Stockman says it like it is

“The Great Deformation – The Corruption of Capitalism in America”

by DETLEV SCHLICHTER

David Stockman’s new book “The Great Deformation” is a brilliant, penetrating analysis of the present state of the US economy and the US political system, and a detailed account of how the nation got into this mess. The book will upset Democrats and Republicans alike, and quite a few other constituencies as well, which can, in this case, be safely accepted as proof that Stockman’s narrative is spot on.

Stockman is an angry man and he admits so himself early in his 719-page tome. That anger adds bite and verve to his writing and keeps what is in fact a detailed historical account and economic analysis always highly entertaining. The book is long but never boring. Furthermore, Stockman does not let the anger cloud his judgement, which remains, in my view, relentlessly accurate throughout.
When dissecting Washington politics and Wall Street deal-making Stockman naturally draws on his experience as the director of the Office of Management and Budget under Ronald Reagan and his many years as an investment banker and private equity investor, and in so doing he reflects on much of his own professional life with commendable candor. But the book goes beyond these specific periods, and Stockman applies the analytical skills and insights acquired on these jobs to the critical examination of a wide spectrum of policy areas and historic periods. Stockman’s command of these topics and the masses of statistics and financial reports involved, and his powers of analytical dissection are impressive. But what is probably even more important for the success of his analysis is that it is based on an accurate understanding of essential economic relationships, in particular the importance of sound money. This is why the narrative that he develops captures America’s present challenges so truthfully and comprehensively. I very much shared Stockman’s anger when I started reading, but even more so when I had finished.

Venezuelans Resist an Illegitimate and Violent Regime

Venezuelans voted for change and now has no choice but to resist 

By Roger Noriega

Is the election in Venezuela over? Apparently not. The self-declared winner, Nicolás Maduro, is behaving very much like a man who knows he lost on April 14. In resorting to violence and brute force to silence the opposition’s demand for an honest recount, Maduro has signed the death warrant for chavismo’s legitimacy.

Numerous videos of soldiers and other chavista thugs chasing, beating, and shooting unarmed protesters have circulated around the world since last month’s election. Last night, video from Venezuela’s national assembly showed opposition members being beaten as they protested a gag rule imposed by assembly president Diosdado Cabello.

Post-election analyses have shown that even many of those who had supported caudillo Hugo Chávez before his recent death were among a majority of Venezuelans who voted for change last month. And that majority now has no choice but to resist the Cuban-backed regime that cannot hold on to power, let alone govern, unless it uses violence against the Venezuelan people.

French Fears, French Fantasies

The specter of 1934 is haunting France today — but this time the popular front is coming from the right

By Roger Kaplan 
What happened on 6 February 1934 is known to every Frenchman of a certain age, but of the younger generation one cannot say, because history has been banned (the word is not too strong) from the curricula of public schools. There are practically no private ones in France and Catholic schools must conform to the state’s standards, while yeshivot are after-school schools.

Indeed observers of the downward spiral of the once vaunted French public education system have singled out the elimination of history as a pedagogical as well as a cultural folly, among many others such the abandonment of Latin and excusing girls of the Muslim faith from gym class. They also cite the absence of zero tolerance against juvenile thugs attacking teachers — often Jews — with brazen effrontery. This overall civilizational cave-in is not unrelated to the education ministry trend toward “universal baccalauréat,” which essentially meant gutting the content from the high school-exiting cum university-entrance exam.

Now the schools are fields of ruins. That France’s immigration policies since the 1970s are partly to blame no serious observer denies, but immigrants as such are not the reason the governing classes have allowed, even encouraged, the erosion of the social fundamentals — such as schools — that make governing possible and coherent.

The True Crisis in the Asia-Pacific

A microcosm of the larger competition being waged for Asia’s future

By Michael Mazza

The Asia-Pacific’s most dangerous crisis may be going overlooked due to North Korean threats. Despite the Obama administration’s ‘pivot’ to the region, Asian allies worry that the United States will not continue to be a steadfast partner.

