Fighting Recession the Icelandic Way

Undoing the damage caused by the crisis is a work in progress

By Bloomberg

Few countries blew up more spectacularly than Iceland in the 2008 financial crisis. The local stock market plunged 90 percent; unemployment rose ninefold; inflation shot to more than 18 percent; the country’s biggest banks all failed.

This was no post-Lehman Brothers recession: It was a depression.

Since then, Iceland has turned in a pretty impressive performance. It has repaid International Monetary Fund rescue loans ahead of schedule. Growth this year will be about 2.5 percent, better than most developed economies. Unemployment has fallen by half. In February, Fitch Ratings restored the country’s investment-grade status, approvingly citing its “unorthodox crisis policy response.”

You can say that again. Iceland’s approach was the polar opposite of the U.S. and Europe, which rescued their banks and did little to aid indebted homeowners. Although lessons drawn from Iceland, with just 320,000 people and an economy based on fishing, aluminum production and tourism, might not be readily transferable to bigger countries, its rebound suggests there’s more than one way to recover from a financial meltdown.

Nothing distinguishes Iceland as much as its aid to consumers. To homeowners with negative equity, the country offered write-offs that would wipe out debt above 110 percent of the property value. The government also provided means-tested subsidies to reduce mortgage-interest expenses: Those with lower earnings, less home equity and children were granted the most generous support.

Debt Relief

In June 2010, the nation’s Supreme Court gave debtors another break: Bank loans that were indexed to foreign currencies were declared illegal. Because the Icelandic krona plunged 80 percent during the crisis, the cost of repaying foreign debt more than doubled. The ruling let consumers repay the banks as if the loans were in krona.

Three New Deals

Why the Nazis and Fascists Loved FDR

by David Gordon

Critics of Roosevelt’s New Deal often liken it to fascism. Roosevelt’s numerous defenders dismiss this charge as reactionary propaganda; but as Wolfgang Schivelbusch makes clear, it is perfectly true. Moreover, it was recognized to be true during the 1930s, by the New Deal’s supporters as well as its opponents.

When Roosevelt took office in March 1933, he received from Congress an extraordinary delegation of powers to cope with the Depression.

The broad-ranging powers granted to Roosevelt by Congress, before that body went into recess, were unprecedented in times of peace. Through this “delegation of powers,” Congress had, in effect, temporarily done away with itself as the legislative branch of government. The only remaining check on the executive was the Supreme Court. In Germany, a similar process allowed Hitler to assume legislative power after the Reichstag burned down in a suspected case of arson on February 28, 1933. (p. 18).

The Nazi press enthusiastically hailed the early New Deal measures: America, like the Reich, had decisively broken with the “uninhibited frenzy of market speculation.” The Nazi Party newspaper, the Völkischer Beobachter, “stressed ‘Roosevelt’s adoption of National Socialist strains of thought in his economic and social policies,’ praising the president’s style of leadership as being compatible with Hitler’s own dictatorial Führerprinzip” (p. 190).

Nor was Hitler himself lacking in praise for his American counterpart. He “told American ambassador William Dodd that he was ‘in accord with the President in the view that the virtue of duty, readiness for sacrifice, and discipline should dominate the entire people. These moral demands which the President places before every individual citizen of the United States are also the quintessence of the German state philosophy, which finds its expression in the slogan “The Public Weal Transcends the Interest of the Individual”‘” (pp. 19-20). A New Order in both countries had replaced an antiquated emphasis on rights.

Mussolini, who did not allow his work as dictator to interrupt his prolific journalism, wrote a glowing review of Roosevelt’s Looking Forward. He found “reminiscent of fascism … the principle that the state no longer leaves the economy to its own devices”; and, in another review, this time of Henry Wallace’s New Frontiers, Il Duce found the Secretary of Agriculture’s program similar to his own corporativism (pp. 23-24).

