the security of international contracts. By doing this, according to Gillian Tett of the FT, they removed the protection that Deutsche Bank, for example thought it had obtained this year by buying CDS on $7 billion of its $8 billion Italian exposure.
Investors in PIIGS debt thus now face the reality that they have been subordinated arbitrarily to the international and eurozone institutions. Their ability to protect themselves by CDS purchase has been removed. The security of their debt contracts themselves has been called into question. Finally, investors’ protection against coups and revolutions, that monetary and fiscal policy were being set by democratically elected governments acceptable to their people, has been removed by the imposition of governments wholly lacking in democratic legitimacy. If those governments impose policies that the populace finds intolerable, as is very likely, there is now far more chance of outright popular revolt or coup d’etat, since ordinary democratic change has been blocked.
In short, the protections given to government debt progressively in the last three centuries have been removed. The rationale for the Basel committee rating government debt at zero in banks’ risk calculations has been exposed for the fraud it always was. Since government levels of taxation are close to the Laffer Curve yield peak in most countries, the protection given to investors by the taxing power has also been rendered nugatory. Investors are no longer in the position of investors in the solid, well managed government debt of Walpole and Lord Liverpool, in which the phrase “as solid as the Bank of England” made British debt sell at the finest international rates. Instead they are in the position of the goldsmiths lending to Charles II, charging 10% for their money and liable to be ruined at any point by a Great Stop of the Exchequer like that of 1672.
I have written before in some detail about the likely effect on the global economy of the removal of government debt markets. In general, it should improve financial availability for the private sector, while starving profligate governments of the means to implement “Keynesian” stimulus and other wasteful policies. Thus it may well improve economic performance in the long run, certainly compared to the anemic growth and high unemployment suffered in most countries since 2009. Needless to say however, the 2010s will be a grim decade, since the transitional and wealth effects of eliminating the government debt markets that have formed the centerpiece of the last three centuries will be enormous – a Reinhart/Rogoff depression of spectacular severity.
However there is another effect of transporting the world financial system back to 1693. The European Central Bank will be bankrupt, because of its holdings of worthless PIIGS debt, and it is most unlikely that German taxpayers will consent to recapitalize an institution that has failed so badly, after first eliminating their beloved deutschemark. The Bank of England, the Federal Reserve and the Bank of Japan will also be legally insolvent, since in their policies of quantitative easing they have acquired gigantic quantities of assets that will drop catastrophically in price once interest rates rise.
The Fed for example is leveraged 60 to 1, and it was recently calculated that a rise in long-term interest rates of only 40 basis points – 0.4% -- would be sufficient to wipe out its capital. Needless to say, a rise of 4-5% in long-term interest rates, back to a historically normal level 2-3% above the true level of inflation, would put a hole in the Fed’s balance sheet that in current stringent budgetary conditions would be politically impossible for the U.S. Treasury to fill. Thus if a debt default in the eurozone spread even partially to the over-indebted economies of Britain, Japan and the United States, not only will government bond markets be wiped out, but central banks in their current form will disappear also.
In the long term, this should also prove a blessing. My colleague and co-author Kevin Dowd has been trying for some years to persuade me that the ideal monetary system is not only a Gold Standard, but one entirely without a central bank. I had always resisted this, believing in the positive qualities of the privately owned Bank of England of the 1797 Old Lady of Threadneedle Street Gillray cartoon, the 1844 Bank Charter Act and the elegant inter-war Montagu Norman, the hero who removed the 1929-31 Labour Government by omitting to tell that bunch of economic illiterates that leaving the Gold Standard was an available option.
However lovers of central banks cannot deny that the Fed bears a substantial share of the responsibility for creating the Great Depression and an even greater share of the responsibility for creating the 2008 crash and the period of grindingly high unemployment that has followed. Thus the existence of a central bank is no longer a battle won and lost in 1694, but must be considered to have become a live question.
If government debt markets across Europe collapse and central banks worldwide are rendered insolvent, the fiat currencies of the world are no longer likely to command enough public confidence to be workable. Like successive generations of Argentine pesos and Ecuadorian sucres, they will have to be junked. Further, since there is unlikely to be a figure like Weimar Germany’s Gustav Stresemann, able to create a new and workable fiat “rentenmark” out of a mythical monetization of land values, a return to a Gold Standard will be not only inevitable but irresistible, since it will have been imposed on the ruins of the current system by the global private sector.
With a Gold Standard, and central banks in ruins, a truly free banking system will also be inevitable. Most large existing banks will have failed along with their central banks, with no more money for bailouts and their regulatory institutions thoroughly discredited. The new central bank-less Gold Standard banking system that arises from the ashes of the old will be perfectly workable, as in 18th century Scotland, 19th century Canada and the United States between 1837 and 1862. It will permit only minimal government, but will allow the private sector, particularly the small scale private sector, to flourish as never before. As after 1945, from the chaos of monetary ruin will emerge a new global economy that is stronger and healthier, provides better living standards for its citizens and imposes far fewer taxes, scams and state-aided rip-offs on their wealth than does the current system.
But the intervening decade is certainly not going to be easy or pleasant.
SOURCE
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The authoritarianism, simple-mindedness and failure of America's pundits
That liberty might be the answer doesn't seem to occur to them
Consider for a moment the paradoxical pain of being a best-selling political pundit so successful that American presidents don’t just seek but heed your advice. You have lobbied in your columns for the commander in chief to deploy your signature catch phrases, and he has. You have, in times of both crisis and sloth, advocated robust federal action in the name of national “greatness,” and the people in power have mostly followed suit. You have been flattered by invitations to the White House and pecked at by lesser partisans, yet you’ve maintained your critical distance in the patriotic spirit of post-ideological problem solving. All this influence and success, and somehow the country still sucks.
“Are we going to roll up our sleeves or limp on?” an exasperated Thomas L. Friedman asked the nation in a September 20 New York Times column. Friedman, the three-time Pulitzer Prize winner, influential Iraq war supporter, champion of “green jobs” industrial policy, and backer of President Barack Obama’s public education initiatives, is threatening to secede from a status quo he helped create.
“Given those stark choices,” he wrote, “one would hope that our politicians would rise to the challenge by putting forth fair and credible recovery proposals that match the scale of our debt problem and contain the three elements that any serious plan must have: spending cuts, increases in revenues and investments in the sources of our strength. But that, alas, is not what we’re getting, which is why there remains an opening for an independent Third Party candidate in the 2012 campaign.”
These are glum times not just for the 23 million working-age Americans without steady jobs but for hyper-employed commentators who have built comparative fortunes whispering into and occasionally bending the world’s most powerful ears. “I’m a sap,” a morose-sounding New York Times columnist David Brooks confessed the day before Friedman’s outburst. “I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around.” But now that the president had unveiled a dead-on-arrival, soak-the-rich jobs package in a televised address designed more to please his progressive base than to actually solve problems, even David Brooks—who in March 2010 deemed Obama “the most realistic and reasonable major player in Washington”—was forced to admit the unbearable: “This wasn’t a speech to get something done.” But noble dreams die hard. “I still believe,” Brooks insisted, “that the president’s soul would like to do something about the country’s structural problems.”
Do something. Is there a two-word phrase in politics more loaded with disguised ideological content? Embedded within is both an urgent call for powerful government action and an up-front declaration that the policy details don’t matter. The bigger the crisis, the more the urgency, the sparser the detail. On September 30, 2008, in a classic of the do-something genre, Brooks argued that the Troubled Asset Relief Program should be rammed through Congress over public objections because the federal government needed “to give people a sense that somebody was in charge, that something was going to be done.” Did that “something” involve buying up toxic assets? Introducing or relaxing certain banking regulations? Taking over or winding down Fannie Mae and Freddie Mac? Not important. “What we need in this situation,” Brooks declared, “is authority.”
American discourse is saddled with a large and influential do-something school of political punditry, a cadre of pragmatists from Meet the Press to your local editorial board who are forever seeking to solve the country’s problems by transcending ideology, demanding collective citizen sacrifice, and—always—empowering authority. In their new book That Used To Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, Friedman and Johns Hopkins foreign policy professor Michael Mandelbaum lament that people “in positions of authority everywhere have less influence than in the past,” due to a “corrosive cynicism” preventing “the collective action that is required.” America, David Brooks wrote in March 2010, “is suffering a devastating crisis of authority,” resulting in a “corrosive cynicism about public action.” The similarities are not accidental.
Brooks and Friedman may be the most prominent practitioners, but the do-something school is evident just about anywhere the political class is talking shop. Here is former George W. Bush speechwriter David Frum at CNN.com on September 26, lamenting that the “old rules” of bipartisan cooperation “have broken down,” unlike those bygone days when “the imperatives of the Cold War inspired a spirit of deference to the president.” There is centrist Matt Miller at Washingtonpost.com the day before, writing an imaginary speech (a favored tactic of the do-something set) for an imaginary independent presidential candidate (ditto) who rejects “the Democrats’ timid half-measures and the Republicans’ mindless anti-government creed” in favor of “a bold agenda equal to the scale of our challenges.” That agenda is virtually indistinguishable from the Brooks/Friedman playbook: higher energy taxes, more money for infrastructure and schools, and national service for the young, all while somehow cutting government spending over the long term.
There are some obvious rejoinders to this fictitious excrescence of the “radical center” (Friedman’s preferred term). As The Washington Post’s Greg Sargent pointed out in response to Miller, “many of those calling for a third party are refusing to reckon with an inconvenient fact: One of the two parties already occupies the approximate ideological space that these commentators themselves are describing as the dream middle ground that allegedly can only be staked out by a third party. That party is known as the ‘Democratic Party.’ ” By dreaming up a third way to deliver ideas and rhetoric already associated with Barack Obama, the centrists are making the implicit admission that the president is ineffectual in the face of GOP intransigence.
But there is an even less charitable explanation. Because do-something punditry inevitably appeals to whoever holds power—what president doesn’t want to rise above partisanship to get things done, particularly if the solution amounts to a blank check to government?—pragmatic centrism has been implemented to a much greater extent than any of the “rigid” ideologies it abhors, whether they be trade unionism, social conservatism, or across-the-board libertarianism. Put another way, we live in a David Brooks/Thomas L. Friedman world, but now that the results have come in they are trying to wash their hands of the whole experiment.
Much more HERE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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Wednesday, November 23, 2011
Tuesday, November 22, 2011
Compassionate Liberalism?
By Gary Baker
While viewing and commenting on a different blog today (Enemy of the Republic ((Hi Susan!))) I came across a comment that was amusing, exasperating, and somewhat ironic. It was amusing in how sincere the writer was. It was exasperating in how factually wrong she was. And it was ironic in that a few comments ago I was cautioned about using that particular blogsite as forum for personal view, and then this comes along. So it goes. At any rate, I sent a follow-up comment stating that I would not try to engage her on that site, but that she could come over here if she had any interest in honest discussion. I am eager to see if she will arrive.
The subject of the thread was government neglect of education. The blogger who commented put forth a number of statements regarding the Bush administration and compassionate conservatism. Many of these are worth examining.
She (the commenter) began by telling the story of a sadly depressed area, the city of East St. Louis (ESL). Lest anyone think that I am mocking the poor, please be assured that I am not. I hardly grew up in a well-to-do area or family. I did some research in this area, and it certainly has had its share of hard knocks. What the commenter wrote:
"I live near one of the most disadvantaged areas in the US. It's called East Saint Louis, IL. At least,75% of the people who live there are below the national poverty level. And these people, were forced to live there because they had no other place to go, they were segregated. Their children were not welcome at our schools, with our children....they were the untouchables of our society. ESL has basically been a reservation. "
Back in the 1980's the city was sued and the plaintiff won, after this the city went bankrupt. ... They no longer had any money to pay the garbage collectors, there were bags of trash sitting in back yards, in empty lots, in the streets. There were huge rats everywhere. Of course, there were children living here. Then, the ancient sewer stystem finally began to wear out. There was sewage all over the city, backing up in peoples houses, their basements, coming out of peoples sinks, pooling in the empty lots. The school kept having to be shut down, the sewage was coming out of the sinks in the school kitchens where the children's meals were prepared. Diptheria and hepatitis were major health threats.
And again, I remind you, this was in the late 1980's.
There have many large factories outside the city, one of them being Monsanto. They had been illegally dumping chemicals into the soil for years. The lead level in the soil is way beyond what is considered toxic. No-one cared, these people had no-one to help them. "
(Full Disclosure - Some of the parts of the text above, though reproduced accurately, do not appear in the same order as they were posted on the original thread. I have taken great pains, however, to ensure that the meaning of the words quoted is accurately preserved. For the complete full thread, please go to Enemy of the Republic blogsite.)
This certainly sounds like an impoverished area. For those most part, the facts are uncontested. According to an article in Time on line, the lawsuit was in 1995. It also said that the town used to be integrated, but by 2001 was 98% black. There are other statements, however, that are far less accurate from a historical aspect. For example:
"This was during Reagan's administration and the policies of the administration were what was making this possible."
A review of the history of the area shows that if Monsanto was illegally dumping, then it was the last of a long and illustrious line. The town had been largely a mining town since early in the century. According to PATRICK E. GAUEN, Politics writer for the St. Louis Post-Dispatch, coal was a large part of the economy, as well as aluminum and zinc. This continued from early in the century until after WWII. Considering the methods involved, I think it reasonable to assume that a good deal of the damage had been done before Reagan took the reins of the country. Also, according to the same columnist,
"East St. Louis remains an enigma to most Illinoisans, who know it only through its poverty, corrupt past, outsized crime rate and historical ability to deliver Democratic votes."
In point of fact, the article shows the past of the town as one mired in corruption, gangsterism, drug abuse, prostitution. All of this, and reliably democrat elected officials. I find it very odd through all of this, only a Republican president is singled out for any blame or responsibility. When the commentor brings up Clinton, it is in a far different reference:
"When Clinton became president, he fixed the most immediate problems. The city is still bad but at least there is not garbage and sewage in the streets. The city is actually run by the State of Illinois now. "
If the commenter can offer some bona fide points that Clinton "fixed" I would be happy to examine them. The press that I read gives credit for the limited recovery to revenues that came when a casino located there in the 94-95 time frame.
"There are people who manage to become productive members of society who come from there, most of them join the Military and hope that they don't get blown up while they are over in Iraq, it is their only ticket and they are willing to take the chance. And we say that they don't try?"
As a former veteran myself, I question the ability of the commenter to determine all the motives that people have for joining up. I myself went into service more for training than for patriotism, and I freely admit that. I got the training, and it has helped me to be far more successful than I might have been without it. I, for one, applaud those who take advantage of the opportunity and privilege to serve.
"No child left behind withholds funds from schools that do not meet federal standards. ESL is a perfect illustration of why this program will not help those who need help the most. It shows a lack of insight and understanding of the environments that these children live in and how they can best be helped. It shows a lack of compassion."
Granting funds to schools that take the children, give them no useful skills, and trap them into poverty is not compassion. It is stupid. And again, the schools were lousy before NCLB. The schools are now being held accountable. Parents with students in failing schools now at least have the hope of transferring to someplace better, and taxpayers have the hope that their hard earned money is not thrown down a rathole. This is compassion that works. This is improving people's lives, not offering them a fake smile while you slowly ruin their children's lives.
The commenter also wrote " Get out of your books and take a walk. Talk to people like this, ask them questions, get to know them.....Jesus did.....and he would have never promoted 'compassionate conservatism'. Anyone who thinks he would have must have a different Bible than I do."
Take a look at that Bible again. Christ gave people a chance for success. He fed some people at his sermons. Once. He didn't say "Come back tomorrow for more." He didn't set up government food programs. During his time, the church was the program for the poor, not the government. Families were to take care of each other. The poor were helped through the church if they were unable to work. Those who could work were expect to do so (Check "gleaning" in your concordance.) Yes, we are to be generous, but with our own resources, not with those who we feel "already have enough." Compassionate liberalism gave people generational welfare, several generations without two parents, and an endless cycle of dependency. I never recall Christ pushing people to be dependent on anyone except for God; certainly not government.
SOURCE
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Can the Underground Economy Save Europe?
"The growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation."