North Korean bombast has been using up all of the oxygen in the Asia-Pacific, but what may be the region’s most dangerous crisis is raging on a few hundred miles to the south. With front pages focused on Kim Jong-un’s threats and the United States’ shows of force, the ongoing Sino-Japanese impasse has gone overlooked in recent weeks. Even so, it is difficult to overstate the importance of the latter conflict’s long-term implications for peace in Asia.

As tensions in the East China Sea have heated up over the past year, analysts, journalists, and businessmen have been asking two questions: Could Japan and China really come to blows over the Senkaku (or, in Chinese, “Diaoyu”) Islands? Would the United States really allow itself to be drawn into a conflict over a handful of obscure, uninhabited rocks? These questions are based on an errant assumption that the roiling conflict is, at heart, about ownership of the Senkakus. It is not.

Sympathy for the Devil

When the search for motives leads to moral alibis

By Lee Harris

In the wake of the Boston Marathon bombing, Americans are again searching for motives. It is our way of dealing with acts that shock and outrage our collective sensibilities. We looked for motives after the Oklahoma City bombing and after 9/11. We looked for them in the aftermath of the Newtown massacre, when we asked ourselves what motive a young man could have to kill first graders. But what exactly are we doing when we go in search of a motive for such crimes?

The concept of a motive is an essential part of any criminal investigation. When detectives are confronted with an unsolved crime, they begin by asking who might have had a motive to commit the crime in question. For example, a woman is found dead under suspicious circumstances. Only weeks before, her husband had taken out a large insurance policy on her life. Here we have a possible motive for him to kill his wife, namely, his desire to collect her life insurance. Needless to say, a possible motive is not enough to convict the husband of his wife’s murder, but it is enough to cause those investigating the case to focus more intensely on the husband as a possible suspect.

The Federal Financial Triangle

What would it mean for the world’s principal central bank to have negative net worth?

By Alex J. Pollock

As odd as it may seem to us now, under the National Banking Act from 1863 to 1913, local banks with national charters were the official issuers of U.S. currency, and the government had no central bank. Hundreds of national banks in towns and cities all across the country were issuing dollar bills. They were replaced in this essential role by the Federal Reserve Banks under the Federal Reserve Act of 1913.

Consistent with their responsibility as the issuers of U.S. paper money, national banks were prohibited during this period from making any real estate loans at all. Today, in contrast, the Federal Reserve is a huge investor in real estate loans. It owns over $1.1 trillion of them — and keeps buying more — in the form of mortgage-backed securities (MBS). This would have greatly surprised and highly displeased the authors of the Federal Reserve Act.

But don’t worry about the credit risk of these mortgage loans: the MBS the Fed keeps buying at the top of the market are guaranteed by Fannie Mae and Freddie Mac. Whoops: Fannie and Freddie both went completely broke, suffering staggering aggregate losses of $246 billion, which wiped out all their capital and a lot more.

 Governments fly myths as banners of truth

by Mark Grant
The bigger the real-life problems, the greater the tendency for people to retreat into a reassuring fantasy-land of abstract theory and technical manipulation.

Many people have little or no understanding of what is presently taking place in Europe. This is because it is reported nowhere, discussed in public by no one and carefully hidden in the data supplied by the European Central Bank.

What I will discuss today is the prime mover, in my opinion, of the destabilization of the European economies and yet, like the debt to GDP ratios on the Continent; just because it isn’t counted does not mean that it does not exist. I will endeavor to explain it as simply as possible.

A bank in some European country such as Spain lends money but the collateral, Real Estate or commercial loans, are going bad. The bank then securitizes a large pool of this collateral and pledges it at the ECB to receive cash. In many cases to take the pool the country has to guarantee the debt. So Spain, in my example, guarantees the loan package which is then pledged at the ECB and is a contingent liability and which is not reported in the debt to GDP ratio of the country but nowhere else that you will find either. “Hidden” would be the appropriate word.

