That's all, folks!

No Independence Day for debt-ridden America

By Mark Steyn

Dozens of countries have "Independence Days." Nov. 25, for example: Independence Day in Suriname. In that instance, as in most others, the designation signifies nothing more than transfer of de jure sovereignty and de facto operational control from a distant European capital to a more local regime. 1975 in Suriname's case. They had the first military coup seven years later.

But in America "Independence" seemed as much a statement about the character of a people as a designation of jurisdictional status. The first Americans were British subjects who had outgrown a British king as benign and enlightened as any ruler on the planet. They demanded "independence" not from foreign rulers of another ethnicity but from their own compatriots with whom they had a disagreement about the nature of government. Long before the Revolutionary War, small New England townships governed themselves to a degree no old England towns did. "Independence" is not about the replacement of a king in London with a president in Washington but about the republican virtues of a self-reliant citizenry free to exploit its own potential.

Please, no snickering. The self-reliant citizen? In the damning formulation of contemporary American vernacular, he's history – as in over and done with, fuhgeddabouttim. What's left of that founding vision on this less than Glorious Fourth of July 2011 in the Brokest Nation in History? "You go talk to your constituents," President Obama taunted Republicans on Wednesday, "and ask them are they willing to compromise their kids' safety so that some corporate jet owner continues to get a tax break?"

In the Republic of Brokistan, that's the choice, is it? Give me safe kids or give me corporate jets! No corporate aviation without safe kiddification! In his bizarre press conference on Wednesday, Obama made no fewer than six references to corporate jet owners. Just for the record, the tax break for corporate jets was part of the "American Recovery and Reinvestment Act of 2009" – i.e., the stimulus. The Obama stimulus. The Obama-Pelosi-Reid stimulus. The Obama-Pelosi-Reid-Democratic Party stimulus that every single Republican House member and all but three Republican senators voted against. The Obama-Corporate Jet stimulus that some guy called Obama ostentatiously signed into law in Denver after jetting in to host an "economic forum."

Charles Krauthammer did the math. If you eliminate the Obama-Pelosi-Reid Corporate Jet Tax Break, you would save so much dough that, after 5,000 years, you would have clawed back enough money to cover one year of Obama's debt. Five thousand years is the year 7,011. Boy, our kids'll really be safe by then. I see some leftie at MSNBC has just been suspended for characterizing the president's performance Wednesday as that of a demotic synonym for the male reproductive organ. So I shall be more circumspect and say only that even being a hollow unprincipled demagogue requires a certain lightness of touch Obama can't seem to find.

Speaking of corporate jets, did the president fly commercial to Denver? Oh, but that's different! He's in "public service." A couple of weeks before he flew Air Force One to Denver, he flew Air Force One to Williamsburg, Virginia. From the White House (well, via Andrews Air Force Base). That's 150 miles, a 30-minute flight. He took a 747, a wide-bodied jet designed to carry 500 people to the other side of the planet, for a puddle-jump across the Potomac.

Oh, but it was for another "economic forum." This time with House Democrats – the ones who voted for the Obama Corporate Jet Tax Break. "Economic forums" are what we have instead of an economy these days.

Aside from the Sultan of Brunei and one or two similar potentates, no other head of state goes around like this. In a self-governing republic, it ought to be unbecoming. But in the Brokest Nation in History it's ridiculous. And the least the beneficiary of such decadence could do is not condescendingly lecture those who pay for their own transportation. America's debt is an existential crisis, and playing shell games with shriveled peas of demonizable irrelevancies only advertises your contempt for the citizenry.

By the way, one way to cut back on corporate jettage would be to restore civilized standards of behavior in American commercial flight. Two weeks ago, a wheelchair-bound 95-year-old woman at Northwest Florida Regional Airport flying to Michigan to be with her family for the final stage of her terminal leukemia was made to remove her adult diaper by the crack agents of the Transport Stupidity Administration. George III wouldn't have done this to her.

Oh, c'mon, do you want to compromise your kids' safety in order to give grope breaks to dying nonagenarians? A spokesgroper for the Transport Stupidity Administration explained that security procedures have to be "the same for everyone" – because it would be totally unreasonable to expect timeserving government bureaucrats to exercise individual human judgment. Oddly enough, it's not "the same for everyone" if you're Olajide Oluwaseun Noibi from Nigeria, who on June 24 got on a flight at JFK with a college ID and an expired boarding pass in somebody else's name. Why, that slippery devil! If only he'd been three-quarters of a century older, in a wheelchair and dying of leukemia, we'd have got him! He was arrested upon landing at LAX, and we're now going to spend millions of dollars prosecuting him. Why? We should thank him for his invaluable expose of America's revolting security theater, and make him head of the TSA.

What else isn't "the same for everyone"? A lot of things, these days. The president has a point about "tax breaks". We have too many. And on the scale of the present tax code that's a dagger at the heart of one of the most basic principles of free societies – equality before the law. But, of course, the president is not opposed to exemptions and exceptions and special privileges on principle: After all, he's issued – what is it now? – over a thousand "waivers" for his own Obamacare law. If you knew who to call in Washington, maybe you got one. If you didn't, tough.

But that's the point. Big Government on America's unprecedented money-no-object scale will always be profoundly wasteful (as on that Williamsburg flight), stupid (as at the TSA) and arbitrary (as in those waivers). But it's not republican in any sense the Founders would recognize. If (like Obama) you're a lifetime member of the government class, you can survive it. For the rest, it ought to be a source of shame to today's Americans that this will be the first generation in U.S. history to bequeath its children the certainty of poorer, meaner lives – if not a broader decay into a fetid swamp divided between a well-connected Latin-American-style elite enjoying their waivers and a vast downwardly mobile morass. On Independence Day 2011, debt-ridden America is now dependent, not on far-off kings but on global bond and currency markets, which fulfill the same role the cliff edge does in a Wile E Coyote cartoon. At some point, Wile looks down and realizes he's outrun solid ground. You know what happens next.

