Rajoy Drives Spanish Revolution With Low-Cost Manufacture

Spain is adjusting its current account deficit without devaluing its currency for the first time in its economic history

By Angeline Benoit, Manuel Baigorri & Emma Ross-Thomas

Spain’s turn toward wage cuts to restore competitiveness without leaving the euro is starting to bear fruit. At least that’s how it seems for Pablo Garcia, a 34- year-old autoworker who just got hired after a year out of work.

“This has been the best Christmas gift I could ever have imagined,” Garcia said as he prepared to enter a PSA Peugeot Citroen (UG) plant on the Madrid outskirts for the afternoon shift. “In the factory there’s a good atmosphere; people are optimistic about the future.”

As labor costs fall and Prime Minister Mariano Rajoy’s legislation makes it easier for companies to cut wages and reorganize staff, carmakers including Ford Motor Co. (F), Renault SA (RNO) and Peugeot are boosting production in Spain. Rajoy says the increase in investment and rising exports will translate into jobs as he battles an unemployment rate of 26 percent, the highest in Europe.

A surge in exports and foreign corporate investment indicates Spain is quietly being transformed within the constraints of the single currency. Rajoy is emulating the policies Germany carried out a decade ago to overhaul its then- sluggish economy, and the euro’s chances of hanging together may hinge on his success.

“Circumstances may be more dramatic in Spain now but it is going through the same kind of internal devaluation as Germany did,” said Nicolas Doisy, an economist at CA Cheuvreux in Paris and a former French Treasury official.

Merkel Advice

German Chancellor Angela Merkel, who has reaped the rewards of the measures that cost her predecessor Gerhard Schroeder his public support, advised Rajoy to learn from her country’s experience. She said in a Sept. 6 press conference with Rajoy in Madrid that while “no country wants to impose anything on another for the sake of it,” Germany’s efforts had cut its ranks of jobless to fewer than 3 million from 5 million.

The Money Monopoly

The MIT Cabal

By Pater Tenebrarum

Many of our readers have probably seen this widely circulated article at the WSJ: “Secret Talks Behind Central Banks' Bets”, in which the Fed's favorite  press mouthpiece Jon Hilsenrath talks about the 'secret meetings' the world's central bankers regularly hold in Basel at the BIS (the Bank for International Settlements, the nexus of global central banking).

So these unelected bureaucrats, who are among the most powerful men in the world due to their control over the fiat money system, hold 'secret meetings' where they discuss their policy steps and agree on coordinated actions far away from the glare of the public eye.

As is usually the case with mainstream articles of this sort, Hilsenrath's article is actually a kind of promotion: it is in not exactly critical of the fact that these men make decisions affecting the lives of billions of people in secret with no accountability whatsoever. After all, we are supposed to accept the State's monopoly on money without questioning, including the manner in which it is organized. As Hans-Hermann Hoppe writes on this topic:

“You can reach the desired independence of taxpayers and tax payments and of banks, if only you establish yourself first as a territorial monopolist of the production of money. On your territory, only you are permitted to produce money. But that is not sufficient. Because as long as money is a regular good that must be expensively produced, there is nothing in it for you except expenses. More importantly, then, you must use your monopoly position in order to lower the production cost and the quality of money as close as possible to zero. Instead of costly quality money such as gold or silver, you must see to it that worthless pieces of paper that can be produced at practically zero cost will become money. (Normally, no one would accept worthless pieces of paper as payment for anything. Pieces of paper are acceptable as payment only insofar as they are titles to something else, i.e., property titles. In other words then, you must replace pieces of paper that were titles to money with pieces of paper that are titles to nothing.)

What rough beast is being born in France?

Slouching Toward Dhimmitude

By Joseph A. Harriss

FRANCE’S LATEST BOUT OF JIHAD JITTERS came in September when two small homemade bombs were thrown into a crowded Jewish grocery store in suburban Paris. The attack was largely symbolic—windows were broken, a few patrons injured—but it was yet another wake-up call to a country still in denial about the extent of the Islamist threat. Police tracked the bomb-thrower to Strasbourg, where he welcomed them to his apartment with fire from a .357 Magnum before being shot. Raids in Paris, Nice, and Cannes netted 11 others ready to kill for love of Allah, one of them arrested as he returned home from his local mosque carrying a loaded rifle. Along with a list of targets and jihadist literature preaching war against France, the police found a small arsenal for that purpose: an assault rifle, a 12-gauge shotgun with 800 cartridges, and materials for making time bombs. An investigator said it all amounted to “an operational unit that was much more dangerous than we had thought.”

