The divided state of America

When the survival of morality becomes reliant on the findings of geneticists, you know that it is in trouble

Charles Murray’s new book is a valiant effort to explain why America's upper classes are now so hollow and defensive, and incapable of marshalling the moral resources to lead society

by Frank Furedi 

The nineteenth-century British politician Benjamin Disraeli once characterised ‘the rich and the poor’ as ‘two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts and feelings, as if they were dwellers in different zones, or inhabitants of different planets’. It is a description that applies uncannily to contemporary American society.

I recall the first time I travelled to America – back in 1967 – having a discussion with my then girlfriend about how difficult it was to distinguish between the well-off and the not so well-off people on the streets of the places we visited. That was then. When I visit these days, I am struck by the contrast in appearance between rich and poor white citizens. They now look so different. They eat different food; they pursue different cultural interests; they speak differently; and, most important of all, they communicate values and attitudes that are often strikingly at odds with one another. It is all very redolent of the kind of social and cultural polarisation so prevalent during the nineteenth century.

A Caveman’s Account of “Civilized Society”

It’s my way…or I club you to death

By Joel Bowman

Freedom has a thousand charms to show,That slaves, howe’er contented, never know.

                                 — William Cowper, Table Talk

Emblazoned across the lucre-basted exterior of the Internal Revenue Service building in Washington DC, reads one of the most intellectually polluted quotes any free mind is ever likely to encounter:

“Taxes are the price we pay for a civilized society.”

Despertar (Awakening)

Dedicated to all Castro's intellectual collaborators around the world

By Generation Y Blog
He holds the microphone pressed to his mouth and his dreadlocks swing restlessly across his back. Raudel Collazo is on stage: sweating, singing, talking, the whole time a chorus of applause joining the music. After the concert he returns to his house in Guines, to the narrow broken sidewalk along which he walks his daughter to school, to his mother with the white wrap around her head. The documentary Despertar (Awakening), directed by Anthony Bubaire and Ricardo Figueredo, explores the man who gives his body over to banned music. On the screen, it exposes the concerns that he voices in the lyrics of el Escuadron Patriota — the Patriot Squadron. Filling out this exploration, the camera also captures the everyday family and personal images that have been narrated in his songs.

Why José Daniel?

Because that's what dictators do

By Yoani Sánchez 

I knew they would go after him. When I spoke with José Daniel Ferrer for the first time, by phone, I immediately noticed his exceptionality. Shortly after, we talked around the table in our house and this impression was further confirmed. While outside night was coming on, the man from Palmarito de Cauto told us of the years he spent in prison, from the Black Spring of 2003 to mid-2011. The beatings, the denouncing, the inmates who respectfully called him “the politician” and the guards who tried to crush him by force. We spent hours listening to those stories, at times of horror and at others of true miracles. Like when he managed to hide a small radio, his most precious possession, from the searches until he himself smashed it against the floor, seconds before a guard confiscated it.

We deserve to get it good and hard, and we will

H.L. Mencken Was Right

“Democracy is also a form of worship. It is the worship of Jackals by Jackasses. It is the theory that the common people know what they want, and deserve to get it good and hard.”

by Jim Quinn

H.L. Mencken was a renowned newspaper columnist for the Baltimore Sun from 1906 until 1948. His biting sarcasm seems to fit perfectly in today’s world. His acerbic satirical writings on government, democracy, politicians and the ignorant masses are as true today as they were then. I believe the reason his words hit home is because he was writing during the last Unraveling and Crisis periods in America. The similarities cannot be denied. There are no journalists of his stature working in the mainstream media today. His acerbic wit is nowhere to be found among the lightweight shills that parrot their corporate masters’ propaganda on a daily basis and unquestioningly report the fabrications spewed by our government. Mencken’s skepticism of all institutions is an unknown quality in the vapid world of present day journalism.

France: The Coming Waterloo

The growing gulf between the illusions fostered by the ruling class and the world as it actually is

By Fabio Rafael Fiallo

In France, conditions appear to be set for a rout that - relatively speaking - bears a triple similitude with the defeat of Napoleon at Waterloo in 1815. Except that, this time, the scene takes place, not on the military-geopolitical ground, but in the realm of finance, and for that matter of the economy in general.

First similitude: in both cases there exists a gulf between, on the one hand, the illusions fostered by the ruling class and, on the other, the world as it actually is.

Indeed, just as Napoleon's France tried to impose her geopolitical pretensions upon the whole Europe even at the twilight of her power, so too a good tranche of today's political establishment in France keeps the public opinion under the illusion that a France with a shrinking weight in the world economy can maintain alive a profligate Welfare State that is seriously impairing the country's competitiveness and finances.