People show up at noon. And they want to be there.

Did Someone Say Tech Bubble?

Silicon Alley entrepreneur Kevin Ryan on competing with Amazon—and why Facebook could be worth $1 trillion

By BARI WEISS

'Tell Kevin Ryan he's stealing our business," said an acquaintance I bumped into this week as I walked across the Upper West Side to meet, well, Kevin Ryan.

This young Manhattanite happens to work in the clothing industry; her company sells overstock brand-name clothes at a steep discount. But her sentiment is pervasive in businesses from travel to gourmet food to computer software. These days, 47-year-old Kevin Ryan may be the most disruptive entrepreneur on the Web.

As CEO of AlleyCorp, Mr. Ryan oversees a network of startups in New York City's Silicon Alley. The jewel in his crown, at least for the moment, is Gilt Groupe. Currently valued at $1 billion, the four-year-old business is by some estimates the most valuable U.S. e-commerce company other than Amazon.

Mr. Ryan is the kind of guy who has 10 inventive ideas per day—or hour. But the concept for Gilt originated with a French company called Vente Privée. He travels regularly to France—including for a year in 1990 at the business school Insead where he met his (French) wife—and he witnessed the incredible popularity of the online retailer. "Why," Mr. Ryan wondered, "is no one doing this here?"

It clicked on 18th Street in April 2007. "I was walking by and these 200 women were lined up, waiting in line for a Marc Jacobs sample sale. And I'm thinking: That's unbelievable—the passion!" he recalls. His next thought: "There are 200 here, but how many women would like to be at this sample sale right now? Obviously the ones in Kansas would be. Even the ones in Westchester. There's women even two blocks away in a meeting. So it means that there's tens or hundreds of thousands of people—and I can do that. I can bring that to them."

Six months later, Gilt brought the sample sale online, making it sleeker, cleaner and more accessible to those women in Kansas. Rather than forcing them to schlep to some lower Manhattan corner to dig through bins of odd-sized shoes in the hope of nabbing a pair of Manolo Blahniks, Gilt allows customers anywhere in the country to click through an uncluttered page of, say, 20 pairs of designer heels at 50% off, selected by top buyers and beautifully photographed.

The key markers of the sample sale—urgency and scarcity of hot products—remain. "That's what makes it different and extraordinarily valuable. It's a small change," says Mr. Ryan, "but it means that people show up at noon. And they want to be there." Do they ever. At 12 p.m., sharp, the Gilty are charged as the daily offerings lead the Samanthas, Carries and their executive assistants to type AmEx digits into office keyboards.

When Mr. Ryan launched his first sale in November 2007, he had eight employees. Now, Gilt employs 717 and expects 850 by year-end. He's also setting up new online stores—"verticals," in the industry lingo—all the time.

Greece, unfortunately

For Whom The Greek Bell Tolls

By S. Forbes

Given its rich mercantile heritage in the Mediterranean, Greece should be the Hong Kong/Singapore/ Switzerland of the Balkans. Its emigrants and their descendants have been huge business successes in the U.S., Australia, New Zealand, Canada and elsewhere. Yet Greece is bankrupt, fiscally and politically.

Why is Greece such a basket case? And what are the implications for Europe and the U.S.?

I recently participated in the Greek Power Summit 2011--Helping Greece Rebuild, which was held in Athens. Here's a wee incident that underscores how clueless and irresponsible the Greek government has become. The bulk of attendees at this confab were business and financial executives who are either Greek emigrants or of Greek descent. They went to Athens to size up investment opportunities and offer suggestions on how to bring the failed Greek economy back to life. These executives manage corporate and financial assets in the tens of billions of dollars. Yet the government acted as if they weren't there. Sure, it was teetering, but you'd think that some top ministers--or at least their high-level representatives-- might have found a few minutes to make contact with these influential executives and entrepreneurs. Not a chance. No one from the president's or the prime minister's office came by or asked us to come over and say hello. Ditto the finance ministry. Leaders of the supposedly conservative opposition? Nowhere to be found.

Athens has been telling creditors that it could raise 50 billion euros or more in a few short years. Attending this summit was Krzysztof "Chris" Walenczak, Poland's under secretary of state at the Ministry of Treasury and the man who's been in charge of that country's privatization program for the last two years. He and his team have won plaudits from impressed observers around the world. Chris shared with us fascinating insights on how Poland has successfully sold off 500 entities, with plans to sell off another 300 fairly soon. But not a single person from the Greek government was there to learn from the Poles' experience in pulling off privatizations of such major proportions. After his absorbing presentation Walenczak couldn't hold back any longer and angrily asked, "Why isn't there anyone here from the government?" And that, in a nutshell, is why Greece is falling apart.

Alas, the government's so-what's-your-problem-with-us attitude reflects the thinking of much of the population. Every evening Syntagma Square, home to the Greek Parliament as well as the hotel where we were staying, is loaded with chanting demonstrators. "Thieves! Thieves!" are the milder epithets they yell at their governors. But it isn't their pols' criminally reckless fiscal behavior that's really angering the demonstrators, it's that Greece's creditors are demanding more belt-tightening.

Last year the government did begin to make some cutbacks. For instance, automatic Christmas, Easter and summer bonuses to all bureaucrats--the equivalent of two months' pay--were eliminated. But not one civil servant from the bloated public sector was sacked. Thanks to fierce union resistance, privatizations have stalled. And the government has made no fundamental structural changes to create a buoyant, entrepreneurially friendly economy. It's no surprise that the economy is still sputtering and that deficits remain gargantuan.

On the first evening of the conference police had to block demonstrators, who'd heard rumors that government ministers were dining with us, from breaking into our hotel. So poisonous is the political atmosphere now that almost all recognizable political figures--in power and out--rarely venture into public places, lest they be physically accosted by angry citizens.