The authorities’ surprise at the extent of Islamist determination to take down France is itself surprising. Only a few months before, Mohamed Merah, a 23-year-old Frenchman of Algerian descent, had shot three French soldiers in the south of France, then slaughtered a teacher, the man’s two young sons, and an 8-year-old girl at a Jewish school in Toulouse before gendarmes satisfied his desire for a martyr’s death. Despite his declared goal of “bringing France to its knees,” his proclaimed affiliation with al Qaeda, and his training trips to Afghanistan, Egypt, Turkey, Syria, Lebanon, and Jordan, the government preferred to describe him as a lone fanatic. “For heaven’s sake,” it said in effect, “don’t blame terrorism on France’s peace-loving Muslim community.” The dozen jihadists arrested in the raids knew better: They praised Mohamed Merah as their role model.

France – Growing Despair, Clueless Politicians

No Future

President Hollande's three musketeers, from left to right: Pierre Moscovici, the would-be reformer, Jean-Marc Ayrault the procrastinator, and Arnaud Montebourg, the knight-tilting-against-the-windmills-of-globalism

By Pater Tenebrarum

Young people have it very difficult in France. Many have no future, as youth unemployment has soared to 26%. German news magazine Der Spiegel gets it right when it fingers the culprit as follows:

“Youth unemployment in France has been high for some time, but it has now climbed to 26 percent. For decades, regardless of their political affiliation, lawmakers have been promising to create a better situation for young people. But exactly the opposite has happened. Labor laws protect those who already enjoy steady jobs, while the economic crisis and recession have limited the number of new jobs created. Meanwhile, housing has become both scarcer and pricier.

"Something must finally be done," says Didier Dugast, director of the Mission locale in Moissy, who reports that the number of those seeking his assistance has been jumping by some 10 percent each year.

A new program from Socialist President François Hollande for the creation of "future jobs" has been in effect since November. It targets people much like Affram [an unemployed youth whose fate the article discusses, ed]. But he just shrugs his shoulders and says: "We're used to politicians constantly coming up with new ideas." (emphasis added)

Of course we cannot expect Mr. Hollande to abandon the sacred 'code du travail'. The unions would be up in arms over it. It goes against the grain of socialist ideology to abandon these laws that are allegedly 'protecting' workers.  Of course they do protect someone, namely those already ensconced in a job. However, even this protection is an illusion. As the economy spirals into the abyss, the code will protect none of those employed by firms that go bankrupt. Once they join the ranks of the unemployed, they will find out that the 'code' has quietly priced them out of the market. Politicians are coming up with 'new ideas', but none of them work, because they all attempt to skirt the laws of economics by pretending that somehow, the problem of institutional unemployment can be solved while the very causes of it are left in place unaltered.

Impotence, Leverage and Central Banking

Deleveraging can occur much more quickly than any central bank can monetize debt

By Nicole Foss

Some of our readers have been wondering why we spend so much time covering the situation in Europe. The relevance of the European situation is not perhaps immediately obvious to those geographically far removed, with a temptation to ascribe the problems of the European periphery to locally-specific conditions.

However, the global economy is exceptionally integrated, and what happens in one location all too readily leads to financial contagion - the spread of fear, from one asset class to another, or from one country to another in the case of sovereign debt risk.

Europe is the epicentre of phase II of the credit crunch, from which waves of financial contagion can be expected to emanate for the next several years. Several member states are effectively at, or near, sovereign debt default, with the potential to trigger credit events in the credit default swap market. Banks are over-leveraged, often highly disproportionate in comparison with their host economies and intertwined with the sovereign debt issue.

In many EU member states there are housing bubbles far larger than the American one that began to burst in phase I of the credit crunch (October 2007-March 2009). Bubbles in some states have already burst, while in other countries, housing markets are going illiquid and prices are beginning to decline. As the value of collateral falls, and economies slide deeper into recession and high unemployment, the leveraged debt will be unsupportable. Personal debt is often sky-high, even in countries which are currently considered wealthy and stable.

