Return of the Czech Communists

Vaclav Havel is turning over in his grave

BY JAMES KIRCHICK

The massive, red-stone headquarters of the Communist Party of Bohemia and Moravia (KSCM) -- named after the two main regions of the Czech Republic -- is located on Prague's Street of Political Prisoners, just across from the capital's decayed art nouveau train station. The road was named in 1946 -- the very year that the Communists won a plurality in a democratic election -- in honor of resistance fighters imprisoned by the Nazis during World War II. The Gestapo had located its headquarters on this same street, in a massive building once owned by a prominent Jewish family. So it is that the twin horrors of Nazi and communist oppression continue to haunt this corner of the Czech capital.

When I suggest to Jiri Dolejs, KSCM vice chairman and member of Parliament, that the location of the party's headquarters on a street named after political prisoners is a grim irony, he chuckles and admits that there is an "obvious paradox." The communist regime that ruled Czechoslovakia from 1948 until the peaceful 1989 Velvet Revolution interned more than 250,000 political prisoners. The most famous, playwright Vaclav Havel, was elected the first president of post-communist Czechoslovakia. When Havel passed away last December at age 75, a spontaneous crowd descended upon Prague's central Wenceslas Square to erect an impromptu vigil; the candles would remain there for an entire month. For a brief moment, the world's attention focused on the heroic philosopher king and his legacy of nonviolent resistance to communist totalitarianism.

West blinks at Wahhabism's dark side

Useful Idiots

By Zubair Khan

In Saudi Arabia there is no church, synagogue, Buddhist nor Hindu temple allowed. Wahhabism (pseudo Salafism) is not a religion of tolerance. Wahhabism provides the fundamental base for jihadism which causes unending strife and misery. 

It is not Iran that should be bombed. In Iran there are still Jews living there and praying in their synagogues. Muammar al-Gaddafi respected Christian and Jewish religions and their churches, synagogues in Libya but American, English, French, Saudi and Qatari-financed terrorists have destroyed churches and synagogues recently. Buddhist temples including Bamiyan Buddha statues have survived in Islamic countries for centuries, but they would not survive under the Wahhabism. 

Washington and London are protecting Wahhabi extremists. In Syria, Christians and their churches were safe before the Westerners began sending their Wahhabi fanatics to kill innocent Syrian civilians. 

In Bosnia and Kosovo, under the guise of "reconstruction aid", Saudi Arabia, Kuwaiti, and other Wahhabi organizations have demolished and removed major Islamic monuments which survived attacks by Serb and Croat militias. These were created by Muslims with an Islamic culture and tradition stretching back to 14th century, long before Ibn Abd al-Wahhab made his 18th century alliance with the warlord Ibn Saud who founded the Saudi dynasty - the House of Saud. 

Turkey's 'zero-problem' policy at crossroads

Turkey must now seek a new guiding principle for regional engagement

By Ramzy Baroud 

It seems that media consensus has been conclusively reached: Turkey has been forced into a Middle Eastern mess not of its own making; the "zero problems with neighbors" notion, once the foreign policy centerpiece of the Justice and Development Party (AKP), has been condemned to a romantic notion of no use in realpolitik. 

Turkey's "policy's goal - to build strong economic, political, and social ties with the country's immediate neighbors while decreasing its dependency on the United States - seemed to be within sight," wrote Sinan Ulgen nearly a year ago. "But the Arab Spring exposed the policy's vulnerabilities, and Turkey must now seek a new guiding principle for regional engagement." 

This reading was not entirely unique and was repeated numerous times henceforth. It suggests an air of naiveness in Turkish foreign policy and overlooks the country's barely selfless regional ambitions. It also imagines that Turkey was caught in a series of unfortunate events, forcing its hand to act in ways inconsistent with its genuine policies of yesteryears. This, however, is not entirely true. 

The recent skirmishes of October 4 at the Syrian-Turkish border were reportedly invited by mortar shells fired from the Syrian side. Five people including three children were killed and the incident was Turkey's "last straw". Turkey's Anatolia news agency reported an official Syrian apology through the United Nations soon after the shelling and the Syrian government promised an investigation. Their seriousness remains doubtful. 

