Wednesday, December 25, 2013
Monday, December 23, 2013
The Free Market's Path to Peace
Having an economic incentive for embracing peace on earth, does count for something.
BY JR NYQUIST
It is the
season of “Peace on earth, good will to men,” though wars continue to occur and
peace is far from established. While mankind should prefer peace we have
nonetheless chosen war again and again. Excepting the Pax Romana from 27 BC to
180 AD, ancient history presents us with one war after another. If we read the
Roman historian Tacitus, even the
Pax Romana appears to have been a series of military operations. All the tribes
of the earth make war, or prepare for war. It is therefore of special interest
when a scholar shows that the free market may have already reduced the number
of wars that otherwise would have been fought. Professor Patrick J. McDonald
has offered exactly such a thesis in a book titled The
Invisible Hand of Peace: Capitalism, the War Machine, and International
Relations Theory.
Under the
rule of law, with private property and “competitive market structures,”
modernity has arguably found a greater incentive to peace than to war. As
McDonald explains in his book, “states that possess liberal political and
economic institutions do not go to war with each other….” What does liberalism
signify in this context? According to Austrian economist Ludwig von Mises, “The
essential teaching of liberalism is that social cooperation and the division of
labor can be achieved only in a system of private ownership of the means of
production, i.e., within a market society, or capitalism.” Mises and McDonald
would both argue that economic freedom, and the institutions which make this
freedom possible, tend to promote peace. McDonald offers a caveat, however. He
warns that democracy is not the guarantor of peace some have asserted it to be.
The free
market and free trade are much stronger guarantors of peace. In the case of
China today, McDonald argues that an autocratic Chinese regime has adopted a
policy of peace for the sake of economic development. “Because conflict or even
the threat of it tends to disrupt normal trading patterns, potentially large
economic costs will deter dependent states from using military force to solve
their political conflicts.” McDonald also noted: “As commerce grows, the
incentives for plunder or conquest decrease simply because it is a more costly
means of generating economic growth.” Not only does free market cooperation
bring wealth to all the parties involved, it displaces national loyalties and
state rivalries.
Of course,
McDonald is well aware that free trade and free markets can be overridden by
democratic ideological imperatives. Simply put, if economic liberalism signifies
the disutility of war,democratic liberalism does no such thing. According to
McDonald, “Even democratic leaders can exploit domestic institutional
instability and public fears of insecurity to construct broad swaths of public
support for war.” It is not the
ballot box that assures peace, says McDonald. It is private property and free
trade which binds nations and peoples to the cause of peace, despite cultural
and political differences.
The
controversial German revisionist, Udo Walendy, summed up democracy’s readiness
to start a global war when he wrote, “On September 3, 1939, England and France
declared war on Germany. In so doing they transformed a limited territorial
dispute between Poland and Germany into a world war over the city of Danzig, a
matter that could easily have been resolved through negotiation.” Patrick
Buchanan offered a similar judgment in his book Churchill,
Hitler, and the Unnecessary War: How Britain Lost Its Empire and the West Lost
the World. Arguably, in both world wars the
democracies fought when they didn’t have to. About this idea George Kennan
wrote: “When you total up the score of two [world] wars, in terms of their
ostensible objective, you find that if there has been any gain at all, it is
pretty hard to discern.”
Read the rest at:
2013: The Year the Arab Spring Died
In the Egyptian coup, democratic hopes were snuffed
out
By TIM BLACK
Back in February 2011, as angry crowds thronged Tahrir
Square in Cairo, calling for President Hosni Mubarak to call time on his 30
years of military dictatorship, Western political leaders, accompanied by an
assortment of the nominally liberal and sort-of leftish, could barely contain
their democratic urges. This wasn’t just the Arab Spring, it was Western
politicos’ spring, too. In the jubilant overthrow of decrepit, hair-dyed
tyrants, they saw a chance to pose as champions of democracy.
As Mubarak stumbled from power, American president Barack Obama beamed: ‘Egypt
has changed, and its future is in the hands of the people. Those who have
exercised their right to peaceful assembly represent the greatness of the
Egyptian people.’ The European Union’s foreign-affairs chief, Baroness Catherine Ashton, was similarly
quick to pen her message of support. ‘I have called on the Egyptian authorities
to embark on a transition towards genuine democratic reform, paving the way for
free and fair elections’, she wrote in the Guardian.
‘The challenge is to lay down the roots of deep democracy; there, too, the EU
stands ready to help.’ Even Mubarak’s mate, the ex-British prime minister, Tony Blair, was prepared
to admit that ‘this is a moment of huge opportunity, and not just for Egypt’.
Pundits from the left side of the tracks were also
eager to issue their undying approval of the Spring-time Arabs. A New York Times columnist wrote
that ‘democracy is good for Arabs as it is for Israelis and Americans’. In the Observer, an op-ed
began: ‘It must be bliss to be alive, young and Arab in this dawn of
revolution.’ Laurie Penny, the faddish embodiment of middle-class leftism,
enthusiastically proclaimed her solidarity with protesters in Tahrir Square.
The difference between protesters overthrowing degenerate despots in the Middle
East and 150 anti-cuts protesters stood outside Camden Council offices on
Euston Road ‘is one of scale, not of substance’, she waxed.
