The lady vanishes

Shale and its Discontents 

The New York Times still doesn’t get the shale revolution

 

By R. Bryce.

The shale-gas (and shale-oil) revolution is the single most important development in the North American energy sector since the discovery of the East Texas Field in 1930. But you won’t get that story by reading the New York Times.

Instead, two recent articles by Ian Urbina, the Times’ designated reporter on shale development, claim that the shale business is overhyped. On Sunday, June 25, the paper ran a front-page story that relied largely on anonymous sources who used phrases such as “giant Ponzi schemes,” “inherently unprofitable,” and “an Enron moment” to describe the last few years of shale development in the U.S. The story ended with yet another unattributed quote, which discussed a rather lackluster well that had been drilled into a shale bed in Europe. An employee of an oil-field-services company said the well “looked like crap” and that it would likely be sold to another company. According to the anonymous source, there’s “always a greater sucker.”

But who’s the sucker here?

Believing Urbina’s story entails believing that the industry’s top management and financial analysts — at ExxonMobil and several other major energy companies — are chumps. In late 2009, ExxonMobil paid $41 billion for XTO Energy, a Houston-based company that was sitting atop huge shale-gas assets. According to the president of Shell US, Marvin Odum, the company has invested some $17 billion in shale drilling over the past few years. During a recent presentation at the Aspen Institute, Odum said, “We wouldn’t be doing it if it wasn’t real.” Numerous companies are building huge pipelines into the Eagle Ford shale in South Texas.

Believing Urbina also requires even the most casual observers of the energy industry to disregard the billions of dollars that consumers have saved over the past couple of years due to the reduced price of natural gas — a price drop made possible by a boost in production. The latest spot price for natural gas at the Henry Hub in Louisiana is about $4.40. To make the math easy, let’s call it $4. Over the four-year period from 2005 to 2008, U.S. natural-gas prices averaged about $7 per thousand cubic feet. That price reduction is now saving American consumers about $60 billion per year, or about $180 million per day. 

U.S. natural-gas production is now at, or above, the peaks achieved in the early 1970s. In 2011, we’ve had more than a dozen days in which gross domestic gas production has been as high as 64 billion cubic feet. The last time the U.S. had gas production at that level was in 1971, when gas production averaged 62 billion cubic feet per day.

Assessing Risk

One Million Dead in 30 Seconds

In an increasingly urbanized world, earthquakes threaten unprepared cities with mass destruction.

by Claire Berlinski

Seismic risk mitigation is the greatest urban policy challenge that the world confronts today. If you consider that too strong a claim, try to imagine another way in which bad urban policy could kill a million people in 30 seconds. Yet the politics of earthquakes are rarely discussed, and when discussed, widely misunderstood. Take the Great East Japan Earthquake on March 11, which released 600 million times the energy of the Hiroshima bomb. The ensuing partial meltdown of the Fukushima reactor prompted international hysteria about nuclear power, but few seemed to realize that a far deadlier threat had been averted. As seismologist Roger Bilham has aptly put it, houses in seismically active zones are the world’s unrecognized weapons of mass destruction—and Japan’s WMDs didn’t go off. Its buildings—at least those that weren’t swept away by the accompanying tsunami, a force of nature against which we are still largely helpless—remained standing, and the people inside survived.

That so few buildings collapsed in the earthquake was a human triumph of the first order. It showed that countries can make great progress in seismic risk mitigation; in the Kobe earthquake of 1995, 200,000 buildings collapsed. But cities around the world seem happy to ignore the earthquake threat—one that is only growing as the cities themselves get bigger and bigger.

In January 2010, an earthquake struck Haiti and destroyed nearly 100,000 buildings. Hospitals, schools, government buildings, jails, hotels, churches, whole neighborhoods—all crumbled, entombing everyone inside. After the quake, I received an e-mail from a scholar of international relations. “It’s odd that earthquakes tend to occur frequently in countries that can least afford them,” she wrote.