Searching for Caligula's Horse

'Politicized' Benghazi distracts from Big Bird

By mark steyn

"The entire reason that this has become the political topic it is, is because of Mitt Romney and Paul Ryan."

Thus, Stephanie Cutter, President Obama's deputy campaign manager, speaking on CNN about an armed attack on the 9/11 anniversary that left a U.S. consulate a smoking ruin and killed four diplomatic staff, including the first American ambassador to be murdered in a third of a century. To discuss this event is apparently to "politicize" it and to distract from the real issues the American people are concerned about. For example, Obama spokesperson Jen Psaki, speaking on board Air Force One on Thursday:

"There's only one candidate in this race who is going to continue to fight for Big Bird and Elmo, and he is riding on this plane."

She's right! The United States is the first nation in history whose democracy has evolved to the point where its leader is provided with a wide-body transatlantic jet in order to campaign on the vital issue of public funding for sock puppets. Sure, Caligula put his horse in the Senate, but it was a real horse. At Ohio State University, the rapper will.i.am introduced the President by playing the Sesame Street theme tune, which, oddly enough, seems more apt presidential walk-on music for the Obama era than "Hail To The Chief."

Mommy will make it all better

I Name The New Baby: "Intervention"

 “Yes, in this immense confusion, one thing alone is clear. We are waiting for Godot to come.”

                  -Samuell Beckett, Waiting for Godot

by Mark J. Grant
It seems these days that we are all waiting. Waiting for some European Moment, waiting for the American elections and waiting for some central bank to propose the next new thing and flood the world, once again, with liquidity. The world seems askew.

There has been the thought, in place for decades, that the greatest danger lay in rapidly escalating Inflation and that governments could ruin the populace and devastate the purses of everyone if Inflation was allowed to run rampant. This was counterbalanced by the fear of Deflation which may have an even worse effect. These two twin evils have been viewed as the mainstay of things that could go wrong and they have each been battled in various ways for the last hundred years. Some missions were successful, some not, but the battle raged on from one administration to another.

Now I wonder if some new infant has not been born to join them. This morning I will name this new baby; “Intervention.” What has become clear to me is that while the worlds’ central bank cannot print money off-world is that we cannot invest money off-world either. They are stuck and we are stuck but the central banks have the advantage. They can print money in an open fashion such as at the Fed or they can do it in some hidden fashion, such as with the ECB and their Euroloans but the world is flooded with liquidity in either case and something must be done with the money. The stuff does not slosh around in giant jars and we are paid to make sure it is put to some kind of useful purpose. Hence the irrational behavior of some markets; they rise because they are forced to by the spigot of liquidity opened by the central banks.

No Matter Who Wins On 11/6, Disgruntled Americans Should Move To...Sweden

Sweden has been advancing rapidly since its disastrous 25-year experiment with Socialism led to a change of course in the early 1990s

By Kyle Smith

Just before the election, at the moment of maximum crazy, you can expect to hear one celebrity or another declaring, “That’s it. If my candidate loses, I’m leaving the country….” It’s easy to imagine Democrats completing the sentence “…and moving to Sweden.” As for where demoralized Republicans might want to move, how about …Sweden?

True, Sweden has much higher taxes and spending than the U.S. On the Heritage Foundation’s index of economic freedom, it ranks 21st, well behind the U.S. at no. 10. On a scale of one to 100, its government spending gets a woeful rating of 8.8 based on 55 percent of GDP coming from the public purse, whereas the U.S. earns a mediocre 46.7. Sweden’s top income tax rate is 57 percent.

However, Sweden is sticking to a fiscal austerity program that has coincided with a rapidly growing economy. In business freedom, Sweden posted a blockbuster rating of 94.6, four points better than the U.S. And if anything, the business climate is only going to grow more sizzling in this part of Scandinavia. The Swedish prime minister has recognized the basic truth that wealth has to come from somewhere before it can be redistributed, so in his next budget he proposes a cut in corporate taxation from 26.3 percent to 22 percent, while the U.S. rate is stuck at 35 percent and demagogues screech about “heartless corporations,” “fairness” and punishing the successful as an act of “economic patriotism.”

Mother Nature, Version 2.0

The defining technology of our age

Welcome to the world of synthetic biology, where micro-organisms can be programmed to invade and destroy cancer cells.

