Germany Speaks

Not So Fast On The Greek "Deal"

by Tyler Durden

Europe's now painfully transparent policy of demanding that Greece decide to default on its own is becoming so glaringly obvious, we truly fear for the intellectual capacity of everyone who ramps the EURUSD on any incremental "europe is saved" rumor. As a reminder, yesterday we said, in parallel with the Greek irrelevant MoU vote: 

We are running behind schedule

Friedrich Hayek on the sanctity of the Rule of Law

by SIMON BLACK 

One of the greatest thinkers of all time was Austrian economic Friedrich Hayek, and his work The Road to Serfdom is an absolute must-read.

Hayek’s writings are incredibly powerful in these times. In light of the countless recent examples of governments changing the rules whenever/wherever it suits them (from the Troika nonsense in Europe to the Fraudclosure settlement in the US), I’d like to share a few key passages with you today.

The Dream and the Nightmare

Europe in the Rearview Mirror

By Victor Davis Hanson 

The European Union was always a paradox. Its existence was predicated entirely on the notion of German guilt, translating into massive cash transfers east and south. Just as Versailles was supposed to have restrained Germany, then a divided, postwar Germany, then NATO integration and the common Soviet enemy, and then the EU — and now what next?

There was quite a EU veneer placed over the politically incorrect “German Problem.” Most of us listened in disbelief as we were lectured that veritable disarmament, subsidized windmills, reach outs to a Syria or Libya, easy anti-Americanism, and sermons about cradle-to-grave socialism were the way of the new Europe. And always came the grating condescension, that a self-appointed bureaucratic class in Brussels might lecture Neanderthals what was good for them, without worry over democratic checks and balances.

The White Man's Burden

The boycottistas didn’t end Apartheid

At long last, a TV documentary on how South Africans, not PC Western shoppers, ended Apartheid.

by David Bowden 

Allegedly, when, in 1972, Richard Nixon asked Zhou Enlai about the impact of the French Revolution, the then Chinese premier quipped: ‘It’s too early to tell.’ He was referring to the 1968 unrest, rather than the 1789 one. Whether or not the attribution is accurate, it was a good line and it particularly came to mind this week as BBC4’s monumental, five-hour documentary The World Against  Apartheid: Have You Heard From Johannesburg? Quietly passed its mid-point.

Three hours into its total running time, it’s still too early to tell just how comprehensive the series will be. And, nearly 20 years after the end of apartheid, it’s still perhaps ‘too early’ to judge how significant its global impact has been. But it’s certainly good to see the topic being given the serious and lengthy treatment it deserves. From economic sanctions to sporting boycotts, so many of the tactics pioneered in the international campaign against the apartheid regime have become touchstones for other political movements in the past few years – from Palestinian solidarity and Chinese human rights campaigning, to environmentalism and the Occupy protests. It was helpful to return to them in their appropriate context.

No more solutions, just ugly choices

The Answer We Don’t Want to Know

By John Mauldin

2012 will be the 11th time in my short life that I will be able to participate in the choosing of a president of the United States. While it may just be me, it seems like each and every election is cast as the most important election of our time and a defining moment for the American Experiment. The future of the Republic was being weighed in the balance, and only the proper outcome (which would of course be the election of the candidate you supported) would assure its survival. This week we will continue our meditations on the economic choices that confront the world, this time focusing on the US.

We will start with a thought experiment, in which I invite you to think about alternate histories. Just how important are presidents (or leaders in general) to the success or failure of the economy? And then how critical is the coming election this fall? We will assault a few of our most cherished beliefs, both from the left and from the right. If I do not offend you in the first few pages, I invite you to keep reading; I will get to you somewhere.

The Rule of Men

Farewell to the Free Market?

Western governments have compounded the economic crisis by rejecting the one force that can end it.

By NICOLE GELINAS

In the years leading up to 2007, the rules necessary to govern a flourishing market economy broke down, producing a financial and economic crisis. Rather than responding to the crisis by fixing those rules, the West aggressively repudiated market economics, and the repudiation continues to this day. Through their actions, which have lately involved everything from European debt to the American financial system to house prices in Britain, government officials around the world have revealed a disturbing assumption: that they can decide how to allocate resources better than markets can. No longer, it seems, do Western governments use investor signals as valuable feedback in devising effective policies; instead, they ignore those signals and plow ahead with their policymaking, leaving chaos in their wake. Often, in fact, public officials actively mute market signals in a vain but destructive attempt to impose their own will on struggling economies.