The second day of the symposium turned out to be the day that opponents of cutbacks had called for massive demonstrations. Syntagma Square was filled with thousands of demonstrators and squads of riot police. Conference proceedings were punctuated with what seemed like thunderclaps but were actually detonating tear-gas canisters. During sessions we occasionally heard the thump! thump! of projectiles hitting the hotel. Tear gas came into the lobby, and kindly attendants provided us with wet towels to cover our faces. Thankfully the violence was episodic, and no guests were hurt.

USA - Too Big Not to Fail

The Coming Destruction of U.S. Pensions

by Mac Slavo 

“We wanted to know how much money we owe our retirees, and how much of that money we don’t have.”-Cook County Treasurer Maria Pappas (June 22, 2011)

We know the Federal and State governments are in serious fiscal trouble. Having overspent and over borrowed, they are now faced with the real prospect of having to reduce jobs, spending programs and retirement related benefits.
But the States and the Federal government are not alone.
During the boom times of entitlement spending and government largess leading up to the financial crisis, local governments that include cities and counties spent their share of forward earnings as well. And now those uncontrolled fiscal policies are coming home to roost.
For those Americans who have worked for decades with the hopes that their pensions, health care and other benefits would be there when they retire, we offer a glimpse into what the future may hold:

Cook County taxpayers are on the hook for a staggering amount of local debt, according to figures presented by Cook County Treasurer Maria Pappas today. Cook County’s numerous local governments face mounting debts totaling more than $108 billion. And, for the first time, specific figures have been collected for municipal unfunded pensions obligations totaling in excess of $25 billion, almost a quarter of debt countywide. The total figures translate into an average debt-per-household in the city of Chicago of $63,525, and $32,901 in the suburbs.
…
“We knew that debt and unfunded pension obligations were serious problems at the state and federal level and assumed that a similar pattern would follow at the local level. But, quite frankly, I was stunned by the depth of the crisis for local governments,” said Pappas.
“This goes well beyond big cities, where you expect financial challenges. These fiscal problems permeate townships, villages, school districts, park districts, fire protection districts and more, and the taxpayers are on the hook.”
Source: Cook County Treasure’s Office

Government employees may currently enjoy higher salaries and benefits than the private sector, but they have been given a false sense of security.
A single county, granted one of the largest in the country, is in hock for $108 billion dollars. That’s roughly 1/7 of the total TARP bailout given to banks in 2008. This is a very big number, indeed.
Whether you are a police officer, fireman, school teacher, or utility worker, you could have serious problems down the road.
While Ms. Pappas offerred some ideas to help reduce Cook County’s spending for the future, she provided no realistic solutions for dealing with the current deficit. The reason for this is obvious. There are no realistic solutions expect for either borrowing the money (and further indebting themselves with high interest) or reset by default.

Welcome to the Socialist Republic of USA

On June 9, 2011, President Obama signed his 86th Executive Order, and almost nobody noticed.

President Obama’s E.O. 13575 is designed to begin taking control over almost all aspects of the lives of 16% of the American people. Why didn’t we notice it?  Weinergate.  In the middle of the Anthony Weiner scandal, as the press and most of the American people were distracted, President Obama created something called “The White House Rural Council” (WHRC).

Normal Use is reserved for the Sheeple of USA

 Section One of 13575 states the following:

Section 1. Policy. Sixteen percent of the American population lives in rural counties. Strong, sustainable rural communities are essential to winning the future and ensuring American competitiveness in the years ahead. These communities supply our food, fiber, and energy, safeguard our natural resources, and are essential in the development of science and innovation. Though rural communities face numerous challenges, they also present enormous economic potential. The Federal Government has an important role to play in order to expand access to the capital necessary for economic growth, promote innovation, improve access to health care and education, and expand outdoor recreational activities on public lands.

Warning bells should have been sounding all across rural America when the phrase “sustainable rural communities” came up. As we know from researching the UN plan for Sustainable Development known as Agenda 21, these are code words for the true fundamental transformation America.

The third sentence also makes it quite clear that the government intends to take greater control over “food, fiber, and energy.”

The last sentence in Section 1 further clarifies the intent of the order by tying together “access to the capital necessary for economic growth, health care and education.”

The most dangerous clique in America today

The Wall Street-Washington Financial Complex

By Jeff Harding

Larry Summers worked for hedge fund D. E. Shaw for one day a week for a year and received $5,200,000. Assuming they gave him a couple weeks off, that’s 50 days of work. $104,000 per day is pretty good work if you can get it. He also made a lot of money from speaking engagements:$2,770,000. If you average the 40 or so engagements, he got about $69,000 per speech. Most of his speeches were to financial companies like Goldman Sachs, Merrill Lynch, JP Morgan, Citigroup, Lehman Brothers and American Express.

After getting his Ph.D. in economics from Harvard he became one of the youngest ever tenured professors at Harvard (1982). He also worked on the Reagan Council of Economic Advisers (1982-1983). In 1991 he left Harvard to be the Chief Economist for the World Bank until 1993. From 1993 to 2001 he served in the Clinton Administration in several positions, lastly being Secretary of the Treasury when his mentor Robert Rubin left for Citigroup. After Clinton he became President of Harvard University until 2005 when he resigned over an argument that deemed him sexist according to university politics.

By all accounts this son of two professors of economics at U of Penn is a brilliant man, going to MIT at age 16. Two of his uncles won Nobel prizes for economics: Paul Samuelson and Kenneth Arrow. Must be some pretty stiff competition in that family.

Mr. Summers never had what most people consider to be a real job. He made money because he was a political trophy for D. E. Shaw, not because he had some extraordinary insight into economic or financial matters. According to the NY Times:

Mr. Summers and Shaw executives say his role there was to be a sounding board for Shaw’s traders. But interviews with friends and former colleagues suggest that Mr. Summers’s role at D. E. Shaw was wider and more complex.