By SCOTT GOTTLIEB

It once seemed that the most profound feats stemming from DNA-based science would spring from our ability to read and detect genes, which we call the science of genomics. But the real opportunities lie in our ability to write DNA, to synthesize new gene sequences and insert them into organisms, resulting in brand-new biological functions. Printing novel DNA might open the way to achievements once only conceivable in science fiction: designer bacteria that can produce new chemicals, such as more efficient fuels, or synthetic versions of our cells that make us resistant to the effects of radiation.

The first such genome was made in 2000 in an experiment where scientists synthesized their own version of the hepatitis C virus so that they could alter it and discover a way to disable the infection. Today it is possible to read gene sequences into computers, where we can alter them and then print a modified gene into living cells. In "Regenesis," a book exploring the science of synthetic biology, George Church and Ed Regis imagine a world where micro-organisms are capable of producing clean petroleum or detecting arsenic in drinking water, where people sport genetic modifications that render their bodies impervious to the flu, or where a synthetic organism can be programmed to invade and destroy cancer cells.

The Christian Exodus From Egypt

For Copts, a persecuting dictator was preferable to the Islamist mob

By SAMUEL TADROS

Visit any Coptic church in the United States and you immediately recognize the newcomers. You see it in their eyes, hear it in their broken English, sense it in how they cling to the church in search of the familiar. They have come here escaping a place they used to call home, where their ancestors had lived for centuries.

Waves of Copts have come here from Egypt before, to escape Gamal Abdel Nasser's nationalizations or the growing Islamist tide. Their country's transformation wasn't sudden, but every year brought more public Islamization. As the veil spread, Coptic women felt increasingly different, alien and marked. Verbal abuse came from schoolteachers, bystanders in the bus station who noticed the cross on a wrist, or commentators on state television.

But life was generally bearable. Hosni Mubarak crushed the Islamist insurgency of the 1980s and '90s. He was no friend to the Copts, but neither was he foe. His police often turned a blind eye when Coptic homes and shops were attacked by mobs, and the courts never punished the perpetrators—but the president wasn't an Islamist. He even interfered sometimes to give permission to build a church, or to make Christmas a national holiday.

East Germany With Palm Trees

A Modest Proposal

by Walter E. Williams

California was once the land of opportunity, but it is going down the tubes. Several of California's prominent cities have declared bankruptcy, such as Vallejo, Stockton, Mammoth Lakes and San Bernardino. Others are on the precipice, and that includes Los Angeles, California's largest city. California's 2012 budget deficit is expected to top $28 billion, and its state debt is $618 billion. That's more than twice the size of New York's state debt, which itself is the second-highest in the nation.

Democrats control California's Legislature, and its governor, Jerry Brown, is a Democrat. California is home to some of America's richest people and companies. It would then appear that the liberals' solution to deficit and debt would be easy. They need only to raise taxes on California's rich to balance the budget and pay down the debt – or, as President Barack Obama would say, make the rich pay their fair share.

The downside to such a tax strategy is the fact that people are already leaving California in great numbers. According to a Manhattan Institute study, "The Great California Exodus: A Closer Look," by Thomas Gray and Robert Scardamalia (October 2012), roughly 225,000 residents leave California each year – and have done so for the past 10 years. They take their money with them. Using census and Internal Revenue Service data, Gray and Scardamalia estimate that California's out-migration results in large shares of income going to other states, mostly to Nevada ($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon ($3.85 billion). That's the problem. California politicians can fleece people in 2012, but there's no guarantee that they can do the same in 2013 and later years; people can leave. Also, keep in mind that rich people didn't become rich by being stupid. They have ingenious ways to hide their money.

The malinvestment crisis

Rates should be raised, even at risk of recession

By Philip Cross

If it’s five years into the crisis, we must be in ­Austria.

William White was the head of research and then deputy governor at the Bank of Canada, before leading research departments at the Bank for International Settlements and the OECD. So he knows a little bit about macroeconomics. He solidified his stellar reputation by being one of the few economists to warn that the U.S. housing bubble would result in a financial crisis.

