Culture Matters

Why the West is Best

By Bruce S. Thornton

Occasionally, the mainstream media will let slip something that reveals the incoherence of multiculturalist orthodoxy. Not long ago, the New York Times reported on an Indian casino in California that had begun purging its rolls of members deemed insufficiently Indian. At the end of the story, an official from the federal Bureau of Indian Affairs, himself an Indian, remarked: “The tribe has historically had the ability to remove people. Tolerance is a European thing brought to the country. We never tolerated things. We turned our back on people.”

Such honesty about the Western origins of goods like tolerance is rare these days among the media, academic, and popular-culture purveyors of multicultural “diversity.” For them, other cultures are just as good as, if not better than, the West’s—but at the same time, these cultures allegedly endorse Western ideals such as tolerance, gender equality, human rights, political freedom, and the other universal boons to which people everywhere aspire. They deem it Eurocentric or racist to assert the superiority of the West because it originated those goods, even as they castigate the West for its racist, sexist, imperialist, and colonialist crimes. But as Ibn Warraq shows in his thoughtful and compelling new book, the ideals that even multicultural relativists profess have their origin and highest development in the West.

The forgotten man

There are still Hans Littens around the world today

by Hans Nilssen
In the Berlin courtroom, Adolf Hitler's face burned a deep, furious red.

The future dictator was not accustomed to this kind of scrutiny.

But here he was, being interrogated about the violence of his paramilitary thugs by a young man who represented everything he despised - a radical, principled, fiercely intelligent Jewish lawyer called Hans Litten.

The Nazi leader was floundering in the witness stand. And when Litten asked why his party published an incitement to overthrow the state, Hitler lost his composure altogether.

"That is a statement that can be proved by nothing!" he shouted.

Litten's demolition of Hitler's argument that the Nazis were a peaceful, democratic movement earned the lawyer years of brutal persecution.

Germany Has To Stay

Unscrambling the omelet

By Francois Chauchat

In his Reuters column last week (see here), and his recent Daily, Anatole argues that it may be more logical for Germany to leave the eurozone, rather than Spain or Italy. Germany is indeed the main outlier in economic terms; if it were removed, intra-euro zone economic dispersion would be much lower. However a scenario where Germany is the only country that exits is not just improbable—it is also undesirable:

·                     Germany has long been considered by the other Europeans as the main vector of reforms, and a catalyst for change in France and Southern Europe. While Germany hardly fits the Anglo-Saxon ideal of a flexible, free-market economy (although more so since the inception of Gerhard Schroeder's reforms), the country is a more acceptable model for Europe's laggards than that provided by the US or the UK. If Germany leaves, which textbook would guide the economic policy of the South? Mao's red book?

What Will Germany Do?

A choice of Break-Up or Break-Down

By Anatole Kaletsky

Now that the Greek election is over, with the pro-bailout parties gaining enough seats for a slim majority, Europe can return to the regular cycle of panic, relief, disappointment and renewed panic, that we have observed for the past two years. This time, however, the relief rally may be even shorter than usual, since the market's attention will soon shift from Athens to Madrid, Paris and, above all, Berlin. Since Greece has no chance of meeting its financial targets, the new government will soon need significant new concessions from the troika. Assuming that Germany resists such concessions, as well as the much larger ones that will soon be required by Spain, the fundamental contradiction of the euro project will again be brought into focus. A single currency can only be sustained within a fiscal and political union that can mutualise and monetize the debt— something that Germany refuses even to discuss.

People Matter

Merchants of Despair

by Bruce S. Thornton

A ruling idea of the last two centuries has been materialism: the notion, as arch-materialist Daniel Dennett asserts, that “there is only one sort of stuff, namely matter—the physical stuff of physics, chemistry, and physiology—and the mind is somehow nothing but a physical phenomenon.” One consequence of this belief has been the rise of antihumanism—the stripping from people of their transcendent value and a reduction of them to mere things in the world to be studied, understood, reshaped—and ultimately controlled.

The zombies are everywhere

When your Credit card stops working

By Bill Bonner

Florida; Nobody knows anything in Florida. They’re all retired down there. They don’t have to think anymore.

And one of the things they don’t think about very much is the zombie wars. You know what’s happening. The productive sector of our economy is being eaten alive by the unproductive, zombie sector — including many of those retirees in Florida.

