Whom the Gods Would Destroy …

Japan in the Grip of Utter Madness

By Pater Tenebrarum

“Quem deus vult perdere, dementat prius”, is an ancient proverb often wrongly attributed to Euripides, which says: “Whom God wishes to destroy, he first makes mad”. It evidently applies in spades to the new leadership of the Bank of Japan. What is so astonishing to us is that this obvious conclusion is not shared by anyone in the so-called 'mainstream'. In short, it seems the Gods have made a whole bunch of people mad.

It is a widely accepted shibboleth that for reasons that are never properly explained, 'deflation is bad for Japan'. Not deflation of the money supply, mind, as that has never once happened anyway. A mild decline in consumer prices is what is widely regarded as such an unmitigated evil.

This is such hair-raising nonsense one is almost at a loss for words. In a progressing unhampered market economy, falling prices for goods and services would be the normal state of affairs.  After all, economic progress is all about doing more with less, or putting it differently, it is all about increasing economic productivity by means of capital accumulation.

The idea that 'deflation is bad' has been reinforced by decades of Keynesian propaganda, but that constant repetition doesn't make it any more true. Of course, for those who are sitting closest to the printing press of the central banks, inflation is an advantage. Everybody else however gets shafted. And so Haruhiko Kuroda has apparently decided it would be a good idea to shaft the vast bulk of the population of Japan.

How to Stop the Korean War

In a far graver crisis, Kennedy did not hesitate to communicate with the culprit

By PATRICK J. BUCHANAN

“If you see 10 troubles coming down the road, you can be sure that nine will run into the ditch before they reach you,” said Calvin Coolidge, who ever counseled patience over the rash response.

Unfortunately, the troubles presented by North Korea’s Kim Jong Un seem unlikely to run into a ditch before they reach us.

For Kim has crawled out on a limb. He has threatened to attack U.S. forces in Korea and bases in Asia, even U.S. cities. He has declared the truce that ended the Korean War dead and that “a state of war” exists with the South. All ties to the South have been cut.

The United States has sent B-52s and stealth fighters to Korea and anti-missile warships to the Sea of Japan. Two B-2 bombers flew from Missouri to Korea and back in a provocative fly-by of the Hermit Kingdom. And both South Korea and we have warned that, should the North attack, swift retribution will follow.

Kim Jong Un is in a box. If he launches an attack, he risks escalation into war. But if his bluster about battling the United States turns out to be all bluff, he risks becoming an object of ridicule in Asia and at home.

Why is he playing with fire? Because his father and grandfather did, and got away with murder.

In 1968, Kim Il Sung hijacked the U.S. intelligence ship Pueblo and held its crew hostage. America, tied down in Vietnam, did nothing. In 1976, North Koreans ax-murdered two U.S. officers in the DMZ. In 1983, Pyongyang tried to assassinate South Korea’s president in Burma and blew up three members of his cabinet. In 1987, North Koreans blew up a South Korean airliner.

The Bitter Legacy of Mickey Mouse

Developments of enormous consequence sometimes follow the most mundane of motives

By RON UNZ

During the mid-1990s, the giant Disney Corporation became concerned that its 1928 copyright on Mickey Mouse was close to expiration.  Deploying heavy lobbying efforts, it persuaded Congress to pass and President Bill Clinton to sign what was officially entitled the 1998 Sonny Bono Copyright Term Extension Act, but more informally known as the “Mickey Mouse Protection Act.”  The result was to extend Mickey’s copyright for another twenty years, and perhaps indefinitely if future corporate lobbying efforts bore similar fruit.

Now I have no particular burning desire to watch Mickey Mouse cartoons without paying for them, and I suspect that those around the world who feel otherwise simply ignore such legal restrictions, just as they watch pirated blockbuster movies just weeks after they are released into the theaters.  So if the Disney executives had merely wanted to protect their rights to old Walt’s lucrative rodent, I wouldn’t have cared in the least.  But since paying Congresspersons to enact such narrowly tailored legislation might have appeared unseemly, they decided to extend all other existing copyrights as well, including the vast number of written works possessing no financial but much intellectual value.

As a direct consequence, the continuous yearly expiration of old copyrights came to a screeching halt at the year 1922, and has moved no further in the last fifteen years. Everything published in America prior to 1923 may be copied, read, and made available without restriction, but for most other works, their precise legal status remains unclear, given the difficulty and inconvenience of determining individual copyright-renewal filings or tracing the legal chain of ownership across sixty or seventy years.  Hence so many of the legal battles subsequently undertaken by Google and various other entities over the legitimate interpretation of “Fair Use” doctrine and the question of what can or can’t be made available on the Internet.

