Hugo Chavez R.I.P.

Chavez belongs to the ages ... like Peron and Melgarejo

by Bill Bonner

Today, we struggle to hold back tears. Another world leader has bit the dust. This time Venezuela's big chief. Some bleak corner of Hell took him in on Tuesday, if not before.

Chavez was a great entertainer. Real life was too small for him. He had to stretch the truth out... bend the real world into a larger, more fantastic shape... and puff it up with hot air until it could hold him.

In real life people go about their business, taking what fortune sends their way and doing their best with it. That stage was much too restricted for Chavez. He aimed to play a more important role under a much bigger proscenium arch. Naturally, he took up politics (the refuge of all fantasists) and tried to overthrow the Venezuelan government; he landed in jail.

The authorities let him out after a couple of years. He went right back to his mischief. A few years later and he was elected president of the country. But even that wasn't enough. He conspired to twist the nation's constitution to make himself "President for Life," which, in an act of divine mercy toward the Venezuelan people, ended this week.

Chavez was a great showman. He kept TV audiences entertained for hours, concocting a larger-than-life fairy tale about how terrible the foreign capitalists were and how his "Bolivarian Revolution" was setting things straight.

Alas, his lines were written by hacks; perhaps he wrote them himself. It took a real A-list actor to deliver his speeches with a straight face. The idea of a 21st Century Socialism, for example, that he claimed to have invented himself, was so transparently hollow and self-serving that a lesser thespian would have been laughed off stage.

A Magisterial Presence

Chavez followed in a long South American tradition of crowd-pleasing strongmen. Like Peron, Castro and Melgarejo, he was not only a leader the masses could adore, but he was also one they deserved.

Melgarejo has been largely forgotten. But he was one of the great standup guys of Bolivian politics. In 1854, like Chavez, he attempted a coup d'etat against the legitimate dictatorship of the time. He was captured. He was tried and found guilty. That should have been the end of him, but he came out with a convincing argument for clemency: that he was drunk at the time and not responsible for his actions.

President Belzu pardoned Melgarejo. A few years later, just to show his gratitude, Melgarejo murdered Belzu. Then came a real tour de force of political theatre, illustrating not only Melgarejo's magisterial stage presence, but also the masses' deep attachment to their leaders.

A crowd had gathered in front of the presidential palace demanding the return of Belzu. "Viva Belzu," they chanted.

Melgarejo appeared on the balcony. He had the dead body brought out and displayed to the crowd.

"Who lives now?" he asked them.

"Viva Melgarejo," they replied.

Having whacked his rival, Melgarejo soon became perhaps the most disastrous leader in the history of South America -- a hotly contested title. He is said to have signed the Treaty of Ayacucho with Brazil, in which he traded millions of acres of Bolivian territory for a "magnificent white horse."

In 1870, France and Germany went to war. Hearing reports of the German assault on Paris, Melgarejo rushed to defend the City of Lights.

He reputedly could not locate it on a map, but he was fascinated by what he had heard of it. So, he told his army to march to Europe. His military commanders informed him that they had no means to cross the Atlantic Ocean. Melgarejo replied: "Don't be stupid! We will take a shortcut through the brush!"

Cash and Claptrap

That was the sort of Bolivarian tradition to which Chavez was heir.

But Melgarejo was hardly the only legator. Chavez learned from Juan Peron too. Argentina had been one of the richest countries in the world, in the early 20th century. You can see the residue of it here today -- broad, tree-lined avenues and beautiful beaux arts, belle époque and arts nouveaux private buildings and public monuments. (The Argentines were great admirers of the French too!)

Now, Argentina is way down the list of the world's richest countries. Today, it is No. 54 on the CIA Factbook list -- with Trinidad and Tobago, Equatorial Guinea and Greece far ahead of it. That, along with periodic financial crises, massive strikes, disappearances and pointless wars, is the legacy given Argentina by Peron and his Peronist successors.

You'd think the gauchos and the porteños would have had enough of it by now. But they still elect Cristina Fernandez de Kirchner, a Peronist candidate, just as they voted for Chavez in Venezuela despite an economic record worthy of Mariano Melgarejo.

That's what makes the masses so attractive to leaders like Chavez: They are incredibly stupid. Consumer prices rise even faster in Caracas than in Buenos Aires. The power goes out, too. Despite being one of the world's top oil producers, supplies are so tight people are urged to take "socialist showers" to conserve energy. And the murder rate is among the highest in the world -- so high that even people from Baltimore are afraid to go there.