How the United Nations could ruin the Internet

Imposing a tax on Web publishers can severely distort what Internet is all about

By John C Abell

The Internet has sustained some pretty intense assaults in the past couple of years. There was the heavy-handed attempt to stamp out content piracy with SOPA/PIPA, the Federal Communications Commission’s Net neutrality ruling, which many saw as splitting the baby, and that whack job who claimed to own a patent on the World Wide Web.

It is again open season on the Internet in Dubai, where the International Telecommunication Union, a United Nations agency ‑ whose mandate includes global communications ‑ is weighing proposals from many of its 193 member nations. Some of these proposals ‑ such as decentralizing the assignment of website names and eliminating Internet anonymity ‑ would make enormous changes to the organization and management of the Internet.

The ITU meeting, which began on Monday, runs through Dec. 14. Its agenda, and even the fact the proceedings are taking place at all, set off alarms among the Internet’s guardian angels.

Among the most vocal critics are a founder of the Internet, Vint Cerf, and of the Web, Tim Berners-Lee. Theirs is not some misplaced paternal instinct or senior graybeard moment or cry for attention. These guys are worried. And if they are worried, we all should be.

Still not sure this is serious business? The U.S. House of Representatives, which cannot agree on anything, voted unanimously to ban ITU regulation of the Internet before it even happens. The European Union did that last month, before the ITU even met.

Whether or not any policy directive emerges (or is abided by anyone) is not the point. The danger is in allowing any country to entertain the notion that Internet protocols can be put up for a vote.

The era of Reagan is over for good

A Republican Retreat – or Rout?

by Patrick J. Buchanan

Given the expectations raised by the Republican punditocracy – that Mitt was headed for a big victory – the jolt of defeat hit especially hard.

Now, what had seemed an orderly retreat has taken on the aspect of a rout, with Beltway Republicans calling for abandonment of fixed positions all along the line.

After Senate candidates Richard Mourdock in Indiana and Todd Akin in Missouri bollixed the question of abortion in cases of rape, Republicans are being counseled to downgrade or dump the social issues. As young people seem to support same-sex marriage, why not be good libertarians and get on board?

As Romney got 27 percent of the Hispanic vote, we must stop this talk of border fences, ID cards, employer sanctions and "self-deportation," and reconsider amnesty and a path to citizenship.

The party is being urged to shed positions dear to loyalists, to win over folks who voted for Obama. And those who urge the ditching of positions dear to the base are rewarded with indulgent media portrayals as Republican leaders who have "grown."

But there are two problems with this panicky reaction to defeat.

First, while the defections depress and dishearten the faithful, they rarely attract the disbelievers whom the switch is designed to appease. Second, such maneuvers are the indelible mark of the opportunist.

Which bring us to John Boehner's concessions to Obama to save us from going over the fiscal cliff.

Though a tax increase would violate party principle and a commitment to constituents just a month ago, and though Lord Keynes himself would argue that raising taxes in a limp economy is risky business, Boehner has offered Obama $800 billion in new tax revenues.

Yet, though Boehner is capitulating, the White House has backhanded his offer. The Clinton tax rates on the rich must be restored or no deal, says Treasury Secretary Tim Geithner. Obama takes a more moderate position. We must raise both rates and revenues.

Anti-Science Climate Deniers On The Retreat In Germany

Scientific Method versus Climate Deniers

By James Taylor,

The Scientific Method struck a valiant blow against climate denialism in Germany this week, as scientists from around the globe gathered to sort out climate change facts from fiction. The climate change conference, hosted by the European Institute for Climate and Energy (known by its German acronym EIKE) and cosponsored by the Heartland Institute, attracted nearly 200 attendees and marks ongoing global momentum in favor of sound science and against factually unsupported alarmism.