Which is probably a good point to make a distinction. There are honest retirees…and zombies. The honest ones worked hard, saved their money…and now they live off the fruits of their own labor.

The dishonest ones live on disability…Social Security…bailouts and government contracts. That is, they live off the fruits of someone else’s labor.

“Hold on, Bill,” we hear you saying. “You can’t condemn a person for living on Social Security. After all, we all pay into the system. It’s not free. You have to earn it.”

Reason, Desire and Divine Intervention

Merkel, Party Of "Nein"

"Ah, nowadays we are all of us so hard up, that the only pleasant things to pay are compliments. They're the only things we can pay."

                                                                                              -Oscar Wilde
By Mark J. Grant
There are those that wait and hope and pray that there will be Divine Intervention. They cling to the belief that Germany, in the end, will back down and retreat and agree to bail everyone out. Germany’s GDP is only $3.2 trillion and this expectation, believed in by more than a few, is not only ridiculous in my opinion but a mathematical impossibility.  If you just take the example of Spain where $125 billion has been pledged to fix its banks and you put it in perspective the situation becomes clearer. As with many things, if they are discussed in the platitude it seems reasonable but when taken down to the hard numbers; a different opinion emerges. If you take just this $125 billion for Spain and consider that the United States has a GDP twelve times that of Spain and that the equivalent number would be $1.27 trillion which is $577 billion more than that was authorized by Congress for our TARP program then you begin to see the enormity of what is taking place in Europe. Next consider that Germany’s GDP is 22.3% of America’s and try to imagine what the troubled nations on the Continent are asking of Germany and why they keep saying “No.”

Fragile Things Have A Tendency To Break

Will German guilt overcome German fiscal responsibility?

By Jeff Harding

Europe is a fine example of the dangers of governments that become too involved with their economies. On the one hand their politicians try to “run the economy” and on the other hand they are fiscally irresponsible, the results of which harm economic growth. It is like watching a slow motion car crash in the making as these governments try to solve the problems they created.

 Last week that in the Rome mini-summit with Merkel, Monti, Hollande, and Rajoy, they agreed to promote a new round of funding for measures to stimulate economic growth to offset the “ravages” of so-called austerity. This €130 billion funding will be another waste of money, much of which will be German money. There is another summit this week. They are worried.

Making the World Safe for Islamism

What has the U.S. won after 30 years of intervention in the Mideast?

By PATRICK J. BUCHANAN

Sixteen months after the United States abandoned its loyal satrap of 30 years, President Hosni Mubarak, to champion democracy in Egypt, the returns are in.

Mohammed Morsi, candidate of the Muslim Brotherhood, is president of Egypt, while the military has dissolved the elected parliament that was dominated by the Brotherhood, and curbed his power.

The military and the mullahs will fight for the future of a country that is home to one in four Arabs. The soldiers who have dominated Egypt since the ouster of King Farouk in 1952 show no willingness to surrender what they have long controlled of the state and economy.

Yet in the long run, the Brotherhood — whose claim to guide the nation’s destiny is rooted in a faith 1,400 years old — is likely to prevail.

Angela Merkel is no Adolf Hitler

Today’s radical anti-Merkel lobby echoes Margaret Thatcher, who also wanted to use Euro structures to neuter wicked Germany.

Politicians of the right and left, both pro-EU and sceptical, have united in a new strident campaign to make Germany submit and surrender any form of self-interest, economic or political, to the ‘remorseless logic’ of an overarching European Union. In other words, whether it likes it or not, Germany needs to fund a fiscal stimulus as a pain-free escape from the crisis. 

by Bruno Waterfield  

Austerity über alles?

Recently, the left British magazine the New Statesman decided to liken contemporary Germany to its Nazi-era predecessor. ‘[Chancellor Angela] Merkel is the most dangerous German leader since Hitler’, the NS claimed. ‘Europe’s austerians have blood on their hands. Suicide rates are up by 40 per cent in Greece; the birthplace of Western democracy is being remorselessly reduced to the status of a developing country.’

And not only does German economic policy literally kill people, it also fuels extremism. To sustain this absurd jackboot theme, the NS also blames Merkel for the rise of the far right across Europe. Germany, without a significant neo-fascist party of its own, is somehow at fault for being ‘relaxed about the rise of anti-austerity, neo-Nazi parties across the EU’. What is Merkel supposed to do? Invade France to fight Le Pen? Get the EU to outlaw far-right parties?