Chavez made their lives more miserable, but the masses still loved him. Of course, he paid for their affection. He took $100 billion in annual oil revenues and spread it around. Realizing that it would go further in poor neighborhoods than in rich ones, he built his popular support on cash and claptrap.

And now he is gone. The performances have come to an end. The show's over.

"Now he belongs to the ages," said Secretary of War Edwin M. Stanton when Abe Lincoln died. Now Chavez belongs to the ages too... like Peron and Melgarejo.

Good riddance.

Clowns Never Learn

Federal Spending in Inflation-Adjusted Terms

President Obama said the sequester cuts would be "catastrophic".

Reader Tim Wallace pinged me with a few comments to help put those catastrophic cuts in perspective.

Tim asks: If you were making $50,000 per year in 2007 and you income went up to $70,000 (a 40% increase in six years), would a $1,750 pay cut to $68,250 be catastrophic?

Apparently it would be for the Obama administration. The federal budget is up 40% from 2007 and the Democrats and President are telling us they cannot afford to cut spending 2.5%.

Not that the "cuts" are real in the first place. All that is really being cut is a decrease in the projected increase. A chart of Federal Spending from PJMedia will add another perspective.
Backing Away From Catastrophic Talk
For obvious reasons (shown above) Larry Kudlow notes The 'Catastrophic' Sequester Narrative Dies a Quick Death 

However you calculate the sequester spending cuts, and however uneven they may be, the reality is that the sequester at least moves the ball in the right direction. I maintain that by reducing the government spending share of GDP, the sequester is pro-growth.

The White House and the CBO are predicting a 0.5 percent to 0.7 percent decline in GDP, post-sequester, and a loss of 750,000 jobs. All this from a spending reduction of roughly 2.4 percent over the next ten years, in which Uncle Sam's spending growth will be $44.8 trillion rather than $46 trillion. 

Fed chairman Ben Bernanke and other demand-siders have called for a slow, gradual federal-spending reduction. Well, that's exactly what they're going to get. The first fiscal year of sequester will see $44 billion in spending cuts, which is about one quarter of 1 percent of GDP. That's pretty gradual. 

And compare that $44 billion 2013 spending cut (most of which is slower baseline growth, not a cut in spending levels) to a roughly $150 billion 2013 tax hike. Hmm, let me get this right: It's okay to raise taxes, because that won't hurt the economy, but it's not okay to cut spending, because that will lower output?

And while the business sector has survived to become highly profitable, the federal sector has become bloated, edging ever closer to debt bankruptcy.

A Storm Is Brewing

Tone-Deaf Eurocrats

The reaction of the European leadership to the Italian post-election predicament has been quite predictable so far: there is no choice, so the consensus, but to basically continue where Monti has left off. This seems quite odd, given that Monti actually left Italy with a new post war record high public debt relative to economic output. What has he done except raising taxes and harassing the public with his 'shadow economy' clampdown? What has been achieved in terms of genuine economic reform or slimming down of the State? Nothing. “Euro Leaders Demand Austerity” writes Bloomberg. Mind, there is nothing wrong in principle with austerity, especially not the kind that involves a lowering of the burden on the economy imposed by government spending, ideally combined with meaningful economic liberalization. This has become nigh impossible though in view of the thicket of regulations emanating from Brussels. As this article from last year argues, Brussels makes regulations tailored for big companies – but big companies only represent 0.2% of all European businesses. They love the regulatory State of course, because it kills their competition for them without them having to lift a finger. Big companies are the only ones that can actually afford dealing with all these regulations.

What Monti has left behind: the biggest debtberg since Mussolini

Mrs. Merkel is actually right with what she says below, in principle. However, the implication of what she says is that something needs to be done that actually ends up producing growth. Doing little besides trying to lower budget deficits by jacking up taxes is not going to produce any. 

“Now in Europe, after the Italian election, it seems to be a case of either austerity and savings programs or growth, but that’s a completely false premise,” German Chancellor Angela Merkelsaid at March 1 event. EU Economic and Monetary Affairs Commissioner Olli Rehn echoed those comments, telling Germany’s Der Spiegel magazine this weekend that there’s no scope for the bloc to let up on budget discipline.

Italian political instability, after last week’s election ended in a four-way split, threatens to reignite concern about the deepening of the debt crisis.Voters in the bloc’s third- largest economy revolted against German-inspired austerity measures, handing the party of comedian-turned-politician Beppe Grillo more than 25 percent of the vote with its anti-spending cut message and a call for a referendum on euro membership.” (emphasis added)

The above sounds almost as though Grillo's movement wanted to increase government spending again, but that is actually not quite true as it turns out.