Mr. Summers, these people say, was a marquee hire, a prized spokesman for Shaw. He routinely made himself available for private consultations with Shaw’s clients, an attractive perk for investing with the firm, as one client put it.

Mr. Summers, who taught economics and public policy at Harvard while advising Shaw, also met with investors in the United States, as well as in the cash-rich Middle East and Asia. He spoke at industry conferences, mixing with officials from public pension funds, endowments and other large institutions with many billions of dollars to invest. …

A spokesman for Shaw said Mr. Summers’s main job was not to act as a salesman. But in the fall of 2007, as the financial crisis simmered, Mr. Summers traveled to Dubai for a series of meetings with Shaw’s marketing staff and potential investors. Bankers from across the region flew in for the event. Mr. Summers spoke at several lavish dinners and met with local parties involved in Shaw’s real estate investments in the area, people briefed on his trip said.

Mr. Summers, as Director of the National Economic Council, is now the most powerful person in the Obama Administration on economic issues.

President Eisenhower warned of a “military-industrial complex,” which was his term for the combination of defense contractors, the military, and politicians who’s goal was, and still is, to influence military, foreign policy, and spending decisions for their benefit. Eisenhower saw it as a threat to individual liberty since it existed to perpetuate its power and money through military spending.

This same issue was raised by Nobel Prize winner and Austrian School economist, Friedrich von Hayek in his classic 1944 book, The Road to Serfdom. His point was that central planning eventually leads to tyranny, as evidenced by the Soviet Union or Nazi Germany. The inevitable failures of central planning leads to demands for more power to accomplish the failed goals which in turn would curtail individual liberty and result in a totalitarian state. He was critical of a war machine driven by former warriors reluctant to give up power.

While we still have the military-industrial complex, we are now seeing the rise of the Wall Street-Washington complex. While not exactly a new phenomenon, actions of the Obama and Bush administrations reveal the power of Wall Street and politics in the arena of economic policy. We have the constant shuffling back and forth between government and Wall Street of very familiar faces who share common ideas and ideals.

It’s been going on for quite a while. Paul Volcker (Princeton/Harvard) left the Fed to become chairman of J. Rothschild, Wolfensohn & Co, a New York investment bank. Allen Hubbard (Vanderbilt/Harvard) was a successful entrepreneur and friend of George W. Bush who became Bush’s chief economic adviser. Laura Tyson (Smith/MIT),another adviser to Clinton, has been a Director of Morgan Stanley,  AT&T,  and Eastman Kodak. Hank Paulson (Dartmouth/Harvard),Bush’s last Treasury secretary, was a Goldman Sachs man, like Robert Rubin. Stephan Friedman (Columbia) also came from Goldman to be another of Bush’s chief economic advisers.

Fed Chairman Ben Bernanke (Harvard/MIT) and Secretary of the Treasury Tim Geithner (Dartmouth/John Hopkins) fit into this mold, although neither has been employed in the private sector. To round it out, Christina Romer, the Chair of Obama’s Council of Economic Advisers, went to William &Mary and MIT.

Mr. Summers made a lot of money for being a trophy schmoozer for D. E. Shaw. I think he sold himself a bit short; Robert Rubin (Harvard/Yale),his predecessor at Treasury, made an estimated $115 million while at Citigroup.

It is well known that after spending time at certain regulatory agencies, former bureaucrats seek financial gain in private industry by dealing with the same agencies they worked for. But what I’m talking about is different.

The Wall Street-Washington complex is a relatively small political-financial-economic clique that revolves around a common orbit:

·         Degrees from Harvard and MIT;

·         Employment with Wall Street banks, especially Goldman Sachs, Merrill Lynch and JP Morgan;

·         Economics professors, especially at Harvard and MIT;

·         A revolving door for the above to become economic policy advisers in government;

·         The politicians and their advisers who have been funded or endorsed by the above.

They share the same basic philosophies in government (interventionist),economics (Keynesian),and finance since they were educated in the same institutions and worked in the same places, public or private. They easily slip back and forth between government and Wall Street and reap the rewards of power and money. As a result they represent current mainstream thinking in economics and finance in America. They are our leaders in government and in finance and investments.

What’s wrong with this picture?

Central Bank Internship

Goldman Sachs’s Connections With Central Banks Reach Deeper After Recent Hirings

By Simon Kennedy

The revolving door between Goldman Sachs Group Inc. (GS) and central banks is spinning again.

The fifth-biggest U.S. bank by assets said yesterday it hired Bank of England economist Andrew Benito after recruiting Huw Pill from the European Central Bank in May and Naohiko Baba from the Bank of Japan in January. Moving in the other direction, Ben Broadbent, Goldman Sachs’s ex-chief U.K. economist, started at the Bank of England last month. Former vice chairman Mario Draghi will take up the presidency of the ECB in November.

The targeting of central banks reflects the value banks such as New York-based Goldman Sachs place on the skills economists gather working in policy-making at a time when growth in advanced economies is struggling to gain momentum. Meantime, governments seeking top officials are again turning to Goldman Sachs for top decision-makers 12 months after it settled U.S. fraud claims and almost four years since the start of the worst financial crisis since the Great Depression.

“The people they’re hiring from central banks tend to have valuable understandings of monetary policies, currencies, what’s going on with regulation and have access to all sorts of important people,” said Roy Smith, a finance professor at New York University and former Goldman Sachs partner. “Goldman Sachs has taken a bashing in the crisis. It’s bound to be near the bottom or recovering now, as there’s nothing of substance to follow the charges. Governments recognize that to be the case.”

‘Talented People’

Benito, who most recently served as a senior economist at the Bank of England’s structural economic analysis division, arrived at Goldman Sachs this week as senior European economist based in London, according to an internal memo obtained by Bloomberg News. Fiona Laffan, a Goldman Sachs spokeswoman, confirmed the memo’s contents. She declined to comment further.