Stating the obvious

Cyprus controls an “omnishambles”

By Hugo Dixon

Cyprus’ capital controls are an “omnishambles”. If the Argentine-style “corralito” really can be lifted in seven days, the damage could be contained. But that doesn’t seem credible. Extended controls could spawn bribery, sap confidence, further crush the economy, spread contagion and ultimately lead to the country’s exit from the euro.

The lesson of capital controls elsewhere is that, once they are imposed, they are hard to remove. Iceland’s curbs are still in place five years after they started. In Argentina, they lasted a year.

There’s little reason to suppose it will be much different in Nicosia. After all, the restrictions – which limit both the amount of money people can take from their banks and the amount they can transfer abroad – have been imposed because the lenders do not have enough access to ready funds. If there’s not sufficient liquidity today, why should anybody believe there will be enough in a week, a month or even a year?

The shambolic manner in which the restrictions have been implemented also rams home the fact that it’s unlikely they will be lifted quickly. An earlier leaked draft didn’t mention any daily limits on cash withdrawals; the final version set it at 300 euros per person. The draft said people could take 3,000 euros abroad per trip; in the end, it was cut to 1,000 euros.

A central bank spokesman said the controls would last four days; in the end it was seven, although the central bank’s own press release didn’t even mention a timetable. The tightening of the controls between the leaked draft and the final version might suggest that liquidity is in pretty short supply.

The internal inconsistency of the controls also seemingly gives a lie to the idea that the controls will last only a week. They prevent people spending more than 5,000 euros a “month” abroad on their credit cards; they limit the transfers to people studying abroad to 5,000 euros per “quarter”. Why are there monthly and quarterly limits if the whole exercise is supposed to last only a week?

Inconvenient Headlines

Life begins when "you take the baby home from the hospital."

Dr. Kermit Gosnell - Serial Killer

By Mona Charen 

It's a deeply felt conviction among liberals that they are the caring party. It's not too much to say that liberals are quite confident that they are nicer, more moral people than conservatives.

It must require truly titanic powers of denial for the "moral" and "compassionate" party to maintain its position on abortion -- a position that leads them into some macabre rationalizations. Consciences among the morally superior party are agreeably quiescent.

But recent headlines have not been similarly cooperative. In Florida, the legislature is considering a variant of the "Born Alive Infants Protection Act," which would require that abortionists provide medical assistance to infants who are "accidentally" born alive and kicking during an abortion. (Then State Senator Barack Obama vociferously opposed similar legislation in Illinois.)

Ms. Alisa LaPolt Snow, representing the Florida Alliance of Planned Parenthood Affiliates, testified against the bill. Florida representative Jim Boyd, apparently unsure that he had understood her correctly, asked:

"So, um, it is just really hard for me to even ask you this question because I'm almost in disbelief. If a baby is born on a table as a result of a botched abortion, what would Planned Parenthood want to have happen to that child that is struggling for life?"

Ms. Snow responded that her organization "believes that any decision that's made should be left up to the woman, her family and the physician." In short, as the Weekly Standard summarized, Florida Planned Parenthood is in favor of "post-birth abortion." This is consistent with the position of the president of the United States and most members of the caring party.

Ms. Snow was asked why she didn't support simply transporting a breathing, moving infant to a hospital where he or she would have the best chance of survival. Snow developed a sudden concern for ambulance convenience: "(T)hose situations where it is in a rural health care setting, the hospital is 45 minutes or an hour away, that's the closest trauma center or emergency room. You know there's just some logistical issues involved that we have some concerns about." Really? Logistical concerns?

The Pharaoh Weeps

Egypt is perched on the precipice of chaos

by JUDITH MILLER

The Cairo subway was one of Hosni Mubarak’s proudest achievements. Built at a cost of several billion dollars in the late 1980s, it reflected Egypt’s ancient civilization and modern Egypt’s national pride. Air-conditioned in summer, quiet as a pharaoh’s tomb, the subway was well-lit and beautifully appointed. Display boxes of ancient Egyptian artifacts lined its platforms. A special police unit kept the stations clean, safe, and graffiti-free.

Then came the Egyptian revolution in January and February 2011. Today, the subway that transports roughly 4 million passengers a day throughout this vast city of roughly 17 million is a wreck. The tile walls of its central hub, Tahrir Square—the epicenter of the protests that forced Mubarak from power—are chipped and filthy. Its platforms are strewn with litter. A main passageway from the platform to the square has been dark for weeks; no one has changed the burned-out bulbs. There are no policemen in sight. The passageways stink.