The New Statesman stops short of calling for military intervention – but only just – in a polemic that makes Merkel personally responsible for all Europe’s woes. ‘In denial and bent on austerity über alles, Merkel is destroying the European project, pauperising Germany’s neighbours and risking a new global depression. She must be stopped’, the NS says.

Anatole Kaletsky, a widely syndicated Reuters columnist, has also joined the campaign to force Germany to nourish the credit-starved Euro economy. Asking ‘Can the rest of Europe stand up to Germany?’, Kaletsky attacked the Germans for refusing to sign up to measures designed to save the Euro at the expense of Germany’s economy and political sovereignty.

‘One country poses an existential threat to Europe – and it is not Greece, Italy or Spain. Every serious proposal to resolve the Euro crisis since 2009 – […] jointly guaranteed Eurobonds, a pan-European bailout fund, quantitative easing by the European Central Bank – has been vetoed by Germany, and this pattern looks likely to be repeated’, he opined. ‘[The] question is not whether Europe will agree to live under German leadership, but whether Germany will agree to live under EU leadership – or whether the other nations must form a united front against Germany to prevent the destruction of Europe, as they have repeatedly in the past.’

Gene Transfer Is Neither Unnatural Nor Dangerous

The transformation of wild plants and animals into the foods we eat today is – by far – the single most dramatic experiment in genetic engineering the human species has undertaken

By Michael Eisen

Last week I wrote about the anti-science campaign being waged by opponents of the use of genetically modified organisms in agriculture. In that post, I promised to address a series of questions/fears about GMOs that seem to underly peoples’ objections to the technology. I’m not going to try to make this a comprehensive reference site about GMOs and the literature on their use and safety (I’m compiling some good general resources here.)

I want to say a few things about myself too. I am a molecular biologist with a background in infectious diseases, cancer genomics, developmental biology, classical genetics, evolution and ecology. I am not a plant biologist, but I understand the underlying technology and relevant areas of biology. I would put myself firmly in the “pro GMO” camp, but I have absolutely nothing material to gain from this position. My lab is supported by the Howard Hughes Medical Institute, the National Institutes of Health and the National Science Foundation. I am not currently, have never been in the past, and do not plan in the future, to receive any personal or laboratory support from any company that makes or otherwise has a vested interest in GMOs. My vested interest here is science, and what I write here, I write to defend it.

So, without further ado:

Question 1: Isn’t transferring genes from one species to another unnatural and intrinsically dangerous?

The most striking thing about the GMO debate is the extent to which it contrasts “unnatural” GMOs against “natural” traditional agriculture, and the way that anti-GMO campaigners equate “natural” with “safe and good”.  I’ll deal with these in turn.

The problem with the unnatural/natural contrast is not that it’s a mischaracterization of GMOs – they are unnatural in the strict sense of not occurring in Nature – rather that it is a frighteningly naïve view of traditional agriculture.

The vast majority of the people are cannon fodder in this financial debacle

If It Doesn’t Work - Keep Trying It Until It Does

by Bill Buckler

Those running the big investment banks and trading floors today bear an uncanny resemblance to the generals on both sides of the conflict in WWI. There is an old military saying about the folly of fighting the “next” war by the methods of the last war. In modern times, the best illustration of the truth of that adage is what happened on the Western Front between 1914 and 1918.

When 1914 dawned, Europe had not seen a continental war for a century. Most of the generals and the vast majority of their political masters on both sides had not noticed that the years since the Battle of Waterloo in 1815 had seen what was and remains the greatest technological revolution in the history of the world. Both sides had seen the US Civil War of 1861-65, a war which proved beyond all shadow of a doubt that a frontal assault on an established defensive position was almost guaranteed to fail. Both sides completely ignored the lesson. The literal “cannon fodder” on both sides paid a gruesome price.

The result of this stubborn ignorance, as the history books so voluminously recount, was the antithesis of “bliss”. It was mass carnage. When an attack by 50,000 men proved impotent to the task, the numbers were raised to 100,000 and then 250,000. When an hour of preliminary shelling of the target proved insufficient, it was raised to an entire morning and then to a day and then to the best part of a week. The “big” battalions got bigger and Bigger and BIGGER. The trenches proliferated. The barbed wire proliferated. The casualties proliferated. The destruction proliferated.