War and the Messianic State

Robert Nisbet on the alliance between militarism and collectivism

"The power of war to create a sense of moral meaning is one of the most frightening aspects of the twentieth century."– Robert A. Nisbet (1953)

by Gary North

From his first book in 1953 until his final book on social theory in 1988, conservative sociologist Robert Nisbet warned against war as the destroyer of both social stability and liberty. He viewed war as the social force above all forces in society that can lead, and has led, to the centralization of the state, which has made mass politics possible. It undermines men's faith in local associations, which therefore undermines the cultural pluralism and localism that retard centralization and bureaucratization.

Oxford University Press published The Quest for Community in 1953. Its subtitle was A Study in the Ethics of Order and Freedom. The book was published early in the Cold War. He finished the manuscript in 1952. In 1952, the United States detonated the first H-bomb. In 1952, the truce which ended the Korean War in 1953 had not been signed. Josef Stalin was still alive when he wrote it; he died in 1953. Joseph McCarthy was gaining influence. The conservative movement was, more than anything else, an extension of the anti-Communist movement. The nation had just elected a general to be President.

There was a free market side of the conservative movement. F. A. Hayek's The Road to Serfdom appeared in 1944. It was condensed in the Reader's Digestin 1945. Henry Hazlitt's Economics in One Lesson appeared in 1946. Ludwig von Mises' Human Action appeared in 1949. But it was not this intellectual stream which caught the attention and widespread support of conservatives in 1953. It was the anti-Communist crusade.

This is why Nisbet's book seemed unlikely to become a foundation stone in the development of the conservative intellectual movement in America. It appeared in the same year that Russell Kirk's Conservative Mind appeared. Prior to 1953, there was no intellectual conservative movement in the United States. Nisbet in 1952 had never heard of Kirk. Hardly anyone had heard of Nisbet.

Nisbet's book remains in print, six decades later, published since 2010 by the Intercollegiate Studies Institute, which was founded in 1953 as the Intercollegiate Society of Individualists. The ISI was an early attempt to create intellectual leadership for the fledgling movement. It was co-founded by William F. Buckley and libertarian Frank Choderov.

Nisbet began his public criticism of the modern warfare state in 1953. His final book on social theory began with a criticism of the Pentagon as a betrayal of limited government. This was in 1988, the year before the Berlin Wall went down, three years before the Soviet Union committed suicide. The world had lived under the threat of nuclear war the entire time. The fall of the USSR in December 1991 served as the headstone of the French Revolution, the movement that Nisbet had spent his entire academic career criticizing for its totalitarianism. The totalitarian impulse was alive and well in 1953.

The Euro: a Step Toward the Gold Standard?

The gold standard emerged without formal agreements

by Andreas Hoffmann

In a recent piece Jesus Huerta de Soto (2012) argues that the euro is a proxy for the gold standard. He draws several analogies between the euro and the classical gold standard (1880-1912). Like when “going on gold” European governments gave up monetary sovereignty by introducing the euro. Like the classical gold standard the common currency forces reforms upon countries that are in crisis because governments cannot manipulate the exchange rate and inflate away debt. Therefore, to limit state power and to encourage e.g. labor market reforms he views the euro as second best to the gold standard from a free market perspective. Therefore, we should defend it. He finds that it is a step toward the re-establishment of the classical gold standard.

There has been much criticism of the piece that mainly addresses the inflationary bias of the ECB. I actually agree with much of it. In particular, imperfect currency areas have the potential to restrict monetary nationalism. This can be welcomed just as customs unions that allow for free trade (at least in restricted areas). But I have some trouble with De Soto’s conclusions and the view that adhering to the euro (as did adhering to gold) gives an extra impetus for market reform – in spite of the mentioned e.g. labor market reforms in Spain. In fact, if the euro was to proxy the gold standard, some countries should have already left the euro and reintroduced national currencies when facing high refinancing costs and negative growth rates. But euro introduction went along with several steps far beyond “simply going on gold”:

Getting the sack for having the wrong beliefs

The dismissal of a bus driver who supports the BNP shows how fragile freedom of association is today

by Rosamund Cuckston 

Thanks to a ruling by the European Court of Human Rights last year, the UK Employment Rights Act has been amended so that, from the first day of employment, an employee can bring a claim of unfair dismissal if the reason for being sacked was his or her political affiliation or opinions. An individual would not need to have worked somewhere for years before getting this protection.