What is unfolding in Europe is highly relevant to the future of the whole global financial system, and where Europe is leading - into debt deflation, liquidity crunch and depression - many other countries will follow over the next few years. We are in the process of crashing our global operating system, as we did on a smaller scale in the 1930s. Our global credit bubble has peaked, and the debt created in the expansion years - excess claims to underlying real wealth - will not be able to be repaid.

Cooling Down the Fears of Climate Change

Evidence points to a further rise of just 1°C by 2100. The net effect on the planet may actually be beneficial

By MATT RIDLEY

Forget the Doha climate jamboree that ended earlier this month. The theological discussions in Qatar of the arcana of climate treaties are irrelevant. By far the most important debate about climate change is taking place among scientists, on the issue of climate sensitivity: How much warming will a doubling of atmospheric carbon dioxide actually produce? The Intergovernmental Panel on Climate Change has to pronounce its answer to this question in its Fifth Assessment Report next year.

The general public is not privy to the IPCC debate. But I have been speaking to somebody who understands the issues: Nic Lewis. A semiretired successful financier from Bath, England, with a strong mathematics and physics background, Mr. Lewis has made significant contributions to the subject of climate change.

He first collaborated with others to expose major statistical errors in a 2009 study of Antarctic temperatures. In 2011 he discovered that the IPCC had, by an unjustified statistical manipulation, altered the results of a key 2006 paper by Piers Forster of Reading University and Jonathan Gregory of the Met Office (the United Kingdom's national weather service), to vastly increase the small risk that the paper showed of climate sensitivity being high. Mr. Lewis also found that the IPCC had misreported the results of another study, leading to the IPCC issuing an Erratum in 2011.

Mr. Lewis tells me that the latest observational estimates of the effect of aerosols (such as sulfurous particles from coal smoke) find that they have much less cooling effect than thought when the last IPCC report was written. The rate at which the ocean is absorbing greenhouse-gas-induced warming is also now known to be fairly modest. In other words, the two excuses used to explain away the slow, mild warming we have actually experienced—culminating in a standstill in which global temperatures are no higher than they were 16 years ago—no longer work.

The case against growth and freedom

The Face of Genocidal Eco-Fascism

by John Aziz 

I am not exaggerating.

This is Finnish writer Pentti Linkola — a man who demands that the human population reduce its size to around 500 million and abandon modern technology and the pursuit of economic growth — in his own words.

He likens Earth today to an overflowing lifeboat:

What to do, when a ship carrying a hundred passengers suddenly capsizes and there is only one lifeboat? When the lifeboat is full, those who hate life will try to load it with more people and sink the lot. Those who love and respect life will take the ship’s axe and sever the extra hands that cling to the sides.

He sees America as the root of the problem:

The United States symbolises the worst ideologies in the world: growth and freedom.

He unapologetically advocates bloodthirsty dictatorship:

Any dictatorship would be better than modern democracy. There cannot be so incompetent a dictator that he would show more stupidity than a majority of the people. The best dictatorship would be one where lots of heads would roll and where government would prevent any economical growth.

The Children of Hannibal

The rich heritage of Tunisia, maybe the only place where the Arab Spring stands a chance

By Michael J. Totten

The Arab Spring began in Sidi Bouzid, a small Tunisian town, at the end of 2010. In a desperate protest against the corrupt and oppressive government that had made it impossible for him to earn a living, food-cart vendor Mohamed Bouazizi stood before City Hall, doused himself with gasoline, and lit a match. His suicide seeded a revolutionary storm that swept the countryside and eventually arrived at the capital, Tunis, where it toppled dictator Zine El Abidine Ben Ali in January 2011. Just weeks later, Hosni Mubarak was thrown from his palace in Egypt. Muammar el-Qaddafi was lynched later that year in Libya. Syria’s Bashar al-Assad may be the next to fall.