Last installments on the Greek Drama

Merkel's Official Denial "I will have no part in forcing Greece out of the euro"; Schäuble Starts Salami Tactics on German Participation, Calls for Vote

Germany's "Official Denial"

If you seek confirmation that Germany is actively trying to force Greece out of the Eurozone, strong evidence appears in the form of an "Official Denial"

Please consider Merkel Says Won't Force Greece Out of Euro

German Chancellor Angela Merkel said on Tuesday she did not want to see Greece being forced out of the euro, warning that this would have "unforeseeable consequences."

Tooth-level surveillance

The Church of Obama

By Mark Steyn

Announcing his support for Commissar Sebelius’s edicts on contraception, sterilization, and pharmacological abortion, that noted theologian the Most Reverend Al Sharpton explained: “If we are going to have a separation of church and state, we’re going to have a separation of church and state.”

Thanks for clarifying that. The church model the young American state wished to separate from was that of the British monarch, who remains to this day supreme governor of the Church of England. This convenient arrangement dates from the 1534 Act of Supremacy. The title of the law gives you the general upshot, but, just in case you’re a bit slow on the uptake, the text proclaims “the King’s Majesty justly and rightfully is and ought to be the supreme head of the Church of England.” That’s to say, the sovereign is “the only supreme head on earth of the Church” and he shall enjoy “all honors, dignities, pre-eminences, jurisdictions, privileges, authorities, immunities, profits, and commodities to the said dignity,” not to mention His Majesty “shall have full power and authority from time to time to visit, repress, redress, record, order, correct, restrain, and amend all such errors, heresies, abuses, offenses, contempts, and enormities, whatsoever they be.”

I Scream, You Scream…

 Paranormal Activity

By Mark Steyn

The other day, The New York Times offered the story of Juliet Pries, who attempted to open an ice cream parlor in San Francisco:

Ms. Pries said it took two years to open the restaurant, due largely to the city’s morass of permits, procedures and approvals required to start a small business. While waiting for permission to operate, she still had to pay rent and other costs, going deeper into debt each passing month without knowing for sure if she would ever be allowed to open.

“It’s just a huge risk,” she said, noting that the financing came from family and friends, not a bank. “At several points you wonder if you should just walk away and take the loss.”

We're All State Capitalists Now

It's called fascism

The debate about whether America or China will ultimately triumph is a red herring that distracts us from the real contest of our time.

BY NIALL FERGUSON

If there is one issue on which the rival candidates for the U.S. presidency agree, it's that America's global leadership will endure. Mitt Romney insists it is not a "post-American century," while Barack Obama declared in his State of the Union address that "anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn't know what they're talking about."

They must enjoy this kind of chest-beating in Beijing.

Did Germany Just Walk Out?

The Athens crew keeps digging deeper

By Tero Kuittinen

After a prolonged week of drama, Athens finally seemed to accept the terms of the new bail-out package.

Too bad the groom may have walked off from the altar. Germany’s response to the Greek “Yes” has been fairly brutal.

According to Reuters sources, Finance minister Schäuble has told German cabinet colleagues that Greece is still on track to 128% debt-to-GDP ratio in 2020 – a clearly unacceptable level. According to WSJ, Schäuble rejected the Greek deal already yesterday, basically immediately.

Sound money as a pillar of civilization

Hazlitt's Battle with Bretton Woods

by Llewellyn H. Rockwell Jr.

"The Austrians were right" is a phrase we hear often now, and for good reason. The housing bubble and bust were called by the Austrians and, essentially, no one else. The Austrians were right about the dot com bubble and bust. The Austrians were right about the 1970s stagflation and the explosion in the price of gold after the gold window was closed.

You can tick through the issues and see that the Austrians have been right again and again throughout history: on price controls, on protectionism, on bailouts, on wars, on regulation, on prohibitions and civil liberties, and so on.