As the old saying goes, the more expensive you are to fire, the more expensive you are to hire. Nowhere is this more apparent than on the European continent.
Even with the United States' lengthening of unemployment insurance benefits at the wake of this crisis, the benefits for the standard down-on-his-luck American pale in comparison to those of the average European. Upon job separation the average Frenchman can expect to see more than half of his salary extended in the form of unemployment benefits. Many European workers see these benefits extended for two to three years after their termination, with some countries extending benefits indefinitely.
Spells of unemployment are consequently prolonged on the European continent. Strict laws governing the separation of employees from companies (a nice way to say, "You're fired") lower the rate of job separation in these countries. Unfortunately, these laws also decrease the rate of job finding, resulting in the prolonged unemployment durations evident.
This problem of unemployed masses was no more than an unfortunate consequence of a well-developed social-welfare system during the boom years. Government coffers were plush to pay out hefty benefits. As the crisis wears on, this unfortunate side effect is increasingly turning into an oncoming train wreck as government deficits widen and welfare payments strain already tenuous state finances.
Decreasing benefits may be unfortunate to those relying on them, but such cuts are inevitable. Already some countries have enacted measures to try to bring these unsustainable systems closer to sustainability. The retirement age has been extended to reduce social-security payments, and unemployment benefits have been cut. People have responded with protests, trying to maintain the standard of living that they fought so hard to achieve over the past decades. Unfortunately, not all things desirable are feasible — Europe's plush welfare system is a case in point.
Fortunately there is a silver lining. In most European countries, and especially in the crisis-stricken periphery, large underground economies exist. While Spain's official unemployment rate is pegged around 20 percent, a substantial portion of its workers are indeed employed, if only outside official statistics. As I outline in a new collection I've edited, Institutions in Crisis: European Perspectives on the Recession, the underground economies of Europe's periphery provide ample (if not always desirable) opportunities for employment. While the Greek economy has the largest underground estimated at 25.2 percent of GDP, the PIGS countries (Portugal, Italy, Greece, and Spain) average 21.7 percent of their economic activity hidden from the official statistics. For comparison, 14.7 percent of German, and 7.8 percent of American output is estimated to be confined to the underground.
If substantial masses of officially unemployed workers can take solace in knowing that there exist large underground venues for their efforts, we may do well to outline the reasons why this unofficial option exists. Hans Sennholz, in his work The Underground Economy, lists four main categories of underground economy activity:
* that portion evading taxes,
* that portion violating laws or production standards,
* production from transfer beneficiaries barred from otherwise partaking in pecuniary-enhancing activities (welfare recipients for example), and
* production from illegal aliens.
While many people assume that the underground economy consists purely of tax evaders and drug dealers, we see that only two of the categories above allow for these groups. That is not to say that underground workers in the other categories do not evade taxes or sell elicit substances. It is to say that the main reason for their involvement outside of the official economy is neither of those reasons.
Europe's underground economies have seen much growth over the past 30 years, especially since this crisis began. In some ways the growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation. Evidence suggests that industry in at least two of our prime culprits have benefited from the expansion of the underground economy. Growing underground economy employment has allowed Italian and Spanish firms to expand and contract production more easily to market demands.
There is an increased emphasis on reallocating the underground economy into the official one as Europe's crisis progresses. The most commonly advocated method involves more frequent tax audits and heavier fines to incentivize entrepreneurs to report their full incomes to the official authorities. The problem with such a solution is that it ignores the core reason why the underground economy exists — and may very well strengthen its existence.
Entrepreneurs operate in the unofficial economy for two main reasons: taxes make official transactions unprofitable, or regulations make them unfeasible. Threats of increased monetary fines do nothing to alleviate the former reason, while only a reduction in the web of rules and regulations will reduce the latter.
Increased fines and audits will undoubtedly reduce the size of the underground economy. Entrepreneurs, even underground ones, will respond to the increased costs and risks by reducing the scope of their activities. This reduction will not translate into an increase in official market activity. Only by easing the regulatory and tax burden facing entrepreneurs will more of them be willing to operate in the official economy.
Instead of viewing Europe's underground economies as bad things, policy makers would do well to start viewing them for what they are: an important signal that old interventionist policies have failed. If one views large underground economies as inherently bad, one must also deem the policies that breed their existence to be bad.
SOURCE
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Big recovery in the Rich Port shows what sensible economic policy looks like
The gridlocked members of the congressional Supercommittee should grab President Barack Obama and decamp to a tropical island. Specifically, they should visit Puerto Rico, where a courageous leader is using free-market reforms to reinvigorate this recently moribund U.S. territory.
"We are clearly pro-growth," says Republican Governor Luis G. Fortuno. "And we do not apologize for that."
Fortuno was inaugurated on January 2, 2009, just 18 days before Obama. Since then, these two officials have marched in opposite directions, with opposite results.
"We were closer to the abyss than most states," Fortuno says. "When I came into office, we were facing not just the worst recession since the '30s, but the worst budget deficit in America, proportionally. We were literally broke. We did not have enough money to meet our first payroll. We had to take out a loan to do that. At that point, my wife asked me if we could ask for a recount."
So, unlike the free-spending Obama, and George W. Bush before him, Fortuno declares: "We cut expenses."
Fortuno gave himself a 10-percent pay cut. He trimmed his agency heads' salaries by 5 percent. That bought him the credibility to chop overall spending by 20 percent. He booted some 20,000 government workers, through attrition as well as layoffs, saving $935 million. (Compare that to Bush-Obama's 11.7 percent hike in federal civilian headcount since the Great Recession began in December 2007 -- excluding temporary Census jobs.) Fortuno has shifted remaining government workers from old-fashioned, statist, defined-benefit pensions to modern, market-friendly, defined-contribution plans.
Ranked No. 51 in 2009, behind each of the United States, in terms of deficit-to-revenue, Puerto Rico now is 15th, with the $3.3 billion deficit Fortuno inherited (44 percent of revenues) now macheteed to $610 million (7.1 percent). Fortuno's reforms, including merging government agencies, led Standard and Poor's to upgrade Puerto Rico's credit rating for the first time in 28 years. S and P, of course, famously downgraded U.S. sovereign debt last August, a historical first. Meanwhile, America's national debt screamed past the $15 trillion mark on Wednesday.
Fortuno has sliced taxes. The corporate tax rate plunged last January 1 from 41 percent to 30 percent, en route to 25 percent in 2014. He cut average individual tax rates by one quarter this year and in half within six years.
"You needed to obtain an average of 28 permits and endorsements to do anything," Fortuno says, regarding regulatory relief. "You had to go to 20-plus different agencies to do that. Today, you go to one agency, and you get your permit there, or you can go to PR.gov, and get it online."
"We have created a better business climate, and it shows," Fortuno explains.
A five-year property-tax holiday and the scrapping of capital gains and death taxes have helped push existing home sales up 35 percent this year (while they fell 7.9 percent on the Mainland) and new home sales soaring 92.2 percent (as they sagged 9.9 percent up north)
SOURCE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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By Gary Baker
While viewing and commenting on a different blog today (Enemy of the Republic ((Hi Susan!))) I came across a comment that was amusing, exasperating, and somewhat ironic. It was amusing in how sincere the writer was. It was exasperating in how factually wrong she was. And it was ironic in that a few comments ago I was cautioned about using that particular blogsite as forum for personal view, and then this comes along. So it goes. At any rate, I sent a follow-up comment stating that I would not try to engage her on that site, but that she could come over here if she had any interest in honest discussion. I am eager to see if she will arrive.
The subject of the thread was government neglect of education. The blogger who commented put forth a number of statements regarding the Bush administration and compassionate conservatism. Many of these are worth examining.
She (the commenter) began by telling the story of a sadly depressed area, the city of East St. Louis (ESL). Lest anyone think that I am mocking the poor, please be assured that I am not. I hardly grew up in a well-to-do area or family. I did some research in this area, and it certainly has had its share of hard knocks. What the commenter wrote:
"I live near one of the most disadvantaged areas in the US. It's called East Saint Louis, IL. At least,75% of the people who live there are below the national poverty level. And these people, were forced to live there because they had no other place to go, they were segregated. Their children were not welcome at our schools, with our children....they were the untouchables of our society. ESL has basically been a reservation. "
Back in the 1980's the city was sued and the plaintiff won, after this the city went bankrupt. ... They no longer had any money to pay the garbage collectors, there were bags of trash sitting in back yards, in empty lots, in the streets. There were huge rats everywhere. Of course, there were children living here. Then, the ancient sewer stystem finally began to wear out. There was sewage all over the city, backing up in peoples houses, their basements, coming out of peoples sinks, pooling in the empty lots. The school kept having to be shut down, the sewage was coming out of the sinks in the school kitchens where the children's meals were prepared. Diptheria and hepatitis were major health threats.
And again, I remind you, this was in the late 1980's.
There have many large factories outside the city, one of them being Monsanto. They had been illegally dumping chemicals into the soil for years. The lead level in the soil is way beyond what is considered toxic. No-one cared, these people had no-one to help them. "
(Full Disclosure - Some of the parts of the text above, though reproduced accurately, do not appear in the same order as they were posted on the original thread. I have taken great pains, however, to ensure that the meaning of the words quoted is accurately preserved. For the complete full thread, please go to Enemy of the Republic blogsite.)
This certainly sounds like an impoverished area. For those most part, the facts are uncontested. According to an article in Time on line, the lawsuit was in 1995. It also said that the town used to be integrated, but by 2001 was 98% black. There are other statements, however, that are far less accurate from a historical aspect. For example:
"This was during Reagan's administration and the policies of the administration were what was making this possible."
A review of the history of the area shows that if Monsanto was illegally dumping, then it was the last of a long and illustrious line. The town had been largely a mining town since early in the century. According to PATRICK E. GAUEN, Politics writer for the St. Louis Post-Dispatch, coal was a large part of the economy, as well as aluminum and zinc. This continued from early in the century until after WWII. Considering the methods involved, I think it reasonable to assume that a good deal of the damage had been done before Reagan took the reins of the country. Also, according to the same columnist,
"East St. Louis remains an enigma to most Illinoisans, who know it only through its poverty, corrupt past, outsized crime rate and historical ability to deliver Democratic votes."
In point of fact, the article shows the past of the town as one mired in corruption, gangsterism, drug abuse, prostitution. All of this, and reliably democrat elected officials. I find it very odd through all of this, only a Republican president is singled out for any blame or responsibility. When the commentor brings up Clinton, it is in a far different reference:
"When Clinton became president, he fixed the most immediate problems. The city is still bad but at least there is not garbage and sewage in the streets. The city is actually run by the State of Illinois now. "
If the commenter can offer some bona fide points that Clinton "fixed" I would be happy to examine them. The press that I read gives credit for the limited recovery to revenues that came when a casino located there in the 94-95 time frame.
"There are people who manage to become productive members of society who come from there, most of them join the Military and hope that they don't get blown up while they are over in Iraq, it is their only ticket and they are willing to take the chance. And we say that they don't try?"
As a former veteran myself, I question the ability of the commenter to determine all the motives that people have for joining up. I myself went into service more for training than for patriotism, and I freely admit that. I got the training, and it has helped me to be far more successful than I might have been without it. I, for one, applaud those who take advantage of the opportunity and privilege to serve.
"No child left behind withholds funds from schools that do not meet federal standards. ESL is a perfect illustration of why this program will not help those who need help the most. It shows a lack of insight and understanding of the environments that these children live in and how they can best be helped. It shows a lack of compassion."
Granting funds to schools that take the children, give them no useful skills, and trap them into poverty is not compassion. It is stupid. And again, the schools were lousy before NCLB. The schools are now being held accountable. Parents with students in failing schools now at least have the hope of transferring to someplace better, and taxpayers have the hope that their hard earned money is not thrown down a rathole. This is compassion that works. This is improving people's lives, not offering them a fake smile while you slowly ruin their children's lives.
The commenter also wrote " Get out of your books and take a walk. Talk to people like this, ask them questions, get to know them.....Jesus did.....and he would have never promoted 'compassionate conservatism'. Anyone who thinks he would have must have a different Bible than I do."
Take a look at that Bible again. Christ gave people a chance for success. He fed some people at his sermons. Once. He didn't say "Come back tomorrow for more." He didn't set up government food programs. During his time, the church was the program for the poor, not the government. Families were to take care of each other. The poor were helped through the church if they were unable to work. Those who could work were expect to do so (Check "gleaning" in your concordance.) Yes, we are to be generous, but with our own resources, not with those who we feel "already have enough." Compassionate liberalism gave people generational welfare, several generations without two parents, and an endless cycle of dependency. I never recall Christ pushing people to be dependent on anyone except for God; certainly not government.
SOURCE
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Can the Underground Economy Save Europe?
"The growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation."
As the old saying goes, the more expensive you are to fire, the more expensive you are to hire. Nowhere is this more apparent than on the European continent.
Even with the United States' lengthening of unemployment insurance benefits at the wake of this crisis, the benefits for the standard down-on-his-luck American pale in comparison to those of the average European. Upon job separation the average Frenchman can expect to see more than half of his salary extended in the form of unemployment benefits. Many European workers see these benefits extended for two to three years after their termination, with some countries extending benefits indefinitely.
Spells of unemployment are consequently prolonged on the European continent. Strict laws governing the separation of employees from companies (a nice way to say, "You're fired") lower the rate of job separation in these countries. Unfortunately, these laws also decrease the rate of job finding, resulting in the prolonged unemployment durations evident.
This problem of unemployed masses was no more than an unfortunate consequence of a well-developed social-welfare system during the boom years. Government coffers were plush to pay out hefty benefits. As the crisis wears on, this unfortunate side effect is increasingly turning into an oncoming train wreck as government deficits widen and welfare payments strain already tenuous state finances.
Decreasing benefits may be unfortunate to those relying on them, but such cuts are inevitable. Already some countries have enacted measures to try to bring these unsustainable systems closer to sustainability. The retirement age has been extended to reduce social-security payments, and unemployment benefits have been cut. People have responded with protests, trying to maintain the standard of living that they fought so hard to achieve over the past decades. Unfortunately, not all things desirable are feasible — Europe's plush welfare system is a case in point.
Fortunately there is a silver lining. In most European countries, and especially in the crisis-stricken periphery, large underground economies exist. While Spain's official unemployment rate is pegged around 20 percent, a substantial portion of its workers are indeed employed, if only outside official statistics. As I outline in a new collection I've edited, Institutions in Crisis: European Perspectives on the Recession, the underground economies of Europe's periphery provide ample (if not always desirable) opportunities for employment. While the Greek economy has the largest underground estimated at 25.2 percent of GDP, the PIGS countries (Portugal, Italy, Greece, and Spain) average 21.7 percent of their economic activity hidden from the official statistics. For comparison, 14.7 percent of German, and 7.8 percent of American output is estimated to be confined to the underground.
If substantial masses of officially unemployed workers can take solace in knowing that there exist large underground venues for their efforts, we may do well to outline the reasons why this unofficial option exists. Hans Sennholz, in his work The Underground Economy, lists four main categories of underground economy activity:
* that portion evading taxes,
* that portion violating laws or production standards,
* production from transfer beneficiaries barred from otherwise partaking in pecuniary-enhancing activities (welfare recipients for example), and
* production from illegal aliens.
While many people assume that the underground economy consists purely of tax evaders and drug dealers, we see that only two of the categories above allow for these groups. That is not to say that underground workers in the other categories do not evade taxes or sell elicit substances. It is to say that the main reason for their involvement outside of the official economy is neither of those reasons.
Europe's underground economies have seen much growth over the past 30 years, especially since this crisis began. In some ways the growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation. Evidence suggests that industry in at least two of our prime culprits have benefited from the expansion of the underground economy. Growing underground economy employment has allowed Italian and Spanish firms to expand and contract production more easily to market demands.
There is an increased emphasis on reallocating the underground economy into the official one as Europe's crisis progresses. The most commonly advocated method involves more frequent tax audits and heavier fines to incentivize entrepreneurs to report their full incomes to the official authorities. The problem with such a solution is that it ignores the core reason why the underground economy exists — and may very well strengthen its existence.