A manifestation of this Napoleonic rejection of reality relates to the flow of extravagant, capitalism-bashing stances taken during the current electoral campaign. In order to explain why things go bad in France, presidential candidates make believe (some more than others) that the culprit of the country's woes is to be found in the outside world - globalization of the world economy, low wages in emerging economies, "voracity" of financial markets, transnational corporations' search of profit-maximization, immigration flows - rather in France's dispendious "social model" and labor-market rigidities.

Sweden’s secret recipe

Advice from a successful – and tax-cutting – finance minister

By FRASER NELSON

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

A New Global Warming Alarmist Tactic

Real Temperature Measurements Don't Matter

By James Taylor

What do you do if you are a global warming alarmist and real-world temperatures do not warm as much as your climate model predicted? Here’s one answer: you claim that your model’s propensity to predict more warming than has actually occurred shouldn’t prejudice your faith in the same model’s future predictions. Thus, anyone who points out the truth that your climate model has failed its real-world test remains a “science denier.”

Climate scientist Roger Pielke Sr. reports on his webpage that he recently reviewed a paper that had the following assertion, “A global climate model that does not simulate current climate accurately does not necessarily imply that it cannot produce accurate projections.” (!)

A Farewell to Factories

Calls to address decline of manufacturing sector in the United States are misguided

By Gary Becker

Manufacturing employment as a fraction of total employment has been declining for the past half century in the United States and the great majority of other developed countries. A 1968 book about developments in the American economy by Victor Fuchs was already entitled "The Service Economy." Although the absolute number of jobs in American manufacturing was rather constant at about 17 million from 1969 to 2002, manufacturing's share of jobs continued to decline from about 28 percent in 1962 to only 9 percent in 2011.

Concern about manufacturing jobs has become magnified as a result of the sharp drop in the absolute number of jobs since 2002. Much of this decline occurred prior to the start of the Great Recession in 2008, but many more manufacturing jobs disappeared rapidly during the recession. Employment in manufacturing has already picked up some from its trough as the American economy experiences modest economic growth, and this employment will pick up more when growth accelerates.

Japan must change

Three Reasons Japan’s Economic Pain Is Getting Worse

By Jared Diamond

Japan’s economic problems are serious and getting worse. Foremost among them is the crushing burden of government debt.

Japan’s ratio of government debt to gross domestic product, currently about 2.28, is by far the highest in the industrial world, almost double that of even Greece and Italy, and steadily growing. Already, the combined costs of interest on that debt and social security are approximately equal to total government tax revenue.

Japan’s trade balance is about to go negative for the first time since 1980. Land values and Nikkei stock values have fallen to about 30 percent of 1989 levels. Now, educated young Japanese women are emigrating, Japanese companies are shifting production overseas (even to the U.S.), national politics are in gridlock (six prime ministers in the past five years), and last year Japan experienced its first mass street protests in decades.

Some Tolstoyan advice for the UK on debt

Unindebted countries are all alike; overindebted countries are overindebted in their own way

By Martin Wolf

The UK’s debt problem has been exaggerated. That was the thesis of a provocative speech on “deleveraging” by Ben Broadbent, a member of the Bank of England’s Monetary Policy Committee, in March. Is this convincing? What does it imply?

Japan shrinks

Japan is now a "net mortality society"

By Nicholas Eberstadt

In 2006, Japan reached a demographic and social turning point. According to Tokyo's official statistics, deaths that year very slightly outnumbered births. Nothing like this had been recorded since 1945, the year of Japan's catastrophic defeat in World War II. But 2006 was not a curious perturbation. Rather, it was the harbinger of a new national norm.

A euro parable

The couple with a joint account

By Kenneth Rogoff
Perhaps the following parable is not entirely fair to the euro, but nevertheless the parallels seem striking.

Consider a young couple who is contemplating marriage, but unsure whether to take the big step. So instead they decide to test things out by opening a joint bank account. At first things go remarkably smoothly. Heady with success, they get the inspiration of extending the arrangement to her brother and his sister. Not only do they hope to show their siblings how well they can cooperate, but with four people, the total size of the account reaches the critical threshold needed to receive exorbitant privileges normally accorded to the bank’s larger customers.

Thanks to a cleverly designed constraint to limit imbalances between each sibling’s contributions and withdrawals, the innovative experiment continues to flourish. There is no real enforcement mechanism, but the two sets of siblings are determined to make the arrangement succeed. Forced to interact routinely, the couple and their siblings start becoming closer. They even start having dinners together on a routine basis.