The essence of White’s latest paper, “Ultra-Easy Monetary Policy and the Law of Unintended Consequences,” published by the Federal Reserve Bank of Dallas, is that, contrary to the hand-wringing of some commentators, central banks are not out of bullets in the fight against persistent stagnation in much of the developed world. Instead, he says that central banks should call a ceasefire, not due to a lack of ammunition, but because the bombardment from easy-money policies is causing more “friendly fire” casualties to their own troops than it is inflicting on the enemy.

White weighs the desirable short-term effects of ultra-easy monetary policy against its undesirable long-term impacts, which after five years are becoming increasingly evident. The stimulative effect of easy monetary policy on demand growth in North America and Europe has been disappointing, while its impact on supply is slowly corroding potential long-term growth.

In his analysis, White tries to reconcile the competing analyses of John Maynard Keynes and the Austrian school of business-cycle thought, best known to most readers by its champion, Friedrich Hayek. White says the cuts to interest rates to stimulate demand were appropriate at the worst of the economic crisis in 2008-09. However, after five years of easy money, he now shares the Austrian concern that low interest rates are counterproductive for growth by distorting resource allocation (“malinvestments,” as Hayek somewhat inelegantly put it).

After Fukushima

Canada’s nuclear ambitions

By Yadullah Hussain

Canada has emerged as one of the few bright spots in the latest International Atomic Energy Agency report, which cast a looming, Fukushima-shaped shadow on the wider industry.

The country’s nuclear-energy sector raised capacity by 35 megawatts last year and increased its contribution to total electricity to 15.3% from 14.8% in 2010, says the IAEA report, published late last month.

These improvements may seem incremental but they come at a time of great hardship for the global industry. An earthquake, followed by a tsunami, in 2011 left the Fukushima Daiichi Nuclear Power Plant in Japan — and the global industry — in a perilous state.

Nuclear power plants have always wrestled with a public relations problem, but the twin Japanese blows shook the industry. Japan, the second-largest producer of nuclear energy in the world and seen as a model for many energy-poor states, retired 12 nuclear power plants in the immediate aftermath of the disaster.

“The Fukushima Daiichi accident resulted in a slowing of the expansion of nuclear power but did not reverse it,” says the IAEA in its latest report. Still, the agency’s post-accident projections of global nuclear power capacity in 2030 were 7–8% lower than its previous estimates.

The agency expects 90 new nuclear power plant to come online by 2030 globally in a low-projection scenario, with much of the new installations coming in emerging economies.

“Of the 64 new power reactors under construction at the end of 2011, 26 were in China, 10 in the Russian Federation, 6 in India and 5 in the Republic of Korea. However, some countries, such as Germany, decided to phase out and discontinue the use of nuclear power.”

OECD countries, such as Switzerland, Italy and Belgium, are getting cold feet regarding their nuclear plans, while Austria, Denmark and New Zealand have completely excluded nuclear as part of their energy mix.

Authoritarians in China and Russia Face an Endgame

The Coming Collapse

By Jackson Diehl

Since the beginning of the twenty-first century, China and Russia have been constants in the world. They have been autocratic, resistant to the spread of freedom, occasionally belligerent toward their neighbors, and increasingly prosperous. They have consistently joined together in order to block Western initiatives in the UN Security Council and to defend dictatorships like Iran, North Korea, and Syria.

The two countries have created the illusion of durability. Vladimir Putin has just begun a six-year presidential term, with an option for another. Hu Jintao and Wen Jiabao are planning to hand over power in October to a new tandem, Xi Jinping and Li Keqiang, who are expected to serve for ten years. Yet the evidence is growing that the apparent stability in Russia and China is untenable. For similar reasons, the two states have exhausted their current political and economic systems. Their rulers have grown rigid and are mired in corruption. Both their political elites and their average citizens are growing visibly restless. In the next decade, it is likely that one or both of these global powers will undergo an economic crisis and a dramatic political transformation. When and how it will happen is the most important “known unknown” that Barack Obama or Mitt Romney will face during the next US presidential term.