Entrepreneurs operate in the unofficial economy for two main reasons: taxes make official transactions unprofitable, or regulations make them unfeasible. Threats of increased monetary fines do nothing to alleviate the former reason, while only a reduction in the web of rules and regulations will reduce the latter.
Increased fines and audits will undoubtedly reduce the size of the underground economy. Entrepreneurs, even underground ones, will respond to the increased costs and risks by reducing the scope of their activities. This reduction will not translate into an increase in official market activity. Only by easing the regulatory and tax burden facing entrepreneurs will more of them be willing to operate in the official economy.
Instead of viewing Europe's underground economies as bad things, policy makers would do well to start viewing them for what they are: an important signal that old interventionist policies have failed. If one views large underground economies as inherently bad, one must also deem the policies that breed their existence to be bad.
SOURCE
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Big recovery in the Rich Port shows what sensible economic policy looks like
The gridlocked members of the congressional Supercommittee should grab President Barack Obama and decamp to a tropical island. Specifically, they should visit Puerto Rico, where a courageous leader is using free-market reforms to reinvigorate this recently moribund U.S. territory.
"We are clearly pro-growth," says Republican Governor Luis G. Fortuno. "And we do not apologize for that."
Fortuno was inaugurated on January 2, 2009, just 18 days before Obama. Since then, these two officials have marched in opposite directions, with opposite results.
"We were closer to the abyss than most states," Fortuno says. "When I came into office, we were facing not just the worst recession since the '30s, but the worst budget deficit in America, proportionally. We were literally broke. We did not have enough money to meet our first payroll. We had to take out a loan to do that. At that point, my wife asked me if we could ask for a recount."
So, unlike the free-spending Obama, and George W. Bush before him, Fortuno declares: "We cut expenses."
Fortuno gave himself a 10-percent pay cut. He trimmed his agency heads' salaries by 5 percent. That bought him the credibility to chop overall spending by 20 percent. He booted some 20,000 government workers, through attrition as well as layoffs, saving $935 million. (Compare that to Bush-Obama's 11.7 percent hike in federal civilian headcount since the Great Recession began in December 2007 -- excluding temporary Census jobs.) Fortuno has shifted remaining government workers from old-fashioned, statist, defined-benefit pensions to modern, market-friendly, defined-contribution plans.
Ranked No. 51 in 2009, behind each of the United States, in terms of deficit-to-revenue, Puerto Rico now is 15th, with the $3.3 billion deficit Fortuno inherited (44 percent of revenues) now macheteed to $610 million (7.1 percent). Fortuno's reforms, including merging government agencies, led Standard and Poor's to upgrade Puerto Rico's credit rating for the first time in 28 years. S and P, of course, famously downgraded U.S. sovereign debt last August, a historical first. Meanwhile, America's national debt screamed past the $15 trillion mark on Wednesday.
Fortuno has sliced taxes. The corporate tax rate plunged last January 1 from 41 percent to 30 percent, en route to 25 percent in 2014. He cut average individual tax rates by one quarter this year and in half within six years.
"You needed to obtain an average of 28 permits and endorsements to do anything," Fortuno says, regarding regulatory relief. "You had to go to 20-plus different agencies to do that. Today, you go to one agency, and you get your permit there, or you can go to PR.gov, and get it online."
"We have created a better business climate, and it shows," Fortuno explains.
A five-year property-tax holiday and the scrapping of capital gains and death taxes have helped push existing home sales up 35 percent this year (while they fell 7.9 percent on the Mainland) and new home sales soaring 92.2 percent (as they sagged 9.9 percent up north)
SOURCE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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Monday, November 21, 2011
Don't Cry For Me, America
In the early 20th century, Argentina was one of the richest countries in the world. It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.
In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of "fundamental change" with an appeal to the middle class. Among Irigoyen's changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy.
Put simply, the state assumed economic control of a vast swath of the country's operations and began assessing new payroll taxes to fund its efforts. With an increasing flow of funds into these entitlement programs, the government's payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers' contributions. Put simply, it quickly became under-funded, much like the United States' Social Security and Medicare programs.
The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation's rich. This targeted group "swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated."
Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions. High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and "contempt for economic realities" lived on. Argentina's federal government continued to spend far beyond its means.
Hyperinflation exploded in 1989, the final stage of a process characterized by "industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy..." The Argentinian government's practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic. Food riots were rampant; stores were looted; the country descended into chaos.
And by 1994, Argentina's public pensions -- the equivalent of Social Security -- had imploded. The payroll tax had increased from 5% to 26%, but it wasn't enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy. A government-controlled "privatization" effort to rescue seniors' pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina's defaulted government bonds.
By 2002, "...government fiscal irresponsibility... induced a national economic crisis as severe as America's Great Depression."
In 1902 Argentina was one of the world's richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.
We've seen this movie before. The Democrats' populist plans can't possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.
Today's Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.
SOURCE
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President do-nothing
Obama fiddles while the economy burns
Even members of the president’s party are growing restive at a president who has time for fundraising, time for foreign receptions where he can bad-mouth the USA as “lazy,” time for a 57 state bus tour under which the finances of the country are regularly thrown to give the bus a little more traction, yet he has no time to negotiate a budget deal.
This is the third time in one year that Obama has had the opportunity to negotiate a major budget deal. It’s also the third time he’s fumbled the chance.
No president has done less with more chances.
“Three times is a lot,” Churchill wrote about how the British Navy blew three opportunities to secure a decisive victory at the Battle of Jutland.
I expect that once the budget deal finally fails and automatic cuts are enacted, Obama will announce a major vacation initiative on Good Morning America.
Obama seems to be stuck refighting Harry Truman’s come from behind campaign against a do-nothing Congress. Problem is this isn’t 1946 and Obama’s no Harry Truman.
He’s a president who has been recorded as not present on budget and fiscal issues since taking the oath of office. He was more believable in the role of the do-nothing Senator than he has been as president. Harry Truman never voted “not present” in his whole life: not as farmer, not as haberdasher, not as Senator, not as president.
As president, Obama has even made a poor Senator.
Democrat US Senator from West Virginia Joe Manchin, a former governor who knows a little about governing- which seems to be a weak spot for Obama- blasted his president on CBS’s Face the Nation on Sunday when asked if Obama is doing enough to reach fiscal sanity: “Well, if it doesn't work, then no one’s done enough on it. And he's the leader of this great country, and we want him to step forward.”
More HERE
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A soft generation
The Occupy crowd saunter from their air-conditioned homes to their air-conditioned cars to their air-conditioned classrooms with their faces buried in smart phones, texting away to their friends about their fantasy football team or the results of Dancing with the Stars. Many look with disdain at the burger-flipping jobs my peers took while working their way through high school and college. They’re too busy with sports and clubs to work, unless it’s an internship for a group that is saving the earth or the whales or the smelt fish – in fact, saving everything except their parent’s money.
To say that they haven’t faced adversity and that they are an abundantly indulged generation severely understates the matter. Of course, there are exceptions in every generation: Athletes who live the principle of sacrifice for their team. There are the engineering and science majors that face demanding curriculums in order to earn good jobs. And, most obviously, there are the large numbers of young Americans who put their lives on the line by volunteering to defend the country in the armed services.
Separate out these remarkable, goal-oriented young men and women – and ignore the crazies and anarchists who have capitalized on the situation – and what you have left are the young Americans of the Occupy generation, a group of people who went through college expecting (yes, expecting) that upon graduation, they would be rewarded with a job where they would continue to be pampered. When they left the protective nest of academia and walked into an economic downturn that didn’t have a big fat job with a big fat paycheck and big fat benefits, they decided it was the mystical “rich” of America – the 1% – who were at fault.
The absolutely hilarious part comes from them completely ignoring that, because they live in America, they are part of the world’s 1%. They ignore that the reason they’re not part of America’s 1% is because they haven’t worked for it. And they really ignore the fact that the scholarships and loans they received are the product of the hard work, contributions, and taxes of the 1% that they both hate and/or envy.
Despite their college “educations,” they display an embarrassing lack of knowledge in economics and government. They demand bailouts from their student loans “just like Wall Street was bailed out,” utterly clueless to the fact that Wall Street paid back the money with interest.
They implore the government to create more “equality” in America, completely oblivious to the following facts: In the last 50 years government has grown from 27% of GDP to 37%; and, during that time, almost 50% of Americans have stopped paying income taxes, while the top earners bear an ever-growing share of the tax burden. And yet despite this blatant redistribution of wealth, income inequality in America has skyrocketed. Maybe they should correlate those facts and figure out that it’s probably government, not Wall Street, that’s the cause of rising inequality – just like government was the root cause of the housing crisis.
So what is our reaction to dealing with these overindulged youths when they decide to protest? We indulge them some more. They go to a park in New York and have a “Love-in.” The Mayor doesn’t give them the boot while other people supply free food and clothing. In a little known fact not reported in the mainstream press, Mayor Bloomberg has recruited a team of mothers to fluff their pillows and tuck them in at night after making them hot chocolate. Finally Bloomberg decides that recruiting all these volunteer mothers is too hard so he gives the kids the boot. Meanwhile, our babysitter-in-chief Barack Obama panders to the group by changing the rules to relieve them of the responsibility of paying their first financial obligation – their student loans.
What they need to do is take one of the jobs that exist in America. Yes, there are a whole lot of them, but those jobs are beneath these kids. I understand there are crops to be picked in Alabama and California because illegal aliens are scarce. Or maybe they could work at a donut shop or a McDonald’s. But that’s not going to happen because these kids have expectations and their food has always just appeared in the refrigerator – provided by magic elves of course.
More HERE
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The Accountability Charade
By Michelle Malkin
You can’t spell “accountability” without “A,” “C” and “T.” But in Washington, government officials routinely get away with “taking personal responsibility” by mouthing empty words devoid of action. Heads nod in collective agreement that mistakes were made. But heads never roll. The Obama administration has raised this accountability charade to an art form.
At a House Energy Committee hearing on the half-billion-dollar bankrupt Solyndra loan-guarantee disaster, Energy Secretary Steven Chu made a grand pretense of falling on his sword. The neon-green solar energy zealot told lawmakers in prepared testimony that the “final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind.” But again and again, Chu admitted, those decisions were made with serial cluelessness about the political jockeying, dire financial warnings, legal red flags and conflicts of interest that “everybody (else) and their dog” knew about (as GOP Rep. Joe Barton of Texas politely pointed out).
While former Democratic chief inquisitor Henry Waxman praised Chu’s “reputation for integrity” as “unimpeachable,” Chu came across as more Mr. Magoo than Mr. Clean.
Chu said he was “unaware” of the Department of Energy’s own staff predictions two years ago that Solyndra would face a serious cash-flow crisis today.
Chu said he was “unaware” of administration pressure on Solyndra to suppress layoff announcements until after the November 2010 midterm elections. “I don’t know. I just learned about that,” he shirked.
In fact, he used the phrase “I am aware of it now” at least a half-dozen times. If there were a Nobel Prize for Unknowing, Chu would be two-time shoo-in. GOP House Energy Committee Chairman Cliff Stearns summed up:
In short, Chu took full responsibility for everything he wasn’t aware of … until it was too late.
Sound familiar? It was the leitmotif played in last week’s Fast and Furious hearings with Attorney General Eric Holder.
Despite a raft of briefing memos with his name on them, Holder claimed he never received or read them. Rhode Island Democratic Sen. Sheldon Whitehouse ran interference, sanctimoniously explaining for all the non-career government attorneys in the audience — including the family of murdered Border Patrol Agent Brian Terry — that nooooooo one in the top echelons of the federal lawyers’ bureaucracy actually reads memos addressed to them. It’s merely a “convention” for junior staff to feel better and more important about themselves.
Taking his boss’s lead, former Holder Chief of Staff Kevin Ohlson — who is seeking a federal judicial slot — explained away his failure to do anything about the festering Fast and Furious gunwalking scandal. He had “been informed that routine courtesy copies of weekly reports were forwarded to me that referred to the operation by name, but that did not provide any operational details and did not refer to gun walking or anything similar.”
Although his name was on the documents, Ohlson just didn’t bother to read them because they weren’t marked important or sensitive. Imagine an ordinary small businessman or taxpayer trying that one out on the IRS.
Situational unawareness in the private marketplace or on the battlefield will cost you your livelihood or your life. In the Age of Obama, however, such willful ignorance is a job prerequisite. The less you know the better.
More HERE
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ELSEWHERE
Putting bureaucracy first: Rachel Maddow’s progressivism: "Progressives today say people should come before profits. Now in a privilege-ridden corporate state, that’s a worthy goal, though Progressives have no clue how to achieve it. How nice it would be if they were equally committed to putting people before bureaucracy. Here they fall down rather badly because their signature ideas would subordinate regular people to the dictates of the power structure."
Middle class in big trouble: "But as much as lefties want to blame this disturbing trend on the evils of capitalism, in fact Big Government is a big culprit. Why has manufacturing declined in the U.S.? Because labor and environmental regulations -- both payoffs to Democrat Party constituents -- have made it virtually impossible to profitably manufacture in America, forcing companies to ship production to low tax, low regulation areas overseas"
There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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In the early 20th century, Argentina was one of the richest countries in the world. It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.
In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of "fundamental change" with an appeal to the middle class. Among Irigoyen's changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy.
Put simply, the state assumed economic control of a vast swath of the country's operations and began assessing new payroll taxes to fund its efforts. With an increasing flow of funds into these entitlement programs, the government's payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers' contributions. Put simply, it quickly became under-funded, much like the United States' Social Security and Medicare programs.
The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation's rich. This targeted group "swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated."
Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions. High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and "contempt for economic realities" lived on. Argentina's federal government continued to spend far beyond its means.
Hyperinflation exploded in 1989, the final stage of a process characterized by "industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy..." The Argentinian government's practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic. Food riots were rampant; stores were looted; the country descended into chaos.
And by 1994, Argentina's public pensions -- the equivalent of Social Security -- had imploded. The payroll tax had increased from 5% to 26%, but it wasn't enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy. A government-controlled "privatization" effort to rescue seniors' pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina's defaulted government bonds.
By 2002, "...government fiscal irresponsibility... induced a national economic crisis as severe as America's Great Depression."
In 1902 Argentina was one of the world's richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.
We've seen this movie before. The Democrats' populist plans can't possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.
Today's Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.
SOURCE
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President do-nothing
Obama fiddles while the economy burns
Even members of the president’s party are growing restive at a president who has time for fundraising, time for foreign receptions where he can bad-mouth the USA as “lazy,” time for a 57 state bus tour under which the finances of the country are regularly thrown to give the bus a little more traction, yet he has no time to negotiate a budget deal.
This is the third time in one year that Obama has had the opportunity to negotiate a major budget deal. It’s also the third time he’s fumbled the chance.
No president has done less with more chances.
“Three times is a lot,” Churchill wrote about how the British Navy blew three opportunities to secure a decisive victory at the Battle of Jutland.
I expect that once the budget deal finally fails and automatic cuts are enacted, Obama will announce a major vacation initiative on Good Morning America.
Obama seems to be stuck refighting Harry Truman’s come from behind campaign against a do-nothing Congress. Problem is this isn’t 1946 and Obama’s no Harry Truman.
He’s a president who has been recorded as not present on budget and fiscal issues since taking the oath of office. He was more believable in the role of the do-nothing Senator than he has been as president. Harry Truman never voted “not present” in his whole life: not as farmer, not as haberdasher, not as Senator, not as president.
As president, Obama has even made a poor Senator.
Democrat US Senator from West Virginia Joe Manchin, a former governor who knows a little about governing- which seems to be a weak spot for Obama- blasted his president on CBS’s Face the Nation on Sunday when asked if Obama is doing enough to reach fiscal sanity: “Well, if it doesn't work, then no one’s done enough on it. And he's the leader of this great country, and we want him to step forward.”
More HERE
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A soft generation
The Occupy crowd saunter from their air-conditioned homes to their air-conditioned cars to their air-conditioned classrooms with their faces buried in smart phones, texting away to their friends about their fantasy football team or the results of Dancing with the Stars. Many look with disdain at the burger-flipping jobs my peers took while working their way through high school and college. They’re too busy with sports and clubs to work, unless it’s an internship for a group that is saving the earth or the whales or the smelt fish – in fact, saving everything except their parent’s money.