Pill, the ECB’s deputy director general of research, will start at the firm as chief European economist in August, succeeding Erik Nielsen, who will become global chief economist at UniCredit SpA (UCG), Italy’s biggest bank. Baba joined in January as chief economist for Japan after leading financial systems analysis at the country’s central bank.

“Investment banks seek out talented people and those who have skills, insight and access to how policy decisions are made are very attractive,” said Peter Hahn, a former Citigroup Inc. banker who lectures on finance at London’s Cass Business School.

Minor Illusions

Ireland left to count the true cost of euro dream

An exclusionary venture that values banks ahead of ordinary people – this is not what we signed up for

By VINCENT BROWNE

JUST THREE years ago we were being bamboozled into voting for the Lisbon Treaty, the then latest stage in the creation of a wondrous European project that would consolidate peace on the continent and promote yet further wealth creation.

It would also give Europe a voice in world affairs corresponding to its financial clout, give greater administrative cohesion to the decision-making processes in the union and incorporate the industries of war (defence industries) into the corporate structure of the union.

The Lisbon Treaty had arisen from the refusal of the French and Dutch electorates to approve a draft European constitution. The new treaty was devised to give effect to the purpose of the draft constitution, while avoiding the tiresome ordeal of obtaining electoral approval anywhere, except Ireland. The Irish electorate, at first, ungallantly baulked at approving this new enhancement of the euro project, as the French and Dutch had done, but then in trepidation, reversed itself in the second vote.

Prior to the temporary Irish blip in 2008, the EU appeared to many to be a momentous achievement: a political and economic union, involving 27 nations, across a Continent which had been ravaged by wars and strife for millennia. A union inspired by the zeitgeist of our age: free markets, deregulation, privatisations, “reforms” of labour markets, the neutralisation of trade unions that for so long had “held back” the forces of progress. Along with the construction of a foreign and security policy that was intended to give “muscle” to that union.

Opposition to that project was perceived as suspect: borne of xenophobia or ultra-left infantilism. It could not be because of concern with the reversal of democracy that the project entailed by marginalising electorates from any direct say in its design and ethos. Nor of any apprehension about the injection of crude neo-liberalism into the veins of the union, nor general trepidation over the fanaticism of zealots hell-bent on this grand endeavour, whatever the consequences to the people they so noisily purported to care about.

It is different now.

The device at the core of the European project, the euro itself, has proved calamitous. The euro involved the creation of a European Central Bank which, at German insistence, was given immunity from any form of democratic control, however indirect. It was also given control over one of the key regulators of economies: the supply of money and of interest rates, with a brief to control inflation.

The ECB managed interest rate policy to the benefit primarily of Germany and to the detriment primarily of Ireland. The ECB made it clear it would not countenance a member state allowing a bank to collapse, which was what partially inspired the bank guarantee here, although not its scope.

The ECB has insisted on member states absorbing the losses of its banks, even though the losses were in part the responsibility of agents in other member states. And along with the EU Commission and the IMF, it has imposed programmes of austerity on Greece, Portugal and Ireland, ravaging still further the lives of the poorest people of those countries.

The new institutional structure of the EU, which was one of the key points of the Lisbon Treaty, has failed to deal with Europe’s debt crisis, a crisis caused in large part by the EU itself. The new presidency of the European Council has been a joke, a joke made all the more bizarre by the recent row between Herman Van Rompuy, the president of the European Council and José Manuel Barroso, the president of the European Commission, over the sharing of executive jets.

The creation of a new position of high representative for foreign affairs and security policy to co-ordinate foreign and security policy has been another failure – the EU has been entirely wrong-footed by the revolts on its doorstep against squalid Arab dictatorships with whom it played footsie for decades.

Those revolts have undermined another central plank of the union, the free movement of labour and have added further force to a menacing plank, that of fortress Europe. Italian and French responses to the flow of immigrants from North Africa in the midst of the recent uprising there have included demands for border controls and a tightening of immigration policies. In several countries there has been a rise of extreme-right parties – in Sweden, Finland, Denmark, France, the Netherlands and the UK – all of them xenophobic.

For Ireland, the crisis has not been just transformative of the society brought about by the Celtic Tiger, it has also been transformative of our relations with the EU. Initially, we were the supplicants, pleading for favours via the Common Agriculture Policy, structural funds, regional policy. Then the model students, obedient and so appreciative.

Now, one of the problem children, truculent and resentful. And perhaps a little sceptical of a venture that is inherently contemptuous of “ordinary” citizens of the union, exclusionary and instilled with an ethos we should never have signed up to.

Looks Greek to me

Scottish practices

By Richard at EuReferendum

So, what are we to do with the news that the cost of the Edinburgh tram system is now going top £1 billion, by the time it is complete – if it ever is – more than double the starting estimate?

Originally, it was intended to run for twelve miles from Edinburgh Airport to Newhaven via central Edinburgh, including a stretch on Princes Street. The 23 stops on the route were to be served by a fleet of 27 low-floor trams. Now there is doubt that it will do even that.

However, even a truncated scheme will cost £773 million - £273 million more than the budget for the entire project - and the limited service then offered would not be viable. It would need a subsidy of some £4m a year: there is no prospect that the short route would ever make a profit. And scrapping the whole scheme entirely would still end up costing £750 million.

But the Scots are wearily familiar with this sort of thing. Another recent project was the M74 extension which began with an estimated cost of £245 million in 2001 and a completion date of 2008. The final cost, including land, came to £692 million, and the extension is finally due to open this week.

Such is the surreal nature of the project though, that the opening is accompanied by farcical ministerial assertions that it had come in "£15m to £20m under budget" and that it was opening "eight months early".

But behind the current disaster is a story little known outside Scotland, centering on the establishment in 2002 of a new body by Edinburgh Council, called TIE Ltd (Transport Initiatives Edinburgh), which was supposed to manage the project.