The subway is a metaphor for post-revolutionary Egypt. The square that symbolized the revolution is now occupied by riffraff and protestors who assemble periodically to show the government that the people remain in control. Traffic around the Middle East’s largest public square has been diverted.

While Cairo may still be safer than Chicago, or even New York, Egyptian women, for the first time in memory, fear shopping or taking cabs at night. Cairo’s police, blamed for the deaths of protesters and unhappy with their pay, working conditions, and lack of respect, sit in their precinct houses, refusing to provide security that Egyptians once took for granted. Tourists have vanished, depriving Egypt of a vital source of jobs and hard currency. Unemployment has risen from 9.8 percent in 2010 to 13 percent today. Inflation is officially 8.7 percent, though more like 9.5 percent, or even higher, for food and basic commodities, say economists. Even these figures are misleading, since an estimated 40 percent of Egypt’s economy is “black” or informal, unregulated by and unreported to the government, according to Hazem el-Beblawi, an economist who served as deputy prime minister under the army’s unpopular transition government in 2011. Beblawi, a strong advocate of free-market liberalism who resigned his post that year, accusing the army of taking Egypt in the “wrong direction,” says youth unemployment probably tops 19 percent. Egypt, he estimates, has less than its officially claimed $13.5 billion in hard-currency reserves (versus $36 billion before the revolution). “Egypt imports roughly $60 billion worth of goods and services,” he says. “It exports under $25 billion.”

Beyond Parody

Talk to Senior Officials of the Central Committee of the Workers’ Party of Korea

Let Us Brilliantly Accomplish the Revolutionary Cause of Juche, Holding the Great Comrade Kim Jong Il in High Esteem as the Eternal General Secretary of Our Party KIM JONG UN

April 6, Juche 101 (2012)

In the run-up to the significant Day of the Sun marking the centenary of the birth of the great leader Comrade Kim Il Sung, we will be holding the Fourth Conference of the Workers’ Party of Korea amidst great expectation and interest of our people and foreigners.

The  forthcoming   conference   will   discuss  and  decide  on  the  agenda  items  of  acclaiming  General Kim Jong Il as the eternal General Secretary of the WPK and glorifying forever his revolutionary career and immortal revolutionary exploits, and amend the Rules of the Party accordingly. It will also recall some members of the central leadership body of the Party and hold an election to fill the vacancies, which is a regular undertaking of a Party conference.

We should ensure that the conference serves as an epoch-making event that sets up an important milestone in holding up General Kim Jong Il, together with President Kim Il Sung, as the eternal leader of our Party and in accomplishing the ideology and cause of the President and the General with credit.

Through the conference, we should clearly show with which faith, will and moral obligation we, the descendants of the President and soldiers and devoted followers of the General, hold them in high esteem and how forcefully we have turned out to accomplish their ideology and cause.

We should hold the General up invariably as the General Secretary of our Party.

To hold him in high esteem as the eternal General Secretary of our Party is, in principle, a demand for consistently holding fast to his ideology and lines and advancing our revolutionary cause victoriously.

Holding him up as the eternal General Secretary of the WPK is never symbolic in itself. It means having him at the post of General Secretary of the Party invariably and conducting Party building and Party activities in accordance with his ideology and intention.

The Proper Use Of Credit

Great fortunes are built on the proper use of credit. Easy credit leads to mal-investment and wealth destruction

by Charles Hugh-Smith
We cannot understand our fundamental financial problems if we do not understand the proper use of credit. Credit has a key role in capitalism; credit-starved economies are underdeveloped economies, as economist Hernando De Soto explained in his masterwork, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.

In the chronically underdeveloped economies De Soto describes, households have assets--land, dwellings, small businesses--but since the assets do not have legally recognized status as "property" (because the system for recognizing and registering property is both cumbersome and corrupt), they cannot act as collateral for borrowed capital, i.e. loans.

As a result, the majority of the assets are "dead capital," difficult to sell, pass on to future generations or use as collateral.

Great fortunes are built on the proper use of credit. The borrower needs capital to expand his/her enterprise, and the lender needs a fast-growing enterprise with collateral and an income stream to support a low-risk, high-yield loan.

We can profitably look to Colonial America as an example of a credit-starved economy. In the wake of the Revolutionary war and the ratification of the Constitution (1789), the U.S. financial system was a mess: debts left by the war burdened the new government, which historian Thomas McCaw noted "started on a shoestring and almost immediately went bankrupt."

Differing views on the role of the central government, central bank and credit splintered the political elite, with Hamilton squaring off against Madison and Jefferson (though Madison's views were by no means identical to Jefferson's).