Free Market Ecology

The history of human civilisation has been one of triumph over the limits of nature

by John Aziz

These gargantuan global conferences where the emissaries of governments meet in hallowed halls to thrash out a global planning agenda — dressed in the clothes of ecology, or sustainable development, or whatever the buzzword of the day — are a waste of time.

They are a waste of time for the taxpayer, who has to stump up to pay for such efforts. They are a waste of time for the protestors who swarm to such events holding placards and shouting slogans. They are a waste of time for the ecologists who — whether right or wrong — believe that the present shape of human civilisation is unsustainable. Possibly the only group that really benefits are the self-perpetuating bureaucratic classes, who often take home huge salaries they could never earn in the private sector.

And the Malthusian targets of the bureaucracy have a history of missing.

The Guardian notes:

Rio+20 was intended as a follow up on the 1992 Earth Summit, which put in place landmark conventions on climate change and biodiversity, as well as commitments on poverty eradication and social justice. Since then, however, global emissions have risen by 48%, 300m hectares of forest have been cleared and the population has increased by 1.6bn people. Despite a reduction in poverty, one in six people are malnourished.

If these bureaucratic classes knew the first thing about economics or markets, they would begin to question whether such conferences — and all the promises, intergovernmental commissions, and regulatory pledges they spawn — are necessary. The more I question, the more I come to believe that all that is needed to halt any man-made ecological crises are free markets and free speech.

The history of human civilisation has been one of triumph over the limits of nature. While we have had our ups and downs, recent projections of imminent ecological ruin — such as those in the 1970s produced by Ehrlich and Holdren and the Club of Rome, or earlier by Keynes, Malthus and Galton (etc) — have all failed to materialise. But the trend goes back much further, into the distant past. Throughout our history our species has done what has been necessary to survive. Humanity has lived on this planet for upwards of 500,000 years, and through that time, we have survived a myriad of climate changes — solar variation, atmospheric variation, cycles of glaciation, supervolcanoes, gamma ray bursts, and a host of other phenomena.

Structural change is, by definition, innovative

Development 3.0

By Justin Yifu Lin

BEIJING – Until the Industrial Revolution, the world was quite flat in terms of per capita income. But then fortunes rapidly diverged, with a few Western industrialized countries quickly achieving political and economic dominance worldwide. In recent years – even before the financial crisis erupted in 2008 – it was clear that the global economic landscape had shifted again. Until 2000, the G-7 accounted for about two-thirds of global GDP. Today, China and a few large developing countries have become the world’s growth leaders.

Yet, despite talk of a rising Asia, only a handful of East Asian economies have moved from low- to high-income status during the past several decades. Moreover, between 1950 and 2008, only 28 economies in the world – and only 12 non-Western economies – were able to narrow their per capita income gap with the United States by ten percentage points or more. Meanwhile, more than 150 countries have been trapped in low- or middle-income status. Narrowing the gap with industrialized high-income countries continues to be the world’s main development challenge.

In the post-colonial period following World War II, the prevailing development paradigm was a form of structuralism: the aim was to change poor countries’ industrial structure to resemble that of high-income countries. Structuralists typically advised governments to adopt import-substitution strategies, using public-sector intervention to overcome “market failures.” Call this “Development Economics 1.0.” Countries that adhered to it experienced initial investment-led success, followed by repeated crises and stagnation.

Global growth killers

Central Planning Going Global

By Terence Corcoran

The supreme political leaders of the world economy keep meeting and meeting and meeting - first the G8, then the G20, now Rio+20, with another round (the 14th) of the expanding Trans-Pacific Partnership trade negotiations set for San Diego on July 2. All this within a few weeks. Meanwhile, the world economy keeps tanking, not helped by other international gatherings of finance ministers, Basel bank regulators, Financial Stability Boards, IMF leaders and central bankers.

It would be too facile to claim that maybe the world economy is tanking because of all these meetings at which nothing happens, little is agreed upon and what is agreed to is often just a dodge of good policy - or, more often, a prescription for bad policy. On the other hand, nobody these days balks at facile analyses or empty slogans. Just read this week's G20 declaration, in which, among scores of other platitudes, leaders said they "are in full agreement that we need to intensify our efforts to reduce both internal and external imbalances."