The predictions that systemic change is inevitable, and that it might be tumultuous, are coming not just from lonely dissidents or hostile Western observers but from stalwarts of the establishments in Moscow and Beijing. In February, a report prepared by experts from China’s Finance Ministry and the Development Research Center of the State Council, in cooperation with the World Bank, concluded that “China has reached a turning point in its development” and that a “strategic” and “fundamental shift is called for,” comparable to Deng Xiaoping’s embrace of the market economy three decades ago. “China 2030” warns:

3D Printing: The end of the globalised supply chain?

End of the reign of globalised supply chain


By  Ella Copeland

The modern supply chain is all about globalisation. Shipping lines, freight forwarders and airlines depend on moving vast quantities of consumer goods on a daily basis, providing Western markets with items manufactured in the Far East.

According to industry experts, however, this could all be about to change. A potential threat to the logistics industry, 3D Printing has the ability to revolutionise production techniques, allowing the use of more automation and thus saving on cost.

Originally developed as an automated method to produce prototypes, 3D Printing builds up layers of material (plastics, ceramics or metal powders) using a computer-aided design to create a three-dimensional product. Able to manufacture items with minimal human assistance, a large number of 3D printers could be a cost-effective way to produce any small product or part without a large workforce -meaning the manufacturer is able to move production closer to the end user at a low cost.

In a White Paper recently released by the industry site Transport Intelligence, John Manners-Bell, Chief Executive Officer (CEO) of Transport Intelligence and Ken Lyon, CEO of Virtual Partners has created a projection of a potential future with 3D Printers at the centre, looking at how the logistics industry may be sidelined and how it could adapt to sit alongside this new technology.

Entitled to Fail

Inside Italy’s Downward Spiral

By Stefano Casertano

October 15, 2011, was the day when recent Italian history changed course. After twenty years of Berlusconian torpor, Italians staged a large demonstration in Rome to voice their woes. It was not so much the “bunga bunga” sex scandals as the tangible perception of financial distress that drove citizens into the streets. Of course, there had been similar events previously in the Eternal City, most notably a recurring “No Berlusconi Day,” but none had had such broad participation. There were families, youngsters, pensioners, blue and white collars, union representatives and entrepreneurs, all chanting and yelling. There were also some who wore black helmets and marched in columns, and some parading with a different uniform of hood and a scarf covering the face. It was just a minority, yet it was motivated enough to turn the half-million-people march into a long afternoon of urban warfare. A Carabinieri (military police) van burst to flames, as paving stones rained on police units. Seventy people had to be treated in the hospital. Television viewers were shocked at the Felliniesque image of a boy carrying a woman in his arms, then throwing her to the ground and kicking her head. It was a statue of the Holy Mary, stolen from a nearby church, and it broke into pieces under his assault.

Welcome to the shale revolution

U.S. natural gas production continues to set records even with fewer rigs than in 1998, thanks to advanced shale drilling

By Mark J. Perry 

The chart above shows something really amazing: The number of rigs drilling for natural gas in the U.S. fell in July to 522 (see red line), which is below the level back in January 1998(608), and since then the rig count has fallen further to only 437 last week, the lowest since 1996 (Baker Hughes data here).  As recently as 2008, there were almost 1,600 natural gas rigs in the U.S. so the current rig count today is more than 70% below the peak.

Meanwhile, the production of natural gas in the U.S. keeps climbing, and the 12-month moving average of gross withdrawals of natural gas reached a record-high level in July (see blue line,data here).  Compared to 1998, the U.S. is now producing 25% more natural gas with fewer rigs, so there have been some amazing gains in productivity and efficiency for gas drilling.

In today’s Financial Times, energy editor Ed Crooks investigates this interesting trend, here’s an excerpt:

More important for some industry executives and analysts is a structural reason for strong gas output: improvements in production techniques.  The shale revolution was made possible by advances in hydraulic fracturing and horizontal drilling, and both techniques have continued to evolve.

Five years ago, horizontal wells would typically extend 1,000-2,000 feet sideways from the well head. Now they regularly run for 5,000 feet. Continental Resources, another independent company that specializes in shale oil production, has extended wells more than 15,000 feet.

“You can open up the reservoir more to produce more gas,” says Matt Jurecky at GlobalData, a consultancy. “It’s more efficient and lower cost.”