But issues concerning fiat money and the business cycle stand out because the Austrians possess unique insight. Only the Austrians have consistently warned that fiat money creates the wrong incentives for the banking industry, that central-bank manipulation of interest rates distorts the structure of production, that the combination of paper money and central banking leads to economic calamity.

The non market force behind rating agencies

Is S&P a Weapon of Mass Destruction ?

By Anthony de Jasay

Is Standard & Poor, the venerable debt rating agency, a weapon of mass destruction reminiscent of the pre-Iraq war of George W. Bush and, like that phantom WMD, perhaps a merely imagined one? The answer is not easy to call, and has some relevance to how we should evaluate the strident demands for more and more regulation to correct alleged market failures.

Self-Interest and the Pathology of Power

Social Fractals and the Corruption of America

Social fractals and social control myths help explain the complete corruption of America.

By Charles Hugh Smith

Part I

Kathy K. recently elucidated a powerful concept: social fractals. We typically think of fractals--structures that are scale-invariant--as features of Nature or finance. For example, a coastline has the same characteristically ragged appearance from 100 feet, 1,000 feet and 10,000 feet in altitude. It is scale-invariant, i.e. its characteristics remain constant whether it is viewed on a small, medium or large scale.

The windmills of our collective minds

Dutch Pull the Plug on Offshore Wind Subsidies

By D. BRADY NELSON

The nation known for its iconic windmills is throwing in the towel on offshore wind power, as Dutch officials have determined the Netherlands can no longer afford large-scale subsidies for expensive wind turbines that cannot produce electricity at economically competitive prices.

The decision is a powerful blow against renewable power advocates who have long asserted Holland proves renewable power can be practical and economical.

Offshore Wind ‘Very Uncompetitive’

“Offshore wind remains a very uncompetitive option,” Dutch Minister of Economic Affairs Maxime Verhagen told Wind Directions: The European Wind Industry Magazine.

In the meantime, the debasement of paper money continues.

There will be no end to ‘quantitative easing’

Money

by DETLEV SCHLICHTER

The Bank of England is expected today to announce another round of debt monetization, called ‘quantitative easing’. A majority of economists polled by Dow Jones Newswire earlier this week expect the central bank’s policy committee to agree “to £50 billion ($79 billion) of additional bond purchases using freshly created money to underpin demand and ensure its 2% inflation target is met. Some expect it to go for £75 billion.”

Deadly Games

Energy policy based on renewables will win hearts but won't protect their owners from frostbite and death due to exposure

By Kevin Myers

Russia's main gas-company, Gazprom, was unable to meet demand last weekend as blizzards swept across Europe, and over three hundred people died. Did anyone even think of deploying our wind turbines to make good the energy shortfall from Russia?

Of course not. We all know that windmills are a self-indulgent and sanctimonious luxury whose purpose is to make us feel good. Had Europe genuinely depended on green energy on Friday, by Sunday thousands would be dead from frostbite and exposure, and the EU would have suffered an economic body blow to match that of Japan's tsunami a year ago. No electricity means no water, no trams, no trains, no airports, no traffic lights, no phone systems, no sewerage, no factories, no service stations, no office lifts, no central heating and even no hospitals, once their generators run out of fuel.

Alas. Politicians are also Human. Really.

How Kennedy bought 1,200 hand rolled Cuban cigars just hours before he ordered blockade of communist state 50 years ago
By LEE MORAN

President John F Kennedy ordered an aide to buy him as many Cuban cigars as he could just hours before he authorised the U.S. trade embargo - which subsequently made them illegal.

Kennedy asked his head of press and fellow cigar smoker Pierre Salinger to obtain '1,000 Petit Upmanns' on February 6, 1962, so he could have them in his hands before they were deemed contraband.

Then, seconds after he was told the next morning that 1,200 of Cuba's finest export had been bought for him, he signed the decree to ban all of the communist state's products from the U.S.