You could only write such a sentence if you had never given the matter much thought. It isn’t odd; in fact, it isn’t true. Mother Nature doesn’t have it in for the poor. Rather, earthquakes come to our attention only when they are disasters, and they are disasters only when they strike dense urban areas full of badly made buildings. Last year, there were a number of earthquakes larger than the one that leveled Port-au-Prince, but they didn’t make the news because they happened in the middle of nowhere. California’s Loma Prieta quake, the “World Series earthquake” of 1989, was as big as the one in Port-au-Prince. It killed so few people by comparison—only 63—because San Francisco’s buildings and infrastructure were well designed and strong.

In the wake of the Kobe quake, Japanese engineers took extensive measures to reinforce buildings and infrastructure. They installed rubber blocks under bridges. They spaced buildings farther apart to prevent domino-style tumbling. They introduced extra bracing, base isolation pads, hydraulic shock absorbers. A minute before the March earthquake, automatic seismic monitoring systems sent warnings to Japanese cell phones. Elevators glided obediently to the nearest floor and opened. Surgeries were halted. Videos from Tokyo show skyscrapers swaying gracefully, like cornstalks in the wind. Not one collapsed.

Likewise, the aftershock that struck Christchurch, New Zealand, this past February was deadly, but the astonishing part of that story isn’t that several of the city’s buildings collapsed; it’s that most of them did not. The peak ground acceleration—a measurement of how much the ground shakes—was immense, one of the highest ever recorded. Something like that would have flattened most cities. New Zealand’s strict and well-enforced building codes saved Christchurch from annihilation.

Paying the tab

Going Soft On Greece

IBD Editorial

Secretary of State Hillary Clinton on Sunday praised Greece for its economic policy "leadership." Wait a minute: Isn't this the country that lied to its creditors and has just stuck U.S. taxpayers with an IMF bailout?

Greece is such a wretched mess that it's hard not to feel sorry for it. It's racked up $329 billion in debts it can't pay.

Now it's passed an austerity package in exchange for a $145 billion bailout from the International Monetary Fund and has its hand out again for a bailout from Europe, which will be hashed out Wednesday.

Beset by riots from its own clueless citizens who refuse to recognize that it's out of money, Greece has become pathetic. In such straits, it's tempting to offer its government some encouragement.

But the hard fact remains that Greece's woes are self-made, making Clinton's words of praise reek of weakness and disingenuity.

"We stand by the people and government of Greece as you put your country back on a path to economic stability and prosperity," Clinton said, appearing with Greek Foreign Minister Stavros Lambrinidis and praising Greece for its recent austerity measures. "Committing to bring down the deficit and passing the medium-term fiscal strategy were vital first steps. We know these were not easy decisions. They were acts of leadership."

Leadership? Actually, in other places, this is known as paying one's bills and living within one's means.

Greece, though, pretty well amounts to the Bernie Madoff of governments. And its late efforts to correct course are driven by the fact that it's bankrupted itself.

Its bad path started from the beginning of the crisis.

• ·        Having promised the European Union it would never let its deficit go higher than 3% of GDP upon joining in 1981, it blithely ignored that and racked up a deficit of 10.5% of GDP without ever seriously trying to cut the size of its government. Today, its endless spending has left it with debt worth 143% of GDP.
• ·        Greece's debt crisis was marked by a notable dishonesty. Working with investment banks such as Goldman Sachs, it borrowed more than it could repay to finance its bloated government and then hid the debt from the European Union and its creditors.
• ·        Using an off-balance-sheet currency swap arrangement since 2002, it swapped its own debt into euro debt to keep it off the official statistics.
• ·        That enabled Greece to issue $15 billion worth of bonds it couldn't have issued under honest conditions.
• ·        The country has also been plagued by corruption and a riot-prone citizenry that not only has no idea what big government costs, but has clearly been taught by its own government to always blame others.