For the most part, the Arab Spring isn’t going well. In the post-Mubarak parliamentary elections, Egyptians voted for radical Islamists by a two-to-one margin. The Libyan state, totalitarian under Qaddafi, is now so weak that it barely exists, as the September terrorist attack that killed the American ambassador demonstrated. In Syria, the revolt against the tyrannical house of Assad may be only the opening chapter in a long civil war. But things look different in Tunisia. True, a mob of radical Salafists rioted at the U.S. embassy in the capital, but the police did their job and protected our diplomatic staff and property. President Moncef Marzouki even dispatched hundreds of his own presidential guards to the scene. The Islamist party Ennahda won more votes in the election last year than any rival, but it still won fewer than half and was forced into a coalition government with secular liberal parties. In Tunisia, no one person or party has its hands on all the levers of power. Citizens are free, and so is the press.

Why is the Arab Spring looking sunnier in the country in which it began? The answer has much to do with Tunisia’s remarkable 3,000-year history.

Too Big To Jail

Once a segment of society becomes protected from criminal liability, that society is down the road to feudalism, to a caste system, to serfdom

by John Aziz

What’s worse than unjust and ineffective laws like the failed War on Drugs and the failed sanctions on Iran?

Unjust and ineffective laws that apply to ordinary folks, but not to banksters:

When the Justice Department announced its record $1.9 billion settlement against British bank HSBC last week, prosecutors called it a powerful blow to a dysfunctional institution accused of laundering money for Iran, Libya and Mexico’s murderous drug cartels.

But to some former federal prosecutors, it was only the latest case of the government stopping short of bringing criminal money laundering charges against a big bank or its executives, at least in part on the rationale that such prosecutions could be devastating enough to cause such banks to fail.

They say it sounds a lot like the “too big to fail” meme that kept big but sickly banks alive on the support of taxpayer-funded bailouts. In these cases, they call it, “Too big to jail.”

This stings. It should sting anyone who cares about the idea of equality in front of the law, anyone who cares about the basic rule of law, anyone who doesn’t want to see their society devolve into a festering pool of feudalism.

According to the most recent data, there were 197,050 sentenced prisoners under federal jurisdiction of which 94,600 were serving time for drug offenses.There were 1,362,028 sentenced prisoners under state jurisdiction of which 237,000 were serving time for drug offenses. That’s over 300,000 individuals serving time currently for drugs offenses, in addition to over one million currently on probation. Now I don’t agree with the War on Drugs at all. But big banks are deemed too “systemically important” to be held to the same standard as the huge and disproportionately black population of low-level drug users.

The Gulag Ameripelago

US Incarceration Surpasses Russia's

by Tyler Durden

Remember when Americans used to mock Russia (f/k/a the USSR) for being one big Gulag prison colony? Those were the good days. One thing is sure: they no longer "hate us for our freedom." On the other hand, if instead of prison, one were to write in "minimum security, free room and board, out early for good behavior" (especially if the world's most famous hedge fund will fund all your cash needs for the rest of your life on the 'other side' just as we predicted three weeks ago), then they would certainly hate us for our benefits.

Why everyday life is tied up in red tape

The proliferation of rules and regulations exposes how much the state distrusts us

by Josie Appleton 

As part of the Manifesto Club’s campaign against leafleting bans in the UK, I met an animal-rights campaigner in Swindon who had been running the same stall in the same position for 30 years. As not many people run the same stall in the same place for 30 years, her experience provides a good barometer of the changing state of regulation in the UK.

For 20 of those years running the stall, she did not encounter any regulation at all. And then about 10 years ago, the police started coming up to her saying that her posters were very distressing, that she needed to tone them down, and that they should only feature fluffy bunnies. About seven years ago, the council also started to intervene, telling her she needed a license to take collections from people. Five years ago, the council announced that she now needed a license to hand out leaflets. And then about three years ago, council officials said that they needed to risk assess her stall every month.

I think the experiences of this campaigner offer us a revealing snapshot of the extent to which everyday life has been regulated in the UK. Contemporary regulation of this type is very different to the forms of regulation associated with classic social protections: no seven-year-old chimney sweeps, essential protections in the workplace and that kind of thing. The regulation of everyday life is very different in nature to those forms of protection, and also to what capitalist regulation was about – easing up social life and enabling things to work better.

Watching your money disappear

The Fiat Money Vortex

by DETLEV SCHLICHTER

 ‘Watching your money disappear’ – I could not think of a more fitting motto at this time. I believe disappearing money will be the major event of the present decade, and it will not just have major implications for your business, it will have grave consequences for society at large.

