A Quote for every Day

Public schooling and its discontent 

In our time, the curse is monetary illiteracy, just as inability to read plain print was the curse of earlier centuries.

      - Ezra Pound (1885-1972) American poet, critic & intellectual.

The Crisis of the American Dream

Beyond Blue 

by WALTER RUSSELL MEAD

The frustration and bitterness that fills American politics these days reflects the failure of our current social, political and economic institutions and practices to deliver the results that Americans want and expect. It’s comparable to the frustration and fear that swept through the country in the late 19th and early 20th century as the first American dream – that every family could prosper on its own farm – gradually died.

From the era of the first European settlements in North America up through World War I, the family farm was the key social, economic and even political institution in the country.  Until the 1920 census, a majority of Americans lived in rural areas and, unlike the oppressed peasants of Europe most owned and worked their own land.

The individual family farm was, in mythology and often enough in reality, prosperous and independent.  For Thomas Jefferson and a long line of ideological descendants, the family farm was the cornerstone of American democracy.  For generations, government policy sought to ease the path to cheap and — after the Homestead Act — free western land for American families.

The limits of this approach did not begin to appear until after the Civil War. As the best land was taken, the remaining land available for homesteading was increasingly marginal.  It was too cold, too dry or too remote.  The dependence of farmers on politically powerful railroad companies to ship their crops to market and the power of banks and speculators in the commodity markets put family farms at a disadvantage. The global commodity glut that developed as new techniques opened up new land not only in the American west, but also in Russia, Canada, Argentina and Australia depressed the prices farmers could get.

The last great burst of traditional American farm policy came with the Oklahoma land rush of 1889.  The federal government opened former tribal lands for homesteading, and thousands of families rushed to stake their claims on new land. Many of these families would be among the dispossessed “Okies” who fled the Dust Bowl a generation later.

The family farm and the social and political model that rested on it didn’t die easy and it didn’t die quick.  (Even today huge agribusinesses shelter their vast subsidy payments behind the public affection for the family farm.) Waves of populist protest against the decline of the original American social model roiled politics for decades. William Jennings Bryan built his political career on the economic and political frustration of millions of small farmers caught up in an inexorable and, to many, incomprehensible set of economic changes.

I’ve written in earlier posts about the shift from the first American Dream to the second: from the family farm to the suburban “homestead.” It was a profound change in American life and culture that has not yet been fully explored.  The family farm integrated production and consumption, work and leisure, family and business.  The family wasn’t just a union of sentiment: it was an element of production.  Mom and Dad worked as a team to feed, house and clothe the family, and as the kids grew up they took on greater and greater responsibilities in the common effort.  Their lives at home prepared them for the new lives they would lead on their own: the kids would grow up, marry, and start farms.

The 20th century suburban homestead was a very different place.  In the early, “pure” form, Mom and Dad were still a team, but their roles were more differentiated than on the farm.  Dad worked in the office or the factory and brought home the money; Mom organized the home and raised the kids.  The kids might do chores around the house (girls more than boys), but their lives were increasingly outside of the family circle.  They went to school full time from the age of six on, and instead of learning basic work and social skills in the family with their parents, they were taught skills and patterns of living in school to prepare them, in turn, for lives in which working life and home life were divided.

After the 1960s, Mom started working in a factory, an office or a store, and for girls as well as boys the center of gravity of their educational and social life moved away from the family circle.

Both the family farm and the “crabgrass frontier” (as Kenneth Jackson calls 20th century suburban America in a remarkable book) had their advantages and their drawbacks, and both allowed for broad prosperity and reasonable dignity and economic security for tens of millions of Americans. Generation after generation embraced both social ideals while millions of people from all over the world came to the United States, hoping to share in the American Dream.

Today the 20th century model of the American dream faces the same kind of crisis the 19th century version experienced 100 years ago.  International competition and technological advances mean that the American factory worker’s earnings and opportunities are depressed in the way farmers were going to the wall 100 years ago.  In the last twenty years, well-intentioned government efforts to put more people in owner-occupied housing led to a housing bubble and mass bankruptcies in the face of a financial panic and the ensuing recession, the worst in eighty years.