But in June 2012, something terrible happened – at
least in the eyes of Western politicians and pundits. The Egyptians, enjoying
the freedom to vote in the first free presidential election in Egypt’s history,
did something wrong. They voted for the wrong candidate, the one the West
wasn’t keen on. The election of Mohamed Morsi of the conservative Muslim
Brotherhood, with 52 per cent of the vote, was too much for those in the West
who, just 16 months earlier, had been the biggest cheerleaders of democracy.
The Arab Spring was no longer to their liking; democracy was not yielding the
right results.
Yet the downbeat reaction to Morsi’s election was
nothing compared with what happened in July this year. After days of anti-Morsi
protests in Tahrir Square attacking the president for his Islamism and his
economic failures, the army moved in and deposed Morsi. Morsi supporters
launched counter protests, but they were crushed by the military. As it stands,
hundreds of Morsi supporters have been beaten, tortured and killed, and Morsi
now faces conspiracy charges and, if found guilty, he could be executed.
Read the rest at:
Keynes and Copernicus
The Debasement Of Money Overthrows The Social Order
And Governments
By Ralph Benko
The United States Senate moves toward the confirmation of Janet Yellen, now posited for
next January 6th, as chair of the Federal Reserve System. Let us in this
moment of recess reflect on eerily similar observations by two of history’s
most transformational figures: John Maynard Keynes and Nicolas
Copernicus.
One of Keynes’s most often-cited observations, from his 1919 The Economic Consequences of the Peace, chapter VI,
contains an indictment of policies very like those which the Federal Reserve
System has been implementing for the past dozen, and more, years. These
policies in slow motion are, in the opinion of this columnist, at the root
of the very political, social, and cultural dysphoria — uneasiness or
generalized dissatisfaction — predicted by Kaynes:
“Lenin is said
to have declared that the best way to destroy the capitalist system was to
debauch the currency. By a continuing process of inflation, governments can
confiscate, secretly and unobserved, an important part of the wealth of their
citizens. By this method they not only confiscate, but they confiscate
arbitrarily; and, while the process impoverishes many, it actually enriches
some. The sight of this arbitrary rearrangement of riches strikes not only at
security, but at confidence in the equity of the existing distribution of
wealth. Those to whom the system brings windfalls, beyond their deserts and
even beyond their expectations or desires, become ‘profiteers,’ who are the
object of the hatred of the bourgeoisie, whom the inflationism has
impoverished, not less than of the proletariat. As the inflation proceeds and
the real value of the currency fluctuates wildly from month to month, all
permanent relations between debtors and creditors, which form the ultimate
foundation of capitalism, become so utterly disordered as to be almost
meaningless; and the process of wealth-getting degenerates into a gamble and a
lottery.
Lenin was
certainly right. There is no subtler, no surer means of overturning the
existing basis of society than to debauch the currency. The process engages all
the hidden forces of economic law on the side of destruction, and does it in a
manner which not one man in a million is able to diagnose.”
An almost identical point was made almost four centuries before Keynes by
iconic savant and polymath Nicolas Copernicus.
Copernicus commenced a study composed for the Prussian and Polish
governments around 1525, On the Minting of Money,
with these words:
“ALTHOUGH THERE
ARE COUNTLESS MALADIES that are forever causing the decline of kingdoms,
princedoms, and republics, the following four (in my judgment) are the most
serious: civil discord, a high death rate, sterility of the soil, and the
debasement of coinage. The first three are so obvious that everybody recognizes
the damage they cause; but the fourth one, which has to do with money, is
noticed by only a few very thoughtful people, since it does not operate all at
once and at a single blow, but gradually overthrows governments, and in a
hidden, insidious way.”
This does not imply plagiarism by Keynes. The coincidence between
Keynes’s “[To debauch the currency] engages all the hidden forces of economic
law on the side of destruction, and does it in a manner which not one man in a
million is able to diagnose” and Copernicus’s “[The debasement of coinage] … is
noticed by only a few very thoughtful people, since it does not operate all at
once and at a single blow, but gradually overthrows governments, and in a
hidden, insidious way” is, however, striking.
Keynes, like Copernicus a paradigm-shifter, was himself extraordinarily
erudite. It is not impossible the young Keynes came across Copernicus’s
work (which reportedly was first actually published in 1826). The
question as to whether Copernicus’s Essay may have
inspired Keynes’s observation must be left to authentic scholars such as Lord
Skidelsky.
The similarity may be merely that of “great minds working alike.”
This columnist has found but one direct reference by Keynes to Copernicus.
Keynes (whose thinking was mostly, although not exclusively, opposed to the
gold standard) was fascinated by one of Copernicus’s most accomplished
scientific successors, Sir Isaac Newton. Newton, also, achieved iconic
status, both for his contributions to physics and, as Master of the Mint of
Great Britain, as the architect of the modern classical gold standard. Newton’s
gold standard was designed along Copernican principles of close correlation
toward nominal and intrinsic value. It served the world very well for
almost 200 years.