This is the sorry reality of Greece. As Clinton pays a solicitous visit, she does so knowing that the U.S. and Europe have been saddled with bailing Greece out.

The U.S. piece of the IMF bailout is $39 billion, money from U.S. taxpayers she purports to represent.

Instead of coddling Greece like a spoiled debutante, wouldn't it have been better to deliver an icier greeting to a country that has practiced so much habitual dishonesty? Some tough love might ensure Greece's government recognizes its error. After all, its weakness not only hurts itself, but leaves it as an enfeebled NATO ally that can no longer pull its weight.

But there are several reasons why that's not happening.

First, Greece's problems are big, and a recalcitrant Greece could pull down some big continental banks.

So Hillary's conciliatory words are little more than the weakness of a banker who wants a faulty creditor to keep paying. That's not a good position for a superpower to be in against a beggar state that isn't even sure it needs to reform.

Second, the U.S. federal debt showdown has the U.S. sadly in about the same situation at home — too much borrowing and big government.

How the U.S. could exert any moral authority over Greece at such a time is hard to see. So while the U.S. is paying the Greeks' tab, it has a tough time telling Greece to live within its means.

Clinton may want to finesse everything, but it's obvious the U.S. position is one of a big government comforting another big government instead of standing up for the interests of the U.S. taxpayers. In the end, again, it's they who get stuck with the tab.

State is essentially a concept of power

The Character of American Individualism

By Murray N. Rothbard

Individualism, and its economic corollary, laissez-faire liberalism, has not always taken on a conservative hue, has not always functioned, as it often does today, as an apologist for the status quo. On the contrary, the revolution of modern times was originally, and continued for a long time to be, laissez-faire individualist. Its purpose was to free the individual person from the restrictions and the shackles, the encrusted caste privileges and exploitative wars, of the feudal and mercantilist orders, of the Tory ancien régime.

Tom Paine, Thomas Jefferson, the militants in the American Revolution, the Jacksonian movement, Emerson and Thoreau, William Lloyd Garrison and the radical abolitionists — all were basically laissez-faire individualists who carried on the age-old battle for liberty and against all forms of State privilege. And so were the French revolutionaries — not only the Girondins, but even the much-abused Jacobins, who were obliged to defend the Revolution against the massed crowned heads of Europe. All were roughly in the same camp. The individualist heritage, indeed, goes back to the first modern radicals of the 17th century — to the Levellers in England, and to Roger Williams and Anne Hutchinson in the American colonies.

The conventional historical wisdom asserts that while the radical movements in America were indeed laissez-faire individualist before the Civil War, that afterwards, the laissez-fairists became conservatives, and the radical mantle then fell to groups more familiar to the modern Left: the Socialists and Populists. But this is a distortion of the truth. For it was elderly New England Brahmins, laissez-faire merchants and industrialists like Edward Atkinson, who had financed John Brown's raid at Harper's Ferry, who were the ones to leap in and oppose the US imperialism of the Spanish-American War with all their might.

No opposition to that war was more thoroughgoing than that of the laissez-faire economist and sociologist William Graham Sumner or than that of Atkinson who, as head of the Anti-Imperialist League, mailed antiwar pamphlets to American troops then engaged in conquering the Philippines. Atkinson's pamphlets urged our troops to mutiny, and were consequently seized by the US postal authorities.

In taking this stand, Atkinson, Sumner, and their colleagues were not being "sports"; they were following an antiwar, anti-imperialist tradition as old as classical liberalism itself. This was the tradition of Price, Priestley, and the late-18th-century British radicals that earned them repeated imprisonment by the British war machine; and of Richard Cobden, John Bright, and the laissez-faire Manchester School of the mid-19th century. Cobden, in particular, had fearlessly denounced every war and every imperial maneuver of the British regime. We are now so used to thinking of opposition to imperialism as Marxian that this kind of movement seems almost inconceivable to us today.