As Der Spiegel reports:

“The Grillini like to point out that they too intend to cut spending. What that means can be seen in the city of Parma, saddled with €800 million in debts. For the past three-quarters of a year, Parma has been governed by Mayor Federico Pizzarotti, 39, a member of the movement who has been busy trimming the fat from the municipal budget. He rides a bicycle to work and has exchanged two official sedans for an Opel natural gas vehicle. He adheres to the rules of the movement and doesn't spend more than what he collects in taxes, but he's still not seen as the Germans' cost-cutting commissioner.” (emphasis added)

What makes Grillo suspect to the eurocratic elites is that he is an anti-establishment figure; that he doesn't regard euro membership as sacrosanct, and intends to increase the level of direct democracy in Italy. This is not to say that the man's economic policy ideas are necessarily better than what has been on tap so far, as he has a number of ideas that strike one as steeped in a kind of naïve romantic socialism.

Green Economics Turns Brown In The UK

Pulling the plug on Green Pipe-Dreams

By Chriss Street

The United Kingdom has been the heralded as the most committed country on earth to embrace green economics. Powered by huge government subsidies, environmental and low-carbon businesses now claim to employ over one million people and make up 8% of the UK’s GDP – from biofuels, electric cars, wind turbines and solar installations.

But with the nation heading into its third recession in four years and losing its AAA credit rating, the British public seems ready to pull the plug on green economics and join the “Dash for Gas” to begin fracking the nation’s immense deep coal deposits.

Following the Financial Crisis of 2008-09, the UK government committed to Keynesian deficit-spending stimulus to “grow” the country into the world leader in green economics. Through public spending and government direct guarantees of high returns to private leveraged investors, total investments in UK renewable energy projects grew from $6.9 billion in 2010 to $9.4 in 2011. More than 800 MW of wind, 300 MW of solar and 500 MW of biomass generating capacity was funded. Phyllis Cuttino, author of the Pew Charitable Trust Energy Report, "Who’s Winning the Clean Energy Race?" stated: 

“In part, investment growth in the United Kingdom can be attributed to investors initiating new projects before policy incentives are curtailed. To maintain growth, the UK must provide consistent, long-term market signals that provide certainty to investors.”

Despite international media adulation for investing public funds in the “industries of the future”, the UK fell back into recession in 2011. Facing falling tax revenue and rising feed-in tariff subsidies for solar panels, the government attempted to cut subsidies to spare slashing social spending. But the UK Supreme Court ruled cutting solar subsidies was “legally flawed”. Despite public protests, the government’s March 2012 budget cut $14 billion in child and welfare spending.

How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank?

The Big Sleep

by Tyler Durden 

It's an odd question, we know - especially ahead of today's Stress Tests, but given today's testimony on assessing the bank secrecy act, apparent trouble-maker Elizabeth Warren pokes and prods (correctly we would add) at the surreality that exists between the Department of Justice, The Treasury, and the financial system. David Cohen, Tom Curry, and Jerome Powell dodged bullets and blame, "does that mean essentially we have a prosecution-free zone for large banks in America?" But Warren wasn't going to be fobbed off with useless banter as she pointed out, "if you're caught with an ounce of cocaine, the chances are good you're going to go to jail...for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night - I think that's fundamentally wrong." Indeed Ms. Warren.

Here is the transcript - note the Treasury officials never actually answer anything...

WARREN: ... As Senator Reed just pointed out, the United States government takes money laundering very seriously for a very good reason. ...

Now in December, HSBC admitted to money laundering. To laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn't do it just one time. It wasn't like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.

Now HSBC paid a fine, but no one individual went to trial. No individual was banned from banking. And there was no hearing to consider shutting down HSBC's activities here in the United States. So what I'd like is, you're the experts on money laundering. I'd like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this? Mr. Cohen, can we start with you?

COHEN: Certainly Senator. No question the activity that was the subject of the enforcement action against HSBC was egregious...

WARREN: But let me just move you along here on the point Mr. Cohen. My question is,given that this is what you did, what does it take to get you to move towards even a hearing? Even considering shutting down banking operations for money laundering?

COHEN: Senator, we at the Treasury Department under OFAC and (ph) authority, we don't have the authority to shut down a financial institution...

WARREN: I understand that. I'm asking, in your opinion, you are the ones who are supposed to be the experts on money laundering. You work with everyone else, including the Department of Justice. In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we're shutting you down?

...

WARREN: ... And I'm asking, what does it take, even to say, here's where the line is. We're going to draw a line here, and if you cross that line, you're at risk for having your bank closed?