Our political battles today reflect the same kinds of frustrations we saw in the old populist era.  Many cannot fathom another and “higher” form of the American Dream beyond the old crabgrass utopia. They want to turn back the clock and restore the old system because they don’t know of anything else that will work.  The explicit political demand for this kind of restoration is usually found on the left, where it is often coupled with demands for the protection of American industries from foreign competition.  But nostalgia for the old days isn’t just a left wing emotion; a free floating anger stemming from the breakdown of a broadly accepted social model helps power political currents on both ends of the spectrum.

In the 1890s, the “restorationists” were the agrarian populists.  They wanted to protect family farmers from the forces that were undermining this hallowed way of life and they genuinely could not imagine that the end result of the shift out of agriculture could lead to richer and better lives for most Americans.  This was perfectly understandable and rational: few people in 1890 could have predicted or imagined the new social system that would emerge on the basis of mass production and mass consumption in the 20th century.

Substituting Coercion for Voluntary Action

The Concept of a Perfect System of Government

by Ludwig von Mises

The "social engineer" is the reformer who is prepared to "liquidate" all those who do not fit into his plan for the arrangement of human affairs. Yet historians and sometimes even victims whom he puts to death are not averse to finding some extenuating circumstances for his massacres or planned massacres by pointing out that he was ultimately motivated by a noble ambition: he wanted to establish the perfect state of mankind. They assign to him a place in the long line of the designers of utopian schemes.

The 400 pound gorilla in the US economic living room

Obama And The Commanding Heights

By Joseph Y. Calhoun

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.  (Applause.)  For the first time in nine years, there are no Americans fighting in Iraq.  (Applause.)  For the first time in two decades, Osama bin Laden is not a threat to this country.  (Applause.)  Most of al Qaeda’s top lieutenants have been defeated.  The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

A Bluffing Game

European Politicians in Denial as Greece Unravels

Europe's politicians are losing touch with reality. Greece is broke, and yet Brussels wants to send the country billions in new loans, to which there is growing opposition within the coalition government in Berlin. Rescue efforts are hopelessly bogged down by bickering over who will ultimately step up.

By Sven Böll, Alexander Neubacher, Ralf Neukirch, Christian Reiermann, Christoph Schult and Anne Seith, Spiegel

Martial music booms from the loudspeakers as warlike images gallop across monitors. A short euro crisis film montage shows police officers being posted in front of the parliament building in Athens and the jostling of frantic reporters, then US investor George Soros uses grim words in an appeal to rescue the euro zone. "The alternative is just too terrible to contemplate," he says.

Cartoon of the Day

The Word "Sustainable"

Catch-22 for the ECB

What keeps central bankers in Frankfurt awake at night – and why should Britain care?

By Mats Persson

In his speech in Davos yesterday, David Cameron outlined some very sensible proposals for how to deal with Europe's economic crisis. But, almost in passing, he also called for a eurozone “central bank that can comprehensively stand behind the currency and financial system”, implicitly suggesting that the ECB must be ready to provide more cash to struggling banks and governments around Europe. Unfortunately this statement completely misses the intricacies which the ECB and the eurozone face in the coming months.

The ECB’s balance sheet now stands at a pretty scary €2.7 trillion, higher than that of the money-printing Federal Reserve in the US. By buying government bonds and providing cheap cash to banks around the eurozone, the ECB is now leveraged 33 times – up from 24 times only last summer. This means that for every €1 the ECB holds in reserves and cash, it has €33 swirling around somewhere in the eurosystem.

The Role of Government in the Economy

Capitalism and its Discontents

By Michael J. Boskin, May 1999

Adam Smith, regarded by many as the intellectual godfather of modern economics and the case for a decentralized competitive market economy, focused his heaviest guns on mercantilism, a topic, by the way, not without relevance today. In the almost two and a quarter centuries since Smith wrote The Wealth of Nations, economic systems have developed in various forms in different places. Serious scholars as well as a much larger number of pundits have debated their relative economic success and moral underpinnings. Within our own profession, the center of gravity has waxed and waned among different schools of thought and political and economic persuasions. It was not all that long ago that Friedrich Hayek and then Milton Friedman were relatively lonely voices calling for restraining, indeed reducing, the role of government in the economy.