The money itself may not in fact disappear (although some of it probably will) but money’s value will disappear, moneys purchasing power. This will not be the result of an act of magic but will simply be the consequence of our monetary arrangements and the established course of policy. Future historians will be surprised that anybody could have seriously contemplated a different and much happier outcome for today’s system of unconstrained fiat money production.

Can the path of policy be changed and can our money still be saved? – Theoretically, yes, but practically – I doubt it. The system has check-mated itself. Large sections of society, first and foremost the financial sector and the government, are by now incurably addicted to cheap credit, and no central banker will have the guts to cut off society from an ever more generous flow of paper and electronic money to keep the illusion of widespread prosperity and solvency alive. The destruction of money is all but inevitable.

I am not talking here about some elevated levels of consumer price inflation for a number of years. I am not referring to the childish hope that a somewhat higher inflation rate could help us painlessly ‘inflate our debt away’, and would thus constitute more of a solution than a problem. I am talking about a proper currency crisis. Hyperinflation. Monetary breakdown. Money disappearing.

 For most people this seems to be an extreme scenario. It doesn’t happen in prosperous, stable societies that are not in the grips of war or revolution. It cannot happen in the UK, or the US, or Germany? Or Japan? – Or can it?

… it happened more often than we think.

US must strip costs

Without the 1970s increase in regulation, GDP would today be 45% higher than it is

By Martin Hutchinson 

As Federal Reserve chairman Ben Bernanke unveils yet another attempt to print enough money to restart the moribund US economy, its true number-one need becomes increasingly clear. It's not lower tax, and only indirectly lower government spending and a better education system. 

In an era when global competition from middle-income and low-income countries has intensified beyond all historical experience, the top priority for policymakers and Americans in all walks of life must be to get excess costs out of the US economy. 

Internationally traded US businesses have been doing this for decades (partly through outsourcing production to cheaper-wage locations), thereby inflating US corporate profits close to record levels in terms of gross domestic product. However only a minority of the economy consists of internationally traded businesses and the remainder of it is barnacle- and weed-ridden beyond belief. 

In terms of cost, the US economy was never especially competitive in many sectors; it survived because of its vast size. Heavy industry became dominated by US manufacturers only after the 1862 Morrill tariff blocked British, German and other foreign imports. Behind the high tariff wall, the US built dominance in most industries in which economies of scale were important. Britain tried to compete from 1846 to 1932 on the basis of free trade, but with a relatively small domestic market its efforts were futile and British industry declined in global importance. 

When Will Death Spiral States Impose Taxes On Fleeing Citizens?

Pretty Soon

By Bill Frezza

One of the most fascinating characteristics of government borrowing - whether at the local, state, or federal level - is that debts contracted over time are obligations tied to specific geographical boundaries but not to the citizens living there when those debts were incurred. For example, while it's customary to say that each of the 210,000 residents of Stockton, California, are on the hook for their share of the bankrupt municipality's estimated $700 million in unpaid bills, the day one of them picks up and moves, personal responsibility for that debt drops to zero.

Imagine if that type of tax "evasion" were eliminated. How would it change America?

Government debts are accrued on your behalf by elected officials for whom you had a chance to vote, all supposedly representing your interests. In a democracy, all citizens are obliged to pay the government's bills as determined by the duly empowered taxing authorities - regardless of whether they voted for a particular officeholder or not. What's to stop legislators from passing laws that make debt obligations due and payable by any citizen who decides to leave for another jurisdiction? After all, they don't hesitate to take your money when you die.

Mayors and governors of most tax-and-spend, heavily unionized, low-growth cities and states are both desperate for revenue and tired of watching disgruntled citizens vote with their feet. Think how politically attractive it would be for them to make "economic deserters" pay their "fair share" of old debts. I can see the arguments already: "You can't move away from credit card debt or commercial debt, so why should government debt be so easy to dodge?" Politicians could easily win kudos from both public employee unions and the overtaxed residents left behind, for the mere cost of enraging emigrants who won't be around to exact retribution at the next election.

And can't you just see the progressive commentariat lining up behind a movement designed to deter well-heeled blue state residents from seeking refuge in those despicable red hinterlands? Like Glenn Close rising from the bathtub to take one more stab in Fatal Attraction, don't be surprised when death-spiral states resort to exit taxes as a last ditch effort to forestall their impending bankruptcies.