By the advent of World War I, however, the death of the older laissez-faire generation threw the leadership of the opposition to America's imperial wars into the hands of the Socialist Party. But other, more individualist-minded men joined in the opposition, many of whom would later form the core of the isolationist Old Right of the late 1930s. Thus, the hardcore antiwar leaders included the individualist Senator Robert LaFollette of Wisconsin and such laissez-faire liberals as Senators William E. Borah (Republican) of Idaho and James A. Reed (Democrat) of Missouri. It also included Charles A. Lindbergh, Sr., father of the Lone Eagle, who was a congressman from Minnesota.

Almost all of America's intellectuals rushed to enlist in the war fervor of the First World War. A leading exception was the formidable laissez-faire individualist Oswald Garrison Villard, editor of the Nation, grandson of William Lloyd Garrison and former member of the Anti-Imperialist League. Two other prominent exceptions were friends and associates of Villard who were later to serve as leaders of libertarian thought in America: Francis Neilson and especially Albert Jay Nock. Neilson was the last of the laissez-faire English Liberals, who had emigrated to the United States; Nock served under Villard during the war, and it was his Nation editorial denouncing the progovernment activities of Samuel Gompers that got that issue of the magazine banned by the US Post Office. And it was Neilson who wrote the first revisionist book on the origins of World War I, How Diplomats Make War (1915). The first revisionist book by an American, in fact, was Nock's Myth of a Guilty Nation (1922), which had been serialized in LaFollette's Magazine.

We are all Greeks now Part II

Divinely comical

by DETLEV SCHLICHTER

“Italy, long a bystander to the euro-zone’s debt woes, was thrust into the eye of the storm on Monday, as investors fled the country’s bonds and Europe’s leaders struggled to keep the crisis from infecting the Continent’s third-largest economy.”

Thus reports the Wall Street Journal Europe this morning. What?, I was thinking. Bystander? Investors fleeing the country? –-  Was anybody still holding Italian bonds?

That Italy was next in line was so obvious, how can anybody truly be surprised? What were you thinking, sitting on a pile of Italian debt while watching Greek bonds slide into the Aegean Sea? This has been talked about for more than a year, for chrissake!

On CNBC yesterday, PIMCO’s Mohamed El Erian said that Italy was not like Greece, Ireland, or Portugal. Better maturity profile, yes, and more debt held by domestic investors. Ah, very clever.

Well, could it be that you are over-analyzing the issue, Mohamed? – I am all for keeping it simple: Italy will not repay its debt, neither will Spain, France or Germany for that matter.

The question is not if Italy is in better shape than Greece but whether it is in good enough shape.

Almost all states are meeting their present obligations by borrowing more. They are servicing their debt by accumulating more debt.

This is not a healthy strategy. It relies crucially on the willingness of your creditors to keep funding an EVER-growing debt pile. Maybe that is asking a bit too much. In any case, lenders are having a re-think right now.

Remember: on a long enough time-line, everywhere is Greece.

Oh, please, you cannot be surprised!

Hey, bond investors, why not be a step ahead of the curve for a change and sell some Bunds? The German government is also heading for fiscal trouble – it is just a question of time. Either Germany has to bail out everybody else in Europe and goes broke that way, or the other European governments finally do the honest and manly thing – don’t count on it!- and default, in which case Germany has to bail out its bankers who for years have been happily handing their funds over to Greek and Italian politicians for a few basis points more in spreads, financial geniuses that they are.

So who is thinking that Bunds are a safe haven? Well, probably the same guys who thought that Italy would be safe. Better maturity profile.

Sorry if I am quoting myself – and Oscar Wilde – but you got to have a heart of stone not to be crying with laughter at the plight of the euro-elite and their grand design built on cheap money and ever more debt.

Two weeks ago, the Financial Times reported that Greek savers were lining up to buy physical gold. I am sure in a few weeks from now we hear the same from Italy. This is still a sensible strategy, in my view – and not just for Greeks and Italians. The governments are bust, the banks are bust – and the major risk is that in their desperation the Eurocrats will use the printing press to buy some time.