The scariest moment in history was even scarier than we thought

Cuba Almost Became a Nuclear Power in 1962

BY SVETLANA SAVRANSKAYA

Cuba would have become the first nuclear power in Latin America 50 years ago, if not for the dynamics captured in this remarkable verbatim transcript -- published here for the first time -- of Fidel Castro's excruciating meeting with Soviet deputy prime minister Anastas Mikoyan, on November 22, 1962. The document comes from the personal archive of his son, the late Sergo Mikoyan, which was donated to the National Security Archive and which appears for the first time in English this month in the new book, The Soviet Cuban Missile Crisis.

Long after the world thought the Cuban Missile Crisis had ended, with Soviet leader Nikita Khrushchev's withdrawal of his medium-range nuclear missiles announced on October 28 -- and two days after President John F. Kennedy announced the lifting of the quarantine around Cuba -- the secret crisis still simmered. Unknown to the Americans, the Soviets had brought some 100 tactical nuclear weapons to Cuba -- 80 nuclear-armed front cruise missiles (FKRs), 12 nuclear warheads for dual-use Luna short-range rockets, and 6 nuclear bombs for IL-28 bombers. Even with the pullout of the strategic missiles, the tacticals would stay, and Soviet documentation reveals the intention of training the Cubans to use them.

But Fidel Castro was livid. Khrushchev had not consulted or even informed Castro about any deals with the Americans -- Fidel heard about the missile withdrawal from the radio. The Cuban leader refused to go along with any onsite inspections in Cuba, and raised further demands. The Soviets had their own Cuban crisis: They had to take back what the Americans called the "offensive weapons," get the U.S. to confirm its non-invasion pledge, and most importantly, keep Cuba as an ally. At the Soviet Presidium, everyone agreed only one man could achieve such a resolution: Anastas Mikoyan.

Germany's Hyperinflation Birthday

There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency

by Art Cashin 

Originally, on this day in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy. Many months earlier they had decided that what was needed was easier money. Their initial efforts brought little response. So, using the governmental "more is better" theory they simply created more and more money. But economic stagnation continued and so did the money growth. They kept making money more available. No reaction. Then, suddenly prices began to explode unbelievably (but, perversely, not business activity).

So, on this day government officials decided to bring figures in line with market realities. They devalued the mark. The new value would be 2 billion marks to a dollar. At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar. In simple terms you needed 4.2 marks in order to get one dollar. Now it was 2 billion marks to get one dollar. And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar. In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind. They are too large to grasp in any “real” sense. Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example. “Young man,” he said, “would you like a million dollars?” “I sure would, sir!”, I replied anxiously. “Then just put aside $500 every week for the next 40 years.” I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that’s without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years. And a…..trillion that would require $500 million every week for 40 years. Even with these examples, the enormity is difficult to grasp.

Central Banks Author the Ruin of Global Economies

The monetary answer cannot be more debt

By Jeffrey Snider

Between February 13 and February 23, 1933, the Senate Committee on Finance held hearings investigating "the present economic problems of the United States with a view to securing constructive suggestions with respect to the solution of such problems." Among the dozens testifying were Winthrop Aldrich (Chairman of Chase bank), Irving Fisher and the president of First Security Corporation in Ogden, Utah, a man by the name of Marriner Eccles.

Mr. Eccles would become Chairman of the Federal Reserve Board of Governors by November 1934, due in large part to his theoretical work which formed the basis of the testimony he gave to the Senate. In another prescient example of how similar circumstances are between then and now, he spoke what sounds eerily appropriate to any discussion about the lack of recovery after the Great Recession. Among his chief observations about the state of monetary affairs at the "bottom" of the Great Depression was:

"Why resort to inflation of the sort referred to when prices can be increased and business revived on the basis of our present money system? We have nearly one and a half billion currency more in circulation at the present time than we had at the peak of 1929, and under our present money system we are able to increase this by several billion more without resorting to any of the three inflationary measures popularly advocated."

He was pushing back against the notion that there had to be an appeal to inflationary monetary policy in order to revive the collapsed economy. To his view, the Federal Reserve had created enough "reserves" by 1933 for the economy to recovery without resorting to what might be thought of as a primitive version of quantitative easing (QE). In his opinion, money stock was not the problem (at least for the recovery, it was, obviously, too little, too late for the collapse).