American atmospheric physicist S. Fred Singer, whose resume of scientific accomplishments runs longer than Al Gore’s obscene electricity usage (seehere), explained how natural variance accounts for most of the global warming of the past century. The German attendees treated Singer like a rock star. Nils-Axel Morner, former head of the Paleogeophysics and Geodynamics Department at Stockholm University, documented a dramatic deceleration of sea level rise during the past 40 years. Nir Shaviv, a professor of astrophysics at the Hebrew University of Jerusalem, showed how cosmic rays account for much recent global warming. Journalist Donna Laframboise related how she discovered an appalling prevalence of incompetence and bias among lead authors for the United Nations Intergovernmental Panel on Climate Change.

The conference’s unmistakable lesson was that the scientific evidence is woefully short of supporting alarmist assertions that humans are causing a global warming crisis. To the extent the scientific evidence leads to a particular conclusion, the conclusion is that humans are modestly enhancing a natural warming cycle that fortunately rescued the planet from the Little Ice Age.

Was blind but now I see

Blinding ourselves by our own liberal delusions

Survivor: Nurbanu's husband threw acid in her face
eight days after she divorced him for being unfaithful

By Vox Clamantis in Deserto

Grisly criminal acts are as old as humanity, but this story encapsulates the greatest evil of our time.

The title sums it up: “Woman forced to remarry the husband who threw acid in her face after she divorced him for being unfaithful.”

This woman’s horrific scars serve as a cruel and permanent reminder of the moment her husband of 18 years flung acid into her face.

Nurbanu had divorced her unfaithful and violent spouse after catching him with another woman.

Eight days later, she was cooking at home in Bangladesh when he pulled up on a motorbike and doused her with acid, leaving her blind and disfigured.

The 36-year-old now has to endure living with her former spouse again after his mother forced her to sign an affidavit to have him released from prison following the attack.

Horrific and sickening.

Monira Rahman, CEO of the Acid Survivors’ Foundation (ASF) in Bangladesh, has worked with the victims of acid and petrol attacks in the country for the past 14 years.

In a blog for the Huffington Post, she said the majority of the girls and women she had worked with had suffered at the hands of men who viewed them as ‘commodities’, and ‘believed they were justified in disfiguring them and violating their rights’.

That there is even a need in this world for an NGO like Acid Survivors’ Foundation is heart-wrenching alone. Tragically, Nurbanu’s suffering is far too typical in certain parts of the world. Wikipedia even has an article on acid throwing.

An illness of acute ideological diarrhea

A meta language has taken over our lives and no word is what it seems

By Yoani Sánchez

Don’t worry, reader, this article isn’t about what you think it is. It’s not a call from the Royal Academy of the Spanish Language to expedite the process of accepting new terms, nor even a demand to reduce the complexity of Spanish spelling. None of that. It’s been quite a while since I hung up the robes of a philologist, and I now understand more about bytes than syllables, more about tweets than conjugations. I am speaking, rather, of those peculiar twists used in Cuba to describe economic, political and social phenomena. The “reforms” that we are experiencing seem to be happening more in the field of linguistics and semantics than in concrete reality. I will offer up some examples… don’t despair.

In our country there has been a call to “update the socialist model” through measures that are simply adding elements of a market economy to the system. What is called “self-employment” is known in other parts of the world as the “private sector.” Nor are the unemployed designated with the corresponding word, but rather given the label of “available workers,” a very smooth way to describe the drama of unemployment. In hospitals, when they greatly reduce the number of X-ray and ultrasound technicians, it’s explained as a chance to “enhance the clinical diagnosis.” Which, translated into a truthful statement, means that the doctor must discover with her eyes and her hands everything from a fracture to an internal hemorrhage.

The Alarming “Sense Of Pauperization” In France

In France, poverty is linked to the private sector that is atrophying and shedding jobs

By Wolf Richter   

In France, 48% of the people considered themselves either living in poverty or on the way to living in poverty. The sobering results of a survey released just ahead of the National Conference of the Fight against Poverty. It’s going to be a big conference—a sign the government is taking poverty seriously. Prime Minister Jean-Marc Ayrault had announced it in September under the motto, “Imagine the social policies of the 21st century.”