This should be unalloyed good news. No one should be sacked simply because of their political allegiances; they should be allowed the freedom to associate with whomever they choose. However, the long chain of events leading to this legal change, granted by a body which has placed a variety of get-out clauses around true freedom of association, suggests that a bit of scepticism is required.

A Deep Frost in Franco-German Relations

Until Elections Do Us Part

By SPIEGEL

Progress in the European Union is stalled at the moment because France and Germany can't get along. Paris is hoping for a change of government in Berlin after elections this fall, but even that would do little to bridge growing differences between the countries.

The ambassadors who gathered in the library of the German Foreign Ministry the Thursday before last knew the situation was unusually serious. These diplomats are accustomed to seeing images of Chancellor Angela Merkel with a Hitler mustache drawn on her face, hearing vitriolic tirades about Germany's enforcement of austerity policies in Europe and experiencing tense diplomatic talks. For some time now, German diplomats have watched anti-German sentiment increase dramatically in many countries in the European Union.

Under these circumstances, the ambassadors who converged at the Foreign Ministry certainly didn't expect the meeting to be any kind of laid-back reunion, but what they encountered still caught them by surprise. Nikolaus Meyer-Landrut, Merkel's EU policy advisor, gave the diplomats an unvarnished picture of the Chancellery's concerns that matters may not improve any time soon. Merkel's advisor left the diplomats with a clear impression that the German government has given up hope of any appreciable progress in European policy before Germany's federal elections this September.

Is France poised for a revolution?

Now, a French Spring?

By Michel Gurfinkiel 

Less than one year after François Hollande’s election as president and the stunning victory of his socialist supporters at the National Assembly, there is a widespread feeling in France that his administration is doomed. According to the latest poll ^[1] released by Journal du Dimanche on April 21, 74% of the French now entertain bad opinions about Hollande as president, whereas only 25% still support him. These represent the worst figures ever for a head of state at the same point in his mandate since the founding of the Fifth Republic in 1958.

The French media wonder whether such discontent may lead to a constitutional crisis — or even a revolution. A French Spring. “Is this 1789 ^[2]?” asked Le Point, a right-of-center magazine. This is a reference to the Great Revolution of 1789 that terminated the Old Regime not just in France, but all over continental Europe. Le Point’s cover featured Hollande as Louis XVI, with a white wig and surrounded by blood thirsty sans-culottes.

Le Nouvel Observateur, a left-wing magazine, offered a different yet equally ominous parallel: “Are the 1930s back? ^[3]“ The 1930s were a time for both left-wing and right-wing revolutions in Europe: Stalin-style communism on one hand, Fascism and Nazism on the other hand. In France, it materialized in right-wing riots in 1934, in a Popular Front electoral victory in 1936, and finally — after a crushing military defeat at the hands of Nazi Germany in 1940 — in a far right dictatorship: the Vichy regime.

Eurocrats with a bee in their bonnets

It seems the bee has replaced the whale and the polar bear as the friendly face of green authoritarianism

by Rob Lyons 

On Monday, an EU committee voted on a proposal by the European Commission, the EU’s executive body, for a partial ban on a widely used class of pesticides called neonicotinoids. The vote was inconclusive, with no ‘qualified majority’ either for or against. In to such situations, the commission is able simply to impose its plan. The whole affair is a case study in incomplete science being used to impose precautionary policy with green NGOs acting as lobbyists and cheerleaders.