In brief, the odds are good that these novel and experimental attempts at global governance and economic management are becoming sources of destruction. Instead of focused national policies around the world, we have global conflabs that generate orchestrated chaos for which nobody is responsible.

One destructive product of the internationalist approach to policymaking may well be a breakdown in central bankers' grasp of monetary policy. At least one economist, Steve Hanke at The Johns Hopkins University in Baltimore, says the combination of monetary mistakes and escalating bank regulation is creating a credit crunch in the United States and turmoil elsewhere.

While central banks, especially the U.S. Federal Reserve, have caused an expansion of government-created money, private-sector money growth has disappeared. In the United States and much of Europe, with the exception of Germany, money-supply growth has been non-existent and even negative.

An American Gulag

Descending into Madness at Supermax

A detailed new federal lawsuit alleges chronic abuse and neglect of mentally ill prisoners at America's most famous prison. 

By Andrew Cohen

When Jack Powers arrived at maximum-security federal prison in Atlanta in 1990 after a bank robbery conviction, he had never displayed symptoms of or been treated for mental illness. Still in custody a few years later, he witnessed three inmates, believed to be members of the Aryan Brotherhood gang, kill another inmate. Powers tried to help the victim get medical attention, and was quickly transferred to a segregated unit for his safety, but it didn't stop the gang's members from quickly threatening him.

Not then. And certainly not after Powers testified (not once but twice) for the federal government against the assailants. The threats against him continued and Powers was soon transferred to a federal prison in Pennsylvania, where he was threatened even after he was put into protective custody. By this time, Powers had developed insomnia and anxiety attacks and was diagnosed by a prison psychologist as suffering from Post-Traumatic Stress Disorder.

Instead of giving Powers medicine, or proper mental health therapy, officials transferred him yet again, this time to another federal prison in New Jersey. There, Powers was informed by officials that he would be removed from a witness protection program and transferred back into the prison's general population. Fearing for his life, Powers escaped. When he was recaptured two days later he was sent toADX-Florence, part of a sprawling prison complex near Florence, Colorado often referred to as "ADX" or Supermax," America's most famous and secure federal prison.

The Consequences Of The Unthinkable

Here Is What Happens When The Euro Breaks Up

As the following image from Spiegel summarizes, three things will happen simultaneously when the unthinkable finally occurs: i) economic output plummets, ii) unemployment rate soars, and iii) consumer prices explode. Of course, this is nothing but merely deferred consequences for Europe partying for over a decade under an unsustainable regime that borrowed from the future (sound familiar?). And now the inevitable hangover. In other words: payback is a bitch.

Forget the PIIGS, the EU as a Whole is Insolvent

Europe is heading into a full-scale disaster

By Graham Summers

You see, the debt problems in Europe are not simply related to Greece. They are SYSTEMIC. The below chart shows the official Debt to GDP ratios for the major players in Europe.

As you can see, even the more “solvent” countries like Germany and France are sporting Debt to GDP ratios of 75% and 84% respectively.

These numbers, while bad, don’t account for unfunded liabilities. And Europe is nothing if not steeped in unfunded liabilities.

Let’s consider Germany. According to Axel Weber, the head of Germany’s Central Bank, Germany is in fact sitting on a REAL Debt to GDP ratio of over 200%. This is Germany… with unfunded liabilities equal to over TWO times its current GDP.

To put the insanity of this into perspective, Weber’s claim is akin to Ben Bernanke going  on national TV and saying that the US actually owes more than $30 trillion and that the debt ceiling is in fact a joke.

What’s truly frightening about this is that Weber is most likely being conservative here. Jagadeesh Gokhale of the Cato Institute published a paper for EuroStat in 2009 claiming Germany’s unfunded liabilities are in fact closer to 418%.

And of course, Germany has yet to recapitalize its banks.

Indeed, by the German Institute for Economic Research’s OWN admission, German banks need 147 billion Euros’ worth of new capital.

To put this number into perspective TOTAL EQUITY at the top three banks in Germany is less than 100 billion Euros.

And this is GERMANY we’re talking about: the supposed rock-solid balance sheet of Europe. How bad do you think the other, less fiscally conservative EU members are?

Think BAD. As in systemic collapse bad.

Should Austrians Embrace the Euro?

Good as Gold?