In 2009, the organisation acquired a new chief executive, Richard Jeffrey, who was to manage the project through the construction phase until operation. On 19 May, however, the media conveyed his abrupt announcement that he was leaving on 8 June, just as the news emerged that the City's main Princess was going to be closed for ten months while repeat roadworks were carried out - the street already having been closed in 2009 (pictured below) after an earlier contractural disaster.

 

This is the third chief executive to have departed. Yet, despite his lamentable performance, Jeffrey is expected to walk away with a year's salary, said to be £155,000, plus other benefits, leaving the Herald Scotland to complain that 72 percent of the construction work remains to be done, while only 38 percent of the budget is left. This confirms, it says, "that cheques have been written out in a wanton and cavalier fashion".

In the interim, TIE has spent £20m on hiring "consultants" to advise them on how to overspend. As well as pocketing huge fees, these people scooped massive bonuses, rent payments and expenses. Creating TIE also meant using a budget that was supposed to be for transport infrastructure is funding an elaborate tier of senior managers and directors.

Amongst the beneficiaries of the consultancy bonanza has been an umbrella outfit called InfraCo which, in addition to high level fees, shared a £140,000 bonus pot for their work. Overall, TIE has paid nearly £250,000 in bonuses to seven consultants for their advice on contractual and other issues.

Too many bright undergrads want to save the world

Endless folly of innovation policy

William Watson 

Reading yet another report on Canada’s lagging productivity growth, you begin to suspect our problem is we’ve got too many people studying productivity and not enough actually going out there and being productive.

This latest report, by the federal Science, Technology and Innovation Council, is probably the most beautiful productivity report ever produced in Canada, and I don’t say that merely because one of the council’s members is my day-job boss, Heather Munroe-Blum of McGill University. It’s got killer graphics.

It opens with a spectacular two-page spread of someone’s brain synapses, followed by about 60 pages of equally stunning colour charts and tables depicting various indicators of innovation and how Canada is doing at them. There are “business innovation indicators” (where we’re generally not so good, especially on the productivity side), “knowledge development and transfer indicators” (we do pretty well in the production of scientific and academic articles) and “talent indicators” (we have among the world’s best statistics for academic achievement and graduation from post-secondary education).

In sum, it’s all very impressive. The only problem is that it tells essentially the same story that has been told time and again in this country since both the Economic Council of Canada and the Science Council of Canada, both now defunct, started studying productivity and innovation in the 1960s. The graphs and charts were in simple black and white back then, the fonts weren’t as stylish and there weren’t quite as many indicators tracked so consistently by international agencies, but the message was essentially the same: We graduate lots of people from post-secondary education; our students’ test scores are internationally competitive; we spend a lot on research and development by universities and government; we have among the most generous tax subsidies for business R&D — and yet, despite all that, our businesses don’t spend as much on R&D as businesses in other countries do and our productivity is middle-of-the-pack, at best, and seldom as good as in our natural comparator, the United States.

Yes, but what about equality?

How The Economic Miracle of Chile Increased Life Expectancy by Almost 22 Yrs. in Just Half a Century

By M. Perry

The top chart above helps to document graphically what has accurately been described as the “the economic miracle of Chile.” Up until the early 1980s, when the first round of economic reforms (1974–1983) were starting to have a positive effect, Chile’s economic performance was among the weakest of the Latin American countries, with annual increases of real GDP per capita averaging only 0.70% from 1913 to 1983. Additional economic reforms in 1985 and 1990 that included trade liberalization supercharged Chile’s economy, and annual growth in per capita output since 1983 has averaged an impressive 4.0% per year. Before the economic reforms, with only 0.70% annual growth, it took almost an entire century for living standards to double in Chile; living standards now double every 19 years with 4.0% real growth, and that’s a real economic miracle!

A major factor in Chile’s amazing economic success has been its active pursuit since the 1990s of becoming one of the world’s most open and free markets. To help overcome its natural handicap of being a small and remote country, Chile has become a world leader in free trade, demonstrated by its free trade agreements with more than 50 countries around the world, giving its consumers and companies access to more than half of the world’s markets.

The bottom chart above illustrates a major benefit of Chile's miraculous economic turnaround: a significant increase in life expectancy relative to its South American neighbors.  In 1960, life expectancy in Chile was only 57 years, much lower than Venezuela (59.5 years), Paraguay (63.8 years) and more than five years below Argentina (65.2 years).  By 2009, life expectancy in Chile increased to 78.7 years, the highest in all of the Americas except for Canada (80.89 years) and the United States (79.43 years).  That's an amazing increase of almost 22 years in life expectancy for Chileans, from 57 to 78.7 years, in just half a century.

Bottom Line: The "Chilean economic miracle" demonstrates that free market capitalism and free trade are the best paths to prosperity and a long life.

Freedom vs "Security"

The Enigma of American Fascism in the 1930s

By Michael Kleen

In the third decade of the Twentieth Century, as the Great Depression dragged on and the unemployment rate climbed above 20 percent, the United States faced a social and political crisis. Franklin Delano Roosevelt was swept to power in the election of 1932, forcing a political realignment that would put the Democratic Party in the majority for decades. In 1933, President Roosevelt proposed a “New Deal” that he claimed would cure the nation of its economic woes. His plan had many detractors, however, and at the fringes of mainstream politics, disaffected Americans increasingly looked elsewhere for inspiration.

Catholic priest and radio-personality Charles Coughlin’s Christian Front, the German American Bund, the Black Legion, and a variety of nationalist, anti-Semitic, and/or isolationist groups opposed to President Roosevelt, “Moneyed Interests,” and Marxism attracted over a million members and supporters during that decade. Collectively, these groups have long been considered to be a particularly American expression of the same type of fascism that swept Europe in the 1920s and 1930s. The application of the term “fascism” to such a wide variety of individuals and organizations has proved troublesome, however, and the historiography on the subject is conflicted. Did European-style fascism appeal to Americans? Could an “American fascism” have kept the United States out of World War 2?