The new ban is a response to a genuine problem: the decline in populations of pollinating insects, particularly bees. A particularly graphic idea in relation to this is ‘colony collapse disorder’, where hives may lose most or all of their bees. At present, bees are widely used to pollinate many food crops, though not all such crops require pollination to produce food. This has led to claims that the threat to bees is, in turn, a major threat to food production, despite the fact that our most important food crops do not require pollination and other crops can be pollinated simply by using more bees or by other means entirely (though this bumps up the cost, of course).

The decline of bees has been going on for a long time, with causes including land-use changes - prompting the loss of plants that bees feed on - and the spread of a mite called Varroa destructor, which causes disease in honeybees. However, in recent years the finger of blame has also been pointed at neonicotinoid pesticides. These were regarded as a step forward for pesticides when introduced 20 years ago. First, they are systemic pesticides, that spread throughout the plant, providing more complete and preemptive protection. This also means they are not normally sprayed on to the surface of plants, which in theory keeps them away from beneficial insects. Secondly, while these nicotine-like substances are deadly to insects, they have low toxicity to mammals and humans, which reduces the negative impacts on other wildlife and human health compared with older pesticides.

How America Wrote Japan's Constitution

Revisiting a Constitution Crafted ‘in a Week’

In this Sept. 19, 1950, file photo, Gen. Douglas MacArthur,
 in passenger seat wearing leather jacket, tours the newly
 opened Incheon Front in western Korea during the Korean War.

By Yuka Hayashi

As he steps up his push to revise Japan’s postwar constitution, Prime Minister Shinzo Abe has explained that the 66-year-old basic law of Japan has become obsolete. The Japanese people must “get back our constitution,” Mr. Abe says, as the current one was written by the “occupying forces” of Gen. Douglas MacArthur, when the world was a different place. It was something drafted by “young staffers of the GHQ in a very short period of time,” he wrote in his book “Toward A New Country” published in January. “Just in 10 days or so.”

Mr. Abe’s account of how the constitution was prepared matches those given by some of those “young staffers” themselves. Several of the two dozen or so former American officials who were tasked with writing the draft constitution in 1946 shared their experiences in detail in video interviews conducted two decades ago.

Viewers can access the videos for free on the web site of the Claremont Colleges Digital Library based in California.

Among those interviewed was Richard Poole, who went to Tokyo to work for General Headquarters as a 26-year-old State Department official in 1946. Mr. Poole, now deceased, discussed how he and a couple of other young officials were assigned to draw up a section that determined Japan’s current imperial system, including the role of the emperor.

“We were told–it was a total surprise to most of us–you are to draft a new constitution for Japan and you’ll complete the work in a week. We were thunderstruck by this assignment,” he said. “Here we were a group of officers, although not a single one of us was a career officer and we were all from different walks of civilian life. We were hardly comparable to the founding fathers who drafted our constitution in the U.S.”

Another participant was Theodore McNelly, who was a 26-year-old intelligence officer working for Gen. MacArthur at his office in Tokyo’s Hibiya neighborhood. He later became a Japan studies scholar. Mr. McNelly, who passed away in 2008, was assigned to the group that drafted Article 9–probably the most controversial part of the constitution in which Japan renounced war and the possession of a military.

Mr. McNelly explained how Gen. MacArthur and Maj. Gen. Courtney Whitney, who as a lawyer led the efforts to prepare the constitution, decided that GHQ had to draw up the draft “as a kind of a model to guide the Japanese.” This came after they determined the document prepared by the cabinet of then Prime Minister Kijuro Shidehara was “really inadequate.”

Writing of the draft, Mr. McNelly said, was such a rush. “We had more materials than we had time to study them,” he said. “When you had to do this in a week, there wasn’t time to do a great deal of historical research.”

Who Will Be Master in Europe?

A dangerous and unnecessary question

By Theodore Dalrymple

If you ask someone who is in favour of "the European project" what that project actually is, he will not reply: "The creation of a large and powerful unitary state without any unnecessary interference from populations that, because of their ignorance and stupidity, see no need for it" - a reply that at least would have the merit of honesty.