To say that they haven’t faced adversity and that they are an abundantly indulged generation severely understates the matter. Of course, there are exceptions in every generation: Athletes who live the principle of sacrifice for their team. There are the engineering and science majors that face demanding curriculums in order to earn good jobs. And, most obviously, there are the large numbers of young Americans who put their lives on the line by volunteering to defend the country in the armed services.
Separate out these remarkable, goal-oriented young men and women – and ignore the crazies and anarchists who have capitalized on the situation – and what you have left are the young Americans of the Occupy generation, a group of people who went through college expecting (yes, expecting) that upon graduation, they would be rewarded with a job where they would continue to be pampered. When they left the protective nest of academia and walked into an economic downturn that didn’t have a big fat job with a big fat paycheck and big fat benefits, they decided it was the mystical “rich” of America – the 1% – who were at fault.
The absolutely hilarious part comes from them completely ignoring that, because they live in America, they are part of the world’s 1%. They ignore that the reason they’re not part of America’s 1% is because they haven’t worked for it. And they really ignore the fact that the scholarships and loans they received are the product of the hard work, contributions, and taxes of the 1% that they both hate and/or envy.
Despite their college “educations,” they display an embarrassing lack of knowledge in economics and government. They demand bailouts from their student loans “just like Wall Street was bailed out,” utterly clueless to the fact that Wall Street paid back the money with interest.
They implore the government to create more “equality” in America, completely oblivious to the following facts: In the last 50 years government has grown from 27% of GDP to 37%; and, during that time, almost 50% of Americans have stopped paying income taxes, while the top earners bear an ever-growing share of the tax burden. And yet despite this blatant redistribution of wealth, income inequality in America has skyrocketed. Maybe they should correlate those facts and figure out that it’s probably government, not Wall Street, that’s the cause of rising inequality – just like government was the root cause of the housing crisis.
So what is our reaction to dealing with these overindulged youths when they decide to protest? We indulge them some more. They go to a park in New York and have a “Love-in.” The Mayor doesn’t give them the boot while other people supply free food and clothing. In a little known fact not reported in the mainstream press, Mayor Bloomberg has recruited a team of mothers to fluff their pillows and tuck them in at night after making them hot chocolate. Finally Bloomberg decides that recruiting all these volunteer mothers is too hard so he gives the kids the boot. Meanwhile, our babysitter-in-chief Barack Obama panders to the group by changing the rules to relieve them of the responsibility of paying their first financial obligation – their student loans.
What they need to do is take one of the jobs that exist in America. Yes, there are a whole lot of them, but those jobs are beneath these kids. I understand there are crops to be picked in Alabama and California because illegal aliens are scarce. Or maybe they could work at a donut shop or a McDonald’s. But that’s not going to happen because these kids have expectations and their food has always just appeared in the refrigerator – provided by magic elves of course.
More HERE
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The Accountability Charade
By Michelle Malkin
You can’t spell “accountability” without “A,” “C” and “T.” But in Washington, government officials routinely get away with “taking personal responsibility” by mouthing empty words devoid of action. Heads nod in collective agreement that mistakes were made. But heads never roll. The Obama administration has raised this accountability charade to an art form.
At a House Energy Committee hearing on the half-billion-dollar bankrupt Solyndra loan-guarantee disaster, Energy Secretary Steven Chu made a grand pretense of falling on his sword. The neon-green solar energy zealot told lawmakers in prepared testimony that the “final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind.” But again and again, Chu admitted, those decisions were made with serial cluelessness about the political jockeying, dire financial warnings, legal red flags and conflicts of interest that “everybody (else) and their dog” knew about (as GOP Rep. Joe Barton of Texas politely pointed out).
While former Democratic chief inquisitor Henry Waxman praised Chu’s “reputation for integrity” as “unimpeachable,” Chu came across as more Mr. Magoo than Mr. Clean.
Chu said he was “unaware” of the Department of Energy’s own staff predictions two years ago that Solyndra would face a serious cash-flow crisis today.
Chu said he was “unaware” of administration pressure on Solyndra to suppress layoff announcements until after the November 2010 midterm elections. “I don’t know. I just learned about that,” he shirked.
In fact, he used the phrase “I am aware of it now” at least a half-dozen times. If there were a Nobel Prize for Unknowing, Chu would be two-time shoo-in. GOP House Energy Committee Chairman Cliff Stearns summed up:
“We talked about the August 2009 email predicting Solyndra would be out of cash in September 2011. You knew about that, but you didn’t seem to know about that.
The PricewaterhouseCoopers concerns about Solyndra, you didn’t seem real concerned or weren’t aware of it.
The White House emailing your chief of staff regarding their concerns with the PricewaterhouseCoopers report, you didn’t seem to know too much about your chief of staff’s awareness of that.
The request to hold off announcement of the DOE loan, and request by your agency to Solyndra to hold off on announcing layoffs till after the midterm election, you don’t have any recollection of this. So what I am saying is that through all of this you seem to have an unawareness.”
In short, Chu took full responsibility for everything he wasn’t aware of … until it was too late.
Sound familiar? It was the leitmotif played in last week’s Fast and Furious hearings with Attorney General Eric Holder.
Despite a raft of briefing memos with his name on them, Holder claimed he never received or read them. Rhode Island Democratic Sen. Sheldon Whitehouse ran interference, sanctimoniously explaining for all the non-career government attorneys in the audience — including the family of murdered Border Patrol Agent Brian Terry — that nooooooo one in the top echelons of the federal lawyers’ bureaucracy actually reads memos addressed to them. It’s merely a “convention” for junior staff to feel better and more important about themselves.
Taking his boss’s lead, former Holder Chief of Staff Kevin Ohlson — who is seeking a federal judicial slot — explained away his failure to do anything about the festering Fast and Furious gunwalking scandal. He had “been informed that routine courtesy copies of weekly reports were forwarded to me that referred to the operation by name, but that did not provide any operational details and did not refer to gun walking or anything similar.”
Although his name was on the documents, Ohlson just didn’t bother to read them because they weren’t marked important or sensitive. Imagine an ordinary small businessman or taxpayer trying that one out on the IRS.
Situational unawareness in the private marketplace or on the battlefield will cost you your livelihood or your life. In the Age of Obama, however, such willful ignorance is a job prerequisite. The less you know the better.
More HERE
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ELSEWHERE
Putting bureaucracy first: Rachel Maddow’s progressivism: "Progressives today say people should come before profits. Now in a privilege-ridden corporate state, that’s a worthy goal, though Progressives have no clue how to achieve it. How nice it would be if they were equally committed to putting people before bureaucracy. Here they fall down rather badly because their signature ideas would subordinate regular people to the dictates of the power structure."
Middle class in big trouble: "But as much as lefties want to blame this disturbing trend on the evils of capitalism, in fact Big Government is a big culprit. Why has manufacturing declined in the U.S.? Because labor and environmental regulations -- both payoffs to Democrat Party constituents -- have made it virtually impossible to profitably manufacture in America, forcing companies to ship production to low tax, low regulation areas overseas"
There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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Sunday, November 20, 2011
Would you like to be a blogger?
I am looking for co-bloggers on my EDUCATION WATCH INTERNATIONAL blog. Education is such a huge topic with so many incidents and controversies to report that I am acutely aware that I only scratch the surface with the blog as it stands.
So if you are of conservative to libertarian views and would like to blog on education (you will probably have some teaching background at some level), email me on jonjayray@hotmail.com
Joining an existing blog is much easier than starting your own. Those who start their own often give up quickly for lack of readers. But my blog does have a small core of regular readers.
************************
What Americans are up against in Washington D.C.
A government of addicts -- addicted to spending with no thought for tomorrow. Can America still afford a Federal bureaucracy that duplicates just about everything that the State governments do? Abolishing (say) the EPA would still leave lots of State government environmental protections in place. There's a whole alphabet soup of Federal agencies that are similarly superfluous and abolishing them would both be a huge saving to the taxpayer and a millstone off the neck of job-creating American businesses
It took 40 presidents and nearly two centuries, from George Washington to Ronald Reagan, for the US government to accumulate $1.5 trillion in indebtedness. The 44th president -- aided and abetted by Congress -- enlarges the federal debt by that amount every 12 months.
Yet the political class has its knickers in a twist because the much-vaunted "supercommittee" has only until Thanksgiving to come up a plan for trimming the deficit by $1.5 trillion over the next 10 years.
Washington's refusal to take spending reduction seriously amounts to an almost criminal abdication of its responsibilities to the taxpayers, and politicians of both parties share in the guilt. As a candidate for president in 2008, Barack Obama properly blasted what was then a $9 trillion national debt as "irresponsible" and "unpatriotic." Just weeks after moving into the White House, he vowed that by the end of his first term he would cut the $1.3 trillion federal budget deficit in half.
"We cannot simply spend as we please and defer the consequences to the next budget, the next administration, or the next generation," Obama told a White House summit on fiscal responsibility. "You don't spend what you don't have."
But Washington continues not only to spend what it doesn't have, but to do so at a record-setting pace. In the fiscal year that ended on September 30, the federal government burned through a staggering $3.6 trillion -- "well above amounts recorded before 2009," as the Congressional Budget Office dryly noted. The budget deficits of the past three years -- $1.416 trillion (2009), $1.294 trillion (2010), and $1.298 trillion (2011) -- have been the largest in American history, whether measured in dollars or as a percentage of GDP.
For all the hyperventilating in recent months about "draconian" cuts and "slashing spending" and the "brutal" scope of the automatic reductions that are supposed to take effect if the supercommittee doesn't agree on a plan, the bottom line is unchanged: The federal budget, like the federal establishment it funds, is grotesquely overweight and getting fatter by the day. The frantic stimulus spendathon has done nothing to heal the economy, and it is ludicrous that anyone can speak of the government's current "austerity" with a straight face. The deal that raised the federal debt ceiling last summer didn't impose austerity on Washington's budget-makers. It averted austerity.
Sequestration -- the triggering of spending cuts if the supercommittee fails to come up with the required deficit trims -- will barely slow the spending train. Between 2013 and 2021, the federal budget is expected to grow by another $1.7 trillion. And if the sequester trigger is pulled? By another $1.6 trillion. If that's "brutal", I'm Katy Perry.
Like any morbidly obese patient, the federal behemoth needs to go on a diet. Ultimately the only prescription for reducing the government's parade of yearly deficits and mounting debt without suffocating economic growth is to cut spending. Politicians find that a frightening prospect, and special interests and pressure groups don't hesitate to exploit their fear.
The budget deficits of the first three years of the Obama administration have been the largest in US history, both in absolute terms and as a share of GDP.
But kicking the out-of-control spending habit isn't impossible. Other governments (and earlier administrations) have done it, and with excellent results. Under Prime Minister Jean Chretien in the 1990s, Canada slashed spending across the board, reduced its federal payroll by 45,000 jobs, and privatized the national railway and air-traffic-control system. The result, as Fred Barnes recently chronicled in National Affairs, was an economic rebound. A deficit of nearly $37 billion turned into a $3 billion surplus, and a national economy that had been growing at an anemic 1% kicked into overdrive, expanding by an annual average of 3.4% between 1994 and 2006.
The longer Washington avoids serious and permanent spending cuts, the higher the debt will climb and the more painful the ultimate reckoning will be. "We cannot simply spend as we please and defer the consequences," the president said in 2009. It was true then. It's even truer now.
SOURCE
************************
The Brain-Dead Left
Obamaville's incoherence is a symptom of intellectual exhaustion
"They paused to scream at the walls of a Citibank branch."
To our mind, that sentence more than anything we've read encapsulates the spirit of Obamaville. It originally appeared in a San Francisco Chronicle story about an incident in which "dozens of college students" invaded a Bank of America Branch, "pitching a tent and chanting 'shame, shame' until they were arrested."
On the way to B of A, they paused at Citi to scream at the walls. These are college students, acting like 2-year-olds throwing a tantrum. What does that tell you about their critical thinking skills--and about the standards of American higher education? The likes of the New York Times expect us to take such incoherent spasms of rage seriously as a political "movement." What does that tell us about the standards of the liberal media?
At the Puffington Host, Robert Reich, who served as President Clinton's labor secretary and is now a professor of public policy at the University of California's flagship Berkeley campus, issues a preposterous defense of the Obamavillians, allegedly on First Amendment grounds. He begins by rehearsing the standard left-liberal lament that the First Amendment prohibits the government from censoring speech merely because the speakers choose to organize themselves as corporations. That leads to this non sequitur:
In reality, the First Amendment guarantees the right to freedom of speech--to state one's views without government censorship or the fear thereof. It guarantees no one the right to make "news." Nor does it guarantee the right to engage in unlawful behavior with the purpose of "making views known."
It is true that constitutional "speech" goes beyond the exercise of the vocal function and includes symbolic actions. Perhaps the most famous example is the burning of an American flag, which the Supreme Court in 1989 held to be "symbolic" speech. But it is not the act of burning that is protected by the First Amendment. Texas v. Johnson did not strike down fire codes, or even set out an exception to them for expressive purposes. It said the government may not penalize the specific act of burning a flag because of that act's symbolic meaning.
Similarly, if, say, the New York City Police Department allowed Tea Partiers but not Obamavillians to camp out for months at Zuccotti Park, that would be a First Amendment problem. But the law, in all its majestic equality, forbids the right, as well as the left, from sleeping in a publicly accessible park. Breaking the law may be an effective way to call attention to one's ideas, but that motive does not confer a right to do so.
On a related note: What ideas? Burning the flag is an act of symbolic speech that carries an easily comprehensible message: "I hate America." By contrast, camping out in a park, or screaming at a bank, is literally unintelligible.
Reich claims to be translating these actions and noises into English when he writes that the "core message" is "that the increasing concentration of income and wealth poses a grave danger to our democracy." That itself is a rather nugatory assertion, but it's also what Reich believes. We suspect he heard it in his own head, not in the screams of the San Francisco college students. There is no basis to credit the screamers with any thought. We assume they are merely stupid, ignorant, immature or all of the above.
The left's embrace of a "movement" based on nonsense is a symptom of its own intellectual bankruptcy. Drew Westen--best known for his massive New York Times op-ed in August calling on President Obama to govern by telling fairy tales, has more comedy gold in an online Times piece in which he puzzles over why Obama has so often delayed the taking of decisions and implementation of policies, ranging from the Keystone XL pipeline to ObamaCare. He toys with the idea that it is a psychological defect:
"A second possibility," he writes, "is that the president either doesn't know or doesn't want anyone else to know what he believes":
Isn't the real explanation pretty obvious? Obama has multiple degrees from Ivy League colleges and spent a good deal of his career as a part-time professor. At Columbia, Harvard and the University of Chicago, he absorbed the politically correct nostrums of the academic left. But he didn't pick up much by way of critical thinking skills (although at least he doesn't scream at banks).
He didn't have to learn how to think, since he was thinking all the "right" thoughts anyway. So he came to office with lots of ideological preconceptions but no ability to adapt or innovate. As a result, he is simply in over his head intellectually--at the mercy of allies, opponents and events.
The other night we happened to catch Harvard's Laurence Tribe, a leading liberal legal scholar, being interviewed on television by Charlie Rose about the ObamaCare cases the Supreme Court had just agreed to take up. It struck us that Tribe, an enthusiastic booster of ObamaCare, seemed a lot less confident that the government would prevail than he was earlier this year.
Because so many intellectuals are on the left, the intellectual dissolution of the left over the past few decades has been easy to overlook. But really, with the exception of same-sex marriage, can you think of a single new idea that has come out of the left since Lyndon Johnson was president? The ObamaCare case illustrates the point beautifully: The so-called individual mandate was originally a conservative idea--though, to be sure, one of the worst conservative ideas ever. But whereas a progressive of Obama's age is at least capable of borrowing bad ideas from the right, the next generation screams at banks.