By Pater Tenebrarum

Introductory Remarks

As we have often pointed out in these pages, to our mind the euro area crisis is not a currency crisis. It is primarily a debt crisis; a crisis of the bloated European welfare states and the fractionally reserved and way overextended   banking systems they harbor. Due to the supra-national status of the central bank it is no longer possible for member nations to simply 'paper over' their economic policy mistakes and so their errors have been revealed for all to see. Instead of being able to surreptitiously impoverish the citizenry by means of inflation and devaluation, the political classes have been forced to face facts.

In this sense, the euro is a great success: it has so far averted an inner-European outbreak of 'beggar-thy neighbor' devaluations. The usual robbing of savers had to be at least partially shelved.

It is entirely mistaken to argue that the monetary union can only work if a so-called 'fiscal union' is established. It is true that the monetary union will work better if its members were to adhere to the rules of the fiscal  pacts they have signed – be it the Maastricht treaty or the latest iteration of the 'fiscal compact'.

However, this is not the main goal of the people pushing for a full fiscal, and presumably political, union. Their aim is to abolish subsidiarity altogether in order to create a European superstate – a giant transfer union in which all tax and regulatory competition is suppressed. Moreover, they want to enable the central bank to do what it currently can not do – namely finance the deficits of governments by means of money printing.

The euro is a medium of exchange. There is no reason whatsoever that  two or more agents using a common medium of exchange need to enter into a 'fiscal union', pooling their debts in order to be able to continue to use a common medium of exchange. The gold standard worked perfectly well for a century before governments deliberately ruined it in order to finance enormous wars. No-one ever suggested at the time that the nations on a gold standard should enter into a 'fiscal union'. It would have been regarded as an utterly absurd demand.

You can review our critique of the various ideas forwarded by the 'centralizers' and our ideas regarding a free market solution to the euro area crisis in a previous article: 'The Euro Area – False Dilemmas and False Choices', where  the above points are discussed in more detail. A further addition to this discussion can be found in 'Growth versus Austerity – A Phony Debate'.

Is There 'Austerity' in Europe?

It has become fashionable among interventionists to take aim at Angela Merkel and the German Bundesbank and accuse them of forcing euro area member states into 'unbearable austerity' by continuing to refuse to bail out all and sundry without preconditions.

Among other things, commentators are lately frequently dragging up the example of Heinrich Brüning's government that was in charge of Germany just prior to the election that brought Hitler to power. A recent example is this article at Bloomberg: “Ghost of Nazi Past Haunts Austerity-Gripped Europe”. The article states: 

“Under Germany’s austerity policies in the 1930s, taxes rose, benefits and wages were reduced and unemployment soared, stoking the popular ire that Hitler harnessed. Extremists are gaining ground now as unemployment in Greece passes the 20 percent mark after five years of recession. The far-right Golden Dawn won 6.9 percent of the vote and 18 seats in the country’s most recent elections. France’s anti-immigrant, anti-euro National Front won two seats in parliamentary elections June 17.

Creditanstalt in 1931, like Spain’s Bankia now, was created by mergers with lenders weakened by toxic loans and capital shortfalls. After Creditanstalt failed, the government stepped in to prop it up, fatally hurting its own credit. A run on Austria’s bonds and the schilling ensued, according to Michael Bordo, national fellow of the Hoover Institution on campus of Stanford University in Palo Alto, California.

“Creditanstalt had been forced into a merger with an insolvent bank, which felled it,” Bordo said. “Really, Austria had a financial system set up to service an empire which was no longer there. The bank was too big.”

Marx Madness

Greece is collapsing, the Iranians are getting aggressive, and Rome is in disarray. Welcome back to 480 BC

By David Galland
Burn the Boats, Kill the Chickens

Although I did manage to squeeze in a few hours in the Portuguese sun chasing a little white ball, the purpose of my just-concluded whirlwind trip – a Sunday-to-Sunday jaunt with stay-overs in four different countries, including two of the PIIGS, Ireland and Portugal, and pending PIIGS member France twice – was mostly business.

As you might expect at this pivotal point in European history, I wasted no opportunity in questioning the locals – from widely followed economists to taxi drivers and everyone in between – about their views on the European Union and the common currency that serves as the glue holding it together, albeit barely.

Now, I am not going to go on at great length on the policy experiments that have brought Europe to its knees, and certainly won't weigh in with a tourist's opinion on how the whole mess will resolve: there are hundreds of media darlings in the wings, clearing their pipes in the hope of being called upon to opine this way or another on just those topics.