The dollar’s days as reserve currency are numbered

How to Centrally Plan Another Disaster on a Global Scale

By Barry Eichengreen

As the International Monetary Fund and World Bank redouble their warnings on the prospects for global growth, central banks continue to flood the markets with liquidity. The US Federal Reserve began its third round of quantitative easing in September; the European Central Bank is offering unlimited purchases of bonds of troubled eurozone countries. The People’s Bank of China, responding to slowing growth, has cut interest rates repeatedly and trimmed reserve requirements.

It may seem a strange time to worry about a shortage of global liquidity. But precisely this risk looms and, if nothing is done, it will threaten 21st-century globalisation.The global trading and financial systems require lubrication by an adequate supply of homogeneous assets that can be bought and sold at low cost and are expected to hold their value. For half a century, US Treasury bills and bonds played this role. Their unique combination of safety and liquidity has made them the dominant vehicle for bank funding globally: it explains why the bulk of foreign exchange reserves are held in dollar form, and why the role of dollar credit in financing and settling international trade far exceeds the US share of international merchandise transactions.

Epiphanies from Nassim Nicholas Taleb

The "Black Swan" theorist reflects on the most stable country in human history and the folly of the European Union

Nassim Nicholas Taleb has made a career of going against the grain, and he has been successful enough that the title of his book The Black Swan is a catchphrase for global unpredictability far beyond its Wall Street origins. Born in Lebanon, he weathered the first few years of the civil war in the late 1970s reading philosophy and mathematics -- from Plato to Poincaré -- in his family's basement. War taught him how quickly fortunes can change, an insight he soon applied to derivatives markets. For Taleb, investing is about "hyper conservatism," which includes making lots of tiny bets on wildly unlikely events -- like a currency crisis or the banking collapse, on which he made tens of millions of dollars. His newest project is helping governments get smarter about risks, and his fervent anti-euro message has helped win him the ear of British Prime Minister David Cameron.

---

There are three categories of things: Fragile things that break, like the financial system; robust things that don't break easily but don't improve, like the Brooklyn Bridge; and my new category, "antifragile" things that gain strength from stressors and get stronger from failure, like evolution. The fundamental problem in foreign policy is that people shoot for stability rather than antifragility.

Who Will Determine Greece's European Future?

There are several member countries that believe that Greece never belonged in the Eurozone to begin with

By Mohamed El-Erian

Many feel that Greece's fate, including its continued membership of the eurozone, rests in the hands of the Troika - officials from the European Commission, European Central Bank and the International Monetary Fund charged with evaluating Greek's reform efforts, its financing needs and how they should be met. But this is not the entire story by any means.

The country's fate is also closely linked to what happens in Italy and Spain, and in a manner that is yet to be sufficiently understood by many. (Read More: Can Spain Avoid Greece’s Vicious Circle?)

Domestic political stability and economic reforms are clearly critical for Greece's continued membership of the eurozone. Many are thus interested in how the Troika, acting on behalf of official creditors, will react to the government's request to stretch out the budgetary adjustment over an extra couple of years.

Will they agree? If they do, how will the accompanied structural reforms be tweaked? And who will pony up the additional financing, either explicitly or through indirect methods (such as the refinancing undertaken recently by the ECB (Learn more)?

Goliath wins, but Venezuela is at a turning point

Venezuela’s destiny in the years ahead will be determined by human frailty, rather than by ideology

By Moisés Naím

Last Sunday Goliath crushed David. Hugo Chávez, Venezuela’s political giant, defeated Henrique Capriles, the 40-year-old opposition candidate, by more than 10 percentage points to win another six-year term leading this oil-rich country. If he completes the term, Mr Chávez will have been in office for two decades.