It will take place in Paris on December 10 and 11 at the Iena Palace, home of the Economic and Social Council, which advises the National Assembly and the Senate on social and economic policies. President François Hollande himself will kick it off. Ayrault will close it. Sandwiched between them will be ministers, representatives of anti-poverty associations, and even people who live in poverty. The goal: a roadmap for social questions in Hollande’s five-year term.

It was one of his campaign promises. “The first time that the poverty has become a political topic that a President seizes,” said Bruno Grouès, coordinator of Alerte, an umbrella organization of 35 anti-poverty associations.

The largest consumer companies are already reacting to “the logic of pauperization,” as L’Oréal CEO Jean-Paul Agon had called it. Unilever, the third largest consumer products company in the world, was adjusting its commercial strategy by redeploying to Europe what had worked in poor countries of the developing world. E.Leclerc, the number one retailer in France, confirmed that poverty is a new commercial reality [read.... The “Pauperization of Europe”].

What I Worry About

Vignettes of Socialism

By Yoani Sánchez

I worry about this old man who, after working all his life, now sells cigarettes on the corner. Also the girl who looks in the mirror and values her body for “the sex market,” where she could meet a foreigner to get her out of here. I worry about the black man with leathery skin who, no matter how early he gets up, can never rise to a position of responsibility because of the racism — visible and invisible — that condemns him to a lower position. The deeply wrinkled forty-something who pays her dues to the union, but senses that at the next meeting they will announce that she is out of work. The provincial teenager who dreams of escaping to Havana, because in his village all that is waiting are material shortages, a badly-paid job and alcohol.

I worry about the girlfriends I grew up with and who now — with the passing of decades — have less, suffer more. The taxi driver who has to carry a machete hidden under the seat because crime is increasing even though the papers never report it. I worry about my neighbor who comes over in the middle of the month to ask for a little rice, despite knowing she’ll never be able to return it. Those people who race to the butcher shop just when the chicken arrives in the ration market, because if they don’t buy it that same day their families will never forgive them.

Startling Look at Job Demographics by Age

Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages

ZeroHedge had an interesting set of charts of BLS data in his post Number Of Workers Aged 25-54 Back To April 1997 Levels.

I picked up on that theme and put together the above chart of BLS data showing various age groups.

Demographic Points of Note

·        Employment in age group 25-54 is 94,063,000

·        Employment in age group 25-54 was 94,167,000 in April 1997

·        Total employment is 143,257,000

 ·        Total employment was  143,449,000 in February 2006

·        The low employment for age group 25-54 was 93,356,000 in October 2011, 28 months after the recovery began

·        Total employment at the start of the recovery in June 2009 was 140,074,000

 ·        Age 55 and up employment at the start of the recovery was 27,105,000 

·        Age 25-54 employment at the start of the recovery was 95,264,000

·        Age 55 and up employment is now 31,119,000

·        Age 25-54 employment is now 94,063,000

·        Reflections on the Recovery

·        Since the start of the recovery, the economy added 3,183,000 total jobs

·        Since the start of the recovery, the economy added  4,014,000 jobs in age group 55+

·        Since the start of the recovery, the economy lost 831,000 jobs of those between 16-54

·        Since the start of the recovery, the economy lost 1,201,000 jobs of those between 25-54

The mandatory stupidity of politicians

Ministers announcing minimum sentences for high-profile crimes looks tough, but is bound to lead to injustice

by Rob Lyons 

Politicians do love mandatory sentences. They really put the Something into Something Must Be Done.

When there seems to be regular outcry at the fact that a killer or rapist has been let off lightly by some supposedly bleeding-heart judge, the announcement of a new mandatory sentence ‘sends out a message’ that society disapproves of particular crimes so much that there are no shades of grey: conviction must lead to draconian punishment.