North Korea redefines 'minimum' wage

North Korea as a Modern Day Nuclear Sparta

By Andrei Lankov 

When one talks about virtually any country, wages and salaries are one of the most important things to be considered. How much does a clerk or a doctor, a builder or a shopkeeper earn there? What is their survival income, and above what level can a person be considered rich? 

Such questions are pertinent to impoverished North Korea, but this is the Hermit Kingdom, so answering such seemingly simple questions creates a whole host of problems. 

We could look first at official salaries but this is not easy since statistics on this are never published in North Korea. Nonetheless, it is known from reports of foreign visitors and sojourners that in the 1970s and 1980s, most North Koreans earned between 50 to 100 won per month, with 70 won being the average salary. 

Vive La Resistance?

France votes to throw down the gauntlet to Europe

By Gideon Rachman

The battle for France has a couple of weeks to run. After that, the battle for Europe will begin. Both Nicolas Sarkozy and his challenger in the French presidential election, François Hollande, are promising to save the “French exception” by radically changing the direction of the European Union.

Most of France’s European partners are inclined to dismiss the two candidates’ rhetoric as cynical sloganeering, as they gear up for the final round of voting on May 6. It is assumed that, at the conference table in Brussels, France will be “reasonable”. But that is complacent. In Sunday’s first round of voting, the far right and far left scooped up about one-third of the votes. This election has already revealed a deep French anxiety about globalisation, austerity and national identity to which all the candidates pandered to. That will be reflected in France’s behaviour in Europe.

Russia's Greek Gambit

Yusufov fights to keep bid for Greek DEPA alive

By Robert M Cutler 

An investment vehicle created by a former Russian energy minister and Gazprom director has appealed against its exclusion from bidding for the Greek public gas utility DEPA. Igor Yusufov's Fund Energy has been suspected of being Gazprom's "Plan B" in the stakes for DEPA, which is being privatized as a result of the crisis in Greek government finances. Yusufov is "part of Russian Prime Minister Vladimir Putin's inner circle, and has already been active in Cyprus", according to the Athens newspaper Kathimerini. 

Gazprom's interest in DEPA stems from the Greek utility's participation in the Interconnector Greece-Italy (IGI) project, a planned natural gas pipeline that has lost out against the Trans-Adriatic Pipeline (TAP) in the competition for candidacy for the "western route" for Azerbaijan's offshore Shah Deniz gas to Europe. 

The French road to perdition

Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back

By Martin Hutchinson 

The French presidential election vote on May 6 is important not only to France; on it rests the future of the euro. Spain, about which the markets have been agonizing for the last few weeks, is merely a sideshow; it has only moderate levels of international debt and could at a pinch be bailed out by its European partners if necessary. 

France is however both considerably larger, and when looked at closely, in poorer shape. If it gets into trouble, it also leaves a rather small group of nations with the "duty" of supporting it. If Nicolas Sarkozy is re-elected, France will probably muddle through, but his opponents' policies are sufficiently bad that if one of them is elected the collapse of both French public finances and the euro system are very likely. 

Feeding Europe's Drug Addiction

Banks Gorging on Sovereign Bonds Shifts Risk

A drug addict lays on the ground in central Athens. Addicts have been a presence in Athens city center for more than 20 years, but with the recent crisis, things are getting worse for them, according to Philippos Dragoumis, president of a municipal center for prevention.

By Yalman Onaran

Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.

Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data.

Spain, Land of Magical Financial Realism

Spanish banks are going to lend the fund that is supposed to bail out the banks, the money to bail them out

By Raoul Ilargi Meijer

These days when I read about Spain I'm wondering more and more how and why it is that the country has any access at all left to international finance markets. The bond auction this week was even sort of bearable, even as yields rose. I'm guessing that either investors have a hard time reading the news or they're going double or nothing in a risk-on bet that Germany and the IMF (China?!) will come to the rescue.

There's certainly a lot of humor in the stories. Which defy even the most imaginative minds; and don't try telling me you could have made this up. Pater Tenebrarum at the Acting Man blog has a few choice bits:

Miserere Nobis – More Pain In Spain

 [..] every time a bank merger is consummated, it turns out that the losses of the weaker banks are far greater than was previously assumed (or rather, admitted to). As a result, Spain's deposit guarantee fund (DGF) has run out of money.

In Britain, the bill comes due

Leniency and Its Costs

by Theodore Dalrymple

The principal cause of the riots in England that astonished the world (but not me) last year was revealed recently, when a man named Gordon Thompson was sentenced to 11 and a half years’ imprisonment at the Old Bailey for arson. That cause is the laxity of the British criminal-justice system.