Will the ECB be a push-over? – Of course!

Read the rest at http://papermoneycollapse.com/2011/07/divinely-comical/

The titanic struggle

The end of progress?

Government overregulation threatens innovation

By R. Rahn

Have things stopped getting better? Americans had become used to ever-increasing living standards, but there is evidence that for many people, life is not improving. There is also a growing pessimism about the future with surveys showing that Americans do not think their children and grandchildren will be better off.

Last week, there was a most interesting discussion between two of the world's leading tech gurus - George Gilder and Peter Thiel - at FreedomFest in Las Vegas. Mr. Gilder has written some of the most influential books of our time, including "WealthandPoverty," "Microcosm" and "Telecosm," and was the one who popularized Moore's Law, which says computer power doubles about every 18 months and costs fall by half. Mr. Thiel is best known as a co-founder of PayPal and the angel investor in Facebook. He also has gained attention by offering $100,000 grants to college students who drop out to form companies.

Mr. Thiel argues that, in many areas, progress has stopped or almost stopped. For instance, for hundreds of years, mankind has sought to travel faster and faster - first with faster and faster sailing ships and then with powered sea vessels, and subsequently with trains, automobiles and airplanes. Fifty years ago, it was widely predicted and assumed that commercial airplanes would be traveling at speeds of 2,000 miles an hour or more by now. It hasn't happened. In fact, travel times have gotten slower. The Concorde, which became the first supersonic commercial airplane in 1976, was abandoned eight years ago. Planes now fly no faster than they did in the 1960s because of government policies and restrictions. In addition, the government's incompetent Transportation Security Administration has unnecessarily managed to increase trip times to another hour or so.

Nuclear power was supposed to bring us electricity too cheap to meter. But government restrictions on many types of power production and excessively costly regulation have driven up energy prices in real terms after centuries of falling energy prices. After the first moon landings, many confidentially predicted that the moon would have permanent manned bases by now and, perhaps, even be colonized - but now the space shuttle has been abandoned with no replacement. Drug approvals are dramatically down at the Food and Drug Administration compared with where they were a decade or more ago. Meanwhile, the promised cure for cancer is still in the future, even though progress has been made.

Some industries, notably education, have been showing negative productivity, in that it now costs more in real terms to provide the same level of education in primary and secondary school as well in college than it did four decades ago.

George Gilder, while agreeing with Mr. Thiel's critique of government in denying people the benefits of existing or new technologies, is somewhat more optimistic about the ability of venture capitalists and the tech entrepreneurs to overcome the heavy drag of government on our lives. Mr. Gilder notes that Moore's Law continues to hold decades after Gordon Moore first described the process. In every decade, we have seen a hundredfold increase in computer power and a 524-fold increase in bandwidth, which is why you can now see movies on your cellphone.

The technologies would have translated into much higher real incomes for most people if it were not for the heavy foot of government on the economic windpipe. Whereas the private sector makes almost everything faster, cheaper and better, the government makes almost everything slower, more expensive and worse.

It is no secret that those in government seek power - including the power to tax and regulate. But it takes some time to figure out how to regulate new industries. Old industries, such as energy production, transportation and education, are heavily regulated. Accordingly, the people do not get the benefits of lower costs and better products in these industries that would be possible if the regulators were not outlawing innovations. The United States and other governments are now in the process of destroying the global financial industry through misguided and destructive regulations. Few medical advances come from countries that have nationalized medicine, and if Obamacare is allowed to continue in the United States, it is almost a certainty that medical progress will be stifled and millions will die unnecessarily early.

The government has not figured out how to destroy the Internet and advances in computers. So the struggle goes on between those who try to innovate faster than the government can find ways to outlaw the future. It is no surprise that as governments grow, the rate of technological progress in those countries slows down and vice versa.