...

COHEN: But I'm not going to get into some hypothetical line drawing exercise.

WARREN: Well it's somewhere beyond $881 million of drug money.

COHEN: Well Senator the actions, and I'm sure the regulators can address this issue. The actions that we took in the HSBC case, we thought were appropriate in that instance.

...

WARREN: So what you're saying to me is you are responsible for these banks, and again, I read your testimony and you talk about the importance of vigorous enforcement here. But you're telling me you have no view when it's appropriate to consider even a hearing to raise the question of whether or not these banks should have to close their operations when they engage in money laundering for drug cartels?

...

WARREN: I understand that I'm over my time. And I'll just say here, if you're caught with an ounce of cocaine, the chances are good you're going to go to jail. If it happens repeatedly you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night. Every single individual associated with this. I just, I think that's fundamentally wrong.

North Korean "Insanity" Part of Geopolitical Game

The ball, it would seem, is in Denis Rodman’s court

By Jen Alic 
North Korean leader Kim Jong-un may be colorful, but he isn’t crazy.

There is logic behind the intensified war rhetoric, and while it may be convenient for the American public to believe that they are about to be attacked unprovoked by the unhinged dictator of an eerily isolated country, the truth of the matter is that the US and its allies have been doing some offensive posturing that has Pyongyang very much on edge.  

North Korea on Tuesday threatened to attack the US and South Korea with “lighter and smaller nukes”. This threat has prompted South Korea to threaten to strike North Korea’s military command if “provoked” and the UN to move closer to slapping new sanctions on Pyongyang’s banking sector and diplomats.

The sanctions resolution was introduced by the US and China and specifically targets North Korean bankers and overseas cash mules. It also targets diplomats and seeks to lend added strength to air and sea cargo inspections going in and out of North Korea.

While mainstream media outlets are wont to describe North Korea’s rhetoric as increasingly bold, the threats and recent tests of long-range rockets and nuclear weapons are not the result of bravado, rather of fear.

The US and its East Asia allies (namely South Korea and Japan) have been preparing for an offensive on North Korea ever since the death of Kim Jong-il. They see a window of opportunity in the instability of the fragile succession. 

Pyongyang has no choice now but to rattle its sabers--and rattling them at traditionally quiet South Korea is the most effective strategy. This is where North Korea can do the greatest damage, and if it feels that a US offensive is imminent, South Korea will come under attack. At the same time, an attack on South Korea will be the final justification for an all-out US-led offensive on North Korea.

Right now, Pyongyang is hedging its bets on whether the US is willing to sacrifice its ally to this conflict.

The Right to Self-Defense

Kings and tyrants have taken this right away

by Andrew P. Napolitano

In all the noise caused by the Obama administration’s direct assault on the right of every person to keep and bear arms, the essence of the issue has been drowned out. The president and his big-government colleagues want you to believe that only the government can keep you free and safe, so to them, the essence of this debate is about obedience to law.

To those who have killed innocents among us, obedience to law is the last of their thoughts. And to those who believe that the Constitution means what it says, the essence of this debate is not about the law; it is about personal liberty in a free society. It is the exercise of this particular personal liberty – the freedom to defend yourself when the police cannot or will not and the freedom to use weapons to repel tyrants if they take over the government – that the big-government crowd fears the most.

Let’s be candid: All government fears liberty. By its nature, government is the negation of liberty. God has given us freedom, and the government has taken it away. George Washington recognized this when he argued that government is not reason or eloquence but force. If the government had its way, it would have a monopoly on force.

Government compels, restrains and takes. Thomas Jefferson understood that when he wrote that our liberties are inalienable and endowed by our Creator, and the only reason we have formed governments is to engage them to protect our liberties. We enacted the Constitution as the supreme law of the land to restrain the government. Yet somewhere along the way, government got the idea that it can more easily protect the freedom of us all from the abuses of a few by curtailing the freedom of us all. I know that sounds ridiculous, but that’s where we are today.

When Postmodern Art Attacks Western Civilization

Honoring envious losers

By Bill Frezza

Most people don’t give much thought to how our cultural institutions shape our world view, and the impact this has on politics, but I’m one of those who do. This can make it problematic to attend a modern art museum with me, a task my wife, a genuine and sophisticated art lover, approaches with a mixture of caution and bravado. While I’ve learned to stifle my public outbursts and gesticulations, her uncanny ability to read my mind invariably generates a burst of frisson best resolved by leaving the museum to take her to an expensive lunch.