Meanwhile, in the real economy, ordinary farmers and entrepreneurs were desperate for long-term credit to fuel their rapidly growing enterprises. Though states were banned by the Constitution from issuing their own currency, states got around this prohibition by granting bank charters. The banks promptly issued the credit that an entrepreneurial economy needed.

Second Thoughts

Germans may want out

By Wolf Richter

Anti-euro movements were pushed aside or squashed by political establishments across the Eurozone. There is, for example, Marine Le Pen, of the right-wing FN in France—“Let the euro die a natural death,” is her mantra. Though she finished third in the presidential election, her party has next to zero influence in parliament. Austria has Frank Stronach, who is trying to get an anti-euro party off the ground, without much effect. Germany has the Free Voters, an anti-bailout party that has been successful in Bavaria but not on the national scene.

Then Italy happened. Two anti-austerity parties with no love for the euro, one headed by Silvio Berlusconi the other by Beppe Grillo, captured over half the vote—and locked up the political system. Newcomer Grillo had thrown the status quo into chaos, for better or worse. Suddenly, everyone saw that anger and frustration could accomplish something.

It stoked a fire in Germany. Chancellor Angela Merkel’s euro bailout policies—“There is no alternative,” is her mantra—hit increasing resistance, particularly in her own coalition, but wayward voices were gagged.

“Time has come,” Konrad Adam called out as a greeting to the crowd Monday night and reaped enthusiastic applause. Despite the snowy weather, over 1,200 people had shown up at the Stadthalle in Oberursel, a small town near Frankfurt, for the first public meeting of the just-founded association, Alternative for Germany (AfD), that isn’t even a political party yet, and that wants to be on the ballot for the federal elections on September 22.

So Adam, one of the founders and a former editor at the Welt and FAZ, was pressed for time. It’s wrong to say there’s no alternative to the euro bailouts, he said. “Politics is nourished by alternatives.” He introduced his demands:

- Dissolution of the “coercive euro association.” An orderly end of the monetary union. Countries should be able to legally exit if they “could not, or did not want to remain.” The euro would be replaced by parallel national currencies or smaller, more stable monetary unions.

Leaving Race Behind

Our growing Hispanic population creates a golden opportunity

By Amitai Etzioni

Some years ago the United States government asked me what my race was. I was reluctant to respond because my 50 years of practicing sociology—and some powerful personal experiences—have underscored for me what we all know to one degree or another, that racial divisions bedevil America, just as they do many other societies across the world. Not wanting to encourage these divisions, I refused to check off one of the specific racial options on the U.S. Census form and instead marked a box labeled “Other.” I later found out that the federal government did not accept such an attempt to de-emphasize race, by me or by some 6.75 million other Americans who tried it. Instead the government assigned me to a racial category, one it chose for me. Learning this made me conjure up what I admit is a far-fetched association. I was in this place once before. When I was a Jewish child in Nazi Germany in the early 1930s, many Jews who saw themselves as good Germans wanted to “pass” as Aryans. But the Nazi regime would have none of it. Never mind, they told these Jews, we determine who is Jewish and who is not. A similar practice prevailed in the Old South, where if you had one drop of African blood you were a Negro, disregarding all other facts and considerations, including how you saw yourself.

You might suppose that in the years since my little Census-form protest the growing enlightenment about race in our society would have been accompanied by a loosening of racial categories by our government. But in recent years the United States government has acted in a deliberate way to make it even more difficult for individuals to move beyond racial boxes and for American society as a whole to move beyond race.

Lies, damned lies and hockey sticks

The exposure of yet another dodgy piece of climate-change alarmism shows the need for serious scepticism

by Rob Lyons 

‘Global temperatures are warmer than at any time in at least 4,000 years… and over the coming decades are likely to surpass levels not seen on the planet since before the last ice age.’ That was the pithy message offered by New York Times eco-columnist Justin Gillis, reporting on a new reconstruction of past global temperatures published in Science last month. The Atlantic was blunter: ‘We’re Screwed: 11,000 Years’ Worth of Climate Data Prove It.’

The Science paper is an attempt to chart changes in global temperatures for the past 11,000 years. In the absence of actual thermometer records any earlier than the late seventeenth century, paleoclimatologists use ‘proxy’ data - things like tree rings - to estimate changing temperatures. The researchers, led by Shaun Marcott of Oregon State University, found ‘Early Holocene (10,000 to 5,000 years ago) warmth is followed by ~0.7 degree Celsius cooling through the middle to late Holocene (less than 5,000 years ago), culminating in the coolest temperatures of the Holocene during the Little Ice Age, about 200 years ago’.