In order to answer those questions, we must first determine what American fascism was and was not, and then we have to understand why these groups and individuals failed to form any kind of broad coalition against Roosevelt, the New Deal, or liberal democracy itself.

Depending on the historian, American fascism began either as a far-ranging, populist-inspired movement and later degenerated into a number of fringe groups and fanatics, or it began as an isolated phenomenon that lost credibility during the Second World War and simply disappeared. Its adherents either consisted of a wide spectrum of Americans, or of a few thousand recently naturalized immigrants and two or three intellectuals.

“In the United States there were all kinds of fascist or parafascist organizations,” Walter Laqueur asserted in Fascism: Past, Present, Future (1996), “but they never achieved a political breakthrough.”[i] A decade earlier, historian Peter H. Amann took an opposite track. “It seems clear that there were far fewer authentically fascist movements in Depression America than was thought at the time,” he argued.[ii] Conversely, Victor C. Ferkiss, writing in the 1950s, contended that American fascism “was a basically indigenous growth,” and that a broad fascist movement “arose logically from the Populist creed.”[iii]

According to Ferkiss, American fascism was defined as a movement that appealed to farmers and small merchants who felt “crushed between big business . . . and an industrial working class,” espoused nationalism in the form of isolationism, believed that authority came from popular will and not from “liberal democratic institutions” that had been corrupted by moneyed interests, and possessed “an interpretation of history in which the causal factor is the machinations of international financiers.”[iv]According to Peter Amann, all fascism (even the American type) was characterized by an opposition to Marxism and representative government, advocacy of a “revolutionary, authoritarian, nationalist state,” the presence of a charismatic leader and a militarized mass movement, and commonly (although not universally) racist and anti-Semitic views.[v]

"A Cold Monster”

Nietzsche on the State

By Michael Kleen

Out of all modern philosophers, Friedrich Nietzsche (1844-1900) was one of the most unique critics of the modern State, yet his views on the subject have been largely overshadowed by his more famous critiques of morality, religion, and art. Since his death, only a handful of authors have broached the topic. Nevertheless, Nietzsche’s views on statism are as relevant today as they were when he wrote them down over a century ago. In his more sober moments, he saw the modern State as nothing more than a vehicle for mass power and as a squanderer of exceptional talent. In his most feverish moods, the State was “a cold monster” and a base falsehood.

During his lifetime, Nietzsche bore witness to the rise of statism in central Europe, and his disgust with nationalism, liberalism, and mass politics led him to live most of his life in self-imposed exile in Switzerland and northern Italy. Even after resigning from the University of Basel in 1879, he took to living in cheap boarding houses rather than return to his native land, which had undergone a dramatic transformation during that time. When Nietzsche was born in Saxony in 1844, the German Confederation consisted of 43 duchies, principalities, kingdoms, and free cities. He was only four years old when liberals and nationalists began to agitate for the creation of one unified German state. They succeeded in 1871, when Prussia defeated France in the Franco-Prussian War (in which Nietzsche briefly served as a medical orderly).

The Sound of Settled Science

A Shocking New Understanding of Static Electricity

A new study has found that the age-old understanding of this everyday phenomenon—one item becoming positively charged while the other becomes uniformly negative—is incorrect.

By Douglas Main

When you rub your hair with a balloon, your hair sticks to it. However, the common explanation behind this elementary school science demonstration may not be correct. A new study proposes a different story that goes against the common wisdom on static electricity that has prevailed for centuries. 
The traditional explanation for the balloon experiment goes like this: Friction causes the balloon and hair to transfer electrons, leaving each item with a uniform opposite charge. One is entirely negative and one positive, and they are then attracted to each other via static electricity. But Northwestern University researcher Bartosz Grzybowski led a study that appeared in Science last week that found things are not so black-and-white. His team's close examination of statically charged objects shows that both contain pockets of negative and positive charges. It is only the net total charge of each object that leads to their attraction. Furthermore, he found, static electricity is not caused solely by a migration of electrons or ions from one item to the other. In fact, Grzybowski says, static electricity may arise from a significant transfer of materials such as surface molecules. 
Grzybowski admits it's bizarre to find a huge surprise in a topic that has been studied since Greek polymath Thales of Miletus first rubbed amber on wool in 600 B.C., and found it could then attract light objects like feathers. Leading lights such as Nikola Tesla and Michael Faraday have studied the phenomenon, but they too reached the same conclusion. "One assumption common to all these models is that one material was positively charged, and one negatively charged," Grzybowski says. "This is actually not true." 
Perhaps we shouldn't be too surprised: Static electricity is a weird phenomenon to begin with, arising from contact between two insulators—materials that don't conduct electricity, but can create it when rubbed together. To test it in the lab, Grzybowski and colleagues used not balloons, but materials like the common polymers PDMS and Teflon. He pressed samples of insulators together before separating them (rubbing them could create more electrification but would make results harder to analyze). He then used Kelvin probe microscopy to measure molecular charges in the material. With this technique, a scientist runs a tiny probe over the microscopic hills and valleys of surfaces, and the probe vibrates differently over differently charged regions, creating a map of the charges. That's how Grzybowski saw that each material had a random patchwork of positive and negative charges, and neither was uniformly charged. In addition, his tests showed that PDMS and Teflon exchange silicon and fluorine atoms upon contact, a more significant transfer of material than ever previously shown. 
Case Western Reserve University chemical engineer Daniel Lacks says this new understanding is both fascinating and surprisingly practical. For instance, photocopying depends on precisely delivering charges to ink particles so they end up in the right place on the paper. But Lacks recalls several examples of powders becoming unexpectedly charged and exploding during manufacturing, something engineers could hopefully avoid with better knowledge of static electricity. That knowledge could also lead to better industrial coatings, which would help people like the manufacturer of polyethylene that Lacks advises. During the creation of polyethylene, sometimes the particles get unexpectedly charged and stick to the side of the reactor vessel. "Then you have to shut it down and clear out the chunks with chainsaws and blowtorches," he says. 
Grzybowski's new study also provides new puzzles for scientists to investigate. While the new study overturns some older beliefs about static electricity, it doesn't fully explain how the phenomenon works. "It's a great day when you come to the office and somebody shows you that your beliefs are wrong," UCLA physicist Seth Putterman says. 
Putterman says one thing that remains unexplained after this new study—and surprises him—is that the geometry of the charge pattern (that map of the different charges) doesn't change significantly as the two statically charged object move together and the charge decreases. To him, this implies that ions that move around easily on an object's surface are not causing static electricity. If they were, they should change the charging pattern that Grzybowski's team saw on the surface, he says. "To me this means you have extra electrons trapped deep inside the material causing the [static electricity], and they can't go walking around the surface as would ions," he says. That's because the electrons are bound up inside the material. 
Whatever the explanation proves to be, Harvard University chemist Logan McCarty says it's incredible something so common as static electricity remains such a mystery. "It's certainly more complicated than we have naively believed for many years." 