To that end, a new set of offences and mandatory sentences has come into force this week in England and Wales. There is now a ‘two strike’ system for serious violent or sexual offences. Someone convicted of such an offence for a second time would now receive an automatic life sentence ‘unless to do so would be unjust’. Extended determinate sentences (EDS) will apply to dangerous criminals who might otherwise be allowed to leave prison on parole after serving just half their sentence (which is normal practice). Under EDS, such prisoners could be forced to serve at least two thirds or even all their original sentences.

There will also be a new offence of aggravated knife possession. For anyone who carries a knife and wields it in a threatening or dangerous manner in a public place or school, there will be a minimum six-month sentence for adults and four months detention for 16- and 17-year-olds.

Where To From Here?

Floating currencies would disappear as suddenly as they appeared a little more the forty years ago

by Gerardo Coco

We face one of the deepest crises in history. A prognosis for the economic future requires a deepening of the concepts of inflation and deflation. Without understanding their dynamic relationship and their implications is difficult to predict how things might unfold. The economic future depends on the interplay of both these forces. From the point of view of their final effects, inflation and deflation are, respectively, the devaluation and revaluation of the currency unit. The quantity theory of money developed in 1912 by the American economist Irving Fisher asserts that an increase in the money supply, all other things been equal, results in a proportional increase in the price level [1]. If the circulation of money signifies the aggregate amount of its transfers against goods, its increase must result in a price increase of all the goods. The theory must be viewed through the lens of the law of supply and demand: if money is abundant and goods are scarce, their prices increase and currency depreciates. Inflation rises when the monetary aggregate expands faster than goods. Conversely, if money is scarce, prices fall and the opposite, deflation, occurs. In this case the monetary aggregate shrinks faster than goods and as prices decrease money appreciates.

Inflation is a political phenomenon because monetary aggregates are not determined by market forces but are planned by central banks in agreement with governments. It is in fact connected with the monetary expansion to fund their deficits. Inflation raises the demand for goods and decreases the demand for money; it increases aggregate spending and money velocity as the ratio between GDP and the amount of money in circulation which expresses the rapidity with which the monetary unit is spent and respent until it remains in existence.

There is no such things as demand-pull inflation or cost-push inflation. Provided that the quantity of money does not increase, if cost or demand for some goods changes, demand for other goods must necessarily adjust, leaving unchanged the amount of spending and the money aggregate in the economic system. If some people spend more, others have to spend less, thus leaving the purchasing power unaltered. The cause of inflation is nothing but money manipulation.

Architect of ObamaCare Jumps Ship To Johnson & Johnson

Meet Ms Liz Fowler

By Mike Krieger

Following the passage of ObamaCare, several of the smartest people I know claimed that the bill was actually written by and for the drug and insurance companies rather than “the people” as Obama had claimed.  My friend and orthopedic surgeon Dave Janda wrote an excellent piece that I published titled: Thoughts on Obamacare from a Surgeon and Friend.

In recent days it has emerged that Liz Fowler, who is said to have been one of the key architects of ObamaCare, is doing what any good revolving door crony capitalist would do.  She is moving to the private sector to receive her payoff.  Trudy Lieberman of the Columbia Journal Review explains that:

Herewith is a brief Fowler curriculum vitae: In 2001 she had a plum job as chief counsel for the Senate Finance Committee, which deals with healthcare bills. As Greenwald’s old Salon post notes, her biography says she “played a key role” in the 2003 Medicare prescription drug law that created a new senior drug benefit—a benefit provided via private insurers, not the government, as is the case for other Medicare benefits. A few years later she landed a position at WellPoint as a vice president overseeing the giant insurer’s lobbying activities.

ICTY: a common enterprise against the Serbs

The international court trying cases from the former Yugoslavia is there to heap blame on just one side

by Tara McCormack 

This week, the International Criminal Tribunal for the Former Yugoslavia (ICTY) found the former prime minister of Kosovo, Ramush Haradinaj, not guilty of all charges against him. Haradinaj had been a commander of the Kosovo Liberation Army (KLA) during the 1999 war in which the majority Albanian area of Kosovo sought to secede from Serbia. The previous week, two Croatian generals, Gotovina and Markac, were acquitted on appeal for charges brought over their role in Operation Storm in 1995. After the verdict of Haradinaj, Serbian president Tomislav Nikolic gave a statement that the ICTY was formed to try the Serbian people. He has a point.