SOURCE
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A man of principle versus a mob
Will America’s character ultimately be defined by the rabid “Me! Me! Me!” mentality of a teeming mob or by the solemn determination of one man to stand on principle when the best career advice would probably tell him to do the opposite? Indeed, Governor Scott Walker of Wisconsin is Kipling’s man who “can keep his head when all about him are losing theirs.”
With Election 2012 all the rage, the travails of the sleepy-eyed governor pale next to the Cain saga and Newt’s meteoric ascension in the polls. But according to The Huffington Post and other outlets, the governor is cancelling an appearance at an upcoming fundraiser in Kansas, where thousands of union employees were threatening to protest.
Earlier this month, Occupy Chicago protestors interrupted his speech at the city’s Union League Club where he was — gasp! — crediting tax cuts for making his state more business friendly. Walker, of course, is most famous for curtailing the collective bargaining of most public sector unions in his state. The streets of Madison soon resembled a mass playroom temper-tantrum, but his legislation stands.
The governor has been savaged personally, and his speech this June at a Special Olympics ceremony was interrupted by protestors dressed — I’m not kidding — as zombies. Classy bunch. Bear in mind, some of these miscreants are teaching your children. Where are the civility monitors who demand the smelling salts every time Sarah Palin or Rush Limbaugh offers an opinion?
I find it intellectually lazy to embrace public figures just because they are targeted by leftist hordes, but someone as progressively uncool as Scott Walker can’t be all bad: a Boy Scout, inspired as a youth by Reagan and a champion of tax cuts.
Somehow, New Jersey’s blustery Chris Christie was touted for standing his ground against collectivized labor, but it is Governor Walker who has felt the most heat, and he deserves the moral support of not just every conservative but any American who values limited government and reasoned, issues-oriented discourse.
The governor is now the subject of a recall effort in his state. Petition drives are underway at this very moment, and activists have already ousted two of six Republicans on ballots this summer for recall. Men such as Walker, who consider themselves Americans first as opposed to mere extras in a rage-of-the-day production for the nightly news, are all that stand between a free capitalist society and, say, Europe.
At times, America seems precariously close to the statist’s primary (but not ultimate) goal of 51 percent of the population permanently dependent on government, either through direct subsidy or employment or both. Sealing America’s fate is the fact that those ties between citizen and state are emotional and not to be easily broken by appeals to reason and individual empowerment.
So, the mob members are fueled by the inertia of their mere numbers, and public policy is soon dictated by who can shout the loudest or stand outside the capital the longest waving a sign of Walker with a Hitler mustache.
But the governor never buckled. Republican primary voters, we are told, are pining for a true conservative voice not swayed by prevailing collectivist passions. Well, the staid and dignified Walker is your man, at least in terms of standing his ground against public sector unions. He is no less a statesman than Christie, and while nothing written here should be taken as an official endorsement of any sort, the man just needs to know that small-government patriots have his back, as do all Americans who value sane, reasoned (albeit passionate) discourse.
Leaders such as Walker seldom seek personal glory, but they do occasionally need the goodwill of supporters. Greece or the United States of America? Free, independent citizens or bile-spewing mobs? Let’s opt for freedom and all hail Scott Walker.
SOURCE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
****************************
I am looking for co-bloggers on my EDUCATION WATCH INTERNATIONAL blog. Education is such a huge topic with so many incidents and controversies to report that I am acutely aware that I only scratch the surface with the blog as it stands.
So if you are of conservative to libertarian views and would like to blog on education (you will probably have some teaching background at some level), email me on jonjayray@hotmail.com
Joining an existing blog is much easier than starting your own. Those who start their own often give up quickly for lack of readers. But my blog does have a small core of regular readers.
************************
What Americans are up against in Washington D.C.
A government of addicts -- addicted to spending with no thought for tomorrow. Can America still afford a Federal bureaucracy that duplicates just about everything that the State governments do? Abolishing (say) the EPA would still leave lots of State government environmental protections in place. There's a whole alphabet soup of Federal agencies that are similarly superfluous and abolishing them would both be a huge saving to the taxpayer and a millstone off the neck of job-creating American businesses
It took 40 presidents and nearly two centuries, from George Washington to Ronald Reagan, for the US government to accumulate $1.5 trillion in indebtedness. The 44th president -- aided and abetted by Congress -- enlarges the federal debt by that amount every 12 months.
Yet the political class has its knickers in a twist because the much-vaunted "supercommittee" has only until Thanksgiving to come up a plan for trimming the deficit by $1.5 trillion over the next 10 years.
Washington's refusal to take spending reduction seriously amounts to an almost criminal abdication of its responsibilities to the taxpayers, and politicians of both parties share in the guilt. As a candidate for president in 2008, Barack Obama properly blasted what was then a $9 trillion national debt as "irresponsible" and "unpatriotic." Just weeks after moving into the White House, he vowed that by the end of his first term he would cut the $1.3 trillion federal budget deficit in half.
"We cannot simply spend as we please and defer the consequences to the next budget, the next administration, or the next generation," Obama told a White House summit on fiscal responsibility. "You don't spend what you don't have."
But Washington continues not only to spend what it doesn't have, but to do so at a record-setting pace. In the fiscal year that ended on September 30, the federal government burned through a staggering $3.6 trillion -- "well above amounts recorded before 2009," as the Congressional Budget Office dryly noted. The budget deficits of the past three years -- $1.416 trillion (2009), $1.294 trillion (2010), and $1.298 trillion (2011) -- have been the largest in American history, whether measured in dollars or as a percentage of GDP.
For all the hyperventilating in recent months about "draconian" cuts and "slashing spending" and the "brutal" scope of the automatic reductions that are supposed to take effect if the supercommittee doesn't agree on a plan, the bottom line is unchanged: The federal budget, like the federal establishment it funds, is grotesquely overweight and getting fatter by the day. The frantic stimulus spendathon has done nothing to heal the economy, and it is ludicrous that anyone can speak of the government's current "austerity" with a straight face. The deal that raised the federal debt ceiling last summer didn't impose austerity on Washington's budget-makers. It averted austerity.
Sequestration -- the triggering of spending cuts if the supercommittee fails to come up with the required deficit trims -- will barely slow the spending train. Between 2013 and 2021, the federal budget is expected to grow by another $1.7 trillion. And if the sequester trigger is pulled? By another $1.6 trillion. If that's "brutal", I'm Katy Perry.
Like any morbidly obese patient, the federal behemoth needs to go on a diet. Ultimately the only prescription for reducing the government's parade of yearly deficits and mounting debt without suffocating economic growth is to cut spending. Politicians find that a frightening prospect, and special interests and pressure groups don't hesitate to exploit their fear.
The budget deficits of the first three years of the Obama administration have been the largest in US history, both in absolute terms and as a share of GDP.
But kicking the out-of-control spending habit isn't impossible. Other governments (and earlier administrations) have done it, and with excellent results. Under Prime Minister Jean Chretien in the 1990s, Canada slashed spending across the board, reduced its federal payroll by 45,000 jobs, and privatized the national railway and air-traffic-control system. The result, as Fred Barnes recently chronicled in National Affairs, was an economic rebound. A deficit of nearly $37 billion turned into a $3 billion surplus, and a national economy that had been growing at an anemic 1% kicked into overdrive, expanding by an annual average of 3.4% between 1994 and 2006.
The longer Washington avoids serious and permanent spending cuts, the higher the debt will climb and the more painful the ultimate reckoning will be. "We cannot simply spend as we please and defer the consequences," the president said in 2009. It was true then. It's even truer now.
SOURCE
************************
The Brain-Dead Left
Obamaville's incoherence is a symptom of intellectual exhaustion
"They paused to scream at the walls of a Citibank branch."
To our mind, that sentence more than anything we've read encapsulates the spirit of Obamaville. It originally appeared in a San Francisco Chronicle story about an incident in which "dozens of college students" invaded a Bank of America Branch, "pitching a tent and chanting 'shame, shame' until they were arrested."
On the way to B of A, they paused at Citi to scream at the walls. These are college students, acting like 2-year-olds throwing a tantrum. What does that tell you about their critical thinking skills--and about the standards of American higher education? The likes of the New York Times expect us to take such incoherent spasms of rage seriously as a political "movement." What does that tell us about the standards of the liberal media?
At the Puffington Host, Robert Reich, who served as President Clinton's labor secretary and is now a professor of public policy at the University of California's flagship Berkeley campus, issues a preposterous defense of the Obamavillians, allegedly on First Amendment grounds. He begins by rehearsing the standard left-liberal lament that the First Amendment prohibits the government from censoring speech merely because the speakers choose to organize themselves as corporations. That leads to this non sequitur:
This is where the Occupiers come in. If there's a core message to the Occupier movement it's that the increasing concentration of income and wealth poses a grave danger to our democracy.
Yet when Occupiers seek to make their voices heard--in one of the few ways average people can still be heard--they're told their First Amendment rights are limited.
The New York State Court of Appeals [sic; actually a state trial judge] along with many mayors and other officials say [sic] Occupiers can picket--but they can't encamp. Yet it's the encampments themselves that have drawn media attention (along with the police efforts to remove them).
A bunch of people carrying pickets isn't news. When it comes to making views known, picketing is no competition for big money.
In reality, the First Amendment guarantees the right to freedom of speech--to state one's views without government censorship or the fear thereof. It guarantees no one the right to make "news." Nor does it guarantee the right to engage in unlawful behavior with the purpose of "making views known."
It is true that constitutional "speech" goes beyond the exercise of the vocal function and includes symbolic actions. Perhaps the most famous example is the burning of an American flag, which the Supreme Court in 1989 held to be "symbolic" speech. But it is not the act of burning that is protected by the First Amendment. Texas v. Johnson did not strike down fire codes, or even set out an exception to them for expressive purposes. It said the government may not penalize the specific act of burning a flag because of that act's symbolic meaning.
Similarly, if, say, the New York City Police Department allowed Tea Partiers but not Obamavillians to camp out for months at Zuccotti Park, that would be a First Amendment problem. But the law, in all its majestic equality, forbids the right, as well as the left, from sleeping in a publicly accessible park. Breaking the law may be an effective way to call attention to one's ideas, but that motive does not confer a right to do so.
On a related note: What ideas? Burning the flag is an act of symbolic speech that carries an easily comprehensible message: "I hate America." By contrast, camping out in a park, or screaming at a bank, is literally unintelligible.
Reich claims to be translating these actions and noises into English when he writes that the "core message" is "that the increasing concentration of income and wealth poses a grave danger to our democracy." That itself is a rather nugatory assertion, but it's also what Reich believes. We suspect he heard it in his own head, not in the screams of the San Francisco college students. There is no basis to credit the screamers with any thought. We assume they are merely stupid, ignorant, immature or all of the above.
The left's embrace of a "movement" based on nonsense is a symptom of its own intellectual bankruptcy. Drew Westen--best known for his massive New York Times op-ed in August calling on President Obama to govern by telling fairy tales, has more comedy gold in an online Times piece in which he puzzles over why Obama has so often delayed the taking of decisions and implementation of policies, ranging from the Keystone XL pipeline to ObamaCare. He toys with the idea that it is a psychological defect:
Decades ago, psychoanalysts identified a particular personality style common among high-achieving men (although not limited to them), and in recent years researchers have been hot on its trail. People with this style (not narcissism, although that would be a good guess) prefer to see themselves as logical and rational, uninfluenced by emotion, and to think in abstract and intellectualized ways, as if emotions were irrelevant or inconsequential to decision making--when in fact they are essential to it. Whether that describes this president I cannot say, although he has been described by a close aide, and similarly by others, as "the most unsentimental man I've ever met."
"A second possibility," he writes, "is that the president either doesn't know or doesn't want anyone else to know what he believes":
During the 2008 election, I remember listening incredulously to focus groups as swing voters would repeatedly say about a man they had watched for two years, "I don't know who he is." Now I understand what they meant. No modern American president has ever managed to make it through nearly three years in the White House with so few people really having any idea what he believes on so many key issues--let alone what his vision for the country is.
Isn't the real explanation pretty obvious? Obama has multiple degrees from Ivy League colleges and spent a good deal of his career as a part-time professor. At Columbia, Harvard and the University of Chicago, he absorbed the politically correct nostrums of the academic left. But he didn't pick up much by way of critical thinking skills (although at least he doesn't scream at banks).
He didn't have to learn how to think, since he was thinking all the "right" thoughts anyway. So he came to office with lots of ideological preconceptions but no ability to adapt or innovate. As a result, he is simply in over his head intellectually--at the mercy of allies, opponents and events.
The other night we happened to catch Harvard's Laurence Tribe, a leading liberal legal scholar, being interviewed on television by Charlie Rose about the ObamaCare cases the Supreme Court had just agreed to take up. It struck us that Tribe, an enthusiastic booster of ObamaCare, seemed a lot less confident that the government would prevail than he was earlier this year.
Because so many intellectuals are on the left, the intellectual dissolution of the left over the past few decades has been easy to overlook. But really, with the exception of same-sex marriage, can you think of a single new idea that has come out of the left since Lyndon Johnson was president? The ObamaCare case illustrates the point beautifully: The so-called individual mandate was originally a conservative idea--though, to be sure, one of the worst conservative ideas ever. But whereas a progressive of Obama's age is at least capable of borrowing bad ideas from the right, the next generation screams at banks.
SOURCE
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A man of principle versus a mob
Will America’s character ultimately be defined by the rabid “Me! Me! Me!” mentality of a teeming mob or by the solemn determination of one man to stand on principle when the best career advice would probably tell him to do the opposite? Indeed, Governor Scott Walker of Wisconsin is Kipling’s man who “can keep his head when all about him are losing theirs.”
With Election 2012 all the rage, the travails of the sleepy-eyed governor pale next to the Cain saga and Newt’s meteoric ascension in the polls. But according to The Huffington Post and other outlets, the governor is cancelling an appearance at an upcoming fundraiser in Kansas, where thousands of union employees were threatening to protest.
Earlier this month, Occupy Chicago protestors interrupted his speech at the city’s Union League Club where he was — gasp! — crediting tax cuts for making his state more business friendly. Walker, of course, is most famous for curtailing the collective bargaining of most public sector unions in his state. The streets of Madison soon resembled a mass playroom temper-tantrum, but his legislation stands.
The governor has been savaged personally, and his speech this June at a Special Olympics ceremony was interrupted by protestors dressed — I’m not kidding — as zombies. Classy bunch. Bear in mind, some of these miscreants are teaching your children. Where are the civility monitors who demand the smelling salts every time Sarah Palin or Rush Limbaugh offers an opinion?
I find it intellectually lazy to embrace public figures just because they are targeted by leftist hordes, but someone as progressively uncool as Scott Walker can’t be all bad: a Boy Scout, inspired as a youth by Reagan and a champion of tax cuts.
Somehow, New Jersey’s blustery Chris Christie was touted for standing his ground against collectivized labor, but it is Governor Walker who has felt the most heat, and he deserves the moral support of not just every conservative but any American who values limited government and reasoned, issues-oriented discourse.
The governor is now the subject of a recall effort in his state. Petition drives are underway at this very moment, and activists have already ousted two of six Republicans on ballots this summer for recall. Men such as Walker, who consider themselves Americans first as opposed to mere extras in a rage-of-the-day production for the nightly news, are all that stand between a free capitalist society and, say, Europe.
At times, America seems precariously close to the statist’s primary (but not ultimate) goal of 51 percent of the population permanently dependent on government, either through direct subsidy or employment or both. Sealing America’s fate is the fact that those ties between citizen and state are emotional and not to be easily broken by appeals to reason and individual empowerment.
So, the mob members are fueled by the inertia of their mere numbers, and public policy is soon dictated by who can shout the loudest or stand outside the capital the longest waving a sign of Walker with a Hitler mustache.
But the governor never buckled. Republican primary voters, we are told, are pining for a true conservative voice not swayed by prevailing collectivist passions. Well, the staid and dignified Walker is your man, at least in terms of standing his ground against public sector unions. He is no less a statesman than Christie, and while nothing written here should be taken as an official endorsement of any sort, the man just needs to know that small-government patriots have his back, as do all Americans who value sane, reasoned (albeit passionate) discourse.