The Unholy Alliance

The Coming of the Fourth Reich?

By David Solway 

Much has been made of the “unholy alliance” ^[1] between the imperial left and a triumphalist Islam in advancing the cause of the modern totalitarian project. The left wants to see a top-down socialist utopia supplant the international order as we know it and militant Islam is determined to impose a Shariate upon the world. Indeed, as Norwegian scholar Hege Storhaug documents in But the Greatest of These Is Freedom ^[2], there is a brisk migration “from left-wing totalitarianism to religio-political totalitarianism.” The totalitarian mind is identical with itself, so to speak, differing only in the accidental content of its doctrines.

No less important, however, than this deep symbiosis between superficially implausible collaborators is the potent tutorial relationship that has been established between the patricians of the left and the emancipated youth of the contemporary West. Such an alliance, conducted under the aegis of the so-called “liberal” academy, is equally unholy. As with the German universities of the 1930s, modern universities throughout the “free world” have become factories of political indoctrination in which history is reinterpreted as a chronicle of infamy and the young are conscripted into the army of those who promise the advent of a golden millennium.

Palpably, the democratic West is becoming less democratic by the day. The rewriting of history linked with the virulent assault against the palladium of traditional liberalism — now better known as conservatism — has captivated the sensibility of the West and a resurgent authoritarianism once again marches into the future. The venerable impulse to restructure the world along the lines of a theoretical blueprint for universal salvation may periodically sink into abeyance, but it always re-emerges in one form or another, whether theocratic or secular. Today the movement has assumed massive proportions, uniting disparate cultures once thought to be immiscible and, as we have noted, even resolving the immemorial conflict between the generations.

The cultural stereotype of youth rebelling against the progenitor generation no longer holds, at least not in the West. Instead, what we are observing is the tightening bond between the clichéd antagonists of old. The generation of the Sixties, controlling the levers of power, has embarked on an intensive recruiting campaign among its epigones to ensure the eventual victory of what we might call the Fourth Reich, a grim collectivist world governed by the presumably enlightened benefactors of all mankind. I am not referring here to Robert Van Kampen’s biblical fantasy in his novel The Fourth Reich ^[3] or to Jim Marr’s thesis of the rise of Nazi-oriented secret societies and corporations in his similarly titled book ^[4], a belief that in my estimation smacks rather more of conspiracism than of fact. I have in mind the undoubted rapprochement between two separate temporal cohorts in the pursuit of a grand political design, with the modern university as the crucible in which the fusion occurs.

This latter development, the melding of the generations into a bichronic demographic, is the key to the program adopted by the utopian left in taking command of the institutions of learning. Ideas concocted in the insulated laboratories of the ivory tower and powered by an amorphous longing for a “we are the world” paradise predicated on the dissolution of the rigors of educated thought have become the reigning ideology of the era. Roger Scruton in Modern Culture ^[5] reminds us of the two disreputable options that tempt the meretricious prof: “pretend to the students that pop culture is the same [as high culture], and join them in their blithe distractions; or show the students how to deconstruct their heritage, and reassure them that it is a burden that they have done well to discard.”

A new Jacksonianism has prevailed. The staunch defender of the democratic West Henry Jackson, whom Daniel Patrick Moynihan, citing a Judaic tradition, called one of the 36 just men who sustain human existence, has given way to the self-indulgent and characterless Michael Jackson, who co-wrote the lyrics to “We Are the World.” And it is a world whose central and defining ideals, properly speaking, must be placed in inverted commas: “equality,” “peace,” “democracy,” “freedom,” “individualism,” “tolerance” now connote the opposite of their original intent. The perversion of language plainly goes hand in hand with the distortion of the historical record and the projection of an oracular depravity upon the political future.

These we-are-the-worlders are to be found everywhere among us, especially among the young enamored of revolutionary “heroes,” self-proclaimed “martyrs,” “epic” but largely fictive personalities, “valiant” jihadists, all professing to be fighting for liberty and justice and representing an infallible enticement to the inchoate sensibilities of those who rush to join what they conceive as the “great struggle” for the redemption of humanity.

Yet it is not a “great struggle.” It is a great debauch relying on the standard tropes of intellectual evasion — the natural goodness of man corrupted by institutional constructs, the colonial aggression of a guilty West, and the Jewish manipulation of world finance and thirst for world domination. (Case in point: The University of Toronto, where the scandalous Israel Apartheid Week originated, has just renewed the contract of a professor who instigated a faculty “Jew count” in support of students who protested against “old Jews because they are rich.” ^[6]) So it goes. And this historical aberration may finally succeed in achieving its aims, thanks to the wholesale seduction of the rising generation, the phalanxes of the young globally inducted into the service of a ruinous ideological regime.