A dire prediction

An explosive report is coming up
By Illargi

No, I’m not talking about the fact that Germany and Holland want to take over as the de facto government in Greece, as Noah Barkin writes for Reuters (that they want to do it through Brussels is a mere technicality).

Germany wants Greece to give up budget control

Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday.

"There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough," the source said.

Onward civilian soldiers

Armies without officers

By George F. Will

War, said James Madison, is “the true nurse of executive aggrandizement.” Randolph Bourne, the radical essayist killed by the influenza unleashed by World War I, warned, “War is the health of the state.” Hence Barack Obama’s State of the Union hymn: Onward civilian soldiers, marching as to war.

Obama, an unfettered executive wielding a swollen state, began and ended his address by celebrating the armed forces. They are not “consumed with personal ambition,” they “work together” and “focus on the mission at hand” and do not “obsess over their differences.” Americans should emulate troops “marching into battle,” who “rise or fall as one unit.”

When is a Person a Non-Person ?

A Few Words About Abortion
by Andrew P. Napolitano

Last week marked the 39th anniversary of Roe vs. Wade, the U.S. Supreme Court decision that permitted abortions. Prior to that case, abortion was regulated by each state, and most of them prohibited it unless two physicians could certify that the baby growing in the mother's womb would likely result in the death of the mother. Even the states that permitted abortions when the pregnancy was caused by rape or incest, an extremely rare occurrence, did not permit it after the sixth month of pregnancy.

Roe vs. Wade changed all that. It permits abortions in all 50 states during the first three months of pregnancy for any reason or for no reason. It permits abortions during the second three months of pregnancy for the health of the mother. "Health of the mother" can mean mental health; thus, most states have taken the liberal position that if a continued pregnancy would make the mom sad or challenge her psychologically, or if she has second thoughts about the pregnancy, the baby may be aborted.

Roe vs. Wade also permits the states to prohibit or to allow abortions during the last three months of pregnancy. Most states prohibit all abortions during the final three months, as this is the period of viability; when the baby can live – assisted, of course – outside the mother's womb. New Jersey, my home state, is the exception, as it permits abortions up to the moment of birth.

Meanwhile back in Athens ...

Greece plans orderly exit of the Eurozone

·         By Dominique Doms, International Trade Examiner, Jan 26^th 2012

Greece plans an orderly exit out of the Eurozone according to two sources close to Mr. Papademos, Greek Prime Minister, who spoke on condition of anonymity earlier today.

The sources confirmed that plans are ready to return to a legacy currency given the current circumstances and that such exit would be dealt with, quote “in as orderly a fashion as possible” unquote.

The plan does not come as a surprise but the timing may be surprising to most members and investors while negotiations about a severe haircut with the IIF are still ongoing.

The Demise of the Petrodollar

It's amazing that the petrodollar system has lasted this long

Rumors are swirling that India and Iran are at the negotiating table right now, hammering out a deal to trade oil for gold. Why does that matter, you ask? Only because it strikes at the heart of both the value of the US dollar and today's high-tension standoff with Iran.

by Marin Katusa
Tehran Pushes to Ditch the US Dollar

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.

But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

Egypt is running out of food

Failed treasury auction portends Egyptian disaster

Interest rate on Egyptian 9-month treasury bills

By Spengler

Investors bought less an a third of the 3.5 billion Egyptian pounds (US$580 million) worth of Treasury bills offered to the market on January 22, a red flag warning that Egypt's foreign exchange position is close to the brink.

Yields on Egyptian government debt maturing in nine months jumped to nearly 16%, but the government could not place its local-currency debt to Egyptian investors, even at that exorbitant rate.