There is a titanic struggle now going on in Washington over the size of the U.S. government. Those who want a smaller government are, in effect, saying they want to unleash the future with all of its benefits by removing many of the regulatory and tax restrictions that impede human progress, while those who seek a bigger government are, in reality, pushing for a less prosperous and less kind future.

Update from the Bolivarian Paradise

Venezuela's Chavez to boost prison construction

by AP

Venezuelan President Hugo Chavez on Friday said he is instructing officials to boost prison construction after a 27-day uprising by inmates highlighted problems of overcrowding and violence.

Chavez likened the problems in Venezuela's prisons to cancer, saying dealing with them requires "deep treatment."

Days before Chavez underwent a cancer operation last month inCuba, troops stormed a prison near Caracas in a search for weapons, and armed inmates began an uprising in response. The nearly monthlong crisis ended on Wednesday when hundreds of prisoners emerged from the adjacent Rodeo II prison after negotiations with authorities. Officials have said that several inmates also escaped, including four who were killed by troops.

"New facilities must be built," Chavez said in an interview with state television, adding that he has also decided to create a new Cabinet ministry to oversee prison issues.

"Those old jails must be transformed," Chavez said. "Thanks to God that this case was resolved."

He condemned corruption among prison guards and administrators that has allowed a flourishing trade in guns and drugs in the prisons. "It's like a cancer. We must fight against that," Chavez said.

Chavez announced on Friday that Peruvian President-elect Ollanta Humala had just arrived for a visit. Chavez called him a brother in a message on Twitter, saying "Let's give him the most patriotic of welcomes!"

Humala, a populist leftist and, like Chavez, a former military man, had delayed his visit because of the Venezuelan leader's health.

Chavez told state television that he has been waking up at sunrise and reading German philosopher Friedrich Nietzsche. He said he also has taken up painting again and has been creating a landscape from one of the windows of the presidential palace.

"I know there are people who are happy because they believe I'm dying, that I'm going to die soon," Chavez said, "but those evil wishes are part of that hatred ... That is erased like a tsunami of love by the blessings and prayers of a nation, of millions."

Re-shaping America

How America dropped the baton

By FRANK MIELE

Every culture is either self-propagating, or by definition it is self-destructive. Culture has no meaning and no value unless it is passed on to the next generation.

Think of it as a generational relay race, with the belief systems of a group of people being the baton that is passed on from runner to runner. You can imagine the mayhem that would be caused in a race if at each hand-off, the runners stopped and debated the shape, size or color of the baton. If each new runner insisted on dictating revisions to the baton before carrying it forward, this would slow things even further. Not only would the team lose the race, but ultimately the baton would not look anything like what it was when the race started.

Under such circumstance, the idea of culture as a set of shared beliefs and values, passed on from father to son, and mother to daughter, would be meaningless. And if each runner taught his or her successor to despise the baton as unworthy, then sooner or later the baton would be dropped, and the culture would end.

It is this picture which must inform our discussion of education as we try to understand why the America of 2011 looks nothing like the America of 1911. Somewhere along the way, the baton of proud American traditions, brilliant accomplishments and upstanding virtues became a thing of shame and ridicule. Our schools, teachers and yes our parents have more and more questioned our long-held values, and have substituted expedient excuses for eternal truths.

Whether such a dangerous agenda was externally imposed or merely a form of accidental suicide, I don’t know. But I am convinced that the proof that such a change took place is just as self-evident as those Jeffersonian truths that mankind for the past 100 years has been so eager to hide from.

You can either believe J. Edgar Hoover or you can believe Nikita Khruschev, two icons from the 1950s — one a proponent of free enterprise and Americanism, the other an advocate of totalitarian communism. But what is funny is that it doesn’t matter which one you believe because they were in total agreement that America was in danger of losing its identity, its values... its cultural baton.

Hoover and Khruschev each acknowledged that there was an effort underway to destroy capitalism and the American way of life. And though both men have tarnished reputations nowadays, in the mid to late 1950s, they were at the pinnacle of their power and were certainly among those in the best position to know whether America was under attack.