Keynes was to have addressed the Royal Society of London’s gathering to
celebrate the tercentenary of Newton’s birth, an event delayed by the
war. Keynes died a few months before he could present his remarks.
Maynard’s remarks, Newton, the Man, were presented
by his brother Geoffrey (and thus might even be characterized as Keynes’s last
words). A brief excerpt:
Why do I call
[Newton] a magician? Because he looked on the whole universe and all that is in
it as a riddle, as a secret which could be read by applying pure thought to
certain evidence, certain mystic clues which God had laid about the world to
allow a sort of philosopher’s treasure hunt to the esoteric brotherhood.
…
[H]e became one
of the greatest and most efficient of our civil servants. He was a very
successful investor of funds, surmounting the crisis of the South Sea Bubble,
and died a rich man. He possessed in exceptional degree almost every kind of
intellectual aptitude – lawyer, historian, theologian, not less than
mathematician, physicist, astronomer.
…
As one broods
over these queer collections [of Newton's alchemical writings, which Keynes
collected], it seems easier to understand – with an understanding which is not,
I hope, distorted in the other direction – this strange spirit, who was tempted
by the Devil to believe at the time when within these walls he was solving so
much, that he could reach all the secrets of God and Nature by the pure power
of mind Copernicus and Faustus in one.
As for Copernicus, On the Minting of Money has
been translated into English several times yet those translations remained
difficult to obtain for students of the monetary arts and sciences. It
has remained mostly the property of elite historians. Scant and
intriguing references were limited to all-too-brief articles such as “Treatise On the Minting of Coin and
Copernicus views on economics”by Leszek Zygner
of Nicolaus Copernicus University.
The full text of Copernicus’s fascinating and invaluable essay remained
elusive, that is, until last month.
Laissez Faire Books published a meticulous and fresh English translation from the Latin, with prefatory
remarks, bibliography, and invaluable critical apparatus by classicist Prof.
Gerald Malsbary. (The volume was co-edited by this columnist and by his
fellow Forbes.com columnist Charles Kadlec, with a foreword by Reagan Gold
Commissioner Lewis E. Lehrman, whose eponymous Institute this columnist
professionally serves).
Read the rest at:
How Savers May Be Forced To Buy Federal Debt
Some of the worst tyrannies of the 20th Century began by expropriating the property of individual citizens
By William Tucker
As still another showdown over the national debt looms, some experts are
concerned that the Obama Administration is poised to begin forcing Americans to
stock their retirement accounts with low-return government bonds.
Richard Cordray, director of the Consumer Financial Protection Board, told Bloomberg News that his new regulatory agency was
mulling a move to control the $20 trillion that Americans have invested for
retirement. He specifically mentioned 401(k) plans and IRAs.
“That’s one of the things we’ve been exploring,” Cordray told Bloomberg reporter Carter Dougherty in January.
Cordray’s seemingly stray comment was largely ignored by mainstream and
financial media, but won the attention of fund managers and economists.
Cordray suggested that “mismanagement” of individual retirement accounts by
the nation’s major financial institutions could leave investors exposed, just
as those who bought subprime mortgages were left in the lurch during the 2008
housing crisis.
Cordray’s agency is already moving toward regulating 401(k)s and IRAs. In
April the CFPB issued a report questioning the “senior designations” that are
awarded to individual financial advisors who manage retirement accounts. “In
recent years, federal and state regulators, financial industry representatives
and consumer groups have been reporting that some financial advisers with
senior designations are targeting older consumers and selling them
inappropriate and sometimes fraudulent financial products,” warned the report.
Although four financial companies – Fidelity Investments, JPMorgan Chase
& Co., Charles Schwab Corp. and the T. Rowe Price Group – handle the
largest portion of individual IRAs and companies manage their employees’
401(k)s, a small portion of financial individual retirement accounts are
handled by independent financial advisers.
The April report claimed that the CFPB had jurisdiction under the 2010 Wall
Street and Consumer Protection (Dodd-Frank) Act, which directed it to “make
recommendations to Congress and the Securities and Exchange Commission (SEC) on
best practices.”
“CFPB will be clearly overstepping its bounds if it makes a blatant
political move to present itself as a protector of senior citizens,” says Mark
Calabria, director of financial regulation studies at the Cato Institute.
“Congress chose to leave oversight for retirement products at the SEC and
Department of Labor. With the creation of the CFPB, Dodd-Frank is attempting to
do for the rest of consumer finance what the federal government has done to the
mortgage market — to completely politicize it and subject it to twisted
incentives that ultimately cost both consumers and the taxpayer.”
Michelle Muth Person, an officer in the CFPB communications office,
declined to be comment on plans to regulate retirement accounts but said that
CFPB has “no immediate plans” for intervening in the management of individual
accounts.
Despite the reassurance, economists and industry officials are still
worried. “The runaway, unaccountable regulators at the Consumer Finance
Protection Bureau would like to ‘protect’ the IRAs of U.S. citizens by making
them into a $20 trillion ATM for the government,” says economist George Gilder.
Critics fear that the CFPB would claim regulatory authority over IRAs and
self-employed person pensions (SEPPs) on the grounds that seniors aren’t
capable of handling their accounts and are being defrauded by the firms that
manage them.