The ICTY was established by the UN Security Council in 1993 during the civil wars that accompanied the break-up of Yugoslavia. The ICTY was specifically set up to try so-called war crimes committed by the warring parties in the former Yugoslavia – for example, breaches of international humanitarian law and the Geneva Conventions. It was the first international criminal tribunal set up since Nuremburg, but it was swiftly followed by several more based on the same model, like the ICT for Rwanda and the Special Panel for Serious Crimes in East Timor. In 2002, a permanent court was established, the International Criminal Court (ICC), to take over the job of the ad-hoc tribunals.

For many critics of the ICTY, it is a tool of Western interests. For supporters, the ICTY heralds a brave new post-Cold War world of international justice, in which those committing war crimes or crimes against humanity can no longer hide behind the barrier of state sovereignty. In fact, both critics and detractors are correct to a point and the contested principle of Joint Criminal Enterprise (JCE) illustrates the way these two aspects of the ICTY meet and are worked out.

Obama's Energy Dilemma

Back Energy fueled Growth or Please Rent Seeking Green Lobby

by Joel Kotkin

Talk all you want about the fiscal cliff, but more important still will be how the Obama administration deals with a potential growth-inducing energy boom. With America about to join the ranks of major natural gas exporters and with the nation’s rising oil production reducing imports, the energy boom seems poised to both  boost our global competitiveness and drive economic growth well above today’s paltry levels.

This puts President Obama in a dilemma. To please his core green constituency, he can strangle the incipient energy-led boom in its cradle through dictates of federal regulators. On the other hand, he can choose to take credit for an economic expansion that could not only improve the lives of millions of middle- and working-class Americans, but also could assure Democratic political dominance for a decade or more.

Stronger economic growth remains the only way to solve our nation’s fundamental fiscal problems other than either huge tax hikes or crippling austerity. As economist Bret Swanson has pointed out, the best way to raise revenues and reduce expenditures, particularly for such things as welfare and unemployment, would be to increase overall growth from the current pathetic 2 percent rate to something closer to 3 or 4 percent.

Swanson suggests in a few simple charts (PDF) that a 4 percent growth rate would drive output to levels that would cover even our current projected spending levels. Even at 3 percent, the additional revenue would be enough, for example, to fill in Medicare’s looming $24.6 billion liability that is projected to 2050. The effects of higher growth are likely far greater than either any anticipated bonanza by raising taxes on the “rich” or enacting the most extreme austerity.

The energy revolution presents Obama with the clearest path to drive this critical boost to greater economic growth. New technologies for finding and tapping resources, such as fracking and other new technologies to tap older oil fields, could make America potentially the largest oil and gas producer by 2020, according to the International Energy Agency.

Assad faces life or death choice

The Syrian leader appears to have his back against a wall

By Victor Kotsev 
Amid significant rebel advances and indications that a partition of Syria might happen in the next months, the government army reportedly readied chemical weapons for use last week. The United States and the North Atlantic Treaty Organization (NATO) alliance responded with harsh warnings and by approving the move of multiple Patriot missile batteries to southern Turkey, something that could further tip the balance in the country. The Syrian civil war seems to have entered a critical phase, with President Bashar al-Assad facing the choice of either stepping down or fighting to the end, by all means available. 
To be fair, there are no specific indications that the Syrian government intends to use weapons of mass destruction against its own citizens, and its spokespeople vehemently denied on Monday any such possibility. These weapons could play different roles in several scenarios, including as a bargaining chip for Assad on his way out of the country, a deterrent against foreign intervention, or a way to cover his potential withdrawal to a rump state centered around territories inhabited by his Alawite sect. 
Some reports claim that Assad is exploring the possibility of seeking political asylum in Latin American countries such as Cuba, Venezuela or Ecuador. Though the Syrian president has denied any such intention and has vowed to "live and die in Syria", his recent military and diplomatic fortunes have turned more toward dying, and he could be expected to reconsider. 
The threat of chemical weapons, on the other hand, could win him a measure of immunity and an offer of more favorable conditions for an exit (of course, only as long as he doesn't use them). 