Hoover, the director of the FBI during five pivotal decades, wrote in the Elks Magazine in August 1956, “We must now face the harsh truth that the objectives of communism are being steadily advanced because many of us do not recognize the means used to advance them... The individual is handicapped by coming face to face with a Conspiracy so monstrous he cannot believe it exists. The American mind simply has not come to a realization of the evil which has been introduced into our midst.”

Dating Scarlett Johannson

No bargaining with Barack Obluffer

By Mark Steyn

There is something surreal and unnerving about the so-called "debt ceiling" negotiations staggering on in Washington. In the real world, negotiations on an increase in one's debt limit are conducted between the borrower and the lender. Only in Washington is a debt increase negotiated between two groups of borrowers.

Actually, it's more accurate to call them two groups of spenders. On the one side are Obama and the Democrats, who in a negotiation supposedly intended to reduce American indebtedness are (surprise!) proposing massive increasing in spending (an extra $33 billion for Pell Grants, for example). The Democrat position is: You guys always complain that we spend spend spend like there's (what's the phrase again?) no tomorrow, so be grateful that we're now proposing to spend spend spend spend like there's no this evening.

President Barack Obama holds a news conference at the Brady Press Briefing Room at the White House July 15, 2011 in Washington, D.C. President Obama discussed the ongoing budget and debt limit negotiations with congressional Republicans and Democrats.

On the other side are the Republicans, who are the closest anybody gets to representing, albeit somewhat tentatively and less than fullthroatedly, the actual borrowers – that's to say, you and your children and grandchildren. But in essence the spenders are negotiating among themselves how much debt they're going to burden you with. It's like you and your missus announcing you've set your new credit limit at $1.3 million, and then telling the bank to send demands for repayment to Mr. and Mrs. Smith's kindergartner next door.

Nothing good is going to come from these ludicrously protracted negotiations over laughably meaningless accounting sleights-of-hand scheduled to kick in circa 2020. All the charade does is confirm to prudent analysts around the world that the depraved ruling class of the United States cannot self-correct, and, indeed, has no desire to.

When the 44th president took office, he made a decision that it was time for the already unsustainable levels of government spending finally to break the bounds of reality and frolic and gambol in the magical fairy kingdom of Spendaholica: This year, the federal government borrows 43 cents of every dollar it spends, a ratio that is unprecedented. Barack Obama would like this to be, as they say, "the new normal" – at least until that 43 cents creeps up a nickel or so, and the United States Government is spending twice as much it takes in, year in, year out, now and forever. If the Republicans refuse to go along with that, well, then the negotiations will collapse and, as he told Scott Pelley on CBS the other night, Gran'ma gets it. That monthly Social Security check? Fuhgeddabouddit. "I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue," declared the president. "Because there may simply not be the money in the coffers to do it."

But hang on. I thought the Social Security checks came out of the famous "Social Security trust fund," whose "trustees" assure us there's currently $2.6 trillion in there. Which should be enough for the Aug. 3 check run, shouldn't it? Golly, to listen to the president, you'd almost get the impression that, by the time you saw the padlock off the old Social Security lockbox, there's nothing in there but a yellowing IOU and a couple of moths. Indeed, to listen to Obama, one might easily conclude that the whole rotten stinking edifice of federal government is an accounting trick. And that can't possibly be so, can it?

For the Most Gifted Orator in Human History, the president these days speaks largely in clichés, most of which he doesn't seem to be quite on top of. "Eric, don't call my bluff," he sternly reprimanded the GOP's Eric Cantor. Usually, if you're bluffing, the trick is not to announce it upfront. But, in fact, in his threat to have Granny eating dog food by Labor Day, Obama was calling his own bluff. The giant bluff against the future that is government spending.