It’s not the fraud that I mind—more power to any artist who can con a patron into paying outrageous sums of money for something as banal as a black stripe on a blank white canvas or a rusty bicycle hanging from a rope. There is no harm in separating a fool from his money as long as it’s not mine.

I can even accommodate myself to the widespread and concerted effort to destroy the very idea of artistic talent evident in most contemporary art, giving talentless frauds the opportunity to pursue lucrative careers and teaching positions. The world will still be filled with beauty and genius even if the public is snookered into believing a million dead and rotting flies glued to a canvas merits display in the Boston Museum of Fine Art. (I kid you not. Since being drawn to that stinking canvas by the odor some years ago I have never again set foot in the MFA.)

Recent Oil Discovery off Lebanese Coast Draws Naval Powers to East Med

Eastern Mediterranean will probably be either the safest place in the world in which to sail or the most volatile

By Claude Salhani 

The discovery a few years ago of an important deposit of oil and gas reserves in the waters just off the Lebanese, Israeli and Cypriot coasts has raised the interest of foreign militaries who have in recent weeks become attracted to the region, adding ingredients at sea to an already explosive atmosphere on land.

From China to Iran, not forgetting Turkey, Israel, the United States, Britain, and France, all the principal actors in the region are now present in the waters of the Eastern Mediterranean.

In addition to the important oil fields under the sea waiting to be exploited, the bloody civil war that has been raging in next door Syria for the past two years has brought renewed interest in these troubled waters.

Russia, primarily, is very concerned by what the future holds for the Assad regime in Damascus as the Syrian Mediterranean port of Tartous serves as the Russian Mediterranean Fleet’s main port of call, where the Russians continue to hold onto an important facility established back in the days of the Soviet Union. For Russia, whose northern Baltic ports freeze over during the long cold winter months, having access to a friendly port for its Med fleet is a matter of national security. To reiterate just how important the Eastern Mediterranean Sea plays in Russian affairs, Moscow has just dispatched a naval task force comprised of about 10 vessels, including its only aircraft carrier, the Admiral Kuznetzov, to the region.

The Chinese, who much like the West are quickly discovering their addiction to oil in order to keep those million of cars that the new middle class is buying up faster than the Koreans and Japanese can manufacture them, are starting to be drawn into this great game of nations, albeit the aquatic version. In recent months units of the Chinese Navy have been seen in the vicinity.

The Iranians, who have always aspired to become a regional force to be reckoned with, have announced last January that they too will be dispatching naval forces to the Eastern Mediterranean.

European powers, France, Britain and to a lesser degree, the Italians and the Germans have all sent naval forces to the region, some as part of the UNIFIL (United Nations Interim Forces in Lebanon) some unilaterally.

The US, who traditionally have maintained an impressive array of naval forces comprised of units of the Sixth Fleet, had decided to reduce its naval presence in the Eastern Med, but in view of the increased traffic, especially by Russia, China and probably the most worrisome of all for the Western allies, the Islamic Republic of Iran, has now changed its mind and will continue to retain an important naval force in the Med.

The Biggest Bubble in Human History?

What kind of liquor do they drink?

by Bill Bonner

Dow up 125 points yesterday, to a new all-time record.

Why? What's behind it? The economy is not so hot. Why the red-hot stock market?

China is back in the news. A new report from CBS's "60 Minutes" documents the extent of the ghost cities in China – miles and miles of empty highway, office towers, apartments and malls. Analysts are talking about the biggest real estate bubble in history!

Is China a bubble? We don't know.

Does it matter? Well... yes... maybe. If China melts down or blows up the demand for oil and other resources goes down. The Chinese have pumped vast sums of money into development projects. That money helped to keep people on the job... and also kept the ships full of stuff, going back and forth across the world's oceans.

Trouble in China is trouble everywhere – particularly in Australia (which has been selling itself by the ton to the Chinese) and in Europe (which sells its precious, high-touch products by the boatload). Drive around Beijing and you see German autos, Italian shoes, Swiss watches and French perfumes.

But why worry? The Chinese can print money too! When China does something, it tends to do it to excess. That's why there are so many empty buildings in the Middle Kingdom and why it might have created the biggest real estate bubble in history.

China overdoes it when it comes to central bank stimulus measures too. Arguably, no central bank has done more than the People's Bank of China when it comes to pumping up the economy.

M2 money supply in China is roughly twice GDP. In developed economies the ratio between M2 and GDP is usually below one. In emerging market countries, M2 is usually 1 to 1.5 times GPD.