Rather, what I would like to do is encapsulate, in as few words as I am capable, the essence of the problems facing Europe, and leave it to you to draw your own conclusions. To assist in that regard, I will use my observations on the ground in Portugal.

For those of you who are unfamiliar with the place, physically and meteorologically, Portugal is about as good as it gets.

The weather is almost identical to Southern California, and the country has a long coastline complete with stunning (and largely empty) beaches. As with Southern California, the land is rich and supports the growing of pretty much any crop.

The people are friendly and well educated, with most speaking three or even four languages (Portuguese, English, German, Spanish are fairly standard). The food is fantastic, especially the fresh seafood, prepared to perfection even when just cooked over coals in a fisherman's shack.

Supplementing the local culture is a robust expat community: in the Algarve, where I stayed, most expats are refugees from the rest of Europe, with what seems to be an extra measure of Brits. Crime is low and, thanks to the crisis, there are bargains aplenty for houses and recently constructed (but now largely empty) apartment buildings, even near the water.

The storied cities of the Old World, Paris, Dublin, Madrid, Rome, Zurich, London are only a short hop by plane, and thanks to the hard-charging Michael O'Leary and his cut-rate Ryan Air, a cheap hop at that.

Which had me wondering, what's the problem? The same thought had come to mind while wandering about the bustling streets of Dublin a couple of days earlier.

Extortion Economics

Boo !!!

By Wolf Richter   

One thing Greek politicians have taught other European leaders: fear mongering for the purpose of extortion is the way to go. It might not work, and it might be counterproductive, and it might destroy confidence in the economy and give investors goose bumps and blow up markets, and it might cause spooked consumers to hold back on purchases and worried businesses to freeze hiring plans, thus exacerbating the situation, but it’s nevertheless the way to go.

Greek politicians learned it from Treasury Secretary Hank Paulson who'd walked into the Capitol in September 2008, threatening that the whole world would collapse if his demands weren’t met. Soon, they expertly issued a series of escalating threats to extort the maximum amount in bailout euros from the Troika. It didn’t work very well as the Greek economy continued to spiral out of control, and as the frustrated Troika halted bailout payments from time to time, and as tempers flared, and as the people in Greece became increasingly edgy. But it was the way to go. Then came Spain. And now Italian Prime Minister Mario Monti.

Austrian Capital Theory

Why It Matters

By Peter Lewin

With the resurgence of Keynesian economic policy as a response to the current crisis, echoes of past debates are being heard—in particular the debate from the 1930s between John Maynard Keynes and Friedrich Hayek. Keynes talked about the “capital stock” of the economy. He argued that by stimulating spending on outputs (consumption goods and services), one can increase productive investment to meet that spending, thus adding to the capital stock and increasing employment.

Hayek accused Keynes of insufficient attention to the nature of capital in production. (By “capital” I mean the physical production structure of the economy, including machinery, buildings, raw materials, and human capital—skills). Hayek pointed out that capital investment does not simply add to production in a general way but rather is embodied in concrete capital items. That is, the productive capital of the economy is not simply an amorphous “stock” of generalized production power; it is an intricate structure of specific interrelated complementary components. Stimulating spending and investment, then, amounts to stimulating specific sections and components of this intricate structure.

Japan and Europe Are Killing Themselves

They are taxing themselves to death

By Jeorge Giddeon

Can the U.S. lead the world back to prosperity? The global economy is lurching toward the cliff. Twice before over the last 75 years Washington took the necessary action, and after November, with a new President and Congress, there will be the opportunity—and imperative—to do so again.

The 1970s were a decade of economic turmoil and stagnation. The 1930s were far worse. And now the world is headed to the brink again.

After the Great Depression and the Second World War the U.S. helped create and nurture the institutions that enabled war-torn Europe and Japan to make rapid recoveries. The gold-based Bretton Woods monetary system provided the currency stability necessary for the resumption of international trade. The General Agreement on Tariffs & Trade (and then its successor, the World Trade Organization) systematically reduced trade barriers. At home we ended wartime controls and rationing, cut taxes and slashed government spending. Almost seamlessly, millions of veterans came home to productive civilian employment. For the next 25 years Japan and Germany repeatedly reduced their tax burdens and became economic global giants.