Leaders such as Walker seldom seek personal glory, but they do occasionally need the goodwill of supporters. Greece or the United States of America? Free, independent citizens or bile-spewing mobs? Let’s opt for freedom and all hail Scott Walker.
SOURCE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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Saturday, November 19, 2011
Was this Obama's first national TV appearance? Hilarious video emerges of President from 1991
Two decades ago Barack Obama was elected as the first black president in history - but of the Harvard Law Review, rather than the U.S. Now a video has emerged of President Obama aged 29 presenting a Black History Minute public service announcement for TBS back in 1991.
It is believed to be his first-ever appearance on national television and his voice sounds much deeper and monotonous compared to the present day.
President Obama was talking about Charles Hamilton Houston, the black lawyer known for teaching Supreme Court Justice Thurgood Marshall. The two worked on the landmark court ruling Brown v Board of Education, which marked the end of colour segregation in public schools.
‘The fact that I've been elected shows a lot of progress,’ President Obama told the New York Times in 1990 of his election as Review president.
President Obama, who also attended Columbia University, had previously spent four years leading a initiative helping poor black people in Chicago. He told the New York Times in 1990 that he intended to spend up to three years working in law and then go into politics or community work.
‘The distinguished lawyer Charles Hamilton Houston was born in 1895, eight months before the Supreme Court’s "separate but equal" ruling in Plessy vs. Ferguson,’ he said in the video. ‘He spent his career fighting to overturn that decision.’
He finishes the video saying: 'I'm Barack Obama, remembering Charles Hamilton Houston and celebrating a great moment in our history.'
SOURCE
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Treasury Admits What Everybody Already Knew: Taxpayer Losses On GM Bailout Are Going to be Massive
Am I allowed to say, I told you so? The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.
The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.
This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. That’s even more that the $34 billion on the outside I had predicted in May.
Although GM will never, ever make taxpayers whole, taxpayer losses could be mitigated if GM’s stock price rises before the Treasury sells its remaining equity, something it was supposed to do by year-end but has postponed under the circumstances. But right now at least the prospects of a serious upward move in GM’s stock don’t look too good for reasons at least partly beyond GM’s control.
GM actually has been doing quite well in North America and China with profit margins of 10 percent, among the best in the industry. How long that will last is an open question. That’s because GM’s new competitors are not Toyota and Honda that share its cost structure but Hyndai and Kia that have a far leaner one. These companies concentrate on the small car market and don’t offer a full product line so GM and Ford’s most profitable vehicles—those evil, gas-guzzling, greenhouse-gas emitting SUV’s and pickup trucks—are somewhat insulated from the downward price pressure. But the greens and Obama administration want GM to reorient its product mix away from big cars and toward money-losing hybrids and electrics, something that could well put GM back in a hole.
But that’s part of the administration’s long-term strategy for ruining GM. The company’s big weak spot right now is Europe for two reasons: One, thanks to political pressure and labor resistance, it hasn’t been able to address its bloated cost structure there. Two, Europe’s economy is imploding, weakening car sales.
All of this shows why forcing taxpayers to wager their hard-earned dollars on a risky venture was exactly the wrong thing to do. But the Ostrich-in-Chief Barack Obama, who had assured taxpayers that their GM "investment" would cost them "not a dime," is drawing the opposite lesson, obviously. He has been trumpeting the success of the bailout—repeatedly. He was in Michigan recently claiming that the “investment had paid off.” What’s more, he declared, that now that GM is back, it is just a matter of time before Detroit is too:
But the “next, proud chapter in Motor City’s history” actually is likely to be bankruptcy. That’s because Detroit is facing a $209 million budget deficit and is going to be completely out of operating cash by April.
Here is a very helpful piece by Detroit Free Press’ editorial page editor, Stephen Henderson, explaining in gory but accurate detail just what a mess the city is in. Perhaps President Obama can glance at it before he returns here and spins some more fairytales?
SOURCE
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Upholding the health insurance mandate would encourage endless meddling in our spending decisions
A couple of months ago, Deputy Assistant Attorney General Beth Brinkmann was standing before the U.S. Court of Appeals for the D.C. Circuit, defending the federal law requiring Americans to buy government-approved health insurance, when Judge Laurence Silberman asked her about broccoli. Specifically, he wanted to know whether a law requiring Americans to buy broccoli would exceed the federal government's authority to regulate interstate commerce. "No," Brinkmann said. "It depends," she added.
Silberman evidently was troubled by that shifty answer. Last week he expressed "discomfort with the Government's failure to advance any clear doctrinal principles limiting congressional mandates that any American purchase any product or service in interstate commerce." Oddly, he voiced that concern in the context of a majority opinion upholding the health insurance mandate. Dissenting Judge Brett Kavanaugh congratulated the majority for its candor in "admitting that there is no real limiting principle to its Commerce Clause holding."
For the sake of our teetering federalist system, which helps preserve liberty by restricting the national government to specifically enumerated powers, let's hope the Supreme Court can locate the limit Silberman could not. On Monday the Court agreed to review an August 12 decision by the U.S. Court of Appeals for the 11th Circuit, which unlike the D.C. Circuit deemed the insurance mandate unconstitutional, saying Congress may not "compel individuals to enter into commerce so that the federal government may regulate them."
If Congress had that authority, Judge Joel Dubina warned in the majority opinion, it would be free to dictate all manner of transactions, beginning with other forms of insurance and extending to decisions about housing, education, investing, and saving for retirement. In fact, he said, if a decision not to buy something can trigger federal intervention, provided it has a "substantial effect" on interstate commerce when combined with similar choices by millions of other individuals, "we are unable to conceive of any product whose purchase Congress could not mandate."
Which brings us back to broccoli. Dissenting from the 11th Circuit's decision, Judge Stanley Marcus said health insurance is not like broccoli because failing to buy it imposes costs on others. Thanks largely to a federal law that requires hospitals to treat people regardless of their ability to pay, taxpayers and policyholders pick up the tab for treating the uninsured.
By contrast, Marcus said, the rationale for a broccoli mandate is that eating more green vegetables would "improve people's health," which would in turn "improve overall worker productivity, thus affecting our national economy." He noted that the Supreme Court has rejected such productivity-based reasoning, precisely because it could apply to almost any activity.
But that is not the only way to justify a broccoli mandate. You could also argue that the failure to eat green vegetables imposes costs on others because it makes people less healthy and therefore more likely to need medical treatment.
That sort of argument becomes increasingly powerful as the government's role in health care expands. When the government forces you to pay for other people's medical treatment, either directly through taxpayer subsidies or indirectly by requiring insurers to take all comers and charge them the same rates regardless of health, you have a financial stake in other people's lifestyle choices, including their diets, their exercise levels, their sleep patterns, their oral hygiene, and their risky habits.
These decisions, aggregated together, have a substantial effect on health care spending, which the Obama administration has vowed to control. Imagine the fun that Congress could have coming up with mandates aimed at coercing healthier lifestyles once it has a constitutional blessing as well as a fiscal justification. Even if it sticks to regulating purchases, the possibilities for meddling will be wide and varied, ranging from food to recreational activities.
If you value your freedom to spend your money as you choose, you should hope the Supreme Court rejects the Obama administration's open-ended view of the Commerce Clause—no matter how you feel about broccoli.
SOURCE
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There is a new definition of patriotism, at least for millionaires: Paying more in taxes
Vice President Joe Biden informed us of that a while back, and in case you’ve forgotten, there is a group called Patriotic Millionaires to help remind us. Patriotic Millionaires has been organized by the left-wing Agenda Project, the same people who brought you the “f*ck tea” campaign.
There are about two hundred millionaires involved in Patriotic Millionaires now, including actress Edie Falco, economist Nouriel Roubini, and the Democratic National Committee’s treasurer, Andrew Tobias. They came to Capitol Hill Wednesday for a hearing with the Congressional Progressive Caucus to deliver their message that to reduce the federal deficit, we must return to the pre-Bush tax rates for upper-income earners, with a top-rate of 39.6%.
(Just to be clear, that top tax rate would apply to those earning less than a million annually too. But hey, we need more patriotic six-figure-naires too.)
One of the group’s assumptions is that Congress can be trusted to use new revenue wisely. That seems like a rather shaky premise, especially at a hearing organized by the really big spenders of Congress. So, at the press conference following the hearing, IBD asked about that. David desJardins, a former software engineer at Google (GOOG) and now director of Electrified Games, responded.
So, the Patriotic Millionaires are going to all of this trouble begging Congress to take more of their money, but they aren’t going to put any effort into following how Congress uses it? They “hope” Congress will be responsible? They also “hope” that Congress will cut spending in nondefense areas?
No wonder the Congressional Progressive Caucus is so enthusiastic about this group!
If Patriotic Millionaires genuinely think that the lawmakers they spoke to at the hearing will be responsible, they should take a look at the Progressive Caucus’ “People’s Budget.” It claims to fully eliminate the deficit over 10 years while also spending an additional $1.45 trillion on “job creation, education, clean energy and broadband infrastructure, housing and R&D.”
It achieves this miracle with higher taxes, much higher than the pre-Bush era. The CPC plan would create “five additional income tax brackets, starting at 45 percent for married couples making over $1 million dollars a year and increasing to 49 percent for people making $1 billion and over.” (Capital gains and dividends would be taxed at these higher rates.) Unfortunately, IBD didn’t get a chance to ask the Patriotic Millionaires if they’d support rates that high.
But we wouldn’t be surprised if they did. After all, if going from 35% to 39.6% is patriotic, then going up to 49% is even more patriotic and this group is nothing if not patriotic.
It also appears to be quite trusting. They seem to genuinely believe that CPC members will use all that new tax money for the sole purpose of reducing the deficit. And the CPC, naturally, is all too happy to play them for fools.
UPDATE: A Daily Caller reporter was also on Capitol Hill Wednesday asking the Patriotic Millionaires if they’d make a contribution to the IRS. You can probably guess what the response was, but watch the video anyway. desJardins shows up at 0:51 and 1:44
SOURCE
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ELSEWHERE
Yes, government does get in the way: "Oh, the I-9. In my family, this form is known as the infamous I-9. It’s infamous because it’s a symbol of the government regulation that slowly sucked away my husband’s desire to continue growing his computer company. It just wasn’t worth the continued frustration."
Cannabis’s impact on health justifies its legalization, not its criminal prohibition: "Despite the U.S. government’s nearly century-long prohibition of the plant, cannabis is nonetheless one of the most investigated therapeutically active substances in history. To date, there are over 20,000 published studies or reviews in the scientific literature pertaining to the cannabis plant and its cannabinoids. Remarkably, nearly one-third of these were published within the last three years."
America’s gerontocracy: "One fact that has become increasingly evident in the Great Recession’s wake is the disproportionate influence exerted upon economic policy by those aged 65 years or older. This group is far more economically secure than most other Americans -- according to a recent Pew Research Center study, the gap between the average net worth of those 65 and over and those under the age of 35 is increasing"
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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Two decades ago Barack Obama was elected as the first black president in history - but of the Harvard Law Review, rather than the U.S. Now a video has emerged of President Obama aged 29 presenting a Black History Minute public service announcement for TBS back in 1991.
It is believed to be his first-ever appearance on national television and his voice sounds much deeper and monotonous compared to the present day.
President Obama was talking about Charles Hamilton Houston, the black lawyer known for teaching Supreme Court Justice Thurgood Marshall. The two worked on the landmark court ruling Brown v Board of Education, which marked the end of colour segregation in public schools.
‘The fact that I've been elected shows a lot of progress,’ President Obama told the New York Times in 1990 of his election as Review president.
President Obama, who also attended Columbia University, had previously spent four years leading a initiative helping poor black people in Chicago. He told the New York Times in 1990 that he intended to spend up to three years working in law and then go into politics or community work.
‘The distinguished lawyer Charles Hamilton Houston was born in 1895, eight months before the Supreme Court’s "separate but equal" ruling in Plessy vs. Ferguson,’ he said in the video. ‘He spent his career fighting to overturn that decision.’
He finishes the video saying: 'I'm Barack Obama, remembering Charles Hamilton Houston and celebrating a great moment in our history.'
SOURCE
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Treasury Admits What Everybody Already Knew: Taxpayer Losses On GM Bailout Are Going to be Massive
Am I allowed to say, I told you so? The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.
The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.
This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. That’s even more that the $34 billion on the outside I had predicted in May.
Although GM will never, ever make taxpayers whole, taxpayer losses could be mitigated if GM’s stock price rises before the Treasury sells its remaining equity, something it was supposed to do by year-end but has postponed under the circumstances. But right now at least the prospects of a serious upward move in GM’s stock don’t look too good for reasons at least partly beyond GM’s control.
GM actually has been doing quite well in North America and China with profit margins of 10 percent, among the best in the industry. How long that will last is an open question. That’s because GM’s new competitors are not Toyota and Honda that share its cost structure but Hyndai and Kia that have a far leaner one. These companies concentrate on the small car market and don’t offer a full product line so GM and Ford’s most profitable vehicles—those evil, gas-guzzling, greenhouse-gas emitting SUV’s and pickup trucks—are somewhat insulated from the downward price pressure. But the greens and Obama administration want GM to reorient its product mix away from big cars and toward money-losing hybrids and electrics, something that could well put GM back in a hole.
But that’s part of the administration’s long-term strategy for ruining GM. The company’s big weak spot right now is Europe for two reasons: One, thanks to political pressure and labor resistance, it hasn’t been able to address its bloated cost structure there. Two, Europe’s economy is imploding, weakening car sales.
All of this shows why forcing taxpayers to wager their hard-earned dollars on a risky venture was exactly the wrong thing to do. But the Ostrich-in-Chief Barack Obama, who had assured taxpayers that their GM "investment" would cost them "not a dime," is drawing the opposite lesson, obviously. He has been trumpeting the success of the bailout—repeatedly. He was in Michigan recently claiming that the “investment had paid off.” What’s more, he declared, that now that GM is back, it is just a matter of time before Detroit is too:
“[D]espite all the work that lies ahead, this is a city where a great American industry is coming back to life and the industries of tomorrow are taking root, and a city where people are dreaming up ways to prove all the skeptics wrong and write the next proud chapter in the Motor City's history."
But the “next, proud chapter in Motor City’s history” actually is likely to be bankruptcy. That’s because Detroit is facing a $209 million budget deficit and is going to be completely out of operating cash by April.
Here is a very helpful piece by Detroit Free Press’ editorial page editor, Stephen Henderson, explaining in gory but accurate detail just what a mess the city is in. Perhaps President Obama can glance at it before he returns here and spins some more fairytales?
SOURCE
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Upholding the health insurance mandate would encourage endless meddling in our spending decisions
A couple of months ago, Deputy Assistant Attorney General Beth Brinkmann was standing before the U.S. Court of Appeals for the D.C. Circuit, defending the federal law requiring Americans to buy government-approved health insurance, when Judge Laurence Silberman asked her about broccoli. Specifically, he wanted to know whether a law requiring Americans to buy broccoli would exceed the federal government's authority to regulate interstate commerce. "No," Brinkmann said. "It depends," she added.
Silberman evidently was troubled by that shifty answer. Last week he expressed "discomfort with the Government's failure to advance any clear doctrinal principles limiting congressional mandates that any American purchase any product or service in interstate commerce." Oddly, he voiced that concern in the context of a majority opinion upholding the health insurance mandate. Dissenting Judge Brett Kavanaugh congratulated the majority for its candor in "admitting that there is no real limiting principle to its Commerce Clause holding."
For the sake of our teetering federalist system, which helps preserve liberty by restricting the national government to specifically enumerated powers, let's hope the Supreme Court can locate the limit Silberman could not. On Monday the Court agreed to review an August 12 decision by the U.S. Court of Appeals for the 11th Circuit, which unlike the D.C. Circuit deemed the insurance mandate unconstitutional, saying Congress may not "compel individuals to enter into commerce so that the federal government may regulate them."
If Congress had that authority, Judge Joel Dubina warned in the majority opinion, it would be free to dictate all manner of transactions, beginning with other forms of insurance and extending to decisions about housing, education, investing, and saving for retirement. In fact, he said, if a decision not to buy something can trigger federal intervention, provided it has a "substantial effect" on interstate commerce when combined with similar choices by millions of other individuals, "we are unable to conceive of any product whose purchase Congress could not mandate."