Yet this election may still mark a turning point in Venezuelan politics. The opposition is better organised and, in Mr Capriles, it has found the best leader it has had since Mr Chávez rose to power. In contrast to the ideological, divisive tactics of the latter, Mr Capriles campaigned on messages of national harmony, tolerance against political opponents and pragmatism – and he succeeded in boosting the anti-Chávez vote by 60 per cent compared to the last election. Millions of erstwhile Chávez supporters have abandoned him. It is impossible to win the 6.5m votes that Mr Capriles received last Sunday without the support of millions of poor people who in past elections were stalwart Chávez voters.Nevertheless, he failed to unseat the president. This was, first, because charisma and cunning make Mr Chávez a formidable competitor who enjoys broad popular support. But in this case, oil matters more than talent. Incumbents always have advantages over their challengers, and Mr Chávez is an incumbent on steroids. He controls all the levers of power and can tap Venezuela’s oil revenues at will. Mr Capriles said: “I am not running against another candidate, I am running against the Venezuelan state.” In just one example, according to data compiled by his campaign, in the week before the vote Mr Chávez was on air for nine hours while, after protesting, Mr Capriles was allowed to address the nation for two minutes.

Money Is Now a Total Fiction

Central Banks Gone Wild

By Jeffrey Snider

For the most part the general public has distinct and sometimes divergent views on the Federal Reserve and the European Central Bank (ECB). Obviously, there are political and institutional differences that present both with unique challenges, meaning that what constraints apply to the Fed do not always apply to the ECB and vice versa. It certainly seems that way on the surface when the ECB pledges to buy an unlimited amount of troubled sovereign bonds to keep those nations from plunging into the Greek abyss, while at nearly the exact same moment the US central bank pledges to buy an unlimited amount of erstwhile untroubled mortgage products to theoretically create jobs.

Despite the operational idiosyncrasies of each central bank, they are entangled by something far more pivotal: operative theory. What I mean by operative theory here goes deeper than just their now-constant appeal to debasement. For all intents and purposes, global central banks view "money" as nothing more than "charta", a Latin word for "token".

The word itself is more meaningful than just its Latin etymology. In the early part of the 20th century, there was a school of thought advocating a full fiat system where money was nothing more than a creature of government whim. Through the power of taxation a government can essentially create currency or money from anything it wished: if government accepts sea shells as payment for taxes, sea shells become fiat money. In theoretical terms, if the government tomorrow declared this to be the case, suddenly sea shells have been given "value" through the creation of coercive demand enforced at the point of the figurative government gun.

Mexico’s Massacre Era

Gruesome Killings, Porous Prisons

By Gary Moore

When forty-nine dismembered torsos were dumped for public display near Cadereyta, Mexico, in May of this year, they confirmed a grim pattern: what might be called a massacre era has been unfolding in Mexico for nearly two years now, since August 2010.

Before that, firefights and multiple murders had certainly characterized the nation’s drug cartel warfare, but there had been limits. For whatever reasons of logistics or psychology, not even the worst known clashes before 2010 had produced more than about twenty-five fatalities each. Most were far smaller.

Venezuela: the left’s heart in a heartless world

The Western left’s bizarre love affair with the Hugo Chavez speaks volumes about its intellectual disarray and desperation

by Brendan O’Neill 

For an insight into the collapsed standards, declining intellectual rigour and desperate opportunism of the modern Western left, look no further than its fawning over Hugo Chavez of Venezuela. In the past, much of the left - both the radical sections and even some of the stuffy Stalinist crowd - was highly critical of the Bonapartist antics of populist Latin American leaders. They critiqued the way these leaders mobilised the masses to give their narrow, bourgeois, largely state-orientated policies a gloss of legitimacy or the appearance of revolutionism. But now, so isolated is the Western left, so bereft is it of a domestic constituency or anything approaching a political plan, that it sees in Chavez’s twenty-first-century Bonapartism something ‘genuinely progressive’.

This week, Chavez won a fourth term as president of Venezuela. He did not repeat his landslide victory of 2006, instead winning a safe but not-especially-astounding 54 per cent of the vote (on a turnout of 81 per cent). His supporters among Western radicals immediately went into hyperbolic hyperdrive, talking about the ‘revolution’ that Chavez has led in Venezuela and commending him for ‘challenging imperial domination’. Chavez’s posturing against US influence in Latin America and his implementation of social-assistance programmes for the Venezuelan poor are variously described as ‘radical’, ‘progressive’ and part of his broader ‘profoundly revolutionary struggle’. He is compared to Simon Bolivar, the nineteenth-century political leader who liberated much of the Latin American continent from Spanish rule, or to Che Guevara, the more recent Argentine radical beloved of t-shirt sellers in hipster communities across the West.