No: he will start mumbling about peace and the need to avoid a repetition of World War II, as if, were it not for directives from Brussels about how large bananas must be or what are the permitted scents in soap, Europeans would once again be at each other's throats.

Actually, a forced European unity, conjured from no popular sentiment by a strange combination of bureaucratic mediocrity and gaseous utopianism, is more likely to lead to conflict than to prevent it; and the increasingly wide divergence of the interests of France and Germany is fast recalling the ghosts of the past. The French fear to be dominated; the Germans don't want to be condescended to.

Relations between the two countries, often called (between them) the locomotive of Europe, have deteriorated since the arrival in power of Francois Hollande, who was elected on the promise of doing precisely the opposite of what the Germans think the French ought to do. Hollande was hoping for an alliance with Italy and the German Social Democrats if they returned to power; but the German Social Democrats are closer in policy to Angela Merkel than they are to Hollande (indeed, they are the authors of the very policies Hollande was elected to resist); and Italy can hardly help itself at the moment, let alone France. Hollande wanted to go for a grand slam when Germany held all the cards.

Two or three rather foolish recent statements have made matters worse. Hollande called for a state of "friendly tension" between the two countries, as if the differences between them were merely academic or a matter of cafe discussion, rather than of fundamental national interest.

The weird obsession with chemical weapons

If Assad really has killed 15 people with sarin, why is that worse than his slaughter of thousands of others with bullets and bombs?

by Tim Black 

It seems fairly likely, but still uncertain, that the government forces of Syrian president Bashar al-Assad deployed some sort of chemical weapon against rebels in the cities of Aleppo, Homs and Damascus. Intelligence agencies in Israel, UK, France and the US certainly seem convinced. As indeed do politicians. But here’s the question few seem to be asking: so what?

That is not to diminish or demean the deaths of the 15 or so alleged to have been killed by some sort of chemical agent. Rather, it is to ask: what makes those deaths so different from the 70,000 others who have lost their lives during the two-year-long Syrian conflict? There certainly seems to be an assumption that these deaths are different, that, in short, a handful of chemically aided fatalities are somehow more morally repugnant than the tens of thousands of non-chemically aided deaths. For some as yet obscure ethical reason, the means of death appear to matter to Western observers. Burning people alive or mangling them to death are, it seems, deemed lesser wrongs than suffocating people using a nerve agent.

Which doesn’t really make any sense. Why is there this obsession in Western political circles with the possible use of chemical weapons? No doubt, the potent symbolism of chemical warfare plays a part. Largely invisible, chemical weapons play upon the idea of the unseen enemy, the unseen threat. And as such, in our fearful, hyper-vulnerable times, the idea of unsighted chemical agent wreaking silent destruction resonates in a way an all-too-tangible tank does not. To compound the curious socio-cultural significance of chemical weapons, there is also the myth-bound historical legacy of chemical-weapon use during the First and Second World Wars, despite actual gas-induced fatalities being far outweighed by fantastical fears. In fact, such was the terror of the Germans dropping a chemical payload on Britain during the Second World War that the entire population was provided with a gas mask.

Italy to Brussels: Give Us More Money

Beggars and Choosers 

Newly elected Italian PM Enrico Letta is getting bolder and more assertive by the minute, judging by his remarks at a recent Berlin press conference. According to the FT, Letta said that a single European currency doesn’t do enough to promote economic growth in member countries. He stated that more political union is needed to help European economies thrive:

 “Now we have to make up for lost time. That time was lost because too many countries have looked at the next elections and by doing this they have made it harder to explain to citizens that they had to concede sovereignty,” Mr Letta said in a speech to the Italian senate.

“Our destiny as Europeans is common, otherwise it will be made up of individual countries that will slowly decline . . . in a world where the powers of countries with populations in their billions will prevail,” Mr Letta said.