Which brings us back to broccoli. Dissenting from the 11th Circuit's decision, Judge Stanley Marcus said health insurance is not like broccoli because failing to buy it imposes costs on others. Thanks largely to a federal law that requires hospitals to treat people regardless of their ability to pay, taxpayers and policyholders pick up the tab for treating the uninsured.
By contrast, Marcus said, the rationale for a broccoli mandate is that eating more green vegetables would "improve people's health," which would in turn "improve overall worker productivity, thus affecting our national economy." He noted that the Supreme Court has rejected such productivity-based reasoning, precisely because it could apply to almost any activity.
But that is not the only way to justify a broccoli mandate. You could also argue that the failure to eat green vegetables imposes costs on others because it makes people less healthy and therefore more likely to need medical treatment.
That sort of argument becomes increasingly powerful as the government's role in health care expands. When the government forces you to pay for other people's medical treatment, either directly through taxpayer subsidies or indirectly by requiring insurers to take all comers and charge them the same rates regardless of health, you have a financial stake in other people's lifestyle choices, including their diets, their exercise levels, their sleep patterns, their oral hygiene, and their risky habits.
These decisions, aggregated together, have a substantial effect on health care spending, which the Obama administration has vowed to control. Imagine the fun that Congress could have coming up with mandates aimed at coercing healthier lifestyles once it has a constitutional blessing as well as a fiscal justification. Even if it sticks to regulating purchases, the possibilities for meddling will be wide and varied, ranging from food to recreational activities.
If you value your freedom to spend your money as you choose, you should hope the Supreme Court rejects the Obama administration's open-ended view of the Commerce Clause—no matter how you feel about broccoli.
SOURCE
***************************
There is a new definition of patriotism, at least for millionaires: Paying more in taxes
Vice President Joe Biden informed us of that a while back, and in case you’ve forgotten, there is a group called Patriotic Millionaires to help remind us. Patriotic Millionaires has been organized by the left-wing Agenda Project, the same people who brought you the “f*ck tea” campaign.
There are about two hundred millionaires involved in Patriotic Millionaires now, including actress Edie Falco, economist Nouriel Roubini, and the Democratic National Committee’s treasurer, Andrew Tobias. They came to Capitol Hill Wednesday for a hearing with the Congressional Progressive Caucus to deliver their message that to reduce the federal deficit, we must return to the pre-Bush tax rates for upper-income earners, with a top-rate of 39.6%.
(Just to be clear, that top tax rate would apply to those earning less than a million annually too. But hey, we need more patriotic six-figure-naires too.)
One of the group’s assumptions is that Congress can be trusted to use new revenue wisely. That seems like a rather shaky premise, especially at a hearing organized by the really big spenders of Congress. So, at the press conference following the hearing, IBD asked about that. David desJardins, a former software engineer at Google (GOOG) and now director of Electrified Games, responded.
IBD: How confident are you that Congress will use this extra tax money to actually reduce the deficit instead of more spending?
David desJardins: I don’t think that’s really our job. I think that’s Congress’ job. I hope Congress does the right thing. I think the American people are here to keep an eye on them. I don’t think anybody is in favor of wasteful spending or unnecessary spending. There is plenty of room for defense cuts, for reductions in spending in other areas and I hope they can do that too.
So, the Patriotic Millionaires are going to all of this trouble begging Congress to take more of their money, but they aren’t going to put any effort into following how Congress uses it? They “hope” Congress will be responsible? They also “hope” that Congress will cut spending in nondefense areas?
No wonder the Congressional Progressive Caucus is so enthusiastic about this group!
If Patriotic Millionaires genuinely think that the lawmakers they spoke to at the hearing will be responsible, they should take a look at the Progressive Caucus’ “People’s Budget.” It claims to fully eliminate the deficit over 10 years while also spending an additional $1.45 trillion on “job creation, education, clean energy and broadband infrastructure, housing and R&D.”
It achieves this miracle with higher taxes, much higher than the pre-Bush era. The CPC plan would create “five additional income tax brackets, starting at 45 percent for married couples making over $1 million dollars a year and increasing to 49 percent for people making $1 billion and over.” (Capital gains and dividends would be taxed at these higher rates.) Unfortunately, IBD didn’t get a chance to ask the Patriotic Millionaires if they’d support rates that high.
But we wouldn’t be surprised if they did. After all, if going from 35% to 39.6% is patriotic, then going up to 49% is even more patriotic and this group is nothing if not patriotic.
It also appears to be quite trusting. They seem to genuinely believe that CPC members will use all that new tax money for the sole purpose of reducing the deficit. And the CPC, naturally, is all too happy to play them for fools.
UPDATE: A Daily Caller reporter was also on Capitol Hill Wednesday asking the Patriotic Millionaires if they’d make a contribution to the IRS. You can probably guess what the response was, but watch the video anyway. desJardins shows up at 0:51 and 1:44
SOURCE
*************************
ELSEWHERE
Yes, government does get in the way: "Oh, the I-9. In my family, this form is known as the infamous I-9. It’s infamous because it’s a symbol of the government regulation that slowly sucked away my husband’s desire to continue growing his computer company. It just wasn’t worth the continued frustration."
Cannabis’s impact on health justifies its legalization, not its criminal prohibition: "Despite the U.S. government’s nearly century-long prohibition of the plant, cannabis is nonetheless one of the most investigated therapeutically active substances in history. To date, there are over 20,000 published studies or reviews in the scientific literature pertaining to the cannabis plant and its cannabinoids. Remarkably, nearly one-third of these were published within the last three years."
America’s gerontocracy: "One fact that has become increasingly evident in the Great Recession’s wake is the disproportionate influence exerted upon economic policy by those aged 65 years or older. This group is far more economically secure than most other Americans -- according to a recent Pew Research Center study, the gap between the average net worth of those 65 and over and those under the age of 35 is increasing"
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
****************************
Friday, November 18, 2011
Europe's social failure
(By Oliver Marc Hartwich, a German economist who has now fled to sunnier climes and a more relaxed lifestyle in Australia)
Capital markets are not loquacious storytellers. They condense the world into simple numbers. For this reason, the surge in Greek, Italian and Spanish bond yields could be mistaken for a mere technicality, a simple recalibration between the forces of demand and supply that happens in markets every day.
But these are no ordinary times. Through bond yields, credit spreads and bets on government defaults, capital markets are delivering the clearest possible verdict on the grand European experiment of social democracy.
Italy now needs to pay more than 7 per cent interest on its long-term borrowing, which means investors no longer believe that the country has a future in its present state. They doubt Italy can return from the brink of bankruptcy after wrecking its public finances through decades of overspending and over-borrowing.
Politicians and intellectuals still refuse to understand what is easily discernible on the cold-hearted trading floors of the world's bond markets: The European social model, the romantic idea of an omnipotent and omni-responsible state, has passed its use-by date.
Ironically, in today's Europe there are only social democrats left, who face the unenviable task of cleaning up the mess of social democracy.
Almost 30 years ago, in a book published in 1983, the great Anglo-German sociologist Ralf Dahrendorf declared the end of social democracy. Not because it had failed but because it had reached all of its traditional goals: "We have all absorbed a few core ideas and made them look self-evident, which define the theme of the social-democratic century: growth, equality, work, reason, state, internationalism."
The social-democratic program was so attractive that it had been accepted by political parties Left, Right and Centre, argued Dahrendorf. This rendered the original social democrats strangely visionless because they no longer had anything to fight for, at least nothing that would distinguish them from other political parties.
In hindsight, Dahrendorf's obituary to social democracy came too early because he had underestimated social democrats' desire to extend the reach of the state. What he also probably did not realise was that, in the 1980s, social democracy had moved beyond workers' movements to activism in fields such as gender equality, environmentalism and political correctness.
In fact, Europe's social democracy turned away from its traditional labour roots and replaced them with a new statism of the inner-city elites.
The only constant was social democracy's unwavering trust in the power of the state to organise the economy and society. Nothing could deter social democrats from their belief in the primacy of politics over economics, not even the giant bill that came with it. Instead of questioning their underlying philosophy, they glossed over its inherent contradictions by running massive deficits.
In one aspect, however, Dahrendorf's analysis was spot-on. By the end of the 20th century, the once colourful political spectrum had shrunk to a single spot. Political parties may have still called themselves conservative, Christian democrat, liberal or green but in effect they were just different shades of social democrat. A Christian Democrat was just a social democrat who went to church on Sundays; a Greens supporter was a social democrat who recycled their rubbish to perfection; and a Liberal was a social democrat who liked to talk about freedom when it suited them.
In Europe's political practice, conservatives and social democrats have become virtually indistinguishable. It probably takes a microscope and a PhD in political science to detect the great ideological differences between Tony Blair and David Cameron, or Gerhard Schroeder and Angela Merkel. In reality, there are no differences because they are all varying shades of social democrats.
There are at least two good reasons Europe's political systems have converged on the social democratic Centre. One is the fallout from the collapse of Soviet communism. The other is the practical constraint: the need to win elections.
When communism collapsed in eastern Europe and the Berlin Wall fell in 1989, many observers concluded that this marked the triumph of the Western model. Indeed it did. The state-run economies of the East could not keep pace with the mixed economies of the West.
But instead of celebrating the victories of the market economy over planning, Europe's more conservative parties were left strangely weakened by these events.
Perhaps they naively believed that history had indeed reached its end state, as Francis Fukuyama famously opined. The result was a certain smugness on the part of the political Right, who assumed that the big ideological confrontations were a thing of the past now that Western liberalism had won the battle of the ideology. This was naive because the demise of the Soviet Union in no way diminished the aspirations of the Western social democrats to reform society according to their values.
While the Left was thus busy entrenching the welfare state, the Right made the mistake of not realising that history had never stopped. The demise of the threat of communism made the liberals and conservatives forget what they stood for because they had lost the main threat they once were united against.
The second reason for the convergence of Europe's political system on the social-democratic centre was that it is here that elections are being lost and won in modern mass democracies. To win a majority of the voters, no politician can afford to move too far from this Centre. And when a large group of the population receives a large part of its income from or through the state, it is no surprise that the political system reinforces this dependence through elections. Consequently, dependence on the state tends to enlarge the state's activities through time.
Economists have long analysed this phenomenon. Anthony Downs explained it in great detail in his treatise An Economic Theory of Democracy, first published in 1957. He contended that in modern democracies, political parties tried to target the so-called "median voter". By moving closer to the political centre, left-wing parties could win over some right-leaning voters and vice versa. As a result, left and right parties became more like each other with each election because they were both after the support of the "median voter".
What sounds very game-theoretical has been Europe's practical experience. Blair's New Labour was an attempt to shift the old Labour Party to the Centre. In the same way, Cameron's repositioning of the Conservative Party only had one goal: to win back the voters in the Centre who had previously been lured over by Blair. No wonder die-hard traditionalists in both parties were equally irritated: old-school Labour supporters because Labour sounded too much like the Tories, and old-fashioned conservatives because Cameron styled himself as the "heir to Blair". But that was precisely the point of the exercise.
In mixed economies with their large welfare states, the drive to the Centre has made economic reforms all but impossible. Unless circumstances are as dire as after Britain's 1978-79 "Winter of Discontent" that brought Margaret Thatcher to power, elections can no longer be won by promising radical change.
Merkel had to learn this lesson the hard way. In the 2005 German general election, she ran on a ticket of fundamental free-market reforms. As opposition leader, she promised a complete overhaul of the health system and a fundamental simplification of the complex tax system. One of her key advisers even wondered publicly whether Germany should move towards flat taxes by abolishing the myriad tax breaks that Germans had become used to.
On election day, Merkel was punished for so much courage. In an election thought to be unlosable for the opposition, her party only narrowly won more votes than the social democrats, with whom she was forced to enter into a grand coalition. Merkel learned her lesson and has not talked about anything that remotely looks like an economic reform.
On the contrary, she now talks and acts like the social democrats she once liked to castigate. In her latest U-turn, she supports universal minimum wages (she calls them "lower-wage limits").
The quest for the often welfare-dependent median voter has turned all parties across Europe into social democratic parties.
Elections in the past have been thinly disguised bidding wars between political operators that turned around the question of who could promise more to the present generation at the expense of generations to come. The bills for politicians' profligacy were shifted into the distant future. Europe's politicians became masters in the art of fiscal illusion, always making the costs of their programs appear smaller than they really were.
It is fair to say that European politicians not only managed to fool voters about the true nature of their fiscally unsound policies, but for a long time their reckless policies also escaped the attention of capital markets. Perhaps that was because deficit spending in Europe had been practised for so long that it was regarded as a perfectly normal state of affairs. In any case, Europeans were convinced that state bankruptcies could happen only to hapless Latin Americans or unsophisticated Southeast Asians, not to them.
As Europe's debt crisis now reveals, that was an arrogant mistake. Like everybody else, Europeans cannot escape the consequences of their actions forever. The day of reckoning for Europe's previously celebrated social model has come.
This is a rude awakening from the social democratic dreams across Europe, not just in Greece, Spain or Italy. Germany, the self-righteous and self-proclaimed anchor of stability, has an official debt ratio of 81 per cent of GDP, which is still higher than Spain's. And British politicians, who gleefully look down on the troubled eurozone, can only hope that the debt vigilantes do not turn their attention to Britain's budget deficit, which is just as bad as Greece's.
Europe is a continent run by a deeply statist social democratic elite. For decades, they have become used to only enjoying the proceeds of growth. And when that growth was no longer sufficient, they were quick to prop it up by going deep into debt.
In recent months, capital markets have finally - and not a day too late - made it clear to politicians that this is an unsustainable business model for Europe. What must happen next is the painful task of reining in public expenditure, cutting back the state, and freeing the economy so it can recover.
All these tasks are anathema to social democrats. Little wonder that European politicians are going cap in hand to the Chinese rather than tackling their own home-made problems. But whether they like it or not, for lack of any political alternatives, it will be up to Europe's social democrats of all parties to clean up the mess they have created.
SOURCE
**************************
The impending collapse of Italy
By economic historian Martin Hutchinson
In the past decade, Italy under Silvio Berlusconi has been considerably better managed than was Lehman Brothers. Berlusconi and in particular his finance minister Giulio Tremonti have an excellent grasp of Italy’s weaknesses, and have tried within the constraints of the Italian political system to bring the country’s bloated spending under control, improve its abysmal tax compliance and, as a corollary, reduce its excessive burden of taxes. In consequence, the Berlusconi governments have at least stabilized Italy’s grossly excessive public debt, which had risen disgracefully from 30% of GDP in 1970 to 120% in 1995, but has been flat since then in spite of Italy’s deteriorating demographic profile. They have also accomplished a considerable amount in pension reform, but have not adequately reformed Italy’s corrupt public sector, its over-burden of regulation or its opaque and sluggish corporations.
The main criticism of the Berlusconi governments, which should really be directed at the leftist governments that intermingled with them, is that they have not prevented a substantial deterioration in Italy’s relative productivity against its Eurozone neighbors, which has gradually made Italian exports uncompetitive and widened its balance of payments deficit to 3.7% of GDP.
Italy’s problem is now a political one. Under Berlusconi it was mostly competently run and could hold its own internationally if only through the force of Berlusconi’s personality. As the market figured out in its negative second-day movement after Berlusconi’s departure, it is most unlikely that any Berlusconi successor will be anything like as good. Even if some figure from Berlusconi’s own party, such as Angelino Alfano, were to succeed him, he would have far less authority over the fractious center-right coalition and far less ability to keep the necessary budget-cutting reforms moving forward. A “technocrat” successor such as the much loved (by the EU bureaucracy) Mario Monti would be much worse; he would secure a large handout from his friends at the EU or the IMF, and would then waste the proceeds in government aggrandisement, making an eventual Italian bankruptcy 12-18 months down the road all the more painful. Since the market would quickly spot the road down which a Monti government was heading, it would withdraw support for Italian bonds within weeks, well before that inevitable destination had been reached.