It was Thompson who, last August, set fire to a family-owned furniture store in Croydon that had stood as a landmark for 140 years. The blaze spread quickly and people, some lucky to survive, had to be evacuated from nearby houses. The photo of a woman leaping from her window to escape the flames became for a time as emblematic of London as the Houses of Parliament.

Thompson, now 34, was heard to boast of his exploit immediately afterward; but, arraigned in court, he thought better of it and, through his lawyer, apologized to “everyone involved” but especially to the store’s owners.

Merkel’s Back is Against the Wall…

Time for Germany’s “Plan B”?

Politics, not economics, rule Europe. What I mean by this is that most major decisions in Europe are determined by political agendas that ignore economic and financial realities.

This is at the core of the “welfare state” mentality that permeates Europe as a whole. The EU in general is comprised of an aging population that is more concerned about receiving the pensions/ health benefits/ social payouts that were promised to them by the system than anything else.

As a result of this, EU voters, who determine EU elections, don’t take action until what has promised to them comes under threat.

For this reason, EU political leaders will maintain their agendas regardless of whether said agendas go against financial or economic realities (or common sense for that matter) until these agendas begin to have real negative consequences for their political careers.

Skeletons are getting out of the Chinese closet

The Paranoid Style in Chinese Politics

By Minxin Pei

Henry Kissinger, who learned a thing or two about political paranoia as Richard Nixon’s national security adviser and Secretary of State, famously said that even a paranoid has real enemies. This insight – by the man who will be known forever for helping to open China to the West – goes beyond the question of whether to forgive an individual’s irrational behavior. As the scandal surrounding Bo Xilai’s dramatic fall from power shows, it applies equally well to explaining the apparently irrational behavior of regimes.

Separated at Birth

Does it Matter if Obama Beats Romney? Does it Matter if Hollande Beats Sarkozy?

By Mike "Mish" Shedlock

Does it really matter who wins the French presidential election between socialist François Hollande and incumbent president Nicolas Sarkozy?

What about the race in the US between President Obama and Mitt Romney? Let's discuss those questions one at at time.

Does it Matter if Hollande Beats Sarkozy?

In spite of alleged differences, both candidates are in support of Eurobonds, both candidates want immigration controls, both candidates want the ECB to be more proactive, both candidates want to protect French farms from import threats.

To varying degrees both candidates are against free trade. Most importantly, both candidates want Germany to take on more risk and pony up more money to "save" the euro.

Ich Bin Ein Athener

The Big Fat Greek Wedding is coming up on May 6

 “The only relevant test of the validity of a hypothesis is comparison of prediction with experience”                                                   -Milton Friedman

by Mark J. Grant

It was on January 13, 2010 that I first predicted that Greece would default. The yield on their ten year was 4.38%. I took a lot of flak for that call at the time. Vindication was mine in the end and Greece may be the spark that lights the fuse by the time we all look back and marvel at the way the European Union played out. Yesterday as we all watched the Holland and Hollande Show; Greece was scarcely on the radar. That act was behind us now we think and we are off to different adventures. Not so fast my friends, a moment’s respite; nothing more.

Living Above and Beyond Market Forces

See tomorrow today?

Bret Stephens in the WSJ:

“ … the mystery of France is how a nation can witness what happens to countries that live beyond their means and yet insist on living beyond its means. France’s debt-to-GDP ratio will rise to 90% this year from 59% a decade ago. It spends more of its GDP on welfare payments (28.4%) than any other state in the developed world. It has an employment rate of 62.8%, as compared to Germany’s 76.5% or Switzerland’s 82.9%…Americans should also take note that we aren’t so different from France, either: in our debt-to-GDP ratio, our employment rate, our credit rating. Above all, both in France and in America there’s a belief that, as exceptional nations, we are impervious to the forces that make other nations fall. It’s the conceit that, sooner or later, brings every great nation crashing to earth.”

Still, France looks relatively sane compared to some of the things that are happening in the US.

Utopia in action

With Venezuelan Food Shortages, Some Blame Price Controls

By WILLIAM NEUMAN

CARACAS, Venezuela — By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries.

“Whatever I can get,” said Katherine Huga, 23, a mother of two, describing her shopping list. She gave a shrug of resignation. “You buy what they have.”

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.