That's why bad news for China... like bad news for the U.S. economy... could be good news for the stocks. The Chinese feds will pump more money. Stocks will go up!

The New York Times reports:

The Dow Jones industrial average, which measures the performance of 30 blue-chip companies, closed with a gain of more than 125 points Tuesday, surpassing its previous record close of 14,164.53, which it achieved nearly five and a half years ago, as well as its record intraday high, set around the same time, of 14,198.10.

Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.

The Conservative Case Against More Prisons

Higher incarceration rates aren't making us safer—and there are better, smaller-government alternatives

By VIKRANT P. REDDY AND MARC A. LEVIN

Since the 1980s, the United States has built prisons at a furious pace, and America now has the highest incarceration rate in the developed world. 716 out of every 100,000 Americans are behind bars. By comparison, in England and Wales, only 149 out of every 100,000 people are incarcerated. In Australia—famously founded as a prison colony—the number is 130. In Canada, the number is 114.

Prisons, of course, are necessary. In The Scarlet Letter, Nathaniel Hawthorne observed that “The founders of a new colony, whatever Utopia of human virtue and happiness they might originally project, have invariably recognized it among their earliest practical necessities to allot a portion of the virgin soil… as the site of a prison.” As long as there are people, there will be conflict and crime, and there will be prisons. Prisons, however, are not a source of pride. An unusually high number of prison cells signals a society with too much crime, too much punishment, or both.

There are other ways to hold offenders—particularly nonviolent ones—accountable. These alternatives when properly implemented can lead to greater public safety and increase the likelihood that victims of crime will receive restitution. The alternatives are also less costly. Prisons are expensive (in some states, the cost of incarcerating an inmate for one year approaches $60,000), and just as policymakers should scrutinize government expenditures on social programs and demand accountability, they should do the same when it comes to prison spending. None of this means making excuses for criminal behavior; it simply means “thinking outside the cell” when it comes to punishment and accountability.

This argument is increasingly made by prominent conservatives. Bill Bennett, Jeb Bush, Newt Gingrich, Ed Meese, and Grover Norquist have all signed the Statement of Principles of Right On Crime, a campaign that advocates a position on criminal justice that is more rooted in limited-government principles. They are joined as signatories by the conservative criminologist John Dilulio and by George Kelling, who helped usher in New York City’s successful data-driven policing efforts under Mayor Rudolph Giuliani. Some groups, like Prison Fellowship Ministries, approach the issue from a socially conservative perspective. Others, like the American Legislative Exchange Council and the State Policy Network, have fiscal concerns top of mind. Regardless, a sea change is underway in sentencing and corrections policy, and conservatives are leading it.

An Enemy of the State

Mark Leier, Bakunin: A Biography

By KIRKPATRICK SALE

Mark Leier sets out to rescue not only Mikhail Bakunin, the great anarchist thinker, but the whole anarchist tradition, which he argues is a pertinent political force today: “The current interest in anarchism,” he writes, “is not misplaced or irrelevant.” He certainly accomplishes the former and does much to dispel the multiple canards that have surrounded this man, many of them fabricated by Marx and the Marxists, but I don’t think he makes much of a case for the latter.

Bakunin, aptly called “the hairy Russian giant,” was born to a noble family of only modest means in a village north of Moscow in 1814. As the firstborn male, he was destined for a military career and at 15 was sent to a rigid, anti-Western military school, where he chafed at the arbitrary discipline and the narrow curriculum—much less encompassing than the homeschooling he had experienced before. He gradually learned to resist the system in minor ways and soon lost all interest in formal studies, reading instead in philosophy, history, and languages (none of which were in the official curriculum), getting himself expelled from school in 1834 for poor grades and assigned to barracks on the Polish frontier. He liked that no better, went AWOL after a year, and eventually, in 1836, landed in Moscow, gravitating to a circle of students and intellectuals, most of whom were sharply critical of the repressive tsarist regime.

Bakunin spent the next four years, supported apparently by loans that he couldn’t repay and occasional handouts from his family, voraciously reading—English and French Romantics and German philosophers, in particular—and writing for little Russian magazines. This provided the basis for his later theories, but he was not yet an anarchist and like many of his circle saw his task as developing a critique of the tsarist state—though not too openly or the police would be on him. When he left Russia to go to study at the University of Berlin in 1840, pursuing his deep interest in Hegel in particular, he was a highly regarded writer, “in the vanguard,” Leier says, “of progressive Russian thinkers.”