This is a new and ominous decline in the financial position of the most populous Arab country. I have been warning since last May that "Egypt is running out of food, and, more gradually, running out of the money with which to buy it." How fast this may occur is hard to specify, but the government's inability to borrow on money markets suggests that the crunch is not far off. (See The hunger  to come in Egypt Asia Times Online, May 10, 2011.) 

Follow the money

No Need to Panic 

Signed by the 16 scientists listed at the end of the article

There's no compelling scientific argument for drastic action to 'decarbonize' the world's economy.

A candidate for public office in any contemporary democracy may have to consider what, if anything, to do about "global warming." Candidates should understand that the oft-repeated claim that nearly all scientists demand that something dramatic be done to stop global warming is not true. In fact, a large and growing number of distinguished scientists and engineers do not agree that drastic actions on global warming are needed.

Business as usual

The Greatest Threat

by Justin Raimondo

There’s always a Looming Danger, an Ominous Threat lurking somewhere – that’s the War Party’s bread-and-butter. Back in the day, it was the Germans, who were going to cross the Atlantic and meet their Japanese allies somewhere near the Mississippi. Then it was the Commies, who were not only in the process of swallowing Asia but supposedly had their Fifth Column right here in the US, ready willing and able to take the Capitol at a signal from the Kremlin. After that there was some hesitation in deciding just who or what would take the place of the Red Threat, but that was decided on September 11, 2001, when Osama bin Laden’s Global Caliphate emerged as the Bogeyman of the moment. It turned into quite a long moment, as we have seen, one that still lingers to this day, even after bin Laden’s death and the crushing of al-Qaeda: Americans, being sentimentalists, hang on to their villains long after their shelf life has expired. 

That’s because these dark eminences are alluring, in their way: the narratives we construct tell us a story we can be proud of, a tale of derring-do in which the American people are made of Heroic Stuff, holding aloft the Torch of Freedom lest it be extinguished by rampaging hordes of Orcs, sacrificing their pelf, their liberty – and, often, their lives – in the name of Saving the World. 

There are times for dreaming big dreams, and there are times to wake up

The State of Our Union Is Broke By Mark Steyn Had I been asked to deliver the State of the Union address, it would not have delayed your dinner plans: “The State of our Union is broke, heading for bankrupt, and total collapse shortly thereafter. Thank you and goodnight! You’ve been a terrific crowd!” I gather that Americans prefer something a little more upbeat, so one would not begrudge a speechwriter fluffing it up by holding out at least the possibility of some change of fortune, however remote. Instead, President Obama assured us at great length that nothing is going to change, not now, not never. Indeed the Union’s state — its unprecedented world-record brokeness — was not even mentioned. If, as I was, you happened to be stuck at Gate 27 at one of the many U.S. airports laboring under the misapprehension that pumping CNN at you all evening long somehow adds to the gaiety of flight delays, you would have watched an address that gave no indication its speaker was even aware that the parlous state of our finances is an existential threat not only to the nation but to global stability. The message was, oh, sure, unemployment’s still a little higher than it should be, and student loans are kind of expensive, and the housing market’s pretty flat, but it’s nothing that a little government “investment” in green jobs and rural broadband and retraining programs can’t fix. In other words, more of the unaffordable same.

Drink Now, Pay Later

Explaining Modern Finance And Economics Using Booze And Broke Alcoholics
From reszatonline

Helga is the proprietor of a bar.

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).

Word gets around about Helga’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar. Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Helga’s gross sales volume increases massively.

The West is Desperate and Clueless

All that glitters is ... oil
By Pepe Escobar 

In his State of the Union address, United States President Barack Obama said, "Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal." 

In the real world, this means Washington is willing to go to war - the economic war is already on - against a country that subscribes to the nuclear Non-Proliferation Treaty and is not seeking nuclear weapons, according to the International Atomic Energy Agency and the latest US National Intelligence Estimate. 

Obama also said, "The [Tehran] regime is more isolated than ever before; its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent." 