In short, Letta is telling Berlin: all your money belongs to us. We earlier noted that Letta’s first speech to parliament pointed to an Italy ready to take a harder line with Europe. Many smart Italians think Germany has way overplayed its hand and that it will ultimately be forced to fold on austerity issues just as it was forced to fold on the ECB policy of accommodating the needs of debtor countries. The alternatives are just too expensive and dangerous. Given that belief, they think Italy has a strong hand and should play a more aggressive game.

It looks like Letta agrees, and he’s getting clearer and clearer about what he wants European policy to look like. 

There Will Be Haircuts

The barber has you cornered

by William H. Gross

“Good as Money,” proclaimed the ad for Twenty Grand Cognac. Being a beer drinker, and never having cashed in a Budweiser to pay for a fill-up at the local gas station, I said to myself “Man, that must be really good stuff!” Even in a financial meltdown I thought, you could use it in place of cash, diamonds, gold or Bitcoins! And if the Mongol hordes descend upon us during a future revolution, who wouldn’t prefer a few belts of Twenty Grand on the way out, instead of some shiny rocks and a slingshot?

Well, not being inebriated at that moment I immediately shifted focus to a more serious topic. What IS money? A medium of exchange and a store of value is a rather succinct definition, but we generally think of it as cash or perhaps checks that reflect some balance of “ready” cash at a friendly bank. Yet as technology and financial innovation have progressed over the past few decades, and as central banks have tenuously validated the liquidity and price of various forms of credit, it seems that the definition of money has been extended; not perhaps to a bottle of Twenty Grand Cognac, but at least to some other rather liquid forms of near currency such as money market funds, institutional “repo” and short-term Treasuries “guaranteed” by the Fed to trade at par over the next few years.

All of the above are close to serving as a “medium of exchange” because they presumably can be converted overnight at the holder’s whim without loss and then transferred to a savings or checking account. It has been the objective of the Fed over the past few years to make even more innovative forms of money by supporting stock and bond prices at cost on an ever ascending scale, thereby assuring holders via a “Bernanke put” that they might just as well own stocks as the cash in their purses. Gosh, a decade or so ago a house almost became a money substitute. MEW – or mortgage equity withdrawal – could be liquefied instantaneously based on a “never go down” housing market. You could equitize your home and go sailing off into the sunset on a new 28-foot skiff on any day but Sunday.

So as long as liquid assets can hold par/cost with an option to increase in price, then these new forms of credit or equity might be considered “money” or something better! They might therefore represent a “store of value” in addition to serving as a convertible medium of exchange. But then, that phrase “Good as Money” on the cognac bottle kept coming back to haunt me. Is all this newfangled money actually “money good?” Technology and Fed liquidity may have allowed them to serve as modern “mediums of exchange,” but are they legitimate “stores of value?” Well, the past decade has proved that houses were merely homes and not ATM machines. They were not “good as money.” Likewise, the Fed’s modern day liquid wealth creations such as bonds and stocks may suffer a similar fate at a future bubbled price whether it be 1.50% for a 10-year Treasury or Dow 16,000.

The Next Great Economic Depression Has Already Started In Europe

This is all going to end very, very badly

by Michael Snyder

The next Great Depression is already happening - it just hasn't reached the United States yet.  Things in Europe just continue to get worse and worse, and yet most people in the United States still don't get it.  All the time I have people ask me when the "economic collapse" is going to happen.  Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening.  In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s.

Pay close attention to what is happening over there, because it is coming here too.  You see, the truth is that Europe is a lot like the United States.  We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards.  The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind.  The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day.  We have gone "all in" on kicking the can down the road even though it means destroying the future of America.  But the alternative scares the living daylights out of our politicians.  When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating.  A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe.  Eventually it will spread to the rest of the globe as well.
The following are 20 signs that the next Great Depression has already started in Europe...

Where’s Congress’s ‘Red Line’?

Before we slide into another war, let the country be consulted first

By PATRICK J. BUCHANAN

“The worst mistake of my presidency,” said Ronald Reagan of his decision to put Marines into the middle of Lebanon’s civil war, where 241 died in a suicide bombing of their barracks.