Debt Reckoning for Europe

Country-by-country and bank-by-bank, the good must be disentangled from the bad

By Amar Bhidé

Saving the euro, say the sages of the global economy, requires radical steps.& The OECD recently called for a large European firewall – a mega-bailout fund for troubled governments and banks. Others argue for integrating taxes and borrowing in the eurozone and shedding weak members, like Greece, that struggle with a strong currency.

But tall firewalls, fiscal union, or homogeneity of membership are neither necessary nor desirable. What is needed are mechanisms that recognize and accommodate differences, rather than new top-down efforts to impose uniformity.

What Happens When All the Money Vanishes Into Thin Air?

Paper money is an abstract representation of the real world

Issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth.

by Charles Hugh Smith

I could have written "if all the money vanishes," but that would be misleading, for all unbacked money will most certainly vanish into thin air. The only question is when, not if. Frequent contributor Harun I. explains why:

Those who fail to understand that the Status Quo is impossible to maintain will be shocked when the disintegration is undeniable. But the whole thing was perverse to begin with. Words like capitalism and meritocracy are thrown around to make people feel good when, in reality, we have never owned anything, not even ourselves.

The New War Games

The General's Dystopia

BY ROBERT HADDICK

On April 12, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, discussed what he called the "security paradox" at Harvard's Kennedy School of Government. The good news in the world today, according to Dempsey, is that interstate conflict is currently minimal, human violence is at an all-time low, and the United States faces "no obvious existential threat." Yet Dempsey insisted that "I'm chairman at a time that seems less dangerous but it's actually more dangerous." Why?

The New Narco State

Mexico's drug war is turning Argentina into the new Wild West of the global narcotics trade

BY HALEY COHEN

Last September, Argentine Judge Carlos Olivera Pastor emerged from his courthouse in the northwestern province of Jujuy to find a box next to his parked car. Numbered as if it held judicial files, Pastor removed the box's top and found instead a decapitated head, the eyes glassy and open. In October, two men savagely assaulted a penal secretary from the same district, warning that the next time they would murder him. According to officials at SEDRONAR, a government agency that fights addiction and drug trafficking, most of the drugs that enter Argentina pass through the sparsely populated northwest of the country, and the judges, who frequently handle drug-related cases, avowed narco-traffickers were responsible for the incidents.

Weidmann Says What No Politician Wants to Hear

Jens Weidmann is no longer his master’s voice

By Jeff Black and Tony Czuczka

Almost a year into his new job as the head of Germany’s Bundesbank, Weidmann, 44, has matured from Chancellor Angela Merkel’s discreet right-hand man at global economic meetings into one of the few European policy makers warning that governments are failing to do what’s needed to rescue the euro.

Après Moi, le Déluge

An awful lot of hogs at the trough

By Mark Laudin

If history has taught one certain lesson, it is that the less fettered an economy, the better humankind is able to do what it does best: run from trouble and run toward opportunity. In this way mistakes are quickly resolved and progress assured.

Conversely, the deeper the muck of regulation, mandates, taxes, subsidies and other bureaucratic meddling, the slower we humans are in following our natural instincts until the point that progress is slowed or even stopped.

It is said that history doesn't repeat itself, but it often rhymes. In the current circumstances, it appears that enough time has passed that current generations have completely forgotten the critical connection between the ability of humans to freely pursue their aspirations and economic progress.

Multiculturalism and the Melting Pot

Is Uncle Sam in real danger?

by John Derbyshire

London Mayor Boris Johnson spoke the other day about the riots that devastated London and other English cities last summer:

"The biggest shock for me from the riots was the sheer sense of nihilism—perhaps I should not have been shocked, but in my view literacy and numeracy are the best places to start. In seven particular boroughs in London one in four children are leaving functionally illiterate. In a few schools it is nearer 50%. We have to intervene at an earlier stage, and I think the mayor can help."

The Times they are A-Changin'

Democracy Could Destroy the Euro

Upcoming elections in France and elsewhere will likely show massive popular resistance to the austerity policies needed to save the common European currency

By MICHAEL SIVY

The euro has survived a string of disasters, from the banking crisis in Ireland to the real estate collapse in Spain as well as nonstop economic chaos in Greece. But now the common European currency faces an even greater threat, one that it may be unable to overcome: democracy.

Quite simply, in most of the countries that make up the euro zone, there is no longer a substantial majority willing to make the sacrifices needed to keep the euro currency system together. This has always been true to some extent. Commentators have long talked about the euro zone’s “democratic deficit,” meaning Europe’s economic system is largely the creation of powerful political and business interests and lacks transparency, accountability and a broad popular mandate. But up until now, support by the elites has been more than sufficient to keep the system intact.