Read more:http://www.dailymail.co.uk/news/article-2098064/John-F-Kennedy-bought-1-200-Cuban-cigars-hours-ordered-US-trade-embargo.html#ixzz1lu1jnctG

Trade and Prosperity

The quest for African Trade Liberalization

by Marian L. Tupy

A wonderful short video explaining the benefits of trade liberalization among African countries:

Why Jews Don’t Farm

Literacy and Farming

by Steve Landsbur

In the 1890s, my Eastern European Jewish ancestors emigrated to an American Jewish farming community in Woodbine, N.J., where the millionaire philanthropist Baron de Hirsch provided land, tools, and training at one of the nation’s first agricultural colleges. But within a generation, the family had settled in Philadelphia where they became accountants, tailors, merchants, and eventually, lawyers and college professors.

De Hirsch had a vision of American Jews achieving economic liberation by working the land. If he’d had a better sense of history, he would have built not an agricultural college but a medical school, because for well over a millennium prior to the settlement of Woodbine, Jews had not been farmers—not in Palestine, not in the Muslim empire, not in Western Europe, not in Eastern Europe, not anywhere in the world.

Have you reached your breaking point yet?

INTRODUCING THE GOVERNMENT’S NEWEST UNPAID SPY: YOU

by SIMON BLACK 

One of the most terrifying aspects of George Orwell’s seminal work 1984 was his description of how society had turned into one giant police agency. People were encouraged to rat each other out, groomed since childhood to be unpaid government spies:

“[Children] adored the Party and everything connected with it… All their ferocity was turned outwards, against the enemies of the State, against foreigners, traitors, saboteurs, thought-criminals. It was almost normal for people over thirty to be frightened of their own children.”

You Don't Bring Me Flowers Anymore

Japan is dying

By Al Fin

Japan is dying, and it has nothing to do with the Fukushima nuclear plant that was demolished by a massive earthquake and tsunami. Japan's death is due to debt and demographics -- the two twin demons of destruction sweeping through many of the world's most advanced nations, from Asia to Europe to North America.

Japan's Demographic and Debt Crisis

As many as 1/3 of Japan's population will disappear by the year 2060, due to low birthrates.

In year 2060, Japan will have 87 million people. The number of people 65 or older will nearly double to 40 percent, while the national work force of people between ages 15 and 65 will shrink to about half of the total population, according to the estimate, made by the National Institute of Population and Social Security Research. The total fertility rate, or the expected number of children born per woman during

An orderly EMU break-up, à la Française

Salut souverainistes

By Ambrose Evans-Pritchard

For those wanting more details on the euro break-up plan drafted by French economists, here is the link to the L’Observatoire de L’Europe website.

A few extracts, loosely translated: "The obstinate determination of governments to take us by forced march deeper into the euro impasse can only lead to the general aggravation of the economic situation in Europe."

"Even though our American and Chinese competitors have an interest in the survival of the single currency, the euro is condemned to an uncontrollable explosion sooner or late". (A nice twist that one, inverting the false and widely believed conspiracy theory that the US is trying to destroy the euro.)

If you are not on the table, you are on the menu

Why Our Currency Will Fail

By Chris Martenson

The idea that the very same economic forces that are currently plaguing Greece, et al., are somehow not relevant to the United States' circumstances does not hold water.  As goes the rest of the world, so goes the US. 

When we back up far enough, it is clear that money and debt are there to reflect and be in service to the production of real things by real people, not the other way around. With too much debt relative to production, it is the debt that will suffer. The same is true of money. Neither are magical substances; they are merely markers for real things. When they get out of balance with reality, they lose value, and sometimes even their entire meaning.

America Before The Entitlement State

Mutual Aid Vs The Ponzi Gang

By Yaron Brook and Don Watkins,

Reacting to calls for cuts in entitlement programs, House Democrat Henry Waxman fumed: “The Republicans want us to repeal the twentieth century.” Sound bites don’t get much better than that. After all, the world before the twentieth century–before the New Deal, the New Frontier, the Great Society–was a dark, dangerous, heartless place where hordes of Americans starved in the streets.

Except it wasn’t and they didn’t. The actual history of America shows something else entirely: picking your neighbors’ pockets is not a necessity of survival. Before America’s entitlement state, free individuals planned for and coped with tough times, taking responsibility for their own lives.