Then it would argue that corporate stocks and bonds are too risky and funds
should be instead in the one safe instrument that is the equivalent of cash –-
Treasury bonds, backed by the full faith and credit of the United States. Of
course, the returns paid by the federal government are far lower. Treasuries
pay low interest rates and when combined with inflation, usually provide a
negative real rate of return over time.
For now, almost every dollar in America’s individual retirement accounts is
invested in the private sector — which earns higher returns than government
debt. “I wouldn’t put it past the government to go after some of that money,
almost all which is invested in corporate stocks and bonds or real estate,”
says Curtis De Young, founder and CEO of American Pension Services, a leading
financial advisory company.
Read the rest at:
Dinosaurs and Debt
Public
Pensions and Social Security
by
Michael S. Greve
Public
pension systems and Social Security were built decades ago, under very
different economic and demographic conditions. Alas, our political institutions
are lousy at modernizing the system—even when ruin is just around the corner. A
few quick fun facts:
Public
Pensions
Andrew G.
Biggs (American Enterprise Institute) reports that
state and local pensions systems aren’t just woefully underfunded; they’ve also
come to pose much graver risks to state and local budgets.
First, pension assets are now about 143% of
state and local outlays, up from 49% in 1975. Thus, it’s become three times
more expensive for legislatures to amortize funds in down years. Note, in
passing, that the system are no better funded than they used to be. Rather,
they have “matured.” In the 1970s, there were 4.5 public employees per retiree.
Now, the number is 1.75, and falling. Would the last public employee please
turn off the lights? Thank you.
Second, as returns in the bond markets have
evaporated, pension funds have turned to far riskier investments. Increased
volatility means increased risk to state and local budgets. All told, Andy
Biggs estimates that the pension risk has increased tenfold over the past four
decades.
Social
Security
Since
2010, Social Security has been running a sizeable cash-flow deficit, and it
will continue to do so from here to eternity. The deficit is covered from a
“trust fund,” consisting of something like $2.7 trillion in special-issue
Treasury bonds. That money was credited to Social Security in years when the
fund ran a surplus, plus interest. When Social Security runs a deficit,
Treasury redeems bonds in sufficient amounts and sends the money along. As most
everyone knows, this technical account is very misleading: the $2.7 trillion
has long been spent; so we’re really talking about new debt. But there you have
it.
What
happens, though, when the so-called trust fund (or funds—there are two of them,
for old age and disability) run out? According to current CBO projections, that will happen around 2031. (It
could be sooner—e.g., if something bad happens to the economy.) What
then?
What won’t happen is that Social Security stops
cutting checks altogether. It will keep collecting payroll taxes and benefit
taxes. That will suffice to pay around 77% of benefits. (For details seehere.) What of the rest, though?
It can’t
be paid. That’s because the Antideficiency Act (codified in here relevant part
at 31 U.S.C. 1341) prohibits the expenditure of money that Congress hasn’t
appropriated. So, come to think of it, does the Constitution. That’s what the
fictional “trust fund”actually does:
it obviates the need to appropriate funds on an annual basis.
Read the rest at:
Sunday, December 22, 2013
There is no such thing as the Mafia
Crony
Capitalists Seek Protection
by
Angelo M. Codevilla
Mitch
McConnell, Senate Republican leader, confessed to big business bureaucrats that
he and other Establishment Republicans want to remain their link to government
money and favors. According to a Wall Street Journal story (December 16), he asked them to open their wallets
lest his kind be overwhelmed — not by Democrats, but by those smelly
little Tea Party conservatives — the
real threats to the government spending and regulations by which big business
thrives.
The
confession was almost that forthright: “said one person at the McConnell
fundraiser, held at a Capitol Hill townhouse. ‘The main message he was pushing
was: Get involved, mainly to teach those who are primarying incumbents that it
is not helpful to run against incumbents who are champions for the industry.’”
McConnell
is just one of the dozen Republican Establishment senators who are facing
challenges by conservatives, who are backed by organizations such as the Club
for Growth and the several pro-life organizations. These challengers, always
underfunded by huge margins, nevertheless frighten the well-heeled likes of
McConnell because they bring to politics a source of votes that money can’t
buy: credible commitment to substance. According to John Boehner, House
Republican speaker and a stalwart of that Establishment, such challengers or
merely the prospect that they might appear, have convinced many Republican
congressmen to pay more attention to issues than to the Establishment’s
priorities.
Money is
the Establishment’s main weapon against challengers with small bank accounts
but big followings based on issues. And indeed, big business is stepping up its
defense of threatened Republican Establishmentarians.
Big money
is forthcoming from classic sources for classic reasons. The Journal story continues: “The U.S. Chamber of
Commerce and other business groups have been stepping in to help
business-friendly Republicans aligned with the GOP leadership… a sign of
worries that tea party-aligned candidates might try to eliminate tax breaks and
spending favored by businesses.”
The
bargain is classic, and classically corrupt: Politicians vote taxpayer money to
cronies, who then recycle part of the money back to the politicians. The
corruption is especially evident in McConnell’s case. He made his confession
and plea to representatives of the defense industry, who told the Journal’s
reporter that their cooperation with the Establishment against the
conservatives was all about mutual support for national defense: more money
means more defense. But the corruption inherent in such back-scratching
bargains is especially obvious and noxious in the case of national defense.