However, then things changed dramatically: ‘Current global temperatures of the past decade have not yet exceeded peak interglacial values but are warmer than during ~75 per cent of the Holocene temperature history.’ The accompanying graph of temperature changes, as shown in the Atlantic article, is startling. Temperatures are more or less stable until just over 1,000 years ago, when a marked cooling started. Then, after a recovery since the Little Ice Age, the line takes off like a rocket in the twentieth century. What clearer evidence could there be for manmade global warming?

The shape of the graph is very much like a hockey stick on its side - long and straight with a sharp bend at the end - and there has been plenty of past trouble caused by ‘hockey stick’ graphs. In 1999, a paper published in Nature by Michael Mann and colleagues suggested that the current period was the warmest in at least 1,000 years. Mann’s graph also showed no Medieval Warm Period, previously assumed to have been a spell of warmer weather in the years roughly from 900 to 1300. Such was the impact of this paper that it become the centrepiece of the IPCC’s Third Assessment Report in 2001 and got a major plug in Al Gore’s film, An Inconvenient Truth. As Andrew Montford has noted previously on spiked, the Canadian government even sent out a leaflet to every household featuring the ‘hockey stick’ graph.

Ten Big Fat Euro Lies

An Empire Built on Lies

by Testosterone Pit

Every country in the Eurozone has its own collection of big fat lies that politicians and eurocrats have served up in order to make the euro and the subsequent bailouts or austerity measures less unappetizing. Here are some from the German point of view, gleaned from the Wirtschafts Woche.

1999: “Can Germany be held liable for the debts of other countries? A very clear No!” said a multi-colored piece of propaganda issued by the CDU, the party of Helmut Kohl who was Chancellor at the time, and of Angela Merkel who is Chancellor now. It explained: “The Maastricht treaty forbids explicitly that the EU or the other EU Partners are liable for the debts of any Member State.” Sounds like a bad joke today.

But fear not: because of the 3% deficit limit in the Maastricht Treaty, “euro Member States will therefore be able to service their debts over the long term without any problems.” Thus, the big fat euro lies started before bank notes had even been put into circulation.

January 2001: “This money will have a great future,” said Kohl during a speech celebrating the introduction of the euro that he’d pushed through with all his corpulence. For a while, it worked. Euros were growing on trees. Even Greece had access to cheap euro debt with which to buy votes and fund the Olympics. Everyone was happy. Until it didn’t work anymore.

Gold, Redeemability, Bitcoin, and Backwardation

Bitcoin is like an attempt to reverse cause and effect

By Keith Weiner

I recently released a video about the Internet-based currency, Bitcoin. I asked the question: is Bitcoin money? In brief, I said no it’s an irredeemable currency. This generated some controversy in the Bitcoin community. I took it for granted that everyone would agree that money had to be a tangible good, but it turns out that requirement is not obvious.This prompted me to write further about these concepts.

A human being has a physical body with physical needs, and lives in a physical world. He produces that he may eat and clothe and shelter himself. Once civilization develops beyond subsistence, men specialize to increase their production. Each relies on others, who specialize in other fields. Each trades his products for the goods produced by others.

A problem arises, called the coincidence of wants. One man produces food and another produces leather moccasins. When the moccasin producer is hungry, the food grower may not need new shoes. Mr.Moccasin must discover that some goods are more marketable than others. He can trade less-marketable moccasins for more-marketable salt, for example. He may not need the salt (though he can always use it) but he knows it is accepted in trade for food and other goods.

Eventually, a market process finds the most marketable good. It becomes even more marketable due to its increasing use as money (but it does not lose the attributes that made it useful in the first place).

The philistines have taken over the classroom

How did we get to a situation where teachers are even more cavalier about knowledge and serious schooling than politicians are?

by Frank Furedi 

In virtually every Western society, education is in trouble.

In part, the crisis of schooling is a product of the politicisation of education. In recent decades, education has been transformed into an instrument of public policy, a means for achieving objectives that are entirely external to learning. Education is now expected to put right the failures of adult society, to transform apathetic youngsters into responsible citizens. Education is meant to promote social mobility, multiculturalism, responsible sex, sound financial behaviour and emotional wellbeing, and to provide youngsters with a variety of key skills.

The instrumental transformation of education into a vehicle for achieving policy objectives means that it is rarely appreciated as something valuable in its own right. Education has been so instrumentalised that its main function is now to ‘provide skills’. The teaching of knowledge itself, for its own sake, is frequently dismissed as an old-fashioned custom that is not relevant to the twenty-first century.