Patients Misused as Guinea Pigs in East Germany

Western Pharmaceutical Trials

By Nicola Kuhrt

Prior to the fall of the Berlin Wall, East Germany sold patients as unwitting guinea pigs in drug trials conducted on behalf of Western pharmaceutical companies, according to a TV documentary. Journalists have spoken to former patients and their relatives and unearthed official documents proving secret collusion between the East and West.

It was as though Gerhard Lehrer suspected that something was amiss. He was being treated in an East German hospital in Dresden after suffering a heart attack in May 1989, and he decided not to hand back the box of drugs he had been given.

Three weeks after he was discharged, he was feeling increasingly ill. The clinic told him to stop taking the mystery drug immediately and to return all the pills he had left. But Lehrer disobeyed. "Keep hold of them, you may need them one day," he told his wife. He died a year later.

His widow Anneliese Lehrer kept the red packet. It was strange, she recalls, how the doctor praised the red-and-white capsules when her husband was taken to the hospital. "You can only get them with me," he said. When she later saw a television documentary about risky drug tests in East German clinics, she rang up broadcaster MDR.

German Gold

Total collapse is a real possibility

by Godfrey Bloom and Patrick Barron

The greatest threat to worldwide prosperity is the collapse of what remains of free-market capitalism. Not depletion of scarce natural resources. Not environmental degradation. Not global warming (or is it "climate change" now?) No, the greatest threat to worldwide prosperity is the complete collapse of what little remains of free-market capitalism. Throughout the world, and not just in totalitarian countries, the state has been advancing at the expense of economic liberty. The indispensible tool that enables the modern state to usurp our liberties is its access to unlimited amounts of fiat money controlled by central banks — i.e., the unholy alliance of the state with the central bank.

Fiat-money expansion has made the advance of statism possible through its ability to thwart the wishes of the people as the final arbiters of state spending. The state can obtain an almost limitless amount of fiat money from its central bank. It need not increase taxes or borrow honestly in the bond market, so it need not fear a tax revolt or high interest rates respectively. All it needs to do is convince the central bank to buy its debt. The state then takes control over more and more resources, squandering them on war and welfare, depriving the free-market economy of its capital base. Once the capital base has been depleted, the economy will go into a steady decline.

For the past forty years, Israel knew no active state-to-state attack on any of its borders

The region is defined by the twin threats of Iranian hegemonic ambitions and the spread of radical Sunni extremism

By Robert Satloff

Even before Gaza fell silent the other week, the blogosphere was full of lists of "winners and losers" of the mini-war that helpfully came to a halt before ruining Thanksgiving dinner. In one article after another, the big winner was Egypt's President Muhammad Morsi, followed by the leaders of Hamas, and maybe Israeli Prime Minister Benjamin Netanyahu; the big loser was Palestinian Authority president Mahmoud Abbas, followed by Turkish Prime Minister Recep Tayyip Erdogan, and maybe Netanyahu.

Titillating though it may be, this focus on personality politics missed the larger significance of the Gaza conflict as the beginning of a new era in the Middle East -- one defined by the end of the region's forty-year peace.

Don't blame yourself if you didn't realize that the Middle East has enjoyed four decades of peace. But that is precisely what has transpired between Israel and Arab states since the Yom Kippur War of 1973. In its first twenty-five years of independence, Israel was characterized by multi-state war with intermittent bouts of unsuccessful diplomacy. Six Arab armies invaded Israel in 1948; Israel fought four Arab armies in June 1967; twelve Arab armies participated in the 1973 war. In the forty years since, Israel has fought no wars against an Arab state, and its history has been characterized by frequently successful diplomacy with intermittent bouts of terrorism and asymmetric war against non-state actors.