Consider:
In 2013, the military budget is an inflation-adjusted $642 billion. In 1988, in
the same dollars, it was $515 billion. Yet whereas in 1988 we had an army of
twenty divisions, today we have one of ten “division equivalents” – barely able
to handle insurgents armed with improvised weapons. Back then we had a six
hundred ship navy. Now, the US Navy has 280. Today, we have half the fighter
planes of a quarter century ago, and their average age is over a quarter
century. In short, the Defense industry is taking
more taxpayer money to the bank than ever while delivering far less than half
the product.
Industry
is not nearly so much to blame for this as are the politicians that write its
orders and sign its checks. Rich corporations take money on the easiest terms,
as naturally as do poor welfare recipients. Corporate welfare, crony
capitalism, is as corrupting as any other kind of welfare. But it is more
deadly to America, especially when the cronies on both sides of the table are
dealing with military matters.
Read the rest at:
Saturday, December 21, 2013
Why Greece Will Leave the Euro
As Greece's political and economic conditions worsen, the conventional wisdom about Greece never abandoning the euro will be sorely tested
By Desmond Lachman
According to an old Wall Street adage, when the winds
are strong even turkeys fly. If ever there was a case to which this adage would
apply, it would be that of the market’s present favor for Greek government bonds.
Over the past year, as the market has stretched for yield in a low interest
rate global environment, the Greek government’s long-term borrowing cost has
declined from over 18 percent to its present level of 8.5 percent. And it has
done so despite increased signs that Greece lacks the political willingness to
resolve the many deep-seated problems that still characterize the Greek
economy.
Anesthetized by ample global liquidity, markets are
simply choosing to ignore many warning signals emanating out of Greece about
that country’s political and economic future. They certainly seem to be turning
a blind eye to the Greek government’s insistence that Greece has reached the
social and political limits as to how much more budget austerity and painful
structural economic reform the country can tolerate. They also seem to be
disregarding Greece’s stalled IMF-EU negotiations and increased signs that its
foot-dragging on real economic reform is causing Berlin’s patience to run out.
A troubling indication that Greece may now be on a
collision course with its official creditors was the Greek government’s recent
presentation of its 2014 budget without the blessing of either Brussels or the
International Monetary Fund. According to the IMF, Greece’s 2014 budget has an
unfinanced gap of around €1.5 billion. The IMF also notes that Greece’s efforts
at structural economic reform have fallen far short of the country’s
commitments under its IMF-EU program, especially in the areas of public sector
layoffs and privatization policy. This lack of progress would seem to make it
highly improbable that Greece’s official creditors would agree to yet more
bailout funds.
Markets also seem to be totally discounting the
possibility that the Greek government could fall next year and that the
far-left Syriza party, which is not known for supporting the IMF-EU policy
prescriptions, could be swept to power. They do so despite the deep divisions
that are now clearly apparent in the Samaras coalition government, which has
already seen its majority in Greece’s 300-member parliament whittled down to
only three members. They also do so despite the very real likelihood that the
Greek government will suffer a humiliating defeat in the May 2014 European
parliamentary elections that would make it difficult for it to continue
governing.
Equally surprising is the market’s apparent equanimity
about Greece’s dismal economic outlook, which seems to be driving its political
fragmentation. Despite the fact that Greece’s economy has contracted by almost
a quarter over the past six years and that Greece’s unemployment rate is around
28 percent, both the OECD and Moody’s are forecasting another small decline in
Greek GDP in 2014. They are doing so in recognition of the additional budget
tightening that Greece has to undertake to put its public finances on a sounder
footing as well as of the ongoing domestic credit crunch that is making it
difficult for households and companies to obtain much-needed bank financing.
Read more at:
The going rate for sexual assault is just 5.000
America, here’s your cruel, senseless,
immoral Drug War….
By Mark J. Perry
About six weeks ago, I reported the disturbing case of
David Eckert (“America’s
cruel Drug War now includes forced anal probing of innocent victims by law
enforcement agencies“), who was anally raped by law enforcement officials
in New Mexico and their medical accomplices in a futile search for drugs that
escalated through multiple cavity searches, enemas, and X-rays, and ended up
with a forced colonoscopy.
Jacob Sullum reports today in Reason (“Drug
Warriors Kidnap and Sexually Assault a Woman After Getting Permission From a
Dog“) on another disturbing drug search case that
produced no drugs, this time of an innocent 54-year old New Mexican woman who
was victimized (kidnapped, sexually/medically assaulted, and raped to be
specific) by law enforcement officers and their medical professional
accomplices. In a failed attempt to find drugs following a false positive alert
by a dog, the victim was subjected to multiple invasive body cavity searches of
her vagina, buttocks and rectum by two different doctors, a forced enema, a
forced X-ray, and an forced CT scan.
Result: No contraband. Then to add
insult to injury, the victim refused to sign a consent form and is now being
billed $5,000, apparently the “going rate for sexual assault and gratuitous
radiological bombardment” as Jacob Sullum aptly describes it.