Western Europe around this time was surging with ideas about freedom and justice and political reform that would lead to the 1848 revolutions, and Bakunin’s thoughts took a new turn. He became a convinced atheist and began to think about ways of obtaining liberty in a new kind of state (“Liberty today stands at the head of the agenda of history”). By 1842, he was arguing that “the passion for destruction is at the same time a creative passion,” by which he did not advocate violence and terror, as he is sometimes accused of, but only meant that if there was going to be movement toward democracy and freedom, the reactionary state had to be done away with. He was developing a revolutionary position, arguing that it was impossible to reform the state: what’s needed “is not only a particular constitutional or politico-economic change, but a total transformation of that world condition.”

Publishing this kind of material did not sit well with the German government, and the paper he published it in was shut down, leading Bakunin to flee to Switzerland. But the Swiss government told the Russians that he was there and hanging around in revolutionary circles, so the Russian ambassador ordered him to return home. When he refused, the tsarist regime ordered him stripped of his noble rank and sentenced him to hard labor in Siberia, whereupon he fled again, to Paris, in 1844.

It was a lively, political city at that time—George Sand, Marx, Louis Blanc, Proudhon were all there—and Bakunin fit in with the growing passion for revolution, giving speeches, writing articles, making a name. But as an anarchist, not a socialist: socialists were “more or less authoritarians” who wanted “to organize the future according to their own ideas” whereas he was for liberty and against authority.

11 Years Later, Senate Wakes Up to War on Terror’s ‘Battlefield America’

Is perpetual war OK with everybody?

BY SPENCER ACKERMAN

Sen. Rand Paul’s filibuster will inevitably fail at its immediate objective: derailing John Brennan’s nomination to run the CIA. But as it stretches into its sixth hour, it’s already accomplished something far more significant: raising political alarm over the extraordinary breadth of the legal claims that undergird the boundless, 11-plus-year “war on terrorism.”

The Kentucky Republican’s delaying tactic started over one rather narrow slice of that war: the Obama administration’s equivocation on whether it believes it has the legal authority to order a drone strike on an American citizen, in the United States. Paul recognized outright that he would ultimately lose his fight to block Brennan, the White House counterterrorism chief and architect of much of the administration’s targeted-killing efforts.

But as his time on the Senate floor went on, Paul went much further. He called into question aspects of the war on terrorism that a typically bellicose Congress rarely questions, and most often defends, often demagogically so. More astonishingly, Paul’s filibuster became such a spectacle that he gothawkish senators to join him.

“When people talk about a ‘battlefield America’,” Paul said, around hour four, Americans should “realize they’re telling you your Bill of Rights don’t apply.” That is a consequence of the September 2001 Authorization to Use Military Force that did not bound a war against al-Qaida to specific areas of the planet. “We can’t have perpetual war. We can’t have a war with no temporal limits,” Paul said.

This is actually something of a radical proposition. When House Republicans attempted to revisit the far-reaching authorization in 2011, chief Pentagon attorney Jeh Johnson conveyed the Obama administration’s objections. Of course, many, many Republicans have been content with what the Bush administration used to call a “Long War” with no foreseeable or obvious end. And shortly before leaving office in December, Johnson himself objected to a perpetual war, but did so gingerly, and only after arguing that the government had the power to hold detainees from that war even after that war someday ends.

French unemployment rises again to highest since 1999

France may be joining the wrong side of the euro zone team

By Ingrid Melander and Vicky Buffery

France's jobless rate hit its highest level in more than 13 years in the last quarter of 2012, underscoring the challenge the government faces over its pledge to reverse the upward trend by year-end.

Thursday's official data prompted a renewed government plea for action at European level to spur growth as the euro zone's No. 2 economy shows increasing signs of languishing behind a more resilient Germany.

The rise to 10.6 percent is the sixth consecutive quarterly increase in the jobless rate in the French economy, which contracted 0.3 percent in the final three months of 2012.

It brings unemployment to its highest since the second quarter of 1999 and is the latest bad news for a government that has admitted it will fall far short of growth and public deficit targets this year. Other data published on Thursday showed a widening trade deficit.

"It is an uncomfortable truth for (President) François Hollande and another sign that France may be joining the wrong side of the euro zone team," said Julien Manceaux, economist at ING Financial Markets, forecasting that unemployment would climb as high as 11.5 percent this year.

The European Commission sees French unemployment hitting 10.7 percent this year, nearly twice the level of Germany's 5.7 percent and not much better than Italy's 11.6 percent, but still far less than in Spain and Greece.

Hollande took power last May promising to halt a relentless rise in unemployment which has left one in four youths out of work and vowing to restore France's industrial competitiveness.