Demography is Destiny

We’re All Greeks Now

by Patrick J. Buchanan 

Departing for New Hampshire in November 2010, Sen. Judd Gregg, the fiscal conservative President Obama wanted in his Cabinet, blurted an inconvenient truth: “This nation is on a course where if we don’t do something about it, get … fiscal policy (under control), we’re Greece.”

The remark was regarded as hyperbole. But Gregg had a point. For though Greece, measured by the size of her economy, is only 2 to 3 percent of the EU or the U.S. economy, she is a microcosm of the West.

Consider the demography.

According to the most recent revision of the U.N.’s “World Population Prospects,” Greece in 2010 had 11.2 million people.

More than 24 percent were 60 or above, more than 18 percent 65 or older. Three percent were 80 or above. And, every year, for every nine Greeks who are born, 10 Greeks die.

Greece is slowly passing away.

Fast forward to 2050.

Greece’s population will have fallen by 300,000 to 10.8 million. The median age will have risen by eight years to 49.5. Half the population will be 50 or older. More critically, the share of Greece’s population 60 or older will be 37.4 percent, with 31.3 percent over 65. One in nine Greeks will be over 80.

If Athens is breaking under the weight of early retirement and pensions for seniors today, her situation will be horrendous by mid-century.

Where, in 2010, there were four Greeks under 60 for every Greek over 60, by 2050, there will only be 1.7 Greeks under 60 for every Greek over 60.

Conclusion: The retirement age must rise, and pension benefits fall, or Greece collapses.

What of the possibility of a new baby boom? Not likely, given that the fertility rate in Greece has been below replacement levels for three decades and is today only two-thirds of that needed to replace the present population.

Indeed, by 2050, the fertility rate of Greek women will have been below zero population growth for 80 years. One wonders: How can the U.N. estimate that Greece’s population will fall only 3 percent by then? Is the U.N. assuming mass immigration from the Muslim world?

But what does Greece have to do with the rest of Europe, or with us?

Only this. The median age of all of Europe is rising, and the demographic numbers for Greece look positively rosy alongside those of the east, where population declines in the tens of millions are projected for Russia and Ukraine. And outside Iceland and Albania, not one nation of Europe has a fertility rate sufficient to maintain its population. Those that are projected to grow, like Britain, have to be relying on Third World immigrants and their higher birth rate.

But while this may maintain an existing population size, immigrants from the Maghreb, Middle East, Caribbean, Latin America and South Asia, on average, lack the language, technical skills and educational levels of native-born Europeans.

The same is true in the U.S., where peoples of European descent are expected to drop to half the population by 2041. Hispanics will grow from 15 percent to near 30 percent of the U.S. population, and their absolute numbers from 50 million to 135 million by 2050.

Yet, again, Hispanics and children of Hispanic immigrants have not, as of yet, reached close to parity in educational achievement with Americans of East Asian or European ancestry.

People equate today’s immigration with the immigration of 1890-1920. But another major difference is this: We erected a Great Society over 50 years that did not exist in 1920.

In Washington in the 1950s, a city of 800,000, half black and half white, food stamps had not been invented. Families fed themselves. Today, in a District of Columbia of 600,000, one in five are on food stamps. Nationally, a program that did not exist in 1964 feeds one in seven Americans, 44 million people, at a cost of $77 billion a year. And that is but a small fraction of our new Great Society.

We are entering a new “age of austerity,” said British Prime Minister David Cameron in 2009.

The halcyon days are over. Government payrolls, as is happening from California to New York to Washington, D.C., will have to be slashed. Pension and health care benefits, not only for seniors, will have to be reduced. Retirement ages will have to be raised. From food stamps to foreign aid, programs are going to be capped and cut.

The left believes it can get the money from the wealthy. But the top 1 percent of Americans in income already carry 40 percent of the federal income tax load, while the bottom 50 percent of wage-earners ride free. This, too, will have to end.

We are either going to man up and radically reduce government at all levels in the United States, or the bond markets are going to do it for us, as they are doing it today for Greece, Ireland and Portugal.