Jacob provides all of the gory details and then ends
with this insightful commentary:
This kind of abuse tends to draw attention only when
the victim is “innocent,” meaning he or she is not in fact smuggling drugs. But
how can any society call itself civilized when it allows human beings to be
treated this way in the name of locating arbitrarily proscribed substances?
Having arrogated to itself the authority to regulate what people put into their
own bodies, the government ends up forcibly delving into those bodies in search
of the chemicals it has anathematized. To enforce politicians’ pharmacological
prejudices, the government’s agents and their medical accomplices become
kidnappers and rapists. There is nothing noble or decent about this immoral
crusade, and anyone associated with it ought to be ashamed of himself.
Read more at:
The Age of Intolerance
The forces of “tolerance” are intolerant of anything less than full-blown
celebratory approval
By Mark Steyn
Last week, following the public apology of an English comedian and the
arrest of a fellow British subject both for making somewhat feeble Mandela
gags, I noted that supposedly free societies were increasingly perilous places
for those who make an infelicitous remark. So let’s pick up where we left off:
Here are two jokes one can no longer tell on American television. But you
can still find them in the archives, out on the edge of town, in Sub-Basement
Level 12 of the ever-expanding Smithsonian Mausoleum of the Unsayable. First,
Bob Hope, touring the world in the year or so after the passage of the 1975
Consenting Adult Sex Bill:
“I’ve just flown in from California, where they’ve made homosexuality legal. I thought I’d get out before they make it compulsory.”
For Hope, this was an oddly profound gag, discerning even at the dawn of
the Age of Tolerance that there was something inherently coercive about the
enterprise. Soon it would be insufficient merely to be “tolerant” — warily
accepting, blithely indifferent, mildly amused, tepidly supportive, according
to taste. The forces of “tolerance” would become intolerant of anything less
than full-blown celebratory approval.
Second joke from the archives: Dean Martin and Frank Sinatra kept this one
in the act for a quarter-century. On stage, Dino used to have a bit of business
where he’d refill his tumbler and ask Frank, “How do you make a fruit cordial?”
And Sinatra would respond, “I dunno. How do you make a fruit cordial?” And Dean
would say, “Be nice to him.”
But no matter how nice you are, it’s never enough. Duck Dynasty’s
Phil Robertson, in his career-detonating interview with GQ, gave a
rather thoughtful vernacular exegesis of the Bible’s line on sin, while
carefully insisting that he and other Christians are obligated to love all
sinners and leave it to the Almighty to adjudicate the competing charms of
drunkards, fornicators, and homosexuals. Nevertheless, GLAAD — “the gatekeepers
of politically correct gayness” as the (gay) novelist Bret Easton Ellis sneered
— saw their opportunity and seized it. By taking out TV’s leading cable star,
they would teach an important lesson pour encourager les autres —
that espousing conventional Christian morality, even off-air, is incompatible
with American celebrity.
Some of my comrades, who really should know better, wonder why, instead of
insisting Robertson be defenestrated, GLAAD wouldn’t rather “start a
conversation.” But, if you don’t need to, why bother? Most Christian opponents
of gay marriage oppose gay marriage; they don’t oppose the right of gays to
advocate it. Yet thug groups like GLAAD increasingly oppose the right of
Christians even to argue their corner. It’s quicker and more effective to
silence them.
As Christian bakers ordered to provide wedding cakes for gay nuptials and
many others well understand, America’s much-vaunted “freedom of religion” is
dwindling down to something you can exercise behind closed doors in the privacy
of your own abode or at a specialist venue for those of such tastes for an hour
or so on Sunday morning, but when you enter the public square you have to leave
your faith back home hanging in the closet. Yet even this reductive consolation
is not permitted to Robertson: GLAAD spokesgay Wilson Cruz declared that “Phil
and his family claim to be Christian, but Phil’s lies about an entire community
fly in the face of what true Christians believe.” Robertson was quoting the New
Testament, but hey, what do those guys know? In today’s America, land of the
Obamacare Pajama Boy, Jesus is basically Nightshirt Boy, a fey non-judgmental
dweeb who’s cool with whatever. What GLAAD is attempting would be called, were
it applied to any other identity group, “cultural appropriation.”
In the broader sense, it’s totalitarian. While American gays were stuffing
and mounting the duck hunter in their trophy room, the Prince of Wales was
celebrating Advent with Christian refugees from the Middle East, and noting
that the land in which Christ and Christianity were born is now the region
boasting “the lowest concentration of Christians in the world — just four
percent of the population.” It will be three, and two, and one percent soon enough,
for there is a totalitarian impulse in resurgent Islam — and not just in Araby.
A few miles from Buckingham Palace, Muslims in London’s East End are now
sufficiently confident to go around warning local shopkeepers to cease selling
alcohol. In theory, you might still enjoy the right to sell beer in Tower
Hamlets or be a practicing Christian in Iraq, but in reality not so much. The
asphyxiating embrace of ideological conformity was famously captured by Nikolai
Krylenko, the People’s Commissar for Justice, in a speech to the Soviet
Congress of Chess Players in 1932, at which he attacked the very concept of
“the neutrality of chess.” It was necessary for chess to be Sovietized like
everything else. “We must organize shock brigades of chess players, and begin
immediate realization of a Five-Year Plan for chess,” he declared.