Why Things Are Falling Apart...

And What We Can Do About It

by Gordon T. Long

To understand the reasons why our financial system, our economy and our present policies are unsustainable, we need to come to grips with two simple truths. First, the economy and government are an interconnected system. As such the party attempting to steer it does not have controlling power over it. The second fact is that “faster, better, cheaper” always wins, replacing the inefficient and unsustainable. This is the reality within which the system operates.

The present foundation of the system, and our economy, is Financialization. This is not by design but rather by Darwinian evolution. It has unfortunately, become the basic engine of consumer growth through its' leveraging of collateral into debt and phantom assets, such as derivatives and bubble valuations. The limiting fact to this system is that ever-rising debt and leverage is unsustainable, once household assets and incomes stop rising.

Uncontrolled financialization & unsound money, without historic exception, consistently leads to:

• Malinvestment in the Private sector - In the private sector cheap money will naturally flow into high-risk, low-return investments. This leads to “McMansions in the Middle of Nowhere”
• Crony Capitalism in the Public sector - In the public sector, crony capitalism secures low risk, high-return investments. This leads to “Bridges to Nowhere.”

The system in its present form has become too complex, fragile and insufficiently robust, that it is realistically unsustainable and un-governable. The unsustainable will collapse and be replaced by an arrangement that is sustainable. Creative destruction and “faster, better, cheaper” is the only sustainable system; the alternative is to cling to failed models until the system collapses.

"Any intelligent fool can make things bigger and more complex... It takes a touch of genius and a lot of courage to move in the opposite direction." (Albert Einstein)

Additionally, our economy and state are unsustainable for converging and disruptive systemic reasons, that go beyond the financial:

• Demographics—our aging populace and the impossible entitlements promises made
• Decline of Paid Work—automation and the Web are destroying more jobs than they create
• Diminishing Returns of Centralization—the more power the State grabs, the more broken the system becomes
• EROEI (energy returned on energy invested): energy may be abundant but expensive
• Healthcare in Crisis—our health declines as we spend 2X more per capita than our competitors
• The End of Consumerist Growth—if debt and income aren’t growing, neither can consumption
• Globalization—the genii cannot be put back in the bottle

What We Can Do about It

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries… and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience  of it.” (Machiavelli, 1532)

The better choice is to embrace technological and social innovations and “faster, better, cheaper.”, since it eventually wins, regardless of our preferences.

This means GLOBALLY accepting and INNOVATIVELY moving RAPIDLY towards a DATA System:

    D- Decentralized

    A- Adaptive

    T- Transparent

    A- Accountable

We don’t get to choose, it is the natural order! 

Insane People Run Japan

When the money is spent, they will contract again and experience zero or negative growth

By Jeff Harding

Insanity

n. Mental illness of such a severe nature that a person cannot distinguish fantasy from reality, cannot conduct her/his affairs due to psychosis, or is subject to uncontrollable impulsive behavior. (See here.)

The above is a legal definition as distinguished from the popular quote (misattributed to Albert Einstein), “Insanity is doing the same thing over and over and expecting different results.” By either definition Japanese politicians and the economists who advise them qualify as “insane.”

New elected prime minister Shinzo Abe of the so-called “conservative” Liberal Democratic Party announced today,

Fresh from an election victory, Japan’s next prime minister, Shinzo Abe, pressed ahead with his top priority of reviving the sickly economy, vowing a hefty spending package and increasing the pressure on the central bank for quick action to pull the country out of recession and deflation. …

Mr. Abe, who said he would form a cabinet on Dec. 26, vowed a “large-scale” budget for government spending to help boost an economy heading toward a third straight quarter of contraction and to end decades of deflation. The budget will take into account the gap between oversupply and weak demand in the economy. …

Mr. Abe vows to force an “accord” on the BOJ to replace its looser goal of 1% inflation with a binding 2% target and to undertake “unlimited” monetary easing to achieve it. He has suggested radical measures for the bank, such as gobbling up government bonds to push more money into the economy and buying foreign bonds to weaken the yen. He has threatened to revise the law granting the central bank its independence if it refuses to cooperate.