The president's approval ratings have slumped to around 30 percent since then as his government battles against a tide of factory closures. After backtracking last month on growth and deficit targets, he conceded the unemployment goal would now be harder to reach.

France's trade deficit widened to 5.9 billion euros in January from 5.4 billion in December, with a large chunk of the worsening data due to a drop in the sale of Airbus aircraft from 26 in December to 18, other data showed on Thursday.

BOOSTING GROWTH?

Industry Minister Arnaud Montebourg said worsening unemployment and bleak fourth-quarter GDP data across the euro zone, including in the bloc's powerhouse Germany, should push the European Union to take steps to boost growth.

"Europe and the euro zone are sinking. This is why the government is fighting, with the European Commission, for growth measures to be taken," he told France Info radio.

The Socialist government has already taken steps to boost competitiveness with measures to ease labour costs and a deal signed with mainstream unions in January to make hiring and firing laws more flexible to help companies weather downturns.

Hard-left unions oppose the agreement, saying it threatens job security, and led several thousand marchers in street protests in towns across France on Tuesday.

On Thursday, workers at tyremaker Goodyear, rallied in a Paris suburb against job cuts at a plant in the northern French city of Amiens, clashing with policemen, hurling paintballs and tyres.

The fourth-quarter headline unemployment figure, based on measurement criteria of the International Labour Organisation, was up 0.3 percentage points from the third quarter.

The total number of unemployed in mainland France was 2.9 million in the fourth quarter, national statistics office INSEE said. Just over a quarter of 15-24 year-olds were unemployed.

According to monthly figures issued last week by the labour ministry, which are not calculated according to ILO measures, mainland jobless totalled 3.17 million in January, the highest since July 1997 and close to the all-time high of 3.196 million.

Despite the bleak economic data, yields on long-term, fixed-rate French bonds largely fell at an auction on Thursday, underscoring the resilience of the country's bond market amidst renewed concerns over euro zone partners Italy and Cyprus. 

Sharing is not really caring

Eric Holder: Some Banks Are So Large That It Is Difficult For Us To Prosecute Them

While it is widely assumed that the too-big-to-fail banks in the US (and elsewhere) are beyond the criminal justice system - based on simple empirical fact - when the Attorney General of the United States openly admits to the fact that he is "concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them," since, "it will have a negative impact on the national economy, perhaps even the world economy," one has to stare open-mouthed at the state of our union. It appears, just as the proletariat assumed, that too-big-to-fail banks are indeed too-big-to-jail.

GRASSLEY: On the issue of bank prosecution, I'm concerned that we have a mentality of too-big-to-jail in the financial sector of spreading from fraud cases to terrorist financing and money laundering cases -- and I cite HSBC. So I think we're on a slippery slope. 

HOLDER: The concern that you have raised is one that I, frankly, share. And I'm not talking about HSBC now. That (inaudible) be appropriate.

But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.

Again, I'm not talking about HSBC. This is just a -- a more general comment. I think it has an inhibiting influence -- impact on our ability to bring resolutions that I think would be more appropriate. And I think that is something that we -- you all need to -- need to consider. So the concern that you raised is actually one that I share. 

Looking for marriage in all the wrong places

The state, and above all a state that seeks self-limitation, needs the family to flourish

By Spengler 

Two mutually incompatible arguments are advanced to defend gay marriage. The first states that marriage is a good thing provided by the state, such that gay people have the same right to it as anyone else. The second states that marriage is a bad thing, and that bringing gay people into the institution of marriage will destroy it from the inside. 

Michelangelo Signorile, a prominent gay activist, urges people in same-sex relationships to "demand the right to marry not as a way of adhering to society's moral codes but rather to debunk a myth and radically alter an archaic institution". They should "fight for same-sex marriage and its benefits and then, once granted, redefine the institution of marriage completely, because the most subversive action lesbians and gay men can undertake ... is to transform the notion of 'family' entirely". 

Signorile is quoted in a new book by the distinguished legal philosopher Robert P George and two of his students. They contend that marriage is an institution quite different from the domestic arrangement that advocates of gay marriage have in mind. Gay marriage as such isn't the issue, argue the authors: it an attempt to do away with the traditional view of marriage as a comprehensive union, and replace it with a view marriage as an especially intense sort of emotional bond. 

Signorile might be tardy in his plan to "redefine the institution of marriage". Hedonistic heterosexuals have been hacking away at the traditional concept of marriage for years. Whether gay marriage becomes law or not, the institution of marriage in the United States may erode so quickly that it will cease to perform its social function, that is, rearing a new generation of Americans.