Six years later, the political winds having shifted, Krylenko was executed
as an enemy of the people. But his spirit lives on among the Commissars of Gay
Compliance at GLAAD. It is not enough to have gay marriage for gays. Everything
must be gayed. There must be Five-Year Gay Plans for American bakeries, and the
Christian church, and reality TV. There must be shock brigades of gay
duck-hunters honking out the party line deep in the backwoods of the
proletariat. Obamacare pajama models, if not yet mandatorily gay, can only be
dressed in tartan onesies and accessorized with hot chocolate so as to
communicate to the Republic’s maidenhood what a thankless endeavor
heterosexuality is in contemporary America.
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Police Claim Teen Shot Himself In Head—While Handcuffed Behind Back
We are just collateral damage in their 'war on crime'
By Anthony Gregory
If the police found a dead body in the back of your car, hands tied
behind the back, with a hole in the head, and your defense was that the person
shot himself, how do you think they would react?
And yet
this has happened in police cars at least three times. This time, in
Durhman, North Carolina, a teenager, searched, arrested, handcuffed behind his back, shoved in
the back of a police car, supposedly shot himself in the head with a firearm
the police apparently had failed to find. If the cops’ story is true, we have a
case of a suicidal young man who could have easily made a fortune on the Vegas
strip mimicking David Copperfield, or at least done well as a contortionist on
a traveling circus act.
The police
chief explains: “I know that it is hard for people not in law enforcement to
understand how someone could be capable of shooting themselves while handcuffed
behind the back. . . . While incidents like this are not common, they
unfortunately have happened in other jurisdictions in the past.”
Yes,
they’ve happened in other jurisdictions. Or so other police have said.
Now, one
doesn’t have to be a paranoid troublemaker to suggest another possible
scenario.* A good detective would consider alternatives in the case of any
homicide, and if a non-police officer were found with a body in the back of his
car, the presumption would probably not be suicide. Of course, it is at least
possible that the cops in this case are simply lying—that they had held the gun
to the boy’s head to instill fear in him, and they accidentally fired the
weapon, killing him, and came up with a ridiculous story to cover it up—one so
ridiculous it just might work, as it’s apparently worked before. The other
possibility, which in a sane world anyone would realize is also much more
likely than suicide, is that a police officer simply murdered the kid in cold
blood, execution-style, for whatever reason.
If the inquiry goes as it usually does, and the officers involved simply
take a little time off and come back to work in a month or so, I predict we
will be seeing this kind of thing happen much more often. If all it takes to
explain this away is “he must have shot himself,” any economist will tell you
the incentive structure will encourage more such mystery shootings.
There will
be some outrage over this, some demands for more police accountability and
transparency, as there always are. But it will not result in any sort of actual
change in policy or meaningful restraint of officers. For one thing, American
culture is thoroughly statist when it comes to law enforcement issues. It is
the one area where folks skeptical of government are most likely to cave, as
respectable members of society still fear ordinary street crime more than the
police state emerging around them. Modern American police forces are
characterized by gangsterism and a fetishization of “officer safety” as the
primary value. The rest of us are just potential collateral damage in their war
on crime. And perversely enough, there exists among conservative and other
circles this myth that the media are too hard on police, and so they work
overtime to support their local law enforcers. In truth, of course, the mass
media hardly report the daily killings, injuries, false imprisonments, rapes,
burglaries, and crime sprees police are responsible for in most urban
jurisdictions nationwide.
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Welcome back to the eurozone nightmare
Monetary union remains as
flawed as ever
The
eurozone has recently been off our news radar. We Britons have become smug of
late given our new-found growth, now that we’re the most rapidly expanding
economy in the Western world (almost).
We
certainly have a sense that the “Continental” economies aren’t doing as well as
ours. Apart from those pesky Germans, of course, who are annoyingly good at
making stuff the rest of the world wants to buy.
Yet, the
fear of the euro as a tinderbox, which at any minute could spark financial
meltdown, seems to have gone. The euro as a ticking-time bomb, about to
explode, causing another Lehman-style Minsky moment on global markets – all
that has been dealt with, we think, sorted, solved?
I would
like to tell you that’s true. But I can’t, because it isn’t. The eurozone’s
deep structural flaws remain as ever they were.
This
jerry-built monetary union, for all the fanfare, arrogance and “solidarity”, is
fundamentally just as vulnerable as it was in the summer of 2012, when,
suddenly, everyone started worrying that the single currency wasn’t, as we’d
always been told, “irreversible”.
Until
then, it was only been “nutters” like me who openly questioned the eurozone’s
long-term survival. We raised such “mad” questions not because we’d spent much
of our adult lives studying economics, history and the minutiae of currency
unions – oh no – but because we were “cranks” and “xenophobes”.
Back in
that Olympic summer, however, as government bond yields in the likes of Greece,
Spain and Italy spiked, and riots broke out in previously laid-back European
capitals, everyone realised that some profligate members could crash-out of
monetary union, forced by market vigilantes and window-smashing thugs, or maybe
even kicked-out by Germany (with the Finns and the Dutch providing moral
cover).