The BOJ has resisted Mr. Abe’s ideas as unrealistic and potentially risky, but the new premier will have the chance to nominate replacements for the top three BOJ officials in March and April. Mr. Abe said he would revive the LDP-era Council on Economic and Fiscal Policy, indicating it will be another vehicle to pressure the BOJ.

Markets have responded enthusiastically to Mr. Abe’s campaign pledges since November. …

Crazifornia: How California Is Committing Suicide

As California goes, so goes the nation

By Bookworm 

Reading my friend Laer Pearce’s book Crazifornia: Tales from the Tarnished State – How California is Destroying Itself and Why it Matters to America made me crazy. Laer is a wonderful writer with straightforward, prose, a witty sense of humor that doesn’t overwhelm the narrative, and a commanding mastery of facts about California’s politics, business, education, and public policy. In theory, I should have galloped through Crazifornia in three hours. In fact, it took me three days to read.

Why did I have a problem with this fascinating book? Because, when I started I did not know how deep the Crazifornia rot ran in the state, nor was I aware quite how infectious the insanity is when it comes to the rest of America. To keep up with the deluge of evidence proving that California is indeed crazy, I repeatedly stopped reading so that I could scratch out little notes to myself: “California’s all-powerful bureaucrats are an army of Leftist Rube Goldberg’s with guns.” “This is a perfect example of voter credulity and bureaucratic overreach.” “California takes a legislatively created energy crisis and makes it worse with more legislation.” The scariest note I wrote was also the shortest: “As California goes, so goes the nation.”

That last note is why you should read the book — and give it to friends and family — in the days remaining before the election. California isn’t just a basket case, it’s a proselytizing basket case, with its environmental zealots, community organizers, and wishful economic thinkers aggressively selling their ideas to other states and to the federal government. As Laer demonstrates, while the recession is slowing the other forty-nine states from buying into California’s governing philosophy, the Obama government is an enthusiastic supporter. Another four years of Obama, and California won’t be the only bankrupt crazy place in America.

Jordan’s King Abdullah Threatens to Shut Down Egypt’s Economy

The expulsion of Egyptian workers would be catastrophic for the disintegrating Egyptian economy

By David P. Goldman 

Speaking at a private meeting this week, Jordan’s King Abdullah warned that he had “bargaining chips” to use against the Muslim Brotherhood, which he denounced as a “new extremist alliance” in the Arab world. The news site AI-Monitor today translates a report from al-Hayat, citing sources from the meeting. “Rhe Jordanian monarch was full of reproach for Egyptian President Mohammed Morsi, who hails from the Muslim Brotherhood,” al-Hayat wrote. “The king added that the Egyptian leadership had ‘marginalized the Jordanian role during the Israeli-Palestinian negotiations to stop the recent aggression on the Gaza Strip.’”

The Muslim Brotherhood has targeted Jordan’s monarchy as the next domino to fall after Egypt. At the Dec. 10 meeting, King Abdullah accused Egypt of economic sabotage.

The king said that “Jordan was severely damaged as a result of frequent interruptions of Egyptian natural gas, which cost the state treasury about 5 billion Jordanian dinars [$7.04 billion],” stressing that the interruption of gas ”is the real reason behind the economic crisis plaguing the country.”

Under previous agreements with the Egyptian authorities, Jordan used to import 80% of its gas needs for the production of electricity, which equates to a daily amount of about 6.8 million cubic meters of imported gas. However, the pipeline which supplies gas to Jordan and Israel was subsequently the target of frequent bombings.

The Jordanian monarch warned that his country would retaliate:

King Abdullah II said that “Amman has bargaining chips through which it can send messages to Cairo, including the fact that 500,000 Egyptians are working in Jordan. Moreover, the kingdom is the only passageway for Egyptian vegetables being exported to Iraq, and tens of thousands of Egyptians working in the Gulf states are using the Nuweiba-Aqaba waterway in their travels.”

…Other official sources talked about the arrest of thousands of Egyptian workers who have breached the conditions of their residency in the past two weeks, as well as the deportation of about 1,900 of them to Egypt, according to Jordanian Minister of Labor Nidal Qatamin. He said his country is not targeting Egyptian laborers, saying that the deportation decisions resulted from “violations of the usual procedures and applicable laws.” Remarkably, according to official sources, of the 500,000 Egyptians working in Jordan, approximately 320,000 have violated the conditions of their residency.