Getting stuck paying the bill

The case of Hong Kong in brief

By Tim Staermose

Hong Kong’s total population is around 7 million. The workforce is 3.75 million.  So generous are the tax breaks and allowances, only about 1.5 million people pay any tax at all.

A single person can earn HK$108,000 a year (about US$14,000) before owing any tax.  And a married person with a dependent spouse can earn HK$216,000 (US$28,000) tax-free.

Why We Are Totally Finished

Capitalism is dead and that is why we are totally screwed

by Davos Sherman Okst

Capitalism Fixes Problems & Preserves Democracy: Capitalism is what we should be relying on to fix our problems. Capitalism has its own ecosystem, just like biology's ecosystem. An economic ecosystem that weeds out the weak has parasites that eat the failures and new bacteria that evolves and grows replacements for that which failed. A system that keeps everything in balance.

The problem is we are no longer a capitalistic society. What we were taught in school is now utter and absolute nonsense. Capitalism is a thing of the past.

As outlined in "It's Not A Financial Crisis - It's A Stupidity Crisis", we created two back to back bubbles. The air out of the Tech Bubble was sucked up for fuel by our next stupidity crisis: The Housing Bubble.

The New Brazil vs anti-modern celebs

Appeasing anti-development fantasists

James Cameron and other wealthy Hollywooders are wrong if they think they can carry on bossing Brazil about.

by John Conroy 

Film director James Cameron, responsible for Terminator, Titanic and, more recently, Avatar, has been working on a considerable side-project for a few years now. Cameron film fans shouldn’t get their hopes up, however. This side-project is more political than filmic. He has been trying to prevent the Brazilian government from constructing Belo Monte, the world’s third-largest hydroelectric dam, on the Xingu river which runs through the Amazonian rainforest.

That a Western movie director has taken an interest in what happens in parts of the Brazilian interior is not without precedent. For some time now, be it John Boorman’s Emerald Forest(1985) or John McTiernan’s Medicine Man (1992), various movie-makers have treated Brazil’s forests as a source of locations and actors to set and populate their fairytales of environmental destruction. 

How Change Happens

It’s not politics

By Jeffrey Tucker

What drives the innovations that improve our standard of living at such an amazing clip? It’s not politic

My brother is teaching a semester in London, and he casually video Skyped me last week to show me around his apartment, which is small but charming. I reciprocated by hauling up the cover of the e-book I am reading, and shared my desktop to show a YouTube performance of Renaissance music I thought he would enjoy. We chatted a bit more and hung up. No “long distance” charges.

Feelings versus Facts

Illusions of Recovery 

There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as the final and total catastrophe of the currency involved.” – Ludwig von Mises

  

The last week has offered an amusing display of the difference between the cheerleading corporate mainstream media, lying Wall Street shills and the critical thinking analysts like Zero Hedge, Mike Shedlock, Jesse, and John Hussman. What passes for journalism at CNBC and the rest of the mainstream print and TV media is beyond laughable. Their America is all about feelings. Are we confident? Are we bullish? Are we optimistic about the future? America has turned into a giant confidence game. The governing elite spend their time spinning stories about recovery and manipulating public opinion so people will feel good and spend money. Facts are inconvenient to their storyline. The truth is for suckers. They know what is best for us and will tell us what to do and when to do it.

Pushing Tensions to the Limit?

Russia and the United States

As Russia and the United States prepare for their respective presidential elections, tensions between the countries are growing. The central point of contention is U.S. ballistic missile defense (BMD) plans. Russia has several levers, including its ability to cut off supply lines to the NATO-led war effort in Afghanistan, to use in the standoff over BMD, but the United States could retaliate by supporting the current protests in Russia. Moscow is willing to escalate tensions with Washington but will not push the crisis to the point where relations could formally break.

Analysis

Relations between the United States and Russia are incredibly tense as both countries prepare for their respective presidential elections in 2012. The campaign season has presented both sides opportunities to escalate tensions, but it is unclear how far each side will go.