A low intensity civil war

Looking into the Syrian abyss

With the outbreak of violence in northern Syria's Idlib governorate in the spring and summer of 2011, cross-border Syrian tourist trade in Antakya's "Syria Bazaar" has come to a complete halt. In early December, Damascus suspended its free trade zone agreement with Turkey in reaction to economic and political sanctions announced by Ankara

By Derek Henry Flood 

ANTAKYA, Hatay province southern Turkey - Five weeks before the beginning of Syria's unarmed uprising against the rule of President Bashar al-Assad, Turkish Prime Minister Recip Tayyip Erdogan and his Syrian counterpart Prime Minister Mohammad Naji Otri laid a symbolic cornerstone for the so-called "Friendship Dam" that was to help control the course of the Orontes River (known as the Asi River in Turkey) that flows through what has traditionally been - and is once again - a bitterly divided Levant region. 

The Arab Winter

Democracy vs Diversity

by Steve Sailer

If the Arab Spring is good for democracy, then it has to be good for diversity, right? We know that democracy and diversity are virtually the same thing: Both words begin with a “d,” end with a “y,” and by definition are good. Who isn’t aware that minority protection (indeed, minority promotion) is the essence of majority rule?

American intellectuals are confident of this because the Nazis were against democracy and diversity. And if you’ve heard of Hitler, what more do you need to know about history?

Saving the Western Economies

Averting Financial Armageddon

After the near-collapse of the financial system in 2008, a growing number of people have come to realize that our monetary disease is terminal.  

by Keith Weiner
It seems self-evident.  The government can debase the currency and thereby be able to pay off its astronomical debt in cheaper dollars.  But as I will explain below, things don’t work that way.  In order to use the debasement of paper currencies to repay the debt more easily, governments will need to issue and use the gold bond. (Wherever I refer to gold, I also mean silver. For the sake of brevity and readability I will only say gold in most cases.

The paper currencies will not survive too much longer.  Most governments now owe as much or more than the annual GDPs of their nations (typically far more, under GAAP accounting).  But the total liabilities in the system are much larger.

The shining city upon a hill

Who Gave Us the Right to Remake the World?

By Patrick J. Buchanan 

U.S. Ambassador Michael McFaul, Obama’s man in Moscow, who just took up his post, has received a rude reception. And understandably so.

In 1992, McFaul was the representative in Russia of the National Democratic Institute, a U.S. government-funded agency whose mission is to promote democracy abroad.

The NDI has been tied to color-coded or Orange revolutions such as those that dethroned regimes in Serbia, Ukraine, Kyrgyzstan, Georgia and Lebanon. The project miscarried in Belarus.

The NDI is one of several agencies, dating to the 1980s, that were set up to subvert communist regimes. With the end of the Cold War, however, these agencies were not decommissioned, but recommissioned to serve as something of an American Comintern.

Where the old Comintern of Lenin sought to instigate communist revolutions across the West and its empires, post-Cold War America decided to promote democratic revolutions to remake the world in the image of late 20th century America.

In 2002, McFaul wrote a book: Russia’s Unfinished Revolution.

Vladimir Putin’s men are not unreasonably asking if he was sent to Moscow to finish that revolution. Putin has already accused Hillary

Sayonara net creditor country

Japan's first trade deficit since 1980 raises debt doubts

By Kaori Kaneko and Tetsushi Kajimoto

Japan's first annual trade deficit in more than 30 years calls into question how much longer the country can rely on exports to help finance a huge public debt without having to turn to fickle foreign investors.

The aftermath of the March earthquake raised fuel import costs while slowing global growth and the yen's strength hit exports, data released on Wednesday showed, swinging the 2011 trade balance into deficit.

Few analysts expect Japan to immediately run a deficit in the current account, which includes trade and returns on the country's huge portfolio of investments abroad. A steady inflow of profits and capital gains from overseas still outweighs the trade deficit.

But the trade figures underscore a broader trend of Japan's declining global competitive edge and a rapidly ageing population, compounding the immediate problem of increased reliance on fuel imports due to the loss of nuclear power.

Only four of the country's 54 nuclear power reactors are running due to public safety fears following the March disaster.