That policymakers confuse education with training is regrettable, but understandable. Far more worrying is the fact that a significant section of the teaching profession has also embraced the philistine skills agenda. Indeed, Britain’s education establishment is if anything more ideologically devoted to instrumental pedagogy than is the Lib-Con coalition government. This became painfully clear at the recent conferences of English teachers’ unions, where opposition to the government was often expressed through denunciations of knowledge-based curricula.

So we heard Alex Kenny, a member of the executive of the National Union of Teachers, dismiss the government’s new national curriculum on the grounds that it is ‘high on content and low on skills’. Numerous delegates attacked the curriculum’s emphasis on core knowledge. A survey of 2,000 NUT members revealed that two thirds of teachers are hostile to the government’s plans to place less emphasis on skills.

This means we have a paradoxical situation, where politicians seem to take the teaching of subject-based knowledge more seriously than educators do. The philistine attitude towards education adopted by some NUT delegates was exposed most strikingly through their confusion of knowledge with facts. Kenny, for instance, said a knowledge-based curriculum is one ‘based on pub quiz-style chinks of information’. The NUT’s general secretary, Christine Blower, equated the acquisition of knowledge with rote learning and said ‘it doesn’t promote the critical thinking and problem-solving skills that are essential for good quality learning’. Her words reflect the current wisdom of utilitarian pedagogy: learning and skills are better than education.

Knowledge and skills

In any discussion about the relationship between analytical skills and knowledge, it is easy to become one-sided. Often, too much of a polarising distinction is made between knowledge and its application. It is possible to make a distinction: knowledge is accomplished through learning principles, concepts and facts, while skills represent the capacity to use that knowledge in specific contexts. But in reality, these two things are inextricably bound together. The gaining of knowledge, particularly deep knowledge, requires such skills as the capacity to conceptualise, compare and critically engage.

The US Corporate State

The Great Deformation

by Llewellyn H. Rockwell Jr.

It didn’t take long for opponents of the market to pounce after the events of 2008. The crash was said to prove how destructive "unregulated capitalism" could be and how dangerous its supporters were – after all, free-marketeers opposed the bailouts, which had allegedly saved Americans from another Great Depression.

In The Great Deformation, David Stockman – former US congressman and budget director under Ronald Reagan – tells the story of the recent crisis, and takes direct aim at the conventional wisdom that credits government policy and Ben Bernanke with rescuing Americans from another Great Depression. In this he has made a seminal contribution. But he does much more than this. He offers a sweeping, revisionist account of US economic history from the New Deal to the present. He refutes widely held myths about the Reagan years and the demise of the Soviet Union. He covers the growth and expansion of the warfare state. He shows precisely how the Fed enriches the powerful and shelters them from free markets. He demonstrates the flimsiness of the present so-called recovery. Above all, he shows that attempts to blame our economic problems on "capitalism" are preposterous, and reveal a complete lack of understanding of how the economy has been deformed over the past several decades.

The Great Deformation takes on the stock arguments in favor of the bailouts that we heard in 2008 and which constitute the conventional wisdom even today. A "contagion effect" would spread the financial crisis throughout the economy, well beyond the confines of a few Wall Street firms, we were told. Without bailouts, payroll would not be met. ATMs would go dark. Wise policy decisions by the Treasury and the Fed prevented these and other nightmare scenarios, and staved off a second Great Depression.

The bailout of AIG, for example, was carried out against a backdrop of utter hysteria. AIG was bailed out in order to protect Main Street, the public was told, but virtually none of AIG’s busted CDS insurance was held by Main Street banks. Even on Wall Street the effects were confined to about a dozen firms, every one of which had ample cushion for absorbing the losses. Thanks to the bailout, they did not take one dollar in such losses. "The bailout," says Stockman, "was all about protecting short-term earnings and current-year executive and trader bonuses."

Ten years earlier, the Fed had sent a clear enough signal of its future policy when it arranged for a bailout of a hedge fund called Long Term Capital Management (LTCM). If this firm was to be bailed out, Wall Street concluded, then there was no limit to the madness the Fed would backstop with easy money.

LTCM, says Stockman, was "an egregious financial train wreck that had amassed leverage ratios of 100 to 1 in order to fund giant speculative bets in currency, equity, bond, and derivatives markets around the globe. The sheer recklessness and scale of LTCM’s speculations had no parallel in American financial history…. LTCM stunk to high heaven, and had absolutely no claim on public authority, resources, or even sympathy."

Egypt Becoming a Nightmare for Muslim Brothers

The quicksand threatens to engulf them all

By Zvi Mazel

For the Muslim Brotherhood, the long awaited dream come true is turning into a nightmare. Having survived 80 years of persecution to achieve power democratically, they suddenly find themselves the focus of widespread popular hatred.