It is unlikely that Jordan would take on Egypt without strong backing from Saudi Arabia. A further 1.7 million Egyptians work in Saudi Arabia and an additional 500,000 in Kuwait. The Egyptian diaspora is the last thing holding up Egypt’s economy. Workers’ remittances stood at $18 billion in 2010, according to the World Bank, or about half of Egypt’s present $36 billion trade deficit. The expulsion of Egyptian workers from the Arab monarchies would have catastrophic impact on the disintegrating Egyptian economy. Two million Egyptians worked in Libya before the civil war, but many fled the country earlier this year.

As it is, President Morsi was forced to postpone negotiations on a proposed $4.8 billion loan from the International Monetary Fund,  after scrapping a proposed tax increase that the IMF considered a condition for the package. With a government budget deficit at 11% of GDP and a trade deficit at 16% of GDP, Egypt must cut expenditures to survive financially. No Egyptian government, though, appears capable of persuading a population half of which lives on less than $2 a day to accept austerity. 

After the Fiscal Imbalance is Resolved: What Then?

After all, we did not get where we are by accident

by Mario Rizzo

Let us suppose that not only the immediate fiscal cliff problem is solved but also the long-run fiscal imbalance is corrected. What then? Presumably federal spending will then be on a sustainable trajectory which is able to cope with cost-of-living increases. Ordinary trend economic growth will already have been figured into the sustainability of the spending trajectory.

So what room is there for more spending without derailing the whole “solution?”  Consider that the contemporary federal government – executive and legislature –exists for the purpose of giving favors to various groups in exchange for electoral support.  Thus, even assuming the unlikely event that the long-term imbalance is resolved, how do we stay within the solution range?  After all, we did not get where we are by accident.

Only a real change in the philosophy (ideology) of government will work. The pragmatic solutions of those who do not challenge the welfare-warfare state, root and branch, are not enough. They are not “pragmatic” enough!

Silence of the Feminists

So many oppressed Muslim women, so few words about them

BY THEODORE DALRYMPLE

The British courts recently asked me to prepare a report on a young Muslim woman of Pakistani descent, and to do so I had to visit her at home. I spoke to her in a room in which a television screen as large as a cinema vied for predominance with embroidered pictures of Mecca and framed quotations from the Koran.

She told me a story with which I was only too familiar. One of eight brothers and sisters, she soon discovered that, while her brothers could do anything they pleased, including crime, she and her sisters were expected to lead spotless lives of infinite tedium and absolutely no choice. At 16, without her consent, she was betrothed to be married to a first cousin in Pakistan, whom she had never met and did not wish to meet. She ran away to avoid being taken back “home” and married off under duress; but in need of companionship and protection (having been until then a virtual prisoner in her parental home), she soon married a young man of Pakistani descent who turned out to be neither a companion nor protective, but criminal and violent. Eventually, she returned to her parents, who gave a less than warm welcome to the prodigal daughter.

She begged to be allowed to go to work, but at first her family said that this would heighten the shame she had brought on them by running away and refusing to marry her cousin. Her brothers in particular accused her of thinking that she was a Western woman, than which (in their eyes) there could be no worse insult. Eventually, however, they gave way; the money might be useful. She had been working ever since, for about ten years.

When she described her work, her manner changed. She became animated, almost passionate, having been subdued before. Though her work was only in a clerical capacity (she had been promoted once or twice), she spoke of it with love. It was her daily release from prison, the only time she was allowed out; it was her window on the world; it was the entirety of her social life; it was air after suffocation.

It occurred to me that if I were an employer, I would want otherwise oppressed Muslim women to work for me. An attitude toward work such as theirs is not common, at least not in Britain. For them, work represents freedom and happiness, not drudgery and exploitation.

But the attitude of her brothers—born, after all, in Britain—stuck in my mind. They were integrated enough to want Westernized lives for themselves but not integrated enough to want such lives for their sisters. It is not difficult to see the reasons for this. But where are our feminists, fearlessly fighting for speech codes and the use of the impersonal she in academic books, when women such as this suffer such severe oppression? Hardly a peep is heard from them.