Of course, if Italy had kept Berlusconi there would have been a clear solution to its problems; departure from the euro. Unlike Greece, whose currency parity needs to drop to a third or less of its current euro parity to be viable, Italy becomes competitive with a devaluation of no more than 20% or so. With a Berlusconi to keep public spending under control, an Italy devalued 20% could even service its public debt, since its average maturity is relatively long and any cost increase resulting from re-liraization could be easily absorbed over time.
More HERE
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Italy defaults on debt and sends lenders broke? So be it
By Adam Creighton, writing from a country that entered the GFC debt-free -- Australia
“Contracting debt will almost infallibly be abused in every government. It would scarcely be more imprudent to give a prodigal son a credit in every banker’s shop in London …” -- David Hume, Of Public Credit (1742)
The interesting question to ask about the European debt crisis is not what sort of bailout package will work, or which Italian or Greek government should oversee it. Economic forces will overwhelm any political theatrics.
The relevant question is how European countries were able to borrow so much in the first place. How did Italy end up with debts of 120% of GDP, or €1.9 trillion? How could Greece, a long-standing economic basket case, borrow as much as 150% of its GDP?
The answer seems to demonstrate either the gross stupidity or masterful sophistication of financial markets.
These countries, especially Greece, should not have been attractive to lenders. Greece had defaulted routinely on its debts since the early 19th century, and its finances (even the faked ones) were demonstrably shambolic right up to the beginning of the financial crisis in 2008.
Italy, still a geographic expression [As Metternich said] as much as a functioning political entity, riddled with corruption, had an excessive debt to GDP ratio of about 110% in 2001.
That governments will want to borrow excessively and wastefully is not a new revelation. David Hume knew that. But how could financial markets, awash with highly paid “risk managers” and apparently staffed with the most talented employees, shovel so much money at these nations?
Both countries were able to borrow almost as cheaply as Germany, a country with more evident fiscal fortitude, throughout the 2000s.
Sure, the advent of the euro had bound European countries more closely together, but that didn’t mean individual countries could no longer default. Indeed, the European Central Bank, the European Union and European politicians were emphatic that no bailouts would ever occur under any circumstances. Edmund Stoiber, a prominent German politician, reckoned bailouts to be as likely as famine in Bavaria.
That many banks and fund managers now face substantial losses on their loans to recalcitrant European countries may demonstrate their foolishness.
Or perhaps their brilliant perspicacity? Year after year lenders made a little bit extra profit on their loans to Greece and Italy. As for the risk, they might have realised that whatever European leaders said, Western governments had become so large, social democracy so rampant, and banks so large and interconnected that it would be impossible for any democratically politician to permit lenders to lose substantial sums on their loans.
And that is exactly what has happened. Indeed, private lenders have transferred vast swathes of their dodgy, multibillion dollar loans to public European institutions such as the European Central Bank, while politicians and the International Monetary Fund fall over themselves to protect lenders from losing money. At the same time, those lenders continue to clock up massive profits and pay absurd salaries to many of their staff.
It is a master stroke for private lenders; never in my lifetime have ordinary taxpayers been bilked so comprehensively and unwittingly.
More HERE
My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
****************************
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
****************************
(By Oliver Marc Hartwich, a German economist who has now fled to sunnier climes and a more relaxed lifestyle in Australia)
Capital markets are not loquacious storytellers. They condense the world into simple numbers. For this reason, the surge in Greek, Italian and Spanish bond yields could be mistaken for a mere technicality, a simple recalibration between the forces of demand and supply that happens in markets every day.
But these are no ordinary times. Through bond yields, credit spreads and bets on government defaults, capital markets are delivering the clearest possible verdict on the grand European experiment of social democracy.
Italy now needs to pay more than 7 per cent interest on its long-term borrowing, which means investors no longer believe that the country has a future in its present state. They doubt Italy can return from the brink of bankruptcy after wrecking its public finances through decades of overspending and over-borrowing.
Politicians and intellectuals still refuse to understand what is easily discernible on the cold-hearted trading floors of the world's bond markets: The European social model, the romantic idea of an omnipotent and omni-responsible state, has passed its use-by date.
Ironically, in today's Europe there are only social democrats left, who face the unenviable task of cleaning up the mess of social democracy.
Almost 30 years ago, in a book published in 1983, the great Anglo-German sociologist Ralf Dahrendorf declared the end of social democracy. Not because it had failed but because it had reached all of its traditional goals: "We have all absorbed a few core ideas and made them look self-evident, which define the theme of the social-democratic century: growth, equality, work, reason, state, internationalism."
The social-democratic program was so attractive that it had been accepted by political parties Left, Right and Centre, argued Dahrendorf. This rendered the original social democrats strangely visionless because they no longer had anything to fight for, at least nothing that would distinguish them from other political parties.
In hindsight, Dahrendorf's obituary to social democracy came too early because he had underestimated social democrats' desire to extend the reach of the state. What he also probably did not realise was that, in the 1980s, social democracy had moved beyond workers' movements to activism in fields such as gender equality, environmentalism and political correctness.
In fact, Europe's social democracy turned away from its traditional labour roots and replaced them with a new statism of the inner-city elites.
The only constant was social democracy's unwavering trust in the power of the state to organise the economy and society. Nothing could deter social democrats from their belief in the primacy of politics over economics, not even the giant bill that came with it. Instead of questioning their underlying philosophy, they glossed over its inherent contradictions by running massive deficits.
In one aspect, however, Dahrendorf's analysis was spot-on. By the end of the 20th century, the once colourful political spectrum had shrunk to a single spot. Political parties may have still called themselves conservative, Christian democrat, liberal or green but in effect they were just different shades of social democrat. A Christian Democrat was just a social democrat who went to church on Sundays; a Greens supporter was a social democrat who recycled their rubbish to perfection; and a Liberal was a social democrat who liked to talk about freedom when it suited them.
In Europe's political practice, conservatives and social democrats have become virtually indistinguishable. It probably takes a microscope and a PhD in political science to detect the great ideological differences between Tony Blair and David Cameron, or Gerhard Schroeder and Angela Merkel. In reality, there are no differences because they are all varying shades of social democrats.
There are at least two good reasons Europe's political systems have converged on the social democratic Centre. One is the fallout from the collapse of Soviet communism. The other is the practical constraint: the need to win elections.
When communism collapsed in eastern Europe and the Berlin Wall fell in 1989, many observers concluded that this marked the triumph of the Western model. Indeed it did. The state-run economies of the East could not keep pace with the mixed economies of the West.
But instead of celebrating the victories of the market economy over planning, Europe's more conservative parties were left strangely weakened by these events.
Perhaps they naively believed that history had indeed reached its end state, as Francis Fukuyama famously opined. The result was a certain smugness on the part of the political Right, who assumed that the big ideological confrontations were a thing of the past now that Western liberalism had won the battle of the ideology. This was naive because the demise of the Soviet Union in no way diminished the aspirations of the Western social democrats to reform society according to their values.
While the Left was thus busy entrenching the welfare state, the Right made the mistake of not realising that history had never stopped. The demise of the threat of communism made the liberals and conservatives forget what they stood for because they had lost the main threat they once were united against.
The second reason for the convergence of Europe's political system on the social-democratic centre was that it is here that elections are being lost and won in modern mass democracies. To win a majority of the voters, no politician can afford to move too far from this Centre. And when a large group of the population receives a large part of its income from or through the state, it is no surprise that the political system reinforces this dependence through elections. Consequently, dependence on the state tends to enlarge the state's activities through time.
Economists have long analysed this phenomenon. Anthony Downs explained it in great detail in his treatise An Economic Theory of Democracy, first published in 1957. He contended that in modern democracies, political parties tried to target the so-called "median voter". By moving closer to the political centre, left-wing parties could win over some right-leaning voters and vice versa. As a result, left and right parties became more like each other with each election because they were both after the support of the "median voter".
What sounds very game-theoretical has been Europe's practical experience. Blair's New Labour was an attempt to shift the old Labour Party to the Centre. In the same way, Cameron's repositioning of the Conservative Party only had one goal: to win back the voters in the Centre who had previously been lured over by Blair. No wonder die-hard traditionalists in both parties were equally irritated: old-school Labour supporters because Labour sounded too much like the Tories, and old-fashioned conservatives because Cameron styled himself as the "heir to Blair". But that was precisely the point of the exercise.
In mixed economies with their large welfare states, the drive to the Centre has made economic reforms all but impossible. Unless circumstances are as dire as after Britain's 1978-79 "Winter of Discontent" that brought Margaret Thatcher to power, elections can no longer be won by promising radical change.
Merkel had to learn this lesson the hard way. In the 2005 German general election, she ran on a ticket of fundamental free-market reforms. As opposition leader, she promised a complete overhaul of the health system and a fundamental simplification of the complex tax system. One of her key advisers even wondered publicly whether Germany should move towards flat taxes by abolishing the myriad tax breaks that Germans had become used to.
On election day, Merkel was punished for so much courage. In an election thought to be unlosable for the opposition, her party only narrowly won more votes than the social democrats, with whom she was forced to enter into a grand coalition. Merkel learned her lesson and has not talked about anything that remotely looks like an economic reform.
On the contrary, she now talks and acts like the social democrats she once liked to castigate. In her latest U-turn, she supports universal minimum wages (she calls them "lower-wage limits").
The quest for the often welfare-dependent median voter has turned all parties across Europe into social democratic parties.
Elections in the past have been thinly disguised bidding wars between political operators that turned around the question of who could promise more to the present generation at the expense of generations to come. The bills for politicians' profligacy were shifted into the distant future. Europe's politicians became masters in the art of fiscal illusion, always making the costs of their programs appear smaller than they really were.
It is fair to say that European politicians not only managed to fool voters about the true nature of their fiscally unsound policies, but for a long time their reckless policies also escaped the attention of capital markets. Perhaps that was because deficit spending in Europe had been practised for so long that it was regarded as a perfectly normal state of affairs. In any case, Europeans were convinced that state bankruptcies could happen only to hapless Latin Americans or unsophisticated Southeast Asians, not to them.
As Europe's debt crisis now reveals, that was an arrogant mistake. Like everybody else, Europeans cannot escape the consequences of their actions forever. The day of reckoning for Europe's previously celebrated social model has come.
This is a rude awakening from the social democratic dreams across Europe, not just in Greece, Spain or Italy. Germany, the self-righteous and self-proclaimed anchor of stability, has an official debt ratio of 81 per cent of GDP, which is still higher than Spain's. And British politicians, who gleefully look down on the troubled eurozone, can only hope that the debt vigilantes do not turn their attention to Britain's budget deficit, which is just as bad as Greece's.
Europe is a continent run by a deeply statist social democratic elite. For decades, they have become used to only enjoying the proceeds of growth. And when that growth was no longer sufficient, they were quick to prop it up by going deep into debt.
In recent months, capital markets have finally - and not a day too late - made it clear to politicians that this is an unsustainable business model for Europe. What must happen next is the painful task of reining in public expenditure, cutting back the state, and freeing the economy so it can recover.
All these tasks are anathema to social democrats. Little wonder that European politicians are going cap in hand to the Chinese rather than tackling their own home-made problems. But whether they like it or not, for lack of any political alternatives, it will be up to Europe's social democrats of all parties to clean up the mess they have created.
SOURCE
**************************
The impending collapse of Italy
By economic historian Martin Hutchinson
In the past decade, Italy under Silvio Berlusconi has been considerably better managed than was Lehman Brothers. Berlusconi and in particular his finance minister Giulio Tremonti have an excellent grasp of Italy’s weaknesses, and have tried within the constraints of the Italian political system to bring the country’s bloated spending under control, improve its abysmal tax compliance and, as a corollary, reduce its excessive burden of taxes. In consequence, the Berlusconi governments have at least stabilized Italy’s grossly excessive public debt, which had risen disgracefully from 30% of GDP in 1970 to 120% in 1995, but has been flat since then in spite of Italy’s deteriorating demographic profile. They have also accomplished a considerable amount in pension reform, but have not adequately reformed Italy’s corrupt public sector, its over-burden of regulation or its opaque and sluggish corporations.
The main criticism of the Berlusconi governments, which should really be directed at the leftist governments that intermingled with them, is that they have not prevented a substantial deterioration in Italy’s relative productivity against its Eurozone neighbors, which has gradually made Italian exports uncompetitive and widened its balance of payments deficit to 3.7% of GDP.
Italy’s problem is now a political one. Under Berlusconi it was mostly competently run and could hold its own internationally if only through the force of Berlusconi’s personality. As the market figured out in its negative second-day movement after Berlusconi’s departure, it is most unlikely that any Berlusconi successor will be anything like as good. Even if some figure from Berlusconi’s own party, such as Angelino Alfano, were to succeed him, he would have far less authority over the fractious center-right coalition and far less ability to keep the necessary budget-cutting reforms moving forward. A “technocrat” successor such as the much loved (by the EU bureaucracy) Mario Monti would be much worse; he would secure a large handout from his friends at the EU or the IMF, and would then waste the proceeds in government aggrandisement, making an eventual Italian bankruptcy 12-18 months down the road all the more painful. Since the market would quickly spot the road down which a Monti government was heading, it would withdraw support for Italian bonds within weeks, well before that inevitable destination had been reached.
Of course, if Italy had kept Berlusconi there would have been a clear solution to its problems; departure from the euro. Unlike Greece, whose currency parity needs to drop to a third or less of its current euro parity to be viable, Italy becomes competitive with a devaluation of no more than 20% or so. With a Berlusconi to keep public spending under control, an Italy devalued 20% could even service its public debt, since its average maturity is relatively long and any cost increase resulting from re-liraization could be easily absorbed over time.
More HERE
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Italy defaults on debt and sends lenders broke? So be it
By Adam Creighton, writing from a country that entered the GFC debt-free -- Australia
“Contracting debt will almost infallibly be abused in every government. It would scarcely be more imprudent to give a prodigal son a credit in every banker’s shop in London …” -- David Hume, Of Public Credit (1742)
The interesting question to ask about the European debt crisis is not what sort of bailout package will work, or which Italian or Greek government should oversee it. Economic forces will overwhelm any political theatrics.
The relevant question is how European countries were able to borrow so much in the first place. How did Italy end up with debts of 120% of GDP, or €1.9 trillion? How could Greece, a long-standing economic basket case, borrow as much as 150% of its GDP?
The answer seems to demonstrate either the gross stupidity or masterful sophistication of financial markets.
These countries, especially Greece, should not have been attractive to lenders. Greece had defaulted routinely on its debts since the early 19th century, and its finances (even the faked ones) were demonstrably shambolic right up to the beginning of the financial crisis in 2008.
Italy, still a geographic expression [As Metternich said] as much as a functioning political entity, riddled with corruption, had an excessive debt to GDP ratio of about 110% in 2001.
That governments will want to borrow excessively and wastefully is not a new revelation. David Hume knew that. But how could financial markets, awash with highly paid “risk managers” and apparently staffed with the most talented employees, shovel so much money at these nations?
Both countries were able to borrow almost as cheaply as Germany, a country with more evident fiscal fortitude, throughout the 2000s.
Sure, the advent of the euro had bound European countries more closely together, but that didn’t mean individual countries could no longer default. Indeed, the European Central Bank, the European Union and European politicians were emphatic that no bailouts would ever occur under any circumstances. Edmund Stoiber, a prominent German politician, reckoned bailouts to be as likely as famine in Bavaria.
That many banks and fund managers now face substantial losses on their loans to recalcitrant European countries may demonstrate their foolishness.
Or perhaps their brilliant perspicacity? Year after year lenders made a little bit extra profit on their loans to Greece and Italy. As for the risk, they might have realised that whatever European leaders said, Western governments had become so large, social democracy so rampant, and banks so large and interconnected that it would be impossible for any democratically politician to permit lenders to lose substantial sums on their loans.
And that is exactly what has happened. Indeed, private lenders have transferred vast swathes of their dodgy, multibillion dollar loans to public European institutions such as the European Central Bank, while politicians and the International Monetary Fund fall over themselves to protect lenders from losing money. At the same time, those lenders continue to clock up massive profits and pay absurd salaries to many of their staff.
It is a master stroke for private lenders; never in my lifetime have ordinary taxpayers been bilked so comprehensively and unwittingly.
More HERE
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
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