From "Hedge" To "Securitised" To "Ponzi"

Bill Gross On Minsky's Take Of The Liquidity Trap

by Tyler Durden

Over the weekend, we commented on Dylan Grice's seminal analysis which excoriates the central planning "fools", who are perpetually caught in the "lost pilot" paradigm, whereby the world's central planners increasingly operate by the mantra of “I have no idea where we’re going, but we’re making good time!” and which confirms that in the absence of real resolutions to problems created by a century of flawed economic models, the only option is to continue doubling down until terminal failure.

Basically, the take home message there is that once "economists" get lost in trying to correct the errata their own models output as a result of faulty assumptions (which they always are able to "explain away" as one time events), they drift ever further into unknown territory until finally we end up with such monetary aberrations as "liquidity traps", "zero bound yields" and, soon, NIRP (which comes after ZIRP), if indeed the Treasury proceeds with negative yields beginning in May under the tutelage of the Goldman-JPM chaired Treasury Borrowing Advisory Committee.

It takes, at least, two to tango

China Takes On Skeptics of Aid to Euro Zone

By Eliot Gao

Chinese Premier Wen Jiabao offered a forceful justification for helping Europe out of its debt crisis, in remarks that appeared aimed in part at countering public skepticism about the wisdom of using Chinese money to support rich world countries.

In remarks published Sunday, Mr. Wen pointed out that it's in China's best interest to aid its largest export market.

"Now that Europe is facing a [sovereign] debt crisis, we must consider our relations with Europe strategically, and preserve our national interests," Mr. Wen said, according to a statement on the central government's website.

Putin has Europe over a barrel. Again.

Power games

By The Automatic Earth

Western Europe is going to find itself very dependent on Russia as an energy supplier in the coming years, and as Eastern Europe already knows, that is an uncomfortable position to be in.

The dispute between Russia and the Ukraine over gas transit is not new. The Ukraine has been helping itself to gas for many years, and much of Ukrainian politics is based on jockeying for control of gas revenues.

Über Alles After All

Europe’s German future

By Christopher Caldwell

Last week Germany reclaimed its status as the leading power in Europe. In the two years since it became apparent that Greece was, essentially, bankrupt, there have been dozens of emergency meetings of the countries that use the common European currency, the euro. Most of the euro-using states believe that Germany—with a booming industrial economy, vast trade surpluses, a reputation for fiscal probity, and a history that makes it reluctant to reject the counsel of France—ought to cover the bill. Germany has long argued that Greece must become competitive again by selling off state assets and cutting government handouts. More recently, Germany has added another demand—that EU authorities be empowered to discipline Greece and other delinquent countries. At the Brussels summit on January 30, the Germans won. 

Aggregate nonsense

In the meantime, the debasement of paper money continues.

by DETLEV SCHLICHTER

The economic policy debate is dominated by wishful thinking and fallacies of the most dangerous kind propagated no less by the high and mighty in the policy bureaucracy and the alleged experts in the media.

Here is my point, and every clear-thinking person already knows it: That economic growth, and thus recovery from the crisis, will come about through the actions of governments is complete and utter nonsense. It is an illusion to assume that running budget deficits and printing lots of money and manipulating prices will make the economy better. Nevertheless, this fantasy is being reflexively regurgitated ad nauseam in countless reports and ‘analyses’ in the media so that nobody really bothers thinking about it anymore. A large part of the public seems to have been numbed into passively accepting it as the truth.

Corporate Power vs The Free Market

The Left and Public Choice Theory

by mark pennington

The mention of public choice theory to those on ‘the left’ of politics can prompt a variety of reactions. Some are based on ignorance about the very existence of public choice economics as a theoretical perspective. This reaction was demonstrated to me following one of the first lectures I gave in my academic career. Having listened to me speak for an hour on the power of incumbent firms to ‘capture’ regulatory agencies an attending student who was an activist in the Socialist Workers Party asked me, ‘when did you become a Marxist?’ Needless to say, for someone who considers himself a radical ‘anti-Marxist’ I was taken aback by this approach! What the question exemplifies though is an attitude that is widespread in academic circles – the assumption that an interest in power imbalances that favour business interests must equate with one having leftist or socialist sympathies. The idea that there might be a classical liberal/free market understanding of ‘power relations’ as exemplified by public choice theory is a possibility that simply hasn’t occurred to this particular species of left-winger.