Never have Egyptians been in such dire economic traits.

Egyptian President Mohamed Morsi, however, is not about to give up and make way for new presidential elections. The Brotherhood will spare no effort to stay in power.

Such is the depth of the economic, social and political crisis that the threat of civil war appears all too real.

Most commentators believe the army won't let things go that far and will step in; however the road back to recovery and a civilian regime accepted by all will be long and arduous.

Civil disobedience is rampant.

In Port Said the police have disappeared from the streets and the army called in to maintain law and order. Indeed here and there people are petitioning the courts to appoint popular Defense Minister Abdel Fattah al-Sisi to rule Egypt in Morsi's stead. They know it won't happen but are trying to make a point. Demonstrations calling for getting rid of Morsi and of the Brotherhood are held on a daily basis in Cairo and in cities all over the country. They are met by militant groups of the Brotherhood. Dozens have died and thousands were wounded in the resulting clashes though both sides are trying not to let the violence escalate.

The economy is in shambles.

In a remarkable and enduring show of unity, non-Islamic opposition parties under the banner of the National Salvation Front are boycotting the regime until their demands - canceling the Islamic constitution and setting up a consensus government until new elections are held - are met.

The Muslim Brotherhood who had won a sweeping victory in the first free parliamentary elections and got their candidate elected president have bitterly disappointed the people who had put their faith in them.

Nothing has been done to improve their lot. Upon taking office Morsi had promised - and failed - to take care of five burning issues within a hundred days: growing insecurity, monster traffic jams in the capital, lack of fuel and cooking gas, lack of subsidized bread, and the mounting piles of refuse in the streets.

The president's high-handed attempt to take over all legislative powers and grant himself full immunity provoked such an outcry that he had to back down. He sacked the prosecutor-general and appointed a new one - only to have his decision overthrown by the Cairo Court of Cassation last week, throwing the judicial system into disarray.

Anti-Imperial Presidency

A 19th-century model for the right foreign-policy

By DANIEL LARISON

Grover Cleveland was the only Democrat to serve as president in the second half of the 19th century, and he was arguably the last conservative Democratic president in U.S. history. But what made him a truly remarkable and admirable figure was his opposition to European imperialism throughout his career. Cleveland’s foreign policy was in many respects very traditional, but what set him apart from his contemporaries, and many of his predecessors, was his willingness to employ American power in a limited way for anti-imperialist ends.

Foreign policy was not a major part of the first of Cleveland’s two non-consecutive terms, although between 1886 and 1888 he successfully countered German ambitions in the South Pacific to take control of Samoa—risking diplomatic rupture with a great power over a place where no major U.S. interests were at stake. Upon entering office the second time, Cleveland delayed but ultimately could not prevent the annexation of Hawaii, which the outgoing Harrison administration had been eager to realize.

Following an 1893 coup by American settlers against the native Hawaiian government, Benjamin Harrison had tried to rush an annexation treaty through the Senate during his last days as president. Cleveland withdrew the treaty and tried to find some way to repair the damage that the annexationists had done. But nothing short of direct intervention against the coup government could restore the status quo ante, and that was something Cleveland could not and would not attempt.

Cleveland had more success when he came to the defense of Venezuela in a boundary dispute with Great Britain’s colony in Guyana, a move that briefly increased tensions between London and Washington. Resolving the dispute paved the way for a long-term improvement in relations between the U.S. and Great Britain—though it did so by expanding the scope of the Monroe Doctrine beyond what its authors had originally intended.

Fools Never Learn

This is all so obviously stupid that only a fool could propose it

by Mike "Mish" Shedlock

Proving that fools never learn, the Obama administration pushes banks to make home loans to people with weaker credit 

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.

Here We Go Again
Mark Hanna commented "And Here We Go Again"
Indeed. Home markets are booming again so let's get everyone in on it.
The whiners are piling on already. 

 “If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”

Peak Oil Cult Is Proved Spectacularly Wrong

We won't hit peak oil until we hit peak imagination

By ROBERT BRYCE
These are lousy times to be in the peak oil cult.

In December, U.S. oil exports hit a record of 3.6 million barrels per day, thanks in part to soaring domestic petroleum production.

Last year, domestic natural gas production averaged 69 billion cubic feet per day, a record, and a 33% increase over the levels achieved back in 2005. That year, Lee Raymond, the famously combative former CEO of ExxonMobil, declared that "gas production has peaked in North America."

Why has the U.S. oil and gas sector recovered? How is it that last year, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859? How could Raymond, the leader of one of the world's most sophisticated companies, be so wrong?