But then
the newish European Central Bank president, Mario Draghi, promised to do
“whatever it takes” to save the euro. At the same time, politicians began
talking about a “banking union” – and with extremely serious faces. As if by
magic, there was calm. The markets relented and bond yields fell back.
Since
then, while it hasn’t been plain sailing, there’s been far less talk of a
stormy “break-up” of monetary union. The euro is actually set to end 2013 as
one of the best-performing main currencies – up from $1.32 in early January to
around $1.37 today.
The fact
that the US government wanted this dollar depreciation, deliberately stoking it
by expanding the Fed’s balance sheet $85bn (£52bn) a month is, of course,
completely irrelevant.
Read more at:
The Sick (German) Banks of Europe
Where There Is One Cockroach…
By John Mauldin
Quick: I say "German banks," and
what's the first thing that comes to your mind? The Bundesbank? Staid,
no-nonsense central banking? The Bundesbank is all about maintaining the price
of money – forget QE. Deutschebank? Big, German – must be stable and low-risk.
The fact that southern Europeans are opening accounts left and right in DB must
mean that DB is lower-risk than the local wild guys. Except that they have the
largest derivatives portfolio, at $70 trillion (but don't worry because it all
nets out, sort of, and of course there is no counter-party risk!), and they are
the most highly leveraged bank in Europe (at 60:1 in the last tests – not a
misprint), which might give you pause. Although their CEO argues that their
leverage doesn't matter. And keeps a straight face. Just saying…
If something happens to DB, they are, in
all likelihood, Too Big To Save, even for Germany. But Deutschebank is not my
focus here today. It is their much smaller brethren, Too small to be called
siblings, actually. More like first cousins twice removed. But there are a lot
of them, and they all piled into some very interesting and, as it turns out,
very questionable trades. And the story begins with the American consumer.
This Christmas, we will all engage, as
will much of the world, in an orgy of gift giving. (I helpfully offer a few
ideas of my own at the end of the letter.) The iPads and Xbox Ones and GI Joes
with the Kung-Fu Grip (gratuitous esoteric movie reference) will be flying off
the shelves. But the one thing that ties all those gifts together is The Box,
the humble container unit, the TEU, which allows the world to transport all
those items ever more cheaply. That story is resoundingly told in a book that
Bill Gates featured in his Best Reads for 2013, simply entitled The Box. You can read a great review here. It turns out that the shipping container was created in the '50s by a
force-of-nature entrepreneur who fought governments and regulators (who
typically tried to protect unions rather than help consumers) to bring the idea
to market. It finally took off when the military decided it was the best way to
ship material to the troops in Vietnam. It is one of those things that make
sense and would have happened anyway, but as often happens, military spending
drove the ramp-up.
The container was not without controversy.
Longshoreman unions fought it aggressively, as containers meant fewer
high-paying jobs. But The Box also meant far cheaper transportation of goods,
and so it helped boost international trade. Now it is hard to imagine a world
without containers. And even though the container business started in the US,
there is not one US firm in the top 18 container shipping companies. The
business is dominated by European and Asian firms.
And container ships were profitable. Oh
my, fortunes were built. And they were so successful that a few German bankers
looked at the easy money made by US bankers securitizing and packaging
mortgages and decided they could do the same with ship financing. I know it is
hard to believe, but the German government decided to create pass-through tax
vehicles that gave serious tax preference to high-tax-rate investors for all
sorts of things, including movies (such cinematic monuments asTerminator 3, I Robot, and the forgettable Stallone flick Get
Carter were financed
with German "tax shelters"); but my research has so far unearthed nothing
to equal the German passion for financing ships. Seriously, would any US
government entity give tax breaks to a favored industry? Would a Canadian or
Australian or [insert your favorite country here] government? Such things are
done by many governements, of course. Here we may apply Mauldin's Rule (stolen
from someone else, I am sure): Any seriously out-of-whack financial transaction
requires government involvement (generally in the form of some
market-distorting law).
Cargo ships, especially container ships,
were serious cash machines for long-term money. Buy the ship with some
leverage, put it to work, and watch the cash roll in. The Greeks were
especially good at this, but the Germans and Scandinavians caught on quick. The
Germans went everyone one better and allowed small high-net-worth investors to
put their money into funds that financed these ships. At one point, I am told,
German banks might have been financing 50% of the world's cargo ships. (They
control at least 40% of the world's container ship market today.) Anyone
familiar with limited partnerships in the US in the late '70s and early '80s
knows how this story ends for the investors.
I came across this story from the inside,
as a business partner of mine is in the shipping business; but he owns and
operates a special type of ship: massive tugboats that move ocean drilling-rig
platforms, and those are still in healthy demand. But his original financing
many years ago was from Germany.
It turns out that if a little leverage
makes a deal look good, then a lot makes it look even better. In 2007, ships
were financed at 75% leverage (on average). It looks like 2008 vintages were
financed in the 90% range! (Data is from a presentation I was sent, done by Dr.
Klaus Stoltenberg of NordLB.)
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