The difference between these two realities may not be great to the grieving mother, the widowed wife, or the orphaned child, but the difference is profound in strategic terms. For the past forty years, Israel knew no active state-to-state attack on any of its borders; its main local threats came from a guerilla organization, Hezbollah, and from the intra-state challenge of rebellion, terrorism and insurrection known as the first and second uprisings (popularly known as "intifadas").

“La Ville Lumiere”, No More

The Age of “Sobriety” Begins

by Pater Tenebrarum

It is incredible how a bearish social mood often leads to actions that will only tend to make it even worse and are likely to result in a plethora of usually very costly unintended consequences.

The French government has now decided that it is time to begin with what one might refer to as the “age of sobriety”. It is going to be celebrated by simply switching off the lights – almost all of them. Parisian merchants are not surprisingly rather distressed over this latest nanny state edict, which is coming on top of a series of other bans that have severely hampered the shopping experience in Paris for a long time.

Bloomberg reports:

“Paris’s legendary label as the “City of Light” may soon lose some of its luster.

The French minister for energy and environment unveiled last week a proposal for lights in and outside shops, offices, and public buildings — including the flagship Louis Vuitton store and the Lido cabaret house on Paris’s Avenue des Champs Elysees — to be turned off between 1 a.m. and 7 a.m. starting in July. The plan, to be applied across French cities, towns and villages, is aimed at saving energy and money and showing “sobriety,” Minister Delphine Batho said.

The move has provoked an outcry from merchants, who say the government is being insensitive to France’s image as the world’s No. 1 tourist destination. They say the rule, on top of existing bans on Sunday store openings and night shopping, will hurt business at a time when the French economy has barely grown for a year and unemployment is at a 14-year high.

Is it time to write off Europe for the next decade?

Most of us still think we're just spectators

By Raoul Ilargi

The EU is a morally bankrupt blind behemoth that, in a doomed attempt to survive, destroys everything around it just to keep itself standing. In that, it is hardly different from several incarnations of the 20th century politburos in Russia and China - and those are by no means the darkest comparisons that could spring to mind.

There are tons of people working in and for the EU, some of whom are smart while others are not, some who are honest and some who are just self-centred , but the apparatus has become a vortex that sucks in all of them. There many be just a small window left for Europeans to retain a grip on democracy. There's not much left. Stock markets may give the impression that things are going fine, but that is possible only because increasingly severe austerity measures are spreading rapidly, and have now reached the core, not just Greece and Spain. The EU induced illusions will keep coming fast and furious, however, until they don't. And then it will be too late for democracy.

It's all in a terribly shaky state already though. Ironically, maybe that's the people's best hope, that it will collapse before the power games are solved with the bureacrats as winners. Today, Italian PM Mario Monti lost his majority in the Senate; he could be gone within days. Only to bring back Silvio Berlusconi. Also today British Chancellor of the Exchequer George Osborne announced that UK austerity will last till 2018 and that he needs to borrow another £100 billion to soothe the deficit. Which led Fitch to threaten a UK downgrade. Mario Draghi, however, claimed that the Eurozone will swing back to growth in 2014. And no matter how hard you may find that to believe, remember: he can't be voted out of office. Draghi doesn't care about his credibility with voters, he wants credibility in the financial world. And he has it, because he delivers.

The next step in the elaborate European centralization plan was announced today by EU President Van Rompuy.

EU President Calls for Central Fund to Wind Down Failing Banks

European leaders proposed an industry-financed fund to cover costs of winding down failing euro-area banks, seeking to deepen the bloc’s integration and limit fallout from future financial crises.

Nations in the currency bloc should back the creation of a centrally managed "European Resolution Fund," according to a report prepared by European Union President Herman Van Rompuy. The fund would be financed by levies on banks and could have a credit-line to the euro area’s firewall fund for sovereigns, according to the report.