And if Barack Obama plunges into Syria’s civil war, it could consume his presidency, even as Iraq consumed the presidency of George W. Bush.

Why would Obama even consider this?

Because he blundered badly. Foolishly, he put his credibility on the line by warning that any Syrian use of chemical weapons would cross a “red line” and be a “game changer” with “enormous consequences.”

Not only was this ultimatum unwise, Obama had no authority to issue it. If Syria does not threaten or attack us, Obama would need congressional authorization before he could constitutionally engage in acts of war against Syria. When did he ever receive such authorization?

Moreover, there is no proof Syrian President Bashar Assad ever ordered the use of chemical weapons.

U.S. intelligence agencies maintain that small amounts of the deadly toxin sarin gas were likely used. But if it did happen, we do not know who ordered it.

Syrians officials deny that they ever used chemicals. And before we dismiss Damascus’ denials, recall that an innocent man in Tupelo, Miss., was lately charged with mailing deadly ricin to Sen. Roger Wicker and President Obama. This weekend, we learned he may have been framed.

It is well within the capacity of Assad’s enemies to use or fake the use of poison gas to suck us into fighting their war.

Even if elements of Assad’s army did use sarin, we ought not plunge in. And, fortunately, that seems to be Obama’s thinking.

Why stay out? Because it is not our war. There is no vital U.S. interest in who rules Syria. Hafez Assad and Bashar have ruled Syria for 40 years. How has that ever threatened us?

The American Pravda

The major media overlooked Communist spies and Madoff’s fraud. What are they missing today?

By RON UNZ

In mid-March, the Wall Street Journal carried a long discussion of the origins of the Bretton Woods system, the international financial framework that governed the Western world for decades after World War II. A photo showed the two individuals who negotiated that agreement. Britain was represented by John Maynard Keynes, a towering economic figure of that era. America’s representative was Harry Dexter White, assistant secretary of the Treasury and long a central architect of American economic policy, given that his nominal superior, Secretary Henry Morgenthau Jr., was a gentleman farmer with no background in finance. White was also a Communist agent.

Such a situation was hardly unique in American government during the 1930s and 1940s. For example, when a dying Franklin Roosevelt negotiated the outlines of postwar Europe with Joseph Stalin at the 1945 Yalta summit, one of his important advisors was Alger Hiss, a State Department official whose primary loyalty was to the Soviet side. Over the last 20 years, John Earl Haynes, Harvey Klehr, and other scholars have conclusively established that many dozens or even hundreds of Soviet agents once honeycombed the key policy staffs and nuclear research facilities of our federal government, constituting a total presence perhaps approaching the scale suggested by Sen. Joseph McCarthy, whose often unsubstantiated charges tended to damage the credibility of his position.

The Cold War ended over two decades ago and Communism has been relegated to merely an unpleasant chapter in the history books, so today these facts are hardly much disputed. For example, liberal Washington Post blogger Ezra Klein matter-of-factly referred to White as a “Soviet spy” in the title of his column on our postwar financial system. But during the actual period when America’s government was heavily influenced by Communist agents, such accusations were widely denounced as “Red-baiting” or ridiculed as right-wing conspiracy paranoia by many of our most influential journalists and publications. In 1982 liberal icon Susan Sontag ruefully acknowledged that for decades the subscribers to the lowbrow Readers Digest had received a more realistic view of the world than those who drew their knowledge from the elite liberal publications favored by her fellow intellectuals. I myself came of age near the end of the Cold War and always vaguely assumed that such lurid tales of espionage were wildly exaggerated. I was wrong.

The notion of the American government being infiltrated and substantially controlled by agents of a foreign power has been the stuff of endless Hollywood movies and television shows, but for various reasons such popular channels have never been employed to bring the true-life historical example to wide attention. I doubt if even one American in a hundred today is familiar with the name “Harry Dexter White” or dozens of similar agents.

Bank of America: Too Crooked to Fail

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed

by MATT TAIBBI

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.