The answer: innovation. Over the past century or so, oil and gas drilling has been transformed from an industry dominated by hunches and wildcatters to one that is more akin to the precision manufacturing that dominates aerospace and automobiles.

The convergence of a myriad of technologies — ranging from better drill rigs and drill bits to robotic rigs and nanotechnology — is allowing the oil and gas sector to produce staggering quantities of energy from locations that were once thought to be inaccessible or bereft of hydrocarbons.

Advocates of renewable energy like to point out that in 2012, some $270 billion was spent globally on "clean energy." But spending on oil and gas exploration dwarfs what is spent on renewables. Last year alone, global drilling expenditures totaled $1.2 trillion, nearly 4.5 times the amount spent on alternative energy. Trillions more were spent transporting, refining, and delivering oil and gas to consumers.

The results of all that spending can be seen in the numbers: Between 1949 and 2010, oil and gas companies drilled more than 2.6 million wells in the U.S.

Over that same period, they reduced their dry holes drilled from 34% to 11%. And the percentage of dry holes being drilled continues to fall.

Today's hydrocarbon hunters are so precise that they can drill wells that are two miles deep, turn their drill bit 90 degrees, drill another two miles horizontally, and arrive within a few inches of the targeted pay zone. The technical prowess of the drilling sector has been proved twice this month with announcements of major discoveries in the Gulf of Mexico.

Anadarko Petroleum and its partners found a huge field in what's known as the Lower Tertiary trend, containing as much as 3.7 billion barrels of oil equivalent.

The well was drilled to a depth of 31,000 feet below the ocean floor in 5,800 feet of water.

Rise of the Nuclear Greens

Some environmentalists see atomic energy as the answer to global warming

By Robert Bryce

In theory, the March 11, 2011, disaster at the Fukushima Daiichi nuclear plant should have bolstered environmentalists’ opposition to new nuclear-energy projects. But in the wake of the worst nuclear accident since Chernobyl, some of the world’s leading Greens have done just the opposite: they have come out in favor of nuclear power. Perhaps the most prominent convert is British activist and journalist George Monbiot, who even cites the disaster as one reason for his change of heart. Just ten days after Fukushima, in a column for theGuardian, Monbiot called the use of solar energy in the United Kingdom “a spectacular waste of scarce resources” and declared that wind energy was “hopelessly inefficient” and “largely worthless.” Moreover, he wrote, “on every measure (climate change, mining impact, local pollution, industrial injury and death, even radioactive discharges) coal is 100 times worse than nuclear power.” He concluded: “Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”

A number of prominent British and American environmentalists were pronuclear before Fukushima. Among the Americans are longtime environmental activist and publisher Stewart Brand, as well as Ted Nordhaus and Michael Shellenberger, founders of the Oakland-based Breakthrough Institute, a center-left think tank. The Brits include environmentalist Mark Lynas, former British prime minister Tony Blair, and scientist and environmentalist James Lovelock. There’s also a Canadian in the group: Greenpeace cofounder Patrick Moore.

The emergence of the pronuclear Greens represents an important schism in modern environmentalism. For decades, groups like the Sierra Club and Greenpeace have pushed an antinuclear agenda and contended that the only energy path for the future is the widespread deployment of wind turbines and solar panels. But fear of carbon emissions and climate change has catalyzed a major rethinking. As Brand puts it in a new documentary, Pandora’s Promise, which explores the conversion of antinuclear activists to the pronuclear side: “The question is often asked, ‘Can you be an environmentalist and be pronuclear?’ I would turn that around and say, ‘In light of climate change, can you be an environmentalist and not be pronuclear?’ ”

Newfound support can only help the nuclear-energy sector, but it remains to be seen whether nuclear will play a major role in the burgeoning global electricity market, which has grown by about 3 percent per year since 1985. It’s already clear that the Greens’ pronuclear stance won’t have a significant impact on the American electricity market over the next decade or so, for a simple reason: the shale-gas revolution here has produced abundant supplies of low-cost natural gas. In 2010, one of the largest electric utilities in the country, Exelon, said that for new nuclear projects to be economically viable, natural gas would have to cost at least $8 per million Btu. Today, the price is about $3.50, and the shale-gas boom means that a price anywhere near $8 is exceedingly unlikely for years to come. Four nuclear reactors are now being built in the United States—the Vogtle 3 and 4 reactors in Georgia and the Summer 2 and 3 reactors in South Carolina—but the projects are going forward only because regulators in those states have allowed the utilities that own them to recover costs from